Legal Intelligencer
(By Blaine Lucas and Anna Jewart)
While property rights are often viewed as inherently private, both law and society recognize that there is also a public nature to the use of land. To this end, the Pennsylvania Municipalities Planning Code (MPC)1 establishes requirements mandating public notice of and allowing for public participation in the land use decision-making process. For example, where a landowner requests a variance or special exception from the zoning hearing board, or a conditional use from the governing body, those entities must publish notice of and hold a public hearing on the application. At that hearing, impacted members of the public may comment on and/or object to the application. However, land use decisions for what are called “uses by right” are not made by the governing body or the zoning hearing board, but instead are addressed at an administrative level by the municipal zoning officer. Upon receipt of an application for a use by right, a zoning officer is not required to provide any public notice, public hearing, or public comment period. As a result, members of the public may not learn of a zoning officer’s approval until the landowner actually commences construction, which could be long after any permit was issued.
The zoning hearing board has jurisdiction over appeals from the determinations of a zoning officer. 53 P.S. §10909.1(3). An appeal from a determination adverse to the applicant must be filed with the board within 30 days after notice of the determination is issued to the applicant. 53 P.S. §10914.1(b). In this situation, the appeals deadline is easy to calculate. However, when an application is granted, individuals who may wish to oppose the application may not have any idea such a decision occurred. Under Section 914.1(a) of the MPC, no person seeking to reverse or limit such an approval is allowed to file any proceeding before a zoning hearing board later than thirty days after an application for development has been approved, “unless such person alleges and proves that he had no notice, knowledge, or reason to believe that such approval had been given.” 53 P.S. §10914.1(a). Once a potential objector has either actual or constructive notice of the approval, the thirty-day clock will begin to run. In other words, rather than formal notice, the event which begins the appeal period for a party objecting to approval of a zoning permit is either actual notice of permit issuance or the existence of circumstances which would give a person reason to believe that approval had occurred. Pennsylvania Courts have consistently ruled that this is an objective standard that can be ascertained by the presence of construction visible to the public.
The Commonwealth Court recently considered exactly what type of activities are sufficient to constitute constructive knowledge of issuance of a permit. In Quakertown Holding Corporation v. Quakertown Borough Zoning Hearing Board, No. 542 C.D. 2021 (July 18, 2022), a developer (Developer) was granted building, zoning, and electrical permits (Permits) required to construct a billboard on property that previously was used solely as a retail drug store (Property). The approvals were granted in January 2017. In August 2017, after engaging in preconstruction tasks such as marking out the foundation and surveying the area, the Developer commenced excavation on the Property for construction of the billboard. During August and September the Developer laid rebar and poured multiple levels of concrete foundation. In October, it began installing electrical conduit, erected an approximately 10-foot-tall cylindrical structure, and installed steel platforms on the foundation. Throughout September and October, construction materials and vehicles were continually present on the Property, and all activities and structures were visible to the public. On November 15, 2017, the owner of an adjacent shopping complex (Objector) filed an appeal with the Borough Zoning Hearing Board which, following multiple public hearings between December 2017 and August 2018, determined the Objector had constructive notice of the issuance of the Permits earlier than thirty days prior to its appeal, and therefore the appeal was untimely. Following appeal by the Objector, the trial court affirmed, and the Objector appealed to the Commonwealth Court.
Before the Commonwealth Court, the Objector raised three issues, the first of which alleged that the trial court erred by finding its appeal to be untimely because substantial evidence did not exist to support the conclusion that the Objector had constructive notice of issuance of the Permits. In deciding this issue, the Court noted that the timeliness of an appeal and compliance with the statutory provisions which grant the right of appeal go to the jurisdiction of the court to hear and decide the appeal. Courts therefore have no power to extend the period for taking appeals, absent fraud or a breakdown in the court’s operation through a default of its officers. The Court considered the application of Section 914.1(a) of the MPC, noting that while either actual or constructive notice suffices to convey the required notice, knowledge, or reason to believe that an approval has been granted, actual notice is not a requirement of the MPC. Ultimately, the Court found no error in the trial court’s conclusion that the Objectors had constructive notice of issuance of the Permits by October 11, 2017, at the latest, and that the laying of rebar, pouring of three layers of concrete, construction of a 10-foot base and attachment of steel platforms to the foundation would have given a reasonable person cause to believe that permit approvals of some sort had been granted. Because Objector filed its appeal more than 30 days later, the appeal was untimely. In light of its disposition of the timeliness issue, the Court did not address the other issues raised by the Objector.
Although the opinion is unreported, Quakertown Holding serves as a reminder to both applicants and potential objectors on how to protect their respective interests. Potential objectors should note that while the MPC provides some relief from the requirement that appeals be filed within thirty days of a zoning officer’s determination, that relief is not unlimited. Immediately upon observing any activity on the subject property, a potential objector should contact the municipal zoning officer and inquire as what permits, if any, have been granted. If the objector questions whether the zoning officer’s determination was correct, he or she should immediately file an appeal with the zoning hearing board.
Conversely, there are several steps applicants can take to avoid late in the game appeals, which, even if ultimately denied as untimely, can result in undue delay and expense. While, as the Court noted in Quakertown Holding, actual notice is not required by the MPC, an applicant can give nearby property owners actual notice of its receipt of a zoning or other permit approval, thereby triggering the running of the appeals deadline. If properly executed, providing direct notice can protect an applicant from the risk of commencing construction only to have the relevant permits overturned on appeal. If actual notice directly to potential objectors is not advisable or feasible, an applicant might also consider whether it should provide a form of more general notice to the public that approval has been received. For example, placing signage on the property, or publishing a legal advertisement, may aid in establishing an earlier date of constructive notice should an untimely appeal be filed.
Blaine A. Lucas is a Shareholder in the Public Sector Services and Energy and Natural Resources groups of the Pittsburgh law firm of Babst, Calland, Clements & Zomnir. Anna S. Jewart is an associate in Babst Calland’s Public Sector Services group and focuses her practice on zoning, subdivision, land development, and general municipal matters.
1 53 P.S. §§10101 et. seq.
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Reprinted with permission from the August 25, 2022 edition of The Legal Intelligencer© 2022 ALM Media Properties, LLC. All rights reserved.
Pipeline Safety Alert
(by Keith Coyle, Chris Hoidal and Brianne Kurdock)
On August 24, 2022, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a new final rule for onshore gas transmission pipelines (the Rule). The Rule marks the completion of a three-phase rulemaking process, commonly referred to as the Gas Mega Rule, that began more than a decade ago. While this part of the Gas Mega Rule is commonly known as the “Repair Rule,” there are numerous other safety provisions that are included in the new regulation that should not be overlooked. The Rule amends or adds various provisions in 49 C.F.R. Part 192 and will become effective on May 24, 2023.
In the Rule, PHMSA added, clarified, or modified the following sections of the natural gas pipeline safety regulations:
- definitions in section 192.3;
- the management of change process;
- corrosion control requirements;
- inspections of pipelines following extreme weather events;
- integrity management provisions;
- integrity management assessment requirements;
- revised repair criteria in high-consequence areas; and
- new repair criteria for non-high consequence areas.
Definitions and Standards Incorporated by Reference
PHMSA added new definitions referenced in the new regulations, including close interval survey, distribution center, dry gas or dry natural gas, hard spot, in-line inspection (ILI), in-line inspection tool or instrumented internal inspection device, and wrinkle bend. Furthermore, the definition of transmission pipelines was revised to include a “connected series” of pipelines to clarify that transmission pipeline can be downstream of other transmission pipelines, and to allow operators to voluntarily designate their pipelines as transmission lines.
The rule also incorporates by reference two NACE standards, NACE SP0204-2008 and NACE SP0206-2006, for stress corrosion cracking direct assessments and internal corrosion direct assessments. These new IBR standards support the new corrosion amendments to the Rule.
Management of Change
PHMSA extended management of change requirements to onshore gas transmission pipelines not currently subject to integrity management requirements. The Agency also amended the existing management of change process in § 192.911(k) to codify specific attributes listed in ASME/ANSI B31.8S, section 11.
Operators of all onshore gas transmission pipelines must now evaluate and mitigate any significant changes that pose a risk to safety or the environment through a management of change process. The process must include the reasons for the change, the authority for approving changes, an analysis of the implications, the acquisition of required work permits, and evidence documenting communication of the change to affected parties, time limitations, and the qualification of staff. Although the Gas Pipeline Advisory Committee had recommended a two-year phased in compliance period, the Agency mandated an 18-month time frame to incorporate the management of change process for pipelines in non-HCAs. For pipeline segments not covered by Subpart O, operators must implement this management of change process by February 26, 2024. Operators may seek a technically justified extension of this deadline of up to one year through the section 192.18 notification process. PHMSA specifically noted that these changes do not apply retroactively and do not cover gathering or distribution pipelines.
Corrosion Control and Related Construction Requirements
The Rule amends numerous corrosion control requirements for onshore gas transmission pipelines, addressing the monitoring and remediation, if needed, of both external and internal corrosion. The Agency issued new requirements to conduct pipe coating assessments soon after construction, determine protective coating strength, survey for interference currents, and monitor gas streams for internal corrosivity. In conjunction with the enhanced corrosion monitoring for internal and external corrosion, PHMSA established new corrosion control remediation criteria and timelines to correct deficiencies found. PHMSA acknowledged that these new construction and corrosion control requirements do not apply to gathering or distribution pipelines.
Pipe Coating
PHMSA added new construction requirements concerning the installation of pipe in a ditch (section 192.319). If a construction project involves 1,000 feet[1] or more of continuous backfill length along the pipeline, the operator must promptly (but not later than six months after placing the pipeline in service) perform an above-ground indirect assessment to identify any coating damage using direct current voltage gradient, alternating current voltage gradient, or other technology. If an operator chooses to use alternative technology, it must notify PHMSA at least 90 days in advance and seek a letter of no objection through the process described in section 192.18. An operator must repair any severe coating damage within six months after the pipeline is put in service (or as soon as practicable after obtaining the necessary permits). The operator must retain records documenting the coating assessment findings and repairs for the life of the pipe.
PHMSA made similar modifications to section 192.461 requiring an onshore gas transmission operator to conduct an above-ground indirect assessment if the backfill length of a repair or a replacement project is 1,000 feet or more. The operator would need to conduct the assessment promptly but no later than six months after the backfill. The operator may also notify PHMSA of its intent to use alternative technology by following the process in section 192.18. The operator must develop a remedial action plan within six months of completing the assessment and repair any severe coating damage within six months of the assessment or as soon as practical upon obtaining the necessary permits. The operator must retain records of the assessment findings and remedial actions for the life of the pipe.
Interference Surveys and Remediation
PHMSA amended section 192.473 to require interference surveys for pipelines subject to stray currents. Currently, an operator with a pipeline subject to stray currents must have a program to minimize the detrimental effect of these currents. An operator with such a pipeline will now have to conduct an interference survey to quantitatively determine the presence and level of interference currents. PHMSA provides in the Rule that an interference survey must be conducted when the monitoring indicates a significant increase in stray current or when new potential stray current sources are introduced. An operator must analyze the results of the survey to determine the cause of the interference and develop a remedial action plan to correct any deficiency if the current is greater than or equal to 100 amps per meter squared or if it impedes the safe operation of the pipeline or if it may cause a condition that would adversely impact the environment or the public. The operator must complete the remediation promptly but no later than the earlier of (1) 15 months of completing the survey or (2) as soon as practicable but not to exceed six months after obtaining the necessary permits.
Cathodic Protection Remediation
Although operators already have a general obligation under § 192.465(d) to promptly remediate any corrosion control deficiencies discovered during cathodic protection (CP) monitoring, PHMSA has now added a requirement for onshore gas transmission operators to develop a remedial action plan for both localized/non-systemic and widespread/systemic corrosion control deficiencies found by the CP monitoring within six months of discovery. The operator must complete the remedial action promptly but no later than the earlier of (1) the next inspection or test interval; (2) within one year, not to exceed 15 months, or (3) as soon as practicable, not to exceed six months after obtaining any necessary permits.
For areas where an annual test station reading indicates inadequate cathodic protection below the required levels in Appendix D, operators must investigate the geographical extent and causes of the low CP levels to determine whether there is systemic/widespread or non-systemic/localized areas of deficient CP. Operators must conduct close interval surveys (CIS) to delineate the pipe segments requiring CP remediation. The CIS must be conducted with the protective current interrupted unless it is impractical to do so for technical or safety reasons. An operator must promptly remediate pipe segments with insufficient cathodic protection, and, following the remediation, confirm the restoration of sufficient cathodic protection.
Internal Corrosion Monitoring and Mitigation
While section 192.477 includes requirements to monitor for internal corrosion if corrosive gas is transported, PHMSA is now adding requirements to continually monitor the gas stream for corrosive constituents. The Rule requires operators to develop a monitoring and mitigation plan for pipelines that transport gas with corrosive constituents. The Rule includes specific content requirements for the plan including an obligation to evaluate the gas monitoring data and review and adjust the plan, if necessary, once each calendar year (not to exceed 15 months).
Remedial Measures
Finally, the Rule amends § 192.485, requiring operators to determine whether remedial measures for general or localized corrosion pitting are necessary by calculating remaining pipe wall thickness using the analysis of predicted failure pressure requirements in § 192.712. While the addition of §192.712 was part of the first phase of the Mega Rule, which focused on MAOP Reconfirmation, this revision to § 192.485 clarifies that determination of remaining strength of pipe in corroded areas must be completed and documented in accordance with § 192.712 for all transmission pipelines, not just those lines that are reconfirming their MAOP.
PHMSA expanded section 192.712 to include dents and other mechanical damage. The expanded analytical requirements will include evaluation of dent and other mechanical damage that could cause a stress riser, exceed the critical strain threshold, or otherwise degrade the integrity of the pipeline.
Inspections and Remedial Action Following Extreme Weather Events
Similar to the requirements for hazardous liquid pipeline operators, PHMSA has now expanded continuing surveillance requirements for an operator to perform an initial inspection following extreme weather events. Numerous examples of extreme weather events are listed and include geohazards such as earthquakes, river channel migration, and landslides. The operator must conduct the inspection 72 hours after it reasonably determines that the affected area can be safely accessed by personnel and equipment and the equipment and personnel are available. The Rule also requires operators to take prompt remedial action discovered during the inspection.
Integrity Management
A significant portion of the Rule focuses on the integrity management (IM) program requirements in 49 C.F.R. 192 Subpart O. The Rule prescribes new or amended requirements for identifying and analyzing threats, performing direct assessments, repairing pipelines, and implementing preventive and mitigative measures (P&MM).
Threat Identification and Data Integration
PHMSA has added certain pipeline attributes from ASME/ANSI B31.8S directly into the pipeline safety regulations. Current IM regulations require operators to conduct a risk assessment using the identified threats to determine what additional P&MM are needed to ensure the safe operation of the pipeline. Operators must begin to integrate all pertinent data elements starting on May 24, 2023, with all available attributes integrated by February 26, 2024. An operator may request an extension of up to one year by submitting a notification to PHMSA at least 90 days before February 26, 2024, in accordance with § 192.18.
Internal Corrosion Direct Assessment and Stress Corrosion Cracking Direct Assessment
The rule addresses direct assessments by incorporating NACE SP0204-2008 and NACE SP0206-2006 by reference. These standards concern stress corrosion cracking direct assessment and internal corrosion direct assessment, respectively.
Repair Criteria
Finally, the Rule provides a robust overhaul of current repair criteria regulations. The Rule applies integrity-related repair criteria to pipelines not subject to the integrity management requirements in Subpart O. Repair criteria for immediate conditions, which include certain crack, dent, and corrosion anomalies, are identical to those in Subpart O (as revised by the final rule and summarized in the chart below). Operators of non-Subpart O pipelines have two years to repair “one-year conditions,” which vary slightly from those in Subpart O, and must monitor certain conditions. The Rule requires operators to use these repair criteria when making permanent repairs on transmission lines located outside of HCAs.
The chart below provides a high-level summary the new requirements:
| Immediate Repair Conditions |
One-year Conditions |
Monitored Conditions |
Metal loss anomaly with failure pressure
≤ 1.1 x MAOP |
*Smooth dent in upper 2/3 of the pipe with depth > 6% of OD |
**Dent in bottom 1/3 of pipe with depth > 6% of OD |
| *Dent in upper 2/3 of the pipe with metal loss, cracking, or a stress riser |
*Dent with depth > 2% of OD that affects girth or long seam weld |
**Dent in upper 2/3 of the pipe with depth
> 6% of OD |
| Metal loss > 80% of nominal wall |
*Dent in lower 1/3 of the pipe with metal loss, cracking, or a stress riser |
**Dent with depth > 2% that affects girth or long seam weld |
| Metal loss preferentially affecting certain long seams and failure pressure < 1.25 x MAOP |
Metal loss with failure pressure < 1.39 x MAOP |
**Dent with metal loss, cracking, or a stress riser |
| Crack plus any metal loss > 50% wall thickness |
Metal loss located at a crossing with another pipeline and certain failure pressure based on class location |
Metal loss preferentially affecting certain long seams and certain failure pressure based on class location |
| Crack plus any metal loss > inspection tool’s max measurable depth |
Metal loss preferentially affecting certain long seams and certain failure pressure based on class location |
Crack with certain failure pressure based on class location |
| Crack with failure pressure < 1.25 x MAOP |
Crack with certain failure pressure based on class location |
|
| Any anomaly that requires immediate action |
|
|
| *Exception if an engineering analysis performed in accordance with § 192.712(c) demonstrates that critical strain levels are not exceeded |
| **An engineering analysis performed in accordance with § 192.712(c) must demonstrate that critical strain levels are not exceeded. |
Other Considerations
In accordance with 49 C.F.R. § 190.335, any interested party may seek reconsideration of the rule by filing a petition with PHMSA by September 23, 2022. Petitions for judicial review must be filed no later than 89 days after the regulation is prescribed.
For a more detailed assessment or to discuss the implications of the final rule, please contact Keith Coyle at 202.853.3460 or KCoyle@babstcalland.com, Chris Hoidal at 202-853-3455 or CHoidal@babstcalland.com, or Brianne Kurdock at 202.853.3462 or BKurdock@babstcalland.com.
[1] PHMSA stated in the preamble that §§ 192.319 and 192.461 apply to segments “greater than 1,000 feet in length” but used “1,000 feet or more” in the rule text.
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Attorney Casey Alan Coyle recently joined Babst Calland as a shareholder and member of its Litigation Group. Mr. Coyle will be based in Harrisburg, Pa.
Mr. Coyle concentrates his practice on appellate law and complex commercial litigation. He frequently represents clients in state and federal appellate courts, with a particular emphasis on appeals before the Pennsylvania Supreme Court. Over his career, he has represented either a party or an amicus curiae in 15 appeals before the Pennsylvania Supreme Court.
Mr. Coyle has also successfully petitioned the Pennsylvania Supreme Court to grant review of an appeal—commonly known as “allocatur”—on six different occasions. In addition, he has presented oral argument before the U.S. Court of Appeals for the Sixth Circuit, Pennsylvania Supreme Court, Pennsylvania Commonwealth Court, and Pennsylvania Superior Court. Before entering private practice, Mr. Coyle served for over two years as a law clerk for the Honorable Thomas G. Saylor, Chief Justice Emeritus of the Pennsylvania Supreme Court.
“We’re very pleased to have Casey as part our Litigation team. He is a highly accomplished litigator representing clients in matters pending before state and federal appellate courts,” said Donald Bluedorn, Babst Calland’s Managing Shareholder. “Casey’s proven experience and track record in appeals before the Pennsylvania Supreme Court will be an invaluable contribution to our Firm, and most importantly for our clients.”
Mr. Coyle also regularly represents businesses in disputes pending before state and federal trial courts. His practice has focused on cases involving theft of trade secrets, non-competition/non-solicitation agreements, shareholder litigation, emergency injunctions, breach of contract, and breach of fiduciary duties. In addition, he has represented clients in matters brought before the Pennsylvania Commonwealth Court as part of its original jurisdiction.
“I look forward to serving the expanding needs of my clients and working with a well-respected legal team who shares my values, experience, and philosophy, and a proactive approach to business-focused problem-solving and client service,” said Coyle.
Prior to joining Babst Calland, Mr. Coyle was a partner at Eckert Seamans Cherin & Mellott, LLC. He is a 2009 graduate of Temple University Beasley School of Law.
Environmental Alert
(By Jean Mosites and Amanda Brosy)
On August 16th, President Joe Biden signed the Inflation Reduction Act of 2022 (the Act) into law. The Act, as part of a larger budget reconciliation package, provides roughly $370 billion in investments in energy and climate reform geared towards lowering greenhouse gas emissions by 40 percent, based on 2005 levels, by 2030.
Among other things, the Act resurrects a long-expired Hazardous Substance Superfund Trust Fund (Superfund) excise tax on oil and petroleum products, effective as of January 1, 2023. In 1980, Congress had established the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). CERCLA is commonly referred to as “Superfund”. It allows EPA to clean up contaminated sites. It also requires the parties responsible for the contamination to either perform cleanups or reimburse the government for EPA-led cleanup work. When there is no viable responsible party, Superfund gives EPA the funds and authority to clean up contaminated sites.
The purpose of the petroleum excise tax is to replenish the Superfund, which provides the federal government with resources to respond to environmental threats related to hazardous substances not otherwise addressed by responsible parties. The petroleum excise tax applies to crude oil received at a U.S. refinery (which tax must be paid by the operator of the refinery) and to petroleum products entering the U.S. for consumption, use, or warehousing (which tax must be paid by the person importing the product into the U.S. for any of those purposes). In addition, if any domestic crude oil is used in or exported from the U.S., and before such use or exportation no tax was imposed on such crude oil at the refinery (as described above), then a separate tax is imposed. That tax would be paid by the person using or exporting the crude oil, as the case may be.
The tax rate is 16.4 cents per barrel on crude oil and petroleum-product imports, indexed to the inflation rate. This is an increase from the rate of 9.7 cents that applied the last time this petroleum excise tax was effective over 25 years ago. It is estimated that the tax will raise $11.7 billion in revenue over 10 years, until the tax is set to expire on December 31, 2032.
The reinstatement of the Superfund excise tax on oil and petroleum products marks the resumption of two of the three original Superfund taxes that were allowed to expire in 1995 (the third was an environmental income tax). As previously reported by Babst Calland, a separate Superfund excise tax on chemical feedstocks was reinstated with the adoption of the federal Infrastructure Bill last November. The reinstatement of these Superfund taxes, with attendant revisions and new provisions, has raised and will raise a multitude of tax implications, questions and uncertainties that are beyond the scope of this alert. The IRS has issued and will continue to issue guidance regarding the applicability of the tax to taxable substances.
Babst Calland’s environmental attorneys continue to track Superfund developments and their implications for industry as developments occur in the coming months. If you have questions or need additional information, please contact Jean Mosites at (412) 394-6468 or jmosites@babstcalland.com or Amanda Brosy at (202) 853-3465 or abrosy@babstcalland.com.
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Babst Calland is pleased to announce that three lawyers were selected as 2023 Best Lawyers “Lawyer of the Year” in Pittsburgh, Pa. and Charleston, W. Va. (by BL Rankings). Only a single lawyer in each practice area and designated metropolitan area is honored as the “Lawyer of the Year,” making this accolade particularly significant.
Receiving this designation reflects the high level of respect a lawyer has earned among other leading lawyers in the same communities and the same practice areas for their abilities, professionalism, and integrity. Those named to the 2023 Best Lawyers “Lawyer of the Year” include:
Blaine A. Lucas, Litigation – Land Use and Zoning “Lawyer of the Year” in Pittsburgh, Pa.
Timothy M. Miller, Oil and Gas Law “Lawyer of the Year” in Charleston, W. Va.
Mychal Sommer Schulz, Litigation – ERISA “Lawyer of the Year” in Charleston, W. Va.
In addition, 31 Babst Calland lawyers were selected for inclusion in the 2023 edition of The Best Lawyers in America (by BL Rankings), the most respected peer-review publication in the legal profession:
- Chester R. Babst – Environmental Law, Litigation – Environmental
- Donald C. Bluedorn II – Environmental Law, Water Law, Litigation – Environmental
- Dean A. Calland – Environmental Law
- Matthew S. Casto – Commercial Litigation
- Frank J. Clements – Corporate Law
- Kathy K. Condo – Commercial Litigation
- James Curry – Energy Law and Oil and Gas Law
- Julie R. Domike – Environmental Law, Litigation – Environmental
- Kevin K. Douglass – Natural Resources Law
- Christian A. Farmakis – Corporate Law
- Leonard Fornella – Admiralty and Maritime Law
- Kevin J. Garber – Environmental Law, Natural Resources Law, Energy Law, Water Law, Litigation – Environmental
- Steven M. Green – Energy Law
- Lindsay P. Howard – Environmental Law, Litigation – Environmental
- Blaine A. Lucas – Energy Law, Land Use and Zoning Law, Municipal Law, Litigation – Land Use and Zoning
- John A. McCreary – Labor Law – Management
- Janet L. McQuaid – Environmental Law
- James D. Miller – Construction Law and Litigation – Construction
- Timothy M. Miller – Energy Law, Commercial Litigation, Bet-the-Company Litigation, Oil and Gas Law, Litigation – Environmental
- Jean M. Mosites – Environmental Law
- Christopher B. Power – Environmental Law, Natural Resources Law, Energy Law, Commercial Litigation, Mining Law, Oil and Gas Law, Litigation – Regulatory
Enforcement (SEC, Telecom, Energy), Litigation – Environmental, Litigation – Land Use and Zoning, Litigation – Municipal
- Joseph K. Reinhart – Environmental Law, Natural Resources Law, Energy Law, Litigation – Environmental
- Bruce F. Rudoy – Mergers and Acquisitions Law, Corporate Law
- Charles F.W. Saffer – Real Estate Law
- Mychal Sommer Schulz – Litigation – ERISA
- Mark D. Shepard – Commercial Litigation, Bet-the-Company Litigation, Litigation – Environmental
- Steven B. Silverman – Information Technology Law, Commercial Litigation
- Laura Stone – Corporate Law
- Robert M. Stonestreet – Environmental Law, Energy Law, Commercial Litigation
- David E. White – Construction Law, Litigation – Construction
- Michael H. Winek – Environmental Law
11 Babst Calland lawyers were also named to the 2023 Best Lawyers: Ones to Watch in America list which recognizes associates and other lawyers who are earlier in their careers for their outstanding professional excellence in private practice in the United States:
- Mary H. Binker – Corporate Law and Real Estate Law
- Katrina N. Bowers – Energy Law and Environmental Law
- Carla M. Castello – Commercial Litigation, Litigation – Labor and Employment and Mass Tort Litigation / Class Actions – Defendants
- Nicholas M. Faas – Administrative / Regulatory Law and Government Relations Practice
- Marc J. Felezzola – Commercial Litigation and Litigation – Construction
- Alyssa Golfieri – Land Use and Zoning Law and Municipal Law
- Sean R. Keegan – Commercial Litigation and Litigation – Labor and Employment
- Jennifer L. Malik – Land Use and Zoning Law and Municipal Law
- James D. Mazzocco – Litigation – Environmental and Transportation Law
- Joshua S. Snyder – Commercial Litigation and Energy Law
- Benjamin R. Wright – Commercial Litigation and Construction Law
Best Lawyers undergoes an authentication process, and inclusion in The Best Lawyers in America is based solely on peer review and is divided by geographic region and practice areas. The list has published for more than three decades, earning the respect of the profession, the media, and the public as the most reliable, unbiased source of legal referrals. Its first international list was published in 2006 and since then has grown to provide lists in over 65 countries.
Legal Intelligencer
(By Stephen A. Antonelli)
Is the country heading toward a recession? Are we already there? If so, for how long will it last? Or, will we narrowly avoid a recession and instead see a mere economic slowdown as we (hopefully) put the global pandemic in our collective rearview mirror?
The answers to these questions are unclear. Inflation and interest rates are rising, yet the economy added 528,000 new jobs in July and unemployment is at a pre-pandemic level of 3.5 percent. Moreover, by the time you read this, the Inflation Reduction Act may have been signed into law. As a result, the opinions of actual economists and other experts in the field differ as to the likelihood, timing, and duration of a recession. I will therefore certainly not attempt to offer a prediction of my own. I will, however, note that employers of all sizes must be mindful of the law if and when they are forced to make the difficult decision of reducing their workforce.
The Worker Adjustment and Retraining Notification (WARN) Act is one such law. The WARN Act was enacted in 1988 in an effort to ensure advance notice to employees in cases of qualified plant closings and mass layoffs, thereby providing employees with sufficient time to prepare for the transition into a new job. It requires larger private employers to give advanced notice of plant closings or mass layoffs to their employees (or their unions, if applicable) as well as to state agencies that assist impacted workers and the local government of the impacted area. Specifically, the Act requires employers with 100 or more full-time employees (or 100 or more full- and part-time employees who work a combined 4,000 hours per week) to provide written notice 60 days in advance of a facility or plant closure or a mass layoff.
A facility or plant closure occurs if an employer discontinues a facility, plant, or operating unit, whether permanently or temporarily, in a manner that affects at least 50 employees at a single site of employment, A mass layoff, on the other hand, occurs if a reduction in force is not the result of a facility or plant closure, but is instead the result of an employer laying off: 500 or more full-time employees at a single site of employment; or laying off 50-499 full-time employees if the number of layoffs equals 33 percent of the employer’s active workforce at the single site of employment. The employer’s “single site of employment” is defined loosely, and may consist of a single building, an office or group of offices within a building, or a group of buildings on a campus or in an industrial park. For workers whose primary duties require travel, or for those who are stationed away from headquarters, the single site of employment to which they are assigned as their home base, from which their work is assigned, or to which they report will be the single site in which they are covered for purposes of the Act. Although not specifically addressed by the applicable regulations, this same rationale will likely apply to employees who have transitioned to a remote work arrangement during the past two and a half years.
The WARN Act also applies if a closure or mass layoff occurs as the result of a sale of all or part of a business, even in the event of an asset only sale. The party responsible for providing the notice is determined by the timing of the closure or mass layoff relative to the sale. The seller is responsible for the notice if the closure or mass layoff occurs before the sale becomes effective. The buyer, on the other hand, is responsible for providing the notice if the closure or mass layoff occurs after the sale becomes effective.
When providing employees with a WARN Act notice, employers should be sure to prepare the notice in a manner that will be easily understood by its intended audience. The notice must indicate: the anticipated date of the job loss; whether the job loss is anticipated to be permanent; whether it will impact an entire work location; and whether the impacted employee has the ability to take the job of a less senior employee who will not be impacted. The notice must also must provide impacted employees with contact information of a company representative who will be able to provide additional information about the closure or mass layoff. The notice must be in writing and may be delivered using any reasonable delivery method designed to ensure delivery at least 60 days before the separation from employment. Employers may not, however, simply include the notice in each employee’s paycheck or pay envelope.
For a unionized workforce, rather than providing the notice to individual employees, employers must notify the bargaining representatives of impacted employees. In addition to the information required by a notice to individuals, when notifying a union, employers must also provide a list of the names and job titles of each impacted employee. The Act does not supersede the terms of a collective bargaining agreement that provide for additional notice or additional rights in the event of closure or mass layoff. Furthermore, employers should be aware of the fact that a number of states have enacted their own “mini-WARN” laws that provide additional protections to employees. Pennsylvania does not have a mini-WARN law, but neighboring states such as Maryland, New York, New Jersey, and Ohio have enacted such laws.
In the event that an employer is not able to determine the exact date the closure or mass layoff will occur, WARN regulations allow employers to identify in their written notice a two-week window during which the closure or mass layoff will occur. In some instances, an employer may need to extend the date of a closure or mass layoff. If such a need arises, the employer must provide a new notice if the date of the closure or mass layoff extends for 60 days or more beyond the 14-day period announced in the original notice. If the extended closure or layoff date is postponed for less than 60 days, less formal notice will suffice.
Upon receipt of a WARN notice, a state agency or Rapid Response Dislocated Worker Unit will coordinate with the employer to provide on-site information to the impacted employees about employment and retraining services that are designed to help them find new jobs. These services often include: general information about the labor market and recent hiring trends; job search and placement assistance; or training, whether entrepreneurial, on-the-job, or in the classroom.
In some instances, employers are unable to provide 60 days’ notice in advance of a plant closing or mass layoff due to unforeseen circumstances such as a natural disaster or business circumstances beyond the company’s control (such as a global pandemic, arguably). In those instances, employers may qualify for an exception to the 60-day notice rule. In the event of a plant closure, if a company is actively seeking capital or business and reasonably believes that compliance with the 60-day rule would preclude its ability to obtain such capital or business, and the new capital or business would allow the employer to avoid or reasonably postpone a shutdown, the company may be excused from the 60-day rule. With each of these three situations, employers must provide as much notice as possible and they must state in their written notice the reason why it failed to provide the requisite 60 days’ notice.
Employers who violate the WARN Act may be ordered to pay impacted workers’ wages and benefits for the period of the violation, for up to 60 days and a civil money penalty not to exceed $500 for each day of the violation. Violating employers may also be ordered to pay the attorneys’ fees and costs of employees who successfully sue the employer. As a result, if the economic outlook calls for your organization to make the difficult decision of a closure or mass layoff, be sure to consult with counsel in advance of announcing the decision.
Stephen A. Antonelli is a shareholder in the Employment and Labor and Litigation groups of Babst Calland. His practice includes representing employers in all phases of labor and employment law, from complex class and collective actions and fast-paced cases involving the interpretation of restrictive covenants, to single-plaintiff discrimination claims and day-to-day human resources counseling. Contact him at santonelli@babstcalland.com or 412-394-5668.
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Reprinted with permission from the August 18, 2022 edition of The Legal Intelligencer© 2022 ALM Media Properties, LLC. All rights reserved.
Firm Alert
(By Jim Curry, Sean McGovern, Gina Falaschi and Varun Shekhar)
On August 16, 2022, President Joe Biden signed the Inflation Reduction Act (the Act) into law, calling it “one of the most significant laws in our history.” The United States House of Representatives passed the Act on August 12 along party lines. This vote followed the Senate’s August 7 passage of the bill, also along party lines, with Vice President Kamala Harris casting the tiebreaking vote. In addition to $369 billion in energy security and climate investments, the bill also includes $64 billion to expand Affordable Care Act subsidies for two years and various tax measures, including a corporate alternative minimum tax of 15% and $80 billion to increase enforcement efforts at the Internal Revenue Service (IRS).
The vast majority of the $369 billion allocated for energy security and climate investments in the Act comes in the form of tax credits. The biggest portion of these is for clean energy tax credits ($161 billion). Some of these are modifications or extensions through 2024 of existing tax credits, such as electricity production from renewable resources. In particular, the current Section 45 production tax credit would be enhanced for renewable electricity production projects using domestic steel and other components. The Act also includes significant tax credits for carbon capture and sequestration (CCS) and clean energy production. The Act extends and increases the tax credit under Section 45Q of the IRS code for CCS, creates a new tax credit under Section 45V for the production of clean hydrogen (up to $0.60 per kg, depending on the GHG emissions associated with production), and creates a new tax credit under Section 45U for production of zero-emission nuclear power. The Act also establishes a new technology-neutral tax credit under Section 45Y for facilities producing electricity with net-zero-GHG emissions, placed in service after December 2024.
The Act further allocates substantial funding for clean energy manufacturing tax credits. This includes the manufacture of both clean energy equipment (e.g., the production of domestic manufacture of solar panels, wind turbines, batteries, and critical mineral processing equipment) as well as for the construction of clean technology manufacturing facilities.
Regarding air and greenhouse gas emissions, the Act appropriates funding to support EPA regulatory programs targeting hydrofluorocarbons (HFCs), as well as reductions of other greenhouse gases (GHGs) under Section 115 of the Clean Air Act (CAA) (relating to international air pollution). The Act would also create the “Greenhouse Gas Reduction Fund” to provide grants to states, local agencies, and tribal authorities for deployment of zero-emission technologies. In addition, the Act appropriates funding for numerous grant programs administered by EPA, including, among others, air toxics fenceline air monitoring, and expanding criteria pollutant monitoring networks. These programs could eventually have significant impacts on the stringency of regulation under the CAA potentially through revisions to National Ambient Air Quality Standards or National Emission Standards for Hazardous Air Pollutants through residual risk and technology reviews.
The Act further appropriates nearly $1 billion to EPA for facilitating regulatory programs associated with methane emissions monitoring and reducing methane emissions from petroleum and natural gas systems. In addition, the Act establishes a fee on excess waste methane emissions over a defined threshold based on the amount of natural gas or oil set to sail from a facility. The fee is assessed at a $900 per ton rate, applicable to many industries, including oil and gas production, gas processing and compression, underground natural gas storage, and onshore gas gathering and transmission. This fee increases by $300 in subsequent years.
Clean vehicle funding includes $1 billion to the EPA to award grants and rebates for medium and heavy-duty vehicles with zero-emission vehicles and $60 million in funding to EPA for grants, rebates, and loans to reduce diesel emissions in low-income and disadvantaged communities. The Act also provides $2 billion to retool existing auto manufacturing facilities to manufacture clean vehicles.
A focus area of the Act is environmental justice. The Act appropriates nearly $3 billion in block grants to community-based nonprofit organizations in disadvantaged communities for various climate-based projects, including but not limited to investing in low- and zero-emission technologies, community-based air pollution monitoring, and mitigating risks from climate change. In addition, the Act makes further tax credits available for qualifying electricity generating projects placed in environmental justice communities. The Act’s expansion of criteria pollutant monitoring networks is also designed to focus on low income and disadvantaged communities.
The Act also reinstates a Superfund tax on certain crude oil received at U.S. refineries and imported petroleum products, amending the tax from 9.7% to 16.4%, and indexing the tax for inflation.
The Act is the latest in a series of developments at the federal level that both enhance and curtail climate change efforts. The passage of the Act comes in the wake of the Supreme Court’s June 30th ruling in West Virginia v. EPA, which held that the EPA did not have authority to impose a regulatory scheme that requires shifting power generation from coal to natural gas and renewable or other zero-emitting sources. The Court’s ruling held that Congress would have needed to grant this authority specifically to an agency. Here, Congress is taking a more direct approach at climate action and renewables at the legislative level with tax credits, direct funding, and other incentives for clean energy.
The Act also joins the SEC’s March 2022 proposed rule, The Enhancement and Standardization of Climate-Related Disclosures for Investors, which includes a new subpart to Regulation S-K of the SEC’s regulations (17 C.F.R. Part 229) that would require a registrant to disclose climate-related risk information in its registration statements and periodic reports. 87 Fed. Reg. 21334. These disclosures would include material effects of climate-related risk on the company, the company’s process for identifying and managing climate-related risk, information regarding publicly set climate-related targets or goals, and the company’s greenhouse gas emissions. Id. While the stated purpose of the proposed rule is to provide standardized and material information regarding climate risks to investors, in practice, the proposed rule will incentivize greenhouse gas emissions reductions. The SEC’s proposed rule and the Act both highlight the emerging trend towards an approach to climate change outside of the confines of EPA regulation, where such efforts have historically been undertaken. This approach is consistent with President Biden’s “Whole-of-Government Approach” to the climate crisis espoused in the first days of his presidency in Executive Order 14008 Tackling the Climate Crisis at Home and Abroad. 86 Fed. Reg. 7619.
While the Act is a significant step towards funding climate change and clean energy efforts at the federal level, the long-term implications of this legislation are still unclear. The programs authorized and funded by this legislation will be developed by the various federal agencies over the coming years, and Babst Calland will continue to monitor these developments. Please contact Jim Curry at (202) 853-3461 or jcurry@babstcalland.com, Gina Falaschi at (202) 853-3483 or gfalaschi@babstcalland.com, Sean McGovern at (412) 394-5439 or smcgovern@babstcalland.com, or Varun Shekhar at (202) 975-1390 or vshekhar@babstcalland.com if you have any questions or need assistance.
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Pittsburgh Business Times
(By Ethan Lott)
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Pretrial Practice & Discovery
American Bar Association Litigation Section by the American Bar Association
(By Janet Meub)
Is the fear of contracting COVID-19 a legitimate excuse to avoid a deposition? Two recent cases highlight the issue.
In March 2020, the world shut down to prevent the spread of the novel coronavirus. Courts closed for all but emergency matters. Touching gas pumps, elevator buttons, and doorknobs could be the kiss of death! Others feared handling mail after it was delivered! When the deposition notice arrives, a witness’s fear of contracting COVID-19 is no excuse to avoid a deposition.
In Stowe v. Alford, No. 2:19-cv-01652 KJM AC, 2021 U.S. Dist. LEXIS 98021 (E.D. Cal, May 24, 2021), the parties were unable to agree, among other issues, as to whether the plaintiff should be required to appear without a mask at his remote Zoom deposition. The first deposition was abruptly discontinued when the plaintiff refused to remove his mask. The defendant filed a motion to compel the plaintiff’s second deposition, and the plaintiff argued that the first deposition was discontinued on meritless grounds.
Federal Rule of Civil Procedure 26(b)(1) governs discovery in federal cases. Remote depositions are permissible under Fed. R. Civ. P. 30(b)(4), especially in light of the COVID-19 pandemic. It is in the court’s discretion to determine whether a second deposition is warranted under the circumstances. Rule 26(b)(2)(C). However, what about the mask issue?
The U.S. District Court for the Eastern District of California ordered that the plaintiff appear on Zoom wearing either no protective face covering or a covering, such as a clear face shield, that allows his face to be seen. The court reasoned that it is the plaintiff’s responsibility to ensure that his face is visible, adding “Plaintiff has several options to ensure safety protocols while still appearing unmasked at his remote deposition: he could be in a separate room, he could ensure proper ventilation, he could wear a face shield. To avoid prejudice to the defendant, plaintiff must appear on video without a mask.”
In Nasuti v. Walmart, Inc., No. 5:20-CV-05023-LLP, 2021 U.S. Dist. LEXIS 107274 (D.S.D., June 8, 2021), a pro se plaintiff refused to sit for his deposition citing multiple excuses, including that the timing of the deposition was premature (two pending motions could render discovery moot), the deposition locale had to be Mason City, Iowa (where he moved after filing his employment case in the U.S. District Court for the District of South Dakota, Western Division) because he did not have a car to return to South Dakota, and the deposition must be conducted outdoors due to his COVID concerns.
While he disagreed that the plaintiff’s pending motions stayed discovery, defense counsel attempted to accommodate the plaintiff, offering to conduct the deposition remotely to avoid travel costs, providing a computer when the plaintiff advised he did not have one, and scheduling the deposition in a hotel conference room near the plaintiff’s home and large enough to permit social distancing to alleviate the plaintiff’s health concerns.
Over the course of several weeks, the pro se plaintiff continued to refuse his deposition, reiterating his COVID fears and stating that he was not available on the scheduled date. Defense counsel invited the plaintiff to propose new dates. When no agreement could be reached, the defendant filed a motion to compel, and the plaintiff responded by filing a motion for protective order (framed as a declaration in opposition to the motion to compel) under Rule 26(c) of the Federal Rules of Civil Procedure.
Addressing the plaintiff’s objection to his deposition based on his health and safety concerns due to the ongoing COVID-19 pandemic (among his other arguments), the court noted that as of August 2021, a vaccine was widely available to everyone above the age of 12; and, that as of May 2021, the Centers for Disease Control and Prevention guidelines opined that it was safe for those who are vaccinated to be within six feet of each other and to not wear facemasks. The court further stated that even if the plaintiff was unvaccinated, the defendant had proposed a plan to adequately provide for his safety. The plaintiff had proposed no alternatives despite the defendant’s invitation to do so. The court held that the plaintiff’s argument against conducting his deposition due to his COVID-19 concerns was without merit.
Take off that mask and sit down for your deposition.
Janet Meub is senior counsel at Babst, Calland, Clements & Zomnir P.C. in Pittsburgh, Pennsylvania.
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© 2022. Navigating Depositions During the Pandemic: Fear of COVID-19, Pretrial Practice & Discovery, American Bar Association Litigation Section, August 14, 2022 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
Environmental Alert
(By Christopher (Kip) Power and Marley Kimelman)
On July 21, 2022, the U.S. Department of the Interior’s Office of Surface Mining Reclamation and Enforcement (OSM) released its long-awaited “Guidance on the Bipartisan Infrastructure Law Abandoned Mine Land Grant Implementation” for use by participating states in applying for the first $725 million in funding available for projects involving the reclamation of abandoned mine lands (AML) under the Bipartisan Infrastructure Law (BIL). Overall, the BIL provides a total of $11.3 billion in AML grant funding over 15 years to eligible states to help communities eliminate dangerous environmental hazards and pollution caused by coal mining that took place prior to the August 3, 1977, effective date of the federal Surface Mining Control and Reclamation Act of 1977, 30 U.S.C. 1201, et seq. (SMCRA).
The AML reclamation program, funded by per-ton fees on coal production, was created under Title IV of SMCRA; the BIL provisions (modifying the “AML Economic Revitalization (AMLER) Program”) greatly increase the funding for the program and provide additional factors to be considered in awarding projects under it. Generally, the AMLER Program has provided annual grants to the six Appalachian States with the highest number of unfunded Priority 1 and Priority 2 AML problems based on OSM’s AML inventory data: Ohio, Pennsylvania, West Virginia, Alabama, Kentucky, and Virginia.
As an example of the magnitude of the increased funding from the BIL, since the program was created in 2016, West Virginia (through its Department of Environmental Protection or “WVDEP”) has received approximately $25-$30 million each year to use in awarding contracts for AMLER projects. Under the BIL, the WVDEP anticipates receiving some $140 million each year for the next 15 years to support projects under the program.
However, use of BIL funding does differ from the traditional fee-based AML funding in a few important ways. Some of those differences are:
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- Stand-alone projects classified as Priority 3 (lowest priority under SMCRA Title IV, that are typically last to be addressed) are eligible for BIL funding, regardless of whether the project will be completed in conjunction with other projects classified as Priority 1 or Priority 2 projects under SMCRA Title IV;
- AMD treatment projects that are not part of a qualified hydrologic unit are eligible for BIL funding; and
- Eligible states and tribes are not authorized to place BIL AML grant funds into AMD set-aside accounts.
In spending BIL AML funds, states are directed to prioritize projects that provide employment opportunities to current and former employees of the coal industry. To measure this, states have the option of requiring contractors to affirm that they will give preference to these individuals in any hiring for BIL-funded AML projects, and they may choose to require submission of data substantiating any reported employment of those persons. The guidance also notes that for projects valued in excess of $1 million, states should require a certification that the project will use a unionized workforce or the project applicant should provide an explanation of how its employment practices satisfy a list of key labor-related requirements.
Additionally, in accordance with President Biden’s Executive Order 14008, states are encouraged to prioritize projects that equitably provide funding under the “Justice40 Initiative,” a policy that establishes a goal that 40 percent of the overall benefits from a program should flow to disadvantaged communities. OSM has indicated that in the near future it plans to commence rulemaking around a proposed regulation that would place firm requirements on states to prioritize contractors that provide these employment opportunities. These current policies and future rules make it important that project applicants work closely with the state agency staff in completing the required application materials in a manner that is sufficiently detailed and responsive to these concerns, so that an application is not disqualified from consideration or determined to be of lower merit for failing to do so.
To be eligible for an award, project applicants must not be permit-blocked under the federal and state regulations that determine eligibility for mining permits and provisional permits, as implemented by OSM’s Applicant/Violator System (or “AVS”). In addition, states are expected to follow best practices in engaging input from local communities and other stakeholders in selecting and developing eligible projects.
Finally, OSM has determined that all BIL AML funded reclamation projects are major federal actions and are therefore subject to review under the National Environmental Policy Act (NEPA). Although NEPA allows for the development and approval of Categorical Exclusions (CE) from the statutory environmental review process (and OSM has a number of CEs in place), OSM anticipates that AMLER projects will typically require completion of at least an Environmental Assessment (EA). In this regard, OSM stresses that projects that will be completed in phases must be evaluated in a single NEPA review document, and all connected actions (regardless of funding source) are considered part of a single project under NEPA.
West Virginia Tax Credits for Reclamation of Bond-Forfeited Sites. On a separate but related note, pursuant to W.Va. Code § 22-3-11(g)(2), West Virginia allows current mine operators to enjoy substantial tax credits for performing reclamation work at mine sites that were the subject of bond forfeitures after August 3, 1977 (so-called “Special Reclamation Fund” or “SRF” sites, that are not eligible for AML funding). Under that statute and associated regulations at W.Va. C.S.R. § 110-29-1, et seq., a mining company may claim dollar-for-dollar credits against its 27.9 cents per-ton SRF fees, calculated based upon the WVDEP’s estimated costs for reclaiming a site — even if the operator spends less to complete the work.
For questions about the AML funding programs and other reclamation contract opportunities available under SMCRA and delegated state mine regulatory programs, please contact Christopher B. (Kip) Power at (681) 265-1362 or cpower@babstclland.com, or Marley R. Kimelman at (202) 853-3464 or mkimelman@babstcalland.com.
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PIOGA Press
(By Kevin J. Garber)
On July 8, the Commonwealth Court enjoined the Department of Environmental Protection and the Environmental Quality Board from implementing the Regional Greenhouse Gas Regulations, which means the regulations are not effective as of the date of this article (August 5, 2022). DEP and EQB immediately appealed that decision to the Supreme Court where we await further developments from the high court.
As background, under the final RGGI regulations that EQB adopted in July 2021, regulated sources must acquire 50 percent of the necessary CO₂ allowances for 2022 emissions by March 1, 2023 and acquire 100 percent of their allowances for the compliance period by March 1, 2024. DEP set a partial-year emissions cap of approximately 40.7 million tons of CO₂ for the remainder of 2022 and approximately 75.5 million tons for 2023, which will gradually decline to approximately 58 million tons in 2030. The modeled allowance price was in the $3-4/ton range when DEP developed the regulations but has increased substantially to $13.90/ton at the last auction on June 1, 2022. The potential financial impact on businesses and consumers is now much greater than originally predicted. At auction prices of $13-14/ton, implementation of the RGGI program in Pennsylvania is expected to cost $700-800 million per year, or nearly $4 billion over five years at current auction prices.
A group of labor and industry petitioners and a group of elected officials (including the chairs of the House and Senate Environmental Resources and Energy committees) are challenging the regulations in Commonwealth Court. They contend the regulations are an unconstitutional tax and that the Air Pollution Control Act does not provide authority for DEP and EQB to promulgate them. Several business and industry groups including the Pennsylvania Manufacturer’s Association, the Pennsylvania Chamber of Business and Industry, and the Industrial Energy Consumers of Pennsylvania filed amicus briefs supporting the challengers. Public interest groups filed amicus briefs supporting the agencies. In separate July 8 opinions in both cases, Commonwealth Court Judge Wojcik held there is a substantial legal question as to whether the regulations are an unconstitutional tax because the revenue to be generated vastly exceeds that necessary to administer the CO₂ budget trading program. The rulemaking record estimated that DEP would use only six percent of auction proceeds to administer the program. DEP acknowledged during the hearing that the estimated receipts for the 2022-23 budget year to be directed into its Clean Air Fund would exceed $443 million. By comparison, over the past five years, there was roughly $20-25 million in the Fund annually and the total amount the General Assembly appropriated to DEP was $169 million. Based on this, the Court found the legal issue to be considerable enough to enjoin the regulations. However, the court rejected the argument, for injunction purposes, that DEP does not have authority under the Air Pollution Control Act to promulgate them.
The agencies’ July 11 appeal to the Supreme Court acted as an automatic stay of Judge Wojcik’s injunction. The elected officials then petitioned to vacate the automatic stay, which the Commonwealth Court granted on July 25, thereby reinstating the injunction. The agencies filed an Emergency Application to Reinstate the Automatic Stay on July 26 with the Supreme Court, but the Court has not ruled on that application as of August 5.
So, what’s next? First, the Supreme Court will review whether the Commonwealth Court had sufficient grounds to enjoin the regulations. The Supreme Court has not yet set an argument date on the appeal. It seems unlikely that a decision will be forthcoming in the third quarter of this year. Second, litigation on the merits of the challenge will continue before the Commonwealth Court. Briefing will take place in September and October, and arguments are currently slated for the Commonwealth Court’s 2022 argument session in Philadelphia. And third, the courts must sort out third-party petitions to intervene in the litigation. A group of environmental organizations (including the Sierra Club, NRDC, and Clean Air Council) together with Constellation Energy Corporation applied to intervene in the Commonwealth Court matter but the Court denied the petition, finding their interests to be adequately represented by DEP and EQB. They also have appealed to the Supreme Court.
There are very important issues with potentially significant consequences to be resolved in a relatively short – period. If the regulations are upheld, the regulated budget sources, which currently comprise about 60 electricity generating facilities (most of which are natural-gas fired), must secure 50 percent of their allowances by March 1, 2023 at auction prices that have risen steadily since the regulation was first proposed. The key legal issues before the Commonwealth and Supreme Courts – i.e., when does revenue generated by an environmental program become a tax that must be imposed by the General Assembly, and to what extent may DEP and EQB rely on general rule-making authority in environmental statutes to promulgate regulations concerning subject matter that is not itself expressly covered in the underlay statute – have implications beyond the RGGI program. Stay tuned!
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Reprinted with permission from the August 2022 issue of The PIOGA Press. All rights reserved.
Legal Intelligencer
(By Gary Steinbauer and Christina Puhnaty)
In June 2022, the U.S. Environmental Protection Agency proposed revisions to its greenhouse gas reporting program rule (GHGRP rule or rule). See 87 Fed. Reg. 36,920 (June 21, 2022). Established in 2009 following a Congressional mandate in the 2008 Consolidated Appropriations Act, the GHGRP rule requires large direct sources of greenhouse gas (GHG) emissions (e.g., with certain exceptions, sources emitting at least 25,000 metric tons of carbon dioxide equivalent), fuel and industrial gas suppliers, and carbon dioxide injection sites to report total annual GHG emissions and other information using specific calculation methodologies. See generally 40 C.F.R. Part 98. The rule requires reporting for over 40 different source categories, with more than 8,000 facilities reporting annually. According to EPA, the reported data cover covers 85% to 90% of the GHG emissions in the United States, and data collected under the program shows that Pennsylvania ranks among the top five states with the highest reported GHG emissions.
The proposed rule does not limit covered sources’ GHG emissions or require sources to take any steps to reduce their GHG emissions. It is strictly a reporting rule, creating a massive dataset that the EPA uses to assess trends and make other policy decisions. The EPA publishes summaries of annual GHG emissions data, including summaries of GHG emissions by sector and facility, geographic information on reported GHG emissions, and environmental justice-related information for each sector.
This GHG emissions data are taking on greater significance as more companies focus on environmental, social and governance (ESG) issues and roll out net zero target dates. In addition, the Securities and Exchange Commission’s recently proposed climate disclosure rule provides that registrants reporting under the SEC reporting regime would be able to rely on data reported under the EPA’s GHGRP rule to partially fulfill their SEC climate-related reporting obligations. See 87 Fed. Reg. 21,334 (Apr. 11, 2022).
According to the EPA, its latest proposed revisions are designed to improve the quality of reported data by changing, among other things, GHG emissions calculations and monitoring methods. In addition, the EPA is proposing to require the reporting of data from certain new source categories as well as new emission sources within existing source categories. The EPA’s proposed revisions to the rule come after roughly six years of no changes. The public comment period for the EPA’s proposed revisions to the GHGRP rule closes on Oct. 6, after being extended an additional 45 days after numerous industry trade groups and other reporters raised concerns about the adequacy of the initial 60-day comment period.
Several of the more noteworthy proposed revisions to the Rule include:
Exiting the GHGRP and Continuing Obligations: The EPA proposes to clarify that reporters seeking to “off-ramp” or exit the GHGRP because calculated GHG emissions are below the reporting threshold, must use the Rule’s emissions estimation methodologies to determine their ability to “off-ramp.” The EPA is also proposing to clarify that the rule’s emissions estimation methodologies must be utilized after exiting the GHGRP to determine whether reporting is triggered again during subsequent years. These proposed revisions have the effect of limiting covered sources to the EPA’s emissions estimation methodologies to exit and potentially return to the GHGRP.
Petroleum and Natural Gas-Related Revisions: The EPA has revised the Petroleum and Natural Gas Systems reporting requirements at 40 C.F.R. Part 98, Subpart W approximately ten times since the rule first required reporting from this source category in 2010. In its latest round of proposed revisions, the EPA states that it is seeking to improve data quality and require reporting for new emission sources. These proposed changes will almost certainly result in higher emissions estimates for petroleum and natural gas facilities than in previous years. Sources that will be covered by reporting requirements for the first time include pneumatic controller venting, abnormal emission events that are unaccounted for with existing reporting requirements (i.e., “other large release events” such as storage wellhead leaks and well blowouts), and acid gas removal vents. The EPA is also proposing to revise existing requirements for emissions from several sources within this source category, including glycol dehydrator vents, liquids unloading, atmospheric storage tanks, associated gas flaring, and equipment leaks. See 87 Fed. Reg. at 36,962–82. Many of these proposed revisions are based on the EPA’s recently proposed changes to the new source performance standards (NSPS) and emissions guidelines (EG) for volatile organic compound and methane emissions from the oil and natural gas industry that would be codified at 40 C.F.R. Part 60, Subpart OOOOa, OOOOb, and OOOOc. See 86 Fed. Reg. 63,110 (Nov. 15, 2021). The EPA proposed the changes to the NSPS and EG in November 2021, without releasing proposed regulatory text. The EPA’s reliance on these proposed NSPS and EG revisions to justify changes to the GHGRP Rule raises questions, particularly when the changes to the NSPS and EG are very likely to be challenged.
Additional Data Proposed for Cement, Glass, and Iron and Steel Industries: For these source categories, the EPA proposes to collect more detailed data to verify reported emissions and, in some instances, calculate back-estimates of process emissions. For example, the EPA proposes requiring affected cement facilities to report emission equations inputs to the agency. The EPA seeks to add this requirement for cement production to back-estimate reported GHG emissions. For glass production, the EPA proposes to require facilities report the “annual quantity of glass produced by the facility in tons, by glass type, from each continuous glass melting furnace and from all furnaces combined.” For iron and steel production, the EPA proposes to require facilities to report the specific type of unit that is an emission source, as well as the annual production capacity and operating hours of the unit. The EPA is also proposing to streamline monitoring requirements for iron and steel production under 40 C.F.R. Part 98, Subpart Q, giving reporters several options to account for carbon dioxide uptake in produced metal materials.
Proposed Clarifications on Carbon Sequestration and Hydrogen Production: EPA is proposing to refine and add requirements to subparts of the GHGRP related to carbon dioxide suppliers, carbon capture and sequestration (CCS), and hydrogen production. 87 Fed. Reg. at 37,012 (carbon dioxide); 37,016 (CCS); 36,958 (hydrogen production). The EPA is also proposing to add a new subpart to the GHGRP Rule—Subpart VV—to create an additional reporting option for geologic sequestration of carbon dioxide in association with enhanced oil recovery operations. Id. at 37,016. These proposed changes are described by EPA as improving the data surrounding these activities. Tax incentives, such as the Internal Revenue Code Section 45Q credit, have relied on the GHGRP rule calculation methodologies as the basis for demonstrating the amount of tax credits available to entities engaged in carbon capture and sequestration. See 26 U.S.C. Section 45Q; IRS Notice 2009-83, //www.irs.gov/pub/irs-drop/n-09-83.pdf. The calculation methodologies in the GHGRP rule for CCS and hydrogen production may continue to serve as guideposts for future tax and financial incentives in these emerging areas.
Potential New Sectors: The EPA’s proposal solicits input on whether it should expand the GHGRP rule to include new source categories, including energy consumption, ceramics production, calcium carbide production, coke calcining, carbon dioxide utilization and others. The EPA has pledged to continue using GHGRP data to evaluate potential new regulations for reporting sectors. Companies currently reporting under the GHGRP and those engaged in activities that are the subject of the proposed rule should carefully review the EPA’s proposed revisions and understand how they may affect their reporting obligations under the GHGRP rule and any future SEC climate disclosure requirements, as well as ongoing ESG initiatives and progress toward achieving net-zero goals.
Gary Steinbauer is a shareholder and Christina Puhnaty is an associate in Babst Calland Clements and Zomnir’s environmental group. Their practices focus largely on matters arising under the Clean Air Act, analogous state clean air laws, and their implementing regulations. Contact them at gsteinbauer@babstcalland.com and cpuhnaty@babstcalland.com.
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Reprinted with permission from the August 4, 2022 edition of The Legal Intelligencer© 2022 ALM Media Properties, LLC. All rights reserved.
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(By Joseph K. Reinhart, Sean M. McGovern, Gina N. Falaschi and Christina Puhnaty)
Effective May 12, 2022, the Office of Surface Mining Reclamation and Enforcement (OSMRE) approved amendments to the Pennsylvania regulatory program under the Surface Mining Control and Reclamation Act of 1977 (SMCRA). See 87 Fed. Reg. 21,561 (Apr. 12, 2022). The Pennsylvania Department of Environmental Protection (PADEP) submitted the amendments to OSMRE for approval in 2012, and years of correspondence between the agencies followed. OSMRE determined that Pennsylvania’s proposed regulations are in accordance with SMCRA and not inconsistent with the federal regulations implementing SMCRA. By approving the amendments, OSMRE is amending the federal regulations at 30 C.F.R. pt. 938, which codify decisions concerning the Pennsylvania program, to include these amendments to the Pennsylvania program.
The amendments to the Pennsylvania program are related to the beneficial use of coal ash at active surface coal mining sites. OSMRE identified key provisions of the amendments as “operating requirements for beneficial use, including certification guidelines for chemical and physical properties of coal ash beneficially used and water quality monitoring requirements.” 87 Fed. Reg. at 21,562.
The amendments include adding definitions to 25 Pa. Code chs. 287 and 290 as well as adding sections to chapter 290 that included the following, among others: general requirements for beneficial use (§ 290.101); beneficial use at coal mining activity sites (§ 290.104); coal ash certification (§ 290.201); exceedance of certification requirements (§ 290.203); water quality monitoring (§ 290.301); requirements for monitoring points (§ 290.302); and standards for wells and casing of wells (§ 290.303).
Copyright © 2022, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(By Joseph K. Reinhart, Sean M. McGovern, Gina N. Falaschi and Christina Puhnaty)
On May 28, 2022, the Pennsylvania Department of Environmental Protection (PADEP) finalized the draft technical guidance that explains PADEP’s considerations when evaluating liners and cap systems installed at coal refuse disposal areas (CRDAs) that was discussed in Vol. XXXVIII, No. 4 (2021) of this Newsletter. See PADEP, Final Technical Guidance Document—Liners and Caps for Coal Refuse Disposal Areas (May 28, 2022). The purpose of the guidance document is to “explain[] the procedures that [PADEP] will use in approving liners and caps for facility designs and the criteria for as-built certifications for [CRDAs].” Id. PADEP issued a comment and response document with the final guidance. See PADEP, Comment and Response Document (May 28, 2022).
Commenters raised concerns with the extent to which PADEP could enforce the requirements in the guidance document because the document is cited in the regulatory text at 25 Pa. Code § 90.50. PADEP, however, explained that this reference does not make the guidance document binding, as “[g]uidance does not rise to the level of regulation because it is possible to deviate from guidance as necessary.” Comment and Response Document at 5.
PADEP also clarified that it is not the agency’s intent to revisit CRDAs that are already reclaimed and have achieved their final configuration and vegetation. Id. Where final configuration and vegetation has not yet been achieved, however, PADEP will require that “the operation is completed with a minimum combined thickness of 4 feet of cover, or a demonstration that the previously approved cover material and thickness will be as effective as 4 feet of combined thickness as per [25 Pa. Code § 90.125(c)].” Id. The guidance document does not acknowledge the waiver in section 90.125(c) for “coal refuse disposal areas permitted prior to July 27, 1991 if the requirements of [25 Pa. Code §§ 90.150–.157 and 90.159–.165] can be attained.” Id. at 13.
In response to one comment pointing out that section 90.50 does not explicitly distinguish between liners and caps, PADEP clarified that the agency’s main purpose in issuing this revised guidance is “to incorporate caps because they are necessary components of most permits under the requirements of Chapter 90.” Id. at 4.
PADEP also reiterated its position that clay layers as a cap are not typically suitable for “circumstances with high hydraulic head conditions, slurry impoundments or as a permanent cap for any coal refuse,” but applicants will have the opportunity to make a demonstration that a clay cap is at least as effective as a synthetic one. Id. at 7. PADEP also reiterated that synthetic liners currently constitute the “best available technology currently feasible.” Id. at 14. Additionally, PADEP revised the guidance to require a minimum hydraulic conductivity for “low hydraulic conductivity soils” (clay) of 1 x 10-7 cm/sec. Id. at 10.
The final technical guidance document was effective upon issuance on May 28, 2022.
Copyright © 2022, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(By Joseph K. Reinhart, Sean M. McGovern, Gina N. Falaschi and Christina Puhnaty)
On July 8, 2022, the Commonwealth Court of Pennsylvania granted a preliminary injunction preventing the State from participating in the Regional Greenhouse Gas Initiative (RGGI) pending resolution of a case. As previously reported in Vol. 39, No. 2 (2022) of this Newsletter, the Pennsylvania Department of Environmental Protection’s (PADEP) CO2 Budget Trading Program rule, which links the commonwealth’s cap-and-trade program to RGGI, was published in the Pennsylvania Bulletin in April 2022. See 52 Pa. Bull. 2471 (Apr. 23, 2022). RGGI is the country’s first regional, market-based cap-and-trade program designed to reduce carbon dioxide (CO2) emissions from fossil fuel-fired electric power generators with a capacity of 25 megawatts or greater that send more than 10% of their annual gross generation to the electric grid.
On April 25, 2022, owners of coal-fired power plants and other stakeholders filed a petition for review and an application for special relief in the form of a temporary injunction, and a group of state lawmakers filed a challenge as well. See Bowfin KeyCon Holdings, LLC v. PADEP, No. 247 MD 2022 (Pa. Commw. Ct. filed Apr. 25, 2022). The commonwealth court held a hearing on May 10 and 11, 2022, on the application for special relief.
Because the commonwealth court had not granted the application for preliminary injunction by July 1, 2022, the date on which compliance was to begin under the rule, sources were obligated to begin tracking CO2 emissions for compliance purposes and planned to participate in the upcoming RGGI CO2 allowance action in September 2022.
On July 8, 2022, the commonwealth court granted a preliminary injunction. The order and opinion enjoined the administration and enforcement of RGGI until further order. The court found there is substantial legal question with respect to whether RGGI is an unconstitutional tax given the revenue expected to be generated versus the cost to administer the regulations. The court also found that the petitioners would face immediate and irreparable harm if the rulemaking is ultimately held invalid because the cost of compliance, including lost profits, would not be recoverable because PADEP and Pennsylvania’s Environmental Quality Board (EQB) enjoy sovereign immunity. The court concluded an injunction is reasonably suited to abate the effects of the rulemaking should it be deemed invalid.
Upon appeal of the preliminary injunction by PADEP and the EQB to the Supreme Court of Pennsylvania, the July 8 ruling was automatically stayed, which occurs as a matter of procedure when a state entity appeals to the supreme court. On July 25, 2022, the commonwealth court reinstated its earlier preliminary injunction ruling that a group of state lawmakers who filed one of two legal challenges against the rule had satisfied their burden of proof to establish the requirements to vacate the stay.
On July 12, 2022, natural gas companies Calpine Corp., Tenaska Westmoreland Management LLC, and Fairless Energy LLC filed a third legal challenge to the rule with arguments similar to those brought in the other two cases. See Calpine Corp. v. PADEP, No. 357 MD 2022 (Pa. Commw. Ct. filed July 12, 2022). Oral argument before the commonwealth court on the merits of these three cases will not likely occur prior to September 2022, at the earliest.
Further information regarding the rule and the history of the rulemaking can be found on PADEP’s RGGI webpage at https://www.dep.pa.gov/Citizens/climate/Pages/RGGI.aspx.
Copyright © 2022, The Foundation for Natural Resources and Energy Law, Westminster, Colorado