The American College of Environmental Lawyers (ACOEL)
(By Chester Babst)
In 2022, the on-going debate will continue over the hotly contested definition of “waters of the United States” (WOTUS), a phrase that determines the scope of federal jurisdiction over streams, wetlands and other waterbodies under the Clean Water Act (CWA). The WOTUS definition is included in 11 federal regulations and affects, among others, NPDES and Section 404 permitting, SPCC plans and spill reporting. This year, both the executive and judicial branches of the federal government are expected to weigh in on this definition, without any guarantee that their interpretations will be consistent.
Proposed Rule 1
USEPA and the Corps have already taken the first step to revise the WOTUS definition, as promised by President Biden during his campaign, by publishing a proposed rulemaking on December 7, 2021 (Rule 1). While this proposed definition is similar to the pre-2015 definition of WOTUS, which is currently in effect, it also reflects relevant Supreme Court decisions (e.g., Rapanos v. United States) that occurred in the early 2000s.
Much of the controversy surrounding the WOTUS definition relates to the two tests identified in the Rapanos decision. Justice Antonin Scalia issued the plurality opinion in Rapanos, holding that WOTUS would include only “relatively permanent, standing or continuously flowing bodies of water” connected to traditional navigable waters, and to “wetlands with a continuous surface connection to such relatively permanent waters.” Justice Anthony Kennedy, however, advanced a broader interpretation of WOTUS in his concurring opinion, which was based on the concept of a “significant nexus,” meaning that wetlands should be considered as WOTUS “if the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered water.”
If promulgated, the December 2021 proposed WOTUS definition would incorporate Justice Kennedy’s significant nexus test into the regulations. Practically speaking, however, the impact is not expected to be significant because, in interpreting the current definition of WOTUS, the Corps has already largely been relying on its 2008 guidance, which reflects Justice Kennedy’s significant nexus concept.
Proposed Rule 2
A more expansive definition of WOTUS is expected when the Biden administration unveils its second proposed WOTUS rulemaking (Rule 2), planned for publication later this year. While the language of Rule 2 is currently unknown, as stated in the Fall 2021 Unified Agenda, Rule 2 is expected to reflect “additional stakeholder engagement and implementation considerations, scientific developments, and environmental justice values. This effort will also be informed by the experience of implementing the pre-2015 rule, the 2015 Clean Water Rule, and the 2020 Navigable Waters Protection Rule.” The effect of identifying federally-regulated waters based on concepts such as environmental justice and, potentially, climate change is uncertain. However, it is expected that this proposed definition will broaden the scope of WOTUS.
Sackett v. USEPA
In addition to the Biden administration’s planned changes to the WOTUS definition, the U.S. Supreme Court, in January 2022, signaled that it would, again, weigh in on the WOTUS debate, when it agreed to hear the case of Sackett v. USEPA. In Sackett, landowners in Idaho have had a long-standing challenge to an administrative order issued against them for allegedly filling wetlands without a permit. The Sacketts assert that Justice Kennedy’s significant nexus test in Rapanos is not the appropriate test to delineate wetlands as WOTUS, and that, under the test identified by Justice Scalia, the wetlands on their property are not WOTUS.
In 2021, the Ninth Circuit ruled against the Sacketts’ position and held that the “significant nexus” test in the Kennedy concurrence was the controlling opinion from Rapanos. The Sacketts petitioned the U.S. Supreme Court to consider whether Rapanos should be revisited to adopt the plurality’s test for wetland jurisdiction under the CWA. However, the Court, instead, will consider the narrow issue of whether the Ninth Circuit “set forth the proper test for determining whether wetlands are ‘waters of the United States.’”
The Supreme Court’s opinion as to whether the significant nexus test is the “proper test” for identifying WOTUS is expected to be very significant in future interpretations of WOTUS. In addition, this ruling could create direct conflicts and further uncertainty if the Court holds that the significant nexus test is not appropriate while the Rule 1 or Rule 2 regulatory definition incorporates the significant nexus test. One thing is clear: the seemingly never-ending debate over WOTUS is not going away anytime soon.
To view the full article, click here.
Reprinted with permission from the March 30, 2022 ACOEL Blog.
Firm Alert
(By Justine Kasznica and Ember Holmes)
On March 21, 2022, President Biden issued a statement in response to evolving intelligence that Russia is exploring options for malicious cyberattacks against the United States. The statement highlights the measures taken by the Administration to strengthen cyber defenses within the federal government and, to the extent that it has authority, within critical infrastructure sectors. Additionally, President Biden called on private sector critical infrastructure owners and operators to accelerate and enhance their cybersecurity measures, urging them to take advantage of public-private partnerships and initiatives, including those administered by the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA). Appended to President Biden’s statement was a Fact Sheet, which outlines specific steps that companies can take to bolster cybersecurity across the nation, and refers readers to various resources compiled by CISA, as part of a cybersecurity campaign.
Background
In November 2021, the Biden administration began ramping up its cybersecurity and defense measures in response to Russian President Vladimir Putin’s escalating aggression toward Ukraine. On January 11, 2022, CISA, the Federal Bureau of Investigation (FBI), and the National Security Agency (NSA) issued Alert AA22-011A, “Understanding and Mitigating Russian State-Sponsored Cyber Threats to U.S. Critical Infrastructure,” which provided an overview of Russian state-sponsored cyber operations; commonly observed tactics, techniques, and procedures (TTPs); detection actions; incident response guidance; and mitigations. The Biden administration, CISA, FBI, and NSA continued to monitor the level of risk posed by Russia, which recently escalated based on intelligence indicating that Russia is planning cyberattacks against the United States in response to economic sanctions that the United States has imposed.
What is Shields Up?
Shields Up is a cybersecurity campaign formed out of the combined efforts of CISA and the FBI to help organizations prepare for, respond to, and mitigate the impact of cyberattacks by Russia. Although the campaign is focused on critical infrastructure, CISA has emphasized that all organizations, regardless of sector or size, must be prepared to defend against and respond to disruptive cyber incidents.
On March 22, 2022, CISA hosted an Unclassified Broad Stakeholder Call to brief attendees on the escalating threat of cybersecurity attacks by Russia. Jen Easterly (Director of CISA), Matt Hartman (Deputy Executive Assistant Director of Cybersecurity of CISA), and Tonya Ugoretz (Deputy Assistant Director of the FBI Cyber Division) addressed attendees, focusing their comments on the Shields Up campaign, and highlighting most important actions that organizations can take to prevent, detect, and respond to possible cyberattacks. A condensed list of these actions includes:
- Familiarize yourself with your networks and actively patrol systems, including informational and operational technology, for perceived threats or unexpected events (identified TTPs, malware signatures, etc.);
- Regularly scan public-facing programs, systems, and software for vulnerabilities;
- Secure your systems and credentials by using complex passwords, two-factor authentication, encryption, patching, etc.;
- Maximize resilience to cyberattacks by strengthening security of operating systems, software, and firmware, and by scheduling automatic updates of these systems;
- Prepare a cyber incident response plan that includes FBI contact information for reporting, as well as contact information for an incident response firm and outside legal counsel; and
- Report any incidents immediately, and maintain a low threshold for reporting.
In addition to the foregoing broad, categorical guidance and advice, the Shields Up website has valuable resources to assist those in the private sector with the development and implementation of enhanced security measures. These resources include technical guidance, a catalog of known exploited vulnerabilities, a catalog of free cybersecurity services and tools provided by the federal government, a catalog of free cyber hygiene services, a ransomware guide, and many other preparedness and response resources.
Babst Calland attorneys are closely following these developments. If you have questions or need additional information, please contact Justine M. Kasznica at 412-394-6466 or jkasznica@babstcalland.com or Ember K. Holmes at 412-394-5492 or eholmes@babstalland.com.
To view the PDF, click here.
HART Energy
(By Gary Steinbauer and Sean McGovern)
Methane emissions are a chief concern across the oil and gas value chain. Gary Steinbauer and Sean McGovern, both shareholders with Babst Calland, discuss methane mitigation and how players in the energy space can best handle it in this three-part video.
In the first segment, Steinbauer discusses the Biden administration’s approach to methane emissions in the energy sector, including proposed regulatory changes in the EPA’s Methane Rule.
In the second segment McGovern discusses abandoned and orphaned wells, how they are being plugged, and the help that operators can receive from the Bipartisan Infrastructure Law that passed in 2021.
In the final segment, both attorneys offer step-by-step advice to operators in Appalachia trying to navigate a slew of updated regulations.
View the three-part video, here.
Renewables Law Blog
(By Bruce Rudoy)
While long term goals of lowering greenhouse gas emissions and employing sustainable energy sources have gained momentum across all industries, Chevron Corp., through its New Energies division, has stated it has shorter term goals as well – it says its planned growth in renewable fuels, hydrogen and carbon capture is expected to enable about 30 million tones of annual CO2 equivalent emission reductions by 2028. Technology adoption, policy and consumer behavior will drive energy choices, says a top sustainability executive, as companies focus on carbon management along the path to net zero. All three factor into whether one form of energy or another is sought to supply demand created by income and population growth, according to Bruce Niemeyer, vice president of strategy and sustainability for Chevron Corp. “Keeping supply and demand balanced through the transition is important so the transition works for all and doesn’t become a negative event for those most vulnerable,” Niemeyer said earlier this month during UT Energy Week. He added, “We’re going to need many forms of energy, which means we need to work on reducing the carbon intensity of all of them.” Chevron is among the many companies working to lower its emissions amid a heightened focus on global warming and future energy supplies. Like the smartphone, technologies with features that meet consumers’ needs or low-cost technologies will gain market share, he said, noting consumer preference is a strong factor. Take, for example, the automotive sector. EVs are expected to play a key role in the energy transition, giving their lower emissions, compared to vehicles with internal combustion engines. However, “last year, our best estimate is there were 6.6 million electric vehicles sold. At the same time, there were 35 million SUVs. It doesn’t mean it will be that way forever, but consumer preferences are strongly important to how energy is demanded by the world and then the choices of whether it’s provided from one form or another.” Most consumers do not appear willing to give up their gasoline-fueled vehicles, however, falling electric vehicle (EV) prices with improved battery technology are contributing to an uptick in sales. Citing data from Wards Intelligence, the U.S. Energy Information Administration said in February that hybrid, plug-in hybrid, and EVs collectively accounted for 11% of light-duty vehicle sales in the United States in fourth-quarter 2021. Several countries and automakers have set ambitions to increase EV sales, including in the U.S. where there is a target of 50% EV sales share in 2030.
Like many of its peers, Chevron is advancing technologies to reduce the carbon intensity of its operations. Its targets include a 35% reduction in upstream CO2 intensity by 2028, a more than 5% reduction in its portfolio carbon intensity by 2028 and net-zero Scope 1 and Scope 2 emissions by 2050. Chevron’s 2030 new energies targets also include producing 150 ktpa in hydrogen, which Niemeyer said could be used to decarbonize the heavy-duty transportation sector; and 25 MMtpa in carbon capture and offsets. The company has formed several partnerships, including with Hydrogenious, a developer of liquid organic hydrogen carrier technology. Speaking during Chevron’s analyst day in March, Chief Technology Officer Eimear Bonner said the technology could deliver affordable and efficient storage and transport of hydrogen. The company has said its planned growth in renewable fuels, hydrogen and carbon capture to these shorter term goals is expected to enable CO2 equivalent emission reductions by 2028.
View the full article here: Chevron Exec Shares Insight on Energy Transition, Oil Major’s Strategy | Hart Energy.
Tags: carbon capture, emission reductions, Hydrogen, renewable energy
Marley R. Kimelman recently joined Babst Calland as an associate in the Environmental Group. Mr. Kimelman assists clients with matters encompassing a broad range of environmental issues, including those related to state and federal permitting, regulatory compliance, and environmental litigation.
Prior to joining the Firm, Mr. Kimelman worked as an Environmental, Health, and Safety Regulatory Consultant at Enhesa, Inc. In this role, he was responsible for analyzing federal and state EHS regulations and drafting legal compliance reports used to advise clients on a course of action to achieve regulatory compliance. Mr. Kimelman is a 2021 graduate of George Washington Law School.
Environmental Alert
(By Robert Stonestreet, Kip Power and Ben Clapp)
During its 2022 60-day Session, the West Virginia Legislature took action to promote development of “rare earth element” recovery in the state, although it failed to deliver on all of the proposed legislative action on the last day of the Session.
On March 10, 2022, the Senate unanimously approved House Bill 4003, which is intended to clarify the ownership of rare earth elements present in mine drainage. The bill creates a new section of the West Virginia Abandoned Mine Lands Act, addressing valuable materials (not limited to rare earth elements) that may be produced through treatment of mine drainage. The new statute declares that these materials are part of the “waters of the state” and that they “can only be separated from the water with expensive and continuing investments of resources which may last for decades.” The new statute provides that any materials extracted through treatment of mine drainage “which have economic value” may be used, sold, or transferred for commercial gain by whoever successfully removes the materials from the mine drainage. To the extent the West Virginia Department of Environmental Protection is engaged in such activity through its mine drainage treatment activities, any proceeds the agency derives from the use, sale, or transfer of extracted materials must be deposited in the Special Reclamation Water Trust Fund or the Acid Mine Drainage Set-Aside Fund. Governor Jim Justice is expected to sign the bill into law.
A related bill that would have suspended for five years the severance tax on recovery of specifically identified rare earth elements (House Bill 4025) failed to complete legislative action before the end of the Session. On Friday March 11, 2022, the Senate amended the bill to include an unrelated change to the taxing authority of county governments. The Senate amendment would authorize county governments to impose up to a two percent “admission or amusement tax upon any public amusement or entertainment conducted within the limits of the county for private profit or gain.” During the final hour of the Session late on Saturday night, the House debated the procedural merits of coupling the “amusement tax” amendment to the severance tax bill, as well as the merits of the amendment itself. According to comments made by House members during debate, the genesis of the Senate amendment was a desire by Tucker County, West Virginia to impose a tax on skiing activity and other outdoor recreation to raise money to improve emergency services in the county. The large number of visitors to Tucker County has, according to certain lawmakers, placed a strain on emergency services in the area. The county also claimed an inability to raise additional money through property taxes due to a large percentage of the land in the county being owned by the state or federal governments. Ultimately, the House rejected the Senate’s amended version of the bill by a vote of 76 to 21, with some legislators referring to the Senate amendment as a “tax on fun.” The Senate did not take further action in response to the House vote before midnight.
As detailed in a prior Alert, the federal Department of Energy will soon be awarding hundreds of millions of dollars in funding associated with research, recovery, and refining of various “critical materials” including rare earth elements. Application opportunities for the various grants under the federal Infrastructure Bill are projected to begin opening in the fall of 2022.
Babst Calland has a team of lawyers following state and federal activities related to rare earth element development opportunities and implementation of the Infrastructure Bill. Please contact any of the following attorneys to learn more: Robert M. Stonestreet at rstonestreet@babstcalland.com or 681.265.1364; Christopher B. “Kip” Power at cpower@babstcalland.com or 681.265.1362; or Ben Clapp at bclapp@babstcalland.com or 202.853.3488.
To view the PDF, click here.
Ember K. Holmes and Audra E. Hutter recently joined Babst Calland as associates in the Corporate and Commercial Group.
Ember Holmes focuses primarily on corporate and transactional matters, including commercial contracts, corporate structuring, mergers and acquisitions, and copyright and trademark issues. Prior to joining Babst Calland, she was an associate with Dickie, McCamey & Chilcote, P.C. Ms. Holmes is a 2018 graduate of the University at Buffalo School of Law.
Audra Hutter focuses primarily on corporate and transactional matters, including commercial contracts, corporate structuring, mergers and acquisitions. Prior to joining Babst Calland, she was an associate with Leech Tishman Fuscaldo & Lampl, LLC. Ms. Hutter is a 2019 graduate of the University of Pittsburgh School of Law.
Environmental Alert
(by Matt Wood and Mackenzie Moyer)
On February 26, 2022, the Environmental Quality Board (EQB) published a proposed rule to amend 25 Pa. Code Ch. 109 (Safe Drinking Water) to regulate certain per- and polyfluoroalkyl substances (PFAS). 52 Pa. B. 1245. Specifically, the rule proposes setting a maximum contaminant level goal (MCLG) and maximum contaminant level (MCL) for both perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS). PFOA and PFOS are two of the most common PFAS, a “family” of thousands of synthetic chemicals that have been used in consumer, commercial, and industrial applications since the 1940s. PFAS have been used to manufacture water-, stain-, and heat-resistant products and have been a common component in some aqueous film forming foams (AFFF) routinely used for firefighting. PFAS have been found in various environmental media like groundwater (including drinking water), plants, animals, and in humans. Because PFAS do not break down naturally in the environment, they have been called “forever chemicals.” Evidence suggests that PFAS exposure can lead to adverse health effects.
The proposed rule sets MCLGs of 8 parts per trillion (ppt) for PFOA and 14 ppt for PFOS and MCLs of 14 ppt for PFOA and 18 ppt for PFOS. The MCLGs are nonenforceable levels developed solely from health effects data and act as the starting point for determining the MCLs. To develop the enforceable MCLs, the Pennsylvania Department of Environmental Protection (PADEP) considered factors beyond health effects data, including technical limitations and costs that may affect the feasibility of achieving the MCLGs. As part of the rulemaking process, PADEP also considered PFAS other than PFOA and PFOS (i.e., PFNA, PFHxS, PFHpA, PFBS, and HFPO-DA), but proposed not establishing MCLs for these substances at this time, primarily due to a lack of occurrence data and incomplete cost/benefit data and analysis. If finalized, the PFOA and PFOS MCLs will apply to all 3,117 community, nontransient, noncommunity, bottled, vended, retail and bulk water systems in the Commonwealth and may affect other programs (e.g., if they are adopted as Act 2 groundwater cleanup standards).
The proposed rule represents a first for the Commonwealth. PADEP has never before developed and promulgated a state-level MCL for any contaminant, instead relying on federal standards and/or guidance. On PFAS, the federal government has moved relatively slowly. Although the U.S. Environmental Protection Agency (EPA) is currently developing drinking water regulations for PFOA and PFOS, the agency’s only current drinking water guidance is its 2016 Health Advisory Level (HAL) of 70 ppt for PFOA and PFOS combined, which critics have said is outdated, too high to be protective, and should be revised. EPA’s HAL is intended to identify the concentration of PFOA/PFOS in drinking water at or below which adverse health effects are not expected to occur over a lifetime of exposure but is not an enforceable standard or regulation. In Pennsylvania, however, public water systems that detect exceedances of the HAL are required to take certain actions depending on the circumstances, e.g., monitoring, notifying consumers, and installing treatment technologies.
In the absence of federal action, many states over the last few years – Pennsylvania among them – have moved on their own to investigate PFAS and develop their own regulations. In 2018, Governor Tom Wolf signed Executive Order 2018-08 creating the PFAS Action Team, a multi-agency group tasked with developing a comprehensive strategy to identify, research, and eliminate sources of PFAS contamination. In July 2019, PADEP began a sampling effort targeted at public drinking water systems within a half mile of potential PFAS sources like manufacturing, fire training, and military facilities. That effort concluded in March 2021 and the final results were posted to PADEP’s PFAS webpage in June 2021. PADEP’s sampling effort, among other things, informed the proposed rulemaking. Other states have already established MCLs for one or more PFAS, including Massachusetts, Michigan, New Hampshire, New Jersey, New York, and Vermont. Pennsylvania’s proposed rule’s MCLs for PFOA and PFOS fall within the same range as their counterparts established in other states (which are all significantly lower than EPA’s HAL).
At the federal level, EPA’s current effort to develop drinking water regulations for PFOA and PFOS is one of multiple goals and strategies summarized in EPA’s “PFAS Strategic Roadmap: EPA’s Commitments to Action 2021–2024” (Roadmap), released on October 18, 2021. The Roadmap highlights EPA’s “whole-of-agency” approach to addressing PFAS over the next few years, focused through three central directives: (1) Research; (2) Restrict; and (3) Remediate. Through these, EPA intends to address the lifecycle of PFAS. Besides establishing PFOA and PFOS drinking water regulations (which EPA expects to propose in fall 2022, with a final rule in fall 2023), EPA intends to designate PFOA and PFOS as hazardous substances under CERCLA and build the technical foundation to address PFAS in air emissions. The Roadmap and related materials are available on EPA’s website here. Babst Calland reviewed the Roadmap and highlighted many of EPA’s goals in an October 2021 Environmental Alert available here.
Despite EPA’s recent actions and current goals, Pennsylvania’s move to regulate PFOA and PFOS in drinking water makes it one of a handful of states outpacing the federal government’s efforts. The public comment period for Pennsylvania’s proposed rule is currently open and interested parties may submit comments through April 27, 2022 using any of the methods listed in PADEP’s announcement of the proposed rule. The EQB will also be holding five virtual public hearings from March 21-25, 2022 to accept public comments on the proposed rule. More information about how to participate in these meetings is posted on PADEP’s website here.
Babst Calland attorneys will continue to track PFAS developments in Pennsylvania and are available to assist you with PFAS-related matters (including preparing and submitting comments to Pennsylvania’s proposed rule). For more information on this development and other remediation matters, please contact Matthew C. Wood at (412) 394-6583 or mwood@babstcalland.com, Mackenzie Moyer at (412) 394-6578 or mmoyer@babstcalland.com, or any of our other environmental attorneys.
Click here for PDF.
Babst Calland, through its Women’s Initiative, is pleased to announce the Firm’s participation in the Allegheny County Bar Association’s ALLY Initiative Cohort. ALLY stands for “Attorneys, Learning as allies, Living as allies, and Yielding results.” The Initiative is designed to engage attorneys and their law firms, corporate legal departments, courts and other organizations to commit to increasing inclusivity, creating equitable workplaces and empowering historically marginalized and underrepresented community members.
The Initiative, which will run from March 15 through October 2022, will offer programing and other projects, which will then allow firms and legal departments to earn an official “ACBA ALLY Certification.”
To read more, click here.
Smart Business
(by Sue Ostrowski featuring Kate Cooper)
When selling your business, you will devote a substantial amount of time and energy to negotiating the representations and warranties in the purchase agreement. Accurate representations and warranties are critical to ensuring that the expectations of the buyer and seller are aligned to minimize the risk of post-closing indemnification claims.
“Representations and warranties are promises made by the seller about the current and future state of the business, assuring the buyer the business is operating the way seller says it is,” says Kate Cooper, shareholder at Babst Calland. “If they are not accurate, a buyer can use these to make a claim for damages post-sale.”
Smart Business spoke with Cooper about why it is critical that representations and warranties accurately portray your business when selling, and how a deal attorney with experience in your industry can help minimize the risk that a buyer will pursue a claim after closing.
What do representations and warranties cover?
Standard representations and warranties in nearly every purchase agreement include that the target entity is in good standing with the state, taxes have been properly filed and paid, and that it is in compliance with all applicable laws. Beyond that, it gets much more nuanced depending on the industry and the nature of the business. A technology company may need to make representations and warranties about its intellectual property, while a manufacturer might address environmental, health and safety issues. If you are selling real estate, you’ll need to make representations about any liens and encumbrances affecting property.
How can an experienced attorney help navigate through the process?
Every deal involves some level of risk-sharing and compromise, and the most effective way to get a deal done is to have seasoned deal lawyers on both sides. An experienced deal lawyer will be able to home in on the most impactful terms of the agreement and highlight the biggest risks to their client. An attorney can advise you on whether you need to make disclosures that set forth exceptions to the statements in a particular representation, whether it is reasonable to attempt to modify a representation with a knowledge or materiality qualifier, and whether it is appropriate to include indemnity limitations.
The owner will be heavily involved in the representations and warranties review, but an attorney can lead you through the process, compiling information about your business that is responsive to the representations and warranties and help evaluate how to communicate that to a buyer with respect to your disclosure schedules and the negotiated language in the purchase agreement.
When choosing an attorney to represent you in a sale, ask about the attorney’s approach to deal-making. Are they going to try to win every single point, at any expense, or will they take a more collaborative approach? There is never a zero-risk deal, but a seasoned attorney will drill down on the key points and focus on the right hills to die on, rather than making a big deal about something that represents an insignificant risk.
Engage an attorney who has done deals in your industry, which will give them a foundational knowledge of the key provisions that are likely to be negotiated and allow them to move the deal forward in the most efficient manner. Ultimately, deal-making is a collaborative process, and the right adviser can help the process run smoothly and get a good result for everyone.
How can you get your business ready for a sale?
Prepare, prepare, prepare. By identifying potential issues early, you can eliminate or minimize risks and address them before the buyer is performing due diligence and you are negotiating the representations and warranties in the purchase agreement. The seller wants to walk away with confidence that post-closing claims are unlikely and their ongoing liabilities are minimized, and buyers want to know they have the ability to make a post-closing indemnification claim to recover their losses if they discover an inaccuracy in the seller’s representations and warranties. Experienced deal attorneys can help balance these competing interests and minimize the risk of costly and time-consuming post-closing disputes.
To view the full article, click here.
To view the PDF, click here.
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(By Joseph K. Reinhart, Sean M. McGovern, Gina N. Falaschi and Christina Puhnaty)
On October 8, 2021, the Pennsylvania Department of Environmental Protection (PADEP) revised the air pollution and noise control plans that apply to the following permit applications: Bituminous Surface Mine Permit 5600-PM-BMP0311, Anthracite Surface Mine Permit Application 5600-PM-BMP0343, and Large Noncoal Industrial Minerals Mine Permit 5600-PM- BMP0315.
The new air pollution and noise control plan requirements for all three application types asks applicants to identify if there will be any processing facilities (crushing, screening, cleaning, and/or stockpiling) in the permit area, and asks applicants to describe those facilities and the amount of minerals to be processed. If the amount of minerals to be processed is less than 200 tons/day, these plans require applicants to describe the management practice to be utilized to control fugitive dust, and if the amount of minerals to be processed is equal to or greater than 200 tons/day, the plans direct the applicant to contact the appropriate PADEP Regional Office Air Quality Program.
To control fugitive dust, the plans ask applicants to describe the practices that will be utilized at the surface mining operation for the following activities: access roads, truck traffic, drilling, overburden removal and coal extraction, stockpiles, loading and unloading, crushing and other processing equipment, and conveyers.
The plans also ask applicants to list all noise sources from equipment and mining activity that will originate within the permit area, indicating the hours of operations for this equipment and whether the permit area is adjacent to any residential areas, schools, hospitals, or churches. The plans require applicants to describe the pre-mining environmental sound levels in the permit area at various points of the day and ask if a noise study has been conducted within the surrounding area. Finally, the plans ask applicants to describe the measures (best management practices) that will be taken to mitigate noise and prevent noise from becoming a public nuisance.
The air pollution and noise control plan for the Large Noncoal Industrial Minerals Mine Permit 5600-PM-BMP0315 contains one additional requirement that is not included in the Bituminous Surface Mine Permit 5600-PM-BMP0311 or Anthracite Surface Mine Permit Application 5600-PM-BMP0343. The Large Noncoal Industrial Minerals Mine Permit plan requires applicants to provide the date that the PADEP Regional Air Quality Office was contacted or, if applicable, provide a copy of the PADEP Air Quality Program’s determination to grant an exemption from the air quality permit requirements and of any authorizations granted under the Air Quality General Operating Permit for Portable Nonmetallic Mineral Processing Plants.
Copyright © 2022, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNEL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(By Joseph K. Reinhart, Sean M. McGovern, Gina N. Falaschi and Christina Puhnaty)
On December 10, 2021, the Pennsylvania Department of Environmental Protection (PADEP) published final technical guidance on remining of areas with preexisting pollutional discharges. See PADEP, TGD No. 563-2112-613, “Remining of Areas with Pre-Existing Pollutional Discharges” (Dec. 10, 2021). The purpose of this guidance is to identify and explain the requirements necessary to qualify for the remining protections found under subchapter F of 25 Pa. Code ch. 87, subchapter G of 25 Pa. Code ch. 88, and subchapter F of 25 Pa. Code ch. 90 (collectively, Subchapter F/G). This guidance explains the obligations of a mine operator during the remining activity, the procedures to be followed to modify a remining permit to account for changes in groundwater flow patterns and/or new discharges, and how to qualify for bond release.
The guidance document first identifies and explains conditions that must be met to qualify for Subchapter F/G permit authorization. For a Subchapter F/G permit to be issued, the proposed mining and reclamation activities should exhibit a significant potential to abate or reduce the pollutional load from the preexisting discharges of previous surface mining. Remining protections under Subchapter F/G do not apply to underground mining permits. To be eligible, applicants for Subchapter F/G permits must have no existing legal responsibility for treatment of the discharges or for reclaiming the proposed pollutional abatement area. The water quality must be indicative of mine drainage pollution and the discharges must be from mining activities that have been abandoned prior to the remining permit application. The discharges must also be hydrologically connected to the permit area and to the proposed pollution abatement area intended to reduce the pollution load.
The guidance document then explains the requirements of the Pollution Abatement Plans that are included in applications for authorization under Subchapter F/G. These Pollution Abatement Plans should describe the anticipated impact on the preexisting pollutional discharges, which may include effects on infiltration, evapotranspiration, water quality improvements, and any other anticipated pollution reduction benefits resulting from implementation of the abatement plan. The Pollution Abatement Plan is then incorporated into the permit as an effluent limit; the best management practices (BMPs) that comprise the Pollution Abatement Plan are the permit’s narrative effluent limits and the numerical limits are determined by a baseline dataset and are represented by the trigger values.
The guidance provides that the protections under Subchapter F/G can be applied in three ways in a tiered manner:
(1) collect data to establish a baseline pollution load at individual points and hydrologic units, (2) sample at designated in- stream monitoring points to establish an instream baseline concentration, or (3) through BMPs only. Applicants should justify why they cannot use option 1 in order to use option 2, and to use option 3, they must justify why they cannot use options 1 and 2. If individual, discrete points can be monitored, the Tier 1 option is likely the appropriate option. The guidance then outlines the steps that operators must take following trigger exceedances.
Finally, the guidance document describes the procedures for modifying Subchapter F/G permits and the permit baselines, and the standards to qualify for bond release.
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)
As previously reported, the Pennsylvania Department of Environmental Protection’s (PADEP) CO2 Budget Trading Program, or Regional Greenhouse Gas Initiative (RGGI), regulation is nearing final publication. See Vol. XXXVIII, No. 4 (2021) of this Newsletter. RGGI is a regional cap-and-trade program for carbon dioxide (CO2) emissions from fossil fuel-fired electric generating units with a nameplate capacity of 25 megawatts or greater. PADEP proposes that the commonwealth join RGGI pursuant to Governor Tom Wolf’s 2019 executive order.
Following approval of the regulation by Pennsylvania’s Independent Regulatory Review Commission in September 2021, the final-form rulemaking was submitted to the House and Senate Environmental Resources and Energy standing committees.
The Senate Environmental Resources and Energy Committee passed a resolution disapproving the regulation and reported that resolution out of committee to the full chamber. The Senate passed Senate Concurrent Regulatory Review Resolution 1 (S.C.R.R.R.1), which disapproves of the rulemaking, on October 27, 2021. S.C.R.R.R.1 was reported by the House Environmental Resources and Energy Committee on November 8, 2021. On December 15, 2021, in a 130-70 vote, the House passed a resolution as well.
While the resolution was pending in the legislature, on November 29, 2021, the Environmental Quality Board (EQB) sub- mitted the CO2 Budget Trading Program rule to the Legislative Reference Bureau for publication in the Pennsylvania Bulletin. The Legislative Reference Bureau informed the EQB that it was not authorized to publish the rule because S.C.R.R.R.1 was still pending before the House of Representatives.
Governor Wolf vetoed the resolution on January 10, 2022, and released a veto message about the importance of the regulation. Press Release, Gov’r Tom Wolf, “Governor Wolf Vetoes Resolution That Would Hinder Pennsylvania’s Ability to Address Climate Crisis” (Jan. 10, 2022). The Governor’s veto sent the resolution back to the legislature, where each chamber has 30 calendar days or 10 legislative days, whichever is longer, to at- tempt a veto override. The legislature needs a veto-proof two- thirds majority to override the veto and block the regulation. As of this writing, neither chamber has attempted to override the veto.
In the meantime, State Senator Gene Yaw, chair of the Senate Environmental Resources and Energy Committee, wrote a letter to PADEP Secretary Patrick McDonnell to urge him to re- consider an invitation to testify before the committee at a hearing to discuss RGGI allowance prices scheduled for January 18, 2022. Letter from Sen. Gene Yaw, to Hon. Patrick McDonnell, Sec’y, PADEP (Jan 13, 2022). PADEP did not attend the hearing.
Based on the legislative calendar, the legislature has until approximately March 29, 2022, to attempt to override the Governor’s veto. In the meantime, however, on February 3, 2022, McDonnell filed suit in the Commonwealth Court of Pennsylvania seeking to compel the Legislative Reference Bureau to publish the EQB’s final-form rulemaking for the CO2 Budget Trading Program in the Pennsylvania Bulletin. See Complaint, McDonnell v. Pa. Legislative Reference Bureau, No. MD 2022 (Pa. Commw. Ct. Feb. 3, 2022).
If the legislature is unsuccessful in blocking the regulation, or if the commonwealth court compels publication before the end of March 2022, it will be published in the Pennsylvania Bulletin as a final rule. The Office of the Attorney General already approved the regulation in December 2021. Legal challenges to the final rule are anticipated. Further information regarding the rule 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
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(By Joseph K. Reinhart, Sean M. McGovern, Gina N. Falaschi and Christina Puhnaty)
On November 6, 2021, the Pennsylvania Environmental Quality Board (EQB) issued proposed amendments to 25 Pa. Code chs. 88 (Anthracite Coal) and 90 (Coal Refuse Disposal). See Coal Refuse Disposal Revisions, 51 Pa. Bull. 6914 (proposed Nov. 6, 2021). The proposed amendments are intended to implement Pennsylvania’s Act of October 4, 2019 (P.L. 452, No. 74) (Act 74) and to address the differences between the commonwealth’s regulations and federal regulations relating to temporary cessation at coal refuse disposal sites.
This proposal was adopted by the EQB at its meeting on June 15, 2021. On January 5, 2022, the EQB received a letter from Pennsylvania’s Independent Regulatory Review Commission (IRRC) indicating that the IRRC has no objections, comments, or recommendations on the proposed rule. See Letter from David Sumner, Exec. Dir., IRRC, to Hon. Patrick McDonnell, Chairman, EQB (Jan. 5, 2022). The amendments will go into effect upon publication of the final-form rulemaking in the Pennsylvania Bulletin.
Changes Proposed Pursuant to Act 74
Act 74 amended section 6.1 of the Coal Refuse Disposal Control Act (CRDA), 52 Pa. Stat. § 30.56a, to remove the commonwealth’s one-year limitation on the temporary cessation of operations at a coal refuse disposal site. The Pennsylvania Department of Environmental Protection (PADEP) has proposed to incorporate this amendment at 25 Pa. Code § 88.310(k)(1).
Pursuant to Act 74’s amendment of section 6.1 of the CRDA, PADEP also proposes to amend 25 Pa. Code § 90.167(a) to address temporary cessation status of operations lasting 30 days or more and will require a notice to be submitted to PADEP. This notice must include the affected acres in the permit area, a description of the extent and kind of reclamation of the area, a description of the activities that will continue during the temporary cessation status, and a description of the status of the operation or operations that is the source of the coal refuse.
Act 74 also allowed PADEP to promulgate regulations that will link the status of operations generating coal refuse to the coal refuse disposal area. For example, under these new regulations, when an underground coal mine is approved for temporary cessation, the coal refuse disposal site associated with that mine would also be approved for temporary cessation because no refuse material is being generated to be sent there. Where a coal refuse disposal site receives material from more than one mine, the coal refuse disposal site’s temporary cessation status ends with the resumption of operations at any of its source mines, or with permanent cessation at all source mines. PADEP has proposed to incorporate these amendments at sections 88.332(d)–(f) and 90.167(e)–(g).
Act 74 also revised section 6.1 of the CRDA to include an enumerated list of the circumstances under which an operator must install a system to prevent precipitation from contacting the coal refuse. These instances include when phases reach capacity, when specified in the permit, when an operator temporarily ceases operation for a period in excess of 90 days unless PADEP approves an operator’s request for a longer period, or when the operation permanently ceases. PADEP proposed changes to section 90.122(h) to parallel Act 74’s language.
Other Changes Proposed by PADEP
PADEP further proposed an amendment to section 88.333(b) that would provide a trigger for when temporary cessation becomes permanent cessation. The three circumstances that will terminate the temporary cessation status are failure to comply with a final adjudicated proceeding through an act or omission that violates the acts defined in section 86.1 or chapters 86–90, failure to comply with a permit condition required by the acts or chapters 86–90, and failure to comply with a consent order and agreement or a consent order. A similar provision is not found in the federal requirements or in Act 74.
PADEP has also proposed clarifications to regulations that will settle confusion for applicants for coal refuse site permits. One such clarification is amending the existing performance standards for terraces and surface water runoff at coal refuse disposal sites to state that terraces must be constructed as they are needed to control erosion and prevent cascading failures of the final cap rather than just being an optional use. This proposed change is found at section 90.122(m).
PADEP has also proposed amendments to sections 88.332(b) and 90.167(b) that address a temporary cessation status of operations lasting 90 days or more. These amendments require operators to submit to PADEP a confirmation that the current bond is adequate to complete reclamation and to describe the timing of the installation of the “phased system” to prevent precipitation from contacting the refuse.
Comments on the proposed amendments were due in early December 2021 and the EQB received comments from two parties, the Center for Coalfield Justice and the Pennsylvania Coal Alliance. Comments on the proposed rule can be found at https://www.ahs.dep.pa.gov/eComment/ViewComments.aspx?enc=DN064MT8R38NKyiRv2iU7MXT16ZFzbgxvN%2bnfipCQR4%3d.
Copyright © 2022, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(By Joseph K. Reinhart, Sean M. McGovern, Matthew C. Wood and Gina N. Falaschi)
On October 5, 2021, Pennsylvania Attorney General Josh Shapiro announced that the Environmental Crimes Section had charged Energy Transfer, L.P. (Energy Transfer), parent company of Sunoco Pipeline, L.P. (Sunoco), with 46 counts of environmental crimes. The charges stemmed from an investigation by the Forty-Fifth Statewide Investigating Grand Jury (Grand Jury), which concluded that Sunoco had violated Pennsylvania law in connection with its construction of the Mariner East 2 pipeline, a project that crosses 17 counties in the commonwealth. Two charges were later added from a criminal referral from the Pennsylvania Department of Environmental Protection (PADEP), bringing the total charges to 48. Among other things, Attorney General Shapiro and the Grand Jury alleged that Sunoco had repeatedly allowed—and failed to report to PADEP, as required by law—spills, leaks, and losses of drilling fluid during horizontal directional drilling (HDD) activities. The Grand Jury also heard testimony from landowners complaining of impacts to their properties, including to drinking water sources, and found that Sunoco’s HDD activities had impacted multiple recreational lakes in different counties. See generally Police Criminal Complaint, Commonwealth v. Energy Transfer, L.P., No. CR- 302-2021 (Pa. Commw. Ct. Oct. 5, 2021); Grand Jury’s Presentment (Oct. 5, 2021).
On December 6, 2021, two months after Attorney General Shapiro announced the criminal charges, PADEP and the Department of Conservation and Natural Resources (DCNR) announced that it had reached a settlement with Sunoco that requires the company to address impacts from releases of drilling fluid and mud that occurred in August 2020 at Marsh Creek Lake State Park in Chester County, Pennsylvania. Specifically, the settlement requires Sunoco to (1) dredge the top six inches of sediment from approximately 15 acres of Ranger Cove (which was closed due to the impacts); (2) replace fish, turtle, and bird habitat structures impacted by the dredging; (3) dewater/transport all dredged material from the lake and restore shoreline and streamside forest buffers; (4) post a $4 million bond (to ensure completion of the remediation); (5) pay $4 million for natural resource damages to be used by DCNR for the benefit of the state park (e.g., an accessible boat launch, stream and shoreline restoration, invasive species suppression, efficiency measures that will take the park to net-zero energy, and a public visitor center); and (6) pay a civil penalty of $341,000 to the Clean Water Fund for permit violations. See News Release, PADEP, “Wolf Administration Requires Sunoco to Restore Lake at Marsh Creek State Park in Chester County” (Dec. 6, 2021); Consent Order and Agreement, In re Sunoco Pipeline, L.P. (PADEP Dec. 6, 2021).
Concurrent with executing the settlement, PADEP approved major amendments to Sunoco’s chapter 102 (Erosion and Sediment Control) and chapter 105 (Water Obstruction and Encroachments) permits for construction of the pipeline at Marsh Creek Lake. The amendments provide Sunoco an avenue to complete construction of the pipeline using a separate route and the open-cut method (as opposed to HDD, meaning no drilling fluids will be used). More information and documents about the Marsh Creek Lake impacts and settlement are available at https://www.dep.pa.gov/About/Regional/SoutheastRegion/ Community%20Information/Pages/Marsh-Creek-Lake-HDD-290. aspx. Construction of the Mariner East 2 pipeline is expected to be completed in the first quarter of 2022. A preliminary hearing in the criminal case against Energy Transfer is scheduled for March 1, 2022.
Copyright © 2022, The Foundation for Natural Resources and Energy Law, Westminster, Colorado