Corps Seeks Comments on Proposed Reinstatement of Suspended NWPs in Pennsylvania

RMMLF Water Law Newsletter

(By Lisa M. Bruderly)

On May 12, 2021, the Baltimore, Philadelphia, and Pittsburgh Districts of the U.S. Army Corps of Engineers (Corps) jointly issued a 15-day public notice (SPN 21-26), requesting comments on whether to reinstate certain 2017 and 2021 nationwide permits (NWPs) that are suspended in parts of Pennsylvania. The comment period closed on May 27, 2021.

The reinstatement is being proposed in case Pennsylvania State Programmatic General Permit 6 (PASPGP-6) is not finalized and issued prior to the expiration of Pennsylvania’s current state programmatic general permit (PASPGP-5) on June 30, 2021. At present, if PASPGP-6 is not issued before July 1, 2021, most projects in Pennsylvania impacting federally regulated waters would be required to obtain individual Clean Water Act § 404 permits. Obtaining an individual permit is typically a more lengthy and complicated process than obtaining coverage under a programmatic general permit or NWP.

State Programmatic General Permit

The PASPGP is the mechanism that the Pennsylvania Department of Environmental Protection (PADEP) and the Corps rely upon to permit most projects in Pennsylvania that impact federally regulated waters, but do not require an individual section 404 permit. PASPGP-6 allows applicants to obtain both federal section 404 permits and state water obstruction and encroachment permits for qualified projects impacting federal and state regulated waters.

PASPGP-6 has not yet been finalized. The draft PASPGP-6 was published for public comment on September 4, 2020. See Corps, Special Pub. Notice SPN-20-57 (Sept. 4, 2020); see also Vol. LIII, No. 3 (2020) of this Newsletter. The public comment period closed on October 4, 2020. On February 12, 2021, PADEP issued a conditional state water quality certification (SWQC) under section 401 of the Clean Water Act, which certifies that activities authorized by PASPGP-6 would comply with the commonwealth’s water quality standards if the applicant complies with the following conditions and “constructs, operates and maintains the project in compliance with the terms and conditions of State permits . . . obtained to meet these SWQC conditions”:

  • Prior to beginning any activity authorized by the Corps under PASPGP-6, the applicant must obtain all necessary environmental permits or approvals, and submit to PADEP environmental assessments and other information necessary to obtain the permits and approvals, as required under state law.
  • Fill material may not contain any wastes as defined in the Solid Waste Management Act.
  • Applicants and projects must obtain all state permits and/or approvals necessary to ensure that the project meets the State’s applicable water quality standards.

51 Pa. Bull. 1592 (Mar. 20, 2021).

Proposed NWP Reinstatement

With the availability of the PASPGP, many NWPs have typically been suspended in Pennsylvania, except for projects in certain section 10 waters and, for certain NWPs, when the regulated activity or indirect impacts extend across state boundaries. (“Section 10 waters” are waters that are considered as navigable under section 10 of the River and Harbor Act of 1899, 33 U.S.C. § 403.) On January 6, 2017, the Corps reissued 54 NWPs, which were effective March 19, 2017. Of these 54 NWPs, 31 NWPs were suspended in Pennsylvania, largely to eliminate redundancy with the PASPGP mechanism. If PASPGP-6 is not issued before PASPGP-5 expires, the Corps is proposing to reinstate 24 of the NWPs suspended in 2017, including NWP 7 (Outfall Structures and Associated Intake Structures), NWP 14 (Linear Transportation Projects), and NWP 18 (Minor Discharges).

On January 13, 2021, the Corps reissued 12 existing NWPs and issued four new NWPs. See 86 Fed. Reg. 2744 (Jan. 13, 2021); see also Vol. LIV, No. 1 (2021) of this Newsletter. The 16 reissued/issued NWPs were effective on March 15, 2021. Of those 16 NWPs, nine were suspended in Pennsylvania, except in “areas within Pittsburgh District’s area of responsibility in the Commonwealth of Pennsylvania.” If PASPGP-6 is not issued before PASPGP-5 expires, the Corps’ proposal would reinstate the nine suspended 2021 NWPs, including NWP 12 (Oil and Natural Gas Pipelines) and NWP 39 (Commercial and Institutional Developments) for the entire state.

If any or all of the NWPs are reinstated, those NWPs would be subject to the applicable 2017 or 2021 regional conditions for Pennsylvania.

Conclusion

If PASPGP-6 is not finalized before PASPGP-5 expires (i.e., by June 30, 2021), the reinstatement of certain currently suspended NWPs would provide flexibility to permit a project impacting regulated waters, without pursuing an often lengthy and complicated individual section 404 permit. However, the prospective permittee must ensure that the project meets the applicability criteria, general conditions, and regional conditions of the selected NWP. These criteria are not the same as under PASPGP-5, and in some instances, a portion of the project may need to be redesigned to meet NWP requirements.

Recent Pipeline Enforcement and Challenges in Pennsylvania

On May 7, 2021, the Pennsylvania Department of Environmental Protection opened the public comment period for a major permit amendment for Sunoco Pipeline, LP, regarding both its Chapter 102 (Erosion and Sediment Control) and Chapter 105 (Water Obstruction and Encroachment) permits for the Mariner East 2 pipeline The amendments request a change to the route and installation method for a water encroachment near Marsh Creek State Park in Chester County, Pennsylvania. The identified location is the same as the location for an 8,000-gallon drilling fluid release.

Copyright © 2021, The Foundation for Natural Resources and Energy Law, Westminster, Colorado

Molly Meacham Named to Pittsburgh Business Times’ 20 People to Know in Law

Pittsburgh Business Times

20 People to Know connects the Pittsburgh-area business community with influential businesspeople working in key industries. In this installment of 20 People to Know, the Pittsburgh Business Times focused on legal professionals.

These listings are not meant to be comprehensive or a ranking, but rather an introduction to some of the behind-the-scenes players, key leaders and up-and-comers. Those selected offered their wisdom and thoughts on the region’s legal marketplace during this turbulent and transformative time.

Named to this list, Molly Meacham became co-chair of Babst Calland’s Litigation Group two years ago and recently was appointed to the firm’s board and is a member of its Emergency Response Committee. She also works in Babst’s Emerging Technologies Group, where she helps to bridge the litigation and mobility/transport practices. Her practice has two primary aspects: representing companies in commercial litigation and employment litigation matters, and serving as outside counsel providing companies with human resources advice and counseling.

For the full article, click here.

Biden Administration Proposes to Revoke Trump Era Rule Limiting Incidental Take Prohibition Under The MBTA

Renewables Law Blog

(By Ben Clapp)

Developers of renewables projects are once again facing regulatory uncertainty regarding the scope of the Migratory Bird Treaty Act (“MBTA”) as a result of a proposed rule issued on May 7 by the U.S. Fish and Wildlife Service (“USFWS”).  The proposed rule, if finalized as issued, would revoke a rule issued in the last days of the Trump administration stipulating that deaths of migratory birds occurring incidental to lawful activities (i.e., incidental take) are not prohibited under the MBTA.

The proposed rule represents the latest development in a long-running debate.  At issue is whether the MBTA, a law passed in 1918 that was originally intended to prevent the extinction of migratory bird species due to commercial trade and hunting practices, prohibits the incidental taking of protected birds as a result of activities that are otherwise lawful, such as the operation of wind turbines or the clearing of land for a solar project, or whether the law prohibits only the intentional take (i.e., purposeful killing) of protected species.  The issue has resulted in a split among U.S. Circuit Courts of Appeals, as well as completely opposite legal interpretations issued by two Solicitors of the Department of Interior within the span of one year in 2017.

By revoking the prior rule, the USFWS would revert to interpreting the MBTA to prohibit incidental take of birds protected under the act, and to employing agency discretion in determining whether an incidental take of such birds warrants an enforcement action.  The proposed rule highlights the need for renewable project developers to implement best practices for avoiding the unintended take of protected migratory birds as a means of qualifying for agency enforcement discretion and thus avoiding fines for noncompliance.  For wind energy projects, this can largely be accomplished through complying with the USFWS’s Land-Based Wind Energy Guidelines, although there is no guarantee that such compliance will preclude an enforcement action.  There are no solar-specific guidelines currently in place.  While the risk posed to migratory birds from solar projects is less than that for wind projects, solar developers should nonetheless implement best practices for reducing impacts to birds, including the general Nationwide Standard Conservation Measures for project development.

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Litigation Continues over West Virginia’s Coal Mine Permit Bonding Program

Environmental Alert

(by Robert Stonestreet and Kip Power)

Environmental interest groups are continuing litigation that appears ultimately aimed at challenging the sufficiency of West Virginia’s bonding program for coal mine operations. On May 17, 2021, three environmental interest groups filed a lawsuit against the United States Department of Interior’s Office of Surface Mining (OSM). The suit alleges that OSM has failed to determine whether changes to West Virginia’s bonding program are needed after OSM received notice from the West Virginia Department of Environmental Protection (WVDEP) regarding the financial circumstances surrounding certain operators in the coal industry. This case is related to a prior suit originally filed on July 9, 2020 against WVDEP concerning the bonding program. As noted in our July 14, 2020 Environmental Alert, the July 9, 2020 suit alleged that WVDEP had failed to properly notify OSM of the financial insolvency of certain coal operators and the purported inability of West Virginia’s Special Reclamation Fund to cover the costs required to complete required reclamation work at mine sites formerly operated by one of those entities, ERP Environmental Fund. The Special Reclamation Fund receives revenue from a tax on coal production. When the amount of a forfeited bond associated with a revoked mining permit is insufficient to cover the costs of completing the required reclamation, the Special Reclamation Fund provides additional funding for use by WVDEP to perform the reclamation work. (For a more detailed explanation of the bonding system and the claims made by the plaintiffs in these lawsuits, see our May 18, 2020 Environmental Alert, West Virginia DEP Receives Notice of Intent to Sue Under SMCRA Based on Deficiencies in Mine Reclamation Fund.)

WVDEP moved to dismiss the previous civil action on various grounds, including the argument that OSM was already aware of the insolvencies of certain operators and the circumstances surrounding ERP Environmental Fund. After the court denied WVDEP’s motion to dismiss, WVDEP sent a formal notice to OSM dated December 30, 2020 specifically identifying the circumstances described in the suit. In a response letter dated January 29, 2021, OSM noted the “complexity” surrounding a solvency evaluation of the Special Reclamation Fund, and the need for additional analysis to determine whether a change to WVDEP’s bonding program is necessary in light of the circumstances. OSM also pledged to coordinate with WVDEP to develop a detailed joint plan to outline goals and objectives along with a timeline for making such a determination.

The May 17, 2021 suit alleges that OSM was required to render a decision on the need for changes to WVDEP’s bonding program within 30 days of receiving WVDEP’s December 30, 2020 letter, and OSM has failed to do so. The suit does not seek a court ruling that changes to the bonding program are necessary. Rather, the suit only asserts a “procedural claim” – i.e. that OSM has failed to perform its duty to make the determination within 30 days as required by the applicable statutes and regulations. Based on the allegations set forth in the complaint concerning the sufficiency of the Special Reclamation Fund, it seems likely that these groups will pursue further litigation in the event OSM determines that a change to WVDEP’s bonding program is not necessary, or if the groups believe any necessary changes identified by OSM are inadequate to ensure the long-term solvency of the Special Reclamation Fund.

Should you have questions about the WVDEP coal mine regulatory program or other environmental permitting matters, please contact Robert M. Stonestreet at 681.265.1364 or rstonestreet@babstcalland.com, or Christopher B. “Kip” Power at 681.265.1362 or cpower@babstcalland.com.

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Protecting your innovations outside the United States

Smart Business 

(by Sue Ostrowski featuring Carl Ronald)

If you’re considering selling your innovative product or commercializing your novel processes in another country, protecting your innovations with a patent in that country may be key to your success. But trying to navigate the process alone can prove difficult.

“It’s surprising how complicated it can be, and there are a lot of places to get tripped up,” says Carl Ronald, shareholder at Babst Calland. “While you can try to do it on your own, hiring a patent attorney can make the process much smoother, ensuring you are including all relevant information and complying with all relevant deadlines to protect your invention in the most cost-effective way possible.”

Smart Business spoke with Ronald about when you might need international protection and how a patent attorney can help you navigate the complex process.

When should a company consider applying for a patent outside the U.S.?

A U.S. patent only provides a protectable interest here in the U.S.; you can’t stop someone from using what your patent teaches to compete with you in other countries unless you’ve timely filed in those countries, as well. If you have an international customer base that is purchasing products or services that, in the future, may be produced with, employ, or contain your patented process or device, you should seek protection, at a bare minimum, in those countries where your anticipated market is largest.

Keep in mind the importance of secrecy before filing your application. In the U.S., you have one year to file a patent application covering your invention after you disclose it publicly. Other nations are not so lenient and, in many countries, any disclosure of your invention to someone who does not have an obligation of confidentiality will destroy novelty and likely preclude you from ever obtaining a patent in that country.

What is the process for filing in a foreign country?

In general, the first step for most U.S.-based applicants is to file either a provisional or a nonprovisional patent application (your “priority filing”) in the USPTO. Once the application has been reviewed for national security issues that would prohibit you from filing outside the country, a foreign filing license grants permission to file in other countries.

If you want to practice your invention in just one or two other countries, your patent attorney can file directly with those countries, so long as the foreign filing license has been granted and it’s less than a year since your original U.S. filing.

However, if you’re seeking patents in more than one or two countries, it’s likely more cost-effective to file an international application through the Patent Cooperation Treaty (PCT). The PCT provides a unified procedure for filing a single patent application that will preserve your ability to ultimately seek protection for your invention with each of its participating members, which includes nearly all industrialized countries.

Deadlines are important; you must file a PCT application within one year of the filing date of your priority filing. After your PCT is filed, you have up to an additional 18 months in most countries before you are required to file your application directly in each country where you’d like to have protection.

How can a business determine if it should apply for a patent outside the U.S.?

Every business has competition in the marketplace and seeks an edge — something to differentiate it from its competitors. One of the ways to compete is to maximize the value of its products and processes and to ensure others are not unfairly competing with it.

If a particular innovation satisfies a need in the marketplace and obtaining a patent will provide a competitive advantage, patent protection should be strongly considered for any country where the innovation is sold.

For the full article, click here.

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Water Law Update: Five Regulatory Changes to Watch in 2021

The Legal Intelligencer

(by Lisa Bruderly)

State and federal water law permitting can pose significant obstacles for energy infrastructure construction projects that impact waterbodies (e.g., wells pads, access roads, natural gas/oil pipelines). The following five new and proposed regulatory changes are likely to significantly affect project design and construction in Pennsylvania.

  1. Waters of the United States (WOTUS)

The definition of WOTUS identifies which waters are federally-regulated under the Clean Water Act (CWA), and, therefore, determines when a federal permit is required for projects that involve dredging or filling of a waterbody (i.e., a Section 404 permit). The current WOTUS definition was promulgated in 2020 under the Trump administration. It has been criticized by environmental groups as federally regulating fewer types of waterbodies than the WOTUS definition promulgated under the Obama administration. For example, ephemeral streams are not regulated under the current WOTUS definition.

President Joseph R. Biden Jr. has asked the U.S. Army Corps of Engineers (the Corps) and the U. S. Environmental Protection Agency (EPA) to consider revising or rescinding the current definition. He has also asked courts to stay judicial challenges to the current WOTUS definition while his administration reconsiders the issue.

The Biden administration is expected to propose its own definition of WOTUS, which will, undoubtedly, be more expansive than the current definition and require more projects to obtain federal CWA permitting. Among other things, the Biden administration’s definition of WOTUS is likely to regulate waters (including ephemeral streams) that are considered to have a “significant nexus” with traditionally navigable waters. This definitional change is expected to extend the time and increase cost of permitting for many energy construction projects.

  1. Nationwide Permits (NWPs)

In Pennsylvania, qualifying projects impacting federally regulated waters may be eligible for one of two types of Section 404 general permits (i.e. NWPs or the Pennsylvania State Programmatic General Permit (PASPGP)), in lieu of the more costly, lengthy and complicated process of obtaining an individual Section 404 permit.

In January, the Corps and EPA revised and reissued 12 existing NWPs and created four new NWPs; all of which were effective on March 15, 2021. The revised NWPs largely relate to energy industry activities, including the revision of NWP12 relating to   oil and natural gas pipeline activities.

Pennsylvania subsequently finalized new/revised regional conditions to the NWPs. Many of these regional conditions apply to all NWPs (i.e., regional general conditions); however, other regional conditions apply to a specific NWP or Corps District. In some instances, these new conditions change the eligibility criteria for a specific NWP or change the information required to be submitted as part of a pre-construction notification to the Corps. When planning a project, it is crucial to identify and comply with the new regional general conditions, as well as conditions applicable to the specific NWP and/or Corps District to avoid project revisions and/or the need to switch from a NWP to an individual permit.

As a further consideration, projects intending to use a NWP should evaluate whether the proposed project is still eligible for coverage, either through grandfathering of the prior NWP or coverage under the revised/new NWP. In some instances, a project may no longer be eligible for a NWP, and the project may need to be redesigned or permitted under the lengthier individual permitting process.

Lastly, while the use of many NWPs, including NWP12, has historically been suspended in Pennsylvania, the new/revised regional general conditions allow the use of nine of the new/reissued NWPs in “areas within Pittsburgh District’s area of responsibility in the Commonwealth of Pennsylvania.” Previously, the PASPGP (discussed below) was the only general permit available for many activities. This exception to the NWP suspensions offers potentially increased flexibility to use NWPs in the western part of Pennsylvania, subject to the discretion of the Pittsburgh District.

  1. PASPGP-6

PASPGP-5 expires on June 30, 2021. The Corps has not yet finalized PASPGP-6, which was proposed in September 2020. PASPGP-6, as proposed, would reduce the general permit’s eligibility threshold from one acre of temporary and/or permanent impact to 0.5 acre of permanent impact and unlimited acreage of temporary impact. In addition, the reporting threshold, triggering the need for Corps review, would be based on impacts from the overall project (i.e., all regulated activities), rather than from each crossing single and complete project (i.e., crossing of a single water). Future projects that are anticipating PASPGP-6 authorization should evaluate applicability with these proposed thresholds (if finalized as proposed).

  1. Section 401 Conditional State Water Quality Certification for NWPs

In December 2020, PADEP conditionally granted 401 Water Quality Certification (WQC) for the new/revised NWPs. The conditions of the 401 WQC are incorporated into the NWP regional conditions, as summarized below:

  • All necessary environmental permits or approvals must be obtained from PADEP and all necessary environmental assessments must be submitted to PADEP before beginning any activity authorized by the Corps under a NWP.
  • Fill material may not contain any waste as defined in the Solid Waste Management Act.
  • Applicants and projects eligible for these NWPs must obtain all necessary state permits and/ or approvals to ensure that the project meets Pennsylvania’s applicable water quality standards, including any project-specific WQC.

Project conditions should be reviewed to determine whether they conform with the 401 WQC. If not, the project could require an individual 401 WQC or waiver.

  1. Chapter 105 – In December 2020, PADEP proposed its first substantive revisions to its stream and wetland regulations (i.e., 25 Pa. Code Chapter 105) since 1991. Chapter 105 regulates obstructions and encroachments of waters of the Commonwealth, similar to the Corps’ Section 404 permitting program under the CWA.

Approximately 20 definitions would be added or amended by the proposed rulemaking. Many of the proposed amendments would codify existing application requirements. However, other amendments introduce new or expanded requirements, which could introduce new hurdles for applicants. Many of these revisions relate to performing an alternatives analysis and cumulative impact analyses to demonstrate that a project’s impacts to regulated waters have been minimized or avoided. If finalized as proposed, the rulemaking will likely increase the cost and effort required to obtain a Chapter 105 permit.

Conclusion

As discussed above, 2021 already has, and will continue to, present challenges regarding the permitting of projects that disturb regulated waters, including wetlands, in Pennsylvania. Energy project developers should stay abreast of these regulatory changes to anticipate new requirements and avoid unnecessary delays.

For the full article, click here.

Reprinted with permission from the May 20, 2021 edition of The Legal Intelligencer© 2021 ALM Media Properties, LLC. All rights reserved.

Corps Seeks Comments on Proposed Reinstatement of Suspended NWPs in Pennsylvania

Environmental Alert

(by Lisa Bruderly)

On May 12, 2021, the Baltimore, Philadelphia and Pittsburgh Districts of the U.S. Army Corps of Engineers (the Corps) jointly issued a 15-day Public Notice (SPN 21-26), requesting comments on whether to reinstate certain 2017 and 2021 Nationwide Permits (NWPs) that are suspended in parts of Pennsylvania. The comment period closes on May 27, 2021.

The reinstatement has been proposed in case the new Pennsylvania State Programmatic General Permit (PASPGP-6) is not finalized and issued prior to the expiration of Pennsylvania’s current state programmatic general permit (PASPGP-5) on June 30, 2021. At present, if PASPGP-6 is not issued before July 1, 2021, most projects in Pennsylvania impacting federally regulated waters would be required to obtain individual Section 404 permits. Obtaining an individual permit is typically a more lengthy and complicated process than obtaining coverage under a programmatic general permit or NWP.

State Programmatic General Permit

The PASPGP is the mechanism that the Pennsylvania Department of Environmental Protection (PADEP) and the Corps rely upon to permit most projects in Pennsylvania that impact federally regulated waters, but do not require an individual Section 404 permit. PASPGP-6 allows applicants to obtain both federal Section 404 permits and state water obstruction and encroachment permits for projects impacting federal and state-regulated waters.

PASPGP-6 has not yet been finalized. The draft PASPGP-6 was published for public comment on September 4, 2020 (SPN 20-57), and the public comment period closed on October 4, 2020. On February 12, 2021, PADEP issued a conditional state water quality certification (SWQC) under Section 401 of the Clean Water Act, which certifies that activities authorized by PASPGP-6 would comply with the Commonwealth’s water quality standards if the applicant complies with the following conditions and “constructs, operates and maintains the project in compliance with the terms and conditions of State permits obtained to meet these SWQC conditions:”

  1. Prior to beginning any activity authorized by the Corps under PASPGP-6, the applicant must obtain all necessary environmental permits or approvals and submit PADEP environmental assessments and other information necessary to obtain the permits and approvals, as required under state law.
  2. Fill material may not contain any wastes as defined in the Solid Waste Management Act.
  3. Applicants and projects must obtain all state permits and/or approvals necessary to ensure that the project meets the State’s applicable water quality standards, including a project-specific SWQC.

Proposed NWP Reinstatement

With the availability of the state programmatic general permit, many NWPs have typically been suspended in Pennsylvania, except for projects in certain Section 10 waters and, for certain NWPs, when the regulated activity or indirect impact extends across state boundaries. On January 6, 2017, the Corps reissued 54 NWPs, which were effective March 19, 2017. Of these 54 NWPs, 31 NWPs were suspended in Pennsylvania to eliminate redundancy with the PASPGP permitting mechanism or due to lack of applicability. If PASPGP-6 is not issued before PASPGP-5 expires, the Corps is proposing to reinstate 24 of the NWPs suspended in 2017, including NWP7 (Outfall Structures and Associated Intake Structures), NWP14 (Linear Transportation Projects) and NWP18 (Minor Discharges).

On January 13, 2021, the Corps reissued 12 existing NWPs and issued four new NWPs. The 16 reissued/issued NWPs were effective on March 15, 2021. Of those 16 NWPs, nine were suspended in Pennsylvania, except in “areas within Pittsburgh District’s area of responsibility in the Commonwealth of Pennsylvania.” If PASPGP-6 is not issued before PASPGP-5 expires, the Corps’ proposal would reinstate the nine suspended 2021 NWPs, including NWP12 (Oil and Natural Gas Pipelines) and NWP39 (Commercial and Institutional Developments) for the entire state.

If any or all of the NWPs are reinstated, those NWPs would be subject to the applicable 2017 or 2021 regional conditions for Pennsylvania.

Conclusion

If the PASPGP-6 is not finalized before PASPGP-5 expires (i.e., by June 30, 2021), the reinstatement of certain, currently suspended NWPs will provide flexibility to permit a project impacting regulated waters, without pursuing an often lengthy and complicated individual Section 404 permit. However, the prospective permittee must ensure that the project meets the applicability criteria, general conditions and regional conditions of the selected NWP. These criteria are not the same as under the PASPGP-5, and in some instances, a portion of the project may need to be redesigned to meet NWP requirements.

Should you have questions regarding Clean Water Act Section 404 permitting and how these reinstated Nationwide Permits (NWPs) may affect your operations and/or plans for development, please contact Lisa M. Bruderly at (724) 910-1117 or lbruderly@babstcalland.com.

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Eastern Pennsylvania Zoning Hearing Board Rejects a Developer’s Application for Large-Scale Solar Project

Renewables Law Blog

(By Blaine Lucas)

With the development of large-scale renewable energy projects, municipal land use officials and private developers face the dilemma of how to classify and address such uses when zoning ordinances do not expressly mention them. Such omissions may be intentional, or, more often, may simply be the result of failures to update their ordinances to account for the changing energy production market.

A recent example of how these issues play out was a decision by the Lower Mount Bethel Township, Northampton County Zoning Hearing Board. There, Glidepath Ventures, LLC d/b/a Prospect 14, desired to construct a 61,000 solar panel facility to generate electricity for public consumption within the Township. The developer had targeted a 130-acre property located largely within the Township’s Agricultural District, and partially within its Conservation District. The Township zoning ordinance does not permit solar panel facilities in any district but does permit “any other use not otherwise listed in any zoning district” as a conditional use within the Township’s Industrial District. Although the developer argued that there was no suitable undeveloped property within the Industrial District, the Township’s expert testified that there was a suitable site within that zone, although the undeveloped space was limited.

At bifurcated hearings spanning several months, the Developer initially sought a use variance to allow the solar facility in the Agricultural and Conservation Districts or, in the alternative, challenged the validity of the Zoning Ordinance, alleging that it was legally defective by excluding the proposed use. After finding that the developer had failed to establish the requisite unnecessary hardship for the grant of a use variance, the Board considered whether the use was either de jure or de facto exclusionary by either expressly or in practice prohibiting the legitimate solar facility use. Ultimately, the Board held the ordinance was not exclusionary because it did not expressly prohibit solar facilities, and the proposed use could be permitted as a conditional use in the Industrial District because it was not otherwise listed in any zoning district.

The Board issued its written decision on April 28. As of this date, no appeal has been filed.

The decision in Glidepath Ventures highlights the need for municipalities and developers alike to consider how they classify and define renewable energy uses. By failing to provide for a legitimate use, the Township was placed in a precarious situation, and if it had not included a provision permitting all other uses within the Industrial District, the ordinance may have been found to be de facto exclusionary and therefore invalid. In addition, the decision is indicative of the disconnect between the type of use and land considered by developers to be functional for larger renewable energy products, and what zones municipalities believe to be suitable from a zoning context. How municipalities classify and define renewable energy uses will likely continue to evolve as renewable energy development increases and cases such as Glidepath Ventures become more prevalent.

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Pennsylvania Trial Courts Hold that the Term “At the Wellhead” in Natural Gas Leases Allows Operators to Deduct Post-Production Costs

Energy Alert

(by Mark Dausch and Cary Snyder )

In two recent opinions in which Babst Calland represented oil and gas operators, Pennsylvania federal and state trial courts ruled that the term “at the wellhead” in natural gas leases must be interpreted to allow operators to deduct post-production costs when calculating royalty payments.  Coastal Forest Res. Co. v. Chevron U.S.A., Inc., et al., No. 2:20-cv-1119, 2021 WL 1894596 (W.D. Pa. May 11, 2021); Dressler Family, LP v. PennEnergy Res., LLC, A.D. No. 2017019357 (Butler Cty. C.P. Apr. 28, 2021).  In doing so, the trial courts held that the Pennsylvania Supreme Court’s interpretation of the term “at the wellhead” in Kilmer v. Elexco Land Servs., Inc., 990 A.2d 1147 (Pa. 2010) is not confined to issues of statutory interpretation, but also applies to leases.

In Kilmer, the Pennsylvania Supreme Court ruled that, among other things, the use of the net-back method to calculate royalties did not violate the Guaranteed Minimum Royalty Act (GMRA), 58 P.S. § 33,[1] which required leases to guarantee the lessor at least a one-eighth royalty of all gas recovered from the property.  When calculating royalties, the net-back method provides a mechanism for determining allowable deductions for post-production expenses associated with bringing the oil or gas from the “wellhead” to the market where it is sold.  In reaching its conclusion, the Court in Kilmer relied on a variety of sources specific to the oil and gas industry that stated a royalty is generally not payable from the operator’s gross profit, but from the net amount remaining after the deduction of post-production costs.  990 A.2d at 1157-58.

In the decade since Kilmer, disputes have arisen as to the scope of its holding.  In particular, many lessors and operators have disagreed whether Kilmer should be confined to issues of statutory interpretation or applied more broadly to breach of contract claims.  Within the span of a few weeks, two trial courts relied on Kilmer to dismiss breach of contract claims against operators accused of wrongfully deducting a royalty interest owner’s share of post-production costs from their royalty payments.

In Coastal Forest, the court held that a lease providing for royalties to be calculated from the “gross sales price received . . . at the wellhead” unquestionably permits use of the net-back method to calculate royalties.  In granting Chevron’s motion to dismiss, the court stated that “[u]nder Kilmer, ‘at the wellhead’ language means that the net-back method may be used for calculation.  This is the only conclusion consistent with Pennsylvania law and industry custom.”  2021 WL 1894596, at *6.

Similarly, in Dressler Family, the court held that a lease providing for royalties to be calculated from the “gross proceeds received from the sale of same at the prevailing price for gas sold at the well” likewise unambiguously allows for the deduction of post-production costs via the net-back method.  In granting summary judgment to PennEnergy, the court found there was “no ambiguity within the four corners of the document” and that the lease was “subject to only one reasonable construction,” which is to calculate royalties based on the market value of the gas “at the well.”  Slip Op. at 16-17.  Since gas is not actually sold at the wellhead, post-production costs had to be deducted to establish that price.  Id., at 17.  The court rejected the plaintiff’s proposal to base the royalty on the gross price at the point of sale because doing so would disregard the phrase “at the well” and use the downstream price instead.  Id.

Lawsuits between lessors and oil and natural gas operators as to whether post-production costs may be deduced when calculating royalties are common. Babst Calland actively tracks these cases in Pennsylvania and other states in the Appalachian Basin. If you have any questions about these disputes, please contact Mark K. Dausch at mdausch@babstcalland.com or 412-394-5655 or Cary M. Snyder at cmsnyder@babstcalland.com or 412-394-5672.

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[1] This statutory minimum is now located in the Oil and Gas Lease Act, 58 P.S. § 33.3 (2013).

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U.S. Senate passes joint resolution disapproving Trump oil and gas methane rule

The PIOGA Press

(by Gary Steinbauer and Gina Falaschi)

On April 28, 2021, the U.S. Senate passed a joint resolution, known as S.J. Res. 14, retroactively revoking a Trump administration rule revising Obama-era Clean Air Act New Source Performance Standards for the Crude Oil and Natural Gas Industry at 40 C.F.R. Part 60, Subparts OOOO and OOOOa (NSPS) that were initially promulgated in 2012 and 2016. The joint resolution, if enacted into law, would reinstate Obama administration rules regulating the methane emissions from the oil and natural gas industrial sector, including the production, processing, transmission and storage segments.

The Trump administration’s Policy Amendments rule
The joint resolution takes aims at a specific Trump administration rule published in the Federal Register on September 14, 2020. Referred to as the “Policy Amendments,” the rule resulted in four key changes to these NSPS, which were promulgated in 2012 and 2016.

First, the Policy Amendments removed the transmission and storage segment, including transmission compressor stations, pneumatic controllers and underground storage vessels. In removing the transmission and storage segments from regulation under the NSPS, the U.S. Environmental Protection Agency (EPA) found that the segments were improperly regulated because the statutory-mandated finding that sources contribute significantly to air pollution was not made when the segments were added to the industrial sector and the NSPS in 2012 and 2016.

Second, the Policy Amendments rescinded the methane emission requirements for the production and processing segments of the sector, which include various emission sources at well sites, gathering and boosting compressor stations, and natural gas processing plants.

Third, by removing the methane limits on the production and processing segments, the Policy Amendments eliminated the Clean Air Act (CAA) requirement to regulate methane emissions from existing sources from within these segments.

Fourth, as an alternative basis for rescinding the limits on methane emissions, the Policy Amendments concluded that the 2016 rule adding methane limits was the product of an insufficient finding that did not satisfy CAA standards. While the Policy Amendments rule resulted in surgical deletions and revisions to the NSPS, it was based upon the Trump administration’s views and interpretations regarding the scope of the CAA’s NSPS provisions and how they are to be applied to previously unregulated sources and air pollutants.

Notably, the joint resolution left a companion rule promulgated by the Trump Administration known as the “Technical Amendments” untouched.

Congressional Review Act-based revocation
To revoke the Policy Amendments rule, the Senate invoked its authority under the Congressional Review Act (CRA). The CRA grants Congress the authority to overturn a federal regulation in its entirety by simple majority votes within specified time periods after the rule is promulgated. Although the CRA is not limited to use in presidential administration changes, it typically is used after such a change as an oversight mechanism for so-called “midnight rules.”

The most potent aspect of a CRA resolution disapproving a federal regulation is that the federal agency may not reissue the rule in “substantially the same form” or issue a “new rule that is substantially the same,” “unless the reissued or new rule is specifically authorized by a law enacted after the date of the joint resolution disapproving the original rule.” The CRA does not define “substantially the same” and is silent on who is responsible for making a determination on whether a new rule is “substantially the same.” For amendments to existing rules, like the Policy Amendments rule, a CRA joint resolution revokes the amendments and leaves the previously existing rule in place.

S.J. Res. 14 passed by a vote of 52-42, with Republican Senators Susan Collins (Maine), Lindsay Graham (South Carolina), and Rob Portman (Ohio) joining Democratic Senators in approving the resolution. Several Republican Senators, including Patrick Toomey (Pennsylvania), did not vote on the joint resolution. The day before the Senate’s vote, the Biden administration urged the Senate to invoke its CRA authority stating that “the oil and gas sector is the largest industrial source of methane emissions” and that “addressing methane pollution from this and other sectors is an urgent and essential step” to “effectively mitigate climate change.”

Unresolved questions about CAA regulation of methane emissions and compliance
Although a CRA revocation of the Policy Amendments is not yet final, it likely is only a matter of time before a Democratically controlled House of Representatives votes to pass the joint resolution and President Biden signs the resolution into law. Legally, a CRA-disapproved rule is treated “as though such rule had never taken effect.” As such, upstream and midstream operators would be well-advised to revisit the 2012 and 2016 NSPS rules and evaluate compliance with their requirements. Practically, reinstituting the methane requirements of the 2016 NSPS should have very little impact on production and processing facilities currently subject to the 2016 NSPS, as the methane reductions in the 2016 NSPS rule were incidentally achieved through volatile organic compound (VOC) control requirements. Transmission and storage facilities, where but for the Policy Amendments the 2012 and 2016 NSPS currently would apply, should review and prepare to comply with the originally promulgated rules.

If finalized, a CRA-based revocation of the Policy Amendments rule will raise significant questions. Ideally, EPA would provide guidance to affected facilities, particularly for transmission and storage facilities constructed, modified or reconstructed sources after September 14, 2020, in reliance on the Trump administration’s rule concluding that the 2016 NSPS did not apply to such sources. In addition, EPA most likely will need to issue a Federal Register notice reinstating the 2012 and 2016 NSPS as originally promulgated. Affected facilities will want to look closely at any Federal Register notice issued by EPA, especially any effective date for reinstating the 2012 and 2016 NSPS.

Congressional revocation of the Policy Amendments rule may also revive currently stayed multi-party litigation over the 2012 and 2016 NSPS. It would also revive EPA’s obligation under section 111(d) of the CAA to regulate methane emissions from existing sources within the oil and natural gas source category. Beyond that, Congress’ likely repudiation of the Trump administration’s interpretations in the Policy Amendments rule may also have lasting impacts on the regulation of greenhouse gas emissions from the oil and natural gas and other industrial sectors regulated under section 111 of the CAA.

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Has COVID-19 Escalated Disagreements Between Business Owners?

Closely-Held Business Perspective

(by Kevin Douglass)

Business owners faced with extraordinary operational and financial challenges caused by the COVID-19 pandemic may also be managing special demands and concerns posed by their owners. There is never a good time for an internal ownership squabble to bubble up to the surface, but owner conflicts or differences can be particularly troublesome when the business is already under duress.

Disruption Can Create Conflict

There is no question that the pandemic has impacted many businesses’ finances and strategy, as well as relationships between co-owners. The warning signs of an owner disagreement should never be ignored. If left unchecked, these misunderstandings can cause real damage to a company’s health and vitality including negative impacts on the bottom line, employee morale, and even relationships with creditors, customers and suppliers. A company can be particularly vulnerable at critical moments when its owners may already be dealing with the pandemic ramifications or other financial and operational challenges. Do not wait for the perfect time to deal with owner disagreements because that time will never come. The stability of a company’s day-to-day operations and future financial success are often dependent upon resolution of these multi-faceted disagreements between owners.

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Second Circuit Holds New York’s Climate Tort Lawsuit in Federal Court is Pre-Empted by the Clean Air Act

Environmental Alert

(by Casey Snyder and Robert Stonestreet)

In a unanimous opinion, the federal Second Circuit Court of Appeals ruled that state law “climate tort” claims asserted by the City of New York (the “City”) against five oil companies are preempted by the federal Clean Air Act (CAA).  City of New York v. Chevron Corporation et al., No. 18-2188, 2021 WL 1216541 (2nd Cir. 2021).  In doing so, the Second Circuit became the first federal appellate court to address the merits of climate change tort suits asserted under state law and filed in federal court.

The City filed the lawsuit in 2018 in federal district court alleging state law claims of public nuisance, private nuisance, and trespass under New York law.  The City argued that the companies’ production, promotion, and sale of fossil fuels has caused, and will cause, the City to expend significant resources in response to climate change impacts, and the companies should bear these costs instead of the City’s taxpayers.

The district court granted the companies’ motions to dismiss the complaint.  In its opinion, the Second Circuit affirmed the dismissal for largely the same reasons as the district court:

  • federal common law, rather than New York law, applied to City’s claims;
  • the CAA displaced claims under federal common law;
  • the CAA regulates only domestic, not foreign, emissions; and
  • foreign policy precluded recognition of a federal common law cause of action targeting greenhouse gas emissions emanating from beyond country’s national borders.

Given the global nature of greenhouse gas emissions, the court determined that such claims were beyond the scope of state law, despite the City’s pleadings alleging only state law claims.  In so holding, the court could apply settled precedent from the Supreme Court holding that the CAA preempts federal common law claims concerning domestic emissions.

The Second Circuit made clear in its opinion that the case was procedurally unique to the much larger number of recent district and appellate court opinions remanding similar cases to state court after the companies being sued removed the cases to federal court based on their preemption defense raising a question under federal law.  In this case, the City filed the case in federal district court, so the district court and Second Circuit were free to consider the merits of the companies’ federal preemption defense.  However, in the cases originally filed in state court, the scope of review is much narrower.  Generally, a defense based on federal law is insufficient to create a “federal question” that supports removal of case to federal court.  The Supreme Court heard oral arguments on one of these cases from the Fourth Circuit in January 2021, and an opinion could come as early as this spring or summer.

Despite the procedural differences, companies defending against other climate change cases filed in state court were quick to rely on City of New York v. Chevron as a source of authority that the state lawsuits belong in federal court.  Those companies identified the Second Circuit’s opinion as supplemental authority in a lawsuit brought by the District of Columbia under its Consumer Protection Procedures Act claiming the defendants misled the public on their products’ alleged contribution to climate change.  The companies argue that the Second Circuit decision supports their arguments that allegations under the D.C. Consumer Protection Procedures Act necessarily arise under federal law, not state law, because of significant federalism concerns and global nature of climate change.

The larger effect of the Second Circuit’s opinion on the other climate litigation remains is uncertain due to the procedural differences between this case and the other climate cases filed in state courts across the country.  New York could appeal the case to the United States Supreme Court, although it would likely face an uphill battle to overturn the Second Circuit’s opinion in the high court.

More recently, on April 22, 2021, the City filed a new lawsuit against six energy companies and the American Petroleum Institute alleging violations of the City’s Consumer Protection Law.  This time, the City filed the case in state court rather than federal court.  The City’s new complaint alleges that the defendants’ promotion of their products as helping to address climate change are false and misleading because the products actually contribute to climate change.  The City also alleges that the defendants falsely present themselves as environmentally responsible companies leading the fight against climate change.  Several similar lawsuits are pending in other state courts across the country.

Babst Calland is actively tracking this case and dozens of other climate change cases throughout the country.  If you have any questions about this case, or other climate change lawsuits, please contact Casey J. Snyder at csnyder@babstcalland.com or 412-394-5438, or Robert M. Stonestreet at rstonestreet@babstcalland.com or 681-265-136.

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Aggressive goals aim to decrease emissions — but challenges await

Smart Business 

(by Sue Ostrowski featuring Jim Curry and Ashleigh Krick)

To remain competitive, businesses should stay on top of evolving state and federal policies on renewable energy. These changes present both opportunities and challenges, according to James Curry, managing shareholder in Babst Calland’s Washington, D.C. office, and Ashleigh Krick, an associate at Babst Calland. Commercial and industrial power consumers may be able to obtain benefits from sourcing renewable power, both financially and to answer growing shareholder and lender scrutiny.

At the same time, the increasing level of renewables coming online presents challenges related to grid reliability, underscoring the continued relevance for other more stable sources of electricity.

Smart Business spoke with Curry and Krick about the increase in state-level carbon reduction targets, the challenges associated with increased use of renewable energy and the role of traditional generation sources to maintain reliability.

What is the current state of affairs for renewables?

In Pennsylvania, bipartisan legislation has been introduced to increase the state’s Alternative Energy Portfolio Standards (AEPS), enacted in 2004 with the goal of increasing the state’s share of power from renewables. The AEPS requires that electric distribution companies and electric generation suppliers supply 18 percent of their electricity from certain alternative energy sources, such as solar, hydropower, geothermal, waste coal and distributed generation. The proposed legislation would increase that requirement by 10 percent.

Although an early adopter of a renewable portfolio standard, neighboring states have jumped ahead of Pennsylvania in recent years. New Jersey and Maryland have set renewable energy targets of 50 percent by 2030, while New York has a goal of 70 percent. And, in April 2020, Virginia passed legislation requiring the state’s largest utility to provide 100 percent of its electricity from renewables by 2045.

Pennsylvania Gov. Tom Wolf recently committed state government to purchasing 50 percent of its electricity needs from solar energy, the largest commitment of its kind in the U.S. The project will involve seven new solar facilities totaling 191 megawatts around the state and is slated to begin operation in 2023.

What are the challenges with renewables?

Renewables such as solar and wind are intermittent resources and do not provide continuous output. As more renewables come online, it becomes more difficult for grid operators and utilities to ensure system reliability. As renewables grow, the additional renewables that must be added to maintain reliability dramatically increase, as does the cost.

In some areas, market participants have looked to utility-scale battery energy storage to fill part of this reliability need. While storage can be a complement to renewables and gas-fired generation, storage faces some of the same reliability issues. As states advance decarbonization targets, traditional, baseload electric generation sources will continue to play a vital role in reliability.

In addition, there is no one-size-fits-all approach for renewables projects. Timelines and success may depend on state, county and local permitting and other requirements. Land acquisition can be challenging and in many states, including Pennsylvania, local municipalities exert substantial control over project-related zoning and land use issues.

Despite the challenges, many utilities and businesses are pursuing renewables projects to meet state targets or mandates.

What does the future hold for renewables?

The cost of renewables is likely to continue to fall, and technologies will continue to improve. Battery electric storage and other storage technologies are expected to become more cost-competitive, with demand for electricity increasing significantly in the coming decades as trends toward the electrification of the transportation and industrial sectors continue.

These factors call for practical, common-sense solutions to our growing energy needs, environmental challenges and continued demand for a reliable grid. While state-level incentives and mandates have been a driving force behind renewables development, we anticipate new federal policies such as tax credits, carbon capture incentives and possibly a federal clean energy standard.

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Environmental considerations for our region

Pittsburgh Business Times

(by Daniel Bates featuring Lisa Bruderly, Kevin Garber and Sean McGovern)

Even before he won the election, President Joe Biden had pledged to reverse Trump-era environmental policies designed to ease the regulatory burden on business. Since then, he already has proposed a sweeping $2 trillion-plus, infrastructure-improvement plan designed to shore up the nation’s roads, bridges, water pipes and other infrastructure, as well as create new jobs.

Such presidential plans for environmental reform are certain to require significant – and potentially expensive – shifts in business practices in the long term, according to leading attorneys from the Environmental Practice of Pittsburgh law firm Babst Calland. As a result, the region’s businesses can expect a climate of transition in the short term, mixed with potential new business opportunities, costly challenges, and delayed development.

“It was no surprise when, out of the gate, the Biden administration signaled that there were going to be a lot of regulatory changes that were significantly different from the regulatory environment of the Trump administration,” said Lisa Bruderly, chair of Babst Calland’s Environmental Practice. “One of his first executive orders was to task EPA and other federal agencies to look at the regulations and policies and directives of the Trump administration and determine whether any of those actions should be revoked, rescinded, or revised.

“So we are waiting to see what those actions may be,” she continued. “Many of those have important environmental implications that could affect future developments – how projects are permitted, for example.”

Bruderly was one of three attorney colleagues who participated recently in a discussion with the Pittsburgh Business Times on “Environmental Considerations for Our Region” as part of the law firm’s Business Insights video series. Joining her for the regulatory discussion were attorneys Kevin Garber and Sean McGovern, both shareholders within the firm’s Environmental Practice. Babst Calland is one of the Pittsburgh region’s largest law firms and nationally recognized for its environmental law practice.

Infrastructure and the environment

Driving much of the regulatory discussion, Bruderly said, is the Biden administration’s proposed infrastructure improvement plan, which emphasizes not only the need for new roads and bridges, but also the desire to improve water and air quality in the face of climate change.

“If approved as proposed, the [infrastructure] plan would provide funding for a number of different traditional infrastructure types of projects – bridges, highways, public transit, airports,” she said.

“However, the plan itself actually goes well beyond traditional infrastructure and talks about a number of other types of improvements. This is being called a once-in-a-generation kind of effort.

“Besides traditional infrastructure,” Bruderly continued, “they’re planning to: eliminate all lead piping in drinking water systems; create more jobs in the renewable sector; bring high-speed broadband Internet to every American; install thousands of miles of electric transmission lines; and modernize about 10,000 bridges and 20,000 miles of highways. It’s a very large undertaking that is being proposed.”

While Bruderly acknowledged the need for such modernization efforts, the challenge to local businesses will be in paying for them.

“The infrastructure plan can have both good and bad effects for the region,” she said. First of all, there are infrastructure projects that are needed and providing that funding will certainly be a help in getting those projects accomplished.”

Bruderly was quick to point out the need for bridge and road repairs, as well as upgrades to drinking water systems and public transit, particularly based on what she described as a Biden administration report card of sorts that gave Pennsylvania a C-grade for its infrastructure conditions – one of 28 states marked with C-grades.

Of particular interest to the Pittsburgh region, Bruderly said, was that the Biden plan also calls for funding to improve inland waterways, including locks and dams, as well as capping “orphaned” oil and gas wells and cleaning up abandoned mining properties.

Paying a price for change

At the same time, she suggested, the additional tax burdens on the industry would be significant.

“It’s [the American Jobs Plan] an interesting proposition,” Bruderly said. “However, paying for these sorts of programs is obviously a concern for many folks. The Biden administration has proposed to pay for this over a 15-year period by raising the corporate tax rates from 21% to 28%. They’ve also proposed several other changes that will have tax implications, especially for fossil fuel industries.”

Planning amidst uncertainty

In the short term, though, the region’s businesses are worried about something else.

“Regional businesses at this point care about the uncertainty of everything right now,” Bruderly said, “and trying to figure out what the new regulatory changes are going to be and how to plan their projects so that they’re meeting those changes when they’ re ready to submit their applications.

“You may have to redesign your project,” said Bruderly, noting the possibility that environmental permitting criteria could change in the middle of one’s project planning. “You may have to go for a different permit, which would take longer, and there could be more public scrutiny of those types of things.”

“One of those regulations about which Bruderly is most concerned pertains to the definition of waters of the United States. “That definition is important because it defines the scope of regulatory jurisdiction under the Clean Water Act and actually affects 11 regulatory programs,” she said.

The ‘Green New Deal’ piece

Bruderly’s colleague, Kevin Garber, said he’s particularly concerned about the role of climate change in driving major aspects of the infrastructure plan.

“There’s no doubt that the Biden administration’s view of climate change and government generally is 180 degrees different from the Trump administration, and the Trump administration, of course, was more free market – less government regulation,” Garber said. “Biden is the opposite of that.”

Garber said he likewise acknowledges the benefits to such an infrastructure funding plan to fund roads, bridges, and water and sewer infrastructure, including upgrading small wastewater treatment plant systems.

“But then the other side of it – the big side of it – is the climate change piece, that is variously called or sometimes criticized as the ‘Green New Deal’ piece,” Garber said.

Climate change and technology commercialization

Garber said he does see a sizable positive potentially arise from the infrastructure plan’s climate change drivers. That is, technology commercialization.

“Several opportunities come out of the climate change component of the bill. One example would be the commercialization of research and development here in Western Pennsylvania,” Garber said. “Our universities have long been looking at the commercialization of technologies, and how we can move into low-carbon energy production. We’re fortunate to have the National Energy Technology Lab here in this region studying carbon capture and sequestration.

”A second example would be the electrification of transportation vehicles,” he continued. ”A third example might be increasing energy storage, and a fourth example would be the further development of hydrogen fuels and the storage of hydrogen fuels. This whole area shows a lot of promise in that regard.”

Said Garber of the opportunities under the premise of climate change: “So, even though the American Jobs Plan has certainly received a lot of criticism based on its reach and its expense, there certainly are pieces of it that come under the climate change umbrella, rather than the infrastructure umbrella that I think hold promise for our region to keep us as a good energy and economically vibrant region.”

The role of environmental justice

One area of environmental regulation under the Biden administration that seems to get less attention but remains a significant part of Biden’s environmental policy, according to attorney Sean McGovern, another Environmental Practice colleague at Babst Calland, is the role of environmental justice when it comes to mitigating impact.

“This is a key pillar of the Biden administration’s initiatives moving forward for environmental matters,” McGovern said. “I have to remind myself at times that we’re well into the fifth decade of environmental justice matters, but still a lot of folks don’t understand quite what it means.”

McGovern defined environmental justice, in accordance with the U.S. Environmental Protection Agency’s definition, as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income.”

In Pennsylvania, he said, “environmental justice embodies the principle that communities and populations are not disproportionately exposed to adverse environmental impacts.”

As such, McGovern said, Pennsylvania has been approaching environmental justice policies and initiatives as a community issue.

“What we have seen … is that the emphasis has been on engagement with the communities that are environmental justice communities,” he said. “It’s a race- and income-based analysis: 30% or greater for minority populations, and 20% or greater [at or below the poverty level] from an income perspective also would qualify as an EJ community.”

With Pennsylvania currently going through an evaluation of its EJ policy, our neighboring state – New Jersey – just passed a law chat adds a new component that caught the attention of many who operate in this space, and that is “the ability to look at cumulative impacts in relation to a permit application on a particular EJ community and potentially decline a permit application based on those impacts,” McGovern said.

Added Garber regarding the effects of environmental justice considerations on larger-scale environmental regulation in Pennsylvania: “Proposed revisions to these rules still in draft form are heavily influenced by environmental justice. They have brought a number of environmental justice principles into the regulation.”

Enforcing justice

To support environmental justice principles, local businesses can expect more aggressive enforcement at the federal level, Bruderly said.

“With the difference in the administration, there’s an expectation that there’s going to be more enforcement than there had been,” she said, “and that enforcement likely will come with more penalties.”

Overall, Garber said, local businesses need to “try to overcome that uncertainty. I think there are opportunities in the way some of these regulatory programs are headed so you just have to keep alert and watch the news every day.”

McGovern concluded, “I think it’s an exciting time to be an environmental lawyer.”

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Commonwealth Court Holds Township Need Not Vacate the Road Less Traveled

The Legal Intelligencer

(by Anna Jewart and Blaine Lucas)

Dating as far back as 1735, when the commonwealth was a province controlled by the heirs of William Penn, Pennsylvania has recognized the importance of public roads and their role in preserving a landowner’s right to access his land. Since that time, it has become a foregone conclusion that the government, at all levels, will provide and maintain public roadways. However, because of the necessary impact on the rights of individual landowners, the creation of anything from a federal highway to a municipal alleyway involves complex legal considerations. While the legal implications involved in the creation of public roads through eminent domain or dedication are well known, the abandonment or “vacation” of public roads also has a significant impact on the property rights of individuals, governments and the public. Recently, the Commonwealth Court, in In Re Vacating of Old Route 322, No. 384 C.D. 2020 (Pa. Cmwlth. Mar. 3, 2021), considered what happens when adjacent landowners allege a public roadway has become so “useless, inconvenient or burdensome,” that the municipality is required to vacate it under the General Road Law, 36 P.S. Sections 1781-2293. Although the case is unreported and not precedential, it may be cited for persuasive value, and offers an opportunity to review of this understudied area of the law.

Local roads often are established by dedication, where a landowner offers land for public use, and the municipality accepts it on behalf of the public. Typically, when a municipality accepts a road dedication it holds that property in trust only for the use for which it was dedicated. This means the dedication of a public road does not invest the municipality with fee title to the land on which it rests but only the right to use, maintain, regulate and control that land as a road. The public then obtains a right of passage over the road, but the fee continues to be held by the owners of the land. When the public is no longer benefited by the use of the land as a public road, the municipality has the power, and sometimes an obligation, to vacate the road.

Municipalities are only authorized to open or vacate public roads by statute. For example, in Pennsylvania boroughs are authorized to vacate streets within their borders in accordance with the Borough Code, 8 Pa.C.S.A. Section 101 et seq., and second class townships in accordance with the Second Class Township Code, 53 P.S. Sections 65101. Both are also constrained and impacted by other statutes including the General Road Law. Generally, a municipality may vacate a road within its borders by ordinance following public notice, as well as personal notice to the owners of any property abutting the road. Most statutes provide affected property owners or other residents the opportunity to request a hearing or review of the ordinance which is then appealable to the Common Pleas Court.  Furthermore, because landowners have an inalienable, compensable, right of access to their property which may be affected by the vacation of a public road, under the Eminent Domain Code, 26 Pa.C.S. Section 715, the affected property owners may recover damages for any injuries sustained by a violation of this right.  This means that municipalities generally may not vacate a road where it is the sole means of access to a tract of land.

However, property owners are not always harmed by vacation of roads abutting their land. As noted above, when a public road is vacated, neither the municipality nor the public retains any right to the land. Rather, because the fee remained with the owners of the dedicated land, each abutting landowner generally will take title of its relevant portion up to the centerline of the street, even if the properties are deeded only to the edge of the right-of-way. Consequently, certain abutting landowners may desire that a roadway be vacated, and the law provides pathways for them to accomplish that goal. Returning to the examples above, the Borough Code, Section 1732, 8 Pa.C.S. Section 1732, and the Second Class Township Code, Section 2304, 53 P.S. Section 67304, permit landowners to petition the municipality to vacate a municipal road. Upon the denial of the petition or a failure to act upon it, the petitioners may present the petition to the Common Pleas Court pursuant to the General Road Law.

Under Section 18 of the General Road Law, 36 P.S. Section 1981, Common Pleas Courts have the authority, upon application by petition of abutting landowners, to vacate the whole or any part of any private or public road whenever it has become “useless, inconvenient or burdensome.” The petitioner only needs to prove that one of these conditions is present. In addition, these terms are not defined, and the courts have found their interpretation to be fluid and entirely fact dependent. Upon receipt of a petition, the court may appoint a board of viewers to hold hearings on the issue, whose findings are then appealable to the court.

In In re Old Route 322, individuals owning property abutting “Old Route 322” in Paint Township, Clarion County (township), petitioned the township to vacate the roadway. The township failed to act, and the landowners subsequently presented a petition to Clarion County Common Pleas Court. The court appointed a board of viewers (board), which held evidentiary hearings to determine whether the roadway met the requirements for vacation under the General Road Law. The board found that while the roadway had become overgrown with grass, weeds and other debris, and was not actively patrolled or maintained by the township, it remained valuable as it produced a certain amount of revenue in liquid fuel tax monies, provided a public and emergency access route to the nearby river, could possibly provide access to a public park in the future, and remained the only land access point to a parcel owned by a nonparty power company. Consequently, the board found that the petitioners had failed to prove that the road was useless, inconvenient or burdensome, and denied the petition.

Following the petitioners’ appeal, the Common Pleas Court adopted the board’s findings and conclusions. In the subsequent appeal to the Commonwealth Court, the petitioners alleged that the trial court erred by finding that the township had standing to assert the private property rights of the power company, and improperly considered certain evidence regarding the use and value of Old Route 322.

The Commonwealth Court began its analysis by stressing the importance of an individual landowner’s, as well as the public’s, ability to access one’s land by road, pointing out that roadway access to individual parcels had been required in Pennsylvania dating back to the early 1700s. It further noted that it was “without question” that a township has the authority to oppose vacation of a township road. The court explained that the township was not asserting the private property rights of the power company, but was instead identifying deficiencies in the petitioners’ argument by showing that they had not proven that the roadway was useless to the power company.

The Commonwealth Court concluded that the board properly relied upon the evidence presented by the township. It held that the liquid fuel tax money received by the township due to its ownership of the roadway was relevant, reasoning that because the statutory term “useless” was “not cast in stone,” the petitioners’ argument that it could pertain only to a physical use of the road was meritless. The court then disposed of the petitioners’ arguments that the board erred because the township’s evidence regarding possible future use of the road to access a park was speculative and that the evidence that the road was valuable for public and emergency access was contradicted by testimony that access was blocked by a locked barrier. The court found that these issues went to the board’s exclusive province over matters involving the credibility of witnesses and the weight afforded to the evidence, which could not be disturbed on appeal. Finally, the court noted that the trial court properly relied on cases which found vacation improper because the roads in question provided the only access to private properties. The court concluded that the trial court had properly found that vacation was not required, as Old Route 322 had not been shown to be useless, inconvenient, or burdensome.

Although the court in In Re Old Route 322 ultimately sided with the township, it should serve as a cautionary tale. A municipality’s rights in dedicated roads are not absolute and are subject to challenge. Consequently, municipalities should be mindful that a failure to maintain or use a public road may result in industrious property owners seeking vacation of the roadway.

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Reprinted with permission from the April 22, 2021 edition of The Legal Intelligencer© 2021 ALM Media Properties, LLC. All rights reserved.

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