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.

For the full article, click here.

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

Bank of America adds to its ESG financing goal – up to $1 trillion by 2030

Renewables Law Blog

(By Bruce Rudoy)

Bank of America last week more than tripled its environmental financing goal, saying it wants to deploy more than $1 trillion by 2030 to accelerate the transition toward a low-carbon, sustainable future, according to a recent press release.

Since launching its environmental business initiative in 2007, the bank said, it has financed $200 billion in sustainable activities, including asset-based lending, tax equity investments and capital raising in the energy and transportation sectors, among others. It pledged to back $300 billion in low-carbon activities between 2019 and 2030.

The $1 trillion pledge is in addition to $500 billion the bank aims to put toward socially inclusive development, including affordable housing, community development, healthcare, education, and racial and gender equality. Karen Fang, Bank of America’s head of global sustainable finance, said the commitment “demonstrates our belief that there is opportunity for exponential market growth in [environmental, social and governance]-themed products and services as well as market share growth.” Bank of America has helped more than 225 clients support their sustainable business needs by raising upward of $300 billion through more than 400 ESG-themed bond offerings. BofA’s commitment is consistent with the United Nations Sustainable Development Goals, to spur transformative change nationally and around the world. Beyond the $1 trillion climate-related finance, the balance of the sustainable finance goal is focused on social inclusive development, scaling capital to advance community development, affordable housing, healthcare, and education, in addition to racial and gender equality.

Banks have markedly ramped up their sustainability goals over the past two years. Between September and March, each of the six largest U.S.-based banks has pledged to achieve net-zero greenhouse-gas emissions in financing activities by 2050.

Bank of America boosts its ESG financing goal to $1 trillion by 2030 | Utility Dive

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West Virginia Legislature Enacts Renewable Energy Site Reclamation Law

(by Christopher (“Kip”) Power)

In an effort to ensure that owners of solar and wind energy facilities (“renewable energy facilities”) do not decommission production facilities without completing proper reclamation, on April 10, 2021, the West Virginia Legislature enacted Senate Bill 492, creating the West Virginia Wind and Solar Energy Facility Reclamation Act (as new Article 32 of Chapter 22 of the West Virginia Code (“Reclamation Act”)). The Reclamation Act (effective July 9, 2021) generally requires that an owner of a wind generation facility or a solar generation facility submit certain information to the West Virginia Department of Environmental Protection (“DEP”), including the date the facility commenced operation; a proposed decommissioning plan (prepared by a “qualified independent licensed professional engineer”); and a cost estimate for execution of that plan. The DEP will use that and other relevant information in preparing (or approving) a decommissioning plan for the site and in determining an appropriate reclamation bond amount for the facility.

Renewable energy facilities with a nameplate capacity of less than 1.0 megawatts are excluded from coverage. In addition to that limitation, the following are exempt from the application and bonding requirements of the statute: (1) those facilities owned by entities that are “regulated public utilities” who can convince the Public Service Commission (“PSC”) and DEP that they have sufficient “financial integrity and long-term viability” to obviate the need for a reclamation bond; (2) facilities whose owners are legally bound by a decommissioning agreement “based upon a qualified independent party” executed prior to July 9, 2021; and (3) facilities that are subject to a siting certificate or other authorization from the PSC that was conditioned on execution of a decommissioning agreement prior to July 9, 2021 (as long as the owner is in compliance with the agreement, the facility has not been sold to a successor who is not bound by the agreement, and the facility has not been “substantially expanded” in terms of disturbed acreage). A separate section (W.Va. Code § 22-32-8) outlines the minimum elements of acceptable decommissioning agreements.

Generally, the owner of a covered solar or wind project that is not exempt must submit an application for a reclamation bond to the DEP within twelve (12) months of starting operation, along with an application fee of $100 per megawatt of nameplate generation capacity. For wind or solar projects that are already in operation or commence operation prior to July 1, 2021, the deadline for submitting a complete application is July 1, 2022. However, that same deadline applies to the posting of a decommissioning bond, so it would be prudent to submit the application for a bond well in advance of that date.

The statute directs that the amount of any such bond shall be “based upon the total disturbed acreage of land” upon which the solar or wind energy facility is operated, less salvage value. It further specifies that the amount of any required bond may not exceed the total projected future costs of decommissioning (less salvage value).

The property owner and the owner of a renewable energy facility (along with any local governing body with jurisdiction) may enter into an agreement that calls for “alternative restoration” of buildings, fixtures, infrastructure and surface lands associated with the facility. Though it is not clear, such “alternative restoration” may be akin to an “alternative post-mining land use” that may be approved in connection with the reclamation of coal mines under the West Virginia Surface Coal Mining and Reclamation Act, W.Va. Code § 22-3-1, et seq. (“WVSCMRA”). As with WVSCMRA, any such proposal must be submitted for review and approval by the DEP before it takes effect. Under the Reclamation Act, the DEP is required to review such a proposal and render a decision regarding its acceptability within ninety (90) days of its submission.

Either separately or in conjunction with an alternative restoration plan, an owner of a renewable energy facility may petition the DEP to modify the approved decommissioning plan and adjust the bond requirements associated with it. A request for reduction in the posted bond amount based on a reduction in the total disturbed acreage may only be submitted once every five years.

Should the DEP unilaterally modify a decommissioning plan and adjust the required bond amount for any solar or wind generation facility, the owner may appeal such an order to the West Virginia Environmental Quality Board (the “EQB,” an independent, quasi-judicial appellate body within the DEP). Any failure to submit a required bond may be subject to an administrative penalty of up to $10,000 for the first day of violation and up to $500 per day for each day the failure continues. The DEP’s assessment of a penalty for such a violation is also appealable to the EQB.  The statute also includes provisions addressing requests for bond release upon successful reclamation and for bond forfeiture for failure to properly decommission a solar or wind energy facility.  All such DEP orders relating to bond release and forfeiture are also appealable to the EQB.

As this summary suggests, there is much to be determined by the DEP regarding how the Reclamation Act will be implemented.  Interested persons should keep an eye out for proposed rules (regulations) as well as policy development from the DEP.  For questions about S.B. 492 or renewable energy development in West Virginia, contact Christopher B. (“Kip”) Power at (681) 265-1362 or cpower@babstcalland.com.

West Virginia Legislature Enacts Renewable Energy Site Reclamation Law

Renewables Law Blog

(By Christopher (Kip) Power)

In an effort to ensure that owners of solar and wind energy facilities (“renewable energy facilities”) do not decommission production facilities without completing proper reclamation, on April 10, 2021, the West Virginia Legislature enacted Senate Bill 492, creating the West Virginia Wind and Solar Energy Facility Reclamation Act (as new Article 32 of Chapter 22 of the West Virginia Code (“Reclamation Act”)). The Reclamation Act (effective July 9, 2021) generally requires that an owner of a wind generation facility or a solar generation facility submit certain information to the West Virginia Department of Environmental Protection (“DEP”), including the date the facility commenced operation; a proposed decommissioning plan (prepared by a “qualified independent licensed professional engineer”); and a cost estimate for execution of that plan. The DEP will use that and other relevant information in preparing (or approving) a decommissioning plan for the site and in determining an appropriate reclamation bond amount for the facility.

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Water law update: Five topics to watch in 2021

The PIOGA Press

(by Lisa Bruderly)

State and federal water law permitting can pose significant obstacles for natural gas construction projects that impact waterbodies (e.g., wells pads, access roads and 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 Biden has already signaled he intends to change the current WOTUS definition. In his first week in office, he asked the U.S. Army Corps of Engineers 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 eventually 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 natural gas projects.

2. 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 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. The revised NWPs largely relate to energy industry activities, including the revision of NWP12 relating to oil and 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. For example, the regional conditions for NWP12 include requiring a pre-construction notification (PCN) for activities under NWP12 (consistent with the 2017 NWP12).

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 an NWP to a generally more costly and more complicated individual permit. For example, the regional conditions for the reissued NWP12 differ from the regional conditions for the 2017 NWP12. The 2021 regional conditions eliminate the prohibition from using NWP12 for projects involving the permanent loss of more than 300 linear feet of stream bed for a single and complete project. In addition, the 2021 regional conditions require a remediation plan, with the PCN, for pipeline projects completed by horizontal directional drilling or other boring methods to address “any anticipated temporary structures, fills or work within waters of the U.S. necessary for the remediation of inadvertent returns of drilling fluids.”

As a further consideration, projects intending to use an NWP should evaluate whether the NWP’s applicability criteria have changed recently and whether the proposed project still is 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. This is especially true if the prospective permittee does not have a written verification letter, or the permitted activity was not commenced, or under contract to commence, by March 14, 2021.

Lastly, while use of many NWPs, including NWP12, historically have been suspended in Pennsylvania, the most recent NWP final regional conditions allow 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 increased flexibility to use NWPs rather than a PASPGP in the western part of Pennsylvania. However, reliance on the NWPs is not guaranteed because the Pittsburgh District still has discretion to select the permitting tool it considers to be the most effective when evaluating a specific action.

3. 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 its 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).

4. Section 401 Conditional State Water Quality Certification for NWPs

On December 15, 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 at Regional General Condition II.H, as summarized below:

  • All necessary environmental permits or approvals must be obtained from the Pennsylvania Department of Environmental Protection and all necessary environmental assessments must be submitted to DEP before beginning any activity authorized by the Corps under an 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.

5. Chapter 105

On December 5, 2020, DEP 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 to demonstrate that the project’s impacts to regulated waters have been minimized or avoided. For example, the alternatives analysis must consider “reasonably foreseeable future development” within the watershed. DEP intends to issue a technical guidance document regarding the Chapter 105 alternatives analysis by July 2021 to enhance the existing alternatives analysis in the Chapter 105 Environmental Assessment form.

The proposed revisions would also provide specificity regarding the application requirements for cumulative impact analyses and water dependency and stormwater management demonstrations. In addition, applicants would be required to develop a compensatory mitigation plan for unavoidable impacts to ensure “no net loss” of wetland resources. If finalized as proposed, the rulemaking will likely increase 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. Natural gas project designers and developers should stay abreast of these regulatory changes to anticipate and prepare for new requirements and avoid unnecessary delays.

For the full article, click here.

WV smooths the path for on-site solar energy facilities

Renewables Law Blog

(By Moore Capito and Robert Stonestreet)

The West Virginia Legislature has passed a bill that will make it easier for retail electric customers to establish on-site solar energy facilities.  Sponsored by Babst Calland Shareholder and House Judiciary Chairman Moore Capito, House Bill 3310 states that solar energy facilities designed to power only the premises where they are located are exempt from the jurisdiction of the West Virginia Public Service Commission under certain conditions.  This means that the PSC is not involved in regulating the rates and other aspects of qualifying solar facilities.  To be exempt, power generated from such a facility must be subject to a “power purchase agreement” with the retail electric customer.  A PPA generally governs the design, permitting, financing, and installation of a solar facility at a retail electric customer’s location by a solar energy developer.  Under a PPA, a retail customer purchases the power generated by the facility at an agreed upon rate.  In addition to receiving revenue generated from the energy produced, the developer is also eligible for renewable energy tax credits.  The bill is intended to promote solar installations at residences, small businesses, and industrial sites by allowing third-party developers to design and finance the installation of solar panels and then sell the electricity generated to the consumer.

To be exempt from PSC jurisdiction, an on-site solar facility must be “located on and designed to meet only the electrical needs of the premises of a retail electric customer” and be designed not to exceed certain generation limits: 25 kilowatts for residential customers; 500 kilowatts for commercial customers; and 2,000 kilowatts for industrial customers.  The legislation also establishes a cap on the aggregate amount of exempt on-site solar energy generation within West Virginia.  The total of all solar PPAs and net metering arrangements cannot exceed 3% of an electric utility’s aggregate customer peak demand in the state during the previous year.  Under a net metering arrangement, a retail customer who generates more power through an on-site solar facility than the customer uses will receive a credit for the excess power that is sent out to the grid rather than consumed.

Before entering into a PPA for an on-site solar facility, a retail customer must notify the electric utility.  If the electric utility does not notify the customer within 30 days that a cap has already been reached, the customer may proceed with the project.

If you have any questions about House Bill 3310 or solar development in West Virginia, please contact Robert M. Stonestreet (681.265.2117; rstonestreet@babstcalland.com) or Moore Capito (681.205.8953; mcapito@babstcalland.com).

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Winds of Change: Biden’s Impact on Superfund

The Legal Intelligencer

(by Alana Fortna)

Introduction

The great Bob Dylan sang, “may you have a strong foundation when the winds of changes shift.” His song may have been released nearly 50 years ago, but his lyrics ring true today in many facets of life, even environmental law and policy. President Joe Biden stayed true to his word on combatting climate change when he signed an executive order before the dust settled on his luggage in the White House. In this article, I discuss these policy changes and my opinions on what this could mean for Superfund sites.

Executive Order on Tackling the Climate Crisis at Home and Abroad

On Jan. 27, Biden signed an executive order regarding climate change and related environmental justice concerns. The executive order speaks to taking a “governmentwide” approach to the climate crisis.

Section 202 establishes the White House Office of Domestic Climate Policy headed by a National Climate Advisor with a National Climate Task Force consisting of Executive Branch agency heads. Pursuant to Section 211, within 120 days of the order, each federal agency must submit a draft action plan to the task force describing efforts to bolster adaption and increase resilience to climate change. To ensure follow-through, agencies must submit annual progress reports on their implementation efforts.

Section 216 provides that within 90 days of the order, the Secretary of the Interior must submit a report to the task force recommending steps to take, working with state, local, Tribal, and territorial governments, agricultural and forest landowners, fishermen, and other stakeholders, to conserve at least 30% of our lands and waters by 2030. The executive order also calls for the Secretary of Commerce to “collect input from fishermen, regional ocean councils, fishery management councils, scientists, and other stakeholders on how to make fisheries and protected resources more resilient to climate change, including changes in management and conservation measures …” This 30% conservation goal could hasten the EPA’s expectations for remedial action at Superfund sites situated in and around stakeholder communities, such as Tribal lands that rely on fish and wildlife for sustenance.

Section 219 calls on agencies to “make achieving environmental justice part of their missions by developing programs, policies, and activities to address the disproportionately high and adverse human health, environmental, climate-related and other cumulative impacts on disadvantaged communities …” Additionally, in Section 222, the executive order outlines key responsibilities for the EPA: strengthen enforcement of environmental violations with disproportionate impact on underserved communities and create a community notification program to monitor and provide real-time data to the public on current environmental pollution in places with the most significant exposure.

  • Potential Impacts of Biden’s New Policies on Superfund Sites

The discussion of climate change and environmental justice in the context of Superfund is not novel. In 2011, the EPA issued its first policy statements on climate change adaptation and coordination with Tribal governments. The new Biden policies mean a heightened focus on Superfund sites with potential impacts during: site listing, remedial activity, the five-year review and litigation.

  • Potential Impacts of Biden Policies on Site Listing

The EPA uses the hazard ranking system (HRS) to assess a site for inclusion on the National Priorities List (NPL). The HRS focuses on risk and determines a score based on four pathways. HRS guidance manual (HRS manual), OSWER Directive 9345.1-07 (Nov. 1992), at p. 1. The four pathways are: ground water migration, surface water migration, soil exposure and subsurface intrusion; and air migration. The risk factors are grouped into three categories: likelihood of release, waste characteristics, and targets affected by the release. HRS Manual, at p. 2. “Targets consist of people, sensitive environments, fisheries, and resources that potentially can be affected by a site.” HRS Manual, at p. 24. The “targets factor” is the only category with no maximum value.

The executive order policies could bleed into the EPA’s scoring process under the HRS. For example, one of the pathways considers “subsurface intrusion” from contaminated groundwater or saturated soil below buildings. Even if vapor intrusion impacts are not documented, the EPA must evaluate the potential for future exposure. See Technical Support Document for U.S. EPA’s Final Rule: Addition of a Subsurface Intrusion Component to the Hazard Ranking System (Nov. 2016), at p. 20. The EPA considers the distance between the highest known point of subsurface contamination and the lowest point of a building. Some sites with contaminated groundwater may be in areas impacted by tidal flow or recharge from rivers. The depth to water table may be decreasing as the groundwater level is impacted by extreme storm events and tidal flows. Depending on the time of year and the depth to groundwater, the question of “potential for future exposure” could become more complicated and problematic.

Additionally, the EPA considers the likelihood of a release of contaminants. Major storm events in certain regions of the country influence storm surges and flows in rivers, particularly those that have tidal influence. This can impact sediment distribution in a contaminated river, which can result in the release or re-suspension of contaminated sediment. Rising sea water levels and corresponding influence on rivers could also impact source control measures and lead to recontamination. Also, any contaminated sites located in and around Tribal territories or waterbodies with critical fisheries used for sustenance fishing may face heightened scrutiny under the “targets factor,” which has no maximum value.

  • Potential Impacts of Biden Policies on Ongoing Remedial Activity and Five-Year Review

Pursuant to CERCLA Section 121, a remedial action must: be protective of human health and the environment, comply with applicable or relevant and appropriate requirements of federal and state law, be cost-effective, utilize permanent solutions and alternative treatment technologies or resource recovery technologies to the maximum extent practicable, and be preferential to treatment as a principal element. See 42 U.S.C. Section 9621(a) and (b); EPA Guide to Selecting Superfund Remedial Actions, OSWER Directive 9355.0-27FS (April 1990). The National Contingency Plan (NCP) defines nine criteria to compare remedial alternatives and select a remedy that satisfies these requirements. At least three of the NCP criteria could be impacted by the executive order: long-term effectiveness and permanence of the remedy, reduction of toxicity, mobility or volume, and community acceptance.

We could see climate change impact the agency’s consideration of the long-term effectiveness and permanence of the remedy. The agency may be focused on extreme weather events in a region and may want the party performing the remedial design to evaluate this and consider whether any modifications/additions are needed.

The reduction of toxicity, mobility or volume through treatment criterion focuses on the anticipated performance of the treatment technologies. If a site is adjacent to a river that has become more prone to flooding, then a treatment technology may need to account for future transition into a veritable floodplain. If a site involves contaminated groundwater, and that groundwater is influenced by a tidal river, does this need to be accounted for differently under the backdrop of climate change? Does investigation and modeling of groundwater need to account for potential future changes in groundwater flow and levels from climate change? It is possible these difficult questions could become a more regular part of the remedial alternative analysis.

As to community acceptance of a remedial alternative, the executive order focuses on environmental justice and calls for more active engagement with state, local and Tribal government stakeholders. While public notice/comment has always played a role in the Superfund program, the executive order heightens this involvement. It is possible we will see updated policies and regulations making participation by identified stakeholders more deliberate and occur earlier in the process. The adage of “too many cooks in the kitchen” comes to mind here.

Under CERCLA Section 121(c), remedial actions are subject to review every five years from initiation of the remedial action. If the EPA determines that further action is necessary during the five-year review, then it will require such action. Given this mandatory review process, climate change and its potential impacts on the permanence and effectiveness of a selected remedy is a possible concern that is not easily managed.

  • Potential Impacts of Biden Policies on Litigation

The executive order calls on the EPA to: strengthen enforcement of environmental violations with a disproportionate impact on underserved communities and create a community notification program to monitor and provide real-time data to the public on current environmental pollution in places with the most significant exposure. Since many contaminated sites are situated in or adjacent to underserved communities or Tribal lands, it is possible that the EPA will increase its information gathering and inspection efforts under CERCLA Section 104(e), as well as its notification of liability. Because the executive order boasts a sense of urgency and calls for heightened scrutiny in these areas, this could also result in an uptick in enforcement action by the EPA at contaminated sites. If potentially responsible parties (PRPs) are not signing up fast enough as work parties for remedial investigation or design, the EPA may be quicker on its draw with its enforcement options.

Additionally, entities tied to contaminated sites could see an uptick in private litigation, including cost recovery actions, toxic tort cases, and citizen suits. It is not just a matter of increased regulation and oversight of contaminated sites and industrial operations. It is also a matter of increased litigation that is borne out of these policy changes. The executive order calls on the EPA to establish a more robust and timely notification system regarding environmental pollution. Such heightened transparency regarding existing pollution and exposure to such pollution could lead to increased litigation alleging health effects, property damage and diminution in property value.

We could also see an increase in “private attorney general” actions in the form of citizen suits under various federal environmental statutes. There is public interest in climate change impacts and environmental justice. Such litigation may arise despite what is already being done to address the existing pollution and that remedial measures take time to implement. Regardless of whether a citizen suit grounded in climate change has teeth, increased litigation is costly and disruptive for PRPs trying to remediate a contaminated site and industrial facilities trying to operate within the confines of the applicable regulatory regime and their existing permits.

For the full article, click here.

Reprinted with permission from the April 8, 2021 edition of The Legal Intelligencer© 2021 ALM Media Properties, LLC. All rights reserved.

How alternative legal service providers can add efficiencies, create value

Smart Business 

(by Sue Ostrowski featuring Chris Farmakis)

With companies consistently scoring law firms an average of just 2 to 3 (on a scale of 10) on the value they receive for legal services, businesses and firms alike are increasingly employing the value-added services of alternative legal service providers (ALSPs).

“Alternative legal service providers are a legitimate avenue to unlock enhanced value and services for clients, and the use of this model is increasing,” says Christian Farmakis, shareholder and chairman of the board at Babst Calland, and president of its affiliated ALSP, Solvaire. “The intersection of the rise in ALSPs, coupled with the use of technology, allows ALSPs to increase efficiencies and reduce legal costs.”

Smart Business spoke with Farmakis about how ALSPs can help businesses get more value from their legal providers.

Why is the use of ALSPs on the rise?

Businesses are continuing to face unprecedented financial and legal challenges. As a result, companies are placing constant demands and pressure on all vendors, including their legal firms, to deliver more value. Well-run ALSPs allow in-house counsel and law firms to work more efficiently and focus on higher-priority work.

The traditional law firm model is based on billable hours. And while businesses generally like the quality of service they receive, they don’t believe they are always getting value based on the type of legal work being performed. While it makes sense to assign complex and specialized legal work to seasoned associates or law firm partners, other services, such as discovery, diligence and technology-enabled tasks should be delegated to others with specific skills and defined pricing models. This is where ALSPs come in. Both clients and their law firms see the value proposition in ALSPs, which are increasingly gaining traction, moving beyond ‘just’ a cost-savings measure to becoming a true industry service partner.

How do ALSPs function?

ALSPs can be independent of a law firm, owned by it, or have an affiliation with a firm, such as Babst Calland and its ALSP, Solvaire. Services include those traditionally performed by law firm associates, such as due diligence, document management and discovery, but at a lower rate structure — not necessarily driven by the billable hour — and a service-oriented delivery service model. Usually there are licensed attorneys overseeing the work.

Clients don’t care how a project gets done. They are looking for fast, efficient, accurate service, with budget certainty. They are demanding this service, and law firms that associate with ALSPs will be the winners.

How is technology helping ALSPs increase the value they provide?

Legal technology used by ALSPs brings efficiencies, and artificial intelligence (natural language processing and machine learning) can help identify relevant information within documents more quickly than a full manual review. Compared to an attorney doing a full manual review of documents in a diligence context, using ‘legal tech’ can decrease the review time by as much as 40 to 60 percent. As such, ALSPs can often cover more information and provide a more complete diligence work product.

Anyone can license legal technology, but you need to know how to properly use it to maximize its benefits. Project management skills, critical to the success of any legal technology services project, are typically not germane to a lawyer’s core competence. Those that can harness the legal technology and provide sound project management skills will excel in this new marketplace.

How can business owners approach their legal provider about engaging with an ALSP?

Ask if the law firm offers alternative legal services, what kind of legal technology they use, and how. Get testimonials from others who have engaged with ALSPs who can speak to the value and quality.

If the firm uses an ALSP, ask if they met deadlines, and if they were happy with the quality, reporting and security. Finally, ask if the ALSP worked seamlessly with the lead law firm managing the overall legal project.

Clients are expecting a higher quality of service for the price they pay. ALSPs are not competitors of law firms; they are partners that can add value through the services they provide.

For the full article, click here.

For the PDF, click here.

Pennsylvania Governor Announces PULSE Project to Provide 50% of Commonwealth Government’s Electricity Consumption

Renewables Law Blog

(By Varun Shekhar)

On March 21, 2021, Pennsylvania Governor Tom Wolf announced the Pennsylvania “Project to Utilize Light and Solar Energy” (“PULSE”), a renewable energy project consisting of seven new solar farms totaling 191 MW in capacity to be constructed in various counties across the Commonwealth by 2023. Upon completion, the PULSE Project is expected to provide upwards of 360,000 MWh of electricity each year, estimated to be enough to supply nearly half of the state government’s annual electricity consumption. Billed as the largest solar commitment by any government in the US, 16 Commonwealth agencies are expected to use electricity generated from the PULSE Project, including, among others, the Pennsylvania Departments of Environmental Protection, Conservation and Natural Resources, Transportation, and Health, as well as the Game and Fish & Boat Commissions.

Part of Governor Wolf’s “GreenGov” initiative, the PULSE Project is a public-private partnership between the Commonwealth, Lightsource BP, and Constellation. Under the project, Lightsource BP will finance, construct, own and operate the solar farms, which will be built in Columbia, Juniata, Montour, Northumberland, Snyder, and York Counties.  Pursuant to a Power Purchase Agreement, Constellation, an electricity supplier, will purchase electricity generated from the solar farms and distribute it to the Commonwealth’s participating agencies under a 15-year fixed-price supply agreement.  Expected benefits of the PULSE Project include an estimated reduction of 157,000 metric tons of carbon dioxide emissions each year and creation of over 400 jobs.

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Department of Energy Announces Plans to Reduce Cost of Solar Energy Technologies by 60 Percent

Renewables Law Blog

(By Ashleigh Krick)

On March 25, 2021, the Department of Energy (DOE) announced plans to reduce the cost of solar energy technologies by 60% over the next 10 years by setting new cost targets and establishing funding opportunities.  The DOE accelerated its cost target for utility-scale solar by establishing a new goal of driving down the current cost of 4.6 cents per kilowatt-hour (kWh) to 3 cents/kWh by 2025 and 2 cents/kWh by 2030.  The DOE also announced $128 million in funding and initiatives aimed at lowering costs, improving performance, and speeding up the deployment of solar energy.  Specifically, the DOE announced funding for advancing solar photovoltaic (PV) materials and a prize competition for perovskite technologies, increasing the lifetime of silicon-based PV systems, and supporting several concentrating solar-thermal power projects.    The DOE stated that in order to meet the Biden Administration’s goal of 100% clean electricity by 2035, lowering the cost of solar energy technologies is needed to accelerate investment and deployment.  More information about DOE’s funding opportunities can be found here: https://www.energy.gov/eere/solar/funding-opportunities.

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‘What’s Up, John?’: A Refresher on the ‘Upjohn’ Standard When Interviewing a Corporate Client’s Employees

The Legal Intelligencer

(by Alex Farone)

As outside counsel for a company, a concern is always whether the corporation will be named as a respondent or defendant in litigation. When those situations do arise, counsel should pay particular attention to the nuances of the attorney-client privilege when beginning an investigation. Many attorneys make assumptions regarding the applicability of the attorney-client privilege when dealing with the company’s employees. Those assumptions, in certain circumstances, can result in discoverable communications. Because in-house counsel serve a dual role of providing legal advice as well as business advice, a more careful analysis must be given to their communications with employees. Therefore, this article focuses solely on typical communications to and from outside counsel when performing an investigation.

In Pennsylvania, the attorney-client privilege operates as a two-way street to protect client-to-attorney and attorney-to-client communications made for the purpose of obtaining or providing legal advice. When the client is a company, do all employees count as an extension of the client such that conversations with them would be privileged? In most situations, they do not.

For a corporate client, the attorney-client privilege extends to communications between the attorney and the corporation’s agents or employees authorized to act on the corporation’s behalf. This is typically interpreted as directors, officers and management employees.

Until the U.S. Supreme Court’s decision in Upjohn v. United States, 449 U.S. 383 (1981), some courts used to adhere to the so-called “control group test,” a similar but restricted version of the “authorized to act” standard used in Pennsylvania. The control group test only applied the privilege to communications made to officers or agents of the corporation responsible for directing the corporation’s actions in response to legal advice. However, the control group test overlooks the fact that the privilege is also meant to protect information given to the attorney. In rejecting the control group test, the Supreme Court created the rule that guides attorneys’ interviews with lower-level employees.

Upjohn recognized that, in many instances, an attorney cannot obtain the information it needs to defend a suit or make a strategy recommendation without speaking to lower-level, nonmanagement, rank and file employees. Aside from a termination or disciplinary issue, these “boots on the ground” employees often have first-hand knowledge of key information about a claim or defense. But, are these conversations privileged? It depends.

Pennsylvania courts have adopted this Upjohn rationale: If the employee possesses facts that the attorney needs in order to advise the corporate client, the communication may be privileged. Often the lower level employees alone will have information vital to counsel’s advice to the corporation. In order for this privilege to apply, the information relayed in the communication must be information known to the employee by virtue of his position or within the scope of his employment. For example, interviewing a new employee whose former employer accuses the corporation of tortious interference involving a restrictive covenant would be a privileged communication. On the other hand, if a corporation is faced with a toxic tort claim for water pollution affecting a community and an employee happens to live in that community, the privilege protection would not apply if the attorney questions the employee on his personal experience with his water because this is not information related to the scope of his employment.

The safest course of action to preserve the attorney-client privilege in conversations with a lower-level employee is to begin the communication with an “Upjohn warning”—a distant step-cousin to the Miranda warnings. An Upjohn warning should state that the attorney represents the corporation and not the interviewed employee, inform them that the corporation holds the attorney-client privilege, confirm that the conversation is occurring because the employee has information not generally available elsewhere and that the attorney needs to advise the corporate client, and instruct the employee not to share the substance of the communication except to other employees on a need-to-know basis. Though no Pennsylvania court has officially held that Upjohn warnings are always required to preserve the attorney-client privilege in these situations, it has been referenced in dicta in multiple Pennsylvania cases over the last five years. Therefore, it would be in the attorney’s best interest to give the Upjohn warnings out of an abundance of caution—if nothing else, it sets clear expectations for the interviewed employee and will allow them to understand the scope and purpose of their interaction with counsel.

For the full article, click here.

Reprinted with permission from the March 25, 2021 edition of The Legal Intelligencer© 2021 ALM Media Properties, LLC. All rights reserved.

Proposed Bipartisan Legislation Would Expand Investment Tax Credit to Standalone Energy Storage Projects

Renewables Law Blog

(By Ben Clapp)

A bipartisan group of federal lawmakers recently introduced a bill aimed at jumpstarting growth in the energy storage sector.  If enacted, the Energy Storage Tax Incentive and Deployment Act of 2021 would broaden the investment tax credit program, which is widely credited with stimulating considerable growth in the solar sector, to include standalone energy storage projects.  The tax credit is currently only available for energy storage projects that are charged directly from other clean energy projects that qualify for the credit, such as solar.  In contrast, the proposed legislation would revise the investment tax credit so that it covers residential battery systems as well as large commercial and utility-scale storage projects, including batteries, pumped hydropower, hydrogen storage, thermal energy storage, and regenerative fuel cells, regardless of whether they are coupled with a qualifying solar project.  Expanding the credit to standalone projects is intended to drive investment to storage projects with greater charging flexibility, potentially allowing storage systems to access a larger piece of the energy market.

The large-scale deployment of domestic energy storage systems is largely viewed as critical to the continued growth of the renewables sector, as well as a key component of achieving the nation’s energy reliability and resiliency goals.  While it may be unrealistic to expect that extension of the tax credit to energy storage projects would result in the stratospheric levels of growth enjoyed by the solar industry over the past decade, the tax credit’s proven track record for stimulating renewables development has energy storage advocates hopeful that the proposed legislation would drive significant investment in the sector, resulting in a meaningful increase in energy storage deployment.

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U.S. Department of Energy Funding Flow Battery R&D

Renewables Law Blog

(By Christopher Hall)

The Department of Energy (DOE) recently announced that it will be awarding up to $20Million to support research and development of emerging flow battery storage technology.  The DOE’s announcement can be found here.  Battery storage has been identified by the DOE as an integral piece of the puzzle to modernizing our grid and enabling the deployment of additional renewable energy resources.  Regarding flow battery technology, the DOE stated that “while lithium-ion batteries are commonly used in electric vehicles and portable devices for various applications, flow batteries are particularly well-suited for grid storage needs.”  The DOE aims to incentivize development of scalable and cost-effective “mid-sized” flow battery systems (between 10 to 100kWh).  This funding opportunity follows several other recent announcements supporting the growth of energy storage, including the DOE’s Energy Storage Grand Challenge, a Department-wide program to accelerate the development, commercialization, and utilization of next-generation energy storage technologies and sustain American global leadership in energy storage, and a recently proposed Federal Bill to introduce a federal tax credit for energy storage, similar to those available to solar and wind projects.

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