The Legal Intelligencer
(by Gary Steinbauer)
Changes are coming to federal and state air quality regulations affecting new and existing upstream and midstream natural gas operations. Congress is in the midst of finalizing legislation to undo a Trump administration Clean Air Act (CAA) rule, which rolled back Obama-era CAA requirements. Separately, the U.S. Environmental Protection Agency (EPA) has begun developing rules for existing air emissions sources within the natural gas sector. At the state level, the Pennsylvania Department of Environmental Protection (PADEP) is poised later this year to finalize its own set of air regulations for existing sources within the natural gas sector. Any of these regulatory developments alone would be noteworthy; combined, they likely signal increased oversight, scrutiny, and regulation of new and existing air emission sources within Pennsylvania’s natural gas sector.
Congress Set to Disapprove Trump EPA Oil and Natural Gas CAA Rule
In March 2021, Congress invoked its rarely used Congressional Review Act (CRA) authority to rescind a Trump EPA rule that excluded emission sources in the transmission and storage segments and rescinded methane emission limits for the production and processing segments in New Source Performance Standards for the Crude Oil and Natural Gas Industry at 40 C.F.R. Part 60, Subparts OOOO and OOOOa (NSPS). Oil and Natural Gas Sector: Emissions Standards for New, Reconstructed, and Modified Sources Review, 85 Fed. Reg. 57018 (Sept. 14, 2020). Reinstating the NSPS methane requirements means that EPA would be statutorily required to regulate methane emissions from existing affected sources within the natural gas sector. See 42 U.S.C. § 7411(d)(1).
While U.S. Senate voted to pass a joint resolution revoking the Trump administration’s revisions to these NSPS in April 2021, a vote in the House of Representatives has yet to be scheduled. News outlets are reporting that the delay in the House is because EPA is asking for a debate on the resolution before bringing it to a vote. Emma Dumain and Kelsey Brugger, E&E News, Why is the House taking so long to undo Trump methane rule? (May 25, 2021). According to this E&E News coverage, EPA reportedly stepped in to encourage the Committee to create a legislative record on the resolution so that Congressional revocation does not unintentionally constrain EPA’s ability to regulate methane emissions from the natural gas sector in the future.
With Democrats holding a majority in the House, it likely is only a matter of time before a CRA-based revocation of the Trump administration’s NSPS revisions becomes law. Legally, a CRA-based revocation treats the rule in question “as though such rule had never taken effect” and prevents EPA from promulgating a new rule that is “substantially the same,” absent express Congressional authorization.
EPA Launches Efforts to Issue CAA Rules for Existing Oil and Natural Gas Sources
While the CRA process unfolds in Congress, EPA has started implementing a directive included in a sweeping inauguration-day Executive Order issued by President Joseph R. Biden Jr. See Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis, E.O. 13390 (Jan. 20, 2021) (E.O. 13390). E.O. 13390 requires EPA to, among other things, consider proposing “new regulations to establish comprehensive standards of performance and emission guidelines for methane and volatile organic compound [VOC] emissions from existing operations in the oil and gas sector, including the exploration and production, transmission, processing, and storage segments, by September 2021.”
In May 2021, EPA launched a public docket to accept comments before it proposes a rule establishing methane emission requirements for new and existing sources within the oil and natural gas sector. In addition, EPA scheduled training sessions for communities, tribes, or small businesses that occurred in late-May 2021, and it has scheduled three public listening sessions in mid-June 2021, each of which focus on different stakeholder groups. Following these outreach efforts, EPA will have roughly three months to issue a formal proposed rule regulating methane and VOC emissions from existing sources within the oil and natural gas sector by the September 2021 target in E.O. 13990.
PADEP Nears Finish Line On Existing Source Regulations
PADEP is finalizing a set of requirements adopting Reasonably Available Control Technology (RACT) requirements and limits to control VOC emissions from existing sources within the oil and natural gas sector. Control of VOC Emissions from Oil and Natural Gas Sources, 50 Pa. B. 2633 (May 23, 2020). PADEP’s proposed RACT rule is based on Control Technique Guidelines (CTGs) for the Oil and Gas Industry that the Obama EPA issued in October 2016. CTGs are not themselves regulations, but rather, they are EPA’s recommendations to states and local air agencies as they develop RACT requirements for existing sources that are later included in State Implementation Plans (SIPs). The CAA requires states to submit SIP revisions to EPA for sources covered by CTGs. See 42 U.S.C. § 7511a(b)(2)(A).
PADEP’s proposed CTG RACT rule would affect many different types of air emission sources involved in natural gas operations. While PADEP indicates that the proposed rule is intended to reduce VOC emissions, it acknowledges, as EPA did when it issued the original NSPS OOOOa in 2016, that methane emissions are reduced incidentally as a co-benefit. Notably, PADEP’s proposed CTG RACT rule is more stringent than what EPA recommended as RACT in the CTGs. For storage vessels and unconventional well sites installed on or after August 10, 2013 and a storage vessel at a gathering and boosting station, natural gas processing plant, or a facility within the natural gas transmission and storage segment, PADEP proposes a VOC applicability threshold of 2.7 tons per year, less than half of EPA’s recommended applicability threshold of 6.0 tons of VOC per year. In addition, PADEP proposes to require more stringent leak detection and repair requirements, consisting of monthly audio, visual, and olfactory inspections and quarterly instrument monitoring.
PADEP’s proposed RACT CTG rule has garnered significant interest by a wide-range of stakeholders. According to PADEP’s Air Quality Technical Advisory Committee website, PADEP received more than 4,000 different comments from over 36,000 commenters. PADEP currently is drafting responses to these comments and projects that it will issue a final rulemaking package later in 2021. PADEP has pledged to finalize the CTG RACT rule in 2021.
Conclusion
Expected Congressional action and overlapping EPA and PADEP air regulations are likely to impose additional regulatory burdens and costs on Pennsylvania natural gas operators. Potentially stringent regulatory requirements and increased scrutiny may also present operational risks for natural gas operators. Upstream and midstream natural gas operators must remain informed, engaged, and vigilant, as the air emissions regulatory landscape could be contentious and uncertain over the next several years.
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Reprinted with permission from the June 10, 2021 edition of The Legal Intelligencer© 2021 ALM Media Properties, LLC. All rights reserved.
The Legal Intelligencer
(by Molly Meacham)
Even in ordinary times, keeping up with an ever-changing employment law landscape is a compliance challenge for businesses. The extraordinary circumstances of the COVID-19 pandemic sparked unprecedented compliance challenges for employers, including workplace safety issues, additional temporary leave requirements, and interpreting existing obligations through the lens of COVID-19.
Compliance obligations for employers are continuing to evolve in 2021. Presidential administration change and a change in the majority party in the U.S. Senate each typically cause new and revised legislation and regulations. Combined with the ongoing pandemic, the result is continued significant alteration to the legal and regulatory framework that will impact employers in 2021 and beyond. These developing issues include worker classification under the Fair Labor Standards Act (FLSA), a temporary expansion of the Consolidated Omnibus Budget Reconciliation Act (COBRA) under the American Rescue Plan Act of 2021 (ARPA), and COVID-19 workplace safety issues relating to fully vaccinated employees.
FLSA Independent Contractor Rule Withdrawn
One of the most important baseline employment-related determinations a business can make is whether a worker is properly classified as an employee or an independent contractor under the FLSA. Worker misclassification is a frequently-litigated issue that represents significant legal exposure for businesses, as damages for misclassification can include retroactive application of minimum wage and overtime requirements, the value of employee benefits that were not provided, any legally-mandated sick time, or self-employment tax paid by the worker.
In the last weeks of the Trump administration in early 2021 the Department of Labor (DOL) issued a Final Rule seeking to clarify the independent contractor test and make it easier to identify workers covered by the FLSA. The traditional independent contractor test contains six non-exclusive factors which the DOL’s Wage and Hour Division and the federal courts evaluate on a case-by-case basis to determine whether a worker is, as a matter of economic reality, dependent on the employer for work or in business for themselves, with no single factor considered dispositive. The Rule’s new test elevated two of those factors to “core factors” intended to carry the most weight in the analysis: (1) the nature and degree of control over the individual’s work, and (2) the worker’s opportunity to earn profits or incur losses based upon their contributions. Only if those factors were inconclusive were other traditional factors to be considered, in particular the worker’s level of skill or expertise, the permanency of the relationship, and whether the workers are an integral part of the business.
Two months into the Biden administration, in March 2021 the DOL delayed the Final Rule’s implementation and proposed its withdrawal, which was finalized on May 6, 2021. See 86 FR 24305-6. The DOL received multiple comments both in favor of and opposed to withdrawing the Rule, and decided to withdraw the Rule on the basis that it is “inconsistent with the FLSA’s text and purpose,” and would depart “from longstanding judicial precedent.” Id. at 24307. The DOL also disagreed with the Rule’s elevation of two core factors over other potential factors, which it believed could cause confusion and disruption for businesses and workers and lead to inconsistent outcomes. Id. at 24308. The DOL stated that it does not currently intend to propose or issue replacement regulatory guidance. As the Rule never actually took effect, following its withdrawal, businesses should not alter their analysis of independent contractor issues based upon the “core factors” approach of the Rule. Instead, businesses should continue to be guided by the application of existing judicial precedent, regulations and Wage and Hour Division guidance to their specific facts and circumstances.
COBRA Extension and Premium Assistance
Several laws have been passed to provide temporary relief relating to the economic impacts to businesses and individuals caused by COVID-19, including the ARPA. The ARPA included an extended period to elect COBRA coverage and a period of COBRA premium assistance, each for qualifying individuals. There are several aspects to qualification, but an individual may qualify if their employment was involuntarily terminated (except for gross misconduct) or their hours were involuntarily reduced. Eligible individuals must be notified of both the election extension and premium assistance.
For qualifying individuals first eligible for COBRA coverage on or after November 1, 2019, the ARPA allows a second extension period during which to elect COBRA coverage, beginning on April 1, 2021 and ending 60 days after a special election notice was provided to the qualifying individual. The special election notice was required to be provided to eligible individuals by May 31, 2021. The ARPA only extends the time to elect coverage and does not extend the COBRA coverage period, which is typically 18 months.
The ARPA also provides COBRA premium assistance for eligible individuals from April 1, 2021 through October 31, 2021. Employers are required to provide the premium assistance to eligible individuals, and then claim a tax credit for reimbursement. Standard COBRA notices should be updated for this period to provide information about premium assistance, and eligible individuals must also be notified when their premium assistance will expire. Again, this premium assistance does not extend the COBRA coverage period.
Businesses should coordinate with their group health plan administrators to identify which individuals are eligible for extended COBRA coverage and premium assistance, and to ensure their COBRA notices to eligible individuals are compliant during these temporary ARPA changes. The DOL has issued model revised notices on its website, including a temporary update to the standard COBRA election notice for use through October 31, 2021.
OSHA, the CDC and Vaccinated Workers
In its existing guidance related to the COVID-19 pandemic posted in January 2021, the Occupational Safety and Health Administration (OSHA) expressly recommended that employers maintain the same protective measures for both vaccinated and unvaccinated employees. That guidance is advisory only, and that same month President Joseph R. Biden Jr. issued an executive order directing OSHA to revise its guidance on COVID-19, including considering an emergency temporary standard to provide OSHA-enforceable workplace safety rules on COVID-19.
OSHA’s emergency temporary standard related to COVID-19 was drafted but not yet finalized or publicized in May 2021 when the Centers for Disease Control and Prevention (CDC) updated their recommendations to allow people who are fully vaccinated to cease wearing a mask or physically distancing except as where required by federal, state, local, tribal, or territorial laws, rules, and regulations, including local business and workplace guidance. Although an emergency temporary standard relating to COVID-19 is still expected at some point, its release has been delayed while OSHA reviews the new CDC guidance. In the interim, the only guidance OSHA has provided to employers is that employers should refer to CDC guidance for information on measures appropriate to protect fully vaccinated workers.
CDC guidelines continue to evolve, and it is uncertain whether OSHA will wholly adopt CDC guidelines or place additional requirements on employers. Before making changes to workplace COVID-19 safety measures employers should consider any relevant state, local or other restrictions, remembering that those restrictions set a minimum standard that must be met. In addition, employers should evaluate how the CDC’s guidelines and the unique circumstances of their workplaces interact with OSHA’s General Duty Clause, which requires employers to provide their workers with a workplace free from recognized hazards that are causing or likely to cause death or serious harm. OSHA’s silence to date on a COVID-19 emergency temporary standard is not likely to go on indefinitely, and employers should remain prepared to implement updated safety measures in the coming months.
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Reprinted with permission from the June 3, 2021 edition of The Legal Intelligencer© 2021 ALM Media Properties, LLC. All rights reserved.
RMMLF Mineral Law Newsletter
(Joseph K. Reinhart, Sean M. McGovern and Casey J. Snyder)
On February 16, 2021, the Pennsylvania Commonwealth Court affirmed the Pennsylvania Environmental Hearing Board’s (EHB) decision to deny environmental groups’ petition for attorney’s fees after a settlement with the Pennsylvania Department of Environmental Protection (PADEP) in a third-party permit appeal over Sunoco Pipeline L.P.’s (Sunoco) Mariner East 2 pipeline because neither side acted in “bad faith.” Clean Air Council v. PADEP, 245 A.3d 1207 (Pa. Commw. Ct. 2021). After the plaintiffs settled the dispute at the EHB over permits issued to Sunoco for its Mariner East 2 pipeline, the plaintiffs filed an application with the EHB to recover costs and fees of the litigation totaling nearly $230,000 from Sunoco, which was not a party to the settlement. Id. at 1210. The EHB applied a stricter standard for recovering fees from a private party than in applications to recover fees from PADEP, requiring the plaintiffs to show the private party acted in “bad faith.” Id. at 1211. Under this standard, the EHB reasoned, permittees would not be “dissuaded from vigorously protecting their interests . . . in good faith.” Id. (quoting Clean Air Council v. PADEP, 2019 EHB 228, 236). Finding no bad faith, the EHB denied the plaintiffs’ application for costs and fees. Id.
The plaintiffs appealed the decision to the commonwealth court, arguing that the EHB should have applied the less stringent “catalyst test,” which would have required the plaintiffs to meet an easier standard: that the opposing party provided some benefit the fee-requesting party sought, the suit stated a genuine claim, and their appeal was a substantial or significant reason why the opposing party provided the benefit the fee-requesting party sought in the underlying suit. Id. at 1215. The court rejected the plaintiffs’ arguments and held “it was entirely within EHB’s discretion, and eminently appropriate, to apply the instant bad faith standard in deciding whether or not to impose costs and fees upon a private party permittee.” Id. at 1218 (emphasis added). Thus, the catalyst test is not the “sole and exclusive” standard the EHB may employ in cost and fee applications against a permittee under section 307(b) of the Clean Streams Law. Id. The court also determined PADEP had no standing to challenge the EHB’s decision on a costs and fees application against a third party where PADEP’s interest was entirely prospective and concerned how the EHB’s application of the bad-faith standard would be applied in future costs and fees applications.
In a separate decision, the commonwealth court upheld an EHB ruling that reduced the fees awarded to a family that challenged PADEP permits for the Mariner East 2 pipeline crossing their land. PADEP v. Gerhart, No. 107 C.D. 2020, 2021 WL 563313 (Table) (Pa. Commw. Ct. Feb. 16, 2021). The EHB in 2019 held that PADEP misclassified a wetland on the Gerhart’s property and that Sunoco had to conduct additional restoration of the wetland after completing the pipeline’s construction under Sunoco’s approved restoration plan. Id. at *1. The EHB held Sunoco to the bad-faith standard and PADEP to the catalyst test in parceling out who was responsible for the reduced legal fee award to the plaintiff. Following the same logic as its ruling in the Clean Air Council case, the court affirmed that the EHB had the discretion to apply both standards in awarding fees, charging no fees to Sunoco and $13,135.77 in fees to PADEP. Id. at *2–3.
On March 18, 2021, the plaintiffs filed an appeal with the Pennsylvania Supreme Court from the February 16, 2021, commonwealth court decision affirming the EHB’s denial of their request for attorney’s fees. See Petition for Allowance of Appeal, Clean Air Council v. PADEP, No. 131 MAL 2021 (Pa. Mar. 18, 2021). PADEP has also appealed the ruling that it did not have standing. See Clean Air Council v. PADEP, No. 132 MAL 2021 (Pa. filed Mar. 18, 2021). A date for oral argument had not been scheduled as of May 1, 2021.
Environmental Groups, PADEP Reach Settlement over Reissued General Permit
In a February 4, 2021, letter, five environmental groups asked the Pennsylvania Department of Environmental Protection (PADEP) to suspend or revoke dozens of permit approvals under recently reissued General Permit WMGR123 (General Permit). See Letter Re: DEP’s Recent Approval of 49 Authorizations Under the New General Permit WMGR123 Without Proper Public Notice (Feb. 4, 2021). The General Permit, created in 2010, provides for the “processing, transfer and beneficial use of oil and gas liquid waste to develop or hydraulically fracture an oil or gas well.” General Permit WMGR123 (as amended Mar. 14, 2012). The General Permit expired on October 4, 2020, but was extended to January 4, 2021, pending PADEP’s planned renewal. PADEP began the process of updating and renewing the General Permit in 2020, and published notification on December 19, 2020, that a new WMGR123 was approved and would become effective January 4, 2021. See 50 Pa. Bull. 7249 (Dec. 19, 2020).
The groups alleged that PADEP failed to follow public notification requirements required under both the reissued General Permit and Pennsylvania regulations at 25 Pa. Code § 287.642(c) for 49 General Permit renewal applications for existing permits. Specifically, the groups alleged PADEP granted 49 total General Permit renewals on December 23, 2020, and January 4, 2021, without providing any public notice, or with providing public notice but under the previous version of the General Permit, despite the new General Permit becoming effective on January 4, 2021. Before any appeals were filed, PADEP and the environmental groups entered into a stipulation of settlement under which PADEP agreed to hold an additional 60-day public comment period and the environmental groups agreed not appeal any of the General Permit approvals based on public notice procedures. See Stipulation of Settlement (Feb. 16, 2021). PADEP published notice of the 60-day public comment period on March 20, 2021, which closed on May 19, 2021. See 51 Pa. Bull. 1535 (Mar. 20, 2021). The groups subsequently filed appeals of six General Permit authorizations with the Pennsylvania Environmental Hearing Board.
Editor’s Note: The reporters’ law firm is representing two companies whose authorizations have been appealed.
Pennsylvania Democrats Granted Intervention in Lawsuit Challenging Delaware River Watershed Drilling Ban
On February 25, 2021, by a 4-0-1 vote, the Delaware River Basin Commission (DRBC) amended its regulations to ban the drilling of unconventional wells in the Delaware River Basin. See News Release, DRBC, “New DRBC Regulation Prohibits High Volume Hydraulic Fracturing in the Delaware River Basin” (Feb. 25, 2021). During the special meeting, the United States abstained from the vote, but indicated support for the result, while the vote was unanimous from the state commissioners.
Prior to the amendment to the Basin regulations, Senator Gene Yaw (R-23), Senator Lisa Baker (R-20), and the Pennsylvania Senate Republican Caucus filed a lawsuit to overturn the de facto moratorium that had been in place since 2010. See Yaw v. DRBC, No. 2:21-cv-00119 (E.D. Pa. filed Jan. 11, 2021). The DRBC alleged it maintained its authority to prohibit construction or operation of natural gas wells within the Basin as a valid exercise of its power to regulate “projects” utilizing “water resources.” Delaware River Basin Compact § 3.8 (1961). The lawsuit asserts several counts, including constitutional claims relating to eminent domain, regulatory takings, and the Republican Form of Government Clause (Guarantee Clause), and an ultra vires claim regarding the DRBC’s authority over the moratorium.
On March 12, 2021, Senator Steve Santarsiero (D-10) was joined by Democratic colleagues, including the Democratic Caucus of the Pennsylvania House of Representatives, to intervene as defendants in the lawsuit. In one-page orders from U.S. District Court for the Eastern District of Pennsylvania, the court allowed the Democratic intervenors to be added as defendants in the case on March 19, 2021, and in a second order, relieved them of any obligation to respond to the initial complaint on March 24, 2021. The intervenors and the DRBC filed motions to dismiss for lack of jurisdiction and failure to state a claim on April 15, 2021, after the plaintiffs amended their complaint on March 31, 2021, to reflect the DRBC’s new regulations prohibiting unconventional wells. See Motion to Dismiss and Memorandum of Law in Support of County Intervenors’ Motion to Dismiss Amended Complaint, Yaw v. DRBC, No. 2:21-cv-00119 (E.D. Pa. Apr. 15, 2021). The motion to dismiss filed by the Democratic intervenors sets forth three main arguments for dismissing the lawsuit. First, the plaintiffs lack standing to file their lawsuit. Second, the plaintiffs’ allegation of a regulatory taking fails as a matter of law. Third, the plaintiffs’ complaint fails to plead a claim under the Guarantee Clause. The court had not ruled on the defendants’ motions as of May 1, 2021.
Chesapeake Reaches $1.9 Million Settlement Agreement with PADEP, EPA over Alleged Wetland and Stream Violations
On March 24, 2021, the Pennsylvania Department of Environmental Protection (PADEP), U.S. Environmental Protection Agency (EPA), and U.S. Department of Justice executed a consent decree with Chesapeake Appalachia, LLC (Chesapeake) to resolve Chesapeake’s alleged violations of the federal Clean Water Act and the Pennsylvania Clean Streams Law and Dam Safety and Encroachments Act associated with the alleged failure to identify and protect wetlands at 76 oil and gas well sites in Pennsylvania. See Proposed Consent Decree, United States v. Chesapeake Appalachia, LLC, No. 4:21-cv-00538 (M.D. Pa. Mar. 24, 2021). The alleged violations stem from discharges of dredged and/or fill material into waters of the United States and/or waters of the Commonwealth, creation of unauthorized encroachments, water obstructions, and issues related to earth disturbance activities, and stormwater management. Beginning in 2013 while renewing Pennsylvania Erosion and Sediment Control General Permit authorizations, Chesapeake discovered that some of its operations in Pennsylvania did not completely delineate all required wetlands or required resources. Chesapeake disclosed these sites to PADEP and EPA and, over the course of several years, the parties worked on how to bring Chesapeake back into compliance. Despite Chesapeake’s efforts to discover and report the non-compliance, PADEP and EPA declined to address the matter under their respective policies on voluntary audit and self-disclosures. Proposed Consent Decree at 7.
Under the terms of the consent decree, Chesapeake agreed to:
- pay a $1.9 million civil penalty;
- replace, restore, or enhance 25.778 acres of wetlands and 2,326 linear feet of streams;
- institute a compliance assurance program to ensure its facilities operate in compliance with federal and state law; and
- pay greater stipulated penalties than normally found in state settlement agreements, should Chesapeake fail to meet its obligations.
The consent decree was subject to a 30-day public comment period that closed on April 29, 2021, and is pending final court approval.
Environmental Justice Updates in Pennsylvania
The Pennsylvania Department of Environmental Protection’s (PADEP) Office of Environmental Justice is in the process of updating its environmental justice (EJ) policy titled “Environmental Justice Public Participation Policy,” in line with a recent trend of similar efforts from the Biden administration and several states to increase EJ review in regulatory actions like permitting. See PADEP, Environmental Justice Public Participation Policy (No. 012-0501-002) (effective Apr. 24, 2004). A revised policy could affect the process of PADEP’s permitting, enforcement, and other regulatory activities.
PADEP’s policy went into effect in 2004. The current policy applies to “Environmental Justice Areas,” which are areas of concern (a half-mile radius from the center of the proposed permit activity and any area outside this radius impacted by the proposed activity) that are also part of a census tract with a 30% or greater minority population or 20% or greater at or below the poverty level, as defined by the U.S. Census Bureau. Permitting actions in Environmental Justice Areas are subject to increased public participation requirements. The policy applies to (1) “trigger permits,” which are permits that PADEP determined to have significant public health concerns; and (2) “opt-in permits,” which are all other permits that PADEP may determine warrant EJ consideration under the policy.
While a draft of the revised policy has not yet been released, PADEP signaled that it could be dramatically changing the scope of the policy. PADEP is currently in a public outreach stage of the revision process, seeking comments on how it can address EJ concerns in addition to public participation in the permitting review process. PADEP’s Office of Environmental Justice held public outreach meetings in late March 2021 to discuss the timeline and seek comments on certain questions about the scope of the policy. Also, PADEP could expand the list of “trigger permits” in the revised policy to include certain oil and gas-related permits. The revisions under discussion now constitute the second proposed draft of the policy since it became effective. In a previous 2018 draft revision of the policy that was withdrawn in November 2020, PADEP proposed to include permits to drill and operate underground injection control wells for disposal of oil and gas liquid waste or enhanced recovery. See PADEP, Draft Environmental Justice Public Participation Policy (No. 012-0501-002) (withdrawn draft from 2018).
A draft of the revised policy is expected to be published sometime in fall 2021. See Office of Envtl. Justice, PADEP, “Environmental Justice Policy Revision,” https://www.dep.pa.gov/PublicParticipation/OfficeofEnvironmentalJustice/Pages/Policy-Revision.aspx. A final revised policy could be in effect by spring or summer 2022, after several stages of planned public comment, internal review, and community engagement.
Copyright © 2021, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
RMMLF Mineral Law Newsletter
(By Joseph K. Reinhart, Sean M. McGovern, Daniel P. Hido and Gina N. Falaschi)
Continuing from previous publications of this Newsletter, this report provides updates on the Pennsylvania Environmental Quality Board’s (EQB) proposed CO2 Budget Trading Program rulemaking, which would link Pennsylvania’s program to and implement the Regional Greenhouse Gas Initiative (RGGI) within the commonwealth. See Vol. XXXVIII, No. 1 (2021), Vol. XXXVII, No. 4 (2020), Vol. XXXVII, No. 3 (2020), Vol. XXXVII, No. 2 (2020), Vol. XXXVII, No. 1 (2020), Vol. XXXVI, No. 4 (2019) of this Newsletter.
After the public comment period closed in January 2021, the Independent Regulatory Review Commission (IRRC) issued its comments on the proposed rule on February 16, 2021. See Comments of the Independent Regulatory Review Commission, Environmental Quality Board Regulation #7-559 (IRRC #3274), CO2 Budget Trading Program (Feb. 16, 2021).
The IRRC’s comments, based on criteria in section 5b of Pennsylvania’s Regulatory Review Act, 71 Pa. Stat. § 745.5b, addressed the significant objections to the proposed rule from the members of the regulated community and general assembly. The comments recommended that EQB explain the choice to institute the program through regulation rather than legislation, provide analysis of its statutory authority to enact the proposal, and consider recommendations from commentators on public health, safety, and welfare, economic or fiscal impact, and adequacy of data. The IRRC also asked EQB to consider delaying the implementation of the rulemaking for one year to give the regulated community an opportunity to adjust business plans to account for increased costs associated with Pennsylvania joining RGGI. Under the Regulatory Review Act process, EQB will respond to these comments, and other public comments, when finalizing this rulemaking.
On March 10, 2021, the Pennsylvania Department of Environmental Protection (PADEP) announced a set of equity principles to help inform the public on the implementation of the RGGI program and investments of the program’s proceeds. See Press Release, PADEP, “Wolf Administration Announces Equity Principles to Guide Investments Through Regional Greenhouse Gas Initiative” (Mar. 10, 2021). The RGGI Equity Principles are (1) inclusively gathering and considering input from the public related to decisions made under RGGI; (2) protecting public health and welfare, mitigating any adverse impacts on human health, especially in environmental justice communities, and seeking to ensure environmental and structural racism are not replicated in the engagement process; and (3) working equitably and with intentional consideration to distribute environmental and economic benefits of the proceeds of allowance auctions. PADEP has also joined with the Delta Institute to engage with impacted communities to identify a path for an equitable transition for all Pennsylvania residents. The Delta Institute will develop a plan to invest RGGI auction proceeds to diversify Pennsylvania’s economy and assist communities that are affected by changes in the energy sector.
At the April 8, 2021, Air Quality Technical Advisory Committee meeting, PADEP presented updates on the status of and revised language for the proposed implementation of the RGGI program. PADEP summarized the key proposed changes and public comments received and updated power sector modeling. Proposed changes to the regulation include adjustment of the waste coal set-aside, expansion of the cogeneration set-aside, clarification of the strategic use set-aside, the addition of annual air quality impact assessment, and the incorporation of the RGGI Equity Principles into the preamble. PADEP made a similar presentation to the Citizens Advisory Council (CAC) on April 20, 2021. PADEP presented the updated modeling and the CAC voted on the proposal at its May 19, 2021, meeting.
PADEP’s proposal continues to meet opposition from the regulated industry and the general assembly. In January 2021, Senator Joe Pittman introduced Senate Bill 119, 204th Leg., Reg. Sess. (Pa. 2021), which would require legislative approval before PADEP could impose a carbon tax on employers engaged in electric generation, manufacturing, or other industries operating in the commonwealth, or enter into any multi-state program, such as RGGI, that would impose such a tax. The bill had its first consideration in the Senate on April 27, 2021, and second consideration on May 12, 2021. This bill is similar to Senate Bill 950 from the legislature’s previous session, a version of which was passed as House Bill 2025 and was vetoed by Governor Tom Wolf in September 2020. See Vol. XXXVII, No. 4 (2020) of this Newsletter.
In addition to introducing legislation, Senate Republicans sent Governor Wolf a letter on April 21 advising him that they will reject all future nominees to the Public Utility Commission (PUC) due to the Governor’s recent actions related to joining RGGI. See Letter from Senate Republicans to Governor Wolf (Apr. 21, 2021). The group has committed not to confirm any PUC nominees until Governor Wolf either removes Pennsylvania from RGGI or submits the compact to the general assembly for approval.
PADEP is currently working on the comment response document. PADEP expects to present the final regulation to EQB in summer 2021. If EQB adopts the final regulation, the regulation will be presented to the Pennsylvania House and Senate Environmental Resources & Energy Committees and the IRRC for action. If approved by the three committees, the regulation will be submitted to the Attorney General’s Office, and upon approval, published in the Pennsylvania Bulletin.
IRRC Approves Final Rulemaking on Water Supply Replacement for Coal Surface Mining
As reported in Vol. XXXVI, No. 4 (2019) of this Newsletter, on November 2, 2019, the Pennsylvania Environmental Quality Board (EQB) published a proposed rule revising the water supply replacement regulations under 25 Pa. Code chs. 87–90. See 49 Pa. Bull. 6524 (proposed Nov. 2, 2019). The final-form regulation was submitted to the Independent Regulatory Review Commission (IRRC) on February 25, 2021. On April 15, 2021, the IRRC issued an order approving the regulation. See IRRC Approval Order (Apr. 15, 2021); see also 51 Pa. Bull. 2468 (May 1, 2021). The Senate and House Environmental Resources & Energy Committees also approved the final regulation on April 14, 2021.
Among other changes, the final rule reserves current 25 Pa. Code §§ 87.119 (surface coal mining) and 88.107 (anthracite mining) and replaces those provisions with the extensively revised new sections 87.119a and 88.107a. The most notable changes in these new sections include:
- Water Supply Survey. Pre-mining water supply surveys are often used to establish baseline water supply conditions. The current regulations only generally refer to such surveys. In contrast, sections 87.119a(a) and 88.107a(a) of the final rule specify that the survey must include the location and type of the water supply, the existing and reasonably foreseeable uses of the supply, the chemical and physical characteristics of the water, historical and recent water quantity measurements, and sufficient sampling to document seasonal variations in hydrologic conditions.
- Water Supply Replacement Obligations. Sections 87.119a(b) and 88.107a(b) clarify that if a water supply has been affected to a demonstrable extent by mining, the operator must restore or replace the water supply with a permanent source adequate for the purposes served and “reasonably foreseeable uses” of the water supply. Subsection (c) requires operators to provide a temporary water supply within 24 hours if the water supply owner/user is without a readily available alternative source of water. Under subsection (d), the Pennsylvania Department of Environmental Protection (PADEP) may provide a temporary water supply and seek to recover costs from the operator.
- Adequacy of Restored or Replaced Water Supply. Sections 87.119a(f) and 88.107a(f) require a restored or replaced water supply to be as reliable and permanent as the previous supply, not require excessive operation and maintenance (O&M) or result in increased cost to the user without compensation, and provide the water supply owner/user with as much control and accessibility as the previous water supply. The final rule expands the concept of “adequate quality,” requiring the restored or replaced water supply to be comparable to the previous supply as documented in the water supply survey, or meet the requirements of the Pennsylvania Safe Drinking Water Act (SDWA). PADEP may require the restored or replaced water supply to be of equivalent quality to the pre-mining supply, even if this requires water of better quality than SDWA standards, if the water supply user demonstrates that such quality is necessary to meet the use served by the original supply. Finally, “adequate quantity” means the restored or replaced water supply must deliver the amount of water necessary to satisfy the purposes served by the supply as documented in the pre-mining survey, including any “reasonably foreseeable uses,” which includes “the reasonable expansion of use where the quantity of the water supply available prior to mining was adequate to supply the foreseeable uses.”
- Reimbursement. Sections 87.119a(e) and 88.107a(e) of the final rule are new provisions that require operators to reimburse water supply owners/users who replace the water supply themselves when it is later determined that the operator is responsible for the water supply problem. The operator may dispute costs that appear to be excessive based on the pre-mining survey.
- Operation and Maintenance. New sections 87.119a(g) and 88.107a(g) contain detailed procedures for determining O&M costs and requiring the operator to post a bond to assure payment of increased O&M costs so that the restored or replaced water supply does not result in increased costs to the user.
- Presumption of Liability. New sections 87.119a(j) and 88.107a(j) clarify the statutory presumption contained at 52 Pa. Stat. § 1396.4b(f)(2) that an operator is responsible for pollution or diminution of water supplies within 1,000 feet of the boundaries of areas affected by surface mining operations, and the defenses available to operators to rebut the presumption.
The final rulemaking package is available at http://www.irrc.state.pa.us/docs/3245/AGENCY/3245FF.pdf. The revised regulations will go into effect upon publication in the Pennsylvania Bulletin.
OSMRE Publishes 2020 Pennsylvania Evaluation Report
In March 2021, the Pittsburgh Field Office of the federal Office of Surface Mining Reclamation and Enforcement (OSMRE) released its annual evaluation report of the regulatory and abandoned mine reclamation programs administered by the Pennsylvania Department of Environmental Protection (PADEP). The report covers the 2020 evaluation year, which ran from July 1, 2019, to June 30, 2020. The report is issued pursuant to OSMRE’s authority under the federal Surface Mining Control and Reclamation Act (SMCRA) to oversee the implementation of state programs that have been approved as meeting the mini-mum requirements of SMCRA.
The first half of the report addresses PADEP’s administration of SMCRA’s regulatory program. The report notes that PADEP reported over 1,100 inspectable sites, including 700 active sites, and performed over 11,000 full or partial inspections. OSMRE conducted 84 oversight inspections, including 71 in the bituminous region and 13 in the anthracite region. Of the 71 inspections in the bituminous region, 40 did not identify any violations. Of the 31 inspections where violations were identified, OSMRE identified a total of 58 violations, 53% of which related to hydrologic balance. OSMRE, “2020 Pennsylvania Annual Evaluation Report,” at 10–12 (Mar. 2021).
The report similarly includes an evaluation of off-site im-pacts from mining. The report notes that PADEP identified a total of 48 off-site impacts related to 34 permits during the evaluation year, with 96% of permits causing no off-site im-pacts. Forty-four of the 48 off-site impacts related to hydrology. Those off-site impacts are classified as major (9), moderate (12), or minor (23). OSMRE noted that of the 141 total violations identified during oversight inspections, 18 involved off-site im-pacts, and 13 of those related to hydrology. Id. at 21–23.
The second half of the report addresses PADEP’s administration of SMCRA’s abandoned mine land (AML) reclamation program and highlights various PADEP AML projects, accomplishments, and initiatives. The report concluded that PADEP effectively administers both the regulatory and AML programs. Id. at 32, 50. The 94-page report is available at https://www. odocs.osmre.gov/ (to access the report, select “Pennsylvania” and “2020” in the respective state and year fields and “Annual Evaluation Reports” in the category field).
Pennsylvania to Become a Leader in Solar Energy Production
On March 22, 2021, Governor Tom Wolf announced a clean energy initiative that would produce nearly 50% of state government’s electricity through seven new solar energy arrays totaling 191 megawatts to be built around the state. See Press Release, Gov. Tom Wolf, “Gov. Wolf Announces Largest Government Solar Energy Commitment in the U.S.” (Mar. 21, 2021). Pennsylvania PULSE (Project to Utilize Light and Solar Energy), a part of the initiative, will go into operation on January 1, 2023.
Solar arrays will be built in seven locations in six counties: Columbia, Juniata, Montour, Northumberland, Snyder, and York. The Pennsylvania Department of General Services contracted with Constellation, a Pennsylvania Public Utility Commission-licensed electric generation supplier, to secure a 15-year fixed-price supply agreement. The project is expected to deliver 361,000 megawatt-hours of electricity per year, or about half the electricity used by state government annually.
To date, this is the largest government-backed commitment to solar energy announced in the United States.
PADEP Publishes Final Revised Policy on Civil Penalty Assessments for Coal Mining Operations
On February 27, 2021, the Pennsylvania Department of Environmental Protection (PADEP) published the final revision to Technical Guidance Document (TGD) No. 562-4180-306, titled “Civil Penalty Assessments for Coal Mining Operations.” 51 Pa. Bull. 1083 (Feb. 27, 2021). The TGD makes several major changes to the procedures for calculating civil penalty amounts for coal mining violations, the most significant of which is the addition of new procedures for calculating water quality violations under section 605 of the Clean Streams Law, 35 Pa. Stat. § 691.605. No revisions were made to the version of the TGD that was published for public comment on October 3, 2020, which is discussed in detail in Vol. XXXVII, No. 4 (2020) of this Newsletter.
Copyright © 2021, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
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
Pittsburgh Business Times
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.
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.
Tags: Migratory Bird Treaty Act, migratory birds, renewable energy projects, solar, wind
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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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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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.
- 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.
- 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.
- 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).
- 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.
- 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.
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:”
- 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.
- 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, 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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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.
Tags: renewable energy projects, use variance, zoning ordinances
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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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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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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