Recent Developments in Medical Marijuana Jurisprudence—in Pa. and Beyond

The Legal Intelligencer

(by John McCreary)

This is the third installment of the author’s episodic examination of the employment law implications of the legalization of medical marijuana. The first installment appeared in The Legal Intelligencer’s Feb. 9, 2017, online edition—shortly after Pennsylvania’s Medical Marijuana Act (MMA) became effective—and described some of the ambiguities of and practical difficulties with the MMA’s employment provisions. This was followed by an article in the March 21, 2019, edition of The Legal surveying how jurisprudence from other jurisdictions had addressed some of the issues identified in the first article. There now have been a few Pennsylvania decisions on the subject, which along with the courts elsewhere are slowly creating a body of law defining rights and obligations under the medical marijuana laws. From review of these recent cases we can conclude that the courts are sympathetic to medical marijuana patients, but to this point they have yet to squarely address the significant job safety issues likely to be encountered  in the workplace, issues recognized in the Pennsylvania MMA as well as in  the analogous legislation  from other states.

Pennsylvania cases

Two Pennsylvania decisions of note provide insight into the approach of the commonwealth’s courts to the issues raised by the use of medical marijuana.

Palmiter v. Commonwealth Health Systems, No. 19-CV-1315 (Lackawanna Cty. 2019) found an implied cause of action to enforce the MMA’s antidiscrimination provision. That section of the MMA creates a protected class of employees “certified to use medical marijuana,” who are protected against employment discrimination because of such “status” as a certified user. See 35 Pa.C.S.A. Section 10231.2103(b)(1). But uniquely among the commonwealth’s employee-protective laws, the MMA does not provide statutory remedies, nor does it explicitly confer jurisdiction on the courts to address violations. This statutory insufficiency is in marked contrast to, for example, the Pennsylvania Human Relations Act, which provides a comprehensive procedure for addressing employment discrimination claims including resort to the courts, and sets forth available remedies such as reinstatement to employment, back pay, and attorney fees. The failure of the legislature to prescribe similar remedies in the MMA suggested to Commonwealth Health Systems that perhaps there was no private cause of action for employment discrimination available under Section 2103(b). The court, however, rejected the contention, ruling that Section 2103(b) implicitly creates a cause of action for employment discrimination motivated by the use of medical marijuana:

However, nothing in the MMA or the promulgated regulations vests the department or any other state agency with the authority to enforce Section 2103(b)(1) against private employers that have not chosen to voluntarily take part in that program, and those anti-discrimination provisions would be rendered meaningless if an aggrieved employee could not pursue a private cause of action and seek to recover compensatory damages from an employer that violates Section 2103(b)(1). Recognition of an implied right of action under Section 2103(b)(1) is consistent with the MMA’s stated purpose of providing safe and effective access to medical marijuana for eligible patients, while simultaneously protecting them from adverse employment treatment in furtherance of the legislative intent in Section 2103(b)(1). Therefore, the employers’ demurrer to the employee’s private cause of action based upon Section 2103(b)(1) will be overruled. See Palmiter v. Commonwealth Health Systems, slip op. at 2-3.

The Pennsylvania Supreme Court in Gass v. 52nd Judicial District, Lebanon County, No. 119 MM 2019 (June 18, 2020) decided that the MMA overrode a Lebanon County court policy prohibiting the use of medical marijuana by individuals under court supervision. The Lebanon County Probation Office policy at issue declared that the “medical marijuana card issued under the MMA is not a prescription for medication, but rather a recommendation by a physician as to a form of treatment” and concluded that because marijuana remained illegal under federal law “the court and the Probation Department should not knowingly allow violations of law to occur, the prohibition against such use is required.” Rejecting the policy in the face of the district’s argument that permitting medical marijuana use would make the supervision of probationers more difficult, a unanimous Supreme Court invoked the “remedial nature” of the MMA, which “should be accorded liberal construction,” and declared that Section 2103(a)(1), which provides that no medical marijuana patient “shall be subject to arrest, prosecution or penalty in any manner, or denied any right or privilege … solely for lawful use of medical marijuana … or for any other action taken in accordance with this act,” 35 Pa.C.S.A. Section 0231.2103(a), actually meant what it said. Ultimately, the court concluded that the potential problems caused by the MMA were beyond its authority to remedy:

As we have observed previously: “The concern that unintended consequences may unfold are prevalent relative to the promulgation of experimental, remedial legislation.” See Williams v. City of Philadelphia, 647 Pa. 126, 150, 188 A.3d 421, 436 (2018). Nevertheless, “where the language of the governing statute is clear (or clear enough) … the solution is legislative—and not judicial—adjustment.”

Together these two decisions signal that the Pennsylvania courts will likely embrace a “liberal construction” of the MMA, one that favors medical marijuana patients attempting to overcome resistance to marijuana use by their employers. A cautious, proactive approach to medical marijuana employment issues would therefore seem to be warranted.

Cases From elsewhere

The trend of liberal construction is also seen in decisions from other jurisdictions. The New Jersey Supreme Court earlier this year ruled that the state’s Compassionate Use Medical Marijuana Act (Compassionate Use Act), N.J.S.A. 24:6I-1 to -16 must be read in para materia with the Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -49, holding that when medical marijuana is prescribed for a condition qualifying as a disability under the LAD, a New Jersey employer has a duty to reasonably accommodate such marijuana use. See Wild v. Carriage Funeral Holdings, 241 N.J. 285, 227 A.3d 1206 (2020). New Jersey thus joins Massachusetts in recognizing that prohibitions against disability discrimination require employers to consider whether prescribed marijuana use is a reasonable accommodation under state disability laws. See Barbuto v. Advantage Sales & Marketing, 477 Mass. 456, 78 N.E.3d 37 (2017), discussed in the 2019 installment. And as also discussed in the 2019 piece, it is likely that the Pennsylvania courts will come to the same decision when presented with the issue.

In Whitmire v. Wal-Mart Stores, 359 F.Supp.3d 761 (D. Ariz. 2019) the court addressed an employer’s affirmative defense under Arizona’s Medical Marijuana Act (AMMA). In addition to holding as a matter of first impression that AMMA’s anti-discrimination provision created a private right of action for alleged violations, the court sua sponte issued summary judgment in favor of the plaintiff on that claim. The court’s reasoning presents a cautionary tale for employers defending such claims. AMMA provides that “[A]n employer may not discriminate against a person in … termination … based upon … a registered qualifying patient’s positive drug test for marijuana components or metabolites, unless the patient used, possessed or was impaired by marijuana on the premises of the place of employment or during the hours of employment.” The plaintiff suffered an injury at work and pursuant to Wal-Mart policy underwent a drug screen. She tested positive for marijuana, but explained in mitigation that she was a registered medical marijuana patient. Wal-Mart nevertheless terminated her employment, contending that the high level of marijuana metabolites discovered by the test (more than 1000 ng/ml of urine) indicated impairment at work. The court found as a matter of law that Wal-Mart could not demonstrate impairment without “expert testimony establishing that the level of metabolites present in the plaintiff’s drug screen demonstrates that marijuana was present in her system in a sufficient concentration to cause impairment.” Thus, “in the absence of any expert testimony or evidence demonstrating impairment, the court will, pursuant to Rule 56(f), sua sponte grant summary judgment in part to the plaintiff solely on the question of liability on the U.S. Court of Appeals for the Second Count of her complaint alleging discrimination under the AMMA.”

The Whitmire decision highlights the importance of establishing an admissible evidentiary basis for the affirmative defenses available to employers under Pennsylvania’s MMA. Recall that the MMA contains provisions permitting employers to exclude employees who are “under the influence” from “life threatening” tasks and duties “which could result in a public health or safety risk.” It is therefore essential that employers relying on these “safety sensitive” defenses present expert evidence about impairment, or risk having their defense rejected out of hand.

Although the reported cases in Pennsylvania and elsewhere certainly seem plaintiff-friendly, plaintiffs do not always win. Lambdin v. Marriott Resorts Hospitality, (D. Hawaii 2017) demonstrates the importance of examining the bona fides of a plaintiff’s claim. After the plaintiff suffered a panic attack at work that necessitated his transportation to the hospital, he was required under Marriott’s policy to undergo a drug screen, which was positive for marijuana. Marriott policy required termination for a positive drug screen administered following an on-the-job accident. The plaintiff’s reliance on Hawaii’s medical marijuana law in opposition to his termination failed because at the time of the drug test he had only applied for certification under the law; it had not yet been issued and he therefore failed “to show that he was lawfully using marijuana pursuant to Hawaii state law.” The court granted summary judgment to Marriott on this basis.

Conclusion

To date, the courts of the commonwealth and elsewhere have interpreted medical marijuana laws in a manner friendly to medical marijuana patients, but have yet to address the legitimate safety issues presented by their presence in the workplace. It can be safely predicted, however, given what our Supreme Court has acknowledged is the remedial nature of the MMA and the Whitmire court’s decision that employers that intend to defend a claim on the basis of safety, impairment or “under the influence” will be required to provide more than anecdotal evidence in support of the defense. Indeed, it is likely that such defenses will require expert testimony.

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Reprinted with permission from the September 17, 2020 edition of The Legal Intelligencer© 2020 ALM Media Properties, LLC. All rights reserved.

EPA finalizes revisions to oil and natural gas New Source Performance Standards

The PIOGA Press

(by Julie Domike, Michael Winek, Gina Falaschi and Gary Steinbauer)

On August 13, the U.S. Environmental Protection issued two prepublication final rules related to the New Source Performance Standards for the Crude Oil and Natural Gas Industry at 40 C.F.R. Part 60, Subparts OOOO and OOOOa (NSPS). The two rules―the “policy amendments” and “technical amendments”―arise from EPA’s review of the NSPS pursuant to President Trump’s 2017 Executive Order 13782, “Promoting Energy Independence and Economic Growth,” which directs the agency to review existing regulations that potentially “burden the development or use of domestically produced energy resources” and to revise or rescind regulatory requirements if appropriate. The rules become effective 60 days after publication in the Federal Register.

 Policy amendments

The agency’s policy amendments revise NSPS Subpart OOOO (promulgated in 2012), regulating volatile organic compound (VOC) emissions from certain new, reconstructed, and modified sources in the oil and natural gas industry, and NSPS Subpart OOOOa (promulgated in 2016), regulating VOC and methane emissions from specified new, reconstructed, and modified sources in the oil and gas industry.[1] This rule provides that:

(1) The transmission and storage segments are no longer included in any source category regulated by the NSPS. These excluded emissions sources include transmission compressor stations, pneumatic controllers and underground storage vessels. To regulate a source category under the NSPS, the agency must first make a finding that the emissions of air pollutants from that source cause or contribute significantly to air pollution. These segments were not included in the original NSPS, and no such finding was made when these segments were added to the NSPS in the 2012 and 2016 final rules, making the regulation of the segments improper under the Clean Air Act (CAA). Accordingly, EPA amended the NSPS to remove these sources fromthe source category and rescinded the NSPS (including both the VOC and methane requirements) applicable to them.

(2) Methane emission limits for the production and processing segments are rescinded. Sources in the production and processing segments include well completions, pneumatic pumps, pneumatic controllers, gathering and boosting compressors, natural gas processing plants, fugitive emissions and storage tanks. EPA found that because the controls to reduce VOC emissions for these segments also reduce methane, separate methane limitations for these segments of the industry are redundant. EPA determined that the rescission of these limits will not affect methane emissions from the production and processing segments.

(3) Methane emission limits from existing affected sources in the oil and natural gas production and processing segments will not be required by Section 111(d) of the CAA. With rescission of the methane limits for the production and processing segments, the Agency is no longer required to issue existing source emission standards in those segments of the oil and natural gas source category pursuant to Section 111(d) of the CAA. In addition, EPA has interpreted CAA Section 111(d) to exclude VOCs from the requirement to address emissions from existing sources under this section because the section only applies to air pollutants for which air quality criteria have not been issued under CAA Section 108. VOCs, as precursor to particulate matter and ozone, are indirectly regulated as a criteria pollutant under CAA Section 108.

(4) EPA finalized its legal position that Section 111 of the CAA requires it to determine that a specific pollutant causes or contributes significantly to dangerous air pollution before the pollutant is regulated in an NSPS, unless the agency addressed the pollutant when it initially regulated the source category. As an alternative ground for rescinding the methane regulations, EPA found that its significant contribution finding for methane in the 2016 rule did not meet the statutory standard. While the policy amendments rescind federal standards, the final rule did not withdraw the 2016 Control Techniques Guidelines for the Oil and Natural Gas Industry (CTG), which provide reasonably available control technology (RACT) requirements for VOC emissions from existing oil and gas sources. Section 182 of the CAA requires states to revise their State Implementation Plans (SIP) to include RACT for sources of VOC emissions covered by a CTG if classified as moderate, serious, severe, or extreme nonattainment for ozone.[2] EPA proposed withdrawing the CTG in March 2018 but has not taken final action, meaning that states, including Pennsylvania, must amend their SIPs.

Technical amendments

In a separate rule, the agency promulgated technical amendments revising numerous substantive requirements of NSPS OOOOa. EPA issued the final technical amendments after responding to more than 500,000 comments on the proposed technical amendments published in September 2018. A summary of notable revisions is provided below:

Fugitive emissions monitoring at well sites and compressor stations

  • As compared to previous quarterly monitoring requirements, semiannual fugitive emissions monitoring is required for compressor stations.
  • Semiannual fugitive emissions monitoring is required for non-low production well sites (i.e., greater than or equal to 15 barrels of oil equivalent per day for the first 30 days of production).
  • Fugitive emission monitoring requirements do not apply at low production well sites (i.e., less than 15 barrels of oil equivalent per day for the first 30 days of production).
  • Initial monitoring must be conducted within 90, as opposed to 60, days after the startup of production.
  • A new definition of “modification” for an existing source separate tank battery surface site clarifies the types of changes that trigger regulatory requirements.

Storage vessels

  • Potential VOC emissions across certain controlled and manifolded storage vessels may be averaged to determine applicability.

Onshore natural gas processing plants

  • The definition of “capital expenditure” uses the Consumer Price Index to calculate the percent of the replacement cost for purposes of determining whether there is a modification triggering the equipment leak standards.
  • Equipment in VOC service for less than 300 hours per year is exempt from monitoring requirements.
  • The initial compliance date applies 180 days after initial startup.

Well completions

  • Nearby, off-site separators, including production separators, may be used to control emissions during the flowback period, and emissions during certain preflowback steps need not be controlled.

Pneumatic pumps

  • The technical infeasibility exemption for pneumatic pumps is expanded to apply at all well sites, not merely greenfield sites.

Closed vent systems (CVS)

  • Pneumatic pump CVS may be monitored for “no detectable emissions” using monthly audio, visual, and olfactory (AVO) monitoring or using optical gas imagery (OGI) at specified frequencies, in addition to annual Method 21 monitoring option.
  • Storage tank CVS may be monitored for “no detectable emissions” using OGI at specified frequencies, in addition to annual Method 21 and monthly AVO monitoring options.

Alternative means of emissions limitation (AMEL)

  • An AMEL satisfying certain criteria may be granted after notice, following an opportunity for a public hearing, “based on the Administrator’s judgment.”
  • For certain individual well sites and/or compressor stations, EPA has adopted alternative fugitive emissions programs as AMEL that have been established in specific states, including Pennsylvania and Ohio.

These are some of the many revisions included in the 235-page pre-publication version of the technical amendments. The less onerous fugitive emissions monitoring requirements and other changes offering additional compliance options and flexibility included in the technical amendments are good news for many oil and natural gas producers and processors, particularly smaller operators. The changes will ease compliance burdens, and EPA estimates that the technical amendments will save the oil and natural gas industry $100 million in compliance costs each year.

Conclusion

Lawsuits challenging the rules are likely, with lawsuits challenging the policy amendments almost certain to be filed. State attorneys general and environmental groups have vowed to challenge one or both rules. The oil and natural gas industry itself is divided on the policy amendments in particular, with some large energy companies voicing opposition to EPA’s removal of methane from the NSPS. Other oil and gas producers have provided their full support for these changes, including those related to methane. Litigation and the November election may affect the future of these rules.

For questions about the Rules or air emissions regulations for the oil and natural gas industry generally, please contact Julie R. Domike at 202-853-3453 or jdomike@babstcalland.com; Michael H. Winek at 412-394-6538 or mwinek@babstcalland.com; Gina N. Falaschi at 202-853-3483 or gfalaschi@babstcalland.com; or Gary E. Steinbauer at 412-394-6590 or gsteinbauer@babstcalland.com.

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Court Enforces Settlement Agreement Despite Sunshine Act Violation

The Legal Intelligencer

(by Blaine Lucas and Anna Skipper)

Most lawsuits settle before disposition by the courts. Any settlement agreement is just that, an agreement between the parties, which to be enforceable must possess all the elements of a valid contract—offer, acceptance, and consideration or a meeting of the minds. In Pennsylvania, when one of the parties to a settlement agreement is a public entity, additional considerations come into play, most notably the Sunshine Act, 65 Pa. C.S. Sections 701-716.

Enacted by the General Assembly to facilitate more transparent means of governmental decision-making, the Sunshine Act has existed in some form since 1974, and places restraints upon a local agency’s ability to enter into contracts, including settlement agreements. Specifically, the Sunshine Act requires that all “official action,” including final decisions on the creation of liability by contract or the adjudication of rights, duties and responsibilities, must be taken at a duly advertised meeting open to the public. On the other hand, the Sunshine Act permits “deliberations” in six enumerated categories to take place in private “executive session.” One permissible reason to deliberate in private is to consult with the agency’s attorney regarding information or strategy in connection with litigation or with issues on which identifiable complaints are expected to be filed. However, any official action arising out of deliberations in executive session still must be taken at an open meeting. Thus, even if  settlement of a lawsuit is discussed in executive session, it still must be voted upon at a public meeting subject to all of the Sunshine Act’s requirements.

Recently, the Pennsylvania Commonwealth Court considered the fate of a settlement agreement that was agreed upon by a public agency in executive session, but never voted upon at a public meeting. In Baribault v. Zoning Hearing Board of Haverford Township, No. 1211 C.D. 2019, (Pa. Commw. Ct. Jun. 12, 2020) the Court held that such an agreement was enforceable, despite this failure.

In Baribault, the parties had been in dispute since 1993, and had already gone through extensive litigation and settlement discussions. The Baribaults (the landowners) owned five properties, which they leased to Villanova University students. In 1989, Haverford Township (the township) amended its zoning ordinance and Home Rule Charter (the township charter) to define student housing, and to permit that use only by special exception. When the township zoning officer denied the landowners’ applications to continue the use of the properties as student housing rentals, the landowners sought a declaration from the Township Zoning Hearing Board (the ZHB) that their continued use of the properties in that manner constituted a lawful nonconforming use, and challenged the constitutionality of the amendments. The ZHB denied relief without opinion, and the Landowners filed five separate land use appeals with the Court of Common Pleas of Delaware County (the trial court). The trial court issued a stay order with regard to one property, although the parties treated it as though it applied to all five. Consequently, for the next 25 years, the Landowners were permitted to rent all five properties to students without additional proceedings or the imposition of fines or penalties.

In 2018, the parties returned to the negotiating table, and entered into settlement discussions to resolve all five outstanding appeals. In August, 2018, the trial court was advised that the parties (consisting of the landowners, the township, and the ZHB), had reached a settlement agreement in which the landowners would relinquish their right to rent two of the five properties to students in exchange for the designation of the remaining properties as nonconforming uses and special exceptions.

The parties all agreed that the township commissioners (the commissioners) had approved the terms of the agreement during an executive session of their regularly scheduled meeting on Oct. 9, 2018. At the township solicitor’s request, the landowners’ counsel drafted a settlement agreement and release (the agreement), which the commissioners reviewed and approved in a second executive session held on Nov. 13, 2018. In December, 2018, the landowners advised the trial court that the township had approved the agreement, and they were waiting on the ZHB’s approval, and the township solicitor confirmed this via email to the trial court. In February 2019, the agreement was circulated to the parties by the landowners, who signed it along with the ZHB through its legal counsel. The township never executed the agreement.

When the landowners subsequently filed a motion to enforce the agreement, the township alleged that there was never a valid agreement to enforce. The township did not dispute any of the facts alleged, but argued that any action taken by the commissioners was a nullity because they never approved or disapproved the proposed settlement terms in an official action at a public meeting, as required under the Sunshine Act as well as the township charter. Because there was no public vote, they argued there was no lawful acceptance of the terms of the settlement, and thus no settlement agreement to enforce.

The trial court consolidated the five appeals, and, in March 2019, granted the landowners’ motion, entering an order enforcing the terms of the agreement. The township appealed, contending that the trial court erred by concluding that the commissioners could approve a settlement agreement, or that the township solicitor could do so on their behalf, when the commissioners did not take official action on the settlement terms at a public meeting. The Commonwealth Court affirmed in a precedential opinion on July 13.

In its plenary review, the court noted that  the enforceability of a settlement agreement is determined according to principals of contract law. The court reasoned that there must have been an offer, acceptance, and consideration or a meeting of the minds, and that oral settlement agreements may likewise be enforceable and legally binding. Reasoning that the commissioners had conveyed approval of the settlement, both to the landowners as well as to the trial court through counsel, the court found that there was a meeting of the minds regarding the material terms of the settlement that expressed the intention of the parties to settle the case and thus was valid and binding, despite the absence of any writing or formality.

Turning then to the unique issues surrounding contracting with public entities, the court considered whether the commissioners could agree to the settlement agreement even when they failed to comply with the requirements of the Sunshine Act and township charter. The court found that the commissioners failure to comply with the requirements of the Sunshine Act did not warrant the automatic nullification of the agreement. The court cited to Section 713 of the Sunshine Act, which states that if a court determines that the meeting did not meet the requirements of the act, it may in its discretion, find that any or all official action taken at the meeting is invalid, thus concluding that invalidation of official action taken in violation of the Sunshine Act is not axiomatic, but discretionary.

In invoking this discretion, the court relied upon prior Commonwealth Court decisions in which public agency decisions or agreements made in private were enforced. The court cited to Borough of East McKeesport v. Special/Temporary Civil Service Commission of Borough of East McKeesport, 942 A.2d 274, 280 (Pa. Commw. Ct. 2008) which held that a special commission’s decision to reinstate the borough police captain would not be invalidated for lack of compliance with the notice requirements of the Sunshine Act, and Keenheel v. Pennsylvania Securities Commission (PSC), 579 A.2d 1358, 1361 (Pa. Commw. Ct. 1990), in which the Securities Commission voted in executive session to accept a settlement agreement in violation of an earlier version of the Sunshine Act, and the court refused to aside the agreement.

Due to the protracted history of the case, the township solicitor’s representations to opposing counsel and the trial court regarding the status of the settlement, and the landowners’ good faith reliance on the settlement, the court held that the trial court did not abuse its discretion by enforcing the agreement and affirmed. As stated by the court “to conclude otherwise and allow the Township to unilaterally nullify the agreement under the guise of a Sunshine Act violation would perpetrate an injustice upon the landowners who have reasonably relied on the township’s representation regarding the settlement agreement.”

The court concluded by briefly disposing of the township’s argument that the township solicitor was not authorized to bind the township to the agreement. The court noted that before an attorney may agree to a settlement, he must have actual authority to settle from his clients, and here the solicitor’s authority was clearly expressed by the commissioners, as evidenced by two emails from the solicitor confirming that the commissioners had approved the settlement and agreed to the proposed language. Thus, the court found that the solicitor did not act on its own by entering the agreement, but was duly authorized by his client to do so.

The Commonwealth Court’s decision in Baribault has made it clear that a public agency cannot avoid its obligations under a settlement agreement based on its own failure to comply with the requirements of the Sunshine Act. This being said, it is in the best interest of both private parties and the governmental agency with which they are litigating to assure that any settlement agreement is approved at a public meeting, so as to avoid situations like that which arose in Baribault.

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Reprinted with permission from the September 4, 2020 edition of The Legal Intelligencer© 2020 ALM Media Properties, LLC. All rights reserved.

Grand Jury Investigation into Unconventional Oil and Gas Industry Findings and Recommendations Released

RMMLF Mineral Law Newsletter

(By Joseph K. Reinhart, Sean M. McGovern and Casey J. Snyder)

In a June 25, 2020, press release and live press conference, Pennsylvania Attorney General Josh Shapiro announced the findings and recommendations of Pennsylvania’s 43rd Statewide Investigating Grand Jury report on the inquiry into the unconventional oil and gas industry. See Office of Att’y Gen., Commw. of Pa., “Report 1 of the Forty-Third Statewide Investigating Grand Jury.” As a result of the two-year investigation, the grand jury’s report outlined its opinion that the Pennsylvania Department of Environmental Protection (PADEP) and the Pennsylvania Department of Health (PADOH) failed to oversee the hydraulic fracturing industry and fulfill their responsibilities to protect Pennsylvanians from the impact of the industry’s operations.

The opinions in the report relied on testimony from Pennsylvania residents about environmental and health impacts from unconventional operations, in addition to testimony of witnesses who worked for PADEP and PADOH. The grand jury’s supervising judge permitted the report to be shared with the Secretaries of PADEP and PADOH, allowing them, or their designees, to respond to the allegation in the report.

The report concluded that PADEP was unprepared for the introduction and expansion of the unconventional oil and gas industry and failed to adequately regulate the industry, train its staff, communicate information within the agency, adequately test water samples, adequately inspect operators, notify landowners near fracking operations of environmental issues, take adequate enforcement action (including failing to refer cases to the state attorney general), or listen to the public. Despite acknowledging PADOH’s efforts under the current gubernatorial administration, the grand jury found that PADOH failed to sufficiently recognize or respond to the public health consequences of fracking, create a collective public outreach or education response to health complaints, or work with PADEP to gather data about health impacts.

In addition to its conclusions, the report detailed eight recommendations for legislative, executive, and administrative action to protect Pennsylvanians from effects of industry operations:

  1. expanding no-drill zones from 500 feet to 2,500 feet from a building or water well and 5,000 feet from schools and hospitals;
  2. requiring hydraulic fracturing companies to publicly disclose all chemicals used in drilling and hydraulic fracturing before they are used on-site;
  3. regulating gathering lines used to transport unconventional gas;
  4. aggregating all sources of air pollution in a given area to accurately assess air quality;
  5. requiring safer transport of the contaminated waste created from hydraulic fracturing sites;
  6. conducting a comprehensive health response to the effects of living near unconventional drilling sites;
  7. limiting the ability of PADEP employees to be employed in the private sector immediately after leaving the agency; and
  8. allowing the attorney general original criminal jurisdiction over unconventional oil and gas operations.

PADEP and PADOH, as well as Michael Krancer (former Secretary of PADEP) and Scott Perry (PADEP Deputy Secretary of the Office of Oil and Gas Management), filed responses to the grand jury’s findings. These responses were accepted by the supervising judge and attached to the report as part of the public record.

No criminal presentments were issued against PADEP, PADOH, or any agency employees as part of this report. Prior to the release of the report, the grand jury issued criminal presentments against two oil and gas companies for alleged violations of Pennsylvania environmental laws. Governor Tom Wolf issued a statement that he shares Attorney General Shapiro’s commitment to upholding Pennsylvania’s constitutional promise of clean air, pure water, and protecting public health. The Governor opined that many of the recommendations in the report either mirror activities that the administration already has in place or it supports as additional actions that would need to be taken by the legislature. See David E. Hess, “Wolf Administration Comments on Grand Jury Report on Regulatory Failures During Natural Gas Fracking Boom,” PA Env’t Digest Blog (June 27, 2020). Many industry groups, such as the Marcellus Shale Coalition (MSC), have also released responses to this report. See Press Release, MSC, “MSC Response to Attorney General Report” (June 25, 2020).

INCREASE TO UNCONVENTIONAL WELL PERMIT APPLICATION FEES GOES INTO EFFECT

On August 1, 2020, the Pennsylvania Environmental Quality Board (EQB) published the final rule, effective immediately, to increase well permit application fees for both vertical and nonvertical unconventional wells to $12,500. See Unconventional Well Permit Application Fee Amendments, 50 Pa. Bull. 3845 (Aug. 1, 2020). Under Pennsylvania’s regulations for unconventional wells, found at 25 Pa. Code ch. 78a, the previous well permit fees were $5,000 and $4,200 for nonvertical unconventional wells and vertical unconventional wells, respectively. See id. § 78a.19. The rule also removes the definitions of “nonvertical unconventional well” and “vertical unconventional well,” leaving only the definition of “unconventional well,” meaning “[a] bore hole drilled or being drilled for the purpose of or to be used for the production of natural gas from an unconventional formation.” Id. § 78a.1.

The Independent Regulatory Review Commission (IRRC), a state agency responsible for reviewing proposed regulations from most state agencies, held public meetings throughout May and June before it approved the regulation on June 18, 2020. See Approval Order, EQB Regulation No. 7-542 (IRRC June 18, 2020). The Marcellus Shale Coalition (MSC), a trade group composed of most of the unconventional operators in Pennsylvania, submitted a comment during the IRRC’s comment period that raised several issues with the fee increase, including how the fee increase will result in Pennsylvania having the highest unconventional well permit fee in the nation. See Comments of the MSC, IRRC No. 3206: EQB No. 7-542 Unconventional Well Permit Application Fee Amendments (June 15, 2020). The Pennsylvania Department of Environmental Protection (PADEP) characterized the fee increase as necessary to sustain its Office of Oil and Gas Management program. PADEP is required to evaluate its well permit fees every three years, but it had not raised unconventional well permit fees since 2014. See 25 Pa. Code §§ 78.19(e), 78a.19(b).

EQB PUBLISHES PROPOSED RULE REGULATING VOC EMISSIONS FROM EXISTING OIL AND GAS SOURCES

On May 23, 2020, the Pennsylvania Environmental Quality Board (EQB) published a proposed rulemaking titled Control of VOC Emissions from Oil and Natural Gas Sources, 50 Pa. Bull. 2633 (May 23, 2020). This proposed rulemaking would apply reasonably available control technology (RACT) requirements and emission limitations for existing oil and natural gas sources of volatile organic compound (VOC) emissions. The current Pennsylvania Department of Environmental Protection (PADEP) air regulations under 25 Pa. Code ch. 129 do not regulate emissions from these existing oil and gas sources.

The proposed rule, adopted by the EQB at its December 17, 2019, meeting, is based on the U.S. Environmental Protection Agency’s (EPA) October 2016 “Control Techniques Guidelines for the Oil and Natural Gas Industry.” See 81 Fed. Reg. 74,798 (Oct. 27, 2016). These guidelines include RACT requirements for VOC emissions from existing oil and gas sources. In 2018, EPA proposed rolling back the guidelines, but has not yet taken final action. Despite this potential rollback, PADEP moved forward with the rulemaking, citing in the preamble to the proposed rule, among other reasons, the need for consistency among all oil and gas sources in the state for monitoring fugitive emissions components and the potential to reduce VOC emissions by more than 4,000 tons per year. The preamble and other meeting materials are available on the EQB’s website at https://www.dep.pa.gov/PublicParticipation/EnvironmentalQuality/Pages/2019-Meetings.aspx.

The proposed rule would apply to owners and operators of the following oil and gas sources of VOC emissions in existence on or before the effective date of the final rule:

  • storage vessels (in all segments except natural gas distribution);
  • natural gas-driven pneumatic controllers;
  • natural gas-driven diaphragm pumps;
  • centrifugal compressors and reciprocating compressors; and
  • fugitive emission components.

As part of the rulemaking process, PADEP held three virtual hearings on June 23, June 24, and June 25, 2020, and comments were accepted until July 27, 2020. According to PADEP’s comment database, the comment period for the proposed rule generated approximately 4,500 individual comments. The rule will be submitted to EPA for approval as a revision to the commonwealth’s state implementation plan, following promulgation of the final-form rulemaking.

BILL INTRODUCED BANNING NATURAL GAS HYDRAULIC FRACTURING

A recent bill introduced by Pennsylvania Senator Daylin Leach (D-Delaware, Montgomery) would ban the use of hydraulic fracturing for extracting natural gas. See Senate Bill 1217 (SB 1217), 204th Leg., Reg. Sess. (Pa. 2020).

Introduced in late June 2020, SB 1217 would amend title 58 (Oil and Gas) of the Pennsylvania Consolidated Statutes to ban “natural gas hydraulic fracturing,” defined as “[t]he breaking of rock by fluid for the purposes of stimulating or extracting natural gas as part of a commercial effort to produce and sell energy.” The proposed legislation includes both criminal penalties and administrative sanctions, including civil penalties of up to$500,000. The bill lists six factors to consider when calculating a penalty, including:

  1. Willfulness of the violation.
  2. Damage to the air, water, land or other natural resources, or their uses, in this Commonwealth.
  3. Cost of restoration and abatement.
  4. Harm caused to the health and safety of affected individuals.
  5. Aggravation of global climate change.
  6. Any other relevant factors.

Other key components of the bill pertaining to liability include provisions for individual liability if a corporation violates the prohibition, and provisions providing for a private right of action against a person who violates the prohibition. The bill instructs the Pennsylvania Department of Environmental Protection to issue regulations for implementing the prohibition.

Finally, more expansive requirements in the bill include an explicit repeal of parts of acts that are inconsistent with the bill’s provisions, and a limitation on the bill that would see its prohibition go into effect only upon a constitutional amendment to Pennsylvania’s constitution that would ban hydraulic fracturing. Senator Leach introduced a joint resolution proposing to amend Pennsylvania’s constitution to include such a ban on the same day he introduced SB 1217. See Senate Bill 1218, 204th Leg., Reg. Sess. (Pa. 2020).

The bill is currently in the Senate Environmental Resources and Energy Committee.

Copyright © 2020, The Foundation for Natural Resources and Energy Law, Westminster, Colorado

Governor Wolf’s and PADEP’s Attempt to Join RGGI Meets Resistance

RMMLF Mineral Law Newsletter

(By Joseph K. Reinhart, Sean M. McGovern, Daniel P. Hido and Gina N. Falaschi)

As previously reported, the Pennsylvania Department of Environmental Protection (PADEP) continues its rulemaking to limit carbon dioxide (CO2) emissions from fossil fuel-fired electric power generators consistent with the Regional Greenhouse Gas Initiative (RGGI) Model Rule and Governor Tom Wolf’s October 3, 2019, Executive Order No. 2019-07, 49 Pa. Bull. 6376 (Oct. 26, 2019). See Vol. XXXVII, No. 2 (2020); Vol. XXXVII, No. 1 (2020); Vol. XXXVI, No. 4 (2019) of this Newsletter. PADEP’s efforts, however, have met significant resistance in recent months.

On June 22, 2020, Governor Wolf amended his original executive order to extend PADEP’s deadline to present the rulemaking to the Environmental Quality Board (EQB), the independent body responsible for adopting proposed PADEP regulations, from July 31, 2020, until September 15, 2020. See Exec. Order No. 2019-07, as amended, 50 Pa. Bull. 3406 (July 11, 2020). This extension provides PADEP with additional time to conduct further outreach needed due to disruption caused by the COVID-19 global pandemic and to respond to advisory committee and community feedback.

Advisory Committee Activities

Several advisory committees have recently voted against presenting PADEP’s draft rulemaking to the EQB. First, PADEP presented its preliminary draft proposed rulemaking to establish a CO2 budget trading program to the Air Quality Technical Advisory Committee (AQTAC) on February 13, 2020, and held a virtual special joint informational meeting with AQTAC and the Citizens Advisory Council (CAC) on April 23, 2020, to present further information on the program.

Further information regarding the CO2 budget trading program was presented at the May 7, 2020, AQTAC meeting. See Presentation by PADEP to the AQTAC, “Draft Proposed Rulemaking: Chapter 145. Interstate Pollution Transport Reduction—Subchapter E. CO2 Budget Trading Program” (May 7, 2020). PADEP reviewed the proposed program and presented changes made to the proposal since the preliminary draft. These changes include (1) amending the definition of legacy emissions, which amends calculation and value of the waste coal set-aside;(2) establishing the allowance base budget at 78 million tons of CO2, which will decline annually; (3) adding two additional allowance allocations, the strategic use set-aside account and cogeneration set-aside account; and (4) removing abandoned well plugging as an offset project option. Id. AQTAC members asked questions and also heard public comment on the proposed program before voting on whether to concur with PADEP’s recommendation to move the proposed rulemaking forward to the EQB for consideration. The AQTAC vote was tied with one abstention, so under the rules, the motion did not carry.

PADEP also presented the draft proposed CO2 budget trading program regulation to the CAC on May 19, 2020. See Minutes of Webex Meeting of Citizens Advisory Council (May 19, 2020). Public comment was heard on the proposal and the CAC voted 9 to 4 (with one abstention) against a motion to recommend that PADEP present the proposed rulemaking to the EQB.

On July 22, 2020, the Pennsylvania Small Business Compliance Advisory Committee also heard a presentation from PADEP on the proposed draft regulation. This committee also voted against a motion to move PADEP’s proposed draft regulation forward.

Legislative Activities

In addition to meeting resistance from advisory committees, Governor Wolf’s executive order is also meeting resistance from the Pennsylvania General Assembly. In response to the Governor’s executive order, in November 2019 members of the Pennsylvania House and Senate referred bipartisan companion bills, House Bill 2025 (HB 2025) and Senate Bill 950 (SB 950), both known as the Pennsylvania Carbon Dioxide Cap and Trade Authorization Act, to their respective Environmental Resources and Energy committees for consideration. See HB 2025, 203d Leg., Reg. Sess. (Pa. 2019); SB 950, 203d Leg., Reg. Sess. (Pa. 2019). The legislation prohibits PADEP from adopting any measure to establish a greenhouse gas cap-and-trade program unless the general assembly specifically authorizes it by statute.

While the legislation was pending, members of the Pennsylvania Senate Republican Caucus wrote a letter to Governor Wolf asking him to rescind his executive order, arguing that the COVID-19 pandemic has significantly reshaped the policymaking process in Pennsylvania and that the constraints caused by the pandemic have limited meaningful participation in the rulemaking process. See Letter to Governor Wolf (Apr. 21, 2020), https://environmental.pasenategop.com/wp – c o n t e n t / u p l oa d s/ si t es/ 34 / 2 0 2 0 / 0 4 / 4 . 2 1 . 2 0 2 0 -PASenateRGGI.pdf. The letter suggests that the current rulemaking activity is premature given recent events, and if continued will likely cause commonwealth power plants and the businesses that supply them to shut down.

The House committee voted on June 9, 2020, to move HB 2025 to the full House for consideration, and the House passed the bill with a vote of 130-71 on July 8, 2020. The bill will now be considered by the Senate and was referred to the Committee on Environmental Resources and Energy on July 13, 2020. Governor Wolf has vowed to veto the bill.

On July 8, 2020, the same day that HB 2025 passed the House, PADEP issued a press release asserting that, according to its analysis, the reduced CO2 pollution from power plants through the commonwealth’s participation in RGGI would save hundreds of lives and billions of dollars in Pennsylvania. See Press Release, PADEP, “Capping Carbon Pollution Would Save Hundreds of Lives and Billions of Dollars” (July 8, 2020). PADEP estimates that participation in RGGI would lead to a net increase of more than 27,000 jobs, add $1.9 billion to the gross state production, and save more than $6 billion in health benefits through 2030 from reduced sulfur dioxide and nitrogen oxide pollution. Id.

Debate on this proposal is likely to continue over the next few months. We continue to follow this issue closely and will provide further information in the next issue.

JOINT LEGISLATIVE CONSERVATION COMMITTEE ISSUES REPORT ON SUPPORTING COAL REFUSE-FIRED POWER PLANTS

In June 2020, the Pennsylvania Joint Legislative Air and Water Pollution Control and Conservation Committee (JLCC) released a report on the benefits of utilizing coal refuse-fired power plants. See JLCC, “The Coal Refuse Reclamation to Energy Industry and Carbon Trading Markets” (June 2020). The JLCC, which is a bipartisan group of 18 members of the Pennsylvania House and Senate, conducts continuing studies of air and water pollution laws and their enforcement and recommends needed changes to the general assembly.

In 2020, the JLCC held hearings and information sessions to explore how the commonwealth balances the services that the coal refuse reclamation to energy industry provides with current initiatives to reduce pollutants, including greenhouse gas emissions. The committee heard from stakeholders and experts to better understand the workings of the industry and the impact of state and federal regulations on it.

The resulting report addresses the environmental and economic benefits of the coal refuse reclamation to energy industry, highlighting that coal refuse-fired power plants generate power using hundreds of legacy waste coal piles across the commonwealth, which contribute to particulate pollution, acid mine drainage, and other environmental and health hazards. The report acknowledges that the plants emit pollutants and carbon dioxide associated with fossil fuels. The alternative, however, would be for commonwealth agencies to use federal and state funds to reclaim these sites directly, which would come at a higher cost to taxpayers. As a result, the JLCC offered five recommendations to support the industry:

  • Increase the Coal Refuse to Energy and Remediation annual cap to $40 million from the current $20 million, while also removing caps to allow the full amount to be accessed by the industry.
  • Advocate for a long-term, industry-sustaining federal credit of at least $12 per ton of refuse burned to eventually replace Pennsylvania’s current credit.
  • Create a Power Purchase Agreement with local utilities or state and federal agencies to ensure the plants continue to operate regardless of fluctuations in the energy market.
  • . . . [C]onsider increasing the [coal refuse to energy industry] set-aside amount [in the Pennsylvania Department of Environmental Protection’s draft Regional Greenhouse Gas Initiative rulemaking] to 12.5 million tons of coal equivalent [from the current 9.3 million tons] to account for decreased production in recent years.
  • Limit participation in Tier II of the Alternative Energy Portfolio Standards program to in-state resources to increase credit value.

Id. at 5.

EQB PROPOSES REVISED WATER QUALITY CRITERIA FOR MANGANESE

On July 25, 2020, the Pennsylvania Department of Environmental Protection’s (PADEP) Environmental Quality Board (EQB) published proposed revisions to the water quality standard for manganese. See Water Quality Standard for Manganese and Implementation, 50 Pa. Bull. 3724 (proposed July 25, 2020).

As previously reported, revisions to the water quality standard for manganese have been in progress for several years, pursuant to the October 30, 2017, amendment to section 1920-A of the Administrative Code of 1929, 71 Pa. Stat. § 510-20, known as Act 40, which directed the EQB to promulgate revised water quality criteria for manganese within 90 days. See Vol. XXXVII, No. 1 (2020); Vol. XXXVI, No. 3 (2019) of this Newsletter. In response to Act 40, PADEP published an advance notice of proposed rulemaking on January 27, 2018, soliciting technical information for the development of the revised water quality standards. See Water Quality Standard for Manganese, 48 Pa. Bull. 605 (Jan. 27, 2018) (advance notice of proposed rulemaking).

There are two major aspects of the July 25, 2020, proposed rule: (1) revised numeric water quality criterion for manganese, and (2) two proposed alternative points of compliance.

Revised Numeric Water Quality Criterion

The current water quality criterion for manganese of 1.0 mg/L is contained in 25 Pa. Code § 93.7, Table 3. The proposed rule would delete the 1.0 mg/L criterion for manganese from Table 3 and add manganese to the list of toxic substances under 25 Pa. Code § 93.8c, Table 5, with a new criterion of 0.3 mg/L. Table 3 generally identifies the “critical use” of waters to be protected by the criteria set forth in the table. In contrast, Table 5 water quality criteria are set at a level to protect human health and aquatic life and apply to all surface waters in the commonwealth.

The preamble to the proposed rule notes that while the U.S. Environmental Protection Agency (EPA) has not developed a human health criterion for manganese, toxicological data relating to human health effects from manganese is available. PADEP therefore developed a new human health criterion for manganese of 0.3 mg/L pursuant to 25 Pa. Code § 16.32(c)(2), following the EPA’s “Methodology for Deriving Ambient Water Quality Criteria for the Protection of Human Health” (2000), and the “2015 EPA Updated Ambient Water Quality Criteria for the Protection of Human Health.”

Point of Compliance Alternatives

The chapter 93 water quality criteria set “instream” water quality criteria that PADEP implements through treatment technologies and effluent limitations requirements in individual National Pollutant Discharge Elimination System (NPDES) permits. Thus, the “point of compliance”—i.e., where in the stream compliance with applicable water quality standards is measured—is an important point.

25 Pa. Code § 96.3(c) requires chapter 93 water quality criteria to be achieved 99% of the time in all surface waters (i.e., compliance is measured at the point of discharge). However, under section 96.3(d), water quality criteria for certain constituents must instead be met 99% of the time at the point of all existing or planned surface potable water supply withdrawals. Act 40 directed PADEP to propose regulations that move the point of compliance for manganese from the point of discharge to the point of all existing or planned surface potable water supply withdrawals under section 96.3(d).

The July 2020 proposed rule proposes setting the point of compliance for the revised manganese water quality criterion at either the point of discharge or the point of all existing or planned surface potable water supply withdrawals and solicits comments on the two proposed alternatives. However, the preamble discussion clearly indicates PADEP’s preference to establish the point of compliance at the point of discharge.

Next Steps

The proposed revision to the water quality standard for manganese would likely have a significant impact on the mining industry in Pennsylvania, as well as many other industries, particularly if the final rule sets the point of compliance at the point of discharge. As stated in the preamble:

Adoption of a new human health toxics criterion for manganese may require new and existing NPDES discharges to be evaluated when permit applications undergo [PADEP] review. This evaluation could potentially result in increased treatment and operational costs for permitted dischargers with manganese effluent limits, depending on the point of compliance for the criterion.

50 Pa. Bull. at 3728. Comments on the proposed rule may be submitted until September 25, 2020.

PADEP POSTS REVISED DRAFT ENGINEERING MANUAL FOR SURFACE MINING OPERATIONS

The Pennsylvania Department of Environmental Protection (PADEP) recently presented a revised draft of the “Engineering Manual for Surface Mining Operations” (Engineering Manual) at the July 16, 2020, meeting of the PADEP Mining and Reclamation Advisory Board (MRAB). The current version of the Engineering Manual was issued in 1999.

The 147-page draft Engineering Manual would apply to all surface coal and non-coal operators in Pennsylvania and contains technical guidance and standards in the areas of erosion and sedimentation control, impoundments, haul roads, water discharges, active and passive mine drainage treatment, streams and wetlands encroachment, mining near public roads, slope stability, and air pollution control. The Engineering Manual is intended to assist operators in preparing permit application materials that require engineering information in these areas, as well as PADEP staff in reviewing permit applications. The Engineering Manual states that it explains acceptable designs and where variations are possible for information required as part of permit applications.

The initial draft of the Engineering Manual was presented to MRAB for discussion as the first step toward finalizing the revised manual. The manual may be further revised in response to feedback from MRAB. Prior to finalization the revised manual will be published in the Pennsylvania Bulletin for public comment. According to PADEP’s non-regulatory agenda, an updated copy of which was also issued in July 2020, PADEP anticipates publishing the proposed revised manual in the third quarter of 2020.

PADEP RELEASES DRAFT 2020 INTERACTIVE STATE WATER QUALITY REPORT

On June 27, 2020, the Pennsylvania Department of Environmental Protection (PADEP) released the “Draft 2020 Pennsylvania Integrated Water Quality Monitoring and Assessment Report.” See Press Release, PADEP, “DEP Releases Draft Report on Statewide Water Quality” (July 2, 2020). PADEP is required to submit the report to the U.S. Environmental Protection Agency every two years under sections 303(d) and 305(b) of the Clean Water Act, 33 U.S.C. §§ 1313(d), 1315(b). In particular, section 303(d) requires states to identify impaired waters that require the development of total maximum daily loads (TMDLs).

The report classifies nearly all of the state’s streams and lakes into eight categories based on the status of attainment with protected uses and implementation of TMDLs. Agriculture, abandoned mine drainage, and stormwater runoff are identified as the most common causes of water impairment. All of the information on impairment listings is downloadable in Excel spreadsheet format. The report also identifies waters that have been restored since the last biannual report, and highlights PADEP’s success in treating abandoned mine drainage, which the report states constitutes the majority of restored waters.

The report also identifies 27 restoration priority watersheds, almost all of which are identified as impaired due to agriculture. The Casselman River watershed in Somerset County, which is identified as impaired due to metals and pH levels caused by abandoned mine drainage, is the only mining-related restoration priority watershed in the report.

The interactive online report includes maps with zoom functions that allow users to identify the status of and obtain information on specific streams of interest. The comment period on the draft report closed on August 11, 2020.

Copyright © 2020, The Foundation for Natural Resources and Energy Law, Westminster, Colorado

California Approves a Program to Install 37,800 Electric Vehicle Chargers

EmTech Law Blog

(by Gina Falaschi)

The State of California has taken another leap to support electric vehicle owners and manufacturers.  On August 27th, the California Public Utilities Commission formally approved a plan from investor-owned utility Southern California Edison (SCE) to fund approximately 37,800 electric vehicle charging ports within its service territory.  Under the program, known as Charge Ready 2, SCE will install and maintain the charging infrastructure, while program participants will own, operate and maintain qualified charging stations.  SCE will also provide rebates to lower the cost of program participation, including an expanded rebate program to support EV charging ports in new multifamily dwellings under construction.

The State of California has taken another leap to support electric vehicle owners and manufacturers.  On August 27

Of the $436-million-dollar budget, $417.5 million will fund the charging infrastructure for Level 1, Level 2, and direct current fast chargers, while the remaining funds will be used for marketing, education, outreach, and evaluation programs.  The utility, which provides power to 15 million people across 50,000-square miles of Southern California, has committed to install 50% of these chargers in disadvantaged communities that are often disproportionately impacted by air pollution.

This program expands the Charge Ready Pilot program, which began three years ago, and joins SCE’s Charge Ready Transport, which aims to provide charging to support 8,490 medium- and heavy-duty electric vehicles over the next five years.

The Charge Ready 2 program will benefit current owners of electric vehicles by increasing charging options and possibly enhancing the market for used electric vehicles, making electric vehicles a more affordable option for more consumers.  The program will also encourage the purchase of new electric vehicles, which will benefit not only consumers wanting to own an EV, but also manufacturers who must meet their required percentage of zero emission vehicle sales. Under California law, which has also been adopted by several other states under the federal Clean Air Act, manufacturers must produce enough zero emission vehicles to meet the minimum credit requirement, which increases by 2.5% annually.  For example, for model year 2020 vehicles, a manufacturer must produce enough zero emission vehicles to have credits equal to 9.5% of the manufacturer’s average fleet sales in model years 2016-2018.

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Webinar: A Decade of Environmental & Regulatory Progress in the Natural Gas Industry

Pittsburgh, PA – Cabot Oil & Gas Corporation, in cooperation with Marcellus Drilling News and Natural Gas Now hosted a Think About Energy Briefing webinar on Wednesday August 26, 2020.

Today’s webinar featured Patrick Henderson of the Marcellus Shale Coalition, Kathryn Klaber of the Klaber Group and Joseph Reinhart of Babst Calland.

The webinar provided attendees with a look back at the environmental and regulatory progress that has occurred since the shale industry started in earnest over a decade ago. Panelists discussed the numerous legislative, regulatory and best management practices that have evolved through cooperation and respect for the communities and environment in which the industry operates.

George Stark, Director, External Affairs, Cabot Oil & Gas Corporation, moderated today’s discussion. “We are fortunate to have panelists who have been involved in the shale industry for more than a decade in the Commonwealth. In each of their respective roles, they all had one common goal – how can we get this done the right way. The industry has made tremendous strides over the past decade and this would not have happened without the expertise of panelists like we have today,” said Stark.

Patrick Henderson, Director of Regulatory Affairs for the Marcellus Shale Coalition, focused on the environmental improvements in Pennsylvania and their impact on the quality of life.

“We’ve made terrific progress over the past decade in Pennsylvania, and because of safe and responsible natural gas development, our environment is better protected and our air quality is dramatically improved,” said Henderson. “Pennsylvania has among the highest of environmental standards for ensuring that natural gas is developed safely and responsibly, and our state Department of environmental Protections own data demonstrates that natural gas operators have among the highest environmental compliance rates of any industry in the Commonwealth.”

Henderson highlighted the shale industry’s commitment to getting it right from an environmental perspective.

“Industry has been at the forefront in demanding excellence in its operations and among its peers. Their employees are members of our local community, and they are rightfully proud of the many significant contributions they have made within their communities,” said Henderson. “Let there be no question: the safe and responsible development of Pennsylvania’s domestic natural gas resources has enhanced our environment; created job opportunities for those in need; strengthened our national security; and helped to elevate our Commonwealth as a leader on the world stage,” concluded Henderson.

Kathryn Klaber, managing partner of the Klaber Group, discussed the industry’s role during the early days of shale development and the involvement of the Marcellus Shale Coalition in the process.

“The early days in the Marcellus were all about earning the license to operate – achieved through authentic outreach to the many stakeholders who were quickly learning about our industry,” said Klaber.

Ms. Klaber helped to organize and served as the inaugural president of the Marcellus Shale Coalition. She discussed the member led approach to public outreach to a variety of stakeholders.

“Of the many proactive actions taken by the industry in the early years, none were to have as far reaching an impact as the many Recommended Practices, developed by the industry and shared with the public,” said Klaber. “The ability for the incredibly diverse companies across the industry to come together, identify priorities & work together to drive consensus on various topics was a monumental task. We then took those topics and created a unified outreach to partners & regulators.”

Joseph Reinhart, Co-Chair of the Environmental, Energy and Natural Resource Groups at Babst Calland, highlighted the regulatory changes as a result of shale development.

“Act 13 of 2012 expanded the existing reporting standards including tracking of waste water & air emissions data that operators are required to provide on an ongoing basis,” said Reinhart. “Operators are now required to report their completion fluids through the chemical disclosure registry Frac Focus.”

Reinhart went on to discuss the external influences and their impact on the progress of the shale industry.

“This past decade has clearly demonstrated the energy industry’s resiliency in the midst of price fluctuations, increased regulation, NGO opposition and policy changes, let alone the current pandemic and economic slowdown,” said Reinhart. “The industry has increased efficiencies even as lower commodity pricing squeezed margins, while at the same time seeking new markets.” Concluding his remarks, Reinhart discussed the midstream development as there are still areas across the United States that are lacking adequate supply. “Transportation options for moving natural resources from growing areas of production to customers continue to be built, even with new hurdles from regulators and other stakeholders.”

For the full aricle, click here.

Pittsburgh’s space industry is thriving

Smart Business 

(by Sue Ostrowski with Justine Kasznica)

As Pittsburgh and the surrounding region continue to attract and grow companies that support the space industry, a space collaborative is gaining ground to bring stakeholders together.

“If we do things right, Pittsburgh is well-positioned to be recognized as a center for research and commercialization of space-related technologies and innovation,” says Justine Kasznica, an attorney at Babst Calland.

Smart Business spoke with Kasznica about the growing number of local companies and regional stakeholders supporting space exploration.

How did the space collaborative begin?

In 2019, Astrobotic Technology Inc., a Pittsburgh-based space robotics company building lunar delivery capabilities, made national news when it was awarded an $80 million NASA grant for a mission to develop a lunar lander to deliver payload to the lunar surface. This year, Astrobotic was awarded an additional $200 million NASA grant for an historic mission to deliver a NASA rover to drill for water ice on the South Pole of the Moon. A group of individuals representing industry, academia, local and state government, as well as regional economic development organizations — all passionate about space — saw this as a unique opportunity to coalesce a broader network of existing regional assets to establish a space industry group in Pittsburgh.

What role have other institutions played in bringing Pittsburgh to the forefront of space-related industries?

Pittsburgh has been involved in space history since the Apollo era, having manufactured much of the steel and glass hardware, as well as communications technology, for the Apollo 11 mission. Today, the region’s advanced manufacturing capabilities and world-class expertise in artificial intelligence, robotics, and space transport and logistics can propel Pittsburgh to an even more dominant seat at the table.

Local universities, in partnership with industry and the federal government, are actively engaged in planetary science research, space navigation, mobility and robotics programs. Life science companies are researching how tissue reacts, grows and interacts with other factors in a zero-gravity environment.

Other stakeholders are working on advanced technologies that are optimized for an extreme space environment and are developing experiments to send to the International Space Station and beyond. Still others are building business, legal and policy capabilities designed to support a growing global space industry.

What is the collaborative’s goal?

The goal is to become a space economic development organization committed to supporting the emerging global commercial space industry by attracting and growing the next generation of space industry businesses and workforce talent in Pittsburgh and the region.

What is the space collaborative currently doing?

The group is engaging in four distinct ways.

  • Sponsorship and partnership opportunities. The collaborative is looking for and identifying sponsors and partners to support regional programs and events and to identify research and funding opportunities for the region that align with the collaborative’s mission.
  • Ecosystem mapping. The collaborative is building a regional map of key participants in the space industry and identifying relevant cross-disciplinary skills in the region that can be leveraged by the space industry, as well as skills gaps that need to be further developed to enable a robust space ecosystem.
  • Government relations/policy. The collaborative is committed to securing strong partnerships with local, state and federal governments, with the goal of driving the development of policies and laws to support the rapid development of a commercial space industry, on and off-Earth, within the existing Outer Space Treaty framework.

  • Education. The collaborative will develop educational materials, networking opportunities, industry events and speaker series to introduce the public to the regional space ecosystem and drive broad cross-sector collaboration.

For the full article, click here.

For the PDF, click here.

Patent Office Reduces Accelerated Examination Fees for COVID-19 Treatments

EmTech Law Blog

(by Carl Ronald)

Not only has the global pandemic spawned a race to develop a cure for COVID-19, it has also created a race to the Patent Office to protect the massive investments companies are making in their attempts to develop novel diagnostics, therapies, and vaccines to combat the disease. In the United States, the first inventor to file a patent application that teaches a new and non-obvious way to treat the virus or its effects will be eligible for the limited monopoly that a patent provides. As has been reported, researchers are employing a variety of different mechanisms to attack the virus and it is expected that a significant number of patents will ultimately issue from these efforts.

programWhile Big Pharma is well-poised to incur the expense of patent filing, including the additional expense of paying for accelerated examination of their applications, smaller concerns may not be in a position to do so. To help small businesses and solo inventors in this regard, the United States Patent Office has announced a program that would fast-track the examination of certain patent applications related to the pandemic. While the typical turn-around time for an Examiner to provide an initial review of a new application is about two years after filing, payment of an extra fee to accelerate examination is also an option. Small businesses and startup companies, however, typically can’t take advantage of this program due to the substantial increased initial cost. To remove this impediment, the new program enables business with less than 500 employees to request accelerated examination of certain COVID-19-related applications with no additional upfront payment. If an application qualifies for the program, the Patent Office promises to fully examine it within a year of being granted prioritized status.

The program is further limited to therapeutics, vaccines and diagnostic tests that are subject to FDA approval for COVID-19 related uses. FDA approvals include, for example, Investigational New Drug (IND) applications, Investigational Device Exemptions (IDE), New Drug Applications (NDA), Biologics License Applications (BLA), Pre-market Approvals (PMA), and Emergency Use Authorizations (EUA).

As of Thursday, August 20th, there have been 274 applicants with 146 requests having been granted. The program is limited to the first 500 approved applicants.

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EPA Finalizes Revisions to Oil and Natural Gas New Source Performance Standards

Environmental Alert

(by Julie Domike, Michael Winek, Gina Falaschi and Gary Steinbauer)

On August 13, 2020, the U.S. Environmental Protection issued two prepublication final rules related to the New Source Performance Standards for the Crude Oil and Natural Gas Industry at 40 C.F.R. Part 60, Subparts OOOO and OOOOa (NSPS).  The two rules – the “Policy Amendments” and “Technical Amendments” (Rules) – arise from EPA’s review of the NSPS pursuant to President Trump’s 2017 Executive Order 13782, “Promoting Energy Independence and Economic Growth,” which directs the Agency to review existing regulations that potentially “burden the development or use of domestically produced energy resources” and to revise or rescind regulatory requirements if appropriate.  The Rules become effective 60 days after publication in the Federal Register.

Policy Amendments.  The Agency’s “Policy Amendments” amend NSPS Subpart OOOO (promulgated in 2012), regulating VOC emissions from certain new, reconstructed, and modified sources in the oil and natural gas industry, and NSPS Subpart OOOOa (promulgated in 2016), regulating VOC and methane emissions from specified new, reconstructed, and modified sources in the oil and gas industry.[1]  This rule provides that:

    1. The transmission and storage segments are no longer included in any source category regulated by the NSPS. These excluded emissions sources include transmission compressor stations, pneumatic controllers and underground storage vessels.  To regulate a source category under the NSPS, the Agency must first make a finding that the emissions of air pollutants from that source cause or contribute significantly to air pollution.  These segments were not included in the original NSPS, and no such finding was made when these segments were added to the NSPS in the 2012 and 2016 final rules, making the regulation of the segments improper under the Clean Air Act (CAA). Accordingly, EPA amended the NSPS to remove these sources from the source category and rescinded the NSPS (including both the volatile organic compounds (VOC) and methane requirements) applicable to them.
    2. Methane emission limits for the production and processing segments are rescinded. Sources in the production and processing segments include well completions, pneumatic pumps, pneumatic controllers, gathering and boosting compressors, natural gas processing plants, fugitive emissions and storage tanks.  EPA found that because the controls to reduce VOC emissions for these segments also reduce methane, separate methane limitations for these segments of the industry are redundant.  EPA determined that the rescission of these limits will not affect methane emissions from the production and processing segments.
    3. Methane emission limits from existing affected sources in the oil and natural gas production and processing segments will not be required by Section 111(d) of the CAA. With rescission of the methane limits for the production and processing segments, the Agency is no longer required to issue existing source emission standards in those segments of the oil and natural gas source category pursuant to Section 111(d) of the CAA.  In addition, EPA has interpreted CAA Section 111(d) to exclude VOCs from the requirement to address emissions from existing sources under this section because the section only applies to air pollutants for which air quality criteria have not been issued under CAA Section 108. VOCs, as precursor to particulate matter and ozone, are indirectly regulated as a criteria pollutant under CAA Section 108.
    4. EPA finalized its legal position that Section 111 of the CAA requires it to determine that a specific pollutant causes or contributes significantly to dangerous air pollution (“significant contribution finding”) before the pollutant is regulated in an NSPS, unless the Agency addressed the pollutant when it initially regulated the source category. As an alternative ground for rescinding the methane regulations, EPA found that its significant contribution finding for methane in the 2016 rule did not meet the statutory standard.

While the Policy Amendments rescind federal standards, the final rule did not withdraw the 2016 Control Techniques Guidelines for the Oil and Natural Gas Industry (CTG), which provide reasonably available control technology (RACT) requirements for VOC emissions from existing oil and gas sources.  Section 182 of the CAA requires states to revise their State Implementation Plans (SIP) to include RACT for sources of VOC emissions covered by a CTG if classified as moderate, serious, severe, or extreme nonattainment for ozone.[2]  EPA proposed withdrawing the CTG in March 2018 but has not taken final action, meaning that states, including Pennsylvania, must amend their SIPs.

Technical Amendments.  In a separate rule, the Agency promulgated “Technical Amendments” revising numerous substantive requirements of NSPS OOOOa.  EPA issued the final “Technical Amendments” after responding to more than 500,000 comments on the proposed technical amendments published in September 2018.  A summary of notable revisions is provided below:

Summary of Revisions
Fugitive Emissions Monitoring at Well Sites and Compressor Stations As compared to previous quarterly monitoring requirements, semi-annual fugitive emissions monitoring is required for compressor stations.
Semi-annual fugitive emissions monitoring is required for non-low production well sites (i.e., greater than or equal to 15 barrels of oil equivalent per day for the first 30 days of production).
Fugitive emission monitoring requirements do not apply at low production well sites (i.e., less than 15 barrels of oil equivalent per day for the first 30 days of production).
Initial monitoring must be conducted within 90, as opposed to 60, days after the startup of production.
A new definition of “modification” for an existing source separate tank battery surface site clarifies the types of changes that trigger regulatory requirements.
Storage Vessels Potential VOC emissions across certain controlled and manifolded storage vessels may be averaged to determine applicability.
Onshore Natural Gas Processing Plants The definition of “capital expenditure” uses the Consumer Price Index to calculate the percent of the replacement cost for purposes of determining whether there is a modification triggering the equipment leak standards.
Equipment in VOC service for less than 300 hours per year is exempt from monitoring requirements.
The initial compliance date applies 180 days after initial startup.
Well Completions Nearby, off-site separators, including production separators, may be used to control emissions during the flowback period, and emissions during certain pre-flowback steps need not be controlled.
Pneumatic Pumps The technical infeasibility exemption for pneumatic pumps is expanded to apply at all well sites, not merely greenfield sites.
Closed Vent Systems (CVS) Pneumatic pump CVS may be monitored for “no detectable emissions” using monthly audio, visual, and olfactory (AVO) monitoring or using optical gas imagery (OGI) at specified frequencies, in addition to annual Method 21 monitoring option.
Storage tank CVS may be monitored for “no detectable emissions” using OGI at specified frequencies, in addition to annual Method 21 and monthly AVO monitoring options.
Alternative Means of Emission Limitation (AMEL) An AMEL satisfying certain criteria may be granted after notice, following an opportunity for a public hearing, “based on the Administrator’s judgment.”
For certain individual well sites and/or compressor stations, EPA has adopted alternative fugitive emissions programs as AMEL that have been established in specific states, including Pennsylvania and Ohio.

These are some of the many revisions included in the 235-page pre-publication version of the Technical Amendments.  The less onerous fugitive emissions monitoring requirements and other changes offering additional compliance options and flexibility included in the Technical Amendments are good news for many oil and natural gas producers and processors, particularly smaller operators.  The changes will ease compliance burdens, and EPA estimates that the Technical Amendments will save the oil and natural gas industry $100 million in compliance costs each year.

Conclusion.  Lawsuits challenging the Rules are likely, with lawsuits challenging the Policy Amendments almost certain to be filed.  State attorneys general and environmental groups have vowed to challenge one or both Rules.  The oil and natural gas industry itself is divided on the Policy Amendments in particular, with some large energy companies voicing opposition to EPA’s removal of methane from the NSPS.  Other oil and gas producers have provided their full support for these changes, including those related to methane.  Litigation and the November election may affect the future of these Rules.

For questions about the Rules or air emissions regulations for the oil and natural gas industry generally, please contact Julie R. Domike at (202) 853-3453 or jdomike@babstcalland.com, Michael H. Winek at (412) 394-6538 or mwinek@babstcalland.com, Gina N. Falaschi at (202) 853-3483 or gfalaschi@babstcalland.com, or Gary E. Steinbauer at (412) 394-6590 or gsteinbauer@babstcalland.com.

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[1] “Oil and Natural Gas Sector: New Source Performance Standards and National Emission Standards for Hazardous Air Pollutants Reviews; Final Rule,” 77 Fed. Reg. 49490 (August 16, 2012); “Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources; Final Rule,” 81 Fed. Reg. 35824 (June 3, 2016).
[2] Section 184(b) of the CAA also obligates states in ozone transport regions to revise their SIPs to implement RACT with respect to all sources of VOC in the state covered by a CTG. The Ozone Transport Region (OTR), established by Section 184(a) of the CAA, is comprised of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont and the Consolidated Metropolitan Statistical Area, which includes the District of Columbia.

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Five Babst Calland Attorneys Named as 2021 Best Lawyers® “Lawyers of the Year”, 32 Selected for Inclusion in The Best Lawyers in America©, and 12 Named to Best Lawyers® “Ones to Watch”

Babst Calland is pleased to announce that five lawyers were selected as 2021 Best Lawyers “Lawyer of the Year” in Pittsburgh, Pa. and Charleston, W. Va. (by BL Rankings). Only a single lawyer in each practice area and designated metropolitan area is honored as the “Lawyer of the Year,” making this accolade particularly significant.

Receiving this designation reflects the high level of respect a lawyer has earned among other leading lawyers in the same communities and the same practice areas for their abilities, professionalism, and integrity. Those named to the 2021 Best Lawyers “Lawyer of the Year” include:

Kevin J. Garber, Environmental Law “Lawyer of the Year” in Pittsburgh, Pa. – In addition to the “Lawyer of the Year” award, Kevin Garber was also listed in the 2021 Edition of The Best Lawyers in America in Environmental Law, Natural Resources Law, Energy Law, Water Law, and Litigation – Environmental.

Timothy M. Miller, Litigation – Environmental “Lawyer of the Year” in Charleston, W. Va. – In addition to the “Lawyer of the Year” award, Timothy Miller was also listed in the 2021 Edition of The Best Lawyers in America in Energy Law, Commercial Litigation, Bet-the-Company Litigation, Oil and Gas Law, Litigation – Environmental.

Christopher B. “Kip” Power, Natural Resources Law “Lawyer of the Year” in Charleston, W. Va. – In addition to the “Lawyer of the Year” award, Kip Power was also listed in the 2021 Edition of The Best Lawyers in America in Environmental Law, Natural Resources Law, Energy Law, Commercial Litigation, Mining Law, Oil and Gas Law, Litigation – Regulatory Enforcement (SEC, Telecom, Energy), Litigation – Environmental, Litigation – Land Use and Zoning, Litigation – Municipal.

Joseph K. Reinhart, Natural Resources Law “Lawyer of the Year” in Pittsburgh, Pa. – In addition to the “Lawyer of the Year” award, Joseph Reinhart was also listed in the 2021 Edition of The Best Lawyers in America in Environmental Law, Natural Resources Law, Energy Law, Litigation – Environmental.

Mychal Sommer Schulz, Litigation – ERISA “Lawyer of the Year” in Charleston, W. Va. In addition to the “Lawyer of the Year” award, Mychal Schulz was also listed in the 2021 Edition of The Best Lawyers in America in Litigation – ERISA.

In addition, 32 Babst Calland lawyers were selected for inclusion in the 2021Edition of The Best Lawyers in America (by BL Rankings), the most respected peer-review publication in the legal profession:

  • Chester R. Babst – Environmental Law, Litigation – Environmental
  • Donald C. Bluedorn II – Environmental Law, Water Law, Litigation – Environmental
  • Dean A. Calland – Environmental Law
  • Matthew S. Casto – Commercial Litigation
  • Frank J. Clements – Corporate Law
  • Kathy K. Condo – Commercial Litigation
  • James Curry – Oil and Gas Law
  • Julie R. Domike – Environmental Law, Litigation – Environmental
  • Kevin K. Douglass – Natural Resources Law
  • Christian A. Farmakis – Corporate Law
  • Kevin J. Garber – Environmental Law, Natural Resources Law, Energy Law, Water Law, Litigation – Environmental
  • Norman E. Gilkey – Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law, Litigation – Bankruptcy, and Mediation
  • Steven M. Green – Energy Law
  • Lindsay P. Howard – Environmental Law, Litigation – Environmental
  • Blaine A. Lucas – Energy Law, Land Use and Zoning Law, Municipal Law, Litigation – Land Use and Zoning
  • John A. McCreary – Labor Law – Management
  • Janet L. McQuaid – Environmental Law
  • James D. Miller – Construction Law and Litigation – Construction
  • Timothy M. Miller – Energy Law, Commercial Litigation, Bet-the-Company Litigation, Oil and Gas Law, Litigation – Environmental
  • Jean M. Mosites – Environmental Law
  • Christopher B. Power – Environmental Law, Natural Resources Law, Energy Law, Commercial Litigation, Mining Law, Oil and Gas Law, Litigation – Regulatory Enforcement (SEC, Telecom, Energy), Litigation – Environmental, Litigation – Land Use and Zoning, Litigation – Municipal
  • Joseph K. Reinhart – Environmental Law, Natural Resources Law, Energy Law, Litigation – Environmental
  • Bruce F. Rudoy – Mergers and Acquisitions Law, Corporate Law
  • Charles F.W. Saffer – Real Estate Law
  • Mychal Sommer Schulz – Litigation – ERISA
  • Mark D. Shepard – Commercial Litigation, Bet-the-Company Litigation, Litigation – Environmental
  • Steven B. Silverman – Information Technology Law, Commercial Litigation
  • Krista-Ann M. Staley – Land Use and Zoning Law
  • Laura Stone – Corporate Law
  • Robert M. Stonestreet – Environmental Law, Energy Law, Commercial Litigation
  • David E. White – Construction Law, Litigation – Construction
  • Michael H. Winek – Environmental Law

Twelve Babst Calland lawyers were also named to 2021 Best Lawyers: Ones to Watch which recognizes associates and other lawyers who are earlier in their careers for their outstanding professional excellence in private practice in the United States:

  • Mary H. Binker – Corporate Law and Real Estate Law
  • Katrina N. Bowers – Energy Law and Environmental Law
  • Carla M. Castello – Commercial Litigation and Mass Tort Litigation / Class Actions – Defendants
  • Marissa A. Cocciolone – Energy Law
  • Marc J. Felezzola – Commercial Litigation and Litigation – Construction
  • Brittany A. Fox – Energy Law
  • Alyssa Golfieri – Land Use and Zoning Law
  • Sean R. Keegan – Commercial Litigation
  • James D. Mazzocco – Litigation – Environmental
  • Joshua S. Snyder – Commercial Litigation and Energy Law
  • Andrew V. Terranova – Corporate Law and Mergers and Acquisitions Law
  • Benjamin R. Wright – Commercial Litigation and Construction Law

Best Lawyers undergoes an authentication process, and inclusion in The Best Lawyers in America is based solely on peer review and is divided by geographic region and practice areas. The list has published for more than three decades, earning the respect of the profession, the media, and the public as the most reliable, unbiased source of legal referrals. Its first international list was published in 2006 and since then has grown to provide lists in over 65 countries.

FTC Investigation of Twitter for Alleged Privacy Violations Reinforces Need for Strong Privacy Policies and Practices

Emerging Technologies Perspectives

(by Ashleigh Krick)

On August 3, 2020, Twitter disclosed in a regulatory filing that it is under investigation by the Federal Trade Commission (FTC) for allegations that the company used user phone numbers and email addresses for targeted advertising in violation of a 2011 Consent Agreement. Twitter estimates that it could face $150 to $250 million in losses due to legal fees and enforcement penalties resulting from this matter.

The 2011 Consent Agreement resolved charges that Twitter violated the Federal Trade Commission Act (FTC Act) when hackers obtained administrative control of Twitter allowing them access to non-public user information, private tweets, and the ability to send out fake tweets from any user’s account. The FTC found that Twitter’s actions neither upheld statements in its privacy policy, nor provided reasonable and appropriate security to prevent unauthorized access to nonpublic user data and honor the privacy choices of its users.

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Report Sees Shale Poised For Growth

American Oil & Gas Reporter

PITTSBURGH–Despite challenges, a maturing shale industry is poised for growth as natural gas and oil producers have slashed the costs of production, concludes the law firm of Babst Calland in its 10th annual energy industry report.

The 2020 Babst Calland Report–The U.S. Oil & Gas Industry: Federal, State, Local Challenges & Opportunities; Legal and Regulatory Perspective for Producers and Midstream Operators covers topics ranging from the industry’s business outlook, regulatory enforcement and rule-making to developments in pipeline safety and litigation trends, Babst Calland says, adding that its attorneys’ collective legal experience and perspectives on these and related business developments are highlighted in the report.

“The U.S. natural gas and oil industry has experienced tremendous growth and change since we first published this report in 2011,” comments Joseph K. Reinhart, shareholder and co-chair of Babst Calland’s Energy and Natural Resources Group. “Fast forward to an unprecedented 2020 with a pandemic, a corresponding economic slowdown, and an oversupply of natural gas and crude oil. With increased public and government pressure, sustained low prices, and less-reliable financing options, resiliency will continue to be the driving force of a dynamic energy market that continues to evolve.”

Reinhart says the past decade clearly has demonstrated the energy industry’s resilience amid price fluctuations, increasing regulation, opposition from nongovernmental organizations and policy changes. He says the industry has improved efficiencies, even as lower commodity pricing has squeezed margins, while also seeking new markets.

According to the Energy Information Administration, Reinhart cites, the United States exported more natural gas in 2019 by pipeline than it imported for the first time since 1985, mainly because of increased pipeline capacity to send natural gas to Canada and Mexico.

“Perhaps a more fossil fuel-friendly federal government and the promise of a predictable federal regulatory landscape helped boost capital spending and the prospects of growth through 2019,” Reinhard poses. “However, despite federal predictability over the last few years, states continue to independently regulate, legislate and take judicial actions that at times challenge natural gas development.”

A Changing Market

U.S. energy production appears poised to continue to outstrip domestic consumption, in some measure because of increased consumption efficiency along with the obvious ramifications of the natural gas revolution, The 2020 Babst Calland Report concludes.

It notes the global economic slowdown coupled with an oversupply of natural gas and crude oil has thrown the U.S. energy production landscape into near-term turmoil. Each company has its own set of opportunities and challenges to navigate based on its financing, debt, shareholder goals, and operations and infrastructure footprint.

Nonetheless, Babst Calland says, America’s plentiful supply of natural gas and oil is expected to continue to fuel its economic future and support national security.

“After a relatively productive 2019, a new decade began with oversupply and a falloff in resource use resulting from the pandemic,” the report points out. “With increased public and government pressure, sustained low prices, and less reliable financing options, resiliency will continue to be the driving force of a dynamic energy market that continues to evolve.”

From a workforce standpoint, the report continues, COVID-19 conditions, and other wage and hour regulations, amendments to the Family Medical Leave Act, and expanded unemployment benefits under the CARES Act, have had an impact on companies across the country.

Legislation And The Courts

In numerous locales, Babst Calland says, companies are encountering land-use and zoning challenges. These increasing headwinds have resulted in slowing new permitting activity, as well as ongoing challenges and ordinance restrictions. Cooperation between operators and local government will become even more essential in the future, given that municipal finances, which depend on property and income taxes, are in a precarious state.
Among the key legislative and legal developments cited in The 2020 Babst Calland Report:

  • In Pennsylvania, Act 85 of 2019 took effect in January and defines the conditions in which oil and gas producers may drill lateral wellbores that cross between two or more pooled units.
  • Last year, Ohio’s lower courts clarified some aspects of both the Ohio Dormant Mineral Act and the Marketable Title Act, but these decisions also highlight a need for further guidance. The Ohio Legislature passed HB 166, which amended the state’s unitization statute.
  • The Texas Supreme Court affirmed the duties executive interest mineral owners owe to nonparticipating royalty interest owners.

Elsewhere, Babst Calland goes on, courts in the Appalachian Basin have clarified the rights of oil and gas operators, lessors and adjacent landowners on a host of matters including timeliness of claims, health effects, forced pooling and related lease rights.

“Although 2019 saw renewed claims of adverse health impacts allegedly associated with unconventional natural gas development, support for such claims continues to be limited,” the firm comments.

Regulatory Developments

Today’s regulatory environment, Babst Calland observes, largely focuses on climate change, reducing emissions, water quality developments and enforcement.

“Enforcement, penalties and increased volumes of written agency guidance continue to challenge the industry across the nation,” The 2020 Babst Calland Report states. “Climate change issues are continuing to garner significant attention, as is an increasing focus on emerging contaminants.”

Among significant developments, Babst Calland outlines, the Environmental Protection Agency has finalized a major overhaul of National Environmental Policy Act regulations, and the U.S. Supreme Court issued a landmark opinion regarding liability for groundwater discharges that reach surface water.

Meanwhile, citizen groups continue to actively challenge any federal or state initiatives designed to expand natural gas or oil development, creating delays or uncertainties, the firm adds. Operators still seek to install new or replace existing pipelines while advocacy groups aggressively oppose many projects, Babst Calland notes.

At the federal level, the Pipeline and Hazardous Materials Safety Administration continues to respond to increased public and congressional pressure by initiating and finalizing new or revised safety regulations.

Technological Advances

Despite the pandemic and its impacts, The 2020 Babst Calland Report says unmanned aircraft systems (UAS) have emerged as essential tools for the energy industry to conduct complex inspection and monitoring of difficult-to-access infrastructure and locations.

Market reports indicate annual growth rates as great as 25% for UAS applications in the energy market. But this growth also comes with challenges in evolving technology, Federal Aviation Administration regulations, rogue drone operations, and threats to cybersecurity and privacy rights, Babst Calland cautions.

Those factors lead The 2020 Babst Calland Report to conclude, “The natural gas and oil industry continues to expand its reach and impact on U.S. energy supply and independence. The nation’s plentiful supply of natural gas and oil is expected to continue to fuel its economic future and to support national security.

To request a copy of the report, contact info@babstcalland.com.

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Babst Calland Attorneys Target Oil and Gas Political Issues to Watch

Hart Energy

(by Joseph Markman and Len Vermillion featuring Kevin Garber and Jean Mosites)

In some presidential election years, voters have struggled to discern substantive differences between the positions of the major party candidates. Not this year.

The energy and environmental policies of President Donald Trump and former Vice President Joe Biden reveal “a night and day difference between the two approaches,” Kevin Garber, a shareholder in the Babst Calland law firm told Hart Energy’s Joseph Markman and Len Vermillion.

But oil and gas executives need to focus their attention beyond the presidential race.

“Looking at the real local level, there are task forces, there are climate plans, there are initiatives for electric vehicles and renewables and building codes—whether you can or cannot have gas hookup in new construction,” said Jean Mosites, also a Babst Calland shareholder who practices environmental law. “A lot of interesting things are going on and certainly not just federal.”

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Justine M. Kasznica – Emerging Technologies Attorney

Emerging Technologies Profile 

What motivated your desire to help start-ups and emerging technology companies with their legal matters? I was a litigator at a large firm in Philadelphia, fresh out of law school, when I started working with a good friend from undergrad to commercialize a robot designed to work with autistic kids. I was able to bring in my first client, and had the rare opportunity to work with a cross-disciplinary team of colleagues to support the legal needs of my friend’s start-up. This was a career turning point for me, as it was the moment when I discovered the rewards of working with start-ups. I saw the critical role that lawyers play in supporting the commercialization of advanced technologies and committed to doing my part in building a responsible future for robotics and artificial intelligence.

As an early adopter of the drone, what was the origin of your drone fascination and expertise? Growing up, my older brother and I spent a lot of time designing, building and flying model rockets, and other favorite aircraft (from balsa/rubber-powered Piper Cubs to radio-controlled Corsairs and B-25 Mitchells). When Jeff Bezos announced (circa 2012) that drones would be delivering all my future Amazon orders to my doorstep, I couldn’t resist learning about the regulatory hurdles facing unmanned aircraft systems (UAS, as we call them), and saw a great opportunity to connect my legal work with my interests in aviation and aerospace. Somewhere along this journey, I received my first drone “Quentin” – a DJI Phantom 4 – as a Valentine’s Day gift from my husband.

How do you effectively manage so many start-up client relationships at the same time? What’s your secret? The truth is, I’m still working on it… There aren’t enough hours in a day, and I am fortunate to work with an incredible team of partners and associates who are equally bought into the vision of an emerging technology/start-up legal practice. That certainly helps!

But at the end of the day, it’s all about working with amazing clients. An entrepreneur’s passion is contagious, and it is as rewarding and exhilarating as it is often difficult to ride alongside a client on the ups and downs of an early-stage company’s lifecycle. The key is to find clients with a business vision you believe in, and to build a partnership with them based on trust (and patience!) to be able to effectively execute that vision. It is when lawyers embrace their role as business partners and solutions providers that they become indispensable to clients and reap the rewards of their efforts.

What recurring advice do you find yourself giving to early-stage companies and their pioneers? If there was one silver bullet for success it’s that technologists have to make sure there is a willing customer who can benefit from and is willing to incorporate a particular technology to achieve their own business goals. It can be the greatest invention, but without an audience to deploy it, it does not become a sustainable (not to mention fundable) business. Successful pioneers are able to recognize if they have brought a visionary product too early to a nascent market and have the wisdom to pivot or the courage to plow forward and build the market themselves.

When you have downtime what do you do to relax? Actually, I have a ton of hobbies (but little time to do them all) and too many unfinished projects. I draw and paint nature and historic structures and landscapes, and illustrate and write children’s books. I am an avid reader. I am inspired by nature, and when I am not working or cooped up inside, I am outdoors – hiking, boating, fishing, reading, gardening, or playing (or trying to play) any outdoor sport.

Do you have ambitions for personal space travel? Is it possible for you? Of course, I would love to travel to space. We may yet have that opportunity in our lifetimes, thanks to those pioneers who are building the transportation capabilities to get us there. But the beauty about working in the space industry is that we can be a part of creating a new chapter in human off-Earth history without ever having to leave Earth.

What’s the most surprising thing that’s happened to you as an attorney? I never imagined becoming a “space lawyer”. When I came to Pittsburgh, I met and ended up marrying a guy who ended up becoming the CEO of a space robotics start-up. We spent the last 13 years building a Pittsburgh company intent on making space exploration and commerce accessible to the world.

What is your favorite meal? Ackee and Salt Fish, or curried goat, both national delicacies of Jamaica.

Favorite vacation spot? There’s a place in the Poconos in Northeastern Pennsylvania that has my heart. Our river house on the Allegheny is a close second.

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