The PIOGA Press
(by Blaine Lucas, Robert Max Junker and Jennifer Malik)
On May 14, the Pennsylvania Supreme Court entered an order denying the petition for allowance of appeal in Frederick v. Allegheny Township Zoning Hearing Board, et al., No. 449 WAL 2018 (Pa. 2019). The order concludes a battle of more than four years over the validity of the Allegheny Township, Westmoreland County, zoning ordinance. Previously in Frederick, the Commonwealth Court in a 5-2 en banc decision, rejected the contention that an unconventional natural gas well pad can be permitted only in an industrial zoning district, concluding that Pennsylvania law empowers municipalities to determine the location of oil and gas development and whether the same is compatible with other land uses within their boundaries. Frederick v. Allegheny Twp. Zoning Hr’g Bd., 196 A.3d 677 (Pa. Cmwlth. 2018).
Frederick is one of at least eight cases involving challenges to the validity of local zoning ordinances in Pennsylvania which authorize oil and gas development. Generally speaking, the challengers in these cases claim, based on the Pennsylvania Supreme Court’s decisions in Robinson Township v. Commonwealth, 83 A.3d 901 (Pa.2013) and Pennsylvania Environmental Defense Foundation v. Commonwealth, 161 A.3d 911 (Pa. 2017) that the zoning ordinances violate substantive due process and Article I, Section 27 of the Pennsylvania Constitution, commonly known as the Environmental Rights Amendment (ERA), because they permit an allegedly industrial use in non-industrial zoning districts.
In Frederick, the Allegheny Township zoning ordinance authorized oil and gas operations as a permitted use by right in all zoning districts.1 After the township issued a zoning permit to an operator for an unconventional well pad, three residents filed an appeal with the zoning hearing board challenging both the permit and the validity of the zoning ordinance. Following multiple nights of hearings, the board dismissed these challenges. The board’s decision contained numerous findings of fact related to the qualities and characteristics of the township and its long history of oil and natural gas development. The board specifically accepted the testimony of an expert proffered by the operator on the interplay between the oil and gas industry and agricultural and rural communities in Pennsylvania. The board rejected the objectors’ claims that the well pad would have an adverse effect on public health, safety, welfare or the environment. The board likewise declined to accept the objectors’ reading of Robinson, concluding that the zoning ordinance was valid.
Both the Westmoreland County Court of Common Pleas and the Commonwealth Court affirmed the board’s decision. Addressing the objectors’ repeated use of the term “industrial” to describe natural gas wells, the Commonwealth Court observed that the objectors did not present any evidence to the zoning hearing board “on what they meant by ‘industrial’ or the significance of that term.” The court observed that oil and gas drilling, like farming, is not a heavy industrial use, but instead is a use traditionally exercised in agricultural areas, containing temporary components of an industrial use. As a result, the court agreed with the zoning hearing board that the zoning ordinance does not violate substantive due process.
Next, the Commonwealth Court addressed the objectors’ contention that the zoning ordinance violates the ERA. The objectors repeated their previous argument under the due process clause―hat oil and gas is an incompatible “industrial use” that degrades the local environment. The objectors also asserted that the Supreme Court’s interpretation of the ERA in Robinson required the township to engage in an undefined preaction environmental impact analysis before enacting the zoning ordinance.
In analyzing the ERA claims, the Commonwealth Court addressed the Pennsylvania Supreme Court’s 2017 decision in PEDF rejecting the three-part test for measuring compliance with the ERA first enunciated in the Commonwealth Court’s 1973 decision in Payne v. Kassab, 312 A. 2d 86 (Pa. Commw Ct. 1973) and instead ruled that challenges raised under the ERA should be decided in accordance with its text. Acknowledging that the “precise duties imposed upon local governments by the first sentence of [the ERA] are by no means clear,” the Commonwealth Court ascertained the relevant standard, based on Robinson and PEDF, to be whether the governmental action “unreasonably impairs” the environmental values implicated by the ERA. However, the court found that Robinson “did not give municipalities the power to act beyond the bounds of their enabling legislation” and that “[m]unicipalities lack the power to replicate the environmental oversight that the General Assembly has conferred upon [the Department of Environmental Protection] and other state agencies.”
The Commonwealth Court also observed that Section 3302 of the Oil and Gas Act preempts municipalities from regulating “how” drilling takes place, and that a municipality only may use its zoning powers to regulate “where” mineral extraction occurs. The court concluded that the objectors failed to prove that the township’s legislative decision expressed in the zoning ordinance allowing gas wells in all zoning districts unreasonably impairs their rights under the ERA, particularly when the record (and the zoning hearing board’s findings) showed how long natural gas development has safely coexisted within rural communities, how the land can be returned to its original state once the wells are completed and how energy extraction can support the agricultural use of land.
In its conclusion, the Frederick majority opinion recognized that municipalities, if they do elect to utilize their discretion to enact land use regulations in the first place, must balance the interests of landowners in the use and enjoyment of their property with the public health, safety and welfare. The objectors’ contention that the ordinance would result in oil and gas development anywhere and everywhere in the township is tempered by the significant setback requirements in Act 13 that remain in effect. In fact, the zoning hearing board found that these requirements eliminated shale gas development from more than 50 percent of the land mass of the township. The Commonwealth Court returned to the “where” versus “how” distinction declared by the Supreme Court and noted that a zoning ordinance expressing legislative decisions regarding where a land use can occur must be affirmed unless clearly arbitrary and unreasonable.
Other validity challenges pending in Commonwealth Court
With the Supreme Court’s denial of the petition for allowance of appeal in Frederick, there is now precedent supporting the validity of zoning ordinances authorizing oil and gas development in all zoning districts. Presumably the Frederick decision will have a significant impact on two other similar ordinance validity challenges currently pending before the Commonwealth Court.
Of particular note is Delaware Riverkeeper Network v. Middlesex Township Zoning Hearing Board, No. 2609 CD 2015 (Pa. Cmwlth. 2015). There, the township zoning hearing board denied a zoning ordinance validity challenge and well permit appeal brought by several residents and nongovernmental organizations. The challenged ordinance permits oil and gas wells as either a use by right or a conditional use in designated rural, residential and commercial districts, but not in all districts. In its decision, the board noted the history of oil and gas production in the township, found the balancing of residential and oil and gas interests in the challenged ordinance to be credible, and found challengers’ arguments would render the zoning ordinance exclusionary. On appeal, the Butler County Common Pleas Court affirmed. The Commonwealth Court, in an unpublished opinion, affirmed the zoning hearing board and the common pleas court. However, in doing so the Commonwealth Court applied the Payne v. Kassab test for measuring compliance with the ERA. Thirteen days later, the Pennsylvania Supreme Court rejected Payne v. Kassab in its PEDF decision. The objectors had filed a timely petition for allowance of appeal in Delaware Riverkeeper, and the Supreme Court subsequently entered an order vacating the Commonwealth Court decision and remanded the case back to the Commonwealth Court for reconsideration. The Commonwealth Court held oral argument on the remanded case on June 6 and a decision is pending.
Finally, in Protect PT v. Penn Township Zoning Hearing Board, 1632 CD 2018 (Pa. Cmwlth. 2018), a nongovernmental organization filed a substantive validity challenge to the Penn Township, Westmoreland County, zoning ordinance on the grounds that allowing oil and gas drilling as a special exception in the Mineral Extraction Overlay (MEO) district, which encompasses portions of the rural resource and industrial districts, violated substantive due process and the ERA. The township zoning hearing board elected not to schedule a hearing on the challenge, resulting in a deemed denial under applicable law.
On appeal, the Westmoreland County Court of Common Pleas heard the case de novo and upheld the validity of the zoning ordinance. The court observed that the township had an established history of oil and gas drilling. Further, the court found that while the MEO district encompasses 54 percent of the township’s land mass, natural gas development is only permitted in less than 10 percent of the township after applying setbacks. Relying on the testimony of an oil and gas operator’s expert witnesses, the court reasoned that natural gas development: (1) did not interfere with the expectations of township residents because historical ordinances were much less stringent concerning oil and gas; and (2) was consistent with and beneficial to the agricultural and residential uses in the rural resource district. Applying the standards set forth in Frederick, the court held that the objector failed to meet its burden that the zoning ordinance violated substantive due process or the ERA. The objector appealed to Commonwealth Court, and the parties have submitted their briefs. Oral argument is scheduled for the October session in Pittsburgh.
For more regarding issues relating to land use and municipal implications of the Frederick case, contact Blaine A. Lucas at 412-394-5657 or blucas@babstcalland.com, Robert Max Junker at 412-773-8722 or rjunker@babstcalland.com, or Jennifer L. Malik at 412-394-5490 or jmalik@babstcalland.com.
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Pittsburgh Business Times and Houston Business Times
(by Patty Tascarella)
Babst Calland has opened its first Texas office via a merger with attorneys of The Chambers Law Firm, a firm based in Houston.
Les Chambers serves as managing shareholder of Babst Calland’s Houston office, which is located in The Woodlands.
Les Chambers, Ryan Chambers and Coleman Anglin have joined Babst Calland as shareholders, and Nataliya Tipton came aboard as an associate, according to a June 5 press release. They specialize in legal and regulatory matters related to oil and gas, property and transactional law as well as oil and gas title examination and analysis process for exploration and production companies in Texas, New Mexico, Oklahoma and the Appalachian Basin.
For the full Pittsburgh article, click here.
For the full Houston article, click here.
The Legal Intelligencer
(by: Kevin Garber and Casey Snyder)
Background: Oil and Gas Produced Water Management
Drilling and operating oil and gas wells, especially unconventional wells, generates a significant amount of flowback and produced water that must be managed properly under federal and state environmental laws (for this article, “produced water” will refer to all oil and gas extraction water). There are multiple produced water management strategies—and trends in the industry vary. The EPA’s newly released draft study, “Study of Oil and Gas Extraction Wastewater Management Under the Clean Water Act,” EPA‐821‐R19‐001 (May 2019), collected stakeholder input on produced water management options nationwide as part of its effort to determine whether future actions are appropriate to permit additional options to manage produced water.
Reviewing current management practices nationally, the EPA determined that injecting produced water into underground injection control (UIC) wells is the most common disposal option. Injection may be for disposal (Class II-D wells) or for enhanced oil recovery (Class II-R wells). The EPA and states with delegated authority implement these programs pursuant to the Safe Drinking Water Act. Pennsylvania has not applied for and does not have primacy to implement the federal UIC program in the commonwealth. Other management options include using produced water to hydraulically fracture new wells; using evaporation ponds or seepage pits in some states to contain produced water and subsequently collect precipitated solids for disposal or sale; using produced water from conventional operations for dust suppression and deicing; treating produced water onsite in mobile treatment units or treating it off site at centralized water treatment facilities (CWTs); disposing produced water from conventional operations at publicly owned treatment works (POTWs); and, in states west of the 98th meridian, discharging to surface water where suitable for agriculture or wildlife.
Pennsylvania is a major producer of oil and gas, especially from unconventional operations in the Marcellus and Utica shale formations. Pennsylvania was the second largest natural gas producer in 2017 with 5,463,888 million cubic feet of gas produced, next only to Texas. A study of recent Pennsylvania Department of Environmental Protection (DEP) data tracking oil and gas waste management in Pennsylvania reported approximately 57 million barrels of liquid waste were produced in 2017, 95 percent of which was produced water.
Produced water management in Pennsylvania has changed over time. In 2012, operators in Pennsylvania transported 52% of produced water to out-of-state UIC disposal wells. However, in 2017, only 7% of liquid waste was disposed of out of state. Reuse is the primary management option in Pennsylvania for both conventional and unconventional operators. The Pennsylvania Department of Environmental Protection’s beneficial reuse general permit, known as the WMGR123 permit, allows produced water from one well to be used to develop or hydraulically fracture another well under certain circumstances. In the early years of the unconventional play in Pennsylvania, operators sent produced water to CWTs and even to a few POTWs for treatment and disposal, but by 2015, over 90 percent of unconventional operators reported reusing produced water as a water management strategy. Conventional operators sent an estimated 7.9 percent of their produced water to POTWs in 2017. A recent EPA rulemaking (discussed in Section III) is likely to end that practice in August 2019.
Produced Water Management Draft Study
Beginning in 2018, the EPA solicited comment on management options for produced water and held a public meeting for stakeholders on Oct. 9, 2018. to address an expected increase of oil and gas production coupled with water shortages experienced by a number of states. The EPA published the draft study in mid-May 2019. The public comment period closes on July 1. The EPA plans to evaluate this study as it determines the next steps for produced water management, suggesting additional consideration is ongoing.
Stated goals of the study were to analyze approaches to oil and gas produced water management at the state and federal levels and to determine whether additional onshore discharge options are necessary. The draft study summarizes applicable regulation and collects stakeholder input but does not reach a conclusion on whether or how the EPA might expand disposal or management options. State agency and industry stakeholders support additional discharge options and offer specific suggestions, including allowing discharges to augment surface and groundwater supply, allowing treatment and discharge options at or closer to well sites, creating a general permit for as-needed discharges, incentivizing CWT facilities that accept produced water from multiple production operations, and revising CWT effluent limitation guidelines (ELGs) to provide additional flexibility for treating oil and gas water, such as permitting CWTs to accept produced water via pipeline. Public interest stakeholders are concerned about constituents of produced water and whether current or expanded treatment options will adequately treat constituents of concern.
2016 Zero-Discharge Effluent Limitation Guideline
In a related development of a few years ago, the EPA amended the federal ELGs at 40 CFR part 435 for the oil and gas extraction point source category on June 28, 2016, to prohibit the discharge of wastewater from unconventional oil and gas extraction to POTWs, effective Aug. 29, 2016. The EPA defined “unconventional oil and gas” to include “crude oil and natural gas produced by a well drilled into a shale or tight formation (including, but not limited to, shale gas, shale oil, tight gas, tight oil).” The EPA concluded that its zero discharge limitation was technologically available and economically feasible because no operators were discharging wastewater to POTWs by 2016. However, that statement was incorrect because conventional operators were discharging to DEP-approved POTWs. In 2015-2016, approximately one million barrels of produced water from conventional operations were sent to POTWs. To the extent conventional operators are covered by the rule, the EPA’s record was incomplete. Recognizing that some POTWs were still receiving produced water from unconventional sources, as defined by the EPA to include conventional operators, the EPA extended the compliance deadline of the rule in December 2016 to Aug. 20, 2019.
The Pennsylvania Grade Crude Oil Coalition, a conventional industry trade group, filed a petition for review of the rule in U.S. Court of Appeals for the Third Circuit in November 2016, which is still pending. The conventional industry seeks to exclude tight oil and gas formations from the EPA’s definition of unconventional oil and gas, which would recognize the Pennsylvania industry’s historical distinction between conventional and unconventional operations. However, absent a revision to the rule, Pennsylvania conventional oil and gas operators may no longer send produced water to POTWs for treatment after Aug. 20, 2019.
Outlook
The EPA’s produced water study does not reach any conclusions on whether the EPA will expand produced water management options for oil and gas operators. The study’s purpose was to collect stakeholder opinion and current management options for reference in ongoing consideration. The EPA does not specify when a final decision is expected. However, the study suggests the EPA is considering whether to expand management options, which would be welcome news because additional flexibility to manage produced water while protecting and possibly benefiting the environment, especially improvements that are implemented at the state level, would promote development of oil and gas resources.
For the full article, click here.
Energy Alert
(by Timothy Miller and Paul Atencio)
On June 5, 2019, the West Virginia Supreme Court issued its opinion in EQT Production Company v. Crowder affirming a decision of the circuit court of Doddridge County, holding that a surface tract cannot be used to produce minerals from neighboring lands in the absence of an agreement with a surface owner, even if the mineral owners/lessees agreed to pooling and unitization.
At the time that the century-old lease was executed, the lessor owned both the surface and minerals in fee. The minerals were later severed from the surface as subdivided tracts were conveyed as “surface only.” The plaintiff surface owners challenged use of their lands to drill horizontal wells extending beyond the limits of their property to produce and transport oil and gas to/from adjacent tracts.
The Circuit Court of Doddridge County agreed with the plaintiffs and entered an order granting partial summary judgment, finding EQT trespassed to the extent it used the plaintiffs’ surface lands to conduct operations under neighboring mineral estates.
The Court held that the long recognized implied right of a lessee to use so much of the surface as “reasonably necessary” to produce the minerals, was limited to use for production under the surface tract only; not neighboring lands, even if the mineral lessees had signed lease modifications allowing pooling and unitization. The appeal resulted from a trial court order finding that production companies do not have the right to produce pooled production through a surface drill tract without an express reservation in a severance deed or surface owner consent.
In its opinion the Court noted it did not decide the case on the “excessive use” claim, but limited it holding to trespass and property law claims. The court relied on a number of coal mining cases which have limited the right of operators to use leased tracts to transport coal from neighboring lands in the absence of an express agreement to do so.
A key takeaway from this decision is that an operator cannot rely on implied rights to use a surface owner’s property for development of minerals produced from pooled and unitized tracts when the surface and minerals are separately owned. This issue can be resolved by a carefully drafted surface use agreement containing language granting surface and subsurface easements for the development of oil and gas.
The Court’s decision regarding the right to produce oil and gas via pooling through a surface drill tract in the absence of an express grant or reservation to use the surface could create additional hurdles and costs for oil and gas operations, and will likely result in increased litigation.
For more information or to discuss implications of this decision, contact Timothy M. Miller at (681) 265-1361 or tmiller@babstcalland.com or Paul J. Atencio at (412) 253-8816 or patencio@babstcalland.com.
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Les Chambers, Ryan Chambers, Coleman Anglin and Nataliya Tipton Join the Firm’s Energy and Natural Resources Practice
Babst Calland today announced the opening of a new office in Houston, Texas, and merger with attorneys of The Chambers Law Firm, a prominent Houston law firm.
Les R. Chambers, Ryan A. Chambers, and Coleman G. Anglin join the Firm as shareholders, and Nataliya K. Tipton as associate.
These Houston-based attorneys represent clients on a variety of legal and regulatory matters, particularly in the areas of oil and gas, property, and transactional law and all aspects of oil and gas title examination and analysis process for exploration and production companies in the Mid-Continent (including Texas, New Mexico and Oklahoma) and Appalachian Basin.
Commenting on these developments, Donald C. Bluedorn II, managing shareholder of Babst Calland, said, “These highly-regarded oil and gas attorneys are a natural fit in advancing our Firm’s vision to continue to expand our geographic footprint to serve clients’ needs in the development of the Permian Basin and other major and emerging shale plays in the country.”
“Our nationally-recognized multidisciplinary team of experienced energy attorneys, along with the resources of our new Houston office, offer our clients exceptional regional and national legal representation to help navigate challenges and opportunities to succeed in the oil and gas industry.”
“We are very excited to be joining Babst Calland,” said Les Chambers. “The vast experience of our respective firms in the energy and natural resource sector, along with the diversity of practice areas and significant support staff at Babst Calland, will create a synergy that will greatly enhance the services we can provide to both our individual and mutual clients across the country.”
Les Chambers, the managing shareholder of Babst Calland’s Houston office, concentrates his practice in the areas of oil, gas and mineral title examination and opinions, oil and gas transactions, property law, as well as assisting clients on a wide range of energy matters including negotiating and drafting oil and gas contracts, leases, due diligence examination and analysis, pipeline acquisitions and surface use and seismic agreements.
Ryan Chambers, Coleman Anglin, and Nataliya Tipton also focus their practice on a wide range of oil, gas, and mineral-related matters including title opinions, title examination, due diligence, business and land transactions, operating agreements, litigation, and contractual and regulatory issues.
“The addition of our Houston office supports our strategy to expand Babst Calland’s team and capabilities to serve the needs of existing and new oil and gas clients in the Permian, San Juan, and Eagle Ford Basins as well as the Mid-Continent,” said Bruce F. Rudoy, Co-Chair of Babst Calland’s Energy and Natural Resources Practice Group.
The Firm’s new Houston, Texas office is located in The Woodlands, Texas.
Pipeline Safety Alert
(by James Curry, Keith Coyle and Brianne Kurdock)
On June 3, 2019, the U.S. Department of Transportation (DOT) sent a legislative proposal to Congress for reauthorization of the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) pipeline safety program. If enacted and signed into law, the legislation would reauthorize PHMSA’s pipeline safety program for an additional four years, or through 2023.
As in previous reauthorizations, the bill includes provisions that respond to recent events—in this case, the September 13, 2018, natural gas distribution incident in Merrimack Valley, Massachusetts. Consistent with the Trump Administration’s broader policy agenda, the bill also includes provisions to promote innovation by supporting new technologies and enhancing pipeline safety and reliability.
The legislation addresses other areas of concern to the pipeline industry, such as requiring more timely review of technical standards and imposing additional criminal sanctions for pipeline vandalism. Finally, the bill includes rulemaking mandates that focus on items of importance to PHMSA—namely, expanding the operator qualification (OQ) program to pipeline construction and establishing regulations for inactive pipelines.
How does the DOT Pipeline Safety Bill Respond to the Merrimack Valley Natural Gas Distribution Incident?
- Secondary or Back-Up Overpressure Protection: Requires gas distribution pipeline operators to provide a secondary or back-up means of overpressure protection, which is capable of shutting the flow of gas or relieving gas to the atmosphere, for regulator stations serving low pressure distribution systems that use the primary and monitor regulator design.
- Management of Change: Permits PHMSA to require all pipeline operators
to prepare and implement pipeline tie-in procedures that address management of change and active monitoring of pressures and control of gas and liquid sources.
How does the DOT Pipeline Safety Bill Advance Industry Initiatives?
- Incentives for Exceeding Safety Standards: Permits PHMSA to provide non-financial incentives or recognition to pipeline operators who voluntarily exceed the minimum federal pipeline safety regulations.
- Pilot Program for Innovative Technologies: Authorizes PHMSA to establish pilot programs to exempt from regulation, for a period of no longer than seven years, innovative technologies that achieve a safety level equivalent to, or greater than, the level of safety that would be achieved through compliance with the regulations. This section also grants PHMSA authority to revoke participation or terminate the pilot program immediately if continuation would be inconsistent with the goals and objectives of the Pipeline Safety Act.
- $100,000 Property Damage Threshold: Updates the property damage threshold for pipeline operator incident reporting requirements to $100,000, with a requirement to adjust this threshold every two years to account for inflation. The current threshold, established in 1984, is $50,000.
- Pipeline Safety Requirements in Permits Issued by Other Federal Agencies: Prohibits federal agencies other than PHMSA and the Federal Energy Regulatory Commission from imposing pipeline safety requirements in permits that are different than PHMSA’s requirements.
- Incorporating New or Updated Industry Standards by Reference Every Two Years: Requires PHMSA to review and update currently incorporated and new industry standards every two years. If PHMSA decides not to incorporate a new or updated industry standard, PHMSA must provide an explanation.
- Additional Criminal Violations: Adds vandalizing, tampering with, impeding, disrupting, or inhibiting the operation of a pipeline facility, including facilities under construction, to the criminal penalties provision of the Pipeline Safety Act.
How does the DOT Pipeline Safety Bill Address Other PHMSA Priorities?
- Pipeline Construction Information Gathering Authority: Allows PHMSA to gather relevant information on pipeline construction projects and the shutdown of pipeline construction projects.
- Voluntary Information Sharing: Permits PHMSA to establish a voluntary information sharing (VIS) system that would include information such as pipeline integrity risk analyses (including information from in-line inspections and dig verification data), lessons learned, and process improvements. This provision supplements the PIPES Act of 2016 which required PHMSA to convene a working group on voluntary information sharing.
- Regulations for Inactive Pipelines: Directs PHMSA to establish regulations for pre-commissioned, active/in-service, inactive/out-of-service, and abandoned pipelines.
- Operator Qualification for New Construction: Authorizes PHMSA to extend OQ requirements to new construction.
- Records of State Inspections: Requires state authorities to provide records of inspections or investigations to PHMSA upon request.
- Cost Recovery for Design Reviews: Reduces the threshold for cost recovery of design reviews including for gas or liquid pipeline projects from $2.5 billion to $250 million. The proposed language would also allow PHMSA to collect the fees in advance of the design review.
- LNG Compliance Review Fee: Requires that operators pay a fee for PHMSA’s expenses in determining compliance of a liquefied natural gas facility with Part 193 in connection with an application to the Federal Energy Regulatory Commission.
What Questions Should Pipeline Operators Consider in Reviewing the DOT Pipeline Safety Bill?
- What kinds of non-financial incentives should PHMSA provide to operators who voluntarily exceed minimum regulatory requirements?
- What are the potential impacts of lowering the threshold for cost recovery of design reviews from $2.5 billion to $250 million? How will PHMSA calculate the costs of its design review in advance?
- Does the provision allowing immediate revocation of a pilot program for innovative technologies create due process concerns? Should pipeline operators be able to rely on these pilot programs when investing money and resources into developing and implementing innovative technologies?
Are statutory mandates for actions PHMSA can pursue under its current statutory authority necessary? What are the potential drawbacks of mandating action that PHMSA can currently take voluntarily?
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The Legal Intelligencer
(by Carla Voigt and Molly Meacham)
Recent guidance from two federal agencies indicates a push by the current administration toward classifying gig economy workers as independent contractors under federal workplace laws. Last month, the Department of Labor’s Wage and Hour Division (WHD) and the National Labor Relations Board (NLRB) each authored guidance declaring certain workers in the gig economy independent contractors, rather than employees.
In an opinion letter issued on April 29, the WHD analyzed whether workers for an unnamed “virtual marketplace company” (VMC) are employees or independent contractors under the Fair Labor Standards Act (FLSA). In refining the definition of independent contractor, the WHD focused on the economic reality test, which considers the totality of the circumstances to determine the degree of economic dependence the worker has on his employer. The WHD opinion letter describes workers’ “economic dependence” on businesses as “the touchstone of employee versus independent contractor status” and evaluated the nature of the relationship using the existing six-factor test previously developed by the U.S. Supreme Court in Rutherford Food v. McComb, 331 U.S. 722, 729 (1947).
Shortly after the WHD issued its opinion letter, in May the NLRB published its own advice memorandum dated April 16, in which it declared a group of Uber drivers to be independent contractors under the National Labor Relations Act (NLRA). Applying the board’s SuperShuttle classification test, the NLRB determined that the drivers have “significant opportunities for economic gain and, ultimately, entrepreneurial independence.” Accordingly, the NLRB opined that the drivers were properly classified as independent contractors and therefore not eligible to unionize under the NLRA. These publications indicate a significant trend by the current administration in favor of classifying workers as independent contractors.
Guiding Federal Law Principles
The FLSA defines an employee for the purposes of minimum wage and overtime pay as any individual employed by an employer, meaning anyone an employer suffers or permits to work, see 29 U.S.C. Section 203(e)(1), (g). Independent contractors are not employees. As recognized by Rutherford Food, workers may be independent contractors when their work does not “in essence … follow the usual path of an employee.”
The determination as to whether a worker qualifies as an employee under the FLSA turns on a weighing of six factors derived from Rutherford Food. These factors include: the nature and degree of the employer’s control over the worker; the permanency of the worker’s relationship with the employer; the amount of the worker’s investment in facilities, equipment or helpers; the amount of skill, initiative, judgment or foresight required for the worker’s services; the worker’s opportunities for profit or loss; and the extent of integration of the worker’s services into the employer’s business. These factors are weighed “in order to answer the ultimate inquiry of whether the worker is ‘engaged in business for himself or herself,’ or ‘is dependent upon the business to which he or she renders service.’” Misclassification by an employer can result in substantial liability under the FLSA in the form of unpaid overtime, minimum wage violations and exposure for benefits that should have been provided to workers.
On the other hand, the NLRB’s recent analysis focused on workers’ ability to organize, which rests on a similar threshold determination of whether the workers are properly classified as employees or independent contractors. The NLRA empowers employees to unionize but does not extend this power to independent contractors. Section 2(3) of the NLRA explicitly excludes “any individual having the status of an independent contractor” from its definition of employees entitled to the act’s protection, see 29 U.S.C. Section 152(3). In evaluating whether workers are employees or independent contractors, the NLRB employs a qualitative application of the 10 nonexhaustive common-law factors enumerated in the Restatement (Second) of Agency, as adopted in the board’s recent SuperShuttle opinion. The inquiry in this context centers on a worker’s “entrepreneurial opportunity;” workers who have significant control over their profits and losses are likely independent contractors.
Federal Agency Guidance
Both the WHD and NLRB have made clear that the factors of their respective tests are to be applied qualitatively, not quantitatively. “The determination of employee status does not depend on such isolated factors but rather upon the circumstances of the whole activity.” As the WHD explained, the analysis of “whether a worker is economically dependent on a potential employer is a fact-specific inquiry that is individualized to each worker.”
Guidance as to the respective weight of the six factors in the economic reality test has varied from one administration to the next. In 2015, the former head of the WHD issued a guidance letter, administrator’s interpretation No. 2015-1 (2015 AI), which took an aggressive position regarding the classification of employees and suggested that most workers should be classified as employees under the FLSA. In applying the economic reality test, the interpretation letter de-emphasized the control factor in favor of a more expansive view of the employer-employee relationship. In 2017, the current administration reversed course, withdrawing the 2015 AI and signaling a move by the current administration toward a narrower view of employee classification. However, until the most recent opinion letter from the WHD, the administration offered little practical guidance as to what this change of course might mean for companies and their workers.
Now, nearly two years later in its April 29, opinion letter, the WHD has reiterated that the appropriate test for employee analysis is the six-factor economic realities test and, at least in the context of an unnamed virtual marketplace company in the gig industry, provided essentially a checklist of characteristics that weigh in favor of independent contractor status.
More specifically, the WHD letter responded to a question submitted by an unnamed VMC described as an “online or smartphone-based referral service that connects service providers to end-market consumers to provide a wide variety of services, such as transportation, delivery, shopping, moving, cleaning, plumbing, painting and household services.” Applying the six-factor Rutherford Food test, the WHD characterized the VMC as a “referral service” that “empowers service providers to provide services to end-market consumers” through the virtual marketplace, rather than receiving services itself. In this context, the company’s primary purpose was to “provide a referral system,” and its “operations effectively terminate at the point of connecting service providers to consumers.” The WHD determined that the providers had “complete autonomy” over their hours and type of work, and “significant flexibility” to pursue external economic opportunities, even with the company’s competition. The WHD further found that there was no permanent working relationship between the company and its service providers that would be indicative of an employer-employee relationship because the service providers maintain a high degree of freedom to exit the relationship at any time. Ultimately, the WHD opined that all six of the factors weighed in favor of independent contractor status.
In a similar vein, the NLRB stated in its recent advice memorandum that it will apply the test it set out in SuperShuttle when evaluating worker classification under the NLRA. This test weighs 10 nonexhaustive factors and, as with the economic dependence test applied by the WHD, “all of the incidents of the relationship must be assessed and weighed with no one factor being decisive.” In the shared-ride and taxicab context, the NLRB explained that the board will give significant weight to two of these ten factors—the level of company control and the relationship between the company’s compensation and the amount of fares collected. To that end, the NLRB concluded that the group of Uber drivers “had significant entrepreneurial opportunity by virtue of their near complete control of their cars and work schedules, together with freedom to choose log-in locations and to work for competitors of Uber.” For the NLRB, the “important animating principle” is “whether the position presents the opportunities and risks inherent in entrepreneurialism.” Ultimately, workers who have significant control over their profits and losses are more likely to be classified as independent contractors under this test.
Virtual Marketplace and Ride Share Companies
The WHD’s opinion letter and the NLRB’s advice memorandum are two apparent signals that this administration intends to find that the fast-growing virtual marketplace business model is staffed by independent contractors, not employees. Under both the “economic dependence” test and the SuperShuttle test, workers for at least two companies with gig business models were easily classified as independent contractors under the relevant tests that include a number of subjective factors.
This indication is not absolute, as the guidance to date is limited to the specific workers and circumstances presented to the agencies. While the WHD opinion letter and NLRB advice memorandum may be used by employers to support their decisions, it remains unclear what level of deference such guidance might receive by the courts. While persuasive and instructive, these publications do not bind any court or state agency and are susceptible to alteration by future administrations. Moreover, the analysis only applies to the two federal laws at issue—the FLSA and NLRA. Thus, it remains to be seen how these publications will influence future classifications of workers, particularly given the overlapping state and federal laws applicable to the workplace.
Conclusion
This administration’s recent guidance for gig economy workers provides a temporary road map for companies to consider when determining whether their workers are properly classified as independent contractors or employees. However, any business relying upon these publications in their decision-making should weigh the impact of future administration change on their strategic choices as to whether the gig economy workers they rely upon are properly classified as employees or independent contractors.
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Smart Business
(by Jayne Gest with Chris Farmakis)
Artificial intelligence (AI) is adding efficiencies and transforming businesses everywhere, and legal practices are no exception.
“General counsels and executives that are hiring lawyers need to understand that this technology is available now, so they can make sure their lawyers leverage the latest technology tools,” says Christian A. Farmakis, shareholder and chairman of the board at Babst Calland. “AI can increase speed, increase efficiency and lower costs for clients — if the law firm has the right tools, but more importantly knows how to use those tools.”
Smart Business spoke with Farmakis about the advancement of AI technology in the legal space, which business executives may want to take advantage of.
How is AI technology disrupting the legal industry?
AI is a term generally used to describe computers performing tasks normally viewed as requiring human intellect.
AI legal technology won’t replace lawyers, but these tools will drastically change the way lawyers provide services for their clients. While estimates vary, 23 percent to 35 percent of a lawyer’s job could be automated. As a result, lawyers will need to be more strategic and supervisorial, able to act as project managers and supervise the information being fed into systems, and knowledgeable about the assumptions underlying the machine learning algorithms.
So far, projects that classify data have been impacted the most, allowing those projects to be done faster and more efficiently. This includes:
- E-discovery.
- Due diligence.
- Research.
Law firms can already pass these savings on to clients, but this is only the beginning of the transformation.
What will be the next wave of AI legal technology?
The next generation, which is starting to hit the market now, will be document automation and legal research and writing tools, as well as predictive technology tools. For example, a contract can be put through an algorithm in order to identify how risky it is. It could be used to determine how likely is it to go into litigation or if it complies with the company’s internal contract procedures and policies.
Another use is analytic tools that can measure efficiency and pricing of the legal services. E-billing and practice management tools could measure whether a service contract should cost $2,500, not the $7,500 that’s being charged. In other instances, AI could help firms do estimates for alternative fee arrangements.
Why is it so important for lawyers to use the right tool for the job?
AI technology is not going away. It’s here to stay, and it’s increasing exponentially. While the AI legal tech revolution is still in its infancy, the tipping point is around the corner. In 2016, the industry spent $8 billion on AI technology; that’s predicted to hit $46 billion by 2020.
However, many of these products are single-tasked products and not integrated tools that can perform multiple tasks. And many of the products’ pricing models do not yet meet the market needs.
While pricing adjustments are already starting to occur and integration should happen over the next five years, AI technology is nothing more than a tool. Just like other technology, purchasing the new tool is only a small part of what needs to happen to gain efficiency and lower prices. The organization has to be behind it, the employees need to know how to use it and the entire project must be managed properly.
Lawyers who have an open mind and an ability to use these new tools effectively are already passing cost efficiencies on to clients, and this should only increase in the future.
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Legal Spotlight: Babst Calland Expands Energy, Environment Work
Bloomberg Environment
(by Chuck McCutcheon)
Pittsburgh-based Babst, Calland, Clements and Zomnir PC is making moves to expand its energy and environment practice.
The firm recently brought aboard Julie Domike as a shareholder in its Washington, D.C., office. Domike’s background includes working as an attorney for the EPA, and she has represented numerous clients in negotiations with that agency and the Justice Department.
It also this month hired Gina Falaschi, who had worked at Haynes and Boone LLP, as an associate in its D.C. office. In addition to counseling on compliance issues, Falaschi has worked with energy companies in developing new projects and advised clients on regulatory issues.
The hirings came partly in response to client requests to provide environmental and mobile-source emissions services before the EPA, California Air Resources Board, and other regulatory agencies, said Donald C. Bluedorn II, Babst Calland’s managing shareholder.
“We think it’s a natural fit, because we do a tremendous amount of stationary-source emissions work,” Bluedorn said of the hiring of Domike and Falaschi.
Babst Calland also has grown with the boom in the Marcellus Shale in the Northeast and has decided to open an office in Houston. That office will initially focus on mineral title work and eventually expand into other areas, Bluedorn said.
https://news.bloombergenvironment.com/environment-and-energy/carbon-capture-backers-seek-to-keep-momentum-going-49
The PIOGA Press
(by Keith Coyle)
On April 10, President Donald Trump signed an executive order, “Promoting Energy Infrastructure and Economic Growth.” In addition to outlining U.S. policy toward private investment in energy infrastructure and directing the U.S. Environmental Protection Agency to take certain actions to improve the permitting process under the Clean Water Act, the executive order instructs the U.S. Department of Transportation (DOT) to update the federal safety standards for liquefied natural gas (LNG) facilities.
The executive order notes that DOT originally issued those safety standards nearly four decades ago and states that the current regulations are not appropriate for “modern, large-scale liquefaction facilities[.]” Accordingly, the executive order directs DOT to finalize new LNG regulations within 13 months, or by no later than May 2020, an ambitious deadline given the complex issues involved and typical timeframe for completing the federal rulemaking process.
Why does dot regulate LNG safety?
The LNG industry has a long history in the United States. The first LNG plant went into service in West Virginia in the World War I era, and a commercial liquefaction plant in Cleveland, Ohio, went into operation in the 1940s. In 1944, the Cleveland plant experienced an LNG tank failure that led to a fatal explosion and fire and resulted in extensive property damage. The first commercial shipment of LNG by vessel occurred 15 years later, in 1959, when the Methane Pioneer sailed from Louisiana to the United Kingdom. Several large-scale LNG terminals were constructed during the late 1960s and 1970s in places like Alaska, Louisiana, Georgia, Maryland, and Massachusetts, a period that coincided with DOT’s initial efforts to establish federal safety standards for LNG facilities.
In the Natural Gas Pipeline Safety Act of 1968, Congress authorized DOT to prescribe and enforce minimum federal safety standards for gas pipeline facilities and persons engaged in the transportation of gas. Acting pursuant to the authority provided in the 1968 act, DOT promulgated interim federal safety regulations for LNG facilities in the early 1970s. The interim regulations required operators to comply with the 1972 edition of the National Fire Protection Association Standard 59A (NFPA 59A), a consensus industry standard for the production, handling and storage of LNG, as well as DOT’s new federal safety standards for gas pipeline facilities.
After issuing the interim regulations, DOT initiated a new rulemaking proceeding to establish permanent federal safety standards for LNG facilities. DOT relied on NFPA 59A in developing those standards, including the concept of requiring an operator or governmental authority to exercise control over the activities that occur within a specified distance of an LNG facility. These distances, known as “exclusion zones,” were designed to protect the public from unsafe levels of thermal radiation and vapor gas dispersion in the event of an LNG incident. DOT proposed to require that operators calculate the dimensions of an exclusion zone using certain mathematical models and other parameters.
While DOT’s LNG rulemaking proceeding was still underway, Congress passed the Pipeline Safety Act of 1979. In addition to expanding DOT’s authority to regulate hazardous liquid pipeline facilities, the 1979 law included a rulemaking mandate directing DOT to finalize the new regulations for LNG facilities. DOT satisfied that mandate in August 1980 by issuing the original version of federal safety standards for LNG facilities. The regulations, codified at 49 C.F.R. Part 193, incorporated the 1979 edition of NFPA 59A by reference and included siting requirements for LNG facilities based on the exclusion-zone approach. Other provisions addressed design, construction, operation, maintenance, security and fire protection.
DOT left the original Part 193 regulations in place for the next two decades as unfavorable market conditions significantly reduced domestic interest in LNG development, particularly for large-scale terminals. In 2000, DOT responded to a rulemaking petition from NPFA by repealing many of its substantive regulations and deferring to the comparable provisions in the 1996 edition of NFPA 59A. In subsequent industry standards updates, DOT incorporated the 2001 edition and 2006 editions of NFPA 59A into Part 193. No other significant changes to the LNG regulations have occurred since DOT issued the original federal safety standards in 1980.
Why is President Trump focusing on DOT’s LNG regulations?
DOT’s LNG-related activities have increased significantly in recent years, primarily in response to the rapid growth of U.S. natural gas resources and renewed interest in domestic LNG projects. In the Obama administration, DOT issued several significant letters of interpretation dealing with the Part 193 siting requirements and approved the use of two alternative vapor gas dispersion models for calculating exclusion zone distances. DOT also issued a series of frequently asked questions on its website providing operators with guidance on LNG issues and created a process for reviewing design spill determinations for proposed LNG projects. In August 2018, DOT and the Federal Energy Regulatory Commission (FERC), the federal agency that exercises economic regulatory and limited safety jurisdiction over LNG terminals and facilities under the Natural Gas Act of 1938, executed a Memorandum of Understanding (MOU) to improve interagency coordination. Under the MOU, DOT is responsible for issuing a letter of determination on whether a proposed FERC-jurisdictional LNG project complies with the Part 193 regulations.
The April 10 executive order seeks to build on these recent efforts by directing DOT to update the Part 193 regulations by no later than May 2020. DOT will need to consider several important issues during the rulemaking process, such as whether to incorporate more recent additions of NFPA 59A into Part 193 by reference, whether changes should be made to the exclusion zone approach in the siting regulations and whether to address a new rulemaking mandate for small-scale LNG facilities that Congress included in the 2016 reauthorization of the Pipeline Safety Act.
Finishing the rulemaking process by the deadline provided in the executive order will be extremely difficult. DOT has not yet issued a notice of proposed rulemaking, and the proceeding is likely to generate significant public interest. Industry has made tremendous technological advances in the four decades since DOT’s last comprehensive review of its LNG regulations, and public interest and other advocacy groups have also become very active in recent proceedings related to new LNG projects. These factors, when combined with the ordinary time horizon for completing DOT rulemaking proceedings and upcoming presidential election, suggest that extraordinary efforts would be needed to issue a final rule in the next 13 months.
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The PIOGA Press
(by Lisa Bruderly and Gary Steinbauer)
On April 23, the U.S. Environ – mental Protection Agency published a notice of availability of an interpretive statement concluding that releases of pollutants to ground – water should be categorically excluded from Clean Water Act (CWA) permitting requirements. 84 Fed. Reg. 16810. The notice opens a 45-day public comment period, ending on June 7. EPA is requesting comments on its analysis and rationale and is also soliciting input on additional actions that may be needed to provide further clarity and regulatory certainty on whether the National Pollutant Discharge Elimination System (NPDES) permit program regulates releases of pollutants to groundwater.
With the issuance of the interpretive statement, EPA has reinjected itself into the ongoing debate, federal circuit court split and pending U.S. Supreme Court case over whether the CWA’s NPDES permit program regulates point source discharges that travel through groundwater before reaching a jurisdictional surface water. The interpretive statement and the related, ongoing judicial decisions are of interest to the natural gas industry, among other industries, given the potential implications related to leaks/spills from pipelines, impoundments and other structures.
Interpretive statement content and reasoning
EPA describes the interpretive statement as the agency’s “most comprehensive analysis” of the CWA’s text, structure and legislative history in relation to whether the NPDES permit program regulates point source releases to groundwater. Most of the 63-page interpretive statement discusses EPA’s legal analysis of the statutory provisions that implement and enforce the NPDES permit program, the forward-looking, information-gathering statutory provisions that explicitly reference groundwater, and the relevant legislative history. Based on its analysis of this information, EPA concludes that Congress deliberately chose to exclude discharges of pollutants to groundwater from the NPDES permit program, even when those pollutants are conveyed to a jurisdictional surface water via groundwater. While EPA’s conclusion is based primarily on its legal interpretation of the CWA, the policy-based rationale supporting its conclusion is that groundwater is extensively regulated under other federal and state statutory regimes. With respect to state laws and regulations that limit discharges to groundwater, EPA notes that several states have laws in place to protect groundwater. On the federal side, EPA notes that the Safe Drinking Water Act, the Resource Conservation and Recovery Act, and the Comprehensive Environmental Response, Compensation and Liability Act all regulate groundwater quality to some extent. According to EPA, these federal and state laws and regulations are sufficient to protect groundwater.
Conflict with existing circuit court opinions and pending Supreme Court appeal
EPA’s position in the interpretive statement differs from the two legal theories that emerged from the 2018 Fourth and Ninth Circuit Court decisions addressing whether the CWA regulates point source discharges that travel through groundwater before reaching a jurisdictional surface water. Unlike the decisions of the Fourth and Ninth Circuits and EPA’s prior statements that have been construed as advocating a different interpretation, EPA now unequivocally states that any release of a pollutant to groundwater does not fall within the ambit of the CWA. Thus, EPA has rejected the “direct hydrological connection” legal test established by the Fourth Circuit in Upstate Forever v. Kinder Morgan[1] and the “fairly traceable” legal test established by the Ninth Circuit in Hawai’i Wildlife Fund v. County of Maui.[2] EPA will, therefore, apply the interpretive statement in all jurisdictions, other than those 14 states (including West Virginia, Virginia and Maryland) and other territories within the Fourth and Ninth Circuits.[3] The decisions of the Fourth and Ninth Circuits will stand until further clarification by the U.S. Supreme Court, which agreed to hear the County of Maui appeal approximately two months ago.
In the Ninth Circuit’s County of Maui v. Hawai’i Wildlife Fund decision, the court affirmed the district court’s decision that the county was liable under the CWA for injecting treated sanitary wastewater into separately permitted underground wells after the plaintiffs demonstrated that the discharge ultimately reached the Pacific Ocean. On appeal, the Supreme Court will be deciding “whether the CWA requires a permit when pollutants originate from a point source but are conveyed to navigable waters by a nonpoint source, such as groundwater.” The court granted the county’s petition for review after the United States filed an amicus brief, in which it noted that EPA would soon be publishing what we now know is the interpretive statement.
It is unclear what role, if any, EPA’s interpretive statement will play in the County of Maui matter. The county’s merits brief currently is due before the close of the public comment period on the interpretive statement. It is also unclear whether EPA will finalize any rulemaking or take any more formal administrative action before the Supreme Court renders its decision, likely in 2020 after oral arguments are heard this fall.[4] Furthermore, the level of deference, if any, the Supreme Court will give EPA on its position in the interpretive statement is unclear, particularly because the position articulated in the interpretive statement is inconsistent with the position that the United States, on behalf of EPA, took in an amicus brief filed when the County of Maui case was previously heard by the Ninth Circuit.
In the meantime, regulated parties outside the Fourth and Ninth Circuits now have additional support to defend against lawsuits alleging that the CWA regulates point source discharges that travel through groundwater before reaching a jurisdictional surface water.
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The PIOGA Press
(by Jean Mosites)
In May 2016, various environmental groups, including the Environmental Integrity Project and the Natural Resources Defense Council, filed a lawsuit in federal court alleging that the United States Environmental Protection Agency failed to evaluate its regulations for managing wastes associated with oil and gas development activities as non-hazardous under Subtitle D of the Resource Conservation and Recovery Act (RCRA). The suit alleged that EPA had a non-discretionary duty under RCRA to periodically review and, if necessary, revise its Subtitle D regulations for solid waste disposal facilities and state solid waste management plans with respect to oil and gas development wastes. It further alleged that EPA had not done so since 1988 and that EPA should be ordered to conduct a subsequent review. The 1980 Bentsen Amendment to RCRA had exempted oil and gas wastes from regulation under RCRA Subtitle C as hazardous waste and permits regulation of such wastes under Subtitle D as non-hazardous. Earlier, EPA had declined a 2010 petition by NRDC requesting E&P waste be regulated as hazardous under Subtitle C.
The May 2016 lawsuit was resolved in December 2016 through the entry of a consent decree in which EPA agreed to either propose revisions to its Subtitle D regulations for oil and gas wastes or make a determination that revision of such regulations is unnecessary by April 23, 2019. On April 23, EPA determined that revising its Subtitle D regulations was not necessary.
To arrive at its determination, EPA examined regulatory programs in states such as Pennsylvania accounting for the vast majority of oil and gas production in the United States. EPA reviewed current waste management practices, waste characteristics, and E&P waste release/spill incidents in these states. The agency found that: 1) uncontrolled releases of oil and gas wastes are uncommon; 2) human error, non-compliance with existing state regulations and equipment failure are the primary cause of releases; and 3) recent releases that had been identified were well contained and addressed onsite. Concluding that state regulations address E&P wastes appropriately and incorporate many of the criteria EPA believes are important components of waste management programs, EPA decided not to revise its Subtitle D regulations.
The environmental groups who originally filed suit in 2016 have since criticized EPA’s determination and might pursue judicial review of EPA’s determination.
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WASHINGTON, DC and PITTSBURGH, PA – May 13, 2019 – Babst Calland announced today the lateral move of Gina Falaschi, who joined as associate in the firm’s Washington, D.C. office in the Environmental, Mobility, Transport and Safety, and Litigation practice groups.
Ms. Falaschi’s move to Babst Calland, along with Julie Domike, another seasoned environmental attorney who recently joined Babst Calland as shareholder in late April, further represents the firm’s commitment to meet clients’ needs related to environmental and emissions mobile source services before EPA, the California Air Resources Board, and other regulatory agencies as a part of its best-in-class team.
Ms. Falaschi provides advice to clients in the energy, transportation, and technology sectors regarding environmental regulatory compliance. She has assisted companies with disclosure of regulatory violations to state and federal agencies, and has counseled clients in negotiations with the U.S. Department of Justice, U.S. EPA, and California Air Resources Board. In addition to counseling on compliance issues, she has worked with technology and energy companies in developing new projects and has advised clients on regulatory issues arising from joint ventures, mergers, and acquisitions.
She has litigated cases in federal court, represented clients in administrative cases before various federal agencies, and has experience with administrative rule challenges before the U.S. Court of Appeals for the District of Columbia Circuit. Ms. Falaschi is admitted to practice in the District of Columbia, California, U.S. Court of Appeals for the District of Columbia Circuit, and U.S. District Court for the Eastern District of California.
Ms. Falaschi earned her J.D. from Georgetown University Law Center in 2016 and her A.B., magna cum laude, from Georgetown University in 2013.
Employment & Labor Alert
(by Stephen Antonelli and Alexandra Farone)
Large and certain mid-size employers must provide demographic data to the EEOC by September 30, 2019 regarding the 2017 and 2018 earnings paid to employees categorized by sex, race, and ethnicity. On April 25, 2019, the U.S. District Court for the District of Columbia ordered the EEOC to collect two years of employers’ pay data by this September deadline, reviving an Obama-era regulation that was stayed by the Trump administration. This requirement will apply to all employers with at least 100 employees, and federal contractors with at least 50 employees.
For more than 50 years, the EEOC has required large and mid-size employers to submit an annual report known as the EEO-1 Report, which identifies the number of employed workers in job categories based on sex, race, and ethnicity. This data is now known as “Component 1” data. The Obama-era EEOC proposed requiring an additional component to this annual report that would require employers to disclose the earnings of these employees, in an effort to identify pay disparities. Known as “Component 2” data, the newly collected information should include employees’ W-2 earnings as well as hours worked in 12 pay bands for each of the 10 EEO-1 job categories. In 2016, the Office of Management and Budget approved the proposed requirement, and the requirement was slated to take effect in 2018. However, in 2017 the Trump administration stayed the implementation of this requirement, citing the burden of compliance upon employers. The validity of the stay on implementation of Component 2 data collection has been the subject of litigation since November 2017. The District Court vacated the stay in March 2019, and recently ruled to extend the Component 2 reporting deadline four months until September 30, 2019.
The Court’s ruling has no effect on the May 31, 2019 standard deadline for employers to submit their 2018 EEO-1 Reports for Component 1 data. Employers must submit their 2018 EEO-1 Reports by the end of May and are encouraged to begin compiling and planning to report 2017 and 2018 Component 2 data—specifically W-2 earnings and hours worked—for compliance with the September 30, 2019 deadline in the event that this deadline is not lifted pursuant to an appeal. The EEOC expects to begin collecting Component 2 data for calendar years 2017 and 2018 in mid-July 2019, and employers can likely expect a process similar to the manner in which they currently upload EEO-1 Reports annually.
Babst Calland’s Employment and Labor Group will continue to keep employers apprised of further developments related to this and other employment and labor topics. For more information about the EEO-1 Report and what is required of reporting employers, contact Stephen A. Antonelli at (412) 394-5668 or santonelli@babstcalland.com, or Alexandra G. Farone at (412) 394-6521 or afarone@babstcalland.com.
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Law360
Babst Calland has hired a longtime environmental attorney from Haynes and Boone LLP who brings with her special expertise in the Clean Air Act, joining the firm a shareholder in its Washington, D.C., office.
Julie Domike joined the firm on April 29 after five years as a partner at Haynes and Boone. Previously, she spent time at Kilpatrick Townsend & Stockton LLP and what is now DLA Piper. She also spent nearly a decade at the U.S. Environmental Protection Agency, working on air enforcement and other matters that she said have continued to inform her work.
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