Firm Alert
(by Chris Farmakis, Susanna Bagdasarova, Kate Cooper, and Dane Fennell)
In recent weeks, significant developments have unfolded regarding the implementation of the Corporate Transparency Act (CTA) and its beneficial ownership information (BOI) reporting requirements to the Financial Crimes Enforcement Network (FinCEN), which remain subject to a nationwide injunction.
As discussed in our previous Alert, on December 3, 2024, the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction in Texas Top Cop Shop, Inc., et al. v. Garland, et al., temporarily halting enforcement of the CTA and its BOI reporting requirements, including the January 1, 2025, filing deadline. The U.S. Department of Justice (DOJ) appealed, requesting a stay of the injunction or, alternatively, a narrowing of the injunction to apply only to the named plaintiffs and members of the National Federation of Independent Business.
In a flurry of year-end decisions, a panel of the Fifth Circuit Court of Appeals granted DOJ’s emergency motion on December 23, 2024, lifting the injunction. Three days later, a separate Fifth Circuit panel reversed the earlier decision, vacating the stay and reinstating the nationwide injunction. As a result, FinCEN again updated its guidance, stating that reporting companies may voluntarily submit BOI filings but are not required to do so during the pendency of the injunction.
On December 31, 2024, DOJ filed an emergency “Application for a Stay of the Injunction” with the U.S. Supreme Court, seeking to stay the injunction pending the Fifth Circuit’s review of the matter. Alternatively, DOJ invited the Court to “treat this application as a petition for a writ of certiorari before judgment presenting the question whether the district court erred in entering preliminary relief on a universal basis.”
The ongoing legal challenges have left the status of the BOI reporting requirement in flux. For the time being, unless the Supreme Court intervenes, the nationwide injunction is likely to remain in place through at least March 25, 2025, the scheduled date for oral arguments before the Fifth Circuit. Businesses that have not yet complied with the reporting requirements should remain alert to any changes. If the injunction is lifted, or if the Supreme Court grants a stay, reporting companies may be required to submit their beneficial ownership information promptly, subject to any deadline extensions provided by FinCEN. In the meantime, voluntary submissions of BOI reports to FinCEN are still accepted, but companies should be prepared to meet any new deadlines should the situation change. The next few months could prove critical for the future of the CTA and its enforcement.
Babst Calland will continue to closely monitor developments on this matter. Please reach out to fincenassist@babstcalland.com or your Babst Calland client relationship lawyer if you have any questions.
GO-WV
(by Kip Power)
The federal Environmental Protection Agency (EPA) recently proposed to approve the application of the State of West Virginia (through its Department of Environmental Protection (WVDEP)) to obtain primary authority (a.k.a., “primacy”) over the issuance of permits for Class VI underground injection wells located within its borders. 89 Fed. Reg. 93538 (Nov. 27, 2024). The federal rulemaking proposal may be found here. Comments on the proposed approval are due on or before December 30, 2024. On the same day, EPA will hold a public hearing on the proposal at the Charleston Marriott Town Center, 200 Lee Street East, in Charleston, West Virginia. Details regarding public participation in the rulemaking may be found here.
Class VI underground injection control (UIC) wells are those wells used for injecting carbon dioxide for the purpose of permanent geologic storage or “sequestration.” WVDEP’s rules for such permits are largely modeled on EPA’s detailed “Class VI” UIC regulations promulgated under the federal Safe Drinking Water Act. If approved, West Virginia will be just the fourth state to receive primacy over the Class VI UIC permitting program (joining North Dakota, Wyoming and Louisiana).
Should it be granted primacy over Class VI well permitting, the WVDEP will be able to issue such permits without following the lengthy (and oftentimes litigated) procedures required under the federal National Environmental Policy Act that applies to EPA-issued UIC permits. The WVDEP would also be in a better position to coordinate the issuance of such Class VI UIC wells with other West Virginia regulatory requirements for carbon dioxide injection projects, including the West Virginia Underground Carbon Dioxide Sequestration and Storage Act (W.Va. Code § 22B-1-1, et seq.). This would help facilitate the development of such projects by a variety of applicants, including those seeking to use underground carbon dioxide sequestration as a part of the production of so-called “blue” hydrogen (reforming fossil fuels to separate hydrogen and capture CO2) and those hoping to comply with proposed EPA rules mandating the use of carbon capture and injection technologies by certain natural gas and coal-fired power plants.
For questions about EPA’s proposal to grant primacy to West Virginia over the issuance of Class VI UIC wells or related issues, please contact Christopher B. (Kip) Power at (681) 265-1362 or cpower@babstcalland.com.
Click here, to view the article online in the January issue of GO-WV News.
Pittsburgh Technology Council
(by Chris Farmakis, Susanna Bagdasarova, Kate Cooper, and Dane Fennell)
As discussed in our previous Alert, the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction in Texas Top Cop Shop, Inc., et al. v. Garland, et al., temporarily halting enforcement of the Corporate Transparency Act (CTA) and its beneficial ownership information (BOI) reporting requirements, including the January 1, 2025, filing deadline. The ruling provided temporary relief to affected businesses, but a pending Department of Justice (DOJ) emergency motion to stay the injunction pending appeal has created further uncertainty.
On December 11 and December 13, 2024, the DOJ filed emergency motions with the District Court and the United States Court of Appeals for the Fifth Circuit respectively, requesting a stay of the District Court’s nationwide injunction. In its motion to the Court of Appeals, the government proposed an expedited briefing schedule, requesting “a ruling on this motion as soon as possible, but in any event no later than December 27, 2024, to ensure that regulated entities can be made aware of their obligation to comply before January 1, 2025.”
On December 17, 2024, the District Court denied the government’s motion, while the Court of Appeals decision remains pending and could be issued as early as December 20, 2024. If the Fifth Circuit grants the stay or narrows the scope of the injunction, the CTA’s reporting requirements, including the January 1, 2025 filing deadline, could be reinstated (unless the court or the Financial Crimes Enforcement Network (FinCEN) issues a deadline extension). FinCEN has already clarified that businesses are not required to file BOI reports while the injunction is in effect, but that they may voluntarily submit reports during this time.[1]
If the Fifth Circuit stays the injunction, reporting companies which have not already submitted their filings should be prepared to finalize their BOI reports and file them promptly to meet the reinstated deadline. FinCEN has not indicated whether it plans to offer reporting companies an extension if the injunction is stayed or narrowed by December 27, 2024. Approximately 8 million of the estimated 32.6 million reporting companies subject to filing requirements have filed so far. In the event the January 1, 2025 deadline remains in place, FinCEN’s website is likely to be overwhelmed with filing attempts, which could lead to delays and technical issues. In light of this uncertainty, reporting companies should consider gathering the required filing information to avoid a potential race against the clock at year-end, or if your business has a conservative mindset, you should file the report now and enjoy the holiday season. Either way, doing nothing does not appear to be an option.
Babst Calland will continue to closely monitor developments on this matter. Please reach out to fincenassist@babstcalland.com or your Babst Calland client relationship lawyer if you have any questions.
[1] https://fincen.gov/boi
To view the full article, click here.
Firm Alert
(by Chris Farmakis, Susanna Bagdasarova, Kate Cooper, and Dane Fennell)
As discussed in our previous Alert, the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction in Texas Top Cop Shop, Inc., et al. v. Garland, et al., temporarily halting enforcement of the Corporate Transparency Act (CTA) and its beneficial ownership information (BOI) reporting requirements, including the January 1, 2025, filing deadline. The ruling provided temporary relief to affected businesses, but a pending Department of Justice (DOJ) emergency motion to stay the injunction pending appeal has created further uncertainty.
On December 11 and December 13, 2024, the DOJ filed emergency motions with the District Court and the United States Court of Appeals for the Fifth Circuit respectively, requesting a stay of the District Court’s nationwide injunction. In its motion to the Court of Appeals, the government proposed an expedited briefing schedule, requesting “a ruling on this motion as soon as possible, but in any event no later than December 27, 2024, to ensure that regulated entities can be made aware of their obligation to comply before January 1, 2025.”
On December 17, 2024, the District Court denied the government’s motion, while the Court of Appeals decision remains pending and could be issued as early as December 20, 2024. If the Fifth Circuit grants the stay or narrows the scope of the injunction, the CTA’s reporting requirements, including the January 1, 2025 filing deadline, could be reinstated (unless the court or the Financial Crimes Enforcement Network (FinCEN) issues a deadline extension). FinCEN has already clarified that businesses are not required to file BOI reports while the injunction is in effect, but that they may voluntarily submit reports during this time.[1]
If the Fifth Circuit stays the injunction, reporting companies which have not already submitted their filings should be prepared to finalize their BOI reports and file them promptly to meet the reinstated deadline. FinCEN has not indicated whether it plans to offer reporting companies an extension if the injunction is stayed or narrowed by December 27, 2024. Approximately 8 million of the estimated 32.6 million reporting companies subject to filing requirements have filed so far. In the event the January 1, 2025 deadline remains in place, FinCEN’s website is likely to be overwhelmed with filing attempts, which could lead to delays and technical issues. In light of this uncertainty, reporting companies should consider gathering the required filing information to avoid a potential race against the clock at year-end, or if your business has a conservative mindset, you should file the report now and enjoy the holiday season. Either way, doing nothing does not appear to be an option.
Babst Calland will continue to closely monitor developments on this matter. Please reach out to fincenassist@babstcalland.com or your Babst Calland client relationship lawyer if you have any questions.
[1] https://fincen.gov/boi
PIOGA Press
(by Chris Farmakis, Susanna Bagdasarova, Kate Cooper, and Dane Fennell)
On December 3, 2024, the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction temporarily halting enforcement of the Corporate Transparency Act (CTA). With less than a month to go before the January 1, 2025 compliance deadline for entities formed prior to 2024, this ruling blocks the U.S. Department of Treasury from enforcing the requirements of the Beneficial Ownership Information Reporting Rule (the “Rule”) issued by the Financial Crimes Enforcement Network (FinCEN).
The Court’s opinion in Texas Top Cop Shop, Inc., et al. v. Garland, et al. raises significant questions about the constitutionality of the CTA and its potential negative impact on small businesses. The CTA, part of broader anti-money laundering efforts, requires companies to disclose personal information about their “beneficial owners” (individuals who ultimately own or control a company) to a federal database maintained by FinCEN. In his Memorandum Opinion and Order, United States District Judge Amos L. Mazzant concluded that the CTA and Rule are likely unconstitutional as they exceed the scope of Congress’s power. The Court held that CTA does not regulate interstate commerce and that it is further not authorized by the Necessary and Proper clause of the Constitution.
The nationwide injunction affects most business entities in the U.S., as the CTA and Rule apply to approximately 32.6 million companies. Per the Court’s order, “reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”
While businesses are temporarily relieved of compliance obligations, the final resolution of the matter remains uncertain. Although no announcement has been made as of the time of this publication, the U.S. Department of Justice is likely to appeal the preliminary injunction to the U.S. Court of Appeals for the Fifth Circuit. Companies should stay informed and be prepared for potential changes to enforcement.
Babst Calland will continue to closely monitor developments on this matter. Please reach out to fincenassist@babstcalland.com or your Babst Calland client relationship lawyer if you have any questions.
To view the full article, click here.
Reprinted with permission from the December 2024 issue of The PIOGA Press. All rights reserved.
The Legal Intelligencer
(by Michael Korns and Anna Hosack)
In Crawford v. Commonwealth, No. 19-EAP-2022 (Pa. Nov. 20, 2024), the Pennsylvania Supreme Court unanimously upheld the constitutionality of state preemptive firearm laws that prohibit municipalities from passing local gun regulations. Advocates for stricter gun laws filed a petition for review under the Commonwealth Court’s original jurisdiction, asking the Court to declare as unconstitutional or otherwise unlawful two statutory provisions that prohibit the enactment of local legislation on the subject: (i) Section 6120 of the Pennsylvania Uniform Firearms Act of 1995, 18 Pa.C.S. § 6120, and (ii) Section 2962(g) of the Home Rule Charter and Optional Plans Law, 53 Pa.C.S. § 2962(g). Generally, these provisions prohibit local governments from enacting or enforcing ordinances that regulate the ownership, transportation, possession, or transfer of firearms.
Crawford was heard en banc at the Commonwealth Court, and ultimately the Court sustained preliminary objections in a plurality decision and dismissed the petition for failure to state claims upon which relief could be granted (demurrer). Petitioners filed an appeal seeking review of the Commonwealth Court’s decision from the Pennsylvania Supreme Court. The City of Pittsburgh, the City of Scranton, and several other Pennsylvania local governments and officials submitted amici curiae briefs in support of the appeal.
The Pennsylvania Supreme Court addressed not only the delineation of power between the legislative and judicial branches of the state government but also the interplay between state and municipal governance. First, the decision emphasized the basic fact that municipalities in Pennsylvania are creatures of the state, created by state legislation and having no inherent powers of their own not granted or delegated by the Commonwealth. The Court reiterated that the General Assembly’s authority over municipalities’ powers is “supreme” and accordingly, municipalities may do only those things which the legislature has expressly or by necessary implication placed within their power to do.
The first law challenged by the Appellants was Section 2962(g) of the Home Rule Charter and Optional Plans Law, 53 Pa.C.S. § 2962(g). Most municipalities are governed by one of four codes promulgated by the general assembly, the First and Second Class Township Codes, the Borough Code, and the Third Class City Code. However, Article IX, Section 2 of the Pennsylvania Constitution, “Home Rule” allows a municipality to “legislate concerning municipal governance without express statutory warrant for each new ordinance; [a municipality’s] ability to exercise municipal functions is limited only by its home rule charter, the Pennsylvania Constitution, and the General Assembly.” Generally speaking, this means that home rule communities can exercise any power that the General Assembly has not forbidden.
The Home Rule Law was enacted in 1996 and regulates the process for creating a home rule municipality, as well as setting boundaries on the powers that the municipality can exercise. It applies to all municipalities other than Philadelphia. In relevant part, Section 2962(c)(2) of the Home Rule Law provides that “[a] municipality shall not … exercise powers contrary to or in limitation or enlargement of powers granted by statutes which are applicable in every part of this Commonwealth.” The Appellants challenged the constitutionality of Section 2962(g) which specifically states that “[a] municipality shall not enact any ordinance or take any other action dealing with the regulation of the transfer, ownership, transportation or possession of firearms.” Pennsylvania courts have consistently held that the General Assembly may negate ordinances enacted by home rule municipalities when the General Assembly has enacted a conflicting statute concerning “substantive matters of substantive concern” including those involving “the health, safety, security and general welfare of all the inhabitants of the State” as opposed to matters of purely local concern which are of no concern to citizens elsewhere. The Supreme Court simply applied this long line of cases to this current challenge.
The second statute challenged, the Uniform Firearm Act, was originally enacted in 1972, and the General Assembly has subsequently demonstrated its state lawmaking power in the realm of firearm regulations through its numerous amendments to the Act over the course of decades. The stated intent of these amendments was to balance the right of Pennsylvania citizens to bear arms with the need for crime prevention and control. At dispute in this case, Section 6120 creates the general rule “no county, municipality or township may in any manner regulate the lawful ownership, possession, transfer or transportation of firearms, ammunition or ammunition components when carried or transported for purposes not prohibited by the laws of this Commonwealth.”
Appellants advanced three arguments in support of their case. First, the Appellants alleged that the State has violated their substantive due process rights to enjoy and defend life and liberty under Article 1, Section 1 including their right “to collectively enact measures that safeguard against gun violence” because the firearm protection laws do not provide due process rights. The Court found this argument failed because the substantive due rights given under Article 1, Section 1 of the Pennsylvania Constitution provides those rights to individuals, not a “collective” right of citizens or municipal corporation rights. A lawfully enacted prohibition on municipal power has no impact on individual due process rights.
Appellants second argument sought relief under the state-created danger doctrine. The “state-created danger” doctrine is a concept borne out of federal substantive due process principles that permits a plaintiff to obtain relief against a state actor for conduct that creates or increases a private danger that causes injury to a plaintiff. Neither the U.S. Supreme Court nor the Pennsylvania Supreme Court has endorsed the doctrine. This cause of action fails because even if endorsed, the doctrine only allows for individual claims based on injuries suffered due to state actions or failures to act. It has not been, and cannot be, invoked to render a statute unconstitutional on broad collective grounds.
Finally, the third argument was brought on behalf of Philadelphia alone, assets that the state through its absence of adequate statewide firearm regulations has improperly interfered with the public health responsibilities that the Commonwealth had delegated to political subdivisions under the Local Health Administration Law and Disease Prevention and Control Law of 1955. The Commonwealth Court plurality held that this claim failed because the term “public health” does not encompass the epidemic of gun violence and its attendant impacts. After applying the Statutory Construction Act, 1 Pa.C.S. §§ 1501-1991, the Pennsylvania Supreme Court held that the more specific firearm protection laws enacted later in time signal that Philadelphia has no delegated authority under the aforementioned laws to regulate firearms.
While these questions were highly contested in the Commonwealth Court, with a strongly worded dissent that would have found that the Appellants had stated a legally sufficient claim with respect to all three counts of the Petition, the Pennsylvania Supreme Court’s unanimous decision to dismiss the petition with prejudice appears to be a decisive answer to any further attempts to enact traditional firearm regulations by municipalities in the Commonwealth. The Court has stated with no ambiguity that regulations on ownership, sale, transfer, transportation or use are preempted by the State. However, there are currently lawsuits in various stages in the Pennsylvania Courts, asking the Pennsylvania Supreme Court to rule on several stalled local gun laws, including an assault rifle ban. In addition, there are additional pending lawsuits specifically challenging the limits of the preemption law in applicability to regulating the sale of “ghost gun” parts and the reporting of lost/stolen guns. Following Crawford, any future litigation over gun regulations would seem to be limited to questions regarding the reach of state Preemption laws, not whether they are in themselves unconstitutional. It is possible that some forms of regulation on ancillary issues may be possible, however, given the unanimous decision of the Court, it seems highly likely that gun regulation in Pennsylvania is an exclusively state issue, and further attempts at local regulations appear dubious, at best, given this decision. The Babst Calland Public Sector group will continue to monitor similar cases for further issues that may impact municipalities.
Michael T. Korns is senior counsel at Babst Calland Clements and Zomnir, P.C. and focuses his practice primarily on municipal permitting, planning, subdivision and land use, and zoning issues. He is also a member of the firm’s Energy and Natural Resources group. Contact him at 412-394-6440 or mkorns@babstcalland.com.
Anna R. Hosack is an associate at the firm and focuses her practice primarily on municipal and land use law. Contact her at 412-394-5406 or ahosack@babstcalland.com.
To view the full article, click here.
Reprinted with permission from the December 13, 2024 edition of The Legal Intelligencer© 2024 ALM Media Properties, LLC. All rights reserved.
Environmental Alert
(by Kip Power)
The federal Environmental Protection Agency (EPA) recently proposed to approve the application of the State of West Virginia (through its Department of Environmental Protection (WVDEP)) to obtain primary authority (a.k.a., “primacy”) over the issuance of permits for Class VI underground injection wells located within its borders. 89 Fed. Reg. 93538 (Nov. 27, 2024). The federal rulemaking proposal may be found here. Comments on the proposed approval are due on or before December 30, 2024. On the same day, EPA will hold a public hearing on the proposal at the Charleston Marriott Town Center, 200 Lee Street East, in Charleston, West Virginia. Details regarding public participation in the rulemaking may be found here.
Class VI underground injection control (UIC) wells are those wells used for injecting carbon dioxide for the purpose of permanent geologic storage or “sequestration.” WVDEP’s rules for such permits are largely modeled on EPA’s detailed “Class VI” UIC regulations promulgated under the federal Safe Drinking Water Act. If approved, West Virginia will be just the fourth state to receive primacy over the Class VI UIC permitting program (joining North Dakota, Wyoming and Louisiana).
Should it be granted primacy over Class VI well permitting, the WVDEP will be able to issue such permits without following the lengthy (and oftentimes litigated) procedures required under the federal National Environmental Policy Act that applies to EPA-issued UIC permits. The WVDEP would also be in a better position to coordinate the issuance of such Class VI UIC wells with other West Virginia regulatory requirements for carbon dioxide injection projects, including the West Virginia Underground Carbon Dioxide Sequestration and Storage Act (W.Va. Code § 22B-1-1, et seq.). This would help facilitate the development of such projects by a variety of applicants, including those seeking to use underground carbon dioxide sequestration as a part of the production of so-called “blue” hydrogen (reforming fossil fuels to separate hydrogen and capture CO2) and those hoping to comply with proposed EPA rules mandating the use of carbon capture and injection technologies by certain natural gas and coal-fired power plants.
For questions about EPA’s proposal to grant primacy to West Virginia over the issuance of Class VI UIC wells or related issues, please contact Christopher B. (Kip) Power at (681) 265-1362 or cpower@babstcalland.com.
Pittsburgh Technology Council
(by Chris Farmakis, Susanna Bagdasarova, Kate Cooper, and Dane Fennell)
On December 3, 2024, the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction temporarily halting enforcement of the Corporate Transparency Act (CTA). With less than a month to go before the January 1, 2025 compliance deadline for entities formed prior to 2024, this ruling blocks the U.S. Department of Treasury from enforcing the requirements of the Beneficial Ownership Information Reporting Rule (the “Rule”) issued by the Financial Crimes Enforcement Network (FinCEN).
The Court’s opinion in Texas Top Cop Shop, Inc., et al. v. Garland, et al. raises significant questions about the constitutionality of the CTA and its potential negative impact on small businesses. The CTA, part of broader anti-money laundering efforts, requires companies to disclose personal information about their “beneficial owners” (individuals who ultimately own or control a company) to a federal database maintained by FinCEN. In his Memorandum Opinion and Order, United States District Judge Amos L. Mazzant concluded that the CTA and Rule are likely unconstitutional as they exceed the scope of Congress’s power. The Court held that CTA does not regulate interstate commerce and that it is further not authorized by the Necessary and Proper clause of the Constitution.
The nationwide injunction affects most business entities in the U.S., as the CTA and Rule apply to approximately 32.6 million companies. Per the Court’s order, “reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”
While businesses are temporarily relieved of compliance obligations, the final resolution of the matter remains uncertain. Although no announcement has been made as of the time of this publication, the U.S. Department of Justice is likely to appeal the preliminary injunction to the U.S. Court of Appeals for the Fifth Circuit. Companies should stay informed and be prepared for potential changes to enforcement. Babst Calland will continue to closely monitor developments on this matter. Please reach out to fincenassist@babstcalland.com or your Babst Calland client relationship lawyer if you have any questions.
To view the full article, click here.
Firm Alert
(by Chris Farmakis, Susanna Bagdasarova, Kate Cooper, and Dane Fennell)
On December 3, 2024, the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction temporarily halting enforcement of the Corporate Transparency Act (CTA). With less than a month to go before the January 1, 2025 compliance deadline for entities formed prior to 2024, this ruling blocks the U.S. Department of Treasury from enforcing the requirements of the Beneficial Ownership Information Reporting Rule (the “Rule”) issued by the Financial Crimes Enforcement Network (FinCEN).
The Court’s opinion in Texas Top Cop Shop, Inc., et al. v. Garland, et al. raises significant questions about the constitutionality of the CTA and its potential negative impact on small businesses. The CTA, part of broader anti-money laundering efforts, requires companies to disclose personal information about their “beneficial owners” (individuals who ultimately own or control a company) to a federal database maintained by FinCEN. In his Memorandum Opinion and Order, United States District Judge Amos L. Mazzant concluded that the CTA and Rule are likely unconstitutional as they exceed the scope of Congress’s power. The Court held that CTA does not regulate interstate commerce and that it is further not authorized by the Necessary and Proper clause of the Constitution.
The nationwide injunction affects most business entities in the U.S., as the CTA and Rule apply to approximately 32.6 million companies. Per the Court’s order, “reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”
While businesses are temporarily relieved of compliance obligations, the final resolution of the matter remains uncertain. Although no announcement has been made as of the time of this publication, the U.S. Department of Justice is likely to appeal the preliminary injunction to the U.S. Court of Appeals for the Fifth Circuit. Companies should stay informed and be prepared for potential changes to enforcement. Babst Calland will continue to closely monitor developments on this matter. Please reach out to fincenassist@babstcalland.com or your Babst Calland client relationship lawyer if you have any questions.
The Legal Intelligencer
(by Casey Alan Coyle and Michael Libuser)
Over 100,000 cases have been brought against Monsanto Corporation nationwide, claiming its Roundup™ weed-killer contains a carcinogenic active ingredient, namely, glyphosate. Hundreds of such cases are pending in Pennsylvania alone. But for over 30 years, the U.S. Environmental Protection Agency (“EPA”) has found evidence of glyphosate’s non-carcinogenicity for humans, and in 2015, the EPA determined “that glyphosate is not likely to be carcinogenic to humans.” EPA, “Glyphosate,” https://www.epa.gov/ingredients-used-pesticide-products/glyphosate.
This long-held conclusion regarding the non-carcinogenicity of glyphosate informed the EPA’s decision to approve a label for Roundup that omitted any cancer warning. By approving (and reapproving, over decades) Roundup’s label—pursuant to its authority under the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. § 136 et seq. (“FIFRA”)—the EPA effectively foreclosed litigants from asserting state-law product liability claims against Monsanto based on a purported duty to warn for failing to include a cancer warning on Roundup’s label. This is so because, as the U.S. Court of Appeals for the Third Circuit recently held in Schaffner v. Monsanto Corp., 113 F.4th 364 (3d Cir. 2024), FIFRA expressly preempts any such claims.
To many, Schaffner appeared to provide the last word on the subject. But some Pennsylvania state courts have declined to adhere to FIFRA-preemption in the wake of the decision. Last month, for example, the Philadelphia Court of Common Pleas concluded a trial—involving, in part, the same state-law failure-to-warn claim deemed preempted in Schaffner—resulting in a $78 million verdict for the plaintiffs. Melissen v. Monsanto Co., No. 210602578 (Phila. Cnty. C.C.P. Oct. 10, 2024). To borrow from Dickens, there appears to be a Tale of Two Courts within Pennsylvania—federal courts (where FIFRA-preemption applies), and state courts (where it does not)—resulting in, among other problems, discord, non-uniformity, confusion, and incentivization of forum-shopping.
FIFRA
FIFRA is a comprehensive regulatory statute that regulates pesticides and empowers the EPA to “supervise the pesticide industry” generally. Schaffner, 113 F.4th at 372. FIFRA prohibits manufacturers from misbranding pesticides, including by prohibiting them from omitting certain warnings or cautioning statements that, if complied with, are “adequate to protect health and the environment.” 7 U.S.C. § 136(q)(1)(G). It also prohibits manufacturers from distributing or selling unregistered pesticides.
The EPA is tasked with determining whether to register a pesticide under FIFRA, a process that requires manufacturers to submit proposed labels for the pesticides, among other things. Once registered, a pesticide cannot be distributed or sold unless it retains the same composition and labeling as presented to the EPA during the registration process. Any manufacturer that modifies a pesticide’s preapproved label must apply for an amended registration; failure to do so bars the manufacturer from distributing or selling the pesticide. The EPA is also charged with reviewing pesticide registrations every 15 years. Notably, FIFRA contains a “uniformity” provision that prohibits states from imposing “any requirements for labeling or packaging in addition to or different from those required under this subchapter.” 7 U.S.C. § 136v(b). This provision “mandates nationwide uniformity in pesticide labeling . . . .” Schaffner, 113 F.4th at 371 (emphasis added).
Schaffner
In Schaffner, a husband and wife sued Monsanto, claiming the husband’s use of Roundup as a professional landscaper and as a property owner caused him to develop non-Hodgkin’s lymphoma and asserting a failure-to-warn claim under Pennsylvania law. Although they filed their claim in Pennsylvania state court, the case was removed to Pennsylvania federal court, transferred to a California federal court involved in multidistrict litigation (“MDL”) proceedings, and then transferred back to the same Pennsylvania federal court before being appealed to the Third Circuit. The MDL court rejected Monsanto’s argument that FIFRA precluded the couple from asserting a state-law failure-to-warn claim based on the Roundup label’s omission of a cancer warning. When the case returned to Pennsylvania—the U.S. District Court for the Western District of Pennsylvania, specifically—the parties settled all aspects of the case excepting Monsanto’s FIFRA-preemption argument, which it expressly reserved for appeal.
On appeal, Monsanto prevailed on its FIFRA-preemption argument. In siding with Monsanto, the Third Circuit made several rulings that cast (arguably conclusive) doubt on any state-court proceedings that recognize a failure-to-warn claim premised on the omission of a cancer warning on Roundup’s label. At its core, Schaffner represents a straightforward application of FIFRA’s statutory framework and corresponding precedent. As the Third Circuit noted, preemption under Section 136v(b) of FIFRA—which, again, prohibits states from imposing different or additional labeling requirements than under FIFRA itself—applies if two conditions are met: (1) the state law imposes a requirement for “labeling or packaging”; and (2) that requirement is “in addition to or different from those required” under FIFRA. Bates v. Dow Agrosciences LLC, 544 U.S. 431, 444 (2005). The U.S. Supreme Court has held that a common-law duty to warn satisfies the first requirement. Id. at 446.
As to the second requirement, the parties in Schaffner sharply disagreed as to its applicability. This requirement implicates the Supreme Court’s “parallel requirements” test, under which “a state-law labeling requirement is not preempted if it is ‘equivalent to a requirement under FIFRA,’ while it is preempted if it ‘diverges from those set out in FIFRA and its implementing regulations.’” Schaffner, 113 F.4th at 379–380 (quoting Bates, 544 U.S. 452–453). The statute operates to preempt “any statutory or common-law rule that would impose [such] a labeling requirement[.]” Id. at 382. The test is a simple one—it requires courts to compare FIFRA’s labeling requirement to the state’s labeling requirement “to determine whether a pesticide label that violates the state requirement would also violate the federal one.” Id. at 380.
Applying this standard, the Third Circuit held that FIFRA preemption applied to bar the couples’ Pennsylvania failure-to-warn claim. The Court first had to identify the FIFRA labeling requirement to compare it to any state-law requirement. The Court concluded that the EPA’s “Preapproval Regulation,” i.e., the regulation that prohibited Monsanto from modifying Roundup’s label to include a cancer warning without further EPA approval, is the relevant FIFRA “requirement” for purposes of applying the parallel-requirements test. In doing so, the Court rejected the couples’ argument that it should only compare the Pennsylvania failure-to-warn “with the statutory definition of misbranding”—without regard to the Preapproval Regulation. The Third Circuit then applied the parallel-requirements test and found that, accepting the allegation that Monsanto violated Pennsylvania’s duty to warn by omitting a cancer warning on Roundup’s label, the omission did not violate the Preapproval Regulation given that Roundup’s previously approved label omitted a cancer warning. The test was therefore not satisfied because the FIFRA and state requirements are not equivalent, and accordingly, FIFRA preemption applied.
Subsequent Pennsylvania State Court Rulings
Despite Schaffner and its clear holding regarding FIFRA preemption vis-à-vis Roundup’s label, uncertainty has been sown by subsequent Pennsylvania state-court proceedings. One example is Melissen, which resulted in a nuclear verdict and is but one of hundreds of similar actions pending as part of the Roundup Products Liability cases in the Philadelphia Court of Common Pleas. There, Monsanto moved for summary judgment, invoking Schaffner and seeking judgment in its favor on plaintiffs’ failure-to-warn claims under FIFRA preemption. The court denied the motion, along with Monsanto’s motion for a stay and request that the court certify the FIFRA-preemption issue for immediate appeal. Monsanto then filed an emergency application for permission to appeal to the Pennsylvania Superior Court, but that, too, was denied.
Although Schaffner is not binding on Pennsylvania state courts, non-adherence to its holding is problematic for several reasons. For one, and as Melissen demonstrates, the Roundup cases have been catapulted into irreconcilable trajectories. In federal court, under Schaffner, the Melissens’ failure-to-warn claim would have been preempted; in Pennsylvania state court, it was not. Meanwhile, state courts in other jurisdictions have begun to follow Schaffner. See, e.g., Cardillo v. Monsanto Co., No. 2177CV00462, at 12–19 (Mass. Super. Oct. 21, 2024). This tension presents a classic Erie problem.
Moreover, ignoring Schaffner promotes discord and non-uniformity, which is doubly concerning in this context given FIFRA’s mandate of nationwide uniformity in pesticide labeling. It also clearly violates the statutory bar on states “imposing labeling requirements that are in addition to or different from the requirements imposed under FIFRA itself.” Schaffner, 113 F.4th at 371. If states can unilaterally decide when they can impose additional labeling requirements, e.g., cancer warnings not approved by the EPA, it would undermine FIFRA entirely.
And this raises still other concerns. States that decide to entertain failure-to-warn claims contra Schaffner will put manufacturers in the intractable position of having to decide between two competing alternatives: follow a federal statute aimed at promoting nationwide uniformity—or attempt to conform pesticide labels to predictions of what one or more states might ultimately require notwithstanding FIFRA. This dilemma implicates “conflict preemption,” which applies when “it is impossible to comply with both state and federal requirements,” or when “state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Roth v. Norfalco LLC, 651 F.3d 367, 374 (3d Cir. 2011) (cleaned up).
A related concern is forum shopping. “[P]art of the policy underlying preemption . . . is to prevent litigants from forum shopping to achieve a different result in federal court than they could obtain in state court.” Stone Crushed P’ship v. Kassab Archbold Jackson & O’Brien, 908 A.2d 875, 887 (Pa. 2006). If state courts refuse to apply preemption under Schaffner, litigants will have the ability to obtain relief in state court that they could not obtain in federal court.
Conclusion
It remains to be seen whether Schaffner will spell the end for the Roundup Products Liability litigation in Pennsylvania state courts. If not, courts across the Commonwealth will need to grapple with the strong policy concerns raised by permitting state-law failure-to-warn claims in the face of FIFRA.
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Casey Alan Coyle is a shareholder at Babst, Calland, Clements and Zomnir. He focuses his practice on appellate law and complex commercial litigation. Coyle is also a former law clerk to Chief Justice Emeritus Thomas G. Saylor of the Pennsylvania Supreme Court. Contact him at 267-939-5832 or ccoyle@babstcalland.com.
Michael Libuser is a litigation associate at the firm. He focuses his practice on appellate law and complex commercial litigation. Before entering private practice, Libuser served as a law clerk to Judge Yvette Kane, Senior U.S. District Judge for the Middle District of Pennsylvania, and then Judge Karoline Mehalchick, U.S. District Judge for the Middle District of Pennsylvania. Contact him at 717-868-8379 or mlibuser@babstcalland.com.
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Reprinted with permission from the December 5, 2024 edition of The Legal Intelligencer© 2024 ALM Media Properties, LLC. All rights reserved.
FNREL Water Law Newsletter
(by Lisa M. Bruderly, Jessica Deyoe and Mackenzie M. Moyer)
On October 5, 2024, the Pennsylvania Department of Environmental Protection (PADEP) published notice of the final Erosion and Sediment Control General Permit for Earth Disturbance Associated with Oil and Gas Exploration, Production, Processing, or Treatment Operations or Transmission Facilities (ESCGP-4). See 54 Pa. Bull. 6341 (Oct. 5, 2024). ESCGP-4 became effective October 5, 2024, and will expire on October 5, 2029. The current ESCGP-3 is scheduled to expire on January 6, 2025, following an administrative extension from October 6, 2023. PADEP will continue to accept applications for ESCGP-3 until October 11, 2024.
There are several notable differences between ESCGP-3 and ESCGP-4. ESCGP-4 requires that if a discharge approved for coverage under ESCGP-4 subsequently exhibits a condition rendering it ineligible for coverage under the permit, ESCGP-4 requires the permittee to promptly take action to restore eligibility, notify PADEP in writing of the condition, and submit an individual erosion and sediment control permit application to PADEP if eligibility cannot be restored. ESCGP-3 had no such requirement for discharges that became ineligible after approval under the permit.
Under ESCGP-3, weekly inspections of controls were required, as well as inspections following stormwater events. ESCGP-4 adds an inspection requirement following “snowmelt sufficient to cause a discharge” and requires that inspections be documented using PADEP’s Chapter 102 Visual Site Inspection Report form (No. 3800-FM-BCW0271d) or a similar form that contains the same information. ESCGP-4 also requires that “qualified personnel, trained and experienced in erosion and sediment control and post-construction stormwater management” complete the required inspections and outlines requirements for such qualifications. Further, ESCGP-4 requires the initiation of repair or replacement of a best management practice or stormwater control measure (SCM) within 24 hours of discovery of an issue, if there is no likelihood of a pollutional incident. When there is a likelihood of a pollution incident, repair or replacement must occur immediately.
ESCGP-4 also requires that any SCM implemented by an operator that is not in PADEP’s Erosion and Sediment Pollution Control Manual (No. 363-2134-008) or the Water Quality Antidegradation Guidance (No. 391-0300-002) be approved by PADEP. Additionally, operators must document the implementation of each structural SCM using a PADEP form—“SCM Construction Certification Form” (No. 3800-FM-BCW0271j)—and submit this documentation to PADEP within 30 days of completion of construction.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
The Foundation Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(by Joe Reinhart, Sean McGovern, Matt Wood and Alexandra Graf)
On October 10, 2024, the Pennsylvania Department of Environmental Protection (PADEP) presented an update on and summary of OOOOc Rulemaking to the Bureau of Air Quality’s Air Quality Technical Advisory Committee (AQTAC). See PowerPoint Presentation, PADEP, “Emissions Guidelines (EGs) for Greenhouse Gas (GHG) Emissions from Existing Crude Oil & Natural Gas Facilities (40 CFR Part 60 Subpart OOOOc)” (Oct. 10, 2024). On March 8, 2024, the U.S. Environmental Protection Agency (EPA) finalized its rule targeting methane emissions from the oil and natural gas sector (the Methane Rule), which established new source performance standards (NSPS) for facilities built, modified, or reconstructed after December 6, 2022 (OOOOb), as well as emissions guidelines (EG) for states to follow in designing and executing state plans for existing sources (OOOOc). See Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review, 89 Fed. Reg. 16,820 (Mar. 8, 2024) (to be codified at 40 C.F.R. pt. 60). The Methane Rule applies to oil and gas facilities involved in production and processing (including equipment and processes at well sites, storage tank batteries, gathering and boosting compressor stations, and natural gas processing plants) and natural gas transmission and storage (including compressor stations and storage tank batteries). The Rule requires frequent monitoring and repair of methane leaks at well sites, centralized production facilities, and compressor stations using established inspection technologies or, at an operator’s selection, novel advanced detection technologies. OOOOb applies to affected facilities that begin construction, reconstruction, or modification after December 6, 2022, while OOOOc (as implemented by state programs) will apply to sources existing as of that same date. The main differences between OOOOb and OOOOc are the timeframe for compliance and the additional requirements for new wells, particularly relating to flaring and well completions.
Under 25 Pa. Code § 122.3, Pennsylvania will incorporate OOOOc by reference and adopt a State Plan based on the Model Rule. PADEP has until March 8, 2026, to submit the State Plan to EPA. The State Plan must document meaningful engagement, which includes input from PADEP advisory bodies, environmental justice communities, stakeholder outreach and discussion, and public hearings. After the State Plan is submitted, EPA has 60 days to determine completeness and then has one year to approve or disapprove the plan. Under the regulations, EPA has until May 2027 to approve the state plans. The projected compliance deadline for owners and operators will be the first quarter of 2029.
Notably, the Methane Rule has several key subparts. First, it aims to phase out venting and flaring of gas from oil wells because the most significant emissions reductions will come from this directive. The Methane Rule also creates the Super Emitter Program (SEP) for identifying and addressing significant methane leaks from production facilities, including an avenue for qualified third parties to alert EPA of owners and operators exceeding the emissions standards and for EPA to require owners/operators to investigate such alerts. A “super emitter” event is defined as emissions of 100 kg (220.5 pounds) of methane per hour or larger. Further, the Methane Rule is also applicable to storage vessels, as owners and operators of existing tanks or tank batteries will need to evaluate a new applicability trigger under OOOOc. Under the presumptive standard, for existing storage tanks or tank batteries with a potential to emit of 20 tons of methane per year or greater, owners/operators will have to reduce their emissions by 95%.
The Methane Rule also establishes new leak detection and repair (LDAR) requirements based on the type of facility involved, which generally includes well sites, centralized production facilities, and compressor stations where methane is emitted. Additionally, for well closure, fugitive emissions monitoring is required to continue until closure and, once closed, a final optical gas imaging survey must be performed. All pneumatic pump affected facilities in the oil and gas industry and pneumatic controllers must have zero emissions, and natural gas-driven pumps are prohibited except at facilities with fewer than three natural gas-driven diaphragm pumps in areas where other power sources are inaccessible. There are also new requirements for well liquids unloading, centrifugal compressors, reciprocating compressors, covers and closed vent systems, natural gas processing plant equipment leaks, and sweetening units.
PUC Issues Final Regulations for Petroleum Products and Other Hazardous Liquids in Intrastate Commerce
On September 14, 2024, the Pennsylvania Public Utility Commission (PUC) published its Rulemaking Regarding Hazardous Liquid Public Utility Safety Standards at 52 Pa. Code Chapter 59 in the Pennsylvania Bulletin, the purpose of which is to “establish State public utility safety standards addressing localized concerns for hazardous liquid public utilities constructing, operating, and maintaining pipeline facilities.” 54 Pa. Bull. 5729 (Sept. 14, 2024). The rulemaking specifically applies to public utility intrastate hazardous liquid pipelines and facilities. It does not apply to Act 127 of 2011 (the Gas and Hazardous Liquids Pipelines Act), 58 Pa. Stat. §§ 801.101—.1101, pipelines or solely interstate hazardous liquid pipelines. The rule primarily establishes new standards for governing hazardous liquid public utilities (HLPUs) and related activities, such as constructing new pipelines; converting, relocating, or replacing existing pipelines; and reporting requirements. It also includes requirements for operations and maintenance, qualifications for pipeline personnel and land agents, and corrosion control standards for all HLPUs. Currently, there are only two certified HLPUs in Pennsylvania. In addition, the PUC made minor revisions to regulations applicable to gas service.
Among other things, the rulemaking includes requirements for conducting geological and environmental impact studies related to pipeline construction and conducting inspections and maintenance of depth of cover for pipes transporting hazardous liquids, construction, and clearance between pipes and underground structures. The rule also prevents constructing, relocating, or converting pipelines under existing buildings and establishes requirements for girth weld testing. More broadly, the rule is intended to improve communications between stakeholders, including the utilities, the public, local government entities, and others. The PUC reasoned the rule is necessary to reduce the frequency and consequences of incidents involving onshore transmission lines by employing prevention methods and early detection of threats to pipelines. As support, the PUC cited 71 hazardous liquid pipeline accidents in Pennsylvania since 2010 that all resulted in releases or spills, and investigations into 243 incidents of reported subsidence since 2017.
The PUC originally adopted and entered the final-form rulemaking order on February 22, 2024, see Rulemaking Regarding Hazardous Liquid Public Utility Safety Standards at 52 Pa. Code Chapter 59, No. L-2019-3010267, but withdrew it prior to review by the Independent Regulatory Review Commission (IRRC). After resubmission, the IRRC approved the revised final-form rulemaking on June 20, 2024. See Press Release, PUC, “PUC Enhancements to Regulations for Hazardous Liquids Pipelines Receive Approval from Independent Regulatory Review Commission” (June 20, 2024). In response to public comments, the PUC removed many requirements from the final rule that were originally included in its proposed rule. Those included design requirements regarding external loads; 40 inches of depth cover in commercial farmland; standards regarding valves for pipelines transporting highly volatile liquids (federal regulations now require rupture mitigating valves or equivalent technology); pressure testing; leak detection and odorization; determination of need for emergency flow restricting devices; additional criteria for cathodic protection; and close interval survey requirements. The docket for the rule, L-2019-3010267, is available here. The final rule is effective on November 13, 2024.
PADEP Begins Accepting Grant Applications for Plugging Orphaned Oil and Gas Wells
On October 9, 2024, the Pennsylvania Department of Environmental Protection (PADEP) began accepting applications for grants to plug abandoned oil and gas wells. See Press Release, PADEP, “Shapiro Administration Launches New Program in Pennsylvania to Plug Orphan Oil and Gas Wells, Creating Jobs and Cutting Methane Emissions in the Commonwealth” (Oct. 2, 2024). PADEP said that this new program is intended to reduce greenhouse gas emissions from orphaned wells that have the potential to leak methane, while also supporting job growth in the energy sector. An orphaned well is defined by section 3202 of the Pennsylvania Oil and Gas Act as “a well abandoned prior to April 18, 1985, that has not been affected or operated by the present owner or operator and from which the present owner, operator or lessee has received no economic benefit other than as a landowner or recipient of a royalty interest from the well.” According to PADEP, Pennsylvania has more than 350,000 orphaned and abandoned wells, which contribute to approximately 8% of the state’s total methane emissions.
The total amount of available funding is $16.8 million, and applicants can apply to plug up to five wells per application, with subawards based on well depths. A maximum of $40,000 will be awarded for each well that is 3,000 feet or less, and a maximum of $70,000 will be awarded for wells greater than 3,000 feet. The grants are available to Qualified Well Pluggers, defined as a “person who demonstrates access to equipment, materials, resources and services to plug wells in accordance with statutory and regulatory requirements.” An applicant may apply to plug additional wells once the last well under its current application is adequately plugged, PADEP issues a plugging certificate, and all terms and conditions of the grant agreement have been satisfied. All wells must be screened for methane prior to the application process, and for wells where methane is detected, emissions must be measured after application approval, but prior to plugging the well.
The funding is part of the $76.4 million Phase 1 formula grant awarded to Pennsylvania through the Infrastructure Investment and Jobs Act (IIJA). Additionally, per the IIJA, recipients of grant funds must submit environmental information documentation to the U.S. Department of the Interior for approval before beginning work on plugging projects, which contains a project scope and description, Endangered Species Act clearance, and National Historic Preservation Act clearance. More information on the application requirements is available here, and more information about the program is available at the Office of Oil and Gas Management’s website here. PADEP published notice of the program and application period in the Pennsylvania Bulletin on October 5, 2024. 54 Pa. Bull. 6343 (Oct. 5, 2024).
PADEP Publishes Final Erosion and Sediment Control General Permit-4
On October 5, 2024, the Pennsylvania Department of Environmental Protection (PADEP) issued a notice publishing the final Erosion and Sediment Control General Permit-4 (ESCGP-4) for Earth Disturbance Associated with Oil and Gas Exploration, Production, Processing, or Treatment Operations or Transmission Facilities. 54 Pa. Bull. 6341 (Oct. 5, 2024). In September 2024, PADEP published a Comment Response Document to comments it received during the comment period from June 29, 2024, to July 29, 2024, and incorporated those comments into ESCGP-4. See PADEP, Comment Response Document (Sept. 2024). In response to comments, PADEP did not eliminate the expedited review process for the ESCGP-4 permit, and noted that there are minimal differences between ESCGP-3 and ESCGP-4.
However, there are several notable changes and additions in ESCGP-4, including (1) where an approved discharge later becomes ineligible for coverage, the permittee must promptly act to restore eligibility and notify PADEP, or apply for an individual erosion and sediment control permit if eligibility cannot be restored; (2) the imposition of a new 60-day deadline to submit the notice of intent (NOI) before the planned date for initiating any new discharge; (3) a weekly inspection requirement after “snowmelt sufficient to cause a discharge” occurs, which must be completed by qualified personnel who meet the enumerated requirements under the permit; (4) that repair or replacement actions be implemented within 24 hours of discovery of an issue, where ESCGP-3 required immediate action; and (5) for any stormwater control measure that is not authorized by PADEP manuals, the permittee must receive PADEP approval and comply with related requirements.
ESCGP-4 became effective on October 5, 2024, and will expire October 5, 2029. Notices of permit approvals will be published in the Pennsylvania Bulletin. As of October 11, 2024, any NOI for new projects, renewals, subsequent phases, or modifications must be submitted under ESCGP-4. See PADEP, ESCGP-4 Transition Plan (Sept. 2024). Further, PADEP is required to act on all NOIs submitted for coverage under ESCGP-3 by January 6, 2025, due to its pending expiration. However, projects that were authorized for coverage under ESCGP-3 prior to this date will have coverage administratively extended under the terms and conditions of ESCGP-3 for the remainder of the time period of the original coverage. That is, if PADEP approves ESCGP-3 coverage, that coverage remains valid through the permit’s approved expiration date, unless PADEP approves a notice of termination or revokes permit coverage in the interim.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
The Foundation Mineral and Energy Law Newsletter
Pennsylvania – Mining
(by Joe Reinhart, Sean McGovern, Christina Puhnaty and Alexandra Graf)
On August 16, 2024, the Office of Surface Mining Reclamation and Enforcement (OSMRE) approved Pennsylvania’s proposed modification of its Pennsylvania Abandoned Mine Land Reclamation Plan under the Surface Mining Control and Reclamation Act of 1977 (SMCRA) by adding Reclamation Plan Amendment No. 3 to allow the Pennsylvania Department of Environmental Protection (PADEP) to administer a State Emergency Abandoned Mine Land Reclamation Program. See 89 Fed. Reg. 66,563 (Aug. 16, 2024). Pennsylvania submitted Reclamation Plan Amendment No. 3 for approval to OSMRE in 2016. Reclamation Plan Amendment No. 3 covers coordination of emergency reclamation work between Pennsylvania and OSMRE as well as procedures for implementing the National Environmental Policy Act and other Pennsylvania procedures. The Pennsylvania Abandoned Mine Land Reclamation Plan, including its amendments, is available here.
Emergency response reclamation activities involve “enter[ing] upon any land where an eligible abandoned coal mine related emergency exists . . . to restore, reclaim, abate, control, or prevent the adverse effects of legacy coal mining practices and to do all things necessary or expedient to protect the public health, safety, or general welfare.” Reclamation Plan Amendment No. 3, pt. G(I) (citing SMCRA § 410(b), 30 U.S.C. § 1240(b)). Pennsylvania defines an “emergency” in Reclamation Plan Amendment No. 3 as “a sudden danger or impairment or previously unknown condition, related to legacy coal mining, which represents a high probability of substantial physical harm to health, safety or general welfare . . . .” Id. at pt. G(III)(1). Under Reclamation Plan Amendment No. 3, PADEP will perform the investigations and eligibility findings for proposed emergency projects under title IV of SMCRA and will subsequently submit this information to an OSMRE official to make the requisite finding of fact and emergency declarations that are required under section 410(a) of SMCRA. PADEP will coordinate its emergency reclamation projects with OSMRE, in part by following the procedures in the OSMRE Federal Assistance Manual, ch. 4-120.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Water Law Newsletter
(by Lisa M. Bruderly, Jessica Deyoe and Mackenzie M. Moyer)
On August 12, 2024, the Pennsylvania Department of Environmental Protection (PADEP) announced the launch of an initiative from the 2024–25 Budget, Fiscal Code H.B. 2310, signed into law by Governor Shapiro on July 11, 2024, to modernize the permit review process. See Press Release, PADEP, “DEP Launches Two New Initiatives from 2024-25 Budget to Continue to Speed Up Permitting Process” (Aug. 12, 2024). The initiative, Streamlining Permits for Economic Expansion and Development (SPEED) Program, is intended to help PADEP reduce backlogs
and process permits more quickly.
The SPEED Program allows permit applicants to use PADEP-verified and qualified third-party contractors to conduct initial reviews of applications for eligible permit types. PADEP was required to issue a request for proposal by mid-October to identify qualified third-party contractors for the SPEED Program. Permits eligible for the SPEED program include air quality plan approvals (state-only) (Pa. Code ch. 127), earth disturbance permits (Pa. Code ch. 102), individual water obstruction and encroachment permits (Pa. Code ch. 105), and dam safety permits (Pa. Code ch. 105). Permit applicants that choose to use a third-party reviewer must pay for any costs associated with the qualified professional’s review of the permit application.
Permits under the SPEED Program are subject to specific timelines established in PADEP’s Permit Decision Guarantee Policy, see Exec. Order No. 2012-11, “Policy for Implementing the Department of Environmental Protection (Department) Permit Review Process and Permit Decision Guarantee” (Nov. 2, 2012), or separate permit decision timelines if agreed to by PADEP and the applicant. The permit decision timeline starts once the qualified professional certifies to PADEP that no conflict of interest exists with the permit applicant.
The qualified professional will perform a technical review of the eligible permit application, then recommend action to PADEP. After receiving the recommendation, PADEP will issue the permit, deny it, or send a technical deficiency letter to the permit applicant explaining necessary changes. Once issues in the application are resolved, PADEP will issue the permit. If issues are not, or cannot be, resolved, PADEP will deny the permit. If PADEP does not issue or deny the permit within the established timeline, the permit application will be immediately elevated for priority review and PADEP will have 10 business days to make a decision. If a decision is not made within 10 business days, PADEP must refund the permit application fee and pay the qualified professional’s cost of the review.
Although PADEP planned to establish a process for the SPEED program by mid-September, as of October 3, 2024, PADEP has not yet published an established process for the SPEED program. SPEED also requires PADEP to create a secure tracking system for applications submitted electronically on PADEP’s website within 180 days of the passage of the bill (i.e., by January 7, 2025), so long as funding is provided. Given this quick timeline, permit applicants may be able to utilize SPEED in the first quarter of 2025.
Copyright © 2024, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
The Legal Intelligencer
(by Steve Antonelli and Alex Farone)
Just as many employers were finalizing their 2025 budgets, on November 15, 2024, a federal court in Texas issued a nationwide injunction six weeks before the second of two meaningful changes to the federal overtime law was set to take effect.
Unless specifically exempted, the Fair Labor Standards Act (FLSA) requires covered employees to be paid overtime when they work more than 40 hours during a week. One group of employees that is exempted from the overtime requirements are those who qualify as executive, administrative, or professional (EAP) employees. To qualify for this overtime exemption, workers must perform certain job duties and be paid on a salary basis. Until earlier this year, to qualify for the exemption, workers had to be paid a minimum yearly salary of $35,568. In other words, those employees who earned in excess of this amount did not have to be paid overtime if they worked more than 40 hours in a week.
In April 2024, the U.S. Department of Labor (DOL) announced a final rule that qualified millions of additional employees for overtime pay because it increased the salary threshold required for the EAP exemption. The rule was to be implemented in phases. The first phase took effect on July 1 and called for an immediate increase to the minimum salary. Specifically, the first phase increased the salary threshold for the EAP exemption from $35,568 (which is $684/week) to $43,888 per year (which is $844/week). To comply with the new rule, employers across the nation had to increase the minimum salary paid to EAP employees by July 1, 2024, to avoid paying overtime to those workers.
The second phase of the new rule required the salary threshold to increase again, this time in a more meaningful way, on January 1, 2025, when the threshold was set to increase to $58,656 (which is $1,128/week). The new rule also required regular updates to the salary threshold every three years to ensure predictability, reflect changes in earnings, and to protect against the potential for future erosion of overtime protections.
The state of Texas and a coalition of trade associations challenged the rule, claiming that the DOL exceeded its authority when issuing the rule. Judge Sean D. Jordan of the Eastern District of Texas agreed and recently issued a nationwide injunction that not only invalidated the upcoming second phase that was set to take effect on January 1, 2025, but also invalidated the first phase of the rule, which took effect on July 1, 2024 and has already rendered an estimated one million workers as nonexempt who had previously been classified as exempt from the overtime requirements. The ruling also invalidates the regular updates every three years.
Practically speaking, where does this leave those employers that have already raised the salaries of exempt employees to meet the July 1, 2024 increase? Employers should exercise caution in taking any action with respect to existing salaries until we learn whether an appeal will be filed, and the ultimate resolution of any such appeal. Furthermore, many employers will be hard-pressed to lower a salary increase that may have been given to avoid qualifying certain EAP employees for overtime in accordance with the now-invalidated phase one increase.
Given the uncertainty of the effect of an appeal, employers are similarly left in limbo with respect to the January 1, 2025 increase. Employers that do not wish to raise salaries on January 1, 2025 in light of the recent decision should budget for the possibility of a successful appeal at some point in 2025, necessitating a later implementation of the contemplated raise to keep these employees exempt under the FLSA. However, given the upcoming presidential administration change, it is impossible to predict where the salary thresholds will ultimately land. The current salary thresholds were set pursuant to a 2019 rule issued by the first Trump administration, and it is unclear whether the incoming Trump administration will support the now-voided thresholds rolled out during the Biden administration, the current thresholds originally set in 2019, or an entirely new set of salary thresholds. Regardless, employers should tread carefully in the coming months when evaluating the amounts that must be budgeted for salaries to ensure exempt employees remain exempt from the FLSA’s overtime requirements.
If you have questions about the status of the now-invalidated DOL rule please contact Stephen A. Antonelli at 412-394-5668 or santonelli@babstcalland.com or Alexandra G. Farone at (412) 394-6521 or afarone@babstcalland.com.
Stephen A. Antonelli is a shareholder in the Employment and Labor and Litigation groups of Babst Calland. His practice includes representing employers of all sizes, from Fortune 500 companies and large healthcare organizations to non-profit organizations and family-owned businesses. He represents clients, in all phases of employment and labor law, from complex class and collective actions and fast-paced cases involving the interpretation of restrictive covenants, to single-plaintiff discrimination claims and day-to-day human resources counseling.
Alexandra G. Farone is an associate in the Employment and Labor and Litigation groups of Babst Calland. Ms. Farone’s employment and labor practice involves representing Fortune 500 companies, startups, public sector organizations, family-owned businesses, health care providers, and the financial services industry on all facets of employment law, including comprehensive human resources counseling concerning restrictive covenants, discrimination and harassment, disability accommodation, grievances, personnel best practices, contract negotiations, wage and hour issues, and collective bargaining.
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Reprinted with permission from the November 26, 2024 edition of The Legal Intelligencer© 2024 ALM Media Properties, LLC. All rights reserved.