Articles, Alerts & Perspectives

Pittsburgh, PA and Washington, DC

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

(Joseph K. Reinhart, Sean M. McGovern, Matthew C. Wood and Gina F. Buchman)

On June 29, 2023, the Pennsylvania House of Representatives passed House Resolution 131, a resolution directing the Legislative Budget and Finance Committee (LBFC) to study the revenue of Pennsylvania’s oil and natural gas industry. Since the enactment of Act 13 of 2012, producers in Pennsylvania have paid an impact fee based on production and pricing for unconventional gas wells. This differs from other states, including Texas, where producers pay a severance tax—a tax on the extraction of oil and natural gas.

The resolution, which was introduced by Representative Mandy Steele, directs the LBFC to conduct a study to determine the revenue Pennsylvania may have collected since the enactment of Act 13 if a severance tax had been implemented. The bill also directs the LBFC to report its findings and severance taxes, impact fees, or other oil or gas related taxes paid by producers in other states for natural gas production by June 2024.

The LBFC is a bipartisan legislative service agency consisting of 12 members of the General Assembly. The LBFC conducts studies and makes recommendations regarding the elimination of unnecessary expenditures, promotion of economy in government, and assurance that commonwealth expenditures are made in accordance with their legislative intent. The staff of the LBFC has experience in business administration, business analytics, economics, environmental science, public administration, law, and supply chain management. They have assisted the LBFC in a variety of public policy and state program areas, including emergency preparedness, community and economic development, education, environmental protection, game and fisheries, health and welfare, law enforcement, liquor control, local government, rural affairs, transportation, and veteran’s affairs. …

Pittsburgh, PA and Washington, DC

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

(Joseph K. Reinhart, Sean M. McGovern, Matthew C. Wood and Gina F. Buchman)

On July 22, 2023, the Pennsylvania Department of Environmental Protection (PADEP) published its semi-annual Regulatory Update, which summarizes the current status of regulations under development or consideration (and includes recently completed regulations). See 53 Pa. Bull. 3905 (July 22, 2023). The Regulatory Update highlighted agency progress on two proposed rulemakings to amend 25 Pa. Code ch. 78, the regulations governing conventional oil and gas well operations, that have been in development since 2020.

The first proposed rulemaking, “Environmental Protection Performance Standards for Conventional Oil and Gas Operators” (#7-539), proposes to amend 25 Pa. Code ch. 78 to update the environmental protection performance standards for surface activities at conventional oil and gas well sites. Among other things, it would amend the chapter 78 regulations to update well reporting requirements and protection and replacement of public or private water supply regulations to align them with Act 13 of 2012 (which amended Pennsylvania’s Oil and Gas Act, 58 Pa. Cons. Stat. §§ 2301–3504). The proposed rule would also amend bonding requirements to align with Act 57 of 1997 (which amended the Administrative Code of 1929) and amends the regulations regarding well inactive status designations. See Proposed Chapter 78 Annex A Rulemaking (Aug. 19, 2021). This proposed rulemaking was most recently presented at the December 16, 2021, Pennsylvania Grade Crude Development Advisory Council (CDAC) meeting and the proposed date of promulgation is Q4 2023. See 53 Pa. Bull. 3905 (July 22, 2023). …

Pittsburgh, PA and Washington, DC

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Mining

(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman and Christina M. Puhnaty)

In May 2023, Governor Shapiro awarded $7.8 million resulting from the federal Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, 135 Stat. 429 (2021), to fund projects for the reclamation of abandoned mine land, abatement of acid mine drainage through reclamation, or treatment of acid mine drainage through the construction, operation, or maintenance of an acid mine drainage treatment facility. See Press Release, Pa. Dep’t of Env’t Prot. (PADEP), “The Shapiro Administration Awards $7.8 Million Dollars in Grants for Environmental Restoration Projects” (May 26, 2023). As a result of the award, PADEP’s Bureau of Abandoned Mine Reclamation announced 16 projects across 12 Pennsylvania counties that PADEP will soon initiate. See id.; see also Guidance, PADEP, “2023 Abandoned Mine Land and Acid Mine Drainage Grant Program,” https://files.dep.state.pa.us/Mining/Abandoned%20Mine%20Reclamation/AbandonedMinePortalFiles/AML_AMD_GRANT_PROGRAM_GUIDANCE.pdf.

Copyright © 2023, The Foundation for Natural Resources and Energy Law, Westminster, Colorado

Pittsburgh, PA and Washington, DC

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Mining

(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman and Christina M. Puhnaty)

In early July 2023, the Pennsylvania Department of Environmental Protection (PADEP) issued a draft general permit, GP-21, and an accompanying technical support document for the regulation of emissions from coal mine methane enclosed flares. See PADEP’s Draft Permit and Technical Support Document at http://www.depgreenport.state.pa.us/elibrary/GetFolder?FolderID=860346. PADEP cites sections 6.1 and 6.6 of the Pennsylvania Air Pollution Control Act, 35 Pa. Stat. §§ 4006.1, .6, and section 504(d) of the Clean Air Act, 42 U.S.C. § 7661c(d), as its authority for regulating coal mine methane enclosed flares.

The draft GP-21 sets forth standardized terms and conditions related to best available technology (BAT), compliance certification, notification, recordkeeping, reporting, and source testing requirements for coal mine methane enclosed flares at natural minor facilities. The GP-21 would authorize the construction, modification, and/or operation of coal mine methane enclosed flares that have actual emissions greater than what PADEP considers de minimis emissions:

• 4 tons per year (tpy) of carbon monoxide from a single source and 20 tpy of carbon monoxide at the facility;
• 1 tpy of nitrogen oxide (NOx) from a single source and 5 tpy of NOx at the facility;
• 6 tpy of oxides of sulfur from a single source and 8 tpy of oxides of sulfur at the facility; 0.6 tpy of PM10 from a single source and 3 tpy of PM10 at the facility;
• 1 tpy of volatile organic compounds (VOCs) from a single source and 5 tpy of VOCs at the facility;

…

Pittsburgh, PA and Washington, DC

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Mining

(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman and Christina M. Puhnaty)

As previously reported in Vol. 39, No. 2 (2022) of this Newsletter, the Pennsylvania Department of Environmental Protection’s (PADEP) CO2 Budget Trading Program rule, or RGGI Rule, which links the commonwealth’s cap-and-trade program to the Regional Greenhouse Gas Initiative (RGGI), was published in the Pennsylvania Bulletin in April 2022. See 52 Pa. Bull. 2471 (Apr. 23, 2022). RGGI is the country’s first regional, market-based cap-and-trade program designed to reduce carbon dioxide (CO2) emissions from fossil-fuel-fired electric power generators with a capacity of 25 megawatts or greater that send more than 10% of their annual gross generation to the electric grid.

On May 24, 2023, the Pennsylvania Supreme Court heard arguments on whether a lower court was right to prevent Pennsylvania’s participation in RGGI. One of the predominant topics at oral argument was the issue of whether the credits that power plants would have to purchase under the regulation are considered a tax or a fee. The petitioners believe the credits to be an unconditional tax while the Commonwealth contends that the credits are a fee as authorized under the Air Pollution Control Act.

The corresponding lower court case was filed on April 25, 2022, by owners of coal-fired power plants and other stakeholders requesting review and a temporary injunction, which was initially granted. See Bowfin KeyCon Holdings, LLC v. PADEP, No. 247 MD 2022 (Pa. Commw. Ct. filed Apr. 25, 2022); Vol. 39, No. …

Pittsburgh, PA, Charleston, WV, Harrisburg, PA, State College, PA and Washington, DC

Babst Calland today published its 13th annual energy industry report: The 2023 Babst Calland Report – Legal & Regulatory Perspectives for the Energy Industry. The Report provides insights on some of the most critical issues facing the industry.

This edition of The Babst Calland Report also features a special video briefing from U.S. Senator Barrasso (R-WY), ranking member of the Senate Committee on Energy and Natural Resources, who is at the forefront on federal energy policy.

Joseph K. Reinhart, shareholder and co-chair of Babst Calland’s Energy and Natural Resources Group, said, “The U.S. energy sector remains as dynamic as ever. New energy policies and legislation are changing the regulatory landscape and affecting all parts of the energy value chain. It is more important than ever for energy executives and their counsel to stay on top of federal, state, and local regulatory developments, legal risks, and the related business implications.”

This year’s Report highlights various challenges and opportunities in the energy sector, including:

• Hydrogen and Carbon Capture and Storage (CCS) are getting a boost as tools for reducing carbon emissions. The 2021 Infrastructure Investment and Jobs Act and the 2022 Inflation Reduction Act (IRA) provided billions in funding in the form of tax credits, grants, and loans for hydrogen and CCS technologies.
• Climate policy and Environmental, Social and Governance (ESG)-related practices may trigger new reporting requirements imposed by federal and state regulatory agencies. With increased focus on reducing greenhouse gas, particularly methane emissions from the energy industry, several proposed federal agency rules could make ESG reporting mandatory for certain sectors.
• Environmental Justice (EJ) efforts continue to expand as a priority for federal and state agencies following directives from the Biden Administration.

…

Pittsburgh, PA

Smart Business

(By Adam Burroughs featuring Joseph Pope)

The commercial real estate market is facing a number of challenges. Among the most pressing are the new market realities being reflected in certain property insurance coverages that are affecting borrowers’ new and existing loans.

“Certain long-standing insurance requirements simply are not available any longer or are undergoing significant adjustment,” says Joseph A. Pope, an attorney with Babst Calland. “It’s playing out in real time between borrowers and their attorneys and lenders.”

Smart Business spoke with Pope about how changes in property insurance coverage are affecting commercial real estate lending, and what borrowers need to know about it.

How is property insurance changing?

Certain property insurance coverage is no longer available that had historically been part of lenders’ standard coverage requirements. Sometimes those considerations are geographic. For instance, in Florida there are types of property insurance that are either no longer being offered, or providers won’t cover certain properties as insurance companies have essentially hit their maximum amount of risk in the state. In Midwest and Gulf Coast states, changes to hail, windstorm and named storm coverage policies are affecting deductibles and certain payouts for these specific coverages. Similar changes are affecting property insurance in essentially all U.S. markets, including Pennsylvania, whether by way of loss of coverage, higher deductibles or increased premiums.

What now must be negotiated with lenders?

Property owners with existing loans in affected jurisdictions now must explain to their lenders that they may no longer be able to fulfill certain loan requirements that are predicated on insurance coverage. Lenders have been slow to proactively update their previous standard minimum requirements on property loans and there’s no guaranty they will do so in a borrower-friendly way. …

Pittsburgh, PA

Legal Intelligencer

(by John McCreary and Janet Meub)

On August 29, 2023, the United States Department of Labor (DOL) published a Notice of Proposed Rulemaking that would permit union representatives and other nonemployees to participate in workplace inspections conducted by Occupational Safety and Health Act Compliance and Safety Officers (CSHOs).

Section 8(e) of the Occupational Safety and Health Act (OSHA) currently allows “a representative of the employer and a representative authorized by employees the opportunity to accompany CHSOs during the physical inspection of the workplace for the purpose of aiding the inspection.” The OSHA and 29 CFR part 1903 give CSHOs the authority to resolve any disputes about who the employer and employee representatives are and to deny any person from participating in the inspection whose conduct interferes with a fair and orderly investigation. The CSHO also has the authority to permit additional employer representatives and representative authorized by employees to participate in the workplace walk-throughs. See 29 CFR 1903.8(a).

OSHA has historically mandated that the representative authorized by employees for a worksite inspection be an actual employee. Over the years, OSHA has offered guidance on its interpretation of section 1903.8(c) and the definition of “representative authorized by employees”. In 2003, OSHA issued a letter of interpretation (the Racic Letter) in response to the question of whether a union representative who files a complaint on behalf of a single worker could act as a walk-through inspection representative in a workplace that had no labor agreement. OSHA determined that there was “no provision for a walkaround representative who has filed a complaint on behalf of an employee of the workplace.” See, ID OSHA – 2023-0008-0002. Ten years later, in 2013, OSHA issued a second letter of interpretation (the Sallman Letter) stating that workers at a worksite without a collective bargaining agreement could designate a union or community organization for purposes of an OHSA walk-through inspection as long as it had been “authorized by employees to serve as their representative”. …

Washington, DC

PIOGA Press

(By Jessica Deyoe)

On August 17, 2023, U.S. Environmental Protection Agency (EPA) announced its National Enforcement and Compliance Initiatives (NECIs) for Fiscal Years 2024-20271. For over 25 years, EPA has reviewed its priorities and set new enforcement and compliance initiatives every four years. Though EPA is charged with the enforcement of many environmental statutes, it prioritizes certain initiatives to address what it perceives to be the most serious and widespread environmental problems facing the United States.

While the EPA is preparing for the next four-year cycle, it is still enforcing under the current set of NECIs for Fiscal Years 2020-2023. The current six NECIs are:

1. Creating Cleaner Air for Communities by Reducing Excess Emissions of Harmful Pollutants from Stationary Sources;
2. Reducing Hazardous Air Emissions from Hazardous Waste Facilities;
3. Stopping Aftermarket Defeat Devices for Vehicles and Engines;
4. Reducing Significant Noncompliance with National Pollutant Discharge Elimination Systems Permits;
5. Reducing Noncompliance with Drinking Water Standards at Community Water Systems; and
6. Reducing Risks of Accidental Releases at Industrial and Chemical Facilities.

To determine initiatives for FY 2024-2027 cycle, EPA identified three criteria to evaluate the FY 2020-2023 initiatives and to consider new initiatives: (1) the need to address “serious and widespread environmental issues and significant noncompliance,” with particular focus on overburdened and disadvantaged communities; (2) a focus on areas where federal enforcement is needed to “hold polluters accountable” in order to “promote a level playing field”; and (3) alignment with EPA’s Strategic Plan Fiscal Year 2022-2026.

The FY 2024-2027 NECIs selected by EPA focus on three of EPA’s Strategic Plan goals in particular: (1) Tackle the Climate Crisis, (2) Take Decisive Action to Advance Environmental Justice, and (3) Enforce Environmental Laws and Ensure Compliance. …

Pittsburgh, PA

TEQ Magazine

(By Kevin Douglass)

Many business owners are blindsided when a co-owner files a lawsuit against them detailing a list of grievances.

When owners form a new business or an owner is added to an existing ownership group, the stakeholders are typically optimistic about the future. Owners often do not discuss or consider the possibility of future differences and may not address them in their written agreements.

Consequently, when a disagreement inevitably arises, business owners frequently choose to minimize or completely ignore the dispute until considerable damage is done to the owners’ relationship, which allows these matters to fester and eventually disrupt the business. But with the right preventive approach, these challenges can be identified and resolved quickly and cost effectively.

What can trigger disagreements among owners?

One common trigger is finances. If the company is doing very well, owners may feel entitled to more compensation or at least more input into how additional profits will be invested. In contrast, if the business begins to struggle, owners’ compensation, distributions and benefits may need to be decreased, and tough decisions made about the company’s direction.

Other reasons for conflict can include a change in an owner’s level of commitment or job performance, an owner’s desire for more authority and input into company management, or conflicting business strategies. Changes in an owner’s personal life may also spark controversy, such as the involvement of a new family member or owner in the business, changes in an owner’s personal finances or simply the advancing age of the company’s primary manager(s).

What are the risks of ignoring owner disagreements?

Owner disagreements can spill over into a business’s operations and finances. …

Pittsburgh, PA

Developing Pittsburgh

(By Michael Korns)

It is a tough market for developers, with both supply chain issues and inflation limiting your options. But luckily, you have found a great piece of property to develop. You have the perfect use in mind; you have your financing lined up; your engineers and architects have determined that you should have no issues with stormwater or permitting; utilities are available; and everything is good to go. You are deep into the due diligence period, perhaps even past it, when you get “the call” with news you never want to hear: “Just a heads up, there may be a problem with the zoning.”

Of course, you looked at the zoning already. You checked the Use Table for this zoning, and you saw your use was listed. Or at least, something close enough was listed. And sure, the definition in the ordinance is a bit strange, and there are some nonsensical technical requirements that are confusing, but there must be a solution? But now the municipality is telling you that you are looking at months of hearings and approvals, and you are stuck in limbo and bleeding money with no guarantee this project will ever get off the ground.

Does this sound realistic to you? Unfortunately, as a land use and zoning attorney, it is all too realistic to me. Many times, when a developer calls, they are facing a situation similar to the one described above. Unfortunately, at this stage, there may be no way to save the project. Even if the issue can be resolved, the project can be significantly delayed, and in a business where timing is everything, a “perfect project” can turn into a black hole waiting for the legal process to unfold. …