Articles, Alerts & Perspectives

Pittsburgh, PA

PIOGA eWeekly

(By Gary Steinbauer and Christina Puhnaty)

On December 2, 2023, the U.S. Environmental Protection Agency (EPA) released a pre-publication version of its final Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review (Final Rule). The Final Rule comes more than two years after EPA published its initial proposal on November 15, 2021 (Initial Proposal) and a supplemental proposal on December 6, 2022 (Supplemental Proposal) (collectively, the “Proposals”). According to EPA, the agency received over one million comments on the Proposals.  For information on the Proposals, please see our November 11, 2021 and December 12, 2022 articles. This Alert focuses on critical aspects of the Final Rule, including key changes that EPA made since issuing the Proposals.1

Brief Overview of Methane Rule

The Methane Rule is comprised of four separate actions proposed under sections 111(b) and 111(d) of the Clean Air Act. EPA currently regulates emissions of volatile organic compounds (VOCs) and methane from oil and natural gas facilities under 40 C.F.R Part 60 Subparts OOOO2 and OOOOa.3 First, through this Final Rule, EPA will regulate oil and natural gas facilities constructed, modified, or reconstructed after December 6, 2022, under a new Subpart OOOOb.  The requirements in OOOOb will apply to affected facilities 60 days after the rule is published in the federal register.  Second, under a new Subpart OOOOc, EPA finalized emissions guidelines that are intended to inform states in the development, submittal, and implementation of state plans to establish standards of performance for greenhouse gases (in the form of limitations on methane) from sources existing on or before December 6, 2022.  …

Pittsburgh, PA and Washington, DC

PIOGA Press

(By Kevin Garber and Jessica Deyoe)

On November 21, 2023, the Shapiro administration appealed, to the Pennsylvania Supreme Court, the Commonwealth Court’s November 1 ruling that the Regional Greenhouse Gas Initiative (RGGI) is an unconstitutional tax, and therefore is void and unenforceable. See Bowfin KeyCon Holdings, LLC et al v. Pennsylvania Department of Environmental Protection and Pennsylvania Environmental Quality Board (No. 247 M.D. 2022). The Commonwealth Court concluded that, to pass constitutional muster, Pennsylvania’s participation in RGGI “may only be achieved through legislation duly enacted by the Pennsylvania General Assembly” and not merely through the rulemaking promulgated by the Environmental Quality Board and the Department of Environmental Protection.

The Shapiro administration said it is appealing the decision because the “Commonwealth Court’s decision on RGGI—put in place by the prior administration—was limited to questions of executive authority, and our Administration must appeal in order to protect the important authority for this Administration and all future governors.”

The Governor’s decision to appeal the Commonwealth Court’s decision does not necessarily mean he supports RGGI, put in place by the previous Wolf administration. Even if the Shapiro administration wins on the appeal, it is unclear whether the Governor will enforce the regulation. In fact, the administration did not oppose the Bowfin KeyCon industry petitioners’ application to vacate the automatic stay that arises by law when the Commonwealth appeals a case. That means the RGGI regulation will continue to be ineffective and unenforceable while the appeal is pending.

The Shapiro administration is urging lawmakers to develop an alternative plan, stating in a press release that “should legislative leaders choose to engage in constructive dialogue, the Governor is confident we can agree on a stronger alternative to RGGI.” The Governor’s spokesperson Manual Bonder indicated that Governor Shapiro “stands ready and willing to implement the recommendations of the RGGI Working Group and he would sign legislation replacing RGGI with a Pennsylvania-based or PJM-wide cap-and-invest program, as they proposed.”

Shortly after taking office, Shapiro formed the RGGI Working Group consisting of a mix of labor, business, energy, and environmental leaders to determine whether RGGI would “protect and create energy jobs,” “take real action to address climate change,” and “ensure reliable, affordable power for consumers in the long-term.” The Working Group never endorsed RGGI. …

Pittsburgh, PA

Legal Intelligencer

(by Gary Steinbauer and Christina Puhnaty)

Pennsylvania oil and gas producers and midstream operators are faced with yet another suite of federal air regulations following the U.S. Environmental Protection Agency’s recent finalization of its far-reaching Methane Rule. On December 2, 2023, EPA released a 1690-page, pre-publication version of the Methane Rule or the Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review. The Methane Rule is aimed at strengthening existing and adding new regulations limiting emissions of methane and volatile organic compounds (VOCs) from the Crude Oil and Natural Gas industrial source category. These federal Clean Air Act (CAA) regulations will apply to a host of new and existing emission sources and activities within the oil and natural gas industry. With Pennsylvania producing more natural gas than any other state except Texas, oil and gas producers and midstream operators must contend with another slate of new, more stringent federal air requirements.

The Methane Rule will become effective within 60 days of publication in the Federal Register. While EPA released it in a single package, the Methane Rule is comprised of four related regulatory actions: (1) updated new source performance standards regulating VOC and methane emission sources for certain emission sources and activities constructed, reconstructed, or modified after December 6, 2022, which will be promulgated at 40 CFR Part 60, Subpart OOOOb; (2) a set of emission guidelines for states to follow when adopting performance standards to limit methane emissions from specified existing air emission sources within the oil and gas industry, which will be promulgated at 40 CFR Part 60, Subpart OOOOc; …

Pittsburgh, PA

Pittsburgh Business Times

(By Daniel Bates featuring Nadya Kessler and Susanna Bagdasarova)

Peace on earth – perhaps wishful thinking during this holiday season in the midst of such extreme global turmoil. But not for the likes of the ever-optimistic GlobalPittsburgh and its local business supporters.

Together, they’re working hard these days to foster international peace and stability by bringing countries and cultures together right here in Pittsburgh, “one handshake at a time,” according to Nadya Kessler, director of GlobalPittsburgh, a nonprofit that has been serving the Pittsburgh community since 1959.

“For almost 65 years, GlobalPittsburgh has been developing and fostering educational, cultural, and business relationships between the Greater Pittsburgh community and international citizens,” said Kessler, a one-time attorney who emigrated from Russia in 2009 and has been leading the nonprofit for the past year. “GlobalPittsburgh is very important to the local business community because it creates long-lasting relationships between local and international community members, giving an opportunity for local businesses and academic institutions to meet international leaders whom they might have never had a chance to meet otherwise.”

Kessler shared the mission of GlobalPittsburgh, alongside Susanna Bagdasarova, an attorney with Pittsburgh-based law firm Babst Calland who serves on GlobalPittsburgh’s board of directors, during a recent interview with the Pittsburgh Business Times.

At ‘the same table’

The organization’s mission, Kessler said, couldn’t prove timelier today, as it “reaches across divides to bring people of diverse backgrounds and perspectives to the same table, forging opportunities for both the international and Pittsburgh communities to learn from and inspire each other.”

GlobalPittsburgh was founded in 1959 as the Pittsburgh Council for International Visitors. Early on, the United States Department of State designated the nonprofit as a regional liaison for the State Department’s International Visitor Leadership Program. …

Pittsburgh, PA

Pretrial Practice & Discovery

American Bar Association Litigation Section

(by Jess Barnes)

Contractual provisions providing for dispute resolution via arbitration are fairly common. In fact, federal policy generally favors arbitration. However, your case still may find its way to litigation over a few typical issues that arise regarding the enforceability of arbitration provisions. Recently, the Toronto Raptors and New York Knicks hit not only the court but the courtroom. These professional basketball teams seek a decision from a New York federal district court on whether their intellectual-property dispute belongs before a judge or the NBA commissioner as arbitrator. In New York Knicks, LLC v. Maple Leaf Sports & Entertainment Ltd. d/b/a Toronto Raptors et al., Case No. 23-CV-7394 (JGLC) (S.D.N.Y 2023), the Toronto Raptors moved the court to compel the action to arbitration. The Raptors argued that both teams are parties to the National Basketball Association (NBA)’s constitution and by-laws. The Raptors explained that the NBA Constitution is a contract among the members of the NBA. Moreover, the NBA Constitution provides an arbitration provision that the NBA commissioner has exclusive jurisdiction over disputes involving two or more members of the NBA.

When reviewing this request to compel arbitration, the court must answer two questions: (1) is there a valid agreement to arbitrate, and (2) if so, whether a court or arbitrator should decide if the underlying dispute is arbitrable.

Here, both parties at minimum conceded that a valid agreement to arbitrate existed between the parties in the NBA Constitution. The Knicks, however, argued that this case, contemplating intellectual-property theft, did not fall within the arbitration provision.

Initially, the Knicks claimed that the court, and not the NBA commissioner, should determine whether the case is arbitrable, because the NBA Constitution itself does not explicitly provide the procedure for resolving questions of arbitrability. …

Pittsburgh, PA

Legal Intelligencer

(by Steve Silverman and Steve Antonelli)

For many employers, it is also performance review season that is often accompanied by announcements concerning employees’ compensation for next year. As a result, this time of year can sometimes cause employees to consider a change of scenery. Employers should therefore be prepared for the possibility that an employee will voluntarily resign their employment and move on to another opportunity.

With the Holiday Season in full swing, many of us are busier than normal. We have parties to attend, shopping to finish (or in my case, start and finish), and year-end goals to accomplish, in addition to our “regular” work duties. This is also the time of year that many employers begin to wrap up financial matters and plan for the coming year by preparing goals, budgets, forecasts, and strategic plans. For many employers, it is also performance review season which is often accompanied by announcements concerning employees’ compensation for next year. As a result, this time of year can sometimes cause employees to consider a change of scenery. Employers should therefore be prepared for the possibility that an employee will voluntarily resign their employment and move on to another opportunity. Accordingly, employers should consider the following checklist if and when an employee announces their resignation:

• Employers should compile an inventory of the departing employee’s contractual obligations. If a departing employee is bound, for instance, by an enforceable restrictive covenant, employers should assess the potential for harm in the event of a violation. While the ever-broadening attempts to limit the use of post-employment, non-competition agreements have been well documented in the past year, reasonable restrictive covenants remain enforceable in Pennsylvania.

…

Harrisburg, PA and Pittsburgh, PA

Law360

(by Stefanie Pitcavage Mekilo and Joseph Schaeffer)

On Nov. 22, the Pennsylvania Supreme Court issued its much-anticipated decision in Hangey v. Husqvarna Professional Products Inc. The majority opinion in Hangey claims to be a narrow one, providing clarification only regarding the standard for evaluating whether venue in any given Pennsylvania county is proper.[1]

That characterization is accurate so far as the legal principle goes: The court held as a matter of law that the percentage of a corporate defendant’s national revenue derived from a forum county alone is not sufficient to support a finding that the defendant does not “regularly conduct business” there for purposes of Pennsylvania’s venue rules.

But the court’s application of that principle to the facts before it — and its holding that the defendant’s de minimis sales in Philadelphia County were sufficient to establish proper venue there — has potential far-reaching consequences for corporate defendants sued in the commonwealth. Indeed, the plaintiffs’ lawyers in Hangey are already cheering the ruling as “one of if not the most impactful venue decisions in the last 20 years.”[2]

The facts of Hangey are uncomplicated. Ronald and Rosemary Hangey, residents of Wayne County, bought a Husqvarna-brand lawnmower from Trumbauer’s Lawn and Recreation Inc., in Bucks County.

Ronald Hangey suffered severe injuries when he was thrown off the lawnmower while operating it on his property in Wayne County. The Hangeys then sued Trumbauer’s, Husqvarna Professional Products Inc. and a handful of Husqvarna affiliates on various tort claims.

But rather than sue in Bucks County or Wayne County, the Hangeys sued in Philadelphia County — a venue with no connection to the underlying incident. …

Washington, DC

Smart Business

(By Sue Ostrowski featuring Ben Clapp)

When conducting corporate or real estate transactions, prospective buyers need to be aware of the environmental risks of the proposed acquisition, or they could find themselves on the hook for millions of dollars in remediation and compliance liabilities.

“Buyers need to work closely with an experienced environmental transactional attorney, sometimes in tandem with an environmental consultant, to ensure they are not acquiring environmental liabilities they didn’t intend to acquire,” says Ben Clapp, shareholder in the Environmental, Corporate and Commercial, and Energy and Natural Resources groups at Babst Calland. “Sellers also need to ensure they do not remain saddled with liabilities they didn’t intend to retain after a sale.”

Smart Business spoke with Clapp about the environmental diligence process in a sale and how to address environmental risks in contractual provisions.

What should potential buyers be aware of regarding environmental risk?

Purchasing a property without proper safeguards could put a buyer at risk of substantial liability should environmental contamination or compliance issues be discovered after purchase. Property owners are generally responsible for contamination, regardless of whether they caused it, including contamination that existed prior to taking ownership. Acquiring a business with undiscovered compliance issues can result in significant capital outlays for corrective actions and raises the possibility of becoming subject to enforcement actions and fines.

Environmental diligence is key to assessing the scope of environmental risk associated with a given transaction. However, the extent of diligence a buyer is permitted to perform can differ based on transaction structure and relative leverage of the parties.

How can buyers identify potential environmental issues?

A Phase I Environmental Site Assessment, performed by an environmental consultant, is often a good place to start. …

Pittsburgh, PA and Washington, DC

FNREL Water Law Newsletter

(Lisa M. Bruderly, Mackenzie M. Moyer and Jessica Deyoe)

The Pennsylvania Department of Environmental Protection’s (PADEP) Policy Office presented at the September 21, 2023, Water Resources Advisory Committee (WRAC) meeting on PADEP’s proposed regulation setting notification requirements for unauthorized discharges to waters of the commonwealth under 25 Pa. Code ch. 91. See PowerPoint Presentation, PADEP, “Notification Requirements for Unauthorized Discharges to Waters of the Commonwealth—Draft Proposed Rulemaking” (Sept. 21, 2023). Currently, the Pennsylvania Clean Streams Law requires PADEP to “determine when a discharge constitutes pollution” and to “establish standards whereby and wherefrom it can be ascertained and determined whether any such discharge does or does not constitute pollution.” 35 Pa. Stat. § 691.1. According to PADEP, the proposed amendments to chapter 91 are intended to enable the Department to meet its statutory obligation and set straightforward requirements for the public, the regulated community, and PADEP.

Under Pennsylvania’s Clean Water Program, the location and characteristics of authorized discharges—discharges permitted under a National Pollutant Discharge Elimination Permit, for example—are known prior to discharge. Permits are designed to ensure that these discharges do not cause or contribute to pollution, but unauthorized discharges—spills, for example—are unknown and unplanned. Many site-specific factors could affect whether the unauthorized discharge will result in pollution. Thus, the responsible party makes the first determination as to whether a discharge will cause or contribute to pollution, then PADEP investigates and assesses whether the discharge did or did not constitute pollution. PADEP intends for the chapter 91 updates to provide clearer reporting guidance and more consistent reporting for unauthorized discharges.

The draft proposed amendments to 25 Pa. …

Pittsburgh, PA and Washington, DC

FNREL Water Law Newsletter

(Lisa M. Bruderly, Mackenzie M. Moyer and Jessica Deyoe)

On September 21, 2023, the Water Resources Advisory Committee (WRAC) for the Pennsylvania Department of Environmental Protection (PADEP) held a meeting to discuss several recent water law updates including chapter 105 alternatives analysis guidance (relating to dam safety and waterway management), aquatic life water quality criteria for copper, and Pennsylvania’s draft integrated water quality report for 2024.

Alternative Analysis

Final edits to the Chapter 105 alternatives analysis technical guidance are nearing completion and PADEP is prepared to publish the final document in the fourth quarter of 2023. The development of this guidance began in 2018 and resulted in an initial proposed draft opened for public comment on September 4, 2021. The final technical guidance document is based on the 93 comments received from six commentators for the 2021 proposal, all of which are addressed in PADEP’s “Guidance for Developing a Chapter 105 Alternatives Analysis—Comment and Response Document” (Aug. 5, 2023).

The guidance seeks to clarify the appropriate level of analysis required when evaluating alternatives for projects that trigger the need for an Individual Water Obstruction and Encroachment Permit under chapter 105 of PADEP’s regulations (25 Pa. Code ch. 105). Chapter 105 regulations require applicants encroaching on waters of the commonwealth to avoid and minimize impacts to those water resources. The permit application must include “[a] detailed analysis of alternatives to the proposed action, including alternative locations, routings or designs to avoid or minimize adverse environmental impacts.” 25 Pa. Code § 105.13(e)(1)(viii). Until now, detailed guidance has not been provided by PADEP. …

Pittsburgh, PA

Pretrial Practice & Discovery

American Bar Association Litigation Section

(By Joseph Schaeffer and Christina Manfredi McKinley)

Corporations choose where to incorporate and maintain a principal place of business for many reasons; regulatory climate, availability of resources and a trained labor force, and logistics are just a few common considerations. Another increasingly common consideration is litigation risk. All things being equal, for instance, most corporations will prefer to avoid incorporating or maintaining principal places of business in jurisdictions known for sizeable jury awards against corporate defendants. But what corporations might not realize is that their best-laid plans can be upset by executives’ remote-work arrangements.

In Evans v. Cardlytics, Inc., for example, two California-based plaintiffs filed suit against their former employer in a California state court. No. 8:23-cv-00606-JWH-KES (C.D. Cal. Nov. 7, 2023). The defendant removed the suit to the Central District of California on the basis of diversity jurisdiction, alleging that it was incorporated in Delaware and maintained its principal place of business in Georgia. The plaintiffs moved to remand, however, on the grounds that the defendants’ principal place of business was not in Georgia, where the defendant maintained its corporate offices, but rather in California, where several of defendants’ officers resided and worked remotely.

The Central District of California granted the remand motion. It found that four of the defendants’ seven officers were residents of California. And while the court was persuaded by the numerical majority of the defendant’s officers, even more so, the court was particularly persuaded by the roles filled by those four officers: chief executive officer, chief operating officer, chief technology officer, and chief product officer. Comparing a corporation’s principal place of business to its “brain,” the court likened the CEO and COO to its “prefrontal cortex and hippocampus, i.e. …