Articles, Alerts & Perspectives

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. …

Pittsburgh, PA and Washington, DC

PIOGA Press

(By Sean McGovern and Amanda Brosy)

Federal Action

Environmental Justice (EJ) efforts continue to expand as a programmatic priority for federal and state governing bodies. On April 21, 2023, President Joe Biden passed a new Executive Order on Revitalizing Our Nation’s Commitment to Environmental Justice for All (E.O. 14096) that builds upon a series of similar orders he signed over the last three years. E.O. 14096 specifically says the Biden administration will pursue a “whole-of-government” approach to EJ.

Accordingly, the Order directs each agency to make achieving EJ a part of its mission and, among other things, take proactive steps to address inequities in federal policies and practices. Notably, the Order also sets forth a new, broader definition of EJ than the EPA’s current definition, specifically including “Tribal affiliation” and “disability” within the list of protected groups. To advance EJ initiatives and coordinate the development of “policies, programs, and partnerships to achieve the policies” described in E.O. 14096, the Order establishes a new White House Office of EJ within the Council on Environmental Quality (CEQ). In addition, to “address the need for a coordinated federal strategy to identify and address gaps in science, data, and research” related to EJ, the Order directs the creation of an EJ Subcommittee of the National Science and Technology Council. This Subcommittee is tasked with preparing a Research Plan (updated biennially) to provide recommendations to the CEQ and federal agencies on data collection, research techniques, and public accessibility of information, with the goal of advancing EJ.

Following clear and consistent directives from President Biden, EJ funding has increased as a result of the 2022 Inflation Reduction Act (IRA). …

Pittsburgh, PA and Washington, DC

PIOGA Press

(By Kevin Garber and Jessica Deyoe)

On November 1, 2023, the Commonwealth Court of Pennsylvania held that the Pennsylvania Department of Environmental Protection’s CO2 Budget Trading Program Regulation is an unconstitutional tax, declared the rule to be void, and enjoined DEP from enforcing it. See Bowfin KeyCon Holdings, LLC et al v. Pennsylvania Department of Environmental Protection and Pennsylvania Environmental Quality Board (No. 247 M.D. 2022). The Regulation would have linked Pennsylvania’s cap-and-trade program to the Regional Greenhouse Gas Initiative (RGGI), which is the regional, market-based cap-and-trade program designed to reduce carbon dioxide emissions from fossil-fuel-fired electric power generators with a capacity of 25 megawatts or greater that send more than 10 percent of their annual gross generation to the electric grid.

The Court reaffirmed its earlier July 8, 2022 opinion in which it preliminarily enjoined the Regulation as an unconstitutional tax. In this November 1 decision on the merits, the Court held that the Regulation constitutes a tax imposed by DEP in violation of the Pennsylvania Constitution.

Undisputed facts of record established that only 6 percent of RGGI auction proceeds are necessary to cover the cost of administering the program and that the annual revenue anticipated from RGGI would be three times greater than the total amount allocated to DEP from the General Fund in a single year. The Court found that the money to be generated by Pennsylvania’s participation in RGGI would be “grossly disproportionate” to the costs of overseeing participation in the program and DEP’s annual needs. Relying on the Pennsylvania Supreme Court’s opinion in Flynn v. Horst, 51 A.2d 54, 60 (Pa. 1947), which found that

[n]o principle is more firmly established in the law of Pennsylvania than the principle that a revenue tax cannot be constitutionally imposed upon a business under the guise of a police regulation, and that if the amount of a ‘license fee’ is grossly disproportionate to the sum required to pay the cost of the due regulation of the business the ‘license fee’ act will be struck down,

the Commonwealth Court concluded that 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 DEP and EQB. …

Pittsburgh, PA

(By Daniel Bates featuring Donald C. Bluedorn II)

Some things never change.

And that’s a good thing, according to Donald C. Bluedorn, II, managing shareholder of Pittsburgh law firm Babst Calland, who has devoted most of his career at the firm to championing a business model and culture that, he said, have fostered long-term, sustainable growth since the firm’s inception in 1986.

That business model and culture, Bluedorn said, are what attracted him to the firm in the first place as a young lawyer, only a year after Babst Calland was established. He also credits this with fueling the firm’s growth across five office locations, including Pittsburgh, Washington, D.C., Charleston, W.Va., State College, Pa., and Harrisburg, Pa., along with several remote “outpost” offices. Such growth also has made Babst Calland one of Pittsburgh’s top law firms.

“When I came to Babst Calland from another larger firm, there were two things that really impressed me and made me want to become part of Babst Calland,” Bluedorn said. “One was there was a lot of flexibility and a lot of ability to control your own destiny as a lawyer and become what you want to be – an opportunity to practice law, manage clients, and gain a lot of hands-on experience, and that really appealed to me as a young lawyer.”

The second factor, he continued, was – and still is – the firm’s culture. “I loved the culture. People were treated with mutual respect, and everyone worked together. And although we’ve grown in size and we’ve added lawyers and practice areas, I think those two attributes of the firm have really stayed the same. They’re part of what define us and are part of what we work to make sure we maintain because this is what differentiates us and makes us so successful in the marketplace.”

He added: “It allows us to retain and attract really sophisticated talent. …

The American Oil and Gas Reporter

(By Del Torkelson)

Featuring a Briefing from U.S. Senator John Barrasso

In “The 2023 Babst Calland Report—Legal & Regulatory Perspectives for the Energy Industry,” which offers updates on top legal and public policy matters confronting the country’s oil and natural gas industry, U.S. Senator John Barrasso, R-Wy., stresses the importance of permitting reform. The law firm’s annual report also explores several other major topics, including climate policy and ESG matters, as well as trends in litigation,

“The U.S. energy sector remains as dynamic as ever as Babst Calland offers its 13th annual perspective on the challenges and opportunities facing all parts of the energy value chain,” the report opens. “This year, U.S. natural gas production and demand is expected to reach record highs. Natural gas production has doubled since 2006 and increasing demand has turned the United States into a leading global natural gas producer. Investments in liquified natural gas infrastructure continue as the United States becomes the top LNG exporter in the world.”

Principles For Reform

Barrasso’s briefing appears in a short video introduced by Babst Calland attorneys A.A. Moore Capito, a shareholder in the Charleston, W.V., office, and Jim Curry, managing shareholder in the Washington office. They also close the video by reflecting on the senator’s remarks.

Barrasso opens by lamenting the extent to which the Biden administration’s energy policies have frustrated U.S. production of traditional energy sources.

When Barrasso began his Senate tenure in 2007, he recounts, the United States imported 29% of its energy, but by 2019, U.S. producers had transformed the country into a net energy exporter. Although growing domestic production has boosted the U.S. …

Washington, DC

Abigail M. Reecer recently joined Babst Calland as an associate in the Energy and Natural Resources Group and Pipeline and HazMat Safety Practice. Ms. Reecer represents client in pipeline safety matters before the Pipeline and Hazardous Materials Safety Administration (PHMSA), state agencies, and federal courts.

Prior to joining Babst Calland, Ms. Reecer was an associate with Hollingsworth LLP. He is a 2021 graduate of Georgetown University Law Center.

Pittsburgh, PA and Washington, DC

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

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

In August 2023, the University of Pittsburgh School of Public Health and the Pennsylvania Department of Health (DOH) released three “observational epidemiological” studies presenting findings of potential health impacts from human exposure to unconventional natural gas development (UNGD) activities. The studies, which were conducted in eight counties in southwestern Pennsylvania, excluding the City of Pittsburgh, focused on three specific health issues: (1) asthma, (2) birth outcomes, and (3) certain childhood cancers.

In the Asthma Study, researchers reviewed medical treatment for asthma (categorized by severity), as well as how close the patient lived to UNGD activities (considering the number of wells, production volume, and the phase of well development, i.e., preparation, drilling, hydraulic fracturing, and production). The study found no relationship between asthma exacerbations and proximity to wells during the well pad preparation, drilling, or hydraulic fracturing phases, but found an increase during the production phase. The increases were fairly consistent in the lower, moderate, and higher exposure groups and therefore, the expected dose/response relationship (i.e., more asthma exacerbations with more exposure) was not found. See Univ. of Pittsburgh Sch. of Pub. Health, “Hydraulic Fracturing Epidemiology Research Studies: Asthma Outcomes” (July 31, 2023); DOH, “PA Health and Environment Study: Asthma” (Aug. 15, 2023).

For the Birth Outcomes Study, researchers reviewed birth records and the distance mothers lived from UNGD activities and other industrial activities. Researchers for the Birth Outcomes Study considered the number of wells, production volume, and the phase of well development, in addition to potential exposure from certain facilities, i.e., impoundment ponds, facilities accepting oil and gas waste, compressor stations, Superfund sites, and industrial sites with a toxic release inventory. …

Pittsburgh, PA and Washington, DC

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

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

On August 23, 2023, a coalition of environmental groups filed a petition for review in the Commonwealth Court of Pennsylvania in which they challenged the constitutionality of Act 96 of 2022, 58 Pa. Cons. Stat. Ann. §§ 2801–2826. See Verified Petition for Review, Clean Air Council v. Pennsylvania, No. 379 MD 2023 (Pa. Commw. Ct. Aug. 23, 2023). Act 96 amended Title 58 to provide for oil and gas well plugging oversight, bonding, and well plugging funds, and requires an operator to obtain a bond to cover the well and well site in the event the operator fails to remediate the site and plug the well.

Act 96 removed authority from the Environmental Quality Board (EQB) to adjust well bonding amounts for conventional wells for 10 years from the effective date (July 19, 2022) and reserved that authority to the Pennsylvania General Assembly. The Act set the bonding amount for a conventional well at $2,500 and allows operators to obtain blanket bond coverage for multiple wells for $25,000, which must be increased by $1,000 for each additional well drilled, with the total blanket bond not to exceed $100,000. The environmental groups—Clean Air Council, Earthworks, Citizens for Pennsylvania’s Future, Protect PT, and Sierra Club—allege that the statutory bond amounts are inadequate and do not cover the actual costs of remediation and plugging. As a result, they argue, operators are not incentivized to promptly clean up and remediate oil and gas wells, leaving the costs of addressing abandoned wells to the Pennsylvania taxpayers. …

Harrisburg, PA and Charleston, WV

Legal Intelligencer

(by Casey Coyle, Stefanie Mekilo and Austin Rogers)

1995 was a watershed year.  Michael Jordan returned to the NBA after a two-year hiatus, Brad Pitt was named Sexiest Man Alive by People magazine, and the world met Buzz Lightyear for the first time.  Today, Buzz remains a constant fixture in pop culture, thanks largely to his signature catchphrase: “To Infinity and . . . Beyond!”  Indeed, Buzz himself may use that phrase to describe the Pennsylvania Supreme Court’s recent decision in Bert Co. v. Turk, 298 A.3d 44 (Pa. 2023), which calls into question the presumptive constitutional limit for punitive damages awards.

Background

In 2017, four employees with non-solicitation agreements left their employment with The Bert Company d/b/a Northwest Insurance Services and joined First National Insurance Agency, LLC.  They moved as part of what is known in business parlance as a “lift-out,” a practice in which a group of employees from one company are hired by a competitor.  Northwest filed suit and obtained a preliminary injunction enforcing the agreements.  At the ensuing trial, the jury exonerated three employees from any liability and exonerated the corporate defendants on two claims.  While they found the remaining employee and corporate defendants liable on other claims, the jury only awarded Northwest $250,000 of the roughly $4 million in compensatory damages sought; the award was joint and several.  However, the jury awarded Northwest $2.8 million in punitive damages—representing an 11.2:1 ratio of punitive-to-compensatory damages on a per-judgment basis.

Appellants challenged the punitive damages award as unconstitutional.  Under U.S. Supreme Court precedent, courts must consider three guideposts when determining if a punitive damages award comports with the Due Process Clause of the Fourteenth Amendment to the U.S. …