April 6, 2023

Resolving conflict among business owners

Pittsburgh, PA

Smart Business

(By Adam Burroughs featuring 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.

“Even companies with just one owner eventually must deal with succession questions, so no business owner is completely immune from dealing with co-owners or the prospect of future owners,” says Kevin Douglass, shareholder at Babst Calland.

Smart Business spoke with Douglass about conflict resolution among business owners.

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. …

April 5, 2023

Appeals Court Blocks Mountain Valley Pipeline Permit – Again

Charleston, WV

Energy Alert

(by Robert Stonestreet and Kip Power)

Five days after upholding a water quality certification issued by the state of Virginia for the Mountain Valley Pipeline (MVP), the same three-judge panel of the federal Fourth Circuit Court of Appeals vacated a similar certification issued by the state of West Virginia. Sierra Club, et al. v. West Virginia Department of Environmental Protection and MVP, Appeal No. 22-1008 (April 3, 2023). Under § 404 of the federal Clean Water Act (CWA), construction activities directly impacting “jurisdictional waters,” such as placing a pipeline through or under a stream, require a “dredge and fill” permit issued by the Corps of Engineers. Before a § 404 permit may take effect, states in which such activities take place must issue a certification under § 401 of the CWA stating that the proposed activities will not violate state water quality standards (assuming compliance with specified conditions). The 34-page opinion identifies four reasons why the panel believes the § 401 certification issued by the West Virginia Department of Environmental Protection (Department) for MVP was “arbitrary and capricious.”

First, the Court concluded that the Department failed to adequately explain why the agency believed MVP’s past permit violations will not continue to occur. According to the Court, the Department was required to impose conditions intended to reasonably assure that “no violations of any applicable water standards would occur” (emphasis in original) and the agency failed to explain how the conditions of the certification would do so. In particular, the Court stressed that even a finding that the MVP project will present “no significant adverse aquatic impacts” does not necessarily show that narrative water quality standards will not be violated (e.g., the prohibition against discharges that cause or contribute to “suspended solids”). …

March 31, 2023

Back to the Future: NLRB Reinstates Significant Restrictions on Severance Agreements

Pittsburgh, PA

The Legal Intelligencer

(by Alex Farone, Janet Meub and Steve Silverman)

The National Labor Relations Board (NLRB) recently announced the return of a wide-sweeping ban on severance agreements that contain provisions that effectively silence certain employees. On February 21, 2023, the NLRB issued its decision in McLaren Macomb, 372 NLRB No. 58, reinstituting its pre-2020 precedent that severance agreements cannot contain: (1) confidentiality agreements precluding the employee from discussing the terms of the severance; and (2) non-disparagement clauses.

In McLaren, a Michigan hospital laid off eleven employees early in the COVID-19 pandemic after federal regulations prohibited the hospital from performing outpatient procedures or allowing nonessential employees to work in the building. The hospital offered these eleven employees a severance agreement that included a non-disparagement clause and a provision not to disclose the terms of the severance agreement. However, the NLRB determined that the severance agreement violated the National Labor Relations Act (NLRA) due to the inclusion of these provisions.

The Board reasoned that offering severance agreements containing broad confidentiality or non-disparagement clauses has a reasonable tendency to interfere with, restrain, or coerce employees’ exercise of their Section 7 rights under the NLRA to engage in protected concerted activity, which constitutes an unfair labor practice in violation of Section 8(a)(1). Under the NLRA, employers are prohibited from interfering with, restraining, or coercing employees who exercise their rights to engage in protected concerted activities, such as discussing the terms and conditions of their employment for the purpose of mutual aid and protection. According to the Board, the confidentiality and non-disparagement clauses in McLaren had a potential chilling effect on the employees’ exercise of their rights, because employees must waive certain Section 7 rights in order to receive the benefits of the severance agreement. …

March 27, 2023

Acting PA DEP Secretary Discusses Broad Views on Environmental Justice and Plans for Additional EJ Staff

Pittsburgh, PA and Washington, DC

Environmental Alert

(by Sean McGovern and Amanda Brosy)

On March 23, 2023, Acting Pennsylvania DEP Secretary Richard Negrin spoke at length about his views on environmental justice (EJ) during the House Appropriations Committee hearing on DEP’s FY 2023-24 budget request. Among other things, Acting Secretary Negrin discussed the importance of taking an expansive approach to environmental justice (EJ), noting that in the past, EJ issues were framed in terms of race, and impacts on communities of color. While he acknowledged that systemic racism and discussions about race are an important part of EJ, he stated that EJ “is not just an issue for those of us who are people of color. It’s an issue for the poor and rural” as well. Specifically, Acting Secretary Negrin mentioned that he considers residents near the site of the Norfolk Southern train derailment, and residents impacted by a leaking abandoned natural gas well outside of Pittsburgh, to be EJ communities. As he noted, this is a broader interpretation of EJ than the Biden administration has espoused.

Acting Secretary Negrin also announced that he had named Fernando Treviño to the new position of Special Deputy Secretary for Environmental Justice. According to Acting Secretary Negrin, Mr. Treviño has acted as a “community engagement professional” for a number of years, last serving as the Regional Political Director for the National Democratic Redistricting Committee. Previously, Mr. Treviño served as the Deputy Executive Director of the Mayor’s Office of Immigrant and Multicultural Affairs in Philadelphia. Mr. Treviño graduated from the UANL School of Law in Mexico, and later received a Certificate on International and Comparative Law from Temple University’s law school. Mr. Treviño will be supported by additional EJ staff in DEP offices throughout the Commonwealth. …

March 23, 2023

ChatGPT and the Environmental Lawyer

Pittsburgh, PA

The American College of Environmental Lawyers (ACOEL)

(By Donald C. Bluedorn II)

Unless you have been hibernating this winter, you know about ChatGPT, the artificial intelligence chatbot that rolled out late in 2022. Its developer, OpenAI, describes ChatGPT as follows:

We’ve trained a model called ChatGPT which interacts in a conversational way. The dialogue format makes it possible for ChatGPT to answer followup questions, admit its mistakes, challenge incorrect premises, and reject inappropriate requests.

Or, for those of us who remember watching Star Trek, ChatGPT functions a lot like the computer on the Starship Enterprise – you ask it to do something, and it does it. People have experimented with ChatGPT to write computer code, draft poems, write term papers, and create visual art, among many others.

Recently I experimented with ChatGPT, in an effort to not be that “senior” lawyer who in the early 1990’s said, “I don’t need to learn this new email thing . . . .” More specifically, I asked ChatGPT to do two things:

  1. Draft a short purchase and sale agreement for a 65-acre coal-fired power plant; and
  2. Prepare a five-page memorandum on the definition of “Waters of the US.”

The results were surprising but instructive.

First, ChatGPT’s purchase and sale agreement was so basic, and so vanilla, that it would be useless to a lawyer hoping to prepare the document in a real transaction.  This surprised me because I had heard and read so many glowing reviews about ChatGPT that I anticipated a fulsome work product.  It is quite possible, if not likely, that much of this is attributable to “user error.”  If I spent more time describing the project and setting forth my anticipated parameters, I expect I would have received a better product.  …

March 22, 2023

No Reason to Cheer—Case Dismissed Due to Severe Discovery Violations

Pittsburgh, PA

Pretrial Practice & Discovery

American Bar Association Litigation Section

(By Jessica Barnes)

A proposed antitrust class action was recently dismissed because of the plaintiffs’ serious failures to comply with the court’s orders regarding discovery.

Interpretations of the extent of a responding party’s obligations to certain discovery requests likely vary by lawyer. One thing that most if not all lawyers would agree with, however, is that a party producing more than 99 percent of its documents after the close of fact discovery is improper, which is what occurred this week in a case out of the U.S. District Court for the Western District of Tennessee.

In American Spirit and Cheer Essentials Inc, et al. v. Varsity Brands, LLC, et al., No. 2:20-cv- 02782-SHL-tmp (W.D. Tenn. Mar. 21, 2023), there were numerous discovery disputes among the parties. Between seeking documents excluded from discovery via protective order, producing documents in a form that was in violation of the mutually agreed upon electronically stored information (ESI) protocol, outright lack of production and responses, failing to maintain and provide lists of search terms used in collecting documents, attempts to serve hundreds of subpoenas, and producing documents either immediately before or after the deposition of a relevant witness, the court described the history of discovery in this matter as “long, complex, and tortured[.]”

The court faced a first round of motions to dismiss in this case, which were granted in part and denied in part. The most critical aspect in the court’s actions here is that it specifically warned the plaintiffs that “willful failure to cooperate in discovery could lead to dismissal of plaintiffs’ case under Rules 37(b) and 41(b).”

Then later came another round of motions to dismiss. …

March 21, 2023

More Than a Buzzword: Why “Civility” Can Be Sound Litigation Strategy

Pittsburgh, PA

Pretrial Practice & Discovery

American Bar Association Litigation Section

(By Joseph Schaeffer)

Parties that act with civility in litigation are more likely to be seen as credible than those that do not.

Most lawyers are likely to have encountered an appeal to “civility.” But what is civility? It is a nebulous concept that escapes easy definition and is most often identified by its absence. Take, for example, a motion to strike a summary judgment response that was recently filed in a case pending in the U.S. District Court for the Northern District of Alabama. Whithworth v. Mezrano, No. 2:20-cv-00756 (N.D. Ala. Jan. 13, 2023). The underlying infraction? Perhaps the plaintiff relied on a sham affidavit? Or perhaps the plaintiff included scandalous and impertinent material of no relevance to the case? No, none of those things. The plaintiff had filed her opposition brief at 5:15 p.m.—15 minutes after the 5:00 p.m. deadline.

The district court was not amused. Finding no prejudice to the defendants from the plaintiff’s 15-minute delay, it denied the motion, but not before taking counsel to task for a pettiness that represented a further lowering of the bar for professionalism in an already contentious case. The defendants’ attempt to take advantage of their opponent’s mistake thus backfired by damaging their own credibility with the district court.

The defendants’ error here was thinking that every infraction deserves a remedy. The defendants would have done better to let such a trivial delay pass by unremarked and count on the district court identifying it on its own. Or if commentary were truly necessary, the defendants should at least have acted proportionally—noting the issue briefly in reply, rather than seeking what would presumably be a case-dispositive sanction for such a minor issue. …

March 15, 2023

EJ Federal and PA Update

Washington, DC and Pittsburgh, PA

PIOGA Press

(By Amanda Brosy and Sean McGovern)

This article provides an update on the recent developments in environmental justice (EJ) policy and funding at the federal level, as well as forthcoming updates to Pennsylvania’s own EJ Policy, which could have tangible impacts on Pennsylvania’s regulated community.

Federal Background

Executive Action 

Since Day One of taking office, the Biden administration has made EJ a priority. For example, on January 20, 2021, President Biden signed Executive Order 13985 (Advancing Racial Equity and Support for Underserved Communities Through the Federal Government), which directs federal agencies, including EPA, to “assess whether underserved communities and their members face systemic barriers in accessing benefits and opportunities available pursuant to those policies and programs.” E.O. 13985 then directs agencies to develop plans to overcome these barriers. Two more executive orders on EJ followed in January 2021, including 14008 (Tackling the Climate Crisis at Home and Abroad), which required the integration of EJ considerations into federal agency processes. Notably, E.O. 14008 established the Justice40 initiative, which sets the goal that 40 percent of the overall benefits of certain federal investments flow to disadvantaged communities, and it established an EJ screening tool to highlight disadvantaged communities that are “marginalized, underserved, and overburdened by pollution.”

Last month, President Biden signed Executive Order 14091 (Further Advancing Racial Equity and Support for Underserved Communities Through the Federal Government), which builds upon the Administration’s prior “equity-related Executive Orders by extending and strengthening equity-advancing requirements for agencies, and [positioning] agencies to deliver better outcomes for the American people.” Among other things, E.O. 14091 addresses equity-focused leadership, embedding equity in government-wide processes, and the creation of economic opportunities in rural communities. …

March 9, 2023

Hydrogen advocates say permitting reform needed before hub becomes reality

Washington, DC and Pittsburgh, PA

(By Paul Gough)

Three advocates for Appalachian hydrogen and carbon capture buildouts said Pennsylvania and the tri-state region will need to focus on permitting and other legal hurdles ahead of the potential projects that are likely coming over the next several decades of the energy transition.

Jim Curry and Kevin Garber, attorneys at Babst Calland, and Michael Docherty, executive director of Appalachian Energy Future, spoke during a webinar on policy and regulatory issues surrounding hydrogen and carbon capture and storage, which the Biden administration is promoting as a solution to reducing the reliance on fossil fuels in energy, electricity production and heavy industry like metal and chemical manufacturing.

For the full article, click here.

March 1, 2023

Why AI isn’t going to replace your lawyer … yet

Pittsburgh, PA

Smart Business

(By Adam Burroughs featuring Dane Fennell)

Artificial Intelligence (AI) has made its way into the legal profession — though not in the way that some news headlines might suggest. Recently, a program called ChatGPT passed several law and business school exams. However, for anyone who has any thoughts that we are entering an age of AI legal representation, flesh and blood lawyers who engage in utilizing AI on a daily basis can confirm that those days are a long way off.

“While AI is being used as a tool in a number of different areas of the law, it’s not yet capable of taking over all human roles,” says Dane Fennell, Senior Counsel at Babst Calland. “It’s just an arrow in the quiver that professionals can use to help them be more efficient, saving them and their clients time and money.”

Smart Business spoke with Fennell about the state of AI technology in the legal profession — how it’s being used, and what it can and can’t do.

How would you characterize AI’s place in the legal world?

There are a number of ways that AI has found its way into the legal profession. For example, in M&A due diligence, AI can be used to review large volumes of documents to assist the legal team to home in on the key aspects of a deal with much more speed and efficiency than a manual review. This saves clients time and money, and actually enables the review team to expand the scope of a review to find the ‘needle in the haystack’ issues.

Consumer-based programs are helping those who find themselves with relatively minor legal issues, such as parking tickets and credit card fees. …

March 1, 2023

PADEP Rescinds 2022 Guidance on Evaluating Aquatic Resource Compensatory Mitigation

FNREL Water Law Newsletter

(By Lisa Bruderly & Mackenzie Moyer)

In early 2022, the Pennsylvania Department of Environmental Protection (PADEP) published a technical guidance document entitled “Pennsylvania Function-Based Aquatic Resource Compensation Protocol,” PADEP Doc. No. 310-2137-001 (effective Mar. 1, 2022) (Mitigation Guidance). See Vol. 55, No. 1 (2022) of this Newsletter. On January 7, 2023, PADEP published a notice in the Pennsylvania Bulletin rescinding the Mitigation Guidance for re-evaluation. 53 Pa. Bull. 107 (Jan. 7, 2023).

The Pennsylvania Dam Safety and Encroachments Act, 32 Pa. Stat. §§ 693.1–.27, and its implementing regulations, 25 Pa. Code ch. 105, require a person to obtain a permit from PADEP to construct, operate, maintain, modify, enlarge, or abandon a dam, water obstruction, or encroachment that alters the course, current, or cross section of a body of water. Mitigation Guidance at 1. A mitigation plan is typically required with the permit application, including, as applicable, a plan to compensate for the impact to regulated waters as a result of the project. Id. at 2.

The Mitigation Guidance was meant to provide a standardized system for evaluating functional compensation offsets associated with proposed aquatic resource impacts, determining compensatory mitigation requirements, assisting in identifying measures to minimize proposed project impacts, reducing subsequent compensation requirements, and evaluating compensation proposals. Id. Prior to the Mitigation Guidance, Pennsylvania’s method for determining compensation for losses to aquatic resources was based on acreage and linear feet.

Due to pushback from affected entities, including mitigation banks and permittees, PADEP formed a stakeholder working group to review the Mitigation Guidance. PADEP officially rescinded the Mitigation Guidance “to reevaluate its effectiveness and review potential revisions through stakeholder outreach.” 53 Pa. …

March 1, 2023

PADEP Releases the Finalized 2022 Pennsylvania State Water Plan

Pittsburgh, PA

FNREL Water Law Newsletter

(By Lisa Bruderly & Mackenzie Moyer)

On January 27, 2023, the Pennsylvania Department of Environmental Protection (PADEP) released the final 2022 Pennsylvania State Water Plan (Plan). The Plan is intended to inform decision making and educate the commonwealth on sustainable use of the commonwealth’s aquatic resources. It identifies regional and statewide water resource priorities and recommends over 100 statewide and legislative actions to address those priorities.

Background

The Water Resources Planning Act of 2002, 2002 Pa. Legis. Serv. Act 2002-220, requires PADEP to collaborate with statewide and regional committees to update the Plan every five years. However, the last State Water Plan was published in 2009.

PADEP identified five main goals for the Plan update:

  1. A reviewed and updated State Water Plan having the input, guidance, and advice from a repopulated and reinstated statewide committee, six regional committees, and the public.
  2. Approved and updated critical area resource plans (CARPs) within the Potomac and the Ohio planning areas left unfinished from the 2009 Plan Update.
  3. Enhanced web-based applications and tools to deliver improved access to water resource information, data, and statistics for educational and water planning purposes.
  4. Plan provisions to implement applicable water resource-related strategies outlined in the 2018 Pennsylvania Climate Action Plan.
  5. An updated 2009 State Water Plan Atlas using a web-based GIS application.

The Plan is meant to be a source of water resource data, the latest information, and policy recommendations. It will assist PADEP and other state agencies with developing and implementing policies, programs, and projects that correspond with Pennsylvania’s current and future water needs.

Plan Recommendations

The updated Plan recommends over 100 actions in areas such as flood control, stormwater management, water withdrawal, legacy coal mining impacts, legacy oil and gas wells, drinking water and wastewater treatment, contaminants of emerging concern, and agricultural nonpoint source pollution. …

February 17, 2023

Growing a New Space Economy for Our Region

Pittsburgh, PA

(By Daniel Bates featuring Justine Kasznica)

Pittsburgh Business Times

One of the first tasks of the Pittsburgh-based Keystone Space Collaborative was commissioning a market report to tally up all the tech companies and organizations from across the region — Pennsylvania, Ohio, and West Virginia — which are receiving funds from NASA or space-related grants from the Department of Defense.

“The numbers of space projects and participants in the region was impressive,” said Justine Kasznica, the industry group’s board chair and a founding member. “We had about 550 participants from across the tri-state region, and this without any dedicated cross-region political championship for the space industry.” Those companies brought more than $2 billion in government funding into the region, the 2021 market report showed. “That number puts us very squarely on the map. It’s a baseline,” she said, “from which to evaluate our future growth.”

With the Keystone Space Collaborative, she hopes to organize and promote space-relevant technology companies across the tri-state region — which are more plentiful and promising than most people realize, Kasznica said.

Kasznica is a tech and corporate attorney, and Chair of the law firm Babst Calland’s Emerging Technology Practice and leading advocate for the region’s space economy.

Leveraging Pittsburgh’s robotics hub.

She has worked with Pittsburgh robotics companies for 14 years. For the last decade, she has served as outside general counsel to Astrobotic Technology, an aerospace robotics company spun out of Carnegie Mellon University that has acquired more than $500 million in NASA contracts and worked on three missions to the lunar surface.

As the Pittsburgh region developed into a robotics hub, it organically gathered the kind of companies whose work is valued by NASA, the DOD and the growing sphere of private spaceflight companies, all of which need more than rockets and rovers. …

February 16, 2023

A Dozen Federal Lawsuits Filed Against West Virginia Wind Farm Operator

Charleston, WV

Environmental Alert

(By Christopher (Kip) Power and Robert Stonestreet)

On February 10, 2023, 12 separate civil actions were filed (by more than 20 individual plaintiffs) in the U.S. District Court for the Northern District of West Virginia, challenging the construction and operation of the Black Rock Wind Farm (BRWF) located in Grant and Mineral Counties, West Virginia. Defendants include the developer of the facility, Clearway Energy Group, LLC, and its wholly-owned subsidiary, Black Rock Wind Force, LLC. Presumably seeking to satisfy the statute of limitations on one or more of plaintiffs’ common law causes of action, the complaints allege that they were filed exactly one year after the BRWF began operation.

The BRWF was authorized by an “Order Granting a Site Certificate” issued by the West Virginia Public Service Commission (PSC) on November 19, 2019. (As noted in that Order, Clearway Energy also owns the Pinnacle Wind Farm in Mineral County, West Virginia.) The application filed with the PSC sought approval to construct up to 29 wind turbines (each with a nameplate capacity between 3.6 MW and 5.8 MW), to be mounted at a hub height of 352.6 feet. Due to an existing 110 MW interconnection limit in Black Rock’s proposed agreement with PJM Interconnection LLC (the regional transmission organization that coordinates the movement of wholesale electricity for West Virginia and 12 other states), only 23 turbines were authorized to be constructed by the PSC Order.

Plaintiffs assert that the operation of the 23-turbine BRWF has “substantially and unreasonably” affected the “serenity, ambience, wildlife viewing and aesthetic nature” of their real property, and that it has harmed their “personal mental, emotional and physical wellbeing” in a variety of ways. …

February 16, 2023

Legislative & Regulatory Update

Pittsburgh, PA

The Wildcatter

(By  Nikolas Tysiak)

Welcome back, I hope everyone had an excellent holiday season. As always, the period covering December and January is usually the slowest time of year regarding judicial and legislative activity, and this year is no exception. Just one case of interest from Ohio, and some minor administrative code revisions in Pennsylvania.

Ohio Public Works Commission v. Barnesville, 2022-Ohio-4603. The village of Barnesville, OH, purchased about 104 acres of land as an “open space” project in connection with the Clean Ohio Conservation Fund, which is administered by the Ohio Public Works Commission (“OPWC”) in 2002. As part of the deal, OPWC required that Barnesville take deeds for the lands with certain covenants and restrictions, including a limitation on the use of the purchased lands, restricting the use of the property for the stated purposes, and empowering the OPWC to enforce the covenants and restrictions with various penalties attached. Barnesville subsequently leased the oil and gas under the lands at issue to Antero Resources in 2012, without the consent of OPWC. The Ohio Supreme Court found that the actions of Barnesville in regard to the oil and gas rights violated the transferability restriction imposed by the OPWC, overruling the 7th District Court of Appeals. However, the Supreme Court also determined that the lease to Antero violated the use restriction imposed by OPWC as part of the overall transaction and affirmed the appropriateness of injunctive relief in enforcing such restrictions, including an injunction deeming the oil and gas lease unenforceable. Consequently, the Supreme Court affirmed the decision of the 7th District Court of Appeals’, remanding the case for further consideration, accordingly.

Pennsylvania has amended several administrative code sections regarding VOC emissions control requirements arising custody transfer from the wellhead to transmission or storage. …

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