Articles, Alerts & Perspectives

Smart Business 

(by Jayne Gest with Julie Domike and Gina Falaschi)

Recent enforcement efforts by the Environmental Protection Agency (EPA) have resulted in a marked upswing in cases — civil and criminal — against parts manufacturers and installers of aftermarket defeat devices on vehicles, including some less than obvious targets.

Aftermarket parts are replacement or additional vehicle or engine parts not made by the original equipment manufacturer. Most aftermarket parts do not violate the Clean Air Act, but some are designed to reduce or eliminate the effectiveness of required emissions controls.

“Business owners need to ensure their company-owned vehicles and engines are legal,” says Julie Domike, shareholder at Babst Calland. “Many of these enforcement cases have been against companies or individuals that produce or install ‘tuners,’ engine control module reprogrammers that disable emission control systems with preloaded software (tunes). These defeat devices are obvious enforcement targets. However, other devices or software could also fall in this category; therefore, liability could extend to other aftermarket suppliers.”

Smart Business spoke with Domike and Gina Falaschi, associate at Babst Calland, about the EPA’s enforcement efforts.

Where might businesses be at risk?

Mechanics sometimes look to increase fuel economy, boost the performance of the vehicle, reduce maintenance costs, or reduce vehicle downtime associated with routine maintenance, such as regenerating diesel particulate filters. The illegal methods of doing this involve removing or disabling emissions control devices on vehicles, such as the diesel particulate filter, exhaust gas recirculation valve and selective catalytic reduction system. Because removing vehicle hardware will result in a check engine notification or may put the vehicle into ‘limp home’ mode, severely limiting power, these changes must be accompanied by an illegal alteration of the software to override its response to missing or disabled hardware. …

The Legal Intelligencer

(by Megan Mariani and Nicholas Habursky)

On Nov. 7, Pennsylvania Gov. Tom Wolf signed into law Senate Bill No. 694 that permits cross-unit drilling for unconventional oil and gas wells. This new law takes effect on Jan. 6, 2020. A cross-unit well (also known as an allocation well) is a lateral wellbore that crosses between two or more pooled units.

Benefits of Cross-Unit Wells

Standard oil and gas lease forms commonly contain acreage limitations regarding the maximum size of a pooled unit within which development can occur. As a result, prior to the passage of this new cross-unit well legislation, operators in Pennsylvania faced inefficiencies in the form of limitations on the length of laterals and required additional surface locations to develop the entirety of the resource. Operators may desire to utilize cross-unit wells because the wells can increase drilling efficiencies and allow for more strategic operations. Landowners also benefit from cross-unit wells because the use of longer lateral wellbores reduces the surface impact of horizontal drilling by limiting the number of surface locations and vertical wellheads needed to produce from the various units. Lawmakers hope this bill will allow operators to maximize the benefits of drilling technologies and practices. Additionally, legislators believe the passage of the bill will increase tax revenue and reduce the workload on the Department of Environmental Protection.

What Does the Law Do?

Senate Bill No. 694 amended the act of July 20, 1979 (P.L. 183, No. 60—known as The Oil and Gas Lease Act) by adding Section 2.2 that expressly allows an operator to drill a cross-unit well if two conditions are met. First, an operator may drill and produce a cross-unit well if the operator reasonably allocates production from the well to or among each unit the operator reasonably determines to be attributable to each unit. …

Emerging Technologies Legal Perspective

(by Justine Kasznica)

In 2018, California signed into law the first state-level comprehensive privacy act, the California Consumer Privacy Act of 2018 (CCPA), which will go into effect Jan. 1, 2020. In part due to the CCPA’s broad scope and reach beyond California, as well as the large fines and penalties for CCPA noncompliance, the law is influencing and setting a high bar for data protection practices nationwide. Since the CCPA was signed into law, several states have proposed or enacted similar legislation, turning privacy and cybersecurity into a patchwork of state-led experimentation.

We are seeing more states joining California and developing their own privacy laws, which will make it difficult for companies to track and comply with every state’s privacy act, not to mention the privacy regimes in non-U.S. jurisdictions, such as Europe’s General Data Protection Regulation (GDPR).

While some states are beginning to enact or consider uniform approaches to privacy and cybersecurity, such as the NAIC Model Law for Cybersecurity, it will take time for such models to emerge and achieve the requisite consensus. In the absence of a uniform federal and state approach to privacy, businesses need to take the initiative now and be aware of the various state, federal and foreign laws being introduced and enacted — even if their operations may not yet affected.

How does California’s privacy act work?

The California Consumer Privacy Act of 2018 (CCPA) protects consumers who are residents of California by giving them rights to disclosure, access, deletion, control (opt-out and portability rights) as well as imposing a prohibition on antidiscrimination. It also addresses the data privacy rights of children under the ages of 13 and 16. …

Environmental Alert

(by Kevin Garber and Jean Mosites)

On Wednesday, November 20, 2019, members of the Pennsylvania House and Senate referred bipartisan companion bills HB 2025 and SB 950, both known as the Pennsylvania Carbon Dioxide Cap and Trade Authorization Act, to their respective Environmental Resources and Energy Committees for consideration.

Sponsors Senator Joe Pittman (R-41) and Representative Jim Struzzi (R-62) announced the bills in a press conference on November 19, 2019 in response to Governor Tom Wolf’s October 3, 2019 Executive Order 2019-07.  That Order directed the Environmental Quality Board to propose, by July 31, 2020, a carbon dioxide cap and trade program for fossil-fuel-fired electric power generators which is at least as stringent as that developed under the  Regional Greenhouse Gas Initiative (RGGI). For more detail on RGGI, see Wolf Administration Announces Plan to Join Northeast Carbon Market.

The bills each provide a declaration of policy, procedures for the proper introduction of any program governing carbon dioxide emissions by the Pennsylvania Department of Environmental Protection, and the process for submitting that program to the General Assembly for approval.

No Current Authority to Regulate CO2 Emissions

Section 2 of the bills finds there is currently no statutory or constitutional authority allowing a state agency to regulate or impose a tax on carbon emissions, and therefore the General Assembly, in consultation with DEP and other agencies, must determine whether and how to do so.

No Rulemaking Without Specific Statutory Authority

Other than a measure required by federal law, Section 4 prohibits DEP from adopting any measure or taking any action to abate, control or limit carbon dioxide emissions (including joining or participating in RGGI or other state or regional greenhouse gas cap-and-trade program) or establishing a greenhouse gas cap-and-trade program unless the General Assembly specifically authorizes it by statute. …

Smart Business

(by Jayne Gest with Justine Kasznica)

In 2018, California signed into law the first state-level comprehensive privacy act, the California Consumer Privacy Act of 2018 (CCPA), which goes into effect Jan. 1, 2020. Due to the CCPA’s broad scope and reach beyond California, as well as its large fines and penalties for noncompliance, the law is influencing and setting a high bar for data protection practices nationwide. Since the CCPA was signed, several states have proposed or enacted similar legislation, turning privacy and cybersecurity into a patchwork of state-led experimentation.

“More states are developing privacy laws, which will make it difficult for companies to track and comply with every state’s privacy act, not to mention the privacy regimes in non-U.S. jurisdictions, such as Europe’s General Data Protection Regulation (GDPR),” says Justine Kasznica, shareholder at Babst Calland.

In the absence of a uniform approach to privacy and cybersecurity, businesses need to be aware of the state, federal and foreign laws being introduced and enacted — even if their operations are not yet affected.

Smart Business spoke with Kasznica about how California’s privacy law, and others, will impact companies.

How does California’s privacy act work?

The CCPA protects consumers who are residents of California, giving them rights to disclosure, access, deletion and control (opt-out and portability rights), as well as imposing a prohibition on antidiscrimination. It also addresses the data privacy rights of children under the ages of 13 and 16.

The CCPA is modeled on the GDPR, articulating similar consumer rights (even if terms differ) and imposing business obligations and enforcement mechanisms. While compliance with GDPR may facilitate CCPA compliance, the two privacy regimes deviate in their definitions of personal information/data, scope of the rights protected, affected organizations, and penalties and enforcement. …

The Legal Intelligencer

(by Stephen Korbel and Anna Skipper)

On Oct. 8, the U.S. Supreme Court heard oral argument on three cases addressing the scope of sex discrimination protections under Title VII of the Civil Rights Act of 1964 Section 7, 42 U.S.C. Section 2000e-2 (1964). Title VII makes it an unlawful practice for an employer to “fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his … sex,” or “to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s … sex.”

Two consolidated cases, Altitude Express v. Zarda, 883 F.3d 100 (2d. Cir. 2018), cert. granted, 139 S. Ct. 1599, 203 L. Ed. 2d 754 (U.S. Apr. 22, 2019) (No. 17-1623) and Bostock v. Clayton County Board of Commissioners, 723 Fed. Appx. 964 (11th cir. 2018), cert. granted, 139 S. Ct. 1599, 203 L. Ed. 2d 754 (U.S. Apr. 22, 2019) (No. 17-1618), address whether discrimination on the basis of sexual orientation is a form of discrimination “because of … sex.” A third case, R.G. & G.R. Harris Funeral Homes v. Equal Employment Opportunity Commission, 884 F.3d 560 (6th Cir. 2018) cert. granted in part, 139 S. Ct. 1599, 203 L. ED. 2d 754 (U.S. Apr. 22, 2019) (No. 18-107), addresses discrimination on the basis of gender  identity and transgender status.

In Zarda, the U.S. Court of Appeals for the Second Circuit held that an employee was entitled to bring a Title VII claim for discrimination based on sexual orientation as a subset of sex discrimination. …

Pipeline Safety Alert

(by James Curry, Keith Coyle and Brianne Kurdock)

This is the last alert in a four-part Babst Calland series on PHMSA’s final rule amending the gas pipeline safety regulations at 49 C.F.R. Part 192 (Rule), published in the Federal Register on October 1, 2019.  The first alert reviewed new requirements for materials verification and reconfirmation of maximum allowable operating pressure (MAOP).  The second alert discussed PHMSA’s extension of integrity assessment requirements to areas outside high consequence areas (HCAs).  The third alert reviewed the new recordkeeping requirements.  This alert discusses the remaining rule topics: strengthening assessment requirements, extending the integrity management (IM) reassessment schedule, adding safety features to launchers and receivers, evaluating seismicity, and reporting MAOP exceedances.

Strengthening Assessment Requirements

PHMSA has incorporated a series of industry consensus standards regarding the use of in-line inspection (ILI) tools for pipeline assessments.  PHMSA has also expanded the array of assessment methods that operators may use, both for covered segments in HCAs and in non-HCA areas.

What’s in the Rule?

• Incorporation by reference of NACE SP0102-2010, Inline Inspection of Pipelines, which relates to the design and construction of pipeline facilities to accommodate the passage of ILI devices, as well as the performance of ILI assessments (§§ 192.150 and 192.493).  Operators may use tethered or remotely controlled tools not explicitly noted in NACE SP0102, as long as they comply with the sections of that standard that are applicable given the technology.
• Incorporation by reference of API STD 1163, In-Line Inspection Systems Qualification Standard, which sets out performance-based requirements for ILI procedures, personnel, equipment and software and ANSI/ASNT ILI-PQ, In-Line Inspection Personnel Qualification and Certification (§ 192.493).

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