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October 15, 2019

PHMSA Publishes Long-Awaited Mega Rule for Gas Transmission Lines: Assessing Areas Outside of High Consequence Areas

Pipeline Safety Alert

(by James CurryKeith Coyle and Brianne Kurdock)

This is the second alert in a four-part Babst Calland series on the Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency) final rule amending the federal safety standards for gas pipeline facilities 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).

This alert discusses PHMSA’s extension of integrity assessment requirements to areas outside high consequence areas (HCAs).  The third alert will review the new recordkeeping requirements.  Finally, Babst Calland will survey the remaining Rule topics.

Assessing Areas Outside of High Consequence Areas – 49 C.F.R. §§ 192.3 and 192.710

PHMSA has introduced new regulations requiring an operator to conduct integrity assessments outside of HCAs.  The Agency has categorized these areas as Moderate Consequence Areas (MCAs).

What is in the Rule?

Moderate Consequence Area Definition.  A “moderate consequence area” is an onshore area that is within a potential impact circle containing either five or more buildings intended for human occupancy or any portion of the paved surface, including shoulders, of a designated interstate, freeway, or expressway, or principal arterial roadway with four or more lanes, as defined by the Federal Highway Administration. Initial Assessment and Reassessment Interval. Operators with an onshore, steel, transmission pipeline segment with a MAOP greater than or equal to 30% SMYS located in a Class 3 or Class 4 location or a piggable MCA segment must assess these segments by July 3, 2034 and every ten years thereafter at intervals of 126 months.  Although PHMSA has allowed a ten-year schedule for reassessments, the Agency has cautioned that an operator must assess its segments earlier depending on the type of anomaly, operational, material, or environmental conditions, or...

FMCSA’s Hours of Service Proposed Rule

Transportation Safety Alert

(by Boyd Stephenson and James Curry)

On August 22, 2019, the Federal Motor Carrier Safety Administration (FMCSA) published a notice of proposed rulemaking (NPRM) containing potential changes to the hours of service (HOS) regulations for all drivers operating in interstate commerce and for drivers transporting hazardous materials in intrastate commerce.  FMCSA initiated the rulemaking to update the HOS in light of compliance challenges revealed by the Agency’s 2017 electronic logging device mandate.  In the NPRM, FMCSA proposes to:

Expand the current “short-haul” exception to the HOS rules; Expand the adverse driving exception to the HOS rules; Allow any 30-minute period of non-driving time to count towards the30-minute rest break; Expand access to the sleeper berth exception; and Allow a single off-duty break to extend the driver’s on-duty window by the length of the break.

The proposed changes will likely provide operational flexibility to every sector of the trucking industry.  Local drivers’ on-duty windows will expand to equal the time currently allotted for long-haul drivers.  At the same time, the rules would provide more options to long-haul operators, who will be able to use on-duty time for their required break and to expand their driving window by strategically taking optional breaks at times that allow them to avoid driving in heavy traffic.  Comments are due by October 21, 2019.

Current Daily Maximum Driving Times

While FMCSA proposes several exceptions to the basic daily rules, the Agency has not proposed changes to the daily base HOS requirement for property-carrying or passenger-carrying commercial motor vehicles (CMVs).

A property-carrying CMV driver may drive up to 11 hours during a14-hour window beginning when the driver begins on-duty status. The driver is then prohibited from driving until a 10 consecutive hour period of off-duty time elapses. A passenger-carrying CMV driver may drive up to...

October 11, 2019

PHMSA Publishes Long-Awaited Mega-Rule for Gas Transmission Lines

Pipeline Safety Alert

(by James CurryKeith Coyle and Brianne Kurdock)

On October 1, 2019, the Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency) published a final rule in the Federal Register amending the federal safety standards for gas pipeline facilities at 49 C.F.R. Part 192 (Rule). The Rule primarily addresses concerns identified in congressional mandates and National Transportation Safety Board (NTSB) recommendations for gas transmission lines.  The most significant provisions include new requirements for verifying pipeline materials, reconfirming maximum allowable operating pressure (MAOP), and performing periodic assessments of pipeline segments located outside of high consequence areas (HCAs), including in newly-defined moderate consequence areas (MCAs).  Other changes include amendments to the integrity management (IM) requirements, new requirements for reporting MAOP exceedances and the safety of inline inspection launcher and receivers, as well as related recordkeeping requirements.

This alert is the first in a four-part Babst Calland series on the Rule.  This first alert discusses the new MAOP reconfirmation and material verification requirements.  The next alert will cover MCAs and new assessment requirements for pipelines located outside of HCAs.  The third client alert will review the new recordkeeping requirements.  Finally, Babst Calland will survey the remaining Rule topics.

Materials Verification – 49 C.F.R. § 192.607

PHMSA established new materials verification requirements for certain kinds of gas transmission pipelines in response to a mandate in the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (2011 Act).  Operators must create procedures for conducting destructive and nondestructive tests if they do not have traceable, verifiable, and complete (TVC) records for pipeline attributes required by other regulations.  Specifically, materials verification may be triggered by MAOP reconfirmation, integrity management, or repair regulations applicable to onshore gas transmission pipelines in Class 3 or 4 locations or HCAs.

The Rule provides operators with flexibility and allows for collection of missing...

New Clean Water Act developments, same uncertainty

The PIOGA Press

(by Lisa Bruderly and Gary Steinbauer)

Despite a recent federal rulemaking on the definition of “waters of the United States” (WOTUS) and the anticipated U.S. Supreme Court matter, County of Maui v. Hawai’i Wildlife Fund, the scope of the federal government’s authority under the Clean Water Act (CWA) could remain in flux.

Even before its publication in the Federal Register, opponents of the WOTUS rulemaking vowed to file legal challenges. Furthermore, a recently announced settlement in the County of Maui case could prevent the Supreme Court from deciding whether point source discharges that travel through groundwater before reaching a jurisdictional surface water are regulated by the CWA. The threatened legal action on the WOTUS rulemaking and the announced settlement in County of Maui could prevent regulated parties from receiving much needed clarity on key jurisdictional issues under the CWA.

WOTUS final repeal rule and new definition

Step 1. On September 12, the U.S. Environmental Protection Agency (EPA) and the Army Corps of Engineers released a pre-publication version of a final rule repealing the Obama administration’s 2015 rule redefining WOTUS under the CWA, typically referred to as the “Clean Water Rule” (CWR). The repeal rule becomes effective 60 days after publication in the Federal Register, which had not yet occurred as of October 7. Major national environmental groups and states have already

vowed to challenge the rulemaking.

The final repeal rule could end the existing regulatory patchwork where the CWR’s definition currently is in place in 22 states (including Pennsylvania) and the pre-2015 definition of WOTUS is in effect in 27 states and recodify the pre-2015 definition of WOTUS consistently across the United States. According to the EPA and

Corps, restoring the pre-2015 CWA jurisdictional regime is appropriate to remedy the identified deficiencies in the CWR’s expansive WOTUS definition.

However, while regulated parties have...

October 8, 2019

West Virginia Attorney Moore Capito Joins Babst Calland

Capito Joins Leading Energy Law Firm as Shareholder Based in Charleston, WV Office

Babst Calland today announced that West Virginia native Moore Capito has joined the firm’s Charleston office as a shareholder and member of its Corporate and Commercial, Emerging Technologies, and Energy and Natural Resources Groups, effective September 30, 2019.  

For the past decade, Moore Capito has worked for Charleston-based Greylock Energy, formerly known as Energy Corporation of America, where he most recently served as Corporate Counsel and Director of Land.

“I am excited to be joining a well-respected legal team in West Virginia representing such a wide range of clients in West Virginia and throughout the country,” said Capito.

“Moore Capito is well-known in industry and among local, state and federal regulatory agencies and the legislature in West Virginia. We’re very pleased to have him become part of our team,” said Don Bluedorn, Babst Calland’s Managing Shareholder. “His proven leadership and passion for natural gas development and West Virginia are great fits for our entire team, and most importantly for our clients.”

Moore Capito spent the first part of his career in public service, including as a staff member for the Secretary of Defense at the Pentagon after he served as a member of The White House advance team traveling in support of the president. His first assignment in Washington, D.C. was working for the House Majority Leader in the United States House of Representatives. Following his assignment at the Pentagon, Mr. Capito attended law school and received his Juris Doctorate from Washington and Lee University in 2011. He holds a Bachelor of Arts degree from Duke University.

Mr. Capito, son of U.S. Senator for West Virginia Shelley Moore Capito and grandson of the late former West Virginia Governor Arch Moore, was elected in 2016 to the West Virginia House of...

October 3, 2019

Legal Battles Begin on Trump Administration’s Key Environmental Deregulatory Actions

The Legal Intelligencer

(by Gary Steinbauer)

Since taking office, President Donald Trump has launched an ambitious deregulatory effort targeting several federal environmental rulemakings completed during the Obama administration. Two of the most noteworthy deregulatory actions involve the scope of the federal government’s authority to regulate greenhouse gas (GHG) emissions from existing sources under the Clean Air Act and discharges to surface water under the Clean Water Act. Lawsuits over these rules are pending or promised, with federal courts, and potentially the U.S. Supreme Court, poised to rule on whether the Trump administration’s actions are appropriate course corrections or themselves illegal.

Clean Air Act

In 2015, the Obama administration promulgated the first-ever requirements for GHG emissions from power plants under the Clean Air Act. Known as the Clean Power Plan (CPP), this rule aimed to reduce GHG emissions from electricity generating units to approximately 32% less than 2005 levels by 2030. The CPP was challenged by numerous states and industry groups in the U.S. Court of Appeals for the District of Columbia Circuit. Challengers asserted that the Clean Air Act requirement to establish the “best system of emissions reduction” (BSER) prohibited the U.S. Environmental Protection Agency (EPA) from forcing fossil fuel plants to offset their emissions by constructing renewable energy sources or purchasing credits from such sources. In February 2016, the Supreme Court took the unprecedented step of staying the CPP before the D.C. Circuit ruled on the merits of the challenge. In September 2016, the entire D.C. Circuit heard oral arguments on the CPP, but effectively stayed the CPP lawsuit while the EPA moved forward with preparing a replacement.

On June 19, the EPA issued a final Affordable Clean Energy (ACE) rule establishing a much different set of requirements for BSER at existing power plants and formally repealing the CPP. Finalized after formal...

October 2, 2019

PHMSA Publishes Long-Awaited Final Rule for Hazardous Liquid Pipelines

Pipeline Safety Alert 

(by James CurryKeith Coyle and Brianne Kurdock)

On October 1, 2019, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a final rule in the Federal Register amending the federal safety standards for hazardous liquids pipelines at 49 C.F.R. Part 195 (84 Fed. Reg. 52260) (Rule).  The publication of the Rule ends a nearly decade-long rulemaking process that began in the wake of a significant pipeline accident in Marshall, Michigan.  A prior version of the Rule, released in the closing days of the Obama administration, was returned to PHMSA for further review pursuant to a White House memorandum issued at the start of the Trump administration.  This version of the Rule reflects changes that PHMSA made after receiving input from the current administration, the most significant of which is the removal of new requirements for performing pipeline repairs. The effective date of the Rule is July 1, 2020.

What’s in the Rule?

The Rule includes the following changes to Part 195:

Extension of reporting requirements to previously-unregulated gravity lines. Operators of gravity lines must submit annual, accident, and safety-related condition reports to PHMSA.  The accident and safety-related reporting requirements become effective on January 1, 2021, whereas the annual reporting requirement become effective on March 31, 2021.  The Rule contains a narrow exemption from the reporting requirements for low-stress gravity lines that travel no farther than one mile from a facility boundary without crossing any waterways used for commercial navigation.  The requirements to provide immediate notification of certain accidents, to submit information to the National Pipeline Mapping System, and to provide safety data sheets after a release do not apply to gravity lines. Extension of reporting requirements to previously-unregulated gathering lines. Operators of previously-unregulated gathering lines must submit annual, accident, and safety-related condition reports to PHMSA.  As with the reporting requirements...

Babst Calland Adds Artificial Intelligence to Accelerate, Enhance Legal Contract Review and Document Management

Babst Calland announces the deployment of artificial intelligence to the due diligence and contract review process for capturing and managing critical business information in high-volume corporate and commercial transactions.Babst Calland is among early law firm adopters to initiate and implement artificial intelligence, machine learning, and predictive analytics to legal contract review and document management, enhancing efficiency, intelligence and quality while reducing costs for clients.

With the addition of new artificial intelligence software, Babst Calland can now deploy highly-trained machine learning algorithms in its due diligence process resulting in faster, more intelligent contract or document review for clients. The Firm can now rapidly review and execute business contracts quickly and accurately whether the client has 100 or 100,000 documents for review.

Providing measurable value requires experience. Babst Calland and affiliate, Solvaire, have been performing complex due diligence, discovery, and document management projects for clients for more than 20 years. During the past year, together with Solvaire, the firm evaluated numerous options, applications before adopting new artificial intelligence software and designing its proprietary platform with the capacity for handling huge volumes of contracts and documents on an expedited basis.

Now leveraging AI technology, coupled with its proven proprietary process, the firm implements projects more accurately and efficiently than ever before. in fact, manual document review time is cut in half offering clients faster risk assessments and more confident decision-making.

 “Clients are demanding more efficiency and enhancements in the due diligence process for complex deals and transactions, requiring more insight from attorneys, as well as more innovative resources to stay one step ahead in a time-sensitive, highly competitive marketplace. Our state-of-the-art approach, along with our systematic process that applies artificial intelligence technology, provides clients with the latest, flexible solution customized to meet their specific business needs,” said Christian Farmakis, shareholder and chairman of...

PHMSA Releases Enhanced Emergency Order Procedures

Pipeline Safety Alert 

(by James CurryKeith Coyle and Brianne Kurdock)

On October 1, 2019, the Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency) published a Final Rule in the Federal Register updating its procedural requirements for issuing emergency orders (EO).  In 2016, PHMSA issued temporary regulations for issuing emergency orders in an interim final rule (IFR).  Unlike the process that ordinarily applies to PHMSA rulemakings under the Pipeline Safety and Administrative Procedure Acts, the Agency issued the temporary EO requirements without providing the public with prior notice or the opportunity to submit comments.  The final rule takes effect on December 2, 2019, and includes changes that the Agency deemed necessary based on comments submitted after the IFR.

What is an Emergency Order?

Congress authorized PHMSA to issue EOs in the Protecting Our Infrastructure of Pipelines and Enhancing Safety (PIPES) Act of 2016.  In response to an imminent hazard, PHMSA may issue an EO imposing restrictions, prohibitions, or safety measures on pipeline owners and operators.  Unlike a Corrective Action Order or a Safety Order, PHMSA may issue an EO to a group of operators that share a common condition or even the entire industry.  PHMSA anticipates issuing an EO to respond to natural disasters, when serious flaws are discovered in pipes or in equipment manufacturing processes, or when an accident reveals an industry practice is unsafe. Aggrieved owners and operators may challenge an EO by choosing a formal hearing before an administrative law judge (ALJ) or filing a written response with the Associate Administrator.  In either scenario, the Associate Administrator must issue the final decision within 30 days of receipt of a petition for review.

What Did PHMSA Change in the New Final Rule?

PHMSA made several important changes to the process of challenging an EO in the final rule, including:

Removing the discretion initially afforded...

October 1, 2019

Babst Calland Adds Artificial Intelligence to Accelerate, Enhance Due Diligence and Contract Review

Emerging Technologies Alert

Babst Calland announces the deployment of artificial intelligence to the due diligence and contract review process for capturing and managing critical business information in high-volume corporate and commercial transactions.

Babst Calland is among early law firm adopters to initiate and implement artificial intelligence, machine learning, and predictive analytics to legal contract review and document management, enhancing efficiency, intelligence and quality while reducing costs for clients.

With the addition of artificial intelligence software, Babst Calland can now deploy highly-trained machine learning algorithms in its due diligence process resulting in faster, more intelligent contract or document review for clients. The Firm can now rapidly review and execute business contracts quickly and accurately whether the client has 100 or 100,000 documents for review.

Providing measurable value requires experience. Babst Calland and our affiliate, Solvaire, have been performing complex due diligence, discovery, and document management projects for clients for more than 20 years. During the past year, together with Solvaire, the firm evaluated numerous options, applications before adopting new artificial intelligence software and designing its proprietary platform with the capacity for handling huge volumes of contracts and documents on an expedited basis.

Now leveraging AI technology, coupled with our proven proprietary process, we implement projects more accurately and efficiently than ever before. in fact, we cut manual document review time in half offering clients faster risk assessments and more confident decision-making.

 Clients are demanding more efficiency and enhancements in the due diligence process for complex deals and transactions, requiring more insight from attorneys, as well as more innovative resources to stay one step ahead in a time-sensitive, highly competitive marketplace. Our state-of-the-art approach, along with our systematic process that applies artificial intelligence technology, provides clients with the latest, flexible solution customized to meet their specific business needs.

About Babst Calland

Babst Calland was founded in 1986 and...

September 30, 2019

Department of Labor Finalizes New Overtime Rule

Employment and Labor Alert

(by Stephen Antonelli and Brian Lipkin)

As we previously reported, the United States Department of Labor (DOL) has been considering changes to the overtime laws.  Last week, the DOL finalized a new overtime rule, which takes effect on January 1, 2020.  Here are the biggest changes:

Higher Salary Threshold.  The new rule raises the salary threshold that exempts certain executive, administrative, professional, and outside sales employees from overtime.  Under the new rule, these employees will need to earn a salary of at least $35,568 per year ($684 per week) to be classified as “exempt” from overtime.  This is an increase from the current salary threshold of $23,660 per year ($455 per week).

Changes for Highly Compensated Employees.  Under the existing federal overtime rules, certain “highly compensated” employees, who earn a salary of at least $100,000 per year, are also exempt from overtime.  The new rule increases to $107,432 per year the minimum salary for employees to qualify as “highly compensated.”  (Pennsylvania does not recognize the highly compensated employee exemption, so this change may only affect employers in other states.)

Handling of Bonuses.  The new rule will allow employers to count nondiscretionary bonuses and incentive payments, which are paid at least once per year, toward up to 10% of the salary threshold.  For example, an employee who earns a salary of $33,000 per year and a nondiscretionary bonus of $3,000 per year satisfies the salary threshold under the new rule.

If the new rule takes effect, it will be the first increase in the salary threshold since 2004.  There is a still a chance, though, that a court will be asked to block or the delay the rule.  This happened in August 2017, when a federal judge in Texas struck down the DOL's previous attempt to increase the salary...

September 26, 2019

Stay Informed: Timely Alerts for Clients with Emerging Technologies

Emerging Tech Alert

We recognize the need for our clients to stay informed about the various legal, regulatory and policy matters impacting companies developing or investing in new technologies, new companies, and new ideas.

Our plan is to periodically share helpful business and legal insights specific to early-stage businesses and technology-driven companies from our team of attorneys experienced in the full spectrum of technology, commercial transactions, intellectual property, compliance, mobility, transportation safety, product quality, artificial intelligence (AI)/machine learning, Internet of Things (IoT), and automation matters.

Babst Calland’s Emerging Technologies practice provides strategic leadership with business and legal representation for manufacturers, suppliers, start-ups, technology companies, investors, universities, and government entities.

We hope that you will keep us as a resource reminder in your in-box. To learn more, contact us or visit Babst Calland/Emerging Technologies.   Thank you!

 

Christian A. Farmakis

Shareholder Chairman of the Board

September 23, 2019

Businesses beware: Courts are shifting the cybersecurity onus toward companies

Smart Business

(by Jayne Gest with Molly Meacham)

In early data breach and cybersecurity litigation, courts took the perspective that cybercriminals were bad-acting third parties and businesses should not be held responsible in negligence for economic losses. That’s changing, however.

“Courts, in general, are looking for ways to turn to companies that are the custodians of the data, versus the individuals who traditionally have borne the uncertain burden of potential future identity theft if their data is stolen,” says Molly Meacham, shareholder at Babst Calland.

Smart Business spoke with Meacham about data breach litigation trends.

What are examples of courts shifting their approaches to data breach litigation?

In Dittman v. UPMC, the Pennsylvania Supreme Court broke new ground, finding that companies have an affirmative duty of care to protect confidential personal data that they have collected. The court viewed the actions of cybercriminals as a foreseeable risk that’s not a shield from liability. The court also did not let UPMC point to the economic loss doctrine, which previously held that if the loss is only financial, it cannot be recovered under a negligence theory.

The Dittman decision drew nationwide attention, because litigants in other states will ask their courts to adopt or reject it.

In addition, courts are looking at data breach damages. Several federal judges rejected data breach class action settlements to demand a larger or simpler recovery for the individuals, including higher caps per plaintiff, larger pools of funds and/or easier hurdles toward getting those funds.

Courts have also pushed back against the threshold issue of whether plaintiffs have to show actual damages to participate in a class action, or whether the risk of future damage is sufficient. For example, Jeep owners are pursuing class claims of diminution of value, following a well-publicized white-hat hacking incident. The manufacturer fixed the vulnerability and no vehicles...

Personalities of Pittsburgh: Babst Calland’s Donald Bluedorn II

Pittsburgh Business Times

(by Patty Tascarella with Don Bluedorn)

A lawyer who's energized by martial arts and draws on engineering skills is leading Pittsburgh's sixth-largest firm with balance in mind.

Donald Bluedorn II built most of his career at Babst Calland and, in mid-2017, became just the second managing shareholder in the law firm’s 33-year history. In June, he took Babst Calland into Texas via a merger with The Chambers Law Group, based in Houston. Bluedorn, who also practices the martial art of Brazilian jiu-jitsu, is focused on energy and natural resources and environmental work.

You have an engineering degree. Did that figure into your decision to be a lawyer?

My father was the first person in our family to go to college — he got an engineering degree, then went to night school and got an MBA and then a law degree. He worked for the local power company and ran a country practice out of our farm. I’d always wanted to be a lawyer. My dad said, “You like science and math, get an engineering degree. If you decide not to go to law school, you can do something with that. With a political science degree, you’re committed to going to law school.” By the time I got to my senior year in college, I really wanted to go into law. But in some ways, engineering was a fantastic background: It taught economic rigor, discipline and to think problems through in a logical way. No one has ever hired me as a lawyer for my engineering skills, but it helps me to understand the science behind what we’re doing and to engage with the engineers or consultants clients might be using. It worked out the way my dad intended.

How does a farm kid...

September 20, 2019

Uniformity or More Chaos: EPA Finalizes Rule Repealing Obama Administration’s Definition of “Waters of the United States”

Environmental Alert

(by Lisa Bruderly and Gary Steinbauer)

On September 12, 2019, the U.S. Environmental Protection Agency (USEPA) and the Army Corps of Engineers (Corps) (collectively, the Agencies) released a pre-publication version of a final rule repealing the Obama administration’s 2015 rule re-defining “waters of the United States” (WOTUS) under the Clean Water Act (CWA), typically referred to as the “Clean Water Rule” (CWR).  The repeal is intended to end the existing regulatory patchwork, where (1) the CWR’s WOTUS definition currently is in effect in 22 states (Pennsylvania and Ohio among them), (2) the pre-2015 definition of WOTUS is in effect in 27 states (including West Virginia), and (3) the applicable WOTUS definition is “under federal court consideration” in New Mexico.  The repeal rule becomes effective sixty (60) days after publication in the Federal Register, which has not yet occurred as of September 20, 2019.  Major national environmental groups have already vowed to challenge the repeal rule in court.

The Trump administration directed the Agencies to review the 2015 WOTUS definition in an Executive Order issued on February 28, 2017.  The repeal rule completes step one of a two-step process designed by USEPA and the Corps to implement the Executive Order.  Step two of the process is underway and involves replacing the CWR’s definition of WOTUS with a revised definition of the term.  On February 14, 2019, USEPA and the Corps published a proposed rule to revise the definition of WOTUS.  The comment period on the proposed revised definition ended on April 15, 2019.  We have discussed the substance of the proposed revised definition of WOTUS in a previous Environmental Alert.  According to the online docket, USEPA and the Corps received more than 621,000 comments on this proposed WOTUS definition.  USEPA and the Corps state that they...

September 19, 2019

Employers Should Fix These 8 Common Problems With Restrictive Covenants

The Legal Intelligencer

(by Brian D. Lipkin and Carly Loomis Gustafson)

When an employee quits, the employer might dig through its files, dust off an old noncompete agreement, and see what rights (if any) it has under the agreement. Does this scenario sound familiar?

Unfortunately, by the time an employee has quit, it’s too late to go back and correct an outdated or insufficient agreement. So, we recommend that each fall, employers look through their existing noncompete agreements (and other restrictive covenants, such as nonsolicitation agreements), and fix these eight common problems:

Problem No. 1: Over the years, the employee signed multiple, conflicting agreements.

Fix: When an employee signs a new agreement, it should clearly state that it replaces all previous agreements.

Problem No. 2: The employee did not receive consideration—such as a new position, raise, bonus or promise of employment for a fixed time period—in exchange for signing the agreement.

Fix: If an employer realizes that an employee may not have received adequate consideration, the employer can pay a bonus in exchange for signing a new agreement. By timing its review of restrictive covenants in the fall, an employer can prepare for employees to sign updated agreements when they receive year-end bonuses or raises.

Problem No. 3: The agreement doesn’t detail what the employee is restricted from doing.

Fix: We often see agreements that prohibit an employee from going to work for a “competitor.” The problem with this language is that it inevitably leads to a dispute about whether the new and old employers really compete with each other.

If an employer is concerned about employees leaving for specific companies, those companies should be named in the agreement. The employer should add that the named companies are only examples, and that the employee is also prohibited from going to work for other companies doing business in a defined industry.

Problem No. 4: The employee’s...

September 16, 2019

2019 Pennsylvania AV Summit – Industry Leaders Discuss AV Regulations and Standards, Safety and Innovation, and Consumer Expectation

Justine M. Kasznica spoke at the Pennsylvania AV Summit on September 4-6 on a panel focused on autonomous vehicle regulations and standards.  Leaders within the industry discussed AV regulations and standardization, balancing safety and innovation, consumer expectation, and self-certification vs. third-party verification.

Panelists photographed left to right: William Gouse, Ground Vehicle Standards – SAE International, Justine M. Kasznica, Attorney at Law - Babst Calland, Monica Lopez, Chief Science and Art Officer - La Petite Noiseuse Productions, Kelly Funkhouser, Head of CAV/Program Manager for Vehicle Usability and Automation - Consumer Reports, Auto Test Center, Matthew Wood, Safety Engineering Lead - Aptiv, and Jackie Erickson, Senior Director of Communications - Edge Case Research.

 

September 12, 2019

September 30 deadline nearing for employers to submit Component 2 data to the EEOC

The PIOGA Press

(by Stephen Antonelli and Alexandra Farone)

For more than 50 years, the Equal Employment Opportunity Commission (EEOC) has required large and mid-sized employers to submit an annual report known as the EEO-1 Report, which identifies the number of employed workers in job categories based on sex, race and ethnicity. This data is now known as “Component 1” data because in 2016 the Obama administration proposed requiring a second component to this annual report that would require employers to also disclose the hours worked and annual earnings of these employees, in an effort to identify pay disparities. Known as “Component 2” data, the newly collected information should include employees’ W-2 earnings as well as hours worked in 12 pay bands for each of the 10 EEO-1 job categories.

In 2016, the Office of Management and Budget (OMB) approved the proposed requirement, and the requirement was slated to take effect in 2018. However, in 2017 the Trump administration stayed the implementation of this requirement, citing the burden of compliance upon employers. The validity of the stay became the subject of litigation in November 2017. The United States District Court for the District of Columbia vacated the stay in March 2019, and ultimately ruled to extend the Component 2 reporting deadline until September 30, 2019.

The court’s ruling had no effect on the standard May 31, 2019 deadline for employers to submit their yearly EEO-1 Reports for Component 1 data. The Department of Justice has appealed the ruling, but the requirement to comply and produce the data by September 30 remains in full force and effect during the pendency of the appeal. Therefore, by September 30 all employers with at least 100 employees are required to collect and submit Component 2 Data for a “workforce snapshot period” as selected by the...

August 23, 2019

Face it head on: How to resolve conflict among business owners

Smart Business 

(by Jayne Gest with Kevin Douglass)

Many business owners claim to be blindsided when a co-owner files a lawsuit against them detailing a list of grievances. The truth is that business owners often ignore disagreements with co-owners for years or even decades by focusing on pressing day-to-day business matters.

If your company does not address owner conflicts and succession planning issues, these matters will eventually disrupt, impact or injure the business. But with the right approach — and the right facilitator — these challenges can be identified and resolved.

“Disagreements among co-owners of a business are natural. They come up frequently. The key is how owners address those conflicts. Even a company with one owner eventually has to deal with succession issues to avoid potential tension between family members or others vying to be the next generation of owners,” says Kevin Douglass, shareholder at Babst Calland.

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

What events can trigger an escalation of a disagreement between owners?

The reasons why a disagreement may bubble to the surface are almost endless. One trigger is business financial health. 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. If the business is struggling, an owner’s benefits may need to be decreased and tough decisions made about the company’s direction.

Other reasons for conflict include a change in an owner’s level of commitment or job performance, a desire to change the governance structure, conflicting business strategies, and compensation and benefit differences. Personal changes may also spark controversy, such as an owner’s marriage or divorce, owner children who are employed by the business, personal finances or advancing age.

It is surprising how often business partners, including those in the same...

Deadline Approaching For Employers to Submit Mandatory Pay Data to EEOC

Employment & Labor Alert 

(by Stephen Antonelli and Alexandra Farone)

In May 2019, we issued a Client Alert after the U.S. District Court for the District of Columbia ordered the EEOC to collect employers’ pay and hours worked data (commonly referred to as “Component 2 Data”) from certain employers. Specifically, the Court ordered the EEOC to collect such data from employer-selected pay periods during the years 2017 and 2018.

We issue this follow-up Client Alert because, by September 30, 2019, all employers with at least 100 employees are required to collect and submit Component 2 Data for a “workforce snapshot period” as selected by the employer for the reporting years 2017 and 2018. 

The mandate for employers to collect Component 2 Data is the subject of an ongoing federal lawsuit. The Department of Justice has appealed the court order, but the requirement to comply and produce the data by September 30, 2019 remains in full force and effect during the pendency of the appeal.

The EEOC portal website through which employers can submit information can be found at: https://eeoccomp2.norc.org/.

Employers should keep the following steps in mind when preparing to produce Component 2 Data:

Identify an appropriate workforce snapshot period—one pay period—for each reporting year. Gather, sort, and verify the relevant Component 2 Data including employees’ race/ethnicity, sex, W-2 payroll information, and hours worked. Provide actual hours worked by employees who are not exempt under the Fair Labor Standards Act (FLSA). For employees who are exempt from the FLSA, employers can provide either proxy hours or actual hours worked. Determine the number of full- and part-time employees pursuant to each of the 10 EEO-1 job categories. Identify the number of employees who fall within each of the 12 compensation bands for each of the EEO-1 job categories. Employers must use...

August 22, 2019

Third Circ. Clarifies First Amendment Level of Scrutiny of Billboards

The Legal Intelligencer

(by Blaine Lucas and Alyssa Golfieri)

Land use disputes arising from the regulation of outdoor advertising signs (i.e., billboards) are not foreign in Pennsylvania, and over the past several decades, have become an increasingly common source of litigation in both state and federal court. Most recently, the U.S. Court of Appeals for the Third Circuit added Adams Outdoor Advertising v. Pennsylvania Department of Transportation, 2019 U.S. App. LEXIS 20841 (3d. Cir. 2019), to the billboard case law progeny.

By way of background, in 1965 the Federal Highway Beautification Act, 23 U.S.C. Section 131 et seq., was enacted to establish a framework for federal-state agreements related to the regulation of outdoor advertising signs near highways. In order to meet the commonwealth’s obligations under the act, in 1971 the Pennsylvania General Assembly enacted the Outdoor Advertising Control Act, 36 Pa. Stat. Section 2718.101-115, which sets forth land use and permitting regulations applicable to outdoor advertising signs near the commonwealth’s interstate and primary highways. The Outdoor Advertising Act charges the Pennsylvania Department of Transportation (PennDOT) with administration of the Outdoor Advertising Act.

At issue in Adams Outdoor is a provision in the Outdoor Advertising Act known as the “interchange prohibition.” The interchange prohibition bars the construction of outdoor advertising signs within 500 feet of a highway interchange or “safety rest area.” The interchange prohibition expressly exempts “official” signs (i.e., directional or other official signs or notices erected and maintained by public officers or agencies for the purpose of carrying out official duty or responsibility) and “on premises” signs (signs that advertise the sale or lease of, or activities being conducted upon, the real property where the signs are located).

Pursuant to the Outdoor Advertising Act, Adams Outdoor Advertising applied to PennDOT for a permit to construct and maintain an off-premises outdoor advertising sign along a...

August 18, 2019

New Work Product Waiver Analysis Provides Third-Party Communications Clarity

The Legal Intelligencer

(by Stephen Antonelli and Carly Loomis-Gustafson)

In mid-June, in a unanimous opinion, the Pennsylvania Supreme Court articulated a new work product doctrine waiver analysis in BouSamra v. Excela Health, No. 5 WAP 2018 (Pa. June 18, 2019). While the decision will be seen as a victory for corporate defendants in that it provides clarity concerning waiver of the attorney work product doctrine related to communications and consultations with third parties in anticipation of litigation, it should also be read as a cautionary tale in support of continued mindfulness in dissemination of privileged information.

The decision stems from a discovery dispute in a defamation case commenced by Dr. George R. BouSamra against Excela Health Westmoreland Regional Hospital and others. BouSamra filed suit after another cardiologist affiliated with Excela accused BouSamra and his colleague, Dr. Ehab Morcos, of regularly overestimating arterial blockages and, as a result, performing improper and medically unnecessary stenting. As part of an attempt to manage potential public relations issues stemming from the results of two peer review studies related to the accusations, Excela’s in-house counsel forwarded an email containing privileged information that it had received from outside counsel to a member of a third-party public relations firm, who then forwarded the email to other members of the firm.

After noticing the emails between Excela and its public relations firm on Excela’s privilege log, BouSamra filed a motion to compel production of the emails. A special master assigned by the trial court determined that Excela had not waived any privileges. The trial court sustained BouSamra’s exceptions to the special master’s recommendation, noting that the third-party was not an agent of Excela’s counsel. It therefore concluded that the attorney-client privilege had been waived. Neither the trial court nor the special master discussed waiver of the work product doctrine. On appeal,...

August 16, 2019

West Virginia District Court Dismisses Citizen Groups’ Effort to Invalidate Mining Permit

Environmental Alert

(by Christopher (Kip) Power and Robert Stonestreet)

On August 12, 2019, the federal District Court for the Southern District of West Virginia (Judge Irene C. Berger) entered an order dismissing a lawsuit filed by the Sierra Club and other organizations (Citizen Groups) seeking to halt operations under a mining permit issued to Republic Energy, LLC (Republic) by the West Virginia Department of Environmental Protection (WVDEP).  Coal River Mountain Watch, et al. v. Republic Energy, LLC, Civil Action No. 5:18-cv-01449, S.D. W.Va. (Memorandum Opinion and Order, August 12, 2019). The Citizen Groups had sought to bring an end to mining under the permit because operations were not initiated until 2018, even though the permit was originally issued by the WVDEP in June 2008.  Pursuant to W.Va. Code § 22-3-8(a)(3) (a part of WVDEP’s approved program under the federal Surface Mining Control and Reclamation Act of 1977, 30 U.S.C. §1201, et seq. (SMCRA)), a mining permit terminates if mining activities under it are not initiated within three (3) years of its issuance, unless extended by the WVDEP.  The company that previously held the Republic mining permit never requested such an extension.  The WVDEP, however, granted an extension of the permit at issue in February 2012, after the agency had notified the permit holder of the expiration of the three-year limit and provided that company with an opportunity to seek a late (retroactive) extension.  After the permit was transferred to Republic, it sought and received a further extension in 2015 on the basis of financial hardship, which the Court noted “is not a recognized statutory justification for an extension.”

Before filing the federal civil action, the Citizen Groups had filed an administrative complaint about the situation with the federal Office of Surface Mining Reclamation and Enforcement (OSM), which is the oversight...

August 15, 2019

Five Babst Calland Attorneys Named as 2020 Best Lawyers® “Lawyers of the Year” and 38 Selected for Inclusion in The Best Lawyers in America©

Bab© st Calland is pleased to announce that five lawyers were selected as 2020 Best Lawyers "Lawyer of the Year" in the Pittsburgh, Pa. and Charleston, W. Va. (by BL Rankings). Only a single lawyer in each practice area and designated metropolitan area is honored as the "Lawyer of the Year," making this accolade particularly significant.

Receiving this designation reflects the high level of respect a lawyer has earned among other leading lawyers in the same communities and the same practice areas for their abilities, professionalism, and integrity. Those named to the 2020 Best Lawyers “Lawyer of the Year” include:

Donald C. Bluedorn II, Environmental Law “Lawyer of the Year” in Pittsburgh, Pa. – In addition to the "Lawyer of the Year" award, Donald Bluedorn was also listed in the 2020 Edition of The Best Lawyers in America in Environmental Law, Litigation – Environmental, and Water Law.

Kevin J. Garber, Energy Law "Lawyer of the Year” in Pittsburgh, Pa. – In addition to the "Lawyer of the Year" award, Kevin Garber was also listed in the 2020 Edition of The Best Lawyers in America in Environmental Law, Natural Resources Law, Energy Law, Water Law, and Litigation – Environmental.

Blaine A. Lucas, Litigation – Land Use and Zoning "Lawyer of the Year” in Pittsburgh, Pa. – In addition to the "Lawyer of the Year" award, Blaine Lucas was also listed in the 2020 Edition of The Best Lawyers in America in Energy Law, Land Use and Zoning Law, Municipal Law, and Litigation – Land Use and Zoning.

Timothy M. Miller, Oil and Gas Law "Lawyer of the Year” in Charleston, W.Va. – In addition to the "Lawyer of the Year" award, Timothy Miller was also listed in the 2020 Edition of The Best Lawyers in America in Energy Law, Oil and Gas Law, Commercial Litigation, Bet-the-Company Litigation,...

August 9, 2019

Commonwealth Court again rejects a challenge to an ordinance authorizing oil and gas development in non-industrial zoning districts

The PIOGA Press

(by Robert Max Junker)

The argument that the Pennsylvania Constitution compels municipalities to classify natural gas extraction from shale formations as a “heavy industrial use” and therefore mineral development cannot occur in agricultural and rural residential zoning districts was roundly rejected by both the Commonwealth Court and the Supreme Court in the case of Frederick v. Allegheny Township Zoning Hearing Board, 196 A.3d 677 (Pa. Cmwlth. 2018) (en banc), appeal denied, ___ A.3d ___ (Pa., No. 449 WAL 2018, filed May 14, 2019). Nevertheless, opponents of natural gas development continue to be undeterred and refuse to give up this mantra. Attacks on municipalities’ legislative decisions on where natural gas development is appropriate within their own borders are still playing out in several Western Pennsylvania communities, with opponents seeking just one judicial decision that will breathe life into this moribund concept. With the June 26 decision from the Commonwealth Court in Delaware Riverkeeper Network v. Middlesex Township Zoning Hearing Board, No. 2609 C.D. 2015 (Pa. Cmwlth. June 26, 2019) (unreported decision), this tenuous theory was put on life support and yet its few remaining proponents stubbornly refuse to acknowledge the inevitable demise.

Middlesex Township is a rural community in Butler County. In 2014, the Board of Supervisors enacted a zoning ordinance amendment to expressly provide for the use and regulation of oil and gas operations within the township. The board decided that oil and gas well site development should be a permitted use by right in the rural residential, agricultural, residential agricultural and the restricted industrial districts; should be allowed as a conditional use following a public hearing in the commercial districts; and should not be permitted in certain other districts.

R.E. Gas Development, LLC applied for and received a zoning permit authorizing construction and operation of a well site...