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November 19, 2021

Infrastructure Bill Provides Billions in Funding for Hydrogen and Carbon Capture, Utilization, and Storage

Client Alert

(By Jim Curry, Ashleigh H. Krick, Christopher T. Kuhman)

On November 15, 2021, President Biden signed the bipartisan $1.2 trillion Infrastructure Investment and Jobs Act (H.R. 3684). This Alert reviews the key provisions related to hydrogen and carbon capture, utilization, and storage (CCUS). Babst Calland has also issued a companion Alert on other renewable energy-related provisions in the Infrastructure Bill.

Hydrogen

  • Regional Clean Hydrogen Hubs (Sec. 40314): In perhaps the most impactful provision, the Bill authorizes an $8 billion program to support the development of at least four regional clean hydrogen hubs to network hydrogen producers, storage, offtakers and transport infrastructure. DOE must solicit proposals for regional clean hydrogen hubs by May 15, 2022, and select the four hubs by May 15, 2023. DOE will solicit at least one hub proposal for each of the following hydrogen production technologies: fossil fuels, renewables or nuclear. And, DOE will solicit at least one hub to provide hydrogen to each of the following sectors: power generation, industrial, residential and commercial heating, and transportation.
  • Clean Hydrogen Definition and Production Qualifications (Secs. 40312 & 40315): Defines “clean hydrogen” and “hydrogen” in a technology neutral way, and requires DOE and EPA to develop an initial carbon standard for projects to qualify as clean hydrogen production, eligible for the variety of incentives throughout the Bill. Clean hydrogen means “hydrogen produced with a carbon intensity equal to or less than 2 kilograms of carbon dioxide (CO2)-equivalent produced at the site of production per...

November 19, 2021

Infrastructure Bill Seeks to Expand and Improve Grid Infrastructure Incentivize Renewables Growth

Client Alert

(by Ben Clapp, Anna Jewart and Josh Snyder)

On Monday, November 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act (Infrastructure Bill) into law.  The historic $1.2 trillion package contains a number of provisions aimed at promoting the growth of the renewable energy sector and places significant emphasis on large-scale improvements to, and expansion of, the electric transmission grid.  Key provisions of the Infrastructure Bill aimed at benefitting the renewables sector are discussed below.  Babst Calland is issuing a companion Alert on the Carbon Capture, Utilization, and Storage and Hydrogen Technologies provisions in the Infrastructure Bill.

Transmission Infrastructure Resiliency and Expansion

It is well understood that grid capacity constraints and access to adequate transmission infrastructure are often roadblocks to siting renewable energy projects.  The Infrastructure Bill’s investment in transmission infrastructure and resiliency and in building out the grid is designed, in part, to ease these impediments with the aim of making more sites viable for renewable energy development across the country.  The Infrastructure Bill allocates about $28 billion to transmission infrastructure generally, including approximately $15 billion in grants and other financial assistance to prevent outages and enhance grid resiliency, develop new or innovative approaches to transmission, storage, and distribution infrastructure, and facilitate siting or upgrading transmission and distribution lines in rural areas.

$2.5 billion is allocated to the “Transmission Facilitation Program,” a fund that allows the Department of Energy (DOE) to enter into a capacity contract for the right to use up to 50 percent of...

November 19, 2021

A conversation about environmental justice with Attorney Sean McGovern

Pittsburgh Business Times

(By Sean M. McGovern)

Babst Calland Shareholder Sean McGovern takes a closer look at Pennsylvania Governor Tom Wolf’s executive order to develop a stronger environmental justice policy and what local business and industry can expect.

Pennsylvania businesses can expect 2022 to become the year of environmental justice, thanks largely to Executive Order 2021-7 issued by Pennsylvania Governor Tom Wolf on October 28.

So said Sean McGovern, a shareholder with Pittsburgh law firm Babst Calland’s environmental practice, who suggested the executive order will, indeed, change Pennsylvania’s approach to environmental justice significantly ahead.

“Certainly, this is a very current development,” McGovern said. “There’s no statute or explicit regulation here in the state. We already have an environmental justice policy, but this new environmental justice order, as well as the Executive Order 14008 from President Biden earlier this year, will further establish the rights and duties under the Environmental Rights Amendment to protect all people in Pennsylvania.”

McGovern shared his insights on environmental justice in Pennsylvania recently with the Pittsburgh Business Times as part of the law firm’s ongoing Business Insights series. Babst Calland is one of the Pittsburgh region’s largest law firms. McGovern is considered one of Babst Calland’s environmental counselors on issues surrounding environmental justice and other matters of environmental law.

Environmental justice defined

So, what is it? The U.S. Environmental Protection Agency defines environmental justice as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income, with respect to the development, implementation, and enforcement of environmental laws, regulations,...

November 11, 2021

Pennsylvania Oil and Gas Producers Take Note: Five Key Changes in EPA’s Proposed Methane Rule

PIOGA Press

(By Gary Steinbauer)

On November 2, the U.S. Environmental Protection Agency (EPA) released its highly anticipated proposal to expand existing and create new regulations related to greenhouse gas (in the form of methane) and volatile organic compound (VOC) emissions from the oil and gas sector. The proposed rule is entitled Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review. The proposal, if finalized, will lead to more stringent Clean Air Act (CAA) emission limitations and other work practice requirements related to emissions of methane and VOCs from new and existing sources within the crude oil and natural gas production sector, including producers in Pennsylvania.

Brief overview of the methane proposal

The methane proposal is comprised of three distinct actions proposed under sections 111(b) and (d) of the CAA: (1) proposed amendments to the existing methane and VOC requirements in Subpart OOOOa of the New Source Performance Standards (NSPS) in 40 CFR Part 60; (2) a proposed new NSPS to be included in new Subpart OOOOb, regulating emissions of methane and VOCs from new, modified and reconstructed sources within the oil and gas sector; and (3) nationwide methane emission guidelines (EGs) for existing sources within the oil and gas sector in new Subpart OOOOc.

EPA’s proposed amendments to the current requirements in Subpart OOOOa are primarily in response to Congress’ June 2021 revocation of regulatory amendments made by the EPA during the Trump administration. The new proposed NSPS...

November 11, 2021

EEOC Provides Employers Clarity in Religious Objection Requests to Mandatory Vaccines

The Legal Intelligencer

By Stephen Antonelli

On September 9, 2021, President Biden announced his administration’s Path out of the Pandemic action plan, a six-pronged national strategy aimed to combat COVID-19 while keeping schools and workplaces open and safe.  One prong of the plan involves vaccinating those who are not yet vaccinated.  To achieve this goal, the president took actions that have since been on the minds of most employers and human resources professionals: he issued an Executive Order requiring contractors who do business with the federal government to mandate vaccinations for their employees; he directed the Occupational Safety and Health Administration (OSHA) to develop a rule requiring employers with 100 or more employees to ensure that their employees are either fully vaccinated or tested weekly; and he ordered the Centers for Medicare & Medicaid Services (CMS) to require vaccinations for most healthcare workers.

As of this writing in early November, the Safer Federal Workforce Task Force has released detailed guidance related to the federal contractor order, but OSHA has not yet released an Emergency Temporary Standard (ETS) to implement the mandate for large employers, and CMS has not yet issued an interim final rule related to healthcare workers.  As a result, employers across the country are waiting for important guidance and details about how vaccine mandates will impact their employees.  Complicating matters further, at least 12 states have commenced litigation against the Biden administration in at least three different federal district courts (Arizona, Missouri, and Florida) over the federal contractor...

November 11, 2021

Small Businesses Need to Be Wary of Cyber Attacks (Opinion)

Charleston Gazette-Mail

By Moore Capito

Small-business owners have many roles to fill–from managing payrolls and marketing to customer service. But one area many small-business owners fail to plan for is their company’s cybersecurity.

According to a recent Small Business Administration survey, 88% of small-business owners feel their business was vulnerable to a cyberattack. Experts warn that small businesses, including those in West Virginia, are under constant attack by cybercriminals, be it from local, national or global actors.

We don’t have to dig deep for a local example of this threat. In 2017 Princeton Community Hospital, in Mercer County, was a victim of the Petya attack, costing the health system $27 million.

Yet, many businesses can’t afford professional IT solutions, have limited time to devote to cybersecurity or simply don’t know where to begin.

As a delegate, I am focused on supporting West Virginia small businesses through state and federal grants and providing critical resources and training to entrepreneurs across the state. Small businesses are the backbone of our economy and provide the greatest opportunity for job growth in our state. We need to do everything we can to encourage and support them. West Virginians are hard-working, dedicated people–they just need the right tools to succeed.

This is where programs like the one hosted by the National Cybersecurity Center come in. The National Cybersecurity Center is a nonprofit organization established to promote cyber innovation and awareness, and offers training for the public and private sector alike. I have the privilege of taking part in a key...

November 11, 2021

Governor Wolf’s Executive Order and Pennsylvania Legislature Emphasize Environmental Justice

Environmental Alert

(By Sean M. McGovern and Evan M. Baylor)

On October 28, 2021, Governor Tom Wolf issued an Executive Order (Order) addressing environmental justice in the Commonwealth (Executive Order 2021-07). In support of the Order, Pennsylvania legislators announced environmental justice actions that would reflect the directives of the Order.

Executive Order

Gov. Wolf’s Order largely focuses on the establishment of bodies within the Department of Environmental Protection (DEP) and an interagency council within the Executive Branch to better address environmental justice, which is addressed in further detail below. The Order also asserts:

  • The Commonwealth’s duty to “ensure the rights and duties of Article I, Section 27 protect all the people of Pennsylvania” and the significance of environmental justice in President Biden’s Executive Order 14008 and his administration’s mission;
  • That low-income communities and communities of color residents bear a disproportionate share of adverse climate and environmental impacts with accompanying adverse health impacts; and
  • That all Pennsylvanians are entitled to meaningful involvement in decision-making that impacts their lives, environments, and health and that such involvement is critical to reduce adverse impacts.
  • Environmental Justice Advisory Board

    The Order formally established the existing Environmental Justice Advisory Board (EJAB). The EJAB makes recommendations to the DEP Secretary concerning environmental justice policies, practices, and actions. The EJAB shall meet at least semi-annually.

    Office of Environmental Justice

    The Order formally establishes the existing Office of Environment Justice (OEJ) within the DEP. In 2002, the DEP established the Office of Environmental Advocate. In 2015,...

    November 5, 2021

    Supreme Court of Appeals of West Virginia Accepts Certified Questions About Deductibility of Post-Production Expenses and the Viability of Tawney

    Energy Alert

    (by Timothy Miller, Jennifer Hicks and Katrina Bowers)

    The West Virginia Supreme Court of Appeals has accepted four questions certified to it by The United States District Court for the Northern District of West Virginia in Charles Kellam, et al. v. SWN Production Company, LLC, et al., No. 5:20-CV-85. The Court will hear oral argument during the January 2022 term. The Court will address four questions: (1) Is Estate of Tawney v. Columbia Natural Resources, LLC, 219 W.Va. 266, 633 S.E.2d 22 (2006) (Tawney) still good law in West Virginia; (2) What is meant by the “method of calculating” the amount of post-production costs to be deducted; (3) Is a simple listing of the types of costs which may be deducted sufficient to satisfy Tawney; and (4) If post-production costs are to be deducted, are they limited to direct costs or may indirect costs be deducted as well?

    At the time of the District Court’s certification in Kellam, defendants’ Motion for Judgment on the Pleadings asserting that the Kellams’ lease complied with Tawney and that the District Court was bound by the decision in Young v. Equinor USA Onshore Properties, Inc., 982 F.3d 201 (4th Cir. 2020) was pending. In Young, the 4th Circuit Court of Appeals reversed Judge Bailey and held the lease clearly and unambiguously allowed the deduction of post-production expenses and noted that “Tawney doesn’t demand that an oil and gas lease set out an Einsteinian proof for calculating post-production costs. By its plain...

    November 5, 2021

    Infrastructure Bill Would Resurrect Superfund Excise Taxes

    The Legal Intelligencer

    By Joe Yeager

    On Aug. 10, the U.S. Senate passed President Joe Biden’s Infrastructure Investment and Jobs Act (HR 3684 or Infrastructure Bill) by a vote of 69-30. The $1 trillion Infrastructure Bill received bipartisan support with a proposed $550 billion in new infrastructure spending over the next five years that would be offset by a combination of tax and nontax provisions.

    Among other proposals, the Senate bill includes a provision to resurrect a modified version of the long-expired Hazardous Substance Superfund Trust Fund (Superfund) excise tax on chemical manufacturing and imports (Superfund excise taxes). The bill reinstates certain excise taxes to replenish the Superfund, which provides the federal government with resources to respond to environmental threats related to managing hazardous substances.

    Congress allowed the excise taxes to expire at the end of 1995, and this absence of funds has forced the Superfund to support cleanup efforts through general disbursements of other tax revenues. Although there have been multiple attempts to reinstate the Superfund excise tax over the course of the last 25 years, none garnered as much bipartisan support.

    The new version of the Superfund tax would apply to the production of certain chemicals through Dec. 31, 2031, effective for periods after June 30, 2022. In addition, the Superfund tax will increase the rate of tax per ton on a list of taxable chemicals. Its proponents assert that over the course of 10 years, the new tax is estimated to raise approximately $14.4 billion (or $1.2 billion annually). In...

    November 4, 2021

    PHMSA Releases Long-Awaited Final Rule for Onshore Gas Gathering Lines

    Pipeline Safety Alert

    (by Keith Coyle, Jim Curry and Brianne Kurdock)

    On November 2, 2021, the Pipeline and Hazardous Materials Safety Administration (PHMSA) released a pre-publication version of its final rule for onshore gas gathering lines.  The final rule, which represents the culmination of a decade-long rulemaking process, amends 49 C.F.R. Parts 191 and 192 by establishing new safety standards and reporting requirements for previously unregulated onshore gas gathering lines.  Building on PHMSA’s existing two-tiered, risk-based regime for regulated onshore gas gathering lines (Type A and Type B), the final rule creates:

    • A new category of onshore gas gathering lines that are only subject to incident and annual reporting requirements (Type R); and
    • Another new category of regulated onshore gas gathering lines in rural, Class 1 locations that are subject to certain Part 191 reporting and registration requirements and Part 192 safety standards (Type C).

    The final rule largely retains PHMSA’s existing definitions for onshore gas gathering lines but imposes a 10-mile limitation on the use of the incidental gathering provision.  The final rule also creates a process for authorizing the use of composite materials in Type C lines and prescribes compliance deadlines for Type R and Type C lines.  Additional information about these requirements is provided below.

         Type R Lines

    The final rule creates a new category of reporting-only regulated gathering lines.  These gathering lines, known as Type R lines, include any onshore gas gathering lines in Class 1 or Class 2 locations that do not meet the...

    November 4, 2021

    Babst Calland Ranked in 2022 “Best Law Firms”

    Babst Calland has been ranked in the 2022 U.S. News & World Report-Best Lawyers® "Best Law Firms" list nationally in eight practice areas and regionally in 32 practice areas:

    • National Tier 2
      • Environmental Law
      • Land Use & Zoning Law
      • Litigation - Environmental
      • Oil & Gas Law
    • National Tier 3
        • Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law
        • Litigation - Construction
        • Mining Law
        • Natural Resources Law
    • Metropolitan Tier 1
      • Pittsburgh
        • Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law
        • Bet-the-Company Litigation
        • Commercial Litigation
        • Construction Law
        • Corporate Law
        • Energy Law
        • Environmental Law
        • Information Technology Law
        • Land Use & Zoning Law
        • Litigation - Bankruptcy
        • Litigation - Construction
        • Litigation - Environmental
        • Litigation - Land Use & Zoning
        • Municipal Law
        • Natural Resources Law
        • Water Law
      • Charleston-WV
        • Commercial Litigation
        • Energy Law
        • Environmental Law
        • Litigation - Environmental
        • Oil & Gas Law
    • Metropolitan Tier 2
      • Pittsburgh, PA
        • Labor Law - Management
      • Charleston-WV
        • Mining Law
        • Natural Resources Law
      • Washington, D.C.
        • Oil & Gas Law
    • Metropolitan Tier 3
      • Pittsburgh, PA
        • Mediation
        • Mergers & Acquisitions Law
      • Charleston-WV
        • Bet-the-Company Litigation
        • Litigation - ERISA
        • Real Estate Law
      • Washington, D.C.
        • Environmental Law
        • Litigation - Environmental

    Firms included in the 2022 “Best Law Firms” list are recognized for professional excellence with persistently impressive ratings from clients and peers. Achieving a tiered ranking signals a unique combination of quality law practice and breadth of legal expertise.

    Ranked firms, presented in tiers, are listed on a national and/or metropolitan scale. Receiving a tier designation reflects...

    November 1, 2021

    WVDEP Working on Permitting Rules for Storage of Captured CO2

    GO-WV News

    By Christopher (Kip) Power

    The West Virginia Department of Environmental Protection (WVDEP) is continuing work on rules for permitting of geologic storage of captured CO2 -- a necessary (but not sufficient) element in developing a CCS industry.

    As discussed in the August GO-WV News, the WVDEP released proposed amendments to its Underground Injection Control (UIC) permitting and related regulations (47 CSR 13) on June 23, 2021 and held a public hearing on the proposed rules on July 23, 2021. Although they include substantial changes to the rules for Class 1 permits (governing hazardous waste injection wells) and Class 2 permits (for enhanced recovery of oil and gas, and disposal of produced water), the rule changes primarily consist of an entirely new section establishing a permitting program for Class 6 wells (those used for injecting carbon dioxide for the purpose of permanent geologic sequestration). Those proposed new Class 6 rules are largely modeled on EPA’s detailed “Class VI” regulations promulgated under the federal Safe Drinking Water Act (40 CFR 146).

    Ten organizations (including GO-WV and several environmental/citizen groups) filed comments on the draft amendments, and a few of their representatives spoke at the hearing. By letter dated July 23, 2021, the WVDEP released copies of the written comments it received, along with its responses. There was a total of 10 comments that the WVDEP considered to be meritorious enough to alter the proposed rule language in minor ways, almost all of which consisted of typographical errors (along with the elimination of...

    October 29, 2021

    How FinTech is Upending a Traditional Industry

    Smart Business

    (by Sue Ostrowski featuring Moore Capito)

    For years, the banking industry has functioned in the same ways it always has. But FinTech — financial technology — is revolutionizing the way things are done and increasing access to financial tools for those who may not have previously had it.

    “At its core, FinTech is when you have the convergence of an emerging technology and a financial service,” says Moore Capito, shareholder at Babst Calland. “It’s using innovation to compete with traditional methods of delivering financial services.”

    Smart Business spoke with Capito about how FinTech is revolutionizing the financial industry, the opportunities it presents and challenges it poses.

    How is Fintech Changing the Financial Industry?

    There are a lot of unbanked, or underbanked, people that have difficulty accessing the traditional banking industry. FinTech products, sometimes in collaboration with a traditional bank, can provide better financial services to these individuals, especially in rural areas where there is less access to bricks-and-mortar banks.

    There are potentially endless applications, from insurance to mobile banking, cryptocurrency, investment apps, and financial products including mortgages — the most well-known being PayPal. The onset of COVID accelerated the necessity and the willingness to adapt with FinTech, doing more transactions remotely from phones and bringing finance directly to individuals, instead of individuals going to a physical banking location.

    On the economic development side, entrepreneurs are coding programs that create the functionality behind the apps. And states such as West Virginia have created regulatory sandboxes for FinTech entrepreneurs. These let participants apply to come in and...

    October 28, 2021

    2021 PFAS Strategic Roadmap Outlines EPA’s Whole-of-Agency Approach to Addressing “Forever Chemicals” through 2024 and Beyond

    Environmental Alert

    (by Matt Wood and Mackenize Moyer)

    On October 18, 2021, the U.S. Environmental Protection Agency (EPA) released its comprehensive strategy for addressing per- and polyfluoroalkyl substances (PFAS), “PFAS Strategic Roadmap: EPA’s Commitments to Action 2021–2024” (Roadmap).  PFAS are a large group of manmade chemicals that have been widely used in various consumer, commercial, and industrial applications since the around 1940s and more recently have been discovered in environmental media (e.g., groundwater), as well as in plants, animals, and humans.  PFAS do not tend to break down naturally, and evidence suggests that exposure to PFAS can lead to adverse health effects.  As such, the EPA Council on PFAS, established by EPA Administrator Michael S. Regan in April 2021, developed the Roadmap to “pursue a rigorous scientific agenda to better characterize toxicities, understand exposure pathways, and identify new methods to avert and remediate PFAS pollution.”

    The Roadmap highlights EPA’s “whole-of-agency” approach, that includes proposed actions across program offices, as well as the PFAS “lifecycle” (i.e., activities that occur prior to PFAS entering the environment, such as manufacturing).  EPA’s “Key Actions” illustrate this approach and are informed by one or more of the Roadmap’s three central directives: (1) Research; (2) Restrict; and (3) Remediate. A selection of the Roadmap’s Key Actions is summarized below.

     Office of Water

    • Establish a National Primary Drinking Water Regulation (NPDWR) for PFOA and PFOS – In March 2021, EPA published the Fourth Regulatory Determinations, which included a final determination to regulate PFOA and PFOS in drinking...

    October 25, 2021

    Challenges and Opportunities for the Pennsylvania Gas Pipeline Industry

    Pittsburgh Business Times

    (by Daniel Bates featuring Keith Coyle and Blaine A. Lucas)

    Even as opposition grows for energy pipelines, and government agencies toughen their regulation of the industry, pipelines remain the most safe, efficient and effective means to transport much-needed natural gas and other energy products from wells to end users to generate power, manufacture goods and heat homes.

    So said Keith Coyle, a shareholder with law firm Babst Calland whose practice areas include energy law and pipeline and hazmat safety.

    “We’re in a moment right now where we’re seeing some growing opposition to natural gas pipeline infrastructure,” Coyle said in making his case for the importance of supporting and protecting the nation’s energy pipeline infrastructure. “We’re seeing efforts to encourage governmental authorities to ban the construction of new pipelines or to delay the issuance of permits that are necessary for projects to move forward. We’re also seeing litigation that’s being used as a tool to try to block new pipelines or stop the operation of existing pipelines.”

    Coyle and his colleague, Babst Calland shareholder Blaine Lucas, took their stand in favor of safe and efficient pipeline infrastructure as part of a recent discussion with the Pittsburgh Business Times on “The Challenges and Opportunities for the Pennsylvania Gas Pipeline Industry.”

    Coyle and Lucas are quick to suggest that the current political climate, as well as the growing opposition from environmental activists and others, are problematic not just for the energy industry, but for people, the economy – and safety.

    “One of the things...

    October 22, 2021

    Court Addresses Limitations on Approval of Planned Residential Developments

    The Legal Intelligencer

    (by Anna Jewart)

    The requirements of a municipal zoning ordinance are strictly applied, and landowners must comply with the express use and dimensional limitations applicable in the zoning districts in which their properties are located. Landowners wishing to stray from the regulations of that district are usually forced to request relief in the form of a variance, the standards for the granting of which are quite rigorous. However, Article VII of the Pennsylvania Municipalities Planning Code, (MPC), 53 P.S. Sections 10701-10713, authorizes municipalities to enact, amend and repeal provisions within a zoning ordinance fixing standards and conditions for a “planned residential development” (PRD), a form of land development intended to offer an alternative to traditional, cookie-cutter zoning. The opinion of the Commonwealth Court in Gouwens v. Indiana Township Board of Supervisors (Gouwens II), offers an opportunity to revisit the foundations of PRD regulation and to explore the requirements for the tentative approval of a PRD. See Gouwens v. Indiana Township Board of Supervisors, Nos. 544, 992-994 C.D. 2020, 2021 (Pa. Cmwlth. July 8, 2021), publication ordered (Sept. 7, 2021)(Gouwens II), on appeal following remand of Gouwens v. Indiana Township Board of Supervisors, Pa. Cmwlth., No. 1377 C.D. 2018, (filed June 25, 2019), publication ordered (Sept. 7, 2021) (Gouwens I).

    A PRD is a larger, integrated residential development that may not meet the use and dimensional standards normally applicable in the underlying zoning district. The idea behind PRD regulations is to create a method of approving large developments which overrides traditional zoning controls and permits the introduction of flexibility into their design. PRD...

    October 21, 2021

    EPA’s Proposed New Oil and Gas Methane Requirements: Where We Are and Where We Are Going

    Energy Alert

    (by Mike WinekGary Steinbauer, Gina Falaschi and Christina Puhnaty)

    The U.S. Environmental Protection Agency (EPA) has pledged to issue, within days from now,  proposed new Clean Air Act (“CAA” or “Act”) regulations for methane emissions from the oil and gas sector.  EPA’s forthcoming proposal is expected to broaden the scope of its current methane requirements for new, modified, or reconstructed sources within the oil and gas sector.  In addition, for the first time, EPA will propose nationwide methane emission guidelines for existing sources within the sector that individual states will be responsible for implementing.  As the oil and gas sector awaits the new proposed methane requirements, this Alert summarizes the important and rare developments that have unfolded in the relatively brief history of EPA regulating methane emissions from the oil and gas sector.

    Obama Administration Issues Initial Regulations of Methane Emissions from Oil and Gas Sector.  EPA issued its first set of oil and gas methane-specific emission regulations in 2016 during the Obama administration.  The 2016 regulations amended the then-current new source performance standards (NSPS) and promulgated new standards to directly regulate emissions of methane, as well as volatile organic compounds (VOC), from new, modified, and reconstructed equipment, processes, and activities across the entire oil and gas sector.  The 2016 amendments to the NSPS were codified at 40 C.F.R. Part 60, Subpart OOOOa (Subpart OOOOa).

    Subpart OOOOa included specific limits on methane emissions for new, modified, and reconstructed sources within the production and processing segments of the oil...

    October 8, 2021

    Groups petition for massive increases in oil & gas well bonds

    The PIOGA Press

    (by Kevin J. Garber, Sean M. McGovern and Jean M. Mosites)

    On September 14, the Sierra Club, PennFuture, Clean Air Council, Earthworks and other groups submitted two parallel rulemaking petitions to Pennsylvania’s Department of Environmental Protection (DEP) asking the Environmental Quality Board (EQB) to require full-cost bonding for conventional and unconventional oil and gas wells, for both new and existing wells. The petitions do not address or consider the permit surcharges and other funding mechanisms for plugging wells, including the federal infrastructure bill that is expected to provide millions of dollars to plug abandoned wells.

    Background

    The Pennsylvania General Assembly addressed and increased bonding in 2012. Under Act 13, well owners/operators are required to file a bond for each well they operate or a blanket bond for multiple wells. Currently, the bond amount for conventional wells is $2,500 per well, with the option to post a $25,000 blanket bond for multiple wells. 72. P.S. §1606-E. For unconventional wells, the current bond amount required varies by the total well bore length and the number of wells and is limited under the statute to a maximum of $600,000 for more than 150 wells with a total well bore length of at least 6,000 feet. 58 Pa.C.S. §3225(a)(1)(ii). EQB has statutory authority to adjust these amounts every two years to reflect the projected costs to the Commonwealth of plugging the well.

    Proposed changes to bond amounts

    The petitioners contend that a lack of full-cost bonding has resulted in the abandonment of thousands...

    October 7, 2021

    Now might be time to appeal your commercial real estate assessment

    Smart Business

    (by Sue Ostrowski featuring Peter Schnore)

    COVID-19 has had a dramatic impact across the board, creating economic uncertainty and having an adverse effect on commercial property values that continues to this day. In Allegheny County, effects are perhaps most pronounced in the office market, and in particular in Class B downtown Pittsburgh office space, but no commercial property type with indoor space has been immune, says Peter Schnore, shareholder at Babst Calland.

    “Tenants’ initial response to COVID was a wait-and-see holding pattern with respect to whether they were going to renew leases or move to new space,” says Schnore. “As a result, many landlords have had to dig deep to keep and attract tenants by offering unprecedented periods of free rent or tenant improvement allowances, creating an adverse impact on net operating income. The unknowns surrounding COVID are still affecting nearly all commercial property types, not just office properties.”

    Smart Business spoke with Schnore about how COVID is impacting the value of commercial real estate and why it may be a good idea to review your recent tax assessment.

    What is the current situation for owners of commercial real estate?

    Future uncertainty while we remain in the throes of COVID is driving up risk of commercial property investment, driving down commercial property values. Landlord concessions — in some cases multiple years of free rent or triple-digit tenant improvement allowances — are increasing operating expenses and reducing short-term income, resulting in an immediate and substantial adverse impact on value. As a result, many properties...

    October 1, 2021

    Pittsburgh company dedicated to promoting entrepreneurship receives $250k in federal grant money

    TRIBLive

    JULIA FELTON | Thursday, Sept. 30

    A Pittsburgh-based company dedicated to promoting entrepreneurship will receive $250,000 in funding from the U.S. Department of Commerce.

    The grant is part of a $36.5 million grant pool that benefited 50 entrepreneurship-focused organizations, nonprofits, institutions of higher learning and state government agencies nationwide. The grants were announced Thursday by Assistant Secretary of Commerce for Economic Development Alejandra Y. Castillo.

    The grants are part of the “Build to Scale” program, which aims to accelerate technology entrepreneurship by increasing access to business support and startup capital. The program is administered by the U.S. Economic Development Administration (EDA).

    “The ‘Build to Scale’ program strengthens entrepreneurial ecosystems across the country that are essential in the Biden Administration’s efforts to build back better,” Secretary of Commerce Gina M. Raimondo said. “This work is critical in developing the innovation and entrepreneurship our country needs to build back better and increase American competitiveness on the global stage.”

    Founded in 2002, Idea Foundry is a global investor with over 250 companies and projects in their portfolio.

    The company says it has generated more than $1 billion in economic impact and created more than 1,000 jobs in the region.

    It works to strengthen entrepreneurship in Pittsburgh through a model that emphasizes hands-on development and a variety of investment vehicles that enable entrepreneurs to develop and scale their ideas into growing enterprises.

    It not only helps to match entrepreneurs with capital, but also to help keep them “alive, growing and in Pittsburgh,” said Michael Matesic, Idea Foundry’s president and CEO.

    The company...

    October 1, 2021

    New court ruling relates to retroactivity of flat rate royalty law

    GO-WV News

    by Katrina Bowers 

    In Williams v. EQT Corp., No. 43-2020-C-26 (Ritchie Co. Cir. Ct. W. Va. Aug. 26, 2021), the Honorable Michael D. Lorensen, sitting by appointment in the Circuit Court of Ritchie County, West Virginia (“Court”), entered an Order finding that the 2018 amendments to W. Va. Code § 22-6-8(e) (“Flat Rate Statute”) did not apply retroactively to permits for oil or gas wells (“permits”) issued before the effective date of the amendments to the Flat Rate Statute.

    The plaintiffs, successors in interest to a 1913 lease providing for a flat rate payment of four hundred dollars per year for each and every natural gas well drilled on the leasehold estate (“Lease”), challenged deductions by an operator for severance tax and certain post-production expenses from their royalties.

    The West Virginia Legislature addressed the issue of flat-rate leases in 1982, when it enacted the Flat Rate Statute prohibiting the issuance of permits where the right to produce was based upon a lease providing for a flat-rate royalty, unless the permit applicant submitted an affidavit certifying that it would pay the lessor no less than one-eighth of the total amount paid or received by or allowed “at the wellhead” for the oil and gas extracted, produced, or marketed (“permit procedure for flat-rate leases”). Id. at *5-6.

    In 2017, the Supreme Court of Appeals of West Virginia addressed the payment of royalties pursuant to flat-rate leases and held that royalty payments subject to the Flat-Rate Statute “may be subject to pro-rata deduction or...

    September 20, 2021

    Groups Petition Environmental Quality Board for Full-Cost Bonding for Oil & Gas Well Plugging

    Energy Alert

    (by Kevin GarberSean McGovern and Jean Mosites)

    On September 14, 2021, the Sierra Club, PennFuture, Clean Air Council, Earthworks and other groups (Petitioners) submitted two parallel rulemaking petitions to Pennsylvania’s Department of Environmental Protection (DEP) asking the Environmental Quality Board (EQB) to require full-cost bonding for conventional and unconventional oil and gas wells, for both new and existing wells. The petitions do not address or consider the permit surcharges and other funding mechanisms for plugging wells, including the federal infrastructure bill that is expected to provide millions of dollars to plug abandoned wells.

    Background

    The Pennsylvania General Assembly addressed and increased bonding in 2012. Under Act 13, well owners/operators are required to file a bond for each well they operate or a blanket bond for multiple wells. Currently, the bond amount for conventional wells is $2,500 per well, with the option to post a $25,000 blanket bond for multiple wells. 72. P.S. §1606-E. For unconventional wells, the current bond amount required varies by the total well bore length and the number of wells, and is limited under the statute to a maximum of $600,000 for more than 150 wells with a total well bore length of at least 6,000 feet. 58 Pa.C.S. §3225(a)(1)(ii). EQB has statutory authority to adjust these amounts every two years to reflect the projected costs to the Commonwealth of plugging the well.

    Proposed Changes to Bond Amounts

    The Petitioners contend that a lack of full-cost bonding has resulted in the abandonment of thousands...

    September 16, 2021

    Unemployment Compensation Roundup: Review of Recent Legislation, Cases, and Concerns

    The Legal Intelligencer

    (by Alex Farone)

    The COVID-19 pandemic has broadly affected nearly every state’s unemployment compensation (UC) system in one way or another, and Pennsylvania is no exception. From extended appeal deadlines to an uptick in UC fraud claims, this article sets forth four of the most recent changes or proposed changes to Pennsylvania’s UC system that have arisen due to COVID-19.

  • Appeal Deadlines: Extension and Refresher
  • The process for employees seeking UC benefits can involve several steps and multiple appeals. The first step involves the recently separated employee filing an application for benefits. Applications are processed by one of several UC Service Centers across the Commonwealth. These Service Centers are tasked with making an initial determination on claimants’ applications. The Service Centers’ determinations may be appealed by either the claimant or their former employer to a UC Referee, who will conduct an evidentiary hearing on the merits of the application. The decision of the UC Referee may then be appealed by either party to the UC Board of Review (Board).

    Until recently, applicants and employers had just 15 days to appeal initial determinations and referees’ decisions. On June 30, 2021, Governor Tom Wolf signed Act 30, formerly H.B. 178, into law, extending the time period allowed for appeals of UC Service Center determinations and UC Referee decisions from 15 days to 21 days.

    Act 30 does not impact the deadlines to file appeals with either the Pennsylvania Commonwealth Court or the Supreme Court of Pennsylvania. An appeal to the Pennsylvania Commonwealth...

    September 15, 2021

    EPA and Corps revert back to pre-2015 definition of ‘waters of the United States’

    The PIOGA Press

    (by Lisa Bruderly)

    The U.S. Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers announced, on September 3 that they had halted implementation of the current definition of “waters of the United States” (WOTUS) effective immediately and reverted back to the pre-2015 definition until further notice. The switch follows an August 30 order from the U.S. District Court for the District of Arizona, which remanded and vacated the definition of WOTUS promulgated by the Trump administration in 2020 (commonly referred to as the Navigable Waters Protection Rule (NWPR)) in the case of Pascua Yaqui Tribe v. U.S. Environmental Protection Agency. While there was speculation that the court’s vacatur could be narrowly interpreted to apply only to states where the plaintiffs in the case were located (i.e., Arizona, Minnesota, Washington and Wisconsin), EPA and the Corps are applying the change in WOTUS definition nationwide.

    Importance of the definition of WOTUS

    The definition of WOTUS identifies which waters are federally-regulated under the Clean Water Act (CWA), and therefore determines when a federal permit is required for projects (e.g., pipelines, access roads, well pads) that involve dredging or filling of a waterbody (i.e., a Section 404 permit). The WOTUS definition also affects federal spill reporting and spill prevention planning.

    With regard to Section 404 permitting, the more expansive the definition of WOTUS, the more waters that are federally-regulated. The extent of WOTUS impacts resulting from a project determines whether an individual or a general Section 404 permit is required, with the process...

    September 14, 2021

    Federal Court Certifies Questions to West Virginia Supreme Court of Appeals About Deductibility of Post-Production Expenses and the Viability of Tawney

    The United States District Court for the Northern District of West Virginia has certified questions to the West Virginia Supreme Court of Appeals asking whether the seminal decision in Estate of Tawney v. Columbia Natural Resources, LLC, 219 W.Va. 266, 633 S.E.2d 22 (2006) regarding the deductibility of post-production expenses remains the law of West Virginia, and if so, the proper interpretation of Tawney.

    In Charles Kellam, et al. v. SWN Production Company, LLC, et al., No. 5:20-CV-85, a class action royalty case, the District Court, Judge John Preston Bailey, certified on his own motion whether Tawney remains the law of West Virginia, whether the lease in question allowed the deductions, and the proper application of Tawney.  The District Court certified the questions without ruling on the defendants’ pending Motion for Judgment on the Pleadings which argued the Kellam’s lease complied with Tawney and the District Court was bound by the decision in Young v. Equinor USA Onshore Properties, Inc., 982 F.3d 201 (4th Cir. 2020), where the Fourth  Circuit Court of Appeals reversed Judge Bailey and held a similar lease clearly and unambiguously allowed the deduction of post-production expenses. The Kellam’s lease states the lessee agrees to pay the lessor “as royalty for the oil, gas, and/or coalbed methane gas marketed and used off the premises and produced from each well drilled thereon, the sum of one-eighth (1/8) of the price paid to Lessee per thousand cubic feet of such oil, gas, and/or coalbed methane gas so marketed...