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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 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...

September 7, 2021

Infrastructure Bill Includes Substantial New Pipeline Safety Grant Program for Upgrades to Gas Distribution Infrastructure

Pipeline Safety Alert

(by James Curry and Evan Baylor)

If enacted, the Senate Infrastructure Investment and Jobs Act of 20211 (Infrastructure Bill) would provide $1 billion for the newly established Natural Gas Distribution Infrastructure Safety and Modernization Grant Program (Program) to be administered by the Pipeline and Hazardous Materials Safety Administration (PHMSA). The program would offer $200 million in grant funding each year for five years, starting in fiscal year 2022. The funding would be available only to municipal and community owned utilities. Eligible projects would include the repair, rehabilitation, or replacement of natural gas distribution pipeline systems and the acquisition of equipment to improve pipeline safety and avoid economic losses. In choosing projects, PHMSA would consider: (1) the risk profile of applicant’s current pipeline systems, including if they are prone to leaks; (2) whether a project may generate jobs; (3) whether a project may benefit disadvantaged communities; and (4) and how a project would impact economic growth.

If enacted, the $1 billion Program would reflect a substantial expansion of PHMSA’s current grant programs both in terms of the amount of funding available and because it would authorize spending on capital projects.

Given the scope of this program, if it is adopted into law, stakeholders may have practical questions on how PHMSA would implement it. For example, would capital projects funded through the Program trigger NEPA? Or would a Categorical Exclusion apply? Current DOT Categorical Exclusions may not cover projects and PHMSA does not have its own set of Categorical Exclusions.2 Would PHMSA need...

September 7, 2021

EPA and the Corps Revert Back to Pre-2015 Definition of “Waters of the United States”

Environmental Alert

(by Lisa Bruderly)

The U.S. Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers (Corps) announced, on September 3, 2021, that they would halt implementation of the current definition of “waters of the United States” (WOTUS) effective immediately and revert back to the pre-2015 definition until further notice. The switch is the result of an August 30, 2021 order from the U.S. District Court for the District of Arizona in the case of Pascua Yaqui Tribe v. U.S. Environmental Protection Agency, 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)). 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 have changed the 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 that involve dredging or filling of a waterbody (i.e., a Section 404 permit) or the discharge of pollutants into a surface water (i.e., a NPDES 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 caused by a project determines whether an individual or a...

September 1, 2021

How to prevent employees from stealing — and detect theft if they are

Smart Business 

(by Sue Ostrowski featuring Kevin Douglass)

You’ve just discovered someone is stealing from your company. Worse yet, what if a high-level person — a partner, an owner, a director or an officer — is involved?

“Particularly if the theft involves a substantial amount of money, an accomplice outside of your business, or if criminal investigatory agencies are involved, you should consult with an attorney about how best to interact with authorities, respond to possible subpoenas, conduct an internal investigation and craft a consistent message to employees and customers,” says Kevin Douglass, a shareholder at Babst Calland.

Of course, every employee with access to company financials poses a risk, and every company should take steps to protect itself.

Smart Business spoke with Douglass about how to keep your business from falling prey to a theft — and what to do if it happens anyway.

How can a company protect its assets?

Employees with the greatest access to the company’s finances are in the best position to take advantage. The easiest way to prevent stealing is to ensure that there are checks and balances built into your company’s financial system, regardless of the trust you have in employees or colleagues responsible for managing that system.

The easiest way to do that is to require that more than one person monitor the company’s cash flow, including approval or review of checks, credit and debit card usage, petty cash and invoicing. If that is not possible, consider an audit every couple of years by an independent accounting firm and provide...

August 19, 2021

Keith Coyle Gives Testimony on the Environmental and Economic Benefits of Pipelines

Pennsylvania House Environmental Resources and Energy Committee Hearing

In his testimony on August 17, 2021 at the Pennsylvania House Environmental Resources and Energy Committee public hearing on the Environmental and Economic Benefit of Pipelines, Babst Calland Attorney Keith Coyle, chairman of the Marcellus Shale Coalition's Pipeline Safety Workgroup, explains, "As long as we are relying on fossil fuels to produce power, we need pipelines to deliver them safely. ...It’s pretty clear we are going to be relying on natural gas and petroleum for some time. There is no other way to do this safely and to move product in bulk besides these pipelines.”

To view the video of the full public hearing of the House Environmental Resources & Energy Committee on the Environmental and Economic Benefits of Pipelines, click here.

August 19, 2021

Privilege under Texas Audit Act Not Applicable in Federal Court

Environmental Alert

(by Julie Domike)

An August 10, 2021 decision by Judge Michael J. Truncale of the U.S. District Court for the Eastern District of Texas may upend assumed privilege for documents and studies gathered as part of an environmental self-audit in Texas. The Order on Motion to Quash Subpoena, Sierra Club v. Woodville Pellets, LLC, No. 9:20-cv-178, 2021 WL 3522443 (E.D. Tex. Aug. 10, 2021) addressed the subpoena for stack test reports sought by the Sierra Club in a Clean Air Act enforcement case against the wood pellet manufacturing facility in Woodville, Texas.

Background

On August 18, 2020, Sierra Club filed a complaint under the citizen suit provisions of the federal Clean Air Act, alleging that Woodville Pellets, LLC had violated the statute by emitting unpermitted amounts of air pollutants from its facility. The matter will be tried before a jury in November; during discovery, the Sierra Club sought reports of stack testing that Trinity Consultants conducted as part of a facility audit under Texas law. Failing to receive the documents from Woodville Pellets, the Sierra Club served a subpoena on Trinity, which is not a party to the litigation, seeking these and other documents. Woodville and Trinity moved to quash the subpoena on the grounds that the documents sought are privileged under the Texas Environmental, Health, and Safety Audit Privilege Act (Audit Act) and this prevents their production.

The Decision

The Court accepted that the stack tests were done as part of an audit under the Audit Act, which extends a privilege to...

August 19, 2021

Three Babst Calland Attorneys Named as 2022 Best Lawyers® “Lawyers of the Year”, 31 Selected for Inclusion in The Best Lawyers in America©, and 13 Named to Best Lawyers® “Ones to Watch”

Babst Calland is pleased to announce that three lawyers were selected as 2022 Best Lawyers “Lawyer of the Year” in 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 2022 Best Lawyers “Lawyer of the Year” include:

Kevin K. Douglass, Natural Resources Law “Lawyer of the Year” in Pittsburgh, Pa.

Mark D. Shepard, Bet-the-Company Litigation “Lawyer of the Year” in Pittsburgh, Pa.

Robert M. Stonestreet, Environmental Law “Lawyer of the Year” in Charleston, W. Va.

In addition, 32 Babst Calland lawyers were selected for inclusion in the 2022 Edition of The Best Lawyers in America (by BL Rankings), the most respected peer-review publication in the legal profession:

  • Chester R. Babst – Environmental Law, Litigation – Environmental
  • Donald C. Bluedorn II – Environmental Law, Water Law, Litigation – Environmental
  • Dean A. Calland – Environmental Law
  • Matthew S. Casto – Commercial Litigation
  • Frank J. Clements – Corporate Law
  • Kathy K. Condo – Commercial Litigation
  • James Curry – Oil and Gas Law
  • Julie R. Domike – Environmental Law, Litigation – Environmental
  • Kevin K. Douglass – Natural Resources Law
  • Christian A. Farmakis – Corporate Law
  • Kevin J. Garber – Environmental Law, Natural Resources Law, Energy Law, Water Law, Litigation – Environmental
  • Norman E. Gilkey – Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law, Litigation – Bankruptcy, and Mediation
  • Steven M. Green – Energy Law
  • Lindsay P....

August 19, 2021

New Legislation Providing for Deployment of Small Cell Wireless Facilities Becomes Effective August 29th

The Legal Intelligencer

(by Krista Staley and Anna Jewart)

On June 30, 2021, Governor Tom Wolf signed Pennsylvania House Bill 1621, the Small Wireless Facilities Deployment Act as Act 50 of 2021 (“Act 50”), into law. This Act reflects years of negotiations between industry groups and municipalities over the balance of local land use authority and ease of deployment in small cell infrastructure deployment.  Effective August 29th, the Act standardizes the local permitting process for small cell facilities located within municipal rights-of-way.

As demand increases exponentially for faster and more reliable wireless service, so does the demand to develop infrastructure capable of providing greater coverage and capacity.  A decade ago, a single large cell tower on the outskirts of town could meet a community’s wireless voice and data service needs.  However, the reliability of these large “macro cell” wireless facilities has decreased as mobile data traffic exploded. The telecommunications industry responded by developing “small cell networks” distributed throughout communities and buildings to better meet to the constant on-the-go data needs of the modern age.  Instead of utilizing a single tower, possibly hundreds of feet high, small cell networks use multiple low-power antennas that connect to fiber optic cables. These small cell systems allow for greater speeds and more uniform coverage where they are deployed. However, they require a greater level of “wireless density” in order to function as intended.  In other words, small cell facilities must be installed every few blocks rather than every few miles.

To achieve the desired wireless density...

August 17, 2021

Regional Developments

The PIOGA Press

This is another excerpt from The 2021 Babst Calland Report, which represents the collective legal perspectives of Babst Calland’s energy attorneys addressing the most current business and regulatory issues facing the oil and natural gas industry. The full report is available online at reports.babstcalland.com/the-2021-babst-calland-report-1.

Appalachian Storage Hub

As has been chronicled in earlier editions of this white paper, the explosive growth of natural gas production from the Marcellus and Utica shale formations in the Appalachian region starting in 2010 produced strong economic gains for West Virginia, Pennsylvania and eastern Ohio for several years.

In addition, much of that gas is relatively “wet”— meaning that it has a high proportion of natural gas liquids (NGLs) such as ethane, propane, butanes and natural gasolines (pentanes) that are used as petrochemicals in various manufacturing industries. Regional leaders, seeking to capitalize on the vast natural gas resources of those shales, began to stress the importance of developing local businesses that use NGLs—rather than allowing plastics manufacturing and other uses to accrue in other areas.

In 2017, the American Chemistry Council published a report suggesting that the buildout of the petrochemical industry in Appalachia could support the construction of as many as five ethane crackers. Among other factors, the report described that a key to the development of petrochemical manufacturing presence in the area would be the establishment of an Appalachian Storage Hub (ASH) that would act as a conduit for the production and sale of NGLs, storing massive quantities of the liquids and...

August 16, 2021

Medical Marijuana in the Workplace, Part 4: Recent Cases Add No Clarity to the Law

The Legal Intelligencer

(by John McCreary)

This is the latest installment of the author’s obsessive examination of Pennsylvania’s Medical Marijuana Act (MMA) and the employment law issues it creates. By this point in our examination, it is now established, at least in the trial courts of the Commonwealth, that the MMA created a private cause of action for medical marijuana users claiming that an employer has discriminated against them because of their medical marijuana use. See e.g., Judge William J. Nealon’s comprehensive opinion in  Palmiter v. Commonwealth Health Systems, No. 19-CV-1315, 2019 Pa. Dist. & Cnty. Dec. LEXIS 12307 (Lackawanna Cty. 2019); Hudnell v. Thomas Jefferson University Hospitals, Inc., 2020 U.S. Dist. LEXIS 176198; 2020 WL 5749924 (E.D. Pa. 2020)(citing Palmiter). See 35 P.S. § 10231.2103(b)(“No employer may discharge, threaten, refuse to hire or otherwise discriminate or retaliate against an employee … solely on the basis of such employee’s status as an individual who is certified to use medical marijuana …”)(emphasis supplied).

In a surprising development (at least to the author), however, Commonwealth Court construed the emphasized language in a manner favorable to employers who continue to enforce “zero tolerance” and similar drug policies. In Harrisburg Area Community College v. PHRC, 245 A.3d 283 (Pa.Cmwlth. 2020) (HACC) a nursing student with a valid medical marijuana prescription was expelled from the nursing program after testing positive for marijuana metabolites. She brought a claim before the Pennsylvania Human Relations Commission (PHRC) for disability discrimination against HACC under the Pennsylvania Human Relations Act’s (PHRA) public...

August 9, 2021

Biden Administration Sets Target of 50% EV Sales Share by 2030 and Announces New Emissions and Fuel Efficiency Regulations

Environmental Alert

(by Julie Domike and Gina Falaschi)

On August 5, 2021, President Biden signed an Executive Order on Strengthening American Leadership in Clean Cars and Trucks (Executive Order).  The White House signing event included American automakers Ford, GM, and Stellantis, as well as the United Auto Workers (UAW), demonstrating support for the president’s Build Back Better agenda and investment in U.S. leadership in electric vehicles and batteries, manufacturing, and jobs.  In conjunction with the signing of this Executive Order, the United States Environmental Protection Agency (USEPA) and United States Department of Transportation (USDOT) announced coordinated notices of proposed rulemaking that are intended to roll back the previous administration’s emissions and fuel economy regulations.

Executive Order

The Executive Order sets a new target to make half of all new vehicles sold in 2030 zero-emissions vehicles, including battery electric, plug-in hybrid electric, or fuel cell electric vehicles.  The Executive Order also directs USEPA to initiate a rulemaking to establish new vehicle and engine emissions standards, including for greenhouse gas emissions.  The Administration instructs the agency to set the following:

  • New emissions standards, including for greenhouse gas emissions, for light- and medium-duty vehicles for model years (MY) 2027 through at least MY 2030, by no later than July 2024;
  • New nitrogen oxides standards for heavy-duty engines and vehicles beginning with MY 2027 and extending through and including at least MY 2030, by no later than December 2022; and
  • New greenhouse gas emissions standards for heavy-duty engines and vehicles to begin as...

August 5, 2021

Pennsylvania Department of Environmental Protection Releases PFAS Sampling Data and Proposes Drinking Water Standards for Two “Forever” Chemicals

The Legal Intelligencer

(by Matt Wood)

Over the past few months, Governor Tom Wolf’s administration, the Pennsylvania Department of Environmental Protection (DEP), and other governmental stakeholders, have made strides toward better understanding and addressing contamination of state waters with perfluoroalkyl and polyfluoroalkyl substances (PFAS).  Specifically, recent sampling efforts of certain public water systems (PWSs) and surface waters have resulted in new information about the prevalence of PFAS in state waters and have informed DEP actions toward regulating certain PFAS compounds.

Public Water Source Sampling

On June 3, 2021, the Wolf administration released sampling results from an approximately two-year long statewide effort to sample PWSs for certain PFAS compounds.  PFAS are a group of manmade chemicals used in numerous industrial, commercial, and consumer products.  Prominent examples include non-stick and waterproofing applications and as chemical components of fire fighting foams.  In recent years, PFAS chemicals have been discovered in the environment, including in groundwater (some used as drinking water sources), and in humans, plants, and animals and some studies suggest that PFAS can negatively affect human health.  Because they do not break down naturally in the environment (including in the human body), they are commonly called “forever” chemicals.

In September 2018, Governor Wolf created via Executive Order a PFAS Action Team to investigate and address potential PFAS concerns in the Commonwealth.  The Action Team, made up of agency heads from multiple Pennsylvania agencies, subsequently developed a plan to sample PWSs for PFAS.  Specifically, the Action Team identified PWSs within a half-mile of potential PFAS sources (such...

August 4, 2021

Force majeure: Why these contract provisions are drawing new scrutiny

Smart Business 

(by Sue Ostrowski featuring Kate Cooper)

“With the pandemic, our clients suddenly cared a lot about whether their contracts included a force majeure provision, what it said, what it meant and how it could be interpreted,” says Cooper.

Smart Business spoke with Cooper about force majeure provisions and how approaches to them are changing.

What are force majeure provisions?

Force majeure provisions govern the conduct of both parties if unexpected or unforeseeable events result in a party being unable to deliver on the terms of the contract, with an emphasis on the unforeseeable. They’re designed to cover unexpected events and potentially allow you to delay delivering on a contract. But the provisions are not a get-out-of-jail free card, and in most circumstances, they do not let a party to a contract completely off the hook.

The disruption to the supply chain caused by the pandemic and government shutdowns has drawn renewed attention to these clauses. For example, when suppliers couldn’t deliver to their customers, those disruptions had a knock-on effect down the supply chain. Companies aiming to avoid breaching their contracts were hopeful that their force majeure provisions would provide them with relief. However, many were disappointed to find that what they wanted to do — whether that be delay performance obligations, or even terminate the contract entirely — wasn’t permitted by the language of the specific provisions set forth in their contracts.

How is the conversation regarding force majeure changing?

It will be difficult to argue that the pandemic is an unforeseeable event now...

August 2, 2021

Donald C. Bluedorn II Elected as an Active Fellow to The American College of Environmental Lawyers

The American College of Environmental Lawyers (ACOEL)

Babst Calland Managing Shareholder Donald C. Bluedorn II was recently elected as an Active Fellow to The American College of Environmental Lawyers for 2021.

The American College of Environmental Lawyers announced that this year it has elected 22 new Active Fellows and two Honorary Fellows to membership in the College. Each individual was selected for his or her distinguished experience, high standards of practice and substantial contributions to the field of environmental law.

ACOEL President, Mary Ellen Ternes, partner with Earth & Water Law, LLC, stated, “The 22 lawyers elected as Fellows to the College represent the best environmental lawyers in government service, public interest, academia, and private practice from across the country. Our new Fellows have earned this recognition based on their career achievements and as leaders in the broad and diverse areas of environmental law and policy. Our Honorary Fellows have distinguished themselves for their substantial contributions as leaders in thought and action regarding Environmental Justice.“

ACOEL Press Release

July 22, 2021

Litigation, land use and trends in local ordinances

The PIOGA Press

This article is an excerpt from The 2021 Babst Calland Report, which represents the collective legal perspectives of Babst Calland’s energy attorneys addressing the must current business and regulatory issues facing the oil and natural gas industry. The full report is available online at reports.babstcalland.com/the-2021-babst-calland-report-1.

Pennsylvania royalty cases

In two recent cases litigated by Babst Calland, courts applying Pennsylvania law reaffirmed that operators were entitled to deduct post-production costs from royalty payments based on lease language containing references to “at the wellhead” provisions. On April 28, 2021, the Court of Common Pleas of Butler County in Dressler v. PennEnergy Resources considered this issue where the lease provided that the gas royalty was to be paid based on “gas sold at the well.” The court held that phrase equated to “at the wellhead” language, which mandates using the net back method for calculating royalties―thus justifying post-production cost deductions.

A nearly identical decision was rendered by the United States District Court for the Western District of Pennsylvania less than two weeks later in Coastal Forest Resources Co. v. Chevron USA, Inc. There, the district court held that the lease’s royalty provision containing “at the wellhead” language had to be broadly interpreted to also allow for post-production cost deductions. Both cases relied on the Pennsylvania Supreme Court’s decision in Kilmer v. Elexco Land Servs., Inc., where “at the wellhead” was defined, to justify their holdings. It is likely that the two decisions will help temper further royalty litigation on the propriety of...

July 22, 2021

PHMSA issues advisory bulletin on minimizing natural gas releases from pipeline facilities

The PIOGA Press

(by Ashleigh Krick)

On June 7, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued an advisory bulletin (ADB) reminding owners and operators of gas and hazardous liquid pipeline facilities of a self-executing mandate from the “Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020” (PIPES Act of 2020).

Statutory mandate

The mandate, codified at Section 114(b) of the PIPES Act of 2020, provides that by December 27, 2021, “each pipeline operator shall update the inspection and maintenance plan prepared by the operator under section 60108(a) of title 49, United States Code, to address the elements described in the amendments to that section made by .”

Section 114(a) of the PIPES Act of 2020 added to 49 U.S.C. § 60108(a) that, in deciding on the adequacy of an inspection and maintenance plan, PHMSA or a certified state authority must consider the extent to which the plan will contribute to “eliminating hazardous leaks and minimizing releases of natural gas from pipeline facilities” and “the extent to which the plan addresses the replacement or remediation of pipelines that are known to leak based on the material (including cast iron, unprotected steel, wrought iron, and historic plastics with known issues), design, or past operating and maintenance history of the pipeline.”

Additionally, Section 114(a) added to 49 U.S.C. § 60108(a) that inspection and maintenance plans must “meet the requirements of any regulations promulgated under section 60102(q).” Section 60102(q) is a new rulemaking mandate from Section 113 of the PIPES Act of 2020...

July 19, 2021

Pennsylvania Public Utilities Commission Proposes Significant Changes to the Hazardous Liquid Pipeline Safety Regulations

Pipeline Safety Alert

(by Keith Coyle and Ashleigh Krick)

On July 15, 2021, the Pennsylvania Public Utilities Commission (PA PUC) issued a Notice of Proposed Rulemaking Order (NOPR) proposing to change the regulations applicable to public utilities that transport petroleum products and other hazardous liquids in Pennsylvania.  The NOPR follows an Advanced Notice of Proposed Rulemaking (ANOPR) that the PA PUC published on June 29, 2019, seeking comments on an expanded regulatory framework for hazardous liquid public utilities.  The proposed regulations go beyond the minimum federal pipeline safety regulations in 49 C.F.R. Part 195 and would impose significant new requirements on public utilities in Pennsylvania.

Below is a summary of the significant items from the proposed regulations.  Public utilities in Pennsylvania that transport hazardous liquids should carefully review the proposed regulations, the potential impact to their operations, and provide comments to the PA PUC accordingly.  Comments will be due 60 days from the date the NOPR is published in the Pennsylvania Bulletin.

Reporting (§ 59.133-59.134)

  • Proposes to require that an operator provide an unredacted failure analysis report based on laboratory testing and root cause analysis to the PA PUC within 120 days of a reportable accident or within 10 days of report completion, whichever comes first. If the reports are not completed within those timeframes, the public utility must provide updates to the PA PUC every 14 days. The analyses must be conducted by a PA PUC-approved independent third-party lab and consultant.
  • In addition to the requirements in 49 C.F.R. Part 195, Subpart B,...

July 8, 2021

Federal Court rules on WV royalty statute

GOWV News

(by Jennifer Hicks)

The United States District Court for the Northern District of West Virginia recently held that a 2018 amendment to W. Va. Code § 22-6-8 (the “Flat Rate Statute”) “clearly does not apply retroactively.” Although the Supreme Court of Appeals of West Virginia has not yet addressed this issue, this federal court decision is indicative of how the highest court in West Virginia may answer the question raised by plaintiffs in royalty litigation across West Virginia: Does the 2018 amendment apply retroactively to alter the way royalties are paid for wells drilled on a flat rate lease before May 31, 2018?

In Corder v. Antero Resources Corporation, Civil Action No. 1:18-cv-30 (N.D. W.Va. May 12, 2021), the Court analyzed several issues related to the payment of oil and gas royalties pursuant to various royalty provisions. One of the leases at issue was what is commonly referred to as a “flat rate” lease, under which the lessee was required to pay “$100 per year for each and every gas well obtained on the premises”

Flat rate leases are governed in West Virginia by W. Va. Code § 22-6-8, which was originally enacted in 1982 and first amended in 1994, to require that no permit for a flat rate well would be issued unless the lessee swore by affidavit that it would pay the lessor no less than one-eighth of the total amount paid to or received by or allowed to the lessee at the wellhead for the oil and...

July 7, 2021

Report: Energy Sector in Limbo over Permitting, ESG and Climate Policies

Joseph Markman Hart Energy

The Babst Calland law firm’s annual report includes a chat with Sen. Joe Manchin and an assessment of the impact of President Biden’s government-wide climate approach.

President Joe Biden’s ambition to entirely wean the U.S. from fossil fuels by 2035 is “unattainable, not doable,” Sen. Joe Manchin (D-W.Va.) told a Babst Calland law firm panel during a recent webinar. The recording is included in the firm’s annual energy industry report, released June 30.

“There’s no way that we can eliminate our way to a cleaner climate,” the chairman of the Senate Committee on Energy and Natural Resources said, noting that the country could not make a sufficient worldwide difference because other countries will not follow its lead in cutting oil, gas and coal from the global energy mix. “Not going to happen.”

In its report, Pittsburgh-based Babst Calland focused on how the oil and gas industry, recovering from the economic impacts of the COVID-19 pandemic, is at an inflection point as it awaits the full impact of President Joe Biden’s climate-centric policies and the emergence of ESG (environmental, social and governance) concerns in investing decisions.

Manchin told the attorneys he was concerned about the federal permit approval process, and how the sluggish system could hinder the oil and gas industry’s—and the country’s—ability to build the infrastructure necessary to put the energy transition into effect. The senator has supported legislation to speed the permitting process.

“I don’t know any other way to get it done,” Manchin said. “We might not live long enough to see...

July 2, 2021

Pennsylvania DEP Releases New PFAS Sampling Data and Proposes Additional Actions to Address “Forever” Chemicals

Environmental Alert

(by Matt Wood)

On June 3, 2021, the Wolf administration released the complete results of sampling for perfluoroalkyl and polyfluoroalkyl substances (PFAS) by the Pennsylvania Department of Environment Protection (PADEP) from certain public drinking water systems located throughout the Commonwealth.  PFAS, a “family” of manmade chemicals in use since the 1940s, have myriad applications in consumer, commercial, and industrial products.  More recently, PFAS have been discovered in various environmental media (e.g., drinking water sources), plants, animals, and humans.  Due to their persistence in the environment – they do not tend to break down naturally – PFAS have been called “forever” chemicals and some research suggests that exposure to PFAS can cause various adverse health effects.

Originally initiated in June 2019, the PADEP-led sampling effort targeted public drinking water systems within a half mile of potential PFAS sources (e.g., manufacturing, fire training, and military facilities).  PADEP also sampled outside of the half-mile radius of potential sources to establish a baseline.  Samples collected in 2019 were analyzed for six PFAS chemicals, but those collected in 2020 and 2021 were analyzed for 18 PFAS chemicals using U.S. Environmental Protection Agency (EPA) Method 537.1 (updated November 2018).  As part of the 2020 and 2021 sampling events, PADEP resampled the 2019 sites in order to obtain additional occurrence data.

Of the 18 PFAS chemicals analyzed from the 412 total samples, only eight were found at the sampled sites: PFOS, PFOA PFNA, PFHxS, PFHpA, PFBS, Perfluorohexanoic acid (PFHxA), and Perfluoroundecanoic acid (PFUnA).  PFOA and PFOS were...

July 1, 2021

Guidance on steps to protect your business against cyberattacks

Smart Business 

(by Sue Ostrowski featuring Ashleigh Krick)

Recent high-profile cybersecurity breaches have highlighted how vulnerable even the largest businesses are to disruption. But even the smallest of businesses face risks, says Ashleigh Krick.

“Organizations may think they are not at risk and do not have valuable information, but they should think again,” says Krick, an associate at Babst Calland. “It does not matter what information you have when a hacker just wants money. It’s not just about data; it’s also about shutting down your business to force you to pay a ransom.”

Smart Business spoke with Krick about steps every business can take to protect itself.

How have recent cyberattacks drawn attention to the vulnerability of businesses?

Recent cyberattacks on Colonial Pipeline and JBS Foods have demonstrated the cyber vulnerabilities of even our nation’s most critical industries. In May, Colonial Pipeline fell prey to a ransomware attack, forcing it to halt transportation of gasoline and other fuels on the largest refined products pipeline on the East Coast. The effect was felt by everyone along the East Coast, as disruption to gasoline supply caused consumer panic and gasoline prices to skyrocket.

Not a month later, JBS Foods, the world’s largest processor of fresh beef and pork, was attacked by ransomware, causing its plants to shut down and rendering the business incapable of processing meat. We are still seeing effects from that, which could disrupt the U.S. market and international markets.

In the aftermath of these attacks, the federal government became immediately involved in how businesses were responding to...

June 30, 2021

The 2021 Babst Calland Report Highlights Legal and Regulatory Perspectives at a Transformational Time for the U.S. Energy Industry

Babst Calland published its 11th annual energy industry report: The 2021 Babst Calland Report – Legal & Regulatory Perspectives for the U.S. Energy Industry. Each of our nation’s energy sectors is impacted by local, state and federal policies, many of which are addressed in this inclusive report on legal and regulatory developments for the energy industry in the United States.

This edition features commentary from Senator Joe Manchin (D-WV), Chairman of the U.S. Senate Energy and Natural Resources Committee, who spoke with Babst Calland energy clients at a special briefing on June 25, 2021. A link to the webinar recording is available in this Report.

To request a copy of The 2021 Babst Calland Report, click here.

The Babst Calland Report represents the timely collective perspectives of more than 45 energy attorneys on the current state of the U.S. natural gas and oil, coal, and renewable energy sectors. For the first time, this Report is presented as an easy-to-navigate digital site featuring 12 sections, addressing the following key topics:

  • Business Outlook for the U.S. Energy Industry
  • Climate Change Initiatives from the Biden Administration
  • Pipeline & Hazardous Materials Safety Administration Priorities
  • Environmental Law Developments
  • Environmental Justice Issues
  • Appalachian Basin Regional Developments
  • Coal Mining Regulatory Changes
  • Expansion of the U.S. Renewable Energy Market
  • Real Estate & Land Use Developments
  • Litigation Trends
  • Changes in Employment & Labor Law
  • Emerging Technologies Affecting the Energy Industry

Joseph K. Reinhart, shareholder and co-chair of Babst Calland’s Energy and Natural Resources Group, said, “The energy industry, once again, is...

June 23, 2021

Commonwealth Court Considers Municipal Boundary Disputes

The Legal Intelligencer

(by Blaine Lucas and Anna Jewart)

This past May, a curio story made international news when a Belgian farmer moved a stone monument on his property by approximately 7.2 feet.  While this typically would have remained unknown, except to the farmer and perhaps to his neighbor, the farmer did not consider that the stone had been placed in 1819 to mark his home country’s border with France, and moving it resulted in an approximate 3,000 square foot loss of territory for the French.  Luckily, the change in location was quickly caught and resolved without international incident.  The quick discovery and resulting amicable resolution between the two nations was made possible in large part because the local Belgian municipality, Erquelinnes, had geo-localized the stones in 2019 for its 200th anniversary and knew exactly where it should have been.  A few days after the story went viral, the Pennsylvania Commonwealth Court addressed what happens when municipalities here misplace their historic markers and later disagree over the location of their common boundaries.  In Woodward Twp. Mun. Corp. of Clinton County, Pa. v. Dunnstable Twp. Mun. Corp. of Clinton County, Pa., Nos. 704 C.D. 2020, 733 C.D. 2020 (Pa. Cmwlth. May 12, 2021), disagreement over boundary stones and surveys dating back to 1844 resulted in a modern-day battle of the experts to determine exactly where the shared boundary of the two townships actually lies.

Although it was avoided by the farmer in Erquelinnes, wars and lawsuits are often fought over the...