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December 5, 2019

Deferring to U.S. EPA’s Interpretive Statement, Court Finds That Groundwater Discharges are Not Regulated by Clean Water Act

Environmental Alert

(by Lisa Bruderly and Gary Steinbauer)

Another district court has weighed in on the continuing debate as to whether the Clean Water Act (CWA) regulates discharges to groundwater that then flow into a surface water. However, unlike previous decisions, the federal district court in Massachusetts has deferred to EPA’s Interpretive Statement on the subject, 84 Fed. Reg. 16810 (April 23, 2019), as its basis for holding that releases of pollutants to groundwater are categorically excluded from the CWA’s permitting requirements. Conservation Law Foundation v. Longwood Venues & Destinations, Inc., Civil Action No. 18-11821 (D. Mass. Nov. 26, 2019).

The Longwood Venues decision comes less than one month after the U.S. Supreme Court heard oral argument in the County of Maui v. Hawai’i Wildlife Fund matter, a pending case addressing this same subject. With the highly anticipated County of Maui decision expected in the summer of 2020, the decision in Longwood Venues provides defendants in citizen suits with a new basis for contesting alleged CWA liability for discharges that travel through groundwater before reaching a jurisdictional surface water. Neither the United States nor any other party in the Supreme Court’s County of Maui case has argued that EPA’s Interpretive Statement is entitled to deference as a reasonable interpretation of the CWA. Rather, these parties contend that the CWA unambiguously provides that discharges to groundwater are not within its scope.   Reliance on the Interpretive Statement injects new fodder into the ongoing debate and litigation over the scope of the CWA’s National Pollutant Discharge Elimination System (NPDES) permit program.

In Longwood Venues, an environmental group sued the owner of a beach club located in southern Cape Cod, claiming that sanitary wastewater released to the groundwater from the club’s onsite wastewater treatment plant was an unpermitted discharge under the CWA. After undergoing treatment,...

A proactive approach: How to prepare for California’s sweeping privacy law

Emerging Technologies Legal Perspective

(by Justine Kasznica)

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

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

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

How does California’s privacy act work?

The California Consumer Privacy Act of 2018 (CCPA) protects consumers who are residents of California by giving them rights to disclosure, access, deletion, control (opt-out and portability rights) as well as imposing a prohibition on antidiscrimination. It also addresses the data privacy rights of children under the ages of 13 and 16. The CCPA is modeled on the GDPR, articulating similar individual consumer rights (even if their terms differ) and imposing business obligations and enforcement...

November 25, 2019

The Pennsylvania General Assembly Introduces the Pennsylvania Carbon Dioxide Cap and Trade Authorization Act

Environmental Alert

(by Kevin Garber and Jean Mosites)

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

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

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

No Current Authority to Regulate CO2 Emissions

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

No Rulemaking Without Specific Statutory Authority

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

If...

November 22, 2019

A proactive approach: How to prepare for California’s sweeping privacy law

Smart Business

(by Jayne Gest with Justine Kasznica)

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

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

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

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

How does California’s privacy act work?

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

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

The CCPA applies to for-profit entities (and certain nonprofits) that do business...

November 20, 2019

Smarter Produced Water Management Options: Can the Regulatory Landscape Keep Pace?

Natural Resources & Environment

(by Gary Steinbauer and Kevin Garber)

Unconventional natural gas development in the Marcellus and Utica shale plays has seen unprecedented growth since 2012. Ohio, Pennsylvania, and West Virginia are now among the top gas-producing states, with Pennsylvania emerging as the second-largest natural gas producer in 2018, behind Texas. U.S. Energy Information Administration, Natural Gas Marketed Production, www.eia.gov/dnav/ng/ng_prod_sum_a_EPG0_VGM_mmcf_a.htm (last visited Aug. 8, 2019). The historic rise in production comes with increased volumes of produced water and waste streams that must be managed by natural gas operators. Produced water is naturally occurring brine brought up to the surface from the hydrocarbon reservoir during extraction of natural gas. Although the volume of produced water varies by well and formation, produced water is by far the largest water source by volume generated in the gas production process. U.S. Environmental Protection Agency (EPA), Management of Exploration, Development and Production Wastes: Factors Informing a Decision on the Need for Regulatory Action (Apr. 2019), at 3–11, www.epa.gov/sites/production/files/2019-04/documents/management_of_exploration_development_and_ production_wastes_4-23-19.pdf. Many unconventional natural gas operators treat, reuse, and recycle produced water to increase their water usage efficiency, cut down on the costs of disposal, and recover valuable materials.

Implementing the most effective strategy for produced water management requires compliance with a complex web of interrelated federal and state laws, which include state oil and gas-related laws, local laws and ordinances, and environmental laws. This article explores the most commonly used management strategies for produced water in the Marcellus and Utica shale plays in these three states and analyzes the federal and state environmental regulatory regimes governing such management alternatives. It begins by examining the chemical characteristics and volume of produced water from an unconventional natural gas well. It then analyzes the federal and state environmental regulatory landscape for the most common ways that produced water...

November 14, 2019

EPA’s Initiative Against Illegal Aftermarket Parts: Deleting Defeat Devices

Emerging Technologies Alert 

(by Julie Domike and Gina Falaschi)

One of the hottest topics of discussion at the November 12, 2019, National Enforcement Conference held by the American Bar Association’s Section on Environment, Energy and Resources was enforcement concerning aftermarket defeat devices. The Environmental Protection Agency’s (EPA) recent efforts have resulted in a marked upswing in cases – both civil and criminal – against parts manufacturers and installers of the devices, including some entities that are less than obvious targets.

Aftermarket parts are replacement or additional vehicle or engine parts not made by the original equipment manufacturer.  Most aftermarket parts do not violate the Clean Air Act, but some are designed to reduce or eliminate the effectiveness of required emissions controls on vehicles and engines.  These are defeat devices, and there is a market for such devices as they can dramatically increase fuel efficiency or boost engine power.  Among the most common users of these defeat devices are truck fleet owners and the shops that service them.  Many of the recent enforcement cases have been against companies or individuals that produce or install “tuners” - engine control module reprogrammers that disable emission control systems with preloaded software (“tunes”).  These defeat devices are obvious enforcement targets. However, other devices or software could also fall in this category, and therefore liability could extend to other aftermarket suppliers.

EPA’s Enforcement Against Aftermarket Defeat Devices

The EPA released its Fiscal Year 2020 – 2023 National Compliance Initiatives on June 7, 2019.  The memorandum from Assistant Administrator for Enforcement and Compliance Assurance Susan Parker Bodine explains the agency’s selection of “Stopping Aftermarket Defeat Devices for Vehicles and Engines” as a new compliance initiative.  The memorandum emphasizes that the Clean Air Act prohibits “tampering with emissions controls, as well as manufacturing, selling, and installing aftermarket devices intended to...

November 11, 2019

PHMSA proposes allowing liquefied natural gas transport by rail

The PIOGA Press

(by Boyd Stephenson and James Curry)

On October 24, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a notice of proposed rulemaking (NPRM) amending the Hazardous Materials Regulations (HMR) to allow the bulk transport of liquefied natural gas (LNG) in DOT-113C120W (DOT-113) specification railcars.

PHMSA issued the NPRM in response to a petition for rulemaking filed by the Association of American Railroads (AAR). Also, an April 10 Executive Order directed PHMSA to issue a final rule on bulk transportation of LNG by rail by May 2020. Comments on the NPRM are due by December 23.

Over the last decade, the number of LNG facilities and total storage and vaporization capacities have drastically increased. And, according to PHMSA, total liquefaction capacity increased by 939 percent due to new LNG export terminals. With this growth, PMHSA has recognized there may be a need for greater flexibility in the modes of transporting LNG.

While LNG is already authorized for transportation by highway and in maritime vessels, LNG may be transported by railcar only with a special permit from PHMSA or in smaller, portable tanks loaded onto a railcar. However, other cryogenic liquids that are chemically similar to LNG already are authorized to be transported by rail under the HMR.

Currently, there is a pending special permit renewal application to transport bulk LNG in DOT-113 specification railcars using requirements identical to those proposed in the NPRM. The comment period ended August 7, with PHMSA receiving nearly 3,000 comments. The agency has not yet acted on the application.

Proposed changes

In the NPRM, PHMSA proposes to:

• Amend the LNG entry on the Hazardous Materials Table (UN 1972, Methane, refrigerated liquid (cryogenic liquid), 2.1) to allow transportation of bulk LNG in rail tank cars under the terms of 49 C.F.R. § 173.319 • Amend the railcar provisions in...

PHMSA publishes three final rules substantially amending the federal pipeline safety regulations

The PIOGA Press

(by Ashleigh Krick and Boyd Stephenson)

On October 1, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published three long-awaited final rules amending the federal pipeline safety regulations. The first rule amends the federal safety standards for gas transmission lines. The second amends the federal safety standards for hazardous liquid pipelines. The third updates procedures for issuing emergency orders. These rules are summarized below.

Safety of gas transmission pipelines

The gas transmission rule, commonly referred to as the “Mega Rule,” is the first in a three-part series of rules that PHMSA will be issuing to substantially revise the current federal safety standards and establish new requirements for gas pipeline facilities. This rule responds to congressional mandates and National Transportation Safety Board recommendations that arose from the investigation a 2010 gas transmission line incident in San Bruno, California. The rule adopts 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). The rule also amends the integrity management (IM) requirements, establishes requirements for reporting MAOP exceedances, for using inline inspection (ILI) launcher and receivers, as well as related recordkeeping requirements. The rule takes effect on July 1, 2020, but includes staggered compliance deadlines that extend as far out as 15 years.

Materials verification. Operators will be required to conduct destructive and nondestructive tests to verify pipeline attributes when they do not have traceable, verifiable and complete records for such attributes in certain situations, such as MAOP reconfirmation, IM or repair requirements. The new requirements allow for collection of missing pipe attributes over time, whenever a pipeline segment is exposed for maintenance or repairs, until a minimum number of excavations are performed. Gathering and distribution lines are not subject to the new materials verification...

November 6, 2019

PHMSA Publishes Long-Awaited Mega Rule for Gas Transmission Lines: Remaining Rule Topics

Pipeline Safety Alert

(by James CurryKeith Coyle and Brianne Kurdock)

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

Strengthening Assessment Requirements

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

What’s in the Rule?

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

November 1, 2019

Babst Calland A Founding Partner of the Pittsburgh Legal Diversity & Inclusion Coalition

Babst Calland has joined with area law firms, in-house legal departments, and law schools to form the Pittsburgh Legal Diversity and Inclusion Coalition (PLD&IC). The Coalition’s mission is to attract and retain people of all races and backgrounds to Pittsburgh, and assist employers in the legal industry for the purpose of increasing the hiring, retention and inclusion of diverse legal professionals. Managing Shareholder Donald C. Bluedorn serves as an officer on the Coalition’s Board. The firm will work collaboratively with PLD&IC and other member organizations to foster diversity and inclusion in the legal community.

In addition to Babst Calland, other current Coalition members include: Alcoa, Allegheny County Bar Association, Chevron, Duquesne Light Company, FedEx Ground, FHL Bank Pittsburgh, Highmark Health, Mine Safety Appliances, PPG, and U.S. Steel, and 18 other prominent law firms in Pittsburgh.

Click here to view a video with Babst Calland Attorney Bilal Harris, along with other attorneys from member companies and law firms, discussing the legal profession in Pittsburgh and the importance of the Coalition’s work in the city.

October 31, 2019

Wolf Administration Announces Plan to Join Northeast Carbon Market

The Legal Intelligencer

(by Kevin Garber and Hannah Baldwin)

On Oct. 3, Gov. Tom Wolf issued Executive Order 2019-07 signifying his intention for Pennsylvania to join the Regional Greenhouse Gas Initiative (RGGI). The order instructs the Pennsylvania Department of Environmental Protection to “develop and present to the Pennsylvania Environmental Quality Board a proposed rulemaking package to abate, control or limit carbon dioxide emissions from fossil-fuel-fired electric power generators,” by no later than July 31, 2020. The order directs the proposed rulemaking to be “sufficiently consistent with the Regional Greenhouse Gas Initiative (RGGI) model rule,” such that allowances may be traded with holders of allowances from other RGGI states. Under the order, the DEP must also conduct a “robust public outreach process” ensuring the program results in reduced emissions, economic gains, and consumer savings, and must consult with PJM, the regional transmission organization that coordinates the movement of wholesale electricity within Pennsylvania and 12 other states, to promote the integration of the program.

What Is RGGI?

RGGI is the country’s first regional, market-based cap and trade program designed to reduce carbon dioxide emissions from power plants. The program was created through a memorandum of understanding (MOU) signed by the governors of Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York and Vermont on Dec. 20, 2005. The MOU committed the signatory states to propose a carbon dioxide budget trading program for legislative and regulatory approval, by setting the initial base annual emissions cap for each state and providing that each state’s annual allocation would decline by 2.5% each year after 2015. The MOU also provided for the creation of the regional organization, which has an executive board comprised of two members from each signatory state that serves as a forum for collective deliberation, emissions and allowance tracking, and technical support for determining offsets....

PHMSA Proposes Allowing Liquefied Natural Gas Transport by Rail

Transportation Safety Alert

(by Boyd Stephenson and James Curry)

On October 24, 2019, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a notice of proposed rulemaking (NPRM) proposing to amend the Hazardous Materials Regulations (HMR) to allow the bulk transport of liquefied natural gas (LNG) in DOT-113C120W (DOT-113) specification railcars.  PHMSA issued the NPRM in response to a petition for rulemaking filed by the Association of American Railroads (AAR).  Also, an April 10, 2019, Executive Order directed PHMSA to issue a final rule on bulk transportation of LNG by rail by May 2020.  Comments on the NPRM are due by December 23, 2019.

Over the last decade, the number of LNG facilities, and total storage and vaporization capacities have drastically increased.  And, according to PHMSA, total liquefaction capacity increased by 939% due to new LNG export terminals.  With this growth, PMHSA has recognized there may be a need for greater flexibility in the modes of transporting LNG.  While LNG is already authorized for transportation by highway and in maritime vessels, LNG may only be transported by railcar with a special permit from PHMSA or in smaller, portable tanks loaded onto a railcar.  However, other cryogenic liquids that are chemically similar to LNG are already authorized to be transported by rail under the HMR.

Currently, there is a pending special permit renewal application to transport bulk LNG in DOT-113 specification railcars using requirements identical to those proposed in the NPRM.  The comment period ended on August 7, 2019, with PHMSA receiving nearly 3,000 comments.  PHMSA has not yet acted on the special permit application.

Proposed Changes

In the NPRM, PHMSA proposes to:

Amend the LNG entry on the Hazardous Materials Table (UN 1972, Methane, refrigerated liquid (cryogenic liquid), 2.1) to allow transportation of bulk LNG in rail tank cars under the terms...

October 28, 2019

PHMSA Publishes Long-Awaited Mega Rule for Gas Transmission Lines: Recordkeeping Requirements

Pipeline Safety Alert

(by James CurryKeith Coyle and Brianne Kurdock)

This is the third alert in a four-part Babst Calland series on the Pipeline and Hazardous Materials Safety Administration’s (PHMSA or the Agency) final rule amending the federal safety standards for gas pipeline facilities (Rule). PHMSA published the Rule in the Federal Register on October 1, 2019. The first alert reviewed new requirements for materials verification and reconfirmation of maximum allowable operating pressure (MAOP). The second alert provided a summary of the integrity assessment requirements for areas outside of high consequence areas. This alert will summarize the new Part 192 recordkeeping requirements. Finally, Babst Calland will survey the remaining Rule topics.

New Part 192 Recordkeeping Requirements – 49 C.F.R. §§ 192.5, 192.67, 192.205, 192.127, 192.227, 192.517, 192.607, 192.619, and 192.624

At an earlier point in the rulemaking process, PHMSA proposed to establish several new retroactive recordkeeping requirements in Part 192. PHMSA also took the position that all records had to satisfy the reliable, traceable, verifiable, and complete (TVC) recordkeeping standard. A version of this standard was used by the National Transportation Safety Board (NTSB) in its recommendations after the 2010 San Bruno pipeline incident. PHMSA did not propose a definition of the TVC recordkeeping standard but instead referred to the agency’s TVC guidance issued in 2012.

In the Rule, PHMSA made significant changes to its proposed recordkeeping requirements including clarifying that the new recordkeeping requirements are prospective only and removing ‘reliable’ from TVC since that term was never used by the NTSB. PHMSA also drew distinctions in several regulations between the obligations that apply to operators of pipelines installed prior to July 1, 2020, which only require retention of existing records, and those installed after this date, further emphasizing the prospective nature of the new obligations.

What is in the Rule?

New Record Requirements...

October 23, 2019

Final Repeal of the Clean Water Rule: the End or Another Beginning to the Regulatory Patchwork?

Environmental Alert

(by Lisa Bruderly and Gary Steinbauer)

On October 22, 2019, the U.S. Environmental Protection Agency (USEPA) and U.S. Army Corps of Engineers (Corps) published a final rule in the Federal Register repealing the Obama administration’s 2015 rule redefining “waters of the United States” (WOTUS) under the Clean Water Act, typically referred to as the “Clean Water Rule” (CWR).  In addition to repealing the CWR, the final rule will restore the regulatory definition of WOTUS that existed prior to the CWR for the 22 states (including Pennsylvania) where the CWR’s WOTUS definition is currently in effect.  The pre-CWR definition of WOTUS, along with agency guidance, are themselves controversial.  The final repeal rule becomes effective on December 23, 2019.

USEPA and the Corps released a pre-publication version of the final repeal rule on September 12, 2019.  Almost immediately, environmental groups and several states vowed to file lawsuits challenging the final repeal rule.  These lawsuits likely will be heard by multiple federal district courts throughout the country and could seek injunctions preventing the final repeal rule from taking effect.  While the intent of the final repeal rule is to end the existing regulatory patchwork where the CWR’s WOTUS definition currently is in effect in 22 states, the lawsuits challenging the final repeal rule could result in a different regulatory patchwork, further exacerbating the regulatory uncertainty surrounding the application definition of WOTUS.  In an interesting twist, the New Mexico Cattle Growers’ Association filed a lawsuit on October 22, 2019 in a federal district court in New Mexico, challenging the final repeal rule because the pre-CWR WOTUS definition and related agency guidance that it readopts are allegedly unlawful.

Babst Calland discussed the final repeal rule in detail in a previous Environmental Alert and will continue to actively monitor the shifting regulatory landscape involving the definition...

Fundraise with care: The pitfalls of hiring intermediaries to find additional investment

Smart Business

(by Jayne Gest with Sara Antol and Chris Farmakis)

When companies start running out of capital and executives are pulled in a million different directions, they often look to an outside party — a person who is well-connected but is not a licensed broker/dealer — to support the fundraising. The two parties may come to an arrangement where he or she will make introductions, help secure additional investment and only be paid a commission if the financing round successfully closes.

The problem is, this scenario is illegal under the rules of Securities and Exchange Commission (SEC). And the excuse — everyone else is doing it — will not work if you are caught, says Sara M. Antol, shareholder at Babst Calland.

“When it comes to broker-dealer territory, many times businesses do not realize how strict the current regulatory environment is, or how extreme the consequences can be when you violate the law,” she says.

Smart Business spoke with Antol and Christian A. Farmakis, shareholder and chairman of the board at Babst Calland, about fundraising compensation.

How common are these arrangements?

Raising money is difficult — it takes time and can be frustrating. Because fundraising is relationship-driven, it is easy to want to bring in a well-connected person in some capacity. And if a company is on a tight budget, it may seem logical to just pay someone if they have success. However, only registered broker-dealers are allowed to engage in this type of activity. And, it is illegal for persons who have not undergone the steps to be registered to act as brokers.

What is permissible?

A company can work with a finder as a consultant, hired under certain narrowly defined conditions. The company must pay a flat or monthly fee that might include helping the organization develop investment materials and making introductions, without negotiating...

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: Material Verification and MAOP Reconfirmation

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...