May 12, 2022

Commonwealth Court continues to reject validity challenges to zoning ordinances authorizing oil and gas development

PIOGA Press

(By Blaine Lucas and Anna Jewart)

What is a “substantive validity challenge?”

Under Pennsylvania law, the question of where certain uses are permitted to occur is fundamentally a local issue. By delegation of the police power through the Municipalities Planning Code, 53 P.S. §§10101 et seq., local governments are vested with the power to adopt zoning ordinances and zoning maps outlining what uses are allowed in what areas within their boundaries. Zoning ordinances are presumed to be valid, and the decision as to where specific uses are permitted is largely within the discretion of the local governing body.

A party challenging the substance of a zoning ordinance bears a heavy burden of proving the provisions are “arbitrary, and unreasonable, and have no substantial relationship to promoting its public health, safety, and welfare.” When reviewing these types of challenges, courts are required to balance the public interest to be served with the confiscatory or exclusionary impact of the ordinance on individual property rights. Although property owners frequently challenge the substantive validity of ordinances they feel are too confiscatory, objectors have also challenged ordinances for being too permissive of a certain use―alleging that they fail to have the required connection to public health, safety or welfare.

Act 13, Robinson II and challenges under the ERA

In 2012, the Pennsylvania General Assembly enacted Act 13, a comprehensive update to the former Oil and Gas Act. Shortly thereafter, the Pennsylvania Supreme Court was tasked with considering the impact of the Article I, Section 27 of the Pennsylvania Constitution, known as the Environmental Rights Amendment (ERA) on Act 13,

May 6, 2022

Factors That Can Trip-Up A Deal

Smart Business Dealmakers

(By Adam Burroughs featuring Kevin Wills)

Around 2019, Edward Saxon, CEO of Conco Systems, and his four siblings were running the business as equal partners when they recognized it was nearing time for a change.

“All of a sudden we woke up one day and realized we are all in our 60s and the runway was getting short,” Saxon says. “And first I said, ‘I’ll be happy to go. I’ve been running it. You guys can have a shot.’ They got together and said, ‘We don’t want the shot.’ Two of them wanted to go and do their own thing.’”

Having heard stories of deals run without professional help that fell apart, Saxon decided to enlist the help of an investment banker. That was a big help, he says, because not only do they bring buyers to the table but they do a lot of work getting the business prepared, putting a CIM (confidential information memorandum) together, helping owners understand where the real value is in their business and adding value beyond what the owners recognize.

Kevin Wills, an attorney with Babst, Calland, Clements and Zomnir, says when someone is looking to sell a business, one of the first things they should do is look into the potential impediments to doing a deal. That could include a shaky organizational structure, a complicated cap table, issues with unanimous consent, any convertible notes that need to be dealt with, or any rights of refusal.

“A fundamental transaction, like the sale of the business, usually triggers rights in people that aren’t operating day-to-day, and you don’t always think of those people,” Wills says. “So, if you got a family-run business with three family members mainly running it but the next generation of grandkids have trusts that are already in there and they have to consent to everything,

May 2, 2022

How business owners can protect data and enhance security

Smart Business

(By Sue Ostrowski featuring Justine Kasznica and Ember Holmes)

Every business, no matter how big or small, faces the risk of a cyberattack.

“If you are on the internet or have networked assets — and almost every business does — you are at risk,” says Justine Kasznica, a shareholder in Babst Calland’s Emerging Technologies, Corporate and Commercial, Mobility, Transport and Safety, and Energy and Natural Resources groups. “The current geo-political climate and the Russia-Ukraine war underscore the paramount importance of cybersecurity to our national security, as Russia has threatened to counter any action the U.S. may make in support of Ukraine with cyberattacks.”

Adds Ember Holmes, an associate in the Corporate and Commercial and Emerging Technologies groups of Babst Calland, “It is prudent that all business owners assess their current situation regarding cybersecurity threats, address areas that are lacking and shore up policies.”

Smart Business spoke with Kasznica and Holmes about the Biden administration’s response to the threat, and how business owners can minimize risk and stay compliant with regulatory requirements.

Who should be concerned about cyber threats?

Threats to cybersecurity impact every business, and ignoring these is irresponsible and dangerous. Small business owners may not think they are at risk, but they are often perceived as not having the resources larger businesses have, making them targets of malevolent attacks. This is especially true for businesses storing or processing personal or sensitive information.

There are also regulatory issues. Small businesses may be prevented from working in certain industries or with certain customers if their systems don’t meet compliance requirements.

How can a business reduce the risk of cyberattacks?

April 29, 2022

Gina Falaschi Selected to 2022 Super Lawyers Rising Stars in Washington, DC

Babst Calland Attorney Gina Falaschi, selected to Super Lawyers, part of Thomson Reuters, Rising Stars for 2022. Based in the Firm’s Washington, DC office, she provides legal services for issues involving Environmental law. Only a few attorneys from each state are selected to Super Lawyers designation for any given year. The multi-factor selection process includes independent research, peer nominations and evaluations, as well as professional achievement in legal practice.

April 22, 2022

Overcoming obstacles in tech innovation

Pittsburgh Business Times

(By Justine Kasznica)

Attorney Justine Kasznica would be the first to admit that she moved to Pittsburgh to take a chance on an apparent regional business renaissance driven by a promising technology sector. Over time, the region hasn’t disappointed.

“It’s an incredibly exciting time to be in this region and to be an attorney working with emerging technologies,” said Kasznica, who quickly would find her way into the center of Pittsburgh’s technology universe and help drive significant industry growth as part of a flourishing entrepreneurial ecosystem here.

“We are absolutely capturing a moment in history in this tri-state region,” she said. “To be able to experience the outputs of the efforts of the technologists across the region and to be part of the investor and adviser teams who are helping them grow is as rewarding as it is exciting.”

Today, Kasznica serves as a shareholder of Pittsburgh law firm Babst Calland, leading the firm’s emerging technologies group and serving on the front lines of a local industry sector that has gained global recognition while also facing its share of business and legal challenges. Babst Calland is one of the Pittsburgh region’s largest law firms.

Kasznica recently shared her insights on Pittsburgh’s burgeoning tech sector, from opportunities to greatest challenges, with the Pittsburgh Business Times as part of the law firm’s ongoing “Business Insights” interview series. The series is produced in partnership with the Pittsburgh Business Times.

Universities, R&D, and entrepreneurial support

So what has made the region’s tech sector – sometimes referred to as Pittsburgh’s innovation economy – so strong and thriving, even compared to the likes of California’s Silicon Valley?

April 22, 2022

Commenters Raise Questions About EPA’s Methane, VOC Proposal

The American Oil & Gas Reporter

(By Gary Steinbauer)

The U.S. Environmental Protection Agency’s highly anticipated November 2021 Clean Air Act proposal regulating methane and volatile organic compound emissions from the oil and gas sector has drawn a reported 400,000 individual comment submissions. EPA seeks to use the methane proposal to expand VOC and methane emissions regulations that apply to new, modified and reconstructed sources within the crude oil and natural gas production sector, which the agency promulgated in 2012 and 2016. In addition, the methane proposal includes the first nationwide methane emissions guidelines for existing oil and gas sector sources.

It is no surprise EPA’s proposal has received a significant number of comments, especially considering the agency’s relatively brief and tumultuous history of regulating oil and gas methane emissions under the CAA. Feedback on the proposal differs considerably. Many commenters, primarily those representing the oil and gas industry and certain states, have raised serious legal concerns and question the proposal’s technical aspects and the propriety of several of its key components.

On the other hand, commenters from other states, local governments and environmental groups urge EPA to impose even more stringent requirements, beyond those included in the methane proposal. Several key themes and legal issues emerge from these comments and it seems worthwhile to highlight some of the potentially pivotal legal issues raised by commenters, including those related to EPA’s proposed community-based monitoring program.

Legal Issues

The numerous legal issues commenters raise about the methane proposal range from foundational questions about whether the CAA allows EPA to regulate methane emissions from the oil and gas in this manner to legal concerns about the way EPA proposes to regulate specific sources.

April 21, 2022

DEP Seeking Public Comments on Revised Environmental Justice Policy by May 11th

Environmental Alert

(by Sean McGovern and Evan Baylor)

On March 12, 2022, the Pennsylvania Department of Environmental Protection (Department) shared an updated draft of the Environmental Justice Policy (Draft EJ Policy) for public comment. Among the many changes, the Draft EJ Policy expands the role of the Office of Environmental Justice (OEJ), creates new requirements for unconventional oil and gas, and creates new enforcement priorities for the Department. The Department is accepting comments on the Draft EJ Policy through May 11th.

Pennsylvania’s Environmental Justice Policy

The OEJ oversees environmental justice initiatives and policies in the state. The primary goal of the OEJ is to increase communities’ environmental awareness and involvement in the Department’s permitting process. In 2004, the Department created the Environmental Justice Public Participation Policy (EJ Policy) to provide citizens in environmental justice communities enhanced public participation opportunities during certain Department permit application processes. The EJ Policy is a critical part of the Department’s environmental justice initiatives, providing guidelines for the Department’s approach to public engagement for permit application reviews in environmental justice areas as defined under the current EJ Policy.

In 2018, the Department circulated a draft revision to the current EJ Policy for public comment. Ultimately, the Department withdrew the proposed draft revisions after public comments were received, and the current 2004 version of the EJ Policy remained in effect. The Department continued to evaluate revisions to the EJ Policy and, in 2021, the Department proposed to update the policy by incorporating, refining, and expanding upon the withdrawn 2018 revisions. On March 12, 2022, the Department released the Draft EJ Policy for a 60-day public comment period with several public meetings and informational webinars.

April 20, 2022

PHMSA Publishes Final Rule with New Valve Installation and Rupture Detection Requirements for Gas, Hazardous Liquid, and Carbon Dioxide Pipelines

Pipeline Safety Alert

(by Keith Coyle and Chris Kuhman)

On April 8, 2022, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a final rule in the Federal Register introducing new valve installation and rupture detection requirements for certain onshore gas, hazardous liquid, and carbon dioxide pipelines (the Final Rule).  PHMSA issued the Final Rule in response to National Transportation Safety Board recommendations and congressional mandates from the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (2011 PIPES Act), as well as related studies prepared by the Government Accountability Office and Oak Ridge National Laboratories.  Below is a summary of the key changes that the Final Rule makes to PHMSA’s regulations.

Rupture Mitigation Valves

The Final Rule prescribes new rupture mitigation valve (RMV) installation requirements for certain onshore gas and hazardous liquid transmission and gathering pipelines.  An RMV is defined as an automatic shut-off valve (ASV) or remote-control valve (RCV) “that a pipeline operator uses to minimize the volume of gas released from the pipeline and to mitigate the consequences of a rupture.”

Operators are required to install RMVs on certain pipeline segments with diameters of six inches or greater that are constructed or “entirely replaced” after April 10, 2023.  “Entirely replaced” is defined for these purposes as replacing two or more miles, in the aggregate, of any contiguous five miles of pipeline during a 24-month period.  However, the RMV installation requirements only apply to entirely replaced pipelines if the addition, replacement, or removal of a valve is part of the replacement project.  The RMV installation requirements also do not apply to any gas pipeline segments in Class 1 or Class 2 locations that have a potential impact radius (PIR) of 150 feet or less.

April 21, 2022

Court Continues to Reject Validity Challenges to Oil and Gas Development

Legal Intelligencer

(By Anna S. Jewart and Blaine Lucas)

In 2013, the Pennsylvania Supreme Court rendered its ground-breaking decision in Robinson Township v. Commonwealth, (Robinson II), in which a three-justice plurality relied on  the Pennsylvania Environmental Rights Amendment, Article I, Section 27 of the Pennsylvania Constitution (ERA) to invalidate certain provisions of Act 13 (the General Assembly’s 2012 comprehensive update to the former Oil and Gas Act) limiting the authority of local governments to regulate oil and gas development. This decision triggered a wave of challenges from objectors who argued local ordinances are substantively invalid where they fail to place sufficient restrictions on oil and gas uses or allow them in allegedly incompatible zoning districts. To date, these types of claims have been consistently rejected by local zoning hearing boards, the Common Pleas Courts and the Commonwealth Court. Extensive case law following Robinson II makes it clear that where oil and gas development occurs is squarely within the purview of local zoning authority, while how it occurs is a state regulatory matter. The Supreme Court’s decisions in Gorsline v. Fairfield Township, 186 A.3d 375 (Pa. 2018), and Robinson IV, 147 A.3d 536 (Pa. 2016), and several Commonwealth Court decisions including Frederick v. Allegheny Township Zoning Hearing Board, 196 A. 3d 677 (Pa. Cmwlth. Ct. 2018), Delaware Riverkeeper Network v. Middlesex Township Zoning Hearing Board, No. 2609 C.D. 2015 (Pa. Cmwlth. 2019) and Protect PT v. Penn Township, No. 1632 C.D. 2018 (Pa. Cmwlth. Nov. 14, 2019), appear to have laid to rest any lingering doubts concerning a municipality’s authority to allow oil and gas uses within its boundaries. 

April 21, 2022

Bruce Rudoy Elected to the Fellows of the American Bar Foundation

Babst Calland is pleased to announce that Bruce F. Rudoy has been elected a Fellow of the American Bar Foundation (ABF). Membership is limited to just one percent of lawyers licensed to practice in each jurisdiction. Members are nominated by their peers and selected by the ABF Board.

The ABF Fellows is a global honorary society that recognizes attorneys, judges, law faculty and legal scholars whose public and private careers have demonstrated outstanding dedication to the highest principles of the legal profession and to the welfare of their communities. ABF Fellows hail from nearly 40 countries and hold a wide variety of influential roles.

Mr. Rudoy is a shareholder and co-chair of Babst Calland’s Energy and Natural Resources and Renewables groups and Land and Energy Title Department. Mr. Rudoy concentrates his practice in the areas of Oil and Gas, Renewable Energy, and the associated business transactions, corporate and real estate law. He counsels various clients on title, transaction and regulatory matters. Those matters are diverse and include title issues and opinions, purchase and sale of assets and equity, due diligence examination and analysis. Transactional matters related to energy contract matters include Joint Ventures, Farm-Outs and Farm-Ins, Power Purchase Agreements, Equipment Supply Agreements, EPC Contracts, Offtake Agreements, leases and licensing, secured lending, and litigation related to all of the foregoing. Mr. Rudoy is also a member of the Firm’s board of directors.

Mr. Rudoy is admitted to practice in Pennsylvania, Alaska, Kentucky, New Mexico, North Dakota, Ohio, Oklahoma, Texas, West Virginia and Wyoming. He is also a member of the bar associations in each of those states. He graduated from Pennsylvania State University in 1987 with a B.S. in Finance. He attended the London Metropolitan University (formerly City of London Polytechnic) in London,

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