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January 15, 2021
Navigating business continuity in a new era
Pittsburgh Business Times
Nothing highlights the urgent need for business continuity planning like a devastating, prolonged global pandemic.
Without question, this global pandemic has forced businesses, large and small, to face and adapt to a new normal. They've had to deal with state mandated closures, layoffs, employee safety threats, new remote work environments, cybersecurity concerns, supply chain interruptions, real estate lease adjustments, and a myriad of other serious business continuity challenges.
Many of those same issues will haunt the business community this year and possibly beyond, even amidst what one might hope would become a strong post-pandemic period of recovery. And that, said Don Bluedorn, managing shareholder and environmental attorney of Pittsburgh law firm Babst Calland, is why more businesses need to consider a longer-term view of their future - including adaptable disaster plans that take into account business continuity in times of unexpected disruptions.
Bluedorn spoke recently with the Pittsburgh Business Times about business continuity planning.
"This has been a unique year," said Bluedorn, who not only advises businesses but also has had to confront the pandemic himself as chief executive of one of Pittsburgh's largest law firms. "There's an old saw that 'tough times don't last, but tough people and tough businesses do. And I think that's certainly true during this pandemic and the difficult economic construct we all have had to face."
Business Continuity: Pre- and Post-Pandemic
Of course, Bluedorn was quick to point out the importance of ongoing business continuity or disaster planning even without the cloud of a pandemic hovering overhead.
"A SWOT analysis of strengths, weaknesses, opportunities and threats still applies," he said. "But I think people need to look more broadly than that now. Certainly, from my perspective, looking at the legal and regulatory implications that have arisen as a result of the pandemic are critically important. I also...
January 14, 2021
EPA issues draft guidance for ‘functional equivalent’ test for point source discharges to surfacewater through groundwater
The PIOGA Press
(by Lisa Bruderly)
On December 10, the U.S. Environmental Protection Agency (EPA) issued for public comment its draft guidance regarding the U.S. Supreme Court’s County of Maui “functional equivalent” analysis within the Clean Water Act (CWA) National Pollutant Discharge Elimination System (NPDES) program (85 Fed. Reg. 79489). The comment period closed on January 11.
In County of Maui v. Hawaii Wildlife Fund, 140 S. Ct. 1462 (2020), the Supreme Court held that an NPDES permit is required in instances when a point source discharge of a pollutant through groundwater to a navigable water is the “functional equivalent” of a direct pollutant discharge from a point source into a navigable water. Babst Calland discussed the Supreme Court’s April 23, 2020, decision and its far-reaching implications in the May 2020 PIOGA Press article “Potential Clean Water Act liability extends to discharges to groundwater that reach surface water.”
The Supreme Court offered a non-exclusive list of seven factors to consider on a case-by-case basis:
Transit time; Distance traveled; Nature of the material through which the pollutant travels; Extent to which the pollutant is diluted or chemically changed as it travels; Amount of pollutant entering the navigable waters relative to the amount of the pollutant that leaves the point source; Manner by or area in which the pollutant enters the navigable waters; and Degree to which the pollution (at that point) has maintained its specific identity.Emphasis on threshold requirements for NPDES permits
The draft guidance stresses that the County of Maui decision did not change the structure of the NPDES permit program, and, at most, only adds another step in determining whether an NPDES permit is required under a limited number of scenarios. In fact, EPA devotes much of the eight-page draft guidance to discussing the following two threshold conditions that trigger NPDES permitting:
...January 14, 2021
U.S. Fish & Wildlife Service finalizes ‘habitat’ definition under Endangered Species Act
The PIOGA Press
(by Robert Stonestreet)
On December 16, the United States Fish and Wildlife Service adopted a final regulation to define the term “habitat” for use when designating “critical habitat” areas under the Endangered Species Act (ESA). 85 Fed Reg 81411. The ESA already defines the term “critical habitat,” which in general means areas designated as essential to preserve or promote recovery of threatened or endangered species regardless of whether those species are actually present in the area. The term “habitat,” however, is not itself defined in the ESA or pre-existing regulations.
The Service proposed two potential “habitat” definitions in August 2020 for public comment. In the final rulemaking, the Service chose to adopt a “habitat” definition markedly different than the two definitions proposed for public comment back in August. The adopted definition reads as follows:
For the purposes of designating critical habitat only, habitat is the abiotic and biotic setting that currently or periodically contains the resources and conditions necessary to support one or more life processes of a species.
According to the Service, abiotic means “derived from non-living sources such as soil, water, temperature, or physical processes” and the term biotic means “derived from living sources such as a plant community type or prey species.” The preamble portion of the Federal Register entry notes that the phrase “resources and conditions” is intended to clarify that habitat “is inclusive of all qualities of an area that can make that area important to the species.”
Compare that definition to the two definitions proposed for public comment on August 5, 2020, which appear below:
Primary Proposed Definition: The physical places that individuals of a species depend upon to carry out one or more life processes. Habitat includes areas with existing attributes that have the capacity to support individuals of the species.
Alternate Proposed Definition:...
January 14, 2021
President signs law reauthorizing federal pipeline safety program
The PIOGA Press
(by Keith Coyle and Brianne Kurdock)
On December 27, President Donald J. Trump signed the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2020 (2020 PIPES Act) into law. Adopted as part of a broader federal spending and COVID-19 relief package, the signing of the 2020 PIPES Act represents the culmination of a multiyear effort to reauthorize the nation’s federal pipeline safety program. The prior reauthorization of the federal pipeline safety program, enacted in the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (2016 PIPES Act), expired on September 30, 2019.
The 2020 PIPES Act authorizes general funding for the Pipeline and Hazardous Materials Safety Admin - istration’s (PHMSA) gas and hazardous liquid pipeline safety programs of $156.4 million for fiscal year 2021, $158.5 million for FY 2022, and $162.7 million for FY 2023, with additional amounts authorized in each of these fiscal years from the Oil Spill Liability Trust Fund for hazardous liquid pipeline safety and the user fee program for underground gas storage facilities. The 2020 PIPES Act also prescribes specific funding amounts that PHMSA must use for certain activities, including for recruitment and retention of federal pipeline safety personnel, operational expenses, and federal grant programs.
In addition to authorizing funding levels through FY 2023, the 2020 PIPES Act contains several amendments to the federal pipeline safety laws. Some of the key changes are highlighted below.
Title I of the 2020 PIPES Act:
Establishes a new three-year program for advancing pipeline safety technologies, testing and operational practices. Adds an operator’s self-disclosure to the list of factors that PHMSA must consider in assessing administrative civil penalties. Recognizes additional due process protections for PHMSA enforcement proceedings, including that: An operator be allowed to request that matters of fact and law be resolved in a...January 12, 2021
PHMSA Publishes Gas Regulatory Reform Final Rule
Pipeline Safety Alert
(by Keith Coyle and Ashleigh Krick)
On January 11, 2021, the Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency) published a Final Rule amending the gas pipeline safety regulations at 49 C.F.R. Parts 191 and 192. Adopted as part of the Trump administration’s efforts to reduce or eliminate unnecessary regulatory burdens, PHMSA estimates that the Final Rule will result in approximately $130 million in annualized cost savings for pipeline operators. Although the effective date of the Final Rule is March 12, 2021, the Agency provided a deferred compliance date of October 1, 2021, for the new amendments.
Additional information about the Final Rule is provided below.
Distribution Integrity Management Program Exemptions and Farm Taps
Consistent with the policy announced in PHMSA’s March 2019 Exercise of Enforcement Discretion, the Final Rule provides operators with the option to maintain pressure regulating devices on farm taps under either the distribution integrity management program (DIMP) requirements or 49 C.F.R. § 192.740. The Final Rule exempts farm taps originating from unregulated production and gathering pipelines from the DIMP requirements, the overpressure protection inspection requirements in § 192.740, and the annual reporting requirements in Part 191. The Final Rule does not amend PHMSA’s regulations to provide additional clarity in determining what qualifies as a farm tap or where production, gathering, or transmission piping ends and distribution service line piping begins in farm tap configurations. The Agency stated that these definitional issues will be addressed in a guidance document that remains under development or in a future rulemaking proceeding. In the preamble to the Final Rule, PHMSA emphasized that any portion of a farm tap originating from an unregulated pipeline that meets the definition of service line must still comply with all applicable Part 191 and 192 requirements. The Final Rule also exempts master meter...January 4, 2021
Moving Forward: Has your business continuity plan changed for 2021?
Smart Business
(by Sue Ostrowski featuring Donald Bluedorn)
A business continuity plan helps protect your business both today and into the future in a way consistent with your goals and culture. But it’s not just about planning for contingencies this time. The pandemic has changed the way businesses need to approach their plans, says Attorney Donald C. Bluedorn II, managing shareholder at Babst Calland.
“Things are much different than a year ago, and along with business and operational contingencies, companies should review their legal and regulatory risks and opportunities as well,” he says.
Smart Business spoke with Bluedorn about how to ensure your business continuity plan moves your business seamlessly forward.
What changes during the pandemic are now either beneficial or detrimental to Business operations?
Businesses need to reimagine how they operate and create a proactive mindset around challenges the business or industry is facing. Are there any advantages or savings in how you operated last year that are sustainable or should be adopted?
Concerns with significant legal and contractual commitments are likely to emerge. And as people re-enter the physical workplace, or not, there may be employment issues. In addition, new leadership at the federal level could pose legal challenges and create evolving tax issues. In the Western Pennsylvania region, this could result in changes to energy regulations, a risk for some but an opportunity for others. Environmental compliance and regulatory obligations are also likely changing, and trusted advisers can help you navigate these challenges and incorporate them in your plan.
It’s an opportune time to review your plan from a business risk or legal and regulatory perspective. Are vendors fulfilling their commitments and are you fulfilling your own contractual obligations? Look at your real estate needs going forward. Will you need as much space? Will it be configured the same way? If you need to change...
January 4, 2021
President Trump Signs Law Reauthorizing Federal Pipeline Safety Program
Pipeline Safety Alert
(by Keith Coyle and Brianne Kurdock)
On December 27, 2020, President Donald J. Trump signed the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2020 (2020 PIPES Act) into law. Adopted as part of a broader federal spending and COVID-19 relief package, the signing of the 2020 PIPES Act represents the culmination of a multi-year effort to reauthorize the nation’s federal pipeline safety program. The prior reauthorization of the federal pipeline safety program, enacted in the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (2016 PIPES Act), expired on September 30, 2019.
The 2020 PIPES Act authorizes general funding for the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) gas and hazardous liquid pipeline safety programs of $156.4 million for fiscal year (FY) 2021, $158.5 million for FY 2022, and $162.7 million for FY 2023, with additional amounts authorized in each of these FYs from the Oil Spill Liability Trust Fund for hazardous liquid pipeline safety and the user fee program for underground gas storage facilities. The 2020 PIPES Act also prescribes specific funding amounts that PHMSA must use for certain activities, including for recruitment and retention of federal pipeline safety personnel, operational expenses, and federal grant programs.
In addition to authorizing funding levels through FY 2023, the 2020 PIPES Act contains several amendments to the Federal Pipeline Safety Laws. Some of the key changes are highlighted below.
Title I of the 2020 PIPES Act:
Establishes a new 3-year program for advancing pipeline safety technologies, testing, and operational practices. Adds an operator’s self-disclosure to the list of factors that PHMSA must consider in assessing administrative civil penalties. Recognizes additional due process protections for PHMSA enforcement proceedings, including that: An operator be allowed to request that matters of fact and law be resolved...January 1, 2021
Babst Calland Names Three New Shareholders: Ben Clapp, Alyssa Golfieri and Gary Steinbauer
Babst Calland recently named Ben Clapp, Alyssa E. Golfieri, and Gary E. Steinbauer as shareholders in the Firm.
Ben Clapp is a member of the Environmental, Energy and Natural Resources, and Emerging Technologies groups. Mr. Clapp advises clients on the environmental components of complex transactions, including identifying and analyzing significant environmental liability and compliance issues arising in connection with mergers and acquisitions, asset sales, securities offerings, project financings, and corporate restructurings, and works to resolve, manage, allocate or mitigate these environmental risks in the client’s best interest. Mr. Clapp assists buyers, sellers, financing sources, and underwriters in transactions taking place across a wide range of industries, including the upstream, midstream, and downstream oil and gas sectors, renewable energy, real estate, utilities, chemicals, manufacturing, mining, pharmaceuticals, pulp and paper, and food and beverage.
Mr. Clapp is a 2008 graduate, cum laude, of the American University Washington College of Law.
Alyssa E. Golfieri is a member of the Public Sector and Energy and Natural Resources groups. Ms. Golfieri’s practice focuses primarily on municipal and land use law, with an emphasis on zoning, subdivision, land development, and municipal ordinance enforcement. Ms. Golfieri represents the Firm’s municipal clients on a wide array of local government issues, including the preparation of zoning and land development ordinances pursuant to the Pennsylvania Municipalities Planning Code, the processing of land development applications, responses to record requests submitted under the Pennsylvania Right-to-Know Law, navigation of public bidding matters, abatement of property maintenance issues, defense of Notices of Violations before zoning hearing boards and magisterial district judges, and compliance with both the Pennsylvania Sunshine Act and the Pennsylvania Public Official and Employee Ethics Act. Ms. Golfieri has also served as assistant solicitor for several years, and is currently the solicitor for the Borough of Ford City.
Ms. Golfieri is a...
December 23, 2020
Congress Reauthorizes Pipeline Safety Act as Part of Year-End Spending and COVID-19 Relief Package
Pipeline Safety Alert
(by Keith Coyle and Ashleigh Krick)
On December 21, 2020, the U.S. Congress passed the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020 (the Act) as part of a larger year-end spending and COVID-19 relief package. The Act reauthorizes the federal pipeline safety program through September 30, 2023, and establishes annual funding levels for the 2021, 2022, and 2023 fiscal years. The Act also makes other important changes to the federal pipeline safety laws administered by the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency).
The Act requires PHMSA to issue new rules for gas pipeline leak detection and repair programs and idle pipelines, update the operations and maintenance standards for certain large-scale liquefied natural gas facilities, and finalize outstanding rulemakings for gas gathering lines, class location changes, and the definition of unusually sensitive areas. The Act establishes additional due process protections for PHMSA enforcement actions, authorizes a new declaratory order proceeding, and obligates PHMSA to consider an operator’s self-report in assessing a civil penalty. Other noteworthy provisions in the Act include authorizing the implementation of a new pipeline safety testing program, the performance of various research and development studies, and the creation of a National Center of Excellence for Liquefied Natural Gas Safety. Lastly, the Act contains various new requirements for distribution lines in response to the 2018 incident in Merrimack Valley, Massachusetts.
The Act does not include several provisions that Congress proposed in earlier versions of the legislation. For example, the Act does not eliminate PHMSA’s obligation to consider the costs and benefits of changes to the pipeline safety regulations or prohibit the use of direct assessments as part of a pipeline operator’s integrity management program. The Act does not change the mens rea (or mental state) requirement in the...
December 17, 2020
U.S. Fish & Wildlife Service Finalizes “Habitat” Definition under Endangered Species Act
Environmental Alert
(by Robert Stonestreet)
On December 16, 2020, the United States Fish and Wildlife Service (Service) adopted a final regulation to define the term “habitat” for use when designating “critical habitat” areas under the Endangered Species Act (ESA). 85 Fed Reg 81411. The ESA already defines the term “critical habitat,” which in general means areas designated as essential to preserve or promote recovery of threatened or endangered species regardless of whether those species are actually present in the area. The term “habitat,” however, is not itself defined in the ESA or pre-existing regulations. As detailed in the Environmental Alert published on August 10, 2020 (available here), the Service proposed two potential “habitat” definitions on August 5, 2020 for public comment. 85 Fed Reg 47333. In the final rulemaking, the Service chose to adopt a “habitat” definition that is markedly different than the two definitions proposed for public comment back in August. The adopted definition reads as follows:
For the purposes of designating critical habitat only, habitat is the abiotic and biotic setting that currently or periodically contains the resources and conditions necessary to support one or more life processes of a species.
According to the Service, “biotic means derived from non-living sources such as soil, water, temperature, or physical processes” and the term “biotic” means “derived from living sources such as a plant community type or prey species.” The preamble portion of the Federal Register entry notes that the phrase “resources and conditions” is intended to clarify that habitat “is inclusive of all qualities of an area that can make that area important to the species.”
Compare that definition to the two definitions proposed for public comment on August 5, 2020, which appear below:
Primary Proposed Definition: The physical places that individuals of a species depend upon to carry out one or...
December 14, 2020
U.S. EPA Issues Draft Guidance Regarding the “Functional Equivalent” Test for Point Source Discharges to Surface Water Through Groundwater
Environmental Alert
(by Lisa Bruderly and Tim Bytner)
On December 10, 2020, U.S. EPA issued for public comment its draft guidance (Draft Guidance) regarding the U.S. Supreme Court’s County of Maui "functional equivalent” analysis within the Clean Water Act (CWA) National Pollutant Discharge Elimination System (NPDES) program (85 Fed. Reg. 79489). The comment period closes on January 11, 2021.
In County of Maui v. Hawaii Wildlife Fund, 140 S. Ct. 1462 (2020), the Supreme Court held that a NPDES permit is required in instances when a point source discharge of a pollutant through groundwater to a navigable water is the “functional equivalent” of a direct pollutant discharge from a point source into a navigable water. Babst Calland discussed the Supreme Court’s April 23, 2020 decision, and its far-reaching implications, in its May 11, 2020, PIOGA Press article titled “Potential Clean Water Act Liability Extends to Discharges to Groundwater That Reach Surface Water.”
The Supreme Court offered a non-exclusive list of seven factors to consider on a case-by-case basis:
Transit time; Distance traveled; Nature of the material through which the pollutant travels; Extent to which the pollutant is diluted or chemically changed as it travels; Amount of pollutant entering the navigable waters relative to the amount of the pollutant that leaves the point source; Manner by or area in which the pollutant enters the navigable waters; and Degree to which the pollution (at that point) has maintained its specific identity.Emphasis on Threshold Requirements for NPDES Permits
The Draft Guidance stresses that the County of Maui decision did not change the structure of the NPDES permit program, and, at most, only adds another step in determining whether a NPDES permit is required under a limited number of scenarios. In fact, U.S. EPA devotes much of the eight-page Draft Guidance to discussing the following...
December 10, 2020
Implications of the 2020 election for the energy industry
The PIOGA Press
(by Kevin Garber and Jean Mosites)
As of the date of this article, Joe Biden is likely to become the 46th president of the United States. Assuming that stands, the Biden-Harris administration will try to implement dramatically different environmental and energy policies than the Trump administration. Whether Congress enacts many or all those policies depends heavily on the outcome of the two January U.S Senate special elections in Georgia. The Biden administration can impart significant changes through executive orders and agency actions despite the outcome of those elections, while states and regional governmental bodies will continue to play a significant role in shaping policy. This article reviews some of the implications of the 2020 election for the energy industry.
2020 election summary
National elections. Republicans cut into the Democrat’s majority in the House but Democrats still hold a 222-205 margin as of the date of this article. Republicans hold 50 Senate seats to 46 for the Democrats and two for independents pending the outcome of the Georgia special elections for Senate in January. If Democrats pick up both seats, Vice President-Elect Kamala Harris would cast the deciding vote on matters which divide the Senate 50-50. Shelley Moore Capito (R-WV) is likely to succeed John Barrasso (R-WY) as the top Republican on (and possibly become the chair of) the Senate Environmental and Public Works Committee when Senator Barrasso moves on to head the Energy and Natural Resources Committee. Both are positive developments for the energy industry.
Mr. Biden has chosen individuals from non-governmental environmental organizations and academia to lead his transition teams to staff the Environmental Protection Agency, Council on Environmental Quality, the Department of Interior and the Department of Energy. The teams themselves are largely comprised of those of similar background. Notably absent are representatives from the energy industry,...
December 8, 2020
Pennsylvania Opens Public Comment Period for Proposed Revisions to Chapter 105 Regulations
Environmental Alert
(by Lisa Bruderly)
On December 5, 2020, the Pennsylvania Environmental Quality Board (EQB) published in the Pennsylvania Bulletin proposed revisions to more than 30 provisions of the dam safety and waterway management regulations under 25 Pa. Code Chapter 105. The public comment period will remain open until February 3, 2021.
The revisions will significantly amend the Pennsylvania Department of Environmental Protection (PADEP) regulations regarding the permitting of obstructions and encroachments of waters of the Commonwealth under Chapter 105. The proposed revisions are expected to create expansive new requirements, almost certainly increasing the time and effort required to complete individual/joint Chapter 105 permit applications. These new requirements, if promulgated, will also likely increase PADEP application review times, particularly at the outset when the agency and the regulated community are becoming familiar with the new requirements. Additionally, revised compensatory mitigation criteria could expand the extent of mitigation required for a project. On the other hand, the addition of six new permit waivers means that certain projects may no longer be required to obtain a Chapter 105 permit.
According to the public comment notice, other revisions include adding or changing 18 definitions, adding antidegradation and cumulative impact subsections to the applicant information requirements, providing a new option for dam owners to satisfy proof of financial responsibility obligations, amending the wetland replacement criteria regarding compensatory mitigation for unavoidable impacts to aquatic resources, and adding new structures and activities that may be exempt from submerged lands licensing charges.
The proposed revisions to Chapter 105 have been anticipated for more than one year. In anticipation, PADEP solicited input from multiple Commonwealth agencies and commissions. It also consulted its Agricultural Advisory Board, Water Resources Advisory Committee and Citizens Advisory Council. The EQB adopted the proposed revisions on July 21, 2020. The last comprehensive revisions to the wetland permitting...
December 4, 2020
Governor Wolf Paves the Way for New Plastics Recycling and Manufacturing in Pennsylvania
Environmental Alert
(by Matt Wood and Colleen Grace Donofrio)
On November 25, 2020, Governor Tom Wolf signed ACT 127 of 2020 (House Bill 1808), which, when effective on January 24, 2021, will amend Pennsylvania’s Solid Waste Management Act (SWMA) to support advanced plastics recycling operations in the Commonwealth by exempting qualifying operations from the waste management requirements. ACT 127 accomplishes this by amending the SWMA to exempt the conversion of plastics at facilities with advanced recycling processes from the waste “processing” and “treatment” requirements under the SWMA and its implementing regulations. These facilities turn hard-to-recycle plastics (e.g., plastic bags, wrappers, PVC 3, LDPE 4, PP 5, PS 6, Other 7) into useable raw materials and products.
Specifically, ACT 127 amends the SWMA to define:
“Post-use polymers” – post-use plastics from residential, municipal, or commercial sources that would not otherwise be recycled and, when converted using advanced recycling, are not considered waste. “Advanced recycling” – a manufacturing process whereby post-use polymers are converted into basic hydrocarbon raw materials, feedstocks, chemicals, liquid fuels, waxes, lubricants, and other related products. Conversion processes include, but are not limited to, pyrolysis, gasification, depolymerization, catalytic cracking, reforming, and hydrogenation. “Advanced recycling facility” – receives, separates, stores, and converts post-use polymers into raw materials and products.Facilities coming under the exclusion are not regulated as waste “processing” or “treatment” facilities but still need to comply with all other applicable environmental requirements (e.g., air, water). Facilities that only perform a portion of these services (e.g., segregation facilities) do not qualify for the exemption from the waste requirements.
ACT 127 is likely to attract new advanced recycling businesses to Pennsylvania and thereby foster job creation, drive investment and innovation, and create regulatory certainty, with the added benefit of recycling more plastics. Conversely, many of the products developed from the...
December 2, 2020
Fourth Circuit Rules Oil and Gas Lease Allows for the Deduction of Post-Production Costs Pursuant to West Virginia Law
Energy Alert
(by Tim Miller and Katrina Bowers)
The United States Court of Appeals for the Fourth Circuit (Fourth Circuit) has vacated a judgment of the United States District Court for the Northern District of West Virginia that held an oil and gas lease failed to sufficiently indicate the method for calculating post-production costs to be deducted from royalty payments pursuant to West Virginia law. The lease provided that the lessor would bear some part of the post-production costs and contained a detailed list of post-production expenses that were deductible from royalties, but the District Court held the accounting methodology was not sufficiently disclosed. In Young v. Equinor USA Onshore Properties, Inc., No. 19-1334 (4th Cir. Dec. 1, 2020), the Fourth Circuit held that West Virginia law does not require that an oil and gas lease set out an “Einsteinian proof” for calculating post-production costs and, in fact, could be satisfied by a simple formula. In holding that the lease sufficiently indicated the method for calculation in compliance with West Virginia law, the Fourth Circuit explained that the method was to add all the identified, reasonable, and actually incurred post-production costs, deduct them from the lessee’s gross proceeds, and then adjust for the lessor’s share of the total pooled acreage and royalty rate. This opinion also questions the continued viability of the West Virginia Supreme Court’s holding in the Estate of Tawney v. Columbia Nat. Res., LLC, 219 W. Va. 266, 633 S.E.2d 22 (2006) in light of critical comments in a subsequent royalty case decided by the West Virginia Supreme Court in 2017, Leggett v. EQT Prod. Co., 238 W. Va. 264, 800 S.E.2d 850 (2017).
If you have any questions about the Young decision or its impact on the oil and gas industry, please contact Timothy Miller...
November 30, 2020
Showcasing expertise: Virgin’s hyperloop project highlights region’s emerging technology capabilities
Smart Business
(by Sue Ostrowski featuring Moore Capito)
West Virginia scored a huge win when it landed the contract for the high-tech Virgin Hyperloop Certification Center in October. Now the state — and the region, including Pittsburgh — are looking to build on that success.
“We’re hoping this is going to be a jumping off point,” says Moore Capito, a shareholder at Babst Calland who also serves in the West Virginia House of Delegates. “Any time you can lend a huge name like Virgin, it certainly gives the region an increased amount of credibility.”
Smart Business spoke with Capito about what the project means for the region and how its success could attract other big projects — and jobs — to West Virginia and Pennsylvania.
What is the Virgin Hyperloop Project?
In general, a hyperloop is an experimental, next-generation mode of transportation that will transport passengers through a network of under- and above-ground tubes, capable of reaching speeds of 670 mph. The goal is to transform transportation, and the broader economy, so that travel that previously took hours will instead take minutes.
More specifically, the Virgin Hyperloop Project, with substantial investments from Sir Richard Branson and DP World Ports, is headquartered in Los Angeles and has been primarily testing the technology in Las Vegas. As part of its growth, Virgin sought a location for a certification center to serve not only as a venue for moving the technology forward but as a place where they could create a regulatory framework.
Regulations cover other modes of transportation — air, rail, sea, cars, trucks — but hyperloop is a grey area. This center will build out that regulatory framework around this new mode of transportation to certify that it is viable for commercial use.
What does the project entail?
The project is located on 800 acres where, in addition to the center,...
November 19, 2020
FTC Issues Settlement Requiring Zoom to Implement Robust Information Security Program in Response to Years of Deceptive Security Practices
Emerging Technologies Perspective
(by Ashleigh Krick)
On November 9, 2020, the Federal Trade Commission (FTC) announced a settlement agreement with Zoom Video Communications, Inc. (Zoom) that arose from alleged violations that Zoom engaged in a series of deceptive and unfair practices that undermined user security.
The FTC found that Zoom made several representations across its platform regarding the strength of its privacy and security measures used to protect users’ personal information that were untrue and provided users with a false sense of security. Specifically, the FTC found that Zoom made multiple statements regarding “end-to-end” and “AES 256-bit” encryption used to secure videoconference communications. However, Zoom did not provide end-to-end encryption for any Zoom meeting conducted outside of Zoom’s “Connecter” product. And, Zoom used a lower level of encryption that did not provide for the same level of security as “AES 256-bit” encryption. The FTC also found that Zoom stored meeting recordings unencrypted and for a longer period than Zoom claimed in its Security Guide. And, Zoom circumvented browser privacy and security safeguards through software updates without notice to users and without establishing replacement safeguards.
November 12, 2020
Allegheny County and Pittsburgh CROWN Acts Prohibit Hairstyle Discrimination
Employment Alert
(by Alexandra Farone)
At the end of October 2020, the Allegheny County Council and Pittsburgh City Council each passed bills entitled “Creating a Respectful and Open World for Natural Hair Acts,” prohibiting hairstyle-based discrimination in employment, housing, and public accommodations. Protective and cultural hair textures and hairstyles, including braids, cornrows, locs, Bantu knots, Afros, and twists, are now protected under these new laws, known as the CROWN Acts. Employers in Allegheny County should review their dress codes and grooming standards to ensure compliance with the CROWN Acts.
The two CROWN Acts are nearly identical. The Allegheny County CROWN Act defines “hairstyle” as “any characteristic, texture, form, or manner of wearing an individual’s hair if such characteristic, texture, form or manner is commonly associated with a particular race, national origin, gender, gender identity or expression, sexual orientation, or religion.”
The Pittsburgh CROWN Act defines “hairstyle” as “hair texture and styles of hair of any length, such as protective or cultural hairstyles, natural hairstyles, and other forms of hair presentation.” Mayor Bill Peduto submitted the CROWN Act for the City Council’s consideration earlier in October, citing the 2019 report of Pittsburgh’s Gender Equity Commission that found inequities and barriers facing people of color—especially women—in the city regarding their hairstyles and natural hair.
Individuals within the City of Pittsburgh seeking to make claims of discrimination based on hairstyle can report the matter to the City’s Commission on Human Relations, the agency tasked with enforcing the CROWN Act. The Commission has released extensive guidance for information regarding the CROWN Act in the employment, housing, and public accommodation sectors.
If you have any questions about the impact of the CROWN Acts, particularly on your existing personnel policies, please contact Alexandra G. Farone at (412) 394-6521 or afarone@babstcalland.com.
November 10, 2020
PHMSA proposes integrity management alternative for class location changes
The PIOGA Press
(by Keith Coyle and Varun Shekhar)
On October 14, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a notice of proposed rulemaking (NPRM) containing potential changes to the federal gas pipeline safety regulations and reporting requirements. Citing PHMSA’s experience administering special permits, as well as the information provided in earlier studies and from various stakeholders, the NPRM proposed to amend the regulations to allow operators to apply integrity management (IM) principles to certain gas transmission line segments that experience class location changes. Comments on the NPRM are due December 14.
PHMSA relied heavily on the conditions included in class location special permits in developing the proposed rules. The IM alternative only would be available to pipeline segments that experience an increase in population density from a Class 1 location to a Class 3 location, subject to certain eligibility criteria. Operators using the IM alternative would be required to conduct an initial integrity assessment within 24 months of the class location change and apply the IM requirements in 49 C.F.R. Part 192, Subpart O to the affected segment. Operators also would be required to implement additional preventative and mitigative measures for cathodic protection, line markers, depth-of-cover, right-of-way patrolling, leak surveys and valves.
PHMSA’s decision to propose an IM alternative for managing class location changes is a significant step forward for pipeline safety. The class location regulations are based largely on concepts established decades ago, and the pipeline industry long has advocated for an approach that reflects modern assessment tools and technologies. While the NPRM does not necessarily satisfy all of the industry’s objectives, PHMSA’s proposal sets the stage for the next phase of the rulemaking process and potential development of a final rule.
Background
In July 2018, the agency published an advance notice of proposed rulemaking (ANPRM) asking for public...
November 6, 2020
Pa. Amends Minimum Wage Act OT Requirements to Exceed Federal Salary Threshold
The Legal Intelligencer
(by Stephen L. Korbel and Anna Z. Skipper)
With approximately 90,700 minimum wage employees in Pennsylvania, it is of little surprise that that minimum wage laws are a frequent topic of conversation and debate. However, most often, the discussion is limited to the wage itself, and the nuances of the laws governing employee compensation are frequently glossed over. The statutes and regulations setting the minimum wage, the Pennsylvania Minimum Wage Act of 1968 (PMWA), 43 P.S. Sections 333.101 et seq., 34 Pa. A.D.C. Section 231.1 et seq., and the federal Fair Labor Standards Act (FLSA), 29 U.S.C.A. Sections 201 et seq. and 29 C.F.R. Ch. V, Pt. 510 et seq., both do much more than simply establishing a minimum rate of pay, and the other requirements are of no less import to Pennsylvania employers’ legal obligations, liability, or bottom line. This year, while debates over the minimum wage were had at dinner tables and debate stages across the nation, both the Pennsylvania and federal overtime regulations were quietly amended to cover more employees, and thus effect more employers than they ever have before.
Historically, the minimum wage and overtime requirements have always gone hand-in-hand. The FLSA was passed in 1938 to establish minimum standards for workers engaged directly or indirectly in interstate commerce. In addition to establishing a minimum wage, it also established the maximum workweek, overtime pay requirements and more. The PMWA, enacted in 1968, largely mirrors the FLSA, and covers most private employers, including those also subject to the FLSA. Where both the PMWA and FLSA apply, an employer is required to comply with both laws, or the stricter requirement favoring the employee. The PMWA sets the Pennsylvania minimum wage equal to that under the FLSA, and both require nonexempt employees to receive overtime pay equal to one and...
November 2, 2020
Corporate venture capital funds can give companies an edge
Smart Business
(by Sue Ostrowski featuring Sara Antol)
Corporate venture capital (CVC) funds are gaining in popularity as established companies seek a competitive advantage in the marketplace.
“More large public and private companies are investing in startups, frequently with an end goal of making an acquisition,” says Sara Antol, a shareholder at Babst Calland PC.
Smart Business spoke with Antol about the rewards — and challenges — of these investments.
What is the difference between a venture capital fund and a CVC fund?
With a venture capital fund, the fund is formed with the sole purpose of investment and is looking for a positive financial return within a relatively short period of time.
With a CVC fund, an operating company puts funding into a startup, generally in its market space or a space the company wants to enter. It still seeks a financial return, but the investment is more likely strategically driven. The end goal is frequently to eventually acquire the startup, but the CVC fund can hedge its bets by first making an investment.
CVC investors want to know the startup’s strategy and be involved, and they may want a bigger voice than a typical venture fund would expect. The CVC fund generally avoids legal control — it wants the ability to make a difference but not to affect the company’s overall growth curve.
Recent reports have shown that CVC funds have accounted for almost 25 percent of all venture investments in 2020. It could be because technology companies have rebounded during the pandemic, giving them more access to capital. It may be that private equity has pulled back, creating more capacity for CVC investment.
Whatever the reason, it’s becoming more common for forward-thinking companies to make these types of investments as part of their strategy.
What are the challenges of this type of investment?
There can be a struggle between...
October 29, 2020
Financial Sector Initiatives to Combat Climate Change Gather Momentum
The Legal Intelligencer
(by Ben Clapp)
In September, the Market Risk Advisory Committee of the U.S. Commodity Futures Trading Commission (CFTC) issued a significant, yet perhaps under-publicized, report titled “Managing Climate Risk in the U.S. Financial System.” The report identified several key findings, including that: climate change “poses a major risk to the stability of the U.S. financial system and to its ability to sustain the American economy;” “financial markets will only be able to channel resources efficiently to activities that reduce greenhouse gas emissions if an economywide price on carbon is in place at a level that reflects the true social cost of those emissions; and “disclosure of information on material, climate-relevant financial risks … has not resulted in disclosures of a scope, breadth, and quality to be sufficiently useful to market participants and regulators.” CFTC, Managing Climate Risk in the U.S. Financial System at i-iv (Sept. 2020). The report recommends that the U.S. establish a price on carbon that is consistent with the Paris Agreement’s goal of limiting global temperature rise this century to less than two degrees Celsius above pre-industrial levels.
The report is particularly notable for its blunt assessment of the risks posed by climate change to the underpinnings of the U.S. economy, and its conclusion that comprehensive federal climate change legislation is required to mitigate these risks. (For those wondering at the unlikelihood of a report such as this being published by a federal agency in a presidential administration that has demonstrated a marked tendency toward deregulation, the report was not voted on by the commissioners of the CFTC and has been characterized as representing the perspective of private sector committee members.) Other federal agencies have been reluctant to take additional steps to address climate change investment risks. The Securities and Exchange Commission, for example, resisted...
October 27, 2020
Introducing PIPES Tracker – Pipeline Safety Database Tool
Babst Calland and our affiliated Alternative Legal Service Provider, Solvaire, announce the availability of PIPES TRACKER™– the most comprehensive and easy-to-use pipeline safety regulatory database search and tracking tool available on the market today.
Now, pipeline operators finally have an easy way to search and track enforcement cases issued by the Pipeline and Hazardous Materials Safety Administration (PHMSA).
With PIPES TRACKER™ you can:
√ Quickly search and identify cases involving a particular citation
√ Evaluate annual reports on developments and enforcement trends
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√ Track PHMSA cases by citation, region, date, operator name and current status
Unlike our competitors, PIPES TRACKER™ is:
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Explore Solvaire and PIPES TRACKER™ – the only tool developed by former PHMSA attorneys who have first-hand knowledge and experience with the PHMSA enforcement process.
Please contact Brianne Kurdock at (202) 774-7016 or bkurdock@babstcalland.com for a customized demonstration of PIPES TRACKER™.
October 25, 2020
The Courts Are Open, but Will They Enforce Your Noncompete Agreement?
The Legal Intelligencer
(by Molly E. Meacham)
It is a familiar scene to many employers. After searching for the right individual to fill an important position, a promising candidate emerges. The new employee will have top-level access to confidential information and customers, and their offer letter anticipates that the employee will sign restrictive covenants including noncompetition and nonsolicitation agreements as a condition of employment. Current operations are a bit chaotic—including some remote work—so the agreement isn’t provided prior to the first day of employment. The employee knows they will have to sign eventually, but the employer doesn’t press the issue and allows time for the new employee to review the terms. Is this a valid and enforceable restrictive covenant agreement? According to the Pennsylvania Supreme Court’s June 16, decision in Rullex v. Tel-Stream, the answer is no.
A restrictive covenant such as a noncompetition or nonsolicitation agreement is a contract that must be supported by adequate consideration to be enforceable in Pennsylvania. Pennsylvania views starting a new job as sufficient consideration, provided that the agreement is executed at the start of the employment relationship. In Rullex, the subcontractor in question was aware that a non-competition agreement would be required as part of the relationship, in which the subcontractor would be performing cellphone tower work for a telecommunications company. Although the subcontractor was given a copy of the agreement on his first day of work, he was allowed to take time to review it and did not return a signed copy until at least two months later. The subcontractor later performed cellphone tower work for a competitor of the telecommunications company, resulting in a lawsuit seeking to prevent him from working with that competitor or any other competitors of the telecommunications company.
In its decision, the Pennsylvania Supreme Court considered whether these factual circumstances constituted...
October 20, 2020
PHMSA Proposes Integrity Management Alternative for Class Location Changes
Pipeline Safety Alert
(by Keith Coyle and Varun Shekhar)
On October 14, 2020, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a notice of proposed rulemaking (NPRM) containing potential changes to the federal gas pipeline safety regulations and reporting requirements. Citing PHMSA’s experience administering special permits, as well as the information provided in earlier studies and from various stakeholders, the NPRM proposed to amend the regulations to allow operators to apply integrity management (IM) principles to certain gas transmission line segments that experience class location changes. Comments on the NPRM are due December 14, 2020.
PHMSA relied heavily on the conditions included in class location special permits in developing the proposed rules. The IM alternative would only be available to pipeline segments that experience an increase in population density from a Class 1 location to a Class 3 location, subject to certain eligibility criteria. Operators using the IM alternative would be required to conduct an initial integrity assessment within 24 months of the class location change and apply the IM requirements in 49 C.F.R. Part 192, Subpart O to the affected segment. Operators would also be required to implement additional preventative and mitigative measures for cathodic protection, line markers, depth-of-cover, right-of-way patrolling, leak surveys, and valves.
PHMSA’s decision to propose an IM alternative for managing class location changes is a significant step forward for pipeline safety. The class location regulations are largely based on concepts established decades ago, and the pipeline industry has long advocated for an approach that reflects modern assessment tools and technologies. While the NPRM does not necessarily satisfy all of the industry’s objectives, PHMSA’s proposal sets the stage for the next phase of the rulemaking process and potential development of a final rule.
Background
In July 2018, the Agency published an advance notice of proposed rulemaking (