Articles, Newsletters & Advisories

August 18, 2019

The Legal Intelligencer

(by Stephen Antonelli and Carly Loomis-Gustafson)

In mid-June, in a unanimous opinion, the Pennsylvania Supreme Court articulated a new work product doctrine waiver analysis in BouSamra v. Excela Health, No. 5 WAP 2018 (Pa. June 18, 2019). While the decision will be seen as a victory for corporate defendants in that it provides clarity concerning waiver of the attorney work product doctrine related to communications and consultations with third parties in anticipation of litigation, it should also be read as a cautionary tale in support of continued mindfulness in dissemination of privileged information.

The decision stems from a discovery dispute in a defamation case commenced by Dr. George R. BouSamra against Excela Health Westmoreland Regional Hospital and others. BouSamra filed suit after another cardiologist affiliated with Excela accused BouSamra and his colleague, Dr. Ehab Morcos, of regularly overestimating arterial blockages and, as a result, performing improper and medically unnecessary stenting. As part of an attempt to manage potential public relations issues stemming from the results of two peer review studies related to the accusations, Excela’s in-house counsel forwarded an email containing privileged information that it had received from outside counsel to a member of a third-party public relations firm, who then forwarded the email to other members of the firm.

After noticing the emails between Excela and its public relations firm on Excela’s privilege log, BouSamra filed a motion to compel production of the emails. A special master assigned by the trial court determined that Excela had not waived any privileges. The trial court sustained BouSamra’s exceptions to the special master’s recommendation, noting that the third-party was not an agent of Excela’s counsel. It therefore concluded that the attorney-client privilege had been waived. Neither the trial court nor the special master discussed waiver of the work product doctrine. On appeal,...

August 16, 2019

Environmental Alert

(by Christopher (Kip) Power and Robert Stonestreet)

On August 12, 2019, the federal District Court for the Southern District of West Virginia (Judge Irene C. Berger) entered an order dismissing a lawsuit filed by the Sierra Club and other organizations (Citizen Groups) seeking to halt operations under a mining permit issued to Republic Energy, LLC (Republic) by the West Virginia Department of Environmental Protection (WVDEP).  Coal River Mountain Watch, et al. v. Republic Energy, LLC, Civil Action No. 5:18-cv-01449, S.D. W.Va. (Memorandum Opinion and Order, August 12, 2019). The Citizen Groups had sought to bring an end to mining under the permit because operations were not initiated until 2018, even though the permit was originally issued by the WVDEP in June 2008.  Pursuant to W.Va. Code § 22-3-8(a)(3) (a part of WVDEP’s approved program under the federal Surface Mining Control and Reclamation Act of 1977, 30 U.S.C. §1201, et seq. (SMCRA)), a mining permit terminates if mining activities under it are not initiated within three (3) years of its issuance, unless extended by the WVDEP.  The company that previously held the Republic mining permit never requested such an extension.  The WVDEP, however, granted an extension of the permit at issue in February 2012, after the agency had notified the permit holder of the expiration of the three-year limit and provided that company with an opportunity to seek a late (retroactive) extension.  After the permit was transferred to Republic, it sought and received a further extension in 2015 on the basis of financial hardship, which the Court noted “is not a recognized statutory justification for an extension.”

Before filing the federal civil action, the Citizen Groups had filed an administrative complaint about the situation with the federal Office of Surface Mining Reclamation and Enforcement (OSM), which is the oversight...

August 15, 2019

Bab© st Calland is pleased to announce that five lawyers were selected as 2020 Best Lawyers "Lawyer of the Year" in the Pittsburgh, Pa. and Charleston, W. Va. (by BL Rankings). Only a single lawyer in each practice area and designated metropolitan area is honored as the "Lawyer of the Year," making this accolade particularly significant.

Receiving this designation reflects the high level of respect a lawyer has earned among other leading lawyers in the same communities and the same practice areas for their abilities, professionalism, and integrity. Those named to the 2020 Best Lawyers “Lawyer of the Year” include:

Donald C. Bluedorn II, Environmental Law “Lawyer of the Year” in Pittsburgh, Pa. – In addition to the "Lawyer of the Year" award, Donald Bluedorn was also listed in the 2020 Edition of The Best Lawyers in America in Environmental Law, Litigation – Environmental, and Water Law.

Kevin J. Garber, Energy Law "Lawyer of the Year” in Pittsburgh, Pa. – In addition to the "Lawyer of the Year" award, Kevin Garber was also listed in the 2020 Edition of The Best Lawyers in America in Environmental Law, Natural Resources Law, Energy Law, Water Law, and Litigation – Environmental.

Blaine A. Lucas, Litigation – Land Use and Zoning "Lawyer of the Year” in Pittsburgh, Pa. – In addition to the "Lawyer of the Year" award, Blaine Lucas was also listed in the 2020 Edition of The Best Lawyers in America in Energy Law, Land Use and Zoning Law, Municipal Law, and Litigation – Land Use and Zoning.

Timothy M. Miller, Oil and Gas Law "Lawyer of the Year” in Charleston, W.Va. – In addition to the "Lawyer of the Year" award, Timothy Miller was also listed in the 2020 Edition of The Best Lawyers in America in Energy Law, Oil and Gas Law, Commercial Litigation, Bet-the-Company Litigation,...

August 9, 2019

The PIOGA Press

(by Robert Max Junker)

The argument that the Pennsylvania Constitution compels municipalities to classify natural gas extraction from shale formations as a “heavy industrial use” and therefore mineral development cannot occur in agricultural and rural residential zoning districts was roundly rejected by both the Commonwealth Court and the Supreme Court in the case of Frederick v. Allegheny Township Zoning Hearing Board, 196 A.3d 677 (Pa. Cmwlth. 2018) (en banc), appeal denied, ___ A.3d ___ (Pa., No. 449 WAL 2018, filed May 14, 2019). Nevertheless, opponents of natural gas development continue to be undeterred and refuse to give up this mantra. Attacks on municipalities’ legislative decisions on where natural gas development is appropriate within their own borders are still playing out in several Western Pennsylvania communities, with opponents seeking just one judicial decision that will breathe life into this moribund concept. With the June 26 decision from the Commonwealth Court in Delaware Riverkeeper Network v. Middlesex Township Zoning Hearing Board, No. 2609 C.D. 2015 (Pa. Cmwlth. June 26, 2019) (unreported decision), this tenuous theory was put on life support and yet its few remaining proponents stubbornly refuse to acknowledge the inevitable demise.

Middlesex Township is a rural community in Butler County. In 2014, the Board of Supervisors enacted a zoning ordinance amendment to expressly provide for the use and regulation of oil and gas operations within the township. The board decided that oil and gas well site development should be a permitted use by right in the rural residential, agricultural, residential agricultural and the restricted industrial districts; should be allowed as a conditional use following a public hearing in the commercial districts; and should not be permitted in certain other districts.

R.E. Gas Development, LLC applied for and received a zoning permit authorizing construction and operation of a well site...

August 1, 2019

The Legal Intelligencer

(by Jean Mosites and Matthew Wood)

Editor’s note: Author Jean M. Mosites of Babst, Calland, Clements & Zomnir represents MSC in this litigation. Matthew C. Wood, an associate with the firm, reported on the decision.

On July 22, the  Pennsylvania Commonwealth Court  issued an opinion addressing an industry trade group’s challenges to parts of the state’s unconventional well regulations (25 Pa. Code § 78a). The regulations impose obligations on the development of natural gas wells in unconventional formations such as the Marcellus Shale and Utica. In 2016, petitioner, the Marcellus Shale Coalition, (MSC) challenged specific portions of the new regulations governing public resources, area of review, on-site processing, well development and centralized impoundments, site restoration, spill remediation and waste reporting. Following its August 2018 decision largely invalidating the public resource provisions challenged in count one of MSC’s petition, and oral argument on the remaining counts in October 2018, the court’s en banc panel decided applications for partial summary relief by MSC and respondents, the Department of Environmental Protection (DEP) and the Environmental Quality Board (EQB).

In its petition, MSC contended that the DEP and EQB lacked statutory authority to adopt the rules, that the new regulations conflicted with current law and were unconstitutional special laws, and that the new regulations were unreasonable. The agencies largely countered that they derived their authority from multiple statutory sources and that the new regulations were necessary for the protection of the environment.

The court reviews the challenges to regulations under the three-part standard articulated in Tire Jockey Services v. Department of Environmental Resources, 915 A.2d 1165, 1187 (Pa. 2007). Under Tire Jockey a regulation is valid if it was adopted within the agency’s granted power, issued pursuant to proper procedure, and is reasonable. Respondents moved for partial summary judgment only on the first part of the...

July 31, 2019

Mobility, Transport & Safety Practice Leader Tim Goodman interviewed NHTSA’s Christopher Perry, the agency's chief legal officer for enforcement, on regulatory oversight, recalls and safety standards at ACI’s annual Automotive Product Liability Litigation Conference in Chicago on July 19. Chris Perry described NHTSA’s regulatory approach as promoting communication and innovation, including in AV technology, while maintaining NHTSA’s mission of safety.

For more information, click here.

July 30, 2019

Law360

(by Keith Coyle)

The Gas Pipeline Advisory Committee, or GPAC, the federal advisory committee that reviews the U.S. Pipeline and Hazardous Materials Safety Administration’s gas pipeline safety rulemaking proposals, met in Washington, D.C., late last month to consider proposed changes to PHMSA’s regulations for onshore gas gathering lines. Driven by recent developments in the oil and gas industry, particularly the expansion of pipeline infrastructure in the nation’s shale plays, PHMSA published a notice of proposed rulemaking in April 2016 that contained significant amendments to the federal safety standards and reporting requirements for rural gas gathering lines.

While the Trump administration had signaled a willingness to pursue a more measured approach, the GPAC largely endorsed the prior administration’s position, a decision that could ultimately produce a final rule with far-reaching impacts for the industry. According to PHMSA’s latest estimates, the GPAC’s recommended proposal would make about 90,000 miles of additional gas gathering lines subject to the agency’s gas pipeline safety standards. The Trump administration’s alternative would only extend the agency’s gas pipeline safety standards to about 25,000 miles of additional gas gathering lines greater than 12 inches in diameter.

The GPAC’s decision to back more ambitious rules for rural gas gathering lines could represent a dramatic turning point for the industry. Most of the nation’s gas gathering infrastructure has remained outside the reach of PHMSA’s jurisdiction for decades, due to a long-standing statutory exemption and the absence of sufficient safety data to justify federal regulations.

But the emergence in recent years of larger-diameter, higher-pressure gas gathering lines in the nation’s shale plays has raised concerns about the need for new safety standards and reporting requirements. Whether those concerns warrant the expansive rules contemplated by the GPAC, which would extend PHMSA’s safety standards to approximately 32,000 miles of 8-inch-diameter gas gathering lines in sparsely...

July 26, 2019

Smart Business

(by Jayne Gest with Justine Kasznica and Timothy Goodman)

At times, automated vehicles (AV) have dominated the headlines, so it can be easy to forget that the technology is still in the early stages of development and commercialization.

Justine Kasznica, shareholder at Babst Calland, is routinely asked: Why are AV companies and their automotive partners missing their stated deployment dates?

“This question raises an important point about current challenges to AV commercialization, with direct analogy to other autonomous mobility platforms, such as drones, personal delivery robots and more,” she says.

Some resources are being held back by the industry because of regulatory uncertainty, safety and security concerns, and the need for infrastructure that supports the technology, says Timothy Goodman, shareholder at Babst Calland.

“Even in view of this, progress is happening, particularly with regard to electrification and advanced driver-assistance systems (ADAS),” he says.

Smart Business spoke with Kasznica and Goodman, in the firm’s Mobility, Transport and Safety practice group, about AV development and commercialization.

Why should business executives stay aware of AV and other mobility development?

Automation has penetrated every segment of industry. In fact, warehousing, shipping, logistics and transportation are becoming more automated at a greater pace than ever before. In the future, whether it’s a drone, a legged robot or a wheeled delivery vehicle that solves the last mile problem, nearly every business will be impacted by AV. In addition, there’s plenty of opportunity to participate in this mobility evolution, even if it’s indirectly.

How is regulatory uncertainty playing a role in AV commercialization?

The federal government controls motor vehicle safety, with input from the automotive industry. Historically, National Highway Traffic Safety Administration regulations assumed vehicles would have a steering wheel, brake pedal and driver. The rules need to catch up to AV technology, which may or may not...

July 15, 2019

Legaltech news

By Christian A. Farmakis

Stories of how AI will change the legal ecosystem forever are endless, yet ‘rubber meets the road’ proof that this is actually happening are few and far between. Here's what one firm learned about knowing what AI can do and what they didn’t know it could do.

Like many law firms, Babst Calland is acutely focused on providing the best client service. However, pick up any corporate counsel survey and you quickly realize that the lack of quality legal service delivery by outside counsel is the number one point of dissatisfaction by GCs. While there’s disagreement between firms and clients about the degree of top-notch service delivery, there’s absolute agreement in identifying technology as the greatest service and innovation accelerator.

Enter artificial intelligence and machine learning, the proverbial silver bullets for every law firm looking to ‘do more with less’ and satisfy every client need. Stories of how AI will change the legal ecosystem forever are endless, yet ‘rubber meets the road’ proof that this is actually happening are few and far between. In fact, according to a Bloomberg Law survey on the state of legal operations and legal technology released during the recent Corporate Legal Operations Consortium (CLOC) Institute annual meeting, less than 25 percent of survey respondents indicated that they are using legal technology with artificial intelligence or machine learning. And of those deploying AI, I guarantee not all are game changing.

Our firm, along with our affiliate technology division Solvaire Technologies, are not only AI believers but after exhaustive AI tool evaluations, trials, and numerous AI projects under our belt, we have become our clients’ go-to resource in how we can leverage AI for their benefit. Our firm, with the guidance of Solvaire, has developed its own sophisticated internal systems and processes to...

July 11, 2019

The PIOGA Press

(The 2019 Babst Calland Report)

This article is an excerpt of The 2019 Babst Calland Report, which represents the collective legal perspective of Babst Calland’s energy, environmental and pipeline safety attorneys addressing the most current business and regulatory issues facing the oil and natural gas industry. A full copy of the report is available by writing info@babstcalland.com.

 Pennsylvania

 Emerging trend of allocation wells and cross unit drilling in the Appalachian Basin

 Allocation wells and cross unit drilling have the potential to create more economic wells using longer laterals, while overcoming unit size limitations commonly found in oil and gas leases. An allocation well is a lateral wellbore that crosses multiple lease boundaries of tracts that have not been pooled or unitized. Similarly, cross unit drilling involves laterals that traverse multiple units.

The use of allocation wells and cross unit drilling in Texas and Oklahoma has evolved out of legislation, administrative rulings and case law. Allocation drilling and cross unit drilling are not yet widely used in the Appalachian Basin, but as drilling technology evolves it is likely that operators will look to the feasibility of employing that technology across the basin.

The biggest risk with allocation wells in the Appalachian Basin is the lack of specific authority under most standard Appalachian Basin leases granting the operator the authority to drill allocation wells. Consequently, possible claims might be asserted challenging an operator’s transportation of non-native gas across leased lands or the commingling of native and non-native gas produced from separate units or leases. Another issue associated with the potential use of allocation wells is determining the appropriate method of allocating production royalties between the different lessors. Absent an agreement between the lessors, there is no comprehensive guidance in the Appalachian Basin for the appropriate method for allocation of royalties between lessors from...

July 3, 2019

Pittsburgh Catholic

(by Paula A. Smith)

Dwayne Coleman, 24, speaking to a group of graduates at a college signing ceremony in May, said that if someone had told him as a teenager that he would travel to China and teach English he would have never believed them.

But with help from the Crossroads Foundation, his mother and the staff at Cardinal Wright Regional School, he came to believe in his academic abilities and potential for success.

Coleman, who was raised by a single mother with two younger children on Pittsburgh’s North Side, graduated from Central Catholic High School in 2012, thanks to assistance from Crossroads.

For the past nine months he worked with the Rand Corp. on the Phresh Project for Pittsburgh Hill/Homewood Research on Neighborhood Change and Health.

“Crossroads really fosters a sense of community,” Coleman said. “It’s easy for students like us to feel out of place because of having a lower socioeconomic background or for being disadvantaged students. But Crossroads provided financial support and tried to make sure the emphasis was on the whole person.”

The Crossroads Foundation is an organization like no other in Pittsburgh. It is a college preparatory program that began with 11 students in 1988 and recently celebrated its 30th academic year with 580 alumni.

Crossroads provides an integral approach committed to helping promising students of all ethnicities with a limited income to obtain a quality Catholic high school education and receive academic support to attend college. Students do not need to be Catholic.

Esther Mellinger Stief, executive director of Crossroads, said, “I make sure Crossroads keeps its commitment to every scholar of providing financial support, but more than that, the opportunities these young people need to...

June 28, 2019

Babst Calland congratulates our friends at LifeWhere on their successful exit. We are proud to have represented you from formation through exit. Resideo and the LifeWhere team are well-positioned to continue the growth opportunities afforded by the LifeWhere technology.

Chris Farmakis, Sara Antol and Michael Fink from Babst Calland’s Emerging Technologies Group represented LifeWhere in the sale.

For more information, click here.

June 21, 2019

Smart Business

(by Jayne Gest with Carl Ronald)

Intellectual property (IP) drives value, especially in industries like robotics or medical devices. However, engineers would rather be developing new products. They dislike spending time on invention disclosures. Carl Ronald, shareholder at Babst Calland, believes patent attorneys can help fill this gap in younger companies that have started taking on outside investors.

“Sometimes, I will get a call from an engineering manager who just approved an employee request to present a poster at a conference. They’re wondering, ‘Is this is something that could affect patentability? Can you look at it? The conference is in five days,’” Ronald says.

It’s better to be proactive and strategic, where an attorney works with your engineering team — reducing the barriers to getting disclosures on paper, identifying what you should patent and what you should keep secret.

Smart Business spoke with Ronald about developing relationships between engineers and attorneys to build up an IP portfolio.

Why is it important to involve a patent attorney early in the development pathway?

It is critical to set the tone early. Executives that position the business as an innovative company need to make sure their employees are educated about IP, and that the organization is utilizing patents, trade secrets and other forms of IP to protect that value.

Let’s say, a Ph.D. student working with a company wants to publish an article. Some magazines have confidentiality around peer reviewers and some do not. So, a submittal to peer review could be a disclosure that could destroy novelty, thus destroying patentability. While in the U.S., you can disclose something and still file a patent within a year, overseas that is not the case.

Some engineers know about IP but do not understand the nuances around publication or the differences between U.S. and foreign patent laws; others know very little. And...

June 20, 2019

The Legal Intelligencer 

(by Krista-Ann Staley and Jenn Malik)

On April 26, the Pennsylvania Supreme Court announced its opinion in Slice of Life v. Hamilton Township Zoning Hearing Board, No. 7 MAP 2018 (Pa. 2019), addressing the permissibility of short-term vacation rentals in residential zoning districts. Specifically, the Supreme Court addressed “whether a zoning ordinance that defines ‘family’ as requiring ‘a single housekeeping unit’ permits the purely transient use of property located in a residential zoning district.”

The Slice of Life litigation arose from a notice of zoning violation issued to the owner of a short-term rental property, a limited liability company whose only member resided in Brooklyn, New York. The owner operated several other properties as short-term vacation rentals. The property in question in Slice of Life operated solely as a short-term vacation rental and was located in Hamilton Township’s single-family residential zoning district. The zoning district only permitted “single family detached dwellings and accessory uses and essential services.” The applicable provisions of the township’s zoning ordinance are as follows:

The subject property is a six-bedroom house that sleeps up to 17 people. One individual is responsible for signing the lease; however, no one associated with the property rental made any effort to ascertain the relationship between the individuals occupying the property. The rental company responsible for handling reservations collects no information concerning additional guests. Within 36 hours after a guest departs the property, a cleaning crew arrives to clean the property and fix anything that’s broken.

The property was the subject of numerous...

June 18, 2019

Pipeline Safety Alert 

(by James Curry, Keith Coyle and Brianne Kurdock)

On June 13, 2019, the Pennsylvania Public Utilities Commission (PAPUC) voted 5-0 to issue an Advance Notice of Proposed Rulemaking (ANOPR) soliciting public comment on whether to amend the pipeline safety requirements for public utilities that transport hazardous liquids.  PAPUC is seeking input on the following topics within 60 days of the date the ANOPR is published, or by no later than August 28, 2019:

In issuing the ANOPR, PAPUC is taking an approach that is similar to the Pipeline and Hazardous Materials Safety Administration (PHMSA), which issued an Advance Notice of Proposed Rulemaking (ANPRM) in 2010 asking for public comment on whether to amend the federal safety standards for hazardous liquid pipelines. After reviewing the comments submitted in response to the ANPRM, PHMSA issued a Notice of Proposed Rulemaking (NPRM) in 2015 containing new safety standards addressing a number of topics.  The Liquid Pipeline Advisory Committee, the federal advisory committee that reviews PHMSA’s proposed changes to the hazardous liquid pipeline safety regulations, reviewed the NPRM in 2016, and PHMSA expects to issue a...

Natural gas production continues to increase in each of the nation’s seven largest shale basins

Babst Calland today released its annual energy industry report: The 2019 Babst Calland Report – The U.S. Oil and Gas Industry: Federal, State and Local Challenges & Opportunities; Legal and Regulatory Perspective for Producers and Midstream Operators. 

In this Report, Babst Calland energy attorneys provide perspective on issues, challenges, opportunities and recent developments in the oil and gas industry that are relevant to producers and midstream operators.

According to the International Energy Agency, “the second wave of the U.S. shale revolution is coming” and the United States will account for a 70 percent increase in global oil production and a 75 percent expansion in LNG trade in the next five years.

On a year-over-year basis, natural gas production continues to increase in each of the seven largest shale basins in the United States. Most notably, oil and natural gas production is being driven by three of the largest producing basins including Appalachia in Pennsylvania, West Virginia and Ohio, the Permian Basin in Texas and New Mexico, and the Haynesville Basin in southwestern Arkansas, northwest Louisiana, and east Texas.

Joseph K. Reinhart, shareholder and co-chair of Babst Calland’s Energy and Natural Resources Group, said, “Domestic shale producers and operators continue to face myriad legal and regulatory challenges by regulatory agencies, the courts, activists, and the market. This annual review is a snapshot of the issues and trends on the federal, state and local level in the oil and gas industry over the past year.”

The 92-page Babst Calland Report covers a range of topics from the industry’s business outlook, regulatory enforcement and rulemaking to developments in pipeline safety and litigation trends. A few of the Report’s highlights include:

June 14, 2019

Energy Alert

(by Timothy Miller and Mychal Schulz)

The West Virginia Supreme Court issued an opinion in Andrews v. Antero Resources Corp. and Hall Drilling, LLC, No. 17-0126 (W. Va. June 10, 2019), an eagerly-awaited decision arising out of the In re: Marcellus Shale Litigation, in which hundreds of lawsuits have been filed against E&P and midstream oil and gas companies alleging that activities related to the production, compression, and transportation of natural gas represented a private nuisance.

The Property Owners in Andrews, which represented the first trial group in In re: Marcellus Shale Litigation, alleged that the fracking operations of Antero and Hall Drilling “in relation to their development of the Marcellus shale have caused Property Owners to lose the use and enjoyment of their properties due to the annoyance, inconvenience, and discomfort caused by excessive heavy equipment and truck traffic, diesel fumes and other emissions from the trucks, gas fumes and odors, vibrations, noise, lights, and dust.”  They filed a complaint alleging claims for “private temporary continuing abatable nuisance and negligence” against Antero and Hall Drilling arising from their “natural gas exploration, extraction, transportation and associated activities in close proximity to properties.”

Eventually, the Property Owners voluntarily dismissed all claims for (1) property damages, (2) physical or medical injury, and (3) negligence.  By the time the Mass Litigation Panel (MLP) addressed the motions for summary judgment filed by Antero and Hall Drilling only the Property Owners’ private nuisance claims remained.

While the MLP granted Antero’s and Hall Drilling’s motion for summary judgment, it “declined to apply principles of nuisance law, and instead ruled on the summary judgment motions based upon Antero’s contractual and property rights.”  Specially, the MLP’s Order stated that “ecause the Court resolves summary judgment based upon Antero’s contractual and property rights, it does not address...

June 11, 2019

The PIOGA Press

(by Blaine Lucas, Robert Max Junker and Jennifer Malik)

On May 14, the Pennsylvania Supreme Court entered an order denying the petition for allowance of appeal in Frederick v. Allegheny Township Zoning Hearing Board, et al., No. 449 WAL 2018 (Pa. 2019). The order concludes a battle of more than four years over the validity of the Allegheny Township, Westmoreland County, zoning ordinance. Previously in Frederick, the Commonwealth Court in a 5-2 en banc decision, rejected the contention that an unconventional natural gas well pad can be permitted only in an industrial zoning district, concluding that Pennsylvania law empowers municipalities to determine the location of oil and gas development and whether the same is compatible with other land uses within their boundaries. Frederick v. Allegheny Twp. Zoning Hr’g Bd., 196 A.3d 677 (Pa. Cmwlth. 2018).

Frederick is one of at least eight cases involving challenges to the validity of local zoning ordinances in Pennsylvania which authorize oil and gas development. Generally speaking, the challengers in these cases claim, based on the Pennsylvania Supreme Court’s decisions in Robinson Township v. Commonwealth, 83 A.3d 901 (Pa.2013) and Pennsylvania Environmental Defense Foundation v. Commonwealth, 161 A.3d 911 (Pa. 2017) that the zoning ordinances violate substantive due process and Article I, Section 27 of the Pennsylvania Constitution, commonly known as the Environmental Rights Amendment (ERA), because they permit an allegedly industrial use in non-industrial zoning districts.

In Frederick, the Allegheny Township zoning ordinance authorized oil and gas operations as a permitted use by right in all zoning districts.1 After the township issued a zoning permit to an operator for an unconventional well pad, three residents filed an appeal with the zoning hearing board challenging both the permit and the validity of the zoning ordinance. Following multiple nights of hearings, the board...

June 6, 2019

Pittsburgh Business Times and Houston Business Times 

(by Patty Tascarella)

Babst Calland has opened its first Texas office via a merger with attorneys of The Chambers Law Firm, a firm based in Houston.

Les Chambers serves as managing shareholder of Babst Calland’s Houston office, which is located in The Woodlands.

Les Chambers, Ryan Chambers and Coleman Anglin have joined Babst Calland as shareholders, and Nataliya Tipton came aboard as an associate, according to a June 5 press release. They specialize in legal and regulatory matters related to oil and gas, property and transactional law as well as oil and gas title examination and analysis process for exploration and production companies in Texas, New Mexico, Oklahoma and the Appalachian Basin.

For the full Pittsburgh article, click here.

For the full Houston article, click here.

The Legal Intelligencer

(by: Kevin Garber and Casey Snyder)

Background: Oil and Gas Produced Water Management 

Drilling and operating oil and gas wells, especially unconventional wells, generates a significant amount of flowback and produced water that must be managed properly under federal and state environmental laws (for this article, “produced water” will refer to all oil and gas extraction water). There are multiple produced water management strategies—and trends in the industry vary. The EPA’s newly released draft study, “Study of Oil and Gas Extraction Wastewater Management Under the Clean Water Act,” EPA‐821‐R19‐001 (May 2019), collected stakeholder input on produced water management options nationwide as part of its effort to determine whether future actions are appropriate to permit additional options to manage produced water.

Reviewing current management practices nationally, the EPA determined that injecting produced water into underground injection control (UIC) wells is the most common disposal option. Injection may be for disposal (Class II-D wells) or for enhanced oil recovery (Class II-R wells). The EPA and states with delegated authority implement these programs pursuant to the Safe Drinking Water Act. Pennsylvania has not applied for and does not have primacy to implement the federal UIC program in the commonwealth. Other management options include using produced water to hydraulically fracture new wells; using evaporation ponds or seepage pits in some states to contain produced water and subsequently collect precipitated solids for disposal or sale; using produced water from conventional operations for dust suppression and deicing; treating produced water onsite in mobile treatment units or treating it off site at centralized water treatment facilities (CWTs); disposing produced water from conventional operations at publicly owned treatment works (POTWs); and, in states west of the 98th meridian, discharging to surface water where suitable for agriculture or wildlife.

Pennsylvania is a major producer of oil and gas, especially...

Energy Alert

(by Timothy Miller and Paul Atencio)

On June 5, 2019, the West Virginia Supreme Court issued its opinion in EQT Production Company v. Crowder affirming a decision of the circuit court of Doddridge County, holding that a surface tract cannot be used to produce minerals from neighboring lands in the absence of an agreement with a surface owner, even if the mineral owners/lessees agreed to pooling and unitization.

At the time that the century-old lease was executed, the lessor owned both the surface and minerals in fee.  The minerals were later severed from the surface as subdivided tracts were conveyed as “surface only.”  The plaintiff surface owners challenged use of their lands to drill horizontal wells extending beyond the limits of their property to produce and transport oil and gas to/from adjacent tracts.

The Circuit Court of Doddridge County agreed with the plaintiffs and entered an order granting partial summary judgment, finding EQT trespassed to the extent it used the plaintiffs’ surface lands to conduct operations under neighboring mineral estates.

The Court held that the long recognized implied right of a lessee to use so much of the surface as “reasonably necessary” to produce the minerals, was limited to use for production under the surface tract only; not neighboring lands, even if the mineral lessees had signed lease modifications allowing pooling and unitization.  The appeal resulted from a trial court order finding that production companies do not have the right to produce pooled production through a surface drill tract without an express reservation in a severance deed or surface owner consent.

In its opinion the Court noted it did not decide the case on the “excessive use” claim, but limited it holding to trespass and property law claims.  The court relied on a number of coal mining cases which have...

June 5, 2019

Les Chambers, Ryan Chambers, Coleman Anglin and Nataliya Tipton Join the Firm’s Energy and Natural Resources Practice

Babst Calland today announced the opening of a new office in Houston, Texas, and merger with attorneys of The Chambers Law Firm, a prominent Houston law firm.

Les R. Chambers, Ryan A. Chambers, and Coleman G. Anglin join the Firm as shareholders, and Nataliya K. Tipton as associate.

These Houston-based attorneys represent clients on a variety of legal and regulatory matters, particularly in the areas of oil and gas, property, and transactional law and all aspects of oil and gas title examination and analysis process for exploration and production companies in the Mid-Continent (including Texas, New Mexico and Oklahoma) and Appalachian Basin.

Commenting on these developments, Donald C. Bluedorn II, managing shareholder of Babst Calland, said, “These highly-regarded oil and gas attorneys are a natural fit in advancing our Firm’s vision to continue to expand our geographic footprint to serve clients’ needs in the development of the Permian Basin and other major and emerging shale plays in the country.”

“Our nationally-recognized multidisciplinary team of experienced energy attorneys, along with the resources of our new Houston office, offer our clients exceptional regional and national legal representation to help navigate challenges and opportunities to succeed in the oil and gas industry.”

“We are very excited to be joining Babst Calland,” said Les Chambers.  “The vast experience of our respective firms in the energy and natural resource sector, along with the diversity of practice areas and significant support staff at Babst Calland, will create a synergy that will greatly enhance the services we can provide to both our individual and mutual clients across the country.”

Les Chambers, the managing shareholder of Babst Calland’s Houston office, concentrates his practice in the areas of oil, gas and mineral title...

June 4, 2019

Pipeline Safety Alert

(by James Curry, Keith Coyle and Brianne Kurdock)

On June 3, 2019, the U.S. Department of Transportation (DOT) sent a legislative proposal to Congress for reauthorization of the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) pipeline safety program.  If enacted and signed into law, the legislation would reauthorize PHMSA’s pipeline safety program for an additional four years, or through 2023.

As in previous reauthorizations, the bill includes provisions that respond to recent events—in this case, the September 13, 2018, natural gas distribution incident in Merrimack Valley, Massachusetts.  Consistent with the Trump Administration’s broader policy agenda, the bill also includes provisions to promote innovation by supporting new technologies and enhancing pipeline safety and reliability.

The legislation addresses other areas of concern to the pipeline industry, such as requiring more timely review of technical standards and imposing additional criminal sanctions for pipeline vandalism.  Finally, the bill includes rulemaking mandates that focus on items of importance to PHMSA—namely, expanding the operator qualification (OQ) program to pipeline construction and establishing regulations for inactive pipelines.

How does the DOT Pipeline Safety Bill Respond to the Merrimack Valley Natural Gas Distribution Incident?

How does the DOT Pipeline Safety Bill Advance Industry Initiatives?

May 30, 2019

The Legal Intelligencer

(by Carla Voigt and Molly Meacham)

Recent guidance from two federal agencies indicates a push by the current administration toward classifying gig economy workers as independent contractors under federal workplace laws. Last month, the Department of Labor’s Wage and Hour Division (WHD) and the National Labor Relations Board (NLRB) each authored guidance declaring certain workers in the gig economy independent contractors, rather than employees.

In an opinion letter issued on April 29, the WHD analyzed whether workers for an unnamed “virtual marketplace company” (VMC) are employees or independent contractors under the Fair Labor Standards Act (FLSA). In refining the definition of independent contractor, the WHD focused on the economic reality test, which considers the totality of the circumstances to determine the degree of economic dependence the worker has on his employer. The WHD opinion letter describes workers’ “economic dependence” on businesses as “the touchstone of employee versus independent contractor status” and evaluated the nature of the relationship using the existing six-factor test previously developed by the U.S. Supreme Court in Rutherford Food v. McComb, 331 U.S. 722, 729 (1947).

Shortly after the WHD issued its opinion letter, in May the NLRB published its own advice memorandum dated April 16, in which it declared a group of Uber drivers to be independent contractors under the National Labor Relations Act (NLRA). Applying the board’s SuperShuttle classification test, the NLRB determined that the drivers have “significant opportunities for economic gain and, ultimately, entrepreneurial independence.” Accordingly, the NLRB opined that the drivers were properly classified as independent contractors and therefore not eligible to unionize under the NLRA. These publications indicate a significant trend by the current administration in favor of classifying workers as independent contractors.

Guiding Federal Law Principles

The FLSA defines an employee for the purposes of minimum wage and overtime pay as any individual employed...

May 29, 2019

Smart Business

(by Jayne Gest with Chris Farmakis)

Artificial intelligence (AI) is adding efficiencies and transforming businesses everywhere, and legal practices are no exception.

“General counsels and executives that are hiring lawyers need to understand that this technology is available now, so they can make sure their lawyers leverage the latest technology tools,” says Christian A. Farmakis, shareholder and chairman of the board at Babst Calland. “AI can increase speed, increase efficiency and lower costs for clients — if the law firm has the right tools, but more importantly knows how to use those tools.”

Smart Business spoke with Farmakis about the advancement of AI technology in the legal space, which business executives may want to take advantage of.

How is AI technology disrupting the legal industry?

AI is a term generally used to describe computers performing tasks normally viewed as requiring human intellect.

AI legal technology won’t replace lawyers, but these tools will drastically change the way lawyers provide services for their clients. While estimates vary, 23 percent to 35 percent of a lawyer’s job could be automated. As a result, lawyers will need to be more strategic and supervisorial, able to act as project managers and supervise the information being fed into systems, and knowledgeable about the assumptions underlying the machine learning algorithms.

So far, projects that classify data have been impacted the most, allowing those projects to be done faster and more efficiently. This includes:

Law firms can already pass these savings on to clients, but this is only the beginning of the transformation.

What will be the next wave of AI legal technology?

The next generation, which is starting to hit the market now, will be document automation and legal research and writing tools, as well as predictive technology tools. For example, a contract can be put through an algorithm in order to...