Articles, Newsletters & Advisories
June 14, 2019The West Virginia Supreme Court Confirms the Right of Mineral Owners to “Reasonably Use” the Surface to Extract Minerals – for Now
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, 2019State Supreme Court declines case rejecting challenge to zoning ordinance allowing drilling in all districts
The PIOGA Press
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, 2019One of Pittsburgh’s biggest law firms enters Houston
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.
West Virginia Supreme Court Opinion Limits Use of Surface Tract for Production of Gas from Neighboring/Unitized Tracts
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, 2019Babst Calland Opens Houston Office,
Merges with Attorneys from the Chambers Law Firm, PLLC
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.
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, 2019DOT Sends Pipeline Safety Bill to Congress
Pipeline Safety Alert
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?Secondary or Back-Up Overpressure Protection: Requires gas distribution pipeline operators to provide a secondary or back-up means of overpressure protection, which is capable of shutting the flow of gas or relieving gas to the atmosphere, for regulator stations serving low pressure distribution systems that use the primary and monitor regulator design. Management of Change: Permits PHMSA to require all pipeline operators to prepare and implement pipeline tie-in procedures that address management of change and active monitoring of pressures and control of gas and liquid sources.
How does the DOT Pipeline Safety Bill Advance Industry Initiatives?Incentives for Exceeding Safety Standards: Permits PHMSA to provide non-financial incentives or recognition to pipeline operators who voluntarily...
May 29, 2019Artificial intelligence is changing the way lawyers practice
(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:E-discovery. Due diligence. Research.
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...
May 20, 2019Legal Spotlight: Babst Calland Expands Energy, Environment Work
Legal Spotlight: Babst Calland Expands Energy, Environment Work
(by Chuck McCutcheon)
Pittsburgh-based Babst, Calland, Clements and Zomnir PC is making moves to expand its energy and environment practice.
The firm recently brought aboard Julie Domike as a shareholder in its Washington, D.C., office. Domike’s background includes working as an attorney for the EPA, and she has represented numerous clients in negotiations with that agency and the Justice Department.
It also this month hired Gina Falaschi, who had worked at Haynes and Boone LLP, as an associate in its D.C. office. In addition to counseling on compliance issues, Falaschi has worked with energy companies in developing new projects and advised clients on regulatory issues.
The hirings came partly in response to client requests to provide environmental and mobile-source emissions services before the EPA, California Air Resources Board, and other regulatory agencies, said Donald C. Bluedorn II, Babst Calland’s managing shareholder.
“We think it’s a natural fit, because we do a tremendous amount of stationary-source emissions work,” Bluedorn said of the hiring of Domike and Falaschi.
Babst Calland also has grown with the boom in the Marcellus Shale in the Northeast and has decided to open an office in Houston. That office will initially focus on mineral title work and eventually expand into other areas, Bluedorn said.
May 14, 2019Trump executive order puts spotlight on DOT LNG rules
The PIOGA Press
(by Keith Coyle)
On April 10, President Donald Trump signed an executive order, “Promoting Energy Infrastructure and Economic Growth.” In addition to outlining U.S. policy toward private investment in energy infrastructure and directing the U.S. Environmental Protection Agency to take certain actions to improve the permitting process under the Clean Water Act, the executive order instructs the U.S. Department of Transportation (DOT) to update the federal safety standards for liquefied natural gas (LNG) facilities.
The executive order notes that DOT originally issued those safety standards nearly four decades ago and states that the current regulations are not appropriate for “modern, large-scale liquefaction facilities” Accordingly, the executive order directs DOT to finalize new LNG regulations within 13 months, or by no later than May 2020, an ambitious deadline given the complex issues involved and typical timeframe for completing the federal rulemaking process.
Why does dot regulate LNG safety?
The LNG industry has a long history in the United States. The first LNG plant went into service in West Virginia in the World War I era, and a commercial liquefaction plant in Cleveland, Ohio, went into operation in the 1940s. In 1944, the Cleveland plant experienced an LNG tank failure that led to a fatal explosion and fire and resulted in extensive property damage. The first commercial shipment of LNG by vessel occurred 15 years later, in 1959, when the Methane Pioneer sailed from Louisiana to the United Kingdom. Several large-scale LNG terminals were constructed during the late 1960s and 1970s in places like Alaska, Louisiana, Georgia, Maryland, and Massachusetts, a period that coincided with DOT’s initial efforts to establish federal safety standards for LNG facilities.
In the Natural Gas Pipeline Safety Act of 1968, Congress authorized DOT to prescribe and enforce minimum federal safety standards for gas pipeline facilities and persons engaged...
EPA releases interpretive statement excluding releases to groundwater from NPDES program
The PIOGA Press
On April 23, the U.S. Environ - mental Protection Agency published a notice of availability of an interpretive statement concluding that releases of pollutants to ground - water should be categorically excluded from Clean Water Act (CWA) permitting requirements. 84 Fed. Reg. 16810. The notice opens a 45-day public comment period, ending on June 7. EPA is requesting comments on its analysis and rationale and is also soliciting input on additional actions that may be needed to provide further clarity and regulatory certainty on whether the National Pollutant Discharge Elimination System (NPDES) permit program regulates releases of pollutants to groundwater.
With the issuance of the interpretive statement, EPA has reinjected itself into the ongoing debate, federal circuit court split and pending U.S. Supreme Court case over whether the CWA’s NPDES permit program regulates point source discharges that travel through groundwater before reaching a jurisdictional surface water. The interpretive statement and the related, ongoing judicial decisions are of interest to the natural gas industry, among other industries, given the potential implications related to leaks/spills from pipelines, impoundments and other structures.
Interpretive statement content and reasoning
EPA describes the interpretive statement as the agency’s “most comprehensive analysis” of the CWA’s text, structure and legislative history in relation to whether the NPDES permit program regulates point source releases to groundwater. Most of the 63-page interpretive statement discusses EPA’s legal analysis of the statutory provisions that implement and enforce the NPDES permit program, the forward-looking, information-gathering statutory provisions that explicitly reference groundwater, and the relevant legislative history. Based on its analysis of this information, EPA concludes that Congress deliberately chose to exclude discharges of pollutants to groundwater from the NPDES permit program, even when those pollutants are conveyed to a jurisdictional surface water via groundwater. While EPA’s conclusion...
EPA determines that revisions to Subtitle D regulations for oil and gas wastes are unnecessary
The PIOGA Press
(by Jean Mosites)
In May 2016, various environmental groups, including the Environmental Integrity Project and the Natural Resources Defense Council, filed a lawsuit in federal court alleging that the United States Environmental Protection Agency failed to evaluate its regulations for managing wastes associated with oil and gas development activities as non-hazardous under Subtitle D of the Resource Conservation and Recovery Act (RCRA). The suit alleged that EPA had a non-discretionary duty under RCRA to periodically review and, if necessary, revise its Subtitle D regulations for solid waste disposal facilities and state solid waste management plans with respect to oil and gas development wastes. It further alleged that EPA had not done so since 1988 and that EPA should be ordered to conduct a subsequent review. The 1980 Bentsen Amendment to RCRA had exempted oil and gas wastes from regulation under RCRA Subtitle C as hazardous waste and permits regulation of such wastes under Subtitle D as non-hazardous. Earlier, EPA had declined a 2010 petition by NRDC requesting E&P waste be regulated as hazardous under Subtitle C.
The May 2016 lawsuit was resolved in December 2016 through the entry of a consent decree in which EPA agreed to either propose revisions to its Subtitle D regulations for oil and gas wastes or make a determination that revision of such regulations is unnecessary by April 23, 2019. On April 23, EPA determined that revising its Subtitle D regulations was not necessary.
To arrive at its determination, EPA examined regulatory programs in states such as Pennsylvania accounting for the vast majority of oil and gas production in the United States. EPA reviewed current waste management practices, waste characteristics, and E&P waste release/spill incidents in these states. The agency found that: 1) uncontrolled releases of oil and gas wastes are uncommon; 2) human...
May 13, 2019Babst Calland Expands Washington, D.C. Environmental and Mobility, Transport and Safety Practices
WASHINGTON, DC and PITTSBURGH, PA – May 13, 2019 – Babst Calland announced today the lateral move of Gina Falaschi, who joined as associate in the firm’s Washington, D.C. office in the Environmental, Mobility, Transport and Safety, and Litigation practice groups.
Ms. Falaschi’s move to Babst Calland, along with Julie Domike, another seasoned environmental attorney who recently joined Babst Calland as shareholder in late April, further represents the firm’s commitment to meet clients’ needs related to environmental and emissions mobile source services before EPA, the California Air Resources Board, and other regulatory agencies as a part of its best-in-class team.
Ms. Falaschi provides advice to clients in the energy, transportation, and technology sectors regarding environmental regulatory compliance. She has assisted companies with disclosure of regulatory violations to state and federal agencies, and has counseled clients in negotiations with the U.S. Department of Justice, U.S. EPA, and California Air Resources Board. In addition to counseling on compliance issues, she has worked with technology and energy companies in developing new projects and has advised clients on regulatory issues arising from joint ventures, mergers, and acquisitions.
She has litigated cases in federal court, represented clients in administrative cases before various federal agencies, and has experience with administrative rule challenges before the U.S. Court of Appeals for the District of Columbia Circuit. Ms. Falaschi is admitted to practice in the District of Columbia, California, U.S. Court of Appeals for the District of Columbia Circuit, and U.S. District Court for the Eastern District of California.
Ms. Falaschi earned her J.D. from Georgetown University Law Center in 2016 and her A.B., magna cum laude, from Georgetown University in 2013.
May 10, 2019EEO-1 Update: Employers Must Provide Pay Data to EEOC by September 30, 2019
Employment & Labor Alert
Large and certain mid-size employers must provide demographic data to the EEOC by September 30, 2019 regarding the 2017 and 2018 earnings paid to employees categorized by sex, race, and ethnicity. On April 25, 2019, the U.S. District Court for the District of Columbia ordered the EEOC to collect two years of employers’ pay data by this September deadline, reviving an Obama-era regulation that was stayed by the Trump administration. This requirement will apply to all employers with at least 100 employees, and federal contractors with at least 50 employees.
For more than 50 years, the EEOC has required large and mid-size employers to submit an annual report known as the EEO-1 Report, which identifies the number of employed workers in job categories based on sex, race, and ethnicity. This data is now known as “Component 1” data. The Obama-era EEOC proposed requiring an additional component to this annual report that would require employers to disclose the earnings of these employees, in an effort to identify pay disparities. Known as “Component 2” data, the newly collected information should include employees’ W-2 earnings as well as hours worked in 12 pay bands for each of the 10 EEO-1 job categories. In 2016, the Office of Management and Budget approved the proposed requirement, and the requirement was slated to take effect in 2018. However, in 2017 the Trump administration stayed the implementation of this requirement, citing the burden of compliance upon employers. The validity of the stay on implementation of Component 2 data collection has been the subject of litigation since November 2017. The District Court vacated the stay in March 2019, and recently ruled to extend the Component 2 reporting deadline four months until September 30, 2019.
The Court’s ruling has no...
May 9, 2019Babst Calland Picks Up Enviro Pro From Haynes And Boone
Babst Calland has hired a longtime environmental attorney from Haynes and Boone LLP who brings with her special expertise in the Clean Air Act, joining the firm a shareholder in its Washington, D.C., office.
Julie Domike joined the firm on April 29 after five years as a partner at Haynes and Boone. Previously, she spent time at Kilpatrick Townsend & Stockton LLP and what is now DLA Piper. She also spent nearly a decade at the U.S. Environmental Protection Agency, working on air enforcement and other matters that she said have continued to inform her work.
For the full article, click here.
May 6, 2019Veteran Environmental Attorney Joins Babst Calland’s Washington, D.C. Office
WASHINGTON, DC and PITTSBURGH, PA – May 6, 2019 – Law firm Babst Calland today announced the lateral move of Julie Domike, a veteran environmental attorney, who joined the firm’s Washington, D.C. office as shareholder, effective April 29.
Ms. Domike will provide senior-level legal counsel in key practice areas including Environmental, Mobility, Transport and Safety, and Litigation. Ms. Domike has represented numerous clients across the country in complex negotiations with the U.S. Department of Justice and EPA, resulting in global settlements affecting multiple company facilities. Much of Ms. Domike’s practice involves permitting and other issues under the Clean Air Act, addressing issues associated both with mobile and stationary sources. Ms. Domike has worked with companies engaged in developing new projects or modifying existing plants, and she has worked with clients on environmental audits and subsequent correction and disclosure to state and federal environmental agencies.
Having previously served as an attorney and manager at the United States Environmental Protection Agency (EPA) Headquarters, Ms. Domike understands the Agency’s enforcement approach and counsels clients to engage with EPA in rulemaking, and enforcement. She has represented a variety of companies that have been the focus of EPA’s regulations, including refineries, engine manufacturers, independent power producers, chemical plants, fuel producers, and construction and farm equipment makers.
Commenting about this lateral move to the Firm, Donald C. Bluedorn II, managing shareholder of Babst Calland, said, “We are very pleased to welcome Julie to our Firm and to our established team in Washington, D.C. She is a natural fit for us and her experience further complements the existing synergies that we offer clients, particularly in the Energy, Mobility, and Transportation industries."
Julie Domike’s arrival at Babst Calland also represents sustained growth in the Mobility practice, led by Firm shareholder Tim Goodman, responding to our clients’ requests to provide environmental...
May 2, 2019Public Comment Period Open on EPA’s Interpretive Statement Excluding Releases to Groundwater from NPDES Program
On April 23, 2019, the U.S. Environmental Protection Agency (EPA) published a Federal Register notice of availability of an Interpretive Statement concluding that it considers releases of pollutants to groundwater to be categorically excluded from the Clean Water Act’s permitting requirements. The notice opens a 45-day public comment period, ending on June 7, 2019. EPA is requesting comments on the analysis and rationale included in the Interpretive Statement and is soliciting input on additional actions that may be needed to provide further clarity and regulatory certainty on whether the NPDES permit program regulates releases of pollutants to groundwater. The publication of the Interpretive Statement has reinjected EPA into the ongoing debate, federal circuit court split, and pending U.S. Supreme Court case over whether the CWA’s National Pollutant Discharge Elimination System (NPDES) permit program regulates point source discharges that travel through groundwater before reaching a jurisdictional surface water.
Content and Reasoning Behind the Interpretive Statement
EPA describes the Interpretive Statement as the Agency’s “most comprehensive analysis” of the CWA’s text, structure, and legislative history as they relate to whether the NPDES permit program governs point source releases to groundwater. The bulk of the 63-page Interpretive Statement includes EPA’s legal analysis of the statutory provisions implementing and enforcing the NPDES permit program, the forward-looking, information-gathering statutory provisions that explicitly reference groundwater, and legislative history. Based on its analysis of this information, EPA concludes that Congress deliberately chose to exclude discharges of pollutants to groundwater from the NPDES permit program, even when those pollutants are conveyed to a jurisdictional surface water via groundwater.
While EPA’s conclusion is based primarily on its legal interpretation of the CWA, the major policy-based rationale supporting its conclusion is that groundwater is extensively regulated under other federal and...
April 22, 2019Entity choice – When picking your company structure, it requires more than Googling
(by Jayne Gest with Kevin Wills)
Founders should understand that choosing a business entity isn’t one size fits all. That’s why founders should consult with legal and tax advisers to make sure that they choose the entity that works best for their circumstances.
“A big issue is that clients don’t always consult legal and tax advisers. They Google ‘start a company’ and go with one of the first links they find,” says Kevin T. Wills, shareholder at Babst Calland.
People also will call and say, ‘I want to start a company. Everyone says I should be a Delaware corporation,’ he says. That may be the case, but it’s important to talk it through first. A different structure may be better for your business.
Smart Business spoke with Wills about legal structures for startups.
What are some potential entity types?
When starting a business, most founders tend to consider three options.C corporation (C-corp). A traditional corporation that is run by a board of directors, owned by stockholders and subject to federal income taxation. Limited liability company (LLC). More of a contractual arrangement that is governed by an operating agreement and offers pass-through taxation. S corporation (S-corp). This is a corporation, but the company’s revenue passes directly through and is only taxed at the shareholder distribution level.
What about limited partnerships (LPs)?
LPs are still prevalent in certain industries, but LLCs have limited the utility of LPs. Generally, you can structure an LLC to operate like an LP, where a board of managers runs the company and members are passive investors who get distributions.
What are the advantages and disadvantages to each structure?
C-corps work well for startups that need to raise capital from professional investors or plan to give employees stock grants to supplement compensation. They can be more attractive for investors because many venture capital funds have tax-exempt...
April 18, 2019Equitable Relief in Land Use and Zoning Matters—Three Main Theories
The Legal Intelligencer
Defenses or claims based in equity have long been recognized by Pennsylvania courts in zoning and other land use matters. There are three main equitable theories, all of which bar a municipality from enforcing its land use regulations and permit property owners to continue a use or activity in violation of applicable ordinances—equitable estoppel, vested rights and variance by estoppel. Pennsylvania courts consider all three theories unusual remedies that should only be granted in the most extraordinary of circumstances, as in Lamar Advantage GP v. Zoning Hearing Board of Adjustment, 997 A.2d 423 (Pa. Commw. Ct. 2010). These three theories are closely related and the elements of each vary only subtly.
The doctrine of equitable estoppel applies when:The municipality intentionally or negligently misrepresented a material fact; The municipality knew or had reason to know that the property owner would justifiably rely on the misrepresentation; and The misrepresentation induced the property owner to act to his detriment because of his justifiable reliance, as in Cicchiello v. Bloomsburg Zoning Hearing Board, 617 A.2d 835, 837 (1992).
The Commonwealth Court has consistently held that the theory of equitable estoppel cannot be relied upon to provide relief when the property owner asserting it “knew or should have known that the alleged promisor was without authority to effectuate the alleged promise,” as in DiSanto v. Board of Commissioners, 172 A.3d 139 (Pa. Commw. Ct. 2017). For example, a property owner cannot reasonably rely on the statement of an appointed official when the property owner knew, or should have known, that the official does not have the authority to bind the municipality with his statements. See, e.g., Strunk v. Zoning Hearing Board of Upper Milford Township, 684 A.2d 682, 685 (Pa. Commw. Ct. 1996) (landowners could not justifiably rely on a zoning officer’s...
Pennsylvania EQB Advances a Cap and Trade Petition to Reduce Greenhouse Gas Emissions
On April 16, 2019, the Pennsylvania Environmental Quality Board, in a vote of 14-5, directed the Pennsylvania Department of Environmental Protection to develop a report and recommendation on a petition for a cap and trade regulation. The Clean Air Council, Widener Commonwealth Law School Environmental Law and Sustainability Center, and others submitted the Petition on February 28, 2019 asking EQB to promulgate a regulation that would create a multi-sector cap and trade system to reduce greenhouse gas (GHG) emissions to achieve carbon neutrality in Pennsylvania by 2052.
The Petition includes a fully drafted regulation that establishes a cap on covered GHG emissions, based on a 2016 base year, and reduces GHG emissions to carbon neutrality by 2052. The regulation borrows heavily from the California cap and trade regulation, which is a multi-sector program that includes Ontario and Quebec. The California regulation, however, does not require a reduction of all GHG emissions to net zero.
Citing a goal set by the United Nations Framework Convention on Climate Change and the Paris Agreement, the regulation proposes a cap on Pennsylvania GHG emissions to begin at 91 percent of 2016 emissions and thereafter decline by three percent each year until reaching net zero emissions by 2052. Covered entities would be required to obtain allowances, by auction or allocation, for each metric ton of reportable GHG emissions per year attributable to their operations in Pennsylvania. Allowances would cost a minimum of $10 each in 2020, with the price increasing by 10 percent plus the rate of inflation each year. Any person may buy from the available allowances regardless of whether that person must surrender allowances for GHG emissions or not.
The petitioners cite the Pennsylvania Air Pollution Control Act and the Environmental Rights Amendment, Article I,...
April 17, 2019Federal Court Partially Vacates U.S. EPA’s Steam-Electric Power Plant Effluent Limitations Guidelines
On April 12, 2019, the Fifth Circuit Court of Appeals issued a decision in Southwestern Electric Power Company, et al. v. EPA, addressing pending claims in consolidated petitions challenging the U.S. Environmental Protection Agency’s revised effluent limitations guidelines for the Steam Electric Power Generating Point Source Category (ELGs). The Opinion vacated the “legacy” wastewater and “combustion residual leachate” best available technology economically achievable (BAT) standards promulgated by EPA in 2015. A copy of the Opinion is available here: http://www.ca5.uscourts.gov/opinions/pub/15/15-60821-CV0.pdf.
Under the Clean Water Act (CWA), EPA is responsible for establishing nationwide technology-based standards to govern discharges of pollutants by specific industrial categories. See 33 U.S.C. § 1314(b). In November 2015, EPA promulgated revisions to the ELGs after a multi-year study of wastewater management and treatment technologies used by steam-electric power plants since the ELGs were last revised in 1982. EPA revised the ELGs to regulate six separate wastewater streams: (1) flue gas desulfurization (FGD) wastewater; (2) fly ash transport wastewater; (3) bottom ash transport wastewater (BATW); (4) flue gas mercury control wastewater; (5) combustion residual leachate (leachate); and (6) gasification wastewater. In addition, the ELGs regulate “legacy” wastewater, which consists of one or more of the above-referenced wastewater streams (commingled or separate) if they are generated before the date determined by the state permitting authority. For leachate and “legacy” wastewaters, EPA selected impoundments as BAT-level controls. By contrast, EPA affirmatively rejected surface impoundments as BAT for the other five wastewater streams and imposed limits based on other forms of wastewater treatment or management.
In granting the environmental groups’ challenge to the BAT “legacy” wastewater limits in the ELGs, the Court repeatedly emphasized what it felt was a false distinction that EPA created between “legacy” wastewater and the other wastewater streams regulated under...
Trump Executive Order Puts Spotlight on DOT LNG Rules
Pipeline Safety Alert
On April 10, 2019, President Donald Trump signed an Executive Order on Promoting Energy Infrastructure and Economic Growth (Executive Order). In addition to outlining U.S. policy toward private investment in energy infrastructure and directing the U.S. Environmental Protection Agency to take certain actions to improve the permitting process under the Clean Water Act, the Executive Order instructs the U.S. Department of Transportation (DOT) to update the federal safety standards for liquefied natural gas (LNG) facilities. The Executive Order notes that DOT originally issued those safety standards nearly four decades ago and states that the current regulations are not appropriate for “modern, large-scale liquefaction facilities” Accordingly, the Executive Order directs DOT to finalize new LNG regulations within 13 months, or by no later than May 2020, an ambitious deadline given the complex issues involved and typical timeframe for completing the federal rulemaking process.
What is LNG?
LNG is natural gas that is cooled through a liquefaction process to minus 260 degrees Fahrenheit. Natural gas converts to a liquid state at that temperature and occupies a volume that is 600 times smaller than its gaseous counterpart. The reduced volume and high energy density of LNG makes long-distance transportation commercially viable, particularly to markets that lack access to local supplies of natural gas. LNG facilities create three primary risks from a safety perspective. As a cryogenic liquid, LNG can cause frostbite or severe burns upon contact with skin. LNG also vaporizes when released into the environment and can ignite in certain air-gas mixtures. High concentrations of LNG vapors may displace oxygen, creating the risk of asphyxiation in confined spaces.
Why Does DOT Regulate LNG Safety?
The LNG industry has a long history in the United States. The first LNG plant went into service...
April 15, 2019Babst Calland Continues to Expand Mobility and Safety Practice; Former NHTSA Senior Attorney Arija Flowers Joins Law Firm
Ms. Flowers, a former NHTSA attorney well-known in the industry, served as a Senior Trial Attorney with the NHTSA Office of Chief Counsel. There, she was the lead U.S. federal enforcement attorney for a number of matters addressing some of the most significant issues in the industry. Ms. Flowers’ joining the Firm continues to enhance its best-in-class capabilities to meet the developing needs of mobility and transport clients and other companies with emerging technologies. The practice provides strategic leadership with business and legal advice for manufacturers, suppliers, start-ups, technology companies and government entities in the full-spectrum of transportation regulatory, safety, product quality, and automation matters, including automated/autonomous driving systems.
“Arija Flowers’ joining our team represents a consolidation at Babst Calland of several recent former NHTSA and DOT senior staff and leadership with the freshest and deepest understanding of NHTSA/DOT’s current decision-makers and technical analysis approach,” said Babst Calland’s Managing Shareholder Donald C. Bluedorn II. “The continued outreach to us for services from companies – even those who are well represented at present – has really spoken to the success of our vision,” he added.
Ms. Flowers will join Will Godfrey, Babst Calland’s Director, Mobility, Automation and Safety, and a former General Motors engineer and senior NHTSA regulatory chief, and Tim Goodman, the leader of Babst Calland’s Mobility, Transport and Safety Group, and former NHTSA chief legal officer for enforcement and U.S. federal senior executive.
Ms. Flowers will help companies navigate the full-spectrum of mobility, vehicle safety and related regulatory matters, including self-certification of standards, homologation, regulatory compliance, automated/autonomous driving systems, innovative mobility and safety approaches, best practices and emerging trends, standards enforcement, defects...
April 12, 2019Groundwater Conduit Theory and Its Impact on Superfund Sites, Waste Management Units
The Legal Intelligencer
(by Alana Fortna)
The Clean Water Act regulates the discharge of pollutants into “waters of the United States” pursuant to National Pollutant Discharge Elimination System (NPDES) permits issued by the U.S. Environmental Protection Agency (EPA) or an authorized state agency. This is not a new concept. However, what has come to be known as “the groundwater conduit theory” is disrupting the long-standing understanding of what is and what isn’t covered by the Clean Water Act. This new theory also creates questions for companies and attorneys dealing with Superfund sites and waste management units regulated under RCRA. This article discusses the circuit split on this theory and what I view as potential implications for Superfund sites and waste management units depending on how the U.S. Supreme Court rules.
Several federal cases have addressed the issue of the indirect discharge of pollutants into jurisdictional waters via groundwater transport, and the Supreme Court may weigh in on this question soon. This is an important issue with far-reaching ramifications because it is generally understood that all groundwater that is not otherwise removed (i.e., pumped for drinking water supply) will eventually discharge to a surface water. The Clean Water Act prohibits discharges of pollutants from a “point source” without a NPDES permit, 33 U.S.C. Section 1342. A “point source” is defined as “any discernible, confined and discrete conveyance, including but not limited to any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft, from which pollutants are or may be discharged.” Based on this definition, discharges into and through groundwater have not been considered point source discharges because they are not the typical “end of the pipe” discharges. Recent case law out of the U.S. Courts of Appeal for the Fourth, Ninth...
April 11, 2019Babst Calland Nabs Ex-NHTSA Atty Who Led Takata Probe
(by Cara Salvatore)
Babst Calland has hired a former National Highway Traffic Safety Administration lawyer who played a lead role in the agency's work on the Takata air bag probe and other high-profile matters, the firm said Wednesday, the third former NHTSA staffer to join the firm's transportation practice in recent years.
For the full article, click here.
April 10, 2019EQB to consider cap-and-trade petition this month
The PIOGA Press
The Pennsylvania Environmental Quality Board (EQB) will consider a petition for a cap-and-trade regulation at its April 16 meeting. The Clean Air Council, Widener Commonwealth Law School Environmental Law and Sustain-ability Center, and others submitted the petition on February 28, asking EQB to promulgate a regulation that would create a multi-sector cap-and-trade system to reduce greenhouse gas (GHG) emissions to achieve carbon neutrality in Pennsylvania by 2052.
The petitioners initially submitted the petition to EQB on November 27, 2018. Under EQB’s Petition Policy (25 Pa. Code Chapter 23), the Department of Environmental Protection is to notify EQB and the petitioner within 30 days of DEP’s receipt of the petition whether the petition meets the policy’s eligibility criteria. DEP advised the petitioners on December 26 that the petition met the criteria and would be submitted to EQB for consideration at the first meeting of 2019.
However, DEP did not notify EQB members until, apparently, early February. Upon learning of the petition, Representative Daryl Metcalfe, chairman of the House Environmental Resources and Energy Committee, requested DEP on February 19 to have the petitioners resubmit their petition. The petitioners resubmitted the petition on February 28 with minor changes and additional signatories. DEP notified petitioners and the EQB on March 1 that DEP would review the petition to ensure it still meets the eligibility criteria. DEP has now done that and EQB scheduled the matter for consideration at its April 16 meeting.
The petition includes a fully drafted regulation that establishes a cap on covered GHG emissions, based on a 2016 base year, and reduces GHG emissions to carbon neutrality by 2052. The regulation borrows heavily from California’s cap-and-trade regulation, which is a multi-sector program that includes Ontario and Quebec. The California regulation, however, does...