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July 22, 2021

PHMSA issues advisory bulletin on minimizing natural gas releases from pipeline facilities

The PIOGA Press

(by Ashleigh Krick)

On June 7, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued an advisory bulletin (ADB) reminding owners and operators of gas and hazardous liquid pipeline facilities of a self-executing mandate from the “Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020” (PIPES Act of 2020).

Statutory mandate

The mandate, codified at Section 114(b) of the PIPES Act of 2020, provides that by December 27, 2021, “each pipeline operator shall update the inspection and maintenance plan prepared by the operator under section 60108(a) of title 49, United States Code, to address the elements described in the amendments to that section made by .”

Section 114(a) of the PIPES Act of 2020 added to 49 U.S.C. § 60108(a) that, in deciding on the adequacy of an inspection and maintenance plan, PHMSA or a certified state authority must consider the extent to which the plan will contribute to “eliminating hazardous leaks and minimizing releases of natural gas from pipeline facilities” and “the extent to which the plan addresses the replacement or remediation of pipelines that are known to leak based on the material (including cast iron, unprotected steel, wrought iron, and historic plastics with known issues), design, or past operating and maintenance history of the pipeline.”

Additionally, Section 114(a) added to 49 U.S.C. § 60108(a) that inspection and maintenance plans must “meet the requirements of any regulations promulgated under section 60102(q).” Section 60102(q) is a new rulemaking mandate from Section 113 of the PIPES Act of 2020...

July 19, 2021

Pennsylvania Public Utilities Commission Proposes Significant Changes to the Hazardous Liquid Pipeline Safety Regulations

Pipeline Safety Alert

(by Keith Coyle and Ashleigh Krick)

On July 15, 2021, the Pennsylvania Public Utilities Commission (PA PUC) issued a Notice of Proposed Rulemaking Order (NOPR) proposing to change the regulations applicable to public utilities that transport petroleum products and other hazardous liquids in Pennsylvania.  The NOPR follows an Advanced Notice of Proposed Rulemaking (ANOPR) that the PA PUC published on June 29, 2019, seeking comments on an expanded regulatory framework for hazardous liquid public utilities.  The proposed regulations go beyond the minimum federal pipeline safety regulations in 49 C.F.R. Part 195 and would impose significant new requirements on public utilities in Pennsylvania.

Below is a summary of the significant items from the proposed regulations.  Public utilities in Pennsylvania that transport hazardous liquids should carefully review the proposed regulations, the potential impact to their operations, and provide comments to the PA PUC accordingly.  Comments will be due 60 days from the date the NOPR is published in the Pennsylvania Bulletin.

Reporting (§ 59.133-59.134)

  • Proposes to require that an operator provide an unredacted failure analysis report based on laboratory testing and root cause analysis to the PA PUC within 120 days of a reportable accident or within 10 days of report completion, whichever comes first. If the reports are not completed within those timeframes, the public utility must provide updates to the PA PUC every 14 days. The analyses must be conducted by a PA PUC-approved independent third-party lab and consultant.
  • In addition to the requirements in 49 C.F.R. Part 195, Subpart B,...

July 8, 2021

Federal Court rules on WV royalty statute

GOWV News

(by Jennifer Hicks)

The United States District Court for the Northern District of West Virginia recently held that a 2018 amendment to W. Va. Code § 22-6-8 (the “Flat Rate Statute”) “clearly does not apply retroactively.” Although the Supreme Court of Appeals of West Virginia has not yet addressed this issue, this federal court decision is indicative of how the highest court in West Virginia may answer the question raised by plaintiffs in royalty litigation across West Virginia: Does the 2018 amendment apply retroactively to alter the way royalties are paid for wells drilled on a flat rate lease before May 31, 2018?

In Corder v. Antero Resources Corporation, Civil Action No. 1:18-cv-30 (N.D. W.Va. May 12, 2021), the Court analyzed several issues related to the payment of oil and gas royalties pursuant to various royalty provisions. One of the leases at issue was what is commonly referred to as a “flat rate” lease, under which the lessee was required to pay “$100 per year for each and every gas well obtained on the premises”

Flat rate leases are governed in West Virginia by W. Va. Code § 22-6-8, which was originally enacted in 1982 and first amended in 1994, to require that no permit for a flat rate well would be issued unless the lessee swore by affidavit that it would pay the lessor no less than one-eighth of the total amount paid to or received by or allowed to the lessee at the wellhead for the oil and...

July 7, 2021

Report: Energy Sector in Limbo over Permitting, ESG and Climate Policies

Joseph Markman Hart Energy

The Babst Calland law firm’s annual report includes a chat with Sen. Joe Manchin and an assessment of the impact of President Biden’s government-wide climate approach.

President Joe Biden’s ambition to entirely wean the U.S. from fossil fuels by 2035 is “unattainable, not doable,” Sen. Joe Manchin (D-W.Va.) told a Babst Calland law firm panel during a recent webinar. The recording is included in the firm’s annual energy industry report, released June 30.

“There’s no way that we can eliminate our way to a cleaner climate,” the chairman of the Senate Committee on Energy and Natural Resources said, noting that the country could not make a sufficient worldwide difference because other countries will not follow its lead in cutting oil, gas and coal from the global energy mix. “Not going to happen.”

In its report, Pittsburgh-based Babst Calland focused on how the oil and gas industry, recovering from the economic impacts of the COVID-19 pandemic, is at an inflection point as it awaits the full impact of President Joe Biden’s climate-centric policies and the emergence of ESG (environmental, social and governance) concerns in investing decisions.

Manchin told the attorneys he was concerned about the federal permit approval process, and how the sluggish system could hinder the oil and gas industry’s—and the country’s—ability to build the infrastructure necessary to put the energy transition into effect. The senator has supported legislation to speed the permitting process.

“I don’t know any other way to get it done,” Manchin said. “We might not live long enough to see...

July 2, 2021

Pennsylvania DEP Releases New PFAS Sampling Data and Proposes Additional Actions to Address “Forever” Chemicals

Environmental Alert

(by Matt Wood)

On June 3, 2021, the Wolf administration released the complete results of sampling for perfluoroalkyl and polyfluoroalkyl substances (PFAS) by the Pennsylvania Department of Environment Protection (PADEP) from certain public drinking water systems located throughout the Commonwealth.  PFAS, a “family” of manmade chemicals in use since the 1940s, have myriad applications in consumer, commercial, and industrial products.  More recently, PFAS have been discovered in various environmental media (e.g., drinking water sources), plants, animals, and humans.  Due to their persistence in the environment – they do not tend to break down naturally – PFAS have been called “forever” chemicals and some research suggests that exposure to PFAS can cause various adverse health effects.

Originally initiated in June 2019, the PADEP-led sampling effort targeted public drinking water systems within a half mile of potential PFAS sources (e.g., manufacturing, fire training, and military facilities).  PADEP also sampled outside of the half-mile radius of potential sources to establish a baseline.  Samples collected in 2019 were analyzed for six PFAS chemicals, but those collected in 2020 and 2021 were analyzed for 18 PFAS chemicals using U.S. Environmental Protection Agency (EPA) Method 537.1 (updated November 2018).  As part of the 2020 and 2021 sampling events, PADEP resampled the 2019 sites in order to obtain additional occurrence data.

Of the 18 PFAS chemicals analyzed from the 412 total samples, only eight were found at the sampled sites: PFOS, PFOA PFNA, PFHxS, PFHpA, PFBS, Perfluorohexanoic acid (PFHxA), and Perfluoroundecanoic acid (PFUnA).  PFOA and PFOS were...

July 1, 2021

Guidance on steps to protect your business against cyberattacks

Smart Business 

(by Sue Ostrowski featuring Ashleigh Krick)

Recent high-profile cybersecurity breaches have highlighted how vulnerable even the largest businesses are to disruption. But even the smallest of businesses face risks, says Ashleigh Krick.

“Organizations may think they are not at risk and do not have valuable information, but they should think again,” says Krick, an associate at Babst Calland. “It does not matter what information you have when a hacker just wants money. It’s not just about data; it’s also about shutting down your business to force you to pay a ransom.”

Smart Business spoke with Krick about steps every business can take to protect itself.

How have recent cyberattacks drawn attention to the vulnerability of businesses?

Recent cyberattacks on Colonial Pipeline and JBS Foods have demonstrated the cyber vulnerabilities of even our nation’s most critical industries. In May, Colonial Pipeline fell prey to a ransomware attack, forcing it to halt transportation of gasoline and other fuels on the largest refined products pipeline on the East Coast. The effect was felt by everyone along the East Coast, as disruption to gasoline supply caused consumer panic and gasoline prices to skyrocket.

Not a month later, JBS Foods, the world’s largest processor of fresh beef and pork, was attacked by ransomware, causing its plants to shut down and rendering the business incapable of processing meat. We are still seeing effects from that, which could disrupt the U.S. market and international markets.

In the aftermath of these attacks, the federal government became immediately involved in how businesses were responding to...

June 30, 2021

The 2021 Babst Calland Report Highlights Legal and Regulatory Perspectives at a Transformational Time for the U.S. Energy Industry

Babst Calland published its 11th annual energy industry report: The 2021 Babst Calland Report – Legal & Regulatory Perspectives for the U.S. Energy Industry. Each of our nation’s energy sectors is impacted by local, state and federal policies, many of which are addressed in this inclusive report on legal and regulatory developments for the energy industry in the United States.

This edition features commentary from Senator Joe Manchin (D-WV), Chairman of the U.S. Senate Energy and Natural Resources Committee, who spoke with Babst Calland energy clients at a special briefing on June 25, 2021. A link to the webinar recording is available in this Report.

To request a copy of The 2021 Babst Calland Report, click here.

The Babst Calland Report represents the timely collective perspectives of more than 45 energy attorneys on the current state of the U.S. natural gas and oil, coal, and renewable energy sectors. For the first time, this Report is presented as an easy-to-navigate digital site featuring 12 sections, addressing the following key topics:

  • Business Outlook for the U.S. Energy Industry
  • Climate Change Initiatives from the Biden Administration
  • Pipeline & Hazardous Materials Safety Administration Priorities
  • Environmental Law Developments
  • Environmental Justice Issues
  • Appalachian Basin Regional Developments
  • Coal Mining Regulatory Changes
  • Expansion of the U.S. Renewable Energy Market
  • Real Estate & Land Use Developments
  • Litigation Trends
  • Changes in Employment & Labor Law
  • Emerging Technologies Affecting the Energy Industry

Joseph K. Reinhart, shareholder and co-chair of Babst Calland’s Energy and Natural Resources Group, said, “The energy industry, once again, is...

June 23, 2021

Commonwealth Court Considers Municipal Boundary Disputes

The Legal Intelligencer

(by Blaine Lucas and Anna Jewart)

This past May, a curio story made international news when a Belgian farmer moved a stone monument on his property by approximately 7.2 feet.  While this typically would have remained unknown, except to the farmer and perhaps to his neighbor, the farmer did not consider that the stone had been placed in 1819 to mark his home country’s border with France, and moving it resulted in an approximate 3,000 square foot loss of territory for the French.  Luckily, the change in location was quickly caught and resolved without international incident.  The quick discovery and resulting amicable resolution between the two nations was made possible in large part because the local Belgian municipality, Erquelinnes, had geo-localized the stones in 2019 for its 200th anniversary and knew exactly where it should have been.  A few days after the story went viral, the Pennsylvania Commonwealth Court addressed what happens when municipalities here misplace their historic markers and later disagree over the location of their common boundaries.  In Woodward Twp. Mun. Corp. of Clinton County, Pa. v. Dunnstable Twp. Mun. Corp. of Clinton County, Pa., Nos. 704 C.D. 2020, 733 C.D. 2020 (Pa. Cmwlth. May 12, 2021), disagreement over boundary stones and surveys dating back to 1844 resulted in a modern-day battle of the experts to determine exactly where the shared boundary of the two townships actually lies.

Although it was avoided by the farmer in Erquelinnes, wars and lawsuits are often fought over the...

June 11, 2021

Understanding legal challenges facing businesses today

Pittsburgh Business Times

(by Nick Keppler featuring Don Bluedorn)

During the past year, Babst Calland has been helping to navigate both the practical obstacles in the legal process and general anxiety among clients, said Donald C. Bluedorn II, managing shareholder of the downtown law firm, recognized for its work in environmental, energy and corporate law.

“It’s obviously an understatement to say the last year has been very challenging for all of us,” Bluedorn said in a conversation with the Pittsburgh Business Times. “Our clients have had to adapt in the face of the pandemic and its economic impacts, and of course, we did too.” Add to all of that, a new federal administration that commenced changes in energy policy and regulation in the name of climate change.

“There were a number of legal challenges that we had to work through quickly with clients. There were changes in the substantive legal area and the way things were done,” said Bluedorn. “For example, courts were closed. How do you maintain litigation and do discovery and engage with witnesses while courts are closed?” Our firm does a lot of environmental work. The offices that issue permits necessary for environmental testing were also temporarily delaying some of that work. In many cases, deadlines were suspended.

Like every other workplace, Babst Calland’s clients also faced sudden and jarring disruptions to the most basic aspects of their workplaces, including having a communal environment.

“Obviously, a number of our clients had direct issues associated with the pandemic,” said Bluedorn. Early on,...

June 11, 2021

EPA’s proposed budget highlights Biden administration focus on environmental justice concerns

The PIOGA Press

(by Ben Clapp)

The proposed budget for fiscal year 2022 for the U.S. Environmental Protection Agency (EPA), submitted to Congress on May 28, provides important insights into the agency’s priorities in the coming years under the Biden administration. Broadly speaking, the proposed budget, which is the largest ever in absolute terms, emphasizes what the agency describes as “four cross-cutting priorities: Tackling the Climate Crisis through Science, Advancing Environmental Justice, Supporting State, Tribal and Local Partners and Expanding the Capacity of EPA.” These points of emphasis are generally consistent with expectations and with earlier environmental policies adopted by the Biden administration, including the executive order on “Tackling the Climate Crisis at Home and Abroad” (E.O. 14008).

While the agency priorities set forth in the proposed budget are perhaps not particularly surprising, the prominence in the budget of advancing environmental justice, a topic with potential impacts on the oil and gas sector, is unprecedented. (Note, for example, that the terms “environmental justice” or “EJ” appear more than 400 times in the EPA’s lengthy budget justification document, compared to just over 40 times in the fiscal year 2021 document.) While environmental justice considerations have been a component of EPA’s work since the 1990s, the Biden EPA is poised to bring it to the forefront of environmental decision-making. This heightened emphasis is also reflected in EPA Administrator Michael Regan’s April 7 message to EPA staff, in which he stated that the agency would do more to address environmental justice concerns, including:

  • Strengthening enforcement of...

June 10, 2021

Major Air Regulatory Developments Anticipated for Pennsylvania Natural Gas Operators

The Legal Intelligencer

(by Gary Steinbauer)

Changes are coming to federal and state air quality regulations affecting new and existing upstream and midstream natural gas operations.  Congress is in the midst of finalizing legislation to undo a Trump administration Clean Air Act (CAA) rule, which rolled back Obama-era CAA requirements.  Separately, the U.S. Environmental Protection Agency (EPA) has begun developing rules for existing air emissions sources within the natural gas sector.  At the state level, the Pennsylvania Department of Environmental Protection (PADEP) is poised later this year to finalize its own set of air regulations for existing sources within the natural gas sector.  Any of these regulatory developments alone would be noteworthy; combined, they likely signal increased oversight, scrutiny, and regulation of new and existing air emission sources within Pennsylvania’s natural gas sector.

Congress Set to Disapprove Trump EPA Oil and Natural Gas CAA Rule

In March 2021, Congress invoked its rarely used Congressional Review Act (CRA) authority to rescind a Trump EPA rule that excluded emission sources in the transmission and storage segments and rescinded methane emission limits for the production and processing segments in New Source Performance Standards for the Crude Oil and Natural Gas Industry at 40 C.F.R. Part 60, Subparts OOOO and OOOOa (NSPS).  Oil and Natural Gas Sector: Emissions Standards for New, Reconstructed, and Modified Sources Review, 85 Fed. Reg. 57018 (Sept. 14, 2020).  Reinstating the NSPS methane requirements means that EPA would be statutorily required to regulate methane emissions from existing affected sources within the natural gas...

June 3, 2021

Changing Compliance Obligations for Employers Continue into 2021

The Legal Intelligencer

(by Molly Meacham)

Even in ordinary times, keeping up with an ever-changing employment law landscape is a compliance challenge for businesses.  The extraordinary circumstances of the COVID-19 pandemic sparked unprecedented compliance challenges for employers, including workplace safety issues, additional temporary leave requirements, and interpreting existing obligations through the lens of COVID-19.

Compliance obligations for employers are continuing to evolve in 2021.  Presidential administration change and a change in the majority party in the U.S. Senate each typically cause new and revised legislation and regulations.  Combined with the ongoing pandemic, the result is continued significant alteration to the legal and regulatory framework that will impact employers in 2021 and beyond.  These developing issues include worker classification under the Fair Labor Standards Act (FLSA), a temporary expansion of the Consolidated Omnibus Budget Reconciliation Act (COBRA) under the American Rescue Plan Act of 2021 (ARPA), and COVID-19 workplace safety issues relating to fully vaccinated employees.

FLSA Independent Contractor Rule Withdrawn

One of the most important baseline employment-related determinations a business can make is whether a worker is properly classified as an employee or an independent contractor under the FLSA.  Worker misclassification is a frequently-litigated issue that represents significant legal exposure for businesses, as damages for misclassification can include retroactive application of minimum wage and overtime requirements, the value of employee benefits that were not provided, any legally-mandated sick time, or self-employment tax paid by the worker.

In the last weeks of the Trump administration in early 2021 the Department of Labor (DOL) issued a Final...

June 2, 2021

Molly Meacham Named to Pittsburgh Business Times’ 20 People to Know in Law

Pittsburgh Business Times

20 People to Know connects the Pittsburgh-area business community with influential businesspeople working in key industries. In this installment of 20 People to Know, the Pittsburgh Business Times focused on legal professionals.

These listings are not meant to be comprehensive or a ranking, but rather an introduction to some of the behind-the-scenes players, key leaders and up-and-comers. Those selected offered their wisdom and thoughts on the region’s legal marketplace during this turbulent and transformative time.

Named to this list, Molly Meacham became co-chair of Babst Calland’s Litigation Group two years ago and recently was appointed to the firm’s board and is a member of its Emergency Response Committee. She also works in Babst’s Emerging Technologies Group, where she helps to bridge the litigation and mobility/transport practices. Her practice has two primary aspects: representing companies in commercial litigation and employment litigation matters, and serving as outside counsel providing companies with human resources advice and counseling.

For the full article, click here.

May 24, 2021

Litigation Continues over West Virginia’s Coal Mine Permit Bonding Program

Environmental Alert

(by Robert Stonestreet and Kip Power)

Environmental interest groups are continuing litigation that appears ultimately aimed at challenging the sufficiency of West Virginia’s bonding program for coal mine operations. On May 17, 2021, three environmental interest groups filed a lawsuit against the United States Department of Interior’s Office of Surface Mining (OSM). The suit alleges that OSM has failed to determine whether changes to West Virginia’s bonding program are needed after OSM received notice from the West Virginia Department of Environmental Protection (WVDEP) regarding the financial circumstances surrounding certain operators in the coal industry. This case is related to a prior suit originally filed on July 9, 2020 against WVDEP concerning the bonding program. As noted in our July 14, 2020 Environmental Alert, the July 9, 2020 suit alleged that WVDEP had failed to properly notify OSM of the financial insolvency of certain coal operators and the purported inability of West Virginia’s Special Reclamation Fund to cover the costs required to complete required reclamation work at mine sites formerly operated by one of those entities, ERP Environmental Fund. The Special Reclamation Fund receives revenue from a tax on coal production. When the amount of a forfeited bond associated with a revoked mining permit is insufficient to cover the costs of completing the required reclamation, the Special Reclamation Fund provides additional funding for use by WVDEP to perform the reclamation work. (For a more detailed explanation of the bonding system and the claims made by the plaintiffs in...

May 24, 2021

Protecting your innovations outside the United States

Smart Business 

(by Sue Ostrowski featuring Carl Ronald)

If you’re considering selling your innovative product or commercializing your novel processes in another country, protecting your innovations with a patent in that country may be key to your success. But trying to navigate the process alone can prove difficult.

“It’s surprising how complicated it can be, and there are a lot of places to get tripped up,” says Carl Ronald, shareholder at Babst Calland. “While you can try to do it on your own, hiring a patent attorney can make the process much smoother, ensuring you are including all relevant information and complying with all relevant deadlines to protect your invention in the most cost-effective way possible.”

Smart Business spoke with Ronald about when you might need international protection and how a patent attorney can help you navigate the complex process.

When should a company consider applying for a patent outside the U.S.?

A U.S. patent only provides a protectable interest here in the U.S.; you can’t stop someone from using what your patent teaches to compete with you in other countries unless you’ve timely filed in those countries, as well. If you have an international customer base that is purchasing products or services that, in the future, may be produced with, employ, or contain your patented process or device, you should seek protection, at a bare minimum, in those countries where your anticipated market is largest.

Keep in mind the importance of secrecy before filing your application. In the U.S., you have one year to file a...

May 20, 2021

Water Law Update: Five Regulatory Changes to Watch in 2021

The Legal Intelligencer

(by Lisa Bruderly)

State and federal water law permitting can pose significant obstacles for energy infrastructure construction projects that impact waterbodies (e.g., wells pads, access roads, natural gas/oil pipelines). The following five new and proposed regulatory changes are likely to significantly affect project design and construction in Pennsylvania.

  • Waters of the United States (WOTUS)
  • The definition of WOTUS identifies which waters are federally-regulated under the Clean Water Act (CWA), and, therefore, determines when a federal permit is required for projects that involve dredging or filling of a waterbody (i.e., a Section 404 permit). The current WOTUS definition was promulgated in 2020 under the Trump administration. It has been criticized by environmental groups as federally regulating fewer types of waterbodies than the WOTUS definition promulgated under the Obama administration. For example, ephemeral streams are not regulated under the current WOTUS definition.

    President Joseph R. Biden Jr. has asked the U.S. Army Corps of Engineers (the Corps) and the U. S. Environmental Protection Agency (EPA) to consider revising or rescinding the current definition. He has also asked courts to stay judicial challenges to the current WOTUS definition while his administration reconsiders the issue.

    The Biden administration is expected to propose its own definition of WOTUS, which will, undoubtedly, be more expansive than the current definition and require more projects to obtain federal CWA permitting. Among other things, the Biden administration’s definition of WOTUS is likely to regulate waters (including ephemeral streams) that are considered to have a “significant nexus” with traditionally navigable waters....

    May 18, 2021

    Corps Seeks Comments on Proposed Reinstatement of Suspended NWPs in Pennsylvania

    Environmental Alert

    (by Lisa Bruderly)

    On May 12, 2021, the Baltimore, Philadelphia and Pittsburgh Districts of the U.S. Army Corps of Engineers (the Corps) jointly issued a 15-day Public Notice (SPN 21-26), requesting comments on whether to reinstate certain 2017 and 2021 Nationwide Permits (NWPs) that are suspended in parts of Pennsylvania. The comment period closes on May 27, 2021.

    The reinstatement has been proposed in case the new Pennsylvania State Programmatic General Permit (PASPGP-6) is not finalized and issued prior to the expiration of Pennsylvania’s current state programmatic general permit (PASPGP-5) on June 30, 2021. At present, if PASPGP-6 is not issued before July 1, 2021, most projects in Pennsylvania impacting federally regulated waters would be required to obtain individual Section 404 permits. Obtaining an individual permit is typically a more lengthy and complicated process than obtaining coverage under a programmatic general permit or NWP.

    State Programmatic General Permit

    The PASPGP is the mechanism that the Pennsylvania Department of Environmental Protection (PADEP) and the Corps rely upon to permit most projects in Pennsylvania that impact federally regulated waters, but do not require an individual Section 404 permit. PASPGP-6 allows applicants to obtain both federal Section 404 permits and state water obstruction and encroachment permits for projects impacting federal and state-regulated waters.

    PASPGP-6 has not yet been finalized. The draft PASPGP-6 was published for public comment on September 4, 2020 (SPN 20-57), and the public comment period closed on October 4, 2020. On February 12, 2021, PADEP issued a conditional state water quality certification (SWQC)...

    May 17, 2021

    Pennsylvania Trial Courts Hold that the Term “At the Wellhead” in Natural Gas Leases Allows Operators to Deduct Post-Production Costs

    Energy Alert

    (by Mark Dausch and Cary Snyder )

    In two recent opinions in which Babst Calland represented oil and gas operators, Pennsylvania federal and state trial courts ruled that the term “at the wellhead” in natural gas leases must be interpreted to allow operators to deduct post-production costs when calculating royalty payments.  Coastal Forest Res. Co. v. Chevron U.S.A., Inc., et al., No. 2:20-cv-1119, 2021 WL 1894596 (W.D. Pa. May 11, 2021); Dressler Family, LP v. PennEnergy Res., LLC, A.D. No. 2017019357 (Butler Cty. C.P. Apr. 28, 2021).  In doing so, the trial courts held that the Pennsylvania Supreme Court’s interpretation of the term “at the wellhead” in Kilmer v. Elexco Land Servs., Inc., 990 A.2d 1147 (Pa. 2010) is not confined to issues of statutory interpretation, but also applies to leases.

    In Kilmer, the Pennsylvania Supreme Court ruled that, among other things, the use of the net-back method to calculate royalties did not violate the Guaranteed Minimum Royalty Act (GMRA), 58 P.S. § 33, which required leases to guarantee the lessor at least a one-eighth royalty of all gas recovered from the property.  When calculating royalties, the net-back method provides a mechanism for determining allowable deductions for post-production expenses associated with bringing the oil or gas from the “wellhead” to the market where it is sold.  In reaching its conclusion, the Court in Kilmer relied on a variety of sources specific to the oil and gas industry that stated a royalty is generally not payable from...

    May 12, 2021

    U.S. Senate passes joint resolution disapproving Trump oil and gas methane rule

    The PIOGA Press

    (by Gary Steinbauer and Gina Falaschi)

    On April 28, 2021, the U.S. Senate passed a joint resolution, known as S.J. Res. 14, retroactively revoking a Trump administration rule revising Obama-era Clean Air Act New Source Performance Standards for the Crude Oil and Natural Gas Industry at 40 C.F.R. Part 60, Subparts OOOO and OOOOa (NSPS) that were initially promulgated in 2012 and 2016. The joint resolution, if enacted into law, would reinstate Obama administration rules regulating the methane emissions from the oil and natural gas industrial sector, including the production, processing, transmission and storage segments.

    The Trump administration’s Policy Amendments rule The joint resolution takes aims at a specific Trump administration rule published in the Federal Register on September 14, 2020. Referred to as the “Policy Amendments,” the rule resulted in four key changes to these NSPS, which were promulgated in 2012 and 2016.

    First, the Policy Amendments removed the transmission and storage segment, including transmission compressor stations, pneumatic controllers and underground storage vessels. In removing the transmission and storage segments from regulation under the NSPS, the U.S. Environmental Protection Agency (EPA) found that the segments were improperly regulated because the statutory-mandated finding that sources contribute significantly to air pollution was not made when the segments were added to the industrial sector and the NSPS in 2012 and 2016.

    Second, the Policy Amendments rescinded the methane emission requirements for the production and processing segments of the sector, which include various emission sources at well sites, gathering and boosting compressor stations,...

    May 4, 2021

    Has COVID-19 Escalated Disagreements Between Business Owners?

    Closely-Held Business Perspective

    (by Kevin Douglass)

    Business owners faced with extraordinary operational and financial challenges caused by the COVID-19 pandemic may also be managing special demands and concerns posed by their owners. There is never a good time for an internal ownership squabble to bubble up to the surface, but owner conflicts or differences can be particularly troublesome when the business is already under duress.

    Disruption Can Create Conflict

    There is no question that the pandemic has impacted many businesses’ finances and strategy, as well as relationships between co-owners. The warning signs of an owner disagreement should never be ignored. If left unchecked, these misunderstandings can cause real damage to a company’s health and vitality including negative impacts on the bottom line, employee morale, and even relationships with creditors, customers and suppliers. A company can be particularly vulnerable at critical moments when its owners may already be dealing with the pandemic ramifications or other financial and operational challenges. Do not wait for the perfect time to deal with owner disagreements because that time will never come. The stability of a company’s day-to-day operations and future financial success are often dependent upon resolution of these multi-faceted disagreements between owners.

    Click here for PDF. 

     

    April 30, 2021

    Second Circuit Holds New York’s Climate Tort Lawsuit in Federal Court is Pre-Empted by the Clean Air Act

    Environmental Alert

    (by Casey Snyder and Robert Stonestreet)

    In a unanimous opinion, the federal Second Circuit Court of Appeals ruled that state law “climate tort” claims asserted by the City of New York (the “City”) against five oil companies are preempted by the federal Clean Air Act (CAA).  City of New York v. Chevron Corporation et al., No. 18-2188, 2021 WL 1216541 (2nd Cir. 2021).  In doing so, the Second Circuit became the first federal appellate court to address the merits of climate change tort suits asserted under state law and filed in federal court.

    The City filed the lawsuit in 2018 in federal district court alleging state law claims of public nuisance, private nuisance, and trespass under New York law.  The City argued that the companies’ production, promotion, and sale of fossil fuels has caused, and will cause, the City to expend significant resources in response to climate change impacts, and the companies should bear these costs instead of the City’s taxpayers.

    The district court granted the companies’ motions to dismiss the complaint.  In its opinion, the Second Circuit affirmed the dismissal for largely the same reasons as the district court:

    • federal common law, rather than New York law, applied to City's claims;
    • the CAA displaced claims under federal common law;
    • the CAA regulates only domestic, not foreign, emissions; and
    • foreign policy precluded recognition of a federal common law cause of action targeting greenhouse gas emissions emanating from beyond country's national borders.

    Given the global nature of greenhouse gas emissions, the...

    April 29, 2021

    Aggressive goals aim to decrease emissions — but challenges await

    Smart Business 

    (by Sue Ostrowski featuring Jim Curry and Ashleigh Krick)

    To remain competitive, businesses should stay on top of evolving state and federal policies on renewable energy. These changes present both opportunities and challenges, according to James Curry, managing shareholder in Babst Calland’s Washington, D.C. office, and Ashleigh Krick, an associate at Babst Calland. Commercial and industrial power consumers may be able to obtain benefits from sourcing renewable power, both financially and to answer growing shareholder and lender scrutiny.

    At the same time, the increasing level of renewables coming online presents challenges related to grid reliability, underscoring the continued relevance for other more stable sources of electricity.

    Smart Business spoke with Curry and Krick about the increase in state-level carbon reduction targets, the challenges associated with increased use of renewable energy and the role of traditional generation sources to maintain reliability.

    What is the current state of affairs for renewables?

    In Pennsylvania, bipartisan legislation has been introduced to increase the state’s Alternative Energy Portfolio Standards (AEPS), enacted in 2004 with the goal of increasing the state’s share of power from renewables. The AEPS requires that electric distribution companies and electric generation suppliers supply 18 percent of their electricity from certain alternative energy sources, such as solar, hydropower, geothermal, waste coal and distributed generation. The proposed legislation would increase that requirement by 10 percent.

    Although an early adopter of a renewable portfolio standard, neighboring states have jumped ahead of Pennsylvania in recent years. New Jersey and Maryland have set renewable energy targets of 50 percent...

    April 26, 2021

    Environmental considerations for our region

    Pittsburgh Business Times

    (by Daniel Bates featuring Lisa Bruderly, Kevin Garber and Sean McGovern)

    Even before he won the election, President Joe Biden had pledged to reverse Trump-era environmental policies designed to ease the regulatory burden on business. Since then, he already has proposed a sweeping $2 trillion-plus, infrastructure-improvement plan designed to shore up the nation's roads, bridges, water pipes and other infrastructure, as well as create new jobs.

    Such presidential plans for environmental reform are certain to require significant – and potentially expensive – shifts in business practices in the long term, according to leading attorneys from the Environmental Practice of Pittsburgh law firm Babst Calland. As a result, the region's businesses can expect a climate of transition in the short term, mixed with potential new business opportunities, costly challenges, and delayed development.

    "It was no surprise when, out of the gate, the Biden administration signaled that there were going to be a lot of regulatory changes that were significantly different from the regulatory environment of the Trump administration," said Lisa Bruderly, chair of Babst Calland's Environmental Practice. "One of his first executive orders was to task EPA and other federal agencies to look at the regulations and policies and directives of the Trump administration and determine whether any of those actions should be revoked, rescinded, or revised.

    "So we are waiting to see what those actions may be,"...

    April 22, 2021

    Commonwealth Court Holds Township Need Not Vacate the Road Less Traveled

    The Legal Intelligencer

    (by Anna Jewart and Blaine Lucas)

    Dating as far back as 1735, when the commonwealth was a province controlled by the heirs of William Penn, Pennsylvania has recognized the importance of public roads and their role in preserving a landowner’s right to access his land. Since that time, it has become a foregone conclusion that the government, at all levels, will provide and maintain public roadways. However, because of the necessary impact on the rights of individual landowners, the creation of anything from a federal highway to a municipal alleyway involves complex legal considerations. While the legal implications involved in the creation of public roads through eminent domain or dedication are well known, the abandonment or “vacation” of public roads also has a significant impact on the property rights of individuals, governments and the public. Recently, the Commonwealth Court, in In Re Vacating of Old Route 322, No. 384 C.D. 2020 (Pa. Cmwlth. Mar. 3, 2021), considered what happens when adjacent landowners allege a public roadway has become so “useless, inconvenient or burdensome,” that the municipality is required to vacate it under the General Road Law, 36 P.S. Sections 1781-2293. Although the case is unreported and not precedential, it may be cited for persuasive value, and offers an opportunity to review of this understudied area of the law.

    Local roads often are established by dedication, where a landowner offers land for public use, and the municipality accepts it on behalf of the public. Typically, when a municipality accepts...

    April 14, 2021

    West Virginia Legislature Enacts Renewable Energy Site Reclamation Law

    (by Christopher (“Kip”) Power)

    In an effort to ensure that owners of solar and wind energy facilities (“renewable energy facilities”) do not decommission production facilities without completing proper reclamation, on April 10, 2021, the West Virginia Legislature enacted Senate Bill 492, creating the West Virginia Wind and Solar Energy Facility Reclamation Act (as new Article 32 of Chapter 22 of the West Virginia Code (“Reclamation Act”)). The Reclamation Act (effective July 9, 2021) generally requires that an owner of a wind generation facility or a solar generation facility submit certain information to the West Virginia Department of Environmental Protection (“DEP”), including the date the facility commenced operation; a proposed decommissioning plan (prepared by a “qualified independent licensed professional engineer”); and a cost estimate for execution of that plan. The DEP will use that and other relevant information in preparing (or approving) a decommissioning plan for the site and in determining an appropriate reclamation bond amount for the facility.

    Renewable energy facilities with a nameplate capacity of less than 1.0 megawatts are excluded from coverage. In addition to that limitation, the following are exempt from the application and bonding requirements of the statute: (1) those facilities owned by entities that are “regulated public utilities” who can convince the Public Service Commission (“PSC”) and DEP that they have sufficient “financial integrity and long-term viability” to obviate the need for a reclamation bond; (2) facilities whose owners are legally bound by a decommissioning agreement “based upon a qualified independent party” executed prior to...