September 9, 2022

Federal Court Dismisses Challenge to Oil and Gas Unitization Statute

Energy Alert

(by Austin Rogers and Robert Stonestreet)

On Wednesday, September 7, 2022, Judge John Preston Bailey of the federal District Court for the Northern District of West Virginia granted a motion to dismiss a lawsuit challenging the validity of Senate Bill 694, West Virginia’s new oil and gas unitization statute. The statute authorizes the West Virginia Oil and Gas Conservation Commission to issue orders authorizing certain oil and gas interests to be included in what are known as development units, even without the consent of the interest owner, under very narrow circumstances.

Plaintiffs, who owned mineral interests in property that could potentially be subject to the unitization procedure in SB 694, sought to prevent the statute from becoming effective by claiming that the law, among other things, allows the unconstitutional taking of private property without just compensation in violation of both the United States Constitution and the West Virginia Constitution. Plaintiffs also argued that the statute deprived them of due process in the taking of their property in violation of the Fifth and Fourteenth Amendment of the United States Constitution. The Court dismissed the challenge because (1) the plaintiffs lacked standing and (2) Governor Jim Justice, the sole defendant, has sovereign immunity under the Eleventh Amendment.

With respect to standing, the Court held that the plaintiffs failed to satisfy any of the three requirements: (1) an injury-in-fact; (2) that was traceable to the statute; and (3) that could be redressed by the Court. According to Judge Bailey, the plaintiffs did not suffer an injury in fact because their tract has not been unitized, and no operator has even applied to unitize their mineral tracts under SB 694. Second, the alleged injury is not traceable to the Governor’s conduct because the Governor has no power to enforce SB 694. …

September 8, 2022

Significant WOTUS Developments Expected in 2022

PIOGA Press

(By Lisa Bruderly)

Why is the WOTUS Definition Important?

This article is an excerpt of The 2022 Babst Calland Report, which represents the legal perspective of Babst Calland’s energy attorneys addressing the most current business and regulatory issues facing the energy industry. To view the full report, go to reports.babstcalland.com/energy2022-2.

Compliance with federal permitting associated with disturbances to streams and wetlands can be a challenge for large and small pipeline projects, causing delays and increased expenses. The extent of required federal permitting is largely dependent on the definition of “waters of the United States” (WOTUS), which determines federal jurisdiction under the Clean Water Act (CWA).

The definition of WOTUS must be considered anytime there is earth disturbance that may impact a stream or wetland. For example, pipeline construction requires U.S. Army Corps of Engineers (Corps) permitting for impacts from crossing, or otherwise disturbing, federally regulated streams and wetlands. Note that the WOTUS definition is included in 11 federal regulations and affects, not only federal permitting for impacts to regulated streams and wetlands (i.e., Section 404 permitting), but also the applicability of NPDES permitting requirements, federal spill reporting and SPCC plans.

Why is the WOTUS Definition Controversial?

The definition of WOTUS has been hotly contested and frequently changed for more than a decade. Presidents Obama, Trump and Biden have all proposed their own definitions, which largely reflected their agendas for more, or less, stringent regulation. The current definition is actually the definition that was in place prior to the Obama administration. The Corps and U.S. Environmental Protection Agency (USEPA) reverted back to this definition when President Trump’s Navigable Waters Protection Rule (NWPR) was vacated by the U.S. …

October 7, 2022

Susanna Bagdasarova and Joseph Pope Join Babst Calland

Attorneys Susanna Bagdasarova and Joseph A. Pope recently joined Babst Calland.

Susanna Bagdasarova joins the Corporate and Commercial and Emerging Technologies groups as an associate. She represents business clients in connection with a broad range of general corporate and commercial law matters, including entity formation, corporate structuring, corporate governance, commercial contracts, and mergers and acquisitions, with a focus on the technology sector. Prior to joining Babst Calland, Ms. Bagdasarova was an associate with Jones Day. She graduated summa cum laude from The Pennsylvania State University, The Dickinson School of Law in 2015.

Joseph Pope joins the Corporate and Commercial Group as senior counsel. Mr. Pope’s practice focuses on corporate and transactional matters, including corporate and commercial finance transactions, with a particular focus on transactions involving commercial real estate. Prior to joining Babst Calland, he was a senior attorney with Hergenroeder Rega Ewing & Kennedy. Mr. Pope graduated cum laude from the University of Pittsburgh School of Law in 2008.

September 6, 2022

Developments in the calculation of an assessment ratio could benefit Allegheny County property owners

Smart Business

(By Sue Ostrowski featuring Peter Schnore)

Commercial property owners in Allegheny County may be able to significantly reduce their real estate tax assessments — and their property taxes — in 2023.

“Real estate taxes are nearly always the largest operating expense for an income-producing property, and an important development in the calculation of the Common Level Ratio for Allegheny County presents a golden opportunity to reduce property taxes,” says Peter Schnore, Shareholder at Babst Calland.

Smart Business spoke with Schnore about what has changed in the assessment ratio, and how commercial property owners can take steps to reduce their property taxes.

What change is impacting commercial Allegheny County property owners?

The Pennsylvania State Tax Equalization Board recently published the Common Level Ratios (CLR) to be used in evaluating the merits of Pennsylvania tax assessment appeals for the 2023 tax year.

The CLR for Allegheny County has dropped significantly since its publication by the state last year — from 81.1 percent to 63.6 percent. This means that if a property was accurately assessed for 2022, all else equal, it will be overassessed by about 27 percent for Tax Year 2023.

A recent court challenge to the 2022 CLR’s calculation, which remains ongoing at the time of publication, appears to have led to the dramatic drop in the CLR for Allegheny County.

What can property owners do to take advantage of this opportunity?

Property owners should find an attorney who is familiar with this area of the law to help them gather evidence to present a strong case for proof of the property’s fair market value. …

September 1, 2022

U.S. Environmental Protection Agency Proposes Designating Certain PFAS as Hazardous Substances Under Superfund

Environmental Alert

(By Matthew Wood and Mackenzie Moyer)

On August 26, 2022, the U.S. Environmental Protection Agency (EPA) issued a pre-publication version of its Proposed Rule which would designate two PFAS chemicals as “hazardous substances” under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as Superfund (Proposed Rule). Specifically, the Proposed Rule would list perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) – the two most common and well-studied PFAS – and their salts and isomers as hazardous substances under CERCLA. This is the first time EPA is making such designations by exercising its authority under CERCLA Section 102, 42 U.S.C. § 9602. Until now, CERCLA has always defined hazardous substances by reference to other statutes (e.g., the Clean Water Act and the Resource Conservation and Recovery Act).

In the Proposed Rule, EPA identified five broad categories of potentially affected entities: (1) PFOA/PFOS manufacturers (including importers and importers of articles); (2) PFOA/PFOS processors; (3) manufacturers of products containing PFOA/PFOS; (4) downstream product manufacturers and users of PFOA/PFOS products; and (5) waste management and wastewater treatment facilities. Potentially affected industries include aviation operations, chemical manufacturing, firefighting foam manufacturers, fire departments and training facilities, polymer manufacturers, and waste management and remediation services.

In the lead-up to issuance of the Proposed Rule, certain entities, such as drinking water utilities, wastewater utilities, and landfill operators, expressed concerns that they could face significant new liabilities for contamination originating from others. In its accompanying announcement, EPA said, without identifying specific industries, that it is “focused on holding responsible those who have manufactured and released significant amounts of PFOA and PFOS into the environment” and intends to use its “enforcement discretion” to “ensure fairness for minor parties who may have been inadvertently impacted by the contamination.” EPA further said that it will continue to engage with impacted communities, wastewater utilities, businesses, farmers, and other parties throughout the consideration of the Proposed Rule. …

August 30, 2022

Attorney Alex Farone Leads Newsletter to Receive a 2022 ABA Award of Achievement

Attorney Alex Farone who is also the Co-Chair of the Allegheny County Bar Association’s Communications Committee of the Young Lawyer’s Division and the Editor and Chief of its “Point of Law” Newsletter led the newsletter to receive a 2022 American Bar Association Award of Achievement. This award is presented to projects submitted by local, state and national ABA YLD Affiliates for well-planned, and executed, programs that contribute significantly to the public and the betterment of the legal profession. Recognition is determined by a jury of their peers.

View the “Point of Law” Newsletter, here.

View the Spring 2022 issue, here.

August 25, 2022

Who Knows? Timeliness of Objector Appeals of Zoning Permit Approvals

Legal Intelligencer

(By Blaine Lucas and Anna Jewart)

While property rights are often viewed as inherently private, both law and society recognize that there is also a public nature to the use of land.  To this end, the Pennsylvania Municipalities Planning Code (MPC)1 establishes requirements mandating public notice of and allowing for public participation in the land use decision-making process.  For example, where a landowner requests a variance or special exception from the zoning hearing board, or a conditional use from the governing body, those entities must publish notice of and hold a public hearing on the application.  At that hearing, impacted members of the public may comment on and/or object to the application.  However, land use decisions for what are called “uses by right” are not made by the governing body or the zoning hearing board, but instead are addressed at an administrative level by the municipal zoning officer.  Upon receipt of an application for a use by right, a zoning officer is not required to provide any public notice, public hearing, or public comment period.  As a result, members of the public may not learn of a zoning officer’s approval until the landowner actually commences construction, which could be long after any permit was issued.

The zoning hearing board has jurisdiction over appeals from the determinations of a zoning officer.  53 P.S. §10909.1(3).  An appeal from a determination adverse to the applicant must be filed with the board within 30 days after notice of the determination is issued to the applicant.  53 P.S. §10914.1(b).  In this situation, the appeals deadline is easy to calculate.  However, when an application is granted, individuals who may wish to oppose the application may not have any idea such a decision occurred.   …

August 24, 2022

PHMSA Publishes Final Rule Introducing New Requirements for Gas Transmission Pipeline Operators

Pipeline Safety Alert

(by Keith Coyle, Chris Hoidal and Brianne Kurdock)

On August 24, 2022, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a new final rule for onshore gas transmission pipelines (the Rule).  The Rule marks the completion of a three-phase rulemaking process, commonly referred to as the Gas Mega Rule, that began more than a decade ago.  While this part of the Gas Mega Rule is commonly known as the “Repair Rule,” there are numerous other safety provisions that are included in the new regulation that should not be overlooked. The Rule amends or adds various provisions in 49 C.F.R. Part 192 and will become effective on May 24, 2023.

In the Rule, PHMSA added, clarified, or modified the following sections of the natural gas pipeline safety regulations:

  • definitions in section 192.3;
  • the management of change process;
  • corrosion control requirements;
  • inspections of pipelines following extreme weather events;
  • integrity management provisions;
  • integrity management assessment requirements;
  • revised repair criteria in high-consequence areas; and
  • new repair criteria for non-high consequence areas.

Definitions and Standards Incorporated by Reference

PHMSA added new definitions referenced in the new regulations,  including close interval survey, distribution center, dry gas or dry natural gas, hard spot, in-line inspection (ILI), in-line inspection tool or instrumented internal inspection device, and wrinkle bend. Furthermore, the definition of transmission pipelines was revised to include a “connected series” of pipelines to clarify that transmission pipeline can be downstream of other transmission pipelines, and to allow operators to voluntarily designate their pipelines as transmission lines. …

August 22, 2022

Attorney Casey Coyle Joins Babst Calland

Attorney Casey Alan Coyle recently joined Babst Calland as a shareholder and member of its Litigation Group. Mr. Coyle will be based in Harrisburg, Pa.

Mr. Coyle concentrates his practice on appellate law and complex commercial litigation.  He frequently represents clients in state and federal appellate courts, with a particular emphasis on appeals before the Pennsylvania Supreme Court.  Over his career, he has represented either a party or an amicus curiae in 15 appeals before the Pennsylvania Supreme Court.

Mr. Coyle has also successfully petitioned the Pennsylvania Supreme Court to grant review of an appeal—commonly known as “allocatur”—on six different occasions.  In addition, he has presented oral argument before the U.S. Court of Appeals for the Sixth Circuit, Pennsylvania Supreme Court, Pennsylvania Commonwealth Court, and Pennsylvania Superior Court.  Before entering private practice, Mr. Coyle served for over two years as a law clerk for the Honorable Thomas G. Saylor, Chief Justice Emeritus of the Pennsylvania Supreme Court.

“We’re very pleased to have Casey as part our Litigation team. He is a highly accomplished litigator representing clients in matters pending before state and federal appellate courts,” said Donald Bluedorn, Babst Calland’s Managing Shareholder. “Casey’s proven experience and track record in appeals before the Pennsylvania Supreme Court will be an invaluable contribution to our Firm, and most importantly for our clients.”

Mr. Coyle also regularly represents businesses in disputes pending before state and federal trial courts.  His practice has focused on cases involving theft of trade secrets, non-competition/non-solicitation agreements, shareholder litigation, emergency injunctions, breach of contract, and breach of fiduciary duties.  In addition, he has represented clients in matters brought before the Pennsylvania Commonwealth Court as part of its original jurisdiction.

“I look forward to serving the expanding needs of my clients and working with a well-respected legal team who shares my values, experience, and philosophy, and a proactive approach to business-focused problem-solving and client service,” said Coyle. …

August 19, 2022

The Inflation Reduction Act Reinstates Superfund Petroleum Excise Tax

Environmental Alert

(By Jean Mosites and Amanda Brosy)

On August 16th, President Joe Biden signed the Inflation Reduction Act of 2022 (the Act) into law. The Act, as part of a larger budget reconciliation package, provides roughly $370 billion in investments in energy and climate reform geared towards lowering greenhouse gas emissions by 40 percent, based on 2005 levels, by 2030.

Among other things, the Act resurrects a long-expired Hazardous Substance Superfund Trust Fund (Superfund) excise tax on oil and petroleum products, effective as of January 1, 2023. In 1980, Congress had established the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). CERCLA is commonly referred to as “Superfund”. It allows EPA to clean up contaminated sites. It also requires the parties responsible for the contamination to either perform cleanups or reimburse the government for EPA-led cleanup work. When there is no viable responsible party, Superfund gives EPA the funds and authority to clean up contaminated sites.

The purpose of the petroleum excise tax is to replenish the Superfund, which provides the federal government with resources to respond to environmental threats related to hazardous substances not otherwise addressed by responsible parties. The petroleum excise tax applies to crude oil received at a U.S. refinery (which tax must be paid by the operator of the refinery) and to petroleum products entering the U.S. for consumption, use, or warehousing (which tax must be paid by the person importing the product into the U.S. for any of those purposes). In addition, if any domestic crude oil is used in or exported from the U.S., and before such use or exportation no tax was imposed on such crude oil at the refinery (as described above), then a separate tax is imposed. …

August 18, 2022

Three Babst Calland Attorneys Named as 2023 Best Lawyers® “Lawyers of the Year”, 31 Selected for Inclusion in The Best Lawyers in America®, and 11 Named to Best Lawyers® “Ones to Watch”

Babst Calland is pleased to announce that three lawyers were selected as 2023 Best Lawyers “Lawyer of the Year” in 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 2023 Best Lawyers “Lawyer of the Year” include:

Blaine A. Lucas, Litigation – Land Use and Zoning “Lawyer of the Year” in Pittsburgh, Pa.

Timothy M. Miller, Oil and Gas Law “Lawyer of the Year” in Charleston, W. Va.

Mychal Sommer Schulz, Litigation – ERISA “Lawyer of the Year” in Charleston, W. Va.

In addition, 31 Babst Calland lawyers were selected for inclusion in the 2023 edition of The Best Lawyers in America (by BL Rankings), the most respected peer-review publication in the legal profession:

  • Chester R. Babst – Environmental Law, Litigation – Environmental
  • Donald C. Bluedorn II – Environmental Law, Water Law, Litigation – Environmental
  • Dean A. Calland – Environmental Law
  • Matthew S. Casto – Commercial Litigation
  • Frank J. Clements – Corporate Law
  • Kathy K. Condo – Commercial Litigation
  • James Curry – Energy Law and Oil and Gas Law
  • Julie R. Domike – Environmental Law, Litigation – Environmental
  • Kevin K.

    • …

August 18, 2022

Not Just Another WARNing About the Economy

Legal Intelligencer

(By Stephen A. Antonelli)

Is the country heading toward a recession?  Are we already there?  If so, for how long will it last?  Or, will we narrowly avoid a recession and instead see a mere economic slowdown as we (hopefully) put the global pandemic in our collective rearview mirror?

The answers to these questions are unclear.  Inflation and interest rates are rising, yet the economy added 528,000 new jobs in July and unemployment is at a pre-pandemic level of 3.5 percent.  Moreover, by the time you read this, the Inflation Reduction Act may have been signed into law.  As a result, the opinions of actual economists and other experts in the field differ as to the likelihood, timing, and duration of a recession.  I will therefore certainly not attempt to offer a prediction of my own.  I will, however, note that employers of all sizes must be mindful of the law if and when they are forced to make the difficult decision of reducing their workforce.

The Worker Adjustment and Retraining Notification (WARN) Act is one such law.  The WARN Act was enacted in 1988 in an effort to ensure advance notice to employees in cases of qualified plant closings and mass layoffs, thereby providing employees with sufficient time to prepare for the transition into a new job.  It requires larger private employers to give advanced notice of plant closings or mass layoffs to their employees (or their unions, if applicable) as well as to state agencies that assist impacted workers and the local government of the impacted area.  Specifically, the Act requires employers with 100 or more full-time employees (or 100 or more full- and part-time employees who work a combined 4,000 hours per week) to provide written notice 60 days in advance of a facility or plant closure or a mass layoff. …

August 17, 2022

The Inflation Reduction Act Bolsters Efforts at the Federal Level to Tackle Climate Change and Promote Clean Energy Solutions

Firm Alert

(By Jim Curry, Sean McGovern, Gina Falaschi and Varun Shekhar)

On August 16, 2022, President Joe Biden signed the Inflation Reduction Act (the Act) into law, calling it “one of the most significant laws in our history.” The United States House of Representatives passed the Act on August 12 along party lines. This vote followed the Senate’s August 7 passage of the bill, also along party lines, with Vice President Kamala Harris casting the tiebreaking vote. In addition to $369 billion in energy security and climate investments, the bill also includes $64 billion to expand Affordable Care Act subsidies for two years and various tax measures, including a corporate alternative minimum tax of 15% and $80 billion to increase enforcement efforts at the Internal Revenue Service (IRS).

The vast majority of the $369 billion allocated for energy security and climate investments in the Act comes in the form of tax credits. The biggest portion of these is for clean energy tax credits ($161 billion). Some of these are modifications or extensions through 2024 of existing tax credits, such as electricity production from renewable resources. In particular, the current Section 45 production tax credit would be enhanced for renewable electricity production projects using domestic steel and other components. The Act also includes significant tax credits for carbon capture and sequestration (CCS) and clean energy production. The Act extends and increases the tax credit under Section 45Q of the IRS code for CCS, creates a new tax credit under Section 45V for the production of clean hydrogen (up to $0.60 per kg, depending on the GHG emissions associated with production), and creates a new tax credit under Section 45U for production of zero-emission nuclear power. …

August 17, 2022

20 People to Know in Energy: Jean Mosites, environmental attorney, shareholder, Babst Calland

Pittsburgh Business Times

(By Ethan Lott)

Jean Mosites is one of Pittsburgh’s most well-known experts in energy and environmental law and a shareholder in Babst Calland’s Environmental, Energy and Natural Resources Group. Her legal expertise and advice has been instrumental for Babst Calland’s clients in energy who are navigating the complexities of the Marcellus Shale development and the myriad regulations in Pennsylvania that surround it.

What do you see as the biggest opportunities for the energy industry right now?

One current opportunity is for oil and gas producers to enhance our country’s energy security and independence by building and maintaining a steady supply of fuel. Production, however, is only one part of the necessary steps in getting products to market. Support is needed to ensure that transmission and refining capabilities are available for long-term reliability of supplies.

What’s your biggest concern for the energy industry right now?

The difficulty of getting product to market as permits and approvals for transmission are challenged, blocked or overturned. This situation affects not only consumers in the region and in the United States, but in the world. Blocking natural gas production in the region reduces energy options for the poorest at home and abroad.

What are some of the major legal issues involving natural gas producers in Pennsylvania?

As environmental law evolves, a major legal issue for natural gas producers is keeping track of new laws, regulations, policies and procedures. The changing nature of the law presents a challenge for businesses that need certainty for long-term planning. New permit requirements related to air emissions or new listings of endangered species, for example, affect operational, regulatory and financial decisions regarding the development of natural gas assets in Pennsylvania. …

August 14, 2022

Navigating Depositions During the Pandemic: Fear of COVID-19

Pretrial Practice & Discovery

American Bar Association Litigation Section by the American Bar Association

(By Janet Meub)

Is the fear of contracting COVID-19 a legitimate excuse to avoid a deposition? Two recent cases highlight the issue.

In March 2020, the world shut down to prevent the spread of the novel coronavirus. Courts closed for all but emergency matters. Touching gas pumps, elevator buttons, and doorknobs could be the kiss of death! Others feared handling mail after it was delivered! When the deposition notice arrives, a witness’s fear of contracting COVID-19 is no excuse to avoid a deposition.

In Stowe v. Alford, No. 2:19-cv-01652 KJM AC, 2021 U.S. Dist. LEXIS 98021 (E.D. Cal, May 24, 2021), the parties were unable to agree, among other issues, as to whether the plaintiff should be required to appear without a mask at his remote Zoom deposition. The first deposition was abruptly discontinued when the plaintiff refused to remove his mask. The defendant filed a motion to compel the plaintiff’s second deposition, and the plaintiff argued that the first deposition was discontinued on meritless grounds.

Federal Rule of Civil Procedure 26(b)(1) governs discovery in federal cases. Remote depositions are permissible under Fed. R. Civ. P. 30(b)(4), especially in light of the COVID-19 pandemic. It is in the court’s discretion to determine whether a second deposition is warranted under the circumstances. Rule 26(b)(2)(C). However, what about the mask issue?

The U.S. District Court for the Eastern District of California ordered that the plaintiff appear on Zoom wearing either no protective face covering or a covering, such as a clear face shield, that allows his face to be seen. …

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