Articles, Alerts & Perspectives

Washington, DC

PIOGA Press

(By Ben Clapp and Gina Falaschi Buchman)

On March 22, 2023, Chubb, one of the world’s largest insurance companies, introduced new climate-focused underwriting standards intended to induce reductions of methane emissions from the oil and gas production sector.

Under the new standards, Chubb will continue to offer coverage only to clients that implement evidence-based plans to manage methane emissions including, at a minimum, a leak detection and repair (LDAR) program, elimination of non-emergency venting, and measures to reduce emissions from flaring. These criteria commence immediately, but customers will have time to develop an action plan based on their individual risk characteristics. Chubb has also committed to creating a customer resource center to support oil and gas insureds implementing these requirements.

Chubb also announced that it will immediately cease offering coverage for oil and gas projects in government-protected conservation areas designated by state, provincial or national governments. This will include conservation areas covered by International Union for the Conservation of Nature (IUCN) management categories I-V in the World Database on Protected Areas, which includes nature reserves, wilderness areas, national parks and monuments, habitat or species management areas, and protected landscapes and seascapes. A sixth IUCN category applies to protected areas that allow sustainable use, and Chubb plans to develop standards for projects in category VI areas and for oil and gas extraction projects in certain key zones not currently listed in the World Database on Protected Areas by the end of 2023.

It is unclear how Chubb’s new underwriting criteria will compare with existing and proposed federal and state rules like NSPS Part 60, Subparts OOOO and OOOOa, the proposed NSPS Part 60, Subparts OOOOb and OOOOc, and Pennsylvania’s 2022 Control of VOC Emissions from Unconventional and Conventional Oil and Natural Gas Sources Rules. …

Pittsburgh, PA

The Wildcatter

(By Nikolas Tysiak)

For this month’s edition of the Wildcatter, we have two cases from Ohio that are of interest.

In Tera, LLC v. Rice Drilling D, LLC (2023-Ohio-273; 7th Dist.), the Court of Appeals for Ohio’s 7th district was asked to overturn the significant award of monetary damages in favor of a landowner based on a trespass claim. The lease at issue expressly reserved all the oil and gas rights “in all formations below the base of the Utica Shale,” while production indicated that the wellbores had penetrated the Point Pleasant formation. The trial court found that such penetration violated the reservation language of the lease, resulting in the trespass. The Operators involved appealed on various grounds, conceding that the Point Pleasant formation is now considered a distinct rock formation, but was not considered separate from the Utica Shale at the time the leases at issue were executed in 2013 and 2014, and that the term “Utica Shale” held special meaning at that time in Ohio, allowing for the use of extrinsic evidence (evidence outside the lease document) to interpret the lease. The court of appeals agreed with the trial court that the term “Utica Shale” was entirely unambiguous and that no extrinsic evidence was warranted to interpret the same and upheld the trial court’s decision. The appeals court went on to indicate that some of the factors regarding the calculation of damages required further analysis at trial and remanded to the trial court with some instructions on damages calculations. The key takeaway being, at least at this time, in Belmont County, Ohio, leases covering the “Utica Shale” will not cover the Point Pleasant formation.

In Chartier v. …

Pittsburgh, PA

Legal Intelligencer

(by Matt Wood and Mackenzie Moyer)

On March 14, 2023, the U.S. Environmental Protection Agency (EPA) provided a pre-publication version of a proposed National Primary Drinking Water Regulation Rulemaking that would regulate six polyfluoroalkyl substances (PFAS) under the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq (PFAS Rule). The proposed PFAS Rule would establish Maximum Contaminant Level Goals (MCLGs) and Maximum Contaminant Levels (MCLs) for perfluorooctanoic acid (PFOA) and perfluorooctane sulfonic acid (PFOS), two of the most common PFAS – a group of thousands of manmade chemicals used in various consumer, commercial, and industrial manufacturing processes since the 1940s – as individual contaminants. It would also establish a Hazard Index MCL for mixtures containing one or more of perfluorononanoic acid (PFNA), hexafluoropropylene oxide dimer acid and its ammonium salt (HFPO-DA, commonly known as GenX chemicals), perfluorohexane sulfonic acid (PFHxS), and perfluorobutane sulfonic acid (PFBS). Years in the making, the final PFAS Rule will be the first federally enforceable drinking water rule governing PFAS. EPA intends to finalize the PFAS Rule by the end of 2023.

PFAS have been used to make products water-, stain-, and heat-resistant and have been a key ingredient in some aqueous film forming foams (AFFF) used to extinguish flammable liquid fires (e.g., those that might occur on airports or military bases). PFAS are known as “forever chemicals” because they do not break down naturally in the environment. Due to these properties and their ubiquitous nature, PFAS have been found in various environmental media, such as groundwater (including drinking water), plants, animals, and in humans. Toxicity studies suggest that PFAS exposure can lead to adverse health effects.

For PFOA and PFOS, the proposed PFAS Rule sets MCLGs – non-enforceable health-based goals that represent the maximum concentration of a contaminant in drinking water at which there is no known or anticipated negative effect on a person’s health – at 0 parts per trillion (ppt). …

Pittsburgh, PA

Smart Business

(By Adam Burroughs featuring Kevin Douglass)

Many business owners are blindsided when a co-owner files a lawsuit against them detailing a list of grievances. When owners form a new business or an owner is added to an existing ownership group, the stakeholders are typically optimistic about the future. Owners often do not discuss or consider the possibility of future differences and may not address them in their written agreements. Consequently, when a disagreement inevitably arises, business owners frequently choose to minimize or completely ignore the dispute until considerable damage is done to the owners’ relationship, which allows these matters to fester and eventually disrupt the business. But with the right preventive approach, these challenges can be identified and resolved quickly and cost effectively.

“Even companies with just one owner eventually must deal with succession questions, so no business owner is completely immune from dealing with co-owners or the prospect of future owners,” says Kevin Douglass, shareholder at Babst Calland.

Smart Business spoke with Douglass about conflict resolution among business owners.

What can trigger disagreements among owners?

One common trigger is finances. If the company is doing very well, owners may feel entitled to more compensation or at least more input into how additional profits will be invested. In contrast, if the business begins to struggle, owners’ compensation, distributions and benefits may need to be decreased, and tough decisions made about the company’s direction.

Other reasons for conflict can include a change in an owner’s level of commitment or job performance, an owner’s desire for more authority and input into company management, or conflicting business strategies. …

Pittsburgh, PA

The Legal Intelligencer

(by Alex Farone, Janet Meub and Steve Silverman)

The National Labor Relations Board (NLRB) recently announced the return of a wide-sweeping ban on severance agreements that contain provisions that effectively silence certain employees. On February 21, 2023, the NLRB issued its decision in McLaren Macomb, 372 NLRB No. 58, reinstituting its pre-2020 precedent that severance agreements cannot contain: (1) confidentiality agreements precluding the employee from discussing the terms of the severance; and (2) non-disparagement clauses.

In McLaren, a Michigan hospital laid off eleven employees early in the COVID-19 pandemic after federal regulations prohibited the hospital from performing outpatient procedures or allowing nonessential employees to work in the building. The hospital offered these eleven employees a severance agreement that included a non-disparagement clause and a provision not to disclose the terms of the severance agreement. However, the NLRB determined that the severance agreement violated the National Labor Relations Act (NLRA) due to the inclusion of these provisions.

The Board reasoned that offering severance agreements containing broad confidentiality or non-disparagement clauses has a reasonable tendency to interfere with, restrain, or coerce employees’ exercise of their Section 7 rights under the NLRA to engage in protected concerted activity, which constitutes an unfair labor practice in violation of Section 8(a)(1). Under the NLRA, employers are prohibited from interfering with, restraining, or coercing employees who exercise their rights to engage in protected concerted activities, such as discussing the terms and conditions of their employment for the purpose of mutual aid and protection. According to the Board, the confidentiality and non-disparagement clauses in McLaren had a potential chilling effect on the employees’ exercise of their rights, because employees must waive certain Section 7 rights in order to receive the benefits of the severance agreement. …

Pittsburgh, PA

The American College of Environmental Lawyers (ACOEL)

(By Donald C. Bluedorn II)

Unless you have been hibernating this winter, you know about ChatGPT, the artificial intelligence chatbot that rolled out late in 2022. Its developer, OpenAI, describes ChatGPT as follows:

We’ve trained a model called ChatGPT which interacts in a conversational way. The dialogue format makes it possible for ChatGPT to answer followup questions, admit its mistakes, challenge incorrect premises, and reject inappropriate requests.

Or, for those of us who remember watching Star Trek, ChatGPT functions a lot like the computer on the Starship Enterprise – you ask it to do something, and it does it. People have experimented with ChatGPT to write computer code, draft poems, write term papers, and create visual art, among many others.

Recently I experimented with ChatGPT, in an effort to not be that “senior” lawyer who in the early 1990’s said, “I don’t need to learn this new email thing . . . .” More specifically, I asked ChatGPT to do two things:

1. Draft a short purchase and sale agreement for a 65-acre coal-fired power plant; and
2. Prepare a five-page memorandum on the definition of “Waters of the US.”

The results were surprising but instructive.

First, ChatGPT’s purchase and sale agreement was so basic, and so vanilla, that it would be useless to a lawyer hoping to prepare the document in a real transaction.  This surprised me because I had heard and read so many glowing reviews about ChatGPT that I anticipated a fulsome work product.  It is quite possible, if not likely, that much of this is attributable to “user error.”  If I spent more time describing the project and setting forth my anticipated parameters, I expect I would have received a better product.  …

Pittsburgh, PA

Pretrial Practice & Discovery

American Bar Association Litigation Section

(By Jessica Barnes)

A proposed antitrust class action was recently dismissed because of the plaintiffs’ serious failures to comply with the court’s orders regarding discovery.

Interpretations of the extent of a responding party’s obligations to certain discovery requests likely vary by lawyer. One thing that most if not all lawyers would agree with, however, is that a party producing more than 99 percent of its documents after the close of fact discovery is improper, which is what occurred this week in a case out of the U.S. District Court for the Western District of Tennessee.

In American Spirit and Cheer Essentials Inc, et al. v. Varsity Brands, LLC, et al., No. 2:20-cv- 02782-SHL-tmp (W.D. Tenn. Mar. 21, 2023), there were numerous discovery disputes among the parties. Between seeking documents excluded from discovery via protective order, producing documents in a form that was in violation of the mutually agreed upon electronically stored information (ESI) protocol, outright lack of production and responses, failing to maintain and provide lists of search terms used in collecting documents, attempts to serve hundreds of subpoenas, and producing documents either immediately before or after the deposition of a relevant witness, the court described the history of discovery in this matter as “long, complex, and tortured[.]”

The court faced a first round of motions to dismiss in this case, which were granted in part and denied in part. The most critical aspect in the court’s actions here is that it specifically warned the plaintiffs that “willful failure to cooperate in discovery could lead to dismissal of plaintiffs’ case under Rules 37(b) and 41(b).”

Then later came another round of motions to dismiss. …

Washington, DC and Pittsburgh, PA

PIOGA Press

(By Amanda Brosy and Sean McGovern)

This article provides an update on the recent developments in environmental justice (EJ) policy and funding at the federal level, as well as forthcoming updates to Pennsylvania’s own EJ Policy, which could have tangible impacts on Pennsylvania’s regulated community.

Federal Background

Executive Action 

Since Day One of taking office, the Biden administration has made EJ a priority. For example, on January 20, 2021, President Biden signed Executive Order 13985 (Advancing Racial Equity and Support for Underserved Communities Through the Federal Government), which directs federal agencies, including EPA, to “assess whether underserved communities and their members face systemic barriers in accessing benefits and opportunities available pursuant to those policies and programs.” E.O. 13985 then directs agencies to develop plans to overcome these barriers. Two more executive orders on EJ followed in January 2021, including 14008 (Tackling the Climate Crisis at Home and Abroad), which required the integration of EJ considerations into federal agency processes. Notably, E.O. 14008 established the Justice40 initiative, which sets the goal that 40 percent of the overall benefits of certain federal investments flow to disadvantaged communities, and it established an EJ screening tool to highlight disadvantaged communities that are “marginalized, underserved, and overburdened by pollution.”

Last month, President Biden signed Executive Order 14091 (Further Advancing Racial Equity and Support for Underserved Communities Through the Federal Government), which builds upon the Administration’s prior “equity-related Executive Orders by extending and strengthening equity-advancing requirements for agencies, and [positioning] agencies to deliver better outcomes for the American people.” Among other things, E.O. 14091 addresses equity-focused leadership, embedding equity in government-wide processes, and the creation of economic opportunities in rural communities. …

Washington, DC and Pittsburgh, PA

(By Paul Gough)

Three advocates for Appalachian hydrogen and carbon capture buildouts said Pennsylvania and the tri-state region will need to focus on permitting and other legal hurdles ahead of the potential projects that are likely coming over the next several decades of the energy transition.

Jim Curry and Kevin Garber, attorneys at Babst Calland, and Michael Docherty, executive director of Appalachian Energy Future, spoke during a webinar on policy and regulatory issues surrounding hydrogen and carbon capture and storage, which the Biden administration is promoting as a solution to reducing the reliance on fossil fuels in energy, electricity production and heavy industry like metal and chemical manufacturing.

For the full article, click here.

Pittsburgh, PA

Smart Business

(By Adam Burroughs featuring Dane Fennell)

Artificial Intelligence (AI) has made its way into the legal profession — though not in the way that some news headlines might suggest. Recently, a program called ChatGPT passed several law and business school exams. However, for anyone who has any thoughts that we are entering an age of AI legal representation, flesh and blood lawyers who engage in utilizing AI on a daily basis can confirm that those days are a long way off.

“While AI is being used as a tool in a number of different areas of the law, it’s not yet capable of taking over all human roles,” says Dane Fennell, Senior Counsel at Babst Calland. “It’s just an arrow in the quiver that professionals can use to help them be more efficient, saving them and their clients time and money.”

Smart Business spoke with Fennell about the state of AI technology in the legal profession — how it’s being used, and what it can and can’t do.

How would you characterize AI’s place in the legal world?

There are a number of ways that AI has found its way into the legal profession. For example, in M&A due diligence, AI can be used to review large volumes of documents to assist the legal team to home in on the key aspects of a deal with much more speed and efficiency than a manual review. This saves clients time and money, and actually enables the review team to expand the scope of a review to find the ‘needle in the haystack’ issues.

Consumer-based programs are helping those who find themselves with relatively minor legal issues, such as parking tickets and credit card fees. …