Articles, Alerts & Perspectives

Harrisburg, PA

Morgan M. Madden recently joined Babst Calland as an associate in the Energy and Natural Resources, Public Sector and Employment and Labor groups. Ms. Madden represents traditional and renewable energy industry clients in land use and other local regulatory matters.  She also has served as a solicitor for several Pennsylvania municipalities and municipal authorities.  Ms. Madden provides a wide range of services to clients in both the public and private sectors, with an emphasis on land use, zoning, planning, labor and employment advice, and litigation.

Prior to joining Babst Calland, Ms. Madden served as an associate with Eckert Seamans Cherin & Mellott, LLC. She is a 2017 graduate of Widener University Delaware Law School.

Pittsburgh, PA

TEQ Hub

(by Chris Farmakis, Susanna Bagdasarova, Kate Cooper, and Dane Fennell)

By now, you have likely heard about the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) Beneficial Ownership Information Reporting Rule (the “Rule”) from your accountant, attorney, or business colleagues. Promulgated under the Corporate Transparency Act (CTA), the Rule requires most business entities to disclose information to FinCEN about their “beneficial owners”:  individuals who directly or indirectly own or control such entities.

Enacted as part of the Anti-Money Laundering Act in 2021, the CTA is intended to “prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity.” The Rule aims to enhance transparency and support the mission of the CTA by requiring domestic and U.S. registered foreign entities to report information about their beneficial owners to FinCEN. Most entities in the U.S. will likely be required to comply with the Rule, and FinCEN estimates approximately 32 million business will be required to make a filing. The Rule exempts 23 types of entities from reporting requirements, primarily large or regulated entities already subject to various reporting requirements, such as banks, SEC-reporting companies, insurance companies, and ‘large operating companies’, as well as wholly owned subsidiaries of the foregoing.  Entities formed before January 1, 2024, have until 2025 to comply, while entities formed in 2024 have a 90-day compliance period.

Under the Rule, reporting companies must provide detailed personal identifying information for each individual beneficial owner, including name, date of birth, residential street address, and unique identifying number (such as a passport or driver’s license number). A ‘beneficial owner’ is a natural person who directly or indirectly owns or controls at least 25% of the ownership interests of a reporting company or who exercises ‘substantial control’ over the reporting company. …

Pittsburgh, PA and Washington, DC

Law360

(by Joseph Schaeffer and Jessica Deyoe)

On June 28, 2024, the modern administrative state died with the United States Supreme Court’s overruling of Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). Born in obscurity as a six-justice plurality opinion on the meaning of “stationary source” under the Clean Air Act, its two-step framework for resolving ambiguities in agency-administered statutes soon catapulted Chevron into the most-cited opinion in the Supreme Court’s canon. That framework required courts reviewing agency’s statutory interpretations to ask, first, whether Congress had clearly spoken to the precise question at issue. If so, the Congressional intent controlled over any contrary agency interpretation. But, if not, the Court was to defer to the agency as long as it offered a permissible construction of the statute, even if that construction was not the one the Court would have reached on its own.

Chevron and its two-step framework enjoyed a charmed childhood as a perceived means to achieving uniformity in interpretation of agency-administered statutes. But as Chevron entered its teenage years, and particularly once it entered adulthood, its original luster began to tarnish. Members of the bench and bar began to question how the deference owed to agency interpretations under Chevron could be squared with Congress’s directive in the Administrative Procedure Act that “the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action.”[1] And some members of Congress and the broader public bemoaned Chevron as transferring power away from the legislative to the executive branch, enabling each new administration to offer a new gloss on statutory enactments that the prior administration had thought settled. …

Pittsburgh, PA

Pretrial Practice & Discovery

American Bar Association Litigation Section

(by Lucy Wiesner)

Under the Federal Rules of Civil Procedure, parties may obtain discovery regarding any nonprivileged matter that is relevant to either party’s claim or defense and proportionate to the needs of the case. While irrelevant information falls outside the scope of the express language of the rule, courts are generally reluctant to allow parties to redact irrelevant information contained within an otherwise responsive document.

A recent decision from the Southern District of New York provides helpful guidance on when relevancy redactions may be appropriate and how parties can avoid motions practice to resolve disputes over their scope.

The case Kaiser Aluminum Warrick, LLC v. U.S. Magnesium, LLC, No. 22-cv-3105 (JGK) (KHP) (S.D.N.Y. Feb. 27, 2023) concerned the defendant’s failure to fulfill its contract to supply magnesium to the plaintiff. The defendant relied on a force majeure defense, citing unexpected equipment failures. During discovery, the defendant produced several otherwise responsive documents with relevance redactions, to which the plaintiff objected. The plaintiff moved the court to require the defendant to produce the challenged documents in full “arguing that redactions for relevance are disfavored when there is a protective order in place, as one is here.” Id. at *1. The defendant responded that the redacted information was “irrelevant and competitively sensitive, and therefore, it should not be required to be produced in unredacted form.” Id.

The court held that where relevancy redactions “are consistent with Rule 1 and Rule 26 and do not deprive the other party of context, they may be appropriate” but advised that “a party should request permission to make such redactions in advance of production.” Id.  …

Pittsburgh, PA and Washington, DC

PIOGA Press

(by Jean Mosites and Gina Buchman)

On May 30, 2024, Vermont Governor Philip Scott allowed S.259, An act relating to climate change cost recovery, to become law without his signature.  S. 259, entitled the Climate Superfund Act, will require the development of claims to shift the cost of alleged climate-related impacts in Vermont onto the companies that produced fossil fuels responsible for greenhouse gas (GHG) emissions.

This bill is the first of its kind to become law in the United States, and similar legislation is pending in Massachusetts, New York, and Maryland.  Borrowing some concepts from the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), or Superfund, which imposes strict liability for cleanup of contaminated sites on potentially responsible parties, this Act seeks to assign financial liability for climate-related impacts on the companies that extracted and refined petroleum products and other fossil fuels.  Like CERCLA, the Act imposes retroactive liability on entities having conducted lawful business activities in the past.

Vermont’s Act establishes a Climate Superfund Cost Recovery Program to be administered by the Climate Action Office of the Agency of Natural Resources.  The Vermont Treasurer will be required to assess the cost of GHG emissions to the state and its residents during the period January 1, 1995 through December 31, 2024.  The Agency of Natural Resources will apportion liability and make cost recovery demands to “Responsible Parties,” those entities engaged in the trade or business of extracting fossil fuel or refining crude oil responsible for more than one billion metric tons of covered greenhouse gas emissions during the covered period. …

Pittsburgh, PA

The Legal Intelligencer

(by Max Junker and Anna Jewart)

Noted wordsmith Justice Michael Musmanno articulated the rationale for the “deemed approval” concept in Pennsylvania land use law noting: “Without this kind of coercive determination, a Board could effectively prevent the erection of needed structures through the simple process of luxurious lolling while spiders of inattention spin webs of indifference over pending public problems.”  To avoid luxurious lolling by local governments, the Legislature included mandatory deadlines in the Pennsylvania Municipalities Planning Code, 53 P.S. § 10101 et seq. (“MPC”), which governs municipal regulation of zoning, subdivision and land development within the Commonwealth.  The MPC sets forth strict requirements for when and how municipalities make decisions on land use applications, in addition to how they communicate those decisions to the applicant.  A failure to comply with these requirements may result in a deemed approval of the underlying application.

Within days of each other, the Commonwealth Court issued two reported opinions which affirmed the deemed approvals of land use applications. CRG Services Management, LLC v. Lowhill Township, No. 1091 C.D. 2023 (Pa. Cmwlth. June 3, 2024) (deemed approval of a land development plan for a warehouse because the township’s denial letter was inadequate) and Folk v. Mifflin Township Zoning Hearing Board, 969 C.D. 2023 (Pa. Cmwlth. June 5, 2024) (deemed approval for a variance to operate a wedding venue on a farm because the zoning hearing board did not commence the public hearing within 60 days of application’s submission).  In light of these cases, this article provides a brief overview of key MPC provisions which could result in a deemed approval of a land use application. …

Pittsburgh, PA

Pittsburgh Business Times

(by Jenn Malik featuring Joel Bibby)

There’s no magic pill for weight loss – but many think we’re getting closer to having one with the widespread use of diabetes medications, also known as GLP-1s (glucagon-like peptide analogs). And employers with sponsored health plans are seeing a significant impact on their plan budgets from the increased use of these drugs.

“It used to be that the majority of (a company’s) prescription spend on their health benefits was really in specialty drugs,” said Jenn Malik, an attorney in the employment and labor and public sector groups at the law firm Babst Calland. “But now you’re seeing a shift to these GLP-1s that are really topping the charts.”

Primarily injected, the drug compounds, better known as Ozempic and Mounjaro approved for treating type 2 diabetes, and their approved-for-weight-loss lifestyle counterparts, such as brands commonly known as Wegovy and Zepbound, are made of the same active ingredient as the diabetes version, explained Joel Bibby, a licensed pharmacist and managing director of clinical services for Integrity Pharmaceutical Advisors. They work by affecting an enzyme in your gut that can help you feel full and help your body process blood sugars. In addition to treating diabetes, they can help with issues associated with diabetes, like being overweight, which affect many different body systems.

“Indications for use of these drugs are expanding. In March, they were approved to reduce the risk of certain cardiovascular events, like heart attack and stroke. There are also rumors of Wegovy’s pending approval for help with other conditions,” Malik said.

“The broadening use of GLP-1 medications is also driving employers to rethink their plan designs. …

Pittsburgh, PA and Washington, DC

The Authority

(by Michael Korns and Amanda Brosy)

Municipal authorities and other public entities in Pennsylvania have long been familiar with the weight and burden of DEP and EPA mandates and regulations.  Whether it involves issues with stormwater infiltration, erosion and sediment control, or any number of issues related to water treatment, all too often authorities must correct issues that they did not cause.  Given that history, authorities should brace themselves, because new regulations will put them in the crosshairs again.

PFAS – A pollutant that means forever.

The new issue facing authorities relates to a large group of man-made chemicals known as per- and polyfluoroalkyl substances, or “PFAS” for short.  PFAS are resistant to heat, oils, stains, and water, and for that reason, PFAS have been incorporated into a wide variety of consumer products and industrial processes since the 1940s.  They are ubiquitous in the environment and are known as “forever chemicals” because they do not readily break down in nature.  Ongoing research shows a variety of potential health risks related to PFAS exposures.

Pennsylvania has adopted PFAS standards related to drinking water and environmental cleanup, and  EPA, which is working to address PFAS pollution on multiple regulatory fronts, recently finalized the first-ever national drinking water standard related to PFAS. In December 2023, DEP also updated its NPDES Individual Industrial Wastewater permit application to include PFAS sampling. Applications going forward are required to include sampling for four PFAS: PFOA, PFOS, PFBS, and HFPO-DA (commonly referred to as GenX) as part of Pollutant Group 1 sampling.  Because sampling is required under Pollutant Group 1, all industrial categories are subject to the sampling requirements.

The heart of the issue for authorities is this: the elimination of PFAS in drinking water is a regulatory priority for both EPA and DEP.  …

Charleston, WV

The Wildcatter

(by Nikolas Tysiak)

A few cases to report on this month.

Griffin v. Toland, 2024 WL 2269941 (W. Va. S. Ct. May 20, 2024). In a memorandum decision (i.e. – without oral arguments), the West Virginia Supreme Court sought to interpret intentions of the parties to a 1976 deed containing oil and gas reservation language. Hazel L. White acquired all the surface and ½ the oil and gas under a tract of 82 acres during her lifetime, one-half the oil and gas having been properly and effectively reserved by a predecessor in title pursuant to a 1943 deed. By deed dated June 29, 1976, Hazel White conveyed the 82 acres to Timmie and Vickie McMillan, with an exception of ½ the oil and gas. The exception language in the June 29, 1976 was reportedly identical to the reservation language used by Hazel White’s predecessor in title to retain the “other” ½ of the oil and gas via the 1943 deed. The 82 acres was purportedly conveyed multiple times following the June 29, 1976 deed, all containing language nearly identical to both the 1943 deed and the June 29, 1976 deed. Griffin, as successor to Hazel White, filed a declaratory judgment action claiming rightful ownership of the ½ oil and gas interest purportedly reserved under the June 29, 1976 deed, as against the current surface owners (Toland). The trial court found in favor of Toland, stating that the June 29, 1976 deed was ambiguous as to Hazel White’s intent – the language does not indicate whether Hazel indicated to retain the “remaining” one half of the oil and gas associated with the 82 acres, ½ of the ½ interest, or none of the oil and gas. …

Pittsburgh, PA and Washington, DC

The Foundation Water Law Newsletter

(by Lisa M. Bruderly, Mackenzie M. Moyer and Jessica Deyoe)

On March 9, 2024, the Pennsylvania Department of Environmental Protection (PADEP) announced the availability of its draft National Pollutant Discharge Elimination System (NPDES) General Permit for Discharges of Stormwater Associated with Construction Activities (draft 2024 General Permit), which would apply to eligible projects proposing earth disturbance greater than or equal to one acre. See 54 Pa. Bull. 1263 (Mar. 9, 2024). PADEP accepted comments on the draft through April 8, 2024. PADEP’s draft 2024 General Permit includes significant changes compared to the PAG-02 General Permit currently in effect, set to expire on December 7, 2024 (2019 General Permit). To supplement these changes, PADEP is expected to update the Erosion and Sediment Module 1 and Post-Construction Stormwater Management (PCSM) Module 2 to be consistent with the draft 2024 General Permit upon reissuance.

The 2019 General Permit requires that proof of the recording of an instrument for post-construction stormwater management (PCSM) best management practices (BMPs), now referred to as stormwater control measures (SCMs), be submitted to PADEP or the County Conservation District (CCD) with the Notice of Termination (NOT) or a Transfer Application. The draft 2024 General Permit would require submission of the full recording and proof of the recording to PADEP before a pre-construction meeting is scheduled, as well as upon the submission of the NOT to ensure compliance. The draft 2024 General Permit would also require the use of a standard form to document the completion of each structural PCSM SCM, which must be signed by a licensed professional and submitted to PADEP or CCD within 30 days of completion of each SCM. …

Pittsburgh, PA and Washington, DC

The Foundation Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman, Matthew C. Wood)

On January 26, 2024, the Pennsylvania Department of Environmental Protection (PADEP) announced that it would implement a policy requiring natural gas well operators to disclose chemicals they use in drilling and hydraulic fracturing operations before the chemicals are used on-site. See Press Release, PADEP, “Shapiro Administration, DEP Requires All Fracking Companies to Be More Transparent About Chemicals Used in Drilling” (Jan. 26, 2024). To accomplish this, PADEP said it would revise the process by which an operator submits its site-specific preparedness, prevention, and contingency plan (PPC Plan). Regulations require that an operator prepare a PPC Plan before it stores, uses, or generates regulated substances on-site, but until this change, an operator was only required to submit its PPC Plan to PADEP upon request.

Now, PADEP’s policy is that operators must submit PPC Plans to the agency prior to conducting drilling operations so PADEP can post them online on its PA Oil and Gas Mapping website. PADEP has informed operators and industry groups of the change, and since January 3, 2024, has included the policy in cover letters attached to issued unconventional well permits. This change appears to respond to one of eight recommendations summarized in the report prepared by Pennsylvania’s 43rd Statewide Investigating Grand Jury on the unconventional oil and gas industry. See Office of the Att’y Gen., Commw. of Pa., Report 1 of the Forty-Third Statewide Investigating Grand Jury (June 2020). The grand jury was convened, and the PPC Plan policy subsequently implemented, under then-Attorney General and current Governor Josh Shapiro. …

Pittsburgh, PA and Washington, DC

The Foundation Mineral and Energy Law Newsletter

Pennsylvania – Mining

(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman, Christina M. Puhnaty)

Pennsylvania Governor Josh Shapiro recently announced two pieces of legislation as part of his “commonsense energy plan” that would replace state efforts to join the Regional Greenhouse Gas Initiative (RGGI): (1) the Pennsylvania Climate Emissions Reduction Act (PACER) and (2) the Pennsylvania Reliable Energy Sustainability Standard (PRESS). Press Release, Gov’r Josh Shapiro, “Governor Josh Shapiro’s Energy Plan Builds on Pennsylvania’s Legacy of Energy Leadership by Protecting and Creating Energy Jobs and Lowering Electricity Costs for Consumers” (Mar. 13, 2024). According to the Shapiro administration, these Pennsylvania-specific programs are aimed at reducing greenhouse gas emissions, lowering utility bills for consumers, and creating and protecting jobs in the Commonwealth.

PACER was introduced as House Bill 2275 by Representative Aerion Abney and as Senate Bill 1191 by Senator Carolyn Comitta on May 8, 2024, along with many cosponsors. The legislation proposes to establish a Pennsylvania-run CO2 Budget Trading Program with its own auction of CO2 allowances. The bill directs the Pennsylvania Department of Environmental Protection (PADEP) to administer this program in accordance with parts of the regulation promulgated to implement the commonwealth’s participation in RGGI, 25 Pa. Code ch. 145, subch. E (CO2 Budget Trading Program), with some changes. “Budget sources”—fossil fuel-fired electricity generators with a nameplate capacity of 25 MW or more—would be required to comply with the program under PACER and purchase allowances (authorization to emit one ton of VOCs) equal to the tons of CO2 emitted annually.

The legislation also directs PADEP to review the base budget—the number of allowances available for auction set in the CO2 Budget Trading Program regulation—and consider the impact of the budget on jobs, consumers, and the environment to determine whether revisions to the budget are necessary. …