Articles, Alerts & Perspectives

The Legal Intelligencer

(by Krista Staley and Anna Jewart)

On June 30, 2021, Governor Tom Wolf signed Pennsylvania House Bill 1621, the Small Wireless Facilities Deployment Act as Act 50 of 2021 (“Act 50”), into law. This Act reflects years of negotiations between industry groups and municipalities over the balance of local land use authority and ease of deployment in small cell infrastructure deployment.  Effective August 29th, the Act standardizes the local permitting process for small cell facilities located within municipal rights-of-way.

As demand increases exponentially for faster and more reliable wireless service, so does the demand to develop infrastructure capable of providing greater coverage and capacity.  A decade ago, a single large cell tower on the outskirts of town could meet a community’s wireless voice and data service needs.  However, the reliability of these large “macro cell” wireless facilities has decreased as mobile data traffic exploded. The telecommunications industry responded by developing “small cell networks” distributed throughout communities and buildings to better meet to the constant on-the-go data needs of the modern age.  Instead of utilizing a single tower, possibly hundreds of feet high, small cell networks use multiple low-power antennas that connect to fiber optic cables. These small cell systems allow for greater speeds and more uniform coverage where they are deployed. However, they require a greater level of “wireless density” in order to function as intended.  In other words, small cell facilities must be installed every few blocks rather than every few miles.

To achieve the desired wireless density providers have sought to utilize existing utility poles, street lights, or other structures within municipal rights-of-way. This allows for ease of installation as well as proximity to users.  While the use of the right-of-way, and the existing infrastructure therein, is a convenient solution for wireless providers, the rapid development of these technologies has forced municipalities across the country to scramble to determine how to handle permits for the installation of small cell facilities within their communities.  …

The PIOGA Press

This is another excerpt from The 2021 Babst Calland Report, which represents the collective legal perspectives of Babst Calland’s energy attorneys addressing the most current business and regulatory issues facing the oil and natural gas industry. The full report is available online at reports.babstcalland.com/the-2021-babst-calland-report-1.

Appalachian Storage Hub

As has been chronicled in earlier editions of this white paper, the explosive growth of natural gas production from the Marcellus and Utica shale formations in the Appalachian region starting in 2010 produced strong economic gains for West Virginia, Pennsylvania and eastern Ohio for several years.

In addition, much of that gas is relatively “wet”— meaning that it has a high proportion of natural gas liquids (NGLs) such as ethane, propane, butanes and natural gasolines (pentanes) that are used as petrochemicals in various manufacturing industries. Regional leaders, seeking to capitalize on the vast natural gas resources of those shales, began to stress the importance of developing local businesses that use NGLs—rather than allowing plastics manufacturing and other uses to accrue in other areas.

In 2017, the American Chemistry Council published a report suggesting that the buildout of the petrochemical industry in Appalachia could support the construction of as many as five ethane crackers. Among other factors, the report described that a key to the development of petrochemical manufacturing presence in the area would be the establishment of an Appalachian Storage Hub (ASH) that would act as a conduit for the production and sale of NGLs, storing massive quantities of the liquids and connecting the storage facilities to end users via pipelines. U.S. Senators Shelley Moore Capito and Joe Manchin of West Virginia, along with Senator Rob Portman of Ohio, introduced legislation intended to promote the goal of establishing an ASH. …

The Legal Intelligencer

(by John McCreary)

This is the latest installment of the author’s obsessive examination of Pennsylvania’s Medical Marijuana Act (MMA) and the employment law issues it creates. By this point in our examination, it is now established, at least in the trial courts of the Commonwealth, that the MMA created a private cause of action for medical marijuana users claiming that an employer has discriminated against them because of their medical marijuana use. See e.g., Judge William J. Nealon’s comprehensive opinion in  Palmiter v. Commonwealth Health Systems, No. 19-CV-1315, 2019 Pa. Dist. & Cnty. Dec. LEXIS 12307 (Lackawanna Cty. 2019); Hudnell v. Thomas Jefferson University Hospitals, Inc., 2020 U.S. Dist. LEXIS 176198; 2020 WL 5749924 (E.D. Pa. 2020)(citing Palmiter). See 35 P.S. § 10231.2103(b)(“No employer may discharge, threaten, refuse to hire or otherwise discriminate or retaliate against an employee … solely on the basis of such employee’s status as an individual who is certified to use medical marijuana …”)(emphasis supplied).

In a surprising development (at least to the author), however, Commonwealth Court construed the emphasized language in a manner favorable to employers who continue to enforce “zero tolerance” and similar drug policies. In Harrisburg Area Community College v. PHRC, 245 A.3d 283 (Pa.Cmwlth. 2020) (HACC) a nursing student with a valid medical marijuana prescription was expelled from the nursing program after testing positive for marijuana metabolites. She brought a claim before the Pennsylvania Human Relations Commission (PHRC) for disability discrimination against HACC under the Pennsylvania Human Relations Act’s (PHRA) public accommodation provisions, claiming that her medical marijuana use did not impact her ability to complete the nursing coursework and that HACC should be required to reasonably accommodate her by permitting her to use medical marijuana to treat symptoms of her underlying disabilities (post-traumatic stress disorder and irritable bowel syndrome). …

Washington, DC

Renewables Law Blog

(By Ashleigh Krick)

On July 12, 2021, Ohio Governor Mike DeWine signed into law Senate Bill 52 providing counties with the authority to block the construction of certain large solar and wind facilities in unincorporated townships.  The law goes into effect on October 11, 2021.  In short, Senate Bill 52 allows county commissioners to establish restricted areas in unincorporated townships prohibiting the construction of solar developments with generating capacity over 50 MWs and wind farms with over 5 MWs of generating capacity.  If a township is incorporated, it retains jurisdiction to regulate whether the development occurs rather than defer to the county commissioners. Senate Bill 52 also contains requirements pertaining to public meetings in the counties that the facility will be located and decommissioning requirements.  Practically speaking, Senate Bill 52 means that even if a solar or wind company obtains the necessary land rights to construct a solar or wind facility, counties can block its construction.

Senate Bill 52 follows a string of legislative actions in Ohio that appear to have stifled development and investment in solar and wind in the state.  For example, in 2014, Ohio passed legislation requiring wind farms to be setback a minimum of 1,125 feet from the nearest adjacent property line.  In contrast, oil and gas production wells are only required to be located at least 100 feet from the nearest homes.  Since Ohio enacted the wind farm setback requirement, only one wind farm has been approved in the state.

While the full impact of Senate Bill 52 is unknown at this time, solar and wind developers can expect some counties to begin using their authority to restrict the location of solar and wind developments after the law goes into effect in October. …

The Legal Intelligencer

(by Matt Wood)

Over the past few months, Governor Tom Wolf’s administration, the Pennsylvania Department of Environmental Protection (DEP), and other governmental stakeholders, have made strides toward better understanding and addressing contamination of state waters with perfluoroalkyl and polyfluoroalkyl substances (PFAS).  Specifically, recent sampling efforts of certain public water systems (PWSs) and surface waters have resulted in new information about the prevalence of PFAS in state waters and have informed DEP actions toward regulating certain PFAS compounds.

Public Water Source Sampling

On June 3, 2021, the Wolf administration released sampling results from an approximately two-year long statewide effort to sample PWSs for certain PFAS compounds.  PFAS are a group of manmade chemicals used in numerous industrial, commercial, and consumer products.  Prominent examples include non-stick and waterproofing applications and as chemical components of fire fighting foams.  In recent years, PFAS chemicals have been discovered in the environment, including in groundwater (some used as drinking water sources), and in humans, plants, and animals and some studies suggest that PFAS can negatively affect human health.  Because they do not break down naturally in the environment (including in the human body), they are commonly called “forever” chemicals.

In September 2018, Governor Wolf created via Executive Order a PFAS Action Team to investigate and address potential PFAS concerns in the Commonwealth.  The Action Team, made up of agency heads from multiple Pennsylvania agencies, subsequently developed a plan to sample PWSs for PFAS.  Specifically, the Action Team identified PWSs within a half-mile of potential PFAS sources (such as military, fire training, and manufacturing facilities).

In June 2019, the DEP started sampling these PWSs (as well as other locations outside of the half-mile radius of potential sources to establish a baseline).  …

Smart Business 

(by Sue Ostrowski featuring Kate Cooper)

“With the pandemic, our clients suddenly cared a lot about whether their contracts included a force majeure provision, what it said, what it meant and how it could be interpreted,” says Cooper.

Smart Business spoke with Cooper about force majeure provisions and how approaches to them are changing.

What are force majeure provisions?

Force majeure provisions govern the conduct of both parties if unexpected or unforeseeable events result in a party being unable to deliver on the terms of the contract, with an emphasis on the unforeseeable. They’re designed to cover unexpected events and potentially allow you to delay delivering on a contract. But the provisions are not a get-out-of-jail free card, and in most circumstances, they do not let a party to a contract completely off the hook.

The disruption to the supply chain caused by the pandemic and government shutdowns has drawn renewed attention to these clauses. For example, when suppliers couldn’t deliver to their customers, those disruptions had a knock-on effect down the supply chain. Companies aiming to avoid breaching their contracts were hopeful that their force majeure provisions would provide them with relief. However, many were disappointed to find that what they wanted to do — whether that be delay performance obligations, or even terminate the contract entirely — wasn’t permitted by the language of the specific provisions set forth in their contracts.

How is the conversation regarding force majeure changing?

It will be difficult to argue that the pandemic is an unforeseeable event now that we are a year and a half into COVID-19, meaning that COVID-19 (and pandemics generally) will need to be specifically referenced in the provision in order for it to be enforceable in most jurisdictions. …

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)].”

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 that requires PHMSA to issue new leak detection rules for operators of regulated gas gathering, transmission, and distribution lines by December 27, 2021.

Section 114(a) also provided that PHMSA or a relevant state authority must review each plan not later than December 27, 2022, and then every five years. …

Pittsburgh, PA

Renewables Law Blog

(By Anna Jewart)

On June 4, 2021, following 21 nights of public hearings held over the course of 15 months, a conditional use application for a proposed 75 megawatt solar energy system filed by Brookview Solar I, LLC, was denied by operation of law due to a two-two tie vote, with one abstention, by the Board of Supervisors of Mount Joy Township, Adams County.  The applicant faced many of the same challenges and opposition frequently levied against traditional energy sources.

In November 2019, the applicant submitted its application for a solar energy field, proposed to be sited across eleven properties totaling approximately 374 acres of land located largely within the Township’s Baltimore Pike Corridor District (“BPC”) and partially within its Agricultural District (“AC”).  Solar energy systems are a permitted use in the AC district and permitted as a conditional use within the BPC district under the Township Zoning Ordinance, subject to extensive use-specific regulations.  The Board began holding public hearings on the application in January 2020 and concluded in March of 2021.  On June 4, 2021, a motion to approve the application with conditions resulted in a 2-2-1 vote, as did a motion to deny the application.  Under Pennsylvania case law, where a judicial or quasi-judicial body is equally divided, the subject matter with which it is dealing must remain in status quo, in this case resulting in a denial of the application.  Due to the 2-2-1 vote, the Township did not prepare official written findings, but submitted two draft decisions in support of the Board’s motions to deny and approve the application, as well as an official decision simply noting the denial as an operation of law.  The applicant appealed to the Adams County Court of Common Pleas on June 28, 2021. …

Pittsburgh, PA

Renewables Law Blog

(By Bruce Rudoy)

A financial rebound is in progress as COVID-19 becomes less of a driver to business and our general livelihood, and it is one that is apparent in the renewables sector. Experts see growth fueled not just by pent-up demand, but also growing attention to ESG considerations and renewables’ financial advantages.

Corporate merger and acquisition activity was up significantly with solar developers expanding their pipelines, oil and gas companies diversifying into renewables, and funds buying up renewable assets.

According to Mercom CEO Raj Prabhu, Solar project acquisitions reached a record high in the second quarter, he said, with more than 24.7 GW of capacity acquired. That total came from 34 corporate M&A deals, compared to 20 in the first quarter of this year and 13 in the second quarter of 2020.

In the first half of 2021, solar project acquisitions reached 39.3 GW, more than doubling the 14.7 GW acquired in the first half of 2020.

Venture capital funding in particular has experienced a strong recovery. Funding for VC was 680% higher in the first half of the year, compared with last year, with $1.6 billion raised in 26 deals, according to Mercom.

Renewables have been rapidly gaining market share for years. In 2020, the United States saw its fifth consecutive year of renewables consumption growth, reaching a record high of 12% of the country’s total consumption, according to the U.S. Energy Information Administration (EIA).

EIA estimates solar energy accounted for about 11% of last year’s renewable energy consumption, and “overall, 2020 U.S. solar consumption increased 22% from 2019.”

By comparison, the agency said fossil fuel consumption fell last year by 9% to “the lowest level in nearly 30 years.”

The trend is represented globally as well. …

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 gas so extracted, produced or marketed. In 2017, in Leggett v EQT Prod. Co., 800 S.E.2d 850, 862 (W.Va. 2017), the Supreme Court of Appeals of West Virginia interpreted this language as allowing a pro-rata deduction or allocation of all reasonable post-production expenses actually incurred by the lessee, and held that a lessee may utilize the “net-back” or “work-back” method to calculate royalties owed to a lessor pursuant to a lease governed by W. …