Articles, Alerts & Perspectives

Babst Calland today published its 12th annual energy industry report: The 2022 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.

The Babst Calland Report represents the timely and insightful perspectives of the firm’s energy attorneys on some of the most critical issues facing the industry, including climate change, cybersecurity, ESG and environmental justice, hydrogen and carbon capture sequestration, pipelines, and renewables.

Joseph K. Reinhart, shareholder and co-chair of Babst Calland’s Energy and Natural Resources Group, said, “The U.S. energy industry, and the U.S. economy as a whole, is reacting to shifting market forces and potential significant new changes in laws and regulations. Importantly, Russia’s invasion of Ukraine earlier this year and the resulting worldwide shortage of oil and gas has spotlighted the world’s continued reliance on fossil fuels and reinforced the value of America’s relative energy independence even as the nation and the world continue to seek alternative energy sources.”

Report Features Video Commentary from U.S. Senator Joe Manchin

This edition of The Babst Calland Report also 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 May 26, 2022 called “A Perspective on U.S. Energy Policy with Senator Joe Manchin.” 

To request a copy of The 2022 Babst Calland Report, click here.

The Babst Calland Report is provided for informational purposes for our clients and friends and is not intended to constitute legal advice. 

The Wildcatter

(By Nikolas Tysiak)

PENNSYLVANIA

Commonwealth v. International Development Corporation, 2022 WL 628284 (Commw. Ct. Pa. 2022). This is a deed interpretation case with some Title Wash sprinkles mixed. In 1894, two individuals (Proctor and Hill) conveyed approximately 2,000 acres in Bradford County to Union Tanning Company, excepting and reserving all the coal, oil and gas. This was unseated lands, and the minerals remained assessed with the surface. After several intervening conveyances, the surface estate became vested in Central Pennsylvania Lumber Company (CPLC). CPLC’s surface assessment went delinquent and was sold to Calvin McCauley in 1908. The deed to McCauley effectively “washed” the title to the reserved minerals, which also effectively became vested in McCauley. McCauley subsequently transferred the newly-reunified estates under the 2000 acres back to CPLC in 1910. In 1920, CPLC conveyed the land to the Commonwealth, utilizing the following language:

[t]his conveyance is made subject to all the minerals, coal, oil, gas or petroleum found now or hereafter on, or under the surface on any or all of the lands described in each of the above mentioned parts or divisions [of the 1920 deed]; together with the right and privilege of ingress, egress and regress upon said lands for the purpose of prospecting for, or developing, working or removing the same, as fully as said minerals and mineral rights were excepted and reserved in deed dated October 27, 1894, from … Proctor [and Hill] to … Union …

International Development Corporation became the current successor to CPLC as to the minerals following the above 1920 deed, and the Commonwealth of Pennsylvania continues to own the surface estate to this deed. …

Legal Intelligencer

Alyssa Golfieri is a shareholder in the firm’s public sector and energy and natural resources groups. Her practice focuses primarily on municipal and land use law, with an emphasis on zoning, subdivision, land development and municipal ordinance enforcement.

Practice Profile:

Golfieri is a shareholder in the firm’s public sector and energy and natural resources groups. Her practice focuses primarily on municipal and land use law, with an emphasis on zoning, subdivision, land development and municipal ordinance enforcement.

She represents the firm’s municipal clients on a wide array of local government issues, including the preparation of zoning and land development ordinances pursuant to the Pennsylvania Municipalities Planning Code, the processing of land development applications, responses to record requests submitted under the Pennsylvania Right-to-Know Law, navigation of public bidding matters, abatement of property maintenance issues, defense of notices of violations before zoning hearing boards and magisterial district judges, and compliance with both the Pennsylvania Sunshine Act and the Pennsylvania Public Official and Employee Ethics Act.

Leadership Activity:

Golfieri is an active leader within the firm, having served on the associates, summer associates, recruiting, technology and carpetmaster’s committees. She also serves as a mentor to future generations of attorneys outside the firm.

Pro Bono and Civic Work:

She frequently volunteers as an alumni judge for Duquesne University School of Law 1L appellate oral arguments, a juror for Allegheny County High School Mock Trial Competition, a panelist for Allegheny County Bar Association’s young lawyer’s division roundtable discussion titled “Preparing for the Bar Examination,” and a coordinator for Allegheny County Bar Association’s young lawyer division holiday toy drive.

Experience:

Current employer, May 2011-present, summer associate, 2011, associate, September 2012-December 2020, shareholder, Jan. …

PIOGA Press

(By Sean McGovern)

The Pennsylvania Department of Environmental Protection on March 12 shared an updated draft of its Environmental Justice (EJ) Policy for public comment. Among the many changes, the draft EJ Policy expands the role of the Office of Environmental Justice (OEJ), creates new requirements for unconventional oil and gas, and creates new enforcement priorities for the department. Comments were accepted through May 11.

Pennsylvania’s Environmental Justice Policy

The OEJ oversees environmental justice initiatives and policies in the state. The primary goal of the OEJ is to increase communities’ environmental awareness and involvement in DEP’s permitting process. In 2004, the department created the Environmental Justice Public Participation Policy to provide citizens in environmental justice communities enhanced public participation opportunities during certain permit application processes. The EJ Policy is a critical part of DEP’s environmental justice initiatives, providing guidelines for the agency’s approach to public engagement for permit application reviews in environmental justice areas as defined under the current EJ Policy.

In 2018, DEP circulated a draft revision to the current EJ Policy for public comment. Ultimately, the department withdrew the proposed draft revisions after public comments were received, and the current 2004 version of the EJ Policy remained in effect. DEP continued to evaluate revisions to the EJ Policy and in 2021 proposed to update the policy by incorporating, refining and expanding upon the withdrawn 2018 revisions. On March 12, DEP released the draft EJ Policy for a 60-day public comment period with several public meetings and informational webinars.

Significant revisions and additions to the draft EJ Policy 

The draft EJ Policy proposes to make significant changes to the current policy. …

Legal Intelligencer

(By Varun Shekhar)

On April 6, the U.S. Environmental Protection Agency (EPA) published in the Federal Register a proposed rule that, if finalized, would establish a federal implementation plan (FIP) to address regional ozone transport under the Clean Air Act (CAA). The proposed rule is noteworthy based on the numerous adjustments it makes to existing nitrogen oxides (NOx) emissions budgets for a number of states, including Pennsylvania, as well as marking the first time that the EPA has used the regional ozone transport provision under the CAA to regulate sources other than electricity generating units (EGUs).

Background

Section 109 of the CAA directs the EPA to establish federal National Ambient Air Quality Standards (NAAQS) for certain pollutants deemed appropriate by the EPA. One of these pollutants is ozone, which is formed in part by photochemical reactions involving NOx and volatile organic compounds (VOCs). The most recent NAAQS for ozone was promulgated by the EPA in 2015, which establishes an eight-hour 70 parts per billion ambient standard. Section 110 of the CAA also directs states to submit to the EPA “state implementation plans” (SIPs), to detail how emissions from facilities in each state will attain the NAAQS. SIPs are also required to demonstrate that emissions from facilities in the state will not “contribute significantly” to nonattainment or interfere with continued attainment of the NAAQS by other states (often referred as the CAA’s “Good Neighbor” provision). If a state fails to submit a satisfactory SIP to achieve these requirements, the EPA is required under the CAA to develop and implement a FIP for that state.

The EPA’s approach to implementing the CAA’s Good Neighbor provision began in 2011 with enactment of the Cross-State Air Pollution Rule (CSAPR) (76 Fed. …

Smart Business

(By Sue Ostrowski featuring Ben Clapp)

When conducting corporate or real estate transactions, prospective buyers need to be aware of the environmental risks of the proposed acquisition, or they could find themselves on the hook for millions of dollars in remediation and compliance liabilities.

“Buyers need to work closely with an experienced environmental transactional attorney, sometimes in tandem with an environmental consultant, to ensure they are not acquiring environmental liabilities they didn’t intend to acquire,” says Ben Clapp, shareholder in the Environmental, Corporate and Commercial, and Energy and Natural Resources groups at Babst Calland. “Sellers also need to ensure they do not remain saddled with liabilities they didn’t intend to retain after a sale.”

Smart Business spoke with Clapp about the environmental diligence process in a sale and how to address environmental risks in contractual provisions.

What should potential buyers be aware of regarding environmental risk?

Purchasing a property without proper safeguards could put a buyer at risk of substantial liability should environmental contamination or compliance issues be discovered after purchase. Property owners are generally responsible for contamination, regardless of whether they caused it, including contamination that existed prior to taking ownership. Acquiring a business with undiscovered compliance issues can result in significant capital outlays for corrective actions and raises the possibility of becoming subject to enforcement actions and fines.

Environmental diligence is key to assessing the scope of environmental risk associated with a given transaction. However, the extent of diligence a buyer is permitted to perform can differ based on transaction structure and relative leverage of the parties.

How can buyers identify potential environmental issues? …

Legal Intelligencer

(By Alexandra Farone and Jessica Altobelli)

Regardless of the outcome of the Dobbs case, key employment discrimination standards on the topics of pregnancy and abortion will remain unchanged absent significant legislative amendment to Title VII.

By now, most of us have heard of the infamous U.S. Supreme Court draft opinion leak in the case of Dobbs v. Jackson Women’s Health Organization. The Supreme Court is expected to officially issue its opinion in early July, and if the leaked opinion is an accurate foreshadowing, the court will overturn Roe v. Wade and Planned Parenthood v. Casey to abolish the previously held constitutional right to pre-viability abortions. The leaked opinion, and the larger topic of abortion generally, are often considered third-rail topics in many workplaces, given the strongly held opinions on both sides of the issue. For the same reasons, current U.S. Court of Appeals for the Third Circuit law concerning pregnancy- and abortion-related discrimination, also tends to be an avoided topic. However, attorneys are likely to see a marked uptick in questions from employer-clients concerning their current legal obligations toward pregnant employees or employees who have sought or obtained an abortion. Regardless of the outcome of the Dobbs case, key employment discrimination standards on the topics of pregnancy and abortion will remain unchanged absent significant legislative amendment to Title VII.

Title VII of the Civil Rights Act of 1964 prohibits employment discrimination on the basis of sex. The Pregnancy Discrimination Act of 1978 (PDA) amended Title VII to prohibit sex discrimination on the basis of pregnancy. Specifically, the PDA extended the definition of “on the basis of sex” to include—but is not limited to—pregnancy, childbirth or related medical conditions. …

PIOGA Press

(By Blaine Lucas and Anna Jewart)

What is a “substantive validity challenge?”

Under Pennsylvania law, the question of where certain uses are permitted to occur is fundamentally a local issue. By delegation of the police power through the Municipalities Planning Code, 53 P.S. §§10101 et seq., local governments are vested with the power to adopt zoning ordinances and zoning maps outlining what uses are allowed in what areas within their boundaries. Zoning ordinances are presumed to be valid, and the decision as to where specific uses are permitted is largely within the discretion of the local governing body.

A party challenging the substance of a zoning ordinance bears a heavy burden of proving the provisions are “arbitrary, and unreasonable, and have no substantial relationship to promoting its public health, safety, and welfare.” When reviewing these types of challenges, courts are required to balance the public interest to be served with the confiscatory or exclusionary impact of the ordinance on individual property rights. Although property owners frequently challenge the substantive validity of ordinances they feel are too confiscatory, objectors have also challenged ordinances for being too permissive of a certain use―alleging that they fail to have the required connection to public health, safety or welfare.

Act 13, Robinson II and challenges under the ERA

In 2012, the Pennsylvania General Assembly enacted Act 13, a comprehensive update to the former Oil and Gas Act. Shortly thereafter, the Pennsylvania Supreme Court was tasked with considering the impact of the Article I, Section 27 of the Pennsylvania Constitution, known as the Environmental Rights Amendment (ERA) on Act 13, in which a plurality of the court ultimately invalidated certain provisions of Act 13 limiting the authority of local governments to regulate oil and gas development. …

Smart Business Dealmakers

(By Adam Burroughs featuring Kevin Wills)

Around 2019, Edward Saxon, CEO of Conco Systems, and his four siblings were running the business as equal partners when they recognized it was nearing time for a change.

“All of a sudden we woke up one day and realized we are all in our 60s and the runway was getting short,” Saxon says. “And first I said, ‘I’ll be happy to go. I’ve been running it. You guys can have a shot.’ They got together and said, ‘We don’t want the shot.’ Two of them wanted to go and do their own thing.’”

Having heard stories of deals run without professional help that fell apart, Saxon decided to enlist the help of an investment banker. That was a big help, he says, because not only do they bring buyers to the table but they do a lot of work getting the business prepared, putting a CIM (confidential information memorandum) together, helping owners understand where the real value is in their business and adding value beyond what the owners recognize.

Kevin Wills, an attorney with Babst, Calland, Clements and Zomnir, says when someone is looking to sell a business, one of the first things they should do is look into the potential impediments to doing a deal. That could include a shaky organizational structure, a complicated cap table, issues with unanimous consent, any convertible notes that need to be dealt with, or any rights of refusal.

“A fundamental transaction, like the sale of the business, usually triggers rights in people that aren’t operating day-to-day, and you don’t always think of those people,” Wills says. “So, if you got a family-run business with three family members mainly running it but the next generation of grandkids have trusts that are already in there and they have to consent to everything, you want to make sure you don’t have rogue holdouts that could hijack your deal or leverage better terms for themselves. …

Smart Business

(By Sue Ostrowski featuring Justine Kasznica and Ember Holmes)

Every business, no matter how big or small, faces the risk of a cyberattack.

“If you are on the internet or have networked assets — and almost every business does — you are at risk,” says Justine Kasznica, a shareholder in Babst Calland’s Emerging Technologies, Corporate and Commercial, Mobility, Transport and Safety, and Energy and Natural Resources groups. “The current geo-political climate and the Russia-Ukraine war underscore the paramount importance of cybersecurity to our national security, as Russia has threatened to counter any action the U.S. may make in support of Ukraine with cyberattacks.”

Adds Ember Holmes, an associate in the Corporate and Commercial and Emerging Technologies groups of Babst Calland, “It is prudent that all business owners assess their current situation regarding cybersecurity threats, address areas that are lacking and shore up policies.”

Smart Business spoke with Kasznica and Holmes about the Biden administration’s response to the threat, and how business owners can minimize risk and stay compliant with regulatory requirements.

Who should be concerned about cyber threats?

Threats to cybersecurity impact every business, and ignoring these is irresponsible and dangerous. Small business owners may not think they are at risk, but they are often perceived as not having the resources larger businesses have, making them targets of malevolent attacks. This is especially true for businesses storing or processing personal or sensitive information.

There are also regulatory issues. Small businesses may be prevented from working in certain industries or with certain customers if their systems don’t meet compliance requirements.

How can a business reduce the risk of cyberattacks? …

Babst Calland Attorney Christina Manfredi McKinley, selected to Super Lawyers, part of Thomson Reuters, 2022 Rising Stars for Business Litigation. Only a few attorneys from each state are selected to Super Lawyers designation for any given year. The multi-factor selection process includes independent research, peer nominations and evaluations, as well as professional achievement in legal practice.

Babst Calland Attorney Gina Falaschi, selected to Super Lawyers, part of Thomson Reuters, Rising Stars for 2022. Based in the Firm’s Washington, DC office, she provides legal services for issues involving Environmental law. Only a few attorneys from each state are selected to Super Lawyers designation for any given year. The multi-factor selection process includes independent research, peer nominations and evaluations, as well as professional achievement in legal practice.

Pittsburgh Business Times

(By Justine Kasznica)

Attorney Justine Kasznica would be the first to admit that she moved to Pittsburgh to take a chance on an apparent regional business renaissance driven by a promising technology sector. Over time, the region hasn’t disappointed.

“It’s an incredibly exciting time to be in this region and to be an attorney working with emerging technologies,” said Kasznica, who quickly would find her way into the center of Pittsburgh’s technology universe and help drive significant industry growth as part of a flourishing entrepreneurial ecosystem here.

“We are absolutely capturing a moment in history in this tri-state region,” she said. “To be able to experience the outputs of the efforts of the technologists across the region and to be part of the investor and adviser teams who are helping them grow is as rewarding as it is exciting.”

Today, Kasznica serves as a shareholder of Pittsburgh law firm Babst Calland, leading the firm’s emerging technologies group and serving on the front lines of a local industry sector that has gained global recognition while also facing its share of business and legal challenges. Babst Calland is one of the Pittsburgh region’s largest law firms.

Kasznica recently shared her insights on Pittsburgh’s burgeoning tech sector, from opportunities to greatest challenges, with the Pittsburgh Business Times as part of the law firm’s ongoing “Business Insights” interview series. The series is produced in partnership with the Pittsburgh Business Times.

Universities, R&D, and entrepreneurial support

So what has made the region’s tech sector – sometimes referred to as Pittsburgh’s innovation economy – so strong and thriving, even compared to the likes of California’s Silicon Valley? …