Articles, Alerts & Perspectives

Pittsburgh, PA

Smart Business

(By Adam Burroughs featuring Joseph Pope)

The commercial real estate market is facing a number of challenges. Among the most pressing are the new market realities being reflected in certain property insurance coverages that are affecting borrowers’ new and existing loans.

“Certain long-standing insurance requirements simply are not available any longer or are undergoing significant adjustment,” says Joseph A. Pope, an attorney with Babst Calland. “It’s playing out in real time between borrowers and their attorneys and lenders.”

Smart Business spoke with Pope about how changes in property insurance coverage are affecting commercial real estate lending, and what borrowers need to know about it.

How is property insurance changing?

Certain property insurance coverage is no longer available that had historically been part of lenders’ standard coverage requirements. Sometimes those considerations are geographic. For instance, in Florida there are types of property insurance that are either no longer being offered, or providers won’t cover certain properties as insurance companies have essentially hit their maximum amount of risk in the state. In Midwest and Gulf Coast states, changes to hail, windstorm and named storm coverage policies are affecting deductibles and certain payouts for these specific coverages. Similar changes are affecting property insurance in essentially all U.S. markets, including Pennsylvania, whether by way of loss of coverage, higher deductibles or increased premiums.

What now must be negotiated with lenders?

Property owners with existing loans in affected jurisdictions now must explain to their lenders that they may no longer be able to fulfill certain loan requirements that are predicated on insurance coverage. Lenders have been slow to proactively update their previous standard minimum requirements on property loans and there’s no guaranty they will do so in a borrower-friendly way. …

Pittsburgh, PA

Legal Intelligencer

(by John McCreary and Janet Meub)

On August 29, 2023, the United States Department of Labor (DOL) published a Notice of Proposed Rulemaking that would permit union representatives and other nonemployees to participate in workplace inspections conducted by Occupational Safety and Health Act Compliance and Safety Officers (CSHOs).

Section 8(e) of the Occupational Safety and Health Act (OSHA) currently allows “a representative of the employer and a representative authorized by employees the opportunity to accompany CHSOs during the physical inspection of the workplace for the purpose of aiding the inspection.” The OSHA and 29 CFR part 1903 give CSHOs the authority to resolve any disputes about who the employer and employee representatives are and to deny any person from participating in the inspection whose conduct interferes with a fair and orderly investigation. The CSHO also has the authority to permit additional employer representatives and representative authorized by employees to participate in the workplace walk-throughs. See 29 CFR 1903.8(a).

OSHA has historically mandated that the representative authorized by employees for a worksite inspection be an actual employee. Over the years, OSHA has offered guidance on its interpretation of section 1903.8(c) and the definition of “representative authorized by employees”. In 2003, OSHA issued a letter of interpretation (the Racic Letter) in response to the question of whether a union representative who files a complaint on behalf of a single worker could act as a walk-through inspection representative in a workplace that had no labor agreement. OSHA determined that there was “no provision for a walkaround representative who has filed a complaint on behalf of an employee of the workplace.” See, ID OSHA – 2023-0008-0002. Ten years later, in 2013, OSHA issued a second letter of interpretation (the Sallman Letter) stating that workers at a worksite without a collective bargaining agreement could designate a union or community organization for purposes of an OHSA walk-through inspection as long as it had been “authorized by employees to serve as their representative”. …

Washington, DC

PIOGA Press

(By Jessica Deyoe)

On August 17, 2023, U.S. Environmental Protection Agency (EPA) announced its National Enforcement and Compliance Initiatives (NECIs) for Fiscal Years 2024-20271. For over 25 years, EPA has reviewed its priorities and set new enforcement and compliance initiatives every four years. Though EPA is charged with the enforcement of many environmental statutes, it prioritizes certain initiatives to address what it perceives to be the most serious and widespread environmental problems facing the United States.

While the EPA is preparing for the next four-year cycle, it is still enforcing under the current set of NECIs for Fiscal Years 2020-2023. The current six NECIs are:

1. Creating Cleaner Air for Communities by Reducing Excess Emissions of Harmful Pollutants from Stationary Sources;
2. Reducing Hazardous Air Emissions from Hazardous Waste Facilities;
3. Stopping Aftermarket Defeat Devices for Vehicles and Engines;
4. Reducing Significant Noncompliance with National Pollutant Discharge Elimination Systems Permits;
5. Reducing Noncompliance with Drinking Water Standards at Community Water Systems; and
6. Reducing Risks of Accidental Releases at Industrial and Chemical Facilities.

To determine initiatives for FY 2024-2027 cycle, EPA identified three criteria to evaluate the FY 2020-2023 initiatives and to consider new initiatives: (1) the need to address “serious and widespread environmental issues and significant noncompliance,” with particular focus on overburdened and disadvantaged communities; (2) a focus on areas where federal enforcement is needed to “hold polluters accountable” in order to “promote a level playing field”; and (3) alignment with EPA’s Strategic Plan Fiscal Year 2022-2026.

The FY 2024-2027 NECIs selected by EPA focus on three of EPA’s Strategic Plan goals in particular: (1) Tackle the Climate Crisis, (2) Take Decisive Action to Advance Environmental Justice, and (3) Enforce Environmental Laws and Ensure Compliance. …

Pittsburgh, PA

TEQ Magazine

(By 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.

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. Changes in an owner’s personal life may also spark controversy, such as the involvement of a new family member or owner in the business, changes in an owner’s personal finances or simply the advancing age of the company’s primary manager(s).

What are the risks of ignoring owner disagreements?

Owner disagreements can spill over into a business’s operations and finances. …

Pittsburgh, PA

Developing Pittsburgh

(By Michael Korns)

It is a tough market for developers, with both supply chain issues and inflation limiting your options. But luckily, you have found a great piece of property to develop. You have the perfect use in mind; you have your financing lined up; your engineers and architects have determined that you should have no issues with stormwater or permitting; utilities are available; and everything is good to go. You are deep into the due diligence period, perhaps even past it, when you get “the call” with news you never want to hear: “Just a heads up, there may be a problem with the zoning.”

Of course, you looked at the zoning already. You checked the Use Table for this zoning, and you saw your use was listed. Or at least, something close enough was listed. And sure, the definition in the ordinance is a bit strange, and there are some nonsensical technical requirements that are confusing, but there must be a solution? But now the municipality is telling you that you are looking at months of hearings and approvals, and you are stuck in limbo and bleeding money with no guarantee this project will ever get off the ground.

Does this sound realistic to you? Unfortunately, as a land use and zoning attorney, it is all too realistic to me. Many times, when a developer calls, they are facing a situation similar to the one described above. Unfortunately, at this stage, there may be no way to save the project. Even if the issue can be resolved, the project can be significantly delayed, and in a business where timing is everything, a “perfect project” can turn into a black hole waiting for the legal process to unfold. …

Pittsburgh, PA

Smart Business

(By Adam Burroughs featuring Alex Farone)

Many employers have questions about changes, both made and proposed, to certain onboarding issues — an update to the I-9 verification process as well as proposed federal changes to non-competition agreements.

Smart Business spoke with Alexandra G. Farone, Attorney at Law at Babst Calland, about what employers need to know about the I-9 changes and what’s happening with non-compete agreements.

What’s happening with the I-9 verification process?

The I-9 employment eligibility verification process involves looking at documents to confirm the employee is who they say they are and that they are authorized to work in the U.S. The longstanding requirement that employers review those documents in person was relaxed during the COVID-19 pandemic, allowing it to be done remotely. As of August 1, 2023, the categorical relaxation of the in-person verification requirement ended. Employers now are required to resume in-person I-9 verification for all new employees, whether themselves or via an authorized agent, unless they are a registered user of the web-based platform E-Verify in good standing.

In addition, employers are also now required to re-verify in person anyone who had been verified remotely during the COVID-19 pandemic, and to do so by the end of August.

To address the challenge of re-verifying remote employees, employers who are not registered E-Verify users can designate an ‘authorized agent’ — who can be anyone, regardless of qualification — to act on behalf of the company to verify in person the employee’s identification and work authorization documents. But no matter who acts as the agent, the liability for inaccurate verification remains solely with the employer. So, if an agent verified someone who is not actually authorized to work in the U.S., the employer is going to be penalized. …

Pittsburgh, PA

Pretrial Practice & Discovery

American Bar Association Litigation Section

(By Christina Manfredi McKinley and Joseph Schaeffer)

Mallory is undoubtedly a significant development in the Supreme Court’s personal jurisdiction jurisprudence, but its practical impact remains to be seen.

The Fourteenth Amendment to the U.S. Constitution provides that no state shall “deprive any person of life, liberty, or property, without due process of law.” U.S. Const. art. XIV, § 1. For corporations, the question of what constitutes due process—and, specifically, where the corporation can be sued for conduct unrelated to the corporation’s conduct in the forum (i.e., “general personal jurisdiction”)—has continued to evolve.

Indeed, over the last century, the Supreme Court’s jurisprudence has contracted the available forums in which a corporation can be subjected to general personal jurisdiction, culminating in 2014 with the concept that there are only two locations in which a corporation is “at home” for general jurisdiction purposes: where it is incorporated and where it maintains its principal place of business. This test has been a practical one and has provided (some degree of) both certainty to corporate defendants and a disincentive to otherwise-inclined forum shoppers.

At the close of this past term, however, the Supreme Court in Mallory v. Norfolk Southern Railway Co. rejected a due process challenge to a Pennsylvania law that requires out-of-state corporations to submit to general jurisdiction in the Commonwealth as a condition of registering to do business within Pennsylvania. Mallory, 600 U.S. ____, slip op. (2023).

Personal and General Jurisdiction

The concept of “personal jurisdiction” is an important one in the law. It refers to the ability of a court to take an action that is binding on the parties in front of it.  …

Washington, DC

Legal Intelligencer

(by Varun Shekhar)

The U.S. Environmental Protection Agency (EPA) has finalized rulemaking originally proposed in 2016 to remove “emergency” affirmative defense provisions from its Clean Air Act (CAA) permitting regulations for “major sources”.  On July 21, 2023, EPA published a Final Rule amending 40 C.F.R. §§ 70.6 and 71.6 to delete the emergency affirmative defense provisions in light of decisions from the U.S. Court of Appeals for the DC Circuit.

The emergency affirmative defense provision under 40 C.F.R. Parts 70 and 71 originated from rulemaking promulgated by EPA in 1992.  This rulemaking was intended to implement the 1990 amendments to the CAA which established Title V, including requirements for operating permitting programs as applicable to among other things, “major sources”.  The CAA defines a major source as “any stationary facility or source of air pollutants which directly emits, or has the potential to emit, one hundred tons per year or more of any air pollutant…”.  In addition, the CAA also includes as major sources those “that emit[] or ha[ve] the potential to emit considering controls, in the aggregate, 10 tons per year or more of any hazardous air pollutant or 25 tons per year or more of any combination of hazardous air pollutants.”

As part of the 1992 rulemaking, EPA included at 40 C.F.R. §§ 70.6(g) (for state operating permitting programs) and 71.6(g) (for federal operating permitting programs) provisions allowing for an operator to assert an affirmative defense for any unavoidable noncompliance with technology-based emission limits in the event of “any situation arising from sudden and reasonably unforeseeable events beyond the control of the source, including acts of God, which situation requires immediate corrective action to restore normal operation…”.  These provisions also required the operator to keep contemporaneous operating logs or other evidence documenting the occurrence of the emergency event, that the facility was at the time of the event being properly operating, that it took all reasonable steps to minimize emissions, and that notice of the emergency was submitted to the applicable permitting authority within two business days of the exceedance of the emission limit.  …