Articles, Alerts & Perspectives

The Foundation Water Law Newsletter

(By Lisa Bruderly and Christina Puhnaty)

In early September 2022, the Pennsylvania House and Senate Environmental Resources and Energy standing committees (Standing Committees) and the Independent Regulatory Review Commission (IRRC) disapproved the proposed rulemaking to change the water quality criterion for manganese in Pennsylvania. The future of the rulemaking is now uncertain.

Proposed Changes to Manganese Water Quality Criterion

The proposed manganese rule would add a numeric water quality criterion for manganese of 0.3 mg/L to Table 5 at 25 Pa. Code § 93.8c, which is intended to “protect human health from the neurotoxicological effects of manganese.” Executive Summary at 1, “Final-Form Rulemaking: Water Quality Standards and Implementation—Manganese” (Aug. 9, 2022). Section 93.8c establishes human health and aquatic life criteria for toxic substances, meaning the Pennsylvania Department of Environmental Protection (PADEP) would be regulating manganese as a toxic substance. The existing criterion of 1.0 mg/L, which was established in 25 Pa. Code § 93.7 as a water quality criterion, would be deleted. The 0.3 mg/L criterion would apply to all surface waters in the commonwealth. PADEP identified the parties affected by the manganese rule to be “[a]ll persons, groups, or entities with proposed or existing point source discharges of manganese into surface waters of the Commonwealth.” Executive Summary at 3.

PADEP also specifically identified “[p]ersons who discharge wastewater containing manganese from mining activities” as affected parties, and expects that mining operators would need to perform additional treatment to meet this criterion. Id. Final amendments to treatment systems would be implemented through PADEP’s permitting process and other approval actions. Consulting and engineering firm Tetra Tech estimated the overall cost to the mining industry to achieve compliance with the 0.3 mg/L criterion “could range between $44–$88 million in annual costs (that is, for active treatment systems using chemical addition for manganese removal) and upwards of $200 million in capital costs.” Comment and Response Document at 213, “Water Quality Standard for Manganese and Implementation” (Aug. …

Pittsburgh Business Times

In March, the Securities and Exchange Commission (SEC) released a proposed rule entitled Enhancement and Standardization of Climate-Related Disclosures for Investors. If finalized, this rule would become some of the first mandatory Environmental, Social and Governance (ESG) reporting requirements for U.S. companies, requiring the disclosure of climate-related risk information in registration statements and periodic reports.

This proposed regulation has significant consequences not just for public companies, but private companies as well. Babst Calland Environmental Attorney Gina N. Falaschi explains the implications of the proposed rules, should they take effect.

What requirements could the rules introduce?

Under the SEC proposal, public companies would be required to disclose the oversight and governance of climate-related risk by their board and management; how any climate-related risk has a material effect on business and consolidated financial statements; the process for identifying, assessing and managing climate-related risks and how to integrate those processes into the company’s overall risk management; whether the company has adopted a transition plan to deal with climate-related risks and how to measure any physical or transitional risks to its operations; the effect of severe weather events and related natural conditions; and information regarding any publicly set climate-related targets or goals.

The SEC’s proposal also requires the disclosure of certain greenhouse gas emissions. These emissions are divided into three categories based on the Greenhouse Gas Protocol definitions. Scope 1 emissions are the direct greenhouse gas emissions that occur from sources that a company owns or controls, such as emissions from manufacturing activities and vehicles. Scope 2 emissions are the indirect greenhouse gas emissions that occur from the generation of energy that a company buys and consumes in its operations. Scope 3 emissions are the result of assets not owned or controlled by a company that the company indirectly impacts in its value chain, both upstream and downstream, from the company’s operations, such as the purchased goods and services, waste generation, business travel, downstream transportation, distribution and use of products sold, and the end-of-life treatment of products sold. …

Smart Business

(By SBN Staff featuring Gina Falaschi)

In March, the Securities and Exchange Commission (SEC) released a proposed rule entitled Enhancement and Standardization of Climate-Related Disclosures for Investors. If finalized, this rule would become some of the first mandatory Environmental, Social and Governance (ESG) reporting requirements for U.S. companies, requiring the disclosure of climate-related risk information in registration statements and periodic reports.

This proposed regulation has significant consequences not just for public companies, but private companies as well.

Smart Business spoke with Gina N. Falaschi, an associate at Babst Calland, about the implications of the proposed rule, should it take effect.

What requirements could the rule introduce?

Under the SEC proposal, public companies would be required to make a number of disclosures related to their climate-related risks and impact. Those include disclosures regarding the oversight and governance of climate-related risk by their board and management, how any climate-related risk has a material effect on business and consolidated financial statements, and information regarding any publicly set climate-related targets or goals.

The SEC’s proposal also requires the disclosure of certain greenhouse gas emissions, which are divided into three categories. Scope 1 emissions are the direct greenhouse gas emissions that occur from sources that a company owns or controls. Scope 2 emissions are the indirect greenhouse gas emissions that occur from the generation of energy that a company buys and consumes in its operations. Scope 3 emissions are the result of assets not owned or controlled by a company that the company indirectly impacts in its value chain, both upstream and downstream from the company’s operations. Scope 3 emissions would have to be disclosed only if considered ‘material.’

What do companies need to do to prepare? …

The American College of Environmental Lawyers (ACOEL)

(By Donald C. Bluedorn II)

On November 3, 2022, Pennsylvania Governor Wolf signed House Bill 1059, which amends the Commonwealth’s Tax Reform Code and, among other things, establishes the Pennsylvania Economic Development for a Growing Economy (“PA EDGE”) program, consisting of tax credits for four economic areas.  https://www.legis.state.pa.us/cfdocs/billinfo/billinfo.cfm?sYear=2021&sInd=0&body=H&type=B&bn=1059.

Much of the publicity around the bill has focused on the tax credits available to promote a “hydrogen hub” and the use of hydrogen-based technologies.  Indeed, the bill provides for tax credits up to $50 million per year, or a total of $1 billion over a 20-year period.

In explaining his support for House Bill 1059, Governor Wolf started by noting his belief in the importance of the role of hydrogen in addressing the effects of climate change.  “In its most recent report, the Intergovernmental Panel on Climate Change notes that ‘hydrogen is a promising energy carrier for a decarbonized world,’ and highlights hydrogen’s potential to ‘provide low-carbon heat for industrial processes or be utilized for direct reduction of iron ore.’”  https://www.governor.pa.gov/wp-content/uploads/2022/11/20221103-1059.pdf.

The Governor then went on to note his belief that the use of hydrogen must be tied responsibly to the reduction of emissions and the consideration of Environmental Justice.

That said, I recognize that in order for hydrogen to play a meaningful role in reducing emissions, we must ensure that hydrogen used is truly “clean” through stringent emissions standards. We must also commit to strong and equitable community protections to prevent impacts to already overburdened communities and to guide benefits to communities that need them.

Perhaps the most controversial provisions of the bill, or at least those that drew the most attention in much of the press, were the provisions that also authorized a tax credit for the use of natural gas in the manufacturing of petrochemicals or fertilizers. …

Legal Intelligencer

(by Alex Farone and Janet Meub)

Navigating the Family and Medical Leave Act (FMLA) in the COVID era, including the pandemic-related amendments, has felt like a minefield for many employers. Now that the surge of COVID-related uses of FMLA leave has largely passed, a new aspect of statutory compliance is emerging as a hot-button issue: treatment of remote workers under the FMLA.

The FMLA provides eligible employees with up to 12 weeks of protected, unpaid leave per year for qualifying family or medical reasons. In order to be eligible for FMLA coverage, four elements must be met:

1. The employer is a covered employer under the Act, meaning it has at least 50 employees for at least 20 weeks in the current or previous year;
2. The employee must have worked for the employer for at least 12 months, not necessarily consecutively;
3. The employee must have worked at least 1250 hours in the last 12-month period; and
4. The employee must be employed at a worksite where the employer employs at least 50 employees within a 75-mile radius.

Many employers do not pay much consideration to the last element, also known as the “50/75 Rule,” likely because the first element requires 50 employees and in the majority of instances those 50 employees are by default going to work within a 75-mile of the employer’s office. However, in the COVID era and beyond, more and more employees are permitted to work remotely on a full-time basis, and employers are hiring remote employees all over the country, regardless of the location of the employer’s physical office or operations.

The FMLA itself does not address remote workers, but the Department of Labor’s regulations specify that an employee’s personal residence is not a worksite for employees who work at home by telecommuting. …

PIOGA Press

Sources for below article: Pennsylvania Oil & Gas Landowner Alliance (POGLA) Post – November 6, 2022, Senator Yaw Press Release dated 11/7/22, and ‘Pennsylvania General Assembly Enacts Senate Bill to Amend Oil and Gas Lease Act’ alert by Babst Calland published on 11.8.22

(By Chelsea Heinz and Devlin Carey)

Legislation aimed at ensuring landowners are afforded a clear and distinct assessment of royalties paid to them through lease agreements with oil and natural gas operators has been signed by Governor Tom Wolf.

On November 3, 2022, the Pennsylvania General Assembly enacted Senate Bill 806, which amends the Oil and Gas Lease Act of 1979 (P.L. 183, No. 60). The new act seeks to increase transparency around the payment of royalties from oil and natural gas operators to landowners pursuant to their lease agreements.

Senator Gene Yaw (R-23) believes the act will address recent concerns among landowners regarding the way in which royalties are being calculated, described and ultimately paid.

“Concerns have been expressed by land and mineral owners for some time now centered on the lack of transparency that can come with deductions from their royalty payments,” Yaw said. “In some cases, general deductions with little to no description are subtracted from landowner’s checks, leaving them with a fraction of what was promised. “My legislation would not impact lease agreements, but it would require entities making payments to landowners to provide more description, clarity and uniformity on their royalty check statements, something I’ve heard a great deal about from leaseholders across our region,” Yaw said. “This proposal is designed to help ensure all parties feel their lease agreements are executed as intended, and it will help mitigate concerns that have developed in recent years.”

Senate Bill 806, now Act 153 of 2022, was supported by various agencies and organizations, including the Pennsylvania Farm Bureau, the Pennsylvania Oil and Gas Landowner Alliance, the Marcellus Shale Coalition, Bounty Minerals, the Pennsylvania Independent Oil & …

PIOGA Press

(By Gary Steinbauer, Gina Falaschi and Christina Puhnaty)

On October 14, 2022, the U.S. Environmental Protection Agency published a proposed rule that would require all emission sources subject to the Agency’s major New Source Review (NSR) permitting program to consider fugitive emissions when evaluating whether a new source or physical or operational change triggers the stringent major NSR permitting requirements. 87 Fed. Reg. 62,322 (Oct. 14, 2022) (Proposed Rule). The treatment of fugitive emissions, i.e., those “which could not reasonably pass through a stack, chimney, vent, or other functionally equivalent opening,” under the major NSR permitting program has been controversial for decades. While EPA predicts that the Proposed Rule will have limited impact on the regulatory community, EPA and state air permitting authorities may now place even greater pressure on industry to predict and quantify “fugitive emissions” from physical or operational changes to their facilities.

The major NSR permitting program is the Clean Air Act’s permit program that applies to the construction of new “major sources” and “major modifications” (i.e., qualifying physical or operational changes) to existing “major sources.” Applicability determinations under the major NSR program often rely heavily on predicted emissions from a new source or planned physical or operational changes to an existing source. When the new or existing source is located in an area that is in attainment with the Clean Air Act’s national ambient air quality standards (NAAQS), the major NSR program’s Prevention of Significant Deterioration (PSD) requirements apply. More stringent requirements, known as non-attainment NSR requirements, apply when the source will be or is located in an area that is not meeting one or more of the NAAQS. …

Babst Calland has been ranked in the 2023 U.S. News & World Report and Best Lawyers® “Best Law Firms” list nationally in seven practice areas and regionally in 29 practice areas:

• National Tier 1
  • Environmental Law
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    • Bet-the-Company Litigation
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…

Smart Business

(By Sue Ostrowski featuring Chris Farmakis and Mike Matesic)

Finding the right match between investors and businesses needing capital can be hit or miss. How can investors reduce the challenges they face in identifying potential investment opportunities, and how can growing businesses attract the right partner?

“One of the most common barriers to bringing companies and investors together is mismatched expectations, where investors think a company is more mature, and the company is presenting itself that way, but after the investment, the investors find out the company is not as mature as they thought,” says Mike Matesic, President and CEO of Idea Foundry, which has helped launch more than 250 companies that have generated more than $1 billion in direct economic impact to the region over the last 20 years. Helping companies attract needed capital has been an essential part of Idea Foundry’s services and that required getting close to investors to understand their needs.

“The other challenge is that investors don’t like to immediately say ‘no’,” says Chris Farmakis, shareholder and Board Chair at law firm Babst Calland.

“It’s very dangerous for a business to think it’s getting funding and start spending before they have it,” says Farmakis. “It is very difficult for a company to recover when it finds out its promised funding fell through.”

An experienced funding program, however, can screen companies, ensure transparent communication, and bring companies together with a pool of investors.

Smart Business spoke with Farmakis and Matesic about how a third-party funding program can help both sides of the investment equation make the most of the deal.

What are the advantages of working with experienced organizations to find the right partner on both sides? …

Pittsburgh Business Times

In a new partnership between Pittsburgh-based global investor Idea Foundry and law firm Babst Calland, IF Ventures held its inaugural angel investment opportunities event recently. IF Ventures aims to fill a critical investment gap in the Pittsburgh region.

The partnership between the two firms is a natural fit as they have worked together for 15 years, starting and growing new companies, President and CEO of Idea Foundry Mike Matesic told the Pittsburgh Business Times. This new initiative capitalizes on the strengths of both firms to attract investors to raise capital to advance high potential, emerging growth stage companies from various types of industries throughout the Pittsburgh region.

“Idea Foundry is focusing on sourcing the deals, doing the initial vetting, and bringing them forward,” Matesic said. “Chris Farmakis and his team at Babst Calland are working with the investors to help attract the new investors to the program … Chris’ business skills coupled with his legal experience will kick in when we start to put the deals together.”

The initiative uses 20 years of lessons learned — from Idea Foundry’s helping to launch more than 250 companies — to reduce the challenges that commonly occur when bringing companies together, Matesic said. The most common challenge is the mismatched expectations that occur when a company presents itself as being more mature than it actually is, causing a potential investor to realize achieving success will take more money than initially thought.

Babst Calland Shareholder and Board Chairman Chris Farmakis explained how IF Ventures does the “prework” of vetting and evaluating companies for those looking to invest — something, he said can be a “risky and speculative venture.”

“IF Ventures is a group of investors who are serial investors in the region, business owners and just smart people who are involved and engaged in the community,” Farmakis said. …