Articles, Alerts & Perspectives

Charleston, WV and Pittsburgh, PA

Babst Calland recently names Tiffany Arbaugh, Dane Fennell, Sean Keegan and Matthew Wood as Senior Counsel in the Firm.

Tiffany Arbaugh is a member of the Energy and Natural Resources and Litigation groups. Mrs. Arbaugh has more than 16 years of experience in the oil and gas industry. She focuses her practice on representing corporations in a variety of litigation matters with an emphasis on mineral title, real estate, trespass, fraud and title curative disputes. Mrs. Arbaugh’s practice also includes advising clients in customary business operations, litigation avoidance strategies and litigation preparedness.

Dane Fennell is a member of the Corporate and Commercial group of Babst Calland. Mr. Fennell’s practice focuses primarily on commercial real estate transactions, mergers and acquisitions, drafting commercial transaction agreements, and general corporate matters. Mr. Fennell’s background includes managing complex due diligence aspects of small and large acquisitions and contract management projects. For these projects, he works closely with Solvaire Technologies, L.P., an affiliate of Babst Calland, to achieve reliable and cost-effective results.

Sean Keegan is a member of the Litigation and Employment and Labor groups of Babst Calland. Mr. Keegan has a broad range of litigation experience in several practice areas including commercial, labor and employment, energy, and maritime. He has experience defending shareholder dispute claims, oil and gas lease disputes, insurance claims, and premises liability claims. Mr. Keegan has represented clients in both state and federal courts throughout the United States.

Matthew Wood is a member of the Environmental group. He assists clients on a variety of environmentally-related legal matters arising under major federal and state environmental and regulatory programs, with a focus on issues involving government inquiries, environmental investigations, remediation and concomitant activities under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the Resource Conservation and Recovery Act (RCRA), and their state analogs. …

Washington, DC and Pittsburgh, PA

Babst Calland recently named Varun Shekhar and Josh Snyder shareholders in the Firm.

Varun Shekhar is a member of the Environmental and Transportation Safety groups. Mr. Shekhar’s Environmental practice emphasizes federal, state and local regulatory matters arising under the Clean Air Act (CAA). He counsels Title V facilities across the country regarding compliance determination and assurance, CAA Section 114 information requests, and environmental audits. Mr. Shekhar draws upon his science and engineering background to help clients develop compliance solutions that are practical, technically and legally sound, and to advise entities in the course of enforcement actions by the U.S. Environmental Protection Agency, U.S. Department of Justice, and state agencies, as well as citizen suits within federal district and appellate courts. Mr. Shekhar also has substantial experience in assisting entities with continuous parametric and emissions monitoring systems, including coordinating with consultants and other technical advisors in identifying and addressing operational and data processing issues as they relate to compliance determination.

Joshua Snyder is a member of the Litigation and Energy and Natural Resources groups of Babst Calland.  Mr. Snyder has extensive experience representing oil and gas producers in a range of disputes.  His energy litigation experience includes defending oil and gas producers and contractors from personal injury, toxic tort, nuisance, and lease dispute claims.  Additionally, Mr. Snyder has represented clients in the manufacturing, finance, healthcare, and coal industries in a range of commercial disputes.  He has represented clients in federal and state courts, as well as before administrative bodies and arbitration panels.

Smart Business

(By Sue Ostrowski featuring Gina Falaschi and Susanna Bagdasarova)

Under a proposed new rule, many federal suppliers would be required to annually disclose their greenhouse gas (GHG) emissions and climate-related financial risks, in addition to setting GHG emissions reduction targets. The result could be a significant impact on a business’s reporting requirements.

“The proposed rule was published on Nov. 14, 2022, by the Department of Defense, General Services Administration and National Aeronautics and Space Administration,” says Susanna Bagdasarova, an associate at Babst Calland. “The Federal Supplier Climate Risks and Resilience Rule directs some federal suppliers to address climate-related risks as part of the Biden administration’s climate-change initiatives, including its goal of achieving a net-zero emissions economy by 2050.

“Businesses with government contracts should assess whether they need to comply,” says Gina Falaschi, an associate at Babst Calland. “Assessing potential impacts will help businesses be prepared for compliance deadlines when and if the rule is finalized.”

Companies can submit written comments on the proposed rule until Feb. 13, 2023, which will be reviewed prior to the federal agencies releasing the text of the final rule.

Smart Business spoke with Falaschi and Bagdasarova about how the Federal Supplier Climate Risks and Resilience Rule could impact federal suppliers.

What does the proposed rule require?

It imposes GHG emissions disclosure and reporting requirements on certain federal suppliers. “Significant contractors,” those receiving at least $7.5 million but less than $50 million in federal contract obligations during the previous fiscal year, would be required to report an annual inventory of their Scope 1 and Scope 2 emissions.

“Major contractors,” those receiving more than $50 million in federal contract obligations during the previous year, would be subject to the same requirements. …

Pittsburgh, PA

Legal Intelligencer

(By Harley Stone and Anna Jewart)

Enacting and amending zoning regulations is a time-consuming matter. In fact, months often pass from the inception of an idea to the implementation of a zoning scheme and its actual effective date. This is due in large part to the stringent adoption requirements set forth by the Pennsylvania Municipalities Planning Code, 53 P.S. Section 10101 et seq. (MPC). These MPC mandated procedures require municipalities to obtain recommendations from their local planning bodies, submit proposed zoning ordinances and amendments to the relevant county planning agency, and to hold public hearings to solicit public comment.

Consequently, municipalities frequently must consider what to do with land use applications received during the period in which an ordinance is “pending,” but has not yet become effective. The “pending ordinance doctrine,” was created by the courts prior to adoption of the MPC. The doctrine was designed to protect municipalities from instances where an applicant proposes a use which conforms to the existing zoning scheme but would not be permitted under zoning changes being considered by the municipality and for which it has advertised its intent to hold public hearings. When the pending ordinance doctrine applies, a land use applicant may be required to conform to proposed zoning regulations which have not yet been adopted.

However, the doctrine does not always apply. In fact, the MPC includes certain statutory exceptions to the pending ordinance doctrine which are intended to protect landowners and applicants. Section 508(4)(i) of the MPC, and its counterpart in Section 917 modify the applicability of the pending ordinance doctrine to protect duly filed land development applications from changes or amendments in the relevant zoning ordinance. …

Legal Intelligencer

(by Ben Clapp)

The risk transfer transaction structure is being increasingly employed in Pennsylvania and elsewhere as industrial site owners seek to clear long-tail environmental liabilities off their balance sheets.  Commonly known as an environmental liability transfer, these transactions generally involve the purchaser acquiring the real property and other assets associated with an industrial facility and assuming responsibility for all environmental liabilities associated with that property, including site closure, demolition, and environmental remediation obligations.  Often, the purchaser agrees to assume all such liabilities regardless of whether they arose prior to or after the purchaser’s acquisition of the facility.  The purchaser also commonly provides a release of liability and indemnity to the seller.  The costs associated with the purchaser assuming these obligations and liabilities are then deducted from the value of the assets being acquired to arrive at the transaction price. This price is frequently “upside-down,” with the seller paying the purchaser to acquire the property and assume its obligations.

While environmental liability transfers have been around for years, the transaction structure appears to have increased in popularity recently as power generators and other industrial companies are motivated to divest non-core assets and reduce environmental expenditures.  In the power sector in particular, a shift away from coal-fired electricity generation has left power producers holding old coal plants that are closed or rapidly nearing closure, and ancillary assets such as coal ash landfills, all of which come with hefty environmental carrying costs.  On the other hand, these properties are often well-suited for redevelopment, being industrially zoned, with access to electricity transmission lines and, often, shoreline infrastructure.  Companies specializing in acquiring properties through environmental liability transfers believe that they can address environmental issues more efficiently and cost-effectively than the previous owners, leaving them well-positioned to profit by redeveloping the property and either selling or operating it once environmental obligations have been satisfied. …

TEQ Magazine

(By Justine Kasznica)

Be Prepared

According to the CISA and the FBI the first and most important step towards protection is preparation. Being prepared includes creating, maintaining, and exercising a cyber incident response plan, resilience plan, and continuity of operations plan; ensuring personnel are familiar with key steps that must be followed during a cyber breach incident; identifying a resilience plan that addresses how to operate if you lose access to-or control of- your company’s systems; and implementing back data back-up procedures. In addition, companies need to minimize gaps by ensuring all security protocols and protections happen around the clock, including holidays and weekends.

Enhance the Organization’s Cyber Posture

Enhancing an organization’s cyber posture is imperative to its safety from any form of cyberattack. An organization may ensure proper identity and success management, protective controls and architecture, and vulnerability and configuration, by requiring strong passwords and multi-factor authentication for all users. By monitoring and detecting abnormal activity like various unsuccessful logins or unlikely geographic access, a company can spot attempted breaches early enough to prevent any damage from occurring. It is also helpful to update software in a timely manner and to be sure to use industry recommended antivirus programs.

Stay Vigilant

Simply implementing initial data privacy, security, and response measures is not enough. Cybercriminals and their methods are constantly evolving. Taking a proactive approach to data privacy and security, and being willing to invest in same, is vital to ensuring that a company’s safeguards are adequate and up-to-date. As necessary, internal and external annual audits and/or reviews of a company’s systems and policies is crucial to its data security. …

The Wildcatter

(By Nikolas Tysiak)

I hope everyone had a wonderful Thanksgiving holiday full of friends and family (and delicious, delicious turkey). I want to start out this update with something that should have been in the last update but was not.

Effective June 10, 2022, the West Virginia legislature modified Chapter 11A of the West Virginia Code to streamline the tax sale process by (1) eliminating the bifurcated distinction between “delinquent” and “non-entered” tax assessments, and (2) standardizing the statute of limitations for bringing procedural challenges to the tax sale process. Under the old laws, separate tax sale procedures existed for tax assessments that were “delinquent” (e.g., entered on the tax rolls but not timely paid) vs. “non-entered” (e.g., an assessment for a given real estate interest did not clearly exist on the appropriate county tax rolls). For delinquent assessments, the local sheriff’s tax office had original jurisdiction over the administration of sales and tax deeds; if a given assessment was not redeemed from delinquency or sold within certain time frames, such delinquent assessments were turned over to the State Auditor’s office for further administration and sale. Non-entered assessments existed exclusively under the original jurisdiction of the State Auditor’s office for administration and sale. In practice, the State Auditor’s office either explicitly or implicitly gave county assessors and sheriffs significant leeway in administering these taxation issues.

As landmen and lawyers practicing in West Virginia likely know, property interests affected by tax sales and tax deeds have proven challenging insofar as the ownership of executive rights and royalties pertaining to oil and gas. Recent caselaw brought a semblance of continuity to the effect of “non-standard” assessments affecting oil and gas interests, but in a way that was not anticipated by many title and real estate practitioners, which yielded varying and sometimes counter-intuitive results. …

PIOGA Press

(By Gary Steinbauer, Gina Falaschi and Christina Puhnaty)

On November 11, 2022, the U.S. Environmental Protection Agency (EPA) released a pre-publication version of its supplemental proposal for Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review (Supplemental Proposal). The Supplemental Proposal has been highly anticipated since EPA published its initial proposal on November 15, 2021. EPA, Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review, 86 Fed. Reg. 63110 (Nov. 15, 2021) (Initial Proposal).

EPA currently regulates emissions from oil and natural gas facilities under 40 C.F.R Part 60 Subparts OOOO[1] and OOOOa.[2] As part of the Initial and Supplemental Proposals, EPA would regulate oil and natural gas facilities constructed, modified, or reconstructed after November 15, 2021, under a new Subpart OOOOb. With the Supplemental Proposal, EPA has released proposed regulatory language for Subpart OOOOb. In addition, EPA released proposed regulatory text for emissions guidelines in a new Subpart OOOOc. These emissions guidelines are intended to inform states in the development, submittal, and implementation of state plans to establish standards of performance for greenhouse gases (in the form of limitations on methane) from sources existing on or before November 15, 2021. Under the Supplemental Proposal, states and tribes would be required to submit plans to EPA for review within 18 months of the publication of a final rule, with a compliance deadline for existing sources that is no later than 36 months after the deadline to submit the plan to EPA. The Supplemental Proposal also includes an updated proposed “Appendix K,” which is a protocol for determining leaks using optical gas imaging that EPA is now proposing to limit to natural gas processing plants. …

Pretrial Practice & Discovery

American Bar Association Litigation Section

(By Jessica Barnes)

Numerous allegations of misconduct support a request for over $2 million in sanctions in an ongoing discovery dispute.

There is a line between zealous advocacy and bad-faith avoidance of discovery obligations. Attorneys in In re: Facebook Inc. Consumer Privacy User Profile Litigation, Case No. 18-md-02843-VC (N.D. Ca. 2022) may have crossed that line.

This matter began in March 2018 and involves the discovery that a third-party app developer harvested personal data from roughly 87 million Facebook users and sold it to Cambridge Analytica, a political consulting firm.

In September 2022, the Facebook-user plaintiffs explained to a California district judge why discovery sanctions were appropriate in this case. Specifically, the judge found “abominable” deposition misconduct and was outraged by Facebook’s years-long refusal to turn over certain user data and non-privileged internal communications.

The so-called “deposition misconduct” included Facebook’s witness refusing to answer basic questions and the defense attorney repeatedly telling the witness that she did not have to respond to the question.

With respect to the allegations of refusing to turn over certain information, Facebook attorneys argued that the orders of the judge who presided over discovery disputes were ambiguous. The current district judge did not buy that argument, accusing Facebook attorneys of pouncing on any “little ambiguity” and using it to obstruct and delay the production of obviously responsive materials.

In November 2022, the Facebook-user plaintiffs submitted their total monetary request for sanctions related to fees and costs as a result of discovery misconduct—which totaled over $2 million.

The Facebook-user plaintiffs explained in their briefing, “Plaintiffs believe that the general approach that Facebook . …

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

(By Joseph Reinhart, Sean McGovern, Matthew Wood and Gina Falaschi)

On July 19, 2022, House Bill 2644, 2022 Pa. Legis. Serv. Act 2022-96 (Act 96), became law, without Pennsylvania Governor Tom Wolf’s signature. The new law keeps Pennsylvania’s oil and gas well bonding amounts at the current levels of $2,500 per conventional well and $25,000 for a blanket bond for multiple conventional wells. The blanket bond amount will increase by $1,000 for every additional conventional well drilled six months after July 19, 2022, not to exceed $100,000. However, the Pennsylvania Department of Environmental Protection (PADEP) will waive the $1,000 increase for a new conventional well if the operator has plugged an orphan well at the operator’s own expense. Other than the $1,000 increase for blanket bonds, Act 96 precludes PADEP and the Environmental Quality Board (EQB) from raising bonding amounts for 10 years from the effective date. During this time, only the general assembly has such authority. Act 96 does not place a similar 10-year protection period on the adjustment of unconventional well bond amounts, allowing the EQB to adjust amounts every two years to reflect PADEP’s projected well plugging costs. The EQB has been considering two petitions: one to increase well bonding amounts for conventional wells to $38,000 per well and another to increase unconventional well bonding amounts to $83,000 per well. Act 96’s enactment effectively prevents the petitioned increase for conventional wells. See Vol. XXXVIII, No. 4 (2021) of this Newsletter.

In a formal statement published in the July 30, 2022, Pennsylvania Bulletin, Governor Wolf said he allowed Act 96 to become law, but had several concerns with the legislation, including: (1) the directive that federal Infrastructure Investment and Jobs Act (IIJA), Pub. …

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

(By Joseph Reinhart, Sean McGovern, Matthew Wood and Gina Falaschi)

In response to passage of the Infrastructure Investment and Jobs Act (IIJA), Pub. L. No. 117-58, 135 Stat. 429 (2021), and its conventional well plugging component, the Pennsylvania Department of Environmental Protection (PADEP) invited stakeholders to participate in several workgroup sessions to gather information and assist with PADEP’s development of a new conventional oil and gas well plugging program. See PowerPoint Presentation, PADEP, “Infrastructure Investment and Jobs Act (IIJA) Implementation” (Apr. 28, 2022); Notice, “DEP Inviting Stakeholders to Participate in Workgroups on New Federal Conventional Oil & Gas Well Plugging Program,” PA Env’t Digest (Aug. 4, 2022).

PADEP held seven workgroup sessions between August 23 and September 19, 2022. The sessions were open to the public, other interested parties, and industry. Covered topics included due diligence and documentation of previously undocumented abandoned wells; project prioritization; engineering design, permitting, and monitoring requirements; and handling of waste generated from plugging abandoned wells and reclaiming well sites. See PADEP, “September 2022 Report to the Citizens Advisory Council” (Sept. 2022); PADEP, “October 2022 Report to the Citizens Advisory Council” (Oct. 2022).

Of note, at a September 1, 2022, workgroup meeting, Joe Kelly, PADEP Bureau of Oil and Gas Planning and Program Management, said that any waste generated by the new plugging program will not be exempt from hazardous waste requirements, unlike the same or similar wastes generated from active oil and gas production wells and facilities (as exempted by 40 C.F.R. § 261.4(b)(5)). See David E. …

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

(By Joseph Reinhart, Sean McGovern, Matthew Wood and Gina Falaschi)

On June 25, 2022, the Pennsylvania Department of Environmental Protection (PADEP) published General Permit WMGR163 (Permit) in the Pennsylvania Bulletin, 52 Pa. Bull. 3632 (June 25, 2022). PADEP issued the Permit following a 60-day comment period that closed on March 15, 2022. As issued, the Permit authorizes the short-term processing, transfer, and beneficial use of oil and gas liquid waste to hydraulically fracture or otherwise develop an oil or gas well under the authority of the Solid Waste Management Act, 35 Pa. Stat. §§ 6018.101– .1003, and the Municipal Waste Planning, Recycling and Waste Reduction Act, 53 Pa. Stat. §§ 4000.101–.1904. The Permit covers facilities that process and beneficially reuse oil and gas liquid waste for no more than 180 consecutive days at any one time.

Any company interested in using the Permit must register its authorized activities with PADEP. 25 Pa. Code § 287.643. In addition, PADEP is prohibited from requiring an applicant to obtain a determination of applicability from the agency prior to the issuance of the final permit for the land application of material. See id. § 287.641(c), (d). The Permit is applicable to the same oil and gas facilities eligible for coverage under General Permit WMGR123 (“Processing and Beneficial Use of Oil and Gas Liquid Waste”), but with fewer conditions. Key provisions in the Permit include:

1. An authorized facility may process and transfer oil and gas liquid waste for no more than 180 consecutive days during the Permit’s two-year coverage period and a permittee can only operate for a maximum of one year during that period.

…

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

(By Joseph Reinhart, Sean McGovern, Matthew Wood and Gina Falaschi)

On June 11, 2022, the Pennsylvania Department of Environmental Protection (PADEP) published a substantive revision to its technical guidance document (TGD) Radioactivity Monitoring at Solid Waste Processing and Disposal Facilities (Guidance), TGD No. 250-3100-001 (June 11, 2022), in the Pennsylvania Bulletin, 52 Pa. Bull. 3374 (June 11, 2022). PADEP updated the Guidance, which was immediately effective, to assist unconventional oil and gas operators in complying with the obligation under 25 Pa. Code § 78a.58(d) to prepare an action plan specifying procedures for monitoring for and responding to radioactive material produced by the treatment processes (and other procedures). The Guidance does not cover waste from conventional oil and gas operations.

The Guidance applies to all solid waste processing or disposal facilities, including underground injection control wells, as defined in the Guidance, and well sites where fluids or drill cuttings generated by the development, drilling, stimulation, operation, or plugging of an oil or gas well are processed on-site. Facilities that are not required to monitor radiation, but do so voluntarily, are also subject to the Guidance.

PADEP originally published a draft version of the Guidance in the Pennsylvania Bulletin in October 2019. See 49 Pa. Bull. 6197 (Oct. 19, 2019). The final Guidance follows PADEP’s July 2021 announcement that all Pennsylvania landfills, including those accepting unconventional oil and gas waste, would be required to conduct quarterly testing of leachate for radiological contamination prior to the liquid being treated on-site or being sent to an off-site wastewater treatment facility. …

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

(By Joseph Reinhart, Sean McGovern, Matthew Wood and Gina Falaschi)

On May 26, 2022, Penn State announced that a health study commissioned by the Pennsylvania Department of Environmental Protection (PADEP) to examine the environmental and human health impacts of spreading conventional oil and gas produced water (OGPW) as a dust suppressant concluded the practice is ineffective for that purpose and poses dangers to the environment and human health. See News Release, Tim Schley & Ashley J. WennersHerron, Penn State Coll. of Eng’g, “Oil and Gas Brine Control Dust ‘No Better’ than Rainwater, Researchers Find” (May 26, 2022). The announcement coincided with PADEP’s finalization of the study. See William Burgos et al., Penn State Univ., “Evaluation of Environmental Impacts from Dust Suppressants Used on Gravel Roads” (May 26, 2022) (Study).

Historically, road spreading OGPW was authorized in Pennsylvania, but PADEP placed a moratorium on the practice in response to a 2018 legal challenge and subsequent decision by the Environmental Hearing Board. See Lawson v. PADEP, EHB Docket No. 2017-051-B (May 17, 2018). In accordance with Pennsylvania solid waste laws, using OGPW on roads for dust control could continue if conventional operators demonstrated the chemical makeup of the wastewater was similar to commercially available dust suppressants.

The Study assessed the effectiveness and environmental impacts associated with various dust suppressants used on dirt and gravel roadways, which included testing synthetic rainwater, calcium chloride (CaCl2) brine, soybean oil, and OGPW from three conventional oil and gas operations.

PADEP presented the study results at the July 25, 2022, Oil and Gas Technical Advisory Board meeting. …