Articles, Alerts & Perspectives

The American College of Environmental Lawyers (ACOEL)

(By Chester Babst)

In 2022, the on-going debate will continue over the hotly contested definition of “waters of the United States” (WOTUS), a phrase that determines the scope of federal jurisdiction over streams, wetlands and other waterbodies under the Clean Water Act (CWA). The WOTUS definition is included in 11 federal regulations and affects, among others, NPDES and Section 404 permitting, SPCC plans and spill reporting. This year, both the executive and judicial branches of the federal government are expected to weigh in on this definition, without any guarantee that their interpretations will be consistent.

Proposed Rule 1

USEPA and the Corps have already taken the first step to revise the WOTUS definition, as promised by President Biden during his campaign, by publishing a proposed rulemaking on December 7, 2021 (Rule 1). While this proposed definition is similar to the pre-2015 definition of WOTUS, which is currently in effect, it also reflects relevant Supreme Court decisions (e.g., Rapanos v. United States) that occurred in the early 2000s.

Much of the controversy surrounding the WOTUS definition relates to the two tests identified in the Rapanos decision. Justice Antonin Scalia issued the plurality opinion in Rapanos, holding that WOTUS would include only “relatively permanent, standing or continuously flowing bodies of water” connected to traditional navigable waters, and to “wetlands with a continuous surface connection to such relatively permanent waters.” Justice Anthony Kennedy, however, advanced a broader interpretation of WOTUS in his concurring opinion, which was based on the concept of a “significant nexus,” meaning that wetlands should be considered as WOTUS “if the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered water.”

If promulgated, the December 2021 proposed WOTUS definition would incorporate Justice Kennedy’s significant nexus test into the regulations. …

Firm Alert

(By Justine Kasznica and Ember Holmes)

On March 21, 2022, President Biden issued a statement in response to evolving intelligence that Russia is exploring options for malicious cyberattacks against the United States. The statement highlights the measures taken by the Administration to strengthen cyber defenses within the federal government and, to the extent that it has authority, within critical infrastructure sectors. Additionally, President Biden called on private sector critical infrastructure owners and operators to accelerate and enhance their cybersecurity measures, urging them to take advantage of public-private partnerships and initiatives, including those administered by the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA). Appended to President Biden’s statement was a Fact Sheet, which outlines specific steps that companies can take to bolster cybersecurity across the nation, and refers readers to various resources compiled by CISA, as part of a cybersecurity campaign.

Background

In November 2021, the Biden administration began ramping up its cybersecurity and defense measures in response to Russian President Vladimir Putin’s escalating aggression toward Ukraine. On January 11, 2022, CISA, the Federal Bureau of Investigation (FBI), and the National Security Agency (NSA) issued Alert AA22-011A, “Understanding and Mitigating Russian State-Sponsored Cyber Threats to U.S. Critical Infrastructure,” which provided an overview of Russian state-sponsored cyber operations; commonly observed tactics, techniques, and procedures (TTPs); detection actions; incident response guidance; and mitigations. The Biden administration, CISA, FBI, and NSA continued to monitor the level of risk posed by Russia, which recently escalated based on intelligence indicating that Russia is planning cyberattacks against the United States in response to economic sanctions that the United States has imposed. …

HART Energy

(By Gary Steinbauer and Sean McGovern)

Methane emissions are a chief concern across the oil and gas value chain. Gary Steinbauer and Sean McGovern, both shareholders with Babst Calland, discuss methane mitigation and how players in the energy space can best handle it in this three-part video.

In the first segment, Steinbauer discusses the Biden administration’s approach to methane emissions in the energy sector, including proposed regulatory changes in the EPA’s Methane Rule.

In the second segment McGovern discusses abandoned and orphaned wells, how they are being plugged, and the help that operators can receive from the Bipartisan Infrastructure Law that passed in 2021.

In the final segment, both attorneys offer step-by-step advice to operators in Appalachia trying to navigate a slew of updated regulations.

View the three-part video, here.

Pittsburgh, PA

Renewables Law Blog

(By Bruce Rudoy)

While long term goals of lowering greenhouse gas emissions and employing sustainable energy sources have gained momentum across all industries, Chevron Corp., through its New Energies division, has stated it has shorter term goals as well – it says its planned growth in renewable fuels, hydrogen and carbon capture is expected to enable about 30 million tones of annual CO2 equivalent emission reductions by 2028. Technology adoption, policy and consumer behavior will drive energy choices, says a top sustainability executive, as companies focus on carbon management along the path to net zero. All three factor into whether one form of energy or another is sought to supply demand created by income and population growth, according to Bruce Niemeyer, vice president of strategy and sustainability for Chevron Corp. “Keeping supply and demand balanced through the transition is important so the transition works for all and doesn’t become a negative event for those most vulnerable,” Niemeyer said earlier this month during UT Energy Week. He added, “We’re going to need many forms of energy, which means we need to work on reducing the carbon intensity of all of them.” Chevron is among the many companies working to lower its emissions amid a heightened focus on global warming and future energy supplies. Like the smartphone, technologies with features that meet consumers’ needs or low-cost technologies will gain market share, he said, noting consumer preference is a strong factor. Take, for example, the automotive sector. EVs are expected to play a key role in the energy transition, giving their lower emissions, compared to vehicles with internal combustion engines. However, “last year, our best estimate is there were 6.6 million electric vehicles sold. At the same time, there were 35 million SUVs. …

Marley R. Kimelman recently joined Babst Calland as an associate in the Environmental Group. Mr. Kimelman assists clients with matters encompassing a broad range of environmental issues, including those related to state and federal permitting, regulatory compliance, and environmental litigation.

Prior to joining the Firm, Mr. Kimelman worked as an Environmental, Health, and Safety Regulatory Consultant at Enhesa, Inc. In this role, he was responsible for analyzing federal and state EHS regulations and drafting legal compliance reports used to advise clients on a course of action to achieve regulatory compliance. Mr. Kimelman is a 2021 graduate of George Washington Law School.

Environmental Alert

(By Robert Stonestreet, Kip Power and Ben Clapp)

During its 2022 60-day Session, the West Virginia Legislature took action to promote development of “rare earth element” recovery in the state, although it failed to deliver on all of the proposed legislative action on the last day of the Session.

On March 10, 2022, the Senate unanimously approved House Bill 4003, which is intended to clarify the ownership of rare earth elements present in mine drainage. The bill creates a new section of the West Virginia Abandoned Mine Lands Act, addressing valuable materials (not limited to rare earth elements) that may be produced through treatment of mine drainage. The new statute declares that these materials are part of the “waters of the state” and that they “can only be separated from the water with expensive and continuing investments of resources which may last for decades.” The new statute provides that any materials extracted through treatment of mine drainage “which have economic value” may be used, sold, or transferred for commercial gain by whoever successfully removes the materials from the mine drainage. To the extent the West Virginia Department of Environmental Protection is engaged in such activity through its mine drainage treatment activities, any proceeds the agency derives from the use, sale, or transfer of extracted materials must be deposited in the Special Reclamation Water Trust Fund or the Acid Mine Drainage Set-Aside Fund. Governor Jim Justice is expected to sign the bill into law.

A related bill that would have suspended for five years the severance tax on recovery of specifically identified rare earth elements (House Bill 4025) failed to complete legislative action before the end of the Session. …

Ember K. Holmes and Audra E. Hutter recently joined Babst Calland as associates in the Corporate and Commercial Group.

Ember Holmes focuses primarily on corporate and transactional matters, including commercial contracts, corporate structuring, mergers and acquisitions, and copyright and trademark issues. Prior to joining Babst Calland, she was an associate with Dickie, McCamey & Chilcote, P.C. Ms. Holmes is a 2018 graduate of the University at Buffalo School of Law.

Audra Hutter focuses primarily on corporate and transactional matters, including commercial contracts, corporate structuring, mergers and acquisitions. Prior to joining Babst Calland, she was an associate with Leech Tishman Fuscaldo & Lampl, LLC. Ms. Hutter is a 2019 graduate of the University of Pittsburgh School of Law.

Babst Calland, through its Women’s Initiative, is pleased to announce the Firm’s participation in the Allegheny County Bar Association’s ALLY Initiative Cohort. ALLY stands for “Attorneys, Learning as allies, Living as allies, and Yielding results.” The Initiative is designed to engage attorneys and their law firms, corporate legal departments, courts and other organizations to commit to increasing inclusivity, creating equitable workplaces and empowering historically marginalized and underrepresented community members.

The Initiative, which will run from March 15 through October 2022, will offer programing and other projects, which will then allow firms and legal departments to earn an official “ACBA ALLY Certification.”

To read more, click here.

Smart Business

(by Sue Ostrowski featuring Kate Cooper)

When selling your business, you will devote a substantial amount of time and energy to negotiating the representations and warranties in the purchase agreement. Accurate representations and warranties are critical to ensuring that the expectations of the buyer and seller are aligned to minimize the risk of post-closing indemnification claims.

“Representations and warranties are promises made by the seller about the current and future state of the business, assuring the buyer the business is operating the way seller says it is,” says Kate Cooper, shareholder at Babst Calland. “If they are not accurate, a buyer can use these to make a claim for damages post-sale.”

Smart Business spoke with Cooper about why it is critical that representations and warranties accurately portray your business when selling, and how a deal attorney with experience in your industry can help minimize the risk that a buyer will pursue a claim after closing.

What do representations and warranties cover?

Standard representations and warranties in nearly every purchase agreement include that the target entity is in good standing with the state, taxes have been properly filed and paid, and that it is in compliance with all applicable laws. Beyond that, it gets much more nuanced depending on the industry and the nature of the business. A technology company may need to make representations and warranties about its intellectual property, while a manufacturer might address environmental, health and safety issues. If you are selling real estate, you’ll need to make representations about any liens and encumbrances affecting property.

How can an experienced attorney help navigate through the process? …

The Foundation Mineral and Energy Law Newsletter

Pennsylvania- Mining

(By Joseph K. Reinhart, Sean M. McGovern, Gina N. Falaschi and Christina Puhnaty)

On November 6, 2021, the Pennsylvania Environmental Quality Board (EQB) issued proposed amendments to 25 Pa. Code chs. 88 (Anthracite Coal) and 90 (Coal Refuse Disposal). See Coal Refuse Disposal Revisions, 51 Pa. Bull. 6914 (proposed Nov. 6, 2021). The proposed amendments are intended to implement Pennsylvania’s Act of October 4, 2019 (P.L. 452, No. 74) (Act 74) and to address the differences between the commonwealth’s regulations and federal regulations relating to temporary cessation at coal refuse disposal sites.

This proposal was adopted by the EQB at its meeting on June 15, 2021. On January 5, 2022, the EQB received a letter from Pennsylvania’s Independent Regulatory Review Commission (IRRC) indicating that the IRRC has no objections, comments, or recommendations on the proposed rule. See Letter from David Sumner, Exec. Dir., IRRC, to Hon. Patrick McDonnell, Chairman, EQB (Jan. 5, 2022). The amendments will go into effect upon publication of the final-form rulemaking in the Pennsylvania Bulletin.

Changes Proposed Pursuant to Act 74

Act 74 amended section 6.1 of the Coal Refuse Disposal Control Act (CRDA), 52 Pa. Stat. § 30.56a, to remove the commonwealth’s one-year limitation on the temporary cessation of operations at a coal refuse disposal site. The Pennsylvania Department of Environmental Protection (PADEP) has proposed to incorporate this amendment at 25 Pa. Code § 88.310(k)(1).

Pursuant to Act 74’s amendment of section 6.1 of the CRDA, PADEP also proposes to amend 25 Pa. …

The Foundation Mineral and Energy Law Newsletter

Pennsylvania- Oil & Gas

(By Joseph K. Reinhart, Sean M. McGovern, Matthew C. Wood and Gina N. Falaschi)

On October 5, 2021, Pennsylvania Attorney General Josh Shapiro announced that the Environmental Crimes Section had charged Energy Transfer, L.P. (Energy Transfer), parent company of Sunoco Pipeline, L.P. (Sunoco), with 46 counts of environmental crimes. The charges stemmed from an investigation by the Forty-Fifth Statewide Investigating Grand Jury (Grand Jury), which concluded that Sunoco had violated Pennsylvania law in connection with its construction of the Mariner East 2 pipeline, a project that crosses 17 counties in the commonwealth. Two charges were later added from a criminal referral from the Pennsylvania Department of Environmental Protection (PADEP), bringing the total charges to 48. Among other things, Attorney General Shapiro and the Grand Jury alleged that Sunoco had repeatedly allowed—and failed to report to PADEP, as required by law—spills, leaks, and losses of drilling fluid during horizontal directional drilling (HDD) activities. The Grand Jury also heard testimony from landowners complaining of impacts to their properties, including to drinking water sources, and found that Sunoco’s HDD activities had impacted multiple recreational lakes in different counties. See generally Police Criminal Complaint, Commonwealth v. Energy Transfer, L.P., No. CR- 302-2021 (Pa. Commw. Ct. Oct. 5, 2021); Grand Jury’s Presentment (Oct. 5, 2021).

On December 6, 2021, two months after Attorney General Shapiro announced the criminal charges, PADEP and the Department of Conservation and Natural Resources (DCNR) announced that it had reached a settlement with Sunoco that requires the company to address impacts from releases of drilling fluid and mud that occurred in August 2020 at Marsh Creek Lake State Park in Chester County, Pennsylvania. …

The Foundation Water Law Newsletter

(By Lisa M. Bruderly, Mackenzie Moyer and Evan M. Baylor)

On October 16, 2021, the Pennsylvania Department of Environmental Protection (PADEP) published a revised draft technical guidance document entitled “Guidance on Notification Requirements for Spills, Discharges, and Other Incidents of a Substance Causing or Threatening Pollution to Waters of the Commonwealth Under Pennsylvania’s Clean Streams Law,” PADEP Doc. No. 383-4200-003 (Oct. 16, 2021) (Spill Guidance). See 51 Pa. Bull. 6559 (Oct. 16, 2021). This guidance replaces the first draft published on August 8, 2020, in response to comments on that draft. The intended purpose of the Spill Guidance is to address what spills, discharges, or other incidents need to be immediately reported to PADEP.

Background of Immediate Notification Procedures

Pennsylvania’s Clean Streams Law, 35 Pa. Stat. §§ 691.1–.1001, requires PADEP to protect the waters of the commonwealth from activities that pollute or have the potential to pollute these waters. Chapters 91 and 92a of Pennsylvania’s regulations, specifically, 25 Pa. Code §§ 91.33 and 92a.41, require immediate notification to PADEP when a spill, discharge, or other incident results in an unpermitted discharge of a sub- stance that causes, or threatens to cause, pollution of the waters of the commonwealth, endangerment to downstream users, or damage to property.

Specifically, section 91.33(a) requires the responsible person to immediately notify PADEP

[i]f, because of an accident or other activity or incident, a . . . substance which would endanger downstream users of the waters of this Commonwealth, would otherwise result in pollution or create a danger of pollution of the waters, or would damage property, is discharged into these waters . …

Law360

(By Robert Stonestreet, Christopher (Kip) Power and Ben Clapp)

State and federal lawmakers are creating economic opportunities for the coal industry and landowners to support production of critical materials in high demand for technology products.

The term “critical materials” refers to a group of 50 minerals, elements, substances and materials, including substances known as rare earth elements, that the U.S. Department of Energy has identified as key components of products that are essential to the economic or national security of the U.S., and that are susceptible to supply chain disruption.

According to the U.S. Geological Survey, approximately 97% of rare earth elements are produced in China. The federal legislation known as the Infrastructure Investment and Jobs Act, or IIJA, seeks to reduce the risk of supply chain disruption by diversifying and domesticating production of these materials.

To that end, the act allocates over $1.3 billion to support a number of new and existing DOE initiatives directed toward research, development and production of critical materials generally — and in some cases, rare earth elements specifically.

Rare earth elements are essential for many high-tech products, such as smartphones and other sophisticated electronic devices. They are key components of important defense applications, such as guidance systems, sonar and radar. These elements also serve as important raw materials used in the manufacture of renewable energy equipment, such as solar panels and wind turbines.

Rather than being rare, these elements exist in many places throughout the U.S. and the rest of the world, although generally in very low concentrations that make them difficult to economically recover and process. …

The Legal Intelligencer

(by Lisa Bruderly)

The controversy continues over the hotly contested definition of “waters of the United States” (WOTUS), a phrase that determines the scope of federal jurisdiction over streams, wetlands and other waterbodies under the Clean Water Act (CWA). The U.S. Environmental Protection Agency (USEPA) and the U.S. Army Corps of Engineers (Corps) published a proposed revision to the WOTUS definition on December 7, 2021 (Rule 1), with the public comment period closing on February 7, 2022. Nearly 90,000 comments were received.

This proposed definition is similar to the pre-2015 definition of WOTUS, which is currently in effect, but it also includes updates to reflect relevant Supreme Court decisions (e.g., Rapanos v. United States) that occurred in the early 2000s. Much of the controversy surrounding the WOTUS definition relates to the two tests identified in the Rapanos decision. Justice Antonin Scalia issued the plurality opinion in Rapanos, holding that WOTUS would include only “relatively permanent, standing or continuously flowing bodies of water” connected to traditional navigable waters, and to “wetlands with a continuous surface connection to such relatively permanent waters.” Justice Anthony Kennedy, however, advanced a broader interpretation of WOTUS in his concurring opinion, which relied on the concept of a “significant nexus.” In his opinion, Justice Kennedy stated that wetlands should be considered as WOTUS “if the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered water.”

If promulgated, the December 2021 proposed WOTUS definition would incorporate Justice Kennedy’s significant nexus test into the regulations, by designating waters such as wetlands, lakes and streams as WOTUS if they “alone or in combination with similarly situated waters in the region, significantly affect the chemical, physical, or biological integrity” of traditionally navigable waters. …