February 11, 2022

Endangered Species Issues Slow Pipeline Completion

Environmental Alert

(by Robert Stonestreet)

The federal Fourth Circuit Court of Appeals has struck down an evaluation by the U.S. Fish and Wildlife Service of the potential impacts on two endangered fish species presented by stream crossings for the Mountain Valley Pipeline.  In its February 3, 2022 opinion, the Court concluded that the Service failed to sufficiently establish the “environmental baseline” conditions for each species, and failed to adequately evaluate how the stream crossings, along with other anticipated activities impacting the streams, will affect the species on a cumulative basis.  The Court also faulted the Service for not assuming future negative effects of climate change in its analysis.

In September 2020, the Service published a “Biological Opinion” addressing how the proposed pipeline would likely affect five species listed for protection under the federal Endangered Species Act (ESA) (one plant; two fish; and two bats).  The Service concluded that the pipeline would likely affect each species, but would not jeopardize those species, which is the key determination under the ESA for whether other federal agencies may issue permits for a project.  The Service also issued an “Incidental Take Statement” that authorized certain levels of “take” of each species associated with construction of the stream crossings, which would otherwise be prohibited by the ESA.  For purposes of the ESA, “take” of a species means actions “to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct.”

A group of organizations opposed to the pipeline, including the Sierra Club, challenged both the Biological Opinion and the Incidental Take Statement with regard to the two fish species (Roanoke Logperch and Candy Darter) and one bat species (Indiana Bat).  …

February 10, 2022

Former PHMSA Official and Former API Policy Advisor Join Babst Calland’s Energy and Pipeline & HazMat Safety Practice

Babst Calland announced the addition of two professionals to its Washington, D.C. office – former PHMSA Official Christopher Hoidal as Senior Director of Safety and former API Policy Advisor, Christopher Kuhman as an Associate.

Chris Hoidal recently joined Babst Calland as Senior Director of Safety in the Energy and Natural Resources, Environmental and Pipeline and HazMat Safety groups. Mr. Hoidal advises clients throughout the United States on the regulation of transportation pipelines, LNG facilities and other regulated energy facilities. He has over 30 years of experience in various leadership roles with the U.S. Department of Transportation, Pipeline and Hazardous Materials Safety Administration (PHMSA).

Mr. Hoidal has extensive knowledge of the pipeline safety regulations, industry codes and standards, and agency policy. He guides industry stakeholders seeking to improve regulatory compliance and safety performance, conducting transactional due diligence, and building remedial programs to address accidents and near-miss events. Mr. Hoidal also advises clients on special permits, inspection preparation, enforcement, rulemaking and policy development.

Mr. Hoidal worked for the United States Department of Transportation from 1990 to 2021, and the Pipeline and Hazardous Materials Safety Administration’s Office of Pipeline Safety since 1993.  Prior to joining the Firm, Mr. Hoidal served as a Senior Technical Advisor in PHMSA’s Office of Pipeline Safety between 2018 and 2021.  In this role, he supported PHMSA in the development of recent rules and guidance, including the 2019 Gas “Mega Rule.” Before this role, Chris served for 20 years as PHMSA’s Western Region Director for the Office of Pipeline Safety.

Mr. Hoidal has his Bachelor of Science in Geotechnical Engineering from the University of Nevada (1980), and Master of Business Administration from the University of Colorado (1983).

Chris Kuhman recently joined Babst Calland as an associate in the Energy and Natural Resources and Pipeline and HazMat Safety groups. …

February 10, 2022

Recent updates on Nationwide Permits and waters of the United States, with more expected

PIOGA Press

(By Lisa Bruderly and Evan Baylor)

The U.S. Environmental Protection Authors: Agency (EPA) and the U.S. Army Corps of Engineers have recently issued updates regarding Nationwide Permits (NWPs) under Section 404 of the Clean Water Act (CWA) and Section 10 of the Rivers and Harbors Act of 1899, as well as a new proposed definition of waters of the United States (WOTUS). More developments on both subjects are anticipated in 2022 from these agencies, as well as from the U.S. Supreme Court.

On December 27, 2021, the Corps published a final rule reissuing 40 existing NWPs and issuing one new NWP (Water Reclamation and Reuse Facilities) (86 Fed. Reg. 73522). Broadly, NWPs authorize certain work in streams, wetlands and other WOTUS when those activities will result in no more than minimal individual and cumulative adverse environmental effects. This final rule rounds out NWP rulemaking activities that began in September 2020, when the Corps, under the Trump administration, proposed to reissue the 52 existing NWPs and issue five new NWPs.

As background, in January 2021, the Corps modified and reissued 12 of the existing NWPs and issued four of the five proposed NWPs. The January 2021 final rule also revised and reissued the NWP general conditions and definitions. The focus of that rule was largely to revise and reissue NWPs that relate to the energy industry, including the division of existing NWP 12 (Utility Line Activities) into three NWPs, depending on the type of utility line: oil and natural gas pipeline activities (NWP 12), electric utilities and telecommunications (NWP 57), and utility lines for water and other substances (NWP 58). The December 2021 rule does not address these 16 NWPs that were finalized in January 2021. …

February 10, 2022

Court: Findings of Fact Failed in Experts’ Battle Over Wind Turbine Noise

The Legal Intelligencer

(by Anna Jewart and Blaine Lucas)

In recent years, public support for renewable energy generation has increased across the United States. According to a recent article published by the National Agricultural Law Center, 89% of Americans support expanding solar power generation and 83% support wind power expansion. See, Peggy Kirk Hall, Whitney Morgan and Jesse Richardson, “Land Use Conflicts Between Wind and Solar Renewable Energy and Agricultural Uses,” Nat’l Ag. Law Center (Jan. 10, 2022). National approval, however, often fails to translate into local support.  Those seeking to site wind or solar projects are frequently met with opposition from neighbors, many of whom may be generally supportive of renewable energy, but when it comes time to decide where generation will occur, they repeat the well-known adage, “Not in my back yard.” In fact, local objection to renewable projects frequently mirrors that which has been levied for decades against traditional energy development. Concerns over aesthetics, noise, storm water, or traffic can be expected whether an applicant proposes an oil and gas well or a wind farm. In either instance, broad concerns over impacts on the community often devolve into highly technical debates over compliance with not only the local ordinances, but the validity or reliability of different scientific methods or standards. As a result, zoning hearings on any energy project may become full-blown battles of the experts. In Atlantic Wind v. Zoning Hearing Board of Penn Forest Township, No. 585 C.D. 2020, No. 591 C.D. 2020, No. 20 C.D. 2021, No. 242 C.D. 2021, (Pa. Cmwlth. Jan. 12, 2022), the Pennsylvania Commonwealth Court considered whether a zoning hearing board properly handled competing expert testimony over what metrics to use in calculating maximum noise levels. …

February 9, 2022

Tim Schoonover named in Pennsylvania Business Central Top 100 People

Pennsylvania Business Central

Tim Schoonover is a shareholder in the Energy and Natural Resources, Litigation and Public Sector groups of law firm Babst Calland. Tim has practiced law in the Centre County region since 1997. He currently serves as Solicitor for Haines Township, and is the former Solicitor to Benner Township and counsel to AccuWeather, Inc. Tim has significant experience with Marcellus Shale related issues, including contract matters and land use litigation issues. His practice also focuses on the areas of real estate, corporate/business law, municipal law, litigation, and estate planning and administration.

Tim received his J.D. from the Ohio Northern University Pettit College of Law in 1995. He is an active volunteer in Centre County having held board positions for the Centre County Bar Association, State College Jaycees, Infant Evaluation Program, Habitat for Humanity of Greater Centre County, Centre County Housing and Land Trust, and YMCA of Centre County.

To view the article, click here.

February 8, 2022

Recent Trends Suggest It Is an Ideal Time for Commercial Property Owners to Evaluate Their Real Estate Assessments

Alert

(by Peter Schnore and Ed Phillips)

At the beginning of 2022, the Pittsburgh Post-Gazette reported that the overall vacancy rate in the Pittsburgh commercial real estate market was 20.8% at the end of 2021, which was an increase from the 19.3% vacancy rate at the end of 2020. [1]  But statistics like this tell only part of the story, as they reflect past events, rather than what market participants anticipate will occur in the future.  The same article noted that some property owners are offering incentives, such as free rent and higher improvement allowances to retain and attract tenants.  The COVID pandemic is having, and will have, a material impact on the value of various commercial property types for quite some time.

Given the trends in increasing vacancy rates and incentives—along with concerns for what long-term effects the pandemic will have on tenants’ future needs—commercial property owners should consider whether the time is right to appeal their commercial real estate assessments.  For many commercial property owners, the best approach is to work with an attorney familiar with the appeals process and property valuation through the lens of Pennsylvania assessment law, to best appreciate whether an appeal is likely to be a worthwhile endeavor.  In Allegheny County, property owners have until March 31, 2022 to initiate an appeal for Tax Year 2022.  For property owners in the remainder of Pennsylvania, annual appeal deadlines fall between August 1 and the first Monday in October, depending on the county.

Each year, Pennsylvania publishes an equalization ratio for each county based on a comparison of the county’s most recent years’ sales data vs. the sold properties’ assessments.  In a properly filed appeal, this ratio is applied to the property’s current fair market value to set the assessment.  …

February 4, 2022

Legislation Incentivizes Rare Earth Element Development in Coal Mining Areas

Infrastructure Alert

(By Robert M. Stonestreet, Christopher B. “Kip” Power, 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 that the U.S. Department of Energy (DOE) has identified as key components of products that are essential to the economic or national security of the United States, and that are susceptible to supply chain disruption. The federal legislation generally known as the “Infrastructure Bill” allocates more than $1.3 billion to support a number of new and existing DOE initiatives directed toward research, development, and production of critical materials, including substances known as “rare earth elements.”

Rare earth elements are essential for many high-tech products such as smart phones and other sophisticated electronic devices. Rather than being “rare,” these elements exist in many places throughout the United States (and the rest of the world) although generally in very low concentrations that make them difficult to economically recover and process. Relatively greater concentrations of rare earth elements, along with other critical materials, can be found in coal seams and adjacent geologic formations. Even higher concentrations often exist in polluted water flowing from surface and underground coal mines – commonly referred to as “acid mine drainage” or AMD.

Members of the mining industry – not just academic institutions or research foundations – are eligible to apply for large amounts of funding created by the Infrastructure Bill related to the extraction of critical materials generally and rare earth elements specifically. The bill allocates $127 million in grants focused on research to support the recovery of rare earth elements from coal and coal byproducts, such as AMD. …

February 2, 2022

Commercial leasing: Pittsburgh market facing challenges, opportunities

Smart Business

(by Sue Ostrowski featuring Mary Binker)

While the COVID-19 pandemic has had a significant negative impact on downtown Pittsburgh’s commercial leasing market, it has also created new opportunities for both tenants and landlords.

“While the pandemic changed a lot in the commercial real estate market in Pittsburgh, increasing vacancy rates and creating other challenges, it has also provided the chance for tenants and landlords to negotiate better terms,” says Mary Binker, a shareholder in the Real Estate, Corporate and Commercial, and Energy and Natural Resources groups of Babst Calland. “It has also allowed new tenants, who previously may not have been able to access the downtown commercial real estate market, to more seriously look into the downtown space.”

Smart Business spoke with Binker about how landlords and tenants can adjust to an evolving commercial real estate market.

How has the pandemic impacted downtown Pittsburgh commercial real estate?

Rates, lease terms and tenants’ concerns have changed, and vacancy rates have increased. Before the pandemic, the commercial real estate vacancy rate downtown was in the mid to low teens, but in January 2022, it was just over 20 percent, which is higher than in recent years. We are also seeing more tenants attempting to sublease all or part of their space.

Employers are grappling with how the pandemic is impacting office space, with many moving to remote work or, more recently, a hybrid model. What does that look like? Will the number of desks be limited? If everyone is in the office on the same days, how will that work? How do you accommodate a cleaning schedule and provide storage if different people use the same workspace on different days? …

February 2, 2022

Legislative & Regulatory Update

The Wildcatter

(By Nikolas Tysiak)

Hello MLBC friends and family! As we survive the freezing cold of winter, there are only a few things to report to you. This time of year, with its proximity to the holidays, tends to be a judicial legislative “slow time.” As always, the Legislative and Regulatory Committee looks forward to hearing from anyone with an idea or suggestion of something to include in our newsletter updates.

OHIO

Hein Bros., LLC v. Reynolds, 2021-Ohio-4633 (7th Dist. Ct. App.). Owners of severed mineral interest brought an action to have a prior judgment divesting them of such severed minerals deemed void for failure of notice. In 2013, the surface owners of this property in Belmont County brought an action to have previously-severed minerals under their lands declared vested with the surface estate. Service of notice of the lawsuit was attempted by certified mail, with the surface owners’ attorney stating that various methods were attempted to locate the severed mineral owners. Certified mail having failed, notice was served by publication in accordance with Ohio law. In 2020, the same severed mineral owners sought the judgment overturned due to failure of notice, claiming that no reasonable person would not have been able to locate their addresses for service by certified mail if applying due diligence in 2013. Under Ohio law, there is a rebuttable presumption that the reasonable diligence exercised in issuing notice by mail has been followed, and to counterbalance the presumption evidence of a substantial nature must be presented. The severed mineral owners presented evidence from an identity investigator, working in 2021, to prove that they were locatable with reasonable diligence in 2013. The trial court was not swayed by this evidence, and the Court of Appeals followed the lead of the trial court and affirmed their judgment, denying the claims by the severed mineral owners in favor of the surface owners. …

February 1, 2022

WV Supreme Court of Appeals to examine Tawney/post-production expense deductibility

GO-WV News

(By Katrina Bowers)

The West Virginia Supreme Court has accepted certified questions from the United States District Court for the Northern District of West Virginia concerning whether the seminal decision in Estate of Tawney v. Columbia Natural Resources, LLC, 219 W.Va. 266, 633 S.E.2d 22 (2006) (“Tawney”) regarding the deductibility of post-production expenses remains the law of West Virginia, and if so, the proper interpretation of Tawney.

In Charles Kellam, et al. v. SWN Production Company, LLC, et al., No. 5:20-CV-85, a case filed as a class action but not yet certified, the United States District Court for the Northern District of West Virginia, Judge John Preston Bailey, certified on his own motion whether Tawney remains the law of West Virginia, whether the lease in question allowed the deductions, and the proper application of Tawney. At the time of the District Court’s certification in Kellam, pending before the District Court was the defendants’ Motion for Judgment on the Pleadings which argued the Kellam’s lease complied with Tawney and the District Court was bound by the decision in Young v. Equinor USA Onshore Properties, Inc., 982 F.3d 201 (4th Cir. 2020). The Kellam’s lease states the lessee agrees to pay the lessor “as royalty for the oil, gas, and/or coalbed methane gas marketed and used off the premises and produced from each well drilled thereon, the sum of one-eighth (1/8) of the price paid to Lessee per thousand cubic feet of such oil, gas, and/or coalbed methane gas so marketed and used . . . less any charges for transportation, dehydration and compression paid by Lessee to deliver the oil, gas, and/or coalbed methane gas for sale.”

The Kellam lease is very similar to the lease considered in Young, where the 4th Circuit Court of Appeals reversed Judge Bailey and held the lease clearly and unambiguously allowed the deduction of post-production expenses. …

February 1, 2022

Christina Manfredi McKinley Joins Babst Calland as Shareholder

Christina Manfredi McKinley recently joined Babst Calland as a shareholder in the Litigation, Energy and Natural Resources, and Environmental groups.

Ms. McKinley provides business-oriented solutions to her clients and routinely serves as a general advisor, counseling clients on day-to-day legal and business matters on any number of issues. Her business-focused, proactive approach to problem-solving allows her to provide solutions to clients in a variety of industries, including manufacturing, retail, energy, chemicals, and environmental.

As a litigator who focuses on complex commercial matters, Ms. McKinley’s trial practice encompasses all phases of litigation, from early alternative dispute resolution through post-trial motions. She has concentrated experience in complex purchase agreement and commercial contracts disputes, protection of competitive interests (e.g., Lanham Act, unfair competition, tortious interference, trade secret protection, restrictive covenants), technology disputes (e.g., software services and license agreements), and director and officer defense.

An experienced appellate litigator, Ms. McKinley has practiced before the United States Supreme Court at every stage of the process, including the briefing and preparation of two merits cases that were argued before the Court. She also has briefed and prepared cases for argument before the United States Courts of Appeals for the Second, Third, Sixth, and D.C. Circuits, and she has argued numerous cases before the Pennsylvania intermediate appellate court.

Prior to joining Babst Calland, Ms. McKinley was a shareholder with Dentons Cohen & Grigsby. She is a graduate of The Catholic University of America, Columbus School of Law.

January 28, 2022

Medical Marijuana, Part 5: Practical Considerations in Employment Litigation

The Legal Intelligencer

(by John McCreary)

Within days of the publication in the August 16, 2021 Legal Intelligencer of the last installment of this occasional series on Pennsylvania’s Medical Marijuana Act (MMA), the Superior Court affirmed Judge William J. Nealon’s decision – discussed in that article — that the  MMA does provide for a private right of action by medical marijuana patients claiming discrimination in employment. Palmiter v. Commonwealth Health Systems, 260 A.3d 967 (Pa.Super. 2021). Rejecting the contention that exclusive jurisdiction over enforcement of the MMA lies with the Department of Health, the Court stated that “[a]lthough the General Assembly did not expressly create a private right of action on behalf of an employee whose employer discriminates against her for medical marijuana use, it proclaimed a public policy prohibiting such discrimination. See 35 P.S. § 10231.2103.” 260 A.3d at 973. Beyond acknowledging the existence of the claim, however, the Court did not provide any specific guidance to either patients or employers concerning their rights and obligations under the statute. It acknowledged generally that:

[T]he same section of the statute [that creates employment protections for patients] also explicitly sets forth the rights of employers, i.e., that an employer is not required to provide an accommodation for certified users and may discipline employees who are under the influence of medical marijuana in the workplace. See § 2103(b)(2). Thus, in the employment context, § 2103(b) of the MMA not only delineates the rights afforded employees who are certified users, but also sets forth the rights of employers to discipline employees who are in violation of the terms of certified use.

260 A.3d at 975. The Court also noted that the MMA does not provide a specific remedy, id. …

January 28, 2022

Mitigating Methane

Pittsburgh Business Times

(By Gary Steinbauer)

Babst Calland Shareholder Gary Steinbauer unpacks a series of proposed new EPA regulations that would further restrict methane gas emissions within the region’s oil and gas industry.

The region’s oil and gas industry is about to face yet another round of restrictive new federal and state regulations aimed at reducing the industry’s impact on the world’s climate. This time, the U.S. Environmental Protection Agency (EPA) has proposed a new set of rules under the Clean Air Act that would greatly restrict the emission of methane gas — known more commonly as greenhouse gas — into the air at gas wells, transmission stations and processing plants.

Likewise, the industry will soon have to contend with similar new regulations from the likes of the U.S. Pipeline and Hazardous Materials Safety Administration, the multi-state Regional Greenhouse Gas Initiative (RGGI), and the Pennsylvania Department of Environmental Protection, among others.

So what does this mean for the region’s already-heavily regulated oil and gas industry, which remains a target of the Biden administration and its climate-change initiatives?

“It’s going to be a busy year,” said Gary Steinbauer, a shareholder with Pittsburgh law firm Babst Calland and member of the firm’s environmental practice. “Let’s just say that, in 2022, when it comes to these federal Clean Air Act requirements particularly, we all should just buckle up and be prepared to invest the resources and time to really understand what this is going to mean for the future of air regulations that will impact the industry.”

In other words, the oil and gas industry should take action now about the proposed regulations for consideration.

“Companies,” he added, “should be reviewing, evaluating and considering how the proposal may impact their operations and also strongly consider participating in the rule-making process and submitting comments to the EPA.”

Steinbauer shared this summary of the current regulatory situation with the Pittsburgh Business Times recently as part of the law firm’s ongoing “Business Insights” video series, produced in partnership with the Pittsburgh Business Times. …

January 12, 2022

Infrastructure bill provides billions in funding for hydrogen and carbon capture, utilization, and storage

The PIOGA Press

(By Jim Curry and Chris Kuhman)

On November 15, 2021, President Biden signed the bipartisan $1.2 trillion Infrastructure Investment and Jobs Act (H.R. 3684). This Alert reviews the key provisions related to hydrogen and carbon capture, utilization, and storage (CCUS).

Hydrogen

Regional Clean Hydrogen Hubs (Sec. 40314): In perhaps the most impactful provision, the Bill authorizes an $8 billion program to support the development of at least four regional clean hydrogen hubs to network hydrogen producers, storage, offtakers and transport infrastructure. DOE must solicit proposals for regional clean hydrogen hubs by May 15, 2022, and select the four hubs by May 15, 2023. DOE will solicit at least one hub proposal for each of the following hydrogen production technologies: fossil fuels, renewables or nuclear. And, DOE will solicit at least one hub to provide hydrogen to each of the following sectors: power generation, industrial, residential and commercial heating, and transportation.

Clean hydrogen definition and production qualifications (Secs. 40312 & 40315): Defines “clean hydrogen” and “hydrogen” in a technology neutral way, and requires DOE and EPA to develop an initial carbon standard for projects to qualify as clean hydrogen production, eligible for the variety of incentives throughout the Bill. Clean hydrogen means “hydrogen produced with a carbon intensity equal to or less than 2 kilograms of carbon dioxide (CO2)-equivalent produced at the site of production per kilogram of hydrogen produced.” The standard must consider technological and economic feasibility and allow production from fossil fuels with CCUS, hydrogen carrier fuels, renewables, nuclear and other methods that DOE determines are appropriate.

Research and development program and national clean hydrogen strategy and roadmap (Secs. …

January 12, 2022

Babst Calland Names Katrina Bowers a Shareholder

Babst Calland recently named Katrina N. Bowers a shareholder in the Firm.

Katrina Bowers is a member of the Corporate and Commercial, Litigation, and Energy and Natural Resources groups. Ms. Bowers currently serves as General Counsel to the West Virginia International Yeager Airport, and as general counsel and advisor to airports in West Virginia, on day-to-day legal and business matters, such as compliance with West Virginia and federal law, employment and litigation matters, corporate governance, and contract negotiations.

Ms. Bowers’ practice also includes representing oil and gas companies in litigation concerning a variety of matters including trespass, negligence, property damage, royalty payments, toxic torts, title disputes, breach of contract, preliminary and permanent injunctions, and fraud as well as advising them regarding proposed, pending, and enacted safety, health, and environmental regulations. Ms. Bowers has also represented coal operators in cases alleging adverse treatment, deliberate intent, and wrongful termination. Further, she has represented clients against civil penalties and violations issued by the Mine Safety and Health Administration and the Occupational Safety and Health Administration.

Ms. Bowers is a 2013 graduate of West Virginia University College of Law.

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