Articles, Alerts & Perspectives

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? …

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Mining

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

On October 8, 2021, the Pennsylvania Department of Environmental Protection (PADEP) revised the air pollution and noise control plans that apply to the following permit applications: Bituminous Surface Mine Permit 5600-PM-BMP0311, Anthracite Surface Mine Permit Application 5600-PM-BMP0343, and Large Noncoal Industrial Minerals Mine Permit 5600-PM- BMP0315.

The new air pollution and noise control plan requirements for all three application types asks applicants to identify if there will be any processing facilities (crushing, screening, cleaning, and/or stockpiling) in the permit area, and asks applicants to describe those facilities and the amount of minerals to be processed. If the amount of minerals to be processed is less than 200 tons/day, these plans require applicants to describe the management practice to be utilized to control fugitive dust, and if the amount of minerals to be processed is equal to or greater than 200 tons/day, the plans direct the applicant to contact the appropriate PADEP Regional Office Air Quality Program.

To control fugitive dust, the plans ask applicants to describe the practices that will be utilized at the surface mining operation for the following activities: access roads, truck traffic, drilling, overburden removal and coal extraction, stockpiles, loading and unloading, crushing and other processing equipment, and conveyers.

The plans also ask applicants to list all noise sources from equipment and mining activity that will originate within the permit area, indicating the hours of operations for this equipment and whether the permit area is adjacent to any residential areas, schools, hospitals, or churches. …

FNEL Mineral and Energy Law Newsletter

Pennsylvania – Mining

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

On December 10, 2021, the Pennsylvania Department of Environmental Protection (PADEP) published final technical guidance on remining of areas with preexisting pollutional discharges. See PADEP, TGD No. 563-2112-613, “Remining of Areas with Pre-Existing Pollutional Discharges” (Dec. 10, 2021). The purpose of this guidance is to identify and explain the requirements necessary to qualify for the remining protections found under subchapter F of 25 Pa. Code ch. 87, subchapter G of 25 Pa. Code ch. 88, and subchapter F of 25 Pa. Code ch. 90 (collectively, Subchapter F/G). This guidance explains the obligations of a mine operator during the remining activity, the procedures to be followed to modify a remining permit to account for changes in groundwater flow patterns and/or new discharges, and how to qualify for bond release.

The guidance document first identifies and explains conditions that must be met to qualify for Subchapter F/G permit authorization. For a Subchapter F/G permit to be issued, the proposed mining and reclamation activities should exhibit a significant potential to abate or reduce the pollutional load from the preexisting discharges of previous surface mining. Remining protections under Subchapter F/G do not apply to underground mining permits. To be eligible, applicants for Subchapter F/G permits must have no existing legal responsibility for treatment of the discharges or for reclaiming the proposed pollutional abatement area. The water quality must be indicative of mine drainage pollution and the discharges must be from mining activities that have been abandoned prior to the remining permit application. …

FNREL Mineral and Energy Law Newsletter

Pennsylvania- Mining

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

As previously reported, the Pennsylvania Department of Environmental Protection’s (PADEP) CO2 Budget Trading Program, or Regional Greenhouse Gas Initiative (RGGI), regulation is nearing final publication. See Vol. XXXVIII, No. 4 (2021) of this Newsletter. RGGI is a regional cap-and-trade program for carbon dioxide (CO2) emissions from fossil fuel-fired electric generating units with a nameplate capacity of 25 megawatts or greater. PADEP proposes that the commonwealth join RGGI pursuant to Governor Tom Wolf’s 2019 executive order.

Following approval of the regulation by Pennsylvania’s Independent Regulatory Review Commission in September 2021, the final-form rulemaking was submitted to the House and Senate Environmental Resources and Energy standing committees.

The Senate Environmental Resources and Energy Committee passed a resolution disapproving the regulation and reported that resolution out of committee to the full chamber. The Senate passed Senate Concurrent Regulatory Review Resolution 1 (S.C.R.R.R.1), which disapproves of the rulemaking, on October 27, 2021. S.C.R.R.R.1 was reported by the House Environmental Resources and Energy Committee on November 8, 2021. On December 15, 2021, in a 130-70 vote, the House passed a resolution as well.

While the resolution was pending in the legislature, on November 29, 2021, the Environmental Quality Board (EQB) sub- mitted the CO2 Budget Trading Program rule to the Legislative Reference Bureau for publication in the Pennsylvania Bulletin. The Legislative Reference Bureau informed the EQB that it was not authorized to publish the rule because S.C.R.R.R.1 was still pending before the House of Representatives. …

FNREL 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. …

FNREL 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. …

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

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

On November 29, 2021, the Pennsylvania Supreme Court overturned a decision by the Pennsylvania Commonwealth Court, ruling that UGI Storage Company (UGI) could be held liable for taking oil and gas drilling rights in a proposed protective buffer zone around the Meeker natural gas storage field in Tioga County, Pennsylvania. In 2009, UGI, a quasi-public entity with the power of eminent domain, sought from the Federal Energy Regulatory Commission (FERC) a certificate of public convenience and necessity to acquire and operate certain facilities related to the interstate transportation and sale of natural gas owned by UGI Central Penn Gas, Inc. (CPG), including a 1,216- acre underground storage field in Tioga County and an additional 2,980-acre protective buffer zone around the storage field.

FERC granted UGI’s application for the storage field but denied its request for the full buffer zone (citing issues with notification and property rights requirements in accordance with applicable federal regulations). The decision resulted in only parts of the buffer zone being certificated. In 2015, certain property owners sought the appointment of a board of viewers to assess damages for de facto condemnation of their properties under section 502(c) of the Eminent Domain Code, 26 Pa. Cons. Stat. § 502. The property owners claimed that although only certain segments of the buffer zone had been certificated, UGI was treating the properties within the uncertificated segments in the same manner as those within the certificated are- as as protection for the integrity and security of the storage field. …

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

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

On January 15, 2022, the Pennsylvania Department of Environmental Protection (PADEP) published draft General Permit WMGR163 (Draft Permit) in the Pennsylvania Bulletin for public comment. See 52 Pa. Bull. 419 (Jan. 15, 2022). PADEP created the Draft Permit as a result of the July 9, 2021, passage of Act 70, which amended the Administrative Code of 1929. As pro- posed, the Draft Permit would authorize 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 Draft Permit covers facilities that process and beneficially reuse oil and gas liquid waste for no longer than 180 consecutive days.

If finalized as proposed, any company interested in using the Draft Permit will have to register its authorized activities with PADEP pursuant to 25 Pa. Code § 287.643. PADEP will be prohibited from requiring an applicant to obtain a determination of applicability from the agency (25 Pa. Code § 287.641(c)) prior to the issuance of the final permit as authorized under 25 Pa. Code § 287.641(d) for the land application of material. Key provisions in the Draft Permit include:

1. Facilities are authorized to process and transfer oil and gas liquid waste for no more than 180 consecutive days during the permit’s one-year coverage
2. The permittee may not store more than 1,000,000 gallons of oil and gas liquid waste on-site at any one
3. Oil and gas liquid waste is not subject to concentration limits or chemical testing in order to be stored in an impoundment (unlike General Permit WMGR123).

…

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

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

The Pennsylvania Department of Environmental Protection (PADEP) is preparing to finalize a rulemaking that adopts reasonably available control technology (RACT) requirements and RACT emission limitations for existing oil and natural gas sources of volatile organic compound (VOC) emissions. This proposal is based on the U.S. Environmental Protection Agency’s (EPA) October 2016 Control Techniques Guidelines (CTG) for the Oil and Gas Industry, 81 Fed. Reg. 74,798 (Oct. 27, 2016), which provide RACT requirements for VOC emissions from existing oil and gas sources. The rule would apply to owners and operators of any of the following oil and natural gas sources of VOC emissions that were in existence on or before the effective date of this rulemaking: storage vessels (in all segments except natural gas distribution), natural gas-driven continuous bleed pneumatic controllers, natural gas-driven diaphragm pumps, centrifugal and reciprocating compressors, and fugitive emission components.

Pennsylvania’s Environmental Quality Board (EQB) first published a proposed rulemaking on May 23, 2020. 50 Pa. Bull. 2633 (May 23, 2020); see Vol. XXXVII, No. 3 (2020) of this Newsletter. The proposed rulemaking was published for public comment, three virtual hearings were held, and the comment period ended on July 27, 2020. PADEP received roughly 4,500 comments from approximately 36,000 commenters. PADEP is preparing, but has not yet released, a comment and response document for the rulemaking.

The draft final-form rule was presented to the Air Quality Technical Advisory Committee in December 2021 and was presented to PADEP’s other advisory committees in January 2022. …

FNREL 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 . …

FNREL Water Law Newsletter

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

On January 25, 2022, the Pennsylvania Department of Environmental Protection (PADEP) published a long-awaited technical guidance document, entitled “Pennsylvania  Function- Based Aquatic Resource Compensation Protocol,” PADEP Doc. No. 310-2137-001 (effective Mar. 1, 2022) (Mitigation Guidance), for evaluating and valuing aquatic resource compensatory mitigation.

As background, a draft version of the Mitigation Guidance was published in March 2014. PADEP revised that draft to in- corporate feedback from other federal and Pennsylvania agencies, PADEP’s Water Resources Advisory Committee, and public comments.

The Pennsylvania Dam Safety and Encroachments Act, 32 Pa. Stat. §§ 693.1–.27, and its implementing regulations, 25 Pa. Code ch. 105, require a person to obtain a permit from PADEP to construct, operate, maintain, modify, enlarge, or abandon a dam, water obstruction, or encroachment that alters the course, current, or cross section of a body of water. Mitigation Guidance at 1. A mitigation plan is typically required with the permit application, including, as applicable, a plan to compensate  for the impact to regulated waters as a result of the project. Id. at 2.

The stated purposes of the Mitigation Guidance are to:

1. provide an acceptable methodology to evaluate functional compensation offsets associated with proposed aquatic resource impacts and determine compensatory mitigation requirements;
2. assist in identifying measures that minimize proposed project impacts on aquatic resource functions to reduce subsequent compensation requirements; and
3. provide a means for evaluating compensation proposals performed on-site, at a mitigation bank, or through an in-lieu fee

Id.

The Mitigation Guidance is intended to ensure consistency in determining compensation requirements and valuing compensation projects.  …

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. …