July 24, 2020

IMPACTS OF COVID-19 ON EXISTING AND FUTURE PROJECTS

Breaking Ground

(by Marc Felezzola)

The COVID-19 pandemic has resulted in a “new normal” that was likely not accounted for in pricing and scheduling for projects awarded prior to the pandemic (“existing projects”). As owners and contractors move forward with new projects in a post-pandemic world, there is incredible uncertainty to what extent COVID-19-related requirements will impact future projects (“Future Projects”). This article addresses some of the major risks that owners and contractors face on both existing projects and future projects.

Existing Projects
A. Impacts
The forced COVID-19 shutdown and subsequent resumption of existing projects will likely result in costs to contractors for demobilization and remobilization, downtime/standby, possible material and labor escalation costs, and extended general conditions (“primary impacts”). These primary impacts typically arise with every suspension or delay to a project and are not unique to COVID-19 forced stoppages. Whether and to what extent these costs are recoverable by contractors depends on the terms of the applicable contract, and in particular its force majeure language. However, because a force majeure event is by definition an event not caused by the owner or contractor, the parties typically bear their own costs associated with the delay caused by the force majeure event. The contractor cannot recover its delay/suspension costs but does get a schedule extension; and the owner cannot recover any costs it incurs as a result of the delay. If nothing else, the contractor will almost certainly be entitled to a change order extending the project schedule for at least the length of the forced shutdown.

Beyond the primary impacts are the costs and schedule impacts associated with resuming work under drastically different circumstances. These impacts range from new social distancing requirements and correlating prohibitions (e.g., limiting use of an elevator at the job site to one worker at a time; …

July 23, 2020

Can Technology Help Us Return to Work?

Emerging Technologies in a Time of Pandemic

(by Ben Clapp, Julie Domike, Gina Falaschi, Justine Kasznica and Boyd Stephenson)

COVID-19 restrictions are both easing and tightening in cities around the country, and a nationwide return to work seems further off than it did a month ago. But it is never too early to plan ahead. As the United States looks to safely return to work, offices are preparing for a radical shift, accelerating a need for emerging technologies to address challenges in the workplace. Separation, space, health, and cleanliness concerns are paramount, in an abrupt about-face from the pre-virus trends towards flexible workspaces and open floor plans. This has created a host of novel issues for business administrators, who are leveraging technology to keep work environments safe while maintaining a semblance of business normalcy in these unprecedented times.

Click here for PDF. 

July 14, 2020

Corps Proposes New Pennsylvania State Programmatic General Permit

The Foundation Water Law Newsletter

(By Lisa M. Bruderly)

On September 4, 2020, the U.S. Army Corps of Engineers (Corps) published, for 30-day public comment, draft Pennsylvania State Programmatic General Permit 6 (PASPGP-6). See Corps, Special Pub. Notice SPN 20-57 (Sept. 4, 2020). The public notice was jointly issued by the Corps’ Baltimore, Philadelphia, and Pittsburgh Districts. PASPGP-6 would replace the current PASPGP-5, which was issued on July 1, 2016, and will expire on July 5, 2021, unless suspended or revoked prior to that date.

PASPGP-6 would be issued under section 404(e) of the Clean Water Act, 33 U.S.C. § 1344(e), which allows the Corps to issue general permits on a statewide basis for categories of activities involving discharges of dredged or fill material to “waters of the United States” (WOTUS) if the Corps determines that the activities (1) are similar in nature, (2) will cause only minimal environmental impact when performed separately, and (3) will have only minimal cumulative adverse impacts on the environment. In Pennsylvania, the Corps relies primarily on the state programmatic general permit, rather than nationwide permits, to authorize impacts to regulated waters that meet the criteria of the general permit. Projects impacting WOTUS that do not qualify for coverage under the programmatic permit must obtain an individual permit under section 404.

As discussed below, PASPGP-6 would revise PASPGP-5 in several ways that would likely impact energy projects in Pennsylvania, especially natural gas pipelines. Generally, PASPGP-6 is expected to ease permitting obligations for projects with temporary impacts, and to impose more stringent threshold eligibility and reporting requirements for projects with permanent impacts to regulated waters. The proposed general permit would also require consideration of cumulative effects of the overall project when determining whether the project required additional Corps review. …

July 14, 2020

West Virginia DEP Sued Over Coal Mine Bonding Program

Environmental Alert

(by Robert Stonestreet and Kip Power)

On May 18, 2020, we reported on a “notice of intent to sue” letter sent to the West Virginia Department of Environmental Protection (WVDEP) on behalf of three environmental interest groups concerning West Virginia’s program for bonding of coal mining operations.  As more fully explained in our May 18, 2020 article, available here, those groups demanded that WVDEP formally notify the federal Office of Surface Mining (OSM) of three events that they claimed would significantly affect the financial condition of the bonding program: (1) the insolvency of coal mine permittee “ERP Environmental Fund” and the associated receivership proceeding commenced by WVDEP; (2) an alleged lack of sufficient funding in the bonding program to cover the reclamation and water treatment costs at ERP’s operations; and (3) the potential insolvency of other mining companies.

On July 8, 2020, WVDEP formally notified OSM of the ERP proceedings, but denied that the circumstances surrounding ERP significantly affect the WVDEP bonding program.  The very next day, the three groups filed suit against WVDEP in the federal District Court for the Southern District of Virginia.  The complaint acknowledges WVDEP’s July 8, 2020 letter addressing the ERP proceedings, but alleges that the letter improperly failed to formally notify OSM of two other events the groups claim significantly affect the bonding program: (1) the bankruptcy proceedings of two other coal operators and the purported threatened insolvency of a third operator; and (2) WVDEP’s alleged inability to complete the required reclamation work at ERP’s operations with available funds.

The complaint requests that the court declare that WVDEP has failed to administer its regulatory program in accordance with the federal Surface Mining Control and Reclamation Act, and further requests entry of an order commanding WVDEP to do so.  …

July 8, 2020

Babst Calland Joins SEPA

Babst Calland is a member of the Smart Electric Power Alliance (SEPA). An educational non-profit association within the electric power industry, SEPA facilitates education, research, standards and collaboration with utilities, solution providers, and other energy industry leaders.

July 8, 2020

Energy Bar Association Welcomes Babst Calland Professional Members

Babst Calland is a member of the Energy Bar Association (EBA), an international, non-profit association established in 1946 to advance the professional excellence of those engaged in energy law, regulation and policy through professional education, exploring diverse viewpoints and building connections.

The EBA is a dynamic organization of attorney, energy professionals, students and academia interested in all facets of the practice of energy law. EBA’s mission to promote professional excellence and ethical integrity of its member in the practice, administration, and development of energy laws, regulations, and policies.

July 2, 2020

Enforceability of Oral Change Orders Despite ‘No Oral Modification’ Clauses

The Legal Intelligencer

(by James Miller and Benjamin Wright)

The recent decision in STI Oilfield Services v. The Williams Companies, Inc. f/k/a Access Midstream Partners, No. 2018-1003 C.P. (Pa. Com. Pl., Susquehanna County, March 16, 2020 Opinion), highlights the challenges those in the construction industry face when contractors or subcontractors seek additional compensation based upon an alleged oral change order or modification, even when the underlying contract contains a clear “no oral modification” (NOM) clause.

Most construction contracts contain one or more NOM clauses, including a requirement that valid change orders be in writing. Generally, these clauses provide that a contract cannot be modified absent a writing executed by the parties. This is intended to avoid having the carefully drafted written agreement of the parties set aside based on alleged oral conversations that are often supported only by memory or by piecing together evidence of conduct of the parties. Oral modifications naturally breed disagreements, misunderstandings and protracted litigation—everything a well-written contract seeks to avoid. However, Pennsylvania courts have not strictly enforced NOM clauses, especially with respect to construction contracts and alleged oral change orders for extra work.

In Universal Builders v. Moon Motor Lodge, 244 A.2d 10, 15 (Pa. 1968) the Pennsylvania Supreme Court held that, outside of a contract subject to the statute of frauds, a written “contract can be modified orally although it provides that it can be modified only in writing.” “Construction contracts typically provide that the builder will not be paid for extra work unless it is done pursuant to a written change order, yet courts frequently hold that owners must pay for extra work done at their oral direction.” “The effectiveness of a nonwritten modification in spite of a contract condition that the modifications must be written depends upon whether enforcement of the condition is or is not barred by equitable considerations, not upon the technicality of whether the condition was or was not expressly and separately waived before the non-written modification.”

Courts have significant discretion in determining whether to allow oral modification claims to survive dispositive motions and move to trial. …

June 23, 2020

The 2020 Babst Calland Report Highlights Legal and Regulatory Challenges for the U.S. Oil and Gas Industry

Oversupply and pandemic bring on need to adapt to a changing market

Babst Calland today published its 10th annual energy industry report: The 2020 Babst Calland Report – The U.S. Oil & Gas Industry: Federal, State, Local Challenges & Opportunities; Legal and Regulatory Perspective for Producers and Midstream Operators. 

In this Report more than 50 energy attorneys provide perspective on the current state of the U.S. natural gas and oil production industry and its growth to historic highs due to more than a decade of advances in on-shore horizontal drilling and high-volume hydraulic fracturing. It asserts that despite current challenges, a maturing shale industry is poised for future growth as natural gas and oil producers have driven down the costs of production. Transportation options for moving these natural resources from growing areas of production to customers continue to be built, even with new hurdles from regulators and other stakeholders.

Joseph K. Reinhart, shareholder and co-chair of Babst Calland’s Energy and Natural Resources Group, said, “The U.S. natural gas and oil industry has experienced tremendous growth and change since we first published this Report in 2011. Fast forward to an unprecedented 2020 with a pandemic, a corresponding economic slow-down and oversupply of natural gas and crude oil. With increased public and government pressure, sustained low prices, and less-reliable financing options, resiliency will continue to be the driving force of a dynamic energy market that continues to evolve.”

Report highlights

The Babst Calland Report is an annual review of the issues and trends at the federal, state and local level in the oil and gas industry over the past year. The 102-page Report covers a range of topics from the industry’s business outlook, regulatory enforcement and rulemaking to developments in pipeline safety and litigation trends. …

June 22, 2020

How to mitigate legal liability while reopening your business

Smart Business

(by Adam Burroughs with Molly Meacham)

As states begin to relax restrictions on social gatherings, businesses are trying to reopen in a manner that is safe for their employees, vendors, customers and clients. They’re also trying insulate themselves from the legal exposures they face as they work out a plan to get their business up and running.

“I’m getting a lot of questions from employers who want to do right on all of those fronts,” says Molly Meacham, a shareholder at Babst Calland. “They are really working hard, thinking through the issues, listening to state, local and federal government advice, all while trying to keep their businesses running.”

Smart Business spoke with Meacham about addressing the legal risks that come with operating during the pandemic.

What legal concerns do companies have as they reopen?

The most significant concern is that a company will have an outbreak at their workplace. If that happens, it means considering the company benefits employees should be entitled to, such as sick leave or short-term disability, if they are eligible for leave under the Family and Medical Leave Act (FMLA), if they are covered by Families First Coronavirus Response Act (FFCRA) and eligible for those leaves, or if they’re entitled to any accommodation under the Americans with Disabilities Act.

Another risk is that contracting the illness could lead to a lawsuit or workers’ compensation claim. In a classic workers’ compensation scenario, the employee would need to prove they contracted the virus at the workplace. Some states are reducing employees’ burden of proof, or covering COVID-19 illness for certain groups of employees. For those states that are not making changes, whether or not COVID-19 is covered by workers’ compensation is likely to be a hotly litigated issue. …

June 17, 2020

Ninth Circuit denies emergency motion for partial stay of Montana district court’s NWP 12 vacatur

The PIOGA Press

(by Lisa Bruderly and Ben Clapp)

On May 28, the Ninth Circuit denied the U.S. Army Corps of Engineers’ request for an emergency stay pending appeal of a Montana district court’s vacatur of Nationwide Permit (NWP) 12 in Northern Plains Resource Council, et al. v. Army Corps of Engineers, a challenge to the Keystone XL Pipeline. As a result of the denial, NWP 12 remains unavailable for the construction of new oil and gas pipelines. The ruling means continued permitting delays are likely for pipeline developers seeking federal authorization for stream and wetland crossings and any resulting discharge of dredged or fill material into waters of the United States under Section 404 of the Clean Water Act (CWA).

A Montana district court’s April vacatur of NWP 12 was based on the judge’s determination that the Corps failed to comply with the Endangered Species Act (ESA) when NWP 12 was last issued in 2017. The decision was interpreted as a broad vacatur of NWP 12, extending beyond permitting of the Keystone XL Pipeline. In a significant positive development for permittees proposing work on existing pipelines, on May 11 the district court narrowed the scope of its original vacatur “to the construction of new oil and gas pipelines” with NWP 12 remaining “in place during remand insofar as it authorizes non-pipeline construction activities and routine maintenance, inspection, and repair activities on existing NWP 12 projects.”

For pipeline developers, however, the stay sought by the Corps represented the final possibility of continuing to conduct work under NWP 12 during the long appellate process. The Ninth Circuit denied the Corps’ request on grounds that the Corps had not demonstrated a likelihood of success on the merits or probability of irreparable harm if the stay was not granted. …

June 17, 2020

EQB publishes proposed rulemaking for control of VOC emissions from existing oil and natural gas sources

The PIOGA Press

(by Mike Winek, Gary Steinbauer and Gina Falaschi)

Pennsylvania’s Environmental Quality Board (EQB) published a proposed rulemaking in the May 23 Pennsylvania Bulletin entitled “Control of VOC Emissions from Oil and Natural Gas Sources.” 50 Pa.B. 2633 (www.pacodeandbulletin.gov/ Display/pabull?file=/ secure/pabulletin/data/ vol50/50- 21/684.html). This proposed rulemaking would have Pennsylvania adopt reasonably available control technology (RACT) requirements and RACT emission limitations for existing oil and natural gas sources of volatile organic compound (VOC) emissions.

As proposed, 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 pneumatic controllers, natural gas-driven diaphragm pumps, centrifugal compressors and reciprocating compressors, and fugitive emission components.

This proposal is based on EPA’s October 2016 Control Techniques Guidelines (CTG) for the Oil and Gas Industry, which provide RACT requirements for VOC emissions from existing oil and gas sources. Pursuant to the federal Clean Air Act, EPA established National Ambient Air Quality Standards (NAAQS) for six “criteria pollutants,” which includes ground-level ozone. Ground level ozone is created in a photochemical reaction of oxides of nitrogen (another criteria pollutant) and VOCs in the presence of sunlight.

The federal statute requires any (i) existing major source of VOC emissions (generally more than 50 tons per year of VOC depending on location) in an ozone nonattainment area and (ii) any other source (i.e., minor sources) for which EPA has issued a CTG to implement RACT to control emissions, consistent with the issued CTG. Pennsylvania is in the northeast ozone transport region, which makes the Commonwealth nonattainment for ozone, and thus triggers RACT under federal law. …

June 17, 2020

Commonwealth Court Sees Spot Zoning, Overturns Industrial Rezoning

The Legal Intelligencer

(by Anna Skipper and Krista Staley)

For over 100 years, local governments have used zoning regulations, enabled by the police powers delegated from the states, to implement plans for the development of their communities. For just as long, objectors have challenged zoning regulations as exceeding this authority. The Commonwealth Court recently upheld such a challenge in Allen Distribution v. West Pennsboro Township Zoning Hearing Board, No 524 C.D. 2019 (Pa. Commw. Ct. May 11, 2020), finding that West Pennsboro’s decision to change the zoning of two parcels constituted illegal spot zoning.

Zoning ordinances generally enjoy a presumption of constitutional validity. However, an ordinance will be held to be unconstitutional if it is unreasonable, arbitrary or not substantially related to the police power interest it purports to serve. Thus, zoning enabling acts, such as the Pennsylvania Municipalities Planning Code, 53 P.S. Section 10101 et seq. (the MPC), require all zoning measures to be substantially related to the protection and preservation of the public health, safety, morality and welfare interests of its community.

Zoning regulations consist of a zoning map and zoning text. Those documents work in tandem; the map divides the municipality, or municipalities in cases of joint zoning, into “districts” while the text provides regulations for each district, imposes requirements for specific uses and outlines various procedures. Under the MPC, either the municipality or a landowner (including a leaseholder or potential buyer) can propose text and map amendments. The amendment process allows municipalities to improve their ordinances by, for example, adapting them to accommodate new and evolving uses. However, when used in a piecemeal fashion to achieve inconsistent goals, amendments may no longer have a reasonable relationship to the police power they must promote. …

June 17, 2020

Appalachian Trail Not a Barrier to Atlantic Coast Pipeline

Energy Alert

(by Robert Stonestreet and Jim Curry)

The United States Forest Service may grant permission for a natural gas pipeline to go underneath the Appalachian Trail, so says the United States Supreme Court in an opinion released on June 15, 2020.  Seven of the nine justices voted to reverse a decision by the Fourth Circuit Court of Appeals that had concluded the Forest Service lacked authority to do so for the Atlantic Coast Pipeline (ACP).  Only Justice Sonia Sotomayor and Justice Elena Kagan dissented from the decision.

The ACP is a proposed 604-mile pipeline stretching from West Virginia to North Carolina.  Approximately 16 miles of the pipeline route goes through the George Washington National Forest, which requires approval from the Forest Service.  The Appalachian Trail, a 2,200-mile federally designated footpath from Mount Katahdin in Maine to Springer Mountain in Georgia, also passes through the George Washington National Forest with permission from the Forest Service.  The National Park Service administers the Appalachian Trail through various arrangements with the Forest Service.  At issue in this case is a 0.1-mile segment of the pipeline that would pass under the Appalachian Trail at a depth of approximately 600 feet.  Both the entry and exit locations for this segment of the pipeline would be on private land, would not be visible from the Appalachian Trail, and would not disturb the surface of the trail.

In 2018, the ACP developers obtained the necessary authorizations from the Forest Service to place the pipeline through the National Forest and under the Appalachian Trail.  Several organizations challenged these authorizations by arguing that the Forest Service lacked authority to authorize a pipeline to cross under the trail.  The Fourth Circuit agreed and vacated the authorizations issued by the Forest Service. …

June 12, 2020

Client Spotlight: Congratulations, Astrobotic!

Pittsburgh, PA

EmTech Law Blog

(by Justine Kasznica)

Today, we are thrilled to celebrate with Astrobotic Technology, Inc., a Pittsburgh-based space robotics and lunar transportation and logistics company, on receiving a $199.5 NASA award to send the NASA Volatiles Investigating Polar Exploration Rover (VIPER) to the lunar surface in 2023 to search for water-ice. Not only is this a historically significant mission, as it is the first “resource-mapping” mission of its kind, this is an amazing achievement for a company that that has worked tirelessly for 13 years to prove a new commercial space market. For more information, click here.

Our Emerging Technologies attorneys are fortunate to work with incredible innovators, entrepreneurs and visionaries pushing the frontiers of technology and industry. We love to showcase our clients, especially when they hit notable milestones that may be of interest to our entire Babst Calland EmTech family.

Our newly launched EmTech Blog will enable us to do more of these Client Spotlights, so stay tuned! If you would like your company to be featured, please send accomplishments or highlights to jkasznica@babstcalland.com.

Tags: , , , , , 

June 11, 2020

Pa. Proposes Changes for Permitting Projects With Stream, Wetland Impacts

The Legal Intelligencer

(by Lisa Bruderly and Daniel Hido)

The Pennsylvania Department of Environmental Protection (PADEP) is proposing significant revisions to its regulations and guidance regarding the permitting of obstructions and encroachments of waters of the commonwealth under 25 Pa. Code Chapter 105. The regulatory revisions, if promulgated, are expected to significantly change the Chapter 105 permitting process by increasing the level of required effort to complete an individual (joint) permit application and potentially increasing the time for the PADEP to review such applications.

The PADEP has presented the regulations and guidance to several of its advisory committees, including, most recently, the Water Resources Advisory Committee (WRAC) on May 28. Later this year, the proposed revisions are expected to be presented to the Environmental Quality Board, with a public comment period to follow. The PADEP’s “draft final” technical guidance document (TGD) on alternatives analysis requirements is expected to be finalized and published in coordination with the proposed regulatory revisions.

Proposed Regulatory Changes to Chapter 105

Proposed revisions to Chapter 105 include the following:

Permit Waivers—Addition of six new permit waivers to 25 Pa. Code Section 105.12, including new waivers for temporary environmental investigation activities and for temporary mats and pads used to minimize erosion and sedimentation at wetland crossings.

Alternatives Analysis—Addition of criteria to the alternatives analysis requirements at 25 Pa. Code Section 105.13(e)(viii), including identification of the effects of “reasonably foreseeable future development” within the wetland or watercourse upstream and immediately downstream of the proposed project and demonstration that project alternatives impacting other regulated waters would meet the requirements of 25 Pa. Code Section 105.16, regarding environmental, social and economic balancing. …

Top