June 24, 2018

Lien and Bond Claims: A Subcontractor’s Security Blanket

ASA’s The Contractor’s Compass

(by Marc J. Felezzola)

Although every subcontractor begins a project with full expectations of a successful project for which it will receive timely payment, the reality is that some projects encounter financial difficulties. Fortunately, the law provides subcontractors with security against those difficulties in the form of mechanic’s lien or payment bond rights (or sometimes both). This security is not absolute, however, and there are many potential pitfalls along the way about which subcontractors should be aware to ensure their right to the security provided by a lien and/or payment bond is not inadvertently lost. This article provides a general overview of the potential ways in which a subcontractor may lose its payment security during a construction project and provides some general guidance on how to avoid them.

The general concept underpinning a mechanic’s lien is that construction of a building or other structure improves the value of the real estate on which the building or structure is constructed, and therefore, those who furnish the labor and materials for the construction (collectively, “constructors”) should be allowed to put a lien on the title to the property as security for payment for their work. Importantly, the lien is against the property itself rather than the property owner, and therefore, the property serves as the collateral securing the debt owed to the constructor. Thus, in the event of nonpayment, a constructor with a mechanic’s lien can foreclose on the lien and force the sale of the property. The proceeds from that sale will then be used to pay the debt owed the constructor.

This mechanism of providing constructors security works well for privately owned property, where a change in ownership will not have a significant detriment to the general public. …

June 22, 2018

West Virginia – not EPA – Will Develop Water Quality Improvement Plans

Environmental Alert

(by Robert M. Stonestreet and Christopher B. Power)

On West Virginia’s 155th birthday, the Fourth Circuit Court of Appeals vindicated the state’s approach to developing plans for improving the quality of its waterways.  The appeals court reversed a lower court decision that concluded West Virginia had failed to timely submit such plans to the federal Environmental Protection Agency (EPA) for approval, which could have required the EPA to supplant West Virginia’s role in developing those plans.  A brief background on the applicable law and circumstances of the litigation will help provide context for understanding the ruling.

The federal Clean Water Act requires states who administer approved water pollution control programs to take certain actions and make a multitude of different submissions to the EPA reflecting those actions.  These submissions include proposed water quality standards, draft permits, reports on the health of a state’s waterways, and action plans to address waterways determined to be impaired.  The Clean Water Act requires the EPA to approve or disapprove certain of these state submissions, such as plans to improve the quality of impaired waters through the development of “total maximum daily loads” for the waterbody (TMDLs).  TMDLs are essentially calculations of the maximum volume of certain pollutants that can be discharged into a waterway and still allow the waterway to achieve compliance with water quality standards – i.e. no longer be impaired.  Once a TMDL is adopted, a “waste load allocation” based on the TMDL is used to calculate effluent limits for those who hold permits to discharge into that waterbody so that the total cumulative discharged concentration of the pollutant at issue does not exceed the TMDL.

Many TMDLs address numeric water quality standards, which as the name suggests, are numeric concentrations of various substances that may exist in waterways without impairing the designated uses of the water.  …

June 20, 2018

The 2018 Babst Calland Report Focuses on the Appalachian Basin Oil & Gas Industry Forging Ahead Despite Obstacles

Marcellus, Utica Shale Plays Account for 41 Percent of U.S. Natural Gas Output

The 2018 Babst Calland Report – Appalachian Basin Oil & Gas Industry: Forging Ahead Despite Obstacles; Legal and Regulatory Perspective for Producers and Midstream Operators,  the firm’s annual review of shale gas development activity in the Appalachian Basin, acknowledges an ongoing rebound despite obstacles presented by regulatory agencies, the courts, activists, and the market. To request a copy of the Report, contact info@babstcalland.com.

In this Report, Babst Calland attorneys provide perspective on issues, challenges, opportunities and recent developments in the Appalachian Basin and beyond relevant to producers and operators.

According to the U.S. Energy Information Administration’s May 2018 report, the Appalachian Marcellus and Utica shale plays account for more than 40 percent of U.S. natural gas output, compared to only three percent a decade ago. Since then, the Appalachian Basin has become recognized in the U.S. and around the world as a major source of natural gas and natural gas liquids.

The industry has been forging ahead amidst relatively low natural gas prices, infrastructure building, acreage rationalization and drilling plans that align with business expectations. The policy landscape continues to evolve with ever-changing federal and state environmental and safety regulations and tax structures along with a patchwork of local government requirements across the multi-state region.

Joseph K. Reinhart, shareholder and co-chair of Babst Calland’s Energy and Natural Resources Group, said, “This Report provides perspective on the challenges and opportunities of a shale gas industry in the Appalachian Basin that continues to enjoy a modest rebound. While more business-friendly policies and procedures are emanating from Washington, D.C., threats of trade wars are raising concerns about the U.S. …

June 18, 2018

Pennsylvania DEP Finalizes Significant Changes to Air Permitting Program for Oil and Gas Industry

Environmental Alert

(by Michael H. Winek, Meredith Odato Graham and Gary E. Steinbauer)

On June 7, 2018, Pennsylvania Governor Tom Wolf and Department of Environmental Protection (DEP) Secretary Patrick McDonnell announced the final issuance of air permitting documents affecting oil and gas operations in the Commonwealth.  DEP shortly thereafter released a suite of new materials to mark the latest step forward in implementing Governor Wolf’s Methane Reduction Strategy.  The new permitting documents are controversial in so far as they represent a significant departure from the status quo, requiring operators to take a fresh look at when and where an air permit may be needed.

The suite of materials recently finalized by DEP includes three key permitting documents: (1) a revised Air Quality Permit Exemption List (with substantial changes to the longstanding “Exemption 38” for well sites); (2) a revision of the existing general permit for natural gas compression and processing facilities, known as “GP-5”; and (3) a new general permit known as “GP-5A” to authorize the construction and operation of unconventional natural gas well site operations and remote pigging stations.  DEP accepted stakeholder feedback on multiple drafts before issuing the final documents, which are all effective August 8, 2018.  The agency also released various ancillary documents, including a Technical Support Document and new permit application forms.

Operators now face the challenging task of adjusting to the new permitting regime.  Although the changes to the program are generally forward-looking—affecting new or modified sources—all operators should become familiar with the applicability triggers associated with Exemption 38, GP-5, and GP-5A.  What may seem like a routine activity at a facility could have unexpected consequences for permitting purposes.  Operators will also want to become familiar with DEP’s new e-Permitting platform for GP-5 and GP-5A, as DEP believes that use of the e-Permitting system will expedite review of applications. …

June 14, 2018

Pennsylvania Environmental Hearing Board continues analysis of the Environmental Rights Amendment

The PIOGA Press

(by Kevin J. Garber and Jean M. Mosites)

The Pennsylvania Environmental Hearing Board has issued several adjudications and opinions regarding challenges brought under Pennsylvania’s Environmental Rights Amendment (ERA) since the Pennsylvania Supreme Court decision in Pennsylvania Environmental Defense Foundation v. Commonwealth (PEDF) last June. PEDF set aside the long-standing three-part test in Payne v. Kassab used to analyze claims brought under the ERA and replaced it with a standard based on the text of the ERA and principles of Pennsylvania trust law. The PEDF decision addressed the allocation and use of royalties generated by leasing publicly owned oil and gas interests and did not provide a definitive test to be applied in the permitting context.

The board has addressed the obligations imposed by the ERA in Friends of Lackawanna v. DEP and Keystone Sanitary Landfill, (FOL), Center for Coalfield Justice and Sierra Club v. DEP, (CCJ) and Center for Coalfield Justice and Sierra Club v. DEP. The most recent opinion, issued on May 11 in the Delaware Riverkeeper case, reflects a continuation of the analysis provided by these earlier decisions.

Delaware Riverkeeper Network v. DEP

In The Delaware Riverkeeper, et. al. v. DEP and R.E. Gas Development, LLC the board upheld well permits and renewals issued by the Department of Environmental Protection in an appeal based in part on the ERA. Two citizens groups, the Delaware Riverkeeper and the Clean Air Council, along with several residents of Middlesex Township (collectively, Delaware Riverkeeper), appealed unconventional gas well permits and subsequent renewals issued to R.E. …

June 13, 2018

Babst Calland Expands Mobility, Transport and Safety Practice Former U.S. Department of Transportation and NHTSA Enforcement Division Chief Will Godfrey Joins Law Firm

Babst Calland announced the addition of William L. Godfrey as Director, Mobility, Automation and Safety.

The Firm is expanding its capabilities to support the developing needs of companies with emerging technologies.  It provides strategic leadership with business and legal advice for manufacturers, suppliers, start-ups, technology companies and government entities in the full-spectrum of transportation regulatory, safety, product quality, and automation matters, including those related to automated/autonomous driving systems.

“Will Godfrey’s expertise and creativity deepens our unique vision to deliver full-stack solutions to clients’ problems that integrate technical and engineering know-how with legal insight to expand business opportunities,” said Tim Goodman, Chair of Babst Calland’s Mobility, Transport and Safety Group, and former National Highway Traffic Safety Administration Assistant Chief Counsel for Enforcement and Federal Senior Executive.

A former General Motors vehicle engineer, production manager and senior U.S. federal regulatory chief at the National Highway Traffic Safety Administration (NHTSA)/U.S. Department of Transportation (DOT), Will Godfrey will assist clients in achieving their business goals and navigating obstacles by applying a current and detailed understanding of the federal government’s approach to transportation safety regulation (particularly motor vehicles), including its programs, processes, and personnel.

Godfrey spent nearly a decade at NHTSA/DOT, where he served in various leadership capacities.  Among other things, as NHTSA’s Trends and Analysis Division Chief, he led the oversight, analysis, and investigation of more than 1,100 vehicle, equipment, tire, motorcycle, and child car seat manufacturers globally, including TREAD Act/Early Warning Reporting Program and the integration of new, data-driven techniques.  As a senior policy advisor to the NHTSA Administrator, he led the agency’s comprehensive reorganization of the NHTSA Office of Defects Investigation (ODI).

“Will Godfrey is well-regarded and uniquely qualified to serve clients with emerging technologies as a senior technical and strategic advisor, integrated with our best in class legal and technical team,” said Donald C. …

June 13, 2018

GDPR Client Alert Part 1: What it is, What it Means in the U.S., and How U.S. Companies Should React

Corporate Alert

(by Johanna H. Jochum and Kevin T. Wills)

On May 25, 2018, the European Union General Data Protection Regulation No. 2016/679 (GDPR), which limits personal data processing, became effective and enforceable.  Unlike most EU regulations, portions of the GDPR are applicable to companies in third party countries—including companies in the United States.

The extraterritorial ramifications of the GDPR are already apparent.  Many U.S.-based companies that generate revenue from processing large amounts of personal data have recently revised their privacy policies to comply with the GDPR requirements.  However, for companies with business models that do not center on personal data processing, the extent of the GDPR’s reach and application is less clear.

1. What is the GDPR?

In the age of the internet, nearly everyone routinely shares personal data in everyday tasks. The purpose of the GDPR is to protect the “fundamental rights and freedoms” of people who share that personal data by limiting the extent a third party can process that personal data.

The GDPR’s definitions of “personal data” and “processing” are broad enough that most online activities are captured. For example, “personal data” can be “any information” relating to an identifiable person, including a person who can be identified by a username or location ID.[1] Further, “processing” is defined to include activities such as collection, storage or dissemination of personal data.[2]

Generally speaking, no company may process personal data that is distributed during these everyday tasks at all unless the data falls into one of six broad exemption categories: (1) consent; (2) contractual obligations; (3) legal obligations; (4) protection of “vital interests”; …

June 12, 2018

Babst Calland builds mobility, transportation and safety practice

Pittsburgh Business Times 

(by Patty Tascarella)

Pittsburgh’s seventh-largest law firm, best known for its energy and environmental practices, is preparing for a potential surge in work linked to advancements with autonomous vehicles.

Babst Calland is building a foundation through its mobility, transportation and safety practice, capitalizing on emerging technologies and synergies between its downtown headquarters and fast-growing office in Washington, D.C.

For the full article, click here.

June 7, 2018

High Court Rejects NLRB’s Position That Class Waivers Violate Federal Law

The Legal Intelligencer

(by Sean R. Keegan)

The U.S. Supreme Court’s recent decision in Epic Systems v. Lewis is a win for employers who have included or wish to include class action waivers in arbitration agreements that employees are required to sign as a condition of employment. On May 21, the Supreme Court rejected the existing position of the National Labor Relations Board (NLRB), which had held that arbitration agreements waiving the right to pursue class or collective actions violated federal labor law. The Supreme Court overturned the NLRB and held that the Federal Arbitration Act (FAA) requires such mandatory arbitration agreements to be enforced according to their terms. Following this decision, individual arbitration provisions may preclude employees from pursuing class or collective actions to resolve employment disputes.

The Supreme Court held that Congress has instructed in the Federal Arbitration Act that arbitration agreements providing for individualized proceedings must be enforced, and neither the Federal Arbitration Act’s saving clause nor the National Labor Relations Act suggests otherwise. Prior to Epic Systems, the NLRB had interpreted Section 7 of the National Labor Relations Act to encompass the right to bring a class or collective action, as it gives employees the right to organize, bargain collectively and engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection. Consequently, the NLRB’s position was that an employment agreement that required employees to resolve their workplace disputes (such as wage and hour and discrimination claims) by arbitration on an individual basis was an unfair labor practice under Section 8 of the National Labor Relations Act.

Before the Epic Systems decision there was a split in the circuit courts. …

June 7, 2018

Pennsylvania Supreme Court Reverses Approval of Oil and Gas Well on Narrow Grounds

Energy and Natural Resources Alert

(by Blaine A. Lucas and Robert Max Junker)

In Gorsline, Court Declines to Rule on Broader Issue of Compatibility With Uses in Residential and Agricultural Zoning Districts, but Suggests that Municipalities May Permit Unconventional Natural Gas Drilling in any and all Zoning Districts

The Pennsylvania Supreme Court published its long-awaited opinion in Gorsline v. Board of Supervisors of Fairfield Township on June 1, 2018.  Although the majority reversed the Commonwealth Court’s decision affirming the granting of a conditional use for an unconventional natural gas well pad, it did so in a narrow holding, finding that Inflection Energy, LLC (Inflection) did not present enough evidence before the Fairfield Township (Township) Board of Supervisors (Board) establishing that its proposed unconventional gas well pad was similar to other uses allowed in the Township’s  Residential-Agricultural Zoning District (R-A District).  Unlike most zoning ordinances, the Township’s zoning ordinance did not specifically authorize oil and gas wells.  Instead, Inflection had relied upon a “savings clause,” which allowed uses “similar to” the other uses specifically allowed in the R-A District.

Despite headlines and press releases touting the Gorsline decision as a wholesale rejection of oil and gas development in residential and agricultural zoning districts, its ruling was much more limited.  In fact, language in both the Gorsline majority and dissenting opinions largely rejects the post-Robinson Township assertion of many shale gas opponents that natural gas wells must be relegated to industrial zoning districts and are fundamentally incompatible with residential or agricultural zoning districts.

Background

Babst Calland’s overview of the Commonwealth Court’s September 14, 2015 decision can be found here.  …

June 5, 2018

Second Circuit Affirms Gathering Agreements can be Rejected in Bankruptcy

Energy Alert

(by David W. Ross, Mark A. Lindsay and Erica K. Dausch)

On May 25, 2018, in In re: Sabine Oil & Gas Corporation, 2018 WL 2386902 (2d. Cir. May 25, 2018), the United States Court of Appeals for the Second Circuit affirmed that a bankrupt energy and production company could reject its gas gathering agreements with a midstream company under Section 365 of the Bankruptcy Code because the gas gathering agreements did not create or involve an interest in real property.

Background
Sabine Oil & Gas Corporation (Sabine), an energy and production (E&P) company, filed for Chapter 11 bankruptcy protection in 2015 in the Southern District of New York.  Prior to its bankruptcy filing, Sabine entered into gathering agreements (the “Agreements”) with Nordheim Eagle Ford Gathering, LLC (Nordheim), whereby Sabine was required to “dedicate” all of the gas it produced in a designated area to Nordheim, which would then gather and treat the gas.  If Sabine could not deliver the minimum required amounts of gas to Nordheim, it was required to make significant deficiency payments.

Section 365 of the Bankruptcy Code permits a debtor to reject pre-petition executory contracts and unexpired leases that the debtor deems to be burdensome, thereby relieving the debtor of the obligation to perform moving forward.  Agreements that involve the conveyance or creation of interests in real property (other than unexpired leases) are generally not subject to rejection under Section 365.

Sabine sought to reject the Agreements under Section 365 because Sabine deemed the terms of the Agreements, including the requirement to make significant deficiency payments, overly burdensome.  Nordheim argued that the “dedications” contained in the Agreements were “covenants that run with the land” and thereby constituted interests in real property that were not subject to rejection under Section 365. …

May 22, 2018

Pennsylvania Supreme Court rejects DEP’s ‘water-to-water’ theory of violations under the Clean Streams Law

The PIOGA Press

(by Kevin Garber, Jean Mosites and Esther Mignanelli)

In a case of first impression, the Pennsylvania Supreme Court rejected the Department of Environmental Protection’s untested legal theory that penalty liability under the Clean Streams Law continues as long as any constituents of a release remain in waters of the Commonwealth—days, months and years after the release has been stopped.

On March 28, the Supreme Court held “[t]he mere presence of a contaminant in a water of the Common – wealth or a part thereof does not establish a violation of Section 301, 307, or 401 of the Clean Streams Law, since movement of a contaminant into water is a predicate to violations.” EQT Prod. Co. v. Com., Dep’t of Envtl. Prot., 6 MAP 2017, slip op. at *37 (Pa. Mar. 28, 2018) (emphasis in original). In other words, a violation of these sections of the Clean Streams Law is based on the initial entry of pollutants into waters of the Commonwealth, not the presence or movement of constituents within such waters.

The Supreme Court’s opinion provides necessary clarification concerning the scope of liability for penal – ties under the Clean Streams Law for all persons, entities, businesses and industries that are responsible for remediation, those who would redevelop brownfield properties for reuse under Act 2, as well as any property owner with an historic contamination in groundwater that it did not cause. The decision reaffirms that penalty liability is distinct from cleanup liability and recognizes that penalties are neither appropriate nor effective in altering the time that may be necessary for full remediation.

The parallel proceedings between EQT and the department
The court’s statutory construction stemmed from a controversy between EQT Production Company and DEP regarding the liability and penalties that could be imposed for  a release from an onsite pit at a Marcellus Shale well pad in Tioga County in 2012. …

May 16, 2018

Pennsylvania Environmental Hearing Board’s Analysis of Oil and Gas Well Permitting and the Environmental Rights Amendment

Environmental Alert 

(by Kevin J. Garber and Jean M. Mosites)

On May 11, 2018, in The Delaware Riverkeeper, et. al. v. DEP and R.E. Gas Development, LLC., the Pennsylvania Environmental Hearing Board issued an opinion upholding well permits and renewals issued by the Department of Environmental Protection in an appeal based in part on Article I, Section 27 of the Pennsylvania Constitution, commonly known as the Environmental Rights Amendment (ERA). EHB Dkt. No. 2014-142-B (consolidated with 2015-157-B) (May 11, 2018).

The ERA provides:

The people have a right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment. Pennsylvania’s public natural resources are the common property of all the people, including generations yet to come. As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of all the people.

The Board previously addressed the ERA in Friends of Lackawanna v. DEP and Keystone Sanitary Landfill, EHB Dkt. No. 2015-063-L (November 10, 2017) (FOL) and Center for Coalfield Justice and Sierra Club v. DEP, EHB Dkt. No. 2014-072-B (August 15, 2017) (CCJ). In another matter involving the Center for Coalfield Justice and DEP permitting action with respect to proposed mining operations, the Board also analyzed the ERA in a decision denying a petition for supersedeas. Center for Coalfield Justice and Sierra Club v. DEP, EHB Dkt. No. 2018-028-R (April 24, 2018). All of these cases analyze Department permitting decisions in light of the Pennsylvania Supreme Court’s June 20, 2017 decision in Pennsylvania Environmental Defense Foundation v. …

April 23, 2018

Automated/Autonomous Driving Systems (ADS) Innovation Boot Camp for Automotive Product Liability Litigators

Attorney Tim Goodman will be presenting a pre-conference workshop “Automated/Autonomous Driving Systems (ADS) Innovation Boot Camp for Automotive Product Liability Litigators” at the American Conference Institute’s Automotive Product Liability Conference, July 18-20, 2018.

Automotive experts forecast that within the next five years, we will be sharing the road with automated/autonomous vehicles on a daily basis. In theory, vehicular automation is intended to increase safety by eliminating the human error component that causes most accidents. However, in practice, the prospect of every OEM developing an autonomous vehicle does not come without concerns, especially relative to automotive product liability. Despite the intended consequences of autonomous vehicles, there are certain outcomes that are leaving members of the legal community scratching their heads. Join attorneys and technical specialists who are helping shape ADS policy in the mobility, transport and safety space.

This workshop will provide insights into this technology, along with the legal and regulatory ramifications. Points of discussion, among other things, will include:

  • SAE levels of driving automation
  • ADS systems, sensors, connectivity, architecture and related issues
  • ADS and self-certification of applicable federal safety standards
  • Homologation and regulatory compliance challenges
  • Innovative mobility and safety approaches
  • Best practices and emerging trends
  • Recent legislative and regulatory developments

For more information about the conference and this pre-conference workshop, click here.

April 23, 2018

EPA’s ban on ‘unconventional’ wastewater discharges to POTWs

The PIOGA Press 

(by Jean M. Mosites and Abigail F. Jones)

On June 28, 2016, the U.S. Environmental Protection Agency (EPA) published a rule entitled “Effluent Limitation Guidelines and Standards for the Oil and Gas Extraction Point Source Category,” which prohibits the discharge of unconventional wastewater to publicly owned treatment works (POTWs). The rule went into effect on August 29, 2016.

The prohibition, now codified in 40 C.F.R. §§ 435.33 and 435.34, applies to “wastewater pollutants associated with production, field exploration, drilling, well completion or well treatment for unconventional oil and gas extraction.” The phrase “unconventional oil and gas extraction” (UOG) is defined in the rule to mean oil and natural gas produced from “a shale and/or tight formation (including, but not limited to, shale gas, shale oil, tight gas, tight oil).”

Subsequently, the rule was challenged in court and has been remanded to EPA for review and possible revision. The legal challenge to the rule, described in detail below, relates to its applicability to Pennsylvania-defined “conventional” oil and gas operators. However, EPA’s administrative review of the rule could affect oil and gas wastewater disposal options for both conventional and unconventional operators in Pennsylvania.

Implementation deadline extension

In the preamble to the publication of the final rule, EPA stated that no operators subject to the rule were currently discharging to POTWs. Based on this understanding, the rule was to go into effect within 60 days of publication. Following promulgation of the rule, EPA received letters indicating that there were facilities likely discharging UOG wastewater to POTWs in Pennsylvania. As a result, EPA issued a final rule on December 7, 2016, to extend the implementation deadline for existing sources that were lawfully discharging wastewater to POTWs between April 17, 2015, and June 28, 2016. …

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