West Virginia Executive
Despite the state legislature’s efforts, laws in West Virginia that allow pooling exclude shallow horizontal wells. Since wells drilled in the Marcellus Shale are considered shallow, creating a shallow pooling law may be the key to maximizing the state’s shale development.
PIttsburgh Business Times
As a result of a Pennsylvania Supreme Court decision, municipalities are adopting a greater number of ordinances that impact oil and gas operations, according to a new report by Pittsburgh law firm Babst Calland.
“Local governments are adopting, at an accelerated pace, ordinances that regulate the oil and gas industry’s operations, sometimes in a very aggressive and restrictive fashion,” the firm, which tracks local rule-making, said in the report.
The PIOGA Press
On February 11, the Occupational Safety and Health Administration (OSHA) issued a memorandum to all OSHA regional directors and state plan designees authorizing the addition of upstream oil and gas hazards to the list of high-emphasis hazards in the Severe Violator Enforcement Program (SVEP). This policy change is significant because
it permits OSHA to concentrate resources and enforcement efforts on oil and gas employers any time an incident meets the SVEP criteria.
Employment Bulletin
Individual, collective and class action lawsuits alleging misclassification of oil and gas industry employees under federal and state wage hour laws have flooded the Pennsylvania and Ohio dockets. This is occurring approximately two and a half years after the United States Department of Labor (DOL) prioritized an ongoing multi year enforcement initiative under the Fair Labor Standards Act (FLSA). By December 2014, this initiative resulted in more than 5,300 oil and gas industry employees recovering nearly $4.5 million in back wages for unpaid overtime and other wage violations.
The PIOGA Press
Recently, the United States Department of Labor (DOL) announced that it has helped more than 5,300 oil and gas workers recover nearly $4.5 million in back wages for unpaid overtime and other wage violations as a result of an “ongoing multiyear enforcement initiative” conducted by the DOL’s Wilkes-Barre and Pittsburgh Wage and Hour Division offices which found significant violations of the Fair Labor Standards Act (FLSA). The DOL found that the majority of the FLSA violations were due to improper payment of overtime. In many cases, employee’s production bonuses were not included in their “regular rate” of pay. In other cases, employers failed to pay overtime to employees that were paid day rates. The DOL attributed the wage violations in part to the structure of the oil and gas industry in Pennsylvania and West Virginia. According to the DOL, job sites “that used to be run by a single company can now have dozens of smaller contractors performing work, which can create downward economic pressure on lower level subcontractors,” which can lead to noncompliance with wage and hour laws and regulations.
Administrative Watch
On May 27, 2015, the United States Environmental Protection Agency (EPA) and the United States Army Corps of Engineers (Corps) released the long-awaited final rule redefining the extent of the agencies’ jurisdiction over “waters of the United States” (WOTUS) under the Clean Water Act. The Final Rule, known as the “Clean Water Rule,” abruptly changes (i.e., within 60 days of publication in the Federal Register) the types of waters that will be regulated under numerous federal programs, including NPDES permitting, wetland and watercourse (i.e., dredge and fill) permitting, spill response planning, and spill reporting. The Final Rule will affect all types of industries, real estate development, construction activities, and other entities by increasing the types and extent of waters that will be regulated under the Clean Water Act and introducing a new analysis for evaluating whether a water is jurisdictional.
Charleston Area Alliance
We would like to send out a warm welcome to our newest member of the Alliance, Babst Calland Clements & Zomnir, P.C.
Babst Calland is one of the most respected top-tier law firms in the mid-Atlantic United States. Their attorneys have the knowledge and experience needed to solve complex legal problems for corporations, private companies and organizations of all types. Babst Calland attorneys deliver a broad range of quality legal services, responding quickly and efficiently to answer questions and solve problems and litigate issues in federal state courts and before administrative tribunals. Babst Calland’s Charleston, WV office handles a wide range of legal issues that include a particular focus on natural gas and other energy related issues, as well as environmental, business services, title, litigation, land use, construction, and employment and labor law. Babst Calland just moved to their new office centrally located in the BB&T building in Downtown Charleston.
Employment Bulletin
On April 20, 2015, the United States Equal Employment Opportunity Commission (EEOC) issued its long-awaited Proposed Amendment to Regulations under the Americans with Disabilities Act (the “Proposed Rule”), which provides guidance on the EEOC’s application of the Americans with Disabilities Act (ADA) to employer wellness programs. Specifically, the Proposed Rule addresses: (1) whether a wellness program is considered “voluntary”; (2) what notice must be provided to employees concerning a wellness program; and (3) the limits to incentives or disincentives that may be provided by employers. While the Proposed Rule offers some much needed clarity to the EEOC’s position on wellness programs, it also raises several questions and concerns in an already muddied area of law. The publication of the Proposed Rule triggered a 60-day public notice and comment period. Employers sponsoring wellness programs are encouraged to submit comments by June 19, 2015.
The PIOGA Press
In a somewhat ironic twist, anti-industry residents and environmental groups have been relying on their victory in Robinson Township v. Commonwealth, 83 A.3d 901 (2013), which invalidated the statewide standardized land use control set forth in Act 13 and restored local land use control over oil and gas operations, to challenge local zoning ordinances that regulate oil and gas development. The challengers in these validity actions generally argue that, per the plurality’s expansion of the Pennsylvania Constitution’s Environmental Rights Amendment (ERA) in Robinson Township, each municipality must engage in substantial environmental and safety analysis prior to enacting oil and gas regulations or issuing permits thereunder. According to the challengers, an ordinance enactment process or permit review process that does not satisfy these requirements is invalid.
The Legal Intelligencer
The Pennsylvania Supreme Court recently rendered a decision in Reading Area Water Authority v. Schuylkill River Greenway Association, 100 A.3d 572 (Pa. 2014), further narrowing the definition of what constitutes a “public purpose” for a taking by eminent domain in Pennsylvania. The Reading opinion is significant, as it constitutes yet another Pennsylvania decision favoring the protection of private property rights from seizure by the government. The decision is particularly noteworthy in the context of the U.S. Supreme Court’s controversial expansive view of the eminent domain power in Kelo v. City of New London, 454 U.S. 469, from 2005.
*Reprinted with permission from the 4/28/15 issue of The Legal Intelligencer. © 2015 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.
Administrative Watch
On April 17, 2015, the U.S. Environmental Protection Agency published the Hazardous and Solid Waste Management System; Disposal of Coal Combustion Residuals from Electric Utilities; Final Rule (Final Rule) in the Federal Register (see 80 Fed. Reg. 21302, April 17, 2015). The electric utility industry has been awaiting this rule to be published since the pre-publication copy was made publicly available on December 19, 2014. The Final Rule establishes minimum criteria for the placement of coal combustion residuals (CCR) in landfills and surface impoundments. The Final Rule applies to CCR generated by coal-fired power plants.
The Public Record
On April 8, 2015, the Pennsylvania Supreme Court agreed to hear an appeal from the Pennsylvania Commonwealth Court’s decision in Fish v. Township of Lower Merion. In Fish, the Commonwealth Court determined that the Local Tax Enabling Act (LTEA), the state law that authorizes and regulates local taxes, prohibits a political subdivision from imposing a business privilege tax on lease revenue. The Supreme Court’s decision in Fish will constitute an important development in the law as many municipalities currently collect business privilege tax on lease income.
In Fish, several individuals who own and rent property in Lower Merion Township (Township) challenged the Township’s collection of a 1.5 mill business privilege tax on their lease revenue. The property owners based their challenge on an exclusion set forth under Section 301.1(f)(1) of the LTEA, which expressly prohibits a political subdivision from taxing leases or lease transactions if the tax was not imposed prior to July 1, 2008. According to the property owners, a tax on gross receipts from lease revenue is the same as a tax on individual leases or lease transactions, as prohibited under Section 301.1(f)(1). The Township took the position that Section 301.1(f)(1) prohibits the imposition of a “direct tax,” e.g. a per-lease tax, but not the imposition of a tax on lease revenue. The Township argued that it was taxing the privilege of doing business in the Township, as authorized under the LTEA, not leases or lease transactions.
Rejecting the lessors’ argument, the Montgomery County Court of Common Pleas ruled in favor of the Township. On appeal, however, the Commonwealth Court, strictly construing Section 301.1(f)(1) of the LTEA against the Township, disagreed and reversed. In doing so, the Pennsylvania Commonwealth Court concluded that Section 301.1(f (1) of the LTEA “bars ‘any tax’ – i.e., privilege, transactional, or otherwise – on leases or lease transactions”, noting that it is thus immaterial that the challenged tax was characterized by the Township as a tax on the privilege of engaging in business, and not on a particular lease or lease transaction. …
Administrative Watch
On August 3, 2015, the United States Environmental Protection Agency (EPA) released its highly anticipated final Clean Power Plan regulating carbon dioxide emissions from existing power plants. The Clean Power Plan makes several changes to EPA’s initial proposal that was published in June 2014. Implementation of the Clean Power Plan will significantly alter the landscape of power generation in the United States, and could seriously affect power plants and the energy industry.
The PIOGA Press
Should an operator in a lawsuit challenging the validity of its oil and gas lease have to risk having its lease expire during that suit by not commencing operations? Nearly all states whose courts have addressed this issue say, “No.” Those states’ courts allow operators to extend or “equitably toll” their challenged leases if they prevail in the suit. But not in Pennsylvania, where the Supreme Court has rejected equitable tolling in most situations and forced the operator to bear the risk that its lease will expire during the suit challenging that lease.
The PIOGA Press
Pennsylvania’s evolving law regarding regulation of oil and gas development has undergone yet another change, this time in a footnote to the Commonwealth Court’s January 7, 2015 en banc opinion in Pennsylvania Environmental Defense Foundation v. Commonwealth 2015 Pa. Commw. LEXIS 9 (2015). The Pennsylvania Environmental Defense Foundation (PEDF) case, in which PIOGA filed an amicus brief, rejected constitutional challenges to the leasing of state land for natural gas development and to the use of funds generated by those leases. In doing so, the Commonwealth Court took the opportunity to clarify the legal weight to be given to the analysis of the plurality decision in Robinson Township v. Commonwealth, 83 A.2d 901 (2013) interpreting Article I, Section 27 of the Pennsylvania Constitution (the Environmental Rights Amendment).