Articles, Alerts & Perspectives

Pittsburgh, PA

Pretrial Practice & Discovery

American Bar Association Litigation Section

(by Alexandra Graf)

Prior to the recently decided U.S. Supreme Court case Coinbase, Inc. v. Bielski, 216 L.Ed.2d 671 (2023), there was a circuit split as to whether an interlocutory appeal of a denied motion to compel arbitration forces the district court to stay the underlying proceedings. Pursuant to the Federal Arbitration Act, 9 U.S.C. § 16(a), “when a district court denies a party’s motion to compel arbitration, that party may make an interlocutory appeal.” This is a statutory exception to the typical rule that parties may not appeal before a final judgment is rendered. In a 5–4 decision, the Court held that the district court must stay its pretrial and trial proceedings while the interlocutory appeal on arbitrability is ongoing. This ruling incentivizes parties to enforce their arbitration clauses because a motion to compel arbitration is not shielded from appeal as other pretrial orders are, and the underlying matter will now be stayed until resolution of the appeal.

The U.S. Court of Appeals for the Fifth and Ninth Circuits previously held that whether the underlying district-court proceedings were stayed during an interlocutory appeal of this nature was a decision for the district court judge to make at their discretion. In the remaining circuits, the underlying case was automatically stayed upon an interlocutory appeal of a denied motion to compel arbitration. In resolving this circuit split, the Court relied on the Griggs rule, which is a longstanding concept of procedure that states that an appeal, including an interlocutory appeal, “divests the district courts of its control over those aspects of the case involved in the appeal.” Griggs v. …

Pittsburgh, PA

PIOGA Press

(by Christian Farmakis, Susanna Bagdasarova, Kate Cooper, and Dane Fennell)

By now, you have likely heard about the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) Beneficial Ownership Information Reporting Rule (the “Rule”) from your accountant, attorney, or business colleagues. Promulgated under the Corporate Transparency Act (“CTA”), the Rule requires most business entities to disclose information to FinCEN about their ‘beneficial owners’: individuals who directly or indirectly own or control such entities.

Enacted as part of the Anti-Money Laundering Act in 2021, the CTA is intended to “prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity.” The Rule aims to enhance transparency and support the mission of the CTA by requiring domestic and U.S. registered foreign entities to report information about their beneficial owners to FinCEN. Most entities in the U.S. will likely be required to comply with the Rule, and FinCEN estimates approximately 32 million business will be required to make a filing. The Rule exempts 23 types of entities from reporting requirements, primarily large or regulated entities already subject to various reporting requirements, such as banks, SEC-reporting companies, insurance companies, and ‘large operating companies’, as well as wholly owned subsidiaries of the foregoing. Entities formed before January 1, 2024, have until 2025 to comply, while entities formed in 2024 have a 90-day compliance period.

Under the Rule, reporting companies must provide detailed personal identifying information for each individual beneficial owner, including name, date of birth, residential street address, and unique identifying number (such as a passport or driver’s license number). A ‘beneficial owner’ is a natural person who directly or indirectly owns or controls at least 25% of the ownership interests of a reporting company or who exercises ‘substantial control’ over the reporting company. …

Pittsburgh, PA and Harrisburg, PA

The Legal Intelligencer

(By Max Junker and Morgan Madden)

Ordinance enforcement is an essential function for a municipality to keep its residents and community functioning efficiently.  Indeed, the goal of zoning enforcement is to “ensure compliance with [an] ordinance such that the community is protected.  Borough of Bradford Woods v. Platts, 79 A.2d 984 (Pa.Cmwlth. 2002).  The Pennsylvania Municipalities Planning Code (“MPC”) sets forth a straightforward mechanism to enforce a municipality’s zoning ordinance, but what happens when that enforcement process goes haywire?  Small and seemingly innocuous departures from the specific requirements of the enforcement process and the provisions of the MPC can have significant and cascading consequences.  Crossing and dotting the proverbial “t’s” and “i’s” at each step of the process will help to ensure the effective administration of a zoning ordinance.

An Effective Ordinance

Pursuant to the MPC, zoning ordinances may contain “provisions for the administration and enforcement” of such ordinance.  53 P.S. § 10603(c)(3).  Despite the apparent optional nature to include such enforcement provisions in a municipality’s ordinance, inclusion of the same is fundamental to successful enforcement and must comply with the enforcement provisions in the MPC.  An effective enforcement provision will put property owners on express notice of their rights and responsibilities relative to zoning ordinance compliance, and the enforcement procedures relative thereto.  Effective ordinances clearly set forth policy goals for zoning ordinance compliance, establish expectations for compliance, and lay out the steps the municipality will take to enforce said expectations (i.e., its enforcement procedure and available remedies).

The Zoning Notice of Violation

The first official step in zoning enforcement for a municipality is the issuance of an enforcement notice.  …

Charleston, WV

The Wildcatter

(by Nikolas Tysiak)

All the cases of interest this time around are from Ohio’s 7th Circuit Court of appeals. Only a couple directly involve the Marketable Title Act and Dormant Mineral Act, so more to digest this time.

Hogue v. PP&G Oil Company, LLC, 2024-Ohio-2938 (7th Dist.), involved a dispute arising from operations under different depths associated with a single oil and gas lease following a leasehold depth severance. PP&G held 4 traditional, vertical oil and gas wells in Monroe County. PP&G assigned a 2.5% working interest in the wells and 20-acre squares around the units to the Hogues in 2007, “from the surface to the bottom of the deepest producing geological formation.” The wells bottomed out around 2,500 feet. In 2011, PP&G subleased various of its lands, including the lands affected by the above wells, to HG Energy LLC as to depths from the top of the Clinton formation to the basement. The sublease was later amended to exclude the land around certain wells, and eventually became vested in Gulfport Appalachia LLC. The Hogues allege that the assignment of working interests to them do not contain express depth restrictions, that they held rights to the land itself surrounding the several wells, and that the sublease of the deep rights under the lands therefore violated the Hogues’ property rights. The 7th District Court found that, at the time of the assignment to the Hogues, there was an inherent depth limitation to unitized vertical wells under Ohio law of 4000 feet. Consequently, the Hogues received no rights deeper than 4000 feet and had no inherent interest in any depths or wells subleased to Gulfport. The appeals court remanded the suit to the trial court for further proceedings accordingly. …

Pittsburgh, PA

TEQ Hub

(by Christian Farmakis, Susanna Bagdasarova, Kate Cooper and Dane Fennell)

Reminder – Upcoming January 1, 2025 compliance deadline for the Financial Crimes Enforcement Network (FinCEN) Beneficial Ownership Information Reporting Rule (the “Rule”).

By now, you have likely heard about the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) Beneficial Ownership Information Reporting Rule (the “Rule”) from your accountant, attorney, or business colleagues. Promulgated under the Corporate Transparency Act (“CTA”), the Rule requires most business entities to disclose information to FinCEN about their ‘beneficial owners’: individuals who directly or indirectly own or control such entities.

Enacted as part of the Anti-Money Laundering Act in 2021, the CTA is intended to “prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity.” The Rule aims to enhance transparency and support the mission of the CTA by requiring domestic and U.S. registered foreign entities to report information about their beneficial owners to FinCEN. Most entities in the U.S. will likely be required to comply with the Rule, and FinCEN estimates approximately 32 million business will be required to make a filing. The Rule exempts 23 types of entities from reporting requirements, primarily large or regulated entities already subject to various reporting requirements, such as banks, SEC-reporting companies, insurance companies, and ‘large operating companies’, as well as wholly owned subsidiaries of the foregoing. Entities formed before January 1, 2024, have until 2025 to comply, while entities formed in 2024 have a 90-day compliance period.

Under the Rule, reporting companies must provide detailed personal identifying information for each individual beneficial owner, including name, date of birth, residential street address, and unique identifying number (such as a passport or driver’s license number). …

Pittsburgh, PA

Pennsylvania Business Central

(by Kevin Douglass, Carla Castello, and Stephen Antonelli)

Today’s businesses are subject to in­creasing workplace scrutiny concern­ing possible misconduct of their owners, officers, management, and personnel. When faced with an allegation that can potentially expose the company to legal, financial and reputational harm, it is crit­ical that the company promptly investi­gate the facts and assess the business risk in order to make an informed deci­sion on the best course of action.

Is an Internal Company Investigation Warranted?

Employee complaints, or even allega­tions from third parties, concerning im­proper workplace conduct should al­ways be taken seriously. Whether the claims involve an entry level employee, a manager, a corporate officer, or anyone in between, the company should assess whether the allegations, if true, would constitute violations of law or company policies, or otherwise materially impact the company’s finances, culture, reputa­tion, or workforce.

Workplace investigations are often sen­sitive. Employees may be reluctant to step forward and become the center of an investigation. They may also fear backlash from the individual(s) being in­vestigated, particularly if they carry sig­nificant clout within the company. The company can assuage those concerns by reminding employees involved in the in­vestigation of the company’s obligation to comply with applicable anti-retalia­tion laws and company policies. The com­pany should also explain that it will per­form the investigation with impartiality and (as much as possible) confidentiality, and that it will comply with the organiza­tion’s policies and procedures while min­imizing business disruption.

Planning for and Conducting the Investigation

At the outset, the company must de­fine the scope and purpose of the inves­tigation (i.e. identify the allegations and the reasons for undertaking the investi­gation), select an investigation team, and determine a timeline for the investigation. …

Pittsburgh, PA

TEQ

(by Kristen Petrina)

Artificial Intelligence (AI) is advancing at unprecedented speeds. AI relies on vast amounts of datasets for processing and model training, creating the challenge of balancing the benefits of AI, while protecting data privacy. As a result of improper data processing and usage, organizations are facing harsh penalties including AI usage prohibition, algorithm disgorgement, and multibillion dollar fines. When considering how to introduce AI into any organization, one of the first questions to consider is, “How can AI be utilized to drive innovation without violating privacy and misusing collected data?”

AI governance analysis should be under a privacy lens, as personal data is at the core of many opportunities that come with AI development. Privacy risks may result in societal and ethical impacts on individuals which speaks to the heart of responsible AI usage. Incorporating responsible AI practices is user specific to each organization and it is possible to protect privacy and drive innovation. In order to achieve both goals, organizations should consider data protection preventative measures before implementing AI into its processes.

• Data privacy should be addressed at the onset of AI implementation. Organizations should conduct risk assessments and consider data enablement through AI from the beginning before it becomes an issue. Generative AI in particular is self-learning, the more data fed into the model, the harder it will be to unwind or remove data if improperly used.
• AI and data privacy governance teams must work together from the beginning to address any risks that may arise. Organizations may consider forming an ethical AI committee engaging diversified team members to reduce potential bias in the development and design.
• Contemplate data inputs by asking questions such as what the existing and potential future data sources may be, what data will be collected, what are in the datasets, how to categorize the types of data, will the data modeling receive personal or sensitive data, should those things be included.

…

Pittsburgh, PA

The Legal Intelligencer

(by Steve Antonelli and Alex Farone)

Changes in the world of non-competition agreements (“non-competes”) have been particularly prevalent in recent weeks, most notably including court activity barring the Federal Trade Commission’s new non-compete ban and Pennsylvania’s new law restricting the use of certain non-competes for healthcare practitioners.

In May of this year, the Federal Trade Commission (FTC) published a final rule that would ban nearly all new non-competes with employees, independent contractors, and volunteers nationwide, with the exception of non-competes entered into pursuant to certain business sales, on the basis that non-competes are an unfair method of competition and therefore a violation of Section 5 of the FTC Act.

The final rule would also void all pre-existing non-competes except (1) those made with senior executives earning more than $151,164 annually who are in a policy-making position, and (2) those that have been breached and for which a cause of action accrued prior to the final rule’s effective date of September 4, 2024.

The final rule would additionally require employers to provide “clear and conspicuous notice” to all current and former workers, other than senior executives, with existing non-competes by September 4 stating that the non-compete will not be, and cannot legally be, enforced. Immediately after the final rule was published, legal challenges to the ban were quickly filed in various federal courts across the country. As the September 4 deadline approached without a decisive ruling from any of these courts, employers wondered whether the non-compete ban would be ultimately enforceable and began to make strategic plans on whether to proactively change their non-compete practices.

Two weeks before the ban went into effect, on August 20, 2024, the U.S. …

Washington, DC

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Pittsburgh, PA and Washington, DC

The Foundation Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman and Matthew C. Wood)

On April 4, 2024, the Pennsylvania Public Utility Commission (PUC), in a 4–1 vote, adopted a joint motion to comprehensively review processing times of certain applications under its purview. See Press Release, PUC, “PUC Launches Comprehensive Review of Application Procedures” (Apr. 4, 2024). Specifically, the PUC proposed to analyze how to make more efficient application processes that do not have applicable regulatory or statutory deadlines (or have deadlines that the PUC has authority to extend). Joint Motion for Chairman Stephen M. De Frank and Commissioner Ralph V. Yanora (Joint Motion), at 2.

The initiative consists of two parts. First, the PUC directed each of its various bureaus that work on these types of applications to review and inventory each applicable proceeding with the following information:

• the methods by which the PUC receives the applicable filings;
• the statutory or regulatory authority underlying issued approvals;
• whether publication of an application is required;
• whether the application has a protest period, and if so, its length; and
• a description of the bureau’s tasks.

Id.

Second, the Office of the Executive Director will analyze the inventory information, examine each bureau’s average application review time and the total average processing time from application filing to a final decision, and evaluate process improvements. Id. The goal of the evaluation is to reduce processing times by at least 15% (subject to revision), while also considering the allocation of necessary resources, legal deadlines, and compliance with applicable legal requirements under the Public Utility Code, PUC Regulations, or PUC Orders.  …

Pittsburgh, PA and Washington, DC

The Foundation Mineral and Energy Law Newsletter

Pennsylvania – Mining

(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman and Christina M. Puhnaty)

On June 1, 2024, the Pennsylvania Department of Environmental Protection (PADEP) issued a request for information (RFI) to anyone interested in submitting concept papers for PADEP’s consideration for the Design, Development, Commercialization and Maintenance of Clean Energy Campus (CEC) Projects on abandoned mine lands (AML) controlled by the Commonwealth. 54 Pa. Bull. 3098 (June 1, 2024) PADEP requests concept papers from project sponsors, namely clean energy project developers, asset owners, financial institutions, and other relevant parties, willing to coinvest with PADEP to transfer AML sites into CECs. PADEP notes in the notice that it owns 13 properties greater than 50 acres in size eligible for conversion.

In terms of design, PADEP requests information on the design for land reclamation and remediation to create sites ready for clean energy generation or energy storage sites. PADEP is looking for a sponsor who can provide professional design services, feasibility studies, geophysical investigations, construction oversight, and other technical services as required. Such remediation designs could require action in perpetuity. With respect to development, PADEP is looking for a project sponsor that can manage the remediation and development of the site by completing leases, conducting site preparation, securing permitting, conducting geotechnical investigations, and securing interconnection. PADEP has pointed to EPA’s Revitalization Handbook as guidance for renewable energy development on AML sites, which recommends property purchasers assess whether they should conduct all appropriate inquiries to take advantage of CERCLA liability protections. For commercialization, PADEP seeks sponsors with experience deploying grid-scale clean energy generation and storage projects. …

Pittsburgh, PA

The Legal Intelligencer

(by Max Junker and Anna Hosack)

If sunlight is said to be the best of disinfectants and electric lights the most efficient policeman, then what is said of the darkness of anonymity?  Many agencies have been receiving Right-to-Know Law, 65 P.S. § 67.701, et seq. (“RTKL”) record requests created through “FOIA Buddy” that they suspect are anonymous.  FOIA Buddy is an online service that lists its mission as “simplifying the process of requesting public records.”  After numerous inquiries about anonymous requests, the Pennsylvania Office of Open Records (“OOR”) released a memo confirming that FOIA Buddy is operated by people who have a stated goal of efficiently promoting government transparency and accountability in a cost-effective manner for all involved and that the OOR found no indication that FOIA Buddy is part of a phishing, scraping, or scamming activity.  The memo also stated that the OOR is unable to provide specific legal advice on responding to RTKL requests that are made by or through FOIA Buddy.  However, the OOR recommends that agencies ensure their internal RTKL policies are clear and posted on the agency’s website and easily accessible.  This has provided an opportunity for local agencies to dust off their RTKL policies, which likely have not been reviewed since the enactment of the new RTKL in 2008.

Section 702 of the RTKL provides that “Agencies may fulfill verbal, written or anonymous verbal or written requests under this act.”  Therefore, agencies have discretion as to whether they will answer anonymous requests.  For a request not to be anonymous, the request must have a valid requester with an ascertainable address.  A “requester” is defined by the RTKL as “[a] person that is a legal resident of the United States.”  Section 703 of the RTKL requires that all written requests under the RTKL “shall include the name and address to which the agency should address its response.”  The use of an alias or fake name or the lack of inclusion of a verifiable address on the RTKL form constitutes an anonymous request. …