By: Michael Solomon
For more than 25 years, clients have relied on Cohen Seglias attorneys for business insight, practical legal advice, and a deeper understanding of the legal issues impacting their businesses. With every change in state government, our clients ask us: “What’s Next?” Since the new Wolf administration took office in January we have been tracking trends and changes in Pennsylvania’s business and regulatory environments. Some of these changes are great news, while some are precursors to a cautionary tale for many of our clients.
When the Public and Private Sectors Collide . . .
Changes in a state’s executive branch, especially when there is a Democrat taking the helm, usually mean increased contacts between the public and private sectors. When the public and private sectors interact with each other more frequently, we tend to see more government regulation. In our state, this is playing out in a variety of arenas. However, there are big changes afoot in three important areas: public construction, the oil and gas industry, and the workplace.
P3s are Primed to Jumpstart our State Infrastructure!
Perhaps the epitome of the public-private sector collision is the state’s Public-Private-Partnership law, also known as Act 88. Pennsylvania’s P3 law is a very good example of new legislation that can work for everyone. The Act, which was promulgated and signed by Gov. Tom Corbett, looks to have a strong future under the Wolf administration. According to Senior Counsel,Jason Tomasulo, this is great news for our large construction client base and Pennsylvania residents.
“Even before he took office, Governor Wolf was thinking about how to improve Pennsylvania’s transportation and infrastructure,” Tomasulo says. “His ‘Fresh Start’ policy plan identified transportation as a major initiative vital to positioning Pennsylvania as a leader in the domestic and world markets. P3s can leverage private sector funds to improve transportation and to develop some of the Governor’s infrastructure wish list, such as a high speed rail line that would move Pennsylvania products from Philadelphia to Chicago in three hours.”
While some of the Governor’s infrastructure ideas may have been driven by his election campaign, Tomasulo says that early indicators suggest that Pennsylvania will continue to utilize P3s to address transportation and other needs. For example, Governor Wolf has taken steps to build on the public-private programs already in progress, such as the Rapid Bridge Replacement P3 project. The compressed natural gas fueling stations and the wireless telecomm partnership, among others, continue to move forward, with PennDOT’s P3 Office reviewing and evaluating additional projects for consideration by the Public-Private Transportation Partnership Board.
“The importance of such continuity cannot be understated, as evidenced by the impact that project uncertainty has had on neighboring Maryland,” says Tomasulo. “Governor Hogan’s ongoing review of the ‘Purple Line’ light rail project for suburban Washington D.C., and the associated delays have raised significant questions about whether the project will even be awarded.”
In addition to transportation and infrastructure-related construction, Gov. Wolf is also exploring the use of P3s in other areas, such as expanded pre-K and full day kindergarten programs in Pennsylvania school districts and so-called “Pay for Success” contracts. Tomasulo predicts that the continued use of P3s in Pennsylvania will stimulate economic activity and creatively meet public needs.
New Oil & Gas Regulations: Workable framework or Barrier to Growth?
Not all predictions for the new administration are so rosy. Under the Corbett administration, in 2012 the state modernized Pennsylvania’s laws governing oil and natural gas development through Act 13. Cohen Seglias Partner Chris Carusone, Chair of the firm’s Energy and Utilities group, was the principal author of Chapter 33 of the Act that clarified the role of municipalities regulating oil and gas development. He projects that newly proposed regulations will upset the delicate balance between government and industry achieved under Act 13.
“We’re seeing slumping oil and natural gas prices, which is concerning for a variety of reasons,” says Carusone. “I think it’s caused in part by the Wolf Administration’s failure to clear the way for new pipelines that can bring our natural gas to market. Layer on top of that a new proposal for a $1 billion severance tax on natural gas production, and you’re left with a pattern of policies that force energy companies to reduce capital expenditures. That has real consequences for Pennsylvanians.”
According to Carusone, the Wolf administration’s fast-tracked energy regulations seem to be long on detail and short on benefits. One such proposed regulation that goes well above the environmental protections contained in Act 13 governs the use of tanks that store fluids produced during the extraction process. The proposed regulation includes new design standards and new regulations relating to permits, monthly inspections, testing, and recordkeeping seems to have the deleterious effect of driving up the costs of bringing oil and natural gas to market without solving any identified problem.
“If it isn’t broken, don’t fix it,” says Carusone. “A 2014 review of the state’s oil and natural gas compliance reports found that out of 13,445 well inspections, less than 1 percent revealed a leaking storage tank. This regulation is not warranted by the state’s own data and is another example of regulation that threatens to further slow the growth of this promising industry.”
Unconventional Wisdom: Internal Investigations Actually Save Money
Many of the firm’s Labor & Employment attorneys predict an increase in oversight of the private sector under the Wolf administration that will impact employers. The new PA Whistleblower Act that passed this year with little fanfare will nonetheless have great impact on any company doing business with the state. From Equal Opportunity Employment Commission complaints to allegations of systemic bullying and harassment to allegations of large-scale fraud and waste, Cohen Seglias clients are seeing a marked rise in employment litigation.
“The fact is, retaliation claims are on the rise — with almost 38,000 claims filed with the EEOC in the last year,” says Steve Williams, Managing Partner of the Cohen Seglias Harrisburg office. “It’s imperative that employers take all complaints of harassment, discrimination, and other wrongdoing within their company seriously.”
In most cases, these kinds of complaints require an employer investigation. Williams is predicting an upsurge in internal workplace investigations over the next few years — a concern shared by our employer clients. The extent of an investigation will depend on the nature of the complaint. In some cases, an investigation may be conducted internally by the human resources department or a compliance officer under the direction of in-house counsel. In others, the hiring of an outside attorney may be necessary. Regardless of the format of the investigation, it must be conducted promptly and properly.
“A failure to adequately investigate can result in the employee filing a relation claim,” cautioned Williams. “Conducting a proper investigation can save employers the inconvenience and expense of retaliation litigation.”
Williams recommends interviewing all witnesses of the alleged conduct as well as others who may have relevant knowledge. All relevant correspondence and emails—where the truth is usually found—should also be reviewed. Once a determination on the merits of the claim is made, implement the warranted remedies without delay.
Michael Solomon is Senior Counsel in the Harrisburg Office of Cohen Seglias; our attorneys may be reached at 717.234.5530 and 215.564.1700.