If a Tree Falls in Maryland, Will the Legislature Make a Sound?

With all the recent focus on controversies involving federal environmental regulatory action, we often forget that states continue to play a leading role in environmental and natural resources policy.  State activity often flies under the radar, but can have a tremendous impact on development projects, large and small.  The Maryland legislature is currently engaged in debate over one such potentially significant proposal.

A bill that would amend the Maryland Forest Conservation Act (FCA) to require more stringent conservation measures is scheduled for hearings in the Maryland General Assembly on February 20 (SB 610) and 21 (HB 766).  The bill greatly expands the areas that are considered a priority for retention under the FCA, most significantly by broadly defining “contiguous forest” as at least 1) 5 acres in a priority funding area that connects the largest undeveloped or most vegetated tracts of land within and adjacent to the site; 2) 10 acres that is in a local watershed that is less than 40% forested; or 3) 20 acres.  For forests considered “priority retention areas,” the bill requires mitigation at a 1:1 replacement ratio, a dramatic increase from the 0.25:1 ratio typical under current law.

The bill also limits the discretion of state and local authorities to allow the clearing of priority forests.  Currently, priority retention areas are to be left in an undisturbed state unless the applicant demonstrates to the satisfaction of approval authorities that “reasonable efforts have been made to protect them and the plan cannot be reasonably altered.”  Under the bill, a state or local authority may not approve the clearing of priority retention areas based 1) solely on cost; 2) on preferred site design; 3) on a desire to obtain maximum zoning density or intensity; or 4) on a desire to conduct mass grading or clearing.  The approval authority will be required to explain in writing that no other alternatives to the clearing exist.  The bill will prohibit the clearing of priority retention areas for temporary sediment and erosion control devices or stormwater management devices.

The Department of Legislative Services’ fiscal analysis is not yet available.  Interested parties may submit their views on the proposed legislation by mail or by personally appearing at the scheduled hearings.  The committees considering SB610/HB766 will report back to their respective chambers with their recommendations.  The legislation must be passed by a majority of each chamber and signed by the governor before it can become law.  A gubernatorial veto can be overridden only by a three-fifths vote of the membership of each house.

Of Infrastructure and Spring Training

For over 60 years, the concept of a “federally assisted, state run” program was the underlying premise for our nation’s transportation infrastructure system.  The federal “assistance” came largely in the form of money, providing the majority share of funds for capital projects across the country.  The central government also offered states and its other grantees a framework for engineering and safety considerations.  In exchange for federal financial support, Congress required grantees to advance substantial policy goals, addressing labor, procurement, and environmental initiatives.

The Trump administration’s long-awaited Legislative Outline for Rebuilding Infrastructure in America essentially turns that paradigm on its head.  States and localities would bear a much larger portion of the financial burden for building and repairing infrastructure.  Reliance on private funding, a well-established but relatively small fraction of our collective infrastructure budget, would increase.  State and local control would be elevated over federal standards, most notably in the area of environmental protection.  Although the word never appears in the document, the plan clearly favors the concept of “devolution” of our nation’s infrastructure system away from the federal government and toward the states.

Prior leaks of key elements of the outline resulted in few surprises when it was formally released.  The $200 billion figure of federal assistance did materialize, roughly divided into $100 billion for an Incentives Program for a wide range of infrastructure assets, $50 billion for a Rural Infrastructure Program, $20 billion for “Transformative Projects” (those that create significant new services through innovation or other metrics), and $20 billion of additional support for existing federal loan programs.  As the president previewed in the State of the Union address, this federal investment is designed to stimulate $1.5 trillion in overall infrastructure spending.

The funding proposals do not represent additional federal investment when the plan is viewed in the context of the administration’s fiscal year 2019 budget proposal, released on the same day.  The budget cuts substantially from existing transit and rail programs, among others, as a means of financing the federal incentives in the infrastructure plan.  In this way, the administration has left the heavy financial lifting to Congress, which will decide if there is any room for additional infrastructure spending in light of the recently passed tax cuts and spending bill compromise.  Initial reactions from the Hill do not indicate a large appetite for that, and certainly not on a bipartisan basis (notwithstanding calls to raise the federal gas tax from outgoing House Transportation and Infrastructure Chair Bill Shuster and the U.S. Chamber of Commerce).

Environmental permitting and other streamlining proposals mirrored those that we had previously summarized, and the reactions were predictable.  If, as some members of Congress have stated, “everyone” recognizes the need for approving infrastructure proposals more quickly, it does not appear that “everyone” is on board with the far-reaching scope of the administration’s outline.  Specific proposals would and should receive support, such as creating a uniform 150-day statute of limitations for all federal court challenges to infrastructure environmental reviews and permitting decisions.  However, it is unclear whether legislators will take the time and make the effort to unravel the various environmental proposals in the absence of agreement on funding.

There’s definitely an air of asking whether the glass is half-full or half-empty when it comes to the state of infrastructure legislation.  On the one hand, there are elements of the administration’s plan that have been discussed for years and would likely garner support from both sides of the aisle.  For example, an expansive definition of “infrastructure” that includes essential public assets far beyond highways and bridges is a welcome perspective.  On the other hand, the plan’s heavy reliance on incentives to create or encourage state and local financial support may not be grounded in reality.  It seems unlikely that many governors can safely predict additional investment, especially given uncertainties over how the new tax code could impact state coffers.  One need only look to Connecticut, which just recently suspended spending on hundreds of transportation projects because of financial difficulties.

Looming over all these essential policy debates, of course, is the contentious deliberation over immigration reform now kicking off in Congress, as well as already fractured political relationships on the eve of the 2018 midterm elections (yes, I’m counting eight months in advance of November as the “eve”).  Surprises abound in Washington, DC these days, so do not rule out action on an infrastructure bill.  But the stars will have to align in fairly short order if we are to see such a result in this legislative session.

Above all else, as a harbinger of warmth and good feelings, remember that pitchers and catchers just reported to spring training across Florida and Arizona.  As the baseball saying goes, hope springs eternal.

Ninth Circuit: “Indirect” Discharges Through Groundwater Can Lead to Clean Water Act Liability

On February 1, 2018, the United States Court of Appeals for the Ninth Circuit held that a pollutant need not be discharged from a point source directly  into navigable water to be subject to NPDES permitting requirements and that therefore Clean Water Act liability can attach to point source discharges through groundwater to navigable water.

The dispute in Hawai‘i Wildlife Fund v. County of Maui involved 4 wells that discharge 3 to 5 million gallons of treated effluent from the County of Maui into the groundwater each day.  A “tracer dye” study conducted by the EPA confirmed that at least some of this treated effluent travels through the groundwater and ultimately reaches the Pacific Ocean.  The County argued unsuccessfully that these discharges do not require a NPDES permit because they do not convey pollutants directly  to navigable water.

The Ninth Circuit held that a discharge to groundwater is subject to NPDES permitting requirements when 1) there is a discharge of pollutants from a point source, 2) the pollutants are “fairly traceable” from the point source to the navigable water, and 3) more than a de minimis level of pollutants reaches the navigable water.  Significantly, the court rejected the rule proposed by the U.S. EPA as amicus curiae, which would have required a “direct hydrological connection” between the groundwater and the navigable water.  Unfortunately, the court declined to decide “when, if ever, the connection between a point source and a navigable water is too tenuous to support liability under the CWA,” leaving this question to be litigated another day.

In its decision, the Ninth Circuit looked to cases out of both the Second and Fifth Circuits.  Specifically, it referenced Concerned Area Residents for the Environment v. Southview Farm, a case in which the Second Circuit held that NPDES permitting requirements apply to liquid manure that is collected in tankers, discharged onto fields, and flows over the fields and into navigable water.  Additionally, it cited a Fifth Circuit case, Sierra Club v. Abston Construction, which involved the discharge of sediments that were collected in basins and carried “by gravity flow of rainwater” into navigable waters.  The Ninth Circuit reasoned that the wells at issue were analogous to the point sources in Abston and Southview Farm because they “discretely collect and convey” the effluent to navigable water, even though the effluent happens to travel through groundwater first.

In addition to citing cases from other circuits, the court considered Justice Scalia’s plurality opinion in Rapanos v. United States  “for its persuasive value.”  In Rapanos, Justice Scalia acknowledged that the CWA does not prohibit the “‘addition of any pollutant directly to navigable waters from any point source,’ but rather the ‘addition of any pollutant to  navigable waters.’”  The court found that the County’s position was not only at odds with Scalia’s plurality opinion but also strayed from the plain language of the CWA by reading the word “directly” into the statute.

Finally, the court rejected the County’s argument that it lacked fair notice that its actions were prohibited by the CWA and, therefore, that enforcement of CWA would violate due process.  The County contended that it lacked such notice because the CWA could be fairly read to exclude the County’s wells from the NPDES permitting requirements.  The court disagreed, finding that a reasonable person would have understood the CWA to prohibit the County’s actions, which fell “squarely within” the CWA’s plain language.

The tone of the court’s rather firm ruling was captured in its conclusion, when it stated that its decision will prevent the County “from doing indirectly that which it cannot do directly.”

Infrastructure Proposal Stresses Environmental Streamlining and Reform

In advance of the State of the Union address, leaked copies of the administration’s infrastructure legislative outline appeared in the media.  While this outline failed to address key questions facing both the White House and Congress concerning how to pay for an infrastructure initiative, it described dozens of reforms to permitting requirements for federal decisions impacting virtually every major environmental program.

Many of these proposals are not new.  They appear in previous legislation, such as MAP-21 and the FAST Act.  The administration simply seeks to extend these reforms to a broader cross section of infrastructure sectors.  Others have been articulated in one of the several streamlining executive orders issued during the Trump administration’s first year.

However, many other suggestions represent significant departures from current practice, in terms of which agencies have authority over permit decision-making, the relative roles of state and federal agencies, and how courts adjudicate environmental review and permitting actions across the federal government.

Here is a summary of some of the key proposals found in the outline:

Key Proposals for Environmental Review Generally

  • Require lead agencies to complete the environmental review and issue a Finding of No Significant Impact (FONSI) or a Record of Decision (ROD) within 21 months, and within three months of that decision require permitting agencies, including state agencies of delegated federal programs, to make a determination on the necessary permits.  If permitting agencies fail to make a decision in the three-month window, then the matter is automatically reviewed by the Federal Permitting Improvement Steering Council.  In conjunction, courts are instructed not to find FONSI and RODs issued within the 21-month time frame insufficient “based on a lack of analysis if the court finds that the agency made a good faith effort to provide adequate analysis within the allotted time and resources available.”
  • Consolidate environmental review with the lead agency by confirming that the lead agency has the final authority to determine the purpose and need and to select the range of alternatives, requiring the lead agency to develop a single federal environmental review document and single ROD that will be signed by the lead agency and all cooperating agencies, and allowing lead agencies to issue the Federal Environmental Impact Statement (FEIS) and the ROD at the same time, extending to other infrastructure projects the authority MAP-21 granted to surface infrastructure projects.
  • Require the Council on Environmental Quality to review and revise its regulations to streamline NEPA.
  • Allow federal agencies to use the Categorical Exclusions of any other federal agency.
  • Allow certain activities, such as final design activities of design-build contractors and acquisition and preservation of rights-of-way, to occur prior to completion of NEPA review.
  • Allow all lead federal agencies to opt in and apply the provisions under 23 USC §139 (providing for efficient environmental review of highway and transit projects) to other infrastructure projects.
  • Allow federal agencies to accept funds from non-federal entities, including private project sponsors, to support environmental review and permitting.

Key Proposals Regarding the Clean Water Act Section 404 Program

  • Eliminate the Interagency Review Team to streamline the review of mitigation banks and increase the efficiency of the mitigation bank approval time frames.
  • Eliminate automatic USACE review of all agency determinations that a project meets the requirements of a USACE Nationwide Permit, but retain USACE’s authority to reinitiate its review if it determines an agency has improperly found NWP criteria met.
  • Streamline the Section 404 permitting process by consolidating “waters of the United States” jurisdictional determinations with the USACE, removing EPA’s authority to veto a USACE-issued Section 404 permit, and eliminating the duplication between the Clean Water Act Section 404 process and the Rivers and Harbors Act Section 408 process.

Key Proposals Regarding the Clean Water Act Section 402 and 401 Programs

  • Require states to determine the completeness of a 401 Certification application within 90 days of submission and, once application is deemed complete, make a decision to issue or deny the 401 Certification within three months.  If the state fails to make a completeness determination in the allotted time frame, the administrator may make the decision, and if the state fails to make a decision on the 401 Certification within the time frame, the project applicant can appeal to the lead agency.
  • Extend a National Pollutant Discharge Elimination System permit time limit to ten years and allow for automatic renewals if more stringent permit limits are not required based on water quality needs.

Key Proposals Regarding the Clean Air Act

  • Eliminate the EPA’s review and assessment of EIS’s under Section 309 of the Clean Air Act.
  • Amend the Clean Air Act to clarify that metropolitan planning organizations need conform only to the most recent National Ambient Air Quality Standard.
  • Amend the Clean Air Act to allow transportation conformity to apply one year after EPA approves emission budgets needed for the conformity determination.

Key Proposals Regarding the Endangered Species Act

  • Clarify that where the Fish and Wildlife Service (FWS) or the National Marine Fisheries Service (NMFS) has made a jeopardy determination, the reasonable and prudent alternatives analysis in a biological opinion is not a final agency action triggering NEPA review.
  • Provide flexibility in listing petition deadlines, to allow for prioritization of listing petitions and provide for a short-term independent panel within the FWS and NMFS to evaluate and complete reviews of delisting petitions.  Additionally, allow FWS and NMFS to consider conservation efforts in place to benefit a species, including voluntary efforts, when making a listing/delisting determination.
  • Allow delegation of authority for intrastate activities to states to carry out habitat conservation planning, issuance of incidental take permits, and related NEPA review.
  • Require FWS and NMFS to designate critical habitat within a year of the final approval of a species recovery plan.

Key Proposals Regarding the National Historic Preservation Act

  • Remove duplicative federal agency responsibilities to review Section 4(f) determinations.
  • Allow the Department of Transportation to use an agreement reached under the Section 106 process to meet its obligations under the Section 4(f) process to eliminate duplicative review.
  • Eliminate National Park Service approval for identifying and procuring replacement property when property funded by Land and Water grants is being converted to a different use.
  • Authorize the Secretary of the Interior to approve rights-of-way for natural gas pipelines across land administered by the National Park Service, consistent with authority for other types of rights-of-way.

Key Proposals Regarding the Federal Power Act

  • Amend the Federal Power Act to prohibit federal agencies invited to cooperate with FERC under a NEPA review from also intervening in a licensing proceeding, consistent with FERC policy and regulations.

Key Proposals Regarding State Delegation

  • Authorize other federal agencies to delegate NEPA responsibilities to states, similar to the current authority of the Federal Highway Administration (FHWA) and the Federal Transit Administration (FTA).
  • Broaden NEPA assignment under the Surface Transportation Project Delivery Program to allow states to assume responsibility for project-level conformity determinations under the Clean Air Act and determinations for flood plain protections and noise policies.
  • Allow states to assume some or all of FHWA’s right-of-way approval responsibility.

Key Proposals Regarding Pilot Programs

  • Establish and implement a pilot program to address the impacts of a project based on performance standards rather than environmental review.
  • Establish and implement a pilot program to address the impacts of a project through negotiated mitigation agreements, which would include mitigation strategies such as purchase of offsets, avoidance of impacts, or an in-lieu fee dedicated to an advanced mitigation fund.

Key Proposals Regarding Judicial Review

  • Require that stopping a project shall be available as a judicial remedy only under exceptional circumstances.
  • Revise the statute of limitations for any federal permit or decision for an infrastructure project to 150 days, consistent with the statute of limitations established for surface transportation projects.
  • Clarify that categorical exclusions developed by federal agencies should be given deference and are not subject to judicial review under the Administrative Procedure Act.
  • Codify that a Biological Opinion is not a final agency action and is not subject to a legal challenge.

In the days to come, we will provide more in-depth analysis of these proposals in this space.  For now, here’s a trivia question coming out of MAP-21, which was enacted in 2012:  Who were the two Senate co-sponsors of the environmental streamlining provisions of that statute?

While you ponder your answer, consider this:  In the view of many experts, infrastructure has the potential to be a (the only?) possible topic of bipartisan legislative action prior to the 2018 mid-term elections.  In the past, building that legislative coalition was based on finding common ground for key projects around the country (formerly known as earmarks) and a perceived equitable distribution of federal support for such projects.  Only recently was environmental review and permit streamlining added to that equation.  Even those reforms were, for the most part, bipartisan.  In the absence of a funding solution, will a new coalition be possible?

Now, the answer to the trivia question:  Senators Barbara Boxer and James Inhofe led the fight for MAP-21’s environmental streamlining provisions – possibly the most liberal and most conservative members of that body at that time.  Reactions to this infrastructure outline and to the president’s State of the Union address will indicate whether such a partnership is even remotely possible now.

 

Supreme Court Simultaneously Rejects and Creates Chaos in WOTUS Litigation

The Supreme Court’s unanimous ruling in National Association of Manufacturers (NAM) v. Dept. of Defense, et al., on Monday, January 22, 2018 will make the already long, drawn-out battle over the Waters of the United States (WOTUS) Rule even longer and more convoluted.  The Court’s decision did not address the perennial question of the substance of the WOTUS Rule (i.e., the definition of “waters of the United States”), but rather decided whether district courts or federal circuit courts of appeals have jurisdiction to hear challenges to the Rule.  In finding that district courts are the proper venue for such challenges, the Court adhered to established principles of statutory construction, even conceding that the interests of judicial efficiency could not overcome the plain language of the Clean Water Act (CWA).

NAM, along with several states and environmentalists, had argued that the WOTUS Rule does not fall within any of the seven categories of circuit court jurisdiction explicitly set forth in the CWA § 1369(b)(1) and, therefore, that district courts have exclusive jurisdiction to hear challenges to the Rule.  The EPA and Army Corps of Engineers, on the other hand, asserted that subsections (E) and (F) of CWA’s jurisdictional provision should be interpreted to give circuit courts jurisdiction over WOTUS Rule challenges.  Subsections (E) and (F) respectively grant original jurisdiction to circuit courts for challenges to 1) “any effluent limitation or any other limitation” promulgated under Section 1311 of the CWA and 2) any EPA action “in issuing or denying any permit under Section 1342.”  The government urged the Court to consider the practical effects its decision could have on judicial efficiency and national uniformity and, based on such considerations, to interpret the jurisdictional provision broadly.  Specifically, the government argued that a broad interpretation would eliminate a layer of judicial review and ensure that related agency actions were routed through the same judicial channels.

The Court rejected both of the government’s assertions.  First, the Court found that the WOTUS Rule is not an “effluent or other limitation” promulgated under Section 1311.  The Court reasoned that Congress intended the “other limitation” language to mean other limitations “similar in kind to an ‘effluent limitation’: that is, a limitation related to the discharge of pollutants.”  The Court noted that Congress’s cross-reference to Sections 1311, 1312, 1316, and 1345, which all restrict the discharge of pollutants, “reinforces this natural reading.”  Moreover, the Court noted that regardless of whether the “other limitation” language of § 1369(b)(1)(E) is read broadly or narrowly, the WOTUS Rule is not a limitation promulgated “under section 1311.”  The Court found the “under section 1311” requirement is “most naturally read” to require approval or promulgation “pursuant to” or “by reason of the authority of” § 1311.  Finally, the Court rejected the government’s “practical-effects” test, finding that the express statutory text clearly grants circuit courts jurisdiction over the approval or promulgation of an effluent or other limitation, not over “EPA actions that have the ‘legal or practical effect’ of making such limitations applicable to certain waters.”

Next, the Court found that the WOTUS Rule is likewise not covered by § 1369(b)(1)(F), because the Rule itself neither issues nor denies a NPDES permit.  While the Court acknowledged that the WOTUS Rule may “define a jurisdictional prerequisite of the EPA’s authority to issue or deny a permit,” it stressed that this is in no way equivalent to issuing a decision on an actual, individual permit application.  Thus, the Court “decline[d] the Government’s invitation to override Congress’ considered choice by rewriting the words of the statute.”

In embracing a strict textual interpretation of the CWA’s jurisdictional provision, the Court disregarded pleas to base its decision on practicality.  The Court acknowledged that district court review could cause delays and lead to conflicting outcomes.  Nevertheless, it recognized that judicial efficiency and national uniformity were not the only considerations Congress balanced when drafting the statute.  Thus, while admitting that it “might [have drafted] the statute differently,” the Court found that such practical considerations could not justify a departure from the plain language of the statute.  Interestingly, the Court’s decision supported what many of us environmental lawyers have known for a long time—the CWA is illogical as written.  Writing for the Court, Justice Sotomayor conceded that the government’s arguments based on practical considerations carried “logical force.”  Nonetheless, she and her brethren ultimately felt bound to comply with Congress’s express, if illogical, intent as evidenced by the clear statutory text.

Where does this leave the current state of play for the WOTUS Rule?  In short, fasten your seatbelts.  District court litigation that had been on hold will kick into gear in multiple jurisdictions.  The Sixth Circuit will likely dissolve its injunction over implementation of the Obama-era Rule, although it isn’t clear how quickly it will take that action.  The administration’s efforts to repeal and replace the WOTUS Rule will continue on a parallel track, with every step taken in that process likely to be challenged (in district courts, of course) by stakeholders on all sides.  These rulings will slowly percolate up to the circuit courts and, eventually, back to the Supreme Court.  In the meantime, the Corps and EPA will adjudicate Section 404 permits under the “old” Rule, as modified by the “new” interpretation championed by current political leadership.

Permit applicants hoping for regulatory certainty would be better off purchasing a Powerball ticket—the odds of success are probably about the same.  The sad history of Section 404 of the CWA continues to be written, with no end in sight.

Breathing New Life into Older Buildings

As workplace technology and space needs continue to change, traditional office tenants are increasingly harder to come by.  At the same time, people who have opted out of commuting from the suburbs to enjoy a more urban existence closer to central business districts are finding affordable housing choices ever more challenging.  These forces, among many others, are leading owners of older office buildings to look at ways to adapt their properties to residential and other uses.  Doing so not only benefits the owner’s bottom line, but also comes with the green benefits of reducing construction waste and avoiding energy-intensive new construction.

Local governments, recognizing the economic benefits of reducing office vacancy rates while invigorating formerly sleepy office-only enclaves, have been doing their part to facilitate office conversions.  Fairfax County, Virginia, recently adopted a new policy to allow office conversions to occur under appropriate circumstances without the need for lengthy and costly amendments to the County’s comprehensive plan.  Legislation is also pending in the District of Columbia that would provide tax abasement incentives for office-to-residential conversions in certain parts of the District.

Interesting examples of office conversions around the country include:

  • Lofts within a former office building in Alexandria, Virginia, that can be used as a home, office, or both;
  • 223 apartments in a 21-story office building in downtown Cleveland;
  • Micro-unit apartments with large common areas in Arlington, Virginia;
  • Conversion of a 1915 office building in Detroit into a mixed-use facility with apartments, a hotel, and ground-floor retail; and
  • An elementary school in Falls Church, Virginia.

Of course, the trend can also work in reverse, albeit less frequently, with building conversions to office from some other use.  In Los Angeles, for example, a 93-year-old industrial building known as the Harris Building, used for garment manufacturing for decades, was converted to creative office uses.

There are challenges that make such conversions of certain office buildings to other uses difficult.  Chief among these challenges is layout.  Many vacant office buildings were built in the era of the cubicle, massive file storage areas, and air conditioning.  These factors created little need for window access, so deep floorplates were the natural result.  Carving up such large interior spaces into individual apartments is problematic, since building codes require that residential units have windows.  Another challenge for conversion is location, since an office building to be converted into an apartment building has to attract people who would want to live there.  An office building hemmed in by highways or surrounded by seas of surface parking and no amenities will therefore not be a good conversion candidate.  Price is also a critical factor for making the project economics work, since office rents usually far exceed residential rents.

Despite the challenges, office conversions will likely continue for some time to come.  Conversions are possible even among buildings that may not be the best candidates because of deep floorplates, thanks to innovative solutions such as interior courtyards, interior common areas, and other nonresidential uses in the center of the building.   Whatever creative architects and engineers can dream up will continue to influence the potential reimagination of urban building spaces, especially in those areas confronting a shrinking affordable housing stock.  Real estate lawyers and urban planners will have to be part of this creative effort, finding ways to amend building codes or flexibility in existing laws.  The ongoing evolution in how we all live and work, together with ever-changing urban economics, could very well accelerate and broaden this trend in coming years.

Bold Predictions for 2018

2017 ended with a bang, well, more like a “pop.” I’m writing this with my leg comfortably elevated, recovering from a torn Achilles tendon and subsequent surgery. This mandatory rest period has provided the opportunity to watch all those year-end cable news shows where the so-called experts look back on forecasts they made a year before. You soon realize that the prediction business is doing quite poorly. In today’s topsy-turvy world, things that once seemed certain are anything but; the improbable is more likely to come to pass.

With that sober context, “Envirostructure” now offers the following, most likely wildly incorrect predictions for the coming year.

1)  The administration will offer a formal infrastructure legislative proposal. Yes, I know I thought that would happen last year, but so did many other experts. An infrastructure bill is probably the only legislative initiative that has any chance of progressing on the cusp of the 2018 mid-term elections. However, introducing a proposal and passing a bill are two different things. The bill will languish and die until after the November elections.

2)  Courts will pull in the reins on environmental regulation roll-backs. 2017 marked an unprecedented and largely successful effort by the new administration to reverse, delay, or eliminate a wide-range of environmental and natural resources regulations, consistent with the President’s Executive Orders to, among other things, reduce regulation and control regulatory costs.  For the most part, these actions were only part one of a three-act play that now turns to the judiciary.  High-profile matters like WOTUS and the Clean Power Plan will garner most of the attention, but courts will take steps to ensure that EPA, the Department of the Interior, and other agencies meet their obligations under the Administrative Procedure Act to justify all manner of regulatory reforms.

3)  Aggressive measures to streamline permitting for a wide range of sectors will be proposed and successfully instituted, especially in the mining and energy sectors. No new legislation is necessary to accomplish this aim, and a long backlog of projects is waiting for this favorable treatment. Project proponents will be anxious to test how project delivery reforms can be put to use, and federal agencies will be willing to push the envelope.  Which leads to…

4)  Environmental litigation will continue to be filed at a remarkable rate. Challenges to all manner of public and private actions will be filed, not just by traditional non-governmental entities, but also by state attorneys general across the country. If EPA’s rate of pollution enforcement actions lags in any way, citizen’s suits will blossom across virtually all statutes providing that option.

I realize that these predictions were somewhat tame, so let’s get a little bit more imaginative.

5)  Administrator Scott Pruitt will resign by the end of 2018 to pursue political office. More than almost any other cabinet or sub-cabinet official, Mr. Pruitt has fulfilled just about every objective consistent with his express goal of reinventing his agency. The impending new balance of power in Congress, with the enhanced oversight that will bring, will convince the Administrator to that he has accomplished all that he could.  He is an ambitious person, and he will seize new political opportunities.

6)  Major legislation and regulations that are major components of the federal environmental law regime will see significant reform proposals. The administration and Congress will push changes to NEPA and the Endangered Species Act, both statutes and programs that have not seen substantial changes for decades. These reforms may not be finalized in 2018, but there will be a push to update both statutes, which have long been viewed by certain advocates as having morphed from their original intent to act as more of a weapon to attack development and infrastructure proposals.

7)  The demand for fossil fuels will decline from current levels as more countries and local jurisdictions make commitments to advance the electrification of vehicles. Sales of EVs will reach historic highs, and advances in battery efficiency will enable the application of new technology to the heavy-duty trucking sector. The price of a barrel of oil, which had been slowly recovering, will drop again by the end of the year.

8)  And finally, 2018 will once again bring a series of natural disasters, whether storms, wildfires, or another phenomenon, that will place even more pressure on the United States to participate in commitments articulated in the Paris Accord, even if it does not take action to rejoin the treaty. A new Congress will promise to support programs for states and cities inclined to promote climate or resilience actions, over objections of the administration.

There you have it. Educated guesses that are bound to be wrong… except for the ones that may be right. From everyone at Venable’s environmental practice group, have a happy and healthy 2018, and may all your happiest predictions for the New Year come true!

 

The True Culprit Behind “Sue and Settle”

EPA’s recently announced directive ending “regulation through litigation,” otherwise known in many circles as “sue and settle,” aimed most of its ire at actions allegedly taken outside the typical administrative process “through backroom deals.”  Indeed, the “sue and settle” phenomenon has long been the bugaboo of many national advocacy groups.  The thought has been that the agency actually welcomed litigation brought by public interest groups with which the agency sympathized, only then to settle on extremely favorable terms, committing the government to policies that never would have been implemented, and paying the plaintiffs handsome attorneys’ fees to boot.

The reality of these cases is somewhat less conspiratorial.

Let’s start with a basic truth:  90+ percent of all civil cases settle.  Parties genuinely may be unable to resolve their dispute without a court telling them who wins or loses, but with rare exception, parties dislike having a judge (who may or may not have pertinent expertise) dictate what actions they have to take.  The same holds true for the government.  Any regulatory agency prefers creating its own rulemaking plan over having a court tell it how quickly it needs to act.

Another truth:  federal government agencies do not settle cases independently.  They all have strict oversight from their skilled counsel at the U.S. Department of Justice.  DOJ attorneys carefully review any proposed agreement to ensure that the settlement terms do not bind the agency to actions it otherwise would not have been compelled to take.  Theoretically, even if an agency “plotted” with an outside organization to have a case filed against it so that a favorable deal could be struck, DOJ is a vigilant steward of the government’s resources and will simply not permit the ink to dry on an over-reaching settlement.

More reality?  The rules concerning attorneys’ fees awards following settlements have been sealed largely by case law interpreting various statutory provisions making the payment of attorneys’ fees available in the first place.  Common law says that if a plaintiff successfully settles a case and obtains relief through the filing of its lawsuit, it is a “prevailing party” and eligible for fees.  It’s just a matter of how much.  Again, here’s where DOJ plays an important role.  The government’s lawyers hate seeing Uncle Sam pay huge fee awards.  Sure, the Judgment Fund represents a large available pot of money to pay fees outside an individual agency’s budget, but as a former DOJ lawyer, I can tell you we took pride in paying the absolute minimum.

One last painful truth: the vast majority of cases brought in the context of what could be called “sue and settle” are open and shut, no-doubt-about-it losers for the government.  They are largely brought because the agency has missed a deadline to issue a regulation or take a specific administrative action mandated by the legislature.  The deadline passes without the requisite action in place, and the agency is vulnerable to litigation without any real credible defense.  The agency could litigate to defeat and allow a court to tell it what to do and when, or it could figure out what it could reasonably accomplish on what schedule and settle.  Practical as salt.

Administrator Pruitt’s recent directive properly makes transparency through public disclosure a requirement of any future settlement or proposed consent decree.  Publishing notice of all proposed settlements and allowing a comment period is good government, pure and simple.  The new EPA policy is really no different from the procedure by which the agency publishes its regulatory agenda through the Office of Management and Budget.  The public deserves to know what an agency is planning to do with respect to its regulations and to have some idea about the schedule by which regulatory actions will be taken.

So why the hubbub? It’s probably because stakeholders on all sides of the controversy seem intent on ascribing bad motives to the entire litigation enterprise.  Plaintiff thinks (twirling his evil, curly moustache): “Aha!  I know how to get that agency to do what I want!  I’ll bring litigation reminding it of a deadline it already knows about, and can’t possibly meet!”  Agency responds (winking with both eyes so quickly, it could be mistaken for blinking): “Thanks, evil Plaintiff!  Without your complaint, I surely would have ignored the will of Congress indefinitely!”  Of course, no public interest or industry stakeholders behave this way.

Parties upset with the reality of litigation dictating administrative action should focus their attention squarely on Congress.  It is the legislature, after all, that routinely sets unrealistic regulatory deadlines, or passes mandates that in any reasonable world would take years of analysis, but must be done “12 months from the effective date of this statute.”  The result is inevitable.  Agencies miss deadlines (even with the best of intentions) and aggrieved parties sue.

EPA’s new policy most likely will not alter the trajectory of “sue and settle.”  It may, however, shed more light on the regulatory process.  In that way it could force Congress to consider more carefully its role in the seemingly never-ending cycle of legislate/litigate/regulate that is all too pervasive in the world of environmental law.

 

Autonomous Vehicles: Zoning, Land Use, and Infrastructure Issues to Consider Right Now

Illustration credit: H.B Vestal, “Everywoman’s Magazine”, Jan 1956

Autonomous vehicles are coming.  No one agrees on when they will be in widespread use, but everyone agrees that they are coming soon in some form.  Just like smart phones, ride-hailing services, social media, and other innovations of the past decade, autonomous vehicles will almost certainly dramatically change the way we live, work, and interact with each other.  They will also have major implications for zoning ordinances, land use policies, and infrastructure across the country that state and local governments, commercial property owners, developers, and society in general should start discussing sooner rather than later.

At the federal level, the fashioning of a regulatory framework to allow for the development and widespread adoption of autonomous vehicles is well under way.  Just last month, the House passed H.R. 3388, a bill with bipartisan support called the SELF DRIVE (Safely Ensuring Lives Future Development and Research In Vehicle Evolution) Act.  The bill’s primary objective is to provide for expanding autonomous vehicle testing on public roads, an obvious and crucial next step in refining the technology.  The Senate has also introduced companion legislation, S. 1887, the American Vision for Safer Transportation through Advancement of Revolutionary Technologies (AV START) Act.

These proposals come on the heels of multiple state-enacted laws and guidelines that have so far regulated the budding industry.  Under the SELF DRIVE legislation, the National Highway Traffic Safety Administration (NHTSA) would maintain its regulatory role in establishing standards and regulations for how vehicles are designed and perform, while the states would continue to oversee vehicle registration, licensing, and insurance requirements as they already do for regular vehicles.  The legislation gives the NHTSA two years to come up with safety rules and one year to assess the necessary performance standards.  It also permits a ramp up in the number of exemptions of certain standards that the NHTSA may grant for autonomous test vehicles, up to 100,000 in three years.  Such exemptions are necessary in the event that, for example, a manufacturer may want to design a vehicle without a steering wheel or pedals because the occupants are not expected to take control at any point.

As these proposals continue to develop at the state and federal levels, local governments need to consider how they can adjust their own zoning and land use policies in response to the coming of autonomous vehicles.  Those places that are successful in doing so will likely be the winners in adapting to autonomous vehicles and thereby maintaining a vibrant economy and high quality of life.  This is particularly true if the widespread assumption, informed by current urban trends in the age of ride-hailing services, is proved correct:  that most autonomous vehicles in cities will be owned jointly or operated in large fleets.

Local governments should focus their discussions on the following:

  1. Mandatory Parking – Most local zoning ordinances still mandate that a minimum amount of parking be provided for new projects.  However, autonomous vehicles could greatly increase the number of people who are simply dropped off at a building and therefore have no need for parking.  Future minimum parking requirements should have flexibility built into them—if they are not eliminated altogether—to avoid construction of additional parking that may eventually be largely obsolete.
  2. Conversion of Parking Lots and Structures – Zoning ordinances and land use policies must be ready to allow for the potential conversion of existing parking lots and structures in urban areas to other uses.  In many places, architects are already designing parking garages that can easily be converted to apartments, offices, or other uses in the future.  Conventional garages are more difficult to repurpose, but innovative designers have demonstrated the possibilities of giving new life to obsolete garages by transforming them into micro-housing unit communities, elevated parks, luxury homes, antique markets, apartments, and offices, among others.  Surface parking lots obviously allow for much easier conversion to other uses, such as urban park space.
  3. Curbside Management – With the use of autonomous vehicles, effective curbside management (i.e., designating where parking, loading, etc., are permitted) will only become more important in terms of providing adequate dropoff locations.  If done correctly, dropoff locations and pedestrian-only zones can be created that will both reduce vehicular congestion and create a better environment for pedestrians.
  4. Planning for Autonomous Vehicle Service Areas – Even if all of these autonomous vehicles are not parking in urban areas very often, they will definitely require service from time to time.  Jurisdictions should consider where to locate autonomous vehicle service areas, whether on the edge of town where real estate prices are lower or incorporated into mixed-use developments.  Existing service stations and garages in urban areas may also be natural places to locate autonomous service areas as well.
  5. Road Recapture – If the more aggressive predictions come true, the need for vehicular travel lanes could dramatically shrink over time with autonomous vehicles.  This will present opportunities for converting such lanes to bicycle or pedestrian ways or even more urban park space.  It will also be interesting to see how, as autonomous technology develops and improves, roadway geometry might change in terms of decreased lane width, site distance requirements, and road curvature.  All of these changes could provide even more opportunities for adapting portions of our roads to other uses.

This list is, of course, by no means exhaustive.  Many other issues should no doubt be added, and the relative significance of each item is uncertain.  No matter how quickly the impact of autonomous vehicles on our urban areas will be felt, the time to start contemplating and discussing these issues is now.

Cost-Benefit Analyses: Focus of the Next Wave of APA Litigation

Stop me if you’ve heard this one.

An engineer, a mathematician, and an economist find themselves stuck in a 30-foot-deep ditch.  Two of them start working away furiously—the engineer is scratching out plans to alter the slope of the ditch to allow them to climb to safety, and the mathematician is calculating the items of clothing needed to create a lifeline to the top of the ditch.  All the while, the economist is lounging comfortably in a corner.

“Why aren’t you helping us figure out a way to escape?” the others ask impatiently.

The economist barely lifts an eye in their direction and answers, “It’s easy; we just assume a 30-foot ladder!”

Don’t yell at me; some of my best friends are economists.  But this old joke perfectly summarizes the current state of environmental regulation that will be the subject of major litigation, assuming that the administration moves forward with repeal of major rules, including, among others, the Clean Power Plan and Waters of the United States regulations.  How does the government do its cost-benefit analyses that justify promulgating or (as is currently in vogue) repealing regulations?

Environmental, health, and safety rules often are tied up in the standards for the value of a human life (a decidedly awkward calculation) and estimates of how many lives could be saved or injuries prevented if that particular rule were in place.  These benefits are balanced against the expected costs associated with the regulated community’s efforts to comply with the rule.  Those figures get tied up in things like completion of paperwork, employee hours, or perhaps the investment in specific equipment or modification of existing facilities.

As one example, the EPA re-evaluated how the WOTUS rule would affect wetlands.  The new administration determined that there would be $500 million less benefit from the rule’s expanded scope than the previous administration had calculated.  As another, the EPA crunched the numbers on the Clean Power Plan’s effect on health benefits and determined that the rule as created would have $34 billion fewer in health benefits than the prior administration had calculated.  By making different economic assumptions and taking different issues into consideration, the cost-benefit analysis looks vastly different from the analysis performed to promulgate these rules.

Environmental organizations have already announced their intention to challenge these revised benefit analyses as “arbitrary and capricious.”  Not unlike the stranded economist in the ditch, groups planning to challenge EPA’s cost-benefit analyses say the agency has simply assumed away large chunks of potential benefits in order to support the proposed regulatory repeals.  (EPA also estimated additional expected compliance costs, further supporting its position regarding the onerous nature of the proposed rules.)

Anticipated litigation will shed light on the economic analysis that often flies well under the radar during agency rulemaking.  During my time as agency general counsel, I had many confusing and frustrating discussions with OMB officers and internal agency economists.  While some benefits calculations were made using government-wide standards, such as the cost of a human life mentioned above, others, by contrast, were based on totally ad hoc analyses using a series of assumptions that resulted from a thought process that was clearly more art than science.  For example, in the last administrations, the USDOT issued a series of rules mandated by the MAP-21 transportation law designed to enhance public participation and transparency in infrastructure funding decisions.  You tell me:  What’s the monetary benefit of a more informed citizenry?  What calculation should we assign to greater faith in how and why the government is spending taxpayer dollars?  That was the point of the regulation and reflected express congressional intent, but I challenge you to pick a per capita number that can accurately capture the true benefit of those rules.

Environmental regulations are no different.  In the context of WOTUS, the preservation of wetlands could be calculated based on generally accepted appraisal standards by assigning a dollar value per acre of land that would be saved or preserved.  Beyond that, how should EPA or the Corps calculate the benefit of wetlands preserved in coastal areas in terms of those lands’ ability to enhance flood control or protection from storm surge?  Making that one assumption could literally change the agency’s cost-benefit analysis to the tune of billions of dollars.  The inclusion or exclusion of that assumption could serve to support political objectives on either end of the political spectrum.

I am not suggesting here that the discipline of cost-benefit analysis is per se arbitrary.  Agencies should attempt to reveal to the public (in understandable terms, but that’s another story) how their regulatory actions could impact the conduct of business and how successful they may be in achieving public health and safety objectives.  Upcoming litigation will test the extent of the executive branch’s discretion in preparing these calculations as justification for either extending or contracting regulatory oversight.  No matter which political party is in control, however, it seems clear that federal agencies will have to prove in court whether there’s really a 30-foot ladder in the ditch.

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