New Proposition 65 Safe Harbor Warnings for Residential Rental Properties

On March 21, 2019, the Office of Environmental Health Hazard Assessment (OEHHA) adopted amendments to California’s Safe Drinking Water and Toxic Enforcement Act of 1986 (known as Proposition 65 or Prop 65) that add sections on safe harbor warnings for exposures to listed chemicals at residential rental properties. The purpose of the new regulations is to provide more specificity regarding the content of safe harbor warnings for exposures to listed chemicals that may occur at residential rental properties, and the corresponding methods for providing warnings for those exposures. The new regulations become effective on July 1, 2019.

Prop 65 Background

Under Prop 65 and the implementing regulations, businesses with 10 or more employees must provide “clear and reasonable” warnings to Californians before exposing them to a chemical listed by OEHHA as a carcinogen or reproductive toxicant (more than 900 chemicals are now on the list). The regulations establish criteria for what OEHHA considers to be a “clear and reasonable” warning, including specific language that, if used, is deemed compliant with the regulations (known as “safe harbor” warning language). Compliance with safe harbor warnings enables businesses to avoid litigation concerning the sufficiency of their warnings.

In 2016, OEHAA adopted new Prop 65 safe harbor warning regulations that became effective on August 30, 2018. The new regulations include generic safe harbor warning language, as well as safe harbor warnings for specific businesses, such as hotels, restaurants, and dentists. The California Apartment Association requested that OEHHA include in the new regulations a “tailored warning” for exposures to chemicals that may occur at apartments. However, OEHHA did not include a tailored warning in the rulemaking at that time, but agreed to consider the possibility of a future rulemaking for residential rental properties.

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Are You Ready? California’s New Proposition 65 Warning Requirements Took Effect August 30

As of August 30, 2018, businesses will are now required to provide revised “clear and reasonable” warnings under California’s Safe Drinking Water and Toxic Enforcement Act of 1986 (known as Proposition 65 or Prop 65) if they would like to avail themselves of the safe harbor provided by the implementing regulations of the Office of Environmental Health Hazard Assessment (OEHHA or the Agency). Retailers and manufacturers/distributors alike should ensure that they are in compliance with the new rules, keeping in mind that there are specific requirements related to products sold via the Internet and product catalogs.

Under Prop 65 and the implementing regulations, businesses with 10 or more employees must provide “clear and reasonable” warnings to Californians before exposing them to a chemical listed by OEHHA as a carcinogen or reproductive toxicant (more than 900 chemicals are now on the list). The previous regulations, adopted in 1988, established criteria for what OEHHA considered to be a “clear and reasonable” warning, including specific language that, if used, would be deemed compliant with the regulations (known as “safe harbor” warning language).

In 2016, OEHAA adopted new safe harbor warning regulations that became effective this month. The new regulations place a significantly heavier burden on manufacturers/distributors to provide consumer product warnings. Specifically, manufacturers/distributors must provide revised warnings on the labels of their consumer products or provide notice and materials to retailers so that retailers can post the revised warning on signs or shelf tags at the point of purchase. Manufacturers/distributors must update the notice to retailers periodically and obtain electronic or written confirmation from the retail seller that it received the notice.

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Interior’s Latest Endangered Species Act Guidance: Crucial Information for Developers (and AP Government Students)

One of my happiest marital duties is being a guest speaker for my wife’s AP Government classes.  As part of her students’ preparation for the annual AP exam, she asks me to give a presentation focused on the role of the executive branch in relation to the other two main branches of government.  “The kids love stories to explain how the theory of checks and balances really works,” she reminds me each year.  With that expert advice, I call on my past government experience as a political appointee and as a career trial attorney to attempt to bring the general concept of checks and balances to life.

I gave my presentation a couple of weeks ago, but I was too early to use probably the best and most recent example of how an agency’s discretion influences how (or if) legislation is enforced, and the role that Congress may play in overseeing an agency’s exercise of discretion.

On April 26, the U.S. Fish & Wildlife Service issued guidance to its Regional Directors concerning the trigger for an “incidental take permit” (or ITP) under Section 10(a)(1)(B) of the ESA in cases where private action modifies occupied or potentially occupied habitat of listed species.  This guidance fostered some controversy, with allegations from certain environmental groups that it sends a strong message to FWS field staff that the ESA will not be enforced to promote or to protect the habitats of threatened or endangered species.  Some background is in order.

Among the many internal directives and policies from the last administration that have been reversed by new leadership at the Interior Department includes those designed to encourage habitat conservation as a means of enforcing the ESA.  Perhaps best reflected in private party/governmental cooperation to address the sage grouse in many western states, these policies drew the scorn of many in the energy and mineral industries.  They argued that these policies reflected an overly aggressive agency interpretation of its role in enforcing the ESA.  Habitat conservation measures, while laudable, should not be imposed on the development of private lands unless there was actual “harm” to a protected species.

This new guidance clearly reacts to those objections and goes further by expressly instructing what FWS staff should instruct parties regarding their obligations under the law.  The language is striking and is worth quoting in full:

“The Habitat Conservation Plan (HCP) process is applicant-driven, and that includes the threshold determination of whether to develop an HCP and apply for a permit.  That threshold determination ultimately rests with the project proponent.  Project proponents can take Service input into account and proceed in a number of ways, based upon their own risk assessment.  They may proceed (at their own risk) as planned without a permit, modify their project and proceed without a permit, or prepare and submit a permit application.”

The remainder of the guidance recounts the development of the law of incidental takes and harm, as interpreted by the agency and courts.  In the end, it suggests that an incidental take permit “is only needed when an activity (or the results of the activity) is likely to result in the take of listed wildlife and that it is the potential applicant’s decision whether to apply for an ITP.”

The implications of this guidance are significant.  In years past, I would strongly recommend that parties planning major infrastructure development with potential impacts to listed species habitat engage in “pre-application” review with local FWS officials.  This consultation could often result in an agreement on how to avoid the need for an ITP or use good planning principles for habitat conservation to gain agency support.  The process was sometimes cumbersome, but given the agency’s ESA enforcement policies, it was often the best approach to expedite project approval.

Now, I am not so sure.  If FWS staff are being directly instructed that a project proponent may proceed “at its own risk,” and that they cannot suggest that a permit is “required,” what message does that send?  If an applicant makes a good faith effort to assess its project and determines (with the assistance of experts) that no significant degradation to habitat will occur, or in fact changes its project specifically to address potential habitat impacts, what are the odds that the FWS will demand a permit?  Even if the FWS staff has not been involved in that planning, and the project is brought to their attention by interested outside parties, will they take a different position from the project applicant?

Listen up, Ms. Wagner’s AP Government classes.  Agency enforcement of existing laws is one of the most important consequences of political regime change.  Current policy, as reflected in Interior’s recent guidance, reflects deference to private action and less of an enforcement priority.  The law hasn’t changed.  How the agency will enforce that law has.  Congress plays its role in oversight of the agency.  If it feels that its laws are not being enforced as written, or that policy directives have gone too far (one direction or the other), it can call hearings to demand that agency leadership explain its actions.  If dissatisfied, Congress can further clarify its intention through legislation or budgetary decisions.  Hence, when pundits talk about the importance of the mid-term elections, the role of oversight under Democrat or Republican leadership is one of the biggest issues.

In the context of the ESA, one other governmental branch plays an oversized role.  Citizen suits under the ESA against private actors may see a large uptick in light of this new guidance.  If wildlife advocacy groups interpret the guidance as a strong message to FWS staff that enforcement of the statute for failure to get a permit will not be a future priority, they will clearly fill that breach.

I don’t know if this post will get students a “5” on the AP exam, but I hope it gives clients a window on the future of the ESA under the current administration.

Inside EPA Quotes Envirostructure Editor Fred Wagner

Fred Wagner was quoted on April 3, 2018, in Inside EPA in an article about how the Trump administration could begin a review and rewrite of the Council on Environmental Quality’s (CEQ) National Environmental Policy Act (NEPA) rules.

Such an effort would allow the administration to implement a series of reforms to how NEPA is implemented given the unlikelihood that Congress will adopt legislative reforms the Trump administration and many GOP lawmakers and industry officials favor to speed approval of infrastructure projects, Mr. Wagner said.

“It is pretty clear to me the objective of the administration is to open up for discussion and revision of the existing CEQ [NEPA] regulations. It’s going to happen. I don’t know when they will announce it but it will be soon, and they will seek a lot of input and see if they can put a lot of what we talked about in the rules,” says Wagner.

The Trump administration’s proposed NEPA reforms “mirrors and expands what was done already” by the prior administration and lawmakers, including specific changes to how the Department of Transportation (DOT), of which FHWA is a part, conducts its NEPA reviews that were authorized through MAP 21 in 2012 and the FAST Act in 2016, Wagner says.

Rather than legislating NEPA reforms, a better approach, he says, is to continue building on the progress that the prior administration made, by giving agencies the tools they need to make their reviews more efficient and in compliance with the laws on the books, according to Wagner.

“I believe the last administration made a great deal of progress” in helping agencies better implement their NEPA responsibilities. “What you are seeing now is an acceleration of the same processes.”

One item missing from the administration’s plan that Wagner finds beneficial to expand beyond DOT is to give agencies authority to combine a final environmental impact statement (EIS) and a record of decision (ROD) — both required NEPA processes.

Current CEQ rules require a 30-day “cooling off” period between the two documents but the actual lag time is generally six months or more, Wagner says. He notes that combining the EIS and ROD authorities was in an early administration draft infrastructure plan that was leaked but was dropped from the final official version.

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.

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!