Federal environmental permitting is complicated even under normal circumstances. But given recent legal turmoil surrounding the EPA’s significant “Waters of the U.S.” (WOTUS) rule revisions, this process has become even more complicated.
In brief, last year the EPA issued rules that dramatically expanded federal control over land and water resources traditionally regulated at the state and local levels. A federal judge in North Dakota and panels of the 6th and 11th Circuits quickly stayed the new rules and late this summer, the 11th Circuit formally deferred to the 6th Circuit. This avoids the possibility of conflicting federal appeals decisions over the rule’s legality.
As a legal matter, the 6th Circuit’s objection to the EPA’s rules strikes us as sound. Section 509 of the Clean Water Act limits EPA actions that Congress intended for review in the appellate courts. Also, it does not include the WOTUS definitional rule that covers Clean Water Act permitting actions.
The Army Corps of Engineers had prepared extensive objections to EPA on these and other issues, which EPA rejected. Therefore, for the foreseeable future, home builders seeking Section 404 or other environmental permits from the Corps will likely face greater uncertainty in their applications. Because of this, we'd like to offer home builders a few suggestions for effective permitting:
--Legal uncertainties make smart negotiation even more important. In California, a home builder purchased property with $1 million of offsite mitigation in place. The company was stunned to receive an alternate development proposal from the Corps of Engineers that called for 40% of the property’s acreage to be reserved for wetlands. Though the home builder seemed to have a good legal case, although one that might have taken years to resolve, the company engaged the Corps directly on the key issues in the dispute.
The strategy worked and took only about six months. Estimated savings to the company: about $10 million.
--Understand the Corps’ concerns. A sure way to delay your application is by ignoring an issue, even if it only tangentially impacts the permit. Don’t think that your reviewers won’t notice! They will and if they think you deliberately tried to hide something, your application will slow even further.
Conversely, addressing all issues in a comprehensive, integrated way, can pay huge dividends. Two years ago, a major home builder purchased 500+ acres in South Florida with plans for a development that includes homes and a golf course. The normal permitting procedure for a project this size would be about 18 to 24 months.
The company received its permit in only 9 months. How? Its application addressed every federal concern, with detail and technical thoroughness from environmental regulation and policy, historic and cultural resources, and water quality. On endangered species, the builder defined the potential wildlife impacts and provided both on and off site mitigation to address ESA requirements.
--Remember that preparation involves tomorrow as much as today. More than a few home builders have been frustrated when their applications were delayed due to circumstances occurring after the applications were submitted. Provisions in the Endangered Species Act offer a good example of how this can happen. Every application to the Corps must address a project’s impact on endangered or threatened species.
But if a species is added to either list after the application is filed, the applicant must still address the impact. That’s why applicants are well-advised to investigate the potential for future ESA designations and preparing impact statements. By taking this step, home builders can save four to six months in delays.
Home builders should also understand the implications of the Corps’ proposed Nationwide Permits published earlier this summer. The Corps issued two new Nationwide Permits and re-issued 50 existing permits. These could potentially delay a project if not properly permitted or result in fines if work is found to be in violation.
In sum, we see an emerging environment of greater complexity for permit applicants including home builders and developers. This environment will place a premium on staying abreast of shifting requirements, sound planning, and patient execution.
