flooded field

The Realtors® Land Institute Applauds The New WOTUS Rule

January 23, 2020 (Chicago) – The REALTORS® Land Institute applauds the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers for replacing the 2015 Clean Water Act, also known as Waters of The U.S. (WOTUS), with a new Clean Water/WOTUS rule that provides much-needed and long-awaited regulatory certainty for landowners nationwide.

The new rule brings clarity to which level of government – federal or state – oversees land that is usually dry but may take on water depending on weather. The new rule does not change who oversees permanent waterways, such as lakes, rivers, streams and other bodies that always or usually contain water. However, it does make clear that usually dry areas, like Prior Converted Crop (PCC) land, should not be considered federal waters and will remain excluded from their jurisdiction.

The 2020 National President of the REALTORS® Land Institute Kyle Hansen, ALC, responded to the news with the following comment, “The REALTORS® Land Institute and National Association of REALTORS® have long been strong supporters of the review and repeal of the WOTUS rule so that clarifications like this could be made to ensure that both private property rights and clean waterways are protected. This is a big win for landowners across the country, and a perfect reminder of the importance of using a qualified agent to help you navigate both the local and federal regulations that can come with conducting a land transaction.”

About the Realtors® Land Institute
The Realtors® Land Institute, The Voice of Land, continually strives to maintain its status as the acknowledged leader for all matters pertaining to the land real estate profession. The Realtors® Land Institute provides the expertise, camaraderie, and valuable resources that are the foundation for all land real estate professionals to become the best in the business. For more information, visit rliland.com or call 800.441.5263.

For additional information, please contact:
Jessa Friedrich, MBA, Marketing Manager
800-441-5263 | jfriedrich@realtors.org

Washington DC

News & Notes From Inside The Beltway: A Land Legislation Update From The Hill

Despite the rancor and polarization in Washington, D.C. these days, there is good news coming out of the nation’s capital. The following two issues show that positive developments can still happen to encourage economic development and protect property rights.

Qualified Opportunity Zones

The Qualified Opportunity Zones (“QOZ”) program was enacted in the 2017 Tax Cuts and Jobs Act to encourage economic growth in underserved communities through tax incentives for investors. Along with those tax benefits, it presents opportunities for real estate investment and development in those communities. American states and territories, including Washington, D.C., nominated areas (by census tract) to be designated as QOZs in 2018, and the IRS and Treasury finalized the designations that year. This temporary program (set to expire on December 31, 2047) presents opportunities for real estate investment and development in distressed communities. There are several potential tax benefits to investors who invest in a QOZ, if all requirements are met:

  • First, capital gains reinvested (within 180 days of a sale to a nonrelated person) into a QOZ are tax-free as long as they are held in the program, through 2026.
  • If held for five years, the tax ultimately paid on the reinvested gains is reduced by 10%; if held for seven years, that reduction is increased to 15%.
  • In addition, gains accrued on deferred gains funds while invested in a QOZ are tax-free if they are held for at least ten years.

Investments in “Opportunity Funds” (O Funds) may be gains from a previous sale (within 180 days) and/or non-gains funds, but only reinvested capital gains are eligible for the tax benefits. If both gains and non-gains funds are invested, they are treated as separate investments and will receive different tax treatments.

  • To qualify for the tax benefits, investments into a QOZ must be made through an O Fund, which may be a partnership or corporation organized for the purpose of investing in QOZ property. The requirements for an O Fund are:
    • Must hold at least 90% of the assets in QOZ property (which can be stock, partnership interests, and/or tangible property used in a trade or business within a QOZ, such as real estate);
    • Must certify with the Treasury and IRS, via a self-certification filed with federal tax returns (Form 8996).

Finally, the “QOZ business property” that an O Fund invests in must be “substantially all” in a QOZ, which under the proposed rules is met if 70% or more of the property is in a QOZ. The statute also requires that after an O Fund acquires QOZ business property that it be either “original use” (new) or “substantially improved,” which means investing at least as much on the improvement as was paid for the used asset. “Original use” commences with depreciation, so an unfinished asset purchase by an O Fund in a QOZ can qualify for original use as long as it has not been depreciated yet. In addition, vacant or abandoned property can be considered original use if it has been in that state for at least five years. The proposed rules state that the basis of the land a business sits on does not need to be included for the substantial improvement requirement, thus reducing the required investment amounts.

On December 12, 2018, the White House issued an Executive Order establishing the White House Opportunity and Revitalization Council, chaired by Housing and Urban Development (HUD) Secretary Ben Carson and comprised of 13 Federal agencies. The Council will focus on ways to revitalize low-income communities, through streamlining coordinating existing Federal programs to economically distressed areas, including Opportunity Zones. In May 2019, U.S. Department of Housing and Urban Development (HUD) released a notice that it will be offering new incentives for multifamily property owners to invest in Opportunity Zones.

Knick v. Scott Township, PA Supreme Court Case

The Supreme Court of the United States (SCOTUS) issued a landmark property rights decision on June 21, ruling that the federal courts are open to decide landowners’ claims for a Fifth Amendment “taking” of property by local regulatory agencies. In Knick v. Township of Scott, the nation’s highest court reversed a 1985 precedent that had forced property owners to first bring takings lawsuits in state courts, which acted as “gatekeepers” to block the claims from ultimately getting to federal court.

The 5-4 ruling in Knick holds that suits arising under the Takings Clause can be brought as an initial matter in U.S. trial courts, and then appealed as of right in U.S. circuit courts – just like any other alleged grievance to vindicate protections in the Constitution’s Bill of Rights. Such matters are no longer relegated to state judges for resolution. Federal courts are now proper venues to test the constitutionality of aggressive land-use decisions by local regulators, and can decide whether landowners are owed “just compensation” for a property taking.

Chief Justice Roberts’s majority opinion corrected the litigation dilemma for property owners trapped between the state and federal judiciaries. “The takings plaintiff thus finds himself in a Catch-22: He cannot go to federal court without going to state court first; but if he goes to state court and loses, his claim will be barred in federal court,” Roberts wrote. “The federal claim dies aborning.”

Roberts added, “Takings claims against local governments should be handled the same as other claims under the Bill of Rights. We now conclude that the state litigation requirement imposes an unjustifiable burden on takings plaintiffs, conflicts with the rest of our takings jurisprudence, and must be overruled.” The attorney representing the property owners before SCOTUS remarked that Knick “reject[s] barriers that unfairly deny property owners their day in court [and] sends a message that property rights are just as sacred as all other rights.”

Russell RiggsAbout the Author: Russell Riggs is a Senior Policy Representative with the National Association of Realtors in Washington, DC. For the past 23 years, Russell has advocated on behalf of Realtors on energy, environment, property rights, immigration and natural resource issues before Congress and federal regulatory agencies.

Russell also serves as the Advocacy Liaison to the REALTORS Land Institute, NAR‘s Global and Business Affairs Group, and NAR’s Resort and Second Home Group. Prior to his position with NAR, Russell held positions with the U.S. Department of Energy, the Council of State Governments, the National Governors Association and the New Jersey Department of Environmental Protection. Russell holds a Bachelors degree from Virginia Commonwealth University, and Masters Degrees from Tufts University and New York University.

WOTUS

Repeal Of WOTUS Rule Finalized

The US Environmental Protection Agency and the Army Corps of Engineers has announced they have finalized the repeal of the controversial WOTUS Rule. This move will provide much-needed and long-awaited regulatory certainty for landowners nationwide. The revocation of the rule was announced via Facebook Live by U.S. Environmental Protection Agency (EPA) Administrator, Andrew Wheeler, and Assistant Secretary of the Army for Civil Works, R.D. James, in Washington, D.C.

“Repealing the rule is a major win for American agriculture,” noted U.S. Secretary of Agriculture Sonny Perdue, in remarks he made at the presentation. “Farmers and ranchers are exceptional stewards of the land, taking great care to preserve it for generations to come. President Trump is making good on his promise to reduce burdensome regulations to free our producers,” he added.

According to the EPA news release, the 2015 rule:

  • Did not implement the legal limits on the scope of the agencies’ authority under the Clean Water Act as intended by Congress and reflected in Supreme Court cases.
  • Failed to adequately recognize, preserve, and protect the primary responsibilities and rights of states to manage their own land and water resources.
  • Approached the limits of the agencies’ constitutional and statutory authority absent a clear statement from Congress.
  • Suffered from certain procedural errors and a lack of adequate record support as it relates to the 2015 Rule’s distance-based limitations.

“With this final repeal, the agencies will implement the pre-2015 regulations, which are currently in place in more than half of the states, informed by applicable agency guidance documents and consistent with Supreme Court decisions and longstanding agency practice,” the news release stated.

The REALTORS® Land Institute and National Association of REALTORS® has been a strong supporter of the review and repeal of the WOTUS Rule, as laid out by President Trump’s Executive Order, to ensure that both private property rights and clean waterways are protected.

Related Articles

US Supreme Court

U.S. Supreme Court Rules Property Owners Can Go Directly To Federal Court With Claims

In a 5-4 decision on Friday, June 21, the US Supreme Court overturned decades of precedent by ruling that “property owners can go directly to federal court with claims that state and local regulations effectively deprive landowners of the use of their property.” The REALTORS Land Institute stands behind this ruling, which gives more power to private property owners over their land. This decision will especially impact cities and properties on the coasts which tend to have strict regulations for development. Developers and private property owners often find themselves battling red tape with zoning rules and other state or local regulations which often effectively take their property for public benefit.

Read more on this topic:

RLI at the REALTOR Legislative Meetings and Trade Expo

RLI Attends 2019 REALTOR® Legislative Meetings & Trade Expo

REALTORS® Land Institute leadership and members attended the REALTORS® Legislative Meetings and Trade Expo in Washington, DC, from May 13-18. Check out these key highlights from the event to see RLI’s presence and impact while at the event:

  • The morning of Tuesday, May 14, RLI hosted its RLI Leadership and Member Meeting where Russell Riggs, RLI’s Legislative Liaison to the National Association of REALTORS®, gave an update on the latest legislative issues affecting the land industry and Aubrie gave an update about the RLI 2017-2020 Strategic Plan.
  • RLI Leadership again attended the NAR Commercial Reception in the evening on Thursday, May 16 to make sure our organization’s presence was felt.
  • While in town, RLI 2018-19 National President Jeramy Stephens, ALC, and RLI CEO Aubrie Kobernus visited the Capitol to thank Senator Cotton (R-AR) for sponsoring SR 115 which congratulates RLI on its 75th Anniversary this year!
  • Finally, on Friday, May 17, RLI 2016 National President Bob Turner, ALC, was invited to the stage by US President Donald Trump to speak on Opportunity Zones. Turner is considered the REALTOR® expert on the topic. President Trump started off his speech discussing how his policies have helped strengthen private property rights in the land industry. He came back to discussing land-related issues various times throughout the speech to his audience of REALTORS®, referencing the positive impacts of his administration’s polices being implemented by the Environmental Protection Agency, the benefits landowners may see from the recent tariff policies, and more.

 

Qualified Opportunity Zones

Qualified Opportunity Zones

Environmental Protection Agency and Army propose a new definition of the WOTUS

 

On December 11, the U.S. Environmental Protection Agency (EPA) and the Army proposed a new definition of the Waters of the United States rule (WOTUS). This proposal is the final step in the process to review and revise the controversial rule following President Trump’s 2017 “Restoring the Rule of Law, Federalism, and Economic Growth by Renewing the ‘Waters of the United States’ Rule” Executive Order.

 

“Our proposal would replace the Obama EPA’s 2015 definition with one that respects the limits of the Clean Water Act and provides states and landowners the certainty they need to manage their natural resources and grow local economies,” said EPA Acting Administrator Andrew Wheeler. “For the first time, we are clearly defining the difference between federally protected waterways and state protected waterways. Our simpler and clearer definition would help landowners understand whether a project on their property will require a federal permit or not, without spending thousands of dollars on engineering and legal professionals.”

wotus proposal epa signing december 11

RLI Past President Bob Turner, ALC, attended the official signing. “We will finally have clarification of the rules, we will be able to easily determine what is Federal waters and what is not without having to hire engineers, consultants and lawyers to get a determination,” said Turner. “This will allow landowners, farmers, developers, home builders, and conservationist to own, improve, develop, maintain and pass on to future generations with a clear, understandable and implementable definition.” Read more.

Land and Congress: Just The Facts

It seems like the more news there is, the harder it is to find out the facts. Important news about land legislative issues, such as tariffs and WOTUS, can get lost in a sea of opinion pieces. Let’s take a look at the simple facts surrounding five of the most pressing issues in the land industry.

Waters of the United States (WOTUS) rule

WOTUS is one of the most controversial land legislative issues in the land industry. This law was written to clarify water resource management but sparked a debate about property rights.

“Many (wetlands) are already covered under the Clean Water Act,” said Russell Riggs, RLI’s Government Affairs Liaison for  the National Association Of REALTORS® (NAR) and Senior Regulatory Representative for NAR, in an interview with REALTOR® magazine. “This expands it beyond navigable waterways to little streams, ditches, and isolated wetlands that were never really intended to be covered by the Clean Water Act. WOTUS would sweep in thousands of smaller water bodies under the authority of the Environmental Protection Agency and now you’re talking about all kinds of different permitting, regulatory burdens, as well as infringements of property rights.”

Many land organizations, including RLI, opposed the rule and have been avid advocates for its repeal and reform. In response to the land industry, the Trump Administration put the rule under review. At time of publication, WOTUS has been revived in 26 states.

Russell Riggs will be speaking on key land legislative issues at the 2019 National Land Conference in Albuquerque, NM, giving an update on the latest legislation affecting the land real estate industry.

The 2018 Farm Bill

On September 30th, 2018, the 2014 Farm Bill expired. The Farm Bill expired because Congress couldn’t reach an agreement on the many influential land legislative issues that this bill governs, such as:

This bill covers dozens of incredibly important and complex land legislative issues. Changes made to this bill will impact every corner of the land industry. Landowners, investors, and consumers will all be impacted. It’s important that your representatives in D.C. hear what you have to say about the Farm Bill. RLI has a strong voice in D.C., thanks to our member-driven Government Affairs Committee and by keeping members informed on the latest land laws in blog posts, social media, and D.C. Updates.

Update: The Farm Bill Passed

Tariffs

Tariffs are a tax a country puts on a product made abroad. The intention is to motivate Americans to buy local products at a cheaper price. At the time of publication, there is a ten percent tariff adding up to $200 billion on Chinese imports. President Trump is expected to raise tariffs in the future.

In retaliation, China imposed tariffs on American products, including soybeans, pork, milk, fruit, and many other crops. Soybeans, in particular, have struggled. The Chinese tariffs have driven soybeans prices down and some soybean farmers are struggling to pay the bills.

“Farmers see that pain right now,” said American Soybean Association CEO Ryan Findlay in an interview on CNBC. “You have to have the prices to pay the bill — and the prices aren’t there right now.”

During a record production year, many farmers are storing soybeans in the hopes that the trade war will soon end.  The long-term impacts, good or bad, are unknown right now.

Bailout

To help ease the economic stress of the ongoing tariff war, the USDA authorized a $12 billion bailout plan for farmers.

Farmers who met the criteria would receive incremental payments from USDA programs. The first $6 billion was distributed in late August. Additionally, the USDA’s Agricultural Marketing Service (AMS) set up the Food Purchase and Distribution program to buy $1.2 billion in American goods that were impacted by the tariffs.

Endangered Species Act

In an 8-0 vote, the Supreme Court ruled to limit which habitats can be protected under the Endangered Species Act. The central point of the debate was if lands where endangered species weren’t currently living, but might one day, protected under the law.

“Only the ‘habitat’ of the endangered species is eligible for designation as critical habitat,” the chief justice said highlighting how the scope of the law as written now is limited. “Even if an area otherwise meets the statutory definition of unoccupied critical habitat because the secretary finds the area essential for the conservation of the species, [the law] does not authorize the secretary to designate the area as critical habitat unless it is also habitat for the species.”

Staying up to date on land news is tricky, especially when so many key land legislative issues are always being updated or debated. We hope this article offered a no-nonsense look at the current state of several pressing land laws. If you’d like to get more involved with the Advocacy side of RLI, consider applying for our Governmental Affairs Committee and make sure to check back regularly to our DC Updates page for the latest news about the latest legislative issues affecting the land industry. Remember – your voice deserves to be heard in Congress!

About the Author: Laura Barker is a freelance writer based out of California for the REALTORS® Land Institute. She has been with RLI since October 2017.

Supreme Court Limits Reach Of Endangered Species Act

In an 8-0 ruling, the Supreme Court ruled to limit the broad habitat protections of the Endangered Species Act. A key debating point was how the law could impact the dusky gopher frog, an endangered species in Louisiana. Environmental groups argued that protecting land that could be used as a habitat for the frogs could save the species, while development companies questioned how the land could be “critical” if the frogs did not live there and could not live there without changes to the land there.

“Only the ‘habitat’ of the endangered species is eligible for designation as critical habitat,” the chief justice said highlighting how the scope of the law as written now is limited. He continued “Even if an area otherwise meets the statutory definition of unoccupied critical habitat because the secretary finds the area essential for the conservation of the species, [the law] does not authorize the secretary to designate the area as critical habitat unless it is also habitat for the species.” Read more.