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NY-state-logo-300x158Although cannabis is still classified as a controlled substance at the federal level, New York State recently enacted the Marijuana Revenue and Taxation Act (MRTA), a law legalizing adult-use cannabis within the state. Questions abound, however. When will all five members of the Cannabis Control Board be appointed? When will the Board, once appointed, establish regulations including with regards to the licensing and application process—and what kinds of licenses will be available? Practically speaking, will landlords be willing to take on the risk of leasing space to cannabis cultivators, processors or dispensaries—and, if so, what are some of the issues that will arise in negotiating leases to cannabis operators? What constraints does the MRTA place on the location of these businesses?

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The new infrastructure bill proposes regulations for the cryptocurrency industry, the demand for logistics rental space increases, the Supreme Court ends the eviction moratorium, and more.

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Proptech-817442226-300x200The commercial real estate industry is increasingly adopting proptech to unearth savings and business insights. But companies need to be careful. Security and privacy are two foundational components of a successful data analytics initiative. Ensuring the information is stored securely while adhering to the complex framework of privacy laws will be instrumental to a real estate organization’s success with data. Why? If the information is not kept safe or is used contrary to law or the commitments a business has made to consumers, companies will face fines, regulatory investigations and customer ire.

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Diversity and inclusion efforts increase in the infrastructure industry, a recent United Nations report on climate change highlights its potential effects on real estate, construction projects fall behind schedule due to labor shortages, and more.

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On August 16, 2021, the U.S. Court of Appeals for the Ninth Circuit affirmed the lower court’s ruling that the Idaho property of Michael and Chantell Sackett was a regulated wetlands under the then-controlling 1977 EPA rules defining “waters of the United States,” and that the Sacketts dredging and filling of their property was subject to regulation by the U.S. Army Corps of Engineers or EPA. EPA’s case, as it has been for many years, was based on 2008 EPA and Corps inspection reports and Justice Kennedy’s “significant nexus” test as the controlling opinion in the 2006 Supreme Court case, Rapanos v. United States. The Sacketts’ argument was that the text of the Clean Water Act, as interpreted by Justice Scalia and three other Justices, was controlling, but for several years, the Ninth Circuit has relied on Justice Kennedy’s opinion in these CWA controversies. The court’s opinion expressed considerable sympathy for the Sacketts as they negotiated the thicket of EPA’s regulatory processes, but it could not disregard circuit precedent. A few years ago, the Supreme Court ruled, in a unanimous decision, that EPA’s then extant administrative compliance orders were arbitrary and capricious. (See Sackett v. US, 566 US 120 (2015).) After that decision, the case was remanded to the federal district court, where it lingered for several more years.

It will be interesting to see if there will be another Supreme Court challenge to the Ninth Circuit’s disposition of the Sacketts’ Clean Water Act jurisdictional arguments.

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Tax-credit-commercial-real-estate-129243370-300x201At the end of July 2021, a bill was introduced in the House and Senate, which, if enacted, would create a federal tax credit to fund the conversion of unused office buildings into residential, commercial, or mixed-use properties. The Revitalizing Downtowns Act (S. 2511), which is modeled after the federal historic rehabilitation tax credit, would provide a federal tax credit equal to 20 percent of “qualified conversion expenditures” with respect to a “qualified converted building.”

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On August 10, 2021, the U.S. Senate passed the bipartisan Infrastructure Investment and Jobs Act, a mammoth $1.2 trillion infrastructure package that includes spending for roads, bridges, electric vehicles, broadband, water infrastructure, and grid resilience, among other priorities. In “Senate Passes $1.2 Trillion Infrastructure Package, Tees up $3.5 Trillion Budget Reconciliation Bill,” our colleagues on the Global Trade, Public Policy and Energy teams take a closer look at the legislation.

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Texas and Louisiana are stepping up efforts to assume regulatory authority for an emerging wave of Carbon Capture and Storage (CCS) projects. Despite carbon sequestration being highly touted as a key tool to mitigate climate change, few commercial CCS projects have been permitted in the United States. Texas and Louisiana are moving towards regulating geological carbon sequestration by assuming “primacy” over wells built to sequester CO2. Louisiana’s primacy application is set for EPA review, while legislation in Texas recently simplified jurisdiction over carbon sequestration wells with an eye towards assuming regulatory control in the future. In State-Level Permitting Primacy May Boost Carbon Capture and Storage, colleague’s Anne Idsal Austin, Sheila McCafferty Harvey, Robert A. James, Jorge Medina, Alex Peyton explain.

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Proptech and office return delays continue to grow, the new infrastructure bill could track your travel data, investor activity shows an expectation that business properties will rebound after COVID-19 shutdowns, and more.

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In our June 16 CMA Update, we discussed how the New York City Climate Mobilization Act (CMA) will affect building owners and the market for CMBS mortgage loans (loans pooled and resold as commercial mortgage-backed securities). (For more information on C-PACE financing, see Sustainable Buildings and Development: Carbon Emissions and the Recent Climate Mobilization Act of New York City.) In this update, we will outline some of the funding solutions that are available to New York City building owners looking to retrofit their buildings in order to comply with the CMA’s requirements.

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