The bands are warming up for inauguration festivities in Washington, D.C. And as Americans greet a new administration, real estate and other industries are paying rapt attention to changes now taking place in the nation’s regulatory agencies.
And with good reason. The entrance of a new set of regulators, bureaucrats and various and sundry officials creates an opportunity for real estate industry lobbyists and advocacy groups to form new alliances and seek support for their special-interest agendas.
Two areas of particular concern are the now and future policies of the Federal Communications Commission (FCC) and the Environmental Protection Agency.
Over at the FCC, the regulatory agency has for months been considering proposals to allow forced building access by phone companies. Under these proposed rules, any competitive local exchange carrier (CLEC) could enter every privately owned, multi-tenanted building in America to install their own wiring and equipment at little or no cost.
Why is this a problem? Imagine if a company had the right to use a corner of your basement for its equipment. Then imagine that you wanted that space for yourself -- it is your property, after all -- or that another company was willing to pay for the right to use your property. If the federal government can rule that you must make that basement available to every company, you would lose a competitive advantage because firms would not bid so hard to get into your property and you would also lose the right to control your property -- property you bought and for which you pay taxes.
Although the rules have met with opposition from several legislators – most of them Republican – commissioners still were pursuing the possibility of requiring forced building access, which largely has been lobbied for by local phone companies. The FCC decided against the proposal late last year, but CLEC lobbyists held out hope that similar regulations would see new life in a Gore administration.
Now, under a Republican administration, it is unlikely that the FCC would again consider, much less accept, forced building access rules.
“Most policymakers have decided that the marketplace is working to meet consumer demand,” said Tony Edwards, senior vice president and general counsel for the National Association of Real Estate Investment Trusts, which has fought forced building access both in Congress and before the FCC.
In addition, a Bush administration likely would balk at the constitutional issues arising from forced access. Bush has long been a strong advocate of property rights in his home state of Texas, and the FCC proposal is regarded by many as a "taking" by government, something prohibited by the Fifth Amendment. Under the Fifth Amendment of the Bill of Rights, government must provide just compensation before taking property from private citizens.
Meanwhile, over at the U.S. Environmental Protection Agency (EPA), home builders are crying foul over the agency’s regulation of wetlands. In particular, the National Association of Home Builders is railing against the Tulloch Rule, which is administered by the EPA in conjunction with the Army Corps of Engineers.
Under the Clean Water Act, the EPA and Corps regulate the discharge of dredged and fill materials into wetlands. But for many years, the Clean Water Act did not allow these agencies to regulate the removal of materials from wetlands.
But in 1993, the Corp came out with the Tulloch Rule, which regulated certain land removal activities in wetlands. Why? Well, the Corps claimed that any removal activities also resulted in discharge, since materials could fall off of a shovel or backhoe and be deposited back into the wetland.
This broad definition of “discharge” resulted in a dramatic increase in the number of builders, land owners and land developers required to obtain elaborate permits for their activities. In a victory for developers, the rule eventually was struck down by the U.S. Court of Appeals. And in the Supreme Court , Environmental Wetlands Supreme Court Ruling, last week the Justices ruled that an area was not a "wetland" subject to the rules of the Army Corps of Enginners merely because a migrating bird landed on the property. Some 8 million properties, many miles from any ocean, river, swamp, pond, or lake, are impacted by the decision.
But the EPA and Corps refuse to say die. The agencies last week announced a new Tulloch Rule. This version does not go as far as the original rule. But real estate industry advocates argue that is still goes far beyond the legislative intent of the Clean Water Act, requiring more people to get permits and adding delays and costs.
So the question remains. Under a Bush administration, will regulators be more sympathetic to real estate interests? Perhaps a fight over the Tulloch Rule will be a good first test.