High court’s wetlands opinion could be game changer By: John Kolanz

Kolanz-John[1]Chalk one up for property rights. The U.S. Supreme Court just changed the playing field for wetland permitting, notably tipping the balance toward landowners and developers seeking clarification of whether their planned activities require Army Corps of Engineers authorization. Moreover, in somewhat of a rarity in environmental cases, the court did so unanimously.

The Clean Water Act requires a landowner to obtain a Corps permit before working in “waters of the United States,” a phrase that defines the reach of the Act.  Contrary to what one might expect, it often is not clear whether a property contains such waters. Therefore, the Corps has long provided property owners Approved Jurisdictional Determinations that state the agency’s definitive position on whether a project area contains protected waters.

If the Corps determines that a planned project area does not contain protected waters (a negative JD), the project can proceed without a permit. A negative JD generally gives the property owner a five-year “safe harbor” for work in the evaluated area. However, if the Corps determines that the area contains protected waters (a positive JD), the landowner typically seeks Corps authorization before proceeding.

In this case, a company in Minnesota sought to expand its existing peat-mining operation to nearby lands. Before doing so, it requested an Approved JD from the Corps for certain wetlands in the expansion area. The Corps issued a positive JD based on the wetlands’ “significant nexus” to a river some 120 miles away. Moreover, the Corps indicated to the company that the required permitting process would take years and be very expensive.

Corps regulations specifically allow a party to appeal an Approved JD to a higher level within the Corps. The company pursued such an appeal, but the Corps affirmed its original determination. The company then sought review of the Approved JD by a court.

For years, courts have supported the Corps’ position that Approved JDs are not judicially reviewable. This recently began to change, causing inconsistencies among the lower courts. The Supreme Court accepted this case to definitively resolve the issue.

The authority of a court to hear such an appeal turns in part on whether the agency action at issue — here, the Approved JD — has legal consequences. The Corps has long argued that Approved JDs effectively have no legal consequences because landowners still have the options of applying for a permit and appealing any unsatisfactory results, or proceeding without a permit on the theory that the Corps’ Approved JD is faulty.

All eight Supreme Court justices (the late Antonin Scalia would have made it nine) rejected the Corps’ position, finding the agency’s articulated options inadequate. The court observed that getting a permit can be time-consuming and expensive, citing a study from 1999 showing that permits, such as the one required here, take an average of 788 days and $271,596 to obtain.  (These figures have likely risen significantly since then.) Moreover, a positive JD deprives landowners of the five-year safe harbor, exposing them to potential civil penalties of up to $37,500 per day, and even higher criminal fines and imprisonment. The court found these to be tangible legal consequences that make Approved JDs appropriate for judicial review.

The Corps’ response to this decision is difficult to predict. Since the Clean Water Act does not require the Corps to issue Approved JDs, the agency could simply stop the practice. However, one justice warned the Corps about such a move.

In a concurring opinion, Justice Anthony Kennedy stated that the Clean Water Act, especially without the JD procedure, raises “troubling questions regarding the government’s power to cast doubt on the full use and enjoyment of private property throughout the nation.” In other words, dropping the practice of providing Approved JDs may prompt heightened scrutiny of the Corps’ authority under the Act. The court will likely soon have an opportunity to scrutinize the Corps’ Clean Water Act authority when, as most expect, it reviews a controversial rule defining which “waters” the Act protects.

Assuming the Corps continues its practice of issuing Approved JDs, this decision will change the dynamics between the Corps and landowners. Landowners will gain leverage in the JD process.  The prospect of a resource-consuming judicial appeal will make the Corps less likely to push the envelope on JDs and more likely to seek common ground. Landowners should carefully consider the legal implications of this case, and how it ties into other recent Clean Water Act developments, before discussing planned projects with the Corps.

http://bizwest.com/high-courts-wetlands-opinion-game-changer/?utm_medium=email

John Kolanz is a partner with Otis, Bedingfield and Peters LLC in Loveland. He focuses on environmental matters and can be reached at 970-663-7300 or JKolanz@nocoattorneys.com.

 

What is a trademark? And how is it different from a copyright? By: Shannan de Jesús

Shannan 120If you have a creative side, or have recently opened a business, you might want to know how you can safeguard your hard work from others who may try to ride on your coattails or improperly copy your efforts. When you want to profit from your creative endeavors, protecting your intellectual property can be as important as protecting your personal property. “Intellectual  property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names, and images used in commerce.”[i] Below is a brief introduction to two kinds of IP: trademarks and copyrights, their differences, and how they might help protect you.

Trademarks

Trademarks can be found almost any place – on business signs (Sears®), restaurant menus (Big Mac®), drink labels (Coke®), home appliances (GE®), children’s toys (Fisher-Price®), and fashion accessories (Cole Haan®), to name a few. Basically, a trademark is a recognizable design used to identify goods or services. The legal definition of a trademark is “a word, phrase, logo, or other graphic symbol used by a manufacturer or seller to distinguish its product or products from those of others.”[ii] In the marketplace, they are the bottle shape, lettering style, and colors that help consumers distinguish Coke® from Pepsi® before they have even tasted the two drinks. Recently, trademarks have also come to be sounds (the Intel Tune, MGM Lion, and Harlem Globetrotter’s theme[iii]) and smells. Have you stepped into a Verizon Wireless store recently? Was there a “flowery musk scent” when you walked in? That scent was registered with the United States Patent and Trademark Office (USPTO) on October 7, 2014, to help distinguish Verizon® from other communications retailers.[iv] A combination of the things that comprise a trademark may also be used to identify the goods or services you offer as belonging to you or your company, rather than your competitors.

Obtaining a trademark registration puts your home state – or “the world” if you acquire a federal registration – on notice that you are using your trademark and intend to defend and protect it from unauthorized use. Trademarks are critical to separating your goods and services from those of your competitors. If a customer tries your pizza and thinks it’s good, you want them to remember that they liked it and purchase it again. A trademark can help your customers quickly identify your pizza out of an entire aisle of frozen foods in the supermarket. In addition, your trademark helps your customers distinguish your tasty pizza from the inferior ones, just by looking at the package. Finally, a federal registration can pave the way for recovering damages against someone who may infringe on your rights in the future.

Before you start using your trademark, you should take steps to make sure that no one is using a mark like it – to make sure you are not infringing on someone else’s rights. An attorney who is familiar with trademark clearance searches can help you determine whether someone else is already using a trademark similar to the one you want to use. Why does it matter? Because anyone who is currently using a mark that is the same as or substantially similar to yours may oppose registration of your mark, may sue you for infringement, and may obtain an injunction requiring you to stop using your mark (potentially meaning a lot of time and money lost).

On the flip side, once you decide on the trademark you want to use, it is important to think about how to protect it. The easiest ways to protect your trademark are by registering and policing it. Trademarks may be registered within your state, nationally, and even in some other countries. Where you want your goods or services to be recognized is important when deciding where you should seek registration. If you are a small business owner and never plan to expand outside your state, you may want to consider only a state trademark registration. If you plan to “go big,” however, a federal registration may be right for you. Policing your mark means making sure that no one else is using your mark or one that is confusingly similar. It can also mean making sure that people aren’t unknowingly drinking Pepsi® when they asked for Coke® . Policing your mark is important for maintaining your registration and defending any future lawsuits. You can do this yourself, or an attorney can help you.

Copyrights

While trademarks are used to identify the source of a particular good or service, copyrights protect original artwork, books, songs, architecture, movies, choreography, computer software, and more. Copyrights protect how a creative idea is expressed, but not the idea itself. By definition, copyrights protect “original works of authorship fixed in a tangible medium of expression.”[v]  In other words, you cannot copyright your idea unless you put it in some form that can be touched and redistributed.

As an “author” (the creator of a work that can be copyrighted), you obtain a basic common-law copyright from the moment your work is “fixed.” However, only the parts of your work that are original will be covered. Multiple people can obtain basic copyrights in their own portrayals of the same subject. The predictable plot of a romantic comedy movie is not copyrightable, but (assuming no infringement has occurred) each writer’s individual movie script is.

In addition to owning the original work you have created, a copyright owner also has the exclusive right to control how the work is used: to reproduce it; create derivative works; distribute it; publicly perform or display a literary, musical, dramatic, choreographic, pantomime, motion picture, or other audiovisual work; and publicly perform a sound recording by means of digital audio transmission. This means, for example, you can write and play a song in public, but no one else can play your song without your permission. However, another musician may like your song, add their own style to it, and make it their “own.” You can create a bronze sculpture of a family, but another artist can legally create his or her own bronze sculpture of the family, too. This is why copyright registration is so important.

If you want to sue someone for infringing on your rights in the future, your work must be registered with the U.S. Copyright Office. Whether your work is registered with the U.S. Copyright Office also determines what damages you can recover if your lawsuit is successful. Additionally, not every country recognizes U.S. copyrights, so if you want to send your work abroad, you should check the Copyright Office circulars or consult an attorney to determine what your rights will be in other countries and how best to protect them.

Trademarks and copyrights can be instrumental in protecting both your business and your work product. If you are interested in securing a trademark or copyright, or have one that you need help with, contact the lawyers at Otis, Bedingfield & Peters, LLC today.

[i] http://www.wipo.int/about-ip/en/

[ii] Black’s Law Dictionary, 2d Pocket Ed.

[iii] http://mentalfloss.com/article/12341/8-sounds-are-trademarked

[iv] USPTO Reg. No. 4618936.

[v] http://www.copyright.gov/help/faq/faq-general.html#what

 

The First Decision in Forming a Business: What Type of Entity? By: Corey Moore

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Choosing the appropriate entity for a new business is not as easy as one might think. Most people tend to gravitate towards a limited liability company, or LLC, for its relative ease of formation and asset protection, however there are various other entities that can be beneficial for an emerging business.  The various entity types, including C and S corporations, LLCs, and partnerships all have aspects that can be useful to a new business and should be examined before selecting an entity.

Businesses with Multiple Owners

If the new business entity will have multiple owners with different rights and interests when it comes to control, income, business losses, or assets upon liquidation, ownership rights may need to be structured differently for each owner.

If the new entity is a C or S corporation, ownership is limited to company issued stock and those owning the majority of outstanding stock control the business, whereas partnerships and LLCs are flexible and can customize and define control and interests through the entity’s operating agreement. The ability to customize LLCs and partnerships can allow the owners to set up a business structure that can take into account the differences each owner may bring to the business.

Earnings Bailout Potential

Further, it is important for the new business owners to fully understand the earnings bailout potential of various entities. With S corporations, LLCs, and partnerships, it is fairly easy to remove earnings from the business and pass them on to the owners.  In this case the profits generated by the business are taxed directly to the owners, so the distribution of profits in the form of dividends or partnership distributions will not carry tax consequences for the entity.  However, when a C corporation distributes earning to owners, or shareholders, in the form of dividends, the dividend distribution is not deductible to the corporation. Instead, it is double taxed, once to the entity and once to the owner, which can be a huge hit against company profits.  This tax trap can be avoided if the shareholders are employed by the corporation and receive earnings in the form of taxable compensation.  The compensation would then be deductible to the corporation, which results in a tax at shareholder level only.

Business Losses

A new entity can also benefit from utilizing losses generated by the business. The threshold issue is whether the losses should be retained by the entity or passed through to the owners. Losses generated by C corporations are retained in the business and can be carried backwards or forwards to be deducted against earned income.  This can be a valuable tool in lowering the business’s tax liability once the business makes a profit, but the shareholders never benefit from the losses of the business.  In an S corporation, LLC, and partnership, losses can be passed through to the owners.  For example, when losses are anticipated in the first year of the business, passing the losses on to the owners may generate tax advantages if the owners have other taxable income against which those losses can be offset. 

Ability to Restructure

Additionally, the ability of an existing organization to restructure without being penalized can be a helpful tool for a business down the road. For a C corporation looking to restructure, the options are limited.  If it converts to a partnership or LLC, the corporation will recognize gain on all its assets, and the shareholders will recognize gain on the liquidation of their stock, leading to tax liability.  An S corporation and other pass through entities, on the other hand, can convert without triggering the type of gain and tax consequences you would see with a C corporation.

Estate Plan Integration

Although most people do not consider it when starting a business, it is also important to integrate a new business entity with the owners’ estate plan. Owners may want to shift income to a lower tax bracket, freeze or slow down the growth of an estate, or utilize the annual gift tax exclusion.  To make use of these options, LLCs and partnerships provide the best options and flexibility.

Potential of Sale

Finally, although most people will not think about it when beginning a business, it is important to consider the possibility of selling the business or going public. If the business is an S corporation, partnership, or LLC when the assets are sold, the gains realized on the sale of the assets are taxed to the owners in proportion to their interests in the business.  In a C corporation there will be taxes levied on the proceeds at the corporate level and then upon distribution to the shareholders.  The shareholders will pay capital gains tax on the difference between the amount they received in distribution and their individual basis in the corporation’s stock.  While there are ways for C corporations to mitigate their tax liability, it would be easier to sell a business if it was not a C corporation.  However, if the company is funded with outside capital, as many emerging companies are these days, and the plan is to eventually go public, then a C corporation is the only option.  The interests of outside investors and potential gain that can be found on the public market may trump any of the other concerns discussed above.

Deciding which type of entity to use for a new business venture may not be a difficult decision for some, but it is important to look at all the factors before creating the entity. The above discussion does not address every factor to consider nor is it a thorough discussion of the factors mentioned.  The point is to make sure to fully analyze and understand how the choice of entity decision can help or hinder the goals of the business.

Don’t Let Emotional Support Animals Drive You Crazy – By: Brandy Natalzia

If you own or manage residential rental property in Colorado, you may have noticed a growing trend in tenant requests for “reasonable accommodations” in the form of emotional support animals (ESAs). Reasonable accommodations are defined as when a tenant asks a landlord to make a change in an existing rule or policy so they may have an equal opportunity to enjoy the unit and surrounding property. The Federal Fair Housing Act and the Americans with Disabilities Act require landlords to provide reasonable accommodations for tenants with disabilities, and ESAs typically do qualify as such an accommodation. This means that if your property is a “no-pet” property, you would be required to modify your policy to allow an animal that is claimed to be an ESA.

Landlords cannot refuse to rent to tenants with disabilities nor can landlords ask applicants and tenants about the details of any conditions. Sometimes the disability is apparent, such as a tenant in a wheelchair, but many times a person’s disability is not obvious to observers. An ESA is a companion animal which provides therapeutic benefit, such as alleviating or mitigating some symptoms of an individual’s mental or psychiatric disability. ESAs are typically dogs and cats, but may include other animals.

Many homeowners, property managers, and homeowners associations have become all too familiar with health professionals producing letters for individuals seeking to keep an emotional support animal in a property based on an online health questionnaire. Unlike service animals under the ADA, standards governing emotional support animals are virtually non-existent and there are no restrictions on the types of animals that qualify as assistance or companion pets. Associations frequently end up relying on statements made by unlicensed individuals who may be out of state and never even met the individuals making requests.  The standards are vague enough that landlords and property managers may face a risk if they fail to make a proper determination regarding a tenant’s request for a reasonable accommodation.

House Bill 16-1201 (“HB 1201”) was introduced to address a gaping loophole used by tenants to keep dogs and cats in communities which ban them, but was killed by the Democrats in the House Health, Insurance & Environment Committee in March on a 7 to 6 party line vote.

HB 1201 would have regulated how licensed professionals in Colorado must approach providing recommendations for ESAs under the Colorado Fair Housing Act.  In particular, this bill would have required that licensed physicians, physician assistants, nurses, psychologists, social workers, marriage and family therapists, licensed professional counselors and addiction counselors must make the following findings prior to recommending that an individual should be permitted to have an emotional support animal:

  1. The licensed professional must make a finding that the individual requesting the emotional assistance animal has a disability as defined by Colorado law orthat there is insufficient information available to make a determination that the individual has a disability; and
  2. The licensed professional must actually meet with the individual requesting an emotional support animal IN PERSON, prior to making a finding of whether the person has a disability which necessitates the emotional support animal.

This bill would have all but done away with the concept of online ESA approvals that require little more than a valid credit card to obtain. It would have given landlords a greater ability to confirm a tenant’s true disability and would have decreased the current abuse of the existing policy.

While House Bill 1201 has been defeated, there is now a new bill (House Bill 16-1308) that has been introduced and referred to the Judiciary Committee.  Federal and state law require places of public accommodation to allow service animals trained to do work or perform tasks for a disabled person.  Under this bill, it would be a misdemeanor for a person to intentionally and fraudulently misrepresent an animal in his possession as his service animal for the purpose of obtaining any of the rights or privileges granted by law to persons with disabilities that have service animals.  This bill does not have the same type of impact on landlords since it applies to places of public accommodations, but further indicates that whether the issue is emotional support animals or service animals, there is a growing legislative reaction to perceived abuses of statutes designed to help persons with disabilities.

Many of the more recent court cases involving landlords, property owners, tenants, and animals center on the laws, rules, and regulations about ESAs, not service animals. To outsiders, it is difficult to distinguish between an ESA and a pet. As a landlord, it can be difficult to ensure that you are following federal, state, and municipal laws regarding reasonable accommodations. However, even if you believe you are in compliance with the law, it does not prevent an applicant or tenant from filing a discrimination claim if you deny the reasonable accommodation request. If a prospective tenant files a complaint with HUD, which is usually turned over to the Colorado Civil Rights Division (“CCRD”), you are required to thoroughly respond to the complaint in a timely manner. This response can be time-consuming with requests for documentation, telephone interviews, rebuttals, etc. If the CCRD finds probable cause for discrimination, there is a mandatory conciliation that the landlord and tenant must attend, at which time the CCRD will attempt to negotiate a settlement between the parties, which usually involves a monetary payment to the tenant. If that conciliation does not result in a resolution, the matter must then be set for a trial in front of an administrative law judge.

In general, the consequences of denying a reasonable accommodation request can vary depending on location. If you find yourself with a request for a reasonable accommodation, your existing community pet restriction policies are likely inapplicable and the consequences of denying a request could be costly, both in time and money. The best course of action for most landlords is to seek legal counsel before responding to these types of requests.

Involving Litigation Counsel Early on in a Dispute Can Help Keep You Out of Court- By: Jennifer Lynn Peters

BW Thought Leaders JLP

Otis, Bedingfield & Peters, LLC attorney Christian J. Schulte appointed to the Greeley Chamber of Commerce Board of Directors

christian-120x180 2Otis, Bedingfield & Peters, LLC is proud to announce that attorney Christian J. Schulte has been accepted to The Greeley Chamber of Commerce Board of Directors.

The Greeley Chamber of Commerce is an investment organization that is driven to meet the needs of the businesses in our community. The chamber is a great source of information for assisting and promoting businesses.

The Greeley Chamber of Commerce Board of Directors develops and oversees the implementation of the Chamber’s Strategic Plan. They identify policies and initiatives for the benefit of all Chamber investors.

“I am truly pleased to be involved with the Greeley Chamber, because it does so much to help our city thrive. It’s a great group of people to work with, and I’m looking forward to doing my part,” said Christian J. Schulte.

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Otis, Bedingfield & Peters, LLC provides real estate law and business law services throughout Northern Colorado. OBP has 13 attorneys spread across its two offices in Greeley and Loveland.  For more information, contact Christian J. Schulte at cschulte@nocoattorneys.com or Jennifer Lynn Peters at jpeters@nocoattorneys.com or 970-330-6700 or visit www.nocoattorneys.com.

 

Ruling on Endangered Species Act listing has wide implications

Kolanz-John[1]By: John Kolanz on September 18, 2015

Oil and gas and agricultural interests in Colorado and four nearby states celebrated a Texas federal judge’s ruling last week vacating Endangered Species Act protections for the lesser prairie chicken. Environmental interests were less enthused. While the ruling may ease the regulatory burden for certain entities in the region, its real significance could reach much further.

The judge found that the U.S. Fish and Wildlife Service misapplied the factors that it must consider to determine whether a species qualifies for ESA protection (i.e., “listing”). The Act requires FWS to consider, among other things, the adequacy of existing regulatory protections.  If non-ESA mechanisms sufficiently protect a species, it should not qualify for listing.

The ESA is widely considered the strictest of all environmental laws. Once its protections attach to a species, the Act can severely limit activities that may harm the species or its habitat. In the case of the prairie chicken, this had implications for routine oil and gas and agricultural operations within the species’ range.

In an effort to avert a listing, Colorado, Texas, New Mexico, Oklahoma and Kansas teamed with private interests to create a comprehensive rangewide conservation plan for the prairie chicken.  When implemented, the plan would raise funds through enrollment and mitigation fees, and use these funds to develop conservation measures. Landowners would dedicate “offset land” consisting of prairie chicken habitat to be enhanced and preserved to counter unavoidable impacts to habitat elsewhere in the range. Landowners would receive payment and other economic incentives to provide offset land to the program.

Despite these efforts, FWS listed the bird as threatened in April 2014. At the time of the listing decision, the plan had not yet been implemented.  Therefore, the service determined that participation in the plan, as well as its implementation and funding, were too uncertain to guarantee protection to the bird. FWS further concluded that not listing the bird would discourage participation in the plan. The judge rejected this analysis an improper application of the service’s own policy on evaluating forthcoming conservation efforts during listing decisions.

The judge held that for FWS to give weight to such emerging plans in its listing analysis, it need only find that the plans are likely to be implemented and effective. In assessing the likelihood of implementation, FWS should consider prior industry and landowner participation in similar conservation efforts, and whether the plan creates a “good deal” for landowners in which they will want to participate. The judge held that the Service’s application of a stricter standard rendered the lesser prairie chicken’s listing invalid.

The direct effect of the ruling will take some time to sort out. For instance, it is somewhat unclear whether it vacates the lesser prairie chicken’s listing only in Texas, or in all five states where the bird is present.

However, its larger impact will go beyond the present case.  For starters, the ruling could influence the upcoming listing decision for the greater sage grouse, due this month, as well as the pending appeal of the recent decision to list the Gunnison sage grouse. Both have significant implications for Colorado.

Moreover, FWS is scheduled to make many more listing decisions for species across the country.  Comprehensive mitigation plans have become a popular mechanism to help avoid listings, but have had varying success. The ruling should reinforce the importance of state, local, and private entity cooperation in developing comprehensive plans to protect vulnerable species.  Properly crafted and implemented, these plans can provide numerous benefits.

They can create markets for property owners, who often bear a disproportionate burden under the Act, to get paid for the ecosystem benefits their lands provide. Moreover, these plans offer far more certainty to the regulated community in terms of the cost and timing of activities and projects that would otherwise require ESA review.

The plans also can help local and state governments minimize economic disruptions for their citizens and businesses. They can further help ensure that FWS allocates its limited resources to those species truly needing ESA protection. Finally, at-risk species can benefit from early conservation efforts that could be implemented more quickly than those produced through individual ESA review.

While opportunities presented by each species will vary, in many cases, the potential benefit of encouraging such plans is widespread and substantial. What some may consider a defeat for the lesser prairie chicken actually could be a win for all.

John Kolanz is a partner with Otis, Bedingfield & Peters LLC in Loveland. He can be reached at 970-663-7300 or via email at JKolanz@nocoattorneys.com.

Otis, Bedingfield & Peters, LLC welcomes attorney Nathaniel Wallshein

Nathaniel Wallshein 120X120

Nathaniel Wallshein joins the firm as a litigation associate. Before joining Otis, Bedingfield & Peters, Nate worked as a judicial fellow for the Honorable Norman D. Haglund. He most recently served as law clerk for the Honorable R. Michael Mullins of the Denver District Court.

“We are excited to bring a talented young lawyer like Nate to Northern Colorado and our firm,” says managing member Jennifer Lynn Peters. “Nate’s energy and passion for the law is infectious, and in the short time he has been with us he has already made a big contribution to our ongoing complex cases.”

Nate was born and raised in Northern Virginia. He received his undergraduate degree from the University of Connecticut and he earned his J.D. from the University of Colorado Law School. During law school, he worked as a law clerk for the Office of the Solicitor at the U.S. Department of the Interior, and as a law clerk for the Office of Chief Counsel at the U.S. Department of Energy.  Nate also worked as a student attorney for the Natural Resources Law Clinic. There he represented a variety of organizations in litigation concerning Forest Service approval of two coal leases within the Thunder Basin National Grassland.

Nate is admitted to practice in Colorado and is a member of the Colorado Bar Association. His practice at the firm will focus on complex commercial litigation, probate litigation and appeals.

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Otis, Bedingfield & Peters, LLC provides real estate law and business law services throughout Northern Colorado. OBP has 12 attorneys spread across its two offices in Greeley and Loveland. For more information, contact Nathaniel Wallshein at nwallshein@nocoattorneys.com or Jennifer Lynn Peters at jpeters@nocoattorneys.com or 970-330-6700 or visit www.nocoattorneys.com.

New federal water rule taps reservoir of angst

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By: John Kolanz

It is largely about perspective. Some say the new federal rule defining the reach of the Clean Water Act will pave “the road to a regulatory and economic hell.” Others see it as a rollback of current protections that fails to close loopholes that have made the nation’s waters vulnerable to destruction by developers, corporate agriculture and general industry. Like most politically charged issues, however, the truth is somewhere in between.

Once effective later this summer, the new rule will provide the framework by which the federal government decides what waters receive CWA protection. This fundamental aspect of the Act remains confusing and contentious 40 years after its passage.

CWA regulation often brings to mind images of a sewage-treatment plant or large industrial facility discharging effluent into a river. While the Act certainly covers such activities, its application is much more extensive. For example, the Act also can apply to discharges of rainwater and snowmelt or placement of materials such as dirt, sand or gravel (“fill”) into protected waters.

This latter component of the Act, often called “dredge-and-fill” or “wetlands” permitting, is the component likely to be most affected by the new rule. This permitting program often covers routine activities related to oil and gas production and distribution, road building, agriculture, and all aspects of development, including construction of the family home. Therefore, changes in the Act’s coverage can impact many routine business activities, particularly in a region of dynamic growth, such as Northern Colorado.

The stakes can be high. Activities impacting protected waters require permits that can be difficult and expensive to obtain. Some projects may be denied permits. Even when issued, a permit creates binding obligations with potentially severe penalties for noncompliance.

The new rule is an attempt to clarify the reach of the Act because of uncertainty created largely by two U.S. Supreme Court opinions and subsequent government guidance on how to implement the Act in the wake of those opinions. The uncertainty led to many case-by-case determinations of coverage, creating permitting delays and inconsistent application of the Act.

To achieve clarity and certainty, the new rule draws bright lines to automatically protect certain waters. In some cases, these lines are based on distance to other protected waters, as opposed to scientific evaluation. However, despite the goal of certainty, the new rule also creates a potentially complicated test for extending the Act’s protections to a “catch-all” category that will include many waters not now typically captured.

On the other hand, the new rule specifically excludes some waters that the Act would otherwise cover. Perhaps most significantly in Colorado, the new rule excludes certain irrigation ditches, artificially irrigated areas that would revert to dry land in the absence of irrigation, and water-filled excavations created incidental to construction or mining. Moreover, the new rule leaves in place existing permitting exclusions, including rather extensive exclusions related to agriculture.

Some industry groups have condemned the new rule as an inappropriate (and illegal) extension of the Act, and have threatened to file suit to challenge the rule. Environmental groups who think the new rule does not go far enough may pursue similar challenges. Legislation to limit or prohibit implementation of the new rule also is a possibility.

Often missing from hyperbolic exchanges regarding the new rule is acknowledgment of the expansive reach of the existing rule. While the Act currently protects “more-obvious” waters such as the South Platte River, it also extends to “less-obvious” waters such as many irrigation ditches and even meadows that appear dry for much of the year.

Because of its different approach to identifying covered waters, the new rule will change the playing field for the regulated community. Just how much is difficult to know until the new rule is applied. Some waters currently covered by the Act no longer will be included, while some waters not currently covered will be. How any given project will be impacted will depend on its own unique circumstances.

John Kolanz is a partner with Otis, Bedingfield & Peters LLC in Loveland. He can be reached at 970-663-7300 or via email at JKolanz@nocoattorneys.com.

The Million Dollar Comma

Brandy 120X180The Million Dollar Comma

By: Brandy E. Natalzia

With the advent of legal service websites like Legal Zoom, Rocket Lawyer, nolo.com, etc., almost anyone can draft a will, a durable power of attorney, or a real estate contract.  People can even set up a limited liability company and draft their own divorce documents.  The advent of “cost effective” online legal services should be signaling the demise of the brick and mortar, flesh and blood attorney, right?

We’ve all heard the old adages:  “Pay now or pay later” and “Just enough information to be dangerous.”  That has never been more applicable than with the proliferation of self-help legal websites.  These websites offer form banks for standard documents and general legal and/or statutory guidelines.  But there are times when that may not be enough.  Have you ever heard of the “Million Dollar Comma”?  Often touted as rumor or some sort of urban legend, it is anything but.

One part of the U.S. Tariff Act of June 6, 1872 contained a sentence that intended to exempt the importation of semi-tropical and tropical fruit plants from tariffs. The sentence was meant to read “Fruit plants, tropical and semi-tropical for the purpose of propagation or cultivation.” One comma, however, was mysteriously moved one word to the left during the copying process, thereby rendering the sentence as: “Fruit, plants tropical and semi-tropical for the purpose of propagation or cultivation.”

Importers of oranges and lemons and the like were quick to seize upon the misplacement and use it to their advantage. They contended that under the wording of the act, all tropical and semi-tropical fruit were exempt and thus could be brought into the U.S. without payment of the tariffs.

The Treasury initially ruled against this interpretation, but then later reversed itself and sided with the fruit importers. Most of the monies collected as duty on the import of tropical and semi-tropical fruit while the errant comma was in effect were refunded to those who had paid the fee.  That memorable punctuation error deprived the U.S. government of an estimated $1 million in revenues.

Of course, most of us aren’t dealing with something on the scale of the above example and that really isn’t a case of not having adequate legal representation; however, similar consequences are well within the realm of possibility for anyone.  Imagine, for example, that you have a modest estate and you love all three of your children equally.  Your spouse predeceased you and you would like to update your will to reflect your current situation.  So, you go online with the best intentions to draft a simple will that divides your estate equally among your three children.  You draft your will to leave your entire estate “to Child A, Child B and Child C, in equal shares.”  Despite your intentions, what you have now done constructively is to give Child A half of your estate while Child B and Child C will be left to divide the other half.  The proper drafting to achieve your desired result would have been to leave your entire estate “to Child A, Child B, and Child C, in equal shares.”  Thus, each child would thereby receive 33 1/3% of your estate. While this simple punctuation mistake may be overlooked by many, this missing comma could provide an heir with the legal grounds to contest the will.  What was intended to be a simple will could potentially result in a contentious and costly court battle.

Legal websites will tell you that drafting basic legal documents rarely involves complicated legal rules and most people do not need a lawyer’s help to draft those types of documents.  While that may be true, it’s not always the “complicated legal rules” that you need to look out for.  Sometimes it just may be worth it to pay a professional for that added peace of mind.