Federal Environmental Laws Affecting Real Estate: A Review of Clean Water Act Section 404, the Endangered Species Act, the National Environmental Policy Act, and Section 106 of the National Historic Preservation Act

Robert D. Anderson, Norm James, Dawn Meidinger & Greg Adams.

Standard practice for conducting due diligence as part of real estate transactions has long included an assessment of the potential for a site to have “recognized environmental conditions,” i.e., hazardous substances or petroleum products released to the environment. In addition to this evaluation, sound due diligence practices should include an evaluation of the potential for federal regulatory requirements to significantly affect value. This paper will look at four general areas: the Clean Water Act (“CWA”), the Endangered Species Act (“ESA”), the National Environmental Policy Act (“NEPA”) and the National Historic Preservation Act (“NHPA”).

Section 404 of the CWA generally requires that a permit be obtained from the U.S. Army Corps of Engineers to discharge dredge or fill material into “navigable waters.” The term “navigable waters” is defined as “the waters of the United States, including the territorial seas.” In turn, the Corps of Engineers and the Environmental Protection Agency (“EPA”) have each adopted rules that define “waters of the United States” to include virtually every type of water body imaginable, as well as the tributaries of such waters. Under the Section 404 permit program, regulated “discharges” include activities such as placing fill material into a watercourse or wetland area in connection with routine construction activities. Consequently, this program imposes significant burdens on the regulated community, and can complicate site development and thereby substantially affect value.

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