Category Archives: Uncategorized

Early Lessons from the Equifax Hack

Early Lessons from the Equifax Hack

The Equifax data breach, also known as the Equifax hack, in which highly sensitive personal information of approximately 50% of all Americans was compromised, is fascinating from a legal standpoint for a variety of reasons.

It will likely take years to fully understand what happened, what measures Equifax did or did not have in place to prevent the breach, exactly what Equifax did in the immediate aftermath of learning of the hack, and the extent of damages and harm to the 143 million or so individuals whose data was stolen.

We know that multiple states’ attorneys generals are conducting investigations, including the New York State Attorney General’s office, the FTC has instituted an investigation, quite a bit of noise is being made about the fact that three company insiders sold $1.5 million of company shares shortly after the breach but prior to Equifax publicly disclosing it (which will likely lead to at least some additional regulatory or perhaps congressional inquiries), thousands of individuals have filed small claims law suits against Equifax thanks to a chatbot, which streamlines the process for individuals to file such actions, and more than twenty class action law suits have been filed, with plaintiffs’ attorneys in the first filed case stating that they will seek an eye popping $70 billion in damages.

So, Equifax’s legal team will have its hands full for a while.

Lessons Learned from the Equifax Hack

What interests me about this case so much is that it touches upon and provides lessons, or at least will provide lessons as we learn more, about both preventative cybersecurity measures and reactive measures in the case of an actual breach and the developing web of regulations dealing with both of those items.

While keeping data safe is of course paramount, the inherent fallibility of current cyber security measures means that what companies do after a breach is at least as important as what they do to prevent one.

Earlier this year, I wrote a blog post that discussed the increasing focus of FINRA and the SEC on cybersecurity enforcement actions against covered entities. This trend is certainly continuing and recent statements and publications by the SEC have made clear that cybersecurity will continue to be a, if not the, major focus of the Commission moving forward. Specifically, earlier this Summer, Steven Peiken, the co-director of the Division of Enforcement, gave an interview in which he stated that “The greatest threat to our markets right now is the cyber threat.” And in August, the Office of Compliance Inspections and Examinations (OICE) of the SEC, as part of its Cybersecurity 2 Initiative, released the findings of its examination of the cybersecurity practices of 75 broker dealers, investment advisors, and investment firms. Among other things, the OICE’s findings included a list of suggested best practices and identified certain common deficiencies in cybersecurity plans/implementation at the examined firms. 1

What Companies Do After a Breach

Another aspect of cybersecurity regulations, which has been brought sharply into focus in the Equifax case, is aimed at what a company does after it learns of a breach. While the SEC and FINRA regulations are focused on preventing data breaches, much of the work currently being done at the state level addresses the steps that companies must take following a breach (the New York State Department of Financial Services Cyber Security Regulations 2, enacted March of this year and which many think will become a model for other states to follow, address both preventative and remedial issues).

While keeping data safe is of course paramount, the inherent fallibility of current cyber security measures means that what companies do after a breach is at least as important as what they do to prevent one. In short, it is impossible to secure data with certainty and all companies, and particularly those holding sensitive personal information (like Equifax), should assume that they will be hacked and have a plan in place for how they will respond when that happens.

Various state and federal regulators will continue to adopt rules and regulations addressing what a company needs to do following a breach, but this will likely be a moving target for some time, if not indefinitely. In the meantime companies big and small that hold customers’ personal data need to have plans in place for what they will do in the aftermath of a breach, which conform to the specific regulatory requirements that those companies are governed by and which make business and customer relations sense.

We do not yet know what Equifax could have done to prevent the hack or at least mitigate the risk of a hack. But, it is already clear that the company’s response to the hack was lacking, to put it mildly. Equifax did not notify customers until well after learning about the hack. It then communicated poorly regarding what it was offering to customers to help protect them and the terms of that offer. And it has been largely unable or unavailable to answer questions from individual customers and media outlets about what happened and what it was doing about it. This response has had the impact of making a very bad situation worse and bringing more regulatory and legal scrutiny on a company that was already going to face a lot of it.

As I noted above, we will continue to learn lessons from this case as more and more information is uncovered, but in the immediate aftermath, we have a clear reminder that a big part of compliance planning and execution is to do no harm. Sometimes plans do not work – they may not be executed properly, or were insufficient in the first place, or maybe a company did everything right but something still went wrong – and bad things happen. Companies, particularly in the area of cybersecurity, need to have a plan for that eventuality so that they can prevent a bad business and legal situation from becoming worse.

Land use trends and developments

2017 TRENDS + DEVELOPMENTS. LAND USE.

The most significant developments, issues and opportunities, as we see it, facing us on the road ahead.

Retail

A key trend in the ever-changing retail market is the need for companies to provide a unique experience, not just a product, in order to compete with e-commerce retailers. At the same time, e-commerce retailers known exclusively as online companies are seeking to expand their brick and mortar presence, becoming an important entrant into the market. In addition, as brick-and-mortar companies and e-commerce retailers continue to trade strategies, the food and beverage industry will continue to be the bridge between them and consumers.
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Retail
Solar Energy

Solar Energy

Our Energy & Environmental Law Practice Group anticipates providing assistance in the coming months with the development of Community Choice Aggregation (CCA) energy purchasing groups not only in the Hudson Valley but throughout New York State in view of its orts in the development of the CCA known as Westchester Power by Sustainable Westchester.
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Meeting the needs of an aging population

An active topic of discussion amongst planners has been the impending effects on communities as the United States’ aging population sharply increases. Studies have shown that older citizens stay healthy longer in walkable urban settings. Some may benefit from adult day care programs that provide assistance during certain hours of the day, when adult children or other caretakers are working.
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Meeting the needs of an aging population
Educational & Medical - EDS & meds

Educational & Medical – EDS & meds

Health and educational innovation and development increasingly rely on high speed and high capacity data infrastructure including wired broadband, wireless networks and data storage.
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Brownfields

It’s Time to Repave and Redevelop a (Brownfield) Parking Lot to Reuse and Rebuild a New Paradise

For Developers, Participants and Volunteers alike in the Brownfields Cleanup Program, new deadlines incentivize timely redevelopment for sites to finish cleanup to ensure that a development comes in at the right price including all available incentives and tax credits.
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Brownfields
Transit oriented development

Tod: Transit oriented development

Location, Location, Location – Transit Oriented Development Takes Off In Westchester

Many Westchester communities are reexamining their local codes to focus specifically on transit-oriented development in an attempt to attract young professionals. The key is proximity (and planning!). Communities in Westchester are using local land use planning tools including rezoning, incentive zoning and smart growth techniques to foster transit oriented development zones in an attempt to attract and maintain millennial populations.
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Landlocked property rights New York State – Easement by necessity New York

When is Necessity Actually Necessary? The Changing Landscape of Easements by Necessity in New York

A situation commonly arising in the course of a land use and real estate practitioner’s work sounds much like the following: Smith owns Greenacre, a large parcel of land that she subdivides and then sells piecemeal. Jones, looking for somewhere nice to build his home, purchases one of the lots, which just happens to be landlocked and inaccessible from the local roads. Not being of substantial means, and his helicopter badly needing repairs, Jones must obtain an easement, or right to use others’ land for some purpose (in this circumstance, as a right of way). If, for some reason, our unlucky protagonist is unable to negotiate an easement with one of his neighbors so that his lot has overland access to a public right of way, his primary recourse would be to commence an action seeking a declaration from a court that an easement for such use is necessary and that he be permitted access.

To prevail on this claim, the law in New York has traditionally required that Jones establish, by clear and convincing evidence, that his lot was part of a greater unified parcel that became landlocked upon severance, or division, such that an easement was absolutely necessary at the time of severance. In other words, under the traditional framework, the claimed necessity must have always existed – and not because of some action taken by the party seeking the easement – or an easement by necessity was not the appropriate remedy.

Interestingly, the defendant’s lot had already been accessible for years pursuant to an express easement that had been deeded to him by the owner of a separate adjacent parcel.

This high standard is understandably difficult to meet and has resulted in application of the doctrine in limited circumstances.  As a result, some courts have begun to weaken the originally stringent requirement that the necessity for the easement exist at the time of severance, and have replaced it with a more attainable standard that, unfortunately, has all but eliminated the certainty associated with the traditional rule.

Over the years, a line of cases has developed whereby claimants have prevailed in seeking an easement by necessity despite there being no strict necessity for it at the time of severance. Illustrative of this is Mobile Motivations, Inc. v. Lenches, 809 N.Y.S.2d 253 (3d Dept. 2006), where the Appellate Division for the Third Department cited the significantly broadened version of the rule in a decision affirming the lower court’s finding that an easement by necessity had been established. The plaintiff in Lenches sought to enjoin the use of its driveway by the defendant, who was a neighbor with a landlocked parcel.

Interestingly, the defendant’s lot had already been accessible for years pursuant to an express easement that had been deeded to him by the owner of a separate adjacent parcel. The necessity for the new easement – which was absolute and not occasioned by any conduct of the defendant – only arose when a septic system was constructed in the vicinity of the former easement, thereby rendering it unusable. The Appellate Division held that, regardless of the fact that there had been a deeded right-of-way since the time of severance, and hence no necessity at that time, the subsequent alterations that destroyed its utility resulted in necessity sufficient to warrant invocation of the doctrine.

As this decision highlights, there are plenty of sound reasons for New York courts to expand the scope and application of the doctrine of easements by necessity, for without such an expansion of the rule the Lenches defendant would have been left without any means by which to access his property, a result not favored by the law. However, this apparent circumvention of the traditional rule’s requirement of strict necessity at the time of severance was accomplished without comment or further explanation by the court, and practitioners are left with no clear indication that the doctrine would be similarly applied in future cases.

Given the current state of legal limbo on this issue, it would be highly beneficial to practitioners for the courts to finally retire the requirement of strict necessity at the time of severance in favor of the broader, more inclusive rule that strict necessity arising at any time – so long as not self-created – is sufficient to justify application of the doctrine. In doing so, the interests of justice would be better served, predictability for practitioners and their clients would be dramatically enhanced, and the law of easements would be updated to address the fast-paced changes widespread development is bringing to the system.

The Land Use, Zoning & Development attorneys at Cuddy & Feder are available to address any questions you may have regarding easement by necessity or landlocked property rights in New York State.

document with gavel

DEC’s Proposed 2017 Amendments to SEQRA: Do They Help or Hurt Project Applicants?

The New York State Department of Environmental Conservation (“DEC”) has proposed a series of amendments to the State Environmental Quality Review Act (“SEQRA”), which the agency maintains are intended to streamline the review process, especially for projects that the agency considers to be in line with state public policy. Comments on the proposed changes will be accepted until close of business on May 19, 2017.  The DEC has established a regional public hearing schedule for March 31, 2017 in Albany, April 6th in New Paltz, April 13th in Hauppauge, and April 18th in Rochester.

Cuddy & Feder is a mid-size firm operating in the Hudson Valley, Long Island, and New York City’s outer boroughs. The firm exclusively and passionately represents project applicants. Our clients include both for-profit and not-for-profit property owners, and those whose underlying business is real estate, as well as those whose business operates from real estate. Thus, the firm’s perspective stems from extensive experience in representing our clients throughout the SEQRA process.

The following analysis shows that the proposed SEQRA amendments slightly improve the existing regulations for certain types of projects, but will in most instances lengthen the review process due to proposed mandatory scoping. The elephant in the room is what these regulations don’t do for applicants – provide any assurances as to SEQRA processes or timelines.

The number of caveats and restrictions based on local population, location/prior use of the parcel, and square footage limitations altogether provide that only a narrow range of projects will qualify as a Type II action under this provision.

We encourage our clients to contact the DEC about the lack of certainty in the review process as well as the timeliness of review, and how this impedes them from taking risks in growing their businesses and/or siting facilities in New York.  Further, we think it is time for DEC to provide dispute resolution provisions for applicants who find their projects at an impasse with the Lead Agency at key junctures, such as the determination of significance, and the completeness of either a DEIS or FEIS.

1.    Proposed Changes to the Type II List

The changes to the Type II list are a slight improvement over the existing exemptions of 4,000 SF for non-residential uses and 10,000 SF for educational uses (§ 617.5(c)(7),(8)), but either benefit only municipalities or specific and limited applicant projects.

A.    Solely Municipal Benefits

Many of the proposed Type II additions only provide a benefit to municipal processes and projects, and do not ease the burden on applicants. These include transfers and dedication of parkland and acquisition of less than 100 acres of dedicated parkland (§ 617.5(c)(44), § 617.5(c)(45)); land transfers of five acres or less to a public or nonprofit corporation from a municipality to construct 1- to 3-family homes § 617.5(c)(46)); selling/conveying property by public auction (pursuant to RPTL Art. II (§ 617.5(c)(47)); siting anaerobic digesters at publically-owned wastewater treatment facilities and municipal landfills (§ 617.5(c)(49)); and siting solar arrays of less than 5MW on mostly publically-owned sites such as landfills, brownfield sites, wastewater treatment facilities, industrial sites, canopies above residential/commercial parking facilities, and on existing non-historic structures (§§ 617.5(c)(15), (16)).

B.    Narrow Application and Limited Benefits for Applicants

There may be some very limited benefits from a few of the proposed amendments for certain types of applicants; e.g., nonprofit organizations such as Habitat for Humanity may benefit from the new land transfer addition. However, even the benefits aimed at applicants have limited application, or have almost uniformly long been treated as not having environmental significance despite technically being considered Unlisted. For example, applicants may benefit from the solar array Type II addition, but only for very specific types of solar; arrays must be less than 5MW, and the classification only applies to arrays sited on brownfield and industrial sites, parking facilities, or existing non-historic structures (§§ 617.5(c)(15), (16)).

The other proposed additions are likewise quite constricted in their application to development projects. Minor subdivisions (§ 617.5(c)(18)) are proposed to receive a boost to the Type II list. However, which subdivisions qualify is another very narrowly targeted provision: the subdivision must be either defined as “minor” in the local code or consist of 4 or fewer lots (whichever is less); involve 10 acres or less; may not have been part of a larger tract subdivided within the previous 5 years; and may not be within/substantially contiguous to a designated critical environmental area.

Reuse of a “commercial or residential structure” (§ 617.5(c)(23)), where the activity is consistent with the current zoning law – a measure aimed at adaptive reuse of the state’s many existing vacant and abandoned buildings – is another proposed Type II list addition. However, the proposed amendments do not define what constitutes a vacant “commercial or residential structure,” or provide any guidance beyond requiring consistency with the locality’s zoning. This addition could therefore do as much or more harm than good, as applicants will likely have to expend resources to achieve a determination that their adaptive reuse project can be classified under this provision.

DEC considers that their proposed Type II actions to promote “sustainable development” on “previously disturbed urban sites” (617.5(c)(19), (20), (21), (22)), will provide a “sliding scale of development”; yet, these sustainable development exemptions still have a narrow scope. Only applicable to previously disturbed urban sites within municipal centers that have adopted zoning laws, the projects may not involve a change in zoning, a use variance, or the construction of new roads. The amendments add definitions for “municipal center” and “previously disturbed” which make it clear that the projects are limited to “central business districts, main streets, and downtown areas” and parcels within those areas that were “occupied by a principal building” once “used for residential or commercial purposes” where the building “has been abandoned or demolished.” These projects must also be subject to site plan review, and ultimately be connected to existing community-owned or public water/sewer systems that have capacity to provide service. The maximum square footage for projects meeting the above requirements is further broken down by the population size of the community in which it is to be sited, as follows:

  • a local population of 20,000 persons or less permits construction of a residential or commercial structure or facility involving less than 8,000 SF of gross floor area;
  • a local population of more than 20,000 persons but less than 50,000 persons permits construction of a residential or commercial structure or facility involving less than 10,000 SF of gross floor area;
  • a local population of than 50,000 persons but less than 250,000 persons permits construction of a residential or commercial structure or facility involving less than 20,000 SF of gross floor area; and
  • a local population of 250,000 persons or more permits construction of a residential or commercial structure or facility involving less than 40,000 SF of gross floor area. However, this project must additionally be located within a quarter mile of a commuter railroad station, be classified under a transit-oriented zoning district or overlay district.

The number of caveats and restrictions based on local population, location/prior use of the parcel, and square footage limitations altogether provide that only a narrow range of projects will qualify as a Type II action under this provision.

In sum, although the above proposed amendments present slight improvements and expansions beyond the existing Type II exemptions for non-residential and educational uses, it is not clear that any of these proposed additions will provide material additional benefits to the majority of project applicants.

C.    Provisions Merely Clarifying That Unlisted Actions Almost Always Treated to Have No Environmental Significance are Type II

Finally, several provisions merely clarify that some actions have clearly either never been subject to SEQRA (such as County planning board referrals pursuant to GML §§ 239-m, 239-n, which are advisory opinions), or that are Unlisted but when considered alone, are almost always determined to never have a significant impact on the environment. These include expansion of broadband services (§ 617.5(c)(7)) in existing highway or utility rights of way; co-location of cellular antennas and repeaters (§ 617.5(c)(14)) on any non-historic structures (clarifying that the current Type II item 617.5(c)(7) precluding the installation of radio communication and microwave transmission facilities as a Type II action should not likewise preclude co-location); brownfield site clean-up agreements pursuant to ECL (§ 617.5(c)(48); provided that design and implementation of the remedy do not commit DEC or any other agency to specific further uses or actions or prevent an evaluation of a reasonable range of alternative future uses of or actions on the remedial site); and any lot line adjustments/area variances not involving a change in allowable density (replacing existing items 12 and 13 in § 617.5(c); as these often have no significance alone and are just one step in the context of a larger project subject to SEQRA review).

2.    Proposed Changes to the Type I List

The proposed changes to the Type I list lower the thresholds so that more projects fall within the ambit of the Type I category. A brief summary of the proposed Type I actions are as follows:

A.    Reducing Threshold for Residential Units

DEC first proposes to reduce the §§ 617.4(b)(5)(iii),(iv),(v) threshold for residential units, maintaining that the threshold level was set too high in 1978 and that the threshold is therefore rarely triggered. The threshold reductions are broken down by local population/ triggering number of units as follows:

  • local population of 150,000 or fewer, 200 units (decreased from 250 units);
  • local population of more than 150,000 but less than 1,000,000, 500 units (decreased from 1,000 units);
  • local population of greater than 1,000,000, 1,000 units (decreased from 2,500 units).

Applicants will therefore be subject to Type I review at lower thresholds, whereas the project would previously have been considered an Unlisted action.

B.    Addition of Parking Space Threshold

Currently, the SEQRA regulations classify as a Type I action in § 617.4(b)(6)(iii),(iv) all activities that result in the parking for 1,000 or more vehicles. The proposed amendment would lower the parking thresholds based on local population as follows:

  • a locality having a population of 150,000 or less, parking for 500 vehicles;
  • a locality having a population of 150,000 or more, parking for 1,000 vehicles.

This amendment will result in many more commercial and industrial activities being classified as Type I actions, despite DEC’s assertion that many of these projects would have triggered the existing Type I threshold of 100,000 SF of gross floor area anyway.

C.    Addition of 25% Historic Threshold and Expansion to Include OPRHP “Eligible” List

Currently, any Unlisted action occurring partly/wholly within or substantially contiguous to a historic resource is elevated to a Type I action, no matter the size of the action. This proposed amendment classifies as a Type I action any Unlisted action that exceeds 25% of any threshold in this section occurring wholly/partly within or substantially contiguous to a historic building, structure, facility, site, district, or prehistoric site that is listed on the National or State Register of Historic Places. It also expands this provision to include any historic property determined by the Commissioner of the Office of Parks, Recreation and Historic Preservation to be eligible for listing on the State Register of Historic Places. DEC has acknowledged here that it has been “unduly onerous for a project sponsor to have to complete a Full EAF for a relatively minor activity.” However, it is unclear given the other changes proposed whether adding a 25% threshold will lessen the burden on an applicant.

D.    Mandatory Scoping

The importance of DEC’s proposed amendment to § 617.8 that all Type I actions that receive a positive declaration now undergo mandatory scoping cannot be understated. Despite DEC’s assertion that this will be a benefit for project sponsors because EISs can become too “defensive” and result in “cooking the ocean” (in other words, unnecessarily including a discussion of impacts that are trivial or non-significant), making this additional step mandatory can greatly lengthen the EIS process and adds to applicant uncertainty as to the SEQRA timeline for a project.

All projects that will now fall under these proposed reduced thresholds will be subject to Type I review, which means that the project will then require a full environmental assessment form, need to undergo coordinated review, and be subject to the Type I presumption of significance. Ultimately, these reductions are greatly concerning for applicants as the proposed amendments may significantly lengthen the timeline for any project determined to be Type I.

3.    Takeaway: What is Missing is More Significant than What is Proposed

The ultimate takeaways from a review of the proposed amendments are that: (1) no procedural changes are proposed and (2) no new timelines have been provided. Meanwhile, the proposed amendments leave applicants in no better position than before, as the addition of a few narrowly targeted actions to the Type II list are negligible compared to the increased burdens that will be placed on project applicants by the reduction of several Type I thresholds and the imposition of mandatory scoping. The daily, practical difficulties of integrating SEQRA into a wide variety of different development activities, having varying timelines and myriad procedural steps, remain unaddressed.

Further, no dispute resolution processes are proposed, such as permitting the Commissioner of DEC to hear and resolve disputes over stages in the SEQRA process, particularly those that have gone outside the few existing timelines, or that have not necessarily yet resulted in an agency’s “final determination.” Litigation remains an applicant’s sole remedy. We see the need for dispute resolution occurring through the DEC Commissioner when: (i) a positive declaration is made that appears inconsistent with prior Lead Agency determinations or is intended as a means to delay or stop a project, or (ii) the review process exceeds any of the handful of mandatory timeliness in SEQRA such as the scoping process, or (iii) the SEQRA review process has exceeded 2 years since the establishment of a Lead Agency.

Alternatively, DEC should consider amendments to SEQRA to explicitly require the strict adherence to enumerated deadlines, or in other words, project benchmarks, including but not limited to existing SEQRA time frames such as the thirty (30) day period to establish lead agency, the sixty (60) day (optional) scoping period, and the forty-five (45) day period to accept the Draft Environmental Impact Statement (“EIS”).  Such benchmark violations would not result in default entitlement to receive the subject approvals. Instead, if the lead agency failed to comply with each deadline, the application would automatically move to the next stage in the process.

Additionally, it is worth noting an amendment to § 617.13 proposes to give applicants a clearer right to information about how their escrow funds are being used; but what is the remedy for applicants for excessive fees? Litigation is still the only way for an applicant to achieve a just determination and recoup costs after an abuse of the SEQRA process. SEQRA will continue to have few teeth.

The above conclusions are troubling, as SEQRA already adds a substantial layer of regulation for businesses interested in either putting down roots or remaining located in New York. With today’s technological advances such as telecommuting and the ongoing retail revolution of “clicks vs. bricks”, the state should be cognizant of staying competitive in attracting people, jobs, and commercial investment. It was “not the intention of SEQRA that environmental factors be the sole consideration in decision-making”; rather, it was the intention of the Legislature that the “protection and enhancement of the environment, human and community resources should be given appropriate weight with social and economic considerations in determining public policy, and that those factors be considered together in reaching decisions on proposed activities” (See SEQRA § 617.1(d)). What was sought was that a “suitable balance of social, economic and environmental factors be incorporated into the planning and decision-making processes of state, regional and local agencies” (See SEQRA § 617.1(d)). Therefore, for the benefit of businesses in New York as a whole, these proposed amendments fall far short of providing the clearer guidance needed to provide more certainty as to SEQRA’s process and timelines.

Retailers are Re-Tooling – Is Your Community Ready?

Retailers are Re-Tooling – Is Your Community Ready?

In order to survive, retailers must adapt to the major shift in buying habits from brick and mortar to e-commerce. How big a shift is it? Think about it for a minute – how much on-line shopping do you do today? Now compare that frequency to the amount of on-line shopping you did five years ago. In fact, for Black Friday 2016, the National Retail Federation’s consumer survey showed that 108.5 million people shopped Black Friday deals online while 99 million shopped in stores. 3 This trend will only continue as mobile bandwidth and speed become more available.

This trend to offer more than just your typical retail experience is also being embraced by the e-commerce retailers known exclusively as on-line retailers.

To compete with this rapidly increasing trend, many retailers boosted their on-line presence. However, more is needed to remain competitive as evidenced by the bankruptcies of Borders, Circuit City, Office Depot, to name a few. The brick and mortar retailer needs to find ways to attract customers and create a unique experience so that customers stay in the physical store and shop. To accomplish this, retailers are adding and combining multiple services, such as dining and entertainment, to their traditional retail spaces.

The new Barnes & Noble model is one such example. 4 They rolled out 4 new concept stores that feature wine and beer and an expanded café to draw in shoppers and keep them in the store. Another example is Starbucks’ Roastery locations, where customers are encouraged to interact with roasters and baristas and learn about sourcing, roasting and brewing rare coffees. 5

This trend to offer more than just your typical retail experience is also being embraced by the e-commerce retailers known exclusively as on-line retailers. Amazon plans to open a brick and mortar store in New York City and planning “pop up” stores in malls and existing shopping centers. 6 They are also introducing curb-side pickup locations to support its grocery business.

This retail re-tooling is good news for communities as it presents an opportunity to re-adapt existing buildings. The large retailers that could not adapt left big empty buildings in the wake of their demise. These existing empty spaces can be readapted to host these new multiple-service retailers. Using existing space is attractive for retailers as it is typically less expensive than building out raw space and eliminates the need to find available land. For communities, readapting existing space revitalizes neighborhoods, boosts the local economy and results in less impacts than new construction.

So, is your community ready to embrace the benefits of this new trend in the retail market?  Since many local zoning codes were adopted long before the impacts of e-commerce forced retailers to rethink their business models, many codes may hinder creative adaptive reuse, or stifle projects that seek to create a new shopping experience for consumers. For example, for a project involving more than one use, like a retailer with a restaurant component, some codes require the provision of the minimum off-street parking requirement for each use. This requirement leads to over-parking as it fails to account for shared parking. And, in many cases, this requirement will result in the need for a parking variance as existing parking areas were not designed for this new trend in multiple complementary uses, or, in some cases, there is just not enough land to build the required parking.

Local municipalities, like the retailers, need to adapt to market changes and examine their codes to encourage adaptive reuse and promote the new retail business model, both of which result in many benefits to their communities. However, updating a zoning code is rarely a timely process. So, in the meantime, what can retail developers do to get their new business model implemented?  They can work with experienced land use counsel, like Cuddy & Feder, to discover creative ways to interpret existing zoning requirements to streamline the process and avoid variances and to engage the community to demonstrate the benefits of their project.

The re-tooling of the retail market is an opportunity for growth and innovation and communities that embrace this change will reap the benefits.

Wind and Solar energy development

New York State’s Energy Marketplace Heading Into 2016 Q4

Reforming the Energy Vision New York State has positioned itself as a significant disruptor in the energy markets through its Reforming the Energy Vision (REV) initiative. As part of REV, on August 1, 2016, Governor Andrew M. Cuomo announced the New York State Public Service Commission’s approval of his directive to establish New York’s Clean Energy Standard, calling it “the most comprehensive and ambitious clean energy mandate in the state’s history, to fight climate change, reduce harmful air pollution, and ensure a diverse and reliable energy supply.”

The Clean Energy Standard will require that 50 percent of New York’s electricity comes from renewable energy sources (such as wind and solar) by 2030. In its initial phase, utilities and other energy suppliers are required to procure and phase in new renewable power resources starting with 26.31 percent of the state’s total electricity load in 2017 and growing to 30.54 percent of the statewide total in 2021.

It is anticipated that this “50 by 30” goal will foster a large push to further deregulate the energy marketplace, and to decouple the elements of the energy industry, namely, the generation (the process of generating electric power at a power plant), the transmission (moving the generated electricity from a power plant to a substation) and the supply (moving the electricity from the substation to customers).

Property Assessed Clean Energy (PACE) financing for renewable and energy efficiency, administered through the Energy Improvement Corporation of NY, based in northern Westchester County, continues to gain traction and grow.

The approval of the Clean Energy Standard comes on the heels of another aspect of REV: the NYS PSC’s efforts to foster Community Choice Aggregation, or CCA, which is a program that allows municipalities to pool together to replace the utility as the default supplier of electricity and gas. CCAs are created through the municipalities’ home rule power to enact local laws. Sustainable Westchester was the first CCA, and is the model for other statewide CCAs.

It is anticipated that municipalities will band together through inter-municipal agreements to retain Community Choice Aggregation Administrators, who will guide the municipalities through the process of moving most energy users to receiving supply from energy supply companies (ESCOs) after a competitive bid process. The goal is for the ESCO competition to drive down NY’s electricity rates.

Currently, certain customers pay in excess of 20 cents/kW hour, and supply generally represents at least half of that kW hour cost.

The Public Service Commission also has open dockets seeking to encourage and facilitate community solar, demand response, distributed energy resources, microgrids, and energy efficiency in localities.

Property Assessed Clean Energy Financing

Meanwhile, Property Assessed Clean Energy (PACE) financing for renewable and energy efficiency, administered through the Energy Improvement Corporation of NY, based in northern Westchester County, continues to gain traction and grow.

EIC’s Energize NY program has approved millions of dollars in clean energy projects in its member municipalities since launching in 2015, including a 120 kW roof-mounted solar electric system at Terra Tile & Marble in the Town of Ossining, and energy efficiency upgrades at the Robson House, a multifamily affordable housing facility in North Salem, which is owned by A-HOME, a not-for-profit based in Pleasantville, NY. More recently, Energize NY approved a 20-year $150,800 PACE loan that covered 100% of the costs of both roof repair and solar installation, at a very affordable 3.83% interest rate, for St. Christopher’s Roman Catholic Church in Cortlandt, NY.

In July 2016, the Federal Housing Authority (FHA) and the U.S. Department of Veterans Affairs (VA) issued guidelines to the housing lending market indicating that both agencies will continue to insure mortgage loans associated with individually owned residential properties that have taken out a PACE loan to finance energy improvements.

The NY Green Bank also has committed to deals resulting in $686 million of private and public investments to date, including its announced closing on August 5, 2016, of a $37.5 million loan to Vivint Solar, which will result in approximately $167 million in new investment in New York’s clean energy economy, and will provide financing for thousands of new solar projects at homes across the state.

Other Projects

The incumbent utility companies are also seeking to actively participate in this dialogue and the oncoming transition to renewable energy. By example, Con Edison, through its “Connected Homes” REV demonstration project, seeks to increase the use of distributed energy resources and energy savings products, by using advanced customer segmentation and targeting analytics to allow users to determine the costs and benefits of these products, while receiving fees from companies such as Nest for introductions to potential customers — a new revenue stream for providing more than electricity and engaging customers.

Similarly, the New York ISO (Independent System Operator) continues to evaluate how, notwithstanding REV, it will maintain reliability and the overall cost of electricity. On June 30, 2016, the NY ISO issued a report entitled “Solar Impact on Grid Operations — An Initial Assessment,” examining the potential for growth in solar power, the impact of increasing intermittent resources on grid operations, and forecasting issues that must be addressed to make effective use of solar resources in the future.

Following its pioneering work in the area of wind forecasting, the NY ISO is evaluating potential solar forecasting systems, and is on track to have a system in place by the summer of 2017. The NY ISO’s forecasting tools are intended to help successfully integrate solar resources and explore the potential of storage resources with an energy storage market integration and optimization initiative. Further, the NY ISO is developing a Distributed Energy Resource Roadmap, to help guide changes in wholesale electricity market design that will enhance integration of distributed energy resources.

Conclusions

Ultimately, it seems that the trend for the future is more local and distributed energy. In many cases, it is expected that municipalities, through CCAs, will be the empowered parties, using municipal home rule legislation and project administrators paid for with energy savings. Indeed, REV seeks to create a disaggregated energy future, where each of the utilities will be pushed to have 50 percent of its generation provided by renewable sources, ESCOs will fight competitively for the supply business, and the transmission infrastructure will require numerous upgrades.

As such, we foresee REV continuing to push forward, with the New York State PSC (and possibly the legislature) as well as NYSERDA interpreting and providing for numerous changes to the rules and regulations, in order to facilitate the goals of increasing adoption of distributed energy resources, improving energy efficiency, and increasing customer engagement.

The opinions expressed are those of the authors and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

The Year of Cybersecurity

The Year of Cybersecurity

Perhaps 2016 could be considered the year of cyber threats. This is not to say that this was a new issue in 2016, but rarely this year did more than a few news cycles pass without there being talk of a significant cybersecurity attack – be it hackers accessing customer data from a multinational corporation, state-sponsored attacks against foreign corporations, or good old fashion (adjusted to the modern age) State vs State espionage. Of course, the recent revelations regarding Russian hacking of both the Republican and Democratic National Committees in order to influence the U.S. Presidential election, and reports of similar efforts by Russia to impact upcoming European elections, is a stark reminder of just how serious cybercrime and cybersecurity is. But, in addition to being a national security issue and a business risk for large, multinational companies which hold large quantities of data, it is an everyday business risk that must be addressed and dealt with by companies of all sizes. This is not only because of the business and reputational risk that companies face should they fall victim to an attack, but because those companies’ regulators are now increasingly focusing on the internal controls that entities holding client information are putting in place.

There are multiple SEC and FINRA regulations and rules aimed at protecting confidential client information – the main one used in the context of cybersecurity protections is SEC Regulation S-P, which requires registered entities to “adopt written policies and procedures that address administrative, technical, and physical safeguards for the protection of customer records and information.” Prior to 2016, FINRA more often than the SEC had brought enforcement actions for violations of Regulation S-P and similar FINRA regs. In all instances the firms entered into consent orders, in which they did not admit or deny any allegations but consented to the findings of fact contained in the order and the monetary penalty, which ranged from approximately $210,000 in customer reimbursements and fines for failure to formalize certain cybersecurity training leading to wires to an unauthorized bank account after a customer’s email account was hacked in In re VCA Securities, to a $375,000 fine for not having adequate safeguards to protect a database server that contained confidential customer information in In re D.A. Davidson & Co.

If FINRA decides to move further in the direction of penalizing firms for insufficient cybersecurity policies and procedures even where there has been no breach, that could drastically impact firms of all sizes.

At the beginning of 2016, both the SEC and FINRA stated that one of their regulatory/enforcement priorities would be on firms’ policies, procedures and implementation of same to protect customer and firm data. And in line with its stated focus, at the very end of its 2015 year (the SEC’s fiscal year begins in the 4th quarter), the SEC brought its first disciplinary action based solely on a violation of Regulation S-P against R. T. Jones. The SEC censured and fined R. T. Jones $75,000 for the firm’s failure to adopt written policies and procedures reasonably designed to protect customer information prior to a breach that compromised personal information of thousands of firm clients. Then in June of 2016, the SEC handed out a much meatier penalty to Morgan Stanley Smith Barney after customer information which it held was hacked and sold to third parties. In the Morgan Stanley matter, the SEC did not find a wholesale failure of Morgan Stanley’s policies and procedures, rather the Commission’s Consent Order stated that that the firm’s policies and procedures with respect to two portals that allowed employees to access confidential account info were not reasonable. As a result an employee impermissibly accessed and transferred data regarding over 700,000 accounts to his personal server, which was later hacked. Morgan Stanley paid a $1 million fine (the employee involved was criminally convicted and paid a $600,000 fine in a separate matter).

FINRA’s 2016, on the other hand, was notable with regards to cybersecurity for two reasons. First, FINRA made inquiries about cybersecurity a focus in its routine member institution examinations in continuation of a program it started in 2014 with the stated goals of (1) better understanding the threats that firms face, (2) increasing understanding of firms’ risk appetite, exposure and major areas of vulnerabilities, (3) better understand firms’ approaches to managing these threats, and (4) to share observations with firms (FINRA released a report based on its findings and observations in February 2015 [http://www.finra.org/sites/default/files/p602363%20Report%20on%20Cybersecurity%20Practices_0.pdf]). Second, in late December, FINRA announced a series of substantial enforcement actions in which it fined 12 separate firms a total of $14.4 million for failing to protect records from alteration. While not a violation of Regulation S-P, FINRA noted that these enforcement actions were directly related to FINRA’s focus on cybersecurity.

While the number of firms fined by FINRA sticks out, what is most significant about these enforcement actions is that they were for essentially victimless crimes. There were no allegations that any records had been breached or re-written, rather, the firms were penalized for failing to have proper procedures in place to prevent that possibility. In the past all SEC and FINRA actions based on cybersecurity deficiencies followed an actual breach of customer data. If FINRA decides to move further in the direction of penalizing firms for insufficient cybersecurity policies and procedures even where there has been no breach, that could drastically impact firms of all sizes.

Cybersecurity is sure to be a major issue in 2017 from both a business and reputational risk, as well as a regulatory risk. And firms of all sizes will need to look at their own policies and procedures. Indeed in FINRA’s 2015 Report on Cybersecurity Practices it specified that no firm was off the hook – stating that “no matter the firm’s size or business model” cybersecurity risk assessments served as “foundational tools” for firms. And along these lines, FINRA has published a cybersecurity checklist for small firms’ cybersecurity programs at http://www.finra.org/industry/cybersecurity#checklist, which smaller institutions would be well heeded to review both to protect customer data and to provide the firm protection from regulatory censure.

It’s Time To Change The Law Firm Business Model

It’s Time To Change The Law Firm Business Model

Every year, statistics on women and minorities in the legal profession are reported. And, every year, these statistics reveal very little change in the number of women and minorities in the ranks of partnership. In response, some firms have adopted policies seemingly designed to encourage diversity and equality. Yet, despite this response, the makeup of law firm leadership largely remains unchanged. In fact, Catalyst estimates “that it will take more than a woman lawyer’s lifetime to achieve equality” with their male counterparts.[1]

So how do law firms change this painfully slow rate of progress? It takes more than adding a diversity policy or a women’s leadership program to the current law firm business model. For law firms to effectively address these sobering statistics and address the needs of current and future lawyers, the typical law firm business model needs to transform. And law firm leadership needs to embrace the transformation and support policies and programs that invest in their attorneys and staff.

Some may ask — why? Why change the way we’ve been doing business for decades? We’ve been successful thus far … The answer to this question is really quite simple — we’re living in a time unlike any other and maintaining the status quo in today’s rapidly changing global economy is not an option for future success. Law firms need to reflect the global marketplace to attract clients and future business. In a world of “do-it-yourself online” legal services, law firms need to distinguish themselves and add value to their legal services. They need to retain talented lawyers for stability in times of change and to reduce the costs incurred by high turnover. Thus, while adapting to change is typically not the nature of a lawyer, change is critical to the future success of law firms.

Inadequacies of the Current Law Firm Business Model

However, the glacially slow rate of change in the number of women and minorities achieving success and recognition in all levels of the legal profession demonstrates that these policies are merely a Band-Aid on a wound that needs surgery.

The typical current law firm business model is based on a lifestyle that has not existed in several decades. The successful lawyer bills as many hours as he can and spends the rest of his time rainmaking, with his wife at home taking care of everything else — the house, the kids, parents, etc. This is the path to equity partner status — prioritizing high billable hours and rainmaking. The lack of diversity in equity partnerships and the data on the number of accomplished women lawyers leaving the profession[2] demonstrate that this model does not address the current reality of life for talented lawyers. And the current model is also not consistent with the future pool of professionals, known to some as “millennials,” who seek work-life balance.

And yes, over the past few decades some firms have instituted policies, such as flex-time and paid parental leave, in response to the lack of work-life balance of the typical law firm business model. However, the glacially slow rate of change in the number of women and minorities achieving success and recognition in all levels of the legal profession demonstrates that these policies are merely a Band-Aid on a wound that needs surgery. Moreover, the data suggest that policies geared solely for women are short-sighted and miss the point of truly addressing work-life balance.

Why aren’t these “work-life balance” policies effective? Because, for the most part, these policies are not consistent with the law firm business model. The result is that these policies often become window dressing and lawyers are discouraged from using them. Take paid parental leave as an example. In 2015, Above the Law reported the results of its survey on paid parental leave: women lawyers receive an average of 14.33 weeks of paid maternity leave and male lawyers receive an average of 6.33 weeks of paid paternity leave.[3] These numbers are not terrible. What is disappointing is the reaction when male and female lawyers attempted to take paid parental leave in accordance with their firm’s policy. Lawyers reported that they were admonished for low billable hours during the months they took parental leave. Female lawyers who returned after paid parental leave were given less interesting matters and less work. Similar treatment was reported by lawyers trying to use their firm’s other family friendly policies such as flex-time or telecommuting.[4]

The data also suggest that women’s leadership programs within law firms are also not effective in advancing the legal careers of women. In December 2016, the New York Times reported that women make up the majority of law students.[5] However, Catalyst reported that in a survey of the 50 best law firms for women, only 19 percent of the equity partners were women.[6] Women’s leadership programs need to focus on the law firm as a whole by addressing unconscious bias and exclusionary informal practices.

This information shows that trying to integrate these policies into the typical law firm business model just doesn’t work. Successful policies require a new model and a different approach to managing a law firm.

The New Law Firm Business Model

So, how does one transform a business model that has persisted for decades? Law firms can look outside of the typical law firm to find a successful business model that reflects diversity and equality and achieves results. One potential source of successful business models is another type of yearly statistic — the “best places to work” data. Fortune publishes its “100 Best Companies to Work For,”[7] where two-thirds of a company’s score is based on the results of an employee survey.

A review of Fortune’s report reveals some commonalities among companies where 95 percent or more employees express a sense of pride and a belief that management is competent at running the business:

  •  Open communication and transparency, including data on salaries
    •    Programs to support professional development of under-represented groups
    •    Workshops on inclusion and reversing biases
    •    Family care programs such as backup childcare; elder care resources; parental leave where employees do not have to use all of their personal time
    •    Flexible schedules, compressed work weeks and telecommuting options
    •    Teamwork awards
    •    Perks such as free beverages, subsidized public transportation, fitness and nutrition classes, social outings/gatherings
    •    Generous health care benefits

The results of Fortune’s employee surveys also revealed that employees were willing to “go the extra mile” to get work done or serve a client. Employees are willing to work hard to achieve results for employers who invest in their success. Makes perfect sense.

What does this tell us? Successful business models include a broad focus. In addition to prioritizing profits (billable hours, rainmaking), law firms need to also concentrate on their resources — lawyers. This transformation will lead to law firms where lawyers are committed to the firm, their clients, and their practice. This transformation is critical. The market for legal services has significantly changed and only law firms that adapt will realize future success.

 

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

 

[1] Catalyst Quick Take: Women in Law in Canada and the U.S.. New York: Catalyst, 2015.

[2] Id.

[3] Which Biglaw Firm Has The Best Parental Leave Policy? By Staci Zaretsky, May 11, 2015, http://abovethelaw.com/2015/05/which-biglaw-firm-has-the-best-parental-leave-policy/

[4] Id.

[5] Elizabeth Olson, Women Make Up Majority of U.S. Law Students for First Time, NY Times, December 16, 2016, http://www.nytimes.com/2016/12/16/business/dealbook/women-majority-of-us-law-students-first-time.html?_r=0

[6] Catalyst Quick Take: Women in Law in Canada and the U.S.. New York: Catalyst, 2015.

[7] 100 Best Companies To Work For – Fortune: http://fortune.com/best-companies/

 

 

How local energy aggregation works

Energy Bill Savings through Community Choice Aggregation (CCA)

Whether it’s tickets for a sporting event, or a health care plan, the concept is a familiar one: discounted entrance fee or membership for groups of individuals. The same concept applies to Community Choice Aggregation (“CCA”), a program where municipalities can use the influence of aggregation, or groups of customers, to negotiate discounted rates with private energy suppliers. In a CCA program, a municipality or group of municipalities act as an aggregator and broker for the sale of energy (gas and/or electric service) to residents. In addition to reducing energy costs for residents and small non-residential entities, the CCA empowers communities and individuals to select and promote clean energy.

On April 21, 2016, the Public Service Commission (PSC) issued an order authorizing the establishment of CCA programs by municipalities statewide. (See PSC Case 14-M-0224). In this Order, the PSC declared that the goals of CCA programs are aligned with the goals of Governor Cuomo’s Reforming the Energy Vision (known as REV), which include “increasing the ability of individuals and communities to manage their energy usage and bills, facilitating wider market-based deployment of clean energy including energy efficiency, large-scale renewable and distributed energy resources and increasing the benefits of retail competition for residential and small non-residential customers.” The PSC based this Order partly on the success of a CCA Pilot Program implemented by Sustainable Westchester known as the Westchester Power CCA Program. This pilot program includes 20 participating municipalities in Westchester County.

So, what kind of savings do CCAs deliver? The Westchester Power program promises that rates will be lower than the 12-month average for 2015 for Con Edison and NYSEG and the rate is fixed for 24-36 months.

Neil J. Alexander of Cuddy & Feder LLP provided pro bono counsel to Sustainable Westchester on several facets of that Pilot CCA program, including discussions with the NYS Attorney General’s Office as to the legality of the program, and the negotiation of the salient documents such as a Memorandum of Understanding between Sustainable Westchester and each of its member municipalities, an Electric Service Agreement among Sustainable Westchester, its member municipalities and the responsible ESCO (Energy Service Company), and a Data Access and Mutual Non-Disclosure Agreement with the Investor Owned Utilities (IOUs).

Recognizing that CCA programs are a new and different approach to energy supply and a new and very different role for municipalities, the PSC tapped the New York State Energy Research and Development Authority (NYSERDA) to provide technical assistance including a CCA Toolkit which includes templates for the various required documents and community outreach materials. In addition to the NYSERDA guidance documents, the CCA Rules authorize a CCA Administrator, who can be a non-profit or consultant, or the municipality acting on its own behalf.

In a significant departure from other policies and programs, the PSC established that CCA Programs must be “opt-out” programs, where qualifying residents and small non-residential customers must affirmatively opt-out of the CCA, rather than sign up, or affirmatively opt-in. Based on CCA programs in other states, the PSC determined that a successful CCA program requires an opt-out set up. Given this opt-out requirement, community outreach and engagement are critical components of an effective and meaningful program, not to mention data protection for customers’ data. CCA Programs also require that municipalities invoke their home rule authority and enact a local law to establish the CCA. As such, the ESCO is chosen by the municipality (or group of municipalities acting pursuant to a MOU) through a competitive procurement process. In addition, the PSC CCA Rules require the submission of an Implementation Plan, a Data Protection Plan and certification of local authorization (enactment of a local law) to the PSC for approval. The complete CCA Rules can be found in Appendix D of the Order.

So, what kind of saving do CCAs deliver? The Westchester Power program promises that rates will be lower priced than the 12-month average for 2015 for Con Edison and NYSEG and the rate is fixed for 24-36 months. And, every eligible customer of the Westchester Power program has the choice to buy 100% renewable supply for all of their electric needs.

Although CCA 1.0 is just getting started statewide, the projection is that CCA 2.0 will entail the development of energy efficiency and DER (Distributed Energy Resources) programs as well as otherwise engaging in a full range of energy planning and management activities. We all have to face the fact that energy sources are finite: yet energy demand is growing. CCA programs are one of the innovative ways that we can balance the supply and demand of energy to ensure a sustainable energy future.

Anthony Morando Wireless Approval Timeframes

Wireless Approval Timeframes – Time’s Up, Now What?

This piece is “Part II” of a two part blog on Section 6409 of the Spectrum Act – a portion of the Federal Middle Class Tax Relief and Job Creation Act of 2012, or “Section 6409” for short.7 “Part 1” is available for a quick review of some basics of Section 6409.

Section 6409 requires municipalities to approve applications to add, replace or modify wireless transmission equipment currently on existing towers, buildings and other structures that contain transmission equipment (e.g., smokestacks or water towers with antennas). The goal of Section 6409 is to promote the deployment of wireless infrastructure by eliminating unnecessary reviews, costs and delays. The tools to achieve Section 6409’s goal are set forth in the FCC’s implementing regulations (47 C.F.R. § 1.40001).

The FCC regulations specifically contain a “failure to act” provision which appears to be the “hammer” in the 6409 toolbox.8 The failure to act provision states that: “In the event the reviewing State or local government fails to approve or deny a request seeking approval under [Section 6409] within the timeframe for review (accounting for any tolling), the request shall be deemed granted.” (Emphasis added.) This generally means that if a municipality fails to approve a complete application filed under Section 6409 within 60 days from its filing date, then the application is approved by default. The question that has many applicants wondering is what do they do next after their application is “deemed granted” by a municipality’s lack of action?

Under the FCC’s regulations relating to Section 6409 applications to add, replace or modify wireless infrastructure, the “failure to act” provision is the “hammer” in the 6409 toolbox. Applicants should consult counsel in advance of their 6409 filings to establish a strategy at the start of the process to ensure that their rights under federal law are protected, and to minimize the risk of experiencing protracted delays and unnecessary expenses.

Let’s walk through a typical fact pattern, like that described in Part I of this blog, and some potential issues for an applicant to consider.

An applicant files a complete building permit application for a 6409 eligible modification meeting all applicable building code requirements and establishing compliance with the 6409 parameters. The 60-day period is about to expire without the Town granting the application, and without the Town providing the applicant with any written notice within the first 30 days (identifying items the Town would have wanted the applicant to submit as part of its review).

First, the applicant should consider sending a pre-60 day expiration communication notifying the municipality in writing of the impending approval deadline. This helps to keep the municipality informed and encourages the municipality’s compliance before the 6409 deadline expires.

Second, once the 60-day period expires the FCC regulations require an applicant to send notice. Indeed, the regulations actually state: “The deemed grant does not become effective until the applicant notifies the applicable reviewing authority in writing after the review period has expired (accounting for any tolling) that the application has been deemed granted.” (Emphasis added). This is the only “deemed granted” procedural requirement stated in the FCC regulations.

It is worth noting that one Circuit Court opined that the “failure to act” provision and “deemed granted” language does not actually require the municipality to take any action. Specifically, the Fourth Circuit held in Montgomery County, Md. v. F.C.C. that the “deemed granted” procedure comports with the Tenth Amendment because it does not require the states or municipalities to take action, but rather allows the applications to be granted by default rather than an affirmative approval.9 The Court interpreted this key provision to preempt state and local regulations that prevent an applicant’s Section 6409 request from being timely approved.

The applicant’s third, and possibly final step is very much dependant on the specific facts of the application, the applicant’s goals for the application and the applicant’s past experiences with the municipality. A strict reading of Section 6409 supports the applicant proceeding with work. However, a particular applicant may be willing to allow the municipality a few extra days to issue the requested permit, or to at least acknowledge that the request has been deemed granted if perhaps the applicant previously had a favorable 6409 experience with the same municipality.

Applicants should speak with experienced practitioners in advance of their 6409 filings to establish a strategy at the start of the process to ensure that their rights under federal law are protected, and to minimize the risk of experiencing protracted delays and unnecessary expenses.