Our latest summary of some recent developments in the courts and the federal agencies includes a unique case involving salt marshes adjacent to San Francisco Bay.
The Role of Intercreditor Agreements between Mortgage Lenders and Mezzanine Lenders
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Mortgage lenders and mezzanine lenders considering amendments to loan documents, forbearance, loan transfers, the exercise of remedies or deeds in lieu of foreclosure, and other loan-related fact patterns will need to revisit and comply with the provisions of their respective ICAs. In “Distressed Real Estate During COVID-19: The Role of Intercreditor Agreements between Mortgage Lenders and Mezzanine Lenders“, colleague Caroline A. Harcourt discusses how the current distressed real estate environment will put many of these arrangements to the test.
Real Estate Trends: Looking Ahead to 2021
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2020 has been an unprecedented year, and, while there are likely more twists and turns to come before December 31, it is essential to look at how the real estate markets have changed this year and which trends are likely to continue into 2021. The COVID-19 pandemic has impacted nearly every industry, including commercial real estate, and its impact will continue to influence the market and commercial real estate long after the virus has been eradicated.
A Court-Side Seat: A FACA Fight, a Carbon Pledge and Some Venue on the SCOTUS Menu
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In this summary of recent developments in environmental and regulatory law, venues are challenged, standing is upheld, statutory exemption is disputed and more.
THE U.S. SUPREME COURT
Change Must Come from Within … Maryland?
As the new term begins, the Court has agreed to review BP PLC v. Mayor and City Council of Maryland, a decision of the U.S. Court of Appeals for the Fourth Circuit which held that a climate change damages case filed against many energy companies must be heard in the state courts of Maryland and not the federal courts. The petitioners argue that the federal office removal statute authorizes such removal, and the Fourth Circuit’s contrary decision conflicts with rulings from other circuit courts.
The Energy Transition & Hydrogen
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In episode 18 of Industry Insights podcast, host Joel Simon and Elina Teplinsky discuss the financial community’s response to the energy transition including the focus on novel technologies such as clean hydrogen, advanced nuclear reactors and carbon capture and storage.
Joel Simon: With climate change and sustainability dominating the environmental landscape, there has been a lot of press in the last year or two about the energy transition. What exactly is the energy transition, and why is it so important? Continue Reading ›
Hotels & Hospitality: Opportunities, New Strategies and Future Transformation
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In episode 17 of Industry Insights podcast, host Joel Simon and Christian Salaman discussed the changes the hotel and hospitality industry are undergoing.
Joel Simon: Christian, you have a really great practice with an emphasis on two industries, one of which seems relatively insulated by the unusual circumstances we’re facing today and the other which has been rocked pretty hard. It’s the second one I’d like to focus on today. Can you start us off with a brief discussion of the status of the hotel business and what a recovery might look like for that sector?
Trump Administration Announces New Eviction Moratorium
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With the financial impacts of the COVID-19 pandemic continuing to be felt by the American public, the Trump Administration has taken steps to try to allay a coming eviction crisis by enacting a moratorium on evictions through the end of 2020. With the first eviction moratorium instituted by the CARES Act expiring, lawmakers have been pushing to include eviction protections in the next COVID-19 relief package. However, with Congressional leaders still far from an agreement on the next bill, the Centers for Disease Control and Prevention (CDC) has now used its emergency pandemic powers under the Public Health Service Act to temporarily halt residential evictions.
No Vacatur, No Protection, No Deference and No Discretion: Important End-of-Summer Environmental Decisions
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As the end of summer approaches, the courts have provided a potpourri of relevant environmental decisions.
FEDERAL COURTS OF APPEAL
Town of Weymouth, et al. v. Massachusetts Department of Environmental Protection (MDEP)
On August 31, 2020, the U.S. Court of Appeals for the First Circuit issued an opinion revising the mandate of its earlier June 3, 2020, ruling in the case. In the earlier ruling, the court vacated the grant by the MDEP of an air permit to Algonquin Gas Transmission to build and operate an air compressor station, ordering the agency to “redo” its Best Available Control Technology analysis within 75 days. Algonquin asked the court to reverse without vacatur because the agency could not comply within the time limits established by the court. The First Circuit agreed, and established a new deadline for the agency of January 19, 2021.
CMBS Disruptions in the Real Estate Market
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The past few months saw, and continue to see, significant disruptions to the real estate market and the real estate finance market in particular. According to Trepp LLC, June saw the delinquency rate for commercial mortgage-backed security (CMBS) loans hit 10.32 percent, which is just shy of the peak delinquency rate for CMBS loans in 2012 (or a full four years following the 2007 – 2008 recession). That we could have nearly reached the 2012 peak so quickly—given the last time lag between a recession and peak delinquencies—has caused some investors to worry that much worse is yet to come. These numbers also cause certain investors to question whether CMBS disclosures may have been overly optimistic or failed to properly disclose risks. At the same time, regulated mortgage lenders, which must project losses, are assuming losses at approximately two percent on average.
A Court-Side Seat: Flint Failures, Missed Deadlines, Toad Work and a Game of Chicken
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The last few weeks have yielded a number of interesting developments in the Federal courts.
FEDERAL COURTS OF APPEAL
In re Flint Water Cases
Several local and State of Michigan officials, including the former governor, requested dismissal from the civil litigation seeking damages for the massive failure of Flint, Michigan’s public drinking water system. On August 5, 2020, the U.S. Court of Appeals for the Sixth Circuit agreed that the plaintiffs, residents of Flint, have successfully pled a case that the conduct of the defendants so “shocked the conscience” that a claim for a violation of their substantive due process rights was appropriately alleged. The defendants, including the former governor, argued that they were entitled to a qualified immunity defense. The court rejected this argument on the basis of the earlier decisions made by the court in this matter. Judge Sutton concurred because he was bound by this precedent, but remarked that the evidence for the governor’s culpability was very thin; he was not intimately connected to the extraordinary error in judgment. The majority was very upset with this concurrence as indicted by their own opinion.