The National Law Forum

Recently Effective & Pending State Housing Laws: 2024 Land Use, Environmental & Natural Resources Update

Various state housing bills are currently making their way through the State Legislature that are expected to benefit mixed-income multifamily housing developers. The following summaries reflect the status of the legislation as of May 15, 2024. The legislative process is ongoing and future amendments are expected.

The recently effective state housing laws are also summarized below.

PART I: RECENTLY EFFECTIVE STATE HOUSING LAWS

Governor Newsom approved multiple state housing bills passed by the State Assembly and Senate during the last legislative session. The following is an abbreviated summary of a few of the key bills that are expected to benefit mixed-income multifamily housing developers, with a more detailed summary available in our prior legal alert.

SENATE BILL 423 — EXPANSION AND EXTENSION OF SENATE BILL 35

SB 423 (Wiener) extends the sunset provision for and makes other substantive changes to SB 35. As explained in our prior legal alert, SB 35 provides for a streamlined ministerial (i.e., no CEQA) approval process for qualifying housing development projects in local jurisdictions that have not made sufficient progress towards their state-mandated Regional Housing Needs Allocation (RHNA), as determined by the California Department of Housing and Community Development (HCD).

SB 423 made the following key amendments to SB 35:

Extended SB 35 to January 1, 2036
Expanded SB 35 to apply when a local jurisdiction fails to adopt a housing element in substantial compliance with state housing element law (regardless of RHNA progress), as specified and as determined by HCD
Revised the coastal zone development prohibition to allow for projects in specified urban coastal locations (e.g., property not vulnerable to five feet of sea level rise or within close proximity to a wetland) where the property is zoned for multifamily housing and is subject to a certified local coastal program or a certified land use plan
Removed skilled and trained workforce requirements for projects below 85 feet in height and imposes modified skilled and trained workforce requirements, as specified, for projects at least 85 feet in height. In exchange, projects with 50 or more dwelling units and using construction craft employees to meet apprenticeship program requirements and provide health care expenditures for each employee, as specified

Please see our prior legal alert for information about other SB 35 amendments made by SB 423, including San Francisco-specific amendments.

ASSEMBLY BILL 1287 — ADDITIONAL DENSITY BONUS UNDER STATE DENSITY BONUS LAW

AB 1287 (Alvarez) amended the State Density Bonus Law (Government Code § 65915) by incentivizing the construction of housing units for both the “missing middle” and very-low-income households by providing for an additional density bonus, and incentive/ concession for projects providing moderate-income units or very-low-income units.

The project must provide the requisite percentage of on-site affordable units to obtain the maximum density bonus (50%) under prior law: 15% very-low-income units, or 24% low-income units, or 44% moderate-income (ownership only) units (the Base Bonus). To qualify for an additional density bonus (up to 100%) and an additional incentive/concession under AB 1287, the project must provide additional on-site affordable units, as specified (the Added Bonus). The Added Bonus may be obtained by adding moderate-income units to either a rental or ownership project, but that is capped at a total maximum of 50% moderate-income units.

ASSEMBLY BILL 1633 — EXPANSION OF HOUSING ACCOUNTABILITY ACT PROTECTIONS: CEQA

AB 1633 (Ting) closed a loophole in the Housing Accountability Act (HAA) (Government Code section 65589.5 et seq.) by establishing when a local agency’s failure to exercise its discretion under CEQA, or abuse of its discretion under CEQA, constitutes a violation of the HAA.

To qualify under AB 1633, the project must be a “housing development project” under the HAA and meet other specified requirements, as summarized in our prior legal alert. Under AB 1633, the following circumstances constitute “disapproval” of the project, in which case the local agency could be subject to enforcement under the HAA:

CEQA Exemptions. If (i) the project qualifies for a CEQA exemption based on substantial evidence in the record (and is not subject to an exception to that exemption) and (ii) the local agency does not make a lawful determination, as defined, on the exemption within 90 days (with a possible extension, as specified) of timely written notice from the applicant, as specified.
Other CEQA Determinations. If (i) the project qualifies for a negative declaration, addendum, EIR, or comparable environmental review document under CEQA; (ii) the local agency commits an abuse of discretion, as defined, by failing to approve the applicable CEQA document in bad faith or without substantial evidence in the record to support the legal need for further environmental study; (iii) the local agency requires further environmental study; and (iv) the local agency does not make a lawful determination, as defined, on the applicable CEQA document within 90 days of timely written notice from the applicant, as specified.

AB 1633 includes a limited exception to enforcement where a court finds that the local agency acted in good faith and had reasonable cause to disapprove the project due to the existence of a controlling question of law about the application of CEQA or the CEQA Guidelines as to which there was a substantial ground for difference of opinion at the time of the disapproval.

ASSEMBLY BILL 1485 — STATE ENFORCEMENT OF HOUSING LAWS

AB 1485 (Haney) granted the California Attorney General the “unconditional right to intervene” in lawsuits enforcing state housing laws, whether intervening in an independent capacity or pursuant to a notice of referral from HCD. Under prior law, the Attorney General and HCD were required to petition the court to be granted intervenor status and join a lawsuit, which can be a “lengthy and onerous process.”

PART II: PENDING STATE HOUSING LAWS

Various state housing bills are currently making their way through the State Legislature that are expected to benefit mixed-income multifamily housing developers. AB 2243 (Wicks) would amend AB 2011 (the Affordable Housing and High Road Jobs Act of 2022). AB 1893 (Wicks) and AB 1886 (Wicks and Alvarez) would amend Builder’s Remedy provisions under the HAA. AB 2560 (Alvarez) and SB 951 (Wiener) would help facilitate housing development in the coastal zone. AB 3068 (Haney) would provide for the streamlined ministerial (i.e., no CEQA) approval of qualifying adaptive reuse projects involving the conversion of an existing building to residential or mixed-uses. SB 1227 (Wiener) would help facilitate middle-income housing and other projects in the San Francisco Downtown Revitalization Zone.

The following summaries reflect the status of the legislation as of May 15, 2024. The legislative process is ongoing and future amendments are expected.

ASSEMBLY BILL 2243 — AB 2011 AMENDMENTS

AB 2243 (Wicks) would amend AB 2011 (operative as of July 1, 2023). As explained in our prior legal alert, AB 2011 provides for “by right” streamlined ministerial (i.e., no CEQA, no discretion) approval of qualifying mixed-income and affordable housing development projects along commercial corridors in zoning districts where office, retail, and/or parking uses are principally permitted.

As currently proposed, AB 2243 would:

Project Review and Approval

Require the local government to approve the AB 2011 project within a specified timeframe. Once the project is deemed to be consistent with applicable objective planning standards, the local government would be required to approve the project within 180 days (for projects with more than 150 housing units) or 90 days (for projects with 150 or fewer housing units).
Require the local government to determine project consistency or inconsistency with applicable objective planning standards within 30 days when a project is resubmitted to address written feedback. The otherwise applicable timeframe is within 60 or 90 days, with the longer timeframe applying to projects with more than 150 housing units.
Provide that a density bonus under the State Density Bonus Law, including related incentives, concessions and/or waivers, “shall not cause the project to be subject to a local discretionary government review process” even if the requested incentives, concessions and/or waivers are not specified in a local ordinance. This is important because some local governments purport to require discretionary approval for specified “off menu” incentives, concessions and waivers despite the fact that AB 2011 provides for a ministerial (i.e., no CEQA) project approval process and specifically contemplates utilization of the State Density Bonus Law in conjunction with AB 2011.
Provide that the Phase I Environmental Assessment (ESA) requirement would be imposed as a condition of project approval versus prior to project approval. If any remedial action is required due to the presence of hazardous substances on the project site, that would need to occur prior to issuance of a certificate of occupancy (as specified).

Residential Density

Provide that the AB 2011 (base) residential density, which varies depending on the location and size of the project site, is now the “allowable” density (prior to any density bonus) instead of a minimum (“meet or exceed”) density requirement.
Impose a new minimum residential density requirement, which would be 75% of the greater of the applicable “allowable” residential density.
Specify that the imposition of applicable objective planning standards shall not preclude the “required” (minimum) AB 2011 residential density (prior to any density bonus) or require a reduction in unit sizes. It appears that this new provision is instead intended to apply to the “allowable” AB 2011 residential density pursuant to the cross-referenced subsections.

Commercial Corridor Frontage Requirements

Revise the definition for “commercial corridor” based on the applicable height limit. Where local zoning sets a height limit for the project site of less than 65 feet, the right-of-way would need to be at least 70 feet, which is the current AB 2011 requirement. For all other project sites, the right-of-way would now only need to be at least 50 feet.
Clarifies that the width of the right-of-way includes sidewalks for purposes of determining whether it is a “commercial corridor.”
Expand eligible sites to include conversions of “existing office buildings” that meet all other AB 2011 requirements, even if they are not on a commercial corridor.

Project Site Size Requirements

Waive the current 20-acre project site size limitation for “regional malls” that are up to 100 Regional malls is defined to include malls where (i) the permitted uses on the site include at least 250,000 square feet of retail, (ii) at least two-thirds of the permitted uses on the site are retail, and (iii) at least two of the permitted retail uses on the site are at least 10,000 square feet. Additional criteria for the redevelopment of regional mall sites is expected to be added to the bill.

Setback Requirements

Provide that density bonus incentives, concessions, and waivers permitted under the State Density Bonus Law may be utilized to deviate from specified AB 2011 setback requirements related to existing adjacent residential uses. The HCD previously opined that under existing AB 2011, only the AB 2011 height and density maximums can be modified via the density bonus approval process.

Freeway, Industrial Use, & Oil/Natural Gas Facility Proximity

Eliminate the freeway proximity and active oil/natural gas facility proximity prohibitions and replace those with specified air filtration media requirements.
Revise the AB 2011 limitation on project sites dedicated to industrial uses. Currently, project sites are disqualified where more than one-third of the square footage is dedicated to industrial use or the project site adjoins a site exceeding that threshold. “Dedicated to industrial use” would no longer include sites (i) where the most recently permitted use was industrial, but that use has not existed on the site for over three years; or (ii) where the site is designated industrial by the general plan, but residential uses are a principally permitted use on the site or the site adjoins an existing residential use.
Revise the definition of “freeway” to specify that freeway on-ramps and off-ramps are not included.

Coastal Zone Projects

Newly prohibit AB 2011 projects in the coastal zone that do not meet SB 35 coastal zone siting requirements (as recently amended by SB 423) under Government Code section 4(a)(6), exclusive of the requirement for the project site to be zoned for multifamily housing (since AB 2011 allows for multifamily housing on commercially zoned properties), including (but not limited to) where the applicable area of the coastal zone is not subject to a certified local coastal program or a certified land use plan.
Provide that the public agency with coastal development permitting authority, as applicable, shall approve the permit if it determines that the project is consistent with all objective standards of the local government’s certified local coastal program or certified land use plan, as applicable.
Provide that any density bonus, concession, incentive, waiver, and/or (reduced) parking ratios granted pursuant to the State Density Bonus Law “shall not constitute a basis to find the project inconsistent with the local coastal program.”

Residential Conversion Projects

Eliminate the residential density limit for the conversion of existing buildings to residential use, except where the project would include net new square footage exceeding 20% of the “overall square footage of the project.”
Prohibit the local government from requiring common open space beyond “what is required for the existing project site” versus required pursuant to the objective standards that would otherwise apply pursuant to the closest zoning district that allows for the AB 2011 residential (base) density, where applicable.
Exempt the conversion of “existing office buildings” from the commercial corridor frontage requirement.

Clarifications

Clarify that the AB 2011 on-site affordable housing requirement only applies to new housing units created by the project.
Clarify that the number of on-site affordable housing units required under AB 2011 is based on number of housing units in the project prior to any density bonus (i.e., the “base” project), which is consistent with the State Density Bonus Law.
Clarify the process for calculating the on-site affordable housing requirement under AB 2011 where the local jurisdiction requires a higher percentage of affordable units and/or a deeper level of affordability.
Clarify that the “allowable” density under AB 2011 is calculated prior to any density bonus under the State Density Bonus Law.
Clarify that “urban uses” includes a public park that is surrounded by other urban uses.

Implications

AB 2243 would make important clarifications in advance of the to-be-provided HCD guidance document on the implementation of AB 2011. The bill would make important amendments to the prior freeway and oil/natural gas facility proximity prohibitions by instead requiring installation of air filtration media, consistent with Senate Bill 4 (Affordable Housing on Faith and Higher Education Lands Act of 2023). The bill would also help facilitate AB 2011 projects in specified coastal zone areas. Under existing law, a qualifying AB 2011 project would be subject to streamlined ministerial approval at the local level, but not by the Coastal Commission, which could separately trigger a discretionary (i.e., CEQA) review and approval process. AB 2243 partially addresses that, but only in qualifying coastal zone areas (pursuant to SB 423, as modified) that are subject to a certified local coastal program or certified land use plan, which excludes various coastal zone areas.

ASSEMBLY BILL 2560 & SENATE BILL 951 — COASTAL ZONE PROJECTS

Assembly Bill 2560

AB 2560 (Alvarez) would amend the State Density Bonus Law to partially address coastal zone projects. Currently, the State Density Bonus Law explicitly provides that it “does not supersede or in any way alter or lessen the effect or application of the California Coastal Act of 1976” (Public Resources Code § 30000 et seq.). As currently proposed, AB 2560 would revise that provision to instead provide that any density bonus, concessions, incentives, waivers, or reductions of development standards, and (reduced) parking ratios to which an applicant is entitled under the State Density Bonus Law “shall be permitted notwithstanding the California Coastal Act of 1976” but only if the development is not located on a site that is any of the following:

An area of the coastal zone that is not subject to a certified local coastal program
An area of the coastal zone subject to paragraph (1), (2), or (3) of subdivision (a) of Section 30603 of the Public Resources Code (i.e., within a specified distance of the sea, estuary, stream, coastal bluff, tidelands, submerged lands, public trust lands, or sensitive coastal resources area)
An area of the coastal zone that is vulnerable to five feet of sea level rise, as determined by the National Oceanic and Atmospheric Administration, the Ocean Protection Council, the United States Geological Survey, the University of California, or a local government’s coastal hazards vulnerability assessment
A parcel within the coastal zone that is not zoned for multifamily housing
A parcel in the coastal zone and located on either of the following: (i) on, or within a 100-foot radius of, a wetland, as defined in Section 30121 of the Public Resources Code or (ii) on prime agricultural land, as defined in Sections 30113 and 30241 of the Public Resources Code

Implications

AB 2560 should help facilitate density bonus projects in coastal zone areas, but the coastal zone area would need to be subject to a certified local coastal program (versus either that or a certified land use plan pursuant to SB 423). Again, that excludes various coastal zone areas.

Senate Bill 951

SB 951 (Wiener) would amend the State Housing Element Law (Government Code § 65580 et seq.). Existing law requires rezoning by a local government, including adoption of minimum density and development standards (as specified), when the local government’s Housing Element site inventory does not identify adequate sites to accommodate the applicable state mandated RHNA. As currently proposed, SB 951 would require local governments in the coastal zone to make “any necessary local coastal program updates” to meet the applicable RHNA.

SB 951 would also amend the California Coastal Act to target the City and County of San Francisco. Existing law provides that approval of a coastal development permit by a “coastal county” with a certified local coastal program may be appealed to the California Coastal Commission under specified circumstances, including where the approved use is not “the principal permitted use” under the local zoning ordinance or zoning map. As currently proposed, SB 351 would provide that for purposes of that provision, “coastal county” does not include a local government that is both a city and county.

Implications

SB 951 would effectively require consistency between local coastal programs and any upzoning or rezoning required under State Housing Element Law. The appealability of coastal zone permits approved by the City and County of San Francisco would also be limited by the bill, which could help facilitate new housing development projects.

ASSEMBLY BILL 1893 & ASSEMBLY BILL 1886 — BUILDER’S REMEDY AMENDMENTS

As explained in our prior legal alert, the Builder’s Remedy applies when a local jurisdiction has not adopted an updated Housing Element in compliance with State Housing Element Law (Gov. Code § 65580, et seq.), in which case the local jurisdiction cannot deny a qualifying housing development project even if it is inconsistent with the local general plan and zoning ordinance (subject to limited exceptions).

To qualify for the Builder’s Remedy, the project must currently (i) fall under the definition of a “housing development project” under the HAA (i.e., a project consisting of residential units only, mixed-use developments consisting of residential and non-residential uses with at least two-thirds of the square footage designated for residential use, or transitional or supportive housing) and (ii) dedicate at least 20% of the dwelling units in the project as lower income (or 100% of the units as moderate income), as defined in the HAA.

Assembly Bill 1893

As currently proposed, AB 1893 would (i) reduce the required percentage of affordable units for mixed-income Builder’s Remedy projects from 20% lower income to 10% very low-income; (ii) impose new size and location guardrails on Builder’s Remedy projects; and (iii) authorize local jurisdictions to require compliance with other specified objective development standards so long as they do not reduce the “allowed” residential density or result in an increase in “actual costs.” AB 1893 would also eliminate the affordability requirement for Builder’s Remedy projects consisting of 10 units or fewer, so long as the project site is smaller than one acre with a minimum density of 10 units per acre.

New Basis for Denial & New Project Requirements

AB 1893 would significantly amend the most controversial component of the Builder’s Remedy, which is that a local jurisdiction without a substantially compliant Housing Element (“Non-Compliant Jurisdiction”) cannot deny a qualifying Builder’s Remedy project unless specified findings are made, which are intended to create a high threshold for denial by local jurisdictions.

As currently proposed, AB 1893 would newly authorize a Non-Compliant Jurisdiction to deny a qualifying Builder’s Remedy project if the project fails to meet any of the following “objective” standards. In other words, Builder’s Remedy projects would need to meet all the following new requirements (unless the project is “grandfathered” as explained below):

The project site must be designated by the general plan or located in a zone where housing, retail, office, or parking are “permissible” uses. Alternatively, if the project site is designated or zoned for agricultural use, at least 75% of the perimeter of the project site must adjoin parcels that are developed with urban uses, as defined under AB 2011. Recall that AB 2243 would amend the AB 2011 definition of “urban use” to clarify that urban use includes a public park that is surrounded by other urban uses.
The project site must not be on a site or adjoined to any site where more than one-third of the square footage on the site is “dedicated to industrial use,” as defined under AB 2011. Recall that AB 2243 would amend the AB 2011 definition of “dedicated to industrial use” to no longer include sites (i) where the most recently permitted use was industrial, but that use has not existed on the site for over three years; or (ii) where the site is designated industrial by the general plan, but residential uses are a principally permitted use on the site or the site adjoins an existing residential use.
The residential density for the project must not exceed the “greatest” of the following density calculations, as applicable, prior to any density bonus under the State Density Bonus Law (there is no codified limit under existing law):
- For project sites within “high or highest resource census tracts” (as defined): (i) 50% greater than the “maximum” density deemed appropriate to accommodate (lower income) housing for the local jurisdiction as specified in Government Code section 65583.2(c)(3)(B) (e.g., for a local jurisdiction in a metropolitan county, “at least” 30 dwelling units per acre); or (ii) three times the density allowed by the general plan, zoning ordinance, or state law (prior to any density bonus under the State Density Bonus Law), whichever is greater.
- For other project sites, (i) the “maximum” density appropriate to accommodate (lower income) housing for the local jurisdiction as specified in Government Code section 65583.2(c)(3)(B) (see above); or (ii) twice the density allowed by the general plan, zoning ordinance, or state law (prior to any density bonus under the State Density Bonus Law), whichever is greater.
- For project sites located within one-half mile of a major transit stop, up to 35 dwelling units per acre more than the “amount allowable” specified above, as applicable.
- The project must comply with “other” objective development standards (as defined) imposed by the local jurisdiction that apply in closest zone in the local jurisdiction for multi-family residential use at the “allowed” residential density If no such zone exists, the applicable objective standards shall be those for the zone that allows the greatest density within the city, county, or city and county, as applicable.

AB 1893 would provide that in no case may the local agency apply any objective development standards that will (i) have the effect of physically precluding the construction of the project at the “allowed” residential density (see above) or (ii) result in an increase in “actual costs.” The local agency would bear the burden of proof under these circumstances.

Project “Grandfathering”

As currently proposed, the foregoing new requirements would not apply to Builder’s Remedy applications that are “deemed complete” on or before April 1, 2024. Under existing law, “deemed complete” is defined to mean that the applicant has submitted a SB 330 preliminary application or, if that has not been submitted, a complete development application (as defined) has been submitted. AB 1893 would add that the local agency shall bear the burden of proof in establishing that the applicable application is not complete.

Implications

AB 1893 is an attempt to “modernize” the Builder’s Remedy by providing clarity to developers, local jurisdictions, and courts to avoid the “legal limbo” described by Attorney General Rob Bonta. As part of that compromise, significant new requirements would be imposed on Builder’s Remedy projects, including a new “cap” on residential density where no codified limit currently exists. In return, the clarifications made by AB 1893 and the reduced affordability requirement for mixed-income projects could help facilitate Builder’s Remedy projects in Non-Compliant Jurisdictions.

Assembly Bill 1886

A recent Builder’s Remedy lawsuit exposed some ambiguity regarding when a Housing Element is deemed “substantially compliant“ with State Housing Element Law. Opposing sides of the litigation disputed where (retroactive) self-certification by the local jurisdiction was sufficient. The court ruled that it was not. See our prior legal alert for our coverage of this ruling, which appears to be the impetus for the amendments proposed under AB 1886 (Alvarez and Wicks).

As currently proposed, AB 1886 would:

Clarify the point at which a Housing Element is deemed substantially compliant with State Housing Element Law: (i) the Housing Element has been adopted by the local jurisdiction and (ii) the local jurisdiction has received an affirmative determination of substantial compliance from HCD or a court of competent jurisdiction.
Clarify that the Housing Element shall continue to be considered in substantial compliance with State Housing Element Law until either: (i) HCD or a court of competent jurisdiction determines that the adopted Housing Element is no longer in substantial compliance (e.g., where any required rezoning is not approved in a timely manner) or (ii) the end of the applicable Housing Element cycle.
Specify that Housing Element compliance status is determined at the time the SB 330 Preliminary Application is submitted for the qualifying Builder’s Remedy project, which is consistent with HCD’s prior determination that the Builder’s Remedy is vested on that filing date. If a SB 330 Preliminary Application is not submitted, then the compliance status would be determined when a complete development application (as defined) is filed for the Builder’s Remedy project.
- Require a local jurisdiction that adopted its Housing Element despite HCD’s non-compliance determination to submit the required findings, as specified, to HCD. In any legal proceeding initiated to enforce the HAA, HCD’s determination on the required findings would create a rebuttable presumption of substantial compliance or lack thereof.

Implications

AB 1886 would make it clear that a local jurisdiction cannot “self-certify” its Housing Element. Rather, an affirmative determination must be granted by HCD or, if a local jurisdiction adopts its Housing Element notwithstanding HCD’s determination to the contrary, a court of competent jurisdiction would need to agree with the local jurisdiction, notwithstanding the “rebuttable presumption” in favor of HCD’s non-compliance determination, where applicable.

ASSEMBLY BILL 3068 — ADAPTIVE REUSE PROJECTS

AB 3068 (Haney, Quirk-Silva, and Wicks) would provide for the streamlined ministerial (i.e., no CEQA) approval of qualifying adaptive reuse projects involving the conversion of an existing building to residential or mixed-uses, as specified. Qualifying adaptive reuse projects would be deemed “a use by right” regardless of the applicable zoning district, with the exception of any proposed non-residential uses.

As currently proposed, the following requirements would need to be met:

Threshold Requirements

The project must retrofit and repurpose an existing building to create new residential or mixed-uses (Adaptive Reuse). The Adaptive Reuse of light industrial buildings is prohibited unless the local planning director (or equivalent) determines that the “specific light industrial use is no longer useful for industrial purposes.”
At least 50% of the Adaptive Reuse project must be designated for residential use, which is defined to include housing units, dormitories, boarding houses, and group housing. For purposes of calculating total project square footage, underground spaces, including basements or underground parking garages, are excluded.
Any nonresidential uses must be “consistent with the land uses allowed by the zoning or a continuation of an existing zoning nonconforming use.”
If the existing building is a listed historic resource or is over 50 years old, specified requirements must be met.

Affordability Requirements

For rental projects, either (i) 15% of the units must be lower income (as defined) or (ii) 8% of the units must be very low income and 5% of the units must be extremely low income (as defined), unless different local requirements apply.
For ownership projects, either (i) 15% of the units must be lower income (as defined) or (ii) 30% of the units must be moderate income (as defined), unless different local requirements apply.
Where different local requirements apply, the project must include the higher percentage requirement and the lowest income target, unless local requirements require greater than 15% lower income units (only), in which case other specified requirements apply.
For rental projects, the affordable units must be restricted for 55 years and for ownership projects, the affordable units must be restricted for 45 years.
Affordable units in the project must have the same bedroom and bathroom count ratio as the market rate units, be equitably distributed within the project, and have the same type or quality of appliances, fixtures, and finishes.

Project Site Requirements

The Adaptive Reuse project site must be in an urbanized area or urban cluster (as defined and specified) and at least 75% of the perimeter must adjoin (as defined) parcels that are developed with urban uses (not defined in AB 3068 but separately defined in AB 2011).
Required Phase I ESA and if a recognized environmental condition is found, specified requirements must be met.

Labor Requirements

All construction workers must be paid at least the general prevailing wage of per diem wages for the type of work in the geographic area (as specified), except that apprentices registered in approved programs (as specified) may be paid at least the applicable apprentice prevailing rate.
The prevailing wage requirement must be included in all construction contracts, and all contractors and subcontractors must comply with specified requirements.
If the Adaptive Reuse project would include 50 or more dwelling units, additional requirements would apply (as specified), including but not limited to participation in an approved apprenticeship program and health care expenditures for any construction craft employees.

Project Approval Process

If the Adaptive Reuse project is determined by the local planning director (or equivalent) to be consistent with the foregoing requirements (referred to collectively as “objective planning standards”), the local agency must approve the project. That consistency determination must be based on whether there is “substantial evidence that would allow a reasonable person to conclude that the project is consistent with the objective planning standards.”
If the project is deemed to conflict with any applicable objective planning standards, the local agency must notify the project sponsor within 60 to 90 days of submittal of the development proposal, depending on whether the project contains more than 150 dwelling units. If the local agency fails to provide the required documentation (as specified), the project shall be deemed to satisfy applicable objective planning
Design review may be conducted by the local agency but must be objective (as specified) and must be concluded within 90 to 180 days of submittal of the development proposal, depending on whether the project contains more than 150 dwelling units.

Development Impact Fees

Adaptive Reuse projects would be exempt from all development impact fees “that are not directly related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed-use” and any development impact fees charged must be “proportional to the difference in impacts caused by the change of use.” The project sponsor may also request that payment of development impact fees be deferred to the date that the certificate of occupancy is issued, subject to a written agreement to pay the development impact fees at that time.

Adjacent Projects

A qualifying Adaptive Reuse project “may include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the parcels adjacent to the proposed adaptive reuse project site” if specified requirements are met.

Implications

AB 3068 would be another tool in the growing toolbox available to real estate developers to encourage the adaptive reuse of underutilized commercial buildings, including office buildings. Financial feasibility is likely to remain an issue due to high interest rates and construction costs. There are well-documented design challenges associated with the conversion of existing buildings to residential use due to required compliance with the strict provisions of the California Building Code, the California Residential Code, and local amendments to those codes. Even if alternate buildings standards are available for adaptive reuse projects (see the directive under AB 529), it not clear yet whether alternative standards would be available for required seismic upgrades, which are often cost-prohibitive.

Financial feasibility would be partially addressed by AB 3068, which would authorize local agencies to establish an Adaptive Reuse Investment Program funded by ad valorem property tax revenues (as specified), which could be transferred to the owners of qualifying Adaptive Reuse projects for the purpose of subsidizing the on-site affordable housing units required by AB 3068. The bill would also “align program requirements to encourage the utilization of existing programs such as the Federal Historic Tax Credit, the newly adopted California Historic Tax Credit, the Mills Act, and the California Historical Building Code.”

SB 1227 — SAN FRANCISCO DOWNTOWN REVITALIZATION ZONE PROJECTS

SB 1227 (Wiener) aims to speed the recovery of downtown San Francisco by creating a new CEQA exemption for qualifying student housing and mixed-use residential projects (along with commercial and institutional projects) in the Downtown Revitalization Zone, which includes the Financial District, Union Square, Eastern SOMA, Mid-Market, and Civic Center neighborhoods. Projects that do not meet all the requirements for the new CEQA exemption could qualify for the new CEQA streamlining process proposed under the bill. SB 1227 would also create a new property tax exemption for moderate-income housing in the Downtown Revitalization Zone.

Qualifying Downtown Revitalization Zone Projects

As currently proposed, the following threshold requirements would need to be met:

The project site must be in the San Francisco Downtown Revitalization Zone.
The general plan land use and zoning designations for the project site must allow for commercial, institutional, student housing, or mixed-uses (as specified below), as applicable to the project.
The project must not include any hotel uses, and if residential uses are proposed, the residential square footage must be less than two-thirds the total project square footage (i.e., the project cannot be a “housing development project” already protected under the HAA). The foregoing square footage limitation (see specified calculation requirements) would not apply to student housing.
To the extent that residential uses are proposed, the project must comply with applicable San Francisco inclusionary affordable housing requirements.
The project must not require the demolition of restricted affordable units, rent-controlled units, or a hotel (as specified). See also the specific requirements that apply to other existing and prior tenant-occupied housing.
The project must comply with 24 enumerated San Francisco ordinances related to development impact fees and environmental protection (including but not limited to the reduction of greenhouse gas emissions and water and energy consumption) and specified provisions of the California Green Building Standards Code.
The project site must not be environmentally sensitive, e.g., a delineated earthquake fault zone, habitat for protected species, or a hazardous waste site (as defined and specified).
The project must not result in net additional emissions of greenhouse gases from demolition or construction.

New CEQA Exemption

As currently proposed, the following additional requirements would need to be met to qualify for the new CEQA exemption:

Prevailing wage, skilled and trained workforce, and/or health care expenditure and apprenticeship requirements must be met (as specified), depending on the size of the project.
The project must not include any warehouse uses.
The project must not require the demolition of a building that is over 75 years old (regardless of its historic status) or result in “substantial harm” to a building on a federal, state, or local historic registry.
The project must be LEED Platinum certified (if over 1,000 square feet).
The project must be in an area with a per capita vehicle miles traveled (VMT) level 15% lower than the city or regional VMT.

New CEQA Streamlining Pathway

As currently proposed, San Francisco Downtown Revitalization Zone projects that meet the threshold requirements above, but not all of the additional requirements for the new CEQA exemption, could instead pursue CEQA streamlining whereby the project could be certified by the Governor prior to certification of an EIR for the project pursuant to the Jobs and Economic Improvement Through Environmental Leadership Act of 2021 (Leadership Act), which authorizes the Governor to certify qualifying projects (before January 1, 2032) for CEQA streamlining. One of the benefits of CEQA streamlining under the Leadership Act is that any CEQA litigation must be resolved (to the extent feasible) within 270 days, as specified.

As currently proposed, the following additional requirements would need to be met to qualify for CEQA streamlining:

Prevailing wage, skilled, and trained workforce requirements must be met (as specified).
The project must be at least LEED Gold certified (versus Platinum) if the project contains residential, retail, commercial, sports, cultural, entertainment, or recreational uses.
The project must not demolish a historic structure that is placed on a national, state, or local historic register (versus a building that is over 75 years old, regardless of its historic status).
The project must avoid a substantial adverse change to the significance of a historical or cultural resource.
The project must avoid or minimize significant environmental impacts in a disadvantaged community (as defined) and any required mitigation measures must be undertaken in, and directly benefit, the affected community.
The project must not result in any significant and unavoidable impacts under CEQA that would require adoption of a statement of overriding considerations by the lead agency.
The lead agency must approve a project certified by the Governor before January 1, 2031.

Please see the text of SB 1227 for more information about the proposed CEQA streamlining provisions for qualifying San Francisco Downtown Revitalization Zone projects.

New Property Tax Exemption for Moderate-Income Housing

This new (welfare) property tax exemption would allow for a partial exemption equal to the percentage of the value of the property that is equal to the percentage of the number of units serving moderate-income households. As currently proposed, the following requirements would need to be met to qualify:

The project must be in the San Francisco Downtown Revitalization Zone.
The project must include moderate-income rental units, as defined and specified.
The project must be owned and operated by a charitable organization (as defined), which includes (but is not limited to) limited partnerships in which the managing partner is an eligible nonprofit corporation or eligible limited liability company meeting specified requirements.
A building permit or site permit for the residential units on the property must be filed before January 1, 2035, and the property owner must claim the exemption within five years following the issuance of the first building permit. The new property tax exemption would also apply with respect to lien dates occurring on or after January 1, 2025.

Implications

SB 1227 should help facilitate the development of new housing for the “missing in the middle” in the San Francisco Downtown Revitalization Zone by providing for a new property tax exemption for projects that include moderate-income rental units. That could in turn help increase the financial feasibility of converting underutilized commercial buildings to mixed-uses, including residential uses.

SB 1227 would impose robust labor requirements for both the new CEQA exemption and CEQA streamlining pathway for qualifying projects in the San Francisco Downtown Revitalization Zone, which could inhibit the utilization of those benefits.

Mid-Year Recap: Think Beyond US State Laws!

Much of the focus on US privacy has been US state laws, and the potential of a federal privacy law. This focus can lead one to forget, however, that US privacy and data security law follows a patchwork approach both at a state level and a federal level. “Comprehensive” privacy laws are thus only one piece of the puzzle. There are federal and state privacy and security laws that apply based on a company’s (1) industry (financial services, health care, telecommunications, gaming, etc.), (2) activity (making calls, sending emails, collecting information at point of purchase, etc.), and (3) the type of individual from whom information is being collected (children, students, employees, etc.). There have been developments this year in each of these areas.

On the industry law, there has been activity focused on data brokers, those in the health space, and for those that sell motor vehicles. The FTC has focused on the activities of data brokers this year, beginning the year with a settlement with lead-generation company Response Tree. It also settled with X-Mode Social over the company’s collection and use of sensitive information. There have also been ongoing regulation and scrutiny of companies in the health space, including HHS’s new AI transparency rule. Finally, in this area is a new law in Utah, with a Motor Vehicle Data Protection Act applicable to data systems used by car dealers to house consumer information.

On the activity side, there has been less news, although in this area the “activity” of protecting information (or failing to do so) has continued to receive regulatory focus. This includes the SEC’s new cybersecurity reporting obligations for public companies, as well as minor modifications to Utah’s data breach notification law.

Finally, there have been new laws directed to particular individuals. In particular, laws intended to protect children. These include social media laws in Florida and Utah, effective January 1, 2025 and October 1, 2024 respectively. These are similar to attempts to regulate social media’s collection of information from children in Arkansas, California, Ohio and Texas, but the drafters hope sufficiently different to survive challenges currently being faced by those laws. The FTC is also exploring updates to its decades’ old Children’s Online Privacy Protection Act.

Putting It Into Practice: As we approach the mid-point of the year, now is a good time to look back at privacy developments over the past six months. There have been many developments in the privacy patchwork, and companies may want to take the time now to ensure that their privacy programs have incorporated and addressed those laws’ obligations.

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White House Publishes Steps to Protect Workers from the Risks of AI

Last year the White House weighed in on the use of artificial intelligence (AI) in businesses.

Since the executive order, several government entities including the Department of Labor have released guidance on the use of AI.

And now the White House published principles to protect workers when AI is used in the workplace.

The principles apply to both the development and deployment of AI systems. These principles include:

Awareness – Workers should be informed of and have input in the design, development, testing, training, and use of AI systems in the workplace.
Ethical development – AI systems should be designed, developed, and trained in a way to protect workers.
Governance and Oversight – Organizations should have clear governance systems and oversight for AI systems.
Transparency – Employers should be transparent with workers and job seekers about AI systems being used.
Compliance with existing workplace laws – AI systems should not violate or undermine worker’s rights including the right to organize, health and safety rights, and other worker protections.
Enabling – AI systems should assist and improve worker’s job quality.
Supportive during transition – Employers support workers during job transitions related to AI.
Privacy and Security of Data – Worker’s data collected, used, or created by AI systems should be limited in scope and used to support legitimate business aims.

DOJ Confirms Moving Marijuana to Schedule III; Sidesteps Anticipated Impact on State Cannabis Markets

On May 16, 2024, the Department of Justice (DOJ) initiated the formal rulemaking process to move marijuana to Schedule III of the Controlled Substances Act. The DOJ’s notice of proposed rulemaking unfortunately sidesteps the hard questions about the impact of rescheduling on the existing state adult-use and medical cannabis markets.

Summary of Content

The 92-page notice of proposed rulemaking primarily summarizes and comments on last year’s recommendations by the Department of Health and Human Services to reschedule marijuana, as well as related legal concerns such as compliance with international treaty obligation. The DOJ emphasizes that if marijuana is transferred to Schedule III, “the manufacture, distribution, dispensing, and possession of marijuana would also remain subject to applicable criminal prohibitions under the CSA [Controlled Substances Act],” and that marijuana would remain subject to applicable provisions of the Food Drug and Cosmetic Act.

With respect to the critical question of impact on the cannabis markets, however, the DOJ is silent and merely states that it is “seeking comment on the practical consequences of rescheduling marijuana.”

By way of explanation, the DOJ offers:

“DOJ recognizes this action may have unique economic impacts. As stated above, marijuana is subject to a number of State laws that have allowed a multibillion dollar industry to develop. DOJ acknowledges that there may be large impacts related to Federal taxes and research and development investment for the pharmaceutical industry, among other things. DOJ is specifically soliciting comments on the economic impact of this proposed rule. DOJ will revise this section at the final rules stage if warranted after consideration of any comments received.” (Emphasis added.)

Robust Public Comments Expected

For an industry that has been eagerly awaiting to hear how the DOJ will approach rules that address the interplay between existing state cannabis laws and the complex web of federal laws around Schedule III drugs, the DOJ’s notice is disappointing and may not bode well for a smooth rulemaking process. DOJ will accept public comments for 60 days once the notice of proposed rulemaking has been published in the Federal Register. We can expect robust commentary from cannabis businesses, state regulators, trade organizations and ancillary industries.

Regardless of the outcome of the final rulemaking, it seems apparent that clarity through congressional action is needed more than ever.

United States | State Department Notes Visa Delays at US Embassy Paris

The State Department’s global visa wait times for Paris continue to grow and substantial visa processing delays are expected through mid-September due to the 2024 Paris Olympic and Paralympic Games and D-Day 80th anniversary celebrations.

Key Points:

The Olympics will take place in Paris from July 26 to Aug. 11 and the Paralympics will take place from Aug. 28 to Sept. 8.
Travelers are encouraged to regularly check the U.S. Embassy special events page for France before and during their stay.
The most current visa appointment wait times for the U.S. Embassy Paris can be found here.

Additional Information: Individuals applying for a U.S. visa in Paris should expect delays through at least mid-September 2024. The U.S. Embassy Paris will primarily be providing American citizen services during these events due to the embassy’s location and the increased presence of U.S. citizens in Paris.

The State Department urged travelers in need of a new passport to have their passports renewed as soon as possible if traveling to France and Europe this summer. The French government has launched a new consulate platform to help streamline the visa application process for the 2024 Paris Olympic and Paralympic Games. While U.S. citizens generally do not need a visa to enter France, travelers can complete a short online questionnaire to determine if they require a visa.

HHS Publishes Final Rule to Support Reproductive Health Care Privacy

The Supreme Court’s 2022 decision in Dobbs v. Jackson Women’s Health Organization to eliminate the federal constitutional right to abortion continues to alter the legal landscape across the country. On April 26, 2024, the U.S. Department of Health and Human Services (“HHS”) Office for Civil Rights (“OCR”) published the “HIPAA Privacy Rule to Support Reproductive Health Care Privacy” (the “Final Rule”).

The Final Rule—amending the Standards for Privacy of Individually Identifiable Health Information (“Privacy Rule”) under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as well as the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH Act)—strengthens privacy protections related to the use and disclosure of reproductive health care information. HIPAA’s Privacy Rule limits the disclosure of protected health information (PHI) and is part of HHS’s efforts to ensure that patients will not be afraid to seek health care from, or share important information with, health care providers.

The Final Rule:

Prohibits the use or disclosure of PHI when it is sought to investigate or impose liability on individuals, health care providers, or others who seek, obtain, provide, or facilitate reproductive health care that is lawful under the circumstances in which such health care is provided, or to identify persons for such activities.
Requires covered entities and business associates to obtain a signed attestation that certain requests for PHI potentially related to reproductive health care are not for these prohibited purposes.
Requires covered entities to modify their NPPs to support reproductive health care privacy.

“Since the fall of Roe v. Wade, providers have shared concerns that when patients travel to their clinics for lawful care, their patients’ records will be sought, including when the patient goes home,” OCR Director Melanie Fontes Rainer said in a news release. OCR administers the Privacy Rule, which requires most health care providers, health plans, health care clearinghouses (“covered entities”) and business associates to safeguard the privacy of PHI.

Commenters to an earlier notice of proposed rulemaking (“2023 NPRM”) raised concerns that PHI related to reproductive health care would be used and disclosed to expose both patients and providers to investigation and liability under state abortion laws, particularly new and revived laws. This Final Rule is intended to prohibit the disclosure of PHI related to lawful reproductive health care—a change from the current Privacy Rule where an entity is generally permitted, but not required, to disclose relevant and material information in a legitimate law enforcement inquiry.

Key Takeaways

New Category of Protected Health Information. The Final Rule changes the HIPAA Privacy Rule by defining a new category of protected health information and adds a new “prohibited use and disclosure” under the HIPAA Privacy Rule at 45 CFR 164.502—mandating that a covered entity or business associate may not use or disclose PHI:

To conduct a criminal, civil, or administrative investigation into any person for the mere act of seeking, obtaining, providing, or facilitating “reproductive health care”;
To impose criminal, civil, or administrative liability on any “person” for the mere act of seeking, obtaining, providing or facilitating “reproductive health care”; and
To identify any “person” for any of those above described purposes.

Prohibition. Under the Final Rule, HIPAA-covered entities and business associates who receive requests for protected health information must make a reasonable determination that one or more of the following conditions exists:

The reproductive health care is lawful in the state in which such health care is provided under the circumstances in which it is provided (e.g., if a resident of one state traveled to another state to receive reproductive health care, such as an abortion, that is lawful in the state where such health care was provided).
The reproductive health care is protected, required, or authorized by federal law, including the U.S. Constitution, regardless of the state in which such health care is provided (e.g., reproductive health care such as contraception is protected by the Constitution).

Presumption. Such care is presumed lawful unless the HIPAA-covered entity or business associate has

actual knowledge that the reproductive care was not lawful under the circumstances it was provided; or
factual information supplied by the requester demonstrating a substantial factual basis that the reproductive health care was not lawful under the specific circumstances in which it was provided.

Attestation Requirement. The Final Rule adds 45 CFR § 164.509(c) to require a covered entity or business associate, when it receives a request for PHI potentially related to reproductive health care, to obtain a signed attestation from the requester. However, obtaining the attestation does not relieve a covered entity or business associate from its responsibility to determine whether the reproductive health care that may be the subject of the requested information was lawful. An attestation must contain the following elements:

A description of the information requested that identifies the information in a specific fashion, including one of the following:
- The name(s) of any individual(s) whose protected health information is sought, if practicable;
- If that name is not practicable, the name(s) or other specific identification of the person(s) or class of person(s) who are requested to make the use or disclosure;
The name or other specific identification of the person(s) or class of persons to whom the covered entity is to make the requested use or disclosure;
A clear statement that the use or disclosure is not for a purpose prohibited under 45 CFR § 164.502(a)(5)(iii)(i.e., identifying any person under the newly added prohibition);
A statement that a person may be subject to criminal penalties if they use or disclose the reproductive health information improperly;
Must be in plain language and contain the elements set forth in 45 CFR § 164.509(c) (inclusion of other elements not set forth in 45 CFR § 164.509(c) is prohibited); and
Must be signed by the person requesting the disclosure (which may take an electronic format).

The Final Rule prohibits the attestation from being “combined with” any other document (yet allows additional supporting information or documentation needed for the request to be submitted with the attestation (for example, a clearly labelled subpoena). While covered entities can develop their own attestation form, to reduce the compliance burden, HHS plans to publish a model attestation form prior to the compliance date.

Notices of Policy Practices. With the new processes for using and disclosing reproductive health information, covered entities must update their Notices of Privacy Practices (NPPs) required under 45 CFR § 164.520. For purposes of this Final Rule, updates to the NPPs must describe among other things the types and uses of disclosures of PHI that are prohibited under 45 CFR 164.502(a)(5)(iii). The notice should also contain a description of the uses and disclosures for which an attestation is required under the new 45 CFR § 164.509. Further, the Office of Management and Budget’s (OMB’s) Office of Information and Regulatory Affairs determined that this Final Rule meets the criteria in 5 USC § 804(2) for being a major rule because it is projected to have an annualized impact of more than $100,000,000 based on the number of covered entities and business associates that will have to implement these changes.

Practical Implications for HIPAA Covered Entities & Business Associates

Considering the significant changes this Final Rule introduces, there is no time like the present for covered entities and business associates to consider the compliance implications that a new category of PHI will have on existing HIPAA policies and procedures. In addition to developing and/or obtaining new attestation forms, making reasonable determinations of the lawfulness of reproductive health care and updating notices of privacy practices, privacy and security officers will likely need to evaluate the impact these changes will have on the policies that govern data dissemination, and the processes and procedures that may change as well. Covered entities and business associates will also likely want to include these changes into training for employees involved in these activities.

The Final Rule goes into effect on June 25, 2024, with a compliance date of December 23, 2024. The NPP requirements, however, take effect on February 16, 2026—consistent with OCR’s 42 CFR Part 2 Rule of February 16, 2024, so that covered entities regulated under both rules can implement changes to their NPPs at the same time.

HIPAA covered entities and business associates should consider the context and framework of the HIPAA Privacy Rule and these new modifications as they consider third-party requests for any PHI that may include reproductive health information (the current HIPAA Privacy Rule remains in effect until the new rule takes effect). If the new reproductive health prohibition is not applicable, HIPAA covered entities should still consider the fact that HIPAA otherwise permits, but does not require, them to disclose PHI under most of the HIPAA exceptions contained in 45 CFR § 164.512. Therefore, HIPAA affords covered entities the ability to protect the privacy interests of their patients, especially in the current post-Dobbs environment.

Covered entities and business associates now face the challenge of implementing these new requirements and training their workforce members on how to analyze and respond to requests that include reproductive health care information. Questions remain surrounding a covered entity or business associate’s burden of determining that the reproductive health care provided to an individual was in fact lawful. For example, if a complaint follows, does a covered entity have to account for the disclosures that are made? While the Final Rule is gender-neutral, what is the likelihood that it would be applied to men—could it? In any case, we will continue to monitor developments, including questions of how HIPAA and other privacy concerns interact with reproductive health care, in the wake of Dobbs. For more on the subject, please see our past blog on the 2023 proposed rule.

Ann W. Parks contributed to this article.

NIST Releases Risk ‘Profile’ for Generative AI

A year ago, we highlighted the National Institute of Standards and Technology’s (“NIST”) release of a framework designed to address AI risks (the “AI RMF”). We noted how it is abstract, like its central subject, and is expected to evolve and change substantially over time, and how NIST frameworks have a relatively short but significant history that shapes industry standards.

As support for the AI RMF, last month NIST released in draft form the Generative Artificial Intelligence Profile (the “Profile”).The Profile identifies twelve risks posed by Generative AI (“GAI”) including several that are novel or expected to be exacerbated by GAI. Some of the risks are exotic and new, such as confabulation, toxicity, and homogenization.

The Profile also identifies risks that are familiar, such as those for data privacy and cybersecurity. For the latter, the Profile details two types of cybersecurity risks: (1) those with the potential to discover or enable the lowering of barriers for offensive capabilities, and (2) those that can expand the overall attack surface by exploiting vulnerabilities as novel attacks.

For offensive capabilities and novel attack risks, the Profile includes these examples:

Large language models (a subset of GAI) that discover vulnerabilities in data and write code to exploit them.
GAI-powered co-pilots that proactively inform threat actors on how to evade detection.
Prompt-injections that steal data and run code remotely on a machine.
Compromised datasets that have been ‘poisoned’ to undermine the integrity of outputs.

In the past, the Federal Trade Commission (“FTC”) has referred to NIST when investigating companies’ data breaches. In settlement agreements, the FTC has required organizations to implement security measures through the NIST Cybersecurity Framework. It is reasonable to assume then, that NIST guidance on GAI will also be recommended or eventually required.

But it’s not all bad news – despite the risks when in the wrong hands, GAI will also improve cybersecurity defenses. As recently noted by Microsoft’s recent report on the GDPR & GAI, GAI can already: (1) support cybersecurity teams and protect organizations from threats, (2) train models to review applications and code for weaknesses, and (3) review and deploy new code more quickly by automating vulnerability detection.

Before ‘using AI to fight AI’ becomes legally required, just as multi-factor authentication, encryption, and training have become legally required for cybersecurity, the Profile should be considered to mitigate GAI risks. From pages 11-52, the Profile examines four hundred ways to use the Profile for GAI risks. Grouping them together, some of the recommendations include:

Refine existing incident response plans and risk assessments if acquiring, embedding, incorporating, or using open-source or proprietary GAI systems.
Implement regular adversary testing of the GAI, along with regular tabletop exercises with stakeholders and the incident response team to better inform improvements.
Carefully review and revise contracts and service level agreements to identify who is liable for a breach and responsible for handling an incident in case one is identified.
Document everything throughout the GAI lifecycle, including changes to any third parties’ GAI systems, and where audited data is stored.

“Cybersecurity is the mother of all problems. If you don’t solve it, all the other technology stuff just doesn’t happen” said Charlie Bell, Microsoft’s Chief of Security, in 2022. To that end, the AM RMF and now the Profile provide useful and early guidance on how to manage GAI Risks. The Profile is open for public comment until June 2, 2024.

The Domestic Content Bonus Credit’s Promising New Safe Harbor

On May 16, 2024, the Internal Revenue Service (IRS) published Notice 2024-41 (Notice), which modifies Notice 2023-38 (Prior Notice) by providing a new elective safe harbor (Safe Harbor) that will allow taxpayers to use assumed domestic cost percentages in lieu of percentages derived from manufacturers’ direct cost information to determine eligibility for the domestic content bonus credit (Domestic Content Bonus). The Notice grants a promising reprieve to the Prior Notice’s relatively inflexible (and arguably impracticable) standard on seeking direct cost information from manufacturers, raising novel structuring considerations for energy producers, developers, investors and buyers.

The Notice also expands the list of technologies covered by the Prior Notice (Applicable Projects).

In this article, we share key takeaways from the Notice as they apply to energy producers, developers and investors and provide a brief overview of the Domestic Content Bonus as well as a high-level summary of the Notice’s substantive content.

IN DEPTH

KEY TAKEAWAYS FROM THE NOTICE

The Notice provides a key step forward in eliminating qualification challenges for the Domestic Content Bonus by providing an alternative to the Prior Notice’s stringent requirement of seeking direct cost information from manufacturers. In short, a taxpayer can aggregate the assumed percentages in the Notice that correspond with the US-made manufactured products in its project. If the assumed percentages total is greater than the manufactured product percentage applicable to such project (currently 40%), then the taxpayer is treated as satisfying the manufactured product requirement. Although the Notice promises forthcoming proposed regulations that could amend or override the Notice, this gives taxpayers time to appropriately interpret the latest rules and respond accordingly.

The new guidance’s impact will likely require restructuring to the existing development of energy projects as it relates to the Domestic Content Bonus. Below, we outline some key considerations for energy producers, developers, investors and buyers alike:

The Safe Harbor is expected to dramatically increase the availability of the Domestic Content Bonus. The Prior Notice’s challenging cost substantiation requirements left most industry participants on the sidelines. Initial feedback from developers, investors and credit buyers was extremely positive, and we have already seen fulsome renegotiation and speedy agreement between counterparties over domestic content contractual provisions in project documents.
While the Safe Harbor eliminates the requirement to seek direct cost information from manufacturers for certain Applicable Projects, a taxpayer’s obligations with respect to substantiation requirements for manufacturers’ US activities is not clear in the Notice. Given the standing federal income tax principles on recordkeeping and substantiation, taxpayers should carefully reconsider positions on diligence and review existing relationships with manufacturers.
Although the Notice expressly provides that the Safe Harbor is elective with respect to a specific Applicable Project, it’s unclear whether the Safe Harbor is extended by default to any and all of a taxpayer’s Applicable Projects upon election effect or whether an elective position is required with respect to each Applicable Project. Taxpayers, especially those with multiple Applicable Projects, should consider the various implications resulting from an elective position prior to reliance on the Safe Harbor.
For Safe Harbor purposes, the Notice provides a formula for computing a single domestic cost percentage for solar energy property and battery energy storage technologies that are treated as a single energy project (PV+BESS Project), but ambiguity exists as to whether such technologies should be aggregated for other purposes under the investment tax credit.
It’s unclear how the calculations would operate for repowered facilities given the assumed domestic cost percentage approach.
The Notice limits the Safe Harbor to solar photovoltaic, onshore wind and battery energy storage systems, leaving taxpayers with other types of Applicable Projects stranded with the Prior Notice. For example, the Notice does not cover renewable natural gas or fuel cell. The IRS seeks comments on whether the Safe Harbor should account for other technologies, the criteria and how often the list of technologies should be updated. Affected taxpayers should fully consider the requested comments and provide feedback as necessary.
The IRS seeks comments on various issues with respect to taxpayers who have a mix of foreign and domestic manufactured product components (mixed source items). Taxpayers with mixed source items that the Notice attributes as disregarded and entirely foreign sourced (notwithstanding the domestic portion) should take cautionary note and provide feedback as necessary.

BACKGROUND: THE DOMESTIC CONTENT BONUS CREDIT

The Inflation Reduction Act of 2022 spurred the creation of “adder” or “bonus” incentive tax credits. In pertinent part, Applicable Projects could further qualify for an increased credit (i.e., the Domestic Content Bonus) upon satisfaction of the domestic content requirement.

To qualify for the Domestic Content Bonus, taxpayers must meet two requirements. First, steel or iron components of the Applicable Project that are “structural” in nature must be 100% US manufactured (Steel or Iron Requirement). Second, costs associated with “manufactured components” of the Applicable Project must meet the “adjusted percentage” set forth in the Internal Revenue Code (Manufactured Products Requirement). For projects beginning construction before 2025, the adjusted percentage is 40%.

The Prior Notice provided guidance for meeting these requirements. Taxpayers should begin by identifying each “Applicable Project Component” (i.e., any article, material or supply, whether manufactured or unmanufactured, that is directly incorporated into an Applicable Project). Subsequently, taxpayers must determine whether the Applicable Project Component is subject to the Steel or Iron Requirement or the Manufactured Products Requirement.

If the Applicable Project Component is steel or iron, it must be 100% US manufactured with no exception. If the Applicable Project Component is a manufactured product, such component and its “manufactured product components” must be tested as to whether they are US manufactured. If the manufactured product and all its manufactured product components are US manufactured, then the manufacturer’s cost of the manufactured product is included for purposes of satisfying the adjusted percentage. If any of the manufactured product or its manufactured product components are not US manufactured, only the cost to the manufacturer of any US manufactured product components are included.

The core tension lies in sourcing the total costs from the manufacturer of the manufactured product or its manufactured product components. There’s a substantiation requirement on the taxpayer imposed by the Prior Notice, but there’s also a shrine of secrecy from the corresponding manufacturer.

Apparently acknowledging the need for reconciliation, the Notice aims to pave a promising path for covered technologies (i.e., solar, onshore wind and battery storage).

THE MODIFICATIONS: A PROMISING PATH FOR THE DOMESTIC CONTENT BONUS CREDIT

NEW ELECTIVE SAFE HARBOR

Generally

The Safe Harbor allows a taxpayer to elect to assume the domestic percentage costs (assumed cost percentages) for manufactured products. Importantly, the election eliminates the requirement for a taxpayer to source a manufacturer’s direct costs with respect to the taxpayer’s Applicable Project and instead allows for the reliance on the assumed cost percentages. The Notice prohibits any partial Safe Harbor reliance, meaning taxpayers who elect to use the Safe Harbor must apply it in its entirety to the Applicable Project for which the taxpayer makes such election.

The Safe Harbor only applies to the Applicable Projects of solar photovoltaic facilities (solar PV), onshore wind facilities and battery energy storage systems (BESS). Taxpayers with other technologies must continue to comply with the Prior Notice. Notably, the Notice expands Solar PV into four subcategories: Ground-Mount (Tracking), Ground-Mount (Fixed), Rooftop (MLPE) and Rooftop (String), each having differing assumed cost percentages for the respective manufactured product component. Similarly, BESS is expanded into Grid-Scale BESS and Distributed BESS, each with differing assumed cost percentages for the respective manufactured product component.

For solar PV, onshore wind facilities and BESS, the Safe Harbor provides a list via Table 1[1] (Safe Harbor list) that denotes each relevant manufactured product component with its corresponding assumed cost percentage. Each manufactured product component (and steel or iron component) are classified under a relevant Applicable Project Component.

Of note are the disproportionately higher assumed cost percentages of certain listed components within the Safe Harbor list. For solar PV, cells under the PV module carry an assumed cost percentage of 36.9% (Ground-Mount (Tracking)), 49.2% (Ground-Mount (Fixed)), 21.5% (Rooftop (MLPE)) or 30.8% (Rooftop (String)).

For onshore wind facilities, blades and nacelles under wind turbine carry an assumed cost percentage of 31.2% and 47.5%, respectively.

For BESS, under battery pack, Grid-scale BESS cells and Distributed BESS packaging carry an assumed cost percentage of 38.0% and 30.15%, respectively. Accordingly, projects incorporating US manufactured equipment in these categories are likely to meet the Manufactured Products Requirement with little additional spend. Conversely, projects without these components are unlikely to satisfy the threshold.

Mechanics of the Safe Harbor

Reliance on the Safe Harbor is a simple exercise of component selection and subsequent assumed cost percentage addition. Put more specifically, a taxpayer identifies the Applicable Project on the Safe Harbor list and assumes the list of components within (without regard to any components in the taxpayer’s project that are not listed). Then, the taxpayer (i) identifies which of the components within the Safe Harbor list are in their project, (ii) confirms that any steel or iron components on the Safe Harbor list fulfill the Steel or Iron Requirement, and (iii) sums the assumed cost percentages of all identified listed components that are 100% US manufactured to determine whether their Applicable Project meets the relevant adjusted percentage threshold.

The Notice addresses nuances in situations involving mixed 100% US manufactured and 100% foreign manufactured components that are of like-kind, component production costs and treatment for PV+BESS Projects.

The Notice also provides that a taxpayer adjusts for a mix of US manufactured and foreign manufactured components by applying a weighted formula to account for the foreign components.

Consistent with the Prior Notice, the Notice provides that the assumed cost percentage of “production” costs may be summed and included in the domestic cost percentage only if all the manufactured product components of a manufactured product are 100% US manufactured.

Lastly, in accordance with the view that a PV+BESS Project is treated as a single project, the Notice provides that a taxpayer may use a weighted formula to determine a single domestic content percentage for the project.

The numerator is the sum of the (i) aggregated assumed cost percentages of the manufactured product components that constitute the solar PV multiplied by the solar PV nameplate capacity and (ii) aggregated assumed cost percentages of the manufactured product components that constitute BESS multiplied by the BESS nameplate capacity and the “BESS multiplier.” The BESS multiplier converts the BESS nameplate capacity into proportional equivalency (i.e., equivalent units) to the solar PV nameplate capacity. The denominator is the sum of the solar PV nameplate capacity and the BESS nameplate capacity. Divided accordingly, the final fraction constitutes the single domestic content percentage that the taxpayer uses to determine whether its PV+BESS Project meets the relevant manufactured product adjusted percentage threshold.

Additionally, the Notice confirms that taxpayers can ignore any components not included in the Safe Harbor list. Compared with the Prior Notice, this can be a benefit for taxpayers with non-US manufactured products that are not on the Safe Harbor list. Conversely, for taxpayers with US manufactured products that are not on the Safe Harbor list, they lose the benefit of including such costs in the Manufactured Products Requirement. However, this is mostly a benefit because it eliminates any ambiguity surrounding the treatment of components not listed in the Prior Notice.

EXPANSION OF COVERED TECHNOLOGIES

The Notice adds “hydropower facility or pumped hydropower storage facility” to the list of Applicable Projects as a modification to Table 2 in the Prior Notice. The modification is complete with a list of a hydropower facility or pumped hydropower storage facility’s Applicable Project Components that are delineated as either steel or iron components or manufactured products, though no assumed cost percentages are provided. Further, the Prior Notice’s “utility-scale photovoltaic system” is redesignated as “ground-mount and rooftop photovoltaic system.”

CERTIFICATION

To elect to rely on the Safe Harbor, in its domestic content certification statement, a taxpayer must provide a statement that says they are relying on the Safe Harbor. This is submitted with the taxpayer’s tax return.

RELIANCE AND COMMENT PERIOD

Taxpayers may rely on the rules set forth in the Notice and the Prior Notice (as modified by the Notice) for Applicable Projects, the construction of which begins within 90 days after the publication of intended forthcoming proposed regulations.

Comments should be received by July 15, 2024.

CONCLUSION

While this article provides a high-level summary of the substantive content in the Notice, the many potential implications resulting from these developments merit additional attention. We will continue to follow the development of the guidance and provide relevant updates as necessary.

US Issues Final Regulations on FEOC Exclusions from Clean Vehicle Credit

On May 6, 2024, the U.S. Department of the Treasury (Treasury) and Internal Revenue Service (IRS) published final regulations (Final Regulations) regarding clean vehicle tax credits under Internal Revenue Code sections 25E and 30D established by the Inflation Reduction Act of 2022 (IRA). Among other important guidance, the Treasury regulations finalized its rules on Foreign Entity of Concern (FEOC) restrictions regarding the section 30D tax credit. On the same day, in conjunction with the Treasury final regulations, the U.S. Department of Energy (DOE) published a final interpretive rule (Notification of Final Interpretive Rule) finalizing its guidance for interpreting the statutory definition of FEOC under Section 40207 of the Infrastructure Investment and Jobs Act (IIJA). The Treasury final regulations and the DOE final interpretive rule largely adopted the proposed regulations and interpretive rule on FEOC published by the Treasury and the DOE on December 4, 2023, with some important changes and clarifications.

DOE Final Interpretative Rule on FEOC

The DOE’s final interpretive rule confirms the major elements of the December 2023 proposed interpretive rule and clarifies the definition of “foreign entity of concern” by providing interpretations of the following key terms: “government of a foreign country,” “foreign entity,” “subject to the jurisdiction,” and “owned by, controlled by, or subject to the direction.”

The final rule does not make any changes to its interpretations of “foreign entity” and “subject to the jurisdiction,” but makes clarifying changes to its interpretations of “government of a foreign country” and “owned by, controlled by, or subject to the direction.”

Government of a Foreign Country

The DOE’s final interpretive rule does not change the framework of the definition of “government of a foreign country,” which includes, among other elements, current or former senior political figures of a foreign country and their immediate family members. However, in the specific context of the PRC, DOE makes substantial changes and clarifies that the definition of “senior foreign political figure” now also includes current and former members of the National People’s Congress and Provincial Party Congresses, and current but not former members of local or provincial Chinese People’s Political Consultative Conferences.

Moreover, the final rule further clarifies and broadens when an official will be considered “senior” as follows: “an official should be or have been in a position of substantial authority over policy, operations, or the use of government-owned resources” (emphasis added).

Owned by, Controlled by, or Subject to the Direction

The DOE’s final interpretive rule is largely consistent with the proposed interpretive rule for the interpretations of “owned by, controlled by, or subject to the direction,” but makes some clarifying edits in response to public comments.

Control by 25% Interest

The DOE’s final interpretive rule finalizes the 25% control test provided in the proposed interpretive rule and makes further clarifications to the method for calculating the control percentage. The 25% threshold is to apply to each metric (board seats, voting rights, and equity interests) independently, not in combination, and the highest metric is used for the FEOC analysis. For example, if an entity has 20% of its voting rights, 10% of its equity interests, and 15% of its board seats held by the government of a covered nation, the entity would be treated as being 20% controlled by the covered nation government (not combined 45% control).

Effective Control by Licensing and Contracting

The DOE’s final interpretive rule finalizes that licensing agreements or other contracts can create a control relationship for FEOC test purposes and has proposed a safe harbor for evaluation of “effective control.” The final interpretive rule provides a list of rights covering five categories that need to be expressly reserved under the safe harbor rule. One requirement is that a non-FEOC needs to retain access to and use of any intellectual property, information, and data critical to production. In response to public comments, the final interpretive rule makes compromise regarding this requirement and provides that the non-FEOC entities need to retain such access and use no longer than “the duration of the contractual relationship.”

Moreover, in the final interpretive rule, the DOE declines to expand the definition of “control” to include foreign entities that receive significant government subsidies, grants, or debt financing from the government of a covered nation.

Treasury Final Regulations on FEOC Restrictions

The Treasury’s final regulations cross-reference the DOE’s FEOC interpretive guidance regarding FEOC definitions. Similar to the DOE’s final interpretive rule, the Treasury’s final regulations generally follow the December 2023 proposed regulations regarding FEOC restrictions and compliance regulations relating to the section 30D clean vehicle tax credit, but have also made certain important modifications and clarifications outlined below:

Allocation-based Accounting Rules

For the FEOC restrictions, the Treasury final regulations make permanent the allocation-based accounting rules for applicable critical minerals contained in battery cells and associated constituent materials.

Due Diligence

The final regulations confirm that to satisfy the due diligence requirement for FEOC compliance, and in addition to the due diligence conducted by the manufacturers meeting the qualification requirements of the regulations (qualified manufacturers) themselves, the qualified manufacturers can also reasonably rely on due diligence and attestations and certifications from suppliers if the qualified manufacturers do not know or have reason to know that such attestations or certifications are incorrect.

Impracticable-to-trace Battery Materials

The final regulations finalize a transition rule, which provides that the FEOC restrictions will not apply to qualified manufacturers as to “impracticable-to-trace battery materials” before 2027. The term “impracticable-to-trace battery materials” replaces the proposed regulations’ reference to “non-traceable battery materials.” Impracticable-to-trace battery materials are defined in the final regulations as specifically identified low-value battery materials that originate from multiple sources and are commingled by suppliers during production processes to a degree that the qualified manufacturers cannot determine the origin of such materials. The final regulations also identify certain battery materials as constituting impracticable-to-trace battery materials. Qualified manufacturers may temporarily exclude impracticable-to-trace battery materials from the required FEOC due diligence and FEOC compliance determinations until January 1, 2027. To take advantage of this transition rule, qualified manufacturers must submit a report during the upfront review process as set forth in the final regulations, demonstrating how they will comply with the FEOC restrictions once the transition rule is no longer in effect.

Traced Qualifying Value Test

The final regulations provide a new test, the “traced qualifying value test,” for OEMs to trace the sourcing of critical minerals and determine the actual value-added percentage for each applicable qualifying critical mineral for each procurement chain.

Exemption for New Qualified Fuel Cell Motor Vehicles

The final regulations also confirm that the FEOC restrictions generally do not apply to new qualified fuel cell motor vehicles (with certain exception) as they do not contain clean vehicle batteries.

Conclusion

Under the final regulations and final interpretive rule, to take advantage of the section 30D tax credit, qualified manufacturers shall conduct FEOC and supply chain analysis and satisfy the due diligence, certification and other requirements. Moreover, for the qualified manufacturers that seek to rely on their battery suppliers’ due diligence and relevant attestations or certifications, they should consider incorporating terms in their contracts with such suppliers that require reporting and tracing assurances regarding battery materials and critical minerals.

The DOE’s final interpretive rule became effective on May 6, 2024. The Treasury’s final regulations will be effective on July 5, 2024.

EPA, USDA, and FDA to Clarify Overlapping Biotechnology Regulatory Frameworks

On May 8, 2024, the U.S. Environmental Protection Agency (EPA), U.S. Department of Agriculture (USDA), and U.S. Food and Drug Administration (FDA) released a joint plan to identify areas of ambiguity, gaps, or uncertainty in their coordinated regulation of biotechnology products. Consistent with a directive issued by President Biden in September 2022, the agencies’ plan identifies specific issues that each has either recently addressed or will work to address to promote such products’ safe use.

Key Takeaways

What Happened: EPA, USDA, and FDA issued a joint plan for regulatory reform under their Coordinated Framework for the Regulation of Biotechnology.
Who’s Impacted: Developers of PIPs, modified mosquitos, biopesticides, and other biotechnology products under EPA’s jurisdiction.
What Should They Consider Doing in Response: Watch the three agencies’ regulatory dockets closely and consider submitting comments once new rules or draft guidance are published that may affect their products.

Background

President Biden’s executive order defined “biotechnology” as “technology that applies to or is enabled by life sciences innovation or product development.” Biotechnology products thus may include organisms (plants, animals, fungi, or microbes) developed through genetic engineering or manipulation, products derived from such organisms, and products produced via cell-free synthesis. These products may, in turn, be regulated under the overlapping statutory frameworks of the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), Federal Food, Drugs and Cosmetics Act (FFDCA), Plant Pest Act (PPA), Federal Meat Inspection Act, Poultry Products Inspection Act, and more. Therefore, close coordination between EPA, USDA, and FDA is essential to ensure effective and efficient regulation of biotechnology products.

EPA Sets Sights on PIPs, Mosquitos, and Biopesticide Products

The agencies’ newly released plan identifies five biotechnology product categories where regulatory clarification or simplification are warranted: (1) modified plants; (2) modified animals; (3) modified microorganisms; (4) human drugs, biologics, and medical devices; and (5) cross-cutting issues. Under the new plan, EPA is engaged in all but the fourth category above.

For example, EPA has already taken steps to clarify its regulation of modified plant products, such as exempting from regulation under FIFRA and FFDCA certain plant-incorporated protectants (PIPs) created in plants using newer technologies. EPA next plans to address the scope of plant regulator PIPs and update its 2007 guidance on small-scale field testing of PIPs to reflect technological developments and harmonize with USDA containment measures.

Regarding modified animal products, EPA intends to work with USDA and FDA to coordinate and provide updated information on the regulation of modified insect and invertebrate pests. Specifically, EPA intends to provide efficacy testing guidance on genetically modified mosquitos intended for population control. As outlined in guidance published by FDA in October 2017, products intended to reduce the population of mosquitoes by killing them or interfering with their growth or development are considered “pesticides” subject to regulation by EPA, while products intended to reduce the virus/pathogen load within mosquitoes or prevent mosquito-borne disease in humans or animals are considered “new animal drugs” subject to regulation by FDA.

EPA also now intends to prioritize its review of biopesticide applications, provide technical assistance to biopesticide developers, and collaborate with state pesticide regulators to help bring new biopesticide products to market more quickly.

Further, the three agencies are making efforts to collaborate with each other and with the regulated community. The agencies jointly released plain-language information on regulatory roles, responsibilities, and processes for biotechnology products in November 2023 and now intend to explore the development of a web portal that would direct developers to the appropriate agency or office overseeing their product’s development or regulatory status. The agencies also intend to develop a mechanism for a product developer to meet with all agencies at once early in a product’s development process to clarify the agencies’ respective jurisdictions and provide initial regulatory guidance; to update their joint information-sharing memorandum of understanding; and to formally update the Coordinated Framework for the Regulation of Biotechnology by the end of the year.

Biotechnology product developers should closely monitor EPA, USDA, and FDA’s progress on the actions described above, as well as other USDA- and FDA-specific regulatory moves. Developers should assess the regulatory barriers to their products’ entry to market, consider potential fixes, and be prepared to submit feedback as the agencies propose new rules or issue draft guidance for comment.

PART I: RECENTLY EFFECTIVE STATE HOUSING LAWS

SENATE BILL 423 — EXPANSION AND EXTENSION OF SENATE BILL 35

ASSEMBLY BILL 1287 — ADDITIONAL DENSITY BONUS UNDER STATE DENSITY BONUS LAW

ASSEMBLY BILL 1633 — EXPANSION OF HOUSING ACCOUNTABILITY ACT PROTECTIONS: CEQA

ASSEMBLY BILL 1485 — STATE ENFORCEMENT OF HOUSING LAWS

PART II: PENDING STATE HOUSING LAWS

ASSEMBLY BILL 2243 — AB 2011 AMENDMENTS

Project Review and Approval

Residential Density

Commercial Corridor Frontage Requirements

Project Site Size Requirements

Setback Requirements

Freeway, Industrial Use, & Oil/Natural Gas Facility Proximity

Coastal Zone Projects

Residential Conversion Projects

Clarifications

Implications

ASSEMBLY BILL 2560 & SENATE BILL 951 — COASTAL ZONE PROJECTS

Assembly Bill 2560

Implications

Senate Bill 951

Implications

ASSEMBLY BILL 1893 & ASSEMBLY BILL 1886 — BUILDER’S REMEDY AMENDMENTS

Assembly Bill 1893

New Basis for Denial & New Project Requirements

Project “Grandfathering”

Implications

Assembly Bill 1886

Implications

ASSEMBLY BILL 3068 — ADAPTIVE REUSE PROJECTS

Threshold Requirements

Affordability Requirements

Project Site Requirements

Labor Requirements

Project Approval Process

Development Impact Fees

Adjacent Projects

Implications

SB 1227 — SAN FRANCISCO DOWNTOWN REVITALIZATION ZONE PROJECTS

Qualifying Downtown Revitalization Zone Projects

New CEQA Exemption

New CEQA Streamlining Pathway

New Property Tax Exemption for Moderate-Income Housing

Implications

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Summary of Content

Robust Public Comments Expected

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Key Points:

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Key Takeaways

Practical Implications for HIPAA Covered Entities & Business Associates

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IN DEPTH

KEY TAKEAWAYS FROM THE NOTICE

BACKGROUND: THE DOMESTIC CONTENT BONUS CREDIT

THE MODIFICATIONS: A PROMISING PATH FOR THE DOMESTIC CONTENT BONUS CREDIT

NEW ELECTIVE SAFE HARBOR

Generally

Mechanics of the Safe Harbor

EXPANSION OF COVERED TECHNOLOGIES

CERTIFICATION

RELIANCE AND COMMENT PERIOD

CONCLUSION

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Key Takeaways

Background