The Washington Report

January 23, 2023

In This Issue

Clean Water Act
Coalition Files Suit to Stop WOTUS Rule

Data Privacy and Security
FTC Issues New Requirements for Non-Banking Financial Institutions

Rental Housing Issues
NAR Engaged on Rental Housing Issues

Valuation Issues Update
NAR Makes Recommendations on VA Appraisal Modernization


Clean Water Act

Coalition Files Suit to Stop WOTUS Rule

On January 18, 2023, as part of a large coalition, the National Association of REALTORS® filed a lawsuit in the U.S. District Court for the Southern District of Texas to stop the Environmental Protection Agency’s and Army Corps of Engineers’ (the Agencies’) final Waters of the United States (“WOTUS”) rule from going into effect. The final rule was announced on December 29, 2022, and is set to take effect on March 20, 2023.

The lawsuit challenges the legality of the rule, which purports to clarify the Agencies’ definition of WOTUS. Instead of providing much-needed clarity to the regulated community, the rule instead vastly expands the Agencies’ authority over dry land and water features regardless of the physical connection to actual navigable waters. Under the final rule, the complaint argues that property owners will constantly be at risk that any sometimes-wet feature on their property will be deemed WOTUS by the Agencies using vague and unpredictable standards—making normal business activities in that area not only subject to substantial regulatory burdens, but also subject to criminal and civil penalties for those activities.

The Plaintiffs seek to vacate the rule based on violations of the Administrative Procedures Act, the Constitution’s Commerce Clause and Due Process Clause of the Fifth Amendment, and its departure from the plain text of the Clean Water Act. The Texas Attorney General has also filed a lawsuit in Galveston, arguing the final rule disrupts the state’s development and management of its own energy, agricultural, and transportation infrastructure.

In addition to NAR, the coalition consists of the following organizations: American Farm Bureau Federation, American Petroleum Institute, American Road and Transportation Builders Association, Associated General Contractors of America, Leading Builders of America, Matagorda County Farm Bureau, National Association of Home Builders, National Cattlemen’s Beef Association, National Corn Growers Association, National Mining Association, National Pork Producers Council, National Stone, Sand and Gravel Association, Public Lands Council, Texas Farm Bureau, and the U.S. Poultry and Egg Association.

Stay tuned to for the latest updates on the litigation and implementation of the final rule.

See NAR’s Comment on the final WOTUS Rule.

Read more about the final WOTUS Rule.

Read the complaint.

Christie DeSanctis,, 202-383-1102
Russell Riggs,, 202-383-1259

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Data Privacy and Security

FTC Issues New Requirements for Non-Banking Financial Institutions

In October 2021, the Federal Trade Commission (“FTC”) approved changes to its Standards for Safeguarding Information (“Safeguards Rule”) to include more specific criteria for data protection provisions financial institutions must implement as part of their information security programs. The Safeguards Rule implements the requirements of Section 501(b) of the Gramm-Leach-Bliley Act, which mandates certain regulators to issue regulations to ensure the safeguarding of customer information.  

While many provisions of the Safeguards Rule went into effect 30 days after publication of the Rule in the Federal Register, other sections of the Rule were set to go into effect on December 9, 2022. This deadline has been extended by six months, meaning that covered entities must comply with the Rule’s provisions by June 9, 2023.

The Safeguards Rule requires non-banking financial institutions, such as mortgage brokers and some other real estate companies, to develop, implement, and maintain a comprehensive security program to keep their customers’ information safe. For purposes of the Safeguards Rule, a “customer” is a natural person who obtains a financial product or service for a personal, family, or household purpose and has established a customer relationship with the financial institution.

Covered Entities: The Safeguards Rule applies to financial institutions who are under the FTC’s jurisdiction and not subject to the enforcement authority of another regulator (e.g., Securities and Exchange Commission, federal banking agencies, or state insurance regulators) under Section 505 of the Gramm-Leach-Bliley Act, 15 U.S.C. § 6805. For example, banks, broker-dealers, registered investment advisers, and insurance companies are covered by the rules issued by their regulators and therefore the Safeguards Rule does not apply to them. While the Consumer Financial Protection Bureau issues the regulations implementing the privacy rules under the Gramm-Leach-Bliley Act, it is not responsible for the Safeguards Rule.  An entity is a “financial institution” if it’s engaged in an activity that is “financial in nature” or is “incidental to such financial activities as described in Section 4(k) of the Bank Holding Company Act of 1956. This includes the following types of companies:

  • Entities that provide real estate settlement services;
  • Personal property and real estate appraisers, unless they are only providing one-time appraisal services to the consumer (i.e., not establishing customer relationships);
  • Mortgage brokers; and
  • Companies acting as “finders” in bringing together one or more buyers and sellers of any product or service for transactions that the parties themselves negotiate and consummate.

However, it is important to note that entities that maintain customer information of fewer than 5,000 consumers are classified as exempt, even if they meet the definition of financial institution listed above. 


Information Security Program

Covered financial institutions must develop, implement, and maintain an information security program with administrative, technical, and physical safeguards designed to protect customer information. These information security programs must be written and appropriate to the size and complexity of the business, the nature and scope of its activities, and the sensitivity of the information at issue. The objectives of these security programs are to:

  • Ensure the security and confidentiality of customer information;
  • Protect against anticipated threats or hazards to the security or integrity of that information; and
  • Protect against unauthorized access to that information that could result in substantial harm or inconvenience to any customer.

Data Privacy and Security Provisions

Covered entities must also implement the following specific data privacy and security provisions:

  • Designate a qualified individual to oversee their information security program;
  • Develop a written risk assessment;
  • Limit and monitor who can access sensitive customer information;
  • Encrypt all sensitive information in transit and at rest;
  • Test and monitor effectiveness of key controls, systems, and procedures;
  • Train security personnel;
  • Develop an incident response plan;
  • Oversee service providers by taking reasonable steps to select, retain, and periodically assess their security practices; and
  • Implement multi-factor authentication or another method with equivalent protection for any individual accessing customer information.

Disclaimer: This information is intended for informational and educational purposes and does not constitute any form of legal advice. This should not be relied on or treated as a substitute for specific advice relevant to specific circumstances and is not intended to create, modify, or replace your company’s policies or procedures. NAR urges all members who have questions about their legal compliance to have their attorneys review the Rule’s technical language at:

Olive Morris,, 202-383-1215

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Rental Housing Issues

NAR Engaged on Rental Housing Issues

Since the COVID-19 pandemic began and stay-at-home orders were put into place, rental housing has been in the spotlight, with attention staying on even after residents returned to work due to new challenges from a housing supply shortage and rising inflation. The Biden Administration is particularly focused on rental housing issues, and has hosted a series of informational summits, discussions, and meetings with housing providers, resident-advocate groups, and state, local and national policymakers to discuss the state of rental housing in the country. NAR, as the leading real estate advocacy organization, is one of a select few housing provider groups invited by the White House to join these discussions, and has stressed that its membership – 40% of which owns rental housing property – largely represents “mom-and-pop housing providers,” who own just a few units, have small margins, and who have also been impacted by inflation and rising costs. NAR has steadfastly opposed policy proposals which would interfere with the ability of housing providers to enforce their contracts, the rights of states and localities to set their housing regulations, burdensome requirements that entirely fall on property managers and housing providers with no reciprocal relief for them, and any type of rent control. Amplifying that message is the housing provider coalition NAR belongs to, which brings together representatives from all the major housing provider groups in the country to share their expertise and perspectives on any potential policy actions related to rental housing. 

The White House has made clear that promoting resident-centered property management practices is a priority of the Administration, but it is not yet known what type of promotions or actions they are planning in support of that. NAR has been consistent in its messaging and responses to policymakers in the White House, federal agencies, and on Capitol Hill on these issues, making clear that:  

  • Rental housing policy belongs at the state/local level, where policymakers are closer and better equipped to know the specific needs and challenges faced in their communities;
  • Policies which drive housing providers out of the market will have both the immediate and long-term impact of making rental housing more sparse and thus more expensive;
  • The Federal government has tools at its disposal to alleviate the pressure on rental housing stock by creating more affordable housing – both to rent and buy - and provide rental assistance via a range of channels including grants, state and local fiscal recovery funding, and a variety of HUD programs that can be better funded and improved; and
  • The root causes of recent rising rents are inflation and the housing supply shortage, both of which the Administration and Congress should be addressing – not a symptom of it.  

NAR is at the table for these discussions, and is not faltering in its messaging and advocacy in support of housing providers and property managers, while demanding that federal policymakers address the actual problem – a housing supply shortage and inflation – and not punish one side of those impacted by it in the rental housing ecosystem. NAR, and the housing provider coalition, will continue to engage with the White House on this issue, while exploring other policy solutions to resolve the root cause.

To learn more about the message NAR and its industry partners are sending to policymakers, read the December 2022 coalition letter to the White House regarding "resident-centered property management practices" discussions, and the December 2022 letter to the House Financial Services Committee for a hearing addressing the impact of inflation on housing supply and affordability.  

For additional information on NAR's policies and work on rental housing issues, as well as other resources, visit the NAR Advocacy Rental Housing Resource page.

Erin Stackley,, 202-383-1150
Bryan Greene,, 202-383-1114

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Valuation Issues Update

NAR Makes Recommendations on VA Appraisal Modernization

NAR wrote to the U.S. Department of Veterans Affairs (VA) regarding implementation of H.R. 7735, the Improving Access to the VA Home Loan Benefit Act of 2022, which passed Congress and was signed into law on December 27th, 2022.

The bill provides 90 days from enactment for the VA Secretary to review and propose changes to its requirements for an appraisal as well as its qualifications for appraisers and the use of waivers. It then stipulates an additional 90 days to implement them.

NAR's letter to the Secretary of the VA and the Executive Director of the Loan Guarantee Program articulates NAR's support for modernization of the appraisal industry and process. However, it describes NAR's concern that the rapid timeline for analysis and implementation would not allow the VA to vet internal process for potential innovation or the veracity or applicability of options used in the private sector.  Furthermore, modernization should be balanced against risk to the Loan Guarantee Program, seeking to maintain a sound fund for generations of active duty and veteran buyers to come.

Ken Fears,, 202-383-1066
Jeremy Green,, 312-329-8404

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