NLBMDA: ‘WOTUS’ Rule = Bad News for Home Building

On May 27, the Environmental Protection Agency (EPA) and the Army Corps of Engineers (Army Corps) released the final version of a rule revising the definition of “waters of the United States” (WOTUS). This rule is significant to the home building industry as it changes what areas the federal government can regulate under the Clean Water Act. EPA and the Army Corps already regulate “navigable waters” such as rivers, lakes and streams; however, the new rule is vague and could significantly expand federal jurisdiction of waters upstream, triggering additional expensive and time consuming permitting and regulatory requirements.

Since the Clean Water Act’s inception in 1972, Congress, regulatory agencies and federal courts have been trying to pin down the practical extent of federal jurisdiction over wetlands.

Whether or not a potential jobsite is a jurisdictional wetland is of great importance to building and construction sector. If it is, they have to obtain not only federal permits, but also protection – in the form of contract clauses and insurance — against any potential environmental problems. The additional time and expense involved has to be factored into the project.

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At a minimum, states will have to administer and issue additional permits, as well as develop or revise water quality standards. Not to mention, outside groups are likely to argue that permits are required for all waters subject to the Clean Water Act. The end result of which will be lawsuits that will cause regulatory uncertainty and further delays of projects.

In 2001, and again in 2006, the Supreme Court affirmed that there are limits to federal jurisdiction of water under the Clean Water Act; rejecting, first, the agencies’ broad assertion of jurisdiction based on potential use of isolated waters by migratory birds and, second, the agencies’ assertion of jurisdiction based on “any hydrological connection.”

Yet, the proposed rule defines jurisdiction broadly, to the point where EPA and the Army Corps exempted swimming pools and ornamental ponds from being considered “Waters of the United States.”

Congressional Scrutiny of the Rule
On May 12, the House of Representatives voted 261 to 155 in approving the Regulatory Integrity Protection Act (H.R. 1732). It requires EPA and the Army Corps to withdraw the regulation within 30 days and craft a new version. President Obama has threatened to veto the legislation.