Real Estate / 2 min read
The decades-long debate over which wetlands are protected under the Clean Water Act has come to an end. On May 25, 2023, the United States Supreme Court issued its opinion in Sackett v. U.S. Environmental Protection Agency and limited the federal government's authority to regulate certain wetlands, an issue that has caused a great deal of confusion and frustration for property developers and enforcement agencies alike. In making its decision, the Court considered the federal government's broad authority over wetlands, the significant civil and criminal penalties for violations of the Clean Water Act, and the states' role in regulating water resources.
The Clean Water Act and "Waters of the United States"
The Clean Water Act prohibits dredging or discharging in "waters of the United States" without a permit. The previous interpretation of "waters of the United States" granted the EPA wide-ranging discretion over what constituted a wetland, which the agency admitted included "almost all waters and wetlands [were] susceptible to regulation." Now, a wetland may only be regulated if it has continuous surface water connection to traditional "waters of the United States," such as rivers, lakes, and oceans. The Court acknowledged that some wetlands are not constantly wet due to drought and other factors. Nevertheless, the revised definition reduces the number of wetlands subject to the Clean Water Act, thereby removing the EPA's red tape around the country.
Implications for Development
So, what does this mean for regulated industries and real estate development? Probably fewer permits.
From a federal permitting standpoint, the narrowing of protected wetlands will likely ease regulatory burdens on landowners, property developers, agricultural producers, and industrial dischargers whose projects or facilities have been aggressively regulated by the EPA's extensive application of the Clean Water Act. Thus, parties currently in or about to begin development projects may reevaluate whether any onsite waters remain protected. Though the decision does not change obligations under existing permits, it could change enforcement actions by the EPA as it adjusts to the new ruling.
State and Local Regulation
However, state and local governments may regulate and impose protective requirements for waters and wetlands within their borders as the federal Clean Water Act merely sets a minimum bar. Under its current administration, Texas will likely not push the envelope of wetlands regulation. After all, before the Sackett decision, the State of Texas sought an injunction against the EPA, challenging the EPA's broader definition of "waters of the United States." Texas abides by the U.S. Army Corps of Engineers' permitting requirements, so Texas-based developers and landowners will likely encounter a more streamlined process as the threshold for regulated wetlands is now more precise.
Future Outlook
Moving forward, the EPA must draft a new regulatory definition of "waters of the United States" that complies with the Sackett decision. Also, federal agencies will be constrained by the Court's definition when enforcing the Clean Water Act. While the Supreme Court cleared this wetlands issue, it will be interesting to see how federal agencies, states, and environmental groups muddy the waters in response.