Watershed Moment

In June, the Biden administration announced its intention to develop a new rule governing the definition of the “Waters of the United States” in the Clean Water Act.

The new rule would replace the current Navigable Waters Protection Rule, which was proposed by the Trump administration in 2017 and enacted in April 2020. Developed by the Environmental Protection Agency and the Department of the Army, the rule expanded exemptions for waters from federal jurisdiction, creating 12 categories of exclusions. The EPA estimates that the rule resulted in a 25% reduction in waters eligible to receive protection.

The National Association of REALTORS® applauded the 2020 rule. “The current rule is a commonsense regulation that clearly defines what waters are subject to federal jurisdiction and what waters are subject to state protection,” says Russell Riggs, senior policy analyst at NAR.

According to a joint press release issued by the EPA and the Army, the agencies are now concerned that the Navigable Waters Protection Rule is significantly reducing clean water protections. The new rule will seek to address this issue.

Proponents of the rule change say it will protect the environment; opponents say it will extend government overreach. Both sides agree that any rule the administration develops will likely result in more waters being reclassified to fall under federal control.

NAR is among those watching closely.

“If the definition of WOTUS is expanded to bring more waters under jurisdiction of the federal government, NAR does have concerns,” says Riggs, “Federal control over more waters means more red tape and bureaucracy, which could hinder needed real estate development.”

More red tape could be of particular concern to the multifamily sector. Additional federal control, Riggs says, could hamper the creation of much-needed new housing supply, including multifamily units. And affordable housing for low- and moderate-income renters is already scarce.

In addition, new commercial development across all sectors could be curtailed by a rule change, stymieing growth in a time when businesses are marching toward recovery. “A new WOTUS rule that expands federal government control over more waters will hinder new commercial development by requiring additional cumbersome and expensive permitting,” says Riggs.

A new rule could also extend federal protection to thousands of small streams, wetlands, and other waterways—some of which cross farmland, commercial properties, and other private property—to adverse effect, as these water bodies are already protected by state and local regulations. Farms and small businesses could become subject to regulatory takings of land, says Riggs.

What makes increased federal control even more frustrating, he adds, is that it may do very little to protect water quality.

“The Safe Drinking Water Act protects public health by regulating the nation’s public drinking water supply. It provides for multiple barriers against pollution, including treatment, distribution system integrity, public information, and source protection,” says Riggs. “No WOTUS rule would weaken these protective requirements.”

Ultimately, an ideal rule would bring all affected parties—including developers and business interests—to the table to hammer out a regulation that would stop the pendulum swings that have occurred as administrations change hands. According to Riggs, the constant back and forth has created additional burdens for businesses and developers: “For over 20 years, uncertainty surrounding the scope of federal authority over WOTUS has resulted in litigation and regulatory uncertainty, which is bad for development and bad for water protections.”