What Does the SCOTUS Ruling Mean for KC “Wetlands”?

“Developers should get with their engineers early on for guidance,” said David Rinne, president of Schlagel, when asked what KCHBA members need to do since the Supreme Court of the United States (SCOTUS) ruled on Sackett v. Environmental Protection Agency.

On May 25, SCOTUS issued a unanimous decision in Sackett v. Environmental Protection Agency that will force the Biden administration to overhaul its “waters of the U.S.” (WOTUS) rule and ultimately provide builders and developers more certainty in the federal permitting process, according to the National Association of Home Builders (NAHB).

The Sackett case involved the government regulation of a wetland near a roadside ditch. The government believed that it had Clean Water Act (CWA) authority over the wetland because the government claimed that this wetland, in combination with other nearby wetlands, had a “significant nexus” to Priest Lake, Idaho.

The significant nexus test that establishes federal jurisdiction over minor waterbodies, such as isolated wetlands or human-made ditches, is a critical part of the Biden administration’s WOTUS rule.

The Supreme Court rejected the significant nexus test and the EPA’s reasoning. Five justices joined the opinion of the court, which began its analysis by explaining that the CWA’s use of the term “waters” encompasses only relatively permanent, standing or continuously flowing bodies of water that form geographic features that are ordinarily described as streams, oceans, rivers and lakes.

With respect to wetlands, the Supreme Court explained that in order for a wetland to be regulated under the Clean Water Act, it must have “a continuous surface connection to bodies that are ‘waters of the United States’ in their own right, so that there is no clear demarcation between ‘waters’ and wetlands.” As a practical matter, the court found only wetlands that are indistinguishable from waters of the United States are covered by the CWA.

“The Sackett case will have a significant impact on what the Corps and EPA are able to regulate in the Kansas City area,” said Harold Phelps, president, Phelps Engineering. “Wetlands in farm ponds and along ephemeral streams will no longer be regulatory wetlands and should not require a permit. Fewer permits will mean that projects can be expedited rather than waiting three months to years for a nationwide or individual permit.”

“The ruling will dramatically reduce the length of the permitting process as well as the costs of the permits for a typical residential development,” said Vincent Walker, director of land and development at Ashlar Homes. “In our Woodhaven community the mitigation costs prior to the ruling would have added an additional cost of $500 per lot. After the ruling, we estimate that number will come down to possibly less than $100 per lot. Though this number doesn’t seem impactful, if we didn’t have the high density that this project contains then the impact could have been over $1,000 per home before we even disturbed the dirt.”

Although the Sackett case did not directly address the Biden administration’s newest rule defining “waters of the United States,” this decision has an enormous impact on that rule. The current Biden WOTUS rule is based on the significant nexus analysis the Supreme Court has clearly rejected. Therefore, the administration will have to make extensive changes to the rule.

“The downside to this decision is that if in fact you do need a permit the permit could be delayed for 9-15 months depending on how quickly the Corps and EPA establish a ‘new’ definition of WOTUS and can get it published in the Federal Register,” said Phelps.

What this means going forward is the EPA and the U.S. Army Corps of Engineers will most likely need to go back to the drawing board to craft a revised regulation applicable to all 50 states. This process is expected to take several months.

“The situation is somewhat fluid right now. Based on the Sackett ruling, there has been an impact on how the local regulatory offices are handling jurisdictional determinations as well as permit applications,” said Rinne. “Each project is unique in the best path to follow for the permitting process. Overall, the COE responses have been generally in line with the ruling, it just varies from case to case.”

As the government moves to revamp its WOTUS rule, NAHB will be urging the federal agencies to implement a durable and practical definition of WOTUS that will truly protect our nation’s water resources without infringing on states’ authority and triggering additional expensive, timeconsuming permitting and compliance requirements.

“Being personally involved in the ‘lobbying’ efforts at NAHB and locally, we were not very successful impacting the last definition of WOTUS,” said Phelps. “This administration was set on what they wanted and they got it pushed through. But, this Sackett case has placed a big hole in their new definition so they are going to have to start over with this new case law. NAHB specifically asked for the latest definition to be delayed until the Sackett case was resolved, but the Corps and EPA wanted it out there, in my opinion, to possibly influence the court decision. We will see how effective NAHB is in the new definition.”

Tom Ward, vice president of legal advocacy at NAHB, recently stated on a podcast that he believes the states will have to start stepping up and regulating these waters, but he noted no states have picked up that baton as of yet.

“We did have a permit pending for a project and we have elected to withdraw the permit and continue with the project,” said Walker. “We are sensitive to what we feel could be impacted once the ruling is sorted out and will re-apply once the new rules are established.”