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In response to the Supreme Court decision in the Sackett v. EPA case, the U.S. Environmental Protection Agency (EPA) and Department of the Army announced a final rule amending the 2023 definition of “waters of the United States” (WOTUS), including the removal of the “significant nexus test.”
The agencies said the amended ruling only addresses parts of the 2023 rule that were determined invalid as a result of the Supreme Court’s decision in favor of the Sackett family.

The new rule removes the significant nexus test when identifying tributaries and other waters as federally protected. The significant nexus test required a federal regulator to determine whether a feature significantly impacted “the integrity of traditional navigable water.” While the significant nexus test was one major point of contention with the WOTUS definition from housing organizations, the NAHB said the new final rule still remains a challenge to housing affordability due to the regulatory burdens for builders and developers.

“The amended WOTUS rule represents a blow to housing affordability. It assures continued uncertainty regarding federal jurisdiction as established by the Supreme Court’s recent Sackett decision that made clear the federal government only has authority over relatively permanent water bodies,” NAHB chairman Alicia Huey said in a statement on behalf of the association.

The National Apartment Association (NAA) and the National Multifamily Housing Council (NMHC) also expressed disappointment with the final rule, stating it "will only serve to worsen housing affordability and increase costs for housing providers and residents." While expressing support for the protection of water resources, the two associations said the rule is "vague" and "creates uncertainty" for housing providers, while suggesting the new final rule is not in compliance with the Supreme Court decision from May.

"The revised rule does not comply with Supreme Court precedent and with the limits on regulatory jurisdiction set forth in the Clean Water Act. Federal authorities have chosen to ignore the Supreme Court's direction in Sackett v. EPA set down earlier this summer," the NAA and NMHC said in a joint statement.

The new final rule revises the adjacency test when identifying federally jurisdictional wetlands, clarifies that interstate wetlands do not fall within the interstate waters category, and clarifies the types of features that can be considered under the “additional waters” category. The amendments also do not change the eight exclusions from the definition of WOTUS: prior converted cropland; waste treatment systems; ditches; artificially irrigated areas; artificial lakes and ponds; artificial reflecting pools or swimming pools; water-filled depressions; and swales and erosion features.

“While I am disappointed by the Supreme Court’s decision in the Sackett case, EPA and Army have an obligation to apply this decision alongside our state co-regulators, Tribes, and partners,” EPA administrator Michael Regan said in a news release announcing the new final rule. “Moving forward, we will do everything we can with our existing authorities and resources to help communities, states, and Tribes protect the clean water upon which we all depend.”

The NAHB said the amended rule’s failure to define a “relatively permanent” water body sets the stage for continued federal overreach, bureaucratic delays during the wetlands permitting process, and continued regulatory confusion for builders and land developers.

“[The failure to define a ‘relatively permanent’ water body] will directly result in continued regulatory barriers to affordable housing as single-family and multifamily developers struggle to find the developable land necessary to produce the new affordable housing units this nation desperately needs,” Huey said.

The EPA and Army will host a public webinar in September to provide updates on the definitions of WOTUS and also plan to host “listening sessions” in the fall with co-regulators and stakeholders focusing on issues that may arise outside of the new limited rule amendment to conform the WOTUS definition with the Supreme Court decision.