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In a decision hailed as “a major victory” for the housing industry by the NAHB, the U.S. District Court for the District of North Dakota has ruled the Waters of the United States (WOTUS) rule under the Clean Water Act (CWA) cannot be implemented in 24 states. The NAHB, the National Multifamily Housing Council (NMHC), and 16 other industry groups from the construction, agriculture, and infrastructure sectors supported the North Dakota case.

Following bipartisan approval in the House of Representatives and the Senate in opposition to the WOTUS rule, President Joe Biden vetoed the congressional resolution to rescind the the rule last week. However, the decision in North Dakota and a similar decision in a Texas court in March means the WOTUS rule cannot be enforced in 26 states across the country: Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming.

WOTUS is a threshold term intended to establish the geographic scope of federal jurisdiction under the CWA. The rule would add an additional step in the regulatory process for builders and developers, requiring them to determine whether isolated wetlands, ephemeral streams, or human-made drainage features are “federally jurisdictional.” Under the rule, a federal regulator would apply the “significant nexus test” to determine whether a feature significantly impacted the “integrity of a traditional navigable water.” The NAHB said it is “extremely” difficult to apply the significant nexus test consistently, and, in general, the rule “radically extends” areas in which builders need to get federal permits.

In a 45-page ruling, U.S. District Judge Daniel Hovland wrote the 2023 WOTUS rule “is neither understandable nor intelligible, and its boundaries are unlimited.” Judge Hovland also wrote there are “serious constitutional concerns triggered by the implementation” of the new WOTUS rule.

The U.S. Environmental Protection Agency said in a statement that the agency and the Army Corps of Engineers are reviewing the North Dakota court decision but maintain belief that the new WOTUS rule is “the best” interpretation of the CWA.

While the WOTUS rule remains in effect in 24 states, a pending U.S. Supreme Court case, Sackett v. EPA, could significantly narrow the scope of the EPA’s authority and nullify major elements of the WOTUS definition.