Despite opposition from numerous housing, infrastructure, and agricultural organizations, the updated Waters of the United States (WOTUS) rule under the Clean Water Act is in effect in 48 states. A federal judge in Texas blocked the WOTUS rule from taking effect in Texas and Idaho but denied an effort from several industry groups—including the NAHB and the National Multifamily Housing Council (NMHC)—to stop the rule from coming into effect nationwide.

Judge Jeffrey Brown specifically cited “serious concerns” regarding the significant nexus text of the new WOTUS rule while denying a second lawsuit that argued the U.S. Environmental Protection Agency (EPA) and U.S. Department of the Army should wait for the upcoming Sackett v. EPA decision from the U.S. Supreme Court before implementing the new rules.

The Sackett v. EPA case is focused on the legality of the significant nexus test, which is a critical element of the final WOTUS rule. In its previous opposition to the WOTUS rule, the NAHB and NMHC called for the EPA and the Army to wait until the final decision in the Sackett case, as businesses could invest time and resources to comply with a rule that may be inconsistent with the Supreme Court’s decision.

In addition to the court case in Texas and the Sackett v. EPA case, at least 25 other states have filed complaints and motions for preliminary injunctions against the WOTUS rule, including West Virginia, Kentucky, and North Dakota. In his decision, Brown expressed reluctance "to deprive states that embrace the Rule from exercising their sovereign rights to conform their conduct accordingly at least until the Rule's statutory and constitutional validity has been determined."

While the EPA says the final rule returns WOTUS to a “reasonable and familiar framework” and establishes limits “that appropriately draw the boundary of waters subject to federal protection,” the NAHB has called the expanded definition “a blow to affordability and regulatory certainty” for builders and other stakeholders. The NMHC has previously said the expanded definition would provide additional hurdles to development, creating permitting delays, adding development costs, and creating legal risks.

The NAHB opposes the final rule’s continued reliance on the “significant nexus test” to potentially assert federal control over isolated wetlands and ephemeral streams impacting numerous activities, including home building. The NAHB said the significant nexus test has proven “extremely difficult to apply consistently in the field,” leaving builders and developers unable to determine which isolated wetlands, ephemeral streams, or human-made drainage features are federally jurisdictional under the Clean Water Act.

The NAHB said the new WOTUS rule “radically extends” the areas in which home builders are required to get federal permits and will result in continued regulatory barriers to affordable housing.

The NAHB has worked to get a bipartisan resolution passed that would rescind the Biden administration's WOTUS rule. The House of Representatives passed the Congressional Review Act joint resolution of disapproval last week, which would rescind the WOTUS rule. An identical resolution is pending before the Senate, with a vote expected in the coming weeks. However, the NAHB says President Biden “is expected to veto the measure if it reaches his desk.”