Homebuilders flex as feds cede wetland oversight to states

By Miranda Willson | 03/28/2024 04:45 PM EDT

After a landmark Supreme Court ruling, up to 63 percent of the nation’s wetlands lost federal protection, EPA says. States are moving into the regulatory void.

Photo collage of wetlands and houses in the background with a land for sale sign

POLITICO illustration/Photos by iStock

Homebuilders are exerting their influence in state legislatures to lock in policies to make it easier to develop wetlands, a situation that critics say creates a “slippery slope” for regulatory rollbacks.

The Supreme Court ruling last year in Sackett v. EPA exempted tens of millions of acres of wetlands from Clean Water Act protection and put states in the driver’s seat to determine how to regulate isolated swamps, bogs and other wetlands for the first time in decades.

While some states have expanded protections, others have moved in the opposite direction. Indiana and North Carolina have opened up more wetlands to development through recently enacted laws. And, Tennessee and Missouri are considering bills that would have similar effects.


Among those helping draft the policies are development trade groups, which have long been critical of wetland laws. Some legislators who’ve sponsored the bills also work in real estate and development, although they say they would not personally benefit from the measures.

“The builders associations, and largely development pressure, is the main driver of wetlands rollbacks,” said Kate Burgess, conservation program manager at the nonprofit National Caucus of Environmental Legislators. “It’s a slippery slope, because once some rollbacks are permitted, it starts to delegitimize the importance and value of wetlands in the eyes of other decisionmakers.”

Environmental advocates and former EPA officials are alarmed by the trend. They say more states could follow the same path, at a time when wetland loss is accelerating. The Fish and Wildlife Service reported last month that wetlands covered just 6 percent of the Lower 48 states in 2019. Between 2009 and 2019, the report said, the U.S. lost on net about 221,000 acres of wetlands, a rate described as unsustainable.

In Sackett, the majority on the Supreme Court ruled that only wetlands that physically touch and appear “indistinguishable” from rivers, lakes and oceans are subject to Clean Water Act protection. Legal experts say it’s a major departure from past interpretations of the 1972 law.

The ruling was a victory for Idaho property owners Michael and Chantell Sackett who wanted to build a home over wetlands on their lakeside lot. But it also means that private companies and developers would no longer need a federal permit to fill or dredge roughly 63 percent of the nation’s wetlands, according to EPA.

“There’s this huge vacuum of aquatic resources that are no longer being protected that states need to fill,” said Cale Jaffe, an environmental law professor at the University of Virginia. “The last thing you want to see is states retreating from that obligation.”

Wetlands provide habitat for wildlife, recharge basins for groundwater, and filter pollution for rivers, streams and aquifers. They also reduce the impacts of floods by providing drainage in storms, which scientists say are becoming more frequent and severe due to climate change.

Developers have complained for years that wetland regulations add extra costs that get passed onto homebuyers. They say that the federal government has improperly claimed oversight of small, insignificant wetlands — like those on the Sacketts’ property — that do not benefit the environment.

In addition to the Farm Bureau and energy trade groups, the National Association of Home Builders and the National Association of Realtors have asserted that states — not the federal government — should largely be able to regulate waters as they choose.

“The concern our members have is, if you’re adding the burden of a new permit, what are the economic impacts going to be?” said Adam Pugh, program manager of environmental policy at the National Association of Home Builders. “How much is that going to raise the cost of a house?”

In Oregon, for example, a housing advisory council in January suggested dialing back longstanding wetlands protections as one potential avenue for building more housing.

Yet critics say the building industry has overstated the cost of regulating wetlands and floodplains, making development more susceptible to rising water in storms.

“I do find it interesting that [builders] are being so vocal right now,” said Ellen Gilinsky, a former EPA official who ran Virginia’s wetland program in the early 2000s. “In my experience, most building projects are able to get a permit if they are willing to work around sensitive wetlands on their site and provide mitigation for unavoidable impacts.”


In the Sackett majority opinion, Justice Samuel Alito wrote that states “can and will continue to exercise their primary authority” to combat water pollution.

Some states are beefing up their regulations. Colorado and Illinois, for example, are weighing legislation that would regulate and protect water resources no longer under federal oversight. Last week, Wisconsin Gov. Tony Evers (D) signed a bipartisan bill creating a grant program for local governments to restore wetlands.

Still, as of 2022, 24 states had no wetland permit requirements, according to an analysis by James McElfish, a senior attorney at the Environmental Law Institute. Thirteen states also had laws on the books stating that their environmental rules could not go beyond federal regulations, per McElfish’s report.

That's why environmental advocates are concerned about a pending bill in Tennessee. The proposed House bill from state Rep. Kevin Vaughan (R) would prohibit the state from classifying “real property” as a wetland, unless it already falls under the Clean Water Act.

Vaughan is the owner of Township Development Services, a property development and real estate company. In December, he received $7,500 from the Build Tennessee PAC, a political action committee funded by the Home Builders Association of Tennessee and private development companies.

He didn't respond to requests for an interview, but he told the Tennessee Lookout in March that the notion that he was “double-dealing” or would benefit from the legislation could not be further from the truth.

During a hearing on his bill in February, Vaughan praised the Sackett ruling and lamented having had to mitigate for damages to “isolated wetlands.”

“That’s one of the things that frustrated me in my career, seeing the fact that, again, a soybean terrace is treated the same way as a high-value wetland that does have environmental quality,” Vaughan said during the hearing before the House Agriculture and Natural Resources Subcommittee.

The Tennessee Senate version of the wetland bill was deferred to a summer study last month. The House version was voted out of the agricultural committee and referred to the Finance, Ways and Means Committee on March 20.

State agencies have raised concerns that the bill could worsen flooding and increase disaster spending. Alex Pellom, chief of staff for the Tennessee Emergency Management Agency, said during a hearing that it would be risky to remove wetland mitigation requirements.

“There are certain things that should not be considered wetlands,” Pellom said. “But when we start to talk about low-level wetlands, as well as, even in this bill, up to 4 acres of what we consider moderate-acre wetlands that don’t require permitting, don’t require mitigation, there is a concern that flooding would go up.”

Vaughan has said he has “no concerns” about the bill worsening flooding but that he’s open to discussions with state officials about the language.

Environmental advocates say the idea that the bill would only affect “isolated” wetlands is misleading. If the Tennessee bill were enacted, private entities would be able to fill in dozens of acres of wetlands without any restrictions, said George Nolan, director of the Tennessee office at the Southern Environmental Law Center.

“Allowing developers to destroy wetlands that are that big, with zero analysis of how it would affect neighbors and water quality and ecosystems, would be wrong,” Nolan said in an interview.


Two years before the Sackett decision, Indiana enacted changes to its wetland law through a bill strongly supported by the building industry. This year, the Indiana Builders Association scored another win.

The trade group began meeting last year with the Indiana Department of Environmental Management to discuss ways to make “meaningful revisions” to its wetland law, said Rick Wajda, CEO of the association. Wetland consultants were included in the discussions, Wajda said.

“Certainly, the Sackett decision has changed the landscape across the country and will give individual states and stakeholders an opportunity to shape their policy for non-jurisdictional wetlands,” he said in an email.

The meeting eventually led to a bill in the Indiana General Assembly that was signed by Gov. Eric Holcomb (R) in February. It includes policy changes that "[elevate] protections for Indiana’s most rare and ecologically important wetlands,” said Barry Sneed, a spokesperson for the Department of Environmental Management.

But the law loosens requirements for certain wetlands that were previously considered the most worthy of protection, making them more vulnerable to development. Of the bill’s seven sponsors and authors, four have worked in real estate, building or related industries, according to statements of economic interest filed with the state.

While it’s too soon to know what the law's impacts will be, Brian Vigue, the Great Lakes policy director at the National Audubon Society, said he fears the law could worsen water quality in Lake Michigan and cause more severe flooding. One acre of wetlands can hold at least a million gallons of water, per EPA estimates.

"This isn’t limited to Indiana," Vigue said. "Water flows downhill, and Indiana is in the Mississippi River Basin."

Democratic lawmakers said scientists were sidestepped in discussions over the bill, with the builders steering the process. Two wetland scientists who work in the Department of Environmental Management also raised concerns about the legislation, The Indianapolis Star reported.

“It was introduced as if this was a coming together of the builders, IDEM and wetlands consultants,” said state Sen. Shelli Yoder (D). “Well, what we later learned was the wetlands consultants that were hired by the builders vehemently opposed this bill.”

Wajda insisted that environmental consultants and advocates weighed in, but he and Department of Environmental Management declined to name them. Ultimately, the new policy will help make homes in Indiana more affordable, he added.

State Sen. Rick Niemeyer (R), a co-sponsor, said he thinks the law strikes the right balance for Indiana. Niemeyer carries a real estate license but said that he does not “use it very much” and is not a homebuilder.

“We had almost three hours of testimony in committee. There was a lot more against the bill as opposed to for it,” Niemeyer said. “I think this is going to protect what we need to protect.”

State Sen. Chris Garten (R), another co-sponsor, runs a business, Signature Countertops, that is a member of the Indiana Builders Association. He also previously served on the association's board.

“I don't personally stand to gain anything from the passage of HEA 1383 apart from the knowledge that good policy has successfully been signed into law,” Garten said in an email. “One of the benefits of a part-time legislature is that Indiana continues to elect Hoosiers with varying educational and professional backgrounds.”

North Carolina and Missouri

North Carolina was the first state to change its wetland regulations after Sackett. Under a provision in last year’s Farm Act, the state is now precluded from regulating wetlands not covered under the Clean Water Act.

Gov. Roy Cooper (D) vetoed the bill on the grounds that it would leave about half the state's wetlands unprotected, but the Republican-controlled General Assembly overrode it.

The bill was backed by the North Carolina Home Builders Association. The trade group spent over $276,000 in North Carolina legislative races in 2022, the fourth most of any corporate political action committee that year, according to data compiled by Carolina Forward, a nonprofit, nonpartisan group.

The builders association has been “extremely effective” at influencing lawmakers on wetlands and other issues, said state Rep. Pricey Harrison, a Democrat and critic of the bill.

“They’d been complaining for years about our wetlands rules,” Harrison said. “[This] was their top priority, and it wasn’t a secret.”

Chris Millis, a lobbyist for the builders group, said the wetland provision was not a rollback and was necessary to comply with a statute already on the books. Enacted in 2011, the statute says that state agencies, including the North Carolina Department of Environmental Quality, cannot impose “more restrictive” environmental standards than those in place at the federal level.

“The only thing about the Farm Act was getting the agency’s rules back in line with the established statute,” Millis said. “If an agency wanted to regulate wetlands beyond the federal jurisdiction, they needed to request it from the General Assembly.”

Millis, who served in the North Carolina General Assembly from 2013 to 2017, added that claims about the industry having too much influence on legislators were “absolutely false.”

Missouri is weighing changes to its wetland policy — although the fate of a proposed bill this legislative session is less than certain.

Under the bill sponsored by state Rep. Dean Van Schoiack, a Republican, the state would limit oversight of wetlands to those that are “adjacent to relatively permanent, standing, or continuously flowing bodies of water identified with a continuous surface connection to those waters.” The language is similar to that in Sackett. 

“I think it’s best for the state of Missouri to not be more restrictive than what the Supreme Court says we should be,” Van Schoiack said.

Van Schoiack, who has worked as a farmer, auctioneer and real estate broker outside of his service in the Legislature, said the legislative language was presented to him by the Missouri Cattlemen’s Association. The group did not respond to a request for comment.

“I’ve had discussions with the Missouri [Department of Natural Resources], the Farm Bureau, the Missouri Cattlemen’s Association, the soybean producers,” Van Schoiack said. “Everybody is not exactly on the same page on this right now.”

'An individual state position'

Homebuilders are keeping a close eye on the regulatory landscape.

At the International Builders' Show in February, the National Association of Home Builders’ 140,000 members voted on a sweeping wetlands resolution. It urges EPA and the Army Corps of Engineers to issue more timely permits and limit the scope of the Clean Water Act to navigable waters.

In addition, it says state and local governments are "hastily adopting ill-conceived wetland and water protection policies with a negative impact on residential construction activities." While it does not name specific statesNAHB's Pugh said the resolution refers to how the group's members generally "feel at the state level."

"States have the authority to protect their resources within their border," he said. "How they choose to do that is an individual state position. We hope they bring industry to the table."

In Oregon, Gov. Tina Kotek (D) and state lawmakers have assembled a housing council to help solve the state’s housing crisis. One of many non-binding recommendations offered by the council was that the state dial back its robust wetlands permit program for five years to match the federal regulations.

Bill Ryan, deputy director of operations at the Oregon Department of State Lands, said he hoped that the governor and state Legislature would recognize the trade-offs of that sort of policy.

“We certainly do have a housing crisis, and we’re trying to address that in a bunch of different ways,” said Ryan, whose office oversees wetlands permits. “One solution is to just not regulate [state wetlands] and dial back protections to match those at federal government, but... these wetlands provide important functions and values that need to be protected."

EPA spokesperson Remmington Belford said the agency is committed to supporting states and tribes with efforts to protect water resources.

“States, Tribes, and other entities interested in protecting and restoring freshwater resources can find resources in the Wetland and Water Protection Resource Guide released by the White House in March 2024,” Belford said in a statement.

Time will tell as to how Indiana and North Carolina’s new policies play out, observers said.

Development groups seem to be tapping into communities’ desire to build more affordable housing, said Marla Stelk, executive director of the National Association of Wetland Managers. While much of the U.S. faces a housing crisis, building over wetlands to solve the problem is “a disaster waiting to happen,” she said.

“If you’re planning on building affordable housing in a wetland that’s no longer jurisdictional, you’re putting low-income people at risk, who have the least means to deal with repeat flooding in their homes,” Stelk said.

John Paul Woodley Jr., who served as assistant secretary of the Army under the George W. Bush administration, said that in his experience, local governments and residents do not like to see wetlands being destroyed.

Public outcry over wetland destruction ultimately prompted Virginia to enact its own wetland policy in 2000, he said. Woodley was the state’s secretary of natural resources at the time and now works as a consultant.

“We’ll see if [these states] like what they get,” Woodley said. “My guess is that they won’t.”