Commercial real estate developers want to build projects that enhance lives while also protecting the environment. But in doing so, developers must comply with a litany of regulations at the federal, state and local level. Ensuring these rules are fair and predictable, and strike a balance between environmental protection and economic development, is essential to the industry.
However, at least one such rule, the “waters of the United States” or “WOTUS” rule, is especially confusing.
The WOTUS rule is developed primarily by two regulatory agencies, the U.S. Army Corps of Engineers (Corps) and Environmental Protection Agency (EPA), under the legal authority of the Clean Water Act. The regulation is of particular importance to commercial real estate developers as it dictates which waters receive federal protection and whether costly, often time-consuming permits must be obtained in order to go forward with a project.
As a result, the definition of WOTUS is hotly contested. Through a series of regulations and guidance documents issued over the years, the Corps and EPA have attempted to provide certainty to the regulated community. But given its broad scope, disparate interpretations of the definition of WOTUS – by both regulators and the regulated – have led to dozens of court battles. The rulings have only generated further confusion, resulting in contractions and expansions of federal powers.
In fact, there are two different versions of WOTUS in effect in the U.S. right now. As things currently stand, a 2015 definition of WOTUS is applicable in 22 states nationwide, with the remaining 28 states governed by a 1988 definition.
This means that if you want to build in California, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Vermont, Virginia or Washington, you are governed by the 2015 rule. Outside of those states, even if just across the border from your home or business, the older rule remains in effect. The rules themselves are also vague and subject to interpretation; developers are often forced to hire attorneys and consultants to secure permits. It can take years to obtain those permits, and that means costly project delays.
To bring clarity and allow developers to move forward on projects with confidence, in February the Trump administration proposed new regulations intended to clarify WOTUS. Once finalized, the new rule would replace the Obama-era 2015 regulation, and update the 1988 version for the 21st century.
The new rule would allow developers to work across state borders, confident that they are protecting the environment while complying with federal regulations. It would also move the issue out of the courtroom and back into the regulatory agency process.
The proposal is an important first step towards achieving these goals. To help improve it, NAIOP filed comments and suggestions for modifications to the proposal.
In its formal comment letter, NAIOP outlined four key recommendations that could help those involved in commercial real estate determine which waters are federally regulated, and do so in a timely and cost-efficient manner. NAIOP recommends that the new rules:
- Exempt all existing ditches unless used to move a stream.
- Exempt all existing storm water and wastewater facilities.
- Regulate only significant streams (those with a drainage area greater than 1 percent of the standard one square mile minimum FEMA floodplain), unless a district engineer finds that local conditions warrant a larger drainage area exclusion.
- Regulate all areas exhibiting wetland characteristics to protect water quality and reduce flooding.
We believe these issues can be easily addressed, and that doing so will enable the new WOTUS rule to survive litigation, protect our waters, reduce costs and uncertainty, and generate economic growth. To achieve fair outcomes, policymakers will need to compromise and strike a balance between the need to both strengthen our economy and protect our waters. However, there’s no reason we can’t have sustainable development and clean water throughout the United States.
NAIOP will continue to advocate for an effective WOTUS which affords reasonable protections for our nation’s wetlands while ensuring that responsible development can occur.
Alex Ford is NAIOP’s Director of Federal Affairs.