WOTUS and Its Impact on Homebuilders
Businesses and industries often grumble over regulations. On the other hand, the government creates these regulations to protect people, society, and nature, even if they impact businesses and industries. Some regulations are valid, while others go too far. The new Waters of the United States (WOTUS) regulation is causing great consternation for the construction industry, including home builders.
As the EPA notes, the final revised definition of WOTUS was published in January 2023 and was to take effect in March. The final rule, however, has yet to go into effect due to litigation.
The litigation comes from a wide range of industry associations. Construction Dive reported that the suit to block the new definition of WOTUS came from 16 different industry associations, including the American Road & Transportation Builders Association, the Associated General Contractors of America, and the National Multifamily Housing Council. They argue it’s unconstitutionally broad and encompasses a “staggering range of dry land and water features.” The rule applies to waters of all sizes, including large navigable waters and nearby waterways. Construction Dive gives a great example of what this (really/actually) entails, “… think the Mississippi River— but would also cover small and intermittent streams, wetlands and ponds that might only hold water seasonally or after a heavy rain. In other words, the kinds of bodies of water that are often present on development sites.”
“Just because a piece of land occasionally gets wet doesn’t make it a navigable waterway,” said Stephen E. Sandherr, CEO of the AGC. “Try as it might, the administration cannot redefine the reality of existing law or constitutional limits on executive power.”
Other organizations also expressed concern. “The latest WOTUS proposal could result in regulatory nightmares at a time when both parties in Congress, though the bipartisan infrastructure law, have emphasized the need to reduce delays and deliver transportation improvements to the communities who need them most,” says the American Road & Transportation Builders Association (ARTBA) vice president of regulatory and legal issues.
The legal filing took place in Texas. A federal judge blocked the controversial legislation from taking effect in Texas and Idaho (the two joined with the associations in filing the suit). However, a second lawsuit calling for a nationwide delay in implementing the law was denied.
The delay was for the Supreme Court decision in the Sackett v. EPA case. “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,” notes Builder.
“The Biden WOTUS rule does little to strengthen our nation’s water resources but it does radically extend the areas in which home builders are required to get federal wetlands permits by making human-made ditches and isolated ponds on private property subject to federal jurisdiction,” said Alice Huey, the chairperson of the NAHB. “Adding uncertainty and delay to the federal permitting process needlessly raises housing costs at a time when the nation is already facing a housing affordability crisis.”
Increasing the steps within the regulatory process that home builders must take will impact the market. If the new WOTUS goes into effect, the lengthened homebuilding process will exacerbate the housing shortage. Homebuilders may be deterred from (some/certain) development projects.
Slowing down the permitting process will lead to higher costs for homebuilders. These costs will inevitably result in higher new home prices. Home buyers are already dealing with interest rates that are higher than they’ve been in recent years. For many families, the dream of buying a new home would remain just that.
While this new rule might seem futile, some do believe it is truly a helpful and necessary regulation. The EPA claims WOTUS will strengthen “ … fundamental protections for sources of drinking water, [while] support[ing] agriculture, local economies and downstream communities.” However, this regulation appears to many, including those in the housing industry, as overreach. If WOTUS becomes law, home builders and home buyers will be impacted.
ProHome was founded by builders for builders 40 years ago in Wichita KS. Since starting operations in the DC Metro Area in 2002, we have provided multi-family developer acceptance/single-family quality inspections and third-party warranty management solutions involving over 25,000 units/homes. Our services deliver financial efficiency and seamless operational scalability during all economic cycles for our developer and builder clients.
