Wetlands Regulations: Considerations for Project Developers

Earlier this year, the U.S. Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers published a final rule¹ to revise the definition of waters of the United States.

THIS ARTICLE DISCUSSES THE IMPACT OF THAT REVISION as well as considerations for developers contemplating the purchase or development of real property that contains or is likely to contain regulated wetlands. The presence of regulated wetlands on a site proposed for development can often present complications in terms of time and expense in securing permits as well as restrictions on the type or magnitude of development that regulators will approve. In some circumstances, permits may be denied altogether. Wetlands can be regulated at the federal, state, and municipal levels. This article focuses primarily on the federal regulatory regime, while addressing ways of ascertaining the need for state or local approvals.

Why Regulate Wetlands?

Substantial declines in wetland acreage in the United States have been documented over the past 50 years, as the result of filling for agriculture and other development.² Beginning in the 1970s, recognition arose that wetlands—both freshwater and tidal—perform essential functions in preventing flooding through the retention and slow release of excess water. Wetlands purify storm water runoff by filtering out nutrients, sediments, and pollutants, thereby protecting both surface and ground water. They also provide nesting, wintering, resting, and feeding grounds for numerous species of migratory waterfowl. Estuaries provide critical food sources, spawning grounds, and nurseries for coastal fish and shellfish on both coasts.³ Therefore, they have become the subject of regulatory efforts to protect them, primarily through permitting standards that are designed to require developers to avoid or minimize incursions on wetlands, and to mitigate any unavoidable loss of wetlands through replacement or restoration projects.

Extent of Federal Jurisdiction over Wetlands

Waters of the United States

The primary basis for the federal regulation of wetlands derives from Section 404 of the Federal Water Pollution Control Act, commonly known as the Clean Water Act (CWA).⁴ CWA Section 404 grants the U.S. Army Corps of Engineers (Corps) the authority to issue permits for discharges of dredged or fill material into navigable waters, which the Act defines as waters of the United States.⁵ This term has been interpreted to include not only traditional navigable waters but also tributaries thereto, tidal waters, lakes and ponds, and impoundments thereof, and wetlands adjacent to any of these waters.⁶

A subject of contention and extensive litigation has been the extent to which the federal government can regulate wetlands that are not in and of themselves traditionally navigable. As described below, a recent decision of the U.S. Supreme Court, Sackett v. Environmental Protection Agency,⁷ fundamentally altered the scope of jurisdiction that may be asserted by the federal government. From 2006 until May 2023, under U.S. Supreme Court interpretation, the question was one of the effects of the wetland on the “chemical, physical, or biological integrity” of the navigable water or tributary, or to a wetland adjacent to such a water.⁸ The criterion for determining the presence of such effects was known, from Justice Anthony M. Kennedy’s concurring opinion in Rapanos, as the significant nexus standard.

Following attempts between 2015 and 2020 to define the term through regulations that were vacated at the U.S. District Court level, the operative regulatory definition had been governed by prior versions of the rule, as modified by Rapanos, and 2008 guidance documents issued by the Corps and EPA based on the Rapanos significant nexus inquiry.

On January 28, 2023, EPA and the Corps published a final rule⁹ to revise the definition of waters of the United States. The agencies describe the proposed rule as using the pre-2015 definition of waters of the United States as a foundation while providing “clear rules of the road” to prevent uncertainty. The rule became effective on March 20, 2023.

The 2023 Final Rule revised the regulatory definition of waters of the United States¹⁰ to include:

1. Traditional navigable waters, the territorial seas, and interstate waters (paragraph (a)(1) waters)
2. Impoundments of the above (paragraph (a)(2) impoundments)
3. Tributaries to paragraph (a)(1) waters when the tributaries meet either the relatively permanent standard or significant nexus standard (jurisdictional tributaries)
4. Jurisdictional adjacent wetlands, including:
   • Wetlands adjacent to paragraph (a)(1) waters
   • Wetlands adjacent to and with a continuous surface connection to relatively permanent paragraph (a)(2) impoundments
   • Wetlands adjacent to jurisdictional tributaries that themselves meet the relatively permanent standard
   • Wetlands adjacent to paragraph (a)(2) impoundments or jurisdictional tributaries when the wetlands meet the significant nexus standard
5. Intrastate lakes and ponds, streams, or wetlands not identified above that meet either the relatively permanent standard or the significant nexus standard (paragraph (a)(5) waters)

Under the 2023 Final Rule, a wetland is deemed adjacent if it satisfies any one of the following three criteria:

1. The wetland has an unbroken surface or shallow subsurface connection to jurisdictional waters.
2. The wetland is physically separated from jurisdictional waters by man-made dikes or barriers, natural river berms, and the like.
3. The wetland is reasonably proximate to a jurisdictional water such that the wetland has significant effects on water quality and the aquatic ecosystem.

The agencies provided some gloss in the 2023 Final Rule’s preamble that they “will ordinarily consider all wetlands within a wetland mosaic collectively” and that an entire wetland will be deemed adjacent if any part of it is adjacent.

Unless directly adjacent to a traditional jurisdictional water, under the 2023 Final Rule, adjacent wetlands must meet either the relatively permanent standard or the significant nexus standard. “Relatively permanent, standing, or continuously flowing waters connected to paragraph (a)(1) waters, and waters with a continuous surface connection to such relatively permanent waters or to paragraph (a)(1) waters” satisfy the relatively permanent standard. The significant nexus standard considers whether the adjacent wetland alone or in combination with other similar situated waters in the region “significantly affects the chemical, physical, or biological integrity” of a paragraph (a)(1) water.

The 2023 Final Rule also maintained or codified eight exclusions from regulatory jurisdiction, some of which implicate jurisdiction over arguable wetlands:

• Prior converted cropland (discussed below)
• Waste treatment systems, including treatment ponds or lagoons that are designed to meet the requirements of the CWA
• Ditches (including roadside ditches), excavated wholly in and draining only dry land, and that do not carry a relatively permanent flow of water
• Artificially irrigated areas that would revert to dry land if the irrigation ceased
• Artificial lakes or ponds, created by excavating or diking dry land that are used exclusively for such purposes as stock watering, irrigation, settling basins, or rice growing
• Artificial reflecting pools or swimming pools, and other small ornamental bodies of water created by excavating or diking dry land
• Waterfilled depressions, created in dry land incidental to construction activity and pits excavated in dry land for the purpose of obtaining fill, sand, or gravel unless and until the construction operation is abandoned and the resulting body of water meets the definition of waters of the United States
• Swales and erosional features (e.g., gullies, small washes) that are characterized by low volume, infrequent, or short duration flow

However, the validity of the new rule, as well as the guidance that previously governed jurisdictional determinations, is severely undermined by the Supreme Court’s decision in Sackett. In that case, a majority of the justices joined an opinion authored by Justice Samuel Alitao, which held that to qualify as waters of the United States, water must be a “relatively permanent body of water connected to traditional interstate navigable waters,” and wetlands “must be indistinguishably part of a body of water that itself constitutes ‘waters’ under the CWA” such that there is “no clear demarcation between ‘waters’ and wetland.” A jurisdictional wetland must have a “continuous surface connection with waters of the United States, making it difficult to determine where the ‘water’ ends and the ‘wetland’ begins.” The Court, including the four justices who concurred in the judgment but not the entirety of the majority opinion, rejected the significant nexus test as a basis for jurisdiction. The Corps and EPA have issued an update stating, “The agencies are interpreting the phrase waters of the United States consistent with the Supreme Court’s decision in Sackett. The agencies are developing a rule to amend the
[2023 Final Rule] . . . The agencies intend to issue a final rule by September 1, 2023.”¹¹ 

For guidance related to delineation of wetlands, jurisdictional determinations, which activities in wetlands are regulated, and the individual permitting process, please review the full practice note in Practical Guidance.

For Practical Guidance related to Nationwide Permits, Enforcement of Federal Wetlands Regulations, plus State and Municipal Regulation of Wetlands, subscribers may view the full article in Practical Guidance.

Not yet a Practical Guidance subscriber? Sign up for a free trial of Practical Guidance to read this complete article.

Mark A. Chertok has been active in environmental and land use counseling, permitting, enforcement, and litigation for more than 30 years. He is a principal at Sive, Paget & Riesel, P.C. His experience spans a broad spectrum of substantive areas, including environmental impact statement counseling and litigation under NEPA and the New York State Environmental Quality Review
Act; wetlands and water quality permitting, particularly for waterfront projects, under the CWA and state counterparts; major transportation projects; air quality and climate change issues under the Clean Air Act; hazardous substances remediation and litigation under the Comprehensive Environmental Response, Compensation and Liability Act; remediation under the New York State Brownfield Cleanup Program; oil spill remediation under the New York State Navigation Law; compliance review of Phase I and Phase II environmental assessments; land use and zoning; coastal zone management; and historic preservation. A testament to his wetlands experience, Mark served as an expert in freshwater wetland permitting in a condemnation trial in 2012.

Elizabeth Knauer is a principal at Sive, Paget & Riesel, P.C. Her broad litigation experience includes various matters relating
to environmental contamination and claims for recovery of associated costs under the Comprehensive Environmental Response, Compensation and Liability Act, the New York State Navigation Law, and other statutes; environmental permitting standards; administrative law; and contractual provisions. She has litigated at the trial court and appellate level in both state and federal courts for nearly two decades. She frequently defends land use and other determinations made by municipal and state agencies when legal challenges are filed on environmental grounds.

Related Content

1. 88 Fed. Reg. 3,004 (Jan. 18, 2023). 2. Dahl, T.E., U.S. Dep’t of the Interior, Fish and Wildlife Service, Status and Trends of Wetlands in the Conterminous United States 2004 to 2009 (2011). 3. See M. Holloway, High and Dry: New Wetlands Policy Is a Political Quagmire, Sci. Am. 20 (Dec. 1991). 4. 33 U.S.C.S. § 1251 et seq. 5. 33 U.S.C.S. § 1344(a); 33 U.S.C.S. § 1362(7). See also 33 C.F.R. § 323.1. 6. See 33 C.F.R. § 328.3(a). (Traditionally navigable waters are those that “are currently used, were used in the past, or may be susceptible to use in interstate or foreign commerce, including all waters which are subject to the ebb and flow of the tide.” 33 C.F.R. § 328.3(a)(1). 7. 143 S. Ct. 1322, 215 L. Ed. 2d 579 (2023). 8. Rapanos v. United States, 547 U.S. 716, 126 S. Ct. 2208, 165 L. Ed. 2d 159 (2006); see also 33 C.F.R. § 328.3(a), (c). 9. 88 Fed. Reg. 3,004 (Jan. 18, 2023). 10. 33 C.F.R. § 328.3 and 40 C.F.R. § 120.2. 11. https://www.usace.army.mil/Media/Announcements/Article/3440421/27-june-2023-update-supreme-court-ruling-in-sackett-v-environmental-protection/