Builders warn Congress WOTUS rule will raise housing costs

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Congress received a first-hand account of how the Biden administration’s new waters of the United States (WOTUS) rule is exacerbating the nation’s housing affordability crisis by making home building more inefficient and costly, while simultaneously failing to significantly improve the water quality of navigable waters since much of the rule improperly encompasses isolated and ephemeral water features.

Testifying on behalf of the National Association of Home Builders (NAHB) before the House Small Business Committee, Frank Murphy, chief operating officer at Wynne/Jackson, a small real estate development firm in Dallas, said the new WOTUS rule will needlessly raise housing costs for home builders and buyers.

“The rule’s continued reliance on the significant nexus text to assert federal control over otherwise isolated and ephemeral water features substantially delays the jurisdictional determination process by the U.S. Army Corps of Engineers and increases federal wetlands permitting requirements over private property,” said Murphy. “This convoluted regulatory process makes it more difficult for any business trying to comply, and it makes it much more difficult for my company to provide homes or apartments at a price point attainable for working families.”

The final rule’s regulatory definition for WOTUS includes the problematic significant nexus test to establish federal jurisdiction over minor waterbodies such as isolated wetlands, human-made ditches or features that contain water only in response to rainfall events. The test’s results are determined by a federal regulator who decides whether a specific feature, along with similarly situated waters in the region, has material influence on the chemical, physical or biological integrity of a traditional navigable water.

“NAHB members already report waiting a year or more for the U.S. Army Corps of Engineers to complete a jurisdictional determination as to whether areas under a property are regulated under federal statute,” said Murphy. “These lengthy and uncertain compliance costs are often incurred before home sales, meaning that builders and developers must essentially finance these additional carry costs until the property is sold. The WOTUS rule only adds to the headwinds that our industry faces.”

Murphy further noted the WOTUS rule has a disproportionate impact on small home building firms, which make up the vast majority of home builders nationwide.

“Small home builders often do not have environmental regulatory compliance staff and must hire outside consultants for help when complying with the Clean Water Act,” said Murphy. “These fees, which may cost tens of thousands of dollars, are passed down to home buyers and renters. The agencies are forcing small businesses to pay these fees to hire consultants since the 2023 WOTUS rule relies heavily upon the overly complicated and convoluted significant nexus test.”

And as the administration rushes headlong to implement this rule on March 20, Murphy pointed out to lawmakers how this action is especially shortsighted and a waste of federal resources, given that the Supreme Court’s upcoming ruling under Sackett v. EPA is squarely focused on the legality of the significant nexus test. “Congress should require the EPA and U.S. Army Corps of Engineers to delay implementation of the WOTUS rule until the Supreme Court issues a ruling in this case,” said Murphy.

He further stated that the WOTUS rule does not add new protections for our nation’s water resources; but it does raise housing costs by inappropriately shifting the jurisdictional authority of many drier-end features and non-navigable isolated wetlands, streams and drainage ditches to the federal government.

“I urge Congress to call on the agencies to scrap the 2023 WOTUS rule and develop a meaningful and balanced regulation that will truly protect our nation’s water resources and ensure that federal, state and local agencies cooperate and coordinate to streamline permitting requirements,” said Murphy.