March 2025 brought an important update for land developers and property owners across the U.S. The U.S. Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers (USACE) have clarified how wetlands are regulated under the Clean Water Act (CWA). This change, which centers on the concept of a “continuous surface connection,” is about federal jurisdiction and could significantly impact how land is developed, what permits are needed, and how projects move forward.
So, what does this mean for developers, homebuilders, and commercial property stakeholders? In short: some wetlands that previously required both federal and state permits may now fall under state oversight only.
Let’s break it down.
The Old Way: Confusion and Inconsistency
For years, determining whether a wetland was federally protected often felt like navigating a maze. The rules varied across states and regions, and developers sometimes faced delays or unexpected costs due to unclear permitting requirements.
Before 2023, regulators used a “significant nexus” test, assessing whether a wetland significantly affected downstream waters. This was complex, subjective, and often led to disputes between developers and agencies.
Then came the Supreme Court decision in Sackett v. EPA (2023), which threw out the “significant nexus” test. The Court ruled that only wetlands with a direct, continuous surface connection to a navigable water could be regulated under the Clean Water Act. This created a need for new national guidance.
The New Rule: Clearer Lines, Less Red Tape
The March 2025 EPA-USACE memorandum addresses this directly. It says:
Wetlands are only federally regulated if they directly touch a covered water like a river, lake, or stream. If a wetland is separated by uplands, dikes, roads, or even a culvert or ditch, it no longer counts as a federally protected water.
This effectively narrows federal jurisdiction, meaning fewer projects will require federal permits. However, state regulations still apply. Wetlands not covered under federal rules are still subject to state-level oversight, ensuring that wetland protections remain robust overall.
What Does This Mean for Your Project?
- Fewer Federal Permits: If your project involves wetlands that don’t directly abut a river or stream, you may not need a Section 404 permit from the Army Corps.
- Faster Timelines: With fewer federal reviews, your project could move faster through planning and approval.
- Lower Costs: Avoiding federal permitting can lead to significant cost savings in consulting, mitigation, and legal fees.
- State Rules Still Apply: This change does not remove wetland protections. It means that some wetlands are now regulated solely by states, not by both federal and state authorities.
What About the Environment?
While some may worry that this deregulates wetlands, the reality is nuanced. Many of the now-excluded wetlands are physically separate from major waterways, and state regulations continue to govern these areas. Additionally, developers are still required to maintain best practices and sustainable site planning regardless of federal oversight.
The Bottom Line
This new guidance provides clarity and a chance to rethink land use strategies. Projects once stalled by uncertainty or federal oversight may now proceed with greater confidence and speed. Developers can maximize land value while staying compliant with clearer, streamlined regulations.
If you have questions about how this applies to your land or project, contact us using this form or at projects@ivaenvironmental.com to evaluate how the 2025 guidance may impact your development plans.