In May 2023, the U.S. Supreme Court issued a landmark decision in Sackett v. EPA that significantly narrowed the scope of wetlands protected under the Clean Water Act. As a result, the EPA and U.S. Army Corps of Engineers released updated guidance in March 2025 to align federal regulations with the Court’s ruling. These changes redefine which wetlands are considered “Waters of the United States” (WOTUS), effectively removing many from federal oversight unless they have a direct and continuous surface connection to a traditional navigable water. This shift has important implications for real estate development, land use planning, and permitting across the country.

1.

What Has Changed in the Definition of Wetlands

Wetlands were regulated if they had a “significant nexus” to traditional navigable waters. This allowed for jurisdiction over wetlands that didn’t directly touch navigable water but affected its chemical, physical, or biological integrity.

Following the Sackett v. EPA (2023) Supreme Court decision, the “significant nexus” test was invalidated.

Now, only wetlands with a continuous surface connection to a “water of the United States” (WOTUS) are covered under the Clean Water Act.

• This means the wetland must directly abut or physically touch a navigable or relatively permanent water body.

Wetlands separated by uplands, berms, dikes, or similar barriers are no longer considered “adjacent” and are not federally regulated under this rule.

2.

Who Oversees Wetlands

The primary authorities remain:

• U.S. Environmental Protection Agency (EPA)
• U.S. Army Corps of Engineers (USACE)

These agencies jointly implement the Clean Water Act. Under the revised guidance:

• The Army Corps handles permitting (e.g., for filling or dredging wetlands).
• The EPA oversees enforcement and overall water policy.

Jurisdiction is now determined only if wetlands directly connect to a jurisdictional water body under a consistent federal standard.

3.

How Wetlands Can Be Changed, Modified, or Built Upon

If a wetland is jurisdictional (i.e., has a continuous surface connection):

• You must obtain a permit from the Army Corps of Engineers before altering, filling, or building on the wetland.
• This typically falls under Section 404 of the Clean Water Act, requiring environmental review.

If a wetland is not jurisdictional (i.e., no surface connection):

• It is no longer federally regulated under the Clean Water Act.
• However, state or local laws may still apply. Some states have stricter wetland protections and may still require permits.

4.

What This Means for Real Estate Development

Fewer Wetlands Are Federally Regulated

• Wetlands not directly touching a river, lake, or stream (e.g., those separated by uplands or roads) are no longer regulated by the EPA or Army Corps.
• This may open up more land for potential development without triggering federal permits.

Section 404 Permitting Narrowed

• Only wetlands that directly abut a regulated waterbody now require a Section 404 Permit (from the Army Corps) for filling, dredging, or altering.
• Permitting timelines and costs may decrease in some locations as fewer properties fall under federal oversight.

5.

Impacts on Brokerage & Site Selection

Brokers should be aware of these changes when marketing land:

• Parcels previously deemed encumbered by wetlands may now offer greater development potential.
• But it’s critical to confirm whether the wetlands are jurisdictional under current federal rules and check state/local restrictions.

These changes may also affect land value and development feasibility in certain submarkets.

In Summary:

Aspect	Before (Significant Nexus)	After (Sackett + 2025 Guidance)
Definition	Indirect impact on navigable water could justify jurisdiction	Only wetlands with direct surface connection to covered waters are jurisdictional
Overseen by	EPA + Army Corps	Still EPA + Army Corps
Permitting	Required for many more wetlands	Required only for directly connected wetlands
Modification/Building	More federally restricted	Fewer wetlands federally restricted (but state/local rules may apply)

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