The Costs of a Revised WOTUS to Landowners and Developers | with Guest Russell Riggs, Director of Environmental and Sustainability Policy for the National Association of REALTORS®
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Intro: Welcome to the REALTORS® Land Institute podcast, the Voice of land, the industry's leading land real estate organization.
Justin Osborn: Hello, this is Justin Osborn, accredited land consultant with the Wells Group Real Estate Brokerage in Durango, Colorado. On today's podcast episode of the Voices of Land podcast, we're talking with Russell Riggs. Russell, thanks for joining us, man. I've got a ton of respect for what you're doing for our industry, and I'm really excited to do this today with you.
Russell Riggs: Well, thank you, Justin. I appreciate it and looking forward to our discussion.
JO: Russell, I'll give a little introduction here for our listeners about you. Russell is the Director of Environmental and Sustainable Policy for the National Association of REALTORS® and the Government Affairs Liaison for the REALTORS® Land Institute. Russell engages Congress and federal regulatory agencies like the EPA and the Army Corps of Engineers on issues related to property rights, the environment, natural resources, energy, land use, and insurance. Man, Russell, I'm excited to hear the stories that you've kind of got on the Waters of the US rule.
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RR: Well there's no shortage of those and our listeners that are certainly hopefully you've heard me speak or seen me speak perhaps at a conference or a meeting. And one of the things that I always like to say is if you're not at the table, then you're gonna be on the menu. And that's why it's so important for members of the REALTORS® Land Institute and really all real estate professionals and realtors to engage with their policy makers. Write letters, send emails, call the office. It makes a difference, particularly if you're a constituent of that policy maker. Me as a lobbyist just coming in and trying to persuade them on some issue is good. It's important, but they really pay attention to their constituents. They pay attention to the people who vote them into office.
RR: And it's just important to engage in the political process to the extent that you can. And I know that realtors and members of the REALTORS® Land Institute are super engaged in all of that at the local, state, and federal level because I hear about what they're doing all the time, and it's really impressive and incredible the what they do on a daily basis to make sure their policy makers and their decision makers understand the role that they play, and understand the impact of the policies that they pass on land professionals. I wouldn't be able to do this job if it weren't for the incredible support that we get from members all across the country at state, federal, and local level.
JO: Yeah, it's great seeing the level of involvement from a lot of our brokers, a lot of the RLI members, it's pretty significant across the country. And man, I love what you said, make sure I heard it right. "If you're not at the table, then you're gonna be on the menu."
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RR: That's right.
JO: Man, I need that on like a little bumper sticker or something here in my office. I love that.
RR: Yeah. It resonates with me all the time.
JO: Absolutely. You've talked to landowners around the country about how a revised rule on the jurisdiction over the Waters of the US or WOTUS as it is commonly called, has impacted their ability to buy, sell, or build on land. WOTUS, It's got a long history and it's changed over several federal administrations. Can you give us a brief idea of kinda where it is today?
RR: Yeah. Well, WOTUS does have a complex history. It's a complex regulation, I'm not gonna lie. It's hard to do this in a soundbite. I'm gonna give it a try and certainly, your listeners know they're welcome to contact me and ask me any questions that they might have. But we have to... You have to go back basically three presidents to really understand what's going on with WOTUS. First of all, WOTUS stands for Waters of the US, which is a definition in the original Clean Water Act that was passed back in the '70s. Unfortunately, this phrase, while really important, was not defined very clearly in the statute. And so ever since the statute was passed, the Clean Water Act was passed back in the '70s.
RR: We have been trying to figure out exactly what is a Water of the US. In other words, what Waters in our country have to be or are regulated by the federal government and what Waters are regulated by state and local governments. And that's really what this is. It is a legal definition, which Waters are regulated by the Feds, which Waters are regulated by state and locals. I live in Virginia and I like to describe it like this Chesapeake Bay, a big expanse of water covers three or four different jurisdictions and states touches on a lot of different, like five different states with a lot of tributaries flowing into it, like the Potomac River and the Susquehanna River. Very clearly a water that is regulated by the federal government because of its importance in the fact that it spans interstate boundaries.
RR: The Potomac River, a huge tributary of the Chesapeake Bay, likewise, is regulated by the federal government... Regulated by statute under the Clean Water Act. So if you're doing anything along the Potomac River, upstream, you have to get a permit and you have to comply with the regulations of the Clean Water Act. Now think about all the big tributaries that flow into the Potomac River, such as the Shenandoah River, another fairly big river that, again, spans interstate boundaries. It goes from through West Virginia. Virginia touches on Maryland, etcetera. That likewise is also regulated by the Clean Water Act. It's a federally regulated water. So if you do anything along the Shenandoah River, you gonna have to get a permit to do that through the Clean Water Act.
JO: Okay. So...
RR: Yeah.
JO: Maybe stupid question here, but are there any, let me think of the way to say it. Are there any waterways or lakes or rivers that are in only one state that don't flow to another state that are regulated by the federal government? Or would those all be...
RR: No, generally we're talking interstate waterways.
JO: Okay. That's what I figured. Okay.
RR: That's a main clarifying part of that definition. But the further you get upstream from these big Waters, and particularly wetlands that are adjacent to Waters are likewise, probably regulated by the federal government. But the further away you get from those Waters regulated by the Clean Water Act, then it becomes a little trickier. Is a wetland that's strained two miles from the Potomac River, drained by a couple of different ditches, flows into a wetland that flows into another stream that flows into the Potomac. Is that covered by the Clean Water Act? That's the tricky part. And so if you say that, well, we wanna get as many Waters swept under the Clean Water Act as possible. Now you're talking about increased permitting cost of permitting time, effort, possible infringements on property rights.
RR: The further up you go through the Clean Water Act, most of those Waters are either regulated by local governments or state governments. The further away you get, there are no Waters that are just unregulated. That's kind of a misnomer that if you're not covered by the Clean Water Act, then the Waters aren't regulated. That's a little bit disingenuous. All Waters are regulated in some way, either by the federal, state, or local government. The question is, and what the Waters of the US tries to determine is at what level should this water be regulated? So that's what's been the question. How do we provide clarity and certainty about what Waters are regulated by the Feds and what Waters are not? And so the Obama administration took the first crack at that to try to get a handle on what Waters are regulated by what level of government. As you might expect the rule swept in more Waters than we as a regulated entity would have preferred. Many more Waters are by the Obama administration's rulemaking, were swept under the jurisdiction of the Clean Water Act. And that means if you had some tiny little stream on your back five acres of property and you wanted to do something that would have perhaps impacted that stream, you would have had to get a permit for that.
JO: So what's an example? How many, I guess, tributaries or forks upstream have you seen, what's the most branches, I guess, that you've seen coming off of those Waters that have been swept under that act?
RR: Well. I mean, thousands of miles. Well, under the Obama rule, it would've impacted thousands of stream miles. It would've impacted wet areas that are wet from mainly two or three months out of the year. It would have impacted, for example, dry washes, that in Arizona, a dry wash is dry for most of the year, except for when you have a big rainstorm, water rushes down the dry wash and it's wet for a few days, and then it dries up again. That would've been regulated. Ephemeral streams, small little trickles of water up in mountain areas or meadows or isolated wetlands that perhaps would have drained into another small stream would have drained into a ditch, a man-made conveyance, and then moved on into a Clean Water Act regulated entity that would've been, that isolated wetland would have been covered under the Clean Water Act. So, if the Obama rule would have swept in Waters that had never before been contemplated to be under jurisdiction of the Clean Water Act.
JO: Okay, so that was what, a decade or so ago. So where are we at today?
RR: 2016. Right. So the Obama rule was finalized, was never completely implemented because of all the legal and technical questions that arose as a result of the rule. So Trump comes in, president Trump comes in. One of his very first executive orders was rescinding the Obama rule and asking the Corps and the EPA to do their own rule. So they did that. And, the Trump rule actually provided significant certainty and clarity about what Waters were in the Clean Water Act and what Waters were not...
RR: Two years later, president Trump is out. President Biden comes in, basically does the same thing that Trump did four years previous. Rescinds the Trump rule, moves forward with his own rule. And that's where we are right now. President Biden has created his own rule, very similar in nature to the Obama rule. Does not provide significant clarity and certainty about what Waters are regulated. And as a matter of fact, from our perspective it brings in more Waters that weren't even in the Obama rule. Significant ambiguity and complexity surrounds this entire rulemaking. And as a result of all the legal and technical questions, right now we've got 27 states that are not implementing the Biden rule. So you have half the country that is under a preliminary injunction to not move forward with implementing the Biden rule. And the other half, the other states have kind of thrown up their hands and said, "You know what? Until these things get cleared up we're not gonna move forward with it either." And we can get into the Sackett Supreme Court decision as well if you want, but from a regulatory perspective right now, Biden has its own... The Biden administration has their own rule. It is not being implemented in half the states in the country because of its complexity, ambiguity, does not provide certainty and clarity about what Waters are regulated by the federal government and what Waters are regulated by state and local governments.
JO: Wow. So it's such a complex issue and I really appreciate you kind of dumbing it down to my level for me to understand the history of it because I've read about... I think it's probably your articles that I read in the Terra Firma magazine and you see stuff that's happening online, but to actually sit here and understand the timeline of events and the process to where we're at today is very educational for me. I imagine it's gotta be educational for our listeners as well.
RR: I also... The amazing thing about this rule is the huge amount of industries that are impacted by this. Farmers, and anyone, any industry that has to do anything with land, that has to do any... Make changes to land is gonna be impacted by this. And so now we're talking about huge industries that have to do with... That have to get these permits and have to know if water is either regulated at the federal level or another level. Farmers, obviously, the first. The farmers are kind of the most impacted, I think, from my perspective. 'Cause they have to modify land all the time and if they're modifying land, they're probably gonna bump up against water at some point. Home builders. Home builders are dramatically impacted by this because if you're building a home or a subdivision or a big development, you're gonna be bumping up against water. And this also brings up the question of in the midst of a housing inventory crisis when we are desperately in need of new housing, why is the administration putting up impediments and hindering new housing construction and development, which is what this rule does.
RR: Think about all the transmission wires that you have stretching across the country. When you build those transmission wires, you have to have... You're gonna move land, you're gonna modify and change land, and you're gonna be bumping up against water. Think about pipelines. Gas, oil, water, whatever kind of pipeline, that's gonna go for hundreds, thousands of miles. And you're gonna be moving land, modifying land, and you're gonna be bumping up against water. So whenever you have any industry that has to move land, they are gonna have to go through a complicated, byzantine, and very expensive process to get those permits to do those changes and modifications to the land. And they might not even get the permit. The permit could very easily be turned down, or they have to go through a big appeals process to convince the agencies that they're gonna be doing what they have to do to protect the water and to protect the resource.
JO: Yeah. It's such a good point. And where my mind goes is, think about the impact of the economy. The things you just listed, farmers, developers, housing, pipelines. If all of those could get a little boost, you think of the trickle down effect it would have in our economy with the employees and the workers and everything that are involved in that and it's... I was just talking to another agent earlier today about, it doesn't seem like it matters where it is in the country, Russell. There's a housing crisis in just about every town that's growing where people wanna live, but then the government officials in those towns have barriers that are created that make it so hard. And whether it's coming from a local government official or wherever it is coming from way up like with WOTUS, it seems like the more barriers that we keep putting on all of these developers, the worse our housing crisis is gonna continue. And supply and demand, until we can figure out how to build more product, we're just gonna keep seeing prices go up in all these towns where people wanna live.
RR: Exactly. And it's not only an impediment to the actual construction of the house, it's also adding to the cost of the house. The National Association of Home Builders estimate that about 25% of the cost of a home is all the different regulatory and permitting costs that they have to go through to actually build that house.
JO: Man.
RR: Yeah. That's not an insignificant cost. So they have to deal with that cost and this also ties into the affordability issue. There's a reason why home builders are not building starter homes anymore. It doesn't make economic sense to them, especially when you have 25% of the home. The cost is regulations and permits.
JO: Man, that's a huge...
RR: It doesn't make economic sense to build that house.
JO: No, that's a huge... That's a huge number. I mean that's...
RR: That's why they gotta build $2 million homes.
JO: Yeah.
RR: Million dollar homes because they can't afford any other kind of house. So it definitely ties into the affordability question. Definitely ties into our inventory crisis. And it certainly ties into property rights as well and being able to do what you want to do on your property. Obviously given certain constraints, but overall it could be a big impediment to property rights as well, an infringement on a homeowner's or property owner's property rights.
JO: Well, we've obviously got a lot of land agents listening to this podcast. What would be a few kinda key points, takeaways that you would want them to make sure they really understand about this rule and how it affects their clients and their business?
RR: Well, it's certainly gonna affect their clients because if a client comes to them, let's say this rule is implemented 100% the way it is right now, and the Biden administration moves forward to implementing and enforcing this rule. Right now, they can't. I mean, 27 states can't do that, but let's assume that it does. It's gonna have an impact on the listeners of this podcast by the fact that all of a sudden, I think you're gonna see for example, home builders pulling back from building a subdivision. That a brand new that was transitional land, the deal was made and all of a sudden, and they were gonna move forward with constructing that subdivision. But all of a sudden waters that were not considered under jurisdiction of the Clean Water Act, it was the federal or state, and they had their permits ready to go.
RR: All of a sudden, you have to go through a whole new permitting scenario to get those permits through the Clean Water Act, which is much more complicated, much more time consuming, and much more complex. All of a sudden, you're turning to the, you have to go to the core of engineers and say, "Oh gosh, looks like this water now is a jurisdictional water under the Clean Water Act. What do I do?" Well, you have to go through this permit and this permit process, and it takes, an additional one or two years to move forward with it, etcetera. You have to mitigate for any waters or wetlands that you might destroy, etcetera. And all of a sudden the deal is in jeopardy because of that. So that's one example. I think another example, I know that a lot of land professionals are doing deals related to renewable energy projects like wind farms and solar farms.
RR: They bump up against, they're gonna have to modify lots of land for that, for those kinds of facilities, and they're gonna have to be bumping up against water. That's just the way it is. That's what happens. You might be impacting streams that are now considered jurisdictional under the Clean Water Act. So all of a sudden that directly goes against Biden's push for additional renewable energy projects if making that solar panel farm or that wind farm more expensive because they have to go through a Clean Water Act, jurisdictional permitting process, all of a sudden that deal that was made doesn't look all that promising, doesn't look as good.
JO: Yeah. And that really hits close to home for me because we're seeing a lot of these solar farms out west. I mean...
RR: Right. Sure.
JO: I'm in southwest Colorado and these farmers, it had made sense to be a farmer in our neck of the woods for over 20 years financially, unless you've actually, third, fourth generation farmer own the land free and clear. So what we're seeing is a lot of these guys doing these solar farm.
RR: Yeah.
JO: Long-term solar farm leases, and man, I hadn't even thought about that on how the cause and effect relationship of what we're talking about with WOTUS, with these solar farms.
RR: If there's a water on that property, maybe originally was state regulated or regulated by the local government, all of a sudden becomes a WOTUS under the Clean Water Act, that project becomes a lot more expensive.
JO: Yeah. And that could happen here 'cause we're only, two tributaries away where I'm at from going into the Colorado River and a lot of that water ends up in California.
RR: Yeah. Until it dries up before it gets to the Gulf of Mexico. [laughter]
JO: Exactly.
RR: No, not Gulf of Mexico, Gulf of... Sea of Cortez, right?
JO: Yes.
RR: Yeah, I mean it changes the dynamic. It changes the economic calculations that builders and developers and all other regulated entities are doing. And that's why, that's one of the reasons why we have been fighting so hard against this. And we actually have, well first of all, we've joined a coalition, the Waters Advocacy Coalition, which is a large, robust coalition of probably 30 to 40 regulated entities, industries, associations, etcetera, here in Washington.
RR: We founded this about 15 years ago, and we've been very consistent in our opposition to these kinds of rules that sweep in more waters under the Clean Water Act. So we have joined... The National Association of REALTORS® in cooperation and in league with the REALTORS® Land Institute, has join this coalition, and we've been members, long-standing members for many years. The coalition does a lot of work legislatively and regulatory on this issue and other water quality related issues. And been pretty effective. There's a reason why, first of all, during the Obama administration, that so many legal and technical questions were brought up because of [chuckle] the coalition brought those up.
RR: There's a reason why 27 states, half the country has a preliminary injunction against moving far forward with implementing the Biden rule, because of the coalition. We brought those cases up, we've brought those cases up to judge. There's also a litigation of coalition. A smaller group that is actually moving forward in with litigation against the Biden administration rule. And we have a rule that's ongoing in Texas right now, and we're hoping that that case will essentially overturn the Biden administration rules so we can get back to a regulatory scenario in a regulatory regime that makes sense for developers and other regulated entities that helps them understand what waters are regulated by the feds and what waters are not. It's in their interest, it's in all of our interest to make sure that definition is very clear. And right now it's not... It's very ambiguous. Under the Biden rule, they've actually swept in more waters that we don't think they have the authority to do, and so that's really the basis of our case, is regulatory complexity, ambiguity of the regulatory language, it's going to hinder the economic development, including housing in the midst of an inventory crisis, as well as infringes upon the property rights of owners across the country.
JO: I'm so glad that we've got advocates like you fighting for us, man. I mean, it'd be so... I mean, honestly it'll be impossible for a lot of guys that are in the industry as long as I've been in it, taking care of our clients to do the amount of business we do and also be fighting successfully as you are. And so just on behalf of our whole organization, man, it really means a lot to me and all of the realtors, the RLI members that you're doing this for is because it allows us to keep taking care of our clients, taking care of our families and doing our full-time jobs knowing that our hands are clearly represented with you at the podium.
RR: Well, one thing that listeners of this podcast and members of the REALTORS® Land Institute can do, that is really helpful for our efforts here in Washington, is provide me with these anecdotal stories that build the case that this is infringing upon property owners across the country, and how it's doing that. We've gotten several stories so far that makes the case that this is definitely problematic for land professionals and their clients, but we always need more of those, so I would just send out a call and a plea to all listeners that if you have an experience that has adversely affected your ability to do business, or if you have clients that all of a sudden the deal isn't going through because of the situation, let me know about that, and that just helps build our case that this is a big issue and a big problem for land professionals all across the country. So there's... That's the plea to listeners. Let me know what's going on, tell me what's going on. And that'll help our case here in Washington, DC.
JO: Now, a great point. I hope our folks that are listening really take advantage of that adding. I guess that'd be a good way, in your words, to get off the menu and get to the table, right? Send you an email of the story. [laughter]
RR: Exactly. Exactly.
JO: Politics, it's not always a popular topic, but it certainly impacts how we do business every day as land realtors, and if our listeners are an a RLI member and they want to know more about issues that impact property ownership, you can certainly volunteer for RLIs government affairs committee, we'll be sending out applications here soon for 2024, you can attend a national legislative event or meetings at your local RLI chapter, or just simply read the issues in the Terraform and magazine, listen to the voices of land blog and advocacy resources on the RLI and our websites, they're all excellent sources of information for property rights. Russell, any kind of ending notes, last topics here that have come to your mind that you wanna really make sure folks that are listening take away with?
RR: Well, I mean, this one's a little bit convoluted, but I would say that one thing that we hear consistently is from our friends on the other side of this issue, is that this rule will dramatically impact... Adversely impact our drinky water. And that to me is a little disingenuous because there's a whole set of regulations and statutes and laws that specifically protect the country's drinking water. Now, we don't wanna stand in the way of clean water, absolutely not. But we have to balance that with economic development. And there's a whole "Safe Drinking Water Act" and a whole regulatory regime that protects our drinking water. So, from my perspective, this is not a situation that if we don't have this rule in place, all of a sudden our drinking water is going to be polluted. I don't think that's the case, and I know that's information that's been spread around by our friends on the other side, and I would just suggest to you that we desperately need clean water, we need as much water as we can get, certainly in the West, you guys are experiencing a serious drought, so we wanna make sure that all of our water resources are clean.
RR: We wanna make sure they are protected, and we wanna make sure that everyone has access to it. But at the same time, we also want to ensure that economic development moves forward, job creation moves forward, and housing is built to get ourselves out of this housing inventory crisis that we have presently. So there's a balance, and I think in NAR and the real estate industry has done a great job in making sure that economic development goes hand-in-hand with environmental protection.
JO: That's well said. I think there is a balance, and I appreciate you guys fighting for that balance. And thank you for joining us today, Russell, the regulatory issues, they're certainly complex, and the information you shared, it certainly brings home how important it is for us to pay attention to what's happening in politics and get involved to advocate for the property owners and our property rights. Certainly appreciate all the work you're doing on behalf of the members of the REALTORS® Land Institute and the National Association of REALTORS®.
RR: Thank you, appreciate it. Any time.
JO: For more expertise on land real estate topics, be sure to check out the RLI blog, follow us on social media, and of course, tune in for upcoming episodes of the Voices of Land podcast.
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