Developers could see faster approvals and fewer federal hurdles under the Trump administration’s latest proposal to narrow which wetlands fall under the Clean Water Act, a shift that would hand far more permitting authority to states and cut months from project timelines.

The draft rule would redefine the term “waters of the United States” in the Clean Water Act, which would remove federal oversight from many wetlands and leave state agencies to decide what qualifies for development. For builders, that means fewer projects requiring federal review and more predictable permitting, especially in states that already favor looser rules. 

“The result of each of these, you know, say new regulations and maybe changes in a law, will make fewer wetland impacts require a permit from the federal agencies,” said Thomas F. Mullin, an attorney at Bilzin Sumberg who focuses on wetlands and land development. “The development community will have more certainty, certainty of process, certainty of the rules.”

The new draft rule submitted by the Environmental Protection Agency and U.S. Army Corps of Engineers in September would change what is considered a protected wetland, the latest in a series of moves that have reduced guardrails for the country’s marshes and swamps. 

The end result for the real estate industry of this rollback of protections has been both a relaxation of federal enforcement and permitting — which has helped cut down the time it takes to get entitlements and approvals for new projects — and a foregrounding of state laws, which now carry more weight. 

Getting permission from the federal government, in addition to state and local authorities, has slowed and even killed many developments over the years.

“I've seen projects die because you assumed a certain construction cost when you started, and it changed when you actually got around to start to build it,” Mullin said.

In 2024, the local environmental management authority rejected developer Gershman Partners' application for a permit to build a $175M development in a wetland in Marion County, Indiana. The company could have appealed, but there is no indication that it did so.

And in South Carolina, developers and environmental bodies have traded lawsuits for years over various proposed projects on the Cainhoy Peninsula, a stretch of marshland near Charleston.

The comment period for the proposed regulations began Oct. 9 and remains open for 30 days, after which the agencies will take the comments into consideration and release the final rule.

“The rule we have today will likely be the final rule,” National Resource Defense Council Senior Communications Manager Andrew Scibetta said.

An EPA press release announcing the proposed rule said it would “cut red tape” for developers. 

But the change also deepens the complexity of a patchwork of state laws and court decisions, creating uneven standards across the country.

Developers often need to get both federal and state permitting approval to develop in wetlands. While federal rule changes won’t eliminate the need for state approvals, or for some kind of state permitting, it does remove a significant permitting barrier for developers. 

That could lead to reduced permitting time and costs by one year in some cases, Mullin said. 

“By taking a substantial number of lands out of the jurisdiction of the Clean Water Act, developers are not going to be nearly as constrained as they used to be in areas that had indirect connection,” said Stan Meiburg, a former acting EPA deputy administrator.

He called the interpretations of the Clean Water Act taken by this new proposal “the most anti-environmental you could get.”

The change won’t necessarily open up new land to development, due to state rules, but it does mean that more projects can be done faster with less cost, potentially making more projects pencil for developers, Mullin said.

Meiburg also said he believes the changes will greatly benefit agricultural landowners, pipeline projects and the development of data centers. It will be easier for groups working on data center development to build infrastructure and get permits for water. 

“Will there just all of a sudden be this big boom?” Mullin said. “I don't think in and of itself, but it certainly will remove one of the major bottlenecks.” 

In Florida, executive leadership at the state and national levels saw the wetlands permitting process as a bottleneck, Mullin said. The latest proposed federal change has been geared toward streamlining the process to obtain permits for wetland development and bring certainty. By establishing a clearer and far less inclusive definition of what a wetland is, there’s less debate or regulatory oversight over land. 

“Even if the EPA ultimately would not have ruled that a particular area was a wetland, you were nervous that they might,” Meiburg said.

Before the 2023 Supreme Court decision in Sackett v. EPA that started to scale back federal protections, developers in Florida still had to get permitting from the state Department of Environmental Protection or the local regional water management districts, a process that could take 10 to 18 months. 

But that same master-planned community or mixed-use project would also require a sign-off from the Army Corps of Engineers, which could take up to two years, sometimes longer, due to staffing challenges.

“Over the years, I have literally been told by a reviewer that my project is on the bottom of a stack that he is using as a footrest, and so they are understaffed,” Mullin said.  

That process hasn’t necessarily improved, Mullin said. It’s simply required for fewer projects. He estimates that if a developer had some level of comfort that one didn’t need a federal wetland permit, you could probably reduce your approval period by six to 12 months. 

In some cases, the absence of federal enforcement has led to state regulatory shifts. Some states, such as Colorado and New Mexico, have pushed to increase wetlands protection to fill the void left by receding federal protection.

In other cases, especially in states with Republican-held legislatures, there have been efforts to rewrite laws to encourage more development. In Michigan, Republican legislators have pushed for a suite of bills that would restrict wetlands protection and encourage more development.

“It creates a checkered landscape in terms of water quality,” Marla Stelk, executive director of the National Association of Wetland Managers, told Stateline.

Throwing these regulatory decisions to the states has led to a patchwork of laws, as well as a series of court decisions that have led to an uncertain landscape. In New York state, a decision by a state judge in June meant that protections for more than 1 million acres of wetlands, including urban wetlands that could be potential development sites, have been left in limbo.

Florida, for instance, has a wetlands mitigation banking system. Developers proposing to operate in one specific watershed can invest in wetlands protection and preservation in another area to counterbalance the area they develop. 

A process called the uniform mitigation assessment method scores a potential site, and developers must meet certain requirements for wetlands mitigation.

Wetlands mitigation in Florida delivered $2.4B in net economic gains and prevented $1.6B in flood damage in the 25-year period ending in 2020, according to a study from the Massachusetts Institute of Technology.

While federal changes won’t eliminate the need for this banking, they are expected to open up a larger geographic area and scope for development, allowing real estate interests to build in more regions, and ease some of the development backlog, Mullin said.  

Specifically, the previous understanding of federal versus state jurisdiction meant that the federal government was responsible for wetlands permitting in many former agricultural areas, prime sites for residential and mixed-use projects. 

Now, the newest rules mean the Army Corps of Engineers doesn’t have that jurisdiction. In Florida in particular, that means lots of former citrus farmland requires fewer permitting hurdles to break ground. 

Reducing federal protection for wetlands does bring environmental concerns.

The new draft rule proposed would put 94% of the wetlands in the continental U.S. at risk of pollution or destruction, according to a study by the Natural Resources Defense Council

Meiburg does hold out hope that, as he puts it, there are “internal professional constraints on what you might think is rampant development.” 

Namely, that developers have seen increases in flooding and the dangers of developing on wetlands and will avoid some of these areas by choice, seeking to skip projects that would incur vast insurance costs and potential flooding risk. 

“With great power comes great responsibility,” he said. “You need to think not just about the EPA, but is this a good idea?”