Indiana Repeals State Wetlands Law

In April 2021, Governor Eric Holcomb signed S.B. 389, repealing the majority of Indiana’s state-regulated wetlands law. The repeal was met with bipartisan opposition, arguing that reduced wetland regulation may negatively impact water quality, flood control, wildlife habitat and the outdoor recreation economy. Those who supported the bill cite vague permitting language, over-regulation and high mitigation fees as reasons for the repeal. The legislation has major implications for property owners, including farmers and home builders, that seek to develop areas that may impact nearby wetlands.

There are generally two categories of wetlands: 1) federal jurisdictional wetlands, and 2) isolated wetlands that are regulated at the state level. The Army Corps of Engineers is responsible for issuing Clean Water Act permits for impacts to federal wetlands, while the Indiana Department of Environmental Management is responsible for issuing permits for construction and development in isolated wetlands in the state. Isolated wetlands are divided into three classes in Indiana. The repeal eliminates regulations for Class I wetlands and drastically reduces regulations for Class II wetlands under a certain size. The repeal is retroactive to January 1, 2021.

The repeal may leave nearly 80% of the state’s wetlands unregulated, according to the Indiana Department of Environmental Management. However, the bill also creates a task force to research wetland benefits and create recommendations for preservation measures and permitting improvements. The task force is to provide a report by November 1, 2022.

After passage by the state legislature, it was unknown whether the bill would be vetoed by Governor Holcomb, who had already vetoed another piece of environmental legislation dealing with ethanol. Now that it has been signed by the governor, this law raises the stakes when it comes to federal wetland determinations. Previously, property developers with projects that may impact wetlands outside of federal jurisdiction still had to deal with potentially onerous state permit requirements. Now, landowners may be able to escape any permitting whatsoever if they can show that the wetlands do not have the requisite nexus to a “Waters of the United States” to impose federal jurisdiction.