EPA to Limit States’ Role Under CWA in Federal Permitting

A rule proposed by the EPA last month would reduce the ability of states to influence federal licensing and permitting decisions on purported water-quality grounds.

Under Section 401 of the Clean Water Act (CWA), whenever a planned project could result in a discharge into navigable waters, states and authorized tribes with CWA jurisdiction over the prospective discharge must issue, or waive, a water-quality certification before a federal agency may grant a permit or license for such project. States have previously used this authority to impose conditions on, or outright block, federal permitting and licensing of various projects, frequently in the context of energy infrastructure. EPA’s proposed rule would, among other things, tighten Section 401 certification timelines and limit the scope of certifications to discharges from point sources into waters of the United States, reversing a Biden-era rule that allowed states and tribes to much more broadly evaluate (and object to) the impacts of potential projects. 

The proposed rule is part of the Trump Administration’s effort to accelerate development of energy infrastructure. Comments on the proposed rule must be submitted by February 17, 2026.

Legal Background

Section 401 of the CWA is one example of the principle of cooperative federalism on which the Act as a whole is based. Any applicant for a federal license or permit to conduct an activity that “may result in any discharge into the navigable waters” must “provide the licensing or permitting agency a certification from” a certifying agency.[1] Under Section 401, the certification is required to “set forth” effluent limits or other conditions on the discharge to waters of the United States necessary to assure compliance with Sections 301, 302, 303, 306, and 307 of the CWA.[2] The certifying agency is most often “the State in which the discharge originates or will originate,” though an authorized tribe may be the certifying authority on certain tribal lands, and the EPA may be the certifying authority on federal lands and certain other tribal lands.[3] A certifying agency may grant a Section 401 certification, deny it, waive certification (essentially waiving any objection to the proposed project), or grant the certification with conditions. Failure to act on an application “within a reasonable period of time,” no more than one year, is deemed a waiver of certification.[4]

In practice, Section 401 certification comes up most often in U.S. Army Corps of Engineers (USACE) permits for discharge of dredged or fill material, Federal Energy Regulatory Commission (FERC) licensing for hydropower projects, and EPA-administered National Pollutant Discharge Elimination System (NPDES) permits in states that do not administer their own permitting programs and certain territories and Indian lands.[5] 

States’ Uses of Section 401 Authority

Section 401 certification can be a critical step of federal permitting and licensing, as denial of certification is essentially a death knell for a proposed project.[6] Thus, Section 401 gives states or authorized tribes significant authority over water quality impacts of a proposed project. States have used this authority to slow, block, or impose conditions on proposed projects, sometimes on grounds with arguably only an attenuated connection to water quality concerns.[7]

For example, in 2016, the New York State Department of Environmental Conservation denied a Section 401 certification to Constitution Pipeline Company, LLC with respect to a proposed 121-mile interstate natural gas pipeline, most of which would be in New York.[8] The Department explained that Constitution had failed to provide adequate information showing why trenchless stream-crossing technology was not feasible at each of the 251 streams across the state that the pipeline would need to cross.[9] The U.S. Court of Appeals for the Second Circuit rejected Constitution’s challenge to New York’s decision, effectively dooming the pipeline’s license and permit applications before FERC and USACE.[10] In May 2025, Constitution attempted to revive the project with a new application to New York for Section 401 certification, though in November 2025 it withdrew its application after the state’s continued insistence on additional required data and studies.[11] The next month, Constitution petitioned FERC to find that New York has waived certification of the pipeline.[12]

In 2017, the Washington State Department of Ecology denied a Section 401 certification to Lighthouse Resources, Inc., a coal supply chain company that was aiming to build and operate a new coal export facility called the Millennium Bulk Terminal on the Columbia River in Longview, Washington.[13] The facility would have facilitated the export of some 44 million metric tons of coal per year to Asian countries.[14] The state denied the certificate on the grounds that the project would cause “significant unavoidable adverse impacts” and that the state did not have “reasonable assurance” that the project would meet water quality standards.[15] After years of litigation, including an attempt by Montana and Wyoming to challenge Washington’s denial of a Section 401 certification through an original complaint before the Supreme Court,[16] the Millennium Bulk Terminal ultimately was never built. 

Even where states do not outright block projects, they often impose conditions on Section 401 certification that can significantly influence project development. In 2021, California, for instance, amended a certification originally issued with respect to a hydropower license in 2001 to add conditions requiring that the operator make various accommodations for whitewater recreation, including incorporating new whitewater boating flows, providing new parking spaces for boaters and anglers, posting information on alternative camping opportunities, and consulting with a whitewater recreation nonprofit annually before scheduling whitewater flow releases.[17] In addition, states often grant Section 401 certifications on the condition that permittees or licensees implement wildlife mitigation measures—Oregon, for example, required that an applicant proposing to remove a dam provide and maintain fish passage throughout the removal process, mitigate impacts on certain fish species, and study and implement mitigation actions for the benefit of a species of turtle as the state “deems warranted,” among many other conditions.[18] And Washington State routinely “outlines where sediment spoils can go” when ports seek permission to dredge a channel or waterway.[19]

Previous Rulemaking

To counteract states delaying, blocking, or otherwise influencing projects in these ways, the first Trump Administration issued a rule in 2020 that was the forerunner of the rule recently proposed by EPA. The 2020 rule narrowed the authority of states in what environmental impacts they could consider as part of their inquiries into Section 401 certification and impose more concrete time limits on state action.[20] States and environmental groups swiftly challenged the rule.[21]

Shortly after President Biden took office in 2021, the EPA signaled that it would reconsider the 2020 rule.[22] In 2023, EPA issued a new rule that returned in significant part to the 1971 regulation in place until the Trump Administration’s 2020 rule—most notably, the 2023 rule allows states to consider the overall proposed activity’s impact on water quality in considering Section 401 certification, not just the anticipated point source discharges alone.[23] 

Proposed Rule

That brings us to the rule proposed by EPA on January 15, 2026, which EPA acknowledges is largely a reinstatement of the 2020 rule issued under the first Trump Administration.[24] As justification, EPA primarily cites the Supreme Court’s decision in 2024 to overturn Chevron deference,[25] necessitating a new agency interpretation of Section 401 of the CWA in light of the new framework for statutory interpretation.[26] But the rule may be best understood as one piece of the administration’s broader agenda of accelerating infrastructure development, even where states object.[27]

The rule proposes the following changes to implementation of Section 401:

• Scope of Certification: Most significantly, the proposed rule would limit certifying authorities to considering the water-quality impacts of point source discharges to waters of the United States, prohibiting consideration of and conditions regarding other water-quality impacts as was allowed under the 2023 rule.[28] Thus, under the proposed rule, states generally would not be able to consider “tangential” project impacts like “increased water withdrawals, releasing pollutants into groundwater, increased erosion and sedimentation, reduced stormwater infiltration, disconnecting ecosystems,” “harming endangered species,” “hydrological changes,” or “increases in impervious surfaces that result in high-velocity runoff events that can deposit sediment or other pollutants into waterways”[29]—EPA’s view is that these cannot be considered because they are generally not direct impacts of point source discharges into navigable waters.
• Federal Control of Application Components and Timing: As part of a push to standardize the requirements for Section 401 certification packages, the proposed rule would remove elements of the current rule that allow states and tribes to define additional contents that must be submitted as part of a request for Section 401 certification.[30] The rule would also tighten the time a certifying authority has to make a certification decision. The default time is six months, unless the state and federal government agree to an extended timeline of up to one year.[31] States and authorized tribes also would not be able to ask for withdrawal and resubmission of Section 401 certification applications,[32] as New York did twice with respect to the Constitution Pipeline to obtain significantly more time to review the certification application.[33]
• Documentation of Conditions and Denials of Certification: The proposed rule would standardize the required documentation and explanations from certifying authorities on rationales for imposing conditions on grants of certification and denials of certification.[34]
• Limiting Modification of Certifications: The proposed rule would make it more difficult to modify a Section 401 certification that has already been issued by requiring the federal government, state or other certifying authority, and applicant to agree on specific language for a modification before it may be made.[35]
• Streamlining “Neighboring State” Input: Section 401(a)(2) of the CWA provides a process by which neighboring states may also provide their input on a proposed project’s potential water-quality impacts upon a determination from the EPA that the project “may affect” waters in the neighboring states.[36] The proposed rule would make clear that the EPA can make “may affect” determinations categorically based on proposed projects’ location, project types, and discharge types—potentially speeding up the process.[37] The rule would also require neighboring states to specifically explain their rationales for objecting to a project and set a clear timeline for hearings.[38]
• Amending Process for Tribal Input: Currently, tribes may seek “treatment as a state” status solely for purposes of issuing Section 401 certifications or neighboring state certifications; the proposed rule would remove the option for tribes to seek treatment as a state for purposes of Section 401 only, requiring tribes to instead seek the more general treatment as a state status under 40 C.F.R. § 131.8, which is a broader designation allowing a tribe to be treated as a state for purposes of setting water quality standards in addition to issuing Section 401 certifications.[39] 

Comments on the proposed rule are due by February 17, 2026, although many states and other commenters have requested an extension of time to further consider the rule.

Looking Forward

Considering the prolific litigation springing from the 2020 rule and the 2023 rule, EPA’s proposed rule, if finalized, will almost certainly be challenged by some states and environmental groups, some of which have already expressed their opposition to the proposed rule.[40] 

One issue likely to arise in litigation is whether the proposed rule is consistent with PUD No. 1 of Jefferson Cnty. v. Wash. Dep’t of Ecology,[41] in which the Supreme Court held that the State of Washington could lawfully condition its grant of Section 401 certification for a hydroelectricity project on requiring the project to maintain a minimum stream flow imposed to ensure compliance with the state water quality standards adopted pursuant to CWA § 303. This holding rested on the Court’s conclusion that “§ 401(d) is most reasonably read as authorizing additional conditions and limitations on the activity as a whole once the threshold condition, the existence of a discharge, is satisfied.”[42] But imposing a minimum stream flow condition for the benefit of the designated use of a river as fish habitat does not appear to be permissible under the proposed rule, setting up an arguable conflict with PUD No. 1.[43] Indeed, a district court vacated the 2020 rule on the basis that “[t]he revised scope of certification that EPA promulgated takes an antithetical position to PUD No. 1 without reasonably explaining the change,” though the decision was later reversed because the district court had vacated the rule without first formally holding it unlawful.[44]

This time around, the EPA is likely to rely on the fact that the Supreme Court’s decision in PUD No. 1 relied on now-defunct Chevron deference.[45] Indeed, the proposed rule criticizes the analysis by the majority in PUD No. 1 and sets forth an in-depth alternative statutory interpretation of Section 401 in light of its text, structure, and history, in preparation for future legal challenges.[46]

Conclusion

To obtain more information on the proposed rule, submit a comment on the rule, or discuss Section 401 certifications under the Clean Water Act more generally, please contact Victor Xu or a member of the firm’s Water Quality or Permitting & Environmental Review practices.
 

[1] 33 U.S.C. § 1341(a)(1).

[2] 33 U.S.C. § 1341(a)(1), (d).

[3] 33 U.S.C. § 1341(a)(1); 33 U.S.C. § 1377 (laying out process for authorization for tribe’s treatment as a state for purposes of, inter alia, CWA § 401).

[4] 33 U.S.C. § 1341(a)(1).

[5] The EPA issues all NPDES permits in Massachusetts, New Hampshire, New Mexico, the District of Columbia, and U.S. territories other than the U.S. Virgin Islands.

[6] 33 U.S.C. § 1341(a)(1).

[7]See, e.g., N.Y. State Dep’t of Envtl. Conservation v. FERC, 884 F.3d 450, 454 (2d Cir. 2018) (New York Department of Environmental Conservation denied Section 401 certification for natural gas pipeline because project proponent “failed to evaluate the downstream greenhouse gas emissions,” though FERC determined that New York waived certification by taking too long to reach decision).

[8]Constitution Pipeline Co., LLC v. N.Y. State Dep’t of Envtl. Conservation, 868 F.3d 87, 91 (2d Cir. 2017).

[9]Id. at 96-97.

[10]Id. at 102-03.

[11] New York State Department of Environmental Conservation, Constitution Pipeline Project, https://dec.ny.gov/environmental-protection/facilities-in-your-neighborhood/constitution-pipeline-project (last visited Jan. 20, 2026).

[12] In the Matter of Constitution Pipeline Company, LLC, Docket Nos. CP13-499, CP18-5 (Dec. 19, 2025).

[13]Lighthouse Res., Inc. v. Inslee, 429 F. Supp. 3d 736, 738 (W.D. Wash. 2019).

[14]Id.

[15]Id. at 739 (internal quotation marks omitted).

[16]Montana v. Washington, No. 22O152 (U.S. 2020).

[17] Cardno, Pit 1 Hydroelectric Project 401 Water Quality Certification Amendment Draft Environmental Impact Report (2021), https://www.waterboards.ca.gov/waterrights/water_issues/programs/water_quality_cert/docs/pit1_ferc2687/pit1_rdeir.pdf.

[18] Oregon Dep’t Env’t Quality, Clean Water Act Section 401 Certification for the Klamath River Renewal Corporation License Surrender and Removal of the Lower Klamath Project (2018), https://www.oregon.gov/deq/FilterDocs/ferc14803final.pdf.

[19] Wash. Dep’t of Ecology, Focus on: Section 401 Water Quality Certifications (2020), https://apps.ecology.wa.gov/publications/documents/2006014.pdf

[20]Clean Water Act Section 401 Certification Rule, 85 Fed. Reg. 42210 (July 13, 2020).

[21]Illinois v. Wheeler (In re Clean Water Act Rulemaking), 60 F.4th 583, 590 (9th Cir. 2023).

[22]Notice of Intention to Reconsider and Revise the Clean Water Act Section 401 Certification Rule, 86 Fed. Reg. 29541 (June 2, 2021).

[23]Clean Water Act Section 401 Water Quality Certification Improvement Rule, 88 Fed. Reg. 66558 (Sep. 27, 2023).

[24]See, e.g., 91 Fed. Reg. 2026 (“The 2020 Rule included regulatory text similar to what EPA now proposes . . . .”). 

[25]Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024).

[26] 91 Fed. Reg. 2023.

[27]See, e.g., EO 14156, “Declaring a National Energy Emergency” (Jan. 20, 2025); EO 14241, “Reinvigorating America’s Beautiful Clean Coal Industry” (Apr. 8, 2025); EO 14243, “Protecting American Energy From State Overreach” (Apr. 9, 2025); EO 14326, “Unleashing Alaska’s Extraordinary Resource Potential” (July 31, 2025).

[28] 91 Fed. Reg. 2023.

[29] 85 Fed. Reg. 42252.

[30] 91 Fed. Reg. 2017.

[31] 91 Fed. Reg. 2021.

[32] 91 Fed. Reg. 2021.

[33]Constitution Pipeline, 868 F.3d at 94; see also Hoopa Valley Tribe v. FERC, 913 F.3d 1099, 1104 (D.C. Cir. 2019) (finding states waived certification authority with respect to proposed hydropower project after over a decade of withdrawals and resubmissions of the project proponent’s application).

[34] 91 Fed. Reg. 2030.

[35] 91 Fed. Reg. 2030-31.

[36] 33 U.S.C. § 1341(a)(2).

[37] 91 Fed. Reg. 2031-32.

[38]Id.

[39] 91 Fed. Reg. 2035-36.

[40] Alexandra Trimble, Trump EPA Undercuts State and Tribal Authority Under Clean Water Act, Earthjustice (Jan. 20, 2026), https://earthjustice.org/press/2026/trump-epa-undercuts-state-and-tribal-authority-under-clean-water-act; Andrew Scibetta, EPA Proposal Would Curb States’ and Tribes’ Clean Water Act Oversight, NRDC (Jan. 13, 2026), https://www.nrdc.org/press-releases/epa-proposal-would-curb-states-and-tribes-clean-water-act-oversight.

[41] 511 U.S. 700 (1994).

[42]Id. at 712.

[43]See 85 Fed. Reg. 42256 (in 2020 final rule, EPA stated it “agree[d] that, in some cases,” “requiring minimum in-stream flows is beyond the scope of water quality requirements” and “fish and wildlife impacts are not within the proper scope of section 401, because those impacts are more appropriately addressed under other federal statutes and regulations”).

[44]In re Clean Water Act Rulemaking, 568 F. Supp. 3d 1013, 1025 (N.D. Cal. 2021) (emphasis in original), rev’d, 60 F.4th 583 (9th Cir. 2023) (district court lacked authority to both grant voluntary remand of 2020 rule and vacate it without first holding it unlawful).

[45]PUD No. 1, 511 U.S. at 712 (citing Chevron); id. at 915 (Thomas, J., dissenting) (criticizing majority for invocation of Chevron).

[46] 91 Fed. Reg. 2025-26.