The Pendulum Swings Back: Proposed Clean Water Act Section 401 Rule Resurrects Key Elements Of 2020 Rule

Key Takeaways

• On January 15, the U.S. Environmental Protection Agency (EPA) announced a Proposed Rule to revise its Clean Water Act (CWA) Section 401 water quality certification regulations.
• The Proposed Rule would reverse many elements issued by the Biden administration in 2023, and revive major aspects of the rule adopted during the first Trump administration in 2020.
• Substantively, the Proposed Rule would limit state certifying authorities to regulating solely discharges into waters of the United States from federally-licensed projects, narrowing states' ability to regulate non-discharging aspects of projects.
• Procedurally, the Proposed Rule would establish bright lines for what a project proponent must file when seeking a state certification and determining when the statutory one-year deadline for state action expires.
• The Proposed Rule would benefit project developers who require a federal license or permit by clarifying procedural elements of Section 401 that have produced complex and contradictory court opinions and would limit the discretion of state agencies to add conditions to federal permits.
• The comment period is open from now until February 17, 2026.

Background

Section 401 of the CWA authorizes States and certain Tribes to certify that a discharge into waters of the United States that may result from a federally permitted activity will comply with certain provisions of the CWA, including sections implementing water quality standards. The CWA requires States and Tribes to act on a certification request within a “reasonable time,” not to exceed one year. In response to a request, a State or Tribe to take one of three actions: (1) grant certification; (2) deny certification; or (3) grant certification with conditions. Failure to act in a timely manner by the State or Tribe can result in a waiver of certification. State- or Tribe-imposed conditions become requirements of the federally issued permit. EPA governs the certification process through regulations codified at 40 C.F.R. Part 121.

As detailed in a prior B&D news alert, certifications were for decades governed by EPA rules adopted in 1971. In the last six years, the rules have been amended twice, first in 2020 during the first Trump administration, then again in 2023, when the Biden-era EPA amended the rules to reverse the bulk of the 2020 reforms. The Proposed Rule would swing the pendulum back toward the 2020 rule by restoring many of its key elements, while also retaining important elements of the 2023 rule, such as the requirement for a pre-filing conference with the state certifying authority. 

Summary of Key Proposed Changes

• Certification requests must be in writing and include certain documents and information. The Proposed Rule would prohibit state certifying authorities from requiring additional application information beyond what the federal regulations require, marking a major shift.
• Under the existing rule, the state certifying authority can consider the activity as a whole, including construction and operation, consistent with the Supreme Court's 1994 decision in Public Utility District No. 1 of Jefferson County v. State of Washington, 511 U.S. 700 (1994). The Proposed Rule would narrow the state agency's authority by allowing it to regulate only a project's discharge.
• The Proposed Rule would also limit states to imposing water quality requirements defined specifically by applicable provisions of CWA Sections 301, 302, 303, 306, and 307. EPA also solicited comments on whether the water quality requirements states can consider should include narrative. The Jefferson County  decision held that states have the discretion to base Section 401 certifications on narrative water-quality requirements.
• The current rules require that the state certifying authority issue a decision within one year of receiving the request, absent an agreement to extend the deadline, with shorter periods prescribed in specific circumstances. Failure to agree automatically defaults to a six-month extension. Moreover, under the current rules, some certifying authorities have developed a practice of resetting the one-year deadline by requesting that potential permittees withdraw and resubmit their requests. The Proposed Rule would clarify that the one-year period begins when the certifying authority receives an application containing all the information listed in 40 C.F.R. § 121.5 and would eliminate the automatic six-month extension provision. The Proposed Rule would also bar state certifying authorities from requesting that applicants withdraw and resubmit their applications to reset the one-year response deadline.
• The current rules allow Tribes to seek “treatment in a similar manner as a State” status for the limited purpose of Section 401, which enables tribes to object to permits and recommend added conditions whenever EPA determines the permit “may affect” water quality standards in neighboring jurisdictions. The Proposed Rule would eliminate this provision, so Tribes would no longer be able to obtain TAS status.

Conclusion

While interested parties should recognize that litigation is likely if the Proposed Rule is adopted, the proposed amendments to the current rule would clarify the procedural elements of Section 401 in a manner that would eliminate much of the current controversy about Section 401 timelines and would also impose important limits on state authority to impose conditions on federally-permitted projects under Section 401. For those interested in submitting comments, the deadline is February 17, 2026.

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