EPA Moves to Clarify States’ Role in Water Quality Certifications

On January 15, 2026, the U.S. Environmental Protection Agency (“EPA”) published a proposed rule to revise its regulations governing the water quality certifications that states may issue under Section 401 of the Clean Water Act. The proposed rule follows a memorandum that EPA published on May 21, 2025, clarifying its view of Section 401 certification and announcing its intent to roll back key aspects of the Biden administration’s water quality certification rule promulgated in 2023. Among the many updates and clarifications in the proposed rule, we write here to highlight three: the rule would (1) refocus Section 401 reviews on the proposed discharge rather than the applicant’s activity as a whole; (2) focus reviews on “waters of the United States” and not waters subject only to state jurisdiction; and (3) clarify when and how the clock starts on the statutory 1-year deadline for certification. These changes provide greater clarity for project developers that rely on Section 401 certifications and ensure that state reviews adhere more closely to the statutory text. 

Why the Proposed Rule Matters

Under Section 401 of the Clean Water Act, when an applicant applies for a federal permit to conduct any activity that may result in a discharge of pollutants into waters of the United States, it must provide the federal permitting agency with a certification from the states, authorized Tribes, or other relevant permitting authorities¹ where the discharge will occur that the discharge will comply with applicable water quality standards. This rule is important for large infrastructure projects, and especially for linear projects that cross multiple states, like those permitted by the U.S. Army Corps of Engineers under Section 404 of the Clean Water Act or the Federal Energy Regulatory Commission under the Natural Gas Act. History has shown that individual states may oppose a multi-state project based on policy reasons, or because the state may believe it is being burdened by project siting without receiving the primary benefits of the project.

The authority Congress gave to states under Section 401 is a stark example of cooperative federalism, as it gives certifying states significant authority over projects, like pipelines, data centers, and other large infrastructure projects, that require these permits. States can—and have—used their authority under Section 401 as a veto, rejecting certification for otherwise approved projects, often resting on claims of myriad potential impacts or that the applicant has not supplied enough information for the state to make a decision about compliance with state water quality standards.

The Section 401 process has been a point of contention in recent years, as many claimed that states were abusing the power given to them, and in some cases, doing so to achieve objectives unrelated to water quality. In September 2020, the first Trump administration’s EPA finalized a rule updating Section 401 regulations that had been in place since 1971. That rule update aimed to narrow states’ authority to veto federal permits and to reign in certification timelines. The rule was quickly embroiled in legal challenges, and in 2023, the Biden administration’s EPA finalized its own rule returning many aspects of the regulations to the 1971 regime. After President Donald Trump took office again in 2025, EPA released a memorandum aiming to return Section 401 reviews to their statutory purpose of protecting water quality, and to discourage states from using the certification process as, in the words of EPA, a “weapon” to shut down projects for reasons with no basis in the Clean Water Act or its regulations.

Key Takeaways from the 2026 Proposed Rule

(1) Reviews of water quality impacts would be limited to the “discharge,” not the overall “activity.”

Under Section 401, an applicant for a federal license or permit needs water quality certification “to conduct any activity . . . which may result in any discharge into the navigable waters.” One key issue is whether Section 401 authorizes states to impose conditions or deny certification based not only on discharges, but on any aspect of the entire activity that could affect water quality. As was the case under the 2020 rule, the current proposal would limit this scope to the discharges themselves. The Biden administration’s 2023 rule reverted to the previous “activity as a whole” approach, relying in part on a 1994 Supreme Court case that found it a reasonable interpretation of the statute to allow a state to impose conditions and limitations on the activity as a whole.² That earlier decision, though, was in the era of Chevron deference—with courts deferring to an agency’s interpretation of an ambiguous provision in a statute as long that interpretation was reasonable.

In explaining why EPA is making its fourth change in how it interprets the scope of state review, EPA cites to the Supreme Court’s Loper Bright decision, which overruled Chevron deference to agency interpretations, instead directing courts to determine the best reading of an ambiguous provision in a statute. With this as the launching point, EPA then explains why the focus on discharges is the best reading, as supported by the text of Section 401 and the history of how Congress came to amend Section 401 to change the focus from “activity” to “discharge” in 1972.

This change is particularly significant for developers relying on federal permits requiring Section 401 certification for large infrastructure projects. With this wider lens, some states consider impacts of the activity even when there is no “discharge.” One example is the thermal impact upland clearing might have as result of lost cover or warmer sheet flows of stormwater. The proposed rule would ensure that certification reviews focus only on actual discharges, resulting in a greater likelihood of certification and less burdensome conditions.

(2) Focus would be on federally jurisdictional “waters of the United States,” not waters subject only to state jurisdiction

The 2026 proposed rule would align the scope of a state’s ability to condition a water quality certification with the scope of the state’s review. Section 401(d) of the Clean Water Act allows states to add conditions necessary to ensure compliance with “any other appropriate requirement of state law.” Under the 2023 rule, EPA claimed this allowed states to expand the scope beyond “waters of the United States” as the best way to support principles of cooperative federalism and let states that choose to regulate “state waters” to use the Section 401 process in pursuit of those aims. In the proposed rule, EPA presents what it believes to be the best reading of the statutory text at Section 401—that certification is required for any activity that may result in any discharge into the navigable waters, and that states are to certify that any “such discharge” will comply with water quality requirements. However, EPA requests comments on alternative interpretations of this provision. The ultimate expansiveness of this scope is important given another rulemaking proceeding that would also limit geographic scope—ongoing rulemaking to revise the regulatory definition of “waters of the United States” to align with the Supreme Court’s 2023 decision in Sackett v. EPA. Aligning state certifications with the scope of the Clean Water Act, both in terms of what waters are subject to review and what water quality-related requirements related to those waters apply, would give project developers greater certainty as to the universe of water crossings subject to review and the range of conditions that may be imposed.

(3) Greater adherence to and clarity in statutory deadlines

Section 401 requires states to grant or deny certification within a “reasonable period of time (which shall not exceed one year).” EPA’s rule proposes a number of changes to clarify when this one-year clock starts, as well as several measures to ensure states adhere to it.

First, the proposed rule would clarify that the clock begins when the state or certifying authority receives the complete request for certification. The proposal outlines a set list of components that all requests for certification must include in order to be deemed complete. In a departure from both the 2023 and 2020 rules, the 2026 proposed rule removes states’ ability to require additional components for a certification request. Prior versions of the Section 401 regulations allowed states to require additional components, which gave states greater leeway to determine when a request was officially “complete.” The 2026 proposed rule avoids this uncertainty and makes it easier to determine what the requirements are and when the one-year clock begins.

Second, the proposed rule would prohibit states from requesting an applicant to withdraw and resubmit a request for certification. In times past, this tactic was used in an attempt to restart the one-year clock, ultimately resulting in review periods that long exceeded statutory limits and risked project delays. It also generated questions and litigation over whether states had waived certification, again resulting in uncertainty over project approvals. The 2026 proposed rule would also eliminate automatic extensions of the “reasonable period of time” (for example, the 6-month default period), instead relying on federal agencies and certifying authorities to collaborate on setting reasonable timelines. These changes continue the Trump administration’s efforts to streamline permitting for infrastructure projects by reducing the potential for permitting delay. By setting up guardrails around Section 401’s “reasonable period of time” requirement, the proposed rule would offer developers greater certainty on project timelines.

Public Involvement

EPA is accepting public comment until February 17, 2026. Among the requested areas of comment are (1) the proposed contents of a request for certification, (2) whether states should be allowed to add additional contents to requests, and (3) whether EPA should include the proposed definition of “discharge.” Comments can be submitted to EPA, with more information at regulations.gov on docket no. EPA-HQ-OW-2025-2929. 

We will continue to monitor developments related to Section 401 Certifications and other permitting issues. Please reach out to your Vinson & Elkins team to discuss this ongoing rulemaking and its implications for your business.

¹In states or Tribal lands where the EPA administers Clean Water Act permitting, the EPA itself acts as the certifying authority for Section 401 certifications.

²PUD No. 1 of Jefferson Cnty. v. Wa. Dep’t of Ecology, 511 U.S. 700, 712 (1994) (“EPA’s conclusion that activities—not merely discharges—must comply with state water quality standards is a reasonable interpretation of § 401, and is entitled to deference.”).

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.