U.S. EPA Prepares New Revisions to CWA Section 401: What Industrial Project Teams Should Know Going Into 2026

On November 5, 2025, U.S. Environmental Protection Agency (U.S. EPA) quietly advanced a significant Clean Water Act (CWA) action to the White House Office of Management and Budget (OMB) for review. The proposal would revise the Biden administration’s 2023 Section 401 water quality certification rule. According to the current Unified Agenda, U.S. EPA intends to propose the revised rule in 2025. The stated objective is to “clarify the scope of certification” and address “implementation challenges and regulatory uncertainty associated with the 2023 Rule.” Translation: U.S. EPA is moving toward a narrower interpretation of what states may evaluate when determining whether a project will comply with applicable water quality requirements. 

What Section 401 of the CWA Actually Does 

Section 401 certifications play a pivotal role in federally permitted projects because they give states and tribes the authority to confirm that a proposed activity will comply with state water quality standards before a federal permit can be issued. The certification requirement applies to a range of activities requiring federal approvals, including U.S. Army Corps of Engineers Section 404 dredge-and-fill permits and authorizations issued by the Federal Energy Regulatory Commission (FERC) for projects that may result in a discharge to Waters of the U.S. In practice, a project cannot move forward until the certifying authority either issues the certification or waives it. Because federal authorization hinges on the Section 401 process, even modest adjustments to the scope of review or timing requirements can affect project feasibility, costs, and overall schedules. 

Why U.S. EPA Is Revisiting the 2023 Rule 

U.S. EPA’s stated goal is to “clarify the scope of certification” and reduce the implementation challenges that emerged following the 2023 rule. That rule centered review on the entire project “activity,” which many states and environmental groups supported because it allowed for a broader consideration of potential impacts. Industry groups and other states, however, argued that the 2023 rule opened the door to conditions – or outright denials – based on issues only indirectly connected to water quality.  

U.S. EPA previewed its shifting position in a May 2025 memorandum that encouraged certifying authorities to focus on whether a project would comply with applicable water quality requirements rather than evaluating broader project-level impacts. This narrower interpretation resembles the approach taken under the 2020 rule. 

Signals on the Direction of the New Proposal 

U.S. EPA Administrator Lee Zeldin has emphasized that narrowing the states’ review authority is necessary to prevent states from using Section 401 to block energy infrastructure. At the same time, environmental organizations have urged U.S. EPA to maintain the broader interpretation embedded in the 2023 rule, arguing it aligns more closely with both statute and longstanding practice. 

With these competing pressures, the upcoming proposal will likely aim for a more defined, discharge- or water-quality-focused scope paired with clearer procedural steps – elements industry groups have been requesting for several years. 

What This Means for Industrial and Manufacturing Projects 

If U.S. EPA reinstates a narrower, more discharge-focused scope of the rule: 

• States may have fewer opportunities to impose broad conditions, reducing the likelihood of project delays unrelated to water-quality compliance. 

• Expect clearer timelines and application requirements, which could reduce administrative burden for complex capital projects. 

• Litigation risk may shift. A narrower rule is likely to be challenged by environmental groups, creating potential future uncertainty even if short-term clarity improves. 

• Projects in states that historically exercised broad Section 401 authority – particularly in the Northeast and Pacific Coast – can expect federal pressure to ensure their Section 401 certification approvals toe the line of federal expectations. 

Bottom Line 

Projects entering early-stage planning now may benefit from a more predictable federal-state review process, but only if the proposal survives the next regulatory and litigation cycle. If you’re planning capital improvements, expansions, linear infrastructure, or new discharges that require federal approvals, now is a good time to reassess permitting timelines and stakeholder engagement strategies. ALL4 will continue to track this rule as it moves through the regulatory process. If you have questions or would like to discuss whether this rule impacts your project, please reach out to Cody Fridley at 269.716.6537 or cfridley@all4inc.com or Paul Hagerty at phagerty@all4inc.com.