EPA and Army Corps Release Proposed Rule Significantly Narrowing Federal “Waters of the United States” (WOTUS) Jurisdiction After Sackett

On November 17, 2025, the U.S. Environmental Protection Agency (EPA) and Army Corps of Engineers (Corps) (collectively, the “Agencies”) released a sweeping proposed rule (Proposed Rule) to revise the federal definition of “waters of the United States” (WOTUS) under the Clean Water Act (CWA). The Proposed Rule seeks to implement the U.S. Supreme Court’s 2023 decision in Sackett v. EPA, which concluded federal jurisdiction is limited to “relatively permanent” waters and wetlands with a “continuous surface connection” to those waters.

If finalized, the Proposed Rule would reshape the scope of federal jurisdiction under the CWA for both federal agency actions (including the Agencies’ own regulatory and enforcement activities) and private permitting. Most notably for developers and regulated entities, the Proposed Rule would substantially narrow federal permitting obligations — primarily under CWA Section 404 (dredge/fill) and Section 402 (National Pollutant Discharge Elimination System (NPDES)) — and transfer significant regulatory responsibility to states and tribes. Please see our June 2025 legal alert for further discussion.

WOTUS History

The term WOTUS has long served as the jurisdictional trigger for federal jurisdiction under the CWA, particularly for Section 404 and Section 402 permitting. Over time, the Agencies expanded WOTUS through regulations and guidance, including reliance on Justice Kennedy’s “significant nexus” test from Rapanos v. United States (2006). Under that framework, wetlands and tributaries were federally regulated if they significantly affected the integrity of a navigable water. As a result, many intermittent or seasonally flowing streams and isolated wetlands were subject to federal review. This interpretation generated regulatory uncertainty and litigation, prompting the Agencies to reconsider the boundaries of WOTUS.

Sackett Background

Prior to Sackett, the Agencies implemented the Biden Administration’s 2023 WOTUS rule (the 2023 Rule) which reaffirmed the “significant nexus” test. In Sackett v. EPA (2023), landowners sought to fill a residential parcel of land adjacent to a lake. The Corps asserted jurisdiction under the CWA, claiming the parcel was a wetland subject to the WOTUS definition. The landowners challenged that determination, ultimately leading to the Supreme Court’s review of whether the federal definition of WOTUS encompassed the wetlands in question. The case thus became the legal vehicle for reconsidering the scope of federal wetlands jurisdiction post-Rapanos and under the current regulatory regime.

The Sackett Decision

The Supreme Court in Sackett held that federal jurisdiction under the CWA is limited to: (1) “relatively permanent” waters (i.e., standing or continuously flowing waters such as rivers, lakes, and oceans); and (2) wetlands that have a continuous surface connection to those relatively permanent waters (meaning the wetland is indistinguishably part of the water body itself). The Court expressly rejected the broader “significant nexus” test as a standalone basis for CWA jurisdiction. As a consequence, waters that are ephemeral, intermittent, or separated by uplands, berms, or levees may fall outside federal jurisdiction.

Although Sackett is binding nationwide, the decision created substantial regulatory uncertainty because it did not itself provide a full regulatory framework; instead, it invalidated features of the 2023 Rule and left the Agencies to determine how to implement the Court’s narrower test. In response, the Agencies amended the 2023 Rule to conform to the Sackett decision and to clarify that federal authority applies only to wetlands with a “continuous surface connection” to a WOTUS.

However, existing district court injunctions against the 2023 Rule remained in effect after Sackett, preventing nationwide implementation and creating a split regulatory landscape. As a result, the Agencies implement the amended 2023 Rule in those 24 states (including California) and D.C. where no injunction applies, while the remaining states continue to apply the pre-2015 regulations as constrained by Sackett.

Proposed Rule Summary

The above backdrop frames the Agencies’ new Proposed Rule, which aims to codify Sackett, replace the various overlapping definitions currently in effect, and clarify the limits of federal jurisdiction going forward.

Key elements include:

•  New Definitions Implementing Sackett. For the first time, the Agencies propose regulatory definitions for “relatively permanent waters” (“standing or continuously flowing” waters year-round or during a defined “wet season,” including tributaries, lakes, and ponds) and “continuous surface connection” (wetlands must (1) abut a jurisdictional water and (2) have surface water at least during the wet season).
• Elimination of “Interstate Waters” as an Independent Basis for Jurisdiction. Waters will no longer be deemed jurisdictional solely because they cross state lines.
• Revised Categories of Jurisdictional Waters. The Proposed Rule confirms that WOTUS still includes traditional navigable waters, territorial seas, relatively permanent tributaries, lakes and ponds meeting the permanence standard, and wetlands meeting the new two-part “continuous surface connection” test. The Proposed Rule also removes the term “intrastate” from the lakes/ponds category, further tightening coverage.
• Expanded and Clarified Exclusions. Groundwater would be expressly excluded as non-WOTUS. The Proposed Rule also broadens other key exclusions, including ditches (excludes those excavated wholly in dry land and lacking relative permanence), prior converted cropland (loses its exempt status only if abandoned and reverts to wetlands), and waste treatment systems (expanded definition provides broader exclusion).
• Regulatory Impact and Economic Rationale. The Agencies describe the Proposed Rule as “deregulatory in nature,” and anticipate a reduced number of Section 404 permits, reduced wetland mitigation obligations, shorter permitting timelines, cost savings to project proponents, and ecological benefits associated with fewer avoidance/minimization requirements. While the Agencies frame these impacts as consistent with Sackett, environmental groups have already criticized the rule as a major rollback of federal clean water protections.

Potential Implications

The Proposed Rule could have far-reaching implications for developers, utilities, water districts, and landowners. Many aquatic features  — especially ephemeral and intermittent streams common in the West — will no longer qualify as jurisdictional waters because they lack year-round or “wet season” flow now required. This new “wet season” criterion — an undefined term not referenced in Sackett — adds further uncertainty and will likely be a focal point of future litigation. Wetland jurisdiction will also narrow substantially: seasonal or isolated wetlands, and wetlands separated from other waters by roads, berms, or levees, frequently will not meet the new continuous surface connection standard.

As a result, a wide range of projects — including linear infrastructure, energy facilities, housing, industrial complexes, and agricultural development — may proceed without obtaining a Section 404 permit if impacts are limited to features no longer falling under federal CWA authority.

At the same time, reduced federal oversight will shift regulatory obligations to states, tribes, and local agencies. The Proposed Rule emphasizes that these entities “can and will continue” to regulate waters not covered as WOTUS under the CWA. States such as California, Oregon, and Washington already maintain broader wetland and water protection regimes than federal law. Consequently, project proponents may still need to obtain state wetland permits, state-administered stormwater permits, Porter-Cologne Waste Discharge Requirements in California, or local grading and hydrology approvals, even in the absence of federal permitting.

Finally, stakeholders should expect continued litigation and regulatory uncertainty. Environmental groups are likely to challenge the Proposed Rule as insufficiently protective, while regulated industries may seek additional clarity. As with prior WOTUS rulemakings, multiple lawsuits could result in state-by-state variability in how WOTUS is implemented nationwide until the courts resolve these challenges.

Public Comment & Next Steps

The Proposed Rule was published in the Federal Register on November 20, 2025, and can be found here. Public comments must be submitted by January 5, 2026. The EPA “Fact Sheet” states that the Agencies will hold two hybrid public meetings during the comment period.

Allen Matkins will continue monitoring WOTUS developments and provide updates as they arise. In the interim, please contact our Land Use and Resources team with any questions or for project-specific guidance.