Non-compete bans and WOTUS updates: 2026 regulatory report

Where non-compete and WOTUS stand in 2026

Thanks to changes made by the current Trump administration, the U.S. Environmental Protection Agency (EPA) and the Federal Trade Commission (FTC), it’s worth revisiting two business-related issues covered in previous “Regulatory Report” columns.

Key takeaways

• WOTUS redefined: The EPA and the Army have proposed new revisions to the “Waters of the United States” definition following a landmark Supreme Court decision regarding “continuous surface connections.”
• No national non-compete ban: The FTC has dropped its appeal for a nationwide ban, leaving non-compete regulations as a patchwork of varying state laws.
• Compliance is local: PMPs must ensure their labor agreements and water-related service permits comply with the specific regulations of their states of operation.

1. WOTUS definition to change again

On Nov. 20, the EPA and the Department of the Army proposed revisions to their 2023 definition of waters of the United States (WOTUS). This definition is critical because it specifies the scope of federal jurisdiction over Clean Water Act (CWA) permits.

The definition of WOTUS has changed frequently during the Obama, Trump and Biden administrations. These changes posed a consistent challenge to pest management professionals (PMPs) who may be required to have a National Pollutant Discharge Elimination System (NPDES) permit to perform pest control services near bodies of water.

On Dec. 30, 2022, the EPA and Army issued a final rule that took effect in March 2023. However, legal challenges immediately followed. A federal court judge in Texas issued an injunction stopping the definition in Texas and Idaho. At press time, the rule remains in effect in only 24 states and Washington, D.C. More than 25 other states joined lawsuits to vacate the rule, reverting instead to the pre-2015 definition.

The current shift follows the U.S. Supreme Court decision in Sackett v. Environmental Protection Agency. The Court ruled that the CWA covers only wetlands and permanent bodies of water with a “continuous surface connection” to “traditional interstate navigable waters.” Comments on the latest proposed revisions are currently under review.

2. No nationwide ban for non-competes

Whether you are an employer or an employee, non-compete agreements illicit strong feelings. While the FTC has called them “an unfair method of competition,” new developments have stalled the movement toward a nationwide ban.

Businesses typically use non-competes to restrict where and when an employee can work after leaving a company, often to preserve customer lists or protect proprietary information. In early 2023, following an Executive Order from Joe Biden to “promote competition,” the FTC proposed a rule to prohibit these clauses entirely.

The FTC maintained the rule would increase earnings and encourage new business startups. However, the proposed ban faced significant legal pushback from the business community. While the ban was intended to take effect in September 2024, a legal challenge in Dallas, Texas, blocked the move. On Sept. 5, 2025, the FTC asked the court to dismiss its appeal of that judgment.

Navigating the state-level patchwork

While a nationwide ban won’t happen for now, the FTC will still enforce agreements it deems “unfair.” Currently, PMPs face a “patchwork” of state-mandated laws:

• Full prohibitions: California, Minnesota, Montana, North Dakota, Oklahoma and Wyoming prohibit non-competes with few exceptions.
• Earnings-based restrictions: States like Colorado, Illinois, Maine, Maryland, Virginia and Washington restrict agreements based on the worker’s income.
• No restrictions: Ohio, Michigan and Mississippi currently allow non-compete agreements without specific state-level restrictions.

Because the FTC appears to have no new plans for a federal ban, pest control companies must ensure their agreements comply strictly with the specific regulations enacted in their states of operation.