2020 Rule, with little supporting analysis, asserted incorrectly that
any application of section 401 to non-Federal waters ``would
effectively broaden the scope of the Federal regulatory programs
enacted by the 1972 CWA amendments [e.g., sections 402 and 404] beyond
the limits that Congress intended.'' 85 FR 42234-35. However, the
interpretation taken in this final rule in no way broadens the scope of
sections 402 and 404. Finally, the reasons articulated above in support
of a broad scope of certification (e.g., Congress intended for section
401 to be a powerful tool for states to protect state waters from
federally licensed or permitted projects) also support a state or
authorized Tribe applying state or Tribal law to protect state or
Tribal waters when acting on a request for certification.
e. Scope of Conditions
    The Agency is adding text at Sec.  121.3(b) to clarify that the
scope of review for a certification decision is the same as the scope
of permissible conditions that may be added to that certification. This
is consistent with the proposed rule, which would have required a grant
of certification with conditions to include ``[a]ny conditions
necessary to assure that the activity as a whole will comply with water
quality requirements,'' 87 FR 35378--the same standard as the proposed
scope of review for a certification decision. Moreover, the preamble to
the proposed rule was clear that EPA ``interpret[ed] the scope of
certification review under sections 401(a)(1) and (d) to be the same. .
. .'' 87 FR 35346. To clearly convey the Agency's intent, EPA is adding
regulatory text at Sec.  121.3(b) stating that ``consistent with the
scope of review identified in paragraph (a) of this section, a
certifying authority shall include any conditions in a grant of
certification necessary to assure that the activity will comply with
applicable water quality requirements.''
    Because the scope of review applies when the certifying authority
is determining whether to grant certification, the same ``activity''
standard should apply to a grant of certification, a grant of
certification with conditions, and a denial of certification. That is,
the outcome of the certifying authority's analysis should not dictate
the scope of review. Logically, the same scope applies to a certifying
authority's evaluation of potential water quality effects under both
sections 401(a)(1) and 401(d). This is because the two sections are
inextricably linked. Section 401(d) requires a certifying authority to
determine whether ``the applicant'' will--without additional
conditions--comply with the same CWA provisions identified in section
401(a)(1) and ``any other appropriate'' requirement of state or Tribal
law. Only if the certifying authority determines pursuant to section
401(d) that adding ``any effluent limitations and other limitations,
and monitoring requirements'' to the Federal license or permit will
assure that water

quality requirements will be met, may the certifying authority grant
the certification contemplated by section 401(a)(1). In other words,
when a certifying authority determines that it must add conditions
under section 401(d) to the certification, that is equivalent to
deciding that, without those conditions, it must deny certification.
The certifying authority's evaluations and determinations under
sections 401(a)(1) and 401(d) do not work together in a harmonious
fashion if the statute is interpreted to apply a different scope of
review to each section. EPA has never taken the opposite position. In
the 2020 Rule, EPA also concluded that the scope of sections 401(a)(1)
and (d) should be the same. 85 FR 42252.\71\
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    \71\ See also 2010 Handbook at 18 (rescinded in 2019, see supra)
(``In order to obtain certification of any proposed activity that
may result in a discharge to waters of the U.S., an applicant must
demonstrate that the proposed activity and discharge will not
violate or interfere with the attainment of any limitations or
standards identified in [section] 401(a) and (d).'')
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3. Implementation
    At proposal, the Agency identified examples of certification
conditions possibly falling inside and outside of the water quality-
related scope of section 401 review. Some commenters provided input on
these examples. Some of those commenters explicitly supported the
listed examples, whereas other commenters disagreed that the examples
listed were appropriately within the scope of certification. A few
commenters argued that the scope of certification should be limited to
protection of water quality sufficient to support designated uses, as
opposed to direct protection of those uses, and argued that some
examples in the proposal constituted the latter. A few commenters
focused specifically on the examples regarding public fishing access
and recreation facilities, arguing that they are not linked to
preserving the water quality necessary for the designated use and
should not be in the scope of a certifying authority's review. A few
other commenters asserted that EPA was equating ensuring people can
enjoy the benefits of water quality with actually ensuring water
quality and argued that certifications should not include impacts that
are not directly related to improving or maintaining water quality.
Some commenters provided their own examples of conditions they
considered to be related or unrelated to water quality and asked for
EPA to explicitly state which conditions would be within or outside the
scope of section 401 certification.
    The Agency declines to explicitly identify which conditions would
be within or outside the scope of section 401 certification because,
subject to a case-by-case review of the particular facts presented by
each certification, a wide variety of conditions could be appropriate
as necessary to prevent adverse impacts to a state's or Tribe's water
quality. The appropriateness of any given condition will depend on an
analysis of all relevant facts, including the certifying authority's
applicable water quality requirements. For potentially qualifying
conditions, it is appropriate for the certifying authority to consider
all potential adverse water quality impacts.
    To be clear, a certifying authority could condition an activity to
ensure its compliance with any and all components of applicable water
quality standards (water quality criteria, designated uses, and
antidegradation requirements). Therefore, certifying authorities could
include conditions to ensure a project will comply with, in addition to
water quality criteria, a designated use of a water, see PUD No. 1, 511
U.S. at 714-15 (emphasis in original) (``We think the language of
[section] 303 is most naturally read to require that a project be
consistent with both components, namely the designated use and the
water quality criteria. Accordingly, under the literal terms of the
statute, a project that does not comply with a designated use of the
water does not comply with the applicable water quality standards.''),
or antidegradation requirements, see id. at 718-19 (recognizing the
state appropriately justified its minimum flow rate as necessary to
implement its antidegradation policy). This means conditions, such as
those to ensure compliance with minimum flow rates to protect fisheries
(see, e.g., PUD No. 1, 511 U.S. 700); and scheduled releases to
accommodate existing recreational uses (see, e.g., In re Morrisville
Hydroelectric Project Water Quality, 2019 VT 84, 224 A.3d 473 (2019)),
may be appropriate certification conditions depending on the certifying
authority's water quality standards or other aspects of state or Tribal
law and the activity's impact on achieving compliance with such
requirements.
    The preamble to the final 2020 Rule identified examples of
certification conditions possibly falling outside the water quality-
related scope of section 401 review because they did not address water
quality impacts, including conditions requiring one-time and recurring
payments to state agencies for improvements or enhancements that are
unrelated to the proposed federally licensed or permitted project;
conditions to address potential non-water quality-related environmental
impacts from the creation, manufacture, or subsequent use of products
generated by a proposed federally licensed or permitted activity; and
conditions related only to non-water quality-related impacts associated
with air emissions and transportation effects. See 85 FR 42230. Subject
to a case-by-case review of the particular facts presented by each
certification, it is reasonable to assume that such non-water quality-
related conditions would generally be beyond the scope of section 401.
    Several commenters asserted that the proposed activity-based scope
of certification was too ambiguous and would lead to various
implementation challenges, such as regulatory uncertainty, increased
litigation risk, increased project costs, and project delays. As
discussed above, the Agency disagrees that its approach in the final
rule will lead to implementation challenges. Rather, the final rule's
approach to the scope of certification simply returns to the
longstanding practice. Ultimately, the ``activity'' subject to the
Federal license or permit will depend on the specific facts of a given
situation. For example, the activity may be the construction and
operation of a hydroelectric dam, see, e.g., PUD No. 1, 511 U.S. at
708-09, the construction and operation of a liquified natural gas
marine import terminal and a pipeline connecting the terminal to an
interstate natural gas pipeline, see, e.g., AES Sparrows, 589 F.3d at
723-24, or the construction and operation of a marina, see, e.g., Winer
Memorandum at 1.
    While the specific ``activity'' subject to certification will be
fact specific, the final rule clarifies certain limiting principles
that apply to all certifications. A certifying authority's analysis is
limited to evaluating the adverse water quality-related impacts from
the activity when it evaluates whether the activity will comply with
applicable water quality requirements. As discussed above, both the
terms ``will comply'' and ``applicable water quality requirements''
limit what a certifying authority may consider and ultimately, the
decisions that a certifying authority can make on a given request for
certification.

F. Certification Decisions

1. What is the Agency finalizing?
    In Sec.  121.7(a), the Agency is finalizing that ``a certifying
authority may act on a request for certification in one of four ways:
grant certification, grant

certification with conditions, deny certification, or expressly waive
certification.'' To provide further clarity on how a certifying
authority may ``act on a request for certification,'' EPA is defining
recommended minimum contents of a certification decision at Sec.
121.7(c) through (f) and finalizing that certification decisions must
be in writing. In a change from proposal and in support of the
cooperative federalism balance central to section 401, the Agency is
not requiring certifying authorities to include the components listed
at Sec.  121.7(c) through (f) in their certification decisions.
Instead, the final rule defines recommended contents for a grant of
certification (Sec.  121.7(c)), a grant of certification with
conditions (Sec.  121.7(d)), a denial of certification (Sec.
121.7(e)), and an express waiver (Sec.  121.7(f)).
2. Summary of Final Rule Rationale and Public Comment
a. Decisions on a Request for Certification
    Consistent with the CWA, EPA is finalizing the proposed approach
that a certifying authority must make one of four decisions on a
request for certification pursuant to its section 401 authority: it may
grant certification, grant certification with conditions, deny
certification, or it may expressly waive certification. 40 CFR
121.7(a). This section briefly describes each of the four decisions a
certifying authority may make, including what each decision means and
its impact on the Federal licensing or permitting process. This final
rule's interpretation of the four decisions a certifying authority may
make is consistent with the 2020 Rule and longstanding interpretation
of the 1971 Rule. See 40 CFR 121.7 (2020); 2010 Handbook at 1
(rescinded in 2019, see supra) (``The central feature of CWA Sec.  401
is the state or tribe's ability to grant, grant with conditions, deny
or waive certification.'').
    First, a certifying authority may grant certification. A grant of
certification means that the certifying authority has determined that
the activity will comply with water quality requirements. See section
IV.E in this preamble for further discussion of the scope of
certification and the term ``water quality requirements.'' Granting
certification means that the Federal license or permit may be issued.
See 33 U.S.C. 1341(a)(1). Section 401(a)(1) provides that where there
are no applicable water quality requirements for an activity, the
certifying authority ``shall so certify.'' Id. EPA is finalizing minor
revisions to the regulatory language located at Sec.  121.7(f) of the
2020 Rule that describes this scenario, with minor edits to reflect the
final rule scope of certification. See 40 CFR 121.7(g).
    Second, a certifying authority may grant certification with
conditions. A grant of certification with conditions means that the
certifying authority has determined that the activity will comply with
water quality requirements, but only if certain conditions are met.
Pursuant to section 401(d), if a grant of certification includes
conditions, those conditions must be incorporated into the Federal
license or permit. 33 U.S.C. 1341(d) (``Any certification provided
under this section shall set forth any effluent limitations and other
limitations, and monitoring requirements necessary to assure that any
applicant for a Federal license or permit will comply with [sections
301, 302, 306, and 307], and with any other appropriate requirement of
State law set forth in such certification, and shall become a condition
on any Federal license or permit . . .'') (emphasis added). As
discussed later in section IV.G in this preamble, Federal circuit
courts have routinely held that Federal agencies may not question or
reject a state's certification conditions. See, e.g., American Rivers,
129 F.3d at 107 (``[Section 401(d)] is unequivocal, leaving little room
for FERC to argue that it has authority to reject state conditions it
finds to be ultra vires.''). Granting certification with conditions
means the Federal license or permit may be issued, provided the
conditions are incorporated into that Federal license or permit.
    In this final rule, the Agency is not retaining any regulatory text
on the incorporation of certification conditions as was included in the
2020 Rule. See 40 CFR 121.10 (2020). First, the 2020 Rule limited
incorporation of certification conditions to only those that satisfy
the content requirements at Sec.  121.7(d) of the 2020 Rule.\72\ 40 CFR
121.10 (2020). Section 401(d) requires all certification conditions to
become conditions on a Federal license or permit and does not limit
incorporation to only those conditions that include certain
regulatorily defined components. As discussed in section IV.G of this
preamble, EPA does not interpret the statute as allowing a Federal
agency to review whether a certifying authority included certain
regulatorily defined elements in its certification decisions, nor
reject certifying authority conditions. Second, while the 2020 Rule
required Federal agencies to clearly identify certification conditions
in their Federal license or permit, section 401 does not require
Federal agencies to distinguish among certification conditions in their
licenses or permits. If the Federal agency finds it useful to
distinguish certification conditions for implementation purposes, the
Federal agency may structure its license or permit in such a manner,
but EPA does not find it necessary to require such a distinction.
---------------------------------------------------------------------------

    \72\ For example, the 2020 Rule required certifying authorities
to include a statement explaining why the condition is necessary to
assure that the discharge from the proposed project will comply with
water quality requirements and a citation to Federal, state, or
Tribal law that authorizes the condition for each certification
condition on an individual license or permit. 40 CFR 121.7(d)(1)
(2020).
---------------------------------------------------------------------------

    Third, a certifying authority may deny certification. A denial of
certification means that the certifying authority is not able to
certify that the activity will comply with water quality requirements.
If a certifying authority denies certification, the Federal license or
permit cannot be issued. 33 U.S.C. 1341(a)(1). The 2020 Rule included
regulatory text that discussed the effects of a denial of
certification. See 40 CFR 121.8 (2020). Section 121.8(a) of the 2020
Rule provided that a certification denial would not preclude a project
proponent from submitting a new certification request. Section 121.8(b)
provided that if the Federal agency determined that the certifying
authority's denial satisfied the content requirements at Sec.  121.7(e)
of the 2020 Rule,\73\ then the Federal agency would provide notice to
the certifying authority and project proponent and the Federal license
or permit would not be granted. As discussed below, the Agency is not
retaining any regulatory text that speaks to the effects of a denial of
certification because it is unnecessary.
---------------------------------------------------------------------------

    \73\ For example, the 2020 Rule required certifying authorities
to include three components on all denials of certification for
individual Federal licenses or permits, including the specific water
quality requirements with which the discharge will not comply, a
statement explaining why the discharge will not comply with the
identified water quality requirements, and description of the
specific water quality data or information, if any, that would be
needed to assure that the discharge from the proposed project will
comply with water quality requirements if the denial was due to
insufficient information. 40 CFR 121.7(e)(1) (2020).
---------------------------------------------------------------------------

    A few commenters discussed whether the proposal would prevent a
project proponent from resubmitting a request for certification
following a denial. One commenter noted that while the 2020 Rule
provided that a certification denial would not preclude a project
proponent from submitting a new certification request, the proposal did
not include a similar provision. The commenter

suggested that EPA is taking the position that a certification denial
is always a permanent final action that is taken with prejudice and
asserted that if this is EPA's position, it would be a significant
change from its previous longstanding position affirmed by the 2020
Rule.
    EPA's removal of regulatory text regarding the effects of a denial
of certification has no impact on denials without prejudice. EPA
continues to interpret section 401 as allowing denials without
prejudice.\74\ Section 401(a)(1) provides that a Federal license or
permit may not be granted if certification is denied, but it does not
speak to new requests for certification following a denial of
certification. Nothing in section 401, nor this final rule, prohibits a
project proponent from re-applying for certification if a certifying
authority denies its initial request.
---------------------------------------------------------------------------

    \74\ See e.g., New York State Dep't of Env't Conservation v.
FERC, 991 F.3d 439, 450 at n.11 (2d Cir. 2021) (noting that if a
state finds that a ``particular application requires
supplementation,'' the state ``can deny an application without
prejudice within the one-year deadline, which will presumably prompt
the applicant to resubmit the application with additional
material'') (citing New York State Dep't of Env't Conservation v.
FERC, 884 F.3d 450, 456 (2d Cir. 2018)); Turlock Irrigation Dist. v.
FERC, 36 F.4th 1179, 1183-84 (D.C. Cir. 2022) (rejecting arguments
that, if the court upheld the denials without prejudice at issue
before it, ``State agencies could extend the time for decision
indefinitely by denying one certification request after another
without prejudice, thus nullifying section 401's one-year limit'').
---------------------------------------------------------------------------

    EPA does not find it necessary to add any additional direction or
process for certification denials, beyond providing recommended
contents of a certification denial (as discussed below). If a project
proponent disagrees with a certifying authority's denial, the project
proponent may challenge the certifying authority's decision in the
appropriate court. See S. Rep. 92-414 at 69 (1971) (``Should such an
affirmative denial occur no license or permit could be issued by such
Federal agencies . . . unless the State action was overturned in the
appropriate courts of jurisdiction.''). The 2020 Rule also provided
that a Federal license or permit may not be issued if a certifying
authority denies certification in the manner prescribed by the 2020
Rule (i.e., contains the contents defined at Sec.  121.7(e) of the 2020
Rule). Under this final rule, Federal agencies may not review whether a
certifying authority's certification denial contains the contents
recommended at final rule Sec.  121.7(e).
    Fourth, a certifying authority may expressly waive certification.
The statute explicitly provides for a constructive waiver if the
certifying authority fails or refuses to act on a request for
certification within the reasonable period of time. The statute does
not explicitly state that a certifying authority may expressly waive
certification. A few commenters suggested that the final rule should
remove the term ``expressly'' from the waiver provisions because the
CWA does not provide any circumstances in which certification can be
waived before the reasonable period of time expires, and EPA does not
have the authority to add provisions in which a certifying authority
can expressly waive certification. However, EPA has determined that
providing this opportunity in this final rule is consistent with a
certifying authority's ability to waive through failure or refusal to
act. See EDF v. Alexander, 501 F. Supp. 742, 771 (N.D. Miss. 1980)
(``We do not interpret [the Act] to mean that affirmative waivers are
not allowed. Such a construction would be illogical and inconsistent
with the purpose of this legislation.''). This interpretation is also
consistent with the Agency's longstanding interpretation of the waiver
provision. See 40 CFR 121.9(a)(1) (2020) (allowing a certifying
authority to expressly waive certification via written notification);
40 CFR 121.16(a) (2019) (same). Additionally, continuing to allow
express waivers may create efficiencies where the certifying authority
knows early in the process that it will waive. An express waiver does
not mean that the certifying authority has determined that the activity
will comply with water quality requirements. Instead, an express waiver
indicates only that the certifying authority has chosen not to act on a
request for certification. Consistent with the statutory text, an
express waiver enables the Federal agency to issue a Federal license or
permit without a certification. 33 U.S.C. 1341(a)(1).
b. Defining What It Means ``To Act on a Request for Certification''
    The Agency is finalizing the definition of what it means ``to act
on a request for certification'' as proposed at Sec.  121.7(a). Once a
certifying authority receives a request, the certifying authority must
``act on a request for certification, within a reasonable period of
time (which shall not exceed one year) after receipt of such request.''
33 U.S.C. 1341(a)(1). The phrase ``to act on a request for
certification'' is not defined in the statute; nor did EPA define it in
the 1971 or 2020 Rules. To provide greater clarity regarding how a
certifying authority ``act[s] on a request for certification'' within
the reasonable period of time, EPA is defining the phrase to mean that
a certifying authority is making one of the four certification
decisions discussed above: granting certification, granting
certification with conditions, denying certification, or expressly
waiving certification.
    The Agency is providing clarification regarding what it means to
``act on a request for certification'' in light of commenter input on
this topic and recent case law. For example, would other actions beyond
the four just discussed qualify as ``acting'' on a request for
certification? The Fourth Circuit recently held that it was permissible
for a project proponent to withdraw its application to avoid a
certification denial as long as the certifying authority and project
proponent were not in a ``coordinated withdrawal and resubmission
scheme.'' NCDEQ v. FERC, 3 F.4th 655, 672, 676 (4th Cir. 2021).
However, the court, in dicta, also suggested that the section 401
phrase ``to act'' could be interpreted to mean something different than
a final action on a request for certification. According to the court,
a certifying authority that ``takes significant and meaningful action''
and ``in good faith takes timely action to review and process a
certification request likely would not lose its authority to ensure
that federally licensed projects comply with the State's water quality
standards, even if it takes the State longer than a year to make its
final certification decision.'' Id. at 670.
    EPA proposed to interpret the phrase ``to act on a request for
certification'' to mean that a certifying authority makes one of the
four above-described certification decisions: grant, grant with
conditions, deny, or expressly waive. However, the Agency requested
comment on this interpretation, as well as any alternative
interpretations, such as the NCDEQ approach. A few commenters did not
support the proposed approach and stated that defining ``act'' as
``decide'' violates the presumption that Congress could have included
language that it did not. One commenter stated that Congress
deliberately used the language ``fails or refuses to act'' instead of
``grant or deny'' when crafting the statutory text of section 401. A
few other commenters stated that a certifying authority acting in
``good faith'' to make a final decision on a certification request
should not be deemed a failure to act even if that decision takes
longer than one year. Conversely, some commenters supported the
proposed approach noting it provided much needed clarity and correctly
rejected the NCDEQ approach.

    The Agency finds that defining ``to act on a request for
certification'' as making one of the four above-described certification
decisions is reasonable, consistent with congressional intent, is
consistent with longstanding Agency position and case law, and allows
for greater certainty and transparency in the certification process.
First, while Congress did not use the words ``grant or deny'' or
``decide'' in place of ``act on a request for certification,'' in
context it seems evident that these are the actions Congress had in
mind. After all, section 401(a)(1) is about the effects of granting or
denying certification. Moreover, while Congress did not use the words
``grant or deny,'' it likewise did not use a term that clearly
indicated that Congress had in mind something short of a final
``action'' on a request for certification. Congress clearly intended to
balance state water quality concerns with the need to guard against
unreasonable delays in the Federal licensing or permitting process.
See, e.g., 115 Cong. Rec. 9257, 9264 (April 16, 1969) (``The failure by
the State to act in one way or the other within the prescribed time
would constitute a waiver of the certification required as to that
State.''); H.R. Rep. No. 91-940, at 54-55 (March 24, 1970) (Conf. Rep.)
(``In order to insure that sheer inactivity by the State . . . will not
frustrate the Federal application, a requirement, similar to that
contained in the House bill is contained in the conference substitute
that if within a reasonable period, which cannot exceed one year, after
it has received a request to certify, the State . . . fails or refuses
to act on the request for certification, then the certification
requirement is waived.''). If a certifying authority could merely act
in a ``significant and meaningful'' way to avoid waiver at the
expiration of the reasonable period of time, it could delay the Federal
licensing or permitting process well beyond the statutory one-year
timeframe and have the same practical effect as denying certification
without going on the record to do so. While Congress provided states
and Tribes with a powerful tool to prevent federally licensed or
permitted activities that will not comply with water quality
requirements, Congress clearly intended states and Tribes to take an
affirmative action to prevent such activities. 33 U.S.C. 1341(a)(1)
(``No license or permit shall be granted if certification has been
denied . . .'') (emphasis added). The Agency finds that defining ``to
act'' as taking one of the four decisions contemplated in section 401
best effectuates congressional intent and respects the cooperative
federalism balance central to section 401.
    Further, although the Agency has never explicitly defined ``to act
on a request for certification,'' the interpretation taken in this
final rule is consistent with prior Agency guidance and the 2020 Rule
preamble. In the 2020 Rule, the Agency noted that ``[i]f a certifying
authority fails or refuses to [grant certification, grant certification
with conditions, deny certification, or expressly waive certification]
within the reasonable period of time, the CWA provides that the
certifying authority will be deemed to have waived the certification
requirement.'' 85 FR 42262 (July 13, 2020). One implication of this
language is that the Agency thought that ``to act on a request for
certification'' means to make a final decision on the request (i.e.,
grant, grant with conditions, deny, or expressly waive certification).
Courts appear to agree. See, e.g., Alcoa Power Generating, Inc. v.
FERC, 643 F.3d 963, 972 (D.C. Cir. 2011) (noting that ``[i]n imposing a
one-year time limit on States to `act,' Congress plainly intended to
limit the amount of time that a State could delay a federal licensing
proceeding without making a decision on the certification request'');
NYSDEC, 884 F.3d at 455-56 (noting that a state must act after
receiving a certification request and that denial ``would constitute
`acting' on the request under the language of Section 401''); New York
State Dep't of Environmental Cons. v. FERC, 991 F.3d 439, 443, 450 (2d
Cir. 2021) (State agency could not ``extend[ ] the deadline . . . to
issue or deny water quality certification'' beyond ``one year of the
actual receipt of the application'' for certification); Millennium
Pipeline Co. v. Seggos, 860 F.3d 696, (D.C. Cir. 2017) (``To prevent
state agencies from indefinitely delaying issuance of a federal permit,
. . . . a State [must] grant or deny the certificate'' within one year
from the receipt of a request for certification).
    Lastly, the Agency finds that the final rule's approach best
supports a clear, consistent, and transparent certification process. As
noted at proposal, EPA shared similar concerns as stakeholders with the
NCDEQ approach, noting that it may make the section 401 certification
process less predictable and transparent. 87 FR 35350 (June 9, 2022).
The Agency remains concerned that interpreting ``to act on a request
for certification'' as any ``significant and meaningful action'' might
inject significant uncertainty and subjectivity into the certification
process (e.g., what is a ``significant and meaningful action?'')
causing significant confusion for stakeholders. Id. EPA finds that the
final rule approach will provide stakeholders with a clear and
predictable endpoint for knowing when the certifying authority has
failed or refused to act, resulting in a waiver. See 33 U.S.C.
1341(a)(1).
c. Failing or Refusing To Act on a Request for Certification
    Similar to the proposed rule, the Agency is finalizing at Sec.
121.9(a) that ``the certification requirement shall be waived only if a
certifying authority fails or refuses to act on a request for
certification within the reasonable period of time.'' 40 CFR 121.9(a).
EPA proposed at Sec.  121.8 that ``the certification requirement shall
be waived if a certifying authority fails or refuses to act on a
request for certification in accordance with Sec.  121.7(a) within the
reasonable period of time, as defined at Sec.  121.6.'' EPA has
reorganized the regulatory text by moving the text proposed at Sec.
121.8 (``Failure or refusal to act'') to Sec.  121.9 and made several
revisions. First, EPA made minor non-substantive revisions at Sec.
121.9(a) to remove unnecessary and redundant internal references to
Sec. Sec.  121.6 (reasonable period of time) and 121.7(a) (possible
actions on a request for certification). Second, the Agency has moved
proposed Sec.  121.9(c), which described the process that occurred once
a certifying authority failed or refused to act, to Sec.  121.9(b) to
pair the process that occurs once a certifying authority fails or
refuses to act with the final rule's express statement on constructive
waiver. The Agency intends such restructuring to clearly convey that a
constructive waiver of certification may only occur where a certifying
authority fails or refuses to act, as defined in this final rule,
within the reasonable period of time. See section IV.G in this preamble
for further discussion on Federal agency review for failure or refusal
to act within the reasonable period of time.
    The plain language of section 401(a)(1) provides that the
certification requirement is waived if a certifying authority ``fails
or refuses to act on a request for certification, within a reasonable
period of time (which shall not exceed one year).'' Id. As discussed in
section IV.D of this preamble, a certifying authority and Federal
agency may jointly agree to set the reasonable period of time up to one
year. 40 CFR 121.6(b). However, if they are unable to reach agreement,
it will default to six months. 40 CFR 121.6(c). Accordingly, if the
certifying authority fails or refuses to act in the agreed-upon or
default reasonable period of time, the certifying authority will
constructively waive.

Section 401(a)(1) clearly indicates Congress's intent to limit
constructive waivers to situations where a certifying authority did not
act within the reasonable period of time. See id. (``No license or
permit shall be granted until the certification required by this
section has been obtained or has been waived as provided in the
preceding sentence.'').
    The legislative history of this provision also suggests that
constructive waivers were intended to prevent delays in the Federal
licensing or permitting process due to the certifying authority's
failure to grant or deny certification. See H. Rep. No 92-911, at 122
(1972) (``In order to insure that sheer inactivity by the State,
interstate agency or Administrator as the case may be, will not
frustrate the Federal application, a requirement, that if within a
reasonable period, which cannot exceed 1 year, after it has received a
request to certify the State, interstate agency, or Administrator, as
the case may be, fails or refuses to act on the request for
certification, then the certification requirement is waived.'').
Similarly, the 1971 Rule and subsequent Agency guidance recognized that
constructive waivers could occur due to certifying authority inaction.
See 40 CFR 121.16(b) (2019) (providing that constructive waiver
occurred upon the ``failure of the State . . . concerned to act on such
a request for certification within a reasonable period of time after
receipt of such request''); 2010 Handbook at 11 (rescinded in 2019, see
supra) (``State and tribes are authorized to waive [section] 401
certification . . . by the certification agency not taking action.'').
    The 2020 Rule's interpretation of what it means for a certifying
authority to fail or refuse to act departed from the longstanding
Agency position on constructive waivers. The 2020 Rule allowed a
Federal agency to determine that a certifying authority had failed or
refused to act, and thereby waived certification--even when the
certifying authority did in fact act on a request for certification
within the reasonable period of time--if the Federal agency found that
the action was somehow procedurally deficient (e.g., did not follow the
2020 Rule's procedural requirements for a denial of certification). 40
CFR 121.9(a)(2) (2020); 85 FR 42266. Similarly, a Federal agency could
determine that a certification condition was waived if the condition
did not comply with procedural requirements of the 2020 Rule. Id. at
42250. This aspect of the 2020 Rule drew considerable pre-proposal
input and public comment to the effect that this interpretation could
result in a Federal agency ``veto'' of a section 401 certification, and
that it was contrary to the statute, the legislative history, and case
law. EPA similarly expressed concern in its Federal Register document
announcing its intent to revise the 2020 Rule, noting that ``a federal
agency's review may result in a state or tribe's certification or
conditions being permanently waived as a result of non-substantive and
easily fixed procedural concerns identified by the federal agency.'' 86
FR 29543 (June 2, 2021).
    The 2020 Rule's interpretation of waiver of a certification
decision is not consistent with the plain language of the statute and
its legislative history. The mere failure of a certifying authority to
include certain regulatorily defined elements in its certification
decision or comply with other procedural requirements of section 401,
such as following public notice procedures on a request for
certification, do not qualify as the kind of ``sheer inactivity'' that
Congress contemplated would result in a constructive waiver. This
interpretation also resulted in Federal agencies rejecting
certification decisions intended to prevent adverse water quality
impacts because of fixable procedural concerns. For example, some
commenters noted that use of the 2020 Rule's procedural requirements on
certifications for the Corps' Nationwide General Permits resulted in
certifications with conditions or denials being treated as constructive
waivers. As discussed in section IV.G.2 of this preamble, a
constructive waiver is a severe consequence because a waiver means that
a Federal license or permit which could adversely impact the certifying
authority's water quality (i.e., cause noncompliance with water quality
requirements) may proceed without any input from the certifying
authority. Accordingly, consistent with the statutory language,
legislative history, and prior Agency interpretation, EPA is finalizing
regulatory text to clarify that constructive waivers may occur only if
a certifying authority fails or refuses to take one of the four actions
described in this section within the reasonable period of time.
    Consistent with this approach, EPA is also finalizing targeted
conforming revisions to its part 124 and part 122 regulations, where
these regulations previously allowed EPA to find that a certifying
authority waived its right to certify or waived a certification
condition for reasons other than those specified in final rule Sec.
121.9 (failure to act on a request for certification within the
reasonable period of time). EPA is deleting the majority of the
language in 40 CFR 124.53(e)(2) and (3), which allowed EPA to waive
certification conditions that did not meet certain requirements.\75\
See discussion infra for further discussion on the revisions to Sec.
124.53.
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    \75\ EPA is also deleting provisions in Sec.  124.53(e) because
its approach to the contents of a certification decision differed
from final rule Sec.  121.7, as explained in preamble section
IV.F.2.d of this preamble.
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    EPA is also finalizing revisions to 40 CFR 124.55(c), which allowed
EPA to waive certification conditions or denials that were based on
state law allowing a less stringent permit condition. Specifically, EPA
is deleting the second sentence of Sec.  124.55(c), which allowed EPA
to waive a certification denial or condition. The first sentence of
Sec.  124.55(c) will remain because it is not affected by this final
rule. Finally, EPA is finalizing revisions to 40 CFR 122.44(d)(3),
which allowed EPA to waive certifications that were stayed by a court
or state board under certain circumstances. EPA is deleting the second
and third sentences, which concerned certification waiver. As a result
of these deletions and revisions in EPA's part 124 and part 122
regulations, certification waivers for EPA-issued NPDES permits will be
governed solely by the certification waiver requirements in Sec.  121.9
of the final rule.
d. Contents of a Certification Decision
    To further clarify how a certifying authority may ``act on a
request for certification,'' EPA is finalizing recommended contents of
a certification decision at Sec.  121.7(c) through (f) and finalizing a
requirement that all certification decisions be in writing. In a change
from proposal and in support of the cooperative federalism balance
central to section 401, the Agency is not mandating the contents that
certifying authorities must include in their certification decisions.
Instead, the final rule includes recommended contents for a grant of
certification (Sec.  121.7(c)), a grant of certification with
conditions (Sec.  121.7(d)), a denial of certification (Sec.
121.7(e)), and an express waiver of certification (Sec.  121.7(f)). As
discussed in more detail below, these recommended contents are similar
to those proposed (as requirements) with modifications in light of
commenter input. The Agency is also finalizing revisions to the
regulatory text located at Sec.  121.7(a) of the 2020 Rule with minor,
non-substantive revisions to clarify that all certification decisions
should be within the scope of certification and taken within the
reasonable period of time. 40 CFR 121.7(b).

    EPA is finalizing removal of the regulatory text located at Sec.
121.7(b) of the 2020 Rule, which characterized what actions a
certifying authority may take based on its evaluation of the request
for certification. EPA believes it is redundant to retain separate
regulatory text restating the same ideas as final rule Sec.  121.7(a)
and (c) through (f).
    While the statute provides that certifying authorities may make one
of four decisions when processing a request for certification, the CWA
does not explicitly describe the contents or elements of a
certification decision. EPA's 1971 Rule defined the contents of a
certification and express waiver decision for all certifying
authorities. The 1971 Rule's enumeration of the contents of a
certification decision was simple but effective and included the name
and address of the applicant, a statement that the certifying authority
examined the application, a statement that ``there is a reasonable
assurance that the activity will be conducted in a manner which will
not violate applicable water quality standards,'' and other information
deemed appropriate by the certifying authority. 40 CFR 121.2(a) (2019).
In addition, the 1971 Rule provided that a certification could be
waived upon either (1) written notification from the certifying
authority that it expressly waived its authority to act on a request,
or (2) written notification from the Federal licensing or permitting
agency regarding the failure of the certifying authority to act on a
request for certification within the reasonable period of time. 40 CFR
121.16 (2019). The 1971 Rule did not define the contents of a
certification denial or provide specific requirements for how to
articulate and incorporate a certification condition.
    In the 2020 Rule, EPA updated those requirements for each type of
certification decision and more fully addressed the effects of those
decisions. First, it provided that, when a certifying authority granted
certification under the 2020 Rule, the certification must be in writing
and include a written statement that the discharge from the proposed
project would comply with water quality requirements. 40 CFR 121.7(c)
(2020); 85 FR 42286.
    Second, when a certifying authority granted certification with
conditions, the 2020 Rule required that the certifying authority
explain the necessity of each condition and provide a citation to an
applicable Federal, state, or Tribal law. 40 CFR 121.7(d) (2020); 85 FR
42286. This was a change from the 1971 Rule, which broadly provided for
certifying authorities to include conditions as they ``deem[ed]
necessary or desirable.'' 40 CFR 121.2(a)(4) (2019). The 2020 Rule
preamble stated that the requirements were ``intended to increase
transparency and ensure that any limitation or requirement added to a
certification . . . is within the scope of certification.'' 85 FR
42256. EPA observes that this provision was similar to EPA's current
NPDES program-specific section 401 regulations. See 40 CFR 124.53(e)(2)
(2023) (requiring a citation for any conditions more stringent than
those in the draft permit).\76\
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    \76\ The Agency is finalizing revisions to the part 124
regulations where such provisions are inconsistent with this final
rule, including deleting 40 CFR 124.53(e)(2). See discussion infra.
---------------------------------------------------------------------------

    Third, unlike the 1971 Rule, under which certification denials were
undefined, the 2020 Rule defined the contents of a denial decision.
Specifically, the 2020 Rule required certification denials to be made
in writing and to identify any water quality requirements with which
the discharge will not comply, include a statement explaining why the
discharge would not comply with those requirements, and provide any
specific water quality data or information that would help explain a
denial based on insufficient information. 40 CFR 121.7(e) (2020); 85 FR
42286.
    Fourth, the 2020 Rule included similar language to the 1971 Rule
for express waivers and required written notification from the
certifying authority indicating an express waiver of its authority to
act on a request for certification. 40 CFR 121.9(a)(1) (2020); 85 FR
42286. Lastly, under the 2020 Rule, EPA defined constructive waiver as
a certifying authority's ``failure or refusal to act on a certification
request'' which included failing or refusing to (1) act within the
reasonable period of time, (2) satisfy the procedural requirements for
a grant or denial of certification imposed by the 2020 Rule, or (3)
comply with other procedural requirements of section 401 (e.g., provide
public notice on a certification request). 40 CFR 121.9(a)(2) (2020);
85 FR 42286. The 2020 Rule also provided that condition-specific
waivers could occur if the certifying authority failed to satisfy the
procedural requirements imposed by the 2020 Rule for certification
conditions. 40 CFR 121.9(b) (2020); 85 FR 42286. See section IV.G in
this preamble for further discussion on constructive waivers and the
role of Federal agencies.
    The stated purpose of the 2020 Rule requirements was to promote
transparency and consistency in certification decisions and to help
streamline the Federal licensing and permitting processes. 85 FR 42220.
However, in pre-proposal input, several certifying authorities said
that the 2020 Rule's requirements for the contents of certification
decisions delayed rather than streamlined the certification process.
Conversely, in pre-proposal outreach, project proponents expressed
interest in keeping the 2020 Rule requirements for the added
transparency and argued that it is helpful when certifying authorities
explain their final certification decisions (especially denials). In
response to this mixed input, the Agency proposed to include some
requirements for each of the four types of certification decisions. The
Agency intended for this approach to address both the workload concerns
expressed by certifying authorities, and the desire of project
proponents for increased transparency and consistency in the
certification process.
    Some commenters supported the proposed rule's approach, including
the removal of the 2020 Rule requirements to include specific statutory
or regulatory citations for each certification condition and denial,
and retaining the inclusion of a statement explaining why each of the
included conditions is necessary to assure that the activity as a whole
will comply with water quality requirements. Commenters argued that the
explanation requirement would provide transparency and regulatory
certainty. However, some commenters asserted that any content
requirements imposed by EPA would place an undue burden on the
certifying authority and recommended that the Agency remove all content
requirements. Conversely, some other commenters expressed interest in
keeping the 2020 Rule requirements, including a few commenters who
argued that citations are necessary for legally defensible
certification decisions, to provide transparency, and to enable the
project proponent and the public to understand the rationale for a
condition.
    After reviewing public comments, the Agency is not finalizing any
requirements for certification decisions. Before the 2020 Rule, EPA did
not impose requirements on certifying authorities regarding what
information they must include in a denial or what information they must
include to support a certification condition. EPA is not aware of any
major issues regarding clarity or information in certification denials
or conditions. Instead of mandating detailed requirements for
certifying authorities, the final rule identifies recommended contents
for a grant of certification, a grant of certification with conditions,
a denial of

certification, and an express waiver of certification. This approach
addresses workload concerns expressed by certifying authorities and, in
support of the cooperative federalism balance central to section 401,
provides certifying authorities with the flexibility to determine how
best to communicate certification decisions to project proponents and
Federal agencies. It also will eliminate unnecessary potential disputes
about whether a certifying authority complied with EPA-issued
requirements for certification decision documents (in addition to
whatever requirements the certifying authority imposes on itself). EPA
expects certifying authorities understand the importance of clear,
transparent communication with project proponents and Federal agencies.
Indeed, it is in the certifying authority's own interests to clearly
convey the reasoning and rationale behind its action. To encourage
development of clear certification decisions, the Agency is identifying
recommended--but not required--contents for each certification decision
type at final rule Sec.  121.7(c) through (f). These contents are
similar to the contents proposed (to be required) at Sec.  121.7(c)
through (f), with modifications based on stakeholder input. See
discussion infra. The recommended contents should provide transparency
and consistency in the certification process, particularly where a
certifying authority does not have a standard approach for the contents
of a certification decision. For its part, the Agency intends to
include these contents in certification decisions when it acts as a
certifying authority and encourages other certifying authorities to
include similar contents in their certification decisions. However, the
final rule approach provides certifying authorities with the
flexibility to add different or additional elements or information
requirements to any of these four certification decisions to provide
stakeholders with additional clarity and transparency. For example, a
certifying authority may choose to require a citation to applicable
Federal or state or Tribal water quality requirements to support a
certification condition.
    As discussed above, the Agency is recommending, as opposed to
requiring, additional contents for each type of certification decision.
Before discussing the specific contents of each certification decision
in more detail, the Agency would like to address the recommended
contents that are the same or similar in all four certification
decisions. First, consistent with the 2020 Rule, the Agency has opted
to retain language in the recommended contents of a certification
decision consistent with the 1972 statutory language. Unlike the 2020
Rule, the 1971 Rule included language that reflected the predecessor
statute. As discussed in section III in this preamble, the 1972 CWA
revised the predecessor version of section 401 that the 1971 Rule
relied upon. To continue to account for this change to the statutory
text, the Agency is retaining a similar provision as the 2020 Rule that
certification decisions to grant, grant with conditions, or deny
certification should indicate whether the certifying authority has
determined that an activity will comply with the water quality
requirements identified in the CWA, not just water quality
standards.\77\ Unlike the 2020 Rule, EPA is finalizing that
certification decisions should indicate whether the activity, as
opposed to the discharge, will comply with water quality requirements.
See section IV.E of this preamble for further discussion on the scope
of certification.
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    \77\ The 1971 Rule required a certification issued by any
certifying authority to include, ``A statement that there is a
reasonable assurance that the activity will be conducted in a manner
which will not violate applicable water quality standards.'' 40 CFR
121.2(a)(3) (2019) (emphasis added).
---------------------------------------------------------------------------

    Similar to the Agency's position in the 2020 Rule, the Agency does
not think that retaining the 1972 statutory language ``will comply'' in
the regulations requires certifying authorities to provide absolute
certainty that applicants for a Federal license or permit will never
violate water quality requirements. See 85 FR 42278. This is not EPA's
intention, and EPA does not think such a stringent interpretation is
required by the statutory or final regulatory language. The use of
language comparable to ``will comply'' is not uncommon in CWA
regulatory programs. For example, CWA section 402 contemplates that
NPDES permits will only be issued upon a showing that a discharge
``will meet'' various enumerated provisions of the CWA. 33 U.S.C.
1342(a). This standard has not precluded states, Tribes, or EPA from
routinely issuing CWA compliant NPDES permits to allow pollutant
discharges, nor has it resulted in permits that are impossible for
permittees to comply with.
    Nor does EPA expect that the use of ``will comply'' will impede or
limit a certifying authority's ability to act on a request for
certification or prevent a certifying authority from relying on
modeling information, which provides an informed projection of
potential impacts, to make a certification decision. When a certifying
authority makes a certification decision, it would be certifying that
the activity will comply with water quality requirements for the life
of the Federal license or permit and not just at the moment the Federal
license or permit is issued. The lifespan of FERC licenses can be
decades, whereas CWA section 402 or 404 permits usually last five
years. Given the possible lifespan of a Federal license or permit, and
the possibility that water quality-related changes or impacts may
occur, for example, due to climate change or other factors during that
time, it is reasonable (and perhaps essential in some cases) for
certifying authorities to rely on modeling to inform certification
decisions. EPA does not intend or expect the use of the term ``will
comply'' to limit or impact a certifying authority's ability to rely on
such modeling to support its certification decisions.
    Second, the Agency continues to require all certification decisions
to be in writing. While the Agency is not aware of any certification
decisions being provided in a different manner (e.g., verbally), EPA is
finalizing the requirement that all certification decisions be in
writing to ensure the project proponent and Federal agency can clearly
understand the certification decision and, for a certification with
conditions, any conditions that must be included in the Federal license
or permit.
    Third, the Agency is removing the inclusion of the name and address
of the project proponent from the list of recommended contents of each
certification decision. The Agency finds this component unnecessary
since the certification will be included with the Federal license or
permit that will identify the appropriate project proponent. However,
the Agency is retaining the identification of the applicable Federal
license or permit as one of the recommended components for all
certification decisions. A few commenters suggested that the final rule
should remove any requirements to include the identification of the
Federal license or permit. While this final rule is only recommending
the identification of the Federal license or permit, the Agency
observes that there must be a Federal license or permit to trigger the
section 401 process. As such, the Agency intends for this component to
help clarify which Federal license or permit the certification decision
applies to.
    Fourth, the Agency is adding regulatory text that encourages
certifying authorities to clearly identify the certification decision
type (i.e.,

grant, grant with conditions, denial, or waiver) to ensure project
proponents and Federal agencies can easily understand the nature of the
certification decision. This is particularly important for Federal
agencies who need to look at a certification decision to determine how
it should act in response. For example, if a certifying authority
denies certification, the Federal agency cannot issue the Federal
license or permit. Similarly, if a certifying authority grants
certification with conditions, the Federal agency must include those
conditions in its Federal license or permit.
    Lastly, the Agency is adding regulatory text that encourages a
certifying authority to indicate that it complied with its public
notice procedures established pursuant to CWA section 401(a)(1). As
discussed in section IV.G in this preamble, Federal agency review is
limited to verifying compliance with the requirements of CWA section
401, including whether the certifying authority confirmed it complied
with its public notice procedures established pursuant to CWA section
401(a)(1). See 40 CFR 121.8. The language added throughout Sec.  121.7
is intended to aid this aspect of Federal agency review. EPA is not
defining how exactly a certifying authority must indicate in its
certification decision that it complied with public notice procedures.
Instead, a certifying authority may choose to demonstrate that it
complied with its public notice procedures as it sees fit, including
but not limited to, by including a copy of the public notice in its
certification decision, by including a description of the public notice
process it undertook in the certification decision, or by simply
including an attestation statement in the certification decision that
the certifying authority complied with its public notice procedures.
    While the above paragraphs address aspects of the recommended
components that are the same for all certification decisions, the
following paragraphs describe the individual requirements EPA is
recommending for each of the four kinds of certification decisions.
    First, any grant of certification should (1) identify the decision
as a grant of certification, (2) identify the applicable Federal
license or permit, (3) include a statement that the activity ``will
comply'' with water quality requirements, and (4) indicate that the
certifying authority complied with its public notice procedures
established pursuant to CWA section 401(a)(1). While the 1971 Rule
required a statement that there was ``reasonable assurance,'' 40 CFR
121.2(a) (2019), as explained above, the 2020 Rule and this final rule
use the term ``will comply'' which is more consistent with the 1972
statutory language used in sections 401(a)(1) and 401(d).
    Second, EPA is finalizing that any grant of certification with
conditions should (1) identify the decision as a grant of certification
with conditions, (2) identify the applicable Federal license or permit,
(3) include a statement explaining why each condition is necessary to
assure that the activity will comply with water quality requirements,
and (4) indicate that the certifying authority complied with its public
notice procedures established pursuant to CWA section 401(a)(1). The
Agency proposed that a grant of certification must include any
conditions necessary to assure that the activity as a whole will comply
with applicable water quality requirements. Due to the change in
approach to include recommended components, as opposed to required
components, for certification decisions, the Agency is removing the
proposed text at Sec.  121.7(d)(2) and instead adding text at final
rule Sec.  121.3(b) that requires certifying authorities to include any
conditions necessary to assure that the activity will comply with
applicable water quality requirements. The text at final rule Sec.
121.3(b) reflects the language used in section 401(d).
    The Agency recommends that certifying authorities include a
statement explaining why each of the included conditions is necessary
in a certification with conditions, consistent with proposed Sec.
121.7(d)(3).\78\ A few commenters expressed concern over how such
justifications should be included in a certification decision,
including arguing that it would interfere with readability or
suggesting grouping explanations instead of requiring an explanation
for each condition. Although the Agency is not requiring the inclusion
of a statement explaining why a condition is necessary, EPA finds that
including such a statement will help project proponents and Federal
agencies understand the reason for the condition and assist in its
implementation. As discussed in the implementation section below, there
are several ways a certifying authority can include this information in
a certification decision to aid readability for ease of implementation,
such as including justifications in an addendum to the certification.
See infra. EPA anticipates that such information is readily available
to the certifying authority as part of its decision-making process.
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    \78\ The Agency recommends including at least a succinct
explanation for the certification condition(s) to provide necessary
transparency and clarity for project proponents and Federal
agencies. As a practical matter, certifying authorities will likely
already have developed and considered such information as part of
their decision-making process and included it in the record to
substantiate their decision. Aside from borrowing from their
decision-making record, EPA expects that certifying authorities may
be able to satisfy this requirement in a number of ways. For
example, certifying authorities could identify specific water
quality requirements with which the activity will not comply without
the condition.
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    Consistent with the final rule's shift to recommended contents of a
certification decision, the Agency is not requiring certifying
authorities to include a specific statutory or regulatory citation in
support of a certification condition. Rather, the Agency will let
certifying authorities decide what relevant information to provide in
support of any conditions. EPA encourages certifying authorities to
work with project proponents and Federal agencies to determine what
information would be most useful (e.g., statutory or regulatory
citations). Additionally, EPA is not distinguishing between
certification decisions based on an individual or a general Federal
license or permit. Although EPA made such a distinction in the 2020
Rule, EPA finds it unnecessary here because it is no longer defining
required certification decision contents and the recommended contents
would apply to a certification with conditions regardless of the nature
of the Federal license or permit.
    Third, EPA is finalizing that any denial of certification should
(1) identify the decision as a denial of certification, (2) identify
the applicable Federal license or permit, (3) include a statement
explaining why the certifying authority cannot certify that the
proposed activity will comply with water quality requirements,
including but not limited to a description of any missing water
quality-related information if the denial is based on insufficient
information, and (4) indicate that the certifying authority complied
with its public notice procedures established pursuant to CWA section
401(a)(1). Although the 1971 Rule did not define the elements of a
decision to deny certification, this concept was introduced in the 2020
Rule. The recommended contents for a denial of certification are
similar to the requirements in the 2020 Rule. The Agency did not
propose to retain the regulatory text located at Sec.  121.7(e)(2)(iii)
of the 2020 Rule, which required a certifying authority to describe
specific water quality data or

information that would be needed if the denial is due to insufficient
information. As discussed in the preamble to the proposed rule, the
Agency noted that certifying authorities could provide this sort of
information to satisfy the regulatory requirement at Sec.  121.7(e)(2)
to include a statement explaining why the certifying authority cannot
certify that the activity as whole will comply with water quality
requirements. 87 FR 35353. However, some commenters argued that denials
due to insufficient information should, as in the 2020 Rule, include an
explanation of what information was missing. Although the Agency is not
requiring any specific information for denials of certification, the
Agency is adding language at final rule Sec.  121.7(e)(3) to clarify
that statements explaining why a certifying authority cannot certify
that the activity will comply with water quality requirements may
include, but are not limited to, a description of any missing water
quality-related information if the denial is based on insufficient
information.
    The Agency recommends including at least a succinct explanation for
the certification denial to provide necessary transparency and clarity
for project proponents and Federal agencies. As a practical matter,
certifying authorities will likely already have developed and
considered such information as part of their decision-making process
and included it in the record to substantiate their decision. Aside
from borrowing from their decision-making record, EPA expects that
certifying authorities may be able to satisfy this requirement in
several ways. For example, certifying authorities could identify
specific water quality requirements with which the activity will not
comply, or identify what information about the project or potential
water quality effects is missing or incomplete that led the certifying
authority to not be able to determine whether the activity will comply
with water quality requirements. EPA anticipates that certifying
authorities will work with project proponents and Federal agencies to
determine what information would be most useful. Additionally, EPA is
not distinguishing between certification decisions based on an
individual or a general Federal license or permit. Although EPA took
this approach in the 2020 Rule, EPA is no longer defining required
certification decision-specific contents and the recommended contents
would apply to a denial of certification regardless of the nature of
the Federal license or permit.
    Lastly, EPA is finalizing that any express waiver made by a
certifying authority should (1) identify the decision as an express
waiver of certification, (2) identify the applicable Federal license or
permit, (3) include a statement that the certifying authority expressly
waives its authority to act on the request for certification, and (4)
indicate that the certifying authority complied with its public notice
procedures established pursuant to CWA section 401(a)(1). This approach
is consistent with the 1971 Rule and 2020 Rule, except the final rule
merely recommends inclusion of such a statement of express waiver
instead of requiring it. As noted above, an express waiver indicates
only that the certifying authority has chosen not to act on a request
for section 401 certification. Accordingly, the certifying authority
would only need to state that it is waiving certification and would not
need to make any statement about why it has decided to waive or its
assessment of the project's impact on its water quality.
    In this final rule, EPA is also, in large part, finalizing removal
of 40 CFR 124.53(e)(1) through (3), which address the contents of a
certification for an EPA-issued NPDES permit. EPA proposed to delete of
the entirety of Sec.  124.53. See 87 FR 35357. Most of the contents
identified at Sec.  124.53(e) are not consistent with the contents
identified at Sec.  121.7(d) and (e). For example, Sec.  124.53(e)(2)
required a citation (but not an explanation) for each condition of
certification, whereas final rule Sec.  121.7(e) recommends including
an explanation (but not a citation) for each condition. Further, Sec.
124.53(e)(1) identified what conditions must be included in a
certification but did not match the conditions identified at final rule
Sec.  121.3(b). Final rule Sec.  121.3(b) incorporates the final rule's
concepts of the entire ``activity'' scope of review and ``water quality
requirements'' while Sec.  124.53(e)(1) did not. To be clear, all
certification decisions, including those on EPA-issued NPDES permits,
must comply with this final rule Sec.  121.3(b). As discussed above,
certifying authorities may work with EPA and/or project proponents to
determine what information would be most useful to include in a
certification with conditions on an EPA-issued NPDES permit (e.g., a
citation to the CWA or state law for conditions more stringent than
those in the draft permit).
    EPA is finalizing revisions to Sec.  124.53(e)(3), now Sec.
124.53(e), which allows, but does not require, certifying authorities
to include a statement in a grant of certification regarding the extent
to which each condition of the draft permit can be made less stringent
without violating the requirements of state law, including water
quality standards. EPA has concluded that this provision, as finalized,
is not inconsistent with the Agency's approach to certification
decisions in the final rule because it is a recommended and not
required component of a certification decision. This provision will
assist the NPDES program in its implementation by ensuring that permit
conditions in final NPDES permits are consistent with state law.
However, any statement included pursuant to Sec.  124.53(e) would be
informational, for the benefit of EPA permit writers, and would not be
a condition of certification. Section 124.53(e) would not allow the
Agency to reject or modify certification conditions; rather, this
provision allows certifying authorities to provide EPA with input on
draft permit conditions. This is not the only opportunity for a
certifying authority to provide input on draft NPDES permit conditions.
Certifying authorities could also provide input on draft NPDES permit
conditions through the public notice process or upon review of a draft
NPDES permit.
3. Implementation
    A few commenters suggested that the definition of ``to act'' needed
additional clarity to state the that the four actions proposed are the
only ways in which a certifying authority may ``act'' on a request for
certification. EPA finds that the regulatory text at final rule Sec.
121.7(a) clearly provides that the four decisions (grant, grant with
conditions, denial, express waiver) are the only ways in which a
certifying authority may act. However, EPA wishes to clarify that any
attempt at a ``hybrid'' version of those four decisions does not meet
the standard of ``acting'' on a request for certification (e.g., a
waiver with conditions, a conditional denial). See Waterkeepers
Chesapeake, et al. v. FERC, 56 F.4th 45, 49 (D.C. Cir. 2022) (holding
that FERC could not issue a license ``[i]f a state has neither granted
a certification nor failed or refused to act on a certification
request'' and finding that ``Maryland's subsequent backtracking in the
settlement agreement, in which it `conditionally waiv[ed]' its
authority to issue a water quality certification after the fact, is
neither a `fail[ure]' nor a `refus[al]' to act'' and therefore could
not ``qualify as a section 401(a)(1) waiver.''). To further clarify how
a certifying authority may act on a request for certification, the
Agency is finalizing regulatory text that encourages certifying
authorities to clearly identify whether a decision is a grant, grant
with conditions, denial, or express waiver.

    As discussed above, EPA is not defining how exactly a certifying
authority must indicate in its certification decision that it complied
with public notice procedures. Instead, a certifying authority may
choose how it wishes to demonstrate that it complied with its public
notice procedures. Possible options include, but are not limited to,
providing a copy of the public notice in its certification decision,
describing in the certification decision the public notice process it
undertook, checking a checkbox that indicates that the certifying
authority complied with public notice procedures, or including an
attestation statement that the certifying authority complied with its
public notice procedures.
    Although the Agency is no longer requiring certifying authorities
to include decision-specific contents in each of the four certification
decisions, the Agency strongly encourages certifying authorities to
include the recommended contents located at final rule Sec.  121.7(c)
through (f). EPA finds these recommended contents best reflect the
types of information project proponents and Federal agencies may need
to clearly understand and easily implement a certification decision.
Specifically, clearly identifying the nature of the certification
decision (i.e., a grant, grant with conditions, denial, or waiver) is
an important way to promote transparency and to avoid
misunderstandings. The Agency believes all recommended contents should
be readily available to the certifying authority as part of its
decision-making process, and therefore easily incorporated into a
certification decision.
    The Agency received comments expressing concern over providing a
justification statement for each certification condition because of
readability concerns. To be clear, the Agency is not requiring these
contents to be included in certification decisions, nor prescribing how
they should be incorporated into a certification decision.
Nevertheless, EPA believes there are several options to address such
readability concerns and still provide the recommended information. For
example, a certifying authority may choose to include explanations
(e.g., statement, citations, etc.) immediately following the
certification condition it supports. Alternatively, a certifying
authority could organize those explanations in the form of a table and
reference them in the document. Either of those methods is an
acceptable way to provide the support for why the conditions are
necessary.
    The recommended contents for certification decisions found at final
rule Sec.  121.7(c) through (f) do not represent the totality of
information that a certifying authority may find useful to share with
project proponents and Federal agencies.\79\ Certification decisions
can act as important implementation tools for certifying authorities to
convey best practices, rationales, and other pertinent information to
both project proponents and Federal agencies. However, for
certifications with conditions, it is important to clearly indicate
what information is merely background or supplementary information as
opposed to the actual conditions that must be incorporated into the
Federal license or permit. For example, when EPA acts as the certifying
authority it clearly denotes which aspects of the certification with
conditions are general information versus the actual certification
conditions. Clearly parsing out this information in the decision
document ensures project proponents are best positioned to understand
and comply with certification conditions.
---------------------------------------------------------------------------

    \79\ As discussed above, the Agency intends to include the
recommended contents in certification decisions when it acts as a
certifying authority and encourages other certifying authorities to
include similar contents in their certification decisions.
---------------------------------------------------------------------------

    Related to the importance of clearly communicating certification
decisions to project proponents and Federal agencies is the importance
of drafting clear certification conditions. EPA recognizes that
certification conditions are an important tool that enable certifying
authorities to ensure that projects needing Federal licenses or permits
will be able to move forward without adverse impacts to water quality.
EPA encourages certifying authorities to develop certification
conditions in a way that enables projects to adapt to future water
quality-related changes, i.e., so-called ``adaptive management
conditions.'' For example, if a certifying authority is concerned about
future downstream, climate change-related impacts on aquatic species
due to increased reservoir temperatures during the lifespan of a
hydropower dam license, the certifying authority might develop a
condition that would require a project proponent to take subsequent,
remedial action in response to reservoir temperature increases (e.g.,
conditions that might require monitoring and, as necessary, a change in
reservoir withdrawal location in the water column, a change in the
timing of releases, etc.).
    The Agency wishes to clarify the nature and effect of adaptive
management conditions. A few commenters asserted that adaptive
management conditions are the same as ``reopener'' clauses and that
they are important to ensure water quality resources will be protected
throughout the life of the project if the project changes or conditions
of the waters impacted by the project change. Conversely, one commenter
asserted that certifying authorities should not be able to add adaptive
management conditions to certifications because such conditions are
reopener conditions that could lead to new conditions being
incorporated into the Federal permit long after the certification is
issued. EPA agrees that adaptive management conditions are an important
tool to enable a certification to assure that the project will comply
with water quality activities over the life of the project. However,
the Agency disagrees that these conditions are the same as ``reopener''
clauses.\80\ Reopener clauses purport to authorize a certifying
authority to ``reopen'' and modify a certification at a later date,
sometimes due to the occurrence of a specific event. As discussed at
section IV.I of this preamble, certifying authorities cannot
``bootstrap'' themselves greater authority to modify a certification
beyond what is authorized in this final rule at Sec.  121.10. On the
other hand, adaptive management conditions are set at the time the
certification is granted and provide a concrete action that must occur
in the event certain criteria are met. The text of an adaptive
management condition does not change after certification is granted.
This promotes regulatory certainty, in contrast with a unilateral
modification pursuant to a ``reopener'' clause. For example, a
condition may require a project proponent to increase monitoring
efforts or conduct remediation if the baseline, routine monitoring
established in the certification reveals an increase in a specific
pollutant due to the activity. To ensure project proponents and Federal
agencies understand and are able to implement any such adaptive
management conditions, EPA recommends that certifying authorities
clearly define and explain in the certification document the basis for
these conditions and the circumstances in which adaptive management
conditions would require action by the project proponent (e.g.,
expectations for undertaking additional planning and

monitoring; thresholds triggering adaptive responses; requirements for
ongoing compliance). EPA has previously acknowledged the use of
``adaptive management'' conditions in prior guidance, see, e.g., 2010
Handbook at 32 (rescinded in 2019, see supra).
---------------------------------------------------------------------------

    \80\ See discussion in section IV.I of this preamble about
``reopener'' clauses or conditions and the Agency's position on a
certifying authority's ability to unilaterally modify a
certification after the reasonable period of time.
---------------------------------------------------------------------------

    Once a certifying authority acts on a request for certification,
the certifying authority should send the certification decision to the
project proponent requesting certification. Ultimately, section
401(a)(1) requires the project proponent to provide the Federal agency
with the certification from a certifying authority. However, EPA
encourages certifying authorities to include Federal agencies on any
certification decision transmittal to the project proponent to ensure
all parties have a clear, consistent understanding of the status of the
decision (e.g., copy the Federal agency point of contact on email
correspondence).

G. Federal Agency Review

1. What is the Agency finalizing?
    The Agency is finalizing regulatory text at Sec.  121.8 to clarify
that Federal agency review is limited to verifying compliance with the
requirements of CWA section 401. Specifically, the final rule provides
that to the extent a Federal agency verifies compliance with the
requirements of CWA section 401, its review is limited to (1) whether
the appropriate certifying authority issued the certification decision;
(2) whether the certifying authority confirmed it complied with its
public notice procedures established pursuant to section 401(a)(1); and
(3) whether the certifying authority acted on the request for
certification within the reasonable period of time. 40 CFR 121.8. EPA
proposed at Sec.  121.9 that Federal agency review of a certification
decision is limited to confirming four factors: the nature of the
decision, that the proper certifying authority issued the decision,
that the certifying authority complied with its own public notice
procedures for a request for certification, and that the decision was
issued in the reasonable period of time. As discussed in more detail
below, the Agency removed the first factor (the nature of the decision)
and modified the third factor to clarify that Federal agency review is
limited to verifying that the certifying authority confirmed compliance
with its public notice procedures. Aside from the three elements listed
at Sec.  121.8, EPA concludes that Federal agencies lack the authority
to review other aspects of a certification decision for purposes of
determining whether a ``certification required by [section 401] has
been obtained or has been waived.'' 33 U.S.C. 1341(a)(1).
    As proposed, the Agency is declining to define how a certifying
authority must demonstrate its compliance with the three CWA section
401 requirements listed above. See 87 FR 35356 (June 9, 2022). The
Agency proposed at Sec.  121.9(b) to define a process that a Federal
agency must follow if it determined that a certification decision did
not indicate the nature of the certification decision or the certifying
authority did not provide public notice on the request for
certification. As discussed below, the Agency is not finalizing Federal
agency review for whether the certification decision indicates the
nature of the decision, and therefore EPA need not finalize a
subsequent process. Although the final rule allows Federal agencies to
verify that a certifying authority confirmed compliance with its public
notice procedures, the Agency is returning to its pre-2020 Rule posture
and declining to define a process that Federal agencies must follow if
they are unable to verify compliance. The Agency is finalizing as
proposed a process for the Federal agency to follow if it determines
that a certifying authority failed or refused to act within the
reasonable period of time at final rule Sec.  121.9(b). Specifically,
Sec.  121.9(b) requires the Federal agency to promptly notify the
certifying authority and project proponent in writing that the
certification requirement has been waived and that such notice from the
Federal agency shall satisfy the project proponent's obligation under
CWA section 401.
    The Agency has also reorganized the regulatory text to move the
Federal agency review provision to Sec.  121.8, before the provision in
the final rule regarding what it means to fail or refuse to act. The
Agency believes this reorganization will more clearly communicate that
a Federal agency may only determine that a certifying authority
inadvertently waived where a certifying authority fails or refused to
act within the reasonable period of time. The text as finalized
represents the best reading of the text of section 401, congressional
intent, and relevant case law, and incorporates recommendations from
public comments received on the proposed rule.
2. Summary of Final Rule Rationale and Public Comment
    Section 401 does not explicitly provide a defined role for Federal
licensing or permitting agencies to review certifications. However, the
Agency has long recognized, both in regulation and guidance, that some
degree of Federal agency review of certification decisions is
appropriate. The 1971 Rule provided Federal agencies with the ability
to determine whether a certifying authority acted within the reasonable
period of time. See 40 CFR 121.16(b) (2019) (``The certification
requirement with respect to an application for a license or permit
shall be waived upon . . . Written notification from the licensing or
permitting agency to the Regional Administrator of the failure of the
State or interstate agency concerned to act on such request for
certification within a reasonable period of time after receipt of such
request . . .''). Prior EPA guidance acknowledged that the Federal
licensing or permitting agency may review the procedural requirements
of a certification decision. 2010 Handbook at 32 (rescinded in 2019,
see supra) (``For example, the federal permitting or licensing
authority may review the procedural requirements of [section] 401
certification, including whether the proper state or tribe has
certified, whether the state or tribe complied with applicable public
notice requirements, and whether the certification decision was
timely.'') (citing American Rivers, 129 F.3d at 110-111; City of Tacoma
v. FERC, 460 F.3d 53, 68 (D.C. Cir. 2006)). However, this prior
guidance also acknowledged the limitations of Federal agency review and
stated that Federal agencies cannot pick and choose among a certifying
authority's certification conditions. Id. at 10 (citing American
Rivers, 129 F.3d at 110-11).
    A number of courts have acknowledged a limited role for Federal
agencies to ensure that a certifying authority meets certain statutory
requirements of section 401. The D.C. Circuit has held that section
401(a)(1) authorized FERC, as the relevant Federal licensing agency,
``to determine that the specific certification `required by [section
401 has] been obtained,' '' because otherwise, ``without that
certification, FERC lack[ed] authority to issue a license.'' City of
Tacoma, 460 F.3d at 67-68 (``If the question [raised to FERC] regarding
the state's section 401 certification is not the application of state
water quality standards but compliance with the terms of section 401,
then FERC must address it.''). The court did not define what a
``certification required by this section'' included, but suggested it
included at a minimum, ``explicit requirement[s] of section 401,''
including that the certifying authority provide public notice, which
was the section 401 requirement at issue in the case before

the court. Id. at 68. It is important to note that, while the court
found that FERC had an obligation under the facts of that case to
confirm the public notice requirement was satisfied, the court did not
frame this requirement as a prerequisite in every instance where the
agency is presented with a certification decision. Rather, the court
found that FERC had to confirm compliance in the case before it because
public notice had been ``called into question.'' See id.
    In an earlier case, the Second Circuit ruled that FERC did not have
authority to substantively review certification conditions to ``decide
which conditions are within the confines of [section] 401(d) and which
are not.'' American Rivers, 129 F.3d at 107. In reaching this
conclusion, the court noted that FERC nonetheless did have authority to
determine whether the appropriate certifying authority issued the
certification decision and whether the certification decision was
issued within the reasonable period of time. The court explained that
``[w]hile [FERC] may determine whether the proper state has issued the
certification or whether a state has issued a certification within the
prescribed period, [FERC] does not possess a roving mandate to decide
that substantive aspects of state-imposed conditions are inconsistent
with the terms of [section] 401.'' Id. at 110-11.
    In a more recent case, the D.C. Circuit upheld a FERC order
declining to weigh in on the validity of a certifying authority's
denials of certification. Turlock Irrigation Dist. v. FERC, 36 F.4th
1179 (D.C. Cir. 2022). At issue in the case was the re-licensing of two
hydroelectric facilities. Id. at 1181. The hydroelectric facilities
argued that the denials were invalid under the facts of the case.\81\
FERC found that no party disputed that the certifying authority denied
the requests (without prejudice). Turlock Irrigation Dist. Modesto
Irrigation Dist., 174 FERC ] 61,042, 61,175 (2021). ``FERC reasoned
that the [certifying authority], `by denying the applications without
prejudice, indeed acted on [ ] them. . . .' '' Turlock, 36 F.4th at
1182. FERC declined the facilities' invitation to decide whether the
denials where nonetheless somehow ``invalid'' under Federal law
``because they were `on non-substantive grounds' and not `on the
technical merits of the certification requests.' '' Id. at 1182-83.
FERC ``conclude[d] that it is not the [FERC] Commission's role to
review the appropriateness of a state's decision to deny
certification.'' 174 FERC at ] 61,176. The Court of Appeals upheld
FERC's order.\82\ Turlock, 36 F.4th at 1184.
---------------------------------------------------------------------------

    \81\ For the certification requests of both hydropower
facilities, the certifying authority denied certification without
prejudice to re-request certification within days of the expiration
of the one year reasonable period of time. Id. The facilities re-
requested certification and, about one year later, the certifying
authority did so again. The certifying authority gave as the reason
for denial that the project proponents had not completed the state
environmental review process, which the certifying authority was
required by law to consider in making its certification decision.
Id. The Agency takes no position here regarding repeated denials
without prejudice, generally for the same reasons as it is not
taking a position regarding repeated withdrawal and resubmittals
(e.g., the inquiry is highly fact specific and the caselaw is in
flux). See section IV.D.2.c of this preamble.
    \82\ The petitioners in the D.C. Circuit case petitioned the
Supreme Court for certiorari but the Supreme Court denied the
petition on April 17, 2023. Turlock Irrigation District and Modesto
Irrigation District v. FERC, et al., Docket No. 22-616.
---------------------------------------------------------------------------

    The 2020 Rule went a step further than the Federal agency review
recognized by courts. The 2020 Rule required Federal agencies to
review, in every instance, a certification decision to confirm that
several requirements are met, including non-statutory requirements
imposed by the 2020 Rule, as a prerequisite to accepting the
certification decision. 85 FR 42267 (July 13, 2020). The 2020 Rule
required the Federal licensing agency to ensure (1) compliance with
``other procedural requirements of section 401'' (which included public
notice requirements), (2) compliance with the reasonable period of
time, and (3) compliance with the rule's requirements related to
providing a legal and technical basis within the certification document
for the action taken. The 2020 Rule preamble explained that ``[i]f a
federal agency, in its review, determines that a certifying authority
failed or refused to comply with the procedural requirements of the
Act, including the procedural requirements of this final rule, the
certification action, whether it is a grant, grant with conditions, or
denial, will be waived.'' Id. at 42266. The 2020 Rule took the same
approach with review of individual conditions, i.e., if a condition
does not meet procedural requirements, it is waived (even though the
certification itself stands). Id. at 42263. The 2020 Rule did not
extend Federal agency review to more substantive requirements of the
Act (e.g., whether a certification decision was within the scope of
certification). Id. at 42267.
    The 2020 Rule contained little direction to Federal agencies about
how to conduct the required review (e.g., how to confirm public notice
took place), other than noting in the preamble that the Federal
agency's review role does not require the agency to ``make a
substantive inquiry into the sufficiency of the information provided in
support of a certification, condition, or a denial.'' Id. at 42268.
This lack of clarity in the 2020 Rule led to stakeholder confusion and
misunderstanding about the nature of the Federal agency's review (e.g.,
assertions from both Federal agencies and states and Tribes in
implementation, pre-proposal input, and public comment that the review
was to be ``substantive'' in nature). Additionally, although the 2020
Rule limited Federal agency review to certain procedural components,
Federal agency stakeholders expressed concerns about being required by
the 2020 Rule to undertake even this responsibility.
    Certifying authorities have expressed concern over the potential
consequences of Federal agency review required by the 2020 Rule. A few
commenters discussed their experience with the 2020 Rule and Federal
agency review, including specific examples where Federal agencies
deemed certification decisions waived. Most commenters who discussed
Federal agency review critiqued the 2020 Rule's approach and argued
that allowing, even requiring, Federal agencies to deem non-compliant
certification decisions waived was inconsistent with the CWA and
relevant case law (citing Sierra Club v. U.S. Army Corps of Engineers,
909 F.3d 635, 645 (4th Cir. 2018); United States v. Marathon Dev.
Corp., 867 F.2d 96, 101 (1st Cir. 1989)). A few commenters asserted
that the 2020 Rule provided Federal agencies with improper authority to
``veto'' or ``override'' certifying authorities' decisions under the
2020 Rule. As discussed below, EPA generally agrees with these
commenters. EPA continues to agree with the concerns it expressed in
its Notice of Intent to revise the 2020 Rule, stating that ``EPA is
concerned that a federal agency's review may result in a state or
tribe's certification or conditions being permanently waived as a
result of nonsubstantive and easily fixed procedural concerns
identified by the federal agency.'' 86 FR 29543 (June 2, 2021).
    The following subsections discuss the extent of Federal agency
review, how certifying authorities might demonstrate compliance with
the facial requirements of section 401, and the Federal agency review
process under this final rule.
a. Extent of Federal Agency Review
    The final rule confirms that Federal agencies may review a
certification decision only for the limited purpose of verifying
compliance with the requirements of CWA section 401. EPA

proposed at Sec.  121.9 that Federal agency review of a certification
decision is limited to confirming four factors: the nature of the
decision, that the proper certifying authority issued the decision,
that the certifying authority provided public notice on the request for
certification, and that the decision was issued in the reasonable
period of time. As discussed in more detail below, the Agency removed
the first factor (the nature of the decision) and modified the third
factor to clarify that Federal agency review is limited to verifying
that the certifying authority confirmed compliance with its public
notice procedures.
    As a result, the final rule provides that Federal agencies may
verify (1) whether the appropriate certifying authority issued the
certification decision, (2) whether the certifying authority confirmed
it complied with its public notice procedures established pursuant to
section 401(a)(1), and (3) whether the certifying authority acted on
the request for certification within the reasonable period of time. 40
CFR 121.8. Federal agencies may find that a certifying authority waived
its ability to act on a request for certification only for failures to
act within the reasonable period of time. The Agency finds this Federal
agency review role is reasonable and consistent with the text of
section 401, prior Agency guidance, and case law.
    A Federal agency's review of a certifying authority's action (to
ensure that the certification decision meets certain statutory
requirements) does not require a Federal agency to inquire as to
whether the certification is consistent with the substantive elements
of state or Tribal law concerning certification or whether the
certification action is within the proper ``scope of certification.''
As recognized by prior Agency guidance and the 2020 Rule, section 401
does not authorize Federal agencies to review or change the substance
of a certification (e.g., determine whether the certification or its
conditions are within section 401's scope). See 85 FR 42268; 2010
Handbook at 10 (rescinded in 2019, see supra). As discussed below, the
Agency has revised the proposed regulatory text to better emphasize the
limited extent of Federal agency review.
    Several commenters noted that section 401 does not give Federal
agencies the authority to nullify or reject a certifying authority's
water quality certification or conditions. Some of these commenters
asserted that courts have affirmed that Federal agencies do not have
the authority to ignore conditions of certification. EPA agrees.
Federal circuit courts have routinely held that Federal agencies may
not question or criticize the substance of a state's water quality
certification or conditions, see, e.g., City of Tacoma, 460 F.3d at 67
(``[The Federal agency's] role is limited to awaiting, and then
deferring to, the initial decision of the state.''); American Rivers,
129 F.3d at 111 (``[The Federal agency] does not possess a roving
mandate to decide that substantive aspects of state-imposed conditions
are inconsistent with the terms of [section] 401.''); U.S. Dept. of
Interior v. FERC, 952 F.2d 538, 548 (D.C. Cir. 1992) (``FERC may not
alter or reject conditions imposed by the states through section 401
certificates.''). Courts have also cautioned Federal agencies against
imposing conditions in a Federal license or permit they believe are
more stringent than the certifying authority's conditions. See Sierra
Club v. U.S. Army Corps of Eng'rs, 909 F.3d 635, 648 (4th Cir. 2018)
(``the plain language of the Clean Water Act does not authorize the
Corps to replace a state condition with a meaningfully different
alternative condition, even if the Corps reasonably determines that the
alternative condition is more protective of water quality''); see also
Lake Carriers' Ass'n. v. EPA, 652 F.3d 1, 6, 12 (D.C. Cir. 2011)
(concluding that additional notice and comment on state certification
conditions would have been futile because ``the petitioners have failed
to establish that EPA can alter or reject state certification
conditions . . .'').
    Rather, courts have generally found that Federal agencies may
review certification decisions only to see whether the decision
satisfies the facial statutory requirements of section 401, including
whether the decision was issued within the reasonable period of time,
whether public notice procedures were followed, and whether the
appropriate certifying authority issued the decision. The court in City
of Tacoma found that if the facial public notice requirement of section
401 is ``called into question'' before the Federal agency, the Federal
agency must determine if it was met. 460 F.3d at 68 (requiring the
Federal agency ``to obtain some minimal confirmation of such
compliance, at least in a case where compliance has been called into
question.'').
    EPA proposed to expressly limit Federal agency review at Sec.
121.9 to confirming four factors: the nature of the decision, that the
proper certifying authority issued the decision, that the certifying
authority provided public notice on the request for certification, and
that the decision was issued in the reasonable period of time. Several
commenters agreed with limiting the 2020 Rule's breadth of Federal
agency review, with some of these commenters supporting all four of the
proposed review provisions. A few commenters wrote in favor of the
proposed rule's limited ``ministerial'' role for Federal agencies. EPA
agrees that Federal agency review is limited in nature. As discussed
below, the Agency is finalizing regulatory text at Sec.  121.8 to
affirmatively limit Federal agency review to verifying compliance with
the facial requirements of CWA section 401. However, the Agency is
revising the proposed list of factors that a Federal agency may review,
including removing the first factor (the nature of the decision) from
the final regulatory text.
    Conversely, a few commenters recommended prohibiting Federal agency
review of any certification decisions in the final rule, with one
commenter arguing that Federal agency review erodes cooperative
federalism principles, and another noting that Federal agency review is
unwarranted by the statutory text. A few commenters noted that section
401 does not define a role for Federal agency review of certification
decisions. A couple of commenters argued that the additional oversight
provided by Federal agency review of certification decisions is
inefficient and ineffective for routine projects with minimal impacts.
EPA acknowledges that the text of section 401 does not explicitly
define a role for Federal licensing or permitting agencies to review
certification decisions. However, the Agency has long recognized, both
in regulation and guidance, some degree of appropriate Federal agency
review of certification decisions. Additionally, as discussed above, a
few courts have acknowledged a limited role for Federal agencies to
ensure that a certifying authority meets certain requirements of
section 401. The Agency disagrees that this final rule's approach to
Federal agency review would erode cooperative federalism principles or
prove inefficient for projects. Rather, the final rule recognizes a
Federal agency's legitimate interest in receiving a certification in
accordance with section 401 to lawfully proceed with its licensing and
permitting process.
    On the other hand, other commenters wrote in support of the 2020
Rule's approach to Federal agency review, arguing that Federal agencies
are obligated to determine if procedural requirements have been met and
warned that without Federal oversight, certifying authorities would
have little incentive--and might be

disincentivized--to provide information supporting their certification
actions. A few commenters argued that the 2020 Rule's approach to
Federal agency review was a less costly and more efficient mechanism
than judicial review.
    EPA declines to impose in this final rule a requirement that
Federal agencies review every certification decision for compliance
with the statutory requirements of section 401. EPA recognizes that the
preamble to the 2020 Rule indicated that Federal agency review is
mandatory in every instance. 85 FR 42267-69 (``the Agency has concluded
that under the final rule, federal agencies have an affirmative
obligation to review certifications to ensure that certifying
authorities have complied with procedural requirements and have
included the required information for certifications, conditions, and
denials . . .''). However, most case law on this topic focuses on the
extent of Federal agency review, not the issue of if or when section
401 imposes a duty on the Federal agency to confirm compliance. The
exception to courts not addressing this issue is City of Tacoma, where
the court found that if the public notice requirement of section 401 is
``called into question'' before the Federal agency, the agency must
determine if it was met. 460 F.3d at 68.\83\ This final rule does not
address what circumstances might compel a Federal agency to review
certification decisions, nor does it require Federal agencies to review
every certification decision. Instead, this final rule allows Federal
agencies to review specified aspects of a certification decision,
recognizing that Federal agencies have an interest in ensuring
certifications relating to their permits are facially compliant with
CWA section 401.
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    \83\ In Keating v. FERC, the court required FERC to consider the
application of section 401(a)(3) to a certifying authority's
purported revocation of a certification. 927 F.2d 616 (D.C. Cir.
1991) (``FERC must at least decide whether the state's assertion of
revocation satisfies section 401(a)(3)'s predicate requirements--
i.e., whether it is timely and motivated by some change in
circumstances after the certification was issued.'').
---------------------------------------------------------------------------

    The Agency also disagrees with commenter assertions that the Agency
is removing Federal oversight. The Agency is still authorizing Federal
agencies to review much of what they could under the 2020 Rule. In
fact, the Agency is clarifying in regulatory text that Federal agency
review includes verification that the certifying authority confirmed
that it complied with its public notice procedures and that the correct
certifying authority acted on the request for certification (aspects
that were not directly addressed in the 2020 Rule). The one aspect of
the 2020 Rule that the Agency is removing is Federal agency review of
the procedural and informational requirements (e.g., citation
requirements) of the 2020 Rule (as opposed to the facial requirements
of section 401). The Agency disagrees with commenters who argued that
this will lead to a lack of supporting information in certification
decisions or create a structure for misuse. EPA encourages certifying
authorities to include supporting information with certification
decisions and is finalizing this recommendation at Sec.  121.7.
Furthermore, it is in the certifying authority's interest to include
such information to ensure project proponents and Federal agencies--not
to mention any court reviewing the certification decision--understand
why a condition is placed on a certification or why a certification is
being denied. See supra section IV.F of this preamble for further
discussion of the contents of a certification decision.
    It is unclear why some commenters concluded that the 2020 Rule's
Federal agency review process would reduce litigation or create any
efficiencies when compared to direct judicial review. Those commenters
did not provide any data or information to substantiate a time or cost
differential between the 2020 Rule's Federal agency review process and
any possible judicial review associated with certification decision.
Nothing about the 2020 Rule's approach to Federal agency review removed
or reduced the opportunity or potential for judicial review on a
certification decision. In fact, the 2020 Rule's mandate that Federal
agencies review for compliance with the rule's own procedural and
informational requirements (e.g., citation requirements) added another
possible avenue for judicial review. Federal courts could be called
upon to decide whether a Federal agency properly found that a
certifying authority waived certification for its failure to fully
comply with the 2020 Rule's informational requirements. In fact, one
such case was recently filed in the D.C. Circuit Court of Appeals.
Brookfield White Pine Hydro LLC v. FERC, No. 23-1075 (D.C. Cir.)
(petition for review filed March 20, 2023, regarding FERC determination
that a denial of certification satisfied the procedural requirements of
the 2020 Rule).
    Furthermore, Federal agency review of the substance of
certification decisions in lieu of judicial review is inconsistent with
the legislative history of section 401. Indeed, Congress recognized
that state courts were the proper venue for any issues or concerns
surrounding the substance of a certification decision. See, e.g., H.R.
Rep. No. 91-940, at 55-56 (March 24, 1970) (``If a State refuses to
give a certification, the courts of that State are the forum in which
the applicant must challenge that refusal if the applicant wishes to do
so.''); S. Rep. 92-414, at 1487 (October 28, 1971) (``Should such an
affirmative denial occur no license or permit could be issued by such
Federal agencies as the Atomic Energy Commission, Federal Power
Commission, or the Corps of Engineers unless the State action was
overturned in the appropriate courts of jurisdiction.''); H.R. Rep. 92-
911, at 122 (March 11, 1972) (``If a State refuses to give a
certification, the courts of that State are the forum in which the
applicant must challenge the refusal if the applicant wishes to do
so.'').
    The Agency is finalizing regulatory text substantively similar to
proposed Sec.  121.9(a)(2) that allows a Federal agency to verify
whether the appropriate certifying authority--meaning the entity
responsible for certifying compliance with applicable water quality
requirements where the discharge originates or will originate--issued
the certification decision. 40 CFR 121.8. EPA made one non-substantive
change to proposed text to verify whether the ``appropriate'', as
opposed to ``proper'', certifying authority issued the certification
decision. Section 401 requires a project proponent to provide the
Federal licensing or permitting agency a certification from the state
or authorized Tribe ``in which the discharge originates or will
originate.'' 33 U.S.C. 1341(a)(1). If the project proponent provides
the Federal agency with a certification from the wrong certifying
authority, then the Federal agency cannot issue its license or permit.
Allowing a Federal agency to confirm that the appropriate certifying
authority has issued certification is consistent with case law,
American Rivers, 129 F.3d at 110-11, and prior Agency regulations and
guidance, 85 FR 42267; 2010 Handbook at 10 (rescinded in 2019, see
supra).
    The Agency is finalizing regulatory text that allows a Federal
agency to verify that the certifying authority confirmed it complied
with its public notice procedures established pursuant to section
401(a)(1). 40 CFR 121.8. EPA proposed that a Federal agency may review
a certification decision to determine whether the certifying authority
``provided public notice'' on the request for certification at Sec.
121.9(a)(3). Some commenters noted

that public notice procedures vary amongst certifying authorities,
including one commenter that noted that establishing generally
applicable procedures for public notice is not necessarily the same as
providing public notice on every application. EPA agrees with these
commenters. Section 401(a)(1) requires a certifying authority to
establish procedures for public notice, and a public hearing where
necessary, on a request for certification. 33 U.S.C. 1341(a)(1).
Accordingly, EPA has revised the regulatory text, now located at Sec.
121.8, to better reflect the statutory text and to clarify that a
Federal agency may review whether the certifying authority confirmed it
complied with its public notice procedures.
    One commenter stated that Federal agencies have little knowledge of
the public notice procedures of certifying authorities, and that any
issues with the procedural process would be addressed in state court.
While EPA agrees that questions regarding compliance with specific
state public notice laws and regulations would be addressed in state
proceedings, EPA disagrees that it is therefore inappropriate for a
Federal agency to seek verification from the certifying authority that
it complied with its public notice procedures, a Federal statutory
requirement. The Agency appreciates commenter concerns regarding a
Federal agency's lack of substantive knowledge about a certifying
authority's public notice procedures. Therefore, the Agency is limiting
Federal agency review regarding public notice to simply verifying that
the certifying authority confirmed it complied with its public notice
procedures. This should not require the Federal agency to delve into
any specifics regarding a state or authorized Tribe's public notice
procedures, but rather should entail merely asking the certifying
authority to provide confirmation of its compliance. To aid in this
review, EPA recommends that certifying authorities indicate compliance
with their public notice procedures in its certification decision. See
section IV.F of this preamble for further discussion on ways a
certifying authority can indicate its compliance; see also infra.
    The Agency is also finalizing regulatory text substantively similar
to proposed Sec.  121.9(a)(4) that allows a Federal agency to verify
whether a certifying authority acted on a request for certification
within the reasonable period of time. 40 CFR 121.8. Section 401
provides that certification ``shall be waived'' if the certifying
authority fails or refuses to act within the reasonable period of time.
A Federal agency cannot issue its license or permit until certification
``has been obtained or has been waived.'' 33 U.S.C. 1341(a)(1). It is
thus reasonable for the Federal agency to determine whether a
certifying authority acted within the reasonable period of time, and
this has been the Agency's longstanding position in regulation and
guidance. See 40 CFR 121.16(b) (2019); 85 FR 42267; 2010 Handbook at 10
(rescinded in 2019, see supra). Additionally, as discussed above, this
is also consistent with case law on Federal agency review. See American
Rivers, 129 F.3d at 110-11 (explaining that FERC ``may determine . . .
whether a state has issued a certification within the prescribed
period''); see also Alcoa Power Generating, 643 F.3d at 972-73 (holding
that, like the public notice requirements at issue in City of Tacoma,
the issue of whether a certifying authority acted upon a certification
request within the statutory one-year period was an issue properly
before FERC).
    The Agency is not finalizing the regulatory text proposed at Sec.
121.9(a)(1), which provided that a Federal agency may also review a
certification decision to confirm the nature of the decision (i.e.,
whether the certification decision is a grant, grant with conditions,
denial, or express waiver). The Agency does not disagree with this
aspect of the proposal, but the Agency finds the regulatory text
unnecessary and somewhat confusing when listed among the other
components of Federal agency review. Certainly, a Federal agency needs
to look at the certification decision to determine how it should act in
response. For instance, the Federal agency cannot issue the relevant
license or permit if the certification decision is a denial. If the
decision is a grant with conditions, the Federal agency must include
those conditions in its license or permit. However, looking at the
certification document to see how the certifying authority decided to
act represents a different sort of ``review'' than the other components
of Federal agency review identified in Sec.  121.8. The other
components all concern verifying compliance with the statutory
requirements of section 401. EPA concludes that it is best to remove
this provision to avoid confusion. Further, as one commenter noted, the
decision should generally be apparent on its face. Certifying
authorities and Federal agencies have over 50 years of experience with
developing and receiving certification decisions, respectively.
Additionally, the Agency is finalizing regulatory text at Sec.
121.7(a) that clearly defines the four possible ways a certifying
authority may act on a request for certification, as well as regulatory
text at Sec.  121.7(c) through (f) that clearly outlines recommended
contents for a certification decision. These final rule provisions
should provide certifying authorities with sufficient clarity regarding
possible actions they may take and how to develop clear certification
decisions.
b. Demonstrating Compliance With the Facial Requirements of Section 401
    Consistent with the proposed rule, EPA is declining to define the
specific information a certifying authority must include in a
certification decision to demonstrate compliance with the facial
requirements of section 401. Section 401 does not expressly address
what specific information certifying authorities must include in a
certification decision, nor does it address the process of Federal
agency review. While the statute does contain important information
about the identity of the appropriate certifying authority, the length
of the reasonable period of time, and a requirement for public notice
procedures, it does not prescribe how a certifying authority must
demonstrate compliance with those requirements.
    At proposal, EPA did not define the specific information a
certifying authority must include in its certification decision to
demonstrate that it has met the facial requirements of section 401.
However, EPA requested comment on whether the Agency should identify in
regulation different elements of a certification decision that might be
appropriate for Federal agency review, or whether EPA should defer to
Federal agencies to define those elements.
    In the final rule, the Agency is declining to define the specific
information a certifying authority must include in a certification
decision to demonstrate that it has met the facial requirements of
section 401. Certifying authorities are the entities most familiar with
their certification process, and certifying authorities, and not EPA or
other Federal agencies, are in the best position to determine how to
demonstrate compliance. EPA expects that it should only take minimal
effort by a certifying authority to demonstrate compliance for Federal
agency verification. However, as discussed below, the Agency is
providing recommendations for how certifying authorities can
demonstrate compliance with these requirements.
    To support a streamlined review of whether a certifying authority
complied with its public notice procedures, EPA is finalizing a
recommendation for a

certifying authority to indicate such compliance in its certification
decision.\84\ By doing so, the Federal agency should be able to simply
look at the certification decision and quickly and easily determine
whether the certifying authority indicated that it followed its public
notice procedures.
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    \84\ See section IV.F of this preamble regarding contents of
certification decisions.
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    A few commenters discussed how certifying authorities currently, or
could, demonstrate compliance with their public notice procedures,
including providing a copy of the public notice in the certification
decision or including a description of the public notice process it
undertook in its certification decision. EPA finds that these and other
approaches to demonstrating compliance with public notice procedures
would be sufficient to satisfy Federal agency review. In fact, it would
be sufficient for the certifying authority to simply state in its
certification decision that the certifying authority complied with its
public notice procedures. This inquiry does not require the Federal
agency to research or inquire about the particulars of a state or
Tribal laws and regulations regarding public notice, but rather merely
verify that the certifying authority confirmed it complied with its
public notice procedures. EPA is not defining how a certifying
authority must communicate such confirmation, but EPA does not
anticipate that such demonstrations will be burdensome. As the court
noted in City of Tacoma, Federal agencies only need ``to obtain some
minimal confirmation of such compliance.'' 460 F.3d at 68.
    The Agency is also not defining how a certifying authority must
demonstrate that it provided a certification decision within the
reasonable period of time. However, EPA finds that other provisions in
this final rule should aid in making such a demonstration. For example,
final rule Sec.  121.6(a) requires a certifying authority to send the
project proponent and the Federal agency a written confirmation of the
date that the request for certification was received, while Sec.
121.6(b) requires the Federal agency and certifying authority to
jointly agree on the reasonable period of time in writing. Using this
documentation, the Federal agency should be able to verify whether the
certifying authority acted on the request for certification within the
reasonable period of time. If the Federal agency needs further
information to verify that the certification decision was issued within
the reasonable period of time, the certifying authority could satisfy
this inquiry by providing documentation of the date it furnished the
project proponent with a decision.
    The Agency is also not defining how to demonstrate that the
certification is from the appropriate certifying authority, meaning the
state or authorized Tribe responsible for certifying compliance with
applicable water quality requirements where the discharge originates or
will originate.\85\ EPA finds that the project proponent bears the
burden of demonstrating that it has obtained a certification from the
appropriate certifying authority. See 33 U.S.C. 1341(a)(1) (``Any
applicant . . . shall provide the licensing or permitting agency a
certification from the State in which the discharge originates or will
originate . . .''). Accordingly, if a Federal agency chooses to verify
that the appropriate certifying authority issued the certification
decision, it should work with the project proponent to obtain location
information, such as a map, indicating where the discharge originates
or will originate. The Federal agency and project proponent may also
discuss any questions regarding jurisdiction with the certifying
authority, or as needed, EPA in its technical assistance capacity under
section 401(b).
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    \85\ But see section IV.H of this preamble for further
discussion on instances where EPA acts as the certifying authority
instead of a state or authorized Tribe.
---------------------------------------------------------------------------

c. Federal Agency Review Process
    Consistent with the 1971 Rule and 2020 Rule, the Agency is
finalizing regulatory text to reaffirm that a waiver of certification
occurs only if the certifying authority fails to act within the
reasonable period of time. See 40 CFR 121.9(a)(2)(i) (2020); 40 CFR