of certifying authorities. A more limited scope of review is consistent
with the more limited nature of the neighboring jurisdictions process.
As discussed further below, neighboring jurisdictions only receive
notification under section 401(a)(2) when EPA determines that a
discharge from the project may affect their water quality, unlike
section 401(a)(1) certification where the project proponent for the
Federal license or permit must request certification from the
certifying authority regardless of the known or suspected potential
impacts to water quality. Likewise, notified neighboring jurisdictions
determine whether discharge from the project will affect the quality of
their waters so as to violate any water quality requirements, a
standard inverse to that of a certifying authority determining if it
can certify compliance with water quality requirements pursuant to
section 401(a)(1). This distinction matters because the neighboring
jurisdiction must make an affirmative case to support a ``will affect''
determination, a higher bar than that of a certifying authority, which
could deny certification because of a lack of information supporting a
conclusion that the activity will comply with water quality
requirements. Additionally, in contrast to the certification decision
made by the certifying authority, the outcome of the neighboring
jurisdictions process following a hearing is determined by the Federal
licensing or permitting agency, based upon the recommendations of the
neighboring jurisdiction and EPA, and any additional information
presented at the hearing. Taken together, these procedural distinctions
reflect a more limited authority for notified neighboring jurisdictions
in the neighboring jurisdictions process than the role of a certifying
authorities, which supports EPA's interpretation finding a more limited
scope for the neighboring jurisdictions process.
    In addition to the differences between the extent of authority of a
notified neighboring jurisdiction and a certifying authority, the
statutory text of section

401 also reflects differences in the timing of the neighboring
jurisdictions process compared to the timing of certification, which
likewise support EPA's interpretation of differing scopes for these
steps. In the neighboring jurisdictions process, both EPA and notified
neighboring jurisdictions are provided less time to make determinations
regarding the water quality effects to a neighboring jurisdiction (30
days and 60 days, respectively) than a certifying authority has for
acting on a request for certification (up to a year). The difference in
the timing of determinations at these steps supports differing scopes,
as it may be possible for EPA and notified neighboring jurisdictions to
complete determinations in the more limited time provided for in the
neighboring jurisdictions process based upon a more discrete analysis
focused on discharges.
c. Circumstances Initiating the Neighboring Jurisdictions Process
    The Agency is finalizing its proposed approach to clarify that both
grants of certification (with or without conditions) and waivers of
certification initiate the neighboring jurisdictions process
established by section 401(a)(2). Section 401(a)(2) provides that the
Federal licensing or permitting agency must immediately notify the EPA
Administrator upon receipt of a Federal license or permit application
and certification. 33 U.S.C. 1341(a)(2). Under the 1971 Rule, EPA's
section 401(a)(2) review was initiated upon receipt of either a
certification or a waiver, which was treated as a substitute for
certification. See 40 CFR 121.11, 121.16 (2019). In the 2020 Rule,
EPA's section 401(a)(2) review was initiated only upon receipt of a
certification. 40 CFR 121.12(a) (2020); see 85 FR 42287 (July 13,
2020). Additionally, the 2020 Rule further provided that a Federal
agency may issue a license or permit upon issuance of a written notice
of waiver. 40 CFR 121.9(e) (2020). As proposed, EPA is returning to the
approach taken in the 1971 Rule that the neighboring jurisdictions
process is initiated by either a certification or waiver.
    Although the statutory text does not explicitly identify waiver of
certification as an action that initiates the neighboring jurisdictions
process in section 401(a)(2),\98\ the Agency maintains that it is
reasonable to interpret the waiver of certification as a substitute for
a grant of certification for purposes of section 401(a)(2) review for
several reasons. First, this treatment is consistent with the purpose
of section 401(a)(2). Section 401(a)(2) provides a mechanism for a
notified neighboring jurisdiction to object to the issuance of a
Federal license or permit when it determines that discharge from a
project originating in another jurisdiction will affect the quality of
its waters thus violating its water quality requirements. A waiver does
not indicate a certifying authority's substantive opinion regarding the
water quality implications (for itself or another jurisdiction) of a
project subject to Federal licensing or permitting. Rather, a
certifying authority may affirmatively waive certification for a
variety of reasons, including a lack of resources to evaluate the
project. In addition, a certifying authority may be deemed to have
waived certification if that certifying authority fails or refuses to
act on a request for certification before the end of the reasonable
period of time. See section IV.F of this preamble for further
discussion on waivers of certification. Ultimately a waiver of
certification allows the Federal licensing or permitting agency to
issue its license or permit without receipt of a water quality
certification. As a result, a waived certification could result in
water quality impacts that might violate a neighboring jurisdiction's
water quality requirements. It is reasonable to afford a mechanism for
EPA and a neighboring jurisdiction to evaluate that possibility.
---------------------------------------------------------------------------

    \98\ See 33 U.S.C. 1341(a)(2) (``Upon receipt of such
application and certification the licensing or permitting agency
shall immediately notify the Administrator of such application and
certification.'') (emphasis added).
---------------------------------------------------------------------------

    Second, the approach taken under the 2020 Rule to exclude waivers
from the neighboring jurisdictions process created a method for
certifying authorities to circumvent the neighboring jurisdictions
process in circumstances where they are aware of water quality concerns
from a neighboring jurisdiction regarding a project. As noted above,
EPA finds that section 401(a)(2) was established as a mechanism to
allow notified neighboring jurisdictions an opportunity to object to
the issuance of a Federal license or permit in circumstances where they
find a discharge from the licensed or permitted project will violate
their water quality requirements. EPA does not find that the statutory
language of section 401(a)(2) supports such circumvention of the
neighboring jurisdictions process, as this would thwart the very
purpose of the process established by the statutory text.
    Finally, including waivers as actions initiating the neighboring
jurisdictions process was the Agency's position for over 50 years prior
to the 2020 Rule. See 40 CFR 121.16 (2019). The final rule provides
clarification on when waiver of certification has occurred, allowing
Federal agencies to provide EPA notice of the Federal license or permit
application and waiver as required by Sec.  121.12 of the final rule.
Therefore, consistent with the approach taken in the 1971 Rule, the
Agency is restoring the interpretation that waivers, in addition to
certifications, initiate the neighboring jurisdictions process
established in section 401(a)(2).
    Accordingly, in Sec.  121.12(a) of the final rule, the Agency is
clarifying that the neighboring jurisdictions process is initiated when
the Federal agency ``has received both the application and either a
certification or waiver for a Federal license or permit,'' and must
provide notice to EPA. Additionally, as proposed, the Agency is
removing the regulatory provision located at Sec.  121.9(e) of the 2020
Rule, which provided that a Federal agency may issue a license or
permit upon issuance of a written notice of waiver. As discussed above,
under this final rule waivers of certification also initiate the
neighboring jurisdictions process and EPA may make a ``may affect''
determination based upon a waiver of certification. See 40 CFR
121.12(a). Consistent with the language at Sec.  121.13(d) of the final
rule, a Federal agency shall not issue a Federal license or permit
pending the conclusion of the neighboring jurisdictions process.
    Several commenters provided input on the proposed approach to have
waiver initiate the neighboring jurisdictions process. A few commenters
agreed that a waiver should initiate the neighboring jurisdictions
process and asserted that this approach would improve the neighboring
jurisdictions process. Conversely, a few other commenters argued that a
waiver should not initiate the neighboring jurisdictions process and
asserted that that there is no statutory basis for the inclusion of
waivers in this process. One of these commenters added that expanding
the notification process beyond what the statute provides would lead to
needless process and delays.
    EPA disagrees with the assertion that the statute does not support
waiver initiating the neighboring jurisdictions process established in
section 401(a)(2). As explained above, EPA is interpreting waiver of
certification as a substitute for a grant of certification for purposes
of section 401(a)(2) based upon the purpose of this statutory
provision.\99\

Employing a more restrictive interpretation would otherwise allow
certifying authorities to circumvent the neighboring jurisdictions
process by waiving certification on projects affecting the water
quality of neighboring jurisdictions, which is counter to the purpose
of the process established in section 401(a)(2). Additionally, EPA also
does not agree that this interpretation will result in unnecessary
delays for Federal licensing or permitting because the statute limits
the time EPA and the notified neighboring jurisdiction have to respond
to a notification (30 days and 60 days, respectively). Further, as the
process established by section 401(a)(2) provides an important
mechanism for notified neighboring jurisdictions to meaningfully engage
with Federal agencies on objections where they find a discharge from a
project will violate their water quality requirements, EPA does not
find this approach results in unreasonable process.
---------------------------------------------------------------------------

    \99\ In fact, the language in section 401(a)(1) describes
waivers of certification as a substitute for a granted certification
because the Federal licensing or permitting agency is unable to
proceed with their licensing or permitting process ``until the
certification required by [section 401(a)(1)] has been obtained or
has been waived.'' 33 U.S.C. 1341(a)(1). By listing the two
scenarios under which the process continues, it is reasonable to
consider a waiver of certification as a substitute for a
certification.
---------------------------------------------------------------------------

d. Neighboring Jurisdictions Process Must Conclude Before Federal
License or Permit Issuance
    The proposed text of Sec.  121.13(d) included language intended to
explain that the neighboring jurisdictions process must conclude before
a Federal agency issues a license or permit, stating that ``[a] Federal
license or permit may not be issued pending the conclusion of the
process described in Sec. Sec.  121.14 and 121.15.'' This proposed text
retained language similar to Sec.  121.12(c) of the 2020 Rule, which
stated that ``[t]he federal license or permit may not be issued pending
the conclusion of the processes.'' 40 CFR 121.12(c) (2020). The Agency
is modifying the proposed text of Sec.  121.13 to more clearly state
that a Federal agency is prohibited from issuing a license or permit
subject to section 401 certification pending conclusion of the
neighboring jurisdictions processes addressed in Sec. Sec.  121.13,
121.14, and 121.15. Specifically, EPA changed the proposed text of
Sec.  121.13(d) from providing that the Federal license or permit ``may
not be'' issued pending the conclusion of the neighboring jurisdictions
process to more directly stating that the Federal license or permit
``shall not be'' issued pending the conclusion of the neighboring
jurisdictions process. Further, EPA modified the text of Sec.  121.13
to make clear that the neighboring jurisdictions process includes the
processes described in Sec. Sec.  121.13, 121.14, and 121.15. These
changes are consistent with the proposed regulatory text, but provide
further clarity that pursuant to Sec.  121.13, and the statutory text
of section 401(a)(2), a Federal agency cannot proceed with issuing its
license or permit until the neighboring jurisdictions process set forth
in Sec. Sec.  121.13, 121.14, and 121.15 has concluded.
    In practical terms, this means that Federal agencies must wait to
issue a Federal license or permit until the neighboring jurisdictions
process has concluded. The neighboring jurisdictions process may
conclude in several different ways, depending on factual and procedural
circumstances. One way the neighboring jurisdictions process concludes
occurs when the appropriate Regional Administrator has completed the
``may affect'' determination within 30 days after receiving notice from
the Federal agency, pursuant to Sec.  121.13(a), without making a ``may
affect'' finding. In such circumstances, the neighboring jurisdictions
process has concluded, and the Federal agency may proceed with issuing
the Federal license or permit without waiting for further proceedings.
    In contrast, when the appropriate Regional Administrator completes
the ``may affect'' determination by making a ``may affect'' finding and
provides notification of this finding pursuant to Sec.  121.13(b), the
Federal agency must wait to issue the Federal license or permit until
the notified neighboring jurisdiction has made a ``will violate''
determination, pursuant to Sec.  121.14, within 60 days of the
notification from EPA pursuant to Sec.  121.13, or this time period has
passed. Where a notified neighboring jurisdiction has determined that a
discharge will violate its water quality requirements and has provided
notification of its objection and request for hearing pursuant to Sec.
121.14(a) and (b), the Federal agency cannot issue the license or
permit until either the public hearing process described in Sec.
121.15 is completed, or the notified neighboring jurisdiction withdraws
its objection pursuant to Sec.  121.14(c).
    A few commenters raised concerns regarding the neighboring
jurisdictions process delaying the issuance of Federal licenses or
permits. Additionally, a commenter asserted that EPA should consider
only requiring the neighboring jurisdictions process for larger,
complex individual permit projects because of wide-ranging implications
of this process. The Agency notes that the neighboring jurisdictions
process is a component of the section 401 statutory regime established
by section 401(a)(2) and is not a regulatory creation by EPA.\100\
Moreover, as section 401(a)(2) sets timelines for certain actions in
the neighboring jurisdictions process, it is clear from the statutory
text that Congress considered the timing of this process when it was
established. As discussed further below, EPA is adding clarity
regarding the procedures involved in the neighboring jurisdictions
process in the final rule, which are intended to improve efficiency and
reduce the time necessary for this process. EPA also finds no basis in
the statutory text supporting an exception to this process for general
permits or less complex individual permits. Instead, the type of
project and discharge covered in the Federal license or permit are
factors that may be considered by EPA and any notified neighboring
jurisdictions in their determinations regarding the water quality
effects of a discharge from a project in the neighboring jurisdictions
process.
---------------------------------------------------------------------------

    \100\ Several commenters suggested that the neighboring
jurisdictions process resulted, in part, from the 1971 Rule. As
discussed, the statutory text of section 401(a)(2) establishes this
process.
---------------------------------------------------------------------------

e. Federal Licensing or Permitting Agency's Role in Initiating the
Neighboring Jurisdictions Process
    Section 401(a)(2) requires the Federal licensing or permitting
agency to notify EPA immediately upon receipt of a Federal license or
permit application and the related section 401 water quality
certification. 33 U.S.C. 1341(a)(2). This notification from the Federal
agency commences the remaining steps of the neighboring jurisdictions
process addressed in section 401(a)(2) and discussed in Sec. Sec.
121.13, 121.14, and 121.15 of the final rule. The 1971 Rule established
some procedural requirements for this notification process, which EPA
updated in the 2020 Rule. The 2020 Rule included additional specificity
on the timing of Federal agency notification but did not contain a
standardized process for notification. 40 CFR 121.12(a) (2020).
Instead, under the 2020 Rule, EPA relied on Federal agencies to develop
notification processes and procedures that work within their licensing
or permitting programs. 85 FR 42273.
    In the proposed rule, the Agency likewise proposed regulatory text
to

provide clarity regarding the timing by which a Federal agency must
provide notification to EPA pursuant to section 401(a)(2), and further
proposed additional procedures for Federal agencies to follow when
providing notification to EPA. In the final rule, EPA is maintaining
its interpretation of the timing for Federal agencies to provide
notification pursuant to the statutory text in section 401(a)(2), and
otherwise finalizing the proposed procedures for Federal agencies to
follow when providing notification to EPA with some minor changes to
the text of Sec.  121.12 and the deletion of the definition of
``application'' proposed at Sec.  121.1(c).
i. Timing of Notice From a Federal Agency
    As noted, to initiate the neighboring jurisdictions process, a
Federal licensing or permitting agency must ``immediately'' notify EPA
when it receives a Federal license or permit application and a section
401 certification. 33 U.S.C. 1341(a)(2). EPA is finalizing its proposed
interpretation of ``immediately'' to mean within five calendar days of
the Federal agency's receipt of the application for a Federal license
or permit and either receipt of certification or waiver. This approach
retains the same interpretation of ``immediately'' used in the 2020
Rule. 40 CFR 121.12(a) (2020); see 85 FR 42273.
    EPA is also finalizing the regulatory text in Sec.  121.12(a) of
the final rule providing that ``[w]ithin five days of the date that it
has received both the application and either a certification or waiver
for a Federal license or permit, the Federal agency shall provide
written notification to the appropriate Regional Administrator.'' EPA
is finalizing this provision with only minor changes from the proposal
for added clarity. Specifically, EPA added language to specify that the
Federal agency shall provide the written notification to the
``appropriate'' Regional Administrator, but otherwise maintained the
proposed text providing that the period for the Federal agency to
provide such notification commences upon ``the date that it has
received both the application and either a certification or waiver.''
See 87 FR 35380.
    As previously discussed, this provision reflects EPA's
interpretation that the neighboring jurisdictions process set forth in
section 401(a)(2) is initiated by either certification or waiver. See
supra for further discussion on actions initiating the neighboring
jurisdictions process. It further makes clear that the Federal agency
is only considered to be in receipt of an application for a Federal
license or permit and certification within the meaning of section
401(a)(2) when such agency has received both an application for a
Federal license or a permit, as discussed above, and has either
received a corresponding certification or a waiver has occurred.\101\
---------------------------------------------------------------------------

    \101\ Although this statutory language is unambiguous, EPA is
further discussing when receipt occurs due to questions and
conflicting practices among Federal licensing and permitting
agencies. For example, some Federal agencies provide notice to EPA
concurrently with its public notice on the licensed or permitted
application, see, e.g., 33 CFR 325.2(b)(1)(i) (``The public notice
for such activity . . . will serve as the notification to the
Administrator . . . pursuant to section 401(a)(2) of the Clean Water
Act.''). Such practices are not consistent with the statutory
language or this final rule. It is necessary that certification or
waiver occur for EPA to make a determination as to whether a
discharge from the activity ``may affect'' the water quality of a
neighboring jurisdiction under section 401(a)(2), as EPA only makes
such a determination where certification or waiver has occurred, and
considers any conditions included in a certification in making this
determination.
---------------------------------------------------------------------------

    EPA received several comments on its proposal to retain the five-
day interpretation of ``immediately'' in the context of section
401(a)(2). A few commenters agreed with EPA maintaining the five-day
interpretation of immediately, asserting that this period was adequate
for such notice and consistent with the statutory language. However,
one commenter argued that providing Federal agencies with five calendar
days to notify EPA is an unrealistic timeframe, and asked EPA to
consider interpreting ``immediately'' as five business days or ten
calendar days. EPA disagrees that the five-day period is unrealistic.
EPA did not encounter significant challenges in implementing this
interpretation in the 2020 Rule. The Agency finds five days a prompt
yet reasonable amount of time for Federal agencies to complete
notification to EPA pursuant to section 401(a)(2). This interpretation
reflects the urgency connotated in the statutory language of section
401(a)(2), while also recognizing that the Federal agency needs some
amount of time to process receipt of the Federal license or permit
application and certification or waiver from the project proponent or
certifying authority, and then transmit notice to the appropriate EPA
regional office. Additionally, EPA finds that this approach provides
clarity to Federal agencies regarding the timing of notification to EPA
pursuant to section 401(a)(2), and also ensures consistency in
practices across Federal licensing and permitting agencies.
    Several commenters discussed the proposed language, finalized in
Sec.  121.12(a) of the final rule, which establishes that a Federal
agency's obligation to provide notification to EPA only commences upon
the Federal agency's receipt of both the Federal license or permit
application and either certification or waiver. One commenter agreed
with this approach, noting that the Agency's clarification on this
point will ensure that EPA and neighboring jurisdictions have necessary
information to make determinations within the neighboring jurisdictions
process, and that this otherwise addresses confusion and information
gaps caused by prior inconsistent information sharing practices. A few
commenters, however, suggested that the Federal agency should be able
to provide notification to EPA prior to receipt of certification, such
as upon a receipt of an application for a Federal license or permit and
a request for certification. One such commenter argued that requiring
the Federal agency to be in receipt of both the Federal license or
permit application and certification before notifying EPA would
increase delays in the Federal licensing or permitting process. EPA
disagrees that notification provided by a Federal agency prior to
receipt of certification satisfies the notification requirement in
section 401(a)(2), as this is inconsistent with the statutory language,
which provides that the Federal agency shall provide notification
``[u]pon receipt of such application and certification.'' As a result,
notification prior to receipt of certification or waiver would not be
sufficient to satisfy a Federal agency's obligation pursuant to section
401(a)(2). Furthermore, EPA disagrees that notification after a Federal
agency receives a certification decision will increase delays in the
Federal licensing or permitting process. Rather, a certification
decision may render the need to notify EPA under section 401(a)(2) moot
(i.e., denial) or it may inform EPA's analysis for its ``may affect''
determination and make it unnecessary to make a ``may affect'' finding
(i.e., a certification with conditions).
    A few commenters argued that requiring Federal agencies to provide
notification to EPA after receipt of a certification precluded Federal
agencies from providing notification to EPA earlier (e.g., after
receipt of an application for a Federal license or permit), therefore
prohibiting Federal agencies from engaging in early coordination with
EPA. However, this is not correct. Nothing in the proposed text, or
final rule, prevents a Federal agency from providing notification to
EPA of a Federal license or permit

application for purposes of early coordination. Rather, such notice for
coordination purposes does not satisfy the requirement that the Federal
agency provide notification to EPA upon receipt of the Federal license
or permit application and certification or waiver, pursuant to Sec.
121.12 of the final rule, and would not commence the 30-day period for
EPA's ``may affect'' determination pursuant to section 401(a)(2). Thus,
EPA is providing this clarification in the final rule.
    With regard to the meaning of ``application'' for purposes of
section 401(a)(2), the Agency is maintaining the position stated in the
proposed rule that within this context the term ``application'' is used
to refer to the ``application for such Federal license or permit.'' See
87 FR 35366. Section 401 uses the term ``application'' throughout
section 401(a); however, when read in context, the term is used for
both ``applications for certification'' and ``applications for such
Federal license or permit.'' 33 U.S.C. 1341(a)(1)-(2). The Agency
considers the ``request for certification'' to be an ``application for
certification.'' See section IV.C in this preamble for further
discussion on request for certification. The context of the relevant
statutory language in section 401(a)(2), directing the Federal agency
to provide notification to EPA ``[u]pon receipt of such application and
certification,'' reflects that this use of the term ``application''
refers to ``application for such Federal license or permit,'' rather
than ``application for certification.'' Id. at 1341(a)(2). Accordingly,
the obligation for the Federal agency to provide notification to EPA
pursuant to section 401(a)(2) is initiated upon receipt of both a
Federal license or permit application and either a section 401
certification or a waiver of certification.
    In the proposed rule, EPA noted that there are instances where a
Federal license or permit application does not accompany a
certification or waiver, and therefore proposed to define the term
``application'' to mean ``an application for a license or permit
submitted to a Federal agency, or if available, the draft license or
permit'' to account for differing Federal licensing or permitting
practices. EPA received a few comments related to this definition in
the context of the Federal agency providing notification to EPA
pursuant to section 401(a)(2). One commenter argued that EPA should not
require the Federal agency to have a draft Federal license or permit
when it notifies EPA under the neighboring jurisdictions process. In
contrast, another commenter supported draft Federal licenses or permits
being included in notification to EPA where such drafts are provided
before a certification decision. However, as previously discussed, in
the context of requests for certification, many commenters opposed to
EPA's proposed approach of requiring the project proponent to include
the draft Federal license or permit in all requests for certification.
As a result, EPA is finalizing a bifurcated approach. A project
proponent seeking certification on the issuance of a general license or
permit must submit a copy of the draft Federal license or permit in its
request for certification. A project proponent seeking certification on
an individual license or permit must submit a copy of the Federal
license or permit application in its request for certification. See
section IV.C in this preamble for discussion on bifurcated request for
certification process; 40 CFR 121.5(a). As a result of the comments
received related to the proposed definition of ``application'' and
finalized approach regarding use of draft Federal licenses or permits
in the request for certification context, EPA is not finalizing the
proposed definition of the term ``application'' in the proposed rule.
Although the Agency is not proposing a definition of the term
``application'' in the final rule, it recognizes that with respect to
general Federal licenses and permits, there is no formal
``application,'' and for that reason acknowledges that Federal agencies
may provide a draft Federal license or permit in notification to EPA
pursuant to section 401(a)(2).\102\
---------------------------------------------------------------------------

    \102\ For this final rulemaking, EPA is not suggesting that
Corps civil works projects are exempt from neighboring jurisdictions
processes, even though there are no ``applications'' or draft
Federal licenses or permits. Rather, EPA expects the Corps to
determine how best to comply with all section 401 requirements.
Compliance may involve the Corps sending a project study in
conjunction with a certification or a waiver of certification.
---------------------------------------------------------------------------

ii. Contents of Notification From a Federal Agency
    Although the text of section 401(a)(2) requires a Federal agency to
notify EPA upon receipt of a Federal license or permit application and
certification,\103\ it does not define the contents of such
notification. 33 U.S.C. 1341(a)(2). The 1971 Rule and 2020 Rule
provided some direction on information that could be submitted to EPA
as part of the neighboring jurisdictions process, but neither
regulation defined the contents of the section 401(a)(2) notification.
See 40 CFR 121.12(b) (2020); 40 CFR 121.13 (2019).
---------------------------------------------------------------------------

    \103\ As previously discussed, EPA interprets the waiver of
certification as a substitute for a grant of certification for
purposes of section 401(a)(2). See section IV.K.2.c. of this
preamble for further discussion of this interpretation.
---------------------------------------------------------------------------

    The 1971 Rule provided that upon receipt of an application for a
license or permit with an accompanying certification, the Federal
agency shall forward copies of the application and certification to the
Regional Administrator. 40 CFR 121.11 (2019). It further stated that
only those portions of the application which relate to water quality
shall be forwarded to the Regional Administrator and allowed for the
Regional Administrator to ask for supplemental information if the
documents forwarded did not contain sufficient information to make the
determination provided for in Sec.  121.13. See 40 CFR 121.12 and
121.13 (2019). In the preamble to the 2020 Rule, EPA stated its
expectation that Federal agencies would develop notification processes
and procedures, but noted that the Administrator could request copies
of the certification and Federal license or permit application. 85 FR
42273. During implementation of the 2020 Rule, some but not all
agencies developed their own procedures, and such procedures varied
between Federal agencies and across the country.
    EPA is finalizing its proposed approach to add regulatory text
defining the minimum level of information that must be included in the
notification to EPA to provide consistency in practices across Federal
agencies and to streamline the notification process. In Sec.
121.12(a), the Agency provides that the notification must be in writing
and contain a general description of the proposed project, including
but not limited to the Federal license or permit identifier, project
location information (e.g., latitude and longitude), a project summary
including the nature of any discharge and size or scope of activity,
and whether the Federal agency is aware of any neighboring jurisdiction
providing comment on the project. If the Federal agency is aware that a
neighboring jurisdiction provided comment about the project, the
notification shall include a copy of those comments. 40 CFR
121.12(a)(2). Additionally, the notification shall include a copy of
the certification or notice of waiver, and the Federal license or
permit application. 40 CFR 121.12(a)(1).
    EPA is also finalizing the proposed approach allowing the Regional
Administrator to submit a written request to a Federal agency upon
determining there is a need for supplemental information to make a
determination about potential neighboring jurisdiction effects pursuant
to section 401(a)(2). 40 CFR

121.12(b). This provision allows the Regional Administrator to request
that such information be provided in a timely manner for EPA's ``may
affect'' determination and provides that the Federal agency ``shall
obtain that information from the project proponent and forward the
additional information to the Administrator within such timeframe.''
Likewise, the Agency is finalizing the proposed language allowing the
Regional Administrator to develop agreements with Federal agencies to
refine the notification process and the provision of supplemental
information, in Sec.  121.12(c) of the final rule.
    One commenter addressing these proposed provisions argued that the
Federal agency should not be required to provide EPA with any
information other than the certification or waiver of certification and
the Federal license or permit application, because requiring such
information would exceed EPA's authority under section 401(a)(2) and
could result in burden on the Federal agency and the applicant. The
commenter further asserted that if the final rule includes supplemental
information requirements for section 401(a)(2) notification, then such
information should be limited to existing information that is readily
available. EPA disagrees that the provision in Sec.  121.12(b) of the
final rule allowing the Regional Administrator to request supplemental
information where needed to make a ``may affect'' determination exceeds
the Agency's statutory authority pursuant to section 401(a)(2). The
statutory text of section 401(a)(2) does not preclude the Agency from
seeking supplemental information in such circumstances, and otherwise
does not limit what information the Agency considers in making a ``may
affect'' determination. See 33 U.S.C. 1341(a)(2). Additionally, the
Agency finds that as a practical matter, it is both reasonable and in
the best interests of the Federal licensing or permitting agency and
the project proponent for the Agency to have adequate information to
inform its ``may affect'' determination. Although EPA is not creating
formalized strictures on the supplemental information the Regional
Administrator may request pursuant to Sec.  121.12(b) of the final
rule, given the uncertainty of addressing unknown circumstances
necessitating such supplemental information, it generally anticipates
that such supplemental information would be information readily
available to the Federal agency or project proponent.
f. EPA's Role Under Section 401(a)(2)
    Section 401(a)(2) provides that whenever a discharge ``may affect,
as determined by the Administrator, the quality of the waters of any
other State,'' the Administrator must notify the neighboring
jurisdiction, Federal agency, and the project proponent of the
determination within thirty days of the date of notice of the
application. 33 U.S.C. 1341(a)(2). In Sec.  121.13 of the final rule,
EPA is finalizing its proposed approach to making a ``may affect''
determination and providing notification of a determination that a
discharge from a project may affect the water quality of a neighboring
jurisdiction, although it is doing so with changes to the proposed
regulatory text to omit the requirement that EPA provide such notice to
a certifying authority, and to provide further clarification that a
Federal license or permit cannot be issued without the neighboring
jurisdictions processes concluding, as discussed above. EPA is
otherwise maintaining its positions regarding the requirement that EPA
make a ``may affect'' determination, the timing of this determination
and notification, the meaning of ``may affect'' and EPA's ``may
affect'' analysis, and procedural and content requirements of ``may
affect'' notification, as reflected in Sec.  121.13 of the final rule
and discussed further below.
i. Requirement for EPA To Make ``May Affect'' Determination
    At proposal, EPA stated its interpretation that the statutory text
of section 401(a)(2) requires the Agency to determine whether a
discharge ``may affect'' a neighboring jurisdiction once it receives
notification of the application and certification or waiver. 87 FR
35367. Therefore, EPA proposed regulatory text in Sec.  121.13(a)
providing that the Regional Administrator ``shall determine whether a
discharge from the certified or waived project may affect water quality
in a neighboring jurisdiction.'' EPA is finalizing the proposed
language in Sec.  121.13(a) of the final rule with revisions to remove
the term ``certified or waived.'' The removal of ``certified or
waived'' is intended to ensure language conformity across subpart B,
and remove redundancy, as Sec.  121.12(a) of the final rule already
states that once the Federal agency ``has received both the application
and either a certification or waiver,'' the Federal agency ``shall
provide written notification to the appropriate Regional
Administrator.'' 40 CFR 121.12(a) (emphasis added).
    Under the 1971 Rule, the Regional Administrator was required to
review the Federal license or permit application, the certification,
and any supplemental information provided to EPA, and, if the Regional
Administrator determined that there was ``reason to believe that a
discharge may affect the quality of the waters of any State or States
other than the State in which the discharge originates,'' the Regional
Administrator would notify the affected jurisdictions within thirty
days of receipt of the Federal license or permit application materials
and certification. See 40 CFR 121.13 (2019). Similarly, the 2020 Rule
acknowledged EPA's responsibility to notify a neighboring jurisdiction
whenever it determined that a discharge from the certified activity may
affect the water quality of the neighboring jurisdiction. 40 CFR
121.12(b) (2020); 85 FR 42274. However, the 2020 Rule asserted that it
was within the Agency's discretion whether to make a ``may affect''
determination in the first place, and that EPA was, therefore, not
required to make such a determination. 85 FR 42273.
    To date, EPA is only aware that one Federal district court has
addressed EPA's obligation to make a determination pursuant to section
401(a)(2). In Fond du Lac Band of Lake Superior Chippewa v. Wheeler,
519 F. Supp. 3d 549 (D. Minn. 2021), the court addressed two issues
concerning section 401(a)(2): (1) whether EPA is required to make a
``may affect'' determination and (2) whether EPA's ``may affect''
determination is judicially reviewable. The court concluded that EPA is
required to determine whether the discharge may affect the quality of a
neighboring jurisdiction's waters pursuant to section 401(a)(2). In
coming to this conclusion, the court examined the statutory text and
found that it requires EPA to make ``a discrete factual determination .
. . within a specific timeframe . . . based on an application and
certification. . . .'' Id. at 564. The court found that ``the existence
of such a clear and limited timeframe supports the argument that the
statute imposes a duty on EPA to make a `may affect' determination.''
Id. Further, the court concluded that Federal courts have the
jurisdiction to review EPA's ``may affect'' determination.\104\
---------------------------------------------------------------------------

    \104\ Notably, the court in Fond du Lac did not opine on the
specific meaning of ``may affect'' or factors that EPA should
consider in making a ``may affect'' determination. See 519 F. Supp.
3d 549.
---------------------------------------------------------------------------

    The Agency agrees with the court in Fond du Lac that EPA, pursuant
to section 401(a)(2), must determine whether a discharge ``may affect''
a

neighboring jurisdiction once it receives notification of the Federal
license or permit application and certification or waiver from the
Federal agency consistent with Sec.  121.12(a) of the final rule. As
discussed by the court in Fond du Lac, the statutory language in
section 401(a)(2), which requires the Agency to provide notification
within a set timeframe to a neighboring jurisdiction when it finds that
discharge from the project may affect its water quality, supports
finding that EPA is required to make a ``may affect'' determination.
See Fond du Lac, 519 F.Supp.3d at 563-64. Accordingly, the Agency is
finalizing language in Sec.  121.13(a) of the final rule, with the
modifications discussed above, to reflect this interpretation and
clarify that the Regional Administrator shall make this determination,
consistent with the Agency's interpretation of section 401(a)(2).
    EPA received comments regarding its interpretation of section
401(a)(2) requiring the Agency to make a ``may affect'' determination,
and commenters were divided on whether EPA is required to make a ``may
affect'' determination. Some commenters agreed with EPA's
interpretation and the language in the proposal stating that section
401(a)(2) requires EPA to make a ``may affect'' determination upon
receiving notice from the Federal licensing or permitting agency.
Reasons cited for supporting this position included the rationale
provided by the court in Fond du Lac, cited by some commenters, and the
assertion that this approach better allows neighboring jurisdictions to
protect their water quality and provides transparency regarding the
Agency's actions.
    Some other commenters asserted that section 401 provides EPA
discretion whether to make a ``may affect'' determination, and that EPA
need not make this determination with regard to all Federal licenses or
permits subject to section 401. In addition to asserting the position,
taken in the 2020 Rule, that the statutory language provides EPA
discretion as to whether to make a ``may affect'' determination, some
of these commenters otherwise argued that requiring EPA to make a ``may
affect'' determination for all Federal licenses or permits subject to
section 401 would be an inefficient use of EPA resources and would
result in unnecessary delays in the Federal licensing or permitting
process.
    EPA finds that the statutory language in section 401(a)(2) provides
EPA discretion when making a ``may affect'' determination. However, the
Agency does not agree that the statutory text provides EPA with
discretion to decide that the Agency will not make a may affect
determination following appropriate notification from the Federal
agency. As noted by the court in Fond du Lac, this interpretation would
be inconsistent with the statutory text of section 401(a)(2) directing
the Agency to provide notification within a set timeframe to a
neighboring jurisdiction when it finds that a discharge from a project
may affect its water quality. See Fond du Lac, 519 F.Supp.3d at 563
(noting that it would be odd ``if a decisionmaker . . . was mandated by
law to do everything that was necessary to make a particular type of
decision . . . but was not mandated by law to actually make the
decision.''). Given the Agency's interpretation that it is required to
make a ``may affect'' determination upon appropriate notification from
the Federal licensing or permitting agency pursuant to section
401(a)(2), the Agency finds that use of resources for this purpose is
necessary to comply with the statute. Finally, the Agency rejects the
argument that making ``may affect'' determinations in accordance with
Sec.  121.13(a) of the final rule will add unnecessary delays to the
Federal licensing or permitting process, as the Agency is finding that
it is required to make a ``may affect'' determination pursuant to
section 401(a)(2), and the statutory text provides a set, relatively
short, timeframe for the Agency to make this determination (30 days).
See 33 U.S.C. 1341(a)(2).
ii. Timing of EPA's ``May Affect'' Determination and Notification
    As previously discussed, section 401(a)(2) requires EPA to provide
notification ``within thirty days of the date of notice of application
for such Federal license or permit'' to the neighboring jurisdiction,
the Federal Agency, and the project proponent whenever it determines
that a discharge from a project may affect the water quality of a
neighboring jurisdiction. 33 U.S.C. 1341(a)(2). EPA finds that the
``notice of application for such license or permit'' references the
prior statutory text of section 401(a)(2) requiring the Federal agency
to immediately notify the Administrator ``[u]pon receipt of such
application and certification.'' See section IV.K.2.e in this preamble
for discussion regarding timing of Federal agency notification to EPA
pursuant to section 401(a)(2). Accordingly, EPA finds that section
401(a)(2) provides EPA with a 30-day period to make its ``may affect''
determination and provide any required notification after receiving
notice from the Federal agency of the Federal license or permit
application and certification or waiver. EPA has, therefore,
incorporated this 30-day period into the provisions it is finalizing in
Sec.  121.13(a) and (b) regarding its ``may affect'' determination and
``may affect'' notification, as it proposed. This is consistent with
the approach taken in the 2020 Rule, which also provided a 30-day
period for the EPA to make a ``may affect'' determination and provide
``may affect'' notification following appropriate notice from the
Federal agency. See 40 CFR 121.12 (2020).
    A few commenters discussed the period EPA is provided to make a
``may affect'' determination or ``may affect'' notification. One
commenter argued that 30 days is too long of a period for EPA to make
``may affect'' determinations, and suggested EPA limit the timeframe to
complete these determinations to 15 days. Another commenter requested
that EPA establish a reasonable period of time to provide notification
to the Federal agency and certifying authority calculated from the date
the individual certification is issued for purposes of avoiding
unnecessary permitting delays. As discussed above, the statute provides
EPA with a 30-day period to make a ``may affect'' determination and
provide any required notification, and EPA declines to shorten the time
period for the Agency to take such actions. EPA notes that the 2020
Rule also provided a 30-day timeframe for the Agency to perform these
actions, and EPA did not find that this approach resulted in
unnecessary Federal licensing or permitting delays. Accordingly, the
Agency finds it reasonable to retain the 30-day period reflected in
statute for making a ``may affect'' determination and providing any
required notification.
iii. EPA's ``May Affect'' Determination and ``May Affect'' Standard
    Section 401(a)(2) provides that EPA makes the ``may affect''
determination in the neighboring jurisdictions process, as discussed
above, but notably does not delineate specific factors for the Agency
to consider in determining whether a discharge from a project may
affect the water quality of a neighboring jurisdiction. See 33 U.S.C.
1341(a)(2). Likewise, the 2020 Rule did not address in either preamble
or regulatory text whether there are specific factors that the EPA
considers in making a ``may affect'' determination or whether any other
interested party can be involved in making this determination. See 85
FR 42273. During the pre-proposal outreach, stakeholders raised
concerns that EPA had not clearly identified what factors it intended
to use in determining whether a discharge ``may affect'' the water
quality of a neighboring jurisdiction. Stakeholders also objected

to EPA asserting sole discretion over this ``may affect'' determination
without obtaining input from the neighboring jurisdiction or other
stakeholders.
    In the preamble to the proposed rule, EPA asserted that the Agency,
in making a ``may affect'' determination, has discretion to look at a
variety of factors depending on the type of Federal license or permit
and discharge. 87 FR 35367. EPA further stated that factors it may
consider in making a ``may affect'' determination include but are not
limited to the type of project and discharge covered in the Federal
license or permit, the proximity of the project and discharge to other
jurisdictions, certification conditions and other conditions already
contained in the draft Federal license or permit, and the neighboring
jurisdiction's water quality requirements. 87 FR 35367-68. The Agency
clarified that it was not proposing to identify specific factors EPA
must analyze in making a ``may affect'' determination, given the range
of Federal licenses or permits that are covered by CWA section
401(a)(2) and EPA's discretion to look at various factors. 87 FR 35368.
The Agency noted that each ``may affect'' determination is likely to be
fact-dependent and based on situation-specific circumstances and
expressed uncertainty that it could provide a required list of factors
for it to consider in making a ``may affect'' determination. Id.
However, the Agency solicited comment on whether such a list of
specific factors that EPA must consider in making a ``may affect''
determination should be set forth in regulation and, if so, what
factors should be included. Id.
    Additionally, in the proposal, the Agency clarified its position
that it has sole discretion under section 401(a)(2) to examine the
facts and determine whether the discharge ``may affect'' the quality of
a neighboring jurisdiction's waters once it receives notice from a
Federal agency initiating its obligation to make a ``may affect''
determination. 87 FR 35368. As a result, EPA stated that the Agency is
not required to engage with stakeholders or seek their input in making
this determination, and otherwise noted interested parties may have
recourse under the Administrative Procedure Act, as discussed in Fond
du Lac case. Id.; see also Fond du Lac, 519 F.Supp.3d at 565-67.
However, EPA stated that it intends to consider the views of
neighboring jurisdictions in making its ``may affect'' determination if
such views are provided in a timely manner. Id. Specifically, the
Agency proposed regulatory language in Sec.  121.12(a), as discussed
above, to define the contents of a Federal agency's notification to EPA
to include an indication of whether any neighboring jurisdictions have
expressed water quality concerns or provided such comment on the
project.\105\
---------------------------------------------------------------------------

    \105\ The Agency notes, as it did at proposal, that there are
other opportunities for stakeholders to provide input into the
certification and Federal licensing or permitting process, including
the public notice and comment processes on the certification and the
Federal license or permit.
---------------------------------------------------------------------------

    The Agency is maintaining its position that it has sole discretion,
pursuant to section 401(a)(2), to examine the facts and determine
whether the discharge ``may affect'' the quality of a neighboring
jurisdiction's waters. This interpretation regarding the Agency's
discretion is consistent with the statutory language of section
401(a)(2), which directs EPA to notify neighboring jurisdictions
``[w]henever such a discharge may affect, as determined by the
Administrator. . . .'' 33 U.S.C. 1341(a)(2) (emphasis added). The
Agency is further maintaining its position that EPA is not required to
engage with stakeholders or seek their input in making a ``may affect''
determination. However, as previously discussed, the Agency may
consider the neighboring jurisdiction's views on the effect of a
discharge from the project on its water quality as a factor in making a
``may affect'' determination. Further, in Sec.  121.12(a) of the final
rule, EPA is finalizing the proposed regulatory text defining the
contents of a Federal agency's notification to EPA to include an
indication of whether any neighboring jurisdictions have expressed
water quality concerns or provided such comment on the project. This
provision may increase EPA's awareness of water quality concerns raised
by neighboring jurisdictions at the time the Agency receives notice
prompting it to make a ``may affect'' determination, and EPA reiterates
its intention to consider such views of neighboring jurisdictions if
provided in a timely manner.
    Some commenters disagreed with EPA's position on the role of
neighboring jurisdictions or other stakeholders during in its ``may
affect'' process. A few commenters suggested that EPA consult with or
involve neighboring jurisdictions in making ``may affect''
determinations. Additionally, a commenter argued that it was
appropriate and reasonable for EPA to solicit input from the project
proponent and Federal licensing or permitting agency in the process of
making a ``may affect'' determination. EPA finds its position regarding
its sole discretion in making a ``may affect'' determination and the
role of stakeholders, including neighboring jurisdictions, in such a
determination is reasonable and consistent with the statutory text of
section 401(a)(2). Section 401(a)(2) specifically recognizes EPA's
discretion in making a ``may affect'' determination, and does not
establish a role for stakeholders in EPA's determination. Further,
section 401(a)(2) provides EPA with only 30 days to make a ``may
affect'' notification and provide any required notification to
neighboring jurisdictions. EPA does not find the limited period of time
that the statute affords the Agency for its ``may affect''
determination and any required notification consistent with a process
in which it engages stakeholders and solicits their input, and imposing
such a process would burden the Agency. Accordingly, EPA declines to
adopt such a process for ``may affect'' determinations.
    EPA is not further defining the meaning of ``may affect'' in
section 401(a)(2), aside from identifying factors that it may consider
in making a ``may affect'' determination, as the statutory language
provides sufficient clarity that this standard is met ``[w]henever such
a discharge may affect, as determined by the Administrator, the quality
of the waters'' of a neighboring jurisdiction. 33 U.S.C. 1341(a)(2).
Some commenters sought, or offered, further interpretations of the
``may affect'' standard in section 401(a)(2). Such commenters asserted
differing interpretations of the meaning of the ``may affect''
standard, including recommending that EPA make an actual demonstration
that there may be an effect and suggesting that it is a low threshold
(i.e., some reasonable possibility an effect may exist). As stated
above, EPA is not defining the meaning of the ``may affect'' standard.
This standard is necessarily broadly applicable, as it must be applied
to differing Federal licenses and permits in a wide range of factual
circumstances. Moreover, section 401(a)(2) recognizes the
Administrator's discretion applying this standard in a ``may affect''
determination.
    Although EPA is not attempting to further define the ``may affect''
standard in the final rule, it notes that this standard is
distinguishable from the standard that notified neighboring
jurisdictions apply to make a determination regarding an objection,
which is whether ``such discharge will affect the quality of its waters
so as to violate any water quality requirements'' in its jurisdiction.
See 33 U.S.C. 1341(a)(2). Unlike the standard applied by notified
neighboring jurisdictions in making a determination regarding an

objection, the standard applied by EPA in its ``may affect'' analysis
does not require consideration of whether water quality effects of
discharge from the project will result in violation of water quality
requirements. Instead, the standard applied by EPA in its ``may
affect'' determination only requires analysis of whether discharge from
the project may have water quality effects on a neighboring
jurisdiction.\106\ Additionally, the ``may affect'' standard, in
contrast to the standard applied by notified neighboring jurisdictions,
does not require a finding that the discharge ``will'' effect water
quality. Accordingly, EPA finds this standard may be met where there
may be an effect to a neighboring jurisdiction's water quality, but
such effect is not certain to occur.
---------------------------------------------------------------------------

    \106\ See section IV.E of this preamble for further discussion
on the breadth of water quality effects that may be considered under
section 401.
---------------------------------------------------------------------------

    EPA is finalizing the proposed approach to identify factors that
EPA may consider in making a ``may affect'' determination and is not
establishing specific factors that EPA must analyze in making a ``may
affect'' determination. EPA is also reiterating the factors that it
identified in the preamble of its proposal as factors it may consider
in making a ``may affect'' determination. Accordingly, EPA is
identifying that such factors include, but are not limited to, the type
of project and discharge covered in the Federal license or permit, the
proximity of the project and discharge to neighboring jurisdictions,
certification conditions and, as applicable, other conditions already
contained in the draft Federal license or permit, the neighboring
jurisdiction's water quality requirements, and the views of the
neighboring jurisdiction on the effect of discharge from the project on
its water quality. Based on public comments, EPA is also identifying
additional factors it may consider. Specifically, EPA may consider the
current water quality and characteristics of the water receiving the
discharge in making a ``may affect'' determination. However, EPA
reiterates that it is neither limited to considering, nor required to
consider, the factors identified here.
    With regard to the Agency's proposed approach of identifying
factors it may consider in making a ``may affect'' determination, most
commenters addressing this approach supported EPA providing some
identification of such factors in the final rule. Such commenters noted
that identification of factors clarifies and provides broader
understanding of the EPA's process in making a ``may affect''
determination and could improve efficiency in making this
determination. Some commenters agreed that EPA has discretion in making
a ``may affect'' determination, but asserted that this discretion is
constrained by the statutory bounds of section 401.
    However, commenters were notably divided on the approach the Agency
should take to identifying these factors. Some commenters recommended
that EPA establish an exclusive list of factors it considers in making
``may affect'' determinations, limiting the factors considered in each
determination to only those identified on this list. Commenters
supporting this position collectively asserted that this approach would
limit subjectivity in such determinations, increase predictability, and
allow Federal agencies and project proponents to better plan for these
determinations. Other commenters supported EPA codifying a list of
factors it must consider in making a ``may affect'' determination, but
providing that EPA may consider other factors. In contrast, some other
commenters supported EPA's proposed approach to identify examples of
factors the Agency may consider, but did not recommend requiring EPA to
consider factors in recognition of the fact-dependent nature of ``may
affect'' determinations.
    EPA agrees that its discretion regarding making a ``may affect''
determination is bounded by the statutory grant of authority in section
401. EPA disagrees with the approaches suggested by certain commenters
that EPA identify either an exclusive list of factors for the Agency to
consider in making this determination, or establish a minimum list of
factors that EPA must consider, as these approaches do not recognize
the fact-dependent nature of a ``may affect'' determination and do not
provide the flexibility necessary for the Agency to make ``may affect''
determinations involving different types of licenses and permits.
Identifying an exclusive list of factors for the Agency to consider in
making a ``may affect'' determination could preclude the Agency from
considering important information relevant to determining whether
discharge from a project may affect the water quality of a neighboring
jurisdiction. Additionally, this approach does not appear to be
consistent with the statutory language in section 401(a)(2), which does
not impose limitations on the information the Agency may consider in
making this determination, but rather recognizes the Agency's
discretion in making this determination. Likewise, establishing a
minimum list of factors that EPA must consider in a ``may affect''
determination could require the Agency to consider factors even where
they are not relevant to determining whether discharge may affect the
water quality of a neighboring jurisdiction. This approach would not
prove efficient, which is of particular concern as the Agency is only
afforded 30 days to make a ``may affect'' determination and provide any
required ``may affect'' notification. Instead, the Agency finds that
identifying examples of factors that it may consider in making a ``may
affect'' determination, as it has above, provides greater clarity
without inappropriately limiting the Agency from considering other
relevant factors or requiring it to apply factors where they are
irrelevant.
iv. ``May Affect'' Notification
    If EPA determines that a discharge from a project may affect a
neighboring jurisdiction's water quality, section 401(a)(2) requires
EPA to notify the neighboring jurisdiction, Federal agency, and the
project proponent. 33 U.S.C. 1341(a)(2). As previously discussed, EPA
must provide such notification within 30 days from notice provided by
the Federal agency in accordance with section 401(a)(2). See id.;
section IV.K.2.f.ii in this preamble for discussion on timing of EPA's
may affect finding and any resulting notice. Notably, a finding by EPA
that a discharge from a project may affect a neighboring jurisdiction's
water quality pursuant to section 401(a)(2) is often referred to as a
``may affect'' finding, and the resulting notification of this finding
is referred to as a ``may affect'' notification. Section 401(a)(2) does
not require EPA to provide notification in circumstances where it has
completed its ``may affect'' determination but has not found that a
discharge from the project may affect a neighboring jurisdiction's
water quality (i.e., has not made a ``may affect'' finding). See 33
U.S.C. 1341(a)(2). Accordingly, in its proposal, EPA stated that it is
not required to provide notification of its ``may affect''
determination in such circumstances. Consistently, EPA further stated
that if a Federal agency does not receive notification from EPA that a
discharge may affect a neighboring jurisdiction's water quality within
30 days after the proper notice, then the Federal agency may proceed
with processing the Federal license or permit. 87 FR 35368.
    EPA received comments relating to its ``may affect'' notification
in the neighboring jurisdictions process. A few commenters expressed
concern that EPA is not required to provide a response when not finding
that a

discharge may affect the water quality of a neighboring jurisdiction
and suggested that lack of a response could have meaning other than
this finding. Some of these commenters proposed that EPA provide
notification to neighboring jurisdictions in circumstances where the
Agency's ``may affect'' determination does not result in ``may affect''
finding, or otherwise suggested that the Agency provide public notice
regarding its ``may affect'' determination. Some commenters supporting
these approaches to notification asserted that they would increase
transparency regarding EPA's ``may affect'' determination and inform
interested parties regarding this determination.
    In consideration of the statutory constraints on EPA to make a
``may affect'' determination and provide ``may affect'' notification
within 30 days of proper notice from the Federal agency, EPA is not
expanding the notification requirements beyond the circumstances and to
the parties it is required to provide such notification pursuant to
section 401(a)(2). The neighboring jurisdictions process established in
section 401(a)(2) does not direct the EPA to provide notification
outside of circumstances in which the Agency has determined that a
discharge from the project may affect a neighboring jurisdiction's
water quality. Likewise, the statutory language does not provide for
``may affect'' notification to other parties besides the relevant
neighboring jurisdiction, the Federal agency, and the project
proponent. See 33 U.S.C. 1341(a)(2). Accordingly, the statutory
language reflects a more limited process for the Agency to provide
``may affect'' notification than suggested by certain commenters, which
is consistent with the limited duration of time afforded the Agency for
making a ``may affect'' determination and providing such notification
in section 401(a)(2). Given the limited 30-day period for Agency action
in this context, and in consideration of the overall volume of ``may
affect'' determinations made by the Agency, EPA finds it reasonable to
maintain the notification requirements established in the statutory
text of section 401(a)(2), and is not expanding these requirements
beyond the statutory bounds.
    In addition to incorporating the notification requirements on EPA
in section 401(a)(2) pertaining to a ``may affect'' finding, the 2020
Rule established additional procedures for EPA in providing such
notification. The 2020 Rule required EPA to provide such notification
to the certifying authority, as well as the neighboring jurisdiction,
Federal agency, and the project proponent. 40 CFR 121.12(c) (2020).
Additionally, the 2020 Rule required the notification to be dated and
in writing and established certain requirements on the content of such
notification. 40 CFR 121.12(c)(1) (2020). Specifically, the 2020 Rule
required that the notification identify the materials provided by the
Federal agency and inform the neighboring jurisdiction that it had 60
days to notify the Administrator and the Federal agency, in writing,
whether it had determined that the discharge will violate any of its
water quality requirements, to object to the issuance of the Federal
license or permit, and to request a public hearing from the Federal
agency. Id. In contrast, the 1971 Rule did not define the contents of a
``may affect'' notification from EPA to a neighboring jurisdiction,
Federal agency, and project proponent. However, the 1971 Rule required
EPA to send the neighboring jurisdiction a copy of the application and
certification it received to initiate the neighboring jurisdictions
process. 40 CFR 121.14 (2019).
    EPA proposed retaining regulatory text similar to that in the 2020
Rule requiring EPA to provide the ``may affect'' notification to the
neighboring jurisdiction, Federal agency, the project proponent, and
the certifying authority. The Agency further proposed maintaining
content requirements for the ``may affect'' notification, but proposed
revising these requirements to establish that the notification shall be
in writing and shall include a statement that the Agency has determined
that the discharge may affect the neighboring jurisdiction's water
quality, as well as a description of the next steps in the neighboring
jurisdictions process, a copy of the certification or waiver, and a
copy of the Federal license or permit application.
    In Sec.  121.13(b) and (c) of the final rule, EPA is finalizing the
proposed approach for providing a ``may affect'' notification with
minor changes to the content requirements for a ``may affect''
notification and the omission of the requirement that EPA provide such
notice to a certifying authority. As noted above, EPA revised the
proposed text of Sec.  121.13(c), addressing the contents of the
Regional Administrator's ``may affect'' notification, to conform the
statement that the Agency provides to notified neighboring
jurisdictions more closely with the statutory text of section 401(a)(2)
and provide greater clarity about notification needed for an objection.
Rather than providing a statement that the notified neighboring
jurisdiction ``has 60 days'' to provide written notification ``whether
it has determined that the discharge will violate any of its water
quality requirements,'' as proposed in Sec.  121.13(c)(3), the final
rule states that the Agency provides a statement that the notified
neighboring jurisdiction ``has 60 days after such notification'' from
the Agency to provide written notification ``if it has determined that
the discharge will violate any of its water quality requirements.'' 40
CFR 121.13(c)(3). This revision ensures that the ``may affect''
notification reflects the statutory text of section 401(a)(2) and more
clearly conveys the statutory time and content requirements of the
notification needed for an objection than the proposed regulatory text.
    Likewise, as previously mentioned, Sec.  121.13(b) and (c) of the
final rule was revised to omit the requirement that EPA provide the
``may affect'' notification to the certifying authority. Although the
2020 Rule required EPA to provide the ``may affect'' notification to
the certifying authority, and proposed retaining this provision, EPA is
omitting such notification to the certifying authority in the final
rule to more closely reflect the statutory language in section
401(a)(2), which does not require such notification to the certifying
authority. This is consistent with the Agency's approach in the final
rule to likewise remove language from the proposed regulatory text
requiring a notified neighboring jurisdiction to provide notification
to the certifying authority in Sec.  121.14. Both changes reflect the
structure of the neighboring jurisdictions process established in
section 401(a)(2), which does not provide a specified role for the
certifying authority.
    In addition to EPA's role in the neighboring jurisdictions process
to make a ``may affect'' determination and provide ``may affect''
notification, as addressed in Sec.  121.13 of the final rule and
described above, the Agency also has at role at a hearing on an
objection of a notified neighboring jurisdiction, which is reflected in
Sec.  121.15(c) of the final rule and discussed further below. See
section IV.K.2.h in this preamble for discussion of the Agency's role
to provide its evaluation and recommendations concerning the objection
at such hearing and Sec.  121.15(c).
g. Neighboring Jurisdiction's Role Under Section 401(a)(2)
    CWA section 401(a)(2) provides that if, within 60 days after
receipt of EPA's ``may affect'' notification, a neighboring
jurisdiction determines that such discharge will affect the quality of
its waters so as to violate any water quality

requirements in its jurisdiction, and within such 60-day period
notifies the Administrator and the Federal licensing or permitting
agency in writing of its objection to the issuance of such Federal
license or permit and requests a public hearing, the Federal licensing
or permitting agency shall hold a public hearing on the objection. 33
U.S.C. 1341(a)(2). Therefore, only neighboring jurisdictions notified
by EPA may object to issuance of a Federal license or permit and
request a hearing on this objection pursuant to section 401(a)(2).
Further, in order for a notified neighboring jurisdiction to make an
objection, it must (1) determine that a discharge from the project for
which it received such notification will affect the quality of its
waters so as to violate any of its water quality requirements, and (2)
provide written notification of its objection and request for hearing
to EPA and the Federal licensing or permitting agency within sixty days
after receipt of notification from EPA. Notably, the determination made
by a notified neighboring jurisdiction as to whether a discharge from
the project will affect the quality of its waters so as to violate any
water quality requirements is often referred to as a ``will violate''
determination. The provisions in the final rule regarding a notified
neighboring jurisdiction's ``will violate'' determination and
notification of objection and request for hearing are discussed below.
i. ``Will Violate'' Determination and Standard
    Under section 401(a)(2), a notified neighboring jurisdiction's
``will violate'' determination is based upon whether a discharge from
the project ``will affect the quality of its waters so as to violate
any water quality requirements'' in its jurisdiction. 33 U.S.C.
1341(a)(2). EPA incorporated this standard in the proposed text of
Sec.  121.14(a), which reflected that the neighboring jurisdiction
``determines that a discharge will violate any of its water quality
requirements.'' However, EPA did not propose to further define the
``will violate'' standard applied by notified neighboring
jurisdictions, or otherwise identify specific factors that neighboring
jurisdictions may or must consider in making this determination.
    EPA is revising the proposed text of Sec.  121.14 to clarify that
the ``will violate'' determination is made only by a notified
neighboring jurisdiction, and is therefore adding text to Sec.
121.14(a) providing that a ``will violate'' determination is made by
``a neighboring jurisdiction notified by the Regional Administrator
pursuant to Sec.  121.13(b),'' and is otherwise revising references to
``the neighboring jurisdiction'' in the proposed text to ``the notified
neighboring jurisdiction'' in Sec.  121.14 of the final rule. EPA is
otherwise modifying the text of Sec.  121.14(a) to further reflect that
the notified neighboring jurisdiction is evaluating ``discharge from
the project.'' 40 CFR 121.14. These changes were made to add clarity,
as pursuant to section 401(a)(2), only notified neighboring
jurisdictions make a ``will violate'' determination, and this
determination evaluates discharge from the project for which the
neighboring jurisdiction received such notification from EPA. See 33
U.S.C. 1341(a)(2). EPA is otherwise maintaining the proposed approach
in the final rule to not further define the ``will violate'' standard
in regulation or identify factors for consideration in making this
determination.
    EPA received comment related to the ``will violate'' standard
applied by notified neighboring jurisdictions. One commenter requested
that EPA modify proposed Sec.  121.14 to ensure that the regulation
reflects that the ``will affect'' standard includes a discharge's
contributions to water quality violations and that the discharge itself
does not have to be the sole cause of the water quality violation. EPA
finds that the statutory text of section 401(a)(2), and the consistent
text of Sec.  121.14(a), sufficiently establish the ``will violate
standard,'' and therefore declines to further define this standard.
Like the Agency's ``may affect'' standard, the ``will violate''
standard is necessarily broadly applicable, as it must be applied to
differing Federal licenses and permits in a wide range of factual
circumstances. Accordingly, the Agency is not modifying Sec.  121.14 as
suggested by the commenter; however, EPA agrees that the ``will
violate'' standard includes a discharge's contributions to water
quality violations. Therefore, the neighboring jurisdiction does not
have to find that the discharge itself violates water quality
requirements and, instead, can find that the discharge contributes to
violations of water quality requirements to determine the ``will
violate'' standard is met. EPA further notes that the public, including
interested stakeholders, will have the opportunity to participate in
any hearing on an objection conducted by the Federal licensing or
permitting agency, pursuant to section 401(a)(2) and Sec.  121.15 of
the final rule.
ii. Notification of Objection and Request for Hearing
    As previously noted, section 401(a)(2) requires a notified
neighboring jurisdiction to provide written notification of its
objection and request for hearing to EPA and the Federal licensing or
permitting agency within sixty days after receipt of notification from
EPA in order to raise an objection. See 33 U.S.C. 1341(a)(2). The
statutory text, however, does not further describe the contents of this
written notification. The 1971 Rule did not describe the contents or
form that such an objection notification must take. However, the 2020
Rule provided that ``[n]otification of objection and request for a
hearing from the neighboring jurisdiction shall: be in writing;
identify the receiving waters it determined will be affected by the
discharge; and identify the specific water quality requirements it
determines will be violated by the certified project. 40 CFR
121.12(c)(2) (2020); 85 FR 42274.
    EPA proposed to revise the specific regulatory requirements for
what a neighboring jurisdiction is required to include in an objection
notification and request for hearing sent pursuant to section 401(a)(2)
in proposed Sec.  121.14(b). Consistent with the statutory text of
section 401(a)(2), the Agency proposed to retain the requirement that
the objection be in writing. Additionally, EPA proposed that the
notification of objection and request for hearing from the notified
neighboring jurisdiction include ``[a] statement that the neighboring
jurisdiction objects to the issuance of the Federal license or permit''
(proposed Sec.  121.14(b)(1)), and ``[a] request for a public hearing
from the Federal agency on its objection'' (proposed Sec.
121.14(b)(3)). However, rather than requiring the notified neighboring
jurisdiction to identify the receiving waters affected by the discharge
and the specific water quality requirements violated as required in the
2020 Rule, EPA proposed in Sec.  121.14(b)(2) that the notification
include ``[a]n explanation of the reasons supporting the neighboring
jurisdiction's determination that the discharge will violate its water
quality requirements, including but not limited to, an identification
of those water quality requirements that will be violated.'' EPA
proposed in Sec.  121.14(a), that the notification of objection and
request for hearing from the notified neighboring jurisdiction be made
``within 60 days after receiving notice in accordance with Sec.
121.13(c),'' and otherwise that such notification be made to the
Regional Administrator, the

Federal agency, and the certifying authority.
    In Sec.  121.14, the Agency is finalizing the proposed contents of
a notification of objection and request for hearing from a notified
neighboring jurisdiction with modifications for purposes of adding
clarity and more closely conforming this regulatory text with section
401(a)(2). Consistent with revisions throughout Sec. Sec.  121.14 and
121.15 in the final rule, EPA revised references to ``the neighboring
jurisdiction'' in the proposed text of Sec.  121.14 to ``the notified
neighboring jurisdiction'' in the final rule to clarify that pursuant
to section 401(a)(2) only a neighboring jurisdiction notified by EPA
makes a ``will violate'' determination and may provide notification of
an objection and request a hearing. Likewise, consistent with revisions
throughout Subpart B of the final rule, EPA revised Sec.  121.14 of the
final rule to clarify that the ``discharge'' that the notified
neighboring jurisdiction considered in its ``will violate''
determination is ``discharge from the project'' in accordance with
section 401(a)(2). Otherwise, EPA is maintaining the requirements that
the notification of objection and request for hearing be in writing and
include (1) a statement that the notified neighboring jurisdiction
objects to the issuance of the Federal license or permit, (2) an
explanation of the reasons supporting the notified neighboring
jurisdiction's determination that the discharge from the project will
violate its water quality requirements, including but not limited to,
an identification of those water quality requirements that will be
violated, and (3) a request for public hearing from the Federal agency
on the notified neighboring jurisdiction's objection.
    EPA received comments regarding the contents of a notification of
objection and request for hearing from a notified neighboring
jurisdiction. Some commenters stated that EPA should eliminate any
content requirements that go beyond the express language in section
401(a)(2), including an explanation of the reasons supporting the
determination that the discharge will violate water quality
requirements. More specifically, these commenters objected to the
requirement that the neighboring jurisdiction identify the water
quality requirements that will be violated on the basis that this
requirement is too burdensome on the notified neighboring jurisdiction.
Other commenters concurred that the objection should include
identifiable and justifiable reasons supporting the determination that
the discharge will violate water quality requirements. In addition,
some commenters stated that the neighboring jurisdiction should be
required to include a citation to the water quality requirements that
it believes will be violated.
    EPA does not find that Sec.  121.14(b) is too burdensome on the
notified neighboring jurisdiction, and otherwise finds it reasonable
that the notified neighboring jurisdiction's notification of an
objection and request for hearing include an explanation of the reasons
supporting the ``will violate'' determination. Section 401(a)(2) of the
CWA states that a notified neighboring jurisdiction may make an
objection and request a hearing ``[i]f . . . [the neighboring
jurisdiction] determines that such discharge will affect the quality of
its waters so as to violate any water quality requirements. . . .'' 33
U.S.C. 1341(a)(2) (emphasis added). To accomplish this, the neighboring
jurisdiction necessarily must consider its water quality requirements
and complete an analysis or evaluation to determine that a discharge
from the project will violate such water quality requirements. All EPA
is requiring in Sec.  121.14(b)(2) of the final rule is that the
neighboring jurisdiction provide an explanation of that analysis or
evaluation in its notification of objection and request for hearing,
including the identification of the water quality requirements that
will be violated. This will inform the Federal licensing or permitting
agency, EPA, and the project proponent of the reasoning for the
objection; allow the Federal agency and EPA to prepare for a hearing on
the objection; and may assist in determining whether there is a way to
resolve the objection before the public hearing. EPA finds this
requirement is reasonable to inform the neighboring jurisdictions
process and does not find it imposes an unreasonable burden on the
notified neighboring jurisdiction.
    Some commenters recommended that EPA require the neighboring
jurisdiction to identify a Federal license or permit condition(s) that
it thinks would resolve the objection in its notification of objection
and request for hearing. Conversely, one commenter stated that EPA
should not require the neighboring jurisdiction to provide conditions
that would resolve the objection. EPA is not requiring the notified
neighboring jurisdiction to include conditions with its objection
notification and request for hearing; however, EPA recommends that the
neighboring jurisdiction provide Federal license or permit conditions
that will resolve the objection, if this is possible. Identifying
conditions to resolve an objection, where possible, may help inform the
hearing process, and could also help resolve an objection in advance of
a hearing. In circumstances where the notified neighboring jurisdiction
does not find any conditions would resolve the objection, EPA notes
that the neighboring jurisdiction could simply state this in its
objection notification and hearing request.
    A few commenters asserted that the project proponent, as opposed to
the neighboring jurisdiction, has the burden to show that a Federal
license or permit should be issued. EPA observes that section 401(a)(2)
only provides the notified neighboring jurisdiction, the Federal
licensing or permitting agency, and EPA with explicit roles and duties
in the neighboring jurisdictions process. CWA section 401(a)(2)
requires the neighboring jurisdiction to determine whether the
discharge will violate its water quality requirements after EPA makes a
``may affect'' determination, and if so, object to the issuance of the
Federal license or permit and request a public hearing. After that, if
the neighboring jurisdiction does not withdraw its objection, the
Federal licensing or permitting agency must hold a public hearing and
determine whether any conditions are necessary to ensure that the
neighboring jurisdiction's water quality requirements are met. See 33
U.S.C. 1341(a)(2) (``Such Agency . . . shall condition such license or
permit in such manner as may be necessary to insure compliance with
applicable water quality requirements.''). Section 401(a)(2) does not
provide an explicit role for the project proponent in the neighboring
jurisdictions process, although the project proponent may provide input
at the public hearing. Accordingly, this final rule cannot require a
project proponent to demonstrate that a Federal license or permit
should be issued through the neighboring jurisdictions process.
    Some commenters asserted that the neighboring jurisdiction should
be required to identify the ``potentially affected'' receiving water in
an objection notification and request for hearing. This request appears
similar to language in the 2020 Rule that required a notified
neighboring jurisdiction to ``identify the receiving waters it
determined will be affected by the discharge.'' 40 CFR 121.12(c)(2)
(2020). One of these commenters stated that failure to identify the
receiving water makes it impossible to determine the validity of the
concerns raised to resolve the neighboring jurisdiction's concerns and
allows the neighboring jurisdiction to

raise arbitrary concerns to slow down the Federal licensing or
permitting process.
    EPA declines to require the notified neighboring jurisdiction to
specifically identify affected receiving waters in its notification of
objection and request for hearing. However, as EPA noted in its
proposal, the Agency anticipates that this information is likely to be
included in a notified neighboring jurisdiction's explanation of the
reasons supporting its ``will violate'' determination, and EPA
encourages neighboring jurisdictions to include this information where
possible, as it may assist the Federal agency in evaluating the
objection. As the notified neighboring jurisdiction has a limited time
period of 60-days to make its ``will violate'' determination and issue
any notification of an objection and request for hearing, imposing a
requirement that this notification identify all waters where discharge
will violate water quality requirements may not be feasible in all
circumstances. Accordingly, EPA is not including this requirement.
    In addition to the requirements regarding the content of a
notification of objection and request for hearing, EPA is also
finalizing the procedural requirements in Sec.  121.14(a) with some
modifications for purposes of added clarity and consistency with
section 401(a)(2). Consistent with the statutory language in section
401(a)(2), EPA is retaining the requirement that the notified
neighboring jurisdiction provide notification of its objection and
request for hearing within 60 days of a ``may affect'' notice from EPA
but is updating the internal citation to reflect that this notification
is provided by the Regional Administrator ``pursuant to Sec.
121.13(b)'' of the final rule. Additionally, as mentioned above, EPA is
removing the requirement in the proposed regulatory text that a
notified neighboring jurisdiction provide notification to the
certifying authority in order to more closely reflect the statutory
language in section 401(a)(2), which does not require notification to
the certifying authority.
    EPA received comments regarding its proposal to require the
notified neighboring jurisdiction to send the ``will affect''
notification to the certifying authority, as well as to the Federal
licensing or permitting agency and Regional Administrator. Some
commenters supported this proposed approach. Conversely, another
commenter stated that the neighboring jurisdiction should not be
required to send the notification to the certifying authority because
there is no statutory basis for this requirement and CWA section
401(a)(2) provides no role for the certifying authority. As noted, in
the final rule, EPA has eliminated the requirement that the notified
neighboring jurisdiction send the notification to the certifying
authority to conform the regulatory text more closely with the
statutory language in section 401(a)(2), which does not require
notification to the certifying authority. EPA agrees that, unlike the
Regional Administrator and the Federal agency, the certifying authority
does not have a specific role under CWA section 401(a)(2). In fact, the
neighboring jurisdictions process occurs after the certifying authority
has acted on a request for certification. However, like the project
proponent, the certifying authority may participate in the neighboring
jurisdictions process by providing comments during the public hearing.
EPA encourages the Federal agency to involve the certifying authority
in conversations that occur prior to the public hearing, if it believes
that the certifying authority may have information that could inform
discussions with the notified neighboring jurisdiction.
iii. Withdrawal of Objection Prior to Hearing
    CWA section 401(a)(2) states that if a notified neighboring
jurisdiction notifies EPA and the Federal agency ``in writing of its
objection to the issuance of [the] license or permit and requests a
public hearing on such objection, the licensing or permitting agency
shall hold such a hearing.'' 33 U.S.C. 1341(a)(2). Therefore, for a
hearing to be required under section 401(a)(2), there must be (1) a
written objection from the notified neighboring jurisdiction and (2) a
request for a public hearing on the objection. Id. EPA proposed that if
one of these elements were not present, then the Federal agency would
not be required to hold a hearing and requested comment on whether to
develop regulatory text for a process where the neighboring
jurisdiction could withdraw its objection and eliminate the requirement
to hold a public hearing. 87 FR 35370.
    EPA received numerous comments recommending that it include
language allowing notified neighboring jurisdictions to withdraw their
objections before the hearing, thus, eliminating the need to hold a
public hearing. Some of these commenters stated that allowing the
neighboring jurisdiction to withdraw its objection is in line with
section 401's cooperative federalism scheme, while other commenters
stated that allowing for withdrawal provides for efficiency in the
Federal licensing or permitting process. EPA agrees that including a
provision addressing withdrawal of an objection improves the efficiency
of the neighboring jurisdictions process, as it recognizes the
possibility that neighboring jurisdictions may be able to resolve
objections before the hearing stage of the neighboring jurisdictions
process, conserving resources that would otherwise be expended to
conduct and participate in such a hearing in these circumstances. EPA
observes that nothing in the statute prohibits withdrawal of an
objection, which would remove the prerequisite condition for a Federal
agency to hold a public hearing. EPA also finds that including a
provision addressing the circumstances of withdrawal provides added
clarity by establishing a uniform procedure for executing withdrawal of
an objection. Accordingly, EPA has included a provision in Sec.
121.14(c) that allows a notified neighboring jurisdiction to withdraw
its objection prior to the public hearing. The final rule states that
if the notified neighboring jurisdiction withdraws its objection, it
shall notify the Regional Administrator and Federal agency in writing
of the withdrawal. See 40 CFR 121.14(c). If the neighboring
jurisdiction withdraws the objection, the Federal agency will not need
to proceed with a public hearing and can move forward with issuing the
Federal license or permit. EPA has also added language to this effect
at Sec.  121.15(a). It should be noted that the Federal agency might
have to comply with its own public notice procedures if it agreed to
add certain Federal license or permit conditions in return for
withdrawal of the objection.
h. Objection and Public Hearing Process Under Section 401(a)(2)
    CWA section 401(a)(2) requires the Federal licensing or permitting
agency to hold a public hearing on the objection of a notified
neighboring jurisdiction if such neighboring jurisdiction provides
notification of its objection and request for hearing in the required
60-day timeframe. 33 U.S.C. 1341(a)(2). As explained above, EPA is
adding language to Sec.  121.15(a) which clarifies that if the
neighboring jurisdiction withdraws its objection, then the Federal
agency does not have to proceed with a public hearing. Otherwise,
consistent with section 401(a)(2), the final rule provides that the
Federal agency must hold the public hearing upon a request for hearing
from a notified neighboring jurisdiction in accordance with the
requirements for the notification and request for hearing

in Sec.  121.14(b) of the final rule. 40 CFR 121.15(a).
    Section 401(a)(2) does not provide for a specific process for the
public hearing conducted by the Federal licensing or permitting agency.
It merely states that the hearing is public and shall be held by the
Federal licensing or permitting agency. 33 U.S.C. 1341(a)(2). The
statute further provides that the EPA Administrator must submit an
evaluation and recommendations regarding the objection at the hearing.
Id. Further, section 401(a)(2) states that additional evidence may be
presented at the hearing. After the public hearing, the Federal
licensing or permitting agency must consider the recommendations of the
neighboring jurisdiction and EPA Administrator as well as any
additional evidence presented at the hearing and, based on that
information, must condition the Federal license or permit as may be
necessary to ensure compliance with applicable water quality
requirements. If additional conditions cannot ensure compliance with
applicable water quality requirements, the Federal agency shall not
issue the license or permit. Id. Notably, the statute is silent as to
whether public notice of the public hearing is required; the nature of,
and specific procedures for, the public hearing; the need for a court
reporter or transcript; whether the Federal licensing or permitting
agency's decision is appealable; and other such matters.
    The Agency proposed to add transparency to the neighboring
jurisdictions process by requiring the Federal agency to provide for a
minimum of a 30-day public notice of the hearing, but declined to
define the type of public hearing that the Federal agency must hold.
Commenters provided various recommendations regarding the Federal
agency's public hearing, including those addressing the notice of
hearing, hearing procedures, and the location of a hearing. One
commenter, who supported EPA's approach to the public hearing process,
suggested that EPA should develop hearing procedures that can act as a
default for Federal agencies that do not have public hearing
procedures. On the other hand, another commenter stated that EPA should
not impose a minimum notice requirement for the public hearing.
    EPA is finalizing the proposed requirement that the Federal agency
must provide notice at least 30-days prior to the public hearing, but
is adding text to clarify that only a notified neighboring jurisdiction
can make a request for hearing, and specify that the Federal agency
must provide such public notice to interested parties. Consistent with
revisions to Sec.  121.14 of the final rule, discussed above, EPA is
adding language to Sec.  121.15 of the final rule to make clear that
pursuant to section 401(a)(2) only a notified neighboring jurisdiction
may provide notification of an objection and request a hearing.
Additionally, EPA is adding language in Sec.  121.15(b) that requires
the Federal agency to provide public notice ``to interested parties,
including but not limited to the notified neighboring jurisdiction, the
certifying authority, the project proponent, and the Regional
Administrator,'' at least 30 days prior to the public hearing. 40 CFR
121.15(b). This language was included to ensure that all interested
parties will have notice of the public hearing such that they can
prepare for and provide their testimony or comments at the public
hearing.
    The Agency is otherwise maintaining the approach of not defining
the type of public hearing that the Federal agency must hold, since
many Federal agencies have their own regulations regarding public
hearings on licenses and permits, and the Federal agencies are better
suited to determine the appropriate process for holding their own
public hearings. However, EPA recommends that the Federal agency accept
comments and additional evidence on the objection at the public
hearing. EPA also defers to the Federal agency to decide whether the
public hearing would be conducted in-person and/or remotely through
telephone, online, or other virtual platforms depending on the
circumstances and the Federal agency's public hearing regulations. In
determining the method for conducting the hearing and hearing location,
EPA encourages the Federal agency to take into consideration the
purpose of CWA section 401(a)(2) to establish a mechanism allowing
notified neighboring jurisdictions an opportunity to object to the
issuance of a Federal license or permit in circumstances where they
find a discharge from the licensed or permitted project will violate
their water quality requirements. Thus, interested parties, which
include representatives of the neighboring jurisdiction, should be able
to easily attend the public hearing.
    As previously mentioned, section 401(a)(2), also establishes a role
for EPA at the public hearing, providing that the Agency ``shall . . .
submit [its] evaluation and recommendations with respect to any such
objection to the licensing or permitting agency'' at the public
hearing. 33 U.S.C. 1341(a)(2). Consistently, EPA is finalizing Sec.
121.15(c) as proposed which mirrors the statute by stating that ``[a]t
the hearing, the Regional Administrator shall submit to the Federal
agency its evaluation and recommendation(s) concerning the objection.''
40 CFR 121.15(c). As stated in its proposal, EPA interprets its role in
providing the evaluation and recommendations on the notified
neighboring jurisdiction's objection as that of an objective and
neutral evaluator providing recommendations to the Federal licensing or
permitting agency based upon its expert, technical analysis of the
record before it. 87 FR 35369. EPA intends to conduct its evaluation
and make any recommendations based on the information before it, giving
equal consideration to the information and views--if provided--by
interested parties, including the objecting neighboring jurisdiction,
project proponent, and certifying authority. Id. Consistent with this
approach, as a general matter EPA does not intend to invite public
comment and input from, or engage with, interested parties when
developing its evaluation and recommendations on the objection.
However, EPA may, where it deems it appropriate, seek additional
information regarding a notified neighboring jurisdiction's objection
to be sure EPA is able to develop an informed and well-supported
evaluation and accompanying recommendations. This approach to
developing its evaluation and recommendations is consistent with the
hearing process established by section 401(a)(2), which recognizes a
role for the notified neighboring jurisdiction independent of the
Agency and allows for presentation of evidence at the hearing by any
interested stakeholder, including the notified neighboring
jurisdiction. If a stakeholder agrees or disagrees with EPA's
evaluation and recommendations presented at the hearing, such
stakeholder may have an opportunity to provide additional information
and comment directly to the Federal agency for its consideration.
    After conducting the public hearing, pursuant to CWA section
401(a)(2), the Federal licensing or permitting agency must consider the
recommendations of the notified neighboring jurisdiction and EPA, as
well as any additional evidence presented at the hearing, as it
determines whether additional permit or license conditions are
necessary to ensure compliance with applicable water quality
requirements. 33 U.S.C. 1341(a)(2). The Act does not accord special
status to EPA's evaluation and recommendations compared with the
notified neighboring jurisdiction's input

or other evidence received at the hearing; rather, the section appears
to contemplate that the Federal agency will consider all of the
information presented in making its decision.
    If the Federal licensing or permitting agency determines that
additional conditions may be necessary to ensure compliance with the
neighboring jurisdiction's water quality requirements, the Federal
licensing or permitting agency must include those conditions in the
Federal license or permit pursuant to section 401(a)(2). 33 U.S.C.
1341(a)(2). In addition, if the Federal licensing or permitting agency
cannot include conditions that will ensure compliance with applicable
water quality requirements, the Federal agency cannot issue the Federal
license or permit. Id. EPA is finalizing regulatory text that
specifically incorporates these statutory requirements. 40 CFR
121.15(d) and (e). If the Federal agency decides that conditions are
necessary to ensure that a project will comply with a neighboring
jurisdiction's water quality requirements, EPA notes that the Federal
agency may also have to comply with its own public notice and comment
requirements before finalizing the Federal license or permit.
    A few commenters provided input on how the Federal agency should
engage with stakeholders after the conclusion of the public hearing.
EPA declines to prescribe how a Federal agency must engage with
stakeholders after the public hearing. However, EPA encourages the
Federal agency to consult with the objecting neighboring jurisdiction
and certifying authority, as well as all necessary parties, before
making a decision under CWA section 401(a)(2).
    EPA did not propose to establish a deadline by which the Federal
licensing or permitting agency must make a determination after the
public hearing on the notified neighboring jurisdiction's objection but
requested comment on whether such a deadline should be established. A
few commenters recommended that EPA create a timeline of the
neighboring jurisdictions process and specifically include timelines
for establishing a public hearing, making determinations, and finishing
the post-public hearing process. Several commenters recommended that
EPA establish a deadline for the Federal agency to make a decision
after the public hearing on the objection. At least one commenter
stated that establishing a deadline would be inappropriate and
inconsistent with CWA section 401(a)(2), arguing that Congress
consciously chose not to impose a deadline on the Federal agency and
did not include language that would allow EPA to establish a deadline.
In the final rule, the Agency is declining to add specific timelines
for the neighboring jurisdictions process beyond those already
established in the statute. There are many factors, including the
complexity of the facts at issue in an objection and a Federal agency's
own regulations, that impact the duration of time necessary for a
Federal agency to complete its determination following a hearing on a
neighboring jurisdiction's objection. However, EPA encourages Federal
agencies to communicate with the notified neighboring jurisdiction and
other interested stakeholders regarding its expectations or
considerations in determining the time to make a decision on the
Federal license or permit after a public hearing.
3. Implementation
    As discussed in detail above, once a Federal agency receives a
Federal license or permit application and a certification or waiver, it
may proceed with the neighboring jurisdictions process (i.e., notify
EPA as required under this final rule). The Agency wishes to reiterate
that all certifications or waivers will trigger the neighboring
jurisdictions process, even those for minor or remote projects. The
requirement to notify EPA under section 401(a)(2) depends on the
Federal agency's receipt of a Federal license or permit application and
certification or waiver; it does not depend on the location of the
project or the nature of the Federal license or permit. The Agency is
aware that there are instances where a Federal license or permit
application does not accompany a certification or waiver (e.g.,
certification on general permits or Corps civil works projects).
Certifications or waivers on those projects are not exempt from the
neighboring jurisdictions process. Rather, EPA expects Federal agencies
to determine how best to comply with all section 401 requirements. For
example, on a Corps civil works project, compliance may involve the
Corps sending a project study in conjunction with a certification or a
waiver of certification. Ultimately, EPA is responsible for determining
whether a discharge from a project may affect the water quality of a
neighboring jurisdiction. As stated in Sec.  121.13(d) of the final
rule, and discussed above, a Federal agency cannot issue a license or
permit pending the conclusion of the neighboring jurisdictions process,
set forth in Sec. Sec.  121.13, 121.14, and 121.15 of the final rule.
    Several commenters discussed the need for collaboration between EPA
and other stakeholders prior to the initiation of the neighboring
jurisdictions process. EPA agrees that early coordination can generally
be beneficial to all parties, though this may not always be necessary
depending on project complexity and resources. The Agency has
encouraged early coordination and communication throughout the final
rule, including pre-filing meeting requests and request for
certification. Additionally, EPA observes that section 401 requires
certifying authorities to develop public notice procedures for requests
for certification. See 33 U.S.C. 1341(a)(1). A certifying authority's
public notice procedures for certification could provide an additional
opportunity for neighboring jurisdictions and other stakeholders to
participate in the process. Generally, early engagement can provide
stakeholders the opportunity to communicate needs and requirements,
potentially streamlining processes and helping ensure any concerns are
noted and addressed. EPA disagrees with one commenter's assertion that
EPA has a responsibility to proactively work with project proponents
and other Federal agencies as early as possible in the Federal
licensing or permitting process. As discussed above, EPA has a
specific, statutorily defined role in the neighboring jurisdictions
process, which does not require the Agency to proactively coordinate
with other Federal agencies or project proponents or take any action
pursuant to section 401(a)(2) prior to receiving notice from the
Federal agency of its receipt of the application and either a
certification or waiver.

L. Treatment in a Similar Manner as a State Under Section 401

1. What is the Agency finalizing?
    The Agency is finalizing the proposed provisions enabling Tribes to
obtain TAS solely for section 401, as well as provisions on how Tribes
can obtain TAS for the limited purpose of participating as a
neighboring jurisdiction under section 401(a)(2).\107\ Section 121.11
of the final rule includes the criteria an applicant Tribe would be

required to meet to be treated in a similar manner as states, the
information the Tribe would be required to provide in its application
to EPA, and the procedure EPA would use to review the Tribal
application.
---------------------------------------------------------------------------

    \107\ Prior to this final rule, in the absence of TAS provisions
tailored specifically for section 401, Tribes had received TAS for
section 401 when eligible for TAS to administer the section 303(c)
program for water quality standards. 40 CFR 131.4(c) (``Where EPA
determines that a Tribe is eligible to the same extent as a State
for purposes of water quality standards, the Tribe likewise is
eligible to the same extent as a State for purposes of
certifications conducted under Clean Water Act section 401.'').
---------------------------------------------------------------------------

    Consistent with the requirements provided in CWA section 518, the
final rule requires that four criteria must be met for Tribes to obtain
TAS for section 401, including section 401(a)(2). First, the Tribe must
be federally recognized by the U.S. Department of the Interior and meet
the definitions finalized in Sec.  121.1(d) and (e). Second, the Tribe
must have a governing body that carries out ``substantial governmental
duties and powers'' over a defined area. Third, the Tribe must have
appropriate authority to regulate and manage water resources within the
borders of the Tribe's reservation. Lastly, the Tribe must be
reasonably expected, in the Regional Administrator's judgment, to be
capable of administering a section 401 water quality certification
program.
    The Tribe may satisfy the first criterion by stating that it is
included on the list of federally recognized Tribes that is published
periodically by the U.S. Department of the Interior. Alternatively, the
Tribe may submit other appropriate documentation (e.g., if the Tribe is
not yet included on the U.S. Department of the Interior list but is
federally recognized).
    To meet the second criterion, the Tribe would show that it conducts
``substantial governmental duties and powers,'' which the Agency views
as performing governmental functions to promote the health, safety, and
welfare of the affected population within a defined geographical area.
See 54 FR 39101; 81 FR 65906. This requires a descriptive statement
that (1) describes the form of Tribal government, (2) describes the
types of essential governmental functions currently performed by the
Tribal governing body, including but not limited to, the exercise of
the power of eminent domain, taxation, and police power, and (3)
identifies the sources of authorities to carry out these functions.
    To meet the third criterion that the Tribe has the authority to
manage the water resources within the borders of the Tribe's
reservation, the Tribe would submit a descriptive statement comprised
of two components: (1) a map or legal description of the area over
which the Tribe has authority to regulate surface water quality, and
(2) a statement signed by the Tribe's legal counsel or equivalent
explaining the legal basis for the Tribe's regulatory authority. EPA
notes that section 518 of the CWA includes a delegation of authority
from Congress to eligible Indian Tribes to regulate the quality of
waters of their reservations under the CWA. See 81 FR 30183 (May 16,
2016). Absent rare circumstances that may affect a Tribe's ability to
effectuate the delegation of authority, Tribes may rely on the
congressional delegation of authority included in section 518 of the
statute as the source of authority to administer a section 401 water
quality certification program. This is identical to the way Tribes have
been demonstrating authority for eligibility to administer 401
certifications under existing TAS regulations, the only change being
that under the final regulations, Tribes will be able to seek TAS
eligibility for section 401 only. Similarly, as with Tribes already
administering section 401 under prior TAS approvals, the authority to
issue certifications exercised by a Tribe authorized under the new
regulation will, by virtue of the congressional delegation, apply
throughout the reservation area covered by the TAS approval,
irrespective of land ownership or the Tribal membership status of the
Federal license or permit applicant. See, e.g., 81 FR 30190. Therefore,
grants or waivers of certification by an authorized Tribe, as well as
any conditions included in a certification or denials of certification
by an authorized Tribe, would apply to any application for a Federal
license or permit throughout the relevant reservation without any
separate need to demonstrate inherent Tribal jurisdiction.
    A Tribe may satisfy the fourth criterion regarding its capability
by either (1) providing a description of the Tribe's technical and
management skills to administer a water quality certification program
or (2) providing a plan that proposes how the Tribe will acquire such
skills. Additionally, when considering Tribal capability, EPA would
also consider whether the Tribe can demonstrate the existence of
institutions that exercise executive, legislative, and judicial
functions, and whether the Tribe has a history of successful managerial
performance of public health or environmental programs.
    Section 121.11 of the final rule is intended to ensure that Tribes
treated in a similar manner as states for the purposes of the section
401 water quality certification program are qualified, consistent with
CWA requirements, to implement a water quality certification program.
The procedures are meant to provide more opportunities for Tribes to
engage fully in the program and are not intended to act as a barrier to
Tribal administration of the section 401 program. The procedures are
modeled after the TAS regulatory provisions for the CWA section 303(c)
water quality standards (WQS) program, located at 40 CFR 131.8, and the
TAS provisions for the CWA section 303(d) impaired water listing and
total maximum daily load program, located at 40 CFR 130.16. The WQS TAS
regulations, developed in the early 1990s, have acted as a model for
other programs including the section 303(d) regulations. See 81 FR
65905. Additionally, EPA's TAS regulations allow Tribes to
simultaneously obtain TAS for sections 303(c) and 401. As a result, the
part 131 and part 130 TAS regulations provide an appropriate model for
this final rule.
    These provisions provide more opportunities and clarity for Tribes
interested in participating in the section 401 certification process.
Although the CWA clearly allows Tribes to obtain TAS for section 401,
current regulations and practice treat TAS for section 401 as an
adjunct to TAS for the CWA section 303(c) program for water quality
standards. To date, 83 federally recognized Tribes (out of 574) have
received TAS for section 401 concurrently with obtaining TAS for
section 303(c).\108\ The TAS provisions in this final rule do not
eliminate or modify the section 401 procedures already found in part
131. Instead, they provide an alternate path for Tribes wishing to
obtain TAS status only for section 401 and not also for section 303(c).
---------------------------------------------------------------------------

    \108\ See https://www.epa.gov/tribal/tribes-approved-treatment-state-tas. To date, one Tribe with TAS for section 303(c) (Havasupai
Tribe in Arizona) has declined TAS for section 401.
---------------------------------------------------------------------------

    Upon receiving TAS for section 401, Tribes have two roles. First,
Tribes that receive section 401 TAS are responsible for acting as a
certifying authority for projects that may result in a discharge into
waters of the United States on their Indian reservations. As certifying
authorities, Tribes with TAS may grant, grant with conditions, deny, or
waive certification based on whether a federally licensed or permitted
project will comply with sections 301, 302, 303, 306, and 307 of the
CWA and any other appropriate requirements of Tribal law. See 33 U.S.C.
1341(a)(1) and (d). Second, Tribes that receive section 401 TAS are
accorded the status of ``neighboring jurisdiction'' for purposes of
section 401(a)(2). If EPA makes a ``may affect'' finding during its
determination with respect to that neighboring jurisdiction, the
notified neighboring jurisdiction, including Tribes with TAS for
section 401 and

Tribes with TAS for section 401(a)(2), may object to the issuance of
the Federal license or permit if they determine that a discharge from
the project ``will violate'' any of its water quality requirements and
request a public hearing from the Federal licensing or permitting
agency. 33 U.S.C. 1341(a)(2); 40 CFR part 121, subpart B.
2. Summary of Final Rule Rationale and Public Comment
    The final rule's inclusion of TAS provisions solely for section 401
and 401(a)(2) provides alternate paths for Tribes to engage in the
section 401 process without also needing to apply for section 303(c),
promoting cooperative federalism and Tribal rights. Many of the
commenters addressing the proposal to add provisions enabling Tribes to
obtain TAS solely for section 401 and for section 401(a)(2) expressed
support for finalizing the proposed TAS provisions. These commenters
supported the inclusion of section 401 TAS provisions for various
reasons including interest in supporting Tribal agency, increasing
Tribal participation in Federal licensing and permitting processes,
providing Tribes a tool for protecting water quality and treaty rights,
recognizing the vast knowledge of Tribal communities and their
sovereignty, respecting the role waters play in Tribal cultures, and
affording Tribes more options regarding administration of CWA programs.
    EPA appreciates these commenters' support. Promulgating a
regulation expressly providing a process and requirements for section
401 TAS in the absence of section 303(c) TAS is consistent with section
518 and would provide clarity and increased opportunities for
interested Tribes to participate in section 401. CWA section 518
authorizes the Agency to treat eligible Tribes with reservations in a
similar manner to states ``for purposes of subchapter II of this
chapter and sections . . . 1341, . . . of this title to the degree
necessary to carry out the objectives of this section.'' See 33 U.S.C.
1377(e). Section 518(e) establishes eligibility criteria for TAS.\109\
---------------------------------------------------------------------------

    \109\ Section 518(e) authorizes EPA to treat eligible Tribes in
a similar manner as a state if (1) the Indian tribe has a governing
body carrying out substantial governmental duties and powers; (2)
the functions to be exercised by the Indian tribe pertain to the
management and protection of water resources which are held by an
Indian tribe, held by the United States in trust for Indians, held
by a member of an Indian tribe if such property interest is subject
to a trust restriction on alienation, or otherwise within the
borders of an Indian reservation; and (3) the Indian tribe is
reasonably expected to be capable, in the Administrator's judgment,
of carrying out the functions to be exercised in a manner consistent
with the terms and purposes of this chapter and of all applicable
regulations. See 33 U.S.C. 1377(e).
---------------------------------------------------------------------------

    Additionally, developing regulations on section 401 TAS as a
standalone process for Tribes seeking this authority who are not
concurrently applying for section 303(c) TAS may encourage more Tribes
to seek TAS for section 401. Decoupling section 401 TAS from section
303(c) recognizes that section 401 and section 303(c) administration
are related, but distinct functions and is responsive to Tribal
stakeholders who have expressed an interest in participating in the
section 401 certification process.
    However, EPA recognizes that some Tribes may not desire or have the
resources to apply for the section 401 certification program. Pre-
proposal input suggested that Tribes may wish to be notified about and
have the ability to object to and provide information regarding,
potential Federal licenses and permits that may impact their waters.
Several Tribal stakeholders have expressed concern that Tribes without
TAS are not able to participate in the section 401(a)(2) neighboring
jurisdictions process. In response to pre-proposal input, EPA proposed
a separate TAS provision for the section 401(a)(2) neighboring
jurisdictions process. Many commenters from the public comment period
indicated support for the proposed TAS provisions, including
specifically for section 401(a)(2). Commenters asserted that waters on
reservations are susceptible to degradation from upstream discharges
and that the TAS provisions for section 401(a)(2) provided a mechanism
for objecting and requesting a hearing on the issuance of Federal
licenses and permits for those discharges while limiting administrative
burdens associated with obtaining TAS for section 401(a)(1). As a
result of this input, EPA is finalizing as proposed to provide Tribes
with an opportunity to seek TAS authorization for the limited purpose
of being a neighboring jurisdiction pursuant to section 401(a)(2). The
final rule promotes Tribal engagement by providing an opportunity for
Tribes to protect their water quality through participating in the
section 401 certification process without needing to assume all of the
authorities and responsibilities of section 401. Tribes applying for
TAS solely for section 401(a)(2) will still need to meet the same four
criteria discussed above. However, since participating as a neighboring
jurisdiction under section 401(a)(2) does not involve any exercise of
regulatory authority and involves carrying out fewer functions than
acting as a certifying authority, EPA anticipates that demonstrations
that the applicant Tribe satisfies the criteria will be more
streamlined than the demonstrations in applications for TAS for
purposes of administering the entirety of section 401. See discussion
infra.
    Some commenters expressed concern about the addition of TAS
provisions for section 401 and section 401(a)(2). Some of these
commenters asserted that section 401 is limited to ensuring compliance
with EPA-approved water quality standards, and they questioned how
Tribes without EPA-approved water quality standards under section
303(c) of the Clean Water Act would implement section 401. EPA
disagrees that section 401 is limited to ensuring compliance with Clean
Water Act section 303(c) water quality standards. The term ``water
quality requirements'' is used throughout section 401, and EPA has
defined ``water quality requirements'' to include any limitation,
standard, or other requirement under the provisions enumerated in
section 401(a)(1), any Federal and state or Tribal laws or regulations
implementing the enumerated provisions, and any other water quality-
related requirement of state or Tribal law regardless of whether they
apply to point or nonpoint source discharges. 40 CFR 121.1(j). Under
this approach, authorized Tribes can base their section 401
certification decisions on compliance with water quality requirements
other than Tribal water quality standards approved under section
303(c). Examples include Tribal ordinances or other Tribal laws related