Environmental Program GrantsState, Interstate, and Local Government Agencies

SUMMARY: This regulation proposes to revise and update requirements in

several Environmental Protection Agency regulations, particularly

subpart A of part 35, governing grants to State, interstate and local

government agencies from EPA under several environmental programs. The

regulation advances ongoing efforts to build more effective State-EPA

partnerships and to improve environmental conditions by providing

States with increased flexibility to direct resources where they are

needed most to address environmental and public health needs. This

regulation: updates, clarifies, and streamlines requirements governing

environmental program grants; establishes requirements for the new

Performance Partnership Grant (PPG) program; and establishes

requirements for grant programs that began after the original rule was

published. (A regulation governing environmental program grants to

Indian Tribes and Tribal Consortia is published elsewhere in this issue

of the Federal Register.)

DATES: Please submit comments on this proposed rule by September 7,

1999.

ADDRESSES: Written comments should be submitted to: Performance

Partnership Grants--State Comment Clerk (Docket #WD-98-9); Water Docket

(MC-4104); U.S. Environmental Protection Agency; 401 M Street, SW;

Washington, DC 20460. Comments may be hand-delivered to the Water

Docket; U.S. Environmental Protection Agency; 401 M Street, SW; East

Tower Basement; Washington, DC 20460. Comments may be submitted

electronically to [email protected].

FOR FURTHER INFORMATION CONTACT: W. Scott McMoran, Grants Operations

Branch B (3903R), United States Environmental Protection Agency, 401 M

Street, SW, Washington, DC 20460, (202) 564-5376.

SUPPLEMENTARY INFORMATION:

I. Regulated Entities

Entities eligible to receive the environmental grants listed in 40

CFR 35.100 are regulated by this rule. Regulated categories and

entities include:

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Category Regulated entities

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Government.................................................................... State Governments/Agencies.

Local Governments/Agencies.

Interstate Agencies.

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This table is not intended to be exhaustive, but rather provides a

guide for readers regarding entities eligible under EPA's authorizing

and appropriations statutes that EPA is now aware could potentially be

regulated by this action. Other types of entities could also be

regulated. To determine whether your organization is regulated by this

action, you should carefully examine the applicability criteria in

Sec. 35.134 and the program-specific provision in Secs. 35.140 through

35.418 of the rule. If you have questions regarding the applicability

of this action to a particular entity, consult the person listed in the

FOR FURTHER INFORMATION CONTACT section.

II. Comments and Record

Please submit an original and three copies of your comments and

enclosures (including references). The Agency requests that commenters

follow the following format: Type or print comments in ink, and cite,

where possible, the paragraphs in this notice to which each comment

refers. Electronic comments must be submitted as a WP5.1 or WP6.1 file

or as an ASCII file avoiding the use of special characters. Comments

and data will also be accepted on disks in the formats above.

Electronic comments may be filed online at many Federal Depository

Libraries. Commenters who want EPA to acknowledge receipt of their

comments should include a self-addressed, stamped envelope. No

facsimiles (faxes) will be accepted.

Availability of Record: The record for this Notice, which includes

supporting documentation as well as printed, paper versions of

electronic comments, is available for inspection from 9 a.m. to 4 p.m.

(Eastern Time), Monday through Friday, excluding legal holidays, at the

Water Docket, U.S. EPA Headquarters, 401 M Street, SW; East Tower

Basement; Washington, DC 20460. For access to docket materials, please

call (202) 260-3027 to schedule an appointment.

III. Background

Since EPA was formed in 1970, State capacity and responsibility for

implementing environmental and public health protection programs has

grown steadily. Meanwhile, environmental problems and their solutions

have grown more complex. In light of these changes, State and EPA

leaders recognized that continued environmental progress could be best

achieved if EPA and States worked together more effectively--as

partners.

In 1995, they agreed to develop and implement the National

Environmental Performance Partnership System (NEPPS). NEPPS is designed

to: promote joint planning and priority setting by EPA and the States;

provide States with greater flexibility to direct resources where they

are needed most; foster use of integrated and innovative strategies for

solving water, air, and waste problems; achieve a better balance in the

use of environmental indicators and traditional activity measures for

managing programs; and improve public understanding of environmental

conditions and the strategies being used to address them.

The changes proposed in this rule are intended to promote State-EPA

collaboration; provide opportunities for innovation; and reduce

paperwork--while ensuring sound fiscal management and accountability

for environmental performance--in a manner consistent with NEPPS. For

example, EPA hopes to foster joint planning and priority-setting by

explicitly requiring that State priorities and needs be considered,

along with national and regional guidance, in negotiating grant work

plans. Under this rule, a State can choose to organize its grant work

plans in accordance with environmental goals and objectives or in other

new ways rather than using categories pre-defined by EPA. The length of

a grant budget period will be negotiable. These flexibilities are

available to all States, regardless of whether they are actively

participating in other aspects of NEPPS.

More than half of the States have elected to negotiate and enter

into

[[Page 40065]]

Performance Partnership Agreements (PPAs) with EPA as the primary

mechanism for implementing NEPPS. Although each PPA is different, PPAs

typically set out jointly developed goals, objectives, and priorities;

the strategies to be used in meeting them; the roles and

responsibilities of the State and EPA; and the measures to be used in

assessing progress. (In some cases, comparable negotiated agreements

are given a different name, such as Environmental Performance

Agreements.) A PPA is generally based on information about the

environmental and program conditions of the State as well as national

and regional priorities and concerns. A State may apply for and receive

any grant, including a PPG, without negotiating a PPA. However, a PPA

can provide the strategic underpinning for the work a State plans to

carry out with EPA financial assistance and the PPA can serve as a

grant work plan if it meets other grant-related statutory and

regulatory requirements.

Recognizing the limitations of traditional categorical grants to

allow full achievement of the NEPPS goals, EPA asked Congress for new

authority that would give States greater flexibility in the use of

federal grant funds. In the Omnibus Consolidated Rescissions and

Appropriations Act of 1996 (Pub. L. 104-134) and EPA's FY 1998

Appropriation Act (Pub. L. 105-65), Congress authorized the award of

Performance Partnership Grants (PPGs), in which State and interstate

agencies (and Tribes and Intertribal Consortia) can choose to combine

two or more environmental program grants.

Under a PPG, a recipient can achieve cost and administrative

savings by reductions in the amount of grant paperwork as well as

simplified accounting requirements that do not require the recipient to

account for expenditures in accordance with their original funding

sources. With PPGs, recipients can negotiate work plans with EPA that

direct federal funds where the recipients need them most to address

environmental and public health problems. Recipients can also try new

multi-media approaches and initiatives, such as children's health

protection programs, multi-media inspections, compliance assistance

programs, and ecosystem management, that were difficult to fund under

traditional categorical grants.

This rule is designed to accommodate all potential variations in

how EPA and individual States may work to build partnerships. The rule

is also designed to minimize duplicative effort by allowing for

multiple uses of information or processes wherever appropriate. A State

may choose to negotiate a PPA or comparable strategic agreement with

EPA. Where a State negotiates both a PPA and PPG, the processes and

documentation can be integrated and, if appropriate, identical. Also, a

State can receive a separate categorical grant for each environmental

program, a PPG covering all programs eligible for inclusion, or a

combination of separate categorical grants and PPGs covering only some

programs.

These regulations will be codified in 40 CFR part 35 as EPA's

Environmental Program Grant regulations. Subpart A applies to State,

interstate, and local agencies. EPA is proposing to add to the existing

subpart A provisions for the following programs: Performance

Partnership Grants, Lead-Based Paint Grant Program; State Indoor Radon

Grants; Toxic Substances Enforcement Grants; State Underground Storage

Tank Grants; Pollution Prevention Incentives Grants for States; Water

Quality Cooperative Agreements; and Wetlands Development Grant Program.

EPA is also publishing subpart B in this issue of the Federal Register,

which applies to Tribes and Intertribal Consortia.

These regulations supplement EPA's Grants and Cooperative

Agreements to State and Local Governments regulations (40 CFR part 31).

Part 31 applies to grants and subawards to State governments,

interstate agencies, and local governments, including a council of

governments (whether or not incorporated as a nonprofit under State

law), and any other regional or interstate government entity.

This rule proposes to delete 40 CFR 745.330, which authorizes EPA

to make grants to States and Indian Tribes under section 404(g) of the

Toxic Substances Control Act for lead-based paint programs. Provisions

governing those grants are included in this proposed subpart A and in

proposed subpart B of 40 CFR part 35.

IV. Requirements for Environmental Program Grants

Sections 35.100 through 35.118 of the proposed rule apply to all

environmental program grants covered by subpart A of part 35, including

PPGs. This rule contains changes to foster State-EPA partnerships,

improve accountability for environmental and program performance, and

streamline administrative requirements. Some of the proposed rule's key

features are discussed below.

State-EPA Partnerships

To foster joint planning and priority setting, the rule explicitly

requires consideration of State priorities along with national and

regional guidance in negotiating grants. However, the EPA Regional

Administrator must consult with the National Program Manager before

agreeing to a State work plan that differs substantially from national

guidance. A State is provided flexibility through the work plan

negotiation process, and in particular through its ability to organize

work plan components in whatever way fits best. States applying for

PPGs will have still greater flexibility as described in the PPG

discussion below. Where appropriate, the grant work plan will reflect

both EPA and State roles and responsibilities and there will be a

negotiated joint performance evaluation process.

Accountability

The rule has been updated to accommodate results-oriented

approaches to planning and managing environmental programs. Definitions

and other aspects of the rule dovetail with the new Government

Performance and Results Act (GPRA) and reflect efforts to establish

goals and objectives as well as environmental and program performance

measures at both the national and State levels. The rule recognizes the

need for a mix of outcome (results) and output (activity) measures for

management purposes. While the revised rule encourages States to

organize their work plans around goals and objectives, States may

continue to use existing structures if they wish.

Administrative Changes

Under the rule, States can negotiate budget periods of one or more

years with EPA. EPA recommends, however, that budget periods not exceed

five years because it is difficult to account for funds and maintain

records for longer periods.

The rule streamlines some requirements and eliminates other

requirements associated with changes made to grant work plan

commitments and budgets. These requirements replace those found in 40

CFR 31.30. Prior written approval from EPA is still required for

significant changes in a grantee's work plan commitments. Written, but

not prior, approval is required for changes requiring increases in

grant amounts and extensions of the budget period. EPA approval is no

longer required for other changes in the work plan or budget, changes

in key persons or decisions to carry out portions of the work through

subgrants or contracts unless the Regional Administrator determines, on

a case-by-

[[Page 40066]]

case basis, that circumstances warrant imposing additional approval

requirements on a particular recipient.

Pre-award Costs

Pre-award costs may be reimbursed under the grants without prior

approval so long as they are incurred within the budget period,

identified in the approved grant application, and would have been

allowable if incurred after the award.

Insular Areas

EPA is proposing conforming changes in the rule to reflect the

change in status of the Marshall Islands, the Federated States of

Micronesia, and Palau. They were previously entities within the Trust

Territory of the Pacific Islands, but they have entered into Compacts

of Free Association with the Government of the United States. As a

result, each is now a sovereign, self-governing State and as such is no

longer eligible to receive grants as a territory or possession of the

United States. Because the Trust Territory of the Pacific Islands no

longer exists, the rule's provisions regarding allotments omit any

reference to the Trust Territory and references to the Trust Territory

in environmental program grant statutes, including the references in

the definitions of ``State,'' no longer have legal effect.

The Administrator of EPA is authorized to consolidate grants and

waive administrative requirements for grants made to certain insular

areas. 48 U.S. C. 1469a. Through this regulation that authority is

delegated to the Regional Administrators.

V. Performance Partnership Grants

Sections 35.130 through 35.138 contain requirements that apply only

to Performance Partnership Grant (PPGs). In a Performance Partnership

Grant, the recipient can combine funds from two or more environmental

program grants into a single grant under streamlined administrative

requirements. Funds may be used for eligible cross-media activities or

strategies and do not need to be accounted for in accordance with their

original program sources. Key features of the PPG rule are discussed

below.

Funds and Activities Eligible for Inclusion in a PPG

Funds for any particular environmental program grant may be

included in a PPG only if the funds for that grant are appropriated in

the same specific appropriation (earmark) as the funds for PPGs. EPA

will announce any changes in its appropriation acts that affect the

list of programs in Sec. 35.101. Currently, funds from all but two of

the environmental program grants listed in Sec. 35.101 are eligible for

inclusion in a PPG. Funds for Water Quality Management Planning grants

under section 205(j)(2) of the Clean Water Act are not available for

inclusion in PPGs because funds for these grants are reserved from a

different earmark in the Agency's appropriation act. In addition, there

are no funds appropriated for State Administration grants under section

205(g) of the Clean Water Act.

A PPG recipient may use PPG funds to carry out any activity that

would be authorized under at least one of the environmental program

grants from which funds are combined in the PPG. This means that a PPG

recipient may not spend PPG funds on an activity unless the PPG

includes some funds from an environmental program grant under which

that activity would be eligible. For example, a PPG recipient could not

use PPG funds for an activity that is authorized only under sections

205(g) or 205(j)(2) of the Clean Water Act because no section 205(g) or

205(j)(2) funds will have been included in the PPG. On the other hand,

if an activity would be authorized under section 106 of the Clean Water

Act, and the PPG includes section 106 funds, then the activity may be

funded by the PPG.

A State or interstate agency must meet the requirements for award

of each of the environmental programs from which funds are combined in

the PPG, with a few specified exceptions. The exceptions are

requirements that restrict how a specific environmental program grant

can be used after award. These requirements are not appropriate to be

carried over to Performance Partnership Grants because after funds are

awarded in a Performance Partnership Grant they may be used for cross-

media purposes and States interstate agencies do not need to account

for the funds in accordance with their original program sources.

Entities Eligible for PPGs

The types of organizations eligible for PPGs are determined by the

authorizing statutes for the PPG program, which are EPA's FY 1996 and

1998 appropriation acts, (Omnibus Consolidated Rescissions and

Appropriations Act of 1996, Public Law 104-134, 110 Stat. 1321, 1321-

299 (1996); Departments of Veterans Affairs and Housing and Urban

Development, and Independent Agencies Appropriations Act, 1998, Pubic

Law 105-65, 111 Stat. 1344, 1373 (1997)). Consistent with those

statutes, only States and interstate agencies will be eligible for PPGs

under this proposed rule. Interstate agencies are only eligible for

PPGs that combine funds from a few existing grant programs because

interstate agencies are only authorized to receive grants under those

few environmental programs. Specifically, interstate agencies are

eligible for PPGs that include funds from the following programs: Air

Pollution Control (section 105 of the Clean Air Act); Water Pollution

Control (section 106 of the Clean Water Act); Wetlands Development

Grants (section 104(b)(3) of the Clean Water Act); and Water Quality

Cooperative Agreements (section 104(b)(3) of the Clean Water Act).

Recipients must be interstate agencies as defined by either the Clean

Water Act, the Clean Air Act, or both, depending on which funds are

included in the PPG. Congress authorized EPA to award PPGs to

interstate agencies, but only as provided in authorizing statutes;

Congress did not intend to change any of the existing program grant

eligibility requirements, including the definition of interstate

agency. The ability of recipients to make subgrants will not be

affected by combining funds into a PPG.

Competitive Grants and PPGs

States must compete for some of the environmental programs eligible

for a PPG (e.g., pollution prevention incentives for States, wetlands

program development, and water quality cooperative agreements). States

must first be selected in the competitive process in order to include

these competitive grants in a PPG. In some programs, this process may

include the awarding of funds to a State agency through decisions made

during a joint planning process. To maintain the integrity of the

competitive process and ensure that the work that was the basis for

EPA's selection of the proposal is performed, the State must include

the work plan commitments proposed in the competitive grant application

in the PPG work plan. However, as with other program funds included in

a PPG, the State does not need to account for these funds in accordance

with the funds' original environmental program source. Although a State

must agree to complete the work plan commitments proposed in the

competitive work plan, it need not account for the funds spent on a

specific environmental program or activity. Also, if the time required

to complete work under the competitive program is longer than the

budget period for the States' PPG, States must make provisions to carry

the activities (and funds, if appropriate) to subsequent PPG budget

periods to complete them.

[[Page 40067]]

Administrative Flexibility

A primary advantage of PPGs is the administrative flexibility

provided to all PPG recipients. A PPG requires only a single

application, work plan, and budget regardless of how many environmental

programs provide the funds for the PPG. Once funds are awarded in a

PPG, recipients can direct the funds as needed to achieve work plan

commitments and need not account for funds in accordance with their

original funding program sources. The minimum cost share required for a

PPG is the sum of the cost share amounts required for each of the

environmental program grants combined in the PPG. If a program has both

a match and a maintenance of effort requirement, the greater of the two

amounts will be used to calculate the minimum cost share attributed to

that program. Just as federal funds in the PPG do not need to be

accounted for on the basis of their original program source, the non-

federal share of a PPG may be expended on work plan commitments without

regard to the original source of the cost share requirement. These

administrative features also make it possible for States to negotiate a

work plan that includes cross-media or innovative strategies for

addressing environmental problems.

Programmatic Flexibility

If approved by the EPA Regional Administrator, a PPG can also

provide the State with programmatic flexibility to increase efforts in

some program areas where the State's needs are greater and decrease

them in others where the State's needs are less. In applying for

programmatic flexibility, the State agency must provide a rationale

commensurate with the type and amount of flexibility being proposed,

explaining the basis for the State's priorities and the environmental

or other benefits it expects to achieve. The State must also assure

that basic programs are maintained for all programs combined in the

grant. The Regional Administrator and State agency will negotiate

regarding the environmental and other information that EPA needs to

make a decision regarding the application for flexibility. Information

useful in supporting a State's proposal for programmatic flexibility

may already exist, such as in a PPA, a recent water quality report, or

a previous grant evaluation. Such information should be used to the

extent possible to minimize duplication of effort.

Performance Incentives

One goal of the performance partnership grant program is to find

ways to encourage and reward outstanding State recipient performance.

EPA believes this regulation will establish the foundation for such an

incentive program by assuring--

States and EPA's regions agree to measurable outcomes and

outputs when awards are signed in accordance with the agreement on core

measures.

Outcome and output accomplishments are measured and

documented through the joint evaluation process developed and agreed to

by the States and EPA under the rule.

We would expect such a program to be based on each year's

performance evaluation. We are considering incentive approaches such

as--

Using a part of each year's funds to provide incentive

bonuses to States which are most successful in meeting commitments, and

Using a part of each year's funds to provide bonuses to

States which assume primacy/authorization for programs such as drinking

water and hazardous waste.

There may be many other possible incentive approaches and we are

soliciting recommendations for them. We also request your comments on

the options suggested above.

VI. Implementing GPRA

The Agency has developed an approach toward the integrated

implementation of GPRA, the Chief Financial Officers Act (CFOA), and

the Federal Financial Management Improvement Act of 1996 (FFMIA). These

laws provide EPA with a framework to demonstrate to Congress and the

taxpayers the costs to the federal government of EPA's program goals

and objectives. The States, by virtue of delegated program authorities

and as recipients of EPA grant funds, play an integral part in

achieving those goals and objectives. Thus EPA's reports of Agency

resources associated with outcomes and outputs will incorporate--at

some level--expenditures incurred in the form of payments under grants

and cooperative agreements . In order to comply with the Paperwork

Reduction Act and the federal government's general grant regulations,

EPA also has a responsibility to minimize additional administrative

reporting requirements and costs borne by the States. In addition,

under current regulations EPA generally may not impose accounting

requirements on States beyond those currently required by 40 CFR part

31.

EPA will therefore use the budget information that States provide

in grant applications as a basis for linking the Agency's actual

expenditures with outcomes. EPA will be able to rely on State budget

information to determine the costs of EPA's outcomes, as long as the

following three conditions exist, which are all required by the

proposed regulation:

(1) States provide the program budget information required as part

of the application;

(2) EPA and the States explicitly define work plan activities,

outcomes, and outputs, as well as the program flexibility contained in

the work plan; and

(3) States report back on work plan accomplishments.

The proposed rule ensures that States will meet these three

conditions, thus providing a reasonable basis for using State grant

program budgets to estimate State contributions to the costs of

achieving EPA's outcomes.

EPA's regional offices, with necessary consultation with

recipients, will be responsible for cross-walking the State budget

information (grant application and work plan data) into the GPRA goals

and objectives architecture. If a grant is subsequently amended to

reflect significant adjustments to work plan commitments, the region

will consult with the State to develop an estimate of the budget

associated with the revision so that it can be reflected in regional

GPRA reporting. The Office of the Chief Financial Officer will provide

regions with guidance on the approach to use for the cross-walk process

to ensure that the results achieved by States with EPA funds are

captured in the Agency's Annual Performance Reports.

VII. Program Specific Provisions

Requirements applicable to each environmental grant program are

located in Secs. 35.140 through 35.418.

Eligibility

The requirements that recipients must meet to qualify to receive

funds under specific environmental programs are included in the

program-specific provisions (see Secs. 35.140 through 35.418).

Cost Share

The required cost share for each environmental program is

identified in the program specific sections. Some programs do not have

cost share requirements, while others have percentage matching share

[[Page 40068]]

requirements, level of effort requirements, or both.

VIII. Conclusion

This regulation will be the foundation for continuing efforts to

improve partnerships between EPA and its State, interstate, and local

environmental protection partners. All recipients will benefit from the

streamlined and simplified requirements of the regulation. In addition,

it will provide recipients choosing to participate in the PPG program

with programmatic flexibility to better use funds to address

environmental priorities.

Regulatory Flexibility Act

The Agency has determined that the requirement in the Regulatory

Flexibility Act (RFA) to prepare a regulatory flexibility analysis does

not apply to this rule. A regulatory flexibility analysis must be

prepared only where the Agency is required by Administrative Procedure

Act (APA) or another statute to publish a general notice of proposed

rulemaking. 5 U.S.C. 603. Grant making matters, such this rule, are not

subject to the notice and comment requirements of the APA (5 U.S.C.

553(a)(1)). Nor is this rule required to undergo notice and comment

rulemaking under any other statute.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public

Law 104-4, 2 U.S.C. 1501 et seq., 109 Stat. 48 (1995), establishes

requirements for federal agencies to assess the effects of their

regulatory actions on State, local, and Tribal governments and the

private sector. Under section 202 of the UMRA, EPA generally must

prepare a written statement, including a cost-benefit analysis, for

proposed and final rules with ``federal mandates'' that may result in

expenditures by State, local, and Tribal governments, in the aggregate,

or by the private sector, of $100 million or more in any one year. This

regulation contains no federal mandates (under the regulatory

provisions of Title II of the UMRA) for State, local, or Tribal

governments or the private sector. The UMRA excludes from the

definitions of ``federal intergovernmental mandate'' and ``federal

private sector mandates'' duties that arise from conditions of federal

assistance.

National Technology Transfer and Advancement Act

Under section 12(d) of the National Technology Transfer and

Advancement Act (NTTAA), EPA is required to use voluntary consensus

standards in its regulatory activities unless to do so would be

inconsistent with applicable law or otherwise impracticable. Voluntary

consensus standards are technical standards (e.g., materials

specifications, test methods, sampling procedures, business practices,

etc.) that are developed or adopted by voluntary consensus standards

bodies. Where available and potentially applicable voluntary consensus

standards are not used, the Act requires EPA to provide Congress,

through the Office of Management and Budget, an explanation of the

reasons for not using such standards.

This proposed rule does not involve any technical standards.

Therefore, EPA is not considering the use of any voluntary consensus

standards. Commenters who disagree with this conclusion should indicate

how the Notice is subject to the Act and identify any potentially

applicable voluntary consensus standards.

Executive Order 13045

Executive Order 13045 applies to any rule that is determined to be:

(1) ``economically significant'' as defined under Executive Order

12866, and (2) concerns an environmental health or safety risk that EPA

has reason to believe may have a disproportionate effect on children.

If the regulatory action meets both criteria, EPA must evaluate the

environmental health or safety effects of the planned rule on children;

and explain why the planned regulation is preferable to other

potentially effective and reasonably feasible alternatives considered

by the Agency.

EPA has determined that the proposed rule is not a covered

regulatory action because it is not economically significant and it

does not involve decisions based on environmental health or safety

risks. As a result, the proposed rule is not subject to the

requirements of the Executive Order.

Executive Order 12866

Under Executive Order 12866, (58 FR 51735 (October 4, 1993)) a

significant regulatory action is subject to OMB review and the

requirements of the Executive Order. The Order defines ``significant

regulatory action'' as one that is likely to result in a rule that may:

(1) Have an annual effect on the economy of $100 million or more or

adversely affect in a material way the economy, a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, or State, local, or Tribal governments or

communities;

(2) Create a serious inconsistency or otherwise interfere with an

action taken or planned by another agency;

(3) Materially alter the budgetary impact of entitlements, grants,

user fees, or loan programs or the rights and obligations of recipients

thereof; or

(4) Raise novel legal or policy issues arising out of legal

mandates, the President's priorities, or the principles set forth in

the Executive Order.

It has been determined that this rule is a ``significant regulatory

action'' under the terms of Executive Order 12866 because the

Performance Partnership Grant authority is a new type of grant

authority and therefore raises novel policy issues. As such, this

action was submitted to the Office of Management and Budget (OMB) for

review. Changes made in response to OMB suggestions and recommendations

are documented in the public record.

Paperwork Reduction Act

In keeping with the requirements of the Paperwork Reduction Act

(PRA), as amended, 44 U.S.C. 3501 et seq., the information collection

requirements contained in this rule have been approved by OMB under

information collection request number 0938.06 (OMB Control Number 2030-

0020) and Quality Assurance Specifications and Requirements information

request number 0866.05 (OMB Control Number 2080-033). This rule does

not contain any collection of information requirements beyond those

already approved. Since this action imposes no new or additional

information collection, reporting or record-keeping requirements

subject to the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., no

information request will be submitted to the Office of Management and

Budget for review.

Executive Order 12875

Under Executive Order 12875, Enhancing Intergovernmental

Partnerships, EPA may not issue a regulation that is not required by

statute and that creates a mandate upon a State, local or tribal

government, unless the federal government provides the funds necessary

to pay the direct compliance costs incurred by those governments or EPA

consults with those governments. If EPA complies by consulting,

Executive Order 12875 requires EPA to provide to the Office of

Management and Budget a description of the extent of EPA's prior

consultation with representatives of affected State, local and Tribal

governments, the nature of their concerns, any written communications

[[Page 40069]]

from the governments, and a statement supporting the need to issue the

regulation. In addition, Executive Order 12875 requires EPA to develop

an effective process permitting elected officials and other

representatives of State, local and Tribal governments ``to provide

meaningful and timely input in the development of regulatory proposals

containing significant unfunded mandates.''

This proposed rule does not create a mandate on State, local or

Tribal governments nor does it impose any enforceable duties on these

entities as it governs the award of financial assistance. Instead, this

proposed rule is designed to reduce the administrative burden

associated with grants for environmental programs. Accordingly, the

requirements of section 1(a) of Executive Order 12875 do not apply.

Executive Order 13084

Under Executive Order 13084, Consultation and Coordination with

Indian Tribal Governments, EPA may not issue a regulation that is not

required by statute, that significantly or uniquely affects the

communities of Indian Tribal governments, and that imposes substantial

direct compliance costs on those communities, unless the federal

government provides the funds necessary to pay the direct compliance

costs incurred by the Tribal governments. If a regulatory mandate is

necessary, EPA must provide to the Office of Management and Budget, in

a separately identified section of the preamble to the rule, a

description of the extent of EPA's prior consultation with

representatives of affected Tribal governments, a summary of the nature

of their concerns, and a statement supporting the need to issue the

regulation. In addition, Executive Order 13084 requires EPA to develop

an effective process permitting elected and other representatives of

Indian Tribal governments ``to provide meaningful and timely input in

the development of regulatory policies on matters that significantly or

uniquely affect their communities.''

This proposed rule does not affect the communities of Indian Tribal

governments, because environmental program grants to Tribes and

intertribal consortia are not covered in this rule; they are covered

under 40 CFR part 35, subpart B, published elsewhere in this Federal

Register. Accordingly, the requirements of section 3(b) of Executive

Order 13084 do not apply.

List of Subjects

40 CFR Part 35

Environmental protection, Administrative practice and procedures,

Evaluation of performance, Performance partnership grants, Requirements

for specific grant programs, Work plan requirements.

40 CFR Part 745

Environmental protection, Administrative practice and procedures,

Hazardous substances.

Dated: June 30, 1999.

Carol M. Browner,

Administrator.

For the reasons set forth in this preamble, title 40, chapter I of

the Code of Federal Regulations is proposed to be amended as follows:

PART 35--[AMENDED]

1. The authority citation for Part 35 is revised to read as

follows:

Authority: 42 U.S.C. 4368b unless otherwise noted.

2. Revise Sec. 35.001 to read as follows:

Sec. 35.001 Applicability.

This part codifies policies and procedures for financial assistance

awarded by the Environmental Protection Agency (EPA) to State,

interstate, and local agencies, Indian Tribes and Intertribal Consortia

for pollution abatement and control programs. These provisions

supplement the EPA general assistance regulations in 40 CFR part 31.

3. Revise Subpart A to read as follows:

Subpart A--Environmental Program Grants

All Grants--General

Sec.

35.100 Purpose of the subpart.

35.101 Environmental programs covered by the subpart.

35.102 Definition of terms.

Preparing an Application

35.104 Components of a complete application.

35.105 Time frame for submitting an application.

35.107 Work plans.

35.108 Budget period.

35.109 Consolidated grants.

EPA Action on Application

35.110 Time frame for EPA action.

35.111 Criteria for approving an application.

35.112 Factors considered in determining award amount.

35.113 Reimbursement for pre-award costs.

Post-Award Requirements

35.114 Amendments and other changes.

35.115 Evaluation of performance.

35.116 Direct implementation.

35.117 Unused funds.

35.118 Unexpended balances.

Performance Partnership Grants

35.130 Purpose of Performance Partnership Grants.

35.132 Requirements summary.

35.133 Programs eligible for inclusion.

35.134 Eligible recipients.

35.135 Activities eligible for funding.

5.136 Cost share requirements.

35.137 Application requirements.

35.138 Competitive grants.

Air Pollution Control (Section 105)

35.140 Purpose.

35.141 Definitions.

35.143 Allotment.

35.145 Maximum Federal share.

35.146 Maintenance of effort.

35.147 Minimum cost share for a Performance Partnership Grant.

35.148 Award limitations.

Water Pollution Control (Section 106)

35.160 Purpose.

35.161 Definition.

35.162 Basis for allotment.

35.165 Maintenance of effort.

35.168 Award limitations.

Public Water System Supervision (Section 1443(a))

35.170 Purpose.

35.172 Allotment.

35.175 Maximum Federal share.

35.178 Award limitations.

Underground Water Source Protection (Section 1443(b))

35.190 Purpose.

35.192 Basis for allotment.

35.195 Maximum Federal share.

35.198 Award limitation.

Hazardous Waste Management (Section 3011(a))

35.210 Purpose.

35.212 Basis for allotment.

35.215 Maximum Federal share.

35.218 Award limitation.

Pesticide Cooperative Enforcement (Section 23(a)(1))

35.230 Purpose.

35.232 Basis for allotment.

35.235 Maximum Federal share.

Pesticide Applicator Certification and Training (Section 23(a)(2))

35.240 Purpose.

35.242 Basis for allotment.

35.245 Maximum Federal share.

Pesticide Program Implementation (Section 23(a)(1))

35.250 Purpose.

35.251 Basis for allotment.

35.252 Maximum Federal share.

Nonpoint Source Management (Section 319(h))

35.260 Purpose.

35.265 Maximum Federal share.

35.266 Maintenance of effort.

35.268 Award limitations.

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Lead-Based Paint Program (Section 404(g))

35.270 Purpose.

35.272 Funding coordination.

State Indoor Radon Grants (Section 306)

35.290 Purpose.

35.292 Basis for allotment.

35.295 Maximum Federal share.

35.298 Award limitations.

Toxic Substances Compliance Monitoring (Section 28)

35.310 Purpose.

35.312 Competitive process.

35.315 Maximum Federal share.

35.318 Award limitation.

State Underground Storage Tanks (Section 2007(f)(2))

35.330 Purpose.

35.332 Basis for allotment.

35.335 Maximum Federal share.

Pollution Prevention Incentives for States (Section 6605)

35.340 Purpose.

35.342 Competitive process.

35.343 Definitions.

35.345 Eligible applicants.

35.348 Award limitation.

35.349 Maximum Federal share.

Water Quality Cooperative Agreements (Section 104(b)(3))

35.360 Purpose.

35.362 Competitive process.

35.364 Maximum Federal share.

Wetlands Development Grant Program (Section 104(b)(3))

35.380 Purpose.

35.382 Competitive process.

35.385 Maximum Federal share.

State Administration (Section 205(g))

35.400 Purpose.

35.402 Allotment.

35.405 Maintenance of effort.

35.408 Award limitations.

Water Quality Management Planning (Section 205(j)(2))

35.410 Purpose.

35.412 Allotment.

35.415 Maximum Federal share.

35.418 Award limitations.

Subpart A--Environmental Program Grants

Authority: 42 U.S.C. 7401 et seq.; 33 U.S.C. 1251 et seq.; 42

U.S.C. 300f et seq.; 42 U.S.C. 6901 et seq.; 7 U.S.C. 136 et seq.;

15 U.S.C. 2601 et seq.; 42 U.S.C. 13101 et seq.; Pub. L. 104-134,

110 Stat. 1321, 1321-299 (1996); Pub. L. 105-65, 111 Stat. 1344,

1373 (1997).

All Grants--General

Sec. 35.100 Purpose of the subpart.

This subpart establishes administrative requirements for grants

awarded to State, interstate, and local agencies and other entities for

the environmental programs listed in Sec. 35.101. This subpart

supplements requirements in EPA's general grant regulations found at 40

CFR part 31. Sections 35.100-35.118 contain administrative requirements

that apply to all environmental program grants included in this

subpart. Sections 35.130 through 35.418 contain requirements that apply

to specified environmental program grants. Many of these environmental

programs also have programmatic and technical requirements that are

published elsewhere in the Code of Federal Regulations.

Sec. 35.101 Environmental programs covered by the subpart.

(a) The requirements in this subpart apply to grants awarded for

the following programs:

(1) Performance partnership grants (Omnibus Consolidated

Rescissions and Appropriations Act of 1996, Public Law 104-134, 110

Stat. 1321, 1321-299 (1996) and Departments of Veterans Affairs and

Housing and Urban Development, and Independent Agencies Appropriations

Act, 1998, Public Law 105-65, 111 Stat. 1344, 1373 (1997)).

(2) Air pollution control (section 105 of the Clean Air Act).

(3) Water pollution control (section 106 of the Clean Water Act).

(4) Public water system supervision (section 1443(a) of the Safe

Drinking Water Act).

(5) Underground water source protection (section 1443(b) of the

Safe Drinking Water Act).

(6) Hazardous waste management (section 3011(a) of the Solid Waste

Disposal Act).

(7) Pesticide cooperative enforcement (section 23(a)(1) of the

Federal Insecticide, Fungicide, and Rodenticide Act).

(8) Pesticide applicator certification and training (section

23(a)(2) of the Federal Insecticide, Fungicide, and Rodenticide Act).

(9) Pesticide program implementation (section 23(a)(1) of the

Federal Insecticide, Fungicide, and Rodenticide Act).

(10) Nonpoint source management (sections 205(j)(5) and 319(h) of

the Clean Water Act).

(11) Lead-based paint program (section 404(g) of the Toxic

Substances Control Act).

(12) State indoor radon grants (section 306 of the Toxic Substances

Control Act).

(13) Toxic substances compliance monitoring (section 28 of the

Toxic Substances Control Act).

(14) State underground storage tanks (section 2007(f)(2) of the

Solid Waste Disposal Act).

(15) Pollution prevention incentives for states (section 6605 of

the Pollution Prevention Act of 1990).

(16) Water quality cooperative agreements (section 104(b)(3) of the

Clean Water Act).

(17) Wetlands development grants program (section 104(b)(3) of the

Clean Water Act).

(18) State administration of construction grant, permit, and

planning programs (section 205(g) of the Clean Water Act).

(19) Water quality management planning (section 205(j)(2) of the

Clean Water Act).

(b) Unless otherwise prohibited by statute or regulation, the

requirements in Sec. 35.100 through Sec. 35.118 of this subpart also

apply to grants under environmental programs established after this

subpart becomes effective if specified in Agency guidance for such

programs.

Sec. 35.102 Definitions of terms.

Terms are defined as follows when they are used in this subpart.

Allotment. EPA's calculation of the funds that may be available to

an eligible recipient for an environmental program grant. An allotment

is not an entitlement.

Budget period. The period specified in the grant agreement during

which the recipient may expend or obligate funds for the purposes

specified in the agreement.

Consolidated grant. A single grant made to a recipient

consolidating funds from more than one environmental grant program.

After the award is made, recipients must account for grant funds in

accordance with the funds' original environmental program sources.

Consolidated grants are not Performance Partnership Grants.

Environmental program. A program for which EPA awards grants under

the authorities listed in Sec. 35.101. The grants are subject to the

requirements of this subpart.

National program guidance. Guidance issued by EPA's National

Program Managers for establishing and maintaining effective

environmental programs. This guidance establishes national goals,

objectives, and priorities as well as the core performance measures and

other information to be used in monitoring progress. The guidance may

also set out specific environmental strategies, criteria for evaluating

programs, and other elements of program implementation.

Outcome. The environmental result, effect, or consequence that will

occur from carrying out an environmental program or activity that is

related to an

[[Page 40071]]

environmental or programmatic goal or objective. Outcomes must be

quantitative, and they may not necessarily be achievable during a grant

budget period. See ``output.''

Output. An environmental activity or effort and associated work

products related to an environmental goal or objective that will be

produced or provided over a period of time or by a specified date.

Outputs may be quantitative or qualitative but must be measurable

during a grant budget period. See ``outcome.''

Performance Partnership Agreement. A negotiated agreement signed by

the EPA Regional Administrator and an appropriate official of a State

agency and designated as a Performance Partnership Agreement. Such

agreements typically set out jointly developed goals, objectives, and

priorities; the strategies to be used in meeting them; the roles and

responsibilities of the State and EPA; and the measures to be used in

assessing progress. A Performance Partnership Agreement may be used as

all or part of a work plan for a grant if it meets the requirements for

a work plan set out in Sec. 35.107.

Performance Partnership Grant. A single grant combining funds from

more than one environmental program. A Performance Partnership Grant

may provide for administrative savings or programmatic flexibility to

direct grant resources where they are most needed to address public

health and environmental priorities (see also Sec. 35.130). Each

Performance Partnership Grant has a single, integrated budget and

recipients do not need to account for grant funds in accordance with

the funds' original environmental program sources.

Planning target. The amount of funds that the Regional

Administrator suggests a grant applicant consider in developing its

application, including the work plan, for an environmental program.

Regional supplemental guidance. Guidance to environmental program

applicants prepared by the Regional Administrator, based on the

national program guidance and specific regional and applicant

circumstances, for use in preparing a grant application.

Work plan commitments. The outputs and outcomes associated with

each work plan component, as established in the grant agreement.

Work plan component. A negotiated set or group of work plan

commitments established in the grant agreement. A work plan may have

one or more work plan components.

Preparing an Application

Sec. 35.104 Components of a complete application.

A complete application for an environmental program must:

(a) Meet the requirements in 40 CFR part 31, subpart B;

(b) Include a proposed work plan (Sec. 35.107); and

(c) Specify the environmental program and the amount of funds

requested.

Sec. 35.105 Time frame for submitting an application.

An applicant should submit a complete application to EPA at least

60 days before the beginning of the proposed budget period.

Sec. 35.107 Work plans.

(a) Bases for negotiating work plans. The work plan is negotiated

between the applicant and the Regional Administrator and reflects

consideration of national, regional, and State environmental and

programmatic needs and priorities.

(1) Negotiation considerations. In negotiating the work plan, the

Regional Administrator and applicant will consider such factors as

national program guidance; any regional supplemental guidance; goals,

objectives, and priorities proposed by the applicant; other jointly

identified needs or priorities; and the planning target.

(2) National program guidance. If an applicant proposes a work plan

that differs significantly from the goals and objectives, priorities,

or core performance measures in the national program guidance

associated with the proposed activities, the Regional Administrator

must consult with the appropriate National Program Manager before

agreeing to the work plan.

(3) Use of existing guidance. An applicant should base the grant

application on the national program guidance in place at the time the

application is being prepared.

(b) Work plan requirements.

(1) The work plan is the basis for the management and evaluation of

performance under the grant agreement.

(2) An approvable work plan must specify:

(i) The work plan components to be funded under the grant;

(ii) The estimated work years and funding amounts for each work

plan component;

(iii) The work plan commitments for each work plan component and a

time frame for their accomplishment;

(iv) A performance evaluation process and reporting schedule in

accordance with Sec. 35.115 of this subpart; and

(v) The roles and responsibilities of the recipient and EPA in

carrying out the work plan commitments.

(3) The work plan must be consistent with applicable federal

statutes, regulations, circulars, executive orders, and delegation or

authorization agreements.

(c) Performance Partnership Agreement as work plan. An applicant

may use a Performance Partnership Agreement or a portion of a

Performance Partnership Agreement as the work plan for an environmental

program grant if the portions of the Performance Partnership Agreement

that can serve as all or part of the grant work plan:

(1) Are clearly identified and distinguished from other portions of

the Performance Partnership Agreement; and

(2) Meet the requirements in Sec. 35.107(b).

Sec. 35.108 Budget period.

The Regional Administrator and applicant may negotiate the length

of the budget period for environmental program grants, subject to

limitations in appropriations acts.

Sec. 35.109 Consolidated grants.

(a) Any applicant eligible to receive funds from more than one

environmental program may submit an application for a consolidated

grant. For consolidated grants, an applicant prepares a single budget

and work plan covering all of the environmental programs included in

the application. The consolidated budget must identify each

environmental program to be included, the amount of each program's

funds, and the extent to which each program's funds support each work

plan component. Recipients of consolidated grants must account for

grant funds in accordance with the funds' environmental program

sources; funds included in a consolidated grant from a particular

environmental program may be used only for that program.

(b) Insular areas that choose to consolidate environmental program

grants may be exempted by the Regional Administrator from requirements

of this subpart in accordance with 48 U.S.C. 1469a.

EPA Action on Application

Sec. 35.110 Time frame for EPA action.

The Regional Administrator will review a complete application and

either approve, conditionally approve, or disapprove it within 60 days

of receipt. This period may be extended by

[[Page 40072]]

mutual agreement between EPA and the applicant. The Regional

Administrator will award the funds for approved or conditionally

approved applications when the funds are available.

Sec. 35.111 Criteria for approving an application.

(a) The Regional Administrator may approve an application if he or

she determines, that:

(1) The application meets the requirements of this subpart and 40

CFR part 31;

(2) The application meets the requirements of all applicable

federal statutes, regulations, circulars, executive orders, and

delegation or authorization agreements;

(3) The proposed work plan complies with the requirements of

Sec. 35.107; and

(4) The achievement of the proposed work plan is feasible,

considering such factors as the applicant's existing circumstances,

past performance, program authority, organization, resources, and

procedures.

(b) If the Regional Administrator finds the application does not

satisfy the criteria in paragraph (a) of this section, the Regional

Administrator may either:

(1) Conditionally approve the application if only minor changes are

required, with grant conditions necessary to ensure compliance with the

criteria, or

(2) Disapprove the application in writing.

Sec. 35.112 Factors considered in determining award amount.

(a) After approving an application under Sec. 35.111, the Regional

Administrator will consider such factors as the applicant's allotment,

the extent to which the proposed work plan is consistent with EPA

guidance and mutually agreed upon priorities, and the anticipated cost

of the work plan relative to the proposed work plan components, to

determine the amount of funds to be awarded.

(b) If the Regional Administrator finds the requested level of

funding is not justified or that the work plan does not comply with the

requirements of Sec. 35.107, he or she will attempt to negotiate a

resolution of the issues with the applicant before determining the

award amount. The Regional Administrator may determine that the award

amount will be less than the amount allotted or requested.

Sec. 35.113 Reimbursement for pre-award costs.

(a) Notwithstanding the requirements of 40 CFR 31.23(a) and OMB

cost principles, EPA may reimburse recipients for pre-award costs

incurred from the beginning of the budget period established in the

grant agreement if such costs would have been allowable if incurred

after the award and the recipients submitted complete grant

applications before the beginning of the budget period. Such costs must

be identified in the grant application EPA approves.

(b) The applicant incurs pre-award costs at its own risk. EPA is

under no obligation to reimburse such costs unless they are included in

an approved grant award.

Post-Award Requirements

Sec. 35.114 Amendments and other changes.

The provisions of 40 CFR 31.30 do not apply to environmental

program grants awarded under this subpart. The following provisions

govern amendments and other changes to grant work plans and budgets

after the work plan is negotiated and a grant awarded.

(a) Changes requiring prior approval. Recipients may make

significant changes in work plan commitments only after obtaining the

Regional Administrator's prior written approval. The regional office,

in consultation with the recipient, will document these revisions

including budgeted amounts associated with the revisions.

(b) Changes requiring approval. Recipients must request, in

writing, grant amendments for changes requiring increases in

environmental program grant amounts and extensions of the budget

period. Recipients may begin implementing a change before the amendment

has been approved by EPA, but do so at their own risk. If EPA approves

the change, EPA will issue a grant amendment. EPA will notify the

recipient in writing if the change is disapproved.

(c) Changes not requiring approval. Other than those situations

described in paragraphs (a) and (b) of this section, recipients do not

need to obtain approval for changes, including changes in grant work

plans, budgets, or other components of grant agreements, unless the

Regional Administrator determines approval requirements should be

imposed on a specific recipient for a specified period of time.

(d) OMB cost principles. The Regional Administrator may waive in

writing approval requirements for specific recipients and costs

contained in OMB cost principles.

(e) Changes in consolidated grants. Recipients of consolidated

grants under Sec. 35.109 may not transfer funds among environmental

programs.

(f) Subgrants. Subgrantees must request required approvals in

writing from the recipient and the recipient shall approve or

disapprove the request in writing. A recipient will not approve any

work plan or budget revision which is inconsistent with the purpose or

terms and conditions of the federal grant to the recipient. If the

revision requested by the subgrantee would result in a significant

change to the recipient's approved grant which requires EPA approval,

the recipient will obtain EPA's approval before approving the

subgrantee's request.

Sec. 35.115 Evaluation of performance.

(a) Joint evaluation process. The applicant and the Regional

Administrator will develop a process for jointly evaluating and

reporting progress and accomplishments under the work plan. A

description of the evaluation process and a reporting schedule must be

included in the work plan. The schedule must require the recipient to

report at least annually and must satisfy the requirements for progress

reporting under 40 CFR 31.40(b).

(b) Elements of the evaluation process. The evaluation process must

provide for:

(1) A discussion of accomplishments as measured against work plan

commitments;

(2) A discussion of the cumulative effectiveness of the work

performed under all work plan components;

(3) A discussion of existing and potential problem areas; and

(4) Suggestions for improvement, including, where feasible,

schedules for making improvements.

(c) Resolution of issues. If the joint evaluation reveals that the

recipient has not made sufficient progress under the work plan, the

Regional Administrator and the recipient will negotiate a resolution

that addresses the issues. If the issues cannot be resolved through

negotiation, the Regional Administrator may take appropriate measures

under 40 CFR 31.43. The recipient may request review of the Regional

Administrator's decision under the dispute processes in 40 CFR 31.70.

(d) Evaluation reports. The Regional Administrator will ensure that

the required evaluations are performed according to the negotiated

schedule and that copies of evaluation reports are placed in the

official files and provided to the recipient.

Sec. 35.116 Direct implementation.

If funds remain in a State's allotment for an environmental program

grant either after grants for that environmental program have been made

or because no grant was made, the Regional Administrator may, subject

to any

[[Page 40073]]

limitations contained in appropriation acts, use all or part of the

funds to support a federal program required by law in the State in the

absence of an acceptable State program.

Sec. 35.117 Unused funds.

If funds for an environmental program grant remain in a State's

allotment either after an initial environmental program grant has been

made or because no grant was made, and the Regional Administrator does

not use the funds under Sec. 35.116 of this subpart, the Regional

Administrator may award the funds to any eligible recipient in the

region, including the same State or an Indian Tribe or Tribal

consortium, for the same environmental program or for a Performance

Partnership Grant, subject to any limitations in appropriation acts.

Sec. 35.118 Unexpended balances.

Subject to any relevant provisions of law, if a recipient's

Financial Status Report shows unexpended balances, the Regional

Administrator will deobligate the unexpended balances and make them

available, to either the same recipient in the same region or other

eligible recipients, including Indian Tribes and Tribal Consortia, for

environmental program grants.

Performance Partnership Grants

Sec. 35.130 Purpose of Performance Partnership Grants.

(a) Purpose of section. Sections 35.130 through 35.138 govern

Performance Partnership Grants to States and interstate agencies

authorized in the Omnibus Consolidated Rescissions and Appropriations

Act of 1996, (Pub. L. 104-134, 110 Stat. 1321, 1321-299 (1996)) and the

Departments of Veterans Affairs and Housing and Urban Development, and

Independent Agencies Appropriations Act, 1998, (Pub. L. 105-65, 111

Stat. 1344, 1373 (1997).

(b) Purpose of program. Performance Partnership Grants enable

States and interstate agencies to combine funds from more than one

environmental program grant into a single grant with a single budget.

Recipients do not need to account for Performance Partnership Grant

funds in accordance with the funds' original environmental program

sources; they need only account for total Performance Partnership Grant

expenditures subject to the requirements of this subpart. The

Performance Partnership Grant program is designed to:

(1) Strengthen partnerships between EPA and State and interstate

agencies through joint planning and priority-setting and better

deployment of resources;

(2) Provide State and interstate agencies with flexibility to

direct resources where they are most needed to address environmental

and public health priorities;

(3) Link program activities more effectively with environmental and

public health goals and program outcomes;

(4) Foster development and implementation of innovative approaches

such as pollution prevention, ecosystem management, and community-based

environmental protection strategies; and

(5) Provide savings by streamlining administrative requirements.

Sec. 35.132 Requirements summary.

Applicants and recipients of Performance Partnership Grants must

meet:

(a) The requirements in Secs. 35.100 to 35.118, which apply to all

environmental program grants, including Performance Partnership Grants;

and

(b) The requirements in Secs. 35.130 to 35.138, which apply only to

Performance Partnership Grants.

Sec. 35.133 Programs eligible for inclusion.

(a) Eligible programs. Except as provided in paragraph (b) of this

section, the environmental programs eligible, in accordance with

appropriation acts, for inclusion in a Performance Partnership Grant

are listed in Sec. 35.101(a)(2) through (17). (Funds available from the

section 205(g) State Administration Grants program (Sec. 35.100(b)(18))

and the Water Quality Management Planning Grant program

(Sec. 35.100(b)(19)) may not be included in Performance Partnership

Grants.)

(b) Changes in eligible programs. The Administrator may, in

guidance or regulation, describe subsequent additions, deletions, or

changes to the list of environmental programs eligible for inclusion in

Performance Partnership Grants.

Sec. 35.134 Eligible recipients.

(a) Eligible agencies. All State agencies (including environmental,

health, agriculture, and other agencies) and interstate agencies

eligible to receive funds from more than one environmental program may

receive Performance Partnership Grants.

(b) Designated agency. A State agency must be designated by a

Governor, State legislature, or other authorized State process to

receive grants under each of the environmental programs to be combined

in the Performance Partnership Grant. If it is not the designated

agency for a particular grant program to be included in the Performance

Partnership Grant, the State agency must have an agreement with the

State agency that does have the designation regarding how the funds

will be shared between the agencies.

(c) Programmatic requirements. A State or interstate agency must

meet the requirements for award of each of the environmental programs

from which funds are combined in the agency's Performance Partnership

Grant, except the requirements at Secs. 35.268(b) and (c), 35.272, and

35.298 (c),(d),(e), and (g). These requirements can be found in this

regulation beginning at Sec. 35.140.

Sec. 35.135 Activities eligible for funding.

(a) A recipient may use a Performance Partnership Grant, subject to

the requirements of paragraph (c) of this section, to fund any activity

that is eligible for funding under at least one of the environmental

programs from which funds are combined into the grant.

(b) A recipient may also use a Performance Partnership Grant to

fund multi-media activities that are eligible in accordance with

paragraph (a) of this section and have been agreed to by the Regional

Administrator. Such activities may include multi-media permitting and

enforcement and pollution prevention, ecosystem management, community-

based environmental protection, and other innovative approaches.

(c) A recipient may not use a Performance Partnership Grant to fund

activities eligible only under a specific environmental program grant

unless some or all of the recipient's allotted funds for that program

have been included in the Performance Partnership Grant.

Sec. 35.136 Cost share requirements.

(a) An applicant for a Performance Partnership Grant must provide a

non-federal cost share that is not less than the sum of the minimum

non-federal cost share required under each of the environmental

programs that are combined in the Performance Partnership Grant. Cost

share requirements for the individual environmental programs are

described in Secs. 35.140 to 35.418.

(b) When an environmental program included in the Performance

Partnership Grant has both a matching and maintenance of effort

requirement, the greater of the two amounts will be used to calculate

the minimum cost share attributed to that environmental program.

[[Page 40074]]

Sec. 35.137 Application requirements.

(a) An application for a Performance Partnership Grant must

contain:

(1) A list of the environmental programs and the amount of funds

from each program to be combined in the Performance Partnership Grant;

(2) A consolidated budget;

(3) A consolidated work plan that addresses each program being

combined in the grant and that meets the requirements of Sec. 35.107;

and,

(4) A rationale, commensurate with the extent of any programmatic

flexibility (i.e., increased effort in some programs and decreased

effort in others) indicated in the work plan, that explains the basis

for the applicant's priorities, the expected environmental or other

benefits to be achieved, and the anticipated impact on any

environmental programs or program areas proposed for reduced effort.

(b) The applicant and the Regional Administrator will negotiate

regarding the information necessary to support the rationale for

programmatic flexibility required in paragraph (a)(4) of this section.

The rationale may be supported by information from a variety of

sources, including a Performance Partnership Agreement or comparable

negotiated document, the evaluation report required in Sec. 35.125, and

other environmental and programmatic data sources.

(c) A State agency seeking programmatic flexibility is encouraged

to include a description of efforts to involve the public in developing

the State agency's priorities.

Sec. 35.138 Competitive grants.

(a) Some environmental program grants are awarded through a

competitive process. An applicant and the Regional Administrator may

agree to add funds available for a competitive grant to a Performance

Partnership Grant. If this is done, the work plan commitments that

would have been included in the competitive grant must be included in

the Performance Partnership Grant work plan. After the funds have been

added to the Performance Partnership Grant, the recipient does not need

to account for these funds in accordance with the funds' original

environmental program source.

(b) If the projected completion date for competitive grant work

plan commitments added to a Performance Partnership Grant is after the

end of the Performance Partnership Grant budget period, the Regional

Administrator and the applicant will agree in writing as to how the

work plan commitments will be carried over into future work plans.

Air Pollution Control (Section 105)

Sec. 35.140 Purpose.

(a) Purpose of section. Sections 35.140 through 35.148 govern Air

Pollution Control Grants to State, local, interstate, or intermunicipal

air pollution control agencies (as defined in section 302(b) of the

Clean Air Act) authorized under section 105 of the Act.

(b) Purpose of program. Air Pollution Control Grants are awarded to

administer programs that prevent and control air pollution or implement

national ambient air quality standards.

(c) Program regulations. Refer to 40 CFR parts 49, 50, 51, 52, 58,

60, 61, 62, and 81 for associated program regulations.

Sec. 35.141 Definitions.

In addition to the definitions in Sec. 35.102, the following

definitions apply to the Clean Air Act's section 105 grant program:

Implementing means any activity related to planning, developing,

establishing, carrying-out, improving, or maintaining programs for the

prevention and control of air pollution or implementation of national

primary and secondary ambient air quality standards.

Nonrecurrent expenditures are those expenditures which are shown by

the recipient to be of a nonrepetitive, unusual, or singular nature

such as would not reasonably be expected to recur in the foreseeable

future. Costs categorized as nonrecurrent must be approved in the grant

agreement or an amendment thereto.

Recurrent expenditures are those expenses associated with the

activities of a continuing environmental program. All expenditures are

considered recurrent unless justified by the applicant as nonrecurrent

and approved as such in the grant award or an amendment thereto.

Sec. 35.143 Allotment.

(a) The Administrator allots air pollution control funds under

section 105 of the Clean Air Act based on a number of factors,

including:

(1) Population;

(2) The extent of actual or potential air pollution problems; and

(3) The financial need of each agency.

(b) The Regional Administrator shall allot to a State not less than

one-half of one percent nor more than 10 percent of the annual section

105 grant appropriation.

(c) The Administrator may award funds on a competitive basis.

Sec. 35.145 Maximum Federal share.

(a) The Regional Administrator may provide air pollution control

agencies, as defined in section 302(b) of the Clean Air Act, up to

three-fifths of the approved costs of implementing programs for the

prevention and control of air pollution or implementing national

primary and secondary ambient air quality standards.

(b) Subject to the conditions set forth below, the Regional

Administrator may, at the request of the Governor of a State or the

Governor's designee, or in the case of a local jurisdiction, the

authorized local official, waive, for a one year period, all or a

portion of the cost-sharing requirement of paragraph (a) of this

section. The Regional Administrator may renew the waiver for no more

than two years so long as the total waiver period does not exceed three

years from the approval date of a State's permit program required under

section 502 of the Clean Air Act.

(1) The waiver may be approved on a case-by-case basis and only

when a State or local government's non-federal contribution is reduced

below the required two-fifths minimum as a result of the redirection of

its non-federal air resources to meet the requirements of section

502(b) of the Act.

(2) In applying for a waiver, the Governor or the Governor's

designee, or in the case of a local jurisdiction, the authorized local

official, must:

(i) Describe the extent of fiscal and programmatic impact on the

agency's section 105 program as a result of the transfer of non-federal

resources to support the program approved by EPA under section 502(b)

of the Clean Air Act;

(ii) Provide documentation of the amount of the cost-sharing

shortfall and the programmatic activities that would not be able to be

carried out if the section 105 grant is reduced or not awarded as a

result of a State or local air pollution control agency's inability to

meet the cost-sharing requirements;

(iii) Assure that there is no source of funding that may reasonably

be used to meet the cost-sharing requirement for the affected grant

budget period; and

(iv) Assure that during the section 105 grant period the non-

federal share of the program costs will not be reduced in an amount

greater than that authorized by the waiver.

Sec. 35.146 Maintenance of effort.

(a) To receive funds under section 105, an agency must expend

annually, for recurrent section 105 program expenditures, an amount of

non-federal funds at least equal to such expenditures during the

preceding fiscal year.

(b) In order to award grants in a timely manner each fiscal year,

the

[[Page 40075]]

Regional Administrator shall compare an agency's proposed expenditure

level, as detailed in the agency's grant application, to that agency's

expenditure level in the second preceding fiscal year.

(c) The Regional Administrator may grant an exception to 40 CFR

35.146(a) if, after notice and opportunity for a public hearing, the

Regional Administrator determines that the reduction is attributable to

a non-selective reduction of the programs of all executive branch

agencies of the applicable unit of government.

(d) The Regional Administrator will not award section 105 funds

unless the applicant provides assurance that the grant will not

supplant non-federal funds that would otherwise be available for

maintaining the section 105 program.

Sec. 35.147 Minimum cost share for a Performance Partnership Grant.

(a)(1) To calculate the cost share for a Performance Partnership

Grant (see Secs. 35.130 through 35.138) that includes section 105

funds, the minimum cost share contribution for the section 105 program

will be the match requirement set forth in Sec. 35.145 or the

maintenance of effort established under Sec. 35.146, whichever is

greater.

(2) The maintenance of effort established under Sec. 35.146 of this

subpart in the first year that the section 105 grant is included in a

Performance Partnership Grant will be the maintenance of effort amount

used to calculate the cost share in subsequent years in which the

section 105 funds are included in a Performance Partnership Grant.

(b) If an air pollution control agency includes section 105 air

program funding in a Performance Partnership Grant and subsequently

withdraws that program from the grant, the maintenance of effort amount

for the section 105 grant in the first year after the grant is

withdrawn will be equal to the amount required in the year before the

agency included the section 105 program in the Performance Partnership

Grant.

(c) The Regional Administrator may approve an exception from

paragraph (b) of this section if the Regional Administrator determines

that exceptional circumstances justify a reduction in the maintenance

of effort, including when an air pollution control agency reduces

section 105 funding as part of a non-selective reduction of the

programs of all executive branch agencies of the applicable unit of

government.

Sec. 35.148 Award limitations.

(a) The Regional Administrator will not award section 105 funds to

an interstate or intermunicipal agency:

(1) That does not provide assurance that it can develop a

comprehensive plan for the air quality control region which includes

representation of appropriate State, interstate, local, Tribal, and

international interests; and

(2) Without consulting with the appropriate official designated by

the Governor or Governors of the State or States affected or the

appropriate official of any affected Indian Tribe or Tribes.

(b) The Regional Administrator will not disapprove an application

for or terminate or annul a section 105 grant without prior notice and

opportunity for a public hearing in the affected State or States.

Water Pollution Control (Section 106)

Sec. 35.160 Purpose.

(a) Purpose of section. Sections 35.160 through 35.168 govern Water

Pollution Control Grants to State and interstate agencies (as defined

in section 502 of the Clean Water Act) authorized under section 106 of

the Clean Water Act.

(b) Purpose of program. Water Pollution Control Grants are awarded

to assist in administering programs for the prevention, reduction, and

elimination of water pollution, including programs for the development

and implementation of ground-water protection strategies. Some of these

activities may also be eligible for funding under sections 104(b)(3)

(Water Quality Cooperative Agreements and Wetlands Development Grants),

205(j)(2) (Water Quality Management Planning), and section 205(g)

(State Administration Grants) of the Clean Water Act. (See

Secs. 35.160, 35.360, 35.380, 35.400, and 35.410.)

(c) Associated program requirements. Program requirements for water

quality planning and management activities are provided in 40 CFR part

130.

Sec. 35.161 Definition.

Recurrent expenditures are those expenditures associated with the

activities of a continuing environmental program. All expenditures,

except those for equipment purchases of $5,000 or more, are considered

recurrent unless justified by the applicant as nonrecurrent and

approved as such in the grant award or an amendment thereto.

Sec. 35.162 Basis for allotment.

The Administrator allots funds for Water Pollution Control Grants

to States and interstate agencies based on the extent of the pollution

problems in the respective States.

Sec. 35.165 Maintenance of effort.

To receive section 106 funds, a State or interstate agency must

expend annually for recurrent section 106 program expenditures an

amount of non-federal funds at least equal to expenditures during the

fiscal year ending June 30, 1971.

Sec. 35.168 Award limitations.

(a) The Regional Administrator may award section 106 funds to a

State only if:

(1) The State monitors and compiles, analyzes, and reports water

quality data as described in section 106(e)(1) of the Clean Water Act;

(2) The State has authority comparable to that in section 504 of

the Clean Water Act and adequate contingency plans to implement such

authority;

(3) There is no federally assumed enforcement as defined in section

309(a)(2) of the Clean Water Act in effect with respect to the State

agency; and

(4) The State's work plan shows that the activities to be funded

are coordinated, as appropriate, with activities proposed for funding

under sections 205 (g) and (j) of the Clean Water Act.

(5) The State filed with the Administrator within one hundred and

twenty days after October 18, 1972, a summary report of the current

status of the State pollution control program, including the criteria

used by the State in determining priority of treatment works.

(b) The Regional Administrator may award section 106 funds to an

interstate agency only if:

(1) The interstate agency filed with the Administrator within one

hundred and twenty days after October 18, 1972, a summary report of the

current status of the State pollution control program, including the

criteria used by the State in determining priority of treatment works.

(2) There is no federally assumed enforcement as defined in section

309(a)(2) of the Clean Water Act in effect with respect to the

interstate agency.

Public Water System Supervision (Section 1443(a))

Sec. 35.170 Purpose.

(a) Purpose of section. Sections 35.170 through 35.178 govern

Public Water System Supervision Grants to States (as defined in section

1401(13)(A) of the

[[Page 40076]]

Safe Drinking Water Act) authorized under section 1443(a) of the Act.

(b) Purpose of program. Public Water System Supervision Grants are

awarded to carry out public water system supervision programs including

implementation and enforcement of the requirements of the Act that

apply to public water systems.

(c) Associated program regulations. Associated program regulations

are found in 40 CFR parts 141, 142, and 143.

Sec. 35.172 Allotment.

(a) Basis for allotment. The Administrator allots funds for grants

to support States' Public Water System Supervision programs based on

each State's population, geographic area, numbers of community and non-

community water systems, and other relevant factors.

(b) Allotment limitation. No State, except American Samoa, Guam,

the Virgin Islands, and the Commonwealth of the Northern Mariana

Islands, shall be allotted less than $334,500 (which is one percent of

the FY 1989 appropriation).

Sec. 35.175 Maximum Federal share.

The Regional Administrator may provide a maximum of 75 percent of

the State's approved work plan costs.

Sec. 35.178 Award limitations.

(a) Initial Grants: The Regional Administrator will not make an

initial award unless the applicant has an approved Public Water System

Supervision program or agrees to establish an approvable program within

one year of the initial award.

(b) Subsequent Grants: The Regional Administrator will not award a

grant to a State after the initial award unless the applicant has

assumed and maintained primary enforcement responsibility for the

State's Public Water System Supervision program.

Underground Water Source Protection (Section 1443(b))

Sec. 35.190 Purpose.

(a) Purpose of section. Sections 35.190 through 35.198 govern

Underground Water Source Protection Grants to States (as defined in

section 1401(13)(A) of the Safe Drinking Water Act) authorized under

section 1443(b) of the Act.

(b) Purpose of program. The Underground Water Source Protection

Grants are awarded to carry out underground water source protection

programs.

(c) Associated program regulations. Associated program regulations

are found in 40 CFR parts 124, 144, 145, 146, and 147.

Sec. 35.192 Basis for allotment.

The Administrator allots funds for grants to support States'

underground water source protection programs based on such factors as

population, geographic area, extent of underground injection practices,

and other relevant factors.

Sec. 35.195 Maximum Federal share.

The Regional Administrator may provide a maximum of seventy-five

percent of a State's approved work plan costs.

Sec. 35.198 Award limitation.

The Regional Administrator will only award section 1443(b) funds to

States that have primary enforcement responsibility for the underground

water source protection program.

Hazardous Waste Management (Section 3011(a))

Sec. 35.210 Purpose.

(a) Purpose of section. Sections 35.210 through 35.218 govern

Hazardous Waste Management Grants to States (as defined in section 1004

of the Solid Waste Disposal Act) under section 3011(a) of the Act.

(b) Purpose of program. Hazardous Waste Management Grants are

awarded to assist States in the development and implementation of

authorized State hazardous waste management programs.

(c) Associated program regulations. Associated program regulations

are at 40 CFR part 124, subparts B, E, and F; 40 CFR parts 260 through

266; 40 CFR parts 268 through 273; and 40 CFR part 279.

Sec. 35.212 Basis for allotment.

The Administrator allots funds for Hazardous Waste Management

Grants under section 3011(b) of the Solid Waste Disposal Act based on

factors including:

(a) The extent to which hazardous waste is generated, transported,

treated, stored, and disposed of in the State;

(b) The extent to which human beings and the environment in the

State are exposed to such waste, and;

(c) Other factors the Administrator deems appropriate.

Sec. 35.215 Maximum Federal share.

The Regional Administrator may provide up to 75 percent of the

approved work plan costs.

Sec. 35.218 Award limitation.

The Regional Administrator will not award Hazardous Waste

Management Grants to a State with interim or final hazardous waste

authorization unless the applicant is the lead agency designated in the

authorization agreement.

Pesticide Cooperative Enforcement (Section 23(a)(1))

Sec. 35.230 Purpose.

(a) Purpose of section. Sections 35.230 through 35.235 govern

Pesticide Enforcement Cooperative Agreements to States (as defined in

section 2 of Federal Insecticide, Fungicide, and Rodenticide Act) under

section 23(a)(1) of the Act.

(b) Purpose of program. Pesticides Enforcement Cooperative

Agreements are awarded to assist States to implement pesticide

enforcement programs.

(c) Program regulations. Associated program regulations are at 40

CFR parts 150 through 189 and 19 CFR part 12.

Sec. 35.232 Basis for allotment.

(a) Factors for FIFRA enforcement program funding. The factors

considered in allotment of funds for enforcement of FIFRA are:

(1) The State's population,

(2) The number of pesticide-producing establishments,

(3) The numbers of certified private and commercial pesticide

applicators,

(4) The number of farms and their acreage, and

(5) As appropriate, the State's potential farm worker protection

concerns.

(b) Final allotments. Final allotments are negotiated between each

State and the appropriate Regional Administrator.

Sec. 35.235 Maximum Federal share.

The Regional Administrator may provide up to 100 percent of the

approved work plan costs.

Pesticide Applicator Certification and Training (Section 23(a)(2))

Sec. 35.240 Purpose.

(a) Purpose of section. Sections 35.240 through 35.245 govern

Pesticide Applicator Certification and Training Grants to States (as

defined in section 2 of Federal Insecticide, Fungicide, and Rodenticide

Act) under section 23(a)(2) of the Act.

(b) Purpose of program. Pesticide Applicator Certification and

Training Grants are awarded to train and certify restricted use

pesticide applicators.

(c) Associated program regulations. Associated program regulations

are found in 40 CFR parts 162, 170, and 171.

Sec. 35.242 Basis for allotment.

The Regional Administrator considers two factors in allotting

pesticides

[[Page 40077]]

applicator certification and training funds:

(a) The number of farms in each State; and

(b) The numbers of private and commercial applicators requiring

certification and recertification in each State.

Sec. 35.245 Maximum Federal share.

The Regional Administrator may provide up to 50 percent of the

approved work plan costs.

Pesticide Program Implementation (Section 23(a)(1))

Sec. 35.250 Purpose.

(a) Purpose of section. Sections 35.250 through 35.259 govern

Pesticide Program Implementation Cooperative Agreements to States (as

defined in section 2 of Federal Insecticide, Fungicide, and Rodenticide

Act) under section 23(a)(1) of the Act.

(b) Purpose of program. Pesticide Program Implementation

Cooperative Agreements are awarded to assist States to develop and

implement pesticide programs, including programs that protect farm

workers, groundwater, and endangered species from pesticide risks and

for other pesticide management programs designated by the

Administrator.

(c) Program regulations. Associated program regulations are at 40

CFR parts 150 through 189 and 19 CFR part 12.

Sec. 35.251 Basis for allotment.

(a) Factors for pesticide program implementation funding. The

factors considered in allotment of funds for pesticide program

implementation are based upon potential ground water, endangered

species, and worker protection concerns in each State relative to other

States and on other factors the Administrator deems appropriate for

these or other pesticide program implementation activities.

(b) Final allotments. Final allotments are negotiated between each

State and the appropriate Regional Administrator.

Sec. 35.252 Maximum Federal share.

The Regional Administrator may provide up to 100 percent of the

approved work plan costs.

Nonpoint Source Management (Section 319(h))

Sec. 35.260 Purpose.

(a) Purpose of section. Sections 35.260 through 35.268 govern

Nonpoint Source Management Grants to States (as defined in section 502

of the Clean Water Act) authorized under section 319 of the Act.

(b) Purpose of program. Nonpoint Source Management Grants may be

awarded for the implementation of EPA-approved nonpoint source

management programs, including ground-water quality protection

activities, that will advance the implementation of a comprehensive

approved nonpoint source management program.

Sec. 35.265 Maximum Federal share.

The Regional Administrator may provide up to 60 percent of the

approved work plan costs in any fiscal year. The non-federal share of

costs must be provided from non-federal sources.

Sec. 35.266 Maintenance of effort.

To receive section 319 funds in any fiscal year, a State must agree

to maintain its aggregate expenditures from all other sources for

programs for controlling nonpoint pollution and improving the quality

of the State's waters at or above the average level of such

expenditures in Fiscal Years 1985 and 1986.

Sec. 35.268 Award limitations.

The following limitations apply to funds appropriated and awarded

under section 319(h) of the Act in any fiscal year.

(a) Award amount. The Regional Administrator will award no more

than 15 percent of the amount appropriated to carry out section 319(h)

of the Act to any one State. This amount includes any grants to any

local public agency or organization with authority to control pollution

from nonpoint sources in any area of the State.

(b) Financial assistance to persons. States may use funds for

financial assistance to persons only to the extent that such assistance

is related to the cost of demonstration projects.

(c) Administrative costs. Administrative costs in the form of

salaries, overhead, or indirect costs for services provided and charged

against activities and programs carried out with these funds shall not

exceed 10 percent of the funds the State receives in any fiscal year.

The cost of implementing enforcement and regulatory activities,

education, training, technical assistance, demonstration projects, and

technology transfer programs are not subject to this limitation.

(d) Requirements. The Regional Administrator will not award section

319(h) funds to a State unless:

(1) Approved assessment report. EPA has approved the State's

assessment report on nonpoint sources, prepared in accordance with

section 319(a) of the Act;

(2) Approved State management program. EPA has approved the State's

management program for nonpoint sources, prepared in accordance with

section 319(b) of the Act;

(3) Progress on reducing pollutant loadings. The Regional

Administrator determines that the State made satisfactory progress in

the preceding fiscal year in meeting its schedule for achieving

implementation of best management practices to reduce pollutant

loadings from categories of nonpoint sources, or particular nonpoint

sources, designated in the State's management program. The State must

have developed this schedule in accordance with section 319(b)(2)(C) of

the Act;

(4) Activity and output descriptions. The work plan briefly

describes each significant category of nonpoint source activity and the

work plan commitments to be produced for each category; and

(5) Significant watershed projects. For watershed projects whose

costs exceed $50,000, the work plan also contains:

(i) A brief synopsis of the watershed implementation plan outlining

the problem(s) to be addressed;

(ii) The project's goals and objectives; and

(iii) The performance measures or environmental indicators that

will be used to evaluate the results of the project.

Lead-Based Paint Program (Section 404(g))

Sec. 35.270 Purpose.

(a) Purpose of section. Sections 35.270 through 35.278 govern Lead-

Based Paint Program Grants to States (as defined in section 3 of the

Toxic Substances Control Act), under section 404(g) of the Act.

(b) Purpose of program. Lead-Based Paint Program Grants are awarded

to develop and carry out authorized programs to ensure that individuals

employed in lead-based paint activities are properly trained; that

training programs are accredited; and that contractors employed in such

activities are certified.

(c) Associated program regulations. Associated program regulations

are found in 40 CFR part 745.

Sec. 35.272 Funding coordination.

Recipients must use the lead-based paint program funding in a way

that complements any related assistance they receive from other federal

sources for lead-based paint activities.

State Indoor Radon Grants (Section 306)

Sec. 35.290 Purpose.

(a) Purpose of section. Sections 35.290 through 35.298 govern

Indoor Radon

[[Page 40078]]

Grants to States (as defined in section 3 of the Toxic Substances

Control Act, which include territories and the District of Columbia)

under section 306 of the Toxic Substances Control Act.

(b) Purpose of program. (1) State Indoor Radon Grants are awarded

to assist States with the development and implementation of programs

that assess and mitigate radon and that aim at reducing radon health

risks. State Indoor Radon Grant funds may be used for the following

eligible activities:

(i) Survey of radon levels, including special surveys of geographic

areas or classes of buildings (such as public buildings, school

buildings, high-risk residential construction types);

(ii) Development of public information and education materials

concerning radon assessment, mitigation, and control programs;

(iii) Implementation of programs to control radon on existing and

new structures;

(iv) Purchase by the State of radon measurement equipment and

devices;

(v) Purchase and maintenance of analytical equipment connected to

radon measurement and analysis, including costs of calibration of such

equipment;

(vi) Payment of costs of Environmental Protection Agency-approved

training programs related to radon for permanent State or local

employees;

(vii) Payment of general overhead and program administration costs

in accordance with Sec. 35.298(d);

(viii) Development of a data storage and management system for

information concerning radon occurrence, levels, and programs;

(ix) Payment of costs of demonstration of radon mitigation methods

and technologies as approved by EPA, including State participation in

the Environmental Protection Agency Home Evaluation Program; and

(x) A toll-free radon hotline to provide information and technical

assistance.

(2) States may use grant funds to assist local governments in

implementation of activities eligible for assistance under paragraphs

(b)(1)(ii), (iii), and (vi) of this section.

(3) In implementing paragraphs (b)(1)(iv) and (ix) of this section,

a State should make every effort, consistent with the goals and

successful operation of the State radon program, to give preference to

low-income persons.

(4) Recipients may not use State Radon Program Grant funds to cover

the costs of proficiency rating programs under section 305(a)(2) of the

Act.

Sec. 35.292 Basis for allotment.

(a) The Regional Administrator will allot State Indoor Radon Grant

funds based on the criteria in EPA Guidance in accordance with section

306(d) and (e) of the Toxic Substances Control Act.

(b) No State may receive a State Indoor Radon Grant in excess of 10

percent of the total appropriated amount made available each fiscal

year.

Sec. 35.295 Maximum Federal share.

The Regional Administrator may provide State agencies up to 50

percent of the approved costs for the development and implementation of

radon program activities.

Sec. 35.298 Award limitations.

(a) The Regional Administrator shall not include State Indoor Radon

funds in a Performance Partnership Grant awarded to another State

Agency without consulting with the State Agency which has the primary

responsibility for radon programs as designated by the Governor of the

affected State.

(b) No grant may be made in any fiscal year to a State which in the

preceding fiscal year did not satisfactorily implement the activities

funded by the grant in the preceding fiscal year.

(c) The costs of radon measurement equipment or devices (see

Sec. 35.290(b)(1)(iv)) and demonstration of radon mitigation, methods,

and technologies (see Sec. 35.290(b)(1)(ix)) shall not, in the

aggregate, exceed 50 percent of a State's radon grant award in a fiscal

year.

(d) The costs of general overhead and program administration (see

Sec. 35.290(b)(1)(vii)) of a State Indoor Radon grant shall not exceed

25 percent of the amount of a State's Indoor Radon Grant in a fiscal

year.

(e) A State may use funds for financial assistance to persons only

to the extent such assistance is related to demonstration projects or

the purchase and analysis of radon measurement devices.

(f) Recipients must provide the Regional Administrator all radon-

related information generated in its grant supported activities,

including the results of radon surveys, mitigation demonstration

projects, and risk communication studies.

(g) Recipients must maintain and make available to the public, a

list of firms and individuals in the State that have received a passing

rating under the EPA proficiency rating program under section 305(a)(2)

of the Act.

Toxic Substances Compliance Monitoring (Section 28)

Sec. 35.310 Purpose.

(a) Purpose of section. Sections 35.310 through 35.315 govern Toxic

Substances Compliance Monitoring Grants to States (as defined in

section 3(13) of the Toxic Substances Control Act) under section 28(a)

of the Act.

(b) Purpose of program. Toxic Substances Compliance Monitoring

Grants are awarded to establish and operate compliance monitoring

programs to prevent or eliminate unreasonable risks to health or the

environment associated with chemical substances or mixtures within the

States with respect to which the Administrator is unable or not likely

to take action for their prevention or elimination.

(c) Associated program regulations. Associated program regulations

are at 40 CFR parts 700 through 799.

Sec. 35.312 Competitive process.

EPA will award Toxic Substances Control Act Compliance Monitoring

grant funds to States through a competitive process in accordance with

national program guidance.

Sec. 35.315 Maximum Federal share.

The Regional Administrator may provide up to 75 percent of the

approved work plan costs.

Sec. 35.318 Award limitation.

If the toxic substances compliance monitoring grant funds are

included in a Performance Partnership Grant, the toxic substances

compliance monitoring work plan commitments must be included in the

Performance Partnership Grant work plan.

State Underground Storage Tanks (Section 2007(f)(2))

Sec. 35.330 Purpose.

(a) Purpose of section. Sections 35.330 through 35.335 govern

Underground Storage Tank Grants to States (as defined in section 1004

of the Solid Waste Disposal Act) under section 2007(f)(2) of the Act.

(b) Purpose of program. State Underground Storage Tank Grants are

awarded to States to develop and implement a State underground storage

tank release detection, prevention, and corrective action program under

Subtitle I of the Resource Conservation and Recovery Act.

(c) Associated program regulations. Associated program regulations

are found in 40 CFR parts 280 through 282.

Sec. 35.332 Basis for allotment.

The Administrator allots State Underground Storage Tank Grant funds

[[Page 40079]]

to each regional office. Regional offices award funds to States based

on their programmatic needs and applicable EPA guidance.

Sec. 35.335 Maximum Federal share.

The Regional Administrator may provide up to 75 percent of the

approved work plan costs.

Pollution Prevention Incentives for States (Section 6605)

Sec. 35.340 Purpose.

(a) Purpose of section. Sections 35.340 through 35.349 govern

Pollution Prevention Incentive for States Grants under section 6605 of

the Pollution Prevention Act.

(b) Purpose of program. Pollution Prevention Incentives for States

Grants are awarded to promote the use of source reduction techniques by

businesses.

Sec. 35.342 Competitive Process.

EPA regions award Pollution Prevention Incentives for States Grants

to State programs through a competitive process in accordance with EPA

guidance. When evaluating State applications, EPA must consider, among

other criteria, whether the proposed State program would:

(a) Make specific technical assistance available to businesses

seeking information about source reduction opportunities, including

funding for experts to provide onsite technical advice to businesses

seeking assistance in the development of source reduction plans;

(b) Target assistance to businesses for whom lack of information is

an impediment to source reduction; and

(c) Provide training in source reduction techniques. Such training

may be provided through local engineering schools or other appropriate

means.

Sec. 35.343 Definitions.

In addition to the definitions in Sec. 35.102, the following

definition, Pollution prevention/Source reduction, applies to the

Pollution Prevention Incentives for States Grants program and to

Secs. 35.340 through 35.349:

(a) Pollution prevention/source reduction is any practice that:

(1) Reduces the amount of any hazardous substance, pollutant, or

contaminant entering any waste stream or otherwise released into the

environment (including fugitive emissions) prior to recycling,

treatment, or disposal;

(2) Reduces the hazards to public health and the environment

associated with the release of such substances, pollutants, or

contaminants; or

(3) Reduces or eliminates the creation of pollutants through

(i) Increased efficiency in the use of raw materials, energy,

water, or other resources; or

(ii) Protection of natural resources by conservation.

(b) Pollution prevention/source reduction does not include any

practice which alters the physical, chemical, or biological

characteristics or the volume of a hazardous substance, pollutant, or

contaminant through a process or activity which itself is not integral

to and necessary for the production of a product or the providing of a

service.

Sec. 35.345 Eligible applicants.

Applicants eligible for funding under this grant program include

any agency or instrumentality, including State universities, of the 50

States, the District of Columbia, the U.S. Virgin Islands, the

Commonwealth of Puerto Rico, and any territory or possession of the

United States.

Sec. 35.348 Award limitation.

If the Pollution Prevention Incentives for States Grants are

included in a Performance Partnership Grant, the work plan commitments

must be included in the Performance Partnership Grant work plan (see

Sec. 35.138).

Sec. 35.349 Maximum Federal share.

The Federal share for Pollution Prevention Incentives for States

Grants will not exceed 50 percent of the allowable pollution prevention

incentives to States project cost.

Water Quality Cooperative Agreements (Section 104(b)(3))

Sec. 35.360 Purpose.

(a) Purpose of section. Sections 35.360 through 35.364 govern Water

Quality Cooperative Agreements to State water pollution control

agencies and interstate agencies (as defined in section 502 of the

Clean Water Act) and local government agencies under section 104(b)(3)

of the Act. These sections do not govern Water Quality Cooperative

Agreements to other entities eligible under sections 104(b)(3); those

cooperative agreements generally are subject to the uniform

administrative requirements of 40 CFR part 30.

(b) Purpose of program. EPA awards Water Quality Cooperative

Agreements for investigations, experiments, training, demonstrations,

surveys, and studies relating to the causes, effects, extent,

prevention, reduction, and elimination of water pollution. EPA issues

guidance each year advising EPA regions and headquarters regarding

appropriate priorities for funding for this program. This guidance may

include such focus areas as National Pollutant Discharge Elimination

System watershed permitting, urban wet weather programs, or innovative

pretreatment program or biosolids projects.

Sec. 35.362 Competitive process.

EPA will award Water Quality Cooperative Agreement funds through a

competitive process in accordance with national program guidance.

Sec. 35.364 Maximum Federal share.

The Regional Administrator may provide up to 100 percent of

approved work plan costs.

State Wetlands Development Grants (Section 104(b)(3))

Sec. 35.380 Purpose.

(a) Purpose of section. Sections 35.380 through 35.385 govern State

Wetlands Development Grants for State and interstate agencies (as

defined in section 502 of the Clean Water Act) and local government

agencies under section 104(b)(3) of the Act. These sections do not

govern wetlands development grants to other entities eligible under

section 104(b)(3); those grants generally are subject to the uniform

administrative requirements of 40 CFR part 30.

(b) Purpose of program. EPA awards State Wetlands Development

Grants to to assist in the development of new, or refinement of

existing, wetlands protection and management programs.

Sec. 35.382 Competitive process.

State Wetlands Development Grants are awarded on a competitive

basis. EPA annually establishes a deadline for receipt of proposed

grant project applications. EPA reviews applications and decides which

grant projects to fund in a given year based on criteria established by

EPA. After the competitive process is complete, the recipient can, at

its discretion, accept the award as a State Wetlands Development Grant

or add the funds to a Performance Partnership Grant. If the recipient

chooses to add the funds to a Performance Partnership Grant, the

wetlands development program work plan commitments must be included in

the Performance Partnership Grant work plan.

Sec. 35.385 Maximum Federal share.

EPA may provide up to 75 percent of the approved work plan costs

for the development or refinement of a wetlands protection and

management program.

[[Page 40080]]

State Administration (Section 205(g))

Sec. 35.400 Purpose.

(a) Purpose of section. Sections 35.400 through 35.408 govern State

Administration Grants to States (as defined in section 502 of the Clean

Water Act) authorized under section 205(g) of the Act.

(b) Purpose of program. EPA awards these grants for the following

two purposes:

(1) Construction management grants. A State may use section 205(g)

funds for administering elements of the construction grant program

under sections 201, 203, 204, and 212 of the Clean Water Act and for

managing waste treatment construction grants for small communities. A

State may also use construction management assistance funds for

administering elements of a State's construction grant program which

are implemented without federal grants, if the Regional Administrator

determines that those elements are consistent with 40 CFR part 35,

subpart I.

(2) Permit and planning grants. A State may use section 205(g)

funds for administering permit programs under sections 402 and 404,

including Municipal Wastewater Pollution Prevention activities under an

approved section 402 program and State operator training programs, and

for administering statewide waste treatment management planning

programs, including the development of State biosolids management

programs, under section 208(b)(4). Some of these activities may also be

eligible for funding under sections 106 (Water Pollution Control),

205(j)(2) (Water Quality Management Planning), and 104(b)(3) (Water

Quality Cooperative Agreements and Wetlands Development Grants) of the

Clean Water Act. (See Secs. 35.160, 35.410, 35.360, and 35.380.)

(c) Associated program requirements. Program requirements for State

construction management activities under delegation are provided in 40

CFR part 35, subparts I and J. Program requirements for water quality

management activities are provided in 40 CFR part 130.

Sec. 35.402 Allotment.

Each State may reserve up to four percent of the State's authorized

construction grant allotment as determined by Congress or $400,000,

whichever is greater for section 205(g) grants.

Sec. 35.405 Maintenance of effort.

To receive funds under section 205(g), a State agency must expend

annually for recurrent section 106 program expenditures an amount of

non-federal funds at least equal to such expenditures during fiscal

year 1977, unless the Regional Administrator determines that the

reduction is attributable to a non-selective reduction of expenditures

in State executive branch agencies (see Sec. 35.165).

Sec. 35.408 Award limitations.

The Regional Administrator will not award section 205(g) funds:

(a) For construction management grants unless there is a signed

agreement delegating responsibility for administration of those

activities to the State.

(b) For permit and planning grants before awarding funds providing

for the management of a substantial portion of the State's construction

grants program. The maximum amount of permit and planning grants a

State may receive is limited to the amount remaining in its reserve

after the Regional Administrator allows for full funding of the

management of the construction grant program under full delegation.

(c) For permit and planning grants unless the work plan submitted

with the application shows that the activities to be funded are

coordinated, as appropriate, with activities proposed for funding under

sections 106 (Water Pollution Control) and 205(j) (Water Quality

Management Planning) of the Clean Water Act.

Water Quality Management Planning Grants (Section 205(j)(2))

Sec. 35.410 Purpose.

(a) Purpose of section. Sections 35.410 through 35.418 govern Water

Quality Management Planning Grants to States (as defined in section 502

of the Clean Water Act) authorized under section 205(j)(2) of the Act.

(b) Purpose of program. EPA awards Water Quality Management

Planning Grants to carry out water quality management planning

activities. Some of these activities may also be eligible for funding

under sections 106 (Water Pollution Control), 104(b)(3) (Water Quality

Cooperative Agreements and Wetlands Development Grants) and section

205(g) (State Administration Grants) of the Clean Water Act. (See

Secs. 35.160, 35.360, 35.380, and 35.400.) EPA awards these grants for

purposes such as:

(1) Identification of the most cost-effective and locally

acceptable facility and nonpoint measures to meet and maintain water

quality standards.

(2) Development of an implementation plan to obtain State and local

financial and regulatory commitments to implement measures developed

under paragraph (b)(1) of this section.

(3) Determination of the nature, extent, and causes of water

quality problems in various areas of the State and interstate region.

(4) Determination of those publicly owned treatment works which

should be constructed with State Revolving Fund assistance. This

determination should take into account the relative degree of effluent

reduction attained, the relative contributions to water quality of

other point or nonpoint sources, and the consideration of alternatives

to such construction.

(5) Implementation of section 303(e) of the Clean Water Act.

(c) Program requirements for water quality management planning

activities are provided in 40 CFR part 130.

Sec. 35.412 Allotment.

States must reserve, each fiscal year, not less than $100,000 nor

more than one percent of the State's construction grant allotment as

determined by Congress for Water Quality Management Planning Grants

under section 205(j)(2). However, Guam, the Virgin Islands, American

Samoa and the Commonwealth of the Northern Mariana Islands must reserve

a reasonable amount for this purpose. (See 40 CFR 35.3110(g)(4)

regarding reserves from State allotments under Title VI of the Clean

Water Act for section 205(j) grants.)

Sec. 35.415 Maximum Federal share.

The Regional Administrator may provide up to 100 percent of the

approved work plan costs.

Sec. 35.418 Award limitations.

The following limitations apply to funds awarded under section

205(j)(2) of the Clean Water Act. The Regional Administrator will not

award these grants to a State agency:

(a) Unless the agency develops its work plan jointly with local,

regional and interstate agencies and gives funding priority to such

agencies and designated or undesignated public comprehensive planning

organizations to carry out portions of that work plan.

(b) Unless the agency reports annually on the nature, extent, and

causes of water quality problems in various areas of the State and

interstate region.

(c) Unless the work plan submitted with the application shows that

the activities to be funded are coordinated, as appropriate, with

activities proposed for funding under section 106 (Water Pollution

Control) of the Clean Water Act.

[[Page 40081]]

PART 745--[AMENDED]

4. The authority citation for Part 745 continues to read as

follows:

Authority: 15 U.S.C. 2605, 2607, 2681-2692, and 42 U.S.C. 4852d.

5. EPA is proposing to remove 40 CFR 745.330.

[FR Doc. 99-17341 Filed 7-22-99; 8:45 am]

BILLING CODE 6560-50-U