| Federal Register Environmental Documents

Note: EPA no longer updates this information, but it may be useful as a reference or resource.

[Federal Register: August 19, 1996 (Volume 61, Number 161)]
[Notices]

[Page 42887-42899]

>From the Federal Register Online via GPO Access [wais.access.gpo.gov]

ENVIRONMENTAL PROTECTION AGENCY

[FRL-5556-1]

Performance Partnership Grants for State and Tribal Environmental
Programs: Revised Interim Guidance

AGENCY: Environmental Protection Agency.

ACTION: Notice.

SUMMARY: The ``Performance Partnership Grants for State and Tribal
Environmental Programs: Revised Interim Guidance'' is the revised
version of the Performance Partnership Grant (PPG) guidance dated
December 1995. The revisions reflect the change in year and the
existence of Congressional authority to award PPGs. A few other minor
clarifications were also made. This revised guidance will serve as the
operating guidance for States and Tribes interested in applying for
PPGs.

PPGs are intended to provide States and Tribes with greater
flexibility to address their highest environmental priorities, improve
environmental performance, achieve administrative savings, and
strengthen partnerships between EPA and the States or Tribes.

FOR FURTHER INFORMATION CONTACT: Juanita Smith, Office of Water (4102),
U.S. Environmental Protection Agency, 401 M Street, SW, Washington, DC
20460, Telephone: (202) 260-6226, FAX: (202) 260-5711, or Jack Bowles,
U.S. Environmental Protection Agency, Region VIII, 999 18th Street,
Suite 500, Denver, CO 80202-2466, Telephone: (303) 312-6315, FAX: (303)
312-6067.

SUPPLEMENTARY INFORMATION: PPGs are a powerful funding tool that EPA is
offering to eligible States and Tribes. A PPG is a multi-program grant
made to a State or Tribal agency from funds otherwise available for
categorical grant programs. A State or Tribe can combine funds from 2
or more of 16 eligible grant

[[Page 42888]]

programs into 1 or more PPGs. Recipients may then use PPGs to fund
activities that are within the cumulative eligibilities of the 16
eligible grant programs.

EPA encourages States and Tribes to take advantage of PPGs. PPGs
enable States and Tribes to better direct their funding toward their
most critical environmental problems and address multi-media high
priority strategies such as community-based environmental protection,
pollution prevention, and environmental justice. States and Tribes
interested in pursuing PPGs should work in partnership with their
Regional office to develop a PPG that funds solutions to the highest
environmental priorities and ensures that EPA statutory and program
requirements are met.

Additional contacts for information on PPGs are:

Headquarters:

Bruce Feldman, Chief, Grants Policy, Information and Training or
Ellen Haffa, Grants Administration Division, U.S. EPA (3901F), 401 M
Street, SW, Washington, DC 20460, (202) 260-2523.
Region 1:

Robert Goetzl, Chief, Strategic Planning Office, CSP, U.S. EPA--
Region I, John F. Kennedy Federal Building, One Congress Street,
Boston, Massachusetts 02203, (617) 565-3378.
Region 2:

Tierre Jeanne, Chief, Grants and Contracts Management Branch, U.S.
EPA--Region II, 290 Broadway, New York, NY 10007-1866, (212) 637-3402.
Dennis Santella, U.S. EPA--Region II, 290 Broadway, Strategic
Planning and Multi-media Programs Branch, New York, NY 10007-1866,
(212) 637-3746.

Region 3:

Mary Zielinski, Robert Picollo, Grants and Audit Management Branch,
U.S. EPA--Region III, 841 Chestnut Street, Philadelphia, PA 19107,
(215) 566-5415 (Mary Zielinski), (215) 566-5405 (Robert Picollo).
Region 4:

Michelle Glenn, U.S. EPA--Region IV, 345 Courtland Street, Atlanta,
GA 30365, (404) 347-7109 ext. 6878.

Region 5:

Tom Jackson, Acquisition and Assistance Branch (MC-10J), U.S. EPA--
Region V, 77 West Jackson Blvd., Chicago, Illinois 60604, (312) 886-
7523.

Region 6:

Brenda Durden, Chief, Program Planning and Grants Branch, U.S.
EPA--Region VI, 1445 Ross Avenue, Dallas, Texas 75202, (214) 665-6510.
Joe Massey, Grants Management Office, U.S. EPA--Region VI, 1445
Ross Avenue, Dallas, Texas 75202, (214) 665-7408.
Region 7:

Carol Rompage, Grants Management Officer, U.S. EPA--Region VII, 726
Minnesota Avenue, Kansas City, KS 66101.
Region 8:

Tony Medrano, Director, Office of Grants, Audit and Procurement,
U.S. EPA--Region VIII, 999 18th Street, Suite 500, Denver, CO 80202-
2466, (303) 312-6336.

Jack Bowles, U.S. EPA--Region VIII, 999 18th Street, Suite 500,
Denver, CO 80202-2466, (303) 312-6315.

Region 9:

Melinda Taplin, Chief, Grants Management Section (P-4-4), U.S.
EPA--Region IX, 75 Hawthorne Street, San Francisco, California 94105,
(415) 744-1693.

Region 10:

Denise Baker, U.S. EPA--Region X, 1200 6th Avenue, Seattle, WA
98101, (206) 553-8087.

Dated: August 13, 1996.

Dana Minerva,

Deputy Assistant Administrator, Office of Water.
Kerrigan Clough,

Assistant Regional Administrator, Office of Pollution Prevention, State
and Tribal Assistance, Region VIII.

Performance Partnership Grants Guidance

Executive Summary

Performance Partnership Grants (PPGs)

A PPG is a multi-program grant made to a State or Tribal agency by
the U.S. Environmental Protection Agency (EPA) from funds allocated and
otherwise available for categorical grant programs. PPGs provide States
and Tribes with the option to combine funds from two or more
categorical grants into one or more PPGs.

Purpose

<bullet> Flexibility. States and Tribes will have the flexibility
to address their highest environmental priorities across all media and
establish resource allocations based on those priorities, while
continuing to address core program commitments.
<bullet> Improved Environmental Performance. States and Tribes can:
(1) more effectively link program activities with environmental goals
and program outcomes; and (2) develop innovative pollution prevention,
ecosystem, and community-based strategies.
<bullet> Administrative Savings. Recipients and EPA can reduce
administrative burdens and costs by greatly reducing the numbers of
grant applications, budgets, workplans, and reports.
<bullet> Strengthened Partnerships. EPA will develop partnerships
with States and Tribes where both parties share the same environmental
and program goals and deploy their unique resources and abilities to
jointly accomplish those goals.

Authority

<bullet> Authorization for PPGs is contained in the 1996 Omnibus
Consolidated Rescissions and Appropriations Act (PL 104-134).
<bullet> Authority applies to funds from sixteen program grants
funded from EPA's State and Tribal Assistance Grants (STAG)
appropriation.

Eligibility

<bullet> All States and federally recognized Indian Tribes
(including environmental, health, agriculture, and other State/Tribal
agencies) eligible to receive more than one categorical grant in Fiscal
Year (FY) 1997 are eligible to receive PPGs.
<bullet> Local agencies are eligible if they: (1) Are eligible
under state authority to implement EPA funded programs; and (2) receive
direct funding from EPA for two or more of the eligible grant programs.
<bullet> PPGs do not affect State or Tribal agency ``pass-through''
grants to local or other agencies.

<bullet> State/Tribal agency eligibility is subject to the
authority of the governor or State legislature, or Tribal authorities,
as appropriate.

Application

<bullet> States and Tribes may apply for PPGs for any period after
enactment of statutory authority for the PPG program (April 26, 1996)
and may convert FY 1997 categorical grants to a PPG during the year.
<bullet> PPG program commitments are the programmatic basis for the
PPG award and grant accountability. Commitments may consist of
environmental indicators, performance measures (including measures of
activity), and narrative descriptions of program activities or program
elements. PPG program commitments must have core program elements and
performance measures, as defined by appropriate environmental statutes,
regulations and EPA or State policy. PPG program commitments may be
contained in categorical workplans, in an Environmental Performance
Agreement

[[Page 42889]]

(EnPA) or in a Tribal Environmental Agreement (TEA).

Funding and State/Tribal Cost Share

<bullet> EPA's allocation of grant funds to States will be the same
whether the funds are awarded as PPGs or categorically. PPGs do not
adversely affect a Tribe's ability to compete for any grant.
<bullet> PPGs may fund any activities eligible to be funded under
sixteen specified EPA grant authorities.
<bullet> FY 1995 and prior year federal grant funds must be
expended as categorical grants and may not be carried over into PPGs,
because authority for PPGs begins with FY 1996 federal funds.
<bullet> EPA's policy and goal is that States and Tribes should
continue to spend, in effect, the same amount of funds for
environmental programs under PPGs as under categorical grants.
Although, under PPGs, recipients will have the flexibility to realign
those resources among environmental programs based on negotiated
priorities in the EnPA/TEA, the total resources in the State or Tribe,
both Federal and non-Federal, targeted to environmental programs should
not be reduced, except in exceptional circumstances, for example, where
a State or Tribe reduces funds across all State or Tribal agencies.
Thus, the required cost share (based on the match or maintenance of
effort requirements of the categorical grants included in the PPG) will
be the same under PPGs as under categorical grants, unless EPA
determines that there are exceptional circumstances justifying a
reduction in cost share for a PPG for the year that the PPG is awarded.
<bullet> Applicants may have a single PPG budget for accounting and
reporting purposes.

State/Tribal Options

<bullet> The content of each PPG depends on its purpose and the
extent to which a recipient would like to deviate from traditional
categorical workplans or enter the National Environmental Performance
Partnership System (NEPPS). Below are the four major categories of PPGs
defined in this guidance (applicants may suggest other options):
<bullet> Administrative flexibility and savings only (with
categorical workplans);

<bullet> Administrative and programmatic flexibility (with
categorical workplans and a supplemental EnPA or TEA that explains the
rationale and benefits of the PPG);

<bullet> Administrative and programmatic flexibility; single/
multimedia EnPA/TEA in place of categorical workplans; and
<bullet> Any of the above PPG options and entering NEPPS.

EPA Regional Implementation

<bullet> EPA's Regional Administrators will be the designated
approval and award officials for PPGs, with the ability to redelegate
authority within their Regions.

<bullet> EPA Regions will designate a single grant Project Officer
for each PPG.

<bullet> When State/Tribal PPG proposals present significant
national policy issues, EPA Regions will consult with EPA's national
program managers.

Table of Contents

Section 1. Overview of EPA's Performance Partnership Grant Program
Section 2. Authority

Section 3. Eligibility

Section 4. PPG Application Options

Section 5. EPA and Recipient Roles and Responsibilities
Section 6. Funding

Section 7. Administrative Information

Section 8. Post-Award Requirements

Attachment 1. Sample Performance Measures

Section 1. Overview of the U.S. Environmental Protection Agency's
Performance Partnership Grant Program

Section 1.1 Scope of Guidance

A Performance Partnership Grant (PPG) is a single grant made to a
State or Tribe from grant funds allocated and otherwise available for
existing categorical grant programs. PPGs are voluntary and provide
States and Tribes with the option to combine funds from two or more
categorical grants into one or more PPGs. Recipients may receive their
financial assistance as one or more PPG(s), or continue receiving funds
as categorical grants. States and Tribes may apply for these grants for
any period after enactment of statutory authority for the PPG program
(April 26, 1996).

This Guidance provides direction for: (1) States and Tribes that
apply for and receive PPGs; (2) States applying for PPGs and entering
the National Environmental Performance Partnership System (NEPPS); and
(3) EPA Regions that approve and award PPGs. This document remains in
effect until superseded by statute, federal regulation, or amended
guidance. EPA expects to develop and issue regulations governing PPGs
during FY 1996/1997. The Agency expects extensive stakeholder
involvement in the development of the regulation.

Section 1.2 Organization

The guidance is divided into two parts. Sections 1-3 present an
overview of the new program, explaining the purpose and expected
benefits of PPGs, and identifying eligible grants, recipients, and
activities. Sections 4-8 provide more specific guidance to Federal,
State, and Tribal officials responsible for implementing the grant
program. States and Tribes are presented a variety of options for how
to apply for and manage PPGs. Section 4, in particular, helps
applicants identify reasons for applying for a PPG and provides
application criteria. Each section includes a checklist of steps and
options.

Section 1.3 Purpose and Goals

President Clinton announced Performance Partnership Grants on March
16, 1995, as part of the Administration's program to ``Reinvent
Environmental Regulation.'' PPGs are a part of EPA's continuing effort
to reinvent government and build State and Tribal environmental
protection capacity. This voluntary program is a response to
recommendations from various internal and external stakeholders 1
to:

\1\ The National Performance Review (``Creating a Government
That Works Better and Costs Less''), September 1992; EPA's State-EPA
Capacity Steering Committee recommendations in ``Strengthening
Environmental Management in the United States, Report of the Task
Force to Enhance State Capacity,'' Environmental Protection Agency,
Office of the Administrator, EPA-270-R-93-001, July 1993; and the
National Academy of Public Administration Report (``Setting
Priorities, Getting Results: A New Direction for EPA''), April 1995.

<bullet> Increase State and Tribal flexibility,
<bullet> Help States and Tribes improve environmental performance,
<bullet> Achieve administrative savings by streamlining the grants
process, and

<bullet> Strengthen EPA partnerships with State and Tribal
governments.

These previous recommendations have formed the basis for the
purposes and goals of the PPG program, as described below:
Flexibility. PPGs will provide States and Tribes with flexibility
to address their most pressing environmental priorities across all
media and establish resource allocations based on those priorities,
while continuing to address core program commitments. They will allow
recipients to more effectively administer core statutory, regulatory
and non-regulatory programs. Recipients will also be able to develop
innovative multimedia programs and activities that are difficult to
fund with separate categorical grants. Moreover, recipients will have
the option of developing multi-year planning.
Improved Environmental Performance. PPGs will encourage States and
Tribes to improve

[[Page 42890]]

environmental performance and more effectively link program goals with
program outcomes. Recipients will be able to establish priorities
across all environmental programs, and integrate strategic goals such
as pollution prevention and community-based environmental protection
into their program planning. States and Tribes will be able to achieve
these objectives by:

<bullet> Coordinating and integrating activities which are now
fragmented under many statutes, regulations, and programs,
<bullet> Conducting assessments to define environmental problems
and set priorities with the public,

<bullet> Targeting the most significant environmental problems,
<bullet> Building environmental protection capacity through
training, technical assistance and other appropriate means, and
<bullet> Using common sense and multimedia environmental protection
strategies such as pollution prevention, ecosystem protection,
community-based protection and environmental justice.
The emphasis on improved environmental performance will be achieved
by increasing the use of environmental indicators and program
performance measures, and decreasing the reporting of inputs and
activities. Performance measures, to be developed jointly by EPA and
each State or Tribe, will gauge progress toward agreed upon goals (see
Section 1.7). Improved performance measures will provide the foundation
for better reporting, monitoring, and assessment of State, Tribal and
national environmental conditions. EPA expects that targeted strategic
approaches and improved performance measures, when implemented
together, will accelerate long-term systematic improvements in
environmental conditions.

Administrative Savings. EPA, States, and Tribes expect PPGs to
reduce administrative burdens and costs by reducing the overall number
of grant applications, workplans, reports and certifications associated
with traditional, single media federal grants. Multi-year planning may
also contribute to reduced administrative costs.
Strengthened Partnerships. EPA will develop partnerships with
States and Tribes where both parties share the same environmental and
program goals and jointly deploy their unique resources and abilities
to accomplish those goals.

Section 1.4 Summary of State and Tribal Options

The PPG program is designed to provide maximum flexibility to
States and Tribes. Potential recipients may apply for a PPG to replace
all sixteen eligible categorical grants, some of the sixteen (e.g.,
water media PPG), or portions of some of them (e.g., an enforcement
PPG). As summarized below and explained in Section 4, application
options are streamlined and tailored to the specific goals of the PPG.
States and Tribes may apply for a PPG using any of the following four
options. EPA will also work with States and Tribes on any other options
they would like to propose.

I. Administrative flexibility and savings based on categorical
workplans (see Section 4.3).

II. Administrative and programmatic flexibility with an
Environmental Performance Agreement (EnPA)/Tribal Environmental
Agreement (TEA) that includes categorical workplans. In this case, the
categorical workplans still establish most of the PPG program
commitments. The EnPA/TEA also explains the rationale for the PPG and
identifies any additional PPG program commitments (see Section 4.4).
III. Administrative and Programmatic flexibility based on an EnPA/
TEA that replaces categorical workplans. In this case, the EnPA/TEA
establishes all of the PPG program commitments (see Section 4.5).
IV. Application for a PPG under any of the three previous options
and entering the National Environmental Performance Partnership System
(NEPPS). Currently, this option is available for States, although
interested Tribes could explore applicability with their Regional
Administrator (see Section 4.6).

Section 1.5 Relationship to Oversight Reform and the National
Environmental Performance Partnership System

On May 17, 1995, State and EPA leaders signed a ``Joint Commitment
to Reform Oversight and Create a National Environmental Performance
Partnership System'' (NEPPS). The objective of signing this agreement
was to accelerate the transition to a new working relationship between
EPA and the States--one which reflects the advancement made in
environmental protection over the preceding two decades by both the
States and EPA.

Key goals that this new partnership agreement share with PPGs are:
to allow States and EPA to achieve improved environmental results by
directing scarce public resources toward the highest priority, highest
value activities; to provide States with greater flexibility to achieve
those results; to improve public understanding of environmental
conditions and choices; and to enhance accountability to the public and
taxpayers. Other key goals of the NEPPS partnership agreement are
increased reliance on self-management by State programs and a
differential approach to oversight that serves as an incentive for
State programs to perform well, rewarding strong programs and freeing
up federal resources to address problems where State programs need
assistance.

NEPPS and PPGs share many of the same objectives. Of course, States
may apply for PPGs without entering NEPPS (and vice-versa) . But where
States wish to apply for PPGs and enter NEPPS, the processes and
documentation are integrated and, where appropriate, identical. The
Environmental Performance Agreement (EnPA) is a document that is common
to both PPGs and NEPPS. For States doing both, the EnPA will allow the
processes and documentation to be integrated (see Section 4.6 for more
details).

Section 1.6 Relationship to Tribal Environmental Agreements

On July 14, 1994, Administrator Browner issued a nine-point Action
Memorandum on Strengthening Tribal Operations which called for the
development of Tribal-EPA Workplans (now called Tribal Environmental
Agreements) to be jointly developed by EPA Regions and Tribes. In
consultation with the Agency's Tribal Operations Committee, the
American Indian Environmental Office and the National Indian Work Group
developed guidance for the Tribal Environmental Agreements (TEAs).
Currently, EPA Regions and Tribes are developing TEAs, many of which
will be signed within the next year.

The TEAs (signed by the EPA Regional Administrator and the Tribal
leadership) are a planning tool which clearly identifies the Tribe's
environmental objectives, expected outcomes and resource needs, and
implementation and management assistance needed from EPA. The
Agreements establish the Tribe's environmental objectives over 3-4
years, but are flexible documents that can be changed to meet Tribal
needs.

For Tribal PPGs, the TEAs will substitute for the State EnPAs. In
order for the TEAs to also compare with the EnPAs as commitment
documents (PPG Options II-IV) where Tribes/States are shifting funds,
Tribes wanting to enter a PPG will have to include a specific

[[Page 42891]]

section on the anticipated PPG funds and program commitments in
addition to the other elements of the TEA or as an amendment to an
already signed TEA. By using the TEA instead of the EnPA, the Tribes
will not have to conduct two planning processes. The addition of a
commitment section to the TEA should ensure that PPG funding shifts,
commitments, and expectations are clearly defined in one document
signed by both the Tribe and EPA. TEAs will be required for Tribes
wherever EnPAs are required for States.

Section 1.7 PPG Accountability and Performance Measures

All PPGs will be required to contain a legally binding set of
program commitments. These program commitments will be the primary
basis for evaluating the success of a PPG. Some program commitments
will be required in all PPGs because they are required by statute,
regulation, standing legal agreements between EPA and States/Tribes
(e.g., Delegation Agreements), or National Program Manager/Regional
program guidance. Others will be optional.
For the purposes of this PPG guidance, program commitments are ``a
description of the PPG program goals and objectives, results and
benefits expected, a plan of action, and quantifiable projections of
the program and environmental accomplishments to be achieved and the
performance measures to be used. Where accomplishments cannot be
quantified, activities can be listed to show the schedule of
accomplishments. PPG program commitments are the legal basis for the
expenditure of federal grant funds and the recipient's matching
requirement'' (see Section 1.8).

EPA will continue to work with States and Tribes to define the
elements of program commitments, including national environmental goals
and performance measures.

As EPA and States/Tribes negotiate program commitments under PPGs,
they are encouraged to use performance measures that measure program
and environmental outcomes and outputs more often than they now do.
Performance measures that are PPG program commitments must be
quantifiable, measurable, and verifiable. Specifically, EPA encourages
all States and Tribes to adopt outcome and output-oriented performance
measures that track program performance, environmental conditions and
trends, and business environmental performance.
State/Tribal Program Performance measures suggest how effectively
or reliably a State/Tribal Program is achieving its objectives.
Measures may be outcome or output oriented. They may include, where
appropriate and necessary, activity measures traditionally used to
evaluate environmental programs.

Business Environmental Performance measures assess environmental
behavior in the private sector.

Environmental Indicators are measures of actual changes in air and
water quality, land use, and changes in living resources and human
health.

Appropriate accountability provisions are essential in designing
the new PPG program. A fundamental goal of EPA's efforts to design
accountability provisions into PPGs is to begin moving Federal, State,
and Tribal programs toward the use of results-oriented measures of
environmental and program performance that are understandable and
meaningful to the public. In recent years, EPA, States, and Tribes,
with input from the stakeholders and the public, have embarked on new
and innovative strategic directions and developed or tested innovative
performance measures that are a natural fit to incorporate into PPGs.
EPA believes that PPG performance measures should be consistent with
ongoing EPA and State or Tribal initiatives, such as ``The New
Generation of Environmental Protection: EPA's Five-Year Strategic
Plan,'' 2 the National Environmental Goals Project, and EPA
National Program performance measures (developed under the NEPPS
initiative). Examples of some potential performance measures are
included in Attachment 1. A more comprehensive list of optional
environmental indicators may be found in ``Prospective Indicators for
State Use in Performance Agreements'' prepared under a cooperative
agreement with the Florida Center for Public Management, Florida State
University. This report provides a preliminary list of national
environmental indicators that may be helpful to States, Tribes and EPA
looking for good ideas about available environmental indicators.3

\2\ EPA 200-B-94-002.

\3\ To obtain a copy of the document, contact EPA's Office of
Policy, Planning and Evaluation, at (202) 260-4909, or Florida State
University at (904) 921-0423.

Specific performance measures are required only if they are
required by statute, regulation or standing legal agreements between
EPA and States/Tribes (e.g., Delegation Agreements), or if EPA National
Program Managers or Regions have required them in guidance or policy.

Section 1.8 Definitions

Agency--United States Environmental Protection Agency (EPA).
Categorical Grant--Media-specific or multimedia grant for a
particular program or narrowly defined activities.
Environmental Performance Agreement (EnPA)--Broad strategic
document containing negotiated environmental priorities and goals. The
EnPA may also include specific program commitments that are
incorporated by reference in the Performance Partnership Grant
Agreement. A State may use this document as a means to implement NEPPS,
even if the State does not apply for a PPG.
National Environmental Performance Partnership System (NEPPS)--A
new approach to developing and implementing the State-EPA oversight
relationship agreed to by the States and EPA. It contains seven
principal components: (1) Increased use of environmental indicators;
(2) a new approach to program assessments by States; (3) environmental
performance agreements; (4) differential oversight; (5) performance
leadership programs; (6) public outreach and involvement; and (7) joint
system evaluation.

National Program Manager--Individual responsible for setting the
direction and policy for the management of an EPA media or enforcement
program on a National level.

Oversight Reform--Same as National Environmental Performance
Partnership System (see above).

Performance Partnership Grant (PPG)--A PPG is a single grant made
to a State or Tribe from grant funds allocated and otherwise available
for more than one existing categorical grant program. PPGs are
voluntary and will provide States and Tribes with the option to combine
funds from two or more of their categorical grants into one or more
PPGs. Recipients must be eligible to receive the categorical grants
included in a PPG. However, the unique administrative requirements and
limitations set forth in 40 CFR Part 35 Subpart A for each categorical
program will not apply after the funding is approved for a PPG. Only
those requirements that pertain to PPGs will be applicable.
Performance Partnership Grant Agreement--The legal instrument by
which EPA will transfer money, property, services or anything of value
to an eligible PPG grant recipient. The agreement will specify:
<bullet> Budget and project periods,
<bullet> Federal share of eligible program costs,

[[Page 42892]]

<bullet> Combined budget,

<bullet> PPG program commitments (see definition below), and
<bullet> Any terms and conditions.
Performance Partnership Grant Program Commitments--A description of
the PPG program goals and objectives, results and benefits expected, a
plan of action, and quantifiable projections of the program and
environmental accomplishments to be achieved and the performance
measures to be used. Where accomplishments cannot be quantified,
activities can be listed to show the schedule of accomplishments. PPG
program commitments are the legal basis for the expenditure of federal
grant funds and the recipient's matching requirement. This guidance
will commonly refer to PPG program commitments as consisting of goals,
objectives, performance measures and program activities. A set of core
program commitments must be included in the PPG Program Commitments.
These core program commitments are based on requirements in statutes,
regulations, standing legal agreements between EPA and States/Tribes
(e.g. Delegation Agreements), and National Program Manager/Regional
guidance.

Program Flexibility--Reduction of effort or elimination of a
program element in order to invest in another media-specific or
multimedia program element.

Tribal Environmental Agreement (TEA)--A planning tool (signed by
the EPA Regional Administrator and the Tribal leadership) which clearly
identifies the Tribe's environmental objectives, expected outcomes and
resource needs, as well as implementation and management assistance
needed from EPA. The Agreements establish the Tribe's environmental
objectives over 3-4 years, but are flexible documents that can be
changed to meet Tribal needs.

Section 2. Authority

Section 2.1 Statutory Authority

Authority for PPGs is contained in the 1996 Omnibus Consolidated
Rescissions and Appropriations Act (P.L. 104-134). The authorizing
language reads as follows:

That beginning in fiscal year 1996 and each fiscal year
thereafter, and notwithstanding any other provision of law, the
Administrator is authorized to make grants annually from funds
appropriated under this heading, subject to such terms and
conditions as the Administrator shall establish, to any State or
federally recognized Indian tribe for multimedia or single media
pollution prevention, control and abatement and related
environmental activities at the request of the Governor or other
appropriate State official or the tribe.

Section 2.2 Other Authorities

The requirements of 40 CFR Part 31, ``Uniform Administrative
Requirements for Grants and Cooperative Agreements to State and Local
Governments,'' will apply to a PPG as they do to a categorical grant.
Some limited exceptions to 40 CFR Part 31 may be necessary to
accommodate these grants. EPA will manage such exceptions through the
grant deviation process. Additional requirements are included in
substantive program regulations, OMB Circulars A-87 and A-102, the EPA
Assistance Administration Manual, EPA-State/Tribal Memoranda of
Agreement (MOA), NPM-Regional Guidance and MOA, the NEPPS agreement
signed on May 17, 1995 (for States entering NEPPS), and E.O. 12372,
``Intergovernmental Review of Federal Programs.''

Section 3. Eligibility

Section 3.1 Eligible Applicants

All States, territories, and Federally recognized Indian Tribes
eligible to receive more than one of the categorical grants referred to
in Section 3.2 are eligible to receive a PPG(s). Any duly authorized
State or Tribal entity that currently receives or is eligible to
receive EPA categorical program grants may request a PPG for the funds
it administers. This may include agencies other than environmental
agencies (e.g., agricultural and health agencies), where authorized by
State/Tribal law. Agencies that now receive pass-through funding from a
State or Tribe may continue to receive such funding subject to
applicable State, Tribal or Federal law. For any agency that now
receives direct Federal funding, but is not eligible for a PPG (e.g.,
local air districts), EPA will continue to make Federal funding
available pursuant to existing categorical grant authorities.
Eligibility for PPGs is subject to the appropriate State, Tribal, or
Territorial executive or legislative authorities.
In the case of proposals which combine funds currently awarded to
separate, duly authorized State or Tribal agencies--such as combining
funds from an environmental department with funds from program grants
to an agriculture or health department--a joint proposal signed by the
appropriate officials should indicate a method for sharing funds in
addition to demonstrating the eligibility, planning, accountability and
evaluation elements of PPGs described in this guidance.
If program eligibility, formerly referred to as Treatment as State
(TAS), is required for a Tribal applicant to be eligible to receive
categorical funding for a specific program, the Agency will require the
same eligibility if the Tribal applicant intends to include funds for
that categorical grant in the PPG or to use PPG funds for activities
under that program.

EPA encourages applicants to combine funds from as many categorical
program grants as possible into a PPG to achieve maximum flexibility.

Section 3.2 Eligible Grant Programs

Funds available for the following sixteen grants identified in
EPA's FY 1996 State and Tribal Assistance Grants (STAG) appropriation
are eligible to be combined into a PPG in FY 1996:

Air pollution control (CAA section 105),
Water pollution control (CWA section 106),
Nonpoint source management (CWA section 319),
Water quality cooperative agreements (CWA section 104(b)(3)),
Wetlands program development (CWA section 104(b)(3)),
Public water system supervision (SDWA sections 1443(a) and
1451(a)(3)),

Underground water source protection (SDWA section 1443(b)),
Hazardous waste management (Solid Waste Disposal Act section
3011(a)),

Underground storage tank (Solid Waste Disposal Act section
2007(f)(2)),

Radon assessment and mitigation (TSCA section 306),
Lead-based paint activities (TSCA section 404(g)),
Toxics compliance and monitoring (TSCA section 28),
Pollution prevention incentives for States (PPA section 6605),
Pesticide enforcement (FIFRA section 23(a)(1)),
Pesticide applicator certification and training/pesticide
program (FIFRA section 23(a)(2)), and

General Assistance Grants to Indian Tribes (Indian
Environmental General Assistance Program Act of 1992). Only eligible
Tribes can propose to include these funds in a PPG application.
Generally, grant funds that States combine into PPGs are those that
provide for continuing, ongoing, environmental programs. Grants to
capitalize Clean Water and Drinking Water State Revolving Funds, and
other amounts specified for stated purposes in the STAG account, are
not eligible for inclusion in PPGs.

Because all EPA grants to Tribes are awarded through a competitive
or

[[Page 42893]]

discretionary process, Tribes will be allowed to include these grants
in a PPG without adverse effects to their ability to compete for any
grant. For competitive grants on the above list (e.g., pollution
prevention incentives for States, wetlands program development, water
quality cooperative agreements, general assistance program grants to
Tribes) to be combined in a PPG, the State or Tribe must first be
awarded the competitive grant, and must identify specific output
measures as a condition for adding the funds to a PPG. A State or Tribe
may include these grant output measures in its EnPA/TEA. EPA will add
the funds to the PPG by a grant amendment.

Section 3.3 Eligible Activities

Recipients may use PPGs to fund activities that are within the
cumulative eligibilities of the grants listed in Section 3.2. Within
these eligibilities, a PPG may fund multimedia regulatory and nonregulatory
activities that could be difficult to fund under any
individual categorical grant. EPA, in consultation with the States and
Tribes, has developed a list of activities indicative of those it hopes
PPGs will encourage. The list does not indicate pre-approval of
activities and is not intended to be exhaustive. It merely illustrates
the kind of activities which States, Tribes, the Agency and other
stakeholders have identified as difficult to conduct with categorical
grants and for which PPGs would be appropriate.
Activities that PPGs may support, but are not limited to:
<bullet> Pollution prevention oriented multi-media rules,
permitting, compliance assistance, inspections, enforcement, training,
and facility planning (e.g., one industry/one rule, one stop emission
reporting, permitting and compliance assistance),
<bullet> Non regulatory pollution prevention technical assistance,
technology development and diffusion, and partnerships with
accountants, financiers, insurers, risk managers, urban planners,
chemists, product designers and marketers, and other professions,
<bullet> Ecosystem, community, sector, watershed, or airshed
environmental protection strategies (e.g., watershed targeted NPDES
permits, empowerment zones),

<bullet> Support of Agency initiatives including Common Sense
Initiative & Regulatory Reinvention (e.g., XL strategy implementation,
market based strategies, local community risk assessment, negotiated
rulemaking, third-party auditing, self-certification for compliance),
<bullet> Environmental justice,
<bullet> Public outreach and involvement,
<bullet> Information clearinghouses,
<bullet> Environmental monitoring,
<bullet> Capacity building and environmental code development, and
<bullet> Integration of regulatory and non regulatory strategies.

Section 4. PPG Application Options

Section 4.1 Introduction

This chapter presents the application options for States and Tribes
applying for a PPG(s). For program grants with budget periods beginning
10/1/96, applications are due by 8/1/96. Reimbursement for pre-award
costs from 10/1/96 until the date of award are only available if EPA
has received the application by 9/30/96. Applicants choosing to apply
only for categorical grants for FY 1997 will continue to follow the
current process and schedule for categorical grants.

Section 4.2 PPG Options

For FY 1997, EPA is providing PPG applicants with the following
four application options:

I. Administrative flexibility and savings based on categorical
workplans (see Section 4.3).

In addition to these options, EPA will continue working with States
and Tribes to identify other application options for implementing PPGs.
PPG applicants, like all State, local, and Tribal federal grant
applicants, will continue to use the ``Application for Federal
Assistance: State and Local Non-Construction Programs'' (Standard Form
424), including the required supporting documents. Submittal of this
application by a Governor or other appropriate State or Tribal official
will serve as the State's or Tribe's official request for a PPG.

Section 4.3 Option I. Applicants Seeking a PPG for Administrative
Flexibility and Savings Based on Categorical Workplans

When an applicant has completed negotiation of its categorical
grant workplans, the PPG program commitments will consist of those
grant workplans. The PPG application should contain:
<bullet> First page of Standard Form 424--``Application for Federal
Assistance,''

<bullet> Consolidated budget (separate categorical budgets totaled
for funding in the PPG),

<bullet> A list of the grant programs (or portions thereof) from
which funds will be reprogrammed to a PPG(s),
<bullet> A narrative statement explaining the rationale and
expected benefits of the PPG (i.e., improved performance of the
combined grant, administrative savings, reinvestments), and
<bullet> Categorical workplans proposed for inclusion in the PPG
(same workplans submitted with categorical applications can be used).

Section 4.4 Option II. Applicants Seeking a PPG for Administrative and
Programmatic Flexibility, Based on an EnPA/TEA That Includes
Categorical Workplans

This section applies to applicants who will use PPGs to implement a
new strategic direction, programmatic flexibility, or innovative
environmental protection strategies, not already explained in
categorical grant workplans. In this case, an EnPA/TEA will contain:
the goals and rationale for the PPG; the categorical workplans that
establish most of the PPG program commitments; and any additional PPG
program commitments not contained in categorical workplans. The PPG
Agreement would reference the categorical workplans and any other
sections of the EnPA/TEA that contain PPG program commitments. The
intent is to develop the EnPA in two phases. In the first phase, EPA
and the applicant negotiate and agree on environmental priorities and
goals. In the second phase, EPA and the applicant negotiate PPG program
commitments to achieve these goals.

The PPG application should contain the following:
<bullet> First Page of Standard Form 424--``Application for Federal
Assistance,''

<bullet> Single budget supporting the PPG, and
<bullet> An EnPA/TEA that includes:

[[Page 42894]]

<bullet> A list of grants (or portions thereof) from which funds
will be reprogrammed to a PPG(s),

<bullet> Negotiated environmental priorities and goals,
<bullet> A narrative statement explaining the rationale and
expected benefits (i.e., improved performance of the combined grant,
administrative savings, disinvestments, reinvestments),
<bullet> Identification of EPA Roles and Responsibilities,
<bullet> PPG program commitments consisting of:
<bullet> Categorical workplans proposed for inclusion in the PPG
(workplans submitted with categorical applications can be used), and
<bullet> Any additional multimedia or strategic PPG program
commitments and performance measures,

<bullet> A description of public participation efforts (optional),
and

<bullet> Evaluation criteria and procedure.

Section 4.5 Option III. Administrative and Programmatic Flexibility
Based on an EnPA That Replaces Categorical Workplans

This section describes the elements of a PPG application based
entirely on an EnPA/TEA that establishes PPG program commitments. The
EnPA/TEA replaces the categorical workplans. The PPG Agreement would
reference the sections of the EnPA/TEA that are PPG program
commitments. In this case, a State or Tribe could: (1) Continue to make
media or program the primary basis for organizing its PPG program
commitments; or (2) organize PPG program commitments on some other
primary basis (e.g., community-based environmental protection).
The PPG application should contain the following:
<bullet> First Page of Standard Form 424--``Application for Federal
Assistance,''

<bullet> Single budget supporting the PPG, and
<bullet> An EnPA/TEA that includes:
<bullet> A list of grants (or portions thereof) from which funds
will be reprogrammed to a PPG(s),

<bullet> Negotiated environmental priorities and goals,
<bullet> A narrative statement explaining the rationale and
expected benefits (i.e., improved performance of the combined grant,
administrative savings, disinvestments, reinvestments),
<bullet> Identification of EPA roles and responsibilities,
<bullet> PPG program commitments that include:
<bullet> Core program commitments, and
<bullet> Multimedia and additional media-specific program
commitments,

<bullet> A description of Public Participation efforts (optional),
and

<bullet> Evaluation.

The following explains in more detail some of the elements of the
EnPA/TEA not previously addressed:

<bullet> Negotiated Environmental Priorities and Goals. This part
of the EnPA/TEA is the product of negotiation between senior Regional
officials and State or Tribal officials in positions to negotiate
across grant programs, where this is appropriate. This part identifies
the applicant's most significant environmental problems and the goals
the applicant expects to achieve with the PPG. This strategic planning
process reflects the applicant's priorities (as contained in any State
or Tribal strategic plans or self-assessments), comparative risk
studies or other risk-based approaches, and national priorities
(enumerated in EPA's five-year strategic plan \4\, the National
Environmental Goals Project and National program priorities specified
in EPA HQ/Regional Memorandums of Agreement). Major new strategic or
program directions or investments/disinvestments should be identified
here.

\4\ ``The New Generation of Environmental Protection: EPA's
Five-Year Strategic Plan,'' (EPA 200-B-94-002)

<bullet> EPA Roles and Responsibilities in Supporting State or
Tribal Efforts. To strengthen the federal partnership with States and
Tribes, the EnPA/TEA should describe how EPA will carry out its federal
responsibilities and how it will support the State's or Tribe's
environmental protection efforts. The negotiated agreement should
include the program commitments (goals, performance measures, and/or
program activities) the recipient expects to achieve under the PPG. The
agreement should also set forth procedures (e.g., mid-year and end-ofyear
reviews, reporting requirements, joint activities) that EPA and
the recipient will use for evaluating accomplishments, discussing
progress, and making adjustments to meet milestones.
<bullet> Core Program Commitments. The EnPA/TEA must include core
program commitments (goals, performance measures, program activities)
derived from statutes, regulations, and standing legal agreements
between EPA and States/Tribes (e.g., Delegation Agreements). As
appropriate and negotiated between EPA Regions and recipients, core
program commitments and performance measures should reflect National
Program Manager/Regional guidance, EPA Headquarters-Regional MOA,
Regional-State/Tribal MOA, and other EPA or State/Tribal policies. EPA
should work with States and Tribes to balance the need to maintain core
program requirements with the need to incorporate program flexibility
and move toward program performance measures and environmental
indicators. An EnPA/TEA may also include measures for which data
sources are not yet available if there is a commitment to develop
reliable data sources.

<bullet> Public Participation. States and Tribes should continue to
use their current public participation processes in conjunction with
PPGs. EPA believes that it is critical to involve all stakeholders in
the process of determining environmental priorities and goals, and
therefore strongly encourages States and Tribes to involve stakeholders
in identifying priority environmental problems. Recognizing the role
and contribution of general purpose and special purpose local
governments in the Nation's overall protection of the environment, EPA
strongly encourages States to engage local jurisdictions which would be
affected by a PPG. EPA also encourages recipients to share with
stakeholders the results of their goals and activities defined in the
EnPA/TEA. Effective public participation will establish the foundation
for greater program flexibility and the achievement of better
environmental results.

<bullet> PPG Evaluation. The recipient should prepare a PPG annual
report (as described in 40 CFR Sec. 31.40(b)) as well as satisfy any
other reporting requirements required in the PPG agreement. In addition
to evaluating performance based on PPG program commitments, the
recipient should identify any problems, delays or conditions which
materially affected the recipient's ability to meet the PPG objectives,
and any benefits that enabled the recipient to perform better than
expected. EPA and the States/Tribes are also interested in knowing
whether the work undertaken under the grant: (1) addressed the stated
strategic priorities and goals; (2) achieved administrative cost
savings; (3) where appropriate, improved environmental results (to the
extent environmental performance measures were part of the PPG program
commitments); and (4) improved EPA/grantee working relationships.5
After reviewing the annual report, the EPA Project Officer will provide
evaluation findings to the recipient and will include such findings in
the official PPG file.

\5\ The FY 1995 grant flexibility demonstration projects in New
Hampshire, Massachusetts and North Dakota provide some useful
lessons in evaluating combined grants. Updates on these projects are
available from Regions I and VIII.

[[Page 42895]]

<bullet> Evaluating the National PPG Program. EPA will request the
assistance of PPG recipients to evaluate the overall PPG process.
Lessons learned from the FY 1996/1997 experience will be used to modify
the program in subsequent years. The overall PPG grant process will be
evaluated by EPA and program participants in order to understand how
well it is being implemented as a national program. In addition to the
criteria used to evaluate individual PPGs, national criteria will
address whether PPGs: (1) led to greater State and Tribal flexibility;
(2) resulted in States and Tribes adopting innovative environmental
protection strategies; (3) changed polluter behavior; and (4) improved
public health and the environment.

Section 4.6 Applicants Seeking a PPG and Entering the National
Environmental Performance Partnership System (NEPPS) in FY 1997. 6

\6\ Currently, this option is available for States, although
interested Tribes could explore applicability with their Regional
Administrator.

This section applies to States interested in applying for a PPG and
entering NEPPS. A State may choose to enter NEPPS in combination with
any of the PPG options described above. In addition to providing the
information for PPGs described in either Sections 4.3, 4.4, or 4.5, a
NEPPS State would have to consult the May 17, 1995 NEPPS agreement for
details of the NEPPS system.

Section 4.7 Converting Categorical Grants to a PPG During FY 1997

In FY 1997, for various reasons (e.g. converting to a fiscal year
different than 10/1/96-9/30/97) a state may wish to convert from
categorical grants to a PPG during the federal fiscal year. The
following procedures apply to those applicants who receive a
categorical grant(s) for the beginning of FY 1997 and desire to convert
from a categorical grant(s) to a PPG(s).
The State or Tribe should submit applications for all FY 1997
categorical grants according to the current categorical application
schedule. EPA will continue to award the applicant's categorical grants
for FY 1997. To facilitate the applicant's receipt of its total annual
grant funding the applicant should be prepared to indicate at the time
of its categorical award whether it anticipates participation in a PPG
in FY 1997. If so, the applicant should provide an estimated start date
for the PPG. There is no deadline for submitting a PPG application to
convert specified categorical grants during FY 1997. However, the
sooner an application is submitted, the more advantages of the PPG the
recipient will realize in FY 1997. Applicants should refer to Section 4
for additional instructions.

If an applicant then decides to convert to a PPG, the applicant
must submit a PPG application and consult with the Regional
Administrator to select a PPG start date. The Regional Administrator
will arrange for the necessary deobligation and reprogramming of funds.
Any unobligated FY 1996 or FY 1997 funds may be reprogrammed from the
categorical grant to the PPG. However, sufficient funds must remain in
the categorical grant for close-out until the final Financial Status
Report (FSR) has been received. Upon receipt of the final FSR, any
remaining unexpended funds in the categorical grant may be deobligated
and reprogrammed into the new PPG. The Regional Administrator will then
award the PPG. The FY 1997 categorical grant should be closed when
appropriate and upon receipt of a final FSR funds will be reprogrammed
into the PPG. Further instructions on conversion are contained in the
``FY 1996 Advice of Allowance Letter'' (June 25, 1996).

Summary of PPG Application Requirements

Applicants for a PPG
Applicants for a PPG seeking administrative
seeking administrative and programmatic Applicants seeking
flexibility only based flexibility based on admin. and program

PPG application elements on categorical grant categorical grant flexibility based on an

workplans. Most workplans. EnPA/TEA EnPA/TEA that replaces
elements already in addresses differences categorical grant
categorical workplans from categorical workplans
workplans

Standard Form 424--``Application for Required............... Required............... Required.

Federal Assistance'' (1st page).

EnPA/TEA............................. Optional............... Required............... Required.
Budget............................... Required............... Required............... Required.
Grant Selection...................... Required............... Required............... Required.
Rationale and expected benefits...... Required............... Required............... Required.
Negotiated Environmental Goals and N/A.................... Required............... Required.

Priorities.

EPA Roles and Responsibilities to Optional............... Required............... Required.

Support State and Tribal Efforts.

PPG Program Commitments.............. Required............... Required............... Required.

Categorical Workplans................ Required............... Required............... N/A

Core Program Commitments............. Required............... Required............... Required.
Multimedia/ strategic Program Optional............... Encouraged............. Encouraged.

Commitments.

Environmental Indicators............. Optional............... Optional............... Optional.
Evaluation of PPG.................... Required............... Required............... Required.
Public Participation................. Optional............... Optional............... Optional.

Key: N/A=Not applicable.
Note: States entering NEPPS also references May 17 NEPPS Agreements.

[[Page 42896]]

Section 5. EPA and recipient roles and responsibilities

Section 5.1 EPA headquarters

National Program Manager (NPM). The NPMs set national strategic
direction and core program requirements and priorities for all
environmental programs. In any circumstance where a State or Tribe
proposes activities that will lead it to significantly deviate from NPM
priorities or regulatory requirements, or raise issues of national
consistency, the Regions will consult with the appropriate NPM. In many
cases, NPMs also allocate national categorical grant funds to EPA's
Regions based on an established allocation criteria.
Grants Administration Division (GAD). The GAD's responsibilities
include: (1) Sponsoring Office for the Performance Partnership Grant
Delegation of authority; (2) approving Office for deviations to 40 CFR
Part 31 required to implement PPGs; and (3) sponsoring office for
proposed PPG regulations (FY 1997).

Office of the Comptroller (OC). The OC's responsibilities include:
(1) Distributing categorical grant funds to the Regions; (2) approving
requests by the Regions to reprogram categorical grant funds into the
PPG program element; and (3) upon request of Appropriations Committees
providing periodic reports on the number of states participating in
PPGs and the grant funds they are using.

Section 5.2 EPA Regions

Regional Administrator (RA). The RA is the designated approval and
award official for PPGs with re-delegation authority to the Deputy
Regional Administrator or the Division Director or equivalent level
(See Section 7.1). The RA, or a senior regional official(s) designated
by the RA, should conduct the initial negotiations with the applicant
to establish environmental priorities and goals (See Section 4.5). The
RA should notify NPMs when their programs are being incorporated into a
PPG and should keep the NPMs informed of activities carried out under
PPGs that affect the NPMs' programs.

The RA should also designate a single point of contact to serve as
the Performance Partnership Grant Project Officer (PO) on each award.
Because PPGs cross programs, the PO should coordinate negotiations with
the recipient on behalf of all the relevant EPA programs. The RA may
wish to designate a team of sub-project officers to support the
designated Project Officer, or set additional criteria for designating
the PO.

Regional Program Manager. The managers of all programs included in
the PPG will jointly be the program managers of the PPG, as will other
appropriate Regional management officials. Regional Program Managers:
(1) Will at a minimum be consulted about/participate in negotiations
with States and Tribes; (2) articulate Agency, NPM and Regional goals
and priorities and work with the States and Tribes to incorporate them
into the EnPA/TEA; (3) serve as the principal source for technical
program assistance to States and Tribes; and (4) participate in State
and Tribal program evaluation as defined by the EnPA/TEA. In any
circumstance where a State or Tribe proposes activities that will lead
it to significantly deviate from NPM priorities or regulatory
requirements, or raise issues of national consistency, the Regions will
consult with the appropriate NPM.

Regional Project Officer. As designated by the RA, the Performance
Partnership Grant Project Officer (PO) will be the primary point of
contact for the grant recipient. This individual will be responsible
for coordinating all programmatic and technical aspects of the EnPA/TEA
and PPG program commitments and the PPG agreement. All POs must have
successfully completed the EPA training course ``Managing Your
Financial Assistance Agreement--Project Officer Responsibilities.'' The
POs should coordinate closely with the Regional Indian Coordinator/
Regional Indian Office for Tribal PPGs.
Regional Grants Management Office (GMO). Regional GMOs are
responsible for carrying out all administrative functions associated
with the receipt of the PPG application, processing of the PPG award,
and post-award administrative management of the PPG grants. (These
functions are the same as those for the award and management of
categorical grants.)

Regional Budget Offices. Regional Budget Offices are responsible
for submitting approval requests to Headquarters Budget Division for
Regional reprogramming of funds from categorical program elements to
the PPG program element and, upon approval, completing the
reprogramming of the funds. Both the PPG award and obligation must
include the State identifier code on transactions in IFMS.

Section 5.3 Recipients

Recipients may wish to designate a single point of contact for each
PPG to serve as the counterpart to the EPA Project Officer. This
individual would be responsible for coordinating all programmatic and
technical aspects of the PPG as well as for all intra-State or intraTribal
agreements. Recipients should identify these points of contact
in their PPG application.

Section 6. Funding

Section 6.1 Project period and availability of funds

In consultation with the Regional Administrator, the applicant may
choose to submit either annual or multi-year EnPAs/TEAs or workplans.
Budget periods for PPGs will be for 12 months but the applicant has the
flexibility to select, in consultation with the Regional Administrator,
the specific start and end dates for the budget period. Project periods
may remain open to reflect the continuing nature of PPGs. Project and
budget periods may not begin before the date of enactment of PPG
statutory authority (April 26, 1996).

Section 6.2 Award amounts and distribution of funds

National and Regional allocation of grant funds to State and Tribal
recipients will be the same whether the funds are awarded as PPGs or
categorically.

Section 6.3 Reprogramming of funds

EPA's Budget Division will continue to allocate grant funds in the
current categorical program elements. Regional Budget Officers will
request the reprogramming of funds into the PPG program element. The
PPG program element is EY5H2B. For FY 1996, the reprogramming of funds
to implement PPGs is exempt from the $500,000 Congressional
reprogramming limitation. Reprogramming requests will be made only
after the PPG project officer, EPA approval official and the Grants
Management Office find the PPG application and PPG program commitments
acceptable. The purpose statement/justification that should be included
in the reprogramming request is:

Purpose: This action reprograms resources ($) from existing
categorical grants, air ($.), water ($), etc. to support the
implementation of the Performance Partnership Grant for the State/
Tribe of ________. This transfer is authorized by the decision
memorandum dated ________ and

Signed by ________.

Person to contact:-----------------------------------------------------
Phone: ________ (including area code) #

Section 6.4 FY 1995 Carryover and Unexpended Prior Year Funds

Funds appropriated in FY 1995 and prior years that remain available
for obligation, or that are deobligated,

[[Page 42897]]

should not be awarded in PPGs. The recipient, in consultation with the
Regional Administrator, may choose to maintain FY 1995 and prior year
unexpended balances by extending the existing categorical grants,
consistent with limits established on carry-over by the Comptroller
General, or by applying for a partial categorical grant for the next
fiscal year to cover the unexpended funds. Project officers should
inform recipients proposing to apply or to convert to a PPG of the need
to maintain prior year accounts through extensions until FY 1995 and
prior year funds are expended.

Funds recovered from an applicant's FY 1996 categorical grants will
be available to fund PPGs awarded in FY 1997 and beyond, provided there
is consistency with the appropriation and/or the underlying categorical
program statutes and Comptroller Policy No. 88-09 ``Disposition of
Unobligated Balances of Assistance Awards.'' FY 1997 carryover of
unobligated balances will be allowed provided that the recipient uses
the carryover award amount to support either ongoing programmatic
goals, a multi-year PPG workplan, or those activities contemplated for
the next PPG award cycle's goals.

If the PPG program commitments include activities that cannot be
fully funded at the time of award, additional funding can be added as
it becomes available. The Regions may also forward-fund PPG awards.

Section 6.5 Cost Share Requirements

EPA's policy and goal is that States and Tribes should continue to
spend, in effect, the same amount of funds for environmental programs
under PPGs as under categorical grants. Although, under PPGs,
recipients will have the flexibility to realign those resources among
environmental programs based on negotiated priorities in the EnPA/TEA,
the total resources in the State or Tribe, both Federal and nonFederal,
targeted to environmental programs should not be reduced.
Thus, the required cost share (based on the match or maintenance of
effort requirements of the categorical grants included in the PPG) will
be the same under PPGs as under categorical grants, unless EPA
determines that there are exceptional circumstances justifying a
reduction in cost share for a PPG for the year that the PPG is awarded.
The primary exception is where a State or Tribe reduces funds across
all State or Tribal agencies. When the reduction is due to a nonselective
reduction in the expenditures related to all programs and
entities of the executive branch of the State or Tribal government, EPA
also will allow reductions in environmental program resources.
It is also important to recognize that, when the categorical funds
are reprogrammed into the PPG program element and the PPG is awarded,
those funds lose their categorical nature. The recipient's minimum cost
share requirement applies to the entire grant. The recipient cost share
must be expended for performance of the approved PPG program
commitments as reflected in the approved PPG budget of total estimated
program costs, i.e., without regard to the original categorical source
of federal funds and categorical activities. As the costs of performing
PPG work are incurred, the recipient will be reimbursed the federal
share of total expenditures based on the federal/recipient share ratios
stated on the PPG grant award. While recipients must maintain adequate
financial records of their cost share, EPA may not require categorical
financial reporting by recipients or track categorical match shares or
maintenance of effort (MOE) expenditures for those grant funds included
in a PPG.

Recipients should calculate a single, composite minimum cost share
for each of their PPGs. To calculate the minimum cost share for a PPG,
start with the amount of federal dollars from each program (source of
funds) going into the PPG. The minimum required cost share for each
portion is determined by following the cost share requirements of the
relevant categorical grant program (based on the source of funds). The
minimum recipient cost share for the PPG is the sum of the minimum cost
shares of the contributed components shown in the fourth column of the
following example.

Example. A State applies for a PPG combining its Water-106,
Nonpoint Source, UIC, UST, RCRA and Air-105 categorical grants. The
portion of the federal categorical grant funding from each program
designated by the recipient to be reprogrammed to the PPG is listed
in the third column below. (This amount does not necessarily reflect
all the Federal dollars available to the recipient for that specific
categorical program. The recipient may choose to continue to receive
some of the program's funding categorically.) The fourth column
illustrates the minimum recipient cost share for each piece (based
on the cost share requirements of the program that is the source of
the funds). The fifth column notes the basis for the requirement.
The total amount of federal money awarded in the PPG is the sum of
the contributed portions dollars in the third column. The minimum
recipient PPG cost share is the sum of the minimum recipient cost
shares for each of the contributed portions shown in the fourth
column.

Federal Recipient
Funding source PPG total share cost share Basis of cost share

Water-106.............................................. 1,239,064 1,087,995 \1\ 151,069 MOE.
Nonpoint Source........................................ 924,333 554,600 \2\ 369,733 MOE or 40% match.
UIC.................................................... 78,796 59,097 19,699 25% match.
UST.................................................... 216,667 162,500 54,167 25% match.
RCRA................................................... 465,989 349,492 116,497 25% match.
Air-105................................................ 2,290,230 1,374,198 \2\, \3\ 91
6,132 MOE or 40% match.
----------------------------------------
PPG.................................................... 5,215,079 3,587,882 1,627,297 PPG guidance.

\1\ The Water 106 program has no match requirement. However, it has a MOE requirement based on recurrent expenditures in the FY year ending (1) June 30,
1971 or (2) October 1, 1977, if the State is expending funds awarded in any fiscal year for construction grants management under section 205(g). This
requirement obligates a State to spend at least the base year amount of money each year without regard to the amount of the federal award. EPA will

continue to use this MOE requirement amount to calculate recipient minimum cost share when the Water 106 program is part of a PPG.

\2\ The Air 105 and the Nonpoint Source programs have both a match and an MOE requirement. The greater of the MOE or the match requirements of these two

programs will be used to calculate the minimum cost share requirement for a PPG, when the programs are part of a PPG.

\3\ Revenue generated by the collection of Clean Air Act Title V fees can only be used for the Title V Operating Permit program and cannot be used to

meet cost share requirements for any grants, including PPGs as well as section 105 grants.

The minimum composite cost share for the PPG in this example is
$1,627,297, which is 31.2% of the PPG total of $5,215,079. The
percentage is based on the ratio between the total dollar value
(Federal and non-Federal)

[[Page 42898]]

of each program, activity, etc., included in the PPG(s) and the dollar
value of its respective cost sharing requirement. EPA uses this
percentage to determine the recipient's share of each dollar expended
for the PPG(s).

If a recipient chooses to split federal categorical funding between
a PPG and a categorical grant, the minimum required cost share for the
PPG will be directly related to the portion of the categorical grant
funds moving to the PPG. The following is an example of how this would
apply to the UST funding cited above. If half of the funding was
maintained in a categorical grant ($81,250 went to both the PPG and the
categorical grant), the minimum cost share for the PPG would be half of
$54,167 or $27,083.50.

If the cost share requirement for a categorical grant is a minimum
percentage of the total grant program (combined federal and recipient
contributions), the minimum allowable recipient contribution can be
calculated using a two step process. Following is an example of how
this would apply to the RCRA funding above: (1) Divide the available
federal funding by the maximum federal share ($349,492 divided by 75%).
The result is the minimum total program amount (federal and State
shares combined) for the grant ($465,989). (2) Subtract the federal
contribution from the minimum total program amount to determine the
minimum required recipient contribution. ($465,989 - $349,492 =
$116,497. $116,497 represents 25% of the total.)
If a recipient decides to withdraw an environmental program with an
MOE requirement from the PPG and seek funding for the environmental
program under a categorical grant, the MOE requirement for the new
categorical grant will be no less than the MOE requirement in the
fiscal year immediately preceding the entry of the environmental
program into the PPG. EPA may approve an adjustment to the MOE
requirement for the new categorical grant if EPA determines that there
are exceptional circumstances justifying such an adjustment. This
requirement is a condition of receiving a PPG and, therefore, must be
included in all PPG grant agreements.

Section 7. Administrative Information

Section 7.1 Delegation of Authority

The Regional Administrator is the designated approval and award
official for PPGs with approval redelegation authority to the Deputy
Regional Administrator or the Division Director level. References:
Delegation #1-14--Assistance Agreements; Delegation # 1-101--
Performance Partnership Grants.

Section 7.2 Grant Budget Information

Applicants may merge funding for all PPG programs and activities
into a single budget for accounting and reporting purposes. This budget
must display a breakdown of costs by object class categories on
Standard Form 424B. For applicants proposing multi-year PPG program
commitments, the applicant need only reflect object class costs for FY
1997. However, the budget information must accurately reflect the grant
agreement and be able to be tracked to support the program outcomes and
outputs cited in that grant agreement. The Regional Administrator may
also require the applicant to submit a level of supplemental budget
detail necessary to allow for adequate determination of the
allowability, allocability, necessity, and reasonableness of each
element of program costs. Required budget detail should not exceed
levels supplied under previous EPA categorical grant awards.

Section 7.3 Certifications

States/Tribes may submit one set of grant certifications (i.e.,
anti-lobbying, debarment/suspension, SF424B--assurances and
procurement) with the PPG application on an annual basis--bundled
certifications.

Section 7.4 Standard Terms and Conditions

EPA will add standard terms and conditions to the PPG agreement as
required by the authorities set forth in sections 2.1 and 2.2. The PPG
agreement must cite the PPG program commitments as terms and conditions
of the agreement. The Region may add any additional State or Tribal
specific terms and conditions deemed appropriate and necessary on a
case by case basis.

Section 7.5 Grants Information and Control System (GICS) Data

The following are the GICS codes for PPGs.

--Program Code: BG

--Description: Performance Partnership Grants
--Statutory Authority Code: 141

--Text: Appropriations Act of 1996 (PL-104-134)
--Regulatory Code: A4

--CFDA number: To be assigned

Section 8. Post-Award Requirements

Section 8.1 Pre-Award Costs

Consistent with 40 CFR Sec. 35.141 and subject to the availability
of funds, EPA will reimburse applicants for allowable costs incurred
from the beginning of the approved budget period.

Section 8.2 Financial Management and Reporting

PPG recipients will continue to follow the regulations for
Standards for Financial Management Systems contained in 40 CFR Part
31.20. Fiscal control and accounting procedures of the recipient
applicant must be sufficient to permit preparation of Financial Status
Reports for PPG awards.

PPG recipients must maintain accounting and financial records which
adequately identify the source (i.e., Federal funds and match) and
application of funds provided for PPG activities. These records should
contain relevant information such as obligations, unobligated balances,
outlays, expenditures and program income.
Recipients will track PPG funds to the total effort or costs
incurred for the PPG work. EPA will reimburse the recipient for the
federal share of the costs from the PPG budgetary program element. PPG
costs will not be tracked to each of the original individual
categorical source(s) of grant funding.

Section 8.3 Payment

To reduce paperwork and facilitate payment, EPA will encourage PPG
recipients to receive electronic payments via the Automated
Clearinghouse (ACH) System. Inability to qualify for an ACH method of
payment will not preclude an otherwise eligible recipient from
receiving a PPG award.

Section 8.4 Allowable Costs

OMB Circular A-87 (cost principles) and EPA regulations in 40 CFR
Part 31 will apply to PPGs to determine the reasonableness,
allowability, necessity and allocability of costs.

Section 8.5 Additions/Deletions of Programs From Existing PPGS.

States/Tribes may elect which categorical program(s) or project
grants will be included in its established PPG award(s), consistent
with Section 3.2. In general, once an annual PPG is awarded for a given
fiscal year, EPA will authorize no programmatic deletions until the
beginning of the next award cycle. Once PPG program commitments are
approved and funds have been reprogrammed by EPA, the funds lose their
categorical identity and cannot be pulled out by an applicant.
Funds for grants approved in the middle of the fiscal year and
appropriate competitive grants may be

[[Page 42899]]

added to the PPG subject to PO approval. The PO and recipient will
renegotiate the approved environmental performance agreement goals and
revise the PPG program commitments and budgets. EPA will reprogram the
funds to be added to a PPG. The recipient must submit a formal
amendment to add funding to the PPG. EPA will process the amendments as
expeditiously as possible, while maintaining fiduciary responsibility,
to accommodate the recipient.

If a recipient chooses to add a categorical grant program to a twoyear
PPG, the match requirements of that program will then be
calculated as part of the overall PPG composite match (see Section
6.5).

If the recipient drops a program at the end of a cycle, based on
the recipient's decision to redirect its efforts and with the prior
approval of the PPG PO, the PPG recipient shall be reimbursed for
allowable costs incurred during the PPG project period.
If a recipient withdraws an environmental program with an MOE
requirement from the PPG at the end of the award cycle and seeks
funding for the program under a categorical grant, the MOE requirement
for the new categorical grant will be no less than the MOE requirement
in the fiscal year immediately preceding the entry of the environmental
program into the PPG. EPA may approve an adjustment to the MOE
requirement for the new categorical grant if EPA determines that there
are exceptional circumstances justifying such an adjustment (see
Section 6.5). This requirement is a condition of receiving a PPG and,
therefore, must be included in all PPG grant agreements.

Section 8.6 Enforcement

If a recipient materially fails to comply with a term or condition
in the PPG award, EPA may impose sanctions in accordance with 40 CFR
Sec. 31.43, including the conversion of a PPG back to individual
categorical grants during the next award cycle.

Section 8.7 Disputes

The dispute process set forth in 40 CFR Sec. 31.70 will apply to
PPGs. Disagreements between the recipient and EPA regarding PPG
applications, including PPG program commitments, priorities and/or
related performance indicators, or PPGs themselves, including
disallowances or enforcement actions, are to be resolved at the lowest
level possible, i.e., the project officer.
The Regional Administrator designates the Dispute Decision
Official--the next level of appeal after the project officer. Because
of the multi-media nature of the PPG program, it is suggested that the
Regional Administrator select a multi-media Division Director in
Regions where applicable, or the Region's Senior Resource Official/
Assistant Regional Administrator as the Disputes Decision Official to
resolve disputes arising under the PPG assistance agreements.
The Regional Administrator will continue to be the final level of
appeal at the Regional level. The Deputy Administrator or his/her
designee will serve as the Headquarters Disputes Review Official to
resolve disputes arising under PPG assistance agreements appealed to
Headquarters.

Attachment 1--Sample Performance Measures

Below are examples of performance measures that fall into three
categories:

<bullet> Program performance measures,
<bullet> Business environmental performance measures, and
<bullet> Environmental indicators.
State/Tribal Program Performance Measures suggest how
effectively or reliably a State/Tribal program is operating, and are
the ones we have traditionally relied on to judge State and Tribal
programs. While these kinds of measures will still be required for
PPGs, the States', Tribes' and EPA's goals are to reduce these to a
minimum, make the ones we use more meaningful, and develop useful
measures of cross-program activities such as multi-media pollution
prevention, ecosystem management, etc. Measures could include:

--percentage of NPDES permit holders in significant non-compliance,
--percentage of enforcement actions taken within timely and
appropriate guidelines,

--percentage of permits up-to-date,

--percentage of river, lake and estuary miles monitored,
--percentage of falsification rates in drinking water data,
--percentage of enforcement actions leading to supplement projects,
--number of permits avoided by helping companies reduce emissions
below permit thresholds,

--number of multi-media inspections or permits,
--percentage of State or Tribal program personnel trained in
pollution prevention, ecosystem management, or environmental
justice, and

--number of innovative pilot programs (e.g., voluntary programs).

Business Environmental Performance Measures assess environmental
behavior in the private sector. These measures can complement or
substitute for environmental indicators that may be difficult or
expensive to measure. Measures could include:

--compliance rates for particular sectors,
--percentage reductions in water generation rates (per unit
product),

--percentage reduction in total emissions,
--percentage of facilities participating in voluntary pollution
prevention programs and meeting their publicly stated pollution
prevention goals,

--number of significant changes at any entity (public or private)
that have been made as a result of compliance assistance in three
categories: (1) notification, (2) regulatory requirements, and (3)
environmental improvements,

--change in the compliance profile of a particular sector, regulated
population, or community that is the focus of a compliance
assistance initiative,

--percent of entities (public or private) within a particular
sector, regulated population, or community that have received
compliance assistance, and

--percent of facilities that participate in voluntary compliance
assistance programs and come in to compliance within the requisite
correction period.

Environmental Indicators measure changes in air, water and land
quality parameters and human health. Measures could include:
--the percentage of population exposed to substandard air,
--the percentage of population exposed to substandard water,
--percentage of stream miles meeting designated uses,
--percentage reductions in air pollution such as VOCs, Sox, etc.,
and

--percentage reductions in dangerous blood-lead levels in children.

[FR Doc. 96-21085 Filed 8-16-96; 8:45 am]
BILLING CODE 6560-50-P

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