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Participation by Disadvantaged Business Enterprises in Procurement Under Environmental Protection Agency (EPA) Financial Assistance Agreements
Note: EPA no longer updates this information, but it may be useful as a reference or resource.
[Federal Register: July 24, 2003 (Volume 68, Number 142)]
[Proposed Rules]
[Page 43823-43852]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24jy03-49]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 30, 31, 33, 35, and 40
[Docket ID NO. OA-2002-0001; FRL-7528-1]
RIN 2020-AA39
Participation by Disadvantaged Business Enterprises in
Procurement Under Environmental Protection Agency (EPA) Financial
Assistance Agreements
AGENCY: Environmental Protection Agency.
ACTION: Notice of proposed rulemaking.
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SUMMARY: EPA is proposing to revise its Minority Business Enterprise
(MBE) and Women's Business Enterprise (WBE) Program and rename it as
EPA's Disadvantaged Business Enterprise (DBE) Program. EPA is proposing
to delete existing MBE and WBE specific provisions in regulations for
Grants and Agreements With Institutions of Higher Education, Hospitals,
and Other Non-Profit Organizations, Uniform Administrative Requirements
for Grants and Cooperative Agreements to State and Local Governments,
State and Local Assistance, and Research and Demonstration Grants and
is proposing to consolidate and add to these provisions in a new
regulation. The new regulation is intended to harmonize EPA's statutory
DBE procurement objectives with the United States Supreme Court's
decision in Adarand Constructors, Inc. v. Pena, 115 S. Ct. 2097 (1995).
In Adarand, the Supreme Court extended strict judicial scrutiny to
federal programs that use racial or ethnic criteria as a basis for
decision making. This proposed rule reflects EPA's efforts to ensure
that the compelling government interest of remedying past and current
racial discrimination through the use of agency-wide DBE procurement
objectives at EPA is served by a narrowly-tailored program. If you are
a recipient of an EPA financial assistance agreement or an entity
receiving an identified loan under a financial assistance agreement
capitalizing a revolving loan fund, this proposed rule may affect you.
DATES: Comments: You must send comments electronically, by mail or
through hand delivery/courier on or before January 20, 2004.
ADDRESSES: Send your comments (in triplicate, if possible) to: Office
of Environmental Information Docket Environmental Protection Agency,
Mailcode 28221T, 1200 Pennsylvania Ave., NW., Washington, DC 20460,
Attention Docket ID No. OA 2002-0001. Please use a font no smaller than
12pt. Comments may also be submitted electronically, or through hand
delivery/courier. Follow the detailed instructions as provided in I.B.
of the SUPPLEMENTARY INFORMATION section.
Public hearings: EPA will hold public hearings on this proposed
rule. If you wish to speak, contact the person(s) named under the
section entitled ``For Further Information Contact.'' Verbatim
transcripts of the hearings will be available for reading and copying
at the official public docket for this action under Docket ID NO. OA-
2002-0001. See Supplementary Information I.A.1.
FOR FURTHER INFORMATION CONTACT: Mark Gordon, Attorney Advisor at (202)
564-5951, Kimberly Patrick, Attorney Advisor at (202) 564-5386, or
David Sutton, Deputy Director at (202) 564-4444, OSDBU, U.S.
Environmental Protection Agency, Ariel Rios Building, 1200 Pennsylvania
Avenue NW., Washington, DC 20460.
SUPPLEMENTARY INFORMATION:
I. General Information
A. How Can I Get Copies of This Document and Other Related Information?
1. Docket. EPA has established an official public docket for this
action under Docket ID No. OA-2002-0001. The official public docket
consists of the documents specifically referenced in this action, any
public comments received, and other information related to this action.
Although a part of the official docket, the public docket does not
include Confidential Business Information (CBI) or other information
whose disclosure is restricted by statute. The official public docket
is the collection of materials that is available for public viewing at
the Office of Environmental Information Docket in the EPA Docket
Center, (EPA/DC) EPA West, Room B102, 1301 Constitution Ave., NW.,
Washington, DC. The EPA Docket Center Public Reading Room is open from
8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal
holidays. The telephone number for the Reading Room is (202) 566-1742,
and the telephone number for the Office of Environmental Information is
(202) 566-1752.
2. Electronic Access. You may access this Federal Register document
electronically through the EPA Internet under the ``Federal Register''
listings at http://www.epa.gov/fedrgstr/.
An electronic version of the public docket is available through
EPA's electronic public docket and comment system, EPA Dockets. You may
use EPA Dockets at http://www.regulations.gov/ to submit or view public
comments, access the index listing of the contents of the official
public docket, and to access those documents in the public docket that
are available electronically. Once in the system, select ``search,''
then key in the appropriate docket identification number.
Certain types of information will not be placed in the EPA Dockets.
Information claimed as CBI and other information whose disclosure is
restricted by statute, which is not included in the official public
docket, will not be available for public viewing in EPA's electronic
public docket. EPA's policy is that copyrighted material will not be
placed in EPA's electronic public docket but will be available only in
printed, paper form in the official public docket. To the extent
feasible, publicly available docket materials will be made available in
EPA's electronic public docket. When a document is selected from the
index list in EPA Dockets, the system will identify whether the
document is available for viewing in EPA's electronic public docket.
Although not all docket materials may be available electronically, you
may still access any of the publicly available docket materials through
the docket facility identified in I.A.1 above.
For public commenters, it is important to note that EPA's policy is
that public comments, whether submitted electronically or in paper,
will be made available for public viewing in EPA's electronic public
docket as EPA receives them and without change, unless the comment
contains copyrighted material, CBI, or other information whose
disclosure is restricted by statute. When EPA identifies a comment
containing copyrighted material, EPA will provide a reference to that
material in the version of the comment that is placed in EPA's
electronic public docket. The entire printed comment, including the
copyrighted material, will be available in the public docket.
Public comments submitted on computer disks that are mailed or
delivered to the docket will be transferred to EPA's electronic public
docket. Public comments that are mailed or delivered to the Docket will
be scanned and placed in EPA's electronic public docket. Where
practical, physical objects will be photographed, and the photograph
will be placed in EPA's electronic public docket along with a brief
description written by the docket staff.
For additional information about EPA's electronic public docket
visit EPA
[[Page 43825]]
Dockets online or see 67 FR 38102, May 31, 2002.
B. How and To Whom Do I Submit Comments?
You may submit comments electronically, by mail, or through hand
delivery/courier. To ensure proper receipt by EPA, identify the
appropriate docket identification number in the subject line on the
first page of your comment. Please ensure that your comments are
submitted within the specified comment period. Comments received after
the close of the comment period will be marked ``late.'' EPA is not
required to consider these late comments. However, late comments may be
considered if time permits.
1. Electronically. If you submit an electronic comment as
prescribed below, EPA recommends that you include your name, mailing
address, and an e-mail address or other contact information in the body
of your comment. Also include this contact information on the outside
of any disk or CD ROM you submit, and in any cover letter accompanying
the disk or CD ROM. This ensures that you can be identified as the
submitter of the comment and allows EPA to contact you in case EPA
cannot read your comment due to technical difficulties or needs further
information on the substance of your comment. EPA's policy is that EPA
will not edit your comment, and any identifying or contact information
provided in the body of a comment will be included as part of the
comment that is placed in the official public docket, and made
available in EPA's electronic public docket. If EPA cannot read your
comment due to technical difficulties and cannot contact you for
clarification, EPA may not be able to consider your comment.
i. EPA Dockets. Your use of EPA's electronic public docket to
submit comments to EPA electronically is EPA's preferred method for
receiving comments. Go directly to EPA Dockets at http://www.epa.gov/
edocket, and follow the online instructions for submitting comments.
To access EPA's electronic public docket from the EPA Internet Home Page,
select ``Information Sources,'' ``Dockets,'' and ``EPA Dockets.'' Once
in the system, select ``search,'' and then key in Docket ID No. OA-
2002-0001. The system is an ``anonymous access'' system, which means
EPA will not know your identity, e-mail address, or other contact
information unless you provide it in the body of your comment.
ii. E-mail. Comments may be sent by electronic mail (e-mail) to
oei.docket @ epamail.epa.gov Attention Docket ID No. OA-2002-0001. In
contrast to EPA's electronic public docket, EPA's e-mail system is not
an ``anonymous access'' system. If you send an e-mail comment directly
to the Docket without going through EPA's electronic public docket,
EPA's e-mail system automatically captures your e-mail address. E-mail
addresses that are automatically captured by EPA's e-mail system are
included as part of the comment that is placed in the official public
docket, and made available in EPA's electronic public docket.
iii. Disk or CD ROM. You may submit comments on a disk or CD ROM
that you mail to the mailing address identified in I.A.1 above. These
electronic submissions will be accepted in WordPerfect or ASCII file
format. Avoid the use of special characters and any form of encryption.
2. By Mail. Send your comments (in triplicate, if possible) to:
Office of Environmental Information Docket Environmental Protection
Agency, Mailcode: 28221T, 1200 Pennsylvania Ave., NW., Washington, DC,
20460, Attention Docket ID No. OA 2002-0001. Please use a font size no
smaller than 12.
3. By Hand Delivery or Courier. Deliver your comments (in
triplicate, if possible) to: EPA Docket Center, (EPA/DC) EPA West, Room
B 102, 1301 Constitution Avenue, NW., Washington, D.C. Attention Docket
ID No. OA 2002-0001. Such deliveries are only accepted during the
Docket's normal hours of operation as identified in I.A.1 above. Please
use a font size no smaller than 12.
The docket is an organized file of all the information EPA
considered in developing this proposed rule. The docketing system
allows you to readily identify and locate documents so you can
participate in the rulemaking. Along with the proposed and promulgated
standards and their preambles, contents of the docket will serve as the
record in case of judicial review.
C. What Should I Consider as I Prepare My Comments for EPA?
You may find the following suggestions helpful for preparing your
comments:
1. Explain your views as clearly as possible.
2. Describe any assumptions that you used.
3. Provide any technical information and/or data you used that
support your views.
4. If you estimate potential burden or costs, explain how you
arrived at your estimate.
5. Provide specific examples to illustrate your concerns.
6. Offer alternatives.
7. Make sure to submit your comments by the comment period
deadline identified.
8. To ensure proper receipt by EPA, identify the appropriate
docket identification number in the subject line on the first page
of your response. It would also be helpful if you provided the name,
date, and Federal Register citation related to your comments.
D. Will EPA Hold Public Hearings and Tribal Consultations on This
Proposed Rule?
EPA plans to hold a number of public hearings on this proposed rule
during the 180 day comment period. As part of its ongoing consultation
with Tribes, EPA also plans to hold a number of meetings with Tribal
officials/representatives on this proposed rulemaking during the 180
day comment period. EPA will announce in the Federal Register the
dates, times and locations of these public hearings and meetings.
In writing the following proposed preamble and rule, EPA has
considered all comments received in response to the staff draft of the
preamble and rule, dated June 19, 2000, which was posted on EPA's
website at http://www.epa.gov/osdbu and distributed to various
stakeholders. Changes have been made to this proposed preamble and rule
in response to some of these comments.
This is a proposed rule. The contents of today's preamble are
listed in the following outline:
I. Introduction
II. Section-by-Section Analysis
A. Subpart A--General Provisions
B. Subpart B--Certification
C. Subpart C--Good Faith Efforts
D. Subpart D--Fair Share Objectives
E. Subpart E--Recordkeeping and Reporting
III. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review
B. Paperwork Reduction Act
C. Regulatory Flexibility Act (RFA), as amended by the Small
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5
U.S.C. 601 et. seq.
D. Unfunded Mandates Reform Act
E. Executive Order 13132: Federalism
F. Executive Order 13175: Consultation and Coordination with
Indian Tribal Governments
G. Executive Order 13045: Protection of Children from
Environmental Health Risks and Safety Risks
H. Executive Order 13211: Actions that Significantly Affect
Energy Supply, Distribution, or Use
I. National Technology Transfer and Advancement Act
I. Introduction
40 CFR Part 33, Procurement under Assistance Agreements, became
effective March 28, 1983. These procurement requirements required
recipients of EPA financial assistance
[[Page 43826]]
agreements to take the six affirmative steps to assure that small,
minority and women's businesses were used when possible as sources of
construction, services and supplies. As part of a government-wide
effort in 1988, EPA promulgated 40 CFR Part 31, Uniform Administrative
Requirements for Grants and Cooperative Agreements to State and Local
Governments. In 1996, the Agency promulgated 40 CFR Part 30, Grants and
Agreements with Institutions of Higher Education, Hospitals, and Other
Non-Profit Organizations. Parts 30 and 31 superseded the procurement
provisions of former Part 33. Parts 30 and 31 contain DBE Program
provisions at 40 CFR 30.44(b) and 31.36(e), respectively.
Various EPA programs have their own regulations containing DBE
requirements. For example, the EPA Superfund Program promulgated
regulations which contain DBE provisions for Grants for Technical
Assistance at 40 CFR 35.4066(g) and for Cooperative Agreements and
Superfund State Contracts for Superfund Response Actions at 40 CFR
35.6015(a)(26) and (54), 35.6580 and 35.6665 (b). The EPA Clean Water
State Revolving Fund (CWSRF) Program promulgated regulations containing
DBE provisions at 40 CFR 35.3145(d) and (e). The DWSRF Program has
promulgated regulations containing DBE provisions at 40 CFR 35.3575(d).
DBE requirements for Research and Demonstration Grants can be found at
40 CFR 40.145-3(c).
EPA's legal authorities for its DBE Program are:
Public Law 102-389, a 1993 appropriations act (42 U.S.C. 4370d)
(EPA's 8% statute), which provides:
The Administrator of the Environmental Protection Agency shall,
hereafter, to the fullest extent possible, ensure that at least 8 per
centum of Federal funding for prime and subcontracts awarded in support
of authorized programs, including grants, loans and contracts for
wastewater treatment and leaking underground storage tanks grants, be
made available to business concerns or other organizations owned or
controlled by socially and economically disadvantaged individuals
(within the meaning of Section 8(a)(5) and (6) of the Small Business
Act (15 U.S.C. 637(a)(5) and (6)), including historically black
colleges and universities. For purposes of this section, economically
and socially disadvantaged individuals shall be deemed to include women
* * *
Public Law 101-549, Title X of the Clean Air Act Amendments of 1990
(42 U.S.C. 7601 note) (EPA's 10% statute), which states:
In providing for any research relating to the requirements of
the amendments made by the Clean Air Act Amendments which use funds
of the Environmental Protection Agency, the Administrator of the
Environmental Protection Agency shall, to the extent practicable,
require that not less than 10 percent of the total Federal funding
for such research will be made available to disadvantaged business
concerns. Nothing in this title shall permit or require the use of
quotas or a requirement that has the effect of a quota in
determining eligibility * * *
Other legal authorities include Public Law 99-499, the Superfund
Amendments and Reauthorization Act of 1986; Public Law 100-590, the
Small Business Administration Reauthorization and Amendment Act of
1988; Executive Order 12138, ``Creating a National Women's Business
Enterprise Policy and Prescribing Arrangements for Developing,
Coordinating and Implementing a National Program for Women's Business
Enterprise,'' issued May 18, 1979; Executive Order 11625, ``Prescribing
Additional Arrangements for Developing and Coordinating a National
Program for Minority Business Enterprise,'' issued October 13, 1971;
and Executive Order 12432, ``Minority Business Enterprise
Development,'' issued July 14, 1983.
In 1995, the Supreme Court's decision in Adarand Constructors, Inc.
v. Pena, 115 S. Ct. 2097(1995), extended strict judicial scrutiny to
federal affirmative action programs that use racial or ethnic criteria
as a basis for decision making. In other words, such programs must be
based on a compelling governmental interest, for example, remedying the
effects of discrimination, and must be narrowly tailored to accomplish
that interest.
In 1996, the Department of Justice (DOJ) began a review of
affirmative action programs in the Federal Government. In response to
this review, the Department of Transportation (DOT) revised its program
for participation of DBEs in procurement under DOT's financial
assistance agreements. 64 FR 5096. In direct Federal procurement, the
Small Business Administration (SBA) has issued final regulations
amending two programs intended to foster small disadvantaged business
participation, the 8(a) Business Development and Small Disadvantaged
Business Participation Programs. 63 FR 35726; 63 FR 36120.
This proposed rulemaking would affect only procurements pursuant to
EPA financial assistance agreements rather than direct Federal
procurement actions. All of EPA's current DBE fair share objectives and
good faith efforts regulatory provisions would be deleted as part of
this rulemaking effort, and the proposed DBE provisions to be codified
in the new 40 CFR Part 33 would apply. In addition, this proposal would
supersede inconsistent provisions of previous guidance documents for
EPA's former MBE and WBE Program, including, but not limited to,
OSDBU's ``Guidance for Utilization of Small, Minority, and Women's
Business Enterprises in Procurement Under Assistance Agreements' (the
1997 Guidance). 62 FR 45645.
II. Section-by-Section Analysis
Subpart A--General Provisions
Section 33.101 What Are the Objectives of This Part?
This proposed rule is EPA's revision to its current MBE and WBE
Program. EPA needs to reconcile its requirements for financial
assistance agreements under EPA's 8% statute and EPA's 10% statute with
the Supreme Court's decision in Adarand. In that case the Supreme Court
held that Federal Government programs that use race or national origin
as a criterion for decision making are subject to strict judicial
scrutiny. Such programs must be based on a compelling government
interest, for example, remedying the effects of racial/ethnic
discrimination, and must be narrowly tailored to accomplish that
interest.
EPA's proposed rulemaking is one part of the Agency's overall
effort to review and, where necessary, revise affirmative action
programs in light of Adarand. This rulemaking proposal tailors EPA's
DBE Program more precisely to the objective of remedying the effects of
racial/ethnic discrimination.
Section 33.102 When Do the Requirements of This Part Apply?
This Part's requirements apply to procurement under EPA financial
assistance agreements, including financial assistance agreements to
capitalize revolving loan funds, performed entirely within the United
States. The term ``United States'' is later defined in 33.103 to
include the Commonwealth of Puerto Rico and any other territories and
possessions of the United States.
Section 33.103 What Do the Terms in This Part Mean?
To the extent possible, EPA has referred to definitions contained
in 40 CFR Parts 30, 31 and 35, and other agencies' existing
regulations, e.g., Historically Black College or University
[[Page 43827]]
(HBCU). Other definitions were derived from the 1997 Guidance.
EPA is creating a new term, DBE, for its revised program. The new
Part 33 defines DBE as an entity owned or controlled by an individual
who is socially and economically disadvantaged under EPA's 8% statute,
an entity owned and controlled by an individual who is socially and
economically disadvantaged under EPA's 10% statute, as well as a Small
Business Enterprise (SBE), a Small Business in a Rural Area (SBRA), a
Labor Surplus Area Firm (LSAF), a Historically Underutilized Business
(HUB) Zone Small Business Concern, or a concern under a successor
program. Unlike EPA's previous program, the terms MBE and WBE no longer
describe the entire program. Instead, these terms are now merely
subsets of the entities described as DBEs. As a result, the definition
of MBE has been modified to include an entity owned and/or controlled
by an individual who is socially and economically disadvantaged under
either EPA's 8% or 10% statutes.
In addition, the term ``financial assistance agreement'' has been
defined as both grants and cooperative agreements awarded by EPA,
including such agreements used to capitalize revolving loan funds
including, but not limited to, the Clean Water State Revolving Fund,
the Drinking Water State Revolving Fund or the Brownfields Revolving
Fund Programs. The term ``identified loan'' is also defined to indicate
those projects and activities to which the requirements of this Part
apply for recipients of capitalization agreements for revolving loan
funds. For Brownfields capitalization grant recipients, the identified
loans will be those funded with EPA financial assistance.
The definition of Small Business in Rural Areas has been shortened
from the one contained in the 1997 Guidance. No substantive change is
intended. The U.S. Department of Agriculture (USDA) Rural-Urban
Continuum Classification Code applies to every county in the United
States, and classifies counties based on proximity to metropolitan
areas. EPA is using Codes 6-9 as rural counties for purposes of
identifying small businesses in rural areas.
Section 33.104 May a Recipient Apply for a Waiver From the Requirements
of This Part?
A recipient will be able to apply for a waiver in a special or
exceptional situation where the recipient believes that compliance with
any of the requirements in this Rule would be impractical. The Agency
believes that the waiver provision is an important component of
narrowly tailoring its DBE Program to unique local circumstances and to
ensure non-discrimination. EPA intends to carefully review any waiver
applications to ensure that any proposed alternative program is able to
meet the objectives of EPA's DBE Program and is in accordance with law.
This added flexibility could allow an EPA financial assistance
agreement recipient to deal creatively with its specific circumstances.
Section 33.105 What Are the Compliance and Enforcement Provisions of
This Part?
This section reserves to EPA the right to take remedial action
under existing legal authorities if a recipient fails to comply with
any of the requirements of the Rule.
Section 33.106 What Assurances Must EPA Financial Assistance Recipients
Obtain From Their Contractors?
An EPA financial assistance recipient must ensure that the contract
term and condition in the Appendix to this Rule is included in the
procurement contracts it awards under EPA financial assistance
agreements. This includes contracts under identified loans pursuant to
EPA financial assistance agreements capitalizing revolving loan fund
programs. This term and condition ensures that a recipient applies
pertinent provisions of this Rule to its prime contractor.
Section 33.107 What Are the Rules Governing Availability of Records,
Cooperation, and Intimidation and Retaliation?
Paragraph (a) of this section discusses the availability to the
general public of information concerning EPA's DBE Program. Paragraphs
(b) and (c) discuss the obligation of all participants in EPA's DBE
Program to cooperate and never use intimidation and retaliation with
respect to EPA's DBE Program.
Subpart B--Certification
Section 33.201 What Does This Subpart Require?
Currently EPA recognizes an entity which is certified as socially
and economically disadvantaged by the Small Business Administration
(SBA), certified as an MBE by a State or Federal Agency or self-
certifies that it is an independent business concern owned and
controlled by a minority group member(s) as an MBE. 40 CFR 35.6015
(26); the 1997 Guidance, pp. 3-2 through 3-6.
EPA is proposing to make four changes to the current certification
requirements. The first change is to no longer allow an entity to self-
certify as being owned and/or controlled by a socially and economically
disadvantaged individual or as a WBE under EPA's 8% or 10% statutes.
The second change is to allow recognition of certifications of entities
as owned and/or controlled by a socially and economically disadvantaged
individual or by a woman under EPA's 8% or 10% statutes by Indian
Tribal, State (including Insular Areas) and local Governments or
independent private organizations so long as the applicable criteria
match those under SBA's applicable 8(a) Business Development Program
regulations. The third change is to clarify that EPA will accept DOT
DBE certifications of U.S. citizens as valid certifications under this
program. The fourth change is that EPA will set up its own
certification program with the possible use of EPA Private Certifiers
to assist EPA in its certification determinations.
The provisions for certification under EPA's 8% and 10% statutes
have been separated from one another since the presumptions under those
statutes are different. Because EPA's 8% statute incorporates Section
8(a)(5) of the Small Business Act, this Rule adopts for purposes of the
8% statute SBA's regulatory presumption that the following individuals
are socially disadvantaged: Black Americans; Hispanic Americans; Native
Americans (American Indians, Eskimos, Aleuts or Native Hawaiians);
Asian Pacific Americans (persons with origins from Burma, Thailand,
Malaysia, Indonesia, Singapore, Brunei, Japan, China (including Hong
Kong and Macao), Taiwan, Laos, Cambodia (Kampuchea), Vietnam, Korea,
the Phillippines, U.S. Trust Territory of the Pacific Islands,
(Republic of Palau), Republic of the Marshall Islands, Federated States
of Micronesia, the Commonwealth of the Northern Mariana Islands, Guam,
Samoa, Fiji, Tonga, Kiribati, Tuvalu, or Nauru); Subcontinent Asian
Americans (persons with origins from India, Pakistan, Bangladesh, Sri
Lanka, Bhutan, the Maldives Islands or Nepal); and members of other
groups designated from time to time by SBA. As is the case under SBA's
8(a) Business Development Program, Brazilian Americans with Portugese
surnames and Portugese Americans would be considered Hispanic Americans
under this Program. In addition, Congress has by statute established
that HBCUs and women also automatically qualify as
[[Page 43828]]
socially and economically disadvantaged under EPA's 8% statute. An
entity must still be certified by a third party as to ownership or
control in order to be eligible to participate as a WBE contractor for
an EPA recipient under the DBE Program.
EPA's 10% statute also adopts SBA's regulatory presumption
regarding the socially disadvantaged status of the individuals listed
above. However, EPA's 10% statute also presumes that Black Americans,
Hispanic Americans, Native Americans, Asian Americans, Women and
Disabled Americans are socially and economically disadvantaged
individuals. Furthermore, Congress provided in EPA's 10% statute that
the following institutions are presumed to be entities owned and
controlled by socially and economically disadvantaged individuals:
HBCUs, colleges and universities having a student body in which 40% of
the students are Hispanic, Minority Institutions and private and
voluntary organizations controlled by individuals who are socially and
economically disadvantaged. EPA's 8% and 10% statutes may be
distinguished by their provisions regarding ownership and control.
EPA's 8% statute references entities owned or controlled by socially
and economically disadvantaged individuals while EPA's 10% statute
references entities owned and controlled by socially and economically
disadvantaged individuals.
Section 33.202 How Does an Entity Qualify as an MBE or WBE Under EPA's
8% Statute?
An entity must establish that it is owned or controlled by socially
and economically disadvantaged individuals who are of good character
and citizens of the United States. With one exception, definitions of
``ownership,'' ``control'' and ``socially and economically
disadvantaged individuals'' are the same as under the Small Business
Act and its implementing regulations at 13 CFR 124.105, 124.106,
124.103 and 124.104. (See also 13 CFR 124.109 for special rules
applicable to Indian tribes and Alaska Native Corporations; 13 CFR
124.110 for special rules applicable to Native Hawaiian Organizations).
Generally, these regulations provide that ownership must be real,
substantial and continuing, going beyond pro forma ownership of the
business concern as reflected in ownership documents. Owners must share
in the risks and profits of the business concern commensurate with
their ownership interests. Control is demonstrated in most cases by the
power to direct or cause the direction of the management and policies
of the business concern and to make day-to-day as well as long-term
decisions on matters of management, policy and operations. The one
exception from the regulation regarding economic disadvantage worth
noting is the exclusion of individuals with a net worth greater than or
equal to $250,000 from initial eligibility and individuals with a net
worth greater than or equal to $750,000 from continued eligibility.
Similar to DOT, EPA is proposing to make $750,000 the cut off point for
both initial and continued eligibility under the DBE Program.
HBCUs do not need to go through the certification process contained
in Subpart B of this Rule since EPA's 8% statute automatically deems an
HBCU to be owned or controlled by socially and economically
disadvantaged individuals. While women are also deemed to be socially
and economically disadvantaged under EPA's 8% statute, entities must
still evidence ownership or control in accordance with paragraph (a) of
this section, which may be accomplished by certification, pursuant to
Sec. 33.204.
Section 33.203 How Does an Entity Qualify as an MBE or WBE Under EPA's
10% Statute?
An entity must establish that it is owned and controlled by
socially and economically disadvantaged individuals who are of good
character and citizens of the United States. Again with the same
notable exception discussed above regarding the $750,000 personal net
worth threshold, definitions of ``ownership,'' ``control'' and
``socially and economically disadvantaged individuals'' are the same as
under the Small Business Act and its implementing regulations at 13 CFR
124.105, 124.106, 124.103 and 124.104. (See also 13 CFR 124.109 for
special rules applicable to Indian tribes and Alaska Native
Corporations; 13 CFR 124.110 for special rules applicable to Native
Hawaiian Organizations).
With one exception, the provisions contained within subparagraphs
(d)-(g) of this section are derived from EPA's 10% statute. EPA's 10%
statute contains a presumption that colleges and universities having a
student body in which 40% of the students are Hispanic should be
considered entities owned and controlled by socially and economically
disadvantaged individuals. In order to eliminate the burden of
additional certification by such colleges and universities, EPA is
proposing instead to apply the presumption to colleges and universities
which have qualified as Hispanic-Serving Institutions under the
Department of Education regulations at 34 CFR Part 606 or as Minority
Institutions as defined by Sec. 33.103 of this proposed Rule. Among
other things, Hispanic-Serving Institutions and Minority Institutions
require a student body in which 50% of the students are Hispanic.
Because EPA's 10% statute only requires the Agency to implement the
statute's requirements to the ``extent practicable,'' the Agency, for
administrative reasons, may propose regulatory provisions which vary
from the exact wording of the statute.
Section 33.204 Where Does an Entity Become Certified Under EPA's 8% and
10% Statutes?
This proposed rule discontinues acceptance of an individual's self-
certification regarding his or her racial/ethnic status in order to
ensure consistency with the approach taken by other Federal agencies.
For example, SBA under its Small Disadvantaged Business Program no
longer permits self-certification of social and economic disadvantaged
status. Similarly, DOT does not allow self-certification under its DBE
Program. EPA is also proposing to discontinue self-certification by
WBEs.
In addition, EPA would require that an entity first attempt to
become certified as an MBE or WBE by the SBA or DOT under their
respective programs or by an Indian Tribal Government, State
Government, local Government, or independent private organization
consistent with EPA's 8% or 10% statute as applicable. An entity may
only attempt to become certified by EPA as an MBE or WBE under the
procedures described in Sec. 33.205 if that entity is unable to obtain
certification from the other certifying entities described above.
However, as part of the certification process, EPA will make the
determination as to whether an entity's current certification by DOT,
an Indian Tribal Government, State Government, local Government, or
independent private organization constitutes acceptable certification
under EPA's 8% statute, EPA's 10% statute or both. Acceptance of
certifications from these other certifying entities is EPA's attempt at
easing the burden created by discontinuation of the self-certification
option. EPA currently envisions five categories of individuals or
groups who would qualify for MBE or WBE certification under EPA's DBE
Program but would be unable to obtain MBE or WBE certification from SBA
or DOT due to differences in those Agencies' respective programs. These
categories are women-owned and minority-owned
[[Page 43829]]
concerns that do not meet the SBA/DOT size standards (EPA's 8% and 10%
statutes), Disabled Americans (EPA's 10% statute), private and
voluntary organizations controlled by individuals who are socially and
economically disadvantaged (EPA's 10% statute), entities which are
certified under criteria which are inconsistent with EPA's DBE Program
criteria (EPA's 8% and 10% statutes) and any entity claiming that it is
owned or controlled by socially and economically disadvantaged
individuals under EPA's 8% statute. SBA and DOT currently do not
certify the first three categories and, as to the fifth category,
requires a showing of ownership and control. Accordingly, these
categories of individuals or groups may initially come to EPA for MBE
or WBE certification if that individual or group is also unable to
obtain MBE or WBE certification from an Indian Tribal, State, or local
Government or an independent private organization in accordance with
EPA's 8% or 10% statute as applicable. Finally, in implementing its own
certification program, the Agency may use EPA Private Certifiers to
assist the Agency in its certification determinations.
EPA has had a longstanding policy of requiring U.S. citizenship for
eligibility as an MBE or WBE. See ``EPA Guidance for Utilization of S/
M/WBE in Procurement under Assistance Agreements' dated 05/22/86. This
policy was continued in the Agency's 1997 Guidance. Currently, the
Agency's regulatory definition of an MBE requires U.S. citizenship for
a minority group member. See 40 CFR 35.6015(a)(26)(iii). EPA believes
that its requirement for U.S. citizenship is consistent with SBA's 8(a)
Business Development Program regulations at 13 CFR 124.101, and its
Small Disadvantaged Business Programs regulations at 13 CFR
124.1002(d). While the Agency recognizes that DOT allows lawfully
admitted permanent residents to qualify for certification under its DBE
Program (49 CFR 26.67), the Agency believes that given its close
association with SBA requirements, it is appropriate for U.S.
citizenship to be a requirement for certification by EPA as well. In
addition, at this time, EPA lacks data regarding how many additional
entities EPA would have to certify if the Agency were to change its
longstanding policy on this issue and the possible resource
implications of such a policy change; the Agency believes that changing
its policy on this issue could result in a substantial increase to the
number of entities EPA would have to certify.
EPA welcomes public comment on these proposed changes, especially
from large businesses and members of the DBE community since they are
most likely to be directly affected if these proposed changes become
part of the final rule. In addition, because EPA continues to explore
opportunities to standardize DBE certification with other Federal
agencies, the Agency encourages specific comments on the requirement
for U.S. citizenship under this program, and the resource implications
for the Agency if it were to change its policy of requiring U.S.
citizenship for certification by EPA.
Section 33.205 How Does an Entity Become Certified by EPA?
This section describes the EPA certification application process,
including procedures regarding the filing of an application,
application processing, EPA's ownership and/or control determination,
EPA's disadvantaged determination and evaluation standards.
Section 33.206 Is There a List of Certified MBEs and WBEs?
This provision provides two ways someone can obtain a list of
certified MBEs and WBEs under EPA's DBE Program, via internet or mail.
Section 33.207 Can an Entity Reapply to EPA for MBE or WBE
Certification?
This section describes how long an entity must wait before
reapplying to EPA for MBE or WBE certification.
Section 33.208 How Long Does an MBE or WBE Certification From EPA Last?
This provision states that MBE or WBE certifications from EPA
generally last for three years.
Section 33.209 Can EPA Re-Evaluate the MBE or WBE Status of an Entity
After EPA Certifies It To Be an MBE or WBE?
This section explains procedures for removal of an entity from the
EPA list of certified MBEs and WBEs. Credible information calling into
question an entity's eligibility as an MBE or WBE may come from any
source.
Section 33.210 Does an Entity Certified as an MBE or WBE by EPA Need To
Keep EPA Informed of Any Changes Which May Affect the Entity's
Certification?
This provision requires an annual affidavit from EPA certified MBEs
or WBEs affirming that no changes in circumstance have occurred that
affect the entity's status as an MBE or WBE. In addition to this annual
affidavit, MBEs and WBEs certified by EPA are under a constant
requirement throughout the year to keep EPA informed of any changes in
circumstance which might affect that entity's status as an MBE or WBE.
Section 33.211 What Is an EPA Private Certifier?
This provision generally describes the role of an EPA Private
Certifier. In all cases, EPA shall make the determination as to whether
a particular entity should be certified as an MBE or WBE. EPA Private
Certifiers are used by EPA merely to assist in the Agency's
certification determination.
Section 33.212 Can an EPA Private Certifier Charge a Fee to an Entity
To Process the Entity's Application for MBE or WBE Certification?
A reasonable fee, not contingent on whether the entity is
eventually certified as an MBE or WBE by EPA, may be charged with the
permission of the Agency.
Section 33.213 How Does an Organization or Business Concern Become an
EPA Private Certifier?
This provision establishes the means by which an organization or
business concern may become an EPA Private Certifier. In addition, this
provision describes some of the requirements an organization or
business concern must meet in order to be an EPA Private Certifier.
Section 33.214 How Long May an Organization or Business Concern Be an
EPA Private Certifier?
The length of time an organization or business concern may be an
EPA Private Certifier will be negotiated between EPA and that
organization or business concern.
Section 33.215 Is There a List of EPA Private Certifiers?
This provision provides two ways someone can obtain a list of EPA
Private Certifiers under EPA's DBE Program, via internet or mail.
Section 33.216 What Is the Process for Appealing or Challenging an EPA
MBE or WBE Certification Determination?
This section describes the way in which an entity who has been
denied MBE or WBE certification by EPA or a third party who disagrees
with EPA's decision to certify an entity as an MBE or WBE can submit an
appeal or challenge to the Agency. Included in these procedures are
filing deadlines, appeal or challenge content
[[Page 43830]]
requirements and the Agency's standard of review.
Section 33.217 What Conduct Is Prohibited by This Subpart?
This provision prohibits false, fraudulent or deceitful conduct on
the part of entities attempting to participate in the DBE Program. It
has been placed in the Rule in order to protect the integrity of the
DBE Program.
Subpart C--Good Faith Efforts
Section 33.301 What Does This Subpart Require?
The good faith efforts required by this section are activities by a
recipient or its prime contractor to increase DBE awareness of
procurement opportunities through race/gender neutral efforts. Race/
gender neutral efforts are ones which increase awareness of contracting
opportunities in general, including outreach, recruitment and technical
assistance. The good faith efforts must be made by a recipient and its
prime contractor toward all DBEs, including SBEs, LSAFs and SBRAs and
not just MBEs and WBEs, even if the fair share objective requirements
of Subpart D have been met.
For purposes of simplification, EPA has combined the six positive
efforts of 40 CFR 30.44(b) applicable to institutions of higher
education, hospitals and other non-profit organizations with the six
affirmative steps of 40 CFR 31.36(e) applicable to Indian Tribal,
State, and local Government recipients and renamed them the six ``good
faith efforts.''is not the intention of the Agency to change the
substance of the positive efforts or the affirmative steps.
The six good faith efforts required by this section must be
performed by all recipients (including recipients who have been
exempted under Sec. 33.411 from the requirements of applying fair
share objectives) and their prime contractors, if they award
subcontracts, for the procurement categories of construction,
equipment, services (including consulting services) and supplies. EPA
offers the following examples to assist recipients and prime
contractors in carrying out the good faith efforts.
(1) Ensure DBEs are made aware of contracting opportunities to the
fullest extent practicable through outreach and recruitment activities.
For Indian Tribal, State and local Government recipients, this will
include placing DBEs on solicitation lists and soliciting them whenever
they are potential sources.
(a) Maintain and update a listing of qualified DBEs that can be
solicited for construction, equipment, services and/or supplies.
(b) Provide listings to all interested parties who request copies
of the bidding or proposing documents.
(c) Contact appropriate sources within your geographic area and
State to identify qualified DBEs for placement on your DBE business
listings.
(d) Utilize other DBE listings such as those of the State's
Minority Business Office, the Small Business Administration, Minority
Business Development Agency (MBDA) of the Department of Commerce, EPA
OSDBU, and DOT.
(e) Have State environmental agency personnel review solicitation
lists.
(2) Make information of forthcoming opportunities available to DBEs
and arrange time frames for contracts and establish delivery schedules,
where the requirements permit, in a way that encourages and facilitates
participation by DBEs in the competitive process. This includes,
whenever possible, posting solicitations for bids or proposals for a
minimum of 30 calendar days before the bid or proposal closing date.
(a) Develop realistic delivery schedules which may provide for
greater DBE participation.
(b) Advertise through the minority media in order to facilitate DBE
utilization. Such advertisements may include, but are not limited to,
contracting and subcontracting opportunities, hiring and employment, or
any other matter related to the project.
(c) Advertise in general circulation publications, trade
publications, State agency publications and minority and women's
business focused media concerning contracting opportunities on your
projects. Maintain a list of minority and/or women's business-focused
publications that may be utilized to solicit DBEs.
(3) Consider in the contracting process whether firms competing for
large contracts could subcontract with DBEs. For Indian Tribal, State
and local Government recipients, this will include dividing total
requirements when economically feasible into smaller tasks or
quantities in order to increase opportunities for participation by DBEs
in the competitive process.
(a) Perform an analysis to identify portions of work that can be
divided and performed by qualified DBEs.
(b) Scrutinize the elements of the total project to develop
economical units of work that are within the bonding range of DBEs.
(c) Conduct meetings, conferences, and follow-ups with DBE
associations and minority media to inform these groups of opportunities
to provide construction, equipment, services and supplies.
(4) Encourage contracting with a consortium of DBEs when a contract
is too large for one of these firms to handle individually.
(a) Notify DBEs of future procurement opportunities so they may
establish bidding solicitations and procurement plans.
(b) Provide DBE trade organizations with succinct summaries of
solicitations.
(c) Provide interested DBEs with adequate information about plans,
specifications, timing and other requirements of the proposed projects.
(5) Use the services and assistance of the SBA and the MBDA.
(a) Use the services of outreach programs sponsored by the MBDA
and/or the SBA to recruit bona fide firms for placement on DBE bidders
lists to assist these firms in the development of bid packaging.
(b) Seek out Minority Business Development Centers (MBDCs) to
assist recipients and prime contractors in identifying DBEs for
potential work opportunities on projects.
Appropriate use of the services and assistance of the SBA and the
MBDA depends on the circumstances. It may involve using the services of
outreach programs sponsored by the MBDA and/or the SBA to recruit bona
fide firms for placement on DBE bidder's lists to assist the firms in
the development of bid packages. Recipients and prime contractors may
use SBA's Pro-Net Procurement Marketing and Access Network services to
identify available DBEs to do the work. Recipients and prime
contractors may utilize MBDCs for assistance in identifying DBEs for
potential work opportunities on contracts under EPA financial
assistance agreements, as well as using MBDA's Phoenix dBASE System to
identify available DBEs to do the work.
(6) If the prime contractor awards subcontracts, require the prime
contractor to take the steps in subparagraphs (1)-(5) of this section.
Section 33.302 Are There Any Additional Contract Administration
Requirements?
The first provision of this section is intended to ensure that
subcontractors receive prompt payment from prime contractors. The other
provisions of this section, including the requirement to complete the
forms mentioned below, are intended to prevent any ``bait and switch''
tactics at the subcontract level by prime contractors which may
[[Page 43831]]
circumvent the spirit of the DBE Program. In addition, this proposal
would require a recipient to be notified in writing before its prime
contractor could terminate a DBE subcontractor for convenience and then
perform the work itself.
Furthermore, when a DBE subcontractor is terminated or fails to
complete its work under the subcontract for any reason, the recipient
must require the prime contractor to make good faith efforts if the
prime contractor chooses to hire another subcontractor. A recipient
must also require its prime contractor to continue to make the good
faith efforts even if the fair share objectives in Subpart D of this
Rule have been met. Finally, this proposed rule mentions three new
forms which are required if there are DBE subcontractors involved in a
procurement. First, a recipient must require its prime contractor to
provide EPA Form 6100-2--DBE Program Subcontractor Participation Form
to all of its DBE subcontractors. EPA Form 6100-2--DBE Program
Subcontractor Participation Form will allow DBE subcontractors the
option of describing to EPA the work the DBE subcontractor received
from the prime contractor, how much the DBE subcontractor was paid and
any other concerns the DBE subcontractor might have. Second, a
recipient must require its prime contractor to have any anticipated DBE
subcontractors complete EPA Form 6100-3--DBE Program Subcontractor
Performance Form. The prime contractor would then submit this form as
part of its bid or proposal package when competing for a procurement.
Third, a recipient must have its prime contractor complete EPA Form
6100-4--DBE Program Subcontractor Utilization Form whenever applicable
and submit the form as part of the prime contractor's bid or proposal
package when competing for a procurement.
Section 33.303 Are There Special Rules for Loans Under EPA Financial
Assistance Agreements?
A recipient of an EPA financial assistance agreement to capitalize
a revolving loan fund, such as a State under the CWSRF or DWSRF or an
eligible entity under the Brownfields Cleanup Revolving Loan Fund
program, must require that borrowers receiving identified loans comply
with the good faith efforts described in Sec. 33.301 and the contract
administration requirements of Sec. 33.302. This provision does not
require that such private or non profit borrowers expend identified
loan funds in compliance with any other procurement procedures
contained in 40 CFR Part 30, 40 CFR Part 31, or 40 CFR Part 35, Subpart
O, as applicable.
Section 33.304 Must a Native American (Either as an Individual,
Organization, Tribe or Tribal Government) Recipient or Prime Contractor
Follow the Six Good Faith Efforts?
Native Americans are defined in Sec. 33.103 to include American
Indians, Eskimos, Aleuts and Native Hawaiians. A Native American
(either as an individual, organization, corporation, Tribe or Tribal
Government) recipient or prime contractor must follow the six good
faith efforts only if doing so would not conflict with existing Tribal
or Federal law, including but not limited to the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450e) which
establishes, among other things, that any federal contract,
subcontract, grant, or subgrant awarded to Indian organizations or for
the benefit of Indians, shall require preference in the award of
subcontracts and subgrants to Indian organizations and to Indian-owned
economic enterprises.
Indian organizations awarded an EPA financial assistance agreement
have the ability to solicit and recruit Indian organizations and
Indian-owned economic enterprises and give them preference in the award
process prior to undertaking the six good faith efforts. Tribal
governments with promulgated tribal laws and regulations concerning the
solicitation and recruitment of Native American-owned and other
minority business enterprises, including women-owned business
enterprises, have the discretion to utilize these tribal laws and
regulations in lieu of the six good faith efforts. If the effort to
recruit Indian organizations and Indian-owned economic enterprises is
not successful, then the recipient must follow the six good faith
efforts. Such tribal governments still must retain records documenting
compliance in accordance with Sec. 33.501 of the Rule and must report
to EPA on their accomplishments in accordance with Sec. 33.502 of the
Rule.
Any recipient, whether Native American or not, of an EPA financial
assistance agreement for the benefit of Native Americans, is required
to solicit and recruit Indian organizations and Indian-owned economic
enterprises and give them preference in the award process prior to
undertaking the six good faith efforts. If the efforts to recruit
Indian organizations and Indian-owned economic enterprises is not
successful, then the recipient must follow the six good faith efforts.
Subpart D--Fair Share Objectives
Section 33.401 What Does This Subpart Require?
EPA's previous fair share policy has required that fair share
objectives for MBEs and WBEs be negotiated with EPA financial
assistance recipients, but has not required that fair share objectives
be established for other types of DBEs. While good faith efforts have
been required with respect to all DBEs, including LSAFs, SBEs and
SBRAs, numerical fair share objectives need only be negotiated for MBEs
and WBEs in accordance with EPA's 8% and 10% statutes. This proposed
rule would continue this policy.
EPA's position reflects the requirement of its 8% and 10% statutes
and is consistent with Executive Order 12138 (May 18, 1979), which
requires all Federal agencies to take ``appropriate affirmative action
in support of [WBEs].'' Further, OMB Circular A-102 (March 3, 1988)
provides that ``[i]t is national policy to award a fair share of
contracts to small and minority business firms: and that ``[g]rantees
shall take similar appropriate affirmative action * * * [in]
support of
women's enterprises * * *''
Prior to FY 1998, EPA applied its 8% and 10% MBE and WBE objectives
directly to each of its financial assistance agreements. Thus, each EPA
financial assistance agreement for research relating to the
requirements of the Clean Air Act Amendments of 1990 had a minimum of
10% as MBE and WBE fair share objectives. All other EPA financial
assistance agreements had a minimum of 8% as MBE and WBE fair share
objectives. EPA changed this policy beginning with its FY 1998
financial assistance agreements so that the minimum 8% and 10% MBE and
WBE fair share objectives became agency-wide objectives rather than
fair share objectives for each EPA financial assistance agreement.
Notwithstanding these national objectives, fair share objectives for
each financial assistance agreement recipient are negotiated based on
an assessment of the availability of qualified MBEs and WBEs in the
relevant procurement market for construction, equipment, services and
supplies; thus, the overall national objectives may vary from the
specific fair share objectives of an individual financial assistance
agreement recipient.
The 8% and 10% objectives are national objectives which EPA uses to
evaluate and monitor MBE and WBE opportunities to participate in
contracts under EPA financial assistance agreements. They do not serve
as quotas or set-asides. These national objectives
[[Page 43832]]
do not authorize or require a recipient to automatically establish MBE
or WBE fair share objectives at the 8% or 10% levels. The fair share
objectives apply only to procurement dollars and not, for example, to
salaries or other overhead costs.
Section 33.402 Are There Special Rules for Loans Under EPA Financial
Assistance Agreements?
A recipient of an EPA financial assistance agreement to capitalize
a revolving loan fund will apply its fair share objective (if the
entity receiving the identified loan uses a relevant geographic area
that is substantially similar to the recipient's) or a separately
negotiated fair share objective to entities receiving identified loans.
For the CWSRF and DWSRF Programs, identified loans are those projects
or activities funded from amounts equal to the capitalization grant.
For the Brownfields Cleanup Revolving Loan Fund (BCRLF) Program,
identified loans are those projects funded with federal financial
assistance. If procurements will occur over more than one year, the
recipient may choose to apply the fair share objective in place either
for the year in which the identified loan is awarded or for the year in
which the procurement action occurs. The recipient must specify this
choice in the financial assistance agreement, or incorporate it by
reference therein.
Section 33.403 What Is a Fair Share Objective?
A fair share objective is a percentage based on the capacity and
availability of qualified MBEs, and WBEs in the relevant geographic
market for the procurement categories of construction, equipment,
services and supplies compared to the number of all qualified entities
in the same market for the same procurement categories adjusted, if
possible, to reflect the level of MBE and WBE participation absent the
effects of past discrimination in the marketplace.
A fair share objective is not a quota. A recipient and its prime
contractor must make the good faith efforts described in Subpart C of
this Rule in attempting to achieve its fair share objectives.
Section 33.404 When Must a Recipient Negotiate Fair Share Objectives
With EPA?
This Rule requires a recipient to submit its proposed fair share
objectives and supporting documentation to the Agency within 90 days
after its acceptance of a financial assistance agreement for more than
$250,000. In situations where a recipient receives several EPA
financial assistance agreements that are $250,000 or less in one fiscal
year, the recipient must submit its proposed fair share objectives and
supporting documentation to the Agency within 90 days after its
acceptance of the financial assistance agreement that takes the
recipient over the $250,000 threshold (see Sec. 33.411). In recent
years EPA has included time frames for submission of proposed fair
share objectives in special grant conditions for each financial
assistance agreement. EPA is now incorporating a general time frame
into this Rule. A recipient may not spend any of its financial
assistance award for procurement until the fair share objective
negotiation process has been completed.
Section 33.405 How Does a Recipient Determine Its Fair Share
Objectives?
Starting in FY 1998, EPA, through the 1997 Guidance and
implementing terms and conditions, has required that fair share
objectives for MBEs and WBEs be based on the availability of qualified
MBEs and WBEs in the relevant market for the four procurement
categories of construction, equipment, services and supplies. In this
proposed regulation, EPA is also offering recipients the option of
combining the four proposed procurement category objectives for MBEs
into a single weighted objective. The same option would be available
for WBEs. In this proposed regulation, EPA is continuing to allow
recipients to establish separate MBE and WBE fair share objectives for
different EPA financial assistance programs and to establish separate
MBE and WBE fair share objectives by geographic area.
Beginning with MBE and WBE objectives for FY 1999, the Agency
required that fair share negotiations be supported by an availability
analysis, or at the recipient's option, a disparity study conducted
within the past ten years. In this rulemaking, EPA is proposing to keep
this basic approach, with some fine tuning. The recipient would have to
consider whether an adjustment from the availability analysis or
disparity study percentage is needed based on past MBE or WBE
achievements, other disparity studies done within the recipient's
jurisdiction or other types of relevant available data (e.g.,
statistical disparities in the ability of MBEs and WBEs to obtain
financing, bonding and insurance required to participate in the DBE
Program). This process is needed to ensure that objectives accurately
reflect the MBE and WBE participation expected absent the effects of
discrimination.
Recognizing that EPA makes many different types of financial
assistance awards (e.g., Superfund awards for Hazardous Waste Cleanup,
CWSRF capitalization grants) to a wide variety of recipients, EPA is
also soliciting comments to help us determine how best to achieve a
``level playing field'' for MBEs and WBEs. EPA is specifically asking
for comments on whether recipients should be able to choose from a
variety of methods in calculating MBE and WBE fair share objectives
with the Agency.
This process is intended to provide maximum flexibility for
recipients while ensuring that objectives are based, at a minimum, on
the capacity and availability of qualified MBEs and WBEs in the
recipient's relevant market.
A recipient may negotiate separate MBE and WBE fair share
objectives applicable to different geographic markets, and must use the
fair share objectives for the geographic markets in which the contract
work for its project is being performed.
(1) Step 1: Determining a Base Figure for the MBE and WBE Objectives
A recipient may determine a base figure by preparing an
availability analysis. An availability analysis represents an actual
measurement by the recipient of the availability of MBEs and WBEs in
the relevant geographic market in the four procurement categories
compared to the number of all businesses in the same market that
perform work in the same procurement categories. From these data the
recipient would derive a base figure that is as accurate a
representation as possible of the percentage of qualified MBEs and WBEs
available versus the total number of available businesses.
EPA is not specifying a methodology or formula for a recipient to
use in preparing its availability analysis. Instead, the Agency is
proposing to place primary emphasis on the principles underlying the
measurement, requiring only that a measurement of the availability be
made on the basis of demonstrable evidence of relevant market
conditions.
EPA is providing a number of examples which recipients may adopt or
use as guidelines for deriving their own availability analysis.
(A) MBE/WBE Directories and Census Bureau Data
The first example is setting an MBE base figure using a recipient's
own MBE directories, including the bidders list required by Sec.
33.501. For each procurement category, the recipient would first
tabulate the number of
[[Page 43833]]
qualified MBEs, with the resulting number becoming the numerator of the
base figure. The denominator could then be derived from the Census
Bureau's County Business Pattern (CBP) Database. The CBP Database
contains all available businesses in the recipient's relevant
geographic market organized by Standard Industrial Code (SIC code). SIC
codes have been converted to North American Industrial Classification
System (NAICS) codes. For purposes of the following discussion, NAICS
codes may be substituted for SIC codes. The recipient may then combine
all available businesses pertaining to construction, for example, and
use this number as the denominator in the base figure for that
particular procurement category.
EPA has a link to the Census Bureau's website at osdbuweb.dot.gov/
business/dbe/abe.pdf. Utilizing this data, recipients would be able to
customize their base figure within each procurement category. For
example, major construction SIC codes are 15, 16 and 17. If a recipient
estimates it will spend 10% of its federal funds within SIC code 15,
40% in SIC code 16, 25% in SIC code 17, and the remaining 25% on
contracting spread over SIC codes 35 (equipment) and 87 (services), the
recipient could separately determine the availability of MBEs for each
of the SIC codes and weight each according to the amount of money to be
spent in each area. In this example, the recipient could calculate its
weighted base figure by first determining the number of MBEs in its
directory for each of the SIC codes, then extracting the availability
of CBP businesses for the same SIC codes. The recipient would then
perform the following calculation to arrive at a base figure for step
one of the objective setting process for MBEs.
Numerator = [.10 (MBEs in SIC code 15) + .40(MBEs in SIC code 16) +
.25(MBEs in SIC code 17) + .25(MBEs in SIC codes 35 & 87) ]
x 100
Denominator = CBPs in SIC code 15 + CBPs in SIC code 16 + CBPs in SIC
code 17 + CBPs in SIC codes 35 & 87
[GRAPHIC]
[TIFF OMITTED]
TP24JY03.003
This formula is offered only as an example of how a recipient could
choose to use the CBP Database. Recipients using the CBP data could
choose whether to weight their calculation, and whether to do so by
individual SIC codes or by groups of SIC codes, based on their own
assessment of which method will best fit their spending patterns.
EPA is proposing to allow a recipient to negotiate separate MBE and
separate WBE fair share objectives for each of the four procurement
categories of construction, equipment, services and supplies or, at its
option, negotiate a combined weighted objective for these four
procurement category objectives for MBEs and separately for WBEs. This
proposed approach would give recipients flexibility in preparing their
availability analyses.
Several issues arise when comparing numbers from two different data
sources. First, recipients will need to ensure that the scope of
businesses included in the numerator is as close as possible to the
scope included in the denominator. A recipient using its own MBE and
WBE directories will still need to determine a similar scope for the
fields it will use for the denominator. A good way for a recipient to
do this would be to examine its contracting program and determine the
SIC codes for the majority of its contracts. While it may be sufficient
for some recipients to use their State borders as the boundaries for
their relevant geographic market, this may not be appropriate for other
recipients whose relevant geographic market may extend beyond their
State borders. Conversely, the relevant geographic market for some
recipients may be a specific region within a State's borders.
An alternative means of calculating the numerator is to use a
bidders list. Under this approach the recipient would measure
availability by the number of firms that have previously competed in
the recipient's procurement process. The recipient must include all
firms that have competed for prime and/or subcontracts.
In the category of construction, most MBE and WBE participation
occurs through subcontracting. It is therefore crucial that all firms
competing for subcontracts be included in the bidders list. EPA
encourages recipients to use any sources of local data which allows
them to make a more accurate calculation.
(B) Data From a Disparity Study
Another option for a recipient in determining a base figure is
using a disparity study. Disparity studies involve comparing available
MBE and WBE contractors with the contracts actually awarded to them.
They generally are based on statistics which measure MBE and WBE
utilization and anecdotal evidence showing that the underutilization of
MBEs and WBEs is caused by conditions other than chance. These studies
may be expensive and time consuming to perform.
EPA is not requiring a recipient to conduct a disparity study. EPA
is also not specifying the data or analysis required in a disparity
study since the design and conduct of the study are best left to
recipients and the professional organizations with which they contract
to perform the studies. If a disparity study is used it must address
MBE and WBE utilization under the four procurement categories and be no
more than ten years old. The fact that a disparity study utilized in
negotiating fair share objectives has become more than ten years old
during the three year period does not by itself constitute a
significant change requiring renegotiation.
(C) The Objective of Another EPA Recipient
A recipient may also use another EPA recipient's MBE and WBE
objectives if they were established in accordance with this Rule and
were based on a substantially similar relevant geographic market. For
example, a non-State agency recipient may use a State agency's MBE and
WBE fair share objectives, but only if the non-State agency uses a
substantially similar geographic market. Otherwise, the non-State
Agency recipient would have to negotiate its own MBE and WBE fair share
objectives with EPA based on the availability of MBEs and WBEs in its
relevant geographic market. With the proposed exemption from the fair
share objective negotiation process, the number of recipients who would
be required to separately negotiate with EPA would be substantially
reduced.
(D) Alternative Methods
This proposal also includes an option for recipients to propose an
alternative method for calculating MBE and WBE base figures. Recipients
may use this option to take advantage of any unique expertise or source
of data that may not be available to other recipients, such as a
comparable objective negotiated with DOT. EPA will consider any such
proposal that recipients believe will better reflect their relevant
market than any of the examples provided in this Rule.
Step 2: Adjusting the Base Figure for the MBE and WBE Objectives
Once a recipient has derived base figures for its proposed MBE and
WBE objectives, it must then consider whether an adjustment from the
Step 1 MBE and WBE base figures is appropriate. This second step is
needed to ensure that objectives more
[[Page 43834]]
accurately reflect the MBE and WBE participation expected absent the
effects of discrimination. A recipient should consider the proven
capacity of MBEs and WBEs to perform on contracts under EPA financial
assistance agreements. MBE and WBE past utilization does not
necessarily reflect the availability of MBEs and WBEs. However, such
past utilization is an indicia of the proven capacity of an MBE or WBE
to perform on contracts under EPA financial assistance agreements.
Other relevant information which should be examined, if available,
include any other disparity studies conducted within a recipient's
relevant geographic market; statistical disparities in the ability of
MBEs and WBEs to get necessary financing, bonding and insurance; and
data on limitations for employment, self employment, education,
training and union apprenticeship.
EPA is not proposing to require recipients to make an adjustment to
their base figures. Rather, recipients must consider whether an
adjustment to the base figures is appropriate, and if so, make the
adjustment. It is important to note that the data recipients would
consider under this proposed approach only involve existing data and
not the generation of any new data.
The question of allowability of costs of preparing availability
analyses or disparity studies in connection with the DBE Program is
determined in accordance with the cost principles applicable to the
organization incurring the cost. 40 CFR 30.27 and 31.22. For State and
local governments, the pertinent cost principles are found in OMB
Circular A-87, as amended 8/29/97 (``A-87''). For institutions of
higher education and other non-profit institutions, OMB Circulars A-21
and A-122 apply, respectively. Allowability of costs for hospitals is
determined in accordance with the provision of appendix E of 45 CFR
Part 74.
In general, the cost must be necessary and reasonable, be allocable
to the Federal grant, be consistent with State law and be afforded
consistent treatment as direct or indirect. The cost must be adequately
documented, and be the net of any applicable credits. There is nothing
inherent in the cost principles that would render the DBE costs
unallowable.
Each recipient will have different fact situations to apply. In
CERCLA Core Program Cooperative Agreements, costs incurred in
encouraging DBE utilization in the Superfund Program are allowable for
funding. The recipient may have conducted an analysis or study for its
own purposes prior to the EPA financial assistance agreement, in which
case some of the costs might be allocable to the EPA grant as an in-
kind contribution. Costs must also be treated consistently as either
direct or indirect in similar circumstances. Under OMB cost principles
the costs of such analyses or studies could either be allowable direct
or allowable indirect costs under an EPA assistance award. The
recipient must determine whether under its particular circumstances,
the DBE costs are allocable to the cost objective in question, and
whether it is a direct or indirect cost.
In each case, the recipient will have to devise a method of
allocating the cost of the analysis or study appropriately. If audited,
the recipient may be asked to document and justify the allocation. If a
recipient has questions concerning allocation issues, it should contact
its appropriate EPA grants administration office.
Section 33.406 May a Recipient Designate a Lead Agency for Fair Share
Objective Negotiation Purposes?
If an Indian Tribal, State or local Government has more than one
agency that receives EPA financial assistance, the agencies within that
government may designate a lead agency to negotiate MBE and WBE fair
share objectives with EPA to be used by each of the agencies. Each
agency must otherwise negotiate with EPA separately its own MBE and WBE
fair share objectives.
Section 33.407 How Long Do MBE and WBE Fair Share Objectives Remain in
Effect?
Once approved, a recipient's MBE and WBE fair share objectives
would remain in effect for three fiscal years. However, if significant
changes have occurred rendering the data relied upon in establishing
the fair share objectives obsolete, the fair share objectives may need
to be renegotiated before the end of the three fiscal year period. The
fact that a disparity study utilized in negotiating fair share
objectives has become more than ten years old during the three year
period does not by itself constitute a significant change requiring
renegotiation.
Section 33.408 May a Recipient Use Race and/or Gender Conscious
Measures as Part of This Program?
To the extent good faith efforts described in Subpart C of this
Rule and other race and/or gender neutral efforts prove to be adequate
to achieve fair share objectives for MBEs and WBEs, a recipient or
prime contractor need not take any race and/or gender conscious action.
To the extent good faith efforts described in Subpart C of this Rule
and other race and/or gender neutral efforts prove to be inadequate to
achieve fair share objectives for MBEs and WBEs, a recipient or prime
contractor is encouraged to take reasonable race and/or gender
conscious action, subject to Sec. 33.409, to more closely achieve the
fair share objectives. Such actions may include, among other things,
price incentives and technical evaluation credits. Any use of race and/
or gender conscious measures must not result in the selection of an
unqualified MBE or WBE. A recipient must notify EPA in advance of any
race and/or gender conscious action it plans to take.
Section 33.409 May a Recipient Use Quotas as Part of This Program?
Quotas may never be used under EPA's 8% or 10% statute. In fact,
EPA's 10% statute specifically prohibits quotas.
Section 33.410 May a Recipient Be Penalized for Failing To Meet Its
Fair Share Objectives?
Under this Rule, a recipient may not be penalized or considered to
be in noncompliance solely because its MBE or WBE utilization falls
short of its fair share objectives. However, EPA may take remedial
action under Sec. 33.105 for a recipient's failure to administer any
portion of the DBE Program including, but not limited to, the good
faith efforts requirements described in Subpart C of this part.
Section 33.411 Who May be Exempted From This Subpart?
EPA is proposing to exempt recipients of financial assistance
agreements with a combined total of $250,000 or less in EPA funds for
any particular EPA financial assistance project or in any one fiscal
year from the fair share objective requirements. These recipients would
not be exempted from the six good faith efforts requirements of Subpart
C or the recordkeeping and reporting requirements of Subpart E. The
Agency is requesting comments on whether the exemption should be
extended to the other requirements. Commenters are encouraged to submit
relevant burden and/or cost information in support of extending the
exemption to the other requirements of this Rule.
Financial assistance agreements of $250,000 or less account for
about 82% of new EPA financial assistance awards each fiscal year, but
less than 12% of the total EPA financial assistance funds awarded. For
the Clean Water State Revolving Fund (CWSRF), Drinking Water State
Revolving Fund (DWSRF), and Brownfields Cleanup Revolving
[[Page 43835]]
Loan Fund (BCRLF) Programs, recipients are not required to apply the
fair share objective requirements to an entity receiving an identified
loan in the amount of $250,000 or less or to an entity receiving a
combination of loans totaling in the amount of $250,000 or less in any
one fiscal year. These exemptions are designed to minimize
administrative burdens on EPA recipients. Recipients exempted by this
provision are not exempted from the other requirements of the rule. The
Agency is requesting comment, including comments from Tribes, on
whether the exemptions should apply to other requirements, specifically
the good faith efforts and reporting requirements. Commenters are
encouraged to submit relevant burden and/or cost information in support
of their comments to extend the exemption to other requirements of this
Rule, including the good faith efforts and reporting requirements.
EPA is proposing to exempt Tribal and tribal consortia recipients
from applying the fair share objective requirements to eligible program
grants which can be included in Performance Partnership Grants (PPGs)
under 40 CFR Part 35, Subpart B, due to the nature of these program
grants and the unique nature of eligible recipients.
Finally, a recipient of a Technical Assistance Grant (TAG) would
not be required to apply the fair share objective requirements of this
Subpart to that grant. This provision would not, however, exempt such
recipients from any other requirements of this Part.
Section 33.412 Is There a Special Rule for an Insular Area or Indian
Tribal Government Recipient?
Currently, Insular Area and Indian Tribal Government recipients are
not required to negotiate fair share objectives with EPA. For the most
part, EPA is proposing to treat Insular Area and Indian Tribal
Government recipients the same as other recipients with regard to the
fair share objective negotiation requirements. For example, the fair
share objectives of another recipient may be used so long as the
relevant geographic market is the same or substantially similar.
The impact of this change on Indian Tribal Government recipients
would be minimized by the general exemption described in Sec.
33.411(a). The impact is further minimized in the case of tribes and
tribal consortia by the exemption for eligible program grants which can
be included in Performance Partnership Grants (PPGs) under 40 CFR Part
35, Subpart B, described in Sec. 33.411(c). As with other recipients,
fair share objectives would remain in effect for three years.
EPA is proposing to phase-in the MBE and WBE fair share objective
negotiation process for Insular Area and Indian Tribal Government
recipients over three years in order for such recipients to adjust to
this change in policy. The Agency will develop guidance on what
specific factors should be taken into account in determining the phase-
in period for these recipients. In the interim, such recipients must
still comply with all other requirements of this Rule.
Subpart E--Recordkeeping and Reporting
Section 33.501 What Are the Recordkeeping Requirements of This Part?
A recipient is required to maintain the records documenting its
compliance with the requirements of this Part, including documentation
of its and its prime contractor's good faith efforts and data relied
upon in formulating its fair share objectives. A recipient must also
comply with the applicable retention and access requirements for its
financial assistance agreement, e.g., 40 CFR 30.53 (for institutions of
higher education, hospitals and other non-profit organizations); 40 CFR
31.42 (for Indian Tribal, State and local Government recipients); and
40 CFR 35.6705, 35.6710 (for Superfund Response Action Cooperative
Agreements). In addition, a recipient of a Continuing Environmental
Program Grant (e.g., a State) or other annual grant would be required
to create and maintain a bidders list. Such a list must only be kept
until the grant project period has expired and the recipient is no
longer receiving EPA funding under the grant. In addition, a recipient
of an EPA financial assistance agreement to capitalize a revolving loan
fund also must require entities receiving identified loans to create
and maintain a bidders list if the recipient of the loan is subject to,
or chooses to follow, competitive bidding requirements. (See e.g., 40
CFR 33.303). The purpose of a bidders list is to provide the recipient
and entities receiving identified loans who conduct competitive bidding
with as accurate a database as possible about the universe of MBE/WBE
and non-MBE/WBE prime and subcontractors. Such a list must only be kept
until the project period for the identified loan has ended. Recipients
are required to comply with these recordkeeping requirements, even if
they are exempted by Sec. 33.411 from applying the fair share
objective requirements. The Agency is requesting comments on whether
the exemption should be extended to the recordkeeping requirements.
Commenters are encouraged to submit relevant burden and/or cost
information in support of their comment to extend the exemption to the
recordkeeping requirements.
Section 33.502 What Are the Reporting Requirements of This Part?
The effectiveness of EPA's DBE Program may be measured through its
reporting requirements. These reports measure EPA's progress in
achieving the national objectives established by EPA's 8% and 10%
statutes.
All financial assistance agreement recipients must report on a
quarterly basis except for recipients of continuing environmental
program grants, and institutions of higher education, hospitals and
other non-profit organizations receiving financial assistance awards
under 40 CFR Part 30, who report on an annual basis. Examples of
continuing environmental program grants include those specified in 40
CFR Part 35, Subpart A, as well as Performance Partnership Grants
(PPGs) and GAP Grants for Indian Tribal governments and intertribal
consortia. Recipients of grants capitalizing CWSRF or DWSRF Programs
have historically reported MBE/WBE participation quarterly, and will
continue to do so under this rule. Recipients of financial assistance
agreements that capitalize revolving loan programs must require
entities receiving identified loans to submit their MBE and WBE
participation reports on a quarterly basis to the financial assistance
agreement recipient, rather than to EPA. Private and non-profit
organization loan recipients are not required to maintain a certified
procurement system (e.g., see 40 CFR 35.6055(a)).
In the past, EPA has presumed that all financial assistance award
funds to Indian Tribal Government and Insular Area recipients have
benefitted MBEs. Accordingly, despite the reporting requirements
contained in 40 CFR Part 31, as a matter of policy, EPA has not
uniformly required Indian Tribal Government and Insular Area recipients
to report their degree of MBE or WBE utilization. In this proposed
Subpart, Indian Tribal Government and Insular Area recipients are
treated the same as other recipients with regard to recordkeeping and
reporting requirements. All such recipients would therefore be required
to retain records and report on actual MBE and WBE utilization.
The reporting requirements are applicable to all recipients, even
those exempted from applying the fair share
[[Page 43836]]
objective requirements. The Agency is requesting comments on whether
the exemption should be extended to the reporting requirements.
Commenters are encouraged to submit relevant burden and/or cost
information in support of their comment to extend the exemption to the
reporting requirements.
Section 33.503 How Does a Recipient Calculate MBE and WBE Participation
for Reporting Purposes?
In this rulemaking proposal the Agency is proposing to codify the
principles of Chapter 8 of its 1997 Guidance concerning how MBE and WBE
participation is counted.
EPA requires that a recipient report the total amount of financial
assistance spent on procurement and the amount awarded to an MBE or
WBE. For EPA assistance awards, except the CWSRF and DWSRF Revolving
Funds, all project expenditures are deemed to include both the Federal
Share and the recipient's required matching share. Therefore, except in
the SRF Programs, the amount of procurement in the assistance award as
a whole, i.e., including any required cost share funds contributed by
the recipient is reported. In the SRF Programs, only identified loans
are considered to include Federal funds. Negative reports are required,
i.e., if a recipient does not make an MBE or WBE procurement award in a
reporting period, the recipient must still file a Form 5700-52A.
By requiring recipients to report, EPA is attempting to measure the
amount of overall MBE and WBE participation under the DBE Program. The
reporting of MBE and WBE dollar amounts under a particular prime
contract will result in a total that is no more than 100% of the prime
contract value. For example, if an MBE is awarded a prime contract and
then subcontracts 30% of the value of the contract, the total number of
dollars reported would remain at the 100% level. This would be true
even if the subcontractor in this example is another MBE.
If all project costs attributable to MBE and WBE participation are
not eligible for funding under the EPA financial assistance agreement,
the recipient may report MBE and WBE participation compared to the
total eligible and non-eligible costs of the project.
Joint Ventures. The MBE and WBE participation within a joint
venture shall be credited in a pro rata fashion. Where an MBE's or
WBE's risk of loss, control or management responsibilities is not
consistent with its share of the profit, the award official may direct
an adjustment in the percentage of MBE or WBE participation.
Central Purchasing or Procurement Centers. Recipients must verify
procurement dollars awarded to MBE and WBE firms from a recipient's
central purchasing or procurement center.
In reporting MBE and WBE utilization, a recipient may use one of
the methods described below or propose another method for approval by
EPA.
(1) A recipient may report actual dollars expended on procurement
from EPA financial assistance agreement funds to MBEs and WBEs, if
sufficient records are maintained;
(2) If records are maintained for a recipient's MBE and WBE
procurement generally but records are not specifically maintained for
procurement under EPA financial assistance agreements, a recipient's
MBE and WBE percentage utilization for its funds as a whole may be
applied proportionally to the amount of procurement under EPA financial
assistance agreements; or
(3) If actual records of MBE and WBE utilization are not
maintained, a recipient may authorize its procurement center to
estimate the total amount of funds awarded to MBEs and WBEs. Such
estimate, provided it is reasonable, will be accepted.
Brokers. MBE and WBE participation will be credited for those MBEs
and WBEs performing a useful business function according to industry
custom and practice. Recipients may not count expenditures to an MBE or
WBE that acts merely as a broker or passive conduit in a transaction. A
broker is a firm that does not itself perform, manage or supervise the
work of its contract or subcontract in a manner consistent with the
normal business practices for contractors or subcontractors in its line
of business. However, an MBE or WBE may subcontract a portion of the
work to a non-MBE or non-WBE, provided that such further subcontracting
is in accordance with this proposed regulation and that the majority of
work is retained by the MBE or WBE having the prime contract.
Presumption. If an MBE or WBE prime contractor awards 50% or more
of the prime contract value to a non-MBE and non-WBE, EPA presumes that
such a MBE or WBE prime contractor is a broker. No MBE or WBE
utilization may be reported for a broker.
Rebuttal. An MBE or WBE contractor may rebut this presumption by
demonstrating that the degree of subcontracting is consistent with
normal business practice and that it will actively perform, manage and
supervise the work under its contract.
MBE or WBE Truckers/Haulers. A recipient may only count
expenditures to an MBE or WBE Trucker/Hauler if that MBE or WBE
Trucker/Hauler is performing a commercially useful function. The
proposed rule discusses two factors to consider in determining whether
an MBE or WBE Trucker/Hauler is performing a commercially useful
function.
III. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review
Under Executive Order 12866 (58 FR 51735, October 4, 1993), EPA
must determine whether the regulatory action is ``significant'' and
therefore subject to review by the Office of Management and Budget
(OMB). The Executive 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 tribal, State or local 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 programs, or the rights and obligations of recipients
thereof.
(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.
This rule is a significant rule under Executive Order 12866 because
of the substantial public interest concerning and policy importance of
programs to ensure nondiscrimination in Federally assisted contracting.
It also affects a wide variety of parties, including all EPA financial
assistance programs, and the DBE and non-DBE contractors that perform
work under them. As such, this action was submitted to OMB for review.
Changes made in response to OMB suggestions or recommendations will be
documented in the public record.
Based on currently available information about costs that may be
associated with complying with this rule (e.g., costs to obtain MBE or
WBE certification), EPA believes that this rule will not have an annual
effect on the economy of $100 million or more. Therefore, EPA does not
plan to prepare a regulatory impact statement for this rule. However,
EPA invites commentors
[[Page 43837]]
to furnish information on the economic costs, impacts and
distributional effects of this proposed rule, after which the agency
may reconsider its position.
B. Paperwork Reduction Act
The information collection requirements in this proposed rule have
been submitted for approval to the Office of Management and Budget
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The
Information Collection Request (ICR) document prepared by EPA has been
assigned ICR No-2047.01.
This ICR is for the purpose of ensuring that EPA's statutory DBE
procurement goal requirements are implemented in harmony with the
United States Supreme Court's decision in Adarand Constructors, Inc. v.
Pena, 115 S. Ct. 2097 (1995).
The requirements to complete EPA Forms 6100-2-DBE Program
Subcontractor Participation Form, 6100-3-DBE Program Subcontractor
Performance Form, and 6100-4-DBE Program Subcontractor Utilization
Form, are intended to prevent any ``bait and switch'' tactics at the
subcontract level by prime contractors which may circumvent the spirit
of the DBE Program.
The requirements to complete the EPA DBE Certification Application
(EPA Form 6100-1a) (Sole Proprietorship), the EPA DBE Certification
Application (EPA Form 6100-1b) (Limited Liability Company), the EPA DBE
Certification Application (EPA 6100-1c) (Partnerships), the EPA DBE
Certification Application (EPA Form 6100-1d) (Corporations), the EPA
DBE Certification Application (EPA Form 6100-1e) (Alaska Native
Corporations), the EPA DBE Certification Application (EPA Form 6100-1f)
(Tribally Owned Businesses), the EPA DBE Certification Application (EPA
Form 6100-1g) (Private and Voluntary Organizations), the EPA DBE
Certification Application (EPA Form 6100-1h) (Concerns owned by Native
Hawaiian Organizations), and the EPA DBE Certification Application (EPA
Form 6100-1i) (Concerns Owned by Community Development Corporations),
as applicable, would be required to be completed by an entity seeking
to be counted as a minority business enterprise (MBE) or women's
business enterprise (WBE) under EPA's DBE Program, which cannot get
certified as an MBE or WBE by the SBA or DOT under their respective
programs or by an Indian Tribal Government or independent private
organization consistent with EPA's 8% or 10% statute as applicable.
Responses to the collection of information will be mandatory. EPA's
legal authorities for the DBE Program are Public Law 102-389, a 1993
appropriations act (42 U.S.C. 4370d) (EPA's 8% statute), and Public Law
101-549, Title X of the Clean Air Act Amendments of 1990 (42 U.S.C.
7601 note) (EPA's 10% statute).
Other legal authorities include Public Law 99-499, the Superfund
Amendments and Reauthorization Act of 1986; Public Law 100-590, the
Small Business Administration Reauthorization and Amendment Act of
1988; Executive Order 12138, ``Creating a National Women's Business
Enterprise Policy and Prescribing Arrangements for Developing,
Coordinating and Implementing a National Program for Women's Business
Enterprise,'' issued May 18, 1979; Executive Order 11625, ``Prescribing
Additional Arrangements for Developing and Coordinating a National
Program for Minority Business Enterprise,'' issued October 13, 1971;
and Executive Order 12432, ``Minority Business Enterprise
Development,'' issued July 14, 1983.
EPA may make available to the public any information concerning
EPA's DBE Program release of which is not prohibited by Federal law or
regulation, including EPA's Confidential Business Information
regulations at 40 CFR Part 2, Subpart B.
The total labor burden and costs to MBEs and WBEs for certification
under State, Tribal and Insular Area funding programs is estimated to
total $8,750,300, with 168,275 burden hours and 6,731 MBE and WBE
entities affected for the three-year period of the ICR. The estimated
annual burden hours per response is 25 hours; the number of respondents
is estimated at 2,244 at an average annual labor burden and cost per
MBE and WBE of $1300. The average annual burden and costs are estimated
by spreading the first year cost over the three-year period of the ICR,
yielding a total annual average burden of 56,092 hours and $2,916,767
in costs.
The total labor burden and costs to all EPA grant and loan
recipients that would have to perform an availability analysis to meet
the requirements of the proposed rule and other paperwork requirements
are estimated to be $16,509,500 with 825,475 burden hours and 3,115
entities affected for the three-year period of the ICR. The estimated
annual burden hours for all responses is 275,158, and the annual number
of respondents is estimated at 1,038.
The annual cost for all respondents would be $5,503,167. The cost
per respondent is estimated at $5,250 (each respondent is estimated to
perform an availability analysis once every three years) and is
estimated to take 265 hours at $20/hour. EPA assumed there were no
additional start up costs or capital expenditures.
Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This includes the time
needed to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to
comply with any previously applicable instructions and requirements;
train personnel to be able to respond to a collection of information;
search data sources; complete and review the collection of information;
and transmit or otherwise disclose the information.
An Agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations are listed in 40 CFR Part 9 and 48 CFR Chapter 15.
To comment on the Agency's need for this information, the accuracy
of the provided burden estimates, and any suggested methods for
minimizing respondent burden, including the use of automated collection
techniques, EPA has established a public docket for this ICR under
Docket ID No. OA-2002-0001 which is available for public viewing at the
OEI Docket in the EPA Docket Center (EPA/DC), EPA West Room B102, 1301
Constitution Ave., NW., Washington, DC. The EPA Docket Center Public
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding legal holidays. The telephone number for the Reading
Room is (202) 566-1744, and the telephone number for the OEI Docket is
(202) 566-1752. An electronic version of the public docket is available
through EPA Dockets (EDOCKET) at http://www.epa.gov/edocket. Use
EDOCKET to submit or view public comments, access the index listing of
the contents of the public docket and to access those documents in the
public docket, and to access those documents in the public docket that
are available electronically. Once on the system, select ``search,''
then key in the docket ID number identified above. Also, you can send
comments to the Office of Information and Regulatory Affairs, Office of
Management and Budget, 725
[[Page 43838]]
17th St., NW., Washington, DC 20503, Attention: Desk Officer for EPA.
Please include the EPA Docket ID No. OA-2002-0001 in any
correspondence. Since OMB is required to make a decision concerning the
ICR between 30 and 60 days after July 24, 2003, a comment to OMB is
best assured of having its full effect if OMB receives it by August 25,
2003. The final rule will respond to any OMB or public comments on the
information collection requirements contained in this proposal.
C. Regulatory Flexibility Act (RFA), as amended by the Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et
seq.
Today's proposed rule is not subject to the RFA, which generally
requires an agency to prepare a regulatory flexibility analysis for any
rule that will have a significant economic impact on a substantial
number of small entities. The RFA applies only to rules subject to
notice-and-comment rulemaking requirements under the Administrative
Procedure Act (APA) or any other statute. As a grants-related rule,
this rule is not subject to the notice and comment requirements of the
APA, 5 U.S.C. 553(a)(1). Nor is there any other statute which requires
EPA to undergo notice and comment for this rulemaking.
Although this proposed rule is not subject to the RFA, EPA
nonetheless will assess the potential of this rule to adversely affect
small entities, which include small businesses, small not for profit
enterprises and small governmental jurisdictions. At the outset, it is
important to note that EPA's DBE Program is aimed at improving
contracting opportunities for small businesses owned and controlled by
socially and economically disadvantaged individuals, among others
(e.g., HBCUs, etc.). Accordingly, EPA believes that this proposed rule
would affect a substantial number of small entities.
However, if the proposed exemptions at the $250,000 level or less
from the fair share objective requirements are adopted, EPA believes
that the effect on small entities, including small government
jurisdictions, would be minimal. Additionally, under this rulemaking
proposal, small entity recipients would be able to use State Agency
negotiated MBE/WBE objectives if such recipients solicit bids/offers
from a substantially similar geographic market as that State Agency.
Accordingly, EPA believes that the economic impact of this rule, if
enacted, on small entities should be minimal.
In EPA's view, this rule, if enacted, would not affect the total
funds or business opportunities available to small businesses that seek
to work in EPA financial assistance programs. To the extent that the
provisions in this rulemaking proposal (e.g., with respect to changes
in the methods used to set objectives) lead to different objectives
than those under EPA's current program policy, some firms may gain and
others lose, business.
EPA is unaware of any data which would enable the Agency at this
time to measure the distributive effects of the rulemaking proposal on
various types of small entities. We continue to be interested in the
potential impacts of this proposed rule on small entities and welcome
comments on issues related to such impacts.
D. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, 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 to the private sector of $100 million or more in any
one year. Before promulgating an EPA rule for which a written statement
is needed, section 205 of the UMRA generally requires EPA to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost-effective or least burdensome alternative
that achieves the objectives of the rule. The provisions of section 205
do not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective or least burdensome alternative that
achieves the objectives of the rule. The provisions of section 205 do
not apply when they are inconsistent with applicable law. Morever,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective or least burdensome alternative if the
Administrator publishes with the final rule an explanation why that
alternative was not adopted. Before EPA establishes any regulatory
requirements that may significantly or uniquely affect small
governments, including tribal governments, it must have developed under
section 203 of the UMRA a small government agency plan. The plan must
provide for notifying potentially affected small governments, enabling
officials of affected small governments to have meaningful and timely
input in the development of EPA regulatory proposals with significant
Federal intergovernmental mandates, and informing, educating and
advising small governments on compliance with the regulatory
requirements.
Today's rule 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 excluded from the
definition of ``Federal intergovernmental mandate'' duties that arise
from conditions of federal assistance.
Pursuant to section 203 of the UMRA, EPA has also determined that
this rule contains no regulatory requirements that might significantly
or uniquely affect small governments. If the proposed exemptions at the
$250,000 level or less from compliance with the fair share objective
requirements are adopted, EPA believes that there would be minimal
impacts on small entities, including small government jurisdictions.
Additionally, under this rulemaking proposal, small entity recipients
would be able to use appropriate State Agency-negotiated MBE/WBE
objectives if such recipients solicit bids/offers from substantially
the same relevant geographic market as that State Agency. Therefore,
this rule does not meet the threshold test for application of Section
203 of UMRA.
E. Executive Order 13132: Federalism
Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' is defined in the
Executive Order to include regulations that have ``substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''
Under Executive Order 13132, EPA may not issue a regulation that
has federalism implications, that imposes substantial direct compliance
costs, and that is not required by statute, unless the Federal
government provides the funds necessary to pay the direct compliance
costs incurred by State and local governments, or EPA consults with
State and local officials early in the process of developing the
proposed regulation. EPA also may not issue a regulation that has
federalism implications and that preempts State
[[Page 43839]]
law unless the Agency consults with State and local officials early in
the process of developing the proposed regulation.
This rule does not have ``federalism implications,'' as that phase
is defined in the Executive Order. It will not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government, as specified
in Executive Order 13132. Because this rule conditions the use of
federal assistance, it will not impose substantial direct compliance
costs on State and local governments. Thus, the requirements of section
6 of the Executive Order do not apply to this rule.
Stakeholders, including representatives from State government
agencies, State government organizations and local governments, were
given an opportunity to comment on a draft of the rule which was posted
on the Internet for public comment. Meetings were also held in several
states across the country to discuss the draft of the rule and to
encourage comment.
In the spirit of Executive Order 13132, and consistent with EPA
policy to promote communications between EPA and State and local
governments, EPA specifically solicits comment on this proposed rule
from State and local officials.
F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments
On November 6, 2000, the President issued Executive Order 13175 (65
FR 67249) entitled, ``Consultation and Coordination with Indian Tribal
Governments.'' Executive Order 13175 took effect on January 6, 2001,
and revokes Executive Order 13084 (Tribal Consultation) as of that
date. EPA to a great extent developed this proposed rule, however,
during the period when Executive Order 13084 was in effect. Although
EPA believes that it has fully complied with the requirements of
Executive Order 13175, as indicated in the following discussion, EPA
will analyze and ensure full compliance with the requirements of
Executive Order 13175 before promulgating the final rule.
Executive Order 13175 requires EPA to develop an accountable
process to ensure ``meaningful and timely input by tribal officials in
the development of regulatory policies that have tribal implications.''
``Policies that have tribal implications'' is defined in the Executive
Order to include regulations that have ``substantial direct effects on
one or more Indian tribes, on the relationship between the Federal
government and the Indian tribes, or on the distribution of power and
responsibilities between the Federal government and Indian tribes.''
Under section 5(b) of Executive Order 13175, EPA may not issue a
regulation that has tribal implications, that imposes substantial
direct compliance costs, and that is not required by statute, unless
the Federal government provides the funds necessary to pay the direct
compliance costs incurred by tribal governments, or EPA consults with
tribal officials early in the process of developing the proposed
regulation. Under section 5(c) of Executive Order 13175, EPA may not
issue a regulation that has tribal implications and that preempts
tribal law, unless the Agency consults with tribal officials early in
the process of developing the proposed regulation. However, today's
proposed rulemaking will neither impose substantial direct compliance
costs on tribal governments, nor preempt tribal law. Thus, the
requirements of section 5(b) and 5(c) of the Executive Order do not
apply to this rule.
EPA has concluded that the proposed rule would have tribal
implications because it will have substantial direct effects on one or
more Indian tribes. The substantial direct effects on tribal
governments are as follows:
Tribes receiving an EPA financial assistance agreement of more than
$250,000 for any single assistance agreement or of more than one
financial assistance agreement with a combined total of more than
$250,000 in any one fiscal year (excluding PPG eligible grants to
tribes and intertribal consortia under 40 CFR Part 35, Subpart B) would
have to negotiate fair share objectives with EPA unless they choose to
adopt MBE and WBE objectives of another EPA recipient consistent with
today's proposed rule. Those tribes required to negotiate fair share
objectives with EPA would have a phase-in period of up to three years
in which to do so; their fair share objectives will remain in effect
for three fiscal years after they have been approved by EPA, unless
there are significant changes to the data supporting the fair share
objectives.
Some tribally owned businesses (businesses that a Federally
recognized tribal government owns or in which it has a majority share)
would not be eligible to be counted in the future towards meeting the
MBE/WBE fair share objectives if they do not meet the applicable SBA
8(a) criteria, e.g., see 13 CFR 124.109(b); under EPA's current
requirements such businesses may self certify their MBE status. Of
course, tribes may continue to do business with tribally owned or other
companies which do not meet the applicable SBA 8(a) criteria, they
simply could not count such procurements toward meeting MBE/WBE
objectives. In addition, the proposed rule would have the following
impacts on tribes/tribally owned businesses:
First, a business owned by a Federally recognized tribal government
would have to file an annual affidavit with EPA certifying no change in
its MBE status, pursuant to Sec. 33.210 of today's proposed
rulemaking.
Second, a business owned by a Federally recognized tribal
government would have to be recertified every three years as meeting
SBA's applicable 8(a) criteria to be eligible to be counted in the
future towards meeting the MBE/WBE fair share objectives, pursuant to
Sec. 33.208.
Third, a business owned by a Federally recognized tribal
government, if it is not already certified in accordance with SBA's
applicable 8(a) criteria, may have to incur costs to be certified if
there is no tribal certifier available and the other certifying entity
charges for its services.
Fourth, a tribe as a recipient of EPA financial assistance, would
have to be notified in writing before any termination of a DBE
subcontractor for convenience is made by its prime contractor, pursuant
to Sec. 33.303(a).
Fifth, consistent with other Federal and tribal laws, a tribe would
have to require its prime contractor, after the tribe has
unsuccessfully sought to apply Indian preference consistent with the
Indian Self-Determination and Education Assistance Act, to employ the
good faith efforts described in Sec. 33.301 if a DBE subcontractor
fails to complete work under a subcontract for any reason and the prime
contractor solicits a replacement subcontractor, pursuant to Sec.
33.303(b).
Sixth, consistent with other Federal and tribal Laws, a tribe would
have to require its prime contractor, after it has unsuccessfully
sought to apply Indian preference consistent with the Indian Self-
Determination and Education Assistance Act, to employ the good faith
efforts described in Sec. 33.301 even if it has achieved its fair
share objectives under Subpart D of the rule, pursuant to Sec.
33.303(c).
Seventh, a tribe would have to require its prime contractors to
provide EPA Form 6100-2--DBE Program Subcontractor Participation Form,
EPA Form 6100-3--DBE Program Subcontractor Performance Form and EPA
Form 6100-4--DBE Program
[[Page 43840]]
Subcontractor Utilization Form to all of its DBE subcontractors,
pursuant to Sec. 33.303(e), (f) and (g), respectively.
Eighth, a tribal recipient that conducts procurements will have to
create and maintain a bidders list in accordance with Sec. 33.501(b).
The purpose of this list is to provide recipients as accurate a
database as possible about the universe of MBE/WBE and non-MBE/WBE
prime and subcontractors who seek to work on procurements under EPA
financial assistance agreements. The following information must be
obtained from all such prime and subcontractors: (1) Entity name; (2)
Entity address; (3) Entity's status as an MBE/WBE.
Consistent with EPA policy, EPA nonetheless consulted with tribal
officials and/or representatives of tribal governments early in the
process of developing this regulation to permit them to have meaningful
and timely input into its development. Because E.O. Sections 5(b) and
5(c) do not apply, a Tribal Impact Summary is not required. EPA
nonetheless is including one in this preamble.
The following constitutes a Tribal Impact Summary under Executive
Order 13175:
EPA posted a staff draft of this proposed rule, dated June 19,
2000, on EPA's internet website. As part of its ongoing tribal
consultations on this rule, EPA held meetings with tribal officials to
discuss the staff draft rule in Boston, Massachusetts on April 11, 2001
and in Seattle, Washington on May 23, 2001. EPA held further formal
consultations with tribal officials to discuss a draft of this Rule in
Ocean Shores, Washington during the week of January 28, 2002.
By way of further background, today's proposed rule has been under
development for the past several years. EPA invited tribal recipients
of EPA grants and cooperative agreements to an EPA/State/Tribal Annual
Conference held on February 2-4, 1999 in Albuquerque, New Mexico.
During this conference, EPA representatives discussed a number of
issues relating to the rule under development with the general
audience. In addition, EPA representatives met separately with tribal
officials and/or representatives to discuss issues of concern to
tribes. On June 27-30, 2000, the Agency held its EPA/State/Tribal
Annual Conference in Albuquerque, New Mexico. Again, EPA invited tribal
recipients of EPA financial assistance agreements to attend. During the
June, 2000 conference, agency representatives discussed in detail the
June 19, 2000 staff draft of the rule, which had been posted on EPA's
website. EPA solicited comments on the staff draft of the rule from
conference participants. Tribal officials and/or representatives
attended that conference as well. As of June 30, 2001, EPA has received
a total of 17 written comments on the staff draft from Indian tribes.
During the development of this rule EPA representatives have made a
number of oral presentations to the Tribal Operations Committee (TOC)
on the rule's progress and solicited input. The TOC is comprised of 19
national tribal representatives from the nine EPA Regions that have
federally recognized tribes, and EPA Senior Management; its role is to
provide input into EPA decision making affecting Indian Country. On
November 29, 2000, EPA representatives met with the TOC at the EPA
Tribal Caucus Regional Joint meeting in Miami, Florida to discuss the
staff draft rule and to obtain further tribal input into the rulemaking
process.
Starting in November, 2000, EPA invited tribal recipients of EPA
grants and cooperative agreements to participate in outreach sessions
held in cities around the country having EPA Regional offices in order
to discuss the staff draft rule. EPA has further solicited tribal input
into the rulemaking at meetings with tribal officials/representatives
at the Department of the Interior 2001 Conference on the Environment
hosted by the Bureau of Indian Affairs on March 13-15, 2001 in
Albuquerque, New Mexico and at the Reservation Economic Summit and
American Indian Business Trade Fair (RES 2001) in Anaheim, California,
on March 20, 2001. EPA further solicited tribal input in another
meeting with the TOC on April 24, 2001 in Miami, Florida.
EPA has considered tribal concerns and written comments in today's
rulemaking. A summary of the nature of tribal concerns and EPA's
initial response follows:
1. In general, tribes believe they should be exempt from the rule.
Awards of Grants and Cooperative Agreements to tribes are currently
governed by 40 CFR Part 31, ``Uniform Administrative Requirements for
Grants and Cooperative Agreements to State and Local Governments.''
These are government wide requirements that have been in effect since
1988. Among other entities subject to the regulations are governments.
The definition of ``Government'' in 40 CFR 31.3 includes ``* * * a
federally recognized Indian tribal government.'' Many requirements
contained in this proposed rule are not new but rather are the same
requirements contained in 40 CFR Part 31, with which many tribes
already have been complying. For example, the reporting and
recordkeeping requirements are already applicable to Indian tribes. In
addition, neither EPA's 10% MBE/WBE procurement objective statute for
research relating to the requirements of the Clean Air Act Amendments
of 1990 nor EPA's statutory 8% MBE/WBE procurement objective
requirements for all other programs contain language exempting tribes
from their applicability. Therefore, EPA proposes that tribes should
not be exempted from this rule because it promotes the utilization of
all disadvantaged entities in procurement under EPA financial
assistance agreements, including tribally owned businesses and
businesses owned by a member(s) of a tribe.
2. Trigger for Fair Share Negotiations.
The issue of increasing the dollar amount of the trigger requiring
compliance with the fair share objective requirements and the
corresponding availability analysis was of special concern to tribes
awarded GAP grants. One commentor also expressed the view that
availability analysis preparation requirements should apply only to
tribes spending 90% or more of their grants on outside procurement.
Other tribes expressed the view that preparing availability analyses is
too costly for them, especially for smaller tribes.
In response to concerns raised by tribes, under today's proposed
rulemaking, the trigger requiring compliance with the fair share
objective requirements has been increased to $250,000 from $100,000
contained in the staff draft of the rule. Also because of the nature of
eligible program grants which can be included in Performance
Partnership Grants (PPGs) to tribes under 40 CFR Part 35, Subpart B,
and the unique nature of eligible recipients, the Agency is proposing
to exempt PPG eligible program grants to tribes under 40 CFR Part 35,
Subpart B from the fair share negotiation requirements.
Accordingly, only tribes receiving an EPA financial assistance
agreement of more than $250,000 for any single assistance agreement or
of more than one financial assistance agreement with a combined total
of more than $250,000 in any one fiscal year (excluding PPG eligible
program grants under 40 CFR Part 35, Subpart B) would have to comply
with the fair share objective requirements.
The Agency believes that this change effectively addresses the
concerns by setting a uniform standard applicable to all recipients,
including tribes, rather than, for example, setting a standard based on
amounts spent by tribes on outside procurement, which could pose
implementation difficulties. EPA believes that most tribes will not
have
[[Page 43841]]
to comply with the fair share objective requirements under today's
rulemaking because they will fall under the $250,000 exemption or the
exemption for PPG eligible program grants under 40 CFR Part 35, Subpart
B. Finally, EPA believes that a number of tribes which otherwise would
have to negotiate fair share objectives may elect instead to apply the
objectives of another recipient in accordance with the requirements of
today's rulemaking. In any case, the rule would provide tribes with a
three year phase-in period to comply with the fair share negotiation
requirements.
Comments were also received suggesting that EPA exempt tribes from
Fair Share Negotiations based on procurement dollars, rather than on
total grant dollars. EPA is considering this option which would exempt
tribal grantees whose actual procurement activities total $250,000 or
less from Fair Share Negotiations. EPA is specifically requesting
public comment on this suggestion.
3. The reporting and recordkeeping requirements.
Some tribes expressed concerns that keeping records of and
reporting purchases for EPA funded grants would impose a heavy burden
on tribal governments. Instead, they suggested basing reporting on the
amount of money the tribe received rather than on the amount of money
it spent on outside supplies and services.
EPA considered these concerns. However, 40 CFR Part 31 already
requires tribes to comply with Part 31's recordkeeping and reporting
requirements, which include MBE/WBE recordkeeping and reporting.
Today's proposed rulemaking make no changes to the existing Part 31
reporting and recordkeeping requirements. The Agency believes that
basing requirements on amounts received rather than on amounts spent
would be an inaccurate measurement of MBE/WBE procurement utilization.
EPA currently requires financial assistance recipients to report MBE/
WBE accomplishments based on dollars spent on MBE/WBE procurements. EPA
is not proposing to change this requirement.
4. Compliance with the good faith efforts requirements.
One commentor objected to having to advertise in newspapers; a
comment was also made that EPA should investigate alternative
mechanisms that encourage a tribe to seek out MBEs/WBEs during the
procurement process without incurring an unreasonable financial burden.
However, as discussed above, Section 7(b) of the Indian Self-
Determination and Education Assistance Act requires tribal governments
to solicit tribally-owned businesses and/or businesses owned by a
member(s) of a tribe, before undertaking the six good faith efforts.
Tribes currently are currently subject to 40 CFR Part 31, which
requires them to make good faith efforts to ensure that DBEs are used
whenever possible. EPA is not proposing to change this requirement. EPA
does not believe that the good faith efforts requirements are unduly
burdensome. The good faith efforts requirements would take effect only
if no DBEs are found to do the work in each of the four procurement
categories of construction, equipment, services and supplies in the
initial tribal solicitation.
5. Phase-In Period.
One commentor expressed a concern about the timing of the phase-in
period and the maximum amount of time needed for the requirement to be
implemented.
EPA expects those tribes who could implement this requirement
before the expiration of the three year phase-in period to do so. Those
tribes who cannot do so would be given the full three years. It is
important for tribes to note that the three year phase-in period would
only begin after the final rule's effective date, which should allow
tribes sufficient time to comply with prepare for the implementation of
the requirement.
In the spirit of Executive Order 13175 and consistent with EPA
policy to promote communications between EPA and tribal governments,
EPA specifically solicits additional comment on this proposed rule from
tribal officials.
Copies of written communications submitted by tribal officials/
representatives are available upon request from the docket clerk for
this rulemaking.
G. Executive Order 13045: Protection of Children From Environmental
Health Risks and Safety Risks
Executive Order 13045 applies to any rule that is determined to be:
(1) ``economically significant'' as defined under Executive Order
12866, and (2) concerns any 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.
H. Executive Order 13211: Actions that Significantly Affect Energy
Supply, Distribution, or Use
This rule is not a ``significant energy action'' as defined in
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 28355
(May 22, 2001)) because it is not likely to have a significant adverse
effect on the supply, distribution, or use of energy. EPA has concluded
that this rule is not likely to have any adverse energy effects.
I. National Technology Transfer and Advancement Act
Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (``NTTAA''), Public Law 104-113, 12(d) (15 U.S.C. 272 note)
directs EPA 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 and business practices) that are developed or adopted by
voluntary consensus standards bodies. The NTTAA directs EPA to provide
Congress, through OMB, explanations when the Agency decides not to use
available and applicable voluntary consensus standards.
This proposed rulemaking does not involve technical standards.
Therefore, EPA is not considering the use of any voluntary consensus
standards.
List of Subjects
40 CFR Part 30
Environmental protection, Administrative practice and procedure,
Grant programs--environmental protection, Reporting and recordkeeping
requirements.
40 CFR Part 31
Accounting, Administrative practice and procedure, Grant programs,
Indians, Intergovernmental relations, Reporting and recordkeeping
requirements.
40 CFR Part 33
Grant programs--environmental protection.
[[Page 43842]]
40 CFR Part 35
Grant programs--environmental protection. Grant programs--Indians,
Hazardous waste, Indians, Intergovernmental relations, Reporting and
recordkeeping requirements.
40 CFR Part 40
Research and Demonstration Grants--Projects involving construction.
Dated: July 9, 2003.
Linda J. Fisher,
Acting Administrator.
For the reasons set out in the preamble, title 40, chapter I of the
Code of Federal Regulations is proposed to be amended as follows:
PART 30--[AMENDED]
1. The authority citation for part 30 continues to read as follows:
Authority: 7 U.S.C. 135 et seq.; 15 U.S.C. 2601 et seq.; 33
U.S.C. 1251 et seq.; 42 U.S.C. 241, 242(b), 243, 246, 300f, 300j-1,
300j-2, 300j-3; 1857 et seq.; 6901 et seq., 7401 et seq., OMB
circular A-110 (64 FR 54926, October 8, 1999).
Sec. 30.44 [Amended]
2. Section 30.44 is amended by removing and reserving paragraph
(b).
PART 31--[AMENDED]
3. The authority citation for part 31 continues to read as follows:
Authority: 33 U.S.C. 1251 et seq.; 42 U.S.C. 7401 et seq.; 42
U.S.C. 6901 et seq.; 42 U.S.C. 300f et seq.; 7 U.S.C. 136 et seq.;
15 U.S.C. 2601 et seq.; 42 U.S.C. 9601 et seq.; 20 U.S.C. 4011 et
seq.; 33 U.S.C. 1401 et seq.
Sec. 31.36 [Amended]
4. Section 31.36 is amended by removing and reserving paragraph
(e).
5. Part 33 is added as follows:
PART 33--PARTICIPATION BY DISADVANTAGED BUSINESS ENTERPRISES IN
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY PROGRAMS
Subpart A--General Provisions
Sec.
33.101 What are the objectives of this part?
33.102 When do the requirements of this part apply?
33.103 What do the terms in this part mean?
33.104 May a recipient apply for a waiver from the requirements of
this part?
33.105 What are the compliance and enforcement provisions of this
part?
33.106 What assurances must EPA financial assistance recipients
obtain from their contractors?
33.107 What are the rules governing availability of records,
cooperation, and intimidation and retaliation?
Subpart B--Certification
33.201 What does this subpart require?
33.202 How does an entity qualify as an MBE or WBE under EPA's 8%
statute?
33.203 How does an entity qualify as an MBE or WBE under EPA's 10%
statute?
33.204 Where does an entity become certified under EPA's 8% and 10%
statutes?
33.205 How does an entity become certified by EPA?
33.206 Is there a list of certified MBEs and WBEs?
33.207 Can an entity reapply to EPA for MBE or WBE certification?
33.208 How long does an MBE or WBE certification from EPA last?
33.209 Can EPA re-evaluate the MBE or WBE status of an entity after
EPA certifies it to be an MBE or WBE?
33.210 Does an entity certified as an MBE or WBE by EPA need to keep
EPA informed of any changes which may affect the entity's
certification?
33.211 What is an EPA Private Certifier?
33.212 Can an EPA Private Certifier charge a fee to an entity to
process the entity's application for MBE or WBE certification?
33.213 How does an organization or business concern become an EPA
Private Certifier?
33.214 How long may an organization or business concern be an EPA
Private Certifier?
33.215 Is there a list of EPA Private Certifiers?
33.216 What is the process for appealing or challenging an EPA MBE
or WBE certification determination?
33.217 What conduct is prohibited by this subpart?
Subpart C--Good Faith Efforts
33.301 What does this subpart require?
33.302 Are there any additional contract administration
requirements?
33.303 Are there special rules for loans under EPA financial
assistance agreements?
33.304 Must a Native American (either as an individual,
organization, Tribe or Tribal Government) recipient or prime
contractor follow the six good faith efforts?
Subpart D--Fair Share Objectives
33.401 What does this subpart require?
33.402 Are there special rules for loans under EPA financial
assistance agreements?
33.403 What is a fair share objective?
33.404 When must a recipient negotiate fair share objectives with
EPA?
33.405 How does a recipient determine its fair share objectives?
33.406 May a recipient designate a lead agency for fair share
objective negotiation purposes?
33.407 How long do MBE and WBE fair share objectives remain in
effect?
33.408 May a recipient use race and/or gender conscious measures as
part of this program?
33.409 May a recipient use quotas as part of this program?
33.410 Can a recipient be penalized for failing to meet its fair
share objectives?
33.411 Who may be exempted from this subpart?
33.412 Must an Insular Area or Indian Tribal Government recipient
negotiate fair share objectives?
Subpart E--Recordkeeping and Reporting
33.501 What are the recordkeeping requirements of this part?
33.502 What are the reporting requirement of this part?
33.503 How does a recipient calculate MBE and WBE participation for
reporting purposes?
Appendix to Part 33--Term and Condition
Authority: 42 U.S.C. 7601 note, 42 U.S.C. 4370d, 15 U.S.C. 637
note, 42 U.S.C. 9605(f); E.O. 11625, 36 FR 19967, 3 CFR, 1971 Comp.,
p. 213; E.O. 12138, 49 FR 29637, 3 CFR, 1979 Comp., p. 393; E.O.
12432, 48 FR 32551, 3 CFR, 1983 Comp., p. 198.
Subpart A--General Provisions
Sec. 33.101 What are the objectives of this part?
The objectives of this part are:
(a) To ensure nondiscrimination in the award of contracts under EPA
financial assistance agreements;
(b) To ensure that EPA's DBE Program is narrowly tailored in
accordance with applicable law;
(c) To help remove barriers to the participation of DBEs in the
award of contracts under EPA financial assistance agreements; and
(d) To provide appropriate flexibility to recipients of EPA
financial assistance in establishing and providing contracting
opportunities for DBEs.
Sec. 33.102 When do the requirements of this part apply?
The requirements of this part apply to procurement under EPA
financial assistance agreements performed entirely within the United
States, whether by a recipient or its prime contractor, for
construction, equipment, services and supplies.
Sec. 33.103 What do the terms in this part mean?
Terms not defined below shall have the meaning given to them in 40
CFR part 30, part 31 and part 35 as applicable. As used in this part:
Availability analysis means documentation of the availability of
MBEs and WBEs in the relevant geographic market in relation to the
total number of firms available in that area.
Award official means the EPA Regional or Headquarters official
delegated the authority to execute financial assistance agreements on
behalf of EPA.
[[Page 43843]]
Broker means a firm that does not itself perform, manage or
supervise the work of its contract or subcontract in a manner
consistent with the normal business practices for contractors or
subcontractors in its line of business.
Business, business concern or business enterprise means an entity
organized for profit with a place of business located in the United
States, and which operates primarily within the United States or which
makes a significant contribution to the United States economy through
payment of taxes or use of American products, materials or labor.
Construction means erection, alteration, or repair (including
dredging, excavating, and painting) of buildings, structures, or other
improvements to real property, and activities in response to a release
or a threat of a release of a hazardous substance into the environment,
or activities to prevent the introduction of a hazardous substance into
a water supply.
Disabled American means, with respect to an individual, permanent
or temporary physical or mental impairment that substantially limits
one or more of the major life activities of such an individual; a
record of such an impairment; or being regarded as having such an
impairment.
Disadvantaged Business Enterprise (DBE) means an entity owned or
controlled by a socially and economically disadvantaged individual as
described by Public Law 102-389 (42 U.S.C. 4370d) or an entity owned
and controlled by a socially and economically disadvantaged individual
as described by Title X of the Clean Air Act Amendments of 1990 (42
U.S.C. 7601 note); a Small Business Enterprise (SBE); a Small Business
in a Rural Area (SBRA); or a Labor Surplus Area Firm (LSAF), a
Historically Underutilized Business (HUB) Zone Small Business Concern,
or a concern under a successor program.
Disparity study means a comparison within the preceding ten years
of the available MBEs and WBEs in a relevant geographic market with
their actual usage by entities procuring in the categories of
construction, equipment, services and supplies.
EPA Private Certifier means an organization or business concern
approved by EPA's Office of Small and Disadvantaged Business
Utilization (OSDBU) to assist in EPA OSDBU's determination of whether
an entity is owned and/or controlled by one or more individuals
claiming disadvantaged status.
Equipment means items procured under a financial assistance
agreement as defined by applicable regulations (for example 40 CFR 30.2
and 40 CFR 31.3) for the particular type of financial assistance
received.
Fair share objective means an objective expressing the percentage
of MBE or WBE utilization expected absent the effects of
discrimination.
Financial assistance agreement means grants or cooperative
agreements awarded by EPA. The term includes grants or cooperative
agreements used to capitalize revolving loan funds, including, but not
limited to, the Clean Water State Revolving Loan Fund (CWSRF) Program
under Title VI of the Clean Water Act, as amended, 33 U.S.C. 1381 et.
seq., the Drinking Water State Revolving Fund (DWSRF) Program under
section 1452 of the Safe Drinking Water Act, 42 U.S.C. 300j-12, and the
Brownfields Cleanup Revolving Loan Fund (BCRLF) Program under section
104 of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. 9604.
Good faith efforts means the race and/or gender neutral measures
described in Subpart C of this part.
Historically Black College or University (HBCU) means an
institution determined by the Secretary of Education to meet the
requirements of 34 CFR part 608.
HUBZone means a historically underutilized business zone, which is
an area located within one or more qualified census tracts, qualified
metropolitan counties, or lands within the external boundaries of an
Indian reservation.
HUBZone Small Business Concern means a small business concern that
appears on the List of Qualified HUBZone Small Business Concerns
maintained by the Small Business Administration.
Identified loan means a loan project or set-aside activity
receiving assistance from a recipient of an EPA financial assistance
agreement to capitalize a revolving loan fund, which:
(1) In the case of the CWSRF Program, is a project funded from
amounts equal to the capitalization grant;
(2) In the case of the DWSRF Program, is a loan project or set-
aside activity funded from amounts up to the amount of the
capitalization grant; or
(3) In the case of the BCRLF Program, is a project that has been
funded with EPA financial assistance.
Insular area means the Commonwealth of Puerto Rico or any territory
or possession of the United States.
Joint venture means an association of two or more concerns to carry
out a single, for-profit business enterprise, for which the parties
combine their property, capital, efforts, skills and knowledge.
Labor Surplus Area Firm (LSAF) means a concern that together with
its first-tier subcontractors will perform substantially in labor
surplus areas (as identified by the Department of Labor in accordance
with 20 CFR part 654). Performance is substantially in labor surplus
areas if the costs incurred under the contract on account of
manufacturing, production or performance of appropriate services in
labor surplus areas exceed 50 percent of the contract price.
Minority Business Enterprise (MBE) means a Disadvantaged Business
Enterprise (DBE) other than a Small Business Enterprise (SBE), a Labor
Surplus Area Firm (LSAF), a Small Business in Rural Areas (SBRA), or a
Women's Business Enterprise (WBE).
Minority institution means an accredited college or university
whose enrollment of a single designated group or a combination of
designated groups (as defined by the Small Business Administration
regulations at 13 CFR part 124) exceeds 50% of the total enrollment.
Native American means any individual who is an American Indian,
Eskimo, Aleut, or Native Hawaiian.
Recipient means an entity that receives an EPA financial assistance
agreement or is a subrecipient of such agreement.
Services means a contractor's labor, time or efforts provided in a
manner consistent with normal business practices which do not involve
the delivery of a specific end item, other than documents (e.g.,
reports, design drawings, specifications).
Small business, small business concern or Small Business Enterprise
(SBE) means a concern, including its affiliates, that is independently
owned and operated, not dominant in the field of operation in which it
is bidding, and qualified as a small business under the criteria and
size standards in 13 CFR part 121.
Small Business in a Rural Area (SBRA) means a small business
operating in an area identified as a rural county with a code 6-9 in
the Rural-Urban continuum Classification Code developed by the United
States Department of Agriculture in 1980.
Supplies means items procured under a financial assistance
agreement as defined by applicable regulations for the particular type
of financial assistance received.
United States means any of the several States, the District of
Columbia, the Commonwealth of Puerto Rico and
[[Page 43844]]
any other territories and possessions of the United States.
Women's Business Enterprise (WBE) means a business concern which is
at least 51% owned or controlled by women for purposes of EPA's 8%
statute or a business concern which is at least 51% owned and
controlled by women for purposes for EPA's 10% statute. Determination
of ownership by a married woman in a community property jurisdiction
will not be affected by her husband's 50 percent interest in her share.
Similarly, a business concern which is more than 50 percent owned by a
married man will not become a qualified WBE by virtue of his wife's 50
percent interest in his share.
Sec. 33.104 May a recipient apply for a waiver from the requirements
of this part?
(a) A recipient may apply for a waiver from any of the requirements
of this part that are not specifically based on a statute or Executive
Order, by submitting a written request to the Director of the Office of
Small and Disadvantaged Business Utilization (OSDBU Director).
(b) The request must document special or exceptional circumstances
that make compliance with the requirement impractical, including a
specific proposal addressing how the recipient intends to achieve the
objectives of this part as described in Sec. 33.101. The request must
show that:
(1) There is a reasonable basis to conclude that the recipient
could achieve a level of MBE and WBE participation consistent with the
objectives of this part using different or innovative means other than
those that are provided in subparts C or D of this part;
(2) Conditions in the recipient's jurisdiction are appropriate for
implementing the request; and
(3) The request is consistent with applicable law.
(c) The OSDBU Director has the authority to approve a recipient's
request. If the OSDBU Director grants a recipient's request, the
recipient may administer its program as provided in the request,
subject to the following conditions:
(1) The recipient's level of MBE and WBE participation continues to
be consistent with the objectives of this part;
(2) There is a reasonable limitation on the duration of the
recipient's modified program; and
(3) Any other conditions the OSDBU Director makes on the grant of
the waiver.
(d) The OSDBU Director may end a program waiver at any time upon
notice to the recipient and require a recipient to comply with the
provisions of this part. The OSDBU Director may also extend the waiver
if he or she determines that all requirements of paragraphs (b) and (c)
of this section continue to be met. Any such extension shall be for no
longer than the period originally set for the duration of the program
waiver.
Sec. 33.105 What are the compliance and enforcement provisions of
this part?
If a recipient fails to comply with any of the requirements of this
part, EPA may take remedial action under 40 CFR parts 30, 31 or 35, as
appropriate, or any other action authorized by law, including, but not
limited to, enforcement under 18 U.S.C. 1001 and/or the Program Fraud
Civil Remedies Act of 1986 (31 U.S.C. 3801 et seq.).
Sec. 33.106 What assurances must EPA financial assistance recipients
obtain from their contractors?
The recipient must ensure that each procurement contract it awards
contains the term and condition specified in the appendix to this part
concerning compliance with the requirements of this part. The recipient
must also ensure that this term and condition is included in each
procurement contract awarded by an entity receiving an identified loan
under a financial assistance agreement to capitalize a revolving loan
fund.
Sec. 33.107 What are the rules governing availability of records,
cooperation, and intimidation and retaliation?
(a) Availability of records. (1) In responding to requests for
information concerning any aspect of EPA's DBE Program, EPA complies
with the provisions of the Federal Freedom of Information and Privacy
Acts (5 U.S.C. 552 and 552a). EPA may make available to the public any
information concerning EPA's DBE Program release of which is not
prohibited by Federal law or regulation, including EPA's Confidential
Business Information regulations at 40 CFR part 2, subpart B.
(2) EPA recipients shall safeguard from disclosure to unauthorized
persons information that may reasonably be considered as confidential
business information, consistent with Federal, state, and local law.
(b) Cooperation. All participants in EPA's DBE Program are required
to cooperate fully and promptly with EPA, EPA Private Certifier and EPA
recipient reviews, investigations, and other requests for information.
Failure to do so shall be a ground for appropriate action against the
party involved in accordance with Sec. 33.105.
(c) Intimidation and retaliation. A recipient, contractor, or any
other participant in EPA's DBE Program must not intimidate, threaten,
coerce, or discriminate against any individual or firm for the purpose
of interfering with any right or privilege secured by this Part.
Violation of this prohibition shall be a ground for appropriate action
against the party involved in accordance with Sec. 33.105.
Subpart B--Certification
Sec. 33.201 What does this subpart require?
(a) In order to participate as an MBE or WBE prime or subcontractor
for EPA recipients under EPA's DBE Program, an entity must be properly
certified.
(b) EPA's DBE Program is primarily based on two statutes. Public
Law 102-389, 42 U.S.C. 4370d, provides for an 8% objective for awarding
contracts under EPA financial assistance agreements to business
concerns or other organizations owned or controlled by socially and
economically disadvantaged individuals, including HBCUs and women
(``EPA's 8% statute''). Title X of the Clean Air Act Amendments of
1990, 42 U.S.C. 7601 note, provides for a 10% objective for awarding
contracts under EPA financial assistance agreements for research
relating to such amendments to business concerns or other organizations
owned and controlled by socially and economically disadvantaged
individuals (``EPA's 10% statute'').
Sec. 33.202 How does an entity qualify as an MBE or WBE under EPA's
8% statute?
To qualify as an MBE or WBE under EPA's 8% statute, an entity must
establish that it is owned or controlled by socially and economically
disadvantaged individuals who are of good character and citizens of the
United States. An entity need not demonstrate potential for success.
(a) Ownership or control. ``Ownership'' and ``control'' shall have
the same meanings as set forth in 13 CFR 124.105 and 13 CFR 124.106,
respectively. (See also 13 CFR 124.109 for special rules applicable to
Indian tribes and Alaska Native Corporations; 13 CFR 124.110 for
special rules applicable to Native Hawaiian Organizations).
(b) Socially disadvantaged individual. A socially disadvantaged
individual is a person who has been subjected to racial or ethnic
prejudice or cultural bias because of his or her identity as a member
of a group without regard to his or her individual qualities and as
further defined by the implementing regulations of section 8(a)(5) of
the
[[Page 43845]]
Small Business Act (15 U.S.C. 637(a)(5); 13 CFR 124.103; see also 13
CFR 124.109 for special rules applicable to Indian tribes and Alaska
Native Corporations; 13 CFR 124.110 for special rules applicable to
Native Hawaiian Organizations).
(c) Economically disadvantaged individual. An economically
disadvantaged individual is a socially disadvantaged individual whose
ability to compete in the free enterprise system is impaired due to
diminished capital and credit opportunities, as compared to others in
the same business area who are not socially disadvantaged and as
further defined by section 8(a)(6) of the Small Business Act (15 U.S.C.
637(a)(6)) and its implementing regulations (13 CFR 124.104). (See also
13 CFR 124.109 for special rules applicable to Indian tribes and Alaska
Native Corporations; 13 CFR 124.110 for special rules applicable to
Native Hawaiian Organizations). Under EPA's DBE Program, an individual
claiming disadvantaged status must have an initial and continued
personal net worth of less than $750,000.
(d) HBCU. An HBCU automatically qualifies as an entity owned or
controlled by socially and economically disadvantaged individuals.
(e) Women. Women are deemed to be socially and economically
disadvantaged individuals. Ownership or control must be demonstrated
pursuant to paragraph (a) of this section, which may be accomplished by
certification under Sec. 33.204.
Sec. 33.203 How does an entity qualify as an MBE or WBE under EPA's
10% statute?
To qualify as an MBE or WBE under EPA's 10% statute, an entity must
establish that it is owned and controlled by socially and economically
disadvantaged individuals who are of good character and citizens of the
United States.
(a) Ownership and control. An entity must be at least 51% owned by
a socially and economically disadvantaged individual, or in the case of
a publicly traded company, at least 51% of the stock must be owned by
one or more socially and economically disadvantaged individuals, and
the management and daily business operations of the business concern
must be controlled by such individuals. (See also 13 CFR 124.109 for
special rules applicable to Indian tribes and Alaska Native
Corporations; 13 CFR 124.110 for special rules applicable to Native
Hawaiian Organizations).
(b) Socially disadvantaged individual. A socially disadvantaged
individual is a person who has been subjected to racial or ethnic
prejudice or cultural bias because of his or her identity as a member
of a group without regard to his or her individual qualities and as
further defined by the implementing regulations of section 8(a)(5) of
the Small Business Act (15 U.S.C. 637(a)(5); 13 CFR 124.103; see also
13 CFR 124.109 for special rules applicable to Indian tribes and Alaska
Native Corporations; 13 CFR 124.110 for special rules applicable to
Native Hawaiian Organizations).
(c) Economically disadvantaged individual. An economically
disadvantaged individual is a socially disadvantaged individual whose
ability to compete in the free enterprise system is impaired due to
diminished capital and credit opportunities, as compared to others in
the same business area who are not socially disadvantaged and as
further defined by section 8(a)(6) of the Small Business Act (15 U.S.C.
637(a)(6)) and its implementing regulations (13 CFR 124.104). (See also
13 CFR 124.109 for special rules applicable to Indian tribes and Alaska
Native Corporations; 13 CFR 124.110 for special rules applicable to
Native Hawaiian Organizations). Under EPA's DBE Program, an individual
claiming disadvantaged status must have an initial and continued
personal net worth of less than $750,000.
(d) Presumptions. In accordance with Title X of the Clean Air Act
Amendments of 1990, 42 U.S.C. 7601 note, Black Americans, Hispanic
Americans, Native Americans, Asian Americans, Women and Disabled
Americans are presumed to be socially and economically disadvantaged
individuals. In addition, the following institutions are presumed to be
entities owned and controlled by socially and economically
disadvantaged individuals: HBCUs, Minority Institutions (including
Tribal Colleges and Universities and Hispanic-Serving Institutions) and
private and voluntary organizations controlled by individuals who are
socially and economically disadvantaged.
(e) Individuals not members of designated groups. Nothing in this
section shall prohibit any member of a racial or ethnic group that is
not designated as socially and economically disadvantaged under
paragraph (d) of this section from establishing that they have been
impeded in developing a business concern as a result of racial or
ethnic discrimination.
(f) Rebuttal of presumptions. The presumptions established by
paragraph (d) of this section may be rebutted in accordance with Sec.
33.209 with respect to a particular entity if it is reasonably
established that the individual at issue is not experiencing
impediments to developing such entity as a result of the individual's
identification as a member of a specified group.
(g) Joint ventures. (1) A joint venture may be considered owned and
controlled by socially and economically disadvantaged individuals,
notwithstanding the size of such joint venture, if a party to the joint
venture is an entity that is owned and controlled by a socially and
economically disadvantaged individual.
(2) A person who is not an economically disadvantaged individual or
an entity owned and controlled by a socially and economically
disadvantaged individual, as a party to a joint venture, may not be a
party to more than two awarded contracts in a fiscal year solely by
reason of paragraph (g)(1) of this section.
Sec. 33.204 Where does an entity become certified under EPA's 8% and
10% statutes?
(a) In order to participate as an MBE or WBE prime or subcontractor
for EPA recipients under EPA's DBE Program, an entity should first
attempt to become certified by the following:
(1) The United States Small Business Administration (SBA), under
its 8(a) Business Development Program (13 CFR part 124, subpart A) or
its Small Disadvantaged Business (SDB) Program, (13 CFR part 124,
subpart B);
(2) The United States Department of Transportation (DOT), under its
regulations for Participation by Disadvantaged Business Enterprises in
DOT Programs (49 CFR parts 23 and 26); or
(3) an Indian Tribal Government, State Government, local Government
or independent private organization in accordance with EPA's 8% or 10%
statute as applicable.
(4) Such certifications shall be considered acceptable for
establishing MBE or WBE status, as appropriate, under EPA's DBE Program
so long as the certification meets EPA's U.S. citizenship requirement
under Sec. 33.202 or Sec. 33.203. An entity may only apply to EPA for
MBE or WBE certification under the procedures set forth in Sec. 33.205
if that entity first is unable to obtain MBE or WBE certification under
paragraphs (a) (1) through (3) of this section.
(b) [Reserved].
Sec. 33.205 How does an entity become certified by EPA?
(a) Filing an application. In accordance with Sec. 33.204, an
entity may apply to EPA's Office of Small and Disadvantaged Business
Utilization (EPA OSDBU) for certification as an
[[Page 43846]]
MBE or WBE. EPA's Regional Offices will provide further information and
required application forms to any entity interested in MBE or WBE
certification. In order to become certified as an MBE or WBE, an entity
may apply to EPA OSDBU or, if directed by EPA OSDBU, to an EPA Private
Certifier. The applicant must attest to the accuracy and truthfulness
of the information on the application form. This shall be done either
in the form of an affidavit sworn to by the applicant before a person
who is authorized by state law to administer oaths or in the form of an
unsworn declaration executed under penalty of perjury of the laws of
the United States. The application must include evidence demonstrating
that the entity is owned or controlled by one or more individuals
claiming disadvantaged status under EPA's 8% statute or owned and
controlled by one or more individuals claiming disadvantaged status
under EPA's 10% statute, along with certifications or narratives
regarding the disadvantaged status of such individuals. In addition,
the application must include documentation of a denial of certification
by a Federal agency, State government, local government, Indian Tribal
government, or independent private organization, if applicable.
(b) Application processing. EPA OSDBU or an EPA Private Certifier
will advise each applicant within 15 days, whenever practicable, after
receipt of an application whether the application is complete and
suitable for evaluation and, if not, what additional information or
action is required. EPA OSDBU shall make its certification decision
within 30 days of receipt of a complete and suitable application
package, whenever practicable. The burden is on the applicant to
demonstrate that those individuals claiming disadvantaged status own or
control the entity under EPA's 8% statute or own and control the entity
under EPA's 10% statute.
(c) Ownership and/or control determination. EPA OSDBU first will
determine whether those individuals claiming disadvantaged status own
or control the applicant entity under EPA's 8% statute or own and
control the applicant entity under EPA's 10% statute. If EPA OSDBU
determines that the applicant does not meet the ownership and/or
control requirements of this Subpart, EPA OSDBU will issue a written
decision to the entity rejecting the application and set forth the
reasons for disapproval.
(d) Disadvantaged determination. Once EPA OSDBU determines whether
an applicant meets the ownership and/or control requirements of this
subpart, EPA OSDBU will determine whether the applicable disadvantaged
status requirements under EPA's 8% or 10% statute have been met. If EPA
OSDBU determines that the applicable disadvantaged status requirements
have been met, EPA OSDBU shall notify the applicant that it has been
certified and place the MBE or WBE on EPA OSDBU's list of qualified
MBEs and WBEs. If EPA OSDBU determines that the applicable
disadvantaged status requirements have not been met, EPA OSDBU will
reject the entity's application for certification. EPA OSDBU will issue
a written decision to the entity setting forth EPA OSDBU's reasons for
disapproval.
(e) Evaluation standards. (1) An entity's eligibility shall be
evaluated on the basis of present circumstances. An entity shall not be
denied certification based solely on historical information indicating
a lack of ownership and/or control of the firm by socially and
economically disadvantaged individuals at some time in the past, if the
entity currently meets the ownership and/or control standards of this
Subpart.
(2) Entities seeking MBE or WBE certification shall cooperate fully
with requests for information relevant to the certification process.
Failure or refusal to provide such information is a ground for denial
of certification.
(3) In making its certification determination, EPA OSDBU may
consider whether an entity has exhibited a pattern of conduct
indicating its involvement in attempts to evade or subvert the intent
or requirements of the DBE Program.
(4) EPA OSDBU shall not consider the issue of whether an entity
performs a commercially useful function in making its certification
determination. Consideration of whether an entity performs a
commercially useful function or is a regular dealer pertains solely to
counting toward MBE and WBE objectives as provided in subpart E of this
part.
(5) Information gathered as part of the certification process that
may reasonably be regarded as proprietary or other confidential
business information will be safeguarded from disclosure to
unauthorized persons, consistent with applicable Federal, State, and
local law.
(6) To assist in making EPA OSDBU's certification determination,
EPA OSDBU itself, or through an EPA Private Certifier, may take the
following steps:
(i) Perform an on-site visit to the offices of the entity.
Interview the principal officers of the entity and review their resumes
and/or work histories. Perform an on-site visit to local job sites if
there are such sites on which the entity is working at the time of the
certification investigation. Already existing site visit reports may be
relied upon in making the certification;
(ii) If the entity is a corporation, analyze the ownership of stock
in the entity;
(iii) Analyze the bonding and financial capacity of the entity;
(iv) Determine the work history of the entity, including contracts
it has received and work it has completed;
(v) Obtain a statement from the entity of the type of work it
prefers to perform for EPA recipients under the DBE Program and its
preferred locations for performing the work, if any, and;
(vi) Obtain or compile a list of the equipment owned by or
available to the entity and the licenses the entity and its key
personnel possess to perform the work it seeks to do for EPA recipients
under the DBE Program.
Sec. 33.206 Is there a list of certified MBEs and WBEs?
EPA OSDBU will maintain a list of certified MBEs and WBEs on EPA
OSDBU's Home Page on the Internet. Any interested person may also
obtain a copy of the list from EPA OSDBU.
Sec. 33.207 Can an entity reapply to EPA for MBE or WBE
certification?
An entity which has been denied MBE or WBE certification may
reapply for certification at any time 12 months or more after the date
of the most recent determination by EPA OSDBU to decline the
application.
Sec. 33.208 How long does an MBE or WBE certification from EPA last?
Once EPA OSDBU certifies an entity to be an MBE or WBE by placing
it on the EPA OSDBU list of certified MBEs and WBEs specified in Sec.
33.206, the entity will generally remain on the list for a period of
three years from the date of its certification. To remain on the list
after three years, an entity must submit a new application and receive
a new certification.
Sec. 33.209 Can EPA re-evaluate the MBE or WBE status of an entity
after EPA certifies it to be an MBE or WBE?
(a) EPA OSDBU may initiate a certification determination whenever
it receives credible information calling into question an entity's
eligibility as an MBE or WBE. Upon its completion of a certification
determination, EPA OSDBU will issue a written determination regarding
the MBE or WBE status of the questioned entity.
(b) If EPA OSDBU finds that the entity does not qualify as an MBE
or WBE, EPA OSDBU will decertify the entity as
[[Page 43847]]
an MBE or WBE, and immediately remove the entity from the EPA OSDBU
list of certified MBEs and WBEs.
(c) If EPA OSDBU finds that the entity continues to qualify as an
MBE or WBE, the determination remains in effect for three years from
the date of the decision under the same conditions as if the entity had
been granted MBE or WBE certification under Sec. 33.205.
Sec. 33.210 Does an entity certified as an MBE or WBE by EPA need to
keep EPA informed of any changes which may affect the entity's
certification?
(a) An entity certified as an MBE or WBE by EPA OSDBU must provide
EPA OSDBU, every year on the anniversary of the date of its
certification, an affidavit sworn to by the entity's owners before a
person who is authorized by state law to administer oaths or an unsworn
declaration executed under penalty of perjury of the laws of the United
States. This affidavit must affirm that there have been no changes in
the entity's circumstances affecting its ability to meet disadvantaged
status, ownership, and/or control requirements of this subpart or any
material changes in the information provided in its application form.
Failure to comply may result in the loss of MBE or WBE certification
under EPA's DBE Program.
(b) An entity certified as an MBE or WBE by EPA OSDBU must inform
EPA OSDBU in writing of any change in circumstance affecting the MBE or
WBE's ability to meet disadvantaged status, ownership, and/or control
requirements of this subpart or any material change in the information
provided in its application form. The MBE or WBE must attach supporting
documentation describing in detail the nature of such change. The
notice from the MBE or WBE must take the form of an affidavit sworn to
by the applicant before a person who is authorized by State law to
administer oaths or of an unsworn declaration executed under penalty of
perjury of the laws of the United States. The MBE or WBE must provide
the written notification within 30 calendar days of the occurrence of
the change.
Sec. 33.211 What is an EPA Private Certifier?
An EPA Private Certifier is an organization or business concern
assisting EPA OSDBU in its determination of whether an entity applying
for MBE or WBE certification is owned and/or controlled by one or more
individuals claiming disadvantaged status. EPA OSDBU may elect to
arrange for one or more EPA Private Certifiers to perform certain
functions in the certification process; however the determination as to
whether an entity will be certified as an MBE or WBE under this program
shall only be made by EPA OSDBU. If EPA OSDBU elects to use EPA Private
Certifiers to perform certain functions in the certification process,
the provisions of Sec. Sec. 33.212 through 33.214 will apply to those
EPA Private Certifiers. EPA OSDBU may establish more detailed standards
regarding qualifications, monitoring, procedures and use, if any, of
EPA Private Certifiers in specific contracts or agreements between EPA
and the EPA Private Certifiers.
Sec. 33.212 Can an EPA Private Certifier charge a fee to an entity to
process the entity's application for MBE or WBE certification?
With EPA OSDBU's approval, an EPA Private Certifier may charge a
reasonable fee to an entity in order to screen the entity's application
for completeness. The fee must be for actual services rendered and must
not be related to whether or not the entity is found to be owned and/or
controlled by one or more individuals claiming disadvantaged status.
Sec. 33.213 How does an organization or business concern become an
EPA Private Certifier?
(a) EPA may execute contracts or agreements with organizations or
business concerns seeking to become EPA Private Certifiers. Any such
contract or agreement will include provisions for the oversight,
monitoring, and evaluation of all certification related activities by
EPA.
(b) The organization or business concern must demonstrate a
knowledge of EPA and SBA regulations regarding ownership and control,
as well as business organizations and the legal principles affecting
their ownership and control generally, including stock issuances,
voting rights, convertibility of debt to equity, options, and powers
and responsibilities of officers and directors, general and limited
partners, and limited liability members.
(c) The organization or business concern must also, along with its
principals, demonstrate good character. Good character does not exist
for these purposes if the organization or concern or any of its
principals:
(1) Is debarred or suspended under any Federal procurement or non-
procurement debarment and suspension regulations; or
(2) Has been indicted or convicted for any criminal offense or
suffered a civil judgment indicating a lack of business integrity.
(d) As a condition of approval, EPA may require that appropriate
officers and/or key employees of the organization or business concern
attend a training session on EPA and SBA rules and requirements.
(e) An organization or business concern seeking to become an EPA
Private Certifier must agree to provide access to EPA of its books and
records when requested, including records pertaining to its
certification related activities.
(f) EPA will include in any contract or agreement document
authorizing an organization or business concern to act as an EPA
Private Certifier appropriate conditions to prohibit conflicts of
interests between the EPA Private Certifier and the entities for which
it processes MBE or WBE certifications.
Sec. 33.214 How long may an organization or business concern be an
EPA Private Certifier?
(a) EPA's contract or agreement with the EPA Private Certifier will
specify how long the organization or business concern may be an EPA
Private Certifier.
(b) EPA may terminate a contract or agreement with an organization
or business concern which is an EPA Private Certifier for the
convenience of the Government at any time, and may terminate the
contract or agreement for default where appropriate. Specific grounds
for termination for default include, but are not limited to:
(1) Charging improper, unreasonable or contingent fees in violation
of Sec. 33.212; or
(2) Engaging in prohibited business transactions with firms for
which it processes MBE or WBE certification applications in violation
of Sec. 33.213(f).
Sec. 33.215 Is there a list of EPA Private Certifiers?
EPA OSDBU will maintain a list of approved EPA Private Certifiers
on EPA OSDBU's Home Page on the Internet. Any interested person may
also obtain a copy of the list from EPA's OSDBU. The list is available
at: www.epa.gov/osdbu.
Sec. 33.216 What is the process for appealing or challenging an EPA
MBE or WBE certification determination?
(a) An entity which has been denied MBE or WBE certification by EPA
OSDBU under Sec. 33.205 or Sec. 33.209 may appeal that denial. A
third party may challenge EPA OSDBU's determination to certify an
entity as an MBE or WBE under Sec. 33.205 or Sec. 33.209.
(b) Appeals and challenges must be sent to the Director of OSDBU at
Environmental Protection Agency, 1200 Pennsylvania Avenue, NW., Mail
Code 1230A, Washington, DC 20460.
[[Page 43848]]
(c) The appeal or challenge must be sent to the Director of OSDBU
(Director) within 90 days of the date of EPA OSDBU's MBE or WBE
certification determination. The Director may accept an appeal or
challenge filed later than 90 days after the date of EPA OSDBU's MBE or
WBE certification determination if the Director determines that there
was good cause, beyond the control of the appellant or challenger, for
the late filing of the appeal or challenge.
(d) No specific format is required for an appeal or challenge.
However, the appeal or challenge must include information and arguments
concerning why EPA OSDBU's MBE or WBE certification determination
should be reversed. For challenges in which a third party questions EPA
OSDBU's determination to certify an entity as an MBE or WBE under Sec.
33.205 or Sec. 33.209, the third party must also send a copy of the
challenge to the entity whose MBE or WBE certification is being
questioned. In addition, the Director shall request information and
arguments from that entity as to why EPA OSDBU's determination to
certify the entity as an MBE or WBE should be upheld.
(e) The Director makes his/her appeal or challenge decision based
solely on the administrative record and does not conduct a hearing. The
Director may supplement the record by adding relevant information made
available by any other source, including the EPA Office of Inspector
General; Federal, State, or local law enforcement authorities; an EPA
recipient; or a private party.
(f) Consistent with Federal law, the Director shall make available,
upon the request of the appellant, challenger or the entity affected by
the Director's appeal or challenge decision, any supplementary
information the Director receives from any source as described in
paragraph (e) of this section.
(g) Pending the Director's appeal or challenge decision, EPA
OSDBU's MBE or WBE certification determination remains in effect. The
Director does not stay the effect of its MBE or WBE certification
determination while he/she is considering an appeal or challenge.
(h) The Director shall reverse EPA OSDBU's MBE or WBE certification
determination only if there was a clear and significant error in the
processing of the certification or if EPA OSDBU failed to consider a
significant material fact contained within the entity's application for
MBE or WBE certification.
(i) All decisions under this section are administratively final.
Sec. 33.217 What conduct is prohibited by this subpart?
An entity that does not meet the eligibility criteria of this
subpart may not attempt to participate as an MBE or WBE in contracts
awarded under EPA financial assistance agreements or be counted as such
by an EPA recipient. An entity that submits false, fraudulent, or
deceitful statements or representations or under circumstances
indicating a serious lack of business integrity or honesty may be
subject to sanctions under Sec. 33.105.
Subpart C--Good Faith Efforts
Sec. 33.301 What does this subpart require?
A recipient, including one exempted from applying the fair share
objective requirements by Sec. 33.411, is required to make the
following good faith efforts whenever procuring construction,
equipment, services and supplies under an EPA financial assistance
agreement, even if it has achieved its fair share objectives under
subpart D of this part:
(a) Ensure DBEs are made aware of contracting opportunities to the
fullest extent practicable through outreach and recruitment activities.
For Indian Tribal, State and local and Government recipients, this will
include placing DBEs on solicitation lists and soliciting them whenever
they are potential sources.
(b) Make information on forthcoming opportunities available to DBEs
and arrange time frames for contracts and establish delivery schedules,
where the requirements permit, in a way that encourages and facilitates
participation by DBEs in the competitive process. This includes,
whenever possible, posting solicitations for bids or proposals for a
minimum of 30 calendar days before the bid or proposal closing date.
(c) Consider in the contracting process whether firms competing for
large contracts could subcontract with DBEs. For Indian Tribal, State
and local Government recipients, this will include dividing total
requirements when economically feasible into smaller tasks or
quantities to permit maximum participation by DBEs in the competitive
process.
(d) Encourage contracting with a consortium of DBEs when a contract
is too large for one of these firms to handle individually.
(e) Use the services and assistance of the SBA and the Minority
Business Development Agency of the Department of Commerce.
(f) If the prime contractor awards subcontracts, require the prime
contractor to take the steps in paragraphs (a) through (e) of this
section.
Sec. 33.302 Are there any additional contract administration
requirements?
(a) A recipient must require its prime contractor to pay its
subcontractor for satisfactory performance within a specific number of
days from the prime contractor's receipt of payment from the recipient.
(b) A recipient must be notified in writing by its prime contractor
prior to any termination of a DBE subcontractor for convenience by the
prime contractor.
(c) If a DBE subcontractor fails to complete work under the
subcontract for any reason, the recipient must require the prime
contractor to employ the six good faith efforts described in Sec.
33.301 if soliciting a replacement subcontractor.
(d) A recipient must require its prime contractor to employ the six
good faith efforts described in Sec. 33.301 even if the prime
contractor has achieved its fair share objectives under subpart D of
this part.
(e) A recipient must require its prime contractor to provide EPA
Form 6100-2--DBE Program Subcontractor Participation Form to all of its
DBE subcontractors. EPA Form 6100-2 gives a DBE subcontractor the
opportunity to describe the work the DBE subcontractor received from
the prime contractor, how much the DBE subcontractor was paid and any
other concerns the DBE subcontractor might have, for example reasons
why the DBE subcontractor believes it was terminated by the prime
contractor. DBE subcontractors may send completed copies of EPA Form
6100-2 directly to the appropriate EPA DBE Coordinator.
(f) A recipient must require its prime contractor to have its DBE
subcontractors complete EPA Form 6100-3--DBE Program Subcontractor
Performance Form. A recipient must then require its prime contractor to
include all completed forms as part of the prime contractor's bid or
proposal package.
(g) A recipient must require its prime contractor to complete and
submit EPA Form 6100-4--DBE Program Subcontractor Utilization Form as
part of the prime contractor's bid or proposal package.
(h) Copies of EPA Form 6100-2--DBE Program Subcontractor
Participation Form, EPA Form 6100-3--DBE Program Subcontractor
Performance Form and EPA Form 6100-4--DBE Program Subcontractor
Utilization Form may be obtained from EPA OSDBU's Home Page on the
Internet or directly from EPA OSDBU.
[[Page 43849]]
(i) A recipient must ensure that each procurement contract it
awards contains the term and condition specified in the Appendix
concerning compliance with the requirements of this part. A recipient
must also ensure that this term and condition is included in each
procurement contract awarded by an entity receiving an identified loan
under a financial assistance agreement to capitalize a revolving loan
fund.
Sec. 33.303 Are there special rules for loans under EPA financial
assistance agreements?
A recipient of an EPA financial assistance agreement to capitalize
a revolving loan fund, such as a State under the CWSRF or DWSRF or an
eligible entity under the Brownfields Cleanup Revolving Loan Fund
program, must require that borrowers receiving identified loans comply
with the good faith efforts described in Sec. 33.301 and the contract
administration requirements of Sec. 33.302. This provision does not
require that such private and nonprofit borrowers expend identified
loan funds in compliance with any other procurement procedures
contained in 40 CFR part 30, part 31, or part 35, subpart O, as
applicable.
Sec. 33.304 Must a Native American (either as an individual,
organization, Tribe or Tribal Government) recipient or prime contractor
follow the six good faith efforts?
(a) A Native American (either as an individual, organization,
corporation, Tribe or Tribal Government) recipient or prime contractor
must follow the six good faith efforts only if doing so would not
conflict with existing Tribal or Federal law, including but not limited
to the Indian Self-Determination and Education Assistance Act (25
U.S.C. 450e), which establishes, among other things, that any federal
contract, subcontract, grant, or subgrant awarded to Indian
organizations or for the benefit of Indians, shall require preference
in the award of subcontracts and subgrants to Indian organizations and
to Indian-owned economic enterprises.
(b) Tribal organizations awarded an EPA financial assistance
agreement have the ability to solicit and recruit Indian organizations
and Indian-owned economic enterprises and give them preference in the
award process prior to undertaking the six good faith efforts. Tribal
governments with promulgated tribal laws and regulations concerning the
solicitation and recruitment of Native-owned and other minority
business enterprises, including women-owned business enterprises, have
the discretion to utilize these tribal laws and regulations in lieu of
the six good faith efforts. If the effort to recruit Indian
organizations and Indian-owned economic enterprises is not successful,
then the recipient must follow the six good faith efforts. All tribal
recipients still must retain records documenting compliance in
accordance with Sec. 33.501 and must report to EPA on their
accomplishments in accordance with Sec. 33.502.
(c) Any recipient, whether or not Native American, of an EPA
financial assistance agreement for the benefit of Native Americans, is
required to solicit and recruit Indian organizations and Indian-owned
economic enterprises and give them preference in the award process
prior to undertaking the six good faith efforts. If the efforts to
solicit and recruit Indian organizations and Indian-owned economic
enterprises is not successful, then the recipient must follow the six
good faith efforts.
(d) Native Americans are defined in Sec. 33.103 to include
American Indians, Eskimos, Aleuts and Native Hawaiians.
Subpart D--Fair Share Objectives
Sec. 33.401 What does this subpart require?
A recipient must negotiate with the appropriate EPA award official,
or his/her designee, fair share objectives for MBE and WBE
participation in procurement under the financial assistance agreements.
Sec. 33.402 Are there special rules for loans under EPA financial
assistance agreements?
A recipient of an EPA financial assistance agreement to capitalize
revolving loan funds must either apply its own fair share objectives
negotiated with EPA under Sec. 33.401 to identified loans using a
substantially similar relevant geographic market, or negotiate separate
fair share objectives with entities receiving identified loans, as long
as such separate objectives are based on demonstrable evidence of
availability of MBEs and WBEs in accordance with this subpart. If
procurements will occur over more than one year, the recipient may
choose to apply the fair share objective in place either for the year
in which the identified loan is awarded or for the year in which the
procurement action occurs. The recipient must specify this choice in
the financial assistance agreement, or incorporate it by reference
therein.
Sec. 33.403 What is a fair share objective?
A fair share objective is an objective based on the capacity and
availability of qualified MBEs and WBEs in the relevant geographic
market for the procurement categories of construction, equipment,
services and supplies compared to the number of all qualified entities
in the same market for the same procurement categories, adjusted, as
appropriate, to reflect the level of MBE and WBE participation expected
absent the effects of discrimination. A fair share objective is not a
quota.
Sec. 33.404 When must a recipient negotiate fair share objectives
with EPA?
A recipient must submit its proposed MBE and WBE fair share
objectives and supporting documentation to EPA within 90 days after its
acceptance of its financial assistance award. EPA must respond in
writing to the recipient's submission within 30 days of receipt, either
agreeing with the submission or providing initial comments for further
negotiation. Failure to respond within this time frame may be
considered as agreement by EPA with the fair share objectives submitted
by the recipient. MBE and WBE fair share objectives must be agreed upon
by the recipient and EPA before funds may be expended for procurement
under the recipient's financial assistance agreement.
Sec. 33.405 How does a recipient determine its fair share objectives?
(a) A recipient must determine its fair share objectives based on
demonstrable evidence of the number of qualified MBEs and WBEs in the
relevant geographic market for each of the four procurement categories.
The relevant geographic market is the area of solicitation for the
procurement as determined by the recipient. The market may be a
geographic region of a State, an entire State, or a multi-State area.
Fair share objectives must reflect the recipient's determination of the
level of MBE and WBE participation it would expect absent the effects
of discrimination. A recipient may combine the four procurement
categories into one weighted objective for MBEs and one weighted
objective for WBEs.
(b) Step 1. A recipient must first determine a base figure for the
relative availability of MBEs and WBEs. The following are examples of
approaches that a recipient may take. Any percentage figure derived
from one of these examples should be considered a basis from which a
recipient begins when examining evidence available in its jurisdiction.
(1) MBE and WBE directories and Census Bureau data. Separately
determine the number of qualified MBEs and WBEs in the relevant
geographic market for each procurement category from a MBE/WBE
directory, such as a bidder's list. Using the Census Bureau's County
Business Pattern (CBP)
[[Page 43850]]
data base, determine the number of all qualified businesses available
in the market that perform work in the same procurement category.
Separately divide the number of MBEs and WBEs by the number of all
businesses to derive a base figure for the relative availability of
MBEs and WBEs in the market.
(2) Data from a disparity study. Use a percentage figure derived
from data in a valid, applicable disparity study conducted within the
preceding ten years comparing the available MBEs and WBEs in the
relevant geographic market with their actual usage by entities
procuring in the categories of construction, equipment, services and
supplies.
(3) The objective of another EPA recipient. A recipient may use, as
its base figure, the fair share objectives of another EPA recipient if
the recipient demonstrates that it will use the same, or substantially
similar, relevant geographic market as the other EPA recipient. (See
Sec. 33.411 for exemptions from fair share objective negotiations).
(4) Alternative methods. Subject to EPA approval, other methods may
be used to determine a base figure for the overall objective. Any
methodology chosen must be based on demonstrable evidence of local
market conditions and be designed to ultimately attain an objective
that is rationally related to the relative availability of MBEs and
WBEs in the relevant geographic market.
(c) Step 2. After calculating a base figure, a recipient must
examine the evidence available in its jurisdiction to determine what
adjustment, if any, is needed to the base figure in order to arrive at
the fair share objective.
(1) There are many types of evidence that must be considered when
adjusting the base figure. These include:
(i) The current capacity of MBEs and WBEs to perform contract work
under EPA financial assistance agreements, as measured by the volume of
work MBEs and WBEs have performed in recent years;
(ii) Evidence from disparity studies conducted anywhere within the
recipient's jurisdiction, to the extent it is not already accounted for
in the base figure; and
(iii) If the base figure is the objective of another EPA recipient,
it must be adjusted for differences in the local market and the
recipient's contracting program.
(2) A recipient may also consider available evidence from related
fields that affect the opportunities for MBEs and WBEs to form, grow
and compete. These include, but are not limited to:
(i) Statistical disparities in the ability of MBEs and WBEs to get
the financing, bonding and insurance required to participate; and
(ii) Data on employment, self-employment, education, training and
union apprenticeship programs, to the extent it can be related to the
opportunities for MBEs and WBEs to perform in the program.
(3) If a recipient attempts to make an adjustment to its base
figure to account for the continuing effects of past discrimination
(often called the ``but for'' factor) or the effects of another ongoing
MBE/WBE program, the adjustment must be based on demonstrable evidence
that is logically and directly related to the effect for which the
adjustment is sought.
Sec. 33.406 May a recipient designate a lead agency for fair share
objective negotiation purposes?
If an Indian Tribal, State or local Government has more than one
agency that receives EPA financial assistance, the agencies within that
government may designate a lead agency to negotiate MBE and WBE fair
share objectives with EPA to be used by each of the agencies. Each
agency must otherwise negotiate with EPA separately its own MBE and WBE
fair share objectives.
Sec. 33.407 How long do MBE and WBE fair share objectives remain in
effect?
Once MBE and WBE fair share objectives have been negotiated, they
will remain in effect for three fiscal years unless there are
significant changes to the data supporting the fair share objectives.
The fact that a disparity study utilized in negotiating fair share
objectives has become more than ten years old during the three year
period does not by itself constitute a significant change requiring
renegotiation.
Sec. 33.408 May a recipient use race and/or gender conscious measures
as part of this program?
(a) Should the good faith efforts described in subpart C of this
part or other race and/or gender neutral measures prove to be
inadequate to achieve an established fair share objective, a recipient
and its prime contractor are encouraged, but not required, to take
reasonable race and/or gender conscious action, subject to Sec.
33.409, to more closely achieve the fair share objectives.
(b) A recipient must notify EPA in advance of any race and/or
gender conscious action it plans to take. Any use of race and/or gender
conscious efforts must not result in the selection of an unqualified
MBE or WBE.
Sec. 33.409 May a recipient use quotas as part of this program?
A recipient is not permitted to use quotas in procurements under
EPA's 8% or 10% statute.
Sec. 33.410 Can a recipient be penalized for failing to meet its fair
share objectives?
A recipient cannot be penalized, or treated by EPA as being in
noncompliance with this subpart, solely because its MBE or WBE
participation does not meet its applicable fair share objective.
However, EPA may take remedial action under Sec. 33.105 for a
recipient's failure to comply with other provisions of this part,
including, but not limited to, the good faith efforts requirements
described in subpart C of this part.
Sec. 33.411 Who may be exempted from this subpart?
(a) General. A recipient of an EPA financial assistance agreement
in the amount of $250,000 or less for any single assistance agreement,
or of more than one financial assistance agreement with a combined
total of $250,000 or less in any one fiscal year, is not required to
apply the fair share objective requirements of this subpart. This
provision does not exempt such recipients from any other requirements
of this part.
(b) Clean Water State Revolving Fund (CWSRF) Program, Drinking
Water State Revolving Fund (DWSRF) Program, and Brownfields Cleanup
Revolving Loan Fund (BCRLF) Program identified loan recipients. A
recipient under the CWSRF, DWSRF, or BCRLF Program is not required to
apply the fair share objective requirements of this subpart to an
entity receiving an identified loan in an amount of $250,000 or less or
to an entity receiving more than one identified loan with a combined
total of $250,000 or less in any one fiscal year. This provision does
not exempt such recipients from any other requirements of this part.
(c) Tribal and Intertribal Consortia recipients of program grants
which can be included in Performance Partnership Grants (PPGs) under 40
CFR Part 35, Subpart B. Tribal and Intertribal consortia recipients of
PPG eligible grants are not required to apply the fair share objective
requirements of this subpart to those grants.
(d) Technical Assistance Grant (TAG) Program Recipients. A
recipient of a TAG is not required to apply the fair share objective
requirements of this subpart to that grant. This provision does not
exempt such recipients from any other requirements of this part.
[[Page 43851]]
Sec. 33.412 Must an Insular Area or Indian Tribal Government
recipient negotiate fair share objectives?
The requirements in this subpart regarding the negotiation of fair
share objectives will not apply to an Insular Area or Indian Tribal
Government recipient until three calendar years after the effective
date of this part. Furthermore, in accordance with Sec. 33.411(c),
tribal and intertribal consortia recipients of program grants which can
be included in Performance Partnership Grants (PPGs) under 40 CFR part
35, subpart B are not required to apply the fair share objective
requirements of this subpart to such grants.
Subpart E--Recordkeeping and Reporting
Sec. 33.501 What are the recordkeeping requirements of this part?
(a) A recipient, including those recipients exempted under Sec.
33.411 from the requirement to apply the fair share objectives, must
maintain all records documenting its compliance with the requirements
of this part, including documentation of its, and its prime
contractor's, good faith efforts and data relied upon in formulating
its fair share objectives. Such records must be retained in accordance
with applicable record retention requirements for the recipient's
financial assistance agreement.
(b) A recipient of a Continuing Environmental Program Grant or
other annual grant must create and maintain a bidders list. Such a list
must only be kept until the grant project period has expired and the
recipient is no longer receiving EPA funding under the grant. In
addition, a recipient of an EPA financial assistance agreement to
capitalize a revolving loan fund also must require entities receiving
identified loans to create and maintain a bidders list if the recipient
of the loan is subject to, or chooses to follow, competitive bidding
requirements. (See e.g., Sec. 33.303). The purpose of a bidders list
is to provide the recipient and entities receiving identified loans who
conduct competitive bidding with as accurate of a database as possible
about the universe of MBE/WBE and non-MBE/WBE prime and subcontractors.
Such a list must only be kept until the project period for the
identified loan has ended. The following information must be obtained
from all prime and subcontractors: entity name; entity address;
entity's status as an MBE/WBE.
Sec. 33.502 What are the reporting requirements of this part?
MBE and WBE participation must be reported by recipients, including
those recipients exempted under Sec. 33.411 from the requirement to
apply the fair share objectives, on EPA Form 5700-52A on a quarterly
basis, except for recipients of Continuing Environmental Program
Grants, and institutions of higher education, hospitals and other non-
profit organizations receiving financial assistance agreements under 40
CFR part 30, which report on an annual basis. Recipients of financial
assistance agreements capitalizing revolving loan funds, including
those exempted by Sec. 33.411 from the requirement of applying the
fair share objectives, will continue to report quarterly. Recipients of
financial assistance agreements that capitalize revolving loan programs
must require entities receiving identified loans to submit their MBE
and WBE participation reports on a quarterly basis to the financial
assistance agreement recipient, rather than to EPA.
Sec. 33.503 How does a recipient calculate MBE and WBE participation
for reporting purposes?
(a) General. Amounts of MBE and WBE participation are calculated as
a percentage of total financial assistance agreement project
procurement costs, which include the match portion of the project
costs, if any. For recipients of financial assistance agreements that
capitalize revolving loan programs, the total amount is the total
procurement dollars in the amount of identified loans equal to the
capitalization grant amount.
(b) Ineligible project costs. If all project costs attributable to
MBE and WBE participation are not eligible for funding under the EPA
financial assistance agreement, the recipient may choose to report the
percentage of MBE and WBE participation based on the total eligible and
non-eligible costs of the project.
(c) Joint ventures. For joint ventures, MBE and WBE participation
consists of the portion of the dollar amount of the joint venture
attributable to the MBE or WBE. If an MBE's or WBE's risk of loss,
control or management responsibilities are not commensurate with its
share of the profit, the Agency may direct an adjustment in the
percentage of MBE or WBE participation.
(d) Central purchasing or procurement centers. A recipient must
report MBE and WBE participation from its central purchasing or
procurement centers.
(e) Brokers. A recipient may not count expenditures to a MBE or WBE
that acts merely as a broker or passive conduit of funds, without
performing, managing, or supervising the work of its contract or
subcontract in a manner consistent with normal business practices.
(1) Presumption. If 50% or more of the total dollar amount of a MBE
or WBE's prime contract is subcontracted to a non-DBE, the MBE or WBE
prime contractor will be presumed to be a broker, and no MBE or WBE
participation may be reported.
(2) Rebuttal. The MBE or WBE prime contractor may rebut this
presumption by demonstrating that its actions are consistent with
normal practices for prime contractors in its business and that it will
actively perform, manage and supervise the work under the contract.
(f) MBE or WBE truckers/haulers. A recipient may count expenditures
to an MBE or WBE trucker/hauler only if the MBE or WBE trucker/hauler
is performing a commercially useful function. The following factors
should be used in determining whether an MBE or WBE trucker/hauler is
performing a commercially useful function:
(1) The MBE or WBE must be responsible for the management and
supervision of the entire trucking/hauling operation for which it is
responsible on a particular contract, and there cannot be a contrived
arrangement for the purpose of meeting MBE or WBE objectives.
(2) The MBE or WBE must itself own and operate at least one fully
licensed, insured, and operational truck used on the contract.
Appendix to Part 33--Term and Condition
Each procurement contract signed by an EPA financial assistance
agreement recipient, including those for an identified loan under an
EPA financial assistance agreement capitalizing a revolving loan
fund, must include the following term and condition:
The contractor shall not discriminate on the basis of race,
color, national origin or sex in the performance of this contract.
The contractor shall carry out applicable requirements of 40 CFR
part 33 in the award and administration of contracts awarded under
EPA financial assistance agreements. Failure by the contractor to
carry out these requirements is a material breach of this contract
which may result in the termination of this contract or other
legally available remedies.
PART 35--[AMENDED]
Subpart E--[Amended]
6. The authority citation for part 35, subpart E, continues to read
as follows:
Authority: Secs. 109(b), 201 through 205, 207, 208(d), 210
through 212, 215 through
[[Page 43852]]
217, 304(d)(3), 313, 501, 511, and 516(b) of the Clean Water Act, as
amended, 33 U.S.C. 1251 et seq.
Sec. 35.936-7 [Removed]
7. Section 35.936-7 is removed.
Sec. 35.938-9 [Amended]
Section 35.938-9 is amended by removing and reserving paragraph
(b)(2).
Subpart K--[Amended]
8. The authority citation for part 35, subpart K, continues to read
as follows:
Authority: Sections 205(m), 501(a) and title VI of the Clean
Water Act, as amended, 42 U.S.C. 1285(m), 33 U.S.C. 1361(a), 33
U.S.C. 1381-1387.
Sec. 35.3145 [Amended]
9. Section 35.3145(d) is removed and reserved.
Sec. 35.3145 [Amended]
10. Section 35.3145(e) is removed.
Subpart L--[Amended]
11. The authority citation for part 35, subpart L, continues to
read as follows:
Authority: Section 1452 of the Safe Drinking Water Act, as
amended, 42 U.S.C. 300j-12.
Sec. 35.3575 [Amended]
12. Section 35.3575(d) is removed and reserved.
Subpart M--[Amended]
13. The authority citation for part 35, subpart M, continues to
read as follows:
Authority: 42 U.S.C. 9617(e); sec. 9(g), E.O. 12580, 52 FR 2923,
3 CFR, 1987 Comp., p. 193.
Sec. 35.4170 [Amended]
14. Section 35.4170(b) is removed and reserved.
Sec. 35.4205 [Amended]
15. Section 35.4205(g) is removed.
Sec. 35.4240 [Amended]
16. Section 35.4240(e) is removed and reserved.
Subpart O--[Amended]
17. The authority citation for part 35, subpart O, continues to
read as follows:
Authority: 42 U.S.C. 9601 et seq.
Sec. 35.6015 [Amended]
18. Sections 35.6015(a)(26) and (a)(54) are removed and reserved.
Sec. 35.6580 [Removed]
19. Section 35.6580 is removed.
Sec. 35.6665 [Amended]
20. Section 35.6665(b) is removed.
PART 40--[AMENDED]
21. The authority citation for part 40 continues to read as
follows:
Authority: Cited in Sec. 40.110.
Sec. 40.145-3 [Amended]
22. Section 40.145-3(c) is removed and reserved.
[FR Doc. 03-18002 Filed 7-23-03; 8:45 am]
BILLING CODE 6560-50-P