Environmental Program Grants--State, Interstate, and Local Government Agencies

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

[Federal Register: January 9, 2001 (Volume 66, Number 6)]
[Rules and Regulations]
[Page 1725-1748]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09ja01-18]

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Part II

Environmental Protection Agency

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40 CFR Parts 35 and 735

Environmental Program Grants--State, Interstate, and Local Government
Agencies; Final Rule

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 35 and 735

[FRL-6929-4]
RIN 2030-AA55

Environmental Program Grants--State, Interstate, and Local
Government Agencies

AGENCY: Environmental Protection Agency.

ACTION: Final rule.

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SUMMARY: This final rule revises and updates requirements in several
Environmental Protection Agency (EPA) regulations governing grants to
State, interstate and local government agencies under several
environmental programs. The regulation advances ongoing efforts to
build more effective State-EPA partnerships and to improve
environmental conditions by providing States with increased flexibility
to direct resources where they are needed most to address environmental
and public health needs. This regulation updates, clarifies, and
streamlines requirements governing environmental program grants and
establishes requirements for the Performance Partnership Grant (PPG)
program. The rule includes results-oriented approaches to planning and
managing environmental programs. It also establishes requirements for
grant programs that began after the original 40 CFR part 35, subpart A
was published. (A regulation governing environmental program grants to
Indian Tribes and Tribal Consortia will be published shortly in an
upcoming issue of the Federal Register.)

DATES: This regulation is effective after February 8, 2001.
Effective Date: This rule applies to grants awarded after February
8, 2001 and it may be applied to currently active PPGs, if agreed to in
writing by the Regional Administrator and the recipient.

ADDRESSES: Although this regulation is final, comments may be submitted
at any time to the person identified in the section below.

FOR FURTHER INFORMATION CONTACT: Michelle McClendon, Grants Policy,
Information, and Training Branch (3903R), United States Environmental
Protection Agency, 1200 Pennsylvania Ave., NW, Washington, DC 20460,
Telephone: (202) 564-5357.

SUPPLEMENTARY INFORMATION:

I. Regulated Entities

Entities eligible to receive the environmental grants listed in 40
CFR 35.100 are regulated by this rule. Regulated categories and
entities include:

------------------------------------------------------------------------
Category Regulated entities
------------------------------------------------------------------------
Government..................... State Governments/Agencies.
Local Governments/Agencies.
Interstate Agencies.
------------------------------------------------------------------------

This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities eligible under EPA's authorizing
and appropriations statutes that EPA is now aware could potentially be
regulated by this action. Other types of entities could also be
regulated. To determine whether your organization is regulated by this
action, you should carefully examine the applicability criteria in
Sec. 35.134 and the program-specific provisions in Secs. 35.140 through
35.418 of the rule. If you have questions regarding the applicability
of this action to a particular entity, consult the person listed in the
FOR FURTHER INFORMATION CONTACT section.

II. Comments and Record

The record of this final rule includes copies of the proposed and
final rules, comments received on the rule, EPA's responses to those
comments, and other relevant documents that support the rule. It is
available for inspection from 9 am to 4 pm (Eastern Time), Monday
through Friday, excluding legal holidays, at the Water Docket, U.S. EPA
Headquarters, 401 M Street, SW; East Tower Basement; Washington, DC
20460. For access to docket materials, please call (202) 260-3027 to
schedule an appointment.

III. Background

EPA proposed a rule for environmental program grants for State,
interstate, and local government agencies on July 23, 1999 (64 FR
40064). EPA received eight letters of comment on the proposed rule. A
summary of the comments and EPA's responses are included in this
preamble. The preamble also summarizes a few changes to the rule EPA
determined necessary to clarify various provisions. This publication
makes the rule final.
Since EPA was formed in 1970, State capacity and responsibility for
implementing environmental and public health protection programs has
grown steadily. Meanwhile, environmental problems and their solutions
have become more complex. In light of these changes, State and EPA
leaders recognized that continued environmental progress could be best
achieved if EPA and States worked together more effectively--as
partners.
In 1995, they agreed to develop and implement the National
Environmental Performance Partnership System (NEPPS). NEPPS is designed
to: Promote joint planning and priority-setting by EPA and the States;
provide States with greater flexibility to direct resources where they
are needed most; foster use of integrated and innovative strategies for
solving water, air, and waste problems; achieve a better balance in the
use of environmental indicators and traditional activity measures for
managing programs; and improve public understanding of environmental
conditions and the strategies being used to address them.
The changes in this rule are intended to promote State-EPA
collaboration; provide opportunities for innovation; and reduce
paperwork--while ensuring sound fiscal management and accountability
for environmental performance--in a manner consistent with NEPPS. For
example, EPA hopes to foster joint planning and priority-setting by
explicitly requiring that State priorities and needs be considered,
along with national and regional guidance, in negotiating grant work
plans. Under this rule, a State can choose to organize its grant work
plans in accordance with environmental goals and objectives or in other
new ways rather than using categories predefined by EPA. However, EPA
must be able to link the grant work plan to EPA's Government
Performance and Results Act Goal and Objective Architecture, as
discussed in Section VIII. The length of a grant budget period is
negotiable. These flexibilities are available to all States, regardless
of whether they are actively participating in other aspects of NEPPS.
More than half of the States have elected to negotiate and enter
into Performance Partnership Agreements (PPAs) with EPA as the primary
mechanism for implementing NEPPS. Although each PPA is different, PPAs
typically set out jointly developed goals, objectives, and priorities;
the strategies to be used in meeting them; the roles and
responsibilities of the State and EPA; and the measures to be used in
assessing progress. (In some cases, comparable negotiated agreements
are given a different name, such as Environmental Performance
Agreements.) A PPA is generally based on information about the
environmental and program conditions of the State as well as national
and regional priorities and concerns. A State may apply for and receive
any grant, including a Performance Partnership Grant (PPG),

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without negotiating a PPA. However, a PPA can provide the strategic
underpinning for the work a State plans to carry out with EPA financial
assistance, and the PPA can serve as a grant work plan if it meets
other grant-related statutory and regulatory requirements.
Recognizing the limitations of traditional categorical grants to
allow full achievement of the NEPPS goals, EPA asked Congress for new
authority that would give States greater flexibility in the use of
federal grant funds. In the Omnibus Consolidated Rescissions and
Appropriations Act of 1996 (Pub. L. 104-134, 110 Stat. 1321, 1321-299
(1996)) and EPA's FY 1998 Appropriation Act (Pub. L. 105-65, 111 Stat.
1344, 1373 (1997)), Congress authorized the award of Performance
Partnership Grants (PPGs), in which State and interstate agencies (and
Tribes and Intertribal Consortia) can choose to combine two or more
environmental program grants.
Under a PPG, a recipient can achieve cost and administrative
savings by reductions in the amount of grant paperwork as well as
simplified accounting requirements that do not require the recipient to
account for expenditures in accordance with their original funding
sources. With PPGs, recipients can negotiate work plans with EPA that
direct federal funds where the recipients need them most to address
environmental and public health problems. Recipients also can try new
multi-media approaches and initiatives, such as children's health
protection programs, multi-media inspections, compliance assistance
programs, and ecosystem management that were difficult to fund under
traditional categorical grants.
This rule is designed to accommodate all potential variations in
how EPA and individual States may work to build partnerships. The rule
also is designed to minimize duplicative effort by allowing for
multiple uses of information or processes wherever appropriate. A State
may choose to negotiate a PPA or comparable strategic agreement with
EPA. Where a State negotiates both a PPA and PPG, the processes and
documentation can be integrated and, if appropriate, identical. Also, a
State can receive a separate categorical grant for each environmental
program, a PPG covering all programs eligible for inclusion, or a
combination of separate categorical grants and PPGs covering only some
programs.
These regulations will be codified in 40 CFR part 35 as EPA's
Environmental Program Grants regulation. Subpart A applies to State,
interstate, and local agencies covering the following programs: Air
Pollution Control; Water Pollution Control; Public Water System
Supervision; Underground Water Source Protection; Hazardous Waste
Management; Pesticide Cooperative Enforcement; Pesticide Applicator
Certification and Training; Pesticide Program Implementation; Nonpoint
Source Management; State Administration; Water Quality Management
Planning; Performance Partnership Grants; Lead-Based Paint Grant
Program; State Indoor Radon Grants; Toxic Substances Compliance
Monitoring Grants; State Underground Storage Tank Grants; Pollution
Prevention State Grants; Water Quality Cooperative Agreements; and
State Wetlands Development Grants. EPA is also publishing subpart B in
this issue of the Federal Register, which applies to Tribes and
Intertribal Consortia.
These regulations supplement EPA's Uniform Administrative
Requirements for Grants and Cooperative Agreements to State and Local
Governments regulation (40 CFR part 31). Part 31 applies to grants and
subawards to State governments, interstate agencies, and local
governments, including councils of governments (whether or not
incorporated as nonprofit organizations under State law), and any other
regional or interstate governmental entity. (Under a few of the
programs included in this rule, grants may be made directly to
universities, non-profit organizations, and individuals. In those
cases, the rule also supplements EPA's Uniform Administrative
Requirements for Grants and Agreements with Institutions of Higher
Education, Hospitals, and Other Non-Profit Organizations (40 CFR part
30).)
This rule deletes 40 CFR 745.330, which authorizes EPA to make
grants to States and Indian Tribes under section 404(g) of the Toxic
Substances Control Act for lead-based paint programs. Provisions
governing those grants are included in this rule and in the companion
rule issued as subpart B of 40 CFR part 35 for Tribes and Intertribal
Consortia.

IV. Requirements for Environmental Program Grants

Sections 35.100 through 35.118 of the rule apply to all
environmental program grants covered by subpart A of part 35, including
PPGs. This rule contains changes to foster State-EPA partnerships,
improve accountability for environmental and program performance, and
streamline administrative requirements. Some of the rule's key features
are discussed below.
State-EPA partnerships. To foster joint planning and priority-
setting, the rule explicitly requires consideration of State priorities
along with national program and regional supplemental guidance in
negotiating grants. However, the EPA Regional Administrator must
consult with the National Program Manager before agreeing to a State
work plan that differs substantially from national program guidance. A
State is provided flexibility through the work plan negotiation
process, and in particular through its ability to organize work plan
components in whatever way fits best. States applying for PPGs will
have still greater flexibility as described in the PPG discussion
below. Where appropriate, the grant work plan will reflect both EPA and
State roles and responsibilities and there will be a negotiated joint
performance evaluation process.
Accountability. The rule accommodates results-oriented approaches
to planning and managing environmental programs. Definitions and other
aspects of the rule are compatible with the Government Performance and
Results Act (GPRA) and reflect efforts to establish goals and
objectives as well as environmental and program performance measures at
both the national and State levels. The rule recognizes the need for a
mix of outcome (results and output (activity) measures for management
purposes. While the rule encourages States to organize their work plans
around goals and objectives, States may continue to use existing
structures if they wish. However, EPA must be able to link the grant
work plans to EPA's GPRA Goal and Objective Architecture.
Administrative changes. Under the rule, States can negotiate
funding periods of one or more years with EPA. EPA recommends, however,
that funding periods not exceed five years because it is difficult to
account for funds and maintain records for longer periods. (The term
``funding period'' used in this preamble and 40 CFR 31.23 has the same
meaning as the term ``budget period'' on EPA's grant and cooperative
agreement and amendment forms.)
The rule streamlines some requirements and eliminates other
requirements associated with changes made to grant work plan
commitments and budgets. These requirements replace those found in 40
CFR 31.30. Prior written approval from EPA is still required for
significant changes in a grantee's work plan commitments. Written, but
not prior, approval is required for changes requiring increases

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in grant amounts and extensions of the funding period. EPA approval is
no longer required for other changes in the work plan or budget,
changes in key persons, or decisions to carry out portions of the work
through subgrants or contracts, unless the Regional Administrator
determines, on a case-by-case basis, that circumstances warrant
imposing additional approval requirements on a particular recipient.
Pre-award costs. Pre-award costs may be reimbursed under the grants
without prior approval so long as they are incurred within the budget
period, identified in the approval grant application, and would have
been allowable if incurred after the award.
Insular areas. This rule includes conforming changes to reflect the
change in status of the Marshall Islands, the Federated States of
Micronesia, and Palau. They were previously entities within the Trust
Territory of the Pacific Islands, but they have entered into Compacts
of Free Association with the Government of the United States. As a
result, each is now a sovereign, self-governing entity and, as such, is
no longer eligible to receive grants as a territory or possession of
the United States. Because the Trust Territory of the Pacific Islands
no longer exists, the rule's provisions regarding allotments omit any
reference to the Trust Territory, and references to the Trust Territory
in environmental program grant statutes, including the references in
the definitions of ``State,'' no longer have legal effect.
The Administrator of EPA is authorized to consolidate grants and
waive administrative requirements for grants made to certain insular
areas (48 U.S.C. 1469a). Through this regulation that authority is
delegated to the Regional Administrators.

V. Performance Partnership Grants

Sections 35.130 through 35.138 contain requirements that apply only
to Performance Partnership Grants (PPGs). In a PPG, a State or
interstate agency recipient can combine funds from two or more
environmental program grants into a single grant under streamlined
administrative requirements. Funds may be used for eligible cross-media
activities or strategies and do not need to be accounted for in
accordance with their original program sources. Key features of the PPG
rule are discussed below.
Funds and activities eligible for inclusion in a PPG. Funds for any
particular environmental program grant may be included in a PPG only if
the funds for that grant are appropriated in the same specific
appropriation (earmark) as the funds for PPGs. EPA will announce any
changes in its appropriation acts that affect the list of programs in
Sec. 35.101. Currently, funds from all but two of the environmental
program grants listed in Sec. 35.101 are eligible for inclusion in a
PPG. Funds for Water Quality Management Planning grants under section
205(j)(2) of the Clean Water Act are not available for inclusion in
PPGs because funds for these grants are reserved from a different
earmark in the Agency's appropriation act. In addition, there are no
funds appropriated for State Administration grants under section 205(g)
of the Clean Water Act.
A State or interstate agency PPG recipient may use PPG funds to
carry out any activity that would be authorized under at least one of
the environmental program grants from which funds are combined in the
PPG. This means that a PPG recipient may not spend PPG funds on an
activity unless the PPG includes some funds from an environmental
program grant under which that activity would be eligible. For example,
a PPG recipient could not use PPG funds for an activity that is
authorized only under sections 205(g) or 205(j)(2) of the Clean Water
Act because no section 205(g) or 205(j)(2) funds will have been
included in the PPG. On the other hand, if an activity would be
authorized under section 106 of the Clean Water Act, and the PPG
includes section 106 funds, then the activity may be funded by the PPG.
A State or interstate agency must meet the requirements for award
of each of the environmental programs from which funds are combined in
the PPG, with a few specified exceptions. The exceptions are
requirements that restrict how a specific environmental program grant
can be used after award. These requirements are not appropriate to be
carried over to PPGs because: (1) after funds are awarded in a PPG,
they may be used for cross-media purposes and; (2) States and
interstate agencies do not need to account for the funds in accordance
with their original program sources.
Entities eligible for PPGs. The types of organizations eligible for
PPGs are determined by the authorizing statutes for the PPG program,
which are EPA's FY 1996 and 1998 appropriation acts, (Omnibus
Consolidated Rescissions and Appropriations Act of 1996, Pub. L. No.
104-134, 110 Stat. 1321, 1321-299 (1996); Departments of Veterans
Affairs and Housing and Urban Development, and Independent Agencies
Appropriations Act, 1998, Pub. L. No. 105-65, 111 Stat. 1344, 1373
(1997)). Consistent with those statutes, only States and interstate
agencies are eligible for PPGs under this rule. Interstate agencies are
only eligible for PPGs that combine funds from a few existing grant
programs because interstate agencies are only authorized to receive
grants under those few environmental programs. Specifically, interstate
agencies are eligible for PPGs that include funds from the following
programs: Air Pollution Control (section 105 of the Clean Air Act);
Water Pollution Control (section 106 of the Clean Water Act); Wetlands
Development Grants (section 104(b)(3) of the Clean Water Act); and
Water Quality Cooperative Agreements (section 104(b)(3) of the Clean
Water Act). Recipients must be interstate agencies as defined by either
the Clean Water Act, the Clean Air Act, or both, depending on which
funds are included in the PPG. Congress authorized EPA to award PPGs to
interstate agencies, but only as provided in authorizing statutes;
Congress did not intend to change any of the existing program grant
eligibility requirements, including the definition of interstate
agency. The ability of recipients to make subgrants is not affected by
combining funds into a PPG.
Competitive grants and PPGs. States must compete for some of the
environmental programs eligible for a PPG (e.g., Pollution Prevention
State Grants, Wetlands Program Development, and Water Quality
Cooperative Agreements). States must first be selected in the
competitive process in order to include these competitive grants in a
PPG. In some programs, this process may include awarding funds to a
State agency through decisions made during a joint planning process. To
maintain the integrity of the competitive process and ensure that the
work that was the basis for EPA's selection of the proposal is
performed, the State must include the work plan commitments proposed in
the competitive grant application in the PPG work plan. EPA will then
consider the competitive grant work plan commitments in determining the
funding mix of the PPG among EPA's GPRA Goal and Objective
architecture. However, as with other program funds included in a PPG,
the State does not need to account for these funds in accordance with
the funds' original environmental program source. Although a State must
agree to complete the work plan commitments proposed in the competitive
work plan, it need not account for the funds spent on a specific
environmental program or activity. Also, if the time required to
complete work under the competitive

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program is longer than the funding period for the States' PPG, States
must make provisions to carry the activities (and funds, if
appropriate) to subsequent PPG funding periods to complete them.
Administrative flexibility. A primary advantage of PPGs is the
administrative flexibility provided to all PPG recipients. A PPG
requires only a single application, work plan, and budget, regardless
of how many environmental programs provide the funds for the PPG. Once
funds are awarded in a PPG, recipients can direct the funds as needed
to achieve work plan commitments and need not account for funds in
accordance with their original funding program sources. The minimum
cost share required for a PPG is the sum of the cost share amounts
required for each of the environmental program grants combined in the
PPG. If a program has both a match and a maintenance of effort
requirement, the greater of the two amounts will be used to calculate
the minimum cost share attributed to that program. Just as federal
funds in the PPG do not need to be accounted for on the basis of their
original program source, the non-federal share of a PPG may be expended
on work plan commitments without regard to the original source of the
cost share requirement. These administrative features also make it
possible for States to negotiate a work plan that includes cross-media
or innovative strategies for addressing environmental problems.
Programmatic flexibility. If approved by the EPA Regional
Administrator, a PPG can also provide the State with programmatic
flexibility to increase efforts in some program areas where the State's
needs are greater and decrease them in others where the State's needs
are less. In applying for programmatic flexibility, the State agency
must provide a rationale commensurate with the type and amount of
flexibility being proposed, explaining the basis for the State's
priorities and the environmental or other benefits it expects to
achieve. The State must also assure that basic programs are maintained
for all programs combined in the grant. The Regional Administrator and
State agency will negotiate regarding the environmental and other
information that EPA needs to make a decision regarding the application
for flexibility. Information useful in supporting a State's proposal
for programmatic flexibility may already exist, such as in a PPA, a
recent water quality report, or a previous grant evaluation. Such
information should be used to the extent possible to minimize
duplication of effort.
Performance incentives. One goal of the Performance Partnership
Grant program is to find ways to encourage and reward outstanding State
recipient performance. EPA believes this regulation establishes the
foundation for such an incentive program by assuring--
States and EPA's regions agree to measurable outcomes and
outputs when awards are signed in accordance with the agreement on core
measures.
Outcome and output accomplishments are measured and
documented through the joint evaluation process developed and agreed to
by the States and EPA under the rule.
We would expect such a program to be based on each year's
performance evaluation and might include incentive approaches such as--
Using a part of each year's funds to provide incentive
bonuses to States which are most successful in meeting commitments, and
Using a part of each year's funds to provide bonuses to
States which assume primacy/authorization for programs such as drinking
water and hazardous waste.
EPA requested but received no comments on a performance incentive
program. We are not including requirements for a performance incentive
program at this time. Nevertheless, EPA may develop such a program in
the future and may use this rule as a foundation.

VI. Response to Comments

EPA received eight letters commenting on the proposed rule. In
general, the comments supported the rule as written but suggested a few
changes. Specifically:
1. Two commenters expressed concern that Sec. 35.107(a) codifies
EPA guidance, increasing the time period for development of an approved
work plan; further limiting the flexibility given to grantees to tailor
work plans to local needs; and, effectively precluding local air
agencies from negotiating a work plan that targets resources to areas
of greatest need within the community.
Section 35.107(a)(2) requires the Regional Administrator and
applicants to consider the national program guidance in place at the
time of the award in negotiating a work plan, and if an applicant
proposes a work plan that deviates significantly from the goals and
objectives, priorities, or core performance measures in the national
program guidance associated with the proposed activities, then the
Regional Administrator must consult with the appropriate National
Program Manager (NPM) before agreeing to the work plan. The requirement
that the Regional Administrator consult with the relevant NPM before
agreeing to a work plan that significantly deviates from national
program guidance does not require anything of States; it governs EPA's
internal operations. More specifically, Sec. 35.107 is intended to
assure that the appropriate NPM is informed of significant deviations
from the national program guidance and has an opportunity to
participate in the Regional Administrator's decision to agree to a work
plan that deviates significantly from national program guidance. Thus,
for example, the NPM would be informed, and have an opportunity to
consider the implications of a proposed State work plan that does not
include core program activities which EPA would be required by law to
carry out if the State did not do so. Finally, Sec. 35.107(a)(3) states
that applicants should ``base'' grant applications on the national
program guidance in place at the time the application is being
prepared. The purpose of this provision is to clarify that applicants
may use the guidance that is in effect to develop work plans when EPA
is late in issuing current guidance.
2. Several commenters expressed concern about the addition of
Sec. 35.143(c) which provides that the Administrator may award Clean
Air Act section 105 funds on a competitive basis. Section 105(b) of the
Clean Air Act directs the Administrator to award funds upon such terms
and conditions as the Administrator may find are necessary to carry out
the purpose of section 105.
The statute also directs the Administrator to give due
consideration, so far as practicable, to the factors of population, the
extent of the actual or potential air pollution problem, and the
financial need of the respective agencies in establishing regulations
for the award of funds. Working in concert with State and local
agencies over the years, the Agency has found that a limited amount of
funds made available to air pollution control agencies on a competitive
basis for section 105 grants has led to innovative and productive
approaches for the prevention and control of air pollution (e.g.,
market-based programs, mobile source public outreach) which are of
benefit to all air pollution control agencies and applicable in other
areas. Section 35.143(c) simply articulates this long-standing practice
of awarding a limited amount of section 105 funds to air pollution
control agencies based on a competition. It is not intended to signal a
shift on the part of the Agency

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in determining how section 105 resources to State and local agencies
are distributed.
3. Two commenters stated that Sec. 35.268(d)(5) of the Nonpoint
Source Management program regulation requires a level of project
reporting that is not required by the statute (section 319 of the Clean
Water Act) and out of keeping with the spirit of the National
Environmental Performance Partnership System (NEPPS). They recommended
that Sec. 35.268(d)(5) be dropped in its entirety.
EPA disagrees with this recommendation. Section 35.268(d)(5)
requires recipients to include specific information in their work plan
for watershed projects whose costs exceed $50,000. The section 319
program is different from most programs under this rule in several
respects. The program does not implement or support the implementation
of a national regulatory program. Thus, States' use of the current
annual appropriation of $200 million is not guided by a regulatory
framework with objective technical or environmentally based standards
or guidelines. Rather, under section 319(b) of the Clean Water Act,
States are free to implement their programs with or without regulatory
standards, using any combination of technical assistance, financial
assistance, education or demonstration projects, and other techniques
as the States see fit.
In the absence of clear regulations and standards and a reasonable
amount of information on funded projects, it would be very difficult
for EPA and the States to achieve the information transfer goals of
section 319 or to assure that the funds are being used effectively to
achieve program goals. In the early years of the national nonpoint
source program (1990-1996), EPA addressed these difficulties by using a
competitive approach to awarding the State grants. In May, 1996, based
on a cooperative EPA/State development process, EPA published, with
cover letters of endorsement by both the President of the Association
of State and Interstate Water Pollution Control Administrators
(ASIWPCA) and the Chairman of ASIWPCA's Nonpoint Source Task Force, a
new national nonpoint source program and grants guidance which remains
in effect. In this guidance, EPA eliminated the competitive approach
and reduced reporting burdens for States and EPA and the States also
agreed that the States would upgrade their nonpoint source programs.
While agreeing to minimize the grant application burdens for
States, however, the guidance also requires States to include in their
work plan for watershed projects which cost more than $50,000, a brief
(e.g., two or three page) synopsis of the watershed implementation plan
outlining the problems to be addressed, the project's goals and
objectives; and the performance measures or environmental indicators
that will be used to evaluate the results of the project. Section
35.268(d)(5) reflects this EPA-State understanding.
It is EPA's belief that preparing a two or three page summary of
$50,000 projects is a small time burden that will have great benefits
to the public. It will enable citizens, sister State agencies, and
practitioners in any other State to easily learn what projects the
State is implementing, where they are located, and what types of
measures or practices will be implemented. This will facilitate the
involvement of citizens in watershed projects and also the transfer of
technology development to other professionals. These are the hallmarks
of successful State nonpoint source programs. The summaries will also
help assure, in the absence of regulatory benchmarks, that States apply
their funds to their highest-priority environmental needs.
4. One commenter objected to Sec. 35.290(b)(4), stating that the
language will prevent States from using funds for a State radon
proficiency rating program.
It was not EPA's intention to restrict the use of radon funds in
this way. We have clarified the language to make it clear that the
restriction applies to the use of State radon program grant funds for a
federal proficiency rating program, not a State one.
5. One commenter was concerned that EPA awards are often late,
causing States to use non-federal resources to finance federal
activities in the beginning of many fiscal years.
Unfortunately, delays in awards are most often caused by delays in
appropriations, apportionment of funds, and approval of operating
plans. While all of these steps are necessary in order for the EPA to
determine the final amounts that will be available to the States for
grants under the environmental programs, they are not controlled by
EPA. Delays occur most often when EPA begins the fiscal year with
funding under a Continuing Resolution rather than an annual
appropriation act. Under Continuing Resolutions, affected agencies
typically receive limited funds for a short period of time covered by
the Resolution, making it difficult or impossible for EPA regional
offices to fully fund their continuing environmental program grants
until EPA's annual appropriation act is enacted. In response to the
commenter's characterization of the activities performed with EPA grant
funds as ``federal'' activities, EPA would like to clarify that the
principal purpose of these grants is to finance State, local, and
interstate environmental programs, not federal activities.
6. One commenter was concerned that because ``significant'' is not
defined in Sec. 35.114(a), it may lead to inconsistent enforcement.
Section 35.114 requires recipients to obtain the Regional
Administrator's prior written approval before making significant
changes to the grant work plan or budget after the work plan has been
negotiated. Under the Uniform Administrative Regulations for Grant and
Cooperative Agreements to State and local Governments (40 CFR part 31),
recipients are required to get EPA's prior written approval for ``any
revision of the scope or objectives of the project (regardless of
whether there is an associated budget revision requiring prior
approval).'' 40 CFR 31.30(d)(1). EPA believes that, for the continuing
environmental program grants covered by this rule, prior written
approval for changes is necessary only for significant changes, and
that the grantee, with assistance from its EPA project officer, if
necessary, is in the best position to distinguish significant from
insignificant changes in the context of its particular work plan.
Further, we believe that defining the term would reduce management
discretion and flexibility which we believe essential to the
regulation. Accordingly, EPA has decided not to define ``significant''
in Sec. 35.114(a). If there is any question as to whether a post-award
change in the work plan is significant, grantees are encouraged to
consult with the EPA project officer for the grant before making the
change.
7. One commenter questioned whether Sec. 35.145(b) is necessary.
Section 35.145(b) of the proposed rule provided for a waiver of the
match requirement for section 105 grants under the Clean Air Act for up
to three years after the approval of the recipient's Section 502(b)
operating permit program (Title V program). The previous final rule
included a similar provision at 40 CFR 35.205(b). Title V permit fees
cannot be used to meet the cost share requirement of Section 105
grants. Since Title V fees replaced most recipients' existing fee
systems, which had been a significant source of revenue for meeting the
cost share requirements of section 105 grants, some air pollution
control agencies needed additional time to adjust their programs and
meet their match requirements without using Title V fee revenue.
However, all affected air

[[Page 1731]]

pollution control agencies have now received at least interim approval
of their Title V program and those few agencies that needed a waiver
have requested and received it. As there is no need to retain this
provision in the regulations, it has been deleted from the final rule.
8. One commenter suggested that the requirement to identify funding
amounts for each work plan component contained in Sec. 35.107(b)(2)(ii)
appears to undermine the purpose of PPGs, which is to allow flexibility
in shifting funds to address public health and environmental
priorities. The commenter believes targeting the funding amounts during
work plan development restricts a State's ability to shift funds to
address these priorities. EPA is clarifying that Sec. 35.107(b)(2)(ii)
requires recipients to specify the estimated work years and the
estimated funding amounts for each work plan component. EPA believes
that estimating the resources necessary to carry out work plan
components in the planning stages of the grant represents prudent
management practices. However, this requirement will not preclude
recipients from shifting funds prior to award to address environmental
and programmatic needs and priorities. The negotiated work plan
components can be cross-media and supported with any of the funds
combined into the PPG. Nor will this requirement preclude recipients
from making such changes after the grant has been awarded. Recipients
may make changes to grant work plans and budgets in accordance with
Sec. 35.114, which requires prior approval or approval for certain
types of changes, but requires no approval for all other changes.
9. A commenter questioned whether the data gathered from grant
applications and work plans could be correlated in a manner that would
allow EPA to determine the costs of implementing GPRA goals and
objectives.
EPA agrees that this is not the most precise method of determining
the costs of each GPRA subobjective. However, the alternative would be
to place a greater burden on recipients by requiring more complex
recipient accounting systems which is contrary to the simplification
goal of this regulation. EPA does not think that the added benefits of
more exact accounting would justify the additional costs associated
with obtaining such accounting precision.
10. One commenter stated that there is a conflict between the
definition of outcomes and the requirement that work plan commitments
include a time frame for accomplishment.
The definition of outcome notes that outcomes may not necessarily
be achievable during a grant funding period, whereas
Sec. 35.107(b)(2)(iii) (``Work plan requirements'') requires that the
work plan include the work plan commitments (which include outcomes)
and a time frame for their accomplishment. Nothing in
Sec. 35.107(b)(2)(iii) requires that the time frame for accomplishment
of the work plan commitments, including outcomes, be within the funding
period. Therefore, we have decided not to change the definition of
outcome or the requirements for work plans in the final rule.
11. A commenter asked how the requirement of Sec. 35.107(b)(2)(iv)
differs from EPA's annual program reviews.
Section 35.107(b)(2)(iv) requires recipients to specify in their
work plans a performance evaluation process in accordance with
Sec. 35.115 (``Evaluation of Performance''). EPA's annual program
review is the joint evaluation process described in Sec. 35.115.

VII. Other Changes in the Proposed Rule

EPA made several changes to the proposed rule to clarify certain
provisions even though the provisions were not the subject of comments.
1. On May 3, 1999, EPA published an amendment related to grant fund
allotment for its regulations implementing the Water Pollution Control
Program under section 106 of the Clean Water Act (40 CFR 35.252). These
provisions were not included in the proposed regulation due to timing
of the publication. We added the provisions at Sec. 35.162..
2. EPA made editorial changes to the provisions related to the PPG
cost share requirements for the Air Pollution Control Program under
section 105 of the Clean Air Act to assure this rule is consistent with
the Act. There is no substantive change in the final rule, but EPA
believes the editorial changes will help grantees to understand and
comply with the match and maintenance of effort requirements for
section 105 funds when they are included in a PPG and when an air
agency withdraws from the PPG.
EPA added a new provision in the final rule to the section
governing grants for Air Pollution Control Programs under section 105
of the Clean Air Act. Paragraph (b) of Sec. 35.145 (``Maximum federal
share'') provides that ``revenue collected pursuant to a State's Title
V operating permit program may not be used to meet the cost share
requirements of Section 105.'' This is not a new restriction; it was
the basis for the temporary cost share waiver which has been omitted
from the final rule because it is obsolete. This restriction was
discussed at length in the preamble announcing changes to the Section
105 regulations in 1995 (60 FR 366, 368, Jan. 4, 1995).
EPA added two new provisions to the regulation governing grants for
Air Pollution Control Programs to clarify that (1) When expenditure
data for the preceding fiscal year is complete, the Regional
Administrator shall use that information to determine the agency's
compliance with its maintenance of effort requirement (MOE) and (2) if
a state does not meet the MOE requirement, EPA will recover the grant
funds. This is because section 105 explicitly provides that ``[n]o
agency shall receive any grant under this section during any fiscal
year when its expenditures of non-Federal funds for recurrent
expenditures for air pollution control programs will be less than its
expenditures were for such programs during the preceding fiscal year''
(42 U.S.C. Sec. 7405(c)(1)). EPA dos not intend to establish any new
requirements with these changes; these provisions have been added to
the final rule only to clarify the existing MOE requirements.
3. EPA changed the name of the Pollution Prevention program from
Pollution Prevention Incentives for States as identified in the
proposed regulation to Pollution Prevention State Grants to make it
clear that we award several types of Pollution Prevention grants under
section 6605 of the Pollution Prevention Act. Pollution Prevention
Incentive Grants are just one type of grant awarded under section 6605.
4. Finally, while the regulation uses the term ``Regional
Administrator'' throughout, grants subject to these provisions may also
be approved and awarded by officials in EPA Headquarters from time to
time. Accordingly, the final rule has been modified by adding
Sec. 35.101(c) to clarify that this subpart applies and the phrase
``Regional Administrator'' means ``Assistant Administrator'' in the
case of grants awarded from EPA headquarters.

VIII. Implementing GPRA

The Agency has developed an integrated approach for implementing
GPRA, the Chief Financial Officers Act (CFOA), and the Federal
Financial Management Improvement Act of 1996 (FFMIA). These laws
provide EPA with a framework to demonstrate to Congress and the
taxpayers the costs to the federal government of EPA's program

[[Page 1732]]

goals and objectives. The States, by virtue of delegated program
authorities and as recipients of EPA grant funds, play an integral part
in achieving those goals and objectives. Thus EPA's reports of Agency
resources associated with outcomes and outputs will incorporate--at the
GPRA goal, objective, and subobjective level--expenditures incurred in
the form of payments under grants and cooperative agreements . In order
to comply with the Paperwork Reduction Act and the federal government's
general grant regulations, EPA also has a responsibility to minimize
additional administrative reporting requirements and costs borne by the
States. In addition, under current regulations EPA generally may not
impose accounting requirements on States beyond those currently
required by 40 CFR part 31.
EPA will therefore use the budget information that States provide
in grant applications as a basis for linking the Agency's actual
expenditures with outcomes. EPA will be able to rely on State budget
information to determine the costs of EPA's results based outcomes
according to the requirements of this rule:
(1) States provide the program budget information required as part
of the application (see Sec. 35.107(b)(2)(ii));
(2) EPA and the States explicitly define work plan activities,
outcomes, and outputs, as well as the program flexibility contained in
the work plan (see Sec. 35.107(b)(2)(i)); and
(3) States report back on work plan accomplishments (see
Sec. 35.115).
The rule will ensure that these three requirements are met.
Additionally, in accordance with Sec. 35.114(a), recipients may make
significant changes to the work plan commitments only after obtaining
the Regional Administrator's prior written approval. The regional
office, in consultation with the recipient, will document these
revisions including budgeted amounts associated with the revisions. If
necessary, the EPA funding office will make adjustments to original
budget linking work plan components to EPA's Goal and Objective
Architecture. Once these requirements are met, they provide a
reasonable basis for using State grant program budgets to estimate
State contributions to the costs of achieving EPA's result's based
outcomes.
EPA, in consultation with recipients, is responsible for cross-
walking the State budget information (grant application and work plan
data) into the GPRA Goal and Objective architecture. Cross-walk
information is developed by EPA during the work plan/PPA negotiation
process with the State.

IX. Program-Specific Provisions

Requirements applicable to each environmental grant program are
located in Secs. 35.140 through 35.418.
Eligibility. The requirements that recipients must meet to qualify
to receive funds under specific environmental programs are included in
the program-specific provisions (see Secs. 35.140 through 35.418).
Cost share. The required cost share for each environmental program
is identified in the program-specific sections. Some programs do not
have cost share requirements, while others have percentage matching
share requirements, level of effort requirements, or both.

X. Conclusion

This regulation will be the foundation for continuing efforts to
improve partnerships between EPA and its State, interstate, and local
environmental protection partners. All recipients will benefit from the
streamlined and simplified requirements of the regulation. In addition,
it will provide recipients choosing to participate in the PPG program
with programmatic flexibility to better use funds to address
environmental priorities.

Regulatory Flexibility Act

This final rule is not subject to the Regulatory Flexibility Act
(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 notice and comment rulemaking requirements under the
Administrative Procedure Act (APA) or any another statute. Grant award
and administration matters, such as this rule, are explicitly exempt
from the notice and comment requirements of the APA (5 U.S.C.
553(a)(1)). Nor is this rule required to undergo notice and comment
rulemaking under any other statute.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, 2 U.S.C. 1501 et seq., 109 Stat. 48 (1995), establishes
requirements for federal agencies to assess the effects of their
regulatory actions on State, local, and Tribal governments and the
private sector. Under section 202 of the UMRA, EPA generally must
prepare a written statement, including a cost-benefit analysis, for
proposed and final rules with ``federal mandates'' that may result in
expenditures by State, local, and Tribal governments, in the aggregate,
or by the private sector, of $100 million or more in any one year. This
regulation contains no federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, or Tribal
governments or the private sector. The UMRA excludes from the
definitions of ``federal intergovernmental mandate'' and ``federal
private sector mandates'' duties that arise from conditions of federal
assistance.

National Technology Transfer and Advancement Act

Under section 12(d) of the National Technology Transfer and
Advancement Act (NTTAA), EPA is required to use voluntary consensus
standards in its regulatory activities unless to do so would be
inconsistent with applicable law or otherwise impracticable. Voluntary
consensus standards are technical standards (e.g., materials
specifications, test methods, sampling procedures, business practices,
etc.) that are developed or adopted by voluntary consensus standards
bodies. Where available and potentially applicable voluntary consensus
standards are not used, the Act requires EPA to provide Congress,
through the Office of Management and Budget, an explanation of the
reasons for not using such standards.
This rule does not involve any technical standards. Therefore, EPA
did not consider the use of any voluntary consensus standards.

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 an environmental health or safety risk that EPA
has reason to believe may have a disproportionate effect on children.
If the regulatory action meets both criteria, EPA must evaluate the
environmental health or safety effects of the planned rule on children;
and explain why the planned regulation is preferable to other
potentially effective and reasonably feasible alternatives considered
by the Agency.
EPA interprets E.O. 13045 as applying only to those regulatory
actions that are based on health or safety risks, such that the
analysis required under section 5-501 of the Order has the potential to
influence the regulation. This rule is not subject to E.O. 13045
because it does not establish an environmental standard intended to
mitigate health or safety risks.

[[Page 1733]]

Executive Order 12866

Under Executive Order 12866, (58 FR 51735 (October 4, 1993)) a
significant regulatory action is subject to OMB review and the
requirements of the Executive Order. The Order defines ``significant
regulatory action'' as one that is likely to result in a rule that may:
(1) Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or Tribal governments or
communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
It has been determined that this rule is a ``significant regulatory
action'' under the terms of Executive Order 12866 because the
Performance Partnership Grant authority is a new type of grant
authority and therefore raises novel policy issues. As such, this
action was submitted to the Office of Management and Budget (OMB) for
review. Changes made in response to OMB suggestions and recommendations
will be documented in the public record.

Paperwork Reduction Act

In keeping with the requirements of the Paperwork Reduction Act
(PRA), as amended, 44 U.S.C. 3501 et seq., the information collection
requirements contained in this rule have been approved by OMB under
information collection request number 0938.06 (OMB Control Number 2030-
0020) and Quality Assurance Specifications and Requirements information
request number 0866.05 (OMB Control Number 2080-0033). This rule does
not contain any collection of information requirements beyond those
already approved. Since this action imposes no new or additional
information collection, reporting or record-keeping requirements
subject to the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., no
information request has been or will be submitted to the Office of
Management and Budget for review.

Executive Order 13084

Under Executive Order 13084, Consultation and Coordination with
Indian Tribal Governments, EPA may not issue a regulation that is not
required by statute, that significantly or uniquely affects the
communities of Indian Tribal governments, and that imposes substantial
direct compliance costs on those communities, unless the federal
government provides the funds necessary to pay the direct compliance
costs incurred by the Tribal governments, or EPA consults with those
governments. If EPA complies by consulting, Executive Order 13084
requires EPA to provide to the Office of Management and Budget, in a
separately identified section of the preamble to the rule, a
description of the extent of EPA's prior consultation with
representatives of affected Tribal governments, a summary of the nature
of their concerns, and a statement supporting the need to issue the
regulation. In addition, Executive Order 13084 requires EPA to develop
an effective process permitting elected and other representatives of
Indian Tribal governments ``to provide meaningful and timely input in
the development of regulatory policies on matters that significantly or
uniquely affect their communities.''
This rule does not significantly or uniquely affect the communities
of Indian Tribal governments, because environmental program grants to
Tribes and intertribal consortia are not covered in this rule; they are
covered under 40 CFR part 35, subpart B, published elsewhere in this
Federal Register. Accordingly, the requirements of section 3(b) of
Executive Order 13084 do not apply.

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 section 6 of 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 law, unless
the Agency consults with State and local officials early in the process
of developing the proposed regulation.
This final rule does not have federalism implications. 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. Thus, the requirements of
section 6 of the Executive Order do not apply to this rule. Further,
because this rule regulates the use of federal financial assistance, it
will not impose substantial direct compliance costs on States. Although
section 6 of Executive Order 13132 does not apply to this rule, EPA did
consult with State and local officials in developing the proposed rule
and all States and local governments have had an opportunity to comment
on the proposed rule after it was published. Before promulgating this
final rule, EPA considered all of the comments it received regarding
this rule.

Congressional Review Act

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2). This rule will be effective thirty days after publication in
the Federal Register.

List of Subjects

40 CFR Part 35

Environmental protection, Air pollution control, Coastal zone,
Grant programs-environmental protection, Grant programs-Indians,
Hazardous waste, Indians, Intergovernmental relations, Pesticides and
pests, Reporting and recordkeeping requirements, Superfund, Waste

[[Page 1734]]

treatment and disposal, Water pollution control, Water supply.

40 CFR Part 745

Environmental protection, Administrative practice and procedures,
Hazardous substances.

Dated: December 28, 2000.
Carol M. Browner,
Administrator.

For the reasons set forth in this preamble, title 40, Chapter I of
the Code of Federal Regulations is to be amended as follows:

PART 35--STATE AND LOCAL ASSISTANCE

1. The authority citation for part 35 is revised to read as
follows:

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

2. Revise Sec. 35.001 to read as follows:

Sec. 35.001 Applicability.

This part codifies policies and procedures for financial assistance
awarded by the Environmental Protection Agency (EPA) to State,
interstate, and local agencies, Indian Tribes and Intertribal Consortia
for pollution abatement and control programs. These provisions
supplement the EPA general assistance regulations in 40 CFR part 31.

3. Subpart A is revised to read as follows:

Subpart A--Environmental Program Grants

Sec.

General

35.100 Purpose of the subpart.
35.101 Environmental programs covered by the subpart.
35.102 Definitions of terms.

Preparing an Application

35.104 Components of a complete application.
35.105 Time frame for submitting an application.
35.107 Work plans.
35.108 Funding period.
35.109 Consolidated grants.

EPA Action on Application

35.110 Time frame for EPA action.
35.111 Criteria for approving an application.
35.112 Factors considered in determining award amount.
35.113 Reimbursement for pre-award costs.

Post-Award Requirements

35.114 Amendments and other changes.
35.115 Evaluation of performance.
35.116 Direct implementation.
35.117 Unused funds.
35.118 Unexpended balances.

Performance Partnership Grants

35.130 Purpose of Performance Partnership Grants.
35.132 Requirements summary.
35.133 Programs eligible for inclusion.
35.134 Eligible recipients.
35.135 Activities eligible for funding.
35.136 Cost share requirements.
35.137 Application requirements.
35.138 Competitive grants.

Air Pollution Control (Section 105)

35.140 Purpose.
35.141 Definitions.
35.143 Allotment.
35.145 Maximum federal share.
35.146 Maintenance of effort.
35.147 Minimum cost share for a Performance Partnership Grant.
35.148 Award limitations.

Water Pollution Control (Section 106)

35.160 Purpose.
35.161 Definition.
35.162 Basis for allotment.
35.165 Maintenance of effort.
35.168 Award limitations.

Public Water System Supervision (Section 1443(a))

35.170 Purpose.
35.172 Allotment.
35.175 Maximum federal share.
35.178 Award limitations.

Underground Water Source Protection (Section 1443(b))

35.190 Purpose.
35.192 Basis for allotment.
35.195 Maximum federal share.
35.198 Award limitation.

Hazardous Waste Management (Section 3011(a))

35.210 Purpose.
35.212 Basis for allotment.
35.215 Maximum federal share.
35.218 Award limitation.

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

35.230 Purpose.
35.232 Basis for allotment.
35.235 Maximum federal share.

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

35.240 Purpose.
35.242 Basis for allotment.
35.245 Maximum federal share.

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

35.250 Purpose.
35.251 Basis for allotment.
35.252 Maximum federal share.

Nonpoint Source Management (Section 319(h))

35.260 Purpose.
35.265 Maximum federal share.
35.266 Maintenance of effort.
35.268 Award limitations.

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

35.270 Purpose.
35.272 Funding coordination.

State Indoor Radon Grants (Section 306)

35.290 Purpose.
35.292 Basis for allotment.
35.295 Maximum federal share.
35.298 Award limitations.

Toxic Substances Compliance Monitoring (Section 28 )

35.310 Purpose.
35.312 Competitive process.
35.315 Maximum federal share.
35.318 Award limitation.

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

35.330 Purpose.
35.332 Basis for allotment.
35.335 Maximum federal share.

Pollution Prevention State Grants (Section 6605)

35.340 Purpose.
35.342 Competitive process.
35.343 Definitions.
35.345 Eligible applicants.
35.348 Award limitation.
35.349 Maximum federal share.

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

35.360 Purpose.
35.362 Competitive process.
35.364 Maximum federal share.

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

35.380 Purpose.
35.382 Competitive process.
35.385 Maximum federal share.

State Administration (Section 205(g))

35.400 Purpose.
35.402 Allotment.
35.405 Maintenance of effort.
35.408 Award limitations.

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

35.410 Purpose.
35.412 Allotment.
35.415 Maximum federal share.
35.418 Award limitations.

Subpart A--Environmental Program Grants

Authority: 42 U.S.C. 7401 et seq.; 33 U.S.C. 1251 et seq.; 42
U.S.C. 300f et seq.; 42 U.S.C. 6901 et seq.; 7 U.S.C. 136 et seq.;
15 U.S.C. 2601 et seq.; 42 U.S.C. 13101 et seq.; Pub. L. 104-134,
110 Stat. 1321, 1321-299 (1996); Pub. L. 105-65, 111 Stat. 1344,
1373 (1997).

General

Sec. 35.100 Purpose of the subpart.

This subpart establishes administrative requirements for all grants
awarded to State, interstate, and local agencies and other entities for
the environmental programs listed in Sec. 35.101. This subpart
supplements requirements in EPA's general grant regulations found at 40
CFR parts 30 and 31. Sections 35.100--35.118 contain administrative
requirements that apply

[[Page 1735]]

to all environmental program grants included in this subpart. Sections
35.130-35.418 contain requirements that apply to specified
environmental program grants. Many of these environmental programs also
have programmatic and technical requirements that are published
elsewhere in the Code of Federal Regulations.

Sec. 35.101 Environmental programs covered by the subpart.

(a) The requirements in this subpart apply to all grants awarded
for the following programs:
(1) Performance partnership grants (Omnibus Consolidated
Rescissions and Appropriations Act of 1996, Pub. Law 104-134, 110 Stat.
1321, 1321-299 (1996) and Departments of Veterans Affairs and Housing
and Urban Development, and Independent Agencies Appropriations Act,
1998, Pub. Law 105-65, 111 Stat. 1344, 1373 (1997)).
(2) Air pollution control (section 105 of the Clean Air Act).
(3) Water pollution control (section 106 of the Clean Water Act).
(4) Public water system supervision (section 1443(a) of the Safe
Drinking Water Act).
(5) Underground water source protection (section 1443(b) of the
Safe Drinking Water Act).
(6) Hazardous waste management (section 3011(a) of the Solid Waste
Disposal Act).
(7) Pesticide cooperative enforcement (section 23(a)(1) of the
Federal Insecticide, Fungicide, and Rodenticide Act).
(8) Pesticide applicator certification and training (section
23(a)(2) of the Federal Insecticide, Fungicide, and Rodenticide Act).
(9) Pesticide program implementation (section 23(a)(1) of the
Federal Insecticide, Fungicide, and Rodenticide Act).
(10) Nonpoint source management (sections 205(j)(5) and 319(h) of
the Clean Water Act).
(11) Lead-based paint program (section 404(g) of the Toxic
Substances Control Act).
(12) State indoor radon grants (section 306 of the Toxic Substances
Control Act).
(13) Toxic substances compliance monitoring (section 28 of the
Toxic Substances Control Act).
(14) State underground storage tanks (section 2007(f)(2) of the
Solid Waste Disposal Act).
(15) Pollution prevention state grants (section 6605 of the
Pollution Prevention Act of 1990).
(16) Water quality cooperative agreements (section 104(b)(3) of the
Clean Water Act).
(17) Wetlands development grants program (section 104(b)(3) of the
Clean Water Act).
(18) State administration of construction grant, permit, and
planning programs (section 205(g) of the Clean Water Act).
(19) Water quality management planning (section 205(j)(2) of the
Clean Water Act).
(b) Unless otherwise prohibited by statute or regulation, the
requirements in Sec. 35.100 through Sec. 35.118 of this subpart also
apply to grants under environmental programs established after this
subpart becomes effective if specified in Agency guidance for such
programs.
(c) In the event a grant is awarded from EPA headquarters for one
of the programs listed in paragraph (a) of this section, this subpart
shall apply and the term ``Regional Administrator'' shall mean
``Assistant Administrator'.

Sec. 35.102 Definitions of terms.

Terms are defined as follows when they are used in this subpart.
Allotment. EPA's calculation of the funds that may be available to
an eligible recipient for an environmental program grant. An allotment
is not an entitlement.
Consolidated grant. A single grant made to a recipient
consolidating funds from more than one environmental grant program.
After the award is made, recipients must account for grant funds in
accordance with the funds' original environmental program sources.
Consolidated grants are not Performance Partnership Grants.
Funding period. The period of time specified in the grant agreement
during which the recipient may expend or obligate funds for the
purposes set forth in the agreement.
Environmental program. A program for which EPA awards grants under
the authorities listed in Sec. 35.101. The grants are subject to the
requirements of this subpart.
National program guidance. Guidance issued by EPA's National
Program Managers for establishing and maintaining effective
environmental programs. This guidance establishes national goals,
objectives, and priorities as well as the core performance measures and
other information to be used in monitoring progress. The guidance may
also set out specific environmental strategies, criteria for evaluating
programs, and other elements of program implementation.
Outcome. The environmental result, effect, or consequence that will
occur from carrying out an environmental program or activity that is
related to an environmental or programmatic goal or objective. Outcomes
must be quantitative, and they may not necessarily be achievable during
a grant funding period. See ``output.''
Output. An environmental activity or effort and associated work
products related to an environmental goal or objective that will be
produced or provided over a period of time or by a specified date.
Outputs may be quantitative or qualitative but must be measurable
during a grant funding period. See ``outcome.''
Performance Partnership Agreement. A negotiated agreement signed by
the EPA Regional Administrator and an appropriate official of a State
agency and designated as a Performance Partnership Agreement. Such
agreements typically set out jointly developed goals, objectives, and
priorities; the strategies to be used in meeting them; the roles and
responsibilities of the State and EPA; and the measures to be used in
assessing progress. A Performance Partnership Agreement may be used as
all or part of a work plan for a grant if it meets the requirements for
a work plan set out in Sec. 35.107.
Performance Partnership Grant. A single grant combining funds from
more than one environmental program. A Performance Partnership Grant
may provide for administrative savings or programmatic flexibility to
direct grant resources where they are most needed to address public
health and environmental priorities (see also Sec. 35.130). Each
Performance Partnership Grant has a single, integrated budget and
recipients do not need to account for grant funds in accordance with
the funds' original environmental program sources.
Planning target. The amount of funds that the Regional
Administrator suggests a grant applicant consider in developing its
application, including the work plan, for an environmental program.
Regional supplemental guidance. Guidance to environmental program
applicants prepared by the Regional Administrator, based on the
national program guidance and specific regional and applicant
circumstances, for use in preparing a grant application.
Work plan commitments. The outputs and outcomes associated with
each work plan component, as established in the grant agreement.
Work plan component. A negotiated set or group of work plan
commitments established in the grant agreement. A

[[Page 1736]]

work plan may have one or more work plan components.

Preparing an Application

Sec. 35.104 Components of a complete application.

A complete application for an environmental program must:
(a) Meet the requirements in 40 CFR part 31, subpart B;
(b) Include a proposed work plan (Sec. 35.107); and
(c) Specify the environmental program and the amount of funds
requested.

Sec. 35.105 Time frame for submitting an application.

An applicant should submit a complete application to EPA at least
60 days before the beginning of the proposed funding period.

Sec. 35.107 Work plans.

(a) Bases for negotiating work plans. The work plan is negotiated
between the applicant and the Regional Administrator and reflects
consideration of national, regional, and State environmental and
programmatic needs and priorities.
(1) Negotiation considerations. In negotiating the work plan, the
Regional Administrator and applicant will consider such factors as
national program guidance; any regional supplemental guidance; goals,
objectives, and priorities proposed by the applicant; other jointly
identified needs or priorities; and the planning target.
(2) National program guidance. If an applicant proposes a work plan
that differs significantly from the goals and objectives, priorities,
or core performance measures in the national program guidance
associated with the proposed activities, the Regional Administrator
must consult with the appropriate National Program Manager before
agreeing to the work plan.
(3) Use of existing guidance. An applicant should base the grant
application on the national program guidance in place at the time the
application is being prepared.
(b) Work plan requirements. (1) The work plan is the basis for the
management and evaluation of performance under the grant agreement.
(2) An approvable work plan must specify:
(i) The work plan components to be funded under the grant;
(ii) The estimated work years and the estimated funding amounts for
each work plan component;
(iii) The work plan commitments for each work plan component and a
time frame for their accomplishment;
(iv) A performance evaluation process and reporting schedule in
accordance with Sec. 35.115 of this subpart; and
(v) The roles and responsibilities of the recipient and EPA in
carrying out the work plan commitments.
(3) The work plan must be consistent with applicable federal
statutes; regulations; circulars; executive orders; and EPA
delegations, approvals, or authorizations.
(c) Performance Partnership Agreement as work plan. An applicant
may use a Performance Partnership Agreement or a portion of a
Performance Partnership Agreement as the work plan for an environmental
program grant if the portions of the Performance Partnership Agreement
that serve as all or part of the grant work plan:
(1) Are clearly identified and distinguished from other portions of
the Performance Partnership Agreement; and
(2) Meet the requirements in Sec. 35.107(b).

Sec. 35.108 Funding period.

The Regional Administrator and applicant may negotiate the length
of the funding period for environmental program grants, subject to
limitations in appropriations acts.

Sec. 35.109 Consolidated grants.

(a) Any applicant eligible to receive funds from more than one
environmental program may submit an application for a consolidated
grant. For consolidated grants, an applicant prepares a single budget
and work plan covering all of the environmental programs included in
the application. The consolidated budget must identify each
environmental program to be included, the amount of each program's
funds, and the extent to which each program's funds support each work
plan component. Recipients of consolidated grants must account for
grant funds in accordance with the funds' environmental program
sources; funds included in a consolidated grant from a particular
environmental program may be used only for that program.
(b) Insular areas that choose to consolidate environmental program
grants may be exempted by the Regional Administrator from requirements
of this subpart in accordance with 48 U.S.C. 1469a.

EPA Action on Application

Sec. 35.110 Time frame for EPA action.

The Regional Administrator will review a complete application and
either approve, conditionally approve, or disapprove it within 60 days
of receipt. This period may be extended by mutual agreement between EPA
and the applicant. The Regional Administrator will award the funds for
approved or conditionally approved applications when the funds are
available.

Sec. 35.111 Criteria for approving an application.

(a) The Regional Administrator may approve an application upon
determining that:
(1) The application meets the requirements of this subpart and 40
CFR part 31;
(2) The application meets the requirements of all applicable
federal statutes; regulations; circulars; executive orders; and
delegations, approvals, or authorizations;
(3) The proposed work plan complies with the requirements of
Sec. 35.107; and
(4) The achievement of the proposed work plan is feasible,
considering such factors as the applicant's existing circumstances,
past performance, program authority, organization, resources, and
procedures.
(b) If the Regional Administrator finds the application does not
satisfy the criteria in paragraph (a) of this section, the Regional
Administrator may either:
(1) Conditionally approve the application if only minor changes are
required, with grant conditions necessary to ensure compliance with the
criteria, or
(2) Disapprove the application in writing.

Sec. 35.112 Factors considered in determining award amount.

(a) After approving an application under Sec. 35.111, the Regional
Administrator will consider such factors as the applicant's allotment,
the extent to which the proposed work plan is consistent with EPA
guidance and mutually agreed upon priorities, and the anticipated cost
of the work plan relative to the proposed work plan components, to
determine the amount of funds to be awarded.
(b) If the Regional Administrator finds the requested level of
funding is not justified or the work plan does not comply with the
requirements of Sec. 35.107, the Regional Administrator will attempt to
negotiate a resolution of the issues with the applicant before
determining the award amount. The Regional Administrator may determine
that the award amount will be less than the amount allotted or
requested.

Sec. 35.113 Reimbursement for pre-award costs.

(a) Notwithstanding the requirements of 40 CFR 31.23(a) and OMB
cost principles, EPA may reimburse recipients for pre-award costs
incurred

[[Page 1737]]

from the beginning of the funding period established in the grant
agreement if such costs would have been allowable if incurred after the
award and the recipients submitted complete grant applications before
the beginning of the budget period. Such costs must be identified in
the grant application EPA approves.
(b) The applicant incurs pre-award costs at its own risk. EPA is
under no obligation to reimburse such costs unless they are included in
an approved grant award.

Post-Award Requirements

Sec. 35.114 Amendments and other changes.

The provisions of 40 CFR 31.30 do not apply to environmental
program grants awarded under this subpart. The following provisions
govern amendments and other changes to grant work plans and budgets
after the work plan is negotiated and a grant awarded.
(a) Changes requiring prior approval. Recipients may make
significant changes in work plan commitments only after obtaining the
Regional Administrator's prior written approval. EPA, in consultation
with the recipient, will document these revisions including budgeted
amounts associated with the revisions.
(b) Changes requiring approval. Recipients must request, in
writing, grant amendments for changes requiring increases in
environmental program grant amounts and extensions of the funding
period. Recipients may begin implementing a change before the amendment
has been approved by EPA, but do so at their own risk. If EPA approves
the change, EPA will issue a grant amendment. EPA will notify the
recipient in writing if the change is disapproved.
(c) Changes not requiring approval. Other than those situations
described in paragraphs (a) and (b) of this section, recipients do not
need to obtain approval for changes, including changes in grant work
plans, budgets, or other components of grant agreements, unless the
Regional Administrator determines approval requirements should be
imposed on a specific recipient for a specified period of time.
(d) OMB cost principles. The Regional Administrator may waive in
writing approval requirements for specific recipients and costs
contained in OMB cost principles.
(e) Changes in consolidated grants. Recipients of consolidated
grants under Sec. 35.109 may not transfer funds among environmental
programs.
(f) Subgrants. Subgrantees must request required approvals in
writing from the recipient and the recipient shall approve or
disapprove the request in writing. A recipient will not approve any
work plan or budget revision which is inconsistent with the purpose or
terms and conditions of the federal grant to the recipient. If the
revision requested by the subgrantee would result in a significant
change to the recipient's approved grant which requires EPA approval,
the recipient will obtain EPA's approval before approving the
subgrantee's request.

Sec. 35.115 Evaluation of performance.

(a) Joint evaluation process. The applicant and the Regional
Administrator will develop a process for jointly evaluating and
reporting progress and accomplishments under the work plan. A
description of the evaluation process and a reporting schedule must be
included in the work plan (see Sec. 35.107(b)(2)(iv)). The schedule
must require the recipient to report at least annually and must satisfy
the requirements for progress reporting under 40 CFR 31.40(b).
(b) Elements of the evaluation process. The evaluation process must
provide for:
(1) A discussion of accomplishments as measured against work plan
commitments;
(2) A discussion of the cumulative effectiveness of the work
performed under all work plan components;
(3) A discussion of existing and potential problem areas; and
(4) Suggestions for improvement, including, where feasible,
schedules for making improvements.
(c) Resolution of issues. If the joint evaluation reveals that the
recipient has not made sufficient progress under the work plan, the
Regional Administrator and the recipient will negotiate a resolution
that addresses the issues. If the issues cannot be resolved through
negotiation, the Regional Administrator may take appropriate measures
under 40 CFR 31.43. The recipient may request review of the Regional
Administrator's decision under the dispute processes in 40 CFR 31.70.
(d) Evaluation reports. The Regional Administrator will ensure that
the required evaluations are performed according to the negotiated
schedule and that copies of evaluation reports are placed in the
official files and provided to the recipient.

Sec. 35.116 Direct implementation.

If funds remain in a State's allotment for an environmental program
grant either after grants for that environmental program have been made
or because no grant was made, the Regional Administrator may, subject
to any limitations contained in appropriation acts, use all or part of
the funds to support a federal program required by law in the State in
the absence of an acceptable State program.

Sec. 35.117 Unused funds.

If funds for an environmental program grant remain in a State's
allotment either after an initial environmental program grant has been
made or because no grant was made, and the Regional Administrator does
not use the funds under Sec. 35.116 of this subpart, the Regional
Administrator may award the funds to any eligible recipient in the
region, including the same State or an Indian Tribe or Tribal
consortium, for the same environmental program or for a Performance
Partnership Grant, subject to any limitations in appropriation acts.

Sec. 35.118 Unexpended balances.

Subject to any relevant provisions of law, if a recipient's
Financial Status Report shows unexpended balances, the Regional
Administrator will deobligate the unexpended balances and make them
available, to either the same recipient in the same region or other
eligible recipients, including Indian Tribes and Tribal Consortia, for
environmental program grants.

Performance Partnership Grants

Sec. 35.130 Purpose of Performance Partnership Grants.

(a) Purpose of section. Sections 35.130 through 35.138 govern
Performance Partnership Grants to States and interstate agencies
authorized in the Omnibus Consolidated Rescissions and Appropriations
Act of 1996, (Pub. L. 104-134; 110 Stat. 1321, 1321-299 (1996)) and the
Departments of Veterans Affairs and Housing and Urban Development, and
Independent Agencies Appropriations Act, 1998, (Pub. L. 105-65; 111
Stat. 1344, 1373 (1997)).
(b) Purpose of program. Performance Partnership Grants enable
States and interstate agencies to combine funds from more than one
environmental program grant into a single grant with a single budget.
Recipients do not need to account for Performance Partnership Grant
funds in accordance with the funds' original environmental program
sources; they need only account for total Performance Partnership Grant
expenditures subject to the requirements of this subpart. The
Performance Partnership Grant program is designed to:
(1) Strengthen partnerships between EPA and State and interstate
agencies

[[Page 1738]]

through joint planning and priority-setting and better deployment of
resources;
(2) Provide State and interstate agencies with flexibility to
direct resources where they are most needed to address environmental
and public health priorities;
(3) Link program activities more effectively with environmental and
public health goals and program outcomes;
(4) Foster development and implementation of innovative approaches
such as pollution prevention, ecosystem management, and community-based
environmental protection strategies; and
(5) Provide savings by streamlining administrative requirements.

Sec. 35.132 Requirements summary.

Applicants and recipients of Performance Partnership Grants must
meet:
(a) The requirements in Secs. 35.100 to 35.118, which apply to all
environmental program grants, including Performance Partnership Grants;
and
(b) The requirements in Secs. 35.130 to 35.138, which apply only to
Performance Partnership Grants.

Sec. 35.133 Programs eligible for inclusion.

(a) Eligible programs. Except as provided in paragraph (b) of this
section, the environmental programs eligible, in accordance with
appropriation acts, for inclusion in a Performance Partnership Grant
are listed in Sec. 35.101(a)(2) through (17). (Funds available from the
section 205(g) State Administration Grants program (Sec. 35.100(b)(18))
and the Water Quality Management Planning Grant program
(Sec. 35.100(b)(19)) may not be included in Performance Partnership
Grants.)
(b) Changes in eligible programs. The Administrator may, in
guidance or regulation, describe subsequent additions, deletions, or
changes to the list of environmental programs eligible for inclusion in
Performance Partnership Grants.

Sec. 35.134 Eligible recipients.

(a) Eligible agencies. All State agencies (including environmental,
health, agriculture, and other agencies) and interstate agencies
eligible to receive funds from more than one environmental program may
receive Performance Partnership Grants
(b) Designated agency. A State agency must be designated by a
Governor, State legislature, or other authorized State process to
receive grants under each of the environmental programs to be combined
in the Performance Partnership Grant. If it is not the designated
agency for a particular grant program to be included in the Performance
Partnership Grant, the State agency must have an agreement with the
State agency that does have the designation regarding how the funds
will be shared between the agencies.
(c) Programmatic requirements. In order to include funds from an
environmental program grant listed in Sec. 35.101 of this subpart in a
Performance Partnership Grant, applicants must meet the requirements
for award of each of the environmental programs from which funds are
combined in the agency's Performance Partnership Grant, except the
requirements at Secs. 35.268(b) and (c), 35.272, and 35.298 (c), (d),
(e), and (g). These requirements can be found in this regulation
beginning at Sec. 35.140.

Sec. 35.135 Activities eligible for funding.

(a) A recipient may use a Performance Partnership Grant, subject to
the requirements of paragraph (c) of this section, to fund any activity
that is eligible for funding under at least one of the environmental
programs from which funds are combined into the grant.
(b) A recipient may also use a Performance Partnership Grant to
fund multi-media activities that are eligible in accordance with
paragraph (a) of this section and have been agreed to by the Regional
Administrator. Such activities may include multi-media permitting and
enforcement and pollution prevention, ecosystem management, community-
based environmental protection, and other innovative approaches.
(c) A recipient may not use a Performance Partnership Grant to fund
activities eligible only under a specific environmental program grant
unless some or all of the recipient's allotted funds for that program
have been included in the Performance Partnership Grant.

Sec. 35.136 Cost share requirements.

(a) An applicant for a Performance Partnership Grant must provide a
non-federal cost share that is not less than the sum of the minimum
non-federal cost share required under each of the environmental
programs that are combined in the Performance Partnership Grant. Cost
share requirements for the individual environmental programs are
described in Secs. 35.140 to 35.418.
(b) When an environmental program included in the Performance
Partnership Grant has both a matching and maintenance of effort
requirement, the greater of the two amounts will be used to calculate
the minimum cost share attributed to that environmental program.

Sec. 35.135 Application requirements.

(a) An application for a Performance Partnership Grant must
contain:
(1) A list of the environmental programs and the amount of funds
from each program to be combined in the Performance Partnership Grant;
(2) A consolidated budget;
(3) A consolidated work plan that addresses each program being
combined in the grant and that meets the requirements of Sec. 35.107;
and,
(4) A rationale, commensurate with the extent of any programmatic
flexibility (i.e., increased effort in some programs and decreased
effort in others) indicated in the work plan, that explains the basis
for the applicant's priorities, the expected environmental or other
benefits to be achieved, and the anticipated impact on any
environmental programs or program areas proposed for reduced effort.
(b) The applicant and the Regional Administrator will negotiate
regarding the information necessary to support the rationale for
programmatic flexibility required in paragraph (a)(4) of this section.
The rationale may be supported by information from a variety of
sources, including a Performance Partnership Agreement or comparable
negotiated document, the evaluation report required in Sec. 35.125, and
other environmental and programmatic data sources.
(c) A State agency seeking programmatic flexibility is encouraged
to include a description of efforts to involve the public in developing
the State agency's priorities.

Sec. 35.138 Competitive grants.

(a) Some environmental program grants are awarded through a
competitive process. An applicant and the Regional Administrator may
agree to add funds available for a competitive grant to a Performance
Partnership Grant. If this is done, the work plan commitments that
would have been included in the competitive grant must be included in
the Performance Partnership Grant work plan. After the funds have been
added to the Performance Partnership Grant, the recipient does not need
to account for these funds in accordance with the funds' original
environmental program source.
(b) If the projected completion date for competitive grant work
plan commitments added to a Performance Partnership Grant is after the
end of the

[[Page 1739]]

Performance Partnership Grant funding period, the Regional
Administrator and the applicant will agree in writing as to how the
work plan commitments will be carried over into future work plans.

Air Pollution Control (Section 105)

Sec. 35.140 Purpose.

(a) Purpose of section. Sections 35.140 through 35.148 govern Air
Pollution Control Grants to State, local, interstate, or intermunicipal
air pollution control agencies (as defined in section 302(b) of the
Clean Air Act) authorized under section 105 of the Act.
(b) Purpose of program. Air Pollution Control Grants are awarded to
administer programs that prevent and control air pollution or implement
national ambient air quality standards.
(c) Program regulations. Refer to 40 CFR parts 49, 50, 51, 52, 58,
60, 61, 62, and 81 for associated program regulations.

Sec. 35.141 Definitions.

In addition to the definitions in Sec. 35.102, the following
definitions apply to the Clean Air Act's section 105 grant program:
Implementing means any activity related to planning, developing,
establishing, carrying-out, improving, or maintaining programs for the
prevention and control of air pollution or implementation of national
primary and secondary ambient air quality standards.
Nonrecurrent expenditures are those expenditures which are shown by
the recipient to be of a nonrepetitive, unusual, or singular nature
that would not reasonably be expected to recur in the foreseeable
future. Costs categorized as nonrecurrent must be approved in the grant
agreement or an amendment thereto.
Recurrent expenditures are those expenses associated with the
activities of a continuing environmental program. All expenditures are
considered recurrent unless justified by the applicant as nonrecurrent
and approved as such in the grant award or an amendment thereto.

Sec. 35.143 Allotment.

(a) The Administrator allots air pollution control funds under
section 105 of the Clean Air Act based on a number of factors,
including:
(1) Population;
(2) The extent of actual or potential air pollution problems; and
(3) The financial need of each agency.
(b) The Regional Administrator shall allot to a State not less than
one-half of one percent nor more than 10 percent of the annual section
105 grant appropriation.
(c) The Administrator may award funds on a competitive basis.

Sec. 35.145 Maximum federal share.

(a) The Regional Administrator may provide air pollution control
agencies, as defined in section 302(b) of the Clean Air Act, up to
three-fifths of the approved costs of implementing programs for the
prevention and control of air pollution or implementing national
primary and secondary ambient air quality standards.
(b) Revenue collected pursuant to a State's Title V operating
permit program may not be used to meet the cost share requirements of
section 105.

Sec. 35.146 Maintenance of effort.

(a) To receive funds under section 105, an agency must expend
annually, for recurrent section 105 program expenditures, an amount of
non-federal funds at least equal to such expenditures during the
preceding fiscal year.
(b) In order to award grants in a timely manner each fiscal year,
the Regional Administrator shall compare an agency's proposed
expenditure level, as detailed in the agency's grant application, to
that agency's expenditure level in the second preceding fiscal year.
When expenditure data for the preceding fiscal year is complete, the
Regional Administrator shall use this information to determine the
agency's compliance with its maintenance of effort requirement.
(c) If the expenditure data for the preceding fiscal year shows
that an agency did not meet the requirements of Sec. 35.146, the
Regional Administrator will take action to recover the grant funds for
the year in which the agency did not maintain its level of effort.
(d) The Regional Administrator may grant an exception to
Sec. 35.146(a) if, after notice and opportunity for a public hearing,
the Regional Administrator determines that a reduction in expenditure
is attributable to a non-selective reduction of the programs of all
executive branch agencies of the applicable unit of government.
(e) The Regional Administrator will not award section 105 funds
unless the applicant provides assurance that the grant will not
supplant non-federal funds that would otherwise be available for
maintaining the section 105 program.

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

(a) To calculate the cost share for a Performance Partnership Grant
(see Secs. 35.130 through 35.138) in the initial and subsequent years
that it includes section 105 funds, the minimum cost share contribution
for the section 105 program will be the match requirement set forth in
Sec. 35.145, or the maintenance of effort established under Sec. 35.146
in the first year that the section 105 grant is included in a
Performance Partnership Grant, whichever is greater.
(b) If an air pollution control agency includes its section 105 air
program funding in a Performance Partnership Grant and subsequently
withdraws that program from the grant:
(1) The required maintenance of effort amount for the section 105
program for the first year after the program is withdrawn will be equal
to the maintenance of effort amount required in the year the agency
included the section 105 program in the Performance Partnership Grant.
(2) The maximum federal share for the section 105 program in the
first and subsequent years after the grant is withdrawn may not be more
than three-fifths of the approved cost of the program.
(c) The Regional Administrator may approve an exception from
paragraph (b) of this section upon determining that exceptional
circumstances justify a reduction in the maintenance of effort,
including when an air pollution control agency reduces section 105
funding as part of a non-selective reduction of the programs of all
executive branch agencies of the applicable unit of government.

Sec. 35.148 Award limitations.

(a) The Regional Administrator will not award section 105 funds to
an interstate or intermunicipal agency:
(1) That does not provide assurance that it can develop a
comprehensive plan for the air quality control region which includes
representation of appropriate State, interstate, local, Tribal, and
international interests; and
(2) Without consulting with the appropriate official designated by
the Governor or Governors of the State or States affected or the
appropriate official of any affected Indian Tribe or Tribes.
(b) The Regional Administrator will not disapprove an application
for or terminate or annul a section 105 grant without prior notice and
opportunity for a public hearing in the affected State or States.

Water Pollution Control (Section 106)

Sec. 35.160 Purpose.

(a) Purpose of section. Sections 35.160 through 35.168 govern Water
Pollution Control Grants to State and interstate agencies (as defined
in section 502 of the Clean Water Act) authorized under section 106 of
the Clean Water Act.

[[Page 1740]]

(b) Purpose of program. Water Pollution Control Grants are awarded
to assist in administering programs for the prevention, reduction, and
elimination of water pollution, including programs for the development
and implementation of ground-water protection strategies. Some of these
activities may also be eligible for funding under sections 104(b)(3)
(Water Quality Cooperative Agreements and Wetlands Development Grants),
205(j)(2) (Water Quality Management Planning), and section 205(g)
(State Administration Grants) of the Clean Water Act. (See
Secs. 35.160, 35.360, 35.380, 35.400, and 35.410.)
(c) Associated program requirements. Program requirements for water
quality planning and management activities are provided in 40 CFR part
130.

Sec. 35.161 Definition.

Recurrent expenditures are those expenditures associated with the
activities of a continuing Water Pollution Control program. All
expenditures, except those for equipment purchases of $5,000 or more,
are considered recurrent unless justified by the applicant as
nonrecurrent and approved as such in the grant award or an amendment
thereto.

Sec. 35.162 Basis for allotment.

(a) Allotments. Each fiscal year funds appropriated for Water
Pollution Control grants to State and interstate agencies will be
allotted to States and interstate agencies on the basis of the extent
of the pollution problems in the respective States. A portion of the
funds appropriated for States under the Water Pollution Control grant
program will be set aside for allotment to eligible interstate
agencies. The interstate allotment will be 2.6 percent of the funds
available under this paragraph.
(b) State allotment formula. The Water Pollution Control State
grant allotment formula establishes an allotment ratio for each State
based on six components selected to reflect the extent of the water
pollution problem in the respective States. The formula provides a
funding floor for each State with provisions for periodic adjustments
for inflation and a maximum funding level (150 percent of its previous
fiscal year allotment).
(1) Components and component weights. (i) Components. The six
components used in the Water Pollution Control State grant allotment
formula are: Surface Water Area; Ground Water Use; Water Quality
Impairment; Point Sources; Nonpoint Sources; and Population of
Urbanized Area. The components for the formula are presented in Table 1
of this section, with their associated elements, sub-elements, and
supporting data sources.

BILLING CODE 6560-50-P

[[Page 1741]]

[GRAPHIC] [TIFF OMITTED] TR09JA01.019

(ii) Component weights. To account for the fact that not all of the
selected formula components contribute equally to the extent of the
pollution problem within the States, each formula component is weighted
individually. Final component weights will be phased-in by Fiscal Year
(FY) 2004,

[[Page 1742]]

according to the schedule presented in Table 2 of this section:

Table 2.--Component Weights in the Water Pollution Control State Grant Allotment Formula
----------------------------------------------------------------------------------------------------------------
FY 2000 FY2001-FY2003 FY2004+
Component (percent) (percent) (percent)
----------------------------------------------------------------------------------------------------------------
Surface Water Area.............................................. 13 13 12
Ground Water Use................................................ 11 12 12
Water Quality Impairment........................................ 13 25 35
Point Sources................................................... 25 17 13
Nonpoint Sources................................................ 18 15 13
Population of Urbanized Area.................................... 20 18 15
-----------------------------------------------
Total....................................................... 100 100 100
----------------------------------------------------------------------------------------------------------------

(2) Funding floor. A funding floor is established for each State.
Each State's funding floor will be at least equal to its FY 2000
allotment in all future years unless the funds appropriated for States
under the Water Pollution Control grant program decrease from the FY
2000 amount.
(3) Funding decrease. If the appropriation for Water Pollution
Control State grants decreases in future years, the funding floor will
be disregarded and all State allotments will be reduced by an equal
percentage.
(4) Inflation adjustment. Funding floors for each State will be
adjusted for inflation when the funds appropriated for Water Pollution
Control State grants increase from the preceding fiscal year. These
adjustments will be made on the basis of the cumulative change in the
Consumer Price Index (CPI), published by the U.S. Department of Labor,
since the most recent year in which Water Pollution Control State grant
funding last increased. Inflation adjustments to State funding floors
will be capped at the lesser of the percentage change in appropriated
funds or the cumulative percentage change in the inflation rate.
(5) Cap on annual funding increases. The maximum allotment to any
State will be 150 percent of that State's allotment for the previous
fiscal year.
(6) Cap on component ratio. A component ratio is equal to each
State's share of the national total of a single component. The cap on
each of the six State formula components ratios is 10 percent. If a
State's calculated component ratio for a particular component exceeds
the 10 percent cap, the State will instead be assigned 10 percent for
that component. The component ratios for all other States will be
adjusted accordingly.
(7) Update cycle. The data used in the State formula will be
periodically updated. The first update will impact allotments for FY
2001, and will consist of updating the data used to support the Water
Quality Impairment component of the formula. These data will be updated
using the currently available Clean Water Act section 305(b) reports.
After this initial update, the data used to support all six components
of the Water Pollution Control State grant allotment formula will be
updated in FY 2003 (for use in the determination of FY 2004
allotments). Thereafter, all data will be updated every five years
(e.g., in FY 2008 for FY 2009 allotments and in FY 2013 for FY 2014
allotments.) There will be an annual adjustment to the funding floor
for all States, based on the appropriation for Water Pollution Control
State grants and changes in the CPI.
(c) Interstate allotment formula. EPA will set-aside 2.6 percent of
the funds appropriated for the Water Pollution Control State grant
program for interstate agencies. The interstate agency Water Pollution
Control grant allotment formula consists of two parts: a base allotment
and a variable allotment.
(1) Base allotment. Each eligible interstate agency shall be
provided a base allotment of $125,000 to help fund coordination
activities among its member States. However, no more than 50 percent of
the total available interstate set-aside may be allotted as part of the
base allotment. If, given the 50 percent limitation placed on the base
allotment, the amount of interstate set-aside funds is insufficient to
provide each interstate agency with $125,000, then each interstate
agency will receive a base allotment equal to 50 percent of the total
interstate set-aside divided by the total number of eligible interstate
agencies.
(2) Variable allotment. The variable allotment provides for funds
to be distributed to interstate agencies on the basis of the extent of
the pollution problems in the respective States. Funds not allotted
under the base allotment will be allotted to eligible interstate
agencies based on each interstate agency's share of their member
States' Water Pollution Control grant formula allotment ratios. Updates
of the data for the six components of the Water Pollution Control State
grant allocation formula will automatically result in corresponding
updates to the variable allotment portion of the interstate allotments.
The allotment ratios for those States involved in compacts with more
than one interstate agency will be allocated among such interstate
agencies based on the percentage of each State's territory that is
situated within the drainage basin or watershed area covered by each
compact.

Sec. 35.165 Maintenance of effort.

To receive a Water Pollution Control grant, a State or interstate
agency must expend annually for recurrent section 106 program
expenditures an amount of non-federal funds at least equal to
expenditures during the fiscal year ending June 30, 1971.

Sec. 35.168 Award limitations.

(a) The Regional Administrator may award section 106 funds to a
State only if:
(1) The State monitors and compiles, analyzes, and reports water
quality data as described in section 106(e)(1) of the Clean Water Act;
(2) The State has authority comparable to that in section 504 of
the Clean Water Act and adequate contingency plans to implement such
authority;
(3) There is no federally-assumed enforcement as defined in section
309(a)(2) of the Clean Water Act in effect with respect to the State
agency;
(4) The State's work plan shows that the activities to be funded
are coordinated, as appropriate, with activities proposed for funding
under sections 205(g) and (j) of the Clean Water Act; and
(5) The State filed with the Administrator within 120 days after

[[Page 1743]]

October 18, 1972, a summary report of the current status of the State
pollution control program, including the criteria used by the State in
determining priority of treatment works.
(b) The Regional Administrator may award section 106 funds to an
interstate agency only if:
(1) The interstate agency filed with the Administrator within 120
days after October 18, 1972, a summary report of the current status of
the State pollution control program, including the criteria used by the
State in determining priority of treatment works.
(2) There is no federally-assumed enforcement as defined in section
309(a)(2) of the Clean Water Act in effect with respect to the
interstate agency.

Public Water System Supervision (Section 1443(a))

Sec. 35.170 Purpose.

(a) Purpose of section. Sections 35.170 through 35.178 govern
Public Water System Supervision Grants to States (as defined in section
1401 (13)(A) of the Safe Drinking Water Act) authorized under section
1443(a) of the Act.
(b) Purpose of program. Public Water System Supervision Grants are
awarded to carry out public water system supervision programs including
implementation and enforcement of the requirements of the Act that
apply to public water systems.
(c) Associated program regulations. Associated program regulations
are found in 40 CFR parts 141, 142, and 143.

Sec. 35.172 Allotment.

(a) Basis for allotment. The Administrator allots funds for grants
to support States' Public Water System Supervision programs based on
each State's population, geographic area, numbers of community and non-
community water systems, and other relevant factors.
(b) Allotment limitation. No State, except American Samoa, Guam,
the Virgin Islands, and the Commonwealth of the Northern Mariana
Islands, shall be allotted less than $334,500 (which is one percent of
the FY 1989 appropriation).

Sec. 35.175 Maximum federal share.

The Regional Administrator may provide a maximum of 75 percent of
the State's approved work plan costs.

Sec. 35.178 Award limitations.

(a) Initial grants. The Regional Administrator will not make an
initial award unless the applicant has an approved Public Water System
Supervision program or agrees to establish an approvable program within
one year of the initial award.
(b) Subsequent grants. The Regional Administrator will not award a
grant to a State after the initial award unless the applicant has
assumed and maintained primary enforcement responsibility for the
State's Public Water System Supervision program.

Underground Water Source Protection (Section 1443(b))

Sec. 35.190 Purpose.

(a) Purpose of section. Sections 35.190 through 35.198 govern
Underground Water Source Protection Grants to States (as defined in
section 1401(13)(A) of the Safe Drinking Water Act) authorized under
section 1443(b) of the Act.
(b) Purpose of program. The Underground Water Source Protection
Grants are awarded to carry out underground water source protection
programs.
(c) Associated program regulations. Associated program regulations
are found in 40 CFR 124, 144, 145, 146, and 147.

Sec. 35.192 Basis for allotment.

The Administrator allots funds for grants to support State's
underground water source protection programs based on such factors as
population, geographic area, extent of underground injection practices,
and other relevant factors.

Sec. 35.195 Maximum federal share.

The Regional Administrator may provide a maximum of 75 percent of a
State's approved work plant costs.

Sec. 35.198 Award limitation.

The Regional Administrator will only award section 1443(b) funds to
States that have primary enforcement responsibility for the underground
water source protection program.

Hazardous Waste Management (Section 3011(a))

Sec. 35.210 Purpose.

(a) Purpose of section. Sections 35.210 through 35.218 govern
Hazardous Waste Management Grants to States (as defined in section 1004
of the Solid Waste Disposal Act) under section 3011(a) of the Act.
(b) Purpose of program. Hazardous Waste Management Grants are
awarded to assist States in the development and implementation of
authorized State hazardous waste management programs.
(c) Associated program regulations. Associated program regulations
are at 40 CFR part 124, subparts B, E, and F; 40 CFR parts 260 through
266; 40 CFR parts 268 through 273; and 40 CFR part 279.

Sec. 35.212 Basis for allotment.

The Administrator allots funds for Hazardous Waste Management
Grants in accordance with section 3011(b) of the Solid Waste Disposal
Act based on factors including:
(a) The extent to which hazardous waste is generated, transported,
treated, stored, and disposed of in the State;
(b) The extent to which human beings and the environment in the
State are exposed to such waste, and;
(c) Other factors the Administrator deems appropriate.

Sec. 35.215 Maximum federal share.

The Regional Administrator may provide up to 75 percent of the
approved work plant costs.

Sec. 35.218 Award limitation.

The Regional Administrator will not award Hazardous Waste
Management Grants to a State with interim or final hazardous waste
authorization unless the applicant is the lead agency designated in the
authorization agreement.

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

Sec. 35.230 Purpose.

(a) Purpose of section. Sections 35.230 through 35.235 govern
Pesticide Enforcement Cooperative Agreements to States (as defined in
section 2 of Federal Insecticide, Fungicide, and Rodenticide Act) under
section 23(a)(1) of the Act.
(b) Purpose of program. Pesticides Enforcement Cooperative
Agreements are awarded to assist States to implement pesticide
enforcement programs.
(c) Program regulations. Associated program regulations are at 40
CFR parts 150 through 189 and 19 CFR part 12.

Sec. 35.232 Basis for allotment.

(a) Factors for FIFRA enforcement program funding. The factors
considered in allotment of funds for enforcement of FIFRA are:
(1) The State's population,
(2) The number of pesticide-producing establishments,
(3) The numbers of certified private and commercial pesticide
applicators,
(4) The number of farms and their acreage, and
(5) As appropriate, the State's potential farm worker protection
concerns.
(b) Final allotments. Final allotments are negotiated between each
State and the appropriate Regional Administrator.

[[Page 1744]]

Sec. 35.235 Maximum federal share.

The Regional Administrator may provide up to 100 percent of the
approved work plan costs.

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

Sec. 35.240 Purpose.

(a) Purpose of section. Sections 35.240 through 35.245 govern
Pesticide Applicator Certification and Training Grants to States (as
defined in section 2 of Federal Insecticide, Fungicide, and Rodenticide
Act) under section 23(a)(2) of the Act.
(b) Purpose of program. Pesticide Applicator Certification and
Training Grants are awarded to train and certify restricted use
pesticide applicators.
(c) Associated program regulations. Associated program regulations
are found in 40 CFR parts 162, 170, and 171.

Sec. 35.242 Basis for allotment.

The Regional Administrator considers two factors in allotting
pesticides applicator certification and training funds:
(a) The number of farms in each State; and
(b) The numbers of private and commercial applicators requiring
certification and recertification in each State.

Sec. 35.245 Maximum federal share.

The Regional Administrator may provide up to 50 percent of the
approved work plan costs.

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

Sec. 35.250 Purpose.

(a) Purpose of section. Sections 35.250 through 35.259 govern
Pesticide Program Implementation Cooperative Agreements to States (as
defined in section 2 of Federal Insecticide, Fungicide, and Rodenticide
Act) under section 23(a)(1) of the Act.
(b) Purpose of program. Pesticide Program Implementation
Cooperative Agreements are awarded to assist States to develop and
implement pesticide programs, including programs that protect workers,
groundwater, and endangered species from pesticide risks and for other
pesticide management programs designated by the Administrator.
(c) Program regulations. Associated program regulations are at 40
CFR parts 150 through 189 and 19 CFR part 12.

Sec. 35.251 Basis for allotment.

(a) Factors for pesticide program implementation funding. The
factors considered in allotment of funds for pesticide program
implementation are based upon potential ground water, endangered
species, and worker protection concerns in each State relative to other
States and on other factors the Administrator deems appropriate for
these or other pesticide program implementation activities.
(b) Final allotments. Final allotments are negotiated between each
State and the appropriate Regional Administrator.

Sec. 35.252 Maximum federal share.

The Regional Administrator may provide up to 100 percent of the
approved work plan costs.

Nonpoint Source-Management (Section 319(h))

Sec. 35.260 Purpose.

(a) Purpose of section. Sections 35.260 through 35.268 govern
Nonpoint Source Management Grants to States (as defined in section 502
of the Clean Water Act) authorized under section 319 of the Act.
(b) Purpose of program. Nonpoint Source Management Grants may be
awarded for the implementation of EPA-approved nonpoint source
management programs, including ground-water quality protection
activities, that will advance the implementation of a comprehensive
approved nonpoint source management program.

Sec. 35.265 Maximum federal share.

The Regional Administrator may provide up to 60 percent of the
approved work plan costs in any fiscal year. The non-federal share of
costs must be provided from non-federal sources.

Sec. 35.266 Maintenance of effort.

To receive section 319 funds in any fiscal year, a State must agree
to maintain its aggregate expenditures from all other sources for
programs for controlling nonpoint pollution and improving the quality
of the State's waters at or above the average level of such
expenditures in Fiscal Years 1985 and 1986.

Sec. 35.268 Award limitations.

The following limitations apply to funds appropriated and awarded
under section 319(h) of the Act in any fiscal year.
(a) Award amount. The Regional Administrator will award no more
than 15 percent of the amount appropriated to carry out section 319(h)
of the Act to any one State. This amount includes any grants to any
local public agency or organization with authority to control pollution
from nonpoint sources in any area of the State.
(b) Financial assistance to persons. States may use funds for
financial assistance to persons only to the extent that such assistance
is related to the cost of demonstration projects.
(c) Administrative costs. Administrative costs in the form of
salaries, overhead, or indirect costs for services provided and charged
against activities and programs carried out with these funds shall not
exceed 10 percent of the funds the State receives in any fiscal year.
The cost of implementing enforcement and regulatory activities,
education, training, technical assistance, demonstration projects, and
technology transfer programs are not subject to this limitation.
(d) Requirements. The Regional Administrator will not award section
319(h) funds to a State unless:
(1) Approved assessment report. EPA has approved the State's
assessment report on nonpoint sources, prepared in accordance with
section 319(a) of the Act;
(2) Approved State management program. EPA has approved the State's
management program for nonpoint sources, prepared in accordance with
section 319(b) of the Act;
(3) Progress on reducing pollutant loadings. The Regional
Administrator determines that the State made satisfactory progress in
the preceding fiscal year in meeting its schedule for achieving
implementation of best management practices to reduce pollutant
loadings from categories of nonpoint sources, or particular nonpoint
sources, designated in the State's management program. The State must
have developed this schedule in accordance with section 319(b)(2)(c) of
the Act;
(4) Activity and output descriptions. The work plan briefly
describes each significant category of nonpoint source activity and the
work plan commitments to be produced for each category; and
(5) Significant watershed projects. For watershed projects whose
costs exceed $50,000, the work plan also contains:
(i) A brief synopsis of the watershed implementation plan outlining
the problem(s) to be addressed;
(ii) The project's goals and objectives; and
(iii) The performance measures or environmental indicators that
will be used to evaluate the results of the project.

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

Sec. 35.270 Purpose.

(a) Purpose of section. Sections 35.270 through 35.278 govern Lead-
Based Paint Program Grants to States (as defined in section 3 of the
Toxic Substances

[[Page 1745]]

Control Act), under section 404(g) of the Act.
(b) Purpose of program. Lead-Based Paint Program Grants are awarded
to develop and carry out authorized programs to ensure that individuals
employed in lead-based paint activities are properly trained; that
training programs are accredited; and that contractors employed in such
activities are certified.
(c) Associated program regulations. Associated program regulations
are found in 40 CFR part 745.

Sec. 35.272 Funding coordination.

Recipients must use the lead-based paint program funding in a way
that complements any related assistance they receive from other federal
sources for lead-based paint activities.

State Indoor Radon Grants (Section 306)

Sec. 35.290 Purpose.

(a) Purpose of section. Sections 35.290 through 35.298 govern
Indoor Radon Grants to States (as defined in section 3 of the Toxic
Substances Control Act, which include territories and the District of
Columbia) under section 306 of the Toxic Substances Control Act.
(b) Purpose of program. (1) State Indoor Radon Grants are awarded
to assist States with the development and implementation of programs
that assess and mitigate radon and that aim at reducing radon health
risks. State Indoor Radon Grant funds may be used for the following
eligible activities:
(i) Survey of radon levels, including special surveys of geographic
areas or classes of buildings (such as public buildings, school
buildings, high-risk residential construction types);
(ii) Development of public information and education materials
concerning radon assessment, mitigation, and control programs;
(iii) Implementation of programs to control radon on existing and
new structures;
(iv) Purchase by the State of radon measurement equipment and
devices;
(v) Purchase and maintenance of analytical equipment connected to
radon measurement and analysis, including costs of calibration of such
equipment;
(vi) Payment of costs of EPA-approved training programs related to
radon for permanent State or local employees;
(vii) Payment of general overhead and program administration costs
in accordance with Sec. 35.298(d);
(viii) Development of a data storage and management system for
information concerning radon occurrence, levels, and programs;
(ix) Payment of costs of demonstration of radon mitigation methods
and technologies as approved by EPA, including State participation in
the EPA Home Evaluation Program; and
(x) A toll-free radon hotline to provide information and technical
assistance.
(2) States may use grant funds to assist local governments in
implementation of activities eligible for assistance under paragraphs
(b)(1)(ii), (iii), and (vi) of this section.
(3) In implementing paragraphs (b)(1)(iv) and (ix) of this section,
a State should make every effort, consistent with the goals and
successful operation of the State radon program, to give preference to
low-income persons.
(4) Funds appropriated for section 306 may not be used to cover the
costs of federal proficiency rating programs under section 305(a)(2) of
the Act. Funds appropriated for section 306 and grants awarded under
section 306 may be used to cover the costs of State proficiency rating
programs.

Sec. 35.292 Basis for allotment.

(a) The Regional Administrator will allot State Indoor Radon Grant
funds based on the criteria in EPA Guidance in accordance with sections
306(d) and (e) of the Toxic Substances Control Act.
(b) No State may receive a State Indoor Radon Grant in excess of 10
percent of the total appropriated amount made available each fiscal
year.

Sec. 35.295 Maximum federal share.

The Regional Administrator may provide State agencies up to 50
percent of the approved costs for the development and implementation of
radon program activities.

Sec. 35.298 Award limitations.

(a) The Regional Administrator shall not include State Indoor Radon
funds in a Performance Partnership Grant awarded to another State
Agency without consulting with the State Agency which has the primary
responsibility for radon programs as designated by the Governor of the
affected State.
(b) No grant may be made in any fiscal year to a State which in the
preceding fiscal year did not satisfactorily implement the activities
funded by the grant in the preceding fiscal year.
(c) The costs of radon measurement equipment or devices (see
Sec. 35.290(b)(1)(iv)) and demonstration of radon mitigation, methods,
and technologies (see Sec. 35.290(b)(1)(ix)) shall not, in the
aggregate, exceed 50 percent of a State's radon grant award in a fiscal
year.
(d) The costs of general overhead and program administration (see
Sec. 35.290(b)(1)(vii)) of a State Indoor Radon grant shall not exceed
25 percent of the amount of a State's Indoor Radon Grant in a fiscal
year.
(e) A State may use funds for financial assistance to persons only
to the extent such assistance is related to demonstration projects or
the purchase and analysis of radon measurement devices.
(f) Recipients must provide the Regional Administrator all radon-
related information generated in its grant supported activities,
including the results of radon surveys, mitigation demonstration
projects, and risk communication studies.
(g) Recipients must maintain and make available to the public, a
list of firms and individuals in the State that have received a passing
rating under the EPA proficiency rating program under section 305(a)(2)
of the Act.

Toxic Substances Compliance Monitoring (Section 28)

Sec. 35.310 Purpose.

(a) Purpose of section. Sections 35.310 through 35.315 govern Toxic
Substances Compliance Monitoring Grants to States (as defined in
section 3(13) of the Toxic Substances Control Act) under section 28(a)
of the Act.
(b) Purpose of program. Toxic Substances Compliance Monitoring
Grants are awarded to establish and operate compliance monitoring
programs to prevent or eliminate unreasonable risks to health or the
environment associated with chemical substances or mixtures within the
States with respect to which the Administrator is unable or not likely
to take action for their prevention or elimination.
(c) Associated program regulations. Associated program regulations
are at 40 CFR parts 700 through 799.

Sec. 35.312 Competitive process.

EPA will award Toxic Substances Control Act Compliance Monitoring
grant funds to States through a competitive process in accordance with
national program guidance.

Sec. 35.315 Maximum federal share.

The Regional Administrator may provide up to 75 percent of the
approved work plan costs.

Sec. 35.318 Award limitation.

If the toxic substances compliance monitoring grant funds are
included in a Performance Partnership Grant, the toxic substances
compliance monitoring work plan commitments must be included in the
Performance Partnership Grant work plan.

[[Page 1746]]

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

Sec. 35.330 Purpose.

(a) Purpose of section. Sections 35.330 through 35.335 govern
Underground Storage Tank Grants to States (as defined in section 1004
of the Solid Waste Disposal Act) under section 2007(f)(2) of the Act.
(b) Purpose of program. State Underground Storage Tank Grants are
awarded to States to develop and implement a State underground storage
tank release detection, prevention, and corrective action program under
Subtitle I of the Resource Conservation and Recovery Act.
(c) Associated program regulations. Associated program regulations
are found in 40 CFR parts 280 through 282.

Sec. 35.332 Basis for allotment.

The Administrator allots State Underground Storage Tank Grant funds
to each EPA regional office. Regional Administrators award funds to
States based on their programmatic needs and applicable EPA guidance.

Sec. 35.335 Maximum federal share.

The Regional Administrator may provide up to 75 percent of the
approved work plan costs.

Pollution Prevention State Grants (Section 6605)

Sec. 35.340 Purpose.

(a) Purpose of section. Sections 35.340 through 35.349 govern
Pollution Prevention State Grants under section 6605 of the Pollution
Prevention Act.
(b) Purpose of program. Pollution Prevention State Grants are
awarded to promote the use of source reduction techniques by
businesses.

Sec. 35.342 Competitive process.

EPA Regions award Pollution Prevention State Grants to State
programs through a competitive process in accordance with EPA guidance.
When evaluating State applications, EPA must consider, among other
criteria, whether the proposed State program would:
(a) Make specific technical assistance available to businesses
seeking information about source reduction opportunities, including
funding for experts to provide onsite technical advice to businesses
seeking assistance in the development of source reduction plans;
(b) Target assistance to businesses for whom lack of information is
an impediment to source reduction; and
(c) Provide training in source reduction techniques. Such training
may be provided through local engineering schools or other appropriate
means.

Sec. 35.343 Definitions.

In addition to the definitions in Sec. 35.102, the following
definitions apply to the Pollution Prevention State Grants program and
to Secs. 35.340 through 35.349:
(a) Pollution prevention/source reduction is any practice that:
(1) Reduces the amount of any hazardous substance, pollutant, or
contaminant entering any waste stream or otherwise released into the
environment (including fugitive emissions) prior to recycling,
treatment, or disposal;
(2) Reduces the hazards to public health and the environment
associated with the release of such substances, pollutants, or
contaminants; or
(3) Reduces or eliminates the creation of pollutants through:
(i) Increased efficiency in the use of raw materials, energy,
water, or other resources; or
(ii) Protection of natural resources by conservation.
(b) Pollution prevention/source reduction does not include any
practice which alters the physical, chemical, or biological
characteristics or the volume of a hazardous substance, pollutant, or
contaminant through a process or activity which itself is not integral
to and necessary for the production of a product or the providing of a
service.

Sec. 35.345 Eligible applicants.

Applicants eligible for funding under the Pollution Prevention
program include any agency or instrumentality, including State
universities, of the 50 States, the District of Columbia, the U.S.
Virgin Islands, the Commonwealth of Puerto Rico, and any territory or
possession of the United States.

Sec. 35.348 Award limitation.

If a State includes a Pollution Prevention State Grant in a
Performance Partnership Grant, the work plan commitments must be
included in the Performance Partnership Grant work plan (see
Sec. 35.138).

Sec. 35.349 Maximum federal share.

The federal share for Pollution Prevention State Grants will not
exceed 50 percent of the allowable pollution prevention State grant
project cost.

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

Sec. 35.360 Purpose.

(a) Purpose of section. Sections 35.360 through 35.364 govern Water
Quality Cooperative Agreements to State water pollution control
agencies and interstate agencies (as defined in section 502 of the
Clean Water Act) and local government agencies under section 104(b)(3)
of the Act. These sections do not govern Water Quality Cooperative
Agreements to other entities eligible under sections 104(b)(3) which
are generally subject to the uniform administrative requirements of 40
CFR part 30.
(b) Purpose of program. EPA awards Water Quality Cooperative
Agreements for investigations, experiments, training, demonstrations,
surveys, and studies relating to the causes, effects, extent,
prevention, reduction, and elimination of water pollution. EPA issues
guidance each year advising EPA regions and headquarters regarding
appropriate priorities for funding for this program. This guidance may
include such focus areas as National Pollutant Discharge Elimination
System watershed permitting, urban wet weather programs, or innovative
pretreatment program or biosolids projects.

Sec. 35.362 Competitive process.

EPA will award Water Quality Cooperative Agreement funds through a
competitive process in accordance with national program guidance.

Sec. 35.364 Maximum federal share.

The Regional Administrator may provide up to 100 percent of
approved work plan costs.

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

Sec. 35.380 Purpose.

(a) Purpose of section. Sections 35.380 through 35.385 govern State
Wetlands Development Grants for State and interstate agencies (as
defined in section 502 of the Clean Water Act) and local government
agencies under section 104(b)(3) of the Act. These sections do not
govern wetlands development grants to other entities eligible under
section 104(b)(3) which are generally subject to the uniform
administrative requirements of 40 CFR part 30.
(b) Purpose of program. EPA awards State Wetlands Development
Grants to assist in the development of new, or refinement of existing,
wetlands protection and management programs.

Sec. 35.382 Competitive process.

State Wetlands Development Grants are awarded on a competitive
basis. EPA annually establishes a deadline for receipt of proposed
grant project applications. EPA reviews applications and decides which
grant projects to fund in a given year based on criteria

[[Page 1747]]

established by EPA. After the competitive process is complete, the
recipient can, at its discretion, accept the award as a State Wetlands
Development Grant or add the funds to a Performance Partnership Grant.
If the recipient chooses to add the funds to a Performance Partnership
Grant, the wetlands development program work plan commitments must be
included in the Performance Partnership Grant work plan.

Sec. 35.385 Maximum federal share.

EPA may provide up to 75 percent of the approved work plan costs
for the development or refinement of a wetlands protection and
management program.

State Administration (Section 205(g))

Sec. 35.400 Purpose.

(a) Purpose of section. Sections 35.400 through 35.408 govern State
Administration Grants to States (as defined in section 502 of the Clean
Water Act) authorized under section 205(g) of the Act.
(b) Purpose of program. EPA awards these grants for the following
two purposes:
(1) Construction management grants. A State may use section 205(g)
funds for administering elements of the construction grant program
under sections 201, 203, 204, and 212 of the Clean Water Act and for
managing waste treatment construction grants for small communities. A
State may also use construction management assistance funds for
administering elements of a State's construction grant program which
are implemented without federal grants, if the Regional Administrator
determines that those elements are consistent with 40 CFR part 35,
subpart I.
(2) Permit and planning grants. A State may use section 205(g)
funds for administering permit programs under sections 402 and 404,
including Municipal Wastewater Pollution Prevention activities under an
approved section 402 program and State operator training programs, and
for administering statewide waste treatment management planning
programs, including the development of State biosolids management
programs, under section 208(b)(4). Some of these activities may also be
eligible for funding under sections 106 (Water Pollution Control),
205(j)(2) (Water Quality Management Planning), and 104(b)(3) (Water
Quality Cooperative Agreements and Wetlands Development Grants) of the
Clean Water Act. (See Secs. 35.160, 35.410, 35.360, and 35.380.)
(c) Associated program requirements. Program requirements for State
construction management activities under delegation are provided in 40
CFR part 35, subparts I and J. Program requirements for water quality
management activities are provided in 40 CFR part 130.

Sec. 35.402 Allotment.

Each State may reserve up to four percent of the State's authorized
construction grant allotment as determined by Congress or $400,000,
whichever is greater, for section 205 (g) grants.

Sec. 35.405 Maintenance of effort.

To receive funds under section 205(g), a State agency must expend
annually for recurrent section 106 program expenditures an amount of
non-federal funds at least equal to such expenditures during fiscal
year 1977, unless the Regional Administrator determines that the
reduction is attributable to a non-selective reduction of expenditures
in State executive branch agencies (see Sec. 35.165).

Sec. 35.408 Award limitations.

The Regional Administrator will not award section 205(g) funds:
(a) For construction management grants unless there is a signed
agreement delegating responsibility for administration of those
activities to the State.
(b) For permit and planning grants before awarding funds providing
for the management of a substantial portion of the State's construction
grants program. The maximum amount of permit and planning grants a
State may receive is limited to the amount remaining in its reserve
after the Regional Administrator allows for full funding of the
management of the construction grant program under full delegation.
(c) For permit and planning grants unless the work plan submitted
with the application shows that the activities to be funded are
coordinated, as appropriate, with activities proposed for funding under
sections 106 (Water Pollution Control) and 205(j) (Water Quality
Management Planning) of the Clean Water Act.

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

Sec. 35.410 Purpose.

(a) Purpose of section. Sections 35.410 through 35.418 govern Water
Quality Management Planning Grants to States (as defined in section 502
of the Clean Water Act) authorized under section 205(j)(2) of the Act.
(b) Purpose of program. EPA awards Water Quality Management
Planning Grants to carry out water quality management planning
activities. Some of these activities may also be eligible for funding
under sections 106 (Water Pollution Control), 104(b)(3) (Water Quality
Cooperative Agreements and Wetlands Development Grants) and section
205(g) (State Administration Grants) of the Clean Water Act. (See
Secs. 35.160, 35.360, 35.380, and 35.400.) EPA awards these grants for
purposes such as:
(1) Identification of the most cost-effective and locally
acceptable facility and nonpoint measures to meet and maintain water
quality standards.
(2) Development of an implementation plan to obtain State and local
financial and regulatory commitments to implement measures developed
under paragraph (b)(1) of this section.
(3) Determination of the nature, extent, and causes of water
quality problems in various areas of the State and interstate region.
(4) Determination of those publicly owned treatment works which
should be constructed with State Revolving Fund assistance. This
determination should take into account the relative degree of effluent
reduction attained, the relative contributions to water quality of
other point or nonpoint sources, and the consideration of alternatives
to such construction.
(5) Implementation of section 303(e) of the Clean Water Act.
(c) Program requirements for water quality management planning
activities are provided in 40 CFR part 130.

Sec. 35.412 Allotment.

States must reserve, each fiscal year, not less than $100,000 nor
more than one percent of the State's construction grant allotment as
determined by Congress for Water Quality Management Planning Grants
under section 205(j)(2). However, Guam, the Virgin Islands, American
Samoa and the Commonwealth of the Northern Mariana Islands must reserve
a reasonable amount for this purpose. (See 40 CFR 35.3110(g)(4)
regarding reserves from State allotments under Title VI of the Clean
Water Act for section 205(j) grants.)

Sec. 35.415 Maximum federal share.

The Regional Administrator may provide up to 100 percent of the
approved work plan costs.

Sec. 35.418 Award limitations.

The following limitations apply to funds awarded under section
205(j)(2) of

[[Page 1748]]

the Clean Water Act. The Regional Administrator will not award these
grants to a State agency:
(a) Unless the agency develops its work plan jointly with local,
regional and interstate agencies and gives funding priority to such
agencies and designated or undesignated public comprehensive planning
organizations to carry out portions of that work plan.
(b) Unless the agency reports annually on the nature, extent, and
causes of water quality problems in various areas of the State and
interstate region.
(c) Unless the work plan submitted with the application shows that
the activities to be funded are coordinated, as appropriate, with
activities proposed for funding under section 106 (Water Pollution
Control) of the Clean Water Act.

Part 745--[AMENDED]

1. The authority citation for part 745 continues to read as
follows:

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

Sec. 745.330 [Removed]

2. 40 CFR 745.330 is removed.

[FR Doc. 01-218 Filed 1-8-01; 8:45 am]
BILLING CODE 6560-50-P

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