[Federal Register Volume 61, Number 48 (Monday, March 11, 1996)]
[Notices]
[Pages 9696-9708]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5711]



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ENVIRONMENTAL PROTECTION AGENCY

[FRL-5438-8]


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

AGENCY: U.S. Environmental Protection Agency.

ACTION: Notice.

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SUMMARY: The ``Performance Partnership Grants for State and Tribal 
Environmental Programs: Interim Guidance'' provides information for: 
States and Tribes that apply for and receive Performance Partnership 
Grants (PPGs); States applying for PPGs and entrance into the National 
Environmental Performance Partnership System (NEPPS); and EPA Regions 
that approve and award PPGs.
    PPGs are intended to provide States and Tribes with greater 
flexibility to address their highest environmental priorities, improve 
environmental performance, achieve administrative savings, and 
strengthen partnerships between EPA and the States or Tribes.

FOR FURTHER INFORMATION CONTACT: Anne Robertson, Office of Water 
(4102), U.S. Environmental Protection Agency, 401 M Street, SW, 
Washington, DC 20460, Telephone: (202) 260-5034, FAX: (202) 260-5711, 
or Jack Bowles, U.S. Environmental Protection Agency, Region VIII, 999 
18th Street, Suite 500, Denver, CO 80202-2466, Telephone: (303) 312-
6315, FAX: (303) 312-6067.

SUPPLEMENTARY INFORMATION: EPA is offering PPGs to eligible States and 
Tribes in Fiscal Year 1996 (FY96). A PPG is a multi-program grant made 
to a State or Tribal agency from funds otherwise available for 
categorical grant programs. A State or Tribe can combine funds from 2 
or more of 16 eligible grant programs into 1 or more PPGs. Recipients 
may then use PPGs to fund activities that are within the cumulative 
eligibilities of the 16 eligible grant programs.
    As of the date of this Federal Register Notice, EPA does not yet 
have authorization to award PPGs. Congress included authority for 
awarding PPGs in 

[[Page 9697]]
its FY96 EPA Appropriations Bill, but this bill did not become law. EPA 
can begin to award PPGs only after the enactment of this language.
    Additional contacts for information on PPGs are:

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

Region 1:
    Robert Goetzl, Chief, Strategic Planning Office, CSP, U.S. EPA--
Region I, John F. Kennedy Federal Building, One Congress Street, 
Boston, Massachusetts 02203, (617) 565-3378.
    Peter Connell, Manager, Grants Management Unit, AGM, U.S. EPA--
Region I, John F. Kennedy Federal Building, Boston, MA 02203, (617) 
565-3378.

Region 2:
    Tierre Jeanne, Chief, Grants Administration Branch, U.S. EPA--
Region II, 290 Broadway, New York, NY 10007-1866, (212) 637-3402.
    John Malleck, Chief, Water Quality Management Section, Water 
Management Division, U.S. EPA--Region II, 290 Broadway, New York, NY 
10007-1866, (212) 637-3720.

Region 3:
    Grants and Audit Management Branch, U.S. EPA--Region III, 841 
Chestnut Street, Philadelphia, PA 19107, (215) 597-7805.

Region 4:
    Michelle Glenn, U.S. EPA--Region IV, 345 Courtland Street, Atlanta, 
GA 30365, (404) 347-7109 ext. 6878.

Region 5:
    Tom Jackson, Acquisition and Assistance Branch (MC-10J), U.S. EPA--
Region V, 77 West Jackson Blvd., Chicago, Illinois 60604, (312) 886-
7523.

Region 6:
    Brenda Durden, Chief, Program Planning and Grants Branch, U.S. 
EPA--Region VI, 1445 Ross Avenue, Dallas, Texas 75202, (214) 665-6510.
    Joe Massey, Grants Management Office, U.S. EPA--Region VI, 1445 
Ross Avenue, Dallas, Texas 75202, (214) 665-7408.

Region 7:
    Carol Rompage, Grants Management Officer, U.S. EPA--Region VII, 726 
Minnesota Avenue, Kansas City, KS 66101.

Region 8:
    Tony Medrano, Director, Office of Grants, Audit and Procurement, 
U.S. EPA--Region VIII, 999 18th Street, Suite 500, Denver, CO 80202-
2466, (303) 312-6336.
    Jack Bowles, U.S. EPA--Region VIII, 999 18th Street, Suite 500, 
Denver, CO 80202-2466, (303) 312-6315.

Region 9:
    Melinda Taplin, Chief, Grants Management Section (P-4-4), U.S. 
EPA--Region IX, 75 Hawthorne Street, San Francisco, California 94105, 
(415) 744-1693.

Region 10:
    Denise Baker, U.S. EPA--Region X, 1200 6th Avenue, Seattle, WA 
98101, (206) 553-8087.

    Dated: March 5, 1996.
Dana Minerva,
Deputy Assistant Administrator, Office of Water.
Kerrigan Clough,
Assistant Regional Administrator, Office of Pollution Prevention, State 
and Tribal Assistance, Region VIII.

Performance Partnership Grants Guidance

Executive Summary

Performance Partnership Grants (PPGs)

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

Purpose

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

Authority

     The House and the Senate have included the necessary 
appropriations language.
     It appears likely that authority will exist when EPA's 
appropriations act becomes law.
     EPA cannot award PPGs until the necessary appropriations 
language becomes law.
     Authority would apply to funds from sixteen grants funded 
from EPA's proposed Program and Infrastructure Assistance (PIA) 
appropriation.

Eligibility

     All States and federally recognized Indian Tribes 
(including environmental, health, agriculture, and other State/Tribal 
agencies) eligible to receive more than one categorical grant in Fiscal 
Year (FY) 1996 are eligible to receive PPGs.
     Local agencies are eligible if they: (1) Are a State 
agency; and (2) receive direct funding from EPA for two or more of the 
eligible grant programs.
     PPGs do not affect State or Tribal agency ``pass-through'' 
grants to local or other agencies.
     State/Tribal agency eligibility is subject to the 
authority of the governor or State legislature, or Tribal authorities, 
as appropriate.

Application

     States and Tribes may apply for PPGs for any period after 
enactment of statutory authority for the program and may convert FY 
1996 categorical grants to a PPG during the year.
     Applicants should apply for FY 1996 categorical grants in 
the event that EPA does not receive PPG authority. Applicants may use 
most of the same elements (e.g. workplans or program plans) of the 
categorical application package for the PPG application package. EPA 
will eliminate any unnecessary or duplicative documentation.
     PPG program commitments are the programmatic basis for the 
PPG award and grant accountability. Commitments may consist of 
environmental indicators, performance measures (including measures of 
activity), and narrative descriptions of program activities or program 
elements. PPG program commitments must have core program elements and 
performance measures, as defined by appropriate environmental statutes, 
regulations and EPA or State policy. PPG program commitments may be 
contained in categorical workplans, in an Environmental Performance 
Agreement (EnPA) or in a Tribal Environmental Agreement (TEA). 

[[Page 9698]]


Funding and State/Tribal Cost Share

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

State/Tribal Options

     The content of each PPG depends on its purpose and the 
extent to which a recipient would like to deviate from traditional 
categorical workplans or pilot the National Environmental Performance 
Partnership System (NEPPS). Below are the four major categories of PPGs 
defined in this guidance (applicants may suggest other options):
     Administrative flexibility and savings only (with 
categorical workplans);
     Administrative and programmatic flexibility (with 
categorical workplans and a supplemental EnPA or TEA that explains the 
rationale and benefits of the PPG);
     Administrative and programmatic flexibility; single/
multimedia EnPA/TEA in place of categorical workplans; and
     Any of the above PPG options and piloting the NEPPS.

EPA Regional Implementation

     EPA's Regional Administrators will be the designated 
approval and award officials for PPGs, with the ability to redelegate 
authority within their Regions.
     EPA Regions will designate a single grant Project Officer 
for each PPG.
     When State/Tribal PPG proposals present significant 
national policy issues, EPA Regions will consult with EPA's national 
program managers.

Table of Contents

Section 1. Overview of EPA's Performance Partnership Grant Program
Section 2. Authority
Section 3. Eligibility
Section 4. PPG Application Options in FY 1996
Section 5. EPA and Recipient Roles and Responsibilities
Section 6. Funding
Section 7. Administrative Information
Section 8. Post-Award Requirements
Attachment 1. Sample Performance Measures

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

Section 1.1  Scope of Guidance

    A Performance Partnership Grant (PPG) is a single grant made to a 
State or Tribe from grant funds allocated and otherwise available for 
existing categorical grant programs. PPGs are voluntary and provide 
States and Tribes with the option to combine funds from two or more 
categorical grants into one or more PPGs. Recipients may receive their 
financial assistance as one or more PPG(s), or continue receiving funds 
as categorical grants. States and Tribes may apply for these grants for 
any period after enactment of statutory authority for the PPG program.
    This Guidance provides direction for: (1) States and Tribes that 
apply for and receive PPGs; (2) States applying for PPGs and piloting 
the National Environmental Performance Partnership System (NEPPS); and 
(3) EPA Regions that approve and award PPGs. This document remains in 
effect until superseded by statute, federal regulation, or amended 
guidance. EPA expects to develop and issue regulations governing PPGs 
during FY 1996/1997. The Agency expects extensive stakeholder 
involvement in the development of the regulation.

Section 1.2  Organization

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

Section 1.3  Purpose and Goals

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

    \1\ The National Performance Review (``Creating a Government 
That Works Better and Costs Less''), September 1992; EPA's State-EPA 
Capacity Steering Committee recommendations in ``Strengthening 
Environmental Management in the United States, Report of the Task 
Force to Enhance State Capacity,'' Environmental Protection Agency, 
Office of the Administrator, EPA-270-R-93-001, July 1993; and the 
National Academy of Public Administration Report (``Setting 
Priorities, Getting Results: A New Direction for EPA''), April 1995.
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     Increase State and Tribal flexibility,
     Help States and Tribes improve environmental performance,
     Achieve administrative savings by streamlining the grants 
process, and
     Strengthen EPA partnerships with State and Tribal 
governments.
    These previous recommendations have formed the basis for the 
purposes and goals of the PPG program, as described below:
    Flexibility. PPGs will provide States and Tribes with flexibility 
to address their most pressing environmental priorities across all 
media and establish resource allocations based on those priorities, 
while continuing to address core program commitments. They will allow 
recipients to more effectively administer core statutory, regulatory 
and non-regulatory programs. Recipients will also be able to develop 
innovative multimedia programs and activities that are difficult to 
fund with separate categorical grants. Moreover, recipients will have 
the option of developing multi-year planning.
    Improved Environmental Performance. PPGs will encourage States and 
Tribes to improve environmental performance and more effectively link 
program goals with program outcomes. Recipients will be 

[[Page 9699]]
able to establish priorities across all environmental programs, and 
integrate strategic goals such as pollution prevention and community-
based environmental protection into their program planning. States and 
Tribes will be able to achieve these objectives by:
     Coordinating and integrating activities which are now 
fragmented under many statutes, regulations, and programs,
     Conducting assessments to define environmental problems 
and set priorities with the public,
     Targeting the most significant environmental problems,
     Building environmental protection capacity through 
training, technical assistance and other appropriate means, and
     Using common sense and multimedia environmental protection 
strategies such as pollution prevention, ecosystem protection, 
community-based protection and environmental justice.
    The emphasis on improved environmental performance will be achieved 
by increasing the use of environmental indicators and program 
performance measures, and decreasing the reporting of inputs and 
activities. Performance measures, to be developed jointly by EPA and 
each State or Tribe, will gauge progress toward agreed upon goals (see 
Section 1.7). Improved performance measures will provide the foundation 
for better reporting, monitoring, and assessment of State, Tribal and 
national environmental conditions. EPA expects that targeted strategic 
approaches and improved performance measures, when implemented 
together, will accelerate long-term systematic improvements in 
environmental conditions.
    Administrative Savings. EPA, States, and Tribes expect PPGs to 
reduce administrative burdens and costs by reducing the overall number 
of grant applications, workplans, reports and certifications associated 
with traditional, single media federal grants. Multi-year planning may 
also contribute to reduced administrative costs.
    Strengthened Partnerships. EPA will develop partnerships with 
States and Tribes where both parties share the same environmental and 
program goals and jointly deploy their unique resources and abilities 
to accomplish those goals.

Section 1.4  Summary of State and Tribal Options

    The PPG program is designed to provide maximum flexibility to 
States and Tribes. Potential recipients may apply for a PPG to replace 
all sixteen eligible categorical grants, some of the sixteen (e.g., 
water media PPG), or portions of some of them (e.g., an enforcement 
PPG). As summarized below and explained in Section 4, application 
options are streamlined and tailored to the specific goals of the PPG. 
States and Tribes may apply for a PPG using any of the following four 
options. EPA will also work with States and Tribes on any other options 
they would like to propose.
    I. Administrative flexibility and savings based on FY 1996 
categorical workplans (see Section 4.3).
    II. Administrative and programmatic flexibility with an 
Environmental Performance Agreement (EnPA)/Tribal Environmental 
Agreement (TEA) that includes FY 1996 categorical workplans. In this 
case, the categorical workplans still establish most of the PPG program 
commitments. The EnPA/TEA also explains the rationale for the PPG and 
identifies any additional PPG program commitments (see Section 4.4).
    III. Administrative and Programmatic flexibility based on an EnPA/
TEA that replaces categorical workplans. In this case, the EnPA/TEA 
establishes all of the PPG program commitments (see Section 4.5).
    IV. Application for a PPG under any of the three previous options 
and piloting the National Environmental Performance Partnership System 
(NEPPS). Currently, this option is available for States, although 
interested Tribes could explore applicability with their Regional 
Administrator (see Section 4.6).

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

    On May 17, 1995, State and EPA leaders signed a ``Joint Commitment 
to Reform Oversight and Create a National Environmental Performance 
Partnership System'' (NEPPS). The objective of signing this agreement 
was to accelerate the transition to a new working relationship between 
EPA and the States--one which reflects the advancement made in 
environmental protection over the preceding two decades by both the 
States and EPA.
    Key goals that this new partnership agreement share with PPGs are: 
to allow States and EPA to achieve improved environmental results by 
directing scarce public resources toward the highest priority, highest 
value activities; to provide States with greater flexibility to achieve 
those results; to improve public understanding of environmental 
conditions and choices; and to enhance accountability to the public and 
taxpayers. Other key goals of the NEPPS partnership agreement are 
increased reliance on self-management by State programs and a 
differential approach to oversight that serves as an incentive for 
State programs to perform well, rewarding strong programs and freeing 
up federal resources to address problems where State programs need 
assistance.
    NEPPS and PPGs share many of the same objectives. Of course, States 
may apply for PPGs without piloting NEPPS (and vice-versa) in FY 1996. 
But where States wish to apply for PPGs and enter NEPPS, the processes 
and documentation are integrated and, where appropriate, identical. The 
Environmental Performance Agreement (EnPA) is a document that is common 
to both PPGs and NEPPS. For States doing both, the EnPA will allow the 
processes and documentation to be integrated (see Section 4.6 for more 
details).

Section 1.6  Relationship to Tribal Environmental Agreements

    On July 14, 1994, Administrator Browner issued a nine-point Action 
Memorandum on Strengthening Tribal Operations which called for the 
development of Tribal-EPA Workplans (now called Tribal Environmental 
Agreements) to be jointly developed by EPA Regions and Tribes. In 
consultation with the Agency's Tribal Operations Committee, the 
American Indian Environmental Office and the National Indian Work Group 
developed guidance for the Tribal Environmental Agreements (TEAs). 
Currently, EPA Regions and Tribes are developing TEAs, many of which 
will be signed within the next year.
    The TEAs (signed by the EPA Regional Administrator and the Tribal 
leadership) are a planning tool which clearly identifies the Tribe's 
environmental objectives, expected outcomes and resource needs, and 
implementation and management assistance needed from EPA. The 
Agreements establish the Tribe's environmental objectives over 3-4 
years, but are flexible documents that can be changed to meet Tribal 
needs.
    For Tribal PPGs, the TEAs will substitute for the State EnPAs. In 
order for the TEAs to also compare with the EnPAs as commitment 
documents (PPG Options II-IV) where Tribes/States are shifting funds, 
Tribes wanting to enter a PPG will have to include a specific section 
on the anticipated PPG funds and program commitments in addition to the 
other elements of the TEA or as an amendment to an already signed TEA. 
By using the TEA instead of the EnPA, the Tribes will not have to 

[[Page 9700]]
conduct two planning processes. The addition of a commitment section to 
the TEA should ensure that PPG funding shifts, commitments, and 
expectations are clearly defined in one document signed by both the 
Tribe and EPA. TEAs will be required for Tribes wherever EnPAs are 
required for States.

Section 1.7  PPG Accountability and Performance Measures

    All PPGs will be required to contain a legally binding set of 
program commitments. These program commitments will be the primary 
basis for evaluating the success of a PPG. Some program commitments 
will be required in all PPGs because they are required by statute, 
regulation, standing legal agreements between EPA and States/Tribes 
(e.g., Delegation Agreements), or National Program Manager program 
guidance. Others will be optional.
    For the purposes of this PPG guidance, program commitments are ``a 
description of the PPG program goals and objectives, results and 
benefits expected, a plan of action, and quantifiable projections of 
the program and environmental accomplishments to be achieved and the 
performance measures to be used. Where accomplishments cannot be 
quantified, activities can be listed to show the schedule of 
accomplishments. PPG program commitments are the legal basis for the 
expenditure of federal grant funds and the recipient's matching 
requirement'' (see Section 1.8).
    During FY 1996, EPA will continue to work with States and Tribes to 
define the elements of program commitments, including national 
environmental goals and performance measures.
    As EPA and States/Tribes negotiate program commitments under PPGs, 
they are encouraged to use performance measures that measure program 
and environmental outcomes and outputs more often than they now do. 
Performance measures that are PPG program commitments must be 
quantifiable, measurable, and verifiable. Specifically, EPA encourages 
all States and Tribes to adopt outcome and output-oriented performance 
measures that track program performance, environmental conditions and 
trends, and business environmental performance.
    State/Tribal Program Performance measures suggest how effectively 
or reliably a State/Tribal Program is achieving its objectives. 
Measures may be outcome or output oriented. They may include, where 
appropriate and necessary, activity measures traditionally used to 
evaluate environmental programs.
    Business Environmental Performance measures assess environmental 
behavior in the private sector.
    Environmental Indicators are measures of actual changes in air and 
water quality, land use, and changes in living resources and human 
health.
    Appropriate accountability provisions are essential in designing 
the new PPG program. A fundamental goal of EPA's efforts to design 
accountability provisions into PPGs is to begin moving Federal, State, 
and Tribal programs toward the use of results-oriented measures of 
environmental and program performance that are understandable and 
meaningful to the public. In recent years, EPA, States, and Tribes, 
with input from the stakeholders and the public, have embarked on new 
and innovative strategic directions and developed or tested innovative 
performance measures that are a natural fit to incorporate into PPGs. 
EPA believes that PPG performance measures should be consistent with 
ongoing EPA and State or Tribal initiatives, such as ``The New 
Generation of Environmental Protection: EPA's Five-Year Strategic 
Plan,'' 2 the National Environmental Goals Project, and EPA 
National Program performance measures (developed under the NEPPS 
initiative). Examples of some potential performance measures are 
included in Attachment 1. A more comprehensive list of optional 
environmental indicators may be found in ``Prospective Indicators for 
State Use in Performance Agreements'' prepared under a cooperative 
agreement with the Florida Center for Public Management, Florida State 
University. This report provides a preliminary list of national 
environmental indicators that may be helpful to States, Tribes and EPA 
looking for good ideas about available environmental indicators.3

    \2\ EPA 200-B-94-002.
    \3\ To obtain a copy of the document, contact EPA's Office of 
Policy, Planning and Evaluation, at (202) 260-4909, or Florida State 
University at (904) 921-0423.
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    For FY 1996, performance measures are required only if they are 
required by statute, regulation or standing legal agreements between 
EPA and States/Tribes (e.g., Delegation Agreements), or if EPA National 
Program Managers or Regions have required them in guidance or policy.

Section 1.8  Definitions

    Agency--United States Environmental Protection Agency (EPA).
    Categorical Grant--Media-specific or multimedia grant for a 
particular program or narrowly defined activities.
    Environmental Performance Agreement (EnPA)--Broad strategic 
document containing negotiated environmental priorities and goals. The 
EnPA may also include specific program commitments that are 
incorporated by reference in the Performance Partnership Grant 
Agreement. A State may use this document as a means to implement NEPPS, 
even if the State does not apply for a PPG.
    National Environmental Performance Partnership System (NEPPS)--A 
new approach to developing and implementing the State-EPA oversight 
relationship agreed to by the States and EPA. It contains seven 
principal components: (1) Increased use of environmental indicators; 
(2) a new approach to program assessments by States; (3) environmental 
performance agreements; (4) differential oversight; (5) performance 
leadership programs; (6) public outreach and involvement; and (7) joint 
system evaluation.
    National Program Manager--Individual responsible for setting the 
direction and policy for the management of an EPA media or enforcement 
program on a National level.
    Oversight Reform--Same as National Environmental Performance 
Partnership System (see above).
    Performance Partnership Grant (PPG)--A PPG is a single grant made 
to a State or Tribe from grant funds allocated and otherwise available 
for more than one existing categorical grant program. PPGs are 
voluntary and will provide States and Tribes with the option to combine 
funds from two or more of their categorical grants into one or more 
PPGs. Recipients must be eligible to receive the categorical grants 
included in a PPG. However, the unique administrative requirements and 
limitations set forth in 40 CFR Part 35 Subpart A for each categorical 
program will not apply after the funding is approved for a PPG. Only 
those requirements that pertain to PPGs will be applicable.
    Performance Partnership Grant Agreement--The legal instrument by 
which EPA will transfer money, property, services or anything of value 
to an eligible PPG grant recipient. The agreement will specify:
     Budget and project periods,
     Federal share of eligible program costs,
     Combined budget,
     PPG program commitments (see definition below), and
     Any terms and conditions. 
    
[[Page 9701]]

    Performance Partnership Grant Program Commitments--A description of 
the PPG program goals and objectives, results and benefits expected, a 
plan of action, and quantifiable projections of the program and 
environmental accomplishments to be achieved and the performance 
measures to be used. Where accomplishments cannot be quantified, 
activities can be listed to show the schedule of accomplishments. PPG 
program commitments are the legal basis for the expenditure of federal 
grant funds and the recipient's matching requirement. This guidance 
will commonly refer to PPG program commitments as consisting of goals, 
objectives, performance measures and program activities. A set of core 
program commitments must be included in the PPG Program Commitments. 
These core program commitments are based on requirements in statutes, 
regulations, standing legal agreements between EPA and States/Tribes 
(e.g. Delegation Agreements), and National Program Manager guidance.
    Program Flexibility--Reduction of effort or elimination of a 
program element in order to invest in another media-specific or 
multimedia program element.
    Tribal Environmental Agreement (TEA)--A planning tool (signed by 
the EPA Regional Administrator and the Tribal leadership) which clearly 
identifies the Tribe's environmental objectives, expected outcomes and 
resource needs, as well as implementation and management assistance 
needed from EPA. The Agreements establish the Tribe's environmental 
objectives over 3-4 years, but are flexible documents that can be 
changed to meet Tribal needs.

Section 2. Authority

Section 2.1  Statutory Authority

    As of the date of this document, there is not yet Federal authority 
providing for the award of PPGs by the Administrator of EPA. The 
President proposed the necessary legislative authority with the FY 1996 
Budget, and the House of Representatives and the Senate have included 
the necessary authority in EPA's appropriations bill. However, the 
Agency cannot award PPGs until EPA's appropriations statute is enacted, 
and the Office of Management and Budget and Congress have approved the 
Agency's Operating Plan. The Agency will keep potential recipients 
informed as to the status of the necessary legislative authority.

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

Section 2.2  Other Authorities

    The requirements of 40 CFR Part 31, ``Uniform Administrative 
Requirements for Grants and Cooperative Agreements to State and Local 
Governments,'' will apply to a PPG as they do to a categorical grant. 
Some limited exceptions to 40 CFR Part 31 may be necessary to 
accommodate these grants. EPA will manage such exceptions for FY 1996 
awards through the grant deviation process. Additional requirements are 
included in substantive program regulations, OMB Circulars A-87 and A-
102, the EPA Assistance Administration Manual, EPA-State/Tribal 
Memoranda of Agreement (MOA), NPM-Regional Guidance and MOA, the NEPPS 
agreement signed on May 17, 1995 (for States piloting NEPPS), and E.O. 
12372, ``Intergovernmental Review of Federal Programs.''

Section 3. Eligibility

Section 3.1  Eligible Applicants

    All States, territories, and Federally recognized Indian Tribes 
eligible to receive more than one of the categorical grants referred to 
in Section 3.2 in FY 1996 are eligible to receive a PPG(s). Any duly 
authorized State or Tribal entity that currently receives or is 
eligible to receive EPA categorical program grants may request a PPG 
for the funds it administers. This may include agencies other than 
environmental agencies (e.g., agricultural and health agencies), where 
authorized by State/Tribal law. Agencies that now receive pass-through 
funding from a State or Tribe may continue to receive such funding 
subject to applicable State, Tribal or Federal law. For any agency that 
now receives direct Federal funding, but is not eligible for a PPG 
(e.g., local air districts), EPA will continue to make Federal funding 
available pursuant to existing categorical grant authorities. 
Eligibility for PPGs is subject to the appropriate State, Tribal, or 
Territorial executive or legislative authorities.
    In the case of proposals which combine funds currently awarded to 
separate, duly authorized State or Tribal agencies--such as combining 
funds from an environmental department with funds from program grants 
to an agriculture or health department--a joint proposal signed by the 
appropriate officials should indicate a method for sharing funds in 
addition to demonstrating the eligibility, planning, accountability and 
evaluation elements of PPGs described in this guidance.
    If program eligibility, formerly referred to as Treatment as State 
(TAS), is required for a Tribal applicant to be eligible to receive 
categorical funding for a specific program, the Agency will require the 
same eligibility if the Tribal applicant intends to include funds for 
that categorical grant in the PPG or to use PPG funds for activities 
under that program.
    EPA encourages applicants to combine funds from as many categorical 
program grants as possible into a PPG to achieve maximum flexibility.

Section 3.2  Eligible Grant Programs

    Funds available for the following sixteen grants identified in 
EPA's FY 1996 Program and Infrastructure Assistance appropriation 
4 are eligible to be combined into a PPG in FY 1996:

    \4\ There has been some discussion of changing the name of the 
Program and Infrastructure Assistance appropriation to the State and 
Tribal Assistance Grants appropriation. As of the date of issuance 
of this document, no final decision had been made, and no name 
change had occurred.
---------------------------------------------------------------------------

1. air pollution control (CAA section 105),
2. water pollution control (CWA section 106),
3. nonpoint source management (CWA section 319),
4. water quality cooperative agreements (CWA section 104(b)(3)),
5. wetlands program development (CWA section 104(b)(3)),
6. public water system supervision (SDWA sections 1443(a) and 
1451(a)(3)),
7. underground water source protection (SDWA section 1443(b)),
8. hazardous waste management (Solid Waste Disposal Act section 
3011(a)),
9. underground storage tank (Solid Waste Disposal Act section 
2007(f)(2)),
10. radon assessment and mitigation (TSCA section 306),
11. lead-based paint activities (TSCA section 404(g)),
12. toxics compliance and monitoring (TSCA section 28)
13. pollution prevention incentives for States (PPA section 6605)
14. pesticide enforcement (FIFRA section 23(a)(1)),
15. pesticide applicator certification and training (FIFRA section 
23(a)(2)), and 

[[Page 9702]]

16. General Assistance Grants to Indian Tribes (Indian Environmental 
General Assistance Program Act of 1992). Only eligible Tribes can 
propose to include these funds in a PPG application.

    Generally, grant funds that States combine into PPGs are those that 
provide for continuing, ongoing, environmental programs. Because all 
EPA grants to Tribes are awarded through a competitive or discretionary 
process, Tribes will be allowed to include these grants in a PPG 
without adverse affects to their ability to compete for any grant. For 
competitive grants on the above list (e.g., pollution prevention 
incentives for States, nonpoint source, wetlands program development, 
water quality cooperative agreements, general assistance program grants 
to Tribes) to be combined in a PPG, the State or Tribe must first be 
awarded the competitive grant, and must identify specific output 
measures as a condition for adding the funds to a PPG. EPA will add the 
funds to the PPG by a grant amendment.

Section 3.3  Eligible Activities

    Recipients may use PPGs to fund activities that are within the 
cumulative eligibilities of the grants listed in Section 3.2. Within 
these eligibilities, a PPG may fund multimedia regulatory and non-
regulatory activities that could be difficult to fund under any 
individual categorical grant. EPA, in consultation with the States and 
Tribes, has developed a list of activities indicative of those it hopes 
PPGs will encourage. The list does not indicate pre-approval of 
activities and is not intended to be exhaustive. It merely illustrates 
the kind of activities which States, Tribes, the Agency and other 
stakeholders have identified as difficult to conduct with categorical 
grants and for which PPGs would be appropriate.
    Activities that PPGs may support, but are not limited to:
     Pollution prevention oriented multi-media rules, 
permitting, compliance assistance, inspections, enforcement, training, 
and facility planning ( e.g., one industry/one rule, one stop emission 
reporting, permitting and compliance assistance),
     Non regulatory pollution prevention technical assistance, 
technology development and diffusion, and partnerships with 
accountants, financiers, insurers, risk managers, urban planners, 
chemists, product designers and marketers, and other professions,
     Ecosystem, community, sector, watershed, or airshed 
environmental protection strategies (e.g., watershed targeted NPDES 
permits, empowerment zones),
     Support of Agency initiatives including Common Sense 
Initiative & Regulatory Reinvention (e.g., XL strategy implementation, 
market based strategies, local community risk assessment, negotiated 
rulemaking, third-party auditing, self certification for compliance),
     Environmental justice,
     Public outreach and involvement,
     Information clearinghouses,
     Environmental monitoring,
     Capacity building and environmental code development, and
     Integration of regulatory and non regulatory strategies.

Section 4. PPG Application Options

Section 4.1  Introduction

    This chapter presents the application options for States and Tribes 
applying for a PPG(s). For FY 1996, all eligible PPG applicants should 
apply for a categorical grant(s) in the event that EPA's appropriations 
statute is not enacted with the necessary PPG authority. As an 
alternative to submitting separate categorical workplans and budgets, 
applicants may submit, in accordance with 40 CFR 35.145, a consolidated 
workplan and budget. The consolidated budget should identify funds from 
each categorical grant program. The consolidated workplan should 
identify how funds from each categorical grant program will support 
particular activities.
    Applicants choosing to apply only for categorical grants for FY 
1996 will continue to follow the current process and schedule for 
categorical grants. (For program grants with budget periods ending on 
9/30/95, applications were due by 8/1/95. Reimbursement for pre-award 
costs from 10/1/95 until the date of award are only available if EPA 
has received the application by 9/30/95).

Section 4.2  PPG Options

    Given the uncertainty of EPA's Congressional appropriations in FY 
1996 and the fact that many States and Tribes have completed or nearly 
completed their categorical grant applications, EPA is providing PPG 
applicants with the following four application options:
    I. Administrative flexibility and savings based on FY 1996 
categorical workplans (see Section 4.3).
    II. Administrative and programmatic flexibility with an 
Environmental Performance Agreement (EnPA)/Tribal Environmental 
Agreement (TEA) that includes FY 1996 categorical workplans. In this 
case, the categorical workplans still establish most of the PPG program 
commitments. The EnPA/TEA also explains the rationale for the PPG and 
identifies any additional PPG program commitments (see Section 4.4).
    III. Administrative and Programmatic flexibility based on an EnPA/
TEA that replaces categorical workplans. In this case, the EnPA/TEA 
establishes all of the PPG program commitments (see Section 4.5).
    IV. Application for a PPG under any of the three previous options 
and piloting the National Environmental Performance Partnership System 
(NEPPS).
    Currently, this option is available for States, although interested 
Tribes could explore applicability with their Regional Administrator 
(see Section 4.6). In addition to these options, EPA will continue 
working with States and Tribes to identify other application options 
for implementing PPGs in FY 1996.
    PPG applicants, like all State, local, and Tribal federal grant 
applicants, will continue to use the ``Application for Federal 
Assistance: State and Local Non-Construction Programs'' (Standard Form 
424), including the required supporting documents. Submittal of this 
application by a Governor or other appropriate State or Tribal official 
will serve as the State's or Tribe's official request for a PPG.

Section 4.3  Option I. Applicants Seeking a PPG for Administrative 
Flexibility and Savings Based on FY 1996 Categorical Workplans

    When an applicant has either completed, or plans to complete, 
negotiation of its categorical grant workplans for FY 1996, the PPG 
program commitments will consist of those grant workplans. The PPG 
application should contain:
     First page of Standard Form 424--``Application for Federal 
Assistance,''
     Consolidated budget (separate categorical budgets totaled 
for funding in the PPG),
     A list of the grant programs (or portions thereof) from 
which funds will be reprogrammed to a PPG(s),
     A narrative statement explaining the rationale and 
expected benefits of the PPG (i.e., improved performance of the 
combined grant, administrative savings, reinvestments), and
     Categorical workplans proposed for inclusion in the PPG 
(same workplans submitted with categorical applications can be used). 

[[Page 9703]]


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

    This section applies to applicants who will use PPGs to implement a 
new strategic direction, programmatic flexibility, or innovative 
environmental protection strategies, not already explained in 
categorical grant workplans. In this case, an EnPA/TEA will contain: 
the goals and rationale for the PPG; the FY 1996 categorical workplans 
that establish most of the PPG program commitments; and any additional 
PPG program commitments not contained in categorical workplans. The PPG 
Agreement would reference the categorical workplans and any other 
sections of the EnPA/TEA that contain PPG program commitments. The 
intent is to develop the EnPA in two phases. In the first phase, EPA 
and the applicant negotiate and agree on environmental priorities and 
goals. In the second phase, EPA and the applicant negotiate PPG program 
commitments to achieve these goals.
    The PPG application should contain the following:
     First Page of Standard Form 424--``Application for Federal 
Assistance,''
     Single budget supporting the PPG, and
     An EnPA/TEA that includes:
     A list of grants (or portions thereof) from which funds 
will be reprogrammed to a PPG(s),
     Negotiated environmental priorities and goals,
     A narrative statement explaining the rationale and 
expected benefits (i.e., improved performance of the combined grant, 
administrative savings, disinvestments, reinvestments),
     Identification of EPA Roles and Responsibilities,
     PPG program commitments consisting of:
     Categorical workplans proposed for inclusion in the PPG 
(workplans submitted with categorical applications can be used), and
     Any additional multimedia or strategic PPG program 
commitments and performance measures,
     A description of public participation efforts (optional), 
and
     Evaluation criteria and procedure.

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

    This section describes the elements of a PPG application based 
entirely on an EnPA/TEA that establishes PPG program commitments. The 
EnPA/TEA replaces the FY 1996 categorical workplans. The PPG Agreement 
would reference the sections of the EnPA/TEA that are PPG program 
commitments. In this case, a State or Tribe could: (1) Continue to make 
media or program the primary basis for organizing its PPG program 
commitments; or (2) organize PPG program commitments on some other 
primary basis (e.g., community-based environmental protection).
    The PPG application should contain the following:
      First Page of Standard Form 424--``Application for 
Federal Assistance,''
     Single budget supporting the PPG, and
     An EnPA/TEA that includes:
     A list of grants (or portions thereof) from which funds 
will be reprogrammed to a PPG(s),
     Negotiated environmental priorities and goals,
     A narrative statement explaining the rationale and 
expected benefits (i.e., improved performance of the combined grant, 
administrative savings, disinvestments, reinvestments),
     Identification of EPA roles and responsibilities,
     PPG program commitments that include:
     Core program commitments, and
     Multimedia and additional media-specific program 
commitments,
     A description of Public Participation efforts (optional), 
and
     Evaluation.
    The following explains in more detail some of the elements of the 
EnPA/TEA not previously addressed:
     Negotiated Environmental Priorities and Goals. This part 
of the EnPA/TEA is the product of negotiation between senior Regional 
officials and State or Tribal officials in positions to negotiate 
across grant programs, where this is appropriate. This part identifies 
the applicant's most significant environmental problems and the goals 
the applicant expects to achieve with the PPG. This strategic planning 
process reflects the applicant's priorities (as contained in any State 
or Tribal strategic plans or self-assessments), comparative risk 
studies or other risk-based approaches, and national priorities 
(enumerated in EPA's 5-year strategic plan 5, the National 
Environmental Goals Project and National program priorities specified 
in EPA HQ/Regional Memorandums of Agreement). Major new strategic or 
program directions or investments/ disinvestments should be identified 
here.

    \5\  ``The New Generation of Environmental Protection: EPA's 
Five-Year Strategic Plan,'' (EPA 200-B-94-002)
---------------------------------------------------------------------------

     EPA Roles and Responsibilities in Supporting State or 
Tribal Efforts. To strengthen the federal partnership with States and 
Tribes, the EnPA/TEA should describe how EPA will carry out its federal 
responsibilities and how it will support the State's or Tribe's 
environmental protection efforts. The negotiated agreement should 
include the program commitments (goals, performance measures, and/or 
program activities) the recipient expects to achieve under the PPG. The 
agreement should also set forth procedures (e.g., mid-year and end-of-
year reviews, reporting requirements, joint activities) that EPA and 
the recipient will use for evaluating accomplishments, discussing 
progress, and making adjustments to meet milestones.
     Core Program Commitments. The EnPA/TEA must include core 
program commitments (goals, performance measures, program activities) 
derived from statutes, regulations, and standing legal agreements 
between EPA and States/Tribes (e.g., Delegation Agreements). As 
appropriate and negotiated between EPA Regions and recipients, core 
program commitments and performance measures should reflect National 
Program Manager guidance, EPA Headquarters-Regional MOA, Regional-
State/Tribal MOA, and other EPA or State/Tribal policies. EPA should 
work with States and Tribes to balance the need to maintain core 
program requirements with the need to incorporate program flexibility 
and move toward program performance measures and environmental 
indicators. An EnPA/TEA may also include measures for which data 
sources are not yet available if there is a commitment to develop 
reliable data sources.
     Public Participation. For FY 1996, States and Tribes 
should continue to use their current public participation processes in 
conjunction with PPGs. EPA believes that it is critical to involve all 
stakeholders in the process of determining environmental priorities and 
goals, and therefore strongly encourages States and Tribes to involve 
stakeholders in identifying priority environmental problems. 
Recognizing the role and contribution of general purpose and special 
purpose local governments in the Nation's overall protection of the 
environment, EPA strongly encourages States to engage local 
jurisdictions which would be affected by a PPG. EPA also encourages 
recipients to share with stakeholders the results of their FY 1996 
activities defined in the EnPA/TEA. Effective public participation will 
establish the 

[[Page 9704]]
foundation for greater program flexibility and the achievement of 
better environmental results.
     PPG Evaluation. The recipient should prepare a PPG annual 
report (as described in 40 CFR 31.40(b)) as well as satisfy any other 
reporting requirements required in the PPG agreement. In addition to 
evaluating performance based on PPG program commitments, the recipient 
should identify any problems, delays or conditions which materially 
affected the recipient's ability to meet the PPG objectives, and any 
benefits that enabled the recipient to perform better than expected. 
EPA and the States/Tribes are also interested in knowing whether the 
work undertaken under the grant: (1) Addressed the stated strategic 
priorities and goals; (2) achieved administrative cost savings; (3) 
where appropriate, improved environmental results (to the extent 
environmental performance measures were part of the PPG program 
commitments); and (4) improved EPA/grantee working relationships.\6\ 
After reviewing the annual report, the EPA Project Officer will provide 
evaluation findings to the recipient and will include such findings in 
the official PPG file.
     Evaluating the National PPG Program. EPA will request the 
assistance of PPG recipients to evaluate the overall PPG process. 
Lessons learned from the FY 1996 experience will be used to modify the 
program in subsequent years. The overall PPG grant process will be 
evaluated by EPA and program participants in order to understand how 
well it is being implemented as a national program. In addition to the 
criteria used to evaluate individual PPGs, national criteria will 
address whether PPGs: (1) Led to greater State and Tribal flexibility; 
(2) resulted in States and Tribes adopting innovative environmental 
protection strategies; (3) changed polluter behavior; and (4) improved 
public health and the environment.
Section 4.6  Applicants Seeking a PPG and Piloting the National 
Environmental Performance Partnership System (NEPPS) in FY 1996 \7\
    This section applies to States interested in applying for a PPG and 
piloting NEPPS. A State may choose to pilot NEPPS in combination with 
any of the PPG options described above. In addition to providing the 
information for PPGs described in either Sections 4.3, 4.4, or 4.5, a 
NEPPS pilot State would have to consult the May 17, 1995 NEPPS 
agreement for details of the NEPPS system.

                                                                                                                
                                   Summary of PPG Application Requirements \1\                                  
----------------------------------------------------------------------------------------------------------------
                                                                  Applicants For a PPG                          
                                         Applicants For a PPG    Seeking Administrative                         
                                        Seeking Administrative       & Programmatic         Applicants Seeking  
                                        Flexibility Only Based    Flexibility Based on       Admin. & Program   
       PPG Application Elements          on Categorical Grant      Categorical Grant     Flexibility Based on an
                                           Workplans. Most        Workplans. EnPA/TEA     EnPA/TEA that Replaces
                                         Elements Already in     Addresses Differences      Categorical Grant   
                                        Categorical Workplans       From Categorical            Workplans       
                                                                       Workplans                                
----------------------------------------------------------------------------------------------------------------
Standard Form 424--``Application for   Required...............  Required...............  Required.              
 Federal Assistance'' (1st page).                                                                               
EnPA/TEA.............................  Optional...............  Required...............  Required.              
Budget...............................  Required...............  Required...............  Required.              
Grant Selection......................  Required...............  Required...............  Required.              
Rationale and expected benefits......  Required...............  Required...............  Required.              
Negotiated Environmental Goals and     N/A....................  Required...............  Required.              
 Priorities.                                                                                                    
EPA Roles and Responsibilities to      Optional...............  Required...............  Required.              
 Support State and Tribal Efforts.                                                                              
PPG Program Commitments..............  Required...............  Required...............  Required.              
Categorical Workplans................  Required...............  Required...............  N/A.                   
Core Program Commitments.............  Required...............  Required...............  Required.              
Multimedia/strategic Program           Optional...............  Encouraged.............  Encouraged.            
 Commitments.                                                                                                   
Environmental Indicators.............  Optional...............  Optional...............  Optional.              
Evaluation of PPG....................  Required...............  Required...............  Required.              
Public Participation.................  Optional...............  Optional...............  Optional.              
----------------------------------------------------------------------------------------------------------------
\1\ As noted in Section 4.1, due to the uncertainty of PPG legislation, all application options assume the      
  submission of separate categorical workplans or a consolidated workplan.                                      
Key: N/A=Not Applicable.      Note: States piloting NEPPS also reference May 17 NEPPS Agreement.                

Section 4.7  Converting Categorical Grants to a PPG during FY 1996
    The following procedures apply to those applicants who receive a 
categorical grant for FY 1996 and desire to convert from a categorical 
grant(s) to a PPG(s).

    \6\ The FY 1995 grant flexibility demonstration projects in New 
Hampshire, Massachusetts and North Dakota provide some useful 
lessons in evaluating combined grants. Updates on these projects are 
available from Regions I and VIII.
    \7\ Currently, this option is available for States, although 
interested Tribes could explore applicability with their Regional 
Administrator.
    The State or Tribe should submit applications for all FY 1996 
categorical grants according to the current categorical application 
schedule. EPA will award the applicant's categorical grants for FY 
1996. If an applicant then decides to convert to a PPG, the applicant 
must submit a PPG application and consult with the Regional 
Administrator to select a start date for the PPG. The Regional 
Administrator will arrange for the necessary deobligation and 
reprogramming of funds. The Regional Administrator will then award the 
PPG. The FY 1996 categorical grant should be closed when appropriate 
and upon
receipt of a final financial status report and funds reprogrammed into 
the PPG. To facilitate the applicant's receipt of its total annual 
grant funding the applicant should be prepared to indicate at the time 
of its categorical award whether it anticipates participation in a PPG 
in FY 1996. If so, the applicant should provide an estimated start date 
for the PPG. Applicants should refer to Section 4 for additional 
instructions.
    There is no deadline for submitting a PPG application to convert 
specified categorical grants during FY 1996. However, the sooner such 
an

[[Page 9705]]

application is submitted, the more advantages of the PPG the recipient 
will realize in FY 1996.

Section 5.  EPA and Recipient Roles and Responsibilities

Section 5.1  EPA Headquarters

    National Program Manager (NPM). The NPMs set national strategic 
direction and core program requirements and priorities for all 
environmental programs. In any circumstance where a State or Tribe 
proposes activities that will lead it to significantly deviate from NPM 
priorities or regulatory requirements, or raise issues of national 
consistency, the Regions will consult with the appropriate NPM. In many 
cases, NPMs also allocate national categorical grant funds to EPA's 
Regions based on an established allocation criteria.
    Grants Administration Division (GAD). GAD responsibilities include: 
(1) Sponsoring Office for the Performance Partnership Grant Delegation 
of authority; (2) approving Office for deviations to 40 CFR Part 31 
required to implement PPGs in FY 1996; and (3) sponsoring office for 
proposed PPG regulations (FY 1997).
    Office of the Comptroller (OC). OC's responsibilities include: (1) 
Establish and secure Congressional approval of PPG program element; (2) 
propose Congressional approval to exempt new PPG program element from 
the reprogramming limit; (3) distribute categorical grant funds to the 
Regions; and (4) approve requests by the Regions to reprogram 
categorical grant funds into the PPG program element.

Section 5.2  EPA Regions

    Regional Administrator (RA). The RA is the designated approval and 
award official for PPGs with re-delegation authority to the Deputy 
Regional Administrator or the Division Director or equivalent level 
(See Section 7.1). The RA, or a senior regional official(s) designated 
by the RA, should conduct the initial negotiations with the applicant 
to establish environmental priorities and goals (See Section 4.5). The 
RA should notify NPMs when their programs are being incorporated into a 
PPG and should keep the NPMs informed of activities carried out under 
PPGs that affect the NPMs' programs.
    The RA should also designate a single point of contact to serve as 
the Performance Partnership Grant Project Officer (PO) on each award. 
Because PPGs cross programs, the PO should coordinate negotiations with 
the recipient on behalf of all the relevant EPA programs. The RA may 
wish to designate a team of sub-project officers to support the 
designated Project Officer, or set additional criteria for designating 
the PO.
    Regional Program Manager. The managers of all programs included in 
the PPG will jointly be the program managers of the PPG, as will other 
appropriate Regional management officials. Regional Program Managers: 
(1) Will at a minimum be consulted about/participate in negotiations 
with States and Tribes; (2) articulate Agency, NPM and Regional goals 
and priorities and work with the States and Tribes to incorporate them 
into the EnPA/TEA; (3) serve as the principal source for technical 
program assistance to States and Tribes; and (4) participate in State 
and Tribal program evaluation as defined by the EnPA/TEA. In any 
circumstance where a State or Tribe proposes activities that will lead 
it to significantly deviate from NPM priorities or regulatory 
requirements, or raise issues of national consistency, the Regions will 
consult with the appropriate NPM.
    Regional Project Officer. As designated by the RA, the Performance 
Partnership Grant Project Officer (PO) will be the primary point of 
contact for the grant recipient. This individual will be responsible 
for coordinating all programmatic and technical aspects of the EnPA/TEA 
and PPG program commitments and the PPG agreement. All POs must have 
successfully completed the EPA training course ``Managing Your 
Financial Assistance Agreement--Project Officer Responsibilities.'' The 
POs should coordinate closely with the Regional Indian Coordinator/
Regional Indian Office for Tribal PPGs.
    Regional Grants Management Office (GMO). Regional GMOs are 
responsible for carrying out all administrative functions associated 
with the receipt of the PPG application, processing of the PPG award, 
and post-award administrative management of the PPG grants. (These 
functions are the same as those for the award and management of 
categorical grants.)
    Regional Budget Offices. Regional Budget Offices are responsible 
for submitting approval requests to Headquarters Budget Division for 
Regional reprogramming of funds from categorical program elements to 
the PPG program element and, upon approval, completing the 
reprogramming of the funds. Both the PPG award and obligation must 
include the State identifier code on transactions in IFMS.

Section 5.3  Recipients

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

Section 6. Funding

Section 6.1  Project Period and Availability of Funds

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

Section 6.2  Award Amounts and Distribution of Funds

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

Section 6.3  Reprogramming of Funds

    EPA is proposing the establishment of a specific PPG program 
element. Pending Congressional approval, EPA's Budget Division will 
continue to allocate grant funds in the current categorical program 
elements. Regional Budget Officers will request the reprogramming of 
funds into the PPG program element. Reprogramming requests will be made 
only after the PPG project officer, EPA approval official and the 
Grants Management Office find the PPG application and PPG program 
commitments acceptable. (Currently, reprogramming requests over 
$500,000 require Congressional approval. EPA will seek a Congressional 
exemption for PPG reprogramming.) The purpose statement/justification 
that should be included in the reprogramming request is:

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

[[Page 9706]]

Person to contact:-----------------------------------------------------
    Phone: ________ (inc. area code)

Section 6.4  FY 1995 Carryover and Unexpended Prior Year Funds

    Unexpended State funds from FY 1995 awards may not legally be used 
to fund first-year (FY 1996) PPGs. The recipient, in consultation with 
the Regional Administrator, may choose to maintain FY 1995 unexpended 
balances by extending the existing categorical grants, consistent with 
limits established on carry-over by the Comptroller General, or by 
applying for a partial FY 1996 categorical grant to cover the 
unexpended funds. Project officers should inform recipients proposing 
to apply or to convert to a PPG for FY 1996 of the need to maintain 
prior year accounts through extensions until FY 1995 funds are 
expended.
    Funds recovered from an applicant's FY 1996 categorical grants will 
be available to fund PPGs awarded in FY 1997 and beyond, provided there 
is consistency with the appropriation and/or the underlying categorical 
program statutes and Comptroller Policy No.88-09 ``Disposition of 
Unobligated Balances of Assistance Awards.'' FY 1997 carryover of 
unobligated balances will be allowed provided that the recipient uses 
the carryover award amount to support either ongoing programmatic 
goals, a multi-year PPG workplan, or those activities contemplated for 
the next PPG award cycle's goals.
    If the PPG program commitments includes activities that cannot be 
fully funded at the time of award, additional funding can be added as 
it becomes available. The Regions may also forward-fund PPG awards.

Section 6.5  Cost Share Requirements

    EPA's policy and goal is that States and Tribes should continue to 
spend, in effect, the same amount of funds for environmental programs 
under PPGs as under categorical grants. Although, under PPGs, 
recipients will have the flexibility to realign those resources among 
environmental programs based on negotiated priorities in the EnPA/TEA, 
the total resources in the State or Tribe, both Federal and non-
Federal, targeted to environmental programs should not be reduced. 
Thus, the required cost share (based on the match or maintenance of 
effort requirements of the categorical grants included in the PPG) will 
be the same under PPGs as under categorical grants, unless EPA 
determines that there are exceptional circumstances justifying a 
reduction in cost share for a PPG for the year that the PPG is awarded. 
The primary exception is where a State or Tribe reduces funds across 
all State or Tribal agencies. When the reduction is due to a non-
selective reduction in the expenditures related to all programs and 
entities of the executive branch of the State or Tribal government, EPA 
also will allow reductions in environmental program resources.
    It is also important to recognize that, when the categorical funds 
are reprogrammed into the PPG program element and the PPG is awarded, 
those funds lose their categorical nature. The recipient's minimum cost 
share requirement applies to the entire grant. The recipient cost share 
must be expended for performance of the approved PPG program 
commitments as reflected in the approved PPG budget of total estimated 
program costs, i.e., without regard to the original categorical source 
of federal funds and categorical activities. As the costs of performing 
PPG work are incurred, the recipient will be reimbursed the federal 
share of total expenditures based on the federal/recipient share ratios 
stated on the PPG grant award. While recipients must maintain adequate 
financial records of their cost share, EPA may not require categorical 
financial reporting by recipients or track categorical match shares or 
maintenance of effort (MOE) expenditures for those grant funds included 
in a PPG.
    Recipients should calculate a single, composite minimum cost share 
for each of their PPGs. To calculate the minimum cost share for a 1996 
PPG, start with the amount of federal dollars from each program (source 
of funds) going into the PPG. The minimum required cost share for each 
portion is determined by following the cost share requirements of the 
relevant categorical grant program (based on the source of funds). The 
minimum recipient cost share for the PPG is the sum of the minimum cost 
shares of the contributed components shown in the fourth column of the 
following example.

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

----------------------------------------------------------------------------------------------------------------
                                                           Federal     Recipient                                
              Funding source                 PPG total      share      cost Share       Basis of cost share     
----------------------------------------------------------------------------------------------------------------
Water-106.................................    1,239,064    1,087,995  151,069 \1\  MOE.                         
Nonpoint Source...........................      924,333      554,600  369,733 \2\  MOE or 40% match.            
UIC.......................................       78,796       59,097       19,699  25% match.                   
UST.......................................      216,667      162,500       54,167  25% match.                   
RCRA......................................      465,989      349,492      116,497  25% match.                   
Air-105...................................    2,290,230    1,374,198  916,132 2,3  MOE or 40% match.            
                                           ---------------------------------------                              
PPG.......................................    5,215,079    3,587,882    1,627,297  PPG guidance.                
----------------------------------------------------------------------------------------------------------------
\1\ The Water 106 program has no match requirement. However, it has a MOE requirement based on recurrent        
  expenditures in the FY year ending (1) June 30, 1971 or (2) October 1, 1977, if the State is expending funds  
  awarded in any fiscal year for construction grants management under section 205(g). This requirement obligates
  a State to spend at least the base year amount of money each year without regard to the amount of the federal 
  award. EPA will continue to use this MOE requirement amount to calculate recipient minimum cost share when the
  Water 106 program is part of a PPG.                                                                           
\2\ The Air 105 and the Nonpoint Source programs have both a match and an MOE requirement. The greater of the   
  MOE or the match requirements of these two programs will be used to calculate the minimum cost share          
  requirement for a PPG, when the programs are part of a PPG.                                                   
\3\ Revenue generated by the collection of Clean Air Act Title V fees can only be used for the Title V Operating
  Permit program and cannot be used to meet cost share requirements for any grants, including PPGs as well as   
  section 105 grants.                                                                                           

 
[[Page 9707]]

    The minimum composite cost share for the PPG in this example is 
$1,627,297, which is 31.2% of the PPG total of $5,215,079. The 
percentage is based on the ratio between the total dollar value 
(Federal and non-Federal) of each program, activity, etc., included 
in the PPG(s) and the dollar value of its respective cost sharing 
requirement. EPA uses this percentage to determine the recipient's 
share of each dollar expended for the PPG(s).
    If a recipient chooses to split federal categorical funding 
between a PPG and a categorical grant, the minimum required cost 
share for the PPG will be directly related to the portion of the 
categorical grant funds moving to the PPG. The following is an 
example of how this would apply to the UST funding cited above. If 
half of the funding was maintained in a categorical grant ($81,250 
went to both the PPG and the categorical grant), the minimum cost 
share for the PPG would be half of $54,167 or $27,083.50.
    If the cost share requirement for a categorical grant is a 
minimum percentage of the total grant program (combined federal and 
recipient contributions), the minimum allowable recipient 
contribution can be calculated using a two step process. Following 
is an example of how this would apply to the RCRA funding above:
    (1) Divide the available federal funding by the maximum federal 
share ($349,492 divided by 75%) The result is the minimum total 
program amount (federal and State shares combined) for the grant 
($465,989). (2) Subtract the federal contribution from the minimum 
total program amount to determine the minimum required recipient 
contribution. ($465,989-$349,492 = $116,497. $116,497 represents 25% 
of the total.)

Section 7. Administrative Information

Section 7.1  Delegation of Authority

    The Regional Administrator is the designated approval and award 
official for PPGs with approval redelegation authority to the Deputy 
Regional Administrator or the Division Director level. References: 
Delegation #1-14-Assistance Agreements; Performance Partnership Grants 
Delegation. (Number to be assigned. The Performance Partnership Grant 
Delegation will be put in place upon approval of authorizing 
legislation.)

Section 7.2  Grant Budget Information

    Applicants may merge funding for all PPG programs and activities 
into a single budget for accounting and reporting purposes. This budget 
must display a breakdown of costs by object class categories on 
Standard Form 424B. For applicants proposing multi-year PPG program 
commitments, the applicant need only reflect object class costs for FY 
1996. However, the budget information must accurately reflect the grant 
agreement and be able to be tracked to support the performance measures 
cited in that grant agreement. The Regional Administrator may also 
require the applicant to submit a level of supplemental budget detail 
necessary to allow for adequate determination of the allowability, 
allocability, necessity, and reasonableness of each element of program 
costs. Required budget detail should not exceed levels supplied under 
previous EPA categorical grant awards.

Section 7.3  Certifications

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

Section 7.4  Standard Terms and Conditions

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

Section 7.5  Grants Information and Control System (GICS) Data

    The following GICS codes for PPGs will be established when 
authorizing legislation for these grants is in place.

--Program Code
--Statutory Authority Code
--Regulatory Code
--CFDA number

Section 8. Post-Award Requirements

Section 8.1  Pre-Award Costs

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

Section 8.2  Financial Management and Reporting

    PPG recipients will continue to follow the regulations for 
Standards for Financial Management Systems contained in 40 CFR Part 
31.20. Fiscal control and accounting procedures of the recipient 
applicant must be sufficient to permit preparation of Financial Status 
Reports for PPG awards.
    PPG recipients must maintain accounting and financial records which 
adequately identify the source (i.e., Federal funds and match) and 
application of funds provided for PPG activities. These records should 
contain relevant information such as obligations, unobligated balances, 
outlays, expenditures and program income.
    Recipients will track PPG funds to the total effort or costs 
incurred for the PPG work. EPA will reimburse the recipient for the 
federal share of the costs from the PPG budgetary program element. PPG 
costs will not be tracked to each of the original individual 
categorical source(s) of grant funding.

Section 8.3  Payment

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

Section 8.4  Allowable Costs

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

Section 8.5  Additions/Deletions of Programs From Existing PPGS

    States/Tribes may elect which categorical program(s) or project 
grants will be included in its established PPG award(s), consistent 
with Section 3.2. In general, once an annual PPG is awarded for a given 
fiscal year, EPA will authorize no programmatic deletions until the 
beginning of the next award cycle. Once PPG program commitments are 
approved and funds have been reprogrammed by EPA, the funds lose their 
categorical identity and cannot be pulled out by an applicant.
    Funds for grants approved in the middle of the fiscal year and 
appropriate competitive grants may be added to the PPG subject to PO 
approval. The PO and recipient will renegotiate the approved 
environmental performance agreement goals and revise the PPG program 
commitments and budgets. EPA will reprogram the funds to be added to a 
PPG. The recipient must submit a formal amendment to add funding to the 
PPG. EPA will process the amendments as expeditiously as possible, 
while maintaining fiduciary responsibility, to accommodate the 
recipient.
    If a recipient chooses to add a categorical grant program to a two-
year PPG, the match requirements of that program will then be 
calculated as part of the overall PPG composite match (see Section 
6.5).
    If the recipient drops a program at the end of a cycle, based on 
the recipient's 

[[Page 9708]]
decision to redirect its efforts and with the prior approval of the PPG 
PO, the PPG recipient shall be reimbursed for allowable costs incurred 
during the PPG project period.

Section 8.6  Enforcement

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

Section 8.7  Disputes

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

Attachment 1--Sample Performance Measures

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

--percentage of NPDES permit holders in significant non-compliance,
--percentage of enforcement actions taken within timely and appropriate 
guidelines,
--percentage of permits up-to-date,
--percentage of river, lake and estuary miles monitored,
--percentage of falsification rates in drinking water data,
--percentage of enforcement actions leading to supplement projects,
--number of permits avoided by helping companies reduce emissions below 
permit thresholds,
--number of multi-media inspections or permits,
--percentage of State or Tribal program personnel trained in pollution 
prevention, ecosystem management, or environmental justice, and
--number of innovative pilot programs (e.g., voluntary programs).

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

--compliance rates for particular sectors,
--percentage reductions in water generation rates (per unit product),
--percentage reduction in total emissions,
--percentage of facilities participating in voluntary pollution 
prevention programs and meeting their publicly stated pollution 
prevention goals,
--number of significant changes at any entity (public or private) that 
have been made as a result of compliance assistance in three 
categories: (1) notification, (2) regulatory requirements, and (3) 
environmental improvements,
--change in the compliance profile of a particular sector, regulated 
population, or community that is the focus of a compliance assistance 
initiative,
--percent of entities (public or private) within a particular sector, 
regulated population, or community that have received compliance 
assistance, and
--percent of facilities that participate in voluntary compliance 
assistance programs and come in to compliance within the requisite 
correction period.

    Environmental Indicators measure changes in air, water and land 
quality parameters and human health. Measures could include:

--the percentage of population exposed to substandard air,
--the percentage of population exposed to substandard water,
--percentage of stream miles meeting designated uses,
--percentage reductions in air pollution such as VOCs, Sox, etc., and
--percentage reductions in dangerous blood-lead levels in children.

[FR Doc. 96-5711 Filed 3-8-96; 8:45 am]
BILLING CODE 6560-50-P