[Federal Register Volume 63, Number 193 (Tuesday, October 6, 1998)]
[Notices]
[Pages 53764-53774]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26459]



[[Page 53763]]

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Part III





Environmental Protection Agency





_______________________________________________________________________



Performance Partnership Grants for State and Tribal Environmental 
Program: Revised Interim Guidance; Notice

  Federal Register / Vol. 63, No. 193 / Tuesday, October 6, 1998 / 
Notices  

[[Page 53764]]



ENVIRONMENTAL PROTECTION AGENCY

[FRL-6171-7]


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

AGENCY: Environmental Protection Agency.

ACTION: Notice.

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SUMMARY: The ``Performance Partnership Grants for State and Tribal 
Environmental Programs: Revised Interim Guidance'' is the revised 
version of the Performance Partnership Grant (PPG) guidance dated July 
1996. This revision reflects the expanded authority provided in EPA's 
FY 1998 Appropriation Act to award PPGs to Interstate Agencies, 
Intertribal Consortia, and Air Pollution Control Agencies. The revision 
also incorporates some of the policy decisions made since July 1996 
that impact PPGs. These decisions include items such as replacing 
references to four different application requirements with one set of 
requirements, adding new definitions and terms to reflect results-based 
management, adding the term ``workplan component'' along with 
requirements that the work plan be organized by workplan components, 
incorporating the use of multi-year grant budget periods, and adding 
Government Performance and Results Act (GPRA) reporting language. This 
revised guidance will serve as the operating guidance for States and 
Tribes interested in applying for PPGs. EPA will be proposing 
regulations governing the PPG program in FY1999.
    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.

EFFECTIVE DATE: October 6, 1998.

FOR FURTHER INFORMATION CONTACT: Ellen Haffa, Office of Water (4102), 
U.S. Environmental Protection Agency, 401 M Street, SW, Washington, 
D.C. 20460, Telephone: (202) 260-3617, FAX: (202) 260-7926.

SUPPLEMENTARY INFORMATION: PPGs are a powerful funding tool that EPA is 
offering to eligible States and Tribes. A PPG is a multi-program grant 
awarded to a State or Interstate Agency, or Tribe or Intertribal 
Consortium from funds otherwise available for categorical grant 
programs. A State or Tribe can combine funds from 2 or more of 17 
eligible grant programs into 1 or more PPGs. Recipients may then use 
PPGs to fund activities that are within the cumulative eligibilities of 
the 17 eligible grant programs.
    EPA encourages States and Tribes to take advantage of PPGs. These 
grants enable State and Tribes to better direct their funding toward 
their most critical environmental problems while continuing to address 
core program requirements, better address multi-media high priority 
strategies such as community-based environmental protection, pollution 
prevention, and environmental justice, and reduce administrative 
burdens and costs by reducing the numbers of grants applications, 
budget, workplans, and reports. States and Tribes interested in 
pursuing PPGs should work in partnership with their Regional office to 
develop a PPG that funds solutions to the highest environmental 
priorities and ensures that EPA statutory and program requirements are 
met.

Submission to Congress and the General Accounting Office

    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 guidance 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. This guidance is 
not a ``major rule'' as defined by 5 U.S.C. 804(2).
    Additional contacts for information on PPGs are:

Headquarters:
    Scott McMoran, Chief, Grants Operations Branch, Grants 
Administration Division, U.S. EPA (3903R), 401 M. Street, SW, 
Washington, D.C. 20460, (202) 564-5376
Region 1:
    Stanley Scott, Manager, Grants Management Unit, U.S. EPA--Region I, 
John F. Kennedy Federal Building, One Congress Street, Boston, MA 
02203-0001, (617) 565-3378
    Robert Goetzl, Associate Director, State Grant and Indian Programs, 
U.S. EPA--Region 1, John F. Kennedy Federal Building, One Congress 
Street, Boston MA 02203-0001, (617) 565-3602
Region 2:
    Donna Vizian, Chief, Grants and Contracts Management Branch, U.S. 
EPA--Region II, 290 Broadway, New York, N.Y. 10007-1866, (212) 637-3402
    Dennis Santella, Leader, Strategic Planning Team, U.S. EPA--Region 
II, 290 Broadway, New York, N.Y. 10007-1866
Region 3:
    Robert G. Reed, Jr. Chief, Grants and Audit Management Branch 
(3PM70), U.S. EPA--Region III, 1650 Arch Street, Philadelphia, PA 
19103-2029, (215) 215-5410
    Mary Zielinski, Grants and Audit Management Branch, U.S. EPA--
Region III, 1650 Arch Street, Philadelphia, PA 19103-2029
Region 4:
    Linda Barrett, Grants and Procurement Branch, U.S. EPA--Region IV, 
61 Forsyth Street, Atlanta, GA 30303, (404) 562-8399
Region 5:
    Pat Thompson, Chief, Assistance Section, U.S. EPA--Region V, 77 
West Jackson Boulevard, Chicago, IL 60604-3507, (312) 886-6015
Region 6:
    Brenda Durden, Chief, Program Planning and Grants Branch, U.S. 
EPA--Region VI, 1445 Ross Avenue, Dallas, TX 75202-2733, (214) 665-6510
    Hattie Brown, Program Planning and Grants Branch, U.S. EPA--Region 
VI, 1445 Ross Avenue, Dallas, TX 75202-2733, (214) 665-7423
Region 7:
    Carol Rompage, Grants Management Officer, U.S. EPA--Region VII 726 
Minnesota Avenue, Kansas City, KS 66101, (913) 551-7346
Region 8:
    Grants, Audits, Procurement Branch, U.S. EPA--Region VIII, 999 18th 
Street, Suite 500, Denver, CO 80202-2466, (303) 312-6104
Region 9:
    Melinda Taplin, Chief, Grants Management Section, P-4-4, U.S. EPA--
Region IX, 75 Hawthorne Street, San Francisco, CA 94105, (415) 744-1693
Region 10:
    Grants Administration Branch, U.S. EPA--Region X, 1200 Sixth 
Avenue, Seattle, WA 98101, (206) 553-2722

[[Page 53765]]

    Dated: September 22, 1998.
Dana Minerva,
Deputy Assistant Administrator, Office of Water.

    Dated: September 21, 1998.
Kerrigan Clough,
Assistant Regional Administrator, Office of Partnerships and Regulatory 
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 requirements.
     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, work plans, 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

     Authorization for PPGs is contained in the 1996 Omnibus 
Consolidated Rescissions and Appropriations Act (PL 104-134). EPA's 
1998 Appropriation Act expanded the authority to award PPGs to 
Interstate Agencies, Intertribal Consortia, and Air Pollution Control 
Agencies.
     Authority applies to funds from seventeen program grants 
funded from EPA's State and Tribal Assistance Grants (STAG) 
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) 1999 are eligible to receive PPGs.
     Local agencies are eligible if they: (1) are eligible 
under state authority to implement EPA funded programs; and (2) receive 
direct funding from EPA for two or more of the eligible grant programs.
     Certain Interstate Agencies and Intertribal Consortia are 
eligible, to the extent of their eligibility for the underlying 
categorical grant funds. Intertribal Consortia are eligible for the 
following categorical grants: General Assistance Program (GAP) grants 
(Indian Environmental General Assistance Program Act of 1992), Wetlands 
Program Development Grants (CWA 104(b)(3)), Water Quality Cooperative 
Agreements (CWA 104(b)(3)), and Water Pollution Control Grants (CWA 
106). The proposed regulation established at 40 CFR Subpart B would 
make Intertribal consortia eligible for all of the remaining 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 budget 
period, including multi-year awards, though EPA recommends not 
exceeding five years. The application must include a work plan 
corresponding to the proposed budget period. PPG work plan 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 work plan components. PPG work plan 
commitments must include core performance measures or accountability 
measures, as defined by appropriate environmental statutes, regulations 
and EPA or State policy. PPG work plan commitments may be contained in 
categorical or PPG work plans, in a Performance Partnership Agreement 
(PPA) or Tribal Environmental Agreement (TEA).

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 
seventeen specified EPA grant authorities.
     EPA's policy is that States and Tribes should continue to 
spend 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 including those in the PPG work plan, 
the total resources of 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 work plans or enter the National Environmental Performance 
Partnership System (NEPPS) or complete a Tribal-EPA Agreement (TEA).
     PPGs may include all of an agency's federally-funded 
environmental programs, a single media (e.g. water), or a single 
function (e.g. compliance).
     The State or Tribe usually decides which grants to include 
in a PPG, with EPA concurrence.

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 or propose to deviate from National Program 
Guidance, EPA Regions will consult with EPA's national program 
managers.

[[Page 53766]]

Table of Contents

Section 1. Overview of EPA's Performance Partnership Grant Program
Section 2. Authority
Section 3. Eligibility
Section 4. Preparing a PPG Application
Section 5. EPA and Recipient Roles and Responsibilities
Section 6. Funding
Section 7. Administrative Information
Section 8. Post-Award Requirements

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 (or Interstate Agency, 
Intertribal Consortium, or local agency) 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.
    This Guidance applies to PPGs for FY 1999, and will remain in 
effect until superseded by statute, federal regulation, or amended 
guidance. It supersedes ``Performance Partnership Grants for State and 
Tribal Programs: Revised Interim Guidance,'' published in the Federal 
Register on August 19, 1996. This Guidance applies to: (1) State and 
Interstate Agencies, Tribes, Intertribal Consortia, and local Agencies 
that apply for or are awarded PPGs; (2) EPA Regions that approve, 
award, and administer PPGs; (3) EPA National Program Managers for any 
funds eligible for inclusion in PPGs; and (4) EPA Headquarters offices 
responsible for the administrative or policy management of PPGs.
    EPA expects to issue proposed regulations for PPGs during FY 1999. 
The Agency has solicited extensive stakeholder involvement in the 
development of these regulations, which are currently in draft. Final 
regulations are anticipated in FY 1999.
    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:
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    \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 work plan commitments. Potential 
recipients may apply for a PPG to replace up to seventeen eligible 
categorical grants, some of the seventeen (e.g., water media PPG), or 
portions of some of them (e.g., an enforcement PPG). 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 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. Core Performance measures, to be developed jointly by EPA 
and each State or Tribe, will gauge progress toward agreed upon goals 
(see Section 1.6). 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. (Core performance measures for Tribal 
programs are still evolving; until EPA has negotiated these measures 
with the Tribes, the Regions should use key work plan goals and 
objectives to reflect the new GPRA requirements.)
    Administrative Savings. EPA, States, and Tribes expect PPGs to 
reduce administrative burdens and costs by reducing the overall number 
of grant applications, work plans, 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  The National Environmental Performance Partnership 
System. On May 17, 1995, State and

[[Page 53767]]

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 agreement are increased 
reliance on self-management by State programs and a differential 
approach to oversight that serves as an incentive for State programs to 
perform well, rewarding strong programs and freeing up federal 
resources to address problems where State programs need assistance.
    NEPPS and PPGs share many of the same objectives. Of course, States 
may apply for PPGs without entering NEPPS (and vice-versa) . But where 
States wish to apply for PPGs and enter NEPPS, the processes and 
documentation are integrated and, where appropriate, identical. The 
Performance Partnership Agreement (PPA) is a document that is common to 
both PPGs and NEPPS. For States doing both, the PPA will allow the 
processes and documentation to be integrated (see Section 4.3 for more 
details).
    Section 1.5  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 are comparable to the State PPAs. In 
order for the TEAs to serves as commitment documents where Tribes are 
shifting funds, Tribes wanting to enter a PPG will have to include a 
specific section on the anticipated PPG funds and work plan 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 PPA, the Tribes 
will not have to conduct two planning processes. The addition of a 
commitment section to the TEA should ensure that PPG funding shifts, 
commitments, and expectations are clearly defined in one document 
signed by both the Tribe and EPA. TEAs will be required for Tribes 
wherever PPAs are required for States.
    Section 1.6  PPG Accountability And Performance Measures. All PPGs 
will be required to contain a legally binding set of work plan 
commitments. These work plan commitments will be the primary basis for 
evaluating the success of a PPG. Some work plan commitments will be 
required in all PPGs because they are required by statute, regulation, 
standing legal agreements between EPA and States/Tribes (e.g., 
Delegation Agreements), or National Program Manager/Regional program 
guidance. Others will be optional.
    For the purposes of this PPG guidance, work plan 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 work plan commitments are the legal basis for the 
expenditure of federal grant funds and the recipient's matching 
requirement'' (see Section 1.7). EPA will continue to work with States 
and Tribes to define the elements of work plan commitments, including 
national environmental goals and performance measures.
    As EPA and States/Tribes negotiate work plan commitments under 
PPGs, they should use performance measures that measure program and 
environmental outcomes and outputs. Performance measures that are PPG 
work plan commitments should be quantifiable, measurable, and 
verifiable. Specifically, all States and Tribes should adopt outcome 
and output-oriented performance measures that track program performance 
and environmental conditions and trends.
    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 core performance measures (developed under the NEPPS). EPA's 
National Program Guidances generally contain the national core 
performance measures. 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. Although this report provides a preliminary list of 
national environmental indicators that may be helpful to States and EPA 
looking for good ideas about available environmental 
indicators,3 Tribes may also find them applicable.
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    \2\ EPA 200nB-94-002.
    \3\ To obtain a copy of the document, contact EPA's Office of 
Policy, at (202) 260-4332, or Florida State University at (904) 921-
0423.
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    Specific performance measures are required only if they are 
required by statute, regulation or standing legal agreements between 
EPA and States/Tribes (e.g., Delegation Agreements), or if EPA National 
Program Managers or Regions have required them in guidance or policy.
    Section 1.7  Definitions. Agency--United States Environmental 
Protection Agency (EPA).
    Categorical Grant--Media-specific or multimedia grant for a 
particular program or narrowly defined activities.
    National Environmental Performance Partnership System (NEPPS)--A 
new

[[Page 53768]]

approach to developing and implementing the State-EPA partnership 
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) Performance Partnership 
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.
    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 budget period. See ``output''.
    Output--An environmental activity or effort and associated work 
products related to an environmental goal or objective that will be 
produced or provided over a period of time or by a specified date. 
Outputs may be quantitative or qualitative but must be measurable 
during a grant budget period. See ``outcome''.
    Performance Partnership Agreement (PPA)--A negotiated agreement 
signed by the EPA Regional Administrator and an appropriate official of 
a State or interstate agency and designated as such. These agreements 
typically set out jointly developed goals, objectives, and priorities 
and include work plan commitments that are the basis for grants; 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 Section 4.3.
    Performance Partnership Grant (PPG)--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. 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.
    Performance Partnership Grant Work Plan Commitments--The outputs 
and outcomes associated with each work plan component, as established 
in the grant agreement.
    Performance Partnership Grant Work Plan Component--A negotiated set 
or group of work plan commitments established in the grant agreement. A 
work plan may have one or more work plan components.
    Program Flexibility--Reduction of effort or elimination of a work 
plan component in order to invest in another media-specific or 
multimedia work plan component.
    Tribal Environmental Agreement (TEA)--A strategic planning document 
designated as a TEA and signed by the Regional Administrator and an 
appropriate Tribal official that sets out negotiated environmental 
goals, objectives, outcomes, outputs, priorities, actions to be taken, 
and measures of performance. A TEA 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 Section 4.3.

Section 2. Authority

    Section 2.1--Statutory Authority. Authority for PPGs is contained 
in the 1996 Omnibus Consolidated Rescissions and Appropriations Act 
(P.L. 104-134). The authorizing language reads as follows:

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

    Additional statutory authority for the awards of PPGs to interstate 
agencies and intertribal consortia is contained in the Departments of 
Veterans Affairs and Housing and Urban Development, and Independent 
Agencies Appropriations Act, 1998, P.L.105-65 (111 Stat. 1344, 1373 
(1997)).
    Section 2.2--Other Authorities. The requirements of 40 CFR Part 31, 
``Uniform Administrative Requirements for Grants and Cooperative 
Agreements to State and Local Governments,'' will apply to a PPG as 
they do to a categorical grant. Some limited exceptions to 40 CFR Part 
31 may be necessary to accommodate these grants. EPA will manage such 
exceptions through the grant deviation process. Additional requirements 
are included in substantive program regulations, OMB Circulars A-87 and 
A-102, the EPA Assistance Administration Manual, EPA-State/Tribal 
Memoranda of Agreement (MOA), NPM-Regional Guidance and MOA, the NEPPS 
agreement signed on May 17, 1995 (for States entering NEPPS), and E.O. 
12372, ``Intergovernmental Review of Federal Programs.''

Section 3. Eligibility

    Section 3.1--Eligible Applicants. All States, territories, 
interstate agencies, local agencies, Federally recognized Indian 
Tribes, and Intertribal Consortia eligible to receive more than one of 
the categorical grants referred to in Section 3.2 are eligible to 
receive a PPG(s). Any duly authorized State or Tribal entity that 
currently receives or is eligible to receive EPA categorical program 
grants may request a PPG for the funds it administers. This may include 
environmental, agricultural, and other 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. Interstate agencies 
and intertribal consortia may combine funds into a PPG if they are 
eligible under the authorizing statutory authorities to receive the 
grant funds.
    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

[[Page 53769]]

program grants as possible into a PPG to achieve maximum flexibility.
    Section 3.2  Eligible Grant Programs. Funds available for the 
following seventeen grants identified in EPA's State and Tribal 
Assistance Grants (STAG) appropriation are eligible to be combined into 
a PPG:

(1) Air pollution control (section 105 of the Clean Air Act).
(2) Water pollution control (section 106 of the Clean Water Act).
(3) Public water system supervision (section 1443(a) of the Safe 
Drinking Water Act).
(4) Underground water source protection (section 1443(b) of the Safe 
Drinking Water Act).
(5) Hazardous waste management (section 3011(a) of the Solid Waste 
Disposal Act).
(6) Pesticide cooperative enforcement (section 23(a)(1) of the Federal 
Insecticide, Fungicide, and Rodenticide Act).
(7) Pesticide applicator certification and training (section 23(a)(2) 
of the Federal Insecticide, Fungicide, and Rodenticide Act).
(8) Pesticide program implementation (section 23(a)(1) of the Federal 
Insecticide, Fungicide, and Rodenticide Act).
(9) Nonpoint source management (sections 205(j)(5) and 319(h) of the 
Clean Water Act).
(10) Lead-based paint program (section 404(g) of the Toxic Substances 
Control Act).
(11) State indoor radon grants (section 306 of the Toxic Substances 
Control Act).
(12) Toxic substances compliance monitoring (section 28(a) and (b) of 
the Toxic Substances Control Act).
(13) State underground storage tanks (section 2007(f)(2) of the Solid 
Waste Disposal Act).
(14) Pollution prevention incentives for states (section 6605 of the 
Pollution Prevention Act of 1990).
(15) Water quality cooperative agreements (section 104(b)(3) of the 
Clean Water Act).
(16) Wetlands development grants program (section 104(b)(3) of the 
Clean Water Act).
(17) General Assistance Grants to Indian Tribes (Indian Environmental 
General Assistance Program Act of 1992). Only eligible Tribes can 
propose to include these funds in a PPG application.

    Generally, grant funds that states combine into PPGs are those that 
provide for continuing, ongoing, environmental programs. Grants to 
capitalize Clean Water and Drinking Water State Revolving Funds, and 
other amounts specified for stated purposes in the STAG account, are 
not eligible for inclusion in PPGs.
    Because all EPA grants to Tribes are awarded through a competitive 
or discretionary process, Tribes will be allowed to include these 
grants in a PPG without adversely affecting their ability to compete 
for any grant. For competitive grants on the above list (e.g., 
pollution prevention incentives for states, wetlands program 
development, water quality cooperative agreements, general assistance 
program grants to Tribes) to be combined in a PPG, the state or tribe 
must first be approved to receive the competitive grant, and must 
identify specific output or outcome measures as a condition for adding 
the funds to a PPG. A State or Tribe may include these grant output 
measures in its PPG work plan. 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.
    PPGs may support multi-media activities, such as:
     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,
     Children's health programs,
     Public outreach and involvement,
     Information clearinghouses,
     Environmental monitoring,
     Capacity building and environmental code development, and
     Integration of regulatory and non regulatory strategies.

Section 4. Preparing a PPG Application

    Section 4.1--Components of a complete application. A complete 
application for a PPG must:
    (a) Meet the requirements in 40 CFR Part 31, Subpart B if the 
applicant is a State, interstate, or local agency, a Tribe or an 
Intertribal Consortium;
    (b) Specify the environmental programs and the amount of funds 
requested from each program to be combined in the Performance 
Partnership Grant;
    (c) Include a consolidated budget;
    (d) Include a work plan that addresses each program being combined 
in the grant and that meets the requirements of Section 4.3; and
    (e) Provide 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.
    The applicant and the Regional Administrator will negotiate 
regarding the information necessary to support the rationale for 
programmatic flexibility required in paragraph (f) 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. 31.40, and other 
environmental and programmatic data sources. 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.
    Section 4.2.--Time frame for submitting an application for EPA 
Action. An applicant should submit a complete application to EPA at 
least 60 days before the beginning of the proposed budget period.
    Section 4.3--Work plans. (a) Bases for negotiating work plans. The 
work plan

[[Page 53770]]

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 applicant's 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/accountability measures in the national program 
guidance, 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 and regional 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) The work plan must correspond to the budget period of the PPG 
(e.g. a two-year PPG requires a two-year work plan.).
    (3) An approvable work plan must specify:
    (i) The work plan components to be funded under the grant;
    (ii) The estimated work years and funding amounts for each work 
plan component;
    (iii) The work plan commitments for each work plan component and a 
time frame for their accomplishment;
    (iv) A performance evaluation process and reporting schedule in 
accordance with Sec. 31.40 of this subpart; and
    (v) The roles and responsibilities of the recipient and EPA in 
carrying out the work plan commitments.
    (4) The work plan must be consistent with applicable federal 
statutes, regulations, circulars, executive orders, and delegation or 
authorization agreements.
    (c) Performance Partnership Agreement (PPA) or Tribal-EPA Agreement 
(TEA) as work plan. An applicant may use a PPA or TEA as all or part of 
the work plan for an environmental program grant if the portions of the 
PPA or TEA that is to serve as the grant work plan:
    (1) Is clearly identified and distinguished from other portions of 
the PPA/TEA; and
    (2) Meets the requirements in Section 4.3(b).
    Section 4.5  Explanation of Certain Elements of a Performance 
Partnership Agreement. The following explains in more detail some of 
the elements of the PPA/TEA not previously addressed:
    (a) Negotiated Environmental Priorities and Goals. This part of the 
PPA/TEA is the product of negotiation between senior Regional officials 
and State or Tribal officials in positions to negotiate across grant 
programs, where this is appropriate. This part identifies the 
applicant's most significant environmental problems and the goals the 
applicant expects to achieve with the PPG. This strategic planning 
process reflects the applicant's priorities (as contained in any State 
or Tribal strategic plans or self-assessments), comparative risk 
studies or other risk-based approaches, and national priorities 
(enumerated in EPA's five-year strategic plan,4 the National 
Environmental Goals Project and National program priorities specified 
in EPA HQ/Regional Memorandums of Agreement). Major new strategic or 
program directions or investments/ disinvestments should be identified 
here.
---------------------------------------------------------------------------

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

    (b) EPA Roles and Responsibilities in Supporting State or Tribal 
Efforts. To strengthen the federal partnership with States and Tribes, 
the PPA/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 work plan 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.
    (c) Core commitments. All PPG work plans must include core work 
plan commitments (goals, core performance or accountability 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 work plan commitments and performance measures should 
reflect National Program Manager/Regional guidance, EPA Headquarters-
Regional MOA, Regional-State/Tribal MOA, and other EPA or State/Tribal 
policies. EPA should work with States and Tribes to balance the need to 
maintain core program requirements with the need to incorporate program 
flexibility and move toward program performance measures and 
environmental indicators. A PPA/TEA may also include measures for which 
data sources are not yet available if there is a commitment to develop 
reliable data sources.
    (d) Public Participation. States and Tribes should continue to use 
their current public participation processes in conjunction with PPGs. 
EPA believes that it is critical to involve all stakeholders in the 
process of determining environmental priorities and goals, and 
therefore strongly encourages States and Tribes to involve stakeholders 
in identifying priority environmental problems. Recognizing the role 
and contribution of general purpose and special purpose local 
governments in the Nation's overall protection of the environment, EPA 
strongly encourages States to engage local jurisdictions which would be 
affected by a PPG. EPA also encourages recipients to share with 
stakeholders the results of their goals and activities defined in the 
PPA/TEA. Effective public participation will establish the foundation 
for greater program flexibility and the achievement of better 
environmental results.
    (e) 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 work plan commitments, the 
recipient should identify any problems, delays or conditions which 
materially affected the recipient's ability to meet the PPG objectives 
or commitments, any benefits that enabled the recipient to perform 
better than expected, and EPA's performance in helping the recipient to 
achieve work plan commitments. 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 work plan commitments); and (4) improved EPA/
grantee working relationships. After reviewing the annual report, the 
EPA Project Officer will provide evaluation findings to the

[[Page 53771]]

recipient and will include such findings in the official PPG file. 
Where required in NPM guidance, the EPA project officer will also 
provide copies to appropriate NPM personnel.
     Evaluating the National PPG Program. EPA will request the 
assistance of PPG recipients to evaluate the overall PPG process. 
Lessons learned from FY 1996-1999 experiences 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 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. NPM and Regional Guidance 
for State grant programs should be issued in a timely fashion to 
accommodate EPA-applicant negotiations of grant work plans. In any 
circumstance where a State or Tribe proposes activities that will lead 
it to significantly deviate from NPM Guidance or EPA policy, the 
Regional Administrator will consult with the appropriate NPM. In many 
cases, NPMs also allocate categorical grant funds to EPA's Regions 
based on established allocation criteria. EPA NPMs should provide 
Regions with grant allocations in a timely fashion to accommodate the 
development of grant applications and the negotiation of grant work 
plans.
    Grants Administration Division (GAD). The GAD's responsibilities 
include: (1) sponsoring the PPG Delegation of authority; (2) reviewing 
and acting on deviation requests from EPA's grant regulations to 
implement PPGs; (3) sponsoring the proposed PPG regulations; (4) 
answering questions regarding the administration of PPGs; (5) 
interpreting 40 CFR Part 31 and Part 35, Subpart A and the draft 40 CFR 
Part 35, Subparts A and B.
    Office of the Chief Financial Officer (OCFO). The OCFO's 
responsibilities include: (1) distributing categorical grant funds to 
the Regions; (2) approving requests by the Regions to reprogram 
categorical grant funds into the PPG program element; (3) upon request 
of Appropriations Committees, provides periodic reports on the number 
of states participating in PPGs and the grant funds they are using; and 
(4) developing guidance for Regions to crosswalk State grant work plan 
budget and performance information to EPA's GPRA budget and reporting 
system.
    Office of Congressional and Intergovernmental Relations (OCIR). 
OCIR responsibilities include: (1) providing guidance on EPA and State 
implementation of the National Environmental Performance Partnership 
System (NEPPS); (2) general interpretation and implementation of NEPPS 
policies; and (3) general national liaison with state and local 
governments and related organizations.
    American Indian Environmental Office (AIEO). AIEO responsibilities 
include: (1) developing Guidance on EPA's partnerships with Tribes and 
Intertribal Consortia and the negotiation of Tribal-EPA Agreements 
(TEAs); (2) developing other crosscutting program guidance related to 
EPA's implementation of Tribal environmental programs; (3) general 
liaison with Tribal governments and related organizations; and (4) 
answering questions regarding PPG implementation in Indian Country.
    Section 5.2  EPA Regions. Regional Administrator (RA). The RA is 
the designated approval and award official for PPGs with redelegation 
authority to the Deputy Regional Administrator or the Division Director 
or equivalent level. The RA, or a senior regional official(s) 
designated by the RA, should conduct the initial negotiations with 
applicants to establish environmental priorities and goals. The RA is 
also responsible for establishing many State grant allocations and a 
work plan negotiation process that will result in timely award of PPGs. 
The RAs should provide applicants with grant planning allocations in a 
timely fashion to accommodate the development of grant applications and 
the negotiation of grant work plans.
    The RA should designate a single PPG Project Officer (PO) for 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 technical program 
staff to support the designated Project Officer, or set additional 
criteria for designating the PO. In any circumstance where an applicant 
proposes activities that will lead it to significantly deviate from NPM 
Guidance or EPA policy, the Regional Administrator will consult with 
the appropriate NPM.
    Regional Program Managers. 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 
should (1) be consulted about or participate in negotiations with 
States and Tribes; (2) articulate Agency, NPM and Regional goals and 
priorities and work with recipients to assure they are incorporated 
into PPG work plans; (3) serve as the principal source for technical 
program assistance to recipients; and (4) participate in PPG program 
evaluation as defined by the PPG work plan.
    Regional Project Officer. The PPG Project Officer (PO) will be the 
primary point of contact for grant recipients. The PO is responsible 
for coordinating programmatic and technical aspects of the PPA/TEA, PPG 
work plan, and the PPG agreement. All project officers must have 
successfully completed the EPA training course ``Managing Your 
Financial Assistance Agreement--Project Officer Responsibilities.'' The 
PO should work 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 the PPG award, and 
post-award administrative management of PPGs. (These functions are the 
same as those for the award and management of categorical grants.)
    Regional Comptroller Offices. Regional Comptroller Offices are 
responsible for submitting approval requests to Headquarters Budget 
Division for Regional reprogramming of funds from categorical grant 
program resource codes to PPG distribution accounts 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 should 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

[[Page 53772]]

annual or multi-year PPG work plans. Project periods may remain open to 
reflect the continuing nature of PPGs. The Regional Administrator and 
applicant may negotiate the length of the budget period for PPGs, 
subject to limitations in appropriations acts. The approved work plan 
must cover the entire PPG budget period.
    Section 6.2  Award Amounts and Distribution of Funds. A state's or 
tribe's choice of PPGs or categorical grants will not affect its 
allocation of grant funds.
    Section 6.3  Reprogramming of Funds. EPA's Budget Division will 
allocate grant funds to the Regions by objective. Regional Budget 
Officers will request the reprogramming of funds from program resource 
codes into a PPG distribution account. For FY 1999, the reprogramming 
of funds to implement PPGs is exempt from the $500,000 Congressional 
reprogramming limitation. Reprogramming requests will be made only 
after the PPG project officer, EPA approval official and the Grants 
Management Office find the PPG application acceptable. Please refer to 
Office of the Comptroller Announcement No. 98--xx, ``Accounting for 
Resources under the Government Performance and Results Act'' for more 
details on budget execution and reporting for PPGs. 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/this 
decision memorandum dated ____________ and signed by ____________.

Person to contact:-----------------------------------------------------
Phone: ____________ (including area code)

    Section 6.4  Carryover And Unexpended Prior Year Funds. Funds 
recovered from an applicant's FY 1996-98 categorical grants will be 
available to fund PPGs awarded in FY 1999 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.'' 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 work plan, a special project falling within the PPG's 
eligibilities, or those activities contemplated for the next PPG award 
cycle's goals. As with all grant funds, the source of funds (e.g. CAA 
Sec. 105, CWA Sec. 106, PPG) determines the cost-share for unexpended 
prior-year funds. Therefore, unexpended prior-year PPG funds take on 
the final cost-share for the previous year's PPG, as described in 
Section 6.5.
    If the PPG work plan commitments include activities that cannot be 
fully funded at the time of award (e.g. multi-year PPG work plans, 
competitive grants), additional funding can be added as it becomes 
available. The Regions may also forward-fund PPG awards.
    Section 6.5  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. 35.200 to 
35.260, and other relevant documents.
    (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.
    (c) Example. A State or Tribe that 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.

----------------------------------------------------------------------------------------------------------------
                                                                   Recipient cost
       Funding source share           PPG total     Federal share       share              Basis of cost
----------------------------------------------------------------------------------------------------------------
Water-106........................       1,239,064       1,087,995      \5\151,069  MOE.
Nonpoint Source..................         924,333         554,600      \6\369,733  MOE or 40% match.
UIC..............................          78,796          59,097          19,699  25% match.
UST..............................         216,667         162,500          54,167  25% match.
RCRA.............................         465,989         349,492         116,497  25% match.
Air-105..........................       2,290,230       1,374,198     6,7 916,132
                                                                       MOE or 40%
                                                                           match.
PPG..............................       5,215,079       3,587,882       1,627,297  PPG guidance
----------------------------------------------------------------------------------------------------------------


[[Page 53773]]

    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).
---------------------------------------------------------------------------

    \5\ The Water 106 program has no match requirement for states. 
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 in part of a PPG. For Tribes, 
there is a 5% match, but no MOE.
    \6\ The Air 105 and the Nonpoint Source programs have both a 
match and a 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.
    \7\ 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.
---------------------------------------------------------------------------

    If a recipient chooses to split federal categorical funding 
between a PPG and a categorical grant, the minimum required cost 
share for the PPG will be directly related to the portion of the 
categorical grant funds moving to the PPG. The following is an 
example of how this would apply to the UST funding cited above. If 
half of the funding was maintained in a categorical grant ($81,250 
went to both the PPG and the categorical grant), the minimum cost 
share for the PPG would be half of $54,167 or $27,083.50.
    If the cost share requirement for a categorical grant is a 
minimum percentage of the total grant program (combined federal and 
recipient contributions), the minimum allowable recipient 
contribution can be calculated using a two step process. Following 
is an example of how this would apply to the RCRA funding above:
    (1) Divide the available federal funding by the maximum federal 
share ($349,492 divided by 75%) The result is the minimum total 
program amount (federal and State shares combined) for the grant 
($465,989). (2) Subtract the federal contribution from the minimum 
total program amount to determine the minimum required recipient 
contribution. ($465,989- $349,492 = $116,497. $116,497 represents 
25% of the total.)
    If a recipient decides to withdraw an environmental program with 
an MOE requirement from the PPG and seek funding for the 
environmental program under a categorical grant, the MOE requirement 
for the new categorical grant will be no less than the MOE 
requirement in the fiscal year immediately preceding the entry of 
the environmental program into the PPG. EPA may approve an 
adjustment to the MOE requirement for the new categorical grant if 
EPA determines that there are exceptional circumstances justifying 
such an adjustment. This requirement is a condition of receiving a 
PPG and, therefore, must be included in all PPG grant agreements.

Section 7. Administrative Information

    Section 7.1  Delegation of Authority. The Regional Administrator is 
the designated approval and award official for PPGs with approval 
redelegation authority to the Deputy Regional Administrator or the 
Division Director level. References: Delegation #1-14 -Assistance 
Agreements; Delegation #1-101 -Performance Partnership Grants.
    Section 7.2  Grant Budget Information. Applicants may merge funding 
for all PPG programs and activities into a single budget for accounting 
and reporting purposes. This budget must display a breakdown of costs 
by object class categories on Standard Form 424B. For applicants 
proposing multi-year PPG work plan commitments, the applicant need only 
reflect object class costs for the initial year. However, the budget 
information must accurately reflect the grant agreement and be able to 
be tracked to support the program outcomes and outputs cited in that 
grant agreement. The Regional Administrator may also require the 
applicant to submit a level of supplemental budget detail necessary to 
allow for adequate determination of the allowability, allocability, 
necessity, and reasonableness of each element of program costs.
    Section 7.3  Certifications. States/Tribes may submit one set of 
grant certifications ((i.e. a bundled certification) for anti-lobbying, 
debarment/suspension, SF424B--assurances and procurement with the PPG 
application.
    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 work plan commitments as terms and conditions of the 
agreement. The Region may add any additional State or Tribal specific 
terms and conditions deemed appropriate and necessary on a case by case 
basis.
    Section 7.5  Grants Information And Control System (GICS) Data. The 
following are the GICS codes for PPGs.

--Program Code: BG
--Description: Performance Partnership Grants
--Statutory Authority Code: 141
--Text: Appropriations Act of 1996 (PL-104-134)
--Regulatory Code: A4
--CFDA number: 66.605

Section 8. Post-Award Requirements

    Section 8.1  Pre-award Costs. Consistent with 40 CFR Sec. 35.141 
and subject to the availability of funds, EPA will reimburse applicants 
for allowable costs incurred from the beginning of the approved budget 
period.
    Section 8.2  Financial Management And Reporting. Recipients. 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 account. PPG costs 
will not be tracked to each of the original individual categorical 
source(s) of grant funding.
    Government Performance and Results Act: EPA will use budget 
information that States and tribes provide in PPG grant applications as 
a basis for linking the Agency's expenditures to with EPA's GPRA budget 
structure. EPA's Regional offices, with consultation with recipients, 
will be responsible for cross-walking PPG application budget data into 
the EPA's GPRA goals, objectives, and subobjective architecture. If a 
PPG work plan is subsequently amended, the Region will consult with the 
recipient to estimate the budget change associated with the amendment. 
Please refer to Office of the Comptroller Policy Announcement No. 98--
xx, ``Accounting for Resources under the Government Performance and 
Results Act'' for guidance on approach to use for the cross-walk to 
ensure that the results achieved by States with EPA funds are captured 
in the Agency's Annual Performance Reports.
    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

[[Page 53774]]

award. Beginning January 1, 1999, all payments to grant recipients will 
be made electronically, although recipients who do not have a formal 
ACH established may still request payment using Standard Form 270.
    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, with Regional concurrence, which categorical 
program or project grants will be included in its established PPG 
award(s). 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 fiscal year. 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 decision to redirect its efforts and with the prior 
approval of the PPG PO, the PPG recipient shall be reimbursed for 
allowable costs incurred during the PPG project period.
    If a recipient withdraws an environmental program with an MOE 
requirement from the PPG at the end of the award cycle and seeks 
funding for the program under a categorical grant, the MOE requirement 
for the new categorical grant will be no less than the MOE requirement 
in the fiscal year immediately preceding the entry of the environmental 
program into the PPG. EPA may approve an adjustment to the MOE 
requirement for the new categorical grant if EPA determines that there 
are exceptional circumstances justifying such an adjustment (see 
Section 6.5). This requirement is a condition of receiving a PPG and, 
therefore, must be included in all PPG grant agreements.
    Section 8.5  Enforcement. If a recipient materially fails to comply 
with a term or condition in the PPG award, EPA may impose sanctions in 
accordance with 40 CFR Sec. 31.43, including the conversion of a PPG 
back to individual categorical grants during the next award cycle.
    Section 8.6  Disputes. The dispute process set forth in 40 CFR 
Sec. 31.70 will apply to PPGs. Disagreements between the recipient and 
EPA regarding PPG applications, including PPG work plan 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. 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.

[FR Doc. 98-26459 Filed 10-5-98; 8:45 am]
BILLING CODE 6560-50-U