[Federal Register Volume 64, Number 141 (Friday, July 23, 1999)]
[Proposed Rules]
[Pages 40064-40081]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17341]



[[Page 40063]]

_______________________________________________________________________

Part II





Environmental Protection Agency





_______________________________________________________________________



40 CFR Parts 35 and 745



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

  Federal Register / Vol. 64, No. 141 / Friday, July 23, 1999 / 
Proposed Rules  

[[Page 40064]]



ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 35 and 745

[FRL-6373-1]
RIN 2030-AA55


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

AGENCY: Environmental Protection Agency.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This regulation proposes to revise and update requirements in 
several Environmental Protection Agency regulations, particularly 
subpart A of part 35, governing grants to State, interstate and local 
government agencies from EPA under several environmental programs. The 
regulation advances ongoing efforts to build more effective State-EPA 
partnerships and to improve environmental conditions by providing 
States with increased flexibility to direct resources where they are 
needed most to address environmental and public health needs. This 
regulation: updates, clarifies, and streamlines requirements governing 
environmental program grants; establishes requirements for the new 
Performance Partnership Grant (PPG) program; and establishes 
requirements for grant programs that began after the original rule was 
published. (A regulation governing environmental program grants to 
Indian Tribes and Tribal Consortia is published elsewhere in this issue 
of the Federal Register.)

DATES: Please submit comments on this proposed rule by September 7, 
1999.

ADDRESSES: Written comments should be submitted to: Performance 
Partnership Grants--State Comment Clerk (Docket #WD-98-9); Water Docket 
(MC-4104); U.S. Environmental Protection Agency; 401 M Street, SW; 
Washington, DC 20460. Comments may be hand-delivered to the Water 
Docket; U.S. Environmental Protection Agency; 401 M Street, SW; East 
Tower Basement; Washington, DC 20460. Comments may be submitted 
electronically to [email protected].

FOR FURTHER INFORMATION CONTACT: W. Scott McMoran, Grants Operations 
Branch B (3903R), United States Environmental Protection Agency, 401 M 
Street, SW, Washington, DC 20460, (202) 564-5376.

SUPPLEMENTARY INFORMATION:

I. Regulated Entities

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

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

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

II. Comments and Record

    Please submit an original and three copies of your comments and 
enclosures (including references). The Agency requests that commenters 
follow the following format: Type or print comments in ink, and cite, 
where possible, the paragraphs in this notice to which each comment 
refers. Electronic comments must be submitted as a WP5.1 or WP6.1 file 
or as an ASCII file avoiding the use of special characters. Comments 
and data will also be accepted on disks in the formats above. 
Electronic comments may be filed online at many Federal Depository 
Libraries. Commenters who want EPA to acknowledge receipt of their 
comments should include a self-addressed, stamped envelope. No 
facsimiles (faxes) will be accepted.
    Availability of Record: The record for this Notice, which includes 
supporting documentation as well as printed, paper versions of 
electronic comments, is available for inspection from 9 a.m. to 4 p.m. 
(Eastern Time), Monday through Friday, excluding legal holidays, at the 
Water Docket, U.S. EPA Headquarters, 401 M Street, SW; East Tower 
Basement; Washington, DC 20460. For access to docket materials, please 
call (202) 260-3027 to schedule an appointment.

III. Background

    Since EPA was formed in 1970, State capacity and responsibility for 
implementing environmental and public health protection programs has 
grown steadily. Meanwhile, environmental problems and their solutions 
have grown more complex. In light of these changes, State and EPA 
leaders recognized that continued environmental progress could be best 
achieved if EPA and States worked together more effectively--as 
partners.
    In 1995, they agreed to develop and implement the National 
Environmental Performance Partnership System (NEPPS). NEPPS is designed 
to: promote joint planning and priority setting by EPA and the States; 
provide States with greater flexibility to direct resources where they 
are needed most; foster use of integrated and innovative strategies for 
solving water, air, and waste problems; achieve a better balance in the 
use of environmental indicators and traditional activity measures for 
managing programs; and improve public understanding of environmental 
conditions and the strategies being used to address them.
    The changes proposed in this rule are intended to promote State-EPA 
collaboration; provide opportunities for innovation; and reduce 
paperwork--while ensuring sound fiscal management and accountability 
for environmental performance--in a manner consistent with NEPPS. For 
example, EPA hopes to foster joint planning and priority-setting by 
explicitly requiring that State priorities and needs be considered, 
along with national and regional guidance, in negotiating grant work 
plans. Under this rule, a State can choose to organize its grant work 
plans in accordance with environmental goals and objectives or in other 
new ways rather than using categories pre-defined by EPA. The length of 
a grant budget period will be negotiable. These flexibilities are 
available to all States, regardless of whether they are actively 
participating in other aspects of NEPPS.
    More than half of the States have elected to negotiate and enter 
into

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Performance Partnership Agreements (PPAs) with EPA as the primary 
mechanism for implementing NEPPS. Although each PPA is different, PPAs 
typically set out jointly developed goals, objectives, and priorities; 
the strategies to be used in meeting them; the roles and 
responsibilities of the State and EPA; and the measures to be used in 
assessing progress. (In some cases, comparable negotiated agreements 
are given a different name, such as Environmental Performance 
Agreements.) A PPA is generally based on information about the 
environmental and program conditions of the State as well as national 
and regional priorities and concerns. A State may apply for and receive 
any grant, including a PPG, without negotiating a PPA. However, a PPA 
can provide the strategic underpinning for the work a State plans to 
carry out with EPA financial assistance and the PPA can serve as a 
grant work plan if it meets other grant-related statutory and 
regulatory requirements.
    Recognizing the limitations of traditional categorical grants to 
allow full achievement of the NEPPS goals, EPA asked Congress for new 
authority that would give States greater flexibility in the use of 
federal grant funds. In the Omnibus Consolidated Rescissions and 
Appropriations Act of 1996 (Pub. L. 104-134) and EPA's FY 1998 
Appropriation Act (Pub. L. 105-65), Congress authorized the award of 
Performance Partnership Grants (PPGs), in which State and interstate 
agencies (and Tribes and Intertribal Consortia) can choose to combine 
two or more environmental program grants.
    Under a PPG, a recipient can achieve cost and administrative 
savings by reductions in the amount of grant paperwork as well as 
simplified accounting requirements that do not require the recipient to 
account for expenditures in accordance with their original funding 
sources. With PPGs, recipients can negotiate work plans with EPA that 
direct federal funds where the recipients need them most to address 
environmental and public health problems. Recipients can also try new 
multi-media approaches and initiatives, such as children's health 
protection programs, multi-media inspections, compliance assistance 
programs, and ecosystem management, that were difficult to fund under 
traditional categorical grants.
    This rule is designed to accommodate all potential variations in 
how EPA and individual States may work to build partnerships. The rule 
is also designed to minimize duplicative effort by allowing for 
multiple uses of information or processes wherever appropriate. A State 
may choose to negotiate a PPA or comparable strategic agreement with 
EPA. Where a State negotiates both a PPA and PPG, the processes and 
documentation can be integrated and, if appropriate, identical. Also, a 
State can receive a separate categorical grant for each environmental 
program, a PPG covering all programs eligible for inclusion, or a 
combination of separate categorical grants and PPGs covering only some 
programs.
    These regulations will be codified in 40 CFR part 35 as EPA's 
Environmental Program Grant regulations. Subpart A applies to State, 
interstate, and local agencies. EPA is proposing to add to the existing 
subpart A provisions for the following programs: Performance 
Partnership Grants, Lead-Based Paint Grant Program; State Indoor Radon 
Grants; Toxic Substances Enforcement Grants; State Underground Storage 
Tank Grants; Pollution Prevention Incentives Grants for States; Water 
Quality Cooperative Agreements; and Wetlands Development Grant Program. 
EPA is also publishing subpart B in this issue of the Federal Register, 
which applies to Tribes and Intertribal Consortia.
    These regulations supplement EPA's Grants and Cooperative 
Agreements to State and Local Governments regulations (40 CFR part 31). 
Part 31 applies to grants and subawards to State governments, 
interstate agencies, and local governments, including a council of 
governments (whether or not incorporated as a nonprofit under State 
law), and any other regional or interstate government entity.
    This rule proposes to delete 40 CFR 745.330, which authorizes EPA 
to make grants to States and Indian Tribes under section 404(g) of the 
Toxic Substances Control Act for lead-based paint programs. Provisions 
governing those grants are included in this proposed subpart A and in 
proposed subpart B of 40 CFR part 35.

IV. Requirements for Environmental Program Grants

    Sections 35.100 through 35.118 of the proposed rule apply to all 
environmental program grants covered by subpart A of part 35, including 
PPGs. This rule contains changes to foster State-EPA partnerships, 
improve accountability for environmental and program performance, and 
streamline administrative requirements. Some of the proposed rule's key 
features are discussed below.

State-EPA Partnerships

    To foster joint planning and priority setting, the rule explicitly 
requires consideration of State priorities along with national and 
regional guidance in negotiating grants. However, the EPA Regional 
Administrator must consult with the National Program Manager before 
agreeing to a State work plan that differs substantially from national 
guidance. A State is provided flexibility through the work plan 
negotiation process, and in particular through its ability to organize 
work plan components in whatever way fits best. States applying for 
PPGs will have still greater flexibility as described in the PPG 
discussion below. Where appropriate, the grant work plan will reflect 
both EPA and State roles and responsibilities and there will be a 
negotiated joint performance evaluation process.

Accountability

    The rule has been updated to accommodate results-oriented 
approaches to planning and managing environmental programs. Definitions 
and other aspects of the rule dovetail with the new Government 
Performance and Results Act (GPRA) and reflect efforts to establish 
goals and objectives as well as environmental and program performance 
measures at both the national and State levels. The rule recognizes the 
need for a mix of outcome (results) and output (activity) measures for 
management purposes. While the revised rule encourages States to 
organize their work plans around goals and objectives, States may 
continue to use existing structures if they wish.

Administrative Changes

    Under the rule, States can negotiate budget periods of one or more 
years with EPA. EPA recommends, however, that budget periods not exceed 
five years because it is difficult to account for funds and maintain 
records for longer periods.
    The rule streamlines some requirements and eliminates other 
requirements associated with changes made to grant work plan 
commitments and budgets. These requirements replace those found in 40 
CFR 31.30. Prior written approval from EPA is still required for 
significant changes in a grantee's work plan commitments. Written, but 
not prior, approval is required for changes requiring increases in 
grant amounts and extensions of the budget period. EPA approval is no 
longer required for other changes in the work plan or budget, changes 
in key persons or decisions to carry out portions of the work through 
subgrants or contracts unless the Regional Administrator determines, on 
a case-by-

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case basis, that circumstances warrant imposing additional approval 
requirements on a particular recipient.

Pre-award Costs

    Pre-award costs may be reimbursed under the grants without prior 
approval so long as they are incurred within the budget period, 
identified in the approved grant application, and would have been 
allowable if incurred after the award.

Insular Areas

    EPA is proposing conforming changes in the rule to reflect the 
change in status of the Marshall Islands, the Federated States of 
Micronesia, and Palau. They were previously entities within the Trust 
Territory of the Pacific Islands, but they have entered into Compacts 
of Free Association with the Government of the United States. As a 
result, each is now a sovereign, self-governing State and as such is no 
longer eligible to receive grants as a territory or possession of the 
United States. Because the Trust Territory of the Pacific Islands no 
longer exists, the rule's provisions regarding allotments omit any 
reference to the Trust Territory and references to the Trust Territory 
in environmental program grant statutes, including the references in 
the definitions of ``State,'' no longer have legal effect.
    The Administrator of EPA is authorized to consolidate grants and 
waive administrative requirements for grants made to certain insular 
areas. 48 U.S. C. 1469a. Through this regulation that authority is 
delegated to the Regional Administrators.

V. Performance Partnership Grants

    Sections 35.130 through 35.138 contain requirements that apply only 
to Performance Partnership Grant (PPGs). In a Performance Partnership 
Grant, the recipient can combine funds from two or more environmental 
program grants into a single grant under streamlined administrative 
requirements. Funds may be used for eligible cross-media activities or 
strategies and do not need to be accounted for in accordance with their 
original program sources. Key features of the PPG rule are discussed 
below.

Funds and Activities Eligible for Inclusion in a PPG

    Funds for any particular environmental program grant may be 
included in a PPG only if the funds for that grant are appropriated in 
the same specific appropriation (earmark) as the funds for PPGs. EPA 
will announce any changes in its appropriation acts that affect the 
list of programs in Sec. 35.101. Currently, funds from all but two of 
the environmental program grants listed in Sec. 35.101 are eligible for 
inclusion in a PPG. Funds for Water Quality Management Planning grants 
under section 205(j)(2) of the Clean Water Act are not available for 
inclusion in PPGs because funds for these grants are reserved from a 
different earmark in the Agency's appropriation act. In addition, there 
are no funds appropriated for State Administration grants under section 
205(g) of the Clean Water Act.
    A PPG recipient may use PPG funds to carry out any activity that 
would be authorized under at least one of the environmental program 
grants from which funds are combined in the PPG. This means that a PPG 
recipient may not spend PPG funds on an activity unless the PPG 
includes some funds from an environmental program grant under which 
that activity would be eligible. For example, a PPG recipient could not 
use PPG funds for an activity that is authorized only under sections 
205(g) or 205(j)(2) of the Clean Water Act because no section 205(g) or 
205(j)(2) funds will have been included in the PPG. On the other hand, 
if an activity would be authorized under section 106 of the Clean Water 
Act, and the PPG includes section 106 funds, then the activity may be 
funded by the PPG.
    A State or interstate agency must meet the requirements for award 
of each of the environmental programs from which funds are combined in 
the PPG, with a few specified exceptions. The exceptions are 
requirements that restrict how a specific environmental program grant 
can be used after award. These requirements are not appropriate to be 
carried over to Performance Partnership Grants because after funds are 
awarded in a Performance Partnership Grant they may be used for cross-
media purposes and States interstate agencies do not need to account 
for the funds in accordance with their original program sources.

Entities Eligible for PPGs

    The types of organizations eligible for PPGs are determined by the 
authorizing statutes for the PPG program, which are EPA's FY 1996 and 
1998 appropriation acts, (Omnibus Consolidated Rescissions and 
Appropriations Act of 1996, Public Law 104-134, 110 Stat. 1321, 1321-
299 (1996); Departments of Veterans Affairs and Housing and Urban 
Development, and Independent Agencies Appropriations Act, 1998, Pubic 
Law 105-65, 111 Stat. 1344, 1373 (1997)). Consistent with those 
statutes, only States and interstate agencies will be eligible for PPGs 
under this proposed rule. Interstate agencies are only eligible for 
PPGs that combine funds from a few existing grant programs because 
interstate agencies are only authorized to receive grants under those 
few environmental programs. Specifically, interstate agencies are 
eligible for PPGs that include funds from the following programs: Air 
Pollution Control (section 105 of the Clean Air Act); Water Pollution 
Control (section 106 of the Clean Water Act); Wetlands Development 
Grants (section 104(b)(3) of the Clean Water Act); and Water Quality 
Cooperative Agreements (section 104(b)(3) of the Clean Water Act). 
Recipients must be interstate agencies as defined by either the Clean 
Water Act, the Clean Air Act, or both, depending on which funds are 
included in the PPG. Congress authorized EPA to award PPGs to 
interstate agencies, but only as provided in authorizing statutes; 
Congress did not intend to change any of the existing program grant 
eligibility requirements, including the definition of interstate 
agency. The ability of recipients to make subgrants will not be 
affected by combining funds into a PPG.

Competitive Grants and PPGs

    States must compete for some of the environmental programs eligible 
for a PPG (e.g., pollution prevention incentives for States, wetlands 
program development, and water quality cooperative agreements). States 
must first be selected in the competitive process in order to include 
these competitive grants in a PPG. In some programs, this process may 
include the awarding of funds to a State agency through decisions made 
during a joint planning process. To maintain the integrity of the 
competitive process and ensure that the work that was the basis for 
EPA's selection of the proposal is performed, the State must include 
the work plan commitments proposed in the competitive grant application 
in the PPG work plan. However, as with other program funds included in 
a PPG, the State does not need to account for these funds in accordance 
with the funds' original environmental program source. Although a State 
must agree to complete the work plan commitments proposed in the 
competitive work plan, it need not account for the funds spent on a 
specific environmental program or activity. Also, if the time required 
to complete work under the competitive program is longer than the 
budget period for the States' PPG, States must make provisions to carry 
the activities (and funds, if appropriate) to subsequent PPG budget 
periods to complete them.

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Administrative Flexibility

    A primary advantage of PPGs is the administrative flexibility 
provided to all PPG recipients. A PPG requires only a single 
application, work plan, and budget regardless of how many environmental 
programs provide the funds for the PPG. Once funds are awarded in a 
PPG, recipients can direct the funds as needed to achieve work plan 
commitments and need not account for funds in accordance with their 
original funding program sources. The minimum cost share required for a 
PPG is the sum of the cost share amounts required for each of the 
environmental program grants combined in the PPG. If a program has both 
a match and a maintenance of effort requirement, the greater of the two 
amounts will be used to calculate the minimum cost share attributed to 
that program. Just as federal funds in the PPG do not need to be 
accounted for on the basis of their original program source, the non-
federal share of a PPG may be expended on work plan commitments without 
regard to the original source of the cost share requirement. These 
administrative features also make it possible for States to negotiate a 
work plan that includes cross-media or innovative strategies for 
addressing environmental problems.

Programmatic Flexibility

    If approved by the EPA Regional Administrator, a PPG can also 
provide the State with programmatic flexibility to increase efforts in 
some program areas where the State's needs are greater and decrease 
them in others where the State's needs are less. In applying for 
programmatic flexibility, the State agency must provide a rationale 
commensurate with the type and amount of flexibility being proposed, 
explaining the basis for the State's priorities and the environmental 
or other benefits it expects to achieve. The State must also assure 
that basic programs are maintained for all programs combined in the 
grant. The Regional Administrator and State agency will negotiate 
regarding the environmental and other information that EPA needs to 
make a decision regarding the application for flexibility. Information 
useful in supporting a State's proposal for programmatic flexibility 
may already exist, such as in a PPA, a recent water quality report, or 
a previous grant evaluation. Such information should be used to the 
extent possible to minimize duplication of effort.

Performance Incentives

    One goal of the performance partnership grant program is to find 
ways to encourage and reward outstanding State recipient performance. 
EPA believes this regulation will establish the foundation for such an 
incentive program by assuring--
     States and EPA's regions agree to measurable outcomes and 
outputs when awards are signed in accordance with the agreement on core 
measures.
     Outcome and output accomplishments are measured and 
documented through the joint evaluation process developed and agreed to 
by the States and EPA under the rule.
    We would expect such a program to be based on each year's 
performance evaluation. We are considering incentive approaches such 
as--
     Using a part of each year's funds to provide incentive 
bonuses to States which are most successful in meeting commitments, and
     Using a part of each year's funds to provide bonuses to 
States which assume primacy/authorization for programs such as drinking 
water and hazardous waste.
    There may be many other possible incentive approaches and we are 
soliciting recommendations for them. We also request your comments on 
the options suggested above.

VI. Implementing GPRA

    The Agency has developed an approach toward the integrated 
implementation of GPRA, the Chief Financial Officers Act (CFOA), and 
the Federal Financial Management Improvement Act of 1996 (FFMIA). These 
laws provide EPA with a framework to demonstrate to Congress and the 
taxpayers the costs to the federal government of EPA's program goals 
and objectives. The States, by virtue of delegated program authorities 
and as recipients of EPA grant funds, play an integral part in 
achieving those goals and objectives. Thus EPA's reports of Agency 
resources associated with outcomes and outputs will incorporate--at 
some level--expenditures incurred in the form of payments under grants 
and cooperative agreements . In order to comply with the Paperwork 
Reduction Act and the federal government's general grant regulations, 
EPA also has a responsibility to minimize additional administrative 
reporting requirements and costs borne by the States. In addition, 
under current regulations EPA generally may not impose accounting 
requirements on States beyond those currently required by 40 CFR part 
31.
    EPA will therefore use the budget information that States provide 
in grant applications as a basis for linking the Agency's actual 
expenditures with outcomes. EPA will be able to rely on State budget 
information to determine the costs of EPA's outcomes, as long as the 
following three conditions exist, which are all required by the 
proposed regulation:
    (1) States provide the program budget information required as part 
of the application;
    (2) EPA and the States explicitly define work plan activities, 
outcomes, and outputs, as well as the program flexibility contained in 
the work plan; and
    (3) States report back on work plan accomplishments.
    The proposed rule ensures that States will meet these three 
conditions, thus providing a reasonable basis for using State grant 
program budgets to estimate State contributions to the costs of 
achieving EPA's outcomes.
    EPA's regional offices, with necessary consultation with 
recipients, will be responsible for cross-walking the State budget 
information (grant application and work plan data) into the GPRA goals 
and objectives architecture. If a grant is subsequently amended to 
reflect significant adjustments to work plan commitments, the region 
will consult with the State to develop an estimate of the budget 
associated with the revision so that it can be reflected in regional 
GPRA reporting. The Office of the Chief Financial Officer will provide 
regions with guidance on the approach to use for the cross-walk process 
to ensure that the results achieved by States with EPA funds are 
captured in the Agency's Annual Performance Reports.

VII. Program Specific Provisions

    Requirements applicable to each environmental grant program are 
located in Secs. 35.140 through 35.418.

Eligibility

    The requirements that recipients must meet to qualify to receive 
funds under specific environmental programs are included in the 
program-specific provisions (see Secs. 35.140 through 35.418).

Cost Share

    The required cost share for each environmental program is 
identified in the program specific sections. Some programs do not have 
cost share requirements, while others have percentage matching share

[[Page 40068]]

requirements, level of effort requirements, or both.

VIII. Conclusion

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

Regulatory Flexibility Act

    The Agency has determined that the requirement in the Regulatory 
Flexibility Act (RFA) to prepare a regulatory flexibility analysis does 
not apply to this rule. A regulatory flexibility analysis must be 
prepared only where the Agency is required by Administrative Procedure 
Act (APA) or another statute to publish a general notice of proposed 
rulemaking. 5 U.S.C. 603. Grant making matters, such this rule, are not 
subject to the notice and comment requirements of the APA (5 U.S.C. 
553(a)(1)). Nor is this rule required to undergo notice and comment 
rulemaking under any other statute.

Unfunded Mandates Reform Act

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

National Technology Transfer and Advancement Act

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

Executive Order 13045

    Executive Order 13045 applies to any rule that is determined to be: 
(1) ``economically significant'' as defined under Executive Order 
12866, and (2) concerns an environmental health or safety risk that EPA 
has reason to believe may have a disproportionate effect on children. 
If the regulatory action meets both criteria, EPA must evaluate the 
environmental health or safety effects of the planned rule on children; 
and explain why the planned regulation is preferable to other 
potentially effective and reasonably feasible alternatives considered 
by the Agency.
    EPA has determined that the proposed rule is not a covered 
regulatory action because it is not economically significant and it 
does not involve decisions based on environmental health or safety 
risks. As a result, the proposed rule is not subject to the 
requirements of the Executive Order.

Executive Order 12866

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

Paperwork Reduction Act

    In keeping with the requirements of the Paperwork Reduction Act 
(PRA), as amended, 44 U.S.C. 3501 et seq., the information collection 
requirements contained in this rule have been approved by OMB under 
information collection request number 0938.06 (OMB Control Number 2030-
0020) and Quality Assurance Specifications and Requirements information 
request number 0866.05 (OMB Control Number 2080-033). This rule does 
not contain any collection of information requirements beyond those 
already approved. Since this action imposes no new or additional 
information collection, reporting or record-keeping requirements 
subject to the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., no 
information request will be submitted to the Office of Management and 
Budget for review.

Executive Order 12875

    Under Executive Order 12875, Enhancing Intergovernmental 
Partnerships, EPA may not issue a regulation that is not required by 
statute and that creates a mandate upon a State, local or tribal 
government, unless the federal government provides the funds necessary 
to pay the direct compliance costs incurred by those governments or EPA 
consults with those governments. If EPA complies by consulting, 
Executive Order 12875 requires EPA to provide to the Office of 
Management and Budget a description of the extent of EPA's prior 
consultation with representatives of affected State, local and Tribal 
governments, the nature of their concerns, any written communications

[[Page 40069]]

from the governments, and a statement supporting the need to issue the 
regulation. In addition, Executive Order 12875 requires EPA to develop 
an effective process permitting elected officials and other 
representatives of State, local and Tribal governments ``to provide 
meaningful and timely input in the development of regulatory proposals 
containing significant unfunded mandates.''
    This proposed rule does not create a mandate on State, local or 
Tribal governments nor does it impose any enforceable duties on these 
entities as it governs the award of financial assistance. Instead, this 
proposed rule is designed to reduce the administrative burden 
associated with grants for environmental programs. Accordingly, the 
requirements of section 1(a) of Executive Order 12875 do not apply.

Executive Order 13084

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

List of Subjects

40 CFR Part 35

    Environmental protection, Administrative practice and procedures, 
Evaluation of performance, Performance partnership grants, Requirements 
for specific grant programs, Work plan requirements.

40 CFR Part 745

    Environmental protection, Administrative practice and procedures, 
Hazardous substances.

    Dated: June 30, 1999.
Carol M. Browner,
Administrator.

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

PART 35--[AMENDED]

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

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

    2. Revise Sec. 35.001 to read as follows:


Sec. 35.001  Applicability.

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

Subpart A--Environmental Program Grants

All Grants--General

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

Preparing an Application

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

EPA Action on Application

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

Post-Award Requirements

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

Performance Partnership Grants

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

Air Pollution Control (Section 105)

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

Water Pollution Control (Section 106)

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

Public Water System Supervision (Section 1443(a))

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

Underground Water Source Protection (Section 1443(b))

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

Hazardous Waste Management (Section 3011(a))

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

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

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

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

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

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

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

Nonpoint Source Management (Section 319(h))

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

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

35.270 Purpose.
35.272 Funding coordination.

State Indoor Radon Grants (Section 306)

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

Toxic Substances Compliance Monitoring (Section 28)

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

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

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

Pollution Prevention Incentives for States (Section 6605)

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

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

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

Wetlands Development Grant Program (Section 104(b)(3))

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

State Administration (Section 205(g))

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

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

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

Subpart A--Environmental Program Grants

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

All Grants--General


Sec. 35.100  Purpose of the subpart.

    This subpart establishes administrative requirements for grants 
awarded to State, interstate, and local agencies and other entities for 
the environmental programs listed in Sec. 35.101. This subpart 
supplements requirements in EPA's general grant regulations found at 40 
CFR part 31. Sections 35.100-35.118 contain administrative requirements 
that apply to all environmental program grants included in this 
subpart. Sections 35.130 through 35.418 contain requirements that apply 
to specified environmental program grants. Many of these environmental 
programs also have programmatic and technical requirements that are 
published elsewhere in the Code of Federal Regulations.


Sec. 35.101  Environmental programs covered by the subpart.

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


Sec. 35.102  Definitions of terms.

    Terms are defined as follows when they are used in this subpart.
    Allotment. EPA's calculation of the funds that may be available to 
an eligible recipient for an environmental program grant. An allotment 
is not an entitlement.
    Budget period. The period specified in the grant agreement during 
which the recipient may expend or obligate funds for the purposes 
specified in the agreement.
    Consolidated grant. A single grant made to a recipient 
consolidating funds from more than one environmental grant program. 
After the award is made, recipients must account for grant funds in 
accordance with the funds' original environmental program sources. 
Consolidated grants are not Performance Partnership Grants.
    Environmental program. A program for which EPA awards grants under 
the authorities listed in Sec. 35.101. The grants are subject to the 
requirements of this subpart.
    National program guidance. Guidance issued by EPA's National 
Program Managers for establishing and maintaining effective 
environmental programs. This guidance establishes national goals, 
objectives, and priorities as well as the core performance measures and 
other information to be used in monitoring progress. The guidance may 
also set out specific environmental strategies, criteria for evaluating 
programs, and other elements of program implementation.
    Outcome. The environmental result, effect, or consequence that will 
occur from carrying out an environmental program or activity that is 
related to an

[[Page 40071]]

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. A negotiated agreement signed by 
the EPA Regional Administrator and an appropriate official of a State 
agency and designated as a Performance Partnership Agreement. Such 
agreements typically set out jointly developed goals, objectives, and 
priorities; the strategies to be used in meeting them; the roles and 
responsibilities of the State and EPA; and the measures to be used in 
assessing progress. A Performance Partnership Agreement may be used as 
all or part of a work plan for a grant if it meets the requirements for 
a work plan set out in Sec. 35.107.
    Performance Partnership Grant. A single grant combining funds from 
more than one environmental program. A Performance Partnership Grant 
may provide for administrative savings or programmatic flexibility to 
direct grant resources where they are most needed to address public 
health and environmental priorities (see also Sec. 35.130). Each 
Performance Partnership Grant has a single, integrated budget and 
recipients do not need to account for grant funds in accordance with 
the funds' original environmental program sources.
    Planning target. The amount of funds that the Regional 
Administrator suggests a grant applicant consider in developing its 
application, including the work plan, for an environmental program.
    Regional supplemental guidance. Guidance to environmental program 
applicants prepared by the Regional Administrator, based on the 
national program guidance and specific regional and applicant 
circumstances, for use in preparing a grant application.
    Work plan commitments. The outputs and outcomes associated with 
each work plan component, as established in the grant agreement.
    Work plan component. A negotiated set or group of work plan 
commitments established in the grant agreement. A work plan may have 
one or more work plan components.

Preparing an Application


Sec. 35.104  Components of a complete application.

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


Sec. 35.105  Time frame for submitting an application.

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


Sec. 35.107  Work plans.

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


Sec. 35.108  Budget period.

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


Sec. 35.109  Consolidated grants.

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

EPA Action on Application


Sec. 35.110  Time frame for EPA action.

    The Regional Administrator will review a complete application and 
either approve, conditionally approve, or disapprove it within 60 days 
of receipt. This period may be extended by

[[Page 40072]]

mutual agreement between EPA and the applicant. The Regional 
Administrator will award the funds for approved or conditionally 
approved applications when the funds are available.


Sec. 35.111  Criteria for approving an application.

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


Sec. 35.112  Factors considered in determining award amount.

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


Sec. 35.113  Reimbursement for pre-award costs.

    (a) Notwithstanding the requirements of 40 CFR 31.23(a) and OMB 
cost principles, EPA may reimburse recipients for pre-award costs 
incurred from the beginning of the budget period established in the 
grant agreement if such costs would have been allowable if incurred 
after the award and the recipients submitted complete grant 
applications before the beginning of the budget period. Such costs must 
be identified in the grant application EPA approves.
    (b) The applicant incurs pre-award costs at its own risk. EPA is 
under no obligation to reimburse such costs unless they are included in 
an approved grant award.

Post-Award Requirements


Sec. 35.114  Amendments and other changes.

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


Sec. 35.115  Evaluation of performance.

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


Sec. 35.116  Direct implementation.

    If funds remain in a State's allotment for an environmental program 
grant either after grants for that environmental program have been made 
or because no grant was made, the Regional Administrator may, subject 
to any

[[Page 40073]]

limitations contained in appropriation acts, use all or part of the 
funds to support a federal program required by law in the State in the 
absence of an acceptable State program.


Sec. 35.117  Unused funds.

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


Sec. 35.118  Unexpended balances.

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

Performance Partnership Grants


Sec. 35.130  Purpose of Performance Partnership Grants.

    (a) Purpose of section. Sections 35.130 through 35.138 govern 
Performance Partnership Grants to States and interstate agencies 
authorized in the Omnibus Consolidated Rescissions and Appropriations 
Act of 1996, (Pub. L. 104-134, 110 Stat. 1321, 1321-299 (1996)) and the 
Departments of Veterans Affairs and Housing and Urban Development, and 
Independent Agencies Appropriations Act, 1998, (Pub. L. 105-65, 111 
Stat. 1344, 1373 (1997).
    (b) Purpose of program. Performance Partnership Grants enable 
States and interstate agencies to combine funds from more than one 
environmental program grant into a single grant with a single budget. 
Recipients do not need to account for Performance Partnership Grant 
funds in accordance with the funds' original environmental program 
sources; they need only account for total Performance Partnership Grant 
expenditures subject to the requirements of this subpart. The 
Performance Partnership Grant program is designed to:
    (1) Strengthen partnerships between EPA and State and interstate 
agencies through joint planning and priority-setting and better 
deployment of resources;
    (2) Provide State and interstate agencies with flexibility to 
direct resources where they are most needed to address environmental 
and public health priorities;
    (3) Link program activities more effectively with environmental and 
public health goals and program outcomes;
    (4) Foster development and implementation of innovative approaches 
such as pollution prevention, ecosystem management, and community-based 
environmental protection strategies; and
    (5) Provide savings by streamlining administrative requirements.


Sec. 35.132  Requirements summary.

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


Sec. 35.133  Programs eligible for inclusion.

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


Sec. 35.134  Eligible recipients.

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


Sec. 35.135  Activities eligible for funding.

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


Sec. 35.136  Cost share requirements.

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

[[Page 40074]]

Sec. 35.137  Application requirements.

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


Sec. 35.138  Competitive grants.

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

Air Pollution Control (Section 105)


Sec. 35.140  Purpose.

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


Sec. 35.141  Definitions.

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


Sec. 35.143  Allotment.

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


Sec. 35.145  Maximum Federal share.

    (a) The Regional Administrator may provide air pollution control 
agencies, as defined in section 302(b) of the Clean Air Act, up to 
three-fifths of the approved costs of implementing programs for the 
prevention and control of air pollution or implementing national 
primary and secondary ambient air quality standards.
    (b) Subject to the conditions set forth below, the Regional 
Administrator may, at the request of the Governor of a State or the 
Governor's designee, or in the case of a local jurisdiction, the 
authorized local official, waive, for a one year period, all or a 
portion of the cost-sharing requirement of paragraph (a) of this 
section. The Regional Administrator may renew the waiver for no more 
than two years so long as the total waiver period does not exceed three 
years from the approval date of a State's permit program required under 
section 502 of the Clean Air Act.
    (1) The waiver may be approved on a case-by-case basis and only 
when a State or local government's non-federal contribution is reduced 
below the required two-fifths minimum as a result of the redirection of 
its non-federal air resources to meet the requirements of section 
502(b) of the Act.
    (2) In applying for a waiver, the Governor or the Governor's 
designee, or in the case of a local jurisdiction, the authorized local 
official, must:
    (i) Describe the extent of fiscal and programmatic impact on the 
agency's section 105 program as a result of the transfer of non-federal 
resources to support the program approved by EPA under section 502(b) 
of the Clean Air Act;
    (ii) Provide documentation of the amount of the cost-sharing 
shortfall and the programmatic activities that would not be able to be 
carried out if the section 105 grant is reduced or not awarded as a 
result of a State or local air pollution control agency's inability to 
meet the cost-sharing requirements;
    (iii) Assure that there is no source of funding that may reasonably 
be used to meet the cost-sharing requirement for the affected grant 
budget period; and
    (iv) Assure that during the section 105 grant period the non-
federal share of the program costs will not be reduced in an amount 
greater than that authorized by the waiver.


Sec. 35.146  Maintenance of effort.

    (a) To receive funds under section 105, an agency must expend 
annually, for recurrent section 105 program expenditures, an amount of 
non-federal funds at least equal to such expenditures during the 
preceding fiscal year.
    (b) In order to award grants in a timely manner each fiscal year, 
the

[[Page 40075]]

Regional Administrator shall compare an agency's proposed expenditure 
level, as detailed in the agency's grant application, to that agency's 
expenditure level in the second preceding fiscal year.
    (c) The Regional Administrator may grant an exception to 40 CFR 
35.146(a) if, after notice and opportunity for a public hearing, the 
Regional Administrator determines that the reduction is attributable to 
a non-selective reduction of the programs of all executive branch 
agencies of the applicable unit of government.
    (d) The Regional Administrator will not award section 105 funds 
unless the applicant provides assurance that the grant will not 
supplant non-federal funds that would otherwise be available for 
maintaining the section 105 program.


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

    (a)(1) To calculate the cost share for a Performance Partnership 
Grant (see Secs. 35.130 through 35.138) that includes section 105 
funds, the minimum cost share contribution for the section 105 program 
will be the match requirement set forth in Sec. 35.145 or the 
maintenance of effort established under Sec. 35.146, whichever is 
greater.
    (2) The maintenance of effort established under Sec. 35.146 of this 
subpart in the first year that the section 105 grant is included in a 
Performance Partnership Grant will be the maintenance of effort amount 
used to calculate the cost share in subsequent years in which the 
section 105 funds are included in a Performance Partnership Grant.
    (b) If an air pollution control agency includes section 105 air 
program funding in a Performance Partnership Grant and subsequently 
withdraws that program from the grant, the maintenance of effort amount 
for the section 105 grant in the first year after the grant is 
withdrawn will be equal to the amount required in the year before the 
agency included the section 105 program in the Performance Partnership 
Grant.
    (c) The Regional Administrator may approve an exception from 
paragraph (b) of this section if the Regional Administrator determines 
that exceptional circumstances justify a reduction in the maintenance 
of effort, including when an air pollution control agency reduces 
section 105 funding as part of a non-selective reduction of the 
programs of all executive branch agencies of the applicable unit of 
government.


Sec. 35.148  Award limitations.

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

Water Pollution Control (Section 106)


Sec. 35.160  Purpose.

    (a) Purpose of section. Sections 35.160 through 35.168 govern Water 
Pollution Control Grants to State and interstate agencies (as defined 
in section 502 of the Clean Water Act) authorized under section 106 of 
the Clean Water Act.
    (b) Purpose of program. Water Pollution Control Grants are awarded 
to assist in administering programs for the prevention, reduction, and 
elimination of water pollution, including programs for the development 
and implementation of ground-water protection strategies. Some of these 
activities may also be eligible for funding under sections 104(b)(3) 
(Water Quality Cooperative Agreements and Wetlands Development Grants), 
205(j)(2) (Water Quality Management Planning), and section 205(g) 
(State Administration Grants) of the Clean Water Act. (See 
Secs. 35.160, 35.360, 35.380, 35.400, and 35.410.)
    (c) Associated program requirements. Program requirements for water 
quality planning and management activities are provided in 40 CFR part 
130.


Sec. 35.161  Definition.

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


Sec. 35.162  Basis for allotment.

    The Administrator allots funds for Water Pollution Control Grants 
to States and interstate agencies based on the extent of the pollution 
problems in the respective States.


Sec. 35.165  Maintenance of effort.

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


Sec. 35.168  Award limitations.

    (a) The Regional Administrator may award section 106 funds to a 
State only if:
    (1) The State monitors and compiles, analyzes, and reports water 
quality data as described in section 106(e)(1) of the Clean Water Act;
    (2) The State has authority comparable to that in section 504 of 
the Clean Water Act and adequate contingency plans to implement such 
authority;
    (3) There is no federally assumed enforcement as defined in section 
309(a)(2) of the Clean Water Act in effect with respect to the State 
agency; and
    (4) The State's work plan shows that the activities to be funded 
are coordinated, as appropriate, with activities proposed for funding 
under sections 205 (g) and (j) of the Clean Water Act.
    (5) The State filed with the Administrator within one hundred and 
twenty days after October 18, 1972, a summary report of the current 
status of the State pollution control program, including the criteria 
used by the State in determining priority of treatment works.
    (b) The Regional Administrator may award section 106 funds to an 
interstate agency only if:
    (1) The interstate agency filed with the Administrator within one 
hundred and twenty days after October 18, 1972, a summary report of the 
current status of the State pollution control program, including the 
criteria used by the State in determining priority of treatment works.
    (2) There is no federally assumed enforcement as defined in section 
309(a)(2) of the Clean Water Act in effect with respect to the 
interstate agency.

Public Water System Supervision (Section 1443(a))


Sec. 35.170  Purpose.

    (a) Purpose of section. Sections 35.170 through 35.178 govern 
Public Water System Supervision Grants to States (as defined in section 
1401(13)(A) of the

[[Page 40076]]

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


Sec. 35.172  Allotment.

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


Sec. 35.175  Maximum Federal share.

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


Sec. 35.178  Award limitations.

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

Underground Water Source Protection (Section 1443(b))


Sec. 35.190  Purpose.

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


Sec. 35.192  Basis for allotment.

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


Sec. 35.195  Maximum Federal share.

    The Regional Administrator may provide a maximum of seventy-five 
percent of a State's approved work plan costs.


Sec. 35.198  Award limitation.

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

Hazardous Waste Management (Section 3011(a))


Sec. 35.210  Purpose.

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


Sec. 35.212  Basis for allotment.

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


Sec. 35.215  Maximum Federal share.

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


Sec. 35.218  Award limitation.

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

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


Sec. 35.230  Purpose.

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


Sec. 35.232  Basis for allotment.

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


Sec. 35.235  Maximum Federal share.

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

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


Sec. 35.240  Purpose.

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


Sec. 35.242  Basis for allotment.

    The Regional Administrator considers two factors in allotting 
pesticides

[[Page 40077]]

applicator certification and training funds:
    (a) The number of farms in each State; and
    (b) The numbers of private and commercial applicators requiring 
certification and recertification in each State.


Sec. 35.245  Maximum Federal share.

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

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


Sec. 35.250  Purpose.

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


Sec. 35.251  Basis for allotment.

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


Sec. 35.252  Maximum Federal share.

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

Nonpoint Source Management (Section 319(h))


Sec. 35.260  Purpose.

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


Sec. 35.265  Maximum Federal share.

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


Sec. 35.266  Maintenance of effort.

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


Sec. 35.268  Award limitations.

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

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


Sec. 35.270  Purpose.

    (a) Purpose of section. Sections 35.270 through 35.278 govern Lead-
Based Paint Program Grants to States (as defined in section 3 of the 
Toxic Substances Control Act), under section 404(g) of the Act.
    (b) Purpose of program. Lead-Based Paint Program Grants are awarded 
to develop and carry out authorized programs to ensure that individuals 
employed in lead-based paint activities are properly trained; that 
training programs are accredited; and that contractors employed in such 
activities are certified.
    (c) Associated program regulations. Associated program regulations 
are found in 40 CFR part 745.


Sec. 35.272  Funding coordination.

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

State Indoor Radon Grants (Section 306)


Sec. 35.290  Purpose.

    (a) Purpose of section. Sections 35.290 through 35.298 govern 
Indoor Radon

[[Page 40078]]

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


Sec. 35.292  Basis for allotment.

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


Sec. 35.295  Maximum Federal share.

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


Sec. 35.298  Award limitations.

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

Toxic Substances Compliance Monitoring (Section 28)


Sec. 35.310  Purpose.

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


Sec. 35.312  Competitive process.

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


Sec. 35.315  Maximum Federal share.

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


Sec. 35.318  Award limitation.

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

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


Sec. 35.330  Purpose.

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


Sec. 35.332  Basis for allotment.

    The Administrator allots State Underground Storage Tank Grant funds

[[Page 40079]]

to each regional office. Regional offices award funds to States based 
on their programmatic needs and applicable EPA guidance.


Sec. 35.335  Maximum Federal share.

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

Pollution Prevention Incentives for States (Section 6605)


Sec. 35.340  Purpose.

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


Sec. 35.342  Competitive Process.

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


Sec. 35.343  Definitions.

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


Sec. 35.345  Eligible applicants.

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


Sec. 35.348  Award limitation.

    If the Pollution Prevention Incentives for States Grants are 
included in a Performance Partnership Grant, the work plan commitments 
must be included in the Performance Partnership Grant work plan (see 
Sec. 35.138).


Sec. 35.349  Maximum Federal share.

    The Federal share for Pollution Prevention Incentives for States 
Grants will not exceed 50 percent of the allowable pollution prevention 
incentives to States project cost.

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


Sec. 35.360  Purpose.

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


Sec. 35.362  Competitive process.

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


Sec. 35.364  Maximum Federal share.

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

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


Sec. 35.380  Purpose.

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


Sec. 35.382  Competitive process.

    State Wetlands Development Grants are awarded on a competitive 
basis. EPA annually establishes a deadline for receipt of proposed 
grant project applications. EPA reviews applications and decides which 
grant projects to fund in a given year based on criteria established by 
EPA. After the competitive process is complete, the recipient can, at 
its discretion, accept the award as a State Wetlands Development Grant 
or add the funds to a Performance Partnership Grant. If the recipient 
chooses to add the funds to a Performance Partnership Grant, the 
wetlands development program work plan commitments must be included in 
the Performance Partnership Grant work plan.


Sec. 35.385  Maximum Federal share.

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

[[Page 40080]]

State Administration (Section 205(g))


Sec. 35.400  Purpose.

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


Sec. 35.402  Allotment.

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


Sec. 35.405  Maintenance of effort.

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


Sec. 35.408  Award limitations.

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

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


Sec. 35.410  Purpose.

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


Sec. 35.412  Allotment.

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


Sec. 35.415  Maximum Federal share.

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


Sec. 35.418  Award limitations.

    The following limitations apply to funds awarded under section 
205(j)(2) of the Clean Water Act. The Regional Administrator will not 
award these grants to a State agency:
    (a) Unless the agency develops its work plan jointly with local, 
regional and interstate agencies and gives funding priority to such 
agencies and designated or undesignated public comprehensive planning 
organizations to carry out portions of that work plan.
    (b) Unless the agency reports annually on the nature, extent, and 
causes of water quality problems in various areas of the State and 
interstate region.
    (c) Unless the work plan submitted with the application shows that 
the activities to be funded are coordinated, as appropriate, with 
activities proposed for funding under section 106 (Water Pollution 
Control) of the Clean Water Act.

[[Page 40081]]

PART 745--[AMENDED]

    4. The authority citation for Part 745 continues to read as 
follows:

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

    5. EPA is proposing to remove 40 CFR 745.330.

[FR Doc. 99-17341 Filed 7-22-99; 8:45 am]
BILLING CODE 6560-50-U