[Federal Register Volume 66, Number 9 (Friday, January 12, 2001)]
[Rules and Regulations]
[Pages 2823-2825]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-693]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 35

[FRL-6931-8]
RIN 2040-AD20


Drinking Water State Revolving Funds Rule

AGENCY: Environmental Protection Agency.

ACTION: Adoption of interim final rule as final rule.

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SUMMARY: The Environmental Protection Agency (EPA) promulgated an 
interim final rule on August 7, 2000 (65 FR 48286) which codified and 
implemented requirements for the Drinking Water State Revolving Fund 
(DWSRF) program. The interim final rule was effective on the date of 
publication in the Federal Register, but included a 60-day comment 
period to give interested parties an opportunity to comment. EPA 
indicated that comments would be considered and, if necessary, the 
Agency would issue a revised final rule changing the interim final rule 
to respond to comments. After careful consideration of the comments 
received on the interim final rule, EPA has determined that it will not 
make changes to the interim final rule.

DATES: The interim final rule became effective on August 7, 2000.

ADDRESSES: Public comments and the comment response document on the 
interim final rule have been established under Docket W-00-11, which 
includes supporting documentation, and is available for review at the 
Water Docket, U.S. Environmental Protection Agency, 401 M Street, SW, 
East Tower Basement, Room EB57, Washington, DC 20460. For access to the 
Docket materials, please call (202) 260-3027 between 9 a.m. and 3:30 
p.m. (Eastern Time), Monday through Friday, for an appointment and 
reference Docket W-00-11.

FOR FURTHER INFORMATION CONTACT: For technical inquiries, contact 
Kimberley Roy, Drinking Water Protection Division, Office of Ground 
Water and Drinking Water (MC-4606), U.S. Environmental Protection 
Agency, Ariel Rios Building, 1200 Pennsylvania Avenue, NW, Washington, 
DC 20460. The telephone number is (202) 260-2794 and the e-mail address 
is [email protected]. For general information, contact the Safe 
Drinking Water Hotline, toll free at (800) 426-4791. The Safe Drinking 
Water Hotline is open Monday through Friday, excluding Federal 
holidays, from 9:00 a.m. to 5:30 p.m. (Eastern Time). DWSRF program 
information, including

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a copy of the interim final rule, are available on EPA's Office of 
Ground Water and Drinking Water website at http://www.epa.gov/safewater/dwsrf.html.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 1452 of the Safe Drinking Water Act (SDWA), 42 U.S.C. 300j-
12, establishes a national DWSRF program to assist public water systems 
in financing the cost of drinking water infrastructure projects needed 
to achieve or maintain compliance with SDWA requirements and to further 
the public health objectives of the Act. Section 1452(g)(3) of the SDWA 
states that ``the Administrator shall publish guidance and promulgate 
regulations as may be necessary to carry out the provisions of this 
section.''
    On August 7, 2000, the EPA promulgated an interim final rule (65 FR 
48286) which codified the DWSRF Program Final Guidelines (EPA-816-R-97-
005) published on February 28, 1997. The interim final rule 
establishes: what States must do to receive a capitalization grant; 
what States may do with capitalization grant funds intended for 
infrastructure projects; what States may do with funds intended for 
set-aside activities; and the roles of both the States and EPA in 
managing and administering the program. Both the DWSRF Program Final 
Guidelines and the interim final rule were the result of a thorough 
stakeholder consultation process.
    The interim final rule was effective on the date of publication in 
the Federal Register, but included a 60-day comment period to give 
interested parties an opportunity to comment. EPA indicated that 
comments would be considered and, if necessary, the Agency would issue 
a revised final rule changing the interim final rule to respond to 
comments. EPA received comments from 15 parties by the close of the 
comment period on October 6, 2000. After careful consideration of the 
comments received on the interim final rule, EPA has determined that it 
will not make changes to the interim final rule. Accordingly, the 
interim final rule is adopted as a final rule without change.

II. Comments on Interim Final Rule

    EPA received comments on the interim final rule from 15 parties 
representing a variety of interests. The majority of commentors 
represented State government and finance agencies that administer State 
DWSRF programs (10 commentors). Other commentors included trade 
associations (2 commentors); environmental/citizen groups (2 
commentors); and a State association (one commentor). Commenters raised 
several key issues which are discussed below. The complete response to 
comments document has been established under Docket W-00-11 and is 
available for review.
    Many of the comments that EPA received addressed issues that go 
beyond the scope of the interim final rule because they would involve 
changes to requirements found in the SDWA. Several commentors stated 
that the requirement that four percent of the allotment can be set 
aside for administration of the DWSRF program is insufficient for 
program administration oversight by States. This restriction on the 
amount of allotment that can be set aside for administration of the 
program is a requirement in section 1452(g)(2) of the SDWA. Several 
commentors stated that EPA should support extending the deadline for 
appropriations for the DWSRF program beyond fiscal year 2003 because of 
the success of the program. The preamble to the interim final rule 
reflects the language in section 1452(m) of the SDWA whereby Congress 
authorized appropriations for the DWSRF program through fiscal year 
2003. One commentor stated that refinancing should be allowed for 
privately-owned systems and that the deadline for transfer of funds 
between the DWSRF and Clean Water SRF programs should be removed. The 
interim final rule reflects the provision in section 1452(f)(2) the 
SDWA which allows refinancing only for publicly-owned systems and the 
provision in section 302 of the SDWA that funds may not be transferred 
between the two SRF programs after September 30, 2001.
    Several of the comments that EPA received asked for modifications 
to provisions that were discussed during development of the DWSRF 
Program Final Guidelines and which EPA indicated would not change as 
part of the rule development process. Specifically, five commentors 
disagreed with EPA's decision to include the requirement in the interim 
final rule that certain types of infrastructure projects are ineligible 
for assistance from the DWSRF program. One commentor agreed with EPA's 
decision. EPA maintains the position established during the development 
of the DWSRF Program Final Guidelines and reflected in the interim 
final rule that certain types of projects are ineligible for DWSRF 
program assistance because they do not further the objectives Congress 
set out in the SDWA to the same extent as other projects that are 
eligible.
    EPA received mixed comments on the level of public involvement that 
the interim final rule should require for States to have in their DWSRF 
programs. Several commentors stated that the rule should have more 
stringent requirements for public review and comment on State DWSRF 
programs. For instance, one commentor indicated that the rule should 
require a State to do more proactive outreach and education to small 
and disadvantaged communities and that the rule should require a State 
to use a percentage of its State program management set-aside for 
public outreach during the development of its Intended Use Plan (IUP). 
Other commentors indicated that the rule requires too much public 
review and comment as part of the IUP process. For instance, one 
commentor indicated that the rule should not require State decisions on 
the use of the set-aside funds to go through public comment as part of 
the IUP process because public input is already received as part of the 
State budget process. EPA believes that the public involvement 
requirements in the interim final rule allow for a balance between the 
need for the public to have sufficient opportunities to provide input 
on State DWSRF programs and the need for States to implement their 
programs in an efficient manner.
    Several of the comments EPA received reflected a misunderstanding 
of the provisions in the interim final rule. One commentor stated that 
the rule should not require a State to include in its Biennial Report a 
demonstration of how it is complying with operator certification and 
capacity development provisions to avoid withholding of funds. In 
actuality, the rule does not require a State to demonstrate in its 
Biennial Report how it is complying with the withholding requirements. 
The rule only requires a State to agree as part of its capitalization 
grant agreement that it will provide the annual program submittals that 
are required in the capacity development and operator certification 
programs. Several commentors stated that the provision to allow set-
aside funds to be used for planning and design costs associated with 
infrastructure projects for small systems is too narrow and that it 
precludes a State from funding the development of comprehensive water 
system plans for systems of all sizes. In actuality, the language in 
the rule does not preclude a State from providing funds for the 
development of comprehensive water system plans as part of capacity 
development assistance since these would not be considered

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planning and design costs. Thus, a State could use the State program 
management set-aside to fund water system plans for systems of all 
sizes, not just small systems.
    EPA received mixed comments on the level of stakeholder involvement 
provided for during the rule development process. Several commentors 
commended EPA for the level of stakeholder input on many policy matters 
in the rule and for the Agency's responsiveness to comments received on 
the rule. Other commentors stated that stakeholder involvement in the 
rule should have been broader and more inclusive. EPA believes that the 
interim final rule gives States a high degree of flexibility to operate 
their programs and is the result of a thorough stakeholder consultation 
process that went beyond what is required under the Administrative 
Procedures Act. The rule is primarily a codification of the DWSRF 
Program Final Guidelines which went through an extensive public comment 
and review process. Any additions or modifications to the Final 
Guidelines that are reflected in the rule went through rounds of public 
comment and revisions in memoranda, guidance documents, or were 
published in the Federal Register for comment. Stakeholders were also 
given multiple opportunities to provide comments during the rule 
development process and all comments received were carefully 
considered.

III. Administrative Requirements

Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, does not 
apply because this action is not a rule, for purposes of 5 U.S.C. 
804(3).

List of Subjects in 40 CFR Part 35

    Drinking water, Environmental protection, Grant programs--
environmental protection, Public health, Safe drinking water act, State 
revolving funds, Water supply.

    Dated: December 27, 2000.
J. Charles Fox,
Assistant Administrator, Office of Water.

    Accordingly, the interim final rule is adopted as a final rule 
without change.
[FR Doc. 01-693 Filed 1-11-01; 8:45 am]
BILLING CODE 6560-50-P