[Federal Register Volume 66, Number 178 (Thursday, September 13, 2001)]
[Notices]
[Pages 47653-47657]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-22994]


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ENVIRONMENTAL PROTECTION AGENCY

[FRL-7054-7]


Supplemental Guidelines for the Award of Section 319 Nonpoint 
Source Grants to States and Territories in FY 2002 and Subsequent Years

September 5, 2001.
AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of availability.

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SUMMARY: EPA has developed guidelines for the award of Clean Water Act 
section 319 nonpoint source grants in FY 2002 and subsequent years. The 
guidelines are intended to assist States and Territories in identifying 
the process and criteria to be used in distributing section 319 grants 
in FY 2002 and subsequent years. The process and criteria for FY 2002 
are generally the same as for FY 2001, with only slight modifications. 
The process and criteria for FY 2003 and beyond provide for a more 
concentrated focus on the implementation of Total Maximum Daily Loads 
(TMDLs) related to NPS pollution.

DATES: The guidelines are effective September 13, 2001.

ADDRESSES: Persons requesting additional information should contact 
Romell Nandi at (202) 260-2324; [email protected]; or U.S. 
Environmental Protection Agency (4503-F), 1200 Pennsylvania Avenue, 
NW., Washington, DC 20460.
    The complete text of today's guidelines is also available at EPA's 
Nonpoint Source website: http://www.epa.gov/owow/nps/cwact.html

    Dated: September 5, 2001.
Carl F. Myers,
Acting Director, Office of Wetlands, Oceans, and Watersheds.

Memorandum

    Subject: Supplemental Guidelines for the Award of Section 319 
Nonpoint Source Grants to States and Territories in FY 2002 and 
Subsequent Years.
    From: Carl F. Myers (for) Robert H. Wayland III, Director Office of 
Wetlands, Oceans, and Watersheds.
    To: EPA Regional Water Division Directors State and Interstate 
Water Quality Program Directors.
    To provide States and Territories (hereafter ``States'') with 
sufficient lead time to develop FY 2002 grant applications for nonpoint 
source funding (NPS) under Section 319 of the Clean Water Act (CWA), I 
am providing you the FY 2002 guidelines at this time. When the 
President signs EPA's FY 2002 appropriations bill later this year, my 
staff will immediately send you the State-by-State allocations based 
upon the long-standing 319 allocation formula. We also intend to 
publish guidance addressing Tribal allocations later this year.

Introduction

    EPA and the States have held several significant meetings around 
the country during recent months in which we discussed the most 
appropriate means to restore waters that are listed as impaired by NPS 
pollution. In the national meetings of the Association of State and 
Interstate Water Pollution Control Administrators (ASIWPCA) held in 
March and August of 2001, the States and EPA discussed the 
opportunities that exist to more effectively utilize CWA Section 319 
funds to help implement TMDLs related to nonpoint source pollution (NPS 
TMDLs). In those meetings, State representatives expressed the view 
that Section 319 provides an appropriate and effective programmatic 
framework for States to develop and implement NPS TMDLs. This guidance 
is intended to strengthen the link between the Section 319 NPS program 
and the development and implementation of NPS TMDLs and to promote the 
use of Section 319 dollars to assist in the development and 
implementation of NPS TMDLs.
    I appreciate the many helpful comments that we received from the 
States and EPA Regions in response to the draft guidelines that we 
provided to you for your review on May 24, 2001. The final guidelines 
make a number of significant changes in response to your comments. Most 
importantly, as explained in detail below, we have

[[Page 47654]]

established FY 2002 guidelines as a transition year towards increasing 
the program's focus on implementing TMDLs; the full transition as 
envisioned in the draft guidelines will not take place until FY 2003. 
This will provide States with more time to complete the development of 
TMDLs and watershed-based plans that will provide a strong foundation 
for implementation activities.
    Beginning in FY 2002, the U.S. Environmental Protection Agency 
(EPA) intends to promote increased use of Section 319 funds to develop 
and implement NPS TMDLs or the NPS components of mixed-source TMDLs 
(hereafter, both of these types of TMDLs will be referred to as ``NPS 
TMDLs''). NPS TMDLs, together with watershed-based plans designed to 
implement the NPS TMDLs, provide the necessary analytic link between 
actions on the ground and the water quality results to be achieved. In 
the absence of such an analytic framework, it is difficult to develop 
and implement a watershed project that will achieve water quality 
standards, or to determine causes of failure when that occurs. 
Therefore, EPA believes that improving the integration of NPS TMDLs and 
watershed plans to implement these NPS TMDLs will provide the most 
effective means to accelerate achievement of water quality standards.
    The approach outlined below is intended to be used for the 
foreseeable future. However, as mentioned above, EPA has heard the 
States' concerns that States need more time to increase their focus 
upon implementing NPS TMDLs. Therefore, EPA will treat FY 2002 as a 
transitional year, so that full implementation of the new features of 
these guidelines will begin in FY 2003. I will first discuss the 
overall approach to be taken over FY 2003 and beyond, and then I will 
discuss the steps that we are asking the States to take in FY 2002.
    Several earlier guidance documents govern the Section 319 grants 
process, and they remain in effect except to the extent that they are 
specifically modified in this memorandum. These are summarized in 
Appendix A to this memorandum. Next year, EPA will consolidate all 
current requirements and recommendations into a single document to make 
reference easier.

Focus on Restoring Waters Impaired by NYPS Pollution

    In FY 1999 and 2000, EPA directed that $100 million (referred to as 
``incremental funds'') be used to develop and implement watershed 
restoration action strategies (``WRASs'') in ``Category I'' watersheds 
that the states identified as most in need of attention. In FY 2001, 
EPA recognized the need to increasingly focus Section 319 grant dollars 
on implementing approved NPS TMDLs, under EPA's existing effective TMDL 
regulations and guidance. Based on this need, EPA stated that 
incremental funds may be used to develop and implement approved NPS 
TMDLs for any 303(d)-listed waterbodies (whether or not these were 
located within a Category I watershed), as well as to develop and 
implement WRASs.
    Beginning in FY 2002, EPA will continue to strengthen its support 
for State efforts to implement NPS TMDLs. A focused and sustained 
effort to restore impaired waters is essential. NPS TMDLs, together 
with watershed-based plans to implement NPS TMDLs, provide the 
technical underpinning for defining the problems and designing the 
solutions to our nation's most pressing water quality problems. EPA has 
been pleased to observe that all of the upgraded State nonpoint source 
programs now place emphasis on the restoration of impaired waters.
    For these reasons, EPA has decided to strengthen support for the 
State efforts with the steps outlined below. These steps are designed 
to promote the development and implementation of NPS TMDLs based upon 
the TMDL regulations that have been published at 40 CFR 130.7 in 1985 
and 1992, as well as guidance published by EPA to assist in the 
implementation of those regulations.

FY 2003 and Beyond

    Beginning in FY 2003, the following three principles will be 
applied:
    1. States may continue to use up to 20% of the ``base'' funds 
(i.e., funds other than the incremental funds) to develop NPS TMDLs and 
watershed-based plans to implement NPS TMDLs, or to conduct other NPS 
monitoring and program assessment/development activities, as in the 
past. EPA anticipates that States will prioritize their NPS TMDL 
development activities in accordance with their TMDL schedules that 
they have developed pursuant to their Section 106 grants. (See pages 2-
3 of the February 16, 2001, memorandum from Michael Cook, Director of 
EPA's Office of Wastewater Management, entitled ``FY 2001 Clean Water 
Act Section 106 Grant Guidance.'')
    2. States may use 20% of the ``incremental'' $100 million funds to 
develop NPS TMDLs as well as watershed-based plans that describe the 
actions that are necessary to implement NPS TMDLs. In doing so, EPA 
asks the States to bear in mind that developing sets of NPS TMDLs on a 
watershed basis as a unified whole, and implementing those NPS TMDLs 
holistically, usually provides the most technically sound and 
economically efficient means of addressing water quality problems. 
Therefore, EPA encourages States to include in their watershed-based 
plans approaches that will address all of the sources of impairments 
and threats to the watersheds in question. Thus, the watershed-based 
plans should address not only NPS TMDLs, but also any pollutants and 
sources of pollution that must be addressed to assure the long-term 
health of the watershed.
    We recognize that some States have not yet developed sufficiently 
detailed watershed-based plans to help the States and their partners 
determine which management measures or practices should be implemented 
in particular places in the watershed to assure that the load reduction 
identified in a NPS TMDL is achieved and that all significant water 
quality problems in the watershed are successfully addressed. In such 
cases, a State may need to use more than 20% of its incremental funds 
to develop sound watershed-based plans that can then be implemented 
successfully. Where this is the case, the State and the Region should 
discuss the State's need to devote greater resources to completing 
watershed-based plans, recognizing at the same time the urgent need to 
focus most 319 funds on actual implementation efforts to achieve water 
quality improvements. Based on these discussions, the Region may 
authorize the State to use more than 20% of the incremental funds to 
develop these watershed-based plans.
    To ensure that Section 319 projects succeed in restoring waters 
impaired by nonpoint source pollution, watershed-based plans that are 
developed with Section 319 funds should include the following elements. 
These elements will help provide reasonable assurance that the nonpoint 
source load allocations identified in the NPS TMDL will be achieved, as 
discussed in the Assistant Administrator's August 8, 1997 memorandum, 
``New Policies for Establishing and Implementing Total Maximum Daily 
Loads (TMDLs).'' (See also Appendix C of the May 1996 Nonpoint Source 
Guidance for more discussion of a ``well-designed watershed 
implementation plan'', which specifically discusses most of the 
elements listed below):
    a. An identification of the sources or groups of similar sources 
that will need to be controlled to achieve the load reductions 
established in the NPS TMDL (and to achieve any other

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watershed goals identified in the watershed-based plan);
    b. A description of the NPS management measures that will need to 
be implemented to achieve the load reductions established in the NPS 
TMDL (as well as to achieve other watershed goals identified in the 
watershed-based plan); an estimate of the load reductions expected for 
these management measures (recognizing the natural variability and the 
difficulty in precisely predicting the performance of management 
measures over time); and an identification of the critical areas in 
which those measures will need to be implemented to achieve the NPS 
TMDL;
    c. An estimate of the sources of technical and financial assistance 
needed, and/or authorities that will be relied upon, to implement the 
plan. As sources of funding, States should consider the use of their 
319 programs, State Revolving Funds, USDA's Environmental Quality 
Incentives Program and Conservation Reserve Program, and other relevant 
Federal, State, local and private funds that may be available to assist 
in implementing the plan;
    d. An information/education component that will be used to enhance 
public understanding of the project and encourage their participation 
in selecting, designing, and implementing the NPS management measures;
    e. A schedule for implementing the NPS management measures 
identified in the plan that is reasonably expeditious;
    f. A description of interim, measurable milestones (e.g., amount of 
load reductions, or improvement in biological or habitat parameters) 
for determining whether NPS management measures or other control 
actions are being implemented;
    g. A set of criteria that can be used to determine whether 
substantial progress is being made towards attaining water quality 
standards and, if not, the criteria for determining whether the NPS 
TMDL needs to be revised.
    h. A monitoring component to evaluate the effectiveness of the 
implementation efforts, measured against the criteria established under 
item (g) immediately above.
    3. States should use any remaining incremental funds to implement 
NPS TMDLs for which watershed-based plans have been completed. To 
assure that the implementation of NPS TMDLs actually results in the 
restoration of watersheds, as well as to maximize efficiencies, we 
recommend that States use these incremental 319 funds on a watershed 
basis to develop and implement the NPS TMDLs for all the waters 
impaired by nonpoint source pollution in a watershed. In addition, as 
in the plan development stage, we recommend that States' implementation 
activities funded by the grant also address other significant nonpoint 
sources and pollutants in these watersheds that are not addressed in 
the NPS TMDL, but that nonetheless should be controlled to assure a 
successful long-term solution to the watershed's existing and 
threatened water quality problems.
    We recognize that States already have in place or have been 
developing watershed plans and strategies of varying levels of scale, 
scope, and specificity that may contribute significantly to the process 
of developing and implementing watershed-based plans. We encourage 
States to use these plans and strategies, where appropriate, as 
building blocks for developing and implementing the watershed-based 
plans. In particular, we recommend that States use their WRASs, water 
quality management plans (WQMPs), comprehensive coastal management 
plans (CCMPs), and other similar holistic watershed documents, to help 
guide their watershed-based approaches to NPS TMDL development and 
implementation.
    We further recommend that States give their highest funding 
priority to projects that are supported by additional funding by other 
Federal, State, and local agencies, SRF funds, or private sector 
funding. Additionally, States should consult their SRF Program's 
Integrated Planning and Priority Setting System, if such system is in 
use, to address the highest priority water quality improvement projects 
(see www.epa.gov/owm/finan.html). Given the significant expense of many 
watershed projects, such an approach will help expedite successful 
implementation of needed practices and thus speed the restoration of 
water quality. It will also help assure that watersheds are addressed 
in a holistic manner that accounts for the broad variety of stressors 
in each watershed.

FY 2002: Transition to Increased Focus on Implementing TMDLs

    EPA recognizes that the approach outlined above cannot be 
implemented immediately in all States. Some States are already 
implementing well-designed watershed projects in impaired waters for 
which no NPS TMDL has yet been established, and halting such a project 
pending development of a NPS TMDL and a watershed-based plan to 
implement the NPS TMDL may well be counterproductive. Furthermore, some 
States have already published requests for new project proposals to be 
submitted by local watershed groups and conservation districts for FY 
2002 funding, and watershed projects have already been planned and 
submitted to the State by such groups.
    To enable such projects to go forward and provide States and their 
local partners an adequate opportunity to transition into the use of a 
TMDL-based framework, EPA will use the following approach for the 
incremental 319 funds in FY 2002:
    Step 1. If a State has developed any watershed-based plans to 
implement TMDLs, implementation of the TMDLs in those watersheds will 
receive the highest funding priority.
    Step 2. A State may use any incremental 319 funds remaining after 
Step 1 to address Section 303(d)--listed waterbodies even in the 
absence of a NPS TMDL, provided that a watershed-based plan has already 
been developed which identifies the pollutants that are causing the 
water quality impairment and generally describes the types of measures 
or practices to be implemented to solve the water quality problem.
    Step 3. For any watershed project addressing Section 303(d)-listed 
waterbodies and funded under the Section 319 grant, the State must 
commit in the work plan (and may use 319 funding) to develop a NPS TMDL 
and a watershed-based plan to implement the NPS TMDL. Continued funding 
of the project in FY 2003 would be contingent upon completion of the 
NPS TMDL and watershed-based plan.

Protection of Threatened Waters

    While States need to place very high priority on the need to 
restore waters impaired by nonpoint source pollution, as described 
above, I wish to recognize and emphasize the continued need to protect 
waters that currently are not impaired by nonpoint source pollution to 
assure that they remain unimpaired. This particularly includes waters 
whose good quality is threatened by such factors as changing land uses. 
EPA recommends that States place a high priority for the use of their 
base Section 319 funding on such protective activity. This includes 
both on-the-ground projects and broader educational and regulatory 
programs established by the State to promote broad awareness and 
implementation of activities that can help protect these waters from 
degradation by new and expanded land use activities which cause 
nonpoint source pollution.

Operation and Maintenance

    The question has arisen as to grantees' obligations to continue 
operating and

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maintaining measures and practices that have been funded with Section 
319 dollars. Each Section 319 grant should contain a condition 
requiring that the State assure that its project sub-awards (e.g., sub-
contracts and sub-grants) include a provision that any management 
practices implemented for the project be properly operated and 
maintained. For assistance in developing appropriate grant condition 
language, Regions should work with their Office of Regional Counsel. 
States may wish to consult with colleagues implementing similar 
programs, such as USDA's Environmental Quality Incentives Program, for 
information on how to develop appropriate contract language that is 
tailored to the types of practices expected to be funded in a 
particular project.

Reporting NPS Results

    Section 319(h)(8) of the CWA requires EPA to determine, prior to 
awarding a Section 319 grant, that the State has made ``satisfactory 
progress'' in meeting the schedule set forth in its NPS management 
program. In addition, Section 319(h)(11) requires that States report 
annually to EPA concerning their progress in meeting their schedules of 
milestones contained in their nonpoint source management programs and, 
to the extent that appropriate information is available, reductions in 
nonpoint source pollutant loading and improvements in water quality. 
These annual reports in turn can assist the Region in making the 
satisfactory determination required by Section 319(h)(8).
    To provide tools that facilitate these determinations and reports, 
EPA is in the process of modifying the nonpoint source grants computer-
based data system, the Grants Reporting and Tracking System (GRTS), 
which will include new and modified data elements to be reported by 
States.
    The most significant new mandated fields will be to: (1) Identify 
the location of the stream (or other waterbody) reach or reaches that 
are intended to be affected by each 319-funded project; (2) describe 
the project; (3) state whether the project consists of one or more of 
(a) the development of a NPS TMDL, (b) the development of a NPS TMDL 
implementation plan to achieve specific load-reduction goals, (c) the 
actual implementation of such a plan or (d) none of the above; and (4) 
annually provide (for nitrogen, phosphorus, and/or sediments) an 
estimate of load reductions achieved by the project. EPA intends to use 
these data as a means of tracking and reporting to Congress and the 
public the progress being made by States to successfully implement 
their NPS TMDLs and other projects to improve water quality.
    We have now web-enabled GRTS, with appropriate password 
protections, to make it easier for States to use the system and to 
enable State sub-grantees to use GRTS as well (if the State chooses to 
allow them access). Furthermore, EPA has released the first version of 
WATERS (a new data system that currently contains 303(d) and water 
quality standards data), and we will now begin to link GRTS to WATERS 
through common geolocational identifiers. Thus, 319-funded watershed 
projects will be linked through geolocational data to water quality 
status and, over time, to water quality improvement information 
contained in WATERS. While there are likely to be a number of factors 
contributing to improvements in a particular waterbody's quality (e.g., 
point source controls as well as various non-319 funds and programs 
that address nonpoint sources), the geolocational link will enable EPA, 
States, and the public to at least note the contribution that 319-
funded projects are making to such improvements.
    To ensure that required information is input into GRTS, each 
Section 319 grant award must include a condition requiring that the 
State enter all mandated data elements into GRTS. Information that is 
available at the time of grant award (e.g., project location and 
description) should generally be entered into GRTS within 3 months of 
the receipt of the grant or by a specific date agreed to by the Region 
and State. Other information should be entered at the appropriate time 
after project implementation has begun (e.g., load reductions would be 
reported annually once project implementation has begun).

Conclusion

    Significant challenges remain in our efforts to abate NPS 
pollution, protect threatened waters, and restore impaired aquatic 
resources. EPA will work with States to make the most effective use of 
Federal resources to meet these challenges.
    If you have any questions or comments, please contact me at 202-
260-7166 or [email protected], or have your staff contact Dov 
Weitman, Chief of the Nonpoint Source Control Branch, at 202-260-7088 
or [email protected].

cc: State Nonpoint Source Coordinators
EPA Regional Water Quality Branch Chiefs
EPA Regional Nonpoint Source Coordinators
EPA Regional Clean Lakes Coordinators
EPA Regional TMDL Coordinators
Robbi Savage (ASIWPCA)

Appendix A--Significant Nonpoint Source Grants Guidance Documents

    EPA has published several guidance documents that apply to the 
Section 319 grants guidance process. These documents are listed and 
briefly summarized below. Each of them may be reviewed online from the 
following address at EPA's nonpoint source website: www.epa.gov/owow/nps/cwact.html
    (1) Nonpoint Source Program and Grants Guidance for Fiscal Years 
1997 and Future Years (May 1996). This 33-page document is the chief 
national nonpoint source program document. It describes criteria and 
processes for States and Territories to upgrade their nonpoint source 
management programs; summarizes statutory and regulatory provisions 
that apply to the award of nonpoint source grants; and provides 
guidance designed to assist States and Territories in implementing 
effective programs and projects.
    (2) Process and Criteria for Funding State and Territorial Nonpoint 
Source Management Programs in FY 1999 (August 18, 1998). This 6-page 
document established guidelines for the use of incremental dollars 
($100 million) that were anticipated to be appropriated later that 
year. The guidance (1) authorized States and Territories to use up to 
20 percent of their Section 319 funds to upgrade and refined their 
nonpoint source programs and assessments; (2) directed that the 
incremental dollars be focused upon implementation of watershed 
restoration action strategies in high-priority watersheds identified by 
the States and Territories as not meeting clean water and other natural 
resource goals; and (3) established a schedule for the award of the 
incremental funds.
    (3) Funding the Development and Implementation of Watershed 
Restoration Action Strategies under Section 319 of the Clean Water Act 
(December 4, 1998). This 4-page document reiterated the priority placed 
on using the incremental $100 million to address the States' and 
Territories' high-priority watersheds that do not meet clean water and 
other natural resource goals, focused particularly in sub-watershed 
where NPS control activities are likely to have the greatest positive 
impact. It identified 303(d) sub-watersheds as high-priorities for such 
work.
    (4) Supplemental Guidance for the Award of Section 319 Nonpoint 
Source Grants in FY 2000 (December 21, 1999). This 10-page document (1) 
asked Regions to assure that, for all 319-

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funded programs or projects that assist animal feeding operations 
(AFOs), the 319 grants include a provision (either as a grant condition 
or through a separate document such as a work plan or BMP 
implementation plan) to assure that any AFO that receives financial 
assistance pursuant to the grant has and will implement a comprehensive 
nutrient management plan; (2) recommended steps intended to achieve a 
suggestion by the congressional appropriations committees that 5 
percent of the Section 319 funds be allocated to clean lakes; and (3) 
announced and discussed EPA's intention to work with the States to 
consider changes to the Section 319 reporting/tracking system to 
support program needs, including promoting better integration with 
Section 305(b) data and Section 303(d) lists.
    (5) Supplemental Guidance for the Award of Section 319 Nonpoint 
Source Grants in FY 2001 (65 FR 70899-70905, Nov. 28, 2000). This 
document (1) discussed how States and Territories may use funding 
increases appropriated in FY 2001; (2) broadened the use of the 
``incremental'' ($100 million) to authorize their use to develop and 
implement TMDLs for any 303(d)-listed waterbodies throughout the State; 
and (3) directed EPA Regional offices to condition grants to those 
States with conditional approval under Section 6217 of the Coastal Zone 
Act Reauthorization Amendments of 1990 (``CZARA'') devote at least 
$100,000 of its FY 2001 319 grant dollars to specific actions that are 
designed to meet all outstanding conditions for NOAA and EPA approval.

[FR Doc. 01-22994 Filed 9-12-01; 8:45 am]
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