[Federal Register Volume 67, Number 15 (Wednesday, January 23, 2002)]
[Notices]
[Pages 3185-3192]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1615]


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ENVIRONMENTAL PROTECTION AGENCY

[FRL-7131-8]


Flexible State Enforcement Responses to Small Community 
Violations, EPA Policy and Guidance

AGENCY: Environmental Protection Agency.

ACTION: Policy statement and request for public comment on possible 
revisions.

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SUMMARY: The Environmental Protection Agency (EPA) is evaluating the 
effectiveness of its 1995 Policy on Flexible State Enforcement 
Responses to Small Community Violations (the Small Communities Policy) 
and seeks public comment on possible revisions to make the policy more 
useful and to promote more widespread implementation of the policy 
among states. Possible revisions include an upward adjustment of the 
population limit for eligible communities, allowing application to 
``fence line'' projects, and provision of additional incentives for 
participation. This notice also discusses other potential minor 
changes. EPA will also consider additional changes that may be 
suggested by commenters. EPA developed the Small Communities Policy to 
enhance protection of public health and the environment by encouraging 
states to help small communities: Identify their environmental 
problems; develop a priority-based schedule for returning to full, 
comprehensive environmental compliance; and build the technical, 
administrative, and financial capacity they need to achieve and sustain 
environmental compliance. The Small Communities Policy can be 
downloaded from the Internet at http://es.epa.gov/oeca/scpolicy.html.

DATES: EPA requests that interested parties comment on this notice in 
writing.
    Comments must be received by April 23, 2002.

ADDRESSES: Send written comments to: the Docket Clerk, Enforcement and 
Compliance Docket and Information Center (2201A), Docket Number EC-P-
2001-003, U.S. Environmental Protection Agency, Ariel Rios Building, 
1200 Pennsylvania Avenue, NW., Washington, DC 20460 (in triplicate, if 
possible). Please use a font size no smaller than 12. Comments may also 
be sent electronically to [email protected] or faxed to (202) 501-
1011. Attach electronic comments as an ASCii (text) file, and avoid the 
use of special characters and any form of encryption. Be sure to 
include the docket number EC-P-2001-003 on your document. In person, 
deliver comments to Enforcement and Compliance Docket and Information 
Center, U.S. Environmental Protection Agency, Ariel Rios Building, Room 
4033, 1200 Pennsylvania Avenue, NW., Washington, DC 20460. Persons 
interested in reviewing this docket may do so by calling (202) 564-2614 
or (202) 564-2119. Hours of operation are 8 a.m. through 4 p.m., 
e.s.t., Monday through Friday, except legal holidays.

FOR FURTHER INFORMATION CONTACT: Kenneth Harmon, telephone (202) 564-
7049; e-mail [email protected].

SUPPLEMENTARY INFORMATION:

I. Explanation of Notice

A. Executive Summary

    During 1994, EPA began informal discussions with the states of 
Oregon and Idaho, (later joined by the state of Nebraska) that centered 
on those states' planned use of enforcement discretion with respect to 
small community violators. EPA's enforcement guidelines generally 
mandate initiation of an enforcement action and assessment of a 
standard penalty amount (which can be adjusted downward on the basis of 
the violator's inability to pay) if a local government entity is 
discovered to have violated environmental regulations. As these states 
noted, small communities may have more difficulty complying with 
environmental regulations than larger communities do. Small communities 
that lack personnel trained in environmental management may be unaware 
of environmental requirements. Once informed of an environmental 
violation, a small community may not know how to correct the problem. 
Because small communities have a smaller tax base and a smaller pool of 
ratepayers, their residents often must pay higher per household costs 
for environmental compliance. Oregon, Idaho, and Nebraska sought 
assurances EPA would defer to a state's exercise of enforcement 
discretion to reduce or waive the standard penalty where a state 
determines that a small community violator is working in diligent good 
faith to correct its violations.
    In 1995, EPA responded by issuing the Policy on Flexible State 
Enforcement Responses to Small Community Violations (``the Small 
Communities Policy''). The Small Communities Policy established the 
parameters within which EPA encourages states \1\ to provide incentives 
for small communities to seek state assistance in identifying their 
environmental problems, developing a priority-based schedule for 
returning to full comprehensive environmental compliance, and building 
technical, administrative, and financial capacity to achieve and 
maintain compliance.
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    \1\ The term ``state'' includes territories of the United States 
and Indian reservations where EPA has approved the Tribe for 
treatment as a State.
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    The major findings of EPA's preliminary evaluation of the Small 
Communities Policy and its implementation are as follows:
     During the past six years, few states have elected to 
establish programs to provide comprehensive environmental compliance 
assistance to small communities. At present, only the states of Oregon 
and Nebraska maintain active programs of this type. In these states, 
the Small Communities Policy has proved effective for reassuring 
communities that compliance evaluations performed by the state do not 
always subject the community to an enforcement action and a requirement 
that they pay penalties.
     The Oregon and Nebraska programs have provided compliance 
assistance to more than 250 small communities.
     Many states have not established programs to provide 
comprehensive compliance assistance to small

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communities because they believe the Small Communities Policy's 
population cap of 2,500 is too low. These states say their communities 
with 2,500 or fewer residents offer only limited and rudimentary public 
services, lack the administrative capacity to implement a comprehensive 
compliance effort, and their compliance needs can be adequately met by 
informal compliance assistance focused on the requirements of 
individual regulatory programs.
     Many small communities see no benefit to be gained by 
participating in a state's comprehensive compliance assistance program, 
as reduction or waiver of the noncompliance penalty is little incentive 
to a community that, because of its limited financial resources, would 
not pay a significant penalty in a traditional enforcement action.
    In response to these findings and others, EPA is considering a 
number of revisions to the Small Communities Policy. One possible 
revision would be to raise the population cap, allowing states to 
direct comprehensive compliance assistance toward larger (but still 
small) communities that do offer a variety of public services and do 
have the capacity to undertake and implement a plan for sustained 
compliance. The Small Communities Policy could also be revised to 
permit a comprehensive approach to environmental compliance within the 
``fence line'' of one of a community's operations, rather than 
requiring comprehensive evaluation of all of a community's operations. 
EPA has also worked to reduce the resource burdens associated with 
establishing and participating in comprehensive environmental 
compliance assistance programs and is considering a number of 
incentives it can offer to both states and small communities. These 
options and others are discussed later in this Notice.

B. Overview of the Small Communities Policy

    EPA's 1995 Small Communities Policy gives states considerable 
freedom to tailor small community environmental compliance assistance 
practices or programs that meet specific local needs. In general, 
application of the Small Communities Policy is restricted to 
communities with a population no larger than 2,500 that are working in 
diligent good faith to achieve and sustain comprehensive environmental 
compliance. The Small Communities Policy requires that states offering 
comprehensive environmental compliance assistance have adequate 
processes for:
     Responding quickly to requests for compliance assistance;
     Selecting communities to participate in the state's 
compliance assistance program;
     Assessing a community's good faith and compliance status;
     Establishing priorities for addressing violations; and
     Ensuring prompt correction of violations.
    Where a state implements the Small Communities Policy, EPA reserves 
all of its enforcement authorities, but will generally defer to a 
state's exercise of its enforcement discretion in accordance with the 
terms of the Small Communities Policy. EPA, however, reserves its 
enforcement discretion with respect to any violation or circumstance 
that may present an imminent and substantial endangerment to, has 
caused or is causing actual serious harm to, or presents a serious 
threat to, public health or the environment.
    The Small Communities Policy does not apply if, in EPA's judgment, 
a state's program to offer comprehensive environmental compliance 
assistance to small communities fails to satisfy the conditions of the 
Small Communities Policy. The Small Communities Policy does not apply 
if, in EPA's judgment, a state's application of its small community 
environmental compliance assistance program fails in a specific case 
adequately to protect human health and the environment because it 
neither requires nor results in reasonable progress toward, and 
achievement of, environmental compliance by a date certain.

C. Relationship of Small Community Policy to Environmental Management 
Systems

    In many respects, the Small Communities Policy promotes an 
environmental management system (EMS) approach by encouraging small 
communities to identify their environmental responsibilities and 
implement management systems that will enable them to sustain 
compliance. While the Small Communities Policy asks participating small 
communities to perform a comprehensive assessment of their 
environmental compliance, the resulting enforceable compliance schedule 
need only address the violations discovered. A small community that 
adopts an EMS signals its ongoing commitment to management practices 
that minimize the likelihood of violations in the future. For this 
reason, EPA supports states that promote the use of environmental 
management systems as a component of their programs that offer 
comprehensive environmental compliance assistance to small communities. 
Small communities will be able to use the resources of the PEER Center 
(see below) to assist them in developing an EMS. If a small community 
develops and implements an EMS as part of its strategy to address its 
noncompliance, the EMS should be incorporated into the written and 
enforceable compliance schedule.

D. Differences Among the Self-Disclosure Policies

    In addition to the Small Communities Policy, the application of 
which is expressly limited to small communities, EPA has issued 
Incentives for Self-Policing: Discovery, Disclosure, Correction and 
Prevention of Violations (the Audit Policy) and the Small Business 
Compliance Policy (the Small Business Policy), both of which were last 
revised in April of 2000. These policies provide penalty relief to 
violators who promptly disclose their violations to EPA and promptly 
return to compliance. Although the Small Communities Policy is often 
grouped with the Audit Policy and the Small Business Policy under the 
shared term ``self-disclosure policies,'' it is different in 
significant ways. The Audit Policy and the Small Business Policy apply 
only to violations voluntarily discovered by the regulated entity, 
i.e., the violator, not a regulator, discovered the noncompliance, and 
the violations were not discovered during the performance of a 
compliance assessment required by statute or regulation. The Small 
Communities Policy, by contrast, allows inclusion both of violations 
discovered by the regulator and of violations found during legally 
required compliance assessments. While the Audit Policy and the Small 
Business Policy do not provide penalty relief for repeat violations, 
the Small Communities Policy allows application of the policy to 
communities with a history of noncompliance if the state determines 
that the community is acting in good faith. The Audit Policy and the 
Small Business Policy generally allow disclosing violators 60 days and 
90 days, respectively, to correct their violations (the Small Business 
Policy allows 180 days for corrections if the violator first submits a 
written schedule, and up to 360 days for corrections if the violator 
will correct the violations by putting into place pollution prevention 
measures.) The Small Communities Policy gives communities 180 days to 
correct violations without a schedule, but, if compliance cannot be 
achieved within that time, allows communities to enter into a written 
and enforceable

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schedule that will address all of their violations in order of risk-
based priority as expeditiously as practicable. Both the Audit Policy 
and the Small Business Policy focus on the noncompliance disclosed by 
the violator, and the disclosed violations must be corrected in a 
timely fashion, but the violator is not asked to conduct voluntary 
evaluations of its compliance with any other regulatory requirements. 
For this reason, the most significant difference between the Small 
Communities Policy and the other self-disclosure policies is the Small 
Communities Policy's emphasis on performing a compliance evaluation of 
all of a community's environmental operations and on developing the 
community's capacity to achieve and sustain comprehensive compliance.

II. Possible Revisions to the Small Communities Policy

    EPA has identified three areas of the Small Communities Policy that 
may have the largest influence on whether or not states and small 
communities participate in programs that provide comprehensive 
environmental compliance assistance to small communities: (1) The 
policy's cap on the population of participating communities; (2) the 
resource burden on states to establish and implement such a program; 
and (3) the incentives for participation. These three areas of specific 
concern will be discussed more fully below. EPA seeks comments from the 
public on how best to address these specific concerns, on other aspects 
of the policy identified in the discussion to follow, and on any other 
issues concerning the Small Communities Policy and its implementation.

A. Possible Revisions To Address Areas of Specific Concern

1. The Population Cap
    All stakeholders agree that the Small Communities Policy is 
valuable for the assurances it provides small communities that a good 
faith request for help can result in compliance assistance instead of 
an enforcement action and penalty. Some stakeholders have told EPA that 
the Small Communities Policy appropriately limits participation to 
communities with a population of 2,500 or less, as a population cap is 
necessary to limit delivery of comprehensive environmental compliance 
assistance to those communities that most need help. Other stakeholders 
believe the Small Communities Policy is of little use to communities 
with 2,500 or fewer residents. In rural areas, small community 
residents may obtain their drinking water from their own wells, capture 
waste water in their own septic systems, or assume responsibility for 
disposing of their own solid waste. In more densely populated areas, 
the residents of small communities may receive public services from the 
surrounding county or district government rather than from their local 
small government authority. If a community does not provide a range of 
public services, it has no need for a program that helps it set 
priorities and develop a schedule for working toward comprehensive 
environmental compliance. These stakeholders assert that there are 
numerous larger (but still small) communities that would enjoy greater 
benefit from participation in such a program, while advancing the 
Agency's goal of encouraging small communities to achieve and sustain 
comprehensive environmental compliance.
    If the Agency were to revise the Small Communities Policy to 
address the population cap that some see as an impediment to 
implementation, EPA would have several options.
a. Raise the Population Cap
    The Small Communities Policy capped a small community's population 
at 2,500 to be consistent with the Small Town Environmental Planning 
Act, 42 U.S.C. 6908(f) (October 6, 1992), where Congress defined a 
``small town'' as one ``with a population of less than 2,500 
individuals.'' If EPA determines that the Small Communities Policy's 
population cap of 2,500 bars participation of small communities that 
could benefit from the policy and advance EPA's goals, one possible 
solution would be to raise the population cap.
    Section 9 of the United States Census Bureau's Statistical Abstract 
of the United States: 2000 indicates that approximately 25,750 of 
America's 36,000 municipalities, towns, and townships have fewer than 
2,500 residents. This 72 percent of America's units of local government 
is home to only 9 percent of the Americans who live in municipalities, 
towns, and townships. Doubling the size of the resident population to 
5,000 adds another 4,000 units of local government and another 6 
percent of the Americans who live within units of local government. 
Another 2,700 units of local government have populations between 5, 000 
and 10,000, and are home to an additional 9 percent of the Americans 
who live within units of local government. All told, the 32,400 units 
of local government that have fewer than 10,000 residents represent 
approximately 90 percent of all units of local government in America, 
and the 51,400,000 people who live in them represent less than a 
quarter of all Americans who live in municipalities, towns, or 
townships.

BILLING CODE 6560-50-P

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[GRAPHIC] [TIFF OMITTED] TN23JA02.007

BILLING CODE 6560-50-C

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    Congress has defined small town differently in various public laws. 
In the Small Business Regulatory Enforcement Fairness Act of 1996, and 
the Small Business Act ``small governmental jurisdiction'' means the 
governments of cities, counties, towns, townships, villages, school 
districts, or special districts, with a population of less than 50,000. 
Both of these statutes allow a federal agency to establish, after 
opportunity for public comment, one or more definitions of small 
governmental jurisdiction ``which are appropriate to the activities of 
the agency and which are based on such factors as location in rural or 
sparsely populated areas or limited revenues due to the population of 
such jurisdiction.''
    Where EPA rules take size into account, most often it is to assign 
facilities to categories on the basis of the amount of pollution the 
facility can potentially release into the environment. In regulations 
controlling municipal storm water discharge facilities and in the 
primary drinking water standards, EPA has established a regulatory 
framework that provides different requirements for communities with 
different resident populations.
    In these examples, the size of the resident population is directly 
proportional to the amount of pollution potentially released into the 
environment by municipal storm water discharge facilities, to the 
number of people whose health is potentially placed at risk by drinking 
water that does not meet standards, and to the number of ratepayers who 
pay the costs of compliance. For rules related to storm water 
discharge, EPA defines small local governments as those serving a 
population of fewer than 100,000. EPA's primary drinking water 
standards establish a number of different population caps beneath which 
communities would be considered small enough that they need not meet 
the more stringent requirements the regulation imposes on larger 
communities. Primary drinking water standards that establish a small 
community population cap most often set the cap at either 3,300 or 
10,000 residents. In proposing the Arsenic Rule, EPA created provisions 
intended to lessen the burden on small public water systems that serve 
fewer than 10,000 persons, citing the population level specified by 
Congress in section 1412(b)(4)(ii) of the Safe Drinking Water Act for 
applicability of small system flexibility provisions. EPA requests 
comment on whether application of the Small Communities Policy should 
continue to be limited to communities with a population of less than 
2,500, whether the Small Communities Policy should adopt the population 
cap of another EPA statute or regulation, or whether it would be 
appropriate to establish a population cap at some level not found in 
EPA statutes or regulations.
b. Replace the Population Cap With a Capacity Test
    Noting that the primary goal of the Small Communities Policy is to 
build a community's capacity to achieve and sustain comprehensive 
environmental compliance, some stakeholders suggest that the number of 
people who live in a community may not be the most reliable measure of 
whether the community lacks or possesses that capacity. They note that 
some violating communities with fewer than 2,500 residents may have the 
financial capacity to achieve and sustain comprehensive environmental 
compliance once their environmental needs are identified. They also 
note larger, poorer communities may be unable to achieve that result 
without extensive assistance. For this reason, these stakeholders 
recommend that EPA's Small Communities Policy determine a community's 
eligibility to participate in a compliance assistance program not on 
the basis of a community's population, but solely on a finding that the 
community lacks the capacity to comply without assistance.
    Although the Small Communities Policy already offers a list of 
indicators states can use to measure a community's capacity to comply, 
revisions to the policy could require that a community's capacity be 
determined either on the basis of one or two indicators, on the basis 
of a detailed demographic analysis, or something in between. Possible 
capacity indicators for a quick determination would likely focus on 
whether or not the community employs either a professional government 
manager or a certified professional whose primary responsibility is 
environmental compliance. If the Small Communities Policy were to adopt 
capacity indicators of this type, EPA would take care not to create 
incentives for communities to avoid employing trained staff as a way to 
receive preferential treatment from their state.
    Some stakeholders have pointed out that a capacity analysis is 
implicit in the Small Communities Policy's requirement that states 
assess the good faith of communities that are candidates for their 
compliance assistance programs. The good faith requirement indicates 
that a community that has the capacity to comply with environmental 
requirements, but chose not to exercise that capacity, would not be 
eligible for participation because it has not acted in good faith. 
Accordingly, some would view elimination of the Small Communities 
Policy's population cap in favor of a capacity analysis as removing an 
arbitrary barrier to delivery of the Small Communities Policy's 
benefits to needy communities larger than 2,500, not as requiring 
states to perform additional analysis of candidate communities. Because 
almost all communities with populations greater than 10,000 are 
professionally managed and do employ certified environmental 
professionals, these stakeholders say, elimination of the population 
cap would not result in application of the Small Communities Policy to 
large communities, as communities with professional staff should be 
able to identify and address environmental compliance issues without a 
state's assistance. Other stakeholders have suggested that small 
communities with professional staff are better able to take advantage 
of the provisions of the Small Communities Policy, and that employment 
of professional staff should not bar a small community's participation 
in comprehensive environmental compliance assistance programs if other 
capacity measures indicate that the community is unlikely to achieve 
and sustain comprehensive compliance without assistance from the state. 
EPA requests comment as to whether the Small Communities Policy should 
establish a measurement of a small community's compliance capacity as 
the exclusive criterion for the community's participation in a 
comprehensive environmental compliance assistance program.
2. The Resource Burden on States
    States note that bringing together staff with expertise in various 
environmental programs, coordinating their efforts, and making them 
available to provide compliance assistance at the request of small 
communities can require the investment of significant state resources. 
EPA hopes to fund a few pilot projects that will help states establish 
and implement a small community comprehensive environmental compliance 
assistance program, but Agency resources for such efforts will be 
limited and subject to annual budget uncertainties.
a. Provide ``In Kind'' Assistance
    EPA anticipates that providing in-kind assistance that lowers a 
state's implementation costs will prove a reliable and effective method 
of addressing the states' lack of resources. Many of the tools a state 
needs to establish a comprehensive

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environmental compliance assistance program have already been developed 
by EPA and are available from EPA and from other sources. Examples 
include:
     The Profile of Local Government Operations (EPA 310-R-99-
001), which details the environmental requirements triggered by typical 
local governmental activities. Sections of this 300-page book focus on 
different government operations (i.e., vehicle/equipment maintenance, 
construction/property management, etc.), and describe the environmental 
requirements associated with the performance of that operation.
     The Local Government Environmental Assistance Network 
(LGEAN). EPA and nine non-governmental organizations maintain an 
Internet site (www.lgean.org) that provides information about the 
environmental responsibilities of local governments; alerts users to 
new and developing issues related to environmental compliance; allows 
users to review and comment on statutes, regulations and guidance in 
development; answers their questions, provides a forum for peer 
counseling, and offers links to grants information and to technical 
consultants. LGEAN's information services are also available via a toll 
free telephone number for those who do not have access to the Internet.
     The Environmental Audit Protocols. To date, EPA has 
published eleven handbooks that provide detailed information on how to 
audit for compliance with various environmental statutes. Links to the 
full text of these protocols can be found at http://es.epa.gov/oeca/main/strategy/crossp.html.
     The Environmental Management, Auditing, and Pollution 
Prevention Tool (EMAPPT). Currently under development, this web-based 
tool will allow users to customize activity-specific compliance 
assistance tools that identify the applicable regulatory requirements, 
audit protocol checklists, environmental management system materials, 
and opportunities for pollution prevention.
     The Compliance Assistance Clearinghouse http://cfpub1.epa.gov/clearinghouse/). This guide to compliance information on 
the Internet provides users quick access to compliance tools, contacts, 
and activities available from EPA and other compliance assistance 
providers.
     The Public Entity EMS Resource (PEER) Center. This Web 
site is scheduled to go on-line in the spring of 2002, with four Local 
Resource Centers to open across the nation shortly thereafter. The PEER 
Center will provide a cost-effective central information source where 
local governments can find quality-assured, field-tested data, 
information, tools, resources, technical assistance, and training they 
need to establish an environmental management system for a variety of 
public facilities in a variety of circumstances.
    In addition to these compliance assistance tools, EPA could develop 
and distribute model documents and process templates that would further 
reduce program development costs for states. EPA welcomes comments on 
the utility of these compliance assistance tools and whether additional 
materials would be helpful.
b. Allow a ``Fence Line'' Approach
    Because performing a comprehensive evaluation of the environmental 
compliance status of all of a small community's operations can 
necessitate input from several individuals and involve extensive 
analysis, allowing participation of small communities on the basis of 
``fence line'' evaluations could be another means of reducing a state's 
resource demands. The fence line approach erects a figurative fence 
around one of the local government's facilities or operations (i,e., a 
waste water treatment plant, vehicle fleet operations, etc.) that is 
the subject of compliance concern. A state can focus personnel and 
expertise on the environmental regulation that primarily controls 
activity within the fence line, and make use of information sources 
like those described in the preceding section to identify additional 
environmental requirements that the local government must meet within 
the fence line. Because the fence line approach has seen widespread use 
by local government's developing environment management systems, the 
PEER Center will make available case studies showing how several 
different types of local government facilities established a process to 
identify their environmental responsibilities. The PEER Center will 
also make available field tested templates for environmental management 
systems local government facilities put in place to ensure sustained 
environmental compliance. By focusing on a limited subset of the small 
community's facilities or operations, a state can reduce the amount of 
resources needed to help a community develop a plan and schedule to 
address environmental concerns identified during a compliance 
assessment. The small community, however, remains at risk of future 
discovery of environmental violations at its other facilities.
c. Shift Costs to the Small Community
    While EPA will continue working to reduce a state's resource 
burdens associated with offering comprehensive environmental compliance 
assistance to small communities, a state can elect to reduce its 
resource burden by requiring local governments to demonstrate that they 
qualify for participation in the state's program, or by placing limits 
on the violations that are eligible for treatment under the Small 
Communities Policy. The policy permits states to select small 
communities for participation in their compliance assistance programs 
at any point in the compliance determination process. A state small 
community compliance assistance program that sends staff consultants to 
each community to evaluate its compliance status and identify its 
violations will require more operating resources than a program that 
limits participation to those communities that complete a compliance 
self-evaluation, find violations of more than one environmental law, 
and reveal those violations to the state in an application for 
participation. EPA acknowledges that many small communities currently 
lack the regulatory knowledge and technical expertise required to 
perform a comprehensive compliance self-evaluation. States, however, 
can direct interested small communities to the EPA compliance 
assistance tools described above, as small communities, in many 
instances, were EPA's intended audience. These tools will help small 
communities understand their environmental responsibilities and measure 
their compliance status. Revisions to the Small Communities Policy 
could either directly append these materials or indicate where they are 
available from EPA or on the Internet.
    States also can reduce their resource demands by awarding grants to 
small communities from an amount EPA has set aside from the Safe 
Drinking Water Act State Revolving Fund. Section 1452(q) of the Safe 
Drinking Water Act authorizes EPA to fund small system technical 
assistance grants for communities with populations of up to 10,000. 
States can award grants that communities are required to use to pay for 
a preliminary engineering evaluation of environmental compliance 
concerns at their drinking water facilities. While these funds are 
available only for activities related to compliance with the primary 
drinking water standards, they can be used as a source of partial 
funding for a more comprehensive

[[Page 3191]]

evaluation of a small community's environmental compliance.
d. Tiering and Streamlining
    There are a number of other possible alternatives for states 
seeking to limit the costs of offering comprehensive environmental 
compliance assistance to small communities. States could assign 
communities to tiers on the basis of population, capacity, or some 
other measure and offer different levels of service to communities in 
different tiers. For example, the smallest communities could receive 
comprehensive, hands-on compliance assistance, while larger (but still 
small) communities would be given an information package that guides 
them through the process of identifying their violations, developing a 
compliance strategy, and applying for state approval of their 
compliance plan.
    EPA may also investigate opportunities to coordinate with other 
federal agencies whose regulations impose requirements on local 
governments with the goal of increasing efficiency through better 
coordination among agencies. Streamlining the process of implementing 
federal regulations could reduce a state's resource burden. EPA seeks 
comment on these possible revisions intended to reduce a state's 
resource burden associated with offering comprehensive environmental 
compliance assistance to small communities, as well as comment on the 
possibility that state resources devoted to compliance assistance will 
be offset by cost savings resulting from better coordination among 
state offices, fewer violations in small communities, the release of 
less pollution to the environment, improved public health protection, 
and reduced demands on inspection and enforcement personnel.
3. The Incentives To Participate
    For the Small Communities Policy to be effective in helping EPA 
meet its goal of comprehensive and sustained environmental compliance 
by small communities, states must have an incentive to offer 
comprehensive environmental compliance assistance to small communities, 
and small communities must have an incentive to participate in a 
state's program.
a. Incentives for States
    States with active programs for providing comprehensive 
environmental compliance assistance to small communities will receive 
intrinsic benefits.
    These states will have more confidence in their assessments of the 
environmental compliance status of their small communities, they will 
make measurable progress toward reducing risks to the health of their 
citizens and to the environment, and will be gathering information that 
will allow them to make accurate plans and develop realistic budgets 
for future environmental compliance. States whose comprehensive 
environmental compliance assistance programs operate within the 
parameters of the Small Communities Policy enjoy a much greater level 
of flexibility than they are afforded under EPA's enforcement policies; 
as they are authorized to exercise their own judgment regarding the 
most appropriate response to discovered violations. An effective 
program will also result in sustained compliance on the part of the 
participating communities that will produce lasting environmental 
benefits and eventually allow the state to refocus enforcement and 
compliance resources on other regulated entities.
    Additionally, EPA is exploring ways it can award recognition to 
states that establish and implement programs that provide comprehensive 
environmental compliance assistance to small communities. For example, 
special recognition can be awarded to the first state to establish such 
a program in each EPA Region. The Agency can offer a limited number of 
grants to states to establish comprehensive small community 
environmental compliance assistance programs, may offer states 
opportunities to participate in EPA-funded pilot projects, and give 
implementing states priority access to new EPA services that support 
the delivery of compliance assistance. EPA seeks comment on these 
possible incentives, and welcomes additional suggestions.
b. Incentives for Small Communities
    To encourage small communities to participate in comprehensive 
environmental compliance assistance programs, the Small Communities 
Policy says EPA will generally defer to a state's decision to waive 
part or all of the enforcement penalty normally assessed in response to 
discovered violations. Because EPA guidances allow penalties to be 
adjusted on the basis of a violator's ability to pay, small communities 
are rarely ordered to pay large penalties in settlement of enforcement 
actions. Evidence that penalty mitigation or waiver has not been an 
effective incentive for small communities can be found in states such 
as Washington and Alaska. These states established programs to offer 
comprehensive environmental compliance assistance to small communities, 
but then found it difficult to recruit communities to participate.
    The significant benefits these programs provide to small 
communities can serve as the incentive to participate if EPA does a 
better job of publicizing those benefits. Small communities may be more 
interested in participating in comprehensive environmental compliance 
assistance programs if they know such programs will identify and 
address all of their environmental concerns, and that they will emerge 
from the process both with a plan for sustained environmental 
compliance and the technical, administrative, and financial capacity to 
follow through on the plan. Communities that participate in such 
programs will know they have done what they should do to protect their 
residents, and they will be able to budget for the future with 
confidence that they will not be surprised by overlooked environmental 
requirements that necessitate expensive remediation.
    EPA seeks comment on additional incentives the Agency and states 
can offer small communities to participate in comprehensive 
environmental compliance assistance programs. Some states currently 
provide communities a small grant to fund a comprehensive or a program-
specific engineering analysis to assess the communities' environmental 
compliance status. Another option may be to give participating 
communities priority access to available capital funding in the form of 
grants or low interest loans, or to provide them greater access to free 
or low-cost operator training. States may also provide participating 
communities opportunities to consolidate operations or operators with 
other nearby communities. EPA may be able to offer participating 
communities priority access to new or premium compliance assistance 
services supported by EPA. Possibilities include web-cast information 
sessions on LGEAN, or environmental management systems counseling 
through one of the PEER Center's Local Resource Centers. Communities 
that have completed the process or achieved measurable results could be 
offered prizes or recognition. Special recognition could be offered to 
the first few communities to complete the process in an EPA Region, 
each state, and within additional political subdivisions as 
appropriate. EPA is also investigating the possibility that 
certification of compliance with comprehensive environmental assessment 
standards can result in improved bond ratings and reduced liability 
insurance premiums. EPA seeks comment on these possible incentives, and 
welcomes additional suggestions.

[[Page 3192]]

E. Possible Revisions to Other Identified Aspects of the Small 
Communities Policy

    If commenters believe that a policy with less flexibility would 
provide clearer guidance, EPA will considerrevising the Small 
Communities Policy to provide states with more specific directions, or 
to append illustrative models and templates. For example, the Small 
Communities Policy could:
     Establish a definite time limit within which a state must 
respond to a small community's request for compliance assistance if the 
Small Communities Policy is to apply;
     Narrow the definition of community;
     Narrow the range of community activities to which the 
Small Communities Policy applies;
     Further limit the types of violations a small community 
comprehensive environmental compliance assistance program can address;
     Specify when and how violations must be discovered if they 
are to be eligible for inclusion in a comprehensive compliance schedule 
and agreement;
     Draw distinctions between major and minor violations, 
between violations of different statutes or regulations with respect to 
appropriate intervals for disclosing and correcting violations;
     Begin tracking the time elapsed for a small community's 
compliance activities from the date it requests assistance from the 
state, the date the state identifies violations in the community, or 
some other date;
     Shorten or lengthen the 180 day interval for a small 
community either to return to compliance or to enter into a written and 
enforceable schedule for returning to compliance;
     Establish a defined interval for achieving compliance that 
a small community must not exceed;
     Incorporate attainment of necessary funding into 
compliance deadlines
     Provide specific guidance on how small communities are to 
prioritize their compliance activities; and
     Provide a structure for how states and EPA will interact 
and how information will be reported to EPA when a state implements a 
small community environmental compliance assistance program.
    EPA welcomes public comment on these aspects of the Small 
Communities Policy.

F. Possible Revisions Related to Small Communities on Indian Lands

    The Small Communities Policy makes no distinction between states 
and Tribes that have received EPA approval for treatment as states. 
Implicit, but not stated in the policy, is the fact that EPA directly 
implements regulatory programs on Indian reservations where the Tribe 
has not be approved for treatment as a state. In such circumstances, 
EPA is the ``state'' and can choose to offer comprehensive 
environmental compliance assistance to small tribal communities. EPA 
requests comment regarding whether the Small Communities Policy contain 
should include provisions specific to small communities located on 
Indian lands or, in the alternative, whether EPA should develop a 
separate policy for such communities.

G. Other Possible Revisions

    EPA acknowledges that this Federal Register Notice may not have 
identified all impediments to effective use of the Small Communities 
Policy to support wide-spread establishment of state programs to 
provide comprehensive environmental compliance assistance to small 
communities. The Agency welcomes all comments and suggestions that will 
promote this goal.

    Dated: January 14, 2002.
Michael M. Stahl,
Director, Office of Compliance.
[FR Doc. 02-1615 Filed 1-22-02; 8:45 am]
BILLING CODE 6560-50-P