[Federal Register Volume 68, Number 142 (Thursday, July 24, 2003)]
[Proposed Rules]
[Pages 43824-43852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-18002]



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Part III





Environmental Protection Agency





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40 CFR Part 30 et al.



Participation by Disadvantaged Business Enterprises in Procurement 
Under Environmental Protection Agency (EPA) Financial Assistance 
Agreements; Proposed Rule

  Federal Register / Vol. 68 , No. 142 / Thursday, July 24, 2003 / 
Proposed Rules  

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 30, 31, 33, 35, and 40

[Docket ID NO. OA-2002-0001; FRL-7528-1]
RIN 2020-AA39


Participation by Disadvantaged Business Enterprises in 
Procurement Under Environmental Protection Agency (EPA) Financial 
Assistance Agreements

AGENCY: Environmental Protection Agency.

ACTION: Notice of proposed rulemaking.

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SUMMARY: EPA is proposing to revise its Minority Business Enterprise 
(MBE) and Women's Business Enterprise (WBE) Program and rename it as 
EPA's Disadvantaged Business Enterprise (DBE) Program. EPA is proposing 
to delete existing MBE and WBE specific provisions in regulations for 
Grants and Agreements With Institutions of Higher Education, Hospitals, 
and Other Non-Profit Organizations, Uniform Administrative Requirements 
for Grants and Cooperative Agreements to State and Local Governments, 
State and Local Assistance, and Research and Demonstration Grants and 
is proposing to consolidate and add to these provisions in a new 
regulation. The new regulation is intended to harmonize EPA's statutory 
DBE procurement objectives with the United States Supreme Court's 
decision in Adarand Constructors, Inc. v. Pena, 115 S. Ct. 2097 (1995). 
In Adarand, the Supreme Court extended strict judicial scrutiny to 
federal programs that use racial or ethnic criteria as a basis for 
decision making. This proposed rule reflects EPA's efforts to ensure 
that the compelling government interest of remedying past and current 
racial discrimination through the use of agency-wide DBE procurement 
objectives at EPA is served by a narrowly-tailored program. If you are 
a recipient of an EPA financial assistance agreement or an entity 
receiving an identified loan under a financial assistance agreement 
capitalizing a revolving loan fund, this proposed rule may affect you.

DATES: Comments: You must send comments electronically, by mail or 
through hand delivery/courier on or before January 20, 2004.

ADDRESSES: Send your comments (in triplicate, if possible) to: Office 
of Environmental Information Docket Environmental Protection Agency, 
Mailcode 28221T, 1200 Pennsylvania Ave., NW., Washington, DC 20460, 
Attention Docket ID No. OA 2002-0001. Please use a font no smaller than 
12pt. Comments may also be submitted electronically, or through hand 
delivery/courier. Follow the detailed instructions as provided in I.B. 
of the SUPPLEMENTARY INFORMATION section.
    Public hearings: EPA will hold public hearings on this proposed 
rule. If you wish to speak, contact the person(s) named under the 
section entitled ``For Further Information Contact.'' Verbatim 
transcripts of the hearings will be available for reading and copying 
at the official public docket for this action under Docket ID NO. OA-
2002-0001. See Supplementary Information I.A.1.

FOR FURTHER INFORMATION CONTACT: Mark Gordon, Attorney Advisor at (202) 
564-5951, Kimberly Patrick, Attorney Advisor at (202) 564-5386, or 
David Sutton, Deputy Director at (202) 564-4444, OSDBU, U.S. 
Environmental Protection Agency, Ariel Rios Building, 1200 Pennsylvania 
Avenue NW., Washington, DC 20460.

SUPPLEMENTARY INFORMATION:

I. General Information

A. How Can I Get Copies of This Document and Other Related Information?

    1. Docket. EPA has established an official public docket for this 
action under Docket ID No. OA-2002-0001. The official public docket 
consists of the documents specifically referenced in this action, any 
public comments received, and other information related to this action. 
Although a part of the official docket, the public docket does not 
include Confidential Business Information (CBI) or other information 
whose disclosure is restricted by statute. The official public docket 
is the collection of materials that is available for public viewing at 
the Office of Environmental Information Docket in the EPA Docket 
Center, (EPA/DC) EPA West, Room B102, 1301 Constitution Ave., NW., 
Washington, DC. The EPA Docket Center Public Reading Room is open from 
8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal 
holidays. The telephone number for the Reading Room is (202) 566-1742, 
and the telephone number for the Office of Environmental Information is 
(202) 566-1752.
    2. Electronic Access. You may access this Federal Register document 
electronically through the EPA Internet under the ``Federal Register'' 
listings at http://www.epa.gov/fedrgstr/.
    An electronic version of the public docket is available through 
EPA's electronic public docket and comment system, EPA Dockets. You may 
use EPA Dockets at http://www.epa.gov/edocket/ to submit or view public 
comments, access the index listing of the contents of the official 
public docket, and to access those documents in the public docket that 
are available electronically. Once in the system, select ``search,'' 
then key in the appropriate docket identification number.
    Certain types of information will not be placed in the EPA Dockets. 
Information claimed as CBI and other information whose disclosure is 
restricted by statute, which is not included in the official public 
docket, will not be available for public viewing in EPA's electronic 
public docket. EPA's policy is that copyrighted material will not be 
placed in EPA's electronic public docket but will be available only in 
printed, paper form in the official public docket. To the extent 
feasible, publicly available docket materials will be made available in 
EPA's electronic public docket. When a document is selected from the 
index list in EPA Dockets, the system will identify whether the 
document is available for viewing in EPA's electronic public docket. 
Although not all docket materials may be available electronically, you 
may still access any of the publicly available docket materials through 
the docket facility identified in I.A.1 above.
    For public commenters, it is important to note that EPA's policy is 
that public comments, whether submitted electronically or in paper, 
will be made available for public viewing in EPA's electronic public 
docket as EPA receives them and without change, unless the comment 
contains copyrighted material, CBI, or other information whose 
disclosure is restricted by statute. When EPA identifies a comment 
containing copyrighted material, EPA will provide a reference to that 
material in the version of the comment that is placed in EPA's 
electronic public docket. The entire printed comment, including the 
copyrighted material, will be available in the public docket.
    Public comments submitted on computer disks that are mailed or 
delivered to the docket will be transferred to EPA's electronic public 
docket. Public comments that are mailed or delivered to the Docket will 
be scanned and placed in EPA's electronic public docket. Where 
practical, physical objects will be photographed, and the photograph 
will be placed in EPA's electronic public docket along with a brief 
description written by the docket staff.
    For additional information about EPA's electronic public docket 
visit EPA

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Dockets online or see 67 FR 38102, May 31, 2002.

B. How and To Whom Do I Submit Comments?

    You may submit comments electronically, by mail, or through hand 
delivery/courier. To ensure proper receipt by EPA, identify the 
appropriate docket identification number in the subject line on the 
first page of your comment. Please ensure that your comments are 
submitted within the specified comment period. Comments received after 
the close of the comment period will be marked ``late.'' EPA is not 
required to consider these late comments. However, late comments may be 
considered if time permits.
    1. Electronically. If you submit an electronic comment as 
prescribed below, EPA recommends that you include your name, mailing 
address, and an e-mail address or other contact information in the body 
of your comment. Also include this contact information on the outside 
of any disk or CD ROM you submit, and in any cover letter accompanying 
the disk or CD ROM. This ensures that you can be identified as the 
submitter of the comment and allows EPA to contact you in case EPA 
cannot read your comment due to technical difficulties or needs further 
information on the substance of your comment. EPA's policy is that EPA 
will not edit your comment, and any identifying or contact information 
provided in the body of a comment will be included as part of the 
comment that is placed in the official public docket, and made 
available in EPA's electronic public docket. If EPA cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment.
    i. EPA Dockets. Your use of EPA's electronic public docket to 
submit comments to EPA electronically is EPA's preferred method for 
receiving comments. Go directly to EPA Dockets at http://www.epa.gov/edocket, and follow the online instructions for submitting comments. To 
access EPA's electronic public docket from the EPA Internet Home Page, 
select ``Information Sources,'' ``Dockets,'' and ``EPA Dockets.'' Once 
in the system, select ``search,'' and then key in Docket ID No. OA-
2002-0001. The system is an ``anonymous access'' system, which means 
EPA will not know your identity, e-mail address, or other contact 
information unless you provide it in the body of your comment.
    ii. E-mail. Comments may be sent by electronic mail (e-mail) to 
oei.docket @ epamail.epa.gov Attention Docket ID No. OA-2002-0001. In 
contrast to EPA's electronic public docket, EPA's e-mail system is not 
an ``anonymous access'' system. If you send an e-mail comment directly 
to the Docket without going through EPA's electronic public docket, 
EPA's e-mail system automatically captures your e-mail address. E-mail 
addresses that are automatically captured by EPA's e-mail system are 
included as part of the comment that is placed in the official public 
docket, and made available in EPA's electronic public docket.
    iii. Disk or CD ROM. You may submit comments on a disk or CD ROM 
that you mail to the mailing address identified in I.A.1 above. These 
electronic submissions will be accepted in WordPerfect or ASCII file 
format. Avoid the use of special characters and any form of encryption.
    2. By Mail. Send your comments (in triplicate, if possible) to: 
Office of Environmental Information Docket Environmental Protection 
Agency, Mailcode: 28221T, 1200 Pennsylvania Ave., NW., Washington, DC, 
20460, Attention Docket ID No. OA 2002-0001. Please use a font size no 
smaller than 12.
    3. By Hand Delivery or Courier. Deliver your comments (in 
triplicate, if possible) to: EPA Docket Center, (EPA/DC) EPA West, Room 
B 102, 1301 Constitution Avenue, NW., Washington, D.C. Attention Docket 
ID No. OA 2002-0001. Such deliveries are only accepted during the 
Docket's normal hours of operation as identified in I.A.1 above. Please 
use a font size no smaller than 12.
    The docket is an organized file of all the information EPA 
considered in developing this proposed rule. The docketing system 
allows you to readily identify and locate documents so you can 
participate in the rulemaking. Along with the proposed and promulgated 
standards and their preambles, contents of the docket will serve as the 
record in case of judicial review.

C. What Should I Consider as I Prepare My Comments for EPA?

    You may find the following suggestions helpful for preparing your 
comments:

    1. Explain your views as clearly as possible.
    2. Describe any assumptions that you used.
    3. Provide any technical information and/or data you used that 
support your views.
    4. If you estimate potential burden or costs, explain how you 
arrived at your estimate.
    5. Provide specific examples to illustrate your concerns.
    6. Offer alternatives.
    7. Make sure to submit your comments by the comment period 
deadline identified.
    8. To ensure proper receipt by EPA, identify the appropriate 
docket identification number in the subject line on the first page 
of your response. It would also be helpful if you provided the name, 
date, and Federal Register citation related to your comments.

D. Will EPA Hold Public Hearings and Tribal Consultations on This 
Proposed Rule?

    EPA plans to hold a number of public hearings on this proposed rule 
during the 180 day comment period. As part of its ongoing consultation 
with Tribes, EPA also plans to hold a number of meetings with Tribal 
officials/representatives on this proposed rulemaking during the 180 
day comment period. EPA will announce in the Federal Register the 
dates, times and locations of these public hearings and meetings.
    In writing the following proposed preamble and rule, EPA has 
considered all comments received in response to the staff draft of the 
preamble and rule, dated June 19, 2000, which was posted on EPA's 
website at http://www.epa.gov/osdbu and distributed to various 
stakeholders. Changes have been made to this proposed preamble and rule 
in response to some of these comments.
    This is a proposed rule. The contents of today's preamble are 
listed in the following outline:

I. Introduction
II. Section-by-Section Analysis
    A. Subpart A--General Provisions
    B. Subpart B--Certification
    C. Subpart C--Good Faith Efforts
    D. Subpart D--Fair Share Objectives
    E. Subpart E--Recordkeeping and Reporting
III. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 
U.S.C. 601 et. seq.
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination with 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children from 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Actions that Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act

I. Introduction

    40 CFR Part 33, Procurement under Assistance Agreements, became 
effective March 28, 1983. These procurement requirements required 
recipients of EPA financial assistance

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agreements to take the six affirmative steps to assure that small, 
minority and women's businesses were used when possible as sources of 
construction, services and supplies. As part of a government-wide 
effort in 1988, EPA promulgated 40 CFR Part 31, Uniform Administrative 
Requirements for Grants and Cooperative Agreements to State and Local 
Governments. In 1996, the Agency promulgated 40 CFR Part 30, Grants and 
Agreements with Institutions of Higher Education, Hospitals, and Other 
Non-Profit Organizations. Parts 30 and 31 superseded the procurement 
provisions of former Part 33. Parts 30 and 31 contain DBE Program 
provisions at 40 CFR 30.44(b) and 31.36(e), respectively.
    Various EPA programs have their own regulations containing DBE 
requirements. For example, the EPA Superfund Program promulgated 
regulations which contain DBE provisions for Grants for Technical 
Assistance at 40 CFR 35.4066(g) and for Cooperative Agreements and 
Superfund State Contracts for Superfund Response Actions at 40 CFR 
35.6015(a)(26) and (54), 35.6580 and 35.6665 (b). The EPA Clean Water 
State Revolving Fund (CWSRF) Program promulgated regulations containing 
DBE provisions at 40 CFR 35.3145(d) and (e). The DWSRF Program has 
promulgated regulations containing DBE provisions at 40 CFR 35.3575(d). 
DBE requirements for Research and Demonstration Grants can be found at 
40 CFR 40.145-3(c).
    EPA's legal authorities for its DBE Program are:
    Public Law 102-389, a 1993 appropriations act (42 U.S.C. 4370d) 
(EPA's 8% statute), which provides:

    The Administrator of the Environmental Protection Agency shall, 
hereafter, to the fullest extent possible, ensure that at least 8 per 
centum of Federal funding for prime and subcontracts awarded in support 
of authorized programs, including grants, loans and contracts for 
wastewater treatment and leaking underground storage tanks grants, be 
made available to business concerns or other organizations owned or 
controlled by socially and economically disadvantaged individuals 
(within the meaning of Section 8(a)(5) and (6) of the Small Business 
Act (15 U.S.C. 637(a)(5) and (6)), including historically black 
colleges and universities. For purposes of this section, economically 
and socially disadvantaged individuals shall be deemed to include women
    * * *

    Public Law 101-549, Title X of the Clean Air Act Amendments of 1990 
(42 U.S.C. 7601 note) (EPA's 10% statute), which states:

    In providing for any research relating to the requirements of 
the amendments made by the Clean Air Act Amendments which use funds 
of the Environmental Protection Agency, the Administrator of the 
Environmental Protection Agency shall, to the extent practicable, 
require that not less than 10 percent of the total Federal funding 
for such research will be made available to disadvantaged business 
concerns. Nothing in this title shall permit or require the use of 
quotas or a requirement that has the effect of a quota in 
determining eligibility * * *

    Other legal authorities include Public Law 99-499, the Superfund 
Amendments and Reauthorization Act of 1986; Public Law 100-590, the 
Small Business Administration Reauthorization and Amendment Act of 
1988; Executive Order 12138, ``Creating a National Women's Business 
Enterprise Policy and Prescribing Arrangements for Developing, 
Coordinating and Implementing a National Program for Women's Business 
Enterprise,'' issued May 18, 1979; Executive Order 11625, ``Prescribing 
Additional Arrangements for Developing and Coordinating a National 
Program for Minority Business Enterprise,'' issued October 13, 1971; 
and Executive Order 12432, ``Minority Business Enterprise 
Development,'' issued July 14, 1983.
    In 1995, the Supreme Court's decision in Adarand Constructors, Inc. 
v. Pena, 115 S. Ct. 2097(1995), extended strict judicial scrutiny to 
federal affirmative action programs that use racial or ethnic criteria 
as a basis for decision making. In other words, such programs must be 
based on a compelling governmental interest, for example, remedying the 
effects of discrimination, and must be narrowly tailored to accomplish 
that interest.
    In 1996, the Department of Justice (DOJ) began a review of 
affirmative action programs in the Federal Government. In response to 
this review, the Department of Transportation (DOT) revised its program 
for participation of DBEs in procurement under DOT's financial 
assistance agreements. 64 FR 5096. In direct Federal procurement, the 
Small Business Administration (SBA) has issued final regulations 
amending two programs intended to foster small disadvantaged business 
participation, the 8(a) Business Development and Small Disadvantaged 
Business Participation Programs. 63 FR 35726; 63 FR 36120.
    This proposed rulemaking would affect only procurements pursuant to 
EPA financial assistance agreements rather than direct Federal 
procurement actions. All of EPA's current DBE fair share objectives and 
good faith efforts regulatory provisions would be deleted as part of 
this rulemaking effort, and the proposed DBE provisions to be codified 
in the new 40 CFR Part 33 would apply. In addition, this proposal would 
supersede inconsistent provisions of previous guidance documents for 
EPA's former MBE and WBE Program, including, but not limited to, 
OSDBU's ``Guidance for Utilization of Small, Minority, and Women's 
Business Enterprises in Procurement Under Assistance Agreements' (the 
1997 Guidance). 62 FR 45645.

II. Section-by-Section Analysis

Subpart A--General Provisions

Section 33.101 What Are the Objectives of This Part?

    This proposed rule is EPA's revision to its current MBE and WBE 
Program. EPA needs to reconcile its requirements for financial 
assistance agreements under EPA's 8% statute and EPA's 10% statute with 
the Supreme Court's decision in Adarand. In that case the Supreme Court 
held that Federal Government programs that use race or national origin 
as a criterion for decision making are subject to strict judicial 
scrutiny. Such programs must be based on a compelling government 
interest, for example, remedying the effects of racial/ethnic 
discrimination, and must be narrowly tailored to accomplish that 
interest.
    EPA's proposed rulemaking is one part of the Agency's overall 
effort to review and, where necessary, revise affirmative action 
programs in light of Adarand. This rulemaking proposal tailors EPA's 
DBE Program more precisely to the objective of remedying the effects of 
racial/ethnic discrimination.

Section 33.102 When Do the Requirements of This Part Apply?

    This Part's requirements apply to procurement under EPA financial 
assistance agreements, including financial assistance agreements to 
capitalize revolving loan funds, performed entirely within the United 
States. The term ``United States'' is later defined in 33.103 to 
include the Commonwealth of Puerto Rico and any other territories and 
possessions of the United States.

Section 33.103 What Do the Terms in This Part Mean?

    To the extent possible, EPA has referred to definitions contained 
in 40 CFR Parts 30, 31 and 35, and other agencies' existing 
regulations, e.g., Historically Black College or University

[[Page 43827]]

(HBCU). Other definitions were derived from the 1997 Guidance.
    EPA is creating a new term, DBE, for its revised program. The new 
Part 33 defines DBE as an entity owned or controlled by an individual 
who is socially and economically disadvantaged under EPA's 8% statute, 
an entity owned and controlled by an individual who is socially and 
economically disadvantaged under EPA's 10% statute, as well as a Small 
Business Enterprise (SBE), a Small Business in a Rural Area (SBRA), a 
Labor Surplus Area Firm (LSAF), a Historically Underutilized Business 
(HUB) Zone Small Business Concern, or a concern under a successor 
program. Unlike EPA's previous program, the terms MBE and WBE no longer 
describe the entire program. Instead, these terms are now merely 
subsets of the entities described as DBEs. As a result, the definition 
of MBE has been modified to include an entity owned and/or controlled 
by an individual who is socially and economically disadvantaged under 
either EPA's 8% or 10% statutes.
    In addition, the term ``financial assistance agreement'' has been 
defined as both grants and cooperative agreements awarded by EPA, 
including such agreements used to capitalize revolving loan funds 
including, but not limited to, the Clean Water State Revolving Fund, 
the Drinking Water State Revolving Fund or the Brownfields Revolving 
Fund Programs. The term ``identified loan'' is also defined to indicate 
those projects and activities to which the requirements of this Part 
apply for recipients of capitalization agreements for revolving loan 
funds. For Brownfields capitalization grant recipients, the identified 
loans will be those funded with EPA financial assistance.
    The definition of Small Business in Rural Areas has been shortened 
from the one contained in the 1997 Guidance. No substantive change is 
intended. The U.S. Department of Agriculture (USDA) Rural-Urban 
Continuum Classification Code applies to every county in the United 
States, and classifies counties based on proximity to metropolitan 
areas. EPA is using Codes 6-9 as rural counties for purposes of 
identifying small businesses in rural areas.

Section 33.104 May a Recipient Apply for a Waiver From the Requirements 
of This Part?

    A recipient will be able to apply for a waiver in a special or 
exceptional situation where the recipient believes that compliance with 
any of the requirements in this Rule would be impractical. The Agency 
believes that the waiver provision is an important component of 
narrowly tailoring its DBE Program to unique local circumstances and to 
ensure non-discrimination. EPA intends to carefully review any waiver 
applications to ensure that any proposed alternative program is able to 
meet the objectives of EPA's DBE Program and is in accordance with law. 
This added flexibility could allow an EPA financial assistance 
agreement recipient to deal creatively with its specific circumstances.

Section 33.105 What Are the Compliance and Enforcement Provisions of 
This Part?

    This section reserves to EPA the right to take remedial action 
under existing legal authorities if a recipient fails to comply with 
any of the requirements of the Rule.

Section 33.106 What Assurances Must EPA Financial Assistance Recipients 
Obtain From Their Contractors?

    An EPA financial assistance recipient must ensure that the contract 
term and condition in the Appendix to this Rule is included in the 
procurement contracts it awards under EPA financial assistance 
agreements. This includes contracts under identified loans pursuant to 
EPA financial assistance agreements capitalizing revolving loan fund 
programs. This term and condition ensures that a recipient applies 
pertinent provisions of this Rule to its prime contractor.

Section 33.107 What Are the Rules Governing Availability of Records, 
Cooperation, and Intimidation and Retaliation?

    Paragraph (a) of this section discusses the availability to the 
general public of information concerning EPA's DBE Program. Paragraphs 
(b) and (c) discuss the obligation of all participants in EPA's DBE 
Program to cooperate and never use intimidation and retaliation with 
respect to EPA's DBE Program.

Subpart B--Certification

Section 33.201 What Does This Subpart Require?

    Currently EPA recognizes an entity which is certified as socially 
and economically disadvantaged by the Small Business Administration 
(SBA), certified as an MBE by a State or Federal Agency or self-
certifies that it is an independent business concern owned and 
controlled by a minority group member(s) as an MBE. 40 CFR 35.6015 
(26); the 1997 Guidance, pp. 3-2 through 3-6.
    EPA is proposing to make four changes to the current certification 
requirements. The first change is to no longer allow an entity to self-
certify as being owned and/or controlled by a socially and economically 
disadvantaged individual or as a WBE under EPA's 8% or 10% statutes. 
The second change is to allow recognition of certifications of entities 
as owned and/or controlled by a socially and economically disadvantaged 
individual or by a woman under EPA's 8% or 10% statutes by Indian 
Tribal, State (including Insular Areas) and local Governments or 
independent private organizations so long as the applicable criteria 
match those under SBA's applicable 8(a) Business Development Program 
regulations. The third change is to clarify that EPA will accept DOT 
DBE certifications of U.S. citizens as valid certifications under this 
program. The fourth change is that EPA will set up its own 
certification program with the possible use of EPA Private Certifiers 
to assist EPA in its certification determinations.
    The provisions for certification under EPA's 8% and 10% statutes 
have been separated from one another since the presumptions under those 
statutes are different. Because EPA's 8% statute incorporates Section 
8(a)(5) of the Small Business Act, this Rule adopts for purposes of the 
8% statute SBA's regulatory presumption that the following individuals 
are socially disadvantaged: Black Americans; Hispanic Americans; Native 
Americans (American Indians, Eskimos, Aleuts or Native Hawaiians); 
Asian Pacific Americans (persons with origins from Burma, Thailand, 
Malaysia, Indonesia, Singapore, Brunei, Japan, China (including Hong 
Kong and Macao), Taiwan, Laos, Cambodia (Kampuchea), Vietnam, Korea, 
the Phillippines, U.S. Trust Territory of the Pacific Islands, 
(Republic of Palau), Republic of the Marshall Islands, Federated States 
of Micronesia, the Commonwealth of the Northern Mariana Islands, Guam, 
Samoa, Fiji, Tonga, Kiribati, Tuvalu, or Nauru); Subcontinent Asian 
Americans (persons with origins from India, Pakistan, Bangladesh, Sri 
Lanka, Bhutan, the Maldives Islands or Nepal); and members of other 
groups designated from time to time by SBA. As is the case under SBA's 
8(a) Business Development Program, Brazilian Americans with Portugese 
surnames and Portugese Americans would be considered Hispanic Americans 
under this Program. In addition, Congress has by statute established 
that HBCUs and women also automatically qualify as

[[Page 43828]]

socially and economically disadvantaged under EPA's 8% statute. An 
entity must still be certified by a third party as to ownership or 
control in order to be eligible to participate as a WBE contractor for 
an EPA recipient under the DBE Program.
    EPA's 10% statute also adopts SBA's regulatory presumption 
regarding the socially disadvantaged status of the individuals listed 
above. However, EPA's 10% statute also presumes that Black Americans, 
Hispanic Americans, Native Americans, Asian Americans, Women and 
Disabled Americans are socially and economically disadvantaged 
individuals. Furthermore, Congress provided in EPA's 10% statute that 
the following institutions are presumed to be entities owned and 
controlled by socially and economically disadvantaged individuals: 
HBCUs, colleges and universities having a student body in which 40% of 
the students are Hispanic, Minority Institutions and private and 
voluntary organizations controlled by individuals who are socially and 
economically disadvantaged. EPA's 8% and 10% statutes may be 
distinguished by their provisions regarding ownership and control. 
EPA's 8% statute references entities owned or controlled by socially 
and economically disadvantaged individuals while EPA's 10% statute 
references entities owned and controlled by socially and economically 
disadvantaged individuals.

Section 33.202 How Does an Entity Qualify as an MBE or WBE Under EPA's 
8% Statute?

    An entity must establish that it is owned or controlled by socially 
and economically disadvantaged individuals who are of good character 
and citizens of the United States. With one exception, definitions of 
``ownership,'' ``control'' and ``socially and economically 
disadvantaged individuals'' are the same as under the Small Business 
Act and its implementing regulations at 13 CFR 124.105, 124.106, 
124.103 and 124.104. (See also 13 CFR 124.109 for special rules 
applicable to Indian tribes and Alaska Native Corporations; 13 CFR 
124.110 for special rules applicable to Native Hawaiian Organizations). 
Generally, these regulations provide that ownership must be real, 
substantial and continuing, going beyond pro forma ownership of the 
business concern as reflected in ownership documents. Owners must share 
in the risks and profits of the business concern commensurate with 
their ownership interests. Control is demonstrated in most cases by the 
power to direct or cause the direction of the management and policies 
of the business concern and to make day-to-day as well as long-term 
decisions on matters of management, policy and operations. The one 
exception from the regulation regarding economic disadvantage worth 
noting is the exclusion of individuals with a net worth greater than or 
equal to $250,000 from initial eligibility and individuals with a net 
worth greater than or equal to $750,000 from continued eligibility. 
Similar to DOT, EPA is proposing to make $750,000 the cut off point for 
both initial and continued eligibility under the DBE Program.
    HBCUs do not need to go through the certification process contained 
in Subpart B of this Rule since EPA's 8% statute automatically deems an 
HBCU to be owned or controlled by socially and economically 
disadvantaged individuals. While women are also deemed to be socially 
and economically disadvantaged under EPA's 8% statute, entities must 
still evidence ownership or control in accordance with paragraph (a) of 
this section, which may be accomplished by certification, pursuant to 
Sec.  33.204.

Section 33.203 How Does an Entity Qualify as an MBE or WBE Under EPA's 
10% Statute?

    An entity must establish that it is owned and controlled by 
socially and economically disadvantaged individuals who are of good 
character and citizens of the United States. Again with the same 
notable exception discussed above regarding the $750,000 personal net 
worth threshold, definitions of ``ownership,'' ``control'' and 
``socially and economically disadvantaged individuals'' are the same as 
under the Small Business Act and its implementing regulations at 13 CFR 
124.105, 124.106, 124.103 and 124.104. (See also 13 CFR 124.109 for 
special rules applicable to Indian tribes and Alaska Native 
Corporations; 13 CFR 124.110 for special rules applicable to Native 
Hawaiian Organizations).
    With one exception, the provisions contained within subparagraphs 
(d)-(g) of this section are derived from EPA's 10% statute. EPA's 10% 
statute contains a presumption that colleges and universities having a 
student body in which 40% of the students are Hispanic should be 
considered entities owned and controlled by socially and economically 
disadvantaged individuals. In order to eliminate the burden of 
additional certification by such colleges and universities, EPA is 
proposing instead to apply the presumption to colleges and universities 
which have qualified as Hispanic-Serving Institutions under the 
Department of Education regulations at 34 CFR Part 606 or as Minority 
Institutions as defined by Sec.  33.103 of this proposed Rule. Among 
other things, Hispanic-Serving Institutions and Minority Institutions 
require a student body in which 50% of the students are Hispanic. 
Because EPA's 10% statute only requires the Agency to implement the 
statute's requirements to the ``extent practicable,'' the Agency, for 
administrative reasons, may propose regulatory provisions which vary 
from the exact wording of the statute.

Section 33.204 Where Does an Entity Become Certified Under EPA's 8% and 
10% Statutes?

    This proposed rule discontinues acceptance of an individual's self-
certification regarding his or her racial/ethnic status in order to 
ensure consistency with the approach taken by other Federal agencies. 
For example, SBA under its Small Disadvantaged Business Program no 
longer permits self-certification of social and economic disadvantaged 
status. Similarly, DOT does not allow self-certification under its DBE 
Program. EPA is also proposing to discontinue self-certification by 
WBEs.
    In addition, EPA would require that an entity first attempt to 
become certified as an MBE or WBE by the SBA or DOT under their 
respective programs or by an Indian Tribal Government, State 
Government, local Government, or independent private organization 
consistent with EPA's 8% or 10% statute as applicable. An entity may 
only attempt to become certified by EPA as an MBE or WBE under the 
procedures described in Sec.  33.205 if that entity is unable to obtain 
certification from the other certifying entities described above. 
However, as part of the certification process, EPA will make the 
determination as to whether an entity's current certification by DOT, 
an Indian Tribal Government, State Government, local Government, or 
independent private organization constitutes acceptable certification 
under EPA's 8% statute, EPA's 10% statute or both. Acceptance of 
certifications from these other certifying entities is EPA's attempt at 
easing the burden created by discontinuation of the self-certification 
option. EPA currently envisions five categories of individuals or 
groups who would qualify for MBE or WBE certification under EPA's DBE 
Program but would be unable to obtain MBE or WBE certification from SBA 
or DOT due to differences in those Agencies' respective programs. These 
categories are women-owned and minority-owned

[[Page 43829]]

concerns that do not meet the SBA/DOT size standards (EPA's 8% and 10% 
statutes), Disabled Americans (EPA's 10% statute), private and 
voluntary organizations controlled by individuals who are socially and 
economically disadvantaged (EPA's 10% statute), entities which are 
certified under criteria which are inconsistent with EPA's DBE Program 
criteria (EPA's 8% and 10% statutes) and any entity claiming that it is 
owned or controlled by socially and economically disadvantaged 
individuals under EPA's 8% statute. SBA and DOT currently do not 
certify the first three categories and, as to the fifth category, 
requires a showing of ownership and control. Accordingly, these 
categories of individuals or groups may initially come to EPA for MBE 
or WBE certification if that individual or group is also unable to 
obtain MBE or WBE certification from an Indian Tribal, State, or local 
Government or an independent private organization in accordance with 
EPA's 8% or 10% statute as applicable. Finally, in implementing its own 
certification program, the Agency may use EPA Private Certifiers to 
assist the Agency in its certification determinations.
    EPA has had a longstanding policy of requiring U.S. citizenship for 
eligibility as an MBE or WBE. See ``EPA Guidance for Utilization of S/
M/WBE in Procurement under Assistance Agreements' dated 05/22/86. This 
policy was continued in the Agency's 1997 Guidance. Currently, the 
Agency's regulatory definition of an MBE requires U.S. citizenship for 
a minority group member. See 40 CFR 35.6015(a)(26)(iii). EPA believes 
that its requirement for U.S. citizenship is consistent with SBA's 8(a) 
Business Development Program regulations at 13 CFR 124.101, and its 
Small Disadvantaged Business Programs regulations at 13 CFR 
124.1002(d). While the Agency recognizes that DOT allows lawfully 
admitted permanent residents to qualify for certification under its DBE 
Program (49 CFR 26.67), the Agency believes that given its close 
association with SBA requirements, it is appropriate for U.S. 
citizenship to be a requirement for certification by EPA as well. In 
addition, at this time, EPA lacks data regarding how many additional 
entities EPA would have to certify if the Agency were to change its 
longstanding policy on this issue and the possible resource 
implications of such a policy change; the Agency believes that changing 
its policy on this issue could result in a substantial increase to the 
number of entities EPA would have to certify.
    EPA welcomes public comment on these proposed changes, especially 
from large businesses and members of the DBE community since they are 
most likely to be directly affected if these proposed changes become 
part of the final rule. In addition, because EPA continues to explore 
opportunities to standardize DBE certification with other Federal 
agencies, the Agency encourages specific comments on the requirement 
for U.S. citizenship under this program, and the resource implications 
for the Agency if it were to change its policy of requiring U.S. 
citizenship for certification by EPA.

Section 33.205 How Does an Entity Become Certified by EPA?

    This section describes the EPA certification application process, 
including procedures regarding the filing of an application, 
application processing, EPA's ownership and/or control determination, 
EPA's disadvantaged determination and evaluation standards.

Section 33.206 Is There a List of Certified MBEs and WBEs?

    This provision provides two ways someone can obtain a list of 
certified MBEs and WBEs under EPA's DBE Program, via internet or mail.

Section 33.207 Can an Entity Reapply to EPA for MBE or WBE 
Certification?

    This section describes how long an entity must wait before 
reapplying to EPA for MBE or WBE certification.

Section 33.208 How Long Does an MBE or WBE Certification From EPA Last?

    This provision states that MBE or WBE certifications from EPA 
generally last for three years.

Section 33.209 Can EPA Re-Evaluate the MBE or WBE Status of an Entity 
After EPA Certifies It To Be an MBE or WBE?

    This section explains procedures for removal of an entity from the 
EPA list of certified MBEs and WBEs. Credible information calling into 
question an entity's eligibility as an MBE or WBE may come from any 
source.

Section 33.210 Does an Entity Certified as an MBE or WBE by EPA Need To 
Keep EPA Informed of Any Changes Which May Affect the Entity's 
Certification?

    This provision requires an annual affidavit from EPA certified MBEs 
or WBEs affirming that no changes in circumstance have occurred that 
affect the entity's status as an MBE or WBE. In addition to this annual 
affidavit, MBEs and WBEs certified by EPA are under a constant 
requirement throughout the year to keep EPA informed of any changes in 
circumstance which might affect that entity's status as an MBE or WBE.

Section 33.211 What Is an EPA Private Certifier?

    This provision generally describes the role of an EPA Private 
Certifier. In all cases, EPA shall make the determination as to whether 
a particular entity should be certified as an MBE or WBE. EPA Private 
Certifiers are used by EPA merely to assist in the Agency's 
certification determination.

Section 33.212 Can an EPA Private Certifier Charge a Fee to an Entity 
To Process the Entity's Application for MBE or WBE Certification?

    A reasonable fee, not contingent on whether the entity is 
eventually certified as an MBE or WBE by EPA, may be charged with the 
permission of the Agency.

Section 33.213 How Does an Organization or Business Concern Become an 
EPA Private Certifier?

    This provision establishes the means by which an organization or 
business concern may become an EPA Private Certifier. In addition, this 
provision describes some of the requirements an organization or 
business concern must meet in order to be an EPA Private Certifier.

Section 33.214 How Long May an Organization or Business Concern Be an 
EPA Private Certifier?

    The length of time an organization or business concern may be an 
EPA Private Certifier will be negotiated between EPA and that 
organization or business concern.

Section 33.215 Is There a List of EPA Private Certifiers?

    This provision provides two ways someone can obtain a list of EPA 
Private Certifiers under EPA's DBE Program, via internet or mail.

Section 33.216 What Is the Process for Appealing or Challenging an EPA 
MBE or WBE Certification Determination?

    This section describes the way in which an entity who has been 
denied MBE or WBE certification by EPA or a third party who disagrees 
with EPA's decision to certify an entity as an MBE or WBE can submit an 
appeal or challenge to the Agency. Included in these procedures are 
filing deadlines, appeal or challenge content

[[Page 43830]]

requirements and the Agency's standard of review.

Section 33.217 What Conduct Is Prohibited by This Subpart?

    This provision prohibits false, fraudulent or deceitful conduct on 
the part of entities attempting to participate in the DBE Program. It 
has been placed in the Rule in order to protect the integrity of the 
DBE Program.

Subpart C--Good Faith Efforts

Section 33.301 What Does This Subpart Require?

    The good faith efforts required by this section are activities by a 
recipient or its prime contractor to increase DBE awareness of 
procurement opportunities through race/gender neutral efforts. Race/
gender neutral efforts are ones which increase awareness of contracting 
opportunities in general, including outreach, recruitment and technical 
assistance. The good faith efforts must be made by a recipient and its 
prime contractor toward all DBEs, including SBEs, LSAFs and SBRAs and 
not just MBEs and WBEs, even if the fair share objective requirements 
of Subpart D have been met.
    For purposes of simplification, EPA has combined the six positive 
efforts of 40 CFR 30.44(b) applicable to institutions of higher 
education, hospitals and other non-profit organizations with the six 
affirmative steps of 40 CFR 31.36(e) applicable to Indian Tribal, 
State, and local Government recipients and renamed them the six ``good 
faith efforts.''is not the intention of the Agency to change the 
substance of the positive efforts or the affirmative steps.
    The six good faith efforts required by this section must be 
performed by all recipients (including recipients who have been 
exempted under Sec.  33.411 from the requirements of applying fair 
share objectives) and their prime contractors, if they award 
subcontracts, for the procurement categories of construction, 
equipment, services (including consulting services) and supplies. EPA 
offers the following examples to assist recipients and prime 
contractors in carrying out the good faith efforts.
    (1) Ensure DBEs are made aware of contracting opportunities to the 
fullest extent practicable through outreach and recruitment activities. 
For Indian Tribal, State and local Government recipients, this will 
include placing DBEs on solicitation lists and soliciting them whenever 
they are potential sources.
    (a) Maintain and update a listing of qualified DBEs that can be 
solicited for construction, equipment, services and/or supplies.
    (b) Provide listings to all interested parties who request copies 
of the bidding or proposing documents.
    (c) Contact appropriate sources within your geographic area and 
State to identify qualified DBEs for placement on your DBE business 
listings.
    (d) Utilize other DBE listings such as those of the State's 
Minority Business Office, the Small Business Administration, Minority 
Business Development Agency (MBDA) of the Department of Commerce, EPA 
OSDBU, and DOT.
    (e) Have State environmental agency personnel review solicitation 
lists.
    (2) Make information of forthcoming opportunities available to DBEs 
and arrange time frames for contracts and establish delivery schedules, 
where the requirements permit, in a way that encourages and facilitates 
participation by DBEs in the competitive process. This includes, 
whenever possible, posting solicitations for bids or proposals for a 
minimum of 30 calendar days before the bid or proposal closing date.
    (a) Develop realistic delivery schedules which may provide for 
greater DBE participation.
    (b) Advertise through the minority media in order to facilitate DBE 
utilization. Such advertisements may include, but are not limited to, 
contracting and subcontracting opportunities, hiring and employment, or 
any other matter related to the project.
    (c) Advertise in general circulation publications, trade 
publications, State agency publications and minority and women's 
business focused media concerning contracting opportunities on your 
projects. Maintain a list of minority and/or women's business-focused 
publications that may be utilized to solicit DBEs.
    (3) Consider in the contracting process whether firms competing for 
large contracts could subcontract with DBEs. For Indian Tribal, State 
and local Government recipients, this will include dividing total 
requirements when economically feasible into smaller tasks or 
quantities in order to increase opportunities for participation by DBEs 
in the competitive process.
    (a) Perform an analysis to identify portions of work that can be 
divided and performed by qualified DBEs.
    (b) Scrutinize the elements of the total project to develop 
economical units of work that are within the bonding range of DBEs.
    (c) Conduct meetings, conferences, and follow-ups with DBE 
associations and minority media to inform these groups of opportunities 
to provide construction, equipment, services and supplies.
    (4) Encourage contracting with a consortium of DBEs when a contract 
is too large for one of these firms to handle individually.
    (a) Notify DBEs of future procurement opportunities so they may 
establish bidding solicitations and procurement plans.
    (b) Provide DBE trade organizations with succinct summaries of 
solicitations.
    (c) Provide interested DBEs with adequate information about plans, 
specifications, timing and other requirements of the proposed projects.
    (5) Use the services and assistance of the SBA and the MBDA.
    (a) Use the services of outreach programs sponsored by the MBDA 
and/or the SBA to recruit bona fide firms for placement on DBE bidders 
lists to assist these firms in the development of bid packaging.
    (b) Seek out Minority Business Development Centers (MBDCs) to 
assist recipients and prime contractors in identifying DBEs for 
potential work opportunities on projects.
    Appropriate use of the services and assistance of the SBA and the 
MBDA depends on the circumstances. It may involve using the services of 
outreach programs sponsored by the MBDA and/or the SBA to recruit bona 
fide firms for placement on DBE bidder's lists to assist the firms in 
the development of bid packages. Recipients and prime contractors may 
use SBA's Pro-Net Procurement Marketing and Access Network services to 
identify available DBEs to do the work. Recipients and prime 
contractors may utilize MBDCs for assistance in identifying DBEs for 
potential work opportunities on contracts under EPA financial 
assistance agreements, as well as using MBDA's Phoenix dBASE System to 
identify available DBEs to do the work.
    (6) If the prime contractor awards subcontracts, require the prime 
contractor to take the steps in subparagraphs (1)-(5) of this section.

Section 33.302 Are There Any Additional Contract Administration 
Requirements?

    The first provision of this section is intended to ensure that 
subcontractors receive prompt payment from prime contractors. The other 
provisions of this section, including the requirement to complete the 
forms mentioned below, are intended to prevent any ``bait and switch'' 
tactics at the subcontract level by prime contractors which may

[[Page 43831]]

circumvent the spirit of the DBE Program. In addition, this proposal 
would require a recipient to be notified in writing before its prime 
contractor could terminate a DBE subcontractor for convenience and then 
perform the work itself.
    Furthermore, when a DBE subcontractor is terminated or fails to 
complete its work under the subcontract for any reason, the recipient 
must require the prime contractor to make good faith efforts if the 
prime contractor chooses to hire another subcontractor. A recipient 
must also require its prime contractor to continue to make the good 
faith efforts even if the fair share objectives in Subpart D of this 
Rule have been met. Finally, this proposed rule mentions three new 
forms which are required if there are DBE subcontractors involved in a 
procurement. First, a recipient must require its prime contractor to 
provide EPA Form 6100-2--DBE Program Subcontractor Participation Form 
to all of its DBE subcontractors. EPA Form 6100-2--DBE Program 
Subcontractor Participation Form will allow DBE subcontractors the 
option of describing to EPA the work the DBE subcontractor received 
from the prime contractor, how much the DBE subcontractor was paid and 
any other concerns the DBE subcontractor might have. Second, a 
recipient must require its prime contractor to have any anticipated DBE 
subcontractors complete EPA Form 6100-3--DBE Program Subcontractor 
Performance Form. The prime contractor would then submit this form as 
part of its bid or proposal package when competing for a procurement. 
Third, a recipient must have its prime contractor complete EPA Form 
6100-4--DBE Program Subcontractor Utilization Form whenever applicable 
and submit the form as part of the prime contractor's bid or proposal 
package when competing for a procurement.

Section 33.303 Are There Special Rules for Loans Under EPA Financial 
Assistance Agreements?

    A recipient of an EPA financial assistance agreement to capitalize 
a revolving loan fund, such as a State under the CWSRF or DWSRF or an 
eligible entity under the Brownfields Cleanup Revolving Loan Fund 
program, must require that borrowers receiving identified loans comply 
with the good faith efforts described in Sec.  33.301 and the contract 
administration requirements of Sec.  33.302. This provision does not 
require that such private or non profit borrowers expend identified 
loan funds in compliance with any other procurement procedures 
contained in 40 CFR Part 30, 40 CFR Part 31, or 40 CFR Part 35, Subpart 
O, as applicable.

Section 33.304 Must a Native American (Either as an Individual, 
Organization, Tribe or Tribal Government) Recipient or Prime Contractor 
Follow the Six Good Faith Efforts?

    Native Americans are defined in Sec.  33.103 to include American 
Indians, Eskimos, Aleuts and Native Hawaiians. A Native American 
(either as an individual, organization, corporation, Tribe or Tribal 
Government) recipient or prime contractor must follow the six good 
faith efforts only if doing so would not conflict with existing Tribal 
or Federal law, including but not limited to the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450e) which 
establishes, among other things, that any federal contract, 
subcontract, grant, or subgrant awarded to Indian organizations or for 
the benefit of Indians, shall require preference in the award of 
subcontracts and subgrants to Indian organizations and to Indian-owned 
economic enterprises.
    Indian organizations awarded an EPA financial assistance agreement 
have the ability to solicit and recruit Indian organizations and 
Indian-owned economic enterprises and give them preference in the award 
process prior to undertaking the six good faith efforts. Tribal 
governments with promulgated tribal laws and regulations concerning the 
solicitation and recruitment of Native American-owned and other 
minority business enterprises, including women-owned business 
enterprises, have the discretion to utilize these tribal laws and 
regulations in lieu of the six good faith efforts. If the effort to 
recruit Indian organizations and Indian-owned economic enterprises is 
not successful, then the recipient must follow the six good faith 
efforts. Such tribal governments still must retain records documenting 
compliance in accordance with Sec.  33.501 of the Rule and must report 
to EPA on their accomplishments in accordance with Sec.  33.502 of the 
Rule.
    Any recipient, whether Native American or not, of an EPA financial 
assistance agreement for the benefit of Native Americans, is required 
to solicit and recruit Indian organizations and Indian-owned economic 
enterprises and give them preference in the award process prior to 
undertaking the six good faith efforts. If the efforts to recruit 
Indian organizations and Indian-owned economic enterprises is not 
successful, then the recipient must follow the six good faith efforts.

Subpart D--Fair Share Objectives

Section 33.401 What Does This Subpart Require?

    EPA's previous fair share policy has required that fair share 
objectives for MBEs and WBEs be negotiated with EPA financial 
assistance recipients, but has not required that fair share objectives 
be established for other types of DBEs. While good faith efforts have 
been required with respect to all DBEs, including LSAFs, SBEs and 
SBRAs, numerical fair share objectives need only be negotiated for MBEs 
and WBEs in accordance with EPA's 8% and 10% statutes. This proposed 
rule would continue this policy.
    EPA's position reflects the requirement of its 8% and 10% statutes 
and is consistent with Executive Order 12138 (May 18, 1979), which 
requires all Federal agencies to take ``appropriate affirmative action 
in support of [WBEs].'' Further, OMB Circular A-102 (March 3, 1988) 
provides that ``[i]t is national policy to award a fair share of 
contracts to small and minority business firms: and that ``[g]rantees 
shall take similar appropriate affirmative action * * * [in] support of 
women's enterprises * * *''
    Prior to FY 1998, EPA applied its 8% and 10% MBE and WBE objectives 
directly to each of its financial assistance agreements. Thus, each EPA 
financial assistance agreement for research relating to the 
requirements of the Clean Air Act Amendments of 1990 had a minimum of 
10% as MBE and WBE fair share objectives. All other EPA financial 
assistance agreements had a minimum of 8% as MBE and WBE fair share 
objectives. EPA changed this policy beginning with its FY 1998 
financial assistance agreements so that the minimum 8% and 10% MBE and 
WBE fair share objectives became agency-wide objectives rather than 
fair share objectives for each EPA financial assistance agreement. 
Notwithstanding these national objectives, fair share objectives for 
each financial assistance agreement recipient are negotiated based on 
an assessment of the availability of qualified MBEs and WBEs in the 
relevant procurement market for construction, equipment, services and 
supplies; thus, the overall national objectives may vary from the 
specific fair share objectives of an individual financial assistance 
agreement recipient.
    The 8% and 10% objectives are national objectives which EPA uses to 
evaluate and monitor MBE and WBE opportunities to participate in 
contracts under EPA financial assistance agreements. They do not serve 
as quotas or set-asides. These national objectives

[[Page 43832]]

do not authorize or require a recipient to automatically establish MBE 
or WBE fair share objectives at the 8% or 10% levels. The fair share 
objectives apply only to procurement dollars and not, for example, to 
salaries or other overhead costs.

Section 33.402 Are There Special Rules for Loans Under EPA Financial 
Assistance Agreements?

    A recipient of an EPA financial assistance agreement to capitalize 
a revolving loan fund will apply its fair share objective (if the 
entity receiving the identified loan uses a relevant geographic area 
that is substantially similar to the recipient's) or a separately 
negotiated fair share objective to entities receiving identified loans. 
For the CWSRF and DWSRF Programs, identified loans are those projects 
or activities funded from amounts equal to the capitalization grant. 
For the Brownfields Cleanup Revolving Loan Fund (BCRLF) Program, 
identified loans are those projects funded with federal financial 
assistance. If procurements will occur over more than one year, the 
recipient may choose to apply the fair share objective in place either 
for the year in which the identified loan is awarded or for the year in 
which the procurement action occurs. The recipient must specify this 
choice in the financial assistance agreement, or incorporate it by 
reference therein.

Section 33.403 What Is a Fair Share Objective?

    A fair share objective is a percentage based on the capacity and 
availability of qualified MBEs, and WBEs in the relevant geographic 
market for the procurement categories of construction, equipment, 
services and supplies compared to the number of all qualified entities 
in the same market for the same procurement categories adjusted, if 
possible, to reflect the level of MBE and WBE participation absent the 
effects of past discrimination in the marketplace.
    A fair share objective is not a quota. A recipient and its prime 
contractor must make the good faith efforts described in Subpart C of 
this Rule in attempting to achieve its fair share objectives.

Section 33.404 When Must a Recipient Negotiate Fair Share Objectives 
With EPA?

    This Rule requires a recipient to submit its proposed fair share 
objectives and supporting documentation to the Agency within 90 days 
after its acceptance of a financial assistance agreement for more than 
$250,000. In situations where a recipient receives several EPA 
financial assistance agreements that are $250,000 or less in one fiscal 
year, the recipient must submit its proposed fair share objectives and 
supporting documentation to the Agency within 90 days after its 
acceptance of the financial assistance agreement that takes the 
recipient over the $250,000 threshold (see Sec.  33.411). In recent 
years EPA has included time frames for submission of proposed fair 
share objectives in special grant conditions for each financial 
assistance agreement. EPA is now incorporating a general time frame 
into this Rule. A recipient may not spend any of its financial 
assistance award for procurement until the fair share objective 
negotiation process has been completed.

Section 33.405 How Does a Recipient Determine Its Fair Share 
Objectives?

    Starting in FY 1998, EPA, through the 1997 Guidance and 
implementing terms and conditions, has required that fair share 
objectives for MBEs and WBEs be based on the availability of qualified 
MBEs and WBEs in the relevant market for the four procurement 
categories of construction, equipment, services and supplies. In this 
proposed regulation, EPA is also offering recipients the option of 
combining the four proposed procurement category objectives for MBEs 
into a single weighted objective. The same option would be available 
for WBEs. In this proposed regulation, EPA is continuing to allow 
recipients to establish separate MBE and WBE fair share objectives for 
different EPA financial assistance programs and to establish separate 
MBE and WBE fair share objectives by geographic area.
    Beginning with MBE and WBE objectives for FY 1999, the Agency 
required that fair share negotiations be supported by an availability 
analysis, or at the recipient's option, a disparity study conducted 
within the past ten years. In this rulemaking, EPA is proposing to keep 
this basic approach, with some fine tuning. The recipient would have to 
consider whether an adjustment from the availability analysis or 
disparity study percentage is needed based on past MBE or WBE 
achievements, other disparity studies done within the recipient's 
jurisdiction or other types of relevant available data (e.g., 
statistical disparities in the ability of MBEs and WBEs to obtain 
financing, bonding and insurance required to participate in the DBE 
Program). This process is needed to ensure that objectives accurately 
reflect the MBE and WBE participation expected absent the effects of 
discrimination.
    Recognizing that EPA makes many different types of financial 
assistance awards (e.g., Superfund awards for Hazardous Waste Cleanup, 
CWSRF capitalization grants) to a wide variety of recipients, EPA is 
also soliciting comments to help us determine how best to achieve a 
``level playing field'' for MBEs and WBEs. EPA is specifically asking 
for comments on whether recipients should be able to choose from a 
variety of methods in calculating MBE and WBE fair share objectives 
with the Agency.
    This process is intended to provide maximum flexibility for 
recipients while ensuring that objectives are based, at a minimum, on 
the capacity and availability of qualified MBEs and WBEs in the 
recipient's relevant market.
    A recipient may negotiate separate MBE and WBE fair share 
objectives applicable to different geographic markets, and must use the 
fair share objectives for the geographic markets in which the contract 
work for its project is being performed.
(1) Step 1: Determining a Base Figure for the MBE and WBE Objectives
    A recipient may determine a base figure by preparing an 
availability analysis. An availability analysis represents an actual 
measurement by the recipient of the availability of MBEs and WBEs in 
the relevant geographic market in the four procurement categories 
compared to the number of all businesses in the same market that 
perform work in the same procurement categories. From these data the 
recipient would derive a base figure that is as accurate a 
representation as possible of the percentage of qualified MBEs and WBEs 
available versus the total number of available businesses.
    EPA is not specifying a methodology or formula for a recipient to 
use in preparing its availability analysis. Instead, the Agency is 
proposing to place primary emphasis on the principles underlying the 
measurement, requiring only that a measurement of the availability be 
made on the basis of demonstrable evidence of relevant market 
conditions.
    EPA is providing a number of examples which recipients may adopt or 
use as guidelines for deriving their own availability analysis.
(A) MBE/WBE Directories and Census Bureau Data
    The first example is setting an MBE base figure using a recipient's 
own MBE directories, including the bidders list required by Sec.  
33.501. For each procurement category, the recipient would first 
tabulate the number of

[[Page 43833]]

qualified MBEs, with the resulting number becoming the numerator of the 
base figure. The denominator could then be derived from the Census 
Bureau's County Business Pattern (CBP) Database. The CBP Database 
contains all available businesses in the recipient's relevant 
geographic market organized by Standard Industrial Code (SIC code). SIC 
codes have been converted to North American Industrial Classification 
System (NAICS) codes. For purposes of the following discussion, NAICS 
codes may be substituted for SIC codes. The recipient may then combine 
all available businesses pertaining to construction, for example, and 
use this number as the denominator in the base figure for that 
particular procurement category.
    EPA has a link to the Census Bureau's website at osdbuweb.dot.gov/business/dbe/abe.pdf. Utilizing this data, recipients would be able to 
customize their base figure within each procurement category. For 
example, major construction SIC codes are 15, 16 and 17. If a recipient 
estimates it will spend 10% of its federal funds within SIC code 15, 
40% in SIC code 16, 25% in SIC code 17, and the remaining 25% on 
contracting spread over SIC codes 35 (equipment) and 87 (services), the 
recipient could separately determine the availability of MBEs for each 
of the SIC codes and weight each according to the amount of money to be 
spent in each area. In this example, the recipient could calculate its 
weighted base figure by first determining the number of MBEs in its 
directory for each of the SIC codes, then extracting the availability 
of CBP businesses for the same SIC codes. The recipient would then 
perform the following calculation to arrive at a base figure for step 
one of the objective setting process for MBEs.

Numerator = [.10 (MBEs in SIC code 15) + .40(MBEs in SIC code 16) + 
.25(MBEs in SIC code 17) + .25(MBEs in SIC codes 35 & 87) ] x 100
Denominator = CBPs in SIC code 15 + CBPs in SIC code 16 + CBPs in SIC 
code 17 + CBPs in SIC codes 35 & 87
[GRAPHIC] [TIFF OMITTED] TP24JY03.003

    This formula is offered only as an example of how a recipient could 
choose to use the CBP Database. Recipients using the CBP data could 
choose whether to weight their calculation, and whether to do so by 
individual SIC codes or by groups of SIC codes, based on their own 
assessment of which method will best fit their spending patterns.
    EPA is proposing to allow a recipient to negotiate separate MBE and 
separate WBE fair share objectives for each of the four procurement 
categories of construction, equipment, services and supplies or, at its 
option, negotiate a combined weighted objective for these four 
procurement category objectives for MBEs and separately for WBEs. This 
proposed approach would give recipients flexibility in preparing their 
availability analyses.
    Several issues arise when comparing numbers from two different data 
sources. First, recipients will need to ensure that the scope of 
businesses included in the numerator is as close as possible to the 
scope included in the denominator. A recipient using its own MBE and 
WBE directories will still need to determine a similar scope for the 
fields it will use for the denominator. A good way for a recipient to 
do this would be to examine its contracting program and determine the 
SIC codes for the majority of its contracts. While it may be sufficient 
for some recipients to use their State borders as the boundaries for 
their relevant geographic market, this may not be appropriate for other 
recipients whose relevant geographic market may extend beyond their 
State borders. Conversely, the relevant geographic market for some 
recipients may be a specific region within a State's borders.
    An alternative means of calculating the numerator is to use a 
bidders list. Under this approach the recipient would measure 
availability by the number of firms that have previously competed in 
the recipient's procurement process. The recipient must include all 
firms that have competed for prime and/or subcontracts.
    In the category of construction, most MBE and WBE participation 
occurs through subcontracting. It is therefore crucial that all firms 
competing for subcontracts be included in the bidders list. EPA 
encourages recipients to use any sources of local data which allows 
them to make a more accurate calculation.
(B) Data From a Disparity Study
    Another option for a recipient in determining a base figure is 
using a disparity study. Disparity studies involve comparing available 
MBE and WBE contractors with the contracts actually awarded to them. 
They generally are based on statistics which measure MBE and WBE 
utilization and anecdotal evidence showing that the underutilization of 
MBEs and WBEs is caused by conditions other than chance. These studies 
may be expensive and time consuming to perform.
    EPA is not requiring a recipient to conduct a disparity study. EPA 
is also not specifying the data or analysis required in a disparity 
study since the design and conduct of the study are best left to 
recipients and the professional organizations with which they contract 
to perform the studies. If a disparity study is used it must address 
MBE and WBE utilization under the four procurement categories and be no 
more than ten years old. The fact that a disparity study utilized in 
negotiating fair share objectives has become more than ten years old 
during the three year period does not by itself constitute a 
significant change requiring renegotiation.
(C) The Objective of Another EPA Recipient
    A recipient may also use another EPA recipient's MBE and WBE 
objectives if they were established in accordance with this Rule and 
were based on a substantially similar relevant geographic market. For 
example, a non-State agency recipient may use a State agency's MBE and 
WBE fair share objectives, but only if the non-State agency uses a 
substantially similar geographic market. Otherwise, the non-State 
Agency recipient would have to negotiate its own MBE and WBE fair share 
objectives with EPA based on the availability of MBEs and WBEs in its 
relevant geographic market. With the proposed exemption from the fair 
share objective negotiation process, the number of recipients who would 
be required to separately negotiate with EPA would be substantially 
reduced.
(D) Alternative Methods
    This proposal also includes an option for recipients to propose an 
alternative method for calculating MBE and WBE base figures. Recipients 
may use this option to take advantage of any unique expertise or source 
of data that may not be available to other recipients, such as a 
comparable objective negotiated with DOT. EPA will consider any such 
proposal that recipients believe will better reflect their relevant 
market than any of the examples provided in this Rule.
Step 2: Adjusting the Base Figure for the MBE and WBE Objectives
    Once a recipient has derived base figures for its proposed MBE and 
WBE objectives, it must then consider whether an adjustment from the 
Step 1 MBE and WBE base figures is appropriate. This second step is 
needed to ensure that objectives more

[[Page 43834]]

accurately reflect the MBE and WBE participation expected absent the 
effects of discrimination. A recipient should consider the proven 
capacity of MBEs and WBEs to perform on contracts under EPA financial 
assistance agreements. MBE and WBE past utilization does not 
necessarily reflect the availability of MBEs and WBEs. However, such 
past utilization is an indicia of the proven capacity of an MBE or WBE 
to perform on contracts under EPA financial assistance agreements. 
Other relevant information which should be examined, if available, 
include any other disparity studies conducted within a recipient's 
relevant geographic market; statistical disparities in the ability of 
MBEs and WBEs to get necessary financing, bonding and insurance; and 
data on limitations for employment, self employment, education, 
training and union apprenticeship.
    EPA is not proposing to require recipients to make an adjustment to 
their base figures. Rather, recipients must consider whether an 
adjustment to the base figures is appropriate, and if so, make the 
adjustment. It is important to note that the data recipients would 
consider under this proposed approach only involve existing data and 
not the generation of any new data.
    The question of allowability of costs of preparing availability 
analyses or disparity studies in connection with the DBE Program is 
determined in accordance with the cost principles applicable to the 
organization incurring the cost. 40 CFR 30.27 and 31.22. For State and 
local governments, the pertinent cost principles are found in OMB 
Circular A-87, as amended 8/29/97 (``A-87''). For institutions of 
higher education and other non-profit institutions, OMB Circulars A-21 
and A-122 apply, respectively. Allowability of costs for hospitals is 
determined in accordance with the provision of appendix E of 45 CFR 
Part 74.
    In general, the cost must be necessary and reasonable, be allocable 
to the Federal grant, be consistent with State law and be afforded 
consistent treatment as direct or indirect. The cost must be adequately 
documented, and be the net of any applicable credits. There is nothing 
inherent in the cost principles that would render the DBE costs 
unallowable.
    Each recipient will have different fact situations to apply. In 
CERCLA Core Program Cooperative Agreements, costs incurred in 
encouraging DBE utilization in the Superfund Program are allowable for 
funding. The recipient may have conducted an analysis or study for its 
own purposes prior to the EPA financial assistance agreement, in which 
case some of the costs might be allocable to the EPA grant as an in-
kind contribution. Costs must also be treated consistently as either 
direct or indirect in similar circumstances. Under OMB cost principles 
the costs of such analyses or studies could either be allowable direct 
or allowable indirect costs under an EPA assistance award. The 
recipient must determine whether under its particular circumstances, 
the DBE costs are allocable to the cost objective in question, and 
whether it is a direct or indirect cost.
    In each case, the recipient will have to devise a method of 
allocating the cost of the analysis or study appropriately. If audited, 
the recipient may be asked to document and justify the allocation. If a 
recipient has questions concerning allocation issues, it should contact 
its appropriate EPA grants administration office.

Section 33.406 May a Recipient Designate a Lead Agency for Fair Share 
Objective Negotiation Purposes?

    If an Indian Tribal, State or local Government has more than one 
agency that receives EPA financial assistance, the agencies within that 
government may designate a lead agency to negotiate MBE and WBE fair 
share objectives with EPA to be used by each of the agencies. Each 
agency must otherwise negotiate with EPA separately its own MBE and WBE 
fair share objectives.

Section 33.407 How Long Do MBE and WBE Fair Share Objectives Remain in 
Effect?

    Once approved, a recipient's MBE and WBE fair share objectives 
would remain in effect for three fiscal years. However, if significant 
changes have occurred rendering the data relied upon in establishing 
the fair share objectives obsolete, the fair share objectives may need 
to be renegotiated before the end of the three fiscal year period. The 
fact that a disparity study utilized in negotiating fair share 
objectives has become more than ten years old during the three year 
period does not by itself constitute a significant change requiring 
renegotiation.

Section 33.408 May a Recipient Use Race and/or Gender Conscious 
Measures as Part of This Program?

    To the extent good faith efforts described in Subpart C of this 
Rule and other race and/or gender neutral efforts prove to be adequate 
to achieve fair share objectives for MBEs and WBEs, a recipient or 
prime contractor need not take any race and/or gender conscious action. 
To the extent good faith efforts described in Subpart C of this Rule 
and other race and/or gender neutral efforts prove to be inadequate to 
achieve fair share objectives for MBEs and WBEs, a recipient or prime 
contractor is encouraged to take reasonable race and/or gender 
conscious action, subject to Sec.  33.409, to more closely achieve the 
fair share objectives. Such actions may include, among other things, 
price incentives and technical evaluation credits. Any use of race and/
or gender conscious measures must not result in the selection of an 
unqualified MBE or WBE. A recipient must notify EPA in advance of any 
race and/or gender conscious action it plans to take.

Section 33.409 May a Recipient Use Quotas as Part of This Program?

    Quotas may never be used under EPA's 8% or 10% statute. In fact, 
EPA's 10% statute specifically prohibits quotas.

Section 33.410 May a Recipient Be Penalized for Failing To Meet Its 
Fair Share Objectives?

    Under this Rule, a recipient may not be penalized or considered to 
be in noncompliance solely because its MBE or WBE utilization falls 
short of its fair share objectives. However, EPA may take remedial 
action under Sec.  33.105 for a recipient's failure to administer any 
portion of the DBE Program including, but not limited to, the good 
faith efforts requirements described in Subpart C of this part.

Section 33.411 Who May be Exempted From This Subpart?

    EPA is proposing to exempt recipients of financial assistance 
agreements with a combined total of $250,000 or less in EPA funds for 
any particular EPA financial assistance project or in any one fiscal 
year from the fair share objective requirements. These recipients would 
not be exempted from the six good faith efforts requirements of Subpart 
C or the recordkeeping and reporting requirements of Subpart E. The 
Agency is requesting comments on whether the exemption should be 
extended to the other requirements. Commenters are encouraged to submit 
relevant burden and/or cost information in support of extending the 
exemption to the other requirements of this Rule.
    Financial assistance agreements of $250,000 or less account for 
about 82% of new EPA financial assistance awards each fiscal year, but 
less than 12% of the total EPA financial assistance funds awarded. For 
the Clean Water State Revolving Fund (CWSRF), Drinking Water State 
Revolving Fund (DWSRF), and Brownfields Cleanup Revolving

[[Page 43835]]

Loan Fund (BCRLF) Programs, recipients are not required to apply the 
fair share objective requirements to an entity receiving an identified 
loan in the amount of $250,000 or less or to an entity receiving a 
combination of loans totaling in the amount of $250,000 or less in any 
one fiscal year. These exemptions are designed to minimize 
administrative burdens on EPA recipients. Recipients exempted by this 
provision are not exempted from the other requirements of the rule. The 
Agency is requesting comment, including comments from Tribes, on 
whether the exemptions should apply to other requirements, specifically 
the good faith efforts and reporting requirements. Commenters are 
encouraged to submit relevant burden and/or cost information in support 
of their comments to extend the exemption to other requirements of this 
Rule, including the good faith efforts and reporting requirements.
    EPA is proposing to exempt Tribal and tribal consortia recipients 
from applying the fair share objective requirements to eligible program 
grants which can be included in Performance Partnership Grants (PPGs) 
under 40 CFR Part 35, Subpart B, due to the nature of these program 
grants and the unique nature of eligible recipients.
    Finally, a recipient of a Technical Assistance Grant (TAG) would 
not be required to apply the fair share objective requirements of this 
Subpart to that grant. This provision would not, however, exempt such 
recipients from any other requirements of this Part.

Section 33.412 Is There a Special Rule for an Insular Area or Indian 
Tribal Government Recipient?

    Currently, Insular Area and Indian Tribal Government recipients are 
not required to negotiate fair share objectives with EPA. For the most 
part, EPA is proposing to treat Insular Area and Indian Tribal 
Government recipients the same as other recipients with regard to the 
fair share objective negotiation requirements. For example, the fair 
share objectives of another recipient may be used so long as the 
relevant geographic market is the same or substantially similar.
    The impact of this change on Indian Tribal Government recipients 
would be minimized by the general exemption described in Sec.  
33.411(a). The impact is further minimized in the case of tribes and 
tribal consortia by the exemption for eligible program grants which can 
be included in Performance Partnership Grants (PPGs) under 40 CFR Part 
35, Subpart B, described in Sec.  33.411(c). As with other recipients, 
fair share objectives would remain in effect for three years.
    EPA is proposing to phase-in the MBE and WBE fair share objective 
negotiation process for Insular Area and Indian Tribal Government 
recipients over three years in order for such recipients to adjust to 
this change in policy. The Agency will develop guidance on what 
specific factors should be taken into account in determining the phase-
in period for these recipients. In the interim, such recipients must 
still comply with all other requirements of this Rule.

Subpart E--Recordkeeping and Reporting

Section 33.501 What Are the Recordkeeping Requirements of This Part?

    A recipient is required to maintain the records documenting its 
compliance with the requirements of this Part, including documentation 
of its and its prime contractor's good faith efforts and data relied 
upon in formulating its fair share objectives. A recipient must also 
comply with the applicable retention and access requirements for its 
financial assistance agreement, e.g., 40 CFR 30.53 (for institutions of 
higher education, hospitals and other non-profit organizations); 40 CFR 
31.42 (for Indian Tribal, State and local Government recipients); and 
40 CFR 35.6705, 35.6710 (for Superfund Response Action Cooperative 
Agreements). In addition, a recipient of a Continuing Environmental 
Program Grant (e.g., a State) or other annual grant would be required 
to create and maintain a bidders list. Such a list must only be kept 
until the grant project period has expired and the recipient is no 
longer receiving EPA funding under the grant. In addition, a recipient 
of an EPA financial assistance agreement to capitalize a revolving loan 
fund also must require entities receiving identified loans to create 
and maintain a bidders list if the recipient of the loan is subject to, 
or chooses to follow, competitive bidding requirements. (See e.g., 40 
CFR 33.303). The purpose of a bidders list is to provide the recipient 
and entities receiving identified loans who conduct competitive bidding 
with as accurate a database as possible about the universe of MBE/WBE 
and non-MBE/WBE prime and subcontractors. Such a list must only be kept 
until the project period for the identified loan has ended. Recipients 
are required to comply with these recordkeeping requirements, even if 
they are exempted by Sec.  33.411 from applying the fair share 
objective requirements. The Agency is requesting comments on whether 
the exemption should be extended to the recordkeeping requirements. 
Commenters are encouraged to submit relevant burden and/or cost 
information in support of their comment to extend the exemption to the 
recordkeeping requirements.

Section 33.502 What Are the Reporting Requirements of This Part?

    The effectiveness of EPA's DBE Program may be measured through its 
reporting requirements. These reports measure EPA's progress in 
achieving the national objectives established by EPA's 8% and 10% 
statutes.
    All financial assistance agreement recipients must report on a 
quarterly basis except for recipients of continuing environmental 
program grants, and institutions of higher education, hospitals and 
other non-profit organizations receiving financial assistance awards 
under 40 CFR Part 30, who report on an annual basis. Examples of 
continuing environmental program grants include those specified in 40 
CFR Part 35, Subpart A, as well as Performance Partnership Grants 
(PPGs) and GAP Grants for Indian Tribal governments and intertribal 
consortia. Recipients of grants capitalizing CWSRF or DWSRF Programs 
have historically reported MBE/WBE participation quarterly, and will 
continue to do so under this rule. Recipients of financial assistance 
agreements that capitalize revolving loan programs must require 
entities receiving identified loans to submit their MBE and WBE 
participation reports on a quarterly basis to the financial assistance 
agreement recipient, rather than to EPA. Private and non-profit 
organization loan recipients are not required to maintain a certified 
procurement system (e.g., see 40 CFR 35.6055(a)).
    In the past, EPA has presumed that all financial assistance award 
funds to Indian Tribal Government and Insular Area recipients have 
benefitted MBEs. Accordingly, despite the reporting requirements 
contained in 40 CFR Part 31, as a matter of policy, EPA has not 
uniformly required Indian Tribal Government and Insular Area recipients 
to report their degree of MBE or WBE utilization. In this proposed 
Subpart, Indian Tribal Government and Insular Area recipients are 
treated the same as other recipients with regard to recordkeeping and 
reporting requirements. All such recipients would therefore be required 
to retain records and report on actual MBE and WBE utilization.
    The reporting requirements are applicable to all recipients, even 
those exempted from applying the fair share

[[Page 43836]]

objective requirements. The Agency is requesting comments on whether 
the exemption should be extended to the reporting requirements. 
Commenters are encouraged to submit relevant burden and/or cost 
information in support of their comment to extend the exemption to the 
reporting requirements.

Section 33.503 How Does a Recipient Calculate MBE and WBE Participation 
for Reporting Purposes?

    In this rulemaking proposal the Agency is proposing to codify the 
principles of Chapter 8 of its 1997 Guidance concerning how MBE and WBE 
participation is counted.
    EPA requires that a recipient report the total amount of financial 
assistance spent on procurement and the amount awarded to an MBE or 
WBE. For EPA assistance awards, except the CWSRF and DWSRF Revolving 
Funds, all project expenditures are deemed to include both the Federal 
Share and the recipient's required matching share. Therefore, except in 
the SRF Programs, the amount of procurement in the assistance award as 
a whole, i.e., including any required cost share funds contributed by 
the recipient is reported. In the SRF Programs, only identified loans 
are considered to include Federal funds. Negative reports are required, 
i.e., if a recipient does not make an MBE or WBE procurement award in a 
reporting period, the recipient must still file a Form 5700-52A.
    By requiring recipients to report, EPA is attempting to measure the 
amount of overall MBE and WBE participation under the DBE Program. The 
reporting of MBE and WBE dollar amounts under a particular prime 
contract will result in a total that is no more than 100% of the prime 
contract value. For example, if an MBE is awarded a prime contract and 
then subcontracts 30% of the value of the contract, the total number of 
dollars reported would remain at the 100% level. This would be true 
even if the subcontractor in this example is another MBE.
    If all project costs attributable to MBE and WBE participation are 
not eligible for funding under the EPA financial assistance agreement, 
the recipient may report MBE and WBE participation compared to the 
total eligible and non-eligible costs of the project.
    Joint Ventures. The MBE and WBE participation within a joint 
venture shall be credited in a pro rata fashion. Where an MBE's or 
WBE's risk of loss, control or management responsibilities is not 
consistent with its share of the profit, the award official may direct 
an adjustment in the percentage of MBE or WBE participation.
    Central Purchasing or Procurement Centers. Recipients must verify 
procurement dollars awarded to MBE and WBE firms from a recipient's 
central purchasing or procurement center.
    In reporting MBE and WBE utilization, a recipient may use one of 
the methods described below or propose another method for approval by 
EPA.
    (1) A recipient may report actual dollars expended on procurement 
from EPA financial assistance agreement funds to MBEs and WBEs, if 
sufficient records are maintained;
    (2) If records are maintained for a recipient's MBE and WBE 
procurement generally but records are not specifically maintained for 
procurement under EPA financial assistance agreements, a recipient's 
MBE and WBE percentage utilization for its funds as a whole may be 
applied proportionally to the amount of procurement under EPA financial 
assistance agreements; or
    (3) If actual records of MBE and WBE utilization are not 
maintained, a recipient may authorize its procurement center to 
estimate the total amount of funds awarded to MBEs and WBEs. Such 
estimate, provided it is reasonable, will be accepted.
    Brokers. MBE and WBE participation will be credited for those MBEs 
and WBEs performing a useful business function according to industry 
custom and practice. Recipients may not count expenditures to an MBE or 
WBE that acts merely as a broker or passive conduit in a transaction. A 
broker is a firm that does not itself perform, manage or supervise the 
work of its contract or subcontract in a manner consistent with the 
normal business practices for contractors or subcontractors in its line 
of business. However, an MBE or WBE may subcontract a portion of the 
work to a non-MBE or non-WBE, provided that such further subcontracting 
is in accordance with this proposed regulation and that the majority of 
work is retained by the MBE or WBE having the prime contract.
    Presumption. If an MBE or WBE prime contractor awards 50% or more 
of the prime contract value to a non-MBE and non-WBE, EPA presumes that 
such a MBE or WBE prime contractor is a broker. No MBE or WBE 
utilization may be reported for a broker.
    Rebuttal. An MBE or WBE contractor may rebut this presumption by 
demonstrating that the degree of subcontracting is consistent with 
normal business practice and that it will actively perform, manage and 
supervise the work under its contract.
    MBE or WBE Truckers/Haulers. A recipient may only count 
expenditures to an MBE or WBE Trucker/Hauler if that MBE or WBE 
Trucker/Hauler is performing a commercially useful function. The 
proposed rule discusses two factors to consider in determining whether 
an MBE or WBE Trucker/Hauler is performing a commercially useful 
function.

III. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), EPA 
must determine whether the regulatory action is ``significant'' and 
therefore subject to review by the Office of Management and Budget 
(OMB). The Executive 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 tribal, State or local 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 programs, or the rights and obligations of recipients 
thereof.
    (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.
    This rule is a significant rule under Executive Order 12866 because 
of the substantial public interest concerning and policy importance of 
programs to ensure nondiscrimination in Federally assisted contracting. 
It also affects a wide variety of parties, including all EPA financial 
assistance programs, and the DBE and non-DBE contractors that perform 
work under them. As such, this action was submitted to OMB for review. 
Changes made in response to OMB suggestions or recommendations will be 
documented in the public record.
    Based on currently available information about costs that may be 
associated with complying with this rule (e.g., costs to obtain MBE or 
WBE certification), EPA believes that this rule will not have an annual 
effect on the economy of $100 million or more. Therefore, EPA does not 
plan to prepare a regulatory impact statement for this rule. However, 
EPA invites commentors

[[Page 43837]]

to furnish information on the economic costs, impacts and 
distributional effects of this proposed rule, after which the agency 
may reconsider its position.

B. Paperwork Reduction Act

    The information collection requirements in this proposed rule have 
been submitted for approval to the Office of Management and Budget 
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The 
Information Collection Request (ICR) document prepared by EPA has been 
assigned ICR No-2047.01.
    This ICR is for the purpose of ensuring that EPA's statutory DBE 
procurement goal requirements are implemented in harmony with the 
United States Supreme Court's decision in Adarand Constructors, Inc. v. 
Pena, 115 S. Ct. 2097 (1995).
    The requirements to complete EPA Forms 6100-2-DBE Program 
Subcontractor Participation Form, 6100-3-DBE Program Subcontractor 
Performance Form, and 6100-4-DBE Program Subcontractor Utilization 
Form, are intended to prevent any ``bait and switch'' tactics at the 
subcontract level by prime contractors which may circumvent the spirit 
of the DBE Program.
    The requirements to complete the EPA DBE Certification Application 
(EPA Form 6100-1a) (Sole Proprietorship), the EPA DBE Certification 
Application (EPA Form 6100-1b) (Limited Liability Company), the EPA DBE 
Certification Application (EPA 6100-1c) (Partnerships), the EPA DBE 
Certification Application (EPA Form 6100-1d) (Corporations), the EPA 
DBE Certification Application (EPA Form 6100-1e) (Alaska Native 
Corporations), the EPA DBE Certification Application (EPA Form 6100-1f) 
(Tribally Owned Businesses), the EPA DBE Certification Application (EPA 
Form 6100-1g) (Private and Voluntary Organizations), the EPA DBE 
Certification Application (EPA Form 6100-1h) (Concerns owned by Native 
Hawaiian Organizations), and the EPA DBE Certification Application (EPA 
Form 6100-1i) (Concerns Owned by Community Development Corporations), 
as applicable, would be required to be completed by an entity seeking 
to be counted as a minority business enterprise (MBE) or women's 
business enterprise (WBE) under EPA's DBE Program, which cannot get 
certified as an MBE or WBE by the SBA or DOT under their respective 
programs or by an Indian Tribal Government or independent private 
organization consistent with EPA's 8% or 10% statute as applicable.
    Responses to the collection of information will be mandatory. EPA's 
legal authorities for the DBE Program are Public Law 102-389, a 1993 
appropriations act (42 U.S.C. 4370d) (EPA's 8% statute), and Public Law 
101-549, Title X of the Clean Air Act Amendments of 1990 (42 U.S.C. 
7601 note) (EPA's 10% statute).
    Other legal authorities include Public Law 99-499, the Superfund 
Amendments and Reauthorization Act of 1986; Public Law 100-590, the 
Small Business Administration Reauthorization and Amendment Act of 
1988; Executive Order 12138, ``Creating a National Women's Business 
Enterprise Policy and Prescribing Arrangements for Developing, 
Coordinating and Implementing a National Program for Women's Business 
Enterprise,'' issued May 18, 1979; Executive Order 11625, ``Prescribing 
Additional Arrangements for Developing and Coordinating a National 
Program for Minority Business Enterprise,'' issued October 13, 1971; 
and Executive Order 12432, ``Minority Business Enterprise 
Development,'' issued July 14, 1983.
    EPA may make available to the public any information concerning 
EPA's DBE Program release of which is not prohibited by Federal law or 
regulation, including EPA's Confidential Business Information 
regulations at 40 CFR Part 2, Subpart B.
    The total labor burden and costs to MBEs and WBEs for certification 
under State, Tribal and Insular Area funding programs is estimated to 
total $8,750,300, with 168,275 burden hours and 6,731 MBE and WBE 
entities affected for the three-year period of the ICR. The estimated 
annual burden hours per response is 25 hours; the number of respondents 
is estimated at 2,244 at an average annual labor burden and cost per 
MBE and WBE of $1300. The average annual burden and costs are estimated 
by spreading the first year cost over the three-year period of the ICR, 
yielding a total annual average burden of 56,092 hours and $2,916,767 
in costs.
    The total labor burden and costs to all EPA grant and loan 
recipients that would have to perform an availability analysis to meet 
the requirements of the proposed rule and other paperwork requirements 
are estimated to be $16,509,500 with 825,475 burden hours and 3,115 
entities affected for the three-year period of the ICR. The estimated 
annual burden hours for all responses is 275,158, and the annual number 
of respondents is estimated at 1,038.
    The annual cost for all respondents would be $5,503,167. The cost 
per respondent is estimated at $5,250 (each respondent is estimated to 
perform an availability analysis once every three years) and is 
estimated to take 265 hours at $20/hour. EPA assumed there were no 
additional start up costs or capital expenditures.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information.
    An Agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations are listed in 40 CFR Part 9 and 48 CFR Chapter 15.
    To comment on the Agency's need for this information, the accuracy 
of the provided burden estimates, and any suggested methods for 
minimizing respondent burden, including the use of automated collection 
techniques, EPA has established a public docket for this ICR under 
Docket ID No. OA-2002-0001 which is available for public viewing at the 
OEI Docket in the EPA Docket Center (EPA/DC), EPA West Room B102, 1301 
Constitution Ave., NW., Washington, DC. The EPA Docket Center Public 
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through 
Friday, excluding legal holidays. The telephone number for the Reading 
Room is (202) 566-1744, and the telephone number for the OEI Docket is 
(202) 566-1752. An electronic version of the public docket is available 
through EPA Dockets (EDOCKET) at http://www.epa.gov/edocket. Use 
EDOCKET to submit or view public comments, access the index listing of 
the contents of the public docket and to access those documents in the 
public docket, and to access those documents in the public docket that 
are available electronically. Once on the system, select ``search,'' 
then key in the docket ID number identified above. Also, you can send 
comments to the Office of Information and Regulatory Affairs, Office of 
Management and Budget, 725

[[Page 43838]]

17th St., NW., Washington, DC 20503, Attention: Desk Officer for EPA. 
Please include the EPA Docket ID No. OA-2002-0001 in any 
correspondence. Since OMB is required to make a decision concerning the 
ICR between 30 and 60 days after July 24, 2003, a comment to OMB is 
best assured of having its full effect if OMB receives it by August 25, 
2003. The final rule will respond to any OMB or public comments on the 
information collection requirements contained in this proposal.

C. Regulatory Flexibility Act (RFA), as amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et 
seq.

    Today's proposed rule is not subject to the RFA, which generally 
requires an agency to prepare a regulatory flexibility analysis for any 
rule that will have a significant economic impact on a substantial 
number of small entities. The RFA applies only to rules subject to 
notice-and-comment rulemaking requirements under the Administrative 
Procedure Act (APA) or any other statute. As a grants-related rule, 
this rule is not subject to the notice and comment requirements of the 
APA, 5 U.S.C. 553(a)(1). Nor is there any other statute which requires 
EPA to undergo notice and comment for this rulemaking.
    Although this proposed rule is not subject to the RFA, EPA 
nonetheless will assess the potential of this rule to adversely affect 
small entities, which include small businesses, small not for profit 
enterprises and small governmental jurisdictions. At the outset, it is 
important to note that EPA's DBE Program is aimed at improving 
contracting opportunities for small businesses owned and controlled by 
socially and economically disadvantaged individuals, among others 
(e.g., HBCUs, etc.). Accordingly, EPA believes that this proposed rule 
would affect a substantial number of small entities.
    However, if the proposed exemptions at the $250,000 level or less 
from the fair share objective requirements are adopted, EPA believes 
that the effect on small entities, including small government 
jurisdictions, would be minimal. Additionally, under this rulemaking 
proposal, small entity recipients would be able to use State Agency 
negotiated MBE/WBE objectives if such recipients solicit bids/offers 
from a substantially similar geographic market as that State Agency. 
Accordingly, EPA believes that the economic impact of this rule, if 
enacted, on small entities should be minimal.
    In EPA's view, this rule, if enacted, would not affect the total 
funds or business opportunities available to small businesses that seek 
to work in EPA financial assistance programs. To the extent that the 
provisions in this rulemaking proposal (e.g., with respect to changes 
in the methods used to set objectives) lead to different objectives 
than those under EPA's current program policy, some firms may gain and 
others lose, business.
    EPA is unaware of any data which would enable the Agency at this 
time to measure the distributive effects of the rulemaking proposal on 
various types of small entities. We continue to be interested in the 
potential impacts of this proposed rule on small entities and welcome 
comments on issues related to such impacts.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, 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 to the private sector of $100 million or more in any 
one year. Before promulgating an EPA rule for which a written statement 
is needed, section 205 of the UMRA generally requires EPA to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-effective or least burdensome alternative 
that achieves the objectives of the rule. The provisions of section 205 
do not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective or least burdensome alternative that 
achieves the objectives of the rule. The provisions of section 205 do 
not apply when they are inconsistent with applicable law. Morever, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective or least burdensome alternative if the 
Administrator publishes with the final rule an explanation why that 
alternative was not adopted. Before EPA establishes any regulatory 
requirements that may significantly or uniquely affect small 
governments, including tribal governments, it must have developed under 
section 203 of the UMRA a small government agency plan. The plan must 
provide for notifying potentially affected small governments, enabling 
officials of affected small governments to have meaningful and timely 
input in the development of EPA regulatory proposals with significant 
Federal intergovernmental mandates, and informing, educating and 
advising small governments on compliance with the regulatory 
requirements.
    Today's rule 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 excluded from the 
definition of ``Federal intergovernmental mandate'' duties that arise 
from conditions of federal assistance.
    Pursuant to section 203 of the UMRA, EPA has also determined that 
this rule contains no regulatory requirements that might significantly 
or uniquely affect small governments. If the proposed exemptions at the 
$250,000 level or less from compliance with the fair share objective 
requirements are adopted, EPA believes that there would be minimal 
impacts on small entities, including small government jurisdictions. 
Additionally, under this rulemaking proposal, small entity recipients 
would be able to use appropriate State Agency-negotiated MBE/WBE 
objectives if such recipients solicit bids/offers from substantially 
the same relevant geographic market as that State Agency. Therefore, 
this rule does not meet the threshold test for application of Section 
203 of UMRA.

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    Under Executive Order 13132, EPA may not issue a regulation that 
has federalism implications, that imposes substantial direct compliance 
costs, and that is not required by statute, unless the Federal 
government provides the funds necessary to pay the direct compliance 
costs incurred by State and local governments, or EPA consults with 
State and local officials early in the process of developing the 
proposed regulation. EPA also may not issue a regulation that has 
federalism implications and that preempts State

[[Page 43839]]

law unless the Agency consults with State and local officials early in 
the process of developing the proposed regulation.
    This rule does not have ``federalism implications,'' as that phase 
is defined in the Executive Order. It will not have substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government, as specified 
in Executive Order 13132. Because this rule conditions the use of 
federal assistance, it will not impose substantial direct compliance 
costs on State and local governments. Thus, the requirements of section 
6 of the Executive Order do not apply to this rule.
    Stakeholders, including representatives from State government 
agencies, State government organizations and local governments, were 
given an opportunity to comment on a draft of the rule which was posted 
on the Internet for public comment. Meetings were also held in several 
states across the country to discuss the draft of the rule and to 
encourage comment.
    In the spirit of Executive Order 13132, and consistent with EPA 
policy to promote communications between EPA and State and local 
governments, EPA specifically solicits comment on this proposed rule 
from State and local officials.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    On November 6, 2000, the President issued Executive Order 13175 (65 
FR 67249) entitled, ``Consultation and Coordination with Indian Tribal 
Governments.'' Executive Order 13175 took effect on January 6, 2001, 
and revokes Executive Order 13084 (Tribal Consultation) as of that 
date. EPA to a great extent developed this proposed rule, however, 
during the period when Executive Order 13084 was in effect. Although 
EPA believes that it has fully complied with the requirements of 
Executive Order 13175, as indicated in the following discussion, EPA 
will analyze and ensure full compliance with the requirements of 
Executive Order 13175 before promulgating the final rule.
    Executive Order 13175 requires EPA to develop an accountable 
process to ensure ``meaningful and timely input by tribal officials in 
the development of regulatory policies that have tribal implications.'' 
``Policies that have tribal implications'' is defined in the Executive 
Order to include regulations that have ``substantial direct effects on 
one or more Indian tribes, on the relationship between the Federal 
government and the Indian tribes, or on the distribution of power and 
responsibilities between the Federal government and Indian tribes.''
    Under section 5(b) of Executive Order 13175, EPA may not issue a 
regulation that has tribal implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the Federal government provides the funds necessary to pay the direct 
compliance costs incurred by tribal governments, or EPA consults with 
tribal officials early in the process of developing the proposed 
regulation. Under section 5(c) of Executive Order 13175, EPA may not 
issue a regulation that has tribal implications and that preempts 
tribal law, unless the Agency consults with tribal officials early in 
the process of developing the proposed regulation. However, today's 
proposed rulemaking will neither impose substantial direct compliance 
costs on tribal governments, nor preempt tribal law. Thus, the 
requirements of section 5(b) and 5(c) of the Executive Order do not 
apply to this rule.
    EPA has concluded that the proposed rule would have tribal 
implications because it will have substantial direct effects on one or 
more Indian tribes. The substantial direct effects on tribal 
governments are as follows:
    Tribes receiving an EPA financial assistance agreement of more than 
$250,000 for any single assistance agreement or of more than one 
financial assistance agreement with a combined total of more than 
$250,000 in any one fiscal year (excluding PPG eligible grants to 
tribes and intertribal consortia under 40 CFR Part 35, Subpart B) would 
have to negotiate fair share objectives with EPA unless they choose to 
adopt MBE and WBE objectives of another EPA recipient consistent with 
today's proposed rule. Those tribes required to negotiate fair share 
objectives with EPA would have a phase-in period of up to three years 
in which to do so; their fair share objectives will remain in effect 
for three fiscal years after they have been approved by EPA, unless 
there are significant changes to the data supporting the fair share 
objectives.
    Some tribally owned businesses (businesses that a Federally 
recognized tribal government owns or in which it has a majority share) 
would not be eligible to be counted in the future towards meeting the 
MBE/WBE fair share objectives if they do not meet the applicable SBA 
8(a) criteria, e.g., see 13 CFR 124.109(b); under EPA's current 
requirements such businesses may self certify their MBE status. Of 
course, tribes may continue to do business with tribally owned or other 
companies which do not meet the applicable SBA 8(a) criteria, they 
simply could not count such procurements toward meeting MBE/WBE 
objectives. In addition, the proposed rule would have the following 
impacts on tribes/tribally owned businesses:
    First, a business owned by a Federally recognized tribal government 
would have to file an annual affidavit with EPA certifying no change in 
its MBE status, pursuant to Sec.  33.210 of today's proposed 
rulemaking.
    Second, a business owned by a Federally recognized tribal 
government would have to be recertified every three years as meeting 
SBA's applicable 8(a) criteria to be eligible to be counted in the 
future towards meeting the MBE/WBE fair share objectives, pursuant to 
Sec.  33.208.
    Third, a business owned by a Federally recognized tribal 
government, if it is not already certified in accordance with SBA's 
applicable 8(a) criteria, may have to incur costs to be certified if 
there is no tribal certifier available and the other certifying entity 
charges for its services.
    Fourth, a tribe as a recipient of EPA financial assistance, would 
have to be notified in writing before any termination of a DBE 
subcontractor for convenience is made by its prime contractor, pursuant 
to Sec.  33.303(a).
    Fifth, consistent with other Federal and tribal laws, a tribe would 
have to require its prime contractor, after the tribe has 
unsuccessfully sought to apply Indian preference consistent with the 
Indian Self-Determination and Education Assistance Act, to employ the 
good faith efforts described in Sec.  33.301 if a DBE subcontractor 
fails to complete work under a subcontract for any reason and the prime 
contractor solicits a replacement subcontractor, pursuant to Sec.  
33.303(b).
    Sixth, consistent with other Federal and tribal Laws, a tribe would 
have to require its prime contractor, after it has unsuccessfully 
sought to apply Indian preference consistent with the Indian Self-
Determination and Education Assistance Act, to employ the good faith 
efforts described in Sec.  33.301 even if it has achieved its fair 
share objectives under Subpart D of the rule, pursuant to Sec.  
33.303(c).
    Seventh, a tribe would have to require its prime contractors to 
provide EPA Form 6100-2--DBE Program Subcontractor Participation Form, 
EPA Form 6100-3--DBE Program Subcontractor Performance Form and EPA 
Form 6100-4--DBE Program

[[Page 43840]]

Subcontractor Utilization Form to all of its DBE subcontractors, 
pursuant to Sec.  33.303(e), (f) and (g), respectively.
    Eighth, a tribal recipient that conducts procurements will have to 
create and maintain a bidders list in accordance with Sec.  33.501(b). 
The purpose of this list is to provide recipients as accurate a 
database as possible about the universe of MBE/WBE and non-MBE/WBE 
prime and subcontractors who seek to work on procurements under EPA 
financial assistance agreements. The following information must be 
obtained from all such prime and subcontractors: (1) Entity name; (2) 
Entity address; (3) Entity's status as an MBE/WBE.
    Consistent with EPA policy, EPA nonetheless consulted with tribal 
officials and/or representatives of tribal governments early in the 
process of developing this regulation to permit them to have meaningful 
and timely input into its development. Because E.O. Sections 5(b) and 
5(c) do not apply, a Tribal Impact Summary is not required. EPA 
nonetheless is including one in this preamble.
    The following constitutes a Tribal Impact Summary under Executive 
Order 13175:
    EPA posted a staff draft of this proposed rule, dated June 19, 
2000, on EPA's internet website. As part of its ongoing tribal 
consultations on this rule, EPA held meetings with tribal officials to 
discuss the staff draft rule in Boston, Massachusetts on April 11, 2001 
and in Seattle, Washington on May 23, 2001. EPA held further formal 
consultations with tribal officials to discuss a draft of this Rule in 
Ocean Shores, Washington during the week of January 28, 2002.
    By way of further background, today's proposed rule has been under 
development for the past several years. EPA invited tribal recipients 
of EPA grants and cooperative agreements to an EPA/State/Tribal Annual 
Conference held on February 2-4, 1999 in Albuquerque, New Mexico. 
During this conference, EPA representatives discussed a number of 
issues relating to the rule under development with the general 
audience. In addition, EPA representatives met separately with tribal 
officials and/or representatives to discuss issues of concern to 
tribes. On June 27-30, 2000, the Agency held its EPA/State/Tribal 
Annual Conference in Albuquerque, New Mexico. Again, EPA invited tribal 
recipients of EPA financial assistance agreements to attend. During the 
June, 2000 conference, agency representatives discussed in detail the 
June 19, 2000 staff draft of the rule, which had been posted on EPA's 
website. EPA solicited comments on the staff draft of the rule from 
conference participants. Tribal officials and/or representatives 
attended that conference as well. As of June 30, 2001, EPA has received 
a total of 17 written comments on the staff draft from Indian tribes.
    During the development of this rule EPA representatives have made a 
number of oral presentations to the Tribal Operations Committee (TOC) 
on the rule's progress and solicited input. The TOC is comprised of 19 
national tribal representatives from the nine EPA Regions that have 
federally recognized tribes, and EPA Senior Management; its role is to 
provide input into EPA decision making affecting Indian Country. On 
November 29, 2000, EPA representatives met with the TOC at the EPA 
Tribal Caucus Regional Joint meeting in Miami, Florida to discuss the 
staff draft rule and to obtain further tribal input into the rulemaking 
process.
    Starting in November, 2000, EPA invited tribal recipients of EPA 
grants and cooperative agreements to participate in outreach sessions 
held in cities around the country having EPA Regional offices in order 
to discuss the staff draft rule. EPA has further solicited tribal input 
into the rulemaking at meetings with tribal officials/representatives 
at the Department of the Interior 2001 Conference on the Environment 
hosted by the Bureau of Indian Affairs on March 13-15, 2001 in 
Albuquerque, New Mexico and at the Reservation Economic Summit and 
American Indian Business Trade Fair (RES 2001) in Anaheim, California, 
on March 20, 2001. EPA further solicited tribal input in another 
meeting with the TOC on April 24, 2001 in Miami, Florida.
    EPA has considered tribal concerns and written comments in today's 
rulemaking. A summary of the nature of tribal concerns and EPA's 
initial response follows:
    1. In general, tribes believe they should be exempt from the rule.
    Awards of Grants and Cooperative Agreements to tribes are currently 
governed by 40 CFR Part 31, ``Uniform Administrative Requirements for 
Grants and Cooperative Agreements to State and Local Governments.'' 
These are government wide requirements that have been in effect since 
1988. Among other entities subject to the regulations are governments. 
The definition of ``Government'' in 40 CFR 31.3 includes ``* * * a 
federally recognized Indian tribal government.'' Many requirements 
contained in this proposed rule are not new but rather are the same 
requirements contained in 40 CFR Part 31, with which many tribes 
already have been complying. For example, the reporting and 
recordkeeping requirements are already applicable to Indian tribes. In 
addition, neither EPA's 10% MBE/WBE procurement objective statute for 
research relating to the requirements of the Clean Air Act Amendments 
of 1990 nor EPA's statutory 8% MBE/WBE procurement objective 
requirements for all other programs contain language exempting tribes 
from their applicability. Therefore, EPA proposes that tribes should 
not be exempted from this rule because it promotes the utilization of 
all disadvantaged entities in procurement under EPA financial 
assistance agreements, including tribally owned businesses and 
businesses owned by a member(s) of a tribe.
    2. Trigger for Fair Share Negotiations.
    The issue of increasing the dollar amount of the trigger requiring 
compliance with the fair share objective requirements and the 
corresponding availability analysis was of special concern to tribes 
awarded GAP grants. One commentor also expressed the view that 
availability analysis preparation requirements should apply only to 
tribes spending 90% or more of their grants on outside procurement. 
Other tribes expressed the view that preparing availability analyses is 
too costly for them, especially for smaller tribes.
    In response to concerns raised by tribes, under today's proposed 
rulemaking, the trigger requiring compliance with the fair share 
objective requirements has been increased to $250,000 from $100,000 
contained in the staff draft of the rule. Also because of the nature of 
eligible program grants which can be included in Performance 
Partnership Grants (PPGs) to tribes under 40 CFR Part 35, Subpart B, 
and the unique nature of eligible recipients, the Agency is proposing 
to exempt PPG eligible program grants to tribes under 40 CFR Part 35, 
Subpart B from the fair share negotiation requirements.
    Accordingly, only tribes receiving an EPA financial assistance 
agreement of more than $250,000 for any single assistance agreement or 
of more than one financial assistance agreement with a combined total 
of more than $250,000 in any one fiscal year (excluding PPG eligible 
program grants under 40 CFR Part 35, Subpart B) would have to comply 
with the fair share objective requirements.
    The Agency believes that this change effectively addresses the 
concerns by setting a uniform standard applicable to all recipients, 
including tribes, rather than, for example, setting a standard based on 
amounts spent by tribes on outside procurement, which could pose 
implementation difficulties. EPA believes that most tribes will not 
have

[[Page 43841]]

to comply with the fair share objective requirements under today's 
rulemaking because they will fall under the $250,000 exemption or the 
exemption for PPG eligible program grants under 40 CFR Part 35, Subpart 
B. Finally, EPA believes that a number of tribes which otherwise would 
have to negotiate fair share objectives may elect instead to apply the 
objectives of another recipient in accordance with the requirements of 
today's rulemaking. In any case, the rule would provide tribes with a 
three year phase-in period to comply with the fair share negotiation 
requirements.
    Comments were also received suggesting that EPA exempt tribes from 
Fair Share Negotiations based on procurement dollars, rather than on 
total grant dollars. EPA is considering this option which would exempt 
tribal grantees whose actual procurement activities total $250,000 or 
less from Fair Share Negotiations. EPA is specifically requesting 
public comment on this suggestion.
    3. The reporting and recordkeeping requirements.
    Some tribes expressed concerns that keeping records of and 
reporting purchases for EPA funded grants would impose a heavy burden 
on tribal governments. Instead, they suggested basing reporting on the 
amount of money the tribe received rather than on the amount of money 
it spent on outside supplies and services.
    EPA considered these concerns. However, 40 CFR Part 31 already 
requires tribes to comply with Part 31's recordkeeping and reporting 
requirements, which include MBE/WBE recordkeeping and reporting. 
Today's proposed rulemaking make no changes to the existing Part 31 
reporting and recordkeeping requirements. The Agency believes that 
basing requirements on amounts received rather than on amounts spent 
would be an inaccurate measurement of MBE/WBE procurement utilization. 
EPA currently requires financial assistance recipients to report MBE/
WBE accomplishments based on dollars spent on MBE/WBE procurements. EPA 
is not proposing to change this requirement.
    4. Compliance with the good faith efforts requirements.
    One commentor objected to having to advertise in newspapers; a 
comment was also made that EPA should investigate alternative 
mechanisms that encourage a tribe to seek out MBEs/WBEs during the 
procurement process without incurring an unreasonable financial burden.
    However, as discussed above, Section 7(b) of the Indian Self-
Determination and Education Assistance Act requires tribal governments 
to solicit tribally-owned businesses and/or businesses owned by a 
member(s) of a tribe, before undertaking the six good faith efforts. 
Tribes currently are currently subject to 40 CFR Part 31, which 
requires them to make good faith efforts to ensure that DBEs are used 
whenever possible. EPA is not proposing to change this requirement. EPA 
does not believe that the good faith efforts requirements are unduly 
burdensome. The good faith efforts requirements would take effect only 
if no DBEs are found to do the work in each of the four procurement 
categories of construction, equipment, services and supplies in the 
initial tribal solicitation.
    5. Phase-In Period.
    One commentor expressed a concern about the timing of the phase-in 
period and the maximum amount of time needed for the requirement to be 
implemented.
    EPA expects those tribes who could implement this requirement 
before the expiration of the three year phase-in period to do so. Those 
tribes who cannot do so would be given the full three years. It is 
important for tribes to note that the three year phase-in period would 
only begin after the final rule's effective date, which should allow 
tribes sufficient time to comply with prepare for the implementation of 
the requirement.
    In the spirit of Executive Order 13175 and consistent with EPA 
policy to promote communications between EPA and tribal governments, 
EPA specifically solicits additional comment on this proposed rule from 
tribal officials.
    Copies of written communications submitted by tribal officials/
representatives are available upon request from the docket clerk for 
this rulemaking.

G. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

    Executive Order 13045 applies to any rule that is determined to be: 
(1) ``economically significant'' as defined under Executive Order 
12866, and (2) concerns any 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.

H. Executive Order 13211: Actions that Significantly Affect Energy 
Supply, Distribution, or Use

    This rule is not a ``significant energy action'' as defined in 
Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 28355 
(May 22, 2001)) because it is not likely to have a significant adverse 
effect on the supply, distribution, or use of energy. EPA has concluded 
that this rule is not likely to have any adverse energy effects.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law 104-113, 12(d) (15 U.S.C. 272 note) 
directs EPA 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 and business practices) that are developed or adopted by 
voluntary consensus standards bodies. The NTTAA directs EPA to provide 
Congress, through OMB, explanations when the Agency decides not to use 
available and applicable voluntary consensus standards.
    This proposed rulemaking does not involve technical standards. 
Therefore, EPA is not considering the use of any voluntary consensus 
standards.

List of Subjects

40 CFR Part 30

    Environmental protection, Administrative practice and procedure, 
Grant programs--environmental protection, Reporting and recordkeeping 
requirements.

40 CFR Part 31

    Accounting, Administrative practice and procedure, Grant programs, 
Indians, Intergovernmental relations, Reporting and recordkeeping 
requirements.

40 CFR Part 33

    Grant programs--environmental protection.

[[Page 43842]]

40 CFR Part 35

    Grant programs--environmental protection. Grant programs--Indians, 
Hazardous waste, Indians, Intergovernmental relations, Reporting and 
recordkeeping requirements.

40 CFR Part 40

    Research and Demonstration Grants--Projects involving construction.

    Dated: July 9, 2003.
Linda J. Fisher,
Acting Administrator.

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

PART 30--[AMENDED]

    1. The authority citation for part 30 continues to read as follows:

    Authority: 7 U.S.C. 135 et seq.; 15 U.S.C. 2601 et seq.; 33 
U.S.C. 1251 et seq.; 42 U.S.C. 241, 242(b), 243, 246, 300f, 300j-1, 
300j-2, 300j-3; 1857 et seq.; 6901 et seq., 7401 et seq., OMB 
circular A-110 (64 FR 54926, October 8, 1999).


Sec.  30.44  [Amended]

    2. Section 30.44 is amended by removing and reserving paragraph 
(b).

PART 31--[AMENDED]

    3. The authority citation for part 31 continues to read as follows:

    Authority: 33 U.S.C. 1251 et seq.; 42 U.S.C. 7401 et seq.; 42 
U.S.C. 6901 et seq.; 42 U.S.C. 300f et seq.; 7 U.S.C. 136 et seq.; 
15 U.S.C. 2601 et seq.; 42 U.S.C. 9601 et seq.; 20 U.S.C. 4011 et 
seq.; 33 U.S.C. 1401 et seq.


Sec.  31.36  [Amended]

    4. Section 31.36 is amended by removing and reserving paragraph 
(e).
    5. Part 33 is added as follows:

PART 33--PARTICIPATION BY DISADVANTAGED BUSINESS ENTERPRISES IN 
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY PROGRAMS

Subpart A--General Provisions
Sec.
33.101 What are the objectives of this part?
33.102 When do the requirements of this part apply?
33.103 What do the terms in this part mean?
33.104 May a recipient apply for a waiver from the requirements of 
this part?
33.105 What are the compliance and enforcement provisions of this 
part?
33.106 What assurances must EPA financial assistance recipients 
obtain from their contractors?
33.107 What are the rules governing availability of records, 
cooperation, and intimidation and retaliation?
Subpart B--Certification
33.201 What does this subpart require?
33.202 How does an entity qualify as an MBE or WBE under EPA's 8% 
statute?
33.203 How does an entity qualify as an MBE or WBE under EPA's 10% 
statute?
33.204 Where does an entity become certified under EPA's 8% and 10% 
statutes?
33.205 How does an entity become certified by EPA?
33.206 Is there a list of certified MBEs and WBEs?
33.207 Can an entity reapply to EPA for MBE or WBE certification?
33.208 How long does an MBE or WBE certification from EPA last?
33.209 Can EPA re-evaluate the MBE or WBE status of an entity after 
EPA certifies it to be an MBE or WBE?
33.210 Does an entity certified as an MBE or WBE by EPA need to keep 
EPA informed of any changes which may affect the entity's 
certification?
33.211 What is an EPA Private Certifier?
33.212 Can an EPA Private Certifier charge a fee to an entity to 
process the entity's application for MBE or WBE certification?
33.213 How does an organization or business concern become an EPA 
Private Certifier?
33.214 How long may an organization or business concern be an EPA 
Private Certifier?
33.215 Is there a list of EPA Private Certifiers?
33.216 What is the process for appealing or challenging an EPA MBE 
or WBE certification determination?
33.217 What conduct is prohibited by this subpart?
Subpart C--Good Faith Efforts
33.301 What does this subpart require?
33.302 Are there any additional contract administration 
requirements?
33.303 Are there special rules for loans under EPA financial 
assistance agreements?
33.304 Must a Native American (either as an individual, 
organization, Tribe or Tribal Government) recipient or prime 
contractor follow the six good faith efforts?
Subpart D--Fair Share Objectives
33.401 What does this subpart require?
33.402 Are there special rules for loans under EPA financial 
assistance agreements?
33.403 What is a fair share objective?
33.404 When must a recipient negotiate fair share objectives with 
EPA?
33.405 How does a recipient determine its fair share objectives?
33.406 May a recipient designate a lead agency for fair share 
objective negotiation purposes?
33.407 How long do MBE and WBE fair share objectives remain in 
effect?
33.408 May a recipient use race and/or gender conscious measures as 
part of this program?
33.409 May a recipient use quotas as part of this program?
33.410 Can a recipient be penalized for failing to meet its fair 
share objectives?
33.411 Who may be exempted from this subpart?
33.412 Must an Insular Area or Indian Tribal Government recipient 
negotiate fair share objectives?
Subpart E--Recordkeeping and Reporting
33.501 What are the recordkeeping requirements of this part?
33.502 What are the reporting requirement of this part?
33.503 How does a recipient calculate MBE and WBE participation for 
reporting purposes?
Appendix to Part 33--Term and Condition

    Authority: 42 U.S.C. 7601 note, 42 U.S.C. 4370d, 15 U.S.C. 637 
note, 42 U.S.C. 9605(f); E.O. 11625, 36 FR 19967, 3 CFR, 1971 Comp., 
p. 213; E.O. 12138, 49 FR 29637, 3 CFR, 1979 Comp., p. 393; E.O. 
12432, 48 FR 32551, 3 CFR, 1983 Comp., p. 198.

Subpart A--General Provisions


Sec.  33.101  What are the objectives of this part?

    The objectives of this part are:
    (a) To ensure nondiscrimination in the award of contracts under EPA 
financial assistance agreements;
    (b) To ensure that EPA's DBE Program is narrowly tailored in 
accordance with applicable law;
    (c) To help remove barriers to the participation of DBEs in the 
award of contracts under EPA financial assistance agreements; and
    (d) To provide appropriate flexibility to recipients of EPA 
financial assistance in establishing and providing contracting 
opportunities for DBEs.


Sec.  33.102  When do the requirements of this part apply?

    The requirements of this part apply to procurement under EPA 
financial assistance agreements performed entirely within the United 
States, whether by a recipient or its prime contractor, for 
construction, equipment, services and supplies.


Sec.  33.103  What do the terms in this part mean?

    Terms not defined below shall have the meaning given to them in 40 
CFR part 30, part 31 and part 35 as applicable. As used in this part:
    Availability analysis means documentation of the availability of 
MBEs and WBEs in the relevant geographic market in relation to the 
total number of firms available in that area.
    Award official means the EPA Regional or Headquarters official 
delegated the authority to execute financial assistance agreements on 
behalf of EPA.

[[Page 43843]]

    Broker means a firm that does not itself perform, manage or 
supervise the work of its contract or subcontract in a manner 
consistent with the normal business practices for contractors or 
subcontractors in its line of business.
    Business, business concern or business enterprise means an entity 
organized for profit with a place of business located in the United 
States, and which operates primarily within the United States or which 
makes a significant contribution to the United States economy through 
payment of taxes or use of American products, materials or labor.
    Construction means erection, alteration, or repair (including 
dredging, excavating, and painting) of buildings, structures, or other 
improvements to real property, and activities in response to a release 
or a threat of a release of a hazardous substance into the environment, 
or activities to prevent the introduction of a hazardous substance into 
a water supply.
    Disabled American means, with respect to an individual, permanent 
or temporary physical or mental impairment that substantially limits 
one or more of the major life activities of such an individual; a 
record of such an impairment; or being regarded as having such an 
impairment.
    Disadvantaged Business Enterprise (DBE) means an entity owned or 
controlled by a socially and economically disadvantaged individual as 
described by Public Law 102-389 (42 U.S.C. 4370d) or an entity owned 
and controlled by a socially and economically disadvantaged individual 
as described by Title X of the Clean Air Act Amendments of 1990 (42 
U.S.C. 7601 note); a Small Business Enterprise (SBE); a Small Business 
in a Rural Area (SBRA); or a Labor Surplus Area Firm (LSAF), a 
Historically Underutilized Business (HUB) Zone Small Business Concern, 
or a concern under a successor program.
    Disparity study means a comparison within the preceding ten years 
of the available MBEs and WBEs in a relevant geographic market with 
their actual usage by entities procuring in the categories of 
construction, equipment, services and supplies.
    EPA Private Certifier means an organization or business concern 
approved by EPA's Office of Small and Disadvantaged Business 
Utilization (OSDBU) to assist in EPA OSDBU's determination of whether 
an entity is owned and/or controlled by one or more individuals 
claiming disadvantaged status.
    Equipment means items procured under a financial assistance 
agreement as defined by applicable regulations (for example 40 CFR 30.2 
and 40 CFR 31.3) for the particular type of financial assistance 
received.
    Fair share objective means an objective expressing the percentage 
of MBE or WBE utilization expected absent the effects of 
discrimination.
    Financial assistance agreement means grants or cooperative 
agreements awarded by EPA. The term includes grants or cooperative 
agreements used to capitalize revolving loan funds, including, but not 
limited to, the Clean Water State Revolving Loan Fund (CWSRF) Program 
under Title VI of the Clean Water Act, as amended, 33 U.S.C. 1381 et. 
seq., the Drinking Water State Revolving Fund (DWSRF) Program under 
section 1452 of the Safe Drinking Water Act, 42 U.S.C. 300j-12, and the 
Brownfields Cleanup Revolving Loan Fund (BCRLF) Program under section 
104 of the Comprehensive Environmental Response, Compensation and 
Liability Act, 42 U.S.C. 9604.
    Good faith efforts means the race and/or gender neutral measures 
described in Subpart C of this part.
    Historically Black College or University (HBCU) means an 
institution determined by the Secretary of Education to meet the 
requirements of 34 CFR part 608.
    HUBZone means a historically underutilized business zone, which is 
an area located within one or more qualified census tracts, qualified 
metropolitan counties, or lands within the external boundaries of an 
Indian reservation.
    HUBZone Small Business Concern means a small business concern that 
appears on the List of Qualified HUBZone Small Business Concerns 
maintained by the Small Business Administration.
    Identified loan means a loan project or set-aside activity 
receiving assistance from a recipient of an EPA financial assistance 
agreement to capitalize a revolving loan fund, which:
    (1) In the case of the CWSRF Program, is a project funded from 
amounts equal to the capitalization grant;
    (2) In the case of the DWSRF Program, is a loan project or set-
aside activity funded from amounts up to the amount of the 
capitalization grant; or
    (3) In the case of the BCRLF Program, is a project that has been 
funded with EPA financial assistance.
    Insular area means the Commonwealth of Puerto Rico or any territory 
or possession of the United States.
    Joint venture means an association of two or more concerns to carry 
out a single, for-profit business enterprise, for which the parties 
combine their property, capital, efforts, skills and knowledge.
    Labor Surplus Area Firm (LSAF) means a concern that together with 
its first-tier subcontractors will perform substantially in labor 
surplus areas (as identified by the Department of Labor in accordance 
with 20 CFR part 654). Performance is substantially in labor surplus 
areas if the costs incurred under the contract on account of 
manufacturing, production or performance of appropriate services in 
labor surplus areas exceed 50 percent of the contract price.
    Minority Business Enterprise (MBE) means a Disadvantaged Business 
Enterprise (DBE) other than a Small Business Enterprise (SBE), a Labor 
Surplus Area Firm (LSAF), a Small Business in Rural Areas (SBRA), or a 
Women's Business Enterprise (WBE).
    Minority institution means an accredited college or university 
whose enrollment of a single designated group or a combination of 
designated groups (as defined by the Small Business Administration 
regulations at 13 CFR part 124) exceeds 50% of the total enrollment.
    Native American means any individual who is an American Indian, 
Eskimo, Aleut, or Native Hawaiian.
    Recipient means an entity that receives an EPA financial assistance 
agreement or is a subrecipient of such agreement.
    Services means a contractor's labor, time or efforts provided in a 
manner consistent with normal business practices which do not involve 
the delivery of a specific end item, other than documents (e.g., 
reports, design drawings, specifications).
    Small business, small business concern or Small Business Enterprise 
(SBE) means a concern, including its affiliates, that is independently 
owned and operated, not dominant in the field of operation in which it 
is bidding, and qualified as a small business under the criteria and 
size standards in 13 CFR part 121.
    Small Business in a Rural Area (SBRA) means a small business 
operating in an area identified as a rural county with a code 6-9 in 
the Rural-Urban continuum Classification Code developed by the United 
States Department of Agriculture in 1980.
    Supplies means items procured under a financial assistance 
agreement as defined by applicable regulations for the particular type 
of financial assistance received.
    United States means any of the several States, the District of 
Columbia, the Commonwealth of Puerto Rico and

[[Page 43844]]

any other territories and possessions of the United States.
    Women's Business Enterprise (WBE) means a business concern which is 
at least 51% owned or controlled by women for purposes of EPA's 8% 
statute or a business concern which is at least 51% owned and 
controlled by women for purposes for EPA's 10% statute. Determination 
of ownership by a married woman in a community property jurisdiction 
will not be affected by her husband's 50 percent interest in her share. 
Similarly, a business concern which is more than 50 percent owned by a 
married man will not become a qualified WBE by virtue of his wife's 50 
percent interest in his share.


Sec.  33.104  May a recipient apply for a waiver from the requirements 
of this part?

    (a) A recipient may apply for a waiver from any of the requirements 
of this part that are not specifically based on a statute or Executive 
Order, by submitting a written request to the Director of the Office of 
Small and Disadvantaged Business Utilization (OSDBU Director).
    (b) The request must document special or exceptional circumstances 
that make compliance with the requirement impractical, including a 
specific proposal addressing how the recipient intends to achieve the 
objectives of this part as described in Sec.  33.101. The request must 
show that:
    (1) There is a reasonable basis to conclude that the recipient 
could achieve a level of MBE and WBE participation consistent with the 
objectives of this part using different or innovative means other than 
those that are provided in subparts C or D of this part;
    (2) Conditions in the recipient's jurisdiction are appropriate for 
implementing the request; and
    (3) The request is consistent with applicable law.
    (c) The OSDBU Director has the authority to approve a recipient's 
request. If the OSDBU Director grants a recipient's request, the 
recipient may administer its program as provided in the request, 
subject to the following conditions:
    (1) The recipient's level of MBE and WBE participation continues to 
be consistent with the objectives of this part;
    (2) There is a reasonable limitation on the duration of the 
recipient's modified program; and
    (3) Any other conditions the OSDBU Director makes on the grant of 
the waiver.
    (d) The OSDBU Director may end a program waiver at any time upon 
notice to the recipient and require a recipient to comply with the 
provisions of this part. The OSDBU Director may also extend the waiver 
if he or she determines that all requirements of paragraphs (b) and (c) 
of this section continue to be met. Any such extension shall be for no 
longer than the period originally set for the duration of the program 
waiver.


Sec.  33.105  What are the compliance and enforcement provisions of 
this part?

    If a recipient fails to comply with any of the requirements of this 
part, EPA may take remedial action under 40 CFR parts 30, 31 or 35, as 
appropriate, or any other action authorized by law, including, but not 
limited to, enforcement under 18 U.S.C. 1001 and/or the Program Fraud 
Civil Remedies Act of 1986 (31 U.S.C. 3801 et seq.).


Sec.  33.106  What assurances must EPA financial assistance recipients 
obtain from their contractors?

    The recipient must ensure that each procurement contract it awards 
contains the term and condition specified in the appendix to this part 
concerning compliance with the requirements of this part. The recipient 
must also ensure that this term and condition is included in each 
procurement contract awarded by an entity receiving an identified loan 
under a financial assistance agreement to capitalize a revolving loan 
fund.


Sec.  33.107  What are the rules governing availability of records, 
cooperation, and intimidation and retaliation?

    (a) Availability of records. (1) In responding to requests for 
information concerning any aspect of EPA's DBE Program, EPA complies 
with the provisions of the Federal Freedom of Information and Privacy 
Acts (5 U.S.C. 552 and 552a). EPA may make available to the public any 
information concerning EPA's DBE Program release of which is not 
prohibited by Federal law or regulation, including EPA's Confidential 
Business Information regulations at 40 CFR part 2, subpart B.
    (2) EPA recipients shall safeguard from disclosure to unauthorized 
persons information that may reasonably be considered as confidential 
business information, consistent with Federal, state, and local law.
    (b) Cooperation. All participants in EPA's DBE Program are required 
to cooperate fully and promptly with EPA, EPA Private Certifier and EPA 
recipient reviews, investigations, and other requests for information. 
Failure to do so shall be a ground for appropriate action against the 
party involved in accordance with Sec.  33.105.
    (c) Intimidation and retaliation. A recipient, contractor, or any 
other participant in EPA's DBE Program must not intimidate, threaten, 
coerce, or discriminate against any individual or firm for the purpose 
of interfering with any right or privilege secured by this Part. 
Violation of this prohibition shall be a ground for appropriate action 
against the party involved in accordance with Sec.  33.105.

Subpart B--Certification


Sec.  33.201  What does this subpart require?

    (a) In order to participate as an MBE or WBE prime or subcontractor 
for EPA recipients under EPA's DBE Program, an entity must be properly 
certified.
    (b) EPA's DBE Program is primarily based on two statutes. Public 
Law 102-389, 42 U.S.C. 4370d, provides for an 8% objective for awarding 
contracts under EPA financial assistance agreements to business 
concerns or other organizations owned or controlled by socially and 
economically disadvantaged individuals, including HBCUs and women 
(``EPA's 8% statute''). Title X of the Clean Air Act Amendments of 
1990, 42 U.S.C. 7601 note, provides for a 10% objective for awarding 
contracts under EPA financial assistance agreements for research 
relating to such amendments to business concerns or other organizations 
owned and controlled by socially and economically disadvantaged 
individuals (``EPA's 10% statute'').


Sec.  33.202  How does an entity qualify as an MBE or WBE under EPA's 
8% statute?

    To qualify as an MBE or WBE under EPA's 8% statute, an entity must 
establish that it is owned or controlled by socially and economically 
disadvantaged individuals who are of good character and citizens of the 
United States. An entity need not demonstrate potential for success.
    (a) Ownership or control. ``Ownership'' and ``control'' shall have 
the same meanings as set forth in 13 CFR 124.105 and 13 CFR 124.106, 
respectively. (See also 13 CFR 124.109 for special rules applicable to 
Indian tribes and Alaska Native Corporations; 13 CFR 124.110 for 
special rules applicable to Native Hawaiian Organizations).
    (b) Socially disadvantaged individual. A socially disadvantaged 
individual is a person who has been subjected to racial or ethnic 
prejudice or cultural bias because of his or her identity as a member 
of a group without regard to his or her individual qualities and as 
further defined by the implementing regulations of section 8(a)(5) of 
the

[[Page 43845]]

Small Business Act (15 U.S.C. 637(a)(5); 13 CFR 124.103; see also 13 
CFR 124.109 for special rules applicable to Indian tribes and Alaska 
Native Corporations; 13 CFR 124.110 for special rules applicable to 
Native Hawaiian Organizations).
    (c) Economically disadvantaged individual. An economically 
disadvantaged individual is a socially disadvantaged individual whose 
ability to compete in the free enterprise system is impaired due to 
diminished capital and credit opportunities, as compared to others in 
the same business area who are not socially disadvantaged and as 
further defined by section 8(a)(6) of the Small Business Act (15 U.S.C. 
637(a)(6)) and its implementing regulations (13 CFR 124.104). (See also 
13 CFR 124.109 for special rules applicable to Indian tribes and Alaska 
Native Corporations; 13 CFR 124.110 for special rules applicable to 
Native Hawaiian Organizations). Under EPA's DBE Program, an individual 
claiming disadvantaged status must have an initial and continued 
personal net worth of less than $750,000.
    (d) HBCU. An HBCU automatically qualifies as an entity owned or 
controlled by socially and economically disadvantaged individuals.
    (e) Women. Women are deemed to be socially and economically 
disadvantaged individuals. Ownership or control must be demonstrated 
pursuant to paragraph (a) of this section, which may be accomplished by 
certification under Sec.  33.204.


Sec.  33.203  How does an entity qualify as an MBE or WBE under EPA's 
10% statute?

    To qualify as an MBE or WBE under EPA's 10% statute, an entity must 
establish that it is owned and controlled by socially and economically 
disadvantaged individuals who are of good character and citizens of the 
United States.
    (a) Ownership and control. An entity must be at least 51% owned by 
a socially and economically disadvantaged individual, or in the case of 
a publicly traded company, at least 51% of the stock must be owned by 
one or more socially and economically disadvantaged individuals, and 
the management and daily business operations of the business concern 
must be controlled by such individuals. (See also 13 CFR 124.109 for 
special rules applicable to Indian tribes and Alaska Native 
Corporations; 13 CFR 124.110 for special rules applicable to Native 
Hawaiian Organizations).
    (b) Socially disadvantaged individual. A socially disadvantaged 
individual is a person who has been subjected to racial or ethnic 
prejudice or cultural bias because of his or her identity as a member 
of a group without regard to his or her individual qualities and as 
further defined by the implementing regulations of section 8(a)(5) of 
the Small Business Act (15 U.S.C. 637(a)(5); 13 CFR 124.103; see also 
13 CFR 124.109 for special rules applicable to Indian tribes and Alaska 
Native Corporations; 13 CFR 124.110 for special rules applicable to 
Native Hawaiian Organizations).
    (c) Economically disadvantaged individual. An economically 
disadvantaged individual is a socially disadvantaged individual whose 
ability to compete in the free enterprise system is impaired due to 
diminished capital and credit opportunities, as compared to others in 
the same business area who are not socially disadvantaged and as 
further defined by section 8(a)(6) of the Small Business Act (15 U.S.C. 
637(a)(6)) and its implementing regulations (13 CFR 124.104). (See also 
13 CFR 124.109 for special rules applicable to Indian tribes and Alaska 
Native Corporations; 13 CFR 124.110 for special rules applicable to 
Native Hawaiian Organizations). Under EPA's DBE Program, an individual 
claiming disadvantaged status must have an initial and continued 
personal net worth of less than $750,000.
    (d) Presumptions. In accordance with Title X of the Clean Air Act 
Amendments of 1990, 42 U.S.C. 7601 note, Black Americans, Hispanic 
Americans, Native Americans, Asian Americans, Women and Disabled 
Americans are presumed to be socially and economically disadvantaged 
individuals. In addition, the following institutions are presumed to be 
entities owned and controlled by socially and economically 
disadvantaged individuals: HBCUs, Minority Institutions (including 
Tribal Colleges and Universities and Hispanic-Serving Institutions) and 
private and voluntary organizations controlled by individuals who are 
socially and economically disadvantaged.
    (e) Individuals not members of designated groups. Nothing in this 
section shall prohibit any member of a racial or ethnic group that is 
not designated as socially and economically disadvantaged under 
paragraph (d) of this section from establishing that they have been 
impeded in developing a business concern as a result of racial or 
ethnic discrimination.
    (f) Rebuttal of presumptions. The presumptions established by 
paragraph (d) of this section may be rebutted in accordance with Sec.  
33.209 with respect to a particular entity if it is reasonably 
established that the individual at issue is not experiencing 
impediments to developing such entity as a result of the individual's 
identification as a member of a specified group.
    (g) Joint ventures. (1) A joint venture may be considered owned and 
controlled by socially and economically disadvantaged individuals, 
notwithstanding the size of such joint venture, if a party to the joint 
venture is an entity that is owned and controlled by a socially and 
economically disadvantaged individual.
    (2) A person who is not an economically disadvantaged individual or 
an entity owned and controlled by a socially and economically 
disadvantaged individual, as a party to a joint venture, may not be a 
party to more than two awarded contracts in a fiscal year solely by 
reason of paragraph (g)(1) of this section.


Sec.  33.204  Where does an entity become certified under EPA's 8% and 
10% statutes?

    (a) In order to participate as an MBE or WBE prime or subcontractor 
for EPA recipients under EPA's DBE Program, an entity should first 
attempt to become certified by the following:
    (1) The United States Small Business Administration (SBA), under 
its 8(a) Business Development Program (13 CFR part 124, subpart A) or 
its Small Disadvantaged Business (SDB) Program, (13 CFR part 124, 
subpart B);
    (2) The United States Department of Transportation (DOT), under its 
regulations for Participation by Disadvantaged Business Enterprises in 
DOT Programs (49 CFR parts 23 and 26); or
    (3) an Indian Tribal Government, State Government, local Government 
or independent private organization in accordance with EPA's 8% or 10% 
statute as applicable.
    (4) Such certifications shall be considered acceptable for 
establishing MBE or WBE status, as appropriate, under EPA's DBE Program 
so long as the certification meets EPA's U.S. citizenship requirement 
under Sec.  33.202 or Sec.  33.203. An entity may only apply to EPA for 
MBE or WBE certification under the procedures set forth in Sec.  33.205 
if that entity first is unable to obtain MBE or WBE certification under 
paragraphs (a) (1) through (3) of this section.
    (b) [Reserved].


Sec.  33.205  How does an entity become certified by EPA?

    (a) Filing an application. In accordance with Sec.  33.204, an 
entity may apply to EPA's Office of Small and Disadvantaged Business 
Utilization (EPA OSDBU) for certification as an

[[Page 43846]]

MBE or WBE. EPA's Regional Offices will provide further information and 
required application forms to any entity interested in MBE or WBE 
certification. In order to become certified as an MBE or WBE, an entity 
may apply to EPA OSDBU or, if directed by EPA OSDBU, to an EPA Private 
Certifier. The applicant must attest to the accuracy and truthfulness 
of the information on the application form. This shall be done either 
in the form of an affidavit sworn to by the applicant before a person 
who is authorized by state law to administer oaths or in the form of an 
unsworn declaration executed under penalty of perjury of the laws of 
the United States. The application must include evidence demonstrating 
that the entity is owned or controlled by one or more individuals 
claiming disadvantaged status under EPA's 8% statute or owned and 
controlled by one or more individuals claiming disadvantaged status 
under EPA's 10% statute, along with certifications or narratives 
regarding the disadvantaged status of such individuals. In addition, 
the application must include documentation of a denial of certification 
by a Federal agency, State government, local government, Indian Tribal 
government, or independent private organization, if applicable.
    (b) Application processing. EPA OSDBU or an EPA Private Certifier 
will advise each applicant within 15 days, whenever practicable, after 
receipt of an application whether the application is complete and 
suitable for evaluation and, if not, what additional information or 
action is required. EPA OSDBU shall make its certification decision 
within 30 days of receipt of a complete and suitable application 
package, whenever practicable. The burden is on the applicant to 
demonstrate that those individuals claiming disadvantaged status own or 
control the entity under EPA's 8% statute or own and control the entity 
under EPA's 10% statute.
    (c) Ownership and/or control determination. EPA OSDBU first will 
determine whether those individuals claiming disadvantaged status own 
or control the applicant entity under EPA's 8% statute or own and 
control the applicant entity under EPA's 10% statute. If EPA OSDBU 
determines that the applicant does not meet the ownership and/or 
control requirements of this Subpart, EPA OSDBU will issue a written 
decision to the entity rejecting the application and set forth the 
reasons for disapproval.
    (d) Disadvantaged determination. Once EPA OSDBU determines whether 
an applicant meets the ownership and/or control requirements of this 
subpart, EPA OSDBU will determine whether the applicable disadvantaged 
status requirements under EPA's 8% or 10% statute have been met. If EPA 
OSDBU determines that the applicable disadvantaged status requirements 
have been met, EPA OSDBU shall notify the applicant that it has been 
certified and place the MBE or WBE on EPA OSDBU's list of qualified 
MBEs and WBEs. If EPA OSDBU determines that the applicable 
disadvantaged status requirements have not been met, EPA OSDBU will 
reject the entity's application for certification. EPA OSDBU will issue 
a written decision to the entity setting forth EPA OSDBU's reasons for 
disapproval.
    (e) Evaluation standards. (1) An entity's eligibility shall be 
evaluated on the basis of present circumstances. An entity shall not be 
denied certification based solely on historical information indicating 
a lack of ownership and/or control of the firm by socially and 
economically disadvantaged individuals at some time in the past, if the 
entity currently meets the ownership and/or control standards of this 
Subpart.
    (2) Entities seeking MBE or WBE certification shall cooperate fully 
with requests for information relevant to the certification process. 
Failure or refusal to provide such information is a ground for denial 
of certification.
    (3) In making its certification determination, EPA OSDBU may 
consider whether an entity has exhibited a pattern of conduct 
indicating its involvement in attempts to evade or subvert the intent 
or requirements of the DBE Program.
    (4) EPA OSDBU shall not consider the issue of whether an entity 
performs a commercially useful function in making its certification 
determination. Consideration of whether an entity performs a 
commercially useful function or is a regular dealer pertains solely to 
counting toward MBE and WBE objectives as provided in subpart E of this 
part.
    (5) Information gathered as part of the certification process that 
may reasonably be regarded as proprietary or other confidential 
business information will be safeguarded from disclosure to 
unauthorized persons, consistent with applicable Federal, State, and 
local law.
    (6) To assist in making EPA OSDBU's certification determination, 
EPA OSDBU itself, or through an EPA Private Certifier, may take the 
following steps:
    (i) Perform an on-site visit to the offices of the entity. 
Interview the principal officers of the entity and review their resumes 
and/or work histories. Perform an on-site visit to local job sites if 
there are such sites on which the entity is working at the time of the 
certification investigation. Already existing site visit reports may be 
relied upon in making the certification;
    (ii) If the entity is a corporation, analyze the ownership of stock 
in the entity;
    (iii) Analyze the bonding and financial capacity of the entity;
    (iv) Determine the work history of the entity, including contracts 
it has received and work it has completed;
    (v) Obtain a statement from the entity of the type of work it 
prefers to perform for EPA recipients under the DBE Program and its 
preferred locations for performing the work, if any, and;
    (vi) Obtain or compile a list of the equipment owned by or 
available to the entity and the licenses the entity and its key 
personnel possess to perform the work it seeks to do for EPA recipients 
under the DBE Program.


Sec.  33.206  Is there a list of certified MBEs and WBEs?

    EPA OSDBU will maintain a list of certified MBEs and WBEs on EPA 
OSDBU's Home Page on the Internet. Any interested person may also 
obtain a copy of the list from EPA OSDBU.


Sec.  33.207  Can an entity reapply to EPA for MBE or WBE 
certification?

    An entity which has been denied MBE or WBE certification may 
reapply for certification at any time 12 months or more after the date 
of the most recent determination by EPA OSDBU to decline the 
application.


Sec.  33.208  How long does an MBE or WBE certification from EPA last?

    Once EPA OSDBU certifies an entity to be an MBE or WBE by placing 
it on the EPA OSDBU list of certified MBEs and WBEs specified in Sec.  
33.206, the entity will generally remain on the list for a period of 
three years from the date of its certification. To remain on the list 
after three years, an entity must submit a new application and receive 
a new certification.


Sec.  33.209  Can EPA re-evaluate the MBE or WBE status of an entity 
after EPA certifies it to be an MBE or WBE?

    (a) EPA OSDBU may initiate a certification determination whenever 
it receives credible information calling into question an entity's 
eligibility as an MBE or WBE. Upon its completion of a certification 
determination, EPA OSDBU will issue a written determination regarding 
the MBE or WBE status of the questioned entity.
    (b) If EPA OSDBU finds that the entity does not qualify as an MBE 
or WBE, EPA OSDBU will decertify the entity as

[[Page 43847]]

an MBE or WBE, and immediately remove the entity from the EPA OSDBU 
list of certified MBEs and WBEs.
    (c) If EPA OSDBU finds that the entity continues to qualify as an 
MBE or WBE, the determination remains in effect for three years from 
the date of the decision under the same conditions as if the entity had 
been granted MBE or WBE certification under Sec.  33.205.


Sec.  33.210  Does an entity certified as an MBE or WBE by EPA need to 
keep EPA informed of any changes which may affect the entity's 
certification?

    (a) An entity certified as an MBE or WBE by EPA OSDBU must provide 
EPA OSDBU, every year on the anniversary of the date of its 
certification, an affidavit sworn to by the entity's owners before a 
person who is authorized by state law to administer oaths or an unsworn 
declaration executed under penalty of perjury of the laws of the United 
States. This affidavit must affirm that there have been no changes in 
the entity's circumstances affecting its ability to meet disadvantaged 
status, ownership, and/or control requirements of this subpart or any 
material changes in the information provided in its application form. 
Failure to comply may result in the loss of MBE or WBE certification 
under EPA's DBE Program.
    (b) An entity certified as an MBE or WBE by EPA OSDBU must inform 
EPA OSDBU in writing of any change in circumstance affecting the MBE or 
WBE's ability to meet disadvantaged status, ownership, and/or control 
requirements of this subpart or any material change in the information 
provided in its application form. The MBE or WBE must attach supporting 
documentation describing in detail the nature of such change. The 
notice from the MBE or WBE must take the form of an affidavit sworn to 
by the applicant before a person who is authorized by State law to 
administer oaths or of an unsworn declaration executed under penalty of 
perjury of the laws of the United States. The MBE or WBE must provide 
the written notification within 30 calendar days of the occurrence of 
the change.


Sec.  33.211  What is an EPA Private Certifier?

    An EPA Private Certifier is an organization or business concern 
assisting EPA OSDBU in its determination of whether an entity applying 
for MBE or WBE certification is owned and/or controlled by one or more 
individuals claiming disadvantaged status. EPA OSDBU may elect to 
arrange for one or more EPA Private Certifiers to perform certain 
functions in the certification process; however the determination as to 
whether an entity will be certified as an MBE or WBE under this program 
shall only be made by EPA OSDBU. If EPA OSDBU elects to use EPA Private 
Certifiers to perform certain functions in the certification process, 
the provisions of Sec. Sec.  33.212 through 33.214 will apply to those 
EPA Private Certifiers. EPA OSDBU may establish more detailed standards 
regarding qualifications, monitoring, procedures and use, if any, of 
EPA Private Certifiers in specific contracts or agreements between EPA 
and the EPA Private Certifiers.


Sec.  33.212  Can an EPA Private Certifier charge a fee to an entity to 
process the entity's application for MBE or WBE certification?

    With EPA OSDBU's approval, an EPA Private Certifier may charge a 
reasonable fee to an entity in order to screen the entity's application 
for completeness. The fee must be for actual services rendered and must 
not be related to whether or not the entity is found to be owned and/or 
controlled by one or more individuals claiming disadvantaged status.


Sec.  33.213  How does an organization or business concern become an 
EPA Private Certifier?

    (a) EPA may execute contracts or agreements with organizations or 
business concerns seeking to become EPA Private Certifiers. Any such 
contract or agreement will include provisions for the oversight, 
monitoring, and evaluation of all certification related activities by 
EPA.
    (b) The organization or business concern must demonstrate a 
knowledge of EPA and SBA regulations regarding ownership and control, 
as well as business organizations and the legal principles affecting 
their ownership and control generally, including stock issuances, 
voting rights, convertibility of debt to equity, options, and powers 
and responsibilities of officers and directors, general and limited 
partners, and limited liability members.
    (c) The organization or business concern must also, along with its 
principals, demonstrate good character. Good character does not exist 
for these purposes if the organization or concern or any of its 
principals:
    (1) Is debarred or suspended under any Federal procurement or non-
procurement debarment and suspension regulations; or
    (2) Has been indicted or convicted for any criminal offense or 
suffered a civil judgment indicating a lack of business integrity.
    (d) As a condition of approval, EPA may require that appropriate 
officers and/or key employees of the organization or business concern 
attend a training session on EPA and SBA rules and requirements.
    (e) An organization or business concern seeking to become an EPA 
Private Certifier must agree to provide access to EPA of its books and 
records when requested, including records pertaining to its 
certification related activities.
    (f) EPA will include in any contract or agreement document 
authorizing an organization or business concern to act as an EPA 
Private Certifier appropriate conditions to prohibit conflicts of 
interests between the EPA Private Certifier and the entities for which 
it processes MBE or WBE certifications.


Sec.  33.214  How long may an organization or business concern be an 
EPA Private Certifier?

    (a) EPA's contract or agreement with the EPA Private Certifier will 
specify how long the organization or business concern may be an EPA 
Private Certifier.
    (b) EPA may terminate a contract or agreement with an organization 
or business concern which is an EPA Private Certifier for the 
convenience of the Government at any time, and may terminate the 
contract or agreement for default where appropriate. Specific grounds 
for termination for default include, but are not limited to:
    (1) Charging improper, unreasonable or contingent fees in violation 
of Sec.  33.212; or
    (2) Engaging in prohibited business transactions with firms for 
which it processes MBE or WBE certification applications in violation 
of Sec.  33.213(f).


Sec.  33.215  Is there a list of EPA Private Certifiers?

    EPA OSDBU will maintain a list of approved EPA Private Certifiers 
on EPA OSDBU's Home Page on the Internet. Any interested person may 
also obtain a copy of the list from EPA's OSDBU. The list is available 
at: www.epa.gov/osdbu.


Sec.  33.216  What is the process for appealing or challenging an EPA 
MBE or WBE certification determination?

    (a) An entity which has been denied MBE or WBE certification by EPA 
OSDBU under Sec.  33.205 or Sec.  33.209 may appeal that denial. A 
third party may challenge EPA OSDBU's determination to certify an 
entity as an MBE or WBE under Sec.  33.205 or Sec.  33.209.
    (b) Appeals and challenges must be sent to the Director of OSDBU at 
Environmental Protection Agency, 1200 Pennsylvania Avenue, NW., Mail 
Code 1230A, Washington, DC 20460.

[[Page 43848]]

    (c) The appeal or challenge must be sent to the Director of OSDBU 
(Director) within 90 days of the date of EPA OSDBU's MBE or WBE 
certification determination. The Director may accept an appeal or 
challenge filed later than 90 days after the date of EPA OSDBU's MBE or 
WBE certification determination if the Director determines that there 
was good cause, beyond the control of the appellant or challenger, for 
the late filing of the appeal or challenge.
    (d) No specific format is required for an appeal or challenge. 
However, the appeal or challenge must include information and arguments 
concerning why EPA OSDBU's MBE or WBE certification determination 
should be reversed. For challenges in which a third party questions EPA 
OSDBU's determination to certify an entity as an MBE or WBE under Sec.  
33.205 or Sec.  33.209, the third party must also send a copy of the 
challenge to the entity whose MBE or WBE certification is being 
questioned. In addition, the Director shall request information and 
arguments from that entity as to why EPA OSDBU's determination to 
certify the entity as an MBE or WBE should be upheld.
    (e) The Director makes his/her appeal or challenge decision based 
solely on the administrative record and does not conduct a hearing. The 
Director may supplement the record by adding relevant information made 
available by any other source, including the EPA Office of Inspector 
General; Federal, State, or local law enforcement authorities; an EPA 
recipient; or a private party.
    (f) Consistent with Federal law, the Director shall make available, 
upon the request of the appellant, challenger or the entity affected by 
the Director's appeal or challenge decision, any supplementary 
information the Director receives from any source as described in 
paragraph (e) of this section.
    (g) Pending the Director's appeal or challenge decision, EPA 
OSDBU's MBE or WBE certification determination remains in effect. The 
Director does not stay the effect of its MBE or WBE certification 
determination while he/she is considering an appeal or challenge.
    (h) The Director shall reverse EPA OSDBU's MBE or WBE certification 
determination only if there was a clear and significant error in the 
processing of the certification or if EPA OSDBU failed to consider a 
significant material fact contained within the entity's application for 
MBE or WBE certification.
    (i) All decisions under this section are administratively final.


Sec.  33.217  What conduct is prohibited by this subpart?

    An entity that does not meet the eligibility criteria of this 
subpart may not attempt to participate as an MBE or WBE in contracts 
awarded under EPA financial assistance agreements or be counted as such 
by an EPA recipient. An entity that submits false, fraudulent, or 
deceitful statements or representations or under circumstances 
indicating a serious lack of business integrity or honesty may be 
subject to sanctions under Sec.  33.105.

Subpart C--Good Faith Efforts


Sec.  33.301  What does this subpart require?

    A recipient, including one exempted from applying the fair share 
objective requirements by Sec.  33.411, is required to make the 
following good faith efforts whenever procuring construction, 
equipment, services and supplies under an EPA financial assistance 
agreement, even if it has achieved its fair share objectives under 
subpart D of this part:
    (a) Ensure DBEs are made aware of contracting opportunities to the 
fullest extent practicable through outreach and recruitment activities. 
For Indian Tribal, State and local and Government recipients, this will 
include placing DBEs on solicitation lists and soliciting them whenever 
they are potential sources.
    (b) Make information on forthcoming opportunities available to DBEs 
and arrange time frames for contracts and establish delivery schedules, 
where the requirements permit, in a way that encourages and facilitates 
participation by DBEs in the competitive process. This includes, 
whenever possible, posting solicitations for bids or proposals for a 
minimum of 30 calendar days before the bid or proposal closing date.
    (c) Consider in the contracting process whether firms competing for 
large contracts could subcontract with DBEs. For Indian Tribal, State 
and local Government recipients, this will include dividing total 
requirements when economically feasible into smaller tasks or 
quantities to permit maximum participation by DBEs in the competitive 
process.
    (d) Encourage contracting with a consortium of DBEs when a contract 
is too large for one of these firms to handle individually.
    (e) Use the services and assistance of the SBA and the Minority 
Business Development Agency of the Department of Commerce.
    (f) If the prime contractor awards subcontracts, require the prime 
contractor to take the steps in paragraphs (a) through (e) of this 
section.


Sec.  33.302  Are there any additional contract administration 
requirements?

    (a) A recipient must require its prime contractor to pay its 
subcontractor for satisfactory performance within a specific number of 
days from the prime contractor's receipt of payment from the recipient.
    (b) A recipient must be notified in writing by its prime contractor 
prior to any termination of a DBE subcontractor for convenience by the 
prime contractor.
    (c) If a DBE subcontractor fails to complete work under the 
subcontract for any reason, the recipient must require the prime 
contractor to employ the six good faith efforts described in Sec.  
33.301 if soliciting a replacement subcontractor.
    (d) A recipient must require its prime contractor to employ the six 
good faith efforts described in Sec.  33.301 even if the prime 
contractor has achieved its fair share objectives under subpart D of 
this part.
    (e) A recipient must require its prime contractor to provide EPA 
Form 6100-2--DBE Program Subcontractor Participation Form to all of its 
DBE subcontractors. EPA Form 6100-2 gives a DBE subcontractor the 
opportunity to describe the work the DBE subcontractor received from 
the prime contractor, how much the DBE subcontractor was paid and any 
other concerns the DBE subcontractor might have, for example reasons 
why the DBE subcontractor believes it was terminated by the prime 
contractor. DBE subcontractors may send completed copies of EPA Form 
6100-2 directly to the appropriate EPA DBE Coordinator.
    (f) A recipient must require its prime contractor to have its DBE 
subcontractors complete EPA Form 6100-3--DBE Program Subcontractor 
Performance Form. A recipient must then require its prime contractor to 
include all completed forms as part of the prime contractor's bid or 
proposal package.
    (g) A recipient must require its prime contractor to complete and 
submit EPA Form 6100-4--DBE Program Subcontractor Utilization Form as 
part of the prime contractor's bid or proposal package.
    (h) Copies of EPA Form 6100-2--DBE Program Subcontractor 
Participation Form, EPA Form 6100-3--DBE Program Subcontractor 
Performance Form and EPA Form 6100-4--DBE Program Subcontractor 
Utilization Form may be obtained from EPA OSDBU's Home Page on the 
Internet or directly from EPA OSDBU.

[[Page 43849]]

    (i) A recipient must ensure that each procurement contract it 
awards contains the term and condition specified in the Appendix 
concerning compliance with the requirements of this part. A recipient 
must also ensure that this term and condition is included in each 
procurement contract awarded by an entity receiving an identified loan 
under a financial assistance agreement to capitalize a revolving loan 
fund.


Sec.  33.303  Are there special rules for loans under EPA financial 
assistance agreements?

    A recipient of an EPA financial assistance agreement to capitalize 
a revolving loan fund, such as a State under the CWSRF or DWSRF or an 
eligible entity under the Brownfields Cleanup Revolving Loan Fund 
program, must require that borrowers receiving identified loans comply 
with the good faith efforts described in Sec.  33.301 and the contract 
administration requirements of Sec.  33.302. This provision does not 
require that such private and nonprofit borrowers expend identified 
loan funds in compliance with any other procurement procedures 
contained in 40 CFR part 30, part 31, or part 35, subpart O, as 
applicable.


Sec.  33.304  Must a Native American (either as an individual, 
organization, Tribe or Tribal Government) recipient or prime contractor 
follow the six good faith efforts?

    (a) A Native American (either as an individual, organization, 
corporation, Tribe or Tribal Government) recipient or prime contractor 
must follow the six good faith efforts only if doing so would not 
conflict with existing Tribal or Federal law, including but not limited 
to the Indian Self-Determination and Education Assistance Act (25 
U.S.C. 450e), which establishes, among other things, that any federal 
contract, subcontract, grant, or subgrant awarded to Indian 
organizations or for the benefit of Indians, shall require preference 
in the award of subcontracts and subgrants to Indian organizations and 
to Indian-owned economic enterprises.
    (b) Tribal organizations awarded an EPA financial assistance 
agreement have the ability to solicit and recruit Indian organizations 
and Indian-owned economic enterprises and give them preference in the 
award process prior to undertaking the six good faith efforts. Tribal 
governments with promulgated tribal laws and regulations concerning the 
solicitation and recruitment of Native-owned and other minority 
business enterprises, including women-owned business enterprises, have 
the discretion to utilize these tribal laws and regulations in lieu of 
the six good faith efforts. If the effort to recruit Indian 
organizations and Indian-owned economic enterprises is not successful, 
then the recipient must follow the six good faith efforts. All tribal 
recipients still must retain records documenting compliance in 
accordance with Sec.  33.501 and must report to EPA on their 
accomplishments in accordance with Sec.  33.502.
    (c) Any recipient, whether or not Native American, of an EPA 
financial assistance agreement for the benefit of Native Americans, is 
required to solicit and recruit Indian organizations and Indian-owned 
economic enterprises and give them preference in the award process 
prior to undertaking the six good faith efforts. If the efforts to 
solicit and recruit Indian organizations and Indian-owned economic 
enterprises is not successful, then the recipient must follow the six 
good faith efforts.
    (d) Native Americans are defined in Sec.  33.103 to include 
American Indians, Eskimos, Aleuts and Native Hawaiians.

Subpart D--Fair Share Objectives


Sec.  33.401  What does this subpart require?

    A recipient must negotiate with the appropriate EPA award official, 
or his/her designee, fair share objectives for MBE and WBE 
participation in procurement under the financial assistance agreements.


Sec.  33.402  Are there special rules for loans under EPA financial 
assistance agreements?

    A recipient of an EPA financial assistance agreement to capitalize 
revolving loan funds must either apply its own fair share objectives 
negotiated with EPA under Sec.  33.401 to identified loans using a 
substantially similar relevant geographic market, or negotiate separate 
fair share objectives with entities receiving identified loans, as long 
as such separate objectives are based on demonstrable evidence of 
availability of MBEs and WBEs in accordance with this subpart. If 
procurements will occur over more than one year, the recipient may 
choose to apply the fair share objective in place either for the year 
in which the identified loan is awarded or for the year in which the 
procurement action occurs. The recipient must specify this choice in 
the financial assistance agreement, or incorporate it by reference 
therein.


Sec.  33.403  What is a fair share objective?

    A fair share objective is an objective based on the capacity and 
availability of qualified MBEs and WBEs in the relevant geographic 
market for the procurement categories of construction, equipment, 
services and supplies compared to the number of all qualified entities 
in the same market for the same procurement categories, adjusted, as 
appropriate, to reflect the level of MBE and WBE participation expected 
absent the effects of discrimination. A fair share objective is not a 
quota.


Sec.  33.404  When must a recipient negotiate fair share objectives 
with EPA?

    A recipient must submit its proposed MBE and WBE fair share 
objectives and supporting documentation to EPA within 90 days after its 
acceptance of its financial assistance award. EPA must respond in 
writing to the recipient's submission within 30 days of receipt, either 
agreeing with the submission or providing initial comments for further 
negotiation. Failure to respond within this time frame may be 
considered as agreement by EPA with the fair share objectives submitted 
by the recipient. MBE and WBE fair share objectives must be agreed upon 
by the recipient and EPA before funds may be expended for procurement 
under the recipient's financial assistance agreement.


Sec.  33.405  How does a recipient determine its fair share objectives?

    (a) A recipient must determine its fair share objectives based on 
demonstrable evidence of the number of qualified MBEs and WBEs in the 
relevant geographic market for each of the four procurement categories. 
The relevant geographic market is the area of solicitation for the 
procurement as determined by the recipient. The market may be a 
geographic region of a State, an entire State, or a multi-State area. 
Fair share objectives must reflect the recipient's determination of the 
level of MBE and WBE participation it would expect absent the effects 
of discrimination. A recipient may combine the four procurement 
categories into one weighted objective for MBEs and one weighted 
objective for WBEs.
    (b) Step 1. A recipient must first determine a base figure for the 
relative availability of MBEs and WBEs. The following are examples of 
approaches that a recipient may take. Any percentage figure derived 
from one of these examples should be considered a basis from which a 
recipient begins when examining evidence available in its jurisdiction.
    (1) MBE and WBE directories and Census Bureau data. Separately 
determine the number of qualified MBEs and WBEs in the relevant 
geographic market for each procurement category from a MBE/WBE 
directory, such as a bidder's list. Using the Census Bureau's County 
Business Pattern (CBP)

[[Page 43850]]

data base, determine the number of all qualified businesses available 
in the market that perform work in the same procurement category. 
Separately divide the number of MBEs and WBEs by the number of all 
businesses to derive a base figure for the relative availability of 
MBEs and WBEs in the market.
    (2) Data from a disparity study. Use a percentage figure derived 
from data in a valid, applicable disparity study conducted within the 
preceding ten years comparing the available MBEs and WBEs in the 
relevant geographic market with their actual usage by entities 
procuring in the categories of construction, equipment, services and 
supplies.
    (3) The objective of another EPA recipient. A recipient may use, as 
its base figure, the fair share objectives of another EPA recipient if 
the recipient demonstrates that it will use the same, or substantially 
similar, relevant geographic market as the other EPA recipient. (See 
Sec.  33.411 for exemptions from fair share objective negotiations).
    (4) Alternative methods. Subject to EPA approval, other methods may 
be used to determine a base figure for the overall objective. Any 
methodology chosen must be based on demonstrable evidence of local 
market conditions and be designed to ultimately attain an objective 
that is rationally related to the relative availability of MBEs and 
WBEs in the relevant geographic market.
    (c) Step 2. After calculating a base figure, a recipient must 
examine the evidence available in its jurisdiction to determine what 
adjustment, if any, is needed to the base figure in order to arrive at 
the fair share objective.
    (1) There are many types of evidence that must be considered when 
adjusting the base figure. These include:
    (i) The current capacity of MBEs and WBEs to perform contract work 
under EPA financial assistance agreements, as measured by the volume of 
work MBEs and WBEs have performed in recent years;
    (ii) Evidence from disparity studies conducted anywhere within the 
recipient's jurisdiction, to the extent it is not already accounted for 
in the base figure; and
    (iii) If the base figure is the objective of another EPA recipient, 
it must be adjusted for differences in the local market and the 
recipient's contracting program.
    (2) A recipient may also consider available evidence from related 
fields that affect the opportunities for MBEs and WBEs to form, grow 
and compete. These include, but are not limited to:
    (i) Statistical disparities in the ability of MBEs and WBEs to get 
the financing, bonding and insurance required to participate; and
    (ii) Data on employment, self-employment, education, training and 
union apprenticeship programs, to the extent it can be related to the 
opportunities for MBEs and WBEs to perform in the program.
    (3) If a recipient attempts to make an adjustment to its base 
figure to account for the continuing effects of past discrimination 
(often called the ``but for'' factor) or the effects of another ongoing 
MBE/WBE program, the adjustment must be based on demonstrable evidence 
that is logically and directly related to the effect for which the 
adjustment is sought.


Sec.  33.406  May a recipient designate a lead agency for fair share 
objective negotiation purposes?

    If an Indian Tribal, State or local Government has more than one 
agency that receives EPA financial assistance, the agencies within that 
government may designate a lead agency to negotiate MBE and WBE fair 
share objectives with EPA to be used by each of the agencies. Each 
agency must otherwise negotiate with EPA separately its own MBE and WBE 
fair share objectives.


Sec.  33.407  How long do MBE and WBE fair share objectives remain in 
effect?

    Once MBE and WBE fair share objectives have been negotiated, they 
will remain in effect for three fiscal years unless there are 
significant changes to the data supporting the fair share objectives. 
The fact that a disparity study utilized in negotiating fair share 
objectives has become more than ten years old during the three year 
period does not by itself constitute a significant change requiring 
renegotiation.


Sec.  33.408  May a recipient use race and/or gender conscious measures 
as part of this program?

    (a) Should the good faith efforts described in subpart C of this 
part or other race and/or gender neutral measures prove to be 
inadequate to achieve an established fair share objective, a recipient 
and its prime contractor are encouraged, but not required, to take 
reasonable race and/or gender conscious action, subject to Sec.  
33.409, to more closely achieve the fair share objectives.
    (b) A recipient must notify EPA in advance of any race and/or 
gender conscious action it plans to take. Any use of race and/or gender 
conscious efforts must not result in the selection of an unqualified 
MBE or WBE.


Sec.  33.409  May a recipient use quotas as part of this program?

    A recipient is not permitted to use quotas in procurements under 
EPA's 8% or 10% statute.


Sec.  33.410  Can a recipient be penalized for failing to meet its fair 
share objectives?

    A recipient cannot be penalized, or treated by EPA as being in 
noncompliance with this subpart, solely because its MBE or WBE 
participation does not meet its applicable fair share objective. 
However, EPA may take remedial action under Sec.  33.105 for a 
recipient's failure to comply with other provisions of this part, 
including, but not limited to, the good faith efforts requirements 
described in subpart C of this part.


Sec.  33.411  Who may be exempted from this subpart?

    (a) General. A recipient of an EPA financial assistance agreement 
in the amount of $250,000 or less for any single assistance agreement, 
or of more than one financial assistance agreement with a combined 
total of $250,000 or less in any one fiscal year, is not required to 
apply the fair share objective requirements of this subpart. This 
provision does not exempt such recipients from any other requirements 
of this part.
    (b) Clean Water State Revolving Fund (CWSRF) Program, Drinking 
Water State Revolving Fund (DWSRF) Program, and Brownfields Cleanup 
Revolving Loan Fund (BCRLF) Program identified loan recipients. A 
recipient under the CWSRF, DWSRF, or BCRLF Program is not required to 
apply the fair share objective requirements of this subpart to an 
entity receiving an identified loan in an amount of $250,000 or less or 
to an entity receiving more than one identified loan with a combined 
total of $250,000 or less in any one fiscal year. This provision does 
not exempt such recipients from any other requirements of this part.
    (c) Tribal and Intertribal Consortia recipients of program grants 
which can be included in Performance Partnership Grants (PPGs) under 40 
CFR Part 35, Subpart B. Tribal and Intertribal consortia recipients of 
PPG eligible grants are not required to apply the fair share objective 
requirements of this subpart to those grants.
    (d) Technical Assistance Grant (TAG) Program Recipients. A 
recipient of a TAG is not required to apply the fair share objective 
requirements of this subpart to that grant. This provision does not 
exempt such recipients from any other requirements of this part.

[[Page 43851]]

Sec.  33.412  Must an Insular Area or Indian Tribal Government 
recipient negotiate fair share objectives?

    The requirements in this subpart regarding the negotiation of fair 
share objectives will not apply to an Insular Area or Indian Tribal 
Government recipient until three calendar years after the effective 
date of this part. Furthermore, in accordance with Sec.  33.411(c), 
tribal and intertribal consortia recipients of program grants which can 
be included in Performance Partnership Grants (PPGs) under 40 CFR part 
35, subpart B are not required to apply the fair share objective 
requirements of this subpart to such grants.

Subpart E--Recordkeeping and Reporting


Sec.  33.501  What are the recordkeeping requirements of this part?

    (a) A recipient, including those recipients exempted under Sec.  
33.411 from the requirement to apply the fair share objectives, must 
maintain all records documenting its compliance with the requirements 
of this part, including documentation of its, and its prime 
contractor's, good faith efforts and data relied upon in formulating 
its fair share objectives. Such records must be retained in accordance 
with applicable record retention requirements for the recipient's 
financial assistance agreement.
    (b) A recipient of a Continuing Environmental Program Grant or 
other annual grant must create and maintain a bidders list. Such a list 
must only be kept until the grant project period has expired and the 
recipient is no longer receiving EPA funding under the grant. In 
addition, a recipient of an EPA financial assistance agreement to 
capitalize a revolving loan fund also must require entities receiving 
identified loans to create and maintain a bidders list if the recipient 
of the loan is subject to, or chooses to follow, competitive bidding 
requirements. (See e.g., Sec.  33.303). The purpose of a bidders list 
is to provide the recipient and entities receiving identified loans who 
conduct competitive bidding with as accurate of a database as possible 
about the universe of MBE/WBE and non-MBE/WBE prime and subcontractors. 
Such a list must only be kept until the project period for the 
identified loan has ended. The following information must be obtained 
from all prime and subcontractors: entity name; entity address; 
entity's status as an MBE/WBE.


Sec.  33.502  What are the reporting requirements of this part?

    MBE and WBE participation must be reported by recipients, including 
those recipients exempted under Sec.  33.411 from the requirement to 
apply the fair share objectives, on EPA Form 5700-52A on a quarterly 
basis, except for recipients of Continuing Environmental Program 
Grants, and institutions of higher education, hospitals and other non-
profit organizations receiving financial assistance agreements under 40 
CFR part 30, which report on an annual basis. Recipients of financial 
assistance agreements capitalizing revolving loan funds, including 
those exempted by Sec.  33.411 from the requirement of applying the 
fair share objectives, will continue to report quarterly. Recipients of 
financial assistance agreements that capitalize revolving loan programs 
must require entities receiving identified loans to submit their MBE 
and WBE participation reports on a quarterly basis to the financial 
assistance agreement recipient, rather than to EPA.


Sec.  33.503  How does a recipient calculate MBE and WBE participation 
for reporting purposes?

    (a) General. Amounts of MBE and WBE participation are calculated as 
a percentage of total financial assistance agreement project 
procurement costs, which include the match portion of the project 
costs, if any. For recipients of financial assistance agreements that 
capitalize revolving loan programs, the total amount is the total 
procurement dollars in the amount of identified loans equal to the 
capitalization grant amount.
    (b) Ineligible project costs. If all project costs attributable to 
MBE and WBE participation are not eligible for funding under the EPA 
financial assistance agreement, the recipient may choose to report the 
percentage of MBE and WBE participation based on the total eligible and 
non-eligible costs of the project.
    (c) Joint ventures. For joint ventures, MBE and WBE participation 
consists of the portion of the dollar amount of the joint venture 
attributable to the MBE or WBE. If an MBE's or WBE's risk of loss, 
control or management responsibilities are not commensurate with its 
share of the profit, the Agency may direct an adjustment in the 
percentage of MBE or WBE participation.
    (d) Central purchasing or procurement centers. A recipient must 
report MBE and WBE participation from its central purchasing or 
procurement centers.
    (e) Brokers. A recipient may not count expenditures to a MBE or WBE 
that acts merely as a broker or passive conduit of funds, without 
performing, managing, or supervising the work of its contract or 
subcontract in a manner consistent with normal business practices.
    (1) Presumption. If 50% or more of the total dollar amount of a MBE 
or WBE's prime contract is subcontracted to a non-DBE, the MBE or WBE 
prime contractor will be presumed to be a broker, and no MBE or WBE 
participation may be reported.
    (2) Rebuttal. The MBE or WBE prime contractor may rebut this 
presumption by demonstrating that its actions are consistent with 
normal practices for prime contractors in its business and that it will 
actively perform, manage and supervise the work under the contract.
    (f) MBE or WBE truckers/haulers. A recipient may count expenditures 
to an MBE or WBE trucker/hauler only if the MBE or WBE trucker/hauler 
is performing a commercially useful function. The following factors 
should be used in determining whether an MBE or WBE trucker/hauler is 
performing a commercially useful function:
    (1) The MBE or WBE must be responsible for the management and 
supervision of the entire trucking/hauling operation for which it is 
responsible on a particular contract, and there cannot be a contrived 
arrangement for the purpose of meeting MBE or WBE objectives.
    (2) The MBE or WBE must itself own and operate at least one fully 
licensed, insured, and operational truck used on the contract.

Appendix to Part 33--Term and Condition

    Each procurement contract signed by an EPA financial assistance 
agreement recipient, including those for an identified loan under an 
EPA financial assistance agreement capitalizing a revolving loan 
fund, must include the following term and condition:
    The contractor shall not discriminate on the basis of race, 
color, national origin or sex in the performance of this contract. 
The contractor shall carry out applicable requirements of 40 CFR 
part 33 in the award and administration of contracts awarded under 
EPA financial assistance agreements. Failure by the contractor to 
carry out these requirements is a material breach of this contract 
which may result in the termination of this contract or other 
legally available remedies.

PART 35--[AMENDED]

Subpart E--[Amended]

    6. The authority citation for part 35, subpart E, continues to read 
as follows:

    Authority: Secs. 109(b), 201 through 205, 207, 208(d), 210 
through 212, 215 through

[[Page 43852]]

217, 304(d)(3), 313, 501, 511, and 516(b) of the Clean Water Act, as 
amended, 33 U.S.C. 1251 et seq.


Sec.  35.936-7  [Removed]

    7. Section 35.936-7 is removed.


Sec.  35.938-9  [Amended]

    Section 35.938-9 is amended by removing and reserving paragraph 
(b)(2).

Subpart K--[Amended]

    8. The authority citation for part 35, subpart K, continues to read 
as follows:

    Authority: Sections 205(m), 501(a) and title VI of the Clean 
Water Act, as amended, 42 U.S.C. 1285(m), 33 U.S.C. 1361(a), 33 
U.S.C. 1381-1387.


Sec.  35.3145  [Amended]

    9. Section 35.3145(d) is removed and reserved.


Sec.  35.3145  [Amended]

    10. Section 35.3145(e) is removed.

Subpart L--[Amended]

    11. The authority citation for part 35, subpart L, continues to 
read as follows:

    Authority: Section 1452 of the Safe Drinking Water Act, as 
amended, 42 U.S.C. 300j-12.


Sec.  35.3575  [Amended]

    12. Section 35.3575(d) is removed and reserved.

Subpart M--[Amended]

    13. The authority citation for part 35, subpart M, continues to 
read as follows:

    Authority: 42 U.S.C. 9617(e); sec. 9(g), E.O. 12580, 52 FR 2923, 
3 CFR, 1987 Comp., p. 193.


Sec.  35.4170  [Amended]

    14. Section 35.4170(b) is removed and reserved.


Sec.  35.4205  [Amended]

    15. Section 35.4205(g) is removed.


Sec.  35.4240  [Amended]

    16. Section 35.4240(e) is removed and reserved.

Subpart O--[Amended]

    17. The authority citation for part 35, subpart O, continues to 
read as follows:

    Authority: 42 U.S.C. 9601 et seq.


Sec.  35.6015  [Amended]

    18. Sections 35.6015(a)(26) and (a)(54) are removed and reserved.


Sec.  35.6580  [Removed]

    19. Section 35.6580 is removed.


Sec.  35.6665  [Amended]

    20. Section 35.6665(b) is removed.

PART 40--[AMENDED]

    21. The authority citation for part 40 continues to read as 
follows:

    Authority: Cited in Sec.  40.110.


Sec.  40.145-3  [Amended]

    22. Section 40.145-3(c) is removed and reserved.

[FR Doc. 03-18002 Filed 7-23-03; 8:45 am]
BILLING CODE 6560-50-P