[Federal Register Volume 69, Number 193 (Wednesday, October 6, 2004)]
[Rules and Regulations]
[Pages 59810-59812]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-22523]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 35

[OW-2004-0034; FRL-7825-2]


Revised Allotment Formula for Interstate Monies Appropriated 
Under Section 106 of the Clean Water Act

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This regulation revises the allotment formula for allotting 
funds appropriated under section 106 of the Clean Water Act (CWA) to 
interstate agencies for use in implementing specific elements of Clean 
Water Act programs. Section 106 of the CWA authorizes the Environmental 
Protection Agency (EPA) to provide grants to states, interstate 
agencies, and Indian tribes qualified under CWA section 518(e) to 
assist them in administering programs for the prevention, reduction, 
and elimination of water pollution. The allotment formulas for the 
state and tribal portions of the CWA section 106 Grant Program are not 
affected by this action.

DATES: This regulation is effective October 6, 2004.

ADDRESSES: EPA has established a docket for this action under Docket ID 
No. OW-2004-0034. All documents in the docket are listed in the EDOCKET 
Index at http://www.epa.gov/edocket. Although listed in the index, some 
information is not publicly available, i.e., confidential business 
information (CBI) or other information whose disclosure is restricted 
by statute. Certain other material, such as copyrighted material, is 
not placed on the internet and will be publicly available only in hard 
copy form. Publicly available docket materials are available either 
electronically in EDOCKET or in hard copy at the Water 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 Public Reading Room is (202) 
566-1744, and the telephone number for the Water Docket is (202) 566-
2426.

FOR FURTHER INFORMATION CONTACT: Carol Crow, Office of Wastewater 
Management (4201M), 1200 Pennsylvania Avenue, NW., Washington, DC 
20460. The telephone number is (202) 564-0644; facsimile number (202) 
501-2399; and e-mail address is [email protected].

SUPPLEMENTARY INFORMATION: CWA section 106(a) provides general 
authority for grants to states, interstate agencies, and Indian tribes 
qualified under CWA section 518(e) to assist them in administering 
programs for the prevention, reduction, and elimination of water 
pollution. Section 106(b) of the CWA directs the EPA Administrator to 
make allotments from sums appropriated by Congress in each fiscal year 
``on the basis of the extent of the pollution problem in the respective 
states.'' National data quantifying the extent of the pollution problem 
in each state have increased in reliability and availability since the 
first CWA section 106 grants to states and interstates were made in 
1972. To reflect this improvement, the formulae for making state and 
interstate allocations on the basis of the extent of the pollution 
problem underwent several revisions. The most recent revision was 
published

[[Page 59811]]

as a final rule in the May 3, 1999, Federal Register (64 FR 23734). To 
prevent sudden fluctuations in annual state section 106 grant funding 
that could compromise the effectiveness of state programs, the revised 
formula for allotting funds to the states established a funding floor 
based on each state's previous level of funding. This ``hold harmless'' 
provision ensures that unless there is a decrease in the CWA section 
106 state appropriation, each state will receive at least the same 
level of funding as the previous year.
    The state funding floor is adjusted for inflation when the funds 
appropriated for states under the Water Pollution Control State grant 
program increase from the preceding fiscal year. These adjustments are 
made on the basis of the cumulative change in the Consumer Price Index 
(CPI), published by the U.S. Department of Labor, since the most recent 
year in which Water Pollution Control State grant funding increased. 
Inflation adjustments for states are capped at the lesser of the 
percentage of change in appropriated funds or the cumulative percentage 
change in the inflation rate.
    The section 106 interstate formula historically has not used a 
funding floor to allocate funds. However, due to fluctuations in 
interstate allocations since the implementation of the most recent 
section 106 state and interstate formula revisions, and in response to 
a request from eligible interstate agencies, EPA is modifying the 
interstate allotment formula to incorporate a funding floor and an 
inflation factor so that it is consistent with the current state 
allocation formula. This ``hold harmless'' provision will ensure that 
unless there is a decrease in the CWA section 106 state appropriation, 
each interstate agency will receive, at a minimum, the same level of 
section 106 funding received in the previous fiscal year.
    The funding floor will be adjusted for inflation when the funds 
appropriated for states under the Water Pollution Control State grant 
program increase from the preceding fiscal year. These adjustments will 
be made on the basis of the cumulative change in the CPI, published by 
the U.S. Department of Labor, since the most recent year in which the 
Water Pollution Control State grant funding increased. Inflation 
adjustments to the interstate agency funding floor will be capped at 
the lesser of the percentage of change in appropriated funds or the 
cumulative percentage change in the inflation rate. Any section 106 
appropriated funds allocated to the interstate agencies through the 
interstate set-aside above the amount needed to meet the funding floor 
described above will be distributed based on ``the extent of the 
pollution problem in the respective states.'' Specifically, in the case 
of interstate agencies, this additional allotment will be based on the 
extent of the pollution problem in those states within the drainage 
basin or watershed area covered by the compact of each interstate 
agency. This variable component of the current interstate allotment 
formula remains unchanged by this action.
    Regulated Entities: The six interstate agencies eligible to receive 
grants under section 106 of the Clean Water Act are regulated by this 
rule. They are: the New England Interstate Water Pollution Control 
Commission; Interstate Environmental Commission; Interstate Commission 
of the Potomac River Basin; Delaware River Basin Commission; 
Susquehanna River Basin Commission; and the Ohio River Valley Water 
Sanitation Commission.
    Background: The current CWA section 106 interstate agency allotment 
formula was finalized in FY 1999. Since FY 1999, the interstate set-
aside has been set at the level of 2.6 percent of the total funds 
appropriated for states under the CWA Section 106 Grant Program. The 
current section 106 interstate agency allotment formula consists of two 
parts: (1) a base allotment; and (2) a variable allotment. See, 40 CFR 
35.162(c)(1) and (2).
    The base allotment of the current formula ensures that each 
interstate agency receives a minimum base allotment of $125,000 to 
provide for coordination activities among its member states. However, 
no more than 50 percent of the total funding available through the 
interstate set-aside may be allocated as part of the base allotment. 
If, given the 50 percent limitation placed on the base allotment, the 
amount of funding available through the interstate set-aside is 
insufficient to provide each interstate agency with $125,000, then each 
interstate agency receives a base allotment equal to 50 percent of the 
total interstate set-aside divided by six; the number of interstate 
agencies.
    The variable allotment provides for funds to be allocated to 
interstate agencies on the basis of ``the extent of the pollution 
problem in the respective States;'' specifically, in the case of the 
allotment to interstate agencies, those states within the drainage 
basin or watershed area covered by the compact of each interstate 
agency. Funds not allotted under the base allotment are allocated to 
interstate agencies based on each interstate agency's share of their 
member states' section 106 allotment ratios. The state allotment ratios 
for those states involved in compacts with more than one interstate 
agency are allocated among such interstate agencies based on the 
percentage of each state's territory that is situated within the 
drainage basin or watershed area covered by each compact. Updates to 
the data sources used to determine the state allotments under the CWA 
section 106 state allocation formula automatically result in 
corresponding updates to the variable allotment to the interstate 
agencies.
    While the current interstate ``base allotment'' ensures a minimum 
$125,000 base level of funding for all interstate agencies, increases 
in funding available to interstate agencies since the formula revisions 
in 1999 have increased each interstate agency's total allotment. As a 
result, the base allotment level of funding is no longer sufficient to 
protect each interstate agency from potentially significant 
fluctuations in total funding resulting from the regularly scheduled 
updates to the support data for the section 106 state formula. This has 
resulted in unexpected decreases in funding for some interstates and 
has impacted their ability to plan for and implement their program 
activities. This revision is meant to protect the interstate agencies 
from the most detrimental impacts of such adjustments in the allocation 
of section 106 funds.
    Statutory and Executive Order Reviews: Under Executive Order 12866 
(58 FR 51735, October 4, 1993), this regulation is not a ``significant 
regulatory action'' and is therefore not subject to OMB review. Because 
this grant regulation is not subject to notice and comment requirements 
under the Administrative Procedures Act or any other statute, it is not 
subject to the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) or 
sections 202 and 205 of the Unfunded Mandates Reform Act of 1999 (UMRA) 
(Pub. L. 104-4). In addition, this regulation does not significantly or 
uniquely affect small governments. This regulation does not have tribal 
implications, as specified in Executive Order 13175 (63 FR 67249, 
November 9, 2000). This regulation will not have federalism 
implications, as specified in Executive Order 13132 (64 FR 43255, 
August 10, 1999). This regulation is not subject to Executive Order 
13211, ``Actions Concerning Regulations that Significantly Affect 
Energy Supply, Distribution, or Use'' (66 FR 28355, May 22, 2001), 
because it is not a significant regulatory action under Executive Order 
12866. This regulation does not involve technical standards; thus, the

[[Page 59812]]

requirements of section 12(d) of the National Technology Transfer and 
Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This 
regulation does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et 
seq.).
    The Congressional Review Act, 5 U.S.C. 801 et seq., generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. Since this final grant rule contains legally binding 
requirements, it is subject to the Congressional Review Act, 5 U.S.C. 
801 et seq., and EPA will submit this rule in its report to Congress 
under the Act.

List of Subjects in 40 CFR Part 35

    Environmental protection, Administrative practices and procedures, 
Environmental program grants, Water pollution control.

    Dated: September 30, 2004.
Mike O. Leavitt,
Administrator.


0
EPA amends 40 CFR part 35 as follows:
0
1. The authority citation for part 35, subpart A continues to read as 
follows:

    Authority: 42 U.S.C. 7401 et seq.; 33 U.S.C. 1251 et seq.; 42 
U.S.C. 300f et seq.; 42 U.S.C. 6901 et seq.; 7 U.S.C. 136 et seq.; 
15 U.S.C. 2601 et seq.; 42 U.S.C. 13101 et seq.; Pub. L. 104-134, 
110 Stat. 1321, 1321-299 (1966); Pub. L. 105-65, 111 Stat. 1344, 
1373 (1997).

Subpart A--Amended

0
2. Section 35.162 is amended by revising paragraphs (c) introductory 
text and (c)(1) to read as follows:


Sec.  35.162  Basis for allotment.

* * * * *
    (c) Interstate allotment formula. EPA will set-aside 2.6 percent of 
the funds appropriated for the Water Pollution Control State grant 
program for interstate agencies. The interstate agency Water Pollution 
Control grant allotment formula consists of two parts: a funding floor 
with provisions for periodic adjustments for inflation, and a variable 
allotment.
    (1) Funding Floor. A funding floor is established for each 
interstate agency. Each interstate's funding floor for FY 2005 will be 
at least equal to its FY 2003 allotment. Beginning in FY 2006, the 
interstate funding floor will ensure that unless there is a decrease in 
the CWA section 106 state appropriation, each interstate will receive 
at a minimum, the same level of funding received in the previous fiscal 
year. The funding floor for each interstate agency will be adjusted for 
inflation when the funds appropriated for states under the Water 
Pollution Control State grant program increase from the preceding 
fiscal year. These adjustments will be made on the basis of the 
cumulative change in the Consumer Price Index (CPI), published by the 
U.S. Department of Labor, since the most recent year in which Water 
Pollution Control State grant funding increased. Inflation adjustments 
to the interstate agency funding floor will be capped at the lesser of 
the percentage of change in appropriated funds or the cumulative 
percentage change in the inflation rate. If the appropriation for 
states under the Water Pollution Control State grant program decreases 
in future years, the funding floor will be disregarded and all 
interstate agency allotments will be reduced by an equal percentage.
* * * * *
[FR Doc. 04-22523 Filed 10-6-04; 8:45 am]
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