[Federal Register Volume 72, Number 188 (Friday, September 28, 2007)]
[Rules and Regulations]
[Pages 55058-55064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-18960]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 30 and 31

[FRL-8472-1]


Award of United States-Mexico Border Program and Alaska Rural and 
Native Villages Program Grants Authorized by the Revised Continuing 
Appropriations Resolution, 2007

AGENCY: Environmental Protection Agency (EPA).

ACTION: Grant Guidelines.

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SUMMARY: This notice provides guidelines on the Award of United States-
Mexico Border Program and Alaska Rural and Native Villages Program 
Grants Authorized by the Revised Continuing Appropriations Resolution, 
2007. This notice provides information and guidelines on how the EPA 
will award and administer the United States-Mexico Border Program and 
the Alaska Rural and Native Villages Program in accordance with the 
Revised Continuing Appropriations Resolution, 2007 (Pub. L. 110-5). The 
Revised Continuing Appropriations Resolution, 2007, provides budget 
authority for funding the United States-Mexico Border Program and the 
Alaska Rural and Native Villages Program. Each grant recipient will 
receive a copy of this notice from EPA.

ADDRESSES: The subject notice and associated documents may be viewed 
and downloaded from EPA's homepage, http://www.epa.gov/owm/mab/owm0330.pdf.

FOR FURTHER INFORMATION CONTACT: Benjamin J. Hamm, Chief, Municipal 
Assistance Branch, Municipal Support Division, Office of Wastewater 
Management (4204M), Environmental Protection Agency, 1200 Pennsylvania 
Ave., NW., Washington, DC 20460; telephone number: (202) 564-0648; e-
mail address: [email protected].

SUPPLEMENTARY INFORMATION: 

I. General Information

    Affected Entities: This action applies to State Agencies, nonprofit 
institutions, international organizations, and Alaska

[[Page 55059]]

rural and native villages which are eligible to receive grants from 
funds included in EPA's State and Tribal Assistance Grants account 
pursuant to the Revised Continuing Appropriations Resolution, 2007, and 
the Department of the Interior, Environment, and Related Agencies 
Appropriations Act, 2006 (Pub. L. 109-54).

II. Background

    The Revised Continuing Appropriations Resolution, 2007, Pub. L. 
110-5, making further continuing appropriations for the fiscal year 
2007, and for other purposes, states, in relevant part:

    The following sums are hereby appropriated, out of any money in 
the Treasury not otherwise appropriated, and out of applicable 
corporate or other revenues, receipts, and funds, for the several 
departments, agencies, corporations, and other organizational units 
of Government for fiscal year 2007, and for other purposes, namely: 
* * * (a) Such amounts as may be necessary, at the level specified 
in subsection (c) and under the authority and conditions provided in 
the applicable appropriations Act for fiscal year 2006, for projects 
or activities (including the costs of direct loans and loan 
guarantees) that are not otherwise provided for and for which 
appropriations, funds, or other authority were made available in the 
following appropriations Acts: * * * (4) The Department of the 
Interior, Environment, and Related Agencies Appropriations Act, 
2006.

The Department of the Interior, Environment, and Related Agencies 
Appropriations Act, 2006, Pub. L. 109-54, also referred to as the 
Agency's fiscal year (FY) 2006 Appropriations Act, included $50,000,000 
for the United States-Mexico Border Program and $35,000,000 for the 
Alaska Rural and Native Villages Program in the State and Tribal 
Assistance Grants (STAG) account. Pursuant to the Revised Continuing 
Appropriations Resolution, 2007, these funding levels are maintained 
for FY 2007.
    The specific requirements governing the award of the program grants 
are contained in the following documents: the Revised Continuing 
Appropriations Resolution, 2007, and the FY 2006 Appropriations Act. 
The requirements contained in these documents have been incorporated 
into this notice.
    The Revised Continuing Appropriations Resolution, 2007, also 
states, in relevant part:

    (c) The level referred to in subsection (a) shall be the amounts 
appropriated in the appropriations Acts referred to in such 
subsection, including transfers and obligation limitations, except 
that--* * * (2) such level shall be calculated without regard to any 
rescission or cancellation of funds or contract authority, other 
than--(A) the 1 percent government-wide rescission made by section 
3801 of division B of Pub. L. 109-148; [and] (B) the 0.476 percent 
across-the-board rescission made by section 439 of Pub. L. 109-54, 
relating to the Department of the Interior, Environment, and Related 
Agencies * * * .

The original amount appropriated for each program, as well as the 
actual amount available for grant award after the reduction due to the 
1 percent rescission and the .476 percent rescission are as follows:

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                                                                                    .476%
                 Program                    Appropriation     1% rescission      rescission       Grant amount
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Alaska Rural and Native Villages Program       $35,000,000          $350,000          $164,934       $34,485,066
United States-Mexico Border Program.....        50,000,000           500,000           235,620        49,264,380
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    The United States-Mexico Border Program funds and the Alaska Rural 
and Native Villages Program funds will be awarded and administered by 
the Regional Offices. On September 28, 2000, the Assistant 
Administrator for Water and the Regional Administrators were delegated 
the authority to award grants and cooperative agreements for funds 
included in the STAG account. Accordingly, the Regions and Headquarters 
have the necessary authority to award grants and cooperative agreements 
for the United States-Mexico Border Program and the Alaska Rural and 
Native Villages Program.

III. Program Specific Guidelines

    The Agency's FY 2006 Appropriations Act contains the authorizing 
language for and requirements applicable to the United States-Mexico 
Border Program and the Alaska Rural and Native Villages Program.

A. United States-Mexico Border Program

    The Agency's FY 2006 Appropriations Act provides $49,264,380, after 
rescission, for ``architectural, engineering, planning, design, 
construction and related activities in connection with the construction 
of high priority water and wastewater facilities in the area of the 
United States-Mexico Border, after consultation with the appropriate 
border commission.'' Pursuant to the Revised Continuing Appropriations 
Resolution, 2007, this funding level is maintained for FY 2007. The 
scope of work for grants awarded for the United States-Mexico Border 
Program must conform to the language contained in the Appropriations 
Act and the grant file should include documentation that describes the 
results of the discussions and consultations with the appropriate 
border commission. In implementing this program, EPA generally provides 
grant funding to the Border Environmental Cooperation Commission (BECC) 
for the Project Development Assistance Program (PDAP) and to the North 
American Development Bank (NADBank) for the Border Environment 
Infrastructure Fund (BEIF). Subgrants from BECC and NADBank should also 
contain documentation of the discussions with the appropriate border 
commission.
    EPA cost participation on projects funded from the United States-
Mexico Border appropriation item will be decided on a project-by-
project basis. The EPA cost share will depend on a number of factors 
which have been separately defined within the context of the United 
States-Mexico Border Program.
    On May 2, 1997, the Agency issued a memorandum \1\ concerning 
``Program Requirements for Mexican Border Area Projects Funded under 
the Authority of this Agency's FY 1995, 1996 and 1997 Appropriations 
Acts.'' That memorandum applies to the United States-Mexico Border Area 
projects funded under the authority of the Revised Continuing 
Appropriations Resolution, 2007, and the Agency's FY 2006 
Appropriations Act.
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    \1\ This document is available on the internet at www.epa.gov/owm/mab/owm0327.pdf.
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B. Alaska Rural and Native Villages Program

    The Agency's FY 2006 Appropriations Act provides $34,485,066, after 
rescission, for:

    Grants to the State of Alaska to address drinking water and 
waste infrastructure needs of rural and Alaska Native Villages: 
Provided, That, of these funds: (1) The State of Alaska shall 
provide a match of 25 percent; (2) no more than 5 percent of the 
funds may be used for administrative and overhead expenses; and (3) 
not later than

[[Page 55060]]

October 1, 200[7] \2\ the State of Alaska shall make awards 
consistent with the State-wide priority list established in 2004 for 
all water, sewer, waste disposal, and similar projects carried out 
by the State of Alaska that are funded under section 221 of the 
Federal Water Pollution Control Act (33 U.S.C. 1301) or the 
Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et. seq.) 
which shall allocate not less than 25 percent of the funds provided 
for projects in regional hub communities.

    \2\ In order to maintain consistency with past appropriations 
acts language, the Agency assumes Congress intended to state 
``October 1, 2007''.

Pursuant to the Revised Continuing Appropriations Resolution, 2007, 
this funding level is maintained for FY 2007. The cost share for the 
State of Alaska pursuant to Item (1) of the Appropriations Act is 
$11,495,022.
    Additionally, the Alaska Rural and Native Villages Program funds 
may be used to pay for activities specified in the Safe Drinking Water 
Act of 1996, (Pub. L. 104-182, Section 303), specifically: ``training, 
technical assistance, and educational programs relating to the 
operation and management of sanitation services in rural and Native 
villages.'' These include the Remote Maintenance Worker (RMW) and the 
Rural Utility Business Advisory (RUBA) programs.
    Pursuant to the 2006 Alaska Rural and Native Villages Program 
Memorandum of Understanding, the State of Alaska has agreed to utilize 
the State's Environmental Review Process (SERP) for all projects funded 
by the program.

IV. Federal Funds as a Source of Matching Funds

    Federal funds from other programs may be used as all or part of the 
match for the United States-Mexico Border Program only if the statute 
authorizing those other programs specifically allows the funds to be 
used as a match for other Federal grants. Additionally, the other 
Federal programs must allow their appropriated funds to be used for the 
planning, design and/or construction of water, wastewater or 
groundwater infrastructure projects. Listed below are the major United 
States Federal programs whose grant funds can be used to provide all or 
part of the match for the United States-Mexico Border Program:
     Department of Agriculture, Rural Development program; and
     Department of Housing and Urban Development, Community 
Development Block Grant program.

For Mexican projects, Federal, state or local grants may be used to 
match United States-Mexico Border Program grant funds.
    As previously stated, Federal funds may be used as all or part of 
the match for other Federal grant programs only if the authorizing 
legislation includes such authority. The United States-Mexico Border 
Program funds and the Alaska Rural and Native Villages Program funds 
cannot be used as a source of matching funds for other Federal 
programs.

V. Pre-Award Costs

    The Grants and Interagency Agreement Management Division (GIAMD) 
issued a policy memorandum (GPI 00-02) on March 30, 2000, that applies 
to all grants, including United States-Mexico Border Program grants and 
Alaska Rural and Native Villages Program grants awarded on or after 
April 1, 2000. Additionally, a clarification to the policy memorandum 
(GPI 00-02(a)) was issued by GIAMD on May 3, 2000. The two memorandums 
revised the Agency's interpretation of a provision contained in the 
general grant regulations at 40 CFR 31.23(a) concerning the approval of 
pre-award costs.
    In essence, the GIAMD memorandums state that:
     Recipients may incur pre-award costs [up to] 90 calendar 
days prior to award provided they include such costs in their 
application, the costs meet the definition of pre-award costs and are 
approved by the EPA Project Officer and EPA Award Official.
     The award official can approve pre-award costs incurred 
more than 90 calendar days prior to grant award, in appropriate 
circumstances, if the pre-award costs are in conformance with the 
requirements set forth in OMB Circular A-87 and with applicable Agency 
regulations, policies and guidelines.
    The GIAMD memorandums state that the award official can approve 
pre-award costs incurred prior to grant award in appropriate situations 
if the approval of the pre-award costs is consistent with the intent of 
the requirements for pre-award costs set forth in OMB Circular A-87 and 
are in conformance with Agency regulations, policies and guidelines. 
The following two situations meet these requirements:
     Any allowable costs incurred after the start of the fiscal 
year for which the funds were appropriated but before grant award (for 
FY 2007 projects, this date is October 1, 2006).
     Allowable facilities planning and design costs associated 
with the construction portions of the project included in the grant 
that were incurred before the start of the fiscal year for which the 
funds were appropriated (for FY 2007 projects, this date is October 1, 
2006).
Accordingly, effective April 1, 2000, the Regions have the authority to 
approve pre-award costs for the two situations described above. Any 
approval, of course, is contingent on the Regional Office determination 
that the pre-award costs in question are in conformance with the 
applicable Federal laws, regulations and executive orders that govern 
EPA grant awards and are allowable, reasonable and allocable to the 
project.
    The Regions may not approve any pre-award costs for United States-
Mexico Border Program grants or Alaska Rural and Native Villages 
Program grants, other than those that involve the two situations 
discussed above, without written approval from Headquarters. The 
request, with sufficient supporting documentation, should be submitted 
to the Director, Office of Wastewater Management, (Mail Code 4201M), 
USEPA, 1200 Pennsylvania Avenue, NW., Washington, DC 20460. The Office 
of Wastewater Management will consult, in appropriate circumstances, 
with the GIAMD and the Office of General Counsel. If appropriate, a 
deviation from 40 CFR 31.23(a) will be processed and issued.

VI. Laws, Regulations and Requirements

    The Federal Laws and Executive Orders that apply to all EPA grants, 
including the United States-Mexico Border Program and the Alaska Rural 
and Native Villages Program which are authorized by the Revised 
Continuing Appropriations Resolution, 2007, and the Agency's FY 2006 
Appropriations Act, are as follows:

A. Environmental Authorities

     Archeological and Historic Preservation Act, Pub. L. 93-
291, as amended.
     Clean Air Act, Pub. L. 95-95, as amended.
     Clean Water Act, Titles III, IV and V, Pub. L. 92-500, as 
amended.
     Coastal Barrier Resources Act, Pub. L. 97-348.
     Coastal Zone Management Act, Pub. L. 92-583, as amended.
     Endangered Species Act, Pub. L. 93-205, as amended.
     Environmental Justice, Executive Order 12898.
     Flood Plain Management, Executive Order 11988 as amended 
by Executive Order 12148.
     Protection of Wetlands, Executive Order 11990 as amended 
by Executive Order 12608.
     Farmland Protection Policy Act, Pub. L. 97-98.

[[Page 55061]]

     Fish and Wildlife Coordination Act, Pub. L. 85-624, as 
amended.
     Magnunson-Stevens Fishery Conservation and Management Act, 
Pub. L. 94-265.
     National Environmental Policy Act, Pub. L. 91-190.
     National Historic Preservation Act, Pub. L. 89-655, as 
amended.
     Safe Drinking Water Act, Pub L. 93-523, as amended.
     Wild and Scenic Rivers Act, Pub. L. 90-54, as amended.

B. Economic and Miscellaneous Authorities

     Debarment and Suspension, Executive Order 12549.
     Demonstration Cities and Metropolitan Development Act, 
Pub. L. 89-754, as amended, and Executive Order 12372.
     Drug-Free Workplace Act, Pub. L. 100-690.
     Government Neutrality Toward Contractor's Labor Relations, 
Executive Order 13202 as amended by Executive Order 13208.
     New Restrictions on Lobbying, Section 319 of Pub. L. 101-
121.
     Prohibitions relating to violations of the Clean Water Act 
or Clean Air Act with respect to Federal contracts, grants, or loans 
under Section 306 of the Clean Air Act and Section 508 of the Clean 
Water Act, and Executive Order 11738.
     Uniform Relocation and Real Property Acquisition Policies 
Act, Pub. L. 91-646, as Amended.

C. Civil Rights, Nondiscrimination, Equal Employment Opportunity 
Authorities

     Age Discrimination Act, Pub. L. 94-135.
     Equal Employment Opportunity, Executive Order 11246.
     Section 13 of the Clean Water Act, Pub. L. 92-500.
     Section 504 of the Rehabilitation Act, Pub. L. 93-112 
supplemented by Executive Orders 11914 and 11250.
     Title VI of the Civil Rights Act, Pub. L. 88-352.

D. Disadvantaged Business Enterprise Authorities

     EPA's FY 1993 Appropriations Act, Pub. L. 102-389.
     Section 129 of the Small Business Administration 
Reauthorization and Amendment Act, Pub. L. 100-590.
     Small, Minority and Women Owned Business Enterprises, 
Executive Orders 11625, 12138 and 12432.
    Some of the authorities only apply to grants that include 
construction, e.g., EO 13202. A more detailed description of the 
Federal laws, Executive Orders, OMB Circulars and their implementing 
regulations is contained in Module No. 2 of the EPA Assistance Project 
Officers Training Course which is available through the Regional Grants 
Management Offices.
    The regulations at 40 CFR Part 31 apply to grants and cooperative 
agreements awarded to State and local (including tribal) governments. 
The regulations at 40 CFR Part 30 apply to grants with nonprofit 
organizations and with non-governmental for-profit entities. In 
appropriate circumstances, such as grants for demonstration projects, 
the research and demonstration grant regulations at 40 CFR Part 40 can 
be used to supplement either 40 CFR Part 30 or Part 31.
    The Agency issued a memorandum \3\ in January 1995, concerning the 
applicability of 40 CFR Part 29 (Intergovernmental Review) to the 
special projects authorized by the Agency's FY 1995 Appropriations Act. 
That memorandum also applies to the United States-Mexico Border Program 
and the Alaska Rural and Native Villages Program which are authorized 
by the Revised Continuing Appropriations Resolution, 2007, and the 
Agency's FY 2006 Appropriations Act.
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    \3\ This document is available on the internet at www.epa.gov/owm/mab/own0326.pdf.
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    The Davis-Bacon Act does not apply to grants awarded under the 
authority of the Revised Continuing Appropriations Resolution, 2007, 
and the Agency's FY 2006 Appropriations Act because neither the 
Resolution nor the Act includes language that makes it apply. However, 
if FY 2007 funds are used to supplement funding of a construction 
contract that includes Clean Water Act title II requirements (e.g., 
contracts awarded under the construction grants or coastal cities 
programs), the entire contract is subject to Davis-Bacon Act 
requirements, including the portion funded with FY 2007 funds.

VII. Specific Environmental Requirements

    The National Environmental Policy Act (NEPA) and other relevant 
applicable statutes and Executive Orders, such as the Endangered 
Species Act (ESA), apply to the United States-Mexico Border Program. 
The applicable NEPA regulations are the Council of Environmental 
Quality's implementing regulations at 40 CFR Parts 1500-1508 and EPA's 
NEPA regulations at 40 CFR Part 6, Subparts A-D.
    The Agency issued a memorandum \4\ on January 20, 1995, concerning 
NEPA compliance for the Special Appropriations Act Projects authorized 
by the Agency's FY 1995 Appropriations Act. That memorandum also 
applies to the United States-Mexico Border Program which is authorized 
by the Revised Continuing Appropriations Resolution, 2007, and the 
Agency's FY 2006 Appropriations Act.\5\
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    \4\ This document is available on the internet at www.epa.gov/owm/mab/owm0330.pdf.
    \5\ EPA is in the process of revising the NEPA implementing 
regulations (40 CFR Part 6). Accordingly, the final rule, once 
promulgated, will supersede and replace the memoranda on NEPA 
compliance.
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    The development of information needed to determine compliance with 
NEPA and other cross-cutting Federal requirements is an allowable cost 
that can, and should, be included in the scope of work of the grant if 
not performed prior to grant award. These activities can be funded on 
an incremental basis, by awarding a grant that only includes these 
activities, or as part of the entire project (i.e., planning, design 
and construction) with the stipulation, in the form of a grant 
condition, stating that EPA will not approve or fund any work beyond 
the conceptual design point \6\ until the applicable requirements of 
such authorities have been met. The Agency issued a memorandum \7\ on 
July 29, 2003, that contains a model grant condition that should be 
used in this situation.\8\
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    \6\ Completion of conceptual design is essentially the same as 
completion of facility planning as defined in EPA's Construction 
Grants program.
    \7\ This document is available on the internet at www.epa.gov/owm/mab/owm0330.pdf.
    \8\ See Footnote 5, supra.
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    It should be noted that NEPA and other cross-cutting Federal 
requirements that apply to the major Federal action (i.e., the approval 
and/or funding of work beyond the conceptual design point) cannot be 
delegated. Although EPA can fund the grantee or state/tribal 
development of an Environmental Information Document (EID) or other 
analysis to provide supporting information, EPA has the legal 
obligation to issue the NEPA documents, to sign NEPA determinations, 
and to fulfill other cross-cutting Federal requirements before 
approving or paying for design and/or construction.
    When both EPA and another Federal agency are funding the same 
project, the agencies may negotiate an agreement for one to be the lead 
agency for performing grant oversight and management activities, 
including those related to NEPA and other cross-cutting Federal 
requirements. The lead agency can be the one which is providing the 
most funds for the project, or the agency that

[[Page 55062]]

provided the initial funds for the project. If an environmental impact 
statement (EIS) is required, EPA should be a co-lead or cooperating 
agency so that it can adopt the EIS without recirculating it. If the 
project requires an environmental assessment (EA), EPA may adopt the 
other agency's EA and use it as a basis for its finding of no 
significant impact (FONSI), provided EPA has independently reviewed the 
EA and agrees with the analysis and circulates the FONSI and attached 
EA for the requisite 30-day comment period. Note that EPA may not use a 
categorical exclusion of another Federal agency unless EPA's 
regulations at 40 CFR Part 6 also provide for the categorical 
exclusion.

VIII. Operating Guidelines

    The authority for awarding grants for the United States-Mexico 
Border Program is the Revised Continuing Appropriations Resolution, 
2007, and the Department of the Interior, Environment, and Related 
Agencies Appropriations Act, 2006 (Pub. L. 109-54). The authority for 
awarding grants for the Alaska Rural and Native Villages Program is 
section 303 of the Safe Drinking Water Act Amendments of 1996 (Pub. L. 
104-182), the Revised Continuing Appropriations Resolution, 2007, and 
Department of the Interior, Environment, and Related Agencies 
Appropriations Act, 2006 (Pub. L. 109-54).
    The Catalog of Federal Domestic Assistance (CFDA) number for the 
United States-Mexico Border Program and the Alaska Rural and Native 
Villages Program is 66.202 ``Congressionally Mandated Projects.'' The 
Integrated Grants Management System (IGMS) code for the United States-
Mexico Border Program and the Alaska Rural and Native Villages Program 
is XP, titled ``Water Infrastructure Grants as authorized by EPA 
Appropriations.'' The Object Class Code (budget and accounting 
information) for the United States-Mexico Border Program and the Alaska 
Rural and Native Villages Program is 41.83. Applicants should use 
Standard Form 424 to apply for the grants.

A. Location of Project

    To be able to report on environmental and public health benefits, 
the Agency has decided to collect, and store in an appropriate 
database, the geographic location for grant funded infrastructure 
projects. Accordingly, all United States-Mexico Border Program grants 
and Alaska Rural and Native Villages Program grants authorized by the 
Revised Continuing Appropriations Resolution, 2007, and the FY 2006 
Appropriations Act should include a term and condition stating that 
locational information must be submitted. For most projects, the 
specific information needed is the National Pollutant Discharge 
Elimination System (NPDES) number(s) or the Safe Drinking Water 
Information System (SDWIS) number(s). EPA's information technology (IT) 
systems will use the NPDES and the SDWIS numbers to determine the 
specific geographic parameters of the project. For those situations 
where NPDES and SDWIS identifiers are not appropriate, the longitude 
and latitude of the project should be provided.

B. Intermunicipal Projects and Service Agreements

    Although a United States-Mexico Border Program grant may be awarded 
to one entity, the successful operations of the grant funded project 
may depend on the support and cooperation of other entities, 
municipalities, or utility districts. This is especially evident when 
one entity is providing wastewater treatment services or supplying 
drinking water to another entity. Accordingly, for projects involving 
interactions between two or more entities, the applicant should provide 
assurances that the grant funded project will function as intended for 
its expected life. Adequate assurance may be met through the creation 
of special service districts, regionalization of systems, or 
intermunicipal service agreements.
    Special service districts and regionalization of systems are 
considered to be obligations in perpetuity to serve the customers of 
the newly created authority and automatically meet the expected 
lifetime requirements. The intermunicipal service agreement or contract 
is a legal document for cooperative ventures between separate entities, 
both of which wish to continue functioning with a large degree of 
independent control in their respective service areas. Such agreements 
will need to extend for a minimum number of years for an EPA funded 
project to be considered viable. For the purposes of the United States-
Mexico Border Program, EPA will accept the following contract lifetimes 
as meeting the minimum standard \9\:
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    \9\ The anticipated useful life of the facility components is 
based on the low end of the assumed service life for items in EPA's 
Construction Grants Program and past experience with the award and 
administration of special Appropriations Act projects.

------------------------------------------------------------------------
                                                                  LIFE
                             ITEM                                (years)
------------------------------------------------------------------------
Land..........................................................     \(1)\
Wastewater/Water Conveyance Structures: collection systems            40
 pipes, interceptors, force mains, tunnels, distribution
 lines, etc...................................................
Other Structures: plant buildings, concrete tankage, basins,          30
 lift station and pump station structures, inlet structures,
 etc..........................................................
Wastewater and Drinking Water Process Equipment...............        15
Auxiliary Equipment...........................................        10
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\1\ Permanent.

A shorter time frame may be accepted if suitably justified and approved 
by EPA.

C. Non-Construction Costs

    The scope of work of a grant may include planning, design and 
administrative activities, and the cost of land. Land need not be an 
``integral part of the treatment process'' as in the Clean Water Act 
title II construction grant program. However, all elements included 
within the scope of work of the grant must conform to the requirements 
of 40 CFR Parts 30 or 31. This means, if planning, design and 
administrative activities are included in the grant, the procurement of 
those services and the contracts must comply with the applicable 
sections of Parts 30 or 31. If land is included, there will be a 
Federal interest in the land regardless of when it was purchased and 
the purchase must be (must have been) in accordance with the applicable 
sections of Parts 30 or 31 and the Uniform Relocation Assistance and 
Real Property Acquisition regulations for Federal and Federally 
assisted programs at 49 CFR Part 24.
    As of August, 2006, the United States-Mexico Border Program 
established a policy that land would not be an allowable BEIF cost, 
even if it is an eligible item under the Appropriations Act. This 
policy was issued by the Deputy Director, Office of Wastewater 
Management, on August 3, 2006.

D. Refinancing

    Funds appropriated for the United States-Mexico Border Program or 
the Alaska Rural and Native Villages Program may not be awarded solely 
to repay loans received from a State Revolving Fund or other 
indebtedness unless the facts of the case are such that this is the 
only way to award the funds that were appropriated for the project. Any 
request to use United States-Mexico Border Program or Alaska Rural and 
Native Villages Program funds to repay a loan, in whole or in part, 
must

[[Page 55063]]

be approved, in writing, by EPA Headquarters. The request, with 
sufficient supporting documentation, should be submitted to the 
Director, Office of Wastewater Management, (Mail Code 4201M), USEPA, 
1200 Pennsylvania Avenue, NW., Washington, DC 20460.

IX. Environmental Results Under EPA Assistance Agreements

A. Introduction

    EPA Order 5700.7,\10\ ``Environmental Results Under Assistance 
Agreements,'' applies to all non-competitive funding packages/funding 
recommendations submitted to the Grants Management Offices after 
January 1, 2005. The Order requires EPA Program Offices to: (1) Link 
proposed assistance agreements to the Agency's Strategic Plan/
Government Performance and Results Act (GPRA) architecture; (2) ensure 
that outputs and outcomes are appropriately addressed in assistance 
agreement work plans \11\ and funding recommendations; and (3) ensure 
that progress in achieving agreed-upon outputs and outcomes is 
adequately addressed in recipient progress reports and advanced 
monitoring activities.
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    \10\ The Order is available on the internet at http://www.epa.gov/ogd/grants/award/5700.7.pdf.
    \11\ Throughout this section, the term ``work plan'' is used for 
convenience. For construction projects, outputs/outcomes are 
normally included in a Facility Plan, Preliminary Engineering 
Report, or an Environmental Information Document. In many cases 
these documents may not exist at the time of grant application. In 
those situations the development of the documents will be included 
in the scope of work of the assistance agreement.
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B. The Strategic Plan/GPRA Architecture

    EPA's 2006-2011 Strategic Plan \12\ sets out five long-term goals. 
Each of these five goals is supported by a series of objectives and 
sub-objectives that identify, as precisely as possible, what 
environmental outcomes or results the EPA seeks to achieve within a 
defined time frame using resources expected to be available. The 
objectives and sub-objectives established in EPA's Strategic Plan are 
part of the ``GPRA architecture'' that is used to measure the EPA's 
progress in meeting its strategic goals.
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    \12\ The Strategic Plan is available on the internet at http://www.epa.gov/ocfo/plan/2006/entire_report.pdf.
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    Program offices must include in the funding package for a proposed 
assistance agreement a description of how the project fits within the 
EPA's Strategic Plan/GPRA architecture. In developing the 
aforementioned descriptions, a project officer must list all applicable 
EPA strategic goals and objectives and, where available, sub-
objectives. The project officer must ensure that the Program Results 
Code(s) (PRCs) listed on the commitment notice is consistent with the 
selected strategic goals, objectives and sub-objectives. The Strategic 
Plan/Program Results Code Crosswalk, which summarizes the strategic 
goals, objectives, sub-objectives, and the PRCs for every EPA 
assistance agreement program, is attached to Appendix A of EPA Order 
5700.7. Additionally, program offices must include in the funding 
package for a proposed assistance agreement an assurance that the 
program office has reviewed, or will review, the assistance agreement 
work plan \13\ and that the work plan includes, or will include, well-
defined outputs and, to the maximum extent practicable, well-defined 
outcomes.
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    \13\ See Footnote 11, supra.
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C. EPA Review of Recipient Performance Reports

    EPA Order 5700.7 also establishes requirements for program office 
review of construction and non-construction interim and final recipient 
performance reports for progress in achieving outputs and outcomes 
contained in assistance agreement work plans. Under 40 CFR Parts 30 and 
31, EPA may require recipients to submit performance/progress reports 
as frequently as quarterly but no less frequently than annually. These 
regulations also require recipients to provide the EPA with an 
acceptable final performance report at the end of a project. While 
performance reports are one way for the EPA to obtain information on a 
recipient's progress toward achievement of agreed-upon outputs and 
outcomes, program offices may also conduct mid-year and end-of-year 
reviews to evaluate recipient performance.
    The review of recipient performance reports is largely the 
responsibility of the EPA project officer. The project officer must 
review interim \14\ and final \15\ performance reports to determine 
whether they adequately address the achievement of agreed-upon outputs/
outcomes, including providing a satisfactory explanation for 
insufficient progress or a failure to meet planned accomplishments 
(when compared with the most recently approved project schedule and 
completion dates for project milestones). This review must be 
documented in the official project file. If a report does not 
adequately address the achievement of outputs/outcomes, the project 
officer should seek further explanation from the recipient and require 
appropriate corrective action.
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    \14\ For construction projects, on-site technical inspections 
and certified percentage of construction data meet the interim 
reporting requirements, see 40 CFR 31.40(c).
    \15\ For construction projects, the final inspection report or 
other final performance report should include a comparison of the 
actual outcomes/outputs with those incorporated into the assistance 
agreement.
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D. Advanced Monitoring

    EPA Order 5700.7 directs program offices, when conducting on-site 
reviews or desk reviews under EPA Order 5700.6, Policy on Compliance, 
Review and Monitoring, to include an assessment of the recipient's 
progress in achieving the outputs and outcomes set forth in the 
assistance agreement work plan.\16\ If the assessment reveals 
significant problems in meeting agreed-upon outputs/outcomes, the 
project officer must require the recipient to develop and implement an 
appropriate corrective action plan and implementation schedule. The 
results of the assessment must be documented in the Grantee Compliance 
Database in a format determined by the Director of the GIAMD.
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    \16\ See Footnote 11, supra.
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X. Grants Management

    Grants awarded under the authority of an Appropriations Act are 
subject to assistance agreement regulations, OMB cost principles and 
Agency policies. The grants must be awarded and managed as any other 
assistance agreement.
    The GIAMD has developed Grants Policy Issuances (GPIs) and 
directives to assist project officers and program offices in fulfilling 
and understanding their responsibilities. Three GPIs that are directly 
related to the award and management of United States-Mexico Border 
Program grants or Alaska Rural and Native Villages Program grants are 
GPI-07-01 ``Management of Earmark Grants,'' GPI-03-01--Attachment VI 
``Policy and Procedures for Funding Assistance Agreements,'' and GPI-
00-05 ``Cost Review Guidance.'' \17\
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    \17\ These GPIs are available at http://intranet.epa.gov/ogd/policy/7.0-GPI-GPI-07-01.htm, http://intranet.epa.gov/ogd/policy/7.0-GPI-GPI-03-01-0.htm and http://www.epa.gov/ogd/grants/award/CostReview.htm.
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    OGD issued guidance ``Assessing Grants Management Performance under 
the 2007 Performance Appraisal and Recognition System (PARS)'' on 
January 17, 2007, to be used for 2007 PARS performance agreements/
appraisals of project officers who are managing at least one active 
grant during the rating period and their supervisors/managers. This 
guidance requires that project officers and their supervisors/managers

[[Page 55064]]

adequately address grants management responsibilities through the 
Agency's PARS process. A directive outlining roles and responsibilities 
for all EPA staff with grants management responsibilities is found at 
http://intranet.epa.gov/rmpolicy/ads/updates.htm.
    EPA Order 5700.6A1, issued January 8, 2004,\18\ streamlines post-
award management of assistance agreements and helps ensure effective 
oversight of recipient performance and management. The Order 
encompasses both the administrative and programmatic aspects of the 
Agency's financial assistance programs. It requires each EPA program 
office providing assistance to develop and carry out a post-award 
monitoring plan, and conduct basic monitoring for every award. From the 
programmatic standpoint, this monitoring should ensure satisfaction of 
five core areas: (1) Compliance with all programmatic terms and 
conditions, (2) correlation of the recipient's work plan/application 
and actual progress under the award, (3) availability of funds to 
complete the project, (4) proper management of and accounting for 
equipment purchased under the award, and (5) compliance with all 
statutory and regulatory requirements of the program. If during 
monitoring it is determined that there is reason to believe that the 
grantee has committed or commits fraud, waste and/or abuse, then the 
project officer must contact the Office of the Inspector General. 
Advanced monitoring activities must be documented in the official grant 
file and the grantee compliance database.
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    \18\ The Order is available on the internet at http://www.epa.gov/ogd/manual6/Library/5700_6A1.pdf.
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    In addition to the general requirements contained in EPA Order 
5700.6A1, the following types of activities, which are directly related 
to construction projects, should be considered in the development of a 
post-award monitoring plan:

--Review periodic payment requests.
--Compare actual completion percentages and milestones with the 
approved project schedule
--Compare actual costs incurred with the approved project budget.
--Conduct interim inspections.
--Review change orders and claims.
--Review and approve final payment requests as required by the Program.
--Determine that the project is capable of meeting the objectives for 
which it was planned, designed and built and is operational.

XI. Project Officer Responsibilities

    The project officers must review the grant application to determine 
that:
--the scope of work of the grant is clearly defined;
--the scope of work is in conformance with the project description;
--project schedule and milestones are addressed;
--there is a clearly stated environmental or public health objective;
--the applicant has the programmatic capability to successfully manage 
the project;
--it is expected that the project will achieve its objective(s); and
--the costs are reasonable, necessary and allowable.
    Grant applications should be carefully reviewed and processed in a 
timely manner. Additionally, the Regions may impose reasonable 
requirements through grant conditions in those situations considered 
necessary.

XII. Actions

    If you have not already done so, you and your staff should initiate 
discussions with the appropriate grant applicants to develop a detailed 
scope of work and to explain the grant application and review process. 
Additionally, the grant applicant should be provided with this Notice 
prior to grant award to ensure that the applicant is on notice of the 
applicable requirements before the grant is awarded.

XIII. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., generally 
provides that before certain actions may take affect, the agency 
promulgating the action must submit a report, which includes a copy of 
the action, to each House of the Congress and to the Comptroller 
General of the United States. Since this final grant action contains 
legally binding requirements, it is subject to the Congressional Review 
Act, and EPA will submit a report containing this action and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of notice in the Federal Register. This action is not a 
``major rule'' as defined by 5 U.S.C. 804(2).

    Dated: September 17, 2007.
Benjamin H. Grumbles,
Assistant Administrator, Office of Water.
[FR Doc. E7-18960 Filed 9-27-07; 8:45 am]
BILLING CODE 6560-50-P