[Federal Register Volume 73, Number 59 (Wednesday, March 26, 2008)]
[Rules and Regulations]
[Pages 15904-15922]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-6003]


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ENVIRONMENTAL PROTECTION AGENCY

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

[Docket ID NO. EPA-HQ-OA-2002-0001; FRL-8545-9]
RIN 2090-AA38


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

AGENCY: Environmental Protection Agency.

ACTION: Final rule.

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SUMMARY: This action will harmonize EPA's statutory Disadvantaged 
Business Enterprise procurement objectives with the United States 
Supreme Court's decision in Adarand Constructors, Inc. v. Pena, 515 
U.S. 200 (1995). In that case, the Supreme Court extended strict 
judicial scrutiny to federal programs that use racial or ethnic 
criteria as a basis for decision making. Remedying discrimination is 
recognized as a compelling government interest, and this rule is 
promulgated on the understanding that the statutory provisions 
authorizing its adoption were enacted for that remedial purpose. This 
rule sets forth a narrowly tailored EPA program to serve the compelling 
government interest of remedying past and current racial discrimination 
through agency-wide DBE procurement objectives. EPA intends to evaluate 
the propriety of the Disadvantaged Business Enterprise program in 7 
years through subsequent rulemaking. This rule also revises EPA's 
Minority Business Enterprise (MBE) and Women's Business Enterprise 
(WBE) program and renames it EPA's Disadvantaged Business Enterprise 
(DBE) Program. EPA is removing existing MBE/WBE specific provisions in 
regulations for grants and agreements with institutions of higher 
education, hospitals, and other non-profit organizations; and uniform 
administrative requirements for grants and cooperative agreements to 
state and local governments, state and local assistance, and research 
and demonstration grants, and is consolidating and adding to these 
provisions in this new regulation. This rule affects only procurements 
under EPA financial assistance agreements. This rule does not apply to 
direct Federal procurement actions. 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 rule may affect you.

DATES: This final rule is effective May 27, 2008.

ADDRESSES: EPA has established a docket for this action under Docket ID 
No. EPA-HQ-OA-2002-0001. All documents in the docket are listed on the 
www.regulations.gov Web site. Although listed in the index, some 
information is not publicly available, e.g., 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 through 
www.regulations.gov or in hard copy at the HQ EPA Docket Center, EPA/
DC, EPA West, Room 3334, 1301 Constitution Ave., NW., Washington, DC 
20004. The 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 Office of Environmental Information is (202) 566-1752.

FOR FURTHER INFORMATION CONTACT: Kimberly Patrick, Attorney Advisor, 
Office of the Administrator, Office of Small and Disadvantaged Business 
Utilization (OSDBU) by phone at (202) 566-2605, by e-mail at 
[email protected], or by fax at (202) 566-0548; or Cassandra 
Freeman, Deputy Director, Office of the Administrator, OSDBU by phone 
at

[[Page 15905]]

(202) 566-1968, by e-mail at [email protected], or by fax at 
(202) 566-0266. Both can be reached by mail to OSDBU, U.S. 
Environmental Protection Agency, 1200 Pennsylvania Avenue, NW., mail 
code 1230T, Washington, DC 20460.

SUPPLEMENTARY INFORMATION: The contents of this final rule are listed 
in the following outline:

Contents of the Final Rule

I. General Information
    A. Does This Rule Apply to Me?
    B. What are the Statutory Authorities for this Final Rule?
II. Background
III. Overview of Final Rule
IV. Summary of Response to Public Comments
V. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    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 and Safety Risks
    H. Executive Order 13211: Actions That Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act of 1995
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act

I. General Information

 A. Does This Rule Apply to Me?

    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, or a minority-owned, 
woman-owned, or small business, this rule may affect you. If you have 
any questions regarding the applicability of this action to a 
particular entity, consult the person listed in the preceding FOR 
FURTHER INFORMATION CONTACT section.

B. What Are the Statutory Authorities for This Final Rule?

    EPA's primary statutory authorities for this final rule are:
    1. Public Law 102-389 (42 U.S.C. 4370d), a 1993 appropriations act 
(``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 * * *; and

    2. 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 and Executive Orders regarding this final 
rule 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.

II. Background

    EPA's current Minority Business Enterprise/Woman-owned Business 
Enterprise (``MBE/WBE'') program has three major components designed to 
ensure that minority and women-owned businesses have the opportunity to 
participate in procurements funded by EPA financial assistance 
agreements. Those components are as follows:
    1. Negotiating Fair Share Goals: The current MBE/WBE program 
requires all recipients of EPA financial assistance agreements to 
negotiate goals with the Agency for the utilization of MBEs/WBEs for 
procurements funded by EPA financial assistance agreements. The goals 
are based on disparity studies or availability analyses showing the 
availability of MBEs or WBEs in the financial assistance recipient's 
relevant geographic buying market. These goals do not operate as 
quotas.
    2. Using the ``Six Positive Efforts'' or ``Six Affirmative Steps'': 
The ``Six Positive Efforts'' or ``Six Affirmative Steps'' are measures 
designed to ensure MBEs and WBEs are considered in a financial 
assistance recipient's procurement practices, and they contain measures 
a recipient may undertake to make procurements more open to MBEs and 
WBEs.
    3. Reporting Accomplishments: Under the current MBE/WBE program, 
recipients of EPA financial assistance agreements are required to 
report on their accomplishments with the program using EPA Form 5700-
52A. Reporting is the tool we use to assess whether or not the program 
is effective and actually translating into increased opportunities for 
MBEs and WBEs.
    EPA's MBE/WBE Program is currently implemented through:
    (1) Existing MBE and WBE provisions scattered throughout 40 CFR 
parts 30, 31, 35 and 40;
    (2) Grant conditions; and
    (3) The Agency's ``Guidance for the Utilization of Small, Minority, 
and Women's Business Enterprises in Assistance Agreements.''
    In 1995, the Supreme Court's decision in Adarand Constructors, Inc. 
v. Federico Pena, Secretary of Transportation, 515 U.S. 200 
(``Adarand''), extended strict judicial scrutiny to federal affirmative 
action programs that use racial or ethnic criteria as a basis for 
decisionmaking. 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.
    Following the Adarand decision, 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), whose DBE program mirrored EPA's MBE/WBE program, 
revised its program for participation of DBEs in procurements under 
DOT's financial assistance agreements to comply with the Adarand 
decision (See 64 FR 5096). This final rule reflects EPA's efforts to 
similarly comply.
    Remedying discrimination is recognized as a compelling government 
interest, and this rule is promulgated on the understanding that the 
statutory provisions authorizing its adoption were enacted for that 
remedial purpose. This

[[Page 15906]]

rule sets forth a narrowly tailored EPA program to serve the compelling 
government interest of remedying past and current racial discrimination 
through agency-wide DBE procurement objectives. EPA intends to evaluate 
the propriety of the Disadvantaged Business Enterprise program in 7 
years through subsequent rulemaking
    This final rule requires recipients to use race/gender-neutral 
measures to ensure DBEs have meaningful opportunities to bid on 
recipient-sponsored procurements. It does not require recipients to use 
race/gender-conscious measures. However, if a recipient elects to use 
such measures, the recipient should satisfy itself that the measure 
meets all applicable legal requirements, including those established in 
Adarand. Because this rule only requires race/gender-neutral measures, 
it should not be subject to strict judicial scrutiny. Even so, we 
believe this rule is narrowly tailored to achieve a compelling 
governmental interest consistent with Adarand.
    EPA worked collaboratively on this rulemaking with various program 
offices within the Agency, the EPA Office of General Counsel, and the 
EPA Regions. We also held discussions with other Federal agencies, 
including SBA and DOT whose DBE programs are in some ways similar to 
ours, or have undergone changes similar to the ones we are 
implementing. EPA has also collaborated with the Civil Rights Division 
of DOJ throughout the rulemaking process.

III. Overview of Final Rule

    This rulemaking removes all of EPA's current MBE/WBE fair share 
objectives and good faith efforts regulatory provisions and replaces 
them with DBE provisions to be codified in the new 40 CFR part 33. In 
addition, this rule supersedes inconsistent provisions of previous 
guidance documents for EPA's former MBE and WBE Program, including, but 
not limited to, EPA's ``Guidance for Utilization of Small, Minority, 
and Women's Business Enterprises in Procurement Under Assistance 
Agreements'' (the 1997 Guidance), 62 FR 45645.
    There are six substantive changes this rule will make to the way 
the program currently operates. Those changes involve: (1) 
Certification of minority and women-owned businesses; (2) the six good 
faith efforts; (3) contract administration requirements; (4) 
negotiation of fair share goals; (5) recordkeeping and reporting 
requirements; and (6) new requirements for Tribal and insular area fair 
share negotiations. The specific changes are summarized as follows:

1. Certification

    Under the current MBE/WBE program EPA recognizes Small Business 
Administration (SBA) certifications, or certifications by a State or 
other Federal Agency, or self-certifications. EPA currently does not 
require WBEs to be certified.
    Under the new DBE program promulgated today, in order to be counted 
as an MBE or WBE under an EPA financial assistance agreement, an entity 
will have to be certified as such. EPA will require an MBE/WBE to first 
seek certification by a federal agency (e.g., the Small Business 
Administration (SBA), the Department of Transportation (DOT)), or by a 
State, locality, Indian Tribe, or independent private organization 
provided their applicable criteria match those under section 8(a) (5) 
and (6) of the Small Business Act and SBA's applicable 8(a) Business 
Development Program regulations. EPA will only consider certifying 
firms that cannot get certified by one of these entities. Requiring 
firms to first seek certification from other sources is beneficial for 
the business entity because an EPA certification is limited in that it 
would only be accepted by EPA. Certifications from other sources have 
broader applications. Also, requiring firms to first seek certification 
from other sources reduces the burden on the Agency associated with 
processing certifications.
    The creation and implementation of an EPA certification program is 
necessary because the statutory authority for EPA's program includes 
classifications of businesses that are not currently certified by other 
sources. Businesses that fall within these classifications would 
potentially have no other option for certification to participate in 
EPA's DBE program. EPA anticipates that the following types of entities 
will have to be considered for certification by EPA:
    1. Disabled American-owned firms;
    2. Private and voluntary organizations controlled by individuals 
who are socially and economically disadvantaged;
    3. Women-owned and minority owned-businesses who cannot get 
certified under DOT or SBA size criteria (EPA does not have size 
criteria) or by a State Government, local Government, Indian Tribal 
Government or independent private organization;
    4. Businesses owned or controlled by socially and economically 
disadvantaged individuals (note--SBA and DOT require an entity to be 
owned and controlled by socially and economically disadvantaged 
individuals. However, the statutory authority for EPA's DBE program 
requires ownership or control, Public Law 102-389); and
    5. Women-owned business enterprises.
    EPA certifications will last for three years as long as the 
certified entity files an annual affidavit affirming that no changes in 
circumstances have occurred which affected the entity's status as an 
MBE or WBE. Appeal procedures are provided for entities denied MBE or 
WBE certification, or anyone who disagrees with EPA's decision to 
certify an entity as an MBE or WBE.

2. Six Good Faith Efforts

    The good faith efforts are activities by a recipient and 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. 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 State, Local and Indian Tribal 
Government recipients and renamed them the six ``good faith efforts.''.

3. Contract Administration Requirements

    The rule adds additional contract administration requirements which 
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 as well as other related requirements. Some of these 
requirements include provisions intended to ensure that subcontractors 
receive prompt payment from prime contractors. 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 the rule have

[[Page 15907]]

been met. Finally, this rule provides for three new forms which are 
required if there are DBE subcontractors involved in a procurement.

4. Negotiation of Fair Share Goals (and $250,000 Exemptions)

    This rule codifies EPA's procedures for negotiating fair share 
goals with financial assistance recipients. The process for such 
negotiations is currently implemented through guidance, as well as 
through terms and conditions incorporated into EPA financial assistance 
agreements. This rulemaking keeps the current basic approach, with some 
fine tuning, including a provision which would exempt a recipient of a 
financial assistance agreement of $250,000 or less for any assistance 
agreement, or of more than one financial assistance agreement with a 
combined total of $250,000 or less in EPA funds in any one year, from 
the fair share objective negotiation requirement. In addition, eligible 
program grants which can be included in Performance Partnership Grants 
to Tribal and Tribal consortia recipients will be exempt from the fair 
share negotiation requirement due to the nature of these program grants 
and the unique nature of eligible recipients. Superfund Technical 
Assistance Grants (TAG's) would be exempt due to the nature of their 
funding cycles. A recipient under the Clean Water State Revolving Fund, 
the Drinking Water State Revolving Fund, and the Brownfields Clean-Up 
Revolving Loan Fund is not required to apply the fair share objective 
requirements to an entity receiving an identified loan in an amount of 
$250,000 or less.

5. Recordkeeping and Reporting Requirements

    Currently, 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. 
This rule will reduce the reporting frequency to semi-annually for all 
recipients who currently report on a quarterly basis.
    This rule also requires all financial assistance recipients, and 
recipients of loans under CWSRF, DWSRF, or BCRLF Programs to create and 
maintain a bidders list. There is an exemption from this requirement 
for recipients receiving grants or loans of $250,000 or less for any 
single assistance agreement or loan, or of more than one financial 
assistance agreement or loan with a combined total of $250,000 or less 
in EPA funds in any one year.

6. New Requirement for Tribal and Trust Territory Fair Share 
Negotiations

    EPA does not currently negotiate fair share goals with Indian 
Tribal Government and Trust Territory recipients. This rule will 
require such recipients to negotiate fair share goals. Therefore, under 
the rule such recipients will have a three year phase-in period to 
adjust to the regulatory change. In the interim, they will still have 
to comply with the other requirements of this rule.

IV. Summary of Response to Public Comments

    Excluding changes in wording to increase clarity, there are only 
four substantive changes reflected in this final rule. Those changes, 
along with a breakdown of the number and type of comments received, are 
below:
    Number of Comments Received: 126

------------------------------------------------------------------------
                                             Number of      Percent of
     Primary areas of public concern         comments      all comments
------------------------------------------------------------------------
Certification...........................              23              18
General (wording and clarification).....              16              13
Good Faith Efforts......................              14              11
Subcontracting Provisions...............              12               9
Bidders List............................              11               9
------------------------------------------------------------------------

    Major Revisions Based on Public Comment (not including wording or 
clarification):
1. Sec.  33.105--Enforcement Provisions
    There were several comments concerning enforcement of the rule. A 
number of comments stated that there are no ``teeth'' in the program 
and that more policing of the program will be needed to insure 
compliance with the requirements of the rule. While the text of the 
rule mentions that EPA can take remedial action for non-compliance, it 
does not clearly state what those actions are. In an effort to show 
more ``teeth,'' this section has been revised to include some of the 
remedial measures EPA can take if a recipient fails to comply with the 
requirements of the rule.
2. Sec.  33.302--Subcontractor Provisions
    Public comment requested that EPA specify the number of days within 
which a prime must pay its subcontractor after payment by the 
recipient. In an effort to curtail the practice of excessively late 
subcontractor payments, the rule establishes maximum of 30 days by 
which a prime contractor must pay its subcontractor, after payment by 
the grant recipient.
3. Sec.  33.501--Bidders List
    Many comments were received requesting clarification about the 
contents, purpose and duration of the bidders list. The purpose of the 
Bidders List is to provide the recipient and entities receiving 
identified loans who conduct competitive bidding with a more accurate 
database of the universe of MBE/WBE and non-MBE/WBE prime and 
subcontractors. The bidders list is intended to be a list of all firms 
that are participating, or attempting to participate, on EPA assisted 
contracts. The list must include all firms that bid on prime contracts, 
or bid or quote on subcontracts under EPA assisted projects, including 
both MBE/WBEs and non-MBE/WBEs. The bidders list is designed to also 
aid recipients in their efforts to comply with the ``six good faith 
efforts,'' by creating a source of MBEs and WBEs that can be relied 
upon to increase the inclusion of MBEs and WBEs in the recipient's 
procurement practices. Section 33.501(b) of the rule has been revised 
to read as follows:

    A recipient of a Continuing Environmental Program Grant or other 
annual grant must create and maintain a bidders list. 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. 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. 
The list must include all firms that bid or quote on prime contracts 
or bid or quote on subcontracts under EPA assisted projects, 
including both MBE/WBEs

[[Page 15908]]

and non-MBE/WBEs. The bidders list must be kept until the grant 
project period has expired and the recipient is no longer receiving 
EPA funding under the grant. For entities receiving identified 
loans, the bidders list must be kept until the project period for 
the identified loan has ended. The following information must be 
obtained from all prime and subcontractors:
    (1) Entity's name with point of contact;
    (2) Entity's mailing address, telephone number, and e-mail 
address;
    (3) The procurement on which the entity bid or quoted, and when; 
and
    (4) Entity's status as an MBE/WBE or non-MBE/WBE.

    In response to internal concerns regarding the application of the 
bidders list requirement, we have created an exemption to this 
provision. The exemption found at Sec.  33.501(c) is as follows:

    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 exempt from the 
paragraph (b) of this section requirement to create and maintain a 
bidders list. Also, a recipient under the CWSRF, DWSRF, or BCRLF 
Program is not required to apply the paragraph (b) of this section 
bidders list requirement 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 exemption is limited 
to the paragraph (b) of this section bidders list requirements of 
this subpart.
4. Sec.  33.502--Reporting
    In response to internal and external comments, this section of the 
rule has been revised to require semiannual reporting for all 
recipients who currently report on a quarterly basis. All recipients 
who report annually will continue to do so.
    A section-by-section analysis of the rule, addressing public 
comments in detail, can be found on the public docket for this rule 
making under Docket ID No. EPA-HQ-OA-2002-0001, at www.regulations.gov.

V. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), 
this action is a ``significant regulatory action.'' This rule reflects 
and raises legal or policy issues arising out of legal mandates. This 
rule has a direct impact on contracting funded by EPA financial 
assistance agreements. There is substantial public interest concerning 
programs to ensure nondiscrimination in federally assisted contracting, 
as well as policy concerns. This rule 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 a 
``significant regulatory action,'' EPA submitted this action to the 
Office of Management and Budget (OMB) for review under EO 12866 and any 
changes made in response to OMB recommendations have been documented in 
the docket for this action.
    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 did not 
prepare a regulatory impact statement for this rule.

B. Paperwork Reduction Act

    The Office of Management and Budget (OMB) has approved the 
information collection requirements contained in this rule under the 
provisions of the Paperwork Reduction Act, 44 U.S.C 3501 et seq. and 
has assigned OMB control number 2090-0030.
    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 and Executive Orders 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 where the 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 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

[[Page 15909]]

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 in 40 CFR are listed in 40 CFR part 9. In addition, EPA is 
amending the table in 40 CFR part 9 of currently approved OMB control 
numbers for various regulations to list the regulatory citations for 
the information requirements contained in this final rule.

C. Regulatory Flexibility Act

    This rule is not subject to the Regulatory Flexibility Act (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.
    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., Historically Black Colleges and Universities, 
etc.). Accordingly, EPA believes that this rule will impact a 
substantial number of small entities.

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 adopts 
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 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.
    This 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. Thus, today's rule is not 
subject to the requirements of section 202 and 205 of the UMRA.
    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. With the exemptions at the 
$250,000 level or less from compliance with the fair share objective 
requirements, EPA believes that there would be minimal impacts on small 
entities, including small government jurisdictions. Additionally, under 
this rule, small entity recipients will 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.''
    This rule does not have ``federalism implications,'' as 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.
    In the spirit of Executive Order 13132 and consistent with EPA 
policy to promote communications between EPA

[[Page 15910]]

and State and local governments, EPA specifically solicited comment on 
the proposed rule from State and local officials. Stakeholders, 
including representatives from State government agencies, State 
government organizations and local governments, were given an 
opportunity to comment on the proposed rule which was published in the 
Federal Register on July 24, 2003, during the 180-day comment period. 
Public hearings were also held in several states across the country to 
discuss the proposed rule and to encourage comment.

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

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000), 
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.'' EPA has concluded that this 
final rule will have tribal implications. However, it will neither 
impose substantial direct compliance costs nor preempt tribal law. 
Those implications 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 Performance Partnership 
Grant eligible grants to tribes and intertribal consortia under 40 CFR 
part 35, subpart B) will have to negotiate fair share objectives with 
EPA unless they choose to adopt MBE and WBE objectives of another EPA 
recipient consistent with the final rule. Those tribes required to 
negotiate fair share objectives with EPA will 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) 
will not be eligible to be counted 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). 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 would not count such 
procurements toward meeting MBE/WBE objectives. In addition, the rule 
will 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 this rule.
    Second, a business owned by a Federally recognized tribal 
government will 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 will 
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 will 
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 will 
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 will 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 Subcontractor Utilization Form to all of its 
DBE subcontractors, pursuant to sections 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's name with 
point of contact; (2) entity's mailing address, telephone number, and 
e-mail address; (3) the procurement on which the entity bid or quoted, 
and when; and (4) entity's status as an MBE/WBE or non-MBE/WBE.
    EPA 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. This rule has been under development for the past several 
years. The meaningful and timely input of Tribal officials and/or 
representatives into the development of this rule is as follows:
    On February 2-4, 1999, EPA invited tribal recipients of EPA grants 
and cooperative agreements to an EPA/State/Tribal Annual Conference 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. EPA posted a staff draft of the proposed 
rule, dated June 19, 2000, on EPA's Internet Web site to solicit public 
comment. 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 
Web site. 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 received a 
total of 17 written comments on the staff draft from Indian tribes.
    During the development of this rule EPA representatives 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

[[Page 15911]]

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 in order to discuss the staff draft 
rule. EPA 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.
    As part of its ongoing tribal coordination 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 coordination meetings with tribal 
officials to discuss a draft of this Rule in Ocean Shores, Washington 
during the week of January 28, 2002. On July 24, 2003, the proposed 
rule was published in the Federal Register, with a 180-day comment 
period. After the rule was published in the Federal Register, EPA held 
10 tribal meetings across the country to solicit comments and 
suggestions on the final rule.
    EPA has considered tribal concerns and written comments in the 
final rule. A summary of the nature of tribal concerns and EPA's 
response follows:
1. Applicability of the Rule to Tribes
    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 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 
statutory 10% MBE/WBE procurement objective requirements for research 
relating to the requirements of the Clean Air Act, nor EPA's statutory 
8% MBE/WBE procurement objective requirements for all other programs, 
exempt tribes. Therefore, tribes are not exempt 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 General Assistance Program grants. Comments 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, the trigger requiring 
compliance with the fair share objective requirements has been 
increased to $250,000 from the $100,000 threshold contained in an 
earlier 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 exempting 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), will 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 to comply with the fair share objective requirements under the 
final rule 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 
the rule. The rule will also provide tribes with a three-year phase-in 
period to comply with the fair share negotiation requirement.
3. 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 and concluded that 40 CFR part 31 
already requires tribes to comply with part 31's recordkeeping and 
reporting requirements, which included MBE/WBE recordkeeping and 
reporting. 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. Therefore, EPA is not 
adopting the suggested change. However, because of comments received 
requesting a reduction in the burden created by quarterly reporting, 
EPA has reduced the reporting requirement to semi-annually for 
recipients who currently report on a quarterly basis. Recipients who 
currently report annually will continue to do so.
4. Compliance With the Good Faith Efforts Requirements
    One comment 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.
    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 are currently subject to 
40 CFR part 31, which requires them to make

[[Page 15912]]

good faith efforts to ensure that DBEs are used whenever possible. EPA 
is changing this requirement. EPA does not believe that the good faith 
effort requirements are unduly burdensome.
5. Phase-In Period
    One comment 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 believes that the three-year phase-in period, which begins 
after the final rule's effective date, allows tribes sufficient time to 
prepare for and comply with the requirements of the rule.
    As required by section 7(a), EPA's Tribal Consultation Official has 
certified that the requirements of the Executive Order have been met in 
a meaningful and timely manner. A copy of the certification is included 
in the docket for this rule.

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

    Executive Order 13045: ``Protection of Children from Environmental 
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies 
to any rule that: (1) Is determined to be ``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 interprets Executive Order 13045 as applying only to those 
regulatory actions that are based on health or safety risks, such that 
the analysis required under section 5-501 of the Order has the 
potential to influence the regulation. This rule is not subject to 
Executive Order 13045 because it does not establish an environmental 
standard intended to mitigate health or safety risks.

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

    As noted in the proposed rule, 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 impractical. 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 rule does not involve 
technical standards. Therefore, EPA is not considering the use of any 
voluntary consensus standards.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes 
federal executive policy on environmental justice. Its main provision 
directs federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    EPA has determined that this final rule will not have 
disproportionately high and adverse human health or environmental 
effects on minority or low-income populations because it does not 
affect the level of protection provided to human health or the 
environment.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, 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. EPA will submit a report containing this rule 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 the rule in the Federal Register. A Major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2). This rule will be effective May 27, 2008.

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.

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: March 18, 2008.
Stephen L. Johnson,
Administrator.

0
For the reasons set out in the preamble, title 40, chapter I of the 
Code of Federal Regulations is amended as follows:

PART 30--[AMENDED]

0
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]

0
2. Section 30.44 is amended by removing and reserving paragraph (b).

PART 31--[AMENDED]

0
3. The authority citation for part 31 continues to read as follows:

    Authority: 7 U.S.C. 136 et seq.; 15 U.S.C. 2601 et seq.; 20 
U.S.C. 4011 et seq.; 33 U.S.C.

[[Page 15913]]

1251 et seq. and 1401 et seq.; 42 U.S.C. 300f et seq., 6901 et seq., 
7401 et seq., and 9601 et seq.


Sec.  31.36  [Amended]

0
4. Section 31.36 is amended by removing and reserving paragraph (e).

PART 33--[ADDED]

0
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 the process for appealing or challenging an EPA MBE 
or WBE certification determination?
33.212 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 requirements of this part?
33.503 How does a recipient calculate MBE and WBE participation for 
reporting purposes?

Appendix A to Part 33--Terms and Conditions

    Authority: 15 U.S.C. 637 note; 42 U.S.C. 4370d, 7601 note, 
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. To that end, implementation of this 
rule with respect to grantees, sub-grantees, loan recipients, prime 
contractors, or subcontractors in particular States or locales--notably 
those where there is no apparent history of relevant discrimination--
must comply with equal protection standards at that level, apart from 
the EPA DBE Rule's constitutional compliance as a national matter;
    (b) To harmonize EPA's DBE Program objectives with the U.S. Supreme 
Court's decision in Adarand Constructors, Inc. v. Pena, 515 U.S. 200 
(1995);
    (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.
    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.

[[Page 15914]]

    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.
    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 a DBE firm and one or more 
other firms to carry out a single, for-profit business enterprise, for 
which the parties combine their property, capital, efforts, skills and 
knowledge, and in which the DBE is responsible for a distinct, clearly 
defined portion of the work of the contract and whose share in the 
capital contribution, control, management, risks, and profits of the 
joint venture are commensurate with its ownership interest.
    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 sub-recipient of such agreement, including loan 
recipients under the Clean Water State Revolving Fund Program, Drinking 
Water State Revolving Fund Program, and the Brownfields Cleanup 
Revolving Loan Fund Program.
    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 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 recipients 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.
    (b) The request must document special or exceptional circumstances 
that make compliance with the

[[Page 15915]]

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.). Examples of the 
remedial actions under 40 CFR parts 30, 31, and 35 include, but are not 
limited to:
    (a) Temporarily withholding cash payments pending correction of the 
deficiency by the recipient or more severe enforcement action by EPA;
    (b) Disallowing all or part of the cost of the activity or action 
not in compliance;
    (c) Wholly or partly suspending or terminating the current award; 
or
    (d) Withholding further awards for the project or program.


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 Appendix A 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 Certifiers and 
EPA recipients in 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 qualify and participate as an MBE or WBE prime or 
subcontractor for EPA recipients under EPA's DBE Program, an entity 
must be properly certified as required by this subpart.
    (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 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

[[Page 15916]]

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, and that entity owns 51% of the joint 
venture.
    (2) As a party to a joint venture, a person who is not an 
economically disadvantaged individual, or an entity that is not owned 
and controlled by a socially and economically disadvantaged individual, 
may not be a party to more than two awarded contracts in a fiscal year 
solely by joint venture with a socially and economically disadvantaged 
individual or entity.


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 must first 
attempt to be 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.
    (2) Such certifications shall be considered acceptable for 
establishing MBE or WBE status, as appropriate, under EPA's DBE Program 
as long as the certification meets EPA's U.S. citizenship requirement 
under Sec.  33.202 or Sec.  33.203.
    (3) 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 MBE or WBE. EPA's 
Regional Offices will provide further information and required 
application forms to any entity interested in MBE or WBE certification. 
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

[[Page 15917]]

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 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 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 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.

[[Page 15918]]

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's 
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 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 1230T, Washington, DC 20460.
    (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.  33.212  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 indicates 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 no more than 30 days from 
the prime contractor's receipt of payment from the recipient.

[[Page 15919]]

    (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.
    (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. 3.302. 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, certified 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.

[[Page 15920]]

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 120 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 certified MBEs and WBEs that are 
ready, willing, and able to perform in the relevant geographic market 
for each of the four procurement categories (equipment, construction, 
services, and supplies). 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 certified MBEs and WBEs that are ready, 
willing, and able to perform 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) database, 
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, race and/or 
gender conscious action (e.g., apply the subcontracting suggestion in 
Sec.  33.301(c) to MBEs and WBEs) is available to a recipient and its 
prime contractor to more closely achieve the fair share objectives, 
subject to Sec.  33.409. Under no circumstances are race and/or gender 
conscious actions required by EPA.
    (b) 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.

[[Page 15921]]

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 
exemption is limited to the fair share objective requirements of this 
subpart.
    (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 exemption is 
limited to the fair share objective requirements of this subpart.
    (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. This exemption is limited 
to the fair share objective requirements of this subpart.
    (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 exemption is limited 
to the fair share objective requirements of this subpart.


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 
contractors', 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. 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 a database as possible 
about the universe of MBE/WBE and non-MBE/WBE prime and subcontractors. 
The list must include all firms that bid or quote on prime contracts, 
or bid or quote subcontracts on EPA assisted projects, including both 
MBE/WBEs and non-MBE/WBEs. The bidders list must only be kept until the 
grant project period has expired and the recipient is no longer 
receiving EPA funding under the grant. For entities receiving 
identified loans, the bidders 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:
    (1) Entity's name with point of contact;
    (2) Entity's mailing address, telephone number, and e-mail address;
    (3) The procurement on which the entity bid or quoted, and when; 
and
    (4) Entity's status as an MBE/WBE or non-MBE/WBE.
    (c) Exemptions. 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 exempt 
from the paragraph (b) of this section requirement to create and 
maintain a bidders list. Also, a recipient under the CWSRF, DWSRF, or 
BCRLF Program is not required to apply the paragraph (b) of this 
section bidders list requirement 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 exemption is limited to 
the paragraph (b) of this section bidders list requirements of this 
subpart.


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

    MBE and WBE participation must be reported by all recipients, 
including those recipients exempted under Sec.  33.411 from the 
requirement to apply the fair share objectives, on EPA Form 5700-52A. 
Recipients of Continuing Environmental Program Grants under 40 CFR part 
35, subpart A; recipients of Performance Partnership Grants (PPGs) 
under 40 CFR part 35, subpart B; General Assistance Program (GAP) 
grants for tribal governments and intertribal consortia; and 
institutions of higher education, hospitals and other non-profit 
organizations receiving financial assistance agreements under 40 CFR 
part 30, will report on MBE and WBE participation on an annual basis. 
All other financial assistance agreement recipients, including 
recipients of financial assistance agreements capitalizing revolving 
loan funds, will report on MBE and WBE participation semiannually. 
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 semiannual 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. Only certified MBEs and WBEs are to be counted towards 
MBE/WBE participation. Amounts of MBE and WBE participation are 
calculated as a percentage of total financial assistance

[[Page 15922]]

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 is 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 A 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]

0
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 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]

0
7. Section 35.936-7 is removed.


Sec.  35.938-9  [Amended]

0
8. Section 35.938-9 is amended by removing and reserving paragraph 
(b)(2).

Subpart K--[Amended]

0
9. The authority citation for part 35, subpart K, continues to read as 
follows:

    Authority: Secs. 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]

0
10. Section 35.3145 is amended by removing paragraphs (d) and (e).

Subpart L--[Amended]

0
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]

0
12. Section 35.3575(d) is removed and reserved.

Subpart M--[Amended]

0
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]

0
14. Section 35.4170(b) is removed and reserved.


Sec.  35.4205  [Amended]

0
15. Section 35.4205(g) is removed.


Sec.  35.4240  [Amended]

0
16. Section 35.4240(e) is removed and reserved.

Subpart O--[Amended]

0
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]

0
18. Section 35.6015(a) is amended by removing the definitions for 
``Minority Business Enterprise (MBE)'' and ``Women's Business 
Enterprise (WBE)''.


Sec.  35.6550  [Amended]

0
19. Section 35.6550(a)(8) is removed and reserved.


Sec.  35.6580  [Amended]

0
20. Section 35.6580 is removed.


Sec.  35.6610  [Amended]

0
21. Section 35.6610(c) is removed and reserved.


Sec.  35.6665  [Removed]

0
22. Section 35.6665 is removed.

PART 40--[Amended]

0
21. The authority citation for part 40 is revised to read as follows:

    Authority: 7 U.S.C. 136 et seq.; 15 U.S.C. 2609 et seq.; 33 
U.S.C. 1254 et seq. and 1443; 42 U.S.C. 241 et seq., 300f et seq., 
1857 et seq., 1891 et seq., and 6901 et seq.


Sec.  40.145-3  [Amended]

0
22. Section 40.145-3(c) is removed and reserved.

 [FR Doc. E8-6003 Filed 3-25-08; 8:45 am]
BILLING CODE 6560-50-P