[Federal Register: March 26, 2008 (Volume 73, Number 59)]
[Rules and Regulations]
[Page 15904-15922]
[DOCID:fr26mr08-22]

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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<PHONE_NUMBER>, and the telephone number
for the Office of Environmental Information is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Kimberly Patrick, Attorney Advisor,
Office of the Administrator, Office of Small and Disadvantaged Business
Utilization (OSDBU) by phone at<PHONE_NUMBER>, by e-mail at
<EMAIL_ADDRESS>or by fax at<PHONE_NUMBER>; or Cassandra
Freeman, Deputy Director, Office of the Administrator, OSDBU by phone
at

(202) 566-1968, by e-mail at<EMAIL_ADDRESS>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

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

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

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

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

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

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

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.

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.

    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

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

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

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.

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.

    (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.

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.

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

agreement project procurement costs, which include the match portion of