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        10             THE EPA REGION IX TRIBAL PUBLIC MEETINGS

        11                         OCTOBER 23, 2003

        12                  SESSION I - PAGES 1 THROUGH 42

        13                 SESSION II - PAGES 43 THROUGH 76

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        21             Reported by Millie Hinkle, CSR No. 9445

        22                       PRS Job No. 1-180335

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                           PAULSON REPORTING SERVICE                      1

         1   Appearances:

         2              Jeanette L. Brown                                           Director          3              U.S. Environmental Protection Agency                         Office of Small and Disadvantaged Business           4              Utilization                         1200 Pennsylvania Avenue, N.W. (1230A)          5              Washington, D.C.  20460

         6              Kimberly Patrick, Esq.                                       Environmental Protection Agency                       7              Office of Small and Disadvantaged Business                         Utilization                        8              1200 Pennsylvania Avenue, N.W. (1230A)                         Washington, D.C.  20460          9

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                           PAULSON REPORTING SERVICE                      2

         1   TEMECULA, CALIFORNIA, THURSDAY, OCTOBER 23, 2003; 1:20 P.M.

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         3              MS. BROWN:  On the record.

         4              There was a ruling that came out of the State of

         5   Colorado, which was the Adarand Decision, where there was a

         6   challenge to the Denver Colorado's procurement process where

         7   minority business was given points to help its bid to win a

         8   contract.  And that was challenged and ended up in the

         9   Supreme Court.  And as a result, we have this decision.  And

        10   it changes the course of how the Federal Government does

        11   business.

        12              Years ago at the state level, back in 1980s, I

        13   believe, there was a court case called the Crozon Decision

        14   out of Richmond, Virginia to change how the states do

        15   business.  As a grant recipient, there are terms and

        16   conditions that come with your grant that everybody must

        17   comply with.  There are things that everybody has to do if

        18   you sign up to take the money, in part, and the portion that

        19   we would like to address today is the MBE/WBE fair share

        20   clause that should be in all your grants.

        21              UNIDENTIFIED SPEAKER:  Is it in all the fair

        22   share?  It's not the six steps, but reporting is.

        23              MS. BROWN:  The six affirmative steps is to log

        24   them in and that's not going to change.  Documentation is

        25   the key to everything that we're talking about here.  Right

                           PAULSON REPORTING SERVICE                      3

         1   now -- and the reason why I'm saying it's going to impact

         2   probably the tribes the most is, Judy for Region 9 as

         3   indicated, and she's out of the grant's office and has

         4   worked with the program with us.  Right now the tribes do

         5   not currently negotiate goals like the states and the other

         6   non-profits, et cetera, do.

         7              When the rule becomes final, there is the

         8   possibility that quite a few of the tribes will have to

         9   negotiate with us the goals on the grant.  This is new.

        10              We have tried to look at how we can streamline

        11   the process as much as possible with some exemptions, and

        12   we'll get into that, but right now what I'd like to do is to

        13   just to kind of give you a synopsis of what this says in

        14   layman's terms.

        15              You still have it.  You can read it.  We'll tell

        16   you where you can go to see it for yourself and how to get

        17   your comments in, but it makes a big difference once you, I

        18   think, hear from us in what I would call layman's terms.

        19              The major change this took -- yes, sir?

        20              UNIDENTIFIED SPEAKER:  Could you just mention

        21   those two cases again?

        22              MS. BROWN:  Okay.  The Adarand's Decision that

        23   came out of the Supreme Court in 1985.  It was Adarand

        24   versus Pena, and it was out -- it was a court case out of

        25   the State of Colorado.

                           PAULSON REPORTING SERVICE                      4

         1              UNIDENTIFIED SPEAKER:  Okay.

         2              MS. BROWN:  The Crozon Decision was one that came

         3   out of Richmond, Virginia.

         4              MS. PATRICK: That's C-r-o-z-o-n.

         5              UNIDENTIFIED SPEAKER:  Z-o-n?

         6              MS. BROWN:  Z-o-n.

         7              UNIDENTIFIED SPEAKER:  And Adarand, A-d- --

         8              MS. BROWN:  A-d-a-r-a-n-d.

         9              And it basically changes how we do business.

        10              UNIDENTIFIED SPEAKER:  Okay.  Thank you.

        11              MS. BROWN:  You're welcome.

        12              So the summary of the major changes are as

        13   follows:  One, would propose to change the current name from

        14   the MBE/WBE program to the DBE Program, to be consistent

        15   with the other federal agencies.

        16              There are three agencies that have similar

        17   programs, and we have been working with the Department of

        18   Justice.  The other agencies that have similar programs are

        19   the Department of Transportation, most people are familiar

        20   with the state DOT Highway Program.  EPA is much smaller,

        21   but it's categorized by DOJ and similar to DOT, and then

        22   NASA.  And I am not sure how NASA carries out their grant

        23   program, but we have been working with the Department of

        24   Justice and the Department of Transportation on our rule.

        25              The Department of Justice -- DOT went out with

                           PAULSON REPORTING SERVICE                      5

         1   their's and their rule became final about two years ago; so

         2   we were the last agency to make these changes to our program

         3   in compliance with the Adarand Decision.

         4              A couple years ago under the prior administration

         5   you may have heard something about mend it, not end it when

         6   they started talking about affirmative action program.  We

         7   at EPA do not consider this to be an affirmative action

         8   program, but because you talk about race and gender, other

         9   people in the government think that it is.

        10              The concern that we have here is programs like

        11   this are challenged all the time and being challenged as we

        12   speak.  We are familiar with a case that's going on now out

        13   of Chicago.  There are cases in other places in the country

        14   where these kinds of programs are being challenged.  We say

        15   this program is an outreach program to be inclusive of

        16   minorities and women in the process, but they can't be

        17   included if they don't know where to go, if they don't know

        18   what the procedures are in terms of how to get bids in and

        19   how to be competitive.  We're saying that any grantee, if

        20   you go out -- and I'm all over the place, but I will get

        21   back to that.

        22              If you go out and buy anything in one of four

        23   categories, our program kicks in.  Those four categories are

        24   this:  Equipment, construction, services or supplies.

        25   That's all inclusive.  That's anything that you will go out

                           PAULSON REPORTING SERVICE                      6

         1   and buy.

         2              The exception is this:  Because you don't have to

         3   use the grant money to enter into a contract, if you decide

         4   from a program manager standpoint that you want to use the

         5   money from the grant to pay salaries, to pay for your staff,

         6   the program does not kick in.  But the minute you go out and

         7   buy water, the program kicks in.

         8              Water, I'm just using that as an example, but you

         9   go out and by anything, a pen, a pencil, supplies, the

        10   program -- that's my point.  The program kicks

        11   in.

        12              Okay.  So what we're proposing to do first is to

        13   change the name to be consistent.  Most people know DOT's

        14   program is the state DOT -- I mean, DBE program.  We're

        15   proposing that our name be changed to be the EPA's DBE

        16   program.

        17              A DBE is defined as an entity owned and/or

        18   controlled by an individual who's socially and economically

        19   disadvantaged under either EPA's eight percent or ten

        20   percent statute, as well as small business enterprises,

        21   labor surplus areas, and this is new.  This is a

        22   change.

        23              Certification, under the proposal there will be

        24   three changes to the current certification requirements in

        25   order to satisfy the Adarand Decision, especially as it

                           PAULSON REPORTING SERVICE                      7

         1   relates to strict scrutiny analysis that we now have to do.

         2              We will no longer accept MBE self-certification.

         3   Right now under the program, if a business says that they

         4   are a minority business, we accept it.  Once the proposed

         5   rule is finalized, we cannot just accept their word.  They

         6   need to be certified, have some kind of documentation to

         7   support that status.

         8              Recognize MBE certifications, certifications of

         9   entities as owned and/or controlled by socially and

        10   economically disadvantaged businesses under EPA's eight

        11   percent or ten percent statutes by state, local or tribal

        12   governments and private certifiers as long as their

        13   criterias matches EPA.

        14              Basically what I'm saying is this.  We recognize

        15   and understand that there are entities out there that

        16   certify minority businesses.  We're saying that we will

        17   accept those certifications provided it meets the federal

        18   standard.

        19              There may be tribe-certified businesses as

        20   minority businesses.  We will accept them provided we are

        21   comparing apples and apples, that the standards are the

        22   same.

        23              Yes, sir?

        24              UNIDENTIFIED SPEAKER:  Have you looked at the

        25   Department --

                           PAULSON REPORTING SERVICE                      8

         1              MS. BROWN:  Yes, go ahead.

         2              MR. PARKS:  My name is Mitchell Parks.  I

         3   represent the Salt River Puma Maricopa Indian community in

         4   Scottsdale.

         5              Have you looked at the Department of Interior's

         6   Buy Indian Act program to see if that matches because they

         7   certify small and minority business enterprises

         8   Indian-owned, controlled and operated firms.

         9              MS. PATRICK:  We have not looked at that yet, but

        10   what we're doing is, once the program gets going, if you

        11   have a prior certification, we're willing to do the analysis

        12   at that point to see if that fits.  But now that I know the

        13   Department of Interior have a similar program, one that

        14   certifies entities, we have a problem with doing an analysis

        15   up front, and perhaps let people know that we will accept

        16   them from the Department of Interior through their program

        17   as long as the standards are the same.  We have no problem

        18   looking at that at all.

        19              MS. BROWN:  Our goal in this is not to become

        20   certifiers.  It is our hope that businesses when they come

        21   will already be certified with the certification that we can

        22   accept.  When and if all else fails, that's when we will

        23   come in because we don't want anybody to lose the

        24   opportunity of winning a contract and getting credit for it,

        25   we will certify.

                           PAULSON REPORTING SERVICE                      9

         1              MS. PATRICK:  At this point -- I'm sorry.

         2              UNIDENTIFIED SPEAKER:  Let me ask another

         3   question along the same lines.

         4              We use Federal supply schedules which are where

         5   we use businesses that are already certified by GSA as small

         6   and minority business enterprises.  Are those acceptable?

         7              MS. PATRICK:  That's what -- I didn't know GSA

         8   was certified.

         9              MS. BROWN:  I didn't know GSA certified.  I think

        10   SBA certifies.

        11              MS. PATRICK:  And GSA.

        12              MS. BROWN:  GSA accepts.

        13              MS. PATRICK:  If that's the case and if they have

        14   SBA certification --

        15              MS. BROWN:  We will accept that.

        16              MR. PARKS:  Okay.

        17              MS. PATRICK:  Basically, we're willing to accept

        18   any certification that meets our criteria whether it's from

        19   the local level, municipality, tribe, state, whoever.  If

        20   it's a certification that you have, our goal is to not make

        21   you go through more process.  If you have a certification,

        22   we want to accept it as long as the criteria are the same.

        23   That's our primary goal.

        24              MS. BROWN:  Yes, sir?

        25              UNIDENTIFIED SPEAKER:  Well, that's actually

                           PAULSON REPORTING SERVICE                      10

         1   where I see a problem developing because how are we to know

         2   without going through the exact same process of certifying

         3   another vendor that has this moniker that they have gotten

         4   from another agency exactly whether that same criteria

         5   applies unless we go through that whole process of criteria

         6   again.  We might as well be recertifying them at this point;

         7   so accepting somebody else's criteria or certification

         8   doesn't really do any good unless they -- that vendor or

         9   entity up front has all of this done ahead of time so that

        10   when we contact them, we say, well, do you have an MBE

        11   certification, and does it meet EPA's criteria, and they go,

        12   what do you mean EPA's criteria?  You know, GSA or SBA put

        13   us through the ringer, you know, for two months trying to

        14   figure this out three years ago.

        15              MS. BROWN:  Well, if it's another federal agency,

        16   for the most part, it will probably -- it will be accepted,

        17   and I have to kind of rephrase that.

        18              MS. PATRICK:  With probably there is one

        19   technicality.  For example, the Department of

        20   Transportation, they will accept certifications from -- they

        21   don't have the U.S. Citizenship requirements.  SBA does have

        22   U.S. Citizenship requirements, and we are proposing to have

        23   the same citizenship requirement; so that is the one

        24   technicality with DOD that we would not match; so we would

        25   accept the certification as long as the citizenship

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         1   requirement is met.

         2              Now, from what you're saying from your

         3   standpoint, if SBA has put that business through the

         4   wringer, we already have an understanding up front that we

         5   accept that certification.

         6              Now, in terms of the other looking to have a

         7   state certification, we've already done a preliminary review

         8   to see which state program have criterias that match ours.

         9   Out of 50 states I believe it's close to 34 or 40 that

        10   matched ours where the person would not have to undergo the

        11   same thing again.  For the other ten states, we already know

        12   ahead of time that that entity would have to get certified

        13   by us or we're trying to tell people from a business-owner's

        14   standpoint it is more advantageous for you to have SBA

        15   certification because it's like having a VISA Platinum card

        16   as a business.  Everybody accepts it.

        17              And so -- and what we tell people is, if you get

        18   certification, that's only for the EPA.  If you get SBA

        19   certification, it's good everywhere, including the DOT

        20   because they have a memorandum of understanding where they

        21   accept each other's certification; so just as a smart

        22   business move it's a good thing to get certified if you're

        23   eligible.

        24              MS. BROWN:  Did I see a hand?

        25              Yes, go ahead.

                           PAULSON REPORTING SERVICE                      12

         1              UNIDENTIFIED SPEAKER:  And this includes small

         2   business?

         3              MS. BROWN:  This is for minority and women-owned

         4   businesses.  And the caveat to all of that is you have to be

         5   small first.  Okay?

         6              All right.  So that's what we are currently

         7   talking about with -- and the criteria that we're looking at

         8   is that under Section 8(a) (5) and (6) of the Small Business

         9   Act from SBA, and SBA 8(a) Business Development Program

        10   regulations, and that's under the 88 program.

        11              We also want to clarify that EPA will accept

        12   DOT/DBE certification as valid certifications, under our

        13   program, again, if citizenship requirements are met.  If

        14   they're not a citizen, then we have to look at that

        15   again.

        16              MS. PATRICK:  No, there are five categories where

        17   as a matter of first impression EPA will have to certify

        18   because nobody else in the country certifies these entities,

        19   currently anyway.  And those would be women-owned

        20   businesses, disabled American-owned businesses, private and

        21   voluntary organizations controlled by individuals who are

        22   socially and economically disadvantaged.

        23              Entities which are certified under criteria which

        24   are inconsistent with EPA's DBE program, which I already

        25   talked about, you can't -- you have to come to us.  And

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         1   finally, any entity claiming that it's owned or controlled

         2   by socially and economically disadvantaged individuals,

         3   under EPA eight percent statute, that's an important

         4   distinction.

         5              At EPA there are two different statutes that we

         6   work under, eight percent statute and ten percent

         7   statute.  While someone was writing these statutes, no one

         8   kind of looked at the other one to see if they matched; so

         9   we have one that says, entity must be owned and controlled.

        10   The other one says, entity has to be owned or controlled.

        11   So we're stuck with having to deal with both sides of the

        12   statute, so which is why we will have to certify entities as

        13   a matter of first impression who were owned or controlled by

        14   social, economically and disadvantaged individuals.  So

        15   that's why the distinction is there.

        16              UNIDENTIFIED SPEAKER:  Isn't there a tax break, I

        17   mean, for these businesses?  Or how does this relate to the

        18   tribes?  I mean, do the tribes get some type of tax break?

        19   Well, obviously, I don't think individual members pay taxes,

        20   but how does it affect, you know, the grants and -- I

        21   mean --

        22              MS. PATRICK:  We're getting to that.  The

        23   certification part is mostly if you're a tribally owned or

        24   an owner of a tribal-owned business, the certification does

        25   not affect you.  Once we get more to the grants of

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         1   requirement part, you'll see how it affects your grants.

         2              MS. BROWN:  Did you talk about five?

         3              MS. PATRICK:  Yes.

         4              MS. BROWN:  Okay.  The other practical affect of

         5   this process if adopted is that the individual that worked

         6   and an individual who owns the minority business could not

         7   be worth anymore than $750,000.  That's consistent with SBA.

         8              MS. PATRICK:  And DOT.

         9              MS. BROWN:  And DOT.  And that was an issue

        10   yesterday in Atlanta for some of the people, so if you have

        11   any concerns or comments, please, let us hear them.

        12     Yes, sir?

        13              UNIDENTIFIED SPEAKER:  You said 750,000.  Does

        14   that mean the contract that's contracted for 750,000, the

        15   amount that they are in the black is 750,000?  The amount of

        16   value of the business including equipment is 750,000?  What

        17   is $750,000?

        18              MS. PATRICK:  That's personal net worth excluding

        19   your own.  So that's your personal money.  It wouldn't

        20   include your business assets.  That's looked at separately;

        21   so your personal net worth cannot be over $750,000,

        22   excluding your personal worth.

        23              UNIDENTIFIED SPEAKER:  I think I just made it

        24   under the wire.  749.

        25              MS. BROWN:  Well, make sure you stay there.

                           PAULSON REPORTING SERVICE                      15

         1              The other proposed change is we're looking to

         2   move and that relates to our good faith effort.  These are

         3   already in your grant, should already be in your grant

         4   document, and we cannot waive these.  Everybody should be

         5   doing this, and these are the steps that you should follow

         6   to insure that we are affording minority and women-owned

         7   businesses the opportunity to participate in your

         8   procurement process.

         9              What we're looking or proposing to do is to --

        10   the six affirmative steps that are found in 40 CFR, Part 31

        11   and the six positive efforts in 40 CFR, Part 30 are being

        12   combined all together, put in one place.  But they are not

        13   new.  This is on the books.  It's in your grant, and we

        14   should be complying with those already.  And I can't  waive

        15   them.  Kimberly, my attorney, can't waive them.  This is

        16   part of the statute.

        17              MS. PATRICK:  Yeah, this part's another effort to

        18   sort of make sense so that everything is in one place

        19   because we had one set of the rules saying six positive

        20   efforts.  The other one's saying affirmative steps.  Were

        21   saying the same thing.  So we're saying we'll put it

        22   together, just make a good-faith effort and everybody can

        23   find them in one place and not be confused.

        24              MS. BROWN:  The other part that we're talking

        25   about next is the contract administration provisions that

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         1   really affect the minority contractors.

         2              A recipient must be notified in writing by his

         3   prime contractor to any termination of a DBE

         4   subcontractor.  Or basically, if you as a grantee contracts

         5   out and your contractor has a subcontractor who is a DBE, if

         6   your prime contractor decides to terminate that contract,

         7   they have to notify you.  Because what we've seen a lot of

         8   times is people whose contracts are cancelled, minority

         9   businesses are adversely affected and they don't have a clue

        10   a lot of times what's going on.

        11              MS. PATRICK:  And most of these are under the

        12   contract administration provision portion of this, it's

        13   mostly about preventing bait and switches because a lot of

        14   times large contractors say, oh, yes, we have this long list

        15   of small and minority businesses we're planning on using for

        16   subcontracting.  As soon as they get the award, all of a

        17   sudden something changes and they don't get anybody.

        18              MS. BROWN:  And we get that a lot.

        19              MS. PATRICK:  So the provisions under this

        20   portion are included so that prevents that from happening so

        21   that when these large contractors come in, they actually are

        22   giving work and awarding the contract to the smaller

        23   businesses.

        24              MS. BROWN:  When the DBE subcontractor fails to

        25   complete his work under the subcontract for any reason, the

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         1   recipient must require a prime contractor to make

         2   good-faith efforts in hiring another subcontractor, that is,

         3   undertaking the six affirmative steps.

         4              Just because they did it the first time and if

         5   that contract doesn't work out and they go back in again,

         6   they should employ those six affirmative steps in trying to

         7   find another minority business.  Not to say, and I need to

         8   -- let me make sure you all understand me.

         9              It needs to make good business sense to use

        10   minority contractors as well.  We're not saying that you

        11   have to absolutely, positively use anybody but minority

        12   contractors.  That's not what we're saying.  What we're

        13   saying is they should be afforded an opportunity to

        14   participate in the process.  And in the event a contract is

        15   terminated, those same efforts that you went through to

        16   secure or acquire a minority business the first time, they

        17   needs to employ those again.  Again, it needs to make good

        18   business sense.

        19              If a contractor wants to charge $25 minority

        20   business for a pen, does that make good business sense?  No.

        21   You document in your file that you couldn't use them and why

        22   you couldn't, and you go and make your award.

        23              Again, the key to all of this is documenting the

        24   file.  One of the things that we found and what we saw was

        25   when the Department of Justice came to do a review of EPA

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         1   grant files to see how we were carrying out our program,

         2   documentation on the part of EPA and our grantees was not

         3   very good.  And so we need to do a better job of documenting

         4   what we do.

         5              What you need to realize and understand is when

         6   you sign up and take this money, terms and conditions or

         7   there are strings attached to.  If there's challenges and

         8   somebody wants to say that we improperly did something or

         9   you used somebody that you shouldn't use, you will have to

        10   defend what you did.

        11              How do you do that if you don't know?  EPA will

        12   be coming saying, what did you do?  We'll know what we did,

        13   hopefully because we will have documented our files, but

        14   you're the ones that are on the front lines because you're

        15   the ones that are entering into these contracts with these

        16   contractors.  So it's critical that you document your file

        17   for the record so that everybody knows what's going on.

        18              A recipient must require its prime contractor to

        19   also make good-faith efforts even if the fair share of

        20   objectives are met.  In some instances, what we see is

        21   after -- and this is primarily with that state and local

        22   government, but as we get to the point where we would be

        23   negotiating goals with the tribes, as the goals are met, you

        24   can't stop and say, well, we've done enough and we don't

        25   need to do anymore.  Again, this is continuous.  Okay?

                           PAULSON REPORTING SERVICE                      19

         1              A recipient must require its prime contractor to

         2   pay its subcontractor for satisfactory performance within a

         3   specific number of days from the date that the prime

         4   contractor got its payment from you all.  What we also see

         5   here is subcontractors, minority businesses in particular

         6   not being paid in a timely manner.  I see a lot of heads

         7   going you heard that before.  Okay?  So you must require

         8   your prime contractors to pay on time.

         9              A recipient must require the completion of some

        10   new forms that we have identified to prevent the bait and

        11   switch, and those forms can be found at our website.

        12              MS. PATRICK:  Yes.

        13              MS. BROWN:  And that's at --

        14              MS. PATRICK:  Some of them are new forms though.

        15   They're not out there yet until they go through all the

        16   clearance and everybody else takes a stab at them.  Then

        17   they will be available, but they're going to come out

        18   probably around the same time.  As the rule goes final, the

        19   forms will go final.

        20              MS. BROWN:  And in doing so, some of these forms

        21   will be completed either by the prime contractor or the DBE,

        22   depending on what the form is.  Basically what we're trying

        23   to do is to have the contractor submit something to the

        24   prime contractor or the subcontractor in terms of payment,

        25   when they got paid, those kinds of things; so that we will

                           PAULSON REPORTING SERVICE                      20

         1   have a record as well what it is that's going on under these

         2   contracts.

         3              Submission of fair share goals.

         4              Kimberly, you want to take that?

         5              MS. PATRICK:  Give me the good part; right?

         6              This is where it really starts to get into your

         7   grant provisions and the grants that you have.  For the

         8   first time we're going to require the tribes negotiate goals

         9   with us for their use of minority and women-owned and small

        10   businesses and so forth.  This is a brand new requirement

        11   particularly for the tribes.

        12              Currently the states already negotiate

        13   goals.  And what happens is the goals are usually based on

        14   either availability analysis or disparity studies which give

        15   us a good picture of what businesses are available in your

        16   particular geographic area, in the area of business that you

        17   need to do business in, and what ends of the business is

        18   available and ready to do the work.  Once those -- we look

        19   at those analyses and we talk and we figure out what the

        20   goals should be based on what's available.

        21              The goals are just that.  They are goals.  They

        22   are things you strive to meet.  They are not quotas.  They

        23   are not requirements.  It's basically a goal that we hope

        24   you will try to get there and meet that objective.  And

        25   that's pretty much how they operate.

                           PAULSON REPORTING SERVICE                      21

         1              It would be the regional MBE/WBE coordinator who

         2   would be the person who would negotiate the goals with the

         3   individual entities, whether it be the tribes or the state

         4   or municipalities, whatever.  That person to reach is Joe

         5   Ochab.  Joe is not here today, but some of you may know his

         6   name and may have had some contact with him.  I'm not

         7   sure.

         8              Joe is the person who does that, and so as the

         9   process gets under way or if one of the rules finally goes

        10   final -- there's something I should point out real quick,

        11   for the tribes, once a rule goes final, there is a

        12   three-year phase-in period for the tribes to get up to

        13   speed, particularly with the negotiations requirements which

        14   is a really brand new thing in here for the tribes.

        15              The states are used to doing this.  They've been

        16   doing it all along; so it's not a huge change for them, but

        17   we want to make sure the tribes have their internal system

        18   set up and are doing the documentation and everything before

        19   we make the full requirements so the rule's imposed on the

        20   tribes.  So there is a three-year phase-in period before

        21   that happens.

        22              During that phase-in period we want it to be our

        23   responsibility to go out and educate as much as possible

        24   about how the system works and to get everybody more

        25   comfortable and up to speed.  It is not an expectation that

                           PAULSON REPORTING SERVICE                      22

         1   on the last date of that three-year period that everybody

         2   will start doing it.  I hope that along the way the

         3   different tribes will get more comfortable with the process,

         4   that they will go ahead and start implementing some of the

         5   changes so we're up to speed and everybody's on board and it

         6   will be a nice little transition; so that's what our plan is

         7   for that negotiation and goals.

         8              MS. BROWN:  The other part with this is that once

         9   this is in effect, the agency would no later than 90 days

        10   after the acceptance of the existence of the award, these

        11   negotiations have to be completed.  If they are not, if they

        12   are not completed after the three-year period and we have

        13   not completed the negotiations with a tribe or state, we

        14   reserve the right to at least hold or not allow or say that

        15   the grantee can't spend any of its financial assistance

        16   award for procurement until negotiations are complete.

        17              We've done this with some of the states who chose

        18   not to negotiate with us for whatever reason.  We just said,

        19   fine.  You can't buy anything.  It didn't take them long to

        20   come to the table.  Okay?

        21              Again, this helps us as well as it does you

        22   because if there's a challenge on the program, we have to

        23   defend what we're doing.  We recognize and understand the

        24   good old boy network system is alive and well in this

        25   country.

                           PAULSON REPORTING SERVICE                      23

         1              UNIDENTIFIED SPEAKER:  Boo.  I know what you mean

         2   exactly.

         3              MS. BROWN:  And so we need to be on board and go

         4   ahead and get these things in place.

         5              MS. PATRICK:  We also want to point out, it's

         6   possible that the cost of preparing the availability

         7   analysis or disparity study may be grant eligible under the

         8   cost of a grant.  So you need to check into the individual

         9   grant circumstances.  I'm not sure what the requirements

        10   are, but check with your grant specialists to find out if

        11   any of that cost is grant eligible.

        12              What we want to point out particularly for the

        13   tribes is that you don't have to go out and do an

        14   availability analysis or disparity study if you don't want

        15   to.  It's open for you to use the goals negotiated by the

        16   the state.

        17              If the state goals are working for you in your

        18   geographic area and you want to adopt a state goal, you can

        19   do that.  And then you don't have to go through the process

        20   of an availability analysis or disparity study.  Otherwise,

        21   one would have to be done in your particular geographic area

        22   and what's available to you and it's possible that those

        23   costs may be granted.

        24              MS. BROWN:  And this is new for us.  In years

        25   prior to I guess the last five years maybe, four years, we

                           PAULSON REPORTING SERVICE                      24

         1   didn't do this.  We didn't fool with availability analysis.

         2   We didn't look at disparity studies, but once the Adarand

         3   Decision became the law of the land it changed how we have

         4   to do business.  So we now are looking at availability

         5   analysis.  We are looking at disparity studies, and let me

         6   tell you this.

         7              We're not telling anybody that you have to do a

         8   disparity study.  Those things cost a lot of money.  There

         9   are other ways using census data and a lot of other

        10   information that's out there that can help one come up with

        11   what the market will bear.

        12              And basically it's looking at what are your

        13   current buying practices, depending on where you're

        14   reservation is or where the tribe is located, what kind of

        15   businesses do you have that you utilize?  How far do you

        16   have to go for certain commodities, those kinds of things,

        17   and you draw your parameters around what your current buying

        18   strategy or practices are.  That's basically it.

        19              Did you have a question, Miss?

        20              UNIDENTIFIED SPEAKER:  Yeah, it says, may be

        21   grant eligible.  As a part of a particular grant that you're

        22   applying for or a separate?

        23              MS. BROWN:  We will look at that on a

        24   case-by-case basis, and it also depends on how you come up

        25   with your analysis.  Say if you are a tribe and you get

                           PAULSON REPORTING SERVICE                      25

         1   several grants from EPA, it may be beneficial to do one

         2   analysis that will cover all of your grants.

         3              Is that right?

         4              MS. PATRICK:  It's possible.

         5              MS. BROWN:  And then that would be -- and you

         6   could kind of like prorate that across the cost that's

         7   associated for what -- across those grants.

         8              UNIDENTIFIED SPEAKER:  Because what I see is the

         9   census information doesn't really create an accurate

        10   picture, and puts you in a whole different bracket that it's

        11   like -- it doesn't even look like you.

        12              MS. BROWN:  Okay.  If the shoe doesn't fit, don't

        13   try to wear it.

        14              MS. PATRICK:  Our entire goal is to make sure

        15   that the goals that you have really make sense for you in a

        16   realistic situation, if you're realistic.  And so our main

        17   thing is to make sure the goal is based on something.  In

        18   the past, goals are pretty arbitrary that we would negotiate

        19   with the state.  Who knows what they were based on in some

        20   instances or where they came from.

        21              We can't do that any more.  This court decision

        22   has made things very, very clear that we can't just

        23   arbitrarily do anything.  Everything we do has to have a

        24   basis.  You have to be able to show why we did this.  Where

        25   this came from, and this is just another part of that.

                           PAULSON REPORTING SERVICE                      26

         1              MS. BROWN:  In years passed, it was kind of like

         2   you did ten percent last year.  You think you can do that

         3   this year.  And that was it.  And so we have really got to

         4   get on board with what the new requirements

         5   are.

         6              UNIDENTIFIED SPEAKER:  When you say there may be

         7   money of the grants available or that sort of thing, is

         8   headquarters going to be having any extra funds for that or

         9   are you just going to rely on the regions to do that?

        10              MS. BROWN:  It will probably come from the

        11   regions.  We do know that for some of the -- in instances

        12   where you have a larger tribe that are getting a lot of

        13   grants, it makes good sense.  What we're seeing with the

        14   state is that they use a lot of the local colleges and

        15   universities to work with them to come up with the data to

        16   do -- to draw the parameters, that kind of thing.  You may

        17   be able to do that that way.

        18              There are a number of things.  One of the things

        19   that we initially talked about was maybe even trying to work

        20   to come up with some kind of resources that we could make

        21   from my office available in helping some of the tribes come

        22   up with this.  That is not completely off the table.  I just

        23   need to know that people will be interested in what the

        24   needs are.

        25              Part of the concern that we have when we were

                           PAULSON REPORTING SERVICE                      27

         1   looking at that is this.  What firm do we pick to help?  And

         2   I can't pick several firms.  I would only probably go with

         3   one, but from what I was told, some people may not like a

         4   certain firm or would prefer not to use, so it kind of puts

         5   me in a quandary as to how we would satisfy that.

         6              But if you have some comments or suggestions on

         7   how we can work with you to make this happen, now is the

         8   time to get that kind of information to us.  Or if you have

         9   anything that you would like to share now, let us know and

        10   we'll take that under advisement.

        11              Yes, ma'am?

        12              UNIDENTIFIED SPEAKER:  I just want to know where

        13   I can send you a proposal to help us out.

        14              MS. PATRICK:  Okay.  We'll get that --

        15              UNIDENTIFIED SPEAKER:  Because I've had a couple

        16   of grants where it's like the applicant is so small and it

        17   just happens to be located in the, you know, wealthier

        18   population, and they get bucketed into this thing and it

        19   doesn't even depict -- you know, give an accurate --

        20              MS. BROWN:  Accurate picture.

        21              UNIDENTIFIED SPEAKER:  And then they don't have

        22   enough money so that they can afford to do something like

        23   that.

        24              MS. PATRICK:  We will skip right to that.  And

        25   when we give you information, we'll just put there are

                           PAULSON REPORTING SERVICE                      28

         1   several ways that entities can comment on this rule.  I

         2   don't know if you all got the handout.

         3              Do you actually have the rule itself, the long

         4   version?  There should be some on the table.  Some right up

         5   here.   This is the actual rule itself.  If you look at the

         6   first few pages, it tells you how to fax it to us, E-mail it

         7   to us, mail it to us, carrier pigeon it to us, however you

         8   want to get it to us, we will accept it and take it because

         9   we are really begging for comments.  We want to get this

        10   thing right.  And I don't want you all to think that your

        11   comments don't mean very much.

        12              Some of the major changes that we have in this

        13   particular version of the rules were very directly based on

        14   comments we received when we went out around the country

        15   before getting comments on the draft of it.  And it results

        16   in serious changes to this rule.

        17              We are very serious about the comments we solicit

        18   and we take them into consideration, but as a direct answer,

        19   you can go to our website.  Go to the website.  It has a

        20   link to the office policy information, the one that handles

        21   that kind of thing.  You can go to www dot --  something or

        22   another, just a second.  Here it is.

        23              If you do it on line you can go to www dot oei --

        24    excuse me, www dot epa dot gov slash edocket.

        25              MS. BROWN:  Right.

                           PAULSON REPORTING SERVICE                      29

         1              MS. PATRICK:  Once you're there, the specific

         2   docket number for this rule is oa dash 2002 dash 0001.

         3              UNIDENTIFIED SPEAKER:  Could you repeat that

         4   again?  That was real fast.

         5              MS. PATRICK:  Sure.  The website is www dot epa

         6   dot gov slash edocket, edocket.  Once you're there, it

         7   prompts you to enter a docket number.  That number for this

         8   rule is oa dash 2002 dash 0001.  And also you can E-mail any

         9   comments directly.  The E-mail address is oei dot docket at

        10   epamail, all one word.  That's all one word, dot epa dot

        11   gov.

        12              UNIDENTIFIED SPEAKER:  E-i-e-i-o.

        13              MS. BROWN:  Okay.  And all of that is spelled out

        14   in your rule itself.

        15              MS. PATRICK:  Yes.  It's found in the first few

        16   questions or the first few questions.  One of the questions,

        17   how do I come to this rule, all of that information is in

        18   here.

        19              MS. BROWN:  In the rule, we go through a general

        20   discussion about how do you determine a fair share goal,

        21   that's kind of complicated, but basically you go to what

        22   your current buying conditions are, like you said, and make

        23   sure it best reflects what you do right now so that we can

        24   get a good picture of what that fair share goal is.

        25              UNIDENTIFIED SPEAKER:  Before we leave the

                           PAULSON REPORTING SERVICE                      30

         1   subject of doing studies and whether we can use our grant

         2   moneys to do those things and that's where -- how to pay

         3   paid for it.  My first glance at this is it appears to be an

         4   unfunded mandate basically because there's no funds provided

         5   with the rule or mechanism in the rule directly to do the

         6   necessary and required studies to come up with the

         7   negotiating points of this requirement.

         8              So when you look at most of the EPA grants that

         9   tribes get, you have got, unlike BIA grants that tribes get,

        10   there is one pot of money that both indirect cost comes out

        11   of plus all of your operating for the grant on the ground

        12   work, plus your salaries, you know, for the people doing

        13   that.

        14              So when you throw in another requirement that all

        15   of a sudden you may have to spend X percentage of your

        16   grant, and although it may be once in three years to do

        17   that, it's still not going to be an insignificant part of

        18   that process because a lot of tribes are getting, you know,

        19   base funding grants, say, $30,000 for their water program.

        20   And now they've got to chop that into more pieces to come up

        21   with how they are going to meet this, that seems like an

        22   unfair and burdensome requirement for the types of grants

        23   that tribes get.

        24              MS. BROWN:  I'm glad you mentioned that, and I

        25   think we came up with what we thought was a way to kind of

                           PAULSON REPORTING SERVICE                      31

         1   address that situation with some of the exemptions that we

         2   have proposed.

         3              In particular, we are proposing to exempt

         4   recipients of EPA financial assistance agreement in the

         5   amount of $250,000 or less for any single assistance

         6   agreement or more than one financial assistance agreement

         7   combined to a total of $250,000 or less in any one fiscal

         8   year.

         9              UNIDENTIFIED SPEAKER:  So they're totally exempt

        10   from the requirements at that point?

        11              MS. PATRICK:  They're exempted from the

        12   negotiation.  You still have to do the reporting.  The

        13   reporting will never go away and you still have to do the

        14   six affirmative steps.

        15              MS. BROWN:  And the point is it's there now.

        16   Everybody needs to do it.

        17              MS. PATRICK:  That's nothing new, but you're

        18   going to have to negotiate the goals which means that you

        19   don't have to go through the availability.  You don't have

        20   to go through the various other parts, which is where the

        21   real central cost comes from.

        22              MS. BROWN:  And then, again, we also have on the

        23   table -- I'm saying if you have any ideas or suggestions on

        24   how we can work to help provide some kind of assistance, I

        25   need to hear that.

                           PAULSON REPORTING SERVICE                      32

         1              In addition to that, when we went through this to

         2   see how and who will be impacted with these exceptions,

         3   Region 9, was it?

         4              MS. PATRICK:  It was Region 10.

         5              MS. BROWN:  Region 10.

         6              MS. PATRICK:  Region 10 had an exorbitant number

         7   of tribes in the region with assistance.  In a test case,

         8   we pulled their numbers.  We backed out every grant that was

         9   less than $50,000.  We backed out every grantee that had

        10   total grants that were under $250,000.

        11              Then we have another exemption.  We're exempting

        12   all PPG eligible grants, which is sentencing grant

        13   categories, we backed those out.

        14              Once we did everything in terms of the

        15   exemptions, what was left was the possibility of negotiating

        16   with only about 25, and that's reducing the number from

        17   well over 400 down to 25.  So we think the exemptions are

        18   helping because most of you probably won't have to negotiate

        19   with all the exemptions that we have.

        20              UNIDENTIFIED SPEAKER:  And there is not a limit

        21   on PPG Grants?

        22              MS. PATRICK:  No, no.

        23              UNIDENTIFIED SPEAKER:  And there's not a monetary

        24   limit?

        25              MS. BROWN:  No, no.  As long as you fall in that

                           PAULSON REPORTING SERVICE                      33

         1   category.

         2              UNIDENTIFIED SPEAKER:  So if you rolled all your

         3   grants into a PPG -- let's say you have got six grants and

         4   they are all PPG eligible, and you rolled all those into an

         5   agreement, then it doesn't matter whether they're 750 --

         6              MS. BROWN:  As long as they fall into that

         7   category of the PPG, and then also the Tag Grants are also

         8   exempted from the fair share negotiation requirements, the

         9   Technical Assistance Grant.

        10              The Technical Assistance Grants are also exempt.

        11   So when you do that, we're talking about a small number of

        12   tribes, and those are probably the larger ones and they can

        13   pretty much afford and need to do that because of the type

        14   of moneys that they are getting.  And if there is a

        15   challenge, again, we got to defend what we do.

        16              Yes, sir?

        17              UNIDENTIFIED SPEAKER:  So grants that are

        18   eligible for PPG, if they're not in a PPG, they don't count.

        19              MS. PATRICK:  They don't count.  They're not

        20   eligible.

        21              MS. BROWN:  We tried to eliminate as many as

        22   possible.  We went round and round and had a number of

        23   discussions and meetings and forums like this.  That's why

        24   we wanted to come to this kind of setting because you are

        25   the ones that are on the front lines and doing this, and we

                           PAULSON REPORTING SERVICE                      34

         1   needed to hear from you.  We got a lot of input back from

         2   Region 9 and ten in terms of what we needed to consider.

         3              MS. PATRICK:  To give you some history, this is

         4   one they're saying there was a direct result of the volume

         5   of comments we received and we initially said everyone was

         6   going to have to negotiate.

         7              MS. BROWN:  So we really need to hear from you

         8   and read this and make sure you thought about what it's

         9   saying so that if it's something that we have not considered

        10   or something that we really need to take a look at, you

        11   bring it to our attention.

        12              Yes?

        13              UNIDENTIFIED SPEAKER:  When does the comment

        14   period close on this?

        15              MS. BROWN:  January 20th.

        16              UNIDENTIFIED SPEAKER:  I guess my comments then

        17   would be towards the way the PPG is worded or worded in here

        18   that you specifically say that they don't have to be in a

        19   PPG agreement at the time that you're receiving it as long

        20   as they're an eligible grant under the PPG program.

        21              MS. PATRICK:  We'll make it clear.

        22              UNIDENTIFIED SPEAKER:  The exemptions are in

        23   here?

        24              MS. BROWN:  Yes, all of what we're going over now

        25   is in the rule.

                           PAULSON REPORTING SERVICE                      35

         1              UNIDENTIFIED SPEAKER:  You just have to find it.

         2              MS. BROWN:  And we thought --

         3              MS. PATRICK:  There's a section that say, are

         4   there any exemptions calling sections.  They are all in

         5   there.

         6              MS. BROWN:  Okay.

         7              MS. PATRICK:  And also, the $250,000 exemption

         8   also applies to your brown bills and your SRF loan programs

         9   as well.  That particular $250,000 exemption applies

        10   there.

        11              MS. BROWN:  So again, we are proposing a

        12   three-year phase-in so this won't hit you all of a sudden,

        13   but we need to make sure that as -- when the rule becomes

        14   final we're making progress in getting close to that

        15   deadline of three years.  Okay?  This is in particular for

        16   the tribes in the trust territories who currently are the

        17   only ones who don't negotiate with us.

        18              The number of new terms that we have identified

        19   in disparity studies and other terms that are in the rule we

        20   give definitions.

        21              Record keeping and reporting.  This is another

        22   area that is critical that should already be going on, but

        23   if it's not, let me encourage you all to go ahead and start

        24   and not wait.

        25              As you may be aware, our grant program is under a

                           PAULSON REPORTING SERVICE                      36

         1   lot of scrutiny and there are still hearings on the hill in

         2   terms of what we're doing and how we're carrying out these

         3   grants; so it will behoove all of us to get our acts

         4   together, internally as well as externally, and documenting

         5   and doing the record keeping so that we are on course with

         6   where we need to be.

         7              Under the record keeping and reporting provisions

         8   a recipient of a Continuing Environmental Grant or other

         9   annual grant will be required to create and maintain a

        10   bidders list.  Such a list must only be kept until a grant

        11   project period has expired and the recipient is no longer

        12   receiving funding under the grant.

        13              Now, when we were in Atlanta yesterday, the

        14   recommendation that I got, and I wrote this one down because

        15   I hadn't heard this one before, we need to be very -- the

        16   recommendation was to be very clear about what we mean when

        17   we say bidder's list because it means different things to

        18   different people.  And at what end of the process are we

        19   talking about?  Are you talking about the front end?  Are

        20   you talking about the back end because it could have some

        21   different connotations.

        22              And so I made these notes yesterday when we were

        23   in Atlanta.  So I need you all to take a look at this and

        24   think about it.  And if you're not clear or if we need to be

        25   inclusive of some more things, let us know.

                           PAULSON REPORTING SERVICE                      37

         1              In addition, a recipient of an EPA financial

         2   assistance agreement to capitalize a revolving loan fund

         3   must also require entities receiving identified loans to

         4   create and maintain a bidder's list as well, if the loan

         5   recipient is subject to, or chooses to follow competitive

         6   bidding requirements.

         7              The purpose of a bidders list is to provide the

         8   recipient and entities receiving identified loans who

         9   conduct competitive bidding with as accurate a database as

        10   possible about the universe of MBE/WBE and non MBE/WBE prime

        11   and subcontractors enter or have available to them.

        12              What we want to do is identify who is out there

        13   as best we can.  Such a list must only be kept until the

        14   project period for identified loan has ended, and recipients

        15   are required to comply with these record-keeping

        16   requirements even if they are exempt from applying the fair

        17   share objective requirements.

        18              So if you go out, you need to maintain some kind

        19   of bidders list if you contract out.  Identify who came in,

        20   how much it was, et cetera, and based on the comments we got

        21   yesterday, we will expand this.

        22              Yes, sir?

        23              UNIDENTIFIED SPEAKER:  Two questions.

        24              The first has to do with what grants would be

        25   falling under the definition of a Continuing Environmental

                           PAULSON REPORTING SERVICE                      38

         1   Program grant.

         2              Do you have a list of those grants in the rule?

         3              MS. PATRICK:  That is about -- the rule is more

         4   specifically just about covering all the grants, pretty

         5   much.

         6              UNIDENTIFIED SPEAKER:  Pretty much.  Okay.  That

         7   answers the first one.

         8              Then the second one is, it's an

         9   overall question about when -- and I'm not an accounting

        10   person.  I'm a program person, but I'm always asked to meet

        11   and document processes with our auditor that comes through

        12   on a yearly basis because we adhere to the Single Audit

        13   Reporting Act because of a variety of reasons; so every year

        14   that accountant who does that independent audit, goes

        15   through and certifies whether we have complied with all of

        16   the financial requirements that are outlined and various

        17   things, our categories, and that sort of thing.

        18              So are you saying that not only do we have to do

        19   reporting on that particular audit so that when we turn that

        20   into the EPA at the end of the year, which we always send

        21   them a copy, we're going to have to do independent

        22   documentation as well of all of these requirements?

        23              MS. PATRICK:  Well, what we're saying is I'm not

        24   exactly sure what types of audit things that the grant

        25   currently requires.

                           PAULSON REPORTING SERVICE                      39

         1              UNIDENTIFIED SPEAKER:  Well, it's under the

         2   single report -- Single Audit Reporting Act, and I thought

         3   that was the whole purpose of that act was to --

         4              MS. PATRICK:  It doesn't cover --

         5              UNIDENTIFIED SPEAKER:  It doesn't cover any of

         6   these requirements.

         7              MS. PATRICK:  It doesn't cover any of these

         8   requirements.

         9              UNIDENTIFIED SPEAKER:  Just so that I get that

        10   when I go back to my accounting person, say this has to be

        11   said.

        12              UNIDENTIFIED SPEAKER:  In one of my hats I am the

        13   accounting person in charge and what that auditor has to do

        14   in any documentation that's chosen for testing is go through

        15   the actual document and find out what the individual grant

        16   requirements are and test those requirements.  And so, yes,

        17   you do have to maintain that documentation so it's available

        18   for the auditor to say you met the requirements, but also

        19   remember that 8133 is not the only audit you go through

        20   because EPA can come back in, based on the results of that

        21   audit, and perform its own audit.  So you need to have that

        22   documentation there.

        23              MS. BROWN:  And right now the reporting form for

        24   this program is the Form 5700 dash 52a.  Are you all

        25   familiar with this?  Please tell me yes.  If you're not, you

                           PAULSON REPORTING SERVICE                      40

         1   need to call Joe.  You all need to get this and you need to

         2   be reporting.  Most of these are done on an annual basis.

         3   Some of them are quarterly, it depends, but you need to know

         4   what this form is.

         5              UNIDENTIFIED SPEAKER:  What's the form number

         6   again?

         7              MS. BROWN:  It's 5700 dash 52a.  And it's on our

         8   website.  You can get it electronically.  It's the EPA Form

         9   5700 dash 52a.  It the MBE/WBE Utilization Reporting

        10   Form.

        11              MR. CRONIN:  I'm just curious.

        12              First of all, I want to thank you for the

        13   information.  It's very interesting.

        14              My name is Ken Cronin, and I just wanted to get

        15   this on the record.  I work with the Tohono O'odham Nation,

        16   and I'm a representative for the region.  I just want to ask

        17   a question of the audience.

        18              How many of you consider yourself to be officials

        19   or representative of your tribe, authorized to consult with

        20   EPA on this issue?

        21              I just wanted to put that on the record because,

        22   you know, in this rule it says that this is a part of the

        23   meetings that are -- the EPA's doing in consultation with

        24   tribes, and I know you were informed that this could not be

        25   consultation for that reason.  These are environmental

                           PAULSON REPORTING SERVICE                      41

         1   professionals for the most part.  So I just wanted to put

         2   that on the record that this should not be considered the --

         3              UNIDENTIFIED SPEAKER:  Thank you very much.

         4              MS. PATRICK:  I just want to say that we in no

         5   way at all consider this a consultation.  We have been read

         6   the consultation riot act.  We know what -- this is not --

         7   we do not consider -- this is not a consultation.

         8              MS. BROWN:  But we recognize and want to make

         9   sure that you get this important information.

        10              MR. CRONIN:  I understand that.

        11              MS. BROWN:  We recognize that it's not a

        12   consultation.

        13              MR. CRONIN:  Thank you.

        14              UNIDENTIFIED SPEAKER:  Is there going to be any

        15   kind of public hearing, public consultation with tribes

        16   other than these informational meetings?

        17              MS. PATRICK:  At this point, that has not been

        18   planned.  We have been advised by --

        19              MS. BROWN:  We're not.  We have tried and the way

        20   we tried it -- and so we still want to just give the

        21   information out to you.

        22              UNIDENTIFIED SPEAKER:  Sure.

        23              MS. PATRICK:  Thank you for coming.

        24              (Session I concluded at 2:20 p.m.)

        25                              * * *

                           PAULSON REPORTING SERVICE                      42

         1             (Beginning of Session II of the hearing)

         2                              * * *

         3              MS. BROWN:  My name is Jeanette Brown.  I'm with

         4   the EPA, and we recognize, and I need to go into the record

         5   that this is not a hearing.  This is not a consultation.

         6   I'm bringing information to you that will impact if you are

         7   a grant recipient from EPA, in particular a tribal entity or

         8   business owner, information that will impact that financial

         9   assistance agreement.

        10              We published in the Federal Register July the

        11   24th, 2003 our proposed rule and changes to our program.  I

        12   provided you a copy of the Federal Register notice and a

        13   summary of what this says kind of in layman's terms.

        14              The lady that's sitting next to me is Kimberly

        15   Patrick.  She's my attorney and advisor.  So she is the

        16   attorney part, and so we have tried to put this in layman's

        17   terms as best we can.

        18              And now what I'd like to do is to just go over

        19   how we kind of got to this point, where we expect to go and

        20   also talk about what we consider the major elements of the

        21   proposed rule and impact that it may have.

        22              Back in 1995 there was a Supreme Court decision

        23   that came out that really affects how we, the Federal

        24   Government, do business.  It was the Adarand decision.  What

        25   it was was a challenge to the State of Colorado's

                           PAULSON REPORTING SERVICE                      43

         1   procurement practices in terms of how they gave some points

         2   to a minority business that practically in effect made a

         3   non-minority lose the award.

         4              He challenged it and it went all the way up to

         5   the Supreme Court.  And as a result, we have some real

         6   changes in terms of how the Federal Government should do

         7   business, and that was the Adarand versus Pena, and it was a

         8   Supreme Court case in 1995.

         9              EPA is one of three agencies that has a similar

        10   program.  Most people are familiar with the state DOT

        11   highway program.  Ours is much, much smaller.  In our

        12   MBE/WBE program our facility is DOT.  The other agency is

        13   NASA.

        14              EPA went through -- is the last one to go through

        15   changes to the proposed rule on our program.  DOT went first

        16   and their program has been in effect now with the new

        17   changes for about a year and a half to two years.

        18              We have been in consultation or discussions with

        19   the Department of Justice in terms of what it is that we

        20   need to change.  They have come in and done a review of our

        21   program and basically they -- when they came in they -- back

        22   in the prior administration you may have heard mend it, not

        23   end it in terms of affirmative action.  Well, we don't

        24   consider this to be an affirmative action program.  Many

        25   people do.

                           PAULSON REPORTING SERVICE                      44

         1              From the perspective that we talk about race and

         2   gender, we consider EPA's MBE/WBE program to be a program of

         3   opportunities and outreach.  What we're saying is that

         4   minorities and women should be included in the procurement

         5   process.

         6              As a grant recipient, there are six affirmative

         7   steps that a grant recipient must go through to insure that

         8   they are doing all that they can to outreach to minorities

         9   and women so that they can be included in the process.

        10   That's not an option.  That's not going to go away.  It

        11   should currently be going on.  If it's not, you need to make

        12   sure if you're a grant recipient, you're reading those terms

        13   and conditions and going through what they are.

        14   In addition to that, now what we are going to do is to go

        15   through the major changes of the proposed rule. Hopefully by

        16   now all of you have a copy of the Federal Register notice

        17   and then a summary, hopefully in layman's terms and then

        18   we'll discuss that.

        19              First major change is the name change.  Most of

        20   you see it in your grant as a "ME-BE, WE-BE."  That's going

        21   to go away.  We're going to be consistent with DOT,

        22   Department of Transportation, and it's going to be the

        23   EPA/DBE program.

        24              A DBE is defined as an entity owned or controlled

        25   by an individual who is socially and economically

                           PAULSON REPORTING SERVICE                      45

         1   disadvantaged either under EPA's eight percent or ten

         2   percent statutes as well as small business enterprise or

         3   labor surplus, and now labor surplus is identified as Hub

         4   Zone or the SBRA Program.  This is new.

         5              The other change is certification.  Under the

         6   proposal, we are proposing three changes to the current

         7   certification requirements to satisfy the Adarand strict

         8   scrutiny analysis.  Once this rule becomes final, we'll no

         9   longer accept the MBE self-certification.

        10              Right now under the program, if you say you are a

        11   minority business, we accept it.  You don't have to do

        12   anything.  We don't have to take a look at anything else.

        13   We just take your word.  Once the rule becomes final, we

        14   need to see a certification.

        15              We recognize MBE certifications and the

        16   certification's of entity owned and controlled by socially

        17   and economically disadvantaged individuals on the EPA's

        18   eight percent and ten percent statute by state, tribe or

        19   local government and private certifiers so long as or

        20   provided that such a criteria matches what has been

        21   established under Section 8(a)(5) and (6) of the Small

        22   Business Act and SBA's 8(a) Business Development Program

        23   Regulations.

        24              What we're saying is this.  We recognize and

        25   understand that there are other entities out there that

                           PAULSON REPORTING SERVICE                      46

         1   certify minority businesses.  EPA under this proposed rule

         2   will accept those certifications provided we are comparing

         3   apples with apples.  The criterias have to match.

         4              In some instances we know that they don't.  When

         5   we started through this process we did an analysis to see

         6   who's certified.  Out of the 50 states, we found that 33 to

         7   about 40 matched EPA.  So their certification process is

         8   fine.  If a business comes in and says that they have that,

         9   no problem, but for the other remaining, they did not and so

        10   we need to look at where else they can go.

        11              We are not in the business to do certifications.

        12   That is not what we prefer to do, but we recognize and

        13   understand that there are going to be some instances --

        14   because of specifically what we do at EPA there are going to

        15   be instances they won't have certifications and have to come

        16   to us.

        17              We'll accept an SBA certification.  If an entity

        18   has been certified by SBA to be an SBB or an 8(a), not a

        19   problem.  All they have to do is show that to us.  We will

        20   accept it.

        21              We will accept a DOT certification provided that

        22   the citizenship requirement is met.  Under the DOT program

        23   they accept or give certifications to people who are not

        24   citizens.  SBA does not.  So we're saying that we will match

        25   what SBA is saying, basically.

                           PAULSON REPORTING SERVICE                      47

         1              We will -- we require an act that first the

         2   entity try to get certified by somebody else, and if all

         3   else fails, you can come to us for the EPA certification and

         4   we'll give it to you.

         5              Recognize and understand for business entities,

         6   the only good that will do you is doing business with EPA,

         7   not like the SBA certification where everybody accepts it

         8   and it's kind of like the law of the land.  So people need

         9   to understand that.

        10              We currently envision that's probably about five

        11   categories.  When we know, we will have to give

        12   certifications because of the way our statute reads.  That's

        13   women-owned businesses, white male, no women-owned

        14   businesses are certified.

        15              That legislation is pending at SBA, but its been

        16   pending now for the last two-and-a-half, three years.  We

        17   don't know where it is.  SBA has proposed that women-owned

        18   businesses be certified as well.

        19              And then we also recognize that there are going

        20   to be minority businesses that do not meet the SBA DOT size

        21   standard.  Please note, the EPA does not have a size

        22   standard criteria for our program.  Our program comes from

        23   or is governed by our eight percent and ten percent statute.

        24              Disabled American owned business, we recognize

        25   that they may need to be certified.  Private or voluntary

                           PAULSON REPORTING SERVICE                      48

         1   organizations controlled by individuals who are socially and

         2   economically disadvantaged and entities which are certified

         3   under criteria which is inconsistent with our DBE program

         4   and now our eight percent, ten percent statute.

         5              Any entity claiming that it is owned or

         6   controlled by socially and economically disadvantaged

         7   business under the eight percent statute, note, SBA and DOT

         8   both require showing ownership and control.

         9              What happened here with our eight percent and ten

        10   percent statute is the stroke of a pen.  On one statute

        11   somebody put and.  And another one somebody put or.  From my

        12   legal people standpoint that's a major difference.  EPA --

        13   and so we will have to look at both.

        14              SBA looks at ownership of and -- I mean,

        15   ownership and control, not or.  And so we recognize that we

        16   have to satisfy both of the statutes, and so we're trying to

        17   accommodate that.  Of course, as I said,

        18   women-owned businesses would have to be certified as well.

        19              Another practical effect of this proposed rule as

        20   adopted is that individuals with a net worth of more than

        21   $750,000 will be precluded from eligibility as a minority

        22   business.  That's personal net worth, excluding your home.

        23   Okay?  $750,000.

        24              The other thing that we're proposing to do is to

        25   move the six affirmative steps that are now in 40 CFR, Part

                           PAULSON REPORTING SERVICE                      49

         1   31 and the six positive steps that are found in 40 CFR, Part

         2   30 being combined together, and this is a new change.

         3              Under the contract administration provisions we

         4   are looking to make some changes there.  In particular, to

         5   cover bait and switch tactics that we know are out there.

         6   We recognize that the good old boy network system is alive

         7   and well throughout the country.  I mean, and a lot of

         8   times, depending on where you go, minorities and women don't

         9   know what the process is.  They are not included in the

        10   process, and so we're hoping that that will be opened up.

        11              And as grant recipients, if you go out and

        12   contract for goods and services in one of any four

        13   categories, equipment, construction, services or supplies,

        14   our program kicks in.

        15              You don't have to contract out, but the minute

        16   you buy anything or prepare to buy anything in any one of

        17   those four categories, under this EPA grant condition, the

        18   program kicks in.  If you were to go out and buy a pen, the

        19   program kicks in.  Okay?  And this is already in your grant.

        20   This is not new.

        21              Under the Contract Administration Provisions, a

        22   recipient must be notified in writing by a prime contractor

        23   to any termination of a DBE subcontractor.  When the DBA

        24   subcontractor fails to complete his work under a subcontract

        25   for any reason, the recipient must notify the prime

                           PAULSON REPORTING SERVICE                      50

         1   contractor to make a good faith effort in hiring another

         2   subcontractor.

         3              A recipient must also require this prime

         4   contractor to make good faith effort even if the fair share

         5   objectives are met.  We'll get into that a little later

         6   because right now the tribes are not currently required to

         7   negotiate fair share goals with EPA or with the proposed

         8   rule.  You won't have to do that and we'll talk about that a

         9   little bit later.

        10              A recipient must also require a prime contractor

        11   to pay his subcontractor for satisfactory work performance

        12   within a specific number of days from the prime contractor's

        13   receipt of the payment from the recipient.

        14              What we hear a lot of, prime contractors hire

        15   subcontractors.  The prime contractors get paid and it takes

        16   forever a lot of times for the subcontractor to get paid.

        17   We're saying that as a grant recipient, you need to insure

        18   that your prime contractors are paying their subcontractors

        19   in a timely manner.

        20              A recipient must require the completion of some

        21   new forms.  Some of those are still under development that

        22   will impact possibly the prime contractor and maybe even the

        23   DBE in terms of information that we need back from

        24   them.

        25              Submission of fair share goals, and this is

                           PAULSON REPORTING SERVICE                      51

         1   Kimberly Patrick, who is my attorney/advisor.  One of them

         2   in the office who's working with me on the rule.  Submission

         3   of fair share goals, the rule would require that a recipient

         4   submits his proposed fair share goals to the agency no later

         5   than 90 days after you receive your acceptance agreement

         6   award.  This is new and it's in particular new for

         7   tribes.

         8              Right now we don't negotiate fair share goals

         9   with tribes or the trust territories.  Any of the other

        10   grant recipients we negotiate goals with the state.  Some of

        11   them non-profit colleges and universities, local

        12   jurisdiction, et cetera.  Once this rule is final, we are

        13   looking to this being extended to the tribes as well as the

        14   commonwealth of Puerto Rico and the Virgin Islands.

        15              Basically what it says in effect is -- and once

        16   it goes into effect, if we don't have your contract -- our

        17   negotiated goals 90 days after you receive your grant

        18   assistance award, we will ask that you -- and say that you

        19   cannot spend money in procurement dollars.

        20              This has worked, and we have had to enforce this

        21   with some of the states who did not want to negotiate with

        22   us.  So we just said -- held up the ability to go out and

        23   buy anything.  If you choose to use all of your money, which

        24   is your choice, to pay salaries, you can do that, but the

        25   minute you try to buy something, if you don't have your fair

                           PAULSON REPORTING SERVICE                      52

         1   share negotiations completed, you can't.  It didn't take the

         2   states long to come to the table.  Okay?

         3              One of the things you need to understand is as a

         4   grant recipient, when you receive this money, there are

         5   terms and conditions that you have to live up to and things

         6   that need to be done.  If there's a challenge to the

         7   program, they will call on us as the federal agent that gave

         8   the money, but they also call you as the grant recipient.

         9   And so you need to document your files.

        10              And the key to all of this is documentation.

        11   Like I said earlier, when the Department of Justice came

        12   around and did a review, our files didn't look too good a

        13   couple of years back.  And we can see from what's already

        14   going on with the hearings that are on the hill a lot of

        15   scrutiny's being given to how we carry out our program, how

        16   it's managed; so documentation is the key.

        17              The other thing that I'm saying in this, and with

        18   this rule, is this.  Going to a minority business should

        19   make good business sense.  If --

        20              UNIDENTIFIED SPEAKER:  Excuse me.

        21              MS. BROWN:  Yes, sir?

        22              UNIDENTIFIED SPEAKER:  There was four items

        23   listed, that was equipment --

        24              MS. BROWN:  Equipment, construction, services or

        25   supplies, which really covers everything except for your

                           PAULSON REPORTING SERVICE                      53

         1   salaries.  Okay?  Anything else, if you go out and buy

         2   something, the program kicks in.

         3              Okay.  Now, the other thing that I was saying is,

         4   it's got to make good business sense.  If a minority

         5   business wants to charge $5 for one can of Coke, does that

         6   make sense?  Document your file and move on.

         7              UNIDENTIFIED SPEAKER:  Where do you draw the

         8   line, though, as far as if you're going to pay more at a

         9   minority business, where do you -- do you see what I'm

        10   saying?

        11              MS. PATRICK:  What we're saying is, we don't want

        12   you to pay more.

        13              MS. BROWN:  Right.

        14              MS. PATRICK:  Your final decision on who you

        15   decide to contract with should be based on sound business

        16   decision. What we're saying is that when you go through your

        17   process of finding who you're going to spend your money

        18   with, make the effort to see if minority or women-owned

        19   business is available.  If they are available and they are

        20   giving you a competitive price, we're encouraging you to go

        21   with them, but if it's something that's going to be a bad

        22   business decision for you, don't do it.

        23              MS. BROWN:  Document your files and move on.

        24              MS. PATRICK:  Just say this is what we did.

        25              MS. BROWN:  We looked, and they were too high.

                           PAULSON REPORTING SERVICE                      54

         1   And we had to go to somebody else.  That's what we're

         2   saying.  It's got to make good business sense.  We're not

         3   saying that you absolutely, positively have to go with

         4   minority businesses and nobody else.  Some people got that

         5   confused or was not clear on that, but it's got to make good

         6   business sense.

         7              What we have seen typically is tribally owned

         8   business, minority businesses a lot of times don't know a

         9   contracting opportunity that are going on under these

        10   grants.  They really just don't know.  What I say to the

        11   contractor is this.  Money is green.  They need to know

        12   where to go to find it.  And in doing business with EPA

        13   There's primarily two ways to do it, directly or indirectly.

        14              At EPA, our grant budget is $4.2 billion annually

        15   in grants alone.  Contracts is 1.2 billion; so you figure,

        16   where is the money going?  The business community needs to

        17   know that these opportunities are available.  Okay?

        18              UNIDENTIFIED SPEAKER:  As long as you make a

        19   reasonable attempt, that's it?

        20              MS. BROWN:  That's right, and go back through the

        21   six affirmative steps, the good faith effort.  If do you

        22   what's in there and document what you have done, that's all

        23   that we can ask, but we need to make sure that that's being

        24   done.

        25              One of the -- when I came on board about five,

                           PAULSON REPORTING SERVICE                      55

         1   six years ago we had some reviews done, and we were seeing

         2   that even in tribal community, a lot of the tribes were

         3   contracting out, but they weren't using other tribal firms

         4   or minority businesses.  And for some of that work there

         5   were businesses that we knew about that existed that

         6   couldn't help.  Well, to me, it's more about putting -- it's

         7   business development in those areas where you're located.

         8   Instead of taking the money out of the neighborhood, keep it

         9   in there and build on that.  That's what we're saying.  And

        10   plus it makes good sense.

        11              UNIDENTIFIED SPEAKER:  It would almost make it

        12   easier if there was some sort of a directory, you know what

        13   I mean?  If you're buying like large orders of something and

        14   you're trying to get comparable quotes -- I spent hours on

        15   the internet before trying to find native-owned businesses.

        16              MS. BROWN:  Well, there is a directory that's

        17   available.  You can go into the SBA, www dot SBA dot gov,

        18   and go into pronet, p-r-o-n-e-t.  And then from there -- and

        19   they all will have -- and you can do it by location, your

        20   area of concentration that you're looking for, by commodity,

        21   all of that.

        22              The other thing that you can use is the Phoenix

        23   data base that's for minority businesses in particular, and

        24   that's done by MBA, the Minority Business Development

        25   Agency, the Department of Commerce.

                           PAULSON REPORTING SERVICE                      56

         1              I'm going to give you my card and from that you

         2   can -- there's a link from our website to both of those data

         3   bases.  In addition to that, at EPA in my office we're

         4   maintaining a data base of people who have come in who said

         5   they want to do business with EPA who has sent us their

         6   capabilities.

         7              Your MBE/WBE coordinators in the region that you

         8   all report to can help you, further assist you in

         9   identifying where the minority businesses are located.

        10              MS. PATRICK:  In the Region 9, that person's name

        11   is Joe Ochab.

        12              UNIDENTIFIED SPEAKER:  Joe Ochab?

        13              MS. PATRICK:  J-o-e, last name, O-c-h-a-b.

        14              MS. BROWN:  Let me give you his --

        15              UNIDENTIFIED SPEAKER:  How many people have that

        16   information?  If you just give out -- I think it would make

        17   it a lot easier because sure, there is a little form that

        18   pertains to the grant and you're supposed to be doing this,

        19   but it doesn't give you any further direction.  It's just

        20   kind of vague; so I think if people had some of that basic

        21   info --

        22              MS. BROWN:  Okay.  So one of the things we could

        23   do, because we do have a listing of all of our MBE/WBE

        24   coordinators in all the ten regions, we can maybe see if the

        25   grant people will give this out when they send the grant out

                           PAULSON REPORTING SERVICE                      57

         1   so that will be your point of contact at a minimum.

         2              Joe's number is --

         3              UNIDENTIFIED SPEAKER:  That will be great.

         4              MS. BROWN:  --<PHONE_NUMBER>.  Okay?  And he is

         5   very eager to work with you and help you.

         6              I was talking about the submission of fair share

         7   goals.  Like I said before, right now the tribes in the

         8   trust are not required to currently, but once the rule

         9   becomes final, they will.

        10              We anticipate that because of a number of

        11   exemptions that we have given of this number of tribes that

        12   we will have to negotiate with will be limited.  We did a

        13   random sample using Region 10 as an example with all of the

        14   tribes because they weren't identified with the region with

        15   the most tribal grants.  Once we ran the numbers and went

        16   through to see how many fell into the various categories of

        17   exemptions, we only came up with about 20, 25 tribes that

        18   would have to actually negotiate.

        19              MS. PATRICK:  Out of the 100.

        20              MS. BROWN:  Out of the three, 400 or more out of

        21   Region 10; so with the exemptions that we put in place, we

        22   think that it will -- now, this is only for

        23   negotiations.  The good faith effort, the documentation of

        24   the file, the six affirmative steps are still in effect.

        25   This is not new.  Everybody should be doing this now.

                           PAULSON REPORTING SERVICE                      58

         1              UNIDENTIFIED SPEAKER:  So then of those 20

         2   something tribes, what commonality did they share that made

         3   them --

         4              MS. PATRICK:  Most of them were tribes that

         5   were -- well, first, let's talk about the exemption.  The

         6   exemptions that we have in the rule at this point would be

         7   grants that are under $250,000 or less or as an aggregate

         8   total, specifically received a number of grants if the

         9   aggregate total of your grant is $250,000 or less for any

        10   single fiscal year will be exempted from negotiated goals

        11   with us.

        12              Also, grants that are PPG eligible.  They don't

        13   necessarily have to be rolled into a PPG, but eligible to be

        14   in one.  That includes 17 grant categories that will be

        15   exempted from negotiation.

        16              UNIDENTIFIED SPEAKER:  You said just to be

        17   eligible?

        18              MS. PATRICK:  Eligible.  Not necessarily enrolled

        19   in, but eligible to be rolled into one.

        20              MS. BROWN:  PPG eligible.

        21              MS. PATRICK:  Will be exempt from negotiations.

        22   That particular exemption alone took out so many that we

        23   would have to potentially negotiate with and so that leaves

        24   a very limited number, which is really the category we're

        25   trying to get to.

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         1              The larger tribes with the large amounts of money

         2   that are going to EPA, those are the ones we need to

         3   negotiate with because of the large amounts of money that's

         4   going there, and we want to know where that money is going

         5   and get a goal in place that will help achieve some of the

         6   objectives of the program.

         7              MS. BROWN:  I have to report back to Congress how

         8   and where the money goes.  We look at both direct and

         9   indirect.  And this is tied to the EPA's appropriations

        10   budget.  And so we really need to have a good handle on a

        11   good account, and we need to be accountable for where the

        12   moneys are going.

        13              And basically again with the program we're saying

        14   that it's an outreach program.  We're saying that minorities

        15   and women should be included, but they can't do that if they

        16   don't know.

        17              MS. PATRICK:  And also in the exemptions part,

        18   the $250,000 requirement -- I mean, exemption also applies

        19   to your Brownfield loan programs and your NSR programs.  So

        20   the loan programs are included in that, not just the grant,

        21   but the loan as well.

        22              MS. BROWN:  And again, the 250K is a combined

        23   total up to 250K in any one fiscal year, either or.

        24              MS. PATRICK:  Also TAG grants to tribes will be

        25   exempt for negotiation for technical assistance grants as

                           PAULSON REPORTING SERVICE                      60

         1   well.

         2              MS. BROWN:  So when you look at what we've

         3   considered, and a large part of how we got to this was in a

         4   forum like this where we got a lot of feedback in terms of

         5   what we should exclude, because at first when we started we

         6   said everything was covered.  And so we've -- look how far

         7   back we have got it; so it's important that we get input

         8   from people so that we take a look at what it is that we're

         9   doing.

        10              You all are there in the front lines for the most

        11   part.  You're managing and administering these grants and

        12   you know what it is that you're faced with and the impact a

        13   lot better than we know sitting in Washington.  And so we're

        14   saying, get your comments in to us.

        15              The other thing that we're proposing that really

        16   impacts the tribes in the trust territories is that we are

        17   looking at a three-year phase-in period to allow all of this

        18   to come into effect, but when I say that, we don't want to

        19   wait until the last year or the last day before the third

        20   year to start working on that.  Once the rule becomes final,

        21   we want to be working with you all through the regional

        22   MBE/WBE coordinators, the tribal office, et cetera, to make

        23   sure that we begun the process to put the infrastructure in

        24   place to do what we need to do so that we will be in

        25   compliance.

                           PAULSON REPORTING SERVICE                      61

         1              Again, you have got to recognize and understand

         2   that when you sign up for this money, if there is a

         3   challenge, we both have to justify and say what it is that

         4   we have done with the funding.  And these kinds of cases or

         5   programs are being challenged all over the country.

         6              We have some definitions, changes or terms that

         7   are in there.  We look at disparity studies.  And the other

         8   thing I need to say is a tribe does not have to negotiate

         9   with us.  You have the option of using a state goal that's

        10   already been negotiated.

        11              What we recognize and understand is there may be

        12   some strikingly different situations with the tribes versus

        13   the state, but you do have that option; so if you look at

        14   the tribe -- if the tribe will look at the state goal and

        15   that looks okay and you can, you know, attest you have the

        16   same general practices, et cetera, you can use the tribe --

        17   the state goal very easily, but you have to tell us that.

        18   And that's an option also that we made available.  Not

        19   saying that you have to, but that's an option that's made

        20   available to you.

        21              The record keeping component and the reporting.

        22   For those of you that are grant recipients, are you

        23   reporting on the 5700 dash 52(a)?  You should be doing that

        24   now.  If you're not, you need to contact Joe.  This is not

        25   new.  It comes with the terms and conditions of your grant

                           PAULSON REPORTING SERVICE                      62

         1   and you should be reporting how you're spending the money.

         2              MS. PATRICK:  That's a current requirement.

         3              MS. BROWN:  This is current.  Okay?  If you have

         4   it, you need to start doing it.  Okay?  And you can contact

         5   Joe or you can get this directly off our website at www dot

         6   epa dot gov forward slash osdbu forward slash 5700 52(a),

         7   and it's a pdf file.

         8              UNIDENTIFIED SPEAKER:  Say that after osdbu

         9   forward slash, what?

        10              MS. BROWN:  5700 52(a).  And I have a card with

        11   that website address on it, so you can just take that, just

        12   add that to it.

        13              A recipient of a Continuing Environmental Program

        14   Grant or other annual grant would be required to create and

        15   maintain a bidders list.  Such a list must only be kept

        16   until a grant project period has expired, and a recipient is

        17   no longer receiving funding under a grant.

        18              In addition, a recipient of a financial

        19   assistance agreement to capitalize a revolving loan fund

        20   must also require entities receiving identified loans to

        21   create and maintain a bidders list as well.  And this is

        22   also to be in place for as long as you receive a

        23   funding.

        24              The purpose of a bidders list is to provide the

        25   recipient and entities receiving identified loans to conduct

                           PAULSON REPORTING SERVICE                      63

         1   competitive bidding with as much information as possible and

         2   the accurate data base about the universe of MBE/WBE and

         3   non-MBE/WBE prime and subcontractors.

         4              Such a list must only be kept until the project

         5   period, the identified loan, has ended and recipients are

         6   required to comply with these record keeping requirements,

         7   even if they are exempt from applying the fair share goal

         8   objective.

         9              There is a waiver provision in the rule and

        10   that's to be done and provided by the director out of Part

        11   33, and that's going to be on a case-by-case basis.  And so

        12   if anyone out there thinks that they have a good reason to

        13   request a waiver, you can send that in and we'll have to

        14   take that under review or advisement.

        15              Again, basically the key to all of this is record

        16   keeping.  Documentation of what it is that you're doing, but

        17   also recognizing and understanding that as you're receiving

        18   federal funding, we should do everything that we can to

        19   insure that minorities and women are included in the

        20   process.

        21              For the business sector, you need to know in

        22   doing business with EPA there are primarily two ways of

        23   doing it, directly and indirectly.  As you have heard here,

        24   my grant budget is four times that of my contract, and a lot

        25   of people don't understand that.  It's been a major shift in

                           PAULSON REPORTING SERVICE                      64

         1   the agency in terms of where the money's going, and a lot of

         2   it is going back to the state and to the tribes and local

         3   jurisdictions via the grants, but contract opportunity may

         4   be available.

         5              You can get information as to who our grantees

         6   are from our office.  You can go into our wedsite and it's

         7   out of the Office of Grants and Environment, and there's a

         8   listing of all of our grantees, how much money they get, all

         9   of that.  And so then you can be in contact with them.

        10              We're seeing more and more of them come to the

        11   private sector for support, but they need to know who you

        12   are, just like these gentlemen who said sometimes you can't

        13   find them, but they need to know and so we're trying to work

        14   together to make sure that they have access to you and you

        15   have access to them.

        16              Do you have any questions?  Does this make any

        17   sense?  Not everybody at the same time.  All

        18   right.

        19              UNIDENTIFIED SPEAKER:  Do you have -- we only

        20   have to keep this file as long as the loan is -- I mean

        21   that's the grant?

        22              MS. BROWN:  In terms of the bidders list.

        23              UNIDENTIFIED SPEAKER:  Okay.  Now, once we're

        24   done with the grant, we can --

        25              MS. PATRICK:  Once you're done, you're done.

                           PAULSON REPORTING SERVICE                      65

         1              MS. BROWN:  But you hold on to it.  You don't

         2   discard it, and, you know, there are things that you have to

         3   do to close out your grant.

         4              UNIDENTIFIED SPEAKER:  Correct.

         5              MS. BROWN:  And for a lot of people, what we're

         6   hearing is they're closing out the grant without doing these

         7   and that's -- and some of them aren't.  I can't give a

         8   waiver for this as the director of the program.  You all

         9   need to be documenting your file and getting these

        10   completed.

        11              Even if you have zero, if you couldn't find any,

        12   if you report zero, you need to report zero.  You still need

        13   to send in a report that says zero.

        14              UNIDENTIFIED SPEAKER:  What is the process for

        15   certification that those women or minority businesses

        16   that --

        17              MS. PATRICK:  You want to know where it is in the

        18   rule?

        19              UNIDENTIFIED SPEAKER:  Yes.

        20              MS. PATRICK:  That would be under Section --

        21              MS. BROWN:  Now, we don't -- what we basically

        22   say is, we want you to get it from someplace else first and

        23   if all else fails, you come to us.  We don't spell out yet

        24   what the exact process is because we are still coming up

        25   with that as well.

                           PAULSON REPORTING SERVICE                      66

         1              UNIDENTIFIED SPEAKER:  So it's not established

         2   yet?

         3              MS. PATRICK:  If you look again at the

         4   certification process, it's laid out in Subpart B of the

         5   rule.  The requirements are there.

         6              MS. BROWN:  The requirements are there, but it

         7   doesn't tell you exactly how.

         8              UNIDENTIFIED SPEAKER:  I mean, like, do they

         9   present a business license or --

        10              MS. BROWN:  Oh, oh, no, we don't get into that in

        11   the rule.

        12              UNIDENTIFIED SPEAKER:  -- something where you

        13   certify them.  I mean, we often hire minority contractors

        14   and women at our business.  I'm just asking how can we get

        15   them certified?

        16              MS. PATRICK:  Right.  What would happen is once

        17   we get these things more finalized, we have a set of

        18   certification forms that have to go before the Office of

        19   Management and Budget to make sure that they're approved,

        20   and we've already laid out a form and how to process this

        21   sort of form to a certain degree.  It just hasn't gone

        22   through this particular document yet, but by the time it's

        23   all final, we'll have all the steps in here.

        24              UNIDENTIFIED SPEAKER:  So the public won't have

        25   the ability to comment on that?

                           PAULSON REPORTING SERVICE                      67

         1              MS. PATRICK:  On the form?  The form itself?  I'm

         2   not sure.  I don't think there's a comment period for the

         3   forms because it's sort of an OMB kind of process that

         4   happens, but we have gone through grant list to make sure

         5   the form for it are streamlined as possible because we know

         6   a lot about the holdup at SBA and how long it takes.  That's

         7   something we want to avoid, and so in the process of

         8   developing the forms, we tried to make them as distinct as

         9   possible so they're not --

        10              UNIDENTIFIED SPEAKER:  They'll be simplistic for

        11   them and they will only have to supply a few items.

        12              MS. BROWN:  Okay.  The other thing, too, we are

        13   in consultation with SBA and DOT looking at how they do

        14   certification in their program to see what we can glean from

        15   them, see what works, and what doesn't work so that when we

        16   come up with --

        17              UNIDENTIFIED SPEAKER:  So it will be painless.

        18              MS. BROWN:  And it is my hope that it will not

        19   take three years or six months or 90 -- you know.  I don't

        20   know, but I don't think we are going to get to that extent

        21   like SBA.  And that's the other reason why we say, too, if

        22   you have got an SBA certification, you're fine.  I wouldn't

        23   touch it.  You just let us know you got that, we see that,

        24   we'll accept it.

        25              Any other -- yes, sir?

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         1              UNIDENTIFIED SPEAKER:  When you were talking

         2   about other lists that were available that might not fully

         3   meet some of the SBA requirements, but that there was, let's

         4   say, a local city that had a list --

         5              MS. BROWN:  Right.

         6              UNIDENTIFIED SPEAKER:  -- you will recognize that

         7   list?

         8              MS. PATRICK:  You mean the certification?

         9              MS. BROWN:  We will look at what they did and the

        10   criteria they used to certify.  If their criteria matches

        11   ours at the federal level, we will accept it.  We have done

        12   a preliminary check of the states and we found that there

        13   are about between 34 and 40 states whose program right now

        14   on the books match ours.

        15              MS. PATRICK:  So that leaves ten where we know we

        16   couldn't accept certification because they don't match our

        17   standards, but the other 40 we take them.  As long as you

        18   match our program, we're happy.

        19              UNIDENTIFIED SPEAKER:  So there may be lists out

        20   there that would not be acceptable, and my question at this

        21   point becomes is the State of California -- do you believe

        22   it will be acceptable if this rule is adopted?

        23              MS. PATRICK:  At this point, I think California

        24   was one that was not, mostly because -- I mean, it's because

        25   California basically works away anything that even remotely

                           PAULSON REPORTING SERVICE                      69

         1   resembles affirmative action.  So you guys don't even have a

         2   program.  So you don't, to my knowledge, even have a

         3   program.

         4              MS. BROWN:  Is it here that you have Prop. 209?

         5              MS. PATRICK:  That's here.

         6              MS. BROWN:  That just wiped it out.

         7              UNIDENTIFIED SPEAKER:  But at the same point in

         8   time where I came from before the City of San Francisco

         9   had --

        10              MS. PATRICK:  Now the city does and their program

        11   matches ours, we will take a city, municipality, a tribal or

        12   county, basically, we don't want to certify --

        13              UNIDENTIFIED SPEAKER:  But at that point if I

        14   were going to say that, well, my question is, if I could

        15   find an environmental consultant out of San Francisco to

        16   either be a prime or a sub, and do outreach through that

        17   list, at that point would I contact a person within the

        18   region and say, would you evaluate the City and County of

        19   San Francisco?

        20              MS. PATRICK:  You contact me.  That's one area

        21   where you're --

        22              UNIDENTIFIED SPEAKER:  So that would be back to

        23   the headquarters?

        24              MS. BROWN:  We've taken it out of the regions and

        25   we'll take a look at that on a case-by-case.  And that's the

                           PAULSON REPORTING SERVICE                      70

         1   only way we can do that.

         2              MS. PATRICK:  That's a legal decision and they

         3   couldn't give us that.

         4              MS. BROWN:  Yes, ma'am?

         5              UNIDENTIFIED SPEAKER:  Our tribe has a program.

         6   It's not tribally funded, but it goes out and it does

         7   acquire its own projects.  And all I know they have at this

         8   point because they haven't gone beyond the reservation, but

         9   they do all the work on the reservation.  They do have a

        10   business license from the tribe.

        11              Now, I don't know how far that extends into if

        12   they got -- you know, were able to receive them from the

        13   State of Arizona, or whatever, but they do a lot of work out

        14   there.  And that's one of our primary things is to be able

        15   to contract our work with them.

        16              They're not a tribal funded entity, but they do

        17   all the work; so they're currently going to do USD pools.

        18   They've been certified to do USD pools and also construction

        19   work out there.  So as long as they are -- have a business

        20   license from the tribe and maybe that we make up some

        21   criteria that's maybe in relationship to the state, would

        22   that suffice?

        23              MS. PATRICK:  What would happen is it would need

        24   to be a program that's carried out across the board.  And so

        25   the tribe in that instance, if you all developed a program

                           PAULSON REPORTING SERVICE                      71

         1   by which not just this business will get certified by the

         2   tribe, we'll say any tribally owned business, not just

         3   tribally owned, any person who owns -- who is a member of a

         4   tribe who owns a business could go to you and get certified

         5   by the tribe, if you had a program that's across the board

         6   that met our standards, we would accept that, but it can't

         7   just be something on a one-case basis.  That's not really a

         8   program.

         9              MS. BROWN:  In addition to that, we recognize and

        10   understand that a lot of the tribes have a buy tribe first

        11   and out of your -- let me make sure I get this, if you're

        12   "TARO", there are practices and policies and procedures that

        13   you won't have to follow.

        14              UNIDENTIFIED SPEAKER:  Right.  Right.

        15              MS. BROWN:  Based on that, we will take a look at

        16   that to see, too, and if that's -- and if you do that across

        17   the board because sometimes we hear, well, on this case, we

        18   did it this way and some place else we -- on another

        19   procurement we did something different, that doesn't apply.

        20              UNIDENTIFIED SPEAKER:  There's got to be some

        21   consistency here across the board.

        22              MS. BROWN:  Got to be consistent and preferably

        23   you have all of that established and written up and you

        24   follow that.

        25              UNIDENTIFIED SPEAKER:  Okay.  All

                           PAULSON REPORTING SERVICE                      72

         1   right.

         2              UNIDENTIFIED SPEAKER:  My next question, and I

         3   understand the -- where originally the proposed rule, and my

         4   understanding was that there would be no exemptions.  Now

         5   that there is a number of various proposed exemptions, and I

         6   think that those were to a large extent to provide relief in

         7   creating a bureaucratic entity within tribal governments,

         8   where it was like, if you're asking us to implement a

         9   program that would be so large it might be ten percent of

        10   tribal government, just trying to do it is particular --

        11              MS. BROWN:  In part and in part, too, not wanting

        12   to have to go through that EPA side, too, because we are not

        13   set up to do --

        14              MS. PATRICK:  The volume of associations would be

        15   huge.  A region we have one MBW coordinator.  Could you

        16   imagine that one person meeting and negotiating with over

        17   400 tribes?  It would be practically impossible.  And so we

        18   went out and we heard back and people are saying, not only

        19   is the person sent to the tribe to do these negotiations,

        20   considering the disparity studies that will be required and

        21   availability analysis, this person's following EPA people to

        22   do this.

        23              So we got the comments backs and we said, okay.

        24   We'll develop more exemptions that will lower the number,

        25   but it will still enable us to capture who we really want,

                           PAULSON REPORTING SERVICE                      73

         1   which is where the major dollars are going.

         2              MS. BROWN:  And again, that is from negotiations.

         3   It's not from the six affirmative steps.  It's not from the

         4   reporting or the record keeping, any of that.  That is on

         5   the books and we should be doing that now.

         6              UNIDENTIFIED SPEAKER:  And my question based upon

         7   that history is, how comfortable should the tribes be

         8   feeling now that these proposed rules are the ones that

         9   would be most likely to be implemented versus the loss of

        10   some of these exemptions?

        11              MS. PATRICK:  We're not going backwards.  We are

        12   not going backwards, at least I hope not with the

        13   exemptions, but that was too much work the first time.  And

        14   from my perspective, what we have in place now is something

        15   that we think will work.  So we don't want to go back and

        16   invent the wheel.  I couldn't imagine what the justification

        17   would be if we decided to go back.  I mean, short of the

        18   Department of Justice telling us, oh, you have to do this,

        19   or someone coming from over our head saying what we have to

        20   do, I can't imagine that that would take place.

        21              MS. BROWN:  And that is in part why we wanted to.

        22   We've been trying to get the message out about the rule and

        23   proposed changed and to also make sure that people are, you

        24   know, what the 5700 dash 52(a) is and that you're doing

        25   that.  Start documenting your files, because this is not

                           PAULSON REPORTING SERVICE                      74

         1   going to go away.  It's here to stay, and to put people on