Page 1 of 16 ENVIRONMENTAL PR OTECTION AGENCY

40 CFR Part 35 [FRL-####-#]
RIN 2050-AG58

Cooperative Agreements and Superfund State Co ntracts for Superfund Response Actions: Amendments

AGENCY: ENVIRONMENTAL PROTECTION AGENCY (EPA).

ACTION: Final rule: Amendments.

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SUMMARY: This rule amends 40 CFR part 35 s ubpart O by allowing inte rim progress reports to be due in 60 days, instead of the current 30 day requirement. In addition, this amendment allows the recipient of a Superfund State Contract to request that EPA apply any overpayment of cost share to another site. The revisions affect States, Indian Tribes, intertribal consortia, and political subdivisions. The revisions will impr ove the administration and effectiveness of Superfund Cooperative Agreements and Superfund State Contracts.

DATE: This rule is effective [insert date 60 days after the da te of publication in the Federal Register ].Page 2 of 16 ADDRESS: EPA has established a docket for th is action under Dock et ID No. EPA-HQSFUND-2010-0085. All documents in the docket are listed on the www.regulations.gov Web site. Although listed in the index, some informati on is not publicly avai lable, e.g., confidential business information (CBI) or other information whose disclosure is re stricted by statute. Certain other material, such as copyrighted mate rial, is not placed on the Internet and will be publicly available only in hard copy form. Pub licly available docket materials are available either electr onically through www.regulations.gov or in hard copy at the CERCLA Docket, EPA/DC, EPA West, Room 3334, 1301 Constituti on Ave., NW, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4: 30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Publ ic Reading Room is (202) 566-1744, and the telephone number for the CERCLA docket is (202) 566-0276.

FOR FURTHER INFORMATION CONTACT: Angelo Carasea, Assessment and Remediation Division, Office of Superfund Re mediation and Technol ogy Innovation, (5204P), Environmental Protection Agency, 1200 Penns ylvania Ave., NW., Washington, DC 20460; telephone number: (703) 603- 8828; fax number: (703) 603- 9112; email address: carasea.angelo@epa.gov

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SUPPLEMENTARY INFORMATION:

I. Statutory AuthorityPage 3 of 16 II. Applicability III. Background IV. Description of Key Changes V. Section-by-Section Analysis VI. Statutory and Executive Order Reviews

I. Statutory authority

This rule is issued under sect ion 104(a)-(j) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. 9601 et seq. ) as amended (hereinafter CERCLA).

II. Applicability

The final regulation requirements shall apply to all new Cooperative Agreements and Superfund State Contracts, funded under CERCLA, which EPA si gns on or after the effective date of this regulation. EPA may agree to amend existing Cooperative Ag reements or Superfund State Contracts to make the final regu lation requirements applicable to work performed on and after the date EPA signs the amendment.

III. BackgroundPage 4 of 16 CERCLA launched the nation’s first centralized and substantial commitment to clean up hazardous substance sites. CERCLA, or Superf und, provided federal authority and resources to respond directly to releas es (or threatened releases) of h azardous substances, pollutants, or contaminants that could endanger human health or the environment. The law also authorized enforcement action and cost recovery from t hose responsible for a release of a hazardous substance.

CERCLA authorizes two types of Superfund res ponse agreements for State, Tribal (including intertribal consortium) and po litical subdivision participatio n in CERCLA implementation: Cooperative Agreements and Superfund State Contra cts. These agreements ensure State and Tribal involvement, consistent with secti on 121 of CERCLA, 42 U.S. C. 9621 (hereinafter section 121), and section 126 of CERCLA, 42 U.S.C. 9626 (hereinafter section 126), and are used to obtain State assurances requ ired under section 104 of CERCLA, 42 U.S.C. 9604, (hereinafter section 104) before EPA begins a remedial action.

EPA uses Cooperative Agreements to transfer funds to a State, political subdivision, or Indian Tribe that assumes responsibility as the lead or support agency for Superfund responses. Core Program Cooperative Agreements are used to fund non-site-specific activities that support a State or Indian Tribe’s invol vement in CERCLA responses.

A Superfund State Contract is used to document a State’s CERCLA section 104 assurances when either EPA or a political subdivisi on has the lead role in the imple mentation of a remedial action.Page 5 of 16 The role of States, Indian Tribes, and po litical subdivisions in Superfund has evolved substantially since 1990 when the original 40 CFR part 35 subpart O regulation was promulgated. The recipients’ cleanup programs ha ve matured and become more sophisticated. In addition, EPA has actively sought to fulfill CERCLA’s mandate in sections 121 and 126 to provide States and Indian Tribes a “substant ial and meaningful invol vement” in Superfund by providing Core Program funding for the developmen t of State and Tribal infrastructure.

On May 2, 2007, EPA promulgated a final regulati on, which amended 40 CFR part 35 subpart O, to reduce the burden on recipien ts to receive and administer Cooperative Agreements and Superfund State Contracts. This rule amends 40 CFR part 35 subpart O to further reduce the recipients’ burden by allowing interim progress repor ts to be due in 60 days, instead of 30 days. Also, under a Superfund State Contra ct, the recipient may request th at the overpayment of cost share from one site be applied to meet th e cost share requirement of another site.

IV. Description of Key Changes

EPA made limited revisions to certain sections of the regulation. The following is a brief description of the key changes.

A. Progress Reports

This rule revises 40 CFR part 35 subpart O by re laxing the current report ing requirements that require the interim progress report to be due with in 30 days after the reporting period. In thePage 6 of 16 revised regulation, interim progr ess reports are now due within 60 days after the reporting period. This change codifies a recommendati on under EPA initiative, “Burden Reduction for
State Grants.”

B. Financial Report

This revision corrects a citati on error to CFR 31.41(b)(3) for quart erly and semiannual financial reports requirement. The correct citation is CFR 31.41(b)(4), which requires quarterly and semiannual financial reports due 30 days after the reporting period.

C. Overpayment

In the revised regulation, a State may also dire ct EPA to use the excess cash cost share funds (overmatch) at one site to meet the cost share obl igations at another State site. This change was made to provide greater flexibil ity to a State on how it wants to address the overmatch of cost share under a Superf und State Contract.

V. Section-by-Section Analysis

Section 35.6650 Progress reports.Page 7 of 16 Paragraph (a) is revised to read, “Reporting frequency. The recipient must submit progress reports as specified in the Cooperative Agreemen t. Progress reports will be required no more frequently than quarterly, and will be requi red at least annually. Notwithstanding 40 CFR 31.41(b)(4), the reports shall be due within 60 days af ter the reporting period. The final progress report shall be due 90 days afte r expiration or termination of the Cooperative Agreement.” The reporting period for quarterly and semiannual progr ess reports was changed from 30 to 60 days.

Section 35.6670 Financial Reports.

Paragraph (b)(2)(i) is revised to read, “If a Financial Status Re port is required annually, the report is due 90 days after the end of the Federal fiscal year or as specified in the Cooperative Agreement. If quarterly or semiannual Financia l Status Reports are requi red, reports are due in accordance with 40 CFR 31.41(b)(4).” The re ference citation to 40 CFR 31.41(b)(3) was changed to 40 CFR 31.41(b)(4), and the redundan t statement, “due 30 days after the reporting period,” was deleted. 40 CFR 31.41(b)(4) requires quarterly and semiannual reports to be due 30 days after the reporting period.

Section 35.6805 Contents of an SSC.

Paragraph (k) is revised to read, “Reconciliation provision , which states that the SSC remains in effect until the financial settleme nt of project costs and final reconciliation of response costs (including all change orders, claims, overmatch of cost share, reimbursements, etc.) ensures that both EPA and the State have satisfied the cost share requirement contained in section 104 ofPage 8 of 16 CERCLA, as amended. The recipien t may direct EPA to return the overmatch or to use the excess cost share payment at one site to meet the cost share obligati on at another site in accordance with 40 CFR 35.6285(d). Reimbursements for any overpayment will be made to the payer identified in the SSC.” The revised regula tion permits the recipien t also to request the overmatch be applied to the cost share requireme nts of another site. Unde r the current regulation, EPA must return the overpay ment to the recipient.

VI. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulat ory Planning and Reviews

Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), this action is a “significant regulatory action.” Accordingly, EPA submitted th is action to the Office of Management and Budget (OMB) for review under EO 12866 and any changes made in response to OMB recommendations have been documente d in the docket for this action.

B. Paperwork Reduction Act

This action does not impose any new informa tion collection burden, because it makes only minimal changes in the current 40 CFR part 35 su bpart O requirements. However, the Office of Management and Budget (OMB) has previous ly approved the information collection requirements contained in the existing regulations in 40 CFR part 35 under the provisions of thePage 9 of 16 Paperwork Reduction Act , 44 U.S.C. 3501 et seq . and has assigned OMB control number 2050- 0179. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

Today’s final rule is not subj ect to the Regulatory Flexibility Act (RFA), which generally requires an agency to prepare a regulatory flexib ility analysis for any rule that will have a significant economic impact on a substantial number of small entities. The RFA applies only to rules subject to notice and comment rule making requirements under the Administrative Procedure Act (APA) or any other statute. Th is rule is not subject to notice and comment requirements under the APA or any other statute becau se this rule pertains to grants which the APA expressly exempts from notice and comm ent rulemaking requirements under 5 U.S.C. 553(a)(2). Moreover, CERCLA also does not require EPA to issue a notice of proposed rulemaking prior to i ssuing this rule.

D. Unfunded Mandates Reform Act

This action contains no Federal mandates under th e provisions of Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S. C. 1531-1538 for State, local, or tribal governments or the private sector

. UMRA excludes from the definition of "Federal intergovernmental mandate" duties that arise from participation in a voluntary Federal program. Therefore, this action is not subject to the requirements of sections 202 or 205 of UMRA.Page 10 of 16 This action is also not subject to the requirements of section 2 03 of UMRA because it contains no regulatory requirements that might significantly or uniquely affect small governments. Participation by small governments in this prog ram is voluntary and is funded by EPA.

E. Executive Order 13132: Federalism This final rule does not have federalism implications. This action will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various level of government, as specified in Executive order 13132. This final ru le makes minor changes to the regulation, under which the 40 CFR part 35 subpart O program has been operating since May 2007. Apart from the minor changes, this rule adds new provision s that increase State fl exibility, so it does not have federalism implications as that phrase is defined for purposes of Executive Order 13132. Further, because this is a rule that primarily conditions the use of Federal assistance, it does not impose substantial direct compliance costs on States. Thus Executive order 13132 does not apply to this final rule.

F. Executive Order 13175: Consultation and Coor dination With Indian Tribal Governments

This action does not have tribal implications , as specified in Executive Order 13175 (65 FR 67249, November 9, 2000). It does not have substant ial direct effects on Tribal governments, on the relationship between the Federal government a nd Indian Tribes, or th e distribution of power between and responsibilities between the Federal government and Indian tribes. Thus, Executive Order 13175 does not apply to this action

.Page 11 of 16 G. Executive Order 13045: Protection of Children from Environmental Health and Safety Risks

EPA interprets EO 13045 (62 F.R. 19885, April 23, 1997) as applying only to those regulatory actions that concern health or sa fety risks, such that the analys is required unde r section 5-501 of the EO has the potential to influe nce the regulation. This action is not subject to EO 13045 because it does not establish an environmental st andard intended to mitigate health or safety risks.

H. Executive Order 132 11 (Energy Effects)

This action is not a “significant energy actio n” as defined in Executive Order 13211 (66 FR 28355 (May 22, 2001)), because it is not likely to ha ve a significant adverse effect on the supply, distribution, or use of energy. Further, we have concluded that this rule is not likely to have any adverse energy effects.

I. National Technology Transfer and Advancement Act

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), Public Law No. 104-113, 12(d) (15 U.S.C. 272 not e) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus sta ndards are technical st andards (e.g., materials specifications, test methods, sampling procedures , and business practices) that are developed orPage 12 of 16 adopted by voluntary consensus st andards bodies. NTTAA direct s EPA to provide Congress, through OMB, explanations when the Agency de cides not to use avai lable and applicable voluntary consensus standards.

This action does not involved tec hnical standards. Therefore, EP A did not consider the use of any voluntary consensus standards.

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

Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal executive policy on environmental justice. Its ma in provision directs federal agen cies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disp roportionately high and adverse human health or environmental effects of their programs, policie s, and activities on minority populations and lowincome populations in the United States.

EPA has determined that this final rule will not have disproportionately high and adverse human health and environmental effects on minority or low-income populations because it does not affect the level of protection prov ided to human health or the environment. This rule amends 40 CFR part 35 subpart O by allowing interim progress reports to be due in 60 days, instead of the current 30 day requirement. In addition, this amendment allows the recipient of a Superfund State Contract to request that EPA apply any overpayment of cost share to another site. ThePage 13 of 16 regulation 40 CFR part 35 subpart O codified: (1) recipient requirements for administering Cooperative Agreements awarded pursuant to section 104(d)(1) of CERCLA; and (2) requirements for administering Superfund State C ontracts for non-State-lead remedial responses undertaken pursuant to section 104 of CERCLA.

K. Congressional Review Act

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptrol ler General of the United States. EPA will submit a report containing this rule and other requ ired information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller Ge neral of the United Stat es prior to publication of the rule in the Federal Regi ster. A major rule cannot take effect until 60 days after it is published in the Federal Register. While this acti on is not a “major rule” as defined by 5 U.S.C. 804(2), the final rule becomes effective 60 days after publication in th e Federal Register on [insert date 60 days afte r publication of the rule in the Federal Register]

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List of Subjects in 40 CFR Part 35
40 CFR Part 35 Administrative practices a nd procedures, Environmenta l protection, Grant programsenvironmental protection, Reporting and recordkeeping.Page 14 of 16 __________________ ____________________ Dated: Lisa P. Jackson, Administrator.

For the reasons set out in the preamble , 40 CFR part 35 is amended as follows:

Part 35 -- State and Local Assistance

Subpart O -- Cooperative Agreements and Superfund St ate Contracts for Superfund Response Actions

1. the authority citation for 40 CFR part 35 subpart O continues to read as follows:

Authority: 42 U.S.C. 9601 et seq.

2. Amend §35.6650 by revising paragra ph (a) to read as follows:

§35.6650 Progress reports.

(a) Reporting frequency. The recipient must submit progres s reports as specified in the Cooperative Agreement. Progress reports will be required no more frequently than quarterly, and will be required at least a nnually. Notwithstanding 40 CFR 31.41(b)(4), the reports shall bePage 15 of 16 due within 60 days after the re porting period. The final progress report shall be due 90 days after expiration or termination of the Cooperative Agreement.

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3. Amend §35.6670 by revising paragraph (b)(2)(i) to read as follows:

§35.6670 Financial Reports.

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(b) ***

(2) ***

(i) If a Financial Status Report is required a nnually, the report is due 90 days after the end of the Federal fiscal year or as specified in the Cooperative Agreement. If quarterly or semiannual Financial Status Reports are require d, reports are due in accordance with 40 CFR 31.41(b)(4);

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4. Amend §35.6805 by revising paragra ph (k) to read as follows:Page 16 of 16 §35.6805 Contents of an SSC.

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(k) Reconciliation provision , which states that the SSC remains in effect until the financial settlement of projec t costs and final reconciliation of response costs (including all change orders, claims, overmatch of cost share, reimbursements, etc.) ensures that both EPA and the State have satisfied the cost share require ment contained in sec tion 104 of CERCLA, as amended. The recipient may direct EPA to return the overmatch or to use the excess cost share payment at one site to meet the cost share oblig ation at another site in accordance with 40 CFR 35.6285(d). Reimbursements for any overmatch will be made to the recipient identified in the
SSC.

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