UNITED STATES ENVIRONMENTAL PROTECTION AGENCY WASH IN G T O N , D.C. 20460



## SEP 3 0 2011

MEMORANDUM SUBJECT: FROM :


### TO : Summary Regio nal A ir Division Directors Regio n s I-X · ng a Non-Selective Re du ction OFFICE OF AIR AND RADIATION

Nu merous state and local governments have had t o grapp le with difficult economic cond iti o n s and variable level s of federal support in recent years . Thi s has complicated their ability to meet the cost sha re requirement s of the continui ng air grant program under § I05 of the Clean Air Act (CAA o r the Act)). EPA ha s reexamined the provisions f o r obtaining an exception (i.e. , waiver) from the § I05 program ' s main tenance of effort (MOE) requirement due to eco nomic c ircu m stances and ha s id en tified a more flexible approac h that co uld e nable more jurisdictions to qualify for the waive r . 1 Additional information o n the ove r all waiver determination process has also been provided to make it possible for state and local age ncies to better evaluate their el igibility for a non- selective reduction in advance of contacting EPA. 

### Background Section I05 of the Act provides grant assistance to s tate, local and tribal a i r agencies t o su pport the ir continuing a ir pollution control program s. Section I 05 contain s two cost s ha ring provi s ions intended t o e n s ure adequate recip ie nt support: a minimum 2/5 (or 4 0 %) recipient m atch , and a MO E requirement. T he latter re quires a recipient to expen d at l east as much for recu rrent pro g ram activities eac h grant year as it did in the prev ious grant year. See CAA secti o n 10 5(c)(l). An in c reas in g numb er of state and local governments h ave been providing a larger s hare of their recurrent program costs while simu ltaneousl y dealing with the chall enge of bud get reductions and variable le ve l s of federal s upport. T hi s has led numerous jurisdictions to inquire about fina ncia l relief from the Act's MOE requirement. The Act a ll ows a recipient to adjust its MOE if the recip ient can demo n str ate that a nonselective reduction in the ex penditures of all executive branch agencies has occurred
. See CAA section 105(c)(2). A waiver to adjust the required MOE l evel due to a non-selective reduction i s included in the statute to spec ifically addr ess econo m ic distress within a state. Th e Agency has exerci s ed flexibility in

1 The term waiver, as used in this guidance, means a waiver from th e requirement to annually s pend as much in rec urrent expenditures as in th e prior grant year and the ability to reduce and reset that level for the year in quest ion based on a non select ive reduction
. This document addresses only t he non-sel ective reduction provisions of the maintenance of effort requirement. For more information on the overall cost sharing requirements of§ I 05 of the Clean Air Act, including the required match. see 'Co nso lidated Guida nce to Administer the Sectio n I 05 Air Grant Program: ' Office of Program Management Operations ; Septembe r. 2008.

Internet Address 11tJ.RL) • http:// www .epa.gov Recycled/Recyclable • Printed with Vegetable Oil Based Inks on Recycled Paper (Minimum 30% Postconsumer)interpreting how this waiver is applied based upon its legislative history (e.g ., health and safety agency expenditures need not be reduced)
. EPA has also identified a range of other unique circumstances in 

### which a recipient could lower its grant contribution without obtaining a non selec tive reduction (see Appendix I). Recently , several Regions and recipients have indicated that the criteria to obtain a MOE waiver are too restrictive and the process too complex. As a result, the Agency has reevaluated the re l evant statutory provisions and legislative history to determine what additional flexibili ty could be afforded in making a nonselective reduction determination. Defining a Non - Selective Reduction The l egislative history of the CAA indicates that the non-selective reducti o n waiver was included in the statute to specifically address adverse economic conditions. The nonselect ive red uction is the primary mechanism avai lable for reducing a state or local agency's MOE to add ress an economic downturn? Whi l e EPA has historically inter preted the statutory language addressing the non-selective reduction waiver as providi ng the Agency w i th some flexib i lity, EPA has found that a major dete rrent in qualifying for a non-se l ect ive reduction for many recipients has been the strict interpretation that the appropriat ions for all executive branch agencies may not be disproportionally reduced in a budget crisis. The Agency has reevaluated thi s req uiremen t a nd determined that an across-the-board proportional reduction is not required under the statute
. The purpose of the nonselective reduction provision is to prevent targeted reductions of air programs within the states . A variable reduc tio n in appropriations across agencies or programs does not necessarily mean that the particular air agency 3 is bein g singled out for a selective reduction. EPA has d eterm ined that the statute does not require the prior interpretation of the no nse lective reduction provision and that the objective of the st atute is still met if the Agency exami ne s the overall budget c ircumstances of the affected agency and jurisdiction and applies a more flexible 'weight of evidence ' approach. The weight of evidence approach recognizes that 

### it may not be possib l e or feasib le for all executive branch agencies to have their expenditures reduced or reduced proport ionally relative to the a i r program. Clear examp l es of this are exceptions for agencies that protect public health and safety. There may a lso be executive b ranch agencies that receive support from separate revenue sources (e.g ., trust funds , user fees) that are not subject to executive level budget limitations or age ncies or programs that are targeted with one time special app ropriations
. However, under the weig ht of evidence approach, i t must be c l ear to EPA that air program expenditures are not being singled out for reduct ion or for disproport io nate reduction relative to other executive branch agenc ies and programs. EPA will not necessarily rely upon a strict dollar for dollar comparison or percentage differential in making its determination. Nonselective reduction determ in ations are discretionary and the Agency may decline to approve a nonselect ive reduction where it determines that circumstances indicate an inappropriate t argeting of the air program or where the reduction wou ld lead to an adverse impact on air quality
. For example, a nonselective reduction request may be denied if the air program is reduced more than all other programs

2 EPA interprets the non-selective reduction provision as allowing an affected recipient to reduce its MOE based solely upon th e reductions required as part of the r elevant executive le ve l budget action
. However, EPA has identified various othe r unique circumstances whereby a recipient could lo wer its grant contribution withou t obtaining a nonselective reduction (see Appendix I)

. 3 The terms agency, recipient or grantee used th rou ghout the document all ref er to the §I 05 air pollution control agency that is seeking an adjustment of its MOE. Jurisdiction refers to the broader state or local government that determines the air pollution control agency ' s budget.

-2-or the e nvironme nta l p rogram that co ntains the air program i s disproportionally reduced when compared w i th all ot h er programs within the jurisdiction. If a nonse le ctive reduction request i s approved, the grantee's MOE leve l can be adjusted by an amount equ i valent to the reduction in the grantee's contribution to the§ 105 ai r program that i s attributable to the nonselective reduction
. However , the statute has no provision for a waive r of the required 40% minim um mat ch and the gran tee 's revised MOE level cannot be lowe r tha n its requ ired 40 %min im um match amount. 4 If the revised MOE level results in the recipient's percen tage contribution fall ing below 40% (relative to the combined federal and non-federa l total) then either the recipient must raise i ts co n tribution to at least a 40% l evel or EPA must lower the fede ra l contribut ion so that it is no more than 60% of the co m b in ed federal/non-federal total for the affected grant period. 

### Guidel i nes for R egions Regions should use the following guidelines to help determ ine whethe r a non-se l ective reduction is appropr iate: (a) Red uctions in the expend i tures of the air program shou ld be part of an across - the -b oard or general reduct ion in the programs of executive branch agencies of a state or local jurisdiction; (b) For general reductions, those w he re not every executive branch agency or i ts programs need be reduced o r red uced as p roportionally as the clean air program as with an across the board reduct ion, it must be c l ear that the c l ean air program is not be in g s ing l ed out for cuts or being disproportio nately impacted; (c) Programs that are criti ca l for the protection of pub Iic health and safety (e.g., police and fire) can be comp l ete l y excepted; (d) Execu ti ve br anch agencies an d programs with budgets that are not subject to executive level budget co ntrol o r limitation can be excepted (e
. g . , programs co mpletely sup ported by dedicated fund s or a dedicated reven ue stream); (e) Executive b ranch agencies w i th a mu l t i-year budget pe riod sup ported by a n approved multi-year appropriation that is impacted by a non-select ive reduction, can adjust their funding over the affected mult i-year period; 

### (f) Reductions may take the form of a perce nta ge o r dollar level reductio n in expenditures or their equiva l en t , including personne l actions which may inclu de, but are not limited to : hiring freezes, layoffs , furloughs, hiri ng caps, e t c.; (g) Reductions in the recipien t 's co ntribu ti o n t o the section 105 air program must be attrib utable to an across-the-board or genera l reduc ti on in the budget affecting executive branch age ncies and may not s imply be a d iscretionary action by the recipient to supplant its funds with federal funds; a nd (h) Expenditures for clean ai r programs s ho u ld not be reduced in o rder to increase fundi ng for prog rams or activities that clearly degrade air qua li ty and j eopardize the public's health
. 

### Expediting the Waiver Review Process

4 Note th at the level of funds that constitutes the 40% min i mum is determined by countin g a grantee's contr ibution towards both its recurrent and non-recurrent expenditures. The MOE is calculated con s idering only the gran tee's recurrent expenditures
.

.., -..>-Clear and timely commu n ication and documentation between the affected jurisdiction and EPA are 

### essential in order to expedite the determination of whether a non-selective reduction has occurred , if the requ ire d MOE l evel can be waived, and what the revised MOE l evel should be. As soon as i t is evident to the grantee that it may not be able to meet i t cost sharing obligations due to executive and/or legislative budgetary action, the grantee should alert its EPA Regional Office. Since federal and non - federal budget and grant cycles may not coincide, this discovery could occur prior to clos eout and before the next grant period, or after a new grant per iod has begun. Once a recipient agency knows its final budget circumstances and believe s that it may qua lify for a waiver due to a non-selective reduction, i t should share this information in writin g, with supporting documentation , with the EPA Region as soon as possible. Prompt action will he lp facilitate the Agency's determination. It i s recommended that the initial communicat io n occur not only between the recipient 's project manager and the EPA regional project officer but also between the state/local ai r director and the EPA regional air divis ion director. It may also be he lpf u l for the grantee to enlist the a ss istance of its c hi ef budget age ncy and i ts legal counsel. In addition to notifying its Regional grants office, t he Regional air program should also alert OAR a nd the Office of General Counsel (OGC) and share the documentation it receives from the affect ed jurisdiction as soon as possible so that these offices can assist in the waiver review. 5 The Headquarters review should large ly focus on app ropriate lega l in terpretatio n and application of the updated non-selective reduction gu idance and the assurance of national consis tency
. Once EPA informs the grantee that it has received all the background information and doc umentation necessary fro m the affected state o r local jurisdictio n, the Agency should take no more t han 60 days to reach an ini tial determination on whether it will gr ant a waiver and allow a re- setti ng of the MOE
. The Regional Administrator, after consu lti ng within the Region and with OAR and OGC, will inform the jurisdiction in writing of its determination. If the determination does not support the jurisdic t ion's request, a re-consideration can be pursued following the dispute procedures outlined in 40 C FR 31
. 70. IfEPA's determination supports the state/loca l jurisdiction's request for a waiver, t he Regional Admin istrator must still provide prior notification to the public and the opportunity for a public hearing through publication of a notice in the Federal Register. The notice shou ld explain the non-selective reduct ion requirements, the specifics of the recipient's request and its fiscal s i tuation, and EPA's determ in ation
. A minimum of30 days for public comment will be allowed. If no written request for a public hearing or no s ig n ificant comment is received within that period, the Agency' s determin ation w ill become final. The determination and any pub lic co mment received must be avai lable to the publ ic upon request. Essential Documentation The recipient seeking a MOE waiver and adjustment is responsible for explaini ng why i t believes a nonselective reduction is warranted. The recipi en t must provide the rationale a nd the documentation necessary to enable EPA to make a determination that a no n- selective reduction has occurred. In order to exped i te EPA's determination , the recipient sh ou ld prov ide details on the budget action and its comparative fiscal impacts on: the jurisdiction's exec utive branch agencies, the affected agency itself, and the agency's air program. The recipient should id ent ify any executive branch age ncies o r programs that

5 See "Consi stent Nationwide Administration of Section I 05 Maintenance of Effort (MOE) Requirements;" Dep u t y Assistant Administrator Beth Craig to EPA Regional Air Division Directors; December I , 2008.

-4-should be excepted from comparison and explain why. The recipient mus t provide evidence that the air program is not being singled out for a reduction or being disproportionately reduced. Doc umentation in two key a reas will be needed: budget data sp ecifi c to the recipient's air program and comparative budget data between the recipient's air program, the agency conta ining the air program and the other executive branch agencies. To assist the recipient and EPA in the non-selective determination, the documentation must address the following questions. Budget Data (I) When does the fiscal year begin and end for the governmental jurisdiction containing the affected state/local air agency? (2) What is the budget (funding) period specified in the section I 05 assistance agreement for which the state/local agency has not, or will not, meet its MOE requirement

- i.e., the MOE shortfall period? (If the fiscal and grant periods are different, the dollar amounts need to be reconciled to enable appropriate analysis and comparison of executive branch agencies over the same MOE shortfall period. (3) How much in non-federal funds did the state/local agency expend on section 105 expenditures over the budget period that preceded the budget shortfall period? What portion of these expenditures was nonrecurrent? What portion was recurrent? [Note that question refers to the leve l of recurrent expenditures and not to their source of support
. An agency's program can be supported by no t only general fund revenues but other sources such as permit and user fees. Al l sources of support for recurrent §I 05 air program expenditures should be shownl (4) What was the state/loca l agency's proposed MOE l eve l for the budge t shortfall peri o d? (This shou ld meet or exceed the level of expenditures for recurrent program activity for the prior grant budget per iod.) (5) a. If the period with the shortfall has expired, and the s tate / local agency has s ubmitted a final financial status report for that gran t , what was the actual recurrent expenditure l evel for that budget period? b. If that budget period has not expired, or the state/agency has not submitted a fina l financial status report for the grant, what is the expected recurren t expenditure level for that budget period? c . What is the amount of the actual or anticipated shortfal l in the level of recurrent expenditures below the required MOE leve l due to the executive branch agency b udget reduction for the budget shortfall period? (6) What MOE level is the state/local agency planning (or proposing) to use in its application for a section I05 grant in the year following the budget shortfall period? What will be the source of funding for the non -federal , recurrent section I 05 expenditures? Funding Actions (7) What were the budgets or the expenditure levels for all the departments or program s within the state/local environmental agency containing the a i r program for the affected MOE shortfall period? For the prior fund in g period? (8) What were the budgets or the expenditure levels for all the executive branch agencies within the state/ local jurisdiction for the affected MOE shortfall period? For the prior funding period?

6 Note that Title V operating permit fees cannot be used to cover§ I 05 grant expenses and should not be inc luded in any cost shar e determination
.
-5-(9) What are the comparative differences in budget totals for the two periods when comparing the 

### affected air program to other programs within its overall environmental agency (if appl icable) and when comparing the air program budget and its agency's budget to those of other executive b ranch agencies? (Please show aggregate totals, dollar differences, and percentage changes by agency and/or program.) ( 1

0) If the budgets of all executive branch agencies were not reduce d , or were reduced in different ways (e.g., dollars vs. positions), or were not reduced proportionally relative to the section105 air program, p l

ease provide a thorough explanation. For More Inf ormation Additional information for Regions and recipients on examples of administrative adjustments to the maintenance of effort requireme nt, inc luding a non-selective reduction, is contained in Appendix 1. Appendix 2 includes frequently asked questions (with responses) addressing the non-se l ective reduction
. For direct questions and comments on this guidance please contact Will iam Houck in the Office of Program Management Operations at 202-564-1234.

-6-Situation Non-Selective Reduct ion

Correction of Recurring/ Nonrecurring Expend it ures

Dissolution of Agency/Assumption of Res pon sib ilill: ie s
Declination of Federal Award

Migration of Activity to Ti tle V Operating Permit Prog ra m

Inclusion of §lOS Air Pro gra m in a Performance Partnership Grant (PPG) Appendix 1. Recent Examples of Approved Adjustments in a §105 Recipient's Cost Share Explanation Section 105(c)(2) contains a provision that enables EPA to make a g rant to an agency that do es not meet its MO E if, after notice and opportunity for public h earing , EPA determines the reduction in expenditures is attributable to a nonselect ive reduction in the expen ditures in the programs o f all Executive Branch agenc i es of the applicable unit of government. A new MOE l evel can be reset based upon the amount of red uct i on attr ibu table to the non-select i ve r e duct io n. Wh ile b ot h nonrecurring a nd recu r ring costs fig ur e in determining w he th er a r ecipient meets the 40% minimum match, only recur r i n g co sts co unt towards the maintenance of effort (MOE) determination

. If a recipient ca n document to EPA's satisfaction t h at i t i ncorrectly incl ud ed n onrecurring costs in pri o r year MOE calculations, it can amend and re -fi le its financia l stat us reports to correct i ts MOE leve l. There have been in stances where an exist ing sec tion 105 recip ient agency must cease operations and its CAA res pon sibili tie s must be assumed by a n ot h er existing or new agency . In this case the successor age ncy can n egot ia te an updated MO E level ( re flec ting its i ncreased r esponsibili ti es but not necessar ily the full level of costs of the d efunct age ncy) with the EPA. Due to an economic down t urn, a recipient may be unable to maintain its historically high co n t ribution lev el to its air program and the recipient may not be ab l e to demonstrate that reduct io ns across all its executive branch agencies

. A recipient m ay d ecline its federal award for one year in order to esta bli sh a new grant relat ionshi p (and a new MOE level) with EPA the n ext grant year. Example Washoe County, Nevada (2009) Sacramen to APCD (2005) San Joaquin Valley APCD (1999)

Clark County, Nevada ( 2008)

El Paso ESD/ E l Paso HED (2009) Ohio EPA/ Cle veland DPH (1999)

New York DEC (2004) Kentucky (2011)

Due to delayed appr ov al of its Ti tle V ope ra ting permit program the recipie nt's differe ntia tion of Tennessee DEC (1999) its Title 

### v and air grant program exp enses wa s also delayed. [Note that if a recipient legitim a te ly a m ends the applicable coverage of its Title V program and fees to cover mor e of its a ir program activity , the recipien t ca n refine its remaining air program a nd hence adjust its MOE. A state which places its section 105 p ro gram within a PPG can ta ke advantage of state funds th at Washington DOE (2001) exce ed the cost share r eq uir emen t s of othe r EP A environmental categorical gra nt pro g rams inclu ded in the PPG and coun t those funds towa rd its required sectio n 105 cost sha r e.

• No t e: The Clean Air Act conta in s 2 inte rrelated cost - sharing prov i sions that m u st be complied with in orde r to receive , and remain e l igib le fo r, a cont i nuing air program grant unde r section lOS

. Sect io n 1 05(a)( l)( A) requi res that a recipient provide no le ss than 2/S (40%) of the cost of imp l ementing its approved air program ('match'), while s ection lOS{c)(l) requires a recipient to exp end annually at least as much in r ecu rr ing expenditures as it did in th e prior year {mainte n ance of effort or 'MOE')

. Wh il e there is a waiver p rovi sion for a re duction in a recipient's dollar level of no n ·fe d eral recurrent expenditures, there i s no p rovision for a r eduction below t h e require d 2/5 (40%) minimum n on ·federal percentage contribution

. If a recipient's percentage contribution falls below 40% (relative to the co m bi n ed federal and non - federal total) then either the recipient needs t o raise i ts contri b u tio n to at least a 40% level or the EPA needs to lower the f ederal award amoun t so that it i s no more than 60% of the combined total. Note that calculation o f t he match includes both rec ur rent and non - recurrent costs
.Append i x 2 

### Frequently Asked Questions (1) What is t he Clean Air Act maintenance of effort requirement? The Clean Ai r Act states that no age ncy s hall receive an y section I 05 g ra nt du ring any fiscal year when i ts level of ex penditures of non-federal funds for recu rrent ac t ivit ies within its approved section 105 air pollutio n contro l p rogram w ill be l ess than the leve l for such expen d itu res in the prece di ng fiscal year. The prospective recip i ent's grant app lication should identify the requ i red maintenance of effort leve l. The rec i pien t 's final section 105 grant fi nanc ia l statu s report includes the final l eve l of ex pendi tu res (inclu d ing those that were recurrent) and hence d ocume nts whethe r the maintenance of effort requ i remen t was me t. 

### (2) Is the m aintenance of effort (MOE) the same as the continui ng eligibility leve l (C E L)? Sectio n 105 contain s two statutory cost
- s ha ring prov i sions : (a) a min im um 2 /5 (40%) match; and ( b) a maintenance of effort requirement. While the terms MOE and CEL have been used interchangeably over the years, for pu r poses of a section I05 g rant, the CEL co ns ists of both the min imu m match and the maintenance of effort (MOE) req uirements, and both must be met t o remain el igible for sectio n I 05 g rant funds
. 

### (3) What is a non-selective reducti o n? CAA section I 05(c)(2) allows EPA to grant a section 105 recip i e nt a waiver from meeting its req ui red MOE leve l if the rec i pient d emo nstrates that its red uced level of expe nditures fo r recu rre nt activities is attributab l e to a non-se l ective reduction in the budgets of a ll the exec ut ive branch agenc i es of t hat agency's applicab le unit of government (e.g., sta t e government, local government, or si ngle-purpose local air district)
. EP A's most recent guidance interp rets a non - selective reduct ion as being o ne w here not a l l execu t ive branch agencies' budgets need be red uced (e
. g . , exceptio ns for pu blic health an d safety agencies) b ut that the weight of evidence m u st indicate that th e section 105 air prog ram is not inc urri ng a s i ngular or di sproportionate reduction
. 

### (4) What is meant by the term 'executive branch ag en cy'? EPA defi nes a n executive b r anch agency, or a sub

-un i t of such an agency, genera ll y as an age ncy which prepares its b udget for the approval of the c hi ef executive of the applicab le unit of gove rn men t prior to its s ubm iss io n for funding t o the legislative br anch or ot her fiscal dec ision-making bo dy . I n th e case o f the state, for example, the chief executive is generally the governo r ; for the county, the c hi ef executive is gene r ally the county execu tive or county com m issioners ; an d f o r a loca l s ing l e purpose air quality district, the chief executive is genera ll y the execut ive directo r o r board of d irectors. 

### ( 5) What eviden ce or documentatio n is necessary f o r t he affecte d section105 agency o r it s ju r isd iction to provide to EPA in suppo r t its request f o r a non - selective r eduction determi nation an d reduction of its maintenance of effort level? EPA inte rprets the stat u te t o require a review of state or local jur isdictio n b udget ary in fo rmat ion because the Age ncy mu st det ermine whether a nonselec ti ve re d uc t ion in the a ir program has occ u rred relative to overall budget act ion. A s suc h, budget a nd expenditu re data fro m the impacted budget period , the prior b u d get period , an d in some cases the pros p ec ti ve b udget period , of exec u tive branch agencies is needed. I n the case of the a i r prog ram , recurrent and non-recurr ent expen ditures need to be d i ffe rentiated , as we ll a s the or iginally re qu ired MO E leve l, the actu a l recurrent expenditure leve l , the amount of sho rt fa ll , a nd the requested new MOE level. Thej urisdictio n s ho u ld supply in format ion that clea rl y shows how the a ir prog ram's funding leve ls com p are to

- 8-funding levels (i.e., approved budgets or actual expenditures) of the other executive branch agencies and programs over the same time period
. While information should be provided on all executive branch agenc ies' 

### budgets, not all such agencies need show reductions or proportionate reductions relative to th e ai r program. H owever, the weight of evidence to EPA must indica te that the section 105 air program is not being singled ou t for disproportionate reduc ti ons . Note that the budgets of Executive Branch agencies may be supported by sources other than, or in addition to, ge neral fu nds (e.g., user fees, dedicated funds, etc.) and that all sources of support funding recurring expenses should be included. 

### (6) Must the non-selective budget action be reflected only in terms of expenditure levels? While the statute refers to reductions in 'expen ditures,' EPA will not base its determ in ation strictly on do llar for dollar comparisons. The Agency will consider various indicators of j urisdiction-wide budget stresses including, for example

- personnel cuts and hiring freezes, furloughs, c hanges in work days, reductions in serv ices, etc
. 

### (7) What is considered to be a disproportionate reduction? The Agency will rely upon a n objective weight of evidence determination rather than a strict dollar level or percentage differential. For example, differences of a few perce ntage points across many age ncies would certainly be reasonab l e while targeted cuts to the air program and a h andful of other programs would likely not be sufficient. Further, expenditures for clean air programs should not be reduced in order to increase funding for programs or activ i ties that wou ld clear l y degrade air qua lity and/or jeopardize the pub lic's health. 

### (8) What is t he difference between recurrent and non-recurrent expenditures? Recurrent expenditures are those expenses associated with activities of a continuing environmental program. All expenditures are considered recurrent unless just ified by th e applicant as non-recurrent and approved by EPA as such in the grant agreement or an amendment thereto
. See Per 40 CFR 35.141. Non-recurrent expenditures are those expen s es which are shown by the recipient to be of a non-repetitive , unusual, or singu lar nature and that would not reaso nab ly be expected t o r ecur in the foreseeable future. Exa mp les might be: investigative one-time monitoring, a spec ial purpose or geographically t argeted stud y of fi nite duration , a pilot project for a new ty pe of control m easu re, o r recipient contrib utions in support of a limited duration, nonrecurring activity ini tiated by EPA. 

### (9) What happens if the non-selective reduction results in a lowering of the §105 agency's cost share below the Clean Air Act's required 2/5 (40%) minimum contribution? Per CAA §I 05(a)(l )(a) and 40 CFR 35
. 145(a), i f a recipient receives a non-selective reduction and the result ing level of non-fede ral expenditures fa lls below the 40% minimum of the remaining total program cost, then the recip ient must increase i ts share to comp ly wi th the statutory match requirement or EPA wi ll reduce the federal share so that i t is no greater than 60% of the new total combined non-federal and federal amount. 

### (10) In seeking a non - selective reduction, can a jurisdiction lower i ts air program's maintenance effort by an amount beyond the level required by the across the board reduction in the budgets of the affected executive branch agencies? For example, can a recipient automatically re-set its MOE contribution level to the statutory minimum of 40%? The Agency interprets the section 105(c)(2) non-selective reduction provis ion as authorizing a recipient's MOE to be red uced on l y by an amount equal to the reduction precipitated by the non-selective reduction. 

### (11) If 

### the M OE level is reduced in one year due an approved non-selective reduction, must it go back up to its previous level in the next year whether or not additional federal funding becomes available?

-9-Once the affected recipient's MOE level is adjusted due to a non-selective reduction, it becomes the new MOE level. A recipient is not required to restore an approved MOE reduction in the following grant budget period. I t is also important to note that add iti onal federal funds can subsequently be added to the rec i pient's award level

- up to a maximum of 3/5 (60%) of the overall combined federal and non-federal funds

- in an ensuing grant period witho u t triggering a corresponding non-federal increase
. However, if the recipient ' s acceptance of these increased federal funds lowers their co ntribution percentage below the required 40% minimum cost share , then the recipient must raise their contribution to the 40% minimum in order to q u alify for the increased federal funds. If the recipient's increased contribution also increases its recurrent expenditures then this would raise and re-set its MOE s ince MOE is based on recurrent expenditures. 

### (12) What are the requirements for public notification when determining whether a non - selective reduction applies? The Regional Administrator may grant an exception to the required MOE leve l if, after not ice and opportunity for a public hearing, the Regional Administrator determines that a reduction in expenditures is attributable to a non-se l ective reduction. See CAA 

### § 1 OS( c)(2) and 40 CFR 35 .1 46(d)
. The notice should e x plain the nonselective reduction requ irements, EPA ' s proposed determi nation, and the specifics of the re cipient ' s request and fiscal situation
. A minim u m of 30 days for pub lic co m ment wil l be allowed. If a written request for a public hearing is not received, EPA's determination will become final. This determination, and any comment received, must be made available upon request from the public
. 

### (13) What happens in a situation where there is a. budget reduction in the overall jurisdiction's budget period but the timing of the budget period and the recipient agency's section 105 grant period do not coincide meaning multiple grant periods may be affected? Typically, the periods of time for which a recipient agency/jurisdiction must compare the air program to the other executive branch agencies are the periods of the MOE shortfall year and the precedi ng grant year. The recipient must assess the impacts of the fu nding reduction on the affected grant periods and seek t he appropriate waiver or waivers based on the appropriately re-calculated MOE level per affected grant pe riod. The nonselective reduction test must be met for each affected grant period. Simi larly if, the recipient agency must alter its grant budget period because its jur isd iction changes t he time period of its fiscal/budget y ear then the required cost share amount should be discussed with EPA though typically it would be calculated o n a pro-rated basis. 

### (14) Who makes the determination at EPA that a non-selective reduction is warranted? The determination is reached though a shared, con s u ltative process. EPA Regional Offices have the delegated authority for general grants administration and as such deal directly with the recipien t in assessing the MOE situation and implementing corrective actions. The decision to grant a waiver is delegated to the Regional Admin istrator but the Regional determination, which should be coordinated with Regional Counsel, of a nonselective reduction affecting a section 105 recipient's MOE must be coordinated with the Office of the General Counse l (OGC), the Office of Air and Radiation (OAR), and the Grants Administration Division. Coordinat ion is cri t ical to maintaining consistency in non-selective reduction determinatio n s. It is recommended that the EPA Region designate a contact, such as the EPA project officer, to be responsible for coordina ting the activities necessary to make the determination. 

### (15) How are adjustments in air cost sharing requirements treated within a performance partnership grant (PPG)? Numerous states have combined their§ 105 air program and other media grant programs within a performance partnership grant (PPG). Several of these states have done so to take advantage of th e flexible cost sharing

- 10-prov isions available under a PPG partic u larly as available resources to meet their air cost s haring requirements have declined
. Under a PPG, the minimum cost share requirements of the included categorical grant programs 

### co nstitute the aggregate cost share for the PPG. 

### See 40 CFR 35.136
. The min imum non-federal cost share dollar con trib ution for the 

### § 105 pro gram in the first year a nd subseq uen t years that i t is in a PPG, is the mi n imum non-fede ral match or the maintenance of effort level, whichever is greater. The term MOE then is no longer applicable under a PPG. Resources that a recipient contr ib ut es above the min i mum matc h requ i rem e n ts fo r o ther grant programs included within the PPG may also be used to meet a shortfall in the requi re d minimum contri bution of the · § 105 air program under a PPG. In the unl ikely circumstance w here a recipient's m inim um re qu ired air contribution (i.e., ini tial year MOE or 40% minimum, whicheve r is g reater) to its PPG is be ing reduced by a non-selective reduction and the rec ipi e n t does not have overmatc h available from other grant programs within the P PG to make up the required ai r min imum , the PPG recipie n t can follow the procedures in 40 

### CFR 35.146,40 

### C F

R 35
. 147, and t his g uida nce to seek an adju stment of its m inimum air cost s h are . H owever , t he resulting recipient air co ntr ibu ti on based on an approved non-se l ective reduction can be no lower than the required CAA statutory minimum of 40% re lative to the fede ral 

### § 105 award leve l. 

### (16) What happens if EPA does not comp le te its review within a 60 day period from the point that complete documentati o n is received from the affected jurisdiction? The s ixty day peri od is mea nt to be a performance metri c for EPA and not a procedural requirement. Neverthe less, EPA takes the review and action period serio u s l y a nd commits t o expedit io u s attention and processing of recipient requests that are accompanied by all the necessary documentation .

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