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                    Document headings vary by document type but may contain                    the following:                  
                -                       the agency or agencies that issued and signed a document                    
                -                       the number of the CFR title and the number of each part                      the document amends, proposes to amend, or is directly                      related to                    
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###### Environmental Protection Agency

          - 40 CFR Part 35
          - [EPA-HQ-OW-2006-0765; FRL-8792-3]
          - RIN 2040-AE99

# AGENCY:

Environmental Protection Agency (EPA).

# ACTION:

Final rule.

# SUMMARY:

EPA is taking final action on withdrawal of a regulation revising the allotment formula contained in EPA's Clean Water Act (CWA) Section 106 Water Pollution Control grant regulations. The current regulations include a financial incentive for States to voluntarily collect adequate National Pollutant Discharge Elimination System (NPDES) permit fees. This final rule withdraws the financial incentive for States to voluntarily collect permit fees.

# DATES:

This rule is effective on April 15, 2009 without further notice.

# ADDRESSES:

                        EPA has established a docket for this action under Docket ID No. EPA-HQ-OW-2006-0765. All documents in the docket are listed in the                         *www.regulations.gov*                         index. Although listed in the index, some information is not publicly available,                               ( print page 17404)    *e.g.*, CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is publicly available only in hard copy. Publicly available docket materials are available either electronically through                         *www.regulations.gov*                         or in hard copy at the Water Docket, EPA/DC, EPA West, Room 3334, 1301 Constitution 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 Public Reading Room is (202) 566-1744, and the telephone number for the Water Docket is (202) 566-2426.                    

# FOR FURTHER INFORMATION CONTACT:

                        Robyn Delehanty, Office of Water, Office of Wastewater Management, 4201M, U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue, NW., Washington, DC 20460; telephone number: (202) 564-3880; fax number: (202) 501-2346; e-mail address:                        *delehanty.robyn@epa.gov*.                    

# SUPPLEMENTARY INFORMATION:

## I. General Information

Affected Entities: State Agencies that are eligible to receive grants under Section 106 of the Clean Water Act (CWA).

## II. Background

                    Section 106 of the CWA authorizes the EPA to provide grants to State and interstate agencies [footnote 1 (CWA Sections 106 and 518 authorize EPA to award such grants to eligible Indian Tribes, but this rule does not affect those grants)] to administer programs for the prevention, reduction, and elimination of water pollution, including the development and implementation of groundwater protection strategies. Section 106(b) of the CWA directs the EPA Administrator to make allotments “in accordance with regulations promulgated by him on the basis of the extent of the pollution problem in the respective States.” EPA's regulations implementing Section 106 can be found at 40 CFR 35.160*et seq.*                     EPA's current allotment formula for Section 106 grants includes an allotment ratio for each State based on six components selected to reflect the extent of the water pollution problem in the respective States. These six components are surface water area, ground water use, water quality impairment, potential point sources, nonpoint sources, and the population of urbanized areas. 40 CFR 35.162(b)(1)(i). By including a component related to point sources, EPA recognizes the important role they play in determining the extent of pollution in a State.                

EPA proposed a rule amending the CWA Section 106 allotment formula on January 4, 2007 (72 FR 293) and requested comments from interested parties. EPA received 717 comments on the proposed rule. A summary of the significant public comments and the Agency's responses can be found at Docket No. EPA-HQ-OW-2006-0765. There were also two changes to the final rule which EPA determined necessary. These changes involved delaying implementation of the rule until FY 2009 and changing the base fiscal year which the Agency would use to determine if an allotment for this purpose should be made. EPA's responses to all comments received on the rulemaking are included in the docket described above.

The final rule promulgated September 10, 2008 (73 FR 52584) amended the State allotment formula to incorporate financial incentives for States to implement adequate NPDES fee programs. The Agency recognizes the importance of States' flexibility in program management. Therefore, the final rule was purely an incentive; it was voluntary and would not have impacted States' base funds. The incentive allotment could only be funded after an increase above the FY 2008 level in the total amount of funds allotted to States under 40 CFR 35.162(b). Additionally, the Agency had discretion regarding whether to fund the incentive allotment.

Today's final rule withdraws the “Permit Fee Rule” promulgated on September 10, 2008.

The Clean Water Act prohibits the discharge of any pollutant from point sources to waters of the U.S. except in compliance with other provisions of the statute. 33 U.S.C. 1311(a). One of these provisions is CWA Section 402, under which pollutant discharges can be authorized by an NPDES permit. 33 U.S.C. 1342(a). EPA oversees the NPDES program and also approves applications from States to administer and enforce the NPDES program in those States. Currently, 46 States are authorized by EPA to administer all or some parts of the NPDES program.

Federal funds under the Water Pollution Control grants, together with State resources, are used to establish and maintain adequate measures to prevent, reduce and eliminate water pollution. As State agencies carry out most of the day-to-day aspects of water quality functions, their responsibilities are expanding while they are simultaneously facing increasingly severe funding constraints. The growing complexity of water quality issues has prompted more States to implement NPDES permit fee programs. An estimated 42 States currently have permit fee programs in place, with such fees paying for all or a portion of the cost of the State's permit program.

A number of States still operate their permit programs with little or no reliance on permit fees. States can address permit program budget shortfalls through the implementation of permit fee programs that collect funds to cover the cost of issuing and administering permits. Funding permit programs with the support of permit fees allows States to use CWA Section 106 funds for other critical water quality programs, which address the prevention, reduction, and elimination of water pollution.

## Conclusion

After careful evaluation, EPA is withdrawing the Permit Fee Rule. EPA has maintained an on-going discussion with the States throughout the rulemaking process and has heard the States' concern with the rule. EPA respects and values this feedback from the States and looks forward to continuing the successful partnership with them. EPA also notes the lack of congressional support for the rule. The FY 2008 Congressional Budget language directed EPA to use the same allocation method as used in prior years and the Conference Report for the Omnibus Appropriations Act for 2009 includes language stating Congress does not support the creation of an incentive pool with 2009 funds. At a time when State budgets are already strained, EPA continues to encourage States to develop sustainable programs that share the cost with those who benefit from NPDES permits. The Agency applauds the 42 States that already collect some form of fees for NPDES permits.

*Statutory and Executive Order Reviews:*                     Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and is therefore not subject to OMB review. Because this rule is not subject to notice and comment requirements under the Administrative Procedures Act or any other statute, it is not subject to the Regulatory Flexibility Act (5 U.S.C. 601*et seq.*). Today's rule contains no Federal mandates (under the regulatory provisions of Title 2 of the Unfunded Mandates Reform Act of 1999 (UMRA)) for State, local, or tribal governments or the private sector that would subject the rule to Sections 202 and 205 of the UMRA) (Pub. L. 104-4). The rule imposes no enforceable duty on any                           ( print page 17405)                        State, local, or Tribal governments or the private sector. In addition, this rule does not significantly or uniquely affect small governments. This rule does not create new binding legal requirements and does not substantially and directly affect Indian Tribes under Executive Order 13175 (63 FR 67249, November 9, 2000). EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) as applying only to those regulatory actions that concern health or safety risks, such that the analysis required under section 5-501 of the Executive Order has the potential to influence the regulation. This action is not subject to Executive Order 13045 because it does not establish an environmental standard intended to mitigate health or safety risks. This rule will not have federalism implications, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). Executive Order 12898 (59 FR 7629 (February 16, 1994)) establishes federal executive policy on environmental justice. EPA has determined that this rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it is a grant rule that does not affect the level of protection provided to human health or the environment. This rule is not a “significant energy action” as defined in Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355 (May 22, 2001)) because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Further, we have concluded that this rule is not likely to have any adverse energy effects. This rule does not involve technical standards; thus, the requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an additional information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501*et seq.*). The Congressional Review Act, 5 U.S.C. 801*et seq.*, generally provides that before certain actions may take effect, the agency promulgating the action must submit a report, which includes a copy of the action, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the                     **Federal Register**                    . A major rule cannot take effect until 60 days after it is published in the                     **Federal Register**                    . This action is not a “major rule” as defined by 5 U.S.C. 804(2). This rule will be effective on April 15, 2009.                

# List of Subjects in 40 CFR Part 35

      - Environmental protection
      - Administrative practices and procedures
      - Reporting and recordkeeping requirements
      - Water pollution control

Dated: April 9, 2009.

Michael H. Shapiro,

Acting Assistant Administrator, Office of Water.

EPA amends 40 CFR part 35 as follows:

# PART 35-[AMENDED]

1. The authority for citation for part 35, subpart A continues to read as follows: 

Authority:42 U.S.C. 7401*et seq.*; 33 U.S.C. 1251*et seq.*; 42 U.S.C. 300f*et seq.*; 42 U.S.C. 6901*et seq.*; 7 U.S.C. 136*et seq.*; 15 U.S.C. 2601*et seq.*; 42 U.S.C. 13101*et seq.*; Public Law 104-134, 110 Stat. 1321, 1321-299 (1966); Public Law 105-65, 111 Stat. 1344, 1373 (1997).                        

§ 35.162 

2. Section 35.162 is amended by removing paragraph (e). 

[FR Doc. E9-8644 Filed 4-14-09; 8:45 am]

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