Document ID: EPA-HQ-OA-2016-0457-0001
Agency: epa
Document Type: Rule
Title: Participation by Disadvantaged Business Enterprises in Procurements under EPA Financial Assistance Agreements; Direct Final Rule
Posted Date: 2016-07-28T04:00Z

[Federal Register Volume 81, Number 145 (Thursday, July 28, 2016)]
[Rules and Regulations]
[Pages 49539-49553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17510]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 33

[EPA-HQ-OA-2006-0278; FRL-9946-27-OA]
RIN 2090-AA40

Participation by Disadvantaged Business Enterprises in 
Procurements Under EPA Financial Assistance Agreements

AGENCY: Environmental Protection Agency.

ACTION: Direct final rule.

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SUMMARY: Environmental Protection Agency (EPA) is taking direct final 
action on revisions to the EPA's Disadvantaged Business Enterprise 
(DBE) program. We are approving these revisions to improve the 
practical utility of the program, minimize burden, and clarify 
requirements that have been the subject of questions from recipients of 
EPA financial assistance and from disadvantaged business enterprises. 
These revisions are in accordance with the requirements of the Federal 
laws that govern the EPA DBE program.

DATES: This rule is effective on October 26, 2016 without further 
notice, unless EPA receives adverse comment by August 29, 2016. If EPA 
receives adverse comment, we will publish a timely withdrawal in the 
Federal Register informing the public that the rule will not take 
effect.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-OA-
2006-0278, at http://www.regulations.gov. Follow the online 
instructions for submitting comments. Once submitted, comments cannot 
be edited or removed from Regulations.gov. The EPA may publish any 
comment received to its public docket. Do not submit electronically any 
information you consider to be Confidential Business Information (CBI) 
or other information whose disclosure is restricted by statute. 
Multimedia submissions (audio, video, etc.) must be accompanied by a 
written comment. The written comment is considered the official comment 
and should include discussion of all points you wish to make. The EPA 
will generally not consider comments or comment contents located 
outside of the primary submission (i.e. on the Web, cloud, or other 
file sharing system). For additional submission methods, the full EPA 
public comment policy, information about CBI or multimedia submissions, 
and general guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Teree Henderson, Office of the 
Administrator, Office of Small Business Programs (mail code: 1230A), 
Environmental Protection Agency, 1200 Pennsylvania Ave. NW., 
Washington, DC 20460; telephone number: 202-566-2222; fax number: 202-
566-0548; email address: henderson.teree@epa.gov.

SUPPLEMENTARY INFORMATION: 
    Acronyms and Abbreviations. The following acronyms and 
abbreviations are used in this document.

BCRLF Brownfields Cleanup Revolving Loan Fund
CWSRF Clean Water State Revolving Fund
DWSRF Drinking Water State Revolving Fund
EDWOSB Economically Disadvantaged Woman Owned Small Business Program
DOT Department of Transportation
SBA Small Business Administration
DBE Disadvantaged Business Enterprise
MBE Minority Business Enterprise
WBE Women's Business Enterprise
EPA Environmental Protection Agency
OSBP Office of Small Business Programs
SBVPS Small Business Vendor Profile System

I. Why is EPA using a direct final rule?

    EPA is publishing this rule without a prior proposed rule because 
we view this as a noncontroversial action and anticipate no adverse 
comments. The actions are intended to improve the practical utility of 
the program, minimize burden, and clarify requirements that have been 
the subject of questions from recipients of EPA financial assistance 
and from disadvantaged business enterprises. However, in the ``Proposed 
Rules'' section of this Federal Register, we are publishing a separate 
document that will serve as the proposed rule to amend these 
regulations, if EPA receives signification adverse comments on this 
direct final rule. We will not institute a second comment period on 
this action. Any parties interested in commenting

[[Page 49540]]

must do so at this time. For further information about commenting on 
this rule, see the ADDRESSES section of this document.
    If EPA receives adverse comment, we will publish a timely 
withdrawal in the Federal Register informing the public that this 
direct final rule will not take effect. We will address all public 
comments in any subsequent final rule based on the proposed rule.

II. Does this action apply to me?

    If you are a recipient of an EPA financial assistance agreement; an 
entity receiving an identified loan under a financial assistance 
agreement capitalizing a revolving loan fund; or a minority-owned, 
woman-owned, or small business, this rule may affect you. If you have 
any questions regarding the applicability of this action to a 
particular entity, consult the person listed in the preceding FOR 
FURTHER INFORMATION CONTACT section.

III. What should I consider as I prepare my comments for EPA?

    A. Submitting CBI. Do not submit this information to EPA through 
www.regulations.gov or email. Clearly mark the part or all of the 
information that you claim to be CBI. For CBI information in a disk or 
CD ROM that you mail to EPA, mark the outside of the disk or CD ROM as 
CBI and then identify electronically within the disk or CD ROM the 
specific information that is claimed as CBI). In addition to one 
complete version of the comment that includes information claimed as 
CBI, a copy of the comment that does not contain the information 
claimed as CBI must be submitted for inclusion in the public docket. 
Information so marked will not be disclosed except in accordance with 
procedures set forth in 40 CFR part 2.
    B. Tips for Preparing Your Comments. When submitting comments, 
remember to:
     Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
     Follow directions--The agency may ask you to respond to 
specific questions or organize comments by referencing a Code of 
Federal Regulations (CFR) part or section number.
     Explain why you agree or disagree; suggest alternatives 
and substitute language for your requested changes.
     Describe any assumptions and provide any technical 
information and/or data that you used.
     If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
     Provide specific examples to illustrate your concerns, and 
suggest alternatives.
     Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.
     Make sure to submit your comments by the comment period 
deadline identified.

IV. Background

    The EPA's DBE Program is implemented through 40 CFR part 33, which 
was promulgated on March 26, 2008 (73 FR 15904) (hereafter referred to 
as ``part 33''). The DBE program arose out of a review of affirmative 
action programs in the federal government following the Supreme Court's 
decision in Adarand Constructors, Inc. v. Federico Pena, Secretary of 
Transportation, 515 U.S. 200. The rule sets forth a narrowly tailored 
EPA program that serves the compelling government interest of remedying 
past and current racial discrimination, by establishing agency-wide DBE 
procurement objectives.
    The DBE Program has four major components designed to ensure that 
minority and women-owned businesses have the opportunity to participate 
in procurements funded by EPA financial assistance agreements. These 
components are as follows:
     DBE Certification: The current DBE Program requires that 
in order to be counted as an MBE or WBE under an EPA financial 
assistance agreement, an entity will have to be certified as such. The 
EPA requires an MBE/WBE to first seek certification by a federal agency 
(e.g., the Small Business Administration (SBA), the Department of 
Transportation (DOT)), or by a State, locality, Indian Tribe, or 
independent private organization provided their applicable criteria 
match those under section 8(a) (5) and (6) of the Small Business Act 
and SBA's applicable 8(a) Business Development Program regulations. The 
EPA then provides for certification of firms that cannot get certified 
by one of these entities. The EPA certification program provides an 
option for businesses that may not fall into a classification that is 
certified by other sources and provides for these businesses to 
participate in EPA's DBE program.
     Negotiating Fair Share Goals: The current DBE program 
requires all recipients of EPA financial assistance agreements to 
negotiate goals with the Agency for the utilization of MBEs/WBEs for 
procurements funded by EPA financial assistance agreements. The goals 
are based on disparity studies or availability analyses showing the 
availability of MBEs or WBEs in the financial assistance recipient's 
relevant geographic buying market. These goals do not operate as 
quotas.
     Using the ``Good Faith Efforts'': The ``Good Faith 
Efforts'' are measures implored by all EPA financial assistance 
agreement recipients to ensure that all DBEs have the opportunity to 
compete for procurements funded by EPA financial assistance dollars, 
and contain measures a financial assistance recipient may undertake to 
make procurements more open to MBEs and WBEs.
     Reporting Accomplishments: Under the current DBE program, 
recipients of EPA financial assistance agreements are required to 
report on their accomplishments with the program using EPA Form 5700-
52A. Reporting is the tool the EPA uses to assess whether or not the 
program is effective and actually translating into increased 
opportunities for MBEs and WBEs.
    When the final rule was promulgated, the EPA stated that the agency 
will ``evaluate the propriety of the Disadvantaged Business Enterprise 
program in 7 years through subsequent rulemaking'' (73 FR 15904). On 
August 13, 2013, OMB approved the information collection request 
supporting the DBE Program with the following Terms of Clearance: 
``This ICR is approved for a period of 2 years until 2015, when EPA 
will undertake a comprehensive review of the Disadvantaged Business 
Enterprise rule.'' The EPA Office of Small Business Programs (OSBP) has 
subsequently worked collaboratively with various program offices within 
the Agency and EPA regional DBE coordinators through various face-to-
face meetings and conference calls from May-December 2014.

V. Summary of Changes

    The EPA is amending subparts A through E of part 33 to improve the 
practical utility of the EPA's DBE program and minimize the burden to 
affected entities. The EPA made three major revisions in the rule that 
will significantly impact the way the DBE program currently operates. 
These changes, which are described in detail in section IV of this 
preamble, include:
    1. Establishing a self-certification platform for MBEs and WBEs. 
The EPA removed existing EPA certification requirements in subpart B of 
part 33 for firms that cannot be certified by another federal agency, 
and will instead allow qualified firms to self-certify as an MBE or 
WBE.

[[Page 49541]]

    2. Updating the exemption threshold for fair share negotiations. 
The EPA increased the threshold for recipients exempted from 
negotiating fair share objectives in subpart D of part 33 from $250,000 
to $1 million.
    3. Revising the reporting frequency and applicability. The EPA 
revised subpart E of part 33 to change the frequency of DBE reporting 
to annual for all recipients, and limit reporting to financial 
assistance agreements with funds budgeted for procurements above the 
simplified acquisition threshold of $150,000.
    In addition to these changes, the EPA made minor changes to part 33 
to minimize information collection, clarify requirements, update 
references, and harmonize requirements with uniform administrative 
requirements published by the Office of Management and Budget (OMB).

VI. Detail and Rationale for Changes

    Additional details for the revisions to subparts A through E of 
part 33 and the rationale for these revisions are described 
respectively in the sections below.

A. Subpart A--General Provisions

    The EPA has made several changes to the General Provisions (subpart 
A) of part 33 to clarify the objectives, applicability, and 
implementation procedures of the DBE Program. The changes are intended 
primarily to clarify the requirements that apply to recipients and will 
not impose any new requirements or burdens that do not already exist.
    First, we changed the first statement of DBE program objectives in 
40 CFR 33.101(a) from: ``To ensure nondiscrimination in the award of 
contracts under EPA assistance agreements'' to: ``To foster 
nondiscrimination in the award and administration of procurements under 
EPA financial assistance agreements''. The purpose of this change is to 
clarify that the program is not limited to particular types of 
procurements by a recipient of EPA financial assistance (e.g., only to 
contracts issued), but applies to all goods or services procured by a 
recipient under any type of financial instrument.
    Second, we clarified to whom the requirements of part 33 apply. We 
changed the title of 40 CFR 33.102 to ``To Whom Does This Part 
Apply?''. The EPA further amended the text to specify that part 33 
applies to recipients of any of four different types of financial 
assistance agreements issued by the EPA, which are as follows: EPA 
financial assistance agreements, grants, or cooperative agreements used 
to capitalize revolving loan funds, Special Appropriations Act 
Projects, and subawards from an EPA recipient of any such funds. The 
revision still specifies that part 33 does not apply to work that is 
conducted outside the United States or its territories and insular 
possessions, or that is not funded under an EPA financial assistance 
agreement. Next, the EPA updated the definitions of terms in 40 CFR 
33.103. One goal of the revisions to part 33 incorporates the 
principles established by 2 CFR part 200--Uniform Administrative 
Requirements, Cost Principles, And Audit Requirements for Federal 
Awards (hereafter referred to as ``part 200''). Part 200 was finalized 
on October 9, 2015, and supersedes a number of OMB circulars governing 
the administration of federal financial awards. The reforms adopted by 
part 200 were intended (1) to streamline OMB guidance for the 
administration of financial awards to ease burden, and (2) to 
strengthen oversight of federal awards to increase efficiency and 
effectiveness of the awards. The rule applies both to federal agencies 
that issue financial assistance, encompassing the types of financial 
assistance provided by the EPA, and to recipients of the awards. We 
made minor amendments throughout Part 33 to incorporate these changes. 
In 40 CFR 33.104, we amended and added several definitions to be 
consistent with part 200, as well as update the introduction to the 
section to state that terms not defined in Part 33 will have the 
meaning given to them in part 200.
    We also consolidated several existing definitions in 40 CFR 33.104. 
For example, we added the term ``procurement'' as ``the acquisition of 
goods and services under a financial assistance agreement as defined by 
applicable regulations for the particular type of financial assistance 
received''. The term encompasses all forms of procurement and will 
replace the current definitions for ``construction'', ``equipment'', 
``services'', and ``supplies'' in subpart A and throughout part 33. To 
improve readability, we consolidated the definitions of all terms in 
Part 33 into subpart A by moving all the terms that are defined in 40 
CFR part 33, subparts B, C, D, and E into 40 CFR 33.103. For example, 
we revised 40 CFR 33.202 and 33.303 to move the definitions of 
``ownership or control,'' ``socially disadvantaged individual'', and 
``economically disadvantaged individual'' to 40 CFR 33.103. Also, we 
amended certain definitions to be consistent with the rules of the 
Small Business Administration (13 CFR part 124) Department of 
Transportation (DOT) DBE Program, and Title X of the Clean Air Act 
Amendments of 1990 (42 U.S.C. 7601 note), as well as to add minor 
clarifications.
    The EPA also made changes to the provisions of 40 CFR 33.104 for 
recipients to obtain a waiver from any of the requirements of part 33. 
We made a substantive change that will place a 5 year limitation on the 
duration of each waiver and a recipient will need to reapply for the 
waiver at least 60 days prior to the expiration date. Previously, 
waivers were granted for ``a reasonable duration'' to be determined by 
the Director of the Office of Small and Disadvantaged Business 
Utilization, and could be terminated at any time at the Director's 
discretion. Providing specific time frames for waiver duration ensures 
equity and consistency in issuing waivers across all recipients. The 
rule also changes the title of Director of the Office of Small and 
Disadvantaged Business Utilization to Director of Small Business 
Programs to reflect current EPA organizational structure. We made 
similar harmonizing changes throughout part 33 to update all references 
to the Office of Small and Disadvantaged Business Utilization (OSDBU) 
to the Office of Small Business Programs (OSBP).
    The rule also revises 40 CFR 33.105, ``What are the compliance and 
enforcement provisions of this part?'' to more clearly parallel the 
applicable noncompliance remedies available to the EPA under 
regulations of the Office of Management and Budget for federal awards 
in 2 CFR 200.338. We changed a reference in 40 CFR 33.105 from 2 CFR 
part 200 to the more specific applicable reference of 2 CFR 200.338, 
and to edit the list of examples of remedial actions in 40 CFR 33.105 
to be identical to the examples provided in 2 CFR 200.338. The EPA 
incorporated a new requirement into 40 CFR 33.107 for recordkeeping and 
records access. We incorporated by reference the recordkeeping and 
records access provisions of 2 CFR 200.33 through 200.337. These 
provisions, in general, require recipients of federal awards to retain 
all records that are relevant to the award for a period of 3 years and 
to allow the government access to the records for purposes of auditing. 
These changes are part of the EPA's effort to update part 33 to 
incorporate the principles established by part 200, as described in 
section IV.1 of this preamble. Finally, we revised appendix A to part 
33. First, we revised appendix A from an appendix of part 33 (following 
subpart E) to an appendix of the General Provisions. The term and

[[Page 49542]]

condition of appendix A is a reference of the requirements of 40 CFR 
33.106; therefore, including the term and condition as an appendix of 
subpart A improves the readability of the subpart. We also amended 
appendix A to add the additional stipulation that any procurement 
contract signed by a recipient must include the contract provisions of 
2 CFR part 200, appendix II. Appendix II clarifies all of the contract 
provisions that are required by other applicable statutes and 
regulations for contracts issued by recipients of federal financial 
assistance. The requirement to comply with appendix II is not a new 
requirement but adding this stipulation in appendix A to part 33 makes 
the requirement clearer to recipients and reduces the risk of 
unintentional noncompliance.

B. Subpart B--Certification

    The rule will implement several significant changes to the existing 
certification requirements of subpart B of part 33. First, the EPA 
revised the certification requirements of 40 CFR 33.204 through 33.211 
to revise the EPA's existing certification process for firms that 
cannot be certified by another federal agency. Under the current 
requirements of part 33, the EPA requires an MBE or WBE to first seek 
certification by a federal agency (e.g., the Small Business 
Administration (SBA), the Department of Transportation (DOT)), or by a 
State, locality, Indian Tribe, or independent private organization 
(provided their applicable criteria match those under section 8(a)(5) 
and (6) of the Small Business Act and SBA's applicable 8(a) Business 
Development Program regulations). The EPA only considers certifying 
firms that cannot get certified by one of these entities. The EPA has 
previously required firms to first seek certification from other 
sources because an EPA certification is limited in that it is only 
accepted for opportunities funded by EPA financial assistance 
agreements. Conversely, certifications from other sources are 
beneficial for the business entity because they have broader 
applications. In implementing the DBE program over the past seven 
years, the EPA has received applications from various entities 
requesting EPA certification of their MBE/WBE status. For an EPA 
certification, the current rule requires that entities submit a paper 
application with evidence demonstrating that the entity meets the 
requirements of 40 CFR 33.202 and 33.203 (i.e., the entity is owned or 
controlled by one or more individuals claiming disadvantaged status 
under the EPA's 8 percent statute or owned and controlled by one or 
more individuals claiming disadvantaged status under the EPA's 10 
percent statute), along with evidence regarding the disadvantaged 
status of such individuals and documentation of a denial of 
certification from another certifying entity. The application is then 
evaluated according to by the EPA within 30 days for approval. A review 
of this process, including the applications that the EPA has approved 
or denied for certification, determined that the overall demand for EPA 
certification has been nominal. In addition, the majority of firms 
seeking an EPA certification under 40 CFR 33.205 were already certified 
under other programs, and further EPA certification was unnecessary. 
Further, the current process, including the period for EPA review, is 
resource intensive and extends the time in which a facility receives 
its certification. For these reasons, the EPA removed the existing EPA 
certification requirements in 40 CFR 33.205 and will no longer 
processes paper applications.
    In lieu of the current application and evaluation requirements, 
revised 40 CFR 33.204 and 33.205 to accept and implement a self-
certification process for firms who are not otherwise certified by 
another entity. The requirements will allow qualified firms to self-
certify under the EPA's DBE program as an MBE or WBE, using the EPA's 
Small Business Vendor Profile System (SBVPS). Under this approach, 
firms seeking an EPA certification will register in the online SBVPS. 
Registration in the SBVPS will require the firm to provide their firm 
name and contact information, federal tax ID, DUNS no., type of 
business, date of start, annual sales, company size and classification, 
ethnicity, any other prior certifications. Firms will then self-attest 
to meeting the eligibility requirements set forth in 40 CFR 33.202 and 
33.203. The self-certification provided through the SBVPS will be 
legally-binding. This approach, which is consistent with the 
certification requirements of other federal agencies including the SBA, 
does not require submittal of additional information, or require EPA 
review of an application. However, the EPA could request entities to 
provide evidence that they meet the eligibility requirements at any 
time. These self-certification requirements will reduce burden on firms 
by removing the current paper application process and decreasing the 
time spent by entities acquiring certification. These changes will also 
streamline agency activities related to maintaining forms, conducting 
reviews, and responding to applicants, resulting in an overall burden 
reduction.
    The approach will no longer require businesses to first seek 
certification from other entities before requesting EPA DBE 
certification. All businesses who meet the EPA DBE program 
certification requirements will be able to participate in self-
certifying. The EPA will still accept certifications from other 
sources, including a federal agency, state, locality, Indian Tribe, or 
independent private organization, provided their standards for 
certification meet or exceed the EPA's. The EPA DBE self-certification 
will also remain only applicable to opportunities funded by EPA 
financial assistance agreements; 40 CFR 33.405 will clarify that the 
EPA's DBE certification will be not recognized by other federal, state 
or local organizations. Therefore, the EPA will continue to encourage 
businesses to obtain certifications from these sources. The self-
certification approach will also provide for proof of certification for 
such facilities under EPA's DBE program. We revised 40 CFR 33.206 to 
provide for firms who self-certify through the SBVPS to be listed on 
the EPA's SBVPS through the OBSP Web site. The list will be publically 
available and provide assurance to recipients of EPA funding that the 
entities listed are certified and eligible for participation.
    Similar to the existing EPA certification, EPA self-certifications 
under this new approach will be valid for a period of three years. We 
revised 40 CFR 33.207 to specify that this period will begin from the 
date an entity is self-certified in the EPA's SBVPS. The SBVPS database 
will automatically purge data every three years, therefore firms will 
be required to re-register every three years to maintain their MBE or 
WBE status. Because facilities will be responsible for their 
registration and are self-certifying, we removed the requirements of 40 
CFR 33.207, 33.209, and 33.211, which apply to re-application, re-
evaluation, and appeal of EPA determinations for certified entities. We 
also revised 40 CFR 33.210 to clarify that facilities are responsible 
for keeping the EPA informed of any changes which may affect the 
entity's certification, including requiring the entity to remove its 
self-certification from the SBVPS database within 30 days of any 
changes to its eligibility status. This timeline is consistent with 
current requirements. The EPA also made several minor revisions to 
subpart B of Part 33 that will clarify existing requirements or provide 
for additional flexibility for affected entities. As discussed in 
section IV.1 of this preamble, we consolidated the

[[Page 49543]]

definitions for ``ownership or control,'' ``socially disadvantaged 
individual'', and ``economically disadvantaged individual'' in 40 CFR 
33.202 and 33.203 under subpart A of part 33. We removed the 
definitions for ``HBCU'' and ``Women'' in paragraphs (d) and (e) of 40 
CFR 33.203; the definition of ``HBCU'' is already included in 40 CFR 
33.103, and a specific definition for ``Women'' is no longer necessary 
as women are included within the definitions for ``socially 
disadvantaged individual'' and ``economically disadvantaged 
individual.''
    We made several clarifications to 40 CFR 33.204, including 
clarifying the content by revising the title to read ``What 
certifications are acceptable for establishing MBE or WBE status under 
the EPA DBE Program?'' We also clarified the rule references for those 
outside certifications currently accepted by the EPA (e.g., the SBA's 
8(a) Business Development Program or its Small Disadvantaged Business 
(SDB) Program), and adding a reference to the Economically 
Disadvantaged Woman Owned Small Business (EDWOSB) Program (13 CFR part 
127, subpart B). The EDWOSB was established on Oct. 7, 2010 (75 FR 
62282) and provides certification requirements that meet or exceed the 
EPA's standards; the change will benefit entities by providing an 
additional certification option. Finally, we are clarifying that the 
certifications under the United States Department of Transportation 
(DOT) Participation by Disadvantaged Business Enterprises in DOT 
Programs are acceptable only with U.S. citizenship. The change 
clarifies that the existing U.S. citizenship requirement under Part 33 
applies to these certifications.

C. Subpart C--Good Faith Efforts

    The EPA made several changes to the Good Faith Efforts requirements 
of subpart C of 40 CFR part 33 to clarify the requirements. The 
revisions will not impose any new requirements or burdens, but 
primarily reorganizes the subpart in a more logical order to make the 
goals and obligations more apparent. We made one change to reduce 
burden.
    We made several changes to 40 CFR 33.301. First, we replaced the 
introduction to 40 CFR 33.301 (``What does this subpart require?'') 
with a statement of purpose to clarify that good faith efforts are 
methods used by EPA recipients to ensure that DBEs have the opportunity 
to compete for procurements funded by EPA financial assistance dollars. 
A new paragraph (h) will consolidate in one place and clarify the 
actions that constitute good faith efforts. Paragraph (h) is a result 
of reorganization and will not change any existing requirements. For 
example, we codified that recipients must use the services of available 
minority/women community organizations; minority/women contractors' 
groups; local, state, and Federal minority/women business assistance 
offices; and other organizations, when feasible, when conducting the 
good faith efforts. This requirement is based on the existing good 
faith efforts, as outlined in the July 24, 2003 proposed DBE rule (68 
FR 43824). We made one minor harmonizing change to 40 CFR 33.408 for 
consistency.
    The rule will also add several new paragraphs to 40 CFR 33.301 to 
clarify the administrative requirements for meeting the good faith 
efforts. First, we are adding new text in paragraphs (b) and (c) to 
clarify that no recipients are exempted from the good faith efforts 
requirements, including recipients that are exempt from the fair share 
objectives of 40 CFR part 33, subpart D. We also added a new paragraph 
(e) to clarify that recipients are required to ensure that all sub-
recipients/prime contractors meet these requirements. These 
stipulations are inferred in the current provisions but were added to 
40 CFR 33.301 for clarity. The changes to 40 CFR 33.301 will also 
clarify that subpart C does not negate the post federal award 
requirements of part 200.
    We also clarified in 40 CFR 33.301(d) that recipients must retain 
records of the methods used to adhere to good faith efforts. This 
provision already is required by the existing recordkeeping 
requirements of 40 CFR 33.501(a), but was added to 40 CFR 33.301(d) for 
clarity and better organizational placement. In a related change, we 
added a new paragraph (i) to clarify what constitutes non-compliance 
with subpart C. Paragraph (i) specifies that recipients that fail to 
meet all the fair share goals will not be penalized if they document 
the circumstances that prohibited full execution of each requirement, 
but that failure to retain proper documentation may constitute 
noncompliance.
    Next, for 40 CFR 33.302 (``Are there any additional contract 
administration requirements?''), we reduced a reporting requirement by 
eliminating Form 6100-2. Under the current rule, prime contractors are 
required to provide Form 6100-2 to DBE subcontractors. Form 6100-2 is 
an optional form that gives a DBE subcontractor the opportunity to 
inform the EPA about the work received and/or report any concerns 
regarding the EPA-funded project (e.g., termination by prime 
contractor, late payments, et al.). We are eliminating this form 
because the EPA has no legal authority or other leverage to intervene 
on behalf of the DBE to resolve any such problems. Eliminating this 
form will not hinder effective implementation of the program, but will 
reduce burden on recipients, prime contractors, DBEs, and the EPA. We 
also added a stipulation to 40 CFR 33.302 that failure to include EPA 
Forms 6100-3 and 6100-4 may constitute non-responsiveness and that the 
recipient may consider this non-responsiveness in evaluating a prime 
contractor's proposal. Forms 6100-3 and 6100-4 document the intended 
degree of DBE utilization under any prime contract issued by the 
recipient. This change is intended to provide clarification of 
compliance under subpart C and does not change any existing 
requirements. To ensure that a recipient is aware of all required 
contracting provisions, text was added to point out that all 
procurement contracts awarded by a recipient must contain the 
provisions specified in 2 CFR part 200, appendix II, as applicable.
    We made one editorial correction to 40 CFR 33.303 (``Are there 
special rules for loans under EPA financial assistance agreements?'') 
by changing the clause beginning with ``such as . . .'' to ``including 
but not limited to . . .'' so that the clause clarifies but does not 
limit applicability of the section.
    Finally, we clarified 40 CFR 33.304 to more accurately reflect the 
contents of the provisions and to clarify that a Native American 
recipient includes a consortium. The title will be ``What special rules 
apply to a Native American (either as an individual, organization, 
Tribe or Tribal Government or consortium) Recipient or Prime Contractor 
when following the six good faith efforts?'' We also made a harmonizing 
change to 40 CFR 33.304(a).

D. Subpart D--Fair Share Objectives

    The EPA made revisions to subpart D of part 33 to revise the 
requirements for recipients of EPA financial assistance agreements to 
negotiate fair share objectives for MBE and WBE participation. The 
changes will generally reduce burden for recipients by reducing the 
number of recipients required to negotiate fair share objectives or 
revising the information that must be submitted by recipients. We also 
provided additional clarifications and harmonizing changes that will 
not impose any new requirements or burdens that do not already exist.
    First, the EPA revised 40 CFR 33.401 and 33.402 to clarify that in 
addition to negotiating its own fair share objectives,

[[Page 49544]]

a recipient may use the approved fair share objective of another 
recipient with the same or similar relevant geographic buying market, 
purchasing the same or similar items. The EPA made one related 
harmonizing change to 40 CFR 33.405(a). These amendments harmonizes the 
requirements for recipients of EPA financial assistance agreements and 
financial agreements to capitalize revolving loan funds with the 
existing requirements of 40 CFR 33.405(b)(3), which allow recipients to 
use the fair share objectives of another recipient when determining a 
base figure for the relative availability of MBEs and WBEs. The EPA 
also revised 40 CFR 33.402 to clarify that for loan procurements that 
will occur over more than one year, the recipient should apply the fair 
share objectives in place to the year in which the procurement action 
occurs. Previously, the recipient could choose to apply the fair share 
objective in place either for the year in which the identified loan was 
awarded or for the year in which the procurement action occurred. These 
two options resulted in frequent questions from recipients; the change 
implements the former option and provides a consistent approach for all 
recipients.
    We made one minor revision to 40 CFR 33.403 (``What is a fair share 
objective?'') to remove the categories of construction, equipment, 
services and supplies, consistent with the changes to the definition of 
``procurement'' discussed in section IV.1 of this preamble.
    Next, we revised the timeline for submittal of proposed fair share 
objectives and the EPA's subsequent review schedule. Specifically, we 
made revisions to 40 CFR 33.404 to shorten the time for recipients to 
submit their proposed MBE and WBE fair share objectives from 120 days 
to 90 days after acceptance of a financial assistance award. Because 
MBE and WBE fair share objectives must be agreed upon by the recipient 
and EPA before funds may be expended for procurement, the EPA has 
determined that recipients must submit their fair share objectives 
sooner in order to ensure that projects are commenced in a timely 
manner. These revisions will affect only those recipients that exceed 
the exemption threshold in 40 CFR 33.411. We also revised the timeframe 
for the EPA to respond in writing to the recipient's submission from 30 
days to 45. We included these extra 15 days because the agency 
typically reviews a high number of applicants at one time. This time 
frame still allows for projects to commence earlier, as the rule 
provides that if EPA does not provide a response within 45 days then 
the fair share objectives submitted by the recipient are automatically 
agreed upon.
    We made two substantive revisions to 40 CFR 33.405, which provides 
for how recipients must determine MBE and WBE fair share objectives. 
First, we made revisions to 40 CFR 33.405(a) to require recipients to 
propose two separate MBE and WBE fair share objectives. Under the 
current rule, recipients are required to determine separate MBE and WBE 
fair share objectives for each of the four procurement categories, with 
the option to combine the four categories into one weighted objective. 
The revision is a harmonizing change with the changes to the definition 
of ``procurement'' discussed in section IV.1 of this preamble, which 
removes the four procurement categories from part 33. The revisions 
will significantly reduce the burden required of recipients by reducing 
the number of fair share objectives that must be determined. We made 
related minor harmonizing changes to 40 CFR 33.405(b)(1) and (2). 
Additionally, we made revisions to 40 CFR 33.405(c) to clearly state 
the applicable noncompliance remedies available to the EPA for 
recipients that fail to determine and implement fair share objectives. 
The rule references the applicable remedies under OMB regulations for 
federal awards in 2 CFR 200.338, including the specific applicable 
reference of 2 CFR 200.338, and the list of examples provided in 2 CFR 
200.338. The EPA made the same changes to 40 CFR 33.410 to clarify the 
remedial actions that may be taken when a recipient fails to meet the 
requirements of subpart D.
    The EPA made amendments to 40 CFR 33.407 to revise the length of 
the period that a recipient's negotiated fair share objectives are 
effective from 3 fiscal years to 5 fiscal years. The increase reflects 
the typical award period for grants, which are 3 to 5 years in length. 
By increasing the period for which fair share objectives are effective 
to five years, the change eliminates the possibility of a grant 
recipient having to renegotiate its fair share objectives midway 
through a project. This revision reduces the burden on recipients by 
reducing the frequency and time needed to revise their objectives.
    We made a significant change to 40 CFR 33.411 to revise the 
exemption threshold for recipients required to meet the fair share 
objectives of subpart D. Currently, recipients of any single EPA 
financial assistance agreement in the amount of $250,000 or less or 
recipients of more than one EPA financial assistance agreement with a 
combined total of $250,000 or less in any one fiscal year is not 
required to apply the fair share objective requirements. In its 
implementation of the DBE program, the EPA has received feedback from 
stakeholders receiving smaller financial assistance rewards regarding 
the burden associated with collecting data for the determination of 
fair share objectives. Typically, the recipients of funding awards 
totaling in an amount lesser than $1 million are smaller entities who 
have very limited resources and personnel available to collect 
directory and census bureau data, perform disparity studies, develop 
alternative methods, or collect evidence from related fields or 
recipients to calculate the fair share goals. Given these limitations, 
such recipients have expressed difficulty in meeting the fair share 
objectives in a timely manner to guarantee funding of the assistance 
agreement. In such cases, these recipients have been unable to take 
advantage of the awarded funds and experienced delays or failures in 
completing EPA projects. In order to reduce the burden for these 
recipients and ensure that these smaller entities are able to expend 
funds under their awarded financial assistance agreement, we revised 
the exemption threshold from $250,000 to $1 million. The EPA identified 
a new threshold of $1 million based on a review of funding awarded to 
all entities during implementation of the program. Through this review, 
the EPA determined that the majority of funding award by the EPA (over 
90 percent) is allotted to larger entities who received financial 
assistance agreements of greater than $1 million or a combination of 
financial assistance agreements whose total exceeds $1 million. 
Therefore, the EPA determined that a $1 million threshold will provide 
relief for smaller entities while ensuring that those recipients that 
receive the majority of funding from financial assistance agreements 
awarded by the EPA will continue to develop fair share objectives. 
These larger entities typically have the resources and personnel to 
conduct the data gathering steps required for development of the fair 
share goals. As such, the new threshold will ensure that for the 
majority of financial assistance agreements awarded by the EPA, 
recipients will continue to set goals for MBE and WBE participation in 
procurement.
    The EPA made additional minor revisions to 40 CFR 33.411. We 
revised 40 CFR 33.411(b) to clarify that the recipients of loans other 
than loans from the Clean Water State Revolving Fund (CWSRF) Program, 
Drinking Water State

[[Page 49545]]

Revolving Fund (DWSRF) Program, and Brownfields Cleanup Revolving Loan 
Fund (BCRLF) Program who are below the exemption threshold of $1 
million are not required to meet the fair share objective requirements 
of subpart D. We also revised 40 CFR 33.411(c) to clarify the reference 
for Performance Partnership Grants (PPGs) and to consolidate the 
requirements of 40 CFR 33.412. We removed 40 CFR 33.412 and revised 40 
CFR 33.411 to include all exemptions to the fair share objectives in 
one place. Finally, we revised the term ``grant'' to ``assistance 
agreement'' in 40 CFR 33.411(c) to clarify that the exemptions apply to 
recipients of annual assistance agreements other than grants.

E. Subpart E--Recordkeeping and Reporting

    The EPA made one significant change and several minor 
clarifications to the recordkeeping and reporting requirements of 
subpart E of part 33. Notably, we revised the reporting requirements of 
40 CFR 33.502 to incorporate a Class Deviation previously issued by the 
EPA to grant exceptions from the reporting requirements of Part 33 
(hereafter referred to as the ``Deviation''). The Deviation changed the 
frequency of DBE reporting in 40 CFR 33.502 to annual for all 
recipients, and limited reporting to financial assistance agreements 
with funds budgeted for procurements above the simplified acquisition 
threshold. Specifically, the Deviation established that recipients, 
including recipients of financial assistance agreements that capitalize 
revolving loan programs, are required to report MBE/WBE participation 
annually on EPA Form 5700-52A when one or more of the following 
conditions are met: (1) There are funds budgeted for procurements, 
including funds budgeted for direct procurement by the recipient or 
procurement under sub-awards or loans in the ``Other'' category that 
exceed the simplified acquisition threshold amount of $150,000; (2) if 
at the time of award the budgeted funds for procurement exceed 
$150,000, but actual expenditures fall below, or; (3) if subsequent 
amendments and funding cause the total amount of procurement to surpass 
the $150,000 threshold. The Deviation also directed that where 
reporting is required, all procurement actions are reportable, not just 
the portion which exceeds $150,000. Reporting is not required if at the 
time of award, funds budgeted for procurements are less than or equal 
to $150,000 and are maintained below the threshold. The changes 
established in the Deviation have been effective since December 4, 
2014, and are only being codified in this rule. We also added a 
provision to 40 CFR 33.502 to clarify that reports must be submitted by 
October 30th of each fiscal year, or 30 days after the end of the 
project period, whichever comes first. This revision is consistent with 
the reporting due date(s) established in the terms and conditions for 
assistance agreement recipients revised February 5, 2015. The change 
will incorporate terms that shortened the submission date from 90 days 
after the end of the project period to 30 days. The EPA previously 
incorporated these changes into existing agreements to ensure that 
final reports were received in a timely fashion to facilitate the close 
out process. The EPA cannot close out an assistance agreement until the 
final report is received. The changes codifies these terms and 
conditions for all assistance agreements for which reporting is 
required.
    We made only minor revisions to 40 CFR 33.501. We revised 40 CFR 
33.501(a) to change the term ``grant'' to ``assistance agreement'' to 
clarify that recipients of annual assistance agreements other than 
grants must maintain a bidder's list. We also removed the requirement 
for recipients to include the mailing address of any prime- or 
subcontractors in the bidder's list; a mailing address is no longer 
necessary because the information in the bidder's list is only handled 
electronically. Finally, revised 40 CFR 33.501(c) to change the phrase 
``a recipient under the CWSRF, DWSRF, or BCRLF Program'' to ``a 
recipient under the CWSRF, DWSRF, BCRLF, or other identified loan 
program'' to clarify that the requirements are not limited to 
recipients of the programs currently listed in the rule; these changes 
are consistent with the changes to 40 CFR 33.303 and 40 CFR 33.411(b) 
discussed in sections IV.A and IV.D of this preamble, respectively.
    Finally, we made one minor revision to 40 CFR 33.503 to clarify 
when reporting amounts of MBE and WBE participation as a percentage of 
total financial assistance agreement project procurement cost, 
recipients should only report funds used for procurements. This change 
is consistent with the existing requirements.

VII. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 13563: Improving Regulation and Regulatory Review

    This action is not a significant regulatory action and was 
therefore not submitted to the Office of Management and Budget (OMB) 
for review.

B. Paperwork Reduction Act

    The information collection activities in this rule will be 
submitted for approval to the Office of Management and Budget (OMB) 
under the PRA. The Information Collection Request (ICR) document that 
the EPA prepared has been assigned EPA ICR number 2536.01. You can find 
a copy of the ICR in the docket for this rule, and it is briefly 
summarized here. The information collection requirements are not 
enforceable until OMB approves them.
    Information requested as a result of the revisions relate to (1) 
the Contract Administration Forms which are required if there are DBE 
subcontractors involved in a procurement under 40 CFR 33.302 (d) and 
(e) (formerly 40 CFR 33.302(f) and (g)), (2) the EPA DBE Self 
Certification process, and (3) fair share objectives required of 
certain recipients of EPA financial assistance. The information that 
will be collected allows EPA to evaluate and ensure the effectiveness 
of, and compliance with, the program's requirements. Information 
gathered that may reasonably be regarded as proprietary or other 
confidential business information will be safeguarded from disclosure 
to unauthorized persons, consistent with applicable federal, state and 
local law. EPA has regulations concerning confidential business 
information. See 40 CFR part 2, subpart B.
    Respondents/affected entities: Recipients of EPA financial 
assistance agreements and entities in the fields of construction, 
equipment, services and supplies who are intent on being prime 
contractors or subcontractors on EPA funded projects.
    Respondent's obligation to respond: Contract Administration: 
Pursuant to 40 CFR 33.302, a recipient must require its prime 
contractor to have its DBE subcontractors complete EPA Form 6100-3--DBE 
Program Subcontractor Performance Form as part of the prime 
contractor's bid or proposal package. Furthermore, a recipient must 
require its prime contractor to complete and submit EPA Form 6100-4--
DBE Program Subcontractor Utilization Form as part of the prime 
contractor's bid or proposal package.

[[Page 49546]]

    Certification: Obtaining EPA DBE Certification is voluntary, 
however, in order to qualify and participate as an MBE or WBE prime or 
subcontractor for EPA recipients under EPA's DBE Program, an entity 
must be properly certified as detailed in 40 CFR 33.201.
    Fair Share Negotiations: It is required that all financial 
assistance recipients, unless exempt under 40 CFR 33.411, negotiate 
objectives/goals for MBE/WBE utilization pursuant to 40 CFR 33.401.
    Estimated number of respondents: 2,132.
    Frequency of response: Contract Administration: Once during bid or 
proposal. Certification: Once during initial DBE certification and 
every three years as needed for re-certification. Fair Share 
Negotiations: Once Every Five Years.
    Total estimated burden: 2,973 hours (per year). Burden is defined 
at 5 CFR 1320.3(b).
    Total estimated cost: $92,840 (per year), includes $0 annualized 
capital or operation & maintenance costs.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for the 
EPA's regulations in 40 CFR are listed in 40 CFR part 9. When OMB 
approves this ICR, the Agency will announce that approval in the 
Federal Register and publish a technical amendment to 40 CFR part 9 to 
display the OMB control number for the approved information collection 
activities contained in this final rule.
    This is rule being published as a direct final action. A public 
comment period prior to this publication was not required.

C. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic 
impact on a substantial number of small entities under the RFA. In 
making this determination, the impact of concern is any significant 
adverse economic impact on small entities. An agency may certify that a 
rule will not have a significant economic impact on a substantial 
number of small entities if the rule relieves regulatory burden, has no 
net burden or otherwise has a positive economic effect on the small 
entities subject to the rule. This action will improve the practical 
utility of the EPA's DBE program and minimize the burden to small 
entities. We have therefore concluded that this action will relieve 
regulatory burden for all directly regulated small entities.

D. Unfunded Mandates Reform Act (UMRA)

    This action does not contain any unfunded mandate as described in 
UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect 
small governments. The costs involved in this action are imposed only 
by conditions of federal assistance. UMRA excludes from the 
definition[s] of ``federal intergovernmental mandate'' duties that 
arise from conditions of federal assistance. Additionally, this action 
imposes no enforceable duty on any state, local or tribal governments 
or the private sector.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have 
substantial direct effects on the states, on the relationship between 
the national government and the states, or on the distribution of power 
and responsibilities among the various levels of government. Because 
this rule conditions the use of federal assistance, it will not impose 
substantial direct compliance costs on State and local governments.

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

    This action has tribal implications. However, it will neither 
impose substantial direct compliance costs on federally recognized 
tribal governments, nor preempt tribal law. The amendments generally 
reduce the burden and compliance costs associated with 40 CFR part 33.

G. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

    The EPA interprets Executive Order 13045 as applying only to those 
regulatory actions that concern environmental health or safety risks 
that the EPA has reason to believe may disproportionately affect 
children, per the definition of ``covered regulatory action'' in 
section 2-202 of the Executive Order. This action is not subject to 
Executive Order 13045 because it does not concern an environmental 
health risk or safety risk.

H. Executive Order 13211: Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This action is not subject to Executive Order 13211, because it is 
not a significant regulatory action under Executive Order 12866.

I. National Technology Transfer and Advancement Act (NTTA)

    This rulemaking does not involve technical standards.

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

    The EPA believes this action will not have potential 
disproportionately high and adverse human health or environmental 
effects on minority, low-income or indigenous populations. The EPA made 
this determination because this rule does not affect the level of 
protection provided to human health or the environment.

K. Congressional Review Act (CRA)

    This action is subject to the CRA, and EPA will submit a rule 
report to each House of the Congress and to the Comptroller General of 
the United States. This action is not a ``major rule'' as defined by 5 
U.S.C. 804(2).

List of Subjects in 40 CFR Part 33

    Environmental protection, Grant programs.

    Dated: July 15, 2016.
Gina McCarthy,
Administrator.

    For the reasons stated in the preamble, the Environmental 
Protection Agency is amending title 40, chapter I, of the Code of 
Federal Regulations as follows:

PART 33--PARTICIPATION BY DISADVANTAGED BUSINESS ENTERPRISES IN 
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY PROGRAMS

0
1. The authority citation for part 33 continues to read as follows:

    Authority:  15 U.S.C. 637 note; 42 U.S.C. 4370d, 7601 note, 
9605(f); E.O. 11625, 36 FR 19967, 3 CFR, 1971 Comp., p. 213; E.O. 
12138, 49 FR 29637, 3 CFR, 1979 Comp., p. 393; E.O. 12432, 48 FR 
32551, 3 CFR, 1983 Comp., p. 198, 2 CFR part 200.

Subpart A--General Provision

0
2. Section 33.101 is amended by revising paragraph (a) to read as 
follows:

Sec.  33.101  What are the objectives of this part?

* * * * *
    (a) To foster nondiscrimination in the award and administration of 
procurements under EPA financial assistance agreements. To that end, 
implementation of this rule with respect to grantees, sub-grantees, 
loan recipients, prime contractors, or

[[Page 49547]]

subcontractors in particular States or locales--notably those where 
there is no apparent history of relevant discrimination--must comply 
with equal protection standards at that level, apart from the EPA 
disadvantaged business enterprise (DBE) Rule's constitutional 
compliance as a national matter;
* * * * *
0
3. Section 33.102 is revised to read as follows:

Sec.  33.102  To whom does this part apply?

    (a) If you are a recipient or prime contractor of any of the 
following types of funds, this part applies to you:
    (1) An EPA financial assistance agreement.
    (2) Grants or cooperative agreements used to capitalize revolving 
loan funds, including, but not limited to, the Clean Water State 
Revolving Loan Fund (CWSRF) Program under Title VI of the Clean Water 
Act, as amended, 33 U.S.C. 1381 et seq., the Drinking Water State 
Revolving Fund (DWSRF) Program under section 1452 of the Safe Drinking 
Water Act, 42 U.S.C. 300j-12, and the Brownfields Cleanup Revolving 
Loan Fund (BCRLF) Program under section 104 of the Comprehensive 
Environmental Response, Compensation and Liability Act, 42 U.S.C. 9604.
    (3) Special Appropriation Act Projects (SAAP) funding.
    (4) A subaward from an EPA recipient to carry out the project or 
program under the Federal award.
    (b) If you are letting a contract, and that contract is to be 
performed entirely outside the United States or its territories and 
insular possessions, this part does not apply to the contract.
    (c) If you are letting a contract that is not being funded under an 
EPA financial assistance agreement or not being funded as part of the 
required match for an EPA financial assistance agreement, this part 
does not apply to the contract.

0
4. Section 33.103 is amended by:
0
a. Revising the introductory text.
0
b. Adding definitions for ``Contract,'' ``Contractor,'' ``Control,'' 
``Economically disadvantaged individual,'' ``Expenditures,'' ``Federal 
award,'' ``Goods and services,'' ``Ownership,'' ``Procurement,'' 
``Relevant geographic market,'' ``Socially disadvantaged individual,'' 
``Subaward,'' ``Subcontract,'' ``Subcontractor,'' ``Subrecipient,'' and 
``Territories and Insular Possessions'' in alphabetical order.
0
c. Revising the definitions of ``Availability analysis,'' 
``Disadvantaged business enterprise (DBE),'' ``Disparity study,'' 
``Identified loan,'' ``Recipient,'' ``United States,'' and ``Women's 
business enterprise.''
0
d. Removing the definitions for ``Construction,'' ``Equipment,'' 
``Insular area,'' ``Services,'' and ``Supplies.''
    The revisions and additions read as follows:

Sec.  33.103  What do the terms in this part mean?

    Terms not defined below shall have the meaning given to them in 2 
CFR 200.1 as applicable. As used in this part:
    Availability analysis means documentation of the availability of 
minority business enterprises (MBEs) and women's business enterprises 
(WBEs), that provide particular goods and services in a relevant 
geographic market, in relation to the total number of firms available 
in that area that provide the same goods or services.
* * * * *
    Contract means a legal instrument by which a non-Federal entity 
purchases goods or services needed to carry out the project or program 
under a Federal award. The term as used in this part does not include a 
legal instrument, even if the non-Federal entity considers it a 
contract, when the substance of the transaction meets the definition of 
a Federal award or subaward (see Subaward as defined this section).
    Contractor means an entity that receives a contract as defined in 
this section.
    Control means both the strategic policy setting exercised by boards 
of directors and the day-to-day management and administration of 
business operations as described in 13 CFR 124.106.
* * * * *
    Disadvantaged business enterprise (DBE) means an entity that is at 
least 51% owned or controlled by a socially and economically 
disadvantaged U.S citizen as described by Public Law 102-389 (42 U.S.C. 
4370d) or an entity owned and controlled by a socially and economically 
disadvantaged individual as described by Title X of the Clean Air Act 
Amendments of 1990 (42 U.S.C. 7601 note); a Small Business Enterprise 
(SBE); a Small Business in a Rural Area (SBRA); or a Labor Surplus Area 
Firm (LSAF), a Historically Underutilized Business (HUB) Zone Small 
Business Concern, or a concern under a successor program.
    Disparity study means an analysis of whether a disparity, or 
differences, exists between the number of MBEs and WBEs within the same 
industries in a relevant geographic market that are available to 
participate in EPA financial assistance agreements, and those that 
actually participate.
    Economically disadvantaged individual means a socially 
disadvantaged individual whose ability to compete in the free 
enterprise system is impaired due to diminished capital and credit 
opportunities, as compared to others in the same business area who are 
not socially disadvantaged and as further defined by section 8(a)(6) of 
the Small Business Act (15 U.S.C. 637(a)(6)) and its implementing 
regulations (13 CFR 124.104). (See also 13 CFR 124.109 for special 
rules applicable to Indian tribes and Alaska Native Corporations; 13 
CFR 124.110 for special rules applicable to Native Hawaiian 
Organizations). Under EPA's DBE Program, an individual claiming 
disadvantaged status must have an initial and continued personal net 
worth of less than or equal to the prevailing Department of 
Transportation (DOT) DBE Program economic disadvantaged threshold as 
described in 49 CFR part 26, subpart D.
    Expenditures means charges made by a non-Federal entity to a 
project or program for which a Federal award was received. The charges 
may be reported on a cash or accrual basis, as long as the methodology 
is disclosed and is consistently applied.
    (1) For reports prepared on a cash basis, expenditures are the sum 
of:
    (i) Cash disbursements for direct charges for property and 
services;
    (ii) The amount of indirect expense charged;
    (iii) The value of third-party in-kind contributions applied; and
    (iv) The amount of cash advance payments and payments made to 
subrecipients.
    (2) For reports prepared on an accrual basis, expenditures are the 
sum of:
    (i) Cash disbursements for direct charges for property and 
services;
    (ii) The amount of indirect expense incurred;
    (iii) The value of third-party in-kind contributions applied; and
    (iv) The net increase or decrease in the amounts owed by the non-
Federal entity for goods and other property received; services 
performed by employees, contractors, subrecipients, and other payees; 
and programs for which no current services or performance are required, 
such as annuities, insurance claims, or other benefit payments.
* * * * *
    Federal award has either of the following meanings, as applicable:
    (1) The Federal financial assistance that a non-Federal entity 
receives

[[Page 49548]]

directly from a Federal awarding agency or indirectly from a pass-
through entity, as described in 2 CFR 200.101 Applicability; or the 
cost-reimbursement contract under the Federal Acquisition Regulations 
that a non-Federal entity receives directly from a Federal awarding 
agency or indirectly from a pass-through entity, as described in 2 CFR 
200.101 (Applicability).
    (2) The instrument setting forth the terms and conditions of a 
grant agreement, cooperative agreement, other agreement for assistance 
covered in paragraph (b) of 2 CFR 200.40 (Federal financial 
assistance), or the cost-reimbursement contract awarded under the 
Federal Acquisition Regulations.
    (3) Federal award does not include other contracts that a Federal 
agency uses to buy goods or services from a contractor or a contract to 
operate Federal Government owned, contractor operated facilities 
(GOCOs).
* * * * *
    Goods and services means tangible consumable items and tasks 
performed by individuals.
* * * * *
    Identified loan means a loan project or set-aside activity 
receiving assistance from a recipient of an EPA financial assistance 
agreement to capitalize a revolving loan fund, that:
    (1) In the case of the CWSRF Program, is a project funded from 
amounts equal to the capitalization grant;
    (2) In the case of the DWSRF Program, is a loan project or set-
aside activity funded from amounts up to the amount of the 
capitalization grant;
    (3) In the case of the BCRLF Program, is a project that has been 
funded with EPA financial assistance; or
    (4) In the case of other loan programs, is a project that has been 
funded with EPA financial assistance.
* * * * *
    Ownership means at least 51 percent of an enterprise is 
unconditionally and directly owned by one or more socially and 
economically disadvantaged individuals who are citizens of the United 
States, except for concerns owned by Indian tribes, Alaska Native 
Corporations, Native Hawaiian Organizations, or Community Development 
Corporations (CDCs) as described in 13 CFR 124.105. See 13 CFR 124.3 
for definition of unconditional ownership; and 13 CFR 124.109, 124.110, 
and 124.111, respectively, for special ownership requirements for 
concerns owned by Indian tribes, Alaska Native Corporations, Native 
Hawaiian Organizations, and Community Development Corporations.
    Procurement means the acquisition of goods and services under a 
financial assistance agreement as defined by applicable regulations for 
the particular type of financial assistance received.
    Recipient means a non-Federal entity that receives an EPA financial 
assistance agreement or is a sub-recipient of such agreement, including 
and not limited to loan recipients under the Clean Water State 
Revolving Fund Program, Drinking Water State Revolving Fund Program, 
and the Brownfields Cleanup Revolving Loan Fund Program.
    Relevant geographic market means is the area of solicitation for a 
procurement as determined by the recipient which may include where the 
recipient has historically done business and/or plans to do business as 
it relates to new markets.
* * * * *
    Socially disadvantaged individual means a person who has been 
subjected to racial or ethnic prejudice or cultural bias because of his 
or her identity as a member of a group without regard to his or her 
individual qualities and as further defined by the implementing 
regulations of section 8(a)(5) of the Small Business Act (15 U.S.C. 
637(a)(5); 13 CFR 124.103; see also 13 CFR 124.109 for special rules 
applicable to Indian tribes and Alaska Native Corporations; 13 CFR 
124.110 for special rules applicable to Native Hawaiian Organizations).
    Subaward means an award provided by an EPA financial assistance 
agreement recipient to a subrecipient for the subrecipient to carry out 
part of an EPA award received by the recipient. It does not include 
payments to a contractor or payments to an individual that is a 
beneficiary of a Federal program. A subaward may be provided through 
any form of legal agreement, including an agreement that the pass-
through entity considers a contract.
    Subcontract means an agreement between an EPA financial assistance 
agreement's prime contractor and a subcontractor to provide goods and 
services.
    Subcontractor means an entity engaged by an EPA financial 
assistance agreement's prime contractor to provide good and services.
    Subrecipient means a non-Federal entity that receives a subaward 
from an EPA recipient to carry out part of an EPA program; but does not 
include an individual that is a beneficiary of such program.
    Territories and Insular Possessions means any type of political 
division that is directly overseen by the United States as described in 
U.S. Code: Title 48.
    United States means any of the 50 States, the District of Columbia, 
the Commonwealth of Puerto Rico and any other territories and 
possessions of the United States.
    Women's business enterprise (WBE) means a business concern which is 
at least 51% owned or controlled by women for purposes of EPA's 8% 
statute or a business concern which is at least 51% owned and 
controlled by women for purposes for EPA's 10% statute. Determination 
of ownership by a married woman in a community property jurisdiction 
will not be affected by her husband's 50 percent interest in her share. 
Similarly, a business concern that is more than 50 percent owned by a 
married man will not become a qualified WBE by virtue of his wife's 50 
percent interest in his share.

0
5. Section 33.104 is amended by:
0
a. Revising paragraphs (a), (c) introductory text, and (c)(2) and (3).
0
b. Adding paragraph (c)(4).
0
c. Removing paragraph (d).
    The revisions and addition read as follows:

Sec.  33.104  May recipients apply for a waiver from the requirements 
of this part?

    (a) A recipient may apply for a waiver from any of the requirements 
of this part that are not specifically based on a statute or Executive 
Order, by submitting a written request to the Director of the Office of 
Small Business Programs (OSBP).
* * * * *
    (c) The OSBP Director has the authority to approve a recipient's 
request. If the OSBP Director grants a recipient's request, the 
recipient may administer its program as provided in the request, 
subject to the following conditions:
* * * * *
    (2) There is a five year limitation on the duration of the 
recipient's modified program. Should it be necessary to extend a waiver 
beyond the five year period, recipients are required to submit a new 
waiver request at least 60 days prior to the modified program's 
expiration date. Should the recipient fail to submit a new waiver 
request prior to the modified program's expiration date, the recipient 
will be required to comply with the provisions of this part and all 
terms agreed upon as a condition of the waiver will expire; and
    (3) Any other conditions the OSBP Director makes on the grant of 
the waiver.
    (4) The OSBP Director may end a program waiver at any time upon 
notice

[[Page 49549]]

to the recipient and require a recipient to comply with the provisions 
of this part.
0
6. Section 33.105 is revised to read as follows:

Sec.  33.105  What are the compliance and enforcement provisions of 
this part?

    If a recipient fails to comply with any of the requirements of this 
part, EPA may take remedial action under 2 CFR 200.338, as appropriate, 
or any other action authorized by law, including, but not limited to, 
enforcement under 18 U.S.C. 1001 and/or the Program Fraud Civil 
Remedies Act of 1986 (31 U.S.C. 3801 et seq.). Examples of the remedial 
actions include, but are not limited to:
    (a) Temporarily withholding cash payments pending correction of the 
deficiency by the recipient or more severe enforcement action by EPA;
    (b) Disallowing (that is, denying both use of funds and any 
applicable matching credit for) all or part of the cost of the activity 
or action not in compliance;
    (c) Wholly or partly suspending or terminating the EPA award;
    (d) Initiating suspension or debarment proceedings as authorized 
under 2 CFR part 180 and EPA regulations (or in the case of a pass-
through entity, recommend such a proceeding be initiated by EPA);
    (e) Withholding further awards for the project or program; and
    (f) Taking other remedies that may be legally available.

0
7. Section 33.107 is amended by:
0
a. Redesignating paragraphs (b) and (c) as paragraphs (c) and (d), 
respectively.
0
b. Adding new paragraph (b).
    The addition reads as follows:

Sec.  33.107  What are the rules governing availability of records, 
cooperation, and intimidation and retaliation?

* * * * *
    (b) Retention requirements and access for records. Recipients are 
required to adhere to the requirements set forth in 2 CFR 200.333 
through 200.337 for record retention and access to records 
requirements.
* * * * *
0
8. Appendix A is added to subpart A of part 33 to read as follows:

Appendix A to Subpart A of Part 33--Term and Condition

    Each procurement contract signed by an EPA financial assistance 
agreement recipient or subrecipient, including those for an 
identified loan under an EPA financial assistance agreement 
capitalizing a revolving loan fund, must include provisions under 2 
CFR part 200, appendix II, as applicable, as well as the following 
term and condition:
    The contractor shall not discriminate on the basis of race, 
color, national origin or sex in the performance of this contract. 
The contractor shall carry out applicable requirements of 40 CFR 
part 33 in the award and administration of contracts awarded under 
EPA financial assistance agreements. Failure by the contractor to 
carry out these requirements is a material breach of this contract, 
which may result in the termination of this contract or other 
legally available remedies.

Subpart B--Certification

0
9. Section 33.202 is revised to read as follows:

Sec.  33.202  How does an entity qualify as an MBE or WBE under EPA's 
8% statute?

    To qualify as an MBE or WBE under EPA's 8% statute, an entity must 
establish that it is owned or controlled by socially and economically 
disadvantaged individuals who are of good character and citizens of the 
United States. An entity need not demonstrate potential for success.

0
10. Section 33.203 is revised to read as follows:

Sec.  33.203  How does an entity qualify as an MBE or WBE under EPA's 
10% statute?

    (a) Qualifications. To qualify as an MBE or WBE under EPA's 10% 
statute, an entity must establish that it is owned and controlled by 
socially and economically disadvantaged individuals who are of good 
character and citizens of the United States.
    (b) Presumptions. In accordance with Title X of the Clean Air Act 
Amendments of 1990, 42 U.S.C. 7601 note, Black Americans, Hispanic 
Americans, Native Americans, Asian Americans, Women and Disabled 
Americans are presumed to be socially and economically disadvantaged 
individuals. In addition, the following institutions are presumed to be 
entities owned and controlled by socially and economically 
disadvantaged individuals: HBCUs, Minority Institutions (including 
Tribal Colleges and Universities and Hispanic-Serving Institutions) and 
private and voluntary organizations controlled by individuals who are 
socially and economically disadvantaged.
    (c) Individuals not members of designated groups. Nothing in this 
section shall prohibit any member of a racial or ethnic group that is 
not designated as socially and economically disadvantaged under 
paragraph (b) of this section from establishing that they have been 
impeded in developing a business concern as a result of racial or 
ethnic discrimination.
    (d) Rebuttal of presumptions. The presumptions established by 
paragraph (b) of this section may be rebutted with respect to a 
particular entity if it is reasonably established that the individual 
at issue is not experiencing impediments as a result of the 
individual's identification as a member of a specified group.
    (e) Joint ventures. A joint venture may be considered owned and 
controlled by socially and economically disadvantaged individuals, 
notwithstanding the size of such joint venture, if a party to the joint 
venture is an entity that is owned and controlled by a socially and 
economically disadvantaged individual, and that entity owns 51% of the 
joint venture. As a party to a joint venture, a person who is not an 
economically disadvantaged individual, or an entity that is not owned 
and controlled by a socially and economically disadvantaged individual, 
may not be a party to more than two awarded contracts in a fiscal year 
solely by joint venture with a socially and economically disadvantaged 
individual or entity.

0
11. Section 33.204 is revised to read as follows:

Sec.  33.204  What certifications are acceptable for establishing MBE 
or WBE status under the EPA DBE Program?

    (a) EPA accepts the following certifications as being acceptable 
for establishing MBE or WBE status under the EPA DBE Program:
    (1) The United States Small Business Administration (SBA), under 
its 8(a) Business Development Program (13 CFR part 124, subpart A), 
Small Disadvantaged Business (SDB) Program (13 CFR part 124, subpart 
B), or Economically Disadvantaged Woman Owned Small Business (EDWOSB) 
Program (13 CFR part 127, subpart B);
    (2) The United States Department of Transportation (DOT), under its 
regulations for Participation by Disadvantaged Business Enterprises in 
DOT Programs (49 CFR parts 23 and 26) with U.S. citizenship;
    (3) Any Indian Tribal Government, State Government, local 
Government or independent private organization certification that meets 
the criteria set forth in Sec.  33.202 or Sec.  33.203; or
    (4) The EPA DBE self-certification as described in Sec.  33.205.
    (b) Such certifications shall be considered acceptable for 
establishing MBE or WBE status, as appropriate, under EPA's DBE Program 
as long as the certification meets EPA's U.S. citizenship requirement 
under Sec.  33.202 or Sec.  33.203.

0
12. Section 33.205 is revised to read as follows:

[[Page 49550]]

Sec.  33.205  How does an entity become self-certified by EPA?

    (a) An entity may self-certify as an MBE or WBE under the EPA DBE 
Program. To self-certify, the entity must register in the EPA Small 
Business Vendor Profile System (SBVPS) and attest to meeting the 
eligibility requirements set forth in Sec.  33.202 or Sec.  33.203.
    (b) EPA DBE Program's self-certifications are only applicable to 
opportunities funded by EPA financial assistance agreements and are not 
recognized by other federal, state or local organizations.

0
13. Section 33.206 is revised to read as follows:

Sec.  33.206  Is there a list of EPA certified MBEs and WBEs?

    A list of firms that have chosen to self-certify as an MBE or WBE 
under the EPA DBE Program can be accessed through the EPA SBVPS on the 
OSBP Web site. EPA will not maintain a list of firms certified through 
other entities.

Sec.  33.207  [Removed and Reserved]

0
14. Section 33.207 is removed and reserved.

0
15. Section 33.208 is revised to read as follows:

Sec.  33.208  How long does an MBE or WBE self-certification from EPA 
last?

    Self-certifications are valid for a period of three years from the 
date an entity is self-certified in the EPA SBVPS. Entities are 
required to re-enter their registration information in the EPA SBVPS 
every three years in order to maintain MBE or WBE status under the DBE 
program. Entries in the EPA SBVPS older than three years will be 
automatically removed from the system.

Sec.  33.209  [Removed and Reserved]

0
16. Section 33.209 is removed and reserved.

0
17. Section 33.210 is revised to read as follows:

Sec.  33.210  Does an entity self-certified as an MBE or WBE by EPA 
need to keep EPA informed of any changes that may affect the entity's 
certification?

    Should there be any changes to the entity's circumstances that 
affects its ability to meet disadvantaged status, ownership, and/or 
control requirements of this subpart, the entity must remove its self-
certification entry in the EPA SBVPS within 30 days of the occurrence 
of the change. Failure to comply may result in the loss of MBE or WBE 
certification under EPA's DBE Program and EPA may take other remedies 
that may be legally available. Failure to comply may result in the loss 
of MBE or WBE certification under EPA's DBE Program, and EPA may take 
other remedies that may be legally available.

Sec.  33.211  [Removed and Reserved]

0
18. Section 33.211 is removed and reserved.

Subpart C--Good Faith Efforts

0
19. Section 33.301 is revised to read as follows:

Sec.  33.301  What does this subpart require?

    (a) The good faith efforts are methods used by all EPA recipients 
to ensure that DBEs have the opportunity to compete for procurements 
funded by EPA financial assistance dollars.
    (b) A recipient, including one exempted from applying the fair 
share objective requirements by Sec.  33.411, is required to make good 
faith efforts whenever making procurements under an EPA financial 
assistance agreement.
    (c) Good faith efforts are required even if the fair share 
objectives have been achieved under subpart D.
    (d) Methods used to adhere to good faith requirements must be 
documented and retained in the recipient's records; this documentation 
should include, but is not limited to, email logs, phone logs, 
electronic searches and communication, handouts, flyers or similar 
records.
    (e) Recipients are required to ensure that the requirements of this 
subpart are passed down to all sub-recipients/prime contractors.
    (f) There are no exemptions to the requirements of this subpart.
    (g) This subpart does not negate the post federal award 
requirements set forth in 2 CFR part 200.
    (h) The following is a list of actions a recipient must perform to 
satisfy the good faith effort requirement:
    (1) Ensure DBEs are made aware of contracting opportunities to the 
fullest extent practicable through outreach and recruitment activities 
by placing DBEs on solicitation lists and soliciting them whenever they 
are potential sources.
    (2) Make information on forthcoming opportunities available to DBEs 
and arrange time frames for contracts and establish delivery schedules, 
where the requirements permit, in a way that encourages and facilitates 
participation by DBEs in the competitive process. This includes, 
whenever possible, posting solicitations for bids or proposals for a 
minimum of 30 calendar days before the bid or proposal closing date.
    (3) Consider in the contracting process whether firms competing for 
large contracts could subcontract with DBEs; this includes, where 
appropriate, breaking out requirements into economically feasible units 
to facilitate DBE participation.
    (4) Encourage contracting with a consortium of DBEs when a contract 
is too large for one of these firms to handle individually.
    (5) Effectively using the services of available minority/women 
community organizations; minority/women contractors' groups; local, 
state, and Federal minority/women business assistance offices; and 
other organizations, when feasible, to conduct the efforts described in 
paragraphs (h)(1) through (4) of this section.
    (i) A recipient should make every attempt to conduct the efforts 
described in paragraphs (h)(1) through (5) of this section. In the 
event that one or more of the aforementioned efforts cannot be 
performed, the circumstances that have prohibited the full execution of 
each step should be documented and retained in the recipient's records. 
Recipients that fail to meet their fair share goals will not be 
penalized provided they attempt to follow the good faith efforts and 
adequately document the methods used to solicit DBEs. However, failure 
to retain proper documentation may constitute noncompliance and result 
in remedial action as described in Sec.  33.105.

0
20. Section 33.302 is amended by revising paragraphs (c) through (i) to 
read as follows:

Sec.  33.302  Are there any additional contract administration 
requirements?

* * * * *
    (c) If a DBE subcontractor fails to complete work under the 
subcontract for any reason, the recipient must require the prime 
contractor to employ the good faith efforts described in Sec.  
33.301(h) if soliciting a replacement subcontractor.
    (d) A recipient must require its prime contractor to have its DBE 
subcontractors complete EPA Form 6100-3--DBE Program Subcontractor 
Performance Form. A recipient must then require its prime contractor to 
include all completed forms as part of the prime contractor's bid or 
proposal package.
    (e) A recipient must require its prime contractor to complete and 
submit EPA Form 6100-4--DBE Program Subcontractor Utilization Form as 
part of the prime contractor's bid or proposal package.
    (f) Copies of EPA Form 6100-2--DBE Program Subcontractor 
Participation Form, EPA Form 6100-3--DBE Program Subcontractor 
Performance Form, and EPA Form 6100-4--DBE Program

[[Page 49551]]

Subcontractor Utilization Form may be obtained online from EPA OSBP's 
Home Page.
    (g) Failure to include EPA Form 6100-3 and EPA Form 6100-4 in a bid 
or proposal package may constitute non-responsiveness. A recipient may 
consider this non-responsiveness in evaluating a prime contractor's 
proposal.
    (h) A recipient must ensure that each procurement contract it 
awards contains the term and condition specified in 2 CFR part 200, 
appendix II, concerning compliance with the requirements of this part. 
A recipient must also ensure that this term and condition is included 
in each procurement contract awarded by an entity receiving an 
identified loan under a financial assistance agreement to capitalize a 
revolving loan fund.
    (i) In addition to requirements stated above, all procurement 
contracts awarded by a recipient must contain provisions detailed in 2 
CFR part 200, appendix II, as applicable.

0
21. Section 33.303 is revised to read as follows:

Sec.  33.303  Are there special rules for loans under EPA financial 
assistance agreements?

    A recipient of an EPA financial assistance agreement to capitalize 
a revolving loan fund, including, but not limited to, a State under the 
CWSRF or DWSRF or an eligible entity under the Brownfields Cleanup 
Revolving Loan Fund program, must require that borrowers receiving 
identified loans comply with the good faith efforts described in Sec.  
33.301 and the contract administration requirements of Sec.  33.302. 
This provision does not require that such private and nonprofit 
borrowers expend identified loan funds in compliance with any other 
procurement procedures contained in 2 CFR part 200, subpart D (Post 
Federal Award Requirements, Procurement Standards), or 40 CFR part 35, 
subpart O, as applicable.

0
22. Section 33.304 is amended by revising the section heading and 
paragraphs (a) through (c) to read as follows:

Sec.  33.304  What special rules apply to a Native American (either as 
an individual, organization, Tribe or Tribal Government or consortium) 
recipient or prime contractor when following the good faith efforts?

    (a) A Native American (either as an individual, organization, 
corporation, Tribe or Tribal Government or consortium) recipient or 
prime contractor must follow the good faith efforts in Sec.  33.301(h) 
only if doing so would not conflict with existing Tribal or Federal 
law, including but not limited to the Indian Self-Determination and 
Education Assistance Act (25 U.S.C. 450e), which establishes, among 
other things, that any federal contract, subcontract, grant, or 
subgrant awarded to Indian organizations or for the benefit of Indians, 
shall require preference in the award of subcontracts and subgrants to 
Indian organizations and to Indian-owned economic enterprises.
    (b) Tribal organizations awarded an EPA financial assistance 
agreement have the ability to solicit and recruit Indian organizations 
and Indian-owned economic enterprises and give them preference in the 
award process prior to undertaking the good faith efforts. Tribal 
governments with promulgated tribal laws and regulations concerning the 
solicitation and recruitment of Native-owned and other minority 
business enterprises, including women-owned business enterprises, have 
the discretion to utilize these tribal laws and regulations in lieu of 
the good faith efforts. If the effort to recruit Indian organizations 
and Indian-owned economic enterprises is not successful, then the 
recipient must follow the good faith efforts. All tribal recipients 
still must retain records documenting compliance in accordance with 
Sec.  33.501 and must report to EPA on their accomplishments in 
accordance with Sec.  33.502.
    (c) Any recipient, whether or not Native American, of an EPA 
financial assistance agreement for the benefit of Native Americans, is 
required to solicit and recruit Indian organizations and Indian-owned 
economic enterprises and give them preference in the award process 
prior to undertaking the good faith efforts. If the efforts to solicit 
and recruit Indian organizations and Indian-owned economic enterprises 
is not successful, then the recipient must follow the good faith 
efforts.
* * * * *

Subpart D--Fair Share Objectives

0
23. Section 33.401 is revised to read as follows:

Sec.  33.401  What does this subpart require?

    A recipient must either negotiate with the appropriate EPA award 
official or his/her designee fair share objectives for MBE and WBE 
participation in procurement under the financial assistance agreements, 
or use the approved fair share objective of another recipient with the 
same or similar relevant geographic buying market, purchasing the same 
or similar items.

0
24. Section 33.402 is revised to read as follows:

Sec.  33.402  Are there special rules for loans under EPA financial 
assistance agreements?

    (a) A recipient of an EPA financial assistance agreement to 
capitalize revolving loan funds must either:
    (1) Apply its own fair share objectives negotiated with EPA under 
Sec.  33.401 to identified loans using a substantially similar relevant 
geographic market;
    (2) Negotiate separate fair share objectives with entities 
receiving identified loans, as long as such separate objectives are 
based on demonstrable evidence of availability of MBEs and WBEs in 
accordance with this subpart; or
    (3) Use the approved fair share objective of another recipient with 
the same or similar relevant geographic buying market, with the same or 
similar items.
    (b) If procurements will occur over more than one year, the 
recipient should apply the fair share objectives to the year in which 
the procurement action occurs.

0
25. Section 33.403 is revised to read as follows:

Sec.  33.403  What is a fair share objective?

    A fair share objective is an objective based on the capacity and 
availability of qualified, certified MBEs and WBEs in the relevant 
geographic market compared to the number of all qualified entities in 
the same market, to reflect the level of MBE and WBE participation 
expected absent the effects of discrimination. A fair share objective 
is not a quota.

0
26. Section 33.404 is revised to read as follows:

Sec.  33.404  When must a recipient negotiate fair share objectives 
with EPA?

    A recipient must submit its proposed MBE and WBE fair share 
objectives and supporting documentation to EPA within 90 days after its 
acceptance of its financial assistance award. EPA must respond in 
writing to the recipient's submission within 45 days of receipt, either 
agreeing with the submission or providing initial comments for further 
negotiation. Failure to respond within this time frame may be 
considered as agreement by EPA with the fair share objectives submitted 
by the recipient. MBE and WBE fair share objectives must be agreed upon 
by the recipient and EPA before funds may be expended for procurement 
under the recipient's financial assistance agreement.

0
27. Section 33.405 is amended by:
0
a. Revising paragraphs (a), (b) introductory text, and (b)(1) and (2);
0
b. Adding paragraph (c)(4).

[[Page 49552]]

    The revisions and addition read as follows:

Sec.  33.405  How does a recipient determine its fair share objectives?

    (a) Unless a recipient chooses to use the approved fair share 
objective of another recipient, it must determine its fair share 
objectives based on demonstrable evidence of the number of certified 
MBEs and WBEs that are ready, willing, and able to perform in the 
relevant geographic market. The market may be a geographic region of a 
State, an entire State, or a multi-State area. Fair share objectives 
must reflect the recipient's determination of the level of MBE and WBE 
participation it would expect absent the effects of discrimination. A 
recipient must propose separate objectives for MBEs and WBEs.
    (b) Step 1. A recipient must first determine a base figure for the 
relative availability of MBEs and WBEs. The following are examples of 
approaches that a recipient may take. Any percentage figure derived 
from one of these examples should be considered a basis from which a 
recipient begins when examining evidence available in its jurisdiction. 
These examples are provided as a starting point and are not intended as 
an exhaustive list.
    (1) MBE and WBE directories and Census Bureau data. Separately 
determine the number of certified MBEs and WBEs that are ready, 
willing, and able to perform in the relevant geographic market from an 
MBE/WBE directory such as those provided by the Department of 
Transportation. When using the Census Bureau's County Business Pattern 
(CBP) database, determine the number of all qualified businesses 
available in the market that perform work in the same business 
industries. Separately divide the number of MBEs and WBEs by the number 
of all businesses to derive a base figure for the relative availability 
of MBEs and WBEs in the market.
    (2) Data from a disparity study. Use a percentage figure derived 
from data in a valid, applicable disparity study conducted within the 
preceding ten years comparing the available MBEs and WBEs in the 
relevant geographic market with their actual usage by entities for 
procurements in the same business industries.
* * * * *
    (c) * * *
    (4) Unless exempt under Sec.  33.411, a recipient that fails to 
establish and implement goals as provided in this section will be 
considered noncompliant and EPA may take remedial action under 2 CFR 
200.338, as appropriate, or any other action authorized by law, 
including, but not limited to, enforcement under 18 U.S.C. 1001 and/or 
the Program Fraud Civil Remedies Act of 1986 (31 U.S.C. 3801 et seq.).

0
28. Section 33.407 is revised to read as follows:

Sec.  33.407  How long do MBE and WBE fair share objectives remain in 
effect?

    Once MBE and WBE fair share objectives have been negotiated, they 
will remain in effect for five fiscal years unless there are 
significant changes to the data supporting the fair share objectives. 
The fact that a disparity study utilized in negotiating fair share 
objectives has become more than ten years old during the five-year 
period does not by itself constitute a significant change requiring 
renegotiation.

0
29. Section 33.408 is amended by revising paragraph (a) to read as 
follows:

Sec.  33.408  May a recipient use race and/or gender conscious measures 
as part of this program?

    (a) Should the good faith efforts described in subpart C of this 
part or other race and/or gender neutral measures prove to be 
inadequate to achieve an established fair share objective, race and/or 
gender conscious action (e.g., apply the subcontracting suggestion in 
Sec.  33.301(h)(3) to MBEs and WBEs) is available to a recipient and 
its prime contractor to more closely achieve the fair share objectives, 
subject to Sec.  33.409. Under no circumstances are race and/or gender 
conscious actions required by EPA.
* * * * *

0
30. Section 33.410 is revised to read as follows:

Sec.  33.410  Can a recipient be penalized for failing to meet its fair 
share objectives?

    A recipient cannot be penalized, or treated by EPA as being in 
noncompliance with this subpart, solely because its MBE or WBE 
participation does not meet its applicable fair share objective. 
However, EPA may take remedial action under 2 CFR 200.338, as 
appropriate, or any other action authorized by law, including, but not 
limited to, enforcement under 18 U.S.C. 1001 and/or the Program Fraud 
Civil Remedies Act of 1986 (31 U.S.C. 3801 et seq.) for failure to 
comply with the provisions of this subpart.

0
31. Section 33.411 is amended by revising paragraphs (a) through (c) to 
read as follows:

Sec.  33.411  Who may be exempted from this subpart?

    (a) General. A recipient of an EPA financial assistance agreement 
in the amount of $1 million or less for any single assistance 
agreement, or of more than one financial assistance agreement with a 
combined total of $1 million or less in any one fiscal year, is not 
required to apply the fair share objective requirements of this 
subpart. This exemption is limited to the fair share objective 
requirements of this subpart.
    (b) Clean Water State Revolving Fund (CWSRF) Program, Drinking 
Water State Revolving Fund (DWSRF) Program, Brownfields Cleanup 
Revolving Loan Fund (BCRLF) Program or other identified loan 
recipients. A recipient under the CWSRF, DWSRF, BCRLF, or other 
identified loan program is not required to apply the fair share 
objective requirements of this subpart to an entity receiving one or 
more identified loans in an amount of $1 million or less in any one 
fiscal year. This exemption is limited to the fair share objective 
requirements of this subpart.
    (c) U.S. Territory and Insular Possession, and Tribal and 
Intertribal Consortia recipients of program assistance agreements that 
can be included in Performance Partnership Grants (PPGs) under 40 CFR 
part 35, subparts A and B, respectively. U.S Territory and Insular 
Possession, and Tribal and Intertribal Consortia recipients of PPG 
eligible grants are not required to apply the fair share objective 
requirements of this subpart to those grants. This exemption is limited 
to the fair share objective requirements of this subpart.
* * * * *

Sec.  33.412  [Removed and Reserved]

0
32. Section 33.412 is removed and reserved.

Subpart E--Recordkeeping and Reporting

0
33. Section 33.501 is amended by revising paragraphs (b) introductory 
text, (b)(2), and (c) to read as follows:

Sec.  33.501  What are the recordkeeping requirements of this part?

* * * * *
    (b) A recipient of a Continuing Environmental Program Grant or 
other annual assistance agreements must create and maintain a bidders 
list. In addition, a recipient of an EPA financial assistance agreement 
to capitalize a revolving loan fund also must require entities 
receiving identified loans to create and maintain a bidders list if the 
recipient of the loan is subject to, or

[[Page 49553]]

chooses to follow, competitive bidding requirements (See e.g., Sec.  
33.303). The purpose of a bidders list is to provide the recipient and 
entities receiving identified loans who conduct competitive bidding 
with as accurate a database as possible about the universe of MBE/WBE 
and non-MBE/WBE prime and subcontractors. The list must include all 
firms that bid or quote on prime contracts, or bid or quote 
subcontracts on EPA assisted projects, including both MBE/WBEs and non-
MBE/WBEs. The bidders list must only be kept until the assistance 
agreement project period has expired and the recipient is no longer 
receiving EPA funding under the assistance agreement. For entities 
receiving identified loans, the bidders list must only be kept until 
the project period for the identified loan has ended. The following 
information must be obtained from all prime and subcontractors:
* * * * *
    (2) Entity's telephone number and email address;
* * * * *
    (c) Exemptions. A recipient of an EPA financial assistance 
agreement in the amount of $250,000 or less for any single assistance 
agreement, or of more than one financial assistance agreement with a 
combined total of $250,000 or less in any one fiscal year, is exempt 
from the paragraph (b) of this section requirement to create and 
maintain a bidders list. Also, a recipient under the CWSRF, DWSRF, 
BCRLF, or other identified loan program, is not required to apply the 
paragraph (b) of this section bidders list requirement of this subpart 
to an entity receiving an identified loan in an amount of $250,000 or 
less, or to an entity receiving more than one identified loan with a 
combined total of $250,000 or less in any one fiscal year. This 
exemption is limited to the paragraph (b) of this section bidders list 
requirements of this subpart.

0
34. Section 33.502 is revised to read as follows:

Sec.  33.502  What are the reporting requirements of this part?

    (a) Recipients are required to report MBE and WBE participation 
annually on EPA Form 5700-52A when one or more of the following 
conditions are met.
    (1) There are funds budgeted for procurements, including funds 
budgeted for direct procurement by the recipient or procurement under 
sub-awards or loans in the ``Other'' procurement category that exceed 
the simplified acquisition threshold amount of $150,000;
    (2) If at the time of award the budgeted funds for procurement 
exceed $150,000, but actual expenditures fall below; or
    (3) If subsequent amendments and funding cause the total amount of 
procurement to surpass the $150,000 threshold.
    (b) Those recipients exempted under Sec.  33.411 from the 
requirement to apply the fair share objectives are required to report 
if one or more of the conditions stated above is met.
    (c) Recipients of financial assistance agreements that capitalize 
revolving loan programs must require entities receiving identified 
loans to submit their MBE and WBE participation reports on an annual 
basis, if one or more of the conditions stated above is met. Reports 
should be submitted to the financial assistance agreement recipient, 
rather than to EPA.
    (d) Where reporting is required, all procurement actions are 
reportable, not just that portion that exceeds $150,000.
    (e) Reporting is not required if at the time of award, funds 
budgeted for procurements are less than or equal to $150,000 and are 
maintained below the threshold.
    (f) Reports are due by October 30th of each fiscal year, or 30 days 
after the end of the project period, whichever comes first.

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35. Section 33.503 is amended by revising paragraph (a) to read as 
follows:

Sec.  33.503  How does a recipient calculate MBE and WBE participation 
for reporting purposes?

    (a) General. Only certified MBEs and WBEs are to be counted towards 
MBE/WBE participation. Amounts of MBE and WBE participation are 
calculated as a percentage of total financial assistance agreement 
project procurement costs, which include the match portion of the 
project costs, if any. Recipients should only report funds used for 
procurements. For recipients of financial assistance agreements that 
capitalize revolving loan programs, the total amount is the total 
procurement dollars in the amount of identified loans equal to the 
capitalization amount.
* * * * *

Appendix A to Part 33 [Removed]

0
36. Appendix A to part 33 is removed.

[FR Doc. 2016-17510 Filed 7-27-16; 8:45 am]
 BILLING CODE 6560-50-P