[Federal Register: March 26, 2008 (Volume 73, Number 59)] [Rules and Regulations] [Page 15904-15922] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr26mr08-22] ======================================================================= ----------------------------------------------------------------------- ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 30, 31, 33, 35 and 40 [Docket ID NO. EPA-HQ-OA-2002-0001; FRL-8545-9] RIN 2090-AA38 Participation by Disadvantaged Business Enterprises in Procurement Under Environmental Protection Agency (EPA) Financial Assistance Agreements AGENCY: Environmental Protection Agency. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: This action will harmonize EPA's statutory Disadvantaged Business Enterprise procurement objectives with the United States Supreme Court's decision in Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995). In that case, the Supreme Court extended strict judicial scrutiny to federal programs that use racial or ethnic criteria as a basis for decision making. Remedying discrimination is recognized as a compelling government interest, and this rule is promulgated on the understanding that the statutory provisions authorizing its adoption were enacted for that remedial purpose. This rule sets forth a narrowly tailored EPA program to serve the compelling government interest of remedying past and current racial discrimination through agency-wide DBE procurement objectives. EPA intends to evaluate the propriety of the Disadvantaged Business Enterprise program in 7 years through subsequent rulemaking. This rule also revises EPA's Minority Business Enterprise (MBE) and Women's Business Enterprise (WBE) program and renames it EPA's Disadvantaged Business Enterprise (DBE) Program. EPA is removing existing MBE/WBE specific provisions in regulations for grants and agreements with institutions of higher education, hospitals, and other non-profit organizations; and uniform administrative requirements for grants and cooperative agreements to state and local governments, state and local assistance, and research and demonstration grants, and is consolidating and adding to these provisions in this new regulation. This rule affects only procurements under EPA financial assistance agreements. This rule does not apply to direct Federal procurement actions. If you are a recipient of an EPA financial assistance agreement or an entity receiving an identified loan under a financial assistance agreement capitalizing a revolving loan fund, this rule may affect you. DATES: This final rule is effective May 27, 2008. ADDRESSES: EPA has established a docket for this action under Docket ID No. EPA-HQ-OA-2002-0001. All documents in the docket are listed on the www.regulations.gov Web site. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through www.regulations.gov or in hard copy at the HQ EPA Docket Center, EPA/ DC, EPA West, Room 3334, 1301 Constitution Ave., NW., Washington, DC 20004. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the Office of Environmental Information is (202) 566-1752. FOR FURTHER INFORMATION CONTACT: Kimberly Patrick, Attorney Advisor, Office of the Administrator, Office of Small and Disadvantaged Business Utilization (OSDBU) by phone at (202) 566-2605, by e-mail at patrick.kimberly@epa.gov, or by fax at (202) 566-0548; or Cassandra Freeman, Deputy Director, Office of the Administrator, OSDBU by phone at [[Page 15905]] (202) 566-1968, by e-mail at freeman.cassandra@epa.gov, or by fax at (202) 566-0266. Both can be reached by mail to OSDBU, U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue, NW., mail code 1230T, Washington, DC 20460. SUPPLEMENTARY INFORMATION: The contents of this final rule are listed in the following outline: Contents of the Final Rule I. General Information A. Does This Rule Apply to Me? B. What are the Statutory Authorities for this Final Rule? II. Background III. Overview of Final Rule IV. Summary of Response to Public Comments V. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review B. Paperwork Reduction Act C. Regulatory Flexibility Act D. Unfunded Mandates Reform Act E. Executive Order 13132: Federalism F. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments G. Executive Order 13045: Protection of Children From Environmental Health and Safety Risks H. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution, or Use I. National Technology Transfer and Advancement Act of 1995 J. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations K. Congressional Review Act I. General Information A. Does This Rule Apply to Me? If you are a recipient of an EPA financial assistance agreement, or 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. B. What Are the Statutory Authorities for This Final Rule? EPA's primary statutory authorities for this final rule are: 1. Public Law 102-389 (42 U.S.C. 4370d), a 1993 appropriations act (``EPA's 8% statute''), which provides: The Administrator of the Environmental Protection Agency shall, hereafter, to the fullest extent possible, ensure that at least 8 per centum of Federal funding for prime and subcontracts awarded in support of authorized programs, including grants, loans and contracts for wastewater treatment and leaking underground storage tanks grants, be made available to business concerns or other organizations owned or controlled by socially and economically disadvantaged individuals (within the meaning of section 8(a)(5) and (6) of the Small Business Act (15 U.S.C. 637(a)(5) and (6)), including historically black colleges and universities. For purposes of this section, economically and socially disadvantaged individuals shall be deemed to include women * * *; and 2. Public Law 101-549, Title X of the Clean Air Act Amendments of 1990 (42 U.S.C. 7601 note) (``EPA's 10% statute''), which states: In providing for any research relating to the requirements of the amendments made by the Clean Air Act Amendments which use funds of the Environmental Protection Agency, the Administrator of the Environmental Protection Agency shall, to the extent practicable, require that not less than 10 percent of the total Federal funding for such research will be made available to disadvantaged business concerns. Nothing in this title shall permit or require the use of quotas or a requirement that has the effect of a quota in determining eligibility * * * Other legal authorities and Executive Orders regarding this final rule include Public Law 99-499, the Superfund Amendments and Reauthorization Act of 1986; Public Law 100-590, the Small Business Administration Reauthorization and Amendment Act of 1988; Executive Order 12138, ``Creating a National Women's Business Enterprise Policy and Prescribing Arrangements for Developing, Coordinating and Implementing a National Program for Women's Business Enterprise,'' issued May 18, 1979; Executive Order 11625, ``Prescribing Additional Arrangements for Developing and Coordinating a National Program for Minority Business Enterprise,'' issued October 13, 1971; and Executive Order 12432, ``Minority Business Enterprise Development,'' issued July 14, 1983. II. Background EPA's current Minority Business Enterprise/Woman-owned Business Enterprise (``MBE/WBE'') program has three major components designed to ensure that minority and women-owned businesses have the opportunity to participate in procurements funded by EPA financial assistance agreements. Those components are as follows: 1. Negotiating Fair Share Goals: The current MBE/WBE 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. 2. Using the ``Six Positive Efforts'' or ``Six Affirmative Steps'': The ``Six Positive Efforts'' or ``Six Affirmative Steps'' are measures designed to ensure MBEs and WBEs are considered in a financial assistance recipient's procurement practices, and they contain measures a recipient may undertake to make procurements more open to MBEs and WBEs. 3. Reporting Accomplishments: Under the current MBE/WBE 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 we use to assess whether or not the program is effective and actually translating into increased opportunities for MBEs and WBEs. EPA's MBE/WBE Program is currently implemented through: (1) Existing MBE and WBE provisions scattered throughout 40 CFR parts 30, 31, 35 and 40; (2) Grant conditions; and (3) The Agency's ``Guidance for the Utilization of Small, Minority, and Women's Business Enterprises in Assistance Agreements.'' In 1995, the Supreme Court's decision in Adarand Constructors, Inc. v. Federico Pena, Secretary of Transportation, 515 U.S. 200 (``Adarand''), extended strict judicial scrutiny to federal affirmative action programs that use racial or ethnic criteria as a basis for decisionmaking. In other words, such programs must be based on a compelling governmental interest, for example, remedying the effects of discrimination, and must be narrowly tailored to accomplish that interest. Following the Adarand decision, in 1996, the Department of Justice (DOJ) began a review of affirmative action programs in the Federal Government. In response to this review, the Department of Transportation (DOT), whose DBE program mirrored EPA's MBE/WBE program, revised its program for participation of DBEs in procurements under DOT's financial assistance agreements to comply with the Adarand decision (See 64 FR 5096). This final rule reflects EPA's efforts to similarly comply. Remedying discrimination is recognized as a compelling government interest, and this rule is promulgated on the understanding that the statutory provisions authorizing its adoption were enacted for that remedial purpose. This [[Page 15906]] rule sets forth a narrowly tailored EPA program to serve the compelling government interest of remedying past and current racial discrimination through agency-wide DBE procurement objectives. EPA intends to evaluate the propriety of the Disadvantaged Business Enterprise program in 7 years through subsequent rulemaking This final rule requires recipients to use race/gender-neutral measures to ensure DBEs have meaningful opportunities to bid on recipient-sponsored procurements. It does not require recipients to use race/gender-conscious measures. However, if a recipient elects to use such measures, the recipient should satisfy itself that the measure meets all applicable legal requirements, including those established in Adarand. Because this rule only requires race/gender-neutral measures, it should not be subject to strict judicial scrutiny. Even so, we believe this rule is narrowly tailored to achieve a compelling governmental interest consistent with Adarand. EPA worked collaboratively on this rulemaking with various program offices within the Agency, the EPA Office of General Counsel, and the EPA Regions. We also held discussions with other Federal agencies, including SBA and DOT whose DBE programs are in some ways similar to ours, or have undergone changes similar to the ones we are implementing. EPA has also collaborated with the Civil Rights Division of DOJ throughout the rulemaking process. III. Overview of Final Rule This rulemaking removes all of EPA's current MBE/WBE fair share objectives and good faith efforts regulatory provisions and replaces them with DBE provisions to be codified in the new 40 CFR part 33. In addition, this rule supersedes inconsistent provisions of previous guidance documents for EPA's former MBE and WBE Program, including, but not limited to, EPA's ``Guidance for Utilization of Small, Minority, and Women's Business Enterprises in Procurement Under Assistance Agreements'' (the 1997 Guidance), 62 FR 45645. There are six substantive changes this rule will make to the way the program currently operates. Those changes involve: (1) Certification of minority and women-owned businesses; (2) the six good faith efforts; (3) contract administration requirements; (4) negotiation of fair share goals; (5) recordkeeping and reporting requirements; and (6) new requirements for Tribal and insular area fair share negotiations. The specific changes are summarized as follows: 1. Certification Under the current MBE/WBE program EPA recognizes Small Business Administration (SBA) certifications, or certifications by a State or other Federal Agency, or self-certifications. EPA currently does not require WBEs to be certified. Under the new DBE program promulgated today, 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. EPA will require 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. EPA will only consider certifying firms that cannot get certified by one of these entities. Requiring firms to first seek certification from other sources is beneficial for the business entity because an EPA certification is limited in that it would only be accepted by EPA. Certifications from other sources have broader applications. Also, requiring firms to first seek certification from other sources reduces the burden on the Agency associated with processing certifications. The creation and implementation of an EPA certification program is necessary because the statutory authority for EPA's program includes classifications of businesses that are not currently certified by other sources. Businesses that fall within these classifications would potentially have no other option for certification to participate in EPA's DBE program. EPA anticipates that the following types of entities will have to be considered for certification by EPA: 1. Disabled American-owned firms; 2. Private and voluntary organizations controlled by individuals who are socially and economically disadvantaged; 3. Women-owned and minority owned-businesses who cannot get certified under DOT or SBA size criteria (EPA does not have size criteria) or by a State Government, local Government, Indian Tribal Government or independent private organization; 4. Businesses owned or controlled by socially and economically disadvantaged individuals (note--SBA and DOT require an entity to be owned and controlled by socially and economically disadvantaged individuals. However, the statutory authority for EPA's DBE program requires ownership or control, Public Law 102-389); and 5. Women-owned business enterprises. EPA certifications will last for three years as long as the certified entity files an annual affidavit affirming that no changes in circumstances have occurred which affected the entity's status as an MBE or WBE. Appeal procedures are provided for entities denied MBE or WBE certification, or anyone who disagrees with EPA's decision to certify an entity as an MBE or WBE. 2. Six Good Faith Efforts The good faith efforts are activities by a recipient and its prime contractor to increase DBE awareness of procurement opportunities through race/gender neutral efforts. Race/gender neutral efforts are ones which increase awareness of contracting opportunities in general, including outreach, recruitment and technical assistance. For purposes of simplification, EPA has combined the ``Six Positive Efforts'' of 40 CFR 30.44 (b) applicable to institutions of higher education, hospitals and other non-profit organizations with the ``Six Affirmative Steps'' of 40 CFR 31.36(e) applicable to State, Local and Indian Tribal Government recipients and renamed them the six ``good faith efforts.''. 3. Contract Administration Requirements The rule adds additional contract administration requirements which are intended to prevent any ``bait and switch'' tactics at the subcontract level by prime contractors which may circumvent the spirit of the DBE Program as well as other related requirements. Some of these requirements include provisions intended to ensure that subcontractors receive prompt payment from prime contractors. In addition, this proposal would require a recipient to be notified in writing before its prime contractor could terminate a DBE subcontractor for convenience and then perform the work itself. Furthermore, when a DBE subcontractor is terminated or fails to complete its work under the subcontract for any reason, the recipient must require the prime contractor to make good faith efforts if the prime contractor chooses to hire another subcontractor. A recipient must also require its prime contractor to continue to make the good faith efforts even if the fair share objectives in subpart D of the rule have [[Page 15907]] been met. Finally, this rule provides for three new forms which are required if there are DBE subcontractors involved in a procurement. 4. Negotiation of Fair Share Goals (and $250,000 Exemptions) This rule codifies EPA's procedures for negotiating fair share goals with financial assistance recipients. The process for such negotiations is currently implemented through guidance, as well as through terms and conditions incorporated into EPA financial assistance agreements. This rulemaking keeps the current basic approach, with some fine tuning, including a provision which would exempt a recipient of a financial assistance agreement of $250,000 or less for any assistance agreement, or of more than one financial assistance agreement with a combined total of $250,000 or less in EPA funds in any one year, from the fair share objective negotiation requirement. In addition, eligible program grants which can be included in Performance Partnership Grants to Tribal and Tribal consortia recipients will be exempt from the fair share negotiation requirement due to the nature of these program grants and the unique nature of eligible recipients. Superfund Technical Assistance Grants (TAG's) would be exempt due to the nature of their funding cycles. A recipient under the Clean Water State Revolving Fund, the Drinking Water State Revolving Fund, and the Brownfields Clean-Up Revolving Loan Fund is not required to apply the fair share objective requirements to an entity receiving an identified loan in an amount of $250,000 or less. 5. Recordkeeping and Reporting Requirements Currently, all financial assistance agreement recipients must report on a quarterly basis, except for recipients of continuing environmental program grants, and institutions of higher education, hospitals and other non-profit organizations receiving financial assistance awards under 40 CFR part 30, who report on an annual basis. This rule will reduce the reporting frequency to semi-annually for all recipients who currently report on a quarterly basis. This rule also requires all financial assistance recipients, and recipients of loans under CWSRF, DWSRF, or BCRLF Programs to create and maintain a bidders list. There is an exemption from this requirement for recipients receiving grants or loans of $250,000 or less for any single assistance agreement or loan, or of more than one financial assistance agreement or loan with a combined total of $250,000 or less in EPA funds in any one year. 6. New Requirement for Tribal and Trust Territory Fair Share Negotiations EPA does not currently negotiate fair share goals with Indian Tribal Government and Trust Territory recipients. This rule will require such recipients to negotiate fair share goals. Therefore, under the rule such recipients will have a three year phase-in period to adjust to the regulatory change. In the interim, they will still have to comply with the other requirements of this rule. IV. Summary of Response to Public Comments Excluding changes in wording to increase clarity, there are only four substantive changes reflected in this final rule. Those changes, along with a breakdown of the number and type of comments received, are below: Number of Comments Received: 126 ------------------------------------------------------------------------ Number of Percent of Primary areas of public concern comments all comments ------------------------------------------------------------------------ Certification........................... 23 18 General (wording and clarification)..... 16 13 Good Faith Efforts...................... 14 11 Subcontracting Provisions............... 12 9 Bidders List............................ 11 9 ------------------------------------------------------------------------ Major Revisions Based on Public Comment (not including wording or clarification): 1. Sec. 33.105--Enforcement Provisions There were several comments concerning enforcement of the rule. A number of comments stated that there are no ``teeth'' in the program and that more policing of the program will be needed to insure compliance with the requirements of the rule. While the text of the rule mentions that EPA can take remedial action for non-compliance, it does not clearly state what those actions are. In an effort to show more ``teeth,'' this section has been revised to include some of the remedial measures EPA can take if a recipient fails to comply with the requirements of the rule. 2. Sec. 33.302--Subcontractor Provisions Public comment requested that EPA specify the number of days within which a prime must pay its subcontractor after payment by the recipient. In an effort to curtail the practice of excessively late subcontractor payments, the rule establishes maximum of 30 days by which a prime contractor must pay its subcontractor, after payment by the grant recipient. 3. Sec. 33.501--Bidders List Many comments were received requesting clarification about the contents, purpose and duration of the bidders list. The purpose of the Bidders List is to provide the recipient and entities receiving identified loans who conduct competitive bidding with a more accurate database of the universe of MBE/WBE and non-MBE/WBE prime and subcontractors. The bidders list is intended to be a list of all firms that are participating, or attempting to participate, on EPA assisted contracts. The list must include all firms that bid on prime contracts, or bid or quote on subcontracts under EPA assisted projects, including both MBE/WBEs and non-MBE/WBEs. The bidders list is designed to also aid recipients in their efforts to comply with the ``six good faith efforts,'' by creating a source of MBEs and WBEs that can be relied upon to increase the inclusion of MBEs and WBEs in the recipient's procurement practices. Section 33.501(b) of the rule has been revised to read as follows: A recipient of a Continuing Environmental Program Grant or other annual grant 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 chooses to follow, competitive bidding requirements. 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 on subcontracts under EPA assisted projects, including both MBE/WBEs [[Page 15908]] and non-MBE/WBEs. The bidders list must be kept until the grant project period has expired and the recipient is no longer receiving EPA funding under the grant. For entities receiving identified loans, the bidders list must be kept until the project period for the identified loan has ended. The following information must be obtained from all prime and subcontractors: (1) Entity's name with point of contact; (2) Entity's mailing address, telephone number, and e-mail address; (3) The procurement on which the entity bid or quoted, and when; and (4) Entity's status as an MBE/WBE or non-MBE/WBE. In response to internal concerns regarding the application of the bidders list requirement, we have created an exemption to this provision. The exemption found at Sec. 33.501(c) is as follows: 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, or BCRLF 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. 4. Sec. 33.502--Reporting In response to internal and external comments, this section of the rule has been revised to require semiannual reporting for all recipients who currently report on a quarterly basis. All recipients who report annually will continue to do so. A section-by-section analysis of the rule, addressing public comments in detail, can be found on the public docket for this rule making under Docket ID No. EPA-HQ-OA-2002-0001, at www.regulations.gov. V. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), this action is a ``significant regulatory action.'' This rule reflects and raises legal or policy issues arising out of legal mandates. This rule has a direct impact on contracting funded by EPA financial assistance agreements. There is substantial public interest concerning programs to ensure nondiscrimination in federally assisted contracting, as well as policy concerns. This rule also affects a wide variety of parties, including all EPA financial assistance programs, and the DBE and non-DBE contractors that perform work under them. As a ``significant regulatory action,'' EPA submitted this action to the Office of Management and Budget (OMB) for review under EO 12866 and any changes made in response to OMB recommendations have been documented in the docket for this action. Based on currently available information about costs that may be associated with complying with this rule (e.g., costs to obtain MBE or WBE certification), EPA believes that this rule will not have an annual effect on the economy of $100 million or more. Therefore, EPA did not prepare a regulatory impact statement for this rule. B. Paperwork Reduction Act The Office of Management and Budget (OMB) has approved the information collection requirements contained in this rule under the provisions of the Paperwork Reduction Act, 44 U.S.C 3501 et seq. and has assigned OMB control number 2090-0030. This ICR is for the purpose of ensuring that EPA's statutory DBE procurement goal requirements are implemented in harmony with the United States Supreme Court's decision in Adarand Constructors, Inc. v. Pena, 115 S. Ct. 2097 (1995). The requirements to complete EPA Forms 6100-2-DBE Program Subcontractor Participation Form, 6100-3-DBE Program Subcontractor Performance Form, and 6100-4-DBE Program Subcontractor Utilization Form, are intended to prevent any ``bait and switch'' tactics at the subcontract level by prime contractors which may circumvent the spirit of the DBE Program. The requirements to complete the EPA DBE Certification Application (EPA Form 6100-1a) (Sole Proprietorship), the EPA DBE Certification Application (EPA Form 6100-1b) (Limited Liability Company), the EPA DBE Certification Application (EPA 6100-1c) (Partnerships), the EPA DBE Certification Application (EPA Form 6100-1d) (Corporations), the EPA DBE Certification Application (EPA Form 6100-1e) (Alaska Native Corporations), the EPA DBE Certification Application (EPA Form 6100-1f) (Tribally Owned Businesses), the EPA DBE Certification Application (EPA Form 6100-1g) (Private and Voluntary Organizations), the EPA DBE Certification Application (EPA Form 6100-1h) (Concerns owned by Native Hawaiian Organizations), and the EPA DBE Certification Application (EPA Form 6100-1i) (Concerns Owned by Community Development Corporations), as applicable, would be required to be completed by an entity seeking to be counted as a minority business enterprise (MBE) or women's business enterprise (WBE) under EPA's DBE Program, which cannot get certified as an MBE or WBE by the SBA or DOT under their respective programs or by an Indian Tribal Government or independent private organization consistent with EPA's 8% or 10% statute as applicable. Responses to the collection of information will be mandatory. EPA's legal authorities for the DBE Program are Public Law 102-389, a 1993 appropriations act (42 U.S.C. 4370d) (EPA's 8% statute), and Public Law 101-549, Title X of the Clean Air Act Amendments of 1990 (42 U.S.C. 7601 note) (EPA's 10% statute). Other legal authorities and Executive Orders include Public Law 99- 499, the Superfund Amendments and Reauthorization Act of 1986; Public Law 100-590, the Small Business Administration Reauthorization and Amendment Act of 1988; Executive Order 12138, ``Creating a National Women's Business Enterprise Policy and Prescribing Arrangements for Developing, Coordinating and Implementing a National Program for Women's Business Enterprise,'' issued May 18, 1979; Executive Order 11625, ``Prescribing Additional Arrangements for Developing and Coordinating a National Program for Minority Business Enterprise,'' issued October 13, 1971; and Executive Order 12432, ``Minority Business Enterprise Development,'' issued July 14, 1983. EPA may make available to the public any information concerning EPA's DBE Program where the release of which is not prohibited by Federal law or regulation, including EPA's Confidential Business Information regulations at 40 CFR part 2, subpart B. The total labor burden and costs to MBEs and WBEs for certification under State, Tribal and Insular Area funding programs is estimated to total $8,750,300, with 168,275 burden hours and 6,731 MBE and WBE entities affected for the three-year period of the ICR. The estimated annual burden per response is 25 hours; the number of respondents is estimated at 2,244 at an average annual labor burden and cost per MBE and WBE of $1300. The average annual burden and costs are estimated by spreading the first year cost over the three-year period of the [[Page 15909]] ICR, yielding a total annual average burden of 56,092 hours and $2,916,767 in costs. The total labor burden and costs to all EPA grant and loan recipients that would have to perform an availability analysis to meet the requirements of the proposed rule and other paperwork requirements are estimated to be $16,509,500 with 825,475 burden hours and 3,115 entities affected for the three-year period of the ICR. The estimated annual burden hours for all responses is 275,158, and the annual number of respondents is estimated at 1,038. The annual cost for all respondents would be $5,503,167. The cost per respondent is estimated at $5,250 (each respondent is estimated to perform an availability analysis once every three years) and is estimated to take 265 hours at $20/hour. EPA assumed there were no additional start-up costs or capital expenditures. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information. 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 EPA's regulations in 40 CFR are listed in 40 CFR part 9. In addition, EPA is amending the table in 40 CFR part 9 of currently approved OMB control numbers for various regulations to list the regulatory citations for the information requirements contained in this final rule. C. Regulatory Flexibility Act This rule is not subject to the Regulatory Flexibility Act (RFA), which generally requires an agency to prepare a regulatory flexibility analysis for any rule that will have a significant economic impact on a substantial number of small entities. The RFA applies only to rules subject to notice-and-comment rulemaking requirements under the Administrative Procedure Act (APA) or any other statute. As a grants- related rule, this rule is not subject to the notice and comment requirements of the APA, 5 U.S.C. 553(a)(1). Nor is there any other statute which requires EPA to undergo notice and comment for this rulemaking. It is important to note that EPA's DBE Program is aimed at improving contracting opportunities for small businesses owned and controlled by socially and economically disadvantaged individuals, among others (e.g., Historically Black Colleges and Universities, etc.). Accordingly, EPA believes that this rule will impact a substantial number of small entities. D. Unfunded Mandates Reform Act Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, EPA generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with ``Federal mandates'' that may result in expenditures by State, local, and tribal governments, in the aggregate, or to the private sector of $100 million or more in any one year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopts the least costly, most cost-effective or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost-effective or least burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted. Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating and advising small governments on compliance with the regulatory requirements. This rule contains no Federal Mandates (under the regulatory provisions of Title II of the UMRA) for State, local, or tribal governments or the private sector. The UMRA excluded from the definition of ``Federal intergovernmental mandate'' duties that arise from conditions of federal assistance. Thus, today's rule is not subject to the requirements of section 202 and 205 of the UMRA. Pursuant to section 203 of the UMRA, EPA has also determined that this rule contains no regulatory requirements that might significantly or uniquely affect small governments. With the exemptions at the $250,000 level or less from compliance with the fair share objective requirements, EPA believes that there would be minimal impacts on small entities, including small government jurisdictions. Additionally, under this rule, small entity recipients will be able to use appropriate State Agency-negotiated MBE/WBE objectives if such recipients solicit bids/offers from substantially the same relevant geographic market as that State Agency. Therefore, this rule does not meet the threshold test for application of section 203 of UMRA. E. Executive Order 13132: Federalism Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure ``meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.'' ``Policies that have federalism implications'' is defined in the Executive Order to include regulations that 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.'' This rule does not have ``federalism implications,'' as defined in the Executive Order. 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, as specified in Executive Order 13132. Because this rule conditions the use of federal assistance, it will not impose substantial direct compliance costs on State and local governments. Thus, the requirements of section 6 of the Executive Order do not apply to this rule. In the spirit of Executive Order 13132 and consistent with EPA policy to promote communications between EPA [[Page 15910]] and State and local governments, EPA specifically solicited comment on the proposed rule from State and local officials. Stakeholders, including representatives from State government agencies, State government organizations and local governments, were given an opportunity to comment on the proposed rule which was published in the Federal Register on July 24, 2003, during the 180-day comment period. Public hearings were also held in several states across the country to discuss the proposed rule and to encourage comment. F. Executive Order 13175 Consultation and Coordination With Indian Tribal Governments Executive Order 13175, entitled ``Consultation and Coordination with Indian Tribal Governments'' (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure ``meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.'' EPA has concluded that this final rule will have tribal implications. However, it will neither impose substantial direct compliance costs nor preempt tribal law. Those implications are as follows: Tribes receiving an EPA financial assistance agreement of more than $250,000 for any single assistance agreement, or of more than one financial assistance agreement with a combined total of more than $250,000 in any one fiscal year (excluding Performance Partnership Grant eligible grants to tribes and intertribal consortia under 40 CFR part 35, subpart B) will have to negotiate fair share objectives with EPA unless they choose to adopt MBE and WBE objectives of another EPA recipient consistent with the final rule. Those tribes required to negotiate fair share objectives with EPA will have a phase-in period of up to three years in which to do so; their fair share objectives will remain in effect for three fiscal years after they have been approved by EPA, unless there are significant changes to the data supporting the fair share objectives. Some tribally owned businesses (businesses that a Federally recognized tribal government owns or in which it has a majority share) will not be eligible to be counted towards meeting the MBE/WBE fair share objectives if they do not meet the applicable SBA 8(a) criteria, e.g., see 13 CFR 124.109(b). Of course, tribes may continue to do business with tribally owned or other companies which do not meet the applicable SBA 8(a) criteria, they simply would not count such procurements toward meeting MBE/WBE objectives. In addition, the rule will have the following impacts on tribes/tribally owned businesses: First, a business owned by a federally recognized tribal government would have to file an annual affidavit with EPA certifying no change in its MBE status, pursuant to Sec. 33.210 of this rule. Second, a business owned by a Federally recognized tribal government will have to be recertified every three years as meeting SBA's applicable 8(a) criteria to be eligible to be counted in the future towards meeting the MBE/WBE fair share objectives, pursuant to Sec. 33.208. Third, a business owned by a federally recognized tribal government, if it is not already certified in accordance with SBA's applicable 8(a) criteria, may have to incur costs to be certified if there is no tribal certifier available and the other certifying entity charges for its services. Fourth, a tribe as a recipient of EPA financial assistance will have to be notified in writing before any termination of a DBE subcontractor for convenience is made by its prime contractor, pursuant to Sec. 33.303(a). Fifth, consistent with other Federal and tribal laws, a tribe will have to require its prime contractor, after the tribe has unsuccessfully sought to apply Indian preference consistent with the Indian Self-Determination and Education Assistance Act, to employ the good faith efforts described in Sec. 33.301 if a DBE subcontractor fails to complete work under a subcontract for any reason and the prime contractor solicits a replacement subcontractor, pursuant to Sec. 33.303(b). Sixth, consistent with other Federal and tribal Laws, a tribe will have to require its prime contractor, after it has unsuccessfully sought to apply Indian preference consistent with the Indian Self- Determination and Education Assistance Act, to employ the good faith efforts described in Sec. 33.301 even if it has achieved its fair share objectives under subpart D of the rule, pursuant to Sec. 33.303(c). Seventh, a tribe will have to require its prime contractors to provide 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 Subcontractor Utilization Form to all of its DBE subcontractors, pursuant to sections 33.303(e), (f) and (g), respectively. Eighth, a tribal recipient that conducts procurements will have to create and maintain a bidders list in accordance with Sec. 33.501(b). The purpose of this list is to provide recipients as accurate a database as possible about the universe of MBE/WBE and non-MBE/WBE prime and subcontractors who seek to work on procurements under EPA financial assistance agreements. The following information must be obtained from all such prime and subcontractors: (1) Entity's name with point of contact; (2) entity's mailing address, telephone number, and e-mail address; (3) the procurement on which the entity bid or quoted, and when; and (4) entity's status as an MBE/WBE or non-MBE/WBE. EPA consulted with tribal officials and/or representatives of tribal governments early in the process of developing this regulation to permit them to have meaningful and timely input into its development. This rule has been under development for the past several years. The meaningful and timely input of Tribal officials and/or representatives into the development of this rule is as follows: On February 2-4, 1999, EPA invited tribal recipients of EPA grants and cooperative agreements to an EPA/State/Tribal Annual Conference in Albuquerque, New Mexico. During this conference, EPA representatives discussed a number of issues relating to the rule under development with the general audience. In addition, EPA representatives met separately with tribal officials and/or representatives to discuss issues of concern to tribes. EPA posted a staff draft of the proposed rule, dated June 19, 2000, on EPA's Internet Web site to solicit public comment. On June 27-30, 2000, the Agency held its EPA/State/Tribal Annual Conference in Albuquerque, New Mexico. Again, EPA invited tribal recipients of EPA financial assistance agreements to attend. During the June, 2000 conference, agency representatives discussed in detail the June 19, 2000 staff draft of the rule, which had been posted on EPA's Web site. EPA solicited comments on the staff draft of the rule from conference participants. Tribal officials and/or representatives attended that conference as well. As of June 30, 2001, EPA received a total of 17 written comments on the staff draft from Indian tribes. During the development of this rule EPA representatives made a number of oral presentations to the Tribal Operations Committee (TOC) on the rule's progress and solicited input. The TOC is comprised of 19 national tribal representatives from the nine EPA Regions that have federally recognized tribes and EPA Senior Management; its role is to provide input into EPA decision making affecting Indian Country. On November 29, 2000, EPA [[Page 15911]] representatives met with the TOC at the EPA Tribal Caucus Regional Joint meeting in Miami, Florida, to discuss the staff draft rule and to obtain further tribal input into the rulemaking process. Starting in November, 2000, EPA invited tribal recipients of EPA grants and cooperative agreements to participate in outreach sessions held in cities around the country in order to discuss the staff draft rule. EPA further solicited tribal input into the rulemaking at meetings with tribal officials/representatives at the Department of the Interior 2001 Conference on the Environment hosted by the Bureau of Indian Affairs on March 13-15, 2001, in Albuquerque, New Mexico and at the Reservation Economic Summit and American Indian Business Trade Fair (RES 2001) in Anaheim, California, on March 20, 2001. EPA further solicited tribal input in another meeting with the TOC on April 24, 2001, in Miami, Florida. As part of its ongoing tribal coordination on this rule, EPA held meetings with tribal officials to discuss the staff draft rule in Boston, Massachusetts on April 11, 2001 and in Seattle, Washington on May 23, 2001. EPA held further coordination meetings with tribal officials to discuss a draft of this Rule in Ocean Shores, Washington during the week of January 28, 2002. On July 24, 2003, the proposed rule was published in the Federal Register, with a 180-day comment period. After the rule was published in the Federal Register, EPA held 10 tribal meetings across the country to solicit comments and suggestions on the final rule. EPA has considered tribal concerns and written comments in the final rule. A summary of the nature of tribal concerns and EPA's response follows: 1. Applicability of the Rule to Tribes Awards of Grants and Cooperative Agreements to tribes are currently governed by 40 CFR part 31,``Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments.'' These are government wide requirements that have been in effect since 1988. Among other entities subject to the regulations are governments. The definition of ``Government'' in 40 CFR 31.3 includes * * * a federally recognized Indian tribal government.'' Many requirements contained in this rule are not new but rather are the same requirements contained in 40 CFR part 31, with which many tribes already have been complying. For example, the reporting and recordkeeping requirements are already applicable to Indian tribes. In addition, neither EPA's statutory 10% MBE/WBE procurement objective requirements for research relating to the requirements of the Clean Air Act, nor EPA's statutory 8% MBE/WBE procurement objective requirements for all other programs, exempt tribes. Therefore, tribes are not exempt from this rule, because it promotes the utilization of all disadvantaged entities in procurement under EPA financial assistance agreements, including tribally owned businesses and businesses owned by a member(s) of a tribe. 2. Trigger for Fair Share Negotiations The issue of increasing the dollar amount of the trigger requiring compliance with the fair share objective requirements and the corresponding availability analysis was of special concern to tribes awarded General Assistance Program grants. Comments also expressed the view that availability analysis preparation requirements should apply only to tribes spending 90% or more of their grants on outside procurement. Other tribes expressed the view that preparing availability analyses is too costly for them, especially for smaller tribes. In response to concerns raised by tribes, the trigger requiring compliance with the fair share objective requirements has been increased to $250,000 from the $100,000 threshold contained in an earlier draft of the rule. Also because of the nature of eligible program grants which can be included in Performance Partnership Grants (PPGs) to tribes under 40 CFR part 35, subpart B, and the unique nature of eligible recipients, the Agency is exempting PPG eligible program grants to tribes under 40 CFR part 35, subpart B from the fair share negotiation requirements. Accordingly, only tribes receiving an EPA financial assistance agreement of more than $250,000 for any single assistance agreement, or of more than one financial assistance agreement with a combined total of more than $250,000 in any one fiscal year (excluding PPG eligible program grants under 40 CFR part 35, subpart B), will have to comply with the fair share objective requirements. The Agency believes that this change effectively addresses the concerns by setting a uniform standard applicable to all recipients, including tribes, rather than, for example, setting a standard based on amounts spent by tribes on outside procurement, which could pose implementation difficulties. EPA believes that most tribes will not have to comply with the fair share objective requirements under the final rule because they will fall under the $250,000 exemption or the exemption for PPG eligible program grants under 40 CFR part 35, subpart B. Finally, EPA believes that a number of tribes which otherwise would have to negotiate fair share objectives may elect instead to apply the objectives of another recipient in accordance with the requirements of the rule. The rule will also provide tribes with a three-year phase-in period to comply with the fair share negotiation requirement. 3. Reporting and Recordkeeping Requirements Some tribes expressed concerns that keeping records of and reporting purchases for EPA funded grants would impose a heavy burden on tribal governments. Instead, they suggested basing reporting on the amount of money the tribe received rather than on the amount of money it spent on outside supplies and services. EPA considered these concerns and concluded that 40 CFR part 31 already requires tribes to comply with part 31's recordkeeping and reporting requirements, which included MBE/WBE recordkeeping and reporting. The Agency believes that basing requirements on amounts received rather than on amounts spent would be an inaccurate measurement of MBE/WBE procurement utilization. EPA currently requires financial assistance recipients to report MBE/WBE accomplishments based on dollars spent on MBE/WBE procurements. Therefore, EPA is not adopting the suggested change. However, because of comments received requesting a reduction in the burden created by quarterly reporting, EPA has reduced the reporting requirement to semi-annually for recipients who currently report on a quarterly basis. Recipients who currently report annually will continue to do so. 4. Compliance With the Good Faith Efforts Requirements One comment objected to having to advertise in newspapers; a comment was also made that EPA should investigate alternative mechanisms that encourage a tribe to seek out MBEs/WBEs during the procurement process without incurring an unreasonable financial burden. Section 7(b) of the Indian Self-Determination and Education Assistance Act requires tribal governments to solicit tribally-owned businesses and/or businesses owned by a member(s) of a tribe, before undertaking the six good faith efforts. Tribes are currently subject to 40 CFR part 31, which requires them to make [[Page 15912]] good faith efforts to ensure that DBEs are used whenever possible. EPA is changing this requirement. EPA does not believe that the good faith effort requirements are unduly burdensome. 5. Phase-In Period One comment expressed a concern about the timing of the phase-in period and the maximum amount of time needed for the requirement to be implemented. EPA believes that the three-year phase-in period, which begins after the final rule's effective date, allows tribes sufficient time to prepare for and comply with the requirements of the rule. As required by section 7(a), EPA's Tribal Consultation Official has certified that the requirements of the Executive Order have been met in a meaningful and timely manner. A copy of the certification is included in the docket for this rule. G. Executive Order 13045: (Protection of Children From Environmental Health Risks and Safety Risks) Executive Order 13045: ``Protection of Children from Environmental Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies to any rule that: (1) Is determined to be ``economically significant'' as defined under Executive Order 12866, and (2) concerns any environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, EPA must evaluate the environmental health or safety effects of the planned rule on children and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency. EPA interprets Executive Order 13045 as applying only to those regulatory actions that are based on health or safety risks, such that the analysis required under section 5-501 of the Order has the potential to influence the regulation. This rule is not subject to Executive Order 13045 because it does not establish an environmental standard intended to mitigate health or safety risks. H. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution, or Use This rule is not a ``significant energy action'' as defined in Executive Order 13211, ``Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 28355 (May 22, 2001)) because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. EPA has concluded that this rule is not likely to have any adverse energy effects. I. National Technology Transfer and Advancement Act As noted in the proposed rule, section 12(d) of the National Technology Transfer and Advancement Act of 1995 (``NTTAA''), Public Law 104-113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards. This rule does not involve technical standards. Therefore, EPA is not considering the use of any voluntary consensus standards. J. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal executive policy on environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States. EPA has determined that this final rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it does not affect the level of protection provided to human health or the environment. K. Congressional Review Act The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A Major rule cannot take effect until 60 days after it is published in the Federal Register. This action is not a ``major rule'' as defined by 5 U.S.C. 804(2). This rule will be effective May 27, 2008. List of Subjects 40 CFR Part 30 Environmental protection, Administrative practice and procedure, Grant programs--environmental protection, Reporting and recordkeeping requirements. 40 CFR Part 31 Accounting, Administrative practice and procedure, Grant programs, Indians, Intergovernmental relations, Reporting and recordkeeping requirements. 40 CFR Part 33 Grant programs--environmental protection. 40 CFR Part 35 Grant programs--environmental protection, Grant programs--Indians, Hazardous waste, Indians, Intergovernmental relations, Reporting and recordkeeping requirements. 40 CFR Part 40 Research and Demonstration Grants--Projects involving construction. Dated: March 18, 2008. Stephen L. Johnson, Administrator. 0 For the reasons set out in the preamble, title 40, chapter I of the Code of Federal Regulations is amended as follows: PART 30--[AMENDED] 0 1. The authority citation for part 30 continues to read as follows: Authority: 7 U.S.C. 135 et seq.; 15 U.S.C. 2601 et seq.; 33 U.S.C. 1251 et seq.; 42 U.S.C. 241, 242(b), 243, 246, 300f, 300j-1, 300j-2, 300j-3; 1857 et seq.; 6901 et seq., 7401 et seq.; OMB circular A-110 (64 FR 54926, October 8, 1999). Sec. 30.44 [Amended] 0 2. Section 30.44 is amended by removing and reserving paragraph (b). PART 31--[AMENDED] 0 3. The authority citation for part 31 continues to read as follows: Authority: 7 U.S.C. 136 et seq.; 15 U.S.C. 2601 et seq.; 20 U.S.C. 4011 et seq.; 33 U.S.C. [[Page 15913]] 1251 et seq. and 1401 et seq.; 42 U.S.C. 300f et seq., 6901 et seq., 7401 et seq., and 9601 et seq. Sec. 31.36 [Amended] 0 4. Section 31.36 is amended by removing and reserving paragraph (e). PART 33--[ADDED] 0 5. Part 33 is added as follows: PART 33--PARTICIPATION BY DISADVANTAGED BUSINESS ENTERPRISES IN UNITED STATES ENVIRONMENTAL PROTECTION AGENCY PROGRAMS Subpart A--General Provisions Sec. 33.101 What are the objectives of this part? 33.102 When do the requirements of this part apply? 33.103 What do the terms in this part mean? 33.104 May a recipient apply for a waiver from the requirements of this part? 33.105 What are the compliance and enforcement provisions of this part? 33.106 What assurances must EPA financial assistance recipients obtain from their contractors? 33.107 What are the rules governing availability of records, cooperation, and intimidation and retaliation? Subpart B--Certification 33.201 What does this subpart require? 33.202 How does an entity qualify as an MBE or WBE under EPA's 8% statute? 33.203 How does