Nonpoint Source Program and Grants Guidelines for States and Territories

[Federal Register: October 23, 2003 (Volume 68, Number 205)]
[Notices]
[Page 60653-60674]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23oc03-39]

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ENVIRONMENTAL PROTECTION AGENCY
[FRL-7577-6]

AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice of availability.

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SUMMARY: EPA has developed guidelines for States' implementation of
nonpoint source management programs under Section 319 of the Clean
Water Act and for the award of Section 319 grants to States to
implement those programs. These guidelines apply to grants appropriated
by Congress in Fiscal Year 2004 and in subsequent years. The guidelines
continue EPA's policy of focusing a significant portion of Section 319
funds ($100 million annually) to address watersheds where nonpoint
source pollution has resulted in impairment of water quality. The
remaining funds are to be used by States to assist in their
implementation of their broad array of programs and authorities to
address all of the water quality threats and impairments caused by
nonpoint source pollution.

DATES: The guidelines are effective October 23, 2003.

ADDRESSES: Persons requesting additional information should contact
Romell Nandi at (202) 566-1203; nandi.romell@epa.gov; or U.S.
Environmental Protection Agency (4503T), 1200 Pennsylvania Avenue, NW,
Washington, DC 20460. The complete text of today's guidelines is also
available at EPA's Nonpoint Source Web site:
http://www.epa.gov/owow/nps/cwact.html.

Dated: October 7, 2003.
Diane Regas,
Director, Office of Wetlands, Oceans, and Watersheds.

Preface

These guidelines are built upon and replace the Nonpoint Source
Program and Grants Guidance for Fiscal Year 1997 and Future Years (May
1996), as well as all of the supplemental annual nonpoint source
guidances and guidelines that have been published subsequently. The May
1996 guidance was developed collaboratively in a series of highly
productive meetings between key representatives of the U.S.
Environmental Protection Agency (EPA) and senior representatives of
State nonpoint source agencies from each of the ten EPA Regions. The
guidance was endorsed by the President of the Association of State and
Interstate Water Pollution Control Administrators (ASIWPCA) as well as
by the State Co-Chair of the State/EPA Nonpoint Source Program
Workgroup in a Forward which stated, ``This guidance represents a sound
framework for setting the future course of the nonpoint source
program.''
Nonpoint source pollution continues to be, and is increasingly
recognized by the public as, the largest remaining source of water
quality impairments in the nation. State and Territory (hereinafter
collectively referred to as ``State'') nonpoint source programs,
originally developed and approved under Section 319 of the Clean Water

[[Page 60654]]

Act in 1989-90, have developed and matured to meet this challenge.
During the past five years, each State has upgraded its nonpoint source
management program to address nine key elements that had been agreed to
by the States and EPA in the May 1996 guidance.
In the intervening years since 1996, States have enhanced their
technical tools and capabilities, strengthened and increased their
partnerships, nurtured a vast network of community-based action on a
watershed basis, and, in many cases, developed stronger financial bases
and legal support for their upgraded programs. As a result, the nation
is experiencing increasingly positive results in terms of both on-the-
ground action and actual water quality improvements. Examples of these
improvements are summarized in Section 319 Success Stories, Volume III:
The Successful Implementation of the Clean Water Act's Section 319
Nonpoint Source Pollution Program (EPA 841-S-01-001, February 2002),
available on the Internet at http://www.epa.gov/owow/nps/Section319III.
Most of these successes are the direct result of State nonpoint source
agencies' cooperation with other governmental agencies, private sector
interests, and citizen groups at the State and watershed level.
Congress has also recognized the need for greater and more
effective action to expedite our national efforts to control nonpoint
source pollution and to focus our attention on sources of nonpoint
pollution that contribute to impairment of waters. During the past four
years of Congressional appropriations, Congress has increased its
appropriations from $105 million in FY 1998 to $238.4 million in FY
2003 to help States focus more resources upon the restoration of
impaired waters as well as to generally implement more robust programs.
Despite all of these program improvements, EPA, States, and all of
our partners have continued to face daunting challenges in our efforts
to implement nonpoint source programs that will protect both our good-
quality and threatened waters and restore those that are impaired. To
improve States' and EPA's ability to meet these remaining challenges,
as well as to implement new directives or recommendations from
Congress, EPA has in the past few years issued supplements to the May
1996 guidance. These have been particularly designed to focus increased
attention on waters that are most in need of attention, especially
those waters that remain impaired even after all required technology-
based controls for point sources have been implemented (i.e., those
waters that have been listed by States under Section 303(d) of the
Clean Water Act as needing total maximum daily loads (TMDLs)). They
have also addressed the recognized need to improve EPA's and States'
ability to account for our accomplishments as well as shortcomings in
implementing the national nonpoint source program.
EPA recognizes that these periodic issuances of supplemental
guidance have made it more difficult to follow and comprehend the
current national nonpoint source program, its central themes, and its
priorities. For this reason, EPA is today publishing new guidelines
that build upon and replace the Nonpoint Source Program and Grants
Guidance for Fiscal Year 1997 and Future Years (May 1996) as well as
all of the supplemental annual guidance and grants guidelines that have
been published subsequently.
These new guidelines do not significantly modify the previous set
of guidance documents. For the most part, they consolidate the
pertinent portions of earlier guidance documents in a cohesive manner;
eliminate or shorten discussion of program aspects that have reduced
relevance to future activities (such as the upgrading of States'
nonpoint source management programs, which all of the States have
successfully completed), and clarify certain issues that States and
Regions have raised from time to time with regard to the program's
implementation during the past several years.
The concepts presented in these guidelines, such as the emphases on
watershed-based planning and on restoring impaired waters through
developing and implementing TMDLs, represent the current state of the
art in fashioning watershed-based solutions to prevent and remedy water
quality problems. These guidelines have benefitted significantly from a
multi-year, evolving process working with States (e.g., through the
``State/EPA Nonpoint Source Partnership'' initiated in 2000). EPA looks
forward to continuing to work with the States and our other partners to
implement an effective and successful nonpoint source program that
makes rapid progress towards our goals of eliminating our remaining
water quality problems and preventing new threats from creating future
impairments.

Table of Contents

Preface
Table of Contents
I. Our Vision
II. Introduction
A. Statutory Background
B. Scope of These Guidelines
C. Watershed Protection and Total Maximum Daily Loads
III. Nonpoint Source Management Programs
A. Progress to Date
B. Continued Focus on Restoring Waters Impaired by Nonpoint
Source Pollution
C. Integrating Other Environmental Protection Programs
D. Watershed-Based Plans
E. Scale and Scope of Watershed-Based Plans
F. Monitoring our Progress
1. Environmental Indicators
2. Monitoring in Watershed Projects
3. National Monitoring Program
IV. Grants
A. Relationship to Performance Partnership Grants
B. Funding Process
1. Allocation of Funds
2. Schedule for Awarding Section 319 Grants
a. Background
b. Six-Step Process to Awarding Section 319 Grants
C. Grant Eligibility
1. Ground-Water Activities and Source Water Protection Programs
2. Urban Storm Water Runoff
3. Abandoned Mine Lands
4. Animal Feeding Operations
5. Lake Protection and Restoration Activities
D. Criteria That Apply to the Award of Section 319 Grants
1. The Work Plan Must Demonstrate That Each Funded Element Will
Implement Specific Activities Identified in the Approved Management
Program
2. Section 319 Grants Must be Awarded as Continuing
Environmental Program Grants
3. The Non-Federal Share Must Be At Least 40 Percent
4. Section 319 May Provide Cost Sharing to Individuals Only in
the Case of Demonstration Projects
5. The State Must Demonstrate Satisfactory Progress
6. States Must Maintain their Level of Effort
7. Administrative Costs Funded by Section 319 Funds May Not
Exceed 10% of the Grant Award
8. Section 319 Grants Must Contain a Condition Requiring
Operation and Maintenance
E. Reporting Requirements to be Included in all Grants
1. Basic Reporting Requirements
a. Grantee Performance Reports
b. Annual Reports
c. Financial Status Reports
2. Reporting Procedures and the Grants Reporting and Tracking
System
3. STORET
4. Reporting and Record-Keeping for Sub-State Organizations
V. Management and Oversight of Section 319(h) Grants
VI. Grants to Indian Tribes
VII. Waiver Process
VIII. Appendices
A. Measures and Indicators of Progress and Success
B. Generic Grant Condition Establishing State Reporting
Requirements

[[Page 60655]]

C. Nationally Mandated Data Elements Under Grants Reporting and
Tracking System
D. Factors in Planning Target Formula
E. State-By-State Section 319 Allocation
F. Generic Grant Condition Regarding Watershed-Based Plans

I. Our Vision

Our long-term vision, established by EPA and the States in 1996,
remains: All States and territories implement dynamic and effective
nonpoint source programs designed to achieve and maintain beneficial
uses of water.

II. Introduction

A. Statutory Background

Congress enacted Section 319 of the Clean Water Act in 1987,
establishing a national program to control nonpoint sources of water
pollution. Nonpoint source pollution is caused by rainfall or snowmelt
moving over and through the ground and carrying natural and human-made
pollutants into lakes, rivers, streams, wetlands, estuaries, other
coastal waters, and ground water. Atmospheric deposition and hydrologic
modification are also sources of nonpoint pollution.
Under Section 319(a), all States and Territories (hereinafter
collectively referred to as ``States'') have addressed nonpoint source
pollution by developing nonpoint source assessment reports that
identify nonpoint source pollution problems and the nonpoint sources
responsible for the water quality problems. Under Section 319(b), all
States have also adopted management programs to control nonpoint source
pollution. Since 1990, Congress has annually appropriated grant funds
to States under Section 319(h) to help them to implement those
management programs.

B. Scope of These Guidelines

These guidelines are primarily directed towards nonpoint source
management programs and grants administered by State lead nonpoint
source agencies designated under Section 319 of the Clean Water Act.
Indian Tribes that have approved nonpoint source assessments and
management programs and also have ``treatment-as-a-State'' status may
also administer nonpoint source management programs and grants under
Section 319 of the Clean Water Act. Apart from providing a brief
overview in Section VI below, these guidelines are not specifically
directed to Tribal nonpoint source management. Because of differing
statutory provisions that apply to Tribes, EPA publishes separate
guidance for Tribal nonpoint source programs and grants.
For grants awarded in FY 2004 and subsequent years, these
guidelines supersede and replace all of the following guidance
documents: Nonpoint Source Program and Grants Guidance for Fiscal Year
1997 and Future Years (May 1996); Process and Criteria for Funding
State and Territorial Nonpoint Source Management Programs in FY 1999
(August 18, 1998); Funding the Development and Implementation of
Watershed Restoration Action Strategies under Section 319 of the Clean
Water Act (December 4, 1998); Supplemental Guidance for the Award of
Section 319 Nonpoint Source Grants in FY 2000 (December 21, 1999);
Supplemental Guidelines for the Award of Section 319 Nonpoint Source
Grants in FY 2001 (November 28, 2000; 65 FR 70899); Supplemental
Guidelines for the Award of Section 319 Nonpoint Source Grants to
States and Territories in FY 2002 and Subsequent Years (September 13,
2001; 66 FR 47653); and Supplemental Guidelines for the Award of
Section 319 Nonpoint Source Grants to States and Territories in FY 2003
(August 26, 2002; 67 FR 54806). (While these superceded guidance
documents will no longer directly apply to State programs, they contain
useful background information and will remain available for reference
at EPA's nonpoint source Web site at http://www.epa.gov/owow/nps/
cwact.html.)
These guidelines are intended to serve as the basis for a
nationally consistent approach for State nonpoint source management
programs and grants. Therefore, EPA Regions will not issue separate,
supplemental guidelines specifically for State nonpoint source programs
or grants. If particular Regional circumstances require additional
clarifications on a particular issue, the Region will consult with the
affected States and with EPA Headquarters on the appropriate next
steps.

C. Watershed Protection and Total Maximum Daily Loads (TMDLs)

EPA has been working with the States to realign our programs to
strengthen our support for watershed-based environmental protection,
whereby local stakeholders join forces to develop and implement
watershed-based plans that make good sense for the particular
conditions found within their communities. The watershed approach is a
coordinating framework for management that focuses public and private
sector efforts to address the highest priority water-related problems
within geographic areas, considering both surface and ground water
flow. The watershed approach is commonly characterized by four
principles: (a) Diverse, well integrated partnerships; (b) a specific
geographic focus; (c) action driven by environmental objectives and by
strong science and data; and (d) coordinated priority setting and
integrated solutions.
These guidelines are intended to help advance the watershed
approach as a means for resolving and preventing nonpoint source
pollution problems and threats. In the initial stages of the national
nonpoint source program, some States and EPA Regions focused their
nonpoint source programs narrowly on demonstrations of particular
technologies, supported by Federal Section 319 grants. In upgrading
their nonpoint source programs during the last few years, many States
have incorporated watershed-based approaches as a significant and
sometimes central organizing theme of their programs. As a result,
State nonpoint source programs have improved their capacity to solve
nonpoint source pollution problems at the watershed scale. At the same
time, EPA and the States have sharpened our focus upon waterbodies
listed by States as impaired under Section 303(d) of the Clean Water
Act. This is particularly critical, as nonpoint source pollution is
reported by States and others to be responsible for the majority of
remaining water pollution in the United States. The two key steps
needed to solve nonpoint source problems within a watershed context are
the development of a watershed-based plan that addresses a waterbody's
water quality needs (including the incorporation of any TMDLs that have
been developed) and the actual implementation of the plan.
These guidelines discuss the use of detailed watershed-based plans
to help solve water quality problems at the watershed level. As
discussed in more detail in Section III.D below, careful analysis of
the sources of water quality problems, their relative contributions to
the problems, and alternatives to solve those problems, provide the
best basis for sound decision-making and implementation that will
actually solve those water quality problems. For this reason, these
guidelines emphasize using watershed-based planning and implementation
processes to solve water quality problems using Section 319 funds.

[[Page 60656]]

III. Nonpoint Source Management Programs

A. Progress to Date

Nonpoint source pollution continues to be, and is increasingly
recognized as, the largest remaining threat to water quality and source
of water quality impairments in the nation. State nonpoint source
programs, originally developed and approved under Section 319 of the
Clean Water Act in 1989-90, have developed and matured to meet this
challenge. Pursuant to the May 1996 guidance, each State and Territory
has upgraded its nonpoint source management program to address nine key
elements that had been agreed to by the States and EPA in the May 1996
guidance. These nine elements include explicit short- and long-term
goals, objectives, and strategies to protect and restore water quality;
strengthened working partnerships with appropriate State, interstate,
Tribal, regional and local entities, private sector groups, citizens
groups, and Federal agencies; balanced approaches that emphasize both
State-wide programs and on-the-ground management of individual
watersheds where waters are impaired or threatened; focus on both
abating existing problems and preventing new ones; and using a periodic
feedback loop to evaluate progress and make appropriate program
revisions.
Since 1996, States have enhanced their technical tools and
capabilities, strengthened and expanded their partnerships, nurtured a
vast network of community-based action on a watershed basis, and, in
many cases, developed stronger financial bases and legal support for
their programs. As a result, the nation is experiencing increasingly
positive results in terms of both on-the-ground action and actual water
quality improvements. Examples of these improvements are summarized in
Section 319 Success Stories, Volume III: The Successful Implementation
of the Clean Water Act's Section 319 Nonpoint Source Pollution Program
(EPA 841-S-01-001, February 2002). Most of these successes are the
direct result of State nonpoint source agencies' cooperation with other
governmental agencies, private sector interests, and citizen groups at
the State and watershed level.
In addition, to further strengthen our collective efforts to
implement successful nonpoint source control programs, the States and
EPA have been implementing since FY 2000 a new State/EPA Nonpoint
Source Partnership. The purpose of this new cooperative process has
been to identify, prioritize, and address the States' needs for
technical, programmatic, and financial assistance to overcome any
remaining obstacles to successfully implementing States' nonpoint
source programs. The partnership consists of a State/EPA Steering
Committee and workgroups to help identify and solve States' highest-
priority nonpoint source needs, including: watershed planning and
implementation; nonpoint source capacity building and funding; grants
management; information transfer and outreach; monitoring; documenting
nonpoint source results; rural nonpoint sources; and urban nonpoint
sources.

B. Continued Focus on Restoring Waters Impaired by Nonpoint Source
Pollution

While we and our partners are achieving considerable success
nationwide, significant challenges remain. Since publication of the May
1996 guidance, EPA's and States' nonpoint source programs have
continued to evolve to meet these challenges. Beginning in FY 1999, EPA
and the States have increased our focus on solving water quality
problems in those waterbodies that are most in need of attention,
including those waters that remain impaired even after all point source
technological controls have been implemented (i.e., those that have
been listed by States under Section 303(d) of the Clean Water Act as
needing TMDLs).
In FY 1999 and again in FY 2000, EPA asked Congress to double
Section 319 funding from $100 million to $200 million. The purpose of
the incremental $100 million was to develop and implement watershed
restoration action strategies (WRASs) in high-priority ``Category I''
watersheds (sized at the 8-digit ``hydrologic unit code'' level). In FY
2001, EPA recognized the need to increasingly focus Section 319 grant
dollars on implementing nonpoint source TMDLs or the nonpoint source
components of mixed-source TMDLs (hereafter, both of these types of
TMDLs will be referred to as ``NPS TMDLs''). Based on this need, EPA
directed that incremental funds be used to develop and implement
approved NPS TMDLs for any 303(d)-listed waterbodies (whether or not
these were located within a Category I watershed), as well as to
develop and implement WRASs. In FY 2002 and 2003, EPA shifted the focus
of the incremental funds entirely to developing NPS TMDLs, developing
watershed-based plans to implement the TMDLs, and implementing the
plans. The FY 2003 guidelines provided that where a NPS TMDL for the
affected waters has already been developed and approved or is being
developed, the watershed-based plan must be designed to achieve the
load reductions called for in the NPS TMDL. The FY 2003 guidelines
further recognized that where a NPS TMDL has not yet been developed and
approved or is not yet being developed for the waters, the State may
use these funds to develop a watershed-based plan in the absence of the
TMDL. In such cases, the FY 2003 guidelines required that the plan be
designed to reduce nonpoint source pollutant loadings that are
contributing to non-attainment of water quality standards. Once the
TMDL is completed and approved, the plan was required to be modified as
appropriate to be consistent with the TMDL.
The guidelines published today for FY 2004 and future years
maintain the approach of focusing $100 million of annual Section 319
funds on the development and implementation of watershed-based plans to
achieve NPS TMDLs. NPS TMDLs, together with watershed-based plans
designed to implement the NPS TMDLs, provide the necessary analytic
link between actions on the ground and the water quality results to be
achieved. In the absence of such an analytic framework, it is difficult
to develop and implement a watershed project that will achieve water
quality standards, or to determine causes of failure when that occurs.
Therefore, EPA believes that continuing to focus on an analytic and
implementation framework that integrates NPS TMDLs, watershed-based
plans to implement these NPS TMDLs, and actual implementation of those
plans, will provide the most effective means to accelerate achievement
of water quality standards.
For these reasons, EPA will continue to implement the general
approach that we have developed during the past few years and finalized
in FY 2003, using the steps outlined below. These steps are designed to
promote the development and implementation of NPS TMDLs based upon the
TMDL regulations that have been published at 40 CFR 130.7 in 1985 and
1992, as well as guidance published by EPA to assist in the
implementation of those regulations. (Currently applicable guidance as
well as other technical and other resources concerning the TMDL program
is available at http://www.epa.gov/owow/tmdl.)
General Principles for Awarding Section 319 Grants
Each year, EPA will award Section 319 grants in accordance with the
following four principles:
1. States may use the ``base funds'' (i.e., all Section 319 funds
other than the ``incremental funds'' described below) for the full
range of activities addressed in their approved nonpoint source

[[Page 60657]]

management programs. Thus these funds may be used both for protection
of unimpaired waters and for restoration of impaired waters. For
example, States may use these funds to protect sources of drinking
water, critical high-quality waters, and threatened waters from current
and future threats.
In general, States have great flexibility as to how to use these
base funds. They may use the watershed-based approaches discussed in
greater detail in Section III.D below (``Watershed-Based Plans'').
States may also choose to use these funds to implement technology-based
approaches. In particular, EPA recommends that coastal States use these
funds to assist in the implementation of both the technology-based and
water-quality-based management measures contained in their coastal
nonpoint pollution control programs under Section 6217 of the Coastal
Zone Act Reauthorization Amendments of 1990 (``CZARA'').
2. States may use up to 20% of the base funds to develop NPS TMDLs
(consistent with their TMDL development schedule) and watershed-based
plans to implement NPS TMDLs; develop watershed-based plans in the
absence of or prior to completion of TMDLs (incorporating the TMDL's
load allocations once it has been completed and approved); develop
watershed-based plans that focus on the protection of threatened
waters, source water, or other high-priority unimpaired waters; and
conduct other NPS monitoring and program assessment/development
activities. (Monitoring the results of implementing a watershed project
is not subject to this 20% limitation.)
3. Except as noted in the next paragraph, States must use $100
million of Section 319 funds (referred to as ``incremental funds'') to
develop and implement watershed-based plans that address nonpoint
source impairments in watersheds that contain Section 303(d)-listed
waters. (However, these plans may also include activities that address
waterbodies within the watershed that are not currently impaired where
appropriate to prevent future impairments within the watershed.)
Regions will include in each grant a condition that provides that the
State will use these funds to implement a watershed-based plan only
after the State completes the development of a watershed-based plan
that addresses each of the watershed planning elements (a) through (i)
that are listed later in this section. (See Appendix F to these
guidelines.)
Regions may authorize States to use a portion of incremental funds
to address watersheds that do not include impaired waters in special
circumstances where it is necessary to address a uniquely high-priority
State need to protect waters that currently are not impaired by
nonpoint source pollution to assure that they remain unimpaired. This
particularly includes waters in which good water quality is threatened
by such factors as changing land uses and the presence of unique
aquatic resources that are especially valuable and at serious risk of
irreparable harm and that therefore require a special focus on
protection activities (e.g., aquatic habitat for salmon migration,
spawning, and rearing). These resources and threats to them should be
documented in the State's 305(b) report. Prior to authorizing use of
incremental funds to address a uniquely high-priority State need, the
Region must find the State has established a schedule for TMDL
development for its NPS-impaired waters consistent with an even pace
and completion of needed TMDLs within 8 to 13 years of listing; the
State is completing TMDLs in reasonable accord with the established
development schedules; and the State is making reasonable progress
developing and implementing watershed-based plans to implement NPS
TMDL's, balancing the State's protection and restoration needs.
4. States may use up to 20% of the $100 million incremental funds
to develop: NPS TMDLs; watershed-based plans to implement NPS TMDLs;
and watershed-based plans in the absence of or prior to completion of
TMDLs in Section 303(d)-listed waters (incorporating the TMDL's load
allocations once it has been completed and approved). The Region may
authorize the State to use over 20% of the incremental funding to
develop watershed-based plans in Section 303(d)-listed waters, but the
Region should assure that a proper balance exists between funding the
development of watershed-based plans and the implementation of
watershed-based plans. On one hand, funding should support the
development of watershed plans at a sufficient pace to support
implementation efforts that may be implemented through 319 funding;
funding from a separate State or Federally-supported program (e.g., via
the U.S. Department of Agriculture); or other programs or mechanisms.
See further discussion in the next section below on integrating other
environmental protection programs. On the other hand, watershed-based
plan development should not be funded at a pace that significantly
exceeds the pace of implementation. This is necessary to maximize
implementation of watershed-based plans that have been completed and
minimize the development of numerous plans that ``sit on the shelf.''

C. Integrating Other Environmental Protection Programs

As discussed in the preceding paragraph, these guidelines authorize
Regions to increase the level of incremental funding that is available
to develop watershed-based plans (previously limited to 20%) so long as
a proper balance exists between funding the development of watershed-
based plans and the implementation of watershed-based plans. Such an
increase may well be warranted where non-319 resources may be available
to help implement the plans. EPA encourages States to leverage funding
from other environmental protection programs to support the
implementation of these plans, as discussed below.
USDA-Supported Programs
EPA wishes to particularly emphasize the significant benefits of
working closely with the United States Department of Agriculture (USDA)
to achieve our common goals of improving restoration and protection of
water quality. This is especially important in light of the new Farm
Security and Rural Investment Act of 2002 (Farm Bill), which presents
tremendous opportunities for integrating funding and other resources
and for creating partnerships to help achieve our common goals,
including meeting water quality standards. Information about
partnership opportunities through programs such as the Environmental
Quality Incentives Program (EQIP) can be found on the internet at
http://www.usda.gov/farmbill and http://www.nrcs.usda.gov/
programs/farmbill/2002. Most notably, USDA's EQIP regulations
have assigned a watersheds consistent with TMDLs, where available, and
this priority will be used as a guide in the allocation of EQIP funds.
It is important to consider how Section 319 funding can be used in
a way that does not duplicate, but rather complements, these other
programs. Section 319 funding is especially suitable to support
activities that are either not eligible for or typically do not receive
significant USDA funding, including: (1) Developing watershed-based
plans in Section 303(d)-listed and other high priority watersheds; (2)
monitoring water quality in high priority watersheds to design and
assess the effectiveness of watershed-based plans; and (3) funding
watershed coordinators to work with local

[[Page 60658]]

communities to help assist and promote the development and
implementation of watershed-based plans. The planning and development
of such watershed-based plans should be done in coordination with local
communities, Conservation Districts, agricultural producers, and other
watershed stakeholders in a cooperative way that will result in locally
led partnerships, with USDA support, choosing to implement the plan.
Achieving local buy-in and commitment to implement watershed-based
plans once they are complete is key to successful watershed planning
and implementation.
USDA's primary conservation funding programs (Environmental Quality
Incentives Program, Conservation Reserve Program, and Wetlands Reserve
Program) are particularly well-designed to support the implementation
of both agricultural best management practices (BMPs) and a suite of
conservation, restoration, and land retirement measures for wetlands,
riparian areas, and other areas of critical importance to the success
of watershed-based plans. States should strive to work with the
agricultural community to accomplish win-win situations whereby Farm
Bill funds are actively used to support the implementation of
watershed-based plans developed under Section 319. Where this approach
is successful, Section 319 funds could be focused (in addition to
monitoring, planning, and providing coordination support for projects)
on the implementation of agricultural BMPs that are not eligible for
Farm Bill funding (e.g., BMPs that are not in the Natural Resources
Conservation Service's Field Office Technical Guide of conservation
standards); implementation of agricultural projects in concert with
other agencies and groups to help solve watershed problems; and
promoting and testing emerging technologies.
EPA recognizes that situations will arise where a State
appropriately places a high priority on implementing agricultural
components of a watershed-based plan for which Farm Bill funding is not
being provided, or is available at only modest levels that require
supplementation with Section 319 funds. State and watershed managers
should certainly take advantage of whatever funding sources and
mechanisms are the best available and most appropriate to accomplish
their watershed goals. In most cases, the resources needed to implement
an entire watershed-based plan will be significant, and success will
depend greatly on enlisting and obtaining the support of all important
stakeholders and the resources that they can provide, including
especially the resources made available by Congress through the Farm
Bill.
Other Environmental Programs
In addition to USDA-supported programs, many other programs that
are implemented at the Federal and State level have common and
overlapping areas with the Section 319 program. States' activities to
upgrade their nonpoint source programs in recent years have
strengthened their links with these various State and Federal programs.
Today's guidelines particularly encourage the integration of State
nonpoint source management programs with other environmental programs
by providing for increased Section 319 funding support for the
development and implementation of watershed-based plans. Such
integration provides a vehicle for cooperative design and
implementation of watershed-based plans in a coordinated manner that
employ the resources, authorities, and expertise of all relevant
programs.
A number of EPA/State programs are closely related to nonpoint
source pollution control and to watershed protection. To maximize
effectiveness, State nonpoint source programs need to continue to be
well integrated with these other State programs to best meet States'
water quality needs. These include:
? The National Pollutant Discharge Elimination System (NPDES)
point source program, particularly with respect to urban runoff,
construction, inactive and abandoned mines, concentrated animal feeding
operations, and marinas;
? Coastal protection programs, including especially coastal
nonpoint pollution control programs under Section 6217 of the Coastal
Zone Act Reauthorization Amendments of 1990 (CZARA, co-administered by
EPA and the National Oceanic and Atmospheric Administration and co-
implemented by our State counterparts), as well as the National Estuary
Program;
? Wetlands protection programs implemented under Section 404
of the Clean Water Act as well as pursuant to a variety of other
Federal and State authorities and programs;
? Source water protection programs under the Safe Drinking
Water Act;
? Clean Lakes programs and wetlands protection and
restoration programs under the Clean Water Act;
? Watershed planning programs; and
? Ambient monitoring programs.
In addition to coordinating program implementation with these
various programs, State NPS program mangers should coordinate their
funding needs with other CWA sources of funding. Most significant is
the Clean Water State Revolving Fund (SRF) under Title VI of the Clean
Water Act. The SRF is currently providing over $200 million annually to
control pollution from nonpoint sources and for estuary protection.
However, most States have under-utilized this resource to date. EPA
believes that the SRF is particularly well suited to assisting in the
implementation of nonpoint source projects requiring capital
investment. States are encouraged to increase their use of this copious
financial resource to help implement their nonpoint source watershed-
based plans and other nonpoint source projects. For more information on
the SRF program, see http://www.epa.gov/owm/cwfinance/cwsrf/index.htm.
In addition to coordinating with these water quality programs,
States should coordinate with programs administered by the Federal land
management agencies (e.g., Bureau of Land Management, Forest Service,
and National Park Service), water management agencies (e.g., Bureau of
Reclamation, Corps of Engineers, Federal Energy Regulatory Commission,
and Tennessee Valley Authority), and resource management agencies. For
example, Section 319 funds may be used to benefit Federal lands, which
strengthens the ability of States to coordinate nonpoint source and
TMDL implementation with Federal land management programs and policies.
Finally, two other Federal agencies whose policies and practices
can greatly influence and/or protect riparian areas, wetlands, and
other sensitive areas and corridors are the Department of
Transportation and the Federal Emergency Management Agency. Both of
these agencies have programs that can help protect these areas or
mitigate potential impairment to these areas, and both have funding
programs that can be used to benefit water quality. EPA strongly
encourages States to work with these partner agencies to achieve common
goals.

D. Watershed-Based Plans

These guidelines promote the use of Section 319 funding for
developing and implementing watershed-based plans to protect unimpaired
waters and restore impaired waters. Watershed-based plans to restore
impaired waters are required, as described above, for all projects
implemented with incremental dollars. However, even for watershed
projects implemented with base funds, EPA recommends that whenever
feasible, watershed-based plans be developed

[[Page 60659]]

and implemented for all watershed projects, whether they are designed
to protect unimpaired waters, restore impaired waters, or both.
For projects funded with incremental dollars, where a NPS TMDL for
the affected waters has already been developed and approved or is being
developed, the watershed-based plan must be designed to achieve the
load reductions called for in the NPS TMDL. However, where a NPS TMDL
has not yet been developed and approved or is not yet being developed
for the waters, the State may use Section 319 funds to develop a
watershed-based plan in the absence of the TMDL. In such cases, the
plan must be designed to reduce nonpoint source pollutant loadings that
are contributing to water quality threats and impairments. Where
feasible, the plan should be designed to meet water quality standards.
In this way, progress towards achieving water quality standards
continues even before a TMDL is established. Once the TMDL is completed
and approved, the plan must be modified as appropriate to be consistent
with the load allocation portion contained within the TMDL.
Alternatively, through the course of implementing the plan, the State
may find that water quality standards are met, obviating the need to
establish the TMDL. EPA believes that improving the integration of
TMDLs and watershed plans to implement nonpoint source management
measures will provide the most effective means for accelerating
achievement of water quality standards.
To ensure that Section 319 projects make good progress towards
remediating waters impaired by nonpoint source pollution, a watershed-
based plan must have been completed before a State implements a
watershed-based plan funded with incremental Section 319 dollars. These
watershed-based plans must include the information set forth in items
(a)-(i) below. This information will help provide assurance that the
nonpoint source load allocations identified in the NPS TMDL (and/or
anticipated in NPDES permits for the watershed) will be achieved.
Furthermore, this information is critical in any case for ensuring the
development of realistic plans to achieve protection goals or water
quality standards, while at the same time providing a significant
degree of flexibility to work with stakeholders in the watershed to use
a range of innovative approaches to implement the plan.
To the extent that necessary information already exists in other
documents (e.g., various State and local watershed planning documents,
or watershed plans developed to help implement conservation programs
administered by USDA), the information may be incorporated by
reference. In addition, we encourage States to incorporate by reference
any voluminous material that already exists in other documents. Thus,
the State need not duplicate any existing process or document that
already provides needed information.
Components of a Watershed-Based Plan
Beginning in FY 2004, the following information must be included in
watershed-based plans to restore waters impaired by nonpoint source
pollution using incremental Section 319 funds. These requirements are
not retroactive to watershed plans developed in accordance with the FY
2002 or FY 2003 Section 319 guidelines; those plans may continue to be
developed and implemented with funds available in FY 2004 and future
years in accordance with the previously applicable requirements of the
Section 319 guidelines.
a. An identification of the causes and sources or groups of similar
sources that will need to be controlled to achieve the load reductions
estimated in this watershed-based plan (and to achieve any other
watershed goals identified in the watershed-based plan), as discussed
in item (b) immediately below. Sources that need to be controlled
should be identified at the significant subcategory level with
estimates of the extent to which they are present in the watershed
(e.g., X number of dairy cattle feedlots needing upgrading, including a
rough estimate of the number of cattle per facility; Y acres of row
crops needing improved nutrient management or sediment control; or Z
linear miles of eroded streambank needing remediation).
b. An estimate of the load reductions expected for the management
measures described under paragraph (c) below (recognizing the natural
variability and the difficulty in precisely predicting the performance
of management measures over time). Estimates should be provided at the
same level as in item (a) above (e.g., the total load reduction
expected for dairy cattle feedlots; row crops; or eroded streambanks).
c. A description of the NPS management measures that will need to
be implemented to achieve the load reductions estimated under paragraph
(b) above (as well as to achieve other watershed goals identified in
this watershed-based plan), and an identification (using a map or a
description) of the critical areas in which those measures will be
needed to implement this plan.
d. An estimate of the amounts of technical and financial assistance
needed, associated costs, and/or the sources and authorities that will
be relied upon, to implement this plan. As sources of funding, States
should consider the use of their Section 319 programs, State Revolving
Funds, USDA's Environmental Quality Incentives Program and Conservation
Reserve Program, and other relevant Federal, State, local and private
funds that may be available to assist in implementing this plan.
e. An information/education component that will be used to enhance
public understanding of the project and encourage their early and
continued participation in selecting, designing, and implementing the
NPS management measures that will be implemented.
f. A schedule for implementing the NPS management measures
identified in this plan that is reasonably expeditious.
g. A description of interim, measurable milestones for determining
whether NPS management measures or other control actions are being
implemented.
h. A set of criteria that can be used to determine whether loading
reductions are being achieved over time and substantial progress is
being made towards attaining water quality standards and, if not, the
criteria for determining whether this watershed-based plan needs to be
revised or, if a NPS TMDL has been established, whether the NPS TMDL
needs to be revised.
i. A monitoring component to evaluate the effectiveness of the
implementation efforts over time, measured against the criteria
established under item (h) immediately above.
EPA recognizes the difficulty of developing the information
described above with precision and, as this guidance reflects, believes
that there must be a balanced approach to address this concern. On one
hand, it is absolutely critical that States make, at the subcategory
level, a reasonable effort to identify the significant sources;
identify the management measures that will most effectively address
those sources; and broadly estimate the expected load reductions that
will result. Without such information to provide focus and direction to
the project's implementation, it is much less likely that the project
can efficiently and effectively address the nonpoint sources of water
quality impairments. On the other hand, EPA recognizes that even with
reasonable steps to obtain and analyze relevant data, the available

[[Page 60660]]

information at the planning stage (within reasonable time and cost
constraints) may be limited; preliminary information and estimates may
need to be modified over time, accompanied by mid-course corrections in
the watershed plan; and it often will require a number of years of
effective implementation for a project to achieve its goals. EPA fully
intends that the watershed planning process described above should be
implemented in a dynamic and iterative manner to assure that projects
with plans that contain the information above may proceed even though
some of the information in the watershed plan is imperfect and may need
to be modified over time as information improves.

E. Scale and Scope of Watershed-Based Plans

The watershed-based plan must address a large enough geographic
area so that its implementation will address all of the sources and
causes of impairments and threats to the waterbody in question. These
plans should include mixed ownership watersheds when appropriate to
solve the water quality problems (e.g., Federal, State, and private
lands). While there is no rigorous definition or delineation for this
concept, the general intent is to avoid single segments or other
narrowly defined areas that do not provide an opportunity for
addressing a watershed's stressors in a rational and economic manner.
At the same time, the scale should not be so large as to minimize the
probability of successful implementation. Once a watershed plan that
contains the information identified in Section III.D has been
established, a State may choose to implement it in prioritized portions
(e.g., based on particular segments, other geographic subdivisions,
nonpoint source categories in the watershed, or specific pollutants or
impairments), consistent with the schedule established pursuant to item
(f) above.
EPA recognizes that States already have in place or have been
developing watershed plans and strategies of varying levels of scale,
scope, and specificity that may contribute significantly to the process
of developing and implementing watershed-based plans. We encourage
States to use these plans and strategies, where appropriate, as
building blocks for developing and implementing the watershed-based
plans. In doing so, to the extent that other documents contain the
information identified above in Section III.D, this information may be
incorporated by reference into States' watershed-based plans. (Where
these plans and strategies have been developed at a large geographic
scale, they will in many cases need to be refined at a smaller
watershed scale to provide the information needed to produce effective
watershed-based plans.) In particular, we recommend that States use
their continuing planning processes, water quality management plans
(WQMPs), Watershed Restoration Action Strategies (WRASs), comprehensive
conservation and management plans (CCMPs), CZARA programs, and other
similar holistic watershed documents, to help guide their watershed-
based approaches to watershed-based plan development and
implementation.
EPA encourages States to develop NPS TMDLs or, where applicable,
sets of NPS TMDLs on a watershed basis. We encourage States to
implement watershed-based plans holistically, as this approach usually
provides the most technically sound and economically efficient means of
addressing water quality problems. Consistent with this approach, EPA
encourages States to include in their watershed-based plans approaches
that will address all of the sources and causes of impairments and
threats to the watersheds in question. Thus, the watershed-based plans
should address not only the sources of water quality impairment, but
also any pollutants and sources of pollution that need to be addressed
to assure the long-term health of the watershed, including both surface
and ground water that serve as sources of drinking water. Finally,
since watersheds with completed TMDLs have the best documentation of
the load reductions needed to achieve water quality standards, EPA
recommends that States assign the highest priority to implementing
watershed-based plans for waters that have completed TMDLs.
We further recommend that States give their highest funding
priority to projects that are supported by additional funding from
other Federal, State, and local agencies (particularly USDA-supported
programs), SRF, or private sector funding. Additionally, States should
consult their SRF Program's Integrated Planning and Priority Setting
System, if such system is in use, to address the highest priority water
quality improvement projects (see http://www.epa.gov/owm/cwfinance/
index.htm). Given the significant expense of many watershed
projects, such an approach will help expedite successful implementation
of needed practices and thus speed the restoration of water quality. It
will also help assure that watersheds are addressed in a holistic manner
that accounts for the broad variety of stressors in the watersheds.

F. Monitoring Our Progress

As States continue to strengthen their focus upon restoring waters
that have been listed as impaired on their Section 303(d) lists, as
well as to protect waters that are currently not impaired, it is
critical that they monitor both: (1) the progress that they are making
towards achieving and maintaining water quality standards; and (2) the
implementation of their programs and projects to assure that they are
successfully implemented. In Section IV.E below, we discuss the use of
the Section 319 program's Grants Reporting and Tracking System (GRTS)
to track implementation of programs and projects, estimate pollutant
load reductions, and report the amount of acres of wetlands and feet of
riparian areas protected or restored. In addition, EPA's Watershed
Assessment, Tracking and Environmental Results (WATERS) Information
System, which combines a variety of water quality information,
including that which is developed by States in Section 305(b) reports
and 303(d) lists, will provide information that indicates when an
impaired waterbody achieves water quality standards. (For more general
information on WATERS, and on the Consolidated Assessment and Listing
Methodology (CALM) that supports the 305(b) and 303(d) processes, see
http://www.epa.gov/waters and http://www.epa.gov/owow/monitoring/
calm.html).
There are a variety of technical tools that can be used by States
to monitor their progress at a program or project level. EPA strongly
encourages States to enter their water quality monitoring data, for
data collected in a waterbody pursuant to the implementation of a
Section 319 project, into EPA's ``storage and retrieval'' (STORET) data
system. States that are not yet prepared to use STORET for storage of
data generated in the development and implementation of Section 319
watershed projects should in the interim store their assessment in an
accessible electronic database.
We discuss some recommended tools and methods immediately below. In
addition, States with approved CZARA programs are responsible under
CZARA for monitoring and tracking progress through successful
implementation of CZARA management measures. EPA has also published
several detailed guidance documents to assist States and others in
conducting monitoring programs to both track implementation and
determine the success of on-the-ground projects in achieving water-
quality-improvement goals. See Monitoring Guidance for Determining the
Effectiveness of Nonpoint Source Controls (U.S.

[[Page 60661]]

Environmental Protection Agency, Office of Water (EPA 841-B-96-004)
(1997)) and other publications that are listed at http://www.epa.gov/
owow/nps/bestnpsdocs.html#nps.
1. Environmental Indicators
States need to use several sets of measures to fully determine
their success in implementing their nonpoint source programs. These
include measures that indicate progress towards achieving and
maintaining beneficial uses of water; towards other long-term goals of
the State's program (e.g., achieving load reductions, installing
appropriate technology at all animal waste facilities that need to be
upgraded, or implementing particular watershed projects); and towards
shorter-term goals and objectives (e.g., successfully implementing a
particular technology) that are designed to lead to the achievement of
longer-term goals.
As discussed in Section IV.E of these guidelines, States must
include in their annual reports at least the three measures of progress
that are required by Section 319(h)(11), including implementation
milestones, available information on reductions in nonpoint source
pollutant loadings, and available information on improvements in water
quality. Approaches that can be used to meet either short-term tracking
or longer-term project evaluation needs include ambient water quality
monitoring (e.g., edge-of-field, small watersheds, multiple watersheds,
in-lake, in-aquifer monitoring), beneficial use assessment (e.g.,
biological/ habitat assessment, attainment of water quality standards),
implementation monitoring (e.g., audits, activity tracking, geographic
information system tracking of land use and land management), model
projections, and photographic evidence. Ambient monitoring and
beneficial use assessment tracking should be included for projects
wherever feasible.
Appendix A of these guidelines contains an illustrative set of
these and other indicators and measures, including those required to
implement Section 319(h)(11) and TMDLs, that can help the States and
the public gauge the progress and success of their programs. States may
identify and use other indicators and measures that are most relevant
to their particular nonpoint source problems, programs, and projects.
However, States should in all cases use environmental indicators to the
greatest extent feasible, so that the State and the public may best
recognize the State's progress in addressing water quality problems in
terms that are most relevant to the public's concerns.
2. Monitoring in Watershed Projects
Appropriate monitoring of watershed project implementation is an
essential tool to enable States to identify nonpoint source pollution
problems, develop effective watershed-based plans, evaluate the
effectiveness of actions taken, and meet reporting requirements under
Section 319(h)(11). All watershed projects designed to implement a
watershed-based plan must describe how the plan's monitoring component
will be used to evaluate the effectiveness of the implementation
efforts over time, measured against the specific criteria that are
established in the watershed plan. As described in Section III.D
(``Watershed-Based Plans''), the criteria against which progress is
being monitored should be designed to focus on whether loading
reductions are being achieved over time and substantial progress is
being made towards attaining or maintaining water quality standards.
This can be achieved through watershed-scale monitoring to measure the
impacts of multiple programs, projects, and trends over time (i.e.,
monitoring need not be conducted for individual BMPs unless that is
particularly relevant to the project). Information on reductions in
nonpoint pollutant loads will then be tracked and reported in the
Section 319 Grants Reporting and Tracking System (GRTS) as described
below in Section IV.E.
While States may use Section 319(h) grant funds for monitoring
activities for particular watershed projects, States are encouraged to
also explore other cost-effective approaches to conducting monitoring.
For example, the U.S. Geological Survey and the National Oceanic and
Atmospheric Administration hold an array of ambient data and can
provide support for various monitoring activities. In addition,
volunteer monitoring programs are used by many States to obtain water
quality data in a cost-effective manner.
3. National Monitoring Program
To provide a national documentation of the feasibility of
controlling and preventing pollution resulting from nonpoint sources,
and to improve technical understanding of nonpoint source pollution and
the effectiveness of nonpoint source control technology and approaches,
EPA and many States have been implementing a more rigorous and
standardized monitoring framework that can be used for a representative
subset of watershed projects funded under Section 319. Monitoring for
this subset of selected watershed projects is being conducted at
appropriate frequency intervals and for appropriately long periods of
time that include monitoring before, during, and following
implementation to assure the accounting of various sources of
variation. We encourage States to conduct intensive water quality
monitoring of one or more of their projects as part of this national
evaluation.
EPA has developed a framework for selecting national monitoring
projects, issued guidelines for minimum monitoring activities, and
developed software for managing and reporting data. To date, 23 high-
quality national projects have been selected across the country through
a rigorous but collaborative process involving the States, EPA Regions,
and EPA Headquarters. Additional high-quality monitoring projects will
be selected in future years using the same collaborative process. For
all projects, EPA provides specialized technical support in project
development, monitoring design, data management and analysis, and
reporting. From time to time, and in close collaboration with relevant
States and project managers, EPA will publish progress reports and
results. The most recent report, Section 319 National Monitoring
Program Projects (December 2001), includes information on each of the
23 projects and highlights the documented water quality improvements
achieved by some of the projects to date. To view or download this
report, or to obtain further information on the National Monitoring
Program, see http://h2osparc.wq.ncsu.edu/319index.html.
This report illustrates the water quality benefits of well-designed and
implemented watershed projects.

IV. Grants

Section 319 grants are important resources available to States to
restore impaired waters and to protect threatened and good-quality
waters. These guidelines provide States with a framework to use Section
319 grant funds in a manner that will implement their nonpoint source
management programs effectively to achieve the vision established at
the beginning of these guidelines and to achieve the specific goals and
objectives established in their upgraded State nonpoint source
management programs. Moreover, EPA and States will continue to minimize
administrative responsibilities to assure that the funds are being used
effectively and in a legally appropriate manner.
While Section 319 funds are important resources, it remains
critical for States to continue to build their existing partnerships
and to develop

[[Page 60662]]

new ones as necessary to achieve their water quality goals. While
Section 319 funds have grown, they remain, taken alone, only a modest
response to the broad range of national nonpoint source impairments and
threats. Therefore, the effectiveness of State nonpoint source programs
will depend on the effective use of their funds, authorities, and other
resources to leverage the funds, resources, and authorities of other
public and private sector entities that have a role to play in abating
and preventing nonpoint source pollution problems.

A. Relationship to Performance Partnership Grants

On January 9, 2001, EPA published rules to revise and update its
grant regulations that apply to Section 319 and other EPA grants
programs. (See 66 FR 1725-1747 (January 9, 2001), 40 CFR part 35,
available at http://www.gpoaccess.gov/index.html.)
The regulation advances ongoing efforts to build more effective State-EPA
partnerships and to improve environmental conditions by providing States
with increasing flexibility to direct resources where they are needed
most to address environmental and health needs.
EPA believes that the States' efforts to upgrade State nonpoint
source programs during the past five years have much in common with
goals and principles of the Performance Partnership Grants (PPG)
program and the broader National Environmental Performance Partnership
System (NEPPS) of which the PPG program is a part. These included
promoting a focus upon improved environmental results by directing
scarce public resources toward the States' highest priority, highest
value activities; providing States with greater flexibility to achieve
those results; improving public understanding of environmental
conditions and choices; and enhancing accountability to the public and
taxpayers.
These new guidelines have similarly been drafted to be consistent
with the overall framework of the NEPPS and PPG. They focus on broad
environmental goals (e.g., achieving water quality standards in
impaired waters through the implementation of TMDLs) while providing
flexibility to States in prioritizing their efforts among their many
impaired waters and in developing and implementing appropriate
practices and systems to solve their water quality problems. They also
focus on reporting environmental outcomes (e.g., ``reductions in
nonpoint source pollutant loading and improvements in water quality''
as called for in Section 319(h)). The nonpoint source program is an
eligible grant program in a PPG. For those States that wish to include
the nonpoint source program in their request for a PPG and/or NEPPS
Agreement, these guidelines should be used as the foundation for
substantive discussions on establishing nonpoint source environmental
goals and program performance expectations.

B. Funding Process

1. Allocation of Funds
EPA uses the allocation formula presented in Appendix D to
determine the amount of funding to be awarded to each State. The
factors used in the allocation formula, as well as the weights used in
the formula, have remained the same as they have been since the Section
319 grants program began. Each year, the Congressional appropriation
for Section 319 will be multiplied by the applicable percentage
presented in Appendix E to determine each State's allocation for that
year. As soon as the annual Section 319 appropriation is made by
Congress, EPA Headquarters will immediately notify the EPA Regional
offices of each State's allocation, and the Regions will immediately
notify the States.
EPA will continue to award funds to States in two portions. EPA
will first subtract $100 million from the total Section 319
appropriation. That portion is referred to as the ``incremental funds''
while the remaining portion is referred to as the ``base'' funds. Both
of these portions are allocated to the States in accordance with the
allocation formula discussed in the preceding paragraph. As discussed
in Section III.B above, the base funds are to be used by the States to
generally implement all aspects of their nonpoint source programs,
while the incremental funds are to be primarily focused upon the
implementation of watershed-based plans to restore waters impaired by
nonpoint source pollution.
2. Schedule for Awarding Section 319 Grants

a. Background

These guidelines present a six-step process for awarding Section
319 grants. EPA recognizes that there is a wide disparity among States
as to their desired schedules (e.g., due to differing fiscal years,
timeliness of weather-related projects, etc.), and is presenting this
process to help provide States and EPA with a general outline of the
steps to be followed without dictating a uniform schedule for State
submissions.
States are strongly encouraged to begin their internal project
development processes (such as identification of priority areas for
funding and solicitation of project proposals) as early as possible to
assure more time for the State and other project proponents to develop
excellent projects in advance of the formal grant application process.
States should reference their approved nonpoint source management
programs (e.g., in a Request for Proposal) so that project sponsors are
focusing on activities consistent with the State's program. States and
Regions are also encouraged, where feasible, to informally discuss
proposed projects prior to formal submission of the draft application
to EPA so that the subsequent submission can be reviewed and approved
quickly and smoothly. In particular, EPA encourages States to submit
early drafts of project proposals to EPA if they believe that there are
difficult issues that may arise (e.g., whether the proposed project is
legally fundable or meets criteria established in applicable
guidelines) or if they desire technical assistance from EPA.

b. Six-Step Process to Awarding Section 319 Grants

? Step 1: EPA Headquarters issues brief annual guidance.
EPA Headquarters will strive to issue brief annual guidance, if any
is needed, in the early Spring preceding the Fiscal Year for which the
Section 319 funding will be applicable.
? Step 2: States submit draft grant applications, including a
draft work plan.
States should expeditiously implement their processes to develop or
solicit draft grant applications (e.g., the Request for Proposals
process used by many States to solicit grant projects from agencies,
watershed groups, and other organizations within the State). They
should also develop expeditious processes (e.g., using State Nonpoint
Source Task Forces such as have been established in many States) to
review project proposals and select the best ones for inclusion in
their draft work plan, so that they can submit good-quality draft
applications in a timely manner.
EPA strongly recommends that the State provide clear written or
oral guidance to all project applicants to assure that the applicants
are aware of Federal requirements for project eligibility and State
criteria for project selection.
Each State will submit a draft grant application, including a draft
work plan. EPA encourages States choosing to submit any voluminous
materials do so

[[Page 60663]]

electronically to minimize resources and expenses. Each Region will
work closely and collaboratively with each State at this stage to
promote the development and submission of high-quality work plans.
Regions must be able to determine from the draft work plans that: (1)
They conform to all applicable legal requirements of Section 319, EPA's
general grant regulations in 40 CFR parts 31 and 35, and the
requirements of OMB Circulars A-21, A-87, A-102, A-110, A-122, A-133;
(2) they are consistent with these guidelines and with the goals,
objectives and priorities in the State nonpoint source management
program; (3) they only include expenditures that are necessary,
eligible, reasonable, and consistent with the grant; (4) the State and
EPA will mutually be able to assess the success of grant activities in
meeting State program goals; (5) nation-wide progress in reducing
nonpoint source pollutant loads and in achieving and maintaining water
quality standards can be tracked, as discussed in Section IV.E below.
Work Plans To Develop Watershed-Based Plans
The work plan to develop a watershed-based plan must include, at a
minimum: (1) An identification of the geographical extent of the
watershed to be covered by the plan; (2) a schedule for developing the
watershed plan; and (3) an estimate of the Section 319 funds that will
be used for developing the watershed plan. All watershed-based plans
that are developed with Section 319 funds must ultimately include all
of the information identified in Section III.D above (``Watershed-Based
Plans'').
Work Plans To Implement Watershed-Based Plans
States are not required to submit their detailed watershed-based
plans for EPA approval. However, they must submit a brief work plan
that: (1) Identifies the watershed-based plan that will be implemented;
(2) provides a schedule for implementing the watershed-based plan; (3)
includes a brief summary of the plan; and (4) provides an estimate of
the Section 319 funds that will be used to implement the watershed
plan. If a State requests funding to implement a watershed-based plan
at the same time that it submits a request for funding to develop the
plan, the State must make its best effort to provide the information
regarding the implementation phase of the project. If the State
believes that it does not yet have enough information to do so, the
Region and State should discuss whether the State has enough
information at this time to provide a reasonable basis for the State to
make a request for implementation funding prior to completing the
development of the watershed-based plan. When appropriate, the request
for implementation funding may be regarded as premature and deferred to
the following year.
In lieu of requiring States to submit their watershed-based plans
to EPA for approval, EPA has chosen to defer to States' expertise and
judgment in developing and implementing these plans. However, EPA
recognizes that watershed-based plans are such critical components that
the success of a State NPS management program rests significantly on
States' success in developing good-quality plans and implementing them
effectively. Therefore, EPA expects that Regional management and
oversight of Section 319(h) grants (see Section V of these guidelines)
will place a special emphasis on reviewing these activities from time
to time and that Regions will therefore periodically review and discuss
State progress in developing plans in conformity with these guidelines
and implementing them effectively. Regions must include a condition in
the grant that contains the language set forth in Appendix F to these
guidelines. That language provides that, upon Regional request, the
State will provide copies of any (i.e., one or more, depending on the
Region's request) 319-funded watershed-based plans and other
information relevant to implementing those plans. This information
would provide a basis for periodic Regional reviews of, and discussions
with the State regarding, the State's implementation of its Section 319
program, its Section 319 grants and, more specifically, its development
and implementation of watershed-based plans that are in conformity with
these guidelines.
Work Plans for All Other Section 319 Projects and Activities
Work plans for all other projects and activities should include a
brief and concise synopsis explaining the State's strategy for using
Section 319 funds in the current fiscal year. This synopsis should
outline the problem to be addressed; the project's goals and
objectives; the lead implementing agency and other agencies that will
be authorized to expend project funds; the types of measures or
practices that will be implemented; the projected implementation
schedule; the outputs to be produced by performance of the project; and
the environmental indicators and/or other performance measures that
will be used to evaluate the success of the project.
Outputs for activities should always be quantified whenever it is
practicable to do so (e.g., all on-the-ground implementation projects
should have quantified outputs). States that include all or a portion
of their Section 319 grants in a Performance Partnership Grant should
note that their work plan similarly is required by regulation to
describe each significant category of nonpoint source activity to be
addressed and the work plan commitments to be produced for each
category. (See 40 CFR 35.268(d)(4)).
Multi-Year Work Plans
EPA encourages States to develop multi-year work plans for Section
319 grants. For example, the State may wish to present a three-year
work plan which would guide the State's grant activities for the next
three years. This work plan, when approved by EPA, would not have to be
resubmitted and re-approved except to the extent that the State wishes
to change it to address new circumstances. In addition to the
information required above (as applicable), the work plan should
include the interim milestones and final dates for completion of
activities. The interim milestones should be sufficiently frequent to
assure timely performance throughout the project period, so that the
State can identify problems and correct them expeditiously.
EPA would like to clarify that the use of a multi-year work plan
does not require the award of all project funds in a single year. It
may rather be used to establish the State's and EPA's mutual intent to
award funds over a several-year period to implement subsequent phases
of the work plan. This may be particularly appropriate in the case of a
watershed-based plan that will require multiple years to implement.
The multi-year planning approach will reduce paper work and will
improve the State's ability to engage in long-term planning and
implementation with respect to both programmatic activities and
specific watershed projects. States will, however, retain the option of
developing and modifying aspects of their programs or projects on an
annual basis where they deem appropriate.
? Step 3: Regions conduct reviews of State draft applications
and provide written comments to the State.
The Region will review each State's draft application and meet or
conduct a telephone conversation with each State to resolve any
technical or administrative issues. Following this

[[Page 60664]]

collaboration, the Region should provide a written reply to the State.
Regions will strive to conduct such reviews and provide feedback to
States within 60 days of receipt of the State application.
The Regional response should include written comments on the
State's draft application, paying particular attention to its
consistency with applicable legal requirements; applicable guidelines
and guidance; and the goals, objectives, and priorities established in
the State management program. The Region will work with the State to
jointly ensure that: The work plan is designed to help achieve the
goals and objectives contained in EPA's guidelines and in the State's
nonpoint source management program; the work plan has programmatic,
technical, and/or scientific merit; the costs are reasonable and
necessary; the work plan is well-coordinated with other State and
Federal programs; gaps between program objectives and planned
activities are identified and resolved; and the work plan clearly
identifies the specific outcomes, outputs, and other results that are
linked to funding and includes target dates and milestones for
achieving them.
In addition to commenting on the consistency of the State program
with applicable requirements, guidelines, guidance, and State program
goals, objectives, and priorities, Regions may also provide technical
comments to the State on ways in which particular proposed projects or
programs could be clarified, improved, or otherwise modified to result
in a better project or program. These comments should be offered as
technical suggestions and should not be regarded by the Region or State
as a prerequisite to grant award unless they raise significant concerns
that a proposed project may fail for technical reasons.
? Step 4: States submit final work plans and grant
applications to EPA Regions.
States are encouraged to submit final work plans and grant
applications to EPA Regions as quickly as possible. States should
contact EPA to discuss any questions and the intended responses to EPA
comments and concerns, and the final work plan must provide a response
to all comments. Good communication between the States and EPA will
help assure work plan approval will occur as quickly as possible and
reduce the need for additional rounds of comment from EPA.
? Step 5: Regions award grants to State.
Each Region will review its States' final work plans. If the
State's work programs meet all applicable legal requirements,
guidelines and guidance, and the goals, objectives, and priorities
established in the State management program, the Region will award the
final grant as quickly as possible. Regions will strive to conduct
final reviews and award the grant to the State within 60 days of
receipt of the final work plans. Where issues remain, the Region will
elevate discussions to more senior management levels quickly to achieve
a satisfactory resolution of the problem. In the event that funds
cannot be fully awarded to a particular State within a reasonable time,
the Region may reallocate the funds to another State. However, the
Region and State should make all reasonable efforts to avoid such an
unsatisfactory result.
The grant award is contingent upon the Region determining in
writing that the State has made ``satisfactory progress'' in the
preceding fiscal year in meeting the schedule specified in the State's
Section 319 nonpoint source management program (as discussed further
below in Section IV.D).
? Step 6: States obligate funds as expeditiously as possible.
States will obligate the awarded funds as quickly as possible and
conduct funded activities according to the schedules contained in the
approved work plan. EPA has interpreted Section 319(h)(6) to provide
that Section 319(h) funds granted to a State shall remain available for
obligation by the State for one year from the grant award. For example,
grant funds awarded to a State on December 1, 2003, remain available
for obligation until December 1, 2004. The amount of any such funds
that cannot be obligated by one year from the grant award shall, under
Section 319(h)(6), be available to EPA for granting to other States.
Regions should include in each grant a condition requiring the grant
recipient to award all proposed contracts and interagency agreements
within one year after the grant award.
EPA recognizes that each State has a different process, often
governed or influenced by State laws, regulations, or control
mechanisms, that result in varying time periods for the award of State
sub-grants or sub-contracts to implement the projects. States should
make every effort, including modifying State procedures if appropriate,
to assure that the funds are made available to project implementers as
soon as possible after the grant is awarded to the State. Projects
often depend upon the active cooperation of private individuals, many
of whom are not professional nonpoint source personnel; it is important
to be responsive to their needs to assure that credibility of the
State's program is maintained and that participation in the program
continues to grow.
The term ``obligate'' does not mean to ``expend.'' As defined in 40
CFR Section 31.3, ``obligations'' means ``the amounts of orders placed,
contracts and subgrants awarded, goods and services received, and
similar transactions during a given period of time that will require
payment by the grantee during the same or a future period.''
EPA believes that it is important that funds appropriated by
Congress do not languish unused for significant amounts of time.
Generally speaking, it is in the public interest for States to expend
appropriated and awarded funds as rapidly as practicable upon receipt
by the State. Where States are implementing multi-year watershed
projects, the preferred approach may be to award the funds gradually
over a period of years rather than to award all of the funds at one
time. Regions and States are encouraged to work together to assure that
funds awarded are sufficient to support any implementation activities
in the watershed that may occur within a reasonable time, while
agreeing that additional funds would be made available in future
funding years to enable the project to be fully implemented over a
period of years. EPA intends to engage in dialogue with the States
during the coming year to assure that we meet the dual goals of putting
the public's funds to work expeditiously while at the same time
providing assurance to the States that they will receive enough funds
to carry implementation efforts to successful completion.

C. Grant Eligibility

Section 319 grant funds are to be directed towards the States' and
EPA's common vision that all States implement dynamic and effective
programs designed to achieve and maintain beneficial uses of water.
Approved State nonpoint source management programs provide the
framework for determining what activities are eligible for funding
under Section 319(h). While these guidelines emphasize the use of
Section 319 funds for the development and implementation of watershed-
based plans to restore priority waters, States may also use Section 319
base funds for other activities that will generally support these
goals, as well as water quality protection goals, including
nonregulatory or regulatory programs

[[Page 60665]]

for enforcement; technical assistance, including staffing; financial
assistance; education; training; technology transfer; demonstration
projects; and monitoring to assess the success of specific nonpoint
source implementation projects.
1. Ground-Water Activities and Source Water Protection Programs
As in the past, EPA's policy will be to award all Section 319
grants under Section 319(h), in lieu of awarding separate grants under
Section 319(i). Thus, these guidelines apply to all Section 319 grants.
This approach will encourage integration of ground-water activities
with overall State nonpoint source control programs, while maximizing
State flexibility to consider and prioritize all causes and effects of
nonpoint sources of water pollution.
Ground-water activities are eligible for Section 319(h) grants to
the extent that they are identified directly in the State's nonpoint
source management program or through incorporation in the management
program by reference to the State's Ground-Water Protection Strategy,
Comprehensive State Ground-Water Protection Program, or Source Water
Protection Program. If such activities are not currently included in
the State's nonpoint source management program, the program should be
amended to include them.
EPA encourages States to coordinate their nonpoint source
management programs with their source water protection programs. This
will assure that programs, authorities, and funding sources to protect
sources of drinking water from nonpoint source pollution are
appropriately coordinated to maximize the effectiveness and efficiency
of both programs' efforts.
2. Urban Storm Water Runoff
Section 319 funds may be used to fund any urban storm water
activities that are not specifically required by a draft or final NPDES
permit. EPA has issued several ``phases'' of regulations defining what
activities are subject to the NPDES permit requirements of Section
402(p)(2) of the Clean Water Act. Phase I, in place since 1990,
requires operators of medium and large municipal separate storm sewer
systems (MS4s) located in incorporated places and counties with
populations of more than 100,000, certain industrial activities, and
construction activities disturbing 5 acres of land or more to obtain an
NPDES permit to discharge storm water runoff (see 55 FR 47990, November
1990). In 1999, EPA expanded the Federal storm water program with the
promulgation of the ``Phase II'' rule (see 64 FR 68722, December 8,
1999). Phase II requires operators of small MS4s (non-Phase I regulated
MS4s) in ``urbanized areas'' and small construction activities
disturbing between 1 and 5 acres of land to obtain an NPDES permit.
States may use section 319(h) funds for those urban storm water
discharges that are not addressed by Phase I and Phase II stormwater
program requirements. These include aspects of Phase I and II
activities that support but do not directly implement activities
required by Phase I or Phase II permits.
EPA and the States recognize the benefits of integrating nonpoint
source funds and storm water activities as much as is legally
allowable. Listed below are a variety of urban runoff management
activities that could be eligible for Section 319(h) funding:
? Technical assistance to State and local storm water
programs;
? Monitoring needed to design and evaluate the effectiveness
of implementation strategies;
? Best management practices for pollution prevention and
runoff control (except for BMPs required by a draft or final NPDES
permit);
? Information and education programs;
? Technology transfer and training; and
? Development and implementation of regulations, policies,
and local ordinances to address storm water runoff. (These may apply to
areas covered by NPDES permits, provided that the regulations, policies
and ordinances apply to non-permitted areas as well.)
Historically, urban storm water management control efforts have
focused on water drainage problems (i.e., water quantity). Now many
storm water control BMPs are designed to control both water quantity
and water quality. Section 319(h) funds may be used to assist in the
incremental funding of certain water quality components of such
practices, except as described below.
Section 319(h) nonpoint source control funds may not be used to
implement specific requirements of draft or final NPDES storm water
permits, nor to implement permit application requirements of EPA's
storm water regulations. For example, Section 319(h) funds may not be
used to meet permit application requirements such as mapping storm
water systems, identifying illicit connections, characterizing storm
water discharges, or monitoring required by permits. Section 319(h)
grant funds may not be used to pay for BMPs or ``end of pipe''
treatments which are required as part of a draft or final NPDES permit.
These prohibitions are based on the statutory limitations on the
use of Section 319 funds, including Congressional intent that these
funds be used to address nonpoint sources, rather than permitted point
sources. Congress determined that permitted point sources would
generally comply with NPDES permit requirements without obtaining
Federal grants. (However, EPA notes that ``publicly owned treatment
works,'' which includes publicly owned methods or systems for
preventing, abating, reducing, storing, treating, separating or
disposing of ``storm water runoff'' are eligible to receive Federal
loans under the State Revolving Loan Fund program.)
3. Abandoned Mine Lands
Abandoned mine land reclamation projects that are designed to
restore water quality are eligible for Section 319 funding except where
funds are used to implement specific requirements in a draft or final
NPDES permit. For example, Section 319 funds cannot be used to build
treatment systems required by an NPDES permit for an inactive mine, but
they may be used to fund a variety of other remediation activities at
the same mine. Examples of activities that could be eligible for
funding include:
? Remediation of water pollution from abandoned mines that
have not yet been issued a draft or final permit;
? Remediation of water pollution from portions of abandoned
mine sites that are not covered by a draft or final permit;
? Mapping and planning remediation at abandoned mine land
sites;
? Monitoring needed to design and evaluate the effectiveness
of implementation strategies;
? Technical assistance to State and local abandoned mine land
programs;
? Information and education programs;
? Technology transfer and training; and
? Development and implementation of policies to address
abandoned mine lands.
The Natural Resources Conservation Service and local soil
conservation districts have a vast array of on-the-ground experience in
the area of rural abandoned mine lands. In addition, the Office of
Surface Mining has a 10% set-aside from its Abandoned Mine Land program
to address water quality problems from abandoned mines.

[[Page 60666]]

4. Animal Feeding Operations
Section 319 funds may be used to support the implementation of a
wide range of animal waste storage, treatment, and disposal options for
animal feeding operations (AFO) that are not subject to NPDES permits
requirements. The NPDES regulations, published on December 15, 2002,
may be reviewed at http://cfpub.epa.gov/npdes/afo/cafofinalrule.cfm.
Any AFO that is defined or designated to be a ``concentrated'' AFO
(i.e., a ``CAFO'') under 40 CFR section 122.23 is ineligible for
funding under Section 319. However, the off-site management of wastes
that have been generated by a CAFO and then transported to an off-site
facility that is not subject to NPDES permit requirements is eligible
for funding if it is managed consistently with the State's nonpoint
source management program.
In March 1999, EPA and USDA published the Unified Animal Feeding
Operation Strategy (AFO Strategy). (This Strategy is available at
http://www.epa.gov/owm.) This Strategy discusses the relationship
between AFOs and environmental and public health; sets forth a national
performance expectation for all AFO owners and operators; and presents
a series of actions to minimize public health impacts and improve water
quality while complementing the long-term sustainability of livestock
production.
The AFO Strategy includes a goal that all AFOs will have
comprehensive nutrient management plans (``CNMP's''). USDA and EPA
funding assistance programs such as the Environmental Quality
Incentives Program and the Section 319 grants program are critical
tools to help assure the development and implementation of several
hundred thousand CNMP's for non-permitted AFOs in the United States. To
this end, Regions must assure that all Section 319 grants that include
programs or projects that assist AFOs include a provision (either as a
grant condition or through a separate document such as a workplan or
BMP implementation plan) to assure that any AFO that receives financial
assistance pursuant to the grant has and will implement a CNMP. (Any
aspect of a CNMP that is not directly related to water quality
concerns--e.g., is related to dust or odor suppresion--is not fundable
under Section 319 and is therefore excluded from this requirement.)
USDA has developed a variety of practice standards, guidance
documents, and other technical assistance tools to assist in the
development and implementation of CNMP's. We recommend that any CNMP
for Section 319-funded AFO projects be developed, reviewed, or approved
by a person who has been certified through a certification program
accepted by USDA or by another equivalent certification program. An
``equivalent certification program'' may include State programs for
certifying private and public sector nutrient management planners.
5. Lake Protection and Restoration Activities
Lake protection and restoration activities are eligible for funding
under Section 319(h) to the same extent, and subject to the same
criteria, as activities to protect and restore other types of
waterbodies from nonpoint source pollution. Where a lake is listed as
impaired on the Section 303(d) list, Section 319 funding can be used to
develop and implement watershed-based plans that contain the
information in Section III.D.
States are encouraged to use Section 319 funding for eligible
activities that might have been funded in previous years under Section
314 of the Clean Water Act. Section 319 funds should not be used for
in-lake work such as aquatic macrophyte harvesting or dredging, unless
the sources of pollution have been addressed sufficiently to assure
that the pollution being remediated will not recur. This policy is
fully consistent with the Clean Lakes regulations at 40 CFR 35.1650-2
(5)(i) and (ii) which provide:

The project does not include costs for harvesting aquatic
vegetation, or for chemical treatment to alleviate temporarily the
symptoms of eutrophication, or for operating and maintaining lake
aeration devices, or for providing similar palliative methods and
procedures, unless these procedures are the most energy efficient or
cost effective lake restorative method.

A recommendation by the Senate Appropriations Committee (see Senate
Report 106-161) suggests that each State use at least 5 percent of its
Section 319 funds for Clean Lakes activities to address the restoration
and protection needs of priority lakes, ponds and reservoirs. We
suggest that States give priority to funding:
a. Lake Water Quality Assessment (LWQA) Projects
LWQA projects are projects which are intended to compile a
comprehensive statewide assessment of lake water quality, to enhance
overall State lake management programs, and to increase public
awareness and commitment to protecting lakes. Specific activities might
include: developing a statewide lake monitoring program; developing an
integrated Section 305(b) water quality report and Section 303(d) list
of impaired waters; building and enhancing the State's lake-related
public outreach and volunteer monitoring activities; and developing and
enhancing state lakes programs including travel/training for program
managers to attend the annual meeting on ``Enhancing State Lake
Management Programs.''
b. Phase 1 Diagnostic/Feasibility Studies
Phase 1 Diagnostic/Feasibility Studies are studies which are
intended to: perform comprehensive studies of particular lakes included
on State's priority lists including Section 303(d) lists; determine the
causes, sources, and extent of pollution to the lake; evaluate possible
solutions; and recommend the most feasible and cost-effective methods
and measures for restoring and protecting lake resources.
The specific requirements for Phase 1 studies are listed in the
Section 314 Clean Lakes Program regulations (40 CFR part 35, subpart
H). The Clean Lakes Program regulations are still valid and provide a
sound basis for the design of Phase 1 studies, and thus, we suggest
that you consult these regulations when you develop work plans for
Phase 1 projects. In many cases, Phase 1 studies should provide the
basis for the development of a TMDL and watershed-based plan for a
particular lake or reservoir.
c. Phase 2 Restoration/Implementation Projects
Phase 2 Restoration/Implementation Projects are projects which are
intended to implement lake protection and restoration measures
recommended in Phase 1 studies. For lakes that are listed as impaired
on the Section 303(d) list, such restoration measures should be
integrated into a watershed-based plan that contains the information in
Section III.D.
d. Phase 3 Post-Restoration Monitoring Studies
Phase 3 Post-Restoration Monitoring Studies are studies to
determine the longevity and effectiveness of various restoration
techniques and to advance the science of lake restoration. Funding
priorities should support the primary purpose of these studies which is
to assess the effectiveness of restoration techniques that have been
applied through Phase 2 projects. Lower priority consideration should
be given to projects that generally support activities to improve and
advance the science of lake restoration and management but are

[[Page 60667]]

not specifically assessing Phase 2 projects.
Section 319-funded Clean Lakes activities should be funded in the
same manner as other parts of a State's Section 319 work program, and
all operative Section 319 grant requirements and guidelines (including
provisions for the use of incremental funds, and reporting on the
amount of funding devoted to Clean Lakes activities) will apply to
these projects as well. Please note that while a State may decide to
fund a LWQA and several Phase 2 studies with Section 319 funds, such
funds are included within the overall limitation allowing States to use
no more than 20 percent of their entire Section 319 allocation to
upgrade and refine their nonpoint source programs and assessments.
Additionally, Clean Lakes activities should be funded only in lakes
that are publicly owned and that have public access, consistent with
the Clean Lakes regulations at 40 CFR 35.1605-3.
EPA has published additional, separate guidance for lakes and
reservoirs. (See ``Guidance on Use of Clean Water Act and Safe Drinking
Water Act Authorities to Address Management Needs for Lakes and
Reservoirs,'' issued July 9, 1998, signed by Robert H. Wayland III,
Director, Office of Wetlands, Oceans and Watersheds (available at:
http://www.epa.gov/owow/lakes/policy.html). This guidance discusses
eligibility of lake and reservoir restoration and protection activities
under Section 319; listing of impaired and threatened lakes and
reservoirs on Section 303(d) lists; and the use of additional funding
authorities such as the Clean Water Act State Revolving Fund for
implementing priority lake and reservoir management projects in
approved State nonpoint source management programs.

D. Criteria That Apply to the Award of Section 319 Grants

As noted previously, Section 319 grants must meet certain
statutory, regulatory and other administrative criteria that have been
established to assure that Section 319 funds are used in a fiscally
prudent manner. (A reference document produced by the State-EPA
Nonpoint Source Partnership Grants Management Workgroup in March 2003
provides an overview of the Federal requirements for administering
Section 319 grants. This document can be found at: http://www.epa.gov/
owow/nps/funding.html.) All Section 319 grants must be consistent with
applicable provisions of Section 319 of the Clean Water Act; EPA's
general grant regulations in 40 CFR parts 31 and 35; OMB circulars; and
applicable EPA guidelines.
State nonpoint source program managers should note that EPA has
most recently revised the grant regulations at 40 CFR part 35 on
January 9, 2001. (See 66 FR 1725-1747.) These regulations contain new
Sections 35.260--268, that address the purpose of nonpoint source
management grants (Section 260); the maximum Federal share (Section
265); the maintenance of effort requirement (Section 266); and some of
the award limitations contained in Section 319 (Section 268).
We discuss below some of the most significant criteria that apply
to the award of Section 319 grants.
1. The Work Plan Must Demonstrate That Each Funded Element Will
Implement Specific Activities Identified in the Approved Management
Program
Section 319(h) of the Clean Water Act provides that Section 319(h)
grants are to be made ``for the purpose of assisting the State in
implementing such management program.'' The grant work program must
therefore be designed to ``implement'' the approved nonpoint source
management program. Each funded program activity or project must in
fact lead to accomplishment of management program objectives that are
identified in the State's approved and upgraded nonpoint source
management program. Grant work plans must link the funded activities or
projects to the relevant element or elements of the States nonpoint
source management program.
2. Section 319 Grants Must Be Awarded as Continuing Environmental
Program Grants
All Section 319(h) grants must be awarded as continuing
environmental program grants, consistent with 40 CFR, part 35. Section
319(h) grants have some unique administrative characteristics (i.e.,
multi-year vs. one-year budget and project periods), which are
different from other EPA continuing environmental grant programs.
Unlike most other continuing environmental grants, Section 319(h)
grants are not required to be closed out annually. However, Regions are
encouraged to award new continuing environmental program grants each
year rather than to add funds to an existing State grant through
amendments. This will allow for greater program accountability over the
multi-year duration of these grants. The Regions must also ensure that
all existing State grants are properly closed out at the conclusion of
the project period.
3. The Non-Federal Share Must Be at Least 40 Percent
Section 319(h)(3) provides: ``The Federal share of the cost of each
management program implemented with Federal assistance * * * in any
fiscal year shall not exceed 60 percent of the cost incurred by the
State in implementing such management program and shall be made on the
condition that the non-Federal share is provided from non-Federal
sources.'' The match need not be on an item-by-item basis; rather, a
single figure that covers the entire non-Federal share of the costs of
implementing a State's Section 319 program. The non-Federal match does
not need to be contributed at the time of the grant award, but the
funds must be contributed in a timely manner as needed to meet the
schedules established in the work plan milestones. EPA Regions must
verify that grantees have satisfied the match requirements upon review
and submittal of the grantee's final financial status report.
Nonpoint source program managers should be aware that recycled
State Revolving Funds under Title VI of the CWA can be used to provide
a match for Section 319 grants. These are funds that have been loaned
by the State and subsequently repaid by the borrower to the State. The
repaid funds are then recycled by the State Revolving Fund program to
provide loans that fund other water quality projects. These recycled
funds are regarded as State monies and therefore are eligible to be
used as match for Section 319 funds, provided that they, like any other
Section 319 match funds, are used to implement the State's approved
Section 319 management program.
4. Section 319 May Provide Cost Sharing to Individuals Only in the Case
of Demonstration Projects
Section 319(h)(7) provides that States may use Section 319(h) funds
to provide financial assistance to ``persons'' only if the costs are
related to implementing ``demonstration projects.'' EPA does not
interpret this provision to mean that a BMP or management measure may
be funded in only one location. A successful or potentially successful
approach may need to be assessed and demonstrated in many locations to
indicate its widespread utility in a variety of hydro-geological and
sociological settings. Moreover, projects should be implemented in a
variety of locations within each State so that they may in fact provide
education, information, and outreach to others who may wish to avail
themselves of the same approaches used in the projects.

[[Page 60668]]

In particular, EPA does not believe that Congress intended to
preclude the funding of demonstration watershed projects that may
require the State to share the cost of a particular practice or set of
practices at a number of sites within the watershed in order to
demonstrate the overall effectiveness of the adopted approach in
solving the water quality problem. EPA's and the States' experiences
during the past decade have demonstrated that watershed problems cannot
generally be solved without implementing a comprehensive plan with
appropriate measures and practices at appropriate sites throughout the
watershed.
Although there have now been an increasing number of nonpoint
source success stories that have improved water quality on a very small
geographic scale, our nation has generally not yet achieved success in
abating or preventing nonpoint source pollution at a scale that
achieves the restoration or protection of entire watersheds to meet
water quality standards. Thus, at this early stage in our collective
attempts to protect and restore watersheds by abating nonpoint source
pollution, each State needs to implement watershed-scale projects that
demonstrate how to successfully implement nonpoint source watershed-
based plans to restore and protect watersheds. For this reason, as
discussed earlier in Section III.B of this guidance, EPA is focusing
incremental Section 319 funds upon the development and implementation
of watershed-based plans to implement NPS TMDLs that will restore water
quality.
To ensure widespread implementation of BMPs in demonstration
projects in high-priority watersheds, we encourage States to supplement
Section 319 cost-share to individuals with additional cost-share from
State funds, as well as to work with other funding authorities and
persons that can contribute resources. Where such an approach is
followed, the total cost-share to an individual from Section 319, State
and other Federal (e.g. USDA) funds may not exceed 100% of the total
cost of the practice.
5. The State Must Demonstrate Satisfactory Progress
Section 319(h)(8) of the Clean Water Act provides that no Section
319 grant may be made to a State in any fiscal year unless the
Administrator ``determines that such State made satisfactory progress
in such preceding fiscal year in meeting the schedule specified by such
State under subsection (b)(2).'' Section 319(b)(2) in turn provides
that States' approved Section 319 management programs shall include:

A schedule containing annual milestones for (i) utilization of
the program implementation methods identified in subparagraph (B),
and (ii) implementation of the best management practices identified
in subparagraph (A) by the categories, subcategories, or particular
nonpoint sources designated under paragraph (1)(B). Such schedule
shall provide for utilization of the best management practices at
the earliest practicable date.

The Region must determine, based on an examination of State
activities, reports, reviews, and other documents and discussions with
the State in the previous year, whether the State's progress for the
previous fiscal year in meeting the schedule set forth in its nonpoint
source management program was satisfactory. A very high level of
significance should be assigned to the State's development and
implementation of watershed-based plans in accordance with these
guidelines and in accordance with any schedules that have been
established. In addition, for States with approved CZARA programs,
successful implementation of CZARA management measures can assist
Regions in determining satisfactory progress.
Regions must include in each Section 319 grant (or in a separate
document, such as the grant-issuance cover letter, that is signed by
the same EPA official who signs the grant), a written determination
that the State has made satisfactory progress during the previous
fiscal year in meeting the schedule of milestones specified by the
State in its nonpoint source management program. The Regions must
include brief explanations that support their determinations.
We discuss States' grants reporting requirements in Section IV.E
below. These reports can, if appropriately done, provide much of the
written information needed by the Regions to determine whether the
States have made satisfactory progress.
6. States Must Maintain Their Level of Effort
Section 319(h)(9) of the Clean Water Act requires any State
applying for Section 319 grants to establish and maintain its aggregate
annual level of State nonpoint source pollution control expenditures
for improving water quality at the average level of such expenditures
in FY 1985 and 1986. This is referred to as the State's ``Maintenance
of Effort'' (MOE) requirement. States should establish their FY 1985
and 1986 levels and annual levels based on expenditures by the lead
State agency or agencies responsible for the State's nonpoint source
pollution control activities. Federal funds may not be included in
calculating the MOE base level.
? Calculation of expenditures is based on activities of the
State lead nonpoint source agency or agencies responsible for the
State's nonpoint source pollution control activities, not on what might
be termed related activities of other State agencies with primary
missions other than nonpoint source control. For example, if the State
water quality agency and agricultural agency both have specific
nonpoint source water quality control programs, these should be counted
in the MOE. State soil conservation programs having water quality
improvement or maintenance as a primary objective also should be
included in a State's MOE.
? The MOE base level or annual level cannot include the MOE
or matching expenditures for other Federal programs, such as Sections
106, 319, 205(j)(5), 314, and 117.
? Determination of whether the State expenditures meet the
MOE level for purposes of awarding a Section 319(h) grant will be based
on the grantee expenditures projected in the grant application. (The
State will report whether it has met its MOE requirements in its final
Financial Status Report at the end of the budget year.)

(For additional guidance regarding MOEs, see memorandum Nonpoint Source
FY-88-39, issued by EPA's Office of Water on July 12, 1988).
7. Administrative Costs Funded by Section 319 Funds May Not Exceed 10%
of the Grant Award
Pursuant to Section 319(h)(12), administrative costs in the form of
salaries, overhead, or indirect costs for services provided and charged
against activities and programs carried out with the grant shall not
exceed 10 percent of the grant award. The costs of implementing
enforcement and regulatory activities, education, training, technical
assistance, demonstration projects, and technology transfer are not
subject to this limitation.
8. Section 319 Grants Must Contain a Condition Requiring Operation and
Maintenance
Each Section 319 grant must contain a condition requiring that the
State assure that any management practices implemented for the project
be properly operated and maintained for the intended purposes during
its life span. Operation includes the administration, management, and
performance of non-

[[Page 60669]]

maintenance actions needed to keep the completed practice safe and
functioning as intended. Maintenance includes work to prevent
deterioration of the practice, repairing damage, or replacement of the
practice to its original condition if one or more components fail.
The condition must require the State to assure that any sub-award
of Section 319 funds similarly include the same condition in the sub-
award. Additionally, such condition must reserve the right of EPA and
the State, respectively, to periodically inspect a practice during the
life span of the project to ensure that operation and maintenance are
occurring, and shall state that, if it is determined that participants
are not operating and maintaining practices in an appropriate manner,
EPA or the State, respectively, will request a refund for that practice
supported by the grant.
The life span of a project will be determined on a case-by-case
basis, tailored to the types of practices expected to be funded in a
particular project, and should be specified in the grant condition. For
assistance in determining the appropriate life span of the project,
States may wish to consult with colleagues implementing similar
programs, such as USDA's conservation programs. For example, for
conservation practices, it may be appropriate to construct the life
span consistent with the life span for similar conservation practices
as determined by the Commodity Credit Corporation (pursuant to the
implementation of the Environmental Quality Incentives Program).
Following the approach used in many State and Federal funding programs,
practices will generally be operated and maintained for a period of at
least five to ten years.
A sub-awardee and the State may agree to transfer a grant to
another party. The transferee must be determined by the State to be
eligible to participate in the administration of the Section 319 grant
and must assume full responsibility under the grant, including
operation and maintenance of those practices already installed and to
be installed as a condition of the grant. The State should require a
participant to refund all or a portion of the grant if the participant
sells or loses control of the land under the grant and the new owner or
controller is not eligible to participate in the program or refuses to
assume responsibility under the contract.

E. Reporting Requirements To Be Included in All Grants

All Section 319(h) grants are subject to EPA's general grant
regulations in 40 CFR parts 31 and 35, which specify a variety of basic
grant reporting requirements for awarding grants to States and
localities. The grant regulations outline a range of administrative
reporting requirements, including performance and financial reports.
In addition to the broad rules specified in 40 CFR parts 31 and 35,
section 319 contains two significant provisions that are specifically
focused upon reporting for the Section 319 program:
1. Section 319(h)(10) authorizes EPA to request information, data
and reports as necessary to determine a State's continuing eligibility
to receive Section 319 grants.
2. Section 319(h)(11) requires States to report annually on their
progress in meeting the schedule of milestones contained in their
nonpoint source management programs, and to report available
information on reductions of nonpoint source pollutant loadings and on
improvements to water quality resulting from implementation of nonpoint
source management programs.
Regions and States should work together to assure that appropriate
reporting requirements are incorporated into each grant, either through
specific grant conditions, or within the work program document (see
Appendix B for generic grant condition language). The specific
reporting requirements reflected in that language are discussed
immediately below. The Regions and States are encouraged to assess the
effectiveness of the reporting process and determine annually if
adjustments or modifications are necessary and mutually beneficial.
In general, reporting should be sufficiently detailed to enable a
reviewer to ascertain whether outputs and milestones are being achieved
on schedule, to identify any problems that may be developing in
carrying out tasks in the grant work plan, to identify corrective
actions to address such problems expeditiously, and to adequately
account for all Federal funds expended.
1. Basic Reporting Requirements
Recipients of funds awarded under Section 319(h) are required by
applicable laws and regulations to provide information to EPA under the
following reporting categories, each of which is further described
below: (a) Grantee performance reports; (b) nonpoint source annual
reports; and (c) financial status reports.
a. Grantee Performance Reports. 40 CFR section 31.40(b)(1) requires
States to submit performance reports on the status of Section 319(h)
grants. At a minimum, States should submit these reports on an annual
basis by a date agreed to by the Region and the State. Final reports
are due 90 days after the expiration or termination of grant support,
pursuant to 40 CFR part 31.
Performance reports should include at a minimum:
? Performance/Milestone Summary: A listing of major program
and project accomplishments for the period (based on the project and
program milestones or commitments contained within approved work plans,
grant agreements, or special conditions/agreements), as well as
progress made toward meeting future milestones. (The State may
accomplish some or all of this reporting requirement through its annual
report, as discussed below.)
? Slippage Reports: Provide reasons for delays in meeting
scheduled milestones/commitments and discuss what actions (State,
Federal or other) will be taken to resolve any current or anticipated
problems.
? Additional pertinent information including, when
appropriate, analysis and explanation of cost overruns, unanticipated
events/consequences, etc.
b. Annual Reports. Section 319(h)(11) requires States to report
annually on progress in meeting the schedule of milestones contained in
their nonpoint source management programs, and, to the extent that
appropriate information is available, report reductions in nonpoint
source pollutant loadings and improvements in water quality resulting
from program implementation. This information may be provided in a
streamlined format suggested immediately below. As noted in Section
IV.E.2 below, some States may wish to use the Grants Reporting and
Tracking System to meet appropriate portions of their annual reporting
requirements.
1. A brief summary of progress in meeting approved milestones and
the short- and long-term goals and objectives identified in the State
nonpoint source management program.
2. A matrix displaying milestones from the current year for the
approved State program with the following information for each
milestone:
a. Applicable project or program
b. Scheduled project completion date
c. Percent completed
3. A discussion of the extent to which Federal agencies, lands and
activities within the State are supporting the State in meeting
approved milestones.
4. A summary of the available information on the extent of
reductions in nonpoint source loadings achieved as a result of nonpoint
source program implementation. (More detailed information would be
provided through

[[Page 60670]]

the Grants Reporting and Tracking System, discussed below.)
5. A summary of the available information on the amount of
improvement in water quality (including aquatic habitat quality) as the
result of nonpoint source program implementation. (More detailed
information would be provided through the Grants Reporting and Tracking
System, discussed below.)
6. Where information is not yet available under items 4 and 5 above
for waters or watersheds where implementation is being assisted,
surrogate measures of environmental progress (such as environmental
indicators) should be used and progress should be reported in terms of
the degree or percentage of completion of the project.
In the past, some States have chosen to include additional
information in their annual report, using the report as a means of
assessing progress to date and the need to modify the program;
providing case studies of particular projects; and conveying
information to a broader audience on the activities being conducted by
the State. States may continue to include such additional information,
as a supplement to the basic information required by law. States may
wish to include the following types of information in their reports, or
to include such information on their Web sites and refer to the
information in their reports:
1. Listing of further actions necessary to achieve the goals of the
Clean Water Act, including any recommendations for future State or
national programs to control nonpoint source pollution.
2. Brief case studies of any particularly successful nonpoint
source control efforts.
3. Information on increases in public awareness of nonpoint source
pollution and public involvement in addressing it.
4. Copies of products produced by the State program (e.g., outreach
materials or BMP documents).
The Results Workgroup of the State/EPA Nonpoint Source Partnership
has discussed ways in which annual reports can be written and presented
in a manner that (analogous to contemporary corporate reports) promotes
greater public knowledge and understanding of nonpoint source pollution
and of States' efforts to prevent and reduce nonpoint source pollution.
Several States have begun to do so, and the results are promising to
improve communication with both the public and decision-makers about
nonpoint source pollution. Possible outputs of that workgroup include
guidance, suggested formats, and examples of such annual reports.
Another option may be to do a separate shorter, reader-friendly annual
report that is designed specifically for public education. EPA
encourages all States to consider how their annual reports can be
improved in terms of content, format, presentation, and style to
enhance public support for their programs.
c. Financial Status Reports. 40 CFR section 31.41(b) requires
grantees to submit financial status reports using Standard Form 269 or
269(a) to report the status of funds under each grant. At a minimum,
States should submit financial status reports annually. Final financial
status reports are due within 90 days after the expiration or
termination of the grant agreement.
2. Reporting Procedures and the Grants Reporting and Tracking System
EPA has developed a computerized system, which States and EPA
Regions may now access directly on the World Wide Web, to manage and
report data on Section 319 grants. This system, known as Section 319
Grant Reporting and Tracking System (GRTS), provides States with the
capability to fulfill grant reporting requirements and has created a
database of nonpoint source program information which can be used to
enhance State, Regional, and national understanding of nonpoint source
projects and programs.
States are required to use GRTS to report the specific nationally
mandated data elements listed in Appendix C. This list consists of
information needed by EPA and the States to account successfully to
Congress, State legislatures, and the public for our accomplishments in
implementing the national nonpoint source program. A memorandum,
Modifications to Nonpoint Source Reporting Requirements for Section 319
Grants (September 27, 2001), that discusses each of the mandated data
elements in detail, as well as other improvements to GRTS, is available
on EPA's Web site at http://www.epa.gov/owow/nps/section319/grts.html.
The most important new features of the modified GRTS are: (1)
Precisely geo-locating Section 319 projects; (2) including a concise
summary of each project; (3) using common geo-locational information to
link funded projects to improvements in waters quality over time, which
will be reported through EPA's WATERS database (which includes States'
305(b) and 303(d) information); and (4) providing information on
reductions in nonpoint pollutant loads. The new GRTS assists the States
in meeting the load reduction reporting requirements of Section
319(h)(11) by providing computer-based tools and formats that have been
designed to simplify the effort as much as possible.
In addition to these mandated elements, GRTS has the capacity to
accept a great deal of additional information on State programs and
projects. States can, if they choose, include detailed project
descriptions or project implementation plans, and attach maps, tables,
photographs, and spreadsheets. In fact, States can attach appropriate
portions of their Section 319(h)(11) annual report to GRTS. Similarly,
States can provide much or all of the information needed by EPA Regions
to make annual ``satisfactory progress'' determinations as required by
Section 319(h)(8). Finally, due to its Web-enabled format, States may
allow sub-State organizations that receive Section 319 funds to
directly enter data into the system, thereby reducing the States' own
reporting burdens.
Regions are encouraged to work with their States to design
reporting procedures utilizing GRTS that will promote efficiency and
eliminate duplication of work. In particular, States are encouraged to
use GRTS to submit grantee performance reports pursuant to 40 CFR
31.40(b)(1). States are also encouraged to use GRTS' project
description, project evaluation, and other data fields for more
complete data management and project reporting purposes. In addition,
the Regions should explore ways to coordinate and synchronize the
submittal of performance reports of other EPA programs managed within
the same State office (e.g., Section 106, 104(b), 305(b) and 604(b)).
Since GRTS is an official reporting vehicle for programs or
projects conducted by States under Section 319(h) grants, a State's
cost to enter data and otherwise utilize GRTS is itself eligible for
funding under Section 319. Regions and States should work together to
ensure that the States are provided sufficient resources in their
Section 319 grants to meet these reporting requirements and management
support needs. Examples of GRTS support needs include: providing
adequate staff support; purchasing necessary equipment, materials, and
supplies (including high-speed data switches or other links that enable
fast and efficient transfer of data to and from GRTS); and attending
GRTS conferences and training.
3. STORET
In March 2003, EPA published ``Elements of a State Water Monitoring
and Assessment Program'' (available at

[[Page 60671]]

http://www.epa.gov/owow/monitoring/repguide.html). The document
recommends the ten basic elements of a State water monitoring program.
One of the ten elements is the use of an accessible electronic data
system for water quality that meets State/Federal geo-locational
standards with timely data entry and public access. EPA's new STORET
(STOrage and RETrieval) system provides an accessible, nationwide
central repository of water information of known quality.
In the future, EPA will require that all States use STORET either
directly or indirectly (e.g., via the Central Data Exchange (CDX) which
will include the Monitoring Data Standard). For States that do not
currently operate STORET, the Elements document cited above states that
these States' monitoring strategies should provide for the use of
STORET as soon as it is practicable. In the interim, the document
states that States should store their assessment information in an
accessible electronic database. Consistent with this approach, States
that are not yet prepared to use STORET for storage of data generated
in the development and implementation of Section 319 watershed projects
should in the interim store their assessment in an accessible
electronic database.
EPA's goal is that, as soon as possible, all States will use STORET
to store data generated in the development and implementation of
Section 319 watershed projects. STORET broadly contains water quality
data with actual concentrations of pollutants that are measured in the
water or other similar parameters that may be used, such as
macroinvertebrate counts. Because STORET is publicly accessible and
utilized on a large scale, it is critical that monitoring data from all
EPA-funded projects be entered into STORET so that the information can
be available to all interested practitioners. Over the past decade EPA
has developed a modernized STORET system that has improved the quality
of entered data (including adding biological data) and is fully
interactive and more user friendly. For more information on STORET, see
http://www.epa.gov/storet.
4. Reporting and Record-Keeping for Sub-State Organizations
Just as the grant agreement specifies outputs and milestones to be
achieved by the States, States should assure that agreements with sub-
State organizations specify outputs, milestones, and reporting and
record keeping requirements in memoranda of agreement, contracts or
other appropriate documents. As indicated in the preceding section,
States may, where appropriate, include in these agreements a provision
requiring the sub-State organization to enter data into STORET and GRTS
reporting worksheets for entry into GRTS.
Where a sub-grantee provides a portion of the State's match, the
State should ensure that adequate records are kept with respect to that
portion. 40 CFR section 31.41(a)(2) specifies that grantees shall not
impose more burdensome requirements on sub-grantees than they are
subject to themselves.

V. Management and Oversight of Section 319(h) Grants

EPA's oversight approach will emphasize cooperative partnerships
based upon EPA's and the States' mutual goal of implementing dynamic
and effective national nonpoint source programs designed to achieve and
maintain beneficial uses of water. The guidelines established in a new
joint performance evaluation process will promote continuous monitoring
throughout the life of projects to help ensure the mutual understanding
of expectations and outputs of particular grants (see 40 CFR 35.115 and
EPA Order 5700.6).
In conducting its oversight activities, EPA will rely to a
significant extent on information and reports provided by the State as
well as data entered by the State into STORET and GRTS. EPA will review
this information and then contact the States if EPA needs additional
information. In addition to reviewing the State's reports, EPA or the
State should endeavor to meet at least annually to discuss the State's
progress in implementing its program.
Of primary importance is the discussion of State progress in
developing and implementing watershed-based plans and achieving results
from these implementation activities. To the extent relevant and
appropriate to fully evaluating this progress, Regions should review at
least some of the State's watershed-based plans and discuss both their
strengths and weaknesses with the State. Regions should also review and
discuss with the State the rate of progress in successfully
implementing these plans.
EPA and the State should also discuss ways in which EPA can better
assist the State during the forthcoming year in implementing the
State's program. Types of assistance to be considered include: support
for State efforts to assess water quality problems; support for State
design and implementation of watershed-based plans; technical
assistance to help the State monitor the progress and results of
watershed projects; and assistance in the development of outreach
tools.
When evaluation results show that grant and contract provisions
have not been substantially achieved, the State and Region should work
cooperatively to take corrective action. If performance or the results
achieved by the State are poor, the Region may be required to determine
that the State has not made ``satisfactory progress'' under Section
319(h)(8) and to deny the State's grant application the following year.
As discussed above, one particular area of importance for Regional
determination is whether States have made satisfactory progress in
addressing their impaired waters through the development and
implementation of watershed-based plan. Other forms of corrective
action are described at 40 CFR 31.43.
When a State lead nonpoint source agency is providing EPA grant
funds to other State or local agencies to carry out the terms of a
nonpoint source grant, the lead agency remains responsible for all
outputs in its Section 319(h) work program. Thus, if a local agency has
difficulties performing particular funded activities, the Region should
work with the State lead agency to resolve the problem.
Periodic Reviews
Using its ``feedback loop'' established in States'' upgraded
nonpoint source management programs, the State should periodically
review and evaluate its nonpoint source management program (i.e., every
five years). Using environmental and functional measures of success,
the State will assess the goals and objectives of the nonpoint source
management program, and revise the program as appropriate, in light of
its review.

VI. Grants to Indian Tribes

These guidelines are not specifically directed to Tribal nonpoint
source management programs. Given the differing statutory provisions
and approaches applicable to Tribal programs, EPA publishes separate
nonpoint source guidance for Tribes. However, we present a brief
overview below. For detailed information about Tribal nonpoint source
programs, we recommend referring to the Tribal Nonpoint Source Planning
Handbook (EPA-841-B-97-004, August 1997) as well as additional guidance
documents written for Tribal nonpoint source programs that are located
at http://www.epa.gov/owow/nps/tribal.html.
Tribes, like States, must have EPA-approved nonpoint source
assessments and management programs (as well as approval for treatment
in a similar

[[Page 60672]]

manner as a State) in order to be eligible for Section 319(h) grants.
EPA is very pleased that to date, more than 80 Tribes, comprising over
70% of all Indian country, have approved nonpoint source assessments
and management programs. EPA encourages other Tribes that have
significant nonpoint source pollution problems to similarly develop
assessments and programs that focus on their highest priority nonpoint
source problems. While Section 319 funds may not be used to develop
nonpoint source assessments and management programs, other EPA funding
programs are available to Tribes to develop nonpoint source assessment
reports and management programs. Technical assistance with the
development of assessment and management programs is available from
EPA.
Section 518(f) states that the Administrator may reserve for Indian
Tribes treated similarly to States not more than one-third of one
percent of the amount appropriated for any fiscal year under Section
319(j) for Sections 319(h) and (i). In each of the Fiscal Years 2000-
2003, Congress has authorized EPA to exceed the 1/3% limitation and EPA
has done so. EPA will annually inform the Tribes as to the amount of
funding that is available for the forthcoming year. To be eligible for
Section 319 nonpoint source grants, Tribes must meet the requirements
in Section 518(e) of the Clean Water Act, as well as applicable
provisions of EPA's general grant regulations in 40 CFR parts 31 and
35.
Indian Tribes are required to meet the 40 percent matching and
maintenance-of-effort requirements under Section 319(h); however, if a
Tribe can demonstrate financial cause, its match requirement may be
reduced to 10 percent, with the Federal share of Section 319(h) funds
increased to 90 percent. In addition, Tribes, like States, may use in-
kind contributions to meet matching requirements.

VII. Waiver Process

Circumstances may arise in which a State believes it is required to
develop and submit a work plan for a particular year that fails to meet
one or more requirements in these guidelines. If such circumstances
arise, and the State believes the circumstances justify a waiver from
one or more requirements in these guidelines, the State may submit a
request for a waiver to EPA's Regional Water Division Director. The
request should identify the requirement from which a waiver is
requested; the circumstances requiring the waiver; a description of the
activities and projects that the State will be implementing in lieu of
those required by these guidelines; and a commitment to adhere to the
guidelines to the greatest extent possible. The Regional Division
Director may approve the waiver for the year requested with the
concurrence of the Director of the Assessment and Watershed Protection
Division (a division of the Office of Water in EPA Headquarters).
This waiver process applies only to the requirements established by
these guidelines; it does not apply to any statutory or regulatory
requirements reiterated in these guidelines. In addition, this process
is not required for any Regional authorization of the use of more than
20% of incremental funds to develop watershed-based plans as discussed
earlier in these guidelines in Section III.B.

Appendix A--Measures and Indicators of Progress and Success

To measure the progress and success of their nonpoint source
programs, States will generally need to use at least three sets of
measures. These include measures to indicate progress towards: (1)
The State's overall water quality vision of achieving and
maintaining beneficial uses of water; (2) the long-term goals set by
the State in its program (e.g., successfully completing the
implementation of a watershed-based plan and achieving water quality
standards, or installing appropriate technologies at all animal
waste facilities that need to be upgraded within a watershed); and
(3) the shorter-term goals and objectives set by the State (e.g.,
successfully demonstrating a particular technology).
The following list illustrates measures and indicators which
States may choose from or add to that will help the States and the
public measure the progress and success of their programs. States
may identify and use other measures and indicators that are most
relevant to their nonpoint source problems, programs, and projects.
However, States must report on at least the three measures of
progress that are identified in Section 319(h)(11) (i.e.,
implementation milestones, available information on reductions in
nonpoint source pollutant loadings, and available information on
improvements in water quality).
Well-designed State programs will usually include several
appropriate measures and indicators from each of the categories set
forth below for each of their projects or program activities. For
overall program status and trends, States will generally include
measure 1.A. below as part of their Section 305(b) reports.
The categories below are approaches which have been successfully
used as water-quality and implementation measures and indicators, as
well as measures of enhanced public education, awareness and action.
They are presented as examples, not requirements, and should be used
as starting points for discussion.

1. Water Quality Improvement From Nonpoint Source Controls

a. Number (or percentage) of river/stream miles, lake acres,
and estuarine and coastal square miles that fully meet all water
quality standards.
b. Number (or percentage) of river/stream miles, lake acres, and
estuarine and coastal square miles that come into compliance with
one or more designated uses (e.g., a river segment that is neither
fishable nor swimmable becomes fishable), or with one or more
numeric water quality standard (e.g., achieves a standard for
phosphorus while continuing to exceed a standard for nitrogen).
c. Demonstrable improvements in relevant surface and ground
water quality parameters.
d. Demonstrable improvements in biological or physical
parameters (e.g., increase in diverse fish or macroinvertebrate
populations, or improved riparian areas or other measures of
habitat).
e. Opening of previously closed shellfish beds.
f. Lifting of fish consumption advisories.
g. Prevention of new impairments (e.g,., number of river miles
removed from the ``threatened'' lists, or number of miles of high-
quality waters protected).

2. Nonpoint Source Pollutant Load Reduction

a. Reductions in pollutant loadings (e.g., by pounds or
percentage) from nonpoint sources in watersheds of impaired/
threatened waters.
b. Reductions in pollutant loadings (e.g., by pounds or
percentage) from nonpoint sources in high-priority watersheds
identified by the State.
c. State-wide reduction in pollutant loadings from nonpoint
sources.
d. In the case of nonpoint source pollution which may result
from activities conducted in the future, prevention or minimization
of new loadings, and/or offset of new loadings by reductions from
existing sources.
e. Reductions in frequencies, or prevention of increases, of
peak flows in developing or developed areas.

3. Implementation of Nonpoint Source Controls

a. Number of measures implemented in watersheds of impaired/
threatened waters (e.g., number of on-the-ground practices
implemented that reflect, for example, the ``best practicable''
approach to solve the identified problem.)
b. Percentage of ``needed'' measures implemented in watersheds
of impaired/threatened waters (e.g., where watershed analysis has
shown the need to implement measures at 20 sites, annual progress in
implementing a watershed project can be shown by the number of BMPs
installed).
c. Combination of 2.b and 3.b.
d. Number of approved or certified plans (e.g., written to
address erosion and sediment control, storm water, nutrient
management, or pest management).
e. Percent of the watershed(s) covered by plans described in
item 3d.
f. Percent of facilities covered by plans described in item 3d.
g. Statistically-based survey of implementation rates (e.g.,
results of State-approved BMP use and effectiveness surveys).

[[Page 60673]]

h. Percent of priority ground water addressed by nonpoint source
controls.

4. Public Education, Awareness, and Action

a. Participation rates in education programs specifically
directed to solving particular nonpoint source pollution problems.
b. Statistically-based survey of public awareness, knowledge,
and action to measure changes in attitudes and action over time.
c. Participation rates in various nonpoint source activities,
such as citizen monitoring and watershed resource restoration
activities.
d. Participation rates in various public awareness and education
efforts.

Appendix B--Generic Grant Condition Establishing State Reporting
Requirements

The recipient (name of State lead nonpoint source agency) agrees
to comply with all reporting requirements required by EPA regulation
and Sections 319(h)(10) and (11) of the Clean Water Act. All
reporting information will be submitted according to the schedule(s)
required in 40 CFR parts 31 and 35 regulations and in the ``Nonpoint
Source Program and Grants Guidelines'' or as subsequently amended.
The three basic reporting categories include: Grantee Performance
Reports [40 CFR, part 31.40(b)(1)]; Nonpoint Source Progress Reports
[CWA, Section 319(h)(11)]; and Financial Status Reports [40 CFR,
part 31.41(b)].
The recipient agrees to use the Agency's Grants Reporting and
Tracking System (GRTS) to provide all nationally mandated data
elements listed in Appendix C of the nonpoint source program and
grants guidelines.
Failure to comply with the above referenced reporting
requirements may result in a disruption of grantee funding and/or
early termination of the grant agreement in accordance with 40 CFR
part 31.43.

Appendix C--Nationally Mandated Data Elements Under Section 319 Grants
Reporting and Tracking System (GRTS)*

Following is a list of mandated reporting elements for State
Section 319 Programs:

1. Project Identification

NPS Program or Project Title
NPS Category (choose from list)
a. Primary Category (e.g., agriculture, silviculture, or
hydrologic modification)
b. Secondary Category of Pollution (e.g., non-irrigated crop
production, road construction/maintenance, or riparian area
degradation)
NPS Functional Category (choose from list)
NPS Waterbody Type (choose from list)
NPS Stream Reach Code (linked to WATERS for easy on-line
identification; for estuaries, latitude/longitude are used in lieu
of a stream reach code)
Pollutant Type (choose from list)
TMDL Check-off (identifying projects that consist of the development
of a NPS TMDL; the development of a watershed-based plan to
implement a TMDL; or the actual implementation of such a plan)
Clean Lakes check-off boxes (yes/no, and if yes, 3 follow-up
questions)

2. Project Description

Best Management Practices (choose from list, or enter a new one if
not listed)
Pollutant Type (choose from list)
Project Description (text field with template provided)

3. Accounting for Results on the Ground

a. Load Reductions for Projects Designed to Reduce Nutrients and/or
Sediment
? Identify if project is a BMP implementation project for
nutrients or sediment
? If so, provide an estimate of sediment and/or nutrient
load reductions
? State whether estimate is based on monitoring or
modeling
? Name of model
b. Wetlands/Streambanks/Shorelines: Account for feet of streambanks/
shorelines restored or protected, and acres of wetlands restored or
protected

4. Accounting for Expenditures of Funds and Implementation of Programs
and Projects

NPS Budget 319(h) Funds
Number of State Employees (FTEs) supported by 319(h) Funds Under
this Grant
Amount of 319(h) Funds Allocated to Sub-State Recipients Under this
Grant
NPS Program or Project Start Code/Date
NPS Program or Project Completion Code/Date
Estimated expenditure breakdown for main source categories after
project is completed

Appendix D

Factors in Planning Target Formula
----------------------------------------------------------------------------------------------------------------
Factor Data source Weighting Rationale
----------------------------------------------------------------------------------------------------------------
I. Statutory set-aside for Indian Tribes. Sec. 106 allocation 0.0033 Sec. 518(f).
formula.
II. Other:
Minimum amount for the States and N/A........................ 0.2643 All States, D.C. and
Territories. territories receive funds
to institutionalize NPS
control activities &
program.
1988 Section 305(b) Report........... 1988 Draft-10/89........... N.A National data used to
determine the weighting
factors for ag, urban,
mining, & forestry as
indicated below.
Population........................... 1980 Census................ 0.2861 Factors include State
1987 Census (est.)......... fraction of national
population, population
density, and population
growth.
Cropland Acreage..................... 1987 Ag Census............. 0.1581 Cropland is used as a
1987 NRI Data.............. surrogate for sediment and
1980 Census Data........... nutrient problems, which
1986 ASIWPCA NPS Report.... account for about 85% of
ag NPS problems. Modeling
approach based partly on
1986 ASIWPCA national
data.
Pasture & Rangeland Acreage.......... 1987 Ag Census............. 0.0205 Animal units & animal units/
farm acre used as
surrogate for BOD &
bacteria problems, which
account for about 11% of
the ag NPS problem.
Forest Harvest Acreage............... EPA........................ 0.0429 Acreage of private &
Federal forest harvested
annually.
Wellhead Protection Areas............ Wellhead Protection Program 0.1135 Factors include relative
Allotment.................. risk to ground water,
Formula--EPA............... number of people
potentially impacted,
number of wellheads to be
protected & size of
States.
Critical Aquatic Habitats............ Dahl, T.E 1990. Wetland 0.0500 State share of total
Losses in the United wetland acreage is a
States 1970s 1980s. U.S. meaningful surrogate for
Dept. of the Interior, critical aquatic habitat
Fish & Wildlife Service, since it covers both fresh
Washington, D.C. and saline waters.

[[Page 60674]]

Other Use Impact--319(a)............. N/A........................ N/A All NPS factors for ag,
urban, forestry & mining
are based upon land-based
activities, therefore
addressing impaired &
threatened waters.
Mining............................... 1987 NRI................... 0.0572 State's fraction of mined
1980 RCA Appraisal......... acres as surrogate for
mining.
Pesticides........................... 1987 NRI................... 0.0074 Amount & rate of
1986 National Pesticide.... application of active
Usage Data Base, RFF & EPA. ingredients for pesticides
recommended for inclusion
in EPA's National
Pesticide Survey.
----------------------------------------------------------------------------------------------------------------
* The weighting for ``Other Factors'' is based on the allocation after National set-asides have been subtracted
from the total appropriated funds. As a result, the sum of the weighting for ``Other Factors'' is unity.
Note: These factors are unchanged from EPA's current formula.

Appendix E

State-by-State Section 319 Allocation

This Appendix sets forth, for each State, its percentage of the
total allocation of Section 319 dollars each year. To calculate the
allocation provided to a particular State in a particular year, do
the following:
1. Begin with the total 319 funding appropriated by Congress for
the year in question.
2. Subtract at least 1/3% of the total 319 appropriation for
distribution to Indian Tribes. (The Clean Water Act allows EPA to
provide only up to one-third of one percent of the total 319
appropriation to Tribes. However, for each of the past several
years, Congress has removed that limitation for the year in
question, and EPA has provided that $6 million of the total 319
appropriation should be distributed to eligible Tribes. Since this
depends on annual congressional appropriations language, the annual
allocation of Section 319 funds to Indian Tribes cannot be reliably
predicted.)
3. Multiply the funds remaining after step #2 by the applicable State
percentage below.

------------------------------------------------------------------------
Percentage
------------------------------------------------------------------------
Region 15
Connecticut................................................ 0.98
Maine...................................................... 1.17
Massachusetts.............................................. 1.36
New Hampshire.............................................. 0.76
Rhode Island............................................... 0.68
Vermont.................................................... 0.74
Region 2
New Jersey................................................. 1.67
New York................................................... 3.40
Puerto Rico................................................ 0.56
Virgin Islands............................................. 0.27
Region 3
Delaware................................................... 0.72
Dist. Of Col............................................... 0.63
Maryland................................................... 1.34
Pennsylvania............................................... 2.95
Virginia................................................... 1.97
West Virginia.............................................. 1.10
Region 4
Alabama.................................................... 1.96
Florida.................................................... 3.92
Georgia.................................................... 2.34
Kentucky................................................... 1.71
Mississippi................................................ 1.92
N. Carolina................................................ 2.33
S. Carolina................................................ 1.56
Tennessee.................................................. 1.59
Region 5
Illinois................................................... 4.12
Indiana.................................................... 2.25
Michigan................................................... 2.93
Minnesota.................................................. 3.46
Ohio....................................................... 3.04
Wisconsin.................................................. 2.59
Region 6
Arkansas................................................... 1.97
Louisiana.................................................. 2.44
New Mexico................................................. 1.22
Oklahoma................................................... 1.58
Texas...................................................... 4.75
Region 7
Iowa....................................................... 2.29
Kansas..................................................... 1.85
Missouri................................................... 2.31
Nebraska................................................... 1.82
Region 8
Colorado................................................... 1.27
Montana.................................................... 1.33
N. Dakota.................................................. 2.42
S. Dakota.................................................. 1.64
Utah....................................................... 0.92
Wyoming.................................................... 0.98
Region 9
Arizona.................................................... 1.64
California................................................. 5.34
Hawaii..................................................... 0.77
Nevada..................................................... 0.85
Am. Samoa.................................................. 0.27
Guam....................................................... 0.27
Marianas................................................... 0.27
Region 10
Alaska..................................................... 1.22
Idaho...................................................... 1.24
Oregon..................................................... 1.39
Washington................................................. 1.92
------------------------------------------------------------------------

Appendix F--Generic Grant Condition Regarding Watershed-Based Plans

The recipient [name of State lead nonpoint source agency]
has
received a grant to implement one or more watershed-based plans. The
recipient shall complete the development of a watershed-based plan,
including all of the information required by elements (a)--(i) in
Section III. D of these guidelines (``Watershed-Based Plans''),
prior to beginning to implement it with Section 319 funds.
Upon request by EPA, the recipient [name of State lead nonpoint
source agency]
shall provide a copy of any watershed-based plan
funded under Section 319 as well as any available information
regarding the status of implementation activities and results,
including but not limited to any reports on BMP's implemented; 319
funds expended; contributions of funds by other sources to assist in
implementation of the watershed-based plans (to the extent this
information is readily available to the State); results achieved;
and other relevant and appropriate information.

[FR Doc. 03-26755 Filed 10-22-03; 8:45 am]
BILLING CODE 6560-50-P

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