also provides for a maximum funding level that a State can receive in any fiscal year (150% of its previous fiscal year allotment).

(1) Components and component weights (i) Components. The six components used in the Section 106 State allotment formula are: Surface Water

Area; Ground Water Use; Water Quality Impairment; Point Sources; Nonpoint Sources; and Population of Urbanized Area. The components for the formula are presented in Table 1 of this section, with their associated elements, sub-elements, and supporting data sources.

(ii) Component weights. To account for the fact that not all of the selected formula components contribute equally to the extent of the pollution problem within the States, each formula compo

nent is weighted individually. Final component weights will be phased-in by FY 2004, according to the schedule presented in Table 2 of this section:

(2) Funding floor. A funding floor is established for each State. Each State's funding floor will be at least equal to its FY 2000 allotment in all future years unless the appropriation for States under the Section 106 Grant Program decreases from its FY 2000 level.

(3) Funding decrease. If the appropriation for the State Section 106 Grant Program decreases in future years, the funding floor will be disregarded and all States allotments will be reduced by an equal percentage.

(4) Inflation adjustment. Funding floors for each State will be adjusted for inflation when the appropriation for the State Section 106 Grant Program increases from the preceding fiscal year. These adjustments will be made on the basis of the cumulative change in the Consumer Price Index (CPI), published by the U.S. Department of Labor, since the most recent year in which State Section 106 funding last increased. Inflation adjustments to State funding floors will be capped at the lesser of the percentage change in appropriated funds or the cumulative percentage change in the inflation

rate.

(5) Cap on annual funding increases. The maximum allotment to any State will be 150 percent of that State's allotment for the previous fiscal year.

(6) Cap on component ratio. A component ratio is equal to each State's share of the national total of a single component. The cap on each of the six State formula components ratios is 10 percent. If a State's calculated component ratio for a particular component exceeds the 10 percent cap, the State will instead be assigned 10 percent for that component. The component ratios

for all other States will be adjusted accordingly.

(7) Update cycle. The data used in the State formula will be periodically updated. The first update will impact allotments for FY 2001, and will consist of updating the data used to support the Water Quality Impairment component of the State formula. These data will be updated using the most currently available CWA Section 305(b) reports. After this initial update, the data used to support all six components of the Section 106 State allotment formula will be updated in FY 2003 (for use in the determination of FY 2004 allotments). Thereafter, all data will be updated every five years (i.e., in FY 2008 for FY 2009 allotments, in FY 2013 for FY 2014 allotments, etc.) Note there will be an annual adjustment to the funding floor for all States, based on the appropriation for the Section 106 Grant Program and changes in the CPI.

(c) Interstate allotment formula. EPA will set-aside 2.6 percent of funds appropriated for States under the Section 106 Grant Program for interstate agencies. The Section 106 interstate allotment formula consists of two parts: a base allotment; and a variable allotment.

(1) Base allotment. Each eligible interstate agency is provided with $125,000 as a base allotment to help fund coordination activities amongst its member States. However, no more than 50 percent of the total available interstate set-aside may be allocated as part of the base allotment. If, given the 50 percent limitation placed on the base allotment the amount of interstate setaside funds is insufficient to provide each interstate agency with $125,000,

then each interstate agency will receive a base allotment equal to 50 percent of the total interstate set-aside divided by the total number of eligible interstate agencies.

(2) Variable allotment. The variable allotment provides for funds to be distributed to interstate agencies on the basis of "the extent of the pollution problems in the respective States.' Funds not allotted under the base allotment will be allotted to eligible interstate agencies based on each interstate agency's share of their member States' Section 106 formula allotment ratios. Updates of the data for the six components of the Section 106 State allocation formula will automatically result in corresponding updates to the variable allotment portion of the interstate allotments. The allotment ratios for those States involved in compacts with more than one interstate agency will be allocated amongst such interstate agencies based on the percentage of each State's territory that is situated within the drainage basin or watershed area covered by each compact.

[64 FR 23737, May 3, 1999]

§35.255 Maintenance of effort.

(a) To receive funds under section 106, any State or interstate agency must expend annually for recurrent section 106 program expenditures an amount of non-Federal funds at least equal to expenditures during the fiscal year ending June 30, 1971.

(b) The maintenance of effort requirement in paragraph (a) of this section shall not apply to eligible Indian Tribes.

[54 FR 14358, Apr. 11, 1989, as amended at 59 FR 13817, Mar. 23, 1994]

§ 35.260 Limitations.

(a) The Regional Administrator will not award section 106 funds to any State which does not monitor and compile, analyze, and report water quality data as described in section 106(e)(1) of the Clean Water Act. The Regional Administrator may award section 106 funds to eligible Indian Tribes even if they do not meet this requirement. However, all monitoring and analysis activities performed by a Tribe must

meet the applicable quality assurance, quality control requirements as specified in 40 CFR part 31.

(b) The Regional Administrator will not award section 106 funds to any State, including any eligible Indian Tribe, which does not have authority comparable to that in section 504 of the Clean Water Act and adequate contingency plans to implement such authority.

(c) The Regional Administrator will not award section 106 funds if federally assumed enforcement as defined in section 309(a)(2) of the Clean Water Act is in effect with respect to the agency.

(d) The Regional Administrator will not award section 106 funds unless the work program submitted with the assistance application shows that the activities to be funded are coordinated, as appropriate, with activities proposed for funding under section 205 (g) and (j) of the Clean Water Act.

[47 FR 44954, Oct. 12, 1982, as amended at 54 FR 14358, Apr. 11, 1989; 59 FR 13817, Mar. 23, 1994]

§35.265 Awards to Indian Tribes.

(a) The Regional Administrator will not award section 106 funds to an Indian Tribe unless EPA has determined that the Indian Tribe meets the requirements set forth at 40 CFR 130.6(d) as well as the applicable limitations in 40 CFR 35.260.

(b) The Regional Administrator will not give a continuation award to any Indian Tribe unless the Tribe shows satisfactory progress in meeting its negotiated milestones and goals.

[54 FR 14358, Apr. 11, 1989, as amended at 59 FR 13817, Mar. 23, 1994]

STATE ADMINISTRATION (SECTION 205(G))

§35.300 Purpose.

Section 205(g) of the Clean Water Act authorizes assistance to States (as defined in section 502 of the Act) for two purposes.

(a) Construction management assistance. The 205(g) funds may be used for administering elements of the construction grant program under sections 201, 203, 204, and 212 of the Clean Water Act and for managing waste treatment

construction grants for small communities. Construction management assistance funds may also be used for administering elements of a State's construction grant program which are implemented without Federal assistance, if the Regional Administrator determines that those elements are consistent with 40 CFR part 35, subpart I. Program requirements for State construction management activities under delegation are provided in 40 CFR part 35, subparts F and I.

(b) Permit and planning assistance. The 205(g) funds may be used for administering permit programs under sections 402 and 404 and for administering statewide waste treatment management planning programs under section 208(b)(4) of the Clean Water Act. Some of these activities may be eligible for funding under sections 106 and 205(j) of that Act. (See §§ 35.250 and 35.350.) Program requirements for water quality management activities are provided in 40 CFR part 35, subpart G.

$35.305 Maintenance of effort.

To receive funds under section 205(g), a State agency must expend annually for recurrent section 106 program expenditures an amount of non-Federal funds at least equal to such expenditures during fiscal year 1977, unless the Regional Administrator determines that the reduction is attributable to a non-selective reduction of expenditures in State executive branch agencies.

§35.310 Limitations.

(a) The Regional Administrator will not award section 205(g) funds for construction management assistance unless there is a signed agreement delegating responsibility for administration of those activities to the State.

(b) The Regional Administrator will not award section 205(g) permit and planning assistance before awarding funds which provide for the management of a substantial portion of construction grants program. The maximum amount of permit and planning assistance a State may receive is the amount remaining in its reserve after the Regional Administrator allows for full funding of the management of the construction grant program under full delegation.

(c) The Regional Administrator will not award section 205(g) permit and planning assistance unless the work program submitted with the assistance application shows that the activities to be funded are coordinated, as appropriate, with activities proposed for funding under sections 106 and 205(j) of the Clean Water Act.

WATER QUALITY MANAGEMENT PLANNING (SECTION 205(J)(2))

§35.350 Purpose.

Sections 205(j)(2) and 518 of the Clean Water Act authorize assistance to States (as defined in section 502 of the Act) and to eligible Indian Tribes to carry out water quality management planning activities. Some of these activities may be eligible for funding under sections 106 and 205(g) of that Act. (See §§ 35.250 and 35.300.) Program requirements for water quality management activities are provided in 40 CFR part 35, subpart G. The purpose of 205(j) funds includes, but is not limited to, the following.

(a) Identification of the most cost-effective and locally acceptable facility and nonpoint measures to meet and maintain water quality standards.

(b) Development of an implementation plan to obtain State and local financial and regulatory commitments to implement measures developed

under paragraph (a) of this section.

(c) Determination of the nature, extent, and causes of water quality problems in various areas of the State and interstate region.

(d) Determination of those publicly owned treatment works which should be constructed with Federal assistance, in which areas and in what sequence, taking into account the relative degree of effluent reduction attained, the relative contributions to water quality of other point or nonpoint sources, and the consideration of alternatives to such construction.

(e) Implementation of section 303(e) of the Clean Water Act.

[47 FR 44954, Oct. 12, 1982, as amended at 54 FR 14358, Apr. 11, 1989; 59 FR 13817, Mar. 23, 1994]