vvEPA
               United States
               Environmental Protection
               Agency
               Office of Water       £^30/9-84-004
               Program Operations (WH-546)   July 1984
               Washington DC 20460
Construction Grants
1985  (CG-85)

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          CONSTRUCTION GRANTS  -  1985


        MUNICIPAL WASTEWATER TREATMENT
United  States Environmental  Protection Agency

     Office of Water Program Operations
            Washington, D.C.  20460
                          U.S. Environs--,!  < -.  -•;   ,lOn Agency
                          Region V,  L: T  : .-
                          230 SoutJi [;._  ...-,-    .t
                          Chicago, Illinois  60C04
                   July 1984
For sale by the Superintendent of Documents, U.S. Government Printing Office
                 Washington, D.C. 20402

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                                          NOTICE


         The mention of trade names or commercial products in this  publication  is  for
     illustration purposes and  does  not  constitute  endorsement  or  recommendation  for
     use by the U.S. Environmental  Protection Agency.
     PREPARED BY:

         Municipal  Construction Division and
         Facilities Requirements Division
         Office of Water Program Operations
         Environmental  Protection Agency
         Washington, DC 20460


     Project Officer:

          James F.  Wheeler,  P.E.
          Municipal Construction Division


     Project Managers:

         James F.  Wheeler, P.E.
         Municipal  Construction Division
         H. William Kramer
         Facilities Requirement Division


     Task Managers:

          Joyce Lemmon, Charles Vanderlyn,  and Bruce Mintz
          Municipal Construction Division
          Sue Johnson
          Facilities Requirements Division


     Contractor:

         Technical  Assistance in the production of this  publication  was
         provided  by:

             Brown  and  Caldwell, Pleasant  Hill,  California;  and  A.T.  Bowyer,  Inc.,
             Towaco, New Jersey
                                            11
3, Envlronner"  ' "

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                                     CONTENTS
          TABLE OF CONTENTS	    iii
          FOREWORD	    xii

                                   INTRODUCTION

          USER GUIDE	    xiv
            Reference to Federal Regulations    	    xiv
            1981 Amendments to the Clean Water Act	     xv
            Terminology	     xv
            Other Guidance	    xvi
            Appendices	    xvi

          MANAGING YOUR PROJECT	    xvi
            Introduction 	    xvi
            Clean Water Act	    xvi
            Grants Program 	  xviii
            State Contact and State Delegation  . . •.	    xix
            Project Management 	    xxi
            Organizing the Project Team	    xxi
            Avoiding Project Delay 	  xxiii
            Allowance for Facilities Planning and Design 	   xxiv
            Compliance	   xxvi

Chapter

                          PART I.  FACILITIES PLANNING


1 .... FACILITIES PLANNING—PURPOSE AND CONTENT	      1
            1.0   Amendments of 1981
            1.1   Facilities Planning—Purpose and Definition
            1.2   Contents of Facilities Plan

2 .... PREPLANNING  	      6
            2.0   Preplanning Conference
            2.1   Eligible Applicant
            2.2   Plan of Study
            2.3   Intergovernmental Coordination
            2.4   Procurement of Services

3 .... FACILITIES PLANNING CONSIDERATIONS 	      8
            3.0   General  Preparation Procedures
            3.1   Public Participation
            3.2   Environmental  Review Process
                    3.2.1    Environmental  Information Document
                    3.2.2    Historical and Archaeological  Sites

                                       iii

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                              CONTENTS (continued)
Chapter

3 (continued)
                    3.2.3    Floodplains, Wetlands, and Flood Insurance
                    3.2.4    Agricultrual Lands
                    3.2.5    Coastal  Zone Management
                    3.2.6    Wild and Scenic Rivers
                    3.2.7    Fish and Wildlife Protection
                    3.2.8    Endangered Species Protection
                    3.2.9    Air Quality
                    3.2.10   Water Quality and Quantity
                    3.2.11   Direct and Indirect Impacts
                    3.2.12   Mitigating Adverse Impacts
                    3.2.13   Determining Need for an EIS

          WATER QUALITY MANAGEMENT PLANS RELATED TO FACILITIES PLANNING  .      21
            4.0   Water Quality Management (WQM) Plans
            4.1   State Priority System and Project Priority List
            4.2   Wasteload Allocation/NPDES Permit
            4.3   Biennial Water Quality Report
            4.4   Quality Assurance

          EXISTING AND FUTURE CONDITIONS 	      24
            5.0   Project Need and Planning Area Identification
            5.1   Existing Environment of the Planning Area
            5.2   Existing Wastewater Flows and Treatment Systems
            5.3   Effluent Limitations
            5.4   Infiltration and Inflow (I/I)
                    5.4.1    Sewer Use Ordinance and Sewer Maintenance
                             Program
            5.5   Future Conditions
                    5.5.1    Population and Land Use Projections
                    5.5.2    Forecasts of Flows and Wasteloads
                    5.5.3    Flow Reduction
            5.6   Future Environment Without the Project

          DEVELOPMENT AND SCREENING OF ALTERNATIVES  	      32
            6.0   Development of Alternatives
            6.1   Optimum Operation of Existing Facilities
            6.2   Regionalization
            6.3   Unsewered Areas
            6.4   Conventional Collection System
            6.5   Alternative Conveyance Systems
            6.6   Evaluation of Sewer Alignments
            6.7   Wastewater Management Techniques
                    6.7.1    Conventional Technologies
                                       IV

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                               CONTENTS  (continued)
Chapter

6  (continued)
7 .
8 . .
                     6.7.2    Alternative Technologies
                     6.7.3    Innovative Technology
                     6.7.4    Innovative and Alternative Cost Preference
                     6.8      Combined Sewer Overflows
                     6.9      Municipal Treatment of  Industrial and Federal
                             Facilities Wastes
                     6.10     Staged Construction
                     6.11     Multiple Purpose Projects
EVALUATION OF PRINCIPAL ALTERNATIVES AND PLAN ADOPTION
53
            7.0
            7.1
            7.2
            7.3
            7.4
            7.5
            7.6
            7.7
            7.8
            7.9
            7.10
            7.11
        Alternative Evaluation
        Evaluation of Monetary Costs
          7.1.1    Sunk Costs
          7.1.2    Cost Escalation Factors for Energy Use
                   and Land
          7.1.3    Allocation of Costs for Multiple Purpose
                   Projects

        Reserve Capacity
        Demonstration of Financial Capability
          7.3.1    Assuring Low Cost Projects for Smaller
                   Communities
        Capital Financing Plan
        Environmental  Evaluation
        Evaluation of Reliability
        Evaluation of Energy Requirements
        Evaluation of Implementability
        Evaluation of Recreational Opportunities
        Comparison of Alternatives
        Views of the Public and Concerned Interests
SELECTED PLAN, DESCRIPTION, AND IMPLEMENTATION ARRANGEMENTS
  8.0   Justification and Description of Selected Plan
  8.1   Design of Selected Plan
  8.2   Cost Estimates for Selected Plan
  8.3   Energy Requirements of Selected Plan
  8.4   Environmental Impacts of Selected Plan
  8.5   Arrangements for Implementation
          8.5.1    Intermunicipal  Service Agreements
          8.5.2    Civil  Rights Compliance
          8.5.3    Operation and Maintenance
                   Requirements
          8.5.4    Pretreatment Program
64

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                              CONTENTS (continued)
Chapter

8 (continued)
            8.6   Land Acquisition
                    8.6.1   General  Acquisition Considerations
                    8.6.2   "No-Cost Arrangments"
                    8.6.3   Acquisition Method
                    8.6.4   Allowable Land Costs

9 .... REVIEW OF FACILITIES PLANS 	     72
            9.0   Review and Evaluation
            9.1   Summary Checklist
            9.2   State Agency Review
                    9.2.1   Advanced Treatment Review
                    9.2.2   EPA Actions Under NEPA
                                PART II.   DESIGN


10  ... PREDESIGN	     75
            10.0  Predesign Conference
            10.1  Field Testing of Innovative or Alternative Technology

11  ... DESIGN AND ADMINISTRATIVE CONSIDERATIONS 	     77
            11.0  Design and Administrative Considerations
            11.1  Design Considerations
                    11.1.1   Pretreatment and NPDES Permit
                    11.1.2   Wet and Dry Well Classifications
                    11.1.3   Use of Mercury Seals
                    11.1.4   Shellfish Waters
                    11.1.5   Disinfection
                    11.1.6   Chlorination Systems Using Gaseous Chlorine
                    11.1.7   Chemical  Storage and Hazardous Materials
                    11.1.8   Safety
                    11.1.9   Bypassing of Sewage
                    11.1.10  Public Water Supply
                    11.1.11  Ventilation
                    11.1.12  Laboratory Facilities
                    11.1.13  Emergency Alarms
                    11.1.14  Equipment and Materials
                    11.1.15  Land Application Systems
                    11.1.16  Erosion and Sediment Control
                    11.1.17  Mitigation of Adverse Environmental Impacts
                    11.1.18  Sewers
                    11.1.19  Sewer Rehabilitation
                                       VI

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                              CONTENTS (continued)
Chapter

11  (continued)
            11.2
            11.3
          11.1.20  Operation and Maintenance
          11.1.21  Handicapped Access
          11.1.22  Use of Recovered Materials
        Administrative Considerations
          11.2.1   Bidding Documents
          11.2.2   Bonding and Insurance
          11.2.3   Construction Incentive Program
          11.2.4   Buy American
          11.2.5   Royalties
          11.2.6   Project Sign
          11.2.7   Small, Minority, Women's and Labor Surplus
                   Area Businesses
        Design Review
12
CONCURRENT ACTIVITIES DURING DESIGN  ...  	
  12.0  Concurrent Activities
  12.1  Value Engineering
          12.1.1   VE Team and Qualifications
          12.1.2   Scope of Work
          12.1.3   Proposal Cost and Timing
  12.2  User Charge System
          12.2.1   Actual Use
          12.2.2   Ad- Valorem Taxes
          12.2.3   Other User Charge Considerations
          12.2.4   Adoption of System
  12.3  Sewer Use Ordinance
  12.4  Plan of Operation
          12.4.1   Budget
          12.4.2   Financial  Management System
          12.4.3   Staffing1 and Training
          12.4.4   Emergency Operations Program
          12.4.5   Administrative Functions
          12.4.6   Start-up Services
          12.4.7   Operation and Maintenance Manual
          12.4.8   O&M Program for Complete Wastewater
                   Treatment Systems
  12.5  Onsite and Cluster Systems
  12.6  Innovative Designation Reconfinflation
  12.7  Planning for Local  Funds
94
                             PART III.  CONSTRUCTION
13  ... GRANT APPLICATION
                                                                    105
                                      VII

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                              CONTENTS (continued)


                                                                             Page
Chapter
13 (continued)
            13.0  Narrative Statement
            13.1  Contents of Application
                    13.1.1   Intergovernmental  Coordination
                    13.1.2   Application Form
            13.2  Limitations on Award
            13.3  Other Step 3 Considerations
            13.4  Procurement
            13.5  Federal Grant Share
            13.6  Grant Award

14  ... PROJECT CONSTRUCTION	    114
            14.0  Project Construction
            14.1  Grant Increases/Decreases
                    14.1.1     Grant Increase
                    14.1.2     Grant Decrease
            14.2  Preconstruction Conference
            14.3  Monitoring Construction
                    14.3.1     Onsite Observation
            14.4  Payment Requests and Limitations
            14.5  Plan of Operation
            14.6  Project Performance
                    14.6.1     Project Schedule
                    14.6.2     I/I Rehabilitation
                    14.6.3     Engineering Services
                    14.6.4     Corrective Action
            14.7  Abandonment
            14.8  Wastewater Process Influent Variations
            14.9  Change Orders
                    14.9.1     Duties and Responsibilities
                    14.9.2     Conditions That May Warrant a Change Order
                    14.9.3     Preparation of the Change Order
                    14.9.4     Reviewing Agency Procedures
                    14.9.5     Reference Material


                PART IV.  FINANCIAL AND PROCUREMENT CONSIDERATIONS


15  ... FINANCIAL CONSIDERATIONS 	    146
            15.0  Allowable and Unallowable Costs
            15.1  Replacement Costs
            15.2  Innovative and Alternative Technology Replacement
                  Grant
            15.3  Force Account
                                       vi n

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                              CONTENTS (continued)
Chapter

15 (continued)
16
INDEX
15.4
15.5
15.6
15.3.1
15.3.2
Payments
15.4.1
15.4.2
15.4.3
Grant In<
Audits
                             Prior Approval
                             Other Force Account Considerations

                             Preaward Costs
                             Interim Payments
                             Final Payment
                        Increases/Decreases

                    15.6.1   Financial  Records
                    15.6.2   Audit Procedures and Reports
PROCUREMENT  ....
  16.0  Introduction
153
            16.1  Procurement Certification
            16.2  Procurement Management and Reporting
            16.3  Methods of Procurement
            16.4  Formal Advertising
                    16.4.1   Solicitation for Bids
                    16.4.2   Bid Receipt and Opening
                    16.4.3   Bid Evaluation
            16.5   Competitive Negotiation
                    16.5.1   Public Notice
                    16.5.2   Evaluation of Proposals
                    16.5.3   Negotiation and Award of Subagreement
                    16.5.4   Optional A/E Selection Procedure
                    16.5.5   Use of the Same A/E During Construction
                    16.5.6   Cost and Price Considerations
            16.6  Noncompetitive Negotiation
            16.7  Small Purchases
            16.8  Subagreements
            16.9  Minority, Women's, Small and Labor Surplus
                  Area Businesses
            16.10 Subagreement Clauses
            16.11 Protests
                               FIGURES AND TABLES
Figure 1.  Construction Grants Process

Figure 2.  Major Activities in the Construction Grants Program
                                                                   xvii

                                                                     xx
                                       IX

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                              CONTENTS  (continued)
                                                                             Page
                         FIGURES AND TABLES (continued)
Figure 3.  Procedural Flow Chart for Facilities Planning for
           Wastewater Treatment and Sludge Management
Figure 4.  General Facilities Plan Preparation Procedures
Figure 5.  Comparison of Principal Alternatives
Figure 6.  Project Schedule:  Pre-Performance Certification Period
Figure 7.  Project Schedule:  Performance Certification Period
Figure 8.  Project Performance Certification
Figure 9.  Sample Certificate of Performance for Publicly Owned
           Treatment Works
Figure 10.  I/I Reduction Acceptability Analysis
Table 1.   Wastewater Treatment System Reliability
Table 2.   Sludge Handling and Disposal System Reliability
Table 3.   Electric Power System Reliability
Table 4.   Grantee and Contractor Responsibilities
  3
  9
 62
121
122
124

125
128
 87
 88
 89
118

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                                   APPENDICES

Appendix
    A  -  Advanced Treatment (AT) Review
    B  -  List of EPA Publications
    C  -  Before and After Study Guidance
    D  -  National Municipal Policy
    E  -  Present Worth and Cost Preference
    F  -  Farmers Home Administration (FmHA)
    G  -  Supplemental Information for Land Acquisition
    H  -  Wet Well and Dry Well  Classification
    I  -  Construction Incentive Clause
    J  -  EPA Project Sign
    K  -  Financial and Management Capability Information Sheet
    L  -  1981 Amendments to the Clean Water Act
    M  -  40 CFR Part 35, Final  Regulations
    N  -  40 CFR Part 33, Final  Regulations
    0  -  Alternative Justifiable Expenditure Method of
          Cost Allocation
    P  -  CSO Guidance
    Q  -  40 CFR Part 30, Final  Regulations
    R  -  How to Conduct a Sanitary Survey
                                       xi

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                                    FOREWORD


    This book  is  a part of  our ongoing  effort to simplify and delegate the
 municipal  construction  grants program.   It replaces its predecessor, CG-82, and
 is  based upon the  final  procurement  and construction  grant regulations (40 CFR
 Part  33 and  Part  35) published  in  the Federal Register on  March  28,  1983 (as
 amended)  and February 17,  1984, respectively  (Appendix M  and N).   We did not
 publish  a CG-83  or CG-84  because  the  final  construction  grant  regulation had
 not been issued.   The  final  regulation fully implements the 1981 Amendments to
 the  Clean Water Act  (except for  Section  23, proposed  regulation published
 November 11,  1983),as well as those policies which  the  Agency  feels are  necessary
 for sound management of the construction grants program.

    The  final  regulations  implementing  the 1981 amendments  to the Federal  Water
 Pollution  Control   Act  contain  the requirements for  obtaining grant assistance
 under  the construction grants program.   To distinguish regulatory  requirements
 from  discretionary guidance or suggestions  of  good  practice in CG-85, the
 following  conventions  are  used:   Requirements use  the words "must" or  "will" or
 are written  as  imperative statements  and are identified by a bar in the margin.
 If there appears to be a difference between the regulations  and their restatement
 in  CG-85, the  regulations govern.   Recommended methods or formats to meet
 regulatory requirements  use the  word  "should".   Suggestions  of  good  practice,
 which  may  not relate  to a particular requirement,  use the words "can"  or  "may".
 A  municipality  is  not required  to follow  the guidance in  CG-85  in  order to
 qualify for Federal grant assistance.

    As stated in CG-82 and reconfirmed  here,  it is  our  desire to focus on current
 statutory and program requirements that  are.necessary to  ensure effective project
 management.   Our concern continues  to  be results, not  procedures,  and we want
 those  results achieved in the most effective and reasonable  manner possible.  The
 guidance  in  CG-85  is  being  provided  to facilitate achieving those  results at
 reasonable costs.   Where a municipality  or State develops alternative procedures
 to meet the stated results,  then  those  procedures are satisfactory.

    The  changes  in the  final construction  grants regulation are described in
 their  preamble  and result  from  public  comment and agency  experience  since the
 publication  of  the interim  final  regulation on May  12, 1982.   The regulatory
changes  are  reflected in CG-85.   In addition,  we have included  a  few changes
 in  CG-85 which  represent  new  Agency  policy for   effective  management of  the
construction  grants program.  Among these changes are:    a detailed discussion of
the review of advanced  treatment facilities  (Appendix  A);  increased  emphasis on
 financial capability  of grant applicants (Appendix K); more detailed discussion
of categorical  exclusion  from  substantive environmental  review; increased
discussion of innovative technology; the National Municipal  Policy (Appendix D);
and reintroduction of  the  construction incentive provisions  (Appendix I).

    As we continue  to  review  our management  of the construction grants  program,
we remain committed to reducing  procedural requirements for planning, design and
building of wastewater treatment  works,  to  publishing new requirements only where
                                      xn

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required  by  law or  executive  order or where  absolutely  essential  for effective
program  management  and to  facilitate  delegation  of  the  review  and  approval  of
projects  to  the States.   In line with reducing  program  requirements,  we remind
you  that all  Program Requirements Memoranda (PRMs)  and Program Operations
Memoranda  (POMs)  were previously  cancelled.    To determine  which  regulations,
PRM,  POM, and  other  Agency policies apply  to earlier grant  projects,  refer  to
"Regulation and Policy Matrix"  (Appendix B).

    We may  at  some time  in  the  future  find it  constructive to  update or revise
CG-85  to provide  improved  guidance.  For  this  reason  we encourage  comment  on
the  contents,  format  and usage  of CG-85.   Send any  comments or suggestions  to
the  Director,  Office  of  Water  Program  Operations (WH-547),  U.S.  Environmental
Protection Agency, Washington D.C.  20460.*

    In closing, while clean water for  the nation must be achieved by  mutual
commitment of  all  levels  of government (local,  State,  and Federal)  the greatest
responsibility  for the goal  of clean water  lies with the community.   It  is the
community that  must  make sure  that wastewater treatment  facilities  are planned
and  constructed properly.   It is  also  the community  that makes the long-term
commitment to  operate and  maintain the  system  throughout  its useful  life.   To
meet  these  responsibilities  successfully,  communities  must  provide  adequate
financial  resources   and  effective  financial   management.    This book  provides
guidance to help accomplish  each  step.
                      William A. Whittington, Acting Director
                        Office  of Water Program Operations
* This  guidance  document  may not be in compliance with  the  laws or requirements
  of every State.   Prior to  initiation  of a  project, a municipality  should
  contact their  State  agency to ensure conformance with  all  State requirements.
                                     xiii

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           INTRODUCTION
USER GUIDE
This  book  contains  guidance  to
participants  of  EPA's municipal
construction grants program.  Guidance
is  discretionary  and  provides
information  and  suggestions  to  help
communities successfully plan, design,
and build municipal  sewage  treatment
works.

A major  purpose of this document is to
help communities seeking or managing  a
construction grant to comply  with all
program  requirements  contained in
Federal   regulation.    Therefore, for
continuity  and  clarity,  we have
summarized  those  regulatory  require-
ments at appropriate points within the
text.  To identify them as mandatory,
we have  employed  words such as "must"
and "will,"  and  highlighted  them with
a bar in the  left margin.  Because
these   statements  are summaries,
the reader  should  not rely on them as
substitutes  for  the regulations.  If
there  appears  to be  a difference
between the  regulations  and the
guidance, the regulations govern.

The  Agency is  considering several
technical  amendments  to the  Innova-
tive/Alternative   (I/A)  provisions
of  the  final  Construction  Grant
Regulation  published  February 12,
1984.  Sections  of the document which
may be effected by such amendments are
marked  with  an  *.  If you  have any
questions concerning current policy of
the  guidance  presented  in  these
sections,  contact your Regional or
State I/A coordinator for assistance.

This latest  revision of the construc-
tion  grants  guidance  supplements
the  current  construction  grants
regulations  (40 CFR 35, Subpart I)
published  in the Federal  Register  on
February  17,  1984.  These regulations
are effective for all  grants awarded
on or  after this date.  Facilities
plans  and designs initiated  prior  to
February  17, 1984,  continue to  be
subject   to the  requirements  in
effect at  that time (40  CFR 35,
Subpart  E  or I).   Work  done  under
Subpart E will  be accepted  for grant
awards  under the current regulations.

Contact your State  reviewing  agency
to  determine   additional  State
requirements,   if  any,  prior  to
initiating your project.

This book contains  guidance  from the
preplanning  stage to construction and
the initial  operation  of the treatment
works.   It is divided  into four major
parts  (planning,  design, construction
and initial  operation, and financial/
procurement).  You may need to review
only those parts which correspond  to
the present  stage  of  development  of
your project.

Reference  to  Federal Regulations

References to regulations in this book
are made by  citing specific  portions
of the  Code of Federal Regulations
(CFR).   Virtually  allregulations
applicable  to the construction grants
program are  contained in Title  40—
Protection  of Environment.   Title 40,
in  turn,  is  broken  into  parts,
sections,  and  subsections.   For
example,  35.2108  means  (Title 40)
Part 35,  Section 2108.

When  other  titles  of the  CFR  are
cited, they will include the  title
numbers  before  the  letters CFR
followed  by the part, section,  and
subsection.   Therefore, 10  CFR  2.7-3
means  Title 10--Energy,  Part  2,
Section 7, Subsection  3.
                                     xiv

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 At  times  it is  necessary  to  cite
 material  published  in  the  Federal
 Register.    This  reference  will  be
 shown  as  45 FR  2186  which means
 Volume 45,  Federal  Register,  page
 2186.    When reference  is  made  to
 a  law, the common name  is generally
 used followed by letters  and  numbers.
 For  example,  the Clean Water  Act
 (CWA)  of 1977 is  the common  name and
 PL  95-217  means  Public Law,  95th
 Congress, 217th law  enacted  by  that
 Congress.

 1981 Amendments  to the Clean Water
 Act

 The  Municipal  Wastewater  Treatment
 Construction  Grants   Amendments
 of  1981,  enacted on  December  29,
 1981,   significantly changed  the
 procedural  and administrative aspects
 of  municipal   construction   grants
 made   after  that  date.   Detailed
 implications of  these   changes  are
 contained in the  regulations  and  are
 incorporated throughout this book.
 For easy  reference,  the  changes  are
 highlighted  in Appendix  L.

 Termi no!ogy

 The  terminology  used  in this book
 is  defined  in  the regulations,
 40 CFR  Parts 30, 33,  or 35 (refer to
 Appendices  M,  N,  and Q).  Although
 separate Federal grants are no longer
 provided for facilities  planning  and
 design  of  projects,  the  previous
 designation  of  these activities  as
 Step  1,  facilities   planning,   and
 Step  2, design,  will  be retained
 because  of  their  common usage  and
 understanding.   The term  Step  3 grant
refers  to  building  of  the  project
 for which grant assistance is awarded.
The term Step 2+3  grant  refers to  a
Step 3 grant award  which includes
 an  allowance   (percentage  of  the
cost of building  the  project)  for
 design  activities.   Normally, Step 3
 grant  assistance  will   include  an
 allowance for the planning and design
 activities.

 The  term "building"  rather  than
 "construction"   has  been   used
 throughout this  book to describe  those
 activities  (erection,  acquisition,
 alteration,  remodeling, improvement or
 extension of  facilities to  transport
 and treat wastewater) for which Step 3
 grant assistance is  awarded.  This is
 done  because the word "construction,"
 as used in the past, is defined in the
 law to include facilities planning and
 design.  However,  in several  locations
 the word "construction"  is  used  where
 its use is quite clear and less  wordy
 (e.g.,  construction  drawings  rather
 than building drawings).

 The  term  "advance"  refers to the
 Federal  funds  provided to small
 communities  that, in  the  opinion  of
 the  State,  would  not  be able  to
 complete the application  requirements
 (facilities   planning  and  design)
 without such an  advance.   If  Step  3
 grant  assistance   is  eventually
 awarded,   the  advance  will  be
 subtracted from the allowance.

 If  Step  2+3  grant assistance  is
 eventually  awarded,  the amount  of
 allowance  will  be  based  on  the
 estimated  Step 3  building cost in the
 Step 2+3 application.   If  the grantee
 has not received  a  grant  or advance
 for facilities  planning,  the  Agency
will  pay  30  percent of the  Federal
 share  of  the  estimated  allowance  as
 soon as requested after the Step 2+3
grant  award.   EPA will  pay  half the
remaining  allowance  when  the  design
 is 50 percent  complete.  The final
portion  of  the  allowance  will be
paid  after  the  grantee awards all
prime  subagreements  for  building  the
project.
                                    xv

-------
 Projects  that received  a  Step  1
 and/or  Step  2  grant  prior  to  the
 enactment  of  the  1981  amendments
 to  the  CWA  should  be completed
 in  accordance  with the  terms  and
 conditions  of their grant  agreement.
 Those projects  that  received a Step  1
 grant, but  no Step 2 grant, prior to
 December 29, 1981,  will   receive  a
 design  allowance  when they  receive
 their  Step  3  grant  assistance.
 However, no  allowance for  facilities
 planning and design will  be included
 in  a  Step  3 grant for  projects  that
 received  a  Step  2  grant  prior to
 December 29,  1981.

 As  used  in  this  book,  the  term
 "project  reviewer"  means   a State
 employee  reviewing  your  project
 in  a  State that has been  delegated
 responsibility  for administration of
 the construction grants  program or an
 EPA employee  reviewing the project in
 a  nondelegated  State.    The  term
 "reviewing  agency" means  the State
 water  pollution  control  agency
 or, in a few instances, EPA.

 Other Guidance

 The text  incorporates  Federal
 regulatory  requirements  and, at
 times, refers to  other EPA guidance
 publications.  The  referenced guidance
 publications  are  generally  technical
 (e.g.,  design criteria  for  land
 application  systems) and provide  much
 greater  detail than required for  this
 book.   Additional  State requirements,
 if  any,  will  be   provided by  your
 project  reviewer.

Appendices

Appendices  in  this  book contain  a
 listing  of  applicable  EPA  technical
 publications,  construction  grants
 and  procurement   regulations,   and
technical  design  or  evaluation
criteria.   Copies of the publications
listed in Appendix  B  may  be obtained
from your  reviewing  agency or from the
address  listed in  the appendix.
Multiple copies  may be  obtained from
the  National  Technical  Information
Service,  5285  Port  Royal  Road,
Springfield, Virginia 22161.

MANAGING YOUR PROJECT

Introduction

This  section  is intended to assist
you  in  managing your  project.   It
provides a description  of  the basic
objective  of the  CWA,  provides  a
summary  of the  construction grants
program  including  an  expanded
discussion of  the  1981 amendments;
discusses  State  delegation,  your
project  team,  and other  topics that
will  be of assistance  in  managing
your  project  from  inception  through
building construction  and  operation.
Figure  1  (Page  xvii)  represents the
organization of  CG-85  and  the flow of
activities  during the grants process.
A  listing of  major  activities  in
the  construction grants  program
is  provided  at  the  end   of  this
introduction.

Clean Water Act

The objective of the CWA as amended in
1981, sometimes  referred to  herein as
"the  Act",  is  "...to  restore  and
maintain the  chemical,  physical, and
biological  integrity of the Nation's
waters."   This objective  is to be
achieved in part by:

  o  Development  of  water  quality
standards and the  regulations
necessary to enforce them;
                                    xvi

-------
(PART 1) (PART II) r"
/FACILITIES / / / / APPLICATION FOR / | STATE CERTIFICATION
PLANNING f / II GRANT / 1 EPA AWARD OF GRANT









"\
INITIAL
OPERATION
X
<
-PREPLANNING
 CONFERENCE
-WQM PLANS
-PROJECT NEED
-EXISTING CONDITIONS
 (FLOWS, I/I)
-FUTURE CONDITIONS
 (POPULATION, FLOWS)
-EVALUATION
 OF ALTERNATIVES
-ENVIRONMENTAL
 EVALUATION
-FINANCIAL CAPABILITY
-PUBLIC PARTICIPATION
-PLAN SELECTION
-INTERGOVERNMENTAL
 COMMENTS1
                                            -PREDESIGN
                                             CONFERENCE
                                            -DESIGN
                                             CONSIDERATIONS
                                            -VALUE ENGINEERING
                                            -USER CHARGE SYSTEM
                                            -SEWER USE ORDINANCE
                                            -DRAFT PLAN OF
                                             OPERATION
                                            -LOCAL FUNDS
                                            -STATE REVIEW1
            -STATE REVIEW
            -EPA ACTION
             UNDER NEPA1
-PREAPPLICATION
 CONFERENCE
-FACILITIES PLAN
-INTERGOVERNMENTAL
 COMMENTS
-ADEQUATE PUBLIC
 PARTICIPATION
-NOTICE OF ADVANCE
 OF ALLOWANCE
-COMPLIANCE WITH
 LIMITATIONS ON AWARD
-CONSTRUCTION DRAWINGS
 AND SPECIFICATIONS
-PROJECT SCHEDULE
-PROCUREMENT CERTI-
 FICATION (PART IV)
-STATE CERTIFICATION
-EPA ACTIONS UNDER
 NEPA
-GRANT AWARD
-PRECONSTRUCTION
 CONFERENCE
-GRANT ADJUSTMENT
 AND PAYMENT
-CONSTRUCTION
 MONITORING
-CHANGE ORDERS
-ONSITE OBSERVATION
-FINAL PLAN OF
 OPERATION
-IMPLEMENTATION Of
  USER CHARGE SYSTEM
  SEWER USE ORDINANCE
  PLAN OF OPERATION
-PROJECT PERFORMANCE
                                                                               APPLICANT
                                                                               ACTIVITY
                                                                                          STATE/EPA
                                                                                          ACTIVITY
                                                                            (PART I) - PORTION OF CONSTRUCTION GRANTS 1984
                                                                                     (SECTIONS 6-9)
                                                                            • THE STATE MAY ADVANCE FUNDS FOR PLANNING AND DESIGN
                                                                              FOR SMALL COMMUNITIES THAT OTHERWISE BE UNABLE
                                                                              TO PREPARE A REQUEST FOR A GRANT


                                                                            1 ITEMS NOT REQUIRED AT THIS TIME BUT STRONGLY ENCOURAGED
                                                                 Figure  1    Construction Grants Process

-------
  o  Formulation of State and areawide
water   quality  management  plans
including  comprehensive  analysis  of
the  actions  necessary  to meet the
water quality standards;

  o  Issuance of permits for all  point
source   di scharges—industrial ,
municipal,  and  other  facilities—that
release pollutants from pipes, sewers,
or other confined outfalls; and

  o  Provision for  Federal  funds
to  assist in  the  construction  of
municipal  wastewater treatment works.

The  reviewing   agency will  work with
you  so  that your project satisfies
the  requirements  of the  CWA, its
implementing  regulations,  and  other
applicable Federal and State  laws and
Executive  Orders.

Grants  Program

EPA  is  authorized under the  CWA,  as
amended,  to provide grant  assistance
to municipalities for the building
of  wastewater  treatment  projects.
EPA  grant assistance may  be up  to
75 percent of  the allowable  costs of
building the  project and  include  an
allowance  for  facilities planning and
design.   After September 30,  1984,
the  Federal  share  will  be  limited
to a maximum  of  55 percent  of  these
costs  unless   modified  to  a  lower
percentage rate uniform throughout
the  State by  the Governor with the
concurrence  of  the  Administrator.
The 55   percent maximum  Federal  share
may not apply  to phased  or segmented
projects  which have received  prior
Step 3  grants.   Section 13.5 contains
additional  information  on   funding
limitations  for  phased  or  segmented
projects.   Innovative and alternative
technology projects  may receive an
additional  20  percent Federal  share,
up to a maximum of 85 percent before
October 1,  1984, and  a maximum  of
75 percent thereafter.

Before  October  1,   1984,  eligible
projects  include collection  systems,
intercepting  sewers,  wastewater
treatment facilities  (including sludge
management  facilities),  outfall
sewers,  infiltration/inflow  (I/I)
rehabilitation,  and  correction  of
combined  sewer  overflows.     After
September 30,  1984, eligible  projects
include  only  intercepting   sewers,
wastewater   treatment  facilities,
outfall sewers and  I/I rehabilita-
tion,  except  that  the Governor
of  a State may  elect to  use  up
to 20 percent of a State's allotment
for previously eligible projects.

Project  development  may  best  be
considered  as  a three-step  process.
(See Figure 1.)

  o  Step 1  - Facilities planning  to
determine  the  type  and  extent  of
project you should build.

  o  Step 2 - Project  design including
the  preparation of construction
drawings,  specifications,  and  other
contract documents.

  o  Step 3  -  Building of the project
for  which  EPA  grant  assistance  is
awarded.

The  construction  grants  regula-
tions  also  allow  other types  of
financial  assistance under  certain
circumstances.  For example:

  o  Step   2+3  -  Available  to
municipalities  with  a  population  of
25,000  or   less  and  with projects
costing $8 million or  less;

  o  Advance  funding  -  Financial
assistance  provided   to  a  small
community   that in  the  judgement
                                   xviii

-------
of  the State would  otherwise be
unable to  prepare a  request for  a
construction  grant; advance  funds so
provided  are  based on an allowance of
costs to  prepare a facilities plan and
design the project; the  advance  will
be  subtracted from  any subsequent
grant or  may be recovered by the State
agency if no grant is made.

After  the   Federal   government
appropriates  funds for  the  grants
program,  EPA  allots the  funds to the
States based  on  a formula set by law.
Each State, in turn,  prepares a  list
of  all  projects to   be  funded  and
ranks the  projects  in  order of
their  importance.    The  resulting
list  is  called  the  State  project
priority list.   Your  project must be
sufficiently  high on  the  list and be
within the  fundable  range  for  any
given  fiscal  year in order  for you
to obtain a grant.

Your application  for grant assistance,
including  supporting documents, is
submitted  to your  State agency.
It  reviews the  application,  and  if
the  State has sufficient  funds, it
certifies your project and  sends the
application to EPA.    If EPA  approves
your  application  and  makes  you
a grant  offer, after your acceptance,
you  may  begin the  procurement
procedures necessary  to  build  the
project  (See  Section  16).   EPA
must approve  or disapprove an applica-
tion  certified  by  a State,  with
sufficient delegated authority, within
45  day:;  of receipt or  the application
is   automatically approved (40 CFR
35.2042).

The  grant award sets aside (obligates)
funds  for  your  project.  You  request
payments from EPA during  construction
as  costs  are  incurred.    Partial
payment  of  your  facilities  planning
and design  allowance may be requested
immediately  after   grant  award.
Advance  payment of  building  costs  is
generally not allowed.

Your Step  3 project costs are subject
to  audit  by the  Federal  government;
therefore,  you should  keep  adequate
and  accurate records.   You  should
obtain  guidance  on  eligible and
allowable  costs  from your project
reviewer before  making expenditures.
This will  help   prevent  audit
exceptions  and  resulting financial
problems.

State Contact and
State Delegation

You  should  first contact  your state
reviewing  agency to obtain  information
and  an application  package.  Also,  if
you  have not already done  so, request
information  as  to  how  to become
listed on  the State project priority
list.

In  order  to eliminate  duplicate
reviews  of  project  documents,  EPA
is   delegating   responsibility  for
management  and administration  of the
construction grants  program  to the
States.    Some   activities  such  as
grant  awards,  payments,  final  audit
determinations,  final   resolution  of
disputes,   and bid protest  appeals
remain  the  responsibility of  EPA.
Several  other activities may  be shared
with the  States  while EPA  retains
responsibility for  the final actions.
Most  of the direct  project  activities
of  EPA  can and are being delegated
to  the States.   The  extent  of
delegation varies from State to State
and  you should check with your  project
reviewer  to determine  how  this may
effect  you.   Figure 2  identifies
materials  to  be  submitted  to  the
State.
                                     xix

-------
                       Action

A.  Request advance (optional)

B.  Request environmental scoping (optional)

C.  Facilities Plan

    -Existing environment (no-action alternative)
    -Effluent requirements
    -I/I analysis (if applicable)
    -Alternative evaluation
    -Open space and recreation evaluation
    -Environmental evaluation

    -Public participation
    -Meet requirements of all other laws
    -CSO need and benefits (if applicable)
    -Selected alternative
    -Complete waste treatment system
    -Applicant's financial (etc) capability
    -Consistency with WQM plan

D.  Project Design

    -Value engineering
    -User charge system
    -Sewer use ordinance
    -Plan of operation
    -O&M Manual
    -Intermunicipal  services agreements

E.  Intergovernmental  Review Under E.O. 12372

    -Compliance with limitations on award

F.  Final  design and specifications and the project
    schedule

G.  Grant application (D through G)

H.  State certification

I.  State preliminary environmental  assessment
    State submit grant application package
    (D through K)

    -Procurement
    -Project changes
    -Project performance
    -Notice of building completion and  final
     inspection
       Regulation*

35.2025(b)

35.2113, 35.2030(c)
40 CFR 6.507
35.2030(b)(2)
35.2030(b)(4)
35.2030(b)(3)
35.2030(b)(5)
35.2030(b)(6);
  40 CFR Part 6
40 CFR 6.504, 35.2040
30.405
35.2024
35.2030(b) (1) & (8)
35.2030(b)(l)
35.2104(b)
35.2102
35.2114
35.2140
35.2130
35.2106
35.2206
35.2107

40 CFR Part 29

35.2100


35.2040

35.2040

35.2042

40 CFR 6.507


35.2042

40 CFR Part 33
35.2204
35.2218

35.2216
    Submit to

State        EPA

  X

  X           X
*Regulations are from 40 CFR Part  35  unless  otherwise  indicated.

               Figure 2   Major Activities in the  Construction Grants Program
                                                xx

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Project Management

The single most  important  task of  a
municipal  official  with  regard to  a
wastewater project is  to manage  the
project  to  ensure  its timely  and
economical  completion.    This  entails
bringing people together to select  the
most  appropriate  technology,  making
financial  arrangements to  pay  the
local   share, obtaining  a Federal  and
possibly a State grant or loan to. help
pay the costs, managing the cash flow
of  all  funds,  and  moving the project
from   development  to  completion
with a minimum of delay.

Organizing the Project Team

To  make a  project  run  as smoothly as
possible,  you  will  need  a  project
team.  The team should consist of:

  o  Municipal  project manager
  o  Architect/Engineer/Construction
       Manager
  o  Accountant
  o  Financial  Advisor
  o  Attorney
  o  Construction  contractor
  o  Treatment plant  operator

o   Municipal  Project  Manager

The municipal project manager  oversees
all  activities  necessary  to  keep
the project moving.  The manager's
primary responsibility is to  maintain
control   over the   progress   of  the
project  and  ensure  that  everyone is
doing  his  job  on  time.   Ideally, the
municipal   project manager is  a
full-time municipal  employee  with
experience in  dealing with regulatory
agencies and Federal  grants.

The municipal  project  manager will
need  to  keep excellent  records,
logs,  and a follow-up system to ensure
that  nothing  is  overlooked.   The
manager should keep project reviewers
informed of progress and forewarn them
of decisions they will have to make  in
the  near  future.    If  the project
reviewer changes, it may be beneficial
to arrange a meeting to bring the new
project  reviewer  up  to date on the
current status of the project.

o  Architect/Engineer

The   selection  of  a  competent,
experienced  architect/engineer  (A/E)
is perhaps the most important decision
you  will  make to  ensure that  your
project  is done correctly,  on  time,
and satisfies all applicable State and
Federal  laws.   In  most  cases,  an A/E
will  do most of  the  work in the
planning  and  design phases of your
project and may provide  other services
during  building  construction  and
initial  operation of the  treatment
works.   The  A/E's primary responsi-
bilities  prior to  grant  application
are to complete the technical portions
of  the  facilities  plan,  prepare and
coordinate the  design,  prepare the
construction  drawings,  specifications
and   contract  documents,  estimate
project  costs, prepare  other reports
which  may be  necessary,  and provide
you  with  professional  engineering
advice.

Other  A/E  services may include  value
engineering   (VE)   or   construction
management.   A VE review  is required
for  projects with  estimated building
costs exceeding  $10 million.   Con-
struction  management  services,   while
optional,  may  provide  specialized
skills  to  ensure efficient  and  timely
construction.   Firms specializing in
construction management  are best hired
as   early  as  possible,  preferably
during the planning phase, so that you
can  realize the maximum  benefit from
                                      xxi

-------
 their  services.   A  construction
 management firm can help you control
 project  costs,  completion  time,  and
 ensure  quality construction.  Typical
 construction  management   services
 include  developing,  monitoring,  and
 updating  the  project  budget  and
 schedule; reviewing  A/E  and construc-
 tion  contractor  staffing  plans
 to  insure that adequate  manpower will
 be  used  to enable the  project to stay
 on  schedule; providing advice  to  the
 A/E  on construction  phasing, trade
 practices,  and the suitability  and
 availability  of  various  construction
 materials;   making  recommendations
 concerning bid packaging to increase
 competition;  expediting  delivery  of
 equipment  which you  are purchasing
 directly; and inspecting  construction
 to   insure  conformance with  the
 specifications.   Despite the A/E's
 role,   it  is your  municipality's
 project  and  you  are responsible  for
 proper management of the project.

 o  Accountant

 Since  you  will  be using  Federal
 funds to  build your  project and  are
 therefore subject  to Federal  audit  of
your  Step 3  project  costs,  it  is
 essential  to maintain accurate and
 detailed  accounts.     Incomplete
 or inaccurate accounts  can lead  to  the
 loss of  part of your grant  and  place
 an  undue financial burden  on your
community.   To  maintain financial
 records, you should use your municipal
 accountant or  a private accounting
firm.   The  accountant should keep
 separate ledgers for the EPA project,
identify  allowable  and unallowable
costs,  maintain  vouchers  for  all
costs incurred,  and  employ  generally
accepted accounting practices.

The  accountant should  make  an
appointment with the project  reviewer
to discuss  the type  and detail  of
 records  to be  maintained.   An  EPA
 publication   entitled   "Accounting
 Guide  for  Construction  Grants"
 and  Appendix A  to  the EPA  regula-
 tions 40  CFR  Part  35  Subpart  I
 will  be  helpful to your  accountant
 (Appendix M).

 o  Financial Advisor

 In  addition to  maintaining financial
 records,  your  community's  financial
 advisor can  help  you  assess  the
 financial capability of your residents
 and  community to afford the project,
 suggest  alternate funding mechanisms
 and  help  decide  how to  proceed.
 Either the  municipal  accountant or  a
 private  accounting  firm should  be
 assigned  this responsibility.

 o  Attorney

 You  will  need  the  assistance  of
 an  attorney  in  procuring  goods
 and  services   (e.g.,  construction
 contractors), completing the applica-
 tion, acquiring property and obtaining
 easements  or rights-of-way.   Your
 municipal  attorney  should  be able
 to provide  these services.

 o  Construction Contractor

 The  construction  contractor's
 responsibilities  will  be  defined  in
 the  contract  documents  accompanying
 the  construction  drawings  and
 specifications  prepared by  your
A/E  firm.   Construction  contractors
 should  be selected through a competi-
tive process  and  will  play  an
 important role as part  of your project
team.

o  Treatment Plant Operator

Your treatment  plant  operator  should
be included in your  project team  at
                                   xx ii

-------
the  earliest  possible  time.   The
operator  may  offer suggestions during
design to ensure efficient  operation
and  maintenance  or make  other
operational   recommendations  such
as  staffing   or training.    During
building  your  operator will have
an opportunity to observe and note
location  of  underground structures  or
piping which may be of assistance
later  should  operational  problems
occur.

Avoiding  Project Delay

The  list  below  briefly  describes
common  issues  which cause  project
delays and often result  in avoidable
hardships to  municipalities.    These
issues are  each addressed in later
sections  of  this  book but  are high-
lighted  here  as an  early  warning
to  project  managers.  In addition,
a  checklist of  major items that
are  required  at  the completion  of
facilities  planning is included  in
Section 9.1.

  o  Project  Responsibility - Although
the   EPA grant may represent  up
to  85 percent  (75 percent  after
September 30, 1984)  of the allowable
project costs and substantial work may
be   performed  by  your  contractors
(e.g., A/E  or  construction   contrac-
tors), you  are  responsible  for  the
successful  management and completion
of  your  project  including operation,
maintenance  and  replacement during
the  design  life  of the  project,
necessary  to  meet your  National
Pollutant Discharge Elimination System
(NPDES)  permit requirements.    In
addition, it  is  your  responsibility
that your project meet  its  project
performance   standards within  1 year
after the  date  of  initiation  of
project operation.  Upon  completion of
this  1-year   performance  period,  you
must certify to your reviewing agency
whether or  not the  project is meeting
its performance  standards.  If you
cannot provide affirmative certifica-
tion,  a corrective  action report
and schedule  must  be developed and
submitted  to  your  reviewing agency
(Section  14.6).   The  section of
the   grant  application  entitled
"Assurances"   sets  forth  your
responsibilities once the  grant is
accepted  and  should be  reviewed
carefully.

  o  Funding Local Share
Your  State  may provide a State  grant
to  cover all  or  some  of the non-EPA
share;  however,  you must  raise any
remaining local  share  of the project
costs.

It may be  possible  to  obtain loans or
loan  guarantees  from  other Federal
agencies.  You may also be eligible to
receive  grants  from  other  Federal
agencies  provided  that  the laws
administered  by   these  agencies
allow their grant funds to be used  as
your  local share.   In the  case of
qualified  areas,  the Farmers  Home
Administration may be able to help you
fund  the costs   not covered by EPA.
Another possible  source of funds could
be the Department of Housing and Urban
Development.   For further information
contact your  project reviewer.

After you  have exhausted  all  possible
sources of  funds, arrange to raise the
remaining local share by, for example,
selling  revenue  bonds  or general
obligation  bonds,  using  revenue
anticipation  notes, or  using special
funds  earmarked  for your  wastewater
project.
                     Service  Agree-
  o  Intermunicipal
ments
 Many  projects  involve  more  than one
 municipality, and  it  is  sometimes
                                    xxiii

-------
 difficult  to  come to  agreement
 with  all  of  the  jurisdictions
 involved.   During  your  facilities
 planning  activities  you  should have
 reached  agreement  with  the  other
 jurisdictions  with  regard  to cost
 sharing, operation  and  maintenance
 responsibilities  of each party,
 enactment of ordinances  concerning
 sewer  use and user  charges,  and any
 other   legally   binding   procedures
 necessary  for  implementing  the
 project.   While you  are not  required
 to  execute  intermunicipal  service
 agreements  at  the completion  of
 facilities planning,  it  may  be prudent
 to do so or at least have  a  meeting of
 the  minds as reflected in  a written
 agreement.

 Executed  intermunicipal   service
 agreements  are  required  with  the
 Step  3  application  for  grant
 assistance or before initiation  of
 procurement action  for  building  on  a
 Step  2+3  project  unless waived  by
 the  EPA  Regional   Administrator.
 Therefore,  you   should  consider
 starting early to negotiate agreements
 and,  if  at  all  possible,  have  a
 written  agreement before  beginning
 work on the design of your project.

 Allowance for Facilities Planning
 and Design

 One of  the most significant changes  in
 the  construction  grants  program
 resulting  from the  1981  Amendments  is
 the elimination of grants for planning
 (Step 1) and  design (Step  2).   In the
 future,  grant agreements will  include
 an allowance  for facilities  planning
 and design.  Grantees that  currently
 have a  Step 1 or Step 2 grant  will be
 able to complete the  work  included  in
 their scope of work using  the  present
 system  of  grant  payments.    However,
the  1981  Amendments  prohibit new
 grants exclusively  for  facilities
 planning or design.   Those  activities
 will  be  completed  by  potential
 grantees before  they apply for  a grant
 to build their projects.

 Appendix M contains the  procedures to
 determine  the  amount of  advance of
 allowance  and  of the estimated  and
 final   allowances.    The  allowance
 tables  in Appendix  M  are based on the
 percentage of  building costs  that
 have historically been attributable to
 facilities  planning  and  design.   No
 reimbursement  for  facility  planning
 or  design  activities,  beyond  the
 allowance,will be made.

 The  allowance  for  a project is  a
 single  sum  based  on  the  actual
 total   allowable  building  cost.
 Allowances  are not auditable  and  the
 activities  they  cover are not subject
 to   EPA requirements  for procurement
 under  assistance agreements (40  CFR
 Part 33).   Likewise, it is noted that
 EPA's  procurement requirements  do
 not  apply  to  expenses for services
 incurred during Step 1  and Step  2.
 However,the Congress did not intend to
 reduce  the opportunities  afforded
 minority  and  women's  business
 enterprises  to compete  for  contracts
 associated with construction   of
 publicly  owned treatment  works,
therefore,  it   is  EPA  policy   to
 encourage recipients to adopt procure-
ment procedures  for all  activities  of
their construction program  that, at  a
minimum, include  the affirmative Steps
 in 40 CFR  33.240.  EPA will ask  for
 information  from grant  applicants
about  the level of  minority and
women's  business  enterprise participa-
tion achieved  during planning and
design  activities in order to meet  our
obligation  to  report  MBE  and WBE
participation in the  construction
grants  program.
                                   xxiv

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The device  in the law is not a cost
reimbursement,  but  an  allowance.
EPA understands  that,  in practice,
any savings  realized  from the allow-
ance  will  be  available  to  each
community for general  public  purposes.
The Agency expects that  these  funds
will  be  used  to  defray  unreimbursed
expenses  associated with  building the
facility.  Due  to the unrestricted
nature  of the allowance,  however, EPA
will  not  audit the use of these funds.

One point that  must  be made clear,
to  both  consulting  engineers  and
grantees,  is  that the  allowance for
facilities planning and design should
never  be used  as a compensation
schedule  or  a fee schedule.   Many
factors, including demonstrated
competence,  experience  and   qualifi-
cations  of  the  firm involved, are
important  factors   in  determining
the  appropriate  compensation  for
engineering  services.  To reinforce
this fact, the following statement was
included  in  the final  construction
grant  regulations.   "The allowance
does not reimburse for cost  incurred.
Accordingly,  the Allowance Tables
shall   not   be  used  to determine
the  compensation for  facilities
planning  or  design  services.   The
compensation  for  facilities  planning
or services  should be based  upon the
nature, scope,  and complexity of the
services required by the community."

  o  Project Cost - Due to the time
interval  between   completion  of
your facilities  plan, the design of
your  project, and the  application
for  grant  assistance,  the  estimated
costs   of  your  project and  your
local  share may  have  increased.   This
is  especially  true  recognizing
the  reduced Federal  grant share
after  October 1, 1984.  You should
periodically review  and revise the
local  cost share  of  your project
and compare these cost estimates with
your  community's  current financial
status to ensure  that  the  project is
realistic  in terms of  the  financial
capability  of your community.

  o  Documentation of Costs  -  The
Step  3 phase  of  your project  is
subject to Federal audit which,  in
turn, requires  documentation  of
project  costs  in  order  for  these
costs to   remain  allowable  for
grant  participation.   For example,
administrative costs  for municipal
employees  must be substantiated by
time  sheets.  Other costs  should  be
substantiated by invoices,  and  in the
case of construction change orders, be
supported  by  written minutes  of
negotiation.  While only Step 3  grant
costs  are  subject  to  Federal  audit,
it  is good practice  to develop and
maintain  an accounting  and  filing
system which provides  an  audit
trail  from  project  initiation through
completion.

  o  Operation,   Maintenance  and
Replacement Costs  - As  project  costs
are periodically revised and as  a plan
of operation is developed, you  should
carefully  review the operation,
maintenance and   replacement  cost
estimates.   Historically, too many
projects  have  underestimated  these
costs  only to  find later that they
are  higher than  anticipated.   Your
reviewing  agency may be able  to
provide  you with  experiences from
other  municipalities  that  will help
guide you as to the reasonableness of
your costs.

  o  Environmental Review  -  The
environmental  review  is to  be
completed   before   submission of your
application.   You should work with
the State and EPA  as early as possible
                                    xxv

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 in the facilities planning  process to
 determine  the  appropriateness of a
 Categorical  Exclusion,  the  scope
 of  your Environmental  Information
 Document,  or the  necessity  for an
 Environmental Impact Statement.   You
 may  request  in writing  that  EPA
 make  a  formal  determination  with
 regard to  its  environmental  review
 (Section  3.2).

 Compliance

 The  Clean  Water  Act  requires  all
 publicly  owned treatment works to meet
 the  statutory  compliance  deadlines
 and  to   achieve  the water  quality
objectives of  the  Act, whether or
not  you  receive  Federal  funds.
This  requirement is  reflected
 in  the   National  Municipal   Policy
 (Appendix D).
                                  xxvi

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    PART  J.  FACILITIES PLANNING

             CHAPTER 1

       FACILITIES PLANNING--
         PURPOSE AND CONTENT
1.0
AMENDMENTS OF
1981
                 The   Municipal
                 Wastewater   Treat-
                 ment   Construction
Grants Amendments of 1981 (PL 97-117),
highlighted  in Appendix L,  changed the
Clean Water Act (CWA) with regard to
facilities  planning  (Step  1)  and
design  (Step  2).    Whi-le  separate
grants  for  facilities  planning and
design  will no longer be made,  an
allowance  will be  included  in the
grant to help  defray  these expenses.
Small communities  may be  eligible to
receive an  advance  of  the allowance
for  planning  and/or  design  of  their
project  if  their  State  reviewing
agency  determines  that  they  would
otherwise  be  unable  to  prepare  a
request,  i.e.,   facilities  plan
and  design,  to qualify  for  grant
assistance.   State  reviewing agencies
may  provide up to 10 percent of  their
annual  construction  grant  funding
allotment  for  advances and  will
determine the  terms and conditions for
seeking  repayment  if a construction
grant is not made at some point  in the
future.
Those  communities  that  received  a
facilities   planning  or design  grant
prior  to  December  29,  1981,  will
complete   their  project  according
to  the existing grant  agreement and
any  special  conditions attached  to it.
At  the  completion  of  these  projects,
municipalities will  then  follow the
current grant  application process.

During facilities  planning you  should
anticipate  the provisions  of the 1981
 amendments  that become  effective  on
 October 1, 1984.  These provisions are
 discussed throughout this  book and
 include  Federal  grant share, reserve
 capacity  and eligible  project
 categories.

 The impact of  these  provisions  will
 be reflected  in the local  share of
 project  costs  to  be borne by  your
 municipality.    It  requires  that
 you carefully  prepare your project
 schedule,  periodically revise it  as
 necessary, and remain in close contact
 with your reviewing agency in order to
 anticipate the timing of your grant.

 Eliminating separate Step 1 and Step 2
 grants will  allow  your community to
 move  more rapidly  in  the  preparation
 of your  grant  application.  This may
 result   in  reduced  project costs
 due  to  the  impacts  of inflation
 on construction.   In  addition, you no
 longer have  to  prepare three separate
 applications.    These  changes  are
 intended  to  enable you to  build your
 project  sooner, resulting  in earlier
 water pollution abatement.

 You should  note that  the technical
 requirements  for  facilities planning
 and project design have  not changed
 significantly   under  the   1981
 amendments   (exceptions  include
 allowable costs for reserve capacity,
 I/I   analysis,  value  engineering,
f301(h) waivers).   You still  will  need
I to complete a facilities plan and meet
I other  various   Federal  requirements.
 Therefore,  you are encouraged to
 follow the guidance  in  this book  and
 seek  review by  your  reviewing agency
 of your  facilities plan  both during
 and after its completion.   It  is also
 recommended that you  request review of
 your  project  design  at   intermediate
 points  and  at  completion to ensure
 compliance with both  State and  Federal

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requirements.   By  maintaining contact
with  your   project  reviewer  and
ensuring  that your project  meets  all
of  the  applicable requirements,  you
will  avoid  potential delays at  the
time of grant application.
1.1
FACILITIES
PLANNING—
PURPOSE AND
DEFINITION
                The  facilities
                planning  process is
                the first major  step
                leading  to  award
                of  grant  assistance.
Facilities planning  consists of those
necessary plans  and  studies  that
directly  relate to treatment works
needed to comply with  the  enforceable
requirements  of the Act.  Facilities
planning  will  substantiate  the
need  for the  proposed  facilities.
Through  a systematic evaluation of
alternatives  that  are  feasible in
light  of  unique demographic, topo-
graphic,  hydrologic  and  institutional
characteristics  of  the area,  it will
demonstrate, except for innovative and
alternative  technology  (Section
6.7.4), that  the selected  alternative
is cost effective (i.e., is  the most
economical  means  of  meeting  the
applicable effluent, water  quality and
public health  requirements over  the
design  life  of  the facility while
recognizing  environmental  and  other
nonmonetary  considerations).   The
facilities plan  will also  demonstrate
that  the  selected  alternative  is
implementable  from legal, institu-
tional,  financial,  and  management
standpoints.  A flow chart (Figure 3)
illustrates  the  principal stages  of
the facilities planning process.  Each
major stage corresponds  to a   chapter
in Part I  of this book.


The facilities  plan  is your record of
why the selected treatment  system best
meets your needs.   The  selection of
the  best  wastewater  and  sludge
management  alternative is the  most
important  outcome  of  the  facilities
planning  process.    The  plan,  there-
fore, should present a clear picture
of how this decision was reached and
also enable your project reviewer to
assure  compliance  with applicable
regulations.
1.2
CONTENTS  OF
FACILITIES PLAN
Include  the
following  in  your
facilities plan:
                                           o  A  description  of both  the
                                         proposed  treatment  works  and  the
                                         complete  waste treatment  system of
                                         which it  is  a part  (Section 5.2 and
                                         Section  8);


                                           o  A  description  of the Best
                                         Practicable   Wastewater   Treatment
                                         Technology (BPWTT) (Section 6.7);


                                           o  A cost-effectiveness analysis of
                                         the feasible conventional, innovative
                                         and  alternative  wastewater  treatment
                                         works,  processes  and  techniques
                                         capable  of  meeting  the  applicable
                                         effluent, water quality  and  public
                                         health  requirements  over  the  design
                                         life of  the facility while recognizing
                                         environmental  and  other  nonmonetary
                                         considerations.  The monetary costs to
                                         be considered must include the  present
                                         worth or  equivalent  annual  value of
                                         all capital  costs  and  operation  and
                                         maintenance  costs.  The  population
                                         forecasting  in  the  facilities  plan
                                         analysis  shall   be consistent  with
                                         the current  Needs Survey.  A cost-
                                         effectiveness analysis must include:


                                           -  An  evaluation of alternative flow
                                              reduction   methods  (Section
                                              5.5.3);

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FACILITIES PLAN
PURPOSE AND
CONTENT
PREPLANNING
3-8.

PREPARATION OF
FACILITIES PLAN
(SEE FIGURE 4)
                                                                                               9.
REVIEW OF
FACILITIES PLAN
         STATE/EPA ACTIVITY
         APPLICANT ACTIVITY
                                 PREPLANNING
                                 CONFERENCE
                                 SPECIAL TOPICS
                                 GENERIC PLANS
                                 PLAN OF STUDY
                                 LOCAL FUNDS
                      3. GENERAL CONSIDERATIONS
                        -PUBLIC PARTICIPATION
                         PROCEDURES
                        -ENVIRONMENTAL
                         DESCRIPTION AND
                         ANALYSIS
                      4. WATER QUALITY
                        MANAGEMENT
                      5. EXISTING AND FUTURE
                        CONDITIONS
                        -POPULATION, FLOWS, LAND USE
                      6.DEVELOPMENT AND
                        SCREENING OF ALTERNATIVES
                      7. EVALUATION OF ALTERNATIVES
                        -COST-EFFECTIVENESS
                         ANALYSIS
                      8. DESCRIPTION OF
                        SELECTED ALTERNATIVE
                               -INTERGOVERNMENTAL
                                COMMENTS1
                               -STATE REVIEW AND
                                CERTIFICATION1
                               -EPA ACTIONS UNDER
                                NEPA1
                               -FmHA COMMENTS
                                (WHERE APPLICABLE) 1
         COORDINATED ACTIVITY
         CHAPTER NUMBER
                                                                                      1   ITEMS NOT REQUIRED AT THIS TIME
                                                                                         BUT STRONGLY ENCOURAGED
         Figure 3  Procedural Flow Chart for Facilities Planning for Wastewater Treatment
                    and Sludge Management

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  -  A description of the relationship
     between the  capacity of alterna-
     tives and the needs to be served,
     including capacity  for future
     growth expected after the treat-
     ment works becomes operational
     (Section 5.5.2);

  -  An  evaluation  of  improved
     effluent  quality attainable by
     upgrading  the  operation  and
     maintenance  and  efficiency of
     existing  facilities as  an
     alternative  or  supplement  to
     building  of new  facilities
     (Section 6.1);

  -  An evaluation of the alternative
     methods for the  reuse or ultimate
     disposal  of treated wastewater
     and sludge  material  resulting
     from  the  treatment  process
     (Section 6.7.1,  6.7.2);

  -  Consideration of  systems with
     revenue  generating  applications
     (Section 6.7);

  -  An evaluation of opportunities to
     reduce use  of or  recover  energy
     (Section 6.7);

  -  Cost information on total capital
     costs, and  annual  operation and
     maintenance costs,  as  well  as
     estimated annual or monthly costs
     to residential  and  industrial
     users (Section 7.1); and

  -  For small  communities, considera-
     tion of appropriate technologies
     (Section 7.3.1).


  o  A demonstration  of the  non-
existence or  possible existence of
excessive  infiltration/inflow  in  an
existing sewer system (Section 5.4);
  o  An analysis  of  the potential
open  space  and  recreation  oppor-
tunities  associated  with  the  project
(Section 7.9);

  o  An adequate  evaluation  of the
environmental  impacts of alternatives
(Section 7.5);

  o  An evaluation of  the  water
supply implications of the project
(Section 3.2.10);

  o  For  the selected  alternative,  a
concise description  at an appropriate
level  of  detail  of  at least the
following:
     Relevant   design
     (Section 8.1);
parameters
  -  Estimated capital construction
     and operation  and maintenance
     costs  (identifying  the  Federal,
     State,  and local shares) and  a
     description  of the  manner
     in  which  the  local costs will be
     financed (Section 8.2);

  -  Estimated   cost  of  future
     expansion and long-term needs  for
     reconstruction  of  facilities
     following  their useful  life
     (Section 7.4);

  -  Cost impacts on  wastewater system
     users (Section 7.3); and

  -  Institutional   and  management
     arrangements   necessary  for
     successful   implementation
     (Section 7.8, 8.5.1).

Other issues which  you  must  address
and which  should be included  in your
facilities plan include:

  o  A description   of  a  municipal
pretreatment  program if applicable
(Section 8.5.4);

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  o  A demonstration  that the selected
alternative  is  consistent with any
applicable  approved  water quality
management (WQM)  plan (Section 4.0);

  o  A  demonstration   that  the
municipality  has  the legal, institu-
tional,  managerial   and   financial
capability  to ensure  adequate
construction  and   operation  and
maintenance  of  the  treatment works
throughout  the system's  service
area including the  ability to  comply
with the  regulations  (40  CFR  30.301
and 30.600-2); this  latter section  of
the  regulations  not only  addresses
financial  and management capabilities
but includes  compliance with the Civil
Rights Act of 1964,  equal   employment
opportunity  and  labor  laws,  etc.
(Sections 8.5 and 13.2);

  o  A summary of public  participation
in  the  development  of the  facilities
plan (Section 7.11).

If  any  of  the above information has
been  developed  separately   from
the facilities  plan,  it  may  be
incorporated by  reference  rather
than  duplicated, although  documenta-
tion  of  each  item  is  necessary
in your completed plan.

Normally,  facilities  planning for the
entire  project  area  is   completed
before design or before  Step 3 grant
assistance  is awarded.   There  are,
however,  circumstances where  grant
assistance   may  be  awarded  before
review  and certification  of  a
facilities  plan  by  the State agency.
In  these cases, grant assistance may
be  awarded  if:   (1)  the  Regional
Administrator determines  that
applicable   statutory  and   regulatory
requirements  (including  the environ-
mental  review under 40 CFR  Part  6)
have been  met;  (2)  the facilities
planning  related  to the  project  has
been substantially completed;  (3)  the
portion  of the  facility  plan  for
which grant assistance  is awarded will
not be significantly  affected by  the
completion  of the  facilities plan
and will  be a  component  part of  the
completed  waste  treatment system;
and  (4)  you agree  to complete  the
facilities  plan on a schedule accept-
able to  your  reviewing  agency.    The
schedule  will be inserted as a special
condition of the grant  agreement.

In  addition to these four conditions
which  are  applicable  to   projects
requesting  grant assistance before
completion  of facilities  planning,
other limitations (Section  13.2)  are
imposed  if the  project is  also  a
phased  or segmented project.

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             CHAPTER 2

            PREPLANNING
2.0
PREPLANNING
CONFERENCE
                 Chapter  1  discusses
                 the  purpose  and
                 content   of
facilities  plans  as  well  as the  1981
amendments  to the CWA.   Preplanning
should precede the  preparation  of  a
facilities  plan  in  order to assure
that  costs,  schedules and scope of
work  performed  during  facilities
planning  are  adequate  to  satisfy
regulatory  requirements and  are
commensurate  with  complexity of
the  water  pollution  problems.
Preplanning  assistance,  including  a
preplanning  conference  with  your
reviewing agency,  is  strongly
encouraged.   In some cases,  the
recommended  conference  will  be
held  after  facilities planning has
begun but  before it has progressed
substantially.

At the State's or your  request, you
may wish to  schedule a preplanning
conference  at  which  you,  other
municipal  officials  and  possibly
your  A/E  will meet  with  the  project
reviewer  to discuss  various  elements
of the  construction  grants  program.
If supplemental grant assistance  from
the  Farmers  Home  Administration
(Appendix  F)  is being  considered
also,  it  is  recommended  that  a
representative from that agency be
present  at  the conference.   While  a
conference may not  be possible for
every  project,  the  project  reviewer
will  provide  you  with  assistance and
explanations  before or  soon  after
you initiate activities leading up to
grant  assistance.

At the  conference,  requirements  for
grant  assistance  and  issues relevant
or  unique  to your project  will  be
reviewed and addressed.  For example:

  o  For small communities, an advance
of  funds  for  planning  and design
(Appendix  B  to  40  CFR Part  35,
Subpart I) and the  use of a simplified
generic facilities  plan;

  o  For   sewered  communities  with
a  population  of 10,000 or  less,
consideration of appropriate  low cost
technologies  such  as  facultative
ponds,  trickling  filters,  oxidation
ditches,  or overland  flow  land
treatment;  for  unsewered  portions
of  communities  of 10,000  or less,
consideration  of  onsite  systems;
and

  o  Estimated  charges to customers
and the impact  of those  charges in
terms  of  annual  costs  per  household
(Section  7.3)  as  well  as your
community's  financial  capability and
arrangements  for financing the local
share of project  costs (Section  12.7).

In addition, you may request  an early
determination of  the  scope  of the
environmental  review  including
eligibility for Categorical Exclusion,
scope  of  an  Environmental  Information
Document  (EID), or  concurrent
development  of an  Environmental
Impact  Statement (EIS) (Sections 3.2.
13, 9.2.2).
                                        2.1
                                        ELIGIBLE
                                        APPLICANT
                A  municipality  or
                State  will   be
                eligible  for grant
assistance  if  it meets  the  following
requirements  at  the  time  of
application:

  o  Is  a  public body created under
State law or  an Indian tribe or an
authorized tribal organization, having

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jurisdiction  for  the treatment,
transport  or  disposal  of domestic
wastewater  in  a  particular geographic
area;

  o  Is  a  designated  and approved
management  agency  authorized  in a
WQM plan; and

  o  Demonstrates the legal authority
and  financial  capability to build
and manage the  resulting treatment
works.

If two or more political jurisdictions
are  included  in  the facilities
planning  area,  the  eventual grant
applicant  may  be  a joint authority
that represents  all  the jurisdictions
or a designated lead agency.  In  these
cases,  carrying  out  the approved
facilities  plan  will  be  based on
written   intermunicipal   seryice
agreement  between  the public  bodies.
For projects involving  more  than  one
municipality, participants  should meet
to  discuss  their  interrelationships,
resolve  differences,  and  set   the
ground  rules  for  working together
before the  application process begins.

2.2
PLAN OF  STUDY    While not required,
                 it  may  be  very
helpful  for you to  prepare a  plan
of  study for  your project.  A  plan
of  study can  help ensure that  you,
your  A/E  firm and the  reviewing
agency  have a common  understanding
of  the  scope, schedule and  costs of
preparing  the  facilities  plan.
Ideally, the plan  of study should be
prepared  prior to the preplanning
conference and  serve  as  the basis
for  discussion.    Suggested  items
to  be included  in  the  plan  of  study
include  a  description  of the  work
tasks  to  be  performed  resulting
in  the  completion of an  approvable
facilities  plan, a  schedule  for
completion  of work tasks and outputs,
and an estimate of manhours and costs
to complete work tasks.
2.3
INTERGOVERN-
MENTAL
COORDINATION
                 At an early stage in
                 development of  your
                 project,  you  are
                 encouraged to obtain
comments that will indicate the degree
of  concern other  agencies have  in
your project.   You should review any
comments  received  to  identify
sensitive  issues for  evaluation  in
your facilities   plan.    In  addition,
your  State  may  have established
procedures  under  EO  12372,  which
replace  OMB Circular  A-95,  for
consulting  between State and local
officials  and  Federal   agencies
concerning  activities  under  Federal
programs.   In this case, certification
that  these  procedures have been
complied  with must accompany  your
application.   EPA regulations  also
specify the  implementation  of the
Agency's  intergovernmental   review
responsibilities.   (40 CFR Part 29).
2.4
PROCUREMENT OF
SERVICES
                 Most  muni ci pa1i t ies
                 find   it  necessary
                 to procure profes-
sional  services  (e.g.,  A/E  firm)  to
assist  them in the  preparation of a
facilities  plan   and  project  design.
Step 3  grant  assistance may include
as  an  allowable  cost, an allowance
for  facilities planning and  project
design.   Because  EPA  will  not
reimburse  you  for your actual  costs,
but  rather provides  an allowance,
you  need not  comply with  the  provi-
sions of EPA's procurement regulations
(40 CFR Part 33)  for procuring these
services unless you intend  to use the
same firm  for engineering  services
during building  as  you  use  for

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planning  or design.   In addition,
you  will  need  to comply  with  the
provisions  during the  building  of
the  project  or certify that  your own
procurement  system,   at  a minimum,
satisfies  the requirements  of  the
regulations  (40 CFR Part 33).

The procurement of services during the
early stages of your project is solely
your  responsibility.   EPA suggests
that you give careful consideration to
the  procurement  procedures you  will
use  and,  lacking  your  own  system,
consider  using 40 CFR  Part  33.   A
discussion of  procurement is included
in Chapter 16.

EPA  encourages recipients to  adopt
procurement   procedures  for   all
activities  of  their  construction
program  that  include  affirmative
steps in  order to maximize  MBE/WBE
participation   (40   CFR   33.240).
EPA  will  request  information  from
grant applicants  regarding  the  level
of minority  and  women's enterprise
participation achieved  during planning
and design activities in order to meet
EPA's obligation to report MBE and WBE
participation  in  the construction
grants program.
             CHAPTER 3

 FACILITIES PLANNING CONSIDERATIONS
3.0
GENERAL
PREPARATION
PROCEDURES
                 Figure  4  is  a
                 flow chart  that
                 i11ustrates   the
                 preparation  of  a
facilities  plan.    The chart  relates
Chapters  4  through  8  of this  book to
the  overall  facilities  planning
process  illustrated  by Figure  3 in
Chapter  1.   Figure  4 graphically
indicates  how public  participation
and  environmental   evaluation   are
integrated  throughout  the development
of the  facilities plan.

To reduce  duplication  in  this  book,
public  participation and environmental
impact  considerations  are discussed in
the  balance  of  this  chapter.    It
should be  noted, however, that  the
environmental  discussions  represent a
summary  of other  Federal  laws  and
policies  of EPA, which in the interest
of brevity  are not complete descrip-
tions  of all  of the  procedures  and
considerations that  must be taken into
account.  Rather, the  descriptions are
intended to  alert  you to the major
areas of concern as  your  project is
developed and  provide  a basis for more
detailed  discussions with your project
reviewer for  those areas likely to
require  a  thorough evaluation.   In
later  chapters  reference  is  made
to the  public  participation  and
environmental  issues discussed in this
chapter with the  intent that you will
review  them as necessary.

Maintaining   the  interrelationship
among  evaluation  of  alternatives,
environmental  evaluation  and  public
participation   will  ensure  that
issues  critical  to  the identification

-------
PUBLIC PARTICIPATION
  CONSIDER
  PRIOR PUBLIC _
 ' NOTICE AND
  CONSULTATION
         3 PUBLIC CONSULTATION
WORK	    OR MEETING AND   	
PLAN       RESPONSIVENESS
           SUMMARY IRS)
                                  PUBLIC
                                  MEETING
                                  AND RS
                                                     PUBLIC
                                                 -»• MEETING
                                                     AND R.S
DESCRIPTION AND EVALUATION
OF ALTERNATIVES
   4. WQM PLANS
     RELATED TO
     FACILITIES
     PLANNING
 5. DESCRIPTION AND
   ANALYSIS OF
   EXISTING    —
   AND FUTURE
   CONDITIONS
 6. DEVELOPMENT
^ AND SCREENING
   OF FEASIBLE
   ALTERNATIVES
 MID-
-COURSE -
 MEETING
 7 EVALUATION
^ OF PRINCIPAL
   ALTERNATIVES
                                                                        I COST-EFFECTIVENESS )
 8 PLAN SELECTION
   PRELIMINARY
^ DESIGN AND
   IMPLEMENTATION
   SCHEDULE
ENVIRONMENTAL
EVALUATION:
  9. REVIEW AND
   ADOPTION OF
   FACILITIES
   PLAN
  PRIOR
  ENVIRONMENTAL
 " IMPACT
  SCOPING
 3 ENVIRONMENTAL
^ DESCRIPTION
   AND
   ANALYSIS
   ALTERNATIVES
   TO AVOID,
   MINIMIZE OR 	
   MITIGATE
   IMPACTS
              PREPARATION
              OF EID OR EIS —
              AS APPROPRIATE
                           COMPLETION
                           OF EID OR 	
                           DRAFT EIS
                           AS APPROPRIATE
 REVISIONS TO
-EID OR DRAFT EIS
 AS NECESSARY
           LEGEND
             3. CHAPTER
                                  Figure 4    General Facilities Plan  Preparation Procedures

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of the most cost-effective alternative
such  as  financial  and  environmental
impacts,  treatment processes,  siting
of facilities, etc., will  be addressed
thoroughly during facilities planning.
Your schedule of work should include a
periodic review  of these  inter-
relationships  with your  project
reviewer  to  ensure  that  they are
maintained  throughout the  facilities
planning  process.
3.1
PUBLIC           Open discussion and
PARTICIPATION     citizen  involvement
                 can help you develop
plans  that   reflect  the  needs and
values of your community.   Informing
the public early about the  scope and
nature of the facilities  planning and
involving  them  during development and
evaluation of alternatives can surface
important  facts  and   identify  issues
early, so they can be resolved without
unnecessary  delay  or  additional  cost.
Even more important,  a  better, less
costly project may result.  The under-
standing  gained for  the  project and
its  costs  during meetings  and  by
reading fact sheets  can  help  develop
citizen support for the bonds  and the
user charge  system needed  to fund the
project.

To  be able  to certify  at  time  of
application  for a  Step  3  grant that
the public  participation  required  in
connection  with  State  and  local
statutes  and  with the  environmental
review process  under  Part  6 has  taken
place, it is most effective to make it
an  integral   part  of   your  facilities
planning  public participation program.

While  you  are not   required  to use
EPA's  Part  25 public participation
regulations  in  preparing  your
facilities  plan  because  there are no
Federal funds involved,  you may wish
to review Part  25  for suggestions for
your program  such as:
 o   Inform local  residents near  the
start  of  the  facilities  planning
process when  assessing problems  and
developing  alternatives;

  o  Provide  your project reviewer
and  the  public with  a brief public
participation work plan.   The work
plan describes  how  public  participa-
tion will be conducted, encouraged  and
assisted  during  facilities  planning.
It includes staffing  plans,  a  budget,
schedule  of  activities,  points  of
consultation  and  preparation  of
responsiveness  summaries,   consulta-
tion  and  information  distribution
mechanisms,   and  an  identification
of  segments  of  the  public  to  be
encouraged  to  participate.   The work
plan and  other information can  be made
available  through  the  use  of existing
local information  channels,  if widely
read, such  as  town bulletin boards or
notices  in the  library.   Further
savings for small  communities can be
realized  by  using  local  officials
or volunteers to coordinate public
participation  efforts and  prepare
records of  meetings;

  o  Consult  with  the public  when
identifying wastewater  problems  and
screening   alternative   solutions,
but  before selection of  principal
alternatives for detailed evaluation;

  o  Provide   the  public  with  at
least  30  days  advance  notice  of
project meetings, such as town  council
or other  regularly scheduled meetings;

  o  Hold  a   public  meeting  after
principal  alternatives  are largely
developed  but  before the proposed
alternative is  selected, and  present
preliminary cost information;

  o  Consider  a midcourse review of
your public participation program with
your project reviewer;
                                      10

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  o  Hold  at  least one public meeting
before adopting  the  facilities  plan.
You should indicate in  a  public notice
that  the  recommendations  of the
facilities  plan,  including financial
information,  will  be  discussed.
Specify  where the  facilities  plan
and  other  pertinent  information  is
available  for public review at  least
30 days  prior to the  meeting;

  o  Allow the public  to make written
and  oral  statements;  a  question  and
answer session  should  be provided  if
possible.   Prepare a  complete record
of the  meeting  and prepare  a  final
responsiveness  summary for inclusion
in the facilities plan;

  o  Prepare  and   distribute   a
responsiveness  summary  after  each
public  meeting.    A  responsiveness
summary  should  address  significant
public  comments, both  adverse  and
beneficial,  and the  justification for
rejection  or incorporation of  the
comments into the plan; and
  o  Present at the meeting
 ummary  of  the  faciliti<
                             a  brief
summary  of  the  facilities   plan
including  the  cost   information
developed  in Chapter 7.

3.2
ENVIRONMENTAL     Under  the  National
REVIEW PROCESS    Environmental Policy
                 Act   (NEPA),   an
environmental  impact  statement  (EIS)
must be prepared by a Federal agency
where a determination  is made that a
proposed action (building a wastewater
treatment  works in this case)  will
have a  significant  adverse  impact  on
the quality of the  human environment.
Grant  assisted  projects  are subject
to  NEPA  and  EPA's  implementing
regulations  (40 CFR  Part  6).   An
environmental  review,  required  by
Part  6,  must  be  completed  before
submission  of  any  Step  2+3  or Step 3
grant  application.   The  potential
applicant  should work  with  the State
and EPA as  early  as  possible in  the
facilities  planning  process   to
determine if the project qualifies for
a  categorical  exclusion from  Part  6
requirements, or whether a finding of
no significant  impact,  or  an  EIS  is
required.

To make this determination,  EPA
conducts an environmental review which
you may request take place at  any time
from  the preplanning stage to  award of
grant  assistance.   In the early
preplanning stages, determination of a
categorical exclusion  from substantive
environmental  analysis and  review,
incorporated into EPA's  regulations in
1982,  is intended to apply to  projects
which  are   small   scale,  minor  and
routine.    Such  projects  may  include
replacement,  minor rehabilitation,
minor expansion or  minor upgrading of
facilities  which should not result in
increasing the overall design  capacity
of the treatment works  nor  the  pipe
size of interceptors  or collection
sewers. Where a categorical exclusion
is granted  by  EPA, an  environmental
information  document  (described
below)  need not be prepared.   State
requirements,  however,  may  still
apply.

The decision to  grant  a categorical
exclusion  is made  by  EPA  based  upon
information  supplied  by  you, your
State reviewing agency, and any other
source  of  information.   If  you  feel
your  project meets the criteria  for
categorical  exclusion,  you  should
contact your project  reviewer  for
instructions  on  how to  proceed.

Lacking  approval   of  a categorical
exclusion,  you  are  required  to
prepare an  environmental information
                                      11

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document  (EID)  as an  integral  part  of
your facilities plan.   The EID is used
by you in evaluating the environmental
impacts,  both  beneficial  and adverse,
of alternative wastewater collection,
treatment,  and  sludge  management
systems as  well  as  the selected plan.
In addition,  the EID  is  used  by your
State agency in  evaluating your
project  and  by  EPA  in  determining
whether  to prepare  an  EIS  or,  in
the  alternative,  a  finding  of  no
significant impact (FNSI).

Where  it  is  necessary  for  you  to
prepare  an EID, it  is  recommended
that you  discuss  the  scope of the EID
with  your  project  reviewer at  a
preplanning conference (Section 2.0).
In this way you will  be able to reach
agreement  on  the issues  that  need  to
be  addressed   and focus  your  efforts
on  them.    Assuming  that  your EID
adequately  addresses these   issues
and  proposes realistic  measures
to  mitigate  adverse impacts, EPA
will  generally be able  to issue  a
FNSI.   The  public  has 30 days  to
comment  on the  FNSI,  after  which
EPA  either finalizes  its decision
not  to prepare  an  EIS or makes  a
determination to prepare an EIS.

It is  in  your best interests  to  (1)
seek  a categorical  exclusion  where
applicable, (2) meet with your project
reviewer  to define  the scope  of the
EID,  (3)  address  and  resolve the
significant   environmental   issues
in  the EID  in  concert with your
public  participation program, and
(4) formally  request  an environmental
review by your  State  agency  and EPA
prior to  formal  adoption  of the
facilities  plan.    The  balance  of
this  chapter  discusses  the contents
of  an EID,   special  environmental
topics which,  if applicable,  must  be
addressed  in  the EID, and  the  joint
EID/EIS procedures  where appropriate
(Section 9.2.2).
3.2.1
ENVIRONMENTAL     To  facilitate  the
INFORMATION       environmental review
DOCUMENT          process  and  the
                 selection  of  an
environmentally  sound   project,
integrate  your  environmental  analyses
throughout  your   facilities  plan.
Ideally, a separate chapter within  the
facilities  plan   should  summarize
the  environmental  issues  and  discuss
measures to  minimize  adverse impacts.
The EID will present information which
describes:

  o  The  proposed  action, including
purpose and need;

  o  The  existing  environment  in
the  planning  area  as related  to
the  evaluation  of the alternatives
and  selection  of the  proposed
project.   The existing environmental
conditions to  be described  in
the  facilities  plan  are  listed in
Section 5.1;

  o  The  future environment  without
the  project,  i.e., the "no  action"
alternative  and  its  effects  on
future environmental conditions in
the planning area (Section 5.6);

  o  The development and evaluation of
alternatives as  described  further in
Chapters  6 and  7.   Evaluate  impacts
on the environment  as  beneficial  or
adverse,   direct  or  indirect,  and
long-term or short-term; and

  o  The environmental impacts of  the
selected  alternative  as  described in
Section 8.4 with special attention to
unavoidable   impacts,  trade-offs,
commitments of resources, and measures
to mitigate adverse effects;

  o  Sources  of  information  used
to describe  existing and  future
                                     12

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conditions.   Consult with  regional,
State and  Federal  agencies  as
appropriate early  in the  planning
process for assistance  in  locating
the sources of  information.

Environmental  resources  in  your
planning  area  may  be  identified
relatively  inexpensively  by
stereoscopic  aerial   photographic
analysis,  obtaining  appropriate maps>
documents, and  by:

  o  Conducting  literature  searches,
interviews  and  limited  field  visits
for  familiarization  with  the area
and  identification  of  areas likely
to  contain   sensitive  resources
(floodplains,  wetlands,   significant
agricultural   lands,   endangered
or  threatened   species   habitat,
cultural properties, parks, etc.);

  o  Using field  surveys  for positive
identification and  verification  in
areas  directly  impacted  by the
principal alternatives;

  o  Conducting  intensive  original
field  research   in  areas  directly
impacted  and  when necessary  to
determine the  significance  of the
resource, the nature and extent  of the
impacts and  to  develop  mitigative
measures.

EPA's  decision  either  to   issue  a
FNSI  or  prepare  an EIS  will  be
based on an environmental  review that
will  include an analysis of the
information  you  provide  in the
facilities plan.   In addition, EPA
must comply  with  procedures  of  other
environmental   laws  and  executive
orders.  Following are special  topics
which require  you  or EPA to  consult
with other agencies or which describe
procedures  designed  to  avoid  delays
during the  preparation and  review  of
your facilities plan.  Adverse impacts
in  any of  these  environmentally
sensitive areas may  result in the need
for  an  EIS  and  the  imposition  of
special  conditions  in  your  grant
agreement.

An evaluation by your  project reviewer
of your responses  to issues raised
during  public participation  and
your  integration   of environmental
considerations into  the facilities
plan  is  strongly  recommended  before
initiating  project  design.   For
further  assistance  in  evaluating
environmental  impacts,   consult
your  project reviewer  and  the  EPA
publication  "Environmental  Assessment
of  Construction  Grants  Projects"
(FRD-5).
3.2.2
HISTORICAL AND
ARCHAEOLOGICAL
SITES
                 The  National
                 Historic  Preserva-
                 tion  Act  and
                 Executive  Order
11593  require procedures for consulta-
tion and  commentary by the  Advisory
Council  on  Historic  Preservation  on
EPA grant  actions that will  affect a
property  listed  or  eligible  for
listing  on  the   National  Register
of  Historic  Places.   EPA guidance
memorandum  of  March 27,  1984,  for
compliance with  Section  106 of the
National  Historic Preservation Act
should  be  utilized.   This guidance
provides  for  integration  of  the
cultural resource  review process into
the  NEPA  review  process  for  the
Construction Grants program.  As early
as  possible  in  the planning  process,
you  should  contact  your  project
reviewer  for  advise  on  specific
procedures for initiating consultation
with the State  Historic  Preservation
Office (SHPO).  The SHPO will  provide
information about  properties listed or
eligible for  listing  on the  National
                                     13

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Register of  Historic  Places  and
recommend the  appropriate level of
cultural  resource survey.

In general, your plan should avoid
direct  and  indirect  impact  by the
proposed  facilities  on  identified
properties  or  potentially  sensitive
areas.   Any  unavoidable direct  impact
will   require  an  evaluation  of the
identified  historic  or  cultural
property,  additional   detailed
information about the property, an
evaluation of the potential effect the
project  may have on  the property
(36  CFR 800.3)  and  any  proposed
measures to  minimize the effects.  At
a minimum,  adequate  data on  the
property's  boundary,   integrity
and  its  significance will be necessary
to  determine  its  eligibility  for
listing  on  the  National  Register
(36  CFR  Part 63).

Cultural  resource  surveys  should be
initiated  early  in  the  planning
process  and completed  as  soon as
practical,  but  before  award of
grant assistance.
3.2.3
FLOODPLAINS,
WETLANDS, AND
FLOOD INSURANCE
                 EPA's  Policy
                 Statement   of
                 Procedures   for
                 Floodplain  Manage-
ment and Wetlands Protection (Appendix
A to Part 6) requires  EPA  to  prepare
an assessment for any action under its
programs that will  affect a floodplain
or wetland.   In addition,  States  may
also have  special  requirements  for
assessing impacts upon these sensitive
areas.   Information   is  generally
readily available to identify 100-year
floodplains  and  wetlands  greater
than 5 acres,  however, the program
requirements are not limited to  areas
of  that  size.   Floodplains  and
flood hazard areas  are  shown on  maps
prepared  by the  Federal  Emergency
Management  Agency  (FEMA).    Wetlands
may be  identified by  maps  available
from  the  U.S.  Fish  and  Wildlife
Service  (USFWS), the  U.S. Army  Corps
of  Engineers   (COE)  or  the  Soil
Conservation Service  (SCS).

You   should  develop or  modify
alternatives  to avoid direct or
indirect  impacts  on  wetlands and
floodplains  wherever  possible.   EPA
will   not  fund  costs  for treatment
works  capacity for  new developments on
environmentally  sensitive land,  such
as floodplains or wetlands.

If your  project  will affect  wetlands,
floodplains,  impact  navigable  waters
or cause the discharge  of  dredge or
fill   materials,  consult with  FEMA,
USFWS, and  EPA, and  contact the COE
to determine  whether  a permit for
discharge  of dredge  or  fill  material
will  be needed.   If a permit is
necessary,  the  COE  should identify
alternative  locations to be  evaluated
and which environmental  factors should
be addressed.

If the  selected alternative proposes
construction or purchase of struc-
turers  in  a  flood  hazard  area,
all  affected  communities  may be
required   to   participate in the
National  Flood   Insurance Program of
the   Federal  Emergency Management
Agency (FEMA).   FEMA may require you
to obtain  and  maintain an adequate
flood  insurance  policy  for the
Structurers.   You  must  satisfy  these
flood  insurance  requirements in  order
for you to receive Step  3  grant
assistance.   Early coordination  among
affected communities  will help  avoid
delays in grant award.

The Coastal Barrier  Resources Act
(PL 97-348  enacted  October  18,  1982)
                                     14

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restricts  the award of  grants  that
will  have  the effect  of  encouraging
development within the  Coastal Barrier
Resources  system.   The  system is made
up of,  for example,  barrier islands
and  related  areas containing  few
manmade structures.  The  areas in the
system  are shown On maps available
from your  State reviewing  agency.

In  addition  to  restricting  grant
awards  for funding construction of
facilities within the  system,  the
Act prohibits  the award of a  grant for
capacity  in  a  treatment  plant  or
conveyance outside the  delineated
areas which would have the effect of
encouraging  development   in   the
delineated  areas.   However,  construc-
tion grant funds  may be awarded after
consultation with the Secretary of the
Interior,  for  the replacement  or
upgrading,  without   expansion,  of
publicly owned  or publicly  operated
sewage treatment structures  or
facilities, if the projects are either
an essential link  in a  larger network
or system   or  are  consistent  with the
purposes of the Act.
3.2.4
AGRICULTURAL
LANDS
                 In your  facilities
                 plan, evaluate the
                 direct and indirect
impacts of your project on  significant
agricultural  lands.   It  is  EPA
policy  and  the Farmland  Protection
Policy Act  (PL 97-98)  aim to protect
these lands  from  irreversible loss as
an environmental  or  essential  food
production  resource by  locating
facilities  on agricultural  land  only
when  necessary  to  serve  existing
residential   users  (Section   6.5).
Identify  in  your  facilities  plan
significant  agricultural  lands  in
the  planning area by  consulting
with  the  local office of the  Soil
Conservation  Service,  U.S. Department
| of  Agriculture  (USDA).    Environ-
 mentally  significant   agricultural
 lands are defined by EPA and USDA to
 include  the following  important
 farmlands:

   o  Land  that has the best combina-
 tion of  physical  and  chemical
 characteristics  for  producing  food,
 feed,  forage,  fiber,  and  oilseed
 crops, and is  also available for these
 uses  (the land  could be  cropland,
 pastureland,  rangeland,  forest  land,
 or other land, but not  developed land
 or  under  water).   It has  the  soil
 quality,  growing  season,  and moisture
 supply needed to  economically produce
 sustained  high yields  of crops  when
 treated   and  managed  according  to
 acceptable farming methods;  or

   o  Land that   is  used  for  the
 production of  specific high  value food
 and fiber crops.   It has the special
 combination of soil quality, location,
 growing  season,  and  moisture  supply
 needed   to  economically produce
 sustained  high quality  and/or  high
 yields of  a specific crop when treated
 and  managed  according  to  acceptable
 farming  methods.

 Discuss  additional farmlands of State,
 local and environmental  importance
 with your project reviewer.  Evaluate
 alternatives that  will  avoid  or
 minimize adverse  impacts on signifi-
 cant agricultural  lands.  Examples of
 mitigation measures  are described in
 Sections 3.2.12, 11.1.7.  Interceptors
 and  collection  systems   should  be
 located   on.  significant  agricultural
 land  only  if necessary to  eliminate
 existing discharges  or  serve existing
 residences.
                                          3.2.5
                                          COASTAL ZONE
                                          MANAGEMENT
                                          Federal
                  The  Coastal   Zone
                  Management  Act
                  requires  that  all
         activities  be  consistent with
                                      15

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approved State coastal zone management
programs   to the maximum  extent
practicable.    If  your  project  is
located in the coastal zone of a State
with  an  approved  coastal  management
plan,  a  consistency  certification
will  need  to  be  submitted  to the
appropriate agency.  Consult  with the
Office of  Coastal  Zone Management,
U.S.  Department  of  Commerce  or
the  appropriate  State  agency for
details.  In developing  and evaluating
alternatives  insure  to the maximum
extent  practicable  that they are
consistent with any  approved  State
coastal management  programs applicable
to the planning area.
3.2.6
MILD AND
SCENIC RIVERS
                 To comply with the
                 Wild  and  Scenic
                 Rivers Act, EPA will
determine  from  the Secretary of the
Interior  or Agriculture  that the
project  will  not  directly and
adversely  impact any wild, scenic, or
recreational  river  area.   During
facilities  planning  identify any
rivers  listed in the Nationwide Rivers
Inventory  or any designated rivers in
the planning area through consultation
with the appropriate State agency and
the National Park  Service, Department
of the  Interior.  Develop and evaluate
project  alternatives  to  avoid or
mitigate  adverse  impacts on  these
rivers.
3.2.7
FISH AND
WILDLIFE
PROTECTION
                 The  Fish  and
                 Wildlife Coordina-
                 tion  Act  requires
                 that  actions that
will control  or modify any natural
streams  or  other  body of  water
be  undertaken  so  as to  protect
fish and wildlife resources  and their
habitats.   During facilities planning
consult the  U.S.  Fish and Wildlife
                                         Service  and  appropriate  State  agency
                                         to find  ways  to prevent  or lessen
                                         adverse  impacts  your project could
                                         have  on fish,  wildlife or  their
                                         habitats.

                                         Wastewater  treatment  facilities  can
                                         attract  birds  that  pose potential
                                         birdstrike hazards at  nearby airports.
                                         If locating a  wastewater treatment
                                         facility within  10,000  feet  of an
                                         airport, you  can coordinate  the
                                         location  with  the regional  Fish and
                                         Wildlife  Service  representative, and
                                         either  regional  Federal  Aviation
                                         Administration  officials  for  civilian
                                         airports  or  nearby military  air  base
                                         commanders.
328
ENDANGERED
SPECIES
PROTECTION
                 Under the Endangered
                 Species  Act  if  a
                 project  affects  a
                 species  of plant,
wildlife  or  its  critical  habitat that
the  Federal  government lists  as
endangered  or  threatened,  EPA will
consult  the U.S.  Fish and  Wildlife
Service,  or  National Marine  Fisheries
Service, to identify mitigative
measures.   Projects  must  avoid
disrupting   threatened  or  endangered
species and  their  habitats, unless an
exemption is granted under  the  Act.
The  facilities  plan will  suggest
mitigative  measures.   Discuss with
your project reviewer  procedures  for
consulting with  these agencies  during
facilities   planning  to  determine
whether  the proposed planning  area
includes the   habitats  of listed
species.

3.2.9
AIR*QUALITY       The Clean  Air  Act
                 requires  all
Federally funded projects  to conform
to  approved  State Air  Quality
Implementation  Plans (SIP).    During
                                     16

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facilities  planning  evaluate  the
direct  and  indirect  impacts  of
the  alternatives  on  air  quality.
Consult  with  the State and  regional
agencies that monitor SIP  compliance.
Evaluate  alternatives  for  compliance
with the  SIP and  include measures
to  mitigate  adverse  impacts,  if
applicable.
3.2.10
WATER QUALITY
AND QUANTITY
                 In  your facilities
                 pi an,  evaluate the
                 capability  of each
alternative  to  meet  applicable
water quality criteria.   For  existing
facilities,  discharges to  surface
water must  meet the conditions  in
your  National   Pollutant  Discharge
Elimination  System  (NPDES)  permits
(5.3  and  4.2).   Include  a  copy  of
the  permit  or  a list  of  the NPDES
effluent limitations  in the  facilities
plan.  The impacts  of your discharge
on  surface  drinking water  sources
or  the  potential  impacts  upon
estuaries  or shellfish  harvesting
areas should be discussed with the
appropriate  State  fish and public
health agencies.

Wherever  effluent from  proposed
facilities will  percolate or discharge
into  groundwater,  include  in  your
facilities plan  information and  an
analysis  showing  the impacts on the
groundwater.   Demonstrate  in  your
plan  that the effluent, when mixed
with  groundwater used  as a public
water supply,   will   comply  with
Federal, State and local  environmental
laws including   the  criteria
established  under   41  FR  6190
(February  11, 1976).   Show that the
facility to be built over the  recharge
zone of a designated  sole or principal
source aquifer and  its  effluent will
not create an immediate or potential
public health hazard.
In  your facilities  plan provide
for the development  of a program to
periodically test water from existing
potable wells  in areas  using  land
application  of  wastewater  (including
onsite  treatment)  in the project area.
If there are a substantial number of
onsite  systems  in the  project area,
additional monitoring  of aquifers may
also be necessary.

A facilities plan should identify and
evaluate special  problems and  the
potential for  erosion  and  sedimenta-
tion resulting from  construction.
Special  problems include long  grades,
steep  slopes   and  highly  erodable
soils.    Special   construction
techniques that  deal  with these
problems  should be addressed.
For project sites where dewatering
operations .are  expected   during
construction, consideration should be
given  to minimizing   adverse  effects
from the discharge   of  silt-laden
waters by  means  of filtration,
sedimentation  basins  or similar
construction methods.

You should  include provisions  in the
facilities  plan  for  supporting local
and  State  shoreline  stabilization
efforts where appropriate.

The  facilities  plan should  also
address the  water supply implications
of  the project  and  the indirect
impacts on water  quality caused by
stprmwater runoff.   Other problems
which may need  to  be addressed  in your
facilities  plan  include depletion of
groundwater, saltwater  intrusion, or
land subsidence.
                                        3.2.11
                                        DIRECT AND
                                        INDIRECT
                                        IMPACTS
                Assess  in  your
                facilities   plan
                both  direct
                (primary)   and
indirect  (secondary)  environmental
                                     17

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impacts  of  the principal  and  selected
alternative.    Direct   impacts  are
caused  by construction,  operation or
maintenance of the treatment works and
may include for example:

  o  Disruption  of  traffic,  business
or  other  daily activities  during
construction;

  o  Damage to historical, archaeolog-
ical ,   cultural  or  recreational
areas during construction;

  o  Disturbance   of   sensitive
ecosystems  such as  wetlands  and
habitats of endangered  or threatened
species  during construction;

  o  Damage  and  pollution  of  surface
waters  due  to  erosion  during
construction;

  o  Impacts on water  quality from
effluent discharge during operation;

  o  Displacement of  households,
businesses, or services; and

  o  Discharge of pollutants,  noise or
visual  impacts.

Indirect  impacts  are  caused  by
development  made  possible   by  the
project  and may include for example:

  o  Changes in the  rate, density,
location  or  type  of  development,
including  residential, commercial  or
industrial;  changes   in  the  use
of open  space or other land;

  o  Increased air, water, or noise
pollution;  increased   solid  waste
production;  or  demand  for  potable
water  from the  induced changes in
population and land  use;

  o  Damage to sensitive ecosystems
(wetlands,  habitats  of endangered
species) and environmentally protected
areas (parks,  historic  and archae-
ological  sites)  that  result  from
changes  in  population and land  uses;
and

  o  Socioeconomic  pressures  for
expansion  of  existing  facilities
(housing,  schools,  highways)  and
services (police,  fire,  medical
emergency)  resulting from induced
changes  in land use and population.

The  environmental analysis  should
give special  attention  to  indirect
impacts  to  determine whether they
will  violate  Federal, State or  local
laws.
3.2.12
MITIGATING
ADVERSE
IMPACTS
                 Earlier   sections
                 have   discussed
                 real  or  potential
                 adverse   environ-
mental  impacts.    Wherever  possible,
avoid or minimize  adverse impacts.
Where adverse  environmental  impacts
are unavoidable,  discuss methods, both
structural   and  nonstructural,  to
mitigate them.    Such  actions  may
include:

Structural:

  o  Changes  in  design,  size  or
location of facilities;

  o  Rerouting  of  interceptors  to
avoid sensitive areas;

  o  Staging  or  orderly  extension of
sewer service;

  o  Screening for  noise,  aesthetic,
and historic purposes;

  o  Appropriate   architectural
treatment  of  publicly  visible
structures;
                                     18

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  o  Systems  for odor or  aerosol
control;
  o  Cultural   resource   recovery
including  artifacts   or  important
data.
Nonstructural:

  o  Development and enforcement  of
sewer use regulations;

  o  Protection  of  environmentally
sensitive areas by local ordinance;

  o  Modification  of   zoning
ordinances,  land  use  or  development
plans;

  o  Stormwater runoff  control
ordinances; and

  o  Water  conservation programs  to
reduce wastewater flows.

Costs to mitigate  the direct, adverse
physical  impacts  resulting  from  the
building of  the treatment  works
are  allowable  for   grant  funding.
Mitigative measures should be reason-
able  in cost and duration  and  should
relate  to   the  resource  affected.
Mitigation  of  indirect  effects  is
best  accomplished by  nonstructural
measures.   Although you may select
structural  or  nonstructural  measures
to mitigate indirect  impacts, they are
not grant eligible.

Grant  assistance  will   not   be
awarded until  your  facilities  plan
provides for  mitigation of adverse
effects.  However, a Step 2+3 or Steps
grant may contain a  grant  condition
requiring implementation of ineligible
mitigation activities.
3.2.13
DETERMINING NEED
FOR AN  EIS
                 Whether a decision
                 to prepare  an EIS
                 is  made  before,
during  or  after  completion  of the
facilities  plan,  it  can  be  made  only
by  EPA based  on  an  environmental
review  (Section  9.2.2).   EPA must
prepare an  EIS  when  any  of  the
following conditions  exist.

  o  The treatment works (including
the  sludge  management system) will
induce  significant changes  in
industrial,  commercial,  agricultural
or residential land use concentrations
or distributions.   Factors that should
be considered in  determining if these
changes  are  significant  include:
(1)  vacant  land  subject to increased
development  pressure as  a  result of
the  treatment works;  (2)  population
increases;  (3)  accelerated  rate of
change  in  population  or population
density;  (4) potential  for overloading
sewage  treatment works; (5)  extent
to  which  landowners may  benefit
from the areas  subject  to  increased
development;  (6)  nature  of land  use
regulations  in  the  affected area
and  their  potential  effects  on
development;  and   (7)  deleterious
changes in  the availability or demand
for energy.

  o  The treatment works,  including
the  collection  system, will have
significant adverse direct or indirect
effects on  wetlands or any major  part
of the  treatment works  will be located
on wetlands.

  o  The treatment works,  including
the  collection  system, will have
significant adverse direct or indirect
effects on a species  identified on  the
Department of Interior's  or  a State's
threatened and endangered species  list
or their critical  habitats.

  o  The treatment  works, will cause
direct or  induced  changes that
significantly:   (1)  displace  popula-
tion;  (2)  alter the character of
                                     19

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an  existing  residential  area;
(3) adversely  affect  a  floodplain or
wetland;  or  (4)  adversely  affect
significant  amounts  of  important
farmland or agricultural operations on
this land  as defined  in  EPA's policy
to protect environmentally significant
agricultural land.

  o  The treatment works  will  have
significant adverse direct or indirect
effects  on  parklands, public lands,
or  areas  of  recognized  scenic,
recreational,  archaeological  or
historic value.

  o  The treatment  works  may  have
significant adverse direct or indirect
effects through induced development on
local ambient  air quality or noise
levels,   surface or  groundwater
quantity  or  quality,  or  fish or
wildlife and their  natural habitats.

  o  The  treated  effluent  will
continue  being discharged  into  a
body of water  for which  the  present
classification  is  too  low  to  protect
present  or recent  uses  and  for  which
the effluent will  not  be of sufficient
quality or  quantity  to meet the
standards of these  uses.

  o  The treated effluent  will have a
significant adverse impact on existing
or  potential  sources  of  groundwater
supply.

If  an EIS  appears to be necessary,
based  in  part on  review  of  your
facilities  plan,   the  applicable WQM
plan, and  public comments, you should
discuss  the possible joint preparation
of  an EIS with an EID (piggybacking)
with your project reviewer.

A piggyback EIS/EID saves considerable
time  because  the EIS  is prepared
concurrent  with,   rather  than
subsequent  to,  the  facilities  plan.
The consultant  preparing the EIS can
have no financial  nor  other  interest
in the  outcome of the project.
If  EPA  determines  that
i s  needed,  an
partici pation
desirable.
expanded
program
 an  EIS
 public
may   be
                                     20

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              CHAPTER 4

   WATER QUALITY MANAGEMENT PLANS
   RELATED TO  FACILITIES PLANNING
4.0
WATER QUALITY     Sections   106,
MANAGEMENT (WQM)  205(j), 208, and 303
PLANS            of the  Clean  Water
                 Act (CWA or Act) are
consolidated  into  an  integrated water
quality  management  (WQM)  planning
process.   Through this  process State
and  sub-State  areawide agencies
conduct   broad-based   WQM  planning
activities,  such  as  developing waste-
load allocations,  setting water
quality   standards,   or  conducting
nonpoint  studies,  designed to achieve
the  water quality goals  of  the  Act.
WQM  activities are  described  in  a
State's  WQM  plan and  annual  work
program.   A water quality based
approach  will   allow States  to  focus
on their priority water  areas  and,
when  necessary,  provide  adequate
protection  beyond  that  achieved
through technology-based control.

If  technology-based   controls  are
inadequate to  protect  desired  uses,
the  water quality standards  are  the
basis  for determining:   (1)  best
management practices (BMPs) needed to
control   nonpoint   sources  and/or  (2)
the need  for  more  stringent treatment
to control point sources.
Key outputs  of the WQM process  which
affect  facilities  planning  include:
the WQM  plan,  development of nonpoint
source control  programs, the  State
priority system,  the  problem
assessment  and  the  State's water
quality  assessment  report  (305(b))
(Section  4.3).   Once completed  and
approved,  the  State  WQM plan  becomes
the  foundation  for  other  water
pollution control  activities.   The
State,  or the  agency to  which  the
State  has  delegated  WQM  planning
functions, will  review each facilities
plan in its area for consistency with
the approved WQM plan.   After a waste
treatment  management agency has been
designated in a WQM plan  and the plan
has been approved, construction grants
funds  may be awarded  only to  those
designated agencies and for projects
that are  consistent with  an approved
WQM plan.

Facilities  planning  is based  on
the wasteload allocations,  delineation
of  planning areas, and  population
projections  in  the  current  NEEDS
study.   If this information  is  not
available in an approved WQM  plan,
the reviewing agency may only approve
grant  assistance  if  the State  or
areawide  WQM agency's  current year
work  program does  not address  the
required  information or the project is
necessary  to  achieve the water quality
goals of  the  Act.   Facilities  plans
which are being prepared at the time
of WQM plan  approval  should continue
unless  the WQM  plan clearly justifies
a change  in the required treatment
levels based  on  lower  costs  or
significant environmental  impacts.

4.1
STATE PRIORITY    The State's priority
SYSTEM  AND       system will  result
PROJECT PRIORITY  in  the  State's
LIST             project  priority
                 list,  from  which
projects are selected and certified by
the  State  for  EPA  grant  funding.
The  regulations  require  that  the
priority  system  at  least include
criteria for ranking projects based on
the  impairment of  classified uses
resulting  from existing  municipal
discharges  and  the  extent  of surface
or  groundwater use restoration  or
public  health  improvement  resulting
                                      21

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 from the reduction  in municipal
 pollution.  The State may also include
 other criteria in its priority  system
 for  ranking projects  such as  the need
 to   complete   and  make  operational
 earlier  grant  assisted phases  or
 segments (Section 13.5), or innovative
 or  alternative  technology  projects
 (Sections 6.7.2 and 6.7.3).

 4.2
WASTELOAD
ALLOCATION/NPDES
PERMIT
                 The minimum level of
                 wastewater treatment
                 that   you  must
                 provide  for  your
project to be  eligible for  EPA  grant
assistance  is  secondary  treatment
(exceptions  may  be  granted  under
certain  conditions  for  marine
discharges).   A technical  definition
of  secondary  treatment  is  given in
EPA's regulations (40 CFR  Part 133).

Under  other  sections of  the  CWA,
States  are  required  to  establish
water quality  standards  based on the
designated  uses  of  the  receiving
bodies of  water.   To  meet these
standards, States next select criteria
for  each  of  the  pollutants to  be
discharged into the water  bodies.  The
criteria  are then used  to  determine
the amount of  each  pollutant  that  a
point  source  (e.g.,  outfall  pipe
from a  sewage treatment  plant) may
discharge.     The  concentrations
of  the pollutants  allowed to  be
discharged  are  determined  through  a
wasteload  allocation  procedure  that
translates  criteria  into  effluent
limitations  normally   included  in
National  Pollutant Discharge  Elimina-
tion System  (NPDES)  permits.   The
wasteload allocation  is the water
quality analysis used to determine the
level  of  treatment required  by  a
specific project  and is  translated
into an effluent limitation,  i.e., the
concentration  of specific pollutants
that  are  permitted  in the  treated
wastewater  as it  is  discharged  from
the treatment plant.
Each point  source  of  pollution, be it
municipal  or industrial,  is  required
to  have a  NPDES  permit (most States
are authorized to issue  the  permits in
which case  the SPDES abbreviation  is
sometimes used).  The discharge permit
will include the effluent limitations,
based on the wasteload  allocation,  as
described above.

While secondary treatment is generally
the  minimum  level required  for  EPA
grant assistance, the designated water
uses and the resulting  water quality
standards may require a higher level,
called advanced  treatment  (AT)  for  a
particular point source  discharge.   It
is  the State's  responsibility  to
establish  the designated  water uses,
water quality  standards, criteria  and
wasteload allocations.  In  some areas,
primarily urbanized, a local  water
quality management planning  agency may
make these determinations  or provide
assistance  to  the State  in  its
determination.

Because the  NPDES  permit limits
determine  the  level  of   treatment
and  consequently  the  cost  of your
project, it  is  of utmost   importance
that  you receive a draft  permit  or
other  document from your State  to
establish the treatment  levels needed.
Recognize, however, that the wasteload
allocation   and  individual  treatment
plant  discharge limits  may  be
different  for  different  bodies  of
water and  even  within segments of the
same  river.   In addition,  be aware
that  if the permit  limits  for your
existing  site   require  advanced
treatment, your project  may be subject
to  additional  review   under  the
Agency's Advanced Treatment Policy
(Section 9.2.1).  (See Appendix A).
                                     22

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4.3
BIENNIAL WATER
QUALITY REPORT

describing the
and  the  status
                 Your   State's
                 biennial  report
                 (305 b) to Congress,
               quality of  its  waters
                of  its water  quality
program, may contain information which
will be very helpful to you during  the
preparation of your  facilities  plan.
In  preparing  this  report your  State
may describe  the  water  quality
benefits resulting  from the construc-
tion grants program such  as pollutant
reduction  and  preservation  or
enhancement of  designated  uses.
Documentation of these benefits  may be
based  in  part on  "before  and  after"
water  quality studies.   The  "before"
study  may be conducted  before your
project is  operational as  a part of
the wasteload  allocation  study
while  the  "after"  study  may be done
after  your  project  is  operating.
Analysis of the physical,  chemical  and
biological  water data from the studies
can be  used  to  verify  previous  model
predictions,  define  water  quality
improvements  resulting  from  your
project, and  assist  in the  planning
and design  of future  projects.
Appendix C contains technical  guidance
concerning "before and after"  studies.
4.4
QUALITY
ASSURANCE
Programs  40  CFR
be  required  to
assurance  program
                 In  accordance with
                 EPA  General  Regula-
                 tions for Assistance
                  Part  30,  you may
                 prepare  a  quality
                 as  specified  in the
regulation (40 CFR  30.302).   You must
develop  a quality  assurance  program
only if  the  conditions of  your  grant
specifically  requires you  to  collect
environmentally  related  data.   If a
quality assurance program is required,
you  must submit   a schedule  for
developing a  quality assurance program
within  30  days  of  assistance  award.
You must not begin field or laboratory
work  until  the  award  official  has
approved your project plan.
                                      23

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             CHAPTER 5

   EXISTING AND FUTURE CONDITIONS
5.0
PROJECT  NEED AND
PLANNING AREA
IDENTIFICATION
           were
The   wastewater
treatment  needs  and
facilities  planning
area  for  your
 identified  during
community
the Water  Quality Management (WQM)
planning  process  based  in  part on
effluent  limitations in your  National
Pollutant  Discharge  Elimination
system (NPDES)   permit  (for  existing
facilities),  applicable  groundwater
criteria  and State requirements.  You
should  review  this  information to
ensure that the planning area  is large
enough to take  advantage of economies
of scale,  efficiencies possible in
regional  planning, or  decentralized
or individual  onsite systems.   The
planning  area  should also  be
sufficiently sized  to  ensure  that the
most cost-effective means of achieving
the established water  quality goals
can be  implemented,  and  that an
adequate  evaluation  of environmental
impacts can be made.
5.1
EXISTING
ENVIRONMENT
OF THE  PLANNING
AREA

for analysis  of
determination  of
impacts  of the
The description
relevant:
The facilities  plan
describes existing
environmental
conditions   to
provide  a  basi s
alternatives and  a
direct  and indirect
 proposed project.
should include,  if
  o  Documented cases of public  health
problems related  directly to water
pollution;
  o  Documented fish
system failures,  well
etc.;
     kills,  septic
      contamination,
  o  Surface and groundwater hydrology
(quantity, quality  and uses);

  o  Physiography,  topography,  geology
and soils;

  o  Precipitation, temperature,  and
prevailing winds;

  o  Terrestrial and  aquatic  plants,
animals and natural communities;

  o  Air quality and noise;

  o  Energy  production  and
consumption;

  o  Population  and   socioeconomic
conditions;

  o  Land  use  and  development
including  percentages  of  area
devoted  to  residential,  industrial,
commerical,   and   agricultural
activities;

  o  Historic  and  archaeological
properties (cultural resources);
                                          o
                                         and
                             Public  facilities  and  services;
                                          o  Related  Federal, State, and other
                                         projects in the planning area.
                                         Clearly  identify   envi
                                         sensitive features  and
                                         avoided or  protected.
                                         consult  with  Federal,
                                         regional agencies and the
                                         in  the planning  process.
                                         sources of information
                                         description.
                        ronmentally
                        areas to be
                         You should
                        State,  and
                        public early
                           Reference
                        used in the
                        5.2
                        EXISTING
                        WASTEWATER FLOWS
                        AND TREATMENT
                        SYSTEMS
                                                         The  facilities
                                                         plan  provides  an
                                                         inventory  of
                                                         existing wastewater
                                                         characteristics  and
                                         treatment   facilities   including
                                         areas  served  by  onsite  systems
                                     24

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 I and  their interrelationships.   The
  inventory   indicates   conditions
  that  limit  the  number of  possible
  alternatives,  the  severity of  the
  pollution problems and should include:

   o  Major influent  characteristics
  (particularly toxic  pollutants)
  and  their  variability as a basis  for
  design   criteria   and   pretreatment
  needs;

   6  The location  of industrial  and
  municipal  treatment plants,  sludge
  management   areas   and   facilities,
  pretreatment  plants, pumping stations,
  and sewer service areas;

   o  A  description  of  these
  facilities,   including  design
  capacities,  existing  flows,
  characteristics  of wastes,   NPDES
  permits, and  overload conditions;

   o  Locations  of  significantly
  developed areas served  by  onsite  or
  unconventional  wastewater  treatment
  systems;

   o  A  discussion   and  analysis  of
  average,  peak, dry and wet weather
  flows,  including  infiltration/inflow
  quantities;

   o   Locations, flow rates, and other
  significant characteristics that would
  justify  need  for  correction   of
  bypasses and  overflows;

   o  The extent of any combined  (storm
  and sanitary) sewer  system;

   o  A  description  of  wastewater
  flow-reduction programs  in effect;  and

   o  Documentation of needs to justify
  projects.

  Documentation  of existing needs  is
  particularly  important because  of  the
| elimination  of  grant eligibility  for
reserve  capacity beginning  October 1,
1984.   Existing needs are  flows
estimated  to  exist  at time of  grant
award as  described  in  an approved
facility  plan.   Existing  needs can
also include   anticipated flows from
documented  failing onsite  systems if
they are  to   be  served now  by the
project  (Section 6.3).
5.3
EFFLUENT
LIMITATIONS
                 Identify  the
                 effluent limitations
                 for all discharges
as contained  in NPDES permits (include
identifying numbers)  issued  to
existing facilities  in  the  planning
area.  Effluent  limitations  are based
on wasteload  allocations developed by
the  State  and will indicate the
level of treatment  required  for each
facility.


At a  minimum, secondary treatment is
required  for  all   municipal  point
source discharges  to surface waters.
Secondary  treatment  is   defined
generally  as 30-day average  not to
exceed 30  milligrams  per liter (mg/1)
each  of biochemical  oxygen  demand
and suspended solids. An amendment.to
the  Clean  Water  Act  (CWA)  allows
the  use of  biological treatment
processes (deemed to be the equivalent
of  secondary  treatment)   such  as
oxidation  ponds, lagoons, and ditches
and  trickling  filters,  provided the
State certifies  that water quality
will  not  be adversely affected.
EPA  is  currently  reevaluating its
definition of  secondary treatment,
based in part  on  provisions  in the
1981  amendments  to  the   CWA  and
comments  on  the   proposed  revised
regulations.    You  should  contact
your  project  reviewer to  ensure that
you have are using the most  recent
regulation.
                                      25

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Higher levels  of treatment (advanced
treatment)  may  be required to meet
State  standards for  water quality
limited waters.  It  is  EPA policy
(Appendix  A)   that  projects  with
incremental  costs,  for the  advanced
treatment  portion, of over $3 million
will  be  reviewed  by  the  EPA
Administrator  and  projects  with
incremental costs  under $3 million
will  be  reviewed  by EPA  regions
or,  delegated  States.   An  advanced
treatment  (AT) project  can be approved
only if the costs  attributable  to  the
more stringent levels of treatment  are
supported  by   a  demonstration  of
significant  improvement   in  water
quality  or mitigation of  existing
public health problems.

Give  special  consideration to land
treatment  systems  (Section  6.7.2)  as
they  are  capable of providing very
high  levels of  treatment   (equivalent
to or exceeding AT requirements)  often
at  considerable  savings  and these
systems qualify  for  increased  grant
funding  as alternative technology.
If your project  may  be subject  to an
AT  or  zero  discharge requirement,  it
should be discussed with your project
reviewer at  the  preplanning conference
or as soon as possible thereafter.
For  existing  treatment plants your
NPDES permits will contain  appropriate
effluent  limitations.   If  ne-w
discharge  locations   are  proposed
during facilities  planning,   the
State  or  EPA  in some cases, will
determine  the effluent limitations for
each new discharge (Section 6.0).
5.4
INFILTRATION AND
INFLOW (I/I)
                 The facilities  plan
                 shall   demonstrate
                 that  each  sewer
                 system discharging
into the treatment  works  is  not,  and
will  not  be,  subject  to excessive
infiltration or inflow.
"Infiltration"  is  water,  other  than
wastewater, that enters a sewer system
(including  sewer service connections
and foundation drains) from the ground
through  such means  as defective pipes,
pipe joints,  connections or manholes.
"Inflow"  is  water,   other  than
wastewater, that enters a sewer system
(including  sewer service connections)
from sources  such as, but not limited
to, roof leaders, cellar drains,  yard
drains,  area  drains,   drains   from
springs  and  swampy areas, manhole
covers,  cross   connections between
storm  sewers and  sanitary sewers,
catch basins,  cooling  towers,  storm
waters,  surface runoff, street  wash
waters  or  drainage.  Excessive I/I  is
the  quantity of  I/I  which  can  be
economically  eliminated   from  a  sewer
system  as determined  in  a  cost-
effectiveness analysis  that  compares
the  costs  for  rehabilitation  plus
transporting  and treating  the
remaining  I/I  to the total  cost  for
transportation  and   treatment of  all
the I/I.

You may determine  the  I/I  conditions
in the  sewer system by  analyzing the
preceding  year's  flow  records  from
existing treatment  plants and  pump
stations.   For  smaller  systems  where
flow records may not  be available, you
should  obtain flow data by conducting
flow monitoring at a  single  point
at the  treatment  plant during  high
groundwater periods  and also  during
rainstorms.   Where   there  is  a
likelihood  of   excessive   I/I  in  a
portion  of the  collection  system,  it
is desirable  to monitor  that portion
separately.

No  further  I/I analysis  will  be
required if domestic wastewater  plus
nonexcessive infiltration does  not
exceed  120 gallons per capita  per
day  (gpcd) during  periods of  high
groundwater,  and if the total  daily
                                      26

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flow during a  storm  does  not exceed
275 gpcd,  and there are no  operational
problems,  such as surcharges,  bypasses
or  poor   treatment   performance,
resulting  from  hydraulic  overloading
of  the  treatment  works during storm
events.

The flow rate of 120  gpcd for infil-
tration analysis contains  two  flow
components:    70 gpcd of  domestic
wastewater  base flow  and  50  gpcd  of
nonexcessive  infiltration.   This  is a
national  average  based  on  the  results
of a needs  survey of some 270  Standard
Metropolitan Statistical Area  cities;

Where the  flow rate  (domestic  base
flow  plus  infiltration  based  on
the highest 7- to 14-day average)  does
not significantly exceed 120  gpcd (say
in  the  range  of 130  gpcd),  you  may
request  approval  by  the  Regional
Administrator  to proceed with treat-
ment  works design  without  further
analysis.   The  Federal  funding of the
treatment  plant, however,   will  be
limited  to the  cost of a project  with
a capacity of  120 gpcd and  you  must
demonstrate that  the proposed  project
is cost-effective and  sufficient local
funds  are available   to  build  and
operate  the entire treatment works.

When  infiltration   significantly
exceeds  120  gpcd,  perform  further
evaluations  of the  sewer system to
determine  the  quantity of excessive
I/I  through  a  cost-effectiveness
analysis.    Under   this   second
option, you  will  propose   a sewer
rehabilitation  program  to  eliminate
the portion of I/I that is excessive
and size your  treatment plant
accordingly.   A  limited  amount  of
grant  assisted  sewer   rehabilitation
may be undertaken on  specific  portions
of the sewer  system where shown to be
cost effective.  In addition, you  will
certify the  I/I  conditions  in  the
sewer system at the end of the first
year of operations  of  a new treatment
facility (Section 14.6).  If the sewer
rehabilitation  program fails to remove
the quantity of I/I  as specified, you
must prepare and resubmit a corrective
program  to  the  reviewing  agency.

If infiltration or  inflow is  possibly
excessive as defined above and further
study indicates that it is  not cost-
effective  to  implement   a sewer
rehabilitation  program,  Federal
funding will  be for the cost-effective
capacity even if it exceeds 120 gpcd.

If further  study of the sewer system
is  not  required  by  the  Regional
Administrator,  the  design  flows  are
incorporated into  the  facilities plan
and should  include:

  o  Total  treatment  plant flow,
infiltration, and inflow;

  o  Occurrence of  rain events  and
level  of  groundwater  during  I/I
study;

  o  Nonexcessive  I/I  to be  included
in the  design capacity of the  proposed
treatment works; and

  o  A   commitment  to develop  an
effective sewer system operation  and
maintenance  program (Section 5.4.1).

If  the  analysis  under the  second
option   is  conducted,  results  of
the  I/I  study are   incorporated
into the facilities plan and should
include:

  o  Total  treatment  plant flow,
infiltration  and inflow;

  o  Estimated  I/I  from  service
laterals,   collector  lines,   and
interceptors;
                                     27

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  o  Estimated cost for transport  and
treatment of  total  design  flow,
including  I/I;

  o  Estimated rehabilitation costs to
eliminate  I/I;

  o  Occurrence of rain  events  and
level  of groundwater during I/I  study;

  o  Excessive I/I;

  o  Nonexcessive  I/I  to  be  included
in the design capacity of the proposed
treatment  works;

  o  A  proposed  sewer  system
rehabilitation  program for  I/I  cost-
effective  to remove; and

  o  A commitment  to  develop  an
effective  sewer  system  operation  and
maintenance program (Section 5.4.1).

You   may   perform  sewer  system
evaluation studies  and minor  sewer
rehabilitation  prior  to  grant  award
(considered  a   preaward  cost) when
approved in advance by your reviewing
agency  provided the work  is  not  a
part  of your municipality's  normal
O&M   responsibilities.    Where
structural  repairs are  required  for
a  large portion of the sewer system,
those  repairs   will  be  made   after
grant award.

Although   the  regulatory requirements
reflected  in  existing guidance  on  I/I
analysis   are  no  longer  current,  the
technical   information contained  in
MCD-19 may be useful in your analysis
(see Appendix B of this book).
5.4.1
SEWER USE
ORDINANCE AND
SEWER
MAINTENANCE
PROGRAM
If   a   sewer
rehabilitation
program is prepared,
it  should  address
corrective  actions
to  be  included  as
                        part of a sewer use ordinance (Section
                        12.3).   The portion of the ordinance
                        addressing  I/I   should  contain  a
                        realistic  program for:   removal  of
                        excessive  infiltration from  sewer
                        service  laterals;  removal  of  illegal
                        connections  from  the  sewer  system
                        (e.g.,  downspouts,  storm  or  area
                        drains); specify acceptable  levels
                        of  infiltration  for   new  sewers;
                        and  provide  design details for  new
                        connections.   The  enactment  and
                        enforcement of the sewer use ordinance
                        will help prevent overloading  of  the
                        completed treatment works.

                        The  sewer  rehabilitation  program
                        should  also contain a  commitment  to
                        develop  a comprehensive  and effective
                        sewer  maintenance  program.   The
                        maintenance  program may be developed
                        as  part  of your  Step 3  grant
                        activities  (Section 8.5.3).
                        5.5
                        FUTURE
                        CONDITIONS
                 The  planning  period
                 for   wastewater
                 proj ects  shall
be  20  years  beyond  the  date the
facilities  are  scheduled  to  begin
operation.  The 1981 amendments to the
CWA, however,  limit  grant assistance
for reserve capacity as  follows:

(a)  If  EPA awarded a  Step 3 grant for
an interceptor segment before December
29, 1981,  additional  grants may  be
awarded  for the remaining interceptor
segments included in  the facilities
plan  with  reserve  capacity,  as
planned, up to 40 years;

(b)  Except as provided  in (a), if EPA
awards  a grant  for a Step 3 or Step 3
segment  of  a  primary, secondary or AT
facility or its interceptors included
in a facilities plan before October 1,
1984,  the  grant for  that  Step  3
                                     28

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project  or  Step 3 segment,  and  any
remaining  segments,  may  include
20 years  reserve capacity;

(c)  Except  as  provided in (b), after
September 30,  1984, no  grant shall  be
made  to   provide  reserve capacity.
Grants  shall  be  based on  capacity
necessary to  serve  existing  needs
(residential,  commercial,  industrial
and other users)  as determined on the
date of Step 3 grant approval.  Grants
awarded  after  September 30,  1990,
shall  be  limited to the  existing needs
on September 30, 1990.

All  incremental  costs for  reserve
capacity  beyond  that  provided  in  (a)
through  (c)  above will  be  paid  at
other than Federal expense.

While a  20 year  planning period does
not require  that  your project include
capacity  for a 20 year  period, it does
require that the project  be  the most
cost-effective when  compared  to
alternatives  with  capacity  for  a
20 year period.

The  most  cost-effective  plan  may
provide  for  staging  construction  of
operable   parts of  the  facilities  to
meet  changing  conditions  during  the
planning  period.   Your plan  should
consider  not  only constructing  a
facility  now which  satisfies your
needs  for the next 20 years  recog-
nizing the  reserve  capacity  grant
limitations,  but  also  consider
if  it is more  cost   effective  to
construct  a  facility  to satisfy your
needs for 10  or 15 years and  later
construct additional   facilities  if
and when they  are required.    The
objective of  evaluating staging  of
construction  (Section 6.10)  is  to
ensure that  oversized  facilities  are
not  constructed  thereby   avoiding
a  potential  financial  burden  or
possible  adverse  environmental
effects  resulting  from  the  project,
particularly  if  expected  growth
fails to occur.
5.5.1
POPULATION AND
LAND USE
PROJECTIONS
                 Wastewater treatment
                 needs  and  design
                 capacities  for your
                 facilities  planning
area  will  be determined  by  land
use patterns, economic growth, and
the resulting increase in  population.
The  population  estimates  in  your
facilities  planning  area over the
next 20  years are to be  consistent
with the  projection for the State used
in EPA's  current  "Needs Survey"  (most
current  1982) which  estimates the
present value of costs for construc-
tion  of  publicly  owned  wastewater
treatment  works to  the  year  2000.
The survey  also projects statewide
populations  based  on information from
the  Bureau  of  Economic  Analysis,
Department  of  Commerce.    The  state-
wide  population  forecast  is  then
disaggregated  into  smaller political
subdivisions such  as  counties,
municipalities, townships,  etc.   It is
the latter  figures that  are to  be
used,  if  available, in  your facilities
plan.   States may, however,  decrease
existing  population projections if it
is  done  on  a consistent statewide
basis.

Most States  have  completed population
projections.   If projections  are not
available,  you may:   prepare  your
projection by calculating your average
yearly  growth rate from 1970  to the
present and  use that  growth  rate  to
obtain a 20 year  projection;  or
compute the  growth rate of  a  larger
area (township  or county for example)
where   future  population   projections
are  available  and  assume  your
community will  grow at the same rate.
                                     29

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If  in  doubt as  to what  population
projection  to use  for  your planning
area, consult your project reviewer.

As  you  prepare  your  facilities  plan
and  develop alternative  wastewater
collection  and  treatment systems,
carefully  consider  land  use  plans
which have been prepared  for the area.
Projected  land  use patterns and
densities are  one  basis  for
determining  the  optimum  capacity  and
location  of  facilities.   Where
land use plans  have not  been prepared
for  all or part  of the planning
area, you can estimate future land use
patterns and densities in consultation
with  existing  planning  agencies  and
zoning commissions.

Lands  where development  should  be
avoided,  such  as highway rights-
of-way, powerline  easements and
environmentally  sensitive  areas
(e.g.,  significant agricultural  lands,
parks and historic or archaeological
sites),  are not  to be  included  when
estimating future development patterns
and densities.

Facilities  planning offers an  ideal
opportunity  to   review  existing
land  use  plans  or  initiate land
use  planning.    The  two  processes
complement  one another.  Adherence  to
carefully conceived land  use  plans,
for example, can  reduce the cost  of
building and  operating a treatment
system   by  discouraging  leapfrog
or  sprawl  development  (reducing
collection  system  costs)  and  by
determining  realistic  limitations  to
future  growth   (reducing  treatment
costs).  In  a  similar  fashion, the
location,  capacity  and  timing  of
treatment   system components can
influence  the  location,  size and
growth  rate of  new development  thus
also affecting  many  other municipal
and private costs.
5.5.2
FORECASTS  OF      The facilities  plan
FLOWS AND         relates  the  size
WASTELOADS       and capacity for the
                 facilities  to  the
needs in  the planning  area.   In
determining  design  flow  for  the
treatment  works,  consider:   existing
base  flows;  estimated future  flows
from residential, commercial, institu-
tional  and industrial sources;  and
nonexcessive I/I.  Existing base flows
equal actual  metered flows  minus  the
excessive  I/I.


You  should  estimate  future  resi-
dential, commercial, and institutional
flows based  on one of the methods
described  below.  Each  method combines
the  sources of  wastewater  flows  and
expresses  their  total  contribution in
terms  of  "residential   population
equivalent"  or gpcd.   Capacity  to
accommodate future   increases of  per
capita  flow  over   time  should  not
be  proposed  or  approved  for  grant
funding.


  o  Method 1  -  Base your estimate of
existing   average  daily  flow  on
reliable water supply records adjusted
for consumption  and  other  losses,  or
on  records of wastewater flows  for
extended  dry  periods minus estimated
infiltration.   This  figure  should  be
further  reduced by  industrial  users
and  limited   users.   For  example,
seasonal  populations can be converted
to  equivalent  full-time  residents
using a  multiplier  of  0.1  to 0.2 for
day use  visitors and 0.5 to  0.8  for
seasonal  visitors.   The  resulting
figure (gpcd based on existing sewered
residential  population equivalent)
is  then   multiplied by the  future
projected  population.  This method  is
preferred  and  should be used whenever
possible.
                                     30

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  o  Method 2  -  When  water supply
or  wastewater  flow  records  are
inadequate,  you  should  calculate
future  average  daily  base  flow
(ADBF)  by  multiplying the  future
population  projection   by 60  to
70 gpcd.   If you propose a higher gpcd
figure,  it must  be  justified  and
include  the results of flow reduction
(Section 5.5.3) and I/I (Section 5.4)
analyses.

The  treatment works may  include
capacity for both existing  and  future
industrial  flows  (Section  6.9).
You should  contact existing industries
during  the  planning  process  to
determine  whether  existing  flows
will  increase or decrease  and  the
characteristics of  their  discharges.
This determination could be influenced
by considerations  such  as:  industrial
recycling,  industrial pretreatment
(required  for  some  industries),
estimated  user  charges,  potential
increased  efficiency, and  the general
economic  situation.   In the  case
of  significant   industrial  users
(industries  which  intend to  increase
their flows or industries  which will
relocate in  the  area),  obtain
letters of intent  documenting capacity
needs and characteristics  for
existing  or  projected flows.  This
information  will  be  particularly
important  to estimate  the  volume and
characteristics of the  sludge produced
and to evaluate alternatives for the
sludge  management  portion   of  the
treatment  works.

Flow  allowances  for unknown future
industrial  growth should be carefully
evaluated  and   in  general   should  not
exceed 5  percent  (or 10 percent where
population  is less than 10,000)  of the
design flow before the unknown  future
industrial  flow  is  considered  or
25  percent  of the total  industrial
flow  (existing  plus  documented
future).  In all  cases, unknown future
industrial  growth  provisions  should
conform  with  WQM  plans,  land use
plans, and zoning ordinances.

5.5.3
FLOW REDUCTION    The  facilities  plan
                 will  include  an
evaluation  of  alternative  flow
reduction  measures  unless:   the
existing ADBF is less than 70 gpcd
or the reviewing  agency determines the
area has an  effective  existing  flow
reduction program.

When these conditions  are not met, the
facilities plan should consider:

  o A  public  information  program to
encourage wastewater reduction;

  o Changes  in  water  and sewerage
pricing  policies to  promote
conservation and  flow  reduction;

  o  Installation of water meters and
retrofitting  existing   homes with
water  saving  devices  by  developing  a
sewer user charge that is proportional
to  actual  water usage  to further
promote water conservation;

  o Changes  in  local ordinances or
codes  that  require installation
of water saving  devices  in new homes
or other buildings.

Your plan should include  recommenda-
tions  on  which  flow  reduction
techniques can  be cost effectively
implemented when  the  project  becomes
operational.   It should  also  include
projections  of  expected  flow  reduc-
tions  in  10  and  20  years.   The
analysis should consider  potential
increased costs of:  administration,  a
public information program, public and
private  sector costs  for retrofitting
                                     31

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existing buildings, and the additional
costs  for  installing water  saving
devices  in  lieu of  conventional
devices.  The  analysis  should also
consider  reduced   or  deferred
construction  and operating  cost
(including energy)  for  your  water
supply system,  water   and  wastewater
treatment works.

The  plan  should  discuss steps  to
implement  flow  reduction where cost
effective.   A public  information
program should  highlight  recommended
flow reduction  measures,  their  costs,
potential  savings and costs  for
a  typical  household.    A  recent
EPA  publication,  "Flow  Reduction:
Methods,  Analysis  Procedures,
Examples," FRD-15, may be helpful.

5.6
FUTURE          The   description
ENVIRONMENT      of  the  future
WITHOUT THE      conditions developed
PROJECT          in  the  preceding
                 sections will help
document the  need for  the  project
and  will  provide  a   benchmark  for
comparison  of  alternatives  (Chapter
6).   A description  of  the  future
environment  without  any project
is termed  the "no action" alternative
and is to be  evaluated as one  of the
options to building your project.  The
"no action"  alternative provides a
dramatic  comparison  between  "do
nothing" and "build  a project" and
will  help you  and the  public more
clearly   understand  the  impacts
(social,  environmental,  economic,
etc.)  of the proposed project.  In
many cases, however, the  "no action"
option  will  be  appropriate  for  a
portion of the planning area.
                CHAPTER 6

         DEVELOPMENT AND SCREENING
              OF ALTERNATIVES
    6.0
    DEVELOPMENT OF    The   primary
    ALTERNATIVES     objective   of
                    facilities  planning
    is  to develop and evaluate various
    solutions   to  the  water pollution
    problem  and select  the most cost-
    effective solution  for wastewater  and
    sludge  management  to serve  the
    planning area.  Cost-effectiveness
    as  used  in this context means both
    monetary  and  nonmonetary  (e.g.,
    environmental,  social, institutional)
    considerations.   Therefore,  the
    development and  selection  process
    seeks to  identify  the  treatment
    system which  is  the  most economical
    means of  meeting  applicable water
    quality  standards  and  public  health
    requirements  over the  design life
    of  the  project  recognizing  environ-
    mental and  other nonmonetary  factors
    and   is  implementable  from  legal,
    institutional,  financial   and
    management  standpoints.

    Small communities should consider  the
    possible use of  simplified (generic)
    and  model  plans to help select the
    most  cost-effective solution.    This
    should be discussed with your  project
    reviewer.

    In  addition,  small communities are
    required  to   evaluate   appropriate
    low-cost  technologies  (Section  7.3)
    even  though local codes  may  restrict
    the use of  some of these  technologies.
    This  evaluation  will  enable  a
    realistic  appraisal  to be  made  of
    the  costs   and  benefits  of  such  a
    restrictive code  and  may  provide
    the   basis for reevaluating  the
32

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restriction.   One  such low  cost
technology  is  upgrading  existing
onsite systems in order to correct the
problems.

For larger communities,  all  feasible
waste  management   systems   are
identified  and  screened  to  determine
those  principle  alternatives  that are
capable of meeting Federal, State,
and  local criteria.    Communities
with  existing  or proposed advanced
treatment  (AT)  or zero  discharge
requirements  must consider  AT and
land  treatment  technologies in  their
cost-effectiveness   analyses  in
addition   to  other  alternatives
involving  relocation of the discharge.
Evaluation  of principle  alternatives
is discussed in Chapter 7.

All communities  consider  additions to
or replacement of  part or all of any
existing  facilities.   Note,  however,
that  if  the existing  facilities
were  built with a grant  under the
Water  Pollution  Control Act of  1956,
(PL 84-660)  or  its   amendments,  a
second grant  during  the facilities
design life is  not  available except
under  limited   circumstances.
Allowable  costs  (Section  15.1) should
be  discussed  with   your  project
reviewer  before  completing  your
financial  capability  analysis
(Section 7.3).

6.1
OPTIMUM OPERATION Include  in  your
OF EXISTING       facilities  plan an
FACILITIES        evaluation    of
                 improved  effluent
quality attainable  by upgrading the
operation and  maintenance (O&M)
of  existing   facilities  as  either
an  alternative or  supplement  to
construction  of  new facilities.
Include an explanation of why improved
effluent  quality cannot  be  obtained
cost-effectively through upgrading if
your  facilities  plan recommends
complete  or  partial  abandonment of
existing facilities.

An evaluation  of  existing facilities,
including  onsite  septic  systems, may
reveal that  they can function more
efficiently with  the  addition of new
equipment, operational changes,  public
education,  or  the addition  and
training  of  operating  personnel.
Problems with  plant and  onsite  system
operation  are usually due  to one
or more of the following:

  o  Inadequacy of the treatment  plant
design for the character and amount of
waste  treated (including infiltration/
inflow (I/I) and industrial  flows);

  o  Inadequacy   of  O&M  program
including  process control  method,
laboratory procedures, maintenance
management   systems, staffing,
salaries,  and  replacement  funds and
schedules;

  o Site-related  problems;  and

  o Outdated or failing equipment.

You should describe the cause,  extent,
nature, and location of such problems.

EPA publications  "Performance  Evalua-
tion and  Troubleshooting at Municipal
Wastewater   Treatment   Facilities,
(MO-16),"  and the  Design Manual:  "On-
site Wastewater Treatment and Disposal
Systems" listed in Appendix  B,  provide
detailed system evaluation guidance.

Whatever  the   results  of the
evaluation,  identifying  the  possible
optimum  operation  of  existing
facilities will   help  determine  if
additions,  expansions or replacements
must be made,  and  the extent to  which
existing  facilities can be  converted
                                     33

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or used in lieu of a new  system.  In
preparing  this  evaluation  be sure to
consider  any  improvements  expected as
a result  of  future pretreatment by
industrial  contributors,  removal  of
excessive  I/I, or  staging  of new
capacity.

6.2
REGIONALIZE I ON   If the  facilities
                 planning   area
includes  several  communities,  a
planning  approach  that  cons-iders
regional   management  as  well  as
physical  consolidation  of existing
systems should  be evaluated.   This
approach  may  have been evaluated or
recommended  in  an approved  water
quality  management (WQM)  plan for
the  area  and  should  be  followed
(Section 4.0).

Alternatives  for  a  large planning
area  may involve various arrangements
for construction,  O&M, and management.
For  example,  several  jurisdictions
may  form  a  regional   authority to
construct, operate and  maintain  a
centralized treatment system for the
entire  planning  area,  while  each
municipality  is responsible for its
own  collection   system.   Another
approach may be where one jurisdiction
serves  as the   lead  agency  for
construction  and  O&M  of  separate
facilities that  serve each  of the
jurisdictions.

Regionalization may, but  need not,
involve construction  of  physically
interconnected  facilities.   Rather,
individual  jurisdictions may be
responsible  for  construction of
municipal facilities  and onsite
systems while a regional  authority may
be formed to administer one or  more
operation  and  management  functions,
such  as sludge management.
Regional  facilities  have  various
advantages  and  disadvantages.
Advantages  may include:   savings in
personnel,  materials  and supplies;
more treatment capability per dollar*
higher operator  skill  levels,*  better
performance  of treatment  plantj
fewer sites   and  effluent  discharge
points.   Fewer  sites  and  effluent
discharge  points  could  reduce  direct
environmental impacts.

Disadvantages may  include:   higher
costs  due  to  heavy  reliance on
technology;  longer  design  and
construction  timej  potential  for
induced  growth and  resultant  adverse
environmental  impacts;  depletion of
streamflow;   concentrated  discharge?
and a need for inter-municipal service
agreements.

When considering regional alternatives
involving  construction  of  new
interceptors  or   collector sewers to
connect  communities  in  the  planning
area,  evaluate  the  environmental
factors  discussed in Sections 3.2 and
6.6.   The cost  for  the collection
system portion of a  project in a small
community  generally represents at
least 50  percent of the total  user
cost and can be as high  as  six times
the cost of the treatment plant alone.
For  this  reason, the financial
impact  of  installing   new  gravity
collection  systems  or extending
sewers should  be carefully  evaluated
(Section 7.3).

Executed   intermunici pal   service
agreements  or  equivalent  documented
commitments  (e.g.,  letters of  intent
from  significant industrial users)
are  to  be submitted with  a Step  3
application  or  before  initiation of
procurement  action  for  building the
project for  Step  2+3  grants  (see
Introduction - Managing Your  Project;
Section 8.5.1).
                                     34

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Regionalization which  includes  an
unincorporated  area  is  usually
accomplished  by any of the  following
methods:

  o  Intermunicipal  service  agreement
where a  "municipality"  (i.e., county)
acts on  behalf  of  the  unincorporated
area;

  o  Annexation; or

  o  Service  contracts with  individual
users.

6.3*
UNSEWERED AREAS   Identify in the
                 facilities  plan
areas which  are served by existing
onsite  or cluster wastewater disposal
systems, and particularly  note  those
systems  that   are  causing or are
likely to cause  public health problems
or  groundwater  contamination.
Onsite  systems  are self-contained
systems   that  provide  both   treatment
and  disposal  of wastewater   on  or
immediately  adjacent to an  individual
lot (e.g., septic  systems).   "Cluster
systems" typically  serve  a  group  of
two or more (up to twelve or so) homes
or small  commercial  establishments.

If  one   of  the  alternatives   to  be
evaluated  is   a  new conventional
collection system (Section  6.4), you
should also evaluate small alternative
wastewater systems  (Section  6.7.2).
These  systems must  be evaluated
for existing unsewered portions  of
communities  with  a  population  of
10,000  or less.   A  community can  be
considered  a  group  or groups  of
homes  and  small  business   establish-
ments (with  dwelling  units in the
majority)  having a recognized identity
or  name in the  area,  although
it  need  not  be an  incorporated
political jurisdiction.
 In  justifying  the need  to  provide
 sewer   service  to  unsewered  areas
 you  should  present  the  following
 information:

  o  Specific  documentation  of
 the  nature  and  extent  of  health,
 groundwater  or  discharge  problems
 associated  with  existing onsite
 systems;
  o  Pertinent  information
physical   restrictions  to
onsite systems  (e.g., soil
tion  maps,  previous  soil
excavation  data,  percol
results,   historical  data,
etc.); and
documenting
the  use  of
classifica-
 borings  or
ation  test
 lot sizes,
  o  Documentation  of  the   type,
condition,  age, number and location of
all  onsite  systems  drinking  water
wells.

The U.S. Department  of Agriculture's
Soil Conservation  Service (SCS), in a
continuing  effort,  has prepared soils
surveys  for more than half of U.S.
counties.   When properly  used,  these
surveys  provide  wastewater  planners
with  valuable  preliminary general
information on the soils in a planning
area.    It  is essential, however, that
planners and designers recognize the
limitations on the use of SCS's soils
surveys.    Individual  survey  mapping
units  represent  areas greater  than 2
to 6 acres.  As  a  result, these units
can contain  soils  which  differ from
the major soil types  indicated  in the
survey.    These  other unidentified
soils  may be better suited for onsite
wastewater  treatment systems.  Because
of  this  inherent  inexactness,  soils
surveys  should  not be used as  a
substitute  for  site-specific  design
investigation.    In  addition,  SCS
limitation  ratings  (e.g.,  slight,
moderate,   severe),  when  used  in
                                     35

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conjunction  with  septic  tank  soil
absorption  system  installations,  are
based  on  a  conventional  trench  or
filter bed design.   The soil ratings
do not  indicate the suitability  of
the  soil   for modified  onsite  or
cluster system  designs  (e.g.,  mound
system).   On  this basis, soils survey
limitations  should not  be used  to
categorically  rule  out all  onsite and
cluster system solutions to wastewater
problems.

A community survey which describes and
analyzes   the system failures  is
recommended and  should describe known
or suspected  water  quality or public
health  impacts  resulting  from  the
failures  (Appendix  R).   Use of local
health department  or  sanitarian
records,  citizen complaints,  maps,
and  aerial  surveys  will  provide
significant  data  to  evaluate  the
condition  of  existing onsite systems.
Detailed   community  surveys  such
as  house-to-house  gathering  of
engineering  data  may  be  necessary
to  fully  evaluate existing  onsite
systems.   In  addition, the survey can
develop actual or  typical  costs  for
rehabilitation,  replacement,  or
modification  of onsite  systems.

Where  the need  to  replace  onsite
systems has  been  justified, compare
the  costs  and environmental impacts
of a  conventional collection (Section
6.4) and centralized treatment system
to  small  alternative  wastewater
systems (Section 6.7.2).
6.4
CONVENTIONAL
COLLECTION
SYSTEM
                 A  conventional
                 collection system is
                 a collection system
                 carrying essentially
raw wastewater, consisting  generally
of 8-inch-diameter  or  larger  gravity
collector  sewers normally  with
manholes, force mains,  pumping or lift
stations and interceptors  leading to a
central  treatment  plant  employing
conventional concepts of treatment and
disposal.  Because the  Clean Water Act
(CWA or Act)  is intended  primarily
to  correct  existing  water  quality
problems, construction  of  conventional
sewage  collection  systems  are  grant
allowable only where:

  o  The  system  is  for  replacement or
major  rehabilitation of  an existing
collection system which was not built
with Federal funds awarded on or after
October 18,  1972,  and  where necessary
to  the  integrity  and   performance of
the  complete waste  treatment system;
or

  o  The  bulk  (generally  two-thirds)
of  the expected  flow  (flow  from
existing  plus   future  residential
users)  will  be from  the  resident
population  on October  18,  1972   (the
date  the  Federal  Water  Pollution
Control  Act  amendments  were enacted);
and

  o  New development will  not occur on
environmentally  sensitive  areas.

Where  a  new  system is  funded,  you
must provide  assurance  that  the
existing  population   will  connect
within  a  reasonable time after project
completion.

The  1981 amendments modified earlier
legislation and discontinue  grants
for  conventional  collection  systems
after September  30,  1984,  except  when
a  Governor  exercises  discretionary
authority  (up to 20  percent  of the
State's  allotment) to approve  such
projects  for grant assistance.

If  a  new   collection  system  meets
the  criteria  above,   the  following
guideline   will  be  of  assistance.
                                      36

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Where  the  population  density  within
a  proposed collection  system area
is  greater  than  6 persons  per
acre  (two  households  per  acre),
conventional gravity collector  sewers
and  centralized  treatment may  be
cost-effective.

Where the population  density is less
than  6  persons  but 1.7 or  more
persons per acre  (one household  per
2 acres),  both  conventional  and  small
alternative  wastewater systems  should
be carefully evaluated.

Where  the  population density in an
area  is  less  than  1.7  persons per
acre  (one  household  per  2 acres),
conventional  collector sewers
generally  are  not considered cost-
effective unless a  severe pollution or
public  health  problem  exists  and
conventional  collector  sewers  are
shown  to  be  clearly  more  cost-
effective  than  any  alternatives
for these  sparsely  populated areas
(Section 6.7.2).
6.5*
ALTERNATIVE
CONVEYANCE
SYSTEMS
                 Alternative  convey-
                 ance  systems consist
                 of   wastewater
                 collection systems
serving  individual   systems,  cluster
systems,  and small  communities or
sparsely  populated  areas of larger
communities.    Historically,  small
communities  have  been of less than
3,500  population  and  sparsely
populated  areas with  a  population
density of less  than 1.7  persons per
acre (one  household  per 2 acres).

Alternative  conveyance  systems are
comprised  of  small  diameter  gravity,
pressure,  or  vacuum  sewers  conveying
fully or partially treated wastewater.
Small  diameter  gravity  sewers
conveying  raw wastewater  to  cluster
                                         systems  are also considered  alterna-
                                         tive conveyance systems for individual
                                         systems, except for the onsite portion
                                         of the building sewer (40 CFR  Part 35,
                                         Appendix  A).   Alternative  conveyance
                                         systems  are  exempted  from  the
                                         collection sewer  limitation (i.e.,
                                         two-thirds rule)  when  planned  for
                                         small communities.  In addition, these
                                         systems remain  eligible for grants
                                         after September 30, 1984.

                                         Under  the   innovative/alternative
                                         set-asides, their Federal share is up
                                         to  85  percent  (75 percent  after
                                         September 30, 1984).   In  addition,
                                         alternative conveyance  systems  may
                                         receive the 15  percent alternative
                                         cost-effectiveness  preference  except
                                         when  they are privately owned
                                         (Section 6.7.4).
                                         6.6
                                         EVALUATION OF
                                         SEWER ALIGNMENTS
                 Since the location
                 and   size   of
                 intercepting  and
collecting  sewers  will  influence
growth  in  the  planning  area, they
should  be  planned  carefully  and
evaluated for staging of construction.
You should:

  o  Not extend interceptors  into
environmentally sensitive,  areas
unless  absolutely   necessary  to
eliminate existing discharges  or serve
existing communities that  violate an
enforceable requirement of the CWA;

  o  Evaluate   direct  and  indirect
impacts  of  interceptors  on  environ-
mentally  sensitive  areas  such  as
archaeological  and  historic sites,
floodplains,  wetlands,  significant
agricultural  lands,  and  undeveloped
lands (less than one  household  per
2 acres); and

  o  Identify  measures  to minimize
adverse impacts  on  environmentally
                                     37

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sensitive  areas  where no practical
alternative  exists.

EPA  will  not  fund portions of
treatment  works  providing capacity
for new development in environmentally
sensitive  areas  and  may  impose
conditions  on related  grants  that
could potentially  impact these areas.
Such conditions could  include restric-
tions  on  sewer  hookups  or  special
conditions  in  National  Pollutant
Discharge  Elimination  System  (NPDES)
permits  to  ensure   implementation
of  mitigating measures.    In  your
facilities  plan  consider  alternative
routes for interceptors  in light  of
the above factors.

Limits  on  the  eligibility of
collectors  are  discussed in
Section 6.4.
6.7
WASTEWATER
MANAGEMENT
TECHNIQUES
                 This   section
                 describes   three
                 classes  of   waste-
                 water  and  sludge
management  techniques  which must  be
evaluated as a part of your facilities
plan.   They are:

  o  Conventional technology  -  bio-
logical  or physical/chemical treatment
with  direct  discharge  to surface
waters;  sludge treatment  and disposal;

  o  Alternative technology - specific
treatment  techniques for  wastewater
and  sludge  reuse  or   disposal  as
defined  by law  and  the implementing
regulations (Section 6.7.2);

  o  Innovative technology  -  a
wastewater  or  sludge management
process  or  technique is  innovative if
it is  not  fully proven  and provides
for advancement over the  state-of-
the-art; modifications to conventional
or  alternative  technologies  meeting
the  criteria may  qualify  them  as
innovative (Section  6.7.3).

For  each  of these  three wastewater
management techniques it is necessary
to  achieve   a  specific  quality  of
effluent  in the treatment  process
before final  disposal  or  reuse.   The
required quality of  effluent is called
the  best  practicable waste treatment
technology   (BPWTT)  which  in  turn
will be established by the method  of
final  effluent disposal  or  reuse.
For example,  in  some  rivers BPWTT may
be  defined as a minimum of secondary
treatment.   In  other  rivers or bodies
of  water  where it  is necessary  to
maintain  a high  level   of water
quality,  BPWTT may be  defined  as
AT,  i.e.,  more  than  just secondary.
In  cases  where   a  marine  waiver
discharge  has been approved, BPWTT may
be  defined   as  something less  than
secondary treatment (Section  5.3).
Finally,  if an  effluent  is to  be
returned  to the groundwater (e.g.,
slow  rate irrigation), BPWTT  may  be
defined as the  primary  drinking water
standards  depending  on  whether  or
not  the groundwater is used or can
potentially  be used  as a potable water
supply.

Therefore,  BPWTT is  broadly  defined
as   the  cost-effective   technology
that  can  treat wastewater,  combined
sewer  overflows,  and nonexcessive
I/I  in publicly  owned  or  individual
wastewater treatment works  to  meet the
applicable provisions of:

  o  Part  133 for  secondary treatment
and discharge to surface waters;

  o  Part  125, Subpart 6  for marine
discharge  waivers (less than secondary
treatment);
                                      38

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  o  Part  122.44(d) for higher  levels
of  treatment  beyond  secondary  if
required  to  meet more stringent water
quality or State standards; or

  o  "Alternative Waste  Management
Techniques  for  Best  Practicable
Waste  Treatment"  (41  FR  6190)  for
treatment and discharge to groundwater
after land application, utilization or
reuse.

The  effluent limitations  that  the
BPWTT is  designed to  meet  are
generally specified in a NPDES permit.
In  those  situations where  a NPDES
permit has  not been   issued,  enforce-
able  requirements of the Act shall
include any requirements which,  in the
Regional   Administrator's   judgement,
would be included  in  the  permit when
issued.   Where no  permit applies,
enforceable  requirements  of  the  Act
shall   include  any requirement which
the Regional  Administrator determines
is necessary for the BPWTT to meet the
applicable criteria.

As  each of  the  three wastewater  and
sludge management   techniques  is
evaluated,  consider  opportunities  to
generate  revenues  and  reduce  the
use  of or  recover  energy.  Such
opportunities  might  include  the
sale  of methane gas  after  anaerobic
digestion, the sale of crops irrigated
with reclaimed wastewater, the sale of
water for  irrigation  or  others.
Revenues  generated   through  these
methods  must be used  to  reduce
O&M costs  resulting in  lower user
charges.

Additional   details of  the  three
management techniques  are  provided in
Sections 6.7.1 through 6.7.3.   Several
important  aspects  of innovative  and
alternative  (I&A) technologies are as
fol1ows.
I&A  technology  projects  offer  an
opportunity  to conserve  energy  or
resources and  reduce  costs.   In
addition  to  the  inherent  incentives
(i.e., cost,  energy, and resource
reductions)  for  innovative  or
alternative  (I   or A)   projects,
however,   the  law and  regulations
provide  additional   incentives  which
include:

  o  Increased   Federal   grant
assistance of 20  percent not  to
exceed  a total  Federal  share  of
85 percent, 75 percent after September
30, 1984;

  o  Special  set-asides  of allotted
funds to be used exclusively on  I or A
projects;

  o  Grant  for  field  testing  of
promising  I or A projects;

  o  Potential  higher  ranking  on
State's project priority list;

  o  15 percent cost preference for I
or  A projects over  conventional
projects  (except  for  privately owned
wastewater treatment  works);

  o  Potential  for  100 percent
replacement or  modification grant for
I  or  A  projects  which  fail  within
2 years of initiation of operation.

In  order to  assist  you and  your
consultant  in evaluating I  or  A
projects, EPA has  established  a
special   program  which  provides
technical assistance  during  the
evaluation phase.   Contact the I&A
coordinator  in your  State or  EPA
office for additional information.  In
addition,  EPA has established a small
alternative  wastewater  technology
clearinghouse  at  West  Virginia
University, which may provide helpful
                                     39

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information to you.  The clearinghouse
address  and  ordering  information is
included in Appendix B.
6.7.1
CONVENTIONAL
TECHNOLOGIES
                 Conventional
                 concepts   of
                 wastewater treatment
are  defined as  those  involving a
biological  or  physical/chemical
wastewater  treatment process  at a
centralized  facility with  a direct
point  source discharge  to surface
waters.   It is what  the general  public
considers  to be  sewage treatment;
i.e., gravity  collection sewers  all
connected  to an  interceptor  sewer
leading to  a  centralized  sewage
treatment  plant  which discharges  its
effluent  into the local stream,  river,
or lake.

In the case  of conventional  concepts
of  centralized  treatment,  the
processes  employed are  those which
have been  used for  years  in  water
pollution  control and are, therefore,
fully  proven  and  reliable.   The
selection  of  one  process  over another
will be  determined  based  on  local
conditions,  costs  and  environmental
impacts.

A significant by-product of wastewater
treatment  is the production of sludge.
The cost-effectiveness of your project
may  be  improved by  increasing the
reuse potential  of your sludge through
decreasing  the  contaminants and by
reducing  the  quantity of  sludge  to be
handled.   For this  reason, you  should
give special  consideration to process
and  programs that  provide reusable
sludge  by  reducing  contaminants.
Special  consideration should also be
given to  use of  waste treatment  and
sludge  handling procedures that  result
in reduced  quantities  of sludge.
Plan the  management of your sludge
with as much care as you give to  the
plan for  treating  wastewater.    In
so  doing,  you  should  consider  the
following factors:

  o  Stabilization  and  management
techniques  that will  not  result
in adverse  impacts on human health or
the environment;

  o  Cost-effective techniques for  use
or  disposal  (including O&M costs);
and

  o  Public  acceptance of  sludge
reuse/disposal  risks,  costs,
alternatives   and   environmental
consequences;   give  particular
attention to siting problems.

Improvement  of  sludge  quality  and
reduction  of sludge  quantity (through
selection  and  operation of wastewater
and  sludge  management   alternatives,
pretreatment,  and  source control)  can
optimize   cost-effective  resource
recovery  and  public acceptance  and
minimize environmental  impacts.

Many different  treatment,  use  and
disposal methods are available  for
evaluation.  In general,  these methods
can  be  considered  in two  major
categories:

  o  Treatment and volume reduction
incineration   (thermal  reduction),
composting  and  surface  impoundments;
and

  o  Ultimate   utilization    and
disposal  -  landfills,  ocean  dumping
and  discharge,   1andspreading   and
distribution/marketing.

In  addition to  the  CWA,  there  are
other  existing  Federal  laws which
emphasize the need for environmentally
sound  methods  for  the reuse  and
                                     40

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disposal  of municipal  sewage sludge.
They include:   the CAA, the Marine
Protection,  Research  and Sanctuaries
Act, the Toxic Substances Control Act,
the National Environmental Policy Act,
and  the  Resource  Conservation  and
Recovery  Act  (RCRA).   The  RCRA
requires  control  of  solid wastes
including toxic  and  hazardous
materials.

In  general, municipal  sludges  are
not  hazardous.    However,   large
quantities  of   storm-water   or
industrial  discharge  into  the
wastewater  treatment   system   will
increase the  possibility that your
sludge  may  be  classified as  hazardous
(Section 11.1.7).

Because  of the complex  nature  of
sludge management  EPA  has  prepared
"A  Guide to Regulations and Guidance
for  the Utilization  and  Disposal  of
Municipal  Sludge"  (MCD-72).    You
should  obtain  a  copy  of  this publica-
tion and  also  discuss sludge disposal
options with your project reviewer.
6.7.2*
ALTERNATIVE
TECHNOLOGIES
                 Alternative
                 technology  is  a
                 concept   of
wastewater  treatment  or   sludge
management  which  emphasizes conserva-
tion or  eliminates  the  discharge  of
pollutants.    This  concept  places
strong  emphasis  on reclaiming  and
reusing  wastewater,   productive
recycling  of  wastewater and  sludge
constituents, energy recovery or other
environmental  benefits  that may
contribute  to reducing costs.

Alternative technology  is  defined  as
any one of a number of processes and
is  specifically  defined to  include
methods of  effluent treatment (land
application, for  example), methods  of
sludge handling  and disposal  (land
application  as  a  fertilizer  or
anaerobic digestion to recover and use
methane  gas),  and  methods such  as
onsite (septic  systems)  treatment  or
alternative  conveyance  systems  which
have special  applicability for  use  in
small  communities.   A listing  of the
technologies  which  have  been defined
as alternative is as follows:

Effluent Treatment

Land  treatment  (rapid  infiltration,
slow  rate  irrigation,  and  overland
flow)

Aquifer recharge

Aquaculture

Direct reuse  (nonpotable)

Horticulture

Revegetation  of disturbed land

Containment ponds (Total)

Preapplication  treatment and storage
of  treated  effluent  (prior to land
treatment)

SIudge

Land application

Composting prior to land  application

Drying prior  to land application

Energy Recovery

Anaerobic  digestion  (greater than 90%
methane recovery and use)

Self-sustaining incineration
                                      41

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Small Community Systems

Onsite  treatment  (individual  or
cluster)

Septage treatment

Alternative  collection and conveyance
systems

Applicable   centralized  treatment
alternatives  (as described above)

Alternative   technologies  are
considered  to be  fully proven but
may  be  relatively  unknown because
of infrequent use.   They also require
some   rather unique  consideration
during  facilities  planning.    Four
alternative technologies  are discussed
in  some  detail  to  provide  more
specific  guidance for  covering  such
unique considerations   in  facilities
planning.

  o  Land treatment - Land application
for treatment and  reuse of wastewater
is encouraged by  both the CWA and the
EPA  because  of  the  recycling and
reclaiming  of   resources  and the
potential  cost   and  energy savings
compared to AT.   Note,  however,
that  if  you  have  an  AT discharge
requirement,  you  must   evaluate
conventional  AT  technologies as  well
as land treatment.  Costs of land used
as an  integral part  of the  treatment
process  may  be  allowable for  grant
funding (Section 8.4.6).   The 15 per-
cent  cost preference (Section  6.7.4)
is also applicable  for  publicly
owned land treatment  systems.

A two-phased  approach  to  the evalua-
tion  of land treatment  is recommended.
The  first  phase should focus on
availability  of  suitable sites and
whether the  cost  of  land treatment  is
competitive  with  other alternatives.
The  second  phase  would  include an
in-depth  investigation  of sites  and
refinement  of  site-specific design
factors.   An analysis  of  land  treat-
ment  should follow  the  procedures
given in "Process Design Manual:   Land
Treatment of  Municipal  Wastewater"
(EPA-625/1-81-013).   Key  design
factors  covered  in  this  manual
include:

  -  Site selection - The  plan  should
     inqlude  a  map  and describe
     reasons for rejecting sites as
     well  as  the  availability of
     suitable   sites.    Categorical
     elimination of  land treatment
     for  lack of  suitable  sites is
     generally   unacceptable  unless
     well  documented  with  supporting
     data;

  -  Loading rates  and land  area -
     Values outside  those  in  the
     design manual  should be justified
     and supported by a discussion of
     extenuating  circumstances,   such
     as  seasonal  limitations  for
     application;

  -  Estimated costs -  Costs for  land
     treatment  should be  consistent
     with  those  in  the  literature.
     Elimination of land treatment  due
     to unusually high costs  should be
     documented;
    Preapplication  treatment - The
    need for treatment more stringent
    than recommended  in the  EPA
    design  manual  should be  well
    documented.   If documentation is
    not  acceptable,  the  costs of the
    additional  processes beyond those
    recommended  in the design manual
    may  be  unallowable  for  grant
    funding;
  -  Environmental
    environmental
effects  -  The
evaluation  of
                                     42

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     land  treatment systems  should
     emphasize  quality and quantity
     of  surface  and  groundwater
     resources,   energy  conservation,
     pollutant recycling, and compati-
     bility  of land  use.    BPWTT
     criteria  are  to be  met  for
     protection   of  groundwater based
     on  current quality and  uses of
     the water.
Three  major  techniques  of  land
treatment  have  been  defined  as
alternative  technologies.    These
include  slow rate  irrigation,  rapid
infiltration and  overland flow and are
discussed  separately  in EPA design
manuals.    Other  land  application
techniques  defined as  alternative
were  listed  at the  beginning  of
Section 6.7.2.


Alternative sludge  technologies   -
Alternative  sludge techniques are
encouraged  by  the CWA  and  EPA due
to  resource  conservation,  energy
savings  or higher  level  of  treatment
achieved  over  conventional  sludge
management  techniques.

  -  Composting  is  a  treatment
     process  which  stabilizes and
     disinfects  sludges,  resulting in
     products which can be distributed
     and  marketed  (giveaway/sale
     program), 1andspread or used as a
     cover  for  landfills.  The  major
     composting  techniques  used  in
     this  nation are open air systems
     (aerated  pile  and windrow),
     though  more  complex  systems
     (enclosed and  mechanical) are now
     being  introduced.  Land may  be an
     eligible cost (Section 8.6.4).
     Planning for a composting process
     requires   some  special  site
     considerations to  ensure  public
     acceptance.
Landspreading  can be  used  in
agriculture,  silviculture,  turf
grass  production, in revegetating
strip-mined or  other disturbed
areas, on roadsides, as  well  as
other uses.    Many forms  of
sludge (e.g.,  liquid, dewatered,
composted) can  be utilized  for
landspreading.   It is  important
to  plan  for  mitigation  of
contaminants  such  as pathogens,
heavy  metals  and toxic  organics
in  landspread  sludge  and  to
identify any  State or local
restrictions on the landspreading
of  sludge.   One of the most
critical  components in planning a
successful  landspreading  program
is  having interaction with  and
support from nearby residents and
farmers.  Land may be an eligible
cost (Section 8.6.4).

Distribution   and   marketing
(giveaway/sale  program),  like
landspreading, involves  the
utilization   of  the   plant
nutrients and soil  conditioning
properties of  sludge.  Distribu-
tion  and marketing,  in  contrast
to  landspreading,  generally
requires a very well stabilized
and easy to handle sludge product
low in critical  contaminants.
For this reason, well disinfected
and low moisture products (e.g.,
composted,  heat-dried  sludges
from  cleaner  sources) are  more
appropriate  for  giveaway/sale
programs. Considerable marketing
expertise is  needed to  provide
use instructions and  to convey to
the receiving  public that sludge
is a valuable resource, and not a
worthless waste  product.

Planning  new  facilities  or
conversion  of existing anaerobic
digesters for the recovery and
                                     43

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     utilization of methane can result
     in considerable cost savings for
     many municipalities.

  -  In order to be eligible for the
     alternative  technology   grant
     funding  preference, an  incinera-
     tion  system must be a net energy
     producer  or  "self-sustaining"
     (including the energy  used for
     sludge dewatering,  combustion and
     pollution control  equipment).  To
     meet  this  requirement,  extremely
     energy efficient  equipment and
     operating  procedures  (such  as
     codisposal) have to  be  used for
     collecting and recovering  heat
     energy.    The  facilities  plan
     should include good documentation
     of net  energy  production  and,
     as appropriate, use  of the net
     energy.

  o  Small   alternative   wastewater
systems (SAWS) - SAWS are systems that
serve small communities  with  a popula-
tion  of 3,500  or  less or  sparsely
populated areas of larger communities.
These SAWS  may receive  up  to 85 per-
cent  grants  (75  percent  after
September  30,  1984)  because  they
qualify  as  alternative   technology
(Section 6.7.2).

For  areas  where  the population  is
less than  6 persons,  but  1.7 or more
persons per  acre  (one  household per
2  acres),  SAWS systems  should  be
carefully evaluated.   Where  the
population  density  in an  area  is
less than  1.7  persons  per  acre  (one
household per 2 acres)  SAWS  are
generally cost-effective unless severe
pollution  or  public  health  problems
exist  and  conventional   collectors
are  shown  to be clearly more  cost-
effective  than other  alternatives
for   sparsely  populated  areas
(Section 6.4).
Twenty-one  SAWS  are  briefly
illustrated  and described in  an  EPA
publication   (FRD-10)  available  from
EPA (Appendix B).   Detailed technical
descriptions  of  many of these  systems
are found in  EPA's  "Design Manual  for
Onsite  Wastewater  Treatment  and
Disposal  Systems"  (EPA-625/1-80-012).
Several  other EPA publications  provide
detailed technical information  on SAWS
technology and management.   Others
provide useful information for  persons
not involved  with the  design of SAWS.
(See Appendix B for  titles.)   You
are  encouraged  to  review  these
publications.

EPA's  small  alternative wastewater
technology   clearinghouse   at  West
Virginia University (see Appendix  B
for  address)  can assist  you  in
obtaining state-of-the-art  and other
information on SAWS.  In  addition, you
may  also  contact your  State  or
EPA  regional  I/A  coordinator  for
assistance in project planning.

In addition to the inherent  incentives
(e.g.,  cost,  energy  and   resource
reductions),  the CWA  and regulations
provide  additional   incentives  to
promote appropriate use of alternative
technologies.   Special   set-asides,
cost preference and other  provisions
are described in the  general   discus-
sions  of I&A technologies found in
Section 6.7.

Combinations  of SAWS and  conventional
systems may  also provide  considerable
savings compared with a single  conven-
tional  collection  and   centralized
treatment system.  For  example, septic
systems may  work quite  well  in  many
small  towns  except  in   an  isolated
area such as a business  district or
"downtown"  area where  open  space  for
septic  systems  is not  available.   In
this case, the business district could
                                      44

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be served by a conventional collection
and treatment system or an alternative
conveyance  system   to a  cluster
treatment  system  on the  outskirts  of
the congested area,  while the outlying
areas  may use septic systems.

Intermittent  sand  filters  (ISF)  may
often  be cost-effective for unsewered
areas  where conditions do  not  permit
the use of conventional  soil  absorp-
tion  systems.    ISF provide  a  low
cost  method  for  upgrading failing
septic tank systems.  They may be well
suited  for  treating  wastewater  from
single-family residences,  clusters  of
residences,  and   small  commercial
establishments.

Grant  assistance  may  be  provided
for both publicly and privately owned
SAWS  serving residences  and  small
commercial  establishments  that  were
inhabited  or in  use on  or  before
December 27,  1977.  However,  these
systems (see  discussion  in this
section)  must  serve  principal
residences  in  order  to  be  grant
eligible.
It is  necessary that your municipality
have  access  to SAWS  even  though
portions may  be  on  private property.
While  this  requirement may  be  met  by
an easement or  a covenant,  it  may be
easily satisfied by a simple agreement
that  is recorded  with the  deed.
Another  option  is  State  enabling
legislation  which  ensures  access  to
municipal  wastewater land disposal
zones.
For  publicly  owned systems, the
agreement  referred to above  should
state  that:

    -  The  municipality  will  retain
        ownership of the system;

    -  The municipality  will  be able
        to  enter  the property for
        inspection,  monitoring,
        construction, O&M, rehabilita-
        tion  or replacement  purposes
        at  reasonable  times for  the
        life  of  the  project;  and

     -   The municipality  will  have
        complete  control  over  the
        system.

For privately owned  systems  a  simple
agreement  with the  property  owner
will  suffice  if it  is  recorded with
the deed for  the  property  served by
each  individual system.  The agreement
provides for access  to  the  system at
all reasonable times for inspection,
monitoring, construction, maintenance,
operation,  rehabilitation, or replace-
ment over  the life of the  project.

Title abstracts or insurance, detailed
property  and  septic  tank  location
descriptions,  or land surveys are not
required  for either  publicly  or
privately owned systems.

Describe  in  the  facilities  plan  a
management  program for  SAWS  to be
'implemented   after  award  of  grant
assistance.    The  description  should
include provisions for:

     -   Physical  inspection  of  all
        onsite systems in the planning
        area  as is necessary to insure
        proper operation;

     -   Pumpouts,  renovation,  and
        replacement as needed;

     -   Routine maintenance  and
        servicing  of mechanical  and
        electrical  components;

     -   Testing of  selected existing,
        local  potable water  wells
        once  a year;
                                      45

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     -  Additional   monitoring  of
        water  supply  aquifers,  if
        appropriate, where substantial
        numbers  of onsite systems
        exist;  and

     -  A  user  charge  system
        and   financing  plan
        (Section 12.2).
Your  management program  could  also
provide  for review and approval  of
new  sites  and  installations,   and
a  public  education  program   for
homeowners  concerning  the operation
and  maintenance  of  their   individual
systems.

For  a more  complete discussion  of
management programs,  see  "Management
of  Onsite  and  Small  Community
Wastewater Systems" (Appendix B),.

The  15   percent cost preference
(Section  6.7.4)  is  applicable  to
"publicly owned"  SAWS (not privately
owned,  individual  systems)  to
determine if it  is  the most cost-
effective alternative (Section 7.3.1).

  o  Individual systems  -   Individual
systems  are  small  alternative
wastewater treatment systems that are
privately owned.   These systems  are
typically onsite  or  cluster treatment
and disposal systems.

     As a  financial incentive to small
or  rural  communities,  an eligible
municipality may apply for  a grant for
construction  of  individual, privately
owned treatment  works when they  are
shown to  be  cost-effective  and public
ownership  is not feasible.

     Grants  for  individual, privately
owned  systems  may be  made  only
for  those  which serve   "principal
residences"  (residence for  51  percent
or more of the year,  i.e., not second
homes  or  vacation  or  recreation
residences),  and "small commercial
establishments"  with   dry   weather
flows  of  25,000  gallons per day  or
less.   Private  nonprofit entities
such as churches, schools,  hospitals
or  charitable  organizations are
considered  small commercial establish-
ments.    These residences  and
establishments must  have  been
constructed  by and  inhabited  on  or
before  December 27, 1977.

Individual  (privately  owned)  systems
do not  qualify for the 15  percent cost
preference  to  determine  cost
effectiveness.   However,  they are
eligible for up to 85  percent (75 per-
cent after September  30,  1984)  grant
assistance  (Section 7.3.1).
6.7.3
INNOVATIVE
TECHNOLOGY
                 Innovative
                 technology is signi-
                 ficantly different
from either conventional  concepts  of
centralized  treatment  or alternative
technology.   Innovative technology  is
not a  specifically defined  treatment
process;  it is something new which has
not been  fully proven  but  is promising
based  on  results from research and
demonstration  projects.    Innovative
technology includes an element of risk
and  a  corresponding  benefit  which
outweighs  the  risk.   The designation
of a project, portion  of a project,  or
a  process unit  as innovative  should
encourage the  design and construc-
tion  of  more   efficient municipal
wastewater  treatment  projects   by
advocating departure from the standard
engineering and  design practices.   It
is to be noted  that both conventional
concepts  of  centralized treatment  and
alternative technology are candidates
for  innovative   classification   if
either  meets  criteria  established  to
                                     46

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 ensure  the  goal   of  advancing  the
 state-of-the-art  for  a promising  new
 concept  that  should  significantly
 reduce  costs  or  provide  significant
 environmental  benefits.   Examples of
 these criteria are as follows:

   o  Cost reduction  (in the range of
 15 percent life cycle cost);

   o  Net primary  energy reduction (in
 the range of 20 percent);

   o  Improved toxics management;

   o  Improved operational  reliability;

   o  Improved environmental  benefit;
 and

   o  Improved   joint   industrial/
 municipal treatment.

 There are some key factors to consider
 in  the  use of  these criteria to
 present,  review  and decide  upon
 the  designation  of a  project  as
 innovative.    The cost  and  energy
 criteria  are  quantitative  while  the
 other  criteria are  qualitative  and
 tend to be subjective.  Documentation
 to  support  designation as  innovative
 in  the  facilities  plan will  be more
 difficult for the qualitative criteria
 yet it is important that this be done.
 Some concepts for  use  of  the criteria
 are discussed separately.
   o  Cost reduction  -  The  proposed
 processes  or  techniques  should
 significantly reduce costs  (in  the
 range of  15 percent).   The cost
 referred to  here is life  cycle cost or
 total present worth costs,  i.e.,  the
 capital  costs plus the present  worth
 of  the  operating, maintenance,  and
 replacement  costs  minus  the present
 worth of  the salvage  value over
I the  life  of the project.   The  cost
I comparison  must  be made throughout
the  treatment system  to determine
the  influences  of  the  processes
proposed  for  innovative designation.
For  example,  an  aeration   process
which  reduces aeration  life-cycle
costs  by  15 percent  with no  other
influences would satisfy the criteria,
while  an  aeration  process which
reduces aeration  life-cycle  costs  by
15 percent  but cause*  a  comparable
10 percent  cost  increase in  other
processes,  would  not  satisfy  the
criteria.

  o  Efficient use of  energy -  The
proposed   process  or technique
significantly reduces  (perhaps through
recovery and reuse)  primary energy use
(in the range of 20 percent).  Primary
energy  referred to  here  is the energy
that  crosses  the treatment  plant
boundary  (electricity or natural gas,
for  example).   The  definition  of
primary energy as "that crossing the
treatment  plant  boundary" eliminates
the  necessity  of evaluating  how
the  electricity,  for   example,  was
generated  (burning coal, oil-fired
generator,  etc.).   The net  primary
energy savings  is  determined  by
comparing  the  proposed  innovative
process  against the  least  energy-
consuming  process (which must also be
cost-effective)  which  would  have
been selected if no innovative process
was  considered,  i.e.,  the  least
energy  consuming  and   cost-effective
non-innovative process.

  o  Improved toxics management  - For
this criterion the proposed innovative
process or technique should reduce or
eliminate  the direct   and  indirect
exposure  of known toxicants to the
environment  beyond   that  normally
expected  in conventional treatment
practice.    Better  management  can
be demonstrated through reduction in
exposure  brought  about  by chemical,
                                       47

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physical, or  biological  mechanisms
that reduce or eliminate the recycling
of toxicants within or between media.
Recognizing that  many,  if not all,
known toxicants  should be  eliminated
at  the  source through pretreatment
of  wastes  (primarily  industrial),
this criterion is  less likely  to be
employed for  qualifying  a process
as innovative.

  o  Improved  operational relia-
bility  -  Under this  criterion the
proposed  process or technique should:
(a)  provide decreased susceptibility
to  plant  upsets  or  interference,
(b)  result  in  reduced occurrence of
inadequately  treated  discharges,  or
(c)  provide  decreased  levels of
required operator  attention  and
skills.  These results may be achieved
by  any  one or more  of the  following
means:
       Greater
       bility;
mechanical  relia-
     -  Greater  inherent  physical,
       chemical  or biological  process
       stability  or  reliability
       including processes or  trans-
       formations  taking place in the
       soils of  land application
       systems;

     -  Improved  system design;

     -  Increased  standby or backup
       facilities;

     -  Continuous  monitoring  alert or
       diversion systems.

  o  Improved environmental benefit  -
This criterion is more subjective than
the others and  requires  considerable
explanation  in  the facilities plan
if  it  is  to be used  as  a  means of
qualifying  a  proposed   process  as
innovative.   The  improved environ-
mental  benefit should  fall  into one
of  five  specific  areas, namely,
(a)  water  conservation,   (b)  more
effective  land use,  (c)  improved air
quality,  (d)   improved  groundwater
quality,  and   (e)  reduced  resource
requirements for facility construction
and operation.

  o  Improved  joint  industrial/
municipal  treatment  -  This  criterion
refers  to treatment  of industrial
wastes  discharged  into a municipal
collection system  for treatment
at  the publicly  owned treatment
works  or the joint  treatment  of
municipal and industrial  residuals
(sludge)  resulting  from  the joint or
independent  treatment of  liquid
wastes.   The  objective  of  this
criterion  is to encourage the develop-
ment of  management  techniques  which
allow  for the  joint  treatment  of
industrial/municipal  wastes  which
(a) maximize the cost-effectiveness of
treatment,  (b)  equitably  distribute
costs,  (c) achieve improved management
of  wastes,  and  (d)  control  toxic
materials  and  industrial wastes.

Examples of some candidate industrial/
municipal  joint treatment  opportuni-
ties are:

     -   Use  of  industrial heat  to
        improve  liquid  or  solids
        processing efficiency;

     -   Industrial  use of municipal
        treatment residuals;

     -   Use  of industrial  waste
        products   as  a  source  of
        additives or bulking agents in
        treatment   processes  (i.e.,
        waste   pickle liquor,  wood
        chips,  or fly ash).
                                     48

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6.7.4*
INNOVATIVE AND    As encouragement  to
ALTERNATIVE COST  consider  and  employ
PREFERENCE         I&A   technologies,
the law  provides a 15 percent  cost
preference  for  either   I  or  A
technology.   Put in a different  way,
the  present  worth  cost  of  the  I
or A  technology may  be  15 percent
more  than the  present  worth  cost
of  the  least  costly conventional
alternative  and  still  be  considered
equal.


To understand  the application  of the
15 percent (sometimes  referred to  as
115 percent) cost preference, refer to
example  4 in  Appendix E.   If  the
entire project is  claimed  to  be
I or A technology,  multiply the total
present worth cost of the least costly
conventional   alternative  by  1.15
(i.e.,  increase the  total present
worth cost by 15 percent) to establish
a  ceiling  cost.   The ceiling  cost
represents  the maximum total  present
worth cost that may not be exceeded by
the proposed  I or A project in order
to  be  considered  cost-effective.
If the proposed  I  or  A project  does
not  exceed  the  ceiling  or maximum
total   present  worth  cost  determined
above,  it may  be  selected  as  the
proposed  project  assuming   that
other criteria beyond  I&A considera-
tions  are  acceptable   (environmental
impacts,  public  acceptance,
implementability, etc.).

If  the  proposed  I  or A  project
contains  only   certain  components
or unit  processes that are claimed
as I  or  A, the  50 percent rule  is
employed.   If the  proposed I  or  A
components or unit processes represent
50 percent  or  more  of  the  total
present   worth  costs  of  the   I&A
project,  multiply  the  total  present
worth  cost  of  the  least  costly
conventional  alternative  by  1.15  to
establish the ceiling cost  and proceed
as described above.

If the proposed I or A components or
unit processes represent  less  than
50 percent  of  the total present worth
cost of the I&A project, multiply only
the  replaced  conventional   components
by 1.15 and add the present  worth cost
of the other  conventional   components
to obtain the ceiling costs.   Again,
proceed as above.

It  should  be  noted  that the  cost
preference  merely  provides an  extra
margin  in terms of total present worth
cost to proposed  I or A projects but
does  not  change  the Federal  grant
share.   In all  cases,  whether  the
proposed  I  or  A  project  contains  1,
5,  10, 50, 73,  or  92  percent  I&A
components or unit processes, only the
I or A components or unit processes
receive the increased grant  share.
6.8
COMBINED SEWER
OVERFLOWS
                 The  costs  and
                 benefits   from
                 control  of combined
sewer  overflows  (CSO)  vary with
numerous  environmental  and  system
related  factors.   Decisions relating
to CSO s  are  made  on a  case-by-case
basis.

Control  of pollution  from CSOs should
be considered  if  application of BPWTT
for dry-weather flows will  not  meet
water  quality  standards.   Where
measures  are  proposed for the control
of CSOs,  the  facilities  plan  should
evaluate  the following:

  o  Alternative control  techniques
and management  practices  that  could
attain various levels of  pollution
                                      49

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control,  including  repairs,  restora-
tion, and maintenance of the existing
system,  newly  emerging  nonstructural
and  less  structurally  intensive
methods  such as in-line  storage, swirl
concentrators  and   sewer  flushing
equipment;

  o  Cost  of  achieving  various levels
of pollution  control  by each  of  the
control  techniques that  appear  to  be
most  feasible and cost-effective;

  o  Benefits  to  receiving  waters  of
a range  of pollution  control alterna-
tives during  wet weather  conditions;
consult  WQM plan as  appropriate;

  o  Costs  and  benefits from addition
of advanced  treatment  processes
for dry  weather flows in the area  as
an alternative to CSO  control.

The alternatives  selected for control
of CSOs  should  meet the following
criteria:

  o  The analysis demonstrates that
the  proposed level  of  pollution
control   is  necessary  to  protect  a
beneficial use of the  receiving waters
even  after the standards required  by
the  CWA for  industrial  discharges
are met  and  a minimum of secondary
treatment is  achieved for  all dry-
weather  municipal  discharges in  the
area;

  o  Provision has  been made for
funding  of   secondary  treatment
of all dry-weather  flows  in  the  area
or an  application  for  a  marine
discharge  waiver  under Section 301(h)
of the CWA has been  received by EPA;

  o  The technique proposed  for CSO
control   is   more  cost-effective
for  protecting beneficial  uses  than
other CSO control  techniques plus
higher  levels  of  treatment  for
dry-weather  municipal flows  in  the
area  (see  the  CSO  Guidebook  and  CSO
Manual -  Appendix B);

  o  The  marginal  costs of  control
are  not  substantial compared  to
incremental benefits.


If portions of the  planning area  are
served  by combined  sewers  and  an
evaluation  of CSO abatement is  to be
included  in the facilities  plan,  you
should request additional  guidance
from  your  project reviewer.   To
determine what  portion of CSO control
costs for  a  multiple-purpose project
is  allowable  for  grant  funding,
refer to the multipurpose  discussion
in Section  7.1.3.

The Agency's  strategy for  addressing
CSO  needs  is  based  on  the 1981
amendments to  the CWA (PL 97-117).
The CWA  provides three ways  to fund
correction  of CSOs.   Section 201(g)(l)
provides  that CSOs are  eligible
for grants  for the construction of
municipal  wastewater   treatment
facilities  from funds  available under
Section 205 until September 30, 1984.
Thereafter, CSOs will  no longer be an
eligible  category,  however,  the
Governor  may  recommend the  use  of up
to 20  percent  of  the State's annual
allotment  for  previously  eligible
categories, such as CSOs.

Second,   Section  201(n)(2)  creates  a
special  fund  to correct  CSOs  into
marine bays   and  estuaries where
significant  usage  of  the  waters  for
shell fishing  and swimming  would  not
otherwise  be  possible.  This  fund,
administered by EPA  Headquarters,  has
received  appropriations totalling  $60
million  for  fiscal  years 1983  and
1984.
                                      50

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 Finally,  beginning October  1,  1984,
 Section* 201(n)(l)  allows use  of
 section  205  funds   in  the  State's
 regular allotment  to  correct CSOs not
 eligible  under  Section  201(n)(2).
 Such projects  may  receive  grant funds
 only  if the  State  designates  the
 receiving  water  as high priority and
 demonstrates that significant usage of
 the waters  for  fishing  and swimming
 would  not otherwise be possible.


 Regulations concerning funding of CSOs
 from the  regular  State  allotment  at
 the  Governor's  request,  require
 demonstration of need  for attaining or
 enhancing  swimming and fishing  uses.
 This demonstration of  need (Section
 35.2024)  is  similar to that  described
 in the guidance  for  marine CSOs.   At
 its discretion,  the State may  use
 the marine CSO  guidance in  preparing
 its demonstration.   For  funding  of
 CSOs from the  Governor's  20 percent
| discretionary  fund, such a  demonstra-
 tion  is not  required.   However,
 because the  impacts of  CSOs and
 the degree  of improvement  provided
 by  corrections  are difficult  to
 determine,  and  due to  limited  funds
 available,  States  may  require  a
 demonstration  under  priority  list
 criteria.

 Because CSO  is an  ineligible category
 after  fiscal  year  1984,   if  a CSO
 project is funded under the Governor's
 20 percent  discretionary  fund,   the
 Federal  share  will  be 55 percent  (or
 lower  if a uniform lower  Federal  share
 is set  by the Governor).  This is also
 true  of other  no  longer  eligible
 categories, i.e., collector sewers and
 major  sewer system rehabilitation.

 The review of plans and specifications
 for marine CSOs  can  be  delegated  to
 the States once the Regions are
satisfied  that  the States  have  the
ability and resources  to conduct  the
review.

It  should  be noted  that  the  CWA
prohibits grant assistance for control
of  pollutant  discharges  from  a
separate  storm  sewer system  or
from a system that was  not designed to
carry  both storm-  and wastewater.
6.9
MUNICIPAL
TREATMENT OF
INDUSTRIAL AND
FEDERAL  FACIL-
ITIES WASTES
                 Consider the issues
                 mentioned below when
                 planning municipal
                 treatment facilities
                 that will  accommo-
                 date  industrial
flows  or  wastes  from  Federal
facilities.    The  treatment  works
design capacity may include allowances
for industrial  flows  if  the  principal
purpose of both your project and the
wastewater treatment  system  of which
it is a part, is for  the treatment of
domestic  wastewater  of the  entire
community,  area,  region  or  district
concerned  (Section  5.5.2).   However,
grant assistance will  not be provided
for:

  o  Costs of interceptor or  collector
sewers  constructed exclusively,  or
almost exclusively to serve industrial
users; or

  o  Costs  for  control  or removal  of
pollutants   from   industrial   users
unless  you  are  required to  remove
such  pollutants  introduced  from
nonindustrial users; or

  o  Costs  to  transport  or treat
wastewater  from a Federal  facility
which  contributes  more  than 250,000
gallons per day or 5  percent  of the
design  flow of  the  complete  waste
treatment  system, whichever is less.
                                       51

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Where industries will  be  served by the
proposed  facilities,   a  pretreatment
program is required when:

  o  The  municipal  treatment  works
or  combination of  treatment  works
operated by  the same authority  has
a flow greater  than 5  million gallons
per  day  and serves  or  is  expected
to  serve  industries  discharging
pollutants  which  pass  through  or
interfere  with  the operation of  the
plant  or  are  otherwise subject  to
pretreatment  requirements  under  the
CWA;and

  o  The water quality management plan
does  not  include  a pretreatment
program.

Other  situations  when a pretreatment
program  may  be   required  should
be  discussed with  your  EPA  or  State
project  reviewer  or  NPDES permit
officer.   Section 8.5.4 identifies
specific elements to be  included in a
pretreatment program.
6.10
STAGED
CONSTRUCTION
                 Adding  plant
                 capacity   or
                 extending  inter-
ceptors  in stages during the 20-year
planning  period may  be more cost-
effective  than  full  development
initially.

Factors you should consider are:

  o  Relative  cost  of  providing  full
capacity  initially   compared  with
the  present worth  of  deferred  costs
for  providing  capacity  when needed;
and

  o  Uncertainties  of  projecting
long-term  wastewater  flows   and
possible  technological  advances  or
flow  and  waste  reduction  measures
which may limit  need  for  full
capacity.
                                         Modular  development of  operable
                                         components  of a treatment  plant  is
                                         advisable in areas where  high growth
                                         rates are  projected, where  treatment
                                         must become  more  stringent  later  in
                                         the planning  period, or where existing
                                         facilities  are  to be used  in  the
                                         interim but  phased out later.

                                         To evaluate the cost-effectiveness of
                                         staged  construction, you should select
                                         an appropriate  staging period as shown
                                         below unless your State has  developed
                                         other guidelines.
                                         If the ratio of:

                                                Qo/Ql is

                                              Less than 1.3
                                              1.3 to 1.8
                                              Greater than 1.8
                          Staging
                       Period (Years)

                            20
                            15
                            10
     Where Qp  is flow  at  end of  a
20-year planning period  and Qi is flow
at the beginning of plant operation.

The  staging  period  for interceptors
is normally 20 years.  However, within
the  limitations  on  reserve  capacity
discussed  in  Section 5.5,  a  larger
interceptor  may  be  appropriate.
In  evaluating  an  interceptor  with
capacity  beyond 20 years,  consider
if:

  o  The  larger  pipe   will reduce
adverse direct and indirect  environ-
mental impacts;

  o  It is consistent with  projected
land use patterns;

  o  It complies with Federal, State
or local  environmental laws;

  o  It takes into account  daily or
seasonal  variations of flow,  timing of
flows from  various parts of  the
tributary  area,  and  pipe   storage
effects;
                                      52

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  o  Off pipe storage  to reduce  peak
flow is feasible; and

  o  Appropriate  peak  flow factors
that decrease as average  daily flow to
be conveyed  increases have been used.

6.11
MULTIPLE         A multiple purpose
PURPOSE PROJECTS  project is a project
                 designed  to  meet
the  enforceable  requirements  of  the
CWA  (i.e.,  NPDES permit or ground-
water  criteria),  but which also  has
components  designed to serve other
functions  as well  (e.g.,  agricultural,
municipal,  or  industrial   water
supply,  sludge  management  using
codisposal  of solid  waste,  or  energy
production).   Appendix 0 contains
additional  information  on  cost
allocation  for  multiple  purpose
projects.

Projects  designed only to meet  an
enforceable requirement are considered
single  purpose.    Thus,  a project
that  includes  land  application  as
an  integral  part  of  a wastewater
treatment  system to  meet effluent
limitations  is  considered  single
purpose.    An  agricultural  reuse
project  that  uses  effluent  that
normally  would be  discharged  to a
stream, i.e.,  discharge meets NPDES
limitations,  is  considered  multiple
purpose.

To reduce  costs and  conserve  energy,
the  facilities plan may  contain a
broad  examination  of  structural   and
nonstructural  alternatives  that
include multiple purpose  options.
Section 7.1.3 discusses the identifi-
cation  of  allowable costs for multiple
purpose projects.
             CHAPTER 7

       EVALUATION OF PRINCIPAL
   ALTERNATIVES AND PLAN ADOPTION
7.0
ALTERNATIVE       After   developing
EVALUATION       feasible   alter-
                 natives  as described
in  Chapter  6,  systematically screen
them  to  identify  those  capable
of  meeting  Federal,  State and
local  criteria  (Section  6.7).
Analyze  the resulting  principal
alternatives  to  identify  those which
are potentially cost-effective.

Principal  alternatives  selected
through this  screening  process  will
undergo a thorough  cost-effectiveness
analysis.  The level of detail in your
analysis  depends  upon the size and
complexity of your project.    In the
facilities plan  discuss  the  reasons
for  the  selection of  a preferred
alternative  and  the reasons  for the
elimination of other alternatives.

The  following sections describe  in
greater detail the  screening criteria
for plan selection.

7.1
EVALUATION OF     Calculate   present
MONETARY COSTS    worth or equivalent
                 uniform annual costs
for  each  principal  alternative  in
order to  make a  valid comparison  of
future  capital   and  operation and
maintenance (O&M).   "Present worth"  is
the  sum which, if  invested now at  a
given rate, would provide exactly the
funds  required  to make  all   future
payments.    "Equivalent  uniform
annual  cost"  is  the expression of  a
nonuniform  series of expenditures
as a  uniform  annual  amount.   Since
both  methods produce  equivalent
results, either may be used.   Several
                                     53

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examples  employing these  methods  of
cost analysis are given in  Appendix E.
Detailed  procedures  for making these
calculations  are explained  in  most
engineering economics  textbooks.

The discount  rate expected to be used
for  facilities  planning  begun  in
fiscal  year 1985 (October  1,  1984  to
September 30,  1985) is  8 3/8  percent.
The rate changes each  yearj check with
your project reviewer.

You  should calculate  costs  on  the
basis of market  prices prevailing  at
the  time  of your  cost-effectiveness
analysis.   The analysis  should  not
allow  for   inflation  of  wages  and
prices, except  those  for land  and
energy (Section 7.1.2).  This  is based
on  the  assumption  that   prices  for
resources  involved  in treatment works
construction and operation, other than
the  exceptions,  will   tend to change
over time  by  approximately  the  same
percentage.   It is  the  differences in
cost  among  alternatives  that  are
important  in  the  screening process as
these differences will  help  identify
the  most  cost-effective alternative.
Later  an   updated or  perhaps  more
detailed cost estimate of the  selected
plan  can  be made  since   it  is  this
cost  estimate  that  will   be  used  in
evaluating  your community's financial
capability.

Your analysis should include all costs
(capital,  annual  and other  direct
costs such  as  disruption   of  business
due  to  street  work  or opportunity
costs  such as  the market value
of  publicly owned  land   that  could
be  used for  purposes other  than
wastewater  treatment)  that   are
attributable   to  the  building  and
operation  of your treatment works.
Some examples  of  capital  costs
are:   building  the  wastewater
treatment  facility  (including  sludge
management),  interceptor  sewers, pump
stations,  collection  sewers;   lease,
easement  or  acquisition  of  sites  or
rights-of-way;  and  relocation.  Costs
that may not be  grant  eligible, such
as  house  laterals on  conventional
collectors, should also be included.

Costs for O&M (e.g., labor, utilities,
materials, outside services,  expenses,
and replacement of equipment  and parts
to  ensure  effective  and dependable
operation   during  the planning
period)  must  be included  in  the cost-
effectiveness  analysis.   These costs
usually  include   both  fixed  and
variable  costs, the latter  generally
depending  on the  quantity of  waste-
water collected and treated.

If necessary  and appropriate, interest
during construction may be computed in
one of two ways.   If expenditures are
uniform and  the  construction  period
is  less  than  4  years,  interest  is
computed  by  taking  one-half  of
the product  of  the  construction
period  (years),  the   total  capital
expenditures   ($)  and  the  discount
rate.    Otherwise,   the  interest
should be calculated on a year-by-year
basis.

The revenue which you may receive from
the  sale of  treatment  by-products
(e.g., methane  gas, crops,  sludge or
compost,  etc.)  is generally  reflected
in  the  cost-effectiveness  analysis
(Section  7.1.3).   You  should subtract
any  revenue from the  annual  O&M cost
in your cost-effectiveness analysis.

Your   cost-effectiveness  analysis
should also consider the salvage value
of  the treatment  works at the  end of
the  planning period.   This  value is
based on a straight-line depreciation
from the initial  cost   at  the  time of
analysis  to  the  end of  the  planning
                                      54

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period  (except for  land  as  noted in
Section 7.1.2).   You  should  use the
following  periods  for  the design life
of the treatment works components:

  o  Land—permanent;

  o  Wastewater conveyance structures
(collection   systems,  outfall  pipes,
interceptors,   force  mains,  tunnels,
etc.)~50  years;

  o  Other   structures  (plant
buildings, concrete tankage,  basins,
lift station structures, etc.)—30 to
50 years;

  o  Process  equipment--15  to  20
years;

  o  Auxiliary  equipment—10  to  15
years.

For  interim  facilities with  an
anticipated  useful  life  of less than
20 years, salvage  value should  be
based on  demonstrated  resale  or
reuse opportunities at the end  of the
interim period.

Once the  present worth or equivalent
uniform  annual cost  is determined
for  each  principal  alternative,  the
alternative  which  is  cost-effective
can be identified.

There is  also  a  cost  preference for
innovative or  alternative technology
projects.   Section  6.7.4 provides
additional guidance and summarizes the
procedures for application of the cost
preference.

7.1.1
SUNK  COSTS        Any  investments  or
                 financial  commit-
ments made before or during facilities
planning  are  regarded  as  sunk  costs.
As sunk  costs  they  should  not  be
included  in  the cost-effectiveness
analysis  because  they have already
been  committed   regardless   of
the  alternative  selected.   Such
investments and commitments include:
  o  Investments  in  existing
wastewater  treatment  facilities
and  associated  lands  even  though
incorporated in the plan;

  o  Outstanding bond  indebtedness;
and

  o  Costs  for   preparing  the
facilities plan.
7.1.2
COST ESCALATION
FACTORS  FOR
ENERGY USE AND
LAND
                 Energy prices may be
                 escalated  for  the
                 appropriate  fuel  if
                 historical  data for
                 your area show that
energy prices  have  been  increasing at
a  faster  rate  than building  and O&M
costs other than energy.  You should
consider the applicable  provisions of
existing  State  energy plans  which
effect  energy costs but  should not
delay if a plan is not available.

Land prices should  be escalated  at  a
uniform  rate  of 3  percent per  year
except for right-of-way easements.

7.1.3
ALLOCATION OF     Multiple  purpose
COSTS FOR         projects  combine
MULTIPLE          water  pollution
PURPOSE  PROJECTS  control   practices
                 meeting the enforce-
able  requirements  of  the CWA  with
other  purposes  (e.g.,   agricultural,
energy  generation   or  recreation).
Generally,  when   projects   involve
multiple  purposes  (Section  6.11)  and
cost more than an  alternative single
purpose  project designed  for municipal
pollution  control  only, the allocation
of  costs  to  each  purpose  will be
based on  the  Alternative Justifiable
Expenditure  (AJE) method as described
in Appendix 0.
                                      55

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However,   if   a  multiple  purpose
project  is  the cost-effective way of
satisfying   enforceable  requirements
(e.g., for CSOs),  it should be treated
as  a single  purpose  project  to
determine grant eligibility.   If the
project  is  cost-effective, it is the
preferred  alternative  regardless  of
what other  purposes it serves.  When
preparing   the  cost-effectiveness
analysis,   apply  the  15  percent
cost preference  as  appropriate for
innovative  and  alternative  (I&A)
projects.

Also, multiple purpose projects that
combine wastewater treatment  with
recreation do  not need to use the AJE
method but  can  be funded  at the level
of the  cost-effective, single purpose
alternative.  Incremental  costs of the
recreation  component  that  exceed
the  cost-effective,  single purpose
alternative cannot be grant funded.

To  determine  what  percentage  of a
project  with  recreation   purposes
is allowable, you  should calculate the
grant  eligibility  percentage  by
dividing the  present worth of the
cost-effective   pollution  control
alternative  by the  present  worth  of
the  multiple   purpose project,  and
multiplying  the  result   by  100.
Another  simpler means  of determining
allowable  costs can be used  for
proposed projects  that involve clearly
separate   recreational   components
that are  part  of  an  otherwise
single  purpose project.   Here the
allowable cost simply equals the total
capital  cost  of  the  single purpose
components.

To determine the  grant assistance for
each  component  of  other   multiple
purpose  projects, multiply  the cost
of  the  component by  the allowable
percentage  determined  by  the
appropriate  cost  allocation  method.
The  resulting  amount  is  then
multiplied  by  75 percent  (55  percent
after  September 30,  1984)  for a
non-I&A  component  and  85  percent
(75 percent  after September 30,  1984)
for an I&A component.   Funding  of up
to  85  percent  for  I&A  technology
is  limited  to project  portions
specifically  identified  as I&A  unit
processes,  I&A  unit operations, or
other  components  uniquely  necessary
for  proper functioning  of the I&A
components.

Revenues generated by multiple purpose
projects   ordinarily  should  not
be deducted  from costs  in either cost-
effectiveness   comparisons  with
single purpose  projects  or in  cost
allocations.   However,  some projects
involving  revenues  from cogeneration
of energy  in  the  form of steam or
methane gas  may  qualify for a limited
exception.   If an  energy cogeneration
project involves the  sale  of  energy
rather than  its  reuse  within the
plant,  then anticipated  revenues may
be used in cost  calculations up  to a
maximum of  the  net value of energy
(revenue less cost of plant reuse)
that  reasonably  could   have been
reused  within the wastewater pollution
control components of the proposed
project.
7.2
RESERVE
CAPACITY
                 Although  you  may
                 propose  reserve
                 treatment   works
capacity beyond  that allowable for
grant  assistance,  it  is  not grant
fundable.   After  September  30,  1984,
grant assistance  will  be limited to
the estimated  cost  for  the  treatment
works  capacity  required  at  the
time of  grant  award.   Additionally,
grant  assistance   awarded  after
September 30,  1990,  shall be  limited
                                     56

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to needs  existing on September  30,
1990.   You should describe the project
to  serve existing  needs  and  the
project with reserve  capacity  at  the
same  level  of  detail.    Special
emphasis  should  be  placed  on  the
environmental  (particularly indirect)
and financial  impacts of the proposed
reserve capacity project.

If reserve capacity is proposed beyond
that  allowable  for  grant  assistance
(Section 5.5.2),  it  is  necessary to
calculate   a  proportioning   factor
(as a  percentage) to be applied to
other  allowable  project  costs  (e.g.,
architect/engineer   (A/E)  services
during building,  acquisition  of
eligible  land,  etc.).  The propor-
tioning factor,  at the time of grant
application,  is  based on the  ratio
of the estimated building costs, i.e.,
construction  contractor  costs  for
building  the  project.  Compute  the
proportioning  factor  as  the  ratio of
the allowable  building  costs  for  the
grant   allowable  capacity  divided by
the building costs for  the proposed
larger  project.   Apply this  factor
to  the  other  allowable  project  cost
and add the  appropriate  allowance
(Section 13.5) to determine the dollar
amount of  grant assistance.

When estimating the building costs for
both  the   allowable  and  reserve
capacity projects, be consistent and,
where  appropriate,  use recent  cost
curves  published  by EPA  (such  as
MCD-10,  MCD-53,  FRD-11,  FRD-21,
FRD-22;  see  Appendix  B for names  and
availability of these  publications).

Although  grant  assistance may  only
fund  a  portion of  the  project,
the review and approval  process  will
be  the  same as  for  a fully  funded
project.  If the environmental impacts
of  any  portion  of  the project  are
unacceptable,  grant  assistance  will
not be awarded to the project.

When you receive the grant offer,  it
may include special grant conditions
to protect  the Federal  government from
any claim  for  any of the costs  of
construction due to reserve capacity.
In addition,  it should be noted that
the user charge  system  applies to the
entire  project  including the  part
providing the reserve capacity.
7.3
DEMONSTRATION
OF FINANCIAL
CAPABILITY
                 The Clean Water Act
                 (CWA)  provides  that
                 no  grant shall  be
                 awarded  for  the
construction  of  a  publicly  owned
treatment  works  unless  the applicant
has demonstrated satisfactorily  that
it  has  the  legal, institutional,
managerial,  and  financial capability
to  ensure  adequate  construction  and
O&M (including equipment  replacement)
of  the proposed  treatment  system.
Requirements  for  demonstrating
financial  and  management capability
are contained  in  the construction
grant  regulations.    The Agency's
Policy on  Financial and Management
Capability (Appendix K)  explains these
requirements.

Guidance  has  been  developed  to
help  States  implement  the  policy
(Appendix  K).  This  guidance  contains
a  Reviewer's  Checklist,  Analysis for
Correcting  High Cost  Projects, and
Suggested  Screening System Elements.

To  assist  grant  applicants  in
demonstrating their  financial
capability,  EPA   has  prepared  a
"Financial Capability Guidebook" which
is available from your State agency or
EPA Regional Office.   This guidebook
also provides  a method to  evaluate the
community's  financial condition.   The
                                      57

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guidebook  is  structured around two
basic information sheets:   the  Waste-
water Facilities Financial Information
Sheet attached  to  the policy and a
Supplemental  Information Sheet.  The
Wastewater  Facilities Financial
Information Sheet provides an optional
format that can  be  used to answer the
five  questions contained  in  the
policy.  Your State  may have developed
a  different   format  for  answering
these questions.   The Supplemental
Information  Sheet  is  provided  to
assist in  evaluating the community's
financial  condition.   Although it is
not  an  EPA requirement to complete
this information sheet,  your community
may  find   it  useful  in evaluating
whether  the community  could  success-
fully finance  the  system or  should
investigate  other   appropriate
alternatives  with  potentially  lower
costs.

The   guidebook  contains   several
worksheets that are  used in completing
the  information sheets.   Specific
instructions  are  provided for each
worksheet  as  well as suggestions
or  examples   of how  the  necessary
information  may be obtained.   To
complete  the  worksheets,  you  may
need  assistance from   the municipal
financial  official  or  the engineering
consultant.    The  results  of the
analysis  will  help local  municipal
officials  reach a  decision  on the
community's capability  to finance and
manage the project  and  also  provide
local  taxpayers  with sufficient
information to  allow them  to  express
their  opinions based  upon factual
information.

The  facilities  plan must demonstrate
that  the   selected alternative  is
impl ementable  from legal, institu-
tional, financial, and management
standpoints.  Therefore, the financial
capability  analysis  should  be
completed,  if possible, during the
planning  stages  of  a  project and
updated  prior to applying for a grant.
The  financial  capability analysis
should  be  kept  up  to date since
several  years may have elapsed between
the initial  planning  of a project and
the award of grant assistance.  During
this time the financial  condition of  a
community may have changed.
7.3.1
ASSURING LOW
COST PROJECTS
FOR SMALLER
COMMUNITIES
                 Per capita costs  for
                 conventional  waste-
                 water projects  are
                 frequently higher in
                 smaller  communities
(flows  less than 1 million gallons  per
day)  partly because of the  size  and
distribution  of  population.    In
addition, smaller  communities
generally  have fewer  financial  and
management resources  from which  to
draw.   These  circumstances make  it
critical that  low cost (especially
low  O&M  cost)  treatment systems  be
selected.   Treatment systems with  low
costs for operation, maintenance,  and
equipment  replacement  are  especially
important  for  smaller  communities
because these  costs  greatly influence
the total  annual  costs your community
and  its  residents  will   pay  for
wastewater  facilities.   Small sewered
communities must at least  consider
land  treatment  and  other  low-cost
alternatives,  such as  facultative
ponds,  trickling  filters,  and
oxidation  ditches.   Those smaller
communities  that  are  unsewered must
consider onsite systems.

In order to help  ensure selection  of
an  appropriate  wastewater  treatment
option, the Financial  and  Management
Capability  Policy requires  delegated
States  to  develop  and  implement  a
screening  procedure.   The  purpose  of
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this  procedure is  to  help identify
potential  problem  projects at an early
stage  when they  can  be more  easily
resolved.    To  assist  States in  this
effort, EPA has  developed  suggested
screening  system  elements as part  of
the  guidance  for  implementing the
policy (Appendix K).  If your project
has been  identified by  the  screening
procedure  as  a  possible  problem
project, your State  will work with you
to take a closer look  at your project
so that any problems can  be analyzed
and resolved.

If  the project  you  are  planning
exceeds your community's financial
capability, it  may be  possible  to
reduce its size.   One way  is  to
take  a hard look at  the population
projections  and  flow  estimates.    Be
realistic  about  estimates of  future
growth and wastewater treatment
needs.  Also re-evaluate the extent  of
sewering.   A  water  conservation
program may  reduce wastewater flow and
the size  of the  proposed treatment
plant.   It  may also allow  continued
use of onsite  systems.   Another  idea
is  to construct  the  facilities  in
stages to  spread the investment  over a
longer time  period.

Often  there are ways to  simplify the
design of  the facilities  to  cut costs
and make   operation  easier.   Make
sure the  layout of the  plant  is  as
efficient  as  possible  and  eliminate
all  nonessential  features.   Perhaps
laboratory or other facilities,  even
plant  operators,  could  be  shared  with
a neighboring town.

Sometimes  the cost  to  finance   a
project can be  reduced.   Be certain
that all  available funding for the
project  has been  obtained.   Some
Federal  and State  agencies  have low
interest  loans.    To reduce  interest
rates, some States have bond banks or
will  guarantee  local  bonds.   In some
cases,  extending  the bond life  can
reduce annual  costs.

If  these  measures  do not  help  to
sufficiently reduce costs, additional
alternatives may need  to be evaluated.
A  combination  of  approaches may be
needed to  solve different wastewater
problems within the community.

Some  communities  have avoided  sewers
altogether  by   using  onsite  systems.
Properly installed  and maintained,
onsite  systems  will  operate satis-
factorily for  20 years  or more  where
site  conditions  are suitable.    A
management district can be  set  up to
oversee O&M.   Several  different  types
of onsite systems  have been developed
to operate in  situations not suitable
for conventional  septic tank  systems
such as steep  slopes,  rocky, or  tight
soils and high  groundwater.

Alternative sewers  should be carefully
considered.     Alternative   sewers  are
smaller in  size and  are  installed  at
shallow depths.   Since they have  no
manholes and fewer joints,  much  less
rain  and groundwater can get  into
alternative sewers  so  treatment  plants
can be smaller.

Where conditions are  not  suitable  for
onsite systems, cluster systems  can be
used.   The  most  common  form uses
alternative  sewers  to  transport  septic
tank effluent from  several  houses to a
common  drain  field.   Treatment  can
also  be  provided by a  pond,  sand
filter,  mound,  or land application.

It  may also  be  useful   for you  to
conduct  an operability assessment.   An
operability    assessment   evaluates
operation,  maintenance, and  replace-
ment  requirements of the treatment
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system  in  the  context  of  the
community's   institutional   structure
and  its  financial   and  management
capabilities.  Such an evaluation  can
point to the need  for  simplifying  the
proposed  technology, improving  the
community's  management capability,
or  both.    Useful  information  for
conducting  such  an evaluation  can  be
found  in  "Comprehensive Diagnostic
Evaluation  and  Selected Management
Issues"  (EPA 430/9-82-003).

7.4
CAPITAL           The  project  for
FINANCING PLAN    which you  request
                 grant assistance  may
not be  the  only project addressed  in
your  facilities plan (e.g.,  staged
construction of  a  larger project that
will  satisfy  future needs).  Plant
expansion,  other projects  in your
jurisdiction,  other facilities  plans,
or  other non-Federally funded  waste-
water treatment projects may represent
future  financial  obligations to  be
borne by your  system  users.   For this
reason,  you  are  encouraged to prepare
a capital  financing plan as  a part of
your facilities  plan  which recognizes
the  cost  relationship between your
proposed project and  future wastewater
projects.   The capital financing  plan
should contain:
                        the  future
                           treatment
  o  A projection  of
requirements  for  waste  treatment
services  within your jurisdiction  for
a period  up to 10 years;

  o  A projection  of the  nature,
extent,  timing  and costs of  future
expansion  and   reconstruction  of
treatment  works  which will   be
necessary  to  satisfy  your  future
requirements  for  waste  treatment
services;  and
  o  The  specific manner you intend to
use  to  finance  the  future expansion
and reconstruction.
                                         7.5
                                         ENVIRONMENTAL     Carefully  evaluate
                                         EVALUATION        the  environmental
                                                          impacts of  principal
                                         alternatives   as  described   in
                                         Section  3.2.  Evaluate the adverse and
                                         beneficial,  direct   and  indirect,
                                         short-term and long-term, monetary and
                                         nonmonetary impacts on the natural  and
                                         human environment.   Identify measures
                                         to mitigate  adverse or unavoidable
                                         impacts,  and consider the irreversible
                                         and  irretrievable  commitments   of
                                         resources  associated  with  each
                                         principal alternative.
                                         7.6
                                         EVALUATION OF
                                         RELIABILITY
                 Evaluate   each
                 alternative  for  its
                 reliability,  i.e.,
ability  to  meet  and maintain effluent
limitations.   The selected  plan must
be able to  consistently meet  this
requirement  throughout  the  planning
period.
                                         7.7
                                         EVALUATION OF
                                         ENERGY
                                         REQUIREMENTS
                 Include  an analysis
                 of energy  require-
                 ments  for  each
                 alternative  system
considered  in  your  facilities  plan.
The  selected plan  should reduce
consumption  or  increase  recovery  of
energy where  cost-effective.   Energy
reduction  or  recovery is one  of  the
important  aspects of  I&A technology
and your  energy analysis  should  be
integrated  into  your  consideration  of
I&A technology.    Where  State energy
plans  exist,  the  analysis should also
consider  the  recommendations of these
plans.

7.8
EVALUATION OF     Evaluate   alterna-
IMPLEMENTABILITY  tives  for  their
                 implementability
taking into  account  legal,   institu-
ional   and  financial  constraints.
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Ensure that all jurisdictions find the
selected  plan acceptable  and equitable
(Section  8.5).    Pay  particular
attention  to  financial management
provisions   of  intermunicipal
service agreements.
7.9
EVALUATION OF
RECREATIONAL
OPPORTUNITIES
                 Include  in  your
                 facilities  plan
                 an  analysi s  and
                 description   of
potential opportunities  for recreation
and  open  space.   Evaluate the
recreational potential of the selected
treatment  plant  site  and  collection
system.   You  should  base the analysis
on existing data  or  evaluation of the
sites.   The  analysis need not require
extensive  new  data collection  or
surveys  to determine suitability.  The
level  of detail  needed to  produce a
good recreational  use   analysis  in a
facilities plan depends upon the size
of  the  community,  the  facility,  and
the suitability of the chosen site for
recreation.

Show you've  considered  the recreation
elements of  approved  Water  Quality
Management  (WQM)  plans.   You should
also  coordinate  with  State  and
local  recreation programs.  Additional
information may be  found in the State
Comprehensive  Outdoor Recreation Plan
or  from the National Park  Service of
the U.S. Department of the Interior.
Potential  recreation  benefits
associated  with  wastewater   projects
include:

  o  Use of  interceptor rights-of-way
for running or hiking paths, bicycling
or equestrian trails;

  o  Use of  roadway  to  facilities for
access  to  waterways   for  canoeing,
boating, fishing, or swimming;
  o  Provision  for  access  to natural
and  historic  sites  for  camping,
photography, and appreciation;

  o  Use  of project sites  for sports
such  as  target  shooting  or  field
sports;

  o  Use  of facilities or  sites  for
educational  or  information  purposes;
and

  o  Recreational  opportunities  at
offsite  locations  such as  application
of effluent or  sludge to  improve other
recreational areas.

Multipurpose  projects that  include
recreation  may  also  be  considered
by  coupling   facilities  planning
activities  with  recreation  planning.
The  allowable  costs  of multipurpose
projects  are  limited to the  cost
effective,  single  purpose  pollution
control  project; however, inclusion of
recreational opportunities  in  the plan
can effectively enhance public support
while not significantly increasing the
local share of  project costs.
                                          7.10
                                          COMPARISON OF
                                          ALTERNATIVES
                 Summarize   and
                 compare  the costs,
                 primary   energy
requirements}  environmental   impacts,
reliability,  implementability  and
other significant  issues of  the
principal  alternatives.   Figure 5 is a
sample of  a tabular  comparison  that
may  be  used effectively  for public
presentations.    Where  quantification
of these  issues is not  possible, a
brief description will  serve.   The
visual display should allow comparison
of alternatives  at  a  glance  so it can
be  used  at  public  meetings.   One
alternative displayed  should  be  the
"no action" alternative.
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           Type of impact                     	Alternatives	
                                             ?I               1213               IT

    Monetary cost, dollars
        Capital cost

        Annual O&M cost

        Total present worth

        Cost per household unit

    Environmental impact
        Cultural Resources

        Floodplains and wetlands

        Agricultural lands

        Coastal zones

        Wild and scenic rivers                                   SAMPLE  FORMAT

        Fish and wildlife

        Endangered species

        Air quality

        Water  quality and uses

        Noise, odor, aesthetics

        Land use

        Energy requirements

        Recreational opportunity

     Reliability

     Implementabil ity
Legend:
    ++  significant beneficial  impact
     +  minimal  beneficial  impact
     o  no impact
     -  minimal  adverse impact
    --  significant adverse impact
                       Figure 5  Comparison of Principal Alternatives
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You should conduct  a  midcourse review
with your reviewing agency to ensure
that  all  alternatives  have  been
adequately  considered,  that  the
evaluation  of  the  environmental
impacts  is adequate and  acceptable and
that applicable Federal, State, local,
and public participation  requirements
have been met.
7.11
VIEWS OF  THE
PUBLIC AND
CONCERNED
INTERESTS
(Section  3.1).
                 A  public  participa-
                 tion  program  should
                 be  an integral  part
                 of  the  facilities
                 planning   process
                 A  section or  chapter
of the facilities plan  should describe
and  summarize your  public  participa-
tion  program   including   typical
comments   and  responses  at  public
meetings.   Correspondence submitted by
individuals,   groups,  or  agencies
should be  appended to the plan.   Where
significant issues surface at meetings
or in correspondence,  the  plan  should
indicate the appropriate response or
action  taken,  justify  controversial
findings,  or be revised.

EPA  recommends  holding  a  public
meeting before  the  facilities plan is
formally adopted and submitted to your
reviewing   agency.    The  preferred
plan and  alternatives  should  be
presented  at the meeting.   After the
meeting, local  officials may  formally
adopt the  facilities plan.  You  should
include a  final responsiveness summary
and  responses  to  significant  comments
in the final facilities plan.

In addition to the comments  from the
public and  interest groups,  you must
obtain  comments  concerning  your
proposed project  from  the designated
WQM  agency (Section  4.0).    These
comments can be obtained through your
State's  intergovernmental coordination
procedures  (Section 2.3).
                                          Finally,  at  the time  of  grant
                                          application  it  is  required that
                                          your  State  agency  certify  to EPA
                                          that there  has  been  adequate  public
                                          participation based on State and local
                                          statutes  during the  development of
                                          your project.   Ensure  that you are
                                          familiar with  and  have satisfied  this
                                          requirement.
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            CHAPTER  8

   SELECTED PLAN, DESCRIPTION, AND
     IMPLEMENTATION ARRANGEMENTS
8.0
JUSTIFICATION     In  a brief narrative
AND DESCRIPTION   you should summarize
OF SELECTED PLAN  why the  proposed
                 plan  was selected.
Demonstrate that  the  plan is cost-
effective  and  environmentally  sound.
Describe the proposed treatment  works
and  the  complete  waste  treatment
system of which  it  is  a  part.
Describe   all  elements   including
service areas,  collection  sewers,
onsite systems,  interceptors,  treat-
ment  works and  ultimate  reuse or
disposal  of  effluent,  sludge and
septage.   Use  maps to  show locations
of  major  components,  existing and
proposed,  and  locations  of  any
individual systems  proposed  for
grant assistance.   The plan should
clearly identify  project segments,
implementing authority   and  include  a
project  schedule.
8.1
DESIGN  OF
SELECTED PLAN
                 Include  in  your
                 facilities  plan
                 relevant   desi gn
parameters to  demonstrate that  all
major components  of the wastewater
treatment and sludge management system
have  been  included,  that  the cost
estimate  is adequate and reasonable,
and  that   the  facilities  can meet
effluent  limitations.   The level  of
detail  describing the relevant design
parameters  varies  from  project  to
project  and depends on the  project's
complexity and  requirements of  the
reviewing agency.   For  example,
standard  package treatment plants  may
not require the  same degree of detail
as a pure oxygen system with phosphate
                                         removal  and  sludge  incineration.
                                         Discuss the  appropriate level with
                                         your project reviewer.

                                         Relevant  design  parameters   should
                                         include a simple  tabulation (one  or
                                         two pages) of information such as:

                                           o  A  description  of  the  major
                                         features;

                                           o  Unit  processes  and   sizes
                                              including lift stations;

                                           o  A  schematic  flow  diagram  and
                                              hydraulic profile;

                                           o  Provisions for disinfection;

                                           o  Sewer lengths  and sizes;

                                           o  Proposed  design  criteria
                                         including  detention times,  overflow
                                         rates,  process and  equipment loadings
                                         such as air  capacity, energy require-
                                         ments, etc.,  removal  efficiencies,
                                         initial  design  flow,   and reserve
                                         capacity; and

                                           o  Schedule for completion of design
                                         and construction.
8.2
COST ESTIMATES
FOR SELECTED
PLAN
                 Your  facilities plan
                 (Section  7.3)   is
                 to  include  cost
                 estimates   for
design,  building,  operation and
maintenance  (O&M)  of the selected
plan.   Additionally,  it  must  include
an estimate of total  project costs  and
average annual   charges  to  customers
(see Appendix K  for  sample  format).
You should also include a statement  on
the availability and estimated  costs
of sites for the selected plan.
                                         8.3
                                         ENERGY
                                         REQUIREMENTS OF
                                         SELECTED PLAN
                 Describe features of
                 the   selected
                 plan  that  conserve,
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I recover or reduce  energy consumption.
 For systems that claim innovation  on
 the basis of energy reduction, the
 plan   should  contain  a  detailed
 energy analysis.
 8.4
 ENVIRONMENTAL
 IMPACTS  OF
 SELECTED PLAN
                 The facilities plan
                 discusses  how  the
                 treatment  works
                 will  comply with
applicable Federal,  State and, local
environmental laws and regulations.

Unless your  project has  been  granted a
Categorical  Exclusion (Section 3.2.1),
the facilities  plan  will  describe the
existing  environment  and  relevant
direct  and  indirect impacts  of  the
selected plan.  Emphasize:

  o  The  selected plan's  unavoidable
adverse  impacts,   especially  on
environmentally sensitive   areas
including  archaeological  and historic
sites, freshwater  and tidal  wetlands,
floodplains,  agricultural  land, steep
slopes,  and  other areas;

  o  The relationship  between  local
short-term  uses  of the  environment
and the  maintenance and  enhancement of
long-term  environmental  productivity;

  o  Irreversible and  irretrievable
commitments  of resources;  and

  o  Mitigation of unavoidable adverse
impacts.

The  description  emphasizes  indirect
impacts  on  environmentally sensitive
areas, present  and future actions  to
protect  these areas, and  assures that
interceptors conform with  approved
Water  Quality Management  (WQM)  plans
and EPA's  objectives  for minimizing
indirect   impacts   on environmentally
sensitive  areas.
 8.5
 ARRANGEMENTS FOR  The  facilities plan
 IMPLEMENTATION    demonstrates   that
                 the   implementing
 authority has  the necessary  legal
 financial,   institutional   and
 managerial  resources to  ensure the
 building, O&M over  the useful life of
 the project.  Where responsibility for
 implementation  rests  with  more than
 one  agency,  executed  intermunicipal
 service  agreements (Section  8.5.1)
 between   agencies  are  required  as
 part  of  the  application  for  grant
 assistance.

 To  describe  the  arrangements  for
 implementation  adequately,   the  plan
 should:

  o  Identify   each  agency,
 jurisdiction  and its responsibility;

  o  Demonstrate  that  each  jurisdic-
 tion  has the ability and  authority
 under State  law  (or  reasonable
 expectation  of  obtaining  such
 authority)  to  finance,  design,
 construct, acquire  access to, operate
 and maintain those facilities  within
 its jurisdiction;

  o  Identify referendums  or  public
 elections necessary to implement  the
 plan;

  o  Include adopted  resolutions  of
 plan  acceptance  and proposed  or
 executed  intermunicipal  service
 agreements; and

  o  Identify  jurisdictions  that
 oppose or have failed  to approve the
 plan and   describe  steps  necessary  to
reach  agreement.

The facilities  plan should  include  a
schedule of  specific  actions  to
 implement  the  plan and  to  meet
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its.objectives.   The  dates  in the
schedule,  if  approved  by  your
reviewing agency,  will be included
in  your grant  agreement  and must
correspond  to  compliance  dates
specified  in  your National  Pollutant
Discharge  Elimination  System  (NPDES)
permits  (if  applicable).   Resolve
differences  that  would  result  in
failure to  meet  the compliance
schedule,  including,  if necessary, a
formal  request  through  the  reviewing
agency  for extension of compliance
dates.

Some capital expenditures could be  met
through  creative  financing techniques
using special  improvement  districts,
industry  assistance  to   local
governments,  or  intergovernmental
agreements.    The  institutional
arrangements  undertaken to finance
the  project,   embodied  within
intermunicipal service agreements  and
described in  your  facilities  plan,
will ensure that your  community  has
the necessary resources available to
satisfy  your financial  responsibility.

If considering the financing technique
of  "privatization"  (where,  for
example, a municipality enters  into a
sale/leaseback of its  Federally funded
wastewater treatment facility with
a  private  sector  firm  or limited
partnership  enabling  the  private
sector   to   receive   depreciation
tax benefits  and  affording the
municipality  the  opportunity to
purchase the  facility at the  end of
the lease period), you should be aware
that Office  of Management  and  Budget
Circular No.  A-102 states,  in effect,
that  partially   or  fully Federally
financed treatment  works cannot be
sold or leased without permission of
the grantor  agency where  leasing is
treated  as a  sale  for tax purposes.
This approval, which would be given if
the property  were no longer needed
for the  original  purpose, would be
contingent  on  the  grantee reimbursing
the Federal  government the percent
of the  proceeds  the  Federal  grant
represented of the original costs.

Your  description of the financial  and
institutional   arrangements  provides
the project reviewer  with  a  starting
point  in  an overall  financial
assessment.  A schedule for marketing
bonds and  developing a user charge
system   can   be   developed  during
facilities  planning.    This  schedule
may be  adjusted  as  necessary  during
subsequent  design  and building  of  the
project.
8.5.1
INTERMUNICIPAL
SERVICE
AGREEMENTS
                 At  the  time  of
                 Step   3  grant
                 a p.p 1 i c at i on  or
                 before initiation of
procurement  action for building the
project  for  a Step  2+3  grant, you
must  submit  executed intermunicipal
service  agreements  unless  waived
by  the  Regional  Administrator or
delegated State.   At a  minimum, an
intermunicipal   service   agreement
must:

  o  Include  the  basis  upon   which
costs  are allocated  between  agencies
(e.g.,  value of existing   facilities,
value  of land,  periodic  capital
requirements  for expansion, costs for
O&M, and  administration);

  o  Include  the  formula  by   which
costs  are allocated   (e.g., quantity,
strength  or rate  of  flow,  or
combinations of these); and

  o  Describe  the manner  in   which
the cost  allocation system will be
administered   (e.g.,   cost  accounting
records,  management systems, etc.).
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In  addition   to  these  minimum
requirements you must include adequate
financial  arrangements and incorporate
appropriate  municipal  legislative
enactments to  enforce the require-
ments  for a  user  charge  system,
enactment  of  a sewer use ordinance
and, where appropriate, implementation
of sewer  system rehabilitation.

The  requirements  for intermunicipal
service  agreements  may  be  waived
by  the  Regional  Administrator
or  delegated  State if  you  can
demonstrate:
  o  That such an agreement is already
in place; or

  o  Evidence  of  historic  service
relationships  for  water  supply,
wastewater,  or  other  services between
the  affected  agencies  regardless  of
the  existence  of formal  agreements;
and

  o  That  the financial strength  of
the  supplier  agency is adequate  to
continue  the project,  even if  one  of
the  proposed customer agencies  fails
to participate.
8.5.2
CIVIL RIGHTS
COMPLIANCE
                 You are required  to
                 comply  with  the
                 Civil  Rights  Act  of
1964  and  EPA's  implementing  regula-
tions  (40 CFR Part  7).   These
requirements forbid  discrimination  on
the ground  of race,  color, or national
origin.   Where minority areas are
included in the facilities  planning
area,  show  in the plan that such areas
will  be served or excluded from
service  only  for   cost-effectiveness
reasons.   Include  in your facilities
plan   a statement  that  these
requirements have been met.
8.5.3
OPERATION AND     The facilities  plan
MAINTENANCE       should  contain  a
REQUIREMENTS      brief but  accurate
                 summary  of  the
personnel, procedures, and budget that
are  necessary  to operate,  maintain,
and  manage the  proposed treatment
works.   While  a  more detailed  draft
plan of operation (Section 12.4) which
includes  O&M  requirements  must
accompany your  grant application,
the  facilities  plan need  only  to
summarize  those   elements  which
impact  costs  and  management
considerations.

If an existing plant is to be upgraded
or  expanded,  existing  staffing,  O&M
policies and budget  should be reviewed
and updated  as necessary  to  assure  a
sound O&M program.  It should be noted
that O&M costs  also  include funds  for
the replacement of  equipment required
during the useful  life or design life,
whichever is  longer, of  the project.
In addition,  your O&M program  should
include routine  sewer inspection  and
maintenance.

Where  a  completely  new treatment
system  will  be constructed, a more
detailed  O&M discussion  should  be
included in the facilities plan.

A recommended list of items to include
in your O&M discussion is:

  o  Annual  O&M  budget  (fixed  and
variable costs);

  o  Staffing   (number   and
certifications);

  o  Training;

  o  Laboratory requirements;

  o  Maintenance requirements;
                                     67

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  o  Special  operating requirements
including  cold  climate restrictions,
operation  under  emergency  conditions
such  as power  outage,  high  flow
(storm)  event,  chlorine  leakage,
etc.;  and

  o  Residuals  disposal   (sludge,
incinerator ash,  etc.).

Although  O&M   costs  (except  for
start-up costs)  are  not  allowable
for grant  assistance, they must be
included in  your   cost-effectiveness
analysis and will  be the basis for
establishing user charges.
8.5.4
PRETREATMENT
PROGRAM
                 Where your treatment
                 facilities  serve
                 or  will   serve
nonresidential  customers  (generally
industrial),  you may decide or be
required to  develop a pretreatment
program  in  accordance  with NPDES
permit  program  requirements.
Additional  information on pretreatment
is included  in an  overview of the
pretreatment program (Appendix B).

A pretreatment  program is intended to
control  pollutants from nonresidential
sources.   This  may include wastes
from  publicly  or  privately owned
municipal  water  supply facilities.
The  objectives  of  a  pretreatment
program are:

  o  To prevent the  introduction  into
the  treatment plant  of pollutants
that  will   interfere  with  plant
operation or  disposal  or  use of
municipal sludge;

  o  To prevent the  introduction  into
the treatment plant of pollutants  that
will  pass  through the  plant  into
receiving  waters  or  that  will be
otherwise harmful; and
  o  To  protect  plant workers'  health
and safety.

When  a  pretreatment  program  is
necessary, your NPDES  discharge permit
will  contain a  schedule  for  program
development.    The  facilities  plan
should  also  include  a discussion  and
schedule  of  actions  to  implement  the
program.   A complete  and approvable
pretreatment  program  should  include
the following:

  o  A  survey that identifies  system
user by  type and location  and  the
character and  volume of pollutants
discharged (industrial waste survey);

  o  An   evaluation  of  the  legal
authority for  control and enforcement
including  adequacy  of  enabling
legislation  and  selection of  mecha-
nisms to  be used (e.g.,  ordinances,
codes);
  o  A  determination of technical  and
administrative procedures  and
information  needed to  support develop-
ment of  an  enforcement  mechanism  to
ensure  compliance with  NPDES  permit
conditions;

  o  An  evaluation to ensure adequate
resources   (funds,   equipment,   and
personnel) are  available to carry out
the pretreatment program;
  o  The  design  of  a  compliance
monitoring and enforcement program;

  o  A  preliminary determination of
monitoring  equipment   required  at
the treatment facilities;

  o  A  determination  of tolerance  of
the  treatment  facilities  to toxic
pollutants;  and
  o  A  preliminary determination of
the  municipal   facilities'   need
for  monitoring  or  analysis  of
nonresidential wastes.
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Certain costs of a municipal pretreat-
ment  program  are allowable under a
grant awarded  for  the construction of
wastewater   treatment  facilities.
The  development  of  an  approvable
municipal  pretreatment  program (40 CFR
403),  the  purchase  of  monitoring
equipment,  and  the  construction
of  facilities to  be used  by the
municipality   in  the  pretreatment
program would   be  allowable costs as
defined in Appendix A (40 CFR Part 35,
Subpart  I).    The specific  cost
elements of  your pretreatment
program should  be reviewed  with  your
review  agency to  determine actual
eligibility.

8.6
LAND ACQUISITION
8.6.1
GENERAL
ACQUISITION
CONSIDERATIONS
                As  an   element
                of  your   cost-
                effectiveness
                analysis,   the
facilities plan will have addressed:
  o  The most suitable land for the
project (e.g.,  size, soil  conditions,
slope,  location);

  o  The most appropriate method to
secure  rights in the  land (fee simple,
easement,  ownership  of some  rights,
lease,  certain  rights for  a period of
time, Section 8.6.2).

Acquisition  of  land,   including
easements,  should be  initiated at
the  earliest possible time.   With
reviewing  agency  approval,  land
acquisition may be initiated  prior to
Step 3   award.  If acquisition  occurs
without reviewing agency approval,
subsequent  claims  may  be  disallowed.
In all   cases,  the reviewing agency
must   determine  that  applicable
provisions  of EPA's  regulations
 (40  CFR  Part  4)  implementing  the
 Uniform Relocation  and  Real  Property
 Acquisition  Policies Act have been
 satisfied.

 Your  project will  be  evaluated  to
 determine  if you have or will have
 sufficient  rights to the project  land
 and to ensure undisturbed building  and
 operation  of  the  project  for  its
 useful  life.   You should include  a
 cost  estimate  and  proposed  schedule
 for securing property rights.

 For  land  to be  eligible  for grant
 assistance,  it  must be an integral
 part  of the  treatment  process  or
 land  that  will  be  used for  the
 ultimate  disposal  of   residuals
 (e.g., sludge).   All land  should  be
 acquired,  option  taken   or   formal
 condemnation  proceedings begun  before
 initiating building of the project.

 You should use  professional staff  to
 appraise,  negotiate  or  condemn  land.
 Consider contracting with State  or
 Federal  land acquisition agencies  if
you do  not  have these  capabilities.
 Use "The Uniform Appraisal  Standards
 for Federal  Land Acquisition" (GPO
052-059-000-20).  See Appendix G  for
 supplemental information.

 You  should  obtain your  reviewing
 agency's  approval  that  the  proposed
 purchase price (based  on an appraisal,
your  record of negotiations  or
condemnation  proceedings)   represents
just  compensation for  the  property.
Costs  in  excess of  just  compensa-
tion  are  unallowable  for  grant
assistance.

Early  land  acquisition with  prior
reviewing   agency approval   is
considered  a  preaward cost  and   is
eligible  for  grant  participation
in  a  future  grant  (Sections 13.2
                                     69

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and 15.4.1)  providing  the  land  1s  an
Integral part of the treatment process
or  will  be  used  for  the  ultimate
disposal of residuals (e.g., sludge).

The reviewing agency should contract
appraisal  review  if it  does not have
qualified  in-house   staff.   For
eligible  land,  you  should not
negotiate  with the  landowner  before
preparing  a written  statement of just
compensation  describing  the  basis
upon which the offer  price  has been
established and prior to receiving the
reviewing agency's comments on the
price  to be offered.   Generally,  the
offer  price  should  be  consistent
with the  amount  established  as just
compensation.   Some modest increase
above  the  appraised  value may be paid
to  avoid  the cost, time  and public
relations  problems  involved   with
condemnation  if  approved  by   your
reviewing agency.

Acquisitions  of  existing  treatment
works are generally ineligible  for
grant  funding  because they usually  do
not provide   new  pollution  control
benefits  (i.e.,   pollution  control
services that  are  additional to  those
being  provided before  grant  award).
Conversely, the upgrade, expansion,  or
rehabilitation  of  a  project   that
includes  an  acquisition does provide
such benefits and, thus the upgrade,
expansion  or  rehabilitation  portion
may be   eligible  although the
acquisition  portion  is  not.   An
example of  an eligible acquisition
would  be a municipality's  purchase  of
demonstrated  excess  treatment  works
capacity that was built without
Federal   funds  and  provides new
pollution control  benefits.
8.6.2
"NO COST
ARRANGEMENTS"
Acquisition  of land
for  some  purposes
such  as  sludge  or
effluent application  may  not  be
necessary;  only  the  right  to  use the
land  for  this  purpose  needs to  be
secured.   This  can  be done  under  no
cost  arrangements  with  a group  of
farmers  so  that the  agricultural
benefits  from the effluent  or sludge
eliminate  the  need for  rental  or
lease  fees.    Carefully scheduled
intermittent  sludge  and  effluent
application   arrangements   of  this
nature can provide for  disposal, but
the value  of the land is not allowable
for  grant  participation  because  the
community  does  not  actually  acquire
any interest in the property itself.

8.6.3
ACQUISITION       Certain land  costs
METHOD           such   as   lease,
                 easement   or  fee
simple  purchase  are  allowable  for
grant  participation.    The  method
of  acquisition  depends on  cost
effectiveness,  public  acceptability,
feasibility and local circumstances.

A  combination of  public  and  private
land  ownership  may be the  best
solution,  i.e.,  the  land required for
preapplication treatment  and  seasonal
storage might be publicly  owned, while
irrigated  land could be leased from a
farmer.

You  may  use your own property
management standards and  procedures
for  land  that has  been acquired  in
part  or  wholly  with  grant funds
as  long   as  they meet  the  minimum
provisions  of   EPA's  regulations.
The sale or use of  land for  purposes
other  than  those  specified  in the
grant  agreement is governed by EPA
regulations  40 CFR  Part  30.   Record
the government's interest  in the title
to the property.

Your lease or easement should contain
conditions such as:
                                      70

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  o. Limiting  the  purpose to  land
application  of  effluent  or  sludge
management and complementary purposes;

  o  Waiving  the  landowner's right to
restoration  at  the termination  of
the  lease/easement.    (The  Federal
government cannot be responsible for
removing  irrigation  systems, draining
and filling ponds, etc.);

  o  Landowner agreeing to apply  a
specified quantity of the community's
wastewater or sludge to  his land  for a
specified time period;

  o  Providing these conditions for
the useful life of the project; and

  o  Providing for  your  full recovery
of damages in the event  of  premature
lease termination.

A  copy  of  the  proposed leasing
agreement  (contract)   and  other
supporting  materials   should  be
presented in your facilities plan.
8.6.4
ALLOWABLE
COSTS
LAND    Land costs allowable
        for grant assistance
        include:
  o  A reasonable  amount  of  land
including  irregularities  in applica-
tion  patterns,  buffer  areas,  berms,
dikes and similar uses where land i's
an  integral  part  of the  treatment
process  or  used for  the  ultimate
disposal of residuals; for example, to
minimize  the amount  of  land needed,
sludge  should be  applied at  the
minimum  safe  rate  (generally not less
than 5 dry tons per acre  per  year);

  o  Land  required for the composting
of  sludge  including its curing and
temporary  storage (if a  program for
use of the compost has been approved);
  o  A soil absorption system for a
group of  two  or more  homes  provided
that  the  municipality has complete
ownership  and  beneficial  use  of the
land;

  o  Ponds constructed specifically
for  temporary storage  of  treated
wastewater prior to  land  application
to  meet   seasonal   imbalances  between
wastewater  supply  and  application
schedules.   The total  land area of
the  pond  or   cell  constructed  for
combination  treatment and  storage
purposes  is   allowable  for  grant
funding   if the storage   volume is
greater than  the treatment volume.
Otherwise,  the grant  fundable area
will  be determined by the ratio of
the storage volume to the total  volume
of the pond (i.e.,  storage  treatment
volume);

  o  Storage volume is that  portion of
a pond or cell which  retains water
prior to  the  water's  application to
the land;  and

  o  Treatment  volume  is that  portion
of  a  pond or cell  specifically
designed  for  biological  stabilization
of the wastewater.

Unallowable  land   costs   including
existing treatment works are discussed
in  Appendix  A to  40  CFR Part 35
Subpart I  of the regulations.

Revenue  from  the sale  of crops grown
on land purchased or  leased  under the
grant  agreement is  to be used to
offset  the  costs   of O&M with  a
proportionate  reduction in  all   user
charges.
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             CHAPTER 9

     REVIEW OF FACILITIES PLANS
9.0
REVIEW AND
EVALUATION
                 The   timing   of
                 review,   approval,
                 and certification of
facilities  plans will  vary from
State  to  State.  Although  State
certification that  a  facilities  plan
satisfies  all regulatory requirements
is not required until  the  submission
by the State  to  EPA of a  Step  3
grant  application,  you are  strongly
encouraged  to have  your  project
reviewer evaluate your  facilities  plan
before  beginning project design.  This
evaluation  will  help ensure that
all  Federal  and  State statutory
requirements  are satisfied  and  that
the  project to be  designed will
meet  the  prerequisites  for  grant
assistance.  You are reminded that the
environmental review  (Section  9.2.2)
must  be  completed  before  submission
of  any  application.   For  rural
communities of less than  10,000
population,  the   draft  facilities
plan  should be submitted  to  the
Farmers Home Administration (FmHA) for
comments  if they  will be  asked to
participate  in   funding the  project.

In addition to your  reviewing agency's
evaluation,  solicit comments on  your
completed  facilities  plan  from the
appropriate  agencies  including the
Water Quality Management (WQM) agency,
if any.  Agency review procedures and
corresponding determinations  of
facilities  plans  are discussed  in
Section 9.2.
9.1
SUMMARY
CHECKLIST
                 Summarized below are
                 the  major  items
                 considered   during
facilities  planning.
Project Management

  o  Prepare plan of  study;

  o  Conduct preplanning meeting  with
reviewing agency;

  o  Arrange  for local  funds  and
advance  of  grant allowance as
appropriate;

  o  Document needs;

  o  Organize  project  team  and
designate municipal  project manager;

  o  Prepare  public   participation
program;

  o  Coordinate with  WQM agency if
applicable;

Facilities Plan

  o  Documentation of project need;

  o  Population, flow, and loading
forecasts;

  o  Infiltration/inflow analysis, if
applicable;

  o  Use of generic plan for small
communities  if applicable;

  o  Effluent limitations;

  o  Alternatives development:

       -  Land application;
       -  Small alternative wastewater
         systems;
       -  Appropriate technologies for
         small communities;
       -  Centralized treatment;
       -  Upgrading   and   optimal
         operation  of the  existing
         system;
                                      72

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       -   Innovative  and  alternative
          technology;
       -   Sludge use or disposal;
       -   No action;
  o  Financial capability analysis;

  o  Environmental  evaluation of
alternatives;

  o  Alternatives evaluation based on:

       -   Costs and financial impact;
       -   Engineering  feasibility;
       -   Environmental impacts;
       -   Public acceptance;
       -   Implementability;
       -   Energy/water conservation;

  o  Public participation program;

  o  Pretreatment;

  o  Intermunicipal   service
agreements;

Facilities Plan review by

  o  WQM agency;

  o  State agency;

Project Administration:

  o  Filing system;

  o  Accounting records;

  o  Force account.
9.2
STATE AGENCY
REVIEW
                 While  review and
                 certification by the
                 State   of  your
completed  facilities  plan  is not
required  until  submission  of your
application,  you  are encouraged
to request  such a  review prior to
undertaking project design.   In order
for you  to understand  the  actions
required  on the  part of the State and
                                         the  decisions  to  be made  by EPA
                                         concerning  the  review and approval
                                         of  your facilities  plan,  a  brief
                                         description  of these actions  is
                                         provided below.   The facilities
                                         plan, along  with comments from the
                                         appropriate  WQM  agency and interested
                                         State and local agencies, is submitted
                                         and  reviewed  by your State  agency.
                                         The  State  will  contact you for
                                         additional  information,  clarifica-
                                         tion  or suggestions  for  change  if
                                         appropriate.   Upon  resolution  of  any
                                         problems the  State  reviewing  agency
                                         will  be in  a  position  to  certify
                                         that:

                                           o  There  has been adequate  public
                                         participation based  on  State and local
                                         statutes;

                                           o  Within  the  scope of authority
                                         delegated  to  the State by EPA,
                                         the  applicable  Federal  requirements
                                         for facilities planning have been  met
                                         (see  Section 13.1  for  a complete
                                         listing  of application  requirements).
                                         9.2.1
                                         ADVANCED
                                         TREATMENT
                                         REVIEW
                 Where   effluent
                 limitations  require
                 additional treatment
                 beyond  secondary and
where the  incremental  capital  cost
of  the  advanced  treatment   (AT)
facility  is greater  than $3 million,
EPA  headquarters will  conduct  the
review based  in  part  on  information
submitted by the State  or EPA regional
office.   (See Appendix  A  for review of
policy.)

For projects  with  incremental  capital
costs of $3 million or  less, the State
or EPA  regional  office  will  conduct
the  review.   The  review must  be
completed prior to submitting a Step 3
grant  application to  EPA  or  the
delegated State.
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9.2.2
EPA ACTIONS       An application  for
UNDER NEPA        grant   assistance
may  be considered only  after  the
Regional  Administrator  has  completed
the appropriate environmental document
(40 CFR Part 6).   If your project  was
not  issued  a Categorical  Exclusion,
EPA will  apply the  criteria under  the
National  Environmental  Policy  Act
(NEPA) to   determine  whether   an
Environmental  Impact Statement (EIS),
or  more  commonly, a  Finding of  No
Significant  Impact   (FNSI)   should
be  prepared (Section  3.2.1).
decision by  EPA is based  on:
The
  o  Your completed facilities  plan
where  review  of  the  facilities
plan has  not  been delegated to the
State;  or

  o  The   State's   preliminary
environmental  assessment where the
State has  been delegated authority for
facilities plan review;  and

  o  Revised environmental analysis to
reflect  significant  project  changes
made during design; and

  o  Other documentation considered
necessary by EPA to allow a determina-
tion.

If  an  EIS is  not warranted,  EPA
will prepare  and  publish  for  public
comment a  FNSI.   The decision  not to
prepare an EIS will be supported by an
environmental  assessment  incorporated
into or attached to the  FNSI.

If  EPA determines that  significant
adverse   impacts  which cannot  be
satisfactorily  mitigated  will  result
from  your project,  you  will  be
notified  prior to the  publication in
the  Federal Register  of  a  notice of
intent  to prepare  an  EIS.  Notices of
record of  decision may include  the
results  of  the  intergovernmental
coordination review (Section 2.3).

EPA will  prepare the EIS either by
direct use of agency  staff, or  by
contract  with  a consultant.  When the
need for  an EIS  is determined before
completion  of facilities  planning, the
joint  EIS/EID  approach can  be  used
(Section  3.2.13).

The EPA  regulations (40 CFR  Part 6)
outline  detailed  procedures  and
criteria  to  be followed  in  the
process  of EIS  preparation.   Grant
assistance  may not be awarded until a
a final EIS has been  prepared and all
regulatory requirements  have  been
met.  However, action may  continue on
discrete   segments  of  the  project
before the environmental review is
complete,  under  certain  conditions
(Section  13.2).
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          PART II.  DESIGN

            CHAPTER 10

            PREDESIGN
10.0
PREDESIGN         A   predesign
CONFERENCE        conference with your
                 reviewing agency and
your design team after facilities plan
approval,  while  not  required,  is
strongly recommended.   When  Farmers
Home  Administration  (FmHA) or  other
sources are being considered  as
funding  sources  for  the  local
share,  their  representation  at  this
conference  is  recommended  (Appendix
F).   The  predesign  conference  will
provide  an  opportunity  to  review
Federal and supplementary State
administrative,   technical,   and
environmental  requirements for design
as well  as  other grant  application
requirements.    Examples  of  other
requirements  which  might be discussed
include:

  o  Field  testing  of  innovative or
alternative  technology  designs
(Section 10.1);

  o  Value   engineering   review
(Section 12.1);

  o  Future funding;

  o  Necessary permits;

  o  User charge system and sewer use
ordinance (Sections 12.2 and 12.3);

  o  Timing and dollar amount of grant
assistance (Section 13.5);

  o  Plan of operation (Section 12.4);

  o  Land acquisition (Section 8.6);
  o  Intermunicipal service agreements
(Section 8.5.1);

  o  Pretreatment  (Section 8.5.4);

  o  Reviewing  agency's  environmental
review of project  (Section 9.2);

  o  Infiltration/inflow investigation
(Section 5.4);

  o  Combination  Step  2+3  grant
(Introduction-Managing  Your  Project,
Section 13.2).

Prior to  the conference you may wish
to prepare a brief description of the
activities you will perform during the
design  phase of your  project.   The
description  could be  similar  to the
plan  of  study  (Section 2.2)  and
address   milestones,  schedule  and
other aspects of your project.

One aspect  of project  design which
should be clarified concerns the  level
of detail of the design  work to be
submitted to  your reviewing  agency.
For example, some architect/engineers
prepare  design engineering reports
which  show  the  assumptions  and
calculations  used  to  size  various
components  of the treatment works.
Items  such as surface settling rates,
weir overflow rates,  detention times,
pump  system head curves,  volume of
various tanks,  etc.,  are  very  often
included in  these  reports.   The
reviewing agency  may or may not wish
to  review  the  assumptions,  design
criteria and calculations prior to the
preparation  of  the drawings.   In any
case,  prudent   project  management
suggests that a  predesign  conference
take  place  and  that  all  significant
project design criteria be reviewed.

10.1
10.1*
FIELD TESTING OF  Field testing  of a
INNOVATIVE OR     proposed  innovative
ALTERNATIVE       (I&A)   technology
TECHNOLOGY        project  is  intended
                                      75

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to provide  an  additional  increment of
verification  of its  performance
capability  under the circumstances of
use.

The  costs  associated  with  field
testing  of proposed  innovative or
alternative  projects  can  be allowable
for grant participation as  a preaward
cost  (if approved by your  reviewing
agency)  or  as  a  separate  grant.  A
separate  field test grant may be  made
at any time.   Approval  of preaward
costs  for  a  field  test  should be
scheduled  to  be consistent  with
construction  award.   In  some  cases,
field  testing  may  require  the
construction,  lease,  or use  of
relatively  large structures.  Discuss
this aspect  with  your  project
reviewer,  and  ensure  that there is
agreement before proceeding.

Applicants  proposing  field testing
should provide  a  detailed explana-
tion of  why  testing is  required.
Justification may be based on concepts
such  as:

  o  Reducing the element of risk;

  o  Increasing confidence   in  design
criteria  and/or performance  standards;

  o  Substantiating  projections of
cost  or energy  savings or significant
environmental  or  conservation
benefits,   when  compared  with
conventional technology.

The size  of a field  testing facility
may range from pilot to full scale and
should  be  determined by  considering
the following items:

  o  Principal  components sized  such
that  physical,  chemical  or  biological
processes are accurately simulated;
  o  Process   variables   normally
expected  in  full-scale application
are simulated;

  o  Variations  in  influent
characteristics   which  will
significantly  affect   performance  in
full-scale application  are anticipated
and simulated;

  o  Duration  of  testing  will  ensure
process  equilibrium and  allow adequate
forecasting  of the service life for
unique equipment;

  o  Full control  of all major process
variables  including side  streams and
need for process additives;

  o  Basic   process   safety,
environmental   and   health  risks
evaluated  and found  to  be within
acceptable limits.

A  program  of  field  testing should
reflect practical  and  efficient
use  of  existing  facilities or  newly
constructed  facilities.   Elements of
project design  that  may  be field
tested  include portions  of  projects
that potentially qualify as innovative
or  alternative (I or A) technology
based on  the evaluation  in  your
facilities  plan and include  complete
systems,  unit  processes,  proprietary
equipment and devices or modifications
and  improvements   of  existing
technology.


When  the  field test  is  to collect
and  evaluate  actual  environmental
measurements  or  data,  your field
test  program must  include a  quality
assurance  program  in  accordance with
EPA regulations (Section 4.4).

A final design report on the field
testing  program  must be  prepared
and submitted   to  the  Regional
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Administrator  and  the  reviewing
agency.   The report should contain
information  such  as  the  procedures,
cost, results and  conclusions  of  the
field  testing,   quality  assurance
requirements,  if  necessary,  or  any
other information  which the reviewing
agency requires.  Field testing should
not  be considered  where  its  use
would  delay  construction of  needed
facilities  beyond  dates necessary  for
compliance with NPDES permit schedules
or approved extensions.

A copy of the  final  report  on  the
results obtained  from  the  field
testing  program  should also  be
submitted  to  the U. S. Environmental
Protection  Agency's Office of Water
Program Operations, Washington,  D.  C.,
for information purposes only.
            CHAPTER 11
      DESIGN AND ADMINISTRATIVE
          CONSIDERATIONS
11.0
DESIGN AND        Treatment  works  are
ADMINISTRATIVE    designed  by  an
CONSIDERATIONS    architect  engineer
                 (A/E)  registered  in
the  State  in which  the project  is
to  be constructed.    In designing
treatment  works  the  A/E  will  employ
sound design  principles and place  his
seal on the construction drawings  and
specifications.  In addition, the  A/E
will  employ State  design  criteria
where applicable.   However,  based  on
past  experiences  and  applicable
Federal  statutes, EPA has established
several  basic  policies concerning
the  design of  treatment works  and
administrative  requirements  that  are
to  be  included  in the construction
drawings and specifications.

Wastewater  treatment  works  should  be
designed  to provide requisite  and
adequate  facilities  in  an  archi-
tectural  style  and  form which  is  in
harmony with its natural  surroundings.
When appropriate, specific attentions
should be  paid to the design features
of  facilities  that  are  in  close
proximity to  other  buildings,
incorporating  into  such  designs
qualities  which  reflect  the  regional
architectural traditions of that part
of the nation  in which the facilities
are located.    Designs  should  adhere
to  sound  construction  practice
and utilize  materials, methods  and
equipment  of  proven dependability.
Buildings  should   be   economical
to  build,   operate,  and maintain,
and  should  be  accessible  to the
handicapped (Section 11.1.21).
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11.1
DESIGN            The   following
CONSIDERATIONS    sections set forth
                 EPA's  policies
concerning the  design of treatment
works.    These  policies  are  not
complete  design  standards and  should
be used  only  to  supplement State
standards.


11.1.1
PRETREATMENT AND  Pretreatment  in the
NPDES PERMIT      context   used
                 in this  book  i s
directed  only to  nonresidential
sources of wastes discharged into your
treatment  system.   The objectives of
pretreatment  are  to prevent  the
introduction  of  pollutants which may
pass  through  or  interfere with your
treatment  process  or  contaminate
your  effluent and/or sludge,  thereby
limiting your  options.  Failure to
attain  the objectives  may lead to a
violation  of  your National  Pollution
Discharge  Elimination  System  (NPDES)
permit.    During  facilities  planning
you  should  have  had preliminary
discussions  with  your reviewing
agency  concerning  your NPDES  permit
and  your  pretreatment requirements
(Section 8.5.4).  If your project will
treat  wastes  from  nonresidential
sources,  it  is  recommended that you
determine  from  your project  reviewer
the  necessary  actions  to   satisfy
pretreatment requirements.
11.1.2
WET AND DRY WELL
CLASSIFICATIONS
                 Decomposition  of
                 wa stewater   can
                 generate explosive
gases.   In  addition,  volatile
products,  such  as  gasoline or
industrial   solvents,  may  be
inadvertently or  illegally introduced
into  the  sewerage  system.   Where
pumping is  necessary,  wastewater is
generally  stored for  a relatively
short time  in  a  holding tank called  a
wet wel 1,  where  sewage gas  or  other
volatiles may  accumulate.   The waste-
water remains  in  the wet well until  a
control signal  turns  the  pumps on
and  lowers the  liquid level  to  a
predetermined  elevation.    Pumps,
motors,  and electrical  equipment  are
sometimes  located in  the  wet well
and may present  an ignition source if
explosive gases are present.

Your design should take this  hazard
into account  and include  features to
preclude the possibility of an explo-
sion as well  as possible injury of
workers due   to  the  inhalation of
potentially  toxic gases.   Equipment
located in wet and dry wells should be
designed to minimize the potential  for
explosion, and  areas subject to
buildup of gases should  be venti-
lated.  Explosion proof classification
of wet and dry  wells as Class  I  and
either  Division  1  or  2   (National
Electrical  Code)  should be  made on  a
case-by-case basis and depends on  the
type of sewer  system, the probability
of hazardous gases being present,  and
the type of ventilation used.

Strict  enforcement  of the  sewer  use
ordinance  and  the   development of
specific  contingency  plans   (included
in the  Operation and Maintenance (O&M)
manual)  to  combat  accidental or
illegal discharge of  compounds is
encouraged.  Guidance containing good
engineering practice for design of
wet  and dry  wells  is  contained in
Appendix H  of this book.
                                         11.1.3
                                         USE OF MERCURY
                                         SEALS
                 Mercury is a toxic
                 and    hazardous
                 substance.    It
should be used with extreme care  in
trickling  filter flow distributors and
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comminutor  seals.    Problems  with
conversion  of older trickling filter
rotary  distributors   from  mercury
seals  to  mechanical  seals may
require  special consideration.  If it
is  anticipated  that  significant
additional  cost,  or  operating  or
maintenance  problems  associated  with
such  conversions  will  arise,  you
should  consult  with  your  project
reviewer.   It may be  determined after
consultation  and  evaluation  of other
alternatives  that continued  use  of
mercury  seals is  the  best solution.
To prevent violation of Section 307(a)
of  the  Clean  Water  Act  (CWA)  you
should  submit a  written  request  for
use of mercury seals to your reviewing
agency  for  approval.  This  request
should address the following issues:

  o  Agreement to comply  with  all
applicable  provisions of the  Resource
Conservation  and  Recovery Act  (RCRA),
especially  Subtitle  C regulations
pertaining  to  the  management  of
sludges  with concentrations of mercury
that cause the sludge to be classified
as hazardous  (Section 11.1.7);

  o  Acknowledgement that you can  be
held liable for any damages related to
the discharge of  mercury contaminated
effluent or sludge;

  o  Establishment of a mercury spill
monitoring program including an annual
mercury  inventory;

  o  Establishment  of an emergency
response   program  which  provides
for  the safe disposal of effluent
and/or  sludge  contaminated with
mercury  and  a program  for  immediately
notifying  all  downstream  water users
of possible mercury contamination;

  o  Modification of your NPDES permit
to  identify a  potential  mercury
contamination hazard.
Mercury float  switches have been used
in treatment works for several  years
with no reported failure where mercury
was discharged to the wastewater.  For
that reason, and since mercury float
switches  contain  small  amounts  of
mercury (usually  less than 15 grams),
those  switches  and other  equipment
containing  similarly  small  quantities
of mercury  may  be  used  in treatment
works.    It  is anticipated  that care
will be exercised when  specifying
equipment   using  small   amounts  of
mercury,  and  consideration  will  be
given  to  provisions  for  assuring
self-containment,  and  corrosion
resistance.

Reviewing  agencies  may  specify
additional   requirements  for assuring
that   applicable   provisions  for
use of mercury have been  addressed
before  construction  drawings  and
specifications are approved.

11.1.4
SHELLFISH WATERS  If  your  project
                 proposes  to dis-
charge  effluent into shellfish-growing
waters, the  environmental  impacts will
have been evaluated in your  facilities
plan and  by your  reviewing  agency.
The environmental  evaluation  in  all
likelihood  will   have   recommended
measures  to  minimize  the  adverse
impacts of  the discharge  upon  shell-
fish.   These recommendations,should be
carefully  considered  during  project
design.   However,  in  addition  to
these   recommendations the  following
considerations  should  be  taken into
account  during  the design  phase of
your project.

Equipment,  unit  processes and  the
overall treatment  process  should  be
designed  to  provide a  Reliability
Class   I  (Section  11.1.14).   In
general, this  reliability  class
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defines  the  redundancy  of  system
components  or provision  for  adequate
capacity when one  component  or  unit
process is  out of service.

Discharge  in  close  proximity to
shellfish harvesting areas should be
avoided  wherever  possible.   State
environmental  protection  authorities
and  shellfish  regulatory agencies
should be contacted for further design
requirements  if  this is unavoidable.

11.1.5
DISINFECTION      Disinfection  of
                 wastewater prior to
discharge  has  long been practiced
and,  in  many cases, is  required by
State  agencies to  protect  public
health.  Chiorination of  effluent  has
been,  and  continues to be, the  most
widely  used  method of disinfection.
Because of  the potential toxic  effects
of chlorination  on  aquatic  wildlife,
chlorination  plus  dechlorination  or
alternative disinfection  methods  such
as ozonation  or ultraviolet radiation
or other  cost-effective  disinfection
techniques  should  be   considered  for
sensitive areas.

If the  disinfection requirements  are
not  addressed  in  the  draft  NPDES
permit for  the treatment facility,  the
issue should have been resolved  during
facility planning.    However,  if  the
issue was  not resolved at  that  time,
it should be discussed with your State
agency at the predesign conference.
11.1.6
CHLORINATION
SYSTEMS USING
GASEOUS CHLORINE
                 Where  disinfection
                 is   required
                 (Section 11.1.5)  and
                 chlorination  with
gaseous chlorine  has been  selected,
several  considerations  should  be
taken  into  account during design.
While  chlorination  is  an effective
disinfectant,  it  also   presents
potentially  dangerous conditions  when
used   improperly  or  accidentally
leaked.   In  the worst  case  chlorine
can cause death  by  suffocation  or
severe burns when  brought  in  contact
with  skin and eyes.   When combined
with  small  quantities  of  water,
chlorine  can become highly corrosive.
Therefore, chlorination systems should
be designed to  prevent chlorine leaks,
to ensure the quick and safe handling
of any chlorine leaks, and to minimize
operator  and  local  resident exposure.

The discussion below represents  EPA's
technical  guidance  and   the basis
for  minimum  adequacy  in  safety
considerations  and  should  be  used  to
supplement (not replace)  other safety
requirements  and regulations  such  as
those   published  by  the  Occupational
Safety   and   Health  Administration
(OSHA).   This section  deals  with
design considerations  and  represents
good engineering practice.

Design Considerations

  o  Where chlorine or chlorination
equipment is  stored or installed  in a
building   used  for  other  purposes,  a
gas-tight partition  should  separate
the chlorination room from.other parts
of  the  building,   doors   should  be
equipped  with panic hardware  and  open
to the outside at  ground level  and
storage  and  feed  areas   should  be
separated.

  o  A clear-glass,  gas-tight  window
should be  installed in the  exterior
door or interior wall of the chlorina-
tion  room to permit  viewing  without
entering  the  room.

  o  Chlorination   rooms   should  be
heated to 50°F and  the  chlorination
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feed equipment  room 5-10°F  higher;
containers  should  be shielded  from
direct  sunlight  to  avoid overheating
above 140°F  and  should be stored with
level  rails or  cradles  designed  for
this purpose.

  o  Forced mechanical  ventilation
should  provide  a complete  air change
every  4 minutes  with inlets  and
outlets  at  opposite ends of the room;
exhaust  outlets should be at  floor
level  since chlorine gas  is  heavier
than air.

  o  Exhaust  equipment should  be
activated  by external  light switches
or  other  automatic systems  such as
door activated mechanisms.

  o  Emergency showers  and   eye
baths  should  be  located  external
to, but  close  by,  the chlorination
room.

  o  An  automatic chlorine  detection
system  should be  provided  for
facilities with  capacity of 1  million
gallons  per day (mgd)  or  more  and
activate  sound alarms,  flashing
lights,  notification to operator's
area or  police  department, or  other
measures  to  ensure emergency response.
Smaller  capacity treatment facilities
should  also  consider use of detention
and alarm systems where the benefits
warrant the  additional cost.

O&M Design Considerations

  o  Rail  delivery  of chlorine  is to
comply  with  Department of Transporta-
tion regulations (49 CFR 174.560) and,
in  general,  provide dead-end  sidings
used only for chlorine delivery.

  o  Chlorine   cylinders  should  be
lifted  with  forklift trucks  and other
hoisting  equipment  equipped   with
special  cradles  or  carriers designed
for  such  purposes;  chains, rope
slings,  or magnetic  hoists  should
never be used.

  o  Tank  barge  unloading  is   to
comply  with   U.S.  Army  Corps   of
Engineers and Coast Guard  regulations.

  o  One-ton  cylinders  should  be
stored on  cradles or  pairs  of level
rails.   One hundred  and  150-pound
cylinders  should  be  secured with
safety  chains  and  should never  be
piled  on  top  of one  another,  nor
stored  with  other compressed  gases;
empty  containers should be  tagged
appropriately  and  stored  separately
from  full  cylinders;  and   cylinder
emergency  repair  kits  should  be
readily available.

  o  Self-contained positive pressure
headgear  with   self-contained
compressed air  supply and  full  face
piece  should  be  located away from
areas likely to be contaminated,  but
should be convenient  and available  for
emergency use;  additional  (spare)  air
supply cylinders  should  be provided;
and,  routine training, inspection  and
cleaning of emergency equipment should
also  be provided.

  o  Piping and  valves   in  chlorine
rooms should  be color  coded  and
labeled.
11.1.7
CHEMICAL  STORAGE
AND HAZARDOUS
MATERIALS
                 All  chemicals should
                 be   stored   and
                 curbed  with  pro-
                 visions  to hold  the
entire volume  of  chemical  material  in
the event of an accidental spill.   In
addition,  adequate  safety protection
gear  is  to  be  provided for  plant
disposal  of   chemicals;  hazardous
materials  may be  subject  to the
provisions  of the Resource Conserva-
tion and Recovery Act (RCRA)  and  the
Toxic  Substances Control Act.
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Sewage Sludge

The storage,  transport,  and  disposal
of sewage sludge  may  be  subjected to
the  hazardous  waste  regulations
implementing  the  RCRA  (Section 6.7).
Regulatory agencies  have generally
not classified  sewage  sludge  as a
hazardous waste.   Rather, it  is up to
each  municipality to determine if  its
sludge is hazardous  based on the types
of industrial waste  discharged  into
the system or by  laboratory testing if
deemed necessary.  The characteristics
of a  hazardous  waste  include:
ignitability, corrosivity, reactivity,
and  extraction  procedure  (EP)
toxicity.   In general,  the charac-
teristic most likely to cause a sludge
to be  hazardous would be the toxicity
level  as determined  by  the EP  test
(40 CFR Part 261).

If a municipal   sludge  is  hazardous,
the  municipality  must  obtain  a
hazardous waste  identification number
(40 CFR  Part 261)  and may  need a
permit to treat,  store,  or dispose of
sludge  for  volumes  greater  than
1,000 kg  (455 pounds) per month.

A publicly owned  treatment works which
accepts  hazardous waste for treatment
is deemed to  have  a  RCRA  permit
("Permits  by  Rule"  (40  CFR  270.60))
if it meets the following conditions:

  - Compliance with its NPDES permit;

  - Compliance  with  notification,
    recordkeeping,  and  report
    requirements  of  40 CFR  Part
    264;

  - Compliance   with  applicable
    pretreatment requirements (40  CFR
    Part 403).

The  results  of the  pretreatment
studies  conducted  during  or after
facilities  planning  or the  require-
ments of the  NPDES permit program may
require  nonresidential  dischargers to
pretreat their  wastes, eliminating
those chemicals which could cause your
sludge to be  classified as hazardous.
If it  is possible  that your sludge
may  be  classified  as  a hazardous
waste,  you   should  contact  your
reviewing  agency during  design to
initiate  procedures  for obtaining
a  permit  as  a  generator,  storer,
transporter, and disposer of hazardous
wastes.

11.1.8
SAFETY           The specifications
                 will   require
contractor  compliance  with OSHA's
regulations   and  applicable   State
requirements.   In  addition, the
specific  design   considerations
for   chlorine  systems, chemical
storage  and  handling, and wet well
classifications as  described  in
earlier  sections should be taken into
consideration.   A  comprehensive
ongoing  safety program  during
construction  and  treatment   plant
operation should be developed.
11.1.9
BYPASSING OF
SEWAGE
                 Avoid bypassing of
                 flows from  sewers
                 or   treatment
facilities  during  construction
except  where absolutely  essential
and with specific  approval from your
reviewing  agency.  Eliminate  existing
bypasses and  include provision in  new
facilities  for  temporary  storage  and
treatment of all  flows.  Any bypassing
to the  receiving stream can only be
authorized by the NPDES permit.
11.1.10
PUBLIC WATER
SUPPLY
                 Use State-approved
                 backflow  preventers
                 to protect  public
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water supplies from the possibility of
contamination.

11.1.11
VENTILATION       Adequate ventilation
                 should  be provided
to  eliminate  hazardous  working
conditions.   Specific requirements
for chlorine systems and wet/dry wells
are  given  in  Sections  11.1.2 and
11.1.6   of  this  book.   Adequate
ventilation  should  also be considered
for chemical storage areas, buildings,
laboratories, enclosed structures, and
sludge handling and digestion  areas.
11.1.12
LABORATORY
FACILITIES
                 Laboratory facili-
                 ties   should  be
                 adequate  to  conduct
sampling  and  testing   required  to
properly  control  the  treatment
process,  and  to provide the report
data required  by the  NPDES  permit or
reviewing  agency.   Alternatively,
provision  may be made  for testing
by  commercial   laboratories,
universities  or  other  facilities
equipped  to  perform the necessary
tests.

11.1.13
EMERGENCY ALARMS  Emergency   alarms
                 should  be provided
to alert operators or other officials
of malfunctions  in system components.
Highest  priority should   be  provided
to systems  which  endanger operator
or public  safety or  cause a  complete
system failure  resulting  in
discharge  of  inadequately  treated
sewage.
11.1.14
EQUIPMENT AND
MATERIALS
                 It   is   important
                 that you provide
                 information  to your
A/E to  ensure compliance with  EPA
procurement  regulations (40  CFR
                                         Part  33)  for  preparation of specifi-
                                         cations,  selection  of  equipment  and
                                         materials, and  other related  items.

                                         Nonrestrictive  Specifications
Specifications  must be  written to
encourage  maximum,  free  and  open
competition.    Specifications  are
not  to  contain  proprietary,
exclusionary   or  discriminatory
requirements   for  structures,
materials,  equipment or processes
other than those based on performance
with two exceptions:

  o  Where  it is necessary to provide
for  interchangeable ity  of parts of
equipment;

  o  Where  it is necessary to test or
demonstrate  or promote  a specific
thing  (for example,   innovative
technology  or techniques).

When  in  your  judgment  it  is
impractical or uneconomical to make a
clear and accurate description of the
technical  requirements,  a "brand name
or equal" description may be used as a
means to  define the performance or
minimum  salient  requirements.   In so
doing,  you need  not  establish  the
existence  of any  source other than
the brand  or source  so  named.   You
must clearly  state in  the specifica-
tions the salient  requirements of the
named brand which  must be met by the
offerers.

With regard to materials  such  as pipe
or chemical grout,  it is not mandatory
that  two or more  types  of material
be  specified.    In  general,  it  is
preferable  to use performance specifi-
cations  for materials   based  upon
accepted  nationally-known  standards.
In the  case  of pipe, for example,
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these standards may be American Water
Works Association, American Society of
Testing  and Materials,  or  Federal
specifications and standards.

If it is  necessary to use a  restric-
tive  specification  which  reflects
minimum essential performance needs,
you should justify its use in writing
to  the  reviewing agency  prior  to
the  issuance of the  specifications
and  be  prepared to defend your
justification   in  the  event of  a
protest (Section  16.11).

Noncompetitive Procurement

Noncompetitive  negotiation is allowed
when  it  can be  demonstrated that  a
particular technology  is  unproven and
has  a  high risk associated  with  it,
and  the  reviewing  agency  approves
the  noncompetitive  procurement.
Noncompetitive   negotiation   requires
the  submission  of a  cost  analysis.
The  analysis  includes   a review of
direct costs (materials,  labor, etc.),
indirect costs  (overhead,  general, and
administrative  expenses), and  profit.
Costs are typically subject to audit.

Qualification of  Major Items
of Equipment
The  qualification of  major  items of
equipment  before receipt  of  bids for
construction   is  optional.   This
procedure may  be  used  to  ease  the
administrative  burden of determining
responsive,  responsible   suppliers on
equipment.   In  all  cases, the equip-
ment  furnished  must  comply  with the
specifications  and qualified  suppliers
may  be rejected as  nonresponsive on
the  basis  of  subsequently  furnished
information.

The   A/E   prepares  a  qualification
information package  which  contains
enough  specific  detail  regarding
performance and quality to assure  that
equipment  suppliers  will  thoroughly
understand what is required.  Adequate
advertisement  (30  days  minimum  or as
required  by  State  law)  or  direct
contact  is  made  with  new  and
established  manufacturers,   small,
minority  and  women's  business
enterprises  to  ensure  each has an
opportunity  to compete.   Date,  time,
and place of qualification  information
are given in advertisements and direct
contacts.

Evaluation  of  the qualification
submittals  should  be made  by the A/E
and reported to  you.   All proposers
are  notified   of their  status.
Protests, if any, should be handled in
accordance  with  the  procurement
regulations  (Section 16.11).

Equipment and Process Compatibility

Recognizing  the  requirements for  free
and  open  competition,  the resulting
uncertainty  of equipment selection and
its incorporation  into the treatment
system,  construction  drawings  and
specifications  should  be  reviewed
to  ensure  equipment  and  process
compatibility.    In many cases,  shop
drawings  from successful  suppliers
will   be  insufficient  to  ensure
compatibility  of operation  and control
of  an  integrated  total   treatment
system.  It  is,  therefore,  essential
that the A/E  thoroughly reviews  unit
process, interfaces  with  respect to
mainstream  process  performance charac-
teristics  and  control,  and the  impact
of  sidestream  and  overall  system
controllability.

Attention   should  be  given  to the
adequacy  of equipment  and  material
warranties  and guaranties  to  support
the  intended  performance  of  unit
processes  and  overall  treatment
objectives.
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Material  and  Storage of Equipment

Materials  and  equipment  should  be
properly stored  at the  construction
site.    The  specifications  should
include a  provision  directing
contractors   to  obtain and  implement
storage  procedures as  recommended  by
the manufacturer.

Reliability

Your  publicly  owned   treatment works
(POTW) is expected to adhere  to its
monthly,  weekly,  and daily  permit
limits.   Therefore,  your  treatment
facilities,  including  sludge handling
systems,   should  be  designed,
constructed,  and  operated  to  ensure
reliable total system performance over
the life of  the  project  as  necessary
to:

  o  Protect  public health;

  o  Achieve  water  quality and
pollution  control   objectives  for
both surface  and groundwater;

  o  Prevent  environmental damage.

Design practices  necessary  to  ensure
reliable  performance  should  be cost-
effective.

Reliability  can  be designed  into  a
project by  one  of two  methods:   (1)  a
separate  analysis  of risks,  costs and
benefits  or   (2) the use of  generally
recognized criteria,  such  as State
standards  or the suggested  design
features  described in  this chapter.
Your A/E generally will select the
most appropriate method.

In the first  method, determination  of
the  level  of  reliability  required
should  consider:
  o  Total  cost  including  capital
cost,  O&M  costs  and  the cost  of
failure (if this can be costed) times
the probability  of failure;

  o  Size and relative contribution
of  excessive  wastewater  pollutant
loadings,  compared  to uncontrolled
sources  (e.g.,   nonpoint   source
pollutant  loadings);

  o  Magnitude,  duration and frequency
of  excessive pollutant  loadings  in
comparison to receiving water  quality
and assimilative capacity;

  o  Stability or  persistence  of
pollutant  in  the receiving waters.

These  factors  identify and quantify
the  consequences of failure  as  the
basis  for  design  levels  of  total
system reliability.

In  the  second method,  techniques  are
employed  to  designate  surface  or
groundwaters by  their  use   and  to
select a corresponding treatment level
and  class  of  reliability for  the
treatment  facilities.    Treatment
levels  are  defined  in "Alternative
Waste  Management  Techniques for
Best  Practicable  Waste Treatment"
(Section 6.4)  with  the  greatest level
of  treatment given to  surface waters
used for public  drinking water  supply,
water  contact  recreation,  shellfish,
and fisheries.

The  reliability  class  for  treatment
facilities   is designated  based
on the use of the receiving  waters and
the  probable  adverse impact  of
inadequately  treated  discharge  on
them.  Reliability classes may be:

  o  Class  I  -  treatment works which
discharge  into  navigable waters  that
could be  permanently or  unacceptably
damaged by effluent  which is degraded
                                     85

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in  quality  for only  a few  hours
(e.g.*,  discharges near drinking  water
sources,  into shellfish  waters or
in close proximity  to areas  used  for
contact  sports);

  o  Class  II  - treatment works  which
discharge  into navigable  waters
that  would  not  be  permanently or
unacceptably  damaged by short-term
effluent quality degradation but  could
be  damaged  by continued   (several
days) effluent quality degradation
(e.g.,   discharges   into  recreational
waters);

  o  Class  III  -  treatment works  not
otherwise designated as Class I  or II.

Each class  is broadly defined for each
of the  three  major  systems  within a
treatment  facility:    (1)  wastewater
treatment  system, (2) sludge  handling
and disposal  system, and (3)  electric
power system.   For  each  of  the  three
major   systems,   recommendations
common  to  each class and component
backup  recommendations for  each
separate  class  are summarized in
Tables 1, 2, and 3.

These   recommendations should be
confirmed with   your  reviewing
agency  to  ascertain if your  State
requirements are more stringent.

11.1.15
LAND APPLICATION The design of  land
SYSTEMS           application  systems
                for wastewater  and
sludge should be based on:

  o  "Process  Design Manual,   Land
Treatment  of Municipal  Wastewater"
(EPA 625/1-81-013);

  o  "Design Manual, Onsite Wastewater
Treatment  and Disposal  Systems"  (EPA
625/1-80-012);
  o  "Process Design Manual for Sludge
Treatment  and Disposal"  (EPA  625/1-
79-011);

  o  "Costs of Wastewater Treatment by
Land Application" (EPA 430/9-75-003 -
Revised 1979);

  o  "Innovative and  Alternative
Technology  Assessment  Manual"
(EPA 430/9-78-009);

  o  "Process Design  Manual,  Land
Application  of  Municipal  Sludge"
(EPA 625/1-83-016).

The specifications should also address
protection  of soil  integrity  during
construction.   For  example, onsite
system trench construction for the
soil absorption system should not take
place during  wet weather  where  clays
are  present,  equipment  travel  should
avoid  infiltrative  surfaces and
special  attention should  be  given
to  grade,  bedding,  and  backfill
materials.   For land  treatment
systems,  the land surface  should be
disturbed  as  little  as possible or
restoration   techniques    (plowing,
discing)  should  be employed wherever
necessary.   Limitations on the  size
and  weight   of the  construction
equipment  and  climatic  conditions
during which construction may not
take  place  should  be  included in
the  specifications,  especially for
land-based  systems.
11.1.16
EROSION AND
SEDIMENT CONTROL
                 During  the  environ-
                 mental   evaluation
                 of your project  in
the facilities  planning stage, the
potential  for  soil  erosion  and
sediment  buildup  in  water bodies,
wetlands  or  floodplains  was  con-
sidered.    In  all  likelihood,  the
environmental  information document
                                     86

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                  Table 1   Wastewater Treatment System  Reliability
UASTEWATER TREATMENT SYSTEM
Features Common to Class I, II, III:

Trash removal or comminution
Grit removal - not applicable to treatment works which do not pump or dewater sludge (e.g., stabilization
ponds)
Provisions for removal of settled solids - applicable to channels, pump wells, and piping prior to
degritting or primary sedimentation
Holding basin - applicable to Class I with adequate capacity for all flows
Unit operation bypass - not applicable where two or more units are provided and operating unit can handle
peak flow; applicable to comminution regardless of number of units
Component Backup Features

Backup bar screen for mechanically
cleaned bar screen or comminutor
Backup pump
Primary sedimentation basins
Trickling filters
Aeration basin
Aeration blowers or mechanical aerators
Air diffusers
Final sedimentation basins
Chemical flash mixer
Chemical sedimentation basins
Filters and activated carbon columns
Flocculation basins
Disinfectant contact basins
Cl'ass I

Yes
Yesa
Multiple basinsb
Multiple filters0
Minimum of two of
equal volume
Multiple units''
Multiple sections'2
Multiple basins0
Minimum of two or
backup^
Multiple basinsc
Multiple unitsc
Minimum, two
Multiple basinsc
Class II

Yes
Yesa
Multiple basins6
Multiple filters'3
Minimum of two of
equal volume
Multiple unitsd
Multiple sections6
Multiple basinsb
No backup
No backup
No backup
No backup
Multiple basins'3
Class III

Yes
Yesa
Minimum, two*3
No backup
Single basin
permissible
Minimum, two^
Multiple sections*
Minimum, two"
No backup
No backup
No backup
No backup
Multiple basins'3
Sufficient capacity of remaining pump to handle  peak flow with one pump out of service
bWith largest unit out of service remaining units have capacity for at  least 50 percent design flow
cWith largest unit out of service remaining units have capacity for at  least 75 percent design flow
duith largest unit out of service remaining units able to maintain design oxygen transfer;  backup
 unit may  be uninstalled
eWith largest section out of service oxygen transfer capability not measurably impaired
flf only one basin, backup system provided with at least two mixing devices (one may be installed)
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                Table 2   Sludge  Handling and Disposal System Reliability
                                   SLUDGE HANDLING AND  DISPOSAL SYSTEM
Features Common  to  Class  I, II, III:

Alternate methods of  sludge disposal and/or treatment -  applicable to unit operations without backup
                                                       capability

Provisions for preventing contamination of treated wastewater


Component Backup Features Common to Class I, II, III:

Sludge holding tanks  -  permissible as alternative to backup capability with adequate capacity for estimated
                       time of repair

Backup pump - sufficient  capacity of remaining pumps to  handle peak  flow with one pump out of service;
              backup  pump may be uninstalled

Anaerobic sludge digestion

    Digestion tanks - at  least two digestion tanks

    Sludge mixing  equipment - backup equipment or flexibility of system such that with one piece of
                             equipment out of service total mixing  capability  is not lost; backup
                             equipment may be uninstalled

Aerobic  sludge digester

    Aeration basin  -  backup not required

    Aeration blowers  or mechanical  aerators - at least two units: permissible for less than design oxygen
                                             transfer with one unit out  of  service; backup unit may be
                                             uninstalled

    Air  diffusers  - with  largest selection out of service oxygen transfer  capability not measurably
                    impaired

Vacuum filter - multiple  filters with capacity to dewater design sludge  flow with largest capacity filter
                out of service; each filter serviced by two vacuum pumps  and two filtrate pumps

Centrifuges - multiple centrifuges  with capacity to  dewater design sludge  flow  with  largest capacity
              centrifuge  out  of service

Incinerators - backup not required; backup required  for critical auxiliary components  (e.g., center
               shaft  cooling  fan)
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                    Table 3  Electric Power System Reliability
ELECTRIC POWER SYSTEM
Features Common to Class I, II, III:

Power sources - two separate and independent electric power sources from either two separate utility
substations or one substation and one standby generator.
Capacity of backup power source

Mechanical bar screen or comminutors
Main pumps
Degritting
Primary sedimentation
Secondary treatment
Final sedimentation
Advanced waste treatment
Disinfection
Sludge handling and treatment
Critical lighting and ventilation
Class I

Yes
Yes
Optional
Yes
Yes
Yes
Optional
Yes
Optional
Yes
Class IIa

Yes
Yes
No
Yes
Optional
Optional
Optional
Yes
No
Yes
Class III3

Yes
Yes
No
Yes
No
No
No
Yes
No
Yes
aAt least  treatment equivalent to sedimentation and disinfection.
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recommended   employing  mitigating
procedures  during  design  and
construction of the project to provide
erosion and  sediment control.  You
should  ensure  that  these  erosion
and  sediment  control  measures,
addressed  in  your facilities plan,
are incorporated  in the design and
construction  phases  of your  project.
Such measures should include:

  o A  schedule that provides for the
construction of structures as soon  as
possible  after clearing  and  grading;

  o Specifications for temporary and
permanent  measures to  be  used for
controlling erosion and sediment;

  o A  list   containing  completion
dates for each temporary and permanent
measure for  controlling  erosion and
sediment;  location,  type  and purpose
for each  measure;  and  dates when
temporary measures will be removed  or
replaced;

  o Soil  or  landscaping maintenance
procedures  (should be  included  in the
O&M manual).
11.1.17
MITIGATION OF
ADVERSE
ENVIRONMENTAL
IMPACTS
                 During   proj ect
                 design, you should
                 review  the recom-
                 mendations   for
                 mitigation   of
adverse  environmental   impacts
contained  in your  facilities plan
(Section  3.2.12)  or  in the reviewing
agency's  environmental assessment  and
incorporate  appropriate mitigation
measures  into the  project design.
Failure  to  incorporate mitigation
measures  will  result  in  a determina-
tion that the design is  inconsistent
with  the  facilities  plan,  thus
potentially  delaying  the  funding  of
your project.
                                         11.1.18
                                         SEWERS            Sewers  should  be
                                                          designed to maintain
                                         minimum  scouring  velocities  and  have
                                         adequate capacity to accommodate flows
                                         based  on  appropriate peaking factors.
                                         An  allowable rate  of infiltration
                                         for sewers  should be specified  and
                                         confirmed by tests after installation.
                                         Additional  information  regarding  the
                                         infiltration  and inflow into  sewer
                                         systems is included in  Section 5.4.
                                         11.1.19
                                         SEWER
                                         REHABILITATION
                 Where sewer  system
                 rehabilitation   is
                 required  based  on
the conclusions  of the  sewer  system
evaluation,  the  specifications  and
bid proposals should  include  unit
prices  for such  items as:   internal
closed-circuit  television  monitoring
(TV),  sewer  line cleaning,  pressure
testing,  chemical  grouting of joints,
slip lining, or any other item of work
that lends itself to unit pricing.  In
addition,  the  specifications  should
define  the   sequence  of operations
(cleaning,   TV,  pressure  test,
grouting)  and the approval  authority
necessary to perform each operation.
11.1.20
OPERATION AND
MAINTENANCE
                 The proposed  design
                 should   provide
                 for   flexibility
in  operation  (e.g.,   bypassing  of
individual   unit   processes   or
components), flexibility between units
(e.g.,  varying mode of operation), and
easy access  to equipment  requiring
routine maintenance (e.g., greasing of
bearings  or changing of lubricants),
or repair.
                                         11.1.21
                                         HANDICAPPED
                                         ACCESS
                 In accordance  with
                 EPA Nondiscrimina-
                 tion   Regulations
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(40 CFR Part 7)  your project  must  be
operated  to be readily accessible  to
handicapped  persons.   New facilities
(and,  to  the extent  feasible,  altera-
tions  to  existing facilities)  must
be designed and  constructed to  be
accessible  to the  handicapped.    You
are not,  however,  required to provide
such  access to buildings  or  parts  of
buildings  that  because of their
intended  use do not require public
access or result  in  employment of the
handicapped.    In  addition,   your
Step   3  grant   applications   must
include certain  assurances of future
compliance  and  a  completed   form
4700-41,  used  in the construction
grants program  to monitor discrim-
inatory practices in the provisions of
wastewater  treatment services.

Compliance  with  these regulations  in
no way releases  you from compliance
with  all  other  applicable laws,
regulations,  and  executive orders
regarding nondiscrimi nation
(Section  8.5.2).
11.1.22
USE OF
RECOVERED
MATERIALS
                 The   Resource
                 Conservation   and
                 Recovery   Act
                 requires  procuring
agencies,  using  appropriated Federal
funds,  to purchase items composed of
the  highest  percentage  of  recovered
material  practical.  EPA has recently
published  final  guidelines  (40  CFR,
Part 249)  for the Federal  procurement
of  cement and  concrete  containing
fly ash).

As  a  procuring  agency, you  should
include  provisions in  construction
contracts  and construction  specifica-
tions  that  allow  for the use  of
concrete  and  cement,  including
products  such as pipe and block, which
contains  fly ash.  This  applies to
                                         all of  your EPA construction  grant
                                         projects,  unless  the use of  fly ash
                                         can be determined to  be  inappropriate
                                         for technical  or  economic  reasons
                                         documented  by  you,  your  design
                                         A/E,  or  other  qualified  person.
                                         You should  also establish a  review
                                         process  to resolve disputes concerning
                                         exclusion  of  cement  and  concrete
                                         containing fly ash.
                                         11.2
                                         ADMINISTRATIVE
                                         CONSIDERATIONS
                 Chapter  16 addresses
                 procurement.    It
                 describes procedures
which  allow  you  to use  your  own
procurement  system  or alternatively
the  minimum  requirements  to  be
followed  when  using EPA's procurement
system.   The  sections that  follow
discuss administrative provisions  of
the procurement regulations applicable
to  the preparation  of project  and
bidding documents.
                                         11.2.1
                                         BIDDING
                                         DOCUMENTS
                 Bidding   documents
                 are prepared by your
                 A/E and include:
  o  A  complete statement  of  work
to  be  performed,   including  where
appropriate,  construction  drawings
and  specifications,  complete  cost
proposal  (separated into allowable and
unallowable   categories),  and  the
required performance schedule;
                                           o
  ~  The terms and conditions  of the
subagreement  to  be awarded,  including
where  appropriate, payment, delivery
schedules,   point of  delivery  and
acceptance criteria;

  o  A  clear  explanation  of  the
methods of bidding and of  evaluating
bid  prices,   and the basis  and method
for awarding  the subagreement;
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  o  The  responsibility  requirements
or criteria  which will be employed  in
evaluating bidders;

  o  The prevailing  wage determination
made  under  the Davis-Bacon Act,  if
applicable;  and

  o  The deadline and place to submit
bids and a copy of the EPA Procurement
Regulations  (40 CFR  33.295, Subparts F
and  G)  and EPA  form 5720-4  "Labor
Standard  Provisions for  Federally
Assisted Contracts."   A copy  of EPA
procurement  regulation  (40 CFR,
Part 35) are included in Appendix N.

It may be to your advantage to require
the contractor to provide detailed,  as
opposed  to  lump  sum  bids.   Such
detailed  information  would make
it easier to determine the reasons for
cost overruns,  to detect bid  rigging,
to calculate incremental costs, and  to
develop  more  accurate  construction
cost data.  When  detailed information
is needed,  the bid forms should  be
kept as  simple as possible.

Other provisions  of  the  procurement
regulations  applicable to construction
of the  project are  briefly described
below.
11.2.2
BONDING AND
INSURANCE
                 Contracts   under
                 $100,000 are subject
                 to State and  local
requirements  for  bid  guarantees,
performance  and  payment  bonds.    For
contracts  in excess of  $100,000  you
may (a)  use  your  own requirements  for
these items  provided  the reviewing
agency determines  that  the Govern-
ment's  interest  is  adequately
protected  or (b)  require  a  5  percent
bid guarantee and 100 percent  perfor-
mance  and  payment bonds.   Bonds
must  be  obtained  from companies
holding  certificates of authority
as acceptable  sureties.  Bond payment
provisions  should  ensure  prompt  pay-
ment in the event of nonperformance.

Contractors  should  be  required
to  obtain  construction   insurance
(e.g,  fire and  extended  coverage,
workmen's  compensation,  public
liability  and  property  damage,
and  "all  risk",  builder's risk,
or  installation  floater  coverage)
as required by State or local law.

Flood Insurance

Flood  hazard  areas  have  been
delineated  on  Flood  Hazard Boundary
Maps  or Flood  Insurance Rate  Maps
issued by  the  Department  of Housing
and  Urban Development.    If flood
hazard  areas  in your community are
delineated  in  one of  these maps,  your
participation in the Federal Emergency
Management  Agency's  flood  insurance
program is a prerequisite  for Step 3
grant assistance.   You will  have  to
provide  adequate  flood   protection
insurance  for  structures  and their
contents if located  in  flood hazard
areas,  both  during construction
(specifications generally  require the
contractor  to  provide this insurance
during  construction)  and  for   the
useful  life of the project.  Insurance
is necessary  on new  or reconstructed
surface structures which are walled or
roofed  (e.g.,  control  building  or
pumping station)  and  have  a value  of
$10,000 or more.

For larger structures, you may find it
prudent to  purchase insurance at  your
own  expense  in  addition  to  the
$200,000 maximum provided  under  the
National Flood Insurance Program.
11.2.3
CONSTRUCTION      A   construction
INCENTIVE         incentive  (CI)
PROGRAM          program  should  be
                 i ncluded   i n  the
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contract documents  if the eligible
construction costs exceed $1  million.
The  CI  program allows the  prime
contractor  to  propose  changes in the
project which will  (a)  provide at
least a $50,000 gross  capital  savings,
and (b)  result in a net saving  (using
a  cost-effectiveness   analysis)   over
the life of the project.  If the CI
change proposal  is approved by the
project  design engineer  and the
reviewing  agency  and  the  net capital
savings is  $1 million or less, the
contractor  would receive 50  percent
of the net  capital  savings.   Above
$1  million,  the  contractor   would
receive  $300,000  plus 20  percent of
the net capital savings.

The CI clause  must  be  included  in the
approved  contract  documents before
bids, i.e.,  it may  not be added by  a
change order after bids are received.
The  CI  clause, including procedures
for  obtaining   approval,  is discussed
in Appendix  I.

11.2.4
BUY AMERICAN     The  CWA  requires
                 that preference be
given  to  domestic  construction
materials  in EPA grant-assisted
projects.    The preference is limited
to 6  percent above  the bid or offered
price on foreign materials (including
duties whether or not assessed).  Some
construction  materials   manufactured
in  the  United States include  both
domestic  and  foreign components.   If
the  construction  material has foreign
components  representing 50 percent  or
more  of the value of the  product, the
entire  product is considered  to  be
foreign.

The  "Buy  American"   clause in
EPA's  procurement  regulations
(40  CFR 33.710) is to be included  in
all  EPA grant-assisted projects.  The
reviewing agency may waive  this
requirement where appropriate.

11.2.5
ROYALTIES         Reasonable royalties
                 associated   with
the procurement of the  right-to-use  or
the  rights  in  a  patented  product,
apparatus,  or  process  are  allowable
costs   for  grant  participation
provided  that  they  are necessary,
cost effective  and that prior written
approval  is  obtained  from the
reviewing  agency.  Periodic payment  of
royalties for the right to operate
under  a  patent  are  considered
operating  costs  and are not allowable
for  grant  participation.   Prior  to
specifying  a  product or process  which
requires the  payment of a royalty, you
should  determine if other royalty-free
products or processes  are available  in
order to provide competitive bidding.
Royalties  allowable  for  grant
participation must   be  based   on
a  published  fee schedule  or   on
reasonable fees charged to other users
under similar conditions.

11.2.6
PROJECT SIGN      An  EPA sign  or  a
                 State sign approved
by  EPA  must be  provided  for
your project  site   in  accordance
with established  specifications
(Appendix  J).

11.2.7
SMALL,  MINORITY,  Contractors  must
WOMEN'S AND       take  affirmative
LABOR SURPLUS    steps to assure that
AREA BUSINESSES   small, minority,  and
                 women's businesses
and  labor surplus  areas are  used when
possible  as  sources  of  supplies,
equipment, construction and services
in  accordance  with EPA's procurement
regulations  (40 CFR  Part 33).   You
and/or  your  State-can  decide how the
                                      93

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affirmative  steps  are to  be  carried
out.   The  six  (6)  affirmative  steps
are  to be  included  in  the bidding
documents (Section 16.9).

11.3
DESIGN REVIEW     A review of  your
                 bidding  documents
including  the  construction  drawings
and  specifications  is  performed
prior  to the award of Step 3 grant
assistance  or before   initiating
procurement  action for  building on
Step 2+3 projects.   A  review of
the  construction  drawings  and
specifications  is  made by  your
reviewing agency.   Your design  should
be  consistent   with  your approved
facilities  plan,  thus  avoiding
any  delay  in  approval.  Also, a
biddability  and   constructability
review is conducted by the Corps of
Engineers   or  delegated State to
ascertain that  the  proposed construc-
tion  drawings  and  specifications
provide adequate  information so  that
a contractor can bid and construct the
facility  without  additional   details
or directions.   The  review  by  the
reviewing agency is  for administrative
purposes only  and is  a  reasonable
determination  that  the effluent
limitations or water quality standards
described in  the facilities plan  will
be achieved,  that  the  results of  the
infiltration/inflow  analysis have  been
considered,  that  the  recommendations
of  the value  engineering  review
have been included.  The design  review
does not relieve you  or your A/E of
responsibility for the project design.
Structural,  electrical  and mechanical
details of  design  will  typically  not
be  reviewed in detail.  Obvious
irregularities  will   be  noted   and
reported to you.  Compliance with  the
design and   administrative  considera-
tions discussed  in  this  section  will
be confirmed by  your reviewing  agency.
            CHAPTER  12

 CONCURRENT ACTIVITIES DURING DESIGN
12.0
CONCURRENT        During   project
ACTIVITIES        design, it will be
                 necessary  to  under-
take other activities which are either
directly  or  indirectly related  to  the
project  design  or are a part  of  the
grant application process.   While
some  of  these  activities  could be
undertaken  after  design,   it  is
recommended  that  they be performed
concurrently  with  design in order to
save time,  reduce  costs  and continue
moving  the  project  toward  grant
award.
12.1
VALUE
ENGINEERING
                 Value  Engineering
                 (VE)  is an intensive
                 review   utilizing
a specialized  cost control  technique
which identifies unnecessary high cost
in a  project.   VE obtains the  best
project at  the least cost, without
sacrificing quality or  reliability, by
using:


     Multidiscipiinary  team of
design  professionals  guided by
a VE  coordinator to:


  -   Evaluate   cost   and  function
relationships;


  —   Concentrate  on  high  cost
areas;


  -   Generate creative  alternatives;

  ~"   Provide recommendations to you
and the  project designer.
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A  VE review  is  required  for  a
construction  project  with a  total
estimated  building  cost in excess of
$10 million.  VE is  also  recommended
for  projects  costing  less  than $10
million  because  they  also  contain the
potential  for substantial  savings.  VE
serves  as  a  mechanism   to  enhance
the  design of wastewater treatment
facilities  by  providing  the  project
designer  with  an opportunity to
utilize  the knowledge  and  experience
of other  individuals to optimize the
project  design.

12.1.1
VE TEAM AND
QUALIFICATIONS
                 The   VE   team
                 coordinator  is  an
                 important   VE
participant who should  have demon-
strated   technical  and  managerial
capability.  The team coordinator acts
as a  liaison between the VE team,  the
project's  design team  and  you.   The
team coordinator should be a qualified
individual  with   VE  experience on
wastewater  construction  projects.

Other VE team  members  should be
experienced professionals  with VE
training,  if possible,   and  previous
VE experience on wastewater construc-
tion  projects.    The  specific  team
makeup and  size should be appropriate
for the  nature,  size,  and  complexity
of the project.

Because  it is  essential  that  the VE
review be independent  and  objective,
it  should  not  be  conducted by  the
design  firm.   You should  consider
using a separate  subagreement with the
VE  review firm to perform the VE
review instead of  a subcontract under
the original architect/engineer (A/E)
subagreement.
 12.1.2
 SCOPE OF WORK
                 The  VE  study  should
                 consider   all
components  and systems of the project.
Depending on the size  and  complexity
of  the  project, the VE  effort may
vary  from  one  team and  one review
session  to  multiple teams and multiple
reviews. For example, a large project
should  involve at least  two separate
reviews:  one review at approximately
the  20-30   percent  design  stage to
evaluate the plant  layout,  structural
design,  hydraulic capacity,  etc.;  and
a  second review  at  approximately  the
65-75  percent  design  stage  when
electrical  and mechanical  systems  are
being designed.

The VE  study will generally result in
two  reports.   The first  VE report
should include such  items as:

   o  Scope  of the VE study;

   o  Basic  VE methodology  employed,
including the results  of  each phase,
such as:

     -  Information  Phase - collection
        of  all  facts,  background  and
        data that are pertinent to the
        design,  including  an energy
        and a cost model;

     -  Speculative/Creative  Phase  -
        creation of an extensive list
        of alternative  ways  to perform
        the essential functions  found
        during  information  gathering,
        concentrating  on areas with
        highest  potential savings;

     -  Evaluation/Analytical  Phase  -
        evaluation  of the feasibility
        of  alternatives  generated
        during the  creative  phase;

     -  Development/Recommendation
        Phase  - a  more   complete
        evaluation   of  the  most
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       .feasible  alternatives
        and  identification  of  VE
        recommendations;

  o  Summary of VE recommendations;

  o  Estimated  cost  savings  for  each
VE recommendation.

The VE report is presented both orally
and in writing  to you  and the project
designer.   Since  the purpose  of
VE  is to  obtain the best  project
at the least  cost without sacrificing
quality  or  reliability,  it  is
important  that  the VE  recommendations
are evaluated  from a  noncritical  and
constructive position.

The final  VE  report  should  include
items  such  as:

  o Accepted VE recommendations;

  o Cost   and  schedule  for  imple-
menting the accepted  recommendations;
  o  Rejected  recommendations
reasons for the rejection;
                                 and
  o  Net savings  (both capital  and
O&M)  over the  planning  period for the
accepted VE recommendations.

In reviewing the  final  report you and
your   reviewing  agency  should  ensure
that  there is sufficient justification
for each rejected VE recommendation.
12.1.3
PROPOSAL  COST
AND TIMING
                 Since   VE  is   a
                 process   that
                 involves   senior
professionals,  the  selection  of
experienced  and well  qualified  VE
team  members and  team coordinator
is  essential  for  best  results.
Likewise,  it  is  vital  that you and
your design A/E, when  soliciting  or
advertising  for  VE  proposals, clearly
specify  the scope of the VE  study,
including  the  number of  studies
required   and  other  essential
factors to  assure that all proposals
will  be  submitted on the same basis.
Proposals should  clearly identify the
number  of  studies and  teams;  the
names and experience backgrounds  for
the  team  coordinator  and  study  team
members,  plus  a  description of the VE
study procedures, with a schedule for
completing the study.

Experience  shows  that  two  VE studies
will   generally  achieve optimum  VE
benefits.   If  the second study cannot
be accomplished,  one study  should
be scheduled around  the 20-30 percent
design  stage  for  best  results.
A  prestudy  meeting  with  you,  your
design A/E,  VE  team coordinator  and
reviewing agency  will  help refine the
scope,  schedules  and  procedures  and
improve  working   relationships  to
maximize  study benefits.   If managed
properly,  VE will  not  delay  the
project.
                                         12.2
                                         USER CHARGE
                                         SYSTEM
                 The  user  charge
                 represents   the
                 amount  of money you
will  charge each customer each year in
order  to  pay for  the operation,
maintenance,  and  replacement  (OM&R)
of  the  wastewater  collection  and
treatment system.  A sound  user charge
system  is  an  essential  step  in
ensuring  your ability to pay for OM&R.
Generally,  the  charges  are  based
on the amount  of  water  (measured  by
water  meters)  used  by   homeowners
and  small  commercial  establishments.
Industries and large commercial users,
in general, also pay by water use but,
in addition, a  surcharge may be added
because the strength  of their  waste
or the  rate  of  discharge  causes
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additional  operation  and maintenance
(O&M)  costs  to  be  incurred.  Nonresi-
dential  users  which  discharge  toxic
pollutants,  if permitted,  into  the
system  will  pay  for any  increased
costs  of  managing  the effluent  or
sludge that  results  from the toxics.
The  objective  of the  user  charge
system is  to provide the money
necessary  to  operate  and maintain the
treatment  works plus  a  reserve to pay
for  replacement.   Maintenance  costs
consist  of  the  expenditures  for
obtaining  and   installing   equipment,
accessories  or appurtenances  during
the useful life of the treatment works
necessary  to  maintain  its  design
capacity and performance (e.g., pumps,
motors, etc.).   The operating costs
will  include items such as  salaries,
chemicals,   utilities,   insurance,
training,  supplies, etc.

The user charge system for  purposes of
the Clean Water Act  must not  include
charges which  are  levied to customers
to  retire bonds  or amortize  debt.
The  EPA regulations do not contain
requirements  for  how you  accomplish
this.   You may include a separate
charge  for  capital  expenses or debt
service on bills  to  users  or  recover
these costs  in  the general  tax base.
In  public meetings  during  facilities
planning,  you should  have advised the
public  of  the  estimated annual  user
charge.  If  the user charges developed
during design are  significantly
different  from those estimated during
facilities  planning, you  should
consider  having  another  public
meeting to  explain  the difference.
An  EPA publication  entitled "A User
Charge Guidance  Manual"  will  be of
assistance to  you in  developing and
implementing your  user charge system.
However, the next  few sections briefly
describe some  aspects of user charge
systems.
12.2.1
ACTUAL  USE        One basis  for a user
                 charge system is the
contributor's  actual use of  the
wastewater  treatment  works.    The
actual  use  is measured in terms of
water meter readings,  measurement of
sewage  flow,  strength or rate  of
discharge from  large  nonresident!'al
users  or  other  means  of  determining
the  proportion of the  system used by
contributors.   The  rate charges based
on  actual  use are  then  uniformly
applied  in  each  class  of users
(residential,  small  commerical, etc.)
in  proportion to  its  contribution.
Note,  however, that  the  rates  may
vary between  classes  and  in  some
water-short areas  rates  have  been
established to help  conserve water
resources and encourage recycling or
reuse of process wastes.

If  you do not have  an existing  user
charge system and are developing a  new
system, the user charge for the first
year should  be based on your estimates
of   O&M costs  and then  adjusted
annually thereafter to reflect actual
O&M  and replacement costs.

12.2.2
AD VALOREM TAXES  Another   approach
                 used  for  developing
a  user charge system  is based on ad
valorem  taxes.  Ad valorem taxes  are
taxes  based on the value of property.
This  system  has  been approved to
permit communities which  have
historically paid  sewage treatment
costs   out  of residential property
taxes,  to  continue  to do  so.   In
order  for  an ad  valorem  based  user
charge  system to be approved, certain
conditions are to be  satisifed:

  o  On  December 27,  1977  you had  in
existence  a  system of dedicated ad
valorem taxes which was used then and
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continues  to be  used  for collecting
revenues  for  the  operation  and
maintenance of your treatment works.

  o  The  ad  valorem  user  charge
system must  distribute costs  to  the
residential  and  small  nonresidential
users class in proportion to  the  use
of the treatment works  by  this class.

  o  Industrial and  commercial  users,
each  of  which discharges more  than
25,000 gallons  per  day  (gpd)  of
sanitary  waste,  as a class must each
pay  their share  of  the O&M  costs
(including   replacement)  based   on
actual use.
12.2.3
OTHER USER
CHARGE
CONSIDERATIONS
                 It  is  necessary
                 that  each user  be
                 notified  at  least
                 annually of the rate
and  portion  of the user charges  or
ad valorem taxes  attributable to OM&R
(waste  treatment  services)  of  the
treatment  works.    For  example,
assume 3  persons  per  household with
each person using  70 gallons per day.
This is equivalent to 76,650 gallons
per year  for the  household.  Further
assume  that the  annual  charge  is
$100  per   year  and of   this  amount
$40  is for OM&R and   $60  is  for
debt retirement; the user charge rate
would  be  $.52 per  1,000 gallons
($40/76.65 x 1,000 gallons).  The user
is specifically notified  of this rate
($.52/1,000 gallons) although in some
cases  the  bill  may  include  other
charges.   In addition,  the user  charge
system must  include an  adequate
financial  management  system  which
accurately accounts  for   revenues  and
expenditures for OM&R  of the treatment
system.

A problem  sometimes  arises  for those
communities  with  existing  sewer
systems   which   contain  some
infiltration  and/or  inflow  which  is
not  economical  to remove  (i.e.,
nonexcessive I/I).  The OM&R  costs for
treating  this  flow can  be  distributed
among all  users based on:

  o  The  same  manner  that  is used for
actual  use; or

  o  Any  combination  of flow  volume,
land area of user, number of  hookups
or discharges,  or  property  valuation
(if  an  ad valorem system  has  been
approved).

Revenues  which  may be  generated from
the  project (e.g., sale of  treatment
related  byproducts, lease  of land,
sale of crops or  digester gas, etc.)
should  be used  to offset  OM&R costs
and  thereby  proportionately  reduce
user charges.
                                          12.2.4
                                          ADOPTION OF
                                          SYSTEM
                 The  user  charge
                 system is  generally
                 developed   during
the design phase  and must  be  approved
as a  prerequisite  to  award  of grant
assistance.    Very often the  user
charge system is  enacted by  a  munici-
pal ordinance and includes details on
how rates will be established,  how
often  bills will be sent,  and  requires
annual  review  and updating.   The
annual  review should  be conducted to
determine  whether  sufficient  revenue
is being collected, whether revenue is
generated  in  proportion  to cost,  and
that the equipment replacement  reserve
account  is adequate.   If your  project
will serve more than one municipality,
it will be necessary for each  partici-
pating jurisdiction to enact  similar
or  identical  user  charge  systems
before the treatment  works is placed
in operation.  Where there are prior
service agreements concerning  user
charges, the  new  system developed and
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approved  under  the  EPA  grant will
take  precedence  over  any  terms or
conditions  of  earlier,  inconsistent
agreements.   Enact the user charge
system before  the treatment  works  are
placed in operation.
12.3
SEWER  USE
ORDINANCE
                 Approval  of  a  sewer
                 use  ordinance  or
                 equivalent  legally
binding  document is a prerequisite to
award of grant assistance.   A  sewer
use  ordinance restricts  certain
connections  and wastes,  in order to
protect  your  investment  and  enhance
treatment  process  stability and
effluent quality.   Many municipalities
with existing wastewater treatment
systems  have already  enacted  a  sewer
use  ordinance.   In this case you
should  submit  a copy with your  grant
application to your project reviewer.

The sewer use ordinance:

  o  Prohibits new  inflow sources,
i.e.,  extraneous  water  generally
associated  with storm  events  such as
downspouts,  area  drains,  sump pumps,
connections from storm  sewers, etc.;

  o  Requires  that  new  sewers and
connections  be   properly designed
and constructed;

  o  Prohibits  introduction of  toxic
or hazardous wastes into the sewers in
an  amount  or concentration  that
endangers  the  public's  safety or the
physical integrity of the system which
may  cause  violations  of your  NPDES
permit  or  precludes  the  selection of
the  most  cost-effective   alternative
for  treatment,   reuse and  sludge
disposal.

  o  You must provide  assurances
that all  existing  residences will
                                         connect to  the  sewer system withi
                                         a  reasonable  time  after  projec
                                         completion.
The  sewer  use  ordinance should  be
directly related  to your municipal
pretreatment  program and  may  be
the  legally  binding  instrument
which  implements   portions  of your
pretreatment program.

While the three items above  form  the
basis for a sewer  use  ordinance,  the
actual  details  contained  in  the
ordinance should be much more specific
and contain descriptions or procedures
such as:   limitations  on wastewater
strength from  nonresidential  users;
prohibition  on  dilution;  notification
procedures   concerning  accidental
spills;  removal of illegal connections
and  rehabilitation of deficient
sewer connections  as a condition  of
property sales;  discharge  reporting
requirements;  rights  of all  parties,
including  right   of  municipality,
EPA  and State personnel  to  enter
all  properties  for  testing  and
measurement,  and  right  of  property
owners   including  protection   of
trade  secrets,   insurance,  and
safety requirements.

As  is  true  with  the user charge
system, if your  project  serves
more  than  one municipality,  each
jurisdiction should  enact a  sewer  use
ordinance in order  to ensure that  the
entire system  is protected as soon as
practical.
                                         12.4
                                         PLAN OF
                                         OPERATION
                 The  construction
                 grant   regulations
                 require that  prior
to initiating procurement  to construct
your  project  for  either  a  Step  3
or Step 2 +  3  grant, that you submit
for approval  a draft plan  of operation
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I to your reviewing  agency.  This draft
 plan summarizes  the  actions  necessary
 to  identify  those  steps  required
 for cost  effective, efficient,  and
 reliable project start-up  and
 continued  successful  operation  to be
 taken  at  the  appropriate times.

 Certain information  that is  needed to
 complete  a  draft plan  of operation
 may not be  known until the project
 building  is  under  way.   Therefore,
 it may be necessary to  define  imple-
 mentation  schedules either  in terms of
 an  estimated  percent  of  building
 completion,  or in terms of  a certain
 number  of days  before the  initiation
 of operation.
 The final  plan  of operation  must be
 submitted to your reviewing agency for
 approval  prior to or at the time you
 request the 50 percent  payment.  This
 final  plan of operation  is to  contain
 detailed   information  concerning  who
 will  perform necessary tasks, when and
 how tasks will be undertaken,  and the
 nature of each task.  The  final plan
 may be in  schedule  format, (like the
 draft plan), with only the major tasks
 to be accomplished shown in detail.

 The plan  of operation should provide a
 concise description and implementation
 schedule,  compiled  in  chronological
 order, that includes  the  major topics
 that  are  summarized  in the following
 sections.

 12.4.1
 BUDGET           Be  sure provisions
                  are made  for  an
 annual budget  sufficient  to  provide
 for  efficient O&M,  and  replacement
 (during   project's  useful   life)
 including  administration,  supplies,
 utility  charges,  and  ancillary
 equipment.
Your  budget  should  also include
provision  for salaries and benefits to
attract  qualified personnel, and funds
to train and upgrade employees.

Timely enactment and implementation of
the user  charge system and  sewer use
ordinance  is  important  to  ensure that
adequate  revenue  is  available  in
advance  of  start-up  to support your
budget needs.  Your revenue generation
should be  reviewed prior to the  end of
the first year's  performance  period
and compared  to actual  operational
costs.  Costs should be reviewed on an
annual basis thereafter.
12.4.2
FINANCIAL
MANAGEMENT
SYSTEM
                 Your  management
                 system can  be either
                 a manually  operated
                 system  in  a  small
wastewater  treatment  plant  or a
computerized  system in a larger plant,
although) recommending a  computerized
system  does  not  imply  the  system
cost  will  be eligible  for grant
participation.   At  a  minimum,  your
system should include the following:

  o  Contain  an  accounting of daily
revenues  and expenditures for  project
O&M  including replacement  of parts
during useful  life;

  o  O&M and replacement  costs and
expeditures incurred  during  the
project's  useful  life  for  materials,
labor,  utilities,  and  other  items
which are necessary  for  managing  and
maintaining  the project to achieve  the
capacity  and performance  for  which  it
was planned,  designed, and built.

Replacement  costs included in  your
Financial  Management  System  are  those
costs  for  obtaining and installing
equipment, accessories, or appurtences
during  the useful  life  of  the
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treatment  works  necessary to maintain
the capacity and performance for which
they were  designed and constructed.
12.4.3
STAFFING  AND
TRAINING
                 You should develop a
                 staffing plan  to
                 include  staffing
patterns  and salary schedules,  staff
structure  and  organization,  and
operator   certification  requirements.
Your  staffing  plan  should   also
include provisions to:

  o  Hire the chief operator before
construction  is  50  percent  complete
(50 percent  payment);

  o  Discuss potential  hiring problems
that may  be  encountered and actions to
solve the problems  at  least  60 days
prior to  start-up;

  o  Develop a  continuous employee
safety   and  operations  training
plan, and schedule training  at  least
30 days prior to start-up;

  o  You  should  formally  review
adherance  to  the  staff ing  and
training  plans prior to the end  of the
1-year performance period.
12.4.4
EMERGENCY
OPERATIONS
PROGRAM
                 You should develop a
                 program   that,
                 addresses  emergency
                 operations.    The
program should include:
  o  A vulnerability  analysis  of the
system,

  o  An emergency response program;

  o  A  periodic  revision  of  the
program as  necessary;

  o  Protection measures.
                                         12.4.5
                                         ADMINISTRATIVE
                                         FUNCTIONS

                                         following:
                 As administrator  of
                 the  project, you
                 should  provide  the
  o  Provide program and  laboratory
facilities  which  are  adequate  to
perform  appropriate monitoring  and
analyses  for  process  control  and
compliance with the National Pollutant
Discharge Elimination  System  (NPDES)
permit  and State requirements;

  o  Implementation  of  a  quality
assurance  program  to  evaluate  and
improve laboratory  analysis  and
reporting  of self-monitoring  NPDES
data;

  o  Ensure  that  arrangements  for
submission  of appropriate  operational
reports to  the State have been made;

  o  Assure  that   adequate considera-
tion has been given to  operational
procedures during the start-up period;

  o  Develop  and  implement  a
maintenance management  system;

  o  Establish procedures  for start-up
and continued engineering  services for
1 year  after  initiation of operation
(i.e.,  1-year performance  period);

  o  Provide a complete  and up-to-date
O&M  Manual  that  is revised  during
the  1-year  performance  period  to
reflect  actual operating  conditions.
Additional  information  on operations
is   included  in  Section  14.6.
Recommended content of the O&M Manual
is described in Section  12.4.7.
                                          12.4.6
                                          START-UP
                                          SERVICES
                 If start-up  services
                 are  provided,  the
                 amount  of  services
must be reasonable for the project's
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complexity and size.  Professional
judgement  should  be  used  in
determining both  the  duration and
amount  of  start-up services  needed.
These  services  should  result in the
project being  on-line and  in full-time
operation  for  the  purpose  for  which
it was planned,  designed,  and  built
(Section 14.6).

The  start-up  services  consist
primarily  of  operator  assistance
and training,  with observation by
qualified operators.  On-site training
rendered during the 1-year performance
period  is  over-the-shoulder operator
assistance  with  the  operator
performing daily facility  operations.

Start-up  services  should  include
training of personnel  in  the  areas
of:

  o O&M  of  specific  treatment
processes to include:

    -  Competent  operational
       assistance for  adjustment
       of  the  treatment  process
       and  related   equipment
       functions to attain  an initial
       stable  state  of continuous
       performance,  safety,  and
       reliability  under  actual
       operating conditions.

  o Detailed  laboratory procedures
including:

    -  Training  and instructions to
       provide  adequate  sampling,
       testing, and quality assurance
       needed  for process  control
       and regulatory  monitoring
       reporting,  including  the
       necessity  for  laboratory
       certification   by   the
       regulatory  agency.
  o  Maintenance  Management System
including:

     -  Services  needed  to implement
       the  maintenance  management
       system outlined  in  the O&M
       Manual,  such  as  lubrication,
       oil and filter changes, and
       other preventive  and  correc-
       tive maintenance procedures as
       well as spare- and consumable-
       parts inventory.

  o  Records Management System setting
forth:

     -  Services  to  provide  the
       training  needed  to implement
       a  records management system
       as  outlined  in  the  O&M
       Manual.   This  system will
       become  a  major  element in
       larger and  more complex
       projects  that  require more
       sophisticated  systems  to
       adequately handle  records
       related to process control,
       effluent  quality   monitoring,
       reporting  requirements,
       inventories  for  chemicals,
       supplies and spare parts,  etc.
12.4.7
OPERATION AND
MAINTENANCE
MANUAL
                An O&M Manual  is an
                essential  part  of
                the plan of opera-
                tion.    Grant
payments  made  to you  from  your
reviewing  agency  will  not exceed
90 percent  of  the  grant award  amount
until  a satisfactory O&M  Manual has
been  accepted  by your  reviewing
agency.

The  O&M  Manual  should  provide
essential information and guidance for
the treatment works for  day-to-day
operations.   The  following  major
topics  should  be included  in the O&M
Manual:
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  o  Information on  process design
assumptions  such as  design flows,
peak flows,  pump capacities,  sedi-
mentation  basin  detention  times,
surface  loadings,  weir  loadings,
food-to-microorganism loadings, oxygen
transfer  requirements,  simplified
schematic  diagrams  of  the  project's
pipelines,  control  systems, and
detailed  diagrams of more complicated
components;

  o  Unit process  information  that
includes  control  measures and
monitoring  procedures  for   various
processes  for  achieving  maximum
efficiency, including a  clear explana-
tion of process functions  of various
components  with  simplified  language
and referencing appropriate equipment
manufacturers'  manuals  and EPA
technical  manuals for  more  detailed
technical information;

  o  Start-up procedures for each unit
operation and piece  of equipment;

  o  Maintenance management system
including schedules  and  procedures for
routine  adjustments,   lubrication,
oil  and  filter  changes,  and  other
preventive  and  corrective maintenance
procedures  as well  as  a spare  parts
inventory;

  o  Laboratory test   procedures,
schedules,  and  equipment,  including
quality  assurance  necessary for
control  of the  treatment  works,  and
the  specific reports  to be  sent  to
local.  State, and Federal  regulatory
agencies;

  o  Safety  procedures  for operating
equipment  with  particular emphasis  on
potentially  hazardous  areas   such  as
wet  and  dry wells,   chlorination
facility, and anaerobic  digesters;
  o  Organizational  structure,  job
descriptions  and  duties, administra-
tive procedures  for purchase  order
preparation  approvals   and  budget
preparation, etc;

  o  "Troubleshooting,"  analyzing  and
solving  problems  which frequently
occur  in  treatment works which  are
related either  to  unit  processes  or
the  operation of  specific  pieces  of
equipment;

  o  An operating plan for emergencies
which may occur and the  procedures to
be followed until  normal  operation can
be resumed.

A  further description   of  the  O&M
Manual  is   in  EPA's  publication
"Considerations  for Preparation  of
Operation  and  Maintenance Manuals"
(EPA-430/9-74-001).
12.4.8
O&M PROGRAM FOR
COMPLETE WASTE-
WATER TREATMENT
SYSTEMS
                 The  plan    of
                 operation   must
                 include  development
                 of an  operations and
                 maintenance  program
that coordinates all O&M activities of
the newly constructed facility as well
as  the O&M  activities of the  other
facilities that comprise your complete
waste treatment system.
12.5
ONSITE AND
CLUSTER SYSTEMS
                 If  your  project
                 includes onsite  or
                 cluster  treatment
systems, you will be required to:
  o  Assume  responsibility  for
participating  contributors   including
proper  installation, operation  and
maintenance;

  o  Assure  that  systems  will  be
constructed,  operated and maintained
to   protect  underground  potable
water sources;
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  o  Develop a user charge system  and
sewer use ordinance;

  o  Obtain  reasonable access to  all
systems;

  o  Establish  a  comprehensive
management  and   inspection  program
including water well  testing.

During the  design  phase you should
prepare  a  brief  report addressing
these responsibilities and indicating
how and when they will be implemented.
12.6
INNOVATIVE
DESIGNATION
RECONFIRMATION
                 During  the  develop-
                 ment   of   your
                 facilities plan  you
                 evaluated numerous
wastewater  treatment  systems.   The
project,  or its components,  selected
in your facilities plan may have been
initially  designated  as innovative
(Section  6.7.3).    Based  on  the
criteria  used  to classify  your
project,  it  may be  necessary to
reconfirm  that designation  during
design.

Conventional  processes  proposed as
innovative  technology projects require
more detailed  evaluation  in order to
confirm the  significant cost or
energy  savings or satisfy the  other
innovative  criteria.   For example, it
may  be  necessary to  recompute  the
cost  or  energy  savings  after  a
significant  portion  of the  design is
completed  and compare  it  with  the
estimates  in the facilities  plan.  On
the other hand, the reviewing agency
may determine  that a treatment system
is  innovative  because  of  local
variations  in  geographic  or  climatic
conditions  or because  it  achieves
significant  public benefits  which
would  not  otherwise  be  possible.
Based on the  results of reevaluation
                                         the project  or  component parts may be
                                         confirmed  as innovative  or lose that
                                         designation.  In  the  latter case, you
                                         should  resolve  with  your  project
                                         reviewer whether  to continue with the
                                         project design presently  under way.
                                         12.7
                                         PLANNING FOR
                                         LOCAL FUNDS
                 One  criterion  for
                 evaluating   and
                 selecting   your
project  during the facilities planning
phase  was  a financial  capability
analysis  (Section  7.3).   At  the
conclusion  of  design you  should
reevaluate  the financial impact of the
project  upon  your  municipality's
financial  status  to  ensure that  the
project is  not too costly.    For
example,  your A/E will  have prepared a
revised  cost estimate  of  the  project
based upon  the detailed construction
drawings  and specifications  and
current  costs  of  construction.   These
costs should be  compared with  the
estimates in your financial capability
analysis.   You should also reexamine
your  municipality's  indebtedness
or  ability  to  finance the  local
cost  share.   During  the time  from
completion  of your facilities  plan
to  completion  of design,  your
municipality  may  have incurred  other
debts or undergone other changes which
affect your debt  limitation.   If you
determine that your project is not too
costly,  you should undertake financial
arrangements  to  ensure that you  can
obtain  the  non-Federal   funds  for
construction  generally within  90 days
of grant award.  If you determine that
your project is too expensive based on
the  criteria in  Section  7.3,  you
should meet with your project reviewer
to determine means of reducing project
costs.
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       PART III.  CONSTRUCTION

            CHAPTER 13

         GRANT APPLICATION
13.0
NARRATIVE
STATEMENT
                 Your  Step 3  grant
                 assistance applica-
                 tion  will  include
your completed  facilities  plan,
bidding documents  including  construc-
tion  drawings  and   specifications
as  well  as  other  supporting  or
supplementary  information.   Supporting
information  may  include such items as
final  NPDES  permit,  discussion  of
historical  sites,   estimated indirect
costs, compliance   reporting schedule
(Form  4700-4),   Minority  Business
Enterprise/Women  Business   Enterprise
(MBE/WBE)  requirements and  report (EPA
6005-1),  cost  summary report  (EPA
5700-41),  and certification that  you
will comply  or have complied with all
applicable Federal,  State,  and local
laws and  ordinances.

After grant award  your  Step  3
activities  will  not  only  include
building  the project  but  also  may
include  other  activities  such  as
preparation   of the  final  plan  of
operation,  implementation of  your
user charge  system, etc.    Therefore,
you  may  find it helpful  to prepare
a  narrative  statement  which
describes  your   project's  history
(e.g., pertinent  correspondence with
your reviewing agency  concerning your
facilities  plan, environmental  review
or  design)  and the activities  you
intend to  undertake after grant award.
The narrative  statement serves to tie
together  all   the  separate  activities
(schedule,  scope   of  work, costs),
places them  in proper  perspective and
helps attain complete understanding of
your project  by  the  project  reviewer.
                                          If you  choose  to  provide  a  narrative
                                          statement, it  could  be  part of your
                                          letter  forwarding  the  application
                                          package or a  separate attachment.
                                         13.1
                                         CONTENTS OF
                                         APPLICATION
An application  for
Step  3   grant
assistance includes:
                                           o  A  facilities  plan  prepared
                                         in accordance with the  regulations
                                         (40 CFR  Part  35, Subpart E  or  I  as
                                         appropriate);

                                           o  Certification  from  the  State
                                         that  there  has  been adequate public
                                         participation based on State and local
                                         statutes (Section 3.1);

                                           o  Notification  of any advance  of
                                         allowance  received  from the  State
                                         (Introduction, Grants Program);

                                           o  Evidence  of compliance  with  all
                                         applicable  limitations  on award
                                         (Section 13.2);

                                           o  Construction  drawings  and
                                         specifications  suitable  for  bidding
                                         purposes (Part II of this  book);

                                           o  Project schedule;

                                           o  In the case of an  application
                                         for Step  3  assistance  that  includes
                                         the  acquisition  of eligible  land,
                                         include a plat which shows the legal
                                         description  of  the  property to  be
                                         acquired,  a  preliminary layout of the
                                         distribution and drainage  systems, and
                                         an explanation  of the intended method
                                         of acquiring the property;

                                           o  In the case of an application for
                                         Step  2+3 grant assistance, include the
                                         above  items,  except  drawings  and
                                         specifications   and  eligible  land
                                         description.   Note that  not all
                                         of the limitations on  award are
                                         applicable  at  the time  of Step  2+3
                                         application.
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The following  sections  discuss  the
contents of an application (other than
facilities  plans  and  project design)
and in  the case of  limitations  on
award,  list  the items  and  provide
references  to  other sections  of this
book.

13.1.1
INTERGOVERNMENTAL At an early  state in
COORDINATION      development  of your
                 project,  you  were
encouraged to  obtain comments that
will  indicate the degree of concern
other  agencies  have   in your project
(Section  2.3).   You should review
any comments received  to  identify
sensitive  issues for evaluation in
your  facilities  plan.   In  addition,
your  State  may have established
procedures  under EO 12372,  which
replaces  Office of  Management  and
Budget  (OMB)  circular A-95,  for
consulting between State  and  local
officials  and  Federal  agencies
concerning  activities under  Federal
programs.   In this case, certification
that  these  procedures have  been
complied  with must  accompany your
application.    Also,   further contact.
may  be  required at the  Step  3
application  stage  even if  you  had
previous  contact earlier in  the
planning or  design  stages.   Contact
your  project  reviewer for  additional
information.

13.1.2
APPLICATION FORM  The  application  form
                 (EPA Form 5700-32)
contains specific instructions for its
completion.   The form is  signed by
your   authorized   representative
acting  as  the  "applicant"  for grant
assistance.   Include a  copy of the
resolution  designating the  official
authorized  to  sign the  application.
Three items,  however,   require special
attention.
Site Information

For  projects  requesting  grant
assistance for  acquisition  of
eligible land a plat  which  shows a
legal  description  is  required
(Section  13.1).   For  projects
requesting  grant assistance  for
eligible  land previously acquired or
for which an option  for  purchase has
been taken and for  which approval  as a
preaward  cost (Section  13.2) has  been
granted, submit a copy  of the deed
or other  interest in the property  or a
copy of  the  option.    In both  cases,
the  deed  will  include  provisions
which note  and  protect  the Federal
interests.

For projects   involving  land
acquisition  not eligible  for grant
assistance,  the  land, easements
or  other  real  property  should be
obtained,  bonafide options  taken or
formal   condemnation  proceedings
initiated   before  application  for
grant  assistance  is  made.   The
municipal   attorney  will need to
describe  the status  of  your  real
property  acquisitions  in a  separate
attachment to your  application.

Sludge  Management

Grant  applicants  should  demonstrate
that provisions   have been  made to
manage the solids generated by the
project  in  a cost-effective manner
that provides for the  protection of
public health  and the environment.
This  demonstration  should   include
evidence  that any  special  permits or
approvals  for the sludge  management
system  have  been addressed.

Funding Local Share

The application  form  requires
information concerning the  amount of
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 grant  assistance  (Federal,  including
 EPA or  Farmers  Home Administration,
 and/or  State;   Section  13.5  and
 Appendix F)  you  expect to receive.
 You should  explain fully how you will
 raise  the non-Federal  project funds in
 order  to initiate  procurement actions
 to build the project promptly.   If
 procurement  action  for  building
 the project is not  initiated promptly
 after  grant award,  your grant  may be
 subject  to  sanctions (40  CFR Part 30).

 In addition, failure to  promptly award
 all subagreements  for  building  the
 project  will result in a  limitation on
 allowable  costs  (40 CFR  Part  35,
 Appendix A, a.Z.e.)
 Assurances
 Review  the assurances  contained in
 Part V  of  the grant  application form
 carefully.  After grant  award you will
 have to anticipate and  plan  for  the
 work  involved  in  meeting   these
 assurances.
 13.2
 LIMITATIONS ON
 AWARD
                 Before grant  award
                 the  State  agency
                 must  approve  your
facilities  plan   and  construction
drawings  and specifications, determine
that all   regulatory requirements are
met and that costs requested for  grant
participation   are  reasonable  and
allowable.   Many of these  limitations
will  have  been satisfied  if  your
facilities  plan  and design have been
completed  in accordance  with  this
guidance.    However,  the  limitations
are  listed  below   as  a  convenient
check to you and referenced  to  other
sections  of this book or  are briefly
described as appropriate.
I Advanced Treatment
 Projects  for which  the  incremental
 capital  cost of  advanced treatment
exceeds  $3  million are to be reviewed
and  approved by  EPA headquarters.
Projects with  incremental costs  of
$3  million  or less are  reviewed
by  the  Regions or delegated  States
(Section 9.2.1).

Water Quality Management  (WQM)
Plans

Projects  will  be  consistent  with
applicable  WQM  plans and   grant
applicants  shall  be  as  designated  in
the plan (Section 4.0).

Priority Determination

Projects will be listed on the  State's
project  priority list.  (Introduction,
Grants Program; Section 4.1).

Funding  and Other Considerations

Grant applicants will  agree  to pay
the  non-Federal   project   costs;
demonstrate the legal, institutional,
managerial  and  financial   capability
to  ensure adequate building  and
operation,  maintenance and  replacement
(OM&R)  of  the  treatment works.   The
applicant must  certify that the costs
and financial  impacts  have  been
analyzed a-nd that the applicant has,
or  has   the  capability to  obtain,
the financial  resources,  technical
qualifications,  experience,  satis-
factory  performance record,  accounting
and auditing  procedures,  property
management   system,  procurement
standards,   organization,   and
facilities  appropriate  to  carry out
and manage the project (Section 7.3).
The  applicant must also certify that
it  has  not  violated  any  Federal,
State,  or  local  civil  rights, equal
employment  opportunity,  labor  law, or
other  statutory  requirements  in
connection  with facilities planning or
design work.
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Debarment and Suspension

Grant  applications  will  indicate
whether a  subagreement was awarded  to
an individual, organization or unit  of
government  for  facilities planning  or
design  work  whose  name appears  on
EPA's  master  list  of  debarments,
suspensions  and voluntary exclusions
(40 CFR Part 32).

If  grant   applicants affirmatively
certify that   such an award  was
made,  EPA  will  closely examine the
facilities  plan, construction drawings
and  specifications to  determine
whether to  award a grant.

Plan of Operation

A  draft plan   of  operation  which
includes a  schedule for  the prepara-
tion  for  and operation of  the
treatment  works   must  accompany
the  application.   The plan  of
operation must address the:

  o  Operation and maintenance manual;

  o  Emergency operating  program;

  o  Personnel training;

  o  Adequate budget;

  o  Operational reports;

  o  Laboratory testing needs;

  o  Operation and maintenance
     program.

During  building of  the  project the
plan of  operation  must  be finalized
and implemented  (Section  12.4).

Intermunicipal Service
Agreements

Executed  intermunicipal  service
agreements  or  other legally  binding
instruments  covering  the  basis  upon
which costs are allocated, the formula
for cost  allocation,  and the manner in
which the cost  allocation system will
be administered will  be submitted for
Step  3  projects  if  the  project
serves  two or  more municipalities
(Introduction, Managing Your Project;
Section  8.5.1).  This requirement may
be waived if:

  o  An  agreement is  already in place;

  o  Historical evidence for services
between  parties exists;  or

  o  The  grant  applicant   is
financially strong enough to continue
the  project  even  if  one  of  the
proposed communities  fails  to
participate.

Segmented Treatment Works

Grant assistance may be awarded for a
phase or segment of a treatment works,
although the  phase or segment  does
not  result in  compliance with  the
enforceable requirements of the Clean
Water Act (CWA), provided;

  o  A  phase  or  segment  is  a
substantial  portion of a facility and
its  interceptors,  if any.   These are
described in the facilities plan;

  o  Grant  agreements  require  the
recipient to make the treatment works,
of  which the  phase or segment  is a
part, operational and comply with the
enforceable  requirements  of  the
CWA according  to  a  schedule specified
in the grant agreement, regardless of
whether grant funding is available for
the  remaining phases  and segments;
and

  o  One  or  more  of the  following
conditions exist:    (1) the  federal
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 share  of  the cost  of building  the
 treatment  works would  require  a
 disproportionate share of the State's
 annual  allotment  relative to  other
 needs or would require a major portion
 of  the State's  annual   allotment;
 (2)  the  period  to  complete  the
 building of the treatment  works will
 cover  three years or more;  (3)  the
 treatment  works must  be  phased  or
 segmented  to meet  the  requirements of
 a Federal  or State court order.

 Step 2+3

 Grant assistance for  Step 2+3 projects
 is  limited  to:   municipalities with
 population of 25,000  or less according
 to  latest  U.S.  Census; total  Step  3
 building cost of $8  million  or less;
 and   complete  treatment  systems
 (i.e., not  for treatment  works phase
 or  segment).   Prior  to  acquiring
 eligible real  property, submit a copy
 of  the plat  and  legal description
 (Section  13.1).   Before  initiating
 procurement  for  building the project,
 the  reviewing  agency must  approve
 the  construction  drawings  and
 specifications,  plan of  operation,
 sewer use  ordinance,  project schedule,
 intermunicipal service agreements, and
 user charge  system.

 Access to  Individual  Systems

 Grant  applicants  will provide
 assurance   of  access  to  privately
 owned  individual  systems  and  provide
 assurance   of  complete   management
 capability   for   small  alternative
 wastewater  treatment  systems
 (Section 6.7.2).

 Revised Water Quality
 Standards

[Grants may not  be  awarded  after
I December 29, 1984,  where the State has
failed  to review and revise  or adopt
(as appropriate)  new water  quality
standards relating to your project.

Marine  Discharge Waiver
Applicants

Grant applicants who have also applied
for  a   secondary  treatment  waiver
(Section  301(h)  of the  CWA)  will
include with their applications
provisions  for   possible  future
additions  of  wastewater treatment and
sludge   management  processes   to  meet
full  secondary treatment requirements
(40 CFR, 35.2112).

Environmental Review

Grant  applicants  will  have consulted
with their  reviewing agency,  prior  to
completing  a  facilities  plan,  to
determine  the appropriateness  of a
categorical exclusion from substantive
environmental  review  or the  scope  of
an environmental  information  document
as an  integral  part of the facilities
plan.    The  reviewing  agency  will
have determined,  ideally after the
completion  of the facilities plan, the
appropriateness for  a  finding  of no-
significant-impact or the  need  to
prepare an  environmental  impact
statement  (Section 9.2.2).    An
application   for   grant  assistance
will be submitted only  after EPA
has  completed  the appropriate
environmental  document  in  accordance
with 40 CFR Part  6.   Based  upon  a
revised  environmental  analysis  to
reflect  only  significant   project
changes made during design.

Value Engineering

Projects with total estimated costs  of
building the treatment works in excess
of $10  million will  be  subject  to
value engineering prior to grant award
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(Section  12.1).  Value  Engineering
recommendations  shall  be  implemented
to  the  maximum  extent  feasible.

Collection System

Except as provided by  the  Regulations
(40 CFR  35.2116), projects  involving
sewage collection systems will be for
replacement or major rehabilitation of
existing  systems  not  built  with
Federal  funds  awarded  on  or  after
October  18,  1972,   and  necessary
to  the  integrity  and  performance of
the complete treatment system, or for
new systems where the  bulk  (generally
two-thirds)  of  the expected  flows are
from  residences  in existence on
October  18,  1972  (Section 6.4).
Major rehabilitation of existing  sewer
systems  are ineligible after September
30,  1984  (CFR, 35.2015).  Grant
applicants will  provide assurance  that
existing  residences  will  connect to
the sewer  system within a  reasonable
time after project completion.

Preaward Costs

In  general, project  work  performed
before grant award  is not  allowable
for grant  participation except:    an
allowance  may  be  included in  the
grant  award  for facilities  planning
and design for preliminary Step  3
work;  in  emergencies  or  where  delay
could  result   in  significant  cost
increase (e.g.,  procurement of  major
equipment  requiring  long  lead times,
field testing of  innovative  and
alternative (I&A) technologies,  minor
sewer  rehabilitation,  acquisition or
option for purchase of eligible land,
advance  building of minor portions of
the treatment  works);  and only  after
completion  of the environmental review
and approval by  the  reviewing agency.
Prior  approval  of preliminary Step  3
work  is  not  an actual  or  implied
commitment  of  grant  assistance,
and potential grant applicants proceed
at their own risk.

Infiltration/Inflow (I/I)

Grant  applicants shall  demonstrate
that  the proposed  treatment  works
project  is  not nor will  be subject
to excessive I/I (Section  5.4).

Approval of User Charge System and
Proposed Sewer Use Ordinance

A  user  charge  system  (Section  12.2)
and sewer use ordinance (Section 12.3)
will  be  approved before  grant award.
Where an existing  system  or  ordinance
is in  effect it must  be  demonstrated
that  it is  adequate  and  being
enforced.

Reserve Capacity

Grant assistance  for reserve capacity
will  be limited depending  on the date
of Step 3 grant award  and the date of
earlier segmented grant awards, if any
(Sections 5.5 and 7.2).

Treatment of Wastewater from
Industrial Users

Grant  assistance  is provided  to
projects  whose   principal   purpose
is  the  treatment  of domestic
wastewater  of  the entire community
concerned and may not include costs of
interceptors   or  collector  sewers
constructed  exclusively, or  almost
exclusively, to serve industrial users
or costs for  control  or removal  of
industrial  pollutants   unless  the
applicant  is  already  required  to
remove  such   pollutants  from  the
nonindustrial users (Section  6.9).

Federal  Facilities

Grant assistance must  not  include the
costs for transport  and  treatment of
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wastewate'r  generated  by a  Federal
facility which  contributes  more
than 250,000 gallons per  day  (gpd) or
5 percent of the design  flow of the
treatment system, whichever is less.
13.3
OTHER  STEP 3
CONSIDERATIONS
                 Other Step 3 actions
                 that  should   be
                 undertaken   either
prior  to  or after Step 3  grant
award include the following.   These
actions  and  their  timing are briefly
described below.
You may need to  furnish evidence  of
your  participation in  the  flood
insurance  program (Section 11.2.2),
you  may  need  to  describe  your
procedures  to comply with  your pre-
treatment program (Section  8.5.4),  or
you may wish to  continue  with your
public  participation  program  (Section
3.1).   In any case, you should provide
sufficient  information  and  documenta-
tion  to describe the activities  you
will  undertake during Step 3.

Grant Payment Schedule

Your application should  include a
preliminary  or  final   schedule  for
disbursement of  grant  funds.   The
payment  schedule may  be  revised after
receipt of  bids  if  necessary.  For
smaller  projects  the  schedule may show
quarterly payment requests  but  for
larger  projects  monthly  reports  of
expenditures may  be advisable.   In
projecting  a payment schedule,  refer
to Section  15.4.  This  information is
used  to forecast  your cash needs for
Federal budgetary  purposes.   Give
careful consideration  to  your cash
flow needs  and  assumptions as  the
schedule is prepared.

Public  Interaction

During construction it  may  be
necessary  to close  streets,  reroute
traffic  or  otherwise  temporarily
inconvenience the  public.   Project
specifications  should require  the
contractor  to  make provisions  for
these  actions  including  notification
to  police, fire  and ambulance
services.   However,  public  notice
of  the  timing  and  duration  of
these   inconveniences  will   help
promote  public  acceptance  and  avoid
complaints.
13.4
PROCUREMENT       You are  encouraged
                 to use  your  own
procurement system  if it  meets the
Federal  minimum requirements  as
described  in  Chapter  16.    It  is
recommended  that,  as early  as
possible,  you  complete and  submit
the "Procurement  System  Certifica-
tion  Form  for  Applicants  for  EPA
Assistance"  (EPA Form 5700-48)  in
accordance  with  its  instructions
(Appendix N).

At the time of grant application one
aspect   of procurement,  namely,
procurement  of  architect/engineer
(A/E)  services,  should be noted.

By  signing  the application  form you
have certified  that  you will   comply
with  the  assurances  contained  in
Part  V  of  the form.   One of  the
assurances requires you to provide A/E
services needed to  complete  the
project,   including  technical
supervision, to  ensure  conformance
with  approved  construction  drawings
and specifications.   In addition,  a
condition of grant  acceptance will
require  that   your  prime  engineer
direct  the operation of the project,
train  or provide  for training  of
operating  personnel,  revise  the
operation  and maintenance  (O&M)
manual,   prepare  curriculum  and
training material for  operating
personnel,  observe   and  periodically
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report  on  the  performance  of the
project,  and advise you  whether the
project  is  meeting its  performance
standards.   Part of these activities
are to be carried out during the first
year of operation of the project.

The  procurement of the A/E firm to
provide  these  services must comply
with the  applicable provisions of your
certified procurement  system or, in
the  alternative,  EPA's  procurement
regulations.  Costs for these services
should be anticipated  prior to, and
included,  in your  application for
grant  assistance.   You  should  note
that  under  certain  circumstances
you  may  continue  with  the same A/E
firm which  provided  engineering
services  during facilities planning or
design without  having  to  readvertise
and   reevaluate  candidate  firms
(see Section   16.5.5).   You may
also consider  the use  of  "Force
Account"  to  provide certain  services
(Section  15.3).
13.5
FEDERAL GRANT
SHARE
                 After  review  and
                 approval   of   a
                 completed applica-
tion,  grant assistance will be awarded
based  on the sum of the total  Step  3
allowable cost  plus the allowance.
Unless  the  Governor  has uniformly
lowered  the  Federal  share,  as
discussed  in the introduction,  grant
assistance will be:

  o 75  percent  before  October 1,
1984;

  o 55  percent after September 30,
1984;  or

  o 75  percent after September 30,
1984,   for  all  phases  or segments
of  treatment  works,  not including
collection systems,  major sewer system
rehabilitations,  and   combined  sewer
overflows  only if the  initial  phase
or a  segment  received Step 3  grant
award prior   to  October  1,  1984
(40 CFR, 35.2152);

  o  I&A technology projects or  their
I&A components may receive increased
Federal grant assistance of 20 percent
greater  than  conventional  projects.
Grant assistance  will not exceed  a
total Federal share  of  85 percent
(75 percent after September 30, 1984),
except for  certain  cases, such as
segmented  projects or as described in
the CWA.

The  1981  amendments to  the CWA
eliminated  grants   for   facilities
planning (Step  1)  and design (Step 2)
and substituted an "allowance" as part
of the Step 3 grant  to help defray
the cost  of these activities.  The
allowance  is not intended to reimburse
you on a  dollar-for-dollar basis for
cost  incurred during  planning and
design.    Rather,   the   amount of
the  allowance  is  based on the
percentage of building costs that have
historically  been attributable to
facilities  planning  and  design
activities.    Appendix  B  to  EPA's
grant regulations (40 CFR Part 35,
Subpart  I) provides  specific  details
for computation  of the allowance and
should be consulted  as you prepare
your grant application.  The construc-
tion grant regulations are  included in
Appendix  M.   Briefly, however, the
procedures may  be  summarized as
follows:

  o  Prepare  an  estimate of the
allowable  building  costs for your
project  (generally prepared by  your
A/E);

  o  Use  Table 1  or  2 (included in
Appendix B cited above)  depending on
whether you received a Step 1 grant;
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  o  Enter  the  appropriate table with
the estimated  allowable building cost
and  determine  the allowance as  a
percentage  of  the  estimated allowable
building cost  (interpolate  between
values);

  o  Compute  the  estimated allowance
(in  dollars)  by multiplying  the
(allowance  percentage)  determined  in
the  previous step  by  the  (estimated
allowable)  building costs.

The Federal share  (the amount of the
EPA  grant)   is  determined  by   summing
the allowance and the Step  3 allowable
cost and multiplying  this  amount  by
the  appropriate   grant   percentage
described  at  the  beginning  of this
section.

The  limitations  on  computing  the
allowance (initially  based  on
estimate;   final   after  bids  are
accepted  and payment of the allowance
(both for Step 3, Step 2+3  and  advance
of  allowance)   should be  carefully
noted as  you prepare your  application
for grant assistance.

In  States  which  provide  State grant
assistance  and  for projects which are
designated  as  innovative  or alterna-
tive (I  or A),   the State  grant
must be  in the same proportion  as
provided  to non  I  or A projects.  For
example,  assume a conventional  project
with  a  total  cost of  $100.   The
Federal  share  would be $75  and  the
non-Federal  share  the  balance or $25.
If  a  State is  awarding  15  percent
grants,  the State  grant  would be $15
and  the  local  share $10.   The State
grant represents 60  percent ($15/$25)
of the non-Federal  share.  If an I or
A  project  costing  $100 is awarded an
85  percent  Federal grant  or $85,  the
non-Federal share is $15.   In this
case, the  State grant is  required to
be  60  percent  (as before)   of  the
non-Federal  share or $9  (60 percent x
$15) and  the local share  is  $6 (40
percent x  $15);

The term  "treatment works  phase or
segment" means a substantial   portion
of  a  treatment facility.    Under
certain   circumstances,   after
September  30,  1984,  a phase  or  segment
of  a treatment works may be eligible
to  receive  75 percent  funding
(grandfathering).    The  requirements
for grandfathering and  the  funding
sequence for  grandfathered  phases or
segments are set  forth  in the  Federal
Share  section  and are explained in the
preamble  of the construction grant
regulation (40 CFR,  Part  35 Preamble;
40 CFR, 35.2152).

All grants  are  subject to  Federal
appropriations and  the  availability
of  remaining  funds  in  the  State's
allotment  or required reserves.

13.6
GRANT  AWARD      State  reviewing
                 agencies   must
receive and  review all  applications
and supporting documents  to  assure
they   are  complete.   The  State
reviewing agency must  also  certify
that the  project is  on  the fundable
portion of  the State  priority  list.
In  States  which  have  been delegated
authority  to  review  and certify all
requirements  necessary  for  award of
Step 2+3 and  Step 3 grant assistance,
the State  will  provide such  certifica-
tion to EPA and EPA will  have  45  days
in which to approve or disapprove the
application.  If  EPA does not  approve
or  disapprove  the  application  within
45  days,   the application will  be
deemed  approved subject  to  available
appropriations.

In  States  which have not entered  into
delegation agreements  with  EPA or do
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not  have  sufficient  authority  to
certify  all  necessary  requirements,
the  State  will  provide EPA  with
certification  and  other  such
documentation  as  has been agreed to
between the State and EPA.

As a  result  of the review process,
the  project reviewer may modify  the
grant  amount,  scope  of  work  or
other  aspects  of the  project.   In
addition,  special conditions  based on
recommendations from the State agency
may be included in the grant agreement
(EPA Form 5700-20).

The completed grant  agreement  will be
mailed to you.   You should  promptly
review the grant agreement.  To accept
the grant, you must  sign and  return
the agreement to EPA within 3 calendar
weeks after  receipt  (40 CFR,  30.305).
The person signing  and  accepting  the
grant is the authorized  representative
(usually the same  person who  signed
the application form).  If there is a
new  authorized  representative,  an
authorizing  resolution  will  be
included  with  the  agreement.  Once
signed, the  agreement forms  a  legally
binding contract  between you  and  the
Federal government.   You should review
the  agreement carefully and,  if
necessary,  discuss   any changes from
your  application with  your  project
reviewer.   Also, note  special  grant
conditions  that require  attention
during your project.
            CHAPTER 14

       PROJECT CONSTRUCTION
14.0
PROJECT
CONSTRUCTION
                 After grant award,
                 you  may  initiate
                 procurement  of
construction  contracts.   Procurement
is discussed  in  Chapter 16 and you
should  comply with guidance in  that
chapter  concerning the use of your or
EPA's procurement  system.
14.1
GRANT INCREASES/
DECREASES
                 At  the  time  you
                 submitted your grant
                 application,  you
requested a  grant  based  on your
estimate  of  allowable  project  costs
including building  costs.   Your
building  costs may also have included
a  "construction  contingency"
(typically  10  percent or  less  of  the
estimated building  costs)  since  you
cannot  be sure of the costs until  the
project  is  bid.   After  receipt of
bids, your building costs are more
firmly  established and the contingency
should be  reduced  (typically 2 to
5 percent).   The post bid contingency
covers  minor   changes  such  as
differences  between estimated  and
actual  quantities  of material
on  unit  price  items  or  unknown
field  conditions  which may be
encountered.

14.1.1
GRANT INCREASE    If the  bid  prices
                 from  the successful
contractors  exceed  your estimated
building  costs   including  the
contingency  and if  the  prices  are
reasonable  and you  wish  to award  the
contracts,  you may  apply  for  a grant
increase.   You  should  submit your
request  and  supporting documents
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to  your  reviewing  agency.   If
appropriate  and  assuming  sufficient
funds remain available in your State's
allotment  (most  States  maintain a
reserve for  grant  increases), your
grant should  be amended by  the  State
and EPA.

14.1.2
GRANT DECREASE    If your  building
                 costs are lower than
estimated  in  your grant  application,
the  State  agency  may  initiate
action to  reduce your  grant to the
appropriate level.  By doing  so, the
State may  recover  sufficient  funds
from your  project and others to allow
additional  projects  to be funded.   A
grant amendment agreement will  be sent
to you.
14.2
PRECONSTRUCTION
CONFERENCE
                 It   is  recommended
                 that after construc-
                 tion   contract
award you  arrange  a preconstruction
(project   management)   conference.
If  deemed  necessary,  a  separate
preconstruction  conference  may
also be  arranged  by the  Equal
Employment  Opportunity Office  (EEO),
U.S. Department   of  Labor  (generally
where  building  costs  exceed
$1 million) to insure that contractors
comply  with  the equal  employment
opportunity  provisions of  applicable
statutes and executive orders.

The  preconstruction   conference
attendees  should include  you, your
architect/engineer (A/E), construction
manager,  project  inspector,  all  prime
contractors, subcontractors, represen-
tatives  from  public  and  private
utilities, and representatives of your
reviewing agency.  The purpose  of the
preconstruction  conference   is  to
coordinate  schedules,  review and
emphasize  regulatory requirements,
resolve  questions,  and  set  the
groundrules  for  working  together
during  construction.

You  or  representatives  of  your
reviewing  agency,  if  present,  should
generally  have a checklist of items to
discuss at  the conference.  Listed
below  are some of the  more common
items:
  o  Responsibilities  and authority of
each party;

  o  Interrelationship  between
contractor,  consultant, municipality,
State,  Corp  of Engineers,  EPA, and
other involved parties;

  o  Schedules for  completion of
project   and  coordination  between
contractors;

  o  Payment   requests  from  con-
tractors-form,  timing, documentation,
retainage;

  o  Change  orders -  requests,  docu-
mentation, approval levels;

  o  Minimum wage -  posting of wage
rate determination;

  o  Compliance with  local,  State and
Federal laws  such as Occupational,
Safety, and  Health  Administration,
Equal   Employment  Opportunity,  minor-
ity, women's,  and  small  businesses,
etc.

The project  reviewer may also want to
meet separately with  you to  discuss
other items not directly affecting the
construction contractors.  Discussions
may include items such as:

  o  Adequate  engineering  supervision
during  construction;

  o  Reviewing  agency   onsite
observations;
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  o  Management  and  processing of
change orders and/or claims;

  o  Processing of payment requests;

  o  Maintenance  of adequate  records
for subsequent audit;

  o  Schedule  for  sewer  system
rehabilitation, if necessary;

  o  Enactment of  sewer use ordinance
and  user  charge  system  before the
treatment   works is  placed  in
operation;

  o  Development,  approval  and
implementation  of  the  final  plan of
operation;

  o  Continuing A/E services during
the first year of operation;

  o  Preparation  of   records  for
project closeout.
14.3
MONITORING
CONSTRUCTION
                 Your   grant
                 application included
                 an   assurance
that you  will  provide and maintain
competent  and  adequate engineering
supervision  and full-time  inspection
of  the project.    The supervision
and  inspection may  be provided by
municipal  employees (force account
Section 15.3), your A/E  or a construc-
tion management firm.  The supervisory
services  should  provide  technical
assistance  in  the  preparation and
negotiation  of  change  orders,
processing  of  contractors'  payment
requests,  shop  drawing  reviews,
preparation  for  regulatory  agency
onsite  reviews,  and assurance that
the  project  is  constructed  in
accordance with the approved construc-
tion  drawings   and  specifications,
permit  and grant conditions,  approved
                                         addenda,  change  orders,  and  environ-
                                         mental  mitigation  measures.   The
                                         responsibility for  monitoring
                                         construction  activities and resolving
                                         problems, however, rests with you.
                                         14.3.1
                                         ONSITE
                                         OBSERVATION
                 To properly manage
                 the project, it  is
                 necessary that you
provide  adequate   engineering  and
observation  during  the  course  of
construction.   Depending on the  size
and complexity of  the  project,  your
oversight  and inspection may  require
periodic  site visits or a full-time
onsite inspector.    During construc-
tion,  the reviewing agency  or Corps  of
Engineers  will make  periodic  onsite
reviews to  ensure that the project
is  being  managed  properly,  is  on
schedule, and is  being constructed
generally  in  accordance with approved
construction  drawings,  specifications
and change orders.

It  is common  practice  for  most
municipalities to procure an A/E  firm
or construction  management firm  to
supervise  building  of the project
(the  alternative  is  using qualified
municipal employees).  The  firm may  be
the  A/E  who  prepared  the project
design, a  different  firm specializing
in  construction  management,  or   a
combination of both.  The  traditional
engineering  services  provided  during
the building  of  a project include:
technical  observation of the building
to ensure  completion and  conformance
with  the  construction  drawings and
specifications;   providing  expert
opinion on  changes  to the project
including   the  preparation   of
independent  cost  estimates;  and
in  general,  acting  as a  technical
advisor.   The specific  scope  of  work
including  duties and  responsibilities
is enumerated in the A/E subagreement.
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Although  not  a complete checklist,
Table  4  illustrates the  typical
functional  relationships  between  the
various  parties associated  with  the
construction  and performance  of  the
project.

The reviewing   agency will make  both
interim  and  final onsite reviews.   In
most cases,  the reviewing agency  will
provide  you  with a  sample form to be
completed  during the  onsite  review.
You should  notify your  project  team
and contractors  of the pending review
and have documents  and  other necessary
data available for review.   Items
typically  observed at  the time of an
interim  onsite review include:

  o  Adequacy  of engineering super-
vision and observation;

  o  Availability   of  approved
construction   drawings,  specifica-
tions,  as-built record  drawings,  and
change orders at the  project site;

  o  General  conformance  of
construction  to approved drawings,
specifications and  change orders;

  o  Spot  check  of latest estimate of
work-in-place with  the  actual  observed
construction;

  o  Review  of  test  reports   for
materials  and equipment;

  o  Protection  and  storage  of
delivered  equipment;

  o  Display of appropriate  project
sign  and posting  of appropriate
wage rate determination;

  o  Implementation  of  special
construction  techniques  including
erosion  and  sediment control  measures
and other measures to  protect  the
environment;
  o  Hiring and  training of opera-
tional  staff in  accordance with  the
plan of operation;

  o  Progress on the preparation  of
the O&M manual;

  o  Progress toward enacting the user
charge  system and sewer use ordinance
before beginning  operation  of  the
treatment works;

  o  Review of existing  and pending
change  orders and claims;

  o  Maintenance of  schedule for sewer
system  rehabilitation if appropriate;

  o  Adequacy  of  treatment  (no
bypassing)  during construction;

Final onsite reviews will  be made soon
after your  request.   The  final  onsite
review  may  include the above items and
a determination that:

  o  Facilities   are   complete,
operating  and  meet  effluent  limita-
tions  contained  in the  National
Pollutant  Discharge  Elimination
System  permit,  including  pretreatment
requirements;

  o  Facilities  conform to  the
approved  construction   drawings,
specifications and change  orders;

  o  Equipment  is   operational   and
performing  satisfactorily;

  o  Operation  and  maintenance  staff
is hired  and trained in  start-up  and
operational procedures;

  o  Laboratory  facilities  are
complete  and  appropriate  tests
are being performed;

  o  Operation  and  maintenance  (O&M)
manual  is  onsite and operators  are
trained in  its use and application;
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Table 4  Grantee and Contractor Responsibilities
Responsible
party
Functions
Responsibil ity
Needs
Additional
services
Municipality
Manage project
Procure services
Operate facility
Certify compliance
Obtain architec-
tural/engineering
assistance
Obtain legal
assistance
Obtain construction
management
Provide planning
design and/or
construction (force
account)
Provide inspection
Provide review and
VE services
Architectural/
engineering
Design project
Prepare drawings
and specifications
Process compat ability
Insurance for error
and omissions
Subcontracts
Provide shop
drawing review
Construction
management
Provide resident
inspection
Provide OfiM manual ,
start-up services,
and train operators
Provide VE
Construction
contractor
Build facility
Install equipment
Performance
Reliability
Guarantees and
bonds for
equipment and
performance
Proposed cost
savings design
and/or construc-
tion modifications
Equipment
suppl ie-
Fabricate and deliver
equipment
Performance
Rel iabil ity
Warranties or bonds
for equipment and
performance
Provide start-up
services
Provide operator
training
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  o Accounting  records are in  place
and available  for audit;

  o Sewer system rehabilitation  is on
schedule, if appropriate;

  o User charge systems and sewer use
ordinances have been enacted;

  o Provision  for continuation  of
engineering services during the  first
year of operation;

  o Flood insurance is  provided
for the useful life of  the project;

  o Property management procedures
and  property  inventory  is
satisfactory.

The  onsite reviewer  will  discuss
any deficiencies,  furnish you  a
copy  of  his  completed  report and
confirm,   in writing,  agreements
resulting  from  your discussions.
These  services  may also  be  provided
under  separate subagreement.

Services for periodic site visits,
shop  drawings  review,   and  other
engineering services may  be  included
in  your  consulting  engineers
subagreement.   Services for construc-
tion  management  or   resident
inspections are  usually  provided  by
separate subagreement.

14.4
PAYMENT REQUESTS  Interim  and   final
AND LIMITATIONS   grant   payment
                requests   are
prepared  and  processed in accordance
with  the  procedures outlined  in
Section  15.4.   At  the time  of
onsite  review,  payments will  be
compared with the  actual construc-
tion  completed.   Construction
contractor payment  requests are
based  on  the work completed or equip-
ment  delivered   to  the site and
are  generally  supported by  your
contractor's estimate of work-in-place
as  approved  by the  A/E.   Grant
payments are limited to 50 percent
until  a satisfactory final  plan
of  operation  has  been  approved
and 90  percent until  a satisfactory
O&M manual  has  been  approved by the
reviewing agency.
14.5
PLAN  OF
OPERATION
                The plan of opera-
                tion (Section  12.4)
                is  important  to
ensure successful  start-up of your
treatment  works  and  to  promote
continued compliance  with  your  NPDES
permit.   Initially,  the  plan  of
operation  focuses  on   staffing,
training  and  operation of the
treatment works.  However, equally
important  are  the  administrative
aspects of protecting your  investment.
Each  year  an  adequate  budget  is
prepared  identifying  the  basis
for determining  the  annual  O&M cost
and the cost  of personnel.  You, as
the project  owner,  will   establish
salary  levels  which  should  be
commensurate   with   the   complexity
of  operating  your  treatment   works
and  adequate  enough  to  attract
and retain competent and  dedicated
employees.
14.6
PROJECT
PERFORMANCE
                There are a number
                of   requirements
                which  you   must
satisfy  prior to beginning the  1-year
project performance  period.   These
requirements  include  a  complete
project schedule, as well as  other
activities to be completed during your
project construction and  operation
phases.
14.6.1
PROJECT          Of  extreme import-
SCHEDULE         ance in  managing
                your project  and to
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I its  operational  performance  is  a
I properly  prepared  project  schedule.
 The  construction grant  regulations
 require  you  to develop a  project
 schedule specifying key events.   This
 schedule must be included  in the grant
 application.

 A project schedule can be a time-line
 diagram.   The  actual  project schedule
 must include  dates of scheduled
 activities.   Figure 6 is a  partial
 project  schedule  that  shows  only
 project events that precede  the
 1-year   performance period which
 directly  impacts the  period.   The
 construction   grant  regulations
 require  that other events be shown on
 the  project schedule,  such  as public
 notices of  proposed procurement
 actions,  subagreement awards, issuance
 of  notice  to  proceed with  building,
 and  the  one-year performance  period.
 It is recommended that advice from the
 design engineer, project  manager,  or
 construction  manager  be  sought  when
 you develop this schedule.

 It  is important  to  note  that  the
 timing  of both the  completion  of
 building  and  initiation of operation,
 which are shown  on  Figure  6,  should
 coincide.   However,   these  dates  may
 not  coincide  because your complete
 wastewater  treatment  system typically
 includes more  than one  project.
 That  is,  segmented  treatment  works,
 interceptor  sewers,  pumping  station,
 and treatment plant may be built under
 different grant agreements.    If
 completion  of  building  each of  these
 projects  does not coincide, wastewater
 flows may  not  be available to  each
 project  so  that initiation  of  the
 one-year  performance period cannot
 occur at the  same time.   You should
 schedule the  date  of initiation  of
 operation when  the project is  capable
 of being used  for purposes  for  which
it was  planned,  designed,  and  built
whether  or  not  the  enforceable
requirements  of the act  apply to that
particular  project.    It  is  EPA's
intent that  one performance  period and
certificate  be  scheduled  for  each
project.

A  project  refers  only to the
activities  or tasks identified  in the
grant agreement.

Completion  of building is the date
when: all but  minor  components  of  a
project have been built,  all equipment
is operational,  and the project  is
capable  of  functioning  as  designed.

Initiation of operation is the date on
which use of  the project  begins for
the  purposes that  it was planned,
designed, and built.

All  components  of  the wastewater
treatment  system  must  be complete
prior  to initiation  of the  1-year
performance  period.    Figure 7  shows
the  key project  events that  occur
after  initiation  of  operation  and
these events  should be a part of your
project schedule.

To  assist  in  achieving proper
performance  of the project, you must
select  the  engineer or engineering
firm  principally  responsible  for
either  supervising construction  or
providing engineering  services  during
construction.    The  selected  firm
serves  as  the   prime  engineer  and
directs  the  operation of  the  newly-
built project during the  first year of
operation,  train  operating  personnel,
and  prepares  curricula  and training
material  for  operating personnel.
Also, the prime  engineer is expected
to   provide  additional   services
including, but not limited to:  revise
the  O&M  manual  for  the project  as
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STEP :
0
STEP ;
APPRO

'

5 AWARD
R
2 C< 3
VALS
NOT TO
EXCEED
12 MONTHS
COMPL
OF BU
50% PAYMENTS 90% PAYMENT
(FROM EPA TO \ (FROM EPA TO \
GRANTEE) \ GRANTEE) \
\ \
ETION
LDING
INITIATION OF
OPERATION
— M/ 	
	 	 	 , 	 // 	
/ / / A
/ / / (SEE Figure 7 )
                           APPROVAL OF
                           FINAL PLAN
                           OF OPERATION
APPROVAL OF
O&M MANUAL
             PROJECT INITIATION
                                                                START-UP SERVICES
SUBMIT DRAFT
PLAN OF OPERATION
          Figure 6  Project Schedule:  Pre-Performance Certification Period
                                           121

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INITIATION
OF OPERATION
                                                             POST-CORRECTIVE ACTION
                                                             AFFIRMATIVE PROJECT
                                                             CERTIFICATION
                     AFFIRMATIVE
                     PROJECT CERTIFICATION
                                            APPLICABLE TO
                                            NON-AFFIRMATIVELY
                                            CERTIFIED PROJECTS
CORRECTIVE ACTION
REPORT AND SCHEDULE
NON-COMPLIANCE WITH
PERFORMANCE STANDARDS
                   12 MONTHS
           PERFORMANCE PERIOD SERVICES
                                                 CORRECTIVE ACTION
                                                                       GRANT SANCTIONS
                                                                       ENFORCEMENT ACTION
          Figure 7  Project Schedule:  Performance Certification Period
                                          122

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necessary to  accommodate actual
operating  experience,  and advise the
grantee whether the project is meeting
the project  performance standards.
These services must  be  included in
your Step 3 or Step 2+3 grant applica-
tion  in  order to be  considered as
project costs.  The engineer that has
prime responsibility  for providing
these  performance  period  services may
subcontract these  services  subject to
the  EPA's  procurement  regulation
(40 CFR Part 33).

If the enforceable requirements of the
Act change between time of grant  award
and the  end of  the  first year of
operation, you  must use  the enforce-
able  requirements of  the Act  under
which the  project  was  planned and
designed  to  meet.    The compliance
schedule and  other  requirements
established  in  the  NPDES permit
for the  facility must  be used  when
you establish  dates  on  the project
schedule.

Although  you  are  responsible  for
planning,  designing,  and  building so
that the  project meets its performance
standards, the  risk  associated with a
negative  certification can  be shared
with  other  parties  to  the project
through  more  assurance,  guarantees,
indemnity,   or  other  contractual
requirements  from  any  party   to  a
subagreement or  contract under the
project.  Nothing  in  the law or
regulations  prevents you   from
requiring  these  additional  require-
ments.   By  requiring  additional
assurances  and  guarantees you are
reducing your  financial  risk in
the  case  that  a nonaffirmative
certification  is submitted.   Costs
for extending  warranties and  bonds
beyond the traditional 1-year period
(but not beyond the 1-year performance
period)  are  grant allowable  costs
if the  costs  are reasonable  and
necessary for ensuring achievement of
an affirmative certification.

Figure 8 shows the  legal relationships
and  the  flow  of  assurances,
guarantees,  indemnity  or  other
contractual  requirements that  may
exist  between the grantee and  various
parties  in  a  construction  grant
project.   You should  assign  specific
responsibilities through subagreements
and contracts  to  each  party to the
project.   These  subagreements  and
contracts   should clearly  define
the specific  services  expected and
responsibilities of  each  party.
Properly  worded documents will  permit
you  to  hold responsible  parties
accountable.

Upon  completion  of  the one-year
performance  period, you  must  certify
to  your reviewing  agency  whether
or  not  the  project  is  meeting
its  performance  standards.   If
a sewer  rehabilitation program was
undertaken  as  part of the  project
being certified,  you  must  include
the results  of this  rehabilitation
program as part of  your  Certificate of
Performance  that you  furnish to your
reviewing agency.

A  sample   project  certification
letter is shown on Figure 9  for your
information.  Documentation of whether
the  project  conforms  with  its
design specifications  and effluent
limitations  is  developed  by  the
engineer  as  part  of  the engineering
services  rendered  during the  1-year
period.   This documentation  should be
kept in  your project file and it must
substantiate  the certification  letter
you submit to your  reviewing agency.

For discharging projects, the project
performance  standards  include  design
specifications   (i.e.,  includes
                                    123

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                                                          POSSIBLE ASSIGNMENT OF
                                                   ASSURANCES, GUARANTEES,  INDEMNITY OR
                                                    OTHER CONTRACTURAL REQUIREMENTS
                                                                     EPA
                                                    I	
                                                                 AGREEMENT
                                                                  GRANTEE
                                                            RESPONSIBLE FOR

                                                            -COMPLYING WITH
                                                              REGULATORY REQUIRE-
                                                              MENTS AND GRANT
                                                              CONDITIONS
                         SUBAQREEMENT
                         PLANNING AND
                         DESIGN SERVICES
                     RESPONSIBLE FOR

                     - PREPARING FACILITIES
                      PLAN, DRAWINGS AND
                      SPECIFICATIONS

                              A/E
                         SUBAQREEMENT
                       STEP 3 A/E SERVICES
                    RESPONSIBLE FOR
                    - PROVIDING BASIC AND
                      SPECIAL SERVICES
                      INCLUDING
                      CONSTRUCTION
                      MANAGEMENT

                              A/E
                         SUBAGREEMENT
                      PERFORMANCE SERVICES
                    RESPONSIBLE FOR

                    - DIRECTING OPERATIONS
                    - REVISING O&M MANUAL
                    - TRAINING PERSONNEL
                    - PREPARING TRAINING
                      MATERIALS
                    - ADVISING GRANTEE ON
                      PROJECT PERFORMANCE

                              A/E
                                                                                         PROJECT
                                                                                         PERFORMANCE
                                                                                         CERTIFICATION
 CORRECTIVE ACTION REPORT
RESPONSIBLE FOR

- DETERMINING CAUSE OF
  FAILURE AND DEVELOPING A
  CORRECTIVE ACTION
  SCHEDULE

           A/E
                                                                                                       SUBAGREEMENT
                                                                                                         BUILDING
                                        RESPONSIBLE FOR:

                                        - COMPLYING WITH PLANS,
                                          SPECIFICATIONS AND
                                          OTHER CONTRACTUAL
                                          REQUIREMENTS


                                        - CONSTRUCTION
                                          CONTRACTOR
                                                                                                      SUBAGREEMENT
                                                                                                         SUPPLIERS
RESPONSIBLE FOR

- PROVIDING EQUIPMENT,
  MATERIALS AND
  SUPPLIES
- EQUIPMENT/MATERIAL
  SUPPLIERS

          A/E
LEGEND
             -»-  -LEGAL RELATIONSHIPS
    •^ — — ^»-  -POSSIBLE ASSURANCES, GUARANTEES, INDEMNITY OR OTHER CONTRACTURAL REQUIREMENTS

    CONTRACT      -NOT ELIGIBLE FOR GRANT PARTICIPATION


    SUBAGREEMENT  -ELIGIBLE FOR GRANT PARTICIPATION
                                  Figure 8    Project Performance Certification

                                                               124

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    As required by the  Clean Water Act under  Title  II,  Section  204(d)  and
40  CFR,35.2218(c)  we 	  (grantee)  certify  that  the
project built  under EPA  Grant No.	  (does,  does not)  meet  the
design specifications, and effluent limitations and all  other project  performance
standards.
                     Grantee
             Signature and T«itle of                               Date
           Authorized Representative

 Figure 9  Sample Certificates of Performance for Publ icily  Owned Treatment Works
                                      125

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engineer's  report,  facility  plan,
detailed  plans  and  specifications)
and  effluent  requirements.   For
nondischarging  projects  such  as
interceptor  sewers,  pumping stations,
etc.,  the  project  performance
standards  include  only  design
specifications.   In the  case  of
projects that include sewer rehabili-
tation  the  quantity of  infiltration
and  inflow (I/I)  eliminated  is
a  component  of  the  performance
standards.   You should include  in
your  grant   application  project's
performance  standards  that you  will
certify at  the  conclusion  of the
1-year  performance period.

Attainment  of  project  performance
standards   means  meeting  effluent
limitations  and design  specifications
under design  year equivalent flows and
loads,  as  well  as  under  initial  year
flows and  loads.   When your  project
has  more  than  one liquid or  solid
process  train,  diverting  flows  into
each train during  project's perform-
ance period, when total flow  is less
than design,  will  assist  in achieving
design  year equivalent  flows for
project certification.
14.6.2
I/I             As  part of  your
REHABILITATION   post const ructi on
                project  evaluation
and  prior  to final  certification,
you  will  be required to  determine
the  amount  of  I/I eliminated.   An
essential  part of  this  determination
is the  identification  of  the  actual
amount  of  I/I reduction  that has been
achieved  through the  corrective
program.   This  requires  an analysis
and evaluation of system flow records
during the wet-weather  season
immediately  following  system
upgrading.   A flow analysis  will  be
needed  to  determine  the overall
reduction  of  I/I as reflected  at the
treatment  plant.   Accordingly, unless
the trunk lines to  the treatment plant
are  surcharged  during  the storm
periods,  I/I  flow data   should  be
collected at the  plant rather  than
at multiple  points throughout  the
collection system.   The Sewer System
Evaluation Survey (SSES) should not be
repeated,  and information developed
should  be  limited to that  required to
develop  a postconstruction  I/I  flow
figure.   This flow figure compared
with  the original  I/I  flow  will
provide  the actual  percentage
reduction achieved.

It will  also  be necessary  to identify
the actual costs of system  rehabilita-
tion  associated  with  the   I/I
reduction.  These costs should include
the  cost  of design and  SSES  costs
expended  to  identify  acceptable
corrective   action.    This system
rehabilitation  cost  (sunk cost)
is  then  compared   against   the
Transportation  and  Treatment  cost
curve  used  in  the  original  cost-
effectiveness  analysis  of  the
SSES  (Method  2,   MCD-19).   If  the
percentage  I/I  reduction is  equal
to  or  greater  than  the  projected
                                   126

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reduction  represented  by Transporta-
tion  and  Treatment  costs  reduced
by  the sunk  cost,  then  the cost
benefit ratio is equal  to or less than
1.0,  and  the  completed program  is
considered to be cost effective.

Ideally,  the original SSES would have
produced separate  cost-effectiveness
analyses for  infiltration and inflow.
If this was done, the postconstruction
evaluation would have to match  the
original  approach.

It  is  technically sound to  perform
cost-effectiveness  analysis  for
infiltration  and  inflow separately.
However, if  this  were  done in  the
original  SSES, you should separate the
combined cost-effectiveness  analysis
curves prior to determining the result
of the rehabilitation program.

Figure  10  shows a graphical  repre-
sentation of  this evaluation process.
This  figure would  be  taken directly
from  the SSES  conducted during  the
planning period.    While  the  planned
corrective  costs  shown  here  are
represented by  "D," matching  the  low
point  of the -Total Cost Curve,  the
actual corrective costs  (sunk costs)
are shown slightly larger, represented
by  "D1."  The  percent reduction read
from the Transportation and Treatment
cost curve  at cost reduction  "D"1 is
indicated at  point  "A" and represents
a  cost/benefit ratio of  1.0.   Any
actual  I/I  reduction  equal  to  or
greater than  this  percentage  is
considered to be  cost  effective, even
though it may be less than the optimum
percent reduction planned  during  the
facilities  planning  stage.   In  other
words,  the actual  cost of your  I/I
reduction  efforts  must  result  in
reducing  your   transportation  and
treatment costs  by at  least the same
amount.
 14.6.3
 ENGINEERING      The  construction
 SERVICES         grant  regulations
                 require  that  the
 engineer  or  engineering  firm  provide
 the following  services  during the
 1-year performance  period:

   o Direct operation of the project;

 Directing  the  operation  involves
 oversight and observation  of the  unit
 processes and equipment which  make  up
 the treatment  works.   Directing
 the operation  of the project  does
 not involve the  engineer  in  the
 administrative  details of  daily
 operation  of the  project  such  as
 individual   personnel  transactions
 or  direct   supervision  of  your
 municipality's employees.   Although,
 where   needed,  the  engineer could
 provide  hands-on demonstrations,  fine
 tuning,  and  make  operating  decisions
 to be  effected by  your personnel.
 Other activities could  include:

     -  briefing municipal officials
 and plant  personnel  on  the status
 of project  performance program and
 overall project  operation;

     -  reviewing  user  charges,
 budgets.,  salaries  or  other  financial
 management items;

     -  providing  assistance  with
 setting  up  and  tracking  warranty
 files,

     -  reviewing  personnel systems,
 record   development,   laboratory
 procedures,  process  systems,   safety
 and emergency systems.

I   o Train or provide for training  of
| operating personnel;

 A  training  program  should  include
 instruction  in  operation  and  control
 of  specific unit   processes  and
                                     127

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                                           TOTAL COST CURVE
LLJ
o
O ill
£<

LLJ
C/J
O
O
          CO

          8
          CO
                     POINT "A"
MINIMUM
ACCEPTABLE I/I
REDUCTION
                                                 D = PLANNED
                                                    CORRECTIVE COST
                                        50


                         % INFILTRATION/INFLOW REDUCTION


               Figure 10  I/I Reduction Acceptability Analysis
                                                      MINIMUM PLANNED

                                                      TOTAL COST POINT
                                     TRANSPORT AND

                                     TREATMENT COST

                                     CURVE



                                     PLANNED I/I
                                     REDUCTION
                                  CORRECTION

                                  COST CURVE
                                                    100
                                   128

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equipment  during  normal  and  abnormal
conditions.  Also, instructions should
be provided in areas such as:   flow
measurement  and   sampling procedures,
laboratory  procedures,  maintenance
management  system,  preventive/
corrective  maintenance,  records
management  system  and  financial
management system.

  o  Prepare curricula and training
materials  for  operating personnel;

Curricula  and   training  materials
should be  applicable to a specific
facility  and  scheduling of partic-
ipants should  be  compatible with  the
facilities  daily operations.   The
trainer should have actual operational
experience  relevant   to   topic
discussed.

  o  Revise  the  O&M  manual  to
accommodate  actual   operating
experience;

The  revised O&M manual  should be
distributed  to your  reviewing
agency that  conducts operation and
maintenance  inspections at  your
completed  project.

  o  Advise you whether the project is
meeting its performance standards:

Documentation  of project's  actual
performance  during the  1-year  period
can  be accomplished by maintaining
ongoing records.   This documentation
can  be used in  preparing periodic
reports that  the  engineer  submits to
you and when  the  engineer advises you
whether or not the project is  meeting
its  performance  standards.    This
documentation  should  include:
measurements of influent and  effluent
quality/quantity including enforceable
requirements  of the  Act and unit
process/equipment  performance,  taking
into account  both  initial  and  design
year flows and organic loads,  as  it
relates  to design  specifications.

The engineer should advise you  of the
following:

  o  The capability and performance
of  the staff to effectively  and
efficiently   operate  and  maintain
the facility  under normal, alternate,
and emergency modes of  operation;

  o  The capability and performance of
the  organization  to effectively
accomplish  necessary  administrative,
management,  and financial  utility
functions;

  o  Actual  costs  in relation  to
prior estimates of costs, the adequacy
of  revenue  sources and actual
charges  necessary  to meet revenue
requirements.

Generally,  the  engineering  services
during the 1-year performance  period
should be phased down  during the one
year  period  while   simultaneously
making sure that your  operating staff
can  properly   operate  the  project  on
their own.  The level-of-effort  of the
engineering services during this  one
year period should be  appropriate for
the  project's  scope.   Generally,
this  means that  project  performance
engineering services  that are  both
reasonable and necessary for  an
interceptor sewer would be  less  than
for  a  pumping  station.   Likewise
engineering services  would be less for
a pumping  station than  for a treatment
plant.
14.6.4
CORRECTIVE
ACTION
an
             If, at  the end  of
             this 1-year period
             you cannot provide
affirmative  certification,  a
                                    129

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corrective  action  report and schedule
must be  developed and submitted  to
your reviewing  agency upon completion
of  the  one year  period.   Costs
associated  with  developing this
corrective  action  report schedule  and
implementing corrective  action are  not
allowable  project  costs.    If  the
project  is  a failed Innovative  and
Alternative  (I&A)  project, then costs
associated  with  the  corrective action
report  and  implementation  may   be
allowable grant costs.   The corrective
action  report must include:

  o  An analysis  of the cause  of  the
project's  inability  to  meet the
performance standards;

  o  A  schedule  for undertaking in  a
timely  manner  the corrective  action
necessary to bring  the  project  into
compliance;

  o  The  scheduled date  for certifying
to  the  reviewing  agency  that  the
project  is  meeting its  performance
standards.

After the corrective action  has  been
completed you must  provide your
reviewing Agency with  an affirmative
certification.

In addition to the above requirements,
your corrective  action  report  should
also include the following:

  o  A  discussion  of appropriate  and
structural  solutions  that  will   be
effective for the design  life  of  the
facility;

  o  A  discussion  of  action   to
mitigate,  insofar  as   possible,
adverse  environmental   impacts   of
unsatisfactory   performance   until
corrective  action is  completed;
  o  A discussion  of all  appropriate
recourse  available  in  procurement
related  insurance,  warranties,
guaranties,  bonds, and indemnities  to
effect timely, complete, and permanent
corrections.

14.7
ABANDONMENT       Federally  funded
                 treatment works must
be  operated and  maintained by the
grantee  for their  design  life  in
accordance  with  grant  conditions  and
enforceable  requirements  of the
Clean Water  Act.   Recovery of federal
funds are  not  required  when the
treatment  works  are beyond  their
design life.

If  based  on changed conditions you
propose  to  abandon a  project,  or
portion thereof,  prior to  the end  of
its  design  life, you  must  request
disposition  instructions in accordance
with Part 30 of Title 40.   EPA will
make  a  determination  of  whether
to  recover  Federal  funds  for the
abandoned treatment works.

In making this determination, EPA will
review any  written documentation you
provide and  will consider among other
things  how  NPDES permit conditions
will   be  maintained,  including
provisions  for  alternative treatment
of wastes emanating from the abandoned
treatment  works   (at  no additional
Federal expense),  so that enforceable
requirements  of   the  Act  and  NPDES
permit conditions  are met.

Modification  or  replacement  funds
may be available  for  failed I/A
technologies (Section 15.2).
14.8
WASTEWATER
PROCESS INFLUENT
VARIATIONS
When the character-
isties  of  the
wastewater  to  the
                                     130

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publically owned treatment  works,  or
the* liquid/  solids/gas  feed  to  a
unit  process or equipment item  are
substantially different  from those
specified, or,  if not specified,  those
normally  anticipated in treatment  of
municipal   wastewater,  the  contractor
should  promptly notify the  owner,  or
his  representative,  of the  apparent
differences.    He   should  request  a
meeting to  discuss  alternate  methods
of  conducting  field performance
testing when such methods are required
for acceptance.

When  agreement  cannot  be  reached
(regarding whether characteristics  are
substantially  different or  regarding
alternative methods  of testing),   an
independent  evaluation  should   be
obtained  by the recipient (owner).
Based on  the  evaluation,  recommenda-
tions for  conducting field performance
testing and  recommended criteria  for
acceptance should be  developed.    If
appropriate,  an adjustment may be made
in  the  contract.   If an  agreement
cannot  be  reached,   the matter  should
be  handled under appropriate contract
provisions.

14.9
CHANGE ORDERS     A  change order  is an
                 order written by  you
to  the  construction  contractor
authorizing an addition,  deletion,  or
revision in the work and/or the time
of completion within the limits of  the
construction  contract after it  has
been executed.   It  is a specific type
of  contract  modification  which does
not go beyond the general  scope of  the
existing contract.

The change order management  procedure
is used when a need is  recognized  for
a change in the terms or conditions of
existing  signed  contract   documents.
It generally originates as  a claim or
a recommendation for a change from  the
construction contractor or  as  a
request-for-proposal from you,  seeking
a  change  to existing  contract
documents.   The  change order  is
necessary to increase  or decrease the
contract cost  or  work,  interrupt  or
terminate  the  project,  revise  the
completion  date,  alter the design,  or
in general,  to implement any deviation
from  the  original  contract  terms
and conditions.

The  successful  completion   of   the
change  order management  process
depends upon the successful execution
of the responsibilities of each of the
participants:   owner,  engineer,
construction contractor, and reviewing
agency.

The bilateral change,  rather than the
unilateral  change, is one agreed to by
both  parties,  and  is   most  desirable
since it minimizes disputes at  a later
date.   Should meaningful negotiations
fail, you have the authority to make a
unilateral  change within the scope  of
the  contract.   In  order to move  the
project  forward,  you  can  issue  a
change  order  without  construction
contractor  agreement  under  a model
"changes"  subagreement  clause.    In
this case,  the construction contractor
must perform  the work,  but may elect
to dispute  the terms and could  recover
additional  costs  from  you under  the
same clause.   In some cases, State law
may  give the construction  contractor
specific rights of recovery.
14.9.1
DUTIES AND
RESPONSIBILITIES
                 You  are  responsible
                 for  the  adminis-
                 tration   and
implementation of  the  project  for
which EPA  Construction  Grant  assist-
ance  is  awarded.   In accepting  the
grant, you have  agreed  to pay  the
non-Federal  costs  of  treatment  works
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construction  associated   with  the
project.   You are also financially
responsible  for  any  additional  non-
Federal  costs  associated  with  a
change.   Should the reviewing agency
determine that the change order is not
allowable  for  Federal   participation,
the entire  change order cost  would
then be considered non-Federal costs.

You are  the one who must agree to any
change  in  the  conditions  of  the
construction  contract because you are
the only party that has entered into
the contract with the construction
contractor.

You may  retain a construction  manager,
particularly  if your own forces do not
have the expertise  or  additional time
available  to  properly  manage  the
additional  responsibilities.    EPA
encourages  the  construction  manager
concept,  but  it  should be discussed
with the reviewing agency before any
commitments  are  made.   While  the
construction manager's  role  and
contractual  relationship  with  you
differ from those of the  engineer, it
is possible for the engineer to  assume
both roles.

Once a grant is awarded and construc-
tion is  under  way,  you  should
not  presume  that  the  engineer,
construction  contractor,   and
regulatory  agencies will  oversee the
management  of the project.   In the
best  interest  of the   community, you
should actively manage  the  project to
completion.    You  should be  convinced
that  a  proposed contract change
is necessary  and  reasonable regardless
of Federal  participation  in the  cost.
You  are  responsible  for  negotiating
fair  and  reasonable  cost  and time
adjustments for a  necessary change and
should  ensure  competent, timely
processing  of change order requests.
Owner's  Responsibilities

You are  responsible for:

  o  Determining  whether  a  change
order is warranted;

  o  Negotiating a fair and reasonable
price  for  required  changes,  or
authorizing the engineer  to do  so;

  o  Maintaining  costing  records for
the  change  including  records  of
negotiation;

  o  Maintaining  current  and accurate
fiscal  projections of  contract and
project  completion costs;

  o  Resolving disputes which may have
arisen as  a result of a proposal  for a
change;

  o  Notifying the reviewing  agency in
writing  of events or proposed  changes
which  require  a grant amendment
(Prior Approval  Requirements,
Section  14.9.1).

Engineer's Role

The engineer  will be expected to:

  o  Act  as  consultant  to  the owner
during the construction of the  project
and  on  changes  that are  proposed;

  o  Provide  expert opinion  on  whether
a change is appropriate or not, and if
so, why;

  o  Prepare  a  fair  and reasonable
independent cost  and time estimate on
the proposed  change to verify that the
estimate  prepared by the construction
contractor is fair and reasonable;

  o  Negotiate  change orders  if
authorized to do  so by the Owner.
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Construction Contractor's
Responsibilities

In order to expedite the processing of
a  change  order,   the  construction
contractor  will   be expected  to:

  o  Furnish  and certify the correct-
ness of  sufficient  cost  and  pricing
data to enable  the  owner to determine
the  necessity  and  reasonableness  of
cost  and  amounts  proposed,  and  to
enable the  reviewing  agency  to
determine  the eligibility  and  allow-
ability of costs proposed;

  o  Submit  change order  proposals
within the  time  allowed  by  the
contract and enter  into meaningful
negotiations  on a  necessary contract
change;

  o  Comply with the record  keeping
and accounting requirements  set by EPA
regulations appropriate to the dollar
amount of the change order;

  o  Maintain  a current construction
schedule,  such as a critical  path
diagram,  with  the level   of  detail
based on  project size and complexity.

Prior Approval Requirements

In  order  to obtain change order
approval, written approval  from
the  reviewing  agency is,  in  some
cases, required  prior to the start of
work  associated  with  the  change,
because of the significant  effect on
performance  or cost  of  the project.
Conditions which require prior written
approval  (which is  always a  formal
grant amendment) include the
following:

  o  Project  changes which:

  -  Alter the  project performance
     standards;
  -  Alter  the type of treatment to
    be provided;

  -  Substantially  alter  the
    facilities plan, design drawings
    and   specifications,  or  the
    location, size,   capacity,  or
    quality of any major part  of  the
    project;

  -  Increase  or  decrease  the  EPA
    grant   needed  to  complete  the
    project;

  -  Significantly delay or accelerate
    the project schedule.

  o  In addition,  for contract changes
involving  dollar  amounts  of $100,000
or more on  grants awarded before  May
12,  1982, if:

  -  Any  single  item  (additive or
    deductive) exceeds  $100,000;

  -  No  single item has  a value of
    $100,000, but  the total  price
    of the change order  is over
    $100,000;

  -  The  total  of the   additive items
    of work  in  the   change order
    exceeds $100,000, or  the total of
    the  deductive  items  of work in
    the  change   order  exceeds
    $100,000, even though the  net
    value of the change order is less
    than $100,000.

  o However, related work must not be
split  into two or more amendments or
change orders  merely to keep it under
$100,000  and avoid the  need for prior
approval.

  o For grants awarded  on  or after
May 12,  1982, the reviewing  agency
may review proposed   change  orders
over  $100,000 if the  owner  has  not
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self-certified its procurement system.
Under these circumstances,  the  owner
should request prior review.

Prior  approval  is not required  for
changes to  correct minor  errors  or
minor  changes  not addressed by  the
above-mentioned  prior   approval
requirements.  It is also not required
for  emergency  changes  as defined
below.

It should  be noted  that the reviewing
agency will respond to  requests  for
prior approval as promptly as possible
in  order  to  avoid undue project
delays.  Therefore, the approval  may
only cover the  concept of the change,
even though certified  cost  data must
be  furnished when  prior  approval  is
required  because the amount of  the
change is  $100,000 or more.  Because
of  this,  the  approval   could  be
subject  to   revision  based   on
later  review of  the  necessity  and
reasonableness  of quantities, cost
analysis,  and  allowability  of  costs
(40 CFR 35.2204).

Emergency  Changes

An  emergency  may  be  described  as
an  unforeseen combination  of circum-
stances leading to a hazard to life,
property destruction, or health which
can  only  be alleviated  by  immediate
action.   Although  prior  approval  is
not  required  for  emergency changes,
the   reviewing  agency  should  be
notified  as soon  as possible  after
the  emergency  has been   put  under
control if  the  work would  otherwise
have required prior approval.

Disputes

Many  of  the  delays  and  misunder-
standings  surrounding the modification
process  can  be  avoided  by effective
and  frequent communication  between
you  and the  construction  contractor.
You  bear  the entire  responsibility
to  settle  construction  contractor
claims.    When  a claim is  submitted,
you  should  request  and  obtain  a
change  order  proposal   from  the
construction  contractor,   investigate
the  circumstances  promptly,  reach  a
tentative  decision  on  the  merits, and
notify  the construction  contractor
of  that  decision,  justifying  the
position,  based  upon  the  plans,
specifications, and  other contract
documents.  In reaching that decision,
you  may find it advisable to obtain
legal  advice  or  to consult  with
representatives  of  the  reviewing
agency.


If you  determine that a change  order
proposal  is meritorious, it should be
negotiated  and settled  through  a
bilaterally-executed change order.  If
you  determine  that a change order
proposal   is   unmeritorious,  the
construction  contractor may decide to
pursue the  claim  through  litigation,
arbitration,  or other  form of dispute
resolution.   In that case,  you may
request  the  reviewing  agency's advice
and  assistance prior to assessing
and/or  defending  against  the  claim.
Reviewing  agency  technical  and
legal assistance can also be requested
for  the administration and enforcement
of  construction contracts, especially
where  a   dispute may  jeopardize
completion of the project.
 14.9.2
 CONDITIONS THAT
 MAY WARRANT A
 CHANGE ORDER
                 A  change   order
                 proposal   may
                 originate  from your
                 own  perception  of
the situation or from a request by the
construction contractor.
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The following are common categories of
conditions  which generally give rise
to a need for contract changes:

  o  Differing site conditions;

  o  Errors  and  omissions in plans and
specifications;

  o  Changes instituted  by regulatory
agencies;

  o  Design  changes;

  o  Overruns/underruns in quantities;

  o  Time of completion.

Differing Site Conditions

A  "differing site  conditions  clause"
or  its  equivalent in  an EPA grant-
assisted construction  contract  will
describe  differing  site conditions
as:

  o  Subsurface or  latent physical
conditions  at  the  site  differing
materially from  those indicated in the
contract; or

  o  Unknown physical  conditions at
the  site,  of  an  unusual  nature,
differing  materially  from  those
ordinarily   encountered  and  generally
recognized  as  inherent  in  work of
the  character  provided  for in the
contract.

The  premises on  which  a differing
site  conditions  clause  in  an EPA
grant-assisted   construction  contract
rests may be described as follows:

  o  Each bidder is  not expected to
perform an  independent subsurface site
investigation  prior to  submission of
bid.   However,  bidders  are generally
advised by  the  contract  documents to
make a site  inspection;
  o  The  contract  bid  price  is
proportional to the degree  of risk the
construction  contractor  must  provide
for in its competitive bid;

  o  The most cost-effective  construc-
tion is obtained  by accepting  certain
risks for  latent  or subsurface site
conditions.

Once the information on differing site
conditions is assembled,  you  should be
in a position to determine  if the site
conditions  differ  materially from
those  indicated in the contract or
those  ordinarily  encountered,  and
whether this will cause an  increase in
the construction  contractor's  cost or
the time to complete the work.   If you
determine  that  a  change  order  is
needed,  it should  provide supporting
documentation   including  reports,
pictures,  plans,  and  whatever  is
appropriate  to demonstrate where and
how  actual  conditions  deviated from
the  plan  or  from conditions that
should have been anticipated.

Errors and Omissions in Plans
and Specification?

Errors  and  omissions  are  usually
design or drafting deficiencies in the
plans and specifications.    Errors on
plans  and  specifications -are items
which  are  shown  incorrectly, while
omissions  are  items  which  are not
shown at al 1.

Some  errors  may  lead  to  disputes
between the engineer and construction
contractor.   You  are  responsible for
resolving  the dispute  and  may have
difficulty  in assessing the situation,
since the engineer may have  also been
the  designer and  may  strongly feel
that  the  design was  adequate.
Moreover,  there  may be  no clearly
discernible  line between design errors
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and  faulty  materials or  installation
by the  construction contractor.   You
may  seek  opinions  from  independent
third  parties  experienced  in modern
design  practices to aid  in  the more
complex decision  making,  but should
request  prior  approval  from  the
reviewing   agency  before   contracting
with a third party.

The  terms of an EPA grant-assisted
designer's  contract  require  the
correction of errors/omissions in the
drawings  or specifications  without
additional compensation.

Time  spent  negotiating an engineer/
construction   contractor  dispute
should  not  extend  the time  of
completion.   However, a  finding of
design deficiency may  be grounds for
time  extension equal  to  that delay
caused by  the error itself.

You  should evaluate these  requests
carefully,  since not  all errors or
omissions  necessitate a change to the
contract price and/or time.  While the
construction contractor  is  entitled to
an equitable adjustment,  he  may have
incurred no additional  expense  and may
have no right to a  claim even though
an error  or omission  has occurred.
If expense was decreased, a credit
could be  due.   You  should pursue the
available  remedies against  all  parties
who  are  responsible  for the added
costs of  a  change to protect  against
vicarious  liability  for the   improper
actions of others.

Changes Instituted by Changes
jn Regulatory Requirements

Compliance to changes   in  the  law or
in  the requirements  of  government
agencies  may  necessitate a  change
order.  Typical examples are:   changes
due to  the  imposition  of the  reserve
capacity  limitation   requirements,
revisions  to building  codes,  or
revised  road construction plans.  The
need for this type of change  should be
well  documented  with  sources  and
dates.    Justification  for  change
should include correspondence, records
and  notes  demonstrating  that  the
requirements  could  not  have  been
incorporated  into  the  contract
documents  prior to bid date.

You  should  review the  documentation
for this kind of  request carefully to
demonstrate that this is  indeed  a
change.

Design Changes

A design  change is a modification to
an  existing  design  which can  be
constructed  and will  operate properly
without modification.  In  order to
warrant   consideration,   it  should
meet  one  or more of the  following
conditions:

  o  Be cost-effective.   That  is,
offer a  savings in excess of  all costs
associated  with  the  change  order
including  future   operation  and
maintenance  costs;

  o  Respond to a  proposal  based on a
construction-incentive   contract
clause.

Design  changes usually  originate  as
proposals  volunteered by the  construc-
tion  contractor,   recommended  by  the
engineer,  or requested by you.   You
may  see  certain  benefits  such  as
reduced  operating costs  or improved
operating  efficiency.    However,  any
such  proposal  deserves particularly
careful  analysis because the  plans and
specifications   have   already  been
determined to  be  adequate for project
purposes by  the reviewing agency.
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You  must  receive  prior  written
approval  from the reviewing  agency
before  authorizing   changes  which
substantially  alter the design, scope,
type of  treatment, location,  size,
capacity,  quality of  any  major  item
of  equipment,  or time  to  project
completion.

Considerations  relating  to  design
changes fall  into five categories:
general,   substitution,  revised  site
location,  additions, and deletions.

o  General
On all  proposals for  design changes,
you should  consider who originated the
proposal,  how it  will  differ from the
original contract, when an answer will
be needed, why the alternative was
not considered during  design, whether
this  is  the  most cost-effective
alternative,  who  will  guarantee the
design  changes,  whether  the  change
affects  the  timing or cost  of  other
contracts,  whether the  change will
affect operation  and  maintenance, and
what the secondary effects are.

o  Substitution

Substituion  is  the exchange  of
specified  equipment,  material,  or
construction  technique  for another of
equal, better,  or lesser quality.  The
substitution  may  require a different
installation technique  from  the
design, with a resulting  change in
installation  costs which far outweighs
differences in material costs.

o  Relocation of Site

Relocation  of  site  is  a  highly
undesirable  circumstance, since it
opens Pandora's  box  to  construction
contractor claims, especially when
done  hastily  in response  to  some
unforeseen  conflict.    You  should
consider  all  secondary  effects and
be assured that a  site relocation is
the only feasible alternative.

o  Additions

You  should  insure that  proposed
additions are  within  contract  scope
and project scope.

o  Deletions

Major deletions should not be accepted
at face value.  Often a careful  review
will  reveal  very extensive  costs and
secondary effects.

Overruns/Underruns in Quantities

Oyerruns/underruns  occur  when  a
difference  develops between  the
quantity estimated in the  bid schedule
and  the quantity  actually required
to complete the  bid  item.    These
differences  occur  only  in  contracts
which are formulated  as  a  series of
bid  unit  prices for each unit  (cubic
yard, linear  foot,  etc.)  of that  item
installed.  They do not  affect  lump
sum  firm  fixed price bids.   When the
differences  are considerable,  it can
result in an unreasonable loss  to you
or the  construction contractor.  You
and  the  engineer should  be alert to
identify  significant overrun/underrun
trends as  early  as possible and
avoid obligating  funds which  are not
available. If  significant overruns or
underruns do  occur,  then  the contract
price will be adjusted  accordingly as
appropriate.

When change  orders  increase  or
decrease  the  quantity  of original
contract items, you may need to review
the unit price  to allow for  reasonable
adjustment if there is a contractual
"variations" clause where:
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  o  You incur unreasonable  expense
when an item priced too high has heavy
overruns;

  o  The  construction  contractor
sustains loss due to heavy overruns in
an item priced too low;

  o  The construction  contractor must
absorb  expenditures  of  general
overhead costs which were included in
the  unit  price for  an item  that  was
only partially used.

Most contracts contain  provisions  for
significant differences in  the  "as
built"  quantities  when compared  with
the  estimated quantities.   If  the
final  quantity  differs from  the
original bid quantity by 15 percent or
more, (less  than 85 percent—more than
115  percent) you  should  consider
negotiating  new unit prices.   You  may
negotiate  an equitable adjustment  in
the  unit price for that  differential
which exceeds the 15 percent margin.

Engineers  are not  always  able to
predict contract   quantities   to  plus
or  minus 15  percent  in advance.
Realizing   this,  construction
contractors sometimes  speculate by
entering  high unit prices on those
items they expect  will  overrun and  low
unit prices  on those items which  may
underrun significantly.   The technique
is referred  to as an unbalanced bid.
The  result  may be  unbalanced unit
prices or  prices which  are   not
proportional  to  the  estimated
construction  costs.    However,  where
the construction contractor has  large
overruns  in  units where  unit  prices
were  underbid   and  there is  no
variations clause  in the contract, a
proposal  to  modify those unit prices
may  be developed.   It should  be
evaluated  on  the  basis   of  the
foregoing discussion.
Additional  clauses  may  have  been
included in the contract to minimize
incentive  for speculative bid  unit
prices such as to:

  o  Consider  overruns/underruns  for
renegotiation  only  on  major  items
(e.g., unit  price  multiplied  by
quantity equals  or  exceeds 10 percent
of  contract  dollar amount) or  high
risk  items  (foundation  excavation).
The  construction  contractor's
competitively  bid unit prices  are
presumed sufficiently balanced  that
only large changes  to  major items will
create  an  unfair  hardship  to  the
construction contractor  or  you.   From
another point  of view,  the increased
cost  (or savings)   resulting from  an
unbalanced  unit  price may be presumed
distributed  over the  other  contract
items;

  o  Place  a  ceiling  or  maximum
permissible  change  allowable  in  the
unit price, e.g., 25 percent;

  o  Establish  a  minimum  amount
payable under  the item to cover fixed
costs.

A  summary change order  to establish
the final  quantities  on  a  unit  price
contract is  an accepted  practice.
However, you  should  recognize  the
purpose and  application of  contract
clauses which were  intended  to
minimize unfair  advantage and  expense
to you or the  construction contractor
caused  by  significant  differences.
These  clauses  are not  necessarily
justification for a  change in price.

Time of Completion

Six conditions   impact  time  of
completion,   which  is  equally  as
important  as  costs:    termination
for  convenience,  termination   for
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default,  suspension of work, directed
acceleration,  time extensions,  and
constructive  acceleration.  It should
be  pointed  out  that  termination  and
suspension  are  not common actions on
public sector construction.

o  Termination for Convenience

You have  the right to terminate any or
all portions of the contract work at
any time during  the  course  of  the
project,  even though neither party has
violated  the contract  or  failed to
perform.   You must follow a  prescribed
course  of  notification and  assume
control   and  ownership  of  facilities
constructed to date.  The construction
contractor is entitled to an equitable
cost adjustment.

o  Termination for Default

If  the  construction contractor fails
to perform all or portions of the work
with  sufficient  diligence  to ensure
completion of the contract  within the
allotted   contract time  plus  time
extensions,  you  may terminate  the
construction  contractor's right to
proceed.    You  assume  ownership of
facilities  constructed  to  date,  and
can complete the  project with your own
forces or by using  another contractor.
The  construction  contractor  is
entitled  to  an  equitable  adjustment
which includes:   payment for work  done
and materials  supplied  to  date,
deduction of any additional  cost  over
and  above  the  contract  amount which
you incur to complete the project, and
deduction for damages sustained by you
due to  the construction contractor's
default.

o  Suspension of  Work

You  have  the  right to temporarily
suspend   or  interrupt   portions  or
all of  the work for  an  appropriate
period  of time.    In a few  cases,
the construction contractor  may be
entitled to  an  equitable  adjustment
for any additional costs  caused by
this suspension.

o  Directed Acceleration

You may determine  that  portions of
the work or  the  entire contract must
be  accelerated  from the  original
contract schedule.    While  directing
acceleration  of  the work may  be
procedurally similar to ordering a
temporary suspension, the construction
contractor  is generally less able to
change  the  work  schedule  without
additional  cost.

o  Time Extensions

You may grant a time extension  to  the
construction  contractor  for  good
cause.   Otherwise, the  construction
contractor  could  be  liable  for
contractual   penalties,  if  any,
resulting  from  failure  to perform
within  the  allotted  time.   A time
extension due  to weather  should
be  granted  only  for working days
(generally  Monday through  Friday,
unless overtime  is  expected) in excess
of  those  expected  under  "normal"
weather conditions  of  the project
location.  A commonly used  mechanism
for controlling unjustified  delays in
contract completion  is  a  liquidated
damages clause in  the contract.   The
clause  generally  assesses a dollar
amount  to be  paid to you from  the
construction  contractor for each  day
that the time required to complete  the
project exceeds  the  contract time.
The  amount  is  based on  estimated
damages  which  would be  sustained by
you.   This clause  is  invoked  only if
the construction  contractor has failed
to complete the  work by the designated
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 time  or fails to  justify  and  obtain
 approval  of time  extensions.   Since
 the  construction  contractor  will
 generally provide a justification,  you
 should keep  complete  time-related
 records  in order  to  enforce this
 clause.


 o   Constructive Acceleration


 You should  not   ignore  a  justifiable
 request for a time extension  since
 this  can result  in  a  construction
 contractor  claim  for  constructive
 acceleration.   This occurs when  a
 construction   contractor   sustains
 additional  costs  by  increasing
 forces  or  otherwise  incurring  added
 expense to  overcome lost  time  which
 occurred through  no fault of its  own
 in  order  to avoid  assessment  of
 liquidated damages.


 Terminations,   suspensions,   and
 extensions  of  time will  necessitate
 processing  a change order.   Termina-
 tions for convenience or default  are
 usually very complex and may require
 evaluation  of the entire  project.
 Other contract provisions  in  addition
 to  EPA-required  contract   provisions
 or  model  subagreement  clauses can
 affect  the  outcome.  Extensions of
 time  should be  fully evaluated and
 justified.   You  are cautioned against
 awarding unwarranted time  extensions,
 so that liquidated  damages may not be
 unnecessarily forfeited.

Whenever  time factors  are  part  of
 a  change   order,  they  should  be
negotiated  together with  the  other
factors, not  deferred  or  separately
negotiated.   In  this way,  claims for
associated   costs   such  as   additional
overhead during time extensions can be
largely avoided.
 14.9.3
 PREPARATION OF    The preparation  of
 THE CHANGE ORDER  the  change  order
                  requires familiarity
 with contract documents, assembling  of
 pertinent   information,  negotiation,
 and  careful  documentation  of the
 proceedings.

 Before  entering  negotiations, you
 should  be totally familiar with the
 options and  incentives provided  by
 the  contract  documents.   Application
 of  these  tools  can  encourage the
 construction  contractor to  negotiate
 meaningfully.

 The bilateral  change  order is the more
 common  type,  it is  one agreed  to  by
 both parties, and it  minimizes  cause
 for  disputes and claims  at a  later
 date.   Should meaningful negotiations
 fail,  you  may  issue  a  unilateral
 change based  on   the  authority
 provided by the EPA-required contract
 provisions  or   model  subagreement
 clauses.  For  a  unilateral  change, the
 construction  contractor,   whose
 concurrence  is  not  required,   is
 entitled to an  "equitable  adjustment"
 for any difference in  cost  resulting
 from  that  change.    Many contracts
 provide  a  formula  for  computing the
 adjustment.  The threat of the  use  of
 the  unilateral  change plus  other
 options  provided for by contract can
 expedite meaningful negotiations.

Other  options  include deletion  of
the work  covered by  the  change and
 performance of that work with your own
forces   (which should  be approved  by
the reviewing agency  before  starting
work), or  performance under a separate
contract awarded to  another  construc-
tion  contractor.   However,  a proposal
deleting the changed  work  may  entitle
the  construction contractor  to  an
equitable  adjustment  for part,  but not
                                     140

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necessarily  a pro rata share, of the
overhead  allocable to the  changed work
and  not  recovered  elsewhere.   The
unilateral  change  should  be  invoked
with caution  since  control over costs
and time may be  lost, the quality of
the work may suffer,  and control  of
the contract  may  suffer.

Convinced  of the need for  a change
order, your next  step is  to  negotiate
the conditions of that change with the
construction  contractor  and  prepare
the change order.  Effective negotia-
tion  is  a vital   function  of  contracts
administration.   You  should,  as
good  business  practice,  prepare for
negotiations  with the same  thorough-
ness  as  the  construction  contractor.
There  should  be  an exchange  of
background information,  clarification
of  the scope of  change,  consultations
with  regulatory  agencies  where
necessary,  exploration of alternatives
and secondary effects  and  cost and
time  considerations.   Each party
should  formulate  certain  negotiable
objectives of performance,  price, and
time.

Preparation for Negotiations

You  are  responsible  for  negotiating
fair  and reasonable cost  and time for
a  necessary change  order.  Preparation
for  negotiations  should  include
consideration  of   quality   control,
cost,  alternative  methods,  secondary
effects, and time.  The engineer's
advice is normally  sufficient for this
preparation.

However, where you are  faced with  an
unusually  substantial   and  complex
claim,  you may  wish  to  use  an
independent  third party to prepare  an
assessment.   This  third  party should
provide  whatever   engineering  and
construction, financial,  and  legal
expertise  is  needed  to clarify your
position  regarding costs,  share of
liability,  and  amount  at  risk.
By  comparing  the  assessment  to
litigation/arbitration  cost  estimates
and  the  construction  contractor's
potential  settlement  offer,  you may
find the  claim close  to  resolution.
It should be noted that written  prior
approval  by  the  reviewing  agency
must be  obtained before  contracting
with a  third  party, if you  want  this
assistance added to the  scope of the
grant-eligible project.

o  Quality Control

Quality of  materials  and workmanship
may  be  a negotiable item  in  some
modifications.   The  corresponding
price  can vary  over  a considerable
range.   Any proposal for change should
include  a  detailed  description of
work,  plus a  specification clearly
defining quality of  materials and
workmanship.

o  Cost
Most change  clauses specify that  an
equitable adjustment should be agreed
upon.    The  goal  of an  equitable
adjustment is  to leave the construc-
tion contractor  in  the same relative
profit  or loss position  on the basic
contract  after the change order as  if
there  had been no need to change the
contract.

You  should  establish  the cost  of the
change,   insofar  as  possible,  before
the start  of  work.   Pricing  of
the work after  its  completion  is
undesirable since it:

   -  Compromises  your  ability  to
     control project costs;

   -  Gives the construction  contractor
     a  distinct  advantage  in negotia-
     tions for extensions of time;
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   -  Fosters  a condition where  the
     price agreement may be based upon
     cost  plus a  percentage  of cost
     basis which is  not  allowed under
     EPA regulations;

   -  Fosters a  pattern of overpriced
     proposals  which delay  agreement
     until  after the  work  is  com-
     pleted.

 At this stage, you should have  the
 construction   contractor's  price
 proposal,  the  Engineer's independent
 cost  estimate  and  possibly an
 independent third party's assessment
 if necessary  for  comparison.   You
 should  be prepared to negotiate
 cost  plus  a fair profit, including
 reductions  in  overhead and profit  for
 deleted  work.   Under  grants  awarded
 on  or  after May  12,  1982,  you  are
 required  by  EPA  regulations  to
 conduct a  cost or price analysis  for
 all negotiated change orders  estimated
 to exceed $10,000.

 o  Alternative Methods

 There  are  generally  a number of
 alternative methods of meeting the
 objective of the proposed change.   The
 construction  contractor, being the
 most knowledgeable about its  operating
 costs,  can often  suggest economies
 in construction methods  or  materials
 not  apparent  to  you.   The  cost
 effectiveness  of the  alternatives
 presented  should be  compared after a
technical   analysis,  taking  into
 account  future  operation and main-
tenance costs.   You  should  also
consider  whether  the  change  is
needed   to complete  the  project
since the "no change" alternative may
in fact  be the most cost-effective
choice over the design  life  of the
project.
 o Secondary Effects

 A seemingly  minor contract  change
 may  have  secondary impacts  which  are
 many times more  costly  than the
 original change order amount.  Assess-
 ment  of  secondary effects presupposes
 a thorough understanding  of the
 project  design,  contract  documents,
 and  the  construction contractor's
 schedule and construction techniques.
 Failure to  properly assess  secondary
 effects  may  undermine  the  cost
 effectiveness justification supporting
 the proposed changes.

 o Time

 Time  affects price.   It  is  unlikely
 that  a  realistic  price can  be
 negotiated  without  the   parties
 agreeing or being close to  agreement
 on  the  time  adjustment  required.
 Deferral  of time negotiations to a
 later  date  suffers  from  the same
 criticisms  as  after-the-fact  pricing,
 since it:

  -  Relieves  the  construction
     contractor  of  pressure  to
     complete the  work  in  a timely
     manner.   However,  if  time
     negotiations are deferred, the
     construction  contractor  must
     still prove the basis for delays;

  -  Places  the  construction
     contractor in the advantageous
     position  of  negotiating  from
     actual time.   This  can  be
     countered by keeping construction
     schedules up to date;

  -  Creates a danger of constructive
     acceleration due to failure to
     issue  justified  time extensions
     promptly.

Approval  of  a change order  for time
extension may  extend  the amount  of
engineering  and  inspection  needed  on
the project.
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Approval  of  a  time  extension will  not
relieve you  from  any  obligations that
the state or EPA may have imposed upon
the project.

In  addition  to  the construction
contractor's proposal  for  time
extension,  you  should  make your
own  independent  estimate  (normally
prepared by  the engineer).

Memorandum of  Negotiation

It  is  a good  construction management
practice to keep a memorandum of the
negotiations  pertaining  to  a change
order.   The  amount  of  detail  and
formality involved in the memorandum
should definitely be  not more than is
justified  by the  complexity of the
work and cost  involved.

A   record   of these  negotiations
documents  that  the parties  have a
clear  understanding  of  the  proposed
changes and  have  jointly evaluated the
reasonableness  of the  proposal.
These  should include considerations of
quality,  cost,   alternative  methods,
secondary   effects,  and time.   The
memorandum  should be prepared at the
negotiating table  and  signed by  all
attending.     Immediate  documentation
minimizes misinterpretation and memory
failure.

The parties may not reach agreement on
some or all  of  the  items  discussed.
The  disagreements  are   often more
 significant than  the  items  resolved.
Those  items which are not resolved or
are not  negotiable  should also be
recorded, stating the position of each
 side  and   whatever reservation of
 rights  is  necessary.   The reasons
 for  disagreement  must   be clearly
 documented.   A  multipart  bilateral
 change order  can then be executed for
 the resolved items and one or  more
unilateral  change orders  issued  for
those  unresolved items which  must
proceed.   The construction contractor
may  then  seek  a  remedy  through
renewed  negotiation,  arbitration  or
litigation.

A  number  of unrelated  items  may
be  discussed  at the   same  session
and  included in  one  memorandum.
The  Memorandum  of  Negotiation
should  should  contain  the  following
information:

o  Project  name and  number,  location,
date;

o  Contract name  and number;

o  Names of  persons  representing
construction contractor,  Owner,
Engineer;

o  Description  of  proposed  change
(attach  revised  specification,  plan,
sketches, shop drawings, etc.)  station
location, plan sheet number;

o  Discussion  of alternative  methods
of  meeting  objective and quality
considerations;

o  Construction  contractor's  price
proposal;

o  Engineer's independent  estimate
of cost  and time  changes;

o  Explanation  for  recalculation  or
disagreement;

 o   Statement  of total cost  changes
 including secondary  costs;

 o   Statement of total  time changes;

 o  Assurance  that  complete  cost of
 secondary effects has  been included;

 o  Dated   signatures of persons
 attending.
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The  Memorandum  is not  a notice  to
proceed, nor is it  a change order.  It
should  be  used in  the preparation  of
the change order and retained in your
files  for  possible later use  by the
reviewing agency.

Change Order

The  change  order  is  the  formal
document which  alters  some  condition
of the contract documents.  The change
order  may  alter the  contract  price,
schedule of payments, completion date,
and plans and specifications.

It specifies the agreed-upon change  to
the  contract  and   should  include  the
fol1owi ng i nformati on:

o  Identification of the change order;

o  Description of change;

o  Reason for change;

o  Change in contract price;

o  Change  in  unit  prices (if  appli-
cable);

o  Change to contract time;

o  Statement   that  secondary  impacts
are included;

o  Approvals  by  the  Owner's  and
construction   contractor's  authorized
representatives.

You  may  require  the  Engineer's
signature  for  internal  control, but
this  is not  a substitute  for your
signature.

Notice to Proceed

Before proceeding  with the work, the
construction  contractor  may  require a
"Change  Order Notice  to  Proceed"
 (standard   forms  available   from
 professional   and  trade associations)
 from you.  If needed, you can provide
 notice  to  proceed immediately unless
 prior  approval  from  the  reviewing
 agency is required.   The  notice to
 proceed may  be  made  a  part of the
 change  order,  allowing  the construc-
 tion  contractor to  proceed  upon
 execution of  the change order by both
 parties.

 Submitting a  Change Order to
 the Reviewing Agency

 EPA regulations intend  that the level
 of detail required in  a  change order
 and attachments depends on the dollar
 amount and complexity  of  the change.
 For changes with a price of $10,000 or
 less, abbreviated  documentation should
 be  used  such  as,  for example,  a
 telephone  memorandum  to  serve  as  a
 Memorandum   of   Negotiation.   As
 another example,  sales  slips,  quota-
 tions,  catalogs and price lists can be
 used to  support  the  price  paid.   By
 using  shortened  procedures  and  by
 grouping changes to be administered in
 one  change  order, preparation  costs
 should  be kept reasonable  in relation
 to the dollar value of the change.
 However, related  work  should not  be
 separated into several   change  orders
 just to  take  advantage of shortened
 procedures.

 Submittal  requirements  also depend on
the  date upon  which the  grant  was
 awarded.   For grants  awarded on or
 after  May 12,  1982,  change orders
would not need to be  submitted to the
 reviewing  agency, unless  you self-
certify  that  your  own  procurement
system  does not meet the intent of EPA
regulations.    However,  these  change
orders  will be subject to audit by the
reviewing agency  at the completion of
the  project.    Documentation,  except
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the approval request, should  therefore
be completed and kept in your files.

In order to assist you in preparation
of the change  order approval  request,
the  information typically  required
by the  reviewer has been  provided in
the  EPA publication   referenced in
Section 14.9.5.  This request formally
notifies the reviewing agency that a
change has been made  to  the contract
documents  and  asks  for change  order
approval  and determination  of  allow-
ability of any additional  costs or
time for federal participation.   Since
the memorandum of negotiation,  change
order  and  notice to proceed  (if  any)
will  be included with  the request, it
is suggested that information given on
them not be duplicated on the request
itself.

The  request must  be   signed by you
prior  to submission to  the  reviewing
agency.   As with  the change order,
the  engineer's  and  construction
contractor's   signatures  may  be
required as a  part of  your internal
control procedures,  but this is  not a
substitute  for  your  signature.
Supporting documentation  should be
referenced  and  then  attached to the
change order request.

You  are expected  to  keep all  change
order documentation  on  file for
3 years following final grant payment.
If a change order is the subject  of a
controversy (such as a claim) or audit
within the 3 years, the period  shall
be  extended  until  resolution of the
controversy or  audit.

You  should  also  check with  your
State  agency  which has  reviewed the
construction  drawings   and  specifica-
tions to  determine  if there are
any  additional  change reporting
requirements, such  as  modifications to
a State-issued  building permit.
14.9.4
REVIEWING AGENCY  The   reviewing
PROCEDURES        agency's  responsi-
                 bility is to  deter-
mine  if  a  change  order  request
complies with  and  satisfies  the EPA
requirements   of  the  construction
grants program.

Each  reviewing  agency has  developed
its  own checklists  for  review of
change  orders.  You  should discuss
those procedures with  the  particular
reviewer who  is  involved.

Grantee Notification

You must be  formally  notified  of the
action taken on  the  completed  change
order  request.   This  notification
informs you that one of the following
actions has been taken:

o  If prior approval is required:

  -  costs  of  change order  are
     allowable  (or partially allowable
     as stipulated);

  -  costs of  change  order are not
     allowable.

o  If prior approval not required:

  -  change  order  is  approved and
     costs  are  allowable (or partially
     allowable  as stipulated);

  -  change  order  is  approved, but
     costs  are  not allowable;

  -  change order is not approved and
     the reason.

o  In all  cases, that approval of  a
project change  does  not  obligate EPA
to any  increase  in  the  amount  of the
grant  or  grant payments  unless an
amendment  to  increase the grant is
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I alsot approved.   This  limitation
 should  be stated in the approval  and
 appropriate  action  taken  toward
 amending  the  grant  if necessary.
 You should  also be informed of  any
 restrictions  on  grant  amendments,
 such  as  the  State  agency denying
 certification  of a grant increase  or
 any  regulation  which  limits  grant
 increases.

 Review  of  Allowability Determination

 You  may  request  a review  of the
 allowability  determination,   This
 applies  to  determinations  oy  the
 State  agency  or EPA  project
 officer.   Details  of  the disputes
 procedure  are explained in Section
 14.9.1  (40 CFR Part  30,  Subpart  L  and
 40 CFR,  35.3030).
 14.9.5
 REFERENCE
 MATERIAL
                 For  further informa-
                 tion on change order
                 preparation, you may
wish to refer to the EPA publication
"Management  of  Construction Change
Orders,  A Guide  for Grantees  -  March
1983."
                                          PART IV.  FINANCIAL AND PROCUREMENT
                                                   CONSIDERATIONS

                                                     CHAPTER 15

                                              FINANCIAL  CONSIDERATIONS
                                         15.0
                                         ALLOWABLE AND
                                         UNALLOWABLE
                                         COSTS
                                         allowable  for
                                         (Append i x  A
                                         Subpart  I)
                 Not   all   costs
                 associated with your
                 wastewater  treat-
                 ment  project  are
               grant  participation
               to 40  CFR  Part  35
                These  regulations
provides  a  specific list of allowable
and unallowable  costs  based on the
Clean  Water Act (CWA) and Federal cost
principles.   The list  should  be
consulted  as you  prepare  a grant
application,  a  payment  request
or during audit as appropriate.

Questions of clarification or requests
for inclusion of  costs as  allowable
and  not otherwise  determined  are
to  be made  through  your reviewing
agency.

Resolve  questions  of  allowable  costs
as  early  as  possible to preclude
potential   adverse financial  impacts
upon  your  community  from decisions
made after  Federal audit.
                                          15.1
                                          REPLACEMENT
                                          COSJS
                                                          Grant  assistance is
                                                          authori zed   for
                                                          treatment  works
                                         including new  facilities or exten-
                                         sions,   improvements,   remodeling,
                                         additions  and alterations to  existing
                                         facilities (40  CFR  Part  35,  Appendix
                                         A).   Grant assistance is not  provided
                                         to replace,  through reconstruction or
                                         substitution,  treatment works that
                                         fail  prior to initiation of operation,
                                         during their design  life  (generally
                                         20 years),  or  fail  to  meet  project
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performance  standards and  which
received  assistance  under the  Water
Pollution  Control  Act  of  1956  or
its  amendments  (except qualifying
innovative  or  alternative  projects;
Section 6.7 and Section 15.2).
15.2*
INNOVATIVE AND
ALTERNATIVE
TECHNOLOGY
REPLACEMENT
GRANT
                 During  facilities
                 planning  you
                 evaluated innovative
                 and alternative  I&A
                 technology  projects
                 as  a  potent i al
cost-effective  solution  to your
wastewater  problem.    In   addition
to  the  cost  or  energy  savings or
conservation  techniques  which  I&A
projects  realize,  an additional
incentive  authorized by the  CWA is
the  potential  for  a  100  percent
modification  or  replacement  (M/R)
grant if the project  fails  within
2  years  following initiation of
operation.

For the  purpose  of 100 percent  M/R
funding,  "failure"  is defined  as  the
inability  of the  entire  system or
significant  elements  to meet project
performance  standards, where  such
failure  is  due  to  the higher  risk
elements  of design.   M/R 100 percent
funding  is  not  available where  the
failure   of  an  I  or  A system or
component  is  covered by a  warranty
or caused  by negligence.

M/R 100  percent  funding is  also  not
available  where  the  non-I&A portion
fails and  the technology  failure is
not caused by the I&A component.

When failure   occurs,   you  are
encouraged  to  pursue  independent
corrective  actions   analysis as  part
of  the   procedures  to  establish  a
firm basis for  requesting  M/R grant
assistance.
Evaluation of requests  for 100 percent
M/R  grants  involves  a determination
that:    (a)  project performance
standards  have  not  been  met;  (b)  the
failure  results  in  a  significant
increase in operations  and maintenance
O&M costs  and/or requires  additional
significant  capital  expenditures  to
correct the problem; and  (c)  the
failure   is not attributable  to
negligence on the part of any person.
Negligence should be evaluated  as the
last item  since the determination is
based upon both technical analysis and
legal  findings.

Initial screening  will  verify  that
there  is  good  justification for  a
detailed  evaluation  or  rejection  of
the  request  for  reasons  such  as
expiration  of  the  two-year period,
hydraulic  or  organic  overloading  of
the  system  or  lack  of  an  adequate
O&M program.

When results  of the  initial screening
indicate that  failure of an  I  or A
technology  is  the  probable  cause,  a
performance  evaluation   should  be
prepared  and  address the following
areas:
  o  Description  of  the  failure
including  date  of occurrence,  manner
of failure, and effects of failure;
  o  Quality  assurance  (if  actual
environmental data is  to be collected
and evaluated,  Section  4.4));

  o  Evaluation  of  the  current  O&M
program;
  o  Evaluation  of  system design,
including  analysis  of  process  theory
and  identification  of  potential
design deficiencies  impacting  system
performance;

  o  Identification  and evaluation of
potential   construction  deficiencies
contributing to the  failure;
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  o  Evaluation   of  equipment
performance and warranties;

  o  Evaluation  of  process warranties
and performance guarantees; and

  o  Description of outstanding claims
and  issues  of  negligence,  where
appropriate.

15.3
FORCE ACCOUNT     As  a  matter  of
                 public policy,  use
of private firms for project  work is
encouraged.   However, some of your
project  work  may be performed more
efficiently  and economically using
municipal  employees.   This procedure
is termed "force account."  You  may
use  this  procedure  for construction
work  only  if costs  are  properly
documented  (40  CFR  Part  30)  and your
municipal  employees  are  qualified  to
perform  the work.   The  costs  for
force account  work, if any, during
facilities  planning  and  project
design are  not allowable for grant
participation,  but the work may be
done under the allowance to be paid as
part of a subsequent Step 3 Grant.

Where it  is proposed  to  use force
account  during  Step  3,  certain
restrictions   and   limitations   are
imposed  to  ensure the  proper  use  and
accounting of public funds.

15.3.1
PRIOR APPROVAL    Prior   written
                 approval  by  the
reviewing agency (for building)  is
needed  for  the use of force account,
if the estimated costs are greater
than  $25,000.    Approval  is based
on  overriding reasons  for  force
account rather  than  private firms  and
can  be  given  only if one  of  two
criteria  is met (40  CFR, 30.520):
  o  The work  can  be accomplished
more economically  by the  use  of this
method  compared  with  competitive
bidding  procurement;

  o  Emergency  circumstances  dictate
its use.

To  satisfy the criterion  of improved
economy you should substantiate:

  o  That   all  anticipated  project
administrative   costs   including
salaries  of  administrative employees
and travel  expenses  have  been
included  and  are  allowable for  grant
participation;
  o  The proposed  method
keeping  and timechecking;
          of  time-
  o  The  method  of establishing  wage
scales  for  laborers,  mechanics,
and supervisory employees;

  o  The  indirect cost rate and  its
method of allocation  to  the project;

  o  The  method  for  computing  allow-
ances for  use, repair and overhaul  of
municipal  equipment,  rental  rates  and
period of use for rental equipment;

  o  The method of computing deprecia-
tion costs of small  tools  and  other
expendable items  or equipment;

  o  The  method  of  disposing  of
unused materials and  tools and  any
appropriate cost  adjustments.
15.3.2
OTHER FORCE
ACCOUNT
CONSIDERATIONS
In  addition  to
substantiation   of
improved   economy,
additional  controls
are needed, such as:

  o  Adequate cost accounting records
substantiating  direct and  indirect
costs;
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  o  Maintaining  other1  ongoing
required municipal functions;

  o  Limiting  minor  construction work
(as a matter of program policy);

  o  Employee  time sheets approved and
signed by a supervisor  accounting for
all hours worked in a day or week by
project (whether or not the project is
Federally funded);

  o  Control  procedures  ensuring that
all materials, supplies, equipment and
labor cost charged  to  the project are
actually used in connection with the
project;

  o  Assurance  that   the Copeland
Anti-Kickback  Act  provision  will  be
enforced;

  o  Adequate  insurance including fire
and  extended  coverage,  workmen's
compensation, public  liability and
property damage, and  "all  risk" in
accordance with local or State law.

The force account method of performing
small   portions  of  project  work
requires careful analysis and  planning
beforehand  and management  and cost
control  after  work is initiated.

15.4
PAYMENTS         Three  needs  arise
                 with  regard  to grant
payments:   (1)  your need for timely
payments to contractors, (2) your need
for  timely payments  from EPA,  and
(3) EPA's need to project outlays for
financial management control.   These
needs can  best  be  met  when there is
agreement initially  as  to amount and
timing  of  payment  requests.   At the
time  of grant application you must
prepare  a schedule of  anticipated
grant payments indicating  months from
grant award  and  estimated amount  of
each payment.  For Step 3 projects you
may request  50 percent  of the  Federal
share  of  the allowance immediately
after  grant  award  and  the  balance
after award  of all prime subagreements
for  building  the  project.   For
Step 2+3 projects where  no facilities
planning  grant was  awarded  you may
request  30  percent  of  the  Federal
share  of  the allowance immediately
after grant  award, 35 percent when the
design is  50 percent complete,  and the
balance  after  award  of  all  prime
subagreements   for  building  the
project.   For  Step 2+3 projects
for which a  facilities  planning  grant
was  awarded, you  may  request  50
percent of  the  Federal  share  of the
allowance  when  the design  is  50
percent complete  and the balance  after
award of  all  prime  subagreements for
building the project.

Payment  schedules  may  be modified
in  consultation with  the  project
reviewer.    Your  requirements  are
combined with  those  of  other projects
and  used  to  forecast Federal   outlay
requirements for  the fiscal year.

EPA  has  a goal  of 22 calendar days
from receipt  of  your payment  request
to your  receipt  of  a check from the
Department  of the  Treasury.   This
presumes  your   payment   request  is
consistent with the  work  progress, is
not  held  up  for a  specific  reason
 e.g»,  plan  of operation), and is in
line  with  your  payment  schedule.
Grant  payments  are  based on costs
incurred and are due and payable.  You
should consider  payment  policies and
procedures that  will  reduce the cost
of  the contract.   These include
payment discounts to determine  the low
bid, progress  payments to architects/
engineers (A/E's) and  construction
contractors,  and minimum retainage
from progress  payments.
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Payment discounts are governed  by  EPA
procurement  regulations  (40 CFR
33.430).   However,  progress  payments
and retainage from  progress  payments
may be governed by your State law.
You may make progress  payments for  the
amount and  value  of work and services
performed.  You may  also make progress
payments  for  materials  or  equipment
delivered  to  or stocked  near the
construction  site.   You  may also
include payment  for undelivered
specifically  manufactured  items
or  equipment,  provided  provisions
regarding   appropriate  insurance,
security,  and  protection of  Federal
interests  and  your interests  in
progress  payments  are  included  in
your  contract documents.   If your
contractor  is  making satisfactory
progress,   and there is no  other
specific  reason for withholding  a
portion  of the  progress payments,
you should  retain  only that  amount
necessary to assure  completion of your
project.

Several  States have laws  or are
considering  legislation that  requires
payment  of  interest  penalties  to
contractors  for  late payment  of
legitimate  invoices.   Federal law
prohibits the  use of  grant  funds  for
payment of  such interest penalties
requiring that  "(a)  in no  case shall
an obligation  to pay such interest
penalties   be  construed to  be  an
obligation  of the  United  States,"
and "(b)  any payment  of such interest
penalties shall not  be made from funds
provided to  a  grantee by a Federal
agency nor shall any non-Federal funds
expended  for such interest  penalties
be  counted toward  any matching
requirement applicable to that grant."

Care in preparing payment requests  and
contact with the payment official will
expedite  processing  of your payments.
If  payments are  not made  promptly
by  you  to your contractor,  interest
earned  on EPA grant  funds will  be
recovered  at audit.

15.4.1
PREAWARD COSTS    In  general,   grant
                 assistance  will  not
be  provided  for  building  work
performed  prior to grant award.   An
exception  to this rule is:

  o  In  emergencies or instances where
delay  could result  in significant
cost increases  and where the regional
administrator  has given  prior
approval.   Examples of this condition
are:  procurement  of major equipment
requiring  long  lead  times;   field
testing  of I  or A  technologies;  minor
sewer rehabilitation,  acquisition  or
option  for  purchase of  eligible
land; or  advance  building of  minor
portions of the treatment works.

Where the  instances  described  above
exist,  the  reviewing agency may
approve  the preliminary Step 3  work
but  only  after  completion  of the
.appropriate   environmental  review
(Section  9.2.2).     If  preliminary
Step  3 work  is  approved by the
reviewing  agency,  such approval  is not
an  actual  nor implied  commitment
of  future  grant assistance and
you  proceed  at your  own  risk.   In
addition,  preaward  procurements  are
subject to  EPA regulations (40 CFR
Part 33 for A/E services;  Part  4 for
acquisition of real  property).

Approval of preliminary Step 3 work  as
a preaward cost is not to be confused
with the allowance (Section 13.5) for
facilities  planning and  project
design.   Preparation  of a  facilities
plan  and  design of the project are
part  of the  application process  and
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do  not  require  (although it  is
reco'mmended)  approval  before grant
application.

If you  believe that  preliminary Step 3
work on your project must begin before
grant  award,  contact  your project
reviewer  for additional  guidance.

15.4.2
INTERIM PAYMENTS  Procedures   for
                 filing   interim
payment  requests  (EPA Form SF-271,
Outlay  Report  and  Request  for  Reim-
bursement  for  Construction  Program)
vary from region to  region or State to
State.    The  frequency  and dollar
amounts should  agree with the payment
schedule  in your grant agreement and
any other special grant conditions.

One  item needing  clarification  from
your  project  reviewer  concerns
supporting  documentation,  if   any,
which  is  to  accompany  a payment
request.   For  instance, such documen-
tation  may  include  invoices   from
your A/E or  the A/E's estimate of
work-in-pi ace.

15.4.3
FINAL PAYMENT     Final  grant payment
                 for  building  the
project will be made  after  satisfac-
tion of all  applicable regulations and
any special grant conditions.  The
final  grant  payment  for  buildir\g
the project  is the  balance of the
Federal share  of the allowable project
costs   adjusted  to  actual  costs
incurred.   The  last  Federal  grant
payment  may  be made (subject to
negotiations   with  your  reviewing
agency)  one  year  after  initiation
of  operation  and  will  include all
allowable  cos^ts  associated   with
project performance (Section 14.6).

The Federal share  of  refunds, rebates
or   other amounts (including any
interest   that  accrue to  the  project
are credited to the State allotment or
paid to the United States.

By  accepting  the final  payment you
agree  to  release  and discharge
the  United  States,  its  officers,
agents,   and  employees  from  all
liabilities,  obligations  and  claims
arising out  of the  project work or
under  the grant,  subject  only to
exceptions previously  specified in
writing between you and the reviewing
agency.

15.5
GRANT INCREASES/  Grant   increases/
DECREASES         decreases are most
                 often   associated
with construction and are discussed in
Section 14.1.

15.6
AUDITS           By accepting  the
                 grant you agree that
all project related books, documents,
records  and papers  and  those  of  your
contractors  are accessible  to the
reviewing  agency or its authorized
representatives  for  audit  purposes.
The objective  of  the  audit is to
determine  whether financial operations
are conducted properly, the financial
statements are presented  fairly, you
complied  with laws  and  regulations
affecting  the expenditure  of  Federal
funds,  internal  procedures were
established to meet the objectives of
the grants  program  and  financial
reports  contain accurate and reliable
information.

You must  conduct an audit at  least
once every   2  years  to  evaluate
the integrity  of  your  financial
transactions and  reports  and to
determine comliance with  the  terms
of  your  assistance  agreement
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(OMB  Circular A102, Attachment  P).
You should conduct your  audit  on  an
organization  wide  basis, and submit a
copy of your  report  to  your cognizant
Federal  agency   (EPA   Construction
Grants Program).

You will  need financial  records which
establish an  audit trail substantiated
by  receipts  and disbursements.   In
addition,  the audit  will ensure that
Step 3 or  approved  preaward procure-
ment   procedures  were properly
followed.   For example, your records
may show that you  purchased, received
and paid for  a piece of  equipment.   If
the equipment price  exceeded $10,000,
you should have received competitive
bids  and  purchased from the  lowest
responsive,  responsible . bidder.   If
you did  not   receive  bids or  don't
have  records  of your  procurement
action, the cost of  the equipment  may
possibly  be   excluded  from Federal
grant  participation.
15.6.1
FINANCIAL
RECORDS
                 Your   grant
                 assistance financial
                 records  should
be  kept separate  from  your  other
municipal  financial  records.    Where
cross referencing  is necessary,  it
should be provided.
The  accounting
include:
                 records  typically
  o  Cash  receipts register;

  o  Check  disbursement ledger  and
cancelled  checks;

  o  Cost  control ledger;

  o  Journal voucher;

  o  Payroll records,  if applicable;

  o  Property record,  if applicable.
                                         The  accounting system should be on a
                                         double  entry  basis  with  a general
                                         ledger.    The financial  management
                                         system  should  include a  series of
                                         checks and balances and have a clear
                                         separation of  functions and  approval
                                         levels.   Your accountant  should be
                                         familiar with these practices and may
                                         obtain additional  guidance  from EPA's
                                         "Accounting  Guide for  Construction
                                         Grants,"  October  1977,  prepared by
                                         Office  of Resources  Management,
                                         Financial  Management Division.
                                         15.6.2
                                         AUDIT PROCEDURES
                                         AND REPORTS
                 After final  onsite
                 review  by  the
                 reviewing agency and
satisfactory   resolution   of  any
deficiencies,  your  project  is ready
for audit.  Keep the  project  records
in  a   safe place  and  under your
control  (40 CFR, 30.501).

The audit  will  be  performed  by  the
reviewing  agency,  other  Federal
agencies  or   an  accounting firm
hired  by  the  reviewing agency.   The
auditors will  contact  you to  arrange
an appointment  for audit purposes.
Auditors  will   obtain  preliminary
information  from the   reviewing
agency's, project files.   During  the
audit  of  your records the  auditors
will  monitor your  files  for  further
documentation and make  spot checks to
verify  specific  items.   The audit may
last from a few  days to weeks  and you
should  provide adequate work space and
make available those employees  who may
be able to respond to questions raised
by the  auditor.

At the  completion  of  the audit,  the
auditors  will   prepare an  audit
report and  review  it  with you.
If  exception  is  taken  to  some  of
the items you  claimed  for grant
participation, you have an opportunity
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to discuss  it  with the auditor and
provide  additional  information  or
documentation.   Evaluation of  this
additional information could result  in
revisions to  the preliminary audit
report.

The draft audit  report is sent  to you
and the  reviewing agency for  action.
You  and  the respective staffs may
discuss  with  the  auditors  any
exceptions and  try  to resolve
differences.   In some  cases, you may
be contacted by the auditor to clarify
or provide  additional  documentation,
before the draft  report  is submitted.
During  this time you  may provide
further   clarifying documentation  or
explanations.  You will   be advised  of
the  final   agency position  on  all
exceptions,  normally within 120  days
from  the date  of the  final  audit
report.   This final determination  will
also  inform you  of  your  right  to
request  a review  of the  audit  report.
(40 CFR Part 30, Subpart  L).
            CHAPTER 16

            PROCUREMENT
16.0
INTRODUCTION      Procurement  is  the
                 purchase   of
materials,  services, and construction.
Services   include   accounting,
engineering, architectural,  legal,  and
other consultant subagreements.   The
objective of a  procurement  system is
to obtain needed goods and services at
a  fair  and reasonable price through
the use  of free and  open competition
appropriate  to the type of project
work  to be  performed.   When  tax
dollars  are involved,  it is  necessary
to  impose  safeguards in public
procurement   to   protect  against
potential fraud and irregularities.

In Chapter 11  aspects  of procurement
related  to project  design and  the
preparation  of  construction drawings
and  specifications  (e.g.,   buy
American,   bonding,  single   material,
etc.)  are  discussed.  Procurement
actions  related  to  management   of
change orders are discussed  in Chapter
14.  This  chapter, however, provides
guidance  from an  overall perspective
to assist  you in understanding  and
satisfying  the   Federal   minimum
requirements  for   procurement.
This guidance  is not  regulation,  and
you  may follow  other procedures
which satisfy the minimum requirements
of EPA's  procurement regulations.

The  EPA procurement  regulations
entitled  "Procurement  Under Assistance
Agreements"  (40  CFR Part 33) reflect
changes  to and a consolidation  of
earlier  procurement   regulations.
Final grant regulations were  published
by EPA  on February 17, 1984, and  the
final  procurement regulations were
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published  on  March  28,  1983,  and
amended  on  July 1, 1983.  Because of
some changes in the final  regulations
you have several  options available to
you  depending on  the date of  your
grant award.
  (1)   If your grant  is  awarded after
       March 28, 1983, your procure-
       ment must  comply  with the
       all  of the requirements  and
       effective dates  of  the final
       regulation.

  (2)   If  your  grant  was awarded
       before  May  12, 1982, you
       may  follow the  procurement
       regulation  which was  in
       effect  at  the time  of grant
       award;  use  the May  12, 1982,
       interim-final  regulation
       provided you completed  the
       certification form  (Section
       16.1);  or  use the  March  28,
       1983,  final  procurement
       regulation,  whichever  you
       prefer.

  (3)   If  your  grant  was awarded
       between May  12,  1982,  and
       March  28,  1983,  you must use
       the  May 12,  1982, interim-final
       regulation,  if you  completed
       the  certification form  before
       March  28,  1983.    If  the
       certification form was  not
       completed and  submitted  before
       March 28, 1983, you must comply
       with the final  regulation.
The  procurement  regulation  shifts
the  responsibility  for  conducting
procurement to you, the grantee.  For
example,  you  may certify that your
procurement  system meets  the  intent
of  the  minimum  Federal  requirements
(or  State   requirements  where
applicable)   and,  therefore,  your
procurement actions will  not  normally
be  reviewed  by your reviewing
agency.  Also,  since  grant  assist-
ance  will  be  provided  only  for
construction  (initiate design  for
Step 2+3 projects)  there  will  be no
Federal  oversight of your  procurement
action  for goods and services  required
in  preparing  your facilities  plan
and/or  project designjas appropriate.

The full responsibility for  procure-
ments  prior  to  and  after  grant
award  rests  solely  with  you
(40  CFR, 35.2118).   In order to
protect  your  interests you should
give careful  consideration  to  the
procurement procedures you  use and
particularly to cost or price  analyses
(Section 16.5.6).

In  the  discussions which  follow the
term "grant  agreement"  refers to the
agreement and  amendments between you
and  EPA.  The  term  "subagreement"
refers  to the  agreement between you
and  a  contractor  (architect/engineer
(A/E),  construction contractor, etc.)
or  the  agreement  between your
contractor and a subcontractor.

Remember as  a  grant recipient you are
responsible  for  maintaining a written
code or standard  of conduct  governing
the award  and  administration of
subagreements supported by EPA funds.
16.1
PROCUREMENT
CERTIFICATION
                At the time of grant
                applicati on  you
                must   review your
Procurement  System to  determine
whether  your  system  meets  regulatory
requirements  (40  CFR,  Part 33),
and  submit  to  your reviewing
agency  your  "Procurement   System
Certification" (EPA Form 5700-48).  If
your system  meets the  requirements,
you may  elect to use your own procure-
ment system.   If it does not meet the
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requirements   of   the  regulations,
including  the  procedural  requirements
(40 CFR,  Part 33, Appendix  A), you
must  allow EPA  the  opportunity to
review  all proposed  subagreements
before  you award them.    Wherever
possible,  you   are  encouraged  to use
your own procurement  system.  You may
also wish  to  consider  modifying your
system as appropriate  to  include  some
of the Federal requirements which may
not presently be in  your  system or
non-EPA funded work  (e.g.,  cost and
price  analysis).

The principal  advantage to  using your
procurement  system  (assuming  it
meets  the minimum Federal  or State
requirements),  is  that once you  have
certified  affirmatively  you  need
submit only minimal  documentation to
your reviewing agency and you do not
need to submit proposed subagreements
for preaward  review  (Section  16.12).
This,  in  turn, saves  both time and
paperwork  for  you and  your  reviewing
agency.   A second advantage  is  that
your procurement  system will  probably
satisfy the  procurement  requirements
of  other  Federal  agencies  from  whom
you may obtain loans  or grants.   Care
must be exercised,  however, if you do
certify your  procurement  system as
meeting the Federal  minimum  require-
ments.    Even though  there  are
distinct advantages to using your own
procurement system, it may still  be to
your advantage to  allow EPA to  review
your  proposed subagreements   because
the possiblity exists  that  excessive
costs  may  be incurred  only  to be
declared   ineligible,  unallowable or
improperly allocated  by  an  auditor
after  completion of the project.

Adoption of a  new  system  or
modification of your  existing  system
to  meet  Federal  minimum  requirements
results in a procurement  system  which
will  serve you well  for all  municipal
procurements  regardless  of whether or
not Federal funds are involved.
16.2
PROCUREMENT
MANAGEMENT AND
REPORTING
                 This  and   the
                 following  sections
                 describe   good
                 procurement
management  practices based on the EPA
regulations.  It is recommended that a
public official,  preferably  a  full-
time municipal  employee,  be  assigned
responsibility   to  coordinate  all
procurement  actions.   This person may
be  titled  "purchasing  agent,"
"procurement   officer,"   "procurement
manager," "service director,"  or other
similar title  which conveys  job
responsibility.   The  purchasing agent
(PA) should be or become very  familiar
with the procurement  system you will
use and act as a clearinghouse for all
matters concerning procurement.

The  PA  should  maintain  detailed
documentation   of all   procurement
actions.   The documentation should
include:

  o-  Correspondence;

  o  Logs of telephone  and personal
conversations;

  o  Minutes of meetings;

  o  Basis  for contractor selection;*

  o  Justification for the procurement
method selected;*

  o  Justification  for  any
specification  which  does   not
provide  for maximum free  and  open
competition;*

  o  Justification for the  type of
subagreement selected;*
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  o  Basis for award cost or price,
including a  copy  of  the cost or
price analysis and  documentation of
negotiations;*

  o  Basis and justification  for
rejection  of any or all bids;*

  o  Bid  tabulations  and  contract
documents;*

  o  Payment files;

  o  Protest files.

Items marked  with an  *  in the list
above  must  be submitted to  your
reviewing  agency for approval  prior to
awarding a subagreement  if you do not
have a  certified  procurement system
or  if  your certification  has  been
revoked.

As  a  general  policy the PA  should
document in writing anything that has
to  do with  procurement  and maintain
the records for review at the time of
Federal  audit.  Although  you may  have
certified  that your procurement system
satisfies Federal  requirements,
you  must  provide  your reviewing
agency  with  a tabulation  of all  bids
and/or  proposals   received  and  the
name,   amount  and  starting  and
completion dates  of the successful
contractor(s)   for   all  subagreements
expected to exceed $10,000 in 1 year.
If  you  wish  to   use  an innovative
procurement method  or if you propose a
noncompetitive   award,  you  must
obtain  your reviewing  agency's prior
approval even  if you have a certified
procurement system.

The  PA  should also  duplicate or
summarize  the   section  of your
procurement system  concerning  a  code
or  standards  of  conduct in  public
contracting  and  distribute  it  by
memorandum  to  appropriate  municipal
officials  and  employees.  The  intent
of  the distribution  is to  alert
employees  that a  code  of conduct
exists  and to  preclude conflicts of
interest.
16.3
METHODS OF
PROCUREMENT
                 The following  are
                 four   different
                 methods  of  procure-
ment which may be used depending  upon
the  circumstances:    (1)   formal
advertising,  (2) competitive  negotia-
tion,  (3)  noncompetitive negotiation,
and  (4)  small  purchase.   For  all
subagreements  expected  to  exceed
$10,000,  the use  of  the  formal
advertising  is preferred.   However,
there  are instances  when you  cannot
draft  an  adequate or realistic
purchase  description  to meet  the
elements  of formal  advertising.
In  those  circumstances  you should
use  the competitive  negotiation
method.  The least favored procurement
method  is  noncompetitive negotiation.
For purchases  which do  not exceed
$10,000, follow  the small  purchase
rules.

It  should   be  noted  that  EPA's
procurement   regulation  prohibits
practices which  unduly restrict or
eliminate  competition.    Examples of
practices considered to  be unduly
restrictive include:

  o  Noncompetitive  practices  between
fi rms;

  o Organizational conflicts of
i nterest;

  o Unnecessary  experience  and
bonding requirements;

  o State or  local  laws, ordinances,
regulations  or  procedures which  give
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local or in-State bidders or proposers
preference  over  other  bidders  or
proposers  in evaluating  bids  or
proposals; and

  o  Placing unreasonable requirements
on firms in  order  for them to qualify
to do business.
16.4
FORMAL
ADVERTISING
                 Formal advertising
                 is  the  preferred
                 method of procure-
ment  and  is the most common method
used  to  procure  construction
contractors.    Formal  advertising
includes  competitive  bidding
procedures and,  in  general,  follows
these steps:

  o  Solicitation for bids  -  a formal
public announcement  that  sealed  bids
will  be  received for the specified
work;

  o  Bid  receipt and opening  - public
opening of bids;

  o  Bid  evaluation - evaluation to
determine  the  lowest  responsive,
responsible bidder;

  o  Subagreement award.

The  following sections describe
each  of  these steps as  related to
the  procurement of  construction
contractors.   Formal  advertising for
other than construction procurements,
will  follow  essentially  the  same
procedure.
16.4.1
SOLICITATION
FOR BIDS
                 A formal  public
                 notice,   more
                 commonly called an
"Invitation  for  Bids,"  is placed in
newspapers,  trade  journals,  and
generally  in  the  case  of  large
projects,  in publications  with nation-
wide distribution.   If your estimated
project construction  cost is expected
to  exceed  $10  thousand  (10,000)
and  you  do  not  have a  certified
procurement  system,  you  must  publish
the  invitation  for bids  in trade
journals  of  nationwide   distribution
for  at least 30  days  before bid
opening  and  submit   proof  of
advertising  to your  reviewing  agency
(40 CFR,.Part 33, Appendix A).

The  public  notice  describes your
project,  indicates where bidding
documents,  such  as construction
drawings  and  specifications,  may be
obtained and specifies  a  time,  date
and  location  for  opening of bids.
Adequate time  generally a minimum of
30 days)  is allowed between the  date
of public notice  and the  date  of bid
opening.
                                         16.4.2
                                         BID  RECEIPT AND
                                         OPENING
                 Bids  are received  in
                 sealed  envelopes
                 from  prospective
contractors  and  publicly opened  at
the date  and time specified in the
public notice.  Bids are reviewed for
completeness  and  the  name and  amount
of each bid  is  read  aloud.   Obvious
discrepancies are noted and announced.
After  all  bids have been  opened, you
announce  the name and price of the
apparent low bid or bidders.

During bid receipt and  opening  it  is
possible  that  a  problem  may  arise
'late  bidder, incomplete  submission,
etc.).  You  may wish to have your A/E
or attorney  present  at bid opening
since these  situations may require
their  advice.
                                         16.4.3
                                         BID EVALUATION
                 You may  have your
                 A/E  or  attorney
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review  bids,  check  arithmetic
computations,  check  references,
insurance  coverage,  bid  bonds,
minority  and  women's  business
compliance, etc.,  but you  are
responsible  to assure  that  bids
are  evaluated  in  accordance  with
the criteria  described  in  the bidding
documents  (Section 11.2.1).    You
may reject all bids only when there
are sound, documented business reasons
to do  so.   Subagreements are  to be
awarded  to  the  lowest  responsive,
responsible bidder.

If  you  are using  a  certified
procurement system,  (Section 16.1) and
assuming  bids are within your estimate
and therefore do not require a grant
amendment, you may award subagreements
as soon as desired  after bid opening.
Submit  to  your reviewing  agency,
for  informational  use only,  a bid
tabulation  and the  name,  amount and
schedule  for successful  bidder(s).
As  a  major  purchaser  of goods and
services, you  can be both  prime
targets for,  and sensitive detectors
of,  antitrust violations.   Types of
antitrust violations you  should  look
for include,  but are not  limited to,
such  things as bid  suppression,
complementary  bidding,   bid  rotation,
market division,  price fixing, and
other  types  of collusion.   If you
detect an  antitrust  violation, you
can perform a triple  public  service:
(1) you  can  end a  practice  that is
costing  your agency  money  and is
costing   consumers and  taxpayers
millions  of dollars; (2) you can  also
bring  monies  to  the  treasury,  since
criminal  penalties  collected in
antitrust  enforcement go  into the
general  treasury fund; and  (3) you
can help  recoup  the additional  prices
paid  since  the  government may  bring
antitrust damage actions  and  actions
under the Federal False  Claims  Act.
If a  grant increase  is  necessary,
contact  your  reviewing  agency before
contract award (Section 14.1.1).

If you do not  have  a  certified
procurement  system or  if your
certification  has  been revoked,  you
must   comply  with  the  procurement
regulation  (40  CFR,  Part 33).   In
addition,  you  should also  submit
the  following information  to  your
reviewing agency:

  o  A  tabulation   of  all  bids
received;

  o  Copies  of the  proposal  form
and  bonds from the successful
bidder(s);

  o  A statement from your authorized
official  giving  the  names  of
bidders  to whom  you  have  awarded
subagreements  and the  amount of each
subagreement;

  o  Proof  of public notice indicating
the circulation dates and the time for
receipt of  bids (minimum of 30 days);

  o  A copy of each addendum issued
during the bidding  period or acknow-
ledgement of its  issue  by  the
successful  bidder at  least 5 days
before bid  deadline;

  o  Signed copies  of  the certifica-
tion  by the  contractors regarding
compliance with  Equal  Employment
Opportunity requirements;

  o  A justification  indicating why
the  low  bidder is  not  responsive
or responsible if  award is to be made
to other than  the low  bidder;

  o  A  revised project cost  estimate
as necessary.
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If the  bids differ from your A/E's
estimate,  it may  be  necessary  for you
to request  adjustment  to  your grant
(Section 14.1).  Upon approval  by your
reviewing  agency  of  your construction
procurement procedures,  and  after
adjustment  of your grant if  required,
you may  award  subagreements.
16.5
COMPETITIVE
NEGOTIATION
                 In   most   cases,
                 procurement   of
                 services related to
the  construction  of  treatment works
uses  the  competitive  negotiation
method.   This method,  includes  the
following steps:

  o  Public  notice  -  advertising your
need  for  services  and  requesting
proposals;

  o  Evaluation of  proposals  -  a
determination  of  the  qualified
offerers and  acceptable proposals;

  o  Negotiation and award.

An optional procedure is available for
the  procurement of A/E  services if
allowed  by State or  local  laws.   It
differs from the above  steps  in
evaluation  criteria,  negotiation,  and
use  of  the  prequalified list.   The
following sections  briefly   describe
each of  these steps.

16.5.1
PUBLIC NOTICE    The objective of the
                 public .notice is to
announce your  need  for services  and
request  proposals  from  qualified
firms.   Your  public  notice should
receive  wide  circulation and  include a
notice  in journals,   newspapers  or
publications   of  general  circulation
over a reasonable area.  If you do not
have  a  certified procurement  system,
your  notice  must  be  published  in
professional  journals,  newspapers or
publications  of  general   circulation
for  at least 30  days  before  the
deadline for receiving proposals.

The  public  notice describes  the
scope of services required, the method
by  which  associated documents  may
be obtained  or examined,  the evalua-
tion  criteria   (including   the
relative  importance attached  to  each
criterion), and the deadline and place
for submitting proposals.
                                          16.5.2
                                          EVALUATION OF
                                          PROPOSALS
                 Proposals  are  to
                 be  uniformly  and
                 objectively   eval-
uated in accordance  with  the criteria
stated  in  the  public  notice.   The
objective of the evaluation process is
to  determine  qualified  offerers  and
acceptable  proposals.
                                          16.5.3
                                          NEGOTIATION
                                          AND AWARD OF
                                          SUBAGREEMENT
                 Unless  the  RFP
                 states  that  the
                 award  of the  sub-
                 agreement  is  to  be
based solely  on  evaluation of initial
proposals, you must conduct meaningful
negotiations  with  all  of the  best
qualified  firms  submitting acceptable
proposals  and  permit revisions  to
obtain best  and  final  offers.  During
negotiations,  you  must  not  disclose
the identity nor any other information
derived from  proposals  of competing
firms.  A subagreement is awarded  to
the responsible firm whose proposal  is
determined to be the most  advantageous
to  you,  taking  into consideration
price  and  other evaluation  criteria
stated in the public notice.
                                          16.5.4
                                          OPTIONAL A/E
                                          SELECTION
                                          PROCEDURE
                 If the  subagreement
                 to be awarded  is for
                 A/E  services,  you
                 may  eval uate  and
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select the most  qualified firm based
on technical qualifications only.

In so doing, the following procedures
may be used:

Prequalified List

Proposals  may  be  requested  from a
firm  on  a  prequalified  list  or from
responses to a Request  for Statements
of Qualifications.   If  a prequalified
list is used, you must:

  o  Develop the list  using  public
notice (Section  16.5.1)  procedures;

  o  Update the list at least every
six months;

  o  Review and act on  each  request
for  prequalification made more than
30 days  before  the  closing  date  for
receipt of  proposals or bid opening.

Request for Qualifications

A  convenient mechanism  used  by many
municipalities for initially screening
firms  is the use  of a  Request For
Qualifications   (RFQ).    The  RFQ  is
included  in  your  public   notice
(Section 16.5.1)  and requests firms to
express their interest in working with
you on  a specific  project.   The  RFQ
provides  firms an  opportunity  to
present  in  writing  their  qualifica-
tions  and  related experience.  The
RFQ does not  request prices  and  is
followed by a Request for Proposals to
those  firms   judged  qualified.
After  receipt   of the  qualification
statements  either the purchasing agent
or a committee  of municipal officials
reviews  them   and  selects  several
firms which are found  to  be the best
qualified.  Often, in evaluating firms
it is helpful  to contact past  clients
to  determine  how well  the  firm
performed.   Documentation  of the RFQ
responses  and  the criteria  used
to  select  the  qualified  firms  is
essential.   Notify unsuccessful  firms
of your decision  and request proposals
from the firms  selected.

Request for  Proposals

A  request  for proposals  is  either
announced  in  a  public  notice
"Section 16.5.1), sent  to  prospective
bidders from your  prequalified  list,
or  sent  to  candidate  firms selected
through the RFQ  procedures  described
above.    Your   notice should describe
your project  requirements  in  detail
including such  items as:

  o  Existing facilities;

  o  How  associated  documents,
including 40 CFR  33.295 and Subparts F
and G,  may be obtained;

  o  Time   requirements  for  RFP
submission  and  completion of the
project work;

  o  Unique  problems;

  p  Previous studies;

  o  Persons to  contact if the firm
has questions   or wishes to  visit the
project site;

  o  Criteria to  be used in evaluating
proposals and   relative  importance of
each criterion;

Request that firms  prepare  a detailed
technical  proposal  of how they  would
undertake  your  project work.   The
PA  should  document  all   telephone
conversations,  correspondence  or
other communications  with  firms.  If
clarifying  or  additional  information
is  provided  to one   firm,  provide
the  same information  to  all   other
candidate firms.
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After, receipt  of proposals  either
the  PA or a committee  of municipal
officials reviews them  and  initially
ranks the  firms  in the order of
preference based on  criteria  in the
public notice.    Criteria  which  could
be used in ranking include:

  o  Specialized  experience  and
technical competence;

  o  Past  record  of  performance
(possibly contact previous clients);

  o  Ability to  perform work in the
time you require;

  o  Familiarity  with your  type of
pollution problems;

  o  No  personal  or  organizational
conflict of interest.

The decision as to how much weight is
given each of these and other  criteria
is yours (assuming that  you do not
show prejudice  or  bias based on
frivolous criteria) but it must  be set
forth in the RFP.

You must  conduct interviews with the
firms judged qualified.    If  so, you
should  allow  approximately  one and
one-half hours for each  interview.
You may  wish to  require the firms to
have  the project officer they will
assign to your  project present  at the
interview.   Most  often  firms will
have  a  15 to  20 minute  presentation
prepared.   Thereafter,  you  will ask
questions  and  evaluate  responses.
Ideally,  you should have  prepared in
advance  a  series  of  questions   which
you will  ask of all firms  to use  as a
common basis for comparison.    Should
the interview  result  in  a need  for a
revised  proposal,  request that the
revision be submitted   as  soon as
possible.
Negotiation and Award of Subagreement

After   evaluating  proposals  and
possibly  conducting  interviews,
determine  the most qualified  firm
based  on  your evaluation  criteria.
Negotiate the scope  of  work  and
corresponding  price  with  that firm.
If you are unable  to reach  agreement,
formally  terminate  negotiations  and
begin negotiations  with  the next most
technically qualified  firm.  Continue
this procedure with each  succeeding
firm in the order  of  their technical
ranking until  you  are  able  to reach
agreement.    Once  negotiations  are
terminated  with a  firm,  you cannot go
back and renegotiate with that firm.
A subagreement is  awarded to the most
qualified  firm  whose  proposal  is
determined  in  writing to be  acceptable
based upon the evaluation criteria in
the  RFP  and  after  negotiation  of a
fair and reasonable price.
16.5.5
USE OF THE
SAME A/E  DURING
CONSTRUCTION
                 EPA  procurement
                 regulations  appli-
                 cable  to  projects
                 receiving   grants
before December 29, 1981, provided for
the  continuation  of  A/E  services
from one grant step to another  without
further  advertising  or  competition.
EPA no longer provides Step 1 nor Step
2 grants nor must you follow  the EPA
procurement  regulations  in  procuring
A/E services for  facilities planning
and design.    However,  EPA wishes  to
continue the  earlier policy  of A/E
continuation  provided  that  certain
conditions are met.

If  you  are  satisfied  with the
qualifications and  performance of the
A/E firm which  provided  facilities
planning or  design services for your
project and  wish  to  retain  that
firm during  building  of the project,
                                     161

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you  may  do  so without  further
public  notice  and  evaluation  of
qualifications provided:

  o  You  received  a facilities
planning  (Step 1)  or  design  (Step 2)
grant and  selected the  A/E  in
accordance  with EPA's  procurement
regulations  which  were in effect  at
the time of grant award; or

  o  Your  reviewing agency approves
noncompetitive  procurement  in
accordance  with  the current  procure-
ment  regulations  (33.605(d))  for
reasons  other than, you  simply want
the same A/E firm;

  o  You are  able to certify  that the
following conditions have been met:

     - Your  initial  RFP  clearly
       stated the possibility that
       a  subagreement  could  be
       awarded  for  A/E services
       during   building  of  the
       project;  and

     - The  A/E was  selected  for
       facilities planning or  design
       in   accordance  with  the
       procedures  for  competition
        33.230)  with appropriate
       documentation  (33.250(a)(l)(3)
       and  (b))   and using either the
       small   purchase,  formal
       advertising  or  competitive
       negotiation  procedures
       (40 CFR Part 33);

     - No  conflict of  interest
       (33.715(a)(3)(iv)).

Even if you satisfy the conditions for
continuing with the same A/E firm, the
subagreement  awarded to the firm must
comply with EPA's current procurement
regulations (Section 16.8).
16.5.6
COST AND PRICE    In  competitive
CONSIDERATIONS    negotiation procure-
                 ment,  cost  is  one
of the  evaluation factors  or criteria
used in the selection process.  In the
optional   A/E selection  procedure,
technical  qualifications  of the firm
are  the   most  important  criterion
and price  is  negotiated  after initial
selection.    However,  price  is
important  and you must conduct  a cost
analysis.   You must  obtain  detailed
cost data from  a  prospective firm
to  determine  the  reasonableness  and
necessity  of  the  proposed  cost.   To
establish  the  reasonableness  and
necessity  of costs you should consider
prices charged   in the  surrounding
geographical  areas  for  similar work,
the complexity  of the  tasks involved
in  the work and  the  risk  to  the
candidate  firm.   Where  there is no
price competition  or  where  price is
based on cost analysis, profit must be
negotiated as a separate element.

Recognizing  that  the  Federal cost
principles  are   applicable to your
grant and  all  subagreements under your
grant,  a brief, simplified description
of  the  basic  elements  of cost is
provided below.

  o  Direct Costs - These  are costs
specifically  incurred for your project
and  will   generally  include  labor,
travel,  materials  and  supplies,  and
reproduction  costs  (for   example,
printing  of multiple  copies  of
construction  drawings  and   specifica-
tions).  Generally,  the largest direct
cost is labor.

  o  Indirect Costs - These  are actual
costs the  firm incurs by providing the
services  you  need  and  include rent,
utilities,  telephone,   employee
insurance and  benefits, accounting
                                    162

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 functions, and other costs of running
 a  business.    Usually  indirect  costs
 are  lumped  together either  as  over-
 head,   general  and  administrative
 burden,  or  a combination of  both.
 Firms  generally  apply the  same
 indirect  cost  rate  to  all  their
 projects.   Indirect  costs vary  among
 firms.   Most  often  indirect costs  are
 shown as a percentage of direct labor.
 For  example,  if  the direct  labor  is
 $100, the  indirect  cost  may  be  $130
 for  a total cost less profit of $230.
 Indirect cost  accounting  systems vary
 widely and you are likely  to encounter
 various methods.

 One  aspect  of the  Federal  cost
 principles with  which  you  should  be
 aware and which is related to indirect
 costs  concerns  unallowable costs.
 Unallowable  costs  as  used in this
 context  are  costs  which many  firms
 generally consider  as overhead  but
 which may not  be  included  in computing
 the  indirect  cost  rate  on  Federally
 financed projects.   A few of the more
 clearly defined unallowable costs are:
 interest on  borrowed  capital,  bad
 debts,   advertisements  or  promotional
 materials,  and entertainment.   These
 costs may not  be  included  in computing
 indirect cost  rates  where Federal
 funds are involved.

  o  Profit  -  This is the  net proceeds
 to the  owners of the  business  after
 all allowable  costs have been deducted
 from sales.   Because this definition
 of profit  is based  on Federal cost
 principles,  it may  vary from a firm's
 definition  of  profit.  Profits  are  to
 be negotiated  as  separate  elements  of
 the  price,  and  are  to  be reasonable
 and reflect  the complexity of the work
 and  the  elements  of risk associated
with  it.

 If you  do not  have  a  certified
 procurement  system, you must submit  to
your  reviewing agency for approval
cost  and  price  data contained in  or
similar to EPA's Form 5700-41 "Cost or
Price Summary  Format for Subagreements
Under U.S. EPA Grants."
16.6
NONCOMPETITIVE
NEGOTIATION
                  Noncompetitive
                  negotiation  is  the
                  least  favored method
of  procurement  and  may only  be  used
when the other procurement methods are
not feasible.

Specifically, award of  a subagreement
on  grant-assisted  projects  employing
noncompetitive   negotiation   may
be  done  only  under  the   following
circumstances:

  o  An item  is available only from a
single source;

  o  Public   exigency  or   emergency
requires immediate action;

  o  Authorization  by  your  reviewing
agency;

  o  After solicitation  from a number
of  sources,  competition is  determined
to be inadequate.

16.7
SMALL PURCHASES   Most  procurement
                 systems   recognize
that there are  times  when  the proce-
dures  used could  cost  more than  the
savings they  are intended to realize.
Therefore, provisions  are made in  EPA
regulations   for  small  purchases,
i.e.,  purchases under $10,000.   Your
existing  procurement  system or  State
requirements  may  set  a  lower dollar
limit.

When  you need  to  make  a  small
purchase,  contact suppliers  and obtain
a telephone price quotation  or a brief
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written  proposal.  Try to  obtain a
reasonable  number of  quotations
(ideally 3 or more)  and make the most
advantageous selection.    Document
your  files to demonstrate  that you
consulted more than one source  for the
item  but  you  need not  advertise,
negotiate,'  nor  follow  the  other
detailed procurement procedures.

16.8
SUBAGREEMENTS    Some   types   of
                 subagreements  are
preferable in  certain  instances and
some are not  allowed.

  o  Fixed Price  -  Where  a  scope of
work  can  be  clearly defined (such as
in  the  procurement of  construction
contractors  using  bidding  documents
including  construction  drawings  and
specifications), a fixed price  or lump
sum  subagreement  is  awarded.   In
the case of  other services,  where the
scope of work can be clearly defined,
a  fixed  price  subagreement  may be
negotiated.  This type of subagreement
has a fixed  price no matter what the
final  costs are unless a change in the
scope of  work  (change  order)  is
negotiated.

For services other  than  construction
contractors,  this type of subagreement
is  not  used as  extensively  as the
cost-plus-fixed-fee  type,   primarily
because of the difficulty of  clearly
defining the  scope and  limitations of
work.  Where applicable,  however, the
fixed  price subagreement  is  the
easiest to administer.

  o  Cost-Plus-Fixed-Fee (CPFF) - The
most  commonly used  type of  subagree-
ment  for  services on grant  assisted
projects (other  than construction) is
the CPFF.    With   a  CPFF  subagreement
a  cost  ceiling   and  fixed  fee are
established for the work.  The  ceiling
cost is  made  up  of direct costs and
indirect  costs.   If,  for example, the
cost ceiling  is $200  consisting of
$100 direct costs, $100 indirect  costs
plus $30  fixed  fee,  but the  project
actually  costs less (say $80  direct,
$80 indirect), you  pay only $190  ($80
direct,  $80 indirect,  but full  fixed
fee of $30).   On the  other hand, if
the  project costs  are  expected to
exceed the  ceiling,  the contractor
must advise you in advance and  you can
complete  the  original  contract,
approve  of the  increased cost, if
justified, or  terminate the contract.
The  contractor  is  not  required to
incur costs in excess  of  the  ceiling
nor even  complete the  project  unless
you negotiate  and authorize a  new cost
ceiling.

If  the   increased  costs  are  for
additional work  within the  original
scope of services, the contractor does
not receive  any increase in fixed fee.
If  the  additional work  is beyond the
scope  of original   subagreement, the
contractor  may  be  authorized to
do  the  additional  work but  also may
claim an additional fixed fee.

CPFF subagreements are used most often
when it is difficult to accurately and
clearly define all of the work.

  o  Percentage of Construction Cost  -
This  type  of  subagreement  is not
allowed.    Used  many years ago,  this
type of  subagreement  established the
price as a percentage of the construc-
tion costs.    This   is  no  longer
acceptable  when  Federal  funds are
involved.

  o  Cost Plus Percentage of Cost  -
This type  of  contract applies  a
multiplier,   including   profit, to
direct  costs  and  is  not acceptable
when EPA funds are  involved.
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  o  Other Subagreement Types  -  Other
types  of subagreements exist,  some
acceptable,   some   less   desirable.
If you are dealing with an  experienced
firm  that  has  previously  done
Federally assisted work, the firm will
be  familiar  with  acceptable  forms
of  subagreements.    Contact  your
reviewing agency if you  have  addi-
tional  questions  concerning the
form of subagreements.

  o  Subagreements  Awarded  by   a
Contractor -ATIsubagreements  must
 include provision for compliance with:
 debarment  and  suspension  (Section
 13.2);  responsibility requirements
 (Section 16.4.3);  profit requirements
 (Section  16.5.6); small, minority,
 women's  and  labor  surplus  area
 business (Section 16.9); specification
 requirements  (Section 11.1.14);  Buy
 American  provisions,  if   applicable,
 (Section  11.2.4);  Federal  cost
 principles  (Section  16.5.6);  pro-
 hibited  types  of  subagreements
 (Section  16.8);  cost   and  price
 considerations   (Section   16.5.6);
 and applicable subagreement provisions
 (Section 16.10).
16.9
MINORITY,
WOMEN'S, SMALL
AND LABOR
SURPLUS AREA
BUSINESSES

(40 CFR 33.005),
The Federal  govern-
ment has identified
four  groups  for
special  considera-
tion where Federal
funds are involved
  o  Minority business enterprises.

  o  Women's business enterprises.

  o  Small businesses.

  o  Labor surplus  area businesses.

Each of  these types  of businesses
should  be afforded  an  opportunity to
compete for the work you will  under-
take and you and your contractors have
to fulfill  specific responsibilities.

EPA  has established  a policy  that
a  fair share  of  EPA-financed  work
should  go to small, women,   and
minority  businesses.   EPA   has
developed a Central Resource Directory
identifying qualified small, minority,
and  women's  business  firms. A  fair
share  is  defined  as  a reasonable
commitment of subagreement  funds
commensurate  with   the  total  project
funding, local  demographic  factors,
and  the  availability of minority and
women's businesses.    In  those  cases
where  there  is  a  State  or  local
executive  directive,  ordinance,
or   statute  prescribing  goals   for
minority  and women's  business
enterprise  participation, those  goals
will  constitute the fair share.

Other  Federal   agencies,  namely,  the
Small Business  Administration and the
Minority Business  Development  Agency
of the  Department of  Commerce  have
established lists  of qualified  small
or minority firms.   In  addition,  other
trade  or   professional   associations,
such as the  American  Consulting
Engineers  Council  or  Associated
General Contractors,  also  have
compiled  lists of small  and   dis-
advantaged  firms.   Each  of  these
agencies will   provide  assistance to
you as  necessary.

You  must take  affirmative steps to
assure  that these  businesses are  used
when possible.   Affirmative  steps
include  the following:

  o  Including qualified  small,
minority  and  women's businesses
on solicitation lists;

  o  Assuring  that these businesses
are  solicited whenever they  are
potential sources;
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 .0  Dividing total requirements, when
economically  feasible,  into  small
tasks or quantities to  permit maximum
participation of these businesses;

  o  Establishing  delivery  schedules,
where  the  work  permits,  which
will  encourage these  businesses  to
participate;

  o  Using  the services of the Federal
agencies cited above;

  o  Requiring your  contractors,  if
they  award subcontracts,  to  comply
with the affirmative steps above.
16.10
SUBAGREEMENT
CLAUSES
                 Subagreements
                 awarded  under  a
                 grant-assisted.
project must  comply  with  the provi-
sions  of  "Subpart F  -  Subagreement
Provisions"  which   is a  part  of
40  CFR Part  33.   These  provisions
describe the minimum  content  of each
subagreement.    Nothing,  however,  in
these provisions  or clauses prohibits
you  from  requiring more  assurances,
guarantees  or  indemnity  or  other
contractual  requirements  in  the
subagreement.

The  subagreement  provisions  address
the following:

  o  Minimum  provisions defining  a
sound and  complete agreement;

  o  Labor standard  provisions  which
are to be incorporated into construc-
tion subagreements  by using EPA Form
5720-4 "Labor  Standards Provisions for
Federally  Assisted  Construction
Contracts"  (includes  items  such as
minimum wage,  work hours and safety,
anti-kickback,   nondiscrimi nation,
etc.);
  o  Nondiscrimination  (Civil  Rights
Act of 1964, handicap, age,  sex);

  o  Patents,  data  and  copyrights
clause;

  o  Violating facilities clause which
prohibits  use  of firms  included on
EPA's  List of Violating  Facilities
(air or water pollution,  etc.);

  o  Energy efficiency  clause which
requires  compliance with  a  State's
energy conservation plan.

In addition,  each subagreement is to
include 14  specific  clauses   (select
only those applicable to  a  particular
subagreement),  or  their  equivalent,
which  address  items such  as change
orders, differing site  conditions,
suspension  of   work,   termination,
access to  records,  etc.   In  the  case
of these 14 clauses  (40  CFR 33.1030),
it may  be easiest  to reproduce  them
directly from the regulations  although
this is not required.

The subagreement provisions, including
all applicable clauses taken together,
are intended only to provide a minimum
level of  protection to  safeguard the
reviewing  agency's  interests  and,
therefore,  alone  do not constitute a
complete subagreement  document.   You
should consider additional  clauses you
feel  appropriate to define a sound and
complete subagreement.

16.11
PROTESTS         Protests of  procure-
                 ment actions may be
lodged  by construction  contractors,
A/E  firms, equipment  suppliers or
anyone  else  with  a  direct financial
interest  adversely  affected  by  your
procurement  action.    Protests  are
filed  with  you,   and  it  is  your
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responsibility to  resolve the  protest
in  accordance  with  your  procurement
system  procedures,  Federal  or State
law or local ordinance.

When  a  protest  is received,  you may
wish  to  contact  your  municipal
attorney or your  A/E  as  appropriate
and arrange a meeting  to  determine
how best  to proceed.   You may also
consider whether  it  is appropriate to
defer the  protested  procurement
action.    Document  your  files
carefully  and  use  "certified
      -  return receipt  requested" for
correspondence concerning the  protest.

Protest  resolution  procedures begin
with  an  initial  determination  of
whether  the protest  has  a basis in
fact,  i.e.,  the protestor should state
the alleged  violation,  cite the local,
State or  Federal law violated, and
indicate  how  the   protestor  was
financially  harmed.    If the  protest
appears  valid,  an  investigation is
conducted  to determine the  facts.  If
the protest  is  frivolous  or  without
a  basis in fact, the  protestor is
so  notified.    In  addition,  most
procurement  procedures  address  time
limitations  or  other  administrative
constraints  which, if violated, form  a
basis  for  protest  denial.

In the  simplest case  you may  be able
to dispense with  a  frivolous  protest
quickly.    More  complex   cases  may
involve court  action.   Therefore, act
promptly and with advice  from legal
counsel.

The EPA  procurement regulations only
address  the administrative  process
that  EPA  will  use  for  the  rapid
resolution of  appeals  of your  protest
resolution filed  with  EPA.    Appeals
may only be  filed  with and  accepted by
EPA when  the protestor  has  exhausted
all  administrative  remedies  with
you  first.    Thereafter, certain
limitations  (timing,  notification,
etc.)  will  determine  whether  EPA
will  accept or act  on an appeal.  If
you are aware of an appeal  being  filed
with EPA, you  may wish to  review the
EPA regulations (Subpart  G to 40 CFR
Part 33)  in  order to understand the
procedures EPA  will follow.

One requirement of  the  EPA protest
regulations should be noted  however.
Upon  receipt  by  EPA  of  a protest
appeal, EPA will  promptly  notify you
and request that  you defer award of
the  subagreement  or subitem under
protest.   If you  do not  defer  award,
you bear the risk that the cost of the
subagreement  or  subitem  may not be
allowable for  grant  participation if
the protest appeal  is  upheld.   If a
protestor does  not agree  to a  request
from you for a  reasonable extension of
the bid or bid  bond  period during this
time,  either you or EPA can summarily
dismiss the protest  or appeal.
                                     167

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         INDEX TO FACILITIES  PLANNING PORTION OF CONSTRUCTION GRANTS 1984

 Key


 o  "6.1"; e.g.; refers to Section 6.1 of Construction Grants 1984.

 o  "35.2005", e.g., refers to the Construction Grants Regulations in Title 40,
       Part 35, Subpart  I of the Code of Federal Regulations.

 o  "Appx.A(b)B", e.g., refers to Appendix A, Section B of Title 40, Part 35,
       Subpart I

 o  "Appx. A" refers to Appendix A of Construction Grants 1984.

 o  "Part 25", e.g., refers to Part 25 of Title 40 of the Code of Federal
       Regulations.

 o  "(CWA 303(e))", e.g., refers to the Clean Water Act, section 303 (e).

 o  "41 FR 6190", e.g., refers to volume 41 of the Federal Register, page 6190.

 o  "15 WCPD 1353", e.g., refers to volume 15 of the Weekly Compilation of
       Presidential Documents, page 1353.

 o  an underlined reference includes a definition or principal discussion.
A/E [architect/engineer]:  introduction, 11.0, 11.1.14, 11.2.1, 11.3, 12.1.3,
13.4, 14.2, 14.3.1, 14.3.2, 15.4.1, 16.4.2, 16.4.3, 16.5, 16.5.4. 16.5.5,
16.5.6!, 35.2005(b)(6)l
A-95:  [see intergovernmental  coordination]

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abandonment:  6.1, 7.3.1,  Appx.  D!,  35.2214,  Appx.  A(b).H.2.e!
access, for operation, etc:   6.7.2,  11.1.20,  12.5,  13.2!,  35.2110!
accountant:  introduction
additional capacity (also  see capacity):   7.2
additions (see expansion):  6.0, 14.6,  15.1!, Appx.A(b)H!
ad valorem taxes:  12.2.2, 12.2.3
advanced treatment, (AT):   4.2,  5.3. 6.0,  6.7.2,  9.2.1,  13.2,  Appx.  A!,  35.2101!
aesthetics:  3.2.11, 3.2.12!, Appx.A(b)B!
ACHP (Advisory Council on  Historic Preservation):   3.2.2
ADBF  (Average Daily Base  Flow):  (see  base flow)
agricultural land, important farmland:   3.2.4, 3.2.13!,  35.2116,  Appx.A(b)H.2.k!
air quality:  3.2.9, 3.2.13,
airports:  3.2.7
AJE:  (see alternate justifiable expenditure)
alignments:  (see sewer collection systems)
allotments:  13.5, 14.1.1, 15.4.3!,  35.2010!
allowable costs (also see  categories, eligible):   (see specific key word),
introduction, 6.0, 14.1, 14.3.2, 15.0,  15.4.3!, 35.2250, Appx.A!
allowability determination:   14.9.4
allowance:  introduction,  1.0, 13.1, 13.2, 13.5,  15.4 et seq.!, 35.2020(e),
35.2025, Appx.A(b)A.2!
alternate justifiable expenditure (AJE):   7.1.3.  Appx. 0!, Appx.A (b)H.l.f!
alternative, feasible:  6.0, 7.0, 7.3.1!.  35.2030(e)!
alternative, no action:  3.2.1,  5.6. 7.10!, 6.506!
alternative, principal:  3.1, 3.2.11, 6.0, 7.0, 7.5, 7.10
alternative, proposed/preferred:  3.1,  6.0!,  35.2030(b)!
alternative, selected:  3.2.1, 3.2.11,  8.0!.  35.2030(a)(l) & (b)(8)!
alternative systems:  (see innovative and  alternative)
amend facilities plan:  (see facilities plan and environmental  analysis
revisions)
amendments (to CWA, 1981):  1.0, 13.5,  14.6,  16.0,  Appx. L
annexation:  6.2
applicant, eligible:  2.1. 4.0!, 35.2005(b)(27),  35.2101!

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application:   8.5.1,  13 et seq..  15.4,  15.4.1,  16.1!,  35.2040,  35.2042,  35.2113!
appraisals:   8.6.1!,  Appx.A(b)D.2!
aquifer:  (see groundwater)
archeological:  (see  historical)
assurances:   11.1.21, 12.3, 13.1.2,  13.4, 14.6.1,  16.10
audit:  11.1.14, 14.2, 14.3, 15.0,  15.4. 15.6 et seq.. 16.2,  14.9.3,  15.6.2
authorized representative:
average daily base flow (ADBF):  5.5.2
award of grant:  3.2.12, 7.2, 9.2.2. 12.4, 13.0, 13.2, 13.6.  15.4!,  35.2042!
AT:  (see advanced treatment)

base flow:  5.5.2, 5.4!, 35.2005(b)  (28)!
basin plan:   (CWA (303(e))
before and after studies:  4.3, Appx. C
best management practices (BMP):   4.0
best practicable waste treatment technology (BPWTT):  6.7, 6.8!, 35.2005(b)(7)!
biddability:
bidding:  11.2, 11.2.5, 11.3, 13.0,  13.1, 15.3.1, 16.4, 16.4.1, 16.4.2,  16.4.3,
16.8 bidding practice:  11.2.1, 16.3, 16.4 et seq.
bid documents:
bid evaluation:  16.4, 16.4.3
bid guarantee:  11.2.2
bids (solicitation for):  11.1.14, 11.2.1, 11.2.3, 13.3, 13.5, 14.1, 14.9.2,
15.6, 16.2,  16.3, 16.4, 16.4.1, 16.4.2, 16.4.3
biological treatment:  6.7!. 35.2005(b)(14)!
bondi ng (performance):
bonds:  3.1, 7.1.1. 7.3.1, 8.5. 11.2.2, 12.2, 14.6.1, 14.6.4, 16.4.3
BPWTT:  (see best practicable wastewater treatment technology)
brand name:   11.1.14
buffer zone:  3.2.12, 8.6.4!. Appx.A(b)B & C!
Buy American:   11.2.4
bypassing:  11.1.9, 11.1.20, 14.3.1

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capacity, additional/excess/reserve:  5.2, 5.5, 6.1, 7.2. 8.6.1. 13.2!, 6.506,
35.2030(b)(3)(ii), 35.2123!
capita^ financing plan:  7.4!. 35.2030(b)(8)(iii). 35.2140(b)>
categorical exclusion:  3.2. 9.2.2, 13.2!, 6.507, 35.2030(c), 35.2113!
categories, eligible:  35.2015(b)(2)
certification, state:  9.2!, 35.2042(b), 35.2050!
change order:  (see facilities plan revision) 14.3.1, 14.3.2, 16.10, Appx. I
change orders (bilateral/unilateral):  14.2, 14.3, 14.3.1, 14.9, 14.9.1, 14.9.2,
14.9.3, 14.9.4, 14.9.5, 16.0
changes to project:  (see facilities plan revision)
charges to customers:  8.2!, 35.2030(b)(8)!
checklist:  introduction, 9.1
chemical treatment:  6.7", 35.2005(b)(14)!
chlorination:  11.1.5, 11.1.6, 12.4.7
civil rights:  8.5.2
claims:  8.6.1, 14.3.1, 14.2, 14.3.2, 14.9.1, 14.9.2, 14.9.3, 15.2, 15.4.3
Clean Water Act:  introduction!, 6.8, 11.1.3, 11.2.4, 1.3.2, 15.2!,
33 U.S.C. 1251 et seq. as ammended!
cluster:  6.3. 7.3.1, 12.5!. 35.2005(b)(18), Appx.A(b)C!
coastal:  3.2.3, 3.2.5
coast guard:  11.1.6
collection systems:  3.2.13, 6.2, 6.3, 6.4.  6.5. 7.3.1. 13.2!,
35.2005(b)(10). 35.2032(c), 35.2034, 35.2116!
combined sewer overflows (CSO):   6.7, 6.8, 7.1.3, appx. P!, 35.2005 (b)(ll),
35.2015(b), 35.2024!
competitive negotiation:  16.3,  16.5
complete waste treatment system:  1.2, 4'.0!, 35.2005(b)(12). 35.2030(b)!
compliance:  8.5, 8.5.4, 14.6!,  35.2040!
community:  6.3
condemnation:  8.6.1
conference, preapplication:
conference, preconstruction:  14.2
conference, predesign:  10.0, 11.1.5
conference, preplanning:  2.0, 3.2

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conflict of interest:  16.5.3,  16.5.5
connection:  6.4!, 35.2116!
constructability:  11.3
construction acceleration:
construction contingency:  14.1
construction contractor:  7.2,  14.9, 14.9.2, 14.9.3, 16.0
construction drawings and specifications:  11.1.14, 11.1.16, 11.1.19,  11.2.1,
11.3, 13.1, 14.3.1, 14.3.2, 16.4.1
construction incentive program:
construction insurance:  11.2.2
construction management:  14.3.1, 14.9.3
construction schedule:   11.1.16t
constructive change:
contingency plans:   11.1.2
continuing A/E services:  14.2
contracts:  (see  procurement), 11.2.3, 14.0; 14.1.1, 14.6.1, 14.9.1, 14.9.2,
14.9.3,  16.10
contracts, types  of:   11.1.22, 11.2.1, 11.2.2
conventional technology:  6.7, 6.7.1, 12.6
cope!and Anti-Kickback  Act:
Corps of Engineers:   3.2.3, 11.3, 14.3.2
cost  accounting  system:   8.5.1
cost  allocation:   8.5.1!,  35.2107!
cost  effectiveness:   1.1,  5.4, 5.5,  5.5.2,  5.5.3,  6.0, 6.7.1, 7.0
et seq.. S.t.w,  8.6.3,  14.3.1!,  35.2030(a)&(b)(3)!
cost  estimates:   3.1, 6.7.3, 6.11,  7.0,  7.1.  7.3.1, 8.1, 8.2, 8.6.1!,
35.2030(b)(3)(viii)  & (b)(8)!
cost  curves:   7.2
cost  opportunity:  7.1
costs,  annual:   7.1, 12.4.3!,  35.2030(b)(3)(viii)!
costs,  capital/direct/monetary/savings:   7.1,  11.1.14, 16.5.6,  16.8!,
35.2030(c)!
CWA:   (see Clean Water Act)

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 Davis Bacon Act:  11.2.1
 debarment:  13.2, 16.8
 deed:   6.7.2
 delegation:  introduction,  35.2000(c):
 demographic projections:  (see population)
 Department of Housing and Urban Development  (HUD):
 Department of Labor (DOL):   14.2
 Department of Transportation (DOT)  regulations:
 depreciation:   7.1
 design life:   1.1,  7.1.  8.5.3,  8.6.3!,  35.2005(36).  (48)&(50), 35.
 2030(a)(l), (b)(3)  & (6)(8)(iii), 35.2214(a), A.b.D.d(Z)!
 design of selected  plan:  8.1,  11.1!, 35.2030(b)(8)(i)!
 differing site conditions clause:   14.9.2
 direct costs:   (see costs,  direct)
 direct impacts:   (see impacts)
 discharge point:  5.3, 6.0,  6.2
 discount  rate:   7.1!.  35.2030(b)(3)!
 disinfection:   8.1,  11.1.5.  11.1.6
 disposal  of residuals:   (see  residuals, disposal)
 domestic  wastewater baseflow:  5.4!, 35.2005(b)(28)!
 dredge and  fill  permits:  3.2.3
 drinking  water:   (see  groundwater)

 easement:   6.7.2, 7.1.2, 8.6.1, 8.6.3
 effluent  discharge  limitations (also see BPWTT):  4.2
 EID:   (see  environmental  information document)
 EIS:   (see  environmental  impact statement)
 eligible  project:   (see categories,  eligible)
 eligible costs:   (see allowable costs)
 emergency operating program:  8.5.3, 135.2106!
 emergency response (program):  11.1.6,  12.4.4
 endangered  species:   3.2.8
enforceable requirements of CWA (also see BPWTT):  35.2005(b)(15)
energy:  3.2.13, 5.5.3, 6.7, 6.7.3.  6.11,  7.0, 7.1.2, 7.3.1,  7.7,  8.3,  9.1,
16.10!, 35.2030(b)(3)(vi)!

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environmental  analysis revision (see also facilities plan revision):   3.2.1!,
6.502(a)(2)!
environmental  benefit:  3.2, 6.7.3
environmental  description and analysis:  3.2.1, 7.5, 8.4
environmental  impact statement (EIS):  3.2, 3.2.1, 3.2.13, 9.2.2, 11.1.17, 13.2!,
6.509, 35.2030(c), 35.2113!
environmental  information document (EID):  3.2.1, 11.1.16, 13.2!, 6.507,
35.2030(c), 35.2113!
environmental  review:  3.1. 3.2, 7.5, 9.2.2, 10.0, 13.2, 15.4.1!,
35.2030(b)(6)  & (c), 35.2113, 35.2123!
environmentally sensitive land:  3.2.1. 3.2.3, 5.5.1, 6.4, 6.6!, Appx.A(b)H.2.k!
Equal Employment Opportunity (EEO):  14.2
equivalent uniform annual costs:  7.1!. 35.2030(b)(3)!
erosion and sediment control:  3.2.10, 11.1.16, 14.3.2
estuaries:  3.2.10
evaluation of proposals:
existing environment:  5.1
existing facilities:  5.2, 6.0, 8.6, 8.6.1, 15.1!, Appx.A(b)D.l(e),!
expansion:  6.0, 7.4, 8.5.3. 8.6.1, 15.1!, 35.2030(b)(8)(iii)!
explosive gases:  11.1.2

facilities plan completion:  1.2, 13.0!, 6.503, 35.2030(a)(2)!
facilities plan content:  1.2, 2.3, 7.3", 35.2030(b), 35.2040!
facilities plan review and approval:   9.0 et seq.!. 35.2030(a)(2)& (c)!
facilities plan revision (also see environmental analysis revision):   9.2.2,
14.3.1!, 6.502(a)(2), 35.2204(b)(4)!
fact  sheet:  3.1
facultative ponds:  7.3.1!, 35.2030(a)(l)!
Farmers Home Administration (FmHA):  2.0, 7.3, 9.0, 13.1.2, Appx. F
farmland:   (see agricultural land)
feasible alternatives:   (see alternatives, feasible)
Federal Emergency Management Agency  (FEMA)
federal facilities:   6.9, 13.2!, 35.2127, Appx.A(b)F, CWA 313!
federal share:  introduction, 6.7, 13.5, 15.4!, 35.2030(b)(8)(ii), 35.2152!
fee simple:  8.6.1

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 field testing:   6.7,  10.0,  10.1!,  35.2005(b)(17). 35.2040(e),  35.2118,  35.2211,
 35.2262!
 Financial  capability:   1.1,  3.1,  5.4,  6.0,  6.7.2, 7.0,  7.1,  7.2,  7.3.  7.3.1,  7.4,
 7.8,  8.5.4,  12.7,  13.2,  Appx.  Kl,  35.2030(a)&(b)t(8),  35.2104,  35.2123,  35.2140(d)!
 finding of no significant  impact  (FNSI):   3.2.  9.2.2,  13.2!, 6.506,  35.2113!
 fiscal  year:   7.1
 fish:   3.2.7, 11.1.14
 flood:   3.2.3.  3.2.12,  11.2.2!, Appx.A to  Part  6!
 flows:    5.2. 5.5.2. 11.1.18!. 35.2030(b)(l)&  (3)!
 flow  reduction:  5.5.2,  5.5.3!. 9.1. 35.2030(b)(3)(i)!
 FNSI  (see  finding  of no  significant  impact):
 force  account:   9.1, 14.3, 15.3, et. seq.
 formal  advertising:  16.3, 16.4
 forms:
 fuel  cost  escalation factors:  7.1.2
 funding:   6.8,  7.1.3, 7.3.1, 8.6.1, 8.6.4,  9.0
 future  growth:   (see capacity)

 gallons per capita per day (gpcd):  5.4
 generic facilities plan:  2.0, 6.0
 governor's discretion:  35.2015(b)(2)(iii)
 grandfathering  (see also phase/segment and  capacity reserve):  13.5!, 35.2152!!
 grant amendment:  14.3.1, 14.1.2, 14.9.1
 grant application:   (see application)
 grant conditions:  3.2.1, 3.2.12, 6.6, 7.2. 15.4.3!, 35.2123(d)(6),
 35.2200—2218!
 grant increase/decrease:  14.1, 14.1.2, 14.1.1, et seq.. 14.3.1, 14.9.4, 15.5,
 16.4.3
 grantee responsibilities:  !35.2214!
 groundwater:  3.2.10.  3.2.13. 6.7, 6.7.2, 11.1.14!, 35.2030(b)(2)&(b) (7)!
 growth, allowable:   (see capacity)
 guidance:  35.2000(e)

hazardous waste: 6.7.1, 11.1.7
hearings:   (see public  hearings)

                                        8

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historical:  3.2.2.  3.2.12,  3.2.13,  14.3.1,  3.2.11
Housing and Urban Development(HUD):   7.3

I&A:  (see innovative and alternative)
I/I:  (see infiltration/inflow)
implementation:  1.1, ^.8^8.5!, 35.2030(a)  & (b)(8)(v),  35.2104,
35.2107!
impacts, indirect/indirect:   3.2.11, 6.10. 7.2!,  6.507,  35.2123(d),
Appx.A(b)B!
indirect costs:  11.1.14, 16.5.6, 16.8
individual systems:   6.7.2,  13.2!.  35.2005(b)(18).  35.2034,  35.2110!
industrial (also see pretreatment):   5.2, 5.5, 5.5.2,  6.2,  6.7.1,  6.7.3,  6.8,
6^12.2, 13.2!, 35.2005(b)(19). 35.2030(b)(3)(ii),  35.2125, Appx.A(b)F!
infiltration/inflow (I/I):  5.4. 5.5.2, 10.0, 11.1.18, 11.1.19,  11.3,  12.2.3,
13.2!, 35.2005(b)(16).(20).(21),(28)&(29). 35.2030(b)(4), 35.2120, 35.2130,
35.2140(e), Appx A(b)G!
inflation:  7.1
innovative and alternative technology (I&A):  4.1,  6.5,  6.7, 6.7.2,  6.7.3, 12.6,
13.5, 14.6, 15.1, 15.2!, 35.2005(b)(4)&(23), 35.2032.  35.2152(b),  Appx.A(b)C!
innovative and alternative cost-effectiveness preference:  6.5,  6.7,  6.7.4!,
35.2032(b)!
inspection:  8.5.3, 11.1.6,  12.5, 14.3, 14.3.1, 14.9.2,  14.9.3
inspection and maintenance program:  6.7.2, 8.5.3!, 35.2034 (b)(5)!
institutional capability:  1.1!, 35.2030(b)(8)(v),  35.2104,  35.2030(a)!
insurance flood:  3.2.3, 11.2.2, 14.3.2
interceptors:  5.5. 6.10, 13.5!. 35.2005(b)(24). 35.2123. 35.2116!
intergovernmental coordination:  2.3, 9.0, 9.1, 13.1.1!, 47
FR 30959, 48 FR 15587, Part 29!
interim facilities:  6.10, 7.1
interest during construction:  7.1
interest rate:  (see discount rate)
intermittent sand filters (ISF):  6.7.2
intermunicipal agreements:  2.1, 6.2, 7.8, 8.5.1, 13.2!, 35.2030(b)  (8)(v),
35.2107!

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joint EIS/EID process:  3.2, 3.2.13, 9.2.2
jurisdiction:  7.4, 8.5!. 35.2030(b)(8)(iii), 35.2104 (b)!

kjdeldahl total nitrogen:  (organic nitrogen fraction of wastewater plus ammonia
nitrogen)

laboratory:  8.5.3, 11.1.12, 12.4.2, 13.2, 14.3.2!, 35.2106!
labor surplus area businesses:  16.8
land acquisition:  8.6 et seq.. 10.0. 13.1, 13.1.2, 15.4.1, Appx.  G!,
35.2040(b)(8), 35.2118, 35.2210, 35.2260, 35.2300(d), Appx.A(b)D!
land application:  6.11, 7.3.1, 8.6.4!. 35.2005(b)(7)!
land escalation factor:  7.1.2
land treatment:  4.2, 5.3, 6.0, 6.7.2, 11.1.15
land use:  3.2.13, 5.5.1. 6.10
lead agency:  6.2
lease:  8.3, 8.6.1, 8.6.2, 8.6.3
legal capability:  1.1!, 35.2030(a), 35.2104!
letters of intent:  5.5.2!, 6.2, 35.2030(b)(3)(ii)!
life cycle costs:  6.7.3!, 35.2005(b)(23)!
list of violating facilities:  16.10
local codes:  6.0
local share (funding):  7.3, 7.9, 10.0, 12.7, 13.1.2!, 13.5,  35.2030(b)(8)(1i)!

maintenance requirements:  (see operation and maintenance)
management capability:  1.1. 2.1, 6.7.2. 7.3.1!, 35.2030(a)&(b)(8)(v),  35.2030(a),
35.2034(b)(5), 35.2104!
marine bay or estuary (also see CSO):  6.8, Appx. P!, 35.2005(b)(26),  35.2024(b),
35.2040(f)!
marine discharge:  6.8, 13.2!, 35.2112, 35.2005(b)(7)!
Marine Protection Research and Sanctuaries Act:   6.7.1
marine waiver:
MBE:  (see minority business enterprises)
meetings:  (see public hearings/meetings)
mercury:  11.1.3
                                        10

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mgd:  (million gallons per day)
midcourse review:  3.1, 7.10
minority business enterprise (MBE):  2.4, 11.1.14. 11.2.7, 14.2, 16.4.3, 16.9
mitigative measures:  3.2, 3.2.1, 3.2.12, 6.6, 11.1 16, 11.1.77!, 6,507, 6.510,
Appx.A(b)B!
modification or replacement (M/R) grant:  (see replacement):  15.2
monetary costs:  (see costs, monetary)
monitor:  3.2.10, 8.5.41. Appx.A(b)B, 35.2110!
multiple purpose projects (also see AJE):  6.8, 6.11, 7.1.3

National Environmental Policy Act (NEPA), (also see environmental):  2.3, 3.2,
3.2.2, 6.7.1, 9.2.2!, 35.2123!
National Pollutant Discharge Elimination System (NPDES):  4.2, 5.3. 6.6, 6.7,
6.9, 8.5.4, 10.1, 11.1 et seq., 12.3, 14.3.1, 14.3.2, 6.8, 7.2, 14.4!, 35.2030(b)
need:  3.2.1. 5.0, 5.1. 5.2, 5.5, 5.5.1, 5.5.2, 6.8, 7.2, 7.3.1!, 35.
2030(b)(3)(i1), 35.2123, 35.2214!
NEPA:  (see National Environmental  Policy Act)
no action alternative:  (see alternative, no action)
no cost:  8.6.1, 8.6.2
no discharge:  6.7.2
noise:  3.2.11, 3.2.13
notice, public:  3.1
noncompetitive negotiation:  11.1.14, 16.3, 16.6
noncompetitive procurement:  (see sole source)
nonmonetary factors:  1.1!, 35.2030(a)!
nonresidential wastes (industrial):  8.5.4
nonrestrictive specifications:  11.1.14
NPDES:  (see National Pollutant Discharge Elimination System)

ocean discharge:  (see marine discharge)
onsite review:  14.3.1, 14.3.2, 14.4, 15.4.3, 15.6.2
onsite review (final):
onsite systems (also see individual systems):  5.2, 6.0, 6.3,  7.3.1,  12.5!,
35.2030(a)(l)!
                                       11

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open space:  (see recreation)
operability assessment:  7.3.1
operation and maintenance (O&M):  6.1, 6.2, 6.7, 7.0, 7.1, 7.3, 7.3.1, 8.5.3,
11.1.20, 12.2 et seq.. 12.5. 13.2, 14.3.2, 15.2!, 35.2005(b)  (31), 35.2106,
35.2206!
operation & maintenance manual:  12.4.6, 12.4.7, 13.2
Operational Safety and Health Administration (OSHA):
option:  8.6.1!, 35.2118!
optional A/E services:
OSHA:  11.1.6,  11.1.8, 14.2
overland flow land treatment:  7.3.1!, 35.2030(a)(1)!
overruns:  11.2.1, 14.9.2
oxidation pond/ditch:  5.3. 7.3.1!, 35.2030(a)(l)!

payments:  14.4, 15.4 et seq.
payment schedule:  13.2, 13.3, 15.4 et seq.
PE:  (see residential population equivalent)
peak flows:  6.10!, 35.2005(b)(29)!
performance standards:  14.6, 15.1, 15.2
permits (also see enforceable requirements):  3.2.3,  10.0, 11.1.7
phased/segmented construction:  introduction, 1.2,  4.1,  5.5,  6.8, 9.2.2,  13.2,
13.5, 14.6!, 6.503, 6.514, 35.2005(b)(49), 35.2024(b)(2)  (ii),  35.2108,  35.2109,
35.2152, 35.2206(c)(l)!
piggyback EIS:   (see joint EIS/EID)
pilot scale:
planning area:   2.1, 4.0. 5.0, 6.3!.  35.2034(b)(3)!
planning period:  5.5, 6.10. 7.1,  7.6!, 35.2030(b)(3),  CWA 208(b)(2)  (A)!
planning process:  1.1, 3.0, 5.5
plan of operation:  8.5.3, 10.0, 12.4 et seq.. 13.2,  4.4!, 35.2106!
plan of study:   2.2
plans and specifications (P&S):  6.8, 14.6.1, 14.9.2, 14.9.3
ponds (also see facultative ponds):  8.6.4
population:  4.0. 5.5.1, 5.5.2, 7.3.1!, 35.2030(b)(3)!
population density:  6.4
                                        12

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 POTW:   (publicly  owned  treatment works)
 preapplication  conference:   (see conference,  preapplication)
 preapplication  treatment:  6.7.2!, Appx.A(b)D!
 preaward:  8.6.1,  10.1,  13.1.2, 13.2,  15.4.1, 15.6, 16.1!, 35.2030(a)
 (2), 35.2118!
 preconstruction conference:  14.2
 predesign conference:   10.0, 10.1, 11.1.5
 preferred alternative:   (see alternative, preferred)
 preliminary design:  8.1!, 35.2030(b)(8)(l)I
 preplanning conference:   (see conference, preplanning)
 prequalified list:  16.5, 16.5.4
 present worth:  7, 7.1,  Appx. E!, 35.2030(b)(3)!
 pretreatment:   5.2, 5.5.2, 6.1, 6.7.1, 6.7.3, 6.9, 8.5.4. 10.0, 11.1.1, 11.1.7,
 12.3, 14.3.2!,  Appx.A(b)F!
 primary impact:   (see impact direct)
 prime contractor:
 principal alternative:   (see alternative, principal)
 principal purpose:  6.9!, 35.2125!
 prior approval:  13.2, 14.9.1, 14.9.2, 14.9.3, 14.9.4, 15.4.1
 prior grant:  1.0!, Preamble!
 priority list:  4.1, 6.7, 13.21. 35.2015(c), 35.2103!.
 priority water quality areas:  4.1!. 35.2005(b)(34). 35.2015(b)!
 privately owned systems  (also see individual systems):  6.5,  6.7,  6.7.2, 13.2!,
 35.2032(b)(l), 35.2034!
 procurement (also see contracts):   2.4, 8.5.1, 11.2, 11.1.14, 11.1.22, 11.2.1,
 11.2.7,  12.4,  11.2.5,  11.3,  13.1.2,  13.2, 13.4.  14.0,  14.3.2, 14.6.1, 14.6.4,
 14.9.1,  14.9.3,  15.0 Part IV, 15.3.1, 15.4.1, 15.6, 16.0-16.5.1, 16.5.5,
 16.5.6-16.7,  16.11, 15.4, 16  et seq.. Appx.  N!,  33.715!
 procurement certification:
 profit:   11.1.14,  14.9.3, 16.5.6,  16.8
project  performance:   14.6,  14.6.1,  14.6.3,  14.9.1, 15.2,  15.4.3
project  reviewer:   introduction, 6.0, 10.1,  13.6,  15.4
proposed alternative:   (see  alternative,  proposed)
                                        13

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protest appeal:  16.11
public hearings/meeting:  3.1, 3.2, 12.2
public participation:  3.1, 3.2.1, 3.2.13,  5.5.3,  6.7.1,  7.3,  7.3.1,  7.10,  7.11,
9.2, 13.1, 13.3!, 6.504, 35.2040(a)(3)l

rapid infiltration land treatment:  6.7.2
rare species:  (see endangered species)
RCRA:  (see Resource Conservation and Recovery Act)
reconstruction:  7.4!, 35.2030(b)(8)(iii)!   15.1
records management system:  8.5.1
recreation:  3.2.13, 7.1.3, 7_.£, 11.1.14!,  35.2030(b)(5)!
regionalization:  6.2
regulations:  (see introduction), 15.6,  Appx. M
rehabilitation:  5.4, 5.4.1, 6_.3_, 6.4, 7.3.1, 8.5.1, 8.6, 8.6.1, 11.1.9 (sewers),
13.2, 14.3.2!, 35.2116, 35.2118(a)(2), 35.2120, Appx.A(b)G!
reliability:  6.7.3, 7.6. 11.1.4, 11.1.14,  12.2
relocation/dislocation:  3.2.11, 3.2.13, 8.6.1!, Appx.A(b)C!
replacement (also see operation and maintenance):   3.2.3, 6.0, 6.3, 6.4, 7.1,
8.5.3, 12.2, 13.2, 14.6, 15.1, 15.2!. 35.2005(b)(36). 35.2116. Appx.A(b)H.2!
request for proposals:  16.5.4
request for qualifications:  16.5.4
reserve capacity:  (see capacity, reserve)
residential population equivalent (PE):   5.5.2
residence, principal: 6.7.2!, 35.2005(b)(31). 35.2034(a)&(b).  Appx.A(b )C!
residuals disposal:  1.2, 3.2.10, 3.2.13, 5.2, 5.5.2, 6.0, 6.7, 6.7.1,  6.7.2,
6.7.3, 6.11, 7.1, 8.0, 8.5.3, 8.5.4, 8.6.1, 8.6.4, 11.1.7, 11.1.14!,
35.2030(b)(3)(iv), 35.2140, Appx.A(b)D!
Resource Conservation and Recovery Act (RCRA):  6.7.1, 11.1.3, 11.1.7
responsibility:  introduction!, 35.2050!
responsiveness summary:  3.1, 7.11
restoration:  8.6.3!, Appx.A(b)C & D!
reuse/recovery/recycle (see also residuals):  6.7.1, 6.7.2,  6.7.3, 6.1 1, 8.5.4!,
35.2030(b)(3)(iv)!
revenue:  6.7. 7.1. 7.1.3. 8.6.4!. 35.2005(b)(7)(1i)(A),  35.2030(b) (3)(v),
35.2140(f)!

                                         14

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 risk:   6.7.3,  10.1
 royalties:   11.2.5
 rural  communities  (also  see  small community):  6.5, 7.3, 7.3.1, 9.0!,
 35.2020(5)!

 salvage value:  7.1, Appx. E
 SAWS:   (see  small alternative wastewater systems)
 scenic  rivers:  3.2.6
 schedule:  1.0, 3.0. 8.1, 8.5. 8.6.1. 11.2.1, 13.1, 14.2, 14.6!, 5.2005(b)(35),
 35.2030(a)(2)(ii), 35.2212!
 screening of alternatives:  3.1, 6.0, 7.0, 7.3
 scope of environmental review:  2.0, 3.2. 5.0!, 35.2030(c). 35.2113 (c)!
 seasonal population:  5.5.2
 secondary impacts:  (see impact, indirect)
 secondary wastewater treatment:  4.2, 5.3. 35.2005(b)(7), Part 133!
 sediment:  (see erosion)
 segment:  (see phase)
 service agreement:  (see intermunicipal agreement)
 service lateral:  5.4.1
 service area:  (see jurisdiction)!, 35.2132(d)(5)!
 sewer maintenance program and ordinance:  5.4.1. 8.5.1
 sewer system evaluation:  5.4!, 35.2120, Appx.A(b)G!
 sewer system rehabilitation:   5.4, 6.8, 8.5.1, 14.3.1
 sewer use ordinance:  5.4.1.  8.5.1. 10.0, 11.1.1, 11.1.2. 12.3. 13.2.  14.2,
 14.3.2!, 35.2122, 35.2130, 35.2202, 35.2208,  35.2260, 35.2262!
 shellfish:  3.2.10. 11.1.4. 11.1.14!. 35.2024(b)!
 SHPO (State Historic Preservation Officer):   3.2.2
 shoreline stabilization:  3.2.10
 site availability:   8.2
SIP (State Air Implementation Plan):   3.2.9
 sludge disposal:   (see residuals)
small  alternative wastewater  systems  (SAWS):   6.7.2, 13.2!, Appx.A(b)  C!
small  business enterprise:   (see minority business enterprise)
small  commercial  establishments:   6.5,  6.7.2, 12.2!, 35.2005(b)(39).
35.2034(b)(2), Appx.A(b)Ci

                                       15

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small community:  6.2, 6.5.  6.7.2,  7.3.1,  9.0!.  35.2005(b)(40),  35.2030(a)(l),
35.2032(a)(2), Appx.A(b)C!
small purchases:  16.3, 16.5.5,  16.7
SMSA (Standard Metropolitan  Statistical  Area):   5.4
social impacts:  3.2.11
soils:  6.3, 11.1.16
sole source procurement:  11.1.14,  16.3, 16.5.5, 16.6
Solid Waste Disposal Act (SWDA)
sources of information:  3.2.1,  5.1
staged construction:  5.5,  6.1,  6.6, 6.10, 7.4
start-up costs:  8.5.3!, Appx. A(b)E.2!
start-up services:  12.4.6
state planning processes:  4.0 et seq.
step 1, 2, 3, and 4, (2+3):   introduction, 1.0,  3.1, 3.2, 3.2.12, 8.5 .1, 8.6.1,
10.0, 13.0, 13.1, 13.2, 13.5, 15.4, 16.5.5!. 35.2005(b)(43) -(46), 35.2109.
35.2202!
storage:  6.8, 6.10, 8.6.4
storm sewers:  6.8!, 35.2005(b)(47), Appx.A(b)H.2.!
stormwater:  3.2.10. 6.7.1!. Appx.A(b)H.2.j!
subagreements:  13.1.2, 14.6.1,  15.4, 16.1, 16.4.3-16.5.3, 16.5.6, 16.5 6-16.9,
16.0, 16.2, 16.3, 16.4, 16.4.3,  16.5.2,  16.5.3.  16.5.4, 16.8, 16.10, 16.11!,
35.2350, Appx.A(b)A!
sunk costs:  7.1.1
surface water:  3.2.10, 11.1.14
suspension:  13.2, 14.9.2,  16.8, 16.10
suspension of work clause:

Termination clause:
threatened species:   (see endangered) 305(b) report:  4.0, 4.3
title (to land):  6.7.2, 8.6.3
toxic pollutants:  6.7.3, 8.5.4. 12.2!, 35.2130!
Toxic Substances  Control Act  (TSCA):  6.7.1, 11.1.3, 11.1.7
training:  6.7.2. 8.5.3, 12.4.1, 12.4.3, 14.3.2, 14.6!, 35.2040(c),
35.2106, 35.2152(d), 35.2218(b)(2)!
                                        16

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treatment works:  1.2, 5.2, 11.1.14!, 35.2005(b)(12),  (48)  & (49)1
trickling filters:  5.3. 7.3.1, 11.1.3!, 35.2030(a)(l)!
two-thirds rule:  6.4. 6.5!, 35.2116!

unallowable costs:  (see allowable costs)
underruns:  14.9.2
undeveloped areas:  6.6
uniform lower federal  share:  introduction, 13.5!, 35.2152(c)!
unilateral change order:
unsewered areas:  6.3, 6.7.2!. 35.2030(a)(l)!
upgrading:  3.2.3, 6.0, 6.1, 6.7.2, 7.0, 7.3.1, 8.5.3,  8.6, 8.6.1!,
35.2030(b)(3)(iii)!
useful life:  7.1. 8.5.3. 8.6.3, 12.2!, 35.2005(36)4(50), A.b.d.b.(Z)!
user charges (also see charges to customers):   7.0, 12.2!,  35.2005(b)  (51),
35.2104!
user charge system:  3.1, 5.5.3, 6.7, 6.7.2, 7.3, 8.5.  8.5.1, 10.0, 12.2,
et seq., 12.5. 13.2, 14.2, 14.3,2!, 35.2122, 35.2123(d)(5), 35.2 140,  35.2208,
35.2202, 35.2260, 35.2262!

value engineering (VE):  10.0, 11.3, 12.1 et seq., 13.2!, 35.2005(b)(5  2),
35.2114!
ventilation:  11.1.2,  11.1.6, 11.1.11
visual impacts:  (see aesthetics)
voluntary exclusions:   13.2

wasteload allocations (WLAs):  4.0, 4.2, 7.3.1
water quality management (WQM):  2.1, 4.0. 6.9, 7.9, 7.11,  9.0,  13.2 !
35.2023(a)(4), 35.2102!
water quality standards (WQS):  4.0, 4.2. 7.3.1, 11.1.1, 11.1.5, 11.3,  13.2
water supply:  (see groundwater)
wet and dry well classifications:
wetlands:  3.2.3, 3.2.13, 11.1.16!, Appx. A to Part 6!
wild and scenic rivers alt:
wildlife:  3.2.7
                                        17

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wild rivers:  3.2.6
Women's Business Enterprise (WBE):  2.4, 11.1.14, 11.2.7. 14.2, 16.4.3, 16.9
WQM:  (see water quality management)
zero discharge:  (see advanced treatment)
                                        18

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     APPENDIX A



ADVANCED TREATMENT

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Monday
May 21, 1984
Part II

Environmental
Protection  Agency
Policy for Review of Advanced
Treatment Projects; Notice

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21462
Federal Register / Vol. 49, No.  99 / Monday, May  21, 1984 / Notices
ENVIRONMENTAL PROTECTION
AGENCY

[WH-FRL 2584-1)

Policy for Review of Advanced
Treatment (AT) Projects

AGENCY: Environmental Protection
Agency.
ACTION: Notice of program policy and
technical procedures for Agency review
of advanced treatment projects
proposed for funding under the
construction grants program.

SUMMARY: This policy supersedes
Program Requirements Memorandum
(PRM) 79-7. dated March 9,1979, and
interim policies based on the draft
revised PRM published for comment on
June 20,1980 (45 FR 41890). Agency
policy and technical procedures are set
forth to direct Headquarters and
Regional (or delegated State) reviews of
all wastewater treatment projects
designed to meet effluent requirements
more stringent than secondary
{treatment.
SUPPLEMENTARY INFORMATION: This
policy establishes nationally consistent
procedures for the conduct of advanced
treatment {AT) reviews by
Environmental Protection Agency (EPA)
Headquarters, Regions and delegated
States, and improves the technical basis
for review of AT projects. Tehcnical
procedures for conducting AT reviews
are included in an Appendix to the
policy.
  EPA's intent is to institutionalize the
conduct of AT reviews at the lowest
feasible level of review and at the
earliest feasible time in project
development. AT review criteria and
technical procedures should be
considered in the development and
review of water quality standards and
in the processes for translating these
standards into water quality based
effluent limitations for National
Pollutant Discharge Elimination System.
  To assist States, EPA is now
improving its guidance for reviewing
water quality standards and for deriving
permit effluent limitations based on the
standards. After this policy goes into
effect, EPA Headquarters will evaluate
State and Regional implementation of
the policy as a basis for judging the
appropriateness of future delegation of
AT reviews for projects with
incremental costs of more than $3
million. This evaluation will comprise
examining how well States and Regions
conduct the required AT reviews for
projects with incremental AT costs of $3
million or less and assessing the quality
of the projects with incremental AT
                  costs over $3 nulBon submitted for
                  Headquarters review.
                    The policy requires review of only the
                  larger more expensive land treatment
                  projects by providing that:
                    EPA Regions should identify proposed
                  projects featuring land treatment, or other
                  innovative/alternative technologies affording
                  wastewater reuse or recycling of pollutants.
                  that result from AT discharge requirements.
                  Where the incremental present worth cast
                  exceeds $3 million, the project must be
                  reviewed under this policy. For this special
                  case, the incremental present worth cost
                  comprises the total present worth cost of
                  project components beyond preliminary
                  treatment. Where the proposed preliminary
                  treatment exceeds the secondary treatment
                  level, the incremental present worth cost
                  includes the cost of proposed treatment
                  beyond that fin achieving secondary
                  treatment.

                    While this provision may require
                  review of a few more land treatment
                  projects than reviewed under the former
                  Program Requirements Memorandum
                  79-7 (PRM 79-7), the number of
                  reviewed projects is not expected to
                  exceed ten percent of all proposed land
                  treatment projects resulting from AT
                  effluent limitations. Thus, project
                  reviews will focus only on the larger and
                  more expensive projects. The $3 million
                  incremental land treatment limit was
                  selected because present worth costs of
                  most of the smaller, less expensive land
                  treatment projects are comparable with
                  costs of new secondary treatment
                  alternatives.
                    The AT policy and technical
                  procedures being published today
                  incorporate many comments from
                  States, EPA Regions and Headquarters'
                  offices, and other Federal agencies.
                    This policy is organized as follows:
                  Statement of Policy
                  Expiration Date Application
                  Background
                  Authority
                  Application
                    1. Definition of Advanced Treatment
                    2. Projects Requiring Reviews
                    3. Review Exemptions
                    4. Review Responsibilities
                  Implementation
                    1. Previously Reviewed or Exempted
                     Projects
                    2. Water Quality Standards
                    3. Wasteload Allocations/Facilities
                     Planning and Design
                    4. Principles for Review
                    5. Submittal of Projects for Headquarters
                     Review
                    6. Review of Draft AT Reports.
                    7. Disposition of Projects
                    8. EPA Report to States
                    9. Agency Overview Procedures
                  Appendix A. Technical Procedures foe
                     Advanced-Treatment Project Reviews
                  Appendix B. Relationship to Previous Policies
Statement of Policy

  The Agency will review and fund
advanced treatment (AT) projects
designed for treatment more stringent
than secondary treatment in accordance
with the criteria and techinical
procedures described herein. Pursuant
to directives of the Appropriations
Conference Committee, grant funds may
be used for construction of new facilities
providing treatment greater than
secondary, as defined by the Agency,
only if the incremental cost of the
advanced treatment is $3 million  or less,
or if the Administrator personally
determines that advanced treatment is
required and will definitely result in
significant water quality and public
health improvements. For AT projects
with incremental AT costs of $3 million
or less, it is the policy of the
Environmental Protection Agency (EPA)
that grants funds may be used for
construction of AT facilities only if the
EPA Regional Administrator, or
delegated State, determines that
advanced treatment is required and will
definitely result in signficant water
quality and public health improvements.
The significance of improvements
resulting from and AT project will be
assessed in terms of contributions
toward restoring designated uses or
preventing the impairment of designated
uses by the proposed project.
  The funding of AT projects reviewed
under this policy shall be considered
justified when all applicable provisions
of 40 CFR Part 35 (including cost-
effectiveness) and the following review
criteria have been met:
  1. Scientific data, information, and
analyses document an existing
impairment of a designated use or a use
impairment that would result without
the proposed project.
  2. A reasonable relationship has been
established scientifically between the
impairment of a designated use and
pollutant loadings.
  3. The additional reduction of
pollutant loadings resulting from
construction and proper operation of the
AT facility will make a substantial
contribution toward the restoration of
the designated use or will prevent
impairment of a designated use by the
proposed project.
  4. All other point source discharges
that contribute pollutants resulting in
the use impairment of the affected
waterbody are regulated under the
National Pollutant Discharge
Elimination System (NPDES).
  5. Provisions have been made to
implement those nonpoint source
pollution controls that together with the

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                    federal Baajalar ; Vol. 49, No. fl9 / Monday. May 21. 1084 / No*roe»               21463
proposed AT project are considered
necessary for restoring a designated use
or preventing the impairment ef A
designated use, and such provisions are
included in certified and approved
water quaWrv management plan.

Expiation Dale
  This policy shall be effective upon its
publication date and wJH remain in
effect until rewarded.

Background
  Tfei policy.
edes Program
Requirements Memorandum {PRM) 79-7,
daied March 3.1S781. and interim
policies based on the draft RRM
published for comment on June 20, 1980
[45 PR 41890]. Agency policy and
tecbmcal procedBres are set forth *o
direct HetdqiMirtars and Regional fior
delegated State) reviews of all
wasfewater treatment projects designed
to meet effluent requirements more
strident than secondary treatment
Technical piooedures far conducting AT
reviews are presented in Appendix A.
Appendix B .describes 1i»relatkiirsbi» of
this policy to previous policies.
  Tie purpose of this policy is to assure
that the uaeof federal finds pd the
construction of municipal treatment
works reQaked by State adopted and
EPA-approved waier quality standards
will result ia the jMudmuai return ia
public aealfh and water quality
improvements. EPA faading decisions
based OB thi* policy do not abrogate the
right and veapoimbiliJy of States to
adopt and oeet water quality siaodacds
under provisions of sections 303. 303.
402 .and iW of the Ad.
  EPA began reviewing AT projects «
accordance with directives from the
House and Senate Appropriations
Committees. The statutory aufhotityiar
AT reviews Is found la section 101(1) of
the Qean Water Act 33HS.C. 1251(0.
which requires Hie Administrator to
implement rhe Clean Water Act by
making the "best use of available
manpower and funds.'" This authority
was upheld by the United States Court
of Appeals for the District of Columbia
Circuit to People of the State of
California v. US. Environmental
Protection Agency, et at, 688 R2d 217
(D.C. Oir. 1982). In that case. Hie Court
rejected a challenge by the State of
Cafiforrda to the legality at AT reviews,
holding that such reviews were
authorized under section lOlff).
  In reports accompanying
Appropriations Acts for fiscal year {FY|
1979 and subsequent fiscal years.
Congress has Distracted EPA to perform
AT reviews. Specifically, m action
approving the TY 79 .appropriation far
the construction grants program, the
House and Senate Appropriations
Conference Committee agree "that grant
funds may be used for construction  ef
new facilities providing treatment
greater than secondary only if the
incremental cost of the advanced
treatment is $1 million or less, or if die
Admiawtrator personally determines
that advanced treatment is required aad
wM definitely result in significant water
quality and public health
improvemeats."
  In implementing that action, EPA
issued PRM 29-7 on Matrch fl, £979.
effective on dial date. AM AT projects
proposed to fecewe either a step 2 or
Step 3 scant in FY 79 were i>equired  to
undergo am AT review unless the AT
project, or portion thereof, had already
been funded by a Step 3 grant before
issuance of the Conference Committee
dkectiwe in October 1978. If the
ir»cre»ental cost for the AT portion of
the project exceeded $1 million, the
review was conducted by EPA
Headquarters and signed by the
Ataanisteatar. If the AT incremental
cost of the project was $1 nuBion or less,
a review was conducted *t the Regional
level. For FY WJ and wAseqaent fiscal
yean, &e limit for Headquarters review
was raised T
                                      the ooal of proposed fcoatmeptpayoad
                                      that for Achieving secondary treatment

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21464
Federal Register / Vol. 49.  No. 99 / Monday, May 21,  1984 / Notices
3, Review Exemptions
  a. Secondary Treatment Processes. (1)
A project designed to meet State
definitions of secondary treatment shall
not be subject to review under this
policy, if the more stringent level of
effluent quality is required by State
effluent standards not more stringent
than 20/20 mg/1 BOD./SS, and only
secondary treatment technologies are
required to achieve those levels.
  (2} A project featuring only the
addition of commonly used disinfection
processes for pathogen inactivation
(such as chlorination /dechlorination,
and ozonation and ultraviolet radiation)
1o a secondary treatment facility shall
not be subject to review under this
policy.
  b. Phosphorus Removal. (1) Secondary
treatment facilities with phosphorus
removal only which are required to, meet
the existing international agreement for
the Great Lakes basin or the Upper
Chesapeake Bay policy shall not be
nubject to review under this policy.
  (2) For projects with incremental AT
costs of $3 million or less, the Regional
Administrator shall also have the option
of exempting from review secondary
facilities with phosphorus removal only,
where the total phosphorus effluent
limitations (as total P) are not less than
1 mg/1, EPA Headquarters will provide
an expedited review for such projects
with incremental costs over $3 million.
  c. Warm Weather Nitrification. For
projects with incremental AT costs of $3
million ot less, the Regional
Administrator shall have the option  of
exempting AT projects from review if
such projects provide: (1) Only for warm
weather (e.g. 20° C or greater)
nitrification designed to achieve effluent
limitations requiring not more than 90
percent removal of ammonia on streams
with designated fishery uses, and (2)
effluent flows are greater than stream
flows at critical low flows. EPA
Headquarters will provide an expedited
review for such projects with
incremental costs over $3 million.

4^Review Responsibilities
  The incremental AT cost is defined as
thq difference in total capital cost
between the most cost-effective
secondary treatment facility and the
proposed treatment alternative. All AT
projects with an incremental 'capital cos.t
for AT over $3 million, unless exempted,
must be approved by the EPA
Administrator in order to receive a Step
3 (or Step 2+3) grant.
  All AT projects with an incremental
capital cost for AT of $3 million or less,
unless exempted, must be approved  by
tllie Regional Administrator in order  to
                  receive a Step 3 (or Step 2+3) grant. The
                  Regional Administrator may delegate
                  responsibility for the review and
                  approval of such AT projects, consistent
                  with the requirements and procedures of
                  this policy, to States with 205(g)
                  delegation for the review of facilities
                  plans.

                  Implementation
                    The EPA Regions shall advise the
                  States of this policy and the review
                  criteria. The EPA Regions shall indentify
                  all projects that require reviews under
                  this policy (see Application section) and
                  also require a Step 3 (or Step 2+3)
                  construction grant award. The Regional
                  Administrator shall assure  that such
                  projects receive adequate reviews under
                  this policy prior to the award of a Step 3
                  (or Step 2+3) construction  grant.

                  1. Previously Reviewed or Exempted
                  Projects
                    No additional AT reviews will be
                  required under this policy of previously
                  reviewed projects with effluent
                  limitation assessments prepared and
                  approved under PRM 79-7 or interim
                  policies based on the draft  revised PRM
                  published June 20,1980. Likewise,
                  projects previously exempted from AT
                  reviews under the aforementioned
                  policies will not require an  AT review
                  under this policy unless the project
                  includes:
                    (a) Denitrification; or
                    (b) Year round nitrification; or
                    (c) A filtration process as an addition
                  to nitrification.

                  2. Water Quality Standards
                    The water quality standards,
                  established by the States and approved
                  by EPA,' are the basic regulatory
                  mechanism for determining the
                  designated uses to be protected and the
                  water quality levels necessary to protect
                  each body of water. The standards
                  include designated uses and criteria
                  established to protect each use. AT
                  project reviews do not substitute for
                  EPA's required review of water quality
                  standards because the AT reviews are
                  predicated on a different objective, are
                  project-specific, and result  in an EPA
                  funding decision. Although the reviews
                  may raise questions about the impact of
                  a State standard on discharges in a
                  segment, a separate State-initiated
                  action is necessary to review and revise
                  the standards. In determining whether a
                  proposed AT project meets the criterion
                  of making a substantial contribution
                  toward restoration of a  designated use
                  or prevention of a use impairment that
                  would occur without the project, the AT
                  project review will take into account the
                  State designated use and the chemical,
physical and biological characteristics
of the receiving water body in relation
to the designated uses.
  The principal foci of the AT analyses
will be: (1) The methods used to
determine the relationship between the
pollutant loadings and the established
water quality criteria (i.e., wasteload
allocations), (2) the adequacy of the
data on which  judgments were made, (3)
other aspects of applying the
established water quality standards (i.e.
permit averaging periods, mixing zone
determinations and seasonal loadings),
and (4) the need for proposed AT
processes to achieve effluent limitations.

3. Wasteload Allocations/Facilities
Planning and Design

  The process- of establishing or revising
effluent limitations for a proposed AT
facility includes the performance of
wasteload allocations (WLAs) and the
establishment of total maximum daily
loads (TMDLs) under section 303(d) of
the Clean Water Act. Regions and
States are strongly encouraged to
review the WLAs/TMDLs and proposed
effluent limitations affecting AT projects
as soon as adequate data are available.
  For projects  still in planning that
appear likely to require a Headquarters
AT review, the Regions 'may submit
WLAs and AT effluent limitations to
Headquarters for a preliminary review*.
The results of such review should be
taken into consideration in the
completion of the facilities plan. This
process will expedite further AT review
when the proposed project is submitted
to Headquarters.
  The construction grants regulation (40
CFR 35.2101) requires the completion of
AT reviews before the award of Step 3
(or Step 2+3) grant assistance.
However, Regions, States, and grantees
are encouraged to submit
documentation for AT projects
immediately following completion of
'facilities planning and prior to the
initiation of work on detailed plans and
specifications. Such reviews will be
conducted in accordance with this
policy.
  Generally, AT project reviews will not
re-examine the facilities planning or
cost-effectiveness analysis that lead to
the selection of the proposed AT
alternative. AT project reviews may,
however, comment upon and make
recommendations as  to the suitability of
AT processes in meeting effluent
limitations found to be justified.

* Principles for Review
  The same review criteria will be used
in reviewing all AT projects, regardless
of incremental costs,  although the

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                     Federal Reaster J VoL 49. No. 99 / Monday, May 21. 1984 /Notices
                                                                     21465
appropriate level of effort required to
satisfy the review criteria will depend
on the nature of the AT project and, in
particular, the magnitude of the AT
costs involved. Technical procedures
are being issued concurrently with this
policy (vee Appendix A}. These
procedures, as applicable, will be
followed IDT AT reviews conducted by
EPA Headquarters under this policy and
should be used for reviews of projects xsf
$3 million or less to ensure consistency
of reviews. Supplemental technical
guidance will be issued from time to
time by the Office of Water. Jn the
review -of projects involving the critical
habitat of an endangered or threatened
species, the requirements of the
Endangered Species Act will be met in
consBitation with the Fish and WSMMfe
Service or the National Marine Fisheries
Service, as appropriate.

5. Subnuttai of Projects for
Headquarters Review

  For AT projects with incremental AT
costs greater than $3 million, the
Regional Office shall submit
documentation for Headquarters review,
including two copies of the following:
  *a) A facilities plan (draft or Baal) that
provides documentation on die
alternative* considered, and the
Region's (or State's) review comments
onibefacflitieflplari;
  (bj An AT Project Checklist
completed by the Regkm;
  (eJThe Region's (or State's)
evaluation of the restoration or
prevention of impairment of designated
uses, and me water quality and public
hearth improvements that will result
from AT, based upon data submitted
concerning the project; and
   (dj The major documents summarizing
the water quality standards and the
establishment of effluent limitations for
the project, including an evaluation of
seasonally applied standards and
limitations.
  This information should be submitted
to: Director, Facility Requirements
Division fWH-595), US. EPA, 401M
Street SW., Washington, DC 20460.
  A draft report, will be produced for
comment within 6 weeks after EPA
Headquarters receives acceptable AT
project documentation Aumiiied for a
funding decision by the Administrator,

6. Review of Draft AT Reports

  As part of EPA'S AT project review, a
draft xepaet will be prepared for each
project and submitted to ibe Regional
Office (when Headquarters prepares the
report}, the State aad grantee tor review
and comment.
7. Disposition offlrojects Following A T
Review
  a. Justified AT Processes. If, as a
result of EPA's AT review, EPA
determines that AT processes are
justified in accordance with this policy,
these processes can "be funded subject to
all applicable provisions of 40 CFR Part
35.
  b.  Unjustified AT Processes. K, as a
result of EPA's AT project review, EPA
determines that certain AT processes
are not justified, then grant awards for
the construction of the unjustified AT
processes will be deferred.
  Construction grant awards can be
made for the construction of secondary
treatment ami any justified AT
components, provided that the grantee
acknowledges that the Federal
government is under no obligation to
award gnats for the construction of the
unjustified AT components in the future.
  Based on State policy or regulation,
the State may require the grantee to
construct the deferred AT components.
(For example, States may require this
action because of a desire for a greater
margin of safety in areas of rapid
growth, or where treated water is
needed for uses such as aquifer recharge
or reclamation.) In such cases, however,
EPA will approve grant funding only for
secondary treatment and justified AT
components, and will not fund the
additional deferred AT components.
  Where the funding for certain AT
components is deferred due to
uncertainty over water quality data,
modeling or pollutant loadings and the
State wishes to resubmit these
processes for funding, a water quality
and biolqgical monitoring program
should be implemented to establish
scientifically the relationship between
the control of pollutants and  the
attainment of designated uses, and
determine whether the AT components
will result in significant water quality
and public health improvements.
  c. Relationship to NPDES Permits.
Deferral of funding for AT facilities
under the provisions of this policy does
not relieve the NPDES permit holder
from the enforceable provisions of the
Clean Water Act, as amended. In cases
where AT processes have been deferred,
the Agency will provide its technical
findings  for consideration by theJMPQES
permitting authority in reviewing and
revising the effluent limitations, as
deemed appropriate.
8. EPA Report to States ftoHovrhg AT
Renew
  Following completion of the AT
project review, the Agency will provide
to the State a report that inciades lite
following:
  (a) A summary statement of the
information and analyses wed ki the AT
project review which describe* how tbe
proposed project relates to the
justification criteria for AT processes;
funding decisions reached;
  (c) Recommendations, if any,
concerning water quality standards
revisions, data and information needs,
water quality and biological survey
needs, special surveys or studies, or
suggested provisions for NPDES permits;
and
  (d) A listing of sources of date,
surveys, studies, plans and other
scientific information, or other public
comment thai was taken into ymf*1* by
the Agency as part of the AT project
review.

9. Agency 'Overview Procedures

  As part of the Agency'*
responsibilities for providing program
overview, EPAfieadoaartei* will
evaluate: (a) The Region's screening
process for previously exeaspted
projects (see subsection 1 of this
section), and (b) the adequacy of
individual Regional/State AT project
reviews. For each AT project reviewed
by the Region or State, the Regional
Administrator shall prepare a brief
summary of the proposed treatment
processes, the funding decision resulting
from the review, and the basis for that
decision. For AT reviews conducted fcy
the Regions, this report can serve as the
summary documentation discussed in
subsection 8 of this section. Summary
documentation of AT reviews will be
used as a basis for conducting
evaluations under the Office of Water
Operating Guidance and Accountability
System.
  Dated: AprM 86.1864.
)ackE.kavan,
Assistant Atbnmistrator for Water.

Appendix A— Technical Procedure far
Advanced Treatment (AT) Project
Reviews

   These technical procedures, a*
applicable, will be followed for AT
reviews conducted by EPA
Headquarters under this pohcy and
should be used for projects of $3 milfioH
or less to ensure consistency of reviews.
As technical guidance M issued oy OK
Office of Water under its "Standards to
Permits" priority project pragma*, these
procedures will be
necessary.

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21466
Federal Register  /  Vol. 49,  No. 99 / Monday, May 21. 1984 / Notices
1. Incremental AT Cost
  The incremental AT cost is defined as
the difference in total capital cost
between the most cost-effective
secondary treatment facility and the
proposed treatment alternative. To
develop secondary treatment cost,
current cost curves adjusted for the local
area or equivalent current cost
experience should be used. Where-the
proposed project involves
regionalize tion or relocation of a
discharge point, all pump stations and
conveyence systems should be included
in the total capital cost

2. Assessment of Significant
Improvement
  Congressional directives require that
grant funds be used for the construction
of new facilities providing treatment
greater than secondary only if the
advance treatment is required and will
definitely result in significant water
quality and public health improvements.
The AT review criteria of this policy
require an assessment of the
significance of water quality
improvements resulting from the effluent
limitations in terms of contributions
towards attaining or restoring
designated uses.
  In applying the AT review criteria and
ensuring that the proposed project meets
the criteria, project reviews should take
into  account the following:
   (a) In some cases, showing only
improvements in chemical water quality
parameters may not sufficiently
demonstrate a substantial contribution
towards the restoration of a use, due to
other factors such as man-made
physical or hydrofogic modifications of
a stream or intermittent flows that
restrict or prevent use attainment.
   (b) A justification for funding an AT
project can be based on the need to
prevent a projected use impairment if
scientific data, information, and
analyses (including an assessment of the
timing and probability of the future
pollutant loadings) show that a
municipal discharge (without providing
for AT) is likely to result in the
impairment of a designated use.
However, where impaired uses are
projected based on uncertain pollutant
loadings, funding of that future AT need
should be deferred, and provisions made
for monitoring the water quality and
biological impacts (see subsection 7(b]
of Implementation section).

3. Water Quality Criteria for Ammonia
 Toxicity
   Due to the significant uncertainties
concerning the chronic effects of
ammonia toxicity concentrations
                  normally encountered in receiving
                  water, AT facilities that are proposed
                  for sole purpose of preventing ammonia
                  toxicity should be approved only if the
                  following has been demonstrated:
                    (a) Site specific biological data show
                  that designated uses cannot be restored
                  (or impairment prevented) without
                  reducing ammonia toxicity; or,
                    (b) Bioassay data (e.g., either
                  laboratory or from a similar site) for
                  resident species show that existing or
                  future ammonia toxicity levels will
                  impair beneficial use attainment.
                  Exposure levels and duration for thefce
                  tests should be similar to those
                  occurring or anticipated to occur in the
                  receiving water.
                    After publication of new ammonia
                  toxicity criteria by EPA, AT processes
                  proposed solely to prevent ammonia
                  toxicity may be approved consistent
                  with those criteria and the criteria
                  implementation document provided that
                  there is a showing that species used to
                  derive the criteria are present or could
                  be present with the reduction of
                  ammonia.

                  4. Modeling Analysis
                    An appropriate modeling analysis
                  should be used to assess the
                  relationship between alternative levels
                  of treatment and resultant water quality.
                  These analyses can range from simple to
                  complex. Complex modeling should be
                  calibrated and verified. (Sensitivity
                  analyses applied to the variables of the
                  model can help establish whether
                  collection of new data is essential.)
                  Simplified procedures may be
                  appropriate in some situations.
                  However, projects that involve
                  discharge into complex stream segments
                  (e.g., with multiple dischargers or
                  dynamic flow characteristics) need more
                  complex analyses. Projects with
                  discharge into lakes, estuaries, or
                  oceans should have special analyses
                  that usually include complex modeling.
                  Normally these projects involve long-
                  term effects rather than critical event
                  analyses often used for the analysis of
                  rivers.
                     The project assessment should weigh
                  the uncertainties inherent in  the water
                  quality analyses with the marginal costs
                  of the processes being proposed. For
                  example, simplified water quality
                  analyses, with more uncertainties than
                  detailed modeling studies (See
                  Simplified Analytical Method-
                  September 26,1980 and addendum dated
                  July 25,1982), may suffice for projects
                  with inexpensive processes that would
                  achieve significant pollution reduction.
                  However, because of the uncertainties
                  and assumptions generally inherent in a
                   simplified analysis, this approach may
be inadequate for AT processes with
high marginal costs with limited
pollutant reduction. In such cases, more
sophisticated modeling may be required.

5. NPDES Permit Effluent Limitations

  The NPDES permit effluent limitations
for the proposed AT facility and the
facility process design related thereto
serve as the the baseline for the AT
project evaluation. The evaluation
should assess the effluent quality
attainable from the proposed AT
facilities during both critical low flow
periods with minimum infiltration/
inflow (usually hot, dry months) and
during higher flow periods as well. The
evaluation should also include
determination of the effluent quality
attainable during such flow condition
for the secondary treatment processes
and that attainable from each proposed
AT process as an added-increment. The
costs of each AT increment should also
be provided.
  The AT project evaluation should
analyze use of seasonal effluent
limitations for achieving the water
quality standards. The effects of
seasonal effluent limitations on
selection, design, operation and costs of
AT processes, particularly those for
ammonia and CBOD removal, should be
assessed.
  The permit averaging period (e.g., the
7-day or 30-day average) is critical to
improving water quality with the least
AT cost. Because the flow variability of
each receiving water is different and the
variability of effluent quality for each
AT process is unique, a single averaging
period may not apply to all situations.
For these reasons, the derivation of the
7-day and 30-day limitations should be
based on a careful evaluation of the
effluent quality variability that can be
tolerated in the receiving waters.
   The Agency is conducting technical
analyses to study the-effects of effluent
concentration and streamfh  •
variability, different dilution ratios, and
the use of alternative averaging period
schemes on receiving water quality.
Preliminary results indicate that effluent
and streamflow variability and
upstream dilution are critical factors
affecting the frequency of severe water
quality violations.
   Based on currently available data for
treatment plant performance, full
nitrification is a relatively stable
treatment process producing stable
effluent quality during the summer
months. When considered together with
streamflow variability and dilution, a
nitrified effluent should not cause wide
water quality fluctuations during periods
of low, stable stream flow.

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                     Federal Register / Vol. 49, No. 99 / Monday, May 21, 1984  /  Notices
                                                                      21467
  Preliminary analysis indicate that
small fluctuations in the effluent quality
of full nitrification facilities designed to
achieve 30-day average permit
limitations are not likely to have any
significant impact on designated uses,
especially where the variability of the
stream flow is low. Thus, model output
should be set as a 30-day average unless
site-specific analyses indicate
otherwise.
  The filtration process usually reduces
fluctuations in the quality of treatment
plant effluent. Thus, a 30-day average
for CBODs and NHj should be used for
such a process unless site-specific
analyses indicate otherwise.
  Since the receiving water response to
fluctuations in inorganic nutrient
loadings (phosphorus and inorganic
nitrogen) is often slow, short-term
fluctuations should not significantly
impact receiving water quality. At least
a 30-day averaging period, preferably
based on site-specific analysis, should
be used for nutrient models. In addition,
since a chronic tenacity criterion is a "no
effect" level for 95 percent of exposed
aquatic organisms, the return period of
such 30 day exposures must be
considered on a site specific basis,
taking into account the extent of the
effects of the discharge on the aquatic
life in the receiving waters.
  t«JPDES regulations require municipal
permit limitations to be expressed as
both 7-day and 30-day average
limitations. Once the appropriate permit
averaging period for the model output
has been determined, effluent
limitations should be calculated for the
other averaging periods. For example, if
the model output is used as a 30-day
limitation, the 7-day limitations must
also be calculated. If necessary, the AT
Task Force may make conclusions
based on 7-day and 30-day averaging
periods to the extent that sufficient
water quality analysis and data have
been submitted or are otherwise
'available to evaluate these averaging
periods.
B. Use of CBODs Measurement for
Water Quality Modeling to Assess
Effects of Existing Treatment Facilities
  Dissolved oxygen water quality
analyses generally account for
carbonaceous oxygen demand and
nitrogenous oxygen demand from
oxidation of ammonia separately.
However, the standard uninhibited
BOD* test measures effects of both
carbonaceous and nitrogenous oxygen
demand if nitrifiers are present in  the
test sample. Thus, when water quality
impacts of existing municipal discharges
are modeled, the nitrogenous oxygen
demand may be double counted if
'standard BOD* test procedures are used
as the model input to represent effluent
quality.
  To avoid potential double counting of
nitrogenous oxygen demand, the
ultimate carbonaceous biochemical
oxygen demand (CBODM) should be
used, as appropriate, as CBOD input to
the water, quality analyses. Necessary
adjustment to the CBOD,. to CBODs"
ratio should be made for the level of
treatment considered, so that actual
CBOD,, loading reflects the future
conditions. Treatment capabilities,
expressed in terms of CBOD, should
represent plant performance expected
during the period being modeled
(generally warm weather, low flow
conditions). AT reviews will be based
on CBODs. Since BODs has been used in
the past to set permit requirements,
conversion of CBODs results to BODs
effluent limitations is as site-specific
determination to be made by the State.
7. Design Conditions for Stream's
Critical Events
  The critical low flow used in the
modeling should reflect the nature of the
water quality criteria used in the
analysis (i.e., chronic or acute).
Typically, most analyses evlauate
chronic exposure criteria. Since model
outputs are usually based on meeting a
chronic criterion value (30-day duration
of exposure) at an appropriate low flow,
model outputs should not be set in
permits as 1-day averages, unless there
is a statistical analysis clearly
demonstrating that the stringent effluent'
averaging period requirements are
needed to attain designated uses. It may
be appropriate to set the model output
as a 1-day average if an acute  criterion
is used as the target concentration for
the model.
8. Nonpoint Sources
  Pollution from nonpoint sources may
degrade water quality regardless of
point source contributions. For example,
upstream background conditions could
prevent attainment of standards or a
significant water quality improvement
even with AT. In such situations,
nonpoint sources should be part of the
analysis used to assess the relationship
between alternative levels of treatment
and resultant water quality. Although
nonpoint sources usually do not directly
affect stream water quality at ciritical
low flow conditions, the water quality
effects from'nonpoint source residuals,
e.g., in-place pollutants, may be
significant at low flow. Irrigation return
flows may also be a significant nonpoint
source in some cases. Other nonpoint
pollution may include discharge of poor
quality water from an upstream lake or
reservoir, or marsh drainage.
  In those situations where nonpoint
sources are suspected of causing or
contributing to non-attainment of
standards, an assessment should be
made of the relative contribution of
point and nonpoint sources. Where Best
Management Practices for nonpoint
source control have been identified by
the State under its water quality
management process as required to
achieve standards not now-being
attained, these controls should be in
place or be included hi a certified and
approved water quality management
plan.

'9. Nitrification
  After treatment beyond secondary has
been demonstrated as necessary to
enhance dissolved oxygen levels,
nitrification facilities are usually cost-
effective where nitrification occurs in
the receiving water.
  Nitrification has the coincidental
benefit for reducing the risk of ammonia
toxicity. This additional benefit should
be considered in the overall water
quality assessment of the project. If
ammonia toxicity is the sole reason for
proposed nitrification facilities, ihe
ammonia limitations should be
supported by site specific criteria and
field survey data developed in
accordance with procedures outlined in
section 3, above.
10. Filtration
  A tertiary filtration process by itself
or following nitrification is generally
less cost-effective than a nitrification
process in removing oxygen demanding
materials. In addition, since nitrificaiton
prior to filtration removes most of the
remaining ultimate carbonaceous
oxygen demand, water quality analyses
are often not sufficiently sensitive to
determine the small incremental water
quality improvement (e.g., 3 to 5 mg/
CBODs reduction) afforded by the added
filtration process.
  Proposed filtration following
nitrification may be justified in
situations where additonal plant
reliability is necessary to protect
beneficial uses, or for facilities having
harmful chemicals discharging to a
drinking water source. Filtration
following nitrification may also be
needed to afford reliability when it is
demonstrated that upsets would occur
with sufficient frequency and severity to
impair beneficial uses, particularly a
drinking water use near the effluent
discharge point.
  For each of the above cases, the
filtration process should be

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 21468
Federal Register / Vol. 49.  No. 99 / Monday, May 21. 1984 / Notices
 demonstrated to be die most cost-
 effective control alternative available to
 achieve the designated beneficial use.
 11. Phosphorus removal
   Phosphorus removal to a level no
 more stringent than 1.0 nag/1 total
 phosphorus can be justified by a study
 that includes: (a) A finding that total
 phosphorus is or will be the nutrient that
 limits plant growth; (b) a nutrient budget
 for the receiving water showing
 contributions of the nonpoint and point
 sources of total phosphorus; and (c) a
 demonstration that control of point
 sources alone will result hi significant
 reduction of phosphorus loading; or, if
 conjunctive point  and nonpoint controls
 are needed to provide a significant
 reduction of total  phosphorus loading, a
 demonstration that such provisions are
 included in a certified and approved
 water quality management plan.
   Comprehensive water quality
 analyses should be conducted in those
 cases involving basinwide phosphorus
 limitations or very stringent limitations
 (e.g., less than 1 mg/1).

 12. Suspended Solids Removal
  Treatment processes proposed solely
 to achieve SS effluent limitations more
 stringent than secondary treatment
 levels should not be approved, unless it
 is demonstrated that (1) the additional
 SS removal is required to achieve the
 proposed effluent  limitation for other
 constituents e.g., CBOD, conform or
 toxics, or (2) discharge of secondary
 treatment SS  levels would result in a
 substantial contribution to impairment
 of a use.
 13, Disinfection
  Where chlorination is proposed along
 with AT processes, the benefits and
 adverse impacts of chlorine on
 designated uses should be evaluated as
 part of the AT review. Chlorination of
 wastewater produces chlorine
 compounds that can be extremely toxic
 to aquatic wildlife. Where the receiving
 water does not provide sufficient
 dilution, such compounds could prevent
 the attainment of die water quality
 improvements that are otherwise
 expected to result  from the proposed AT
 facilities. If chlorination is the method
proposed for disinfection and the
receiving water is  designated for aquatic
wildlife protection, the project should
include dechlorination facilities unless
 an analysis is presented to show that
 the concentration of chlorine
 compounds in the  receiving water will
not exceed criteria established to
protect this use. The recommended
criterion for chronic exposure (30 days)
for the protection of freshwater aquatic
                  life in streams is that recommended hi
                  EPA's "Water Quality Criteria for
                  Chlorine" (see Federal Register, 49 PR
                  4551, February 7,1984 for draft
                  recommendations; the final "Water
                  Quality Criteria for Chlorine" document
                  will be available by November 1984).
                  Chronic effects from total residual
                  chlorine (TRC) hi chlorinated effluents
                  are extremely variable depending on the
                  rate of decay of TRC and, therefore,
                  should be eveluated on a case by-case
                  basis.

                  14. Biological Monitoring
                    Biological monitoring is valuable for
                  assessing overall water Quality, and
                  may be essential for some projects
                  where there is currently an impairment
                  of the designated use. An EPA Technical
                  Support Manual on Water Body Surveys
                  and Assessments for Conducting Use
                  Attainability Analyses discusses
                  biological monitoring and provides a
                  bibliography of references on biological
                  monitoring.

                  Appendix B—Relationship to Previous
                  Policies
                  1. Previous Policies
                    PRM 79-7 contained a general policy
                  for review of AT projects. It categorized
                  AT projects hi one of two ways:
                  Advanced secondary treatment (AST) or
                  advanced wastewater treatment (AWT).
                  In addition to the general review policy
                  and definitions of AT, PRM 79-7 also
                  outlined the procedure and criteria for
                  review of these projects. Briefly, projects
                  were to be reviewed on the basis of the
                  water quality justification including a
                  demonstration that the wasteload
                  allocation or other water quality
                  analyses justifying the effluent
                  limitations were scientifically supported
                  by intensive surveys or other field
                  investigations; land treatment had been
                  adequately evaluated hi all cases; the
                  treatment processes were the most cost-
                  effective means of meeting the
                  prescribed effluent limitations; and
                  finally, die project costs would not
                  result hi an undue financial burden to
                  domestic users.
                    On December 28,1979. the State of
                  Illinois filed suit in U.S. District Court hi
                  the District of Columbia to contest a
                  decision by the Administrator on the
                  Galesburg, Illinois, AT project. As a
                  result of the Agency's review of that
                  project, the tertiary filtration facilities of
                  the Galesburg project were deferred
                  pending water quality justification.
                    EPA and the State of Illinois entered
                  into negotiations on the Illinois suit and
                  eventually signed a settlement
                  agreement which was embodied in a
                  court order on May 22.1980. The
 settlement agreement, although retaining
 many key provisions of PRM79-7,
 required Federal Register publication of
 a draft revision of the PRM to reflect the
 process and new criteria for review
 agreed upon by the two parties. In
 anticipation of the Federal Register
 publication, on May 30,1980, EPA issued
 a memorandum, which provided EPA
 regional offices with the option of using
 the draft Federal Register policy as an
 interim policy, subject to Headquarters
 approval. On June 20,1980, EPA
 published a revised draft of a
 replacement policy for PRM 79-7 hi the
 Federal Register [45 FR 41890], hi
 accordance with the settlement
 agreement. PRM 79-7, the settlement
 agreement and interim policies based on
 the revised June 20,1980, draft have all
 been used hi reviewing AT projects
 during the past three years.

 2. Revisions to Draft Policy

  The June 20,1980, draft AT policy has
 been revised to include a number of
 changes hi organization and emphasis.
 These revisions reflect the Agency's
 experience hi conducting AT project
 reviews and respond tec
  (1) Recent program initiatives and
 regulatory reform efforts,
  (2) Comments received on the draft
 policy and subsequent revisions, and
  (3] Congressional directives contained
 hi actions on the fiscal year 1981
 appropriation for the construction grants
 program and the "Municipal
 Wastewater Treatment Construction
 Grant Amendments of 1981."
  a. Significant Water Quality
 Improvements and Restoration of
 Designated Uses. The AT review policy
 emphasizes the need for a rigorous
 justification of the water quality and
 public health improvements resulting
 from AT projects. This change reflects
 both the likelihood that the availability
 of construction grant funds will be
 limited and the need to  use limited funds
 on the attainment of significant water
 quality or public health improvements.
 The  significance of improvements
 resulting from an AT project will be
 assessed hi terms of contributions made
 to restoring designated uses or
 preventing their impairment. For each
 project, funding decisions will be based
 upon the best available scientific
 information and the best professional
judgment of the responsible official of
 the extent to which the project meets the
 review criteria.
  b.  Elimination of the Affordability
 Guidelines from AT Review Policy. The
Agency has reassessed  the issue of
 affordability guidelines  and their
relationship to the AT review process.

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                    Federal Register / Vol. 49, No. 99 / Monday. May  21. 1984 / Notices
                                                                     21469
Issues of project affordability, which
can more appropriately be stated as
grantee financial capability, will not be
addressed as a part of an AT project
review.
  Under the Clean Water Act prior to
awarding a construction grant, the
Administrator is specifically charged
with making certain determination,
including whether the grantee has the
necessary financial and management
capability to construct,,operate, and
maintain the wastewater treatment
facilities. To serve the intent of the
Clean Water Act, the Agency
emphasizes that all grantees must
demonstrate financial capability prior to
a construction grant award [40 CFR
35.2104]. The Agency has prepared a
policy on financial capability and
guidance that grantees can use to meet
the policy requirements. An adequate
demonstration will involve a more
comprehensive analysis and display of
data and information than previously
required on local financial and
management capabilities.
  C. Inflationary Impacts. Since the
initiation, of the AT project reviews
under PRM 79-7, EPA Headquarters has
received over eighty projects for review.
In more than half of all the projects
reviewed,  AT project components-were
deferred, usually pending additional
water quality justification. Real resource
costs (constant dollars) saved or
deferred so far total $710 million. In
order to reduce' the adverse effects of
rising costs caused by inflationary
factors, the Agency had suggested
provisions for excluding projects where
the costs for AT could be less than the
inflationary costs of delay. However,
since there has now been ample
opportunity for grantees, States and
Regions to anticipate needed AT
reviews, and since inflation has
lessened, the Agency has eliminated
exemptions based on inflationary
factors.
  d. Review Responsibilities. Some
proposed changes to the AT review
policy were precluded by the language
of the Appropriations Committee
actions. For projects with AT
incremental costs over $3 million, the FT
81 Appropriations Conference
Committee Report directed the Agency
to continue the AT project reviews,
perform the reviews at Headquarters,
and cease delegation of data collection
and project evaluation to Regions and
States. The PY 81 Appropriations Act
(Pub. L. 96-526) further provided for the
continuation of AT project reviews by
exempting them "from Appropriation Act
language which otherwise prohibited
retroactive requirements for the
construction grants program.
Additionally, the FY 84 House
Appropriations Committee Report (98-
223) urged that State and Regional
reviews be based on the same set of
criteria as Headquarters to avoid
potential wasted effort in planning and
design  of projects that may not be
approvable. Therefore, the AT review
policy does not include provisions of the
June 20,1980 draft that would have
delegated Headquarters review or
preparation of reports to the Regions or
delegated States for projects with an
incremental cost over $3 million.
  The June 20,1980 draft classified AT
projects as either advanced waste
treatment (AWT) or advanced
secondary treatment (AST). That
distinction has been dropped; AT will be
used to refer to both AWT and AST.
The June 20 draft specified that all AWT
projects and those AST projects costing
over $3 million beyond secondary go to
Headquarters for review. To be
consistent and reduce confusion, the
policy requires that only those AT
(AWT or AST) projects with an
incremental cost over $3 million undergo
Headquarters review..
  6. Elimination of two discrete and
separate levels of review. The June 20
draft described two levels of review
reports: Effluent limitations assessments
and comprehensive evaluations. The
assessment was less broad In scope
than the evaluation. The level of project
review resulted  from screening for
financial impact and inflation impact.
The policy eliminates the distinction hi
favor of one assessment which may vary
in detail from case to case. This action
was based on EPA's experience in the
past two years and the finding that few
projects fit neatly into one category of
review or another. The Agency's
underlying premise in defining the scope
of each project review will be to
continue to concentrate on only those
issues related to AT funding decisions.
Issues will be narrowly defined at first
and then broadened if other factors
affecting the need for AT are
demonstrated. Regions and States are
strongly encouraged to submit AT
projects for early Headquartes reviews
of effluent limitations and modeling
issues, so that issues will be narrowly
defined at the time of the specific
project review.
(FR Doc. 84-12313 Filed 5-18-84:8:45 am]
MUJNO CODE W60-60-M

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      APPENDIX B



LIST OF EPA PUBLICATIONS

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                                 APPENDIX B

                          LIST OF EPA PUBLICATIONS
  LIST OF SELECTED PUBLICATIONS

1.  A Guide to Regulations and
    Guidance for the Utilization
    and Disposal of Municipal
    Sludge, (EPA 430/9-80-015),
    September 1980.

2.  Cost of Land Treatment Systems
    (EPA 430/9-75-003), Revised
    September 1979.

3.  Construction Costs for
    Municipal Wastewater Conveyance
    Systems, 1973-1979,
    (EPA 430/9-81-003), January 1981.

4.  Construction Costs for Municipal
    Wastewater Treatment Plants,
    1973-1978, (EPA 430/9-80-003),
    April 1980.

5.  Composting Processes to Stabilize
    and Disinfect Municipal Sewage
    Sludge (EPA 430/9-81-011),
    June 1981.
6.  Design Manual - Onsite Wastewater
    Treatment and Disposal Systems,
    (EPA 625/1-80-012), October 1980.

7.  Environmental Assessment of
      Construction Grants Projects
    (EPA 430/9/-79-007),
    Jaunary 1979

8.  Field Manual - Performance
    Evaluation and Troubleshooting
    at Municipal Wastewater Treatment
    Facilities, (EPA 430/9-78-001),
    January 1978.
ORDERING SOURCE AND NUMBER

    EPA - WH-547
    401 M. Street, S.W.
    Washington, D.C. 20460
    Ordering No. MCD-72
    EPA (address above)
    Ordering No. MCD-10
    EPA (address above)
    Ordering No. FRD-21
    EPA (address above)
    Ordering No. FRD-11
    U.S. Department of Commerce
    National Technical Information
      Service (NTIS)
    5285 Port Royal Road
    Springfield, Virginia 22161
    (703) 487-4650

    USEPA - CERI
    Cincinnati, Ohio 45268
    (513) 684-7562

    NTIS (address above)
    Ordering No. PB 299209/AS
    Information Reference Center
      (IRC)
    The Ohio State University
    1200 Chambers Road - Rm. 310
    Columbus, Ohio 43212
    (614) 422-6717
    Ordering No. 016U
                                     B-l

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   LIST OF SELECTED PUBLICATIONS
ORDERING SOURCE AND NUMBER
 9.  Financial Capability Guidebook,
     March 1984

10.  Handbook for Sewer Systems
     Evaluation and Rehabilitation,
     (EPA 430/9-75-021), December 1975.

11.  Innovative and Alternative
     Technology Assessment Manual,
     (EPA 430/9-78-009), February 1980.

12.  Innovative and Alternative
     Technology Case Studies,
     (EPA 430/9-81-010), January 1981.

13.  Management of Construction
     Grant Change Orders - A-Guide
     for Grantees, March 1983.

14.  Management of On-Site and Small
       Community Wastewater Systems
     (EPA 600/8-82-009),
     July 1982

15.  Management of Small Flows
     (EPA 600/2-78-173), September 1980.

16.  Manual  of Practice - Sewer System
     Evaluation, Rehabilitation and New
     Construction, (EPA 600/2-77-017d)

17.  Overview of the National Pretreatment
       Program, March 1984
18.  Process Design Manual  - Sludge
     Treatment and Disposal,
     (EPA 625/1-79-011), October 1979.

19.  Process Design Manual  - Land
     Treatment of Municipal  Wastewater,
     (EPA 625/1-81-013), October 1981.

20.  Sludge Treatment and Disposal,
     2 Volumes, (EPA 625/4-78-012),
     October 1978.
    NTIS (address above)
    Order by title

    NTIS (address above)
    Ordering No. PB 257457/AS


    NTIS (address above)
    Ordering No. PB 81103277


    NTIS (address above)
    Ordering No. PB 81246126


    NTIS (address above)
    Ordering No. PB 83211490
    NTIS (address above)
    Ordering No. PB 82260829
    NTIS (address above)
    Ordering No. PB 286560

    NTIS (address above)
    Ordering No. PB 279248/AS
    EPA-EN-336
    Permits Division
    401 M.  Street,  SW
    Washington,  D.C. 20460

    NTIS (address above)
    Ordering No. PB 80200546


    USEPA - CERI (address above)
    NTIS  (address above)
    Volume 1  - "Sludge Treatment"
    Ordering  No.  PB 299593/AS

    Volume 2  - "Sludge Disposal"
    Ordering  No.  PB 299594/2BE
                                       B-2

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   LIST OF SELECTED PUBLICATIONS
                      ORDERING SOURCE AND NUMBER
21.  Small Wastewater Systems -
     Alternative Systems for Small
     Communities and Rural  Areas,
     January 1980. (foldout)

22.  Uniform Appraisal  Standards
     for Federal Land Acquisition.
                          EPA (address above)
                          Ordering No. FRD-10
                          Superintendent of Documents
                          U.S.  Government Printing Office
                          Washington, D.C.   20460
                          (202) 783-3238
                          Ordering No. 052-059-000020
     Other information
     from:
is available
         CAPDET Center
         Civil  Engineering Department
         Mississippi  State University
         P.O. Box C E
         Mississippi, Missouri   39762

         National  Small  Wastewater Flows
           Clearinghouse (SAWS)
         258 Stewart  Street
         West Virginia University
         Morgantown,  West Virginia  26506
         (800)  624-8301

         Innovative and  Alternative
           Technology Clearinghouse
         Municipal  Research Laboratory
         26 West St.  Clair
         Cincinnati,  Ohio  45268
         (513)  684-7611

         A Planning and  Design  Guidebook
         for Combined Sewer Overflow
         Control  and  Treatment,
         (EPA 600/2-82-084), August 1982.

         Code of Federal  Regulations (CFR)
         Title  40  - Protection  of Environment
                          NTIS  (address above)
                          Ordering  No.  PB  82  259235
                          Superintendent  of Documents
                          U.S.  Government Printing  Office
                          Washington,  D.  C.   20402
                          (202)  783-3238

                          (Telephone for  prices  of
                             sections  needed).
                                       B-3

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LIST OF SELECTED PUBLICATIONS

      Considerations for Preparation
      of Operation and Maintenance
      Manuals, January 1974.
      Rural  and Small  Town Planning
ORDERING SOURCE AND NUMBER

    IRC (address above)
    Ordering No. 05U

    American Planning Association
    Planners Press
    1313 East 60th
    Chicago, Illinois  60637
    (312) 955-9100, ext. 265
    Price:   $14.95
                                   B-4

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   APPENDIX C

BEFORE AND AFTER
 STUDY GUIDANCE

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                                   APPENDIX  C

                       "BEFORE AND AFTER" STUDY GUIDANCE


    This document presents  technical  procedures  on  how to  assess  the water
Quality improvements that result from the construction of  municipal  and
industrial  treatment facilities.   A wide  variation  of water quality  data,  from
limited biological  surveys  to comprehensive  studies of the physical  and
chemical properties of the  receiving water,  can  be  used to identify  changes in
water quality over time.   By documenting  the water  quality responses to
increased treatment, these  "before and after"  analyses can be used to evaluate
how effective various treatment processes are  in meeting water quality goals
and objectives.

    Under severe budgetary  constraints, Congress, State and local governments
and laypersons have expressed increasing  concern over whether expenditures for
water pollution control have resulted in  significant improvements in water
quality and water uses.  In particular, analyses used to predict the water
quality impact of expensive advanced treatment (AT) processes have recently
been reevaluated by EPA and the States either directly or  indirectly as part
of EPA's AT Review Program.  As more water quality  emphasis is placed on the
construction grant program, additional analyses will be needed to show that
the greatest water quality improvement is being provided at the least cost.

    A post-operation or "after" study is essentially a wasteload allocation
performed after completion and operation of a treatment process, with
particular emphasis placed on the beneficial use impacts.   Consequently,
biological evaluations, along with the physical  and chemical data commonly
collected in a wasteload allocation, can be compared to any historical or
"before" data to detect how changes in water quality impact beneficial uses.
Further comparisons using a mathematical  model can also be used to predict
current and future water quality conditions with and without the treatment
process.  The result is an actual measurement, either qualitative or
quantitive, of the water quality effects of the discharge and associated
treatment processes on water quality and water uses.

    The following  tasks outline sample procedures  that  snould be considered  in
designing a  "before and after"  study program.   In  addition, a report entitled
"Before and After  Comparisons of Water Quality Following Municipal Treatment
Plant  Improvements" is available in which thirteen before .and after case
studies were performed; see the bibliography appendix.  This guidance  and  the
case study report  also addresses some  of the other beneficial consequences
that can result  from  such a program, as listed below.

    o   These studies  can also  be  used to determine  the need for  additional
        treatment  or  the need for  revision  of the  water quality  standards.

    o   Comparison of  the  "before  and  after" water quality conditions  can  be
        used  to  determine  the accuracy of wasteload  allocation predictions  and
        the  appropriateness  of  the  wasteload allocation procedures  and
        assumptions.

    o   These studies  can  detect  previously unknown  causes of water  quality
        problems that prevent attainment  of beneficial  uses.

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 I.   Project Selection Criteria

     The following general criteria can be used to select the types of projects
 best suited for  "before and after" analyses.

 -    Municipal or industrial treatment facilities which have significantly
     improved their performance or installed new unit processes.

     Non-complex planning situations to simplify the development of
     relationships between the discharge loadings and the water quality
     response.

 -    Projects should have some water quality data, either biological and/or
     chemical, which represents the "before" conditions.  However, projects
    without "before" modeling should also be included to determine the extent
     to which water quality improvements can be demonstrated without "before"
    data or modeling.  For example,  if only a State policy was used to justify
    a project,  the collection of "after" data will  be useful in either
    verifying or refuting the assumptions which form the basis of the policy.

 -   Projects with both detailed "before" modeling work and biological  data are
    particularly useful.

-   Projects should  have  historical  performance data for the major discharges
    in the study area.

    Selection should not  be biased toward projects  that are considered to
    provide the  greatest  water quality improvement.   Understanding which
    planning situations  (type  of receiving water and treatment process)
    provide only a  small  water quality improvement  are also useful.

-   Projects can cover several  types  of  receiving waters,  treatment processes
    and the level  of technical  justification,  as  listed below.

    Receiving Waters:

    o   Streams/rivers -- high,  medium,  low  and  intermittent flows
    o   Lakes -- long and short detention  times, deep  and  shallow
        oligotrophic  and  eutrophic.
    o   Others — estuaries, oceans,  bays, etc.

    Treatment Levels:

    o   Secondary
    o   Nitrification
    o   Tertiary  filtration
    o   Nutrient  removal
    o   Others

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    Justification Levels;

    o    Detailed modeling with data                                       .   n
    o    Simplified modeling with or without data; e.g.,   simplified Modeling
        Methodology
    o    Data  analysis  only; e.g.,  loading calculations or biological data
        analysis
    o    State policy supported by  data
    o    State policy with no  data

II.  Assess  the "Before"  Water Quality Condition

    Gather  the following types of  data  for each  project.

    o    Facility planning information including  the  "before",  "after"  and
        projected  flow conditions, loadings,  population  served and  types  of
        processes.

    o    Plant performance data that corresponds  to the period  that  water
        quality data was collected; e.g.,  flow and concentration.

    o    Hydrologic  data  used  to  determine  the critical condition; i.e.  7Q10.

    o    Water quality  data  used  to support the modeling  and other data which
        characterize water  quality prior to  the  completion  of  the construction
        project.

    o    Water quality  data  for waters other  than the project receiving water
        which may  also exhibit an  improvement; e.g., projects  which include
        elimination of discharges  as  part of a regionalization of wastewater
        treatment.

    o    Data which characterizes the  biological  integrity of the receiving
        water.  This  data  is  particularly useful in  assessing  water quality
        improvements.

    o   Model or data  analysis documentation.  Information  should  include:
        model type or analysis used,  rates selected, assumptions used  during
        calibration,  sensitivity/uncertainty, and other  information wln'ch is
        needed to  reconstruct the  WLA.

    o   Water quality  standards  currently in effect  for  the receiving  water.

    Compile raw data in a  form  that can be used  to evaluate the "before"  water
    quality situation.  For example,  plot DO, nutrients, SOD,  BOD,  and model
    rates versus  river mile; prepare bar graphs of  point and nonpoint source
    loadings in lake situations; map  locations of dischargers  and  sampling
    stations.

    Identify data  that indicate  a  water quality  problem, both  upstream and
    downstream of the discharges.   What parameters are significant?  Compare
    this "problem" data to any  standards in  effect such  as DO.  Which

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    standards are being violated under existing conditions?  What is the
    spatial  and temporal  extent of the problem?

    Summarize the "before" water quality condition.

III. Assess  the Predicted Water Quality Improvement

    Reinterate the conclusions of the original  wasteload allocation (WLA).

    o   If previous modeling work was used to justify  the project,  outline  the
        water quality response that the model  predicted; e.g.,  DO improvement,
        reduced spatial  extent of problem, etc.

    o   If a loading analysis was used in the WLA, summarize the impact that
        the  loading reduction is predicted to have and document the rationale
        used to relate the reductions to improved water quality.  For example
        if ammonia toxicity was used as a basis  for  justifying  nitrification,
        what was the reduction in unionized ammonia  levels that was predicted
        to occur downstream of the plant?

    o   If no modeling or other analyses were used to  determine permit
        limitation (e.g., State policy was used  in lieu of a WLA),  summarize
        the  rationale used to support the limitation for each specific project
        and  determine from this the "assumed"  water  quality improvement.

    Describe the predicted water quality improvement in terms that  can be
    measured in an "after" water quality study;  e.g.,  DO,  nutrient,
    chlorophyll  "a" concentrations, BOD, algal  type, SOD,  etc.   In  other
    words, identify the  parameters that should  be measured in an "after" study.

    Determine the sensitivity of the WLA and the impact of the  uncertainty  on
    the ability of the project to achieve the  predicted water quality
    improvement.

IV.  Collect  and Compile  Post-Operation Water Quality Data

    Design the "after" survey similar to the "before"  survey in terms of the
    time of  year and day, temperature,  location,  etc.  so that consistent
    comparisons can be made.   Note that some revisions to  the "before" survey
    design may be necessary in designing the "after" survey.

    In particular,  collect data that will  clarify the  uncertainties of the
    previous WLA and further describes the water quality problem.

    If modeling was previously used,  collect data that are needed to refine
    key rates or other data to verify previous predictions.

    If plant was not justified by a wasteload allocation modeling study  or was
    justified by a  State  policy,  collect data necessary to develop  a
    calibrated model  which will  reflect the "after"  water  quality condition.
    Back calibrating the  model  to reflect the  "before" plant loading condition
    can then be used as  the basis for comparison.

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    Collect "after"  data on  all  waters  affected  by  the  project under
    evaluation.   For example,  if the  project involves  regionalization  of
    wastwater treatment, the water quality improvement  resulting from  removal
    of a discharge should be documented.

    If "before"  biological  data  is available (fish  population,
    macroinvertebrate diversity, algal  types,  etc.) collect similar "after"
    biological  data.

    Collect biological  data  upstream  and  downstream of  the plant to establish
    a background biological  condition.

    Collect any  data that are  used as criteria in water quality standards;
    e.g., DO and coliforms.

V.  Assess the Measured Water  Quality Improvement

    Table 1 describes in tabular form the types  of  "before and after"
    comparisons  and time frames  that  can  be used to estimate water quality
    improvements.  The types of  comparisons are  described in detail below and
    include the  use of loading calculations, model  results such as dissolved
    oxygen and chlorophyll  "a",  biological data  and water use information to
    measure the  improvements in  water quality.

    Several time frames should be used to determine both short and long-term
    improvements.  This distinction is essential in situations where the
    design capacity of the plant has  not  been reached  at the time the  "after"
    data was collected.  Short-term improvements are those actually measured
    by the "after" study and include  the  four comparison categories listed  in
    Table 1.  Long-term improvements  are  those which are expected to occur
    between the time "after" data was collected  and the end of the twenty year
    planning period (i.e.,  when  the plant reaches its  design capacity.)
    Although these long-term improvements must be predicted with a model or
    otherwise estimated from current  information, the  improved reliability  in
    the modeling work afforded by the "before" and  "after" analysis should
    provide additional accuracy  to the original  WLA predictions.  Those
    predicted long-term improvements  are  therefore  also suggested as a
    component of the program design.

    It should be assured in each case that water quality changes measured in
    the "after" survey are due to the plant improvements and not due to a
    change in upstream or background  pollutant loadings.  If the background
    condition has changed significantly (e.g., removal  or addition of another
    discharge),  an additional  comparison  of the-"after" water quality
    condition without the plant improvements will be needed to establish a
    basis for comparison.  The following  techniques can be used to measure  the
    water quality improvements.

    Loading Comparisons (Quantitative) -  Calculate  loadings for parameters
    reduced by the treatment plant under "before",  "after" (current) and
    future conditions.

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Model Comparisons  (Quantitative) - Use the "before" and "after" data to
calibrate and verify a water quality model.  In non-complex water quality
situations, a simplified model can be used.

o    If a model was previously used in the original wasteload allocation,
     recalibrate the model using the "after" data.  Refine the rates used
     in the earlier modeling work if necessary.  Run the models under
     consistent "before" and "after" conditions (e.g., 7Q10, temperature,
     etc,) to provide a basis for comparison.

o    If no model was previously used in the original wasteload allocation,
     use the "after" data to calibrate a water quality model.  To provide a
     basis for comparison change the key rates (e.g., Kd) and input
     variables (e.g., BOD/NH3 loadings) such that the output reflects the
     "before" water quality conditions.

o    Review the model output and determine if plant improvements reduced
     the spatial and temporal extent of DO problems.

o    For projects with nutrient removal to lakes,  a Vollenweider type
     analysis may often be used to measure in-lake phosphorus
     concentrations.  Use available regression techniques to translate
     phosphorus concentrations to chlorophyll  "a"  concentration.  How did
     the plant reduce in-lake phytoplankton concentrations?

o    In cases where SOD is a significant problem and has been measured in
     the "after" survey, use rough estimates based on literature values to
     determine reductions in SOD (i.e., since it is difficult to
     definitively predict reductions in SOD).

Biological  Comparisons (Qualitative)

o    Gather "after" biological  data consistent with "before" data.

o    Use available biological data to subjectively assess the biological
    water quality improvements; e.g.,  fish, macroinvertebrate,
     phytoplankton, habitat, etc.   Use  biological  indexes if possible.

o   Compare biological  data to chemical  data  and  the above reference
     quantitative analyses.   This will  help determine relationships between
    chemical  criteria and biological  responses.

o   Determine the extent to which the  biological  response  is due to the
    plant improvements.

Use Comparisons (Qualitative)

Determine the extent to which  the above  comparisons show that uses have
been improved by the project.   Did the water  quality improvement result in
an improved fisheries which in turn result in greater use  of area  waters
for fishing?  Use the above chemical  and biological  comparisons to
determine whether the plant improvement  lead  to an improvement  in
fisheries potential.

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                                       7

    o   If possible,  contact  local  fish  and wildlife  offices  to  determine  if
        uses  have  increased;  e.g.,  number  of  fishing  licences.   Contact  local
        citizens to determine if  casual  use has  increased.

    o   Did water  quality  improvement  result  in  improved  boating,  swimming or
        shell fishing  uses? Use the above  chemical  and  biological  comparisons
        to determine  whether  the  plant improvement  lead to  an improved
        potential  for these users.

    o   If possible,  contact  local  health  departments to  determine if the
        number of  days when shellfish  beds of swimming  areas  were  closed has
        decreased.

    o   Did the project improve the quality of a drinking water  source?

    o   Did the project result in attainment  of  water quality standards?
        Compare the measured  or predicted  water  quality improvements  to  the
        water quality standards for the  receiving water.   If  it  is determined
        that  standards will not be attained with the  current  project, use  the
        model  or other predictive tool to  determine whether additional
        treatment  will significantly improve  water  quality  or attain  standards.

    o   Identify reasons for  non-attainment of standards  other than the  point
        source discharge.   For example,  do toxic compounds, nonpoint  sources,
        sediments  or  previously unidentified  pollution  sources prevent
        attainment of water quality standards?

VI.  Summarize Water  Quality  Improvements

    Summarize the  water quality and use  improvements  for  each type of
    treatment process and receiving water.

    Summarize the  types of data and analyses  that are best  suited  to
    quantifying water quality improvements.   Categorize by  type  of treatment
    and receiving  water.

    Identify  the planning situations (treatment  process and receiving water
    type) that result in the  greatest water quality improvement  at the  least
    cost.

    If standards were not attained with  the treatment process, determine
    whether additional treatment  or further analysis  of the water  quality
    standards is needed.

    Compare the predicted and measured responses.

    If the responses  are significantly different, determine what assumptions,
    reaction rates,  state policies or WLA procedures  caused the  prediction to
    be inaccurate.

    Identify the anomalies in State waste!oad allocation  procedures and  make
    appropriate changes.

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                                        8

                                     Table 1

                               Sample Comparisons
                           Water Quality  Improvements

                                 Short-term(Z)                Long-term  (3)
                                 Improvements         Improvements(20 years)
Analysis                 "Before"(U   "After"        With Project  Without"
Project

1.  Loading Comparisons

    COD/UOD/BOD
    NH3/N02/N03
    Phosphorus
    coliforms
    metals, other

2.  Modeling Comparisons

    DO
    chlorophyll "a"
    Phosphorus
    SOD

3.  Biological Comparisons

    Fish populations
    Diversity Indexes
    Habitat Improvement
    Turbidity

4.  Use Comparisons

    General  Descriptions (Aesthetics)
    Swimming days
    Shell fishing Harvesting days


(1) Water quality condition measured before construction of the  project.

(2) Water quality condition measured during post-operation water quality
study.  If the plant has recently  come on line,  this condition most likely
will not represent future flow (population) conditions  modeled in the original
wasteload allocation.

(3) Water quality condition projected to the  end of the  20 year  planning
period.   Comparison of the improvement with and  without  the processes under
evaluation can be used to predict  future water quality  improvements.   Note
that the original  model  should be  corrected based on the comparison of
"before" and "after" data and model  results oefore projecting long-term
improvements.

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       APPENDIX D



NATIONAL MUNICIPAL POLICY

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                                   APPENDIX  D

                            NATIONAL  MUNICIPAL  POLICY

                  UNITED STATES  ENVIRONMENTAL PROTECTION  AGENCY

                               STATEMENT  OF  POLICY


    When the Clean Water  Act  (CWA) was passed in 1972,  Congress  gave  municipal-
ities  until  1977  to  comply  with  its requirements.    Congress  authorized  the
Environmental  Protection  Agency (EPA) to  extend  the deadline  to 1983 and  then
again to July  1,  1988, for some  municipalities.   In addition, Congress  amended
the CWA in 1981 to modify the basic  treatment  requirements.   Therefore, Congress
has  authorized  EPA  to  give  some  municipalities   several  additional  years  to
achieve compliance and  has  also provided more reasonable treatment  requirements
for certain types  of  facilities.

    The CWA  requires  all  publicly  owned  treatment  works  (POTWs)  to meet  the
statutory  compliance  deadlines  and to achieve the water quality  objectives of the
CWA, whether  or not  they  receive Federal   funds.   The  EPA  will  focus on  POTWs
that previously  received Federal  funding  assistance and  are  not  currently  in
compliance with their  applicable  effluent  limits,  on all other major  POTWs,  and
on.  minor  POTWs that  are contributing  significantly to an  impairment of  water
quality.   EPA's goal will  be  to obtain compliance by POTWs as  soon  as possible,
and  no  later than July 1, 1988.   Where there  are extraordinary  circumstances
that preclude compliance  of such  facilities by July 1,   1988, EPA will  work  with
States  and the  affected  municipal  authorities  to  ensure that these  POTWs are on
enforceable schedules  for achieving compliance as  soon  as possible  thereafter,
and  are doing  all  they can in  the meantime to abate  pollution to  the Nation's
water.

                             IMPLEMENTATION  STRATEGY


    The Agency  is  committed  to pursuing a  clear  course  of action  that fulfills
the  intent of  Congress  and  results in the maximum  improvement  in water quality.
The Agency is  also committed  to protecting the public's financial  investment in
wastewater treatment facilities.   To meet  these  objectives,  the Agency  expects
EPA regions and states  to adhere to the National  policy stated above  and to  use
the following mechanisms to carry out the intent of  this  policy.

    EPA regions will  cooperate  with their respective states  to develop  strategies
that describe  how they  plan  to bring noncomplying  facilities  into  compliance.
These  strategies  should  include a complete inventory of all  noncomplying
facilities,  should   identify  the  affected municipalities  consistent  with  the
National policy, and  should describe a plan to bring these  POTWs  into  compliance
as  soon as possible.   Regions  and states will  then use  the annual  state  program
grant negotiation  process to  reach agreement on the  specific  activities they  will
undertake  to carry out  the plan.


                                       D-l

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    Based on the  information  in  the  final  strategies, the  permitting  authority
(Region  or  approved  National  Pollutant  Discharge Elimination  System  (NPDES)
State)  will require affected  municipal  authorities  to  develop one  of the
following as necessary:

        Composite  Correction Plan:    An  affected  municipality  that  has  a
        constructed  POTW that  is not in compliance with its NPDES  permit effluent
        limits  will   be  required  to develop a  Composite  Correction Plan  (CCP).
        The  CCP  should describe the cause(s) of noncompliance,  should outline the
        corrective actions  necessary to  achieve  compliance,  and should  provide a
        schedule for completing the required work and for  achieving  compliance.

        Municipal Compliance Plan:   An affected municipality that  needs to
        construct a  wastewater treatment  facility  in order to  achieve compliance
        will be required to develop a Municipal Compliance  Plan  (MCP).   The MCP
        should  describe  the  necessary  treatment  technology and  estimated cost,
        should  outline the  proposed sources and methods of financing the proposed
        facility (both construction and  operation  and maintenance),  and  should
        provide  a schedule  for achieving compliance as  soon as  possible.

    The permitting  authority  will  use the information in these  plans  and will
work  with the  affected municipality  to  develop a  reasonable  schedule for
achieving compliance.   In  any case,  where the affected  municipal  authority is
unable to achieve compliance  promptly,  the permitting authority will, in addition
to setting  a schedule  for  achieving full  compliance,  ensure that  the POTW
undertakes  appropriate  interim  steps  that lead  to full   compliance as  soon as
possible.   Where  there  are extraordinary circumstances  that make  it impossible
for an affected municipal  authority to meet a  July 1,  1988, compliance date, the
permitting  authority will  work  with  the affected municipality  to establish  a
fixed-date  schedule  to  achieve  compliance  in the  shortest,  reasonable  period
of time thereafter, including interim abatement measures as  appropriate.
The general goal is to establish enforceable compliance schedules  for all
affected municipalities  by  the  end of  FY  1985.     Once   schedules  for affected
municipalities   are  in  place,  the  permitting  authority   will  monitor  progress
towards  compliance  and  will  take  follow-up  action  as   appropriate.     Nothing
in this policy  is intended  to impede  or  delay  any  ongoing or  future enforcement
actions.
                                   OVERVIEW


    EPA headquarters will overview the  implementation  of  this  policy to ensure
that actions taken by regions  and states are consistent with  National  policy and
that the  Agency as  a  whole  is  making  progress towards  meeting  the statutory
deadlines and achieving the water quality objectives of the CWA.
                                      D-2

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            APPENDIX E



PRESENT WORTH AND COST PREFERENCE

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                                    APPENDIX  E
                    PRESENT  WORTH  AND  COST  PREFERENCE  EXAMPLES

Example 1:  Varying O&M Cost, Staged Construction, and SaTvage VaTue

Given:

    sewage treatment plant
    capacity:  year 1-10, 5 mgd; years 11-20, 10 mgd;
    average flow through plant:  increase linearly from 2 mgd to 10 mgd over 20
    years;
    planning period:  20 years;
    salvage value at end of 20 years;   $750,000;
    capital cost of plant (5 mgd);  $2,000,000;
    future capital cost at year 10 to expand to 10 mgd;  $1,500,000;
    O&M costs:

    a.   constant annual O&M cost, years 1-10:  $84,000;

    b.   variable annual O&M cost, years 1-10; increases linearly from
         $0-$29,000 in year 10;

    c.   constant annual O&M cost, years 11-20:  $155,000;

    d.   variable annual O&M cost, years 11-20:  increases linearly from
         $0-$29,000 in year 20.

         discount rate:  8 1/8%

Determine:    Present worth and annual equivalent unifrom cost of plant over 20
              years.

Method:  Present worth equals capital  cost plus present worth of the operating
and maintenance costs.  Calculate O&M costs from year 10 and O&M costs for
years 11 through 20 separately.  Also add present worth of expansion and
subtract present worth of salvage value from present worth of other costs.
Equivalent uniform annual costs equals the present worth times the appropriate
capital recovery factor.

Step 1:

Initial capital cost 	  $2,000,000

Step 2:

Present worth of expansion cost which  occurs at year 10, times single payment
present worth factor @ 8 1/8% for 10 years.   Thus:

$1,500,000  (.458)  	  $  687,000


                                       E-l

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Step 3:

Calculate present worth of O&M costs as follows:

a.  Present worth of constant annual years 1-10 equals given cost times uniform
    series present worth factors @ 8 1/8% for 10  years.   Thus:

    $84,000 (6.672) 	  $  560,450

b.  Present worth of variable O&M costs years 1-10 equals gradient series
    ($2,900) times present worth factor of a gradient series @  8 1/8% for 10
    years.  Thus:

    $2,900 (25.769) 	 $  74,730

c.  Present worth of constant O&M costs year 11-20 are first calculated as in
    (a) above using given cost for years 11-20.  This, however, yields present
    worth in year 11 which must be converted to present worth in year 1.  This
    is accomplished by multiplying present worth  (year 11) times single payment
    present worth factor @ 8 1/8% for 10 years (.458).  Thus, present worth in
    year 1 equals:

    $165,000 (6.672)(.458)  	  $ 504,200

d.  Present worth of variable O&M costs years 11-20 are first calculated as in
    (b) above using gradient series for years 11-20 which is $2,900.  This
    yields present worth in year 11 which again must be converted to present
    worth in year 1 by multiplying present worth  (year 11) times single payment
    present worth factor 8 1/8% for 10 years (.458).  Thus:

    $2,900 (25.769) (.458) 	 $   34,230

Step 4:

Present worth of salvage value at end of 20 years equals that value times
single payment present worth factor @ 8 1/8% for 20 years.  Thus:

$750,000 (.210)  	  $  157,500

Step 5

The sums of values obtained in steps 1, 2, and 3 minus value obtained in step 4
equals present worth of plant.  Thus:

initial capital  cost 	 $2,000,000
present worth of expansion at year  10   .... $  687,000


                                        E-2

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present worth of constant O&M years
  1-10	$  560,450
present worth of variable O&M years
  1-10   	$   74,730
present worth of constant O&M years
  11-20	$  504,200
present worth of variable. O&il years
  11-20	$   34,230
Total	$3,860,610
Subtract from total the present worth of salvage value:
present worth of salvage value 	 $  157,500
PRESENT WORTH of plant 	 $3,703,110
Step 6:
Multiplying present worth of plant (Step 5) times the capital recovery factor
@ 8 1/8 for 20 years will yield equivalent uniform annual equivalent cost.
Thus:
$3,703,110 (.1028) 	 $  380,680
                                       E-3

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Example 2:  Present Worth Analysis of Onsite System Alternative


    Given:

         individual onsite treatment systems consisting of:
         a.   rehabilitation,  upgrading or replacement of onsite systems for
              200 existing homes;
         b.   major rehabilitation of 10 onsite systems per  year;
         c.   construction of  100  onsite systems for new homes.
         planning period: 20 years
         salvage value at end  of 20 years: $120,000
         capital costs:
         a.   rehabilitation,  upgrading, replacement of 200  existing systems:
              $400,000
         b.   rehabilitation of 10 systems per year: $20,000 per year
         c.   construction of  100  new systems (5 per year for 20 years):
              $13,000 per year*
         average annual operation  and maintenance cost (onsite management
         program for 500 systems):  $25,000 per year
         discount rate: 8 1/8  percent

Determine:  Present worth and  equivalent uniform annual cost over 20 years.

Method:  Present worth equals  initial capital cost plus present worth of future
capital costs plus present worth of operation and maintenance costs.  Subtract
present worth of salvage value.  Equivalent uniform annual costs equals the
present worth times the appropriate capital recovery factor.

Step  1:

Initial capital cost  	   $400,000

Step  2:

Calculate  present  worth  of annual  capital costs as follows:

    a.    annual capital  costs equal  $20,000 per year plus $13,000 per year
          equals $33,000  per year.
    b.    present worth of annual  capital  cost  equals given cost  tines the
          uniform series  present worth  factor at 8-1/8% for 20 years.  Thus:

$33,000  (9.728)   	  $321,000

*Not  eligible for  EPA grant funding
                                        E-4

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Step 3:

Present worth of annual O&M cost equals annual O&M costs times the uniform
series present worth factor at 8-1/8% for 20 years.  Thus:

$25,000 (9.728)  	 $243,200

Step 4:

Present worth of salvage value at end of twenty years equals that value times
the single payment present worth factor at 8-1/8% for 20 years.  Thus:

$120,000 (.210)  	 $ 25,200

Step 5:

The sum of values obtained in steps 1,2, and 3 minus the value obtained in
step 4 equal present worth of alternative.  Thus:

Initial capital cost 	 $400,000
Present worth of future capital costs  ....  321,000
Present worth of O&M 	  243,000
Total	$%4,800

Subtract from total the present worth of salvage value:

Present worth salvage value  	 $ 25,200
PRESENT WORTH of alternative 	 $938,800

Step 6

The present worth just derived times the capital recovery factor at 8-1/8% for
20 years will yield equivalent uniform annual cost.  Thus:

$938,800 (.1028) 	 $ 96,500
NOTE:  When comparing conventional  systems with alternative systems all costs,
eligible and ineligible,  must be considered,  including service lines and
hookup fees.
                                      E-5

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Example 3:  Land Application

Given:

    sewage treatment plant
    capacity:  4.0 mgd
    planning period:  20 years
    capital cost:  $7,300,000 including land cost of $137,000
    average annual operation and maintenance cost:  $246,200
    average annual crop yield $20,000
    discount rate:  8-1/8 percent
    salvage value excluding land:  $2,236,200

Determine:  Present worth over 20 years.

Method:  Present worth equals the sum of capital cost plus present worth of
the annual O&M minus the present worth of the average annual crop yield minus
the present worth of the salvage value (Note:  Land values must be appreciated
at 3 percent/year before a salvage value is computed).

Step 1:

Capital cost 	 $7,300,000

Step 2:

Present worth of an annual cost equals annual cost times the uniform series
present worth factor @ 8-1/855 for 20 years.  The present worth of crop
production is subtracted from the present worth of O&M to give the present
worth of annual costs for the system.

O&M:     $246,200 (9.728) 	  $2,395,000
Crops:     20,000 (9.728) 	  $  194,600
PRESENT WORTH of annual costs 	  52,200,400

Step 3:

Compute the future value for the land by multiplying the present value of land
by the compound amount factor @ 3 percent for 20 years.

Future value:  $137,000 (1.806)  	 $  247,400

Step 4:

Compute the total present worth of the salvage value by multiplying the  value
at the end of 20 years times the single payment present worth factor @ 8-1/8
percent for 20 years.  Thus:

Land:  $247,400 (.210) 	 $   52,000
Treatment plant 2,236,000 (.210) 	 $  469,500
Total	$  521,600


                                       E-6

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Step 5:

The sum of the value obtained in Step 1 and 2 minus the value obtained in
Step 4 equals present worth of the plant.  Thus:

Initial capital cost  	 $ 7,300,000
Present worth of annual costs 	 $ 2,200,400
Total	$ 9,500,400
    Subtract from total the present worth of
      salvage value:
      present worth of salvage value  .... $   521,600

PRESENT WORTH of plant  	 $ 8,978,800

Note:  If the land used for land application is purchased or leased by the
municipality, the land is considered a cost to the project and therefore does
enter into the present worth analysis.  If a sharecropping arrangement exists
between the municipality and the farmer,  only the profits/losses realized by
the municipality are used in the present  worth analysis (Chapter 7).
                                      E-7

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EXAMPLE 4.   Application of I&A Cost Preference

Given:

    A proposed project includes portions which are classified as
    nonconventional (innovative or alternative technology).   These components
    are the primary and secondary processes (pretreatment and land application)
    but sludge disposal is by conventional technology (sanitary landfill).

    The present worth costs (including building,  land,  engineering fees,  bond
    sale fees and start-up services) of the proposed system  and the most
    cost-effective conventional system are shown  below.

                        Most Cost-Effective                 Proposed
                           Conventional                  Nonconventional
                              System                    Technology System
                         Capital  PresentCapitalPresent
                          Cost     North*               Cost       Worth  *
    Primary              $  100   $  110               "$   TT     J3T~
    Secondary               720      753                  830         905
    Sludge Disposal         873      971                  873         971
    Total                $1,593   $1,834               $1,734      $1,911

    includes O&M

Determine:     Whether the nonconventional technology system  is cost effective
              by application of cost-preference procedures described in
              Chapter 7.

    a.    $971 (total present worth of conventional component of nonconventional
         technology system)

    b.    $ 971 = 51% (percentage of total present worth represented by
         1,911        conventional components; Note-:  more than 50%)

    c.    (1)  $110 + $753 = $863  (present worth  of replaced components in  the
                                  most cost-effective conventional system)

         (2)  $863 (1.15) = $992.45 (application  of cost preference multiplier)

         (3)  $992.45 + $971 = $1,963  (determination of cost ceiling)

Result:  $1,911  is less than $1,963; therefore, proposed nonconventional
         technology system is considered'cost effective and  may be selected by
         grantee.

GRANT CALCULATION:

    Capital costs  of nonconventional technology components (85% grant)
         $31 + $830 = $861 (.85)  	$  731.85
    Capital Costs  of conventional components  (75% grant)
         $873  (.75)	$  654.75
    Total Grant  	 $1,386.60

                                       E-8

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            APPENDIX F



FARMERS HOME ADMINISTRATION (FmHA)

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                                   APPENDIX F

                           FARMERS  HOME ADMINISTRATION


    The United  States  Department of Agriculture  (USDA)  is the  Federal  Govern-
ment's lead agency for support of rural  development.  Most USDA programs to help
finance the  planning  and building  of  better  rural  community facilities  are
administered  through the Farmers Home Administrarion (FmHA).   They represent the
largest Federal   source  of  community  facility  loans  and grants  specifically
for rural  needs.

    FmHA  financial  assistance is  available  for original   installation  or
improvement of  waste disposal  systems.   Projects  may be located  in  or  serve
towns of not more  than  10,000 population and open countryside. FmHA regulations
pertaining to  the community  facility programs  are 7  CFR  Part 1942,  Subpart  A
and 7 CFR  Part  1942,  Subpart  H.

    The local  share of  an Environmental Protection Agency  project  plus  the
ineligible costs  associated  with  that  project  may  be financed  by  the  FmHA.
Applicants are  encouraged  to contact the FmHA as  early  in the project planning
phase as possible.

    Inquiry about  applying for an FmHA loan or grant may be made at FmHA County,
District or State Office.  Office  locations  are  listed in the "U.S. Government"
section of telephone  directories  under  "Department  of Agriculture".Office
locations  can  also  be  obtained  by  contacting the  Farmers Home Administration,
U.S. Department of Agriculture,  Washington D.C. 20250.
                                      F-l

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       APPENDIX C

SUPPLEMENTAL INFORMATION
   FOR LAND ACQUISITION

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                                   APPENDIX G

                  SUPPLEMENTAL INFORMATION FOR  LAND ACQUISITION


 Applicable Regulations:

     Any land acquired in conjunction with  federally funded projects is subject to
 the  Uniform  Relocation  Assistance  and  Real  Property  Acquisition  Policies  Act of
 1970 (P.L.  91-646).   EPA  regulations  implementing P.L.  91-646 are  found  in CFR
 Part 4.  All appraisals setting the fair market  value of  land to be acquired must
 be  consistent  with  "Uniform  Appraisal  Standards for  Federal  Land  Acquisition"
 prepared by the Interagency Land Acquisition Conference and available through the
 Government Printing Office (GPO Stock Number 052-059-00002-01).

     Costs  in excess  of just compensation  (based  on  appraisals,  your  record
 of   negotiations,   or  condemnation  proceedings   or  determined by the  Regional
 Administrator)  are unallowable for  grant assistance, therefore, you should  obtain
 your reviewing agency's approval  that the  proposed purchase price represents just
 compensation for the property.

     EPA  regulations  require  you  to record EPA's  interest in  real  property
 acquired with  construction  grant  funds,  and  to obtain approval  to use  the
 property for other purposes,  and  to  request  instructions  from  EPA  on   how  to
 dispose  of  the property  (40  CFR 30.535).   The recorded title to  the  property
 should include the following language:

       Federal  Lien:   Federal  grant  funds have been  used to  purchase this
       property.   The United  States  interest  is  	  percent  (depending  on
       the Federal Share at the  time of  grant award)  of the  proceeds from
       any  subsequent  sale  or current  fair  market  value  of the  property
       (40 CFR  30.535).   A lien  to  this  effect and extent is thereby  asserted.

     The final  payment  request is  not released  until municipalities  demonstrate
 that  the  recorded title  documents  include  the above  paragraph  or equivalent
 language protecting the Federal  interest (40 CFR 30.535).

 Professional  Land  Acquisition  Staff:

     It is most  advisable to have all land  acquisition carried  out  by acquisition
 professionals  with  experience  in   working  with  the  Federal  requirements  and
 eminent domain  procedures.   If the  grantee does not have access  to  a  professional
 land acquisition staff with experience  in  working with  P.L.  91-646,  arrangements
 should be made  to  consult  or contract with outside professionals.

    The Federal Highway Administration has  right-of-way offices in each State's
capital  city and  their staff can  provide an overview  of acquisition expertise
within the State,  including  State  professional  and  independent  contractors as
well  as  advice on a  land acquisition plan.   Each State  has  department of


                                       6-1

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transportation or  right-of-way  offices located  in  the capital  city.   Most  of
these  State offices  can provide acquisition assistance to  the acquisition
responsibility.   Some  States  have other  professional  staff available, such  as
State parkes or State  general services  administration.   Some  counties  or  nearby
cities may  also  be able  to  provide  professional  assistance.    Most  Federal  and
State  offices  have lists  of qualified  appraisers  whom  they  employ when  they
require additional  appraisals  for  their  projects.

Appraisals:

    The  grantees should make every  effort to  ensure that the appraiser  has
sufficient knowledge and experience in  the type of appraisal problem to be solved
and  is  thoroughly  familiar with  local  conditions and  property values.    It  is
necessary  to  check  credentials  and  experience  of  independent  professionals
thoroughly.  The use of city, county,  State, or Federal staff has the advantage
that they have met  the  requirements of  their  job descriptions which increases the
probability of getting  qualified  professionals.

    There are professional   appraisal organizations which  sponsor training,
publish  guidance and  information, require proof of  attainment  of expertise for
certification or  professional designation in the organization  and monitor work
performed by  their  members.   Appraisers who  are certified or designated members
of  these organizations  are required  to follow the organization's Code of Ethics
and  are   subject to  disciplinary actions and  dismissal for failure to  perform
according  to the  standards  of the  organization.    A  list of  appraisers  for a
given  area  can  be obtained  from the  headquarters  officers  of  each  appraisal
organization:

         American Institute of Real Estate Appraisers
         400 N. Michigan Avenue
         Chicago, Illinois 60611

         American Society of Appraisers
         Post Office Box 17265
         Washington, D.C. 20041

         American Society of Farm Managers and Rural  Appraisers
         Post Office Box 6857
         Denver, Colorado 80206

         National Association  of Independent  Fee Appraisers
         7501  Murdoch
         St.  Louis, Missouri 63119

         Society of Real  Estate Appraisers
         645  North Michigan Avenue
         Chicago, Illinois 60611

     It  is  mot  desirable to select  knowledgeable local  appraisers who hold
 memberships  in  one or more of these  organizations  and can demonstrate expertise
 in the type of appraisal to  be  performed.   For  further information, contact  the
 land acquisition coordinator  in your EPA Regional Office.


                                        6-2

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 Appraisal  Review:

     If the  grantee does  not  employ  or  affiliate with  an  agency  that employs
 qualified  review appraisers on  its staff, some  other  means of appraisal review
 by appropriately qualified  individuals should be  found.    Various  methods such
 as the  use of  independent fee  appraisers  (members  of  professional   appraisal
 organizations)  or  qualified  appraisal review  personnel  from  county,  State,  or
 Federal  agencies could be used.   If the  estimated fair market value of the land
 to be acquired  is greater than $100,000,  two appraisals should be obtained.  The
 reviewer would approve  one of the  appraisals  or request additional appraisals.

 Negotiation:

    There  should be no negotiation with the landowner prior to the establishment
 of an amount of just  compensation following the  appraisal  of the real property
 and review of the  price  to  be  offered by the reviewing agency.   The land owner
 or the landowner's designated representative  must be  given an  opportunity  to
 accompany  the  appraiser during the  inspection of  the  property.  Some limited or
 modest increase  above the approved  appraised  value may be paid to avoid the cost,
 time,  and  public relations problems  involved with condemnation if approved by the
 Regional  Administrator.   However, the  grantee  should  be   prepared  to initiate
 eminent domain proceedings if  the  required land  cannot  readily be acquired for a
 reasonable price.

 Options:

    Options may be used to  tie  up  land  if purchase money is  not readily
 available.   Land  can  be optioned  or purchased  as soon  as  all  environmental
 documents  have  been approved  and  the  site  has  been determined to  be  suitable.
 However,  approval  must be obtained from  the Regional  Administrator to acquire
 grant-eligible land prior to  Step 3  award.   A satisfactory  argument  for  early
 purchase  can usually be  based on  an  anticipated increase  in land  cost  and  on
 difficulty  in obtaining assurances that the land will remain available.

 Eminent Domain:

    The grantee  should  determine  whether  it has eminent domain  authority  before
 proceeding  with  an  alternative requiring  land  acquisition.   The  State attorney
 general's  (AG) office can be consulted for this determination and  may handle any
 required action.

    The A6  can also advise on  time required  to  complete any condemnation action,
whether the  State has  quick-take  enabling legislation,  whether the  magnitude  of
the  project or  other  considerations  indicate  that project-specific  quick-take
legislation should be considered an how complicated these procedures  would  be.

Relocation:

    Title  II  of   P.L.  91-646,  Uniform  Relocation  Assistance, contains  specific
provisions regarding the  Federal share  for moving  and related expenses,  replace-
ment  housing  payments,  and relocation  assistance advisory  services.   Title  II


                                        G-3

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applies  if  a person  is  displaced as  a result of  a Federally  assisted  project
(40  CFR  4.103, for  the  determination  of  displaced persons).   The Federal  and
State offices  previously  discussed work with  relocation  under this Act  and  can
provide  necessary guidance.    Relocation  eligibility  and   payments  should  be
determined  by  or  in  consultation with  experienced relocation  personnel.    The
grantee is expected to provide relocation assistance in a timely fashion in  order
to allow expeditious  land acquisition.

Alternatives to Acquisition:

    It is advisable to explore leasing or other arrangements  for land application
as alternatives to fee-simple acquisition.   Some farmers may be willing  to take
effluent  or sludge  at nominal  cost  or  no cost,  or even  provide payment  for
wastewater for irrigation.

Site Selection:

    It is essential to complete all studies required to establish the suitability
of the contemplated site  before any  acquisition actions  are  taken.   If condemna-
tion is anticipated,  a court order may be required to complete these studies.   If
the city's  attorney is not familiar  with  condemnation  procedures, the  State AG's
office can usually provide advice or handle any required action.

Records;

    Grantees  should  maintain  all  of  the  requisite land acquisition  background
information and documents in a readily accessible  form.
                                        G-4

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      APPENDIX H

     WET WELL AND
DRY WELL CLASSIFICATION

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                               APPENDIX H

              PROCEDURE FOR THE ELIMINATION OR MINIMIZATION
                      OF EXPLOSION RELATED PROBLEMS
     The following guidance contains good engineering practices.  Since
it is not the intent of this guidance to modify or replace any
appropriate safety requirements and regulations published by the
Occupational Safety and Health Administration  (OSHA) or the National
Fire Protection Association (NFPA), it is recommended that the
guidelines be used to supplement these and other appropriate safety
requirements and codes.

I.   Classification of Wet Wells and Dry Wells for Sewage Lift Stations

     A.   Wet wells and dry wells for sewage lift stations should be
          classified in accordance with article 500 of the National
          Electric Code (NEC)* as found in NFPA publication 70.
          Classification is based principally on whether a flammable
          mixture may be present:  (a) under normal operating
          conditions; or (b) only under abnormal operating conditions or
          equipment breakdown (including lifting of submersible
          equipment for inspection, maintenance or repair).  The
          classification of wet wells and dry wells for sewage lift
          stations must be site specific and established by
          investigation of the conditions for each installation.

          1.   Wet Wells;   Wet wells should be classified on a
               case-by-case basis depending on design, type, and
               intended use.  Guidance for classification of wet wells
               is presented in Figure I.  The following definitions
               can be used in classifying wet wells:

               (a)   Wet Well:   A wet well is a below ground structure
                    designed to accept and temporarily store wastewater
                    for the purpose of pumping.  A wet well may or may
                    not contain electrical equipment such as pumps,
                    motors, wiring and wiring devices, controls, light
                    and other accessories.

               (b)   High Hazard Wet Well:   A wet well which can be
                    expected to receive significant inflow of flammable
                    liquids including all wet wells serving combined
                    sewer systems or serving separate sewer systems that
                    receive flow from industrial sources or those
                    commercial sources such as paint or hardware stores
                    which regularly handle large quantities of volatile
                    or flammable liquids.

*A11 references to NEC found in this guidance means publication No.  70 -
 1984 edition published by the National Fire Protection Association
 (NFPA)
                                 H-l

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               (c)  Low Hazard Wet Well:  A wet well not reasonably
                    expected to receive significant inflow of flaninable
                    liquids.  This includes wet wells serving separated
                    sewer systems for primarily residential sources
                    and/or those commercial sources not handling large
                    quantities of volatile or flammable liquids.

               (d)  Closed Wet Well:  A wet well lacking natural or
                    mechanical ventilation as defined below.

               (e)  Naturally Ventilated Wet Well:  A wet well built
                    with at least one ventilator designed to effectively
                    utilize wind pressure and/or thermal convection to
                    remove gas from the wet well.

               (f)  Mechanically Ventilated Wet Well:  A wet well
                    equipped with continuously or intermittent (time
                    clock) operating mechanical ventilation (totally
                    isolated from the dry well ventilation)  providing at
                    least 10 air changes per hour and equipped with
                    failure alarm.  Intermittent operations must have a
                    minimum of four (4) operations per hour.


                                FIGURE I

                         WET WELL CLASSIFICATION


TYPE     WITHOUT VENTILATION*    NATURAL VENTILATION     MECHANICAL VENTILATION

High
Hazard   Class 1 - Division 1    Class 1 - Division 1    Class 1 - Division 2
Wet Well

Low      Class 1 - Division 1    Class 1 - Division 2    Class 1 - Division 2
Hazard


* Not permitted in most States

          2.   All electrical equipment in the wet well should comply
               with Article 501 of the NEC for Class 1 - Division 1 or 2
               locations as shown in Figure I.  This includes pumps,
               motors, controls and control wiring, lights, power wiring
               and wiring devices and other accessories.
                                    H-2

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3.   Submersible equipment used in wet well classified as
     Division 1 should be either explosion-proof or meet one
     of the four (4) conditions of Article 501-8(a) of the
     NEC.  "Guaranteed Submergence" as interpreted, by EPA,
     from paragraph (4) of this Article means that under
     normal operating conditions the pumping equipment is a
     minimum of 6 inches below low water level at all times
     when the pump is operating.  Double low water cut off
     switches should be used to provide additional safety in
     case of level switch failure.  When "guaranteed
     submergence" is used, sensors to automatically
     de-energize the equipment when liquids falls below a set
     level should be used.  Loss of submergence should, in
     addition to de-energizing the motor, generate an alarm
     similar to that used for high water level.  The motor can
     be re-energized automatically when submergence is
     regained, but the alarm should require manual reset.
     When "guaranteed submergence" is used in place of
     explosion-proof, the pump should have double or tandem
     mechanical seals with outboard seal failure detectors.
     The motors should have terminal board connections which
     are isolated from the motor windings by a separate O-ring
     gasketed chamber or the splice caps should be completely
     incapsulated in epoxy.  The motor should also have
     thermal sensors that limit the motor winding temperature
     in accordance with Section 500-2 (b)  of the NEC Code.

Additional maintenance may be required for installation
utilizing "guaranteed submergence" because of solids
accumulation which may occur in these wet wells.  O&M manuals
should address any additional requirements or procedures.

4.   When oil filled submersible motors are used in Division 1
     or 2 locations they should be equipped with thermal
     detectors designed to de-energize the equipment before
     internal motor temperature reach ignition levels.  Over
     temperature should also generate an alarm similar to that
     used for high water level.  The motor can be re-energized
     automatically when cooled, but the alarm should require
     manual reset.

5.   Submersible equipment used in wet wells classified as
     Division 2 may be, but are not required to be
     explosion-proof.   Motors may be squirrel cage induction
     motors which have no brushes, switching mechanisms or
     similar arc producing devices as described in Article
     501-8(b) of the NEC code.

6.   Flexible cords may be permitted in Division 1 or 2
     locations for submersible pumping equipment designed for
     quick removal.  The flexible cords should be classified
     for use with portable utilization equipment and should
     meet all the requirements of Article 501-11 of the NEC.
                       H-3

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          Flexible cords used with submersible pumps should be
          approved for extra-hard usage and should have an oil
          resident outer jacket.

     7.   Grinder pumps, septic tank effluent pumps and other
          residential pumping units associated with onsite
          wastewater treatment or used to convey wastewater from
          individual dwelling units or clusters are exempt from
          these requirements and are not specifically covered by
          this guidance.  However, the guidance may be used for
          onsite systems where applicable or in the absence of
          other state or local guidance or requirements.

     8.   Non-sparking pumps and guide rail systems for submersable
          equipment are not required for Division 1 or 2 locations.
          When non-sparking guide rails systems are not used however,
          special precaution may be required during abnormal
          operating conditions.  Wet well atmospheres should be
          tested for explosive mixtures and forced air ventilated,
          if necessary, before the pumping equipment is raised for
          inspection, maintenance or repair.  Any wet well alarm
          signal should alert operating personnel of possible
          hazardous gas conditions.

     9.   All wet wells classified as Division 1 locations should
          be narked "Danger-Hazardous Gases".  Operations and
          maintenance manuals should indicate all wet well
          classified as Division 1 locations and should outline
          necessary normal and abnormal operating procedures.

B.   Dry Wells:  Dry wells should be classified on a case-by-case
     basis depending on design, type and intended use.  In general
     dry wells may be classified one class lower than the
     associated wet well.  Guidance for classification of dry wells
     is presented in Figure II.

     1.   The following definitions shall be used in classifying
          dry wells:

          (a)  Dry Wells:  A dry well is an above or below ground
               structure designed to house personnel, controls or
               equipment associated with pumping of wastewater.
               The dry well should have no openings such as hatches
               or doors, (except with gas tight seals or gaskets),
               unpacked pipe sleeves, untrapped drain pipes (unless
               equipped with ball valves or other dry environment
               or seal device)  etc., by which vapor might be
               conveyed from the wet well.  Dry wells should have
               no open surfaces of wastewater except such channels
               and sumps as are necessary to efficiently remove
               seal leakage, condensation and building drainage.   A
               dry well may or may not contain electrical equipment
               such as pumps, motors, wiring, controls lights and
               associated wiring devices and other accessories.
                            H-4

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               (b)  High Hazard Dry Well:  A drywell pumping water from
                    a high hazard wet well using pumps not equipped with
                    fresh water seal purging.

               (c)  Low Hazard Dry Well:  Any drywell pumping from a low
                    hazard wet well or a dry well pumping from a high
                    hazard wet well using pumps equipped with fresh
                    water flushing of shaft packings or seals.

               (d)  Closed Dry Well:  A dry well lacking natural or
                    mechanical ventilation as defined below.

               (e)  Naturally Ventilated Dry Well:  A dry well built
                    with at least two widely separated ventilators
                    designed to effectively utilize wind pressure and/or
                    thermal convection to move air through the dry well.

               (f)  Mechanically Ventilated Dry Well:  A dry well
                    equipped with continuously or intermittent (time
                    clock) operating mechanical ventilation (totally
                    isolated from the wet well ventilation) providing at
                    least 5 air changes per hour and equipped with
                    failure alarm similar to that provided for wet well
                    high level alarm.  Intermittent ventilator
                    operations must have a minimum of four (4)
                    operations per hour.  The dry well must also have
                    adequate drainage or sump pumping to remove the
                    maximum expected leakage from the failure of the
                    shaft seal or packing of any one pump.

                                FIGUPE II

                         DRY WELL CLASSIFICATION
	WITHOUT VENTILATION     NATURAL VENTILATION   MECHANIC VEMTLATION

High
Hazard     Class 1 - Division 1   Class 1 - Division 2      Unclassified
Dry Well

Low
Hazard     Class 1 - Division 1      Unclassified           Unclassified
Dry Well


* Not Permitted in Most States.

Note: All dry well ventilation must comply with all OSHA requirements
and all building and safety codes for personnel occupied working areas.


                                    H-5

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     2.    All electrical equipment in dry wells  should comply with
          Article 501  of the NEC  for Class  1  - Division  I, Division
          2,  or unclassified locations  as shown  in Figure II.  This
          includes pumps, motors,  controls  and control wiring,
          lights, power wiring and wiring devices and other
          accessories.

     3.    Pumping equipment used  in dry wells classified as
          Division 1 should be either explosion-proof or meet one
          of  the four  (4) conditions of Article  501-8(a) of  the
          NEC.

     4.    Pumping equipment used  in dry wells classified as
          Division 2 may be, but  is not required to be explosion
          proof.  Motors may be open enclosed motors, such as
          squirrel-cage induction motors without brushes, switching
          mechanisms or similar arc producing devices in accordance
          with Article 501-8(b) of the  NEC.   Other types of  motors
          and controls may  also be used in  Division 2 locations  as
          also described in this  article.

     5.    Flexible cords should not be  used in dry wells classified
          as  Division  1 or  Division 2 except  as  specified by the
          NEC.

     6.    Non-sparking pumps and  accessories  may be used, but are
          not required for  Division 1 or Division 2 dry  wells.

     7.    In  case of dry well  ventilator failure alarm,  the
          atmospheres  should be tested  for  explosive mixture before
          entering the dry  well and/or  before any electrical
          equipment including  non-explosion proof lights are
          energized.   Continuous/volatile hydrocarbon analysers  are
          recommended  for all  dry wells.

     8.    O&M manuals  should indicate all dry wells classified as
          Division 1  locations and should outline necessary  normal
          and abnormal operating  procedures.

C.   Explosion-Proof Equipment:  Explosion-proof equipment means
     any equipment acceptable  under the following conditions:

     1.    If it is accepted, or certified,  or listed, or labeled,
          or otherwise determined to be safe  by  a nationally
          recognized testing laboratory,  such as, but not limited
          to, Underwriters' Laboratories, Inc.,  and Factory  Mutual
          Engineering Corporation, or
                               H-6

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          2.   With respect to an installation or equipment of a kind
               which no nationally recognized testing laboratory
               accepts, certifies, lists, labels or determines to be
               safe, if it is inspected or tested by a Federal agency,
               or by a State, municipal, or other local authority
               responsible for enforcing occupational safety provisions
               of the NEC, or

          3.   With respect to custom-made equipment or related
               installations which are designed, fabricated for, and
               intended for use by, a particular customer, if it is
               determined to be safe for its intended use by its
               manufacturer on the basis of test data which the employer
               keeps and makes available for inspection to Federal,
               State an/or local authorities.

II.  Classification For Other Pumping Fxpoipment Installations

          In general, pumping equipment and all other electrical devices
     installed in other areas of a wastewater treatment plant should be
     reviewed during the design phase in order to determine if any
     explosion hazards may exist.  It is the responsibility of the
     designer to evaluate these spaces under the rules outlined in NFPA
     documents 70, 70C and 497 and API document KP500A for electrical
     equipment classification.  Pumping installations where explosion
     hazards may exist and that can not be eliminated, should be
     equipped with continuous/volatile hydrocarbon analysers with
     appropriate alarms.

III. Explosion Hazards From Volatile Compounds

          All sewer use ordinance should include a clause that prohibits
     the discharge of volatile or flammable compounds that may cause
     explosion hazards.   Experience has demonstrated, however,  that in
     spite of sewer use ordinances,  illegal discharges or accidental
     spills occur.  Therefore, specific contingency plans are encouraged
     for all pumping stations serving sewer systems where volatile
     compounds may be discharged accidentally or illegally.
                                    H-7

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          APPENDIX I



CONSTRUCTION INCENTIVE CLAUSE

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                                  APPENDIX I

                         CONSTRUCTION INCENTIVE CLAUSE

                      THE EPA CONSTRUCTION GRANTS PROGRAM
  I.  Purpose

    This clause  defines  a  "construction  incentive  change  proposal" (CICP)  and
establishes the policy and  procedures  for  the application of  CICPs in the
construction grant  process  of  the Environmental  Protection Agency's (EPA)
construction grants  program.

 II.  CICP

    A.  Definition:   A  CICP is a formally written  proposal  for  a  change  order
        during the construction  of  a wastewater treatment project  funded  under
        the  EPA construction grants  program.   A  CICP must  be initiated,
        developed,  and  identified  as such  by  the contractor or  subcontractor.
        A CICP must  result  in  a gross capital saving  of $50,000 or more.

        A CICP  must  result in  a net  capital  cost  reduction  while causing  no
        increase in  the  total life  cycle cost of  the  project  and meeting  the
        following conditions.

        1.   The required  function, reliability, and safety of  the  project will  be
            maintained.

        2.   The proposed  change will  not result in any contract rebidding.

        3.   The proposed change must be in  compliance with Section  204(a)(6)  of
            the Federal  Water Pollution  Control  Act Amendments  of 1972  which
            prohibits proprietary  and  restrictive  specifications   for  bids  in
            connection with  construction grant projects.

        4.   The proposed  change will  not cause undue  interruption  of the  contract
            work.

        5.   The proposed change  must be  in compliance with  local  permits  and
            regulations.

    B.  Applicability:   All contracts for the  construction of wastewater treat-
        ment projects funded under the EPA construction grants program.

    C.  Content:   A CICP  must contain pertinent  information  and supporting
        documents  for evaluation by  the  involved contracting  authority.   As  a
        minimum, the  following  information should be  included.

        1.   Name of  individuals  associated with the development  and preparation
            of the CICP.
                                      1-1

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    2.  A detailed description with duly signed plans and specifications of
        the present design and the proposed changes.   Clear identification of
        any advantages  and disadvantages for each change.

    3.  A  detailed  procedure  and  schedule  for implementing  the proposed
        change.   This should include  all  necessary  contract  amendments
        and the latest  date the CICP must be approved for  implementation.

    4.  A summary  of estimated costs to include the  following:

        a.   project construction costs before and after the CICP.   This
            should be  a detailed estimate identifying the  following items for
            each trade  involved in the CICP.

            1.   quantities of materials and equipment
            2.   unit prices of materials and equipment
            3.   labor  hours and rates for installation
            4.   subcontractor  and prime contractor mark-ups

        b.   operation  and maintenance costs before and after the CICP;

        c.   costs  for  implementing the  CICP not included  in item  4a above;

        d.   contractor's share of the savings based  on paragraph III below;

        e.   other  data as required  the construction grants  regulations for
            change orders (40 CFR Part 33 and Part 35).

        f.   time required for executing the proposed change.

To the  extent  indicated  below,  contractors may  restrict  the  EPA's  and the
project owner's use  of any  construction  incentive change proposal  or the
supporting data submitted pursuant to  this  program.  Suggested wording for
inclusion in CICPs is  provided below:

    "This data  furnished pursuant to the construction incentive clause of
     contract 	 shall  not  be  disclosed beyond  that  which  is
     necessary to accomplish  the  review,  or duplicated,  used,  or
     disclosed, in  whole or in part,  for any  purpose other  than to
     evaluate  change  proposals  submitted  under   said  clause.   This
     restriction does  not limit the Government's right to  use information
     contained in this  data  if it  is or  has been  obtained,  or  is
     otherwise  available,  from the  contractor,  or   from  another  source,
     without limitations.   If such  a proposal is accepted by the owner
     under said contract after the  use of this data in  such an  evalua-
     tion,   the United States  Environmental   Protection  Agency  and  the
     project owner shall  have the right to duplicate, use, and disclose
     any data  reasonably necessary  to the  full  utilization  of such
     proposal as accepted, in any manner and  for any purpose whatsoever,
     and have others do also."
                                  1-2

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    The grantee may,  subject to approval  by  the  State  and EPA, modify,  accept, or
reject the CICP.  However,  if  a CICP  is  modified  or is  not  acted  upon  within the
time  frame  specified in the  CICP,  the  contractor may  withdraw,  in  part or in
whole, the CICP.   In any event, the  grantee will  not be  liable for the  cost of
developing the CICP withdrawn or rejected.

    When a CICP  is  accepted by the grantee, the  processing procedure  for change
orders should be used and approval of the CICP  by the State and EPA  is required.
When a CIP is rejected,  the contractor may  not  appeal  to EPA.

III.  Sharing Provisions

Construction Cost Sharing

    Upon acceptance of a CICP, the contractor will share the  net  capital  savings
pursuant to  this contract based on the  formula below.   Computation for  the net
savings is to be based on the following formula:

        Net capital savings  =  (Initial  construction  cost  - revised
                                construction cost) -  (CICP  development
                                cost  + CICP  implementation  cost)

    The CICP  implementation cost  should include, when  appropriate,  consultant's
fee for reviewing and redesigning the changes.   However, costs for processing the
CICP  incurred by the grantee, State and EPA are excluded.

    The contractor's  cost for  developing  the   CICP is  limited to that  directly
associated with the preparation of the  CICP package.   When  approved, such
costs  will  be  reimbursed  to the contractor.   However, any  costs which  cannot
be  satisfactorily  substantiated  will  be  rejected and will  not  be  subject to
reimbursement.

Sharing Formula

    a.  When the total  cumulative  net savings  based  on the computation  above is
        $1 million or less, the contractor will  receive  50  percent of the saving.

    b.  When the total cumulative net savings exceed $1  million, the  contractor's
        share will  be computed based  on the following  formula:


                               y  = .2x + 300,000


where:

    y  =  contractor's share in dollars

    x  =  total net saving in dollars


    For example, if the total net saving is $3,572,000

                  y  = .2($3,572,000) + 300,000  =  $1,014,400


                                       1-3

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   APPENDIX J



EPA PROJECT SIGN

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         APPENDIX K

  FINANCIAL AND MANAGEMENT
CAPABILITY INFORMATION SHEET

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                      GUIDANCE FOR  IMPLEMENTING THE  POLICY
                     ON FINANCIAL AND MANAGEMENT  CAPABILITY
                 FOR PUBLICLY OWNED WASTEWATER TREATMENT SYSTEMS
Introduction
    The decision to construct a wastewater treatment facility  represents  a
major financial commitment by a local government.  Consequently,  there  is a
need for each construction grant applicant to determine  prior  to  actual
construction whether the community and  its residents have  the  financial  and
institutional capability to pay for and manage the proposed  system.   This need
has been clearly recognized by the Policy on Financial and Management
Capability for Publicly Owned Wastewater Treatment Systems.rne  Policy
implements the financial capability demonstration requirement  contained  in the
Clean Water Act and the revised construction grants regulations.   The Policy
sets forth a series of five questions that all grant applicants must  answer in
order to demonstrate their financial capability.

    The Policy also outlines the responsibilities of the grant applicant, the
States and the Regional Offices.  In order to assist these three  major
participants in implementing the Policy effectively, several guidance
documents have been developed and are now available.  These  documents include:

      o  The Financial Capability Guidebook
      o  The Financial Capability Summary Foldout
      o  Suggested Screening System Elements
      o  The Reviewer's Checklist
      o  Analysis for Correcting High Cost Projects

    These documents are described below following a summary  of the Financial
and Management Capability Policy itself.  Copies of the Suggested Screening •
System Elements, the Reviewer's Checklist, and the Analysis  for Correcting
High Cost Projects is attached to this document (Attachments A, B and C,
respectively).  The Financial Capability Guidebook and Summary Foldout can be
obtained from the EPA Regional Offices.  Figure 1 illustrates  the relationship
of the guidance materials to the Policy.

Financial and Management Capability Policy

    The policy on financial and management capability requires that grant
applicants demonstrate their financial and management capability  to construct,
operate and maintain a wastewater treatment system before  receiving
construction grant assistance.

    The financial  capability analysis necessary to support the required
demonstration must answer Five Basic Questions and the answers must be
reviewed by the State before recommending grant assistance.  The  questions  are:

      o  What is proposed in the facilities plan?
      o  What roles and responsibilities will local  government have?

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       o  How much  will  the facilities  cost at today's prices?
       o  How will  construction  and  operation of the facilities be financed?
       o  What are  the  annual  costs  per household?

     Although the demonstration  may  be  presented in any format, a series of
 Wastewater  Facilities  Financial  Information Sheets are presented with the
 Policy as an example of how the  information required to demonstrate financial
 capability  might be displayed.   Other  examples  of formats  which may be used
 include a financial plan,  a separate chapter in the facilities plan, or
 procedures  as prescribed by a delegated State,  provided that the five basic
 questions contained in  the Policy are  adequately addressed.

     In addition to providing  answers to these questions, the applicant must
 consider  the community's financial  condition and must certify in writing that
 it  has the  necessary financial  capability  to construct, own  and operate the
 treatment system.  A sample letter  of  certification is attached to the Policy.

     Applicants proposing to construct  a facility to serve  two or more
 jurisdictions must submit  an  executed  intermunicipal  service agreement that
 shows  how costs will be  allocated among the participating  jurisdictions.  This
 requirement  may, however,  be  waived by the  Regional  Administrator or delegated
 State  under  certain circumstances.

     Although  all financial  capability  demonstrations  should  be reviewed using
 the  Reviewer's Checklist,  the level of detail required in  the review by the
 State  (or Region)  depends  on  how likely the project  is to  have financial
 problems.  The Policy requires that States  develop  screening procedures for
 identifying  communities  whose projects need greater  attention due to their
 high cost, possible technological inappropriateness,  or potential  financial
 impacts.  This "first cut"  determination of a project's potential  for being
 high cost is  to be done  using a  simple screening  system and  should help State
 reviewers to  focus their attention on  the most  critical projects.   The
 Suggested Screening System  Elements and the Reviewer's Checklist are described
 in greater detail  later  in.this guidance.

     For the  financial  capability policy to  be effective, it  is  essential  that
 problem projects be identified early enough  during  the planning  and  design
 phases  to accommodate readily any necessary  corrective actions.   The need to
 consider  financial  and management capability early  during  the project
 development  is required  by  the construction  grants  regulations  which state
 that "the facilities plan will also demonstrate  that  the selected  alternative
 is implementable from legal, institutional,  financial  and management
 standpoints."

 Guidance Available to Assist in the Implementation of  the  Policy

    The Financial  Capability Guidebook

    To assist grant applicants to answer the five questions  contained  in the
 Policy, EPA has prepared the Financial  Capability Guidebook  which  is  available
from your State agency or EPA Regional  Office.   The Guidebook  also
provides a method to evaluate the community's financial condition.   The
Guidebook is structured around two basic information  sheets:   the  Wastewater

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Facilities Financial Information Sheet and a Supplemental Information Sheet.
The Wastewater Facilities Financial Information Sheet provides a format that
can be used to answer the five questions.  This Information Sheet is optional
and is attached to the Financial and Management Capability Policy.  The
Supplemental Information Sheet is provided to assist in evaluating the
community's financial condition.  Although it is not an EPA requirement to
complete this Information Sheet, communities may find it useful in evaluating
whether they could successfully finance the system or should investigate  lower
cost alternatives.

    The Guidebook contains several worksheets that need to be completed in
order to fill out the information sheets.  Specific instructions are provided
for completing each worksheet as well as suggestions and examples of how  the
necessary information may be obtained.  To complete the worksheets, it may be
necessary to have the assistance of the community's financial official and
engineering consultant.  The results of the analysis will not only prove
invaluable to local municipal officials charged with the decision making
responsibility for the project, but will also provide local taxpayers with
sufficient information to allow them to express their opinions based upon
factual information.

    Financial Capability Summary Foldout

    An abbreviated version of the Guidebook (The Financial Capability Summary
Foldout) has been developed for use by communities who do not need detailed
guidance for conducting the financial analysis necessary to answer the five
questions required by the Policy and to consider the community's financial
condition.  The Summary Foldout is most suitable for situations where the
current project represents a relatively small portion of the community's  total
system or where user costs are low enough that the proposed project will  have
little impact on the community.  The Summary Foldout follows the same
methodology as the full size Guidebook and includes a simple and brief
introduction to the system of financial analysis used in the Guidebook.

    Suggested Screening System Elements

    A list of elements suggested for use in screening projects to determine
which ones warrant intensive review is included in Attachment A.  They are
presented to help States to develop their own screening procedure based on
local conditions.  The procedure should be short, objective, and useable  by
staff without financial capability experience.  The screening should take
place early in the planning process and continue periodically through the
review of the Step 3 grant application.  If, at any time, the project should
fail the screen, steps should be taken to initiate a detailed financial
capability review of the project before it is allowed to proceed.

    At the Step 3 grant application stage the project should be subjected to
one last screening.  If it passes, the Reviewer's Checklist should be used to
simply verify that the community has answered the five Policy questions.  If,
however, the project fails the screen at this stage, a more intensive review
of the project should be conducted.  The Reviewer's Checklist is specifically
applicable to this review.  In these cases, the reviewer should use the
Checklist as a systematic approach for thoroughly evaluating whether the

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applicant has accurately answered the five policy questions and certified his
financial capability to construct, own and operate the system.  The reviewer
should also make sure that those communities whose projects receive a more
intensive review have adequately considered the community's financial
condition.

    Reviewer's Checklist

    The Reviewer's Checklist (Attachment B) is intended to assist delegated
States and Regions in assuring that construction grant applicants have
adequately demonstrated their financial and management capability.
Specifically, the Checklist can be used by State and Regional project
engineers or others who have responsibility to review and evaluate an
applicant's answers to the five questions which form the basis of the
financial capability demonstration.

    Format and Use:  the Checklist is formulated around the five questions and
also contains a question about the Letter of Certification required in the
policy.  The Checklist should be used to verify the applicant's demonstration
and to evaluate more thoroughly those projects for which the applicant may not
have the necessary financial and management capability.

    Positive responses (i.e., "yes" answers are positive) to the questions in
the Checklist generally indicate that the applicant may have the required
financial and management capability.  Negative responses should encourage the
reviewer to take a closer look at the application.

    In using the Checklist, reviewers should use judgement in weighing the
relative importance of each question.  Negative answers to many of the
questions may indicate a potentially serious problem requiring further
analysis and action.  One or two negative responses related to less critical
questions or marginal shortcomings may not require further analysis.  In any
case, the reviewer should use professional judgement and specific knowledge of
the applicant's situation.

    Since the applicant is not required by EPA to submit its demonstration
(i.e., the answers to the five questions) in any specified format, the
reviewer may need to consult other sources of information to complete the
Checklist.  Such sources include the facility plan, the environmental
assessment or finding of no significant impact, a capital improvement plan or
any available financial reports issued,by the community or local financial
institutions.  These sources should be used to confirm questionable or
inconsistent data or to fill information gaps in the applicant's submission.
However, the reviewer should not do the applicant's analyses required for the
demonstration.  One of the primary purposes of the policy is to encourage
communities to understand the financial impacts of their projects.  Missing
information in the demonstration may indicate that the community has not
developed or reviewed the information and thus is unable to make informed
decisions.

Reviewer's Findings:  If the reviewer feels that the applicant has the
financial capability, he should recommend grant award.  If, however, after
using the Reviewer's Checklist, the reviewer determines that the project may
be high cost and impose too high a financial burden on the community, the
following steps are suggested:

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      1. The community should be contacted and informed of the reviewer's
         findings.  Important information should be confirmed and unclear
         areas questioned.  Through discussions with the community  and  its
         engineers, the reviewer should satisfy himself that he understands
         the nature and extent of the problem and can identify the  causes.

      2. If the reviewer believes that the project is still high cost but 1)
         not so expensive that it will impose a burden beyond the resources of
         the community and 2) that the community is aware of the cost and
         willing to undertake the commitment, the reviewer should recommend
         the grant be awarded.

      3. If, in the judgement of the reviewer the project is clearly too
         expensive for the community's resources, action should then be taken
         to modify the project such that the community can afford it.  Any
         action which significantly changes the project or causes delays
         should be undertaken as a last resort.  With limited grant funds
         available and intense competition for priority, projects which must
         be redesigned or changed significantly may run the risk of losing
         grant funding.  Guidance to assist States and grantees to  chart a
         course of action to correct a problem is contained in Analysis for
         Correcting High Cost Projects (Attachment C).

    Analysis for CorrectingHighCost Projects

    The Reviewer's Checklist is useful for determining whether a particular
project is  a problem relative to the community's financial and management
capability.  The Checklist does not, however, identify corrective actions to
take when a problem is discovered.   In many cases the causes of the problems
identified  by the Reviewer's Checklist are obvious and lead directly to the
appropriate action.  The Analysis for Correcting High Cost Projects
(Attachment C)  was developed to assist in those cases where the appropriate
action is not readily apparent.

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                                   ATTACHMENT A

                       Suggested Screening System Elements


     It  is  the  delegated  States'  responsibility to  establish a screening system
 to  identify  projects  that  have  a high  probability  of  encountering financial
 difficulties.   The  projects  identified by  this screening system must receive
 very close scrutiny by State reviewers to  ensure that communities have
 adequately considered the  financial  impact of proposed projects and that the
 communities  have  the  capability  to construct, own  and operate the systems.   If
 this more  intensive review discloses that  the project is financially sound,
 the State  should  recommend grant award.   If,  however, this  review indicates
 that the community  may encounter financial  difficulties, the State should work
 with the community  to explore less costly  alternatives,  seek additional
 funding from other  sources,  revise the financing or revise  the scope of the
 project.

    The screening system used by the State may be  based  on  qualitative
 characteristics about the  grant  applicant  or  quantitative indicators about the
 project cost.   Some suggested indicators are:

 o   Size of  Community -  In general most high  cost  problems  occur in smaller
    towns  which have  fewer resources,  are  less densely populated and
    consequently  are  unable  to take  advantage of economies  of scale associated
    with larger wastewater systems.  Thus, all  projects  for communities  under
    a certain  size  (e.g.,  10,000,  3,500 or  another number devised by the State
    based  on local  experience).could be identified by the screen.

 o   Extent of  Sewers  - Sewers often drive  up  the cost of otherwise sound
    projects.  All  projects  installing  sewers  for  the first time or projects
    with a high proportion of cost resulting  from  sewers should be looked  at
    more closely.

 o   Type of Technology Proposed  -  Projects with expensive and sophisticated
    operation  and maintenance (O&M) requirements for  relatively small
    communities should be  identified for a more detailed investigation.
    Technologies such as activated sludge, physical-chemical  treatment  or  any
    of a number of  advanced  treatment  technologies for small  communities tend
    to be operationally  complex  and costly.

 o   Capital Cost Per  Household - National figures  indicate  that new projects
    for which the total   capital   cost per household exceeds  $6,000 are
    generally high cost.    The figure for communities  with some  existing  sewer
    service  is $4,000.   These figures  are for  total cost, exclusive of outside
    funding.   States may want to use values based on  their  own  local
    experience.

o   Total  Annual Cost  Per  Household - On a national basis,  projects  tend to  be
    high cost when the total   annual cost per household exceeds  $250.   States
    may want  to change this figure based on reduced Federal   share  and  on  local
    economic  conditions.

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                                  ATTACHMENT B

                              Reviewer's Checklist


I.    What is proposed In the facility plan?

      o  Is the project described in the grant consistent with the facilities
         plan and/or the FONSI?

      o  If the project is for a community with population under 10,OOOi/» is

         the selected alternative appropriate?-/

      o  Have the basic assumptions in the facility plan concerning either
         population growth or economic base remained the same or have they
         been updated?

II.   What roles and responsibilities will local governments have?

      o  If an Intergovernmental Service Agreement is required, has it been
         executed and is it current?  Has the requirement been waived?

      o  Does the agreement contain 1) the basis upon which costs are
         allocated, the formula by which costs are allocated and the manner  in
         which the cost allocation system will be administered and 2)
         provisions for a cost-accounting system to assure auditability of
         regional operations and costs?

      o  Has the applicant executed agreements for large users?

      o  Has the management agency(ies) stated clearly the roles and
         responsibilities it will undertake in financing, constructing,
         operating and maintaining the proposed facilities?

III.  How much will the facilities cost at today's prices?

      o  Are the engineer's cost estimates complete and in current prices?

      o  Does the cost estimate include all future projects including future
         segments or phases necessary to complete the wastewater treatment
         system?
I/    Experience indicates that problems associated with high cost project  are
      generally confined to communities with populations under 10,000.  Thus,
      the 10,000 population figure is a reasonable cut-off point for certain
      questions even though small communities are defined in the construction
      grant regulations as having less than a 3,500 population or dispersed
      portions of larger communities.

y    Appropriate technology as used in the Checklist is the least cost system
      that the community has the means to build, operate and maintain  and that
      provides adequate wastewater treatment.

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o   Total Annual Cost Per Household as a Percentage of Median Income -
    National values previously used are:

         1.0% if median income is less than $10,000
         1.5% if median income is between $10,000-$17,000
         1.75% if median income is more than $17,000

    States are encouraged to develop figures better matched to local economic
    conditions.  States may also want to expand this indicator and look at the
    financial impact of the project on low income users by looking at the cost
    as a percent of the bottom quartile of income or a certain range of income
    levels rather than the median income.

o   Capital Cost of Treatment Per 1000 Gallons Per Day of Capacity - When the
    cost of building a treatment facility exceeds $3,000 per 1,000 gallons
    capacity, the technology proposed may be inappropriate.

o   Annual Operation, Maintenance and Replacement (0,M&R) Cost Per Household -
    When the O.M&R for a project exceeds $100 per household, the treatment
    technology selected may be too complex for the community.  Unlike capital
    cost, O.M&R will increase in the future as labor, materials and energy
    costs increase.  If O.M&R costs are high initially, the system is starting
    at a disadvantage.

o   Size of Project Relative to Existing Facilities - If the increase in
    household cost of an upgrade or expansion is less than 20% of the existing
    household cost, the project may not need a more intensive review.

o   Reasonableness of Projected Population Growth - If the projected annual
    rate of growth is over two times the historical annual rate of growth
    based on available Federal or local census or other reliable sources, the
    project may need a more intensive review.

    The State should develop a screening system as soon as possible using a
combination of the above screening elements or any other the State feels will
allow it to target its efforts at reviewing potentially high cost projects.
The screen can be applied at appropriate review points (e.g., review of the
FONSI, facility plan, or final design).  The earlier a project is identified
as high cost, the easier it is to correct.

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                                    Figure 1

                 Guidance Material for Implementing the Policy
                     on Financial  and Management Capability
                for Publicly Owned Wastewater Treatment Systems
                         CONSTRUCTION  GRANTS  REGULATIONS
                      |     FINANCIAL  CAPABILITY POLICY    \
                                       _L
                                    GUIDANCE

                                       FOR
    GRANT APPLICANTS
STATE AND REGIONAL REVIEWERS
    FINANCIAL CAPABILITY GUIDEBOOK
SUGGESTED SCREENING
SYSTEM ELEMENTS
    FINANCIAL CAPABILITY SUMMARY FOLDOUT    -  REVIEWER'S CHECKLIST
    LESS COSTLY WASTEWATER TREATMENT FOR
    YOUR TOWN  I/
ANALYSIS FOR CORRECTING
HIGH COST PROJECTS
I/  Available from the Facility Requirements Division (WH-595) USEPA
    401 M Street, S.W., Washington, D.C.  20460

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                                       2

IV.   How will  the construction and operation of the facilities be financed?

      o  Has the grant applicant presented a realistic plan for financing the
         local  cost of the facilities?

         - Is the local share of the costs accurately estimated?

         - Have existing and future EPA grants been correctly estimated in
           terms of the future reduction in the Federal share and restricted
           eligibilities?

         - If Farmer's Home Administration, regional commissions, State loans
           or other financing programs are being used, are the negotiations
           essentially complete and the terms realistic in view of the current
           lending practices of these institutions?

         - Is the estimated interest rate and maturity of the bonds realistic
           in view of the community's bond rating and the current bond market?

         - Is the term of maturity of the bonds realistic in view of the
           community's ability to pay (generally greater than 15 years unless
           refinancing is planned)?

      o  If segments are scheduled for funding beyond FY 1986, has the
         applicant shown how it would proceed to complete the project without
         Federal construction grant funds?

      o  Will revenues provided by the initial customers be sufficient to
         cover  the cost of operation, maintenance, replacement and debt
         service?

V.    What is the annual cost per household?

      o  What will be the total system annual cost per household based on the
         current number of users in .the service area?  $	/year.

      o  What is the current annual cost per household?  $	/year.

      o  Has the estimated total annual cost per household including one-time
         fees been presented to the community?

Letter of Certification

      o  Has the letter of certification as required by the policy been signed
         by the applicant?

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                                  ATTACHMENT C

                   Analysis for Correcting High Cost Projects


    Once a State (or Regional) reviewer determines that a project  is beyond
the financial and/or managerial capability of the grantee, it will be
necessary to modify the alternative or the financing arrangements  and develop
another alternative that is financially sound.  Below is a list of specific
actions which have been taken in the past to correct problem projects.

I.    Restructure Financing

      -  Extend bond life:

         By extending the term of a bond issue, the yearly payments will be
         reduced.  In general, bonds should be issued for as long as possible
         commensurate with the expected actual life of the project.

      -  Pursue other funding sources:

         In addition to grants available from EPA, the Departments of
         Agriculture and Housing and Urban Development and other Federal
         agencies may have funds available for constructing wastewater
         treatment systems.

      -  Reduce high up-front costs:

         If the initial hook-up or connection costs are too high they can be
         reduced by several methods.  One would be to include them in the bond
         issue which amortizes their cost over the life of the bond.   House
         laterals,  for example, which are normally the users' responsibility,
         may be financed through the authority's bonds.   Payments can then be
         included on the user's sewer bill.   (Generally,  a lien is placed on
         the property until the "loan" is paid.)   Other methods for reducing
         high up-front costs include use of short term,  no or low interest
         loans from local  banks or local authorities; and extended pay off as
         part of user charges.

      -  Use innovative financing:

         Through the use of innovative financing  methods,  the cost of
         financing  the local share may be reduced significantly.  There are
         various financing  programs available in  States to assist in  financing
         wastewater treatment facilities.   The following  methods should be
         investigated to determine if they are available  in your State.

           o  revolving loan programs administered by the State (initial seed
              money obtained through State appropriation  or sale of bonds)

           o  State backing of local bonds to reduce  the  interest rate (also
              called credit enhancement)

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           o  State bond bank - where a State issues one bond to cover many
              local projects

           o  issuance of small (e.g.,  $500) tax exempt bonds for local
              purchase

           o  use of "double-barreled bonds" or "quasi revenue bonds" which
              assist the grantee to obtain better bond terms or to use State
              (or county) bonding authority to overcome local limits on
              interest rates or total indebtedness.

           o  dedicated sales, mineral  severance, special assessments, excise
              taxes, and lottery receipts for paying local share of capital
              costs

           o  use of contract operations, singly or in conjunction with
              neighboring jurisdictions.

    Information on innovative financing of wastewater treatment systems is
available.  See "Creative Capital Financing:  A Primer for State and Local
Governments"; Government Financial Associates, Inc. New York and "Creative
Capital Financing for State and Local Governments"; Government Finance
Research Center, 1983 Chicago.

II.   Reduce Complexity and other Unnecessary Expenditures

      -  Share support facilities and operations with neighboring jurisdictions

         Sharing of personnel, labs, maintenance equipment and supplies can
         overcome the costly problems of idle staff, no discount small volume
         purchasing and partially utilized facilities.  Sharing in the early
         stages in the life of a facility that will grow in the future can
         reduce cost to the initial users.

      -  Scrutinize the design for cost saving measures

         Many designs for small community projects reflect design standards
         and safeguards that were developed for larger systems.  By
         eliminating items from design that are not essential to operation or
         safety, significant cost savings may be realized.  Examples include:
         replace two lane surface roads with gravel roads wherever possible;
         use block instead of brick construction; use post and chain instead
         of hand rails in non-hazardous areas.  (See Facility Requirements
         Division Information on North Carolina's Value Determination Program
         for a more complete discussion of cost saving design measures.)

III.  Reduce Scope of Project

      -  Eliminate unnecessary sewering through sparsely populated areas

         Extending sewers to outlying areas which surround a developed core  is
         expensive.  Rehabilitating or constructing of alternative onsite
         systems in remote areas may reduce costs.

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      -  Reduce facility size and stage construction

         Sizing pipe or treatment plants for future growth may be too costly
         for present users.  Costs may be lowered by reducing plant size  and
         providing for future growth by means of staging or other methods.
         Cost to current users can be reduced if construction is done in
         stages corresponding to projected need and/or anticipated revenues.
         If projected growth demand does not materialize or is slow, staging
         will reduce the burden to current users.  Also in some cases,
         inadequate hydraulic flow caused by overdesign may increase unit
         operation, maintenance and replacement costs.

      -  Critically evaluate water quality aspects.

IV.    Make Sure That All  Feasible Alternatives were  Adequately Considered in
      the Cost-Effectiveness Analysis

         For a variety of reasons the selected alternative may not be the most
         cost-effective at  the time of construction.   If corrective measures
         in categories I,  II and  III above have not  reduced costs enough to
         make the  project  financially sound,  new alternatives  should be
         considered.   The  foremost alternative should  be reconstruction and
         rehabilitation of  existing  facilities,  especially onsite systems.
         Existing  facilities should  be abandoned only  as a last  resort.   Sand
         filters or other processes  available to treat septic  tank  effluent
         should be considered.  Other alternatives include:

      -   Alternative  sewers  (pressure,  small  diameter  gravity)
      -   Cluster Systems
      -   Trickling  Filters
      -   Lagoons
      -   Sand  Filters
      -   Overland  Flow
      -   Oxidation  Ditches or other  low  load  aeration  technologies

         These technologies  have proven  to be  less expensive particularly  for
         small communities.  Often these technologies were not considered  in
         the original cost-effectiveness analysis or,  if considered,
         inaccurate or outdated construction  and 0,M&R cost data may have  been
        used.

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Friday
February 17, 1984
Part IV



Environmental

Protection  Agency

40 CFR Part 35
Financial and Management Capability for
Construction, Operations and
Maintenance of Publicly Owned
Wastewater Treatment Systems; Final
Policy

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6254
Federal Register / Vol. 49, No. 34 / Friday, February 17, 1984 / Rules and Regulations
ENVIRONMENTAL PROTECTION
AGENCY

40 CFR Part 35

[WH-FRL-2267-5]

Financial and Management Capability
for Construction, Operation and
Maintenance of Publicly Owned
Wastewater Treatment Systems

AGENCY: Environmental Protection
Agency.
ACTION: Notice of final policy.

SUMMARY: This notice sets forth Agency
policy and procedures to ensure that
construction grants applicants
demonstrate their financial and
management capability to construct,
operate, and maintain (including
equipment replacement) a wastewater
treatment system. The policy describes
the statutory and regulatory
requirements for applicants to
demonstrate that they have answered
five questions concerning the total costs
of (he proposed treatment system, how
it v/ill be financed, the total annual costs
per household, and the roles and
responsibilities of local governments
involved. The demonstration must also
include a written certification by
applicants that they have analyzed the
costs and financial impacts of the
proposed facilities and that they have
the necessary financial and
management capability to complete and
successfully operate the treatment
system. The purpose of the policy is to
interpret more fully the relevant
provisions of the final construction
grants regulations and the Clean Water
Act,  as amended, in order to protect
adequately the Federal  investment in
the construction of publicly owned
treatment systems.
EFFECTIVE/EXPIRATION DATE: This policy
will apply to any applications received
in EPA Regional Offices after
publication of this notice in the Federal
Register. It will expire on September 30,
1988.
FOR FURTHER INFORMATION CONTACT
Keith Dearth, Environmental Protection
Agency, WH-595,401 M Street, SW.,
Washington, D.C. 20460, (202) 382-7226.
SUPPLEMENTARY INFORMATION: Under
the Paperwork Reduction Act of 1980, 44
U.S.C. 3501 et seq., the information
provisions in this notice have been
submitted to the Office of Management
and Budget (OMB), and will become
effective upon OMB approval. A notice
of that approval will be published in the
Federal Register.
  Dated: December 13,1983.
Jack E. Ravan,
Assistant Administrator for Water.
                           The authority for this action is found
                         in section 204(b)(l) of the Clean Water
                         Act, as amended.

                         Financial and Management Capability
                         for Construction and Operation of
                         Publicly Owned Treatment Systems
                         /. Statement of Policy
                           It is the policy of the Environmental
                         Protection Agency (EPA) that no grant
                         shall be awarded for the construction of
                         a publicly owned treatment works
                         (POTW) unless  the applicant has
                         demonstrated substantively to the
                         satisfaction of the delegated State (or
                         EPA for non-delegated States) that it has
                         the legal, institutional, managerial, and
                         financial capability to ensure
                         construction, operation  and
                         maintenance (including equipment
                         replacement) of the proposed treatment
                         system.
                         //. Effective/Expiration Date
                           This policy will apply to any
                         applications received in EPA Regional
                         Offices after publication of this notice in
                         the Federal Register. It will expire on
                         September 30,1988.

                         ///. Background
                           The purpose of this policy is to
                         interpret more fully the  relevant
                         provisions of the revised construction
                         grants regulations and the Clean Water
                         Act, as amended, in order to protect
                         adequately the Federal  investment in
                         the construction of publicly owned
                         treatment works. It draws together
                         various statutory and regulatory
                         provisions pertaining to the local
                         financing and management of Federally
                         funded POTWs.
                         Authority
                           The authority for this policy on
                         financial capability is found in the Clean
                         Water Act (CWA), as amended, as well
                         as the revised construction grants
                         regulations. Specifically, each applicant
                         is required to demonstrate its financial
                         capability prior to award of a Step 3  or
                         2+3 grant (40 CFR 35.2104); and the
                         Administrator is required to determine
                         whether the applicant has, in fact,
                         shown sufficient evidence that it has the
                         legal, institutional, managerial, and
                         financial capability to ensure adequate
                         construction, operation and
                         maintenance of the proposed treatment
                         system (section 204(b)(l)).
                         Discussion
                           The decision  to construct a
                         wastewater treatment facility represents
                         a major financial commitment by a local
                         government. Consequently, there is a
                         need for each applicant to determine
                         whether the community and its residents
                         have the financial and institutional
                         capability to pay for and manage the
proposed system prior to actual
construction.
  This need has been clearly recognized
in the Clean Water Act, which requires
that, before awarding a grant, the
Administrator must be satisfied that a
grantee has the adequate legal,
institutional, managerial, and financial
capability to complete and maintain the
proposed wastewater system. This was
further strengthened with the  1981
Amendments, which  state that the
Administrator should encourage and
assist all applicants for grant  assistance
to develop a capital financing plan. The
clear intent, therefore, is that  all
applicants need to assess adequately
the financial impact of the proposed
facility on the community and its users,
and to disclose how the system will be
financed and managed following
construction.

TV. Application
  This policy will apply to all applicants
for a Step 3 or 2 + 3 grant award under
the Amendments to Title II of the Clean
Water Act and  the revised costruction
grants regulations.

V. Implementation
  At the time of application for a Step 3
or 2+3 grant award, an applicant must
demonstrate that it has the legal,
institutional, managerial, and financial
capability to construct, operate, and
maintain the proposed facility. To do so,
the applicant must answer the following
questions:
  1. What is proposed in the facilities
plan?
  2. What roles and responsibilities will
local governments have?
  3. How much will the facilities cost at
today's prices?
  4. How will construction, operation
and maintenance of the facilities be
financed?
  5. What are the annual costs per
household?
  Attachment A * provides a  format that
the applicant may use to respond to the
above questions.
  The applicant must also submit, along
with the Step 3 or 2 + 3 application,
written certification that it has analyzed
the costs and financial impacts of the
proposed facilities and that it has the
capability to finance  and manage the
construction and operation of the
facilities in accordance with the

  1 Attachment A has been provided as an example
of how the information required to demonstrate
financial capability might be displayed. The grant
applicant may use any format he chooses to meet
the requirement, including, as examples, a financial
plan, a separate chapter in the facilities plan, or
procedures as prescribed by a delegated State,
provided that the information required is
adequately addressed. A publication entitled
                               Continued

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            Federal Register  /  Vol. 49, No.  34 / Friday,  February 17, 1984  / Rules and Regulations
                                                                          6255
construction grants regulations. Before
signing the certification the applicant
must consider the responses to the
questions above as well as the
community's financial condition. The
certification should be  signed by an
elected official or chief financial officer
for the municipality authorized to
commit funding. An example
certification letter is provided in
Attachment B.
  An applicant proposing to construct a
wastewater treatment-facility designed
to serve two or more public agencies or
jurisdictions must show how the costs
will be allocated among the
participating jurisdictions or agencies.
Such applicants  must provide an
executed intermunicipal service
agreement which, at a minimum,
incorporates the following information:
the basis upon which costs are
allocated; * the formula by which costs
are allocated; and the manner in which
the cost allocation system will be
administered. Executed intermunicipal
service agreements are to be submitted
with a  Step 3 grant application or before
initiation of procurement action for
building the project for Step 2+3 grants:
This requirement may be waived by the
Regional Administrator or the delegated
State if the applicant can demonstrate:
that such an agreement is already in
place, or that there is evidence of a
service relationship in  the absence of
formal agreement, and  that the supplier
agency exhibits sufficient financial
strength to continue the project if one or
more of the customer agencies fails to
participate (40 CFR 35.2107).
  The  intermunicipal service agreement
serves as the legal, contractual basis for
implementation of the wastewater
treatment system, and  guarantees future
commitments. Although it will guard
against reneging or unilateral actions by
participants, it should also serve as a
basis for a sound working relationship.
Its institutional provisions should
provide for a management framework,
and should assign roles and
responsibilities for management and
operation of the sys'tem.
Financial Capability Guidebook is available to
assist communities in completing Attachment A or
in developing comparable information.
  2The regional cost basis consists of facilities
(including equipment, sewage treatment facilities,
and interceptors, etc.) and services (administrative,
managerial, legal, etc.) which are to be shared by
two or more jurisdictions and are, therefore, eligible
for regional cost allocation. An auditable cost
accounting system is usually maintained by the
supplier agency: it defines the regional cost basis
and is included in service agreements. Attachment
C provides elements to consider in determining
regional cost basis, and is excerpted from
"Financial Planning for Wastewater Facilities: A
Guide for Wyoming Local Officials" (Part 3).
  In implementing this policy, States,
EPA Regions, and EPA Headquarters
have the following responsibilities:
  • All States: In order to account for
unique aspects of State laws governing
local financing and institutional
arrangements, all States are encouraged
to develop specific guidance and
procedures for communities to use to
demonstrate their financial capability.
Attachment A may be used as the basis
for this guidance, and may be modified
according to individual State needs.
  • Delegated States: At the time of
transmittal of a Step 3 or 2+3 grant
application, a delegated State must
indicate that it has reviewed the
financial information provided by the
applicant, and has determined that the
applicant has adequately demonstrated
its financial capability, and, as
appropriate, has provided an executed
intermunicipal agreement. Delegated
States may waive the requirement for an
executed intermunicipal agreement on
the basis of the criteria cited above.
  The criteria  for approving the
financial capability portion of a grant
application are listed below ("Regional
Offices"). States should use the
reviewer's checklist guidance provided
by EPA or develop comparable guidance
for applying these criteria to financial
capability demonstrations.
  Delegated States must also develop
screening procedures for identifying
communities whose projects need
greater attention to satisfy the
requirements of this policy. These
projects could be identified on the basis
of their high cost, technological
appropriateness or potential financial
impact. A combination of several of the
following  criteria should be used for this
purpose: size of the community, extent
of sewers (for  presently unsewered
communities),  type of technology
proposed, total capital costs per
household,,total annual household costs,
total annual cost per household as a
percentage of median income, capital
cost of treatment perTOOO gpd capacity,
or other meaningful indicators.
  Delegated States should conduct a
more intensive review of projects
identified by these procedures and
should not certify grant applications for
these projects  unless the State is
completely satisfied that the community
and its users can successfully finance
and manage the wastewater treatment
system. If this  intensive review discloses
that the project may  not be financially
sound, the State should provide
assistance to the applicant to resolve
the problem. This assistance should
include both the technical aspects of
projects (e.g., appropriate technology
and project scope and staging) and the
necessary financial arrangements (e.g.,
other sources of funding and alternative
methods for financing the local share.)
Screening procedures should be applied
as early as is feasible during the
development of a project so that
problems can be resolved prior to the
actual grant application.
  • Nondelegated States: Nondelegated
States are encouraged to meet with
communities to review local financial
capability, as well as the overall
feasibility of implementing proposed
projects from financial and institutional
aspects.
  • Regional Offices: In the case of non-
delegated States, the EPA Regional
Office will review the applications as
outlined under "Delegated States."
  The RA or delegated State
representative may approve an
application if all other regulatory
requirements are met and if, in his or her
judgment, the applicant has adequately
demonstrated financial capability by
submission of financial information
consistent with relevant information in
the facility plan; appropriate
assumptions regarding population
projections,  cost estimates, or eligible
costs; appropriate analysis of the
community's proposed financing system,
and the financial impacts of the
proposed system on its users; and
submission of an executed
intermunicipal service agreement if
there are two or more participating
jurisdictions, except as prescribed
above.
  If approval is withheld, the RA or
delegated State representative will
notify the applicant of the reason(s) and
will work with the applicant to resolve
any identified problems or deficiencies.
  • Headquarters: EPA Headquarters
will provide guidance and technical
assistance to Regions and to States to
carry out the intent of this policy.
VI. Overview
  Each fiscal year, the EPA Regions and
States develop an overview progam
consistent with the section  205(g)
regulation. These overview programs
should provide for the Region's review
of all guidance and procedures used by
delegated States to implement this
policy, as well as a random sample of
financial capability demonstrations that
have been accepted by the State. The
overview program should provide for
the Region's review .of financial
capability demonstrations for specific,
selected projects that warrant special
attention or  are determined to be of
overriding Federal interest consistent
with the section 205(g) regulation.
BILLING CODE 6560-50-M

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6256
Federal Register / Vol. 49, No. 34 / Friday, February 17,1984 / Rules and Regulations
                              Attachment A (to Policy Statement)

 Wastewater   Facilities  Financial
 Information  Sheet
Applicant

Nam*	
Address.

City	
                     Zlo
Contact.
Telephone.
 (This is provided for optional use by the grantee community, or its A-E
 consultant, as an aid to conventional Facility planning financial analyses.
 EPA developed this improved and simplified form with the Municipal
 Financial Officers Assn., based on feedback on earlier versions, which
 have been used successfully by consultants for projects In Texas, North
 Carolina, Tennessee, and Pensyhrania.)

 (Information to complete this sheet should be contained in the Facility
 Plan.)
   Additional assistance in completing the Financial Information Sheet
 can be found in the Financial Capability Guidebook which is available
 from the US Department of Commerce, National Technical Information
 Service (NTIS) S28S Port Royal Road Springield. VA 22161

 (This Sheet and the Guidebook will also be provided to grant applicants
 (to assist in facility planning) by EPA Regions & delegated States in th*
 application package.)
What Is Proposed In The Facilities Plan?  (Information should be in Facility Plan.)
• The proposed facilities Will b«:
  {[check more than one If applicable)
                                       D New
An expansion
                                     An upgrade
•  llf treatment facilities are proposed, do they
   feature low 0+M Cost Technology such as ponds,
   trickling filters, overland flow? If yes, please identify.
                                       D Yes
                D  No
 • The facilities will serve:
  Indicate the approximate percentage
  of the plant's capacity that will be
  allocated to each.
D Existing
Population
on Sewers

D Existing Area
Served by
On-Slte
Systems
Q Existing
Industries


D Anticipated
Growth


 e Entitles to be served:
                      D County
D Municipality    G Sewer district  D  Industry
 e Design population
                                        (Year.
                                 THIS IS A SAMPLE FORMAT

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              Federal Register / Vol. 49, No. 34 / Friday, February 17,1984 / Rules and Regulations
                                               6257
 Wastewater  Facilities  Financial
 Information  Sheet
 What  Roles And Responsibilities Will Local Governments Have? (Information in Facility Plan.)
 Cooperative arrangements between various entities may be required to meet the management needs of wastewster treatment facilities.
 • What agency wilt

 • Will there be financial contributions by:
 • Have participating agencies been ssked
  to review.
• Hsve agreementa been sought between
 the operating agency and:
D Own the facilities

Q Other sgencies
Q Wsstewster
   fscitltles plan
Q Participating
   agencies
                                                           D Operste
                                Finance
                                                           Q Industry
                                                           O Population
                                                              projections
                                                           Q Other agencies
                               Service area
                               boundaries
                            Q Industry
 How Much Will The Facilities Cost At Today's Prices? (Information in Facility Plan.)	
 The following figures sre estimated costs for construction, operation, and maintenance of the proposed facilities. Dollar amounts era
 unlnflsted and reflect today's prices.
A. Construction costs estimate

• Wastewster treatment plant
• Pump stations
• Interceptor sewers
• Collection sewers
• On-slto systems
• Land acquisition
• Other
• Totsl construction costs
 B. Estimated annual operation, maintenance, and replscement
   (O,M + P.) costs for the proposed fscllltles
• Labor
• Utilities
• Materials
• Outside services
• Misc. expenses
• Equipment replacement
• Total operation,
  mslntenance and
  replacement costs
How Will The Facilities Be Financed? (Information in Facility Plan.)
                                                                                             per yesr
                                                                                             per yesr
                                                                                             per year
                                                                                             per year
                                                                                             per year
                                                                                             per yesr

                                                                                             per yesr
A. Amount to be borrowed
• Grsntee share of construction i
• Construction-related costs
• Grantee contributions
• Amount to be borrowed
B. Methods of financing the amount to be borrowed
Financing
method
General
obligation
bond
Revenue
bond
Loan
Total
Amount
borrowed




Interest
rste




Term of
maturity




Annusl
debt service
psyment




C. Totsl estlmsted snnusl wsstewster facilities costs
• Net existing O.M * H              	
• Existing snnusl debt service        	
• O.M + R for proposed facilities       	
• Debt service for proposed facilities   	
• Totsl estlmsted annusl wsstewster
  fscllltles costs
 THIS IS A SAMPLE FORMAT
D. Sources of funding for total snnusl wssta
   facilities cost*
• Sewer service charges             	
• Surcharge                      	
• Special assessments and fees
  — connection fee                	
  — betterment assessments         	
  — other                        _
• Trsnsfers from other funds         	
• Other                         _
• Total funding                    	

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6258        Federal Register / Vol. 49, No. 34 / Friday, February 17,1984 / Rules and regulations


Wastewater  Facilities Financial

Information  Sheet



What Are The Annual Costs Per Household?  (Information in Facility Plan)

• Total estimated annual wastewater                      • Total annual costs per household
 facilities charges                   	
• N onresidential share of total annual charges	
• Residential share of total annual charges   	
• Number of households              	
• Annual costs per household for
 ~— wastewater collection and treatment   	
 — other                        	


 Certification of Rnancial Capability


Your community must certify that it has the capability to finance and manage the proposed facility.


The  answers to the preceeding questions will provide useful information regarding the cost of the
proposed facility,  how it will be financed, and what this means in terms of costs to the typical
household user. In order to evaluate effectively the true impact of the proposed treatment system,
however, thi • infomation must be viewed within the  overall context of the community's financial con-
dition, financial resources,  legal constraints, and local public policy.
Listed below are additional elements relating to a community's overall financial condition and its abili-
ty to pay the local costs of constructing and operating the treatment system. These factors should be
considered before signing the financial and management capability certification.


     • reasonableness of population projections relative to historic
       trends (if new population growth is needed to help finance
       the proposed system.)


     • total current outstanding indebtedness


     • state finance laws and legal debt limits


     • historical trends in your community's revenue sources (e.g.,
       changes in taxable assessed property valuation with
       respect to population)


     • current bond rating and its historical trend


If your community would have difficulty financing the proposed project, it should consider alternative
methods of financing to mitigate the adverse impacts, re-evaluate the project alternative and scope, or
consider staging implementation to spread out financing to future users. When certifying your project,
the community  should be fully satisfied that both the users and the community as a whole have the
capability to finance and manage the facility as proposed.



                                 THIS IS A SA MPLE FORMA T

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         Federal Register / Vol. 49, No. 34 / Friday, February 17,1984 / Rules and Regulations
6259

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-------
      APPENDIX L

1981 AMENDMENTS TO THE
   CLEAN WATER ACT

-------
                                  APPENDIX  L

                    1981 AMENDMENTS TO THE  CLEAN WATER ACT
Analysis  of sections  of the
Construction Grants Program:
            1981  amendments  as related  to  EPA's Municipal
    Section  1
    Section  2
    Section 3
 Short Title

    "Municipal  Wastewater  Treatment  Construction  Grant
    Amendments  of  1981,"  P.L.  97-117, enacted December  29,
    1981

 Eligible Categories

    After October  1,  1984, grants  only for  secondary or  more
    stringent  treatment,  or  any  cost  effective  alternative
    thereto,  new interceptors  and  appurtenances  and
    infiltration/inflow corrections, except

    Governor  of  a state  may elect  to  use not  more than
    20 percent of  a state's allotment  to  fund  other types  of
    projects previously eligible.

 Grants for Steps 1 and 2

    After December 29,  1981,  no  grants solely  for  facilities
    planning and design (formerly Step 1 and Step 2).

    Grants  for  construction (Step   3)  shall  include   an
    allowance  for  facilities   planning  and  design  based  on
    the percentage-of  total project costs which  EPA  determines
    is the general  experience for such projects.

    Each  state shall  use a  portion  of  its funds,  not  to
    exceeed  10  percent,  to advance funds to potential  grant
    applicants for  facilities  planning and  design; advances
    are for  small  communities  which  in the judgement  of the
    state would be  unable  to  complete  an  application  (i.e.,
   facilities  plan  and design)  without  such  advance;  the
   allowance  in a subsequent  grant will  be reduced  by the
   amount of  the  advance;  if no subsequent grant, state  to
   seek  repayment  of  advance  under  terms and conditions  it
   may determine.
   Section 6
Capital  Financing

   Grant applicants are
   financing  plan which:
                                            encouraged to  develop a capital
                                     L-l

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Section 7
Section 8
Section 9
Section 10
       addresses  future  wastewater   treatment  requirements
       over at least 10 years,

       projects the  nature,  extent, timing,  and cost  of
       the future requirements,

       sets forth the manner for financing these needs.

Federal  Share

   After  October  1,  1984,  all grants  are reduced  to
   55  percent, except  subsequent  segments  of  projects
   receiving  a  Step  3  grant  before  October 1,  1984,  will
   receive  75  percent  for  all  phases of  such facilities,
   interceptors  and infiltration/inflow correction projects.

Innovative and Alternative Processes

   I or A grant funding  to be additional  20 percent  but
   in no case exceed 85 percent.

   Reserve for  I or A to be minimum of 4  percent and maximum
   of  7-1/2  percent  of  annual  state's  allotment  of which
   1/2 percent must be used for innovative projects.

   Extends the  I and A program through FY  14.

   Allows  field testing  of I  or  A  processes  or techniques
   as a grant eligible cost.

Combined Step 2  and 3 Grants

   Raises  the dollar ceiling  for  combined Step 2+3 projects
   to $8,000,000.

Reserve Capacity

   After October  1,  1984, grant only  for capacity needs
   on  date  of  grant  award  and in no case  exceed  needs on
   October  1,  1990;  grantees to pay incremental  cost of
   additional  reserve  capacity except:

       Subsequent  segments  of projects  receiving  a  Step 3
       grant before  October  1,  1984 shall  be based  on a
       20-year  reserve  capacity and subsequent  segments
       of interceptors  receiving  a Step  3   grant  before
       December 29, 1981  shall  include reserve capacity  not
       to  exceed 40 years.

       Industrial cost  exclusion is eliminated.
                                  L-2

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Section 11      Brand  Name

                   When  in  grantee's  judgement  it is  impractical  or
                   uneconomical  to  describe  technical   requirements  for
                   equipment,  a  brand name  or equal  may be used and grantee
                   need  not establish the existence of any  other  source.
Section 12
Engineering Performance
                   Engineering  services  shall  continue  for  one  year after
                   completion  of  construction  and  include  supervision  of
                   operation, training of  operating  personnel, and  preparing
                   training materials and curriculum for  operating personnel,
                   all  of which are allowable for grant participation.  After
                   one  year grantee must certify whether  or not the  treatment
                   works meets  the  design  specifications  and  effluent
                   1 imitations.

                   If  treatment  works  does  not  meet performance,  it must
                   be  corrected  in  a timely  manner  at  other  than  Federal
                   expense.
Section 14
State Administration  Grants
Section 17
                   State  may use up  to  4 percent  of  the State's allotment
                   based  on the  amount  authorized to  be appropriated or
                   $400,000,  whichever  is  greater,   to  administer  the
                   Construction Grants Program.
Section 15      Water Quality Management Planning
   State shall  use up to 1  percent  of  the  State's  allotment
   or  $100,000,  whichever   is  greater,  to  carry  out  water
   quality management  planning.

Authorization
Section 18
   Authorizes  $2.4 billion
   tion Grants  Program.

Water Quality Priority
                                           for FY 1982-85 for the Construc-
                  Projects which  receive  priority are those projects which,
                  in  the estimation of the  State,  are  designed to achieve
                  optimum water  quality  management   consistent with public
                  health  and  water  quality  goals  and  requirements  of  the
                  CWA.
                                  L-3

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Section 19      Cost Effectiveness

                  Reemphasizes  that  projects  receiving  grants shall  be
                  the  "most economical  and  cost-effective  combination  of
                  devices  and  systems  ..." for  waste  treatment  over the
                  life of the project.

                  Requires  value engineering  prior to grant  award  for all
                  projects which  exceed $10 million and which have not
                  received a grant prior to  December 29,  1981.

Section 20      State Certification

                  States  with  sufficient delegated authority to administer
                  the  Construction  Grants  Program may certify  projects  to
                  EPA  and EPA  has  45  days to  approve  or disapprove the
                  project.  If  EPA does not act, the  project is  deemed
                  approved.

Section 21      Municipal Compliance Deadline

                  Municipal  compliance to  achieve secondary  or  more
                  stringent  treatment   necessary  to   achieve  water  quality
                  standards is extended  from  July  1,  1983, to July 1,  1988,
                  for  those cases which have not been  able  to  move ahead due
                  to limited Federal grant assistance.

Section 22      Ocean Discharge

                  Application  for  ocean discharges waiver extended  for one
                  year from  December   29,  1981,   through  new  applications
                  cannot  be approved  for one year.   No  permit shall .allow
                  discharge of sludge into marine waters.

Section 23      Secondary  Treatment Definition

                  Biological  treatment  facilities such  as oxidation  ponds,
                  lagoons  and  ditches, and trickling filters  shall  be
                  deemed  to be the equivalent of secondary treatment.

Section 24      Revised Water Quality Standards

                   States  to review,  revised or  promulgate  new water  quality
                   standards  by December  29,  1984,  or no  grants  may be
                   awarded.

Section 25      Needs Survey

                   EPA to  prepare new needs  survey  by December 31,  1982.
                                   L-4

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Section 26      Judicial Note
                  Where consent decrees have  been established by the courts,
                  the  courts  are  to  take  note of  the  reduced funding
                  levels  and  make  appropriate adjustments  if  necessary  in
                  schedules.
                                  L-5

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   APPENDIX M

  40 CFR PART 35
FINAL REGULATIONS

-------
Friday
February 17, 1984
Part in

Environmental
Protection Agency
40 CFR Part 35
Grants for Construction of Treatment
Works; Final and Interim Rule

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6224	Federal Register / Vol. 49, No. 34 / Friday. February 17,1984 / Rules and Regulations
ENVIRONMENTAL PROTECTION
AGENCY

40CFRPart35

tWH-FRL 2287-5]

Grants for Construction of Treatment
Workn

AGENCY: Environmental Protection
Agency.
ACTION: Final and interim final rules.

SUMMARY: The construction grants
regulation is being published in two
places in today's Federal Register. This
portion includes, as a final rule, the
main body of the construction grant
regulation (§ 35.2000 et seq.), Appendix
B (Allowance for Facilities Planning and
Design), and Appendix C (Subpart I
Information Collection Requirements).
  Appendix A (Determinations of
Allowable Costs), published together
with this final rule, is a revised interim
final rule which responds to some of the
comments received on the May 12,1982
publication of Appendix A. These
comments are described below under
Description of Major Issues. EPA is
publishing Appendix A as a revised
interim final rule for two main reasons.
First, the Congressional authorization
for the construction grants program
expires  after fiscal year 1985 (September
30,1985). In anticipation of
reauthorization hearings on the Clean
Water Act in 1984, the Agency is
conducting a one-year study of the
funding of municipal was.tewater
facilities. The study will evaluate a
broad range of funding mechanisms
such as loan programs, privatization and
infrastructure banks in addition to the
present grants program. The common
goals which will be used to compare
these alternatives are greater self-
sufficiency of local communities in
addressing wastewater treatment, more
efficient targeting of Federal financial
assistance, and quicker attainment of
water quality goals. We expect to
publish a notice of the study in the
Federal Register in February. The results
of the study may result in changes to the
allowable costs described in Appendix
A. Second, the proposed rule (§ 35.2205)
is expected to elicit comments which
may extend to allowable cost items in
Appendix A.
  A proposed rule published elsewhere
in today's Federal Register, would
create a new section (§ 35.2205) that
would define the maximum increase in
the allowable cost of a grant award. The
hew section would apply7 to all
construction grants regardless of the
grant award date.
  This regulation includes only those
items called for by the Clean Water Act,
including the Municipal Wastewater
Treatment Construction Grant
Amendments of 1981, and the minimum
requirements necessary for effective
program management. The changes
clarify and simplify the regulation and
thereby reduce project costs.
DATES: This regulation is effective
February 17,1984. See also the section
in the preamble on "Effective Date."
Comments on the interim final'
regulation contained in Appendix A,
must be received on or before April 17,
1984.
ADDRESS: Comments should be
addressed to: Central Docket Section
(LE131), Attention: Docket No. G-81-5,
Environmental Protection Agency,
Washington, D.C. 20460.
  The public may inspect the comments
received on this interim final rule at:
Central Docket Section, Gallery \ West
Tower Lobby, Environmental Protection
Agency, 401 M Street, SW., Washington,
D.C., between 8 a.m. and 4 p.m.,
business  days.
FOR FURTHER INFORMATION CONTACT:
William Kramer, Office of Water
Program Operations (WH-595),
Environmental Protection Agency,
Washington, D.C. 20460, (202) 382-7277.
SUPPLEMENTARY INFORMATION: In
keeping with the President's mandate to
reduce the burden of government
regulation, EPA has undertaken a
comprehensive review of the
construction grants regulation. Based on
that review, revisions to the regulation
were proposed in the November 6,1981
Federal Register and published as
interim final on May 12,1982. The
interim rule reflected extensive
experience/with the program, comments
received  over the years from a broad
spectrum of the program's constituents
and comments received on the interim
rule. In developing this regulation, the
Agency consulted with a wide variety of
organizations representing various
participants in the program.
  On December 29,1981, the Municipal
Wastewater Treatment Construction
Grant Amendments of 1981, Pub. L. 97-
117 (1981 amendments), were signed into
law, making several basic modifications
to the grants program. This regulation,
which is  built on the Administration's
commitment to reduce regulatory
burdens to a minimum while
maintaining the program's
environmental and financial integrity,
incorporates provisions to implement
the 1981 amendments and comments on
the interim rule.
  This regulation includes items
required by statute—free of detailed
procedures to be followed—and those
additional minimum requirements that
EPA considers necessary for effective
program management.
  In conjunction with this effort to
reduce regulatory requirements to a
minimum, EPA will issue appropriate
guidance documents. These guidance
documents will not be regulations in
disguise. The regulatory requirements
are repeated in the guidance solely for
continuity and clarity. If there appears
to be a difference between the
regulations and the guidance, the
regulations govern. The guidance
materials will contain information which
is helpful to States and grantees in
managing and carrying out the
construction grants program. Use of the
information in the guidance documents
is to be discretionary. That is, States or
grantees may, adopt other procedures
which are sufficient to meet the
requirements of this regulation.
  The first major guidance document,
Facilities Planning 81 (FP 81), was
published in 1981. Its successor,
Construction Grants 82 (CG 82),
companion to the interim final
regulation,  reflects  and includes this
new emphasis on increased flexibility in
its guidance for planning^design, and
building. Future editions in the CG
series will continue this approach. Other
guidance publications in the areas of
operation and maintenance, financial
planning and development of user
charge systems are being developed. By
linking efforts to reduce mandatory
requirements and to provide guidance,
the greatest possible flexibility is
provided to States and local
governments to effectively carry out the
construction grants program.
  Although this subpart  is the primary
regulation governing the construction
grants program, it is not  the only one.
Others that apply include EPA's
Uniform Relocation Assistance and Real
Property Acquisition Policies Act
regulation (Part 4),  NEPA regulation
(Part 6), public participation regulation
(Part 25), intergovernmental review
regulation (Part 29), general grant
regulation (Part 30), debarment and
suspension regulation (Part 32),
procurement regulation (Part 33), and
pretreatment regulation (Part 403).
Rather than repeat verbatim selected
portions of these Parts, this regulation
will rely on the others and, where
appropriate, cross reference those
requirements. It is felt that this is a
simpler approach and, more helpful to
the States and grantees. Requirements
of these other Parts still  apply to the
construction grants prosram.

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            Federal Register  /  Vol. 49,  No. 34  /  Friday.  February 17,  1984 / Rules and Regulations       6225
  Following is a table showing the
relationship of Subpart I to Subpart E:

CONSTRUCTION GRANT REGULATION—40 CFR
               PART 35
CONSTRUCTION GRANT REGULATION—40 CFR
          PART 35—Continued
Subpart I
Sec 	
35.2000 	
35.2005 	
35.2010
35.2015 	
35.2020 	
35.2021 	
35.2023 	
35.2024 	
3S.2P25 	
35.2030 	
35.2032 	
35.2034 	
35.2040 	
35.2042 	
35.2060 	
35.2100 	
35.2102 	
35.2103 	
35.2104 	
35.2105 	
35.2108 	
35.2107 	
35.2106 	
35.2109 	
35.2110 	
35.2111. 	 	
35.2112 	
35.2113....,, 	
35.21 14.. .* 	
36.2116..-.,. 	
35.2118 	 „.
35.2120 	
35.2122 	
35.2123 	
35.2125 	
35.2127 	
35.2130 	
352140 . ,
35.2152..: 	
35.2200 	
352202
35.2204 	
35.2206 	
35.2208 	
35.2210 	
35.2211 	
35.2212 	
as 9914

Purpose and policy 	
Definitions 	
State priority system and
project priority Hst.
Reserves 	
ReaHotment of reserves....
Water quality manage-
ment pi&nning.
Combined sewer over-
flows.
Allowance and advance
of allowance.
Faculties planning 	
Innovative and alternative
technologies.
Privately owned individual
Systems.
Grant application 	
Review of grant applica-
tions.
Effect of approval or certi-
fication of documents.
LirnilAtkXiS on award 	
Water quality manage-
ment plans.
Priority determination 	
Funding and other consid-
erations.
Debarment and suspen-
sion.
Plan of operation 	
Intermumdpal service
agreements.
Phased or segmented
Step 2+3 	
Access to IndMdual sys-
Revised water quality
standards.
Marine discharge waiver
appfcants.
Environmental review 	
Value engineering 	
Collection system 	
Infiltration/Inflow
Approval of user charge
system and proposed
sewer use ordinance.
Reserve capacity 	
Treatment of wastewater
from industrial users.
Federal facilities
fewer use ordinance 	
Federal share..
Grant conditions 	
Step 2+3 projects 	
*roject changes 	 	 	
Operation and mainte-
nance.
Adoption of sewer use or-
• dbiance and 'user
charge system.
mO acquisition 	
•told testing for innovative
and alternative technol-
ogy report.

Subpart E
Sec.
35.900. 35.901,
35.903, and
35.912.
35.905.
35.915.
35915-1
35.915.
1981
Amend-
ments.
1961
Amend-
ments.
1981
Amend-
monls.
35.917 et seq.
35.908.
35.918.
35.920 et seq.
1981
Amend-
ments.
35.935-1.
35.925.
25.925-2.
35.925-3.
35.925-5.
New Section.
35.925-12.
35.920-3.
New Section.
35.909
35.918-1.
1981
Amend-
merits.
1961
Amend-
ments.
35.925-8.
1981
Amend-
ments.
35.925-13.
35925-18
35 927 et seq
35.929-1,
36.935-13,
and 35.927-
4.
1961
Amend-
ments.
35.925-15.
35925-15
35.927-4.
35929-1
35930-4
35.935 et seq.
35.935-4
35.935-11.
35.935-12.
35.935-4.
New Section.
1981
Amend-
ments.
35935-9

Subpart 1
36.8216 	
35.2218 	
35.2260 	
35.2280 	
35.2262 	
35.2300
35.2350 	
Appendix A 	
Appendix B 	
Appendix C 	 r

Notice of budding comple-
tion And final inspection.
Project performance
Determination of allow-
able costs.
Advance purchase of eli-
gible land.
Funding of field testing 	
Subagreement enforce-
ment.
Determination of allow-
able costs.
Allowance for facilities
planning and design.
Subpart I information col-
lection requirements.
Subpart E
35.935-14.
1981
Arnsnd-
ments.
35.940.
Now Section.
1981
Amend-
ments,
35945
35.970.
35.940 et eeq.
1961
Amend-
ments.
NOW Section.
                                       Description of Major Issues
                                         In response to the interim final
                                       regulation published on May 12,1982,
                                       we received comments from a variety of
                                       States, municipalities, professional
                                       organizations, firms that work in the
                                       program, and industries. Although the
                                       preamble doesn't respond to every
                                       comment individually, all were
                                       considered and many served as the
                                       basis for revisions to the interim final
                                       regulation.

                                       Effective Date
                                         This regulation is effective for all
                                       grants awarded on or after the date of
                                       publication in the Federal Register.
                                       Facilities plans and design initiated
                                       under 40 CFR Subpart E continue to be
                                       subject to the requirements in Subpart E.
                                       Unless required by the 1981
                                       amendments, no revisions to the
                                       facilities plan or design will be required.
                                       Work done under Subpart E will be
                                       accepted for grant awards under this
                                       subpart.
                                         Elsewhere in this issue of the Federal
                                       Register, EPA is proposing a new
                                       section,  § 35.2205, which would specify
                                       a maximum allowable project cost.

                                       Program Direction: Improved Water
                                       Quality
                                         The 1981 amendments stress the
                                       importance of improving water quality
                                       through the construction grants program.
                                       The regulation reflects this emphasis in
                                       several ways. It incorporates the
                                       concept of "priority water quality
                                       areas," which States will identify and
                                       use in setting priorities for projects.
                                       Revised regulations for water quality
                                       management planning (40 CFR Part 130)
                                       and water quality standarda-(40 CFR
                                       Part 131), and guidance for State
                                       preparation of section 305(b) reports will
 also use the concept of priority water
 quality areas for scheduling revisions to
 water quality standards, total daily
 maximum loads, and major permits, as
 well as focusing monitoring,
 enforcement and reporting efforts on
 critical water quality problems. Priority
 water quality areas will generally be
 water quality limited segments, i.e.,
 segments where applicable water
 quality standards are not attainable
 with application of technology-based
 effluent limitations to point sources.
   This term was introduced in the
 interim final regulations; however, the
 concept is not new. For the purposes of
 construction grant funding and this
 regulation, priority water quality areas
 are specific stream segments or bodies
 of water where municipal discharges
 have resulted in the impairment of a
 designated use or significant public
 health risks, and where the reduction of
 pollution from the municipal discharges
 will substantially restore surface or
 groundwater uses.
   The regulation (§ 35.2111) includes a
 limitation stating that no grant
 assistance can be awarded for
 particular stream segments after
 December 28,1984, if a State has failed
 to review and revise, as appropriate, its
 applicable water quality standards. To
 comply with this provision, States will
 need to review and revise the water
 quality standards for each stream
 segment within the State in priority
 order.  In setting priorities for the review
 of water quality standards States should
 focus on priority water quality  areas,
 considering the timing of pending
 advanced treatment and combined
 sewer  overflow funding decisions. The
 necessary level of review will depend
 upon the characteristics of a segirient
 and the priority that a State assigns a
 segment. For most effluent limited
 segments no further water quality
 standards reviews will be needed
 beyond the determination that the
 segment is indeed effluent limited. A
 more comprehensive review will be
 needed for segments designated as
 water quality limited. Regulations
 governing priority setting and the review
 and revision of water quality standards
 are found in the regulations for water
 quality standards (40 CFR Part 131).
  Within this context for setting
priorities, the regulation requires an
annual project priority list with two
 sections: the-fundable portion consists
of those projects anticipated to  be
funded from the current allotment; and
the planning portion consists of projects
anticipated to be funded from future
authorized allotments. After September
30.1982, Regional Administrators will

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6226       Federal Register / Vol. 49, No.  34 / Friday. February 17, 1984 / Rules and Regulations
not fund projects until they accept, and
the States use, priority lists that reflect
the 1981 amendments.
  The 1981 amendments added section
205(j) to the Act which requires States to
reserve not less than $100,000 nor more
than 1 percent of their annual allotment
for water quality management planning.
The regulation provides an exception to
the $100,000 minimum for Guam, the
Virgin Islands, American Samoa, the
Trust Territory of the Pacific Islands and
the Commonwealth of the Northern
Marianas because of the small size of
their allotments.
  The 1 percent ceiling is a maximum
limit rather than a required limit. The
language of the amendments states that
the reserve is "not to exceed" 1 percent.
Also, the "not to exceed" language is
identical to the language of the 205(g)
reserve for State administration which
provides for an optional maximum
percentage rather than a required
percentage. 40 CFR Part 130 will govern
the use of funds reserved under section
205(j).
  This regulation in § 35.2108 also
addresses the need to make EPA funded
treatment'works phases and segments
operate to improve water quality.
Several commenters interpreted the
regulation to require in all cases that
grant recipients build the complete
waste treatment system, including even
its lowest priority components, if grant
assistance were awarded for any part of
the system. We made minor
modifications to the regulation to
address this misunderstanding.
  Section 35.2108 requires that all
recipients of grants for a phase or
segment of treatment works negotiate a
commitment with the Regional
Administrator that assures that the
treatment works of which the phase or
segment is a part will be made
operational and meet the enforceable
requirements of the Act. Section 35.2108
embodies a longstanding EPA policy
previously contained in § 35.930-4. The
policy is that grant recipients must
commit to making EPA funded phases or
segments operational and comply with
the enforceable requirements of the Act
and to making them part of treatment
works that result in water quality
improvements. This does not necessarily
require recipients to commit to building
all parts of a complete waste treatment
system. However, the regulation does
require that recipients commit to
building the treatment works necessary
to make EPA funded phases or segments
contribute to improved water quality.
Priority System and List
  There was some confusion over the
due date for submission of revised
annual lists to the Regional
Administrator for review. We have
revised § 35.2015(e) to clarify that each
State must submit a new' list by August
31 in order to allow time for review by
the Regional Administrator prior to the
beginning of the next fiscal year.

Activities Prior to Grant Award
  One of the most significant changes in
the program resulting from the 1981
amendments is the elimination of grants
for planning (Step 1) and design (Step 2).
An allowance is provided to grantees for
facilities planning and design. A full
discussion of issues related to  the
allowance is in the Appendix B section
of this preamble.
Step 2+3
  We received several comments
recommending that the design  portion of
a Step 2+3 grant be a grant rather than
an allowance. We believe the allowance
is more consistent with the
Congressional intent of the 1981
amendments to reduce EPA involvement
in grantees' design activities.
  The 1981 amendments raised the limit
on building cost for projects eligible for
a Step 2+3 grant to $8 million. The
amount of the allowance will be based
on the estimated Step 3 building cost in
the Step 2+3 grant application. If the
grantee has not received a grant or
advance for facilities planning, the
Agency will pay 30 percent of the
Federal share of the estimated
allowance as soon as requested after the
Step 2+3 grant award. EPA will pay
half the remaining estimated allowance
when the design is 50 percent complete.
The final portion of the allowance will
be paid after the grantee awards all
prime subagreements for building the
project.
Advances
   The 1981 amendments require States
to reserve a portion up to 10 percent of
their allotments to provide advances of
the allowance to small communities
which would otherwise be unable to
undertake planning and design
activities. Although the amendments do
not prescribe a minimum amount, the
Agency believes the Congress intended
that  a reasonable reserve be
established. Designation of eligible
applicants to receive an advance will be
done entirely by the States.
   Upon application by a State, a grant
will be awarded to the State for making
advances of allowance to small
communities. A State may request that
payments under the grant be assigned to
specified potential grant applicants. Any
community that has received an
advance will have any later allowance
reduced by an amount equal to the
advance.
  Some commenters were concerned
that the States would not reserve
adequate funds to meet the demand of
small communities; others were
concerned that States would
unjustifiably lose funds through
reallotment because there would not be
a need or demand for them. The Agency
recognizes the potential for problems
related to this provision of the law, and
believes that solutions can be found to
those individual problems within the
framework provided by the regulation.
In particular, the regulation provides for
waiving this reserve requirement when
the State can demonstrate it is not
necessary because planning and design
requiring an advance is not expected to
begin during the period of availability of
the annual allotment. Some States, prior
to the 1981 amendments, had  built up a
backlog of projects ready for  Step 3
grants  and had planned to initiate few if
any new Step 1 or Step 2 projects.
Further, .States have available the Step
2+3 approach which, if used
extensively, could reduce or eliminate
the need for this reserve.

NEPA  Compliance
  Before publication of the interim final
regulation there was great concern
expressed that the elimination of grants
for planning and design would make
NEPA  compliance ineffective, because
for NEPA compliance to be most
effective, environmental issues must be
addressed in conjunction with planning
the project, and traditionally  that has
been done during Step 1. The
elimination of .Step 1 and Step 2 grants
postpones official EPA involvement in
the project until after planning and
design are complete. To avoid the design
of environmentally unsound
alternatives, the regulation encourages
applicants to confer with review
agencies very early in the process and
request, in writing, that EPA make
necessary NEPA determinations. In this
way, NEPA responsibilities can be met
at the appropriate time, avoiding delay
and added expense that could result
from postponement. In any case, the
regulation requires that the
environmental review under NEPA be
completed before  submission of an
application.
  Grantees currently injhe facilities
planning process with Step 1  grant
assistance are bound by existing
regulations and grant agreements to
complete their environmental
documents as planned and obtain a
formal determination in accordance
with Part 6 of this chapter.

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            Federal Register / Vol.  49.  No. 34  /  Friday. February 17, 1984  /  Rules and Regulations       6227
 Financial Capability
   In 1981 amendments stress the
 importance of the applicant's financial
 and management capability to
 adequately build, operate and maintain
 the proposed project, particularly the
 ability to finance adequate operations
 and maintenance (including
 replacement) of facilities through their
 user charge systems. Three of the
 "limitations on awards"! (conditions that
 must be met before a grant can be
 awarded) are designed to ensure
 adequate financial capability and
 management of Federally funded
 treatment works. First, the applicant is
 required to demonstrate that it has the
 legal, institutional, managerial, and
 financial capability to ensure adequate
 building and operation and maintenance
 of the treatment works. Second,  the
 draft plan of operation, required at the
 time of application, must include "an
 adequate budget identifying the basis
 for determining the annual operation
 and maintenance costs and the costs of
 personnel, material, energy and
 administration." Third, the applicant
 must have the Regional Administrator's
 approval of a user charge system that
 will produce adequate revenues
 required for operation and maintenance
 (including replacement), and that
 contains an adequate financial
 management system that will accurately
 account for revenues generated by the
 system and expenditures for operation
 and maintenance  (including
 replacement) of the treatment system.
 EPA has developed guidance to  assist
 grantees in meeting these requirements.

 Advanced Treatment Reviews
   In March 1979 Congress directed EPA
 to review advanced treatment projects.
 The 1978 oversight and appropriation
 hearings focused on the high costs and
 often marginal benefits of advanced
 treatment projects. In  action approving
 the FY1979 appropriation for the
 construction grants program, the House
 and Senate Appropriations Conference
 Committee agree "that grant funds may
 be used for construction of new  facilities.
 providing treatment greater than
 secondary only if the incremental cost of
. the advanced treatment is $1 million or
 less, or if the Administrator personally
 determines that advanced treatment is
 required and will definitely result in
 significant water quality and public
 health improvements." The incremental
 dollar limit for the Administrator's
 review was raised from $1- million to $3
 million in FY 1980. Each year's
 appropriation legislation or committee
 report has continued the' review
 requirements.
  Review procedures were set forth in
EPA policy issued in March 1979. EPA
published a revised draft policy in June
1980, and a final policy is nearing
publication.
  Section 35.2101 requires that before
award of grant assistance, EPA review
under the advanced treatment policy
any project requiring advanced
treatment. EPA recommends that the
proposed advanced treatment projects
be submitted for review  upon
completion of facility planning, but
requires  that the review  be completed
before submission of any application.
Innovative and Alternative (I/A)
Technology
  The 1981 amendments extend the
innovative and alternative program by
providing an I/A set-aside to increase
grants for I/A projects. The regulation
allows the  Governor to reserve amounts
from the annual allotment which range
from a minimum, of 4 percent up to 7Vz
percent.  The Federal share of grants for
I/A technologies will be 20 percent more
than the Federal share for grants for
conventional technologies as long as the
Federal share totals no more than 85
percent.  The regulation also includes
provisions for field testing for
verification of design parameters for
higher risk technologies  which EPA may
fund either as a preaward cost or as a
separate field testing grant. Upon
completion of the field test, the grantee
must submit a report containing the
procedure, cost, results and conclusions
of the test.
  The 1981 amendments maintain the
cost-effectiveness preference for the I/A
program. Several cornmenters were
confused by the provision which
describes the applicability of the cost-^
effectiveness preference when the I/A
components are less then 100 percent of
the present w,orth cost of project.
Section 35.2032(b) has been clarified to
indicate that when the I/A components
are 50 percent or less of the present
worth cost of the treatment works, the
cost-effectiveness preference applies
only to the I/A components.
  EPA is incorporating the innovative
and alternative technology guidelines
from Appendix E of the  1978 regulation
into the  CG series.
Infiltration/Inflow
  The interim final regulations
simplified  the procedure for determining
whether a  treatment works is subject to
excessive infiltration and inflow (I/I).
The procedures previously specified ifi
the regulation were not  only time
consuming and costly, but also produced
inaccurate and misleading results in
many instances. The net effect was that
considerable effort was spent analyzing
and repairing sewer systems without,
achieving the expected benefits of
reduced flows and properly sized
facilities.
  The revised procedures incorporated
in the interim final regulation specified
baseline values for both infiltration and
inflow. Comparison of the guildline
values with actual flows in sewer
systems allows rapid screening of those
systems not subject to excessive I/I.
This final regulation continues  the use of
a baseline for comparison of infiltration
rates but deletes the baseline value
previously specified for inflow.
  The baseline figure of 120 gallons per
capita per day (gpcd) for infiltration
analysis is unchanged in the final
regulation. The figure derived from
Needs Survey data for 270 Standard
Metropolitan Statistical Area cities. The
120 gpcd value is the national average
wastewater flow for these cities and is
comprised of 70 gpcd domestic
wastewater and 50 gpcd of non-
excessive infiltration.
  The baseline figure for inflow was
deleted because sufficient data were not
available to support its uniform
application to all projects. In the final
regulation, inflow is excessive  when it
results in chronic operational problems
in the treatment system.
  The final regulation provides that no
further I/I work is required if domestic
wastewater plus non-excessive
infiltration does not exceed 120 gpcd,
and there are no chronic operational
problems resulting from hydraulic
overloading of the treatment works
during storm events. Furthermore, even
in cases where infiltration marginally
exceeds 120 gpcd, the grantee may
proceed with design and construction of
facilities to accommodate the entire
flow provided that such facilities are
cost effective. In these cases, Federal
grant participation will be based on 120
gpcd and grantees must demonstrate
that sufficient local funds are available
to construct and operate the entire
treatment works.
  Only, in cases where infiltration is
determined to be excessive in
accordance with the previously
described procedures or the treatment
works is experiencing chronic
operational problems due to inflow, will
grantees be required to undertake more
detailed sewer system evaluation
studies and propose an I/I rehabilitation
program. A limited  amount of grant
assisted sewer rehabilitation may also
be undertaken on systems with flow?
less than 120 gpcd provided that
grantees can demonstrate that such

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rehabilitation is cost effective for
specific portions of their systems.
  Grantees will be responsible for the
results achieved by I/I rehabilitation
programs conducted  using Federal funds
as part of their certification of project
performance at the end of the first year's
operation of the facility. Grantees will
also be responsible for taking corrective
actions if flows are not reduced by the
amounts specified or operational
problems' are not corrected as a result of
the rehabilitation program.

Public Participation
  Several commenters expressed
concern that, with the exception of the
requirement for public hearings in
conjunction with developing State
priority systems and  project priority
lists, the proposed regulation relies on
Part 25 to supply all further
requirements necessary to involve the
public fully in decisions relating to the
construction grants program. EPA is
fully committed to public  participation
in all its programs and believes that Part
25 affords every opportunity necessary
and available under the Clean Water
Act for public participation in the
construction grants program.
  However, because the elimination of
Step 1 and 2 grants effectively prohibits
EPA involvement in facilities planning
and design, neither provisions of this
subpart nor of Part 25 apply to activities
of a potential grantee prior to
submission of the grant application.
Grantees who request an early
determination of NEPA compliance can
take advantage of involving the public in
Step 1 and Step 2 through, application of
public participation requirements of Part
6. Furthermore, this regulation requires
the State to certify at the  time of
application that there has been
adequate public participation in
accordance with State and local laws.
Project Schedule
  The regulation requires that a
timetable of key project events be
included in the grant application. The
advice of the grantee's design engineer
should be sought when developing 'the
schedule. The  schedule should include
important dates regarding procurement
actions, building schedule, and
operation of the project. If the grantee
has multiple projects, he must
coordinate each project's schedule with
the others and  with the State's project
priority list. Any change in the project
schedule will require a formal grant
amendment. This requirement is
necessary to insure the continued
coordination of project completion with
permit and compliance schedules, court
orders and State administrative orders.
                            State Certification
                              The 1981 amendments allow States
                            with sufficient delegated program
                            administration authority to certify that
                            grant applications comply with all
                            applicable Federal requirements. The
                            certification must be supported by
                            documentation specified in the
                            delegation agreement,, and the Regional
                            Administrator shall accept the
                            certification unless he determines the
                            State has failed to establish adequate
                            grounds for the certification or that an
                            applicable requirement has not been
                            met. Several commenters pointed out
                            the failure .of the interim final regulation
                            to state the provision of the 1981
                            amendments mandating EPA to accept
                            or reject in writing a fully certified
                            application within 45 days of receipt or
                            the application is automatically
                            approved. That oversight has  been
                            corrected.

                            Treatment of Wastewater From
                            Industrial Users
                              This section of the interim final
                            regulation that dealt with treatment of
                            wastewater from industrial users was
                            intended to continue the Agency policy
                            of not providing grant assistance for
                            treatment works that are exclusively for
                            industrial use. In stating that policy, we
                            used the term "compatible industrial
                            wastewater" and defined it in terms that
                            could have been interpreted to prohibit
                            funding POTW capacity to serve many
                            industrial users. It was not the Agency's
                            intention to place1 a new restriction on
                            funding for treatment works serving
                            industries. To correct that problem, we
                            eliminated the term "compatible
                            industrial wastewater" and added a
                            new provision. Section 35.2125 prohibits
                            award of grants for treatment works
                            that are exclusively for industrial use. It
                            is similar to a provision proposed in the
                            May 18,1981 Federal Register (46 FR
                            27314). Several commentors objected to
                            the continuation of the Agency policy
                            not to fund projects exclusively for
                            industrial uSe. We believe that
                            expanding eligibility to a substantial
                            new category of industrial projects
                            would be contrary to the overall intent
                            of the 1981 amendments.

                            Project Performance
                              The pu-pose of EPA assistance is to
                            build treatment works that have been
                            planned and designed to meet the
                            enforceable requirements of the Act. By
                            executing a grant agreement,  the grantee
                            is obligated to build the project
                            according to its approved design
                            specifications and operate and maintain
                            the project during its design life to meet
                            the enforceable requirements of the Act.
  The regulation requires, the grantee to
reach this performance goal within a
year after the project has been put into
use for its intended purpose. The costs
of architectural, engineering, legal,
technical and other services necessary
to assure that the project is built
according to its design drawings and
specification? are allowable project
costs.
  The date of initiation of operation is
determined by the grantee,, in
consultation with the design engineer
and included in the project schedule. To
assist in operating the project during the
first full year, the amendments require
the  grantee to procure the services of the
engineer or firm that provided architect
engineering services during construction
or the engineer or firm that supervised
construction. The regulation uses the
term "construction" to clarify
congressional intent and makes this
provision consistent with the language
in the Act. The amendments state that
such engineer shall "supervise operation
of the treatment works, train operating
personnel, and prepare, curricula and
training material for operating
personnel."
  EPA uses the term "supervising" as it
is used in the law only once, when
restating the statutory requirements.
Elsewhere in detailing requirements the
regulation uses language requiring the
engineer to "direct" the operation of the
project and revise the operation and
maintenance manual as necessary to
accommodate operating experience. It is
not the intent of the amendment or the
regulation to involve the engineer in the
administrative details of daily operation
of the plant such as individual personnel
transactions or direct supervision of a
contractor's employees. On the other
hand, the legislative history of the
amendments makes it clear that
Congress envisioned a more active role
for  the engineer than merely advising
the grantee, and that the intent was to
firmly establish appropriate
responsibility of all participants in the
process.
  We believe that (he regulation
provides a sufficiently flexible
framework to allow grantees and  their
engineers  to negotiate, on a case-by-
case basis, appropriate arrangements
that fulfill the intent of the amendments.
The grantee may require sufficient
assurances, guarantees or  indemnity or
other contractual requirements to
achieve this goal.
  At the end of the first year of
operation, the grantee must certify to the
Regional Administrator whether the
project meets its design specifications
and the enforceable requirements of the

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            Federal Register / Vol. 49, No.  34 / Friday, February 17, 1984 / Rules and  Regulations
                                                                        6229
Act. This has been changed from the
language of the interim final regulation
which said the certification was whether
the project was capable of meeting
project performance standards, in order
to more closely reflect the 1981
amendments and their intent. The
certification that the project meets
project performance standards must be
satisfactory to the Regional
Administrator and must reflect at a
minimum that applicable permit or other
discharge requirements are currently
being met.
   If the project is not affirmatively
certified, the grantee must provide a
corrective action report. The cost of
bringing the project into compliance is
the responsibility of the grantee except
for the modification or replacement of
innovative or alternative technology
projects. The grantee must also commit
itself to a reasonable date on which it
can make an affirmative certification to
the Regional Administrator. If the
grantee does not bring the project  into
compliance with the design
specifications and enforceable
requirements of  the Act, EPA will  take
appropriate and prompt remedial action.
   More detailed discussion of project
certification is contained in the CG
series guidance.

Delegation
   For the sake of simplicity, the
regulation refers to the role of the
Regional Administrators. Delegatioi. to
State agencies remains an integral pt. rt
of construction grants program
management. As stated in § 35.2000(c),
to the extent that the Regional
Administrator delegates responsibility
to a State agency under a delegation
agreement, the term "Regional
Administrator" is to be read "State
agency."
Reserve Capacity
   One commenter, noting that
 interceptors funded after the 1981
 amendments are limited to 20 years
reserve capacity in all cases, argued that
the amendments and their history meant
 to allow Step 1 or Step 2 grantees with
interceptors now under design for 40
years reserve capacity to receive Step 3
grants for that capacity. We disagree
 and believe that paragraph (a) of
 § 35.2123 is a correct reading of the law
 and its history. The "grandfathering"
 provision applies only if EPA awarded a
 grant for a Step  3 segment of an
 interceptor before December 29,1981.
   Several commenters expressed
 confusion over the application of 1990
 needs as used in this section. This has
 been rewritten to make it clear that this
 date only has relevance after 1990, with
1990 being the cap on eligible needs
after 1990.
  Additionally, several questions were
raised on how to determine "existing
needs" and their relation to unallowable
(beginning October 1,1984) reserve
capacity. First, existing needs should be
considered flows as estimated to exist
at time of grant award, and as described
in an approved facility plan or facility
plan amendment. For onsite systems,
existing needs can include anticipated
flows from failing onsite systems. The
amount of these anticipated flows
should be based on studies updated to
the estimated date of grant award where
necessary.  Second, the length of the
planning period to use in determining
reserve capacity and in the cost-
effectiveness analyses is to be 20 years
(§ 35.2030(b)(3)). This is consistent with
previous practice {40 CFR, Part 35,
Subpart E, Appendix A.6.b and sections
204(a) (1) and (2) and 208(b)(2)(A) of the
Clean Water Act). While this does not
require that the project include capacity
for a twenty-year period, it does require
that the project be shown to be the most
cost effective when compared to
alternatives with capacity for a twenty
year period.
   For example, a project that only
provides capacity for existing needs
may be a stage of a complete waste
treatment system. Alternatively, the
project could be only for the costs to
meet the existing needs, with the costs
for reserve capacity identified using cost
curves as described in the CG series
guidance.

Federal Share
   Some commenters expressed
confusion relating to eligibility of
treatment works phases or segments for
75 percent Federal grants after
September 30,1984 (grandfathering).
Section 35.2152 of the regulation, which
sets forth the requirement
grandfathering, has been clarified in the
final regulation. The final regulation
makes our original intent that all
grandfathered phases or segments be
described in a facilities plan approved
by the Regional Administrator before
October 1,1984, and that they be built in
logical sequence assuring  expeditious
operation and compliance with the
enforceable requirements  of the Act.
   The fact that an approved facilities
plan despribes a complete waste
treatment system that includes a
grandfathered phase or segment does
not mean that the complete system is
grandfathered. The description of the
complete system is a planning tool to
help put the proposed project in context.
Under § 35.2152, the only grandfathered
 treatment works are those that are
described in a facilities plan that is
approved prior to October 1,1984, and
that include a phase or segment that is
awarded a Step 3 grant prior to October
1,1984. Treatment works that do not
include a phase or segment that is
awarded a grant prior to October 1,
1984, are not grandfathered merely
because they are described in a facilities
plan that contains grandfathered
treatment works. For example, if there
were two treatment facilities and their
interceptors described in the facilities
plan, and only one had received a grant
for a phase or segment prior to October
1,1984, then only that facility and its
interceptors are eligible for
grandfathering. However, two treatment
facilities with simple interconnections,
such as sludge lines, are considered
separate treatment facilities for
purposes of this regulation.
  Concerning the sequence for EPA
funding of grandfathered phases and
segments, § 35.2152 requires that EPA
funded phases and segments be built in
a sequence necessary to make phases or
segments previously funded by EPA
operational and  comply with the
enforceable requirements of the Act
before other phases or segments receive
EPA funding. EPA expects the sequence
of funding segments will result in the
earliest compliance with the enforceable
requirements of the Act. For example,
where an interceptor segment is built,
the next  segments to be funded are
those which will make the interceptor
operational and meet the enforceable
requirements of the Act. EPA would not
expect to fund a segment in another
interceptor until the first interceptor is
operational.
   Another area of concern is the
uniform lower Federal share. The lower
uniform Federal share is applied on a
project-by-project basis. That is, each
separate grant, including phased and
segmented grants, is viewed
individually. Prior to October 1,1984,
grant assistance is awarded for a phase
or segment with the Federal share
prevailing at the time of award.
Separate phases or segments of the
same treatment works may, therefore,
receive grant assistance with varying
Federal shares, but once grant
assistance is awarded for a project, the
Federal share shall be the same for any
grant increase within the scope of the
project.
   There was a question raised on the
relationship between the
"grandfathering" Federal share
provision for treatment works first
awarded segment grants before October
1,1984, and the Governor's discretion to

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uniformly reduce the Federal grant snare
throughout a State.
  When EPA first proposed a regulation
to implement the 1980 amendment (Pub.
L. 96-483) regarding the uniform lower
Federal share (46 FR 27314, May 18,
1981), we addressed the issue of varying
the Federal share among treatment
works phases or segments. That
proposal and this regulation allow
variations among treatment works
phases or segments. Requiring States to
maintain the same Federal share to each
phase or segment of an entire waste
treatment system would inhibit, or even
preclude effectiveness of the
amendment. However, for increases
within the scope of a project, the
Federal share will be the same as the
share of the initial award for that
project.
  In instituting the "grandfathering"
provision, Congress did not restrict the
use of the lower Federal share. The 1981
amendments used the phrase "shall be
eligible for grants at 75 per centum . .  .,"
not "shall be 75 per centum." Reading
this provisions consistent with the
uniform lower Federal share means that
should the Governor not reduce the
Federal share, post 1984 phases or
segments would receive 75 percent
grants like 1984 or earlier phases or
segments of that treatment works. If the
Governor reduces the share, post-1984
phaseo or segments would be eligible for
a grant at only the reduced Federal
share prevailing in that State.
  By maintaining our initial
interpretation we are able to give effect
to both provisions now part of the law.
We believe, further, that this view is
consistent with prevailing policies
calling for maintaining and increasing
State control over the construction
grants program.
  Another issue was the period of time
for which the share would be reduced,
EPA believes that one year periods are
reasonable, but the Governor may lower
the  share for a shorter or longer period
of time as the Governor deems
appropriate. However, this flexibility
may not be used to discriminate against
particular projects or classes of projects.
Allotment and Reallotment
  Recent experience with reallotment
and several comments on the interim
regulation highlighted the need for
changes in the "Allotment and
reallotment" section (§ 35.2010) and the
"Reserves" section (§ 35.2020).
  First, we made it clear that § 35.2010
applies only to funds, appropriated under
section 205 of the Clean Water Act.
Funds available to the construction
grants program from sources other than
section 205, such as the Public Works
                            Employment Act and section 206 of the
                            Clean Water Act, are not subject to
                            reallotment under § 35.2010.
                              We revised  § 35.2010 (c) and (d) to
                            clarify the intent of those provisions.
                            The interim final regulation revised
                            § 35.910-2 in response to a problem
                            encountered in reallotting FY1979 and
                            FY1980 funds last year. Some regions
                            deobligated funds late in fiscal year 1981
                            that were subject to reallotment on
                            October 1,1981.  Deobligated funds must
                            be reissued to the regions by the EPA
                            Comptroller in headquarters before the
                            Regional Administrator can reobligate
                            them to other projects. That process
                            takes time and some funds were not
                            reissued in time  for use before the end of
                            the fiscal year. As a result, § 35.2010 (c)
                            and (d) provide that funds deobligated
                            by a Region which are not reissued to
                            the Region before the reallotment date
                            for those funds will not be subject to
                            reallotment and  shall be made available
                            for obligation.
                              We added a new section (§ 35.2021) to
                            clarify the reallotment provisons of the
                            various reserves under § 35.2020.
                            Paragraph (c) of  § 35.2021 requires that
                            Regions which deobligate funds from
                            one of the mandatory reserves under
                            § 35.2020 before  the initial reallotment
                            date for those  funds return them to the
                            same reserve after they are reissued by
                            the EPA Comptroller. Funds from a
                            mandatory reserve which are
                            deobligated after the initial reallotment
                            date for those funds are not to be
                            returned to the reserve and are governed
                            by § 35.2010(d).
                              Finally, we deleted the words "sums
                            alloted for"  from the  second sentence of
                            § 35.2010(b). This change was necessary
                            to clarify the year with which funds
                            realloted or deobligated before an
                            approval of an appropriation for the
                            current year would be identified. In the
                            future these funds will be treated like
                            funds for the current  year regardless of
                            whether funds for that year have been
                            appropriated.

                            Combined Sewer Overflow
                              The regulation incorporates two
                            provisions of the 1981 amendments
                            directly related to funding the correction
                            of combined sewer overflow problems:
                              (1) Section 35.2024  implements section
                            201(n)(l) of the Act and states that after
                            September 30,1984 (when correction of
                            combined sewer overflows is no longer
                            an'eligible category), the Governor may
                            elect to use the regular State allotments
                            from funds authorized under section 207
                            to address impaired uses in priority
                            water quality areas due to the impacts
                            of combined sewer overflows (CSOs),
                              (2) Section 35.2024  also deals with the
                            use after September 30,1982, of funds to
be appropriated under section 201(n)(2)
of the Act for addressing impaired uses
or public health risks resulting from
combined sewer overflows in marine
bays and estuaries. In addition to the
priority criteria set forth here, § 35.2040
contains particular grant application
requirements for this separate fund.
  While this separate CSO fund's
eligibility and priority criteria and
application requirements are distinct, it
is subject to all applicable limitations on
award and grant conditions, as well as
Federal share, allowable cost and other
provisions imposed on CSO projebts
funded with monies authorized in
section 207.
  The regulation reflects the language of
the conference committee report on H.R.
4503, placing restrictions on the funding
of combined sewer overflow correction.
Directed at both provisions for funding
of combined sewer overflow projects,
this language requires States to
demonstrate to EPA the necessity for the
project and the specific benefits to be
achieved.
  Guidance on the preparation and
review of applications for marine CSO
projects is available from the State
water pollution control agency. Non-
marine CSO projects  applied for under
§ 35.2015(b)(2) (iii) and (iv) can also use
the marine CSO guidance to prepare the
demonstration of water quality benefits
required by § 35.2024(b); however, the
demonstration should address fishing
(rather than shellfishing under the
marine CSO program).
Work by Debarred or Suspended
Persons
  EPA published procedures for
debarments and suspensions under EPA
assistance programs,  40 CFR Part 32 (47
FR 35940) on August 17,1982. This
regulation states EPA's policy to do
business only with persons who
properly use Federal assistance.
  The purpose of § 35.2105 is to inform
EPA whether the applicant awarded a
contract for planning  or design work to a
debarred, suspended, or  excluded
individual, organization,  or unit of
government. If the applicant certifies
that it has made such an award, EPA
shall closely examine the facilities
plans, and design drawings and
specifications to determine whether to
award a Step 3 grant or take other
appropriate action.

Value Engineering
  Before the enactment of Pub. L. 97-
117, value engineering was required
during the design of projects with a
projected total Step 3 grant eligible cost
of $10 million or more, excluding the

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                                                                         6231
cost for interceptor and collector
sewers. Pub. L. 97-117 requires that
value engineering be conducted on all
projects that did not have prior grant
assistance for design where the total
cost of building the treatment works is
estimated to exceed $10 million. (This
includes the cost of building interceptor
and collector sewers but does not
include the cost of services.) Projects
that had grant assistance for design are
subject to the value engineering
requirements of 40 CFR 35.926.

Miscellaneous  Terms
  The terms "project," "treatment
works" and "complete waste treatment
system" have specific meanings in this
regulation and should not be used
interchangeably. This reflects a
consistency with the Act and EPA's
general regulations for assistance
programs (40 CFR Part 30).
  "Project" refers only to the activities
or tasks identified in the grant
agreement.
  The definition of "treatment works" is
essentially the  same as that contained in
section 212 of the Act In the context of
the Clean Water Act, this is airoad
definition, and includes "any devices
and systems for the storage, treatment,
recycling, and reclamation of municipal
sewage, domestic sewage, or liquid
industrial wastes."
   A "complete waste treatment system"
is the total of all elements necessary for
 the transport, treatment and ultimate
disposal of treated wastewater and
residuals.

Building
   The term "building" has been used
 throughout this regulation to describe
 the principal activity to be undertaken
 in  the grants program. That is, the
 program provides assistance for the
 erection, acquisition, alteration,
 remodeling, improvement or extension
 of facilities to transport and treat
 wastewater. The term "building" is used
 in this regulation rather than
 "construction" (the term used in the
 past) because  "construction" is defined
 in the Act to include facilities planning
 and design. EPA can no longer award
 grant assistance solely for facilities
 planning and design activities.

 Costs of Acquiring Existing Treatment
 Works
    Section D.l.e of Appendix A to the
 interim final rule states long-standing
 EPA policy limiting grant assistance for
 the acquisition of existing publicly or
 privately owned treatment works. This
 provision explains that the costs of
 acquiring existing  treatment works are
 allowable only if the acquisition
provides new pollution control benefits
and meets three other criteria.
  The limitations contained in section
D.l.e reflect the purpose of section 201
of the Clean Water Act, which is to
make grant funds available to
municipalities for the construction of
treatment works that provide new
pollution control benefits (i.e., pollution
control services that are additional to
those being provided before grant
award) and not to provide
reimbursement for costs incurred to
construct existing facilities. In view of
this purpose, acquisitions of existing
treatment works are generally ineligible
for section 201 funding because they
usually do not provide new pollution
control benefits. Conversely,  the
upgrade, expansion, or rehabilitation of
a project that includes an acquisition
does provide such benefits and thus the
upgrade, expansion, or rehabilitation
portion may be eligible although the
acquisition portion is not. An example of
an eligible acquisition would be a
municipality's purchase of demonstrated
excess treatment works capacity that
was built without Federal funds and
provides new pollution control benefits.
   On October 28,1982, subsequent to
the promulgation of the interim final
rule, the EPA Board of Assistance
Appeals issued a decision on the case of
Atlantic City Municipal Utilities
Authority (EPA Docket No. 81-19) which
misinterpreted the new pollution control
benefits principle. In Atlantic City, the
Board found allowable the costs
incurred by the Authority to  purchase a
privately-owned sewage collection
 system.  The Board based its
 determination on the assumption that
 the acquisition would result in new
 pollution control benefits because the
 Authority intended to rehabilitate the
 system. This determination, however,
 overlooked the fact that the acquisition
 independent of the rehabilitation plan
 would not provide new water pollution
 control  services additional to those
 being provided before acquisition.
   We have modified Appendix A to
 state explicitly that in determining the
 eligibility of acquisitions of existing
 facilities it is necessary to distinguish
 between the acquisition and any
 subsequent improvements. An
 acquisition of an existing facility is
 eligible only if the acquisition, in and of
 itself, considered apart from any
 upgrade, expansion or rehabilitation,
 provides new pollution control benefits.
Appendix A—Revised Interim Final
Rule
Allowable Costs
  Appendix A consolidates information
on allowable and unallowable costs.
Although the Appendix continues
existing Agency policy in 40 CFR Part
35, the Handbook of Procedures and
Program Requirement Memoranda, it
also reflects new policies designed to
restrict allowability assuring more
pollution control benefits from limited
program funds. To simplify its use,
Appendix A has been organized by type
of cost, i.e., subagreement costs, small
systems, equipment, etc.
Replacement and Additions Costs
  Section H.2.e of Appendix A states
EPA's policy against providing grant
assistance for replacing, through
reconstruction or substitution, failed
treatment works* that were built with
construction grants assistance. This
provision bars ^the procedure of
providing grant assistance for
replacement costs after the costs under
the original grant for the failed
treatment works are disallowed.
  Based on comments received on the
interim final regulation, we have
clarified the replacement cost provision
in two ways. First, the sentence
structure has been modified to make
clear that the provision applies to
treatment works, that fail before the
expiration of their design life, either
before or after initiation of operation.
Second, the statutory reference has been
modified to clarify our original intent
that the provision covers treatment
works built with Federal assistance
 provided under the Federal Water
 Pollution Control Act of 1956 (Pub. L. 84-
 660) or any subsequent amendments
 including, but not limited to, Pub. L. 92-
 500.
   We have also clarified the policy
 against grant assistance for replacement
 costs by explaining, in Paragraph H.l.d
 of Appendix A, EPA's policy concerning
 additions to projects that fail to meet
 their performance standards. The
 additions provision is not an exception
 to the prohibition against grant
 assistance for replacement costs. As
 Paragraph H.2.e makes clear, the costs
 of replacing failed treatment works
 through reconstruction or substitution
 are unallowable.
   Paragraph H.l.d provides that if the
 additions costs are demonstrated not to
 be caused by the grantee's
 mismanagement or the improper actions
 of others (e.g., the grantee's engineers  or
 contractors), the costs are allowable
 under limited conditions. Subparagraph

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H.l.d(3)(a) provides that if the need for
additions is caused by changes in
performance standards of design criteria
outside the grantee's control or by a
written agreement or directive to delay
building a portion of the treatment
works, the cost of the additions is
allowable. Subparagraph H.l.d(3)(b)
limits Che allowability of additions not
covered by subparagraph H.l.d(3)(a) by
excluding the costs of rework, delay,
acceleration or disruption caused by the
additions and requiring on projects for
which grants are awarded after
December 28,1981, that the additions be
made during the project's first year of
operation.

Cost of Corrective Action Report
  In the interim final regulation the cost
of the corrective action report was listed
as allowable. One commenter
questioned this, and upon review of the
1981 amendments we have concluded
that the Congress intended this cost to
be unallowable. The statute refers to
undertaking correction at other than
Federal expense, and the corrective
action report is a part of that effort.

Costs Related to Subagreement
Enforcement
  The construction grants regulation has
long referred to the authority of EPA to
provide technical and legal assistance in
the administration and enforcement of
subagreements. This regulation
describes  EPA financial assistance as
an alternative to direct assistance. It is
generally unallowable unless a number
of conditions are met. These conditions
include a formal grant amendment
specifically covering the costs before
they are incurred and the Regional
Administrator's determination that there
is a significant Federal interest in the
subagreement matters at issue.
Mercury Seals
  The cost of process equipment such as
trickling filters and comminutors that
use mercury seals is no longerjisted as
an unallowable cost. While the Agency-
continues to have concerns about the
safe use of mercury seals, there is no
statutory basis for prohibiting the use of
mercury seals. Decisions on the use of
mercury seals should be made on a
case-by-case basis; specific guidance on
this subject is contained in the CG series
guidance.

Appendix B: Allowance for Facilities
Planning and Design—Final Rule
  One of the most significant changes in
the  construction grants program
resulting from the 1981 Amendments is
the  elimination of grants for planning
(Step 1)  and design (Step 2). Grant
                            agreements include an allowance for
                            facilities planning and design. Grantees
                            that currently have a Step 1 or Step 2
                            grant will be able to complete the work
                            included in their scope of work using the
                            present system of grant payments.
                            However, the 1981 Amendments prohibit
                            new grants exclusively for facilities
                            planning or design. Those activities will
                            be completed by potential grantees
                            before they apply for a grant to build
                            their projects. The Congress, in
                            providing the allowance mechanism,
                            sought to achieve systemwide
                            efficiency. In so doing, the Congress
                            acknowledged the potential for inequity
                            in the allowance for any given project.
                            The device in the law is not a cost
                            reimbursement, but an allowance. EPA
                            understands that, in practice, any
                            savings realized from the allowance will
                            be available to each community for
                            general public purposes. The Agency
                            expects that these funds will be used to
                            defray unreimbursed expenses
                            associated with plant construction. Due
                            to the unrestricted nature of the
                            allowance, however, EPA will not audit
                            the use of these funds.
                             Appendix B contains the procedures
                            to determine'the amount of advances of
                            allowance  and of the estimated and
                            final allowances. Allowances in
                            Appendix B are based on the percentage
                            of building costs that have historically
                            been attributable to facilities planning
                            and design. Costs of specific facilities
                            planning and design activities are not
                            segregated and cannot be considered as
                            a basis for reimbursement in addition to
                            the allowance.
                             The allowance for a project is a single
                            sum based on the actual total allowable
                            building cost. Allowances are not
                            auditable and the activities they cover
                            are not subject to EPA requirements  for
                            procurement under assistance
                            agreements (40 CFR Part 33). However,
                            the Congress did not intend to reduce
                            the opportunities afforded minority and
                            women's business enterprises (MBE/
                            WBE) to compete for contracts
                            associated with construction of publicly
                            owned treatment works; therefore, it is
                            EPA's policy to encourage recipients to
                            adopt procurement procedures for all
                            activities of their construction program
                            that, at a minimum, include the
                            affirmative steps in 40 CFR § 33.240.
                            EPA will request information from grant
                            applicants  regarding the level of
                            minority and women's business
                            enterprise participation achieved during
                            planning and design activities in order
                            to meet our obligation to report MBE
                            and WBE participation in the
                            construction grants program.
                             The data analysis for the development
                            of the allowances took the form of using
 one parameter as the sole predictor of a
 second parameter. The method employed
 was bivariate analysis using a linear
 regression technique, a convenient,
 widely accepted way of analyzing both
 large and small data sets for
 relationships. The least-squares method
 was used for the linear regression
 analysis; this method yields an equation
 which expresses one variable in terms
 of another. The allowances for facilities
 planning and design are based on such
 regression equations.
  Since the allowance applies to all of
 the work performed during the facilities
 planning and design of the project, not
 just architectural or engineering
 services, the historical data used to
 develop the allowance tables included
 all of the allowable costs of the Step 1
 and Step 2 work. In addition, prior to
 any analysis being performed, all of the
 cost values were updated (adjusted for
 inflation) and normalized (adjusted to a
 common geographical area) to fourth
 quarter (calendar year) 1980 Kansas
 City/St. Joseph, Missouri dollars.
  Aftet the publication of the proposed
 allowance tables in the Federal Register
 on May 12,1982, additional analysis of
 the historical cost data was performed.
 This additional work was undertaken
 for two reasons. First, it was desired to
 verify the appropriateness of the
 methodology and procedures used to
 develop the allowance tables, and if
 possible to improve it. Second, the
 additional analysis was necessary to
 respond to comments which suggested
 different approaches for analyzing the
 cost data. As part of this follow-up
 analysis, EPA contracted for a
 statistician to conduct an independent
 review of the methodology and
 procedure that were used to develop the
 proposed (May 12,1982) allowance
 tables.
  The follow-up analysis contains two
 refinements that were not included in
 the development of the proposed
 allowance tables. The proposed
 allowance tables were developed from a
 regression analysis that related building
 cost (in dollars) to Step 1  and/or Step 2
 cost (expressed as a percentage of
 building cost). The proposed allowance
 tables were calculated using the
resulting regression equations. This
technique, although valid, showed a
poor correlation between the two
variables. Although the basic technique
used to generate the regression equation
is sound, the result tends to mask the
actual relationships between building
cost and Step 1 and Step 2 cost. In order
to overcome the masking of the
variation, the independent statistical
consultant suggested a new method of

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                                                                        6233
relating the two variables. The new
method entailed relating the building
cost (in dollars) directly to the Step 1
and/or Step 2 cost (in dollars), and not
to Step 1 and/or Step 2 cost (expressed
as a percentage of building cost) as was
done in the original analysis. This
method produced a very good
correlation (in the 80-85% range) and
supported the underlying hypothesis
that a change in building cost results in
a change in Step 1 and/or Step 2 cost.
  Since the method for developing the
regression equation changed, it was
necessary to change the method of
calculating the allowance percentage.
Instead qf inserting the building coat
into an equation and "Calculating a
percent, a two step process was
necessary. First a building cost was
entered into the regression equation to
obtain the facilities planning and/or
design cost. The resulting dollar value
was then divided by the input building
cost tp obtain the allowance percentage.
  The second change in the
development of the final allowance
tables involved the selection of projects
that were included in the analysis. The
analysis that resulted in the
development of the proposed allowance
tables included all of the projects in
EPA's construction cost data base that
had Step 1 cost and/or Step 2 cost. This
resulted in the inclusion of a number of
projects in the analysis'that wefe
lacking an associated Step 1 or Step 2
cost. The Step cost could have been
missing for a number of reasons. For
example, the Step 1 cost could have
been funded by the community. This
would result in a project being included
in the analysis that had a Step 2 cost
without any associated Step 1 cost. For
 this reason, the analysis that resulted in
 the final allowance tables only included
projects that had both a Step 1 and a
 Step 2 cost.
   In the proposed allowance tables, the
 < "owance for design was developed by
 subtracting the values obtained from the
 regression equation for facilities
 planning from the values obtained from
.the regression equation for combined
 facilities planning and design to develop
 a third equation. This mathematical
 procedure was necessary because many
 of the Step 2 projects included in the
 earlier analysis contained
 reimbursement for facilities planning
 cost in the Step 2 awards. Since the
 analysis that re? -tlted in the
 development cJ the fuial allowance
 tables only included projects that
 contained both a Step 1 and Step  2 cost,
 it was not necessary to use this
 mathematical procedure. Instead  the
 allowance for design was developed
directly from the regression equation
relating building cost (in dollars) to Step
2 cost (in dollars).
  As a result of this follow-up analysis,
the final allowance tables differ slightly
from the tables that were published on
May 12,1982. The percentages in the
final allowance tables are higher for
projects with low building cost and
lower for projects with high building
cost than those in the proposed
allowance tables.
  We received 38 comments concerning
the allowance  for facilities planning and
design. A number of commenters stated
that the allowance would not fully
compensate communities for the
facilities planning and design cost
associated with complicated or involved
projects. Similarly, other commenters
were concerned that the allowance
procedure could discourage value
engineering (VE) or designs
incorporating innovative or alternative
(I/A) technologies, because the higher
cost normally  associated with these
services would not be fully covered by
the allowance.
   EPA carefully considered these
comments. However, after extensive
deliberation, we determined that it was/
not in  the best interest of the program to
change the allowance procedures. This
decision was based on the following:
   (1) EPA does not want to create a
compensation schedule for facilities
planning or design services such as the
one contained in the American Society
of Civil Engineer's Manual No. 45. If
separate allowance tables were created
for advanced treatment projects,
innovative projects, value engineering
projects, or for different geographical
areas  of the country, it would give the
impression  that the allowance tables
could  be used to determine the
compensation for services on these
types  of projects.
   (2) EPA does hot believe the amount
paid under the allowance procedures
would have any significant impact on
the effectiveness of the.VE program or
selection of I/A technologies. The I/A
program already has many incentives,
including a larger Federal share, lower
operational cost, and higher ranking on
the State's priority list. Similarly, EPA
believes that there are sufficient
 safeguards  and incentives contained in
 the regulations to assure an effective VE
program.
   •(3) Congress, in providing an
 allowance for facilities plannning and
 design, sought to achieve overall
 program efficiencies. In doing so, the
 Congress acknowledged the potential
 for inequity in the allowance for an
 individual project.
  A number of commenters suggested
that the allowance tables be changed to
show the percentage for the Federal
share. Although this could simplify the
application of the allowance procedures,
this change could not be made because
the Federal share of a project is not
fixed. Therefore, the tables continue to
show the total allowance and EPA pays
the prevailing Federal share of that
figure.
  The proposed allowance procedures
require that the allowance be based on
the allowable cost of building the
treatment works. Accordingly, the
allowance for a segment of a treatment
works was to be based on the
cumulative allowable building cost to
date minus any previous allowances.
We received  comments from a number
of communities and from members of
the engineering profession stating that
this was not an equitable way to
determine the allowance. These
commenters said that in most cases
each segment stands alone, and for this
reason, the allowance should be based
only on the building cost of that
segment. Another commenter wrote that
the proposed procedure was more
complex, difficult to understand, and
different than the procedures generally
used in the engineering profession. It
was also pointed out that the analysis of
the historical cost information did not,
in many instances, represent the entire
cost of building the treatment works.
Because of these reasons EPA is
deleting the procedures that were
proposed fer determining the allowance
for segmented and phase funded
treatment works. In the future, the
allowance will be based on the
allowable building cost of each segment.
   A number  of commenters objected to
the adjustment of the allowance to
reflect the building cost one year after
substantial completion of the design
drawings and specifications. They argue
that since the allowance is not directly
related to the cost of facilities planning
and design, it should not be related to
the date of completion of such work.
EPA agrees with this logic. Accordingly,
the proposal to adjust the allowance to
reflect the date of completion of
facilities planning and design was
deleted from Appendix B.
   In response to a number of comments
the allowance tables were expanded to
include projects with building cost less
then $100,000 and projects with building
cost between $100 million and $200
million.
   One  commenter suggested that all
references to the allowance being based
 on an analysis of historical data be
removed from Appendix B because such

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 a discussion cou|d give the impression
 that the tables could be used to estimate
 the actual facilities planning and design
 cost. Since these references are not
 needed to determine the allowance, and
 because this preamble includes an
 extensive discussion of the data and
 analysis, these references have been
 deleted from Appendix B.
   Many commenters expressed concern
 that the allowance tables in Appendix B
 would be used by communities to
 determine the amount to be paid to
 architect/engineering firms for planning
 and design services. As stated above,
 the tables are not designed to be used as
 a compensation schedule for facilities
 planning or design services. In fact,
 many variables, including demonstrated
 competence, experience and
 qualifications of the firms involved are
 important factors in determining the
 appropriate fees for architect/
 engineering services. To reinforce this
 fact, a "Note" to this effect has been
 incorporated into Appendix B.

 Regulation Development Process
  This program is listed in the  Catalog
 of Federal Domestic Assistance as
 number 66.416—Construction Grants for
 Wastewater Treatment Works.
 Executive Order 12372 of July 14,1982,
 detailed a  State and local elected
 official consultation process to replace
 Office of Management and Budget
 Circular A-95. EPA published a final
 regulation on June 24,1983,
 implementing this Executive Order (48
 PR 29288).
  Under Executive Order 12291 EPA is
 required to judge whether a regulation is
 "major" and therefore subject to the
 regulatory impact analysis requirements
 of the Order.,We are making these
 changes to implement Pub. L. 96-483, the
 October 21,1980 amendments to the
 Clean Water Act, to reduce the
 complexity of the regulation, and to
 implement the Municipal Wastewater
 Treatment Construction Grant
 Amendments of 1981 (Pub! L. 97-117). I
 have determined this regulation is not a
 major regulation as it will not have a
 substantial impact on the nation's
 economy or large numbers of individuals
 or businesses. Thus it is not subject to
 the impact analysis requirements of
 Executive Order 12291.
  Information collection requirements
 contained in this regulation have been
 approved by the Office of Management
 and Budget (OMB) under the provisions
 of the Paperwork Reduction Act of 1980,
44 LJ.S.C. 3501 et seq. and have  been
 assigned OMB control number 2040-
0027.
  Under the Regulatory Flexibility Act
 (5 U.S.C. 601) I hereby certify that this
 regulation will not have a significant
 impact on a substantial number of small
 entities. This rule is designed to reduce
 regulation burdens.to a minimum. The
 revisions made clarify and simplify the
 regulation, and reduce project costs.

 List of Subjects in 40 CFR Part 35
   Air pollution control, Grant
 programs—environmental protection,
 Indiansr Pesticides and pests, Reporting
 and recordkeeping requirements, Waste
 treatment and disposal, Water pollution
 control.

   This regulation was submitted to the
 Office of Management and Budget for
 review as required by Executiv  ^rder
 12291.
   Dated: February 3,1984.
 William D.Ruckelshaus,
 Administrator.
   For the reasons outlined in the
 preamble, 40 CFR Part 35 is amended by
 revising Subpart I, to read as follows:

 PART 35—STATE AND LOCAL
 ASSISTANCE
Subpart I—Grant* for Construction of
Treatment Works

Sec.
35.2000  Purpose and policy.
35.2005  Definitions.
35.2010  Allotment; reallotment.
35.2015  State priority system and project
    priority list.
35.2020  Reserves.
35.2021  Reallotment of reserves.
35.2023  Water quality management
    planning.
35.2024  Combined sewer overflows.
35.2025  Allowance  and advance of
    allowance.
35.2030  Facilities planning.
35.2032  Innovative and alternative
    technologies.
35.2034  Privately owned individual systems.
35.2040  Grant application.
35.2042  Review of grant applications.
35.2050  Effect of approval or certification of
    documents.
35.2100  Limitations on award.
35.2101  Advanced treatment.
35.2102  Water quality management plans.
35.2103  Priority determination.
35.2104  Funding and other considerations.
35.2105  Debarment  and suspension.
35.2106  Plan of operation.
35.2107  Intermunicipal service agreements.
35.2108  Phased, or segmented treatment
    works.
35.2109  Step 2+3.
35.2110  Access to individual systems.
35.2111  Revised water quality standards.
35.2112  Marine discharge waiver applicants.
35.2113  Environmental review.
35.2114  Value engineering.
35.2116  Collection system.
35.2118  Preaward costs.
35.2120  Infiltration/inflow.
 Sec.
 35.2122  Approval of user charge system and
     proposed sewer use ordinance.
 35.2123  Reserve capacity.
 35.2125  Treatment of wastewat'er from
     industrial users.
 35.2127  Federal facilities.
 35.2130  Sewer use ordinance.
 35.2140  User charge system.
 35.2152  Federal share.
 35.2200  Grant conditions.
 35.2202  Step 2+3 projects.
 35.2204  Project changes.
 35.2206  Operation and maintenance.
 35.2208  Adoption of sewer use ordinance
     and user charge system.
 35.2210  Land acquisition.
 35.2211  Field testing for Innovative and
     Alternative Technology Report.
 35.2212  Project initiation.
 35.2214  Grantee responsibilities.
 35.2216  Notice of building completion and
     final inspection.
 35.2218  Project performance.
 35.2250  Determination of allowable costs.
 35.2260  Advance  purchase of eligible land.
 35.2262  Funding of field testing.
 35.2300  Grant payments.
 35.2350  Subagreement enforcement.
 Appendix A—Determination of allowable
     costs.
 Appendix B—Allowance for facilities
     planning and design.

 Subpart I—Grants for Construction of
 Treatment Works
  Authority: Sees. 101(e), 109(b), 201 through
 205, 207, 208(d), 210 through 212, 215 through
 217, 304(d)(3), 313, 501, 502, 51} and 516(b) of
 the Clean Water Act, as amended, 33 U.S.C.
 1251 et seq.
 § 35.2000 Purpose and policy.
  (a) The primary purpose of Federal
 grant assistance available under this
 subpart is to assist municipalities in
 meeting enforceable requirements of the
 Clean Water Act, particularly,
 applicable National Pollutant Discharge
 Elimination System (NPDES) permit
 requirements.
  (b) This subpart supplements EPA's
 Uniform Relocation and Real Property
 Acquisition Policies Act regulation  (Part
 4 of this chapter), its National
 Environmental Policy Act (NEPA)
 regulation (Part 6 of this chapter), its
 public participation regulation (Part 25
 of this chapter), its intergovernmental
 review regulation (Part 29 of this
 chapter), its general grant regulation
 (Part 30 of this subchapter), its
 debarment regulation (Part 32 of this
 subchapter), and  its procurement under
 assistance regulation (Part 33 of this
 subchapter), and  establishes
requirements for Federal grant
assistance for the building of
wastewater treatment works. EPA may
also find it necessary to publish other
requirements applicable to the
construction grants program in response

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                                                                        6235
to Congressional action and executive
orders.
  (c) EPA's policy is to delegate
administration of the construction grants
program on individual projects to State
agencies to the maximum extent
possible (see Subpart F). Throughout
this subpart we have used the term
Regional Administrator. To the extent
that the Regional Administrator
delegates review of projects for
compliance with the requirements of this
subpart to a State agency under a
delegation agreement (§ 35.1030), the
term Regional Administrator may be
read State agency. This paragraph does
not affect the rights of citizens,
applicants or grantees provided in
Subpart F.
  (d) In accordance with the Federal
Grant and Cooperative Agreement Act
(Pub. L. 95-224) EPA will, when
substantial Federal involvement is
anticipated, award assistance under
cooperative agreements. Throughout this
subpart we have used the terms grant
and grantee but those terms may be
read cooperative agreement and
recipient if appropriate.
  (e) From time to time EPA publishes
technical and guidance materials on
various topics relevant to the
construction grants program. Grantees
may find this information useful in
meeting requirements in this subpart.
These publications, including the MCD
and FRD series, may be ordered from:
EPA, 401 M St. SW, Room 1115 ET, WH
547, Washington, DC 20460. In order to
expedite processing  of requests, persons
wishing to obtain these publications
should request a copy of EPA form 7500-
21 (the order form listing all available
publications), from EPA Headquarters,
Municipal Construction Division (WH-
547) or from any EPA Regional Office.

§ 35.2005  Definitions.
   (a) Words and terms not defined
below shall have the meaning given to
 them in 40 CFR Parts 30 and 33.
   (b) As used in this subpart, the
 following words and terms mean:
   (1) Act. The Clean Water Act (33
 U.S.C. 1251 et seq., as amended).
   (2) Ad valorem tax. A tax based upon
 the value of real property.
   {3) Allowance. An amount based on a
 percentage of the project's allowable
 building cost, computed in accordance
 with Appendix B.
   (4) Alternative technology. Proven
 wastewater treatment processes and
 techniques which provide for the
 reclaiming and reuse of water,
 productively recycle wastewater
 constituents or otherwise eliminate the
 discharge of pollutants, or recover
 energy. Specifically, alternative
technology includes land application of
effluent and sludge; aquifer recharge;
aquaculture; direct reuse (non-potable);
horticulture; revegetation of disturbed
land; containment ponds; sludge
composting and drying prior to land
application; self-sustaining incineration;
methane recovery; individual and onsite
systems; and small diameter pressure
and vacuum sewers and small diameter
gravity sewers carrying partially or fully
treated wastewater.
  (5) Alternative to conventional
treatment wQrks for a small community.
For purposes of §§ 35.2020 and 35.2032 a
treatment works in a small community
using innovative or alternative
technology.
  (6) Architectural or engineering
services. Consultation, investigations,
reports, or services for design-type
projects within the scope of the practice
of architecture or professional
engineering as defined by  the laws of
the State or territory in which the
grantee is located.
  (7) Best Practicable Waste Treatment
Technology (BPWTT). The cost-
effective technology that can treat
wastewater, combined sewer overflows
and nonexcessive infiltration and inflow
in publicly owned or individual
wastewater treatment works, to meet
the applicable provisions of:
   (i) 40 CFR Part 133—secondary
treatment of wastewater;
   (ii) 40 CFR Part 125, Subpart G—
marine discharge waivers;
   (iii) 40 CFR 122.44(d)—more stringent
water quality standards and State
standards; or
   (iv) 41 FR 6190 (February 11,1976)—
Alternative Waste Management
Techniques for Best Practicable Waste
Treatment (treatment and discharge,
land  application techniques and
utilization practices, and reuse).
   (8) Building. The erection, acquisition,
alteration, remodeling, improvement or
extension of treatment works.
   (9) Building completion. The date
when all but minor components of a
 project have been built, all equipment is
 operational and the project is capable of
 functioning as designed.
   (10) Collector sewer. The common
 lateral sewers, within a publicly owned
 treatment system, which are primarily
 installed to receive wastewaters directly
 from facilities which convey wastewater
 from individual systems, or from private
 property, and which include service "Y"
 connections designed for  connection
 with those facilities including:
    (i)  Crossover sewers connecting more
 than one property on one  side of a major
 street, road, or highway to a lateral
 sewer on the other side when more cost
 effective than parallel sewers; and
  (ii) Except as provided in (b)(10)(iii) of
this section, pumping units and
pressurized lines serving individual
structures or groups of structures when
such units are cost effective and are
owned and maintained by the grantee.
  (iii) This definition excludes other
facilities which convey wastewater from
individual structures, from private
property to the public lateral sewer, or
its equivalent and also excludes
facilities associated with alternatives to
conventional treatment works in small
communities.
  (11) Combined sewer. A sewer that is
designed as a sanitary sewer and a
storm sewer.
  (12) Complete waste treatment
system. A complete waste treatment
system consists of all the treatment
works necessary to meet the
requirements of title III of the Act,
involving: (i) The transport of
wastewater from individual homes or
buildings  to a plant or facility where
treatment of the wastewater is
accomplished; (ii) the treatment of the
wastewater to remove pollutants;  and
(iii) the ultimate disposal, including
recycling  or reuse, of the treated
wastewater and residues which result
from the treatment process.
  (13,) Construction. Any one or more of
the following: Preliminary planning to
determine the feasibility of treatment
works, engineering, architectural,  legal,
fiscal, or economic investigations  or
studies, surveys, designs, plans, working
drawings, specifications, procedures,
field testing of innovative or alternative
wastewater treatment processes and
techniques (excluding operation and
maintenance) meeting guidelines
promulgated under section 304(d)(3) of
the Act, or other necessary actions,
erection, building, acquisition,
alteration, remodeling, improvement, or
extension of treatment works, or the
inspection or supervision of any of the
foregoing items.
   (14) Conventional technology.
Wastewater treatment processes  and
 techniques involving the treatment of
wastewater at a centralized treatment
plant by means of biological or
physical/chemical unit processes
 followed by direct point source
 discharge to surface waters.
   (15) Enforceable requirements of the
Act.  Those conditions or limitations of
 section 402 or 404 permits which,  if
 violated,  could result in the issuance of
 a compliance order or initiation of a
 civil or criminal action under section 309
 of the Act or applicable State laws. If a
 permit has not been issued, the term
 shall include any requirement which, in
 the Regional Administrator's judgment,

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Federal Register / Vol.  49, No. 34  /  Friday, February 17, 1984  / Rules  and  Regulations
would be included in the permit when
issued. Where no permit applies, the
term shall include any requirement
which the Regional Administrator
determines is necessary for the best
practicable waste treatment technology
to meet applicable criteria.
  (16J Excessive infiltration/inflow. The
quantities of infiltration/inflow which
can be economically eliminated from  a
sewer system as determined in a cost-
effectiveness analysis that compares  the
costs for correcting the infiltration/
inflow conditions to the total costs for
transportation and treatment of the
infiltration/inflow. (See
§§ 35.2005(b)(28), (b}(29) and 35.2120).
  (17) Field testing. Practical and
generally small-scale testing of
innovative or alternative technologies
directed to verifying performance and/
or refining design parameters not
sufficiently tested to resolve technical
uncertainties which prevent the funding
of a promising improvement in
innovative or alternative treatment
technology.
  (18) Individual systems. Privately
owned alternative wastewater
treatment works (including dual
waterless/gray water systems) serving
one or more principal residences, or
small commercial establishments.
Normally these are onsite systems with
localized treatment and disposal of
wastewater, but  may be systems
utilizing small diameter gravity, pressure
or vacuum sewers conveying treated or
partially treated wastewater. These
systems can also include small diameter
gravity sewers carrying raw wastewater
to cluster systems.
  (19) Industrial user. Any
nongovernmental, nonresidential user of
a publicly owned treatment works
which is identified in the Standard
Industrial Classification Manual, 1972,
Office: of Management and Budget, as
amended and supplemented, under one
of the following divisions:
Division A. Agriculture, Forestry, and Fishing
Division B. Mining
Division D. Manufacturing
Division E. Transportation, Communications,
  Electric, Gas, and Sanitary Services
Division I. Services
  (20) Infiltration. Water other than
wastewater that enters a sewer system
(including sewer service connections
and foundation drains) from the ground
through such means as defective pipes,
pipe joints, connections, or manholes.
Infiltration does  not include, and is
distinguished from, inflow.
  (21) Inflow. Water other than
wastewater that enters a sewer system
(including sewer service connections)
from sources such as, but not limited  to,
                            roof leaders, cellar drains, yard drains,
                            area drains, drains from springs and
                            swampy areas, manhole covers, cross
                            connections between storm sewers/and
                            sanitary sewers, catch basins, cooling
                            towers, storm waters, surface runoff,
                            street wash waters, or drainage. Inflow
                            does not include, and is distinguished
                            from, infiltration.
                              (22) Initiation of operation. The date
                            specified by the grantee on which use of
                            the project begins for the purposes that
                            it was planned, designed, and built.
                              (23) Innovative technology. Developed
                            wastewater treatment processes and
                            techniques which have not been fully
                            proven under the circumstances of their
                            contemplated use and which represent a
                            significant advancement ovef the state
                            of the art in terms of significant
                            reduction in life cycle cost or
                            significant environmental benefits
                            through the reclaiming and reuse of
                            water, otherwise eliminating the
                            discharge of pollutants, utilizing
                            recycling techniques such as land
                            treatment, more efficient use of energy
                            and resources, improved or new
                            methods of waste treatment
                            management for combined municipal
                            and industrial systems, or the confined
                            disposal of pollutants so that they will
                            not migrate to cause water or other
                            environmental pollution.
                              (24) Interceptor sewer. A sewer which
                            is designed for one or more of the
                            following purposes:
                              (i) To intercept wastewater from a
                            final point in a collector sewer  and
                            convey such wastes directly to a
                            treatment facility or another interceptor.
                              (ii) To replace an existing wastewater
                            treatment facility and transport the
                            wastes to an adjoining collector sewer
                            or interceptor sewer for conveyance to a
                            treatment plant.
                              (iii) To transport wastewater from one
                            or more municipal collector sewers to
                            another municipality  or to a regional
                            plant for treatment.
                              (iv) To intercept an existing major
                            discharge of raw or inadequately treated
                            wastewater for transport directly to
                            another interceptor or to a treatment
                            plant.
                              (25) Interstate agency. An agency of
                            two or more States established under an
                            agreement or compact approved by the
                            Congress, or any other agency  of two or
                            more States, having substantial powers
                            or duties pertaining to the  control of
                            water prllution.
                              (26) Marine bays and estuaries. Semi-
                            enclosed coastal waters which have a
                            free connection to the territorial sea.
                              (27) Municipality. A city, town,
                            borough, county, parish, district,
                            association, or other public body
                            (including an intermunicipal agency of
two oi> more of the foregoing entities)
created under State law, or an Indian
tribe or an authorized Indian tribal
organization, having jurisdiction over
disposal of sewage, industrial wastes, or
other waste, or a designated and
approved management agency under
section 208 of the Act.
  (i) This definition includes a special
district created under State law such as
a water district, sewer district, sanitary
district, utility district, drainage district
or similar  entity or an integrated waste
management facility, as defined in
section 201(e) of the Act, which has as
one of its principal responsibilities the
treatment, transport, or disposal of
domestic wastewater in a particular
geographic area.
  (ii) This definition excludes the
following:
  (A) Any revenue producing entity
which has as its principal responsibility
an activity other than providing
wastewater treatment services to the
general public, such as an airport,
turnpike, port facility or other municipal
utility.
  (B) Any special district (such as
school district or a park district) which
has the responsibility  to provide
wastewater treatment services in
support of its principal activity at
specific facilities, unless the special
district has the responsibility under
State law to provide wastewater
treatment  services to the community
surrounding the special district's facility
and no other municipality, with
concurrent jurisdiction to serve the
community, serves or intends to serve
the special district's facility or the
surrounding community.
  (28) Nonexcessive infiltration. The
quantity of flow which is less than 120
gallons per capita per day (domestic
base flow  and infiltration)  or the
quantity of infiltration which cannot be
econpmically and effectively eliminated
from a sewer system as determined in a
cost-effectiveness analysis. (See
§§ 35.2005(b)(16) and 35.2120.)
  (29) Nonexcessive inflow. The rainfall
induced peak inflow rate which does not
result in chronic operational problems
related to  hydraulic overloading of the
treatment  works during storm events.
These problems may include
surcharging, backups, bypasses, and
overflows. (See §§ 35.2005(b)(16) and
35.2120.)
  (30) Operation and Maintenance.
Activities  required to assure the
dependable and economical function of
treatment works.
  (i) Maintenance: Preservation of
functional integrity and efficiency of
equipment and structures. This includes

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            Federal Register / Vol. 49. No.  34 / Friday. February 17,  1984 / Rules and Regulations       6237
preventive maintenance, corrective
maintenance and replacement of
equipment (See § 35.2005(b)(36)) as
needed.)
  (iij Operation: Control of the unit
processes and equipment which make
up the treatment works. This includes
financial and personnel management;
records, laboratory control, process
control, safety and emergency operation
planning.
  (31) Principal residence. For the
purposes of § 35.2034, the habitation of a
family or household for at least 51
percent of the year. Second homes,
vacation or recreation residences are
not included in this definition.
  (32) Project. The activities  or tasks the
Regional Administrator identifies in the
grant agreement for which the grantee
may expend, obligate or commit funds.
  (33) Project performance standards.
The performance and operations
requirements applicable to a project
including the enforceable requirements
of the Act and the specifications,
including the quantity of excessive
infiltration and inflow proposed to be
eliminated, which the project is planned
and designed to meet.
  (34) Priority water quality areas. For
the purposes of § 35.2015, specific
stream segments or bodies of water, as
determined by the State, where
municipal discharges have resulted in
the impairment of a designated use or
significant public health risks, and
where the reduction of pollution from
such discharges will substantially
restore surface or groundwater uses.
  (35) Project schedule. A timetable
specifying the dates of key project
events including public notices of
proposed procurement actions,
subagreement awards, issuance of
notice to proceed with building, key
milestones in the building schedule,
completion of building, initiation of
operation and certification of the
project.
  (36) Replacement. Obtaining and
installing equipment, accessories, or
appurtenances which are necessary
during the design or useful life,
whichever is longer, of the treatment
works to maintain the  capacity and
performance for whiqh such works were
designed and constructed.
  (37) Sanitary sewer.  A conduit
intended to carry liquid and water-
carried wastes from residences,
commercial buildings,  industrial plants
and institutions together with minor
quantities of ground, storm and surface
waters that are not admitted
intentionally.
   (38) Services. A contractor's labor,
time or efforts which do not involve the
delivery of a specific end item, other
than documents (e.g., reports, design
drawings, specifications). This term
does not include employment
agreements or collective bargaining
agreements.
  (39) Small commercial
establishments. For purposes of
§ 35.2034 private establishments such as
restaurants, hotels, stores, filling
stations, or recreational facilities and
private, nonprofit entities such as
churches, schools, hospitals, or
charitable organizations with dry
weather wastewater flows less than
25,000 gallons per day.
  (40) Small community. For purposes of
§§ 35.2020(b) and 35.2032, any
municipality with a population of 3,500
or less,  or highly dispersed sections of
large municipalities, as determined by
the Regional Administrator.
  (41) State. A State, the District of
Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, Guam,
American Samoa, the Trust Territory of
the Pacific Islands, and the
Commonwealth of the Northern
Marianas. For the purposes of applying
for a grant under section 201(g)(l) of the
act, a State (including its agencies) is
subject to the limitations on revenue
producing entities and special districts
contained in  135.2005(b)(27)(ii).
  (42) State agency. The State agency
designated by the Governor having
responsibility for administration of the
construction grants program under
section 205(g) of the Act.
  (43) Step 1. Facilities planning.
  (44) Step 2. Preparation of design
drawings and specifications.
  (45) Step 3. Building of a treatment
works and related services and supplies.
  (46) Step 2+3. Design and building of,
a treatment works and building related
services and supplies.
  (47) Storm sewer. A sewer designed to
carry only storm waters, surface run-off,
street wash waters, and drainage.
  (48) Treatment works. Any devices
and systems for the storage, treatment,
recycling, and reclamation of municipal
sewage, domestic sewage, or liquid
industrial wastes used to implement
section 201 of the Act, or necessary to
recycle or reuse water at the most
economical cost over the design life of
the Works. These include intercepting
sewers, outfall sewers, sewage
collection systems, individual systems,
pumping, power, and other equipment
and their appurtenances; extensions,
improvement, remodeling, additions,
and alterations thereof; elements
essential to provide a reliable recycled
supply  such as standby treatment units
and clear well facilities; and any works,
including acquisition of the land that
will be an integral part of the treatment
process or is used for ultimate disposal
of residues resulting from such
treatment (including land for composting
sludge, temporary storage of such
compost and land used for the storage of
treated wastewater in land treatment
systems before land application); or any
other method or system for preventing,
abating, reducing, storing, treating,
separating, or disposing of municipal
waste or industrial waste, including
waste in combined storm water and
sanitary sewer systems.
  (49) Treatment works phase or
segment. A treatment works phase or
segment may be any substantial portion
of a facility and its interceptors
described in a facilities plan under
135.2030, which can be identified as a
subagreement or discrete subitem.
Multiple subagreements under a project
shall not be considered to be segments
or phases. Completion of building of a
treatment works phase or segment may,
but need not in and of itself, result in an
operable treatment works.
  (50) Useful life. The period during
which a treatment works operates. (Not
"design life" which is  the period during
which a treatment works is planned and
designed to be operated.)
  (51) User charge. A  charge levied on
users of a treatment 'works, or that
portion of the ad valorem taxes paid by
a user, for the user's proportionate share
of the cost of operation and'
maintenance (including replacement) of
such works under sections 204(b)(l](A)
and 201(h)(2) of the Act and this
subpart.
  (52) Value engineering. A specialized
cost control technique which uses a
systematic and creative approach to
identify and to focus on unnecessarily
high cost in a project in order to arrive
at a cost saving without sacrificing the
reliability or  efficiency of the project.

§ 35.2010  Allotment; realtotment
  (a) Allotments are made on a formula
or other basis which Congress specifies
for each fiscal year (FY). The allotment
for each State and the availability
period shall be announced each fiscal
year in the Federal Register. This
section applies only to funds allotted
under section 205 of the Act.
  (b) Unless  otherwise provided by
Congress, all sums allotted to a State
under section 205 of the Act shall
remain available for obligation until the
end of one year after the close of the
fiscal year for which the  sums were
appropriated. Except  as provided in
 | 35.2020)(a), sums not obligated a't the
end of that period shall be subject to
reallotment on the basis of the same
ratio as applicable to the then-current

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6238       Federal  Register / Vol. 49. No.  34 / Friday, February 17.  1984 / Rules and Regulations
fiscal year, but none of the funds
reallotted shall be made available to
any State which failed to obligate any of
the fiscal year funds being reallotted.
Any sum made available to a State by
reallotment under this section shall be
in addition to any funds  otherwise
allotted to such State for grants under
this subpart during any fiscal year and
the reallotted funds shall remain
available for obligation until the last day
of the fiscal year following the fiscal
year in which the reallotted funds are
issued by the Comptroller to the
Regional Administrator.
  (c) Except for funds appropriated for
FY 72 and fiscal years prior to 1972,
sums which are deobligated and
reissued by the Comptroller to the
Regional Administrator before their
reallotment date  shall be available for
obligation in the  same State and treated
in the same manner as the allotment
from which such  funds were derived.
  (d) Except for funds appropriated for
FY 72 and fiscal years prior to 1972,
deobligated sums which are reissued by
the Comptroller to the Regional
Administrator after their reallotment
date shall be available for obligation in
the same State until the last day of the
fiscal year following the fiscal year in
which the reissuance occurs.
  (e) Deobligated FY 72 and prior to
1972 fiscal year funds, except 1964,1965
and 1966 funds, wi,ll be credited to the
allowances of the same Region from
which such funds are recovered, and the
Regional Administrator may determine
how these recoveries are credited to the
States within the Region.

§ 35.2015  State priority system and
project priority list
  (a) General. The Regional
Administrator will award grant
assistance  from annual allotments to
projects on a State project priority list
developed in accordance with an
approved State priority system.  The
State priority system and list must be
designed to achieve optimum water
quality management consistent with the
goals and requirements of the Act. All
projects for building treatment works to
be funded by EPA must be included on a
State project priority list, except training
facilities funded  under section 109(b) of
the Act and marine CSO projects 'funded
under section 201 (n)(2) of the Act.
  (b) State priority system. The State
priority system describes the
methodology used to rank projects that
are considered eligible for assistance.
The priority system should give high
priority to projects 1n priority water
quality areas. The priority system may
also include the administrative,
management, and public participation
procedures required to develop and
revise the State project priority list. The
priority system includes at least the
following elements:
  (1) Criteria, (i) The priority system
shall include at least the following
criteria for ranking projects:
  (A) The impairment of classified
water uses resulting from existing
municipal pollutant discharges; and
  (B) The extent of surface or ground
water use restoration or public health
improvement resulting from the
reduction in pollution.
  (ii) The State may also include other
criteria in its priority system for ranking
projects,  such as the use of innovative or
alternative technology, the need to
complete a. waste treatment system for
which a grant for a phase or segment
was previously awarded; and the
category  of need and the existing
population affected.
  (iii) In ranking phased and segmented
projects States must comply with
§ 35.2108.
  (2) Categories of need All projects
must fit into at least one of the
categories of need described in this
paragraph to be eligible for funding,
except as provided in paragraphs
(b)(2)(iii) and (b)(2)(iv) of this section.
States will have sole authority to
determine the priority for each category
of need.
  (i) Before October 1,1984, these
categories of need shall include at least
the following:
  (A) Secondary treatment (category I);
  (B) Treatment more stringent than
secondary (category II);
  (C) Infiltration/inflow correction
(category IIIA);
  ,(D) Major sewer system rehabilitation
(category HIB);
  (E) New collector sewers and
appurtenances (category IVA);
  (F) New interceptors and
appurtenances (category IVBJ;
  (G) Correction of combined sewer
overflows (category V).
  (ii) After September 30,1984, except
as provided in paragraphs (b)(2)(iii) and
(b)(2)(iv) of this section, these categories
of need shall include only the following:
  (A) Secondary treatment or any cost-
effective alternative;
  (B) Treatment more stringent than
secondary or any cost-effective
alternative;
  (C) New interceptors and
appurtenances; and
  (D) Infiltration/inflow correction.
  (iii) After September 30,1984, up to 20
percent (as determined by the Governor)
of a State's annual allotment may be
used for  categories of need other than
those listed in paragraph (b)(2)(ii) of this
section.
  (iv) After September 30,1984, the
Governor may include in the priority
system a category for projects needed to
correct combined sewer overflows
which result in impaired uses in priority
water quality areas. Only projects which
comply with the requirements of
§ 35.2024(a) may be included in this
category.
  (c) Project priority list. The State's
annual project priority list is an ordered
•listing of projects for which the State
expects Federal financial assistance.
The priority list contains two portions:
the fundable portion, consisting of those
projects anticipated to be funded from
funds available for obligation; and the
planning portion, consisting of projects
anticipated to be funded from future
authorized allotments.
  (1) The State shall develop  the project
priority list consistent with the criteria
established in the approved priority
system. In ranking projects, the State
must also consider total funds available,
needs and priorities set forth  in
areawide water quality management
plans, and any other factors contained
in the  State priority system.
  (2) The list shall include an estimate
of the  eligible cost of each project.
  (d] Public participation. (1) hi
addition to any requirements in 40 CFR
Part 25, the State shall hold .public
hearings as follows:
  (i) Before submitting its priority
system to the Regional Administrator for
approval and before adopting any
significant change to an approved
priority system;  and
  (ii) Before submitting its annual
project priority list to the Regional
Administrator for acceptance and before
revising its priority  list unless the State
agency and the Regional Administrator
determine that the revision is not
significant.
  (iii)  If the approved State priority
system contains procedures for
bypassing projects.on the fundable
portion of the priority list, such bypasses
will not be significant revisions for
purposes of this section.
  (2) Public hearings may be conducted
as directed in the State's continuing
planning process document or may be
held jn conjunction with any regular
public meeting of the State agency.
  (e) Regional Administrator review.
The State must submit its priority
system, project priority list and
revisions of the priority system or
priority list to the Regional
Administrator for review. The State
must also submit each year, by August
31, a new priority list for use  in the next
fiscal  year.

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            Federal Register / Vol. 49. No.  34 / Friday. February 17, .1984 / Rules and Regulations       6239
  (1) After submission and approval of
the initial priority system and
submission and acceptance of the
project priority lists under paragraph (c)
of this section, the State may revise its
priority .system and list as necessary.
  (2) The regional Administrator shall
review the State priority system and any
revisions to insure that they are
designed to obtain compliance with the
criteria established in accordance with
paragraphs (b) and (d) of this section
and the enforceable requirements of the
Act as defined in  § 35.2005(b)(15). The
Regional Administrator shall complete
review of the priority system within 30
days of receipt of the system from the
State and will notify the State in writing
of approval or disapproval of the
priority system, stating any reasons for
disapproval.
   (3) The Regional Administrator will
review the project priority list and any
revisions to insure compliance with the
State's approved priority system and the
requirements of paragraph (c] of this
section. The Regional Administrator will
complete review of the project priority
list within 30 days of receipt from the
State and will notify the State in writing
of acceptance or rejection, stating the
reasons for the  rejection. Any project
which is  not contained on an accepted
current priority list will not receive
funding.
   (f) Compliance with the enforceable
requirements of. the Act. (I) Except as
limited under paragraph (f)(2) of this
section, the Regional Administrator,
after a public hearing, shall require the
removal  of a specific project or portion
thereof from  the State project priority
list if the Regional Administrator
determines it will not contribute to
compliance with the enforceable
requirements of the Act.
   (2) The Regional Administrator shall
not require removal of projects in
categories under paragraphs (b)(2)(i)(D)
through (b)(2)(i)(G) of this section which
do not meet the, enforceable
requirements of the Act unless the total
Federal share of such projects would
exceed 25 percent of the State's annual
allotment.

§35.2020  Reserves.
   In developing its priority list the State
shall establish the reserves required or
authorized under this section. The
amount of each mandatory reserve shall
be based on the allotment to each State
from the annual appropriation under
§ 35.2010. The State may also establish
other reserves which it determines
appropriate.
   (a) Reserve for State management
assistance grants. Each State may
request that the Regional Administrator
reserve, from the State's annual
allotment, up to 4 percent of the State's
allotment based on the amount
authorized to be appropriated, or
$400,000, whichever is greater, for State
management assistance grants under
Subpart F of this part. Grants may be
made from these funds to cover the
costs of administering activities
delegated or scheduled to be delegated
to a State. Funds reserved for this
purpose that are obligated by the end of
the allotment period will be added to the
amounts last allotted to a State. These
funds shall be immediately available for
obligation to projects in the same
manner and to the same extent as the
last allotment.
  (b) Reserve for alternative systems for
small communities.  Each State with 25
percent or more rural population (as
determined by population estimates of
the Bureau of Census) shall reserve 4
percent of the State's annual allotment
for alternatives to conventional
treatment works for small communities.
The  Governor of any non-rural State
may reserve up to 4 percent of that
State's allotment for the same purpose.
  (c) Reserve for innovative and
alternative technologies. Each State
shall reserve not less than 4 percent nor
more than 7Vfe percent from its annual
allotment to increase the Federal share
of grant awards under § 35.2032 for
projects which use innovative or
alternative wastewater treatment
processes and techniques. Of this
amount not less than one-half of one
percent of the State's allotment shall be
set aside to  increase the Federal share
for projects  using innovative processes
and  techniques.
   (d) Reserve for water quality
management. Each'  State shall reserve
not less than $100,000 nor more than 1
percent from its annual allotments, to
carry out water quality management
planning under § 35.2023, except that in
the case of Guam, the Virgin Islands,
American Samoa, the Trust Territory of
the Pacific Islands and the
Commonwealth of the Northern
Marianas, a reasonable  amount shall be
reserved for this purpose.
   (e) Reserve for Advances of
Allowance.  Each State shall reserve a
reasonable portion  of its annual
allotment not to exceed 10 percent for
advances of allowance under § 35.2025.
The Regional Administrator may waive
this  reserve requirement where a State
can  demonstrate that such a reserve is
not necessary because no new facilities
planning or  design work requiring an
advance and resulting in Step 3 grant
awards is expected to begin during the
period of availability  of the annual
allotment.
§ 35.2021   Reallotment of reserves.
  (a) Mandatory portions of reserves
under § 35.2020(b) through (e) shall be
reallotted if not obligated during the
allotment period. The State management
assistance reserve under § 35.2020(a) is
not subject to reallotment.
  (b) States may request the Regional
Administrator to release funds in
optional reserves or optional portions of
required reserves under § 35.2020(b)
through (e) for funding projects at any
time before the reallotment date. If these
optional reserves are not obligated or
released and obligated for other
purposes before the reallotment date,
they shall be subject to reallotment
under § 35.2010(b).
  (c) Sums deobligated from the
mandatory portion of reserves under
paragraphs (b) through (e) of § 35.2020
which are reissued by the Comptroller
to the Regional Administrator before the
initial reallotment date for those funds
shall be returned to the same reserve.
(See § 35.2010.)

§ 35.2023  Water quality management
planning.
  (a) From funds reserved under
§ 35.2020(d) the Regional Administrator
shall make grants to the States to carry
out water quality management planning
including but not limited to:
  (1) Identifying the most cost-effective
and locally acceptable facility and non-
point measures to meet and maintain
water quality standards;
  (2) Developing an implementation
plan to obtain State and local financial
and regulatory commitments to
implement measures developed under
paragraph (a)(l);
  (3) Determining the nature, extent and
causes of water quality problems in
various areas of the State and interstate
region, and reporting on these annually;
and
  (4) Determining which publicly owned
treatment works should be constructed,
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, and implementing section
303(e) of the Act.
  (b) In carrying out planning with
grants made under paragraph (a), a
State shall develop jointly with local,
regional and interstate entities, a plan
for carrying out the program and give
funding priority to such entities and
designated or undesignated public
comprehensive planning organizations
to carry out the purposes of this section.

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6240       Federal Register / Vol. 49. No. 34 / Friday,  February 17,  1984 /  Rules and Regulations
§ 35.2024  Combined sewer overflows.
  (a) Grant assistance from State
allotment. As provided in
§ 35.2015(b)(2)(iv), after September 30,
1984, upon request from a State, the
Administrator may award a grant under
section 201(n){l) of the Act from the
State allotment for correction of
combined sewer overflows provided
that the project is on the project priority
list, it addresses impaired uses in
priority water quality areas which are
due to the impacts of the combined
sewer overflows and otherwise meets
the requirements of this subpart. The
State must demonstrate to the
Administrator that the water quality
goals  of the Act will not be achieved
without correcting the combined sewer
overflows. The demonstration shall as a
minimum prove that significant usage of
the water for fishing and swimming will
not be; possible without the proposed
project, and that the project will result
in substantial restoration of an existing
impaired use.
  (b) Separate fund for combined sewer
overflows in marine waters. (1) After
September 30,1982, the Administrator
may award grants under section
201(n](2) of the Act for addressing
impaired uses or public health risks in
priority water quality areas in marine
bays and estuaries due to the impacts of
combined sewer overflows. The
Administrator may award such grants
provided that the water quality benefits
of the  proposed project have been
demonstrated by the State. The
demonstration shall as a minimum prove
that significant usage of the water for
shellfishing and swimming will not be
possible without the proposed project
for correction of combined sewer
overflows, and the proposed project will
result  in substantial restoration of an
existing impaired use.
   (2)  The Administrator shall establish
priorities for projects with demonstrated
water quality benefits based upon the
following criteria:
   (i) Extent of water use benefits that
would result, including swimming and
shellfishing;
   (ii) Relationship of water quality
improvements to project costs; and
   (iii] National and regional
significance.
   (3) If the project is a phase or segment
of the proposed treatment works
'described in the facilities plan, the
criteria in paragraph (b)(2) of this
 section must be applied to the  treatment
works described in the facilities plan
 and each segment proposed for funding.
   (4) All requirements of this Subpart
 apply to grants awarded under section
 201(n)(2) of the Act except §§ 35.2010,
35.2015, 35.2020, 35.2021, 35.2025(b),
35.2042, 35.2103, 35.2109, and 35.2202.

§ 35.2025  Allowance and advance of
allowance.
  (a) Allowance. Step 2+3 and Step 3
grant agreements will include an
allowance for facilities planning and
design of the project to be determined in
accordance with Appendix B of this
subpart.
  (b) Advance of allowance to potential
grant applicants. (1) After application
by the State (see § 35.2040(d)), the
Regional Administrator will award a
grant to the State in the amount of the
reserve under § 35.2020(e) to advance
allowances to potential grant applicants
for facilities planning and project
design.
  (2) The State may request that the
right to receive payments under the
grant, be assigned to specified potential
grant applicants.
  (3) The State may provide  advances of
allowance only to small communities, as
defined by the State, which would
otherwise be unable to complete an
application for a grant under § 35.2040 in
the judgment of the State.
  (4) The advance shall not exceed the
Federal share of the estimate of the
allowance for such costs which a
grantee would receive under paragraph
(a) of this section.
  (5) In the event a Step 2+3 or Step 3
grant is not awarded to a recipient of an
advance, the State may seek repayment
of the advance on such terms and
conditions as it may determine. When a
State recovers such advances they shall
be added  to its most recent grant for
advances of allowance.

§ 35.2030  Faculties planning.
  (a) General. (1) Facilities planning
consists of those necessary plans and
studies which directly relate to
treatment works needed to comply with
enforceable requirements of the Act.
Facilities  planning will investigate the
need for proposed facilities.  Through a
systematic evaluation of alternatives
that are feasible in light of the unique
demographic, topographic, hydrologic
and institutional characteristics of the
area, it will demonstrate that, except for
innovative and alternative technology
under § 35.2032, the selected alternative
is cost effective (i.e., is the most
economical means of meeting the
applicable effluent, water quality and
public health requirements Over the
design life of the facility while
recognizing environmental and other
non-monetary considerations). For
sewered communities with a population
of 10,000 or less, consideration must be
given  to appropriate low cost
technologies such as facultative ponds,
trickling filters, oxidation ditches, or
overland-flow land treatment; and for
unsewered portions of communities of
10,000 or less, consideration must be
given to onsite systems. The facilities
plan will also demonstrate that the
selected alternative is implementable
from legal, institutional, financial and
management standpoints.
  (2) Grant assistance may be awarded
before certification of the completed
facilities plan if:
  (i) The Regional Administrator
determines that applicable statutory and
regulatory requirements (including Part
6) have been met; that the facilities
planning related to the project has been
substantially completed; and that the
project for which grant assistance is
awarded will not be significantly
affected by the completion of the
facilities plan and will be a component
part of the complete waste treatment
system; and
  (ii) The  applicant agrees to complete
the facilities plan on a schedule the
State accepts and such schedule is
inserted as a special condition of the
grant agreement.
  (b) Facilities plan contents. A
completed facilities plan must include:
  (1) A description of both the proposed
treatment works, and the complete
waste treatment system of which it is a
part.
  (2) A description of the Best
Practicable Wastewater Treatment
Technology. (See § 35.2005(b)(7).)
  (3) A cost-effectiveness analysis of the
feasible conventional, innovative and
alternative wastewater treatment
works, processes and, techniques
capable of meeting the  applicable
effluent, water quality and public health
requirements over the design life of the
facility while recognizing environmental
and other non-monetary considerations.
The planning period for the cost-
effectiveness analysis shall be 20 years.
The monetary costs to be considered
must include the present worth or
equivalent annual value of all capital
costs and operation and maintenance
costs. The discount rate established by
EPA for the construction grants program
shall be used in  the cost-effectiveness
analysis.vThe population forecasting in
the analysis shall be consistent with the
current Needs Survey. A cost-
effectiveness analysis must include:
  (i) An evaluation of alternative flow
reduction methods. (If the grant
applicant demonstrates that the existing
average daily base  flow (ADBF) from
the area is less than 70 gallons per
capita per day (gpcd), or if the Regional
Administrator determines the area has

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            Federal Register  /  Vol. 49, No. 34 / Friday, February 17,  1984 / Rules and Regulations	6241
an effective existing flow reduction
program, additional flow reduction
evaluation is not required.)
  (ii) A description of the relationship
between the capacity of alternatives and
the needs to be served, including
capacity for future growth expected
after the treatment works become
operational. This includes letters of
intent from significant industrial users
and all industries intending to increase
their flows or relocate in the area
documenting capacity needs and
characteristics for existing or projected
flows;
  (iii) An evaluation of improved
effluent quality attainable by upgrading
the operation and maintenance and
efficiency of existing facilities as an
alternative or supplement to
construction of new facilities;
  (iv) An evaluation of the alternative
methods for the reuse or ultimate
disposal of treated wastewater and
sludge material resulting from the
treatment process;
  (v) A consideration of systems with
revenue generating applications;
  (vi) An evaluation of opportunities to
reduce use of, or recover energy;
  (vii) Cost information on total capital
costs, and annual operation and
maintenance costs, as well as estimated
annual or monthly costs to residential
and industrial users.
  (4) A demonstration of the non-
existence or possible existence of
excessive inflitration/inflow in the
sewer system. See § 35.2120.
  (5) An analysis of the potential open
space and recreation opportunities
associated with the project.
  (6) An adequate evaluation of the
environmental impacts of alternatives
under Part 6 of this chapter.
  (7) An evaluation of the water supply
implications of the project.
  (8) For the selected alternative, a
concise description at an appropriate
level of detail, of at least the following:
  (i) Relevant design parameters;
  (ii) Estimated capital construction and
operation and maintenance costs,
(identifying the Federal, State and local
shares), and a description of,the manner
in which local costs will be financed;
  (iii) Estimated cost of future
expansion and long-term needs for
reconstruction of facilities following
their design life;
  (iv) Cost impacts on wastewater
system users; and
  (v) Institutional and management
arrangements necessary for successful
implementation.
  (c) Submission and review of facilities
plan. Each facilities plan must be
submitted to the State for review. EPA
recommends that potential grant
applicants confer with State reviewers
early in the facilities planning process.
In addition, a potential grant applicant
may request in writing from the State
and EPA an early determination under
Par,t 6 of this chapter of the
appropriateness of a categorical
exclusion from NEPA requirements, the
scope of the environmental information
document or the early preparation of an
environmental impact statement.

§ 35.2032  Innovative and alternative
technologies.
  (a) Funding for innovative and
alternative technologies. Projects or
portions of projects using unit processes
or techniques which the Regional
Administrator determines to be
innovative or alternative technology
shall receive increased grants under
§ 35.2152.
  (1) Only funds from the reserve in
§ 35.2020(c) shall be used to increase
these grants.
  (2) If the project is an alternative to
conventional treatment works for a
small community, funds  from the reserve
in § 35.2020(b) may  be used for the 75
percent portion, or any lower Federal
share of the grant as determined under
§ 35.2152.
  (b) Cost-effectiveness preference. The
Regional Administrator may award
grant assistance for a treatment works
or portion of a treatment works using
innovative or alternative technologies  if
the total present worth cost of the
treatment works for which the grant is
to be made does not exceed the total
present worth  cost of the most cost-
effective alternative by more than 15
percent.
  (1) Privately-owned individual
systems (§ 35.2034)  are not eligible for
this preference.
  (2) If the present worth costs of the
innovative or alternative unit processes
are 50 percent or less of the present
worth cost of the treatment works, the
cost-effectiveness preference applies
only to the innovative or alternative
components.
  (c) Modification or replacement of
innovative and alternative projects. The
Regional Administrator may award
grant assistance to fund  100 percent of
the allowable costs  of the modification
or replacement of any project funded
with increased grant funding in
accordance with paragraph (a) of this
section if he determines  that:
  (1) The innovative or alternative
elements of the project have caused the
project or significant elements of the
complete waste treatment system of
which the project is a part to fail to meet
project performance standards;
  (2) The failure has significantly
increased operation and maintenance
expenditures for the project or the
complete waste treatment system of
which the project is a part; or requires
significant additional captial
expenditures for corrective action;
  (3) The failure has occurred prior to
two years after initiation of operation of
the project; and
  (4) The failure is not attributable to
negligence on the part of any person.

§ 35.2034  Privately owned Individual
systems.
  (a) An eligible applicant may apply
for a grant to build privately owned
treatment works serving one or more
principal residences or small
commercial establishments.
  (b) In addition to those applicable
limitations set forth in § 35.2100 through
§ 35.2127 the grant applicant shall:
  (1) Demonstrate that the total cost and
environmental impact of building the
individual system will be less than the
cost of a conventional system;
  (2) Certify that the principal residence
or small commercial establishment was
constructed before December 27,1977,
and inhabited or in use on or before that
date;
  (3) Apply on behalf of a number of
individual units to be served in the
facilities planning area;
  (4) Certify that public ownership of
such works is not feasible and list the
reasons; and
  (5) Certify that such treatment works
will be properly operated and
maintained and will comply with all
other requirements of section 204 of the
Act.

§ 35.2040  Grant application.
  Applicants for Step 2+3 or  Step 3
assistance shall submit applications to
the State. In addition to the information
required in Parts 30 and 33 of this
subchapter, applicants shall provide the
following, information:
  (a) Step 2+3: Combined design and
building of a treatment works and
building related services and supplies.
An application  (EPA form 5700-32) for
Step 2 + 3 grant assistance shall include:
  (1) A facilities plan  prepared in
accordance with Subpart E or I  as
appropriate;
  (2) Certification from the State that
there has been adequate public
participation based on State and local
statutes;
  (3) Notification of any advance
received under  § 35.2025(b); and
  (4) Evidence of compliance with all
applicable limitations on award
(§§ 35.2100 through 35.2127).

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6242       Federal Register  /  Vol. 49. No.  34 / Friday,  February 17, 1984  /  Rules  and  Regulations
   (b) Step 3: Building of a treatment
works and related services and
supplies. An application (EPA form
5700-32) for Step 3 grant assistance shall
include:
   (1) A facilities plan prepared in
accordance with Subpart E or I as
appropriate;
   (2) Certification from the State that
there has been adequate public
participation based on State and local
statutes;
   (3) Notification of any advance
received under § 35.2025(b);
   (4) Evidence of compliance with all
applicable limitations on award
(§§ 35.2100 through 35.2127);
   (5) Final design drawings and
specifications;
   (6) The project schedule; and
   (7) In the case of an application for
Step 3 assistance that is solely for the
acquisition of  eligible real property, a
plat which shows the legal description
of the property to be acquired, a
preliminary layout of the distribution
and drainage systems,  and an
explanation of the intended method of
acquiring the real property (see 40 CFR
Part 4).
   (c) Training facility project. An
application (EPA form 5700-32) for a
grant for construction and support of a
training facility, facilities or training
programs under section 109(b) of the Act
shall include:
   (1) A written commitment from the
State agency to carry out at such facility
a program of training; and
   (2) If a facility is to be built, an
engineering report including facility
design data and cost estimates for
design and building.
   (d) Advances of allowance. State
applications for advances of allowance
to small communities shall be on EPA
form.5700-31, Application for Federal
Assistance (short form). The application
shall include:
   (1) A list of communities that received
an advance  of allowance and the
amount received by each under the
previous State grant; and
   (2) The basis for the amount
requested.
   (e) Field Testing of Innovative and
Alternative  Technology. An application
(EPA Form 5700-32) for field testing of I/
A projects shall include a field testing
plan containing:-
   (1) Identification; including size, of all
principal components to be tested;
   (2) Location  of testing facilities in
relationship to full scale design;
   (3) Identification of critical  design
parameters and performance variables
that are to be verified as the basis for I/
A determinations:
  (4) Schedule for construction of field
testing facilities and duration of
proposed testing;
  (5) Capital and O&M cost estimate of
field testing facilities with
documentation of cost effectiveness of
field testing approach; and
  (6) Design drawing, process flow
diagram, equipment specification and
related engineering data and
information sufficient to describe the
overall design and proposed
performance of the field testing facility.
  (f) Marine CSO Project. An
application (EPA Form 5700-32) for
marine CSO grant assistance under
§ 35.2024(b) shall include:
  (1) All information required under
paragraphs (b)(l), (b)(2), (b)(4), (b)(6),
and (b)(7), of this section;
  (2) Final design drawings and
specifications or a commitment to
provide them by a date set by the
Regional Administrator; and
  (3) The water quality benefits
demonstration required under
§ 35.2024(b)(l).
(Approved by the'Office of Management and
Budget under control number 2040-0027)

§ 35.2042  Review of grant application*.
  (a) All States shall review grant
applications to ensure that they are
complete. When the State determines
the proposed project is entitled to
priority it shall forward the State
priority certification and, except where
application review is delegated, the
complete application to  the regional
Administrator for review.
  (b)(l) All States delegated authority to
manage the construction grants program
under section 205(g) of the Act and
Subpart F of this part shall furnish a
written certification to the Regional
Administrator, on a project-by-project
basis, stating that the applicable Federal
requirements within the scope of
authority delegated to the State under
the delegation agreement have been
met. The certification must be supported
by documentation specified in the
delegation agreement which will be
made available to the Regional
Administrator upon request. The
Regional Administrator shall accept the
certification unless he determines the
State has failed to establish adequate
grounds for the certification or that an
applicable requirement has not been
met.
  (2)(i) When EPA receives a
certification covering all delegable
preaward requirements, the Regional
Administrator shall approve or
disapprove the grant  within 45 calendar
days of receipt of the certification. The
Regional Administrator shall state in
writing the reasons for any disapproval,
 and he shall have an additional 45 days
 to review any subsequent revised
 submissions. If the Regional
 Administrator fails to approve or
 disapprove the grant within 45 days of
 receipt of the application, the grant shall
 be deemed approved and the Regional
 Adminstrator shall issue the grant
 agreement.
   (ii) Grant increase requests are
 subject to the 45 day provision of this
 section if the State has been delegated
 authority over the subject matter of the
 request.
   (c) Applications for assistance for
 training facilities funded under section
 109(b) and for State advances of
 allowance under section 201(1)(1) of the
Act  and § 35.2025 will be reviewed in
 accordance with Part 30 of this
 subchapter.
 (Approved by the Office of Management and
 Budget under control number 2040-0027)

 § 35.2050  Effect of approval or
 certification of documents.
  Review or approval of facilities plans,
 design drawings and specifications or
 other documents by or for EPA is for
 administrative purposes only and does
 not relieve the grantee of its
 responsibility to properly plan, design,
 build and effectively operate and
 maintain the treatment works described
 in the grant agreement as required under
 law, regulations, permits, and good
 management practices. EPA is not
 responsible for increased costs resulting
 from defects in the plans, design
 drawings and specifications or other
 subagreement documents.

 § 35.2100  Limitations on award.
  Before awarding grant assistance for
 any project the Regional Administrator
 shall approve the facilities plan and
 final design drawings and specifications,
 and  determine that the applicant and the
 applicant's project have met all of the
 applicable requirements of § 35.2040 and
 §§35.2100 through 35.2127 except as
 provided in § 35.2202 for Step 2+3
projects.

 § 35.2101   Advanced treatment.
  Projects proposing advanced
treatment shall be awarded grant
assistance only after the project has
been reviewed under EPA's advanced
treatment review policy. This review
must be completed before submission of
any application. EPA recommends that
potential grant applicants obtain this
review before initiation  of design.

§ 35.2102   Water quality management
plans.
  The project shall be consistent with
the approved elements of any applicable

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            Federal  Register / Vol. 49, No.  34 / Friday. February  17.  1984 / Rules and Regulations	6243
water quality management (WQM) plan
approved under section 208 or section
303(e) of the Act; and the applicant shall
be the waste water management agency
designated in that WQM plan.

§ 35.2103  Priority determination.
  The project shall be entitled to
priority in accordance with § 35.2015,
and the award of grant assistance for
the project shall not jeopardize the
funding of any project of higher priority
under the approved priority system.
§ 35.2104  Funding and other
considerations.
  The applicant shall;
  (a) Agree to pay the non-Federal
project costs;
  (b) Demonstrate the legal,
institutional, managerial, and financial
capability to ensure adequate building
and operation and maintenance of the
treatment works throughout the
applicant's jurisdiction including the
ability to comply with Part 30 of this
subchapter. This demonstration must
include: an explanation of the roles and
responsibilities of the local governments
involved; how construction and
operation and maintenance of .the
facilities will be financed; a current
estimate of the cost of the facilities; and
a calculation of the annual costs per
household. It must also include a written
certification signed by the applicant that
the applicant has analyzed the costs and
financial impacts of the proposed
facilities, and that it has the capability
to finance-and manage their building
and operation and maintenance in
accordance with this regulation;
  (c) Certify that it has not violated any
Federal, State or local' law pertaining to
fraud, bribery, graft, kickbacks,
collusion, conflict of interest or other
unlawful or corrupt practice relating to
or in connection with facilities planning
or design work on a wastewater
treatment works project.
  (d) Indicate the level of participation
for minority and women's business
enterprises during facilities planning
and design of the project.
(Approved by the Office of Management and
Budget under control number 2040-0027)

S 35.2105  Debarment and suspension.
  The applicant shall indicate whether
it used the services of any individual,
organization, or unit of government for
facilities planning or design work whose
name appears on the master list of
debarments, suspensions, and voluntary
exclusions. See 40 CFR 32.400. If the
applicant indicates it has used the
services of a debarred individual or
firm, EPA will closely examine the
facilities plan, design drawings and
Specifications to determine whether to
award a grant. EPA will also determine
whether the applicant should be found
non-responsible under Part 30 of this
subchapter or be the subject of possible
debarment or suspension under Part 32
of this subchapter.

§ 35.2106   Plan of operation.
  The applicant shall submit a draft
plan of operation that addresses
development of: An operation and
maintenance manual; an emergency
operating program; personnel training;
an adequate budget consistent with the
user charge system approved under
§ 35.2140; operational reports;
laboratory testing needs; and an
operation and maintenance program for
the complete waste treatment system.

§ 35.2107   Intei-munlcipal service
agreements.
  If the project will serve two or more
municipalities, the applicant shall
submit the executed intermunicipal
agreements, contracts or other legally
binding instruments necessary for the
financing,  building and operation of the
proposed treatment works. At a
minimum they must include the basis
upon which costs are allocated, the
formula by which costs are allocated,
and the manner in which the cost
allocation system will be administered.
The Regional Administrator may waive
this requirement provided the applicant
can demonstrate:
  (a) That such an agreement is already
in place; or
  (b) Evidence of historic service
relationships for water supply,
wastewater or other services between
the affected communities regardless of
the existence of formal agreements, and
  (c) That the financial strength of the
supplier agency is adequate to continue
the project, even if one of the proposed
customer agencies fails to participate.
(Approved by the Office of Management and
Budget under control number 2040-0027)
§ 35.2108
works.
Phased or segmented treatment
  Grant funding may be awarded for a
phase or segment of a treatment works,
subject to the limitations of § 35.2123,
although that phase or segment does not
result in compliance with the
enforceable requirements of the Act,
provided:
  (a) The great agreement requires the
recipient to make the treatment works of
which the phase or segment is a part
operational and comply with the
enforceable requirements of the Act
according to a schedule specified in the
grant agreement regardless of whether
grant funding is available for the
remaining phases and segments; and
  (b) Except in the case of a grant solely
for the acquisition of eligible real
property, one or more of the following
conditions exist:
  (1) The Federal share of the cost of
building the treatment works would
require a disproportionate share of the
State's annual allotment relative to
other needs or would require a major
portion of the State's annual allotment;
  (2) The period to complete the
building of the treatment works will
cover three years or more; or
  (3) The treatment works must be
phased or segmented to meet the
requirements of a Federal or State court
order.

§35.2109 Step 2+3.
  The Regional Administrator may
award a Step 2+3 grant which will
provide the Federal share of an
allowance under Appendix B and the
estimated allowable cost of the project
only if:
  (a) The population of the applicant
municipality is 25,000 or less according
to the most recent U.S. Census;.
  (b) The total Step 3 building cost is
estimated to be $8 million or less; and
  (c) The project is not for a treatment
works phase or segment.

§ 35.2110 Access to individual systems.
  Applicants for privately owned
individual systems shall provide
assurance of access to the systems at all
reasonable times  for such purposes as
inspection, monitoring, building,
operation, rehabilitation and
replacement.

§ 35.2111  Revised water quality
standards.
  After December 29,1984, no grant
assistance can be awarded in a State for
stream segments which have not had
their water quality standards reviewed
and revised, as appropriate, or new
standards adopted under section 303(c)
of the Act, unless the State has in good
faith submitted such water quality
standards and the Regional
Administrator has failed to act on them
within 120 days of receipt.

§ 35.2112 Marine discharge waiver
applicants.
  If the applicant is also an applicant
for a secondary treatment requirement
waiver under section 301 (h) of the Act, a
plan must be submitted which contains
a modified scope  of work, a schedule for
completion of the less-than-secondary
facility and an estimate of costs
providing for building the proposed less-
than-secondary facilities, including

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provisions for possible future additions
of treatment processes or techniques to
meet secondary treatment requirements.

§ 35.2113  Environmental review.
   (a) The environmental review
required by Part 6 of this Chapter must
be completed before submission of any
application. The potential applicant
should work  with the State and EPA as
early as possible in the facilities
planning process to determine if the
project qualifies for a categorical
exclusion from Part 6 requirements, or
whether a finding of no significant
impact or an environmental impact
statement is  required.
   (b) In conjunction with the facilities
planning process as described in
§ 35.2030(c),  a potential applicant may
request, in writing, that EPA make a
formal determination under Part 6 of this
chapter.

§ 35.2114  Value engineering.
   (a) If the project has not received Step
2 grant assistance the applicant shall
conduct value engineering if the total
estimated cost of building the treatment
works is more than $10 million.
   (b) The value engineering
recommendations shall be implemented
 to the maximum extent feasible.
 (Approved by the Office of Management and
 Budget under  control  number 2040-0027)

 § 35.2116 Collection system.
   Except as  provided in § 35.2032(c), if
 the project involves collection system
 work, such work:
   (a) Shall be for the replacement or
 major rehabilitation of an existing
 collection system which was not build
 with Federal funds awarded on or after
 October 18,1972, and shall be necessary
 to the integrity and performance of the
  complete waste treatment system; or
   (b) Shall be for a new cost-effective
  collection system in  a community in
  existence on October 18,1972, which
  has sufficient existing or planned
  capacity to  adequately treat such
  collected wastewater and where the
  bulk (generally two-thirds) of the
  expected flow (flow from existing plus
  future residential users) will be from the
  resident population on October 18,1972.
  The expected flow will be subject to  the
  limitations  for interceptors contained in
  § 35.2123. If assistance is awarded, the
  grantee shall provide assurances that
  the existing population will connect to
  the collection system within a
  reasonable  time after project
  completion.

  § 35.2118 Preaward costs.
    (a) EPA will not award grant
  assistance  for Step 2+3  and Step 3 work
                            performed before award of grant
                            assistance for that project, except:
                              (1) In emergencies or instances where
                            delay could result in significant cost
                            increases, the Regional Administrator
                            may approve preliminary Step 3 work
                            (such as procurement of major
                            equipment requiring long lead times,
                            field testing of innovative and
                            alternative technologies, minor sewer
                            rehabilitation, acquisition of eligible
                            land, or of an option for the purchase of
                            eligible land or advance building of
                            minor portions of treatment works),
                            after completion of the environmental
                            review as required by § 35.2113.
                              (2) If the Regional Administrator
                            approves preliminary Step 3 work, such
                            approval is not an actual or implied
                            commitment of grant assistance and the
                            applicant proceeds at its own risk.
                              (b) Any procurement is subject to the
                            requirements of 40 CFR Part 33, and in
                            the case of acquisition of eligible real
                            property, 40 CFR Part 4.
                            (Approved by the Office of Management and
                            Budget under control number 2040-0027)

                            §35.2120  Infiltration/Inflow.
                               (a) General. The applicant shall
                            demonstrate to the Regional
                            Administrator's satisfaction that each
                             sewer system discharging into  the
                            proposed treatment works project is not
                             or will not be subject to excessive
                             infiltration/inflow. For combined
                             sewers, inflpw is not considered
                             excessive in any event.
                               (b) Inflow. If the rainfall induced peak
                             inflow rate results or will result in
                             chronic operational problems during
                             storm events, the applicant shall
                             perform a study  of the sewer system to
                             determine the quantity of excessive
                             inflow and to propose a rehabilitation
                             program to eliminate the excessive
                             inflow. All cases in which facilities are
                             planned for the specific storage and/or
                             treatment of inflow shall be  subject to a
                             cost-effectiveness analysis.
                               (c) Infiltration. (1) If the flow rate at
                             the existing treatment facility is 120
                             gallons per capita per day or less during
                             periods of high groundwater, the
                             applicant shall build the project
                             including sufficient capacity to transport
                             and treat any existing infiltration.
                             However, if the  applicant believes any
                             specific portion  of its sewer system is
                             subject to excessive infiltration, the
                             applicant may confirm its belief in a
                             cost-effectiveness analysis and propose
                             a sewer rehabilitation program to
                             eliminate that specific excessive
                             infiltration.
                                (2) If the flow rate at the existing
                             treatment facility is more than 120
                             gallons per capita per day during
periods of high groundwater, the
applicant shall either:
  (i) Perform a study of the sewer
system to determine the quantity of
excessive infiltration and to propose a
sewer rehabilitation program to
eliminate the excessive infiltration; or
  (ii) If the flow rate is not significantly
more than 120 gallons per  capita per
day, request the Regional Administrator
to determine that he may proceed
without further study, in which case the
allowable project cost will be limited to
the cost of a project with a capacity of
120 gallons per capita per  day under
Appendix A.G.2.a.
(Approved by the Office of Management and
Budget under control number 2040-0027)

§ 35.2122  Approval «f user charge system
and proposed sewer use ordinance.
  If the project is for Step 3 grant
assistance, unless it is solely for
acquisition of eligible land, the applicant
must obtain the Regional
Administrator's approval  of its user
charge system (§ 35.2140)  and proposed
(or existing) sewer use ordinance
§ 35.2130). If the applicant has a sewer
use ordinance or user charge system in
affect, the  applicant shall  demonstrate
to the Regional Administrator's
satisfaction that they meet the
requirements  of this Part and are being
enforced.
(Approved by the Office of Management and
Budget under control number 2040-0027)

§35.2123   Reserve capacity.
   EPA will limit grant assistance for
reserve capacity as follows:
   (a) If EPA awarded a grant for a Step
3 interceptor segment before December
29,1981, EPA may award grants for
remaining interceptor segments included
 in the facilities plan with  reserve
 capacity as planned, up to 40 years.
   (b) Except as provided  in paragraph
 (a) of this  section, if EPA  awards a grant
 for a Step 3 or Step 3 segment of a
 primary, secondary, or advanced
 treatment facility or its interceptors
 included in the facilities plan before
 October 1,1984, the grant for that Step 3
 or Step 3 segment, and any remaining
 segments, may include 20 years reserve
 capacity.
   (c) Except as  provided  in paragraph
 (b) of this section, after September 30,
 1984, no grant shall be  made to provide
 reserve capacity for a project for
 secondary treatment or more stringent
 treatment or  new interceptors and
 appurtenances. Grants for such projects
  shall be based on capacity necessary to
  serve existing needs (including existing
  needs of residential, commercial,
  industrial, and other users) as

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            Federal Register / Vol.  49.  No. 34  /  Friday, February 17, 1984  /  Rules and Regulations	6245
 determined on the date of the approval
 of the Step 3 grant. Grant assistance
 awarded after September 30,1990 shall
 be limited to the needs existing on
 September 30,1990.
  (d) For any application with capacity
 in excess of that provided by this
 section:
  (1) All incremental costs shall be paid
 by the applicant. Incremental costs
 include all oosts which would not have
 been incurred but for the additional
 excess capacity, i.e., any cost in
 addition to the most cost-effective
 alternative with eligible reserve
 capacity described under paragraphs (a)
 and (b) of this section.
  (2) It must be determined that the
 actual treatment works to be built meets
 the requirements of the National
 Environmental Policy Act and all
 applicable laws and regulations.
  (3) The Regional Administrator shall
 approve the plans, specifications and
 estimates for the actual treatment
 works.
  (4) The grantee shall assure the
 Regional Administrator satisfactorily
 that it has assessed the costs and
 financial impacts of the actual treatment
 works and has the capability to finance
 and manage their construction and
 operation.
  (5) The grantee must implement a user
 charge system which applies to the
 entire service area of the grantee.
  (6) The grantee shall execute
 appropriate grant conditions or releases
 protecting the Federal Government from
 any claim for any of the costs of
 construction due to the additional
 capacity.

 § 35.2125 Treatment of wastewater from
 Industrial users.
  (a) Grant assistance shall not be
 provided for a project unless the project
 is included in a complete waste
 treatment system and the principal
 purpose of both the project and the
 system is for the treatment of domestic
 wastewater of the entire community,
 area, region or district concerned.
  (b) Allowable project costs do not
include:
  11) Costs of interceptor or collector
 sewers constructed exclusively, or
 almost exclusively, to serve industrial
 users; or
  (2) Costs for control or removal of
 pollutants in wastewater introduced into
 the treatment works by industrial users,
 unless the applicant is required to
remove such pollutants introduced from
nonindustrial users.

 § 35.2127 Federal facilities.
  Grant assistance shall not be provided
for costs to transport or treat
 wastewater produced by a facility that
 is owned and operated by the Federal
 government which contributes more
 than 250,000 gallons per day or five
 percent of the design flow of the
 complete waste treatment system,
 whichever is less.,
 (Approved by the Office of Management and
 Budget under control number 2040-0027)

 §35.2130  Sewer use ordinance.
   The sewer use ordinance (see also
 §§35.2122 and 35.2208) or other legally
 binding document shall prohibit any
 new connections from inflow sources
 into the treatment works and require
 that new sewers and connections to the
 treatment works are properly designed
 and constructed. The ordinance or other
 legally binding  document shall also
 require that all  wastewater introduced
 into the treatment works not contain
 toxics or other pollutants in amounts or
 concentrations  that endanger public
 safety and physical integrity of the
 treatment works; cause violation of
 effluent or water quality limitations; or
 preclude the selection of the most cost-
 effective alternative for wastewater
 treatment and sludge disposal.
 (Approved by the Office of Management and
Budget under control number 2040-0027]

 §35.2140  User charge system.
  The user charge system (see
 §§35.2122 and 35.2208) must be designed
 to produce adequate revenues required
 for operation and maintenance
 (including replacement). It shall provide
 that each user which discharges
pollutants that cause an increase in the
 cost of managing the effluent or sludge
from the  treatment works shall pay for
 such increased  cost. The user charge
 system shall be based on either actual
use under paragraph (a) of this section,
ad valorem taxes under paragraph (b) of
this section, or a combination of the two.
  (a) User charge system based on
actual use. A grantee's user charge
system based on actual use (or
estimated use) of wastewater treatment
services  shall provide that each user (or
user class) pays its proportionate share
of operation and maintenance (including
replacement) costs of treatment works
within the grantee's service area, based
on the user's proportionate contribution
to the total wastewater loading from all
users (or user classes).
  (b) User charge system based on ad
valorem taxes. A grantee's user charge
system which is based on ad valorem
taxes may be approved if:
  (1) On  December 27,1977, the grantee
had in existence a system of dedicated
ad valorem taxes which collected
revenues to pay the cost of operation
and maintenance of wastewater
 treatment works within the grantee's
 service area and the grantee has
 continued to use that system;
   (2) The ad valorem user charge system
 distributes the operation and
 maintenance (including replacement)
 costs for all treatment works in the
 grantee's jurisdiction to the residential
 and small non-residential user class
 (including at the grantee's option
 nonresidential, commercial and
 industrial .users that introduce no more
 than the equivalent of 25,000 gallons per
 day of domestic sanitary wastes to the
 treatment works), in proportion to the
 use of the treatment works by this class;
 and
   (3) Each member of the industrial user
 and commercial user class which
 discharges more than 25,000 gallons per
 day of sanitary waste pays its share of
 the costs of operation and maintenance
 (including replacement) of the treatment
 works based upon charges for actual
 use.
   (c) Notification. Each user charge
 system must provide that each user be
 notified, at least annually, in
 conjunction with a regular bill (or other
 means acceptable to the Regional
 Administrator), of the rate and that
 portion of the user charges or ad
 valorem taxes which are attributable to
 wastewater treatment services.
   (d) Financial management system.
 Each user charge system must include
 an adequate financial management
 system that will accurately account for
 revenues generated by  the system and
 expenditures for operation and
 maintenance (including replacement) of
 the treatment system, based on an
 adequate budget identifying the basis
 for determining the annual operation
 and maintenance costs and the costs of
 personnel, material, energy and
 administration.
   (e) Charges for operation and
maintenance for extraneous flows. The
user charge system shall provide that
 the costs of operation and maintenance
 for all flow not directly attributable to
users (i.e., infiltration/inflow) be
distributed among all users based upon
either of the following:
  (1) In the same manner that it
distributes the costs for their actual use,
or
  (2) Under a system which uses one or
any combination of the following factors
on a reasonable basis:
  (i) Flow volume of the users;
  (ii) Land area of the users;
  (iii) Number of hookups or discharges
of the users;
  (jv) Property valuation of the users, if
the grantee has an approved user charge
system based on ad valorem taxes.

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6246	Federal  Register / Vol. 49. No. 34 / Friday,  February 17,  1984 / Rules and Regulations
  (f) After completion of building a
project, revenue from the project (e.g.,
sale of a treatment-related by-product;
lease of the land; or sale of crops grown
on the land purchased under the grant
agreement) shall be used to offset the
costs of operation and maintenance. The
grantee shall proportionately reduce all
user charges.
  (g) Adoption of system. One or more
municipal legislative enactments or
other appropriate authority must
incorporate the user charge system. If
the project accepts wastewater from
other municipalities, the subscribers
receiving waste treatment services from
the grantee shall adopt user charge
systems in accordance with this section.
These user charge systems shall also be
incorporated in appropriate municipal
legislative enactments or other
appropriate authority of all
municipalities contributing wastes to the
treatment works.
  (h) Inconsistent agreements. The user
charge system shall take precedence
over any terms or conditions of
agreements or contracts which are
inconsistent with the requirements of
section 204(b)(l)(A) of the Act and this
section.
(Approved by the Office of Management and
Budget under control number 2040-0027)

§ 35.2152  Federal share.
  (a) General. The Federal share for
each project shall be based on the sum
of the total Step 3 allowable costs and
the allowance established in the grant
agreement under Appendix B. Except as
provided elsewhere in this section, the
Federal share shall be:
  (1) 75 percent for grant assistance
awarded before October 1,1984;
  (2) 55 percent for grant assistance
awarded after September 30,1984,
except as provided in paragraph (a)(3) of
this section; and
   (3) Subject to paragraph (c) of this
section, 75 percent for grant assistance
awarded after September 30,1984, for
sequential phases or segments of a
primary, secondary, or advanced
treatment facility or its interceptors, or
infiltration/inflow correction provided:
   (i) The treatment works being phased
or segmented is described in a facilities
plan approved by the Regional
Administrator before October 1,1984;
   (ii)'The Step 3 grant for the initial
phase or segment of the treatment works
described in (a)(3)(i) of this section is
 awarded prior to October 1,1984; and
   (iii) The phase or segment that
receives 75 percent funding is necessary
 to (A) make a phase or segment
 previously funded by EPA operational
 and comply with the enforceable
 requirements of the Act, or (B) complete
the treatment works referenced in
(a)(3)(i) of this section provided that all
phases or segments previously funded
by EPA are operational and comply with
the enforceable requirements of the Act.
  (b) Innovative and alternative
technology. In accordance with
§ 35.2032, the Federal share for eligible
treatment works or unit processes and
techniques that the Regional
Administrator determines meet the
definition of innovative or alternative
technology shall be 20 percent greater
than the Federal share under paragraph
(a) or (c)  of this section, but in no event
shall the  total Federal share be greater
than 85 percent. This increased Federal
share depends on the availability of
funds from the reserve under § 35.2020.
The proportional State contribution to
the non-Federal share of building costs
for I/A projects must be the same as or
greater than the proportional State
contribution (if any) to the non-Federal
share of eligible building costs for all
treatment works which receive 75 or 55
percent grants or such other.Federal
share under paragraph (c) of this section
in the State.
  (c) Uniform lower Federal share. (1)
Except as provided in § 35.2032 (c) and
(d) of this section, the Governor of a
State may request the Regional
Administrator's approval to revise
uniformly throughout the State the
Federal share of grant assistance for all
future projects. The revised Federal
share must apply to all needs categories
(see § 35.2015(b)(2)).
  (2) After EPA awards grant assistance
for a project, the Federal share shall be
the same for any grant increase that is
within the scope of the project.
  (d) Training Facilities. The Federal
share of  treatment works required to
train and upgrade waste treatment
works operations and maintenance
personnel may be up to 100 percent of
the allowable cost of the project.
   (1) Where a grant is made to serve
two or more States, the Administrator is
authorized to make an additional grant
for a supplemental facility in each State.
The Federal funds awarded to any State
under section 109(b) for all training
facilities shall not exceed $500,000.
   (2) Any grantee who received a grant
under section 109(b) before December
27,1977, may have the grant increased
up to $500,000 by  funds made available
under the Act, not to exceed 100 percent
of the allowable costs.
(Approved by the Office of Management and
Budget under control number 2040-0027)

§ 35.2200 Grant conditions.
   In addition to the EPA General Grant
Conditions (Part 30 of this subchapter),
each treatment works grant shall be
subject to the conditions under
§§ 35.2202 through 35.2218.

§ 35.2202 Step 2+3 projects.
  (a) Prior to initiating action to acquire
eligible real property, a Step 2+3
grantee  shall submit for Regional
Administrator review and written
approval the information required under
§ 35.2040(b)(7).
  (b) Before initiating procurement
action for the building of the project, a
Step 2+3 grantee shall submit for the
Regional Administrator's review and
written approval the information
required under §§ 35.2040 (b)(5) and
(b)(6), 35.2106, 35.2107, 35.2130 and
35.2140.

§ 35.2204 Project changes.
  (a) Minor changes in the project work
that are consistent with the objectives of
the project and within the scope of the
grant  agreement do not require the
execution of a formal grant amendment
before the grantee's implementation of
the change. However,  the amount of the
funding provided by the grant agreement
may only be increased by a formal grant
amendment.
  (b) The grantee must receive from the
Regional Administrator a formal grant
amendment before implementing
changes which:
  (1) Alter the project performance
standards;
  (2) Alter the type of wastewater
treatment provided by the project;
  (3) Significantly delay or accelerate
the project schedule;
  (4) Substantially alter the facilities
plan,  design drawings and
specifications, or the location, size,
capacity, or quality of any major part of
the project; or
  (5) Otherwise require a formal grant
amendment under Part 30 of this
subchapter.

§ 35.2206  Operation and maintenance.
  (a)  The grantee must assure
economical and effective operation and
maintenance (including replacement) of
the treatment works.
  (b) Except as provided in paragraphs
(c)(l) and (c)(2) of this section, the
Regional Administrator shall not pay
more than  50 percent of the Federal
share of any project unless the grantee
has furnished and the Regional
Administrator has approved the final
plan of operation required by § 35.2106,
and shall not pay more than 90 percent
of the Federal share of any project
unless the  grantee has furnished and the
Regional Administrator has approved an
operation and maintenance manual.

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            Federal  Register / Vol.  49.  No. 34  /  Friday. February 17, 1984 / Rules and Regulations	6247
  (c){l) In projects where segmenting of
a proposed treatment works has
occurred, the Regional Administrator
shall not pay more than 90 percent of the
Federal share of the total allowable
costs of the proposed treatment works
until the grantee has furnished and the
Regional Administrator has approved an
operation  and maintenance manual.
  (2) In projects where a component is
placed in operation before completion of
the entire  project, the Regional
Administrator shall not make any
additional payment on that project until
a final operation and maintenance
manual for the operating component is
furnished  and approved.
(Approved  by the Office of Management and
Budget under control number 2040-0027)

§ 35.2208  Adoption of sewer use
ordinance and user charge system.
  The grantee shall adopt its sewer use
ordinance and implement its user charge
system developed under §§ 35.2130 and
35.2140 before the treatment works is
placed in operation. Further, the grantee
shall implement the user charge system
and sewer use ordinance for the useful
life of the  treatment works.

§ 35.2210  Land acquisition.
  The grantee shall not acquire real
property determined allowable for grant
assistance until the Regional
Administrator has determined that
applicable provisions of 40 CFR Part 4
have been met.

§ 35.2211  Field testing for innovative and
alternative technology report.
  The grantee shall submit a report
containing the procedure, cost, results
and conclusions of any field testing. The
report shall be  submitted to the Regional
Administrator in accordance with a
schedule to be  specified in the grant
agreement.
(Approved by the Office of Management and
Budget under control number 2040-0027)

§ 35.2212  Project initiation.
  (a) The  grantee shall expeditiously
initiate and complete the project,  in
accordance with the project schedule
contained in  the grant application and
agreement. Failure to promptly initiate
and complete a project may result in  the
imposition of sanctions under Part 30 of
this subchapter.
  (b) The  grantee shall initiate
procurement action for building the
project promptly after award of a Step 3
grant or after receiving written approval
of the information required under
§ 35.2202 under a Step 2+3 grant. Public
notice of proposed procurement action
should be made promptly after Step 3
award or  final approvals for a Step 2 + 3
grant under § 35.2202. The grantee shall
award the subagreement(s) and issue
notice(s) to proceed, where required, for
building all significant elements of the
project within twelve months of the  Step
3 award or final Step 2 + 3 approvals.
  (c) Failure to  promptly award all
subagreement(s) for building the project
will result in a limitation on allowable
costs. (See Appendix A, A.2.e.).
  (d) The grantee shall notify the
Regional Administrator immediately
upon award of the subagreement(s)  for
building all significant elements of the
project (see 40 CFR 33.211).
(Approved by the Office of Management and
Budget under control number 2040-0027)

§ 35.2214  Grantee responsibilities.
  (a) The grantee shall complete the
project in accordance with the grant
agreement including: the facilities plan
that establishes the need for the project;
the design drawings and specifications;
the plan of operation under § 35.2106
that identifies the basis to determine
annual operating costs; the financial
management system under § 35.2140(d)
that adequately accounts for revenues
and expenditures; the user charge
system under § 35.2140 that will
generate sufficient revenue to operate
and maintain the treatment works; the
project schedule; and all other
applicable regulations. Ttie grantee  shall
maintain and operate the project to  meet
project performance standards including
the enforceable requirements of the  Act
for the design life.
  (b) The grantee shall provide the
architectural and engineering services
and other services necessary to fulfill
the obligation in paragraph (a) of this
section.

§ 35.2216  Notice of building completion
and final Inspection.
  The grantee shall notify the Regional
Administrator when the building of  the
project is complete. Final inspection
shall be made by the Regional
Administrator after receipt of the notice
of building completion.
(Approved by the Office of Management and
Budget under control number 2040-0027)

§ 35.2218  Project performance.
  (a) The grantee shall notify the
Regional Administrator in writing of the
actual date of initiation of operation.
  (b) Subject to the provisions of 40 CFR
Part 33, the grantee shall select the
engineer or engineering firm principally
responsible for either supervising
construction or providing architectural
and engineering services during
construction as the prime engineer to
provide the following'services during the
first year following the initiation of
operation:
  (I) Direct the operation of the project
and revise the operation and
maintenance manual as necessary to
accommodate actual operating
experience;
  (2) Train or provide for training of
operating personnel and prepare
curricula and training material for
operating personnel; and
  (3) Advise the grantee whether the
project is meeting the project
performance standards.
  (c) On the date one year after the
initiation of operation of the project, the
grantee shall certify to the Regional
Administrator whether the project meets
the project performance standards. If the
Regional Administrator or the grantee
concludes that the project does not meet
the project performance standards, the
grantee shall submit the following:
  (1) A corrective action report which
includes an analysis of the cause of the
project's failure to meet the performance
standards (including the quantity of
infiltration/inflow proposed to be
eliminated), and an estimate of the
nature, scope and cost of the corrective
action necessary to bring the project
into compliance;
  (2) The schedule for undertaking in a
timely manner the corrective, action
necessary to bring the projeot into
compliance; and
  (3) The scheduled date for certifying
to the Regional Administrator that the
project is meeting the project
performance standards.
  (d) Except as provided in § 35.2032(c)
the grantee shall take corrective action
necessary to bring a project into
compliance with the project
performance standards at its own
expense.
  (e) Nothing in this section:
  (1) Prohibits a grantee fiom requiring
more assurances, guarantees, or
indemnity or other contractual
requirements from any party performing
project work; or
  (2) Affects EPA's right to take
remedial action, including enforcement,
against a grantee that fails to carry out
its obligations under § 35.2214.
(Approved by the Office of Management and
Budget under control number 2040-0027)

§ 35.2250  Determination of allowable
costs.
  The Regional Administrator will
determine the allowable costs  of the
project based  on applicable provisions
of laws and regulations, the scope of the
approved project, § 30.705 of this
subchapter, and Appendix A of this
subpart.

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6248       Federal Register / Vol.  49,  No.  34 / Friday. February  17,  1984 /  Rules  and  Regulations
§ 35.2260  Advance purchase of eligible
land.
  In the case of grant assistance
awarded solely for the acquisition of
eligible land, the following provisions
are deferred until the award of the
ensuing Step 3 assistance for the
building of facilities: §§35.2105, 35.2130,
35.2140, 35.2206 and 35.2208.

§ 35.2262  Funding of field testing.
  In the case of grant assistance for
field testing of innovative or alternative
wastewater process and techniques, the
following provisions are deferred until
the award of assistance for building the
approved facilities: § § 35.2105, 35.2106,
35.2122, 35.2130, 35.2140, 35.2206, and
35.2208.

§35.2300  Grant payments.
  Except as provided in § 35.2206, the
Regional Administrator shall pay the
Federal share of the allowance under
§ 35.2025 and the allowable project costs
incurred to date and currently due and
payable by the grantee, as certified in
the grantee's most recent payment
request.
  (a) Adjustment. The Regional
Administrator may at any time review
and audit requests for payment and
payments and make appropriate
adjustments as provided in Part 30 of
this subpart.
  (b) Refunds, rebates and credits. The
Federal share of any refunds, rebates,
credit s, or other amounts (including any
interest) that accrue to or are received
by the grantee for the project, and that
are properly allocable to costs for which
the grantee has been paid under a grant,
must be credited to the current State
allotment or paid to the United  States.
Examples include rebates for prompt
payment and sales tax refunds.
Reasonable expenses incurred by the
grantee securing such refunds, rebates,
credits, or other amounts shall be
allowable under the grant when
approved by the Regional
Administrator.
  (c) Release. By its acceptance of final
payment, the grantee releases and
discharges the United States, its officers,
 agents, and employees from all
liabilities, obligations,  and claims
 arising out of the project work or under
 the grant, subject only to exceptions
 previously specified in writing between
 the Regional Administrator and the
 grantee.
   (d) Payment of costs incurred under
 the Uniform Relocation Assistance and
 Real Property Acquisition Policies Act.
 Notwithstanding the provisions of the
 introductory paragraph of this section, if
 the Regional Administrator determines
 it is necessary for the expeditious
completion of a project, he may make
advance payment after grant award for
the Federal share of the eligible cost of
any payment of relocation assistance
under § 4.502(c) of this chapter by the
grantee. The requirements m Part 30 of
this subchapter apply to any advances
of funds for assistance payments.
  (e) Payment under grants to States for
advances of allowance—(1) Advance
payment to State. Notwithstanding the
provisions of the introductory paragraph
of this section, the Regional
Administrator, under a State grant for
advances of allowance (see § 35.2025],
may make payments on an advance or
letter-of-credit payment method in
accordance with the requirements under
Part 30 of this subchapter. The State and
the Regional Administrator shall agree
to the payment terms.
  (2) Assignment. If the State chooses to
assign its payments to a potential grant
applicant, it shall execute an agreement
with the potential grant applicant
authorizing direct payment from EPA
and establishing appropriate terms for
payment. The State shall provide a copy
of the agreement to EPA.
(Approved by the Office of Management and
Budget under control  number 2040-0027)

§ 35.2350  Subagreement enforcement.
   (a) Regional Administrator authority.
At the grantee's request the Regional
Administrator may provide technical
and legal assistance in the
administration and enforcement of any
subagreement related to treatment
works for which an EPA grant was
made and to intervene in any civil
action involving the enforcement of such
subagreements, including subagreement
disputes which are the subject of either
arbitration or court action.
   (b) Privity of subagreement. The
Regional Administrator's technical or
legal involvement in any subagreement
dispute will not make EPA a party to
any subagreement  entered into by the
grantee.
   (c) Grantee responsibilities. The
provision of technical or legal assistance
under this section in no way"releases  the
grantee from its obligations under
 § 35.2214, or affects EPA's right to take
remedial action, including enforcement,
against a grantee that fails to carry out
those obligations.
Appendix A—Revised Interim Final
Rule—Determination of Allowable Costs
   (a) Purpose. The information in this
appendix represents  Agency policies and
procedures for determining the allowability
 of project costs based on the Clean Water
Act, EPA policy, appropriate Federal cost
 principles under Part 30 of this subchapter
 and reasonableness.
  (b) Applicability. This cost information
applies to grant assistance awarded on or
after the effective date of this regulation.
Project cost determinations under this
subpart are not limited to the items listed in
this appendix. Additional cost determinations
based on applicable law and regulations
must of course be made on a project-by-
project basis. Those cost items not previously
included in program requirements are not
mandatory for decisions under grants
awarded before the effective date. They are
only to be used as guidance in those cases.

A. Costs Related to Subagreements
  1. Allowable costs related to
subagreements include:
  a. The costs of subagreements for building
the project.
  b. The costs of complying with the
procurement requirements of Part 33 of this
subchapter, other than the costs of self-
certification under § 33.110.
  c. The cost of legal and engineering
services incurred by grantees in deciding
procurement protests and defending their
decisions in protest appeals under subpart G
of 40 CFR Part 33.
  d. The costs for establishing or using
minority and women's business liaison
services.
  e. The costs of services incurred during the
building of a project to ensure that it is built
in conformanoe with the design drawings and
specifications.
  f. The costs (including legal, technical, and
administrative costs] of assessing the merits
of or negotiating the settlement of a claim by
or against a grantee under a subagreement
provided:
  (1) The claim arises from work within the
scope of the grant;
  (2) A formal grant amendment is executed
specifically covering the costs before they are
incurred;
  (3) The costs are not incurred to prepare
documentation that should be prepared by
the contractor to support a claim against the
grantee; and
  (4) The Regional Administrator determines
that there is a significant Federal interest in
the issues involved in the claim.
  g. Change orders and the costs of
meritorious contractor claims for increased
costs under subagreements as follows:
  (1) Change orders and the costs of
meritorious contractor claims provided the
costs are:
  (i) Within the scope of the project;
  (ii) Not caused by the grantee's
mismanagement; and
  (iii) Not caused by the grantee's vicarious
liability for the improper actions of others.
  (2) Provided the requirements of paragraph
g(l) are met, the following are examples of
allowable change orders and contractor
claim costs:
   (i) Building costs resulting from defects in
the plans, design drawings and
specifications,  or other subagreement
documents only to the extent that the costs
would have been incurred if the
subagreement documents on which the bids
were based had been free of the defects, and
excluding the costs of any rework, delay,

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              Federal Register / Vol. 49.  No.  34  / Friday, February 17. 1984  / Rules  and Regulations	6249
acceleration, or disruption caused by such
defects;
  (ii) Costs of equitable adjustments under
Clause 4, Differing Site Conditions, of the
model subagreement clauses required under
S 33.1030 of this Subchapter.
  (3) Settlements, arbitration awards, and
court judgments which resolve contractor
claims shall be reviewed by the grant award
official and shall be allowable only to the
extent that they meet the requirements of
paragraph g(l), are reasonable, and do not
attempt to pass on to EPA  the cost of events
that were the responsibility of the grantee,
the contractor, or others.
  h. The costs of the services of the prime
engineer required by § 35.2218 during the first
year following initiation of operation of the
project.
  i. The cost of development of a plan of
operation including an operation and
maintenance manual required by § 35.2106.
  j. Start-up services for onsite training of
operating personnel in operation and control
of specific treatment processes, laboratory
procedures, and maintenance and records
management.
  2. Unallowable costs related to
subagreements include:
  a. The costs of architectural  or engineering
services or other services incurred in
preparing a facilities plan and the design
drawings and specifications for a project.
  b. Except as provided in l.g. above,
architectural or engineering services or other
services necessary to correct defects in a
facilities-plan, design drawings and
specifications, or other subagreement
documents.
  c. The costs  (including legal, technical and
administrative) of defending against a
contractor claim for increased  costs under a
subagreement  or of prosecuting a claim to
enforce any subagreement unless:
  (1) The claim arises from work within the
scope of the grant;
  (2) A formal grant amendment is executed
specifically covering the costs before they are
incurred;
  (3) The claim cannot be settled without
arbitration or litigation;
  (4) The claim does not result from the
grantee's mismanagement;
  (5) The Regional Administrator determines
that there is a significant Federal interest in
the issues involved in the claim; and
  (6) In the case of defending against a
contractor claim, the claim does not result
from the grantee's responsibility for the
improper action of others.
  d. Bonus  payments, not legally required, for
completion of building before a contractual
completion date.
  e. AH incremental costs of delay due to the
award of any subagreements for building
more than 12 months after  the Step 3 grant
award or final Step 2 + 3 approvals.

B. Mitigation
  1. Allowable costs include:
  a. Costs necessary to mitigate only direct,
adverse, physical impacts resulting from
building of the treatment works.
  b. The costs  of site screening necessary to
comply with NEPA related studies and
facilities plans, or necessary to screen
adjacent properties.
  c. The cost of groundwater monitoring
facilities necessary to determine the
possibility of groundwater deterioration,
depletion  or modification resulting from
building the project.
  2. Unallowable costs include:
  a. The costs of solutions to aesthetic
problems, including design details which
require expensive building techniques and
architectural features and hardware, that are
unreasonable or substantially higher in cost
than approvable alternatives and that neither
enhance the function or appearance of the
treatment works nor reflect regional
architectural tradition.

C. Privately or Publicly Owned Small and
Onsite Systems
  1. Allowable costs for small and onsite
systems serving residences and small
commercial establishments inhabited on or
before December 27, 1977 include:
  a. The cost of major rehabilitation,
upgrading, enlarging and installing small and
onsite systems, but in the case of privately
owned systems, only for principal residences.
  b. Conveyance pipes from property line to
offsite treatment unit which serves a cluster
of buildings.
  c. Treatment and treatment residue
disposal portions of toilets with composting
tanks, oil flush mechanisms, or similar in-
house devices.
  d. Treatment or pumping units from the
incoming flange when located on private
property and conveyance pipes, if any, to the
collector sewer.
  e. The cost of restoring individual system
building sites to their original condition.
  2. Unallowable costs for small and onsite
systems include:
  a. Modification to physical structure of
homes or commercial establishments.
  b. Conveyance pipes from the house to the
treatment unit located on user's property.
  c. Wastewater generating fixtures such  as
commodes, sinks, tubs, and drains.

D. Real Property
  1. Allowable costs for land and rights-of-
way include:
  a. The cost (including associated legal,
administrative and engineering costs) of land
acquired in fee simple or by lease or
easement  under grants awarded after
October 17,1972, that will be an integral part
of the treatment process or that will be used
for the ultimate disposal of residues resulting
from such treatment provided the Regional
Administrator approves it in the grant
agreement. These costs include:
  (1) The cost of a reasonable amount of
land, considering irregularities in application
patterns, and the need for buffer areas,
berms, and dikes;
  (2) The cost of land acquired for a soil
absorption system for a group of two or more
homes;
  (3) The cost of land acquired for
composting or temporary storage of compost
residues which result from wastewater
treatment;
  (4) The cost of land acquired for storage of
treated wastewater in land treatment
systems before land application. The total
land area for construction of a pond for both
 treatment and storage of wastewater is
 allowable if the volume necessary for storage
 is greater then the volume necessary for
 treatment. Otherwise, the allowable cost will
 be determined by the ratio of the storage
 volume to the total volume of the pond.
  b. The cost of complying with the
 requirements of the Uniform Relocation
 Assistance and Real Property Acquisition
 Policies Act of 1970 (42 U.S.C. 4621 et seq.,
 4651 et seq.), under Part 4 of this chapter.
  c. The cost of contracting with another
 public agency or qualified private contractor
 for part or all of the required acquisition and/
 or relocation services.
  d. The cost associated with the preparation
 of the treatment works site before, during
 and, to the extent agreed on in the grant
 agreement, after building. These costs
 include:
  (1) The cost of demolition of existing
 structures on the treatment works site
 (including rights-of-way) if building cannot be
 undertaken without such demolition;
  (2) The cost (considering such factors as
 betterment, cost of contracting and useful
 life) of removal, relocation or replacement of
 utilities, provided the grantee is legally
 obligated to pay under state or local law; and
  (3) The cost of restoring streets and rights-
 of-way to their original condition. The need
 for such restoration must result directly from
 the construction and is generally limited to
 repaving the width of trench.
  e. The cost of acquiring all or part of an
 existing publicly or privately owned
 wastewater treatment works provided all the
 following criteria are met:
  (1) The acquisition, in and of itself,
 considered apart from any upgrade,
 expansion or rehabilitation, provides new
 pollution control benefits;
  (2) The acquired treatment works was not
 built with previous Federal or State financial
 assistance;
  (3) The primary purpose of the acquisition
 is not the reduction, elimination, or
 redistribution of public or private debt; and
  (4) The acquisition does not circumvent the
 requirements of the Act, these regulations, or
 other Federal, State or local requirements.
  2. Unallowable costs for land and rights-of-
 way include:
  a. The costs of acquisition (including
 associated legal, administrative and
 engineering etc.) of sewer rights-of-way,
 waste treatment plant sites (including small
 system sites), sanitary landfill sites and
 sludge disposal areas except as provided in
paragraph l.a. of this section.
  b. Any amount paid by the grantee for
eligible land in excess of just compensation,
based on the appraised value, the grantee's
record of negotiation or any condemnation
proceeding, as determined by the Regional
Administrator.
  c. Removal, relocation or replacement of
utilities located on land by privilege, such as
franchise.

E. Equipment, Materials and Supplies
  1. Allowable costs of equipment, materials
and supplies include:
  a. The cost of a reasonable inventory of
laboratory chemicals and supplies necessary

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6250	Federal Register  / Vol. 49, No.  34 /  Friday, February  17,  1984 /  Rules and  Regulations
to initiate plant operations and laboratory
items necessary to conduct tests required for
plant Operation.
  b. The costs for purchase and/or
transportation of biological seeding materials
required for expeditiously initiating the
treatment process operation.
  c. Cost of shop equipment installed, at the
treatment works necessary to the operation
of the works.
  d. The costs of necessary safety equipment,
provided the equipment meets applicable
Federal, State, local or industry safety
requirements.
  e. A portion of the costs of collection
system maintenance equipment. The portion
of allowable costs shall be the total
equipment  cost less the cost attributable to
the equipment's anticipated use on existing
collection sewers not funded on the grant.
This calculation shall be based on: [I] The
portion  of the total collection system paid for
by the grant, (2) a demonstrable frequency  of
need, and (3) the need for the equipment to
preclude the discharge or bypassing of
untreated wastewater.
  f. The cost of mobile equipment necessary
for the operation of the overall wastewater
treatment facility, transmission of
wastewater or sludge, or for the maintenance
of equipment. These items include:
   (1) Portable stand-by generators;
   (2) Large portable emergency pumps to
provide "pump-around" capability in the
event of pump station failure or pipeline
breaks; and
   (3)'Sludge or septic tanks, trailers, and
other vehicles having as their sole purpose
the transportation of liquid or dewatered
wastes  from the collector point (including
individual  or on-site systems] to the
treatment facility or disposal site.
   g. Replacement parts identified and
approved in advance by the Regional
Administrator as necessary to assure
uninterrupted operation of the facility,
provided they are critical parts or major
systems components which are:
   (1) Not immediately available and/or
whose procurement involves an extended
"lead-time;"
   (2) Identified as critical by the equipment
supplier(s); or
   (3] Critical but not included in the
inventory provided by the equipment
supplier(s).
   2. Unallowable costs of equipment,
materials and supplies include:
   a. The costs of equipment or material
procured in violation of the procurement
requirements of 40 CFR Part 33.
   b. The cost of furnishings including
 draperies,  furniture and office equipment.
   c. The cost of ordinary site and building
maintenance equipment such as lawnmowers
 and snowblowers.
   d. The cost of vehicles for the
 transportation of the grantees' employees.
   e. Items  of routine "programmed"
 maintenance such as  ordinary piping, air
 filters,  couplings, hose, bolts, etc.

 F. Industrial and Federal Users

   1. Except as provided in paragraph F.2.a.,
 allowable costs for industrial and Federal
 facilities include development of a municipal
pretreatment program approvable under Part
403 of this chapter, and purchase of
monitoring equipment and construction of
facilities to be used by the municipal
treatment works in the pretreatment program.
  2. Unallowable costs for industrial and
Federal facilities include:
  a. The cost of developing an approvable
municipal pretreatment program when
performed solely for the purpose of seeking
an allowance for removal of pollutants under
Part 403 of this chapter.
  b. The cost of monitoring equipment used
by industry for sampling and analysis of
industrial discharges to municipal treatment
works.
  c. All incremental costs for sludge
management incurred as a result of the
grantee providing removal credits to
industrial users under 40 CFR 403.7 beyond
those sludge management costs that would
otherwise be incurred in the absence of such
removal credits.

G. Infiltration/Inflow
  1. Allowable costs include:
  a. The cost of treatment works capacity
adequate to  transport and treat nonexcessive
infiltration/inflow under § 35.2120.
  b. The costs of sewer system rehabilitation
necessary to eliminate excessive infiltration/
inflow as determined in a sewer system study
under § 35.^120.
  2. Unallowable costs include:
  a. When the Regional Administrator
determines that the flow rate is not
significantly more than 120 gallons per capita
per day under § 35.2120(c)(2)(ii), the
incremental cost of treatment works capacity
which is more than 120 gallons per capita per
day.

H. Miscellaneous Costs
  1. Allowable costs include:
  a. The costs of salaries, benefits and
expendable  materials the grantee incurs for
the project.
  b. Unless otherwise specified in this
regulation, the costs  of meeting specific
Federal statutory procedures.
  c. Costs for necessary travel directly
related to accomplishment of project
objectives. Travel not directly related to a
specific project, such as travel to professional
meetings, symposia,  technology transfer
seminars, lectures, etc., may be recovered
only under an indirect cost agreement.
   d. The costs of additions to a treatment
works that was assisted under the Federal
Water Pollution Control Act of 1956 (Pub. L.
/84-660), or its amendments, and that fails to
meet its project performance standards
provided:
   (1) The project is identified on the State
priority list  as a project for additions to a
treatment works that has received previous
Federal funds;
   (2) The grant application for the additions
includes an analysis of why the treatment
works cannot meet its project performance
standards; and
   (3) The additions could have been included
 in the original grant award and:
   (a) Are the result of one of tne following:
   (i) a change in the project performance
 standards required by EPA or the State;
   (ii) a written understanding between the
Regional Administrator and grantee prior to
or included in the original grant award;
   (iii) a written direction by the Regional
Administrator to delay building part of the
treatment works; or
  (iv) a major change in the treatment works'
design criteria that the grantee cannot
control; or
  (b) Meet all the following conditions:
  (i) if the original grant award was made
after December 28,1981, the treatment works
has not completed its first full year of
operation;
  (ii) the additions are not caused by the
grantee's mismanagement or the improper
actions of others;
  (iii) the costs  of rework, delay, acceleration
or disruption that are a result of building the
additions are not included in the grant; and
  (iv) the grant  does not include an
allowance for facilities planning or design of
the additions.
  (4) This provision applies to failures that
occur either before or after the initiation of
operation. This  provision does not cover a
treatment works that fails at the end of its
design life.
  e. Costs of royalties for the use of or rights
in a patented process or product with the
prior approval of the Regional Administrator.
  f. Costs allocable to the water pollution
control purpose of multiple purpose projects
as determined by applying the Alternative
Justifiable Expenditure (AJE) method
described in the CG series. Multiple purpose
projects that combine wastewater treatment
with recreation do not need to use the AJE
method, but can be funded at the level of the
most cost-effective single-purpose
alternative.
  g. Costs of grantee employees attending
training workshops/seminars that are
necessary to provide instruction in
administrative, fiscal or contracting
procedures required to complete the
construction of the treatment works, if
approved in advance by the Regional
Administrator.
  2. Unallowable costs include:
  a. Ordinary operating expenses of the
grantee including salaries and-expenses of
elected and appointed officials and
preparation of routine financial reports and
studies.
   b. Preparation of applications and permits
required by Federal, State or local regulations
or procedures.
  c. Administrative, engineering and legal
activities associated with the establishment
of special departments, agencies,
commissions, regions, districts or other units
of government.
  d. Approval,  preparation, issuance and sale
of bonds or other forms of indebtedness
required to finance the project and the
interest on them.
  e. The costs of replacing, through
reconstruction  or substitution, a treatment
works that was assisted  under the Federal
Water Pollution Control Act of 1956 (Pub. L.
84-660), or its amendments, and that fails to
meet its project performance standards. This
provision applies to failures that occur either
before or after  the initiation of operation.
This provision  does not apply to an
innovative and alternative treatment works
eligible for funding under § 35.2032(c) or a
treatment works that fails at the end of its
design life.

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              Federal  Register /  Vol.  49, No.  34 /  Friday, February 17, 1984  / Rules  and  Regulations
                                                                                   6251
  f. Personal injury compensation JUT damages
arising out of the project.
  g. Fines and penalties due to violations of,
or failure to comply with, Federal, State or
local laws, regulations or procedures.
  h. Costs outside the scope of the approved
project.
  i. Costs for which grant payment has been
or will be received from another Federal
agency.
  j. Costs of treatment works for control of
pollutant discharges from a separate storm
sewer system.
  k. The cost of treatment works that would
provide capacity for new habitation or other
establishments to be located on
environmentally sensitive land such as
wetlands or floodplains.
  1. The costs of preparing a corrective action
report required by § 35.2218(c).

Appendix B—Final Rule—Allowance for
Facilities Planning and Design

  1. This Appendix provides the method EPA
will use to determine both the estimated and
the final allowance under § 35.2025 for
facilities planning and design. The Step 2 + 3
and Step 3 grant agreement will include an
estimate of the allowance.
  2. The Federal share of the allowance is
determined by applying the applicable grant
percentage in § 35.2152 to the allowance.
  3. The allowance is  not intended to
reimburse the grantee for costs actually
incurred for facilities planning or design.
Rather, the allowance is intended to assist in
defraying those costs. Under this procedure,
questions of equity (i.e., reimbursement on a
dollar-for-dollar basis) will not be
appropriate.
  4. The estimated and final allowance will
be determined in accordance with .this
Appendix and Tables \ and 2. Table 2 is to be
used in the event that the grantee received a
grant for facilities planning. The amount of
the allowance is computed by applying the
resulting allowance percentage to the initial
allowable building cost.
  5. The initial allowable building cost is the
initial allowable cost of erecting, altering,
remodeling, improving, or extending a
treatment works, whether accomplished
through subagreement or force account.
Specifically, the initial allowable building
cost is the allowable coat of the following:
  a. The initial award amount of all  prime
subagreements.for building the project.
  b. The initial amounts approved for  force
account work performed in lieu of awarding a
suoagreement for building the project.
  c. The purchase price of eligible real
property.
  6. The estimated allowance is to be based
on the estimate of the initial allowable
building cost.
  7. The final allowance will be determined
one time only for each project, based on the
initial allowable building cost, and will not
be adjusted  for subsequent cost increases or
decreases.
  8. For a Step 3 project, the grantee may
request payment of 50 percent of the Federal
share of the estimated allowance
immediately after grant award. Final
payment of the Federal share of the
allowance may be requested in the first
payment after the grantee has awarded all
prime subagreements for building the project,
received the Regional Administrator's
approval for force account work, and
completed the acquisition of all eligible real
property.
  9. For a Step 2 + 3 project, if the grantee has
not received a grant for facilities planning,
the grantee may request payment of 30
percent of the Federal share of the estimated
allowance immediately after the grant award.
Half of the remaining estimated allowance
may be requested when design of the project
is 50 percent complete. If the grantee has
received a grant for facilities planning, the
grantee may request half of the Federal share
of the estimated allowance when design of
the project is 50 percent complete. Final
payment of the Federal share of the
allowance may be requested in the first
payment after the grantee has awarded all
prime subagreements for building the project,
received the Regional Administrator's
approval for force account work, and
completed the acquisition of all eligible real
property.
  10. The allowance does not include
architect or engineering services provided
during the building of the project, e.g.,
reviewing bids, checking shop drawings,
reviewing change orders, making periodic
visits to job sites, etc. Architect or
engineering services during the building of
the project are allowable costs subject to this
regulation and 40 CFR Part 33.
  11. The State will determine the amount
and conditions of any advance under
§ 35.2025(b), not to exceed the Federal share
of the estimated allowance.
  12. EPA will reduce the Federal share of the
allowance by the  amount of any advances
the grantee received under § 35.2025(b).

    TABLE 1.—ALLOWANCE FOR FACILITIES
           PLANNING AND DESIGN
    TABLE 1 .—ALLOWANCE FOR FACILITIES
      PLANNING AND DESIGN—Continued
Building cost
$100,000 or less 	
120,000 	
150,000 	
175,000 	
200,000 	
250,000 	
300,000 	
350,000 	
400,000 	
500,000 	
600,000 	
700,000 	
800000
900,000 	
1 000000
1,200,000 	
1,500,000 	
1,750,000 	
2,000,000 	
2,500,000 	
3,000,000 	
3,500,000 	
4,000,000 	
5,000,000 	
6,000,000 	
7,000,000 	
8.000,000 	
9,000,000 	
10,000,000 	
12.000,000 	
15;000,000 	
17,500,000 	
20,000,000 	
25,000,000 	
Allowance
as a
percentage
of building
cost"
144945
14 1146
136631
133597
13 1023
12 6832
123507
120764
11 8438
11 4649
11 1644
109165
10 7062
10 5240
103637
100920
97692
95523
9.3682
90686
88309
86348
84684
81975
79827
78054
76550
75248
74101
72159
69851
68300
66984
6.4841
Building cost
30,000,000 	
35000000 	
40000000 	
50,000,000 	
60 000 000 	
70000000 	
80000000 	 	
90 000 000
100000000 	
120000000 .. .
150000000 .. 	
175000000 	
200 000 000

Allowance
as a
percentage
of building
cost*
63142
6.1739
6.0550
5.8613
57077
55809
54734
53803
5.2983
51594
4.9944
48835
4.7894

  NOTE—The allowance  does not reimburse for costs in-
curred. Accordingly, the allowance Tables shall not be used
to determine  the compensation  for  facilities planning or
design services. The compensation tor facilities planning or
design services should  be based upon the nature, scope and
complexity of the services required by the community.
  * Interpolate between values.

   TABLE 2.—ALLOWANCE FOR DESIGN ONLY
Building cost
$100 000 or less
1 20 000
150000 	
175000
200 000
250000 	
300000 . 	
350000 	 	
400000 	
500 000
600000 . 	
700000 	 	
800 000
900 000
1 000000 	
1200000 .... 	
1 500000
1 750 000 . 	
2000000 	
2 500 000 	
3000000 	
3500000 	
4000000 	 	
5000000 ... . 	
6000000
7,000 000 	 	
8000000 ... 	
9 000 000
10000000 	 	
12000000 ... 	
1 5 000 000
17500000 	 	
20 000 000
25000000 	 	
30 000 000 .
35000000
40000000 	 ' 	
50000 000
60000000 	 	
70 000 000
80000000
90000000 	
100 000,000 	
120000000
150000000 	
1 75 000 000
200000,000 	 	

. Allowance
as a
percentage
of building
cost*
85683
83808
8.1570
80059
78772
7.6668
7.4991
7.3602
7.2419
7.0485
68943
6.7666
66578
6.5634
6.4300
6.3383
6 1690
6.0547
5.9574
5.7983
5.6714
55664
5.4769
'53306
52140
5.1174
50352
49637
4.9007
4.7935
46655
45790
45054
4.3851
42892
42097
4 1421
40314
3.9432
38702
38080
37540
37063
36252
3.5284
34630
34074

                                               NOTE.—The allowance does not reimburse for costs in-
                                              curred. Accordingly, the allowance Tables shall not be used
                                              to determine the compensation  for facilities planning or
                                              design services The compensation for facilities planning or
                                              design services should be based upon the nature, scope and
                                              complexity of the services required by the community

                                               •Interpolate between values.
                                              [FR Doc. 84-4076 Filed 2-16-84: 8:45 am|
                                              BILLING CODE 6560-50-M

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   APPENDIX N

  40 CFR PART 33
FINAL REGULATIONS

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Monday
March 28, 1983
Part II

Environmental
Protection Agency
Procurement Under Assistance
Agreements

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12922
Federal Register / Vol. 48, No. 60 / Monday, M^rch 28, 1983 / Rules and Regulations
ENVIRONMENTAL PROTECTION
AGENCY

40 CFR Part 33

[OA-FBL 2210-3]

Procurement Under Assistance
Agreements

AGENCY: Environmental Protection
Agency.
ACTION: Final rule.
SUMMARY: This document makes the
Environmental Protection Agency's Part
33, "Procurement Under Assistance
Agreements," a final rule Part 33
establishes the rules for all procurement
undertaken by recipients of EPA
assistanc