i
Construction
Grants Program
for Municipal
Wastewater
Treatment
Works
Handbook of
Procedures
OOOR76015
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Handbook
of
Procedures
Construction Grants Program
for Municipal Wastewater
Treatment Works
February 1976
Municipal Construction Division
Water Program Operations
Off ice of Water and Hazardous Materials
U.S. Environmental Protection Agency
Washington, D.C. 20460
U.S. Environmental Protection Agency
*-^ion 5, Library (5PL-16)
i S. Dearborn Street, Room 1670
Chicago, IL 60604
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Foreword
his Handbook, like its predecessor which was prepared in 1967 fol-
lowing the enactment of the 1966 amendments to PL 84-660, identifies
and explains in sequence the many procedures to be followed by those
in the Regional Offices and the States responsible for bringing municipal
wastewater treatment projects from their conception to completion.
By setting forth in clear, logical terms the specific tasks to be carried out
in processing applications and monitoring grantee efforts, the Handbook
establishes uniform national operating standards which can be readily
adopted. Of equal importance to this dynamic program is that it pro-
vides for dealing with the endless numbers of emerging issues in terms
which are readily recognized by all concerned.
The Handbook is a welcome addition to our ever expanding guidance
on implementing the construction grant program. Through the regular,
thoughtful application of its procedures, I am confident that the pro-
gram goals to which our Agency is dedicated can be achieved.
Russell E. Train
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Acknowledgement
Handbook was prepared by the Municipal Construction Division,
Water Program Operations, Office of Water and Hazardous Materials.
The basic organization of the Handbook and the initial drafts of the
text materials were prepared, under contract, by Ecol Sciences Inc., Vienna,
Virginia. The reviewing and editing of the Handbook, to validate its accuracy
and ensure that it properly and effectively conveyed current Agency policy,
were performed by the Construction Grants Handbook Review Committee,*
which met with the contractor's project officer, Albert T. Bowyer, after
the drafting of each chapter. Albert L. Pelmoter, Chief, Policy and Pro-
cedural Guidance Staff, Construction Operations Branch, served as pro-
ject manager for the development of the Handbook.
* Members of the standing committee were: Stuart Peterson, Region I; Richard Salkie,
Region II; Dave Olson, Region IV; Ronald Ritter, Region VII; Roy Ellerman, Region
X; Evelyn Thornton, Headquarters; Thomas Ferry, EPA (retired); and Albert L.
Pelmoter, Headquarters.
Other members of the Ecol Sciences, Inc. staff assisting in the preparation were:
Edward Bradley, Joseph Grieshaber, and Robert France.
Handbook Advisory Staff: Harold P. Cahill, Charles Sutfin and Jack Washburn, Direc-
tor, Deputy Director and Chief, Construction Operations Branch of the Municipal
Construction Division respectively.
ill
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CONTENTS
FOREWORD. i
ACKNOWLEDGEMENT Ill
CHAPTER I INTRODUCTION
A. General 1-1
B. Legislative History 1-1
C. Handbook Organization and Use 1-3
1. Purpose 1-3
2. Structure 1-3
3. Format 1-4
4. Related Material 1-5
5. Updating 1-5
6. Appendices 1-6
CHAPTER II STATE PROGRAM
A. Planning Processes II-l
1. General II-l
2. State Continuing Planning Process II-l
3. Basin Plans II-2
4. Areawide Waste Treatment Management Plans II-3
5. Facility Plans II-4
6. Municipal Permits II-5
B. State Strategy and Program II-6
1. Program Submittal 11-6
2. State Priority System and List II-6
3. Funding II-8
4. Delegation of Authority II-9
CHAPTER III PREAPPLICATION INFORMATION
A. General III-l
B. Applicant Eligibility III-2
C. Preapplication Conference III-3
1. Important Dates III-3
2. Contracts for Personal and Professional Services III-4
3. Administrative Requirements III-5
4. Technical Requirements III-6
CHAPTER IV STEP 1 GRANT PROCESSING
A. Introduction IV-1
B. Schematic Flow Diagram IV-2
C. Application Contents IV-3
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D. Plan of Study Review IV- 4
1. Contents IV- 4
2. Planning Considerations IV- 6
3. Prior Costs IV- 6
E. Administrative Review IV- 8
1. Clearinghouse Comments IV- 8
2. Priority List Compliance and Certification IV- 9
3. Application Form IV-10
4. Contracts and Subagreements IV-12
F. Grant Award Procedures IV-l4
1. Regionalized Procedures IV-14
2. Notification of Grant Award Action IV-14
3. Grants Information and Control System (GICS) IV-15
4. Clearinghouse Notification IV-15
5. Grant Agreement/Amendment IV-16
G. Preparation of the Facility Plan IV-17
H. Administrative Review (Facility Plan) IV-18
1. Clearinghouse Comments IV-18
2. State Review and Certification IV-19
I. Facility Plan Review IV-20
1. Summary, Conclusions and Recommendations IV-22
2. Introduction IV-22
2.1 Study, Purpose and Scope IV-22
2.2 Planning Area (Map) IV-22
3. Effluent Limitations IV-22
4. Current Situation IV-24
4.1 Conditions in the Planning Area IV-24
4.2 Existing Wastewater Flows and Treatment Systems.. IV-25
4.3 Infiltration and Inflow IV-26
4.4 Performance of Existing Systems IV-30
5. Future Situation IV-31
5.1 Land Use IV-31
5.2 Demographic and Economic Projections IV-32
5.3 Forecasts of Flow and Waste Load IV-33
5.4 Future Environment of the Planning
Area Without the Project IV-34
6. Alternatives IV-34
6.1 Optimum Operation of Existing Facilities IV-34
6.2 Regional Solutions IV-35
6.3 Waste Treatment Systems IV-35
6.4 Evaluation (Monetary, Environmental,
Implementation) IV-39
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Page
7. Plan Selection........................................ IV-42
7.1 Views of Public and Concerned
Interests on Alternatives...................... IV-42
7.2 Evaluation and Ranking of Proposals.............. IV-43
7.3 Selected Plan (Major Feature Summary)
and Reasons for Selection...................... IV-44
7.4 Environmental Impacts of Selected Plan........... IV-44
8. Cost Estimates, Preliminary Designs................... IV-45
8.1 Description of Design............................ IV-45
8.2 Summary of Cost Estimates........................ IV-46
9. Arrangements for Imp! ementati on....................... IV-47
9.1 Institutional Responsibilities................... IV-47
9.2 Implementation Steps............................. IV-48
9.3 Operation and Maintenance........................ IV-48
9.4 Financial Requirements........................... IV-49
10. Summary of Environmental Considerations............... IV-50
a. Criteria for Determining When to Prepare
an Environmental Impact Statement............... IV-51
(1) Historical and Archaeological Sites.......... IV-52
(2) Wetlands, Flood Plains, Coastal
Zones, Wild and Scenic Rivers,
Fish and Wildlife.......................... IV-54
(3) NEPA Criteria for Determining When
to Prepare an EIS.......................... IV-56
b. No EIS Required................................... IV-57
(1) Negative Declaration......................... IV-57
(2) Environmental Impact Appraisal............... IV-58
(3) Facility Plan Approval....................... IV-58
(4) Grants Information and Control System (GICS). IV-58
c. Prepare EIS....................................... IV-58
(1) Notice of Intent............................. IV-58
(2) Draft EIS.................................... IV-59
CHAPTER V STEP 2 GRANT PROCESSING
A. Introduction.............................................. V- 1
B. Schematic Flow Diagram.................................... V- 2
C. Application Contents...................................... V- 3
D. Facility Plan Approval.................................... V- 3
E. Administrative Review..................................... V- 4
1. Priority List Compliance and Certification............ V- 4
2. Application Form...................................... V- 5
3. Contracts and Subagreements........................... V- 7
4. Assurances and Program Requirements................... V- 8
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Page
F.
G.
H.
I.
Grant Award Procedures
Preparation of Plans and Specifications.
Predesign Conference
Review of Plans and Specifications
Administrative Review.
(1) Supplemental General Provisions.
2) Equal Employment Opportunity
Davis-Bacon Act
Flood Insurance
Bonding
3
4
(5)
b.
(3)
(4)
ill
(7)
(8)
(9)
(10)
Technical Review
(1) Safety Precautions
2) Mitigative Measures
Bypassing
Project Sign
Reliability and Flexibility.
Operation and Maintenance...
Public Water Supply
Chemical Storage
Ventilation
Laboratory Facilities
Emergency Alarms
Use of Mercury
Sewers
Equipment
Shellfish Waters
Pretreatment
12
(13)
(14)
(15)
(16)
c. Plan and Specification Approval
CHAPTER VI STEP 3 GRANT PROCESSING
A. Introduction
B. Schematic Flow Diagram
C. Application Contents
D. Plans and Specifications Approval
E. Administrative Review
1.
2.
3.
4.
Priority List Compliance and Certification.
Application Form
Contracts and Subagreements
Assurances
a. Flood Disaster Protection Act of 1973..
b. Sewer Use Ordinance ,
V- 9
V-10
V-ll
V-14
V-15
V-15
V-16
V-17
V-17
V-17
V-18
V-18
V-18
V-18
V-18
V-19
V-19
V-19
V-19
V-19
V-19
V-19
V-20
V-20
V-20
V-20
V-20
V-21
VI-
VI-
VI-
VI-
VI-
VI-
VI-
VI-
VI-
VI-
VI-
1
2
3
4
4
4
5
7
8
9
9
5. Operation and Maintenance Scheduling.
VI-10
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6. Sewer System Rehabilitation Scheduling VI-10
7. Institutional Arrangements VI-10
F. Grant Award Procedures VI-11
5. Grant Agreement/Amendment VI-11
G. Procurement of Construction Contracts VI-13
1. Authorization and Formal Advertising for Bids VI-13
2. Review of Bids VI-14
3. Grant Increases/Decreases VI-15
4. Protests VI-16
5. Authorization to Award Contracts VI-18
H. Preconstruction Conference VI-18
I. Monitoring of Construction Activities VI-21
1. Change Orders VI-21
2. On-Site Inspections VI-23
3. Payment Conditions VI-26
a. Operation and Maintenance Manual VI-27
b. User Charge System VI-27
c. Industrial Cost Recovery System VI-27
d. Sewer Use Ordinance VI-27
e. Rehabilitation Program VI-28
f. Final Inspection VI-28
4. User Charge System VI-28
5. Industrial Cost Recovery System VI-30
6. Operation and Maintenance Program VI-33
a. Staffing and Training VI-35
b. Administrative Functions VI-35
c. Budget VI-36
d. Emergency Operating Plan VI-36
e. Operation and Maintenance Manual VI-37
CHAPTER VII FINANCIAL CONSIDERATIONS
A. Introduction VII- 1
B. Allowable and Unallowable Costs VII- 2
1. General VII- 2
2. Allowability Determinations VII- 3
3. Allowability/Eligibility of Miscellaneous Costs VII- 3
Indirect Costs VII- 3
Travel Costs VII- 3
Bond Costs VII- 4
Liquidated Damages VII- 4
Bid Bond Forfeiture VII- 4
Rate Studies VII- 5
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Financial Reports and Studies VII- 5
Establishment of Special Assessment Districts VII- 6
Public Liaison Services VII- 6
Assistance with State and Federal Regulations VII- 6
Redesign/Replanning Costs Resulting from
Changes in Federal Requirements VII- 7
Costs of Implementing the Uniform Relocation
Assistance and Real Property Acquisition
Policies Act of 1970 (PL 91-646) VII- 7
Field Surveys to Identify Cultural Resources VII- 8
Industrial Planning VII- 8
Facilities Serving Communities and Federal Facilities VII- §
Site Acquisition vs. Site Preparation Costs VII- 9
Certificate as to Title to Project Site •. VII-10
Acquisition of Privately or Publicly Constructed
Waste Treatment Facilities VII-10
Demolition of Existing Structures VII-10
Removal, Relocation and/or" Replacement of Utilities. VII-11
Restoration of Streets and Rights-of-Way VII-12
Mobile Equipment VII-12
Office Equipment and Furnishings VII-13
Shop Furnishings VII-13
Laboratory Equipment and Supplies VII-13
Safety Equipment VII-14
Tools VII-14
Replacement Parts VII-14
Collection System Maintenance Equipment VII-15
Project Inspection VII-15
Groundwater Monitoring Facilities VII-15
Biological "Seeding" VII-16
Services Charges VII-16
Fringe Benefits VII-16
Labor Charges and Related Costs VII-17
C. Force Account VII-23
1. General VII-23
2. EPA Pri or Approval s VI1-24
3. Other Considerations VII-25
D. Payments VII-25
1. General VII-25
2. Prior Costs VII-26
3. Schedules VII-27
4. Interim Payments VII-28
a. Payment Requests Review VII-28
b. Documentation VII-29
c. Grant Conditions VII-29
5. Final Payments VII-30
6. Refunds, Rebates, Credits, etc VII-30
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Page
E. Increases and Decreases VII-31
1. Increases VII-31
2. Increase Notification Procedure VII-31
3. Decreases VII-32
4. Decrease Notification Procedure VII-32
F. Audits VII-33
1. General VII-33
2. Objective VII-33
3. Types of Audits VII-34
4. Criteria for Choosing Projects VII-34
5. Major Activity Areas for Audit Focus VI1-35
6. Final Report VII-36
APPENDICES
Appendix
Appendix
Appendix
Appendix
A Flow Diagram
B Forms
C Checklist for Plans and Specifications Review
D Transmittal Memoranda
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CHAPTER I
INTRODUCTION
A. General
B. Legislative History
C. Handbook Organization and Use
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A. GENERAL
This chapter describes the organization of the handbook and
its use in administration of the construction grants program.
Background information is presented as a foundation for later
chapters.
B. LEGISLATIVE HISTORY
Federal financial aid in the construction of municipal sewage
treatment works was first authorized in 1948. This was a loan
program which was never implemented because necessary funds were
not appropriated by Congress.
The Federal Water Pollution Control Act of 1956, Public Law
84-660 (PL 84-660), included the first authorization for Federal
grants to assist in the construction of waste treatment works.
Selection of projects to be funded was made the responsibility of
the States, reflecting the policy of Congress to ... ie.c.ogniz<>.,
ptiu&Lve. and protect the. ptujmany ti&>pOYii>
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The 1966 Amendments were the last major legislative changes
prior to the passage of PL 92-500 in 1972. There were, however, other
legislative actions which occurred in that period which had a major
impact upon the program. Most important of these were enactment of
the National Environmental Policy Act (NEPA) in 1969, and creation of
the U.S. Environmental Protection Agency (EPA) in 1970.
Enactment of PL 92-500 in 1972 resulted in extensive changes
in the construction grants program. The Federal share was increased
to 75% of eligible costs and projects involving sewage collection
system construction, sewer system rehabilitation, and (under certain
conditions) combined sewer system separation became eligible for grants.
In addition, funds were included to reimburse those projects which
had proceeded under the reimbursement provisions of the earlier
statutes. Also, a strong enforcement program was called for which
would encompass the statewide planning process, areawide planning,
facilities planning, the construction grants program, and discharge
permits.
This handbook describes actions necessary to the administration
of the construction grants program under PL 92-500 and other pertinent
laws, rules and regulations.
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C. HANDBOOK ORGANIZATION AND USE
1. Purpose
This Handbook is intended to serve as a guide in processing
grant applications for Step 1, Step 2 and Step 3 projects. For
consistency, the Handbook is organized for the processing of grants
as of July 1, 1975. All new projects must begin at the Step 1 stage
as of this date. Portions of the Handbook can also be applied to the
review of pre-July 1, 1975 applications by referring to appropriate
chapters.
The Handbook pertains to processing procedures for both
administrative and technical functions, and these functions are
presented in sequence throughout all steps. However, the review of
administrative and technical functions should be done concurrently
whenever possible.
While the administrative procedures to be followed in
processing of construction grant applications are summarized in this
Handbook, a more comprehensive statement of the administrative and
management requirements is described in the Grants Administration
Manual prepared by the Grants Administration Division, Office of
Resources Management, Office of Planning and Management, EPA.
2. Structure
The processing of grant applications for Step 1, Step 2 and
Step 3 projects is described in Chapters IV, V, and VI respectively.
These Chapters are preceded by background and general information in
Chapters I, II and III and followed by the Financial Considerations
of Chapter VII. The latter Chapter contains information common to the
processing of each category of grant, including eligible costs and
the processing of payment requests.
The Handbook begins functionally with recommendations for the
preapplication conference and proceeds through the completion of
construction, including start-up and operation and maintenance require-
ments. Review procedures are separated into administrative and technical
requirements and grouped together wherever possible. Some technical
requirements which are either complex or time consuming have been treated
separately. This separation is not meant to elevate their importance
over other requirements but rather to emphasize the need for careful
review of such complex requirements.
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The construction grant program is concerned with three types
of projects:
Step 1 Projects - Planning
Step 2 Projects - Design
Step 3 Projects - Construction
When the applicant receives a grant for a Step 1 project,
he prepares a facility plan. The facility plan is a part of the
application requirement for a Step 2 project grant. However, the
review of the facility plan is described in Chapter IV as a part of
the Step 1 project grant processing procedures. Once the facility
plan is approved by EPA, the applicant need only submit the additional
administrative and technical requirements for a Step 2 project grant
as described in Chapter V. Similarly, the review of plans and
specifications is described in Chapter V as part of the Step 2 project
grant processing procedures although it is a requirement for a
Step 3 project grant.
3. Format
Each review function is necessary to insure compliance
with statutory or program requirements. The review procedure usually
is presented in the following format:
Purpose:
A brief explanation of the need for the review is given.
Discussion:
The program requirement is placed in program perspective
and information is given on such things as general operating policy,
important underlying issues, key considerations in approaching the
topic under review and how the topic relates to the greater problem
of which it is a part.
Procedures:
The procedures in the review process are briefly described.
Where specific program items are required, they are listed. Other
more general review items are included as a reminder. However, the
review procedures listed here are not substitutions for nor do they
supersede requirements as described in greater detail in the appropriate
references. Check lists may be utilized as reminders of review
requirements.
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References:
Appropriate laws, regulations, Program Guidance Memorandums
(PG), guidelines, technical bulletins, etc. are cited. Copies of such
reference material can generally be found in the Manual of References,
issued by the Municipal Construction Division, Office of Water Programs,
in October 1975.
Some of the review procedures are self-explanatory or do
not lend themselves to the above format. In these cases, the program
requirements are briefly described.
4. Related Material
Laws, regulations, guidelines, technical bulletins, program
guidance memoranda, executive and administrative orders are referenced
whenever applicable. Generally, references concerning technical
matters have been limited to EPA publications. The review procedures
in this Handbook describe the essence or minimum requirements necessary
in processing of construction grants. More detailed descriptions, as
necessary, may be obtained by reading the reference material.
Italics are used wherever law or regulations are quoted
directly. Requirements of law or regulations may be changed only
through legislative or rule making action, whereas policies may be
changed (under special circumstances) by Headquarters.
An understanding of related laws, regulations and guidelines
for use in conjunction with the Handbook is necessary. The Handbook
describes the requirements for processing construction grant
applications. However, differences in structure of Regional Office
staffs may require some adjustment in the time and place of review
activities.
5. Updating
The Handbook will be updated as changes in laws, regulations,
or policy guidance occur. The responsibility for revisions and updating
of the Handbook is centered in the Construction Operations Branch,
Municipal Construction Division, HQ EPA. All changes will be routed
through established lines of authority, but the final issuance to the
Regional Offices will be from the Deputy Assistant Administrator for
Water Program Operations.
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Revisions will be forwarded by a Transmittal Memorandum (TM).
Each Transmittal Memorandum will be designated with a sequential
number (e.g., TM: 76-1) indicating the fiscal year and number of the
issuance. Each TM will provide specific instructions for removal of
obsolete pages and exhibits and insertion of new material.
The TM may be detached from the material transmitted and
inserted in the appendix, "Transmittal Memoranda". On a yearly basis,
a list of the preceding year's TM's will be sent to the Regional Offices.
This will provide a check list for verifying the accuracy of the
Handbook. Revised material being inserted in the Handbook wi]l show
a revision month and year in the bottom right hand corner of each new
page.
6. Appendices
This Handbook contains the following appendices:
Appendix A: contains a schematic flow diagram
for the processing of construction grants.
Appendix B: includes exhibits of frequently used
OMB and EPA forms.
Appendix C: contains the sample checklist:
"Program Checklist for Engineering Drawings,
Specifications, and Engineering Reports".
Appendix D: is labeled "Transmittal Memoranda"
and is to be used to keep the Headquarters issuances
on Handbook changes (TM's).
1-6
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A. PLANNING PROCESSES
1. General
This Chapter is designed to provide a general working
knowledge of those planning portions of PL 92-500 which directly
affect the construction grants program.
PL 92-500 contains the most complex and far reaching
pollution control amendments to date and firmly commits the Federal
Government to eliminate pollution of the Nation's waterways. Even
though there is a firm Federal commitment, the States still retain
primary responsibility for the establishment of water quality standards,
the control of waste discharges, and the enforcement of these standards.
However, to insure a sound basis of control, PL 92-500 expanded
existing and created new planning processes to be carried out by the
States.
2. State Continuing Planning Process
Section 303(e) of PL 92-500 requires each State to establish
and maintain a continuing planning process which must be reviewed
and approved periodically by the Administrator. The continuous planning
process must be consistent with the Act and include, as a minimum, the
following:
(a) effluent limitations and schedules of compliance
to achieve water quality standards;
(b) an areawide waste treatment management plan or
basin plan under sections 208 and 209 of the Act;
(c) total maximum daily waste load allocations;
(d) procedures for revisions of the plans;
(e) adequate authority for intergovernmental cooperation;
(f) adequate implementation procedures and schedules of
compliance for new or revised water quality standards;
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(g) methods of obtaining control over the disposal of all
residual waste from any water treatment processing;
(h) an inventory and ranking, in order of priority, of waste
treatment works necessary to be constructed to meet
water quality standards.
Three of these items are of particular concern to the construction
grants program, namely:
(b) areawide waste treatment management plans (more commonly
known as 208 plans);
(c) section 303(e) plans (more commonly known as basin plans
or waste load allocation plans);
(h) the State priority list (discussed in section B of
this Chapter).
Each of these items is discussed more completely below.
The three items have as their common objective the achievement of
water quality standards which have been established by the States
and approved by EPA, under PL 92-500 or earlier legislation.
Re_: 40 CFR Part 130 and Part 131
3. Basin Plans
As an integral part of the State Continuing Planning
Process and as a first step in achieving the established water
quality standards, the State must prepare "basin plans" which
classify segments of its waters as either "water quality
limited" or "effluent limited". To make this classification,
the State generally employs mathematical modeling of the river
basin and notes all point and non-point sources of wastes, low
flows and other physical conditions. Using the assumption that
all point sources achieve at least secondary treatment,the model
is able to predict whether the water quality standards are met.
If the standards are met, the stream segment is classified as
"effluent limited" and need only achieve secondary treatment
(unless a more stringent degree of treatment is established by
the State) to satisfy Federal requirements and to be eligible"
for a construction grant.
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If the model of the basin predicts that water quality
standards will not be met when all point sources achieve secondary
treatment, the segment is classified as "water quality limited".
The inputs to the model are varied with the result that waste load
allocations are established for this segment and represent the
minimum of treatment to be achieved by any future publicly owned
wastewater treatment works.
It should be noted that in the 303 planning no direct
controls are exercised to limit the non-point sources. In all
cases, however, applicants for construction grants must comply with
applicable basin plans.
Re: 40 CFR Part 130 and Part 131
4. Areawide Waste Treatment Management Plans
Section 208, Areawide Waste Treatment Management Plan, is
another integral part of the State Continuing Planning Process. These
plans are prepared for areas having substantial water quality control
problems caused by urban-industrial concentration or other factors.
The stream segments in these areas require comprehensive areawide
planning to meet the water quality standards. Not only do these plans
place limitations upon municipal and industrial point sources, they
also address land use policies to control non-point sources, stormwater
discharges, water supply and other limiting factors which may be
controlled to achieve water quality standards.
The 208 planning is broad based and geared toward the more
complex cases. EPA is authorized to provide grants to agencies having
jurisdiction under State law to carry out such planning. The completed
plan must designate one or more agencies to implement its recommendations.
Smaller geographical areas within the 208 area may be designated as
Section 201 facility planning areas.
EPA policy concerning coordination between applicants and 208
agencies is explained in Guidance for Preparing a Facility Plan Revised -
May 1975, pp. 2 and 3.
Re_: 40 CFR Part 126 and Part 131
Program Guidance Memorandum, PG-47, 3/11/75
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5. Facility Plans
Facility plans are required by Section 201 of PL 92-500.
They may be considered as the implementation part of the States
Continuing Planning Process. Facility plans are the first stage
of the three part construction grant process. The facility
planning area is designated by the State agency and may include
one or more political jurisdictions. Overlapping may exist
between 208 areawide planning areas and 201 facility planning
areas. Coordination and cooperation are essential to avoid
duplication, but the completion of 201 plans should not be delayed
or postponed pending completion of 208 plans. Rather,the 208
plans, when completed, should incorporate the provisions of the
completed 201 plans.
Ideally, the 303(e) plan establishes the waste loads,
the 208 plan designates the 201 area and the implementing agency,
and the 201 plan develops a specific project which is the most
environmentally sound and cost effective for achieving the stated
water quality standards. In the case where a 208 area has not been
designated, the State agency will designate the boundaries of the
201 facility planning area, subject to the approval of EPA. If a
303(e) basin plan has not been completed, the waste load allocations,
where necessary, are to be established on a case by case basis by
the State jointly with the applicant.
The objectives of the 201 facility plan are specific and
include the treatment plant site, size, type of process, method
of effluent and sludge disposal, interceptor sewer routings and
other steps necessary for constructing the project. The facility
plan is prepared by the grantee with funds from a Step 1 project
grant.
Facility planning is discussed in greater detail in
Chapter IV and is the subject of the Publication, Guidance for
Preparing a Facility Plan, Revised - May 1975.
Re_: 40 CFR 35.917
40 CFR 130.31
Program Guidance Memorandum, PG-47, 3/11/75
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6. Municipal Permits
PL 92-500 established the National Pollution Discharge
Elimination System (NPDES) as the enforcement mechanism for
achieving water quality standards. The discharge permit issued
under the system is applicable to all municipal and industrial
discharges. Where 303(e), 208 or 201 plans have been established,
the permits will require compliance with such plans. In the case
of existing sewage treatment facilities which,because of present
or anticipated future inadequate treatment,will not achieve the
water quality standards, the NPDES permit may contain limitations,
conditions or schedules which will prompt the municipality to
apply for a construction grant. The State agency will designate
the boundaries (if not previously designated) of the 201 facility
planning area and the construction grant process will begin. An
applicant for a construction grant must comply, at a minimum,
with an applicable existing permit.
Re: 40 CFR Part 125
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B. STATE STRATEGY AND PROGRAM
1. Program Submittal
As a part of the State Continuing Planning Process,
each State is required to submit to EPA a program for the
coming fiscal year. This annual program also satisfies the
requirements of Section 106 of PL 92-500, which provides for
grants to the State agencies to carry out the planning processes.
The key element of the annual plan is the State strategy which
must:
(a) identify water quality problems and their causes;
(b) list these problems by geographical location;
(c) describe the State's approach to solving the problems,
including the extent to which non-point sources will
be addressed;
(d) provide a listing of the priorities and scheduling
of permits, construction grants, areawide plans and
other program actions;
(e) describe the level of detail and the schedule for
preparation of basin plans;
(f) describe how the State will satisfy the reporting
requirements under Section 305(b) of PL 92-500.
The construction grants reviewer is primarily concerned
with item (d) above, namely the listing of State priorities
for construction grants projects.
Re: 40 CFR 130.40
2. State Priority System and List
As a part of its program strategy, the State must
prepare a municipal discharge inventory which ranks all of the
significant municipal discharges within the State. This inventory
must be consistent with the stream segment priority rankings also
prepared as a part of the overall State strategy. The State then
develops a system of ranking projects for funding, which gives
consideration to:
(a) the severity of pollution problems;
(b) the population affected;
II-6
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(c) the need for preservation of high quality waters;
(d) national priorities;
(e) total funds available;
(f) treatment works sequence;
(g) any additional factors considered pertinent by
the State.
The resulting project priority list is a State management tool and
represents the projects which are anticipated to be funded with the
State's allocation.
The priority list of projects which are to receive construction
grant funds within the State must include, as a minimum, the name of
each municipality, a State-assigned EPA project number, a description
of the type and scope of the project, total estimated cost and estimated
Federal assistance. Each project must be certified by the State as
being entitled to priority for Federal assistance from available funds
over other eligible projects in the State.
In reviewing the State priority list, it is necessary to
insure that:
(a) the above information is included for each project;
(b) the grant funds involved equal or exceed the State
allotments available;
(c) known problem areas in the State have been properly
considered;
(d) cost estimates appear to be reasonable;
(e) previously approved Step 1 and Step 2 projects
are properly reflected and realistically scheduled
for funding.
While the project priority list must be developed in accordance
with the criteria listed above, the criteria is not to be construed as
removing all flexibility in the establishment of the list. For example,
large city projects should be precluded from using all or almost all of
a State's allocation. This may be accomplished by the State reserving
funds for projects of smaller communities (as defined by the State and
approved by the Regional Office), or by dividing the work into several
segments or smaller projects. In the first case, the State must consider
the severity of the pollution problem in ranking projects of both the
larger communities category and the smaller communities group and in
consolidating the projects of each group into the priority list. In the
second case, both the State and the applicant must recognize that:
II-7
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(a) all grants must be awarded at the 75% level;
(b) the project must be comprised of a discrete
and meaningful part of the treatment system;
(c) the awarding of the grant does not bind EPA
to fund the remaining parts of the treatment
system;
(d) the acceptance of the grant commits the grantee
to the completion of both an operable treatment works
and the complete sewage treatment system of which the
assisted project is a part.
The project priority list may also contain reserve funds
as explained below under Funding.
The State's priority list is submitted annually as part of
the State's program. The list is not approved by the Regional Administrator
unless it has been the subject of a public hearing. During the year,
certain amendments may have to be made to the list. These amendments
do not require a public hearing if the Regional Administrator does not
consider them significant.
Re_: 40 CFR 35.915, .930-4, .935-1
40 CFR 130.41
Program Guidance Memorandum, PG-33, 5/10/74;
PG-46, 1/17/75
3. Funding
The State allocation of construction grant funds will vary
from year to year. The initial State allotments are available for
30 months. In developing the priority list funding requirements, the
State must reserve a reasonable portion, but not less than five percent
of its annual allocation, for grant increases. While every effort must
be made by the grantee and State to insure accurate and up-to-date
cost estimates for the projects, cost overruns do occur and grant increases
may be made from these reserves. Where cost overruns exceed the reserves,
the State may:
(a) use recovered PL 92-500 funds; or
(b) use funds from the succeeding year's allotment; or
(c) if the succeeding year's allotment has not been allocated,
defer fundable projects on the lowest end of the priority
list to free up funds; or
(d) negotiate with the applicant to consider dividing the work
as explained above.
II-8
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If option (c) is employed, the deferred projects are
automatically placed at the top of the succeeding year's project
priority list.
Also, the State has the option to reserve funds for
Step 1 and Step 2 projects which may be selected by the State
subsequent to the approval of its project priority list. However,
this reserve may not exceed ten percent of the State's annual
allocation and may be reserved for up to eighteen months only.
Any funds remaining at the end of that period are to be used for
additional projects. The funding of additional Step 1 and Step 2
projects from reserve funds must be consistent with the approved
State strategy.
Re: 40 CFR 35.915, .930-4, .935-1
Program Guidance Memorandum, PG-35, 6/3/74;
PG-41, 10/16/74
4. Delegation of Authority
Delegation to the States of various review functions of
the construction grants application processing is intended to
eliminate duplication of effort between States and regional offices,
improve program efficiency and speed the processing of grants. While
PL 92-500 does not specifically address the authority of States to
approve various aspects of an application (except project priority
lists), it has been interpreted as allowing the States to perform
the review function.
The regulations encourage the Regional Administrators
to enter into written agreements with the State agencies under which
the State will carry out the review and certification of the
technical and/or administrative adequacy of specified documents.
Certification by the State of particular documents, such as plans and
specifications, operation and maintenance manuals, etc., is considered
by EPA to have resulted from an in-depth review by the State. In such
cases, EPA must continue to exercise its statutory grant approval and
grant commitment responsibilities.
The reviewer must be aware of existing agreements and their
provisions and any specific limitations which may affect his review.
Agreements will vary from State to State, depending on the State's
capabilities, and will be reviewed periodically and amended or
terminated as appropriate.
Re_: 40 CFR 35.912
II-9
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CHAPTER III
PREAPPLICATION INFORMATION
A. General
B. Applicant Eligibility
C. Preapplication Conference
-------
A. GENERAL
An applicant is often unfamiliar with the requirements
and/or limitations of the construction grants program. Lack of
knowledge of all key aspects of the grants program can be costly
and time-consuming for the applicant, the State and EPA. The
Region, in conjunction with the State, should insure that applications
being submitted are responsive to all technical, administrative
and legal requirements of the program.
Guidance to applicants is presently provided through a variety
of sources, including State and Federal forms, instruction booklets,
EPA guidance publications, and copies of Federal regulations. However,
this information is not always clear to applicants and emphasis is
often incorrectly placed on less important matters. To avoid such
occurances, a preapplication conference between the applicant, the
State and EPA to jointly review both program requirements and
applicant needs, is strongly urged.
III-l
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B. APPLICANT ELIGIBILITY
An eligible applicant is: A ci£y, town, borough, county, panisk,
district, association, on. otheA public, body (including an intesi-
muni.ci.pai. age.ncy o& two on. mole, ofa the, fiosie.goi.ng e.nti£i.es] cAe,ate.d
by on. pursuant to State, law, on. an Indian tsiibe. on. an authoni.ze.d
Indian fiibal on.Qavu.zatA.on, having jurisdiction ov&i disposal o&
sewage, i.ndustAial wastes, on. othesi wastes, on. a designate.d and
appJiove,d managejme.nt age.ncy undeA Se.ction 208 o& the. Act. This
de.{,i.niti.on e.xclu.des a Ape.cial dis&iict, Auch as a school distsiict,
which does not have, as one. o& its pni.nci.pat n.esponsi.biJUtA.es the.
&ieatme.nt, tnanspont, on. disposal of. Liquid wastes.
Under earlier legislation, construction grants were available
to municipal water treatment utilities for sludge handling, pretreatment
and/or overall treatment facilities. Under PL 92-500, however, an
eligible project must have as its principal purpose the treatment of
domestic wastes of the entire community or region. The treatment
of water for human consumption is considered an industrial undertaking.
Whether publicly or privately owned, it is in the same category as
any other industrial service, such as power plants, airports, and
mass transportation, and not eligible for a construction grant under
PL 92-500.
Re_: 40 CFR 35.905-14, .920-1, .925-15
Program Guidance Memorandum, PG-36, 6/5/74;
PG-36-A, 9/17/74
III-2
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C. PREAPPLICATION CONFERENCE
The regulations encourage preapplication assistance, including
a preapplication conference for each project on the State's priority
list. The importance of the preapplication conference cannot be overly
stressed. A meeting where the applicant, the State and the Region
sit down together to discuss the approaching work has the potential of
setting the stage for a well coordinated work program which is void
of major misunderstandings and time delays.
The preapplication conferences may be with one applicant or a
group of applicants and will generally involve only those applicants
included on the State project priority list.
While the entire three step grant process should be discussed
at the preapplication conference, the primary emphasis should be on
the administrative and technical requirements of a Step 1 project
grant application and the preparation of the facility plan. Applicant
conferences throughout the three step grant processing procedures
are encouraged,with emphasis to be placed on specific aspects of the
program at the appropriate time.
The Regions should develop outlines of points to be covered in
the preapplication conferences which may be tailored to the individual
State's and applicant's needs and capabilities. Several important
matters which should be discussed in the conference are as follows:
Re: 40 CFR 35.920-2
1. Important Dates
October 18, 1972 - Passage of PL 92-500. In those States
in which sewage collection systems are federally funded, the bulk
of the design flow (generally two-thirds) of such collection system
must be attributable to a community in existence as of date of
passage of PL 92-500.
June 30, 1975 - After this date the applicant must not
initiate planning work until a Step 1 project grant has been awarded,
or unless a plan of study has been approved and is accompanied by a
request from the State agency to reserve funds for Step 1 project.
III-3
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July 1, 1975 - Costs incurred for project planning prior
to this date may or may not be eligible for grant assistance depending
on the specific date and nature of the work conducted. The regulations
set forth limitations.
Re_: 40 CFR 35.925-13, .925-18
2. Contracts for Personal and Professional Services
The EPA has established rules and regulations concerning
applicant/grantee procurement of architectural and engineering services.
A contract which includes fees based on a percentage of the construction
cost shall not be used since such contracts penalize the engineer
for designing the most economical facility. Multiplier contracts,with
profit as a part of the multiplier, are also prohibited. It is the intent
of the agency that simple, clearcut contracts, which leave no room
for future disagreement, be negotiated. These contracts should be such
that the engineer receives a fair fee with a reasonable profit for his
work, and the municipality receives competent, complete professional
services at a fair cost.
In all A&E contracts, a maximum fee should be fixed. As in
all A&E contracts, should the scope of the project change during the
prosecution of the work, the contract would be open for renegotiation.
The employment of any fee arrangement requires a careful
analysis of the scope of the work to be performed and a detailed estimate
by the engineer of his costs for performing the work. This procedure
should assure a clear understanding of exactly what is to be done,
by whom, and should produce a better end product.
In the actual procurement of A&E services, the procedures
detailed in the regulations must be followed (a copy of the regulations
should be given to the applicant). The regulations require that any
contracts include an "access" clause, allowing the State and EPA access
to project work and records.
Re_: 40 CFR 35.935-7, .936, .937
40 CFR 30.605
Program Guidance Memorandum, PG-53, 7/8/75
III-4
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3. Administrative Requirements
The administrative requirements to be fulfilled by the applicant
are extensive. All necessary forms, authorizations, timing requirements,
and legal requirements should be discussed. The application form (5700-32)
should be reviewed line by line. In addition, recommended formats for
submittal of technical data should be reviewed. Payment procedures and
policy should be fully explained. Finally, the entire application procedure
for Step 1, 2 and 3 projects should be discussed. Special emphasis
should be placed upon the coordination required between the applicant,
the State and EPA to insure accuracy and timeliness in processing grant
applications. Specific points to be covered include:
(a) that after June 30, 1975, a Step 1 project must be
approved for a grant before any work is started
if the costs of such work are to be eligible for grant
assistance;
Re_: 40 CFR 35.925-18
(b) that prior costs, if any, must be claimed in the initial
application for grant assistance;
Re_: 40 CFR 35.925-18
(c) that project work may not be accomplished by force
account (municipal or public service employees) unless
the applicant can demonstrate that:
(i) he possesses the necessary competence to accomplish
the work
(ii) it is more economical to use the force account
method;
Re_: 40 CFR 35.935-2(a)
Program Guidance Memorandum, PG-34, 5/7/74
(d) the institutional arrangements and agreements between
jurisdictions;
Re_: 40 CFR 35.917-6
(e) payment of non-federal share of project costs;
Re: 40 CFR 35.925-5
III-5
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(f) priority lists;
Re: 40 CFR 35.925-3
(g) the procurement of professional services and contracts;
Re_: 40 CFR 35.936, .937
(h) record keeping;
Re_: 40 CFR 30.800, .805
(i) limitations on collection systems;
Re: 40 CFR 35.925-13
(j) user charges and industrial cost recovery;
Re_: 40 CFR 35.925-11, -12
(k) public participation.
Re_: 40 CFR 35.915(f), 917-5
4. Technical Requirements
All technical aspects of the Step 1, 2 and 3 work should be
reviewed with the applicant with special attention to the requirements
for a plan of study and the preparation of a facility plan. At a minimum,
the following items should be discussed:
(a) the degree of technical detail required in both the
plan of study and the facility plan;
(b) specific problems associated with the project in
question and how they should be addressed in item (a);
(c) cost effectiveness in its broadest sense and the trade-off
between engineering, environmental, monetary costs, and
institutional arrangements;
Re: Guidance for Preparing a Facility Plan
Revised - May 1975
(d) infiltration/inflow analysis, sewer system evaluation
survey;
Re: Guidance for Sewer System Evaluation March 1974
40 CFR 35.927
III-6
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(e) environmental assessment integration in the facility
plan and possible environmental impact statement
proceedings, with emphasis on secondary impacts;
Re: Guidance for Preparing a Facility Plan
Revised - May 1975
40 CFR 35.917. .925-8
Program Guidance Memorandum, PG-50, 6/6/75
(f) pretreatment and treatment of incompatible pollutants;
Re_: 40 CFR 35.925-15
(g) BPWTT, including secondary treatment and waste
stabilization ponds;
Re: Alternative Waste Management Techniques for Best
Practicable Waste Treatment 6/75
40 CFR 35.917-1
Program Guidance Memorandum, PG-16, 9/11/73
(h) other Federal requirements, such as historical preservation,
archeological investigations, flood insurance, etc.
Re_: 40 CFR Part 30 Subpart C
Program Guidance Memorandum, PG-52, 7/2/75
PG-54, 7/8/75
III-7
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CHAPTER IV
STEP 1 GRANT PROCESSING
A. INTRODUCTION
B. SCHEMATIC FLOW DIAGRAM
C. APPLICATION CONTENTS
D. PLAN OF STUDY REVIEW
E. ADMINISTRATIVE REVIEW
F. GRANT AWARD PROCEDURES
G. FACILITY PLAN (ADMINISTRATIVE REVIEW)
H. FACILITY PLAN REVIEW
-------
A. INTRODUCTION
This chapter described the contents of, and review procedures for,
the processing of a Step 1 project grant application. It begins
with the receipt of the application package and concludes with the
review and approval of the facility plan.
Section B, Schematic Flow Diagram, visually places this chapter
in the proper sequence and indicates its relationship to previous chapters.
Section C, Application Contents, provides a quick ready listing
of the materials which are contained in an application package.
Section D, Plan of Study Review, is given individual attention
because it is the major technical requirement of the application and
includes discussions prepared by the applicant. This section also
includes a discussion of the 303(e) and 208 plans as they relate to
the plan of study. Costs incurred before filing the application are
briefly discussed.
Section E, Administrative Review, describes the procedures involved
in reviewing clearinghouse comments, priority list compliance and
certification, application form, and contracts and subagreements.
Section F, Grant Award Procedures, describes the action required
on the part of EPA in making the grant offer.
Section G, Facility Plan (Administrative Review), describes the
procedures for approaching the undertaking of the facility plan, the
review of clearinghouse comments and State approval.
Section H, Facility Plan Review, describes the review of the
facility plan according to the contents required by regulation and in
the format recommended by the guidance.
The technical and administrative reviews are to be performed
concurrently whenever possible. When items are missing or explanations
are necessary, the review is to proceed as far as possible to insure
quick action once the deficiencies are corrected.
IV-1
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B. SCHEMATIC FLOW DIAGRAM
The flow diagram below visually places this chapter in the proper
sequence and indicates its relationship to other chapters. The diagram
includes the general functions of the Step 1 project process 3S performed
by the applicant, State and EPA.
IV-2
Rev. 9/5/75
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C. APPLICATION CONTENTS
Below are listed the basic materials to be included in an application
package. The items are listed here for quick reference, while the
review procedures for each item are described later. Initially, the reviewer
is to make a cursory review of the package to insure that all items
are included, that all applicable portions of the forms are completed
and that the documents are signed by the appropriate officials. If
items are missing or explanations are necessary, the State is to be
informed but the review is to proceed as far as possible to insure quick
action once the corrections are made.
1. Plan of Study
2. Comments of State and/or Regional Clearinghouse
(A-95 process)
3. State Priority Certification, EPA Form 5700-28
4. Application, EPA Form 5700-32, including authorizing
resolution
5. Proposed subagreements (generally engineering contracts)
or explanation of method of awarding proposed subagreements
Re: 40 CFR 35.920-3(a), .925-3
40 CFR 30.315
IV-3
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D. REVIEW OF THE PLAN OF STUDY
1. Contents
Purpose:
A plan of study is submitted by the applicant to show
his understanding of the work to be done in preparing a facility
plan. The plan must include the key issues to be addressed, a
time schedule, and itemized costs for the completion of the
specific tasks.
Discussion:
The plan of study is the first element of the grant request
to be submitted by the applicant. It sets out concisely the scope
of the work to be undertaken in preparing a facility plan. It must
be critically reviewed to insure that all statutory requirements are
met and that the project begins on the proper course.
While the plan of study should be brief and generally follow
the format suggested in the Guidance for Preparing a Facility Plan in
terms of subject matter to be included, it should also address unique
features of the project which will require special attention. Such
unique features might include water-short areas, recreational areas,
economically depressed areas, etc.
The plan of study must be reviewed by both the State and EPA
to insure compliance with previously approved wastewater management plans,
interstate agreements or other applicable plans.
The plan of study, once approved and incorporated into the
grant agreement, is to include a time schedule for the completion of
specific tasks, and itemized costs for each of these tasks. This
schedule of tasks and accompanying costs are used to develop a payment
schedule, which in turn is used in preparing projections of cash
disbursements. Once the grant payment schedule has been established,
the grantee may submit requests for payment of work that has been
completed, in accordance with the grant payment schedule. Payments
may not be accelerated beyond those specified on the schedule. (See
Chapter VII Grant Payments).
Review Procedures:
Regulations require that the plan of study contain four
items as follows:
IV-4
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U) the. ptLOpoA&d pUjanyunQ onea;
(e.d
Ste.p 1 pio/ent, 4,nc£u.d2.ng a Ache.du£e.
the. c.omp£et4.on o& Ape.Csi&'ic taAkA; and
an sitW'ize.d deA&u.ption OjJ the.
faon the.
The boundaries of the proposed planning area, item (i)
above, are to be checked with those designated by the State and
approved by EPA as described in Chapter II. In cases where the
State has not previously designated the boundaries of the
facilities planning area, they will be designated by the
Regional Administrator.
Additionally, the Guidance for Preparing a Facility
Plan suggests items which should be included in the plan of study.
These include maps of the planning area with streams, lakes, ponds,
etc., identified; maps of the existing sewerage systems including
treatment plants; need for project because of State or Federal enforcement
orders, public health hazard or water quality problems; and previously
prepared documents which will be used in developing the facility plan.
The plan of study must be reviewed for- completeness and must
include those items necessary for development of an approvable facility
plan. Also, the applicant must satisfy the statutory requirements
described in later chapters of this handbook. The plan of study
must demonstrate that the applicant understands these requirements and
is able to proceed in a manner which will satisfy them.
The applicant must complete the facility plan in a reasonable
period of time and at a reasonable cost. To test for reasonableness,
the time and cost should be compared with other projects of a similar
nature and scope.
Re_: 40 CFR 35.920-3(a), .945
Guidance for Preparing a Facility Plan,
Revised - May 1975, p. 4
IV-5
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2. Planning Considerations
Prior to awarding a grant, EPA must determine that the
proposed project is in conformity with applicable basin plans
approved in accordance with Section 303(e) of FWPCA and areawide
waste treatment management plans approved in accordance with Section
208 of FWPCA (see Chapter II). The reviewer must be familiar with
the planning area and be aware of the status of applicable plans.
In cases where a 303(e) basin plan has not been completed,
the plan of study must indicate that the resulting project will comply
with the National Pollution Discharge Elimination System (NPDES)
permit (see Appendix B) if one has been issued.
In cases where a 208 areawide waste treatment management plan
has been completed and approved, the applicant must be the agency
designated in the plan and the project must be in conformity with
that plan. Where 208 planning has been initiated, the 208 agency must
be afforded the opportunity to review and comment upon the proposed
plan of study. Where a 208 area has not been designated, no further
action is required.
Re: 40 CFR 35.925-2, .925-19
Guidance for Preparing a Facility Plan,
Revised - May 1975, pp. 1-4
3. Prior Costs
The application form requires the applicant to provide
a breakdown of the costs for preparing a facility plan. The plan
of study also requires a breakdown of these costs by specific task.
These costs are to be reviewed to insure that they are allowable
costs as defined in Chapter VII. This section is concerned only with
the timing of when these costs were incurred.
If the costs to prepare the facility plan will be incurred
after the grant award, no special review procedures are required.
Costs for the preparation of the application, plan of study
and other supporting documents are not allowable for EPA grant
assistance.
IV-6
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If the applicant has incurred costs prior to the award of
a grant, and requests EPA grant assistance in these costs, certain
dates are of significance:
June 30,1975 - Costs incurred for work initiated after
this date for Step 1 and Step 2 projects are eligible for
EPA grant assistance only when a grant award has been made
or where the State has requested that funds be reserved
(a plan of study must have been approved).
October 31, 1974 - Costs incurred for work initiated after
this date for Step 1 and Step 2 projects are eligible for
EPA grant assistance provided a plan of study was approved
by EPA.
November 1, 1974 - Costs incurred before this date for
Step 1 and Step 2 projects are eligible for EPA grant
assistance.
In all cases, the applicant must request grant assistance
for prior costs in his first application.
Where prior costs are incurred, the applicant must submit
a breakdown of these costs,identifying the dates the costs were
incurred and the nature of the work which was performed.
Re: 40 CFR 35.925-18, .917(e), .945
IV-7
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E. ADMINISTRATIVE REVIEW
1. Clearinghouse Comments
Purpose:
Applicants for construction grants for wastewater treatment
facilities are required to comply with the Office of Management and
Budget (OMB) Project Notification and Review System (Circular A-95).
This procedure is established to provide for the early contact between
applicants and governmental agencies, and to insure coordination between
related projects.
Discussion:
Prior to submission of a Step 1 project application, the
applicant is required to obtain the comments of the State and/or regional
clearinghouses in accordance with OMB Circular A-95. A copy of the
clearinghouse(s) comments is to be included with the application package.
The clearinghouse comments will indicate the degree of interest
of other governmental agencies in the project. If these comments are
adverse, the applicant is to submit a statement explaining how the
comments were considered. If a clearinghouse recommends that the ap-
plication be rejected but EPA approves it, the clearinghouse must be
notified and given an explanation of the reasons for approval.
Review Procedures:
The reviewer must make particular note of any adverse
clearinghouse comments. These comments may require further explanation
from the applicant, State or clearinghouse. More serious adverse comments
may dictate that the application be returned to the State agency.
The reviewer must determine if the comments warrant a special
condition in the grant agreement (see section F below).
Re_: 40 CFR 35.920-3(a)(3)
40 CFR 30.305
OMB Circular A-95, 38 FR 32874, 11/28/73
IV-8
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2. Priority List Compliance and Certification
Purpose:
The State agency is required to certify each project as
entitled to priority for grant funds in accordance with the State
priority system and the project priority list.
Discussion;
Chapter II discusses the State priority system and list.
Once the system and annual list have been approved by EPA, each
project is certified by the State as being entitled to priority
for a grant over all other projects below it on the priority list
(EPA Form 5700-28, see Appendix B).
A State may elect to set aside up to ten percent of its
yearly allotment to fund Step 1 and Step 2 projects not on the
current priority list. When such projects are certified, the
certification must signify that the grant is to be made from that
reserve allotment.
Only projects which have been certified by the State as
entitled to priority for Federal assistance may receive a grant.
Review Procedures:
Review State Priority Certification to determine that:
a. the name, project number and description of
the project agree with the application, form
5700-32, and the approved State priority list;
b. the form includes the signature of the
authorized State official;
c. the award of grant assistance for the project
will not exceed the State's allotment, includ-
ing reallotments;
d. the award of grant assistance will not
jeopardize the funding of any projects of higher
priority;
IV-9
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e. the State has included a statement to the effect
that all jurisdictions within the facility planning
area have been notified of their inclusion in such
planning.
Re_: 40 CFR 35.915, .917-2, .920-2, .925-3, .925-4
Program Guidance Memorandum, PG-33, 5/10/74;
PG-35, 6/3/75;
PG-46, 1/17/75
3. Application Form
Purpose
EPA Form 5700-32 is the formal application document and sets
forth the information necessary to qualify for a construction grant.
Additionally, the application contains "assurances" from the applicant
which are necessary to satisfy statutory requirements.
Discussion:
The designation of a facility planning area is a State
responsibility and ^koutd -Lnc2u.de. that ate.a de.we.d ne.c.eAAOA.y to
ptepote. an e.nv-lnonme.ntat at>£&>&m o& ac.hte.v4.ng the. eAtabLLs>he.d wateA quatlty
QoaiA can be. planned &on and ^mpiejme.nte.d. The applicant for the
designated area may be a joint authority representing the multiple
jurisdictions, one or more of the eligible jurisdictions or one lead
agency representing all jurisdictions. In all cases, the applicant
must have the legal authority to plan, design, finance, construct,
operate and maintain any resulting wastewater treatment facilities.
The application form is used for an initial grant request,
amendments, or supplemental grants. The form (see Appendix B)
contains instructions for completion of each of the five parts.
Part II, Section B requires information on the project site to be
submitted with the application. Since a facility plan resulting from
the award of a Step 1 project grant will conclude which is the most
cost effective and environmentally sound project site, the information
contained in this section is not necessary for a Step 1 project grant
award.
IV-10
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Part III, Section D concerns the applicant's proposed
method of financing the non-federal share of the project. The
applicant may not use revenue sharing funds obtained under the
State and Local Fiscal Assistance Act of 1972 to finance his portion
of the eligible project costs. However, such items as cost overruns
(not otherwise funded by EPA), cost of sewage collection systems,
or land acquisition costs, for example, which are found by the State
or EPA not to be allowable for participation in the grant programt
may be funded with revenue sharing funds.
The statutes require that the applicant comply with related
laws and regulations and give other assurances. These requirements
are satisfied for a Step 1 project grant when the applicant signs
the application and thereby assures and certifies that he will comply
with the requirements.
The applicant must attach to his application a copy of the
resolution authorizing the person to act as the official representative
of the applicant (Part V, item 1). Any subsequent changes in the
authorized official must also be substantiated by a copy of the
resolution authorizing the change.
Review Procedures:
Review application form and determine that:
a. the name, project number and description of the project
and amount of grant request agree with the State
Priority Certification,Form 5700-32,and the approved
State Priority List;
b. the form is signed by the authorized representative and
and a copy of the authorizing resolution is attached;
c. information regarding project location, entities
involved and cost data corresponds to that in the plan
of study;
d. all items in the application are complete or marked not
applicable (NA);
e. Part V, assurances, is part of application. If not, a
properly signed form must be obtained.
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NOTE: Particular emphasis is to be placed upon review
of Part III, Section D, Proposed Method of Financing
Non-Federal Share, to insure that applicant can
successfully fund his share of the project costs and
that revenue sharing funds will not be used to meet
those costs eligible for EPA grant assistance.
Re: 40 CFR 30.315
40 CFR 35.917-2, .917-3
Program Guidance Memorandum, PG-3, 6/25/73
81 CFR Part 51, Department of Treasury
4. Contracts and Subagreements
Purpose:
Contracts or subagreements for personal or professional
services are submitted by the applicant and reviewed by both the State
and EPA to insure that the scope and nature of the proposed services
are sufficient to result in an approvable facility plan and that the
fees and schedules are reasonable.
Discussion:
The personal and professional services covered by the
subagreements at the time of Step 1 application submission are generally
the consulting engineering services, although separate agreements may
also exist for environmental consultants, financial consultants, etc.
The regulations state that the application shall include proposed sub-
agreements OP an explanation of the -intended method of awarding sub-
agreements for performance of any substantial portion of the project
work.
Also, the regulations require that any such subagreements
or lower tier subagreements include an "access" clause allowing the
State or EPA access, at reasonable times and places, to the work or
records. The "access" clause is applicable to subagreements or lower
tier subagreements in excess of $10,000.
The detailed requirements of and procedures for procuring
personal or professional services appear in 40 CFR 35.936, .937. Sub-
agreements in which the fee is a percentage of construction costs are
not acceptable, nor are cost multiplier contracts where profit is
included in the multiplier.
IV-12
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Review Procedures:
Review the agreement(s) and determine that:
a. the grantee has complied with 40 CFR 35.936
and .937;
b. the scope of work is sufficient to prepare an
approvable facility plan;
c. completion schedules are reasonable and in
agreement with the plan of study.
Re_: 40 CFR 35.920-3(a)(2), .935-7, .936, .937
40 CFR 30.605
Program Guidance Memorandum, PG-53, 7/8/75
IV-13
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F. GRANT AWARD PROCEDURES
The administrative procedures required in awarding a grant are
summarized below. A detailed line-by-line explanation of the adminis-
trative steps necessary in preparing EPA forms and notifications is
described in the Grants Administration Manual prepared by the Grants
Administration Division, Office of Planning and Management, EPA.
Item 1 below describes the actions for which the regional office
may establish procedures. Item 2 through 5 describe uniform actions
prescribed by Headquarters.
1. Regionalized Procedures
a. Notification to financial management branch;
b. Preparation of transmittal letters to the
applicant and State agency (include instruc-
tions for predesign conference, as appropriate);
c. Other regional procedures which have been
worked out with the States, interstate agencies,
etc.
2. Notification of Grant Award Action
The Notification of Grant Award Action, EPA Form 5700-1B,
(see Appendix B) is completed and transmitted to Grants Information
Branch, Headquarters, by Communicating Magnetic Card Selectric
Typewriter on the date of award or no later than the following working
day.
The Grant Information Branch immediately forwards a copy of
the 5700-1B to the Office of Legislation which notifies appropriate
congressional offices.
EPA Form 5700-1D is used in the case of a decrease,
declination, or withdrawal of a grant.
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3. Grants Information and Control System (GIGS)
The Grants Information and Control System (GICS) is a
computer based management system in which information concerning the
construction grants program is stored. This information is used for
analyzing the grant program, manpower requirements, answering
congressional inquiries and other purposes. The information must be
current and available for quick retrieval.
Information concerning the award of each construction
grant is entered into the system using prescribed coding sheets
(see Appendix B).
Re; Grants Information and Control System, GICS,
WWT Construction Grants Information Data Base,
Operators' Manual, 2nd Printing 2/22/74
4. C1earinghouse Notification
Purpose:
Notification of clearinghouse is made in order that
the clearinghouse may inform interested agencies or other entities
of the award of a grant in accordance with Treasury Department
Circular No. 1082.
Procedures:
The notification, Standard Form 240 (see Appendix B),
is completed by the regional office and copies are mailed to the
State, regional and local clearinghouse and the U.S. Department of
the Treasury.
Re_: U.S. Treasury Department Circular No. 1082 8/8/73
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5. Grant Agreement/Amendment
Purpose:
The Grant Agreement/Amendment (EPA Form 5700-20) serves as
a formal document of agreement between the U.S. Government and the
grantee, and constitutes a legally binding contract once executed.
Procedures:
EPA Form 5700-20 (see Appendix B) is completed by the
Regional Office based upon the information submitted in the application
package. The agreement must define the scope of the project.
Modifications to grant amounts, scope of work or other items are made
on the basis of the review process,and special conditions of the grant
are included in Part III b. These special conditions may be based
upon clearinghouse comments, requests from the State agency or
conditions unique to the project.
In order to better forecast future funding requirements,
each applicant for a grant is required to submit cost estimates in the
format shown in the form,Summary of Costs of Planned Treatment Works
Scheduled^by Project and Category (.see Appendix B')'. This requirement
Ts to be incorporated as a special condition in the grant agreement/
amendment.
The grant agreement/amendment is not sent to the applicant
until five working days after the signing by the Regional Administrator
to allow for necessary Congressional notification. The applicant is given
three weeks to accept the grant offer and to return the signed grant
agreement/amendment to EPA.
The individual signing the grant agreement/amendment on
behalf of the applicant should be the same individual who signed the
application. Differences must be explained and a new authorizing
resolution submitted (see Application Form item E.3 of this chapter)
if such occur.
Re: Program Guidance Memorandum, PG-55, 5/5/75
IV-16
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G. PREPARATION OF THE FACILITY PLAN
Purpose and Discussion:
Program responsibility for the progress of a project does
not end with the grant offer. The reviewer must be continually aware
9f the status of the project to insure that the facility plan
is completed in accordance with special requirements and the approved
schedule submitted with the plan of study.
The reviewer should work closely with the grantee in
preparation of the facility plan and should review portions of the
plan as they are developed. This will insure that all regulatory
requirements are satisfied and that additional information and
necessary changes are incorporated into the plan in the most
expeditious manner.
The detail of facilities planning will vary depending on
the complexity and scope of the project and shall be conducted only
to the extent that the Reg-tonal Administrator determines to be
necessary to insure that facilities for which grants are awarded
will be cost effective and environmentally sound This allows
the reviewer to exercise flexibility in advising the grantee as to
plan requirements.
Procedures:
Shortly after award of a Step 1 grant, the reviewer should:
1. contact the grantee and his consultant and make
known the kinds of advice and assistance available
from the State and EPA during the preparation of
the facilities plan;
2. advise the grantee as to progress reports which
must be submitted, depending on the size and
complexity of the project;
3. advise the grantee (normally on large complex
projects) that periodic inspections or audits will
be made by either the State or EPA;
NOTE: During preparation of the plan, conduct inspections and reviews as
necessary.
Re: 40 CFR 35.917-3(d), .917-4(b)
IV-17
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H. ADMINISTRATIVE REVIEW (FACILITY PLAN)
1. Clearinghouse Comments
Purpose:
The grantee must submit the completed facility plan to
the appropriate clearinghouse to allow for review and comment by
interested agencies in accordance with the procedures of the Project
Notification and Review System (OMB Circular A-95).
Discussion:
Before submitting the completed facility plan to the
State agency, the grantee is required to obtain comments from the
appropriate State and Regional clearinghouses. The clearinghouses are.
to review the plan, circulate it to interested agencies, and return
their comments to the grantee within 30 days. If the comments are
adverse, the grantee must submit, with the completed plan, a statement
explaining how the comments were considered.
If, as a result of the facility plan review by the
State or EPA, the proposed project is modified, in accordance with
A-95 procedures, it may be necessary to obtain clearinghouse comments
on the facility plan again.
Review Procedures:
The reviewer must consider all adverse clearinghouse
comments. The comments may require further explanation from the
applicant, State or clearinghouse. If the reviewer finds that any
adverse comments are justified, the completed facility plan must be
returned to the State agency.
Re: 40 CFR 30.305
40 CFR 35.917-1(f)
OMB Circular A-95, 38 FR 32874, 11/28/73
Guidance for Preparing A Facility Plan, Revised -
May 1975, p. 30
IV-18
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2. State Review and Certification
Purpose:
The State agency is responsible for the review and
coordination of .each facility plan and must provide certification to
EPA that these responsibilities have been met.
Discussion:
After obtaining clearinghouse comments, the grantee
must submit the completed facility plan and the clearinghouse comments
to the State agency for review. The State is to insure that the
facility plan is in compliance with plans developed under the State's
Continuing Planning Process. Any problems between the State and
grantee should be resolved prior to review by EPA. A formal facility
plan review and approval by EPA is not to be conducted without State
certification.
Review Procedures:
The State is to certify that the completed facility plan:
a. conforms with the regulatory requirements
for a facility plan;
b. conforms with any completed basin plan
(303(e));
c. has been submitted to any concerned 208
planning agency for comment;
d. conforms with any approved waste treatment
management plan (208(b)).
Re: 40 CFR 35.917-7
Guidance for Preparing A Facility Plan, Revised -
May 1975, p. 30
IV-19
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I. FACILITY PLAN REVIEW
Introduction:
For convenience, the regulatory requirements of a facility plan
are summarized below using the lettering system from 40 CFR 35.917-1.
The plan must encompass the following:
(a) a description of the treatment works for which plans
and specifications will be prepared including:
- engineering data
- cost estimates
- schedules for completion of design and
construction;
(b) a description of the complete treatment system of
which (a) is a part;
(c) infiltration/inflow documentation;
(d) a cost-effectiveness analysis of (a), (b), and alterna-
tives including evaluation of:
(1) the relationship of capacity to needs and reserve
(2) flow and waste reduction measures
(3) optimum performance of existing system
(4) ability to meet effluent limitations
(5) application of best practicable waste treatment
technology
(6) ultimate disposal of effluent and sludge
(7) the environmental impacts as contained in an
adequate assessment;
(e) effluent limitations or NPDES permit;
(f) clearinghouse comments;
(g) a summary of public hearings;
(h) a statement that grantee has resources to construct,
operate and maintain the treatment works;
(i) a statement of compliance with Civil Rights Act of 1964.
IV-20
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Item (d)(7) above is further defined in 40 CFR 6.512 and requires
that an adequate environmental assessment must be an integral, though
identifiable, part of any facilities....plan submitted to EPA, and
include:
(1) a description of the existing environment without
the project;
(2) a description of the future environment without
the project;
(3) documentation;
(4) an evaluation of alternatives;
(5) the environmental impact of the proposed action;
(6) the steps necessary to minimize adverse effect.
These requirements overlap in many areas and may not always be
understood by the applicant or his consultants. To assist the grantee
in understanding and satisfying these requirements, EPA prepared a
publication entitled, "Guidance for Facilities Planning", dated
January 1974. This publication was later revised in May 1975 and
entitled, "Guidance for Preparing A Facility Plan". The revision is an
abbreviated version of the earlier guidance and reflects program
experiences and provides more flexibility. The guidance, however, is
....for advisory information only. A grantee may select his own
method or format for preparing a facility plan as long as he meets the
regulatory requirements above. The grantee does not have to follow
the suggested format in the guidance.
The "Guidance for Preparing A Facility Plan" (GPFP), revised
May 1975, contains a suggested format or outline for the plan on pages
28 and 29. The same format is used in the publication "Model Facility
Plan for a Small Community." The review procedures in this handbook
are based on a facility plan prepared in the suggested format. Some of
the suggested chapters or subparts are self-explanatory and do not
require explanations. Others are more complex and Purpose, Discussion
and Review Procedures are provided. The references at the end
of each part refer to the regulations, program guidance memoranda, or
pages in the guidance which apply to the matters covered therein.
Re: 40 CFR 35.917-1
~ 40 OFR 6.512
IV-21
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1. Summary, Conclusions and Recommendations
(Self-explanatory)
2. Introduction
2.1 Study Purpose and Scope
(Note: The proposed project may include only sewage
collection systems, trunk or intercepting sewers, or treatment plant
expansions or additions. The review procedure which follows assumes
a complete treatment system including all of the above. For projects
of lesser scope, some items will not be applicable and can be omitted.)
2.2 Planning Area (Map)
(Self-explanatory)
3. Effluent Limitations
Purpose;
The limitations placed upon the effluent from the proposed
treatment works establishes quantitative parameters which must be
achieved in order to meet water quality standards.
Discussion;
The facility plan is prepared and the treatment works are
constructed to meet the effluent limitations for the segment of
receiving waters into which the effluent will be discharged. These
limitations, as a minimum, require secondary treatment (as defined in
the regulations) except for storm water discharges from combined systems.
Combined (storm and sanitary sewage) sewer systems present a special
case and may require mathematical modeling or a monitoring program for
the receiving waters in order to establish effluent limitations (refer
to infiltration/inflow analysis report for discussion of combined sewer
systems).
IV-22
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Secondary treatment for sanitary sewage discharges is the
minimum acceptable level of treatment for those segments of the
receiving waters which the State has classified as effluent limited,
but the State may require higher levels of treatment in order to
achieve water quality standards. The State (or EPA) requirements may
involve nutrient removals (nitrates and phosphates), higher BOD and
suspended solids removal, reoxygenation of the effluent, etc. The
segments of receiving waters, in which these higher levels of treat-
ment are required, are water quality limited segments (see Chapter
II A.3).
The facility plan must evaluate alternative solutions to
the water pollution problem, and the effluent limitations may vary
from one alternative to the other. The effluent limitations for
existing discharges are contained in the discharge permit issued
under the National Pollutant Discharge Elimination System (NPDES).
For completely new systems, the State will establish the effluent
limitations based on approved plan and water quality standards.
In preparing the facility pi an,,the grantee is required
to evaluate the following waste treatment management techniques:
( i) Biological or physical-chemical treatment
and discharge to receiving waters;
( ii) Treatment and reuse; and
(Hi) Land application techniques.
«
In all cases, it is the State's responsibility to establish
the effluent limitations for all alternatives and to furnish them to
the grantee.
Review Procedures:
The reviewer must establish that the correct set of effluent
limitations has been used by comparing the stated limitations with:
a. the discharge permit in the case of existing
discharges;
b. limitations established in 303(e) basin plan;
c. the reuse or groundwater recharge requirements
if this alternative has been selected.
Errors, inconsistencies, or other irregularities are to be
corrected with the State agency.
IV-23
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Re_: 40 CFR Part 133
40 CFR 35.917, .925-2, .925-7
GPFP pp. 1, 2, 5
4. Current Situation
4.1 Conditions in the Planning Area
Purpose and Discussion:
The existing conditions in the project area are
described in order to form a basis of comparison between alternatives.
If the topics listed below are described in detail, they will provide
a clear distinction between the "before" and "after" conditions. The
"after" conditions are described in later chapters.
Sources of information should be cited or referenced.
Review Procedures:
Suggested topics which describe the existing
conditions may include:
a. A description of the planning area -
planning area boundaries, political
jurisdictions, and physical charac-
teristics (climate, geology, soils,
topography, hydrology, etc.);
b. Organizational context - the role and
relationship between all existing
organizations involved in planning,
financing, and operating publicly owned
treatment works;
c. Demographic data - the most current popula-
tion estimates and the latest decennial
census; population growth patterns and
densities; number and types of major
industries and other employment generating
entities; existing land-use patterns and
controls including comprehensive planning
and zoning regulations;
d. Water quality - identify quality and quantity
of existing surface and groundwaters;
IV-24
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e. Other existing environmental conditions -
this section is an environmental inventory
and may include, to the extent appropriate,
descriptions of air quality, noise levels,
energy production and consumption, wetlands,
flood plains, coastal zones, wild and scenic
rivers and other environmentally sensitive
areas, historic, architectural and archaeological
sites, plant and aniirtal communities which may be
effected,especially those on the threatened or
endangered species list, and related Federal or
State projects in the area.
The reviewer is to take special note of the items under-
lined in e. above and included in the inventory since the impact of the
proposed project on these items may require the grantee or EPA to follow
special review procedures (see section "10). Also, the reviewer should
note major industrial contributors to insure that they provide pretreat-
ment, as necessary, in the proposed project.
Re: 40 CFR 6.512(a)(l)
GPFP pp. 5,6
4.2 Existing Wastewater Flows and Treatment Systems
Purpose and Discussion:
The inventory of existing wastewater treatment
facilities furnishes information as to the extent of the existing systems,
their interrelationships, and the base line flow information by which
future flows will be determined. The data may indicate conditions which
limit the number of feasible alternatives and give an indication of the
severity of the pollution problems. Later sections address the
performance of existing systems and methods of achieving optimum performance.
Review Procedures:
The inventory should, to the extent appropriate:
a. show the location of all treatment plants,
sludge management areas and facilities,
pretreatment plants, pumping stations and
collection systems;
b. describe the facilities identified in a.,
including design capacity, existing flows
and characteristics of wastes, overloaded
conditions, if any;
c. show the location of, and describe, major
industrial discharges;
IV-25
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d. include a discussion and analysis of average,
peak, dry, and wet-weather flows (also discussed
in III analysis);
e. show the locations of all bypasses and overflows;
f. describe the extent of any combined sewer
system;
g. describe any flow reduction program.
Re: GPFP p. 6
4.3 Infiltration and Inflow
Infiltration/Inflow Analysis
Purpose:
The infiltration/inflow analysis is conducted to
identify the existence, or possible existence, of excessive infiltration/
inflow within each sewer system emptying into the proposed treatment
facilities when the State has inadequate information upon which to base
a certification of such conditions.
Discussion:
As a part of the facility plan, a sewer system evaluation
is begun,consisting of:
an infiltration/inflow analysis conducted in
accordance with the "Guidance for Sewer System
Evaluation".
The purpose of the sewer system evaluation is to identify
infiltration and inflow which may be economically removed from the system.
The results of the sewer system evaluation are used in sizing the proposed
project.
Program experience gained during the initial years
indicates the following procedures can be used to accelerate infiltration/inflow:
a. Only the minimum information needed by the
Regional Administrator upon which to base a
decision need be submitted with the I/I
analysis. Conclusions reached must be
supported by flow data. Where need for a
sewer system evaluation survey is indicated,
preliminary cost estimates should be included.
The analysis must be approved by the State.
IV-26
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For purposes of screening projects and
focusing review effort, it has been found
that where the maximum extraneous flow
observed annually from both infiltration
and inflow from foundation drainage is less
than 1,000 gallons per day per inch of pipe
diameter per mile of sewer, such flow is
generally nonexcessive.
Where possible excessive I/I is identified,
the applicant is to be encouraged to use the
exception clause in the regulations (see
40 CFR 35.927-5(c)). This clause allows the
grantee to complete the facility plan and
conduct the sewer system evaluation survey
concurrently with project design. To
accomplish this, the grantee needs to estimate
the nonexcessive flows or demonstrate that
the proposed.treatment works will be a part
of the rehabilitated sewer system.
The prudent application of these policies will allow the
grantee to conduct the sewer system evaluation survey, if required,
concurrently with the treatment works design. However, the grantee
may conduct or EPA may require the sewer system evaluation survey as
an extension of the facility plan. Such work may be funded by
increasing the Step 1 grant.
The I/I analysis may be submitted by the grantee to EPA
through the State agency at any time prior to the submission of a
completed facility plan.
In lieu of an I/I analysis, the State agency may certify
that excessive I/I does or does not exist. In cases where this procedure
has been established and is still in effect, the grantee need not submit
an I/I analysis.
Review Procedures:
If the State agency has submitted certification for
excessive or nonexcessive I/I, determine that:
a. the State agency continues to have approval
of the Regional Administrator to make such
certification;
IV-27
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b. the certification form is signed by the
authorized State official and contains
language as shown in the sample certification
(see Appendix B).
If the grantee submits an I/I analysis, determine
that:
a. the analysis contains a conclusion as to
the quantity of excessive I/I or that
excessive I/I does not exist;
b. the data analyzed is sufficient to support
the conclusions in a.;
c. the cost estimates and schedules for a sewer
system evaluation survey have been included
as appropriate (these estimates are not
necessary for the award of a Step 2 grant
but must be approved prior to initiation of
the survey.
Re_: 40 CFR 35.927
Program Guidance Memorandum, PG-24, 2/7/74
9
Guidance for Sewer System Evaluation, March 1974
Sewer System Evaluation Survey
Purpose:
The sewer system evaluation survey is conducted to quantify
and locate sources of infiltration/inflow and to determine those which can
be cost-effectively eliminated.
Discussion:
The evaluation survey must be performed by the grantee
in all cases where excessive I/I has been identified. It may be performed
either under a Step 1 or Step 2 grant. These options are discussed in the
Infiltration/Inflow Analysis section.
The survey is performed to determine location, estimated flow
rate, method of rehabilitation and cost of rehabilitation versus cost of
transportation and treatment for each defined source of infiltration/inflow.
The guidance recommends a five phase survey, to insure a systematic and
efficient investigation, composed of:
IV-28
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1. A Physical Survey
2. Rainfall Simulation
3. Preparatory Cleaning
4. Internal Inspection
5. A Survey Report
In some cases, however, the survey may be abbreviated by
combining or eliminating one or more of these phases. For example, the
use of T. V. inspection equipment accompanied by preparatory 'cleaning
may be considered overly expensive in a survey to identify sources of
inflow when the quantity of infiltration is not excessive. Conversely,
the use of rainfall simulation would not be justifiable where there was
no inflow. The omission of any phase other than the required survey
report should be carefully reviewed and adequately justified by the
grantee.
Review Procedures:
Review the sewer system evaluation survey report to
determine that:
a. the survey report presents the results of
each phase and supports the conclusions
concerning sources of I/I;
b. a cost-effective analysis is presented for
sources of infiltration/inflow based on a
comparison of cost of transportation and
treatment versus cost of rehabilitation;
c. the survey report identifies by location and
method of rehabilitation sources of infiltra-
tion/inflow which can be cost-effectively
eliminated;
d. the net savings to be realized through
rehabilitation are identified both in terms
of capacity and total cost;
e. the quantitites of allowable infiltration and
inflow are identified (those which will not be
rehabilitated) and included in the design
capacity of the proposed treatment facilities
(coordinate with review of design);
IV-29
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f. where the evaluation survey is extensive, the
work carried out is not a part of the grantee's
normal operation and maintenance responsibilities
(costs for preparatory cleaning and internal T. V.
inspection must be adequately documented and
justified by the grantee);
g. the appendices contain additional documentation
of the results, including raw data, illustrations,
inspection forms, photographs and other information,
where appropriate.
Re_: 40 CFR 35.927
Program Guidance Memorandum, PG-24, 2/7/74;
Guidance for Sewer System Evaluation, March 1974
4.4 Performance of Existing Systems
Purpose:
Each major component of the existing system is to be
evaluated to determine if it can be used in the new project.
Discussion:
Many existing sewage treatment facilities are not
operated at their optimum efficiency. The reasons for poor performance
are numerous, but it has been found that generally it is more cost-
effective and environmentally sound to bring existing facilities up to
optimum performance rather than to abandon them. Even if optimum
performance of existing facilities cannot achieve effluent limitations,
additional facilities necessary to do so should be less costly.
Operating problems affecting performance should be described in this
section.
In reviewing the grantee's evaluation of the existing
system, the reviewer may wish to compare the evaluation with the operation
and maintenance reports (EPA Form 7500) for the project.
Review Procedures:
Items which might be considered in evaluating the
performance of existing systems include:
a. the adequacy of the treatment plant design
for the type and amount of flow being treated
(compare with NPDES permit);
b. the adequacy of the operation and maintenance
, program (compare with EPA Form 7500);
IV-30
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c. the effects of infiltration/inflow;
d. the effects of industrial discharges.
Re_: 40 CFR 917-l(d) (3)
GPFP p. 7
5. Future Situation
5.1 Land Use
Purpose:
The ability of the land to support various uses is analyzed
to aid in determining future wastewater flows.
Discussion:
The planning period for wastewater treatment facilities
should be 20 years. Construction of the treatment plant may be phased
over this period with the initial capacity less than the 20 year flows.
Intercepting and trunk sewers may be designed for longer periods.
The projected land uses may be a limiting factor in
determining the size, phasing, and location of the proposed facilities.
Undevelopable lands, such as steep slopes, highway rights-of-way, power
line easements, water bodies, environmentally sensitive areas, parks, etc.,
are not to be included when estimating future flows based upon the land
uses. The land uses considered by the grantee in his study must not
contravene State or local land use plans.
In the absence of future land use plans, the grantee should
consult with agencies responsible for planning in the area.
Review Procedures:
Points which might be covered in the land use analysis
include:
a. present land uses to determine patterns of
development;
b. development patterns and zoning ordinances to
see that they are in basic agreement;
c. future land use plans which have been adopted
and are being implemented through the use and
enforcement of zoning ordinances;
IV-31
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d. use of undevelopable lands in estimating future
f 1 ows;
e. consultations with responsible planning agencies
in projecting land use where future land use plans
are lacking.
Re: 40 CFR 6.304(c)
GPFP pp. 7, 8
5.2 Demographic and Economic Projections
Purpose and Discussion:
Increases in future waste loads and flows result from
population increases and industrial growth. Some parts of the U. S. are
included in standard metropolitan statistical areas (SMSA's). Population
projections for these areas have been prepared by the Bureau of Economic
Analysis, Dept. of Commerce, and should be used. Also, if the planning
area includes industrial development boards or other agencies concerned
with the economic development of the area, these agencies should be
consulted for assistance in estimating future industrial needs.
Review Procedures:
Review future projections to determine that:
a. Bureau of Economic Analysis projections of
population have been used for SMSA's;
b. any departures from such projections are justified
and documented;
c. non SMSA's population forecasts are based on
extension of past trends supported by economic
forecasts;
d. industrial growth trends are based on valid
economic projections;
e. future growth trends have considered the
limitations imposed by land use, air or water
quality restrictions, development controls, or
other constraints.
Re: 40 CFR 6.304(a)
GPFP p. 8
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5.3 Forecasts of Flow and Haste Load
Purpose and Discussion:
The forecasting of future flows and waste!oads in the
planning area ties in several topics which have been considered earlier
in the facility plan. The future flows and loads will be directly related
to the future population and industrial activity (i.e., industries likely
to use municipal plants), subject to the limitations of land use, air
quality maintenance plans or other limiting constraints and the quantities
of nonexcessive infiltration/inflow. The future flows and loads are added
to the existing wastewater flows (section 4.2).
Review Procedures:
The reviewer should focus on the methods used in estimating
future wasteloads and flows to insure that the following considerations
have been incorporated where appropriate:
a. projections of economic and population growth;
b. estimates of nonexcessive infiltration/inflow;
c. analysis of pollutant content (characteristics)
and flows in the existing system;
d. analysis of combined sewer overflows;
e. industrial waste flows and loads, considering
possible reductions due to imposition of user
charges, industrial cost recovery, or pretreatment
costs;
f. projections of possible reductions in flow resulting
from measures to reduce water use and waste production
(installation of water meters or ban on garbage
grinders, for example);
g. limitations upon flows due to land use, air quality
maintenance plans or other constraints.
Re: 40 CFR 35.917, .927, .935-13
40 CFR Part 128
GPFP pp. 8, 9
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5.4 Future Environment of the Planning Area
Without the Project
Purpose and Discussion:
The statutes require that "no action" be considered as an
alternative to any proposed project. In order to evaluate and compare
"no action" or "do nothing", the future environment without the project
must be visualized. The items used in this process should be the same as
those used in Section 4.1 to the extent that they include changes to the
environment.
Re: 40 CFR 6.512(a) (2)
GPFP p. 9
6. Alternatives
6.1 Optimum Operation of Existing Facilities
Purpose:
The alternative of optimum operation of the existing facilities
is investigated as a first step in the search for a cost-effective solution
to the water quality problem.
Discussion:
An investigation of existing facilities may reveal that they
can be operated more efficiently with the addition of new equipment,
operational changes or the addition and training of operating personnel,
or that the facilities have been operating at their optimum efficiency.
Whatever the results of the investigation, the optimum operation of the
existing facilities will determine what additions, expansions or replace-
ments must be made and the extent to which existing facilities can be
converted and/or used in the new system. Any improvements expected as a
result of future pretreatment by industrial contributors or removal of
excessive infiltration/inflow should be evaluated and discussed.
Review Procedures:
In considering the alternative of optimum performance of the
existing facilities, one or more of the following items may be appropriate:
a. the maximum performance levels possible with the
existing process design;
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b. the age and reliability of existing equipment
and its remaining useful life;
c. the qualification and number of additional
operating personnel needed;
d. the additional operating controls and laboratory
facilities needed;
e. the process modifications possible (e.g., convert
conventional activated sludge to contact
stabilization; add aeration to stabilization ponds);
f. the impact of requiring industrial pretreatment;
g. the impact of removing excessive infiltration/
inflow.
Re: 40 CFR 35.917-l(d)(3)
GPFP pp. 9, 10
6.2 Regional Solutions
Purpose and Discussion:
The possibility of a regional solution to wastewater
treatment problems should be explored early in the planning process to
reduce the number of options to a more manageable level. If the question
has been resolved by previous studies (e.g., 208 areawide waste treatment
management plans), the result may be incorporated into the facility plan
by reference. If not, the grantee must consider various alternatives,
such as, interconnection of facilities, construction of one or more
larger facilities in lieu of a greater number of small facilities, joint
management, etc. This process should resolve the question as to the
feasibility of regionalization as a viable alternative.
Re: GPFP pp. 9, 10
6.3 Waste Treatment Systems
Purpose:
For each service area identified under the regional solution
analysis, the "no action" alternative and other waste treatment manage-
ment techniques must be investigated to determine which systems are most
feasible and which may be eliminated from further consideration.
IV-35
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Discussion:
The combinations of alternative waste treatment systems
could be astronomical and, therefore, a process must be developed which
eliminates those which are not feasible and identifies those which should
be investigated further. The statutes require that certain systems be
investigated for every project. Beyond these, the application of basic
engineering, environmental, and economic principles will be sufficient
to reduce the alternatives to a reasonable number.
The grantee is to present his reasons for eliminating each
alternative investigated. Where the reasons for elimination are apparent,
they should be briefly stated (e.g., "waste treatment flows cannot be
reduced by I/I rehabilitation or other water saving controls", "sludge
incineration cannot be utilized as it would contravene existing air
quality plans", "no action" is not feasible as the present discharge does
not meet effluent limitations and State has issued a cease and desist
order").
When the reason for eliminating an alternative is not readily
apparent, the grantee is to present evidence or discussion in sufficient
detail to support his conclusion.
This analysis will identify the most feasible alternatives
which will then be evaluated in greater detail.
Review Procedures:
Review the facility plan and determine that the following
topics have been adequately addressed.
a. No Action
Generally, the "no action" alternative can be eliminated
from consideration because of the need for the project as presented in
the preceding chapters. However, where the "no action" alternative may
be feasible, the facility plan should address this concept.
Re: GPFP p. 10
b. Flow and Waste Reduction
The plan should address the feasibility of reducing flows.
Possible methods include:
- sewer system rehabilitation to reduce or
eliminate excessive infiltration/inflow;
- implementation of household water-saving devices;
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- installation of water meters (proven to
reduce water consumption);
- initiating industrial pretreatment
requirements, reuse or recycling.
Re_: 40 CFR 35.917-1 (d)(2)
GPFP p. 13
c. Configuration of Sewers and Interceptors
When service areas have been established, the
configuration of the collection sewers is pretty well prescribed with
regard to routings and size (minimum size in most States is 8 inches).
Attention should be directed toward trunk and intercepting sewer
alternatives to insure that they conform to existing and future land use
plans. Preliminary pipe sizes and costs may have to be estimated to
reduce the alternatives to a manageable number.
Re: GPFP p. 13
d. Sludge Disposal
Of the four generally accepted methods of sludge disposal,
one or more may possibly be eliminated from further consideration based
on physical constraints or regulatory considerations. The plan should
address each of the following alternative sludge disposal methods:
- land application (agricultural, soil
conditioner, etc.);
- sanitary landfill;
- sludge incineration;
- ocean dumping (only under very special
circumstances).
(NOTE: Criteria for determining eligibility of land for use in sludge
disposal is discussed in Chapter VI.)
Re: 40 CFR 35.917-1(d)(6)
GPFP pp. 13, 14
e. Best Practicable Waste Treatment Technology (BPWTT)
The statute requires that each project evaluate, as a
minimum, the following three waste treatment management techniques:
- biological or physical-chemical treatment
and discharge to receiving waters;
- treatment and reuse; and
- land application techniques.
IV-37
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As the "state-of-the-art" develops for each of these
techniques, EPA will publish technical bulletins describing the
application and evaluation of each. In selecting which of these
alternate waste treatment management techniques is most cost-effective
for the proposed project, the grantee must consider the application
of the best practicable waste treatment technology (BPWTT).
£PA has established that the BPWTT for "treatment and
discharge to receiving waters", requires a minimum of secondary treatment
(see Section 3) or such advanced waste treatment methods as is necessary
to achieve the effluent limitations required to meet applicable water
quality standards. Since "reused" wastewater and run off of "land
application" techniques eventually enter receiving waters, the same level
of treatment is required for these techniques. In addition, where
discharges to groundwaters from "land application" may occur, the level of
treatment must be consistent with the existing or potential uses of such
groundwaters.
As each of these three techniques is evaluated, the
grantee must also consider how well the system lends itself to the
application of future technology for reclaiming or recycling the effluent.
Re: 40 CFR 35.917-1(d)(5)
Program Guidance Memorandum, PG-27A, 9/10/75
Alternative Waste Management Techniques for
Best Practicable Waste Treatment, June 1975
f. Industrial Service
The joint treatment of industrial and domestic wastes
should be considered and encouraged where possible. In considering
industrial discharges, the grantee should evaluate to the extent
appropriate:
- the compatability of industrial wastes with
domestic wastes;
- the requirements for pretreatment;
- the volume, strength and method of discharge
(batch or uniform);
- the cost of industrial pretreatment and joint
treatment versus separate industrial treatment;
- the method of implementing and enforcing
limitations on industrial discharges.
IV- 38
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Re: 40 CFR 35.928-15
40 CFR Part 128
GPFP p. 13
6.4 Evaluation (Monetary. Environmental. Implementation)
Purpose:
An evaluation of the most feasible alternatives is performed
in order to select the most cost-effective and environmentally sound
project.
Discussion:
The preceding sections of this chapter provided a systematic
guide for reducing the possible alternatives to a manageable number. The
alternatives to be evaluated in this section are the most feasible and
will be subjected to a more detailed evaluation under the broad categories
of monetary, environmental and implementation considerations.
The results of the evaluation will be a display and ranking
of the final alternatives in preparation for public review and the eventual
selection of the most cost-effective and environmentally sound project.
During this evaluation some of the alternatives may be eliminated from
further consideration based upon adverse environmental impacts, high costs,
legal complications or other reasons. The reasons for elimination must be
stated. The data used in the evaluations must be supported in other
sections of the facility plan. Each alternative should be evaluated in
sufficient detail and in a similar format to facilitate its display and
ranking.
Detailed assistance and instructions for preparing monetary
evaluations is given in the Guidance and in Appendix A, 40 CFR Part 35.
The environmental impact evaluation must consider both primary and
secondary impacts. The secondary impacts (indirect or induced by the
project) must be presented and carefully evaluated as they could form the
basis for the preparation of an environmental impact statement (see
Section 10). The review procedures below highlight the key factors to be
considered in the evaluation.
Review Procedures:
Each alternative should be analyzed and evaluated with regard
to its relationship or impact upon the subjects below:
a. monetary cost analysis based upon:
- present worth or equivalent annual cost
over planning period;
IV-39
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- interest rate as published by U. S. Water
Resources Council at the time of initiation
of the facility plan;
- capital and operation and maintenance costs;
- existing facilities-considered as sunk costs;
- inflation-not considered unless justified;
- interest on capital equipment during
construction-uniform unless longer than
3 years;
- service life - land 50 years
structures 30-50 years
process equipment 15-30 years
auxiliary equipment 10-15 years;
- salvage value included;
Re: 40 CFR Part 35 Appendix A
PG-60, 8/11/75
GPFP pp. 18-24
b. environmental impacts (see Section 10)
- both primary and secondary;
- beneficial and adverse;
- irreversible and irretrievable commitments
of resources;
- long-term and short-term;
- mitigating measures;
Re: 40 CFR Part 6
PG-50, 6/6/75
GPFP pp. 11, 12
c. institutional arrangements
- identify responsible organization for
each alternative;
- estimated costs to each jurisdiction;
Re_: GPFP p. 12
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d. significant industrial service
- costs of separate treatment;
- costs of pretreatment followed by
municipal treatment;
Re_: 40 CFR 35.928-15, Part 128
GPFP p. 13
e. flow and waste reduction measures;
Ke: 40 CFR 35.917-1 (d)(2)
GPFP p. 13
f. sewer system arrangements
- pipe sizes and useful life;
- excess or reserve capacity;
- alternate routings;
Re: 40 CFR 35.917-l(d)(l)
GPFP p. 13
g. method of sludge disposal;
Re_: 40 CFR 35.917(d)(6)
GPFP p. 13
h. location of facilities
- odors and aesthetics;
- cultural or environmentally sensitive
resources (see Section 10);
- relationship to flood plains;
Re_: 40 CFR Part 6
GPFP p. 14
i. revision of waste load allocations;
Re: GPFP p. 14
IV-41
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j. phased construction
- excess or reserve capacity;
- modular designs;
Re: GPFP p. 14
k. project segmenting (see Chapter II B.2.
of Handbook);
1. flexibility
- future land requirements for treatment
plant expansion or upgrading;
- easements and rights-of-way for sewers;
Re: GPFP p. 15
m. -reliability
- treatment processes;
- equipment and personnel.
Re: GPFP p. 15
7. Plan Selection
7.1 Views of Public and Concerned Interests
on Alternatives
Purpose:
Public participation is required to aid the grantee in
selecting a plan which will be cost-effective and have the widest possible
public acceptance.
Discussion:
Issues surrounding water quality problems and the large
amounts of money needed to solve them often come under attack from varied
interests. Although the primary responsibility for water pollution control
and abatement rests in governmental agencies, public involvement in the
decisions and implementation is necessary and desirable. The intent of
public participation is to foster a spirit of openness and a sense of
mutual trust between the public and governmental agencies and to give the
IV-42
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public a role in decision making in efforts to restore and maintain the
integrity of the Nation's waters. The facility plan must contain a
summary of the measures taken to provide for, encourage, and assist
public participation in the plan selection. The summary must also
disclose the public response to the alternatives presented and how
significant responses were incorporated into the plan.
In addition to any informal meetings or other forms of public
participation, a formal public hearing must be held prior to plan
selection unless the hearing requirement has been waived by the Regional
Administrator.
Review Procedures:
Review the hearing summary and supporting documents to
determine that:
a. at least one formal public hearing was held,
unless waived;
b. reports, documents or other data to be discussed
at hearing were avail able'to the public at
convenient times and places approximately 15 days
prior to the hearing;
c. thirty days notice of the hearing was announced
through the press or other news media;
d. notification was made to interested governmental
agencies and interested groups (see clearinghouse
comments);
e. all interested parties were afforded an opportunity
to express their views;
f. adverse or significant views are addressed and
incorporated into the facility plan.
Re_: 40 CFR 35.917-l(g),
40 CFR Part 105
GPFP pp. 17, 18
.917-5
7.2 Evaluation and Ranking of Proposals
Purpose and Discussion:
Evaluation of alternatives, ranking, and plan selection involve
making choices based on costs, environmental impacts and feasibility of
implementation. The grantee may select any number of methods to display
costs and effects of the alternative proposals. Regardless of the display
method, the effects should be listed, wherever possible, in quantitative
IV-43
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terms based on the supporting analysis elsewhere in the plan. Where
quantification is not possible, the comparison should be made by brief
narrative descriptions.
The end result of the evaluation is the assignment of a value
judgement to each alternative, ranking them from most acceptable to least
acceptable.
Re: GPFP p. 25
7.3 Selected Plan (major feature summary) and
Reasons for Selection
Purpose and Discussion:
The selected plan, its major features, and reasons for
selection are presented irr summary form for clarity and the convenience
of reviewers.
Review Procedures:
Review the summary for inclusion of:
a. major features;
b. clear explanation of the reasons for plan
selection.
Re_: GPFP p. 25
7.4 Environmental Impacts of Selected Plan
Purpose:
The primary and secondary environmental impacts of the selected
plan are presented in summary form and specific issues are addressed as
required by the National Environmental Policy Act of 1969 (NEPA).
Discussion;
The same issues and review procedures covered in Section 6,
alternatives, are addressed in the selected plan. However, in review of
the selected plan, they are analyzed in greater detail. Special note
should be made by the reviewer of impacts upon cultural or environmentally
sensitive resources as these require special procedures and considerations
(see Section 10).
IV-44
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The grantee should discuss in this or other sections the
mitigating measures which will be employed in the design and construction
phases of the project to minimize adverse effects. If the adverse impacts
are unacceptable, the reviewer should contact the grantee through the
State agency and discuss mitigating measures which will make the selected
plan acceptable.
Review Procedures:
The summary should include adequate discussions of:
a. any unavoidable adverse impacts resulting from
the proposed project (special note of cultural
or environmentally sensitive resources);
b. the relationship between local short-term uses
of the environment and the maintenance and
enhancement of long-term productivity including:
- tradeoffs between short-term environmental
gains at the expense of long-term gains,
and vice versa;
- the possibility of proposed action foreclosing
future options;
- the effects which narrow the range of future
uses of land and water resources or pose
long-term risks to health or safety;
c. irreversible and irretrievable commitments of
resources, including an evaluation of the extent
to which the proposed project requires commitment
of construction materials, man hours, energy and
other resources, and curtails the range of future
uses of land and water resources;
d. steps to minimize adverse effects.
Re_: 40 CFR 6.512
GPFP p. 16
8. Cost Estimates, Preliminary Designs
8.1 Description of Design
Purpose and Discussion:
The preliminary design of the selected plan is presented to
demonstrate that sound engineering principles have been employed and that
IV-45
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all major components of the system have been included. The detail for
the preliminary design may vary from project to project depending on the
complexity of the project. For example, standard package plants will not
require the same degree of detail as a pure oxygen system with phosphate
removal and sludge incineration.
Review Procedures:
Items in a preliminary design might include:
a. a schematic flow diagram;
b. unit processes and sizes;
c. plant site plans;
d. interceptor and trunk sewer routings;
e. design criteria, including:
- detention times;
- overflow rates;
- other.
Re: 40 CFR 35.917-l(a) and (b)
GPFP p. 16
8.2 Summary of Cost Estimates
Purpose:
Cost estimates for final design, preparation of plans and
specification-, and construction of the treatment facilities are included
to insure that Step 2 and Step 3 grant requests are based upon inclusion
of major components of the selected plan.
Discussion:
As a part of its program responsibility, EPA is required to
forecast future funding requirements for the design and construction of
wastewater treatment facilities. The cost estimates and schedules of
completion provided in this section help fulfill those responsibilities.
The reviewer should be aware of these requirements and of the procedures
for recording the estimated costs into the GICS process. The grantee is
required to submit these estimates in an appropriate format entitled
"Summary of Costs of Planned Treatment Works Scheduled by Project and
Category" (refer to Appendix B) as a special condition of the Step 1 grant
agreement.
IV-46
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Review Procedures:
Review cost estimates to determine that:
a. costs for the construction of the facilities
are reasonable and include both capital and
operation and maintenance costs;
b. costs are presented in the required format;
c. schedules for the completion of related work
have been included.
Re: Program Guidance Memorandum, PG-55, 5/5/75
~~~ 40 CFR 35.917-1(a)
GPFP p. 16
9. Arrangements for Implementation
9.1 Institutional Responsibilities
Purpose:
The agency and its responsibilities for plan implementation
are identified to demonstrate recognition of the steps necessary for
initiation and completion of the project.
Discussion:
The responsibility for the implementation of the selected plan
may rest with one or more agencies. In the case of a single agency, it
must have the authority under State law (or the ability to obtain such
authority) to finance, design, construct, operate and maintain the proposed
facilities. For regional solutions, several agencies may share the
responsibility for plan implementation and each must have the authority
and ability to carry out its functions. A common example of this is where
one agency constructs the treatment plant and interceptor sewers to serve
the entire planning area, and the smaller jurisdictions construct the
trunk and lateral sewers.
In regional solutions, one or more jurisdictions in the planning
area may either oppose or fail to approve the plan. The grantee should
discuss the appropriate measures required to reach agreement among the
jurisdictions. While final agreement is desirable prior to the submission
of the facility plan for review, the State and EPA may approve it even in
the absence of such agreement.
IV-47
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Review Procedures:
For implementation, the plan should:
a. identify each agency or jurisdiction and its
responsibility;
b. show that each agency has ability and authority
(or reasonable expectation to obtain such authority)
under State law to finance, design, construct,
operate and maintain the proposed facilities;
c. identify any referendums or public elections
necessary for plan implementation;
d. include adopted resolutions of plan acceptance
agreements between jurisdictions;
e. include financial arrangements and obligate each
jurisdiction to enforce the requirements for user
charges, industrial cost recovery, sewer system
rehabilitation and sewer use ordinances;
f. identify jurisdictions which oppose or have failed
to approve the plan and describe steps necessary to
reach agreement.
Re: 40 CFR 35.917-6
9.2 Implementation Steps
Note: To demonstrate recognition of the proposed project
and an orderly program for implementing it, the grantee is to present
a step by step schedule of each specific action. The time schedule should
correspond with schedules in the NPDES permit. Differences must be
resolved.
Re: 40 CFR 35.917-1(a)
9.3 Operation and Maintenance
Purpose and Discussion:
As a part of the Step 3 grant application, a detailed Plan
of Operation must be submitted. The preliminary O&M plan described in
the facility plan should include the minimum information needed to perform
cost-effectiveness computations, e.g., discussions of staffing, management,
training, sampling, laboratory facilities, etc.
Re_: GPFP p. 17
IV-48
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9.4 Financial Requirements
Purpose:
A financial program is described to identify the sources of
funds for implementing the proposed project.
Discussion:
The proposed project funding will generally consist of three
parts, namely the Federal grant, the State grant and the local share.
When a State grant is shown as a source of funding, the reviewer should
confirm that the State grant program remains in effect. Generally, the
local funding will be derived from the sale of bonds or industrial
contributions. Funds must be made available to retire these bonds over
a period of years and to provide for operation and maintenance of the
facility. The customary method of obtaining these funds is to proportion
charges to the various classes of users and to recover capital costs from
industrial users. Ad valorem taxes may not be applied as a user charge
system.
As a requirement for a Step 2 grant, the grantee must
furnish evidence of compliance with the user charge and industrial cost
recovery (UC/ICR) provisions of the regulations. Satisfactory evidence
of compliance for a Step 2 grant are letters from the grantee and major
industrial users expressing intent to comply with these provisions. A
detailed UC/ICR program must be submitted and approved by EPA during the
construction (Step 3) of the facilities and no more than 80 percent of
the grant amount may be paid prior to such approval.
Review Procedures:
Review the financial program to determine that:
a. all project costs including engineering,
construction, legal and fixed costs have
been estimated;
b. sources of funds are identified and sufficient;
c. State grants programs are applicable;
d. grantee's share of eligible costs do not
include revenue sharing funds (see Chapter IV,
E.);
e. the grantee has reasonable expectation of
obtaining letters of intent to comply with user
charge and industrial cost recovery programs as
required for a Step 2 grant (see Chapter V, E.4,
of this Handbook).
IV-49
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Re: 40 CFR 35.920-3(b), ,925-11, .925-12, .935-13, Appendix B
Program Guidance Memorandum, PG- 3, 6/25/73;
PG-37, 7/9/74
10. Summary of Environmental Considerations
Purpose:
The summary of environmental considerations is for those plan
reviewers primarily concerned with the environmental impacts of the
proposed project. (It should reference other pages of the facility
plan which provide the detailed environmental analysis.) The summary,
combined with the more detailed discussion so referenced, are necessary
to satisfy regulatory requirements for an adequate identifiable
environmental assessment.
Discussion:
The facility plan must evaluate environmental as well as
engineering, monetary and institutional impacts. Adverse impacts in
any of these categories may be reason for plan revision, the selection
of another alternative, or the incorporation into the design and
construction phases of measures which will minimize the adverse impacts
or problems.
Throughout the entire facility plan preparation, the reviewer
should work with the grantee in satisfying all the regulatory require-
ments and selecting the most acceptable plan. The facility plan may be
reviewed informally or in sections by the reviewer as an aid to the
grantee, and suggested changes may be incorporated with minimum delay
and formality.
After all discussions and revisions are completed, the reviewer
conducts a formal "environmental review". Based upon a review of the
information presented in the facility plan, EPA must make one of three
decisions:
- approve the project;
- disapprove the project;
- prepare an environmental impact statement (EIS).
The discussion and review procedures below provide guidance to
the reviewer in reaching one of these decisions.
The first decision (approval) requires that EPA prepare a
negative declaration supported by an environmental appraisal (contents to
be discussed later) and make these documents and the approval decision
public information.
IV-50
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The second decision (disapproval) is rarely invoked for an
entire project (although segments of a project may be disapproved)
because of the public involvement during the preparation of the facility
plan and the many levels of review by governmental agencies. The public
involvement and governmental reviews assist in changing the scope of the
project, if necessary, and provide guidance in the selection of the most
cost-effective and environmentally sound project.
The third decision (preparation of an EIS) is really a method
of arriving at either the approval or disapproval decision.
In order to arrive at one of the three decisions described above,
many reviewers within EPA and outside of EPA must evaluate the proposed
project and make their recommendations for approval or disapproval of the
project. The summary of environmental considerations presents the
pertinent environmental information to assist in that decision.
The review procedures below are intended to assist the reviewer
in arriving at the decision and, once made, the necessary actions to carry
out the decision.
Review Procedures:
a. Criteria for Determining When to Prepare an
Environmental Impact Statement
The regulations implementing the NEPA requirements for the
construction grants program are quite specific, resulting in reviews and
recommendations by several branches in EPA as well as recommendations
from outside the agency. The construction grants reviewer must prepare
his recommendation in a manner that permits the Regional Administrator to
make a decision as to whether or not an EIS is to be prepared.
The NEPA procedures involve an "environmental review" which
evaluates the project on the basis of two broad criteria; namely, will the
project have significant environmental effects, or have environmental
impacts which are likely to be highly controversial.
For certain projects involving (a) historical and
archaeological sites; and (b) wetlands, flood plain, coastal zones, wild
and scenic rivers, fish and wildlife; additional investigations are
required on the part of either EPA or the grantee which, when evaluated
along with the NEPA criteria, will assist in deciding when an EIS is to be
prepared.
These additional procedures are described below and should be
evaluated in conjunction with the review of the NEPA criteria.
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(1) Historical and Archaeological Sites
EPA has the responsibility under the procedures of
the Advisory Council on Historic Preservation to insure that archaeological
and cultural resources are identified in the primary impact areas of the
project. The investigation to identify resources is carried out by the
grantee. The exact procedures may vary from State to State, and the
reviewer should be familiar with the requirements of his particular State.
Generally, however, the grantee should contact the
State Historic Preservation Officer (SHPO) as soon as the project scope
and general location is known. The SHPO may be able to identify cultural
or historic sites in the area which may aid in selecting the best
alternative. The SHPO may also indicate that the area is quite sensitive
and that a professionally qualified archaeologist should be employed to
identify the resources. In the event that the project is limited to
previously disturbed areas, the SHPO may advise that the project will not
effect any cultural resources and that no further investigations are
required.
In many cases the SHPO or grantee may be able to
review the National Register of Historic Places and identify resources
in the project area. A professional in this field may need to be employed
to identify resources which are eligible for inclusion in the National
Register. The grantee and his professional representative must prepare
a report in consultation with the SHPO stating whether the project will
have any effect upon the cultural resources identified.
Upon receiving this report, and in the case of a
resource eligible for listing in the National Register, EPA should
immediately contact the Department of the Interior to determine if the
resource is, in fact, eligible for inclusion.
For all cultural resources identified, the grantee,
his professional representative, and the SHPO must prepare a report for
review and decision by EPA concerning the effect the project may have on
that resource. Specifically, the following procedures should be followed,
as applicable:
(a) project has_ no_ effect on identified resources -
applicant to include views of SHPO showing
concurrence; exchange of correspondence to be
appended to report;
(b) project has_ effect on identified resources -
apply Advisory Council Criteria of adverse effect;
(c) if the application of adverse criteria results in
the conclusion by the grantee's professional
expert, and is agreed to by the SHPO, that the
effect is not adverse, the documentation supporting
that conclusion must be forwarded to thla Advisory
IV-52
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FIGURE IV-1 PROCEDURES FOR REVIEW OF CULTURAL RESOURCES
* Letters correspond to review procedures
described on preceding pages.
IV-53
Rev. 10/20/75
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Council for concurrence. If Advisory Council
concurrence is received, the project may proceed
as proposed with the application of any mitigating
criteria which may have been recommended;
(d) if the application of the adverse criteria results
in the conclusion that the project will have an
adverse effect, the comments of the Advisory Council
must be obtained and a consultation process is set up;
(e) the consultation process involves:
- on-site inspections;
- public information meetings;
- considerations of alternatives;
- avoidance of adverse effects;
- mitigation of adverse effects;
(f) generally, the above procedures will be sufficient
to resolve adverse effects; specific conditions of
resolution are contained in a Memorandum of Agree-
ment between EPA, the Advisory Council, and the
SHPO.
It is the responsibility of the construction grants
reviewer to insure that the above procedures are, or have been, carried out.
Letters, reports, or other documents in support of the above procedures
are to be appended to the facility plan. The final decision as to the
affect of a project on historic and archaeological resources rests with
EPA under the Advisory Council Procedures.
Re: Federal Register, 2/4/75, Department of the Interior
National Register of Historic Places
40 CFR 30.405-7
40 CFR 6.510(e)
36 CFR 800 (Advisory Council Procedures)
(2) Wetlands, Flood Plains, Coastal Zones, Wild and
Scenic Rivers, Fish and Wildlife
Whenever a selected project will effect any of these
environmentally sensitive resources, the consultations below must be
carried out. The impact of the project upon these resources should be
discussed by the applicant in his environmental assessment statement.
IV-54
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EPA has the responsibility for carrying out these procedures, but the
applicant may be encouraged to do so in preparing the facility plan.
Whether the project will have a harmful affect on these resources
requires prudent judgement on the part of the reviewer.
The consultations below, as applicable, must be carried
out before the facility plan may be approved.
- Wetlands
Consult with:
- Department of the Interior
- Department of Commerce
- U.S. Army Corp of Engineers
Document consultation and obtain written comments
from each of these agencies whenever possible.
- Flood Plains
Refer to Flood Hazard Boundary Maps or Flood
Insurance Rate Maps prepared by DHUD and determine
if grantee is or must be participating in the
flood insurance program; determine if proposed
project satisfies applicable flood plain statutes
and regulations and EPA guidance with regard to
location, elevation or protection of structures.
- Coastal Zones
Consult with:
- Appropriate State office
- Department of Commerce
Document consultation and obtain written comments
from each of these agencies whenever possible.
- Wild and Scenic Rivers
Consult with:
- Appropriate State office, and
- Department of the Interior, or
IV-55
-------
- Department of Agriculture where National
forest lands are involved.
Document consultation and obtain written comments
from each of these agencies whenever possible.
- Fish and Wildlife
If the project will result in the control or
structural modification of any stream or body of
water, consult with:
- U.S. Fish and Wildlife Service, Department of
the Interior
- National Marine Fisheries Service of the
National Oceanic and Atmospheric Administration,
Department of Commerce
- U.S. Army Corp of Engineers
- Appropriate State agency
Document consultation and obtain written comments
from each of these agencies whenever possible.
- Threatened or Endangered Species
Consult with:
- Secretary of the Interior, or
- Secretary of Commerce where marine species
are involved.
Re: 40 CFR 6.214, 6.510 (a)(3)
(3) NEPA Criteria for Determining When to
Prepare an EIS
In addition to evaluating the effects of the
proposed project upon the cultural and environmentally sensitive resources
as required by the regulations, the reviewer must evaluate the environmental
assessment contained within the facility plan and, by applying the NEPA
criteria, determine if an EIS should be prepared.
IV-56
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Environmental impacts are classified as:
- adverse/beneficial
- long-term/short-term
- primary/secondary
Grantees are required to classify the impacts of
the proposed project into these categories. The most difficult of these
impacts to evaluate are the secondary impacts. Secondary impacts are
distinguished from primary impacts as follows:
- Primary impacts are those that can be attributed
directly to the project; for example, construction and operation of the
treatment works. They may be beneficial' (improved effluent) or adverse
(soil erosion during construction) etc. Often, the adverse primary impacts
can be minimized by small changes in the project design or by construction
techniques, both of which are to be discussed in the facility plan.
- Secondary impacts are indirect or induced growth
related changes resulting from the project. They include induced changes
in the pattern of land use, population density, and related effects on air
and water quality or other natural resources, and increased growth at a
faster rate than planned for, or above the total level planned by, the
existing community. The grantee must address the secondary impacts in
the facility plan and, where adverse, propose actions which will minimize
or mitigate these effects.
In evaluating the primary and secondary impacts,
the reviewer must determine if they are significant or controversial.
After all of the applicable procedures listed above are carried out and all
possible mitigative measures have been explored with the grantee and
State, a decision is made to prepare or not to prepare an EIS.
b. No EIS Required
(1) Negative Declaration
Upon deciding not to prepare an EIS, EPA will prepare
a negative declaration which summarizes the purpose of the project, its
location, extent and nature of land use changes, and major primary and
secondary impacts. The negative declaration must also describe how the
more detailed "environmental appraisal" may be obtained. Copies of the
negative declaration are to be distributed in accordance with the regula-
tions (Appendix C Federal Register Vol. 40 No. 72 - Monday, April 14, 1975,
page 16827). Press releases or other public notices are also to be made
and must include copies of the negative declaration. The public notices
must state that interested persons disagreeing with the decision may
IV-57
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submit comments for consideration by EPA. Fifteen working days after
the public notice, and upon consideration of any comments or objections
received, EPA will decide to proceed with the project or prepare an EIS.
In the former case, the grantee is advised to submit the additional
documents of plan approval and that he may proceed with the submission
of other documents for a Step 2 grant (see Chapter V). If an EIS is to
be prepared, the procedures described later are followed.
(2) Environmental Impact Appraisal
Concurrently with the preparation of a negative
declaration, EPA will prepare an environmental impact appraisal. This
appraisal shall be brief but contain more information and explanations
than the negative declaration, including: description of the proposed
project and the most feasible alternatives, its environmental impacts,
adverse unavoidable impacts, relationship between short-term uses of
man's environment and the maintenance and enhancement of long-term
productivity, mitigating measures, resource commitments, summary of
comments and consultations on the project, and reasons for concluding
there will be no significant impacts. Copies of the appraisal are to
be sent to the EIS coordinator at Headquarters, and copies are to be made
available (at cost) to the public upon request.
Re: 40 CFR 6.212, 6.512(g)
(3) Facility Plan Approval
Upon approval, the grantee and State should receive
a letter from EPA notifying them of facility plan approval and setting
forth any special conditions resulting from a review of the facility plan
which might be imposed on the grantee upon application for a Step 2
grant. The approval letter must contain language to the effect that
approval of the facility plan does not constitute an obligation of the
United States for any Step 2 or Step 3 grant.
(4) Grants Information and Control System (GIGS)
Project cost information was entered in the GICS system
at the time the applicant applied for his Step 1 grant (see Chapter IV,
F.3.). Upon approval of the facility plan, the GICS information is to be
updated using the coding sheets (see Appendix B).
c. Prepare EIS
(1) Notice of Intent
Upon deciding to prepare a draft EIS, EPA will issue a
"notice of intent". The purpose of the notice of intent is to advise the
public and other interested agencies of the decision to prepare an EIS and
IV-68
-------
seek their input and involvement at the earliest possible stages. Press
releases and other forms of public notification are to be used.
(2) Draft EIS
As soon as possible after the notice of intent, EPA
will prepare the draft EIS in accordance with the procedures outlined in
EPA regulations entitled "Preparation of Environmental Impact Statements"
(issued 4/14/75). In some cases, a consultant will prepare the EIS under
the direction and close supervision of EPA. During the preparation of
the EIS, the grantee may be requested to submit additional information
concerning the project. The Regional Administrator is to decide the scope
of the EIS and which environmental issues will be discussed in greatest
detail.
A Step 2 grant may not be awarded until a final EIS
has been prepared and all regulatory requirements have been met. The
resulting modified project will have to be rereviewed at the appropriate
stage of the facility planning process. Additionally, a Step 2 grant
award may contain special conditions resulting from the preparation of
an EIS.
Re_: 40 CFR 6.206, 6.208, 6.512(e)
IV-59
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FIGURE IV-2 PROCEDURES FOR NEPA REVIEW
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CHAPTER V
STEP 2 GRANT PROCESSING
A. Introduction
B. Schematic Flow Diagram
C. Application Contents
D. Facility Plan Approval
E. Administrative Review
F. Grant Award Procedures
G. Preparation of Plans and Specifications
H. Predesign Conference
I. Review of Plans and Specifications
-------
A. INTRODUCTION
This chapter describes the contents of and review proce-
dures for processing of a Step 2 grant application. It begins
with the receipt of the application package and concludes with
the review and approval of the plans and specifications.
Section B, Schematic Flow Diagram, visually places this
chapter in the proper sequence and indicates the major activities
of the Step 2 application and review.
Section C, Application Contents, provides a quick ready
listing of the materials which are contained in an application
package.
Section D, Facility Plan Approval, restates the requirements
for an approved facility plan as a part of the Step 2 application.
Section E, Administrative Review, describes the procedures
involved in reviewing priority list compliance and certification,
application form, contracts and subagreements and assurances.
Section F, Grant Award Procedures, describes the action
required on the part of EPA in making the grant offer.
Section G, Preparation of Plans and Specifications, discusses
tne need to work with the grantee during the preparation of P & S.
Section H, Predesign Conference, describes the administrative
and technical considerations to be discussed with the grantee
at the conference prior to the preparation of plans and specifi-
cations .
Section I, Review of Plans and Specifications, describes
the specific information to be reviewed in the plans and
specifications. Technical considerations are included to enable
the reviewer to adequately evaluate the Step 2 treatment works
design.
The technical and administrative reviews are to be performed
simultaneously wherever possible. When items are missing or
explanations are necessary, the review is to proceed as far as
possible to insure quick action once the items are corrected.
V-l
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B.
SCHEMATIC FLOW DIAGRAM
The flow diagram below visually places this chapter in the proper
sequence and indicates its relationship to other chapters. The diagram
includes the general functions of the Step 2 grant process as performed
by the applicant, State and EPA.
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V-2
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C. APPLICATION CONTENTS
Below are listed the basic items to be included in an application
package. The items are listed here for quick reference, while the
review procedures for each item are described later. The reviewer is
to make a cursory review to insure that all items are included, that
all applicable portions of the forms are completed, and that the
documents are signed by the appropriate officials. If items are
missing or explanations are necessary, the State is to be contacted
but the review is to proceed as far as possible to insure quick action
when the required material or information is received.
1. Facility Plan (complete and approved)
2. State Priority Certification, EPA Form 5700-28
3. Application, EPA Form 5700-32, including authorizing
resolution and statement regarding availability of
the proposed site
4. Proposed subagreements (generally engineering contracts)
or explanation of method of awarding proposed subagreements
5. Evidence of compliance with user charge and industrial
cost recovery provision of the regulations
6. Completed or substantially completed service agreements
7. Civil Right compliance, Form 4700-1 and 4700-4
8. Statement of compliance with Relocation and Land
Acquisition Policies Act of 1970, if applicable
Re_: 40 CFR 35.917-6, .920-3(b), .925-3, .925-9, .925-11, .925-12
40 CFR 30.315, .405-2, .405-3
D. FACILITY PLAN APPROVAL
The technical review of a facility plan is described in Chapter IV
of this Handbook. The grantee was notified in writing of his facility
plan approval and need not resubmit it. The reviewer need only confirm
in the project files that the facility plan was approved by EPA.
V-3
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E. ADMINISTRATIVE REVIEW
1. Priority List Compliance and Certification
Purpose:
The State agency is required to certify each project
as entitled to priority for grant funds in accordance with the State
priority system and the project priority list.
Discussion:
Chapter II discusses the State priority system and
list. Once the system and annual list have been approved by EPA,
each project is certified by the State as being entitled to priority
for a grant over all other projects below it on the priority list
(EPA Form 5700-28, see Appendix B).
A State may elect to set aside up to ten percent of its
yearly allotment to fund Step 1 and Step 2 projects not on the current
priority list. When such projects are certified, the certification must
signify that the grant is to be made from that reserve allotment.
Only projects which have been certified by the State
as entitled to priority for Federal assistance may receive a grant.
Review Procedures:
Review State Priority Certification to determine that:
a. the name, project number and description of the
project agree with the application, form 5700-32,
and the approved State priority list;
b. the form includes the signature of the authorized
State official;
c. the award of grant assistance for the project will
not exceed the State's allotment, including reallot-
ments;
d. the award of grant assistance will not jeopardize
the funding of any projects of higher priority;
V-4
-------
Re:
e. the State has included a statement to the effect
that all jurisdictions within the facility planning
area have been notified of State and EPA approval
of the facility plan.
40 CFR 35.915, .917-2, .920-2, .925-3, .925-4
Program Guidance Memorandum, PG-33, 5/10/74;
PG-35, 6/3/75;
PG-46, 1/17/75
2. Application Form
Purpose:
EPA Form 5700-32 is the formal application document and
sets forth the information necessary to obtain a construction grant.
Additionally, the application contains "assurances" from the applicant
which satisfy several statutory requirements.
Discussion:
The application for a Step 2 grant is submitted by the
authorized representative of the jurisdictions included in the approved
facility plan. In all cases, the applicant must have the legal authority
to design, finance, construct, operate, and maintain any resulting
wastewater treatment facilities.
The application form is used to request an initial grant,
make amendments, and to request supplemental grants. The form (see
Appendix B) contains instructions for completion of each of the five
parts. Part II, Section B, requires information concerning the project
site. For a Step 2 application, a statement regarding availability of
the proposed site must be included. Other site information (plot plan,
soil survey, etc.) may be included where necessary.
Part III, Section D, concerns the applicant's proposed
method of financing the non-federal share of the project. The applicant
may not use revenue sharing funds obtained under the State and Local
Fiscal Assistance Act of 1972 to finance his portion of the eligible
project costs. In certain cases involving sewage collection systems
(not treatment plants nor intercepting sewers), the applicant may use
Community Development Block Grant Funds as the community's local share.
V-5
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In these cases the reveiwer should contact the regional DHUD office
for specific limitations. However, such items as cost overruns (not
otherwise funded by EPA), sewage collection systems, or land acquisition,
for example, which are not included within the scope of the EPA grant
as allowable costs, may be funded with revenue sharing funds.
The statutes require that the applicant comply with
related laws and regulations and give other assurances. Many of these
requirements are satisfied for a Step 2 grant when the applicant signs
the application and thereby assures and certifies that he will comply
with the requirements. However, additional evidence of compliance with
some of these assurances is required from the applicant (see Section E.4.).
A copy of the authorizing resolution designating the official to act as
the official representative of the applicant (Part V, item 1 of applica-
tion Form 5700-32) must be included with the application. Any subsequent
changes in the authorized official must also be documented by a copy of
the resolution authorizing the change.
Review Procedures:
Review application form to determine that:
a. the name, the project number, and the description
of project and amount of grant request agree with
the State Priority Certification, Form 5700-28,
and the approved State priority list;
b. the form is signed by the authorized representative
and a copy of the authorizing resolution is attached;
c. a statement regarding availability of the proposed site
is attached;
d. information regarding project location, entities
involved and cost data corresponds to that in the
facility plan and Summary of Costs of Planned Treat-
ment Works Scheduled by Project and Category;
e. all items in the application are complete or marked
not applicable (NA);
f. Part III, Section D, Proposed Method of Financing
Non-Federal Share, assures that the applicant
successfully fund his share of the project costs
and that revenue sharing finds will not be used
to match those costs eligible for EPA grant assist-
ance; if Community Development Block Grant Funds are
to be used, contact DHUD; (Particular emphasis should
be placed on review of this section)
V-6
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g. Part V. Assurances, is included with the
application: if not the application must be
returned to the applicant for inclusion of
a signed copy of the Assurances.
Re: 40 CFR 30.315
40 CFR 35.920-2, .920-3(b)(4)
Program Guidance Memorandum, PG- 3, 6/25/73; PG-55, 5/5/75
81 CFR Part 51, Department of Treasury
3. Contracts and Subagreements
Purpose:
Contracts or subagreements for personal or professional
services are submitted by the applicant and reviewed by both the State
and EPA to insure that the scope and nature of the proposed services
are sufficient to result in approvable plans and specifications and
that the fees and schedules are reasonable.
Discussion:
The personal and professional services covered by the
subagreements at the time of Step 2 application submission are generally
the consulting engineering services. The regulations state that the
application shall include proposed subagreements or an explanation of
the intended method of awarding subagreements for performance of any
substantial portion of the project work.
Also, the regulations require that any such subagreements
or lower tier subagreements include an "access" clause allowing the State
or EPA access, at reasonable times and places, to the work or records.
The "access" clause is applicable to subagreements or lower tier sub-
agreements in excess of $10,000.
The detailed requirements of and procedures for procuring
personal or professional services are contained in the regulations, 40
CFR 35.936, .937. Subagreements in which the fee is a percentage of
construction costs are not acceptable, nor are cost multiplier contracts
where profit is included in the multiplier.
Review Procedures:
Review the agreement(s) to determine that:
a. the applicant has complied with 40 CFR 35.936
and .937;
b. the scope of the work is sufficient to prepare
approvable plans and specifications;
c. completion schedules are reasonable and in agree-
ment with the facility plan.
V-7
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Re: 40 CFR 35.920-3(b)(7), .935-7, .936, .937;
40 CFR 30.605; Program Guidance Memorandum, PG-53, 7/8/75
4. Assurances and Program Requirements
The regulations require that the applicant furnish evidence
of meeting program requisites and assurances made in the Step 1 and
Step 2 grant application as well as requirements prescribed in other
Federal statutes. Evidence of compliance with the following is of
particular importance:
a. user charges - the applicant must submit an approvable
plan and schedule for the implementation of a user
charge system in accordance with the guidelines in the
regulations (40 CFR - Part 35, Appendix B);
b. industrial cost recovery - the applicant must agree to
require all industrial users to pay that portion of the
grant amount allocable to the treatment of wastes from
their use of the system; also the applicant must furnish
letters from the major (10% or more of waste flow or
strength) industrial users indicating that they will
pay their portion of the grant amount allocable to the
treatment of wastes from their use of the system and
their intended period of use.
c. service agreements - where the project involves more
than one political jurisdiction, the applicant must
submit completed or substantially completed service
agreements. These agreements will include financial
arrangements and will obligate each jurisdiction to
enforce the requirements for user charges, industrial
cost recovery, sewer system rehabilitation and sewer
use ordinances.
d. Civil Rights Act of 1964 - the applicant must complete
two forms: Assurance of Compliance, EPA Form 4700-1,
and Compliance Report, EPA Form 4700-4;
e. Relocation and Land Acquisition Policies Act of 1970 -
if the project will result in the acquisition of private
property or the displacement of persons, the applicant
must submit a statement that he will prepare a program
for compliance with the provisions of the Act.
Re: 40 CFR 35.917-6, .920-3(b)(5)(6), .925-9, .925-11, .925-12,
40 CFR 30.405-2, .405-3
V-8
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F. GRANT AWARD PROCEDURES
(Note: See Step 1 award procedures, Chapter IV, pp.14 and 15
for notification procedures and data regarding items 1 through 4)
5. Grant Agreement/Amendment
Purpose:
The Grant Agreement/Amendment (EPA Form 5700-20) serves as
a formal document of agreement between the U.S. Government and the
applicant and constitutes a legally binding contract once executed.
Procedures:
EPA Form 5700-20 (see Appendix B) is completed by the Reqional
Office based upon the information submitted in the application package.
The agreement must define the scope of the project. Modification to
grant amounts, scope of work, or other items are made on the basis of
the review process, and special conditions of the grant are included
in Part III b. These special conditions may be based upon clearing-
house comments, request from the State agency, or conditions unique
to the project. Such unique conditions may include consideration of
mitigating measures identified in the review of the facility plan, EIS
where prepared, sewer system evaluation survey requirements, or other
considerations.
In order to better forecast future funding requirements, each
applicant for a grant is required to submit cost estimates in the format
shown in the form Summary of Costs of PlannedJreatment Works Scheduled
by Project and Category (see Appendix B).This requirement is to be
incorporated as a special condition in the grant/agreement amendment.
The grant agreement/amendment is not sent to the applicant
until five working days after the signing by the Regional Administrator
in order to allow for necessary congressional notification. The
applicant is given three weeks to accept the grant offer and to return
the stgned grant agreement/amendment to EPA.
The individual signing the grant agreement/amendment on behalf
of the applicant should be the same individual who signed the application.
Differences must be explained and a new authorizing resolution submitted
(see Application Form item E.3 of this chapter).
Re: Program Guidance Memorandum, PG-55, 5/5/75
V-9
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G. PREPARATION OF PLANS AND SPECIFICATIONS
Purpose and Discussion:
Program responsibility for the progress of a project does
not end with the grant offer. Rather, the reviewer must know the
day-to-day status of the project to insure that it is completed in
accordance with the approved schedule. Also, he must insure that
the applicant is aware of the administrative and technical
considerations to be included in the plans and specifications.
Procedures:
Shortly after acceptance of a Step 2 grant, the reviewer
should:
1. contact the grantee and his consultant to
make known the kinds of advice and assistance
available from the State and EPA during the
preparation of the plans and specifications; •
2. forward to the grantee and his consultant the
administrative and technical considerations
to be incorporated into the plans and specifi-
cations, including 40 CFR 35.936, .938, .939
and Appendix C-2;
3. arrange for a predesign conference.
V-10
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H. PREDESIGN CONFERENCE
Purpose and Discussion:
EPA, in conjunction with the State agency, should assume
responsibility for insuring that the plans and specifications are
prepared in accordance with sound engineering practice and regulatory
requirements. Because of the complexity of these requirements, a
predesign conference betwaen the grantee, his consultant, the
State and EPA is strongly urged, whenever practicable.
The predesign conference, which may be held with one or
more grantees, promotes careful planning and coordination and insures
the timely completion of, the various phases of a project. In some
cases, the review of plans and specifications may be delegated to a
State. In such cases, the State is responsible for the predesign
conference arrangements. For the other cases, the regions are
encouraged to develop formats for the predesign conferences. The
formats may then be tailored to the individual staffing resources
of the States and the needs of the applicants.
Procedures:
Shortly after acceptance of a Step 2 grant, but prior to
the preparation of plans and specifications, the reviewer should
arrange a predesign conference with the grantee, grantee's
consultant and State agency. Suggested subjects to be discussed
include:
1. the legal requirement for inclusion of and
provisions for carrying out the bidding
procedures described in 40 CFR 35.936, .938,
.939 and Appendix C-2;
2. the technical requirements of the design to
insure that the project will meet effluent
limitations per NPDES permit and will be
designed in accordance with sound engineering
practice;
Re: 40 CFR 35.925-7
V-ll
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3. additional requirements, as applicable, for
detailed design reports beyond that submitted
with the facility plan. Possible examples are:
- loading rates and sizes of various
components of the plant;
- design computations for sewers, including
slopes and capacities;
- system head curves for pumping stations,
indicating number and capacity of pumps;
- other detailed design reports which the
particular project may require;
4. pretreatment design requirements and scheduling,
as applicable, for industrial dischargers;
Re: 40 CFR 35.925-15
5. design considerations or investigations
resulting from the environmental assessment
or environmental impact statement. Possible
examples are:
- a soil erosion plan;
- a traffic control plan;
- archaeological investigations;
Re: 40 CFR 35.925-8
6. design requirements arising from executed
agreements between jurisdictions;
Re_: 40 CFR 35.917-6
7. force account requirements, as applicable;
Re: Program Guidance Memorandum, PG-34, 5/7/74
8. phasing of contracts;
Re: Program Guidance Memorandum, PG-33, 5/10/74
V-12
-------
9. flood protection insurance requirements, as
applicable;
Re_: 40 CFR 30.405-10
Program Guidance Memorandum, PG-54, 7/8/75
10. records to be maintained during design and
construction, separating eligible and ineligible
i terns;
Re_: 40 CFR 30.805, 35.940
11. site certification requirements, if not
previously satisfied;
Re_: 40 CFR 35.920-3 (b)(4)
12. future requirements for
- the user charge and industrial cost
recovery systems;
- a sewer use ordinance;
- an evaluation/rehabilitation program,
as applicable;
- an operation and maintenance program,
including O&M manual, staffing and
training;
Re_: 40 CFR 35.935-12, -13, -16
13. requirements for submission of project status
reports and requirements for periodic
inspections and audits, as necessary, for
large or complex projects;
Re_: 40 CFR 30.635, .820
14. requirements for construction contracts to conform
with the standardized format, "Contract Documents
for Construction of Federally Assisted Water and
Sewer Projects";
Re: Program Guidance Memorandum, PG-17A, 4/15/75
V-13
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15. use of value engineering in the design phases
of the project;
Re: Program Guidance Memorandum, PG-45, 12/11/74
16. possible benefits from the use of construction
management.
The reviewer should provide the grantee with guidelines,
instructions, booklets, or other publications which describe specific
requirements in detail.
I. REVIEW OF PLANS AND SPECIFICATIONS
Purpose:
To insure that the project to be built will satisfy effluent
and statutory requirements.
Discussion:
Depending upon the complexity of the project, periodic reviews
and inspections will have been carried out during the preparation of
the plans and specifications and changes or modifications, if required,
will have been made. The set of plans and specifications submitted for
final review should reflect all changes and be suitable for bidding
purposes.
The review procedures are both administrative and technical.
The technical review procedures are broad in scope and each region is
encouraged to pattern its own review procedures to account for State
or local design practices and requirements. Although not specifically
required, the use of a checklist such as the "Program Checklist for
Engineering Drawings, Specifications, and Engineering Reports",
Appendix C, is recommended.
V-14
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Review Procedures:
a. Administrative Review
The following six items must be included in the
bidding documents:
(1) a statement of work, including drawings
and specifications, and the required
completion schedule;
(2) the terms and conditions of the contract
(40 CFR 35.938-8);
(3) an explanation of the method of bidding;
the method of evaluating the bid prices,
and the basis for the award of the contract;
(4) the criteria for evaluating bidders;
(5) the standard statement concerning the
funding of the project by EPA;
(6) a copy of 40 CFR 35.936, 35.938 and 35.939.
In addition to the above six items, the reviewer is to
insure that the specifications include the following provisions:
(1) Supplemental General Provisions
Appendix C-2 of 40 CFR Part 35 which
includes requirements for:
- audit: access to records
- price reduction for defective
cost or pricing data
- contract work hours and safety
standards
- equal employment opportunity
- utilization of small and minority
business
- covenant against contingent fees
V-15
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- anti-kickback
- gratuities
- patents
- copyrights and rights in data
- clean air and water clause
(2) Equal Employment Opportunity
The EEO provisions must be followed where contracts
are greater than $10,000. In areas having a home-town or an imposed
plan, the contract specifications must contain the specific provisions
of the plan as published by the Secretary of Labor in the Federal
Register. Home-town plans are agreements reached among the local
contractors, trade unions, minority groups and governmental agencies,
which are approved by the Secretary of Labor, and contain the goals for
the hiring and training of minority groups. Imposed plans likewise set
forth minority hiring and training goals; however, such goals are not
reached by agreement, but imposed by the Department of Labor.
In either instance, the reviewer should insure that
the applicable plan is contained in the specifications.
In non-plan areas, contractors will be required to
comply with the provision of Executive Order 11246 and engage in
affirmative action directed at promoting and insuring EEO in the work
force used under the contracts.
When the cost of the construction is estimated to
exceed a ceiling amount specified by the Regional Administrator, the
contracts may require special provisions. The reviewer, in such cases,
should contact the Civil Rights and Urban Affairs Office within the
EPA regional office for specific instructions.
Re: 40 CFR 35.935-6
40 CFR Part 8
V-16
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(3) Davis-Bacon Act
The provisions of the Davis-Bacon Act must be
included in contracts exceeding $2,000. These provisions require the
payment of prevailing wages for the various trades as determined by
the Secretary of Labor.
Prevailing area-wide rates are published weekly
in the Federal Register. For individual projects not included in
areas with area-wide wage rate determinations, the Regional Office will
obtain a wage rate for inclusion in the specifications.
Modifications to area-wide wage rate determinations
are to be included in the bidding documents provided they have been
published 10 days prior to the bid opening date. Modifications to
individual project determinations are to be included provided they are
received in the Regional Office 10 days prior to bid opening.
The reviewer is to insure that the current wage
rate determination is included in the bidding documents or that
provisions for inclusion have been made.
Re: 40 CFR 30.403, .415
(4) Flood Insurance
For projects requiring flood insurance (see
Chapter VI E.4.a. of this Handbook) make certain that the contractor is
required to obtain the necessary flood insurance during construction.
(5) Bonding
For contracts in excess of $100,000, the following
minimum bonding and insurance requirements must be met:
- 5% bid bond;
- 100% performance and payment bond;
- fire and extended coverage, workmen's
compensation, public liability and
property damage, and "all risk", as
required by local or State law;
- flood insurance, as applicable, during
construction.
V-17
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For contracts less than $100,000, bonding and
insurance requirements shall be in accordance with local or State
practices.
b. Technical Review:
The technical review of the plans and specifications is
carried out to insure that the proposed facilities, if constructed in
accordance with the plans and specifications, will achieve the effluent
limitations or water quality standards required by the NPDES permit.
The review is also to insure that sound engineering design principles
are employed, primarily regarding process considerations. Structural,
electrical, and mechanical details of the design are not critically
reviewed because they are the responsibility of the engineer whose seal
appears on the drawings. However, obvious irregularities should be noted.
The technical review should evaluate the plans and
specifications according to the criteria in "Program Checklist for
Engineering Drawings, Specifications, and Engineering Reports" (see
Appendix C) to the extent appropriate for the particular project and
State requirements. The following are examples of items which should be
reviewed.
(1) Safety Precautions
The requirements of the Occupation Safety and Health
Act (OSHA) must be fulfilled;
(2) Mitigative Measures
Plans and specifications must be compared with
mitigative measures required by the environmental assessment or impact
statement. Examples might be soil erosion control, hours of operation,
backfilling and seeding, structural design for buildings in a flood
plain, etc.
(3) Bypassing
Construction is to be carried out so as to prevent
bypassing of flows during construction, where possible.
(4) Project Sign
Contractor is required to provide a project sign in
accordance with the drawing shown in Appendix B.
V-18
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(5) Reliability and Flexibility
The proposed facilities must be reliable and
provide for flexibility in operation. This may be accomplished, for
example, by requiring standby power, by providing for bypass of
individual plant units, by providing pumping capacity sufficient to
operate the plant with the largest pump out of service, etc.
(6) Operation and Maintenance
All equipment, piping, switches, instruments, etc.
are to be clearly marked for ease of identification and location for
operation and maintenance.
(7) Public Water Supply
All public water supplies are to be protected by
adequate backflow preventers (for example, double check valves, air
gap).
(8) Chemical Storage
All chemicals are to be properly stored and curbed
to hold the entire volume in the event of an accidental spill. Also,
adequate safety protection gear is to be provided, with proper storage,
for plant personnel.
Re: Technical Bulletin No. D-71-1, 10/15/71
(9) Ventilation
Adequate ventilation is to be provided in all areas
where necessary (for example wet well, dry well, chlorine room, chemical
storage area, etc.).
(10) Laboratory Facilities
The laboratory facilities must be adequate to conduct
the type of sampling and testing required by the NPDES permit or by the
State agency.
or dangers.
(11) Emergency Alarms^
Adequate alarms are to be provided to warn of failures
V-19
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(12) Use of Mercury
Mercury is not to be used for trickling filter
seals. Other uses of mercury require special review and approval.
Re: Technical Bulletin No. D-71-2, 10/15/71
(13) Sewers
Acceptable levels of infiltration and test therefor
are included; sewers should maintain minimum scouring velocities and
have adequate capacity, including peaking factors.
(14) Equipment
Except where based upon performance specifications
at least two trade names must be specified for all major items of
equipment.
Re: Program Guidance Memorandum, PG-19A
40 CFR 35.936-13(a)
(15) Shellfish Waters
Where discharges will come into contact with
shellfish waters, appropriate measures must be included to protect the
shellfish.
Re: Technical Bulletin, Protection of Shellfish
Waters, EPA 430/9-74-010, July 1974
(16) Pretreatment
Where applicable the design must be in accordance
with the requirements for pretreatment of incompatible industrial wastes.
Re: 40 CFR 35.925-15
V-20
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c. Plan and Specification Approval
Upon approval by EPA of the plans and specifications,
the grantee and State agency are to be so notified. The notification
will generally be in the form of a letter and should contain any special
conditions resulting from the review which would be imposed on the
applicant upon application for a Step 3 grant. The approval notice
should specifically remind the applicant not to advertise for bids until
after applying for and receiving a Step 3 grant. He should also be
reminded that the EPA is not obligated to award a Step 3 grant for the
project.
V-21
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CHAPTER VI
STEP 3 GRANT PROCESSING
A. Introduction
B. Schematic Flow Diagram
C. Application Contents
D. Plans and Specifications Approval
E. Administrative Review
F. Grant Award Procedures
G. Procurement of Construction Contracts
H. Preconstruction Conference
I. Monitoring of Construction Activities
-------
A. INTRODUCTION
This chapter describes the contents of and review procedures
for processing of a Step 3 grant application. It begins with the
receipt of the application and concludes with the start-up of the
completed facilities.
Section B, Schematic Flow Diagram, visually places this chapter
in the proper sequence and indicates the major activities of the
Step 3 application and review.
Section C, Application Contents, provides a quick ready listing
of the materials which are contained in an application package for
a Step 3 grant.
Section D, Plans and ^Specifications Approval, restates the
requirement for approved plans and specifications as a part of the
Step 3 application.
Section E, Administrative Review, describes the procedures
involved in reviewing priority list compliance and certification,
application form, contracts and subagreements, assurances, and
institutional arrangements.
Section F, Grant Award Procedures, describes the action required
on the part of EPA in making the grant offer.
Section G, Procurement of Construction Contracts, describes the
procedures involved in the authorization to advertise for bids, review
of bids, grant increase/decrease, protests, and authorization to award
contracts.
Section H, Preconstruction Conference, describes the administrative
and technical considerations to be discussed with the grantee relative
to construction activities.
Section I, Monitoring of Construction Activities, describes the
procedures involved in the execution of change orders and on-site
inspections, and the review of the user charge, industrial cost recovery
and operation and maintenance programs.
VI-1
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B.
SCHEMATIC FLOW DIAGRAM
The flow diagram below visually places this chapter in the proper
sequence and indicates its relationship to other chapters. The diagram
includes the general functions of the Step 3 grant process as performed
by the applicant, State and EPA.
\—*
VI-2
11/21/75
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C. APPLICATION CONTENTS
Below are listed the basic items to be included in an application
package. The items are listed here for quick reference, while the
review procedures for each item are described later. The reviewer is
to make a cursory review to insure that all items are included, that
all applicable portions of the forms are completed and that the documents
are signed by the appropriate officials. If items are missing or
explanations are necessary, the State is to be contacted but the
reviewer is to proceed as far as possible to insure quick action once
the corrections are made.
1. Plans and Specifications (2 sets)
2. State Priority Certification, EPA Form 5700-28
3. Application, EPA Form 5700-32, including authorizing
resolution and site certificates.
4. Proposed subagreements or explanation of method of
awarding proposed subagreements.
5. Evidence of compliance with the Flood Disaster Protection
Act and the Sewer Use Ordinance requirements.
6. Sewer System Rehabilitation Scheduling, where applicable.
7. Institutional Arrangements (service agreements in
multijurisdictions).
8. Schedule for compliance with Operation and Maintenance
requirements.
9. Payment Schedule (refer to Chapter VII).
10. Evidence of progress in developing user charge system.
Re: 40 CFR 35.920-3(c), .925-3, -10, .927-2, -4
40 CFR 30.315, .405-10
VI-3
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D. PLANS AND SPECIFICATIONS APPROVAL
The review of plans and specifications is described in Chapter V
of this Handbook. The applicant has been notified that the plans and
specifications are approvable, and should have been informed of any
missing forms or documents which must be included in the final bidding
documents. The reviewer should confirm this by examining the project
file. The applicant is responsible for submitting 2 sets of the plans
and specifications, including all required documents, as a part of the
Step 3 application. In particular the applicant should be informed
of the requirement for inclusion of the latest wage rate determination
in accordance with the Davis-Bacon Act.
E. ADMINISTRATIVE REVIEW
1. Priority List Compliance and Certification
Purpose:
The State agency is required to certify each project as
entitled to priority for a grant in accordance with the State priority
system and resulting project priority list.
Discussion:
Chapter II discusses the State priority system and list.
Once the system and annual list have been approved by EPA, each project
is certified by the State as being entitled to priority for a grant over
all other projects below it on the priority list (EPA Form 5700-28, see
Appendix B).
If the project being certified is for a grant increase due
to cost overruns, the applicant and State are subject to special conditions
described in Chapter II, B-2 State Priority System and List, and B-3
Funding.
Only projects which have been certified by the State as
entitled to priority for Federal assistance may receive grants.
VI-4
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Review Procedures:
Review State Priority Certification and determine that:
a. the name, project number and description
of project agree with the application, form
5700-32, and the approved State priority list;
b. the form includes the signature of the
authorized State official;
c. the award of grant assistance for the project
will not exceed the State's allotment,
including reallotments;
d. the award of grant assistance will not jeopar-
dize the funding of any projects of higher
priority.
Re_: 40 CFR 35.915, .917-2, .920-2, .925-3, .925-4
Program Guidance Memorandum, PG-33, 5/10/74;
PG-46, 1/17/75
2. Application Form
Purpose:
EPA Form 5700-32 serves as the formal application
document and sets forth the information necessary to qualify for a
construction grant. Additionally, the application contains "assurances"
from the applicant which are necessary to satisfy statutory requirements.
Discussion:
The application for a Step 3 grant is submitted by the
authorized representative of the jurisdictions included in the approved
facility plan. The applicant must have the legal authority to finance,
construct, operate and maintain the proposed wastewater treatment facilities.
The application form is used to request initial grants,
amendments, and supplemental grants. The form (see Appendix B) contains
instructions for completion of each of the five parts. Part II, Section B
must be completed for a Step 3 grant and must be accompanied by site
certification from legal counsel indicating the applicant's interest in
the project site and ability to obtain any required easements or rights-
of-way.
VI-5
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Part III, Section D, concerns the applicant's proposed
method of financing the non-federal share of the project. The
applicant may not use revenue sharing funds obtained under the State
and Local Fiscal Assistance Act of 1972 to finance his portion of the
eligible project costs. However, items which are not included within
the scope of the EPA grant as allowable costs may be funded with
revenue sharing funds. The grant request should not include costs
for pretreatment of incompatible industrial wastes, nor costs for
treatment of wastes originating from Federal installations (excluded
from allowable costs).
In certain cases involving sewage collection systems
(not treatment plant nor intercepting sewers), the applicant may use
Community Development Block Grant Funds as the community's local share.
In these cases the reviewer should conta-ct the regional DHUD office
for specific limitations.
The statutes require that the applicant comply with
related laws and regulations and give other assurances. Many of these
requirements are satisfied for a Step 3 grant when the applicant signs
the application and thereby assures and certifies that he will comply
with the requirements. However, additional evidence of compliance with
some of these assurances is required from the applicant (see Section E.4)
A copy of the authorizing resolution designating the official to act as
the representative of the applicant (Part V, item 1 of the application
form) must be included with the application. Any subsequent changes in
the authorized official must also be documented by a copy of the
resolution authorizing the change.
Review Procedures:
Review the application form and determine that:
a. the name, project number, and description
of the project and the amount of the grant
request agree with the State Priority
Certification Form 5700-28 and the approved
State Priority List;
b. the form is signed by the authorized
representative and a copy of the authorizing
resolution is attached;
c. the certification of project site interest
and the status of easements and rights-of-way
is included;
VI-6
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d. information regarding the project location,
entities involved and cost data corresponds
to that in the Summary of Costs of Planned
Treatment Works Scheduled by Project and
Category;
e. all items in the application are complete or
marked not applicable (NA);
f. Part V, Assurances is included with the
application. If not, properly signed form
must be obtained.
g. force account work must be properly identified.
NOTE: Particular emphasis is placed upon review
of Part III, Section D, Proposed Method of
Financing Non-Federal Share, to insure that
the applicant can fully fund his share of
the project costs and that revenue sharing
funds will not be used to match those costs
eligible for EPA grant assistance (if
Community Development Block Grant Funds are
to be used, contact DHUD);
Re: 40 CFR 30.315
40 CFR 35.920-2, .920-3(c), .925-15, .925-16
Program Guidance Memorandum, PG-3, 6/25/73;
PG-55, 5/5/75
31 CFR Part 51, Department of Treasury
3. Contracts and Subagreements
Purpose:
Contracts or subagreements for personal or professional
services are submitted by the applicant and reviewed by both the State
and EPA to insure that the scope and nature of the proposed services are
sufficient to result in approvable facilities and that the fees and
schedules are reasonable.
VI-7
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Discussion:
The personal and professional services covered by the
subagreements at the time of Step 3 application submission are generally
the consulting engineering services. The regulations state that the
application shall include proposed subagreements or an explanation of
the intended method of awarding subagreements for performance of any
substantial portion of the project work.
Also, the regulations require that any such subagreements
or lower tier subagreements include an "access" clause allowing the
State or EPA access, at reasonable times and places, to the work or
records. The "access" clause is applicable to subagreements or lower
tier subagreements in excess of $10,000.
The detailed requirements of and procedures for procuring
personal or professional services appear in 40 CFR 35.946, .937.
Subagreements in which the fee is a percentage of construction costs are
not acceptable nor are cost multiplier contracts where profit is included
in the multiplier.
Review Procedures:
Review the agreement(s) and determine that:
a. the grantee has complied with 40 CFR 35.936
and .937;
b. the scope of work is sufficient to construct
approvable facilities;
c. completion schedules are reasonable and in
agreement with the plans and specifications.
Re: 40 CFR 35.920-3(c), .935-7, .936, .937, Appendix D.
40 CFR 30.605
4. Assurances
In addition to the assurances contained in Part V of the
application form, the applicant is to comply with the additional procedures
listed below:
VI-8
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a. Flood Disaster Protection Act of 1973 -
To determine if a community is required to
participate in the flood insurance program,
consult the Federal Register of
June 25, 1975, pages 26740-26756, and the
weekly updates thereto as published in
the Register, or consult the regional DHUD
office. If the community is eligible for
participation and if the project exceeds
$10,000 in value and contains structures
requiring such insurance, the applicant is
to furnish evidence that it is participating
in the program and a letter of intent that
it will obtain the required insurance both
during construction and for the useful life
of the project.
Structures that must be insured are those
containing four walls and a roof (control
building or pumping station for example).
Items which need not be insured are sewers
or othe> facilities not likely to be damaged
in the event of flooding.
Projects outside the flood hazard areas or
in areas not yet delineated by DHUD need not
obtain flood insurance. Communities have
until one year after notification of
identification as a flood-prone area to
meet the flood insurance requirement.
Re: 40 CFR 30.405-10
Program Guidance Memorandum, PG-25, 3/1/74;
PG-25A, 11/4/74;
PG-54, 7/8/75
b. Sewer Use Ordinance - The applicant must
submit a current sewer use ordinance or a
letter of intent that such ordinance will be
enacted before completion of the project.
The sewer use ordinance must prohibit new
sources of inflow (illegal connections from
sump pumps, foundation drains, roof leaders,
etc.) from being connected to the sewer
system and require proper design and
construction techniques for new connections.
It must also require pretreatment of toxic
or incompatible industrial wastes prior to
discharge into the system.
Re: 40 CFR 35.927-4, .925-15
VI-9
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5. Operation and Maintenance Scheduling
The applicant must provide evidence that he will comply
with the requirements for the efficient operation and maintenance
of the proposed facilities. This involves the submission of an
O&M manual, development of emergency procedures, use of properly
trained staff, and provision of adequate budget, operational
reports and adequate laboratory testing. Grant payments will be
limited until these items are submitted by the applicant for
review and approval by EPA.
At the time of the Step 3 application, a schedule wh'ich
shows the time of submission of the required documents to EPA is
satisfactory evidence that the applicant will comply with the O&M
requirements. The schedule may also show, when the operating
personnel will be hired. Many states have adopted specific programs
for O&M and the reviewer should be familiar with the requirements
of the particular state.
Re: 40 CFR 35.920-3(a), .925-10, .935-12
6. Sewer System Rehabilitation Scheduling
Where the scope of the Step 3 grant includes sewer system
rehabilitation, the applicant must submit a schedule for completing
the rehabilitation program. Because the applicant is required to
comply with the schedule for sewer system rehabilitation in order
to receive full grant payment, the schedule must be reasonable for
the work involved. It is desireable that the rehabilitation program
be completed prior to completion of the plant. However, the
rehabilitation program may continue beyond the scheduled start-up
provided that the unfinished rehabilitation work will not have an
adverse affect on the operation of the plant.
Re: 40 CFR 35.927-5(c), .935-16, .927-3
7. Institutional Arrangements
The applicant must have proper jurisdictional control over
all political entities within the service area to insure the adoption
of user charges, cost recovery systems, and sewer use ordinances and
to insure full implementation of the sewer system rehabilitation
program (where applicable). The control will normally be in the form
of signed service agreements between the applicant and each contributing
municipality specifying the obligations of all parties for compliance
with the applicable statutory and regulatory requirements.
Re_: 40 CFR 35.917-6
VI-10
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F. GRANT AWARD PROCEDURES
Procedures for a Step 3 grant award are identical with those
for a Step 1 award, as shown in Chapter IV, pages 14 and 15, insofar
as items 1 through 4 are concerned. Item 5 for a Step 3 grant follows:
5. Grant Agreement/Amendment
Purpose:
The Grant Agreement/Amendment (EPA Form 5700-20) serves as
a formal document of agreement between the U.S. Government and the
applicant, and constitutes a legally binding contract when executed.
Procedures:
EPA Form 5700-20 (see Appendix B) is completed by the
Regional Office based upon the information submitted in the application
package, including any subsequent changes. The agreement must define
the scope of the project. Modifications to grant amounts, scope of
work or other items are made on the basis of the review process.
Special conditions of the grant are included in Part III b. These
special conditions may be based upon clearinghouse comments, requests
from the State agency or conditions unique to the project.
The grantee must complete certain regulatory requirements
before full grant payment may be made. Because these requirements are
so important, and to avoid oversight on the part of the applicant, they
may be included in the grant agreement as "special conditions". These
are:
a. User Charge/Industrial Cost Recovery Systems -
No more than 50% of the Federal share of the
Step 3 grant may be paid until the grantee has
submitted evidence of the timely development of
the UC/ICR systems, and no more than 80% may be
paid until the systems are approved.
b. O&M Manual - No more than 50% of the grant may
be paid until the draft manual has been submitted
or evidence of compliance has been received, and
no more than 90% may be paid until a satisfactory
O&M manual has been furnished.
VI-ll
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c. Sewer Use Ordinance - No more than 80% of the
Step 3 grant may be paid until the sewer use
ordinance(s) is approved.
d. Rehabilitation Program - No more than 80% of
the grant may be paid until compliance with
the rehabilitation program (if required)i.s
achieved.
The grant agreement/amendment is not sent to the applicant
until five working days after the signing by the Regional Administrator
in order to allow for necessary congressional notification. The
applicant is given three weeks to accept the grant offer and to return
the signed grant agreement/amendment to EPA.
The individual signing the grant agreement/amendment must be
the authorized representative as shown on the application form. Any
changes must be documented through a resolution by the jurisdictions
involved.
Re: 40 CFR 35.935-12, -13, -16
VI-12
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6. PROCUREMENT OF CONSTRUCTION CONTRACTS
1. Authorization and Formal Advertising for Bids
Discussion:
Once the grantee has accepted the grant offer, EPA
may authorize advertising for bids (completed and approved bidding
documents, including plans and specifications, were a part of the
Step 3 grant application). While the approved bidding documents
contain the necessary requirements for formal advertising
(35.938-4), the letter authorizing the grantee to advertise for
bids should reemphasize and briefly remind the grantee of these
requirements and the procedures to be followed after receipt of bids.
Procedures:
Immediately after acceptance of the grant offer,
the reviewer should prepare a letter to the grantee:
a. authorizing him to advertise for bids
in accordance with regulations;
b. indicating the documents to be submitted
and procedures to be followed after
receipt of bids (see item 2 following
for list of documents);
c. warning him not to award contracts until
receiving authorization to do so is
received from EPA.
Re: 40 CFR 35.935-10, .938-4
VI-13
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2. Review of Bids
Purpose and Discussion:
A review of the bids, bidding procedures, and
accompanying documents is made to insure compliance with applicable
laws and regulations and to insure that contracts will be awarded to
the lowest responsive, responsible bidder.
Review Procedures:
The following documents are to be submitted and
reviewed prior to authorizing award of construction contracts.
a. a certified tabulation of all bids
received;
b. two copies of the proposal form and
bonds from the successful bidder;
a statement from the authorized
official giving the names of the
bidders to whom the grantee wishes
to award contracts and the amount
of each contract;
d. proof of advertising indicating the
circulation dates and time for receipt
of bids;
e. a copy of each addendum issued during
the bidding period and acknowledgement
of its receipt by the successful bidder;
f. signed copies of the certification by
the contractors regarding compliance
with a home-town or imposed plan, as
applicable;
VI-14
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if award is to be made to other than
the low bidder, a justification from
the applicant indicating why the low
bidder is not responsive or responsible;
h. a revised cost estimate, as necessary
(see suggested cost breakdown format,
Appendix B);
i. other documents showing conformance
with applicable State and local laws
and ordinances.
Re_: 40 CFR 35.935-4, .938
3. Grant Increases/Decreases
Discussion:
The grant amount is adjusted, as appropriate, after
receipt of bids to more accurately reflect project costs.
Procedures:
a. Grant increases - if the bids exceed the estimated
construction costs and the excess costs cannot be covered by the
contingency allowance, and if the grantee wishes to award the contracts
on the basis of these increased costs, he must request a grant increase
through the State agency. The State must submit a statement to EPA
authorizing the grant increase. A contingency allowance (generally
between 3 and 5 percent of construction costs) is to be included in
the revised project costs to allow for change orders, overruns, etc.
Grant increases require a revised grant agreement/amendment, the
updating of the GICS, and Congressional liaison notification if the
increase exceeds $10,000. Refer to Chapter VII, E., Increases and
Decreases, for specific procedural instructions.
VI-15
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b. Grant decreases - If the bids are less than the
estimated construction costs contained in the Step 3 application,
the grant is to be reduced accordingly but should continue to include
a contingency allowance (generally between 3 and 5 percent of
construction costs). Grant decreases require a revised grant
agreement/amendment and the updating of the GICS. Refer to Chapter
VII, E., Increases and Decreases, for specific procedural instructions.
c. Contingency adjustment - regardless of whether a
grant increase or decrease is appropriate, the contingency allowance
noted in the Step 3 grant application should be adjusted after bids
have been received. Common practice has been to allow a ten percent
contingency allowance for a Step 3 grant request but to adjust the
allowance to between 3 and 5 percent of the construction costs after
receipt of bids. Should the contingency adjustment result in a need
for a grant increase or decrease, follow the procedures in a. or b.
above.
Re: 40 CFR 35.915(g), (h)
40 CFR 30.900-1
Program Guidance Memorandum, PG-41, 10/16/74
4. Protests
Discussion:
In the award of contracts, many individuals and firms
have a vested interest in the decision as to who will receive the
construction contract. If the proposed award is not in favor of their
particular interests, they may choose to protest the award. In such
instances, the protester must take his grievance to the grantee for
initial resolution. In turn, the grantee must advise EPA of the
protest, the basis therefor, and his proposed method of resolution.
If the protester is dissatisfied with the decision of the grantee
and feels that Federal law will be violated by the proposed award, he
may ask the Regional Administrator to review the grantee's decision.
The award of contracts is subject to an immense body
of laws and regulations and often involves sensitive legal issues.
Therefore, the construction grants reviewer should consult the Regional
VI-16
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Counsel when he learns of a protest or of an action which may lead
to a protest in order to obtain advice as to any steps he should
take relative to the protest. Early consultation with Regional
Counsel is particularly important when a proposal is made for award
of the contract to other than the low bidder or when an attempt is
made to withdraw a low bid.
Review Procedures:
The construction grants reviewer must exercise
caution in handling protests, especially with regard to commenting
on the nature of the protest or recommending courses of action.
Accordingly, the reviewer should:
Assure that the protest is taken up
with the grantee as a first means of
resolution. Any comments to the grantee
or protester at this time should be
limited to procedural requirements.
2. If the protester is dissatisfied with
the grantee's decision on his protest,
assure that the protest is referred to
the Regional Office with the protester's
statement as to what Federal law or
regulation would be violated by the
proposed award and any comments the
grantee wishes to submit.
The reviewer, in consultation with Regional Counsel,
will decide if the protest is valid or without merit and so advise
the Regional Administrator. If it is decided that the protest is
without merit and the Regional Administrator concurs, the protest
may be dismissed without further proceedings. If the protest appears
to have some merit, Regional Counsel is responsible for coordinating
actions as prescribed in 40 CFR 35.939 to resolve the matter. The
reviewer should assume the lead role in gathering data necessary to
a final decision and in assuring timely resolution of the protest.
Re: 40 CFR 35.939
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5. Authorization to Award Contracts
Discussion:
After reviewing the bids and determining that all
regulatory requirements have been satisfied, the grantee is given
authorization to award contracts. This authorization is in the form
of a letter and should contain instructions for arranging a pre-
construction conference with the grantee, his resident inspector,
the State agency, the successful contractor and a representative of
EPA.
H. PRECONSTRUCTION CONFERENCE
Purpose:
The preconstruction conference is held to identify
and clarify the responsibilities of the grantee (and his consultant,
where appropriate), the contractor, the State and EPA.
Discussion:
Preconstruction conferences are not mandatory but are
to be encouraged wherever possible. The conferences may be called
at the request of the State, the grantee, the contractor or EPA.
EEO may also hold separate preconstruction conferences to discuss the
equal employment opportunity responsibilities of each party. The
subject matter to be discussed at the preconstruction conference may
vary from project to project but should address the responsibilities
of each participant. The procedures below list several areas which
might be discussed at the conference.
Procedures:
Suggested subjects to be discussed at preconstruction
conferences include:
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a. the responsibilities and authority of
the grantee, the contractor, the
resident inspector, the State and EPA;
b. compliance with State and local laws
and ordinances;
Re: 40 CFR 35.935-4
c. compliance with Davis Bacon and related
laws concerning the posting and payment
of minimum wage rates;
Re_: 40 CFR 35.935-5, 30.415
d. equal employment opportunity requirements;
Re: 40 CFR 35.935-6; 40 CFR Part 8
e. access to the work site and records;
Re: 40 CFR 35.935-7
f. requirements for adequate engineering
supervision and inspection during
construction;
Re: 40 CFR 35.935-8
g. payment documents, requests and procedures
for filing;
Re: 40 CFR 35.945
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h. project changes, including time of
completion, change orders, change in
project scope or grant amount;
Re: 40 CFR 35.935-9, .935-11, .938, .955
i. interim and final inspections by the
State and/or EPA;
Re: 40 CFR 35.935-14
j. records to be maintained by the grantee,
the inspector, and the contractor and
the auditing procedures;
Re: 40 CFR 30.805, .820
k. requirements for timely submission of
- a user charge system
- an industrial cost recovery system
- a sewer use ordinance
- an operation and maintenance manual
- a plan of operation
Re: 40 CFR 35.935-12, -13, -16
1. archaeological or historical resources
requirements, as applicable;
Re: 40 CFR 6.214
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m. mitigating measures to be employed
during construction, as recommended
in the environmental assessment and
contract documents.
Re_: 40 CFR 6.512(a) (6)
I. MONITORING OF CONSTRUCTION ACTIVITIES
1. Change Orders
Purpose:
A change order is the customary method of modifying
the construction contracts after work has begun and may result in
cost increases/decreases or other project changes.
Discussion:
During the course of construction, it may be necessary
to make changes in the project which require a modification of the
construction contract. The project changes may result from minor
errors in the plans and specifications or consist of emergency changes
required to protect life or property. Prior approval by EPA of minor
or emergency change orders is not required.
Project changes which will alter the design
or scope of the project; the type of treatment; the location,
size, capacity or quantity of any major component; or which require
additional Federal funds must receive the prior approval of the State
and EPA before being executed. Approved change orders resulting in
construction cost increases are ordinarily paid for from the
contingency portion of the total project cost. Where the change order
or combination of change orders exceeds the contingency allowance and
the grantee requests an increase in the grant amount, the procedures
in item G.3 of this Chapter are to be followed.
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Review Procedures:
To process a change order, the reviewer should
determine that:
it includes a justification statement
from the grantee;
it identifies contract cost increase
or decrease in sufficient detail to
allow for review as to reasonableness
of the costs;
it does not include work clearly approved
in the specifications;
it agrees with the unit price or unit
price adjustments as specified in the
contract documents;
- it has been approved by the State agency;
it does not substitute one piece of
equipment or material for another as a
means of circumventing the "or equal"
provisions of the specifications
(40 CFR 35.936-13(a));
if it alone or in combination with other
change orders exceeds $100,000.00, the
grantee has negotiated with the contractor
and costs are fully detailed and documented
in accordance with 40 CFR 35.938-5(d);
if it results in a request for a grant
increase or decrease, the procedures in
section G.3 of this chapter are followed.
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Upon review and approval of the change order, the
grantee is notified of such approval in writing and is authorized
to execute the change order.
Re: 40 CFR 35.935-11, .938-5, .955
40 CFR 30.900-1
PG 17A, Contract General Provisions, Sec. 14
2. On-Site Inspections
Purpose:
On-site project inspections are made to insure that
the project is being managed properly, is on schedule, and is being
constructed in accordance with approved plans, specifications and
change orders.
Discussion:
On-site project inspections are made during construc-
tion (interim) and at the completion of construction. The frequency
of interim inspections will depend upon the size and complexity of the
project. Interim inspections may be made by the State or EPA. If
made by the State, they should be coordinated with the Regional Office,
and copies of the inspection reports should be furnished to the project
officer. EPA may also utilize Inter-Agency Agreement Inspectors.
Final inspections should be made within 60 days after
being notified by the grantee that the project is complete and
operating, that the necessary operational staff has been hired, and
that the project has been accepted by the grantee. EPA has the
responsibility for conducting final inspections but usually the Federal
inspector will be accompanied by an official of the State agency.
Regional offices are encouraged to develop and use their
own inspection report forms. Appendix B includes a sample inspection
report for reference.
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Procedures:
a. Interim inspections - the EPA or State
inspector shall determine that:
the grantee is providing competent
and adequate supervision and
inspection and is maintaining
appropriate inspector's logs;
approved plans, specifications
and change orders are available
at the project site;
construction conforms to the
approved plans, specifications
and change orders and is on
schedule;
the latest engineer's estimate
of work-in-place agrees reasonably
with the actual observed construc-
tion;
reasonable tests of materials and
equipment are being conducted and
noted in logs or reports (slump
tests of concrete for example);
equipment delivered to the site
is being properly protected and
stored;
a project sign is appropriately
displayed and identifies appropriate
agencies;
the wage rate decision is prominently
displayed and agrees with the contract
documents;
project accounting records are
maintained and they distinguish
between allowable and nonallowable
costs supported by receipts or
certified contractor invoices;
VI-24
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safety provisions are being
followed in accordance with OHSA
requirements;
any special construction techniques
or practices are being employed in
accordance with the grant agreement;
the grantee has hired the operational
staff and is providing training, as
appropriate (see O&M requirements
below);
the grantee is preparing an operation
and maintenance manual;
the grantee is preparing a user
charge and an industrial cost
recovery system, as required;
the grantee is making satisfactory
progress toward the completion of
service agreements;
the grantee is providing wastewater
treatment capability during construc-
tion;
procedure exists to call deficiencies
to the attention of the authorized
representative;
b. Final inspections - the items under interim
inspections should be considered, as appropriate,
as well as the following:
the facilities are complete, operating
and, in the case of a treatment plant,
will meet the effluent limitations
required by the NPDES permit;
the facilities conform to the approved
plans, specifications and change orders;
all equipment is operational and
performing satisfactorily;
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appropriate operation and maintenance
staff has been hired and instructed
in the startup and operational
procedures;
laboratory facilities are complete
and sufficient to conduct appropriate
tests;
the operation and maintenance manual,
with schedule for routine maintenance
and testing, is readily available and
procedures are being carried out in
accordance with the manual;
accounting records are adequate and
will be made available for audits;
if not previously approved, the
grantee is completing a user charge
system, an industrial cost recovery
system, a sewer use ordinance or
service agreements;
industrial dischargers are pretreating
wastes as required.
Re: 40 CFR 35.935-8, -11, -14
3. Payment Conditions
Discussion:
Grant payments are discussed more completely in
Chapter VII of this Handbook. Generally, however, Step 3 grant payments
are made in accordance with the payment schedule included in the grant
agreement. The grantee is responsible for submitting a payment request
(EPA Form 2550-16) and supporting documentation. When it is received,
EPA will review it and authorize payment as appropriate.
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The grantee is also responsible for meeting particular
conditions before he may receive full payment. These have been
mentioned in earlier parts of the Handbook but are summarized below
for the reviewers convenient reference.
Operation and Maintenance Manual - No more
than 50% of the Federal share may be paid
until a draft O&M manual is submitted, and
no more than 90% may be paid until the
manual is approved by the Regional
Administrator.
Re: 40 CFR 35.935-12
b. User Charge System - No more than 50% of
the Federal share may be paid until the
grantee has submitted adequate evidence
of the timely development of a user
charge system, and no more than 80% may
be paid until the system is approved by
the Regional Administrator.
Re: 40 CFR 35.935-13
c. Industrial Cost Recovery System - No more
than 50% of the Federal share may be paid
until evidence of timely development of
an industrial cost recovery system has
been submitted by the grantee, and no more
than 80% may be paid until the system is
approved.
Re_: 40 CFR 35.935-13
d. Sewer Use Ordinance - No more than 80% of
the Federal share may be paid until the
sewer use ordinance(s) has been submitted
by the grantee and approved by the
Regional Administrator.
Re: 40 CFR 35.935-16
VI-27
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e. Rehabilitation Program - No more than 80%
of the Federal share may be paid until the
grantee has given evidence of complying
with a sewer system rehabilitation schedule,
where appropriate, as incorporated in the
grant agreement.
Re: 40 CFR 35.935-16
f. Final Inspection - Final payment may not
be made until the final inspection has
been completed and the Regional Administrator
has determined that the treatment works have
been satisfactorily constructed in accordance
with the grant agreement and approved plans
and specifications
Re: 40 CFR 35.935-14
4. User Charge System
Purpose:
The user charge system requires that users of a
treatment works will pay their proportional share of operation and
maintenance (including replacement) costs.
Discussion:
In the Step 2 application, the applicant must have
developed an approvable plan and schedule for the implementation
of a user charge system. During the Step 3 grant activity, the
applicant must show evidence of carrying out the implementation
plan in accordance with that schedule.
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The system must fulfill the objective of distributing
the costs of O&M among all users in proportion to their waste load
contributions. Factors to be included in the calculation of charges
are the volume, flow rate and strength of the wastes of all users.
Each user, or class of users, must be charged on an equitable basis
to fairly apportion the O&M costs. An effective user charge system
will bring about operational self-sufficiency.
Where more than one political jurisdiction is included
in the project service area, the user charge system must be legally
adopted by each jurisdiction. In the first year of operation, the
user charges may be based upon past experience or reasonable estimates.
However, each year thereafter, the applicant is to review the user
charges and initiate revisions, as necessary, to reflect actual
operation and maintenance costs of the treatment works and actual
waste load contributions from each user or class of users.
No more than 50% of the Federal share of a Step 3
grant may be paid until the grantee has submitted to the Regional
Administrator adequate evidence of timely development of its user
charge system. No more than 80% of the Step 3 grant may be paid until
the user charge system is approved by the Regional Administrator.
Review Procedures:
The user charge system submission must be reviewed
to insure compliance with the following criteria:
a. the program apportions fairly the
O&M costs among all users according
to waste load or flow characteristics.
A system such as one based upon ad
valorem taxes (dependent upon taxable
property ownership) is not acceptable
because it does not adequately consider
waste characteristics. Appendix B of
40 CFR Part 35 includes acceptable
user charge system models;
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b. the implementation of the program
will provide sufficient revenues
to offset all actual O&M costs;
the system will be adopted,
implemented and enforced by all
political jurisdictions within
the service area of the treatment
works. Resolutions, local
ordinances, written statements or
other agreements may be accepted
as evidence of compliance by the
political jurisdictions involved.
Upon review and approval of the user charge system, the
grantee is to be notified in writing of such approval and requested to
submit a certified statement of compliance once the system has been
officially implemented. Payment requests are to be processed as
appropriate.
Re_: 40 CFR 35.905-26,.925-11, .935-13, Appendix B
Program Guidance Memorandum, PG-37, 7/9/74;
PG-38, 7/11/74
5. Industrial Cost Recovery System
Purpose:
The industrial cost recovery system imposed by PL 92-500,
provides a means whereby industrial users of a publicly-owned treatment
works repay the proportionate Federal share of the construction costs
of the treatment works allocated to their use.
Discussion:
The industrial cost recovery (ICR) system provides a
system by which all industrial users of the treatment works will repay,
over a defined period, their portion of the Federal share of construction
costs of the works. These costs are to be recovered by the grantee over
the useful life of the treatment works but not to exceed 30 years. The
grantee is obligated to collect these payments no less often than annually
VI-30
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and to refund 50% of the total amount (plus any interest accrued)
to the U.S. Treasury annually. Of the remaining half of the recovered
funds, 80% (40% of the total) is to be used by the applicant, subject
to the Regional Administrator's approval, for the eligible costs of
expansion or reconstruction of facilities associated with the project.
And 20% (10% of the total) can be used for any purpose except
construction of industrial pretreatment facilities or rebates to
contributing industries. The system is applicable only to the Federal
share of construction costs. No Federal requirement exists for
recovery of the State or local share of costs for treatment of
industrial wastes (although State or local laws may be so enacted).
The Federal share of the cost of construction includes the Steps 1,
2 and 3 grants except the costs associated with I/I analysis and the
cost associated with sewer rehabilitation and nonexcessive I/I if
they are not attributable to industrial users.
ICR assessments are in proportion to the industrial
user's wastewater characteristics. The wastewater characteristics
may include strength, volume, delivery flow rate, and shall be
monitored according to the schedule included in the approved ICR
system. The grantee reviews the ICR system annually and adjusts ICR
payments based on the monitored characteristics. If an industrial
user discontinues use of the treatment works, its ICR payment will
cease.
(NOTE: Certain industrial users may be excluded
from ICR payments. Those are small "dry industries" and, in the
case of a plant expansion, those industrial users which have
reserved and paid for capacity in the existing plant prior to
March 1, 1973 (See ICR Guidelines).
Review Procedures:
The reviewer shall determine that the grantee has met
the following requirements in each milestone point in relation to
grant activity to develop its ICR system:
a. In the application of Step 2 or Step 3
grants:
- an assurance from applicant that he
agrees to require industrial users
to pay that portion of the grant
amount allocable to the treatment
of wastes from such users.
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- signed letters to the applicant
from each significant industrial
users indicating intent to pay its
portion of the grant amount
allocable to the treatment of its
wastes and the period of intended
use of the treatment works.
b. At the 50% level of the Step 3 grant payment:
- the identity of grantee personnel,
consultants, grantees legal
counsel, or certified public
accountants employed or retained
by the grantee to develop the ICR
system;
- a detailed schedule for completion
of all significant portions of the
ICR system (e.g., ordinances,
identification of industrial users,
etc.)
- other evidence to demonstrate that
the grantee has made timely progress
in development of an approved ICR
system.
c. At the 80% level of the Step 3 grant payment:
- a complete questionnaire, in the
form shown in Appendix A of ICR
Guidelines, which describes the
pertinent features of the ICR
system;
- a resolution or written agreement
by the grantee that it will properly
and lawfully implement all the
provisions of its ICR system;
NOTE: See ICR Guidelines for procedures on segmented
and multiple facility projects.
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- an opinion of the grantee's legal
counsel, in the form shown in
Appendix B of ICR Guidelines that
the grantee's ICR system meets
the requirements of Section 204(b)
of the statute, applicable EPA
regulations and ICR Guidelines.
d. At the completion of project or the date of
beneficial use by the first industrial users:
- within 30 days, a notification
in writing from the grantee to
the Regional Administrator of
the date of the implementation
of the approved ICR system.
- proper bookkeeping of financial
records and information relative
to the ICR system for EPA audit
for the duration of the cost
recovery period.
Re: 40 CFR 35.905-6, 7, 8, .925-12, .928, .935-13
ICR Guidelines
6. Operation and Maintenance Program
Purpose:
Federally funded treatment works are to be designed,
operated and maintained to achieve the effluent limitations required in
the NPDES permit. A well planned operation and maintenance program is
an essential step in achieving that objective.
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Discussion:
Surveys conducted in 1973, 1974, and 1975, which are
included in the Clean Water Report to Congress for each of those years,
indicate that approximately one-third of the Federally-funded treatment
plants surveyed were not achieving the level of efficiency for which
they were designed. In most cases, these problems resulted from
inadequate operation and maintenance. To prevent the future occurrence
of these unacceptable conditions, strict attention is to be focused on
operational considerations during facility design and the development
of an effective operation and maintenance program for the completed
treatment facilities.
During the Step 3 activity, the grantee is to implement
a program for efficient staffing, training of staff, and operation
and maintenance of all treatment works facilities. The program must
insure that the facilities are maintained at the designed level of
efficiency to meet the effluent standards as established in the NPDES
permit, and to comply with all other applicable State and Federal
requirements for process control, monitoring and reporting. The
grantee must provide an adequate budget and a trained staff of personnel
to insure the success of the program. The elements of the O&M program
should be those included in a Plan of Operation which also identifies
required actions and related implementation dates needed to assure
proper start-up and continued operation.
A preliminary Plan of Operation should be reviewed
concurrent with the review of project plans and specifications and should
be included as a part of the Step 3 grant application package. The
preliminary plan should be as complete as possible in identifying needed
actions and implementation time frames, but specific dates may, of
necessity, be omitted until a construction start date is known.
A critical responsibility of the applicant is the
preparation of an operation and maintenance manual for each treatment
facility, including pumping stations. No more than 50% of the Federal
share of the Step 3 grant may be paid until the draft operation and
maintenance manual is submitted and no more than 90% of the grant may
be paid unless the grantee has furnished a satisfactory final operation
and maintenance manual.
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Review Procedures:
The review of the operation and maintenance program
submissions included in the Plan of Operation shall assure compliance
with the following requirements:
a. Staffing and training
- that a staffing plan, to include
staffing and salary schedules,
staff structure and organization,
and certification requirements is
developed;*
- that the chief operator is hired
before construction is 50% complete;
- that a preoperation training
schedule is developed within 30
days after hiring chief operator;
- that a discussion of hiring problems
encountered and actions to solve
the problems, if appropriate, is
held 60 days prior to start-up;
- that a list of positions filled
and qualifications of personnel
hired is prepared 30 days prior
to start-up* and assurance is
given that vacancies will be
filled, if appropriate;
- that a continuous training plan
and schedule* is developed 30 days
prior to start-up;
* To be submitted to both State and EPA.
b. Administrative functions
- that program and laboratory facilities
are adequate to perform appropriate
monitoring and analysis necessary to
assure adequate process control and
compliance with the NPDES permit
and State requirements;
VI-35
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that arrangements for submission
of appropriate operational reports
to the State have been made;
adequate consideration has been given
to operational procedures during the
start-up period;
provision is made for employee safety
programs and training is conducted
in advance of plant start-up;
provision is made for developing and
implementing a maintenance management
system;
c. Budget
- provision is made for adequate annual
budget to insure efficient operation
and maintenance, including administra-
tion, supplies, utility charges, and
ancillary equipment;
- provision is made for salaries to
attract qualified personnel and to
train and upgrade employees;
d. Emergency operating plan - in developing
the plan the following items and provisions
should be taken into account:
- effects of emergencies on operation;
- vulnerability analysis of system;
- protective measures;
- emergency response program;
- periodic revision of plan as necessary;
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e. Operation and maintenance manual - the O&M
manual is the primary document required in
the operation and maintenance program, and
should incorporate items a-d above into a
comprehensive package of instructions and
information. Specifically, the manual
should include:
- design information describing the
components and equipment of the
treatment plant, including simplified
schematic diagrams of the facilities,
pipelines and control systems and
detailed diagrams of more complicated
areas;
- process information discussing the
control of various processes to achieve
maximum efficiency, including a clear
explanation of process functions of
the various components in simplified
language with references to appropriate
equipment manuals for detailed technical
information;
- maintenance requirements, including
schedules for routine adjustment and
lubrication of equipment, referencing
appropriate manufacturer's manuals for
details;
- laboratory procedures, specifying
various analyses and monitoring
schedules required for process control
and by the NPDES permit and other
regulations, describing laboratory
equipment and general maintenance, and
referencing appropriate literature for
standard test procedures;
- safety aspects of the various process
units and related equipment and
procedures for complying with the OSHA
requirements;
VI-37
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administrative procedures describing
the various records required and
reports to be submitted as a function
of the State monitoring program;
troubleshooting procedures and a
description of the emergency response
plan, including procedures for
notification of proper authorities,
emergency equipment repair, and
references to the appropriate
equipment manuals for specifications
and limitations of components.
Re: 40 CFR 35.925-10, .935-12
Federal Guidelines, Operation and Maintenance
of Wastewater Treatment Facilities, August 1974
Considerations for Preparation of Operation and
Maintenance Manuals, (GPO No. EP 2.8: OP 2)
Emergency Planning for Municipal Wastewater
Treatment Facilities (GPO No. EP 2.8: W 28/6)
Estimating Laboratory Needs for Municipal
Wastewater Treatment Facilities (GPO No. EP 2.2:
W 28/3)
Start-up of Municipal Wastewater Treatment
Facilities (GPO No. EP 2.8: W 28/5)
Maintenance Management Systems for Municipal
Wastewater Facilities (GPO No. EP 2.8: W 28/4)
Estimating Staffing for Municipal Wastewater
Treatment Facilities (GPO No. EP 2.8: W 28/3)
A Planned Maintenance Management System for
Municipal Wastewater Treatment Plants
(GPO No. EP 1.23/2: 600/2-73-004).
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CHAPTER VII
FINANCIAL CONSIDERATIONS
A. Introduction
B. Allowable and Unallowable Costs
C. Force Account
D. Payments
E. Increases and Decreases
F. Audits
-------
A. INTRODUCTION
This chapter discusses various financial considerations
that are common to all three step grants.
Section B, Allowable and Unallowable Costs, covers problems
faced by the reviewer in dealing with these costs and presents
five major categories of cost statements.
Section C, Force Account, discusses when this method can
be used, prior approvals needed by EPA and other considerations
to serve as guidelines for the reviewer.
Section D, Payments, covers prior costs, Step 1, 2 and 3
grant payment schedules and payments.
Section E, Increases and Decreases, discusses when increases
occur, contingency funds covering these, and what the reviewer
needs for EPA approval.
Section F, Audits, provides the reviewer with pertinent
information to help in answering the questions of grantees and
in working with the auditors.
VII-1
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B. ALLOWABLE AND UNALLOWABLE COSTS
1. General
In the process of reviewing grant payment requests, the
reviewer is confronted with having to make decisions on the
eligibility of certain project costs for which there is no absolute
guidance. Such costs, termed "allowable and unallowable costs,"
have been assembled in paragraph 3 of this Chapter to provide
uniformity in interpreting their eligibility.
In general, for miscellaneous costs to be eligible for
grant participation, they must:
1. Be necessary and reasonable and not a
normal expense of municipal administration.
2. Be authorized (or not prohibited) and be
consistent with Federal, State, and local
laws or regulations.
3. Be consistent with policies and regulations
which are applicable to both federally
assisted and other activities of the unit
of government of which the grantee is a part.
4. Not be included in the costs allocable to
any other federally financed program.
In summary, allowable costs are those for which specific
eligibility has not been statutorily defined and which -- based
upon and EPA policy, appropriate Federal cost principles and
reasonability -- are interpreted as eligible for grant assistance.
Re: 40 CFR 35.940
40 CFR 30.705
VH-2
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2. Allowabillty Determinations
The following pages discuss allowable/unallowable costs.
However, no one document can cover all of the various considerations
that arise. In these instances, the reviewer must make a determina-
tion and, as necessary, seek advice from the Construction Operations
Branch, Municipal Construction Division. Final determinations
concerning the allowability of costs are conclusive unless appealed
within thirty days in accordance with the "Disputes" article
(Article 7) of the EPA General Grant Conditions.
Re: 40 CFR 35.940
3. Allowability/Eligibility of Miscellaneous Costs
The following statements of allowability/eligibility
relating to certain construction grants project costs are included
for the reviewers ready reference:
- Indirect Costs:
Indirect costs are those incurred for a common
or joint purpose, benefiting more than one project
or cost objective and not specifically identifiable
to the particular project or cost objective benefited.
Indirect costs consist of items of a general overhead
nature such as office space, utilities, telephone, etc.
The costs are allowable only if determined on the basis
of a negotiated indirect cost agreement and incorporated
in the grant agreement. See 40 CFR 30.715-2.
- Travel Costs:
Grantee travel costs - allowable travel costs include
travel considered necessary and directly related to the
accomplishment of project objectives. Travel not
directly related to construction and/or "start up" of
the facility, including trips to professional meetings,
symposia, lectures, etc., is not allowable as a direct
charge to the project. Travel not directly related to
a specific project may, however, be recovered under an
Indirect Cost agreement. (Federal Management Circular
(FMC) 74-4, 7-18-74).
VII-3
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Architect/Engineer travel costs - allowable
travel costs include travel considered necessary
and project related, including on-site travel
costs. Costs of relocation of employees and
their families may be considered allowable when
such travel is justified and approved by the
grantee. The cost of transportation between
living quarters and the construction site is
normally unallowable. In unusual circumstances,
where job sites are located in isolated areas
and living quarters are not available within
30 miles, travel costs between living quarters
and the job site are considered allowable.
(41 CFR 1-15.2 and 41 CFR 1-15.4)
- Bond Costs:
All costs under PL 92-500 Grants associated
with the approval, preparation, issuance and
sale of bonds (including bond counsel and
underwriters' fees) are ineligible for grant
participation. Interest on bonds or any other
form of indebtedness is unallowable. (FMC 74-4,
7-18-74)
- Liquidated Damages:
Monies received by grantees in the form of
liquidated damages shall have JTO_ effect on the
determination of allowable costs of grant projects.
However, any additional costs - construction,
engineering, legal, or administrative-generated
because of a contractor's lack of performance
should be covered by the liquidated damages received.
Thus, any such increase in cost as a result of lack
of performance is unallowable for participation
even in the event that the grantee elects not to
exercise his right to recover liquidated damages.
- Bid Bond Forfeiture:
All bid bond forfeitures should be treated as a
reduction to project construction costs.
VII-4
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- Rate Studies:
Such studies are eligible if required for the
establishment of user charge or industrial cost
recovery system in order to comply with Sections
35.925-11 and 12 of the Title II Regulations. Such
studies require prior approval either in the grant
agreement or an amendment thereto. Allowable costs
may include legal, C.P.A., and engineering fees
related to the studies. (In order to avoid double
payment, care must be exercised to assure that such
work is not incident to a general contractual
obligation).
- Financial Reports and Studies:
To the extent that such reports constitute "Rate
Studies" (see above) for user charges and/or
Industrial Cost Recovery procedures, the costs are
allowable; provided that such studies are approved
in advance by the Regional Office and that the
results of such studies are acceptable to EPA.
Financial reports which constitute studies of, for
example, the local tax base, structure, etc., to
determine the financial capabilities of the
applicant or the financial feasibility of the
proposed undertaking are similarly allowable. The
cost of all other financial reports and studies
should generally be considered unallowable in
that they constitute a normal function of government.
In this regard the Regional Office should adhere
to a strict interpretation of the term "studies".
Generally, "studies" refers to preliminary reviews,
overviews, examinations, analyses, etc. The
interpretation must not be extended to include
preparing procedures, designing implementation
schemes, drafting statutes or regulations, delineating
boundaries relating to finances, issuance of bonds,
adjustment of tax rates, establishment of assessment
districts, etc. or other activities which are a normal
function of government and as such are unallowable.
VII-5
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- Establishment of Special Assessment Districts:
The "mechanics" of establishing special assess-
ment districts developed, for example, on the basis
of rate studies (see above), are a normal function
of government and as such the costs associated
therewith are unallowable. Included in this
restriction are legal, administrative and engineering
costs associated with activities such as:
(1) drafting, review and passage of statutes/ordinances,
(2) preparation of regulations, (3) delineation of
district boundaries, (4) elections, etc.
This policy extends equally to the establishment
of any "special districts" such as election, service,
rate, etc. districts (including Regional Authorities)
related to the grant project.
- Public Liaison Services:
Such services are generally unallowable since they
constitute a type of public information service and
as such are not directly related to or necessary for
the construction of the treatment works.
- Assistance with State and Federal Regulations:
The cost of assistance associated with addressing
State and Federal Regulations and procedures which
are basic to the functions of general government,
such as preparation of applications and related
documents, obtaining state construction permits,
discharge permits, etc. are unallowable. Costs
growing out of meeting specific Federal statutory
requirements such as public hearings and other
activities related to the user charge study, facilities
planning, NEPA procedures, Uniform Relocation Assistance
and Real Property Acquisition Policies Act, etc. are
allowable.
If such costs entail assistance which is readily
available through Federal or State offices, such as
interpretation of Regulations, explanations of grant
procedures, etc. they should be disallowed.
VII-6
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(In order to avoid double payment, care must be
exercised to assure that such work is not incident
to a general contractual obligation).
- Redesign/Rep!anning Costs Resulting from Changes
in Federal Requirements:
In those cases in which an applicant's completed
or partially completed planning and/or designs are
rendered invalid or unacceptable by changes in
Federal requirements, both the original cost plus
the redesign or replanning costs are allowable.
The Regional Office must assure itself that the
planning and/or design thus invalidated was under-
taken in good faith by the applicant and was not
the result of a disregard for existing Federal
directives by either the applicant or his agent.
- Costs of Implementing the Uniform Relocation
Assistance and Real Property Acquisition Policies
Act of 1970 (PL 91-64'S]:
Basically there are four categories of costs
associated with this Act which may be considered
allowable:
1. Moving and related expenses
2. Replacement housing
3. Relocation assistance advisory services
(entailing direct services of the grantee
in assisting the displaced person(s)).
4. Acquisition of real property.
Documented allowable costs from these categories
incurred on or after July 1, 1972, will be treated
as other allowable project costs and reimbursed at
the same percentage rate. In the case of costs
resulting from acquisition or displacement occurring
before July 1, 1972, EPA shall pay the full amount
of the first $25,000 of such costs for each displaced
person. Allowable costs should be determined in
accordance with 40 CFR Part 4 and guidelines which
will be issued pursuant thereto.
VII-7
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- Field Surveys to Identify Cultural Resources:
Reasonable costs incident to field surveys to
identify historical, architectural, archaeological
and cultural resources in the primary impact area
of grant projects are allowable. Allowable costs
must be determined on a case-by-case basis and may
include the cost of on-site inspections, review of
pertinent documents, photographic reconnaissance,
services of archaeologists or historians, etc.
Such costs should receive prior approval and
delineation by the EPA Regional Office. Survey
costs associated solely with the examination of
the National Register of Historic Places are
unallowable. EPA may participate in the cost of
intensive surveys (e.g. "digging") only when a
sufficient amount of information exists to
indicate that there is a reasonably high
probability of discovering important cultural
resources.
See Program Guidance Memorandum #52 (7-2-75)
for additional guidance on this subject.
- Industrial Planning:
Step 1 related costs of industrial planning
conducted and paid for by an industry whose wastes
will be treated in a municipal system are not
allowable. (See Section 35.925-15 of the Title
Regulations).
- Facilities Serving Communities and Federal Facilities:
Whenever a planned treatment works will jointly
serve a municipality and a Federal facility, that
portion of the construction cost allocable to the
Federal facility will not be allowable for 75 percent
construction grant funding, subject to the following
exceptions:
1. Facility planning costs.
2. Cost of Step 2 work if a Step 2 grant has
been certified by the State for funding to
EPA prior to the issuance of PG-62 (12-29-75).
VII-8
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Design and construction costs allocable
to Federal facilities producing less
than $250,000 gpd or 5 percent of the
total design flow of waste treatment
works, whichever is less.
That portion of the construction costs allocable
to the Federal facility shall be based on all factors
which significantly influence the cost of the treat-
ment works. Factors such as strength, volume, and
delivery flow rate characteristics will be considered
and included to insure a proportional allocation of
costs to the Federal facility.
As a minimum, the portion of construction cost
allocable to the Federal facility should be based
on the ratio of its flow to the total design flow
of the treatment works. The portion (percentage)
allocable to the Federal facility must be agreed
upon by the municipality and Federal agency, and
approved by EPA prior to award of a Step 2 or Step 3
grant, whichever is applicable, for the works or any
portion thereof. See PG-62 - 12-29-75 for additional
details.
- Site Acquisition vs. Site Preparation Costs:
All costs associated either directly or indirectly
with the acquisition of any land used for or incidental
to the construction of treatment plants, lagoons, force
mains, gravity sewers, outfall lines, appurtenant piping
and structures, and pumping stations whether by purchase,
rental, lease or easement (except as noted above) are
ineligible. Similarly, all legal, realty, engineering,
and grantee costs associated with such ineligible
acquisition are unallowable as are the costs of easements,
rights-of-way, nonconstruction related surveying, plat
preparation, meetings, etc. (NOTE): The cost of land
used as an integral part of the treatment process (such
as spray irrigation sites - see PG-49 - 7-18-75) may be
eligible if approved and in accordance with pertinent
regulations and/or guidelines. Legal, administrative
and engineering costs associated with the acquisition of
grant eligible land are allowable for grant participation.
VII-9
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Costs associated with the preparation of
the treatment works site (including appurtenant
features) before, during, and to the extent agreed
upon in the grant agreement or amendment thereto,
after construction are generally eligible. These
costs include such items as: grade and construc-
tion staking surveys, surveying for alignment and
slope, preparation of working drawings and plans
dealing with site preparation, locations, grades,
slopes, distances, depths, alignments, etc. Also
eligible are costs such as finegrading, seeding,
and protective trees and shrubs.
Costs related to reasonable site screening or
aesthetic purposes are also allowable. Criteria
for participating in aesthetics related work
include: Support expressed in NEPA related studies,
approved facility plans, necessary screening of
adjacent properties, whether the facility is in
constant public view or remote therefrom, etc.
- Certificate as to Title to Project Site:
Legal costs associated with certifying as to the
adequacy of the grantee's interest in the project
site should be considered a normal function of
government incident to the project and as such are
unallowable. (Except in the case of grant eligible
land (see above).
- Acquisition of Privately or Publicly Constructed
Waste Treatment Facilities:
Costs incurred by a grantee or applicant associated
with the purchase, lease or acquisition of privately
or publicly constructed and owned waste treatment
facilities are not allowable.
- Demolition of Existing Structures:
Demolition of existing structures constitutes an
allowable cost provided that the structures are on the
facility site (including rights-of-way for the eligible
sewer lines) and that construction cannot be undertaken
VII-10
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without such demolition. Off site demolition
is unallowable. Aesthetics related demolition
is allowable only if it conforms to the criteria
relating to the allowability of site preparation
outlined above.
If demolition of existing structures is
required on a site not previously owned by the
grantee, the grantee must address such demolition
in the cost effective analysis and demonstrate to
the satisfaction of the Regional Office that in
choosing the site appropriate consideration was
given to the cost of demolition.
- Removal. Relocation and/or. Replacement of
Utilities:
Costs associated with the removal, relocation
and/or replacement of utilities (water, electricity,
etc.) are allowable when such activity is incident
to and necessary for the construction of the eligible
facility. However, participation in the cost of
replacing existing utilities with utilities having
a greater capacity than that originally in place can
only be allowed if mandated by local, State or
Federal codes, ordinances or statutes. If a mandate
for greater capacity does not exist any additional
cost must be borne by the grantee.
The provision of new or increased utility service
when required for the facility (e.g. construction of
a new facility or increased capacity) being constructed
is an allowable cost provided that the grantee (utility
customer) would ordinarily be required to pay for such
installation.
VII-11
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- Restoration of Streets and Rights-of-Way:
The cost of restoring streets and/or rights-
of-way to their original condition is an allowable
cost. The need for such restoration must result
directly from the construction of the eligible
project. Allowable restoration may include, for
example: refilling and patching of street and road-
way surfaces (generally limited to the width of the
trench), fine grading and reseeding of off-street
rights-of-way, reasonable tree plantings, restoration
of sidewalks, etc.
- Mobile Equipment:
Generally, such equipment is allowable if identified
by the grantee and approved in advance of purchase by
the Regional Office and is directly necessary for the
operation and/or maintenance of the overall wastewater
treatment facility. Such equipment must be necessary
for the transmission of wastewater or sludge or for
the maintenance of plant grounds and/or equipment.
Allowable items include but are not limited to:
a. Portable stand-by generators.
b. Large portable emergency pumps to
provide "pump-around" capability in
the event of pump station failure or
pipeline breaks.
c. Sludge tanks and trailers and other
necessary transport and handling
equipment in those cases where the
location of the ultimate sludge
disposal site requires such equipment.
d. Grounds and building maintenance
apparatus. Such apparatus may include,
for example: mowers and snow removal
equipment (in certain geographic areas).
Regional Offices may use such criteria
as cost effectiveness, potential for
abuse, frequency of use, etc. in
considering allowability. Requests for
participation based upon less than 100
percent use, should be agreed to only
in special situations and prorated accordingly.
VII-12
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e. Cars and trucks are unallowable, except
for specialized sludge handling/transport
equipment as noted in "c" above.
NOTE: The grantee is required to maintain property
accountability on all such equipment in accordance
with FMC 74-7 and 40 CFR 30.810.
- Office Equipment and Furnishings:
Such items as identified by the grantee and
approved in advance by the Regional Office, when
installed or located at the treatment works and
necessary to the administrative and/or technical
(including training and meetings) functioning of
the works, may be allowable. In larger facilities
allowability may be extended to reasonable special
purpose rooms and equipment related to the function
of the facility. There may well be instances in
which the Regional Office will need to exercise
judgement as in the case of "luxurious furnishings",
televisions, etc.
NOTE: The grantee is required to maintain property
accountability on all such equipment in accordance
with FMC 74-7 and 40 CFR 30.810.
- Shop Furnishings:
Reasonable furnishings for shop areas such as
shelves, bins, work benches, etc. are allowable costs.
NOTE: The grantee is required to maintain property
accountability on all such equipment in accordance
with FMC 74-7 and 40 CFR 30.810.
- Laboratory Equipment and Supplies:
Generally, laboratory items identified by the
grantee and approved prior to procurement by the
Regional Office as necessary to conduct tests as may
be required for plant operation are allowable. In
addition, the cost of a reasonable inventory of
chemicals and supplies necessary to start operation
of the plant is allowable. Large stocks of expendable
materials are, however not allowable. An EPA
publication "Estimating Laboratory Needs for Municipal
Wastewater Treatment Facilities" discusses equipment
needed for various size plants.
VII-13
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NOTE: The grantee is required to maintain property
accountability on all such equipment in accordance
with FMC 74-7 and 40 CFR 30.810.
- Safety Equipment:
Based upon the specific needs of individual
facilities, necessary and reasonable safety equip-
ment is an allowable cost. Generally such equipment
should be delineated in the operation and maintenance
manual and the approval of that document may constitute
the basis for our participation.
NOTE: Such equipment should meet applicable Federal,
State, local, and industry safety regulations and
standards. The grantee is required to maintain
property accountability on all such equipment in
accordance with, FMC 74-7 and 40 CFR 30.810.
- Tools:
Allowable tools are only those which are specified
as special purpose tools necessary for the repair and
adjustment of specific process components by the
equipment supplier(s)/manufacturer(s) or approved by
the Regional Office. All other tools are unallowable.
NOTE: The grantee is required to maintain property
accountability on all such equipment in accordance
with FMC 74-7 and 40 CFR 30.810.
- Replacement Parts:
Replacement parts identified and approved in advance
by the Regional Office as necessary to assure uninterrupted
operation of the facility may be included as allowable costs.
Allowable replacement items are only those which constitute
critical parts of major systems components and 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) are critical but not
included in the inventory provided by the equipment supplier(s),
In those instances where adequate "back-up" components are
built into the system a reduction in replacement parts should
be made.
VII-14
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Items of routine "programmed" maintenance such as
ordinary piping, air filters, couplings, hose, bolts,
etc. are unallowable. See EPA Technical Bulletin:
"Design Criteria for Mechanical, Electric and Fluid
System and Component Reliability" for additional
discussion.
- Collection System Maintenance Equipment:
EPA participation in the cost of such equipment
purchased in connection with a construction grant
shall be based upon a proration of the portion of
the collection system in which we participate to
the total system. Thus if EPA participates in 65
percent of the grantee's total collection system,
the allowable costs shall constitute 65 percent
of the cost of such equipment purchased pursuant
to the grant agreement. Generally, the proration
should be based upon the relative lengths of the
new to the total system rather than cost or size.
Such equipment must be reasonable and be approved
by the Regional Office.
In addition allowability will be based upon:
(1) a demonstrable frequency of need, and (2)
the equipment must be necessary to preclude the
discharge or by-passing of raw sewage, and/or
(3) the equipment is necessary to provide for
the health, safety and welfare of the citizens.
- Project Inspection:
Costs associated with technical inspections of the
eligible project before and during construction
(including change order approved time extensions) are
allowable. Such costs must be clearly documented and,
to avoid double payment, the work must not be incident
to a general contractual obligation.
- Groundwater Monitoring Facilities:
Costs associated with the construction of ground-
water monitoring equipment and facilities may be
considered allowable only in those cases in which,
as a direct result of project construction, the
possibility of groundwater deterioration, depletion
or modification exists. Allowability may not be
extended to the operation, surveillance and/or
analyses associated with these facilities.
VII-15
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Such facilities require the prior approval of
the Regional Office.
- Biological "Seeding":
Under certain conditions (climatic, geographic,
nature of wastes, etc.) reasonable costs associated
with the purchase and/or transportation of biological
seeding materials required for initiating (or
expiditing the initiation of) the treatment process
operation are allowable.
- Services Charges: I/
Service charges are defined as: any supplemental
charges added to other direct cost (non-salary) which
are claimed on an actual cost basis.
Regardless of contract terms, the actual cost of
service charges must be supported by accounting records.
If the service charges are not supported or if the
actual cost is less than the amount claimed, the total
difference is unallowable for Federal participation.
This is in accordance with the ASCE manual which states
that the service charge is for expenses to be reimbursed
by the client.
- Fringe Benefits: $J
Regardless of contract terms, the actual cost of
fringe benefits must be supported by accounting records
when they are claimed as a direct charge. If the
charges are not supported or if the actual cost is less
than the amount claimed, the total or the difference is
unallowable for Federal participation. Where the fringe
benefits are claimed as a direct charge and also included
in the multiplier the duplicate direct charge is
unallowable for Federal participation.
VII-16
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- Labor Charges and Related Costs:
-------
(Blank page for inclusion of additional cost
items -- the allowability/unallowability of
which will be determined at a later date.)
VII-18
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(Blank page for inclusion of additional cost
items — the allowability/unallowability of
which will be determined at a later date.)
VII-19
-------
(Blank page for inclusion of additional cost
items — the allowability/unallowability of
which will be determined at a later date.)
VII-20
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(Blank page for inclusion of additional cost
items -- the allowability/unallowability of
which will be determined at a later date.)
VII-21
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(Blank page for inclusion of additional cost
items -- the allowability/unallowability of
which will be determined at a later date.)
VII-22
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C. FORCE ACCOUNT
1. General
In most instances a grantee contracts with engineering or
construction firms to perform project related work. The program,
however, permits use of the "force account" method wherein the
grantees use their own employees, material, and equipment to perform
all or part of the project work.
The use of force account is permitted for any Step 1, 2
or 3 grant work provided that prior written approval is obtained from
the Regional Administrator. Such appro-val is based on the grantee's
demonstrating that:
a. he possesses the necessary competence
required to accomplish such work;
b. the work can be accomplished more
economically by use of such method;
c. emergency circumstances dictate its use.
In order to avoid problems with the force account method
and to assist grantees who will be using force account, the reviewer
must be familiar with those items needing prior approval. The
reviewer must determine in advance that adequate procedures, records,
and controls will be used by the grantee.
VII-23
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2. EPA Prior Approvals
A grantee must obtain prior written approval from EPA to
use force account labor in lieu of subagreements for any Step 1 or
Step 2 work in excess of $10,000.00 or any Step 3 work in excess of
$25,000.00
The following items should be considered by the reviewer
in considering approval of force account:
a. all anticipated project administrative costs,
including salaries of administrative employees,
travel expenses, etc., in order to determine the
extent of their allowability;
b. proposed methods of timekeeping and timechecking,
methods for establishment of wage scales for
laborers and mechanics and methods for establish-
ment of salaries of supervisory employees (sample
time sheets, proposed wage rates and an explanation
of the methods for determining those rates and
other information necessary to comply with this
item should be submitted as soon as possible);
c. an indirect cost figure that is going to be used
as part of the costs billed to the project (this
must be a formal written agreement with EPA);
d. allowances for use, repair and overhaul of grantee
owned equipment and rental rates for rental
equipment, including when rental rates begin,
apply and end, and the extent of allowability of
repairs and overhaul (precise usage records for
such equipment must be maintained);
e. the writeoff or depreciation of small tools and
other expendable items or equipment;
f. any disposal and adjustment of costs in connection
with unused material and tools left over on completion
of the work.
VII-24
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3. Other Considerations
The following considerations provide additional guide-
lines for the reviewer in the force account area:
a. adequate cost accounting records must be
maintained;
satisfactory controls must be established
and used to assure that all material, supplies,
equipment, labor cost, etc. charged to the
project are actually used in connection with
the project;
c. the Copeland Antikickback Regulations apply
(see Appendix C-2 of 40 CFR part 35);
adequate insurance must be maintained. This
insurance is the same as that discussed in
40 CFR 35.935-3 covering such construction
insurance as is customary and appropriate
including fire and extended coverage, workmen's
compensation, public liability and property
damage and "all risk" as required by local or
State law.
Re_: 40 CFR 30.645, .810
40 CFR 35.935-2(a), .936-14
Program Guidance Memorandum, PG-34 5/7/74
D. PAYMENTS
1. General
It is the policy of EPA to process payment requests and
to make periodic progress payments as expeditiously as possible.
Payments are to be made in accordance with the approved payment schedule
set forth in the grant agreement.
VII-25
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Re: 40 CFR 35.937-16, .938-6, .945
Program Guidance Memorandum, PG-43, 11/18/74
2. Prior Costs
After June 30, 1975, no Step 1 project work may be
initiated without a grant award unless the State (based on the review
and approval of a plan of study) has requested the Regional
Administrator to reserve grant funds. After June 30, 1975, Step 2
work initiated without first having received a grant from EPA is not
eligible for grant participation.
Occassionally grant applications will be received for
projects in which prior costs have been incurred. These must be
handled on a project by project basis and be in accordance with the
regulatory date limitations as described in 40 CFR 35.925-18.
In considering prior costs the reviewer should bear in
mind that:
- those costs incurred prior to the initiation
of construction of the project must be claimed
prior to the grant award or no payment may be
made for those costs;
- they should be supported by documents identifying
dates and the nature of the work performed;
- they should be examined in light of the allowable/
unallowable cost statements in "Section B" of this
chapter.
Re: 40 CFR 35.945(a)
VII-26
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3. Schedules
Schedules for the completion of any of the three grants
steps are contained in the grant agreement/amendment. The work
schedule is generally discussed with the applicant prior to the
grant application and should reflect realistic targets. However,
the reviewer has the responsibility for final approval of the
schedule, including payments. Once the grant payment schedule has
been approved and incorporated into the grant agreement/amendment,
the grantee may request grant payment for work which has been
completed. If completed work and the resulting payment requests
occur prior to dates set forth in the approved schedule, the
schedule may be revised by preparing a new grant agreement/amendment.
Considerable flexibility may be exercised in setting up the
schedules and the documentation required.
Any time that a progress schedule is revised, the Municipal
Permits Office of EPA should be notified.
a. Step 1 and Step 2 - Periodic progress payments
for Step 1 and 2 work are to be made on the
basis of completion of the step or completion
of specific tasks within the step grant as
contained in the grant agreement. Every
effort should be made to divide the scheduling
into tasks, but where this is not possible or
practical, the grantee should submit a
certified statement as to percentage of
completion of the work on a periodic basis.
b. Step 3 - Step 3 payment schedules should
realistically reflect the likely construction
progress. For example, early equipment
purchases and seasonal weather conditions
may require large grant payments for certain
months. If the monthly requests exceed those
on the schedule, the grant must be amended.
Payment schedules should be structured so as
to preclude any need for frequent changes.
VII-27
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4. Interim Payments
Problems with both payment requests and payments can
be minimized if, at the time of the grant award, the payment request
procedure is discussed with the grantee. Each region has specific
internal procedures for handling requests and processing payments
so the reviewer must be familiar with these. Payments generally
follow the following sequence:
- the grantee submits EPA Form 2550-16
(Outlay Report and Request for
Reimbursement for Construction Programs);
- the grantee provides necessary documenta-
tion to support the request;
- the reviewer approves the request;
- the Regional Fiscal Office is instructed
to make payment.
a. Payment Requests Review
It is the responsibility of the construction grants
reviewer to monitor the progress of the project. One means of doing
this is by periodically reviewing payment requests and supporting
documents. The frequency of the periodic reviews will depend on the
size and complexity of the particular project. In instances where a
monthly payment schedule has been established, the reviewer need not
perform a detailed check of the request and supporting documents
each month. If a problem is discovered later when checking the
supporting documents, it can be resolved on a subsequent payment.
Judgement will be required to avoid unnecessary delays.
VII-28
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b. Documentation
The following are some examples of task documentation
for Step 1 and 2 projects:
- a grantee certified percentage of work
complete—preferably divided into tasks
(e.g. Step 2: 35% completion of design
criteria; 60% completion of preliminary
draft P & S; 90% completion of final
draft plans);
- working drafts completed for specific
tasks and which have been received in
the Regional Office or are held by the
grantee;
The following are some examples of documentation
for Step 3 projects:
the engineer's latest monthly estimate
of work in place;
invoices accompanying claims for work
completed;
equipment invoices accompanying claims
for purchases.
c. Grant Conditions
The reviewer is reminded to check the grant agreement/
amendment and any subsequent amendments for any special grant
conditions prior to approving payment requests. An example of this
would be the limit on the percentage of the Federal share that may
be paid prior to the submission of O&M manual. UC/ICR systems, etc.
(Chapter VI, F, 5).
VII-29
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5. Final Payments
The final payment is made to the grantee after the final
inspection is made by EPA, and after the "final payment request" is
submitted by the grantee and the grantee has been found to have
complied with all applicable requirements of the regulations and the
grant agreement. Prior to the final payment, the grantee must
execute and deliver an assignment,to the United States, in form and
substance satisfactory to the Regional Counsel,of the Federal share
of refunds, rebates, credits or other amounts (including any interest
thereon) properly allocable to costs for which the grantee has been
paid by the Government under the grant. The grantee must also
execute and submit a release discharging 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 such exceptions which may be specified in the release.
Re: 40 CFR 35.945(e)
6. Refunds, Rebates, Credits, etc.
The Federal share of any refunds, rebates, credits, or
other amounts (including any interest on them) that has accrued to
or been received by the grantee in relation to the project, to the
extent that they 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. If the Regional Administrator
approves, the grantee may be allowed, reasonable expenses incurred in
securing these refunds, rebates, credits or other amounts under the
grant.
Re: 40 CFR 35.945(c) and (d)
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E. INCREASES AND DECREASES
1. Increases
Grant increases most commonly occur because of cost
overruns occuring after the receipt of bids, cost of major change
orders, or cost of a sewer system survey. As soon as the grantee
sees that costs are going to be substantially more than that upon
which the grant is based, the grantee must notify the State and EPA
and give an estimate of the amounts involved. EPA will not increase
a grant until the State has approved an increase from its available
allotment.
In order to make a determination on the increase, the
reviewer must:
have a written justification for the increase
from the grantee;
- have an approval letter from the State;
determine that the increase in cost is
eligible for grant participation;
determine that funds for the increased grant
are available in the State's allotment.
2. Increase Notification Procedure
Upon approval of an increase in the grant, the following
procedures must be carried out: (Detailed explanations of each step
can be found in Chapter IV, F.)
a grant amendment must be prepared (EPA Form
5700-20); (if the increase in the grant
amount is over $10,000, the grant amendment
is not sent to the grantee until five working
days after signing by the Regional Administrator
to allow for Congressional notification);
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the grant amendment information must be
entered into GICS;
Standard Form 240 must be prepared for
clearinghouse notification;
Notification of Grant Award Action, EPA
Form 5700-1B, must be prepared and
transmitted to Headquarters.
3. Decreases
Grant decreases most commonly occur when the bids received
are less than the estimated construction costs contained in the
Step 3 grant application. In most instances, a request for a decrease
is not made by the grantee, but action is initiated by EPA after the
review of the bid material. The grant is reduced as necessary but
the new project cost continues a contingency allowance (generally
between three and five percent of construction costs).
4. Decrease Notification Procedure
For a grant decrease, the following procedures must be
followed:
if EPA has initiated the decrease, the State
is to be notified of the decrease and the
State allotment is to be adjusted accordingly;
a revised grant agreement/amendment must be
prepared (EPA Form 5700-20);
a revised grant amount must be entered into
GICS;
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Standard Form 240 must be prepared for
clearinghouse notification;
Notification of Grant Decrease Action,
EPA Form 5700-1D, must be completed and
transmitted to Headquarters.
F. AUDITS
1. General
By signing the grant agreement/amendment for a Step 1, 2
or 3 project, the grantee agrees that its books, documents, records,
and papers, and those of its contractors, are accessable to the EPA
Regional Administrator, the Comptroller General of the United States,
or their authorized representatives. The EPA Office of Audit is
responsible for audits of all Step 1, 2 and 3 grants. For Step 3
grants, however, it is the general rule that only those projects
having grants over $250,000 will be audited unless there is some
indication of irregularities.
Re_: 40 CFR 35.935-7
2. Objective
The objective of audits of construction grants projects is;
a. to determine whether the management controls
exercised by the grantee through its manage-
ment system, accounting system, procurement
system, and property control system are adequate
to assure that costs claimed/incurred are
reasonable, allowable, and allocable to the
project under the grant terms and conditions,
Federal Management Circulars, and applicable
EPA regulations;
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b. to identify any non-compliance with
applicable grant provisions or EPA rules
and regulations and to provide recommenda-
tions for improvement.
3. Types of Audits
There are two types of audits, interim and final
Interim audits are performed during the
earlier part of a project to review internal
accounting controls, procurement systems,
design and construction controls, and costs
incurred.
Final audits are performed after completion
of the project to review the grantee's records
to assure that costs claimed are reasonable,
allocable, and allowable and that the grantee
has met the grant objectives.
4. Criteria for Choosing Projects
All Step 1, 2 or 3 projects are not audited. For Step 3
projects, it is the general rule that only those with grants over
$250,000 will be audited unless there is some indication of
irregularities. Also, the intensity of the audit will vary from
project to project depending on its complexity and the problems
encountered.
The EPA Office of Audit utilizes relevant reports,
construction grant file information, the results of sampling tests
and the following criteria to select projects for audit:
a. size of the grants/projects
b. existence of unit-price contracts
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c. type of contracts and subcontracts
d. the number and significance of change
orders
e. experience with prior grantee's project
audits
f. identification of deficiencies
The EPA grant reviewer will be called upon to supply the
auditors with the following information to assist in determining
the scope, schedule, resource plans and estimates of audit efforts:
a. grant number
b. grantee name, address and phone
c. eligible project cost
d. grant amount
e. number and dollar value of change orders
f. number, amount and type of construction
and engineering agreements
g. extent of force account work
h. cut off date
i. whether construction is located in a
flood hazard area requiring the grantee
to purchase flood insurance
j. NPDES Permit.
5. Major Activity Areas for Audit Focus
The major activity areas that are addressed during the
audits include the grantee's accounting, procurement and project
management practices. Both interim and final audits will include
the audit of costs associated with these activities.
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a. Accounting Practices - the grantee's
accounting system should include the
following:
1) accounting records
2) supporting documents
3) traceability
4) segregation of costs (eligible/
ineligible; allowable/unallowable;
direct/indirect)
5) internal control
6) accounting reports.
Procurement Practices - the grantee is
responsible for demonstrating that
engineering and construction contracts
were awarded in compliance with the
regulations.
Project Management Practices - the project
management approach applied by the grantee
is significant to his ultimate ability to
control costs and schedules.
6. Final Report
The final audit report issued by the Office of Audit is an
advisory report only and any action such as recovery of funds is the
responsibility of the Regional Administrator.
Once the audit review is completed, the process of issuing
a final report is flexible, depending on the complexity or seriousness
of any deficiencies noted in relation to the project. In general, the
following procedures will be followed:
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a. the rough draft report will be presented
to the grantee. The grantee and its
subcontractors have two weeks to answer
any questions raised in the draft;
the Office of Audit will incorporate the
grantee's answers into the report and present
this report to the Regional Construction
Grants Branch Chief. The Branch Chief and
Project Officer will meet with the auditor
to resolve any issues raised in the report
in order to reach concurrence;
c. an exit interview will be held by the
auditors with the grantee to discuss the
findings in the final report;
d. the final report will be presented to the
Regional Construction Grants Branch Chief
who will recommend necessary action to
the Regional Administrator.
The key to this entire process is flexibility because at any
one point the auditor may want to meet with the Project Office to
discuss findings and resolve issues. The reviewer will generally be
involved in the discussions to resolve issues after the grantee has
responded to the rough draft. It is the Project Officer's responsibility
to determine whether exceptions and claims in the report are justified.
The final report will contain a statement of concurrence
between the Regional Administrator and the Office of Audit. A final
report may be issued, however, even if both parties do not concur.
There may be circumstances where the Regional Administrator chooses to
withhold comment pending further investigation. This is usually done
to protect the Agency in cases where future litigation may be involved.
Final resolution rests with the Regional Administrator.
Re_: "Audit Guide for Construction Grant Program"
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APPENDIX A
FLOW DIAGRAM FOR PROCESSING CONSTRUCTION GRANTS
U S, Environmental Protection Agency
~ ^ion 5, Library (5PL-16)
. .1 S. Dearborn Street, Room 1679
. IL 60604
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