" United States -Vv Off ice of Water January 1981
Environmental Protection ^* Program Operations (WH-547)
Agency Washington DC 20460
flCD 02,11
Water
&EPA Program BequirementsENVmo,MENTAt
Memoranda for "&"
Fiscal Year 1981
Municipal Wastewater
Treatment Works
Construction Grants Program
J
7~
MCD-02.11
-------
-------
MCD0211
Municipal Wastewater Treatment Works
Construction Grants Program
PROGRAM REQUIREMENTS MEMORANDA
Table of Contents
PRM 75-6 Adequacy of Treatment Certification 11/8/73
PRM 75-11 Approval of Reimbursement Projects Not Previously 4/17/74
Serviced by EPA
PRM 75-13 Management of Construction Grants Funds 4/19/74
PRM 75-14 Grant Funds and Project Segmenting 5/10/74
PRM 75-17 Construction of Pretreatment or Treatment Facilities 6/5/74
for Municipal Utilities
PRM 75-18 Eligibility of Wastewater Treatment Facilities at 9/17/74
Municipally Owned Water Treatment Works for
Construction Grants
PRM 75-24 Large City Problem in State Priority Lists 1/8/75
PRM 75-25 Eligibility of Land Acquisition Costs for Land
Treatment Processes **
PRM 75-29 EPA Procedures in Initiating Debarment Actions 8/5/75
Against Grantee Contractors
PRM 75-30 Cost Control 9/8/75
PRM 75-35 Allowable Costs for Construction of Treatment Works 12/29/75
that Jointly Serve Municipalities and Federal
Facilities
PRM 75-36 Value Engineering in the EPA Construction Grants Program 1/20/76
PRM 75-37 User Charge System: Plan and Schedule 3/17/76
PRM 75-39 .Eligibility of Land Acquisition Costs for the Ultimate 4/2/76
Disposal of Residues from Wastewater Treatment Processes
PRM 76-5 Flood Insurance Requirements 8/16/76
PRM 77-1 Treatment Works for Recreational Parks, Industrial 11/23/76,
Parks and Institutions
=.
PRM 77-2 Grant Eligibility of Start-up Services [ 11/29/76
•t *
PRM 77-3 Plan of Operation for Municipal Wastewater Treatment 11/29/76
Facilities 1
-------
-2-
PRM 77-5 Grant Eligibility of Land Acquisition by Leaseholds 12/15/76
or Easements for Use in Land Treatment and Ultimate
Disposal of Residues
PRM 77-9 Reallotment of Recovered Funds 8/5/77
PRM 78-1 Erosion and Sediment Control in the Construction 12/29/77
Grants Program (as relates to Step 1 and Step 2 grants)
PRM 78-4 Grant Eligibility of Land Acquired for Storage in 2/17/78
Land Treatment Systems
PRM 78-8 Rejection of All Bids: Guidance for EPA Concurrence 2/13/78
Function
PRM 78-11 Toxicity of Chemical Grouts for Sewer Rehabilitation 5/11/78
PRM 78-12 Preconstruction Lag Management 6/12/78
PRM 79-1 Safety Requirements for the Design and Operation of
Chlorination Facilities Using Gaseous Chlorine
PRM 79-2 Royalties for Use of or for Rights in Patents
PRM 79-5 Construction Incentive Program
PRM 79-7 Grant Funding of Projects Requiring Treatment More
Stringent than Secondary
PRM 79-9 Outlay Management in the Construction Grants Program
PRM 79-10 Qualification of Major Items of Equipment
PRM 79-11 Funding of Waste Load Allocations and Water Quality
Analyses for POTW Decisions
10/23/78
11/13/78
12/28/78
3/9/79
5/11/79
7/12/79
9/5/79
PRM 80-2 Step 2 and Step 3 Architect/Engineer Level of Effort 12/20/79
Study
PRM 80-3 Management Reforms to Reduce the Time Interval Between 5/30/80
Step 3 Grant Award and Initiation of Construction
(Property Acquisition, Local Share Funding, Service
Agreements and Cultural Resource Investigations)
PRM 80-4 Implementation of Women's Business Enterprise Support 7/18/80
Program
PRM 80-5 Buy American 7/9/80
-------
-3-
PRM 80-7 Grant Eligibility of Minority Business Enterprise 8/29/80
and Women's Business Enterprise Liaison Services
PRM 81-1 Issuance of Program Requirements Memorandum 1/7/81
PRM 81-2 Discount Rate 11/19/80
-------
m
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
November 8, 1973
PROGRAM REQUIREMENTS MEMORANDUM PRM 75-6
PROGRAM GUIDANCE MEMORANDUM
NO. PG-20
TQ: All Regional Administrator
Attn: Director, Air and Water Programs Division
FROM: Harold P. CahilT I, Jr.
Director, Municipal Waste Water Systems Division
SUBJECT: Adequacy of Treatment Certification
All EDA and HUD assisted projects must conform to the minimum
treatment requirements required for EPA construction grant projects. .
On EDA and HUD projects that are presently served by primary treatment
only, adequacy of treatment certification may be issued provided that
the municipality obtains a NPDES Municipal permit, or an identification
of permit discharge cpnditipns, in accprdance with Secttpn 402 of the
Act. The permit must cpntain a firm schedule fpr meeting the treatment
requirements of Section 301(.hlO 1(B). and (CL
This supersedes Program Memoranda Np. 72-7 and No, 72-9,
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
SUBJECT: Approval of Reimbursement Projects Not
Previously Serviced by EPA
FROM:
TO:
DATE:
1 7 1974
John T. Rhett
Deputy Assistant Administrate/ Tor Water Opera{ion\ (AW-446)
PROGRAM REQUIREMENTS MEMORANDUM PRM 75-
Regional Administrators " Program Guidance Memorandum
ATTN: Air and Water Program Directors PG-30
This is in response to a need for more specific guidelines required
to properly review and process applications for reimbursement under
Section 206 which were not previously serviced by EPA. The Office of
General Counsel has provided us with an opinion regarding the legal
issues involved and the mandatory requirements which applicants must
meet. It is attached for your information and should be reviewed before
undertaking action on the "woodwork" projects.
So that the review can be conducted using itemized specific require-
ments, we are supplementing the legal opinion with a checklist of
applicable provisions. These provisions represent minimum compliance
requirements to be met by the previously unserviced projects prior to
approval for award.
Initially it is necessary that certain actions on each of the
projects be fulfilled by the State. They are as follows:
1. Provide a copy of the State Permit, or provide
certification that the project was designed and
built in accordance with regulations and
requirements of the State Agency.
2. Certify that the facility, upon completion, was
operated consistent with State requirements. (If
the facility is not currently being operated, an
explanation of the mitigating circumstances must
be provided.)
3. Provide a statement to the effect that the project
was constructed for benefit of public at large.
The statement must address the public benefits
derived by project construction; the relation of
the ultimate cost of constructing and maintaining
the works to the public interest; and the public
necessity of the treatment works.
EPA femi IJJO-4 (fev. &.71)
-------
Upon receipt of the above, the remainder of the review will be
based on information submitted by the applicant. Since it is likely
that all of the needed items of data will rfot be on hand with the
applicant's original application, it will be necessary to request
them in writing. In that letter, it is important to remind the
applicant of the fact that eligibility for reimbursement is limited
solely to treatment works as defined in Section 8 of the Federal Water
Pollution Control Act prior to the October 18, 1972 Amendments thereto,
i.e., sewage treatment plants including additions, modifications,
alterations, etc., and appurtenant intercepting and outfall sewers,
force mains and pump stations. Collection sewers, etc., are not
eligible for reimbursement grant consideration.
In addition to the fact that the municipality's application must
have been on file in the regional office by January 31, 1974, with the
elements of data required in the published regulations, the following
items are also needed to determine its eligibility.
1. Certification that standard procurement procedures
were followed—with all contracts awarded to the
lowest responsive bidder(s); and that proof of
advertising, bid tabs, etc., will be available
upon audit. Certification that all costs applied
for have been paid and that evidence of such
payment will be available upon audit.
2. Certification that the contractors paid the same
general level of wages to their employees as was
paid to those similarly situated at the time.
3. A resolution from the applicant's governing body
authorizing a representative, by name and title,
to execute and file all documents regarding the
project.
4. Evidence that the project was approved by the
appropriate planning agency. (Applicable to
projects applying for the 10% planning bonus.)
5. A true copy of each executed contract document.
6. One copy each of the approved final construction
estimate and bills submitted to the municipality
for engineering services rendered. Requests for
grant assistance for legal costs, bond costs,
administrative costs, etc., should be discouraged.
-------
However, where applicant desires such grant
support, bills pertaining to such costs must
be furnished. If the construction estimate
does not include signatures of the consulting
engineer, the contractor, and the municipality,
appropriate documentation substantiating the
concurrence of the three parties should
accompany the construction estimate.
7. Compliance Report Form (158-R0034); EPA Form No.
4700-4--to indicate noneliscrimination.
8. In addition, the grantee must be notified that,
should his project be otherwise approved for
reimbursement, in accepting the grant he must
also accept the condition to acquire and maintain
flood insurance where applicable and available.
(See page 11 for language of condition.)
9. If project is still under construction, it will
be necessary to assure compliance with the
additional requirements of the General Counsel
memorandum:
a. Relocation Assistance - Page 8
b. E.O. 11246 (equal employment opportunity)-
page 9
c. Cope!and Act; for contracts and subcontracts
awarded subsequent to the date of the
reimbursement grant award. Pages 11 & 12
This memorandum has been concurred in by the EPA Office of Audit.
Attachment
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
TO:
PATE: March 28, 1974
SUBJECT: Federal Requirements Applicable to the
Award of Grant Assistance under
Sec. 206 of the 1972 FWPCA Amendments (33 U^.C. 1286).
FROM: Joseph M. Zorc
Assistant General Counsel, Grants (EG-334)
John T. Rhett
Deputy Assistant Administrator
for Water Program Operations (AW-446)
Section 206(a) of the 1972 FWPCA Amendments
(33 U.S.C. 1286.), as amended on December 28, 1973 by
Public Law 93-207 (87 Stat. 906) authorizes reimbursement
grants for what may be analyzed as two categories of
projects. In the first category are projects previously
awarded grant assistance under the former FWPCA, and
thereby received previously-required Federal approval,
and projects which, while not awarded grant assistance
under the former FWPCA, nevertheless*were submitted for
Federal approval, in order to assure compliance with
applicable Federal requirements and to better assure future
eligibility for Federal reimbursement; in both cases, projects
were reviewed to determine compliance with then-applicable
Federal requirements. In the second category are projects
which have received no grant assistance under the former
FWPCA and were not submitted for review with respect to
Federal requirements prior to application for assistance
under Sec. 206 of the 1972 FWPCA Amendments.
You have requested us to advise you as to the Federal
statutory requirements applicable to the award of assistance
to these projects, particularly with reference to the second
category mentioned above and the requirement of Sec. 206
that the project must be determined to meet "the requirements
of section 8 of this Act in effect at the time of the initia-
tion of construction." We are herewith furnishing our
analysis of what we believe to be the applicable Federal
requirements as follows: (1) the requirements of Section 8
of the former FWPCA; (2) other requirements of the 1972 FWPCA
Amendments; and (3) other Federal requirements.
(A) Requirements of Section 8
Section 206(a) authorizes reimbursement assistance for
each project
EPA Form 1320-6 (R.v. 6-72)
-------
". . .on which construction was initiated
after June 30, 1966, but before July 1, 1972,
which was approved by the appropriate State
water pollution control agency and which the
Administrator finds meets the requirements of
section 8 of this Act in effect at the time of
the initiation of construction . . . ."
For your convenient reference, there is reproduced as an
attachment to this memorandum, those statutory provisions
which were in effect after June 30, 1966, and before July 1,
1972, except for the several technical amendments which
extended the authorization provision of section 8(d) beyond
June 30, 1971, pending enactment of the 1972 FWPCA Amendments
(P.L. 92-500).
In summary, we have found that there are no differences
during this period in the substantive provisions of Section 8
which are relevant to Sec. 206 project review. These require-
ments are discussed in some detail below.
We have also noted, at p. 33 of the Senate Report which
accompanied S. 2770 (S. Rep. 92-414, 92d Cong., 1st Sess.)
the statement of intent that EPA must determine that each
project for which assistance is requested under Sec. 206
"... was designed and constructed in accordance with the
requirements of the Act, and regulations thereunder, in effect
at the time that construction was initiated."(emphasis added).
We believe that the prior regulations are applicable, to the
extent that they reflect an interpretation of statutory require-
ments which are otherwise applicable for the purposes of Sec.
206 review. We do not believe that additional administrative
requirements set forth in prior regulations must be made appli-
cable — for example, -the industrial cost recovery requirement
that related to the non-Federal share of project costs, which
was published at 35 F.R. 10757 on July 2, 1970, and codified
at 18 CFR §601.34 (January 1, 1971 ed.). Inasmuch as the
Section 8 regulations published on June 9, 1972, at 37 F.R.
11650, and codified at 40 CFR §§35.800 et seq. (July 1, 1973
ed.) constituted principally a recodificatxon of the Sec. 8
regulations occasioned by the transfer of the regulations from
Title 18 to Title 40 of the Code of Federal Regulations, we
would suggest that these regulations be utilized to the extent
relevant for Sec. 206 project review.
-------
1. Section 8(b)(1)(first phrase); requires that the
project must have been approved by the appropriate State
water pollution control agency. This provision must be met
for all reimbursement grants. We suggest that this require-
ment be met through certification by the state agency if a
copy of the state agency approval cannot be furnished by the
applicant. The requirement for prior Federal approval is
overriden by Sec. 206, which authorizes reimbursement for
projects for which prior Federal approval or assistance has
has not been obtained.
2. Section 8(b)(1)(second phrase); requires the project
to be included in any "comprehensive program" developed
pursuant to Section 3(a) of the Act. This does not refer
to "comprehensive plans" under Section 3(c) (support for this
can be found not only in the semantics of Section 8, but by
reference to Sections 2 and 6(b)(2) of P.L. 660, July 9, 1956,
which set forth the identical requirement before Section 3(c)
was added by amendment). Similarly, the provision does not
refer to State programs developed pursuant to Section 7 of
the Act, which are addressed in Section ,8(b) (1) (5), discussed
below. Very little of the planning contemplated by the subject
provision was completed. Compliance with this requirement can
be effected by relatively simple intra-agency review to deter-
mine whether the project is consistent with §3 (a) program
requirements, if any, in effect at the time of project initiation,
3. Section 8(b)(1)i (2): sets forth the former basic 30%
Federal participation limitation. This has no bearing on Sec.
206 project review of reimbursement grant applications, since
Sec. 206 authorizes a higher level of Federal assistance
(50/55%) .
4. Section 8(b)(l)(3): requires each grantee to agree
to pay the non-Federal share of the project. We suggest that
this requirement can be met either by a statement from the
applicant, or other adequate evidence of payment of project
costs, in cases where construction has been completed. If
construction has not been completed, payment may not be made
for the incomplete work pursuant to Sec. 206, and the grantee
need only demonstrate that it has made adequate provision to
pay its remaining costs.
5. Section 8(b)(l)(4): requires that the grantee make
"... provision satisfactory to the [Administrator, EPA] for
assuring proper and efficient operation and maintenance of
the treatment works ..." after its completion. For both
completed and uncompleted projects, the Agency must assure
-------
provision by the grantee of proper operation and maintenance.
One means of accomplishing this would be by means of State
assurance that it has found appropriate provision has been
made for O&M by the grantee.
6- Section 8(b)(1)(5): requires that the project be
"in conformity with" the State water pollution control program
submitted pursuant to Section 7 of the former FWPCA, and
also requires that the project be ". . . certified by the
appropriate State water pollution control agency as entitled
to priority over other eligible projects . . . ." The former
limitation may be met by a State assurance that the project
was, at time of initiation of construction, not inconsistent
with the State's Section 7 program. As regards the latter
limitation, certification of priority for reimbursement
projects would be meaningless and, in fact, violative of the
intent of P.L. 93-207; therefore, EPA review need not consider
this element.
7. Section 8(b)(1)(6); sets forth the basis of increase
in Federal participation to 40% of costs, and has no bearing
on Sec. 206 project review of reimbursement grant applications,
since Sec. 206 authorizes a higher level of Federal assistance
(50/55%).
8. Section 8(b)(1)(7); 50% eligibility (see 3 and 7
above). Note that the State's "agreement to pay" is not
required for reimbursement under Section 206.
9. Section 8(c)(first sentence): requires the Adminis-
trator to determine for each project the public benefits to
be derived therefrom; the propriety of Federal aid to the
project; the cost-benefit factor; and the adequacy of provisions
made by the grant applicant for proper and efficient post-
construction operation and maintenance. Assurance from the
State agency would provide a sufficient basis for compliance
with this requirement (see also 5 above).
10. Section 8(c)(remainder): concerns allotment formulae,
reallotment procedures, and reimbursement under Section 8. This
provision has no bearing on project review of reimbursement
grant applications under §206.
11. Section 8 (d) ; an authorization of appropriations,
having no bearing on project review.
-------
12. Section 8 (e): this provision contains a definition
of construction which has been carried forward verbatim into
40 CFR 35.860. This definition of construction is applicable
to all reimbursement projects under Section 206 (a). We are
aware that Section 212(1) of the Amendments contains a much
broader definition of construction which, according to that
section, is for application to all Title II. This provision
was so interpreted in floor comments of former Congresswoman
Bella Abzug (see A Legislative History of the Water Pollution
Control Act Amendments of 1972,93d Cong.,1st Sess., No.93-1,
p~I372(hereinafter "Legislative History"). Nevertheless, we
believe that the definition of construction contained in Section
8 is controlling. In principles of statutory construction,
the specific provision takes preference over the general;
Section 206 (a) specifically directs one to Section 8 of the
Act. Section 212(1) clearly was designed for different
purposes, namely, for correlation with the "segmented" con-
struction approach Congress promoted (see Legislative History/
p. 294). Legislative history of the Act indicates that Section
206 was intended to be remedial in nature, to correct the
inequality which was found between projects funded on different
bases. All projects during the period in question - 6/30/66 -
7/1/72 - were guided by the definition of construction in
Section 8, and a gross broadening of the scope of reimburse-
ment projects - which would result from adopting the new
definition of construction - would appear to be markedly
preferential rather than remedial. Neither the statute nor
its legislative history indicates that Congress intended for
reimbursement projects to suddenly obtain such status. In
summary, we believe that the broader definition of construction
in the 1972 FWPCA Amendments applies solely to new construction
funded under Sec. 201 of the Act, and that the former definition
set forth in 40 CFR 35.860 and Section 8(e) of the prior FWPCA
is applicable to Sec. 206 assistance.
13. Section 8(f) : sets forth the requirements for an
increased grant for urban planning. Section 206 (a) provides
for reimbursement up to 55% of project costs "... where the
Administrator also determines that such treatment works was
constructed in conformity with a comprehensive metropolitan
treatment plan as described in Section 8(f) . . .as in effect
immediately prior to the date of enactment of the [Amendments]
. . . ." As we understand it, arrangements presently exist
(including cooperative arrangements with HUD) which will
facilitate review for this increased benefit. The same
procedures should be observed as have been followed under
Section 8.
-------
14. Section 8 (g); Davis-Bacon Act requirements. Provides
that the Administrator shall "... take such action as may
be necessary to insure that all laborers and mechanics employed
by contractors or subcontractors on projects for which grants
are made under this section ..." shall be paid at least
prevailing wage rates. The Secretary of Labor establishes
the rates, pursuant to 40 USC 276a e_t seq. , the so-called
Davis-Bacon Act. We are informed that the Department of Labor
has advised the Agency informally that it will not be feasible
to determine prevailing wage rates on "old"work. It appears
clear that contracts (or subcontracts) awarded after the date
of reimbursement grant award must conform to the requirements
of the law. For earlier awards, the agency will generally be
unable to determine the prevailing rate; even if the rate was
determined, enforcing compliance with the rate would be difficult.
We do not believe that this very practical inability to determine
retrospective compliance with Section 8(g) should be permitted
to slow the reimbursement program; neither do we believe that
Congress intended such a result. A distinction may be drawn
between the fundamental purpose of the Davis-Bacon Act - which
case law holds to be protection of employees from substandard
wages - and the method of achieving that purpose, which was
to direct the Secretary of Labor to determine minimum wages
for a project based on prevailing rates in the locality. It
will generally be impossible to implement the Act's purpose
by the Congressionally-selected method; we do not, however,
believe this gives the agency authority to dismiss any attempt
at achieving the purpose of the Act. We believe that wherever
possible, the agency should seek to obtain available evidence
regarding whether the grantee's contractors paid the same
general level of wages to their employees as was paid to those
similarly situated at the time. A written affirmation to that
effect, obtained from the grantee and accompanying the grant
application, would generally be sufficient to meet the purpose
of the Act, given the unusual circumstances.
(B) Other Requirements of the 1972 FWPCA Amendments
There are several requirements in the 1972 FWPCA Amend-
ments, as amended, which are applicable. We note, initially,
however, that the requirements of Sec. 201 (g) for the applica-
tion of best practicable waste treatment technology, for the
study of alternative waste management techniques, for the
application of technology for the reclaiming or recycling of
water or otherwise eliminate the discharge of pollutants,
and for infiltration analysis, while applicable to assistance
under Sec. 201, are not applicable to Sec. 206 grant assistance.
The requirements of Section 204 are similarly inapplicable.
-------
1. Section 501(a); issuance of regulations. The
regulations promulgated on January 29, 1974 (39 F.R. 3677}
provide, at 40 CFR §35.865(b) that "The applicant must
furnish such other information as may be required for
determination of entitlement or quantum under this Subpart.
This affords the basis for obtaining documentation or informa-
tion required to be furnished.
2. Section 501(c); grantee records. Pursuant to this
provision, the grantee is obligated to maintain and furnish
records adequate to establish eligibility and prove quantum
with respect to a Sec. 206 claim for reimbursement. As an
alternative to requiring copies of relevant documents (the
construction contract, for example), it would be sufficient
to require that the grantee make such records available upon
audit; see 4. below.
3. Section 501(d); maintenance of records for audit and
examination by EPA or GAO. This pertains to the period of
claims processing, and three years after final payment; see
Article 2 of the EPA General Grant Conditions, Appendix A to
Subchapter B of Title 40 of the Code of Federal Regulations.
4. Section 3 of PL 93-207; audit before final payment.
This statutory provision permits interim payments to be made
on Sec. 206 claims, but also requires, in conjunction with
the Sec. 206 payment mechanism, that an audit be accomplished
for each project prior to the final Sec. 206 payment.
5. Section 2 of PL 93-207: statutory limitations date
for presentation of Sec.206 claims. The grant file must
contain or refer to adequate evidence of receipt of the Sec.
206 claim on or before January 31, 1974.
(C) Other Federal Requirements
In addition to the requirements of Section 8 and of the
1972 FWPCA Amendments, there are other requirements applicable
to all grant awards, by virtue of other legislation and
collateral requirements, such as Executive Orders. We have
noted that Section 206 (a) itself states only that the require-
ments of Section 8 must be met. However, neither this statement
nor the legislative history of the Act provides any basis for
construing Section 206(a) as waiving those other requirements
which are applicable to Federal grant awards generally (such
as the award authority under Section 201 (g) or Section 208).
-------
8
1. NEPA. Section 102 of NEPA (42 U.S.C. 4332) requires
an environmental impact study of all "... major Federal
actions significantly affecting the quality of the human
environment . . . ." However, Sec 511(c)(l) of the 1972
FWPCa Amendments provides that "Except for the provision of
Federal financial assistance for the purpose of assisting the
construction of publicly owned treatment works as authorized
by section 201 of this Act, ... no action of the Administra-
tor taken pursuant to this Act shall be deemed a major Federal
action significantly affecting the quality of the human environ-
ment within the meaning of the National Environmental Policy
Act of 1969 . . . ." Accordingly, NEPA review is not required
for reimbursement grants, which are awarded under the separate
grant award authorization of Sec. 206 of the Act. We note
that NEPA review, if it were required, would be impractical,
since there generally are no alternative approaches which
are feasible in the case of reimbursement projects the construc-
tion of which is either completed or substantially completed.
Also, NEPA was enacted after initiation of construction of
many of the Sec. 206 projects.
2. Relocation Assistance. The Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970
(42 U.S.C. 4621 et seq.,) prohibits approval of any Federal
assistance to any project until the Administrator determines
that the policies of the Act will be met (see 40 CFR Part 4
for EPA regulations implementing the Act). The Act requires
that certain benefits be made available to businesses and per-
sons displaced by a project after January 1, 1971. Thus, even
though a project may have begun in 1967, if persons or businesses
were relocated after January 1, 1971, the benefits of the Act
must be made available (if, on the other hand, dislocation
occurred prior to January 1, 1971 on a project which is not
yet complete, no benefits would be available). Implementation
of the Act during the remaining periods of uncompleted projects
should be accomplished by means of procedures presently used
for relocations under construction grants. Implementation of
the Act for 'relocations which occurred after January 1, 1971
without compliance with the Relocation Act, however, may prove
troublesome. Reimbursement grantees must be notified of the
requirements of the Act, and informed that compliance with
the Act is a condition of the grant. One means of obtaining
such compliance, where required, could be by requiring the
grantee to take all reasonable steps to locate and inform
potential relocation assistance recipients, including, where
necessary, advertisement in newspapers of wide circulation
in the area.
-------
3. The Civil Rights Act of 1964. Title VI of the Civil
Rights Act provides that no person shall, on the basis of
race, color, or national origin "... be excluded from
participation in, be denied the benefits of, or be subjected
to discrimination under any program or activity receiving
Federal financial assistance." (Section 601, 42 USC 2000d).
To effect this provision, all reimbursement project applica-
tions should be accompanied by the Compliance Report form
(EPA Form No.4700-4) developed by EPA's office of civil rights.
This will generally be done quite routinely for ongoing
projects; for completed projects, the form will develop
information on discrimination in service area scope, which
is the primary matter of concern. If discrimination is dis-
covered, this office should be consulted as well as the Office
of Civil Rights and Urban Affairs, prior to the taking of any
action.
4. E.O. 11246 (equal employment opportunity). Section
301 of E.O. 11246 states in pertinent part as follows:
"Each executive department and agency which
administers a program involving Federal financial
assistance shall require as a condition for the
approval of any grant . . . which may involve a
construction contract, that the applicant for
Federal assistance undertake and agree to incorporate,
or cause to be incorporated, into all construction
contracts paid for in whole or in part with funds
obtained from the Federal Government ... or under-
taken pursuant to any Federal program involving such
grant . . . the provisions prescribed for Government
contracts by Section 202 of this Order ..."
The provisions of E.O. 11246 depend for their efficacy upon
contractual implementation. The Order must be implemented for
all contracts awarded after the date of award of a reimburse-
ment grant (see EPA's regulations implementing the Order,
40 CFR Part 8). However, the agency need not require revision
or modification of contracts which have been awarded prior to
the date of grant award. The language of Section 301 of the
Order clearly is susceptible of an interpretation which
countenances prospective application only (as are the implement-
ing regulations of the Department of Labor; see, e.g., 41 CFR
60-1.4(b)). We are informed by EPA's office of Civil Rights
and Urban Affairs that this interpretation is concurred in by
the Office of Federal Contract Complaince. In the event
additional problems arise with regard to particular contracts
under reimbursement grants, it should be noted mat une j_.
-------
10
Department's regulations authorize the Director o£ the
Office of Federal Contract Compliance to ". . . exempt any
agency . . . from requiring the inclusion of any or all of
the equal opportunity clause . . . when he deems that special
circumstances in the national interest so require." 41 CFR
60-1.5(b).
5. Historic preservation. The National Historic
Preservation Act of 1966 (16 USC 470 e_t seq) requires the
agency, prior to grant award, to "take into account" the
impact of the Federal assisted activity on historical sites
and objects included in a National Register developed by
the Department of Interior. In addition, the agency must
also afford the Advisory Council on Historic Preservation
an opportunity to comment on the action. We believe that
State review can provide information necessary for review of
any situation in which uncompleted construction or site
acquisition may affect an historical site. No useful purpose
would be served by reviews of historical dislocations which
have occurred prior to grant award.
6. Clearinghouse review. Section 204 of the Demonstra-
tion Cities and Metropolitan Development Act of 1966 (42 U.S.C.
3334) and the Intergovernmental Cooperation Act of 1968 (42
U.S.C. 4201 et seq), as implemented by OMB Circular A-95,
require submrision of Federal applications for grants for
treatment works construction assistance to certain clearing-
houses for review. The purpose of the review is to assure
coordination of local, State and Federal planning, and as such
the impact is totally prospective. Where construction of a
project has already been initiated (as must be the case in
order for a project to be eligible for a reimbursement grant)
clearinghouse review would serve no useful purpose. It is our
opinion, accordingly, that clearinghouse review is not re-
quired in the case of Sec. 206 grant awards, except in those
cases where such review is required pursuant to State or local
law.
7. Flood insurance. Section 102 of the Flood Disaster
Protection Act of 1973 (P.L. 93-234) (FDPA) prohibits the
approval after March 1, 1974 of any federal financial assist-
ance for acquisition or construction in any flood hazard area
in which flood insurance is then available, unless the buildig
or personal property to which such assistance relates is
covered by flood insurance for its entire useful life, in an
amount at least equal to its cost or the maximum limit of
coverage available, whichever is less. "Financial assistance
-------
11
for acquisition or construction purposes" is defined in
§3(a)(4) of this Act to include "any form of financial
assistance which is in v/hole or in part for the acquisition,
construction, ... of any . . . building . . ., and for any
[personal property] . . . contained or to be contained there-
in . . . ." "[F]inancial assistance" is also defined to
include any form of grant, payment or rebate. §3 (a) (3) .
Accordingly, reimbursement under §206 of the 1972 FWPCA is
included in the definition of financial assistance under the
Flood Disaster Protection Act. Since the federal financial
assistance is in the form of reimbursement of expenditures for
acquisition and construction purposes, the FDPA is applicable.
Therefore, the following grant condition must be
included in any grant awarded under §206:
The grantee agrees to acquire and maintain
any flood insurance made available to it
under the National Flood Insurance Act of
1968, as amended, in an amount at least
equal to the total eligible project costs
or to the maximum limit of coverage made
available under the National Flood Insurance
Act of 1968, as amended, whichever is less
for the entire useful life of* the project.
Provided that this condition shall not be
applicable if, on the date of grant award,
flood insurance was not available pursuant to
the Flood Insurance Act of 1968, as amended,
for property in the project location or if the
property is covered under State policy of self-
insurance approved under such Act.
If Sec. 206 grant agreements have already been approved (after
March 1, 1974) without this condition, no further grant pay-
ment may be made until such condition is incorporated by grant
amendment or amendment of the Sec. 206 regulations, or both.
Determination of compliance with this condition may be accomplished
in conjunction with the Sec. 206 audit.
8. Copeland Act. A portion of the Copeland Act relates
to "kickbacks" from public works employees, the inducement
of which can have criminal consequences. 18 U.S.C. 874. The
remaining provisions of the Act require contractors and sub-
contractors to submit weekly statements of wages paid to
employees. 40 U.S.C. 276c. The statute, and its implement-
ing regulations (29 CFR 3.1 et: seg.) are designed to aid in
enforcement of the minimum wage provisions of the Davis-Iiacon
(see discussion under A-14 above). Generally, 40 U.S.C. 276c
-------
12
will be implementable only for contracts and subcontracts
awarded after the date of reimbursement grant award.
CONCLUSION
The foregoing requirements constitute all of the
Federal requirements which are applicable, in our opinion,
to the award and administration of the Sec. 206 reimbursement
grant awards in the second category first mentioned in this
memorandum. You should note that the requirements mentioned
in Parts (B) and (C), above, are also applicable to the
first category of grants, i.e., those where there has been a
prior grant award or Federal approval. For exa .^le, if a
Sec. 8 grant was awarded in 1968 for a project, the Relocation
Act procedures would not then have been applicable, since
that statute had not yet been enacted; however, the award of
Sec. 206 assistance at this time constitutes a Federal action
which has the effect of making the Relocation Act applicable
to relocations effected after January 1, 1971, even though
the Relocation Act had not previously applied to the project.
The procedures discussed above would be applicable, but we would
expect that such instances would be infrequent.
We would call to your attention, with respect to Sec. 206
award and payment procedures, the following provisions of
Sec. 3 of Public Law 93-207 (emphasis added):
"*** Notwithstanding the provisions of subsection
(d) of such section 206, (1) the Administrator is
authorized to make interim payments to each such
project for which an application has been approved
on the basis of estimates of maximum pro rata
entitlement of all applicants under section 206(a)
. . . . Upon completion by the Administrator of
his audit and approval of al^ projects for which
an application has been filed under subsection (a)
of such Section 206, the Administrator shall,
within the limits of appropriated funds, allocate
to each such qualified project the amount remaining,
if any, of its total entitlement. *** In no event,
however, shall any payments exceed the Federal share
of the cost of construction incurred to the date of
the voucher covering such payment plus the Federal
share of the value of the materials which have been
stockpiled in the vicinity of such construction in
conformity to plans and specifications for the
project."
-------
13
In the accompanying November 29, 1973 House Report (No. 93-680),
there is the following additional comment (emphasis added):
"*** it has become evident that many eligible
recipients would be forced to incur expenses and
delays in new projects or fisk failure of projects
under construction if payments were made only after
complete review and determination on all applica-
tions. The large number of applications for
reimbursement will require extensive processing
by the Environmental Protection Agency beforefull
payment on each can be made. Section 3 of the
legislation authorizes preliminary interim reim-
bursement of funds to projects which can be easily
approved on the basis of available documentation
pending final processing of all projects. This
would include nearly all projects for which there
has been any Federal financial assistance in the
past, from the Environmental Protection Agency or
other source. This will prevent undue disruption
in community plans and also facilitate an orderly
cash flow by the United States Government. It is
expected that the Environmental Protection Agency
will immediately implement the interim payment
provisions of this section."
We are aware that EPA is under considerable pressure
from Congress, state agencies, and eligible municipalities to
expedite Sec. 206 payments. While the agency has no discretion
concerning the applicability of Federal requirements discussed
in this memorandum, it may be possible to ease the administra-
tive burden of such requirements upon grantees and this agency.
We will be pleased to assist in developing alternative procedures,
if any are suggested, to facilitate compliance with applicable
Federal requirements. In order to accomplish the purposes of
Sec. 101 (f) of the 1972 FWPCA Amendments, which emphasize a
national policy of "drastic minimization of paperwork," we
recommend that emphasis should be placed upon record retention
by grantees and examination of grantee records upon audit,
rather than requiring the submission of copies of documents
(such as entire construction contracts), unless such submissions
are absolutely required to determine eligibility or quantum
questions. It may be necessary to defer payment upon projects
in the second category until completion of an audit, unless
entitlement and quantum are adequately demonstrated by the
grantee.
-------
PROGRAM REQUIREMENT MEMORANDUM PRM 75-13
Program Guidance Memorandum
PG-32
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
SUBJECT: Management of Construction Grants Funds DATE: APR
FROM: Alvin L. Aim
Assistant Administrator for Planning and Management
/>
Roger Strelow Aw-
Acting Assistant /Administrator for Air and Water Programs
TO: Regional Administrators
The purpose of this memorandum is to announce a revision of Agency
policy to permit the discretionary use of Title II contract authority for
funding grant increases for cost overruns on Section 8 projects, except
those projects that are eligible for funding under Section 206 of
PL 92-500. This memorandum and the attached documents supersede the following:
- memorandum on Management of Construction Grant Funds from
Messrs. Aim and Sansom to Regional Administrators, dated
December 7, 1973,
- Office of Resources Management, Policy and Procedure Memorandum
#9, dated December 7, 1973, and
- where applicable, opinions of the Office of General Counsel
dated November 16, 1972, March 23, 1973, and July 17, 1973.
Revised Legal Opinion
Attachment I is the revised legal opinion which indicates that we
now find that Section 4(c) of PL 92-500 provides the discretionary authority
to use Title II contract authority to fund grant increases for cost over-
runs on Section 8 projects not eligible under Section 206. This opinion
reverses earlier opinions which found that Title II contract authority
could not be used for Section 8 projects and which determined Agency
policy as delineated in the December 7, 1973 memoranda cited above.
Revised Policy
Pursuant to this revised legal opinion, we have revised and are
hereby issuing Office of Resources Management Policy and Procedures
Memorandum #9A (Attachment II).
-------
- 2 -
Discussion of Revised Policy
Since our policy issuance of December 7, 1973, we have been advised
by the regions that, in many States, there currently are, or are likely
to be, insufficient unobligated 1972 and prior-yea, funds. (includ:ig
potential recoveries of such funds) to cover all Section 8 project cost
overruns. This has resulted in our not being able to provide grant increases
to certain projects where bids substantially exceed the estimated costs. In
some cases, communities have felt forced to give up their Section 8 grants
and reapply under Title II. Also, the regions have reached, or will reach,
the point where eligible grant increases for change orders during construc-
tion cannot be approved within available 1972 and prior-year funds. The use
of Title II contract authority to supplement available 1972 and prior-year
funds, as provided in this policy revision, will provide a means to solve
these problems.
We wish to emphasize that the intent of this revised policy is that
Title II contract authority is available to supplement available 1972 and
prior-year funds for cost overruns. Available 1972 and prior-year funds
must be used first and before Title II contract authority can be used for
Section 8 cost overruns. Also, and equally important, we are continuing
our previous policy (see December 7, 1973 memoranda) of maximizing the
availability of 1972 and prior-year funds through the recovery of funds
where possible, particularly from projects that are not under construction
without good justification within two years after the grant award. In short,
our policy is to use Title II contract authority only when and where 1972 and
prior-year funds are not available or cannot be made available through recov-
eries. When Title II contract authority is used, it should be taken from
the five percent reserve for overruns required under 40 CFR-35.915(g).
Our policy prohibits the use of 1972 and prior-year funds for Title II
projects. It also prohibits, on grounds of equity, the use of either Title II
contract authority or 1972 and prior-year funds for grant increases for changes
in project scope. Such changes in scope should be handled as separate projects-
applied for, funded and processed under Title II.
Funding of Section 206 Projects
The legal opinion and our policy prohibits the use of either Title II
contract authority or 1972 and prior-year funds for the reimbursement of
projects eligible under Section 206 of PL 92-500 since it is clear that
Congress intended that such reimbursements should be exclusively funded
with monies authorized under and appropriated for Section 206.
-------
- 3
We expect project cost overruns (by virtue of change orders) subse-
quent to January 31, 1974, on active Section 206 projects. The revised
policy treats these increases as potential additional demands on Section
206 monies and prohibits the use of either Title II contract authority
or 1972 and prior-year funds for grant increases to cover these cost
overruns.
Funding of Section 202 Requirements
The revised policy does not permit the use of Title II contract
authority to bring grants, eligible under Section 202 of PL 92-500, up
to 75 percent Federal funding. Only 1972 and prior-year funds may be used
for this purpose. The revised policy does permit» however, the use of
either Title II contract authority or 1972 and prior-year funds for grant
increases for cost overruns on projects eligible under Section 202. These
grant increases must be made at the percentage reached through application
of Section 202; that is, either 75 percent or that percentage reached
through the application of waivers.
Mixing of 1972 and 1971 Funds
The December 7, 1973 memoranda cited above prohibited the use of 1972
funds on 1971 and prior-year projects. This previous policy is rescinded.
Under the revised policy, 1972 and prior-year funds can be used interchangably
for grant increases on any Section 8 project except those eligible under
Section 206.
Termination of Old Projects
The December 7, 1973 memoranda directed the termination of Section 8
projects which had been in a preconstruction stage for two years or more.
This policy remains in effect and is to continue to be implemented. More-
over, projects in the preconstruction stage should be continually monitored;
and, when conditions dictate the need for an earlier (than 24 months) termina-
tion, this action should be initiated with State concurrence.
Exceptions can be granted to permit some projects to remain in the
preconstruction stage in excess of 24 months. Requests for waivers for addi-
tional time, based on .prudent justifications, must be addressed to the Deputy
Assistant Administrator for Water Program Operations and contain revised pre-
construction schedules which the Regions will enforce. Grantees under enforce-
ment orders can be expected to be granted reasonable time extensions.
-------
4 -
Effective Date
The revised policy and procedures announced herein become effective
immediately. These are always open to comment, however. If you should
have problems, questions or comments, you may contact Mr. Harold Cahill,
Municipal Waste Water Systems Division or Mr. Gary Dietrich, Associate
Deputy Assistant Administrator for Resources Management.
Attachments
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460 ATTACHMENT I
Apr. 18, 1974
OFFICE OF ENFORCEMENT
MEMORANDUM AND GENERAL COUNSEL
SUBJECT: Use of Funds Authorized or Appropriated under
Section 207 of the 1972 FWPCA Amendments to
Fund Overruns on Grants Awarded Under Section
8 of the Former FWPCA
FROM: Alan G. Kirk II sigaeQ
Assistant Administrator
for Enforcement and General Counsel (EG-329)
TO: John T. Rhett
Deputy Assistant Administrator
for Water Program Operations (AW-446)
You have requested an opinion on the following question
Question
Does Section 4(c), Federal Water Pollution Control Act Amend-
ments of 1972, authorize use of Title II funds authorized or
appropriated under Section 207 to fund grant overruns on Section 8
projects?
Answer
Yes. Section 4(c) of the 1972 FWPCA Amendments permits
utilization of 1973 and later contract authority allocations
and appropriations thereunder for monetary increases necessary
to fund Section 8 grant overruns. However, funding of these
increases is not mandatory.
Section 4(c)
Section 4(c) provides:
"(c) The Federal Water Pollution Control
Act as in effect immediately prior to the
date of enactment of this Act shall remain
applicable to all grants made from funds
authorized for the fiscal year ending
-------
June 30, 1972, and prior fiscal years,
including any increases in, the monetary
amount of any such grant which may be
paid from authorizations for fiscal years
beqinninq after June 30, 1972, except
as specifically otherwise provided in
section 202 of the Federal Water Pollution
Control Act as amended bv this Act and
in subsection (c) of section 3 of this
Act."
Section 4(c) oriqinated in Section 4(c) of H.R. 11896:
there was no comparable provision in S. 2770.
The March 11, 1972 report (Report No. 92-911, 92d
Cong., 2d Sess.) which accompanied H.R. 11896 explained
the foregoing provision, which was enacted into law
without change from the same provision in H.R. 11896,
as follows:
"Subsection (c) of section 4 provides
that the existing Federal Water Pollution
Control Act will remain applicable to all
grants made from Fiscal year 1972 funds
(and prior year funds) including increases
in the monetary amount of any such grant
which may be paid from fiscal year 1973
funds (or later year funds). An exception
to this would be made for the hijher cost
sharing permitted under section 202 of the
Federal Water Pollution Control Act as
amended by section 2 of this bill.
"The Committee notes that there may
be publicly owned treatment works presently
under construction and receiving Federal
assistance under section 8 of the existing
law where it may be later determined that
the Administrator underestimated the eligible
costs of construction. Subsection(c) would
permit the Administrator to pay the grantee
the remaining eligible amount from Fiscal
Year 1973 (or later year) funds. However,
the payment would be based on the applicable
cost-sharing arrangements of section 8 and
-------
not the higher amounts of section 202.
The grants made from fiscal Year 1972
funds being eligible for the higher
percentages of section 202 would,
of course, not be limited to the
amounts specified in section 8 of the
existing law."
As we have noted, Section 4(c) was carried forward
verbatim into Public Law 92-500, enacted October 18, 1972.
The September 28, 1972 Conference Report (Senate Report
No. 92-1236) noted, at p. 152, that there had been no
comparable provision in the Senate bill, that the conference
provision was the same as the House amendment, and
summarized the provisions of Section 4(c) as follows:
"The existing Federal Water Pollution
Control Act is made applicable to all grants
made from funds authorized for fiscal year
1972 and prior fiscal years, including
increases in the monetary amount of any
such grant which may be paid from authorizations
for fiscal years beginning after June 30, 1972,
except as specifically otherwise provided
in section 202 of the Federal Water Pollution
Control Act and section 3(c) of this Act."
Discussion
Section 4 is titled as a "Savings Provision" in
the statute and conference report. Generally, the function
of a savings provision is to preserve that which has
previously been done or provided for and not to constitute
new authority for the expenditure of allocated funds.
Section 4(b), which preserves the validity of regulations
issued and actions taken under the prior. FWPCA, is an example
of a typical savings provision.
The principal intent of Section 4(c) is the same as
that underlying Section 4(b), namely, to clarify what rules
applied to qrants awarded under the authority of Section 8.
Such provision was particularly necessary because Section 3
of the new statute authorized EPA to make additional grants
under Section 8 of the old law after the passage of the new
law. Undoubtedly, Section 4(c) was included in the Act
to make it clear that grants awarded under the authority
of Section 8 through December 31, 1972, would be governed by
the requirements of the Section 8 program.
-------
However, section 4(c) contains the phrase: "any
increase in the monetary amount of any such grant which
may be paid from authorizations-for fiscal years beginning
after June 30, 1972 . . . ." An examination of the legislative
history takes this phrase out of the context of a savings
provision, and constitutes, if it is to be given its literal
interpretation, authority to divert Title II funds,
authorized and appropriated for the principal purpose of
making Title II construction grants, to payment of grant
overruns on old section 8 projects. (See section 207,
FWPCAA.)
We believe a narrow interpretation should be
placed upon this phrase, since it appears to be in
derogation of the intention of Congress to utilize this
fund for new projects. For example, state allocations
for Title II funds are based upon needs surveys for new
construction and not for funding previously approved construction.
To the extent that these funds are used for previously ap-
proved construction projects, new projects now on priority lists
or requesting listing thereon will be delayed in funding. We
note, however, that utilization of Title II contract authority
and appropriations is already occurring in those instances
where a Section 8 project, which has experienced a substantial
overrun, is "split" into two projects to permit funding of a
portion of the construction from Title II contract authority.
It is necessary to examine the provisions of Section 206
in further interpreting the intent of Congress in passing
Section 4(c). Section 206 was, in our opinion, deliberately
designed to be the sole source of reimbursement to Section 8
grantees (and to non-grantees) who proceeded to construction
either with grants at a lower percentage than the law then
allowed or with no grant at all.
Section 206(e) provides in pertinent part:
"The authorizations contained in this subsection
shall be the sole source of funds for reimburse-
ments authorized by this section."
Section 206(d) provides a system of allocating the Section
206(e) funds among all claimants therefor. Section 206(c)
provides that applications for reimbursement under Section 206
may be revised from time to time. Thus Section 206 provides
not only for grant increases to raise the percentage of the
original grant, but also to fund grant overruns at the higher
-------
percentage, all from funds appropriated under Section 206(e) for
reimbursement.
f-ublic Law 93-207, passed December 28, 1973, amended
Section 206(e) to increase the authorization to $2,600,000
and amended Section 207 to provide that authorizations
under Section 207 were not to be used to carry out the
provisions of Section 206.
We conclude, therefor, that those grantees eligible
for Section 206 reimbursement are limited to recovery
of grant overruns from funds allocated for Section 206
reimbursement, and cannot use Section 4(c) as authority
to fund those inadequacies caused by limited funding for
Section 206 projects.
Therefore, we have determined that
(1) Section 4(c) may be used as authority for
funding grant overruns on any Section 8 project which
is not eligible for reimbursement under Section 206, but
such grant overruns must be funded at the original grant
percentage.
(2) Section 4(c) may be used as authority to fund grant
overruns on 1972 Fiscal year funded projects, not eligible for
Section 206 reimbursement, at 75 percent of the cost of
construction, as authorized by Section 202.
(3) The new Title II regulations are not applicable
to Section 8 grants, whether or not grant overruns on these
projects are funded with Section 207 ( Title II) contract authority
funds.
(4) EPA may provide programmatic directions to the Regional
offices and to state pollution control agencies, to implement
this funding option, to the extent that it is deemed necessary
or advisable. The statute is silent on the issue of whether
the funding of these grant overruns should be given precedence
over projects on the Title II priority lists. With EPA approval,
a state may elect to fund eligible Section 8 grant overrun
claims prior to or in conjunction with any other utilization
of FY 73 and later contract authority funds, without amendment
to the Title II priority lists.
-------
The funding of these overruns is discretionary, not
mandatory, in the following respects; Except as otherwise
provided by Section 202, all funding actions under the
authority of Section 8 are discretionary, since that statute
authorized grant awards not in excess of certain maximum
percentages; consequently, if a cost overrun is not funded
the effect is to reduce the Federal share of total actual
project costs, which is permissible under Section 8.
Also, state agency approval is a prerequisite to utilization
of state allocations, so that the state agency necessarily
has discretion to deny or defer funding of cost overruns
in favor of new projects; see 40 CFR SS 35.840(k), 87 F.R. 11663,
and 35.915(h), 35.935-11, and 35.955. Finally, timely notice
and approval of project changes is a prerequisite to considera-
tion of grant amendments to increase grant amounts; for cost overruns
see the nrpvinuslv cited reaulatinns and 40 CFR SS 30.900 and
30.901. Failure to comply with these requirements constitutes
a basis for denial of additional Federal assistance.
For these reasons we have determined that Section 4(c)
affords discretion to fund Section 8 project grant overruns,
but that such funding is not mandatory. Accordingly, to the
extent that the determinations set forth in this opinion differ
from those set out in opinions of this office on the same subject
dated November 16, 1972, March 23, 1973 and July 17, 1973, those
earlier opinions are superseded.
cc: Mr. Alvin L. Aim
-------
Attachment II
OFFICE OF RESOURCES MANAGEMENT App 4
POLICY AND PROCEDURE MEMORANDUM #9A *» ft 1
MANAGEMENT OF CONSTRUCTION GRANT FUNDS FOR PROJECTS FUNDED UNDER SECTION 8
OF PL 84-660 AS AMENDED
I. Purpose
The purpose of this memorandum is to set forth (1) policies for
funding grant increases for cost overruns on Section 8 projects and
(2) procedures for recovering funds from previously awarded projects.
This memorandum supersedes Policy and Procedure Memorandum #9 issued
on December 7, 1973.
II. Definitions
Section 8 projects—projects awarded on and prior to December 31,
1972, under PL 84-660, as amended and those limited number of projects
funded under PL 84-660, as amended, after December 31, 1972, with
discretionary funds. By definition, these projects exclude Section 206
projects as defined below.
Title II projects—projects awarded after December 31, 1972, under
PL 92-500.
Section 206 projects—projects which are eligible for reimbursement
under Section 206 of PL 92-500.
Available 1972 -and prior-year funds—the prevailing amounts of unobligated
funds from 1972 and prior-year appropriations which are issued to a
region in an Advice of Allowance and which, therefore, are available
for obligation.
Title II contract authority—the prevailing amounts of unobligated
contract authority from 1973, 1974 and 1975 authorizations under
PL 92-500 (and future authorizations under amendments to PL 92-500)
which are issued -to a Region in an Advice of Allowance and which,
therefore, are available for obligation.
III. Policy
1. Available 1972 and prior-year funds and Title II contract authority
may be used to fund grant increases for cost overruns on any and
all active Section 8 projects except those eligible for funding
-------
- 2 -
under Section 206 of PL 92-500, provided that:
- all available 1972 and prior-year funds within a State's
current allocation are completely used before using Title II
contract authority;
- such grant increases are not used to change the scope of the
project (changes in scope of Section 8 projects must be treated
as separate projects—applied for, processed and funded under
Title If; and
such grant increases are at the same percentage as the original
grant.
When using Title II contract authority for Section 8 overruns, the
five percent reserve required under 40 CFR-35.915(g) should be used.
Available 1972 and prior-year funds may not be used to fund Title II
projects or increases thereto.
Available 1972 and prior-year funds and Title II contract authority
may not be used to fund grant increases of any kind to Section 8
projects eligible for funding under Section 206 of PL 92-500. Only
monies authorized under and appropriated for Section 206 may be
used to fund grant increases to Section 206 projects, including
grant increases for cost overruns to such projects which occur
after January 31, 1974.
Title II contract authority may not be used to increase grants
eligible under Section 202 of PL 92-500 to 75 percent Federal
funding. However, available 1972 and prior-year funds may be
used for this purpose. Title II contract authority and 1972 and
prior-year funds can be used for grant increases for cost overruns
on Section 202 projects, but the percentage of the grant increase
may not exceed the percentage reached through application of
Section 202.
Grant awards to all Section 8 projects which have been or will be in
a preconstruction stage for more than twenty-four (24) months are
to be terminated by the Regional Administrator unless a waiver is
requested and approved by the Deputy Assistant Administrator for
Water Programs Operations.
-------
- 3 -
6. Funds recovered from the deobligation of awards made in any fiscal
year prior to the fiscal year in which the deobligation is made
must be first reapportioned by the Office of Management and Budget
before they can be and are made available for reobligation. This
applies to 1972 and prior-year funds as well as Title II contract
authority.
7. All recovered 1972 funds and recovered Title II contract authority
will be credited to the allocations of the same States from which
the funds are recovered. All recovered 1971 and prior-year funds,
except 1964, 1965 and 1966 funds, will be credited to the allowance
of the same Region from which such funds are recovered, and the
Regional Administrator will have the discretion to determine how
these recoveries are credited to the States within his Region. All
recovered 1964, 1965 and 1966 funds will revert to the Treasury and
will not be reissued to the Regions. At such times in the future,
when available 1972 and prior-year funds within a State's allocation
exceed its potential needs for cost overruns, these funds will be
reallocated to States having cost overrun needs which cannot be satis-
fied with their available 1972 and prior-year funds.
IV. Procedure for Recoveries
1. At such times as a grant decrease or withdrawal is made against
grants awarded in a fiscal year prior to the fiscal year in which
the grant decreases or withdrawal occurs, the Regional Financial
Management Officer should take appropriate action to deobligate
the respective funds and record these deobligations in the financial
management information system. This procedure applies to grants
awarded with both Title II contract authority and 1972 and prior-
year funds.
2. As funds are deobligated, the Regional Financial Management Officer
should request their recovery and reissuance by the Budget Operation
Division of the Office of Resources Management. This request should
verify that the deobligation(s) has been accomplished and property
recorded and should list the amount(s) of each year's funds deobli-
gated from each State(s) so that, when the funds are recovered
(reapportioned), they can be reissued to the account of the same
State(s). The Regional Administrator has the prerogative of
redistributing recoveries of 1971 and prior-year funds (except 1964,
1965 and 1966 funds which revert to the Treasury); therefore, the
request need not specify how the recovered funds are to be reissued
-------
- 4 -
to individual State accounts.
3. Upon receipt of requests, the Budget Operations Division will
seek reapportionment of the deobligated funds from the Office of
Management and Budget. When reapportioned, the Division will reissue
the funds in accordance with the specifications of the request.
V. Savings Provisions
From time-to-time, the Office of Resources Management may find it
necessary to withhold, withdraw, or place additional constraints or
controls on fund allowances issued under the foregoing policies and
procedures in order to comply with provisions of authorizing or
appropriating legislation, directives of the Office of Management
and Budget, or other external requirements.
Richard Redenius
Deputy Assistant Administrator
for Resources Management
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
May 10, 1974
PROGRAM REQUIREMENT MEMORANDUM PRM 75-14
PROGRAM GUIDANCE MEMORANDUM
NO. PG-33
SUBJECT: Grant Funds and Project Segmenting
FROM : Harold P. CaMll, Jr., Direct
Municipal Construction Dlvisl
TO : All Regional Administrators
Attn: Director, A1r and Water Programs Division
The passage of P. L. 93-243 enables a construction grant to be
awarded to a segment of a project without regard to operabllity.
Regulations Implementing this legislation have been included in
Title II Regulations, paragraphs 35.930-4 and 35.935-1. The
legislation and regulations provide an alternate course of action
in those circumstances where the construction of an extremely
large project would result in program scheduling difficulty for
the State in the management of its total grant program. The
provisions should enable a State's program to move ahead when
its priority list is being blocked by certain project or projects.
Segmenting prudently administered should prove beneficial to
the management of State programs. However, in undertaking the
segmenting of a project it is important that both the State and
municipality recognize that such a step must be taken within the
framework of the law and regulations of which it is a part.
It is essential to insure that (a) all grants are awarded at
the 75% level. Under no circumstances can a grant be awarded
for less than 75% of the eligible cost of the project; (b) the
project must be comprised of a discrete and meaningful contract
or sub-contract; and (c) the awarding of a grant to a segmented
project in no way binds the Federal Government to funding the
remaining segment or segments comprising the total project.
Moreover, when an applicant undertakes a segment of a project
and receives a grant award for that segment, he is committed to
the completion of both an operable treatment works and the
complete sewage treatment system of which the segment is a part.
-------
Therefore, each construction grant (Step 3 grant) awarded for a
segmented project must contain a statement embodying the above and
that which is specifically provided for in paragraphs 35.930-4 and
35.935-1 of the Title II Regulations.
The following statement therefore shall be included as a part
of any Step 3 construction grant for a segmented project.
"The grant awarded is for 75% of a segment of a total project.
In accepting this award, the grantee agrees to complete the
construction of the operable treatment works (see 35.905-15)
and complete waste treatment system of which the project is
a part (see 35.930-4) and, the grantee further understands and
agrees that the Federal Government is not committed to participate
in the funding of the remaining part or parts of the operable
portion of the system or of the complete system (see 35.935-1)."
-------
-------
\ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
I WASHINGTON, D.C. 20460
^ September 17, 1974
PROGRAM REQUIREMENTS MEMORANDUM PRM 75-18
PROGRAM GUIDANCE MEMORANDUM
PG-36A
SUBJECT: Eligibility of Wastewater Treatment Facilities at Municipally
Owned Water Treatment Works for Construction Grants
FROM: Harold P. Cahill, Jr., Director ^f*/^ &
Municipal Construction Division (WH-447>**V *-'
TO: Regional Administrators
ATTN: Air and Water Program Directors
Program Guidance Memorandum 36 issued June 5, 1974, gave notice of
the termination of the practice of funding wastewater treatment projects
at water treatment plants owned by municipalities. Since the issuance of
that memorandum, numerous requests have been received for a more detailed
explanation of the reasons for this action. To give added support to
EPA's position denying the eligibility of municipally owned water treatment
works for wastewater treatment grants, we are providing the following. It
is to be used as a supplementary attachment to PG-36.
Section 201(g)(l) of PL 92-500 authorizes the Administrator to make
grants for the construction of publicly owned treatment works. Section
202(a) of the Act provides that the amount of any grant shall be 75% of one
cost of construction of the treatment works and regulations have been
promulgated setting forth standards for determining construction costs
eligible for grant assistance. In particular, 40 CFR 35.925-15 provides,
in part, "That the allowable project costs do not include costs allocable
to the treatment for control or removal of pollutants in wastes introduced
into the treatment works by industrial users unless the applicant is required
to remove such pollutants introduced from non-industrial sources; and that
the project is included in a waste treatment system, a principal purpose of
which project and system is the treatment of domestic wastes of the entire
community, area, region or district concerned."
From the above, it is clear that one test of a project's eligibility
for grant funds is that it has, as its principal purpose, the treatment of
domestic wastes of the entire community, area, region or district concerned.
A municipally owned utility could not meet this funding test.
-------
The wastes generated by municipal water works are generally not
similar to wastes introduced into the treatment works by non-industrial
sources and, accordingly, special facilities are required in order to
properly treat these wastes. Since the treatment of water for human
consumption is an industrial undertaking, the water company serving a
municipality, whether publicly or privately owned, is in the same position
as any other industrial user of a municipal treatment system introducing
pollutants into the system which require special treatment equipment so
that the wastes will neither impair the system's efficiency nor pass through
insufficiently treated. This viewpoint is derived from Sections 402 and
307(b) of the Act which prohibit the discharge of pollutants into a municipal
treatment works, which are not susceptible to treatment by such treatment
works or, which would interfere with the operation of such treatment works.
Under Section 8 of PL 84-660, grant monies were available to munici-
palities for the construction of necessary treatment works to prevent the
discharge of untreated or inadequately treated sewage or other waste into
waterways. Under Section 307 and 402 of the new statute, grant monies are
available to treat "usual" wastes expected in treatment works, and special
wastes must be removed by the responsible source at its expense.
To allow grant funds to be used to assist the water supply industry
could lead to similar requests from a wide variety of other municipally
owned facilities such as power plants, airports, mass transportation
facilities, feed lots, etc., operated as public utilities. Such action
would have the effect of depleting Federal resources intended to support
the construction of waste treatment facilities to serve the total municipality.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
January 8, 1975
PROGRAM REQUIREMENTS MEMORANDUM PRM 75-24
PROGRAM GUIDANCE MEMORANDUM
PG NO. 46
SUBJECT: Large City Problem in State Priority Lists
FROM: Harold P. Cahill, Jr., Director
Municipal Construction Division (WH-447)
TO: Regional Administrators
Attn: Water Division Directors
Forwarded for information is the General Counsel legal opinion, dated
December 13, 1974, which discusses the relationships between population and
other factors in the composition of a priority list, especially in regard
to large metropolitan areas.
Enclosure
-------
\s>
\ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
I WASHINGTON, D.C. 20460
p* December 13, 1974
MEMORANDUM
SUBJECT: Large City Problem in State Priority Lists
FROM: Alan G. Kirk II /
Assistant Administrator for
Enforcement and General Counsel (EG-329)
TO: James L. Agee
Assistant Administrator for
Water and Hazardous Materials (WH-556)
A question has been raised as to what control EPA has to prevent
large cities, such as Omaha or Honolulu, from using all or almost all
available construction grant funds allocable to a State,
Section 204(a) of the FWPCA requires that the Administrator
determine, before awarding any grant for any project, that the project
has been "certified by the appropriate State water pollution control
agency as entitled to priority over such other works in the State in
accordance with any applicable State plan under section 303(e) of this
Act." (Section 303(e) relates to a State's obligation with regard to
continuing planning).
EPA has promulgated regulations concerning criteria for the
preparation by States of its priority lists. These criteria are found
at 40 C.F.R. S35.915. Subparagraph (c)(l) of that section states that
the State "shall consider the severity of pollution problems, the popula-
tion affected, the need for preservation of high quality waters, and
national priorities..." It is our view that the Administrator may npt
approve a priority list which does not consider and weigh properly the
above criteria so as to produce a priority list which reasonably reflects
the needs of the State. Further, the criteria should preclude population
alone from controlling a priority list.
Where construction needs of a large metropolitan area impinge unduly
upon available funds, consideration should be given to funding only those
"segments" of construction which are necessary to insure that construction
may proceed in accordance with appropriate priorities.
-------
'\ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
-------
-2-
The grantee shall certify to the Regional Administrator that it will
comply with 40 CFR Section 30.810 and specifically Section 30.810-4 and
Section 30.810-5. The certification will be reflected as an encumbrance
in the title to the land. The grantee shall obtain fee simple title to all
land acquired with grant assistance, with no encumbrances other than the
one protecting the Federal interest.
The above criteria relate solely to the issue of eligibility of land
acquisition costs for EPA grant assistance, but are not determinative of
actual funding decisions on individual land acquisitions, since the
application of statutorily required criteria regarding environmental impact,
cost-effectiveness, alternative technologies, available funding, relocation
assistance, and other factors may result in a denial of EPA grant assistance
for land acquisitions which would otherwise be eligible under the above.
-------
\ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
§ WASHINGTON, D.C. 20460
/ August 5, 1975
PROGRAM REQUIREMENTS MEMORANDUM PRM NO. 75-29
Program Guidance Memorandum PG-56
SUBJECT: EPA Procedures in Initiating Debarraent Actions
Against Grantee Contractors
FROM: Alvin L. Aim, Assistant Administrator/^/
for Planning and Management (PM-208)
James L. Agee, Assistant Administrator /*•!
for Water and Hazardous Materials (WH-556)
TO: All Regional Administrators
EPA may initiate debarment proceedings against a grantee contractor
for:
1. Wage rate violations under the provisions of the Davis
Bacon-Act. This Act provides for the use of minimum wage
rates determined by the Department of Labor.
2. Equal Employment Opportunity violations. These provisions,
set forth in Executive Order 11246, deal with racial, religious,
etc., discrimination, as detailed in 40 CFR 8,8 through 8.14.
3. Contract Work, Hpurs and Safety Standards Act violations.
This Act contains overtime provisions.,
4. Copeland Act violations, This Act contains anti-kickback
provisions, Debarment resulting from violations of the
Copeland Act can proceed only after such violations have
been established through adjudicatory proceedings.
Upon finding evidence of being notified of significant violations, the
Regional Contract Compliance Officer, working in concert with the Regional
Counsel, prepares a memorandum citing the particulars of the case including
all pertinent evidence. This memorandum, along with recommendations, is
then forwarded, under the signature of the Regional Administrator, to the
Grants Administration Division, 0PM.
The submission is reviewed by both the Compliance Staff and the Office
of General Counsel. If, as a result of these reviews, it appears that
sufficient justification for debarment exists, the Compliance Staff will
notify the Department of Labor of its intent to file for debarraent and,
concurrently, request an informal reading on the merits of the case. If
the Department of Labor indicates that the case has merit, EPA will
formally submit charges to the Department and request the initiation of
disbarment proceedings.
-------
Department of Labor procedures include an intensive review of the
evidence and formal hearings. If debarment is ordered, appeal hearings
may be held. General notification of debarment is effected by the
General Accounting Office which publishes quarterly, and updates monthly,
lists of companies and persons debarred.
-------
\.. ^/
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
September 8, 1975
PROGRAM REQUIREMENTS MEMORANDUM PRM NO. 75-30
Program Guidance Memorandum PG-57
SUBJECT; Cost Control
FROM: John T. Rhett, Deputy Assistant Administrator
for Water Program Operations (WH^446)
TO: All Regional Administrators
Attn: Director, Water Programs Division
I. Purpose:
This program guidance meraorandurn provides information on cost control
measures to ensure project reviews include full consideration of cost-
effectiveness in design.
II. Background:
Under Section 212(2)(B} of the Federal Water Pollution Control Act
Amendments of 1972, the grant applicant roust demonstrate that the proposed
treatment works is the most cost-effective tp meet the gpals of the Act.
The intent of the Act is to make sure that grant funds are properly managed
throughout the project.
This requirement of the Act is implemented in Section 35.917(d) and
Appendix A of the construction grant regulations. The grant applicant is
required to evaluate alternatives and select the most cost-effective
(including full consideration of non-quantifiable environmental and social
factors). Cost-effectiveness procedur&s are an integral part of the
Step 1 facility planning process and the Step II preparation of plans and
specifications.
III. Value Engineering:
To extend the cost-effectiveness effort to all components of the
project, as intended by the Act, an interim value engineering (VEl program
was introduced in December 1974. The VE methodology is designed to focus
on function and value and has been demonstrated to be effective in
controlling cost and thereby assuring quality and value design, However,
because the present VE program is based on voluntary participation, it can
be expected that many projects will not be subjected to such cost review.
This means significant resources could be spent with very little benefit
as a result of undetected "gold plating". Waste in this nature may seem
small in relation to the total project cost, but in terms of the entire
construction grant program, it could amount to millions pf dollars. In
view pf this, it is essential that the Regional office review procedures
be sensitive to the need for cost-effective design.
-------
IV. Types of high costs to be alert for in construction grant projects:
a. Major unrealistic costs may first appear in the facility planning
process. In this case the total cost for the project appears unreasonable
and inappropriate for the project scope. For example, a 4 million gallon
per day treatment plant, treating primarily domestic sewage to meet
'secondary treatment at a cost of $20 million would merit further investigation.
Similarly, a 20 million gallon per day plant designed to use the extended
aeration process should b,e looked at very closely to be sure all cost-effective
alternatives have been considered. By good cost review of the facility plan
the project manager can forestall needless expenditure of Step II effort on
designs which are not cost-effective and save time in the Step II review process
b. "Gold plating" costs may appear in the Step II design and are much
more difficult to detect. These costs can occur as the Step II design proceeds
and include design details which require expensive construction techniques,
specification of high cost items which are not cost-effective, and inefficient
plant layout, buildings, or hydraulics. Identifying gold plating in a project
design requires an experienced reviewer with knowledge of plant design and
cost-effective design alternatives. In looking for gold plating in a Step II
design, the following points are to be considered.
(1) Plant aesthetics and appearance (.landscaping, building finishes)
are important features in many locations. Wfiile recognizing this importance
of aesthetics, it is also necessary that the design solutions to solve
aesthetic problems also Be cost-effective.
(2) The cost review should concentrate on high cost areas of the
project. Extensive cost review effort on minor items with no significant
cost impact is a misdirection of effort.
V. Techniques for identifying potential unnecessary high costs:
a. Cost curves. When used carefully, cost curves can be an effective
tool for identifying high cost projects and high cost areas within a project.
b. Value Engineering(VE). Value engineering techniques such as cost
to worth ratio and functional cost models are a good method to isolate areas
with potential for cost control, If the project has already been subject
to VE review (see Program Guidance Memorandum 45) then it is likely that
gold plating has been removed.
c. Cost models. Cost models have been developed in various VE work- .
shops for individual projects. An example is attached. In the model, two
separate costs are provided for each component or system within a project.
The higher cost represents estimated design cost and the lower one the
worth. Worth is defined as the lowest initial cost to perform the required
function. Ideally, the ratios of these two costs should approach 1.0, but
in practice it is rarely less than 2.0. When the ratio exceeds about 3.5,
excessive cost is probably present. This procedure allows quick determination
of possible gold plating areas in the project. Detailed review will confirm
whether this is actually the case.
-------
VI. Action to take when potential excessive cost or gold plating is present:
a. Preventive measures. Gold plating can be eliminated when the
project is subject to VE review. To ensure that project completion is not
delayed, the applicant should be encouraged to incorporate VE at an early
stage of the Step II design. This will simplify and speed-up the final
review process. Thorough review of the facility plan will also speed-up
the Step II review by identifying and eliminating major excess cost items.
b. Value engineering. Although not as efficient when performed on
the completed Step II design, VE can identify gold plating and develop more
cost-effective alternatives. In-house (EPA) VE studies can be performed or
the grant applicant can be requested to accomplish VE on the design as a
condition of further grants.
c. Specific request^ to the grant applicant. When there are clearly
identified excessive costs with significant impact the grant applicant can
be requested to develop alternatives or show specific portions of the
project are cost-effective. In order to avoid delay this should be initiated
either by telephone or by a meeting. It may be found that there is a simple
explanation for what appears to be excessive cost, m many cases a
conditional grant can be used, subject to reduction of the excessive costs.
Attachment
-------
I
z
MODEL P
t—
f
Q-
SLUDGE
CTIVATEC
z
o
ONVENT
-~
o
in
o
--J
S-i
o1
1
1
^ACTUAL
p
r~~^i
o|
"l
1
1^ "-1
o ?Q
£ - I
"* .J
L
r
UJ
O
r
U
o:
UJ
z
r-
_J
Z
o
Q
Q
r
o:
SECON
t..
PRELIMINARY''
L
TIONAL
OPERA
r-
OL
0
1
—
_
-
-
i:
I
X
i.
t
^
L
D
^
-
~
a
-
s
/i
D
^
3
3
s*
0
g
s
J-l
J)
5
-1
o
o
- -J
_
°
._
» — ^
Q
_
0
..
-—
o
--
0
o
0
,_
0
o
__
"
o
z
U
0
QC
CL
r*
i
c
S
t
f
r
9
^ c
r-
^
Z
SETTLIN
[~
L
SCREENING
r
K.
O
a
z
O
U
r
,
ex
O
v- —
(N
O
v £
o °
•<
*
h
t
0
— ,
i
o
„„
o
0
-™
o
0
~1
o
o*
..
-
o
-*—
-
s
o
T—II
O
0
o
o
_
o
[•
h-
oc
0
Q_
z
CX
h-
fm
f
O
z
2
Z)
a.
r-
BOD REMOVAL
t
z..
nERAT
>ROT
I—
1
ex
O
r
UJ
U
Z
z
MAINTE
r-
_J
O
z
a
—
-
-
|
-
-
-
—
o
•-
O
—
i
~
0
o
-
r-*
O
o
—
r>
o
•— i
o
c
.1
n
5
„
n
„
o
-
o-
o
-
o
»
r
UO
Q.
Q
I
O
CL
CL
r
NUTRIENT
t
r"
z
Q.
O
UJ
r-
:*:
Z
O
z
UJ
t
a:
0
-
c
c
-
j
<
D
f
j
£
_
—
t
C
_
3
3
—
-
0
o
o
o
"^1
'*!
J
n
o
o
1
1
,1
1
-J
o
0
J
J,
0
0
-
o
0
J
,-
Q:
o
r
<
y
ELECT
r
t.
DISINFECTION
p*
z
c
[
n
o c
z
0
-•"
1
—
z
0
to ^
cr
-
5
O
O
o
1
i
j
1
„ ~
E 0
- i
o 'O
1 •»
"T
J
J
~*~\ *~
S
o
oc
X
O
J
-, r
o
C3
UJ
X
O
J
_ ,„
s
o
cr
X
t-
o
c
a.
\ |-o
— C
BOO
\l\
03^
,_-
di
O
— ^
<
5
..
-40-
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
\ ,
-------
As a minimum, the portion of construction cost allocable to the Federal
facility should be based on the ratio of its total hydraulic requirements,
including allowances for future needs, to the total design flow of the treat-
ment 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.
As an example, in a $10,000,000 actual construction project for which
the Federal facility share has been agreed upon as 20 percent of the total
project cost, the allowable cost and construction grant funding would be as
follows;
Total joint project cost $10,000,000
Federal facility share 2.000,000 (20%)
Maximum allowable cost $ 8,000,000
Grant 0.75 (75%)
EPA grant funding $ 6,000,000
III. OPTIONAL PAYMENT ARRANGEMENTS FOR FEDERAL FACILITY COST SHARE
The EPA grantee may negotiate a payment schedule for the Federal
facility share with the concerned Federal, agency. If payments are not
possible on a timely basis, a possible option is for the grantee to finance,
through bonds or a bank loan, the Federal facility cost share over an
agreed upon number of years and accept periodic payments of principal
and interest. Payments would be provided for in 10-year renewable utility
contracts which are authorized by the Federal Property and Administrative
Services Act. Other payment options may be possible, depending upon the
local situation.
IV. COST SHARING ASSURANCES
The EPA grantee should provide assurances satisfactory to EPA as part
of the Step 2 grant application (or Step 3 if the Step 2 grant was awarded
prior to the effective date of this guidance) that:
1. the Federal facility cost share has been determined as required
herein,
2. the Federal facility cost share has been deducted from the grant
eligible costs, and
3. funds comprising the local plus Federal facility cost shares
will be provided as needed to meet design and construction
payment schedules.
-------
I am responding to EPA to assure them that our policies will be
revised to rectify the previous misunderstandings, and that the DoD
intends to pay for its share of capital costs of joint facilities.
I will also ask them to initiate appropriate revisions to 40 CFR 35
to clarify those portions of subpart E that have led to much of our
difficulties.
A copy of your implementing guidance should be furnished to this
office.
George Marienthal
Deputy Assistant Secretary of Defense
(Environmental Quality)
Enclosure
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
2 o n
SUBJECT: DOD Participation in Regional Wastewater DAT"
Treatment Projects
FROM-. Harold P. Cahill, Director/
Municipal Construction Di
TO: Regional Water Division Directors
Regional Water Branch Chiefs
Note that the attached memorandum on DOD Participation in Regional
Wastewater Treatment Projects should be filed with Program Guidance
Memorandum No. 62.
Enclosure
EPA Form 1320-6 (Rev. 6-72)
-------
ASSISTANT SECRETARY OF DEFENSE
WASHINGTON, D. C. 2O3O1
28 JAN 1976
HEALTH AND
ENVIRONMENT
MEMORANDUM FOR Deputy for Environmental Affairs, OASA(CW)
Special Assistant to ASN(ISiL)
Special -Assistant for Environmental Quality,
SAF/ILE
SUBJECT: DoD Participation in Regional Wastewater Treatment
Projects
In my letter of 23 December 1975, I enclosed a letter from the
Office of Management and Budget which forwarded policy guidance
on the manner in which the financing for the DoD portion of capital
costs of joint projects would be computed and furnished. Essentially,
the policy disallows the capital costs attributable to the DoD share
when computing the amount of EPA construction grant funding to be
provided. This means that the DoD share' of joint facilities will be
appropriated through normal processes, just as if the installation
had gone it alone.
The enclosed letter from EPA indicates that-there is guidance to the
field that should be modified to reflect the recent OMB decision
•mentioned above. I am confident that we can resolve many of the
present impasses by indicating to regional and municipal representatives
our willingness to participate when economically feasible, while
pointing out the appropriations time lag and the attendant statutory
limitations on the contracting process. Their appreciation of these
problems should help all parties to arrive at mutually agreeable
solution^.
While I recognize that, in some cases, our share of capital costs has
escalated for various reasons to levels far above the estimated cost of
constructing DoD treatment facilities, future decisions to participate
in joint facilities must be based on sound economic assessments gained
through continual participation in the planning processes.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
January 20, 1976
PROGRAM REQUIREMENTS MEMORANDUM PRM MO. 75-36
Program Guidance Memorandum PG 63
SUBJECT: Value Engineering in the EPA Construction Grants Program
FROM: John T. Rhett, Deputy Assistant Administrator
for Water Program Operations CWH-546)
TO: All Regional Administrators
Attn: Director, Water Program Division
I, Purpose
The purpose of this program guidance memorandum is to:
1. Provide interim policy on the use of value engineering
(VE) in the EPA construction grant program;
2. Provide the schedule of a mandatory VE program.
3. Update the information on the EPA/VE program contained
in PGM No. 45 (.December 11, 1974). This program guidance memo-
randum supersedes PGM No. 45.
II. Policy
1. Value Engineering analysis proposed by a grant applicant
is grant eligible when written approval is issued by the Regional
Administrator prior to the VE analysis.
2. The grant eligibility of the VE fee is limited to the
actual VE analysis of the project. The applicant may incorporate
training as part of the proposed VE workshop. However, the
intention must be so stated in the proposal, and all costs asso-
ciated with such training must be computed separately. For
example, the cost for a VE instructor, additional time and room
space, etc., must be itemized and separately identified for
training. These additional costs for training are not grant
el igible.
3. The additional engineering fee for any significant
redesign to implement an accepted VE recommendation is grant
eligible when approved by the Regional Administrator prior to
the redesign.
-------
III. VE - Definition
VE is a specialized technique for controlling cost. The
technique is based on a systematic and creative approach which
incorporates the following key characteristics.
1. VE analysis is performed by a multidisciplinary team of
design professionals guided by a VE coordinator;
2. the VE team evaluates cost and function relationships;
3. the VE team identifies and focuses on high cost areas;
4. the VE technique includes a creative session to ensure
generation of alternatives;
5. cost savings are accomplished without sacrificing quality
or reliability of the project;
6. the VE team makes recommendations to the original designer
and owner.
IV. Background
To ensure that the Nation's resources are wisely used, PL
92-500 and the EPA Construction Grant Regulations emphasize the
cost-effectiveness approach. However, the existing cost-effectiveness
program focuses primarily on the Step 1 grant process. It is
essential that cost control be extended whenever it is appropriate
and practical to do so.
In 1974, a voluntary VE program was introduced for application
in the Step II grant process. As a result, EPA construction
grant projects have been subjected to VE analysis under actual
grant conditions. Results from these VE projects indicate:
1. VE is effective for cost control in water pollution
control projects;
2. cost savings have been substantial in all cases completed
to date;
3. project delays can be prevented when the VE program is
properly managed;
4. quality and reliability of the project are maintained;
5. VE is beneficial to project designers in terms of more
efficient and better design techniques.
-------
In view of the results of the voluntary program, the use of
VE should be encouraged and extended to include as many projects
as practicable.
V. Procedure
A. Content of the VE proposal
For those projects where a VE analysis will be performed,
the applicant must submit for approval through the State to the
Regional Administrator, a VE analysis proposal as part of the
Step II grant application, or as an add-on where the Step II
grant has already been awarded. This proposal should Include the
following information.
1. Scope of the VE analysis - Normally, the VE analysis
should be applicable to all components and systems, including
treatment process selection. The only exception is that the
legal or regulatory requirements (such as permit discharge
limitations) are not to be modified by the VE process. If the
applicant wishes to limit the scope, he must so state and provide
justification in the proposal.
2. VE team - The applicant should provide brief information
on the professional background and experience (with emphasis on
VE) of each team member and team coordinator (see section VI).
3. Level of VE effort - Depending on the size and complexity
of the project, the VE effort may vary from one team and one
review session to multiple teams and/or multiple review sessions
in order to adequately review the project. The applicant should
propose the appropriate VE effort to meet the need. For example,
a large plant with advanced treatment processes may justify the
need for two or more VE teams. Similarly, two separate studies
may be proposed. The first study would be held when the design
stage (Step II) is approximately 20 percent - 30 percent complete
to review the treatment process, project design life, plant
layout, structural design, hydraulic capacity, etc. The second
workshop would be held when the electrical and mechanical systems
design is ready to focus on these items. For projects such as a
pumping station, interceptors, etc., a small team will normally
be adequate.
4. VE fee - The applicant should submit a detailed fee
schedule for conducting the VE analysis. The fee schedule should
list the man-hour requirements for the recommended level of
effort. Manhour unit costs and overhead costs should also be
given.
-------
5. Timing - Proper management is the key to preventing pro-
ject delays. The applicant should carefully schedule the VE
analysis so that the VE and the progress design can proceed
concurrently. A detailed VE schedule in relation to project
design and review should be included in the proposal.
B. VE Summary Reports
1. Preliminary VE report - Upon completion of the VE analysis,
a report must be submitted to provide the following information:
- Scope of VE analysis
- Basic VE methodology employed including results for
each phase (information, functional analysis, cost
model, creativity, analysis of alternatives, and
development).
- Summary of VE recommendations
- Estimated cost savings for each recommended alternative
2. Final VE report - A report describing final implementation
of the VE recommendations must be submitted. The report is to
include:
- Accepted recommendations
- Cost and schedule for implementing the accepted recommenda-
tions
- Rejected recommendations and reasons for the rejection
- Net savings for both capital costs and total costs over
the planning period
C. EPA Review and Approval
1. VE proposal - In order to prevent any delay, particularly
where the VE proposal is a part of Step II grant application, the
applicant should make every effort to ensure that adequate infor-
mation is included in the proposal. When appropriate, the Regional
Administrator may condition the grant so that design work can
proceed.
-------
2. Implementation of VE recommendations - Upon completion
of the VE analysis, recommendations will be submitted by the VE
team to the applicant. Normally, the applicant and the project
designer will determine how the recommendations can be implemented.
Results of such decisions will be submitted to the State and EPA
for review. When it is determined that rejection of a VE recom-
mendation is unfounded, the Regional Administrator may, on the
basis of cost-effectiveness, request further explanation or
reconsideration of the rejected VE recommendation.
VI. VE Team and Qualifications
1. Team Coordinator - In addition to demonstrated technical
and managerial capability, the team coordinator must have suc-
cessfully completed a 40 hour VE workshop conducted by an appropriate
organization such as the General Services Administration, the
American Institute of Architects, the American Consulting Engineers
Council, or an accredited university. In addition to the academic
training requirement, some actual VE experience on a construction
project will be required. Ideally, two actual VE experiences on
a construction project should be a minimum requirement for the VE
coordinator. However, such a stringent requirement will not be
realistic at this time because VE is still new to most sanitary
engineering firms and therefore there may not be sufficient
qualified VE coordinators available to meet our needs. In view of
this, the Regional Administrator can prior to December 31, 1976,
approve the VE coordinator's qualifications based on the academic
training requirement only.
2. VE team members - They may or may not have VE back-
ground, however, they must be experienced design professionals in
their own field. Size and composition of the team varies depending
on the type of project to be studied. For a treatment plant, the
team may consist of an electrical engineer, a mechanical engineer,
a civil/structural engineer, a sanitary engineer and a cost
estimator.
3. In-house VE capability - Some large design firms have
developed an in-house VE capability. A proposal to use this
capability is acceptable, provided the designer certifies that
the team members have not actually been involved in any part of
the proposed project design except for VE analysis.
-------
VII. VE Workshops and VE Project Review Sessions
1. Project review workshop - Normally, a project review
conducted according to the basic VE job plan (information, func-
tional analysis, creativity, evaluation and development) will
require approximately 40 hours of team effort. Additionally,
pre-workshop preparation and post-workshop followup may take two
to four weeks total, depending on project size.
2. Training and actual project review workshop combined -
If the applicant wishes to incorporate training in the project
workshop, the intent must be stated in the initial proposal and
additional costs associated with training must be properly identi-
fied and computed separately. Costs for training are not grant
eligible. Normally, combined training and review workshops will
require more than 40 hours and adequate time must be allocated to
project review.
VIII. Mandatory VE Program
In view of the magnitude of the EPA construction grant
program, and to ensure that more projects will receive the bene-
fits of VE review, a mandatory VE program based on the following
schedule is being developed.
1. After July 1, 1976, a VE proposal will be required in
all Step II grant applications with a total estimated project
construction cost of $10 million or greater.
2. For those projects where VE would not be mandatory, VE
participation is voluntary and is encouraged.
3. The mandatory VE analysis is applicable to Step II
grants only (i.e., preparation of plans and specifications).
IX. VE Handbook and References
A Value Engineering Handbook has been prepared and will be
made available to Regional Offices for distribution. The Handbook
contains information pertaining primarily to how to make a VE
proposal for an EPA project. The Handbook does not contain
detailed instructions on how to accomplish a VE study. The
following references contain that type of Information:
Dell'Isola, A.J. Value Engineering in the Construction Industry.
1st Edition. New York. Construction Publishing Co. 1973.
-------
GSA. Design for Value.
GSA. Value Engineering Handbook. PBS P8000.1
GSA. Value Engineering Workbook.
Gage, William L. Value Analysis. New York - McGraw-Hill. 1967.
Martin Company. Value Engineering Program. Book II - Cost Analysis.
Self-Study Program.1963.
Martin Company. Value Engineering Program. Book III - Functional
Evaluation. Self-Study Program. 1965.
Martin Company. Value Engineering Program. Book IV - Creativity
in Value Engineering. Self-Study Program. 1965.
-------
\
1 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
MAR 1 7 1976
PROGRAM REQUIREMENTS MEMORANDUM PRM NO. 75-37
Program Guidance Memorandum
PG-65
Subject: User Charge System: Plan and Schedule
From: John T. Rhett, Deputy Assistant Administrator
for Water Program Operations (WH-546)
To: Regional Administrators
ATTN: Water Division Directors
The purpose of this memorandum is to stress the importance of
implementing the regulation which requires the grantee to submit, with
his Step 2 application, a plan and schedule for the implementation of
his user charge system in sufficient detail to'enable the Regional
Office to monitor developmental progress and to enforce schedule
compliance.
Title II regulations (40 CFR 35.925-11), require the Regional
Administrator to determine, at the time of grant approval, that the
grantee has developed "...an approvable plan and schedule of implementation..."
for a system of user charges. However, a recent GAO study found this
requirement to be inconsistently applied. In some cases, implementation
schedules submitted by grantees were very brief, and consequently, the
Region lacked criteria needed to adequately monitor the grantee's progress.
Accordingly, the Comptroller General's report recommended that "...the
Agency require the submission of plans and schedules of implementation
from the grantees at the time of grant approval in sufficient detail to
provide the Agency with enforceable schedules."
Following receipt of this report, a copy of the Comptroller General's
letter was sent to the Regional Offices to alert them to the problem.
In addition, the section of the Construction Grant Handbook on User Charge
Systems was modified to include the following:
"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."
In brief, Regions are not to wait until the 50% payment point to
insure that "...the grantee has submitted adequate evidence of timely
-------
development of its system(s) of user charges." (§35.935-13). The
implementation schedule in the Step 2 application should provide for
the timely submission of specific documents—such as resolutions
of system adoption from the grantee and communities in the project
service area, partially or fully drafted user charge systems, sewer
use ordinances, etc.—as concrete evidence of implementation progress.
Also, steps should be taken in each Region to remind grantees of
a possible "Hold" on payments at the 50% construction point before that
point is reached. For example, the grantee's file could be checked when
a request for a 30% to 40% payment is submitted to determine if "...evidence
of timely development..." has been received. If not, a letter reminding
the grantee of the requirement should be included with that 30%-40%
payment so to obviate the need for delay at the 50% level.
-------
» *"\
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY /\pft 2 't^§
WASHINGTON. D.C. 20460
PROGRAM REQUIREMENTS MEMORANDUM PRM NO. 75-39
Program Guidance Memorandum PG-67
SUBJECT: Eligibility of Land Acquisition Costs for the Ultimate Disposal
of Residues from Wastewater Treatment Processes
FROM: John T. Rhett, Deputy Assistant Administrator
for Water Program Operations (WH-546)
TO: Regional Administrators
ATTN: Water Division Directors
I. PURPOSE
This memorandum provides guidance on the interpretation of Section
35.940.3 of the construction grant regulations (40 CFR Part 35) relative
to the eligibility of the cost of land required for the ultimate disposal
of residues resulting from wastewater treatment.
II. BACKGROUND
Program Guidance Memorandum No. 49 covers the eligibility of land
acquisition costs for land treatment processes and refers to the future
distribution of this guidance on the eligibility of land costs for
ultimate disposal of residues.
III. POLICY
A. Allowable Costs
The cost of purchasing land for ultimate disposal of residues fron
wastewater treatment is allowable for Federal grant assistance. Ultimate
disposal of residual wastes from wastewater treatment includes disposal
of sludges, ashes, grit or other residues by means of depositing such
materials in land fill sites.
Proposals to acquire land for spreading sludge may be approved if
the grantee demonstrates to the satisfaction of the Regional Administrator
that the primary purpose of the acquisition is disposal of such residues,
and disposal by other means set out in B.2.b. of this guidance is less
cost-effective or not available.
-------
Any land areas to be purchased for land spreading, except for
buffer zones, must be fully utilized for that purpose. Land require-
ments for the spreading of sludge shall be kept to an absolute minimum
determined on the basis of the maximum sludge application rate commen-
surate with ensuring that ground and surface waters are protected and,
in addition for agricultural lands, that cropland resources are pro-
tected and harmful contaminants are not accumulated in the human food
chain. Land acquisition costs for land areas with application rates
below 10 dry tons per acre per year will, in general, not be allowable,
although the Regional Administrator may grant a variance for a larger
land area (with a lower sludge application rate) on a case-by-case basis
where more cost-effective.
The cost of land required for land fill or land spreading, irregu-
larities in spray patterns, reasonable buffering, dikes and drainage
ditches for surface runoff control, groundwater protection measures, and
similar uses is allowable.
Where a purpose of a project is to improve or reclaim land as well
as to dispose of residual wastes, costs may be eligible for an amount
not to exceed the cost of the most cost-effective single purpose method
of disposal of the residual wastes as determined in accordance with this
guidance.
Where land is to be used for disposal of both residues from munici-
pal wastewater treatment and other wastes, only the land cost properly
allocable to disposal of municipal wastewater treatment residues is
allowable. One example of such cost allocation would be division of
costs between municipal waste treatment residues and other municipal
solid wastes based on their relative dry weight proportions. If the dry
weight of the treatment residues handled at the joint disposal site is
less than twenty-five (25) percent of the dry weight of all the wastes
to be disposed of in the land fill, no land acquisition costs for treat-
ment residues will be allowed.
While not exclusive, the cost of land for the following uses is not
allowable except where such land is also necessary for eligible residual
waste management uses as listed above.
1. Sites for placement of buildings, equipment, facilities and
sludge conveyance measures including pipelines, and access roads.
2. Sludge storage basins or other temporary storage facilities,
sludge drying beds, waste stabilization ponds and evaporation ponds.
The cost of leasing land or of obtaining use of land under contract
for residue disposal or utilization is not allowable.
-------
B. Cost Effectiveness Analysis
1. Factors to be Considered
The facility plan for the overall waste treatment system most
include a cost-effectiveness analysis of residual waste management
alternatives. The choice of a residual waste management method is to be
based on comparison of overall waste treatment system alternatives
recognizing the close interrelationships between those facilities
comprising the residual waste management subsystem and the remainder of
the overall waste treatment system.
The residual waste management subsystem includes the facilities,
management practices and lands required ultimately to assimilate resid-
ual wastes into land or air media, beginning with the grit, raw sludges
and other residues obtained directly from wastewater treatment processes.
To aid in screening residual waste management subsystems, the costs and
non-monetary factors for such subsystems may be compared on a preliminary
basis for each wastewater treatment process option. Alternatives which
seem feasible on the basis of the preliminary comparison should be
analyzed in detail.
The cost-effectiveness analysis of residual waste management options
is to include consideration of the following factors, with the amount
and level of detail commensurate with local conditions, the number of
feasible options available, and the complexity, size and nature of the
proposed waste treatment system:
a. Relations of wastewater treatment process option to volume
and characteristics of sludges and residues produced.
b. Conditioning, stabilization or pre-application treatment
for the disposal or utilization option.
c. Alternatives for landfill or land spreading site location
and for conveyance to sites.
d. Sludge storage requirements.
e. Market for free haul or sale of processed sludge and
expected net revenues from sales.
f. Option of contract payments for hauling and disposal of
processed sludge.
g. Land fill management procedures.
h. Land application method and rates and resultant area
required as determined by soils, climate and other site characteristics.
i. Options for obtaining necessary land management rights.
-------
j. Necessary provisions for and costs of relocating persons,
households and businesses.
k. Net revenues from sale of crops, forest products and live-
stock produced by land acquired for sludge application.
1. Environmental effects including impacts on air and water
quality and aesthetics.
m. Odor control measures necessary for land fill or land
spreading site.
n. Groundwater protection measures.
o. Surface runoff control measures.
p. Other public health measures.
q. Energy requirements and potential recovery facilities.
2. Special Considerations for Land Management Options
a. Arrangements for land management must be made to assure
operation over at least a 10 year period, but ordinarily not more than
20 years, to protect investments in facilities and equipment for disposal
or utilization of residual wastes.
b. The following alternatives must'be considered prior to
recommending outright purchase of land for land spreading of sludge or
other residues:
- Sale or free haul of processed sludge or residues
for use by others.
- Contractual payment for hauling processed sludge or
residues for use by others.
- Contract with landowners for rights to develop land
spreading site and to apply sludges, preferably with
either or both tasks to be performed by owners.
- Leasing of land spreading site, preferably providing
for site development or operations by owners.
- Land fill
c. The cost-effectiveness analysis should give special atten-
tion to the alternatives of sale, free-haul or contractual payment to
haul which result in beneficial uses of sludge. These alternatives help
achieve the wastewater treatment objectives without requiring the treat-
ment authority to undertake a major program of land acquisition, manage-
ment and utilization.
-------
C. Land Acquisition Requirements
Grant award or written EPA approval shall be obtained prior to any
acquisition of land for residual waste management in order that such
costs will be allowable. The procedures for the independent appraisal
and acquisition of land contained in the Uniform Relocation Assistance
and Real Property Acquisition Policies Act of 1970, (P.L. 91-646) 42 USC
Section 4651 et. sq. shall be followed. The EPA Regulation implementing
this statutory requirement is contained in Subpart F of Part 4 of Title
40 of the CFR, Section 4.60000 et. seq.
The grantee shall certify to the Regional Administrator that it
will comply with 40 CFR Section 30,810 and specifically Section 30.810
and Section 30.810-5. The certification will be reflected as an encum-
brance in the title of the land. The grantee shall obtain fee simple
title to all land acquired with grant assistance, with no encumbrances
other than the one protecting the Federal interest.
-------
\
? UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C 20460 .. c
AUG 16
/
PROGRAM REQUIREMENTS MEMORANDUM
PRM #76-5
SUBJECT: Flood Insurance Requirements
FROM: Deputy Assistant Administrator
for Water Program Operations
TO: Regional Administrators
ATTN: Water Division Directors
PURPOSE;
This Program Requirements Memorandum summarizes National Flood In-
surance Program requirements applicable to the construction grants
program. It supersedes Program Guidance Memoranda 25, 25A and 54.
DISCUSSION:
The National Flood Insurance Act of 1968 (42 U.S.C. 4001-4127) as
expanded and amended by the Flood Disaster Protection Act of 1973 (P.L.
93-234) provides for low cost flood insurance for projects in flood-
prone areas through the means of a subsidy. A prerequisite for this
assistance is the enactment by local jurisdictions of certain minimum
flood plain management measures to reduce or avoid future flood damage
within their flood-prone areas. When adequate flood plain management
measures have been adopted and approved by the Department of Housing and
Urban Development, HUD announces the community's eligibility for the
sale of flood insurance and the community is then participating in the
program.
The HUD Mandatory Purchase of Flood Insurance Guidelines were
printed in the Federal Register on July 17, 1974 (39 FR 26186-93), and
were supplemented on April 14, 1975, (40 FR 16710).
POLICY;
The Act requires local jurisdictions encompassing designated special
flood hazard areas to participate in the program and purchase flood
insurance as a condition of receiving any form of Federal or Federally-
related assistance for construction purposes or for the acquisition of -
any real or non-expendable personal property in an identified special
flood hazard area if the total cost of such activities is $10,000
-------
per structure or more. Each community has until one year after notifica-
tion of identification as a flood-prone community to enter the flood
insurance program (i.e., become a "participating" or "eligible" community)
or become ineligible for any Federal financial assistance for acquisition
or construction in the flood hazard area.
A community which has not entered the flood insurance program with-
in one year after notification of flood-prone status will be ineligible
to receive a Step 3 grant until it does enter the program if the insura-
ble portion of the proposed project is in a designated flood hazard
area.
Communities which have not yet been surveyed for flood-prone sta-
tus, or which have been surveyed but were notified of flood-prone status
less than a year before, do not have to be participating in the flood
insurance program to obtain a Step 3 grant. Upon completion of the year
after the notification, however, each community in this latter category
must participate in the flood insurance program prior to obtaining any
further grants for construction in flood hazard areas.
Grants may be awarded to non-participating communities where the
project is outside a designated area.
Where the prospective grantee is a "participating" community but
the grant would include the construction of an insurable facility in a
designated area of a non-participating neighboring jurisdiction (and
more than a year has elapsed since identification of the flood hazard
area) the failure of the neighboring jurisdiction to participate in
flood insurance prevents the award of the grant.
IMPLEMENTING PROCEDURE;
A. Insurance Requirements
Environmental Protection Agency grant regulations and procedures,
40 CFR 30.405-10, (40 FR 20232, May 8, 1975), require that the grantee
or the construction contractor (whichever party or parties has insurable
interest) must acquire any flood insurance made available to it under
the National Flood Insurance Act of 1968, as amended, if the value of
insurable improvements is $10,000 per structure or more. Such insurance
must be purchased beginning with the period of construction and maintained
for the entire useful life of the project. HUD has interpreted the
statute as providing insurance only for grant projects involving a new
or reconstructed surface structure which is walled and roofed.
The amount of insurance required is the- total project cost, exclud-
ing facilities which are uninsurable under the National Flood Insurance
Program such as bridges, dams, water and sewer lines (above or below
-------
ground) and underground structures and excluding the cost of the land,
or the maximum limit of coverage made available to the grantee under the
National Flood Insurance Act, whichever is less. The present maximum
limit for non-residential structures is $200,000 on the structure and
$200,000 on contents.
The grantee must certify, along with the first payment request in-
volving reimbursement for insurable construction, that he has purchased
the required flood insurance. The evidence of such insurance must be
available at all times for submission to the Project Officer on request
or for review in the grantee's offices.
Flood insurance is required for buildings during the course of
construction as well as for building materials or equipment stored in a
fully-enclosed structure adjacent to the building site, if the materials
or equipment are scheduled to be incorporated into structures which are
eligible for insurance. The amount of flood insurance required at any
given time need not exceed the amount of the grantee's total disbursement
for insurable construction to date. While underground structures are
not insurable, foundations and footings of a structure which is primarily
above-ground are insurable and are subject to the insurance purchase
requirement since they are the initial stages of construction of the
above-ground portions of the structure.
If a Step 3 grant is made to a grantee which has previously been
assisted with respect to the same facility, the grantee must purchase
flood insurance on the previously assisted facility as well as on the
new construction. The amount of flood insurance required should be
based upon its current value, however, and not on the amount of assist-
ance previously provided.
Flood proofing does not eliminate nor reduce the requirement for
program participation or insurance but could affect the rate charged for
insurance.
The required insurance premium for the period of construction is an
allowable project cost.
B. List of Communities Ineligible for Step 3 Grants
A cumulative list of ineligible communities (i.e. those which were
designated as flood-prone a year or more before but have not met the
above requirement and are therefore prohibited from receiving a Step 3
grant for projects in designated flood hazard areas) is published during
the first week in each month by HUD in the Federal Register under the
title "National Flood Insurance Program, Flood-prone Areas of Communities
-------
Subject to July 1, 1975, Prohibition of Federal and Federally-Related
Assistance." This list will also contain the names of the communities
that face a qualification deadline sometime during that month. In
addition, an updated listing will be published on a weekly basis remov-
ing the names of those communities that have subsequently qualified.
In addition, each Regional Office receives HUD's book-size monthly
list of communities participating, suspended, withdrawn and not parti-
cipating (with flood hazard area identified) in the program. The Region-
al Office may request HUD/FIA Washington to place additional names on
the mailing list for this publication if more copies are needed.
C. Regional Office Responsibilities
The Regional Office shall discuss flood insurance requirements with
all grant applicants at the pre-application conference. It should be
stressed that non-participating communities which have been designated
flood-prone for a year or more under the Flood Disaster Protection Act
will not be able to receive Step 3 grant assistance for a project in the
designated flood-prone area until they have entered the flood insurance
program, and that to qualify they must develop flood plain management
strategies in compliance with HUD guidelines as set forth in Title 24 of
the Code of Federal Regulations, Chapter 10, Subchapter B, commencing at
Part 1909. They will, however, be able to receive grant funds for Steps
1 and 2 without such participation.
Each region has the responsibility to make each community with a
Step 1 or Step 2 grant aware of the National Flood Insurance Program and
its requirements relative to Step 3 grant assistance.
Before awarding any Step 3 grant, the region shall check the most
current list of ineligible communities and communities about to become
ineligible to determine if the applicant or grant project is among them.
D. Environmental Impact of Projects on Flood Plains
The environmental impact of projects on flood plains should be
analyzed in accordance with other facility planning guidance.
E. Sources of Maps and Other Program Information
Flood hazard areas are shown on Flood Hazard Boundary Maps or Flood
Insurance Rate Maps issued by HUD at intervals. These maps are maintained
on file within each eligible community in a repository designated by the
chief executive officer. Maps, literature and policy application forms
and manuals are available from any National Flood Insurers Association
-------
servicing company. HUD Regional Flood Insurance Specialists are located
in each HUD Regional Office and should be utilized by EPA personnel to
answer questions relating directly to the operation of the flood insurance
program. Addresses of HUD Regional Flood Insurance Specialists and
State Coordination Agencies for Flood Insurance are attached as a portion
of the EPA Grants Information Guide, National Flood Insurance Program.
If these sources cannot assist, contact the Federal Insurance Administra-
tion, HUD, Washington, D.C. 20410, 202-755-5581 or toll free 800-424-
8872 or 8873.
F. Assistance From Headquarters
Any questions on the application of the policy to specific projects
should be referred to the Facility Requirements Branch, (202-426-9404),
Office of Water Program Operations or to the Grants Policy and Procedures
Branch (202-755-0860), Grants Administration Division, 0PM.
Attachment
REFERENCES:
The National Flood Insurance Act of 1968 (42 U.S.C. 4001-4127)
The Flood Disaster Protection Act of 1973 (PL 93-234)
HUD Mandatory Purchase of Flood Insurance Guidelines, 1974, (39 FR
26186-93), (40 FR-16710)
EPA Grant Regulations and Procedures (40 FR 20232, May 8, 1975)
(40 CFR 30.405-10)
National Flood Insurance Program, Flood Prone Areas of Communities
Federal Register-Monthly
Title 24, CFR, Chapter 10, Subchapter B, 1909-
-------
TJ.S
.A. OIL N C "5T
D.C. ao-ieo
DIVISION
OJR..A.NTI3
OTJIDIC
NATIONAL FLOOD INSURANCE PROGRAM
General
The National Flood Insurance Program is a Federally-subsidized
program authorized by the National Flood Insurance Act of 1968 (42
U.S.C. 4001-4127) to protect property owners who previously had been
unable to get coverage through the private insurance industry. It is
administered by the Federal Insurance Administration, Department of
Housing and Urban Development. The program, for the first time,
made flood insurance available to individuals at affordable rates. In
return for the Federal subsidy, State and local governments are required
to adopt certain minimum floodplain management measures to reduce or
avoid future flood damage within their floodprone areas.
The Flood Disaster Protection Act of 1973 (P.L. 93-234, December 31,
1973) greatly expanded the available limits of flood^insurance coverage
and imposed additional requirements on property owners and communities.
The Act required the purchase of flood-insurance on and after
March 2, 1974, as a condition of receiving any form of Federal or
Federally-related assistance for construction purposes or for the acquisition
of any real or nonexpendable personal property in an identified special flood
hazard area that is located within any community currently participating in
the National Flood Insurance Program. A "participating community," also
known as an "eligible community," is a community in which the Federal
Insurance Administration has authorized the sale of flood insurance under
the National Flood Insurance Program.
For any community that was not participating in the program at the
time the assistance was approved, the statutory requirement for the purchase
of flood insurance did not apply. However, beginning July 1, 1975, or one
year after notification of identification as a flood-prone community,
whichever is later, the requirement applies to all identified special
flood hazard areas within the United States, which have been delineated
on Flood Hazard Boundary Maps or Flood Insurance Rate Maps issued by
the Department of Housing and Urban Development. Thereafter, no EPA
financial assistance can legally be approved for real or nonexpendable
personal property or for construction purposes in these areas unless
the community has entered the program and flood insurance is purchased.
Regulations
HUD regulations governing the National Flood Insurance Program
are set forth in Title 24 of the Code of Federal Regulations, Chapter 10,
Subchapter B, commencing at Part 1909.
Supersedes information sheet
dated August 8, 1974
July 1, 1975
'
Zacmo Data:
Or an to Information Branch
-------
The final EPA general grant regulations published on the
Federal Register on May 8, 1974, include the requirements for the
purchase of flood insurance as a condition of EPA assistance (40 CFR
30.405-10.)
EPA Grantee Requirements
1. Wastewater treatment construction grants.
The grantee or the construction contractor, as appropriate, must
acquire flood insurance made available to it under the National Flood
Insurance Act of 1968, as amended, beginning with the period of construction
and maintain such insurance for the entire useful life of the project if
the total value of insurable improvements is $10,000 or more. The
amount of insurance required is the total project cost, excluding
facilities which are uninsurable under the National Flood Insurance
Program and excluding the cost of the 'land, or the maximum limit
of coverage made available to the grantee under the National Flood
Insurance Act, whichever is less. The required insurance premium
for the period of construction is an allowable project cost.
2. Other grant programs.
The grantee must acquire and maintain any flood insurance made
available to it under the National Flood Insurance Act of 1968, as
amended, if the approved project includes (a) any incidental construction-type
activity, or (b) any acquisition of real or nonexpendable personal property,
and the total cost of such activities and acquisitions is $10,000 or more.
The amount of insurance required is the total cost of any insurable,
nonexpendable personal or real property acquired, improved, or
constructed, excluding the cost of land, as a direct cost under the grant,
or the maximum limit of coverage made available to the grantee under
the National Flood Insurance Act, as amended, whichever is less, for
the entire useful life of the property. The required insurance premium
for the period of project support is an allowable project cost.
If EPA provides financial assistance for nonexpendable personal property
to a grantee that the Agency has previously assisted with respect to .real
estate at the same facility in the same location, EPA must require flood
insurance on the previously-assisted building as well as on the personal
property. The amount of flood insurance required on the building should
be based upon its current value, however, and not on the amount of assistance
previously provided.
Sources of insurance policies, maps, and program information
1. Insurance policies under the National Flood Insurance Program
can be obtained from any licensed property insurance agent or broker
serving the eligible community, or from the National Flood Insurers
Association (NFIA) servicing company for the State. A current listing
of servicing companies is enclosed.
(2)
-------
2. Flood Hazard Boundary Maps are tl"- lirst maps prepan-d in the.
identification process. These indicate the1, .locations of identified
special flood hazard areas and are always maintained on Cile within each
eligible (participating) community in a repository designated by the mayor
or chief executive officer, usually the building inspector's office or
the city clerk's office. The address of such repository is published
at 24 CFR 1914 and is.amended regularly in the Federal Register.
The Flood Insurance Rate Maps are issued later following a detailed study
of the flood hazard area. These maps delineate degrees of flood hazard
and include more precise area identification.
3. Maps, literature, and policy application forms and manuals
are available for distribution from any NFIA servicing company. The servicing
companies are also equipped to answer questions on eligibility of communities,
scope of coverage, and maximum amounts of insurance available with respect'
to particular types of buildings.
4. Questions that cannot be answered by individual agents or brokers
or by the appropriate servicing company may be referred to the National
Flood Insurers Association, 1755 Jefferson Davis Highway, Alexandria, Va.,
22202, telephone 703-920-2070; to the flood insurance representative at the
nearest HUD regional office (list enclosed); or to the Federal Insurance
Administration, HUD, Washington, D.C. 20410, 202-755-5581, or toll free
800-424-8872 (8873).
5. Communities may obtain assistance from the appropriate State
Coordinating Agency in adopting the required flood plain management
regulations and qualifying for the program. A list of the State Coordinating
Agencies is also attached.
6. Copies of statutes, program regulations, .and community eligibility
application forms may be obtained from HUD regional offices or directly
from the Federal Insurance Administration in Washington, D. C.
(3)
-------
Department of Housing And Urban Development
REGIONAL FLOOD INSURANCE SPECIALISTS
REGION I
John P. Kennedy Federal Building
Room hO$A
Boston, Massachusetts 02203
Telephone: (617) 223-2616 or 2709
(For Connecticut, Maine, Massachusetts,
New Hampshire, Rhode Island, Vermont)
REGION II
26 Federal Plaza
New York, New York 10007
Telephone: (212) 26U-U756 or 8021
(For New Jersey, New York,
Puerto Rico)
REGION III
Curtis Building
Sixth and Walnut Streets
Philadelphia, Pennsylvania 19106
Telephone: (215) 597-9581
(For Delaware, District of Columbia,
Maryland, Pennsylvania, Virginia,
West Virginia)
REGION IV
1371 Peachtree Street, N.E.
Atlanta, Georgia 30309
Telephone: (UOU) 526-2391
(For Alabama, Florida, Georgia,
Kentucky, Mississippi, North
Carolina, South Carolina, Tennessee)
REGION V
300 South Wacker Drive
Chicago, Illinois 60606
Telephone: (312) 353-0757
(For Illinois, Indiana, Michigan,
Minnesota, Ohio, Wisconsin)
REGION VI
New Federal Building
1100 Commerce Street
Dallas, Texas 75202
Telephone: (2lU) 7U9-7U12
(For Arkansas, Louisiana, New
Mexico, Oklahoma, Texas)
REGION VII
Federal Office Building
911 Walnut Street
Kansas City, Missouri 6U106
Telephone: (8l6) 37^-2161
(For Iowa, Kansas, Missouri,
Nebraska)
REGION VIII
Federal Building
1961 Stout Street
Denver, Colorado 80202
Telephone: (303) 837-23U7
(For Colorado, Montana, North
Dakota, South Dakota, Utah,
Wyoming)
REGION IX
U50 Golden-Gate Avenue
P. 0. Box 36003
San Francisco, California 9U102
Telephone: pending
(For Arizona, California, Hawaii,
Nevada)
REGION X
Room 3068 Arcade Plaza Building
1321 Second Avenue
Seattle, Washing-ton 98101
Telephone: (206) 14^2-1026
(For Alaska, Idaho, Oregon,
Washington)
(4)
-------
Department of Housing And Urb.-au Development
STATE COORDINATING AGENCIES FOR FLOOD INSURANCE
ALABAMA
Alabama Development -Office
Office of State Planning
State Office Building
501 Dexter Avenue
Montgomery, ^Alabama 36101*
ALASKA
Department of Community and
Regional Affairs
Division of Community Planning
Pouch B
Juneau, Alaska 99811
ARIZONA
Arizona State Land Department
1621* W. Adams, Room 1*00
Phoenix, Arizona 85007
ARKANSAS
Division of Soil and Water
Resources
State Department of Commerce
1920 West Capitol Avenue
Little Rock, Arkansas 72201
CALIFORNIA
Department of Water Resources
Post Office Box 388
Sacramento, California 95802
COLORADO
Colorado Water Conservation Board
Room 102
181*5 Sherman Street
Denver, Colorado 80203
CONNECTICUT
Department of Environmental
Protection
Division of Water and Related
Resources
Room 207, State Office Building
Hartford, Connecticut 06115
DELAWARE
Division of Soil and Water
Conservation
Department of Natural Resources
and Environmental Control
Tatnall Building, Capitol
Dover, Delaware 19901
FLORIDA
Department of Community Affairs
2571 Executive Center Circle East
Howard Building
Tallahassee, Florida 32301
GEORGIA
Department of Natural Resources
Office of Planning and Research
270 Washington Street, S. W. Rm. 707
Atlanta, Georgia 3033U
HAWAII
Division of Water and Land
Development
Department of Land and Natural
Resources
P. 0. Box 373
Honolulu, Hawaii 96809
IDAHO
Department of Water Administration
State House - Annex 2
Boise, Idaho 83707
ILLINOIS
Governor's Task Force on Flood
Control
300 North State St.
P. 0. 3ox 1*75, Rm. 1010
Chicago, Illinois 60610
INDIANA
Division of Water
'Department of Natural Resources
608 State Office Building
Indianapolis, Indiana 1*6201*
IOWA
Iowa Natural Resources Council
James W. Grimes Building
Des Moines, Iowa 50319
KANSAS
Division of Water Resources
State Department of Agriculture
State Office Building
Topeka, Kansas 66612
KENTUCKY
Division of Water
Kentucky Department of Natural
Resources
Capitol Plaza Office Tower
Frankfort, Kentucky 1*0601
-------
LOUISIANA
State Department of Public Works
P. 0. Box 14*155
Capitol Station
Baton Rouge, Louisiana 7080U
MAINE
Office of Civil Emergency
Preparedness
State House
Augusta, Maine 01*330
MARYLAND
Department of Natural Resources
Water Resources Division
State Office Building
Annapolis, Maryland 21U01
MASSACHUSETTS
Division of Water Resources
Water Resources Commission
State Office Building
100 Cambridge Street
Boston, Massachusetts 02202
MICHIGAN
Water Resources Commission
Bureau of Water Management
Stevens T. Mason Building
Lansing, Michigan [$926
MINNESOTA
Division of Waters, Soils-and
Minerals
Department of Natural Resources
Centennial Office Building
St. Paul, Minnesota 55101
MISSISSIPPI
Mississippi Research and Develop-
ment Center
P. 0. Drawer 21*70
Jackson, Mississippi 39205
MISSOURI
Department of Natural Resources
Division of Program and Policy
Development
State of Missouri
308 East High Street
Jefferson, Missouri 65101
MONTANA
Montana Dept. of Natural Resources
and Conservation
Water Resources Division
32 South Ewing Street
Helena, Montana 59601
NEBRASKA
Nebraska Natural Resources
Commission
Terminal Building, 7th Floor
Lincoln, Nebraska 68508
NEVADA
Division of Water Resources'
Department of Conservation
and Natural Resources
Nye Building
Carson City, Nevada 89701
NEW HAMPSHIRE
Office of Comprehensive Planning
Division of Community Planning
State House Annex
Concord, New Hampshire 03301
NEW JERSEY
Bureau of Water Control
Department of Environmental
Protection
P. 0, Box 1390
Trenton, New Jersey 08625
NEW MEXICO
State Engineer's Office
Bataan Memorial Building
Santa Fe, New Mexico 87501
NEW YORK
New York State Department of
Environmental Conservation
Division of Resources Management
Services
Bureau of Water Management
Albany, New York 12201
NORTH CAROLINA
Division of Community Assistance
Department of Natural &
Economic Resources
P. 0. Box 27687
Raleigh, North Carolina 27611
(6)
-------
NORTH DAKOTA
State Wg.ter Commission
State Office Building
900 E. Boulevard
Bismarck, North Dakota 58501
OHIO
Ohio Dept. of Natural Resources
Flood Insurance Coor. Building
Fountain Square
Columbus, Ohio U322U
OKLAHOMA
Oklahoma Water Resources Board
221^1 Northwest Fortieth Street
Oklahoma City, Oklahoma 73112
OREGON
Executive Department
State of Oregon
Salem, Oregon 97310
PENNSYLVANIA
Department of Community Affairs
Commonwealth of Pennsylvania
Harrisburg, Pennsylvania 17120
PUERTO RICO
Puerto Rico Planning Board
1570 Ponce de Leon Avenue
Stop 22
Santurce, Puerto Rico 00908
RHODE ISLAND
R. I. Statewide Planning Program
265 Melrose Street
Providence, Rhode Island 02907
SOUTH CAROLINA
South Carolina Water Resources
Commission
P. 0. Box U515
Columbia, South Carolina 2921$
SOUTH DAKOTA
State Planning Bureau
Office of Executive Management
State Capitol
Pierre, South Dakota 57501
TENNESSEE
Tennessee State Planning Office
660 Capitol Hill Building
Nashville, Tennessee 37219
TEXAS
Texas Water Development Board
P. 0. Box 13087
Capitol Station
Austin, Texas 78711
UTAH
Department of Natural Resources
Division of Water Resources
State Capitol Building, Rm. 1^35
Salt Lake City, Utah Bl^ilk
VERMONT
Management & Engineering Division
Water Resources Department
State Office Building
Montpellier, Vermont 05602
VIRGINIA
Bureau of Water Control
Management
State Water Control Board
Post Office Box 111^3
Richmond, Virginia 23230
WASHINGTON
Department of Ecology
01ymp;La, Washington 98501
WEST VIRGINIA
Office of Federal-State Relations
Division of Planning & Development
Capitol Building, Rm. 150
Charleston, West'Virginia 25305
WISCONSIN
Department of Natural Resources
P. 0. Box U50
Madison, Wisconsin 53701
WYOMING
Wyoming Disaster and Civil
Defense Agency
P. 0. Box 1709
Cheyenne, Wyoming 82001
(7)
-------
Department of Housing And Urbn.n Development
National Flood Insurance Program
List of Servicing Company Offices
March 1, 1975
ALABAMA DELAWARE
The Hartford Insurance Group General Accident F & L Assurance
Hartford Building Corp. Ltd.
100 Edgewood Avenue Ull; Walnut Street
Atlanta, Georgia 30301 Philadelphia, Pennsylvania 19106
Phone: (UOU) 521-2059 Phone: (215) 238-5000
ALASKA
Industrial Indemnity Co. of Alaska
P. 0. Box 307
Anchorage, Alaska 99510
Phone: (907) 279-9^1
ARIZONA
Aetna Technical Services Inc.
Suite 903
3003 North Central Avenue
Phoenix, Arizona 85012
Phone: (602) 26U-2621
ARKANSAS
The Travelers Indemnity Company
700 South University
Little Rock, Arkansas 72203
P. 0. Box 51
Phone: (501) 66U-5085
CALIFORNIA-NORTHERN
Fireman's Fund American Insurance
Companies
P. 0. Box 3136
San Francisco, California 9UH9
Phone: (1^5) U21-l6?6
CALIFORNIA-SOUTHERN
Fireman's Fund American Insurance
Companies
P. 0. Box 2323
Los Angeles, California 90051
Phone: (213) 381-311*1
COLORADO
CNA Insurance
1660 Lincoln-Suite 1800
Denver, Colorado 80203
Phone: (303) 266-0561
CONNECTICUT
Aetna Insurance Company
P. 0. Box 1779
Hartford, Connecticut 06101
Phone: (203) 523-1+861
FLORIDA
The Travelers Indemnity Company
1516 East Colonial Drive
Orlando, Florida 32803
Phone: (305) 896-2001
GEORGIA
The Hartford Insurance Group
Hartford Building
100 Edgewood Avenue
Atlanta, Georgia 30301
Phone: (UOU) 521-2059
HAWAII
First Insurance Co. of Hawaii, Ltd.
P. 0. Box 2866
Honolulu, Hawaii 96803
Phone: (808) 5U8-511
IDAHO
Aid Insurance Company
Snake River Division
18U5 Federal Way
Boise, Idaho 83701
Phone: (208) 3U3-U931
ILLINOIS
State Farm Fire & Casualty Co.
Illinois Regional Office
2309 E. Oakland Avenue
Bloomington, Illinois 61701
Phone: (309) 557-7211
INDIANA
United FaJ.nn Bureau Mutual Insurance Co,.
130 East Washington Street
Indianapolis, Indiana 1+620U
Phone: (317) 263-7200
IOWA
Employers Mutual Casualty Company
P. 0. Box 8814
DesHoines, Iowa SOJOk
Phone: (515) 280-2511
(8)
-------
KANSAS
Royal-Globe Insurance Companies
1125 Grand Avenue
Kansas City, Missouri 64141
Phone: (816) 842-6116
KENTUCKY
CNA Insurance
580 Walnut Street
Cincinnati, Ohio 45202
Phone: (513) 621-7107
LOUISIANA
Aetna Technical Services, Inc.
P.O. Box 61003
New Orleans, Louisiana 70160
Phone: (504) 821-1511
MAINE
Commercial Union Insurance Company
c/o Campbell, Payson & Noyes
27 Pearl St., Box 527 Pearl St. Station
Portland, Maine 04116
Phone: (207) 774-1431
MARYLAND
U.S. Fidelity & Guaranty Company
P.O. Box 1138
Baltimore, Maryland 21203
Phone: (301) 539-0380
MASSACHUSETTS-EASTERN
Commercial Union Insurance Company
1 Beacon Street
Boston, Massachusetts 02108
Phone: (617) 725-6128
MASSACHUSETTS-WESTERN
Aetna Insurance Company
P.O. Box 1779
Hartford, Connecticut 061 Ql
MICHIGAN
Insurance Company of NortK America
Room 300-Buhl Building
Griswold & Congress Streets
Detroit, Michigan 48226
Phone: (313) 963-4114
MINNESOTA-EASTERN
The St. Paul Fire & Marine Company
P.O. Box 3470
St. Paul, Minnesota 55165
Phone: (612) 222-7751
MINNESOTA-WESTERN
The St. Paul Fire & Marine Company
7900 Xerxes Avenue South
Minneapolis, Minnesota 55431
Phone: (612) 835-2600
MISSISSIPPI
The Travelers Indemnity Company
5360 Interstate 55 North
P.O. Box 2361
Jackson, Mississippi 39205
Phone: (601) 956-5600
MISSOURI-EASTERN
MFA Insurance Companies
1817 West Broadway
Columbia, Missouri 65201
Phone: (314) 445-8441
MISSOURI-WESTERN
Royal-Globe Insurance Companies
1125 Grand Avenue
Kansas City, Missouri 64141
Phone: (816) 842-6116
MONTANA
The Home Insurance Company
8 Third Street N. P.O. Box 1031
Great Falls, Montana 59401
Phone: (406) 761-8110
NEBRASKA
Royal-Globe Insurance Companies
1126 Grand Avenue
Kansas City, Missouri 64141
Phone; (816) 842-6116
NEVADA
The Hartford Insurance Company
P.O. Box 500
Reno, Nevada 89504
Phone: (702) 329-1061
(9)
-------
.NEW HAMPSHIRE
Commercial Union Insurance Company
1 Beacon" Street
Boston, Massachusetts 02108
Phone: (617) 725-6128
NEW JERSEY
Great American Insurance Company
5 Dakota Drive
Lake Success, New York IIO^O
Phone: (201) 22U-U200
NEW MEXICO
CNA Insurance
1660 Lincoln St., Suite 1800
Denver, Colorado 80203
Phone: (303) 266-0561
NEW YORK
Great American Insurance Company
5 Dakota Drive
Lake Success, New York HOljO
Phone: (5l6) 775-6900
NORTH CAROLINA
Kemper Insurance
1229 Greenwood Cliff
Charlotte, North Carolina 2820^
Phone: (70t*) 372-7150
NORTH DAKOTA
The St. Paul Fire & Marine Insurance
Company
2*~>\4 Ha mm Building
U08 St. Peter Street
St. Paul, Minnesota 55102
Phone: (612) 227-9581
OHIO-NORTHERN
Commercial Union Insurance Company
1300 East 9th St.
Cleveland, Ohio hkllk
Phone: (216) 522-1060
OHIO-SOUTHERN
CNA Insurance
580 Walnut Street
Cincinnati, Ohio 145202
Phone: (513) 621-7107
OKLAHOMA
L1'-public-Vanguard Insurance Group
]\ 0. Box 3000
Dallas, Texas 75221
Phone: (2lU) 520-0301
OREGON
State Farm Fire & Casualty Company
U600 25Lh Avenue, N.E.
Salem, Oregon 97303
Phone: (503) 393-0101
PENNSYLVANIA
General Accident F & L Assurance
Corp., Ltd.
UlU Walnut Street
Philadelphia, Pennsylvania 19106
Phone: (215) 238-5512
PUERTO RICO
I.S.O. of Puerto Rico
Penthouse 7th Ochoa Bldg.
7th floor, P.O. Box 1333
San Juan, Puerto Rico 00902
Phone: (809) 723-0000
RHODE ISLAM)
American Universal Insurance Co.
lljll Way land Avenue
Providence, Rhode Island 0290U
Phone: (IjOl) 351-1+600
SOUTH CAROLINA
Maryland Casualty Company
P. 0. Box-11615
Charlotte, North Carolina 28209
Phone: (?OU) 525-8330
SOUTH DAKOTA
The St. Paul Fire & Marine Insurance Co.
25U Hamm Building
1|08 St. Peter Street
St. Paul, Minnesota 55102
Phone: (612) 227-9581
TENNESSEE
CNA Insurance
110-21st Avenue South
Nashville, Tennessee 37203
Phone: (6l5) 327-0061
(10)
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
NOV 2 3 1976
CONSTRUCTION GRANTS
Program Requirements Memorandum No. 77-1
SUBJECT: Treatment Works for Recreational Parks, Industrial Parks
and Institutions
FROM: John T. Rhett, Deputy Assistant AdministratoiiO^ /vv\
for Water Program Operations (WH-546) /
TO: Regional Administrators I - X
ATTN: Water Division Directors
I. PURPOSE
This memorandum confirms Agency policy on construction grant funding
of treatment works which have as their primary or exclusive purpose
providing service for recreational parks, industrial parks or insti-
tutions such as schools, hospitals, prisons, and nursing homes.
II. DISCUSSION
Applications for grants for wastewater treatment projects for
recreational parks, industrial parks, schools and various other in-
stitutions have been received in several regions. Regions have asked
whether these projects should receive Federal assistance while facility
needs and permit conditions for existing comiunities remain unmet.
It is the policy of this Agency, consistent with P.L. 92-500, to
assign highest priority to the provision of grant assistance for waste-
water treatment works to reduce pollution from the backlog of existing
municipal wastewater discharges. Program Guidance Memorandum (SAM-9)
reaffirms this objective, stating that construction grant funds are
intended to be used primarily for the abatement of existing pollution
rather than for the treatment of expected future wastewater flows. As a
means of attaining this objective, the above memorandum requires that
the major priority system criterion, "population affected" be defined as
that population presently existing within the affected area.
III. RELATIONSHIP TO OTHER REQUIREMENTS
This memorandum is concerned with the preparation of State project
priority lists and the Agency's existing policy with respect to the
funding of treatment works for recreational parks, industrial parks or
-------
institutions insofar as it concerns the ranking of projects on State
project priority lists. This memorandum does not affect the Agency's
requirements concerning the eligibility of grantees or the eligibility
of projects for the treatment of industrial wastes. The Agency's regu-
lations define eligible grantees, municipalities, in 40 CFR S35.905-14
and indicate that certain grant applicants, such as a school district
which does not have as one of its principal responsibilities the treat-
ment, transport, or disposal of liquid wastes, would not be eligible for
grant assistance. The Agency's regulations in 40 CFR §35.925-15 state
the costs for facilities for the treatment of industrial wastes are not
allowable unless the grantee-applicant is required to remove such
pollutants from non-industrial sources and the project is included in a
waste treatment system with the principal purpose of providing treatment
for domestic wastes of an entire area. The Agency may continue to deny
grant assistance to such grantee applicants or for such projects irrespective
of and independent of its consideration of State project priority lists
and review of individual grant applications inconsistent with the Agency's
policies regarding priority lists set forth in this memorandum.
IV. POLICY
A. Objectives
Wastewater treatment projects designed to serve proposed recreational
parks, industrial parks, and institutions such as schools, hospitals,
prisons and nursing homes are not to be grant funded until existing
needs for pollution control have been met. Treatment works projects
which have as their primary or exclusive purpose providing service for
existing parks or institutions are not to be grant funded unless their
construction is necessary to alleviate a serious, existing pollution
problem and the individual projects are justified by a rigorous case-by-
case application of the primary priority system criteria (i.e., the
severity of pollution problems, the size of the existing population
affected, and the need for the preservation of high quality waters.)
B. State Responsibilities
To achieve the above objectives, EPA will confirm and strengthen
its existing policy by requiring states to do the following:
(1) Apply the "existing population affected" criterion rigorously
in the preparation of state project priority lists to exclude from
fundable ranking treatment works projects which have as their primary or
exclusive purpose providing service for proposed recreation parks,
industrial parks, and institutions, until projects meeting the criterion
have been funded.
-------
(2) Strictly apply the priority criteria cited in the above
presentation of EPA's objectives on a case-by-case basis to projects
designed to control existing pollution problems created by existing
parks and institutions.
(3) Review grant applications, including plans of study and
facility plans, for individual projects to further assure cotipliance
with the above priority list requirements.
C. EPA Responsibilities
EPA will confirm and strengthen its existing policy by doing the
following :
(1) Exclude any projects failing to comply with the requirements
set forth in the prior section concerning a State's responsibilities in
the preparation of the State project priority list prior to the approval
of the State project priority list.
(2) Review grant applications for individual projects to further
assure compliance with the requirements set forth in the prior section
concerning a State's responsibility in reviewing individual grant
applications and reject any applications failing to meet these require-
ments. States and grant applicants must continue to recognize that EPA
approval of Step 1 funding does not constitute a commitment for the
award of Step 2 grant assistance.
V. IMPLEMEISITATiaSt
The States are to be advised of the Agency's confirmation and
extension of its policy with regard to this subject area at once. The
States will be requested to begin immediately to review individual grant
applications to implement the requirements set forth above outlining
State responsibilities to assure compliance "with EPA's policy and to
reject non-conforming applications. EPA will continue to confirm and
strengthen its existing policy and review individual grant applications
to further assure compliance with those requirements. The Regional
Administrator, at his discretion, may review existing State project
priority lists and will review forthcoming priority lists to bring them
into conformance with the above-outlined objectives and the requirements
set forth above concerning State responsibilities.
VI.
A. 40 CFR S35.914(c) (1) , State Determination of project priority
lists; project priority list.
B. Program Guidance Memorandum: SAM-9, State Priority Systems
Used in the Development of State Project Priority Lists, September 29,
1975.
-------
4
C. 40 CFR 835.905-14 Municipality.
D. 40 CFR 835.925-15 Treatment of industrial wastes.
-------
9 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
? WASHINGTON, D.C. 20460
November 29, 1976
OFFICE OF WATER AND
HAZARDOUS MATERIALS
CONSTRUCTION GRANTS PROGRAM
REQUIREMENTS MEMORANDUM
PRM #77-2
SUBJECT: Grant Eligibility of Start-up Services
FROM: John T. Rhett, Deputy Assistant Administrator 4^A*i"7^
for Water Program Operations (WH-546) /
TO: Regional Administrators I - X
ATTN: Water Division Directors
PJJRPPJSE: The purpose of this memorandum is to identify specific services,
rendered during the start-up period of a new treatment works, that are
eligible for grant funding. Such services will help assure that municipal
treatment works will achieve operational objectives more rapidly and
effectively.
PZSSU_SS_Ip_N: In response to a recognized need to place increased emphasis
on the effective operation of new waste treatment facilities constructed
with Federal grant funds, it has been determined that the cost of certain
services provided during the plant start-up period shall be eligible
for grant support. Such services are intended to assure that: design
operational efficiency is achieved as quickly as possible; process
control and related equipment problems are identified and resolved;
onsite instruction to personnel in details of the process and equipment
of each particular plant is provided, and final revisions to the O&M
manual, based upon actual operating experience, are made.
POLICY: This PRM confirms eligibility for start-up services under
the following terms and conditions. Start-up services for new
wastewater treatment works constructed with contract authority funds
are eligible for grant support in accordance with the following
guidance.
-------
brant eligible start-up services will average 90 man-days for
most treatment plants. For large or complex plants, however, grant
eligible start-up services may range up to 300 man-days. Start-up
services shall be completed within a period of twelve months. In
addition to grant eligible start-up services, grantees, in most cases,
should be encouraged to negotiate separate agreements for technical and
training services to identify and solve operational problems beyond the
initial start-up period. However, only that period of time which con-
forms with guidance provided herein will be eligible for grant assistance.
Grant eligible start-up services are limited to those items described
below. (Other services proposed for grant eligibility will be considered
only on a case-by-case basis by the Regional Administrator.) The extent
of such services will depend on the size and complexity of the facility
and the capabilities of existing or new operational and management staff.
In many cases services to address the potential needs below ,nay be coupled
with other related services. To be grant eligible, the services must be
rendered by the design engineer or others identified by the design engineer.
1. Pre and post start-up personnel training--!.e., onsite training
given plant operation and maintenance personnel on the operation and
control of the specific treatment processes of the facility as well as
specialized training required for the safe operation and maintenance
of plant equipment.
It could also include consultation on the staffing and training
plan before completion of construction. Such consultation would be
supplemental to the O&M manual and intended to give plant personnel a
clear understanding of individualized operational and management
responsibilities. Grant eligible training and related consultation are
not to be a substitute for routine, entry-level or update operator train-
ing, the funding of which is the responsibility of the grantee.
2. Fine tuning to optimize process control--!'.e., expert operational
assistance for adjustment and "fine tuning" of the treatment processes
and related equipment functions to optimize performance, safety and
reliability under actual operating conditions. This should include
the detailing of operational procedures under both normal and abnormal
conditions so as to achieve consistent, reliable, and efficient perfor-
mance from each process component at all times.
-------
3. Laboratory procedures--i.e., onsite training and instruction
to assure that the sampling and laboratory testing program needed for
satisfactory process control and regulatory monitoring and reporting
are fully understood. Entry-level or update training in basic laboratory
testing and procedures for routine analyses are not grant eligible,
although training in unique testing requirements related to some unusual
unit process or process equipment may be determined to be grant eligible.
4. Maintenance management system--i.e., start-up services to
assure effective implementation of the maintenance management system
outlined in the facility's O&M manual. Included is training of the
operation and maintenance staff in the details of the maintenance
management system to establish and maintain a preventive maintenance
program.
5. Records management systems--!.e., services to provide the
training needed to implement a records management system as outlined
in the O&M manual. It will become a major element in the larger and
more complex plants that require a refined system to adequately handle
records related to process control, effluent quality monitoring and
reporting requirements, inventories for chemicals, supplies, and spare
parts, etc.
6. Revise O&M manual--i.e., revising the O&M manual based upon
actual operating experience obtained during the start-up period. It
is not intended to replace the present requirements for drafting and
finalizing the O&M manual before plant start-up, but does recognize
that some aspects of plant operation and process control can be
documented more fully after a period of actual plant operation.
Note that costs normally associated with the operation and main-
tenance of a municipal wastewater treatment facility, such as salaries
for operation and maintenance personnel, chemicals (except for the basic
inventory required for start-up), power, etc., are not eligible. Also
ineligible are the costs of all off-site formal training/orientation
programs. Finally, wet and dry equipment and facility testing is the
responsiblity of the contractor under the supervision of the Engineer.
-------
Start-up service provisions should normally be submitted
as part of a Step 3 grant, and State agencies and potential Step 3 gran-
tees should be encouraged to consider the development of appropriate
provisions as soon as possible. For existing Step 3 projects that have
not begun actual plant operations, grantees should be encouraged, where
timing permits, to develop start-up service provisions prior to plant start-up.
Under exceptional circumstances, consideration may be given to eligibility
of start-up services for grant funded projects that have already begun
operation but for which the Step 3 grant has not been closed out. However,
reimbursement should not be made for start-up services completed prior to
the effective date of this PRM unless specifically described in existing
contract documents.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D C 20460
2 9 1978
OFFICE OF WATER AND
HAZARDOUS MATERIALS
CONSTRUCTION GRANTS
PROGRAM REQUIREMENTS MEMORANDUM
PRM #77-3
SUBJECT: Plan of Operation for Municipal Wastewater
Treatment Facilities
FROM: John T. Rhett, Deputy Assistant
for Water Program Operations (WH-546)
TO: Regional Administrators I - X
Attn: Water Division Directors
PURPOSE.
This memorandum provides guidance on preparing a Plan of Operation for
municipal wastewater treatment facilities being constructed, modified,
or expanded under the Construction Grants program.
DISCUSSION
Section 204(a)(4) of the Federal Water Pollution Control Act Amendments
(PL 92-500) requires all municipal wastewater treatment facilities
constructed with Federal funds to have a Plan of Operation. This memorandum
contains guidance for the development of such a Plan. Additional details
on this requirement can be found in 40 CFR 35.935-12 of the Federal
Register.
A Plan of Operation is intended to identify specific actions and related
completion dates to assure that the facility and all associated personnel
are properly prepared for start-up and continued operation. Actions
identified will be responsive to all technical and administrative
requirements for efficient and reliable performance, including all such
elements outlined in the Operation and Maintenance (O&M) Manual. A Plan
of Operation is not intended to supplant the O&M Manual, which provides
long-term guidance for efficient facility operation and maintenance, but
rather summarizes the actions necessary to assure that all steps required
-------
for start-up and operation are taken at the appropriate times. The Plan
of Operation provides detail on such matters as who will perform the
necessary tasks, when and how they will be undertaken, and, where
necessary, the nature of each task. For example, the O&M Manual will
indicate the staffing and personnel training needs for the facility; the
Plan of Operation will contain the actual schedule to be followed for
hiring and/or training those personnel.
POLICY
Plans of Operation must be submitted and approved to meet requirements
of Section 204(a)(4) of PL 92-500 and 40 CFR 35.935-12. Content of the
Plans of Operation and timing for completion and submittal should follow
the guidance of this Memorandum and the attachments thereto. The Plan
of Operation shall provide a concise, sequential description of, and
implementation schedule for, those activities necessary to assure cost-
effective, efficient and reliable start-up and continued operation of
the facility. The cost of preparing a Plan of Operation is grant eligible
and should be identified as a separate line item in the project costs.
IMPLEMENTATION
Municipal wastewater treatment facility construction projects vary
considerably in size and complexity, and the degree of detail in a Plan
of Operation should reflect this variation. The Plan of Operation must
be tailored to the specific needs of each individual project. The basic
guidance document for the development of a Plan of Operation is Federal
Guidelines - Operation and Maintenance of Wastewater Treatment Facilities,
published by EPA in August 1974. Application of this guidance to the
development of a Plan of Operation is discussed in Attachment "A" to
this PRM entitled "Basic Considerations in the Development of a Plan of
Operation for Wastewater Treatment Plants."
A "sample" Plan of Operation is presented in Attachment B. This sample
illustrates one format for a Plan. The action items shown are not all-
inclusive, nor does each of these items necessarily apply to every
project. An alternative format would be a time based chart that displays
graphically the time span over which items would be completed. In this
case appropriate narrative should be included to provide a full understanding
of each area of activity. Reference to the O&M manual should be utilized
whenever possible to avoid duplication.
Hereafter, grantees should submit a preliminary Plan of Operation along
with the construction plans and specifications. This preliminary Plan
of Operation should be reviewed by the State Water Pollution Control
Agency concurrently with the review of project plans and specifications.
If the plan is incomplete or in need of corrections, resolution should
be accomplished in the same way that problems encountered in the processing
of plans and specifications are now resolved. Certain information needed
to complete a Plan of Operation, particularly the timing for implementing
certain items, will not be known until the construction phase of the
-------
project is underway. In a preliminary Plan, therefore, it may be necessary
to define implementation schedules either in terms of an estimated
percent of completion of construction, or in terms of a certain number
of days before an operational start date. In fact, it may not be possible
to identify all necessary actions related to operations in the preliminary
Plan, although it should be as complete as possible.
It is not required to amend existing Step 2 and Step 3 grants to provide
for preparing a preliminary Plan of Operation.
After construction of the project has begun, the preliminary Plan must
be updated. A final Plan of Operation should be completed, submitted,
and approved not later than the date by which the 50% grant payment of a
Step 3 grant is made. It then will be available to the chief operator,
who should be on board by that time. In that way, the Plan can serve as
a guide to adequately prepare for proper start-up and operation of the
treatment facility.
REFERENCES
PL 92-500, Section 204(a)(4)
40 CFR 35.935-12
-------
ATTACHMENT A
to PRM #77-3
Basic Considerations in the Development of a Plan of Operation
for Wastewater Treatment Facilities
A Plan of Operation for a new or expanded wastewater treatment facility
should provide an action plan and implementation schedule to assure that
all necessary actions to properly prepare for facility start-up and
continued operation are accomplished in a timely fashion. The basic
guidance document for the development of a Plan of Operation is Federal
Guidelines - Operation and Maintenance of_ Wastewater Treatment Facilities,
published by the EPA in August 1974. Some of the guidance needed to
implement the Plan of Operation may be contained in the Operation and
Maintenance (O&M) Manual prepared for the facility. Appropriate reference
in the Plan of Operation to elements of the O&M Manual may suffice for
describing many specific actions. However, at a minimum the Plan of
Operation must identify actions necessary to commence operations and
contain an implementation schedule for their accomplishment. It is
suggested that a summary of the implementation schedule be compiled on a
chronological basis. This will allow easy reference on a routine basis
to assure that necessary actions are initiated and completed on schedule.
The following very briefly identifies the scope of each of the areas
that might be included in a Plan of Operation. The referenced Section
numbers in parentheses relate to appropriate sections in the Federal
Guidelines identified above which contain more detailed information on
each of the areas.
1. Staffing and Training (Section 2.0)
This is a particularly important element in any plan of operation
to assure that supervisory, operations, maintenance, laboratory
support, and administration personnel are hired and trained in
a timely manner. Sources of training should be identified
whenever possible. Of particular importance is the need to
have the Chief Operator on site by 50% completion of construction.
2. Records, Reports, and Laboratory Control (Section 3.0)
The establishment of an adequate laboratory, recording, and
reporting system should be identified, including the development
of any special forms needed for reporting or process control
requirements. Any special training needs related to a laboratory
control program should be specified.
3. Process Control and Start-up Procedures
Adequate consideration of plant start-up is essential to
assure subsequent plant operation with a minimum of problems
and to set the proper framework for long-term, trouble-free,
-------
efficient plant operation under all operating conditions. The
plan should identify necessary actions related to start-up,
such as wet and dry testing of equipment, instrument calibration,
and a review of process control procedures during the start-up
period. (For additional guidance on plant start-up, see PRM
#77-2).
4. Safety (Section 5.0)
Effective employee safety programs should be developed and
appropriate training conducted in advance of start-up. Existing
and projected state and local safety requirements should be
complied with. All hazardous conditions should be appraised
and appropriately considered in the inplant safety and health
plan and the training program should be responsive to identified
needs and guidance.
5. Emergency Operating Plan (Section 6.0)
A comprehensive contingency plan for emergency operations
should be included in the plant O&M manual. This plan should
be substantially implemented in advance of start-up. Appropriate
instructions and specific response guidance should be issued
in order to minimize the possibility of plant failures under
all conditions that may occur. An effective emergency response
plan requires advance training in order to be effective.
6. Maintenance Management (Section 7.0)
A schedule for developing and implementing a maintenance
management system should be included. This should consider
the need for training to operate the system and/or to deal
with complex equipment maintenance problems. Additional
considerations include personnel training, supplies of chemicals
used in the treatment process or process control, laboratory
supplies, the provision of necessary maintenance tools and
spare parts inventory.
7. Operation and Maintenance Manual
The Plan of Operation should include sufficient lead-time for
the submission and review of the plant O&M manual so as to
ensure that the manual is approved by the State Water Pollution
Control Agency at least 30 days prior to plant start-up. The
Plan of Operation should also identify future date(s) for
updating the manual in order to ensure that the most effective
operational guidance is provided based upon actual operating
experience.
8. Operations Budget (Section 9.0)
Any planning process must consider budgetary constraints on
implementation and provide for a process for adequate budget
controls. Consideration must be given to the development and
-------
use of a user charge system; also to the availability of 10%
of industrial cost recovery receipts for supporting O&M costs.
9. Other Elements
Other elements should be addressed as necessary to assure
timely implementation of actions related to continued efficient
and reliable operation of the facility. Actions and timing
related to the development and implementation of sewer use
ordinances, pretreatment ordinances, or other local rules or
regulations should also be identified. Establishment of
procedures for preparing an annual O&M report should be considered
for staffing, training, budget planning, maintenance, and
future construction planning purposes.
The following guidance is suggested for determining the adequacy of
preliminary Plans of Operation:
1. Descriptions and scheduling for elements 2-5 and 7 (above)
should be essentially complete in the preliminary Plan of
Operation. The staffing plan of element 1 (above) should also
be complete, but the training plan may be tentative.
2. Descriptions and scheduling for elements 6, 8 and 9 (above)
may be tentative in the preliminary Plan of Operation.
-------
ATTACHMENT B
to PRM #77-3
Sample
Final Plan of Operation
-------
8
Preface
Note that this "preface" is purely for descriptive purposes in setting
the stage for this example of a Plan of Operation. It would not normally
be included in an actual Plan.
The following material presents one example of a final Plan of Operation
prepared in conjunction with the construction of a new or expanded
wastewater treatment facility. This example is based upon a hypothetical
situation of a new wastewater treatment facility being constructed for
the City of Smithville, Pa. Smithville is a medium sized bedroom community
near a large metropolitan area and has an existing secondary treatment
facility. The new "Westside Wastewater Treatment Facility" is being
constructed to provide treatment of wastes from a previously unsewered
area recently annexed by the City, an industrial park constructed for
light manufacturing industry, and housing in the same general area, and
to provide treatment of some wastes from the presently overloaded
facilities.
The existing facility will continue to provide treatment to the older
part of Smithville. The new facility is in a size range of 5-10 mgd.
The project has followed a normal procedure under the construction grant
program of PL 92-500. A "preliminary" Plan of Operation would be submitted
with the plans and specifications at the completion of the Step 2 facility
design stage. It would differ from this example of a "final" Plan of
Operation in that specific dates would not be shown because a construction
timeframe has not been established. Instead, implementation could be
shown either as an estimate of the percent completion of construction,
or as a certain number of days before an operational start date. Also,
it may not be possible to identify all necessary actions related to
operations in the preliminary Plan, although it should be as complete as
possible.
This example Plan of Operation is not intended as a rigid guide. Obviously,
the size, complexity, and type of facility, as well as other factors,
such as whether the facility is new or an expansion or modification of
an existing facility, will influence the extent of information required
in the Plan of Operation. It is important, however, that each of the
areas illustrated in the example be considered in the Plan of Operation
for any project to assure that all potential needs have been addressed.
As can be seen, the intent of the Plan of Operation is clearly to provide
a simple, straightforward means of identification of an implementation
plan for those action items essential to successful start-up and continued
operation of the treatment facility.
-------
Introduction
This plan of operation provides an identification of needed actions and
an implementation schedule for their completion to assure timely start-
up and efficient operation of the new Westside Wastewater Treatment
Facility now under construction in the City of Smithville, Pa. Construction
of this facility began in May 1975 and is scheduled to be complete in
June 1978. Adherence to the schedule contained in this Plan of Operation
will help assure that start-up of the facility can be accomplished in a
timely and efficient manner.
Many of the details related to necessary actions identified in this plan
of operation are fully discussed in the Operation and Maintenance Manual
being prepared for this facility. Reference to sections of that manual
are included where appropriate to avoid repetition. A copy of the draft
O&M manual is provided with this plan to provide necessary back-up
information.
-------
10
1. Summary of Implementation Dates
The implementation dates of the following sections are arrayed
below in chronological order to allow rapid identification of action
items and related completion dates. Frequent reference to this listing
will help avoid the possibility of omission or slippage of key actions
necessary for successful plant start-up and continued operation.
Date
May 1975
July 1975
June 1976
January 1977
June 1977
August 1977
Sept. 1977
October 1977
January 1978
February 1978
Action
Start construction
facility
Plan of Operation
Section Reference
of treatment
Promulgate new sewer use ordinance to 10(a)
accomodate industrial discharges
Promulgate industrial pretreatment 10(b)
ordinance
FY 77 pre-start-up budget considerations 9
Superintendent (Chief Operator) on Board 2(a)
Complete draft of O&M Manual 8(a)
Review of user charge and industrial 9
cost recovery systems
Senior Operator on Board 2(b)
Chief Chemist on Board 2(c)
FY 78 budget consideration for initial 9
operation
Begin influent sampling program 4(a)
Begin development of detailed emergency 6(a)
procedures plan
Begin development of detailed guidance 5(a)
on employee safety and related training
program
Staff training schedule finalized and 2
approved by State
Begin development of action plan for 4(b)
process control and "fine tuning"
Begin finalization of cooperative 6(b)
agreements with other agencies
Begin specialized training on incinerator 7(b)
O&M
Shift Operators on Board 2(d)
Complete details of emergency procedures 6(a)
plan
-------
11
Date
Action
February 1978 Begin provision of laboratory supply
(continued) inventory
Begin finalization of system and
procedures for notification of
unusual industrial waste discharges
Begin employee training in emergency
procedures
Begin training of plant personnel on
maintenance procedures
Finalize O&M Manual
March 1978
April 1978
May 1978
Plan of Operation
Section Reference
3(b)
4(d)
6(c)
7(f)
8(b)
Complete detailed guidance on employee
safety and related training program
Finalize cooperative assistance agree-
ments with other agencies
Start review of laboratory analytical and
reporting requirements with operators
and laboratory staff
Complete development of action plan for
process control and "fine tuning"
Start safety training program
Begin debugging of maintenance manage-
ment system computer software
5(a)
6(b)
3(a)
4(b)
5(b)
7(c)
3(a)
Complete review of laboratory analytical
and reporting requirements with plant
staff
Complete inventory of laboratory supplies 3(b)
Complete employee training in emergency 6(c)
procedures
Complete spare parts inventory 7(a)
Complete specialized training on incinerator 7(b)
O&M
Start review of process control and 4(c)
detailed start-up procedure with plant
staff
Begin training on maintenance management 7(d)
system usage
O&M Manual approved
Complete debugging of maintenance manage-
ment system computer software
Complete training on maintenance management
system usage
Begin pre-start up maintenance schedule
Maintenance crew on Board
8(c)
7(c)
7(d)
7(e
2(e
-------
12
Plan of Operation
Date Action Section Reference
May 1978 Complete training in heavy metals analysis 3(c)
(continued) Treatment facility design, construction, 3(d)
operations records, and as built plans
completed and on file
Complete review of process control and 4(c)
detailed start-up procedures with
plant staff
Complete influent sampling program 4(a)
Finalize system and procedures for 4(d)
notification of unusual industrial
waste discharges
Complete safety training program 5(b)
June 1978 Complete wet and dry testing of all 4(e)
equipment
Complete construction of treatment facility
(Facility ready for operation)
Start periodic safety reviews with staff 5(c)
Complete training of plant personnel 7(f)
on maintenance procedures
June 1979 Conduct first annual plant safety review 5(d)
and modify safety program, if necessary
Initiate annual emergency procedures 6(d)
update and employee training program
Update O&M Manual 8(dJ
Complete first annual treatment system O&M 10(c)
report
2. Staffing and Training
The recommended staffing complement and a suggested organizational
chart is included in Section of the O&M manual. In accordance with
EPA guidelines, the chief operator of the facility should be on board at
the 50% completion point of the construction phase of the project. The
City has been notified of this requirement, and recruitment actions will
begin soon.
In order to assure adequate time for familiarization with the new
facility and to adequately prepare for start-up, the staff of the facility
should be hired in accordance with the following schedule:
a. Superintendent (Chief Operator) on Board- January 1977
b. Senior Operator on Board- June 1977
c. Chief Chemist on Board- June 1977
d. Shift Operators on Board- February 1978
e. Maintenance Crew on Board- May 1978
-------
13
As each of the personnel are located and hired, training needs must
be identified in cooperation with the State Water Pollution Control
Agency. A training schedule should be finalized no later than October 1977.
It is anticipated that additional training in activated sludge process
control will be needed for this new facility and consideration should be
given to the training courses available through the Smith County Community
College.
Certain specialized training needs have been identified for this
new facility and are discussed as appropriate in other sections of this
plan.
3. Records. Reports and Laboratory Control
Examples of daily log sheets, State reporting forms, and self-
monitoring report forms to comply with NPDES permit requirements are
included in Section of the O&M manual. No special reporting require-
ments have been identified; however, certain heavy metals analysis must
be included due to anticipated discharges from the Westside Industrial
Park to be served by this facility.
Start date
Completion date
March 1978 April 1978
Feb. 1978
a. Conduct review of laboratory
analytical and reporting require-
ments with operators and laboratory
staff
b. Provide inventory of laboratory
supplies
c. Complete training in heavy metals
analysis (identify source of training)
d. Treatment facility design,
construction, operation records, and
as built plans completed and on file
in superintendent's office
4. Process Control and Start-up Procedures
Process control and start-up procedures are detailed in Sections
and , respectively, of the O&M manual. Implementation of the actions
identified in those sections should occur in accordance with the following
schedule:
April 1978
May 1978
May 1978
Start date
Completion date
a. Begin sampling program to define
plant influent characteristics
August 1977 May 1978
-------
14
Start Date Completion Date
b. Develop action plan for process Jan. 1978 March 1978
control and "fine tuning"
c. Review process control and detailed April 1978 May 1978
start-up procedures with plant
operations and laboratory staff
d. Finalize system and procedures Feb. 1978 May 1978
for notification of unusual
industrial waste discharges
e. Complete wet and dry testing of June 1978
all equipment
5. Safety
The need and specifics of a safety program for this facility are
detailed in Section of the O&M manual. Activities related to safety
should be implemented in accordance with the following schedule:
Start Date Completion Date
a. Develop detailed guidance on employee Sept. 1977 March 1978
safety and related training program
b. Conduct training program for all plant March 1978 May 1978
staff prior to start-up
c. Start periodic safety reviews with June 1978
staff
d. Conduct first annual plant safety June 1979
review and modify safety program
if necessary
6. Emergency Operating Plan
Detailed emergency operating procedures are outlined in Section
of the O&M manual. To assure success of these procedures during an
emergency, the following actions should be taken:
Start Date Completion Date
a. Develop details of emergency August 1977 February 1978
procedures plan including
personnel assignments
b. Finalize cooperative assistance Jan. 1978 March 1978
agreements with other agencies
-------
15
Start Date Completion Date
c. Pre-start-up employee training Feb. 1978 April 1978
d. Initiate annual procedures update June 1979
and employee training program
7. Maintenance Management
The maintenance management system for this facility is outlined in
Section of the O&M manual. The maintenance management system will
utilize the City's computer capability to provide routine scheduling of
preventive maintenance activities, spare parts inventory control, and
records of running time and reliability of performance. To successfully
implement this maintenance management system, the following actions must
be taken:
Start Date Completion Date
a. Complete spare parts inventory April 1978
including necessary tools
b. Conduct specialized training on Jan. 1978 April 1978
incinerator operation and
maintenance by equipment supplier
c. Debugging of computer software March 1978 May 1978
by subcontractor
d. Conduct training on system usage April 1978 May 1978
by subcontractor
e. Begin pre-start-up maintenance schedule May 1978
f. Provide training of plant personnel on Feb. 1978 June 1978
maintenance procedures
8. Operation and Maintenance Manual
The operation and maintenance manual should be drafted, finalized,
approved, and updated in accordance with the following schedule:
a. Drafted January 1977
b. Finalized February 1978
c. Approved April 1978
d. Updated based on first year of operating June 1979
experience
9. Operations Budget
This facility is scheduled to begin operation in June 1978. Since
the hiring and training of personnel should begin in January 1977,
-------
16
appropriate considerations of related costs must be provided in the
City's FY 77 budget. Consideration of pre-start-up and full operation
costs must be reflected in the City's FY 78 budget with the first full
year of operation being FY 79. The City's user charge system and rate
structure should be reviewed by January 1977 to assure an adequate base
to provide needed operating and maintenance revenues.
10. Other Elements
The new Westside Wastewater Treatment Facility satisfies needs of
the City of Smithville that will require responsive actions. To complete
pre-start-up and post-operative actions that will assure continued
operational success, the following actions must also be taken in addition
to those previously identified:
a. Promulgate new sewer use ordinance to July 1975
accomodate industrial discharges-
b. Promulgate industrial pretreatment July 1975
ordinance-
c. Complete first annual treatment June 1979
system O&M report including
recommendations on budget, staffing,
training, maintenance and repairs,
and future needs.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
oec \ r> •
PROGRAM REQUIREMENTS MEMORANDUM
PRM #77 - 5
SUBJECT: Grant Eligibility of Land Acquisition by Leaseholds or
Easements for Use in Land Treatment and Ultimate Disposal
of Residues , -•" (
1 / ""
FROM: Russell E. TrainK / •
Administrator ' f\^ N.(.
TO: Regional Administrators, I - X
PURPOSE:
This memorandum provides guidance for the interpretation of the
construction grants regulations concerning grant eligibility of land
acquired by leasing or easements for vise in land treatment and sludge
disposal.
DISCUSSION;
The Agency has conducted an intensive study over several months to
determine if land acquisition by lease or easement should be grant
eligible where the land would be an integral part of the treatment
process or required for the ultimate disposal of residues resulting from
wastewater treatment. The study concluded that under unusual circum-
stances land acquisition by lease or easement will be more cost-effective
than fee simple purchase. Use of grant funds for acquisition by lease
or easement is legal where cost-effective. Serious risks exist, however,
including the possibility that the lease will be prematurely terminated
by the lessee; that the conditions of the lease or easement will be
broken; that funds for payments will be misappropriated; and that re-
newal will be prohibitively expensive or impossible.
It has been roughly estimated that leasing/easements will be
cost-effective only for several hundred projects nationwide. Most of
these projects would be in arid or semi-arid areas where effluent has a"
high value and land has a low value. In these areas, seme landowners
-------
may be willing to pay for wastewater effluents, accept wastewater
effluents free of charge or make leasing arrangements at a nominal
charge.
Leasing for substantial fees would seldom be cost-effective.
Normally, such cases would be limited to situations where landowners are
willing to lease for total payment equivalent to less than fair market
value.
POLICY;
The cost of leasing or of obtaining an easement on land for land
treatment or for ultimate disposal of residues from the wastewater
treatment process is eligible for Federal grant assistance when other-
wise in conformance with the requirements of Program Guidance Memoranda
49 and 67, and of this memorandum. The PGM provisions restricting
eligibility to fee simple purchase are hereby superseded.
Prior to execution of a lease or an easement for land acquisition,
the grantee shall obtain written approval from the Agency of the con-
ditions for the lease or easement in order for the costs to be allowable
for Federal funding. These conditions shall:
1. Limit the purpose of the lease or easement to land application
(land treatment or sludge disposal) and activities incident to land
application. (A provision for sub-leasing or licensing for purposes
consistent with the use of land for application purposes may be included).
2. Describe explicitly the property use desired.
3. Waive the landowner's right to restoration of the property at
the termination of the lease/easement.
4. Provide for payment of the lease/easement in a lump sum for the
full value of the entire term (See item 6 below).
5. Recognizing the serious risk of premature lease termination,
provide for full recovery of damages by the grantee in such an event
with recovery of the paid Federal share or, alternatively, retention of
the Federal share to be used solely for the eligible costs of the ex-
pansion or modification of the treatment works associated with the
project. The damages would include the difference between the total
present worth of costs of treatment works changes resulting from premature
termination and the costs otherwise resulting fron normal expiration of
the lease. The damages would also include any additional losses or costs
due to unplanned disruption of wastewater treatment.
-------
6. Provide for leases/easements for a minimum of twenty (20)
years, or the useful life of the treatment plant, whichever is longer,
with an option of renewal for an additional term, as deemed appropriate.
Whenever leasing is to be recommended, steps shall be taken to
insure that the required lands will be available when needed at the
price and terms presented in the facility plan. The facility plan shall
include a copy of the proposed leasing agreement and letters of intent
to comply with such agreement from the concerned landowners. The Step 2
grant shall contain a condition precluding commencement of Step 2 design
work until the grantee has purchased options to lease in accordance with
the terms of the proposed leasing agreement.
The grantee must take special precautions to avoid actions which
might be construed as a breach of the lease agreement. Land must be used
as agreed upon in the lease/easement. Any payments (which would not be
grant eligible) required for quantity of effluent or sludge applied
should be paid promptly.
Leasing of required lands may be approved only where less costly
than outright purchase of the lands as determined by a cost comparison
for each case. Such comparison must demonstrate that the total present
worth cost of the lease payments plus expected net income accruing to
the landowner from retained uses of the land over 20 years will be less
than an amount representing the market price for fee simple purchase
minus the present worth of the land salvage value 20 years hence. The
cost comparison must comply with the interest rate, planning period, and
salvage value requirements of the Cost Effectiveness Analysis Guidelines
(Appendix A of the Construction Grant Regulations).
Where water and/or nutrients are of value, leasing fees should be
minimal or sale/donation of effluents to nearby agriculture or recrea-
tion activities should be possible without Federal grants for land pur-
chase or leasing.
IMPLEMENTING PROCEDURE;
Each Region shall notify states of this PRM and take actions to
assure that grantees meet all the conditions set forth by this memo-
randum when acquiring land by lease or easement.
REFERENCES;
Program Guidance Memorandum No. 49 of July 18, 1975 (PRM 75-25)
Program Guidance Memorandum No. 67 of April 2, 1976 (PRM 75-39)
40 CFR 35.940-3
40 CFR 4.600 et seq
40 CFR 30.810 et seq
Uniform Relocation Assistance and Real Property Acquisition Policies Act
of 1970, (P.L. 91-646) 42 USC Section 4651 et seq.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C 20460
AUG051977
OFFICE OF WATER AND
HAZARDOUS MATERIALS
SUBJECT: Reallotment of Recovered Funds
FR
Program Requirements Memorandum
PRM 77-9 /
TO:
John T. Rhett, Deputy Assistant Admin}
or Water Program Operations (WH-546
Matthew Pilzys, Acting Deputy Assistant Administrator
for Resources Management (PM-224)
Regional Administrators (I-X)
ATTN: Water Division Directors
Management Division Directors
PURPOSE:
The purpose of this memorandum is to set forth EPA policy regarding the
reallotment of funds recovered from P.L. 92-500 authorizations and subsequent
appropriations.
DISCUSSION:
Unobligated portions of State allotments are, at the end of their initial
allotment periods, subject to reallotment as provided for in section 205(b)(l)
of P.L. 92-500 and 40 CFR 35.910-2(a) and (b). However, the extent to which
recoveries are subject to reallotment after t'he termination date of an initial
allotment period is not as clearly defined. Section 205(b)(2) states that
recovered obligations which are "released by the payment of the final voucher
for the project shall be immediately credited to the State to which such sums
were last allotted. Such released sums shall be added to the amounts last
allotted to such State and shall be immediately available for obligation in
the same manner and to the same extent as such last allotment." Hence, funds
recovered upon the closeout of a project (on or after final payment) are
subject to reallotment after the termination date of the most recent allotment
in effect at the time of the closeout. Funds recovered as a result of the
termination of a project are treated in the same manner.
-------
Neither the Act nor the regulations address the reallotment of other
recoveries, such as those resulting from underruns or descoping—i.e.,
recovered obligations other than those which "remain after final payment, or
after termination of a project" (§35.910-2(c)).
Over the years of operating the construction grants program, it was common
practice to treat all recoveries alike, and to have them remain in the States
to which they were originally allotted. Distinctions were not made between
those resulting from project closeouts and those resulting from actions taken
by EPA due to changes occurring in the process of constructing a project.
However, because of the explicit requirement of section 205(b)(2), that practice
must be modified.
The date of the most recent allotment of funds is important for the
reallotment process. $1 billion was allotted on May 18, 1977, and, in
accordance with the Fiscal Year 1977 Supplemental Appropriations Act, is
subject to reallotment after May 3, 1980, three years after the date of enact-
ment. (The $480 million appropriated under the Public Works Employment Act
will not be treated as an allotment for these purposes.)
POLICY:
FY-75, 74 and 73 funds which the Regional Administrator determines were
recovered prior to May 18, 1977, as a result of the closing out of projects--
i.e., at final payment or upon termination—will be subject to reallotment
after September 30, 1977—the reallotment date of the $9 billion allotted in
FY-76. All other FY-75, 74 and 73 funds which were recovered prior to
May 18, 1977, will not be subject to reallotment on September 30, 1977.
The foregoing policy is applicable only to the September 30, 1977
reallotment. However, if the currently proposed legislation to extend for
another year the reallotment date for FY-76 funds is enacted, the above
policy will be applicable to the extended date, i.e., September 30, 1978
instead of September 30, 1977.
For future fiscal years, a distinction will not be made between recoveries
resulting from project closeouts or terminations and those resulting from
underruns or descoping. Accordingly, all recoveries made subsequent to
May 17, 1977, regardless of how they are generated, will be subject to
reallotment on the basis of the procedure established in §205(b)(2) of the
Act. Therefore, funds recovered from May 18, 1977, until the date of the
next allotment of funds, will be subject to reallotment after May 3, 1980.
When further funds are allotted, recoveries thereafter will be subject
to the reallotment date of those funds. That is, the reallotment date for
recoveries always relates to the most recent allotment.
-------
(NOTE: Upon publication of "Facilities Planning 1981" (FP 81), policy
pertaining to facilities planning contained in this PRM is discontinued.)
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
wto £ s< ^-'f Construction Grants
Program Requirements Memorandum
PRM No. 78-1
SUBJECT: Erosion and Sediment Control in the
Construction Grants Program
FROM: John T. Rhett, Deputy Assistant AdministratorW
-------
-2-
The on-going EPA construction grants program will continue to
generate significant construction activity throughout the country.
Ensuring that erosion and sediment control are properly handled in the
process of constructing these waste treatment projects is part of EPA's
overall responsibility. In December 1976, the Office of Water Planning
and Standards published a report entitled "Nonpoint Source Control
Guidance, Construction Activities." The document is to be used by
States and areawide 208 agencies as a guide for establishing a nonpoint
source pollution control program.
EPA policy is designed to ensure that:
1. Erosion and sediment control will be adequately addressed and
handled in areas where wastewater treatment projects are proposed.
2. Appropriate soil conservation measures are incorporated as part
of the engineering activities in the planning and design process, as
well as the construction phase of construction grant projects.
Policy:
1. Facilities planning (Step 1) - Good environmental assessment
or impact studies should investigate and evaluate the potential
for erosion and sediment runoff which could occur as a result
of construction and operation of the project. An effective
erosion and sediment runoff control program should address
measures to be taken during construction and, where appro-
priate, permanent controls to be incorporated into the completed
project. Other factors being equal, sites chosen for construc-
tion of treatment facilities should be those which offer the
least potential for erosion.
In environmentally sensitive areas (floodplains, wetlands,
coastal zones and estuaries, etc.), special construction
procedures and requirements should be employed to minimize harm
to the sensitive areas. All practicable measures should be utilized,
When applicable, the requirements described in PRM 76-4 (Coor-
dination of Construction Grants Program with EPA-Corps of
Engineers Section 404/Section 10 Permit Programs) must also be
implemented in conjunction with the erosion and sediment
control program.
Wherever State and local ordinances pertaining to construc-
tion activities are adequately defined, the grantee should
clearly specify in the facilities plan, steps to be taken for
controlling erosion and sediment in order to comply with the
State and local ordinances. However, the evaluation of the
adequacy of a project's erosion and sediment control plan
should be based on the attached guidelines.
-------
-3-
2. Design (Step 2) - Appropriate provisions of the erosion and
sediment control program specified in the facilities plan
should be implemented including: (a) scheduling construction
activities to minimize adverse impacts; (b) providing plans
and specifications for any permanent and temporary erosion
control structures and; (c) including specific erosion and
sediment control measures in O&M manuals. The construction
specifications will require implementation of the specified
erosion control plan during construction of the project.
3. Construction (Step 3) - Inspections conducted during construc-
tion should evaluate implementation of and adherence to temporary
erosion and sediment control measures and their effectiveness.
Attention should also be given to permanent erosion control
structures during final inspections.
Detailed guidance to be used in evaluating erosion and sediment
control aspects of construction grant projects, including a pertinent
list of references, is attached.
Implementation:
The measures specified in this memorandum and its attachments are
required for all projects resulting from Step 1 grants awarded after the
date of this memorandum. Appropriate provisions for erosion and sediment
control should be incorporated to the maximum extent practicable in
other active construction grant projects. For example, Step 2 and Step 3
measures should be applicable to those presently active Step 2 and Step 3
grant projects respectively.
Attachments
-------
Attachment A
Evaluation of Erosion and
Sediment Control Measures
The objective of the program is to prevent and correct problems associated
with erosion and sediment runoff processes which could occur during and
after project construction. The program should be consistent with
applicable local ordinances and the EPA Nonpoint Source Pollution
Control Guidance. Whenever appropriate, the program should reflect the
following engineering principles.
1. Construction site selection should consider potential occurrence
of erosion and sediment losses. Study of the site conditions
should include soil and geologic limitations, topography,
vegetation, wildlife habitats, proximity to surface water, and
climate.
2. The project plan and layout should be designed to fit the
local topography and soil conditions.
3. When appropriate, land grading and excavating should be kept
at a minimum to reduce the possibility of creating runoff and
erosion problems which require extensive control measures.
4. Whenever possible, topsoil should be removed and stockpiled
before grading begins.
5. Land exposure should be minimized in terms of area and time.
6. Exposed areas subject to erosion should be covered as quickly
as possible by means of mulching or vegetation.
7. Natural vegetation should be retained whenever feasible.
8. Appropriate structural or agronomic practices to control
runoff and sedimentation should be provided during and after
construction.
9. Early completion of stabilized drainage system (temporary and
permanent systems) will substantially reduce erosion potential.
10. Roadways and parking lots should be paved or otherwise stabilized
as soon as feasible.
11. Clearing and grading should not be started until a firm con-
struction schedule is known and can be effectively coordinated
with the grading and clearing activity.
-------
-2-
Because of technical limitations, it is recognized that the foregoing
principles cannot always be incorporated in a project plan. Whenever
needed, however, these practices should be included.
Minimum Requirements
In addition to the general engineering principles described in the
previous paragraph, the following items represent the minimum engineering
effort to be incorporated in development of the project.
1. Facility Planning (Step 1)
As part of the environmental assessment or environmental impact
study, the potential for erosion and sediment runoff should be identified
and evaluated. In determining the scope of the study, the following items
should be considered and evaluated where appropriate:
- Soil and geologic characteristics
- Land topography and land use classification
- Drainage basin conditions
- Rainfall or wind characteristics
In environmentally sensitive areas such as floodplains and coastal
estuaries, etc., special problems including long slopes, steep grades
and highly erodible soils should be identified and evaluated. When
appropriate, special construction procedures and constraints associated
with these problems should be addressed and incorporated in the plans
and specifications. For project sites where dewatering operations are
required during construction, adverse effects from the discharge of
silt-laden waters should be minimized by means of filtration or sedi-
mentation basins, or any other appropriate methods.
For projects involving land treatment or disposal, methods of
application should be carefully studied and selected to make sure that
soil erosion and sediment runoff is minimized. In addition, requirements
for sediment control practices and their maintenance after construction
is completed should be specified.
2. Plans and Specifications (Step 2)
The project plans and specifications should include all structures
and practices designed for erosion and sediment control. The plan
should be consistent with the general sediment control program set forth
in the facilities plan. In addition, the plan should include the following:
-------
-3-
a. A schedule for land clearing and grading in relation to the
corresponding schedule for each structure to be built. If at
all possible, the clearing should immediately precede the
construction activity.
b. Specifications for temporary and permanent measures to be used
for controlling erosion and sediment including a schedule and
specific location for each measure.
c. A separate list containing: (1) chronological completion dates
for each temporary and permanent measure for controlling
erosion and sediment; (2) location, type and purpose for each
measure; and (3) dates when those temporary measures will be
removed or replaced. This list will serve as a guide for con-
tractors as well as field inspectors during and after construction.
d. Appropriate maintenance procedures for each sediment control
structure should be specified in detail in the operation and
maintenance manual required as part of the construction grant.
3. Construction (Step 3)
The State, EPA and other appropriate local, State and Federal
agencies should coordinate their efforts to effectively carry out the
inspections by using the guide contained in the plans and specifications.
The objective of these inspections is not only to ensure compliance, but
also to make sure that necessary corrective steps are taken where it is
found that (1) sediment control measures originally specified were not
adequate, and (2) additional measures are needed for problems not anticipated
in the design phase.
Post Construction:
The final project inspection should make sure that all temporary
sediment control measures are removed or replaced with permanent measures
and all permanent structures are built as specified.
-------
Attachment B
References
1. U.S. Environmental Protection Agency, Nonpoint Source Control
Guidance. Construction Activities, U.S. EPA, Office of Water
Planning & Standards, Washington, D.C. 20460 (December 1976).
2. U.S. Environmental Protection Agency, Guidelines for Erosion and
Sediment Control Planning and Implementation, EPA R27 2015, U.S.
Government Printing Office, Washington, D.C. (August 1972).
3. Meyer, L. Donald and Kramer, Larry A., "Erosion Equations Predict
Land Slope Development," Agricultural Engineering, Vol. 50, No. 9
(September 1969).
4. Meyer, L.D., "Reducing Sediment Pollution by Erosion Control on
Construction Sites," paper presented at Seventh American Water
Resources Conference, Washington, D.C. (October 1971).
5. Meyer, L.D., et al., "Erosion Runoff and Revegetation of Denuded
Construction Sites," Transactions of the American Society of
Agricultural Engineers, Vol. 14, No. 1, St. Joseph, Michigan
(1971).
6. Meyer, L.D., et al., "Mulch Rates for Erosion Control on Steep
Slopes," Soil Science Society of American Proceedings, Vol. 34, No.
6, Madison, Wisconsin (November/December 1970).
7. Wischmeier, W.H., et al., "A Soil Erodibility Nomograph for Farmland
and Construction Sites." Journal of Soil and Water Conservation
(September/October 1971).
8. U.S. Environmental Protection Agency, Office of Water Program
Operations, Control of Erosion and Sediment Deposition from
Construction of Highways and Land Development, U.S. Government
Printing Office, Washington, D.C. (1971).
9. U.S. Department of the Interior, Federal Water Quality Administration,
Urban Soil Erosion and Sediment Control, U.S. Government Printing
Office, Washington, D.C. (1970).
10. U.S. Environmental Protection Agency, Processes, Procedures, and
Methods to Control Pollution Resulting from All Construction
Activity. EPA 430/9-73-007, U.S. EPA, Office of Air and Water
Programs, Washington, D.C. 20460 (October 1973).
-------
-2-
Attachment B
11. U.S. Environmental Protection Agency, Method to Control Fine-
Grained Sediments Resulting from Construction Activity, EPA 440/9-
76-026, Office of Water Planning and Standards, Washington, D.C.
(December 1976).
12. Local Soil and Water Conservation District Technical Guides on file
at each Soil Conservation Service Office.
13. U.S. Environmental Protection Agency, Methods of Quickly Vegetating
Soils of Low Productivity, Construct!'on Activities, EPA 440/9-75-
006, Office of Water Planning and Standards, Washington, D.C. (July
1975).
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
17FEB1978 Construction Grants
Program Requirements Memorandum
PRM No. 78-4
SUBJECT: Grant Eligibility of Land Acquired for Storage in
Land Treatment Systems
FROM: John T. Rhett, Deputy Assistant Administrator
for Water Program Operations (WH-546)
TO: Regional Administrators
Regions I thru X
PURPOSE
This memorandum provides additional guidance concerning grant
eligibility of land acquired by purchase, leasing, or easements for use
in land treatment systems.
DISCUSSION
The Agency has previously issued three PRM's on acquiring land for
use in land treatment of wastewaters and sludges. PRM 75-25 (formerly
PGM-49) covers the interpretation of the°eligibility of land acquisition
costs for land treatment processes (wastewaters). PRM 75-39 (formerly
PGM-67) covers the eligibility of land acquisition costs for the ultimate
disposal of residues from wastewater treatment processes (sludges). PRM
77-5 covers the eligiblity of leasing or easements in lieu of fee simple
purchase for use in either wastewater treatment alternatives or sludge
management systems. The Clean Water Act of 1977 (P.L. 95-217) requires
changes in Section 35.905-23 (definition of treatment works) and 35.940-
3 (costs allowable, if approved) of the construction grants regulations
(40 CFR Part 35). These changes in the construction grants regulations
require a change in eligibility of land costs as described by PRM 75-25,
but do not affect PRM 75-39 or PRM 77-5.
-------
POLICY
The Federal Water Pollution Control Act Amendments of 1977 (P.I.
95-217) make the land that will be used for storage of treated wastewater
in land treatment systems prior to land application an eligible cost as
of December 27, 1977. Previously, the cost of land for the temporary
storage of effluent was not eligible (PRM 75-25). Acquirement of land
for storage purposes must be by purchase rather than lease or easement.
There are two approaches for providing temporary storage that will
be cost eligible.
1. The cost of land will be eligible for all ponds constructed
specifically to meet storage needs due to climate or a seasonal
imbalance between wastewater supply and application schedules.
The period and total volume of storage provided should be
commensurate with the discussion in Section 5.3 (pages 5-30
thru 5-38) of the Design Manual on Land Treatment of Municipal
Wastewater (EPA 625/1-77-008). Thsse storage ponds should be
designed with the maximum depth appropriate for site conditions,
2. All or part of the land will be eligible for ponds which are
constructed for combination treatment and storage purposes if
such combination ponds meet the definitions and criteria as
listed in (a) through (d) below:
(a) Storage volume is defined as that portion of the pond
desianed to provide the total storage needs due to climate or
a seasonal imbalance between wastewater supply and application
schedules as for (1) abova. Storage volume could represent
the entire volume of a separate call or that portion above the
treatment volume in a combined treatment/storage cell.
(b) Treatment volume is that portion of the pond specifically
designed for biological stabilization of the wastewater. It
may be the entire volume of a treatment cell or the depth
below the liquid level that was designed for treatment in a
combined treatment/storage cell.
(c) If the volume provided for storage is greater than the
volume provided for treatment in any cell of the pond, then
the total land area for that cell is eligible.
(d) If the volume provided for storage is equal to or less
than the volume provided for treatment in any cell of the
pond, then the eligible area will be determined as the ratio
of the storage volume to the total volume of that cell.
-------
IMPLEMENTING PROCEDURE
The provisions of this program requirements memorandum apply to all
projects which had not been given Agency approval of the Step 1 facilities
plan as of December 27, 1977. These provisions supplement PRM #75-25,
which remains in effect.
REFERENCES
Program Requirements Memorandum 75-25 of July 18, 1975
(formerly PGM-49)
Program Requirements Memorandum 75-39 of April 2, 1975
(formerly PGM-67)
Program Requirements Memorandum 77-5 of December 15, 1976
40 CFR 35.905-23
40 CFR 35.940-3
EPA 625/1-77-008: Land Treatment of Municipal Wastewater
-------
\
mj
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
1 3 1978
SUBJECT:
FROM:
TO:
OFFICE OF WATER AND
HAZARDOUS MATERIALS
Rejection of All Bids:
Concurrence Function
Construction Grants
Program Requirements Memorandum
PRM No. 78-8
Guidance for EPA
Qc,
John T. Rhett
Deputy Assistant Administrator/
for Water Program Operations (WH-546)
Joseph M. Zorc
Assistant Gener
Water Division Directors (I-X)
Regional Counsels (I-X)
PURPOSE:
The purpose of this PRM is to set forth a revised Agency procedure
for handling a proposed rejection by a grantee of all bids on Step 3
projects.
POLICY;
It is the policy of the Environmental Protection Agency that
procurement for Step 3 construction contracts will be undertaken in a
manner to best achieve free and open competition. 40 CFR § 35.936-3.
Achievement of that Federal interest requires a standard which inhibits
rejection of all bids and resolicitation. While the Environmental
Protection Agency regulations provide that a grantee may reserve the
right to reject all bids [40 CFR § 35.938-4(h)(2)], the exercise of that
right is contingent upon a grantee's demonstration of good cause for
that proposed action. Any good cause demonstration must reflect that
the public interest is best served by rejection of all bids, considering
applicable Environmental Protection Agency requirements. Additionally,
the absence of good cause for rejection of all bids is incompatible with
the good faith efforts of all associated parties within the grants
process as well as self-defeating in terms of local water pollution
abatement efforts.
-------
DISCUSSION;
The Environmental Protection Agency has established a concurrence
function, regarding a grantee's proposed rejection of all bids on Step 3
construction grant projects, to determine whether adequate good cause is
demonstrated. The following criteria are representative of circumstances
in which good cause for rejection of all bids may be found:
(1) The specifications are ambiguous, inadequate, restrictive, or
otherwise deficient and an addendum to the original invitation for
bids is no longer possible.
(2) The needs of the grantee have changed and the change could
not be imposed upon bidders consistent with applicable procure-
ment requirements.
(3) The specification requirement(s) is(are) determined not to
be necessary.
(4) The bids received indicate that the grantee's quality
requirements were overstated.
(5) The amounts of all acceptable bids (i.e., responsive and
responsible) are reasonable but the grantee is unable to fund the
non-Federal share of project costs associated with the lowest
acceptable bid (variables to consider, in this regard, are the
financial capability of the grantee, the dollar amounts of the
bids and their percent over the engineer's estimate).
(6) The amounts of all otherwise acceptable bids (i.e., respon-
sive and responsible) are unreasonable. This is an obvious matter
for subjective judgment including some deference to the procuring
entity and concerns various factors among which is the validity
of the engineer's estimate.
(7) The bids received failed to provide sufficient competition
to insure fair prices.
(8) The bids:
(a) were not independently arrived at in open competition;
(b) were collusive; or
(c) were submitted in bad faith.
-------
(9) Applicable Federal law or policy (for example, the National
Environmental Policy Act, 42 U.S.C. § 4321 et seq.) requires delay
or further study of the project.
Good cause for rejection of all bids may not be found where the
following is evidenced:
(1) Litigation is instituted concerning contract award, although
litigation may prove a proper ground for rejection of all bids
where prolonged.
(2) The specification requirements are relaxed by a grantee and
the relaxation would not materially affect competition and would
result in only minor savings.
(3) The invitation for bids contained omissions, errors or ambiguities
which did not adversely affect competition, if:
(a) award would result in a binding contract concerning all
material requirements•
(b) performance would satisfy the needs of the grantee; and
(c) the rules of formal advertising, as contained in Agency
regulation, or fundamental principles of procurement necessary
to insure free and open competition, would not be violated.
(4) A local or in-State bidder has not submitted the low bid.
GRANT ELIGIBILITY:
Nothing in this PRM prohibits a Regional Administrator, in recognition
of a paramount Federal interest, from limiting the amount of grant
assistance on any resolicitation to the Federal share of the lowest bid
which could have been accepted by a grantee, or from requiring bid rejection.
PROCEDURE:
The above criteria should provide sufficient guidance to permit
each Regional Water Division to establish procedures for review of
proposed rejections of all bids and concurrence or nonconcurrence on the
part of the Agency. Additional review by Headquarters, on a case-by-
case basis, is not a requirement for the performance of the Agency
concurrence function and generally need not be sought. Advice must be
requested from Regional Counsels in matters concerning rejection of all
bids. Headquarters should be involved in cases which concern issues of
policy definition. A copy of the Regional Office memorandum or other
record of each concurrence/nonconcurrence will be forwarded to both the
Headquarters Office of Water Program Operations, Municipal Construction
Division (WH-547) and the Assistant General Counsel, Grants (A-134).
-------
Generally, after rejection of all bids the plans and specifications
or bidding documents will require modification to assure the correction
of the circumstances which led to rejection. In no case will negotiation
with a low bidder be utilized in lieu of rejection of all bids and read-
vertising in order for the grantee to get within budget.
Cancellation:
This PRM cancels Harold P. Cahill's memorandum of September 1, 1976,
(subjet: "Rejection of Bids on Step III Construction Grant Projects:), and
that of Jack Washburn, dated November 6, 1976, (subject: "Headquarters
Concurrence with Regional Offices' Recommendation on Rejection of Bids by
Grantees"). The policy and procedures established in this memorandum are
effective immediately.
-------
«<. PRO''
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
May 11, 1978
Construction Grants
Program Requirements Memorandum
PRM No. 78-11
SUBJECT: Toxicity of Chemical Grouts for Sewer Rehabilitation
FROM: John T. Rhett, Deputy Assistant Administrator Xs/
for Water Program Operations (WH-546)
TO: Regional Administrators
Regions I thru X
Purpose
This Program Requirements Memorandum provides an alert on the potential
health hazards associated with the field application of a major chemical
grout used in correcting sewer infiltration. The grouting material is AM-9
manufactured by American Cyanamid. Your immediate action is requested in
distributing this memorandum and the attachment to all Construction Grant
Program grantees.
Discussion
In applying the AM-9 grout, a catalyst containing dimethyl ami no
propionitrile (DMAPN) is used. On April 7, 1978, OSHA issued a health
hazard alert concerning DMAPN. It stated, "There is no current permissible
exposure limit. It is unknown at the present time if there is any safe
limit for human exposure to ESN (a trademark name for DMAPN). The use of
the material has been discontinued in plants in both Maryland and Massachusetts,
Accordingly, based on serious and immediate adverse human health effects
already evident it is imperative that worker exposure to ESN and its components
be completely avoided."
The OSHA alert was based on operations involved in the manufacture of
polyurethane foam. However, on the basis of this alert, the Washington
Metropolitan Transit Authority recently requested that all future use of this
produce (DMAPN) be stopped immediately and the product be removed from all
of its subway construction sites. DMAPN had previously been used in grouting
operations in subway tunnels.
-------
Action
1. Distribute this memorandum and the attached OSHA alert to the State
Agencies in your region and to all grantees who are or may potentially
be using the above chemical grouts in sewer rehabilitation projects.
2. There are already efforts underway to continue grouting with AM-9
using a different catalyst agent. However, we understand that the
production of AM-9 will be discontinued as of July 31, 1978. In
view of this and the health related concerns discussed above, please
assess the impact of these events on the infiltration/inflow program
as it relates to the overall management of the Construction Grant
Program. You will be notified as soon as additional information
becomes available. Please keep me advised of your findings and
conclusions.
-------
OSHA HEALTH HAZARD ALERT: NIAX CATALYST ESN
It has come to OSHA's attention that your firm has used and may still
be using NIAX catalyst ESN (registered TM, Union Carbide). ESN is composed
of two chemicals: (1) dimethyl ami no propionitrile, and (2) BIS-2, dimethyl
amino ethyl ether. The material is chiefly used as a catalyst in certain
polyurethane foam production operations.
There have been documented reports on serious adverse health effects
among male and female employees exposed to ESN in plants in both Maryland
and Massachusetts. The most striking symptoms uniformly reported by
afflicted workers are those of urinary dysfunction. In one Maryland
plant 69 of 101 workers questioned complained of difficulty starting urination,
pain and burning on voiding, incomplete emptying of the bladder, slowness in
expelling urine, and other urinary problems. There have also been employee
reports of impotence and sexual difficulties. A few individuals have received
urological surgery. There is evidence that for a smaller number of employees
toxic effects of ESN include damage to the nervous system (peripheral neuropathy)
with symptoms of muscle weakness, loss of balance and coordination, numbness,
tingling, and loss of feelings. ESN exposure may also cause liver dysfunction.
Employees have reported symptoms of toxic effects after as few as three
of ESN exposure. In addition to these immediate urfnary and neurological
effects, exposure to ESN can lead to serious and permanent health damage to
the afflicted worker.
The material has moderate to severe toxicity by the skin, inhalation,
and oral routes of administration in acute animal studies. OSHA has not
found any animal toxicology data on long-term or chronic effects of ESN
exposure.
There is no current permissible exposure limit. It is unknown at the
present time if there is any safe limit for human exposure to ESN. The use
of the material has been discontinued in plants in both Maryland and
Massachusetts. Accordingly, based on the serjous and immediate adverse
human health effects already evident, it is imperative that worker exposure
to ESN and its components be completely avoided. It is also essential that
employers take the following actions regarding ESN;
1) Inform all employees of the possible adverse health effects
of exposure.
2\ Provide all employees with a copy of this telegram.
3) Advise all employees with symptoms described in this notice to
see a physician and show him/her this message. The physician
should be made aware that the urological complaints have been
mistaken for non-occupationally caused prostatic or bladder
disease.
4) Urge all employees with symptoms to report them to OSHA3 to
their bargaining agent if there is one, and to the corporate
medical department if any.
-------
5) Advise the corporate medical department or other designated
physician to inform OSHA promptly of all employee reports of
symptoms described above.
Those involved should contact the OSHA regional administrator to convey
all employee reports of symptoms. A complete list of OSHA regional administrators
is attached as an appendix to this document. Physicians and others seeking
more technical or medical information on health effects of ESN should call the
OSHA regional administrator for referral. Further, since serious physical harm
to employees has taken place after short periods of exposure to ESN, OSHA
compliance officers have been directed to institute imminent danger proceedings
where appropriate measures have not been taken to eliminate this exposure.
Workers exposed to the individual components of ESN, alone or in
combination with other chemical compounds, should be investigated for similar
adverse health effects, with particular reference to urinary tract symptoms.
Eula Binghara
Assistant Secretary for Occupational
Safety and Health
-------
OSHA Regional Administrators
1. Region I - Gilbert Saulter (CT, ME, MA, RI, VT)
617-223-5535
2. Region II - Alfred Harden (NO, NY, PR, VI)
212-399-5941
3. Region III - David Rhone (DE, DC, MD, PA, VA, WV)
215-596-1206
4. Region IV - Allan McMillan (AL, FL, 6A, KY, MS, NC, SC, TN)
404-881-2305
5. Region V - Berry White (IL, IN, MI, MN, OH, WI)
312-353-4716
6. Region VI - Robert Wendell (AR, LA, NM, OK, TX)
214-749-3473
7. Region VII - Vernon Strahro (IA, KS, MO, NB)
816-374-5048
8. Region VIII - Curtis Foster (CO, MT, ND, SD, UT, WY)
303-837-3416
9. Region IX - Gabrel Gillotti (AZ, CA, GU, HI, NV, Am.Sam., Trust. Terr.,
415-556-0586 N.Mariannas)
10. Region X - James Lake (AK, ID, OR, WA)
206-442-5930
-------
'"I ««*<•'
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D C 20460
JUN
OFFICE OF WATER AND
HAZARDOUS MATERIALS
CONSTRUCTION GRANTS
Program Requirements Memorandum
PRM #78-12
SUBJECT: Reconstruction Lag Management
FROM: John T. Rhett, Deputy Assistant Administrator V^^**7\A
for Water Program Operations (WH-546) /
TO: Regional Administrators
ATTN: Water Division Directors
PURPOSE:
The purpose of this memorandum is to establish Agency policy regarding
the managercent of preconstruction lags.
DISCUSSION:
Section 35.935-9 of the current construction grant regulations states
that, if construction of a Step 3 project is not initiated within one year
after award, grant assistance will be terminated. This section also provides
that the Regional Administrator may defer such termination for not more than
six additional months, if there is good cause for the delay in initiation of
construction.
Because of a continuing history of failure by grantees to initiate
construction on their projects within a reasonable period of time following
award of the Step 3 grant, a program for the management of these lags must
be decisive so as to minimize the number and value of projects in
preconstruction over an extended period. Measures, such as anticipating
problems early, having a plan of control, taking the lead in overcoming
delays, and emphasizing to the grantee that his grant may be terminated or
annulled and an enforcement action initiated must be included in such a
program.
-------
The proposed technical amendments published in the FEDERAL REGISTER
on June 2, 1978, has revised Section 35.935-9 to read as follows:
135.935-9 Project initiation and completion.
(a) The grantee agrees to expeditiously initiate and complete the
Step 1, 2 or 3 project, or cause it to be constructed and completed, in
accordance with the grant agreement and application, including any
project schedule, approved by the Regional Administrator. Failure of
the grantee to promptly initiate Step 1, 2 or 3 project construction may
result in annulment or termination of the grant.
(b) No date reflected in the grant agreement, or in the project
completion schedule, or extension of any such date, shall be deemed to
modify any compliance date established in an NPDES permit. It is the
grantee's obligation to request any required modification of applicable
permit terms or other enforceable requirements that may be affected by
an extension.
(c) The invitation for bids for Step 3 project work is expected to
be issued promptly after grant award. Generally this action should occur
within 90 to 120 days after award unless compliance with State or local
laws requires a longer period of time. The Regional Administrator shall
annul or terminate the grant if initiation of Step 3 construction, including
all significant elements of project work, has not occurred within 12 months
of the award of Step 3 grant assistance (or approval of plans and specifica-
tions, in the case of a Step 2+3 grant). However, the Regional Administrator
may defer (in writing) the annulment or termination for not more than 6
additional months if:
(1) The grantee has applied for and justified the extension in
writing to the Regional Administrator;
(2) The grantee has given written notice of the request for
extension to the NPDES permit authority;
(3) The Regional Administrator determines that there is good
cause for the delay in initiation of project construction; and
(4) The State agency concurs in the extension.
POLICY:
Beginning September 1, 1978, to obtain a deviation from 40 CFR 35.935-9,
for deferment beyond 18 months, it shall be Environmental Protection Agency
(EPA) policy that the grantee must document that the delays are due to
circumstances beyond his control and provide certification that construction
will be initiated by the deferment date in the deviation request. Such dates
must be within a brief and strictly limited period of time.
-------
No determination should be made by the Regional Administrator to extend
the required date for initiation of construction of a project, or any segment,
until prior approval has been obtained from the State agency. If an
extension of time is not approved by either EPA or the State, the EPA
Regional Office should take immediate action to terminate or annul the
grant. The funds can then be utilized for other projects within the
State, consistent with the State project priority system.
IMPLEMENTATION:
Regional Office personnel shall coordinate all actions with the
Enforcement Division and Permits Branch in implementing the above policy
as follows:
1. Immediately review the current construction lag report for all
projects with a construction lag in excess of 12 months without
an approved extension and in excess of 18 months without a granted
deviation. Select projects for termination or annulment. For those
projects which the Regional Administrator has assured himself will
be under construction in a reasonable amount of time, an official
extension may be granted or deviation requested, as appropriate.
Other projects should be considered for termination or annulment
and enforcement action.
2. Immediately review all projects which have not gone to construction
by the end of six months after Step 3 grant award and classify them
as being in "Delayed Status." Immediately relay this information
to the Director, Enforcement Division.
3. Immediately review all projects which have not gone to construction
within 120 days of Step 3 grant award and determine if invitations
for bids have been published. Classify those projects which have
not been advertised as being in "Delayed Status" and relay this
information to the Director, Enforcement Division.
4. Continually maintain the Preconstruction Lag Report in detail.
Instructions for maintaining the Preconstruction Lag Report are
contained in References B & C below.
5. Continually monitor all projects on the Preconstruction Lag Report
to spot potential problem projects.
6. At the time that projects are classified as being in "Delayed Status,"
require detailed preconstruction schedules from grantees and aggres-
sively pursue the implementation of these schedules. Monthly, Area
Program Managers in Headquarters will determine the status of all
"Delayed Status" projects, either by telephone or by visits to the
Regional Offices. Area Program Managers will also analyze the
Preconstruction Lag Report and discuss problem aspects with the
Regions.
-------
7. In the seventh month after Step 3 grant award, advise the grantee
that a very real potential exists, both for the termination or
annulment of his project at the end of one year and for possible
enforcement action. Advise the grantee to review his alternative
approaches for solving the problem which is delaying construction.
For projects delayed by circumstances under the grantee's control,
advise the regional Enforcement Division of the situation, including
a recommendation for action from the Water Division.
8. Between the seventh and twelfth month, determine if "Delayed Status"
projects can be brought to construction. If construction cannot
be started before the end of the twelfth month and, if it is
reasonably assured that construction can be started within a six
month extension period, obtain from the grantee the documentation
required by the above policy.
9. At the end of the twelfth month, terminate or annul "Delayed Status"
grants in accordance with the above policy if documentation does not
justify extension. Refer grantee to the Enforcement Division for
more extensive enforcement action.
REFERENCES
A. 40 CFR 35.935-9, Project Completion.
B. Memorandum to Regional Administrators from John T. Rhett,
"Construction Grants Projects Not Yet Under Construction,"
November 5, 1976.
C. Memorandum to Water Division Directors from John T. Rhett,
"Preconstruction Status Report," May 25, 1977.
D. POM 77-12, "Management of Preconstruction Phase of Step 3
Grants," June 21, 1977.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OCT 2 3 1978
Construction Grants
Program Requirements Memorandum
PRM No. 79-1
Subject: Safety Requirements for the Design and Operation
of Chiorination Facilities Using Gaseous Chlorine
From: John T. Rhett, Deputy Assistant Administrator
for Water Program Operations (WH-546)
To: Regional Administrators (I-X)
Attn: Water Division Directors
Purpose:
This memorandum establishes the policy pertaining to safety require-
ments for the design and operation of chlorination facilities utilizing
gaseous chlorine.
While many engineering considerations and operational practices
with regard to chlorine handling are site specific, a number of significant
design specifications and operational procedures should be required as
minimum acceptable practice. There are numerous publications that
provide detailed information pertaining to this subject, including those
listed in Attachment B. This memorandum provides guidelines and general
principles to be used in the design and operation of chlorination
facilities using gaseous chlorine.
Discussion:
Gaseous chlorine refers to chlorine purchased in its elemental form,
occurring in the gaseous or liquid state. It is supplied commercially
in pressurized containers sized to contain either 100 pounds, 150 pounds
or 2,000 pounds of chlorine. In addition, chlorine can be purchased in
single unit and multi-unit railroad tank cars, as well as tank trucks.
-------
Chlorine is a respiratory irritant, and under conditions of sufficient
concentration and exposure, can cause death by suffocation. Chlorine,
especially when combined with even small amounts of water, is highly
corrosive, and can cause severe burns when brought into contact with
skin and eyes. Unfortunately, the toxic and corrosive effects of
chlorine were recently demonstrated by the two publicized railroad tank
car derailments and their subsequent after effects.
The on-going construction grants program will continue to generate
significant construction of wastewater treatment facilities throughout
the country. Chlorination continues to represent the most commonly used
method of disinfection for sewage, and consequently many new treatment
facilities will include provisions for chlorinating treated effluent
prior to discharge. As a result, a major part of EPA's overall responsibility
is ensuring that safe Chlorination practices are implemented.
EPA policy is designed to ensure that:
1. Chlorination systems are designed to prevent chlorine leaks
and to minimize operator and local resident exposure should leaks occur.
2. Chlorine leaks that do occur are handled safely, quickly, and
with minimal environmental exposure.
Policy:
Attachment A is guidance for the design and operation of safe
Chlorination facilities. It is intended that in reviewing plans and
specifications and operation and maintenance manuals for those projects
incorporating Chlorination processes, Sections I and II of Attachment A
be used as a technical guide and basis for minimum adequacy in safety
considerations. The information contained in the guidance was developed
to serve as part of the overall criteria applicable to the design and
operation of such facilities. While it is believed that complying with
the guidance will substantially reduce chlorine hazards which can be
potentially dangerous to plant personnel and nearby residents, it is
recommended that the guidance in this PRM be used to supplement other
applicable information on Chlorination facilities.
Implementation:
The measures specified in this memorandum are required for all
projects that have not yet received Step 3 grants by the date of this
memorandum. In addition, projects that have already received Step 3
grants should incorporate the sections under operation and maintenance
in the O&M manual. Where practical, current Step 3 projects should be
encouraged to make revisions to their designs to comply with the measures
specified herein.
Attachments
-------
ATTACHMENT A
Procedure for the Safety in the Design and
Operation of Chlorine Facilities
This guidance contains a detailed procedure which represents good
engineering practices for the safety in the design and operation of
chlorination facilities. Because it is not the intent of the guidance
to modify or replace any appropriate safety requirements and regulations
published by the Occupational Safety and Health Administration (OSHA),
it is recommended that the guidance be used to supplement the OSHA and
any other appropriate safety requirements.
I. Design of Gaseous Chlorine Facilities
A. If gas chlorination equipment and chlorine cylinders are to be
installed or stored in a building used for other purposes, a gas-tight
partition should separate the chlorination room from any other portion
of the building. Doors to this room should open only to the outside of
the building, and should be equipped with panic hardware. Such rooms
should be at ground level, and should permit easy access to all equipment;
the chlorine storage area(s) should be separated from the chlorine feed
area(s).
B. A clear glass, gas-tight window should be installed in an
exterior door or interior wall of the chlorination room to permit the
chlorinator(s) to be viewed without entering the room.
C. Chlorination rooms should be equipped with heating and ventilating
equipment designed to maintain the room(s) containing the chlorine
containers at approximately 18-21°C (65-70°F) and the room(s) containing
the chlorinator feed equipment at a temperature of 5-10°F higher.
D. Containers (except insulated rail or cargo tanks) should be
shielded from direct sunlight or from overheating0above 60°C (140°F)
any source, either while in storage or in use. Pairs of level rails or
properly designed cradles should be provided for storing one ton cylinders.
E. Forced mechanical ventilation should be included that will
provide a complete air change at least every 1-4 minutes. Because
chlorine gas is heavier than air, location of air inlets and outlets
should be carefully considered to ensure that the entire room will be
thoroughly ventilated. For example, in the exhaust ventilation system,
the exhaust outlet should be located near the floor, with the discharge
being positioned outside of the building at a point where it will not
contaminate the air inlet to any buildings or inhabited areas. The
fresh air inlet should be located at the opposite end of the room from
the exhaust outlet, to facilitate complete air replacement.
-------
F. Exhaust equipment should be automatically activated by external
light switches. That is, an operator should be able to turn the lights
on outside of the chlorination room and thereby activate the ventilation
system prior to entering the enclosed area. Other automatic systems,
including door-activated mechanisms, should also be considered.
G. Emergency showers and eye baths should be located near, but
external to, the chlorination facilities.
H. For facilities having a design hydraulic capacity of five
million gallons per day or more, an automatic chlorine detection system
should be included as part of the chlorination facility. The detection
system should sound alarms and activate flashing lights that are audible
and visible within the POTW. Connection of the alarm system to the
local police station, POTW operator's area, or both, is also recommended
where practical. Consideration of such detection and alarm systems
should also be given in the case of smaller facilities, where the
potential benefits are sufficient to warrant the additional cost and
associated increase in operational complexity.
II. Operation and Maintenance
The following procedures should be included in operation and
maintenance manuals for treatment facilities which incorporate chlorination
processes. While the following criteria are related primarily to the
operation and maintenance of chlorination systems, they should also be
read in the context of their applicability to the design of treatment
plants.
A. Loading and Unloading of Chlorine
1. DOT regulations (174.560) provide that single-unit railroad
tank cars must be unloaded on a private track. This requirement
applies to all EPA supported projects.
2. Whenever practicable, single and multi-unit tank cars
should be delivered at a deadend siding(s) used only for chlorine
delivery, with insurance that the tracks are level. The car(s)
should be protected by a locked derail, a closed and locked switch,
or preferably both.
3. Railway flat cars delivering one ton containers should
also be delivered on a special siding assigned to chlorine unloading
only.
4. Chains, rope slings, or magnetic hoists should never be used.
When cylinders are to be lifted, forklift trucks or hoisting equipment
with special cradles or carriers designed for chlorine equipment should
be utilized.
-------
5. Tank barge unloading facilities should be in compliance with
the Army Corps of Engineers and Coast Guard Regulations.
B. Handling of Chlorine Containers
1. One ton cylinders should be stored on properly designed
cradles or pairs of level rails. Chocks should be placed to prevent
the containers from rolling when unattended.
2. 100 and 150 pound cylinders should be secured with safety
chains in storage and during transport.
3. Containers should never be piled on top of one another.
4. Containers should be stored in a manner that will prevent
them from being hit by vehicles or other heavy objects.
5. Chlorine should not be stored with other compressed
gases.
6. Empty containers should be so tagged, and should be
stored separately from full containers.
7. Cylinders should be used in the order in which they are
received, to prevent valve packing from becoming dry and developing
leaks.
8. Only approved tools designed for use with chlorine containers
should be used. For example, hand trucks specifically designed for
100 and 150 pound cylinders should be used instead of rolling them
on the rim.
9. Chlorine cylinder emergency repair kits should be readily
available.
C. Leak Detection and Emergency Procedures
1. Each POTW should have a formal written set of emergency
procedures that includes the items discussed below, prior to startup
of the chlorination facilities. In addition, operator's manual
must include pre-planned procedures in the event of a catastrophic
leak or container rupture.
2. Self-contained positive pressure helmets, with their own
compressed air supply and full facepiece, should be available for
emergency use. The canister type gas mask is specifically not
recommended. The helmets should be located at readily accessible
points, away from the area(s) likely to be contaminated with chlorine
gas. Spare air supply cylinders should also be on site for use
during prolonged emergencies.
-------
Helmets and breathing air supply tanks should be routinely
inspected and maintained in good condition. They should be cleaned
after each use, and also cleaned routinely at regular intervals.
When needed, air supply tanks should be refilled at stations where
proper air compressor equipment is used to filter out oil in a
contaminated air environment.
Specifications for properly designed positive pressure helmets for
chlorine service can be obtained from the U.S. Bureau of Mines,
OSHA, or NIOSH. In addition, potential users of these helmets, as
well as users of other emergency equipment, should have formal
training in their use and should also be required to have regular
practice sessions.
3. A strong solution of aqueous ammonia (18° Baume or higher)
should be available for use in locating the source of leaks. Dense
white clouds of ammonium chloride are formed by the reaction of the
ammonia and chlorine, thus confirming the source of the chlorine
leak.
4. Repair of any chlorine leaks should be performed by at
least two people wearing self-contained air breathing equipment.
If such repairs must be made below grade, persons entering the area
must also wear safety harnesses which are connected to ropes extending
to a higher level where additional people are stationed to assist
in emergency rescue operations.
5. Piping and valves in chlorine rooms should be color coded
and properly labeled for rapid identification.
6. If a container is leaking chlorine, it should be turned,
if possible, so that gas instead of liquid escapes. The quantity
of chlorine that escapes from a gas leak is about one-fifteenth the
amount that escapes from a liquid leak through the same size hole.
7. If possible, a leaking container should be moved to an
isolated spot where it will do the least harm.
8. Never immerse or throw a leaking chlorine container into
a body of water. The leak will be aggravated and the container may
float when still partially full of liquid chlorine, allowing gas
evolution at the surface.
9. Emergency kits should be readily available for the quick
repair of chlorine leaks. Information on emergency kits is available
from the Chlorine Institute, New York, NY (see Reference 1).
10. In the event of an emergency, technical assistance can be
obtained by calling CHEMTREC (Manufacturing Chemists Association,
Chemical Transportation Emergency Center) at 800/424-9300. This is
a 24-hour toll-free service.
-------
ATTACHMENT B
REFERENCES
1. "Chlorine Manual," The Chlorine Institute, Inc. 342 Madison Avenue,
New York, NY, December, 1972.
2. "VJPCF Manual of Practice No. 1 - Safety in Wastewater Works," Water
Pollution Control Federation, 1975.
3. "WPCF Manual of Practice No. 4 - Chlorination of Wastewater," Water
Pollution Control Federation, 1976.
4. "WPCF Manual of Practice No. 8 - Wastewater Treatment Plant Design,"
Water Pollution Control Federation, 1977.
5. "Liquid Chlorine" Technical and Engineering Service Bulletin No. 7,
Allied Chemical, Morristown, NJ.
6. "Chemical Safety Data Sheet SD-80, Properties and Essential Information
for Safe Handling and use of Chlorine," Manufacturing Chemists
Association, 1970.
7. "Standards for Waste Treatment Works, Municipal Sewerage Facilities,"
New York State Department of Environmental Conservation, 1970.
8. "Chlorine Handbook," Diamond Shamrock Chemical Company, 1976.
9. "Dow Chlorine Handbook," Dow Chemical U.S.A., 1975.
10. Sax, Irving N., Dangerous Properties of Industrial Materials, Van
Nostrand Reinhold Company, 1975.
11. White, George C., Handbook Of Chlorination, Van Nostrand Reinhold Company,
1972.
12. "Hazardous Materials Regulations of the Department of Transportation,
Including Specifications for Shipping Containers," R.M. Grazianos Tariff
Publishing.
13. "Chlorine Detector Saves a Life," Public Works, March, 1978.
14. "Safe Handling of Compressed Gases and Containers," Compressed Gas
Association, Inc., 1974.
15. "Supplement to Federal Guidelines: Design, Operation and Maintenance
of Wastewater Treatment Facilities," Technical Bulletin No. D-71-1,
U.S. Environmental Protection Agency, September, 1970.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
1 3
OFFICE OF WATER AND
HAZARDOUS MATERIALS
CONSTRUCTION GRANTS
PROGRAM REQUIREMENTS MEMORANDUM
PRM No. 79-2
SUBJECT: Royalties for Use of or for Rights in Patents
x"7 1
FROM: John T. Rhett, Deputy Assistant Administrator<-/<>'>*
for Water Program Operations (WH-546) / .
i ,/
Frances E. Phillips, Associate General Counsel -p.,,L
Grants, Contracts and General Administration .(A-lcS4j
To: Regional Administrators
Attn: Water Division Directors
Purpose
This memorandum sets forth Agency policy and procedures concerning
the allowable cost associated with the procurement of the right to use,
or the rights in, a patented product, apparatus or process which is
necessary for the proper performance of a construction grant agreement
or subagreement thereto.
Discussion
Questions have been raised about the allowability of royalties for
the use of or for rights in patents. Royalties are itemized costs or
charges in the nature of patent royalties, license fees, patent or
license amortization costs, or the like. Such royalties are paid to
a patent licensor either by the grantee or by a contractor, who in
turn separately charges the grantee for this actual cost.
This memorandum addresses the payment of royalties during the
construction of the waste treatment works, as distinguished from the
grantee's periodic payment of royalties for the right to operate under
a patent. Periodic payments are operating costs and are not within the
purview of this memorandum. Any part of a license fee, beyond a mere
royalty, which can be attributed to services rendered by the licensor is
also beyond the purview of this memorandum.
-------
There are at least two occasions when the grantee may be obligated
to pay a royalty for the use of or for rights in patents:
1. The treatment works design includes a patented product,
apparatus, or process, or
2. A patented product, apparatus or process may be necessary for
the proper performance of a subagreement to a construction grant.
Policy
Royalties for the use of or for rights in patents, are allowable
costs within the limits of the principles and procedures contained herein.
Implementation
1. The grantee shall report to the EPA Project Officer, with copies
for the EPA Regional Counsel, the following information, if applicable, for
each item of royalty in excess of $1,000 which the grantee will be
obligated to pay as an actual cost:
a. Name and address of licensor;
b. Date of license agreement;
c. Patent Numbers;
d. Brief description, including any part or model
numbers of each contract product, apparatus or process
which the separate royalty is payable;
e. Percentage or dollar rate or royalty per unit or
other method of determining the royaltyj
f. Unit price of contract items;
g. Number of units;
h. Total dollar amount of royalties; and
i. Current license agreements.
2. Prior to selecting a patented product, apparatus, or process for
the treatment works, on which an item of royalty must be paid, the grantee
must consider:
a. The necessity and reasonableness of the royalty.
-------
b. The royalty in any cost-effective analysis and as
an evaluation factor in any bid analysis;
c. The use of performance type specifications for
competitive procurement of a royalty-free product, apparatus
or process; and
d. The use of Step 3 bid alternatives to each proposed
patented product, apparatus, or process on which a royalty
must be paid.
3. The grantee shall obtain and submit to the EPA Project Officer,
with copies for the EPA Regional Counsel, as soon as the patented product,
apparatus or process, on which a royalty must be paid, has been proposed
in the facilities plan or design, a copy of the proposed license agreement.
4. Royalties on a patent necessary for the proper performance of
the grant agreement or any subagreement thereto and applicable to grant
products, apparatus or processes, are allowable unless:
a. The Federal government has title to the patent or
a royalty fee license with the right to sub-license the grantee;
b. The patent has been adjudicated to be invalid, or has
been administratively determined to be invalid by an Agency
of the Federal government;
c. The patent or license agreement is considered to be
unenforceable by the grantee or an Agency of the Federal
government;
d. The patent either has expired or will expire prior to the
incurrence, by the grantee, of any possible infringement liability.
e. The grantee has received from a patent attorney, an opinion
that the patent is either not infringed or invalid.
5. The grantee shall determine whether any of the circumstances of
paragraph 4 above exist. The grantee may also be advised by EPA to
make a study of the validity, infringement or other aspects relating to
the enforceability of the patent. All costs incurred by the grantee in
making the required determinations and studies will be allowable,
provided that prior approval of the anticipated costs has been received
from the EPA Project Officer, with the advice of the EPA Patent
Counsel, Office of General Counsel. Written reports of such determinations
and studies shall be submitted to the EPA Project Officer, with copies
for the EPA Regional Counsel.
-------
6. If the implementation of the facilities plan would obligate
the grantee to the payment of royalties for the use of or rights in
patents in excess of $5,000, the grantee's public hearing, held in
accordance with 40 CFR 35.917-5, shall include a discussion of the
proposed or selected patented product, apparatus or process, and afford
concerned commercial interests adequate opportunity to express their
views.
7. Special care should be exercised by the grantee in determining
reasonableness of the royalties where they may have been arrived at as
a result of less than arm's length bargaining; e.g.:
a. Royalties to be paid to persons, including
corporations, affiliated with the party requiring payments
of such royalty or license fee;
b. Royalties to be paid to unaffiliated parties,
including corporations, under an agreement between the person
requiring payment and the patent licensor which was entered
into in contemplation that the EPA grant or grantee's contract
would be awarded; or
c. Royalties to be paid under an agreement between
the person requiring payment and the patent licensor which
was entered into after the award of the grant by EPA or the
contract by the grantee.
8. In any case involving a patent formerly owned by the grantee's
contractor, the amount of royalty allowed will not exceed the cost
which would have been allowed had the contractor retained title thereto.
9. The royalty shall not exceed the lowest rate at which the
licensor has offered or licensed a public or private entity.
10. When negotiating the royalty, the grantee should consider the
technical and financial risk that they must assume and the future
commercial benefits that may accrue to the licensor as a result of the
grantee's utilization of the patent.
11. EPA payment will normally not be made on a royalty until Step 3.
Certain exceptions should be allowed when the use of a patented product,
apparatus, or process is necessary for the proper performance of the
grant agreement, or a subagreement, during Step 1 or 2. The grantee's
license or other agreement whereby the grantee was obligated to pay
a royalty, must be submitted with the request for EPA payment. If the
grantee's payment is made to a licensee, a copy of that licensee's
agreement with its licensor must be submitted with the request
for EPA payment.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
DEC 28 1978 Construction Grants
Program Requirements Memorandum
PRM No. 79-5
SUBJECT: Construction Incentive Program
FROM: John T. Rhett, Deputy Assistant Administrator
for Water Program Operations (WH-546) /
TO: Regional Administrator
Regions I-X
Purpose
This memorandum provides guidance and policy pertaining to the
application of the construction incentive (CI) clause to the construction
phase of a project (Step 3).
Discussion
The construction incentive program provides a mechanism by which
contractors on construction grant projects can be motivated to use their
construction expertise to improve contract performance and thereby
create an overall reduction in the total cost of the contract. This
motivation is commonly achieved through monetary incentives and its
success has been well demonstrated in direct procurement by other
Federal agencies and in private enterprise.
Section 21 2(2) (c) of the Federal Water Pollution Control Act
Amendments of 1972 requires the use of a cost-effective approach to
wastewater treatment projects. This requirement is being met primarily
by applying a cost-effectiveness analysis in the Step 1 project and
value engineering in Step 2. It is now clear that the application of a
cost reduction incentive program, which is commonly called value engineering
in other Federal agencies, to a project during construction can also be
potentially effective in reducing project costs.
Because experience in construction incentive approaches under a
grant program is limited, program participation by the grantee and
contractors is voluntary. However, technical and cost data for each
construction incentive change proposal (CICP) submitted by the contractor
must be carefully reviewed. Accordingly, necessary arrangements will be
made with the Corps of Engineers (COE) to provide the needed expertise
and resources for the CICP review process.
-------
Policy:
By this memorandum, the grantee may include a CI clause, (see
attached), as part of the construction bid package using the procedures
described in this memorandum.
In order to ensure that each CICP will be properly reviewed and
implemented, the number of projects to have the CI clause should be
limited by the Region. The actual number of CI clauses authorized will
depend on a number of factors determined through experience in imple-
menting the program, including the time needed to review and process
each CICP and the nature of the CICP's received. In addition, the use
of the CICP clause is limited to projects having a Step 3 eligible cost
exceeding $10 million. The Region should report to Headquarters whenever
a contract is allowed to include the CI clause. Headquarters concurrence
is necessary for approval or rejection of each major CICP received. (See
A-3 under Procedure).
The prime contractor and his subcontractors may participate in the
construction incentive program when the CI clause is part of the approved
bid package. However, participation of subcontractors must be through
the prime contractor. In addition, the sharing arrangement must be
mutually agreed upon by the prime contractor and the subcontractor prior
to the submittal of a construction incentive change proposal (CICP).
To ensure the program's effectiveness and integrity, individuals
and firms who have prior involvement in the project, design or in other
value engineering activity prior to Step 3 grant are not eligible to
participate, directly or indirectly, in the development and preparation
of a CICP or monetary sharing of any resulting savings.
While the CICP is being processed, the contractor should continue
the construction activity as scheduled. The additional engineering fees
associated with the evaluation and implementation of the CICP are grant
eligible.
Implementation:
Effective immediately, the grantee may include the EPA/CI clause as
part of the construction bid package for projects having a Step 3
eligible cost of more than $10 million when approved in accordance with
this memorandum.
Procedure:
A. Inclusion of the CI Clause in a Contract
The grantee may submit a written request for inclusion of the CI
clause in a contract. Ideally, such requests should be made prior to
applying for the Step 3 grant. The Region should respond to such requests
in writing and when the request is approved, a copy of the approval
correspondence should be forwarded to Headquarters for information.
-------
B. Approval of a CICP
When a CICP is submitted by the contractor in response to the CI
clause, the grantee will proceed with the following procedural steps:
1. Expeditiously distribute copies of the CICP to the following
offices for review:
a. 3 copies to the Regional EPA
b. 1 copy to the State agency
c. 1 copy to the project designer
2. The Region will forward 1 copy of the CICP to Headquarters and
1 copy to the appropriate office of the COE for technical and
cost review.
3. When a CICP having a potential gross cost reduction of more
than $500,000 is received, the Region should immediately
notify Headquarters. Upon receipt of the notice, a special
team of Headquarters staff with the necessary construction
experience will be designated to provide assistance to the
grantee and Region in the review and approval of the CICP.
4. The grantee will provide follow-up coordination with the
project designer, State and EPA.
5. The grantee will review all comments and, when appropriate,
call a special meeting with all concerned parties to resolve
any outstanding comments.
6. Subject to State and EPA concurrence, the grantee will notify
the contractor in writing of the conclusion of the meeting and
the decision made on the CICP.
-------
Construction Incentive Clause
The EPA Construction Grants Program
I. Purpose
This clause defines a "construction incentive change proposal"
(CICP) and establishes the policy and procedures for the application
of CICP's in the Step 3 grant process of the EPA Construction
Grants Program.
II. CICP
A. Definition: A CICP is a formally written proposal for a
change order during the construction of a wastewater treatment
project funded under the EPA Construction Grants Program. A
CICP must be initiated, developed and identified as such by
the contractor or his subcontractor. A CICP must result in a
gross capital saving of $50,000 or more.
A CICP must result in a net capital cost reduction while
causing no increase in the total life cycle cost of the
project and meeting the following conditions.
1. The required function, reliability and safety of
the project will be maintained.
2. The proposed change will not result in any contract
rebidding.
3. The proposed change must be in compliance with Section
204(a)(6) of the Federal Water Pollution Control Act
Amendments of 1972 which prohibits proprietary and
restrictive specifications for bids in connection
with construction grant projects.
4. The proposed change will not cause undue interruption
of the contract work.
5. The proposed change must be in compliance with local
permits and regulations.
B. Applicability: Subject to the EPA's approval this clause
applies to all contracts for the construction of wastewater
treatment projects funded under the EPA Construction Grants
Program (Step 3 grants).
C. Content: A CICP must contain pertinent information and
supporting documents for evaluation by the involved contracting
authority. As a minimum, the following information should be
included.
-------
1. Name of individuals associated with the development
and preparation of the CICP.
2. A detailed description and duly signed plans and speci-
fications as presently designed and the proposed changes.
Clear identification of any advantages and disadvantages
for each change.
3. A detailed procedure and schedule for implementing
the proposed change. This should include all neces-
sary contract amendments. Also indicated must be the
latest date the CICP must be approved for implementation.
4. A summary of estimated costs to include the following:
a. project construction costs before and after
the CICP. This should be a detailed estimate
identifying the following items for each trade
involved in the CICP:
1. quantities of materials and equipment
2. unit prices of materials and equipment
3. labor hours and rates for installation
4. subcontractor and prime contractor mark-ups
b. operation and maintenance costs before and
after the CICP;
c. costs for implementing the CICP not included in
item 4a above;
d. contractor's share of the savings based on para-
graph III below;
e. other data as required in section 35.938-5(b)(c)
and (d) of the construction grants regulations;
f. time required for executing the proposed change;
To the extent indicated below, contractors may restrict the
Environmental Protection Agency's and the project owner's use
of any construction incentive change proposal or the supporting
data submitted pursuant to this program. Suggested wording
for inclusion in CICP's is provided below:
"This data furnished pursuant to the construction incentive
clause of contract shall not be disclosed beyond
that which is necessary to accomplish the review, or
duplicated, used, or disclosed, in whole or in part, for
any purpose other than to evaluate a value engineering
proposal submitted under said clause. This restriction
does not limit the Government's right to use information
contained in this data if it is or has been obtained, or
is otherwise available, from the contractor, or from
-------
another source, without limitations. If such a proposal
is accepted by the owner under said contract after the
use of this data in such an evaluation, the United States
Environmental Protection Agency and the project owner
shall have the right to duplicate, use, and disclose any
data reasonably necessary to the full utilization of such
proposal as accepted, in any manner and for any purpose
whatsoever, and have others so do."
The grantee may, subject to approval by the State and EPA, modify,
accept or reject the CICP. However, if a CICP were modified or were not
acted upon within the time frame specified in the CICP, the contractor
may withdraw, in part or in whole, the CICP. In any event, the grantee
will not be liable for the cost of developing the CICP withdrawn or
rejected.
When a CICP is accepted by the grantee, the processing procedure
specified under Section 35.938-5 for change orders should be used and
approval of the CICP by the State and EPA is required. When a CICP is
rejected, the contractor may not appeal to EPA.
III. Sharing Provisions
Construction Cost Sharing
Upon acceptance of a CICP, the contractor will share the net capital
savings pursuant to this contract based on the formula below. Computation
for the net savings is to be based on the following formula:
Net Savings = Initial contract cost - (revised contract cost + CICP
development cost + CICP implementation cost)
The CICP implementation cost should include, when appropriate,
consultant's fee for reviewing and redesigning the changes. However,
costs for processing the CICP incurred by the grantee, State and EPA are
excluded.
The contractor's cost for developing the CICP is limited to that
directly associated with the preparation of the CICP package. When
approved, such costs will be reimbursed to the contractor. However,
any costs which cannot be satisfactorily substantiated will be rejected
and will not be subject to reimbursement.
Sharing Formula
a. when the total net savings based on the computation above is
$1 million or less, the contractor will receive 50% of the
saving
-------
b. when the total cumulative net savings exceed $1 million, the
contractor's share will be computed based on the following
formula:
y = .2x + 300,000
where:
y = contractor's share in dollars
x = total net saving in dollars
For example, if the total net saving is $3.572 million --
y = .2($3,572,000) + 300,000
= $1,014,400
-------
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
\f '"; Program Requirements Memorandum
FROM: Thomas jCJvJqjHing | PRM #79-7
Assistant Administrator for Water and Waste Management (WH-556)
TO: Water Division Directors,
Regions l-K -
MAR 9
Purpose
This memorandum sets forth Agency policy and procedures for Headquarters
and regional review of wastewater treatment projects designed to meet
effluent requirements more stringent than secondary treatment. It also
groups such projects into two categories—advanced secondary treatment
(AST) and advanced waste treatment (AWT) and defines these terms. In
addition, this memorandum provides a standard for reviewing the financial
impact of advanced projects upon small communities.
We anticipate that the review process wifl result in the development
of improved national guidance on wasteload allocations and the water
quality standards-setting process. Thus, these review requirements will
be supplemented in the future by such guidance.
Discussion
The Agency has in the past expressed growing concern with the high
cost and energy consumption of publicly-owned treatment works in many
communities. These high costs and energy demands are frequently attribu-
table to optimistic projections of anticipated growth or sophisticated
extra unit processes. Funding facilities with these conditions with
limited grant funds results in fewer projects being funded overall,
delay in accomplishing basic secondary treatment goals, and, particularly
in smaller communities, the financial burden of high operation and
maintenance as well as construction costs.
Consequently, the Agency has to take a hard look at the number and
types of projects that are planned for treatment more stringent than
secondary to achieve the Clean Water Act goals. Regions and States are
reminded in this connection of the checklist procedure for all Step 2
and Step 3 projects that was instituted in the June 8, 1978, joint memo
from Rhett/Davis. The checklist procedure and the independent justifica-
tion described in the following sections are meant to supplement, not
replace, the review of cost-effectiveness and appropriateness of facility
design normally given to projects.
-------
In action approving the FY 79 appropriation for the Construction
Grants Program, the Appropriations Conference Committee agreed "that
grant funds may be used for construction of new facilities providing
treatment greater than secondary...only if the incremental cost of the
advanced treatment is $1 million or less, or if the Administrator person-
ally determines that advanced treatment is required and will definitely
result in significant water quality and public health improvements."
All advanced projects with an incremental capital cost over $1
million that are recommended for funding by the regions or States must
be reviewed at EPA Headquarters after completion of basic facility plan
review and collection of supplementary materials by the regions or
States. All other projects more stringent than secondary but with an
incremental capital cost of $1 million or less shall receive a comparably
intensive review at the regional/State level.
Clarification is needed for terminology used in review of projects.
The Agency has defined secondary treatment as a treatment level meeting
effluent limitations for Biochemical Oxygen Demand (BOD) and Suspended
Solids (SS) of 30/30 mg/1 on a maximum monthly average basis or 85 percent
removal of these parameters, whichever is more stringent. The group of
projects requiring treatment more stringent than secondary can be divided
into two groups: advanced secondary treatment (AST) and AWT.
To arrive at the above distinctions the Agency reviewed about 6,300
projects shown in the 1976 Needs Survey as requiring treatment more
stringent than secondary. Of the 6,300, 1,200 projects as yet unbuilt
will be required to meet very stringent levels of treatment of BOD less
than 10 mg/1 and/or nitrogen removal. Additional analysis by the Agency
showed distinct cost increases and shifts to more sophisticated technology
to achieve these levels. Therefore, the popularized term "AWT" should
only be used to refer to treatment levels providing for maximum monthly
average BOD/SS less than 10 mg/1 and/or total nitrogen removal of greater
than 50 percent. ("Total Nitrogen removal" = TKN plus nitrite+nitrate).
These projects are subject to especially intensive review and require
independent justification. Other projects requiring treatment more
stringent than secondary but not to AWT levels can be referred to as
"advanced secondary treatment." Review procedures for these projects
are somewhat less rigorous.
A treatment facility designed to meet effluent limitations of
BOD/SS 30/30 mg/1 or 85 percent removal with just disinfection processes
shall be considered as a secondary rather than advanced secondary treatment
facility for purposes of this PRM. Other definitions of secondary
treatment (e.g., 25/30 or 20/20) may be used if included in approved
State criteria, if secondary treatment technologies would be used to
achieve these levels, and if any extra costs (present worth) beyond
those for meeting 30/30 limits would be a very small percentage of the
present worth costs of the entire treatment facility. Secondary treatment
facilities with just phosphorus removal add-ons with a capital cost more
-------
than $1 million and derived from the international agreement for the
Great Lakes basin shall be considered advanced secondary, but not subject
to Headquarters review.
The policy of the Agency is to encourage land treatment facilities
and other alternative technologies which provide for reuse of wastewater
or recycling of nutrients and other pollutants. Such projects usually
afford water quality enhancement beyond the minimum established in
permits, and water management benefits as well. Accordingly, where land
treatment or other reuse/recycling technologies are designed to meet
effluent limitations more stringent than secondary, the procedures
herein would allow such projects to proceed without special review
unless their costs were found to be excessive. Excessive costs are
defined as those which would exceed the high cost criterion presented in
section 3 of this memorandum or the average present worth costs of AST
and AWT projects (roughly estimated at 25 percent above secondary for
the former category and 50 percent for the latter).
Some AWT projects, particularly those featuring waste stabilization
ponds plus filtration, may not cost more than AST projects. Thus, AWT
projects with a present worth cost not exceeding that for secondary
treatment by more than 25 percent may be reviewed under procedures
established herein for AST projects.
The cost of treatment - secondary as well as. more stringent than
secondary - can have severe local fiscal impacts. The latest Title II
regulations give more emphasis to alternative or individual systems and
require a cost-effectiveness analysis that could result in lower project
costs, especially to small communities. This emphasis, along with
increased review, should help ensure that projects with excessive capacity
for growth or unnecessarily designed to meet effluent requirements more
stringent than secondary, with capital or operations and maintenance
costs that may place an intolerable financial burden upon the community,
do not receive grant funds.
Additional guidance on coordination of reviews of advanced treatment
projects with the interim municipal enforcement policy will be developed
in conjunction with the EPA Office of Water Enforcement.
The Agency will conduct a rigorous review of projects designed for
treatment more stringent than secondary. The incremental additional
capital costs of a project that are attributable to effluent limitations
or water quality requirements more stringent than secondary must be
based on a justification showing significant receiving water quality
improvement and mitigation of public health problems where they exist.
In addition, projects requiring treatment more stringent than secondary
should be evaluated for their financial impact upon the community.
Also, the inflationary costs for delay should be considered in project
-------
reviews. The regions will review all such projects. They will decide
how to proceed in accordance with this PRM for projects having incremental
costs beyond secondary of $1 million or less, and for other projects
explicitly designated in this PRM for final regional decision. Headquarters
review and decision on how to proceed will follow preliminary regional
review for the remaining projects with incremental capital costs beyond
secondary greater than $1 million.
For projects with an incremental cost of $1 million or less, the
review is a delegable function under the 205(g) delegation agreements.
For projects with an incremental cost of greater than $1 million, States
may do the initial review but regions must concur with the State's
conclusions before transmitting the project to Headquarters.
Beginning in FY 1980, the delegation of that group of project
reviews now conducted by Headquarters to those regional offices demon-
strating capability to perform such reviews well will be considered.
Review of the projects should proceed as outlined below:
Procedure
Preliminary steps in the review should^e 1) determination of the
explicit effluent requirements for the project and identification as
secondary, advanced secondary or AHT, and 2) determination of incremental
capital cost of advanced treatment as more or less than $1 million.
1. Review of Projects Identified as AST
If a project is identified as having to meet advanced secondary
treatment standards (more stringent than secondary but not AWT), the
checklist should be used to review the project.
For project approval, the review must determine that:
1. seasonal operation has been evaluated;
2. the land treatment alternative has been considered; and
3. the advanced secondary portions of the project will definitely
result in significant water quality improvements and mitigation
of public health problems where they exist.
Reviews of project costs and local financial impacts must comply
with section 3. If the checklist review demonstrates that the required
level of treatment is not well justified, Federal funding of all or part
of the project should be postponed until the project is redesigned (if
necessary) or the level of treatment is fully justified.
-------
If the project involves land treatment or other innovative/alternative
technologies featuring wastewater reuse or recycling of pollutants, does
not exceed the high cost criterion given in section 3 below and its
incremental present worth cost does not exceed 25 percent of the cost of
a new secondary treatment plant, then the project should proceed without
further review. If the project does exceed the high cost or present
worth criteria, the procedures prescribed herein for AST projects shall
apply.
a. Incremental cost of AST is $1 million or less.
Regions should follow the criteria and procedures given above. The
decision will be made at the regional level.
b. Incremental cost of AST is greater than $1 million.
If, after the above review, the Regional Administrator wants to
proceed with funding, the project must receive approval from the
Administrator in EPA Headquarters. The following material should be
sent to the Office of Water Program Operations: attention Michael B.
Cook, USEPA, Facility Requirements Division (WH 595), 401 M Street,
S.W., Washington, D.C. 20460, telephone (202) 426-9404, for final
review and approval:
(1) facility plan (draft or final) including supporting
documentation on alternatives considered with region's review and comments;
(2) completed checklist with detailed answers to supplement
checked responses;
(3) region's evaluation of water quality and public health
benefits that will result from advanced secondary treatment based upon
data submitted concerning the project;
(4) region's evaluation of seasonal operation of AST portion
of project; and
(5) the major documents summarizing the establishment of water
quality standards and effluent limitations for the project.
Headquarters has developed procedures for the internal review of
advanced secondary projects which rely heavily upon regional/State
evaluations. Advanced secondary projects without complex issues are
expected to be reviewed within 25 working days of receipt of the project
at Headquarters.
2. Review of Projects Identified as AWT
Regions should assist grantees and the State in developing the data
needed for an independent justification of AWT. This should include at
a minimum:
(1) facility plan (draft or final) and supporting documents,
particularly on alternatives considered with region's review and comments.
-------
(2) completed checklist with detailed answers to supplement
checked responses;
(3) region's evaluation of water quality and public health
benefits that will result from both secondary treatment and the additional
treatment beyond secondary based upon data submitted for the project;
(4) the major documents summarizing the establishment of water
quality standards and effluent limitations for the project;
(5) an identification and review of the need for each proposed
unit process included in the proposed treatment facility for meeting the
effluent limitation identified in item (4). Particular attention should
be given to an assessment of the impact on beneficial uses of dropping
one or a few treatment processes (or redesigning one or more treatment
processes to provide a lesser degree of treatment) and the cost savings
associated with these options:
(6) a detailed review of land treatment and seasonal operation
alternatives; and
(7) if the item 5 and 6 review indicates a more cost-effective
option, an estimate for the 20-year planning period of the capital,
operation and maintenance, and total present worth costs of that option.
The review of an AWT project must determine whether the project
meets all of the following criteria:
(1) The beneficial uses established for the receiving water
can be attained or, if not, lesser uses can be achieved when the effluent
limits are met, and industrial sources meet their pretreatment and
permit conditions. Where Best Management Practices for nonpoint source
control are required to achieve standards not now being attained, these
controls must be in place or part of a draft or an EPA approved water
quality management plan. The differences must be significant between
water quality and beneficial uses attained or enhanced by the proposed
project compared with water quality and uses attainable from the project
with one or a few treatment processes beyond secondary dropped or modified
and with less stringent effluent limitations reflecting their omission
or modification.
(2) State laws or requirements or criteria within State water
quality standards are not more stringent than the Red Book criteria
unless fully justified as essential to achieve and sustain the beneficial
uses.
An exception to this criterion may be allowed if a project is
necessary to prevent degradation of the following types of "national
resources waters":
a. National Parks
b. National Wildlife Refuges
c. National Seashores
d. National Monuments
-------
e. National Marine Sanctuaries
f. National Estuarine Sanctuaries
Funding necessary to prevent degradation of other waters of national,
rather than regional or State, importance may be allowed on a case-by-
case basis if both the following conditions are met:
a. The water is of truly national, rather than regional or State
importance.
b. Federal legislation or regulations are directed toward protecting
the specific body of water from degradation.
(3) The wasteload allocations or other analysis resulting in
the effluent limitations, along with the assumptions on which the analysis
is based, are scientifically supported by intensive water quality
surveys or appropriate field investigations conducted on the water
bodies in question, and calibrated and verified models or other technically
sound analyses.
(4) The treatment processes are the most cost-effective means
of meeting the prescribed effluent limitations.
(5) The community is aware of the project's costs for treatment
and reserve capacity. Cost information on total capital costs, local
financing, and annual or monthly operating and debt service costs should
be presented at a public hearing as required in PRM 76-3. Review of
project costs and local financial impacts must comply with section 3.
(6) Land treatment has been fully evaluated.
If the above conditions are not met, either the entire project or
its AWT elements (if they can be separated out) should not be funded
pending further action.
Federal funding of all or the unjustified part of the project
should be postponed until the project (if necessary) is redesigned or
the level of treatment is fully justified. The advanced wastewater
treatment increment of the project that is not justified should not be
funded unless and until the project will result in significant water
quality and public health improvements.
Should the review show that AWT cannot be justified, but that some
treatment greater than secondary can be justified under the rules for
review of AST projects, then the justified portion should be funded.
The project should be segmented to permit funding of the justified
portion and that section should be designed, if practicable, to allow
addition of the other segment at a later date after further analyses.
-------
8
Projects may be excepted from the AWT review procedures under the
following circumstances:
(1) Project features land treatment or other innovative/alternative
technologies affording wastewater reuse or recycling of pollutants where
the project's cost would not exceed the high cost criterion described in
section 3. Also, the incremental present worth cost of such a project
must not exceed 50 percent of the present worth cost of a new secondary
treatment project. If these criteria are met, the project may proceed
without further review.
(2) The AWT project's incremental present worth cost does not
exceed 25 percent of the present worth cost of a new secondary treatment
facility. Project review must, nevertheless, conform with AST review
procedures.
a. Incremental cost of AWT is $1 million or less.
Regions should follow the criteria and procedures given above. The
decision will be made at the regional level.
b. Incremental capital cost of AWT is greater than $1 million.
If the Regional Administrator is satisfied that the project meets
all of the required criteria and wants to proceed with funding, the
project must receive approval from the Administrator in EPA Headquaters.
The region shall furnish a report covering all of the criteria listed in
section 2 and forward each of the documents listed in section 2 to the
Office of Water Program Operations: attention Michael B. Cook, Director,
Facility Requirements Division (WH 595), United States Environmental
Protection Agency, 401 M Street, S.W., Washington, D.C. 20460, telephone
(202)426-9404, as soon as possible after the need for Headquarters
review is identified.
Headquarters has developed internal procedures for a task force
review of complex AST and AWT projects that will review the major issues
and questions intensively based upon the material sent in by regions and
States. Decisions will be made on the basis of the criteria outlined
above. It is planned for the Administrator's decision on the project to
be made within 45 to 60 working days of receipt of the project at Head-
quarters. This decision will be communicated to the regions.
3. Local Financial Impacts
All projects designed to achieve treatment more stringent than
secondary must be evaluated in terms of financial impact upon the community,
This evaluation should supplement the display and disclosure of financial
information and local costs required of all facility plans and described
in PRM 76-3. Total annual costs to a typical domestic user comprise
both the existing preproject costs and the increase attributable to the
-------
proposed new facilities. A project shall be considered high-cost when
the total average annual cost (debt service, operation and maintenance,
connection costs) to a domestic user exceeds the following percentage of
median household incomes:
1.50 percent when the median income is under $6,000
2.00 percent when the median income is $6,000 - $10,000
2.50 percent when the median income is over $10,000
If review shows that a project is high cost, try to determine which
elements of the project are responsible. Determine whether it is the
treatment processes selected, excessive reserve capacity, new sewer
construction, or other factors in the physical setting that may cause
excessive costs in either construction or operation of the facility.
Work with the grantee and the State to revise the facility plan or
redesign the project to reduce the costs, or obtain assistance from the
Farmer's Home Administration (FmHA) or another source with the local
share. There is agreement between FmHA, EPA and Economic Development
Administration for all to use the above rule-of-thumb in review of
projects. Regions should proceed with a project determined to be high
cost under this criterion only after consulting with the Facility Require-
ments Division in Headquarters.
Implementation
This policy shall be implemented immediately as follows. Regions
shall advise States of the policy of strict review in the regions and
Headquarters of treatment more stringent than secondary (advanced secondary
and AWT). They should also be advised of the Agency's policy not to
fund such projects if not justified. The policy should be applied to
all projects prepared for Step 2 or 3 funding.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C 20460
MAY 1 1 1979
Program Requirements Memorandum
PRM # 79-9
SUBJECT: Outlay
FROM: Thomas
for Water and W;
TO: Regional Adminii
PURPOSE
;ruction Grants Program
,t Administrator
t (IH-556)
tors
This memorandum sets forth policy on outlay management in the
Environmental Protection Agency's construction grants program.
POLICY
It is the policy of the Environmental Protection Agency to establish
and maintain a comprehensive system of outlay planning and management in
the construction grants program. Regional Offices will be responsible
for developing realistic outlay estimates, and for meeting approved
outlay plans on a monthly basis.
In furtherance of this policy, Regional Offices are to pursue a
program of active outlay management, at both the project and the con-
tract levels, for all large construction grants projects designated by
the Regional Administrator. For all such projects outlay schedules are
to be developed for all major construction and A/E contracts at the time
of contract award. This requirement replaces the need for the grantee
to submit the proposed payment schedule prior to grant award that is
normally made part of the grant agreement. For0any contracts not
awarded within six months of grant award, the grantee must furnish a
schedule of projected start and completion dates for each contract. The
method for submitting this information to the Region will be determined
by the Regional Administrator.
The outlay schedules are to be revised annually by July 1st, for
input into the federal budget process, and whenever actual project
performance strays significantly (-5% or +10%) from the schedule. Each
project is to be inspected at least quarterly (on a continuing resident
or monthly basis for large or complex projects) to monitor performance
against these schedules, and to resolve problems before they lead to
project delays.
-------
(2)
To provide the Region with the necessary information for developing
outlay estimates, and to provide a basis for subsequent project/contract
management, the grantee must submit the following information for each
major construction or A/E contract by July 1st of each year:
o EPA project identification (grant) number.
o Grantee name.
o Contract identification (name or number).
o Contract award date.
o Projected contract completion date.
o Total eligible contract amount.
o Quarterly payment schedule (75% EPA share) for last quarter of
current fiscal year and all of the following fiscal year, and
an annual estimate for the succeeding fiscal year. (The
Regional Administrator may request a monthly payment schedule
for contracts that may have a significant impact on Regional
outlay projections.)
o Other information required by the Regional Administrator for
effective contract management.
For new contracts awarded after July 1st, or for contract schedules that
must be revised during the year because actual performance differs fron
the projection, the grantee should submit, along with the other adminis-
trative information, projections only for the quarters that rarain in
the year, plus the annual projection for the succeeding year.
On an annual basis these contract level outlay schedules are to be
aggregated, modified as appropriate, and combined with outlay projections
for Step 1, Step 2, small Step 3 and 4, Section 206(a), and P.L. 84-660
projects, as well as expected outlays for future obligations and drawdowns
of Section 205(g) State delegation agreements, to become the Region's
annual outlay comnitment. This coimitment will be in the form of a
monthly projection, by State and Regional total, of the outlay demand
for the upcoming fiscal year; and a annual projection, by State and
Regional total, for the following (budget) year. The commtment is due
to Headquarters by August 10th of each year. Upon approval by Headquarters,
the Regions will be required to meet their ccmmitment to within ±5% of
the cumulative projection on a monthly basis. Regional performance will
be tracked only against the total Regional monthly conmitment. The
State breakdown and the annual budget year projection will only be
considered activity indicators.
-------
(3)
DISCUSSION
This policy is being implemented by EPA for two purposes: to
develop more accurate fiscal estimates for the President's budget, and
to initiate a comprehensive program of project management in the post-
Step 3 phase of the construction grants process. Accurate budget
estimates are required for this program because of its size and impact
on federal budget decisions. Effective project management is essential
to assure that fiscal estimates are achieved, and that construction
grants projects proceed on schedule to achieve the primary goal of clean
water at the earliest possible date and at minimum cost. The program
being adopted by EPA is designed to attain these objectives.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D C. 20460
1 2 JUL 1979
OFFICE OF WATER AND
HAZARDOUS MATERIALS
Construction Grants
Program Requirements Memorandum
PRM No. 79-10
SUBJECT: Qualification of Major Items of Equipment
FROM: John T. Rhett, Deputy Assistant Administrator
for Water Program Operations (WH-546)
TO: Regional Administrator
Regions I-X
Purpose
This memorandum sets forth guidance for the qualification of major
items of equipment for construction grant projects. This guidance is appro-
priate for use during either Step 2 or Step 3 phases of construction.
Discussion
The following qualification procedures are for optional use by
Environmental Protection Agency (EPA) grantees who desire to qualify major
items of equipment for construction grant projects with the approval of the
EPA regional offices. Under 40 CFR 35.935-2,(43 FR 44071, September 27, 1978)
the Regional Administrator may review grantee procurements including equip-
ment qualification and may request additional grantee actions consistent
with applicable statutes and regulations.
Qualification is a system that may be used to ease the administrative
burden of determining responsive, responsible bidders on equipment. However,
qualification is not a conclusive determination of responsibility and a
qualified equipment bidder or offerer may be rejected as nonresponsive on
the basis of subsequently introduced information e.g., shop drawings. In all
cases the equipment furnished must comply with the specifications.
-------
There are a number of necessary minimum requirements for any quali-
fication system. Whether the qualification procedure is to take place in
Step 2 or Step 3, all of these requirements must be met. If the qualifica-
tion is to occur during Step 2 the qualification information package will
not contain plans and specifications. Therefore a qualification information
package containing the relevant information must be prepared. This package
must contain enough specific detail regarding performance and quality to
assure that equipment sources will thoroughly understand what is required
of the specified equipment.
Adequate advertisement is critically important to assure that knowledge
of the project is widespread and so that new manufacturers, small firms and
minority businesses are provided an opportunity to compete. Adequate time
must be allowed for submission of the necessary information for qualification
review since an overly strict time frame would limit competition. This
should conform to 40 CFR 35.938-4(b) ,(43 FR 44080, September 27, 1978),
generally 30 days. Adequate time must also be provided for the engineering
evaluation of the qualification packages submitted.
Policy
A. Advertisement
The grantee is responsible for accomplishing adequate advertisement for
qualification. Whether qualification occurs during Step 2, or during Step 3,
the advertisement procedure shall conform to Section 35.938-4(a) of the EPA
regulations. The advertisement procedure for qualification shall also conform
to the local regulations regarding advertisements for construction bids.
In addition to advertisements, private mailings to known equipment sources
may be made. Mailing lists of equipment sources are available from trade
journals and technical associations. The advertisement shall contain all
information needed by the sources to properly submit information regarding
their equipment for consideration. The advertisement shall include the
following as a minimum:
1. Address and telephone number of grantee.
2. Name, size and type of plant.
3. Name, address, and telephone number of the designer and
name of contact for inquiries.
4. Location where qualification information package can be obtained.
5. Cost of qualification information package -- (this should not exceed
the price that bidders must pay to obtain bidding documents).
-------
6. Brief schedule of equipment needed in the construction project
that is to be qualified (e.g., filter press).
7. Locations of qualification information for review by interested
individuals. These locations should be the same as those used
for additional information for contractors interested in bidding.
8. Deadline for submittal of qualification packages by equipment
sources. This should be a minimum of 30 days from date of
advertisement to allow adequate time for equipment sources to
prepare their qualification package. Longer time periods should
be provided for qualification submission for complex systems.
B. Qualification Information Package
The qualification information package, prepared by the design engineer,
shall include the construction bid package plans and specifications or
suitable extracts of this information if qualification occurs during Step 2.
These specifications shall be performance specifications where possible and
in all other cases conform to the two brand names or equal requirement. In
addition to the plans and specifications, a description of the package the
equipment sources submit for qualification consideration should be included.
The equipment sources should submit catalog cuts or readily available
specifications and drawings of their equipment and any supplementary information
that would be helpful in the evaluation. It should be stressed that shop
drawing quality submittals are not required or wanted in this phase of the
project.
All equipment manufacturers or distributors interested in supplying their
equipment for the project must submit a qualification package for approval,
including the suppliers who propose to furnish the equipment which may
have been preliminarily named to indicate the salient requirements of the
equipment desired. This is required so that all equipment offerers have the
same opportunity to submit information for consideration, and to assure that
the equipment offered fully meets all requirements of the specifications.
A time schedule of the qualification and bidding process must be
included in the qualification information package.
C. Evaluation
Evaluation of the qualification submission shall be completed by
the design engineer within 30 days from date of closing of submittals of
qualification packages. At the end of the review period, the grantee
will notify all proposers of their status (by registered mail return
-------
receipt requested). Such correspondence should contain notice consistent
with EPA protest regulations described below that any protest actions must
take place within the time limitations described in 40 CFR 35.939(b), (43
FR 44083, September 27, 1978). By addendum to the specifications, the
grantee will notify the holders of the bid package of the equipment that
has been qualified for the specific project.
D. Protest Procedures
Protest procedures regarding qualification must conform to EPA reg-
ulations 40 CFR Section 35.939, (43 FR 44083, September 27, 1978).
The proposer of any equipment qualified as a result of a protest
will be notified by the grantee and a further addendum to the specifications
will be sent to the bid package holders.
In those cases when qualification takes place during Step 3 the
entire process (including protests to the grantee, if any) should take place
within the time frame of the advertisement for construction bids and the bid
opening. When qualification takes place during the Step 2 adequate time
must be allowed for submittals and prompt determination of qualified
equipment must be made. All protests should be resolved before the bidding
process. In order to satisfy this requirement, grantees must state in the
qualification information package and notification to proposers of their
status that any decision on qualification is final grantee action and the
time for protests under 40 CFR 35.939(b), (43 FR 44083, September 27, 1978),
begins to run from the date the proposers receive notification of their
status from the grantee. Failure to protest within one week of this time
period will result in finding the protest untimely. Consistent with the
procedures of this memorandum, after determination of the qualified equip-
ment no other equipment can be considered.
Qualification does not exempt the supplier from meeting the
specifications. The specifications are the final authority for acceptance
of equipment. Approval of a qualification package does not eliminate the
need for shop drawing submittals and approvals during construction.
E. Construction Delays
If bidding is significantly delayed, then the qualification process may
be reopened by the grantee with the EPA regional office approval in order
to allow consideration of equipment sources that may then be interested in
supplying equipment. In such cases the previously qualified equipment need
not be reconsidered.
-------
F. Other Qualification Procedures
Qualification procedures consistent with state or local law which
provide the same considerations in terms of competition may be used
in lieu of these procedures.
G. Public Inspection
On the cut off date for submittal of qualification packages for evaluation
a list of all equipment sources that have submitted qualification packages
shall be published. Whether the packages themselves become available for
public inspection will be decided by local ordinances on the subject of
public disclosure.
H. Costs
The cost incurred by the grantee incidental to qualification of
major items of equipment for inclusion in a construction grant project are
eligible for construction grant funding during the step in which they are
undertaken.
Attachments
-------
-a
ro
CO
o
Q.
CO
3
_j.
c:
CO
o
Q.
Q)
-a -a m
eu -s -Q
o fD c
a> &> -D
IQ -s 3
fD fD fD
CO 3
XD f+
c
CU CO
— ' O
-"• c:
-h ~S
-"• n
o ro
Cu fD E~T
r+ -S fD
->. Cu to
O c-t- -••
O 3
-O 3 fD
Cu -s
O Cu to
CU Q. O
t o o
ro m 3
to < to
QJ -4.
—' O.
I
I
CU fD
3 to
fD
-S
o
Q.
Advertisement for Submittal of
'Qualification Packages
Submittal of Qualification
Package
Notification of Equipment Sources
of Outcome of Evaluation
Advertisement for Bid
Attachment 1
-------
CO
o
Q.
Cu
o T3 m
a> -S -Q
rf C
-j.-O -"•
O Q) T3
3-53
fD (t>
-O 3
CU .O c+
O C
0> CO
— ' O
-•• C
o>
to
fD
CO
O
0)
CO
o
Q.
a>
a> a
r+ IT)
O -'•
CQ
OJ
CQ
fD Cu fD
CO
3 -5
CL co
m O
< O
o> 3
— i co
C. -"•
CU Q.
<-+ ro
-•• -s
o i
3 _
fl)
3
n> -s
-s o
-•• r-i-
O ft)
Q- co
CO
—I
m
^Advertisement for Bids
Qualification
and
Submittal
Package
of Qualification
Notification of Equipment Sources
"and Holders of Bid Package
Bid Opening
Attachment 2
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
Subject:
From:
TO:
Construction Grants
Program Requirements Memorandum
PRM No. 79-11
SAM 38
OFFICE OF WATER AND
HAZARDOUS MATERIALS
Funding of Waste Load Allocations
and Water Quality Analyses for POTW
Swep T. Davis, Deputy Assistant
for Water Planning & Standards
Henry L. Longest II, Acting Deputy Assista
for Water Program Operations
Regional Administrators
ATTN: Regional Water Division Directors
Purpose
This memorandum establishes policy and procedures for the funding
of waste load allocations and water quality analyses required for publicly-
owned treatment works (POTWs) decisions.
Background
EPA, recognizing the costs and energy requirements of publicly-
owned treatment works (POTWs) providing treatment greater than secondary
(AST/AUT), has taken several steps to insure that such facilities are
only Federally funded when based upon technically adequate effluent
limitations. In June 1978 a joint OWPS/OWPO guidance memorandum was
issued which contained a checklist to be completed before a project
providing AST/AWT could receive construction grant funding. On November 2,
1978, SAM 37 was issued by OWPS which established policy and procedures
for the use of Section 208 funds to review and revise waste load allocations
for POTWs subject to permit limitations requiring AST/AWT. On March 9,
1979, PRM 79-7 was issued by OWPO which established policy and procedures
for the review and funding of proposed AST/AWT projects. Reduced
Section 106 and 208 FY 80 appropriations coupled with increasing demands
on Section 106 funds to support the issuance of second round NPDES
permits and expanded monitoring programs may result in some states being
unable to provide adequate funding for the timely review and revision of
waste load allocations. It is therefore necessary to provide additional
-------
- 2 -
policy and procedures for FY'80 on the use of Section 201 and 205(g)
funding to augment Section 106 funds to support these tasks.
Policy
Nothing in this memorandum is to affect the responsibility and right
established by Sections 303 and 510 of the Clean Water Act for each State
to develop water quality standards and waste load allocations. The State
water quality management program will continue to exercise overall manage-
ment responsibility for assuring that water quality analyses and waste
load allocations are conducted in a satisfactory manner. The primary
sources of funding for these activities are program grants and State funds.
The amount of Section 106 and State funds currently expended for POTW-related
waste load allocations should not be reduced because Section 201 and
205(g) funds may be used, on a case-by-case basis and subject to require-
ments in this memorandum, to augment State and Section 106 funds to provide
for the development of POTW-related waste load allocations and supporting
water quality analyses. Except where EPA and the State have determined
that existing limitations should be revised, Section 201 and 205(g) funds
may not be used to review effluent limitations or to develop alternative
effluent limitations; e.g., costs associated with the development of data
in support of Section 301(h) permit modification request are solely the
responsibility of the requesting municipality and are not grant eligible.
Where Section 201 or 205(g) funds are used, the area! extent of waste
load allocation and water quality data collection activities must relate
directly to needed waste load allocations for projects that are on the
State 5-year construction grant priority list.
The priority for use of Section 201 and 205(g) funds to conduct
waste load allocations and water quality analyses is:
1. POTWs which have been determined by EPA and the State, as a
result of a PRM 79-7 review, to require a revised waste load allocation.
2. POTWs on the State 5-year construction grant priority list for
which the State and Regional Administrator have determined, through the
State/EPA agreement process, that existing waste load allocations are
probably insufficient to support AST/AWT requirements.
SAM 37 continues to apply to the use of FY'78 and 79 Section 208
funds for waste load allocations and water quality analyses. FY'80
Section 208 funds may not be used to initiate POTW-related waste load
allocations.
-------
- 3 -
Procedures
1. FY 80 State/EPA Agreement: If Section 201 or 205(g) funds are
to be used for waste load allocations, the FY 80 State/EPA Agreement
(SEA) must contain or provide for the development of a detailed State
review of the Syear construction grant priority list. Specific provision
for the review may be contained in the SEA itself or in the Section 106
program plan or the 205(g) delegation agreement. Wherever a POTW has
effluent limitations potentially requiring AST/AWT and Section 201 and
205(g) funds may be used, the SEA, Section 106 program plan or 205(g)
delegation agreement shall provide for:
0 an informal review of applicable water quality standards to
determine whether they contain unsupported requirements or
criteria; e.g., blanket discharge prohibitions or criteria
substantially more stringent than contained in Quality Criteria
for Water or any subsequent criteria documents published by EPA.
0 the review of existing waste load allocations, if any, to
determine whether they are technically valid and sufficient to
support AST/AKT effluent limitations.
0 the review of any other water-quality based permit limitations
not derived from water quality standards or waste load
allocations to determine whether they are valid.
Wherever the State and EPA determine that an effluent limitation is not
valid or supportable, the State shall provide a program to rectify the
inadequacy. One component of this program shall be a list of projects
for which it is necessary to substantiate inadequate AST/AWT effluent
limitations. This list should subdivide these projects into those
requiring new or revised waste load allocations and those requiring
other work. Projects requiring new or revised waste load allocations
should be subdivided into the two priority classes described above.
Until this listing is complete, Section 201 and 205(g) funds may not be
used to fund waste load allocations.
For all cases where the State has determined that effluent limitations
are unsupported for reasons unrelated to waste load allocations, the
priority of resolution shall be determined by the State and Regional
Administrator.
2. Funding: The SEA shall allocate costs to produce valid effluent
limitations as follows:
0 Section 106 funds may be used in any situation.
0 where tasks relate to the basin-wide revision of waste load
allocations, or to waste load allocations/water quality analyses
not directly related to a POTW on the SEA needs list, only
Section 106 or State funds may be used.
-------
- 4 -
Section 201 and 205(g) funds may be used to augment Section 106
funds for priority one projects upon issuance of this memorandum.
Section 201 and 205(g) funds may be used to augment Section 106 funds
for priority two projects upon EPA approval of the State waste load
allocation program.
3. Headquarters Assistance: PRM 79-7 provides for OWPO and OWPS
review of the adequacy of effluent limitations and facility planning for
certain proposed AWT facilities. Upon request, OWPS will provide technical
assistance and advice on the review of existing water quality standards
and waste load allocations, the development of work programs, and on
draft work products.
4. Relationships: The use of Section 201 and 205(g) funds for
waste load allocations and the involvement of 201 grantees is new so
that additional guidance is necessary:
0 responsibility for the validity of waste load allocations lies
with each State in accordance with Section 303(d)(l)(C) and
303(e)(3) of the Clean Water Act.
0 accountability for Section 201 funds used for waste load
allocations and supporting water quality analyses will rest
with the Section 201 grantee even though the grantee may
execute a contract or intergovernmental agreement with the
State or the State and an areawide 208 agency to perform the
work.
0 in order to prevent a conflict of interest, it is recommended
that waste load allocations and supporting water quality analyses
not be conducted directly by the Section 201 grantee. It is
recommended that the Section 201 grantee instead execute a
contract or intergovernmental agreement with either the State
or the State and an areawide 208 agency, which may subcontract
the work, if necessary.
0 wherever Section 201 funds are to be used for waste load allocations/
and water quality analyses, the scope and schedule of work and
the consultant contract shall be approved by the State and EPA.
The terms of this approval shall be made a condition of the
grant and shall be contained in a memorandum of understanding
entered into by EPA, the State, the 201 grantee, and, when
appropriate, the areawide 208 agency. EPA and the State should
be intimately involved in all phases of the work as discussed in
the attached management guidance.
0 the conduct of joint waste load allocations is encouraged.
Some previous waste load allocations funded by EPA ultimately failed
to be valid because of inadequate data, inexperienced personnel and improper
use of mathematical models. Consultant contracts should include specific
performance standards and a quality assurance program covering, where
-------
- 5 -
applicable, model calibration and verification, sampling and analytical
methodologies, statistical adequacy of data, and personnel requirements
(see the attached management and technical guidance).
5. Municipal Enforcement Strategy: The "Final National Municipal
Policy and Strategy for Construction Grants, NPDES Permits, and Enforce-
ment Under the Clean Water Act" (August 1979) provides that for projects
undergoing an AWT review, NPDES permits should not generally be reissued
until this review is completed. Procedures for modifying or reissuing
permits for these projects are detailed in this document.
Attachments:
Management Guidance
Technical Guidance
-------
Management Guidance for Funding of WLA Studies
Background
In order to ensure that grant funds for WLAs are used in an effective and
efficient manner, OWPS will be working with the Regions to ensure that
all Regions using 106, 201, 205(g) or 208 funds for WLAs have atleast a
minimal technical capability in the WLA program area. In addition, there
should be a strong State program in this area or a committment by the
Region to guide and take responsibility for WLA work done in States lacking
a strong WLA program. This part of the guidance describes what factors
Headquarters will consider in evaluating the Region's technical capability
in the WLA area. It also addresses what factors the Regions should use
in evaluating State WLA programs.
I. Regional Management Guidance
OWPS is presently conducting a study of the AWT/WLA program in each
Region. Each regional contact has received a copy of the draft
report on their Region for their comment and review. Our aim is
to work with any Region needing assistance to ensure that all Regions
develop the necessary minimal technical capability by FY 80.
Based upon our work thus far, the following factors appear to be critical:
(a) Regional Staffing Levels
The Region should have an identifiable staff for guiding and
reviewing:
Work-plans for development of WLAs
Contract Work Statement for WLAs
Interim output of WLA Studies
Final WLA
State WLA effort
(b) Regional Staff Qualifications
Staff responsible for overseeing WLA work must include individuals
trained and experienced in all aspects of the development of
WQ based effluent limits, e.g., planning and conduct of WQ
intensive surveys, mathematical modeling of receiving waters
including calibration/verification, etc.
-------
-2-
II. State Management Controls for 201 and 205(g) Funded WLA Studies
1.
(a) The State must have an identifiable staff which is qualified
and capable of, developing if necessary, or guiding and
reviewing:
Work Plans for development of WLAs
Contract Work Statement for WLAs
Interim outputs of the WLA Study
Final WLA
(b) State Staff Qualifications
Staff responsible for overseeing or developing WLA studies
must include at least one individual trained and experienced
in all aspects of the development of WQ based effluent
limitations, e.g., planning and conduct of WQ intensive
surveys, mathematical modeling of receiving waters including
calibration/verification, etc.
2. EPA approved State Procedures
State technical procedures and policies, (including math
models used, safety margins, data requirements, modeling
assumptions, etc.), for WLA development must be documented
by the State and reviewed and approved by the Region.
3. EPA approved WQ Standards
EPA approved WQ standards must be in place prior to
commencement of the study.
4. Procedures for approval to initiate a WLA Studies
The State and Region must guide the development of WLA, and review
and approve the following prior to initiation of the study:
(a) Remedies to previous deficiencies
Deficiencies that caused the original WLA to be rejected must be
identified and solutions or remedies proposed.
(b) Selection of contractor/consultant to perform the WLA
This selection must be jointly made by the grantee, State and
Region, and should be based largely on the contractor's
previous performance in conducting such studies.
-------
-3-
5. Work Plan for development of the WLA
A detailed work-plan must be developed by the grantee (or
contractor). The work-plan must include details on all
tasks necessary in the development of the WLA. The major
elements of the study will be (1) Data Needs and Collection
(2) Water Quality Analyses/modeling and (3) Allocation of
pollutant loads and determination of effluent limitations
on the basis of the WQ analysis. Tasks for each element
must be described in detail, including description of
work, cost, output of the task and projected date of
completion.
(a) Approval of Work-Plan
The Work-plan must be reviewed and approved by the State and
EPA prior to conduct of the study. The plan will serve as
the guiding document for development of the WLA.
(6) State-EPA tracking of the Study
The Region and State must closely scrutinize every major
output of the study as it proceeds. A review mechanism
must be developed, which will provide for timely reviews
with recommendations for any mid course changes necessary.
The study should proceed in stages or phases that are
designed to produce concrete reviewable outputs at the
end of each phase. EPA and the State must review each
output prior to initiation of the next phase. Errors
or shortcomings must be flagged immediately, and steps
taken to correct the situation before the study resumes.
-------
Preliminary Technical Guidance for WLA Studies
Objectives
This package provides technical guidance on development of WLA's.
The guidance establishes the basis for a credible procedure for WLA
computations. Experience concerning what to emphasize has come from EPA
water quality reviews of POTW projects requiring treatment more stringent
than secondary. EPA's concern is that all future WLA's be sound, reason-
able, and technically defensible.
This preliminary guidance will be refined and improved.
are encouraged.*
Comments
It is EPA policy (PRM 79-7) that: "That Agency will conduct a
rigorous review of projects designed for treatment more stringent than
secondary"; and, with respect to WLA, that: "The waste load allocations
or other analyses resulting in the effluent limitations, along with the
assumptions on which the analysis is based, are scientifically supported
by intensive water quality surveys or appropriate field investigations
conducted on the water bodies in question, and calibrated and verified
models or other technically sound analyses".
This guidance seeks to aid these policies and presents information
on:
1.
the typical level of analysis expected for most WLA studies
to satisfy EPA review. Exceptions, of course, are possible
and should be justified. Examples are simple cases needing
only "desk top" computations or complex cases needing very
specialized mathematical models.
2.
a "norm"
A
3.
4.
for a scientifically defensible WLA procedures.
justification process that follows the norm would not be
expected to cause controversy in the EPA review. Departures
from the norm should be discussed and rational explanations
presented.
the list of representations and presentations that a well
documented WLA should have according to current EPA review
procedures.
a checklist of problem areas that have stalled EPA WLA reviews,
or which are expected to cause difficulties in scoping future
WLA studies; these areas will be further clarified as this
guidance is refined.
Comments should be directed to Dr. Tim Stuart (FTS-426-7766), Chief
Monitoring Branch, Monitoring & Data Support Division (WH-553)
-------
-2-
EPA Expectations
The typical situations are described in this section. Unusual
situations, as they occur, will be judged as departures from the
following normal factors and criteria. The logical core of typical
WLA analyses and water quality concerns can be summarized with three
main points.
1. For most projects, EPA anticipates that the WLA will be based on
dissolved oxygen and/or nutrient (N,P) water quality criteria. Of
course, other water quality criteria will be considered when rele-
vant to the particular project being reviewed. (A significant
additional criterion is ammonia, in relation to fish toxicity).
Within this context:
a. If D.O.-related WLA's are proposed (BOD, NH3/TKN, reaeration),
specify the D.O. criterion in the WQS for the surface waters in
question. Are there minimum and average components in the D.O.
criterion?
b. If nutrient (N or P) WLA's are proposed, are there numerical
ambient criteria for these nutrients, if yes, specify. If not,
are there other provisions in the WQS that address nutrients,
such as narrative criteria that water should be free from aquatic
nuisances, algal counts, chlorophyll criteria? Explain.
c. If WLA's are proposed for parameters other than those related to
D.O. or eutrophication, are there provisions in the WQS for their
control?
2. EPA will use the following criteria when evaluating WLA's related to
dissolved oxygen (BOD, TKN, reaeration.)
a. A steady-state, Streeter-Phelps-type analysis or model (considering
both carbonaceous and nitrogenous wastes) at the critical flow
condition is acceptable, unless existing water quality data or
the hydraulic setting clearly indicates significant time and
flow varying D.O. problems.
b. :he predictive capabilities of the analysis/model must be adequately
demonstrated. This can be accomplished through calibration and
verification using two independent sets of water qua1ity data
for the receiving water in question. If calibration and verifi-
cation are not done, the VILA documentation must explicitly describe
how the predictive accuracy of the analysis was established.
-------
-3-
c. Weather-related nonpoint sources (NPS) loadings do not have to be
considered directly in low-flow situations; however, the analyses
should make reasonable allowances for any leachates, benthic
oxygen demands, and background D.O., BOD, and ammonia.
d. An analysis based on historical data should have been made to
determine the critical conditions for streamflow and temperature
if not prescribed by State WQS.
e. If the critical flow situation is not a low flow, then it must
be indicated how NPS loadings were considered; this is particularly
true for combined-sewer situations.
3. EPA will use the following criteria when evaluating WLA's for nutrients
(P, N):
a. The analysis must demonstrate why a nutrient/eutrophication
problem is anticipated based on existing ambient water
quality data and field observation.
b. Sources and loadings of nutrients from both point sources
and NPS must be evaluated, including estimates of the
relative contributions from each. Annual mass balances
should be presented.
c. The analysis must indicate how the limiting nutrient was
identified and evaluated for the water body in question.
d. The analysis must indicate how the decision criteria for
maximum nutrient loadings were established for the water
body in question.
e. If NPS loadings will be the major source of nutrients after
the proposed plant is operating, the justification must
describe what BMP's were considered and selected or rejected.
How and when will the BMP's be implemented?
Scientifically Accepted Procedures
The objective of this section is to define an approach to the
methodology of wasteload allocation. The approach anticipates
linkages to coordinate complex analysis techniques. Analysis and
the related policy problems are complicated by a large number of
interacting factors. Among these factors are included: point
source (PS) wasteloads, nonpoint source (NPS) loads contained in
land washoff, possible combined sewer overflows (CSO) and inter-
actions of meteorologic conditions that effect pollutional stress
including streamflow, rainfall and water temperature.
Within this framework there exist mathematical computer models
with which the environmental impacts to water quality can be studied.
These models range from simple to complex. Models are tools for esti-
mation of water quality impacts for constant or steady pollutant loads.
The intent of EPA is that when one uses complex models to handle a
complex situation, the margin of safety for load allocation can be
reduced.
-------
-4-
Water Quality Standards
The WLA approach assumes that stream standards are given, and are
consistent with the designated use classification of the receiving stream.
In this regard, it should be noted that all waters, including intermittent
streams, regulated by State water quality standards must be classified and
meet the criteria applicable to that classification. These standards may
provide for time-limited variances for specific dischargers, as long as
existing uses are protected. In general, a specific variance proceeding
is preferred to a general downgrading.
Where intermittent streams do not currently meet designated uses and
cannot attain these designated uses due to 1) natural background features;
2) irretrievable man-induced conditions; or 3) widespread adverse econo-
mic and social impact (See 40 CFR 35.1550 (c)(2) ), a downgrading is
warranted. However, no downgrading may impair or preclude existing water
uses. EPA is developing guidance on downgrading of use classification
based on widespread adverse economic and social impact (item #3
above).
Wholesale downgradings are not permitted, and would violate EPA regu-
lations 40 CFR 35.1550* Also, intermittent streams often serve an impor-
tant role in stream ecology as spawning and feeding grounds. Therefore, to
determine whether a downgrading from the "fishable" classification is
warranted, a site-specified investigation of the particular inter-
mittent stream segment by qualified engineers or scientists is required.
For downgrading to be approved based on natural background or irretrievable
man-induced conditions, this field survey would have to show that the
site does not support fish survival or propagation, and even with dis-
charges at normal levels meeting existing water quality standards would
not support a fishable use.
The link between wasteload allocations and stream standards is a
mathematical model to predict water quality as a function of waste
discharges. Such models exist and are integral parts of the methodo-
logy. For such a method, the waste!oads are one of a set of required
input data. Other members of the set include: geometric definition,
upstream and tributary streamflows, water quality of streamflows, quan-
tification of forces other than gravity that influence the water move-
ment including tides and radiation, and parameters that define the
transformations of the water quality.
The WLA methodology has the following elements, any of which may
be greatly simplified given technical justification:
1. Based on a preliminary review of the discharge site and the
expected impact of the pollution load, selection of a model
is required. This model should be calibrated and verified
for use in the WLA. For DO, the normal model will be a
Streeter-Phelps type (Considering both carbonaceous and
nitrogenous waste) unless circumstances dictate otherwise.
For nutrients, a rational and defensible approach should
be defined; a typical acceptable method for a lake is an
annual mass balance linked to a Vollenweider assessment.
*Refer to OGC #58 dated March 29, 1977.
-------
-5-
2. A determination of the magnitudes of the wasteloads as a
function of location and future population and land use.
a. The point source loads are subjected to various treatment
levels in accordance with current policy and may be trans-
ported to various points according to different local
and regional collection schemes. The array of these
possibilities becomes the alternative set for allocation
analysis.
b. The NPS loads may or may not be a factor in the final WLA.
At the beginning of a WLA analysis, NPS loads must be
evaluated to determine if they should be directly consid-
ered in situations involving nutrients and eutrophication.
3. A determination of what constitutes the "design event" or critical
conditions is required. The design event, expressed in terms of
such variables as streamflow, temperature and waste discharges,
describes a specific condition under which water quality standards
must be met. One allocates waste loads for the design event but
should, if appropriate, make allowances for seasonal variability.
This design event takes into consideration discharger exemptions
from portions of WQS, when natural background conditions, such as
flow, naturally high pollutant concentrations, etc. preclude
attainment of some existing or designated uses. However, all
WQS required to support uses that exist under low flow conditions
must be met. Furthermore, effluent must not cause a nuisance, due
to objectionable deposits, floating debris, or objectionable color,
odor, taste, or contain toxic pollutants in toxic concentrations.
For point source loadings, low summertime flows are usually used.
For nonpoint source loadings no usual condition or standard of
practice exists. In some cases, the problem of defining the
"design event" can be avoided by using continuous simulations
with a mathematical model. A continuous simulation continuously
translates a time series of hydrologic, meteorologic and waste-
load conditions into a continuous representation of water quality.
The results of continuous simulations can be inspected and the
failure frequency can be evaluated more directly.
4. The acquisition of data pertaining to how the waters respond
to wastes is necessary. Either existing data may be assembled,
or a field program is needed. Such field programs should be
of short, intense duration and should measure waste inputs and
water quality responses simultaneously for at least two separate
situations (high and low flows or warm and cold water or two
other events for which water quality responses are different
for the same receiving waters).
-------
-6-
5. EPA recognizes the concept of tranferability of water quality
data from one discharge site to another similar discharge
site. However, it should be emphasized that transferability,
although an acceptable concept, is not applicable in every
situation and calls for considerable judgment on the part of
the water quality analyst to determine whether a situation is
amenable to modeling based on transferred water quality data.
EPA is currently developing detailed guidance on the use of
transferred water quality data, and the criteria and constraints
within which such transference may be attempted.
6. The fitting of the forecasting method (mathematical model) to the
data is necessary. A two data set approach is the standard practice:
a. The first data set is used to adjust the transformation
parameters of the model until observed water quality
agrees with forecasted water quality. This process is
called calibration.
b. The second data set is used in the calibrated model to
independently check the forecast. If the model can
forecast the second data set the model is verified.
7. The forecasting of water quality for the "design event" using alternative
WLA's is conducted in order to prescribe the WLA. Two strategies
are possible in the implementation of this element, each of which
is oriented to determining whether or not carrying capacity is
sufficient to prevent violation of water quality standards.*
a. The alternative projected loadings can be individually
analyzed and the water quality forecast. Degree of
treatment levels are gradually increased until the
water quality standards are satisfied.
b. It is possible to work directly with the carrying capacity.
The maximum amount of wasteload that can be introduced into
the water and still satisfy the water quality standards is
determined. This amount is allocated to the dischargers.
8. An analysis of the impacts of errors, or changes in parameters, forecasts,
and modeling assumptions upon the wasteload allocation is desirable.
This sensitivity analysis is useful for the WLA review process.
*Note that Section 303(d) of the Clean Water Act and EPA regulations require
that an margin of safety be included in the WLA. Also, note that nondegradation
requirements apply for the National Resources Water listed on page 6 of PRM-79-7.
-------
-7-
The methodology of wasteload allocation studies is complex and the
normal mathematical model is a Streeter-Phelps type that handles carbon-
aceous and nitrogenous components. Other methods exist and all methods,
from simple hand calculations to computer models, require a detailed
data base describing the quality and the hydrology of the receiving
waters. Water quality data should, if possible, quantify and qualify the
following physical, chemical, and biological parameters: BOD, dissolved
oxygen, nitrogen, phosphorus, total dissolved solids, pH, coliforms,
chlorophyl-a, biomass information, eutrophication evidence, temperature,
suspended solids, turbidity, and sediment. Other parameters related to
domestic wastewater may be needed in specific cases.
The hydrologic description of the receiving waters generally requires
stream flow data, velocity data, location of tributaries and point
source discharges, nonpoint source contribution rates, water withdrawal
rates and other alteration of natural stream flow. Stormwater discharges
are also of importance to many models as are meteorological data and
stream channel geometry.
Modeling the impact of nonpoint source pollution requires additional
input concerning land use, topography, and soil types.
The particular emphasis and specifics of each method and site
determine the level of detail as well as the specific categories of data
required for an analysis. Current thinking is that two intensive surveys
of a one to two weeks duration be conducted to support such studies.
One survey supports model calibration and the other supports model
verification. A rule-of-thumb for effort expended in field activities
is that they should be budgeted to the same or higher levels as the
modeling analyses.
Documentation for Evaluation
An EPA WLA review is thorough and detailed. The information needs
for the review cover the water quality management field: Water uses,
water classifications, benefits of cleaner water, standards, data,
modeling and WLA. A list of twelve information .areas is presented here
to specify the detailed documentation necessary to thoroughly justify a
WLA:
1. Definition of receiving water, its uses and possible health
issues (maps with demographic features) and the general hydraulic/physical
setting (velocity of waters, gradient, lake or estuary, dimensions
of impact or recovery zone, nature of bottom such as sandy or
rocky and similar details).
2. Specification of impact zone, existing water quality (show
data and evidence of problems) and of future water quality
with proposed facility (for examples give modeling results)
and of existing aquatic growth problems if nutrients influence
level of treatment.
3. Justification and defense of design condition (low flow, water
temperature).
4. Presentation of numerical standards, their relation to uses
and stream classifications and their consistency with Red Book
criteria.
-------
-8-
5. Statement that existing water quality meets adopted WQS, or where
disparities exists, indicate whether downgradings or upgradings
are warranted. (Since most classified streams are designated for
fishable/swimmable uses, proposed downgradings will probably pre-
dominate.) Downgradings must be justified on one of
the three grounds described on p. 3, as specified in the WQS
regulation 40 CFR 35.1550.
6. Specifications of previous field surveys and data used to support
the analysis (quality versus time and quality versus distance
graphs are very useful as well as details of measurements of waste
inputs, instream quality and hydraulic variables) including, if
possible, biological surveys and findings.
7. Tables of annual nutrient loads by category, PS, NPS, background
and by limiting factor (if nutrient problem impairs water use).
8. Details of determination of an allowable nutrient loading with
linkages to nutrient removal requirements (permissible area loading
to lakes and National Eutrophication Survey procedures are typical
level of detail).
9. Technically sound and detailed analysis of NPS and their relationship
to treatment requirements (pull together Basin Plan, 208 and any
EIS studies and tie it into presentation).
10. Presentation, specification, and discussion of methods (models or
otherwise used to analyze field data, calibration and verification)
and give the projections and waste load allocations.
11. Tabulation of calibrated model parameters (carbonaceous decay,
nitrogenous decay, aeration, benthic uptake, temperature cor-
rection factors, logarithmic base (10 or e), and related para-
meters with justifications of their selection).
12. Tabulation of existing and proposed effluent flow and strength;
include nearby PS and NPS data to show relative importance
of proposed project.
-------
-9-
Checklist of Problem Area
This list identifies typical "flaws" observed in materials presented
in support of WLA justifications:
1. Hard data are not presented. Observed data from instream sampling
and effluent sampling both in graphical and tabular form are
desirable to enhance WLA justifications. The data should be
matched by descriptions of how samples were obtained; e.g., grab
samples, composite samples, diurnal effects, etc. In addition,
the standards should be stated numerically. NPDES permits,
existing and proposed, should be included.
2. Modeling results presented have not shown demonstrated calibration
and/or verification. Also needed is the rationale for rates used
and for model inputs, particularly where these differ from field
measurements or particulars presented elsewhere in supporting docu-
ments. The modeled results should demonstrate consistency with
other project justification presented.
3. Benefits of stream clean-up as the result of project implementation
have not been well presented. Typically absent from materials pre-
sented have been details of instream water quality standards vio-
lations or public health problems that the project, as implemented,
would alleviate. Administrator approval of projects is ultimately
based upon such justification.
4. Maps are not detailed enough or are absent. "A picture is worth a
thousand words" is a dictum relevant to WLA justifications.
5. Regional Context and the role of NPS and BMP's have been downplayed.
The project as implemented should result in significant improvements
to water quality and/or the public health. Beneficial results of
the project should not be negated by NPS problems that are not
addressed.
6. Blanket effluent discharge limitations often appear unjustified.
They often do not show thoughtful application to the specific situation.
7. Design treatment flows, population and flow projections often seem
overstated.
8. Critical design conditions are too stringent based on expected
probabilities. In particular, it may not be reasonable to use
the highest one-day temperature of record for any time of year,
with a criterion such as 7Q10 low flow. Temperatures used in
steady-state low-flow analyses should be weekly averages that
would occur during the same calendar period as the low-flow
event.
In addition to these "short run" flaws that will disappear as this
methodology is standardized, there is the major question of model selec-
tion. This issue is expected to dominate the efforts to enhance and
refine this guidance.
-------
I UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
2 0 DEC 1979
Construction Grants
Program Requirements Memorandum
PRM 80-2
SUBJECT: Step 2 and Step 3 Architect/Engineer
Level of Effort Study
FROM: Henry L. Longest II
Deputy Assistant Administrator /!'
for Water Program Operations (WH-546)
TO: Regional Administrators
Attention: Water Division Directors
PURPOSE
The purpose of this memorandum is to initiate a multi-phase approach
to establishing final Agency policy and guidance for evaluating the price
for architect/engineer (A/E) services during Step 2 and Step 3 projects
funded under the Construction Grants Program. In addition, it provides
interim guidance for this evaluation which is to be used until the final
policy and guidance are promulgated. For the purpose of this memorandum,
the terms cost, price and profit have the meanings conveyed in 40 CFR
35.936 and 35.937.
The specific phases are as follows:
Phase 1. Pending development of final Agency policy and guidance
discussed below, "Exhibit II" of the EPA Region VI publication
entitled Engineering Costs and^ Fees for Municipal Wastewater
Treatment Works. An_ Estimating Technique for Design of_
Treatment Plants, Publication No. EPA 906/9-78-003, may be
utilized as an additional tool in analyzing the cost segment
of A/E services to design treatment plants funded under the
construction grants program. Profit should continue to be
analyzed in accordance with specific policies or guidelines
you currently use. These reviews of cost and profit should
be initiated only when the grantee employed Brooks-bill type
negotiations or otherwise did not consider price (the sum of
cost and profit) as the prime criterion in selection of the
engineer.
Phase 2. A computer model will be developed to provide estimates
of the level of effort (work-hours) required to design
treatment facilities (including sewers) of varying sizes
and types. The model will also provide estimates of the
level of A/E effort required during the Step 3 phase of
a project.
-------
-2-
Phase 3.
Phase 4.
Phase 5.
Each Regional Office will accumulate level of effort
and related information on recently completed Step 2
and Step 3 projects in its Region. This phase will
be done simultaneously with Phase 2.
The information obtained from Phase 3 will be used to
verify and "fine tune" the computer model being developed
during Phase 2. It will also be used to develop a family
of curves or charts relating work-hours, and perhaps price,
for elements of Step 2 and Step 3 services to the size
and type of treatment works. These curves or charts
can be used separately or in addition to the computer
model when it becomes available. These curves or charts
will be prepared by an EPA task force which includes
Headquarters and Regional Office personnel. The exact
nature and format of the guidance documents has not
yet been determined.
The curves or charts and computer model, when fully
operational, will be used by Regional Office personnel,
State Agency personnel and grantees in conjunction with
appropriate cost, overhead and profit data, to determine
if the price proposed by the engineer is reasonable.
DISCUSSION
Since publication of EPA regulations governing procurement of A/E
services in December 1975 which prohibited A/E contracts based upon a
percentage of construction cost or cost plus a percentage of cost, EPA
Regional Offices have had a difficult time determining if the proposed
price of A/E services was fair and reasonable. Most of the attention
has focused on review of the profit segment of the engineers price and
the State of California and several Regional Offices have developed
policies and guidance for evaluating profit. This has led to numerous
complaints about the lack of a uniform policy and the disparity in
application of similar guidelines among the ten EPA Regions.
Based on data accumulated from firms and projects in its Region,
Region VI developed the publication referenced above as a guide for reviewing
the cost segment of A/E services to design treatment works. The cost data is
probably not applicable to other Regions, but we believe that the estimate of
work-hours required to design various type of treatment plants, which is shown
in Exhibit II of that publication, may be a useful additional tool in analyzing
the work effort required to design plants in other Regions. However, in
utilizing the Region VI publication for this purpose, consideration must be
given to regional differences in design due to climate and other factors,
established State or local practice as to the number of construction contracts
required, level of detail shown on plans, an individual firm's approach to
design and changes in Agency Regulations since the Region VI data was
collected. By applying an engineer's salary scale to the work-hour estimate,
as modified by the previously cited considerations, adding other direct
expenses and applying the appropriate overhead rate, a reasonable estimate
of the cost segment of A/E services for design can be determined.
-------
-3-
Our objective is to expand the Region VI study to incorporate data
from all other Regions. To accomplish this, we are requesting that
members of your construction grants staff extract required information
from your files and visit A/E firms in your Region to collect level of
effort and other data related to activities such as preparation of plans
and specifications, preparation of UC/ICR systems, preparation of plans
of operation, including O&M Manuals, resident engineering services during
construction and other Step 2 and Step 3 engineering services. The visits
may be combined with your other activities such as review of financial
systems and records or consultation on other matters. To assist in this
effort, Mr. Le Young of Region VI and a cost/price analyst will spend a
week to ten days with your staff to explain the methodology and procedures
to be used in collecting the required data and may accompany them on some
of the field visits.
The cooperation of the consulting engineers is essential to the success
of this effort. Therefore, it should be explained at the outset, that as a
result of this study, more emphasis will be placed on the fairness and
reasonableness of the price of A/E services and less on level of profit.
Also, experience in Region VI showed that it is helpful to seek the
cooperation and assistance of the professional societies such as the
American Consulting Engineers Council, American Society of Civil Engineers,
National Society of Professional Engineers or similar professional organizations.
Representatives of these organizations at the national level are acting as
advisors to the EPA task force.
The Corps of Engineers, in cooperation with EPA, has developed a computer
model, known as CAPDET, which, when given certain basic information, provides
preliminary designs and construction cost estimates for treatment facilities
of various types. This system is to be expanded to provide an estimate of the
level of A/E effort (work-hours) required to design and construct treatment
facilities. It has been decided to estimate "level of effort" rather than
cost so that the model will be applicable nationwide and will not be quickly
outdated by inflation. However, the model will be capable of translating
level of effort information into dollar values when the appropriate cost
information (labor rates, indirect costs, other direct costs) and profit
levels are entered into the computer system.
The computer model will be developed by consultants under contract
to the Corps of Engineers operating under an Interagency Agreement with EPA.
The initial contract for this work is expected to be executed in the near
future and the development of the computer model will be done concurrently
with the Regional data gathering.
IMPLEMENTATION
When the grantee employed Brooks-bill type negotiations, or otherwise
did not consider price (the sum of cost and profit) as the prime consideration
in selection of the engineer, Exhibit II of the Region VI publication may be
used as an additional tool in determining whether the cost segment of A/E
services is reasonable. Profit should continue to be analyzed in accordance
-------
-4-
with specific policies or guidelines you currently use until such time as a
decision is made as to the advisability of establishing National Guidelines.
Further guidance for review of profits will be provided in the near future.
It is requested that an appropriate person be designated to coordinate
your participation in this study. Please advise James R. Murphy, Chief
Eastern Construction Branch at (FTS) 426-8945 as to the name and telephone
number of the person so designated. Mr. Murphy can also answer any questions
you may have regarding this PRM.
In the near future, the appropriate Area Program Manager will contact
your designee to arrange for Mr. Young's visit to your Region.
The methodology, work plan and schedule, and appropriate guidance for the
conduct of this study are being developed by Headquarters and will be mailed
to you as soon as the material is completed. Should you need additional copies
of any document referenced in this memorandum, they are available from the
Municipal Construction Division, EPA Headquarters.
-------
\ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
° WASHINGTON. D C 20460
3 i) 198ft
Construction Grants
Program Requirements Memorandum
PRM #80-3
SUBJECT: Management Reforms to Reduce the Time Interval Between
Step 3 Grant Award and Initiation of Construction
(Property Acquisition, Local Share Funding, Service*
Agreements and Cultural Resource Investigations)/ /<
FROM: Henry L. Longest II, Deputy Assistant Admini
for Water Program Operations (WH-546)
TO: Regional Administrators (I-X)
ATTN: Water Division Directors
INTRODUCTION
We have identified a number of problem areas within the construction
grants program which are causing delays in the preconstruction phase of
Step 3 projects. This memorandum is being issued to implement management
reforms that will minimize many of these delays.
This memorandum sets forth agency policy in the following four
areas:
1. Acquisition of real property (including easements).
2. Local funding requirements.
3. Service agreements.
4. Cultural resource investigations.
The appropriate provisions and procedures contained in this Program
Requirements Memorandum will be incorporated into any proposed revision
to construction grant regulations.
SECTION A - ACQUISITION OF REAL PROPERTY (INCLUDING EASEMENTS)
PURPOSE
The purpose of this section of the memorandum is to clarify agency
policy regarding the time frame within the grant process for the acquisition
of real property, including the taking of easements.
-------
-2-
DISCUSSION
Current Environmental Protection Agency (EPA) regulation 40 CFR
35.920-3(b)(2) requires, as part of a Step 2 grant application,
"Adequate information regarding availability of proposed site(s),
if relevant." PRM 77-6 expands on this point and requires the grantee
to perform preliminary easement related work concurrent with other
Step 2 work. PRM 77-6 also requires the regional office to consider the
need (on a case-by-case basis) for the grantees to undertake the actual
taking of easements and/or acquisition of sites during the Step 2 process.
EPA regulation 40 CFR 35.935-3(b)(3) requires the grantee to obtain all
property rights before the initiation of Step 3 construction. At the
present time, there is no EPA policy that clearly describes the action
that must be completed prior to Step 3 grant award. Consequently,
initiation of construction is delayed on many Step 3 projects until the
grantee has obtained the required property rights. This policy statement
is intended to establish procedures that would minimize this delay.
POLICY
It is EPA policy that all real property (including easements) be
obtained, or bonafide options taken, or formal condemnation proceedings
initiated, prior to Step 3 grant award, unless the action is prohibited
by State or other Federal Agency requirements.
The term "bonafide option" refers to an irrevocable commitment on
the part of the landowner to transfer to the grantee an interest in
land at a specified price. Such options should provide for an expiration
date, normally at least one year, and must be supported by adequate
consideration and include any other applicable requirements necessary to
make the option enforceable under State and local law.
IMPLEMENTATION
Effective October 1, 1980, no Step 3 grant is to be awarded until
the grantee has submitted assurances that all required property rights
as defined in 40 CFR 35.935-3(b) have been obtained, or bonafide options
taken, or formal condemnation proceedings initiated, except for those
situations noted below. This assurance can be in the form of a
certification or other documentation established by the Regional
Administrator.
The assurance requirement would exclude the acquisition of land to
be used for sludge disposal or land treatment, as the costs of such
acquisitions are eligible for Federal participation under a Step 3
grant, but would become unallowable if incurred prior to Step 3 grant
award (see PRM's 75-25, 75-39, 77-5, 78-4 and 40 CFR 35.940-3). However,
amendments to construction grant regulations published July 5, 1979,
authorize the Regional Administrator to use his discretion in permitting
grantees to proceed with the acquisition of eligible land after approval of
-------
-3-
the facilities plan in advance of the normal Step 3 award either by (1) award
of a Step 3 segment consisting only of purchase of eligible land, 40 CFR
35.920-3(c)(2) or (2) approval of the grantee's preaward cost for the
purchase of eligible land, 40 CFR 35.925-18(b). In the case of a Step 3
grant awarded solely for the acquisition of eligible land, compliance with
the requirements for approved user charge/industrial cost recovery systems,
operations and maintenance manuals and sewer use ordinances are deferred
until the award of the ensuing Step 3 assistance for the construction of
the facilities, 40 CFR 35.930-1(a)(l). All grantees are encouraged to
make maximum use of the advance acquisition provisions. In addition,
the regional offices or delegated State agencies, should recommend
the use of the advance acquisitions provisions in situations where the
implementation of the procedures would accelerate the initiation of
construction. However, the review/approval provisions contained in
PRM 79-7 must be completed prior to the purchase of grant eligible land
for projects where treatment more stringent than secondary is anticipated.
In addition, the assurance requirement would exclude the acquiring
or taking of property rights, or bonafide options, or initiating formal
condemnation proceedings, if the action is prohibited by State or other
Federal Agency requirements. However, the grantee must complete all
site acquisition work required for the Step 3 grant that is not prohibited
by State or other Federal Agency requirements.
In the situation where the acquisition of property rights, or bonafide
options, or initiation of formal condemnation proceedings, prior to Step
3 grant award, is prohibited by EPA, State, or other Federal Agency
requirements, the grantee should submit the following information for
each property site excluded from the assurance requirement:
1. The appropriate designation (parcel number, reference code,
etc) for the property site.
2. The State or Federal requirement that prohibits the acquisition
of property rights, or bonafide options, or initiation of
formal condemnation proceedings, prior to Step 3 grant
award.
3. Future actions required to obtain the property or property
rights, and a schedule for these actions.
4. Assurance that all site acquisition work not prohibited by
State or Federal requirements has been completed.
Allowable project costs incurred in the implementation of the
procedures contained in this policy statement, e.g., costs incurred
under the Uniform Relocation Assistance and Real Property Acquisition
Policies Act of 1970, should be included in the Step 2 grant. If
necessary, the Step 2 grant should be amended to include these costs.
-------
-4-
REFERENCES
40 CFR 35.920-3(b)(2)
40 CFR 35.920-3(c)(2)
40 CFR 35.925-18(b)
40 CFR 35.930-1(a)(l)
40 CFR 35.935-3
40 CFR 35.945(g)
40 CFR Part 4
PRM 79-7, "Grant Funding of Projects Requiring Treatment More
Stringent than Secondary," March 9, 1979.
This policy statement supercedes PRM 77-6 issued May 4, 1977. PRM
77-6 is hereby cancelled.
SECTION B - LOCAL FUNDING REQUIREMENTS
PURPOSE
The purpose of this section of the memorandum is to establish
Agency policy to assure that the applicant has reasonable access to
funds required to finance the non-EPA share of the Step 3 project costs.
DISCUSSION
EPA requirements concerning the grantee's ability to finance the
non-EPA share of the construction costs is contained in 40 CFR 35.925-5,
35.935-1(c) and the assurance statement requirements of the "U.S.
Environmental Protection Agency Application for Federal Assistance
(Construction Grants)." I-n Part V of the application, the grantee
assures and certifies that it will have sufficient funds available to
meet the non-EPA share of the cost for construction projects. In Part
III, Section D, of the grant application, the applicant describes the
proposed method for financing the non-EPA share of the project. At the
present time there is no EPA requirement for-the grantee to initiate
financial arrangements prior to Step 3 grant award. Consequently, many
Step 3 projects are delayed while the grantee is obtaining the necessary
funds. This policy statement is intended to establish procedures to
minimize this inherent delay.
POLICY
It is EPA policy that the grantee conduct preliminary financial
planning including structuring of the financing during the Step 1 phase
of the project. As much of the financial arrangements as possible shall
be performed during the Step 2 phase of the project. At the time of
Step 3 grant award, the financial arrangements shall have progressed to
the stage that the grantee can obtain the funds required to finance the
non-EPA share of construction cost within 90 days.
-------
-5-
The Regional Administrator can authorize additional time to complete
the necessary financial arrangements in situations where the State or
other Federal agencies impose requirements such that the non-EPA share
cannot be obtained within 90 days of Step 3 grant award. The authorization
and the amount of additional time authorized should be included in the grant
agreement.
IMPLEMENTATION
Effective October 1, 1980, no Step 3 grant is to be awarded until
the applicant has given assurances that he can obtain the funds necessary
to finance the non-EPA share of the project within 90 days of grant
award. This assurance can be in the form of a certification or other
documentation established by the Regional Administrator. However, the
grantee should exclude from the certification requirement sources of
funds that cannot be obtained within 90 days of Step 3 grant award
because of conflicting State or other Federal Agency requirements.
Effective October 1, 1980, every application for a Step 3 grant
must include the following information for each separate source of
funds required to finance the non-EPA share of Step 3 cost:
1. The source of the funds.
2. The amount of the funds.
3. The financial arrangements completed to date.
4. Future actions required to obtain the funds, and a schedule
for these actions.
For every source of funds excluded from the assurance requirement
the grantee should list:
1. Items 1-4 above.
2. The applicable State or Federal requirement that prohibits
obtaining these funds within 90 days of Step 3 grant award.
REFERENCES
EPA Form 5700-32 (Rev. 8-77)
40 CFR 35.925-5
40 CFR 35.935-1(c)
SECTION C - SERVICE AGREEMENTS
PURPOSE
The purpose of this section of the memorandum is to clarify EPA
regulations regarding the timing for the execution of service agreements
between the grantee and subscribers of the grantee, including major
Federal facilities.
-------
-6-
DISCUSSION
The Environmental Protection Agency (EPA) regulations published
September 27, 1978, include a requirement for the submission of all
intermunicipal agreements with a Step 2 application. Specifically,
40 CFR 35.920-3(b)(6) states that "Before the award of a grant or grant
amendment for a Step 2 project, the grantee must furnish ... Proposed or
executed (as determined appropriate by the Regional Administrator)
intermunicipal agreements necessary for the construction and operation
of the proposed treatment works, for any treatment works serving two or
more municipalities." EPA regulation 40 CFR 35.920-3(c)(l) states that
"final intermunicipal agreements must be furnished" with the Step 3
grant applications.
The term "executed" was used in the regulation governing Step 2
grant applications and the term "final" was used in the regulation
governing Step 3 grant applications. The use of two slightly different
terms to describe the same action could result in a minor misunder-
standing of the regulations. In addition, the regulations do not
specify the timing for the execution of service agreements between the
grantee and major Federal facilities. The intention of this policy
statement is to establish the time frame within the grant process when
service agreements must be executed and to define EPA requirements to
include service agreements between the grantee and major Federal facilities,
POLICY
It is EPA policy that the terms "final" and "executed" as used in
40 CFR 35.920-3(b)(6) and 40 CFR 35.920-3(c)(l) describe the same action
and can be used interchangeably.
It is EPA policy that all agreements necessary for the construction
and operation of a proposed treatment works serving a municipality and
one or more major Federal facilities must be executed prior to Step 3
grant award.
IMPLEMENTATION
This policy is effective October 1, 1980.
REFERENCES
40 CFR 35.920-3(b)(6)
40 CFR 35.920-3(c)(l)
40 CFR 35.925-16
PRM 75-35, Issued December 29, 1975, with attachment issued
February 20, 1976.
Memorandum on "Federal Facility Funding" dated December 18, 1978,
from John T. Rhett to Regional Administrators (I-X).
-------
-7-
SECTION D - CULTURAL RESOURCE INVESTIGATIONS
PURPOSE
The purpose of this section of the memorandum is to clarify agency
policy regarding the time frame within the grant process for the completion
of investigations required to identify cultural resources affected by
EPA construction grant projects.
DISCUSSION
EPA regulations 40 CFR Part 6, Subpart C, 40 CFR 6.507 and the
construction grants "Handbook of Procedures" state that cultural resource
investigations must be integrated with the environmental review and performed
during the facility planning process, however, there is currently no requirement
that specifies the time frame within the grant process for the completion of
these cultural resource investigations. Consequently, some investigations
are not being performed in a timely fashion and portions of the work are
still underway during the Step 3 phase of the project. This policy
statement is intended to eliminate this delay.
POLICY
All investigations required by 40 CFR Part 6, Subpart C and 40 CFR
6.507 should be initiated during the Step 1 phase of the project and be
completed prior to Step 3 grant award. However, nothing in this policy
statement precludes the funding of cultural resources investigations
performed during the Step 3 process, if the need for an investigation or
follow-up work is not identified until that time.
IMPLEMENTATION
This policy is effective October 1, 1980.
REFERENCES
PRM 75-27 issued July 2, 1975.
40 CFR Part 6.
EXEMPTIONS
It is not the intent of this PRM to burden the grantee with unnecessary
or restrictive requirements. The purpose of the PRM is to minimize the
delay in the preconstruction phase of a Step 3 project. However, it is
possible, especially during the initial implementation phase of this new
policy, that a provision of the PRM could place an undue hardship on a
grantee. If this is the case, an exemption to the requirement that is
causing the problem will be considered.
-------
-8-
All requests for exemptions should be submitted to:
Harold P. Cahill, Jr., Director
Municipal Construction Division WH-547
U.S. Environmental Protection Agency
401 M Street, S.W.
Washington, D.C. 20460
The exemption should contain, as a minimum:
(1) The name of the grantee and the grant identification number.
(2) Identification of the section of the PRM from which an
exemption is sought.
(3) An adequate description of the need for an exemption including
any pertinent background information which will contribute to
an understanding of the problem, including any extenuating
circumstances.
(4) A recommendation from the regional office.
ADDITIONAL REFERENCES
A. 40 CFR 35.935-9, Project Completion.
B. Memorandum to Regional Administrators from John T. Rhett,
"Construction Grants Projects Not Yet Under Construction,"
November 5, 1976.
C. Memorandum to Water Division Directors from John T. Rhett,
"Preconstruction Status Report," May 25, 1977.
D. POM 77-12, "Management of Preconstruction Phase of Step 3
Grants," June 21, 1977.
E. PRM 78-12, "Preconstruction Lag Management," June 12, 1978.
F, Memorandum to Regional Administrators from John T. Rhett,
"Step 3 Projects Not Under Construction," December 8, 1978.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
July 18, 1980
Construction Grants
Program Requirements Memorandum
PRM No. 80-4
OFFICE OF
THE ADMINISTRATOR
SUBJECT:
FROM:
TO:
Implementation of Women's Business Enterprise Support Program
Barbara Blum /^
Deputy Administrator
Eckardt C. Beck II, Assistant Administrator/.^,
for Water and Waste Management
Regional Administrators
Attn; Office of Civil Rights and Urban Affairs
and Water Division Directors
Purpose
To establish policies related to use of women-owned businesses.
Discussion
Executive Order 12138, issued May 18, 1979, requires EPA to establish
a program of appropriate affirmative action in support of Women's Business
Enterprise (WBE) and to prohibit actions or policies which discriminate
against women-owned businesses on the basts of sex. Section 13 of the
Federal Water Pollution Control Amendments of 1972 (33 U.S.C. i 1251 note)
prohibits discrimination on the basis of sex in the distribution of benefits
under or in the participation in any program or activity receiving funding
under the Federal Water Pollution Control Act.
Policy
The policy of EPA is to encourage increased participation by women-
owned businesses in all subagreements under EPA grants for construction of
wastewater treatment works. This policy implements Executive Order 12138
and Section 13 of the Federal Water Pollution Control Act Amendments of 1972.
The policy is intended to provide opportunities for immediate participation
of women-owned firms in work performed under the Construction Grants Program,
and to encourage the development and participation of new women-owned firms.
Compliance with this policy, and the requirements under "implementation"
below, shall be a condition of all EPA grants for construction of wastewater
treatment works, within the limits of the "applicability" provision below.
-------
-2-
Implementation
A. Applicability. The policies and requirements of this PRM shall be
applicable to all projects for which assistance is awarded after January 31,
1981. Nothing in this PRM precludes a grantee, contractor, or consultant
from voluntarily implementing these or similar policies for prior projects,
and EPA encourages such action.
B. What Constitutes a Women-Owned Business. The term "women-owned
business," and its variations, means a business which is at least 51 percent
owned by a woman or women who also control and operate it.
1. Ownership. Determination of whether a business is at least
51 percent owned by a woman or women shall be made without regard to community
property laws. For example, an otherwise qualified WBE which is 51 percent
owned by a married woman in a community property state will not be disqualified
because her husband has a 50 percent interest in her share. Similarly, a
business which is 51 percent owned by a married man and 49 percent owned by an
unmarried woman will not become a qualified WBE by virtue of his wife's 50
percent interest in his share of the business.
2. Control and operation. "Control" means exercising the power to
make policy decisions, and "operate" means be>ng actively involved in day-to-
day management.
3. These are some of the factors to be considered in determining
whether the requisite ownership and control exist:
a. The percentage of stock owned in a corporation or
the proportion of capital invested in a partnership.
b. Whether ownership is meaningful (e.g., whether the
woman's ownership interest is such that the woman owner can
sell the business or liquidate at will, or whether the
woman owner's interest is subject to a controlling lien on
her interest).
c. The provisions for sharing income and losses.
d. Whether there is evidence that the woman owner
participates significantly in business policy development
and decisions of importance to the business (e.g., whether
there are procedures requiring her "sign-off" on significant
actions; or whether there is evidence of substantial change
in actions in response to her comments).
e. Whether corporate history indicates that the business
is, in fact, woman controlled (e.g., female ownership prior
to competition for a contract under this policy would be a
factor tending to support validity; on the other hand,
further inquiry might be appropriate if changes in ownership
had occurred within a few weeks or months prior to competition,
if a change in ownership involved related persons, or if the
change involved the same parties in interest: i.e., a former
female minority stockholder in a family business who suddenly
becomes a majority.
-------
-3-
4. Self-certification.
a. Women-owned businesses shall furnish capability
statements and certification of qualification as WBEs to
the grantee.
b. EPA and its grantees reserve the right to review
the representation (including the right to require other
evidence satisfactory to the grantee or EPA).
c. Firms which are not bona fide women-owned and
controlled are not entitled to benefit from the opportunities
under this policy. Those found not to meet the definition
are subject to sanctions, which include a finding of non-
responsibility and, in willful cases, criminal prosecution
under 18 U.S.C. § 1001.
5. Credit under this policy shall be granted for WBEs performing a
useful business function according to custom and practice of the industry. No
credit will accrue for a WBE acting merely as a passive conduit of funds to some
other, non-WBE entity, where such activity is unnecessary to accomplish the
project.
C. Goals for Use of Women-Owned Firms.
1. National Goals. EPA has established a national goal of two percent
(2 percent) of total prime contract dollars awarded.
2. Regional Goals. Each Region shall establish a regional goal equal
to or higher than the national goal. Each Region shall establish regional goals
no later than February 1, 1981. These goals shall be based on the best available
information about current and potential availability of women-owned businesses.
Until regional goals are established, the national goal shall be the applicable
goal for the region. The Region shall reassess the goals at least annually.
3. Project Goals. The Region may establish a goal higher or lower
than the regional goal for individual projects, depending upon availability of
WBEs and the nature of the project.
4. Application of Goal. All prime construction contracts of $500,000
or more and all prime contracts for architectural, engineering, and related
services of $10,000 or more shall be subject to the application of the goal.
5. Method of Calculating WBE Participation. The percentage of
contract dollars awarded to women-owned businesses of total contract dollars
(as defined in paragraph C.4) awarded under a grant shall represent the level of
WBE participation.
D. EPA Responsibilities.
1. Headquarters Responsibilities.
a. The Women's Business Enterprise Officer in OSDB.U
with the assistance of the Office of Water Program Operations
will compile and maintain a source list of WBEs, This source
-------
-4-
list will be available to the Regions for distribution to
grantees, consultants, contractors, and bidders/offerers.
The source list will not serve as EPA certification or
recognition of the authenticity or competency of any WBE
listed. The purpose of the source list is to serve as
one, but not the exclusive, resource for locating WBEs.
b. The Women's Business Enterprise Officer will
provide assistance and direction in support of the policy
in this memorandum, and, within the limits of available
resources, will coordinate an outreach program to identify
and inform women-owned businesses which are potential
participants in the Construction Grants Program.
2. Regional Responsibilities.
a. Each Regional Administrator shall ensure that EPA
regional responsibilities under this memorandum are met.
Each Regional Administrator will make an effort to ensure
that a broad range of WBEs in a variety of disciplines will
be used to meet the goals. Each Regional Administrator is
authorized to establish and publish other criteria for
determining what constitutes a WBE firm, if the require-
ments of local business practices or state laws in a
region justify further means of ensuring that the objectives
of Executive Order 12138 are met.
b. Each Regional Administrator shall establish a
regional goal, with the assistance of the Director of the
Office of Civil Rights and Urban Affairs (OCRUA) and the
Water Division Director and with the advice of Regional
Counsel. The Region in consultation with the grantee may
establish project goals. In establishing goals, the Region
shall consider views of women-owned businesses, women's
organizations, representatives of construction and engineering
firms, technical and professional organizations, women's
banks, affected public agencies, and the public.
c. Promptly after establishing its regional goal in
accordance with paragraph C.2. each Region shall distribute
a statement of its goals and this policy to the affected
States, grantees, all potential grantees (i.e., those in
the fundable portion of the State's project priority list),
women-owned firms on the source lists grantees have developed
under paragraph E., and other appropriate organizations and
individuals. This distribution shall be repeated at regular
intervals and whenever goals change.
d. In administering this PRM, each Region shall ensure
that grantees and their consultants and contractors do not
"double count" minority women for purposes of the WBE and
MBE goals. The prime contractors and consultants may choose
the goal towards which the minority WBE will apply. It will
be acceptable for the contractors and consultants to divide
-------
-5-
the total credit between the WBE and MBE goals. For
example, where a minority WBE will perform six percent
of the work, the credit may be distributed in a number
of ways, including:
1. 6% to WBE, Q% to MBE; or
2. 0% to WBE, 6% to MBE; or
3. divided, for example 3% to WBE, 3% to MBE.
e. Each Region shall review solicitation inserts to
ensure that this policy is adequately reflected in all
solicitations for contracts and other subagreements under
grants. OCRUA may assist in the review of solicitation
documents.
f. Each Region shall establish a process of review and
monitoring to ensure that grantees and their consultants
and contractors make positive efforts to use women-owned
businesses.
g. Each Region shall maintain records on awards of
contracts to WBE firms, to be submitted quarterly to
Headquarters Office of Water Program Operations, which
in turn will apprise OSDBU of regional performance.
h. Each Region shall assist the Women's Business
Enterprise Officer in OSDBU in developing source lists
of WBE firms, in cooperation with grantees, States, and
interested persons and organizations.
E. Grantee Responsibilities. The grantee has primary responsibility for
taking positive actions to ensure maximum feasible participation by women-
owned firms in Steps 1, 2, 3 and 2+3 projects. At a minimum, these positive
efforts shall include the following:
1. Each grantee shall include the project goal in each procurement
solicitation.
2. Each grantee must ensure that procurement documents contain the
following information:
a. Clear notice of the applicable goal, including
a number or range of numbers, and the obligations of the
bidder/offerer under the policy.
b. The method by which positive efforts of the bidder
or offerer will be evaluated.
c. A notice of federal and grantee sanctions for
failure to comply with the positive efforts in the solicitation
documents.
d. A copy of this policy.
-------
-6-
3. Each grantee shall cooperate with the State and appropriate
Regional Office in developing and updating a source list of women-owned
businesses which might be interested in seeking a consultancy, contract, or
other subagreement under the EPA-assisted project.
4. Each grantee shall provide a source list of women-owned firms
to all prospective consultants and contractors, and inform them of EPA policy
on use of women-owned businesses.
5. Each grantee shall ensure that notification of prospective
procurement actions is provided to women-owned firms in sufficient time to
respond. This responsibility includes ensuring that the grantee's contractors,
consultants, and subcontractors, in their respective procurement action, notify
women-owned firms in a timely fashion.
6. Each grantee shall verify that women-owned businesses designated
by bidders or offerers are available to participate in the project. This
verification will occur as part of the determination of a bidder or offerer
responsibility.
7. Each grantee is encouraged to provide liaison services between
WBEs and prospective bidders/offerers
NOTE: Reasonable costs of WBE liaison services, as
determined by the EPA Project Officer, are allowable
costs (liaison services are the services of a grantee,
staff person or other entity which helps the grantee
conduct responsibilities related to this policy).
F. Responsibilities of Consulting Firms and Contractors. All consulting
firms and contractors of the grantee, including WBE firms, are expected to make
good faith positive efforts to identify and use women-owned businesses, in
accordance with the policy, goals, and requirements of this memorandum.
Appropriate positive efforts should Begin during negotiation or bid preparation
and continue throughout the life of the contract. Such efforts shall include,
but not be limited to, the following:
1. Extending opportunities to women-owned businesses for subcontracting,
joint ventures, and provision of equipment, supplies and services.
2. Notifying women-owned businesses on a source list obtained from
the grantee, and other women-owned businesses known to the contractor or
consultant, of goals and opportunities to compete for or do business with the
contractor or consultant within sufficient time to respond. Use of EPA's
source list does not, in and of itself, satisfy the requirements to use positive
efforts.
3. Providing the grantee with adequate documentation of positive
efforts, including nature and dollar amount of work to be performed by WBEs,
and, if the goal will not be met according to the estimates currently available,
documentation showing WBEs contacted, WBE responses, and reasons for non-selection
of WBEs.
-------
-7-
4. Maintaining records, to be available to the grantee and EPA,
of the efforts under paragraphs 1., 2., and 3., and of awards to women-owned
firms.
5. Making positive efforts to compensate for any changes in plans
to award subcontracts to women-owned firms, and informing the grantee and EPA
of such actions.
6. Meeting the requirements of paragraph (J) below.
G. What Women-Owned Firms Should Do. Women-owned businesses should become
knowledgeable about and involved in the State and local project planning process
under the Construction Grants Program. Women-owned firms should provide state-
ments as to the nature and scope of their business and capability statements to
the Women's Business Enterprise Officer in OSDBU for inclusion on the source list,
as well as to the EPA Regional OCRUA, appropriate State and local government
agencies, and contractors and consultants doing business in the Construction
Grants Program. WBEs should make efforts to establish contracts and rapport with
businesses recognized as potential contractors and consultants.
H. Sanctions.
1. Responsibility Determination. In the event a bidder or offerer
fails to objectively demonstrate positive efforts the grantee shall request,
in writing, that the bidder or offerer provide evidence of positive efforts
within 15 days of the request, or he held nonresponsible. The Regional
Administrator may instruct the grantee to request such documentation after the
Region reviews bid documents submitted by the grantee or any other available
information. If the bidder or offerer fails to comply adequately with the
request, the grantee shall determine this bidder or offer to be nonresponsible,
and shall so advise the bidder or offerer promptly in writing with an explanation
of the basis for the determination. A finding of nonresponsibility on a contract
shall not prejudice the right of that bidder or offerer to submit bids or proposals
on other EPA-funded projects. However, in determining responsibility, the grantee
will consider any evidence it has concerning performance in relation to WBE
obligations and goals under other contracts.
2. Protests.
a. If the bidder or offerer disagrees with this
determination of nonresponsibility under paragraph H.I.
the bidder or offerer may then file a protest under
40 CFR § 35.939.
b. A disappointed bidder, offerer or listed WBE
may also file a protest under 40 CFR § 35.939 to
challenge a determination that the apparent low bidder
or offerer fulfilled the positive efforts requirements
of this PRM.
3. Exceptions. Notwithstanding paragraph 1., the grantee may award a
contract (with the approval of the Regional Administrator) where the bidder
or offerer did not demonstrate positive efforts, if (a) delay incident to
resolicitation would cause substantial harm to the grantee, and (b) the contract
(i) requires specific positive efforts for compliance with this policy (including
-------
-8-
goals) during contract performance, and (ii) includes appropriate sanctions
for failure to perform in accordance with the contract (e.g., termination or
liquidated damages).
4. Grantee's failure. If a grantee fails to meet its obligations
under paragraph 1. above, or fails.to meet any other requirement in this
memorandum, EPA may declare the grantee nonresponsible under 40 CFR i 30.340,
or deny, modify, suspend, or terminate assistance in accordance with 40 CFR
Part 30, Subpart H.
I. Grantee's Higher Goals. Nothing in this policy prevents a grantee
from setting higher goals for use of women-owned firms on work under EPA
grants.
J. Contractors' and Consultants' Responsibilities After Award. If
requested, contractors and consultants shall submit to the grantee copies of,
or information concerning, awards to women-owned firms, and lists of WBE firms
contacted and used. From time to time (but not more often than quarterly),
the contractor or consultant will be expected to comply with requests from the
grantee for information on the status of compliance with the policy and require-
ments in this memorandum. In the event a consultant or contractor fails to
conform to its obligations under this memorandum, the grantee will require
corrective efforts or, as appropriate, modify, suspend or terminate the contract
or subagreeraent.
K. Reexamination of Policy.
1. Review of the national goal will take place annually.
2. By October 1, 1983, the Administrator will examine this policy and
its implementation and may modify the policy as is appropriate.
-------
UNiTED STATES ENV 1RONME.NTAL PROTECTION AGENCY
'.V A3H1NGTC.\ ~J~. 20460
?98C
OFFICE OF .VATS.-3
A.NO -VASTS "IAN ACEMENT
Construction Grants
Interim Program Requirements Memorandum
PRM No. 80-5
SUBJECT: Buy American
FROM: Henry L. Longest, II, Deputy Assistant Admi
for Water Program Operations (WH 546)
TO: Regional Administrator
Regions I - X
I. PURPOSE
This PRM sets forth interim Agency policy and procedures
concerning the application of the Buy American provision of the
Clean Water Act of 1977 and the final regulations governing the
Construction Grants Program for municipal wastewater treatment works
published in the Federal Register of September 27, 1978 (Part III).
PRM 78-3 concerning the same subject is superceded, as well as the
temporary guidance document of January 9, 1979. This interim PRM
was developed because numerous requests were received from the
public for further clarification of the application of the Buy
American provision. This interim PRM is also being published in the
Federal Register with a 90-day period provided for comments and
suggestions. Issues which have come to the attention of EPA are
addressed. If there are others, EPA would appreciate being informed
of them, with suggested resolution.
II. DISCUSSION
Section 39 of the Clean Water Act of 1977 added a new section
215 to the Federal Water Pollution Control Act. This new section
requires that only manufactured and unmanufactured materials and
supplies that have been mined, produced or manufactured in the
United States, and are substantially all From United States'
sources, shall be used in treatment works for which grant assistance
is provided by EPA. This is known as the Buy American provision and
it applies to any Step 3 grant for which application is made after
February 1, 1978.
-------
-2-
In the legislative history of the provision, Congress directed
that the Buy American regulations of other Federal departments and
agencies be followed, where applicable. These other regulations are
generally incorporated in the federal procurement regulations in the
Code of Federal Regulations which are generally based on the Buy
American Act of 1933 (42 U.S.C.A. 10a-d) and an Executive Order of
1933, with subsequent updates, which interpreted several aspects of
the Act. (See Executive Order 10582, December 17, 1954, as amended
by Executive Order No. 11051, September 27, 1962.).
SPA issued its own final provision for Buy American in the
Construction Grants regulations by adding a new paragraph (d) to
35-936-13 (Specifications) which requires that bidding documents and
construction contracts for affected projects include a Buy American
provision which requires use of domestic construction material,
substantially all from United States' sources, in preference to
foreign construction material. The regulations also establish those
circumstances under which the Agency may waive the provision.
Domestic construction material must be given preference if the
domestic material is priced no more than 6 percent higher than the
bid or offered price of foreign materials (including import
duties). The application of the Buy American provision normally
occurs after bids or price quotations have been received.
Appendix C-2 to Subpart E was also amended by adding a new
Clause 17 which implements the Buy American provision in construc-
tion contracts.
III. POLICY
In contracting for wastewater treatment works being assisted by
the EPA municipal wastewater treatment Construction Grants Program,
a price preference of up to 6 percent is required to be given to
construction materials that have total component costs of over
50 percent in value from domestic sources, when Osuch materials are
in price competition with construction materials that have component
costs of 50 percent or more in value from nondomestic sources
(subject to waiver from the Regional Admin is ti-a tor, where
appropriate).
IV. IMPLEMENTATION
1. The Three-Procedure Buy American Process
In implementing the Clean Water Act Buy American provision,
there are three major procedures that take place:
First Procedure; Determination of the "construction material"
to which the Buy American provision applies.
-------
-3-
Seoond Procedure; Application of the "manufactured in United
States" and "50 perecent rule" to the construction materials so as
to classify as domestic or nondomestic material.
Third Procedure: Application by the prime construction
contractor of the 6 percent price preference for domestic materials
to the bids or price quotations where domestic and nondomestic
construction materials are in competition.
These procedures are discussed below and are also set forth in
an overall chart at the end of this Interim PRM. Because of the
complexities in applying the Buy American Act of 1933 and subsequent
Executive Orders, regulations, guidances and decisions, it is sug-
gested that the following description of the Buy American procedures
be read in conjunction with the simplifying chart.
First Procedure; Determination of the Construction Material to
Which the Buy American Provision Applies
EPA regulations and the Federal Procurement Regulations refer to
"construction materials" as subject to the Buy American provision.
The regulations define construction material" as any article,
material or supply brought to the construction site for incorpora-
tion into the treatment works. Construction materials are sometimes
referred to as "end products." Installation and other services to
be performed after delivery are normally excluded. The Buy American
provision does not apply to material which a contractor utilizes for
construction but which the project specifications do not require to
be incorporated into the treatment works. Examples include
protective covers for building materials or building forms used in
construction, whether or not left in the ground.
In practice, construction materials are those items that are
referred to as separate distinct items or unit processes in the
specifications for the project. Normally, for example, there will
be only a limited number of separate items of equipment that are
listed in the specifications for both technical and bidding pur-
poses, such as a filter press, incinerator, aerator equipment, large
pump, etc. These are the types of equipment "end products" to which
the Buy American provision is applied. The grantee will normally be
best able to decide upon the appropriate classification of items.
If there are problems, the grantee may seek assistance from the EPA
Regional Office which may consult EPA Headquarters. The State
Agency should be notified by the grantee that this assistance is
being requested.
Construction materials are of two types—manufactured or un-
manufactured—and are of either domestic or nondomestic origin.
Construction materials may be made up of "components." A component
-------
-il-
ia any article, material or supply which is directly incorporated
into a construction material. The 6 percent price preference, as
described in the Third Procedure, is applied to construction
materials and not components.
Unmanufactured Construction Materials
An unmanufactured construction material is a raw material that
is mined or grown. A unmanufactured construction material is a
"domestic construction material" if it has been mined or produced in
the United States. It should be relatively easy to identify raw
materials and their national origins. A raw material could be, for
example, gravel that in the case of municipalities on international
boundaries could come from either the United States or an adjacent
foreign country. If the domestic gravel is in price competition
with nondomestic gravel, the domestic gravel will receive a 6
percent price preference as explained later. If the gravel is
incorporated into concrete which is delivered to the site, then it
is a component of a manufactured construction material.
Manufactured Construction Materials
Manufactured construction materials, as applied to sewage treat-
ment facilities construction, refer to material such as pipe for
sewers, reinforcing steel or structural steel for erecting build-
ings, and equipment that is necessary for the project. These items
will usually be listed in the project specifications in separate
sections. In the case of equipment, construction materials could
include such items as incinerators, aerators, filter presses, large
pumps, etc., as separate, distinct items or unit processes. Usually
equipment that is identified as a construction material will be that
which will usually be supplied by one supplier or manufacturer, is
included within one section of the specifications, and is treated at
the construction site as a separate item of equipment.
Accordingly, an integrated equipment package that is normally
supplied by a single supplier as a trade practice could be
considered as one item of equipment if included as such in specifi-
cations. Also, equipment that is listed in the specifications as a
separate, distinct item will usually be treated as a single product
even though delivered to the construction site in a number of
separate components to be assembled and incorporated into the treat-
ment works.
The identification of a piece of equipment as a. manufactured
material or a component of a manufactured material will sometimes
vary depending upon the particular situation. The same generator,
for example, may be a separate identifiable construction material in
one instance, and a component of a larger item, such as an incinera-
tor, in another instance. The particular circumstances have to be
-------
-5-
considered, but the item that is identified within a separate
section of the specifications and is treated at the construction
site as a distinct, complete item will normally determine that to
which the Buy American provision is to be applied.
A sewage treatment plant, as an entity, would normally not be
considered the end product.
Second Procedure; Application of the "Manufactured in United
States" Requirement and the 50 percent Rule to
Construction Materials
In the case of manufactured construction materials, the statute
and regulations create a preference for construction materials
"manufactured in the United States" that are "substantially all"
from materials, articles or supplies of domestic origin. Construc-
tion materials that meet this test are known as "domestic," those
that do not are "nondomestic."
Federal procurement regulations specify that to be "domestic," a
manufactured construction material must meet two tests: (1) it must
have been manufactured in the United States, and in addition, (2)
the cost of its components which are mined, produced, or
manufactured in the United States must exceed 50 percent of the cost
of all its components (termed "substantially all") from domestic
sources. If a construction material does not meet both of these two
tests, it is considered to be "nondomestic." Explanatory comments
on these two tests follow:
(1) Manufactured in the United States
The Buy American provision requires that to be domestic, con-
struction materials must be manufactured in the United States
(includes all jurisdictions defined as a "State" in Section 502(3)
of the Clean Water Act, 33 USC 1362(3)). A construction material
will not be considered domestic if it is manufactured entirely
outside the United States from domestic components. The
"manufactured in the U.S." test is applied very broadly. For
example, the Comptroller General has ruled that the mounting of
electric motors on an otherwise inoperable imported pump unit
constituted "manufacture" of the unit. However, the Comptroller
General has also ruled that the mere packaging of an item is not
manufacturing, nor are testing and evaluation of items considered
manufacturing.
The determination as to whether or not an item is manufactured
in the United States is not expected to be very difficult in the
ordinary run of cases. If there are problems, they will be resolved
by the grantee or the EPA Regional Office, with appropriate assist-
ance from EPA Headquarters.
-------
-6-
(2) The "Substantially All" (50 Percent) Test
Once the "manufactured in the United States" test has been
satisfied, a manufactured construction material must satisfy the
"substantially all" (50 percent) test. The rules for applying this
test have been established by the Comptroller General (46 Comp. Gen-
784).
This test provides that a manufactured construction material is
classified as domestic if the cost of its components which are
mined, produced, or manufactured in the United States exceeds 50
percent of the cost of all of its components. A component is an
item which actually becomes part of the construction material.
Manufacturing costs to assemble the components into the final
product are not considered in applying the 50 percent rule. For
purposes of determining the ratio of domestic component cost to
total component cost, items such as packaging, shipping, labor and
other production costs, testing and profit, are not considered (as
these are not components).
An example with an explanation of the application of the 50
percent rule follows:
Shipping
Labor
Testing
Profit
Other Production Costs
$12,000
Component
A
Foreign
$20,000
Component
B
Domestic
Component
C
Domestic
Component
D
Domestic*
Final manufacturing
costs not considered
in 50 percent
Basis of 50 percent
cost determination
$4,000
$6,000 $8,000
* - Component made by
equipment manufacture
itself (priced as though
it were purchased from
another manufacturer or
supplier)
-------
-7-
In this illustration, there are four components that make up the
composition of a piece of equipment. Foreign component "A" costs
the manufacturer $20,000. Components "B" and "C" are purchased from
domestic manufacturers and total $10,000 together. Component "D" is
manufactured by the manufacturer itself and has a value, as though
it were purchased like the other domestic components, of $8,000.
The value assessed should be at the component rather than spare
parts level. To compute the 50 percent rule, the value of the
domestic components ($18,000) is compared to the value of the total
of all of the components ($20,000 + $4,000 + $6,000 + $8,000 =
$38,000). As the total value of all of the components is $38,000,
and the value of the domestic components ($18,000) constitutes 47.5
percent of the total value, the equipment is determined to be non-
domestic as the domestic value is not over 50 percent of che total
value. Note that the $12,000 in final manufacturing costs is not
permitted to enter into the computation. It is only the value of
the components that is considered (baaed on the 1967 GAO decision/.
Also note that the 6 percent cost preference rule is not applied
during this evaluation (by GAO decision) as it is used by the prime
contractor only in the evaluation of price quotations from suppliers
or manufacturers.
The 50 percent test does not require the contractor, subcon-
tractor or other lower tier supplier who might supply construction
materials to consider the national origin of the materials that have
been used in the manufacture of the components which make up the
construction material to be delivered. To have the cost of a com-
ponent be regarded as "domestic" for purposes of the 50 percent
test, it need only be established that the component was mined,
produced or manufactured in the United States. In other words, the
50 percent test is not applied to the composition of each component;
rather, the component is considered only as to where it was mined,
produced, or manufactured. 45 Comp. Gen. 658 (1966).
Third Procedure; Application of the 6 Percent Price Preference for
Domestic Construction Materials to Bids or Price
Quotations
When domestic and nondomestic materials are in competition, the
prime construction contractor, as well as subcontractors, are
required to apply the Buy American provision to give preference to
domestic construction materials when the domestic material has a
delivered price of no more than 6 percent over the nondomestic
material.
The differential by which domestic construction material may be
given preference shall generally be the sum determined by computing
up to 6 percent of the bid or offered price of materials of foreign
origin including all costs of delivery to the construction site,
-------
-8-
including any applicable duty, whether or not assessed. Computa-
tions will normally be based on prices on the date of opening of
bids or the date of price quotations.
The contractor applies the Buy American provision at the time
that the identity of the material and its prices become known. For
example, the identity and the delivered price of a construction
material may be able to be determined at the time of bid submittal.
At other times it may be when shop drawings are submitted. If the
original selection is changed or a change order involves construc-
tion materials, then the contractor will have to reapply the Buy
American requirements.
If the prime contractor does not properly comply with the Buy
American provision by providing a nondoinestic material when a
domestic material should have been chosen, it may be required to
substitute the domestic material at no change in price. If the
material has been irrecoverably incorporated into the treatment
works, than the grantee may assess the contractor for the difference
in the costs of the domestic and nondomestic materials that were in
competition.
It should be noted here that a manufacturer or supplier of a
domestic material must have made a bid or price quotation on the
project at the appropriate time for doing so. A manufacturer or
supplier cannot, after the fact, unilaterally secure use of its
domestic material by stating that it will supply it for a price
within the 6 percent variation.
V. WAIVERS
In accordance with the EPA Buy American statute, the Regional
Administrator may waive the Buy American provision based on those
factors deemed relevant, including:
(1) Inconsistency with the public interest, including multi-
lateral government procurement agreements.
(2) Unreasonable cost of the domestic material.
(3) Unavailability of the material from domestic sources in
sufficient and reasonably available commercial quantities
and of a satisfactory quality.
(4) Unavailability of Agency resources to carry out the
provisions.
These four provisions are summarized as follows:
-------
-9-
(1) Inconsistency with Public Interest, Including Multilateral
Government Procurement Agreements
The public interest waiver has traditionally been included in
Buy American regulations to cover unforeseen circumstances. For
example, it has been held that the determination that domestic
sources will be unable to satisfy the needs for material in a timely
manner will suffice as a basis for this waiver. In addition, the
Congress in December 1977 included the possibility of a waiver for
inconsistency with multilateral government procurement agreements.
This provision was included in the context of the multilateral trade
agreement which the White House was negotiating with other nations
to remove obstacles to world trade. The legislative history of the
Trade Agreements Act of 1979 specifically states that the Buy
American provisions in the Clean Water Act will not be affacted by
the Trade Agreements Act. Therefore, no waivers will be made in
connection with that Act.
The Regional Administrator may make the public interest deter-
mination, but the Deputy Administrator must be consulted on any
waiver based on the multilateral government procurement agreement
clause.
(2) Unreasonable Cost of the Domestic Material
The cost of domestic material is considered to be unreasonable
when the delivered price of a domestic material exceeds the
delivered price of a nondomestic material by more than 6 percent.
Under these circumstances, the waiver is automatic, and no applica-
tion for a waiver needs to be made to the Regional Administrator.
(3) Unavailability of Domestic Materials
Where a construction material is not mined, produced, or
manufactured in the United States in sufficient and reasonably
available commercial quantities or satisfactory quality for the
particular project, a nondomestic source may be used. A component
that is domestically unavailable will be treated as a component
manufactured in the United States.
(H) Unavailability of Agency Resources to Implement the Buy American
Provision
The Congress provided EPA with the authority to waive the imple-
mentation of the Buy American provision if EPA resources are not
sufficient to carry out the provision. The Regional Administrator,
with the concurrence of the Deputy Administrator, may exercise this
authority. (The use of this waiver would be a policy decision of
some magnitude and is expected to be used only in extraordinary
circumstances.)
-------
-10-
In answer to several comments, consideration was given to
establishing a floor of $10,000 below which Buy American would be
waived but this was not found to be possible. Comments are, how-
ever, requested on the concept of a floor.
VI. REQUIRED STATEMENT IN BIDDING DOCUMENTS
EPA regulations (40 CFR 35.936-13(d)(4)) provide Buy American
provisions that must be included in the bidding documents (along
with the rest of 40 CFR 35.936, 35.938, and 35.939).
VII. REQUIRED STATEMENT IN STEP 3 CONTRACTS
Appendix 0-2 of the Construction Grants Regulations provides the
Buy American provision for all construction contracts.
7III. ACCESS TO RECORDS
A supplier or manufacturer is obligated to disclose upon
request, cost and price information to the Regional Administrator to
the extent necessary to determine compliance with the Buy American
requirement: However, confidential business data will be protected
from public disclosure by the Regional Administrator.
IX. PROTESTS
Any party with an adversely-affected direct financial interest
may protest an alleged violation of the Buy American provision in
accordance with 40 CFR 35.939 of the regulations for grants for
construction of treatment works.
The Regional Administrator may handle protests under the appro-
priate procedures of 40 CFR 35.939. In making determinations, the
Regional Administrator shall generally use the "Buy American"
procedures, regulations, precedents and requirements of other
Federal departments and agencies.
-------
F13S7 ?30C5DO?E
Identification of
construction aatarial
la vnieii to apply 3uy
American.
3CT AMERICAS FHOCSJOTIS
SECOND ?30CSDURS
Application of 50J rule
to detaraine if construc-
tion aaterial is domestic
or aondoneatic (usually
done 5y sanufacturer).
Djl OF
MATERIAL
Any article, Material or-
supply brought to the
construction site for-
incorporation into the
treatment works. Con-
struction aaterials ar«
sither aanufaetured or-
unmanufactured . -
C3HST33C7TSH
Specifications will
acrmally Identify aanu-
faetured 'snd products"
that are to be delivered
to construction site;
6.3., stael beams.
COHSTOTC"
irat Teat; If construe—
ica aaterial is oanufac--
ur«d In far sign country,
t !_3 aondomastic.
econd Test; If aonstrue-
ion aaterial la aanufac-
«d in the U.S., aad -s>
costs to aanufacturer of
all "components." Ixciuda
profit, labor 4 other
production costs to oanu-
factur*- the- cotaponents into
construction zaterial. If
over 50$ of total costs of
components is- from U.5.
sources, the construction
aatarlal is domestic, if
not, it is nondoaestic.
OSMASuTACTOTED C3SS730C-
TICK MAT2HIAL3
constriM—
tioa aata-ials to be
delirered to construction
aita (usually ained cr
srown; «.g., gravel, ar«
ncrmally self -evident.
Source of unaanufactured
construction aaterials
identifies it as domestic
or nondofflestic.
??OPOSED STA7SCHT OH
amaius
Manufactur«r or supplier
of ccnstructioa aaterial
to provide contractor with
statement that aaterial is
domestic or nondoaeatie,
based on cost of components.
Application of 51 price
preference for donastic
construction aateria-Ls.
(Prise Contractor)
MAT25IJU.
Contractor detaraines
comparaole delivered prices
to the construction site of
the domestic 1 nondoaestic
construction aaterials that
la competition. If the
domestic price is no aore than
51 higher than the nondomestic
price, the domestic construc-
tion saterial aust ba selected
(subject to stat-jtory vmiv-ra
such as inconsistency vith
public intar«st 4 unavail-
ability of domestic sources).
TIDH MATI3IAL3
Same procedure as fcr aanu-
factur«d. Above.
P30POSED 3
OH
?riae contractor to provide
statement that prices of
nondomestic construction
aatarials selected ar« aore
than 5S lass than quoted
prices of domestic equipment
or aajor aaterials. Maker si
statement aust lce«p price
records so as to b« prepared
to justify selection of non-
domestic natarialj upon
request
-------
APPENDIX A
PROPOSED REQUIRED STATEMENTS OF MANUFACTURERS OR SUPPLIERS, AND
PRIME CONTRACTORS IN REFERENCE TO THE BUY AMERICAN PROVISION
A. Statement on Component Contents of a. Construction Material
EPA is concerned that in applying the Buy American provision of
the Clean Water Act of 1977 and implementing regulations, the prime
contractor may not know when it is involved in dealing with a non-
domestic construction material so that it can apply the up to 6
percent price preference for domestic construction materials.
To assist the prime contractor for construction in applying Buy
American, a method is needed to inform the contractor when non-
domestic materials are involved. No problem is anticipated with
unmanufactured materials or foreign manufactured materials that are
identified as foreign in invoices or by markings on the material.
However, difficulties can occur when a domestic manufacturer
provides materials that have a 50 percent or more foreign content,
but there is no labeling or other information as to foreign content.
To remedy this problem, EPA is considering that a statement be
required from the manufacturers or suppliers of major equipment or
major materials, such as pipe, structural steel, or bulk materials,
as listed in the specifications. The statement would read that the
aggregate cost of the components, as determined according to the 50
percent method described in the PRM amounts to a construction
material that is domestic or nondomestic. A sample is as follows:
"The value of the components comprising the construction
material identified as in contract
number for the sewage treatment project for
the municipality of is (or is not) over 50
percent from United States sources and is therefore
domestic (or not domestic) as described in EPA PRM
dated .
Manufacturers or suppliers that state that their product is
domestic must be prepared to substantiate these claims during future
audits or protest actions.
Comments are invited as to whether EPA should require such a
statement to accompany every bid or price quotation of every major
equipment or main materials item, or only upon request when a
protest occurs.
-------
B. Statement of Contractor on Nondomestic Construction Materials
To facilitate the application of the Buy American provision, EPA
is considering requiring that when nondomestic materials are chosen,
the prime contractor must provide the grantee with a statement that
(1) all material to be furnished is domestic, except for that shown
on an attached list displaying major nondomestic equipment or
materials chosen, for which the quoted delivered price of the
nearest competitive domestic equipment (if received) was more than 6
percent over the quoted delivered price of the nondomestic equip-
ment, or (2) the equivalent domestic material is unavailable. The
contractor will maintain records to document the price differ-
entials, for possible audit verification of its compliance or for
other purposes. The statement itself will not require the listing
of prices.
Comments are invited on this provision which is substantially
required by at least one other Federal agency for direct government
procurement.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
AUG Z 8 i960
OFFICE OF WATER
AND WASTE MANAGEMENT
Construction Grants
Program Requirements
Memorandum
PRM No. 80-7
Effective Date -
October 1, 1980
SUBJECT: Grant Eligibility of Minority Business Enterprise
and Women's Business Entferp/lse Liaison Services
FROM: Henry Longest, DeputyJsfgaant Administrator
forjfater£*»t>gram OperiHl/lMW (WH-546)
cting Director
Civil Rights (A-105)
TO: Regional Administrators, Regions I - X
ATTN: Water Division Directors
Office of Civil Rights Directors
I. PURPOSE
The purpose of this memorandum is to define and set forth
guidelines for determining the grant eligibility of Minority
Business Enterprise (MBE) and Women's Business Enterprise
(WBE) liaison services performed during the process of
planning, designing and constructing a wastewater treatment
facility with Environmental Protection Agency (EPA) construc-
tion grant funds.
II. DISCUSSION
The Agency recognizes the need to immediately remedy the
under-utilization of MBEs and WBEs in the Construction
Grants Program. In order to provide the opportunity for
increased MBE and WBE participation, EPA has determined that
a goal oriented system of MBE and WBE participation must be a
clear-cut factor in the evaluation of procurements, bids or
proposals, as well as a condition for a grant award. One
method of affording the opportunity for increased MBE and WBE
participation is for grantees to establish or utilize MBE and
WBE liaison services. The costs to the grantees for such
services are eligible for EPA grant funding.
-------
- 2 -
Such services will assist applicants/grantees to effectively
implement the goal-oriented EPA "Policy for Increased Use of
Minority Consultants and Construction Contractors", 43 Federal
Register 60221 (December 26, 1978), and the "Women's Business
Enterprise Policy for the Construction Grants Program," 45 Federal
Register 51490 (August 1, 1980). See also, 40 C.F.R. 35.936-7,
40 C.F.R.§35.937-12 (b)(2), Appendix C-l (para. 14), and
Appendix C-2 (para. 9). These policies require grantees,
consultants and contractors to take affirmative steps to
utilize minority-and women-owned businesses in providing
engineering and construction services and supplies.
Grantees may formally provide for such services by
selecting:
1. An MBE/WBE liaison officer from internal staff
(Additional staff may supplement internal staff
only if required by project size) or
2. A contractor to perform such services (Contract
services may be provided by either an MBE or WBE
specialist or by a capable consulting firm).
The MBE/WBE liaison officer/service would be responsible for
developing, implementing and managing the grantees MBE and WBE
programs as they relate to the specific EPA funded project.
Responsibilities include, but are not limited to: keeping
records, providing technical assistance to MBEs, disseminating
information on available business opportunities related to EPA
grant projects to ensure that MBEs are provided an equal oppor-
tunity to participate in EPA's Construction Grants Program.
In order to effectively carry out the aforementioned
responsibilities, the MBE/WBE liaison officer/service selected
should be:
a. Familiar with and capable of interpreting and
communicating the grantee's procurement procedures
and requirements as well as EPA's MBE/WBE policies,
b. Understanding of small, minority, and women's
business problems,
c. Capable of communicating effectively with women-
minority-and majority-owned businesses and manage-
ment,
-------
- 3 -
d. Able to maintain a good rapport with the minority
community,
f. Familiar with Federal, State and local resources
available to aid MBEs, WBEs and small business, and
e. Able to maintain a good rapport with the women's
business and community organizations.
III. POLICY
This PRM confirms EPA's policy that costs incurred by the
performance of appropriate and necessary MBE/WBE liaison
services, either by grantee staff or by contractor, which
are directly related to a particular EPA funded construction
project, are eligible for EPA grant participation.
IV. IMPLEMENTATION
Only necessary liaison services rendered in direct connection
with an EPA Construction Grants Project by the MBE/WBE
liaison officer/ service are grant eligible costs. While
the provision of MBE and WBE liaison services is an eligible
cost, it must be borne in mind that EPA will participate in
the costs for hiring additional staff only in municipalities
having ongoing and continuous EPA construction grants
projects, large enough to support the need for such staff.
Contracts for MBE/WBE liaison services which depart from
conventional industry practices and which constitute a
commercially unnecessary intermediate step between a grantee,
liaison officer, consultant or contractor shall be considered
ineligible.
Measures to achieve MBE and WBE program requirements should
be submitted as part of the Step 1, Step 2, Step 3, and Step
2+3 grant applications. State agencies and potential
grantees should be encouraged during the pre-plan-of-study
conferences to integrate planning for use of MBEs and WBEs
into each phase of the construction grant process and to
achieve designated goals. This enables the Agency to judge
before awarding financial assistance whether EPA funds are
likely to be used to achieve the objective of increasing MBE
and WBE participation.
The grantee must maintain complete records of MBE/WBE liaison
services. Such records must include:
a. A brief narrative summary of activities conducted.
b. Certified time and attendance records clearly
establishing relationship to EPA's MBE and WBE
programs.
-------
Bills/vouchers covering travel and other expenditures
incurred in fulfilling the grantee's responsibilities
n>-i/-l^v> 4-Vif> UQT? onH UntT r\/•> 1 -i /-> •! a o
.*, 14 NX VI * * W »•* ^41 •*. W* ^. *. •k^B^ak A*O ^ D
under the MBE and WBE policies
d. Documentation sufficient to constitute an audit trail
of all costs charged to a specific project.
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. Z0460
JAN1 ~ 7 1981
OFFICE OF WATER
AND WASTE MANAGEMENT
Construction Grants
Program Requirements Memorandum
PRM 81-1
SUBJECT: Issuance of Program Requirements Memorandum
FROM: Henry L. Longest II, Deputy Assistant
for Water Program Operations (WH-546)
TO: Regional and State Water Division Directors
PURPOSE:
The purpose of this memorandum is to: (1) set forth the new procedure
for issuing construction grants program policy and (2) give formal notice of those
Program Requirements Memoranda (PRMs) which have been eliminated due to
obsolescence.
DISCUSSION:
Program Requirements Memoranda
A new procedure for transmitting PRMs is being implemented to streamline
the issuance of construction grants program policy and to reduce the number of
transmittals to the minimum necessary to maintain program direction and consistency.
One of the major problems with the present system has been maintaining
its currentness. Accordingly, all PRMs issued since the inauguration of the
system in 1976 have undergone a thorough review. The purpose of this review
was to determine which PRMs were obsolete and which needed to be revised. Based on
the recommendations of reviewers, including the Association of State and Inter-
state Water Pollution Control Administrators Task Force on Construction Grants,
we have rescinded 39 PRMs which have been superseded, usually by subsequent laws,
regulations or later PRMs. In addition, we have revised one PRM to make it
consistent with current policies and consolidated nine others to eliminate
multiple issuances on the same subject.
-------
The list of PRMs being eliminated or revised, together with the reasons
therefore, is appended to this document. The revised PRMs are being incorporated
with existing current PRMs into a single document which will be made available
to Regions, States, grantees and consultants.
Another source of difficulty with the current system has been that PRMs
are issued individually as they are approved. As a result, program officials,
grantees and consultants have not always received timely notice of these new
issuances and the preparation and processing of required grant documents have
had to be disrupted in order to bring them into compliance with new policies.
To resolve this problem, under the new system, all PRMs applicable during
a fiscal year will be published together at the beginning of that fiscal year,
instead of individually from time to time as each new one is approved. This
will have the effect of limiting changes in grant procedures or requirements to
once a year. Hence, the impact of changing policies on the movement of grants
through the system will be minimized.
The new system will be implemented as follows. Prior to the end of each
fiscal year, the existing set of PRMs will be reviewed and revised as necessary.
To this updated set will be added those PRMs which were circulated for comment
and approved during the fiscal year but not made effective until the beginning
of the next fiscal year. The revised and new PRMs will be issued together in
a single document which will become effective at the beginning of the new fiscal
year. Under this system, requirements will not be applied retroactively nor
instituted more often than annually.
Changes in the Construction Grants Handbook will also be made to keep it
consistent with the most recent policy issuances. These changes will be published
soon after the annual publication of the PRMs.
PRMs will continue to be used to convey construction grant program policy,
the specific provisions of which are not available in existing regulations
or in other EPA policy documents. PRMs will be signed by the Deputy Assistant
Administrator for Water Program Operations who serves as national program manager
for the construction grants program.
Program Operations Memoranda/Program Advisory Memoranda
The purpose of the Program Operations Memoranda (POMs) series is to disseminate
administrative and technical guidance to those responsible for the internal
operations of the construction grants program, POMs are addressed only to
Regional and State Offices and should not affect individual grantee projects.
-------
The purpose of the Program Advisory Memoranda (RAM) is to advise persons
involved in the construction grants program of needed changes in, or of improved
methods for, dealing with grant or grant-related activities. Such information
may be intended for the use of grantees and consultants as well as State and
Regional personnel. Because this information is intended primarily to provide
guidance rather than to mandate action, the PRM designation is not applicable.
Also, since such information may impact both grant submitters and grant reviewers
alike, the traditional POM designation is not fitting. Accordingly, for such
issuances, the designation Program Advisory Memoranda will be used.
POLICY:
Beginning October 1, 1981, only the requirements contained in the Fiscal
Year 1982 PRM document will be effective for grants awarded in Fiscal Year 1982.
For Fiscal Year 1981, grants awarded after the publication of the January
issuance of PRMs (MCD-02.11) will be bound by policy contained in that issuance.
Future PRMs will be circulated in draft form for review as they arise. However,
the effective date of each new PRM will be the October following its approval.
Annually, a purged set of old PRMs together with any new PRMs approved
during the previous year, will be issued in one document. Regional and delegated
State staff will have the opportunity to participate actively in this purging
and approval process. Policies contained in the single document will be effective
as of the beginning of the new fiscal year for all grants awarded during the
fiscal year.
Attachment
-------
ATTACHMENT: PROGRAM REQUIREMENTS MEMORANDUM 81-1
PRMs Cancelled
The following PRM's are cancelled for the reasons specified.
1. 75-1 Use of Revenue Sharing Funds for Waste Treatment Projects
Policy no longer valid. Superseded by 31 CFR 51.40 and section 4
of P.L. 94-488.
2. 75-2 Experience Clauses for Equipment Suppliers
Superfluous; policy set forth more completely at 40 CFR 35.936-13(c)
3. 75-3 Waste Stabilization Ponds
Superfluous; policy set forth in 40 CFR 133.102(c).
4. 75-4 Standardized Construction Contract Documents
Guidance no longer useful; contained in 40 CFR 35.938-8
5. 75-5 Non-Restrictive Specification
Covered by 40 CFR 35.936-13(a) and (b).
6. 75-7 Sewer System Evaluation and Rehabilitation
Covered by 40 CFR 35.927, 927-1 through 927-5
7. 75-8 Flood Disaster Protection Act of 1973
75-9 Supplement to PG No. 25; Flood Disaster Protection Act
of 1973 (PL 93-234)
75-28 Flood Insurance Requirements Effective July 1, 1975
All three are expressly superseded by PRM 76-5.
8. 75-10 User Charges and Industrial Cost Recovery System
75-19 Cancelling PG-28 - User Charges and Industrial Cost Recovery
System
Superseded by PRM 76-5. New ICR systems eliminated by P.L. 96-483.
9. 75-12 Obligation; Recovery and Reallotment of Contract Authority Funds
Guidance outdated.
10. 75-15 Class Deviation - Use of Force Account Work on Construction
Grant Projects
Grants deviation from outdated force account regulations
(40 CFR 35.936-2(a) 1972 edition). New procedures are set
forth at 40 CFR 35.936-14.
11. 75-16 Title II Regulations Concerning Reserve for Step 1 and Step 2
Projects
Superseded by 40 CFR 35.915-1(d).
-------
12. 75-20 User Charge Systems
Covered by revised regulations. 40 CFR 35.925-11(5), 35.925-13.
13. 75-21 Overruns, Reserves and Priority Lists
Subject matter no longer an issue; also, more appropriately
Program Operations Memorandum (POM) material.
14. 75-22 Policy Re Retention of Payments
Superfluous; policy contained in 40 CFR 35.938-7
15. 75-23 Escalation Clauses in Construction Grant Projects
Information obsolete
16. 75-33 Discount Rate
78-2 Discount Rate
79-4 Discount Rate
80-1 Discount Rate
Current and future discount rate PRM's will specifically
supersede prior discount rate PRM's and include a table
listing the rate for previous years.
17. 75-34 Grants for Treatment & Control of Combined Sewer Overflows &
Stormwater Discharges.
Section on stormwater treatment superseded by section 211(c)
of Act & 40 CFR 35.925-21 which contains a flat prohibition
against funding of separate stormwater treatment projects.
Remainder of PRM integrated into "Facilities Planning 1981"
(FP-81).
18. 75-40 Priority List Supplement to FY 1977 Construction Grants Guidance
77-7 Management of State Priority Lists
78-5 Interim Management of FY 1978 State Priority Lists under the
1977 Amendments
78-13 Interim Priority List Guidance for the Development and Management
of FY 1979 State Priority Lists
79-6 Priority List Guidance for the Development and Management of FY 1980
State Project Priority Lists
These PRM's overlap and, policy in each subsequent PRM at least
partially supersedes the previous issuance. Future priority list
guidance will be issued in POMs.
19. 76-1 Construction Grant Program Issuance
76-2 Cancellation of certain Program Guidance Memorandum (PGM)
Superseded by PRM 81-1.
20. 76-4 Coordination of Construction Grants Program with EPA-Corps
of Engineers Section 404/Section 10 Permit Programs
Policy integrated in Construction Grants Handbook of Procedures
and "Facilities Planning 1981" (FP-81).
-------
21. 77-6 Easements
Expressly superseded by PRM 80-3.
22. 77-8 Funding of Sewage Collection Projects
Superseded by PRM 78-9.
23. 78-3 Buy American
Expressly superseded by PRM 80-5
24. 78-6 ICR - Interim Guidance
All provisions have been incorporated into regulations; intended
only as interim guidance
25. 78-7 Combined Step 2 & 3 Construction Grant Awards
Superseded by 40 CFR 35.903(b) & 40 CFR 35.909. See 43
Fed Reg 44036
26. 80-6 Retroactive Application of Program Requirements
Policy contained in Jepsen Amendment to FY-81 Appropriation
Bill, P.L. 96-526.
-------
PRMs To Be Discontinued Upon Publication of "Facilities Planning 1981" (FP 81)
PRM 75-26 Consideration of Secondary Environmental Effects in the
Construction Grants Process
PRM 75-27 Field Surveys to Identify Cultural Resources Affected by EPA
Construction Grants Projects
PRM 75-31 Facilitating EIS Preparation with Joint EIS/Assessments
(Piggybacking)
PRM 75-32 Compliance with Title VI in the Construction Grants Program
PRM 75-38 Relationship Between 201 Facility Planning and Water Quality
Management (WQM) Planning
PRM 76-3 Presentation of Local Government Costs of Wastewater Treatment
Works in Facility Plans
PRM 77-4 Cost Allocations for Multiple Purpose Projects
PRM 78-9 Funding of Sewage Collection System Projects
(NOTE: 40 CFR 35.925-13 will be modified to reflect policy
as conveyed in Facilities Planning 1981.)
PRM 78-10 Infiltration/Inflow
PRM 79-3 Revision of Agency Guidance for Evaluation of Land Treatment
Alternatives Employing Surface Application
PRM 79-8 Small Wastewater Systems
PRMs. Partially Cancelled By PRM 81-1, To Be Cancelled Upon Publication of
"Facilities Planning 1981" (FP 81)
PRM 75-34 Grants for Treatment and Control of Combined Sewer Overflows
and Stormwater Discharges
PRM 76-4 Coordination of Construction Grants Program with EPA - Corps of
Engineers Section 404/Section 10 Permit Programs
PRM Partially Cancelled Upon Publication of "Facilities Planning 1981" (FP 81)
PRM 78-1 Erosion and Sediment Control in the Construction Grants Program
Policy as it pertains to Facilities Planning integrated into
"Facilities Planning 1981"
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. Z0460
NOV 19 1980 OFFICE OF WATER
AND WASTE MANAGEMENT
Construction Grants
Program Requirements Memorandum
PRM #81-2
MEMORANDUM
SUBJECT: Discount Rate
FROM: Henry L. Longest II, Deputy Assistant
for Water Program Operations (WH-546)
TO: Water Division Directors
Regions I-X
This supersedes prior Program Requirements Memoranda (PRM) on the discount
rate used by Federal agencies in the formulation and evaluation of plans for
water and related land resources.
Discount rates applied to facility planning starts during prior fiscal
years are:
1978 - 6 5/8 percent (PRM 78-2)
1979 - 6 7/8 percent (PRM 79-4)
1980 - 71/8 percent (PRM 80-1)
The Water Resources Council published new discount rate of 7 3/8 percent
to cover the period of October 1, 1980 through September 30, 1981.
You should use this new discount rate in cost effectiveness analysis for
facility plans starting 60 days or more after the date of this PRM.
A copy of the Federal Register notice published by the Water Resources
Council is attached. Copies of this PRM should be furnished to the States and
to new Step 1 grantees.
Attachment
-------
Federal Ki.;;r,ti:r / Vol. 'If,, No. IW, / U'ediie.'.d.iv. O: iolier 22. IIM'.O / Notices
70157
In order to jircpiire the
recoiiiMirnd.ition lo the President, the
Tr.ide Policy S'aff Committee welcomes
the views and comments of interested
parties concerning the policy issues,
economic (ind political, which should be
considered In rcbtion to the exclusion
of (his product from importation into the
United States.
Written comments should bo
Mibiniltod In 20 copied lo llio Ser.rulnry.
Tuule Policy Sl;iff Committee, Room
7:i5, Office of the United Stales Trade
Representative. 1BOO G Street. N.W..
Washington. D.C. 2C500. Such
submissions should be received by the
close of business, November 14.1900.
For furlher information, call Alice Zalik
(202) 395-3432.
Ann H. Hughea,
Chairman, Tmdc Policy Staff Committee.
[KR Doc. 80-3317 FUni 10-Zl-«). ».« am]
UllUKC CODE 1190-Of-M
SMALL BUSINESS ADMINISTRATION
I License No. 02/02-5385]
H.B.R. Capital Corp.; Issuance of a
License To Operate as a Small
Business Investment Company
On April 8,1980, a notice was
published in the Federal Register (45 FR
23843) stating that H.B.R. Capital
Corporation, located at 1775 Broadway,
New York. New York 10019. has filed an
application with the Small Business
Administration pursuant to 13 CFR
107.102 (1900) for a license to operate as
a small business investment company
under the provisions of Section 301(d) of
the Small Business Investment Act of
1958, as amended.
Interested parties were given until the
close of business April 25,1980. to
submit their commenU to SBA. No
comments were received.
Notice is hereby given that having
considered the application and other
pertinent information. SBA has issued
License No. 02/02-5385 to H.B.R. Capital
Corporation on October 9,1980.
(Catalog of Federal Domestic Assistunce
Program No. 59.011 Small Buaines*
Investment Companiea)
Dated: October 11.1980.
Peter F. McNelsh.
Acting Associate Administrator for
Investment.
if~R Doc. BO-3ZVST FUnd UHI-BCt B.«S «mj
BIUUMO CODE M2&-01-M
* U. S. GOVERNMENT PRINTING OFFICE. I980 - 777-000/1101 Reg. 8
WATER RLSOURCr.S COUNCIL
Principles and Standards for Pi.innlng
Water and Related Land Resources;
Change In Discount Rate
Notice in hereby given that the
Interest rate to be used by Federal
agencies in the formulation and
.evaluation of plans for water and
related lurid resources is 7% percent for
Ihc period October 1.101)0, |hroiij;!i mill
Inclmling September 30, I'.IOl.
The rate has be:cn computed in
accordance with Chapter IV, D., "The
Discount Rate" in the "Standards for
Planning Water and Related Land
Resources" of the Water Resources
Council, as amended (39 KR 29242), and
is to be used by nil Federal agencies in
plan formulation and evaluation of
water and related Innd resources
projects for the purpose of discounting
future benefits and computing costs, or
otherwise converting benefits and costs
to a common time basis.
The Department of the Treasury on
October 18,1980. informed the Water
Resources Council pursuant to Chapter
IV. D., (b) that the interest rate would be
10% percent based upon the formula set
forth in Chapter IV. D.. (a): the
average yield during the preceding
Fiscal Year on interest-bearing
marketable securities of the United
States which, at the time the
computation is made, have terms of 15
years or more remaining to maturity
* * *." However, Chapter IV. D.. (a)
further provides "* * '* that in no event
shall the rate be raised or lowered more
than one-quarter of one percent for any
year." Since the rate in Fiscal Year 1980
was 7Ys percent (44 FR 62116), the rate
for Fiscal Year 1981 is 7Ys percent
Dated: October 17.1080.
Richard N. Vnnnoy,
Acting Director.
[FR Doc BO-3303 FllMl tO-Zt-dft *4& ut]
BILLING COOt 8410-01-11
-------
MCD-02.11
Program Requirements Mem-
oranda for Fiscal Year
1981 Municipal Waste-
water Treatment Works
Construction Grants
Program
-------
United States
Environmental Protection
Agency
Washington DC 20460
Postage and Fees Paid
Environmental Protection Agency
EPA-335
Official Business
Penalty for Private Use $300
Special
"Fourth-Class
Rate
Book
'•-•*-
t,.
„**
------- |