oEPA
United States
Environmental Protection
Agency
Office of
Solid Waste and
Emergency Response
DIRECTIVE NUMBER: 9650.10A
TLE: LUST Trust Fund Cooperative Agreement Guidelines
APPROVAL DATE: tey 24, 1994
EFFECTIVE DATE: May 24, 1994
ORIGINATING OFFICE: Office of Underground Storage
Tanks
S FINAL
Q DRAFT
STATUS:
REFERENCE (other documents): LUST Trust Fund
Cooperative Agreement Guidelines, OSWEK Dir 9650.10,
February 8, 1989
Cost Recovery Policy for the Leaking Underground Storage
Tank Trust Fund, OSWER Dir 9610.10A, May 24, 1994
Leaking Underground Storase Tank Trust Fund State Financial
Management Handbook, Financial Management Division - Fiscal
Policies and Procedures Branch, March 1989
OSWER OSWER OSWER
VE DIRECTIVE DIRECTIVE Dl
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xvEPA
United Stales
Environmental Prottclion
Agency
Office of
Solid Wane and
Emergency Response
DIRECTIVE NUMBER: 9650.10A
TITLE: LUST Trust Flind Cooperative Agreement Guidelines
APPROVAL DATE: ^y 24, 1994
EFFECTIVE DATE: May 24, 1994
ORIGINATING OFFICE: Office of Underground Storage
Tanks
H FINAL
D DRAFT
STATUS:
REFERENCE (other documents): LUST Trust Fund
Cooperative Agreement Guidelines, OSWER Dir 9650.10,
February 8, 1989
Cost Recovery Policy for the Leaking, Underground Storage
Tank Trust Fund, OSWER "Dir 9610.10A; May 24, 1994
Leaking Underground Storage Tank Trust Fund State Financial
Management Handbook, Financial Management Division.- Fiscal
Policies and Procedures Branch, March 1989
OSWER OSWER OSWER
'E DIRECTIVE DIRECTIVE D
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Agency
Washington, DC 20460
OSWER Directive Initiation Request
1. Directive Number
9650.10A
3. Originator Information
Name of Contact Person
John Heffelfinger
Mail Code
5403W
Office
OUST
Telephone Code
703-308-8881
3-Trite LUST Trust Fund Cooperative Agreement Guidelines
4. Summary of Directive (include brief statement of purpose)
This Directive consolidates and updates all previously issued program policy guidelines
for the Leaking Underground Storage Tank Trust Fund. It provides information to assist
states and EPA Regional offices in negotiating, awarding, and overseeing Trust Fund
Cooperative Agreements.
5. Keywords Cooperative Agreement, LUST Trust Fund, Cost Recovery, Underground Storage
Tanks. States. Regions
fPre
6a. Does This Directive Supersede Previous Directive(s)7
b. Does It Supplement Previous Dtrective(s)?
No
No
Yes What directive (number, title)
9650.10
Yes . What directive (number, We)
7. Draft Level
A-SignedbyAA/DAA
B - Signed by Office Director
C - For Review & Comment
D - In Development
8. Document to be distributed to States by Headquarters?
X
Yes
No
This Request Meete OSWER Directives System Format Standards.
9. Signature of lead_Office Directives Coordinator
T e6-c-xvC £vcfu^ / o-\>( /^M^-
Shonee Clark, OUSJT Directive Coordinato^r^
10. Name and Title of Approving Official A \ ' / '^~)
I 1^1^! 1 r f
David W. Ziegele, OUST Office Director! /pc\\JJ\ L^^V^\^
Date
-5"/5V/>y
Date i i
$ PYlvy
EPA Form 1315-17 (Rev. 5-87) Previous editions are obsolete.
OSWER OSWER OSWER O
/E DIRECTIVE DIRECTIVE DIRECTIVE
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OSWER DIRECTIVE 9650.10A
LUST TRUST FUND
COOPERATIVE AGREEMENT GUIDELINES
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF UNDERGROUND STORAGE TANKS
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OSWER DIRECTIVE 9650.10A
TABLE OP CONTENTS
ISSUE SECTION
OVERVIEW OF THE LUST TRUST FUND I
APPLICABILITY OF 40 CFR PART 31 GRANT REGULATIONS II
STATE COST SHARE REQUIREMENTS Ill
ALLOWABLE COSTS IV
TRUST FUND USE AT GOVERNMENT FACILITIES V
SOLVENCY OF OWNERS AND OPERATORS VI
STATE PROGRAM APPROVAL AND COOPERATIVE AGREEMENTS VII
A. Linking of Trust Fund with State Program
Approval Process
B. Relationship of the Trust Fund to EPA's
Transition Strategy
STATE UST PROGRAMS AND COOPERATIVE AGREEMENTS VIII
A. State Capabilities
B. State Certification of Authority
C. State Program Work Plan
D. Federal Oversight
Exhibit 1: Activities Reporting Requirements
for U.S. EPA Office of Underground
Storage Tanks
11
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OSWER DIRECTIVE 9650.10A
•TABLE OP CONTENTS (continued)
ISSUE SECTION
CORRECTIVE ACTION IX
A. Compliance with Corrective Action Regulations
B. Guidance for Conducting Federal-Lead Underground
Storage Tank Corrective Actions
C. State's Priority System for Addressing UST Releases
PUBLIC PARTICIPATION X
STATE'S QUALITY ASSURANCE PROGRAM XI
ADMINISTRATIVE REQUIREMENTS FOR A STATE COOPERATIVE
AGREEMENT APPLICATION XII
COST RECOVERY POLICY FOR THE LEAKING UNDERGROUND STORAGE
TANK TRUST FUND (OSWER DIRECTIVE 9610.10A) APPENDIX A
111
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OSWER DIRECTIVE 9650.10A
I. OVERVIEW OP THE LUST TRUST FUND
\
In October 1986, Congress amended Subtitle I of the
Resource Conservation and Recovery Act (RCRA) to provide EPA, and
States with Cooperative Agreements, new enforcement and
corrective action authorities to respond to actual or suspected
releases from petroleum USTs. Under the amendments, EPA, or
States with Cooperative Agreements, may undertake any of the
following actions, or direct tank owners and operators to do so:
o Test tanks for leaks when a leak is
suspected;
o Investigate a site to evaluate the
source and extent of petroleum
contamination;
o Assess how many individuals may have
been exposed to petroleum contaminants
and the seriousness of exposure, and
estimate resulting health risks;
o Clean up contaminated soil and water;
o Provide safe drinking water to
residents at the site of a tank leak;
and
o Provide for temporary or permanent
relocation of residents.
The 1986 amendments to RCRA also provide a Federal Trust
Fund to finance the cleanup of petroleum releases from
underground storage tanks (USTs). This Trust Fund, financed
through an excise tax of 1/10 of one cent per gallon on motor
fuels, is expected to raise $500 million over a five year period.
However, there are some guidelines that a State must follow
before using Trust Fund dollars. When a leak or spill is
discovered, the States should first seek to identify the tank's
owner or operator and direct him to perform the cleanup at his
expense. A State should only rely on Trust Fund dollars to clean
up a site when they cannot identify a responsible tank owner or
operator who will undertake corrective action properly and
promptly. Even when the Trust Fund is used, tank owners or
operators are liable to the state for costs incurred, and are
subject to cost recovery actions.
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OSWER DIRECTIVE 9650.10A
II. APPLICABILITY OP 40 CFR PART 31 GRANT REGULATIONS
In a joint effort with other Federal agencies, EPA has
recently revised and published common grant regulations that
provide consistency in the administration of grants and
Cooperative Agreements. The revised regulations, promulgated on
March 11, 1988, have an effective date of October 1, 1988.
The common rule, 40 CFR Part 31, published in the Federal
Register on March 11, 1988, supersedes certain EPA general
assistance regulations currently contained in 40 CFR Parts 30 and
33. Specifically, Part 31 is applicable to State and local
governments and Federally recognized Indian tribal governments
and supersedes all regulations pertaining to these entities in 40
CFR Parts 30 and 33. Parts 30 and 33 have been revised to
consist of requirements applicable to grantees other than State
and local governments.
Part 31 is intended to further Federalism principles by
reducing Federal "controls" over State governments. Part 31 will
diminish the Federal role/presence in the States' conduct of
certain LUST Trust Fund related activities because it allows
States to use their own procedures in such areas as procurement
and financial management.
Awards involving FY 89 Trust Fund monies will need to
reference and adhere to the revised grant regulations. EPA's
Grants Administration Division has established the following
general policy regarding the applicability of Part 31:
o Part 31 applies to all Cooperative
Agreements whose budget or project
periods began on or after October 1,
1988;
o Part 31 applies to all amendments of
existing agreements in which all of the
activities in the amendment's scope of
work will be performed after October 1,
1988; and
o Parts 30 and 33 apply to all
Cooperative Agreements and amendments
whose budget or project periods began
before October 1, 1988.
II-l
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OSWER DIRECTIVE 9650.IDA
III. STATE COST SHARE REQUIREMENTS
Policy
In order to comply with Section 9003(h)(7)(B) of Subtitle
I, new or amended Cooperative Agreements that utilize FY 89 Trust
Fund monies must incorporate a minimum 10 percent State cost
share requirement for work done under the Cooperative Agreement.
The cost share requirement applies to FY 89 monies that are
awarded after January 24, 1989 (the effective date of the
"Technical Standards and Corrective Action Requirements for
Owners and Operators of Underground Storage Tanks — Subpart H,
Financial Responsibility"). Awards of Trust Fund Monies prior to
January 24, 1989 are not required to incorporate the cost share
provisions.
Guidance
The State cost share requirement begins with any award of
FY 89 Trust Fund monies after January 24, 1989, the effective
date (not the "compliance" date) of the "Technical Standards and
Corrective Action Requirements for Owners and Operators of
Underground Storage Tanks — Subpart H, Financial
Responsibility." The date of the award is the date on which the
Regioniil Administrator makes a Cooperative Agreement offer to the
State. The cost share requirement does not apply to unspent FY
88 monies which the State may expend after January 24, 1989.
The State cost share percentage should be applied to the
total allowable cost (see Section IV, Allowable Costs) of the
program covered by the State's Cooperative Agreement. State
Cooperative Agreement work plans should reflect a total program
budget, a minimum 10 percent of which will be contributed by the
state. All expenditures under the Cooperative Agreement are
presumetd to be shared on the same percentage basis as the overall
ratio of Federal to State monies under the Cooperative Agreement.
The manner in which States provide their cost share is to
be negotiated with the Region and must be in compliance with the
grant requirements of 40 CFR Part 31. Acceptable methods for
cost sharing include:
o contributions, e.g., staff and equipment; and
o direct, non-Federal funds expended or obligated by
the State, or a political subdivision of the State,
for cost-allowable activities.
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OSWER DIRECTIVE 9650.10A
The amount'"of the State's contribution should be
negotiated in advance and specified in the State's Cooperative
Agreement. Regardless of the source of funds the State uses to
satisfy it cost share requirement, the State's contributions must
be verifiable from its records, in accordance with applicable
grant regulations.
III-2
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OSWER DIRECTIVE 9650.10A
IV. ALLOWABLE COSTS
*»
Policy
Section 9003(h) of RCRA provides that Trust Fund monies
may be used for the following general categories of activities,
both before and after the promulgation of EPA's regulations for
underground storage tanks:
o corrective action;
o enforcement;
o cost recovery;
o exposure assessment;
o provision of temporary and permanent alternate water
supplies; and
o relocation of residents.
These general categories include the following specific
allowable activities:
o emergency response and initial site
hazard mitigation;
o investigation of suspected leaks and
source identification up to the time
that a leak is determined to come from
an unregulated source;
o exposure assessments to determine
potential health effects of a leak and
the establishment of corrective action
priorities;
o development, issuance, and oversight of
enforcement actions directed to
responsible owners/operators;
o cleanup of releases;
o long-term operation and maintenance of
corrective action measures;
o purchase and/or lease of equipment;
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OSWER DIRECTIVE 9650.10A
o recovery of costs from liable tank
owner's and operators; and
o reasonable and necessary administrative
and planning expenses directly related
to these activities.
The Trust Fund may only be used for addressing actual or
suspected petroleum releases from underground storage tank
systems subject to Subtitle I jurisdiction. This includes tanks
that EPA has exempted or deferred from regulation until a later
date in accordance with 40 CFR Part 280. The Trust Fund may not
be used to address releases from tanks that are statutorily
exempt from Subtitle I jurisdiction, although it may be used to
investigate suspected releases up to the time that a leak is
determined to come from a statutorily exempt source.
Allowable activities are limited to actions in response to
an existing or suspected release of petroleum from an UST. Thus,
an inspection and investigation to assess the site of a reported
leak would be an allowable activity, but an inspection conducted
as part of a routine or random inspection scheme would not be
allowable.
In addition, as noted in the Conference Report to the 1986
Subtitle I Amendments, staff or activities that enhance the
general technical or legal capabilities of a State and that are
not directly related to leaking petroleum USTs are not allowable.
Furthermore, Trust Fund money cannot be used to lobby the State
legislature to pass LUST legislation.
Costs incurred by States prior to the award of the
Cooperative Agreement with EPA will not be covered by the Trust
Fund and are not eligible for reimbursement.
Guidance
Alternative Water Supplies:
Temporary or permanent provision of water to protect
human health while waiting for corrective action measures to take
effect is clearly an allowable cost. It is conceivable that, in
some cases, the provision of a permanent alternative water supply
by the State will be necessary, and more cost-effective than
corrective action, relocation, or even extended "temporary"
provision of bottled or trucked-in water. Allowable costs for
permanent water supplies are limited to the initial capital
costs, and do not include operation and maintenance costs of the
system.
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OSWER DIRECTIVE 9650.IDA
As part of their decision-making process, States should
evaluate the cost^effectiveness of providing a permanent water
supply in comparison to other corrective action and clean-up
alternatives. When considering the cost of providing permanent
alternative water supplies the State should consider both the
total cost per site as well as the cost per affected household.
Relatively high total costs may be reasonable if large numbers of
households are affected.
Relocation of Residents:
Temporary relocation of residents is an allowable cost
where it is necessary to protect human health or where corrective
action activities cannot be undertaken safely while residents
remain in their homes. States should evaluate the cost
effectiveness of this measure versus other measures, such as a
temporary water supply or in-house air filtration or venting
units.
Permanent relocation should be considered an allowable
cost only under extreme circumstances in which permanent
relocation is the only available option for protecting human
health or is the most cost-effective option. If permanent
relocation must be undertaken, States must comply with the
Uniform Relocation Act (42 U.S.C. 4610 et. seq.) regarding
property acquisition and relocation of residents.
Operation and Maintenance:
Operation and maintenance (O&M) costs for corrective
action measures, other than permanent water supplies, are
allowable costs under the Trust Fund. States will use discretion
in deciding whether to fund O&M costs out of the Trust Fund or
through other means (e.g., responsible party contributions and
State or local funds).
States will be responsible for setting priorities between
initiating cleanups at new sites or continuing O&M at old sites.
EPA's commitment is limited to providing money only for the work
identified in the Cooperative Agreement, and not to fully fund
sites where the State may choose to continue O&M. Further, EPA
cannot commit monies to States beyond the budget period.
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OSWER DIRECTIVE 9650.10A
Purchase or Lease of Equipment:
Trust Fund monies may be used to purchase equipment if the
equipment is necessary for LUST Trust Fund corrective action or
enforcement activities. EPA generally approves equipment
purchases through the award of Cooperative Agreements. Planned
purchases of equipment should be included in the State's proposed
work plan, negotiated and agreed to by EPA and the State, and
reflected in the "Equipment" budget item under the Cooperative
Agreement. Thus, EPA does not anticipate the need for routine
approval by EPA of individual equipment purchases made by the
State that are reflected in the Cooperative Agreement budget.
However, any purchases of equipment that represent a substantial
change from the approved budget or work plan in the Cooperative
Agreement require prior approval from EPA.
Where corrective action equipment is purchased for use at
a single site, its cost should be attributed only to that site.
Equipment may be used at multiple sites, however. Where this
occurs, the costs of equipment that is over $10,000 should be
allocated among sites where the equipment is used for corrective
action. An exception to this rule may be made for equipment used
at a large number of sites (e.g., response vehicles, field test
equipment) for which it would be impractical to allocate costs to
individual sites.
States should consult EPA's grant regulations for guidance
in final disposition of equipment and supplies purchased with
Trust Fund monies.
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OSWER DIRECTIVE 9650.IDA
V. TRUST FUND USE AT GOVERNMENT FACILITIES
Policy
The Trust Fund ordinarily will not be used to address
petroleum UST releases from government facilities. Governmental
entities should be expected to meet their own obligations of
addressdng environmental hazards for which they are the source.
The Trust Fund may be used if necessary, however, at
Federal, state, or local government UST facilities (subject to
Subtitle I jurisdiction) in the following limited situations:
o emergencies, including the mitigation of imminent
hazards, and
o site investigations, enforcement actions, and
oversight of responsible party (RP)-lead cleanups.
The Trust Fund may not be used for cleanups at Federal or State
UST facilities. The Trust Fund may, however, be used for
cleanups at local government facilities, if the State determines
that the local entity is incapable of carrying out corrective
action properly. This policy does not convey additional
authorities to the State with regard to access to governmental
facilities nor is it intended to alter State policies with regard
to intergovernmental relations.
Guidance
Use of the Trust Fund for emergencies and mitigation of
imminent hazards is allowable because human health and the
environment should not be endangered if actions can be taken to
minimize it. The State, however, should pursue recovery of such
expenditures from the responsible government entity.
As with other RPs, use of the Trust Fund for site
investigations, enforcement, and oversight of government entity-
lead cleanups results in desirable leveraging of Trust Fund
monies. Cost recovery of these expenditures should be consistent
with the. cost recovery policy contained in Appendix A of these
guidelines.
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OSWER DIRECTIVE 9650.10A
The Trust Fund may not be used for cleanups at Federal or
State UST facilities. EPA considers these entities (by
definition) to have the requisite financial strength to cover the
costs of taking corrective action and compensating third parties
in the event of a release. The State should require these
entities to undertake and pay for the cost of cleanup, and should
take enforcement action if necessary.
The Trust Fund may be used for cleanups at local
government facilities, if the State determines they are incapable
of carrying out corrective action properly, and if the State
decides they are high priorities compared to other eligible
sites. The State should treat these entities as they would other
responsible parties. The State should first try to have the
government entity undertake and pay for the cleanup, and expect
the entity to have the required level of financial assurance. If
the Trust Fund is used, cost recovery should follow.
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OSWER DIRECTIVE 9650.10A
VI. SOLVENCY OP OWNERS AND OPERATORS
Policy
Solvent responsible parties (RPs) are expected to
undertake and pay for corrective action, either voluntarily or in
response to corrective action orders. The level of financial
responsibility required to be maintained by owners and operators
is not a limitation of their liability. When a release is
discovered, states should first seek to identify the tank's owner
or operator and direct him to perform the cleanup at his expense.
Where time and circumstances permit, States should pursue RP
cleanups through enforcement mechanisms. States may rely on the
Trust Fund for cleanups when they cannot identify an RP who will
undertake action properly and promptly.
Solvency becomes a consideration when undertaking cost
recovery. With regard to the financial condition of responsible
parties, solvency is defined as the ability to pay financial
obligations as they become due, including the costs of corrective
action and cost recovery. In cost recovery situations, States
should view solvency in terms of how much an RP can afford to pay
without becoming insolvent. In pursuing cost recovery, States
should not impair the ability of RPs to continue in business if
the RP complied with financial responsibility requirements and
there was no negligence or misconduct by the responsible party.
Guidance
Although Congress intended that solvent owners and
operators take responsibility for releases from their tanks, if
the State determines that an RP is incapable "... of carrying out
such corrective action properly," it may use Trust Fund monies to
take corrective action. Several conditions may give rise to this
determination. For example, an RP may refuse to comply with a
request or order to take corrective action, or the RP may claim
he cannot afford the cost of cleanup. Another example is when
the costs of corrective action to be provided by the RP exceed
the required level of financial responsibility and the State
determines that expenditures from the Trust Fund are necessary to
assure an effective corrective action. If such sites are among
the State's priorities, the Trust Fund may be used for cleanup,
with a more detailed analysis of the RP's ability to pay
performed later, as part of the cost recovery process.
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OSWER DIRECTIVE 9650.10A
For cost recovery, when a State is deciding whether and
for what dollar anrount to pursue the RP, more scrutiny should be
given to solvency. In these cases, the State should view
solvency in terms of how much an RP can afford to pay without
becoming insolvent. (Pursuant to RCRA Section 9003 (h)(11),
however, States may not consider the RP's solvency, and are
directed by the statute to seek full cost recovery if the RP has
not complied with applicable financial responsibility
requirements.) The State may view the RP's ability to pay in
terms of a lump sum payment or on an installment basis, depending
on State preference.
The rationale for not forcing RP's to become insolvent is
found in the Congressional Conference Report for the Trust Fund
legislation:
"A full cost recovery is not intended where the owner or
operator has maintained financial responsibility as
required. . . and the financial resources of the owner or
operator (including the insurance or other methods of
financial responsibility which was maintained) are not
adequate to pay for the costs of a response without
significantly impairing the ability of the owner or
operator to continue in business."
This provision is not a legal defense for RPs against
further cost recovery where deemed appropriate, but it provides
an indication of Congressional intent, particularly when small
businesses are concerned.
See Appendix A, the LUST Trust Fund cost recovery policy,
for additional information.
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OSWER DIRECTIVE 9650.10A
VII. STATE PROGRAM APPROVAL AND COOPERATIVE AGREEMENTS
A. Linking of Trust Fund with state Program Approval Process
Policy
States are expected to make reasonable progress toward
submitting a completed application to EPA for approval of their
UST prevention, corrective action, and financial responsibility
programs under Section 9004 of RCRA. A State's success in making
reasonable progress toward submitting a complete application may
be grounds for increasing State access to the Trust Fund.
Guidance
The long-term objectives of the Trust Fund clean-up and
the UST regulatory programs are to protect human health and the
environment from releases caused by leaking USTs. Cleaning up
releases using the Trust Fund is an immediate need, but by itself
is a short-term and temporary solution. The long-term solution
is for States to develop prevention programs which, over time,
will result in fewer leaking tanks. States must also develop
financial assurance requirements or programs that will provide
funds for future cleanups.
Regions are encouraged to use the Trust Fund as an
incentive for States to develop prevention programs and apply for
State program approval. Regions should develop criteria to
measure and evaluate State progress. They should consider the
degree of progress in allocating Trust Fund monies to States.
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OSWER DIRECTIVE 9650.10A
VII. STATE PROGRAM APPROVAL AND COOPERATIVE AGREEMENTS
B. Relationship of the Trust Fund to EPA's Transition strategy
Policy
Following promulgation of EPA's corrective action
regulations for underground storage tanks, States with
Cooperative Agreements will be asked to carry out activities to
implement the Federal regulations during the transition period
prior to State program approval. There are no plans for EPA to
conduct corrective action activities for petroleum UST releases
in these States, except in emergency situations where a State
requests EPA involvement in accordance with Section IX.B.,
Guidance for Conducting Federal-Lead Underground Storage Tank
Corrective Actions.
Guidance
EPA has developed a Transition Strategy (OSWER Directive
9610.5, FY 1989-1990 Transition Strategy for the Underground
Storage Tank Program) and Transition Tasks List (OSWER Directive
9610.5-1) that identify roles for EPA and the. States during the
period of time between the effective date of the Federal UST
regulations and the dates State programs are authorized by EPA to
operate in lieu of the Federal program. This strategy emphasizes
program implementation by State and local programs, with Federal
resources in a supporting role. The transition period will be
characterized by the continued development of State and local
programs.
Activities that States carry out under their Trust Fund
Cooperative Agreements will provide implementation of the Federal
corrective action regulations during the transition period. The
minimum site-specific activities necessary to implement the
Federal corrective action program for petroleum USTs, as
specified in 40 CFR Parts 280.60-280.67, are allowable costs for
States to incur using the Trust Fund. It should be noted,
however, that conduct of these transition period tasks in no way
implies that a State's own program meets the "no less stringent"
or "adequate enforcement" requirements of the State program
approval process under Section 9004 of RCRA.
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OSWER DIRECTIVE 9650.10A
VIII. STATE UST PROGRAMS AND COOPERATIVE AGREEMENTS
«
A. State capabilities
Policy
The legislation establishing the UST Trust Fund requires
that in order for States to participate in the program, EPA must
determine that they have "the capabilities to carry out effective
corrective action and enforcement activities" to protect human
health and the environment (Section 9003(h)(7)(A)(i)).
The State must have or obtain both the authority and
capability to carry out effective corrective action and
enforcement activities. The State must also establish corrective
action and enforcement policies and procedures that can be
applied to known or suspected releases from regulated underground
storage tanks.
Guidance
EPA Regions will evaluate State capabilities as part of
the Cooperative Agreement negotiating process. EPA's intent is
to be flexible in its determination of capability. States must
certify that they have the authority to carry out enforcement
activities, corrective actions, and cost recovery or provide a
schedule and plans for obtaining the necessary authority.
However, a State does not have to have authority to conduct all
the activities of the LUST Trust Fund Program in order to receive
a Cooperative Agreement. A State can receive a Cooperative
Agreement if it certifies that it has authority to conduct the
activities committed to in the work plan.
The Regions will evaluate the States' existing or
potential capabilities in these and other relevant areas. Given
the widely varying level of development of State UST cleanup
programs, the capabilities that will be expected immediately
versus those that can be developed over time will vary from State
to Stats.
Enforcement:
To demonstrate its enforcement capabilities, the State
should describe its existing capabilities in this area, or a plan
for obtaining such capabilities in the Cooperative Agreement.
The description should include, at a minimum, identification of
existing or potential staff capabilities, technical as well as
legal, to pursue enforcement activities, and that staff's
previous experience in UST-related enforcement activities, as
well as ownership of or access to necessary equipment or
facilities.
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OSWER DIRECTIVE 9650.10A
The State should have a set of clearly defined enforcement
policies and procedures for addressing releases from petroleum
USTs, or a plan for developing such policies and procedures. The
policy and procedures should reflect the underlying philosophy of
the Trust Fund to first seek corrective action by the responsible
party, unless there is an imminent and substantial endangerment
of human health and the environment. EPA will consider items
such as proper identification of releases and responsible
parties, proper documentation of enforcement actions, and timely
and appropriate enforcement activity, in evaluating the State's
enforcement policy and procedures.
The State may use its best professional judgment and
enforcement discretion as long as they result in an effective
enforcement program.
corrective Action:
The State should describe its existing corrective action
capabilities, or a plan for establishing such capabilities. The
description should include, at a minimum, the identification of
existing or potential staff capabilities, and ownership of or
access to necessary equipment or facilities. The description may
include capabilities such as:
o Emergency response and hazard mitigation;
o Investigation of suspected leaks and identification
of the source;
o Comprehensive site investigations;
o Exposure assessments to determine potential health
effects;
o Provision of alternative water supplies;
o Temporary or permanent relocation of residents;
o Development of corrective action plans; and
o Site cleanup, including removal, treatment, and
disposal of surface and subsurface contamination.
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OSWER DIRECTIVE 9650.10A
Corrective .actions are often carried out by contractors,
at the direction of the State. As part of its capability
discussion, where applicable, the State should describe its plan
for securing the services of such contracting firms. This plan
should include types of activities, estimated funding, and time
frame for obtaining contractor services.
The State should describe its corrective action policies
and procedures, or plans, with milestones, for developing such
policies and procedures. This may include such items as a
generic: response plan or decision-making framework for corrective
action, criteria for provision of alternative water supplies or
relocation of residents, exposure assessment procedures,
procedures for evaluation and selection of remedies, and any
cleanup standards that the State may wish to impose. The State's
corrective action policy should consider the relationship between
corrective actions that may be taken and the need to protect
human health and the environment.
Cost Recovery:
See Appendix A — Cost Recovery Policy for the Leaking
Underground Storage Tank Trust Fund.
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OSWER DIRECTIVE 9650.10A
VIII. STATE UST PROGRAMS AND COOPERATIVE AGREEMENTS
B. State Certification of Authority
Policy
There are three ways that a State can certify that it has
legal authority to carry out the activities committed to in the
work plan. First, the State can certify that it has specific
authorities similar to Section 9003(h) of RCRA. Secondly, the
State can certify that it has general state law authority
sufficient to carry out the work plan activities, (e.g..
authority to protect public health, to protect the environment,
or to protect any State interest). Thirdly, the State can
certify that it will use the authorities in RCRA Section 9003(h)
to perform and require corrective action and Section
9003(h)(6)(A) to perform cost recovery. In making this type of
certification, the State must assure that use of the RCRA
authorities will not conflict with State law.
Guidance
In view of the State's expertise in interpreting State
law, EPA's role in review of the certification is not to "second
guess" a State interpretation of State law but rather only to
assure that major legal issues have not been overlooked.
The attorney general, or someone designated by the
attorney general, should either sign or concur in the
certification , preferably before the Cooperative Agreement is
awarded. If a signature or concurrence would significantly delay
the awarding of the Cooperative Agreement (i.e.. there are no
other issues holding up the award), it is acceptable for someone
other than the AG/designee to sign the certification. In this
case, the agreement must contain a special condition requiring
submission of the AG/designee's concurrence to EPA within a
reasonable time, not to exceed 120 days after the award of the
agreement. The person who signs at the time of award could be:
1) the head or general counsel of the State environmental agency;
2) the head of the division within the environmental agency that
has direct responsibility for administering the program; 3) the
head of any separate entity that may be responsible for
administering the program, such as the director of the State
water control board.
* The assumption is that the Attorney General is the
ultimate interpreter of State law in the executive branch of the
State. In at least one State, however, the Attorney General is
primarily responsible for litigation, while there is also a
General Counsel to the Governor, who has responsibility for
advising all executive branch agencies on the scope of their
authority. In this situation, the State General Counsel could
substitute for the Attorney General.
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OSWER DIRECTIVE 9650.10A
If the concurrence of the AG/designee is not obtained
within the time specified in the Cooperative Agreement, payments
of Trust Fund money may be withheld, consistent with the
requirements of 40 CFR Part 31.
A State should notify EPA promptly of any reduction in its
authorities (e.g., successful challenge to its State statutory
authority) that may significantly inhibit its ability to carry
out the activities committed to in the Cooperative Agreement.
Amendment of the Cooperative Agreement or recertification may be
necessary in such circumstances.
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OSWER DIRECTIVE 9650.10A
VIII. STATE UST PROGRAMS AND COOPERATIVE AGREEMENTS
C. State Program Work Plan
States are to submit a program work plan to EPA, which is
commensurate with the level of development of the State's
corrective action program for petroleum USTs. The work plan
shall include a budget and a description of proposed activities
and outputs to be accomplished with Trust Fund monies during the
State's Cooperative Agreement period. The budget should include
a breakdown of associated costs of each planned activity and
output. A proposed schedule for accomplishing each activity
should be included. Activities may include, but are not limited
to those mentioned in the following sections.
1. Core Program
Where certain basic program items do not currently exist,
the Cooperative Agreement may provide for their development.
Examples include:
o Develop a system for assigning priorities to sites;
o Establish enforcement policies and procedures;
o Secure contractor services to perform corrective
action;
o Establish cost recovery policies and procedures;
o Establish a site-by-site tracking system for
activities, decisions, and site-specific costs;
o Develop public participation procedures; and
o Develop quality assurance practices.
2. Site-Specific Activities
The Cooperative Agreement should include a description of
and associated budget for those activities that States plan to
undertake at sites. It may include an estimate of the number of
sites at which the State intends to undertake the various
specific activities, and/or identification of individual sites at
which specific work is contemplated. Examples of site-specific
activities include:
o Emergency response;
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OSWER DIRECTIVE 9650.10A
o Source identification;
«%
o Site investigation;
o Exposure Assessment;
o Soil and ground-water remediation;
o Provision of alternate water supplies;
o Resident relocation (temporary or permanent);
o Treatment, storage, and/or disposal of wastes and
recovered materials; and
o Oversight of cleanups, including those performed by
responsible parties.
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OSWER DIRECTIVE 9650.10A
VIII. STATE UST PROGRAMS AND COOPERATIVE AGREEMENTS
«.
D. Federal Oversight
Federal Oversight
EPA will oversee State programs, both formally and
informally, in order to:
o Ensure adequate environmental protection through
sound administration and use of the Trust Fund;
o Enhance State capabilities through effective
communication, evaluation, and support; and
o Describe and analyze the progress of programs on a
regional and national scale.
EPA's Regional staff will have the primary responsibility
for oversight of State programs. Regions and States should
maintain a continuous dialogue so that States can communicate
problems encountered in meeting their commitments and Regions can
be responsive to State needs.
The Regions will formally review State programs at least
once a year. They will rely on required reports, State records,
and visits to the States to identify the successes and problems
encountered in State programs. Formal program reviews should
focus on overall performance rather than individual actions. To
the greatest possible extent, reviews should be based on
objective measures, standards, and expectations that are agreed
to in advance in the Cooperative Agreement.
Effective oversight entails the joint analysis of
identified problems to determine their nature, causes, and
appropriate solutions. It also requires that the Regions
identify and facilitate the transfer of successful approaches to
other States and Regions. Finally, information and insights
gathered in oversight activities should be used to refine
subsequent Cooperative Agreements.
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OSWER DIRECTIVE 9650.10A
Program Oversight Strategy
In FY 89, EPA began to implement a formal program
oversight system. The program oversight focuses on balancing
oversight of State UST programs with service to the State's
needs. The types of reports that will continue to be part of
EPA's oversight process are summarized below.
1) Quarterly Progress Reports, including:
a) Exception Reports;
b) Trust Fund Usage Forecasts; and
c) Financial Reports.
In quarterly progress reports for State Cooperative
Agreements, EPA is requesting that each State
submit data on activities that are supported by
Trust Fund monies as well as comparable information
on the accomplishments of the State's program as a
whole. Exhibit 1 lists the data elements that are
contained in the quarterly progress reports. The
required forms and instruction for the quarterly
progress reports are issued separately from these
guidelines, and will be updated and revised as
necessary in the future.
All States should report in a timely and accurate fashion
the data needed for the quarterly activities report and
the Strategic Targeted Activities for Results System
(STARS) report for the EPA UST program. Regions will need
to relay this data to OUST/HQ within 10 working days of
the end of each Federal fiscal quarter. Regions and
States may develop reporting schedules that allow them to
meet these deadlines.
2) Financial Status Report SF 269 or 269A (year end),
and Federal Cash Transactions Report SF 272
(quarterly).
The Office of the Comptroller is responsible for issuing
Agency financial policies and procedures for tracking the
LUST Trust Fund in the Agency's Financial Management
System (FMS). State UST programs are required to comply
with the provisions of the Leaking Underground Storage
Tank Trust Fund State Financial Management Handbook (March
1989) .
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OSWER DIRECTIVE 9650.10A
Exhibit 1
«
ACTIVITIES REPORTING REQUIREMENTS FOR U.S. EPA OFFICE OF
UNDERGROUND STORAGE TANKS
1. Number of Confirmed Releases
2. Number of Emergency Responses Taken
3. Number of Sites Where Enforcement Actions Taken to Compel
Cleanup
4. Number of Sites Where Cost Recovery Initiated
5. Site Cleanups for Petroleum Releases—Initiated
a. Responsible Party-lead
b. State-lead with Trust Fund money
c. State-lead with no Trust Fund money
6. Site Cleanups for Petroleum Releases—Completed
a. Responsible Party-lead
b. State-lead with Trust Fund money
c. State-lead with no Trust Fund money
7. Exceptions Report (Identify by site where:)
a. State plans to provide permanent alternative water
supply
b. State plans to permanently relocate residents
8. Forecasting Trust Fund Use;
Number of Sites with Confirmed Releases Where:
a. Owner/Operator has been identified
b. Owner/Operator is insolvent/incapable of conducting
timely clean-up
c. Responsible Party search not completed
d. Search for Responsible Party unsuccessful
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OSWER DIRECTIVE 9650.10A
EXHIBIT l (cont'd)
ACTIVITIES REPORTING REQUIREMENTS FOR U.S. EPA OFFICE OF
UNDERGROUND STORAGE TANKS
9. Financial Report
a. State plans to spend over $100,000 of Trust Fund
money at site; include amount
b. State has obligated over $100,000 of Trust Fund
money at a site; include amount
c. State actually spent over $100,000 of Trust Fund
money at a site; include amount
d. For any site, State reached a cost recovery
settlement; include amount
e. For any site, cumulative cost recovery payments
received; include amount
f. Optional: Aggregate State dollars outlayed for site
responses
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OSWER DIRECTIVE 9650.10A
IX. CORRECTIVE ACTION
\
A. Compliance with Corrective Action Regulations
Policy
Corrective actions taken after the effective date of the
Federal corrective action regulations (40 CFR Parts 280.60-
280.67) must be performed in a manner that is consistent with the
substantive requirements of the Federal regulations.
Guidance
This policy pertains to the actual performance of UST
cleanups. It is not intended to supplant the State program
approval process for corrective action. For example, States need
not have, at time of award, their own statutes and regulations in
place that are no less stringent than the Federal regulations.
Rather, States need to assure that the actual cleanups performed,
either by RPs or the State, reflect the substantive requirements
of the Federal corrective action regulations, until approval of
the State's program to operate in lieu of the Federal program.
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OSWER DIRECTIVE 9650.10A
IX. CORRECTIVE ACTION
B. Guidance for Conducting Federal-Lead Underground storage
Tank Corrective Actions
Policy
It is EPA's policy that, except in rare circumstances,
Fund-financed responses at underground storage tank petroleum
releases will be conducted by States under Cooperative Agreement
with EPA. Most states will have broad programmatic Cooperative
Agreements to address emergency response and perform cleanups.
In the absence of such agreements, the Region and State should
develop site-specific Cooperative Agreements under which the
State will conduct corrective actions at individual sites. EPA
will undertake a corrective action only in instances where:
o there is a major public health or environmental
emergency;
o the State is unable to respond; and
o no responsible party is able or willing to provide
an adequate and timely response.
Federal-lead corrective action will be limited to stabilization
of the immediate situation, with the expectation that further
cleanup will be conducted by the State under an appropriate
Cooperative Agreement.
In addition to the criteria presented above, Federal-lead
response should also depend on the existence of one or more of
the following conditions indicative of a major public health or
environmental emergency:
o The release poses an immediate and substantial
threat of direct human, animal, or food chain
exposure to petroleum;
o The release poses an immediate threat of fire or
explosion;
o The release poses an immediate and substantial
threat to public drinking water supplies; or
o The release immediately threatens a significant
population or substantial amounts of property, or
poses substantial threats to natural resources.
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OSWER DIRECTIVE 9650.10A
Obtaining Approval For Federal Response:
As specified in the OSWER Directive 9360.0-16A, Guidance
for Conducting Federal-Lead Underground Storage Tank Corrective
Actions. Federal UST corrective actions that initially cost over
$250,000, and ceiling increases that bring the cost of an action
over $250,000, require approval of the Assistant Administrator
(AA), Office of Solid Waste and Emergency Response (OSWER). The
Office Director (OD) of the Office of Emergency and Remedial
Response (OERR) will approve actions that initially cost up to
$250,000 and ceiling increases that bring the cost of an action
up to $250,000, with concurrence from the OD, Office of
Underground Storage Tanks (OUST). In addition, Regional
Administrators (RAs) may approve actions costing up to $50,000 in
acute, imminently life-threatening situations where response must
be initiated before Headquarters can be contacted. This
authority may be redelegated to Division Directors and On-Scene
Coordinators (OSCs).
Depending upon the nature of the emergency that exists,
response time requirements, and other relevant circumstances,
either a formal written approval process or an oral process (with
written follow-up) should be implemented. Headquarters approval
must be obtained prior to initiating corrective action whenever
possible. No Federal-lead corrective action will be approved
unless an appropriate request is received from the State.
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OSWER DIRECTIVE 9650.10A
IX. CORRECTIVE ACTION
C. State's Priority System for Addressing UST Releases
Policy
The State will ensure that a priority system for
addressing UST petroleum release sites is established and
maintained which incorporates the two priorities set forth in
Section 9003(h) of RCRA. These priorities are:
o releases which pose the greatest threat to human
health and the environment; and
o sites where the State cannot identify a solvent
owner or operator of the tank who will undertake
action properly.
The Cooperative Agreement will include a description of this
system or a schedule, with milestones, for developing one.
Guidance
The purpose of the State priority system requirement is to
ensure that sites addressed with Trust Fund monies provide the
greatest impact on protection of human health and the environment
and respond where private sector resources are inadequate. The
system does not have to be extensive, complex or numerical in
nature. Instead, it can use readily available information to
establish broad, general classes of priority. States may address
the "threat to human health and environment" criteria by
considering factors such as total population exposed, proportion
of the population affected in a community, number of drinking
water wells contaminated, proximity to a major aquifer, and
impact on sensitive populations or environmental areas. States
also should develop methods for establishing capability and
solvency of owner/operators.
This requirement does not necessarily presume the need to
rank all UST releases in the State. Rather, it is a priority
system or scheme that should be used as a screening device to
assure that sites considered to be addressed with Trust Fund
monies are within the higher priority classes established by the
State.
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OSWER DIRECTIVE 9650.10A
X. PUBLIC PARTICIPATION
* *
Policy
Section 7004(b)(1) of RCRA requires that public
participation be provided for and encouraged by the States. In
accordance with this requirement, the State will take lead
responsibility for public notices, public meetings, and other
public participation activities that are related to State actions
funded by the LUST Trust Fund. Further, where corrective action
is undertaken, public participation activities must reflect the
public participation requirements of the Federal corrective
action regulations, 40 CFR Part 280.67.
The State also will have or will develop a public
participation policy for the State's LUST Trust Fund program.
The Cooperative Agreement will include a statement of this policy
or a schedule for developing one.
Guidance
The purpose of the requirement for public participation is
to promote two-way communication between the implementing agency
and the affected public by:
o Facilitating public understanding of State response
procedures and actions; and
o Encouraging public input into State response
decisions and schedules.
It is EPA policy that public participation activities be
appropriate to the circumstances of a release.
The States may address the public participation
requirement by developing a policy for public involvement that
recognizes the nature of the Trust Fund program, that is,
relatively numerous, short-term and small-scale responses. This
is in contrast to programs involving far more complex facilities
and decision making such as the RCRA Subtitle C permitting
program for hazardous waste facilities, or the Superfund remedial
action program. Also, the State should consider the public's
willingness to allow emergency actions without prior
consultation, but understand that the public may demand
information on and input into long-term responses to health
threats. Thus, a State's public participation policy should be
based on the severity of the threat to human health and the
environment posed by a release, the scale and duration of the
response, and the level of public interest.
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OSWER DIRECTIVE 9650.10A
At a minimum, the State's public participation policy must
reflect: the requirements of 40 CFR Part 280.67. For each
confirmed release that requires a Corrective Action Plan (as
directed by the State), the State must notify the public and
provide access to site release information. The State must also
provides public notice if implementation of the Corrective Action
Plan does not achieve the established cleanup levels and the
State is considering terminating the plan.
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OSWER DIRECTIVE 9650.10A
XI. STATE'S QUALITY ASSURANCE PROGRAM
* «
Policy
The State will develop and implement quality assurance
practices in accordance with.EPA's Uniform Administrative
Requirements for Grants and Cooperative Agreements, 40 CFR Part
31.45. The regulation requires the development and
implementation of quality assurance practices that will "produce
data of quality adequate to meet project objectives and to
minimize loss of data due to out-of-control conditions or
malfunctions."
Guidance
The purpose of a quality assurance (QA) program is to
ensure that procedures for data collection and analysis are
appropriate for the uses of that data, and, in particular, for
environmentally related measurements, to provide data that are
scientifically valid, defensible, and of adequate and known
precision and accuracy.
Because the underground storage tank program deals with a
known substance (petroleum), quality assurance procedures and
methodologies normally should not have to be as extensive or as
complex as those for a program where the pollutants can be of
many types, often initially unknown. In the vast majority of
situations, as opposed to the Superfund remedial action program,
UST cleanups will deal with known petroleum materials and
established procedures for corrective action. Accordingly, the
details of the State's QA procedures should be appropriate to the
circumstances of the releases for which the QA procedures will be
applied, and should be designed to meet State program objectives.
For States desiring additional information, guidance on
quality assurance is provided in EPA document QAMS-004/80;
"Guidelines and Specifications for Preparing Quality Assurance
Program Plans" (EPA 600/8-83-024). This is available from the
National Technical Information Service, NTIS Publication No.
PB 83-219667.
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OSWER DIRECTIVE 9650.10A
XII. ADMINISTRATIVE REQUIREMENTS FOR STATE COOPERATIVE AGREEMENT
APPLICATION"'
This section summarizes the basic administrative
requirements for a State Cooperative Agreement application. The
regulations discussed in this section are:
A. Nondiscrimination in EPA Assistance Programs - 40
CFR Part 7;
B. Intergovernmental Review - 40 CFR Part 29;
C. Uniform Administrative Requirements for Grants and
Cooperative Agreements to State and Local
Governments - 40 CFR Part 31; and
D. Debarment and Suspension under EPA Assistance
Program - 40 CFR Part 32.
The discussion that follows provides a brief description of the
requirements contained in each of the above regulations that are
most pertinent to Trust Fund Cooperative Agreements. For
additional guidance and a comprehensive review of EPA's
administrative requirements for assistance under a Cooperative
Agreement, refer to EPA's Assistance Administration Manual
(available through the EPA Grants Administration Division).
A. NONDISCRIMINATION IN EPA ASSISTANCE PROGRAMS - 40 CFR PART 7
Prohibits discrimination based on race, color, sex, or
handicap. Requires applicants to submit an assurance of non-
discrimination (compliance with Part 7) with a Cooperative
Agreement application. The current Part 7 has incorporated the
require»ments previously under Part 12 (The Clean Water Act) .
B. INTERGOVERNMENTAL REVIEW - 40 CFR PART 29
Gives States the option of setting up a State process to
review and comment upon applications for Federal assistance. May
involve comment by State, area-wide, or local governmental units.
EPA must respond to comments. Requires 60 day comment period
before award. Part 29 implements Executive Order 12372.
C. UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND
COOPERATIVE AGREEMENTS TO STATE AND LOCAL GOVERNMENTS
Provides numerous basic requirements concerning application
for award and management of assistance agreements. The most
relevant of these, at this stage of program development are:
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OSWER DIRECTIVE 9650.10A
31.20 Provides that States expend and account for grant
funds* in accordance with State laws and procedures
for expending and accounting for its own funds;
31.21 Discusses methods of making payments to recipients;
31.22 Discusses applicable cost principles and limitations
on use of Federal funds;
31.23 Discusses period of availability of funds;
31.24 Discusses State match and cost sharing provisions;
31.25 Discusses use of program income (this section is
particularly relevant to cost recoveries of Trust
Fund expenditures);
31.32 Specifies that a State will use, manage, and dispose
of equipment in accordance with State laws and
procedures;
31.36 Specifies that for procurement, a State will follow
the same policies and procedures it uses for
procurements from its non-Federal funds;
31.40 Details grantees responsibility to monitor grant and
subgrant supported activities and report program
performance;
31.41 Provides basic requirements for financial reports.
Reports may be required no more frequently than
quarterly, per OMB Circular. Standard forms for
Financial Status Reports (SF-269 or SF-269A) must be
submitted to EPA within 90 days after the end of the
budget period. Final reports are due 90 days after
the expiration or termination of the Cooperative
Agreement; and
31.45 Discusses Quality Assurance requirements.
D. DEBARMENT AND SUSPENSION UNDER EPA ASSISTANCE PROGRAMS -
40 CFR PART 32
Provides rules for suspension and debarment of contractors
from utilization under EPA assistance programs (also direct
procurement). If a contractor is suspended or debarred, he may
not participate in an EPA assistance program. EPA's Grants
Administration Division maintains a list of such contractors.
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OSWER DIRECTIVE 9650.10A
LUST TRUST FUND
COOPERATIVE AGREEMENT GUIDELINES
APPENDIX A
Cost Recovery Policy for
the Leaking Underground Storage Tank Trust Fund
(OSWER Directive 9610.10A)
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