oEPA
               United States
               Environmental Protection
               Agency
Office of
Solid Waste and
Emergency Response
                DIRECTIVE NUMBER: 9650.6-1

                TITLE'Supplemental Requirements for LUST Trust
                   "•Cooperative Agreements
                APPROVAL DATE:

                EFFECTIVE DATE:
 07/27/87


 07/27/87
                ORIGINATING OFFICE: Office of Underground Storage
                              Tanks (OUST)
                0 FINAL

                D DRAFT

                  STATUS:
                REFERENCE (other documents):
                 OSWER Directive 9560.6 - Guidelines for UST Trust Fund
                 Cooperative Agreements
  OSWER      OSWER      OSWER
VE   DIRECTIVE   DIRECTIVE   Dl

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           United States Environmental Protection Agency
                 Washington, DC 20460
OSWER Directive Initiation Request
                                                                 1. Directive Number
                                                                  9650.6-1
                                2. Originator Information
   Name of Contact Person
    J.  Heffelfineer/C. Mooar
                   Mail Code
                    WH-562A
Office
  OUST
Telephone Code
 382-2199/382-7970
   3. Title
      Supplemental Requirements for  Initial LUST Trust Fund Cooperative Agreements
   4. Summary of Directive (include brief statement of purpose)
      This directive provides supplemental information necessary for State/EPA negotiation
      of  initial cooperative agreements under the  LUST Trust Fund.
   5. Keywords
      Cooperative Agreements, States, Regional Offices
   6a. Does This Directive Supersede Previous Directive(s)?    \~%~\
    b. Does It Supplement Previous Directive(s)?
                                          No
                                          No
                                         What directive (number, title)
                                    Yes   What directive (number, tiM, 2650.1   ,
                                         Guidelines for UST Trust Fund
                                    	Cooperative Agreements	
   7. Draft Level
        A - Signed by AA/DAA
              B - Signed by Office Director
       C - For Review & Comment
         D - In Development
8. Document to be distributed to States by Headquarters?


Yes
X

No
This Request Meets OSWER Directives System Format Standards.
9. Signature of Lead Office Directives Coordinator
Betty^R. Arnold, Program Analyst, OUST s~-Zj'fl£~ <^& tfA^^Jw
* ^ 1 *7 ^ ^i-t^txvt^" ^ fff f O'L' fc^t**?^A_-*\
10. Name and\fitle of AJbproviMj Official
J. Win sl&^klrt^rH!'1'' Assistant Administrator,
y
OSWER
Date
/ /
/*/£"// 8"?
Date / /
   EPA Form 1315-| *) (Rev. 5-87) Previous editions are obsolete.
OSWER           OSWER                OSWER               O
       DIRECTIVE          DIRECTIVE        DIRECTIVE

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           UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                      WASHINGTON. D.C. 20460
                           JUL  27 iS37
                                                       OFFICE OF
                                              SOLID WASTE AND EMERGENCY RESPONSE
MEMORANDUM

SUBJECT:  Supplemental Requirements for LUST  Trust  Fund
          Cooperative Agreements

FROM:     Ronald Brand, Director
          Office of Underground Storage Tanks

TO:       Waste Management Division Directors
          Regions I - III, V - X

          Water Management Division Director,  Region  IV

     Attached Is a supplemental OSWER Directive  for negotiating
LUST Trust Fund Cooperative Agreements.  The  directive establishes
specific requirements for State accounting systems, financial
reporting, and cost recovery that reflect the  requirements  set
forth in the July 2, 1987 memorandum, "Reporting  and  Recordkeeping
for LUST Cooperative Agreements," issued by the  Office of the
Comptroller and the Grants Administration Division.

     Please make sure that your staff in the  UST  program has
communicated these requirements to each State  seeking coopera-
tive agreements under the LUST Trust Fund.  Regional  UST staff
should also coordinate with their financial management and
grants administration counterparts to ensure  that these require-
ments are addressed in each State cooperative  agreement.

     If you'have any questions concerning the  directive, please
contact Charles Mooar at (FTS) 382-7970.

Attachment

cc: Assistant Administrator for Administration
    and Resource Managment

    Assistant Regional Administrators for Planning
    and Management

    UST Coordinators

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                                    OSWER DIRECTIVE 9650.6-1
PURPOSE

     This memorandum provides additional direction for Regional
use in negotiating the initial Leaking Underground Storage Tank (LUST)
Trust Fund Cooperative Agreements with States, and supplements
the "Guidelines for UST Trust Fund Cooperative Agreements," OSWER
Directive 9650.6, effective April 2, 1987.  This directive clarifies
and specifies State recordkeeping, accounting requirements, cost
documentation and reporting requirements that will be needed to
ensure sound administration and use of the LUST Trust Fund, and to
provide for effective communication, oversight and program support
between the Regions and the States.

STATE ACCOUNTING SYSTEMS

     Requi rements

     OSWER Directive 9650.6 required that States adhere to general
recordkeeping requirements of 40 CFR Part 30, and specifically that
States must develop a plan for site-specific accounting of Trust
Fund expenditures.  Directive 9650.6 further stated that the
States implement that plan as expeditiously as possible.

     This directive clarifies those requirements to specify that
States must maintain a financial  management system (as required
by 40 CFR 30.510) capable of organizing and recording expenditures
for corrective actions and enforcement activities on a
site-specific basis.  Prior to making expenditures of Trust Fund
monies for site-specific activities, a financial management system
must be in place to record such costs on a site-specific basis.
All costs that can be allocated to a particular site, including
contractor costs, should be charged accordingly.

     In developing and operating State accounting systems, the
State shall maintain cost documentation and other appropriate
records to support any future cost recovery efforts.  The State
shall  adhere> to the principles of documentation and record retention
described in the manual  State Participation in the Superfund
Program, OSWER Directive 9375.1 -4u, "Cost Documentation Requirements
for Superfund Cooperative Agreements."  As specified in OSWER
Directive 9650.6 for Trust Fund Cooperative Agreements, State
accounting data and records shall be available to the Federal
government, as needed, on a case-by-case basis to support program
and fiscal reviews.

     For any award made after August 15, 1987, the requirements
specified above shall be addressed in cooperative agreements
through the use of the specific language contained in paragraphs
1, 2, and 4 of the attachment to this directive.  Awards made
before August 15, 1987 need not contain the verbatim language,
but must assure the substance of the requirements specified
above.

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                                      OSWER DIRECTIVE 9650.6-1
FINANCIAL REPORTING REQUIREMENTS

     Requi rements

     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).
Comptroller Policy Announcement 87-13 contains policies and
procedures for establishing appropriate LUST Trust Fund accounts
in FMS.   With respect to State Cooperative Agreements, the
announcement specifies account structures and activity codes to
be used  by Regions and States, and describes the manner in which
State expenditures, by activity, will be reported through Letter
of Credit drawdown procedures.

     OSWER Directive 9650.6 calls for separate quarterly progress
reports, including Trust Fund expenditures by type of State
activity.  Under the financial reporting requirements specified
in the Comptroller Policy Announcement 87-13, a State will report
on its use of Trust Fund monies under three major activity codes
when it  makes a request for funds (Letter of Credit drawdown).

     Under the Comptroller's policy,  all financial transactions
and financial reporting between EPA and the States with LUST
Trust Fund Cooperative Agreements will be carried in FMS through
the use  of appropriate account codes.  To support adequate tracking
of financial  transactions by the Office of the Comptroller,
States shall  submit annual Financial  Status Reports (SF-269) and
quarterly Federal  Cash Transaction Reports (SF-272), in accordance
with 40  CFR Part 30 and OMB Circular  A-102.

     Regional UST Coordinators shall  work with each State to
ensure the proper allocation of LUST  Trust Fund expenditures to
the three activity codes identified in the Comptroller announcement:
"7" - General Support and Management, "E" - Site Cleanup Actions,
and "4"  - Enforcement.

     In  addition to the exception reporting required by OSWER
Directive 9650.6 for named sites with planned expenditures greater
than $100,000, States shall also identify through quarterly
reports  the sites where LUST Trust Fund expenditures have actually
exceeded $100,000, and shall report the amounts of such expenditures

     For any award made after August  15, 1987, the requirements
specified above shall be addressed in cooperative agreements
through  the use of the specific language contained in paragraphs
5 and 6  of the attachment to this directive.  Awards made before
August 15, 1987 need not contain the  verbatim language, but must
assure the substance of the requirements specified above.

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                                      OSWER DIRECTIVE 9650.6-1
COST RECOVERY

     Requi rements

     As specified in OSWER Directive 9650.6,  States must have or
obtain the authority and capability to recover costs from liable
owners and operators.  It is the responsibility of the State under
each cooperative agreement to pursue recovery of LUST Trust Fund
costs from liable owner/operators on behalf of the LUST Trust Fund.

     Where States have appropriate authorities and capabilities
to collect response expenditures on behalf of the LUST Trust
Fund , the State shal1:

     (1)  make a reasonable effort to recover  costs from liable
         owners and operators;
     (2)  report within 30 days on any amounts received from an
         owner/operator, or agreed or adjudged to be owed by the
         owner/operator, as a recovered cost  of site cleanup;
     (3)  promptly return recovered funds (or  an equivalent amount)
         to EPA for deposit to the LUST Trust Fund, to the extent
         that the State is successful in recovering costs.

     If a State lacks authorities and capabilities to collect response
expenditures on behalf of the LUST Trust Fund (i.e., the authority
to recover such costs from liable owners/operators and return such
monies to EPA for deposit to the LUST Trust Fund), the State shall
agree to  obtain such authorities and capabilities by the end of
the next  legislative session after the execution of the initial
Cooperative Agreement.  (The States understands that EPA may
decline to enter into a subsequent Cooperative Agreement if such
capabilities and authorities are not obtained.)  The State shall
also agree to delay taking cost recovery action under a Cooperative
Agreement until such authorities or capabilities have been obtained.

     After a State obtains authorities and capabilities to collect re-
sponse expenditures on behalf of the LUST Trust Fund, the State shall
adhere to the three requirements specified above, including notifi-
cation of recovery settlements and prompt return of recovered funds.

     Once a State cost recovery action has been reported, the
Regional  UST Coordinator and Regional Financial Management Officers
shall ensure that appropriate accounts are developed to track
adequately the proper payment of such recoveries to the LUST
Trust Fund.

     For  any award made after August 15, 1987, the requirements for
cost recovery specified above shall be addressed in cooperative
agreements through the use of the specific language contained in
paragraph 3 of the attachment to this directive.  "Insert 1" may
be used where States have appropriate authorities and capabilities,
while "Insert 2" may be used where such authorities and capabilities
still need to be developed.  Awards made before August 15, 1987
need not  contain the verbatim language, but must assure the
substance of the requirements specified above.

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                                                    Attachment
                    REQUIREMENTS FOR INCLUSION
               IN LUST STATE COOPERATIVE AGREEMENTS

1.  State agrees to maintain a financial cost accounting system
    which meets the requirements of 40 CFR 30.510.

2.  State agrees to organize and maintain site-specific infor-
    mation on activities and costs where Trust Fund monies are
    used.  Prior to making expenditures of Trust Fund monies for
    corrective and enforcement actions, a system must be in place
    to record these types of costs on a site-specific basis.
    All other costs that can be identified to a particular site
    should be charged accordingly.  State contractors must bill
    costs on a site-specific basis, including corrective action
    costs, enforcement costs and to the extent possible manage-
    ment costs.

3.  The State acknowledges that expenditures from the LUST Trust
    Fund covering the cost of corrective or enforcement action
    constitute a liability of the owner/operator to the United
    States.   (Insert 1 or 2 below)
                         >                                   J
    (INSERT 1,  for States which have authority to collect response
    expenditures on' behalf of the LUST Trust Fund)~

    The State therefore agrees:

    a) That it will make reasonable efforts to recover these
       costs from liable owner/operators.  In making .such efforts,
       States may consider equitable factors to the extent pro-
       vided in section 9003(h)(6)(B) and section 9003(h)(ll)  of
       the Solid Waste Disposal Act, as amended;

    b) That it will report within 30 days on any amounts received
       from,the owner/operator, or agreed or adjudged to be owed
      .by the owner/operator, as a recovered cost of site
       clean-up;  and

    c) That to the extent the State is successful in recovering
       these costs, it will promptly return recovered funds (or
       an equivalent amount) to EPA for deposit in the LUST
       Trust Fund.

    (INSERT 2,  for States lacking authority to collect response
     expenditures on behalf of the LUST Trust FundT

    The State therefore agrees that to the extent the State
    lacks the authority or procedure to collect response expendi-
    tures on behalf of the LUST Trust Fund (i.e., the authority
    to recover such costs from owner/operators and return such
    monies to EPA for deposit to the Trust Fund), the State .
    will:

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                               -2-
    a) Obtain such authority or procedure by the end of the next
       legislative session after the execution of this Agreement.
       (The State understands that if such authority and/or
       procedure is not obtained, EPA may decline to enter into
       subsequent Cooperative Agreements); and

    b) Delay taking cost recovery action under this Cooperative
       Agreement against owner/operators until such authority or
       procedure is obtained.

    c) Once the State obtains that authority or procedure, State
       agrees:

       1) That it will make reasonable efforts to recover these
          costs from liable owner/operators.  In making such
          efforts,  States may consider equitable factors to the
          extent provided in section 9003(h)(6)(B)  and section
          9003(h)(ll) of the Solid Waste Disposal Act, as amended;

       2) That it will report within 30 days on any amounts
          received from the owner/operator,  or agreed or adjudged
          to be owed by the owner/operator,  as a recovered cost
          of site clean-up; and

       3) That to the extent the State is successful in recovering
          these costs, it will promptly return recovered funds
          (or an equivalent amount) to EPA for deposit in the
          LUST Trust Fund.

4.  State agrees to maintain supporting documentation and appro-
    priate records in support of any future  cost recovery efforts.
    The State shall adhere to the principles of documentation
    and records retention described in the manual State Partici-
    pation in the Superfund Program,  OSWER Directive 9375.l-4u,
    "Costs Documentation Requirements for Superfund Cooperative
    Agreements," pending development of more specific guidelines
    on LUST costs documentation.  The State  agrees  to make these
    records available to the Federal Government, as needed, on a
    case by case basis.

5.  State agrees to provide reports as outlined in the "State
    Application Guidelines for Initial LUST  Trust Fund Cooperative
    Agreements" dated March 27,  1987.  These reports consist of;

      9 Quarterly progress reports;
      0 Exception reporting as needed;
      0 Financial Status Reports (SF-269); and

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                           -3-

The State further agrees to provide quarterly reports as
follows:

  0 Federal Cash Transactions Report (SF-272)
  9 All individual sites and their amounts where Trust Fund
    dollars in excess of $100,000 have been expended.

State agrees to identify Letter of Credit drawdowns under
EPA's three major activity codes.  The three codes are
"7" General Support and Management, "E" - Site Cleanup
Actions,  and "4" - Enforcement.  Procedures supplementing
the EPA Letter of Credit Recipients Manual will be provided
to clarify how the State requests funds under the activity
codes.

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                       ATTACHMENT  9
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                                                             fay
OSWHS Direct a ve  Suooieiftersted
Succ< I emerit e-d DV  >i ^
CS St!

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