r/EPA
United Slates
Environmental Protection
Agency
Office of Water
Program Operations (WH-547)
Washington, DC 20460
Fall 1979
Water
Handbook of
Procedures
Construction Grants
Program for
Municipal Wastewater
Treatment Works
Interim
Issuances
MCD-03
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INTERIM ISSUANCE
Handbook
of
Procedures
Construction Grants Program
for Municipal Wastewater
Treatment Works
Fall 1979
Municipal Construction Division
Water Program Operations
Off ice of Water and Waste Management
U.S. Environmental Protection Agency
Washington, D.C. 20460
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FOREWORD
This Handbook identifies and explains the many procedures to
be followed by those in the Regional Offices and the States who are
responsible for bringing municipal wastewater treatment projects
from their conception to completion.
The procedures are set forth sequentially and are expressed in
logical and concise terms. The operational tasks described are
applicable to the program as a whole and are intended to serve as an
operational standard so that this complex, multifaceted Construction
Grants Program can move forward as a national program, uniformly
administered.
Through the thoughtful application of the procedures described
in the Handbook, the water pollution control goals to which the
Environmental Protection Agency is dedicated can be more effectively
achieved.
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ACKNOWLEDGMENTS
The Handbook, including the revisions reflected in this edition,
was prepared by the Municipal Construction Division, Office of Water
Program Operations, Office of Water and Waste Management.
The basic organization of the Handbook and initial drafts of its
revisions were prepared under a consulting contract with EcolSciences,
Inc. Albert L. Pelmoter, Chief, Program Policy Branch, was the project
manager and responsible for the Handbook's overall development. Most
of the basic text was prepared by Albert T. Bowyer, the contractor's
project officer, along with Joseph Grieshaber of his staff. Construction
Grants Program staff from Headquarters and the Regions, too numerous
to mention, contributed considerably to the reviewing and editing of
the drafted text.
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CONTENTS
Page
FOREWORD i
ACKNOWLEDGMENT ill
CHAPTER I. INTRODUCTION
A. General I- 1
B. Second Edition Changes 1-2
C. Legislative History 1-3
D. Handbook Organization and Use 1-6
1. Purpose 1-6
2. Structure 1-6
3. Format 1-7
4. Related Material 1-8
5. Updating 1-8
6. Appendices 1-9
CHAPTER II. STATE PROGRAM
A. Planning Processes II- 1
1. General II- 1
2. State Continuing Planning Process . II- 1
3. Waste Load Allocations II- 2
4. Water Quality Management Plans ... II- 3
5. Facilities Plans II- 5
6. Municipal Permits II- 5
7. Reviews of Advanced Treatment
Projects II- 6
B. State Planning and Implementation
Programs II-7
1. State/EPA Agreement II- 7
2. State Strategy II- 7
3. State Priority System and Priority
List II- 8
4. Funding 11-11
5. State Delegation 11-13
6. U.S. Army Corps of Engineers .... 11-15
CHAPTER III. PREAPPLICATION INFORMATION
A. General Ill- 1
B. Applicant Eligibility Ill- 2
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Page
C. Preapplication Conference Ill- 3
1. Important Dates Ill- 3
2. Contracts, for Personal and
Professional Services Ill- 5
3. Administrative Requirements Ill- 5
4. Technical Requirements Ill- 9
CHAPTER IV. STEP 1 GRANT PROCESSING
A. Introduction IV- 1
B. Schematic Flow Diagram IV- 2
C. Application Contents IV- 3
D. Review of the Plan of Study (POS) .... IV- 4
1. Contents IV- 4
2. Planning Considerations IV- 6
3. Prior Costs IV- 6
E. Administrative Review IV- 8
1. Clearinghouse Comments IV- 8
2. Priority List Compliance and Certi-
fication IV- 9
3. Application Form IV-10
4. Contracts and Subagreements IV-11
F. Grant Award Procedures IV-13
1. Regionalized Procedures IV-13
2. Notification of Grant Award Action . IV-13
3. Grants Information and Control
System (GICS) IV-14
4. Clearinghouse Notification IV-14
5. Grant Agreement/Amendment IV-14
G. Preparation of the Facility Plan .... IV-16
H. Administrative Review (Facility Plan) . . IV-17
1. Clearinghouse Comments IV-17
2. State Review and Certification . . . IV-18
I. Facility Plan Review IV-19
General IV-19
NEPA IV-20
Contents IV-21
1. Summary, Conclusions and Recommenda-
tions IV-21
2. Introduction IV-22
2.1 Study, Purpose and Scope .... IV-22
2.2 Planning Area (Map) IV-22
3. Effluent Limitations IV-22
4. Current Situation IV-25
4.1 Conditions in the Planning Area. IV-25
VI
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Page
4.2 Existing Wastewater Flows and
Treatment Systems IV-26
4.3 Infiltration and Inflow .... IV-27
4.4 Performance of Existing Systems IV-33
5. Future Situation IV-34
5.1 Land Use IV-34
5.2 Demographic and Economic Pro-
jections IV-35
5.3 Forecasts of Flow and Waste
Load IV-36
5.4 Future Environment of the
Planning Area Without the
Project IV-37
6. Alternatives IV-37
6.1 Optimum Operation of Existing
Facilities IV-37
6.2 Regional Solutions IV-38
6.3 Waste Treatment Systems .... IV-39
6.4 Evaluation (Monetary, Environ-
mental, Implementation) .... IV-49
7. Plan Selection IV-54
7,1 Evaluation and Comparison of
Proposals IV-54
7.2 Views of Public and Concerned
Interests on Alternatives . . . IV-54
7.3 Selected Plan (major feature
summary) and Reasons for
Selection IV-57
7.4 Environmental Impacts of
Selected Plan IV-57
7.5 Energy Consideration IV-59
7.6 Recreational Opportunities . . IV-59
8. Cost Estimates, Preliminary Designs. IV-59
8.1 Description of Design IV-59
8.2 Summary of Cost Estimates . . . IV-60
9. Arrangements for Implementation . . IV-61
9.1 Institutional Responsibilities. IV-61
9.2 Implementation Steps IV-62
9.3 Operation and Maintenance . . . IV-63
9.4 Financial Requirements .... IV-63
9.5 Pretreatment Program IV-64
10. Summary of Environmental Considera-
tions IV-66
10.1 Existing Environmental Conditions IV-67
10.2 Future Environment Without the
Project IV-67
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Page
10.3 Evaluation of Alternatives . . . IV-67
10.4 Environmental Effects of the
Selected Plan IV-67
10.5 Interacting Environmental Con-
siderations IV-67
a. Criteria for Determining
when to Prepare an EIS . . . IV-67
b. Required Coordination and
Consultation IV-68
c. Environmental Review .... IV-76
d. Finding of No Significant
Impact (FNSI) IV-76
e. Notice of Intent IV-77
f. EIS Preparation IV-78
CHAPTER V. STEP 2 GRANT PROCESSING
A. Introduction V- 1
B. Schematic Flow Diagram V- 3
C. Application Contents V- 4
D. Facility Plan Approval V- 6
E. Administrative Review V- 7
1. Priority List Compliance and
Certification V- 7
2. Application Form V- 8
3. Contracts and Subagreements V-10
4. Intermunicipal Agreements V-ll
5. Value Engineering Proposal V-ll
6. Project Progress Schedule V-12
7. Evidence of Compliance V-13
8. Pretreatment Requirements V-15
9. Public Participation Work Plan . . . V-17
10. Other Requirements and Limitations. . V-17
F. Combination Step 2 + 3 Grants V-19
G. Grant Award Procedures V-20
H. Predesign Activities V-21
I. Predesign Conference V-22
J. Review of Plans and Specifications . . . V-26
1. Administrative Review V-27
a. Supplemental General Provisions . V-28
b. Equal Employment Opportunity (EEO)
and MBE Utilization V-28
c. Davis-Bacon Act V-29
d. Flood Insurance V-29
e. Bonding and Insurance V-30
f. Construction Incentive Program. . V-30
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Page
2. Technical Review V-30
a. Environmental Considerations . . . V-30
b. Safety V-31
c. Bypassing V-31
d. Project Sign V-31
e. Reliability and Flexibility . . . V-31
f. Operation and Maintenance .... V-31
g. Public Water Supply V-32
h. Chemical Storage V-32
i. Ventilation V-32
j. Laboratory Facilities V-32
k. Emergency Alarms V-32
1. Hazardous Materials V-32
m. Sewers V-33
n. Equipment V-33
o. Shellfish Waters V-33
p. Pretreatment V-33
q. I & A Technology Confirmation . . V-33
3. Plans and Specifications Approval . . V-34
K. O&M Facility/Training Grants V-35
CHAPTER VI. STEP 3 GRANT PROCESSING
A. Introduction VI- 1
B. Schematic Flow Diagram VI- 2
C. Application Contents VI- 3
D. Plans and Specifications VI- 4
E. Administrative Review VI- 5
1. Priority List Compliance and Certifi-
cation VI- 5
2. Application Form VI- 6
3. Contracts and Subagreements VI- 8
4. Intermunicipal Agreement VI- 9
5. Plan of Operation VI- 9
6. Pretreatment Requirements VI-10
7. User Charge System VI-12
8. Industrial Cost Recovery System . . . VI-13
9. Evidence of Compliance VI-15
a. Flood Disaster Protection Act . . VI-15
b. Sewer Use Ordinance VI-15
c. Sewer System Rehabilitation
Schedule VI-16
10. Public Participation Work Plan .... VI-16
F. Grant Award Procedures VI-17
IX
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Page
G. Procurement of Construction Contracts. . . VI-19
1. Authorization and Formal Adver-
tising for Bids VI-19
2. Review of Bids VI-19
3. Grant Increases/Decreases VI-20
4. Protests VI-22
5. Rejection of All Bids VI-23
6. Authorization to Award Contracts . . . VI-24
H. Preconstruction Conference VI-25
I. Monitoring of Construction Activities . . VI-28
1. Change Orders VI-28
2. On-Site Inspection VI-31
3. Payment Conditions VI-34
4. Plan of Operation VI-35
CHAPTER VII. FINANCIAL CONSIDERATIONS
A. Introduction VII- 1
B. Allowable and Unallowable Costs VII- 2
1. General VII- 2
2. Allowability Determinations VII- 2
3. Allowability of Miscellaneous Costs. . VII- 3
Indirect Costs VII- 3
Travel Costs VII- 3
Bond Costs VII- 4
Liquidated Damages VII- 4
Bid Bond Forfeiture VII- 5
Rate Studies VII- 5
Financial Reports and Studies . . . VII- 5
Establishment of Special Assessment
Districts VII- 6
Public Liaison Services VII- 6
Assistance with State and Federal
Regulations VII- 6
Public Participation On-Site Visits. VII- 7
Cost of Grantee Training Workshops . VII- 7
Redesign/Replanning Costs Resulting
from Changes in Federal Require-
ments VII- 8
Cost of Implementing the Uniform
Relocation Assistance and Real
Property Acquisition Policies
Act of 1970 (PL 91-646) VII- 8
Field Surveys to Identify Cultural
Resources VII- 9
Industrial Planning VII- 9
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Page
Facilities Serving Communities
and Federal Facilities VII- 9
Site Acquisition vs. Site Pre-
paration Costs VII-10
Certificate as to Title to
Project Site VII-11
Acquisition of Privately or Publicly
Constructed Waste Treatment
Facilities VII-11
Demolition of Existing Structures . VII-12
Utilities VII-12
Restoration of Streets and Rights-
of-Way VII-13
Mobile Equipment VII-13
Office Equipment and Furnishings. . VII-14
Shop Furnishings VII-14
Laboratory Equipment and Supplies . VII-14
Safety Equipment VII-15
Tools VII-15
Replacement Parts VII-15
Collection System Maintenance
Equipment VII-16
Project Inspection VII-16
Groundwater Monitoring Facilities . VII-17
Biological "Seeding" VII-17
Service Charges VII-17
Fringe Benefits VII-18
Labor Charges and Related Costs . . VII-18
Start-up Services VII-18
Pretreatment Program VII-20
Individual Systems VI1-20
Royalties and Patents VI1-20
Crossover Sewers VI1-21
C. Force Account VII-27
1. General VII-27
2. EPA Prior Approvals VII-27
3. Other Considerations VII-28
D. Payments VII-30
1. General VII-30
2. Prior Costs VII-30
3. Schedules VII-31
4. Interim Payments VII-32
a. Payment Requests Review VII-33
b. Documentation VI1-33
c. Grant Conditions VII-34
XI
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APPENDICES
Appendix A
Appendix B
Appendix C
5. Final Payments VII-34
6. Refunds, Rebates, Credits, etc. ... VII-34
Increases and Decreases VI1-36
1. Increases VII-36
2. Increase Notification Procedure . . . VII-36
3. Decreases VII-37
4. Decrease Notification Procedure . . . VI1-37
Audits VI1-38
1. General VII-38
2. Objective VII-38
3. Types of Audits VII-38
4. Criteria for Choosing Projects .... VII-39
5. Major Activity Areas for Audit Focus . VII-40
6. Final Report .' VII-41
Flow Diagram
Forms
Transmittal Memoranda
LIST OF FIGURES
FIGURE
III-l Review of A & E Contracts
III- 6
IV-1 Schematic Flow Diagram IV- 2
IV-2 Procedures for Infiltration/Inflow Review IV-28
IV-3 Procedures for Review of Cultural Resources .... IV-70
IV-4 Procedures for NEPA Review IV-79
V-l Schematic Flow Diagram V- 3
VI-1 Schematic Flow Diagram VI- 2
Xll
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CHAPTER I
INTRODUCTION
A. GENERAL
B. SECOND EDITION CHANGES
C. LEGISLATIVE HISTORY
D. HANDBOOK ORGANIZATION AND USE
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A. GENERAL
This chapter describes the organization of the Handbook and
its use in administering the construction grants program. The
Handbook of Procedures (MCD-03) was first published in February
1976 and took into account laws, regulations and policy in effect
as of July 1, 1975. Subsequently three transmittal memoranda
(TM's) were issued to reflect policy changes occurring after the
original text was published.
On December 27, 1977 Congress enacted "The Clean Water Act"
PL 95-217 (CWA) which provided mid-course corrections to "The
Federal Water Pollution Control Act Amendments of 1972" (PL
92-500). "The Clean Water Act" mandated significant changes in
the conduct of the construction grants program necessitating the
publication of this second edition of the Handbook of Procedures.
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B. SECOND EDITION CHANGES
The second edition of the Handbook of Procedures replaces
the first edition dated February '1976, and reflects the laws,
regulations and policies in effect as of October 1, 1979.
The first edition used italics when a direct quotation was
cited from the law or regulations. The second edition uses
quotation marks for this purpose and cites references as appro-
priate. Italics are reserved for use of future updates of this
second edition as explained in this chapter under item D.5
Updating. Previous italicized updated material from the first
edition are not specifically identified in the second edition
but are included in normal typeface.
The first edition made reference to Program Guidance Memo-
randa (PG's) and cross-referenced the corresponding Program
Requirements Memoranda (PRM's). Only PRM's are referenced in
the second edition.
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C. LEGISLATIVE HISTORY
Federal financial aid in the construction of municipal
sewage treatment works was first authorized in 1948. This
was a loan program which was never implemented because neces-
sary funds were not appropriated by Congress.
The Federal Water Pollution Control Act of 1956, Public Law
84-660 (PL 84-660), included the first authorization for Federal
grants to assist in the construction of waste treatment works.
Selection of the projects to be funded was made the responsibility
of the States, reflecting the policy of Congress to recognize,
preserve and protect the primary responsibilities of the States
in preventing and controlling water pollution. The Act autho-
rized an appropriation of fifty million dollars a year for such
grants to be allocated to the States on the basis of relative
population and per capita income. Grants from the State alloca-
tions were made directly to applicants for projects certified
by the State as entitled to priority for a grant over other
eligible projects in the State on the basis of water pollution
control and financial needs. The grants were limited to 30% of
the eligible project cost not to exceed $250,000.
Appropriations were increased during the early 1960's, and
major amendments to PL 84-660 occurred in 1966. At that time
appropriation authorizations were increased, the maximum dollar
limitation on grants was dropped, the Federal share was increased
to a maximum of 55%, and provision was made for future reimburse-
ment of State or local funds used in lieu of Federal funds in
construction of projects when Federal funds were inadequate
to provide grants for all eligible projects within a State.
The 1966 Amendments were the last major legislative changes
prior to the passage of PL 92-500 in 1972. There were, however,
other legislative actions which occurred in that period which
had a major impact upon the program. Most important of these
were enactment of the National Environmental Policy Act (NEPA)
in 1969, and creation of the U.S. Environmental Protection
Agency (EPA) in 1970.
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Enactment of PL 92-500 in 1972 resulted in extensive changes
in the construction grants program. The Federal share was
increased to 75% of eligible costs and projects involving sewage
collection system construction, sewer system rehabilitation, and
(under certain conditions) combined sewer system separation
became eligible for grants. In addition, funds were included to
reimburse those projects which had proceeded under the reimburse-
ment provisions of the earlier statutes. Also, a strong enforce-
ment program was called for which would encompass the statewide
planning process, areawide planning, facilities planning, the
construction grants program, and discharge permits.
PL 92-500 also introduced the three step grant process i.e.
Step 1 - planning; Step 2 - design; Step 3 - construction.
Under this Act, grantees were required to provide a minimum of
secondary treatment to be eligible for a Federal grant. New
terminology and concepts were introduced such as facilities
planning, infiltration/inflow analysis, environmental assessment,
user charge/industrial cost recovery, cost-effectiveness, best
practical waste treatment technology, etc. The Act also
authorized $18 billion over a five year period to support the
construction grants program and provide for a continuity of
funding.
PL 92-500 was amended on December 27, 1977 by the Clean
Water Act, PL 95-217 (CWA). This bill contained mid-course
corrections to the earlier legislation and authorized $24.5
billion in support of the construction grants program over a
five year period. Several significant changes were introduced
into the construction grants program. For example grantees are
now required to evaluate innovative and alternative (I&A)
technologies when planning their projects. The mandatory I&A
evaluations reflect the desire of Congress to bring about
conservation through recycling and more efficient energy
utilization or recovery. For approved I&A projects, the Federal
grant share for Step 2 and Step 3 projects may be increased to
85%.
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In addition, the CWA encouraged and provided support funds
for, the delegation of the operation of the construction grants
program to State agencies which can demonstrate the necessary
competency to effectively conduct the program. And, to facilitate
administering grants for small communities, a combined Step 2+3
grant can be used where appropriate.
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D. HANDBOOK ORGANIZATION AND USE
1. Purpose
This Handbook is intended to serve as a guide in processing
grant applications for Step 1, Step 2, Step 3 and Step 2 + 3 pro-
jects and addresses the processing of grants as of October 1, 1979.
Generally, the Handbook addresses processing procedures for
administrative and technical functions separately. However, when-
ever possible, the review of administrative and technical functions
should be done concurrently.
While the administrative procedures to be followed in
processing construction grant applications are summarized in this
Handbook, a more comprehensive discussion of overall administrative
requirements is contained in the Grants Administration Manual
prepared by the Grants Administration Division, Office of Resources
Management, Office of Planning and Management, EPA.
2. Structure
The processing of grant applications for Step 1, Step 2,
Step 3, and Step 2 + 3 projects is described in Chapters IV, V,
and VI respectively. These Chapters are preceded by background
and general information in Chapters I, II and III and followed by
the financial considerations of Chapter VII. The latter chapter
contains information common to the processing of each step grant.
Particular attention is given to eligible costs and the processing
of payment requests.
The Handbook begins with recommendations for the pre-
application conference and proceeds through the completion of
construction, including start-up and operation and maintenance
requirements. Review procedures relating to administrative and
technical requirements are identified separately but grouped
together where they apply to a single function wherever possible.
Technical requirements, which are either complex or extensive,
are in sufficient detail to assure uniform treatment of key
aspects of these requirements.
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The construction grant program is concerned with four
types of projects:
Step 1 Projects - Planning
Step 2 Projects - Design
Step 3 Projects - Construction
Step 2 + 3 Projects - Design and Construction
An applicant receiving a grant for a Step 1 project,
prepares a facilities plan. The completed facilities plan is an
application requirement for a Step 2 project grant. However, the
review of the facilities plan is described in Chapter IV as a part
of the Step 1 project grant processing procedures. Once the
facilities plan is approved by both the State and EPA, the applicant
need only submit the additional administrative and technical require-
ments for a Step 2 project grant as described in Chapter V. Simi-
larly, the review of plans and specifications is described in Chapter
V as part of the Step 2 project grant processing procedures although
it is a requirement for a Step 3 project grant.
3. Format
Each review function is necessary to insure compliance with
statutory or program requirements. Review procedures are presented
in the following format:
Purpose:
A brief explanation of the need for the review is given.
Discussion:
The program requirement is placed in program perspective and
information is given on such things as general operating policy,
important underlying issues, key considerations in approaching the
topic under review and how the topic relates to the greater problem
of which it is a part.
Procedures:
The procedures in the review process are briefly described.
Where specific program items are required, they are listed. Other
more general review items are included as a reminder. However, the
review procedures listed here are not substitutions for nor do they
supersede requirements described in greater detail in the appro-
priate references. Check lists may be utilized as reminders of
review requirements.
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References:
Appropriate laws, regulations, Program Requirements Memoranda
(PRM), Program Operations Memoranda (POM), guidelines, technical
bulletins, etc. are cited. Copies of such reference material can
generally be found in the EPA Regional or State Agency Offices.
Some of the review procedures are self-explanatory or do
not lend themselves to the above format. In these cases, the
requirements or procedures are briefly described.
4. Related Material
The review procedures in this Handbook describe the essence
or minimum requirements necessary in processing of construction
grants. More detailed information may be obtained by reading the
reference materials which are identified throughout the text
wherever they are applicable. Generally, references concerning
technical matters have been limited to EPA publications.
Although the processing steps set forth in the Handbook
are intended to bring about uniformity in the servicing of
construction grant applications nationwide, differences in the
structure of EPA Regional or State Agency Offices may require
some adjustment in the manner in which various review procedures
are followed.
5. Updating
The Handbook will be updated as changes in laws, regulations,
or policy occur. Responsibility for revising and updating the Hand-
book rests with the Program Policy Branch, Municipal Construction
Division, Office of Water Program Operations, and revisions will be
issued from that office.
In July 1976, EPA ceased to use Program Guidance Memoranda
(PGMs) to communicate Construction Grant Program directives. In
their place, an issuance system was established designed to
differentiate between policy and operational matters. Included in
the new system was a mechanism for assuring that the essence of
emerging policy and procedure changes were concurrently readied
for inclusion in the Handbook.
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The new system consists of (1) Program Requirements Memoranda
(PRMs) which convey program policy. (In terms of administering the
Construction Grants Program, the provisions of PRMs are to be carried
out to the same extent as regulations); (2) Program Operations Memo-
randa (POMs) which are for internal or "housekeeping" matters, i.e.
they relate to administrative procedures to be followed by Regional
or State staffs in processing grant documents or preparing program
reports; and (3) Transmittal Memoranda (TMs) which contain changes
to the Handbook. In implementing the new system, all PGMs were
reviewed. Those no longer needed were purged and those which
remained in effect were redesignated as PRMs 75-1 through 75-40.
(See PRM 76-2).
As indicated above, Handbook revisions will be forwarded
by a Transmittal Memorandum (TM). Each TM will be designated with
a sequential number (e.g., TM: 80-1) indicating the fiscal year
and number of the issuance, and will provide specific instructions
for removal of obsolete pages and exhibits and insertion of new
material. So that changes can be readily identified, text revisions
will be printed in italics and underlined.
Additionally, each revised page will show the TM number,
month and year (bottom right side) in which revision was made.
The TM may be detached from the material transmitted and
inserted in Appendix C. "Transmittal Memoranda". Regularly, for
verification purposes, a listing of the changes will be distributed
to holders of the Handbook.
6. Appendices
This Handbook contains the following appendices:
Appendix A: a schematic flow diagram for the processing
of construction grants.
Appendix B: exhibits of frequently used OMB and EPA
forms.
Appendix C: "Transmittal Memoranda", (TMs), issued by
Headquarters to explain revisions to the Handbook may be stored
here.
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CHAPTER II
STATE PROGRAM
A. PLANNING PROCESSES
B. STATE STRATEGY AND PROGRAM
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A. PLANNING PROCESSES
1. General
This chapter is designed to provide a general working
knowledge of those planning portions of The Clean Water Act,
PL 95-217, (CWA) which directly affect the construction grants
program.
PL 92-500 contained complex and far reaching pollution
control measures and firmly committed the Federal Government
to eliminate pollution of the nation's waterways. PL 95-217 amended
PL 92-500 strengthening its goals and reaffirming its commitments.
Even though there is a firm Federal commitment, the States continue
to retain primary responsibility for the establishment of water
quality standards, the control of waste discharges, and the enforce-
ment of these standards. However, to insure a sound basis of
control PL 95-217 authorized the continuation of the planning
processes being carried out by the States under earlier legis-
lation.
2. State Continuing Planning Process
Section 303(e) of the CWA requires each State to establish
and maintain a continuing planning process (CPP) which must be re-
viewed and approved periodically by the Regional Administrator.
The continuous planning process must be consistent with the Act
and include, as a minimum, the following:
a. effluent limitations and schedules of compliance to
achieve water quality standards;
b. an areawide waste treatment management plan or basin
plan under sections 208 and 209 of the Act;
c. total maximum daily waste load allocations;
d. procedures for revisions of the plans;
e. adequate authority for intergovernmental cooperation;
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f. adequate implementation procedures and schedules of
compliance for new or revised water quality standards,
g. methods of obtaining control over the disposal of all
residual waste from any water treatment processing;
h. an inventory and ranking, in order of priority, of
waste treatment works necessary to be constructed to
meet water quality standards.
The output of the continuing planning process is a document
which describes the operating policies, procedures and practices
of a State in implementing the eight requirements listed above. The
actual function of planning, implementing, reassessing, revising and
implementing these requirements has been labeled the Water Quality
Management (WQM) process. Three of the eight requirements listed
above are of particular concern to the construction grants program,
namely:
water quality management plans (referred to in earlier
years as "208" plans)
waste load allocations (referred to in earlier years
and contained in "basin plans")
State priority system and list (discussed in Section B
of this chapter).
All of these agency programs and functions have as their
common objective the attainment of water quality standards. These
standards are or have been established by the States and approved
by EPA under the CWA or earlier legislation.
Re: 40 CFR Part 35, Subpart G
3. Waste Load Allocations
As an integral part of the WQM process and as a first step
in achieving the established water quality standards, the State
must classify segments of its waters as either "water quality limited"
or "effluent limited". To make this classification, the State
generally employs mathematical modeling pf the river basin and notes
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all point and non-point sources of wastes, low flows and other
physical conditions. Using the assumptions that all point sources
achieve at least secondary treatment, the model is able to predict
whether the water quality standards are met. If the standards are
met, the stream segment is classified as "effluent limited" and
publicly owned treatment works (POTW's) need only achieve secondary
treatment.
If the model of the basin predicts that water quality stan-
dards will not be met when all point sources achieve secondary
treatment, the segment is classified as "water quality limited".
The inputs to the model are varied with the result that waste load
allocations are established for each discharge in this segment and
represent the minimum of treatment to be achieved by any future
publicly owned wastewater treatment works. With regard to projects
receiving a construction grant, the reviewer ensures that the proposed
project meets the State established waste load allocation for the
segment of stream into which the project may discharge its effluerit.
This is distinct from the effluent limitations which may be imposed
by the State agency for other alternative discharges (land appli-
cation, groundwater recharge, industrial reuse for example).
It should be noted that in establishing waste load alloca-
tions for publicly owned treatment works no direct controls are
exercised to limit the non-point sources. Non-point source control
is addressed in appropriate water quality management plans.
Re: 40 CFR Part 35 Subpart G
4. Water Quality Management Plans
Regulations published after the passage of PL 92-500
(40 CFR Parts 130 and 131) made a distinction between Basin Plans
and Areawide Waste Treatment Management Plans (the latter more
commonly referred to as 208 Plans). As program experience was ob-
tained it became clear that the planning efforts were not distinct
and should be more closely coordinated and integrated. On May 23,
1979 EPA published Subpart G to 40 CFR Part 35 entitled "Grants for
Water Quality Planning, Management, and Implementation". Subpart G
replaces entirely the earlier 40 CFR Parts 130 and 131.
II-3
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Section 208 of the CWA provides for the Governor of a State
to designate a region for areawide waste treatment management
planning. In general, the designated regions have substantial water
quality control problems caused by urban-industrial concentration
or other factors. The stream segments in these areas (generally
water quality limited) require comprehensive areawide planning to
meet water quality standards. Planning considerations not only
include limitations on municipal and industrial point sources but
also address land use policies to control non-point sources, storm-
water discharges, water supply and other limiting factors which may
be controlled to achieve water quality standards. The 208 planning
is broad based and geared toward the more complex cases. EPA is
authorized to provide grants to agencies having jurisdiction under
State law to carry out such planning.
In non-designated areas the State agency is responsible to
conduct water quality management planning to the extent necessary
for the water quality problem.
In both designated and non-designated areas the responsible
planning agency will conduct a v/ater quality assessment and develop
a WQM work program. The State Agency will utilize the individual
work programs as well as its own to develop a State strategy. The
State strategy document will address items such as funding, resources,
priorities, etc. and is submitted annually to the Regional Administra-
tor of EPA for approval and eventual funding. The final output from
these planning activities is a water quality management plan.
The construction grant project reviewer is concerned with
WQM planning as it relates to a specific project under review. In
designated 208 planning areas the applicant for a construction grant
must be the agency identified in the approved WQM plan. Also,
population forecasts used in facilities planning must agree, with
few exceptions, to those contained in the approved WQM plan. It is
of utmost importance that the construction grant project reviewer
and the grantee coordinate their activities with the appropriate
WQM planning agency.
EPA policy concerning coordination between applicants and
(208) planning agencies is explained in "Guidance for Preparing a
Facility Plan" (MCD-46).
Re: 40 CFR Part 35 Subpart G
40 CFR Part 35 Subpart E, 35.925-2 and Appendix A
PRM 75-38
11-4
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5. Facilities Plans
Facilities plans are required by Section 201 of the CWA.
They may be considered as the implementation part of the States Con-
tinuing Planning Process. Facilities plans are the first stage
of the three part construction grant process. The facilities
planning area is designated by the State agency and may include one
or more political jurisdictions. Overlapping may exist between
(208) areawide planning areas and 201 facilities planning areas.
Coordination and cooperation are essential to avoid duplication,
but the completion of facilities plans should not be delayed or
postponed pending completion of WQM plans. Rather, the WQM plans,
when completed, should incorporate the provisions of the completed
facilities plans.
Ideally, the WQM plan establishes the waste load allocations,
and designates the facilities planning areas and the implementing
agencies. The facilities plan develops a specific project which
is the most environmentally sound and cost-effective for achieving
the stated water quality standards. In the case of non-designated
areas, the State agency will establish the boundaries of the
facility planning area, subject to the approval of EPA. After
September 30, 1979, the project must be based on waste load
allocations from the approved WQM plan, unless a deviation is
granted.
Facilities planning is discussed in greater detail in
Chapter IV and is the subject of the publication: Guidance for
Preparing a Facility Plan.
Re: 40 CFR 35.917
6. Municipal Permits
The Clean Water Act establishes the National Pollution Dis-
charge Elimination System (NPDES) as the enforcement mechanism for
achieving water quality standards. The discharge permit issued
under the system is applicable to all municipal and industrial
discharges. Where WQM plans under Sections 208 or 303(e) or
facilities plans under Section 201 have been established, the
permits will require compliance with such plans. In the case of
existing sewage treatment facilities which, because of present or
II-5
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anticipated future inadequate treatment, will not achieve the water
quality standards, the NPDES permit may contain limitations, con-
ditions or schedules which will prompt the municipality to apply
for a construction grant. The State agency will designate the
boundaries (if not previously designated) of the facilities planning
area and the construction grant process will begin. An applicant
for a construction grant must comply, at a minimum, with applicable
existing permits. The coordination of grants process and the
NPDES permit issuance process is vital. Policy and procedures to
achieve this coordination are set forth in "the National Munici-
pal Policy and Strategy" (October 1979).
Re_: 40 CFR Part 125
40 CFR 35.925-6
7. Reviews of Advanced Treatment Projects
Current EPA policy requires a rigorous review of projects
designed for treatment more stringent than secondary. The incre-
mental , additional capital costs of a project, which are attri-
butable 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. Furthermore, projects re-
quiring treatment more stringent than secondary should be evaluated
for their financial impact on the community. Under this policy,
the Regions have primary responsibility for reviewing such projects,
and will decide how to proceed in accordance with PRM 79-7. In
general, where projects have incremental costs beyond secondary of
$1 million or less, the Region retains the decision-making authority.
Where incremental costs exceed $1 million, approval must be given
by EPA Headquarters. Specific procedures to be followed in the
review of applicable projects are identified in PRM 79-7.
II-6
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B. STATE PLANNING AND IMPLEMENTATION PROGRAMS
1. State/EPA Agreement
After fiscal year 1979, the State/EPA agreement (SEA) pro-
vides the basis for the planning and implementation programs under
CWA as well as under other EPA legislation including the Resource
Conservation and Recovery Act and Safe Drinking Water Act. Each
year the Regions and States negotiate SEA's which identify the
States' environmental problems, objectives and priorities and des-
cribes coordination and integration among the covered programs.
It includes the annual work programs of the covered programs, a
summary of the major work elements, and, by reference, the State's
strategies. It focuses the attention of top EPA and State managers
on the major expected accomplishments and establishes the res-
ponsibilities of each necessary to achieve those accomplishments.
Grants for FY 1980 under Section 106, 205(g) and 208 cannot be
awarded until the 1980 SEA is executed.
2. State Strategy
The State strategy, which is incorporated into the SEA by
reference, includes:
a. goals for a five-year period and estimated costs of
activities to control priority water quality problems;
b. an identification of governmental entities expected
to be responsible for conducting the activities; and
c. a summary of anticipated Federal and other funds for
the strategy period.
Contained within these three items and of particular con-
cern to the construction grants reviewer is the State project
priority list. It is from this list that projects are certified
by the State for funding and the construction grants process begins,
Re: 40 CFR 35.915(c), (e), 1503, 1509-1, -2, 1511-2
II-7
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3. State Priority System and Priority List
As a part of its program stragegy, the State must prepare a
needs inventory which ranks all of the significant municipal dis-
charges within the State. This inventory must consider the con-
struction grants needs and priorities set forth in certified and
approved State and areawide water quality management (WQM) plans.
The State priority system describes the methodology used to
rate and rank projects considered eligible for grant assistance.
It also sets forth the administrative, management and public
participation procedures required to develop and revise State
project priority list.
The project priority list is a ranked listing of projects
for which Federal assistance is expected during the five year
planning period starting at the beginning of the next fiscal year.
The State priority system is based upon the following
criteria:
a. the severity of the pollution problem;
b. the existing population affected;
c. the need for preservation of high quality waters;
d. at the State's option, the specific category of need
that is addressed.
The State has the sole authority to determine the
priority for each category of need. These cate-
gories comprise mutually exclusive classes of
facilities which were identified in the needs
survey prepared under Section 516(b) of the CWA
and include:
Category I:
Category II:
Category IIIA:
Category IIIB:
Category IVA:
secondary treatment
more stringent treatment
infiltration/inflow correction
sewer system replacement or
major rehabilitation
new collectors and appurtenances
II-8
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Category IVB: new interceptors and appurten-
ances
Category V: correction of combined sewer
overflows.
e. Step 2, Step 3, and Step 2 + 3 projects utilizing pro-
cesses and techniques meeting innovative and alterna-
tive guidelines in Appendix E, 40 CFR part 35, may re-
ceive higher priority. Also 100% grants for projects
that modify or replace malfunctioning treatment works
constructed with an 85% grant may receive a higher
priority;
f. other criteria, consistent with these, may be considered
(including the special needs of small and rural
communities). The State may not consider: the project
area's development needs not related to pollution
abatement, the geographical region within the State, or
future population growth projections; and
g. in addition to the criteria listed above, the State must
consider the treatment works and step sequence; the
allotment deadline; total funds available; and other
management criteria.
The project priority list is developed by applying the
priority system to projects included in the needs survey prepared
under Section 516(b) of the CWA. In addition, the State must con-
sider construction grants needs and priorities set forth in certified
State and areawide water quality management plans.
While the project priority list must be developed in accord-
ance with the criteria listed above, the criteria are not to be
construed as removing all flexibility in the establishment of the
list. For example, large city projects should be precluded from
using all, or almost all, of a State's allocation. This may be
accomplished by: 1) the State reserving funds for projects of
smaller communities (as defined by the State and approved by the
Regional Office), or 2) by dividing the work into several segments
or smaller projects. (This could be two lists.) In the latter case,
both the State and the applicant must recognize that:
a. all grants must be awarded at the 75% level except in
the case of projects meeting the innovative or alterna-
tive technology criteria or 100% grant funded projects
II-9
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that modify or replace malfunctioning treatment works
constructed with and 85% grant;
b. the project must be comprised of a discrete and meaning-
ful segment of the treatment system;
c. the awarding of the grant does not bind EPA to fund the
remaining parts of the treatment system; and
d. the acceptance of the grant commits the grantee to the
completion of both an operable treatment works and the
complete sewage treatment system of which the assisted
project is a part.
The project priority list must reflect the funding cutoff.
The fundable portion will include those projects planned for grant
award during the first year of the five year period. The total
grant awards on the fundable portion may not exceed the total funds
expected to be available during the year less all applicable re-
serves (see 4 "Funding" below). The remaining portion will include
all projects outside the fundable portion that may, under anticipated
allotment levels, receive funding during the five year period.
The format for and project information required on the
project priority list is contained in the regulations (40 CFR
35.915(c)(2)) and annual guidance issued by the Administrator. The
annual guidance also outlines the funding assumptions and other
criteria useful in developing the five year priority list.
In reviewing the State priority list, it is necessary to
insure that:
a. the information in 40 CFR 35.915(c)(2) is included
for each project;
b. the grant funds involved equal or do not exceed the
State allotments available;
c. known problem areas in the State have been properly
considered;
d. target application dates and cost estimates appear to
be reasonable; and
11-10
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e. previously approved Step 1 and Step 2 projects are
properly reflected and realistically scheduled for
funding.
The State's priority list is submitted annually as part of
the State's program strategy. The list is not accepted by the
Regional Administrator unless it has been the subject of a public
hearing. During the year, certain amendments may have to be made to
the list. These amendments do not require a public hearing if the
Regional Administrator does not consider them significant.
Re: 40 CFR 35.915,.930-4, .935-1, .960
40 CFR 35.1509-2
PRM 75-14, PRM 75-24,
PRM 77-1, PRM 79-6
4. Funding
a. General:
Under the CWA, authorization for funding construction
grants projects are provided over a five year period. However, such
funds only become available if and when Congress appropriates them.
Generally, each fiscal year, Congress appropriates an amount equal
to or less than the amount authorized. EPA, in turn, allots these
appropriated funds to the States in accordance with the Congression-
al ly mandated formula (generally based upon need and population).
Allotments are available to the States for two fiscal years after
which time the unobligated funds in each State are pooled together
and reallotted to those States which utilized all their funds.
b. Reserves:
In developing the fundable portion of the priority list,
the State must set aside several reserves. Some reserves are re-
quired by law; others are optional. For example:
(1) Reserve for innovative and alternative technology.
Each State has to set aide from its annual allot-
ment a specific amount which is to be used to
increase the Federal share from 75 percent to 85
percent for those eligible portions of a project
11-11
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meeting the innovative or alternative technology
criteria. The set-aside is 2 percent of the State's
annual allotment for FY 1979 and 1980 and 3 percent
for FY 1981. Of this amount not less than one half
of one percent is to be used for innovative projects.
The increased Federal share (from 75 to 85 percent)
is applicable only to Step 2, Step 3 or Step 2+3
projects (not Step 1). Reserves not obligated
during the initial allotment period will be removed
from the State and real lotted to States which did
obligate their full annual allotment.
(2) Reserve for grant increases. Each State must set
aside not less than 5 percent of its annual allot-
ment for grant increases to cover cost overruns or
to fund the development of municipal pretreatment
programs.
(3) Reserve for Step 1 and Step 2 projects. Each State
has the option of reserving funds for Step 1 and
Step 2 projects which may be approved for funding
by the State after the approval of its project
priority list. The reserve may be up to 10 percent
of the State's annual allotment.
(4) Reserve for alternative systems for small communi-
ties.
(a) Each State with a rural population of 2b percent
or more must set aside 4 percent of its annual
allotment to fund alternatives to conventional
treatment works for small communities.
(b) For non-rural States the Regional Administrator,
at the request of the Governor, may authorize a
reserve of up to 4 percent to be used for funding
alternatives to conventional treatment works
for small communities (3,500 or less or dis-
persed sections of larger municipalities).
NOTE: If funds placed in reserves under (2),
(3), or (4)(b) are not obligated prior to
the end of the initial allotment period,
they can be used to fund other projects
on the priority list to avoid being sub-
ject to reallotment.
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(5) Reserve for State management assistance grants
under Section 205(g) of the Act. Where an agree-
ment between the Regional Administrator and a
State is entered into under which the day-to-day
operation of the Construction Grant Program is dele-
gated to that State, on a function-by-function basis,
a Construction Management Assistance (CMA) Grant
may be awarded to the State to cover the State's
costs in carrying out the functions delegated under
the agreement. To fund a CMA grant, the State must
reserve from its allotment an amount not to exceed
2 percent of each year's allotment or $400,000
whichever is greater.
c. Optional Use Other Than Reserves:
Each State may use 25 percent of its annual allotment to
fund certain categories of projects. These categories include:
- sewer system replacement or major rehabilitation
- new collectors, new interceptors and appurtenances
- correction of combined sewer overflows
All projects proposed to be funded which would exceed
this 25 percent limitation will be reviewed by the Regional Adminis-
trator to determine whether or not the proposed project meets the
enforceable requirements of the Act.
Re: 40 CFR 35.904, .910-2(b), .915(g), .915-1, .930-4,
.935-1, .935-11
PRM 79-6
5. State Delegation
Delegation to the State agencies of various review functions
of the construction grants program is intended to eliminate duplica-
tion of effort, improve program efficiency and speed its processing
of grants. Regulations issued under PL 92-500 encouraged the
Regional Administrators to enter into written agreements with the
11-13
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State agencies whereby the State would certify the technical or ad-
ministrative adequacy of specifically required documents. According-
ly, agreements have existed between specific States and Regions per-
mitting State agency certification of plans and specifications, O&M
Manuals and other documents under the construction grants program.
Section 205(g) of PL 95-217 extended this concept considerably
by providing for the State to assume responsibility for conducting a
full range of construction grant activities, and for funds needed to
effectively administer the delegated program. Section 205(g) dele-
gation agreements can be entered into between the Region and State
after the Regional Administrator is assured that the State can and
will administer the full gamut of Construction Grant Program activi-
ties in accordance with EPA requirements. Functions delegated under
the agreement are "phased-in"--i.e., the agreements prescribe their
sequence and timing. Generally grant application and award procedural
type functions and Step 2 activities are delegated initially while
the review and approval of facility plans (because of their com-
plexity) and construction inspections (because, on an interim basis,
this activity can be conducted by the Corps of Engineers under an
interagency agreement with EPA--see 6 below) are deferred until
later. During the "phase-in" period extensive training of State
personnel is conducted by experienced Regional and State staffs and
the State's grant certification procedures are closely monitored by
the Region.
Where delegation agreements exist, the reviewer must become
familiar with the terms of the agreement and know which functions and
activities are delegated, which are not,and the mechanisms for co-
ordination in order that State-EPA duplication is eliminated and a
unified effort is maintained. In addition, reviewers must know the
review and approval procedures to be followed by the State, the
scope, depth, and frequency of Regional Office monitoring activities,
and the specific actions to be taken when inadequate performance is
found.
By law, certain functions of EPA may not be delegated. Hence,
under delegation agreements, EPA must continue to perform or provide
final certification of the following:
a. award of grants or amendments
11-14
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b. National Environmental Policy Act (NEPA) reviews, de-
cision and preparation of Environmental Impact State-
ments if necessary
c. decisions and enforcement of Civil Rights, minority
business business enterprise (MBE) participation, Equal
Employment Opportunities and other Federal require-
ment related to discrimination
d. dispute determinations concerning project eligibility
e. determinations of protests under A/E or construction
contract procurements
f. resolution of construction grant audit exceptions
g. determination that an overriding Federal interest
exists in a particular project which requires greater
Federal oversight or participation
h. final determinations under Federal statutes other
than the CWA.
The ultimate purpose of the State delegation program is to
develop a self-sustaining Federal construction grant program at the
State level. Hence, training and monitoring activities must be
carried out so that this goal can be achieved.
Re.: 40 CFR 35.912, .960(a), Subpart F
POM 78-5
6. U.S. Army Corps of Engineers
In January, 1977 EPA entered into an interagency agreement
with the U.S. Army Corps of Engineers under which the Corps would
provide assistance to EPA primarily in administering the Step 3
aspects of the Construction Grants Program. The specific functions
to be carried out by the Corps are provided for in each of the ten
separately developed regional agreements between the Regional
Office and the geographically adjacent Division Office of the Corps.
Corps responsibilities and procedures for dealing with grantee
projects and project documents vary from Region to Region and State
11-15
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to State. However, in general, in the case of new Step 3 projects,
the Corps is responsible for project management from grant offer
acceptance to project close-out (with certain exceptions, i.e.,
making payments, UC/ICR system approvals, final resolution of audit
exceptions, etc.). Corps activities on Step 3 projects which were
well under construction prior to the Corps agreement will vary from
interim inspections to full project management.
In addition, the Corps conducts biddability and constructibi
lity reviews on plans and specifications on all Step 2 projects in
nearly every State prior to their approval; and, on very large
projects, or clusters of projects in a metropolitan area, with
construction costs totaling about $50 million or more, the Corps
provides full time on site presence--i.e., continuous inspection.
Fundamental to all agreements is that functions which are
delegated to a State will not be performed by the Corps. However,
where temporary shortages in staff resources exist in a delegated
State, that State may request (of EPA) Corps assistance in carrying
out interagency agreement assignments for interim periods. Again,
such activities must be carefully documented in Regional agreements
so that all necessary requirements are fulfilled and maximum
efficiency is achieved in moving grantee projects to a successful
operation.
11-16
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CHAPTER III
PREAPPLICATION INFORMATION
A. GENERAL
B. APPLICANT ELIGIBILITY
C. PREAPPLICATION CONFERENCE
-------
A. GENERAL
An applicant is often unfamiliar with the requirements and/or
limitations of the construction grants program. Lack of knowledge of
all key aspects of the grants program can be costly and time-consuming
for the applicant, the State and EPA. The State, in conjunction with
the Region, should insure that applications being submitted are
responsive to all technical, administrative and legal requirements of
the program.
Guidance to applicants is presently provided through a variety of
sources, including State and Federal forms, instruction booklets, EPA
guidance publications, and copies of Federal regulations. However,
this information is not always clear to applicants and emphasis is
often incorrectly placed on less important matters. To avoid such
occurrences, a preapplication conference between the applicant, the
State and EPA to jointly review both program requirements and appli-
cant needs, is strongly urged.
To assist applicants in understanding the program, EPA has pre-
pared a booklet entitled, "How to Obtain Federal Grants to Build
Municipal Wastewater Treatment' Works" (MCD-04). This booklet should
be provided to a prospective applicant with the grants application
package and reviewed at the preapplication conference.
III-l
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B. APPLICANT ELIGIBILITY
"Municipalities, intermunicipal agencies, States, or interstate
agencies are eligible for grant assistance." The regulations also
provide a more detailed description of an eligible applicant under
definition of a "Municipality" which reads in part:
"Municipality. A city, town, borough, county, parish,
district, association, or other public body (including an
intermunicipal agency of two or more of the foregoing
entities) created under State law, or an Indian tribe or an
authorized Indian tribal organization, having jurisdiction
over disposal of sewage, industrial v/astes, or other waste,
or a designated and approved management agency under section
208 of the Act."
In essence, an eligible applicant must satisfy a three part test.
The applicant must:
1. have as one of its principal responsibilities the treat-
ment, transport or disposal of liquid wastes of the
general public in a particular geographic area;
2. have the legal authority to subsequently construct and
manage the proposed facility, and
3. be the designated agency identified in an approved
Water Quality Management plan authorized under
Section 208 of the Act (where applicable).
Notably excluded from eligibility are revenue producing entities
and special districts (such as school or park districts) not having
as one of their principal responsibilities the treatment, transport
or disposal of liquid wastes. Under the CWA, the treatment of
water for human consumption is considered an industrial undertaking
and whether publicly or privately owned, it is in the same category
as any other industrial service (power plants, airports, mass trans-
portation) and not eligible for a construction grant.
Grant assistance may be provided small wastewater (individual)
systems where such systems are more cost effective than centralized
systems, and where public ownership is proven not feasible. However,
the applicant must be a municipality.
Re: 40 CFR 35.920-1, .905, .917-3(a), .925-2, .925-5
PRM 75-17, PRM 75-18, PRM 77-1, PRM 79-8
III-2
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C. PREAPPLICATION CONFERENCE
The regulations encourage preapplication assistance, including
a preapplication conference for each project on the State's priority
list. The importance of the preapplication conference cannot be
overly stressed. A meeting where the applicant, the State and the
Region sit down together to discuss the approaching work has the
potential of setting the stage for a well coordinated work program
which is void of major misunderstandings and time delays.
The preapplication conferences may be with one applicant or a
group of applicants and will generally involve only those applicants
included on the State project priority list.
While the entire three step grant process should be discussed at
the preapplication conference, the primary emphasis should be on the
administrative and technical requirements of a Step 1 project grant
application and the preparation of the facility plan. Applicant
conferences throughout the three step grant processing procedures are
encouraged, with emphasis to be placed on specific aspects of the
program at the appropriate time.
The Regions should develop outlines of points to be covered in
the preapplication conferences which may be tailored to the individ-
ual State's and applicant's needs and capabilities. Several impor-
tant matters which should be discussed in the conference are as
follows:
Re_: 40 CFR 35.920-2
1. Important Dates
October 18. 1972 - Passage of PL 92-500. No award may be
made for a new sewage collection system in a community unless the
bulk of the design flow (generally two-thirds) is attributable to
that part of the comnunity in existence as of October 18, 1972.
Re_: 40 CFR 35.925-13
June 30. 1975 - After this date the applicant must not initi-
ate work until a Step 1 grant has been awarded, or unless a plan of
study has been approved and is accompanied by a request -from the State
agency to reserve funds for a Step 1 project.
Costs incurred for project planning prior to this date may or
may not be eligible for grant assistance depending on the specific
date and nature of the work conducted. The regulations set forth
1 imitations.
Re: 40 CFR 35.925-18
III-3
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December 27, 1977 - Passage of PL 95-217. Costs for pri-
vately owned treatment works, serving one or more principal resi-
dences or small commercial establishments inhabited or used prior to
this date, are grant eligible.
Re'- 40 CFR 35.91801 (a)
September 30. 1978 - Facilities planning begun after this
date, whether or not prepared under a Step 1 grant, requires analysis
of innovative and alternative treatment processes and technologies,
primary energy requirements, and potential opportunities for recrea-
tion, open space and access to bodies of water.
Re: 40 CFR 35.917-l(d) (8), (9), .917-l(j)
February 1, 1979 - Procurement of subagreements initiated on
or after this date must be in compliance with the minority business
enterprise (MBE) policy of EPA.
Re_: 43 FR 248 pp. 60220-60224
February 16. 1979 - Public participation program requirements
must be met in the development of : the State priority system and
annual fundable project list, plans for wastewater treatment facili-
ties, UC/ICR systems, and State delegation on or after this date.
Re_: 40 CFR Part 25
44 FR 34 pp. 10300-10304
October 1. 1979 - After this date, in order to be grant
eligible, facility planning must be based on information in approved
Water Quality Management plans (unless excepted).
Re.: 40 CFR 35.917(e)
June 30, 1980 - After this date pretreatment requirements
must be met where applicable to Step 2 grant assistance.
Re_: 40 CFR 35.907, .920-3(b) (9)
December 31, 1980 - After this date pretreatment require-
ments must be met where applicable to Step 3 grant assistance.
Re_: 40 CFR 35.907, .920-3(c) (4)
III-4
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2. Contracts, for Personal and Professional Services
It is EPA's policy to ensure that procurement of subagree-
ments is conducted in a manner which provides free and open competi-
tion, and is negotiated on the basis of demonstrated competence and
qualifications with a fair and reasonable price.
In the procurement of subagreements, the procedures detailed
in the regulations must be followed (a copy of the regulations should
be provided to the applicant). The applicabilities of specific
clauses of the regulations are outlined in Figure III-l. Procure-
ment initiated on or after February 1, 1979 must be in compliance
with the goal oriented policies and procedures regarding minority
business enterprises (MBE) set forth in 43 FR 248, which outlines
responsibilities of EPA, grantees, consulting firms, prime contrac-
tors, and MBEs.
It is the intent of the agency that simple, clearcut con-
tracts which leave no room for future disagreement, be negotiated:
These contracts should be such that the engineer receives a fair
price with a reasonable profit for his work, and the municipality
receives competent, complete professional services at a fair cost.
Cost reimbursement or fixed price contracts, or combinations thereof,
may be negotiated for architectural or engineering services. Per
diem may be used where no other types are applicable. Specifically
prohibited are cost-pius-percentage-of-cost and percentage-of-con-
struction cost contracts which penalize the engineer for designing
the most economical facility. All contracts should clearly establish
a maximum price which may not be exceeded without formally amending the
contract.
The employment of any contract arrangement requires a careful
analysis of the scope of the work to be performed and a detailed esti-
mate by the engineer of his costs for performing the work. This
procedure should assure a clear understanding of exactly what is to
be done, by whom, and should produce a better end product. Should
the scope of work change during the performance of the project, the
contract would be open for amendment.
Re_: 40 CFR 35.936, .937, .939
Appendix C-l, D
43 FR 248 pp. 60330-60224
3. Administrative Requirements
The administrative requirements to be fulfilled by the appli-
cant are extensive. All necessary forms, authorizations, timing
requirements, and legal requirements should be discussed. The appli-
cation form (5700-32) should be reviewed line by line. In addition,
III-5
-------
Figure III-l. Review of A & E Contracts
NO
I START REVIEW j
NO
^
HANC
SMALL r
(35.9
r
ILE AS
URCHASE
36-19)
./'CONTRACTX.
X. > $ 100,000^^
JYES
MORE DETAILED
COST INFORMATION
(35937-6(bl)
& PRIOR EPA
APPROVAL BEFORE
EXECUTION
\
r
COMPLETE REVIEW
NEGOTIATION
ASSURANCE &
COST SUMMARY
REQUIRED
(35.937-5,-6)
i
SOLICI
RECK
(35.937-
i
NO SOLICITATION
< NECESSARY
(ELIMINATE
35.937-2,-3,-4)
|YES
TATION
JIRED
2,-3,-4)
NO ^x^GRANTEE^X
^v SATISFIED^X^
\(K
NO ./SAME A&ES.
111-6
-------
recommended formats for submittal of technical data should be
reviewed. Payment procedures and policy should be fully explained.
Finally, the entire application procedure for Step 1,2, 3, and
Step 2+3 projects should be discussed. Special emphasis should
be placed upon the coordination required between the applicant, the
State and EPA to insure accuracy and timeliness in processing grant
applications. Specific points to be covered include:
a. prior allowable costs, if any, must be claimed
in the initial application for grant assistance
Re_: 40 CFR 35.925-18, .940
b. project work may be accomplished by force account
(municipal or public service employees) with prior
approval of the project officer if the applicant
can demonstrate that:
(1) he possesses the necessary competence to
accomplish the work
(2) either the work can be accomplished more
economically by the use of the force account
method, or emergency circumstances dictate
its use.
Re: 40 CFR 35.936-14
c. the institutional arrangements and agreements
between jurisdictions
Re_: CFR 35.917-2(a) (3), .917-6
d. payment of non-federal share of project costs
Re: 40 CFR 35.925-5, PRM 79
e. priority lists
Re: 40 CFR 35.915, .925-3
PRM 79-6
f. the procurement of professional services and"
contracts
Re_: 40 CFR 35.936, .937, .938, .939, 965 and
Appendices C & D
g. record keeping
Re: 40 CFR 30.800, .805
III-7
-------
h. limitations on collection systems
Re_: 40 CFR 35.925-13, .905
PRM 78-9
i. user charges and industrial cost recovery
Re_: 40 CFR 35.925-11, .928, .929
j. public participation
Re_: 40 CFR 35.917-5, 40 CFR Part 25
k. initiation of property acquisition, where applicable
Re_: 40 CFR 35.940-3, PRM
1. compliance with the requirements of the Civil
Rights Act of 1964, including applicability to
sewage collection systems for minority areas,
and MBE policy.
Re: 40 CFR 7, 8, 12
43 FR 248 pp. 60220-60224
PRM 75-32
m. small wastewater systems
Re_: 40 CFR 35.918
PRM 79-8
n. coordination of grant funding with other federal
agencies (FmHA, EDA, HUD, CSA)
Re_: PRM 79-8
o. OMB A-95 review procedures (clearinghouses)
Re_: 40 CFR 30.305
p. allowable and unallowable costs
Re_: 40 CFR 35.940
q. other Federal requirements
Re: 40 CFR Part 30, Subpart C
III-8
-------
4. Technical Requirements
All technical aspects of the Step 1, 2, 3, and 2 + 3 work
should be reviewed with the applicant with special attention to the
requirements for a plan of study and the preparation of a facility
plan. At a minimum, the following items should be discussed:
a. the degree of technical detail required in both
the plan of study and the facility plan
Re_: 40 CFR 35.920-3, .917
Guidance for Preparing a Facility Plan (MCD-46)
Model Plan of Study (MCD-24)
b. specific problems associated with the project in
question and how they should be addressed in
item "a".
c. cost effectiveness in its broadest sense and the
trade-off between engineering, environmental,
monetary costs, and institutional arrangements
Re_: 40 CFR 35.917-l(d), Appendix A, Guidance
for Preparing a Facility Plan (MCD-46)
d. infiltration/inflow analysis, sewer system evaluation
survey
Re: Handbook for Sewer System Evaluation and
Rehabilitation (MCD-19)
40 CFR 35.927
PRM 78-10
e. environmental information document integration
in the facility plan and possible environmental
impact statement proceedings (including "piggy-
backing" option), with emphasis on secondary
impacts
Re: 40 CFR Part 6 (Subpart E) 35.917-1(d) (7), .925-8
Guidance for Preparing a Facility Plan (MCD-46)
Environmental Assessment of Construction Grants
Projects (FRD-5)
PRM 75-26
PRM 75-31
f. pretreatment and treatment of incompatible pollu-
tants
Re: 40 CFR 35.907, .925-15, 1935-19, 40 CFR Part 403
III-9
-------
g. BPWTT, including secondary treatment and waste
stabilization ponds, land application, waste-
water reuse. (AWT or AST projects must undergo
stringent review, see Chapter IV, 1.3.)
Re: Alternative Waste Management Techniques for
Best Practicable Waste Treatment, Evaluation
of Land Application Systems
40 CFR 35.917-l(d) (4), (5)
h. innovative and alternative analysis
Re: 40 CFR 35.908, .917-1(d) (8), Appendix E,
I&A Technology Assessment Manual (MCD-53)
i. other Federal requirements, such as historical pre-
servation, archeological investigations, flood-
plain management and wetlands protection, prime
agricultural land, flood insurance, etc.
Re_: 40 CFR Part 6 Subpart C, Part 30, Subpart C.
EO 11988, 11990
PRM 75-27, PRM 76-5
j. coordination with WQM agencies
Re.: 40 CFR 35.917(e), .917-7
PRM 75-38
k. multi-purpose projects
Re: PRM 77-4
1. recreation and open space
Re: 40 CFR 35.917-l(j)
111-10
-------
CHAPTER IV
STEP 1 GRANT PROCESSING
A. INTRODUCTION
B. SCHEMATIC FLOW DIAGRAM
C. APPLICATION CONTENTS
D. PLAN OF STUDY REVIEW
E. ADMINISTRATIVE REVIEW
F. GRANT AWARD PROCEDURES
G. PREPARATION OF THE FACILITY PLAN
H. FACILITY PLAN (ADMINISTRATIVE REVIEW)
I. FACILITY PLAN REVIEW
-------
A. INTRODUCTION
This chapter describes the contents of, and review procedures
for processing a Step 1 project grant application. It begins with
the receipt of the application package and concludes with the review
and approval of the facility plan.
Section B. Schematic Flow Diagram, visually places this chapter
in the proper sequence and indicates its relationship to previous
chapters.
Section C, Application Contents, provides a quick ready listing
of the materials which are contained in an application package.
Section D, Plan of Study Review, is given individual attention
because it is the major technical requirement of the application
and includes discussions prepared by the applicant. This section
includes a discussion of Water Quality Management (WQM) plans as
they relate to the plan of study. Costs incurred before filing
the application are also discussed.
Section E, Administrative Review, describes the procedures in-
volved in reviewing clearinghouse comments, priority list compliance
and certification, application form, and contracts and subagreements.
Section F, Grant Av/ard Procedures, describes the action re-
quired on the part of EPA in making the grant offer.
Section G, Facility Plan Preparation, describes responsibilities
during preparation of the facility plan.
Section H, Facility Plan (Administrative Review), describes
the procedures for approaching the evaluation of the facility plan,
the review of clearinghouse comments and State approval.
Section I, Facility Plan Review, describes the review of the
facility plan according to the contents required by regulation and
in the format recommended by the guidance.
The technical and administrative reviews are to be performed
concurrently whenever possible. When items are missing or explana-
tions are necessary, the review is to proceed as far as possible
to insure quick action once the deficiencies are corrected.
IV-1
-------
B. SCHEMATIC FLOW DIAGRAM (Figure IV-1).
The flow diagram below visually places this chapter in the
proper sequence and indicates its relationship to other chapters.
The diagram includes the general functions of the Step 1 project
process as performed by the applicant, State and EPA.
HAPTER 2
C STATE PLANNING^
PROCESS j
(STATE PRIORITY
SYSTEM
\ 1
| CHAPTER 3
|
/I
' PREAPPLI-
1 CONFERENCE
1
1
CLEARING-
COMMENTS
STEP 1
APPLICATION
PLAN OF STUDY
STATE REVIEW
APPROVAL
& CERTIFI-
CATION
PREPARATION &
SUBMISSION OF
FACILITY PLAN
STATE REVIEW
IV-2
-------
C. APPLICATION CONTENTS
Below are listed the basic materials to be included in an
application package. The items are listed here for quick reference,
while the review procedures for each item are described later.
Initially, the reviewer is to make a cursory review of the package
to insure that all items are included, that all applicable portions
of the forms are completed and that the documents are signed by
the appropriate officials. If items are missing or explanations
are necessary, the applicant is to be informed through the State
but the review is to proceed as far as possible to insure quick
action once the corrections are made.
1. Plan of Study
2. Comments of State, local and Federal agencies including
Clearinghouses (A-95 process)
3. State Priority Certifications, EPA Form 5700-28 (furnished
by State)
4. Application, EPA Form 5700-32, including authorizing re-
solution
5. Proposed subagreements (generally A&E contracts) or ex-
planation of method of awarding proposed subagreements,
including evidence of compliance with MBE policy
Re: 40 CFR 35.920-2(b), .920-3(a)
~ 40 CFR 30.305, .315
IV-3
-------
D. REVIEW OF THE PLAN OF STUDY (POS)
1. Contents
Purpose:
A plan of study is submitted by the applicant to show his
understanding of the work to be done in preparing a facility plan.
The plan must include the key issues to be addressed, a time sche-
dule, and itemized costs for the completion of the specific tasks.
Discussion:
The plan of study is the first element of grant request
to be submitted by the applicant. It concisely describes the scope,
schedule, and costs of the proposed facility plan. It must be
critically reviewed to insure that all statutory requirements are
met and that the project begins on the proper course.
While the plan of study should be brief and generally
follow the format suggested in the Guidance for Preparing a Facility
Plan in terms of subject matter to be included, it should also
address unique features of the project which will require special
attention. Such unique features might include water-short areas,
recreational areas, historical and archeological sites, and
economically depressed areas.
The plan of study should also include the design effluent
limitations for the proposed project. To avoid long replanning or
design delays which might otherwise result from effluent limitations
changes, limitations requiring treatment greater than secondary
should be reviewed in accordance with PRM 79-7.
The plan of study must be submitted to the appropriate A-95
clearinghouse for review prior to formal submission to the State
and EPA as part of the Step 1 grant application. The plan of study
must be reviewed by all agencies to insure consistency with pre-
viously approved wastewater management plans, interstate agreements,
and other state, areawide, or local plans which are applicable.
The plan of study, once approved and incorporated into the
grant agreement, is to include a time schedule for the completion
of specific tasks, and itemized costs for each of these tasks. This
schedule of tasks and accompanying costs are used to develop a
payment schedule, which in turn is used in preparing projections of
cash disbursements. Once the grant payment schedule has been es-
tablished, the grantee may submit requests for payment of work that
has been completed, in accordance with the grant payment schedule.
IV-4
-------
Review Procedures:
In reviewing the plan of study, attention must be focused
on those items which are required by regulations as well as those
which will need to be developed in the facility plan. The plan
should indicate that the statutory requirements described in later
chapters of this Handbook will be satisfied and that the applicant
understands them and will be able to proceed in a manner which will
satisfy them.
Regulations require that the plan of study contain five
items as follows:
"(i) The proposed planning area;
(ii) An identification of the entity or entities that
will be conducting the planning;
(iii) The nature and scope of the proposed Step 1
project and public participation program, in-
cluding a schedule for the completion of specific
tasks;
(iv) An itemized description of the estimated costs
for the project; and
(v) Any significant public comments received."
Additional items which should be included in the plan of
study are suggested in Guidance for Preparing a Facility Plan and
Model Plan of Study. These include maps detailing the study area's
political boundaries, surface water resources, and service areas of
existing waste treatment systems; description of project need due"
to State or Federal enforcement orders, public health or water
quality problems; and previously prepared documents and other data
which will be used in developing the facility plan.
If, based on this review, the need for an Environmental
Impact Statement (EIS) is apparent, the Regional Office may initiate
the joint EIS/Assessment procedure ("piggybacking") outlined in
PRM 75-31. The use of this procedure can result in considerable
savings of time.
EPA must also determine the level of public participation
to be required (exempt, basic, or full scale) for the proposed
project.
Re: 40 CFR 35.920-3(a), PRM 75-31
Guidance for Preparing a Facility Plan (MCD-46)
Model Plan of Study (MCD-24)
IV-5
-------
2. Planning Considerations
Prior to awarding a grant, EPA must determine that the
proposed POS is consistent with any applicable water quality manage-
ment (WQM) plan approved under section 208 or 303(e) of the CWA and
that the applicant is the wastewater management agency designated
in an approved WQM plan. The reviewer must be familiar with the
planning area and be aware of the status of applicable plans.
Facilities planning must be based on waste load allocations,
delineation of facility planning areas, and total population pro-
jections and disaggregations in approved WQM Plans. After October 1
1979 no grant assistance may be approved if such information is not
available in an approved WQM plan. Notable exceptions are: (1)
where facility related information was not within the WQM scope
of work and (2) where award of grant is necessary to achieve water
quality goals of the CWA.
Re: 40 CFR 35.917(3), 925.-2
Guidance for Preparing a Facility Plan (MCD-46)
3. Prior Costs
The application form requires the applicant to provide a
breakdown of the costs for preparing a facility plan. The plan of
study also requires a breakdown of these costs by specific task.
These costs are to be reviewed to insure that they are allowable
costs as defined in Chapter VII. This section is concerned only
with the timing of when these costs were incurred.
If the costs to prepare the facility plan will be incurred
after the grant award, no special review procedures are required.
Costs for the preparation of the application, plan of
study and other supporting documents are not allowable for EPA
grant assistance.
To ensure, where possible, that costs incurred are allow-
able, the regulations specify that "no grant assistance is authorized
for Step 1 or Step 2 project work performed before award of a Step 1
or Step 2 grant." However, in conjunction with the first award of
grant assistance, payment is authorized for preaward, allowable
costs in the following special cases:
a. where Step 1 work was begun after the approval of the
plan of study by the Regional Administrator, provided
that the State has requested and the Regional Adminis-
trator has reserved funds for the Step 1 grant, and
IV-6
-------
provided that the grant is applied for and awarded
within the allotment period of the reserved funds.
b. where Step 1 or 2 work was begun after October 31 ,
1974 but before June 30, 1975, in accordance with an
approved plan of study or facilities plan respectively,
provided that the grant is awarded before April 1,
1981.
c. where Step 1 or 2 work was begun prior to November 1,
1974, provided that the grant is awarded before
April 1, 1980.
In all cases, the applicant must request grant assistance
for prior costs in his first application.
Where prior costs are incurred, the applicant must submit
a breakdown of these costs, identifying the dates the costs were
incurred and the nature of the work which was performed.
Re_: 40 CFR 35.920-3(a), .925-18(a) ,(c), .945(a)
IV-7
-------
E. ADMINISTRATIVE REVIEW
1. Clearinghouse Comments
Purpose:
Applicants for construction grants for wastewater treat-
ment facilities are required to comply with the Office of Manage-
ment and Budget (OMB) Project Notification and Review System (Cir-
cular A-95). This procedure is established to provide for the
early contact between applicants and governmental agencies, and to
insure coordination between related projects.
Discussion:
Prior to submission of a Step 1 project application, the
applicant is required to submit a plan of study and related Step 1
application material to the State and/or regional clearinghouses for
comment in accordance with OMB Circular A-95. A copy of the
clearinghouse(s) comments is to be included with the application
package.
The clearinghouse comments will indicate the degree of
interest of other governmental agencies in the project. If these
comments are adverse, the applicant is to submit a statement ex-
plaining how the comments were considered. If a clearinghouse
recommends that the application be rejected but EPA approves it,
the clearinghouse must be notified and given an explanation of the
reasons for approval.
Review Procedures:
The reviewer must make particular note of any adverse
clearinghouse comments. These comments may require further explana-
tion from the applicant, State, or clearinghouse. More serious
adverse comments may dictate that the application be returned to
the applicant through the State agency.
The reviewer must determine if the comments warrant a
special condition in the grant agreement (see section F below).
Re: 40 CFR 35.920-3(a)(3)
40 CFR 30.305
OMB Circular A-95
IV-8
-------
2. Priority List Compliance and Certification
Purpose:
The State agency is required to certify each project as
entitled to priority for grant funds in accordance with the State
priority system and the project priority list.
Discussion:
Only projects which have been certified by the State as en-
titled to priority for Federal assistance may receive a grant.
Following EPA approval of the State priority system and acceptance
of the project priority list, each project must be certified by
the State as being entitled to priority for a grant over all other
projects below it on the priority list (EPA Form 5700-28, see
Appendix B). Refer to chapter II for a discussion of the State
priority system and list.
A State may elect to set aside up to ten percent of its
yearly allotment to fund Step 1 and Step 2 projects not on the cur-
rent priority list. When such projects are certified, the certifica-
tion must signify that the grant is to be made from that reserve
allotment.
Review Procedures:
Review State Priority Certification to determine that:
a. the name, project number and description of the project
agree with the application, form 5700-32, and the
approved State priority list;
b. the form includes the signature of the authorized
State official;
c. the award of grant assistance for the project will
not exceed the State's allotment, including reallotments;
d. the award of grant assistance will not jeopardize the
funding of any projects of higher priority;
e. the State has included a statement to the effect that
all jurisdictions within the facility planning area have
been notified of their inclusion .in such planning.
Re: 40 CFR 35.915, .917-2(b), .920-2(b), .925-3, .925-4
PRM 75-14, PRM 75-16, PRM 75-24
IV-9
-------
3. Application Form
Purpose:
EPA Form 5700-32 is the formal application document and
sets forth the information necessary to qualify for a construction
grant. Additionally, the application contains "assurances" from
the applicant which are necessary to satisfy statutory requirements.
Discussion:
The designation of a facility planning area is a State
responsibility and should include that area deemed necessary to
prepare an environmental assessment and to assure that the most
cost-effective means of achieving the established water quality
goals can be planned for and implemented. The applicant for the
designated area may be a joint authority representing the multiple
jurisdictions, one or more of the eligible jurisdictions or one
lead agency representing all jurisdictions. In all cases, the
applicant must have the legal authority to plan, design, finance,
construct, operate and maintain any resulting wastewater treatment
facilities.
The application form is used for an initial grant request,
amendments, or supplemental grants. The form (see Appendix B)
contains instructions for completion of each of the five parts.
Part II, Section B requires information on the project site to be
submitted with the application. Since a facility plan resulting
from the award of a Step 1 project grant will conclude which is
the most cost effective and environmentally sound project site,
the information contained in this section is not necessary for a
Step 1 project grant award.
The CWA requires that the applicant comply with related
laws and regulations and give other assurances. These requirements
are satisfied for a Step 1 project grant when the applicant signs
the application and thereby assures and certifies that he will
comply with the requirements.
The applicant must attach to the application a copy of
the resolution authorizing the signer to act as the official repre-
sentative of the applicant (Part V, item 1). Any subsequent
changes in the authorized official must also be substantiated.
Review Procedures:
Review application form and determine that:
IV-10
-------
a. the name, project number and description of the project
and amount of grant request agree with the State
Priority Certification, Form 5700-28;
b. the form is signed by the authorized representative and
a copy of the authorizing resolution is attached;
c. information regarding project location, entities in-
volved and cost data corresponds to that in the plan
of study;
d. all items in the application are complete or marked
not applicable (NA);
e. Part V, assurances, is part of application. If not,
a properly signed form must be obtained.
f. Part III, Section D, Proposed Method of Financing Non- •
Federal Share, insures that applicant can successfully
fund his share of the project costs.
Re: 40 CFR 30.315
40 CFR 35.917-2, .917-3(a), .920-2, .925-5
PL 94-488
31 CFR Part 51, Department of Treasury
4. Contracts and Subagreements
Purpose:
Contracts or subagreements for personal or professional
services are submitted by the applicant and reviewed by both the
State and EPA to insure that the scope and nature of the proposed
services are sufficient to result in an approvable facility plan
and that the fees and schedules are reasonable.
Discussion:
The personal and professional services covered by the sub-
agreements at the time of Step 1 application submission are
generally the consulting engineering services, although separate
agreements may also exist for environmental consultants, financial
consultants, etc. The regulations state that the application shall
include proposed subagreements or an explanation of the intended
method of awarding subagreements for performance of any substantial
portion of the project work.
IV-11
-------
The detailed requirements of, and procedures for,procuring
personal or professional services appear in 40 CFR 35.936, .937
and Appendices C & D. Certain clauses of these regulations (e.g.
access) are applicable to subagreements and lower tier subagreements
in excess of $10,000. See Figure III-l, previous, for applicability
of specific clauses. The goal oriented policies and procedures
regarding MBE set forth in 43 FR 248 contain the responsibilities
of EPA, Grantees, Consulting firms, Prime Contractors and MBEs.
Review Procedures:
Review the agreement(s) and determine that:
a. the grantee has complied with 40 CFR 35.936, .937, and
(if applicable) .939;
b. the scope of work is sufficient to prepare an approv-
able facility plan;
c. completion schedules are reasonable and in agreement
with the plan of study;
d. the applicant has complied with EPA's policy for in-
creased use of minority business enterprises (MBE).
Re: 40 CFR 35.920-3(a)(2), .935-7, .936, .937, .939
Appendix C-l & D
40 CFR 30.605
43 FR 248 pp. 60220-60224
IV-12
-------
F. GRANT AWARD PROCEDURES
The administrative procedures required in awarding a grant are
summarized below. A detailed line-by-line explanation of the admin-
istrative steps necessary in preparing EPA forms and notifications
is described in the Grants Administration Manual prepared by the
Grants Administration Division, Office of Planning and Management,
EPA.
Item 1 below describes the actions for which the Regional Office
may establish procedures. Item 2 through 5 describe uniform actions
prescribed by Headquarters.
1. Regionalized Procedures
a. Notification to financial management branch;
b. Preparation of transmittal letters to the appli-
cant and State agency (include instructions for
predesign conference, as appropriate);
c. Other regional procedures which have been worked
out with the States, interstate agencies, etc.
2. Notification of Grant Award Action
The Notification of Grant Award Action, EPA Form 5700-18,
(see Appendix B) is completed and transmitted to Grants Information
Branch, Headquarters, by Communicating Magnetic Card Selectric Type-
writer on the date of award or no later than the following working
day.
The Grant Information Branch immediately forwards a copy of
the 5700-1B to the Office of Legislation which notifies appropriate
congressional offices. The applicant is not to be notified of grant
award until 5 working days after congressional notification.
EPA Form 5700-1D is used in the case of a decrease, declina-
tion, or withdrawal of a grant.
IV-13
-------
3. Grants Information and Control System (GIGS)
The Grants Information and Control System (GICS) is a com-
puter based management system in which information concerning the
construction grants program is stored. This information is used for
analyzing the grant program, manpower requirements, ansv/ering con-
gressional inquiries and other purposes. The information must be
current and available for quick retrieval.
Information concerning the award of each construction grant
is entered into the system using prescribed coding sheets.
Re: Grants Information and Control System (GICS), WWT
Construction Grants Information Data Base,
Operators' Manual
4. Clearinghouse Notification
Purpose:
Notification of clearinghouse is made in order that the
clearinghouse may inform interested agencies or other entities of
the award of a grant in accordance with Treasury Department Circular
No. 1082.
Procedures:
The notification, Standard Form 424 (see Appendix B), is
completed by the regional office and copies are mailed to the State,
regional and local clearinghouse.
Re: U.S. Treasury Department Circular No. 1082, Revised (1976)
40 CFR 30.305-4(c)
5. Grant Agreement/Amendment
Purpose:
The Grant Agreement/Amendment (EPA Form 5700-20) serves as a
formal document of agreement between the U.S. Government and the
grantee, and constitutes a legally binding contract once executed.
IV-14
-------
Procedures:
EPA Form 5700-20 (see Appendix B) is completed by the
Regional Office based upon the information submitted in the appli-
cation package. The agreement must define the approved project
scope, budget, total project costs, and pertinent schedule dates in
accordance with the application. Modifications to grant amounts,
scope of work or other items are made on the basis of the review
process, and special conditions of the grant are included in Part
III b. These special conditions may be based upon clearinghouse
comments, requests from the State agency or conditions unique to the
project.
The applicant is given three weeks to accept the grant offer,
and to return the signed grant agreement/amendment to EPA. The
individual signing the grant agreement/amendment on behalf of the
applicant should be the authorized representative who signed the
application. Differences must be explained and a new authorizing
resolution submitted (see Application Form item E.3 of this chapter)
if such occur.
Re_: 40 CFR 30.345
40 CFR 35.930
IV-15
-------
G. PREPARATION OF THE FACILITY PLAN
Purpose and Discussion:
Program responsibility for the progress of a project does not end
with the grant offer. The reviewer must be continually aware of the
status of the project to insure that the facility plan is completed
in accordance with special requirements and the approved schedule
submitted with the plan of study.
The reviewer should work closely with the grantee in preparation
of the facility plan and should review portions of the plan as they
are developed. This will insure that all regulatory requirements
are satisfied and that additional information and necessary changes
are incorporated into the plan in the most expeditious manner.
The detail of facilities planning will vary depending on the
complexity and scope of the project and "shall be conducted only to
the extent that the Regional Administrator finds necessary in order
to insure that facilities for which grants are awarded will be cost
effective and environmentally sound." This allows the reviewer to
exercise flexibility in advising the grantee as to plan requirements.
Procedures:
Shortly after award of a Step 1 grant, the reviewer
should:
1. contact the grantee and his consultant and make known
the kinds of advice and assistance available from the
State and EPA during the preparation of the facilities
plan;
2. advise the grantee as to progress reports, which must
be submitted quarterly for any facilities planning
project scheduled to take more than 1 year for
completion;
3. advise the grantee (normally on large complex projects)
that periodic inspections or audits will be made by
either the State or EPA;
4. point out special grant conditions.
Note: During preparation of the plan, conduct midcourse meet-
ings and other progress reviews as necessary.
Re: 40 CFR 35.917-3(b), .917-4(b), .925-13, .935-7
IV-16
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H. ADMINISTRATIVE REVIEW (FACILITY PLAN)
1. Clearinghouse Comments
Purpose:
The grantee must submit the completed facility plan to the
appropriate clearinghouse to allow for review and conment by
interested agencies in accordance with the procedures of the Project
Notification and Review System (OMB Circular A-95).
Discussion:
Before submitting the completed facility plan to the State
agency, the grantee is required to obtain comments from the appropri-
ate State and Regional clearinghouses. The clearinghouses are to
review the plan, circulate it to interested agencies, and return
their comments to the grantee within 30 days. If the comments are
adverse, the grantee must submit, with the completed plan, a state-
ment explaining how the comments were considered.
If, as a result of the facility plan review by the State or
EPA, the proposed project is modified, in accordance with A-95 pro-
cedures, it may be necessary to obtain clearinghouse comments on the
facility plan again.
Review Procedures:
The reviewer must consider all adverse clearinghouse comments,
The comments may require further explanation from the applicant,
State or clearinghouse. If the reviewer finds that any adverse com-
ments are not adequately addressed, the completed facility plan must
be returned to the applicant through the State agency.
Re: 40 CFR 30.305
40 CFR 35.917-1(f)
OMB Circular A-95
Guidance for Preparing a Facility Plan (MCD-46)
IV-17
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2. State Review and Certification
Purpose:
The State agency is responsible for the review and coordina-
tion of each facility plan and must provide certification to EPA
that these responsibilities have been met.
Discussion:
After obtaining clearinghouse comments, the grantee must sub-
mit the completed facility plan and the clearinghouse comments to the
State agency for review. The State is to insure that the facility
plan is in accordance with the water quality objectives of its pro-
grams. Problems between the State and grantee should be resolved
prior to review by EPA. Facility plan approval by EPA cannot be
made without State certification.
Review Procedures:
The State is to certify that the completed facility plan:
a. conforms with the regulatory requirements for
a facility plan;
b. conforms with any completed basin plan
(303(e));
c. has been available to any concerned 208
planning agency for comment;
d. conforms with any approved waste treatment
management plan (208(b)).
Re: 40 CFR 35.917-7
Guidance for Preparing a Facility Plan (MCD-46)
IV-18
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I. FACILITY PLAN REVIEW
General
The plan must encompass the following:
1. a description of the treatment works for which plans and
specifications will be prepared including:
- engineering data
- cost estimates
- schedules for completion of design and construction;
2. a description of the complete treatment system of which
the works are a part;
3. infiltration/inflow documentation;
4. a cost-effectiveness analysis of 1, 2, and alternatives
including evaluation of:
a. the relationship of capacity to needs and reserve
b. flow and waste reduction, including non-structural
measures
c. optimum performance of existing system
d. ability to meet effluent limitations
e. application of best practicable waste treatment tech-
nology
f. ultimate disposal of effluent and sludge
g. the environmental impacts as contained in an adequate
environmental information document
h. innovative and alternative technology processes
i. primary energy requirements;
5. effluent limitations or NPDES permit;
IV-19
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6. clearinghouse comments;
7. a final responsiveness summary of public participation;
8. a statement that grantee has resources to construct, operate
and maintain the treatment works;
9. a statement of compliance with Civil Rights Act;
10. a description of recreation, open space and water access
opportunities analyzed in the recommended plan;
11. a municipal pretreatment program;
12. an estimate of total project costs and charges to customers;
13. a statement on the availability and estimated cost of pro-
posed sites.
Re_: 40 CFR 35.917-1
NEPA
Regulations (40 CFR 6.506) for the National Environmental
Policy Act (NEPA) require that "an adequate environmental information
document must be an integral part of any facilities plan submitted
to EPA or to a State." In States where the review of facilities
plans has been delegated, State personnel must prepare a preliminary
environmental assessment that will serve as the basis for EPA's
decision to issue a finding of no significant impact (FNSI) or an
EIS. The environmental information document must cover all poten-
tially significant impacts, related factors and concerns under the
following:
1. a description of the existing environment, with emphasis
on the conditions relevant to the analysis of alternatives;
2. a description of the future environment without the project
(no action);
3. a discussion of the purpose and need for wastewater treat-
ment in the planning area;
4. documentation of sources used in the evaluation;
5. an evaluation of alternatives, with attention given to
long term impacts, irreversible impacts and induced impacts;
IV-20
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6. a discussion of the environmental consequences, including
direct and indirect effects of the proposed action;
7. a description of steps to minimize adverse effects, both
structural and nonstructural, considered in the plan or
identified during review, including any which should be-
come contingencies to award of further grant assistance.
To enable grantees to comply with these often complex environ-
mental review requirements, EPA has prepared a publication entitled
"Environmental Assessment of Construction Grants Projects" (FRD-5).
Re: 40 CFR 6.506
Contents
The facilities planning requirements overlap in many areas and
may not always be understood by the applicant or his consultants.
To assist the grantee in understanding and satisfying these require-
ments, EPA prepared a publication entitled, "Guidance for Preparing
A Facility Plan" (MCD-46). The guidance, however, is for advisory
information only. A grantee may select his own method or format
for preparing a facility plan as long as he meets the regulatory
requirements above.
The "Guidance for Preparing A Facility Plan" (GPFP) contains
a suggested format or outline for the plan. The same format is
used in the publication "Model Facility Plan for a Small Community."
The review procedures in this handbook are based on a facility plan
prepared in the suggested format. Some of the suggested chapters
or subparts are self-explanatory and do not require explanations.
Others are more complex and Purpose, Discussion and Review Pro-
cedures are provided. The references at the end of each part refer
to the regulations, program requirements memoranda, or guidance
which apply to the matters covered therein.
1. Summary, Conclusions and Recommendations
(Self-explanatory)
IV-21
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2. Introduction
2.1 Study, Purpose and Scope
(Note: The proposed project may include only sewage
collection, trunk or intercepting sewers, treatment plant expansions
or additions, small wastewater systems, or alternative wastewater
treatment systems. The review procedure which follows assumes a
complete treatment system including all of the above. For projects
of lesser scope, some items will not be applicable and can be
omitted.)
2.2 Planning Area (Map)
(Self-explanatory)
3. Effluent Limitations
Purpose
The limitations upon the effluent from the proposed treat-
ment works establish quantitative parameters which must be
achieved in order to meet water quality standards or environmental
needs.
Discussions
The facility plan is prepared and the treatment works are
constructed to meet the effluent limitations usually for the segment
of receiving waters into which the effluent will be discharged.
These limitations, as a minimum, require best practicable waste
treatment technology (BPWTT, secondary treatment or more stringent
water quality related requirements for discharge to surface waters),
except for discharges from combined systems. Combined (storm and
sanitary) sewer systems present a special case. The required
levels of pollutant removals, and the evaluation of alternatives
to achieve these levels, are to be determined case-by-case as
required by Agency policy (PRM 75-34).
IV-22
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The facility plan must evaluate alternative solutions to the
water pollution or public health problem, and the effluent limitations
may vary from one alternative to the next. The effluent limitations
for existing discharges are contained in the discharge permit
issued under the National Pollutant Discharge Elimination System
(NPDES). For completely new systems, the State will establish the
effluent limitations based on approved water quality standards.
In cases of treatment and discharge, or land application
systems involving discharge to surface waters, secondary treatment
is required for segments classified as effluent limited. Higher
levels of treatment may be required in order to achieve water
quality standards. Segments of receiving waters requiring higher
treatment, for nutrient removal or greater reduction in BOD or
suspended solids, are designated as water quality limited (see
Chapter II). Where land application or utilization techniques
result in eventual discharge to groundwaters (infiltration, per-
colation, etc.), the minimum acceptable treatment must be able to
meet BPWTT.
Current EPA policy requires a rigorous review of projects
designed for treatment more stringent than secondary. The incre-
mental , additional capital costs of a project, which 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. Furthermore, projects requiring treat-
ment more stringent than secondary should be evaluated for their
financial impact on the community. Under this policy, the Regions
have primary responsibility for reviewing such projects, and will
decide how to proceed in accordance with PRM 79-7. In general,
where projects have incremental costs beyond secondary of $1 million
or less, the Region retains the decision making authority. Where
incremental costs exceed $1 million, approval must be given by EPA
Headquarters. Specific procedures to be followed in the review of
applicable projects are identified im PRM 79-7.
Although secondary treatment is the minimum acceptable for
discharge to navigable waters, regulations (40 CFR Part 125) allow
modification of NPDES permits to provide levels of treatment below
secondary under certain circumstances. These regulations apply to
publicly owned treatment works (POTW) having existing discharges
to marine waters as of December 27, 1977, where special applications
for waivers were made in accordance with timing requirements.
IV-23
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In preparing the facility plan, the grantee is required to
evaluate the following waste treatment management techniques:
"(i) Biological or physical-chemical treatment and dis-
charge to receiving waters;
(ii) Systems employing the reuse of wastewater and re-
cycling of pollutants;
(iii) Land application techniques;
(iv) Systems including revenue generating applications; and
(v) Onsite and nonconventional systems."
The State has the responsibility for certifying effluent
limitations. Where existing effluent limitations are found to be
inadequate, and State funds for recomputing the allocations are not
available, 201 funds may be used to define effluent standards appli-
cable to the project.
Review Procedures:
The reviewer must establish that the correct set of effluent
limitations has been used, by comparing the stated limitations with:
a. the discharge permit in the case of existing dis-
charges;
b. limitations established in the WQM plan;
c. the reuse or groundwater recharge requirements if land
application or onsite and nonconventional systems have
been selected.
Errors or inconsistencies are to be corrected by the State
agency.
Note: In accordance with EPA policy, special review pro-
cedures are required in the event of projects involving treatment
levels higher than secondary. In such cases, it is essential that
the reviewer consult PRM 79-7 for details.
Re_: 40 CFR Part 133, Part 125
40 CFR 35.917, .925-2, .925-6
GPFP (MCD-46)
Evaluation of Land Application Systems
PRM 79-3, PRM 79-7, PRM 79-8, PRM 79-11
IV-24
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4. Current Situation
4.1 Conditions in the Planning Area
Purpose and Discussion:
The existing conditions in the project area are described
in order to form a basis of comparison among alternatives. If the
topics listed below are described in detail, they will provide a
clear distinction between the "before" and "after" conditions.
The "after" conditions are described in later chapters.
Sources of information should be cited or referenced.
Review Procedures:
Suggested topics which describe the existing conditions
may include:
a. A description of the planning area—planning area bound-
aries, political jurisdictions, and physical character-
istics (topography, geology, soils, hydrology, etc.);
b. Organizational context—the role and relationship between
all existing organizations involved in planning,
financing, and operating publicly owned treatment
works;
c. Demographic data—the most current population estimates
(in accordance with 40 CFR Part 35 Appendix A) and
the latest decennial census; population growth pat-
terns and densities; minority areas not presently
sewered; number and types of major industries and
other employment generating entities; existing land-
use patterns and controls including comprehensive
planning and zoning regulations;
d. Water quality—identify quality, quantity and uses
of existing surface and groundwaters;
e. Other existing environmental conditions—to the ex-
tent appropriate, descriptions of air quality, noise
levels, energy production and consumption, wetlands,
flood plains, coastal zones, wild and scenic rivers,
prime agricultural lands and other environmentally
sensitive areas, historic, architectural and archeolo-
gical sites, plant and animal communities and habitats
which may be affected, especially those on the
threatened or endangered species list, and related
Federal or State projects in the area.
IV-25
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The reviewer is to take special note of the items under-
lined in e. above and included in the discussion since the impact
of the proposed project on these items may require the grantee,
State or EPA to follow special review procedures and may result in
special conditions on subsequent grants (see section 10). Also,
the reviewer should note major industrial contributors to insure
that they provide pretreatment, as necessary, in the proposed
project.
Re: 40 CFR 6.506
GPFP (MCD-46)
PRM 75-32
4.2 Existing Wastewater Flows and Treatment Systems
Purpose and Discussion:
The inventory of existing wastewater treatment facilities,
including onsite disposal systems, furnishes information as to the
extent of the existing systems, their interrelationships, and the
base line flow information by which future flows will be determined.
The data may indicate conditions which limit the number of feasible
alternatives and give an indication of the severity of the pollution
problems. Later sections address the performance of existing
systems and methods of achieving optimum performance.
Review Procedures:
The inventory should, to the extent appropriate:
a. show the location of all treatment plants, sludge
management areas and facilities, pretreatment plants,
pumping stations and collection systems;
b. describe the facilities identified in a., including
design capacity, existing flows and characteristics
of wastes, overloaded conditions, if any;
c. show the location of, and describe, major industrial
discharges;
d. show locations of significantly developed areas
served by onsite or nonconventional systems;
e. include a discussion and analysis of average, peak,
dry, and wet-weather flows (also discussed in I/I
analysis);
IV-26
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f. show the locations of all bypasses and overflows;
g. describe the extent of any combined sewer system;
h. describe any flow reduction program in effect.
Re: GPFP (MCD-46)
PRM 78-9
4.3 Infiltration and Inflow
Infiltration/Inflow Analysis
Purpose:
The infiltration/inflow analysis is conducted to identify
the existence, or possible existence, of excessive infiltration/inflow
within each existing sewer system to be connected to the proposed
treatment facilities when the State has inadequate information upon
which to base a certification of such conditions.
Discussion:
As part of the facility plan, a sewer system evaluation
is begun, consisting of an infiltration/inflow analysis conducted
in accordance with the "Handbook for Sewer System Evaluation and
Rehabilitation", and/or PRM 78-10. The purpose of the analysis is
to identify infiltration and inflow which may be economically re-
moved from the system. The results are used in sizing the proposed
facilities.
Program experience gained during the initial years indi-
cates the following procedures can be used to accelerate infiltra-
tion/inflow decisions:
a. When the flow meters at the treatment plants are
determined to be well maintained and acceptably
accurate, the quantity of I/I should be determined
on the basis of plant flow charts in conjunction with
the calculated theoretical base flow. A subsystem
approach for determining I/I conditions may be ad-
visable in large systems, especially where flow
records for pump stations are available or where
specific problem areas are known or suspected by the
grantee.
IV-27
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Figure IV-2. Procedures for Infiltration/Inflow Review
IGNIFICANT
»-
-------
b. When the maximum infiltration rate based on the highest
weekly (7 days) average within a twelve month period
is less than 1,500 gallons per day per inch of pipe
diameter per mile of sewer, including service
laterals, the infiltration is considered nonexcessive.
This should normally be based on the total system
flow.
c. For infiltration rates greater than 1,500 gpd/in/m,
a cost-effectiveness study is required for determining
the possible existence of excessive infiltration.
d. For separate sanitary sewers, possible existence of
excessive inflow should be determined by performing
a cost-effectiveness analysis.
e. The results obtained from an economic study in the
I/I analysis phase are, at best, preliminary and sub-
ject to further verification, when possible excessive
I/I exists. Therefore, the cost-effective analysis
should be simple and brief, and additional data
should not be routinely required.
f. A report summarizing the results based on the above
analysis is required by EPA. The report should pro-
vide flow data necessary to substantiate the report's
conclusions. When I/I is determined to be possibly
excessive, the report should include, in addition to
flow data, a detailed program and estimated costs
for performing a sewer system evaluation survey
(SSES).
g. Where possibly excessive I/I is identified, the
applicant may use the exception clause in the regu-
lations (see 40 CFR 35.927-5(c)). This clause allows
the grantee to complete the facility plan and conduct
the sewer system evaluation survey concurrently with
project design. To accomplish this, the grantee
needs to estimate the nonexcessive flows or demon-
strate that the proposed treatment works will be a
part of the rehabilitated sewer system.
The prudent application of these policies may allow the
grantee to conduct the sewer system evaluation survey, if required,
concurrently with the treatment works design. However, the
grantee may conduct or EPA may require the sewer system evaluation
survey as an extension of the facility plan. Such work may be
funded by increasing the Step 1 grant.
IV-29
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The I/I analysis may be submitted by the grantee to the
State agency at any time prior to the submission of a completed
facility plan.
In lieu of an I/I analysis, the State agency may certify
that excessive I/I does or does not exist. In cases where this
procedure has been established and is still in effect, the grantee
need not submit an I/I analysis.
Review Procedures:
If the State agency makes a certification of excessive or
nonexcessive I/I, the following are applicable:
a. the State must continue to have the authorization of
the Regional Administrator to make such certification;
b. the certification form must be signed by the
authorized State official and contain language speci-
fied in PRM 75-7.
If the grantee submits an I/I analysis, determine that:
a. the analysis contains a conclusion as to the quantity
of possibly excessive I/I or that excessive I/I
does not exist;
b. the methods and data analyzed are sufficient to
support the conclusions;
c. the cost estimates and schedules for a sewer system
evaluation survey have been included as appropriate.
Re: 40 CFR 35.917-l(c), .925
PRM 75-7, PRM 78-10
Handbook for Sewer System Evaluation and Rehabilita-
tion, (MCD-19)
Sewer System Evaluation Survey
Purpose:
The sewer system evaluation survey is conducted where
necessary to locate and quantify sources of infiltration/inflow and
to determine those which can be cost-effectively eliminated.
IV-30
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Discussion:
The evaluation survey must be performed by the grantee in
all cases where possibly excessive I/I has been identified. It may
be performed either under a Step 1 or Step 2 grant. These options
are discussed in the Infiltration/Inflow Analysis section.
The survey is performed to determine "location, estimated
flow rate, method of rehabilitation and cost of rehabilitation
versus cost of transportation and treatment for each defined
source of infiltration/inflow." Procedures for conducting an
evaluation survey are explained in the guidance documents and
PRM 78-10.
Subject to the eligibility requirements of 40 CFR 35.927-
3(a), which prohibits the funding of rehabilitation which should
be a part of the applicant's normal operation and maintenance
responsibilities, structural repairs and sewer replacement may be
performed under a Step 1 grant when approved by the State and EPA.
However, when such repairs are required for a substantial portion
of the sewer system, especially in cases where public hearings
are warranted, the grantee should propose that repair work be
performed at later dates and perhaps as part of Step 2 or Step 3.
Review Procedures:
Review the sewer system evaluation survey report to
determine that:
a. the survey report presents the results of the survey
and supports the conclusions concerning sources of
I/I;
b. a cost-effectiveness analysis is included for sources
of infiltration/inflow, based on a comparison of
cost of transportation and treatment versus cost of
rehabilitation, or the 1500 gpd/in/m rate is used to
screen subsystems for excessive infiltration;
c. the report includes a proposed rehabilitation program,
with a detailed cost estimate for completion and
bidding specifications,
d. the net savings to be realized through rehabilitation
are identified both in terms of capacity and total
cost;
IV-31
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e. the quantities of allowable infiltration and inflow
are identified (those which will not be rehabilitated)
and included in the design capacity of the proposed
treatment facilities (coordinate with review of de-
sign);
f. where the evaluation survey is extensive, the work
carried out is not a part of the grantee's normal
operation and maintenance responsibilities;
g. the report contains sufficient documentation to
support the results, including raw data, illustrations,
inspections forms, photographs and other information,
where appropriate.
Re: 40 CFR 35.927
PRM 75-7, PRM 78-10
Handbook for Sewer System Evaluation and Rehabilita-
tion (MCD-19)
Sewer System Maintenance
Purpose and Discussion:
Following the rehabilitation phase, a final analysis on
the I/I conditions should be performed by means of plant flow
charts. When available, pump stations flow data or single point
flow monitoring at the treatment plant should be used. The analysis
should be simple and brief to allow a determination of the total
quantity of non-excessive I/I remaining in the system. In addition,
the analysis should be performed based on flow data obtained
during groundwater conditions comparable to those when the initial
I/I condition was determined.
Review Procedures:
A positive and realistic maintenance program which
addresses the following should be submitted:
a. The timely elimination of all excessive inflow
sources originating from private sources which can
be cost-effectively removed. An acceptable timetable
should specify the elimination of these inflow
sources before the completion of the treatment works
construction;
b. The establishment of continuing sewer maintenance
programs to ensure that the sewer systems will not be
subject to excessive I/I in the future.
Re: PRM 78-10
IV-32
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4.4 Performance of Existing Systems
Purpose:
Each major component of the existing system is to be
evaluated to determine if it can be used in the new project.
This includes both centralized (conventional) facilities and de-
centralized systems (i.e. onsite systems).
Discussion:
Many existing sewage treatment facilities, including on-
site systems, are not operated at their optimum efficiency. The
reasons for poor performance are numerous, but it has been found
that generally it is more cost-effective and environmentally
sound to bring existing facilities up to optimum performance
rather than to abandon them. Even if optimum performance of
existing facilities cannot achieve effluent limitations, additional
facilities necessary to do so should be less costly. Operating
problems affecting performance should be described in this section.
For decentralized systems, the extent, nature and location of mal-
functions should be described in accordance with agency guidance
(PRM 78-9).
In reviewing the grantee's evaluation of the existing
system, the reviewer may wish to compare the evaluation with the
operation and maintenance reports (EPA Form 7500) for the project.
Review Procedures:
Items which might be considered in evaluating the per-
formance of existing systems include:
a. the adequacy of the treatment plant design for the
type and amount of flow being treated (compare with
NPDES permit);
b. the adequacy of the operation and maintenance program
(compare with EPA Form 7500);
c. the effects of infiltration/inflow;
d. the effects of industrial discharges;
e. adequate documentation of problems associated with on-
site disposal systems.
Re: 40 CFR 917-1(d) (3)
GPFP (MCD-46)
PRM 78-9
IV-33
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5. Future Situation
5.1 Land Use
Purpose:
The ability of the land and its resources to support
various uses is analyzed to aid in determining future wastewater
flows.
Discussion:
The planning period for wastewater treatment facilities
should be 20 years. Construction of the treatment plant may be
phased over this period with the initial capacity less than the 20
year flows. Intercepting and truck sewers shall be designed for
20 years, unless the grantee can demonstrate that longer design
periods (not to exceed 40 years) are consistent with WQM plans
and would reduce overall primary and secondary impacts.
The projected land uses may be a limiting factor in deter-
mining the size, phasing, and location of the proposed facilities.
Undevelopable lands, such as steep slopes, highway rights-of-way,
power line easements, flood plains, environmentally sensitive areas,
parks, wetlands and prime agricultural lands, etc., are not to be
included when estimating future flows based upon the land uses.
The land uses considered by the grantee in his study must not
contravene State or local land use plans.
In the absence of future land use plans, the grantee
should consult with agencies responsible for planning in the area.
Review Procedures:
Points which might be covered under land use include:
a. present land uses to determine patterns of development;
b. development patterns and zoning ordinances to see
that they are in basic agreement;
c. future land use plans which have been adopted and
are being implemented through the use and enforce-
ment of zoning ordinances;
d. use of undevelopable lands in estimating future flows;
IV-34
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e. consultations with responsible planning agencies in
projecting land use where future land use plans are
lacking.
Re: 40 CFR 6.506
40 CFR 35.917-l(d)(l) and Appendix A
GPFP (MCD-46)
5.2 Demographic and Economic Projections
Purpose and Discussion:
Increases in future waste loads and flows result in part
from population increases and industrial growth. The determination
as to which population projections should be used depends on the
status and applicability of 208 agency projections and approved,
disaggregated State projections for the facility planning area.
In the absence of either of these, future population may be fore-
cast by linear extrapolation of trends in the recent past (1960
to the present). Standards for compliance are provided in 40 CFR 35
Appendix A. Also, if the planning area includes industrial
development boards or other agencies concerned with economic
development, these agencies should be consulted for assistance in
estimating future industrial needs.
Review Procedures:
Review projections to determine that:
a. applicable projections (40 CFR 35 Appendix A) were
used;
b. any departures from approved projections are justi-
fied and documented;
c. industrial growth trends were based on valid economic
projections;
d. future growth trends have considered the limitations
imposed by land use, air or water quality restrictions,
water supply, development controls or other constraints.
Re: 40 CFR 6.506
GPFP (MCD-46)
40 CFR 35 Appendix A 8(f)(2)
IV-35
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5.3 Forecasts of Flow and Waste Load
Purpose and Discussion:
The forecasting of future flows and wasteloads in the
planning area ties in several topics which have been considered
earlier in the facility plan. The future flows and loads will be
directly related to the future population to be served, based on
results of a survey for presently unsewered areas and industrial
activity (i.e., industries likely to use municipal plants), sub-
ject to the limitations of land use, air quality maintenance plans
or other limiting constraints and the quantities of nonexcessive
infiltration/inflow. The future flows and loads are added to the
existing wastewater flows (section 4.2).
Appendix A to the regulations (40 CFR Part 35) provides
standards to be followed in the estimation of wastewater flows,
based on population and industrial growth, for facilities planning.
Use of average per capita flow rates must be based on these stan-
dards or otherwise justified.
Review Procedures:
The reviewer should focus on the methods used in estimating
future wasteloads and flows to insure compliance with the regulations
The following considerations must be incorporated where appropriate:
a. approvable projections of eocnomic and population
growth;
b. documentation of need for presently unsewered and/or
undeveloped areas;
c. estimates of nonexcessive infiltration/inflow;
d. analysis of pollutant content (characteristics) and
flows in the existing system;
e. consideration of combined sewer overflow;
f. industrial waste flows and loads, considering possible
reductions due to imposition of user charges, indus-
trial cost recovery, or pretreatment;
g. projections of possible reductions in flow resulting
from measures to reduce water use and waste production
(installation of water meters or ban on garbage
grinders, for example);
IV-36
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h. limitations upon flows due to land use, air quality
maintenance plans or other constraints.
Re: 40 CFR 35.917, .927, .935-13, Appendix A
40 CFR Part 403
GPFP (MCD-46)
PRM 78-9
5.4 Future Environment of the Planning Area Without the
Project
Purpose and Discussion:
The statutes require that "no action" be considered as an
alternative to any proposed project. In order to evaluate and
compare "no action" with other alternatives, the future environ-
ment without the project must be visualized. The items used in
this process should be the same as those used in Section 4.1 to
the extent that they include changes to the environment.
Re.: 40 CFR 6.506
GPFP (MCD-46)
6. Alternatives
6.1 Optimum Operation of Existing Facilities
Purpose:
The alternative of optimum operation of the existing
facilities is investigated as a first step in the search for a cost-
effective solution to the water quality problem.
Discussion:
An investigation of existing facilities, including onsite
disposal systems, may reveal that they can function more efficiently
with the addition of new equipment, operational changes or the
addition and training of operating personnel, or that the facilities
have already been operating at their optimum efficiency. Whatever
the results of the investigation, the optimum operation of the
existing facilities will determine what additions, expansions or
replacements must be made, including better design, operation,
and maintenance of private onsite systems, and the extent to
which existing facilities can be converted and/or used in the new
system. Any improvements expected as a result of future pretreat-
ment by industrial contributors or removal of excessive infiltration/
inflow should be evaluated and discussed.
IV-37
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Review Procedures:
In considering the alternative of optimum performance of
the existing facilities, one or more of the following items may
be appropriate:
a. the maximum performance levels possible with the
existing process design;
b. the age and reliability of existing equipment and
its remaining useful life;
c. the qualification and number of additional operating
personnel needed;
d. the additional operating controls and laboratory
facilities needed:
e. the process modifications possible (e.g., convert
conventional activated sludge to contact stabilization;
add aeration to stabilization ponds);
f. the impact of requiring industrial pretreatment;
g. the impact of removing excessive infiltration/inflow;
h. the effectiveness and suitability of existing onsite
disposal systems, and possible modifications for
improving efficiency.
Re: 40 CFR 35.917-1(d)(3)
GPFP (MCD-46)
PRM 78-9, PRM 79-8
6.2 Regional Solutions
Purpose and Discussion:
The possibility of a regional solution to wastewater treat-
ment problems should be explored early in the planning process.
If the question has been resolved by previous studies (e.g., water
quality management plans), the result may be incorporated into the
facility plan by reference. If not, the grantee should consider
various alternatives, such as, interconnection of facilities, con-
struction of one or more larger facilities in lieu of a greater
number of small facilities; combining only selected system elements
such as sludge management, laboratories, advanced treatment pro-
cesses, etc.; joint management; the creation of septic district
IV-38
-------
authorities, etc. Note: regionalization should be given careful
consideration. A regional alternative, involving extensive inter-
ceptor construction in otherwise undeveloped or undisturbed areas
may not be justifiable when compared against the potential adverse
impacts from induced growth. This should resolve the question as
to the feasibility of regionalization as a viable alternative.
Projects involving more than one political jurisdiction
require the completion of service agreements prior to the award
of the Step 2 grant. Such agreements must cover financial arrange-
ments, enforcement, user charge and industrial cost recovery
requirements, sewer system rehabilitation, sewer use ordinances,
etc. Since the agreements often entail long periods of negotiation,
action on them should begin as early as possible during the
development of the Facility Plan.
Re: 40 CFR 35.917-l(h), .920-3(b)(6)
GPFP (MCD-46)
PRM 79-8
6.3 Waste Treatment Systems
Purpose:
For each service area identified under the regional solution
analysis, the "no action" alternative and other waste treatment
management techniques must be investigated to determine which sys-
tems are most feasible and which may be eliminated from further
consideration.
Discussion:
The combinations of alternative waste treatment systems
could be astronomical and, therefore, a process must be developed
which eliminates those which are not feasible and identifies those
which should be investigated further. The statutes require that
certain systems be investigated for every project, including
innovative and alternative technologies (40 CFR 35.908). Beyond
these, the application of basic engineering, environmental, and
economic principles to the preliminary screening process will be
sufficient to reduce the alternatives to a reasonable number.
The grantee is to present his reasons for eliminating
each alternative investigated. Where the reasons for elimination
are apparent, they should be briefly stated (e.g. "waste treatment
IV-39
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flows cannot be reduced by I/I rehabilitation or other water
saving controls", "sludge incineration cannot be utilized as it
would contravene existing air quality plans", "no action is not
feasible as the present discharge does not meet effluent limita-
tions and State has issued a cease and desist order"). However,
alternatives must be given adequate consideration prior to elimina-
tion in all cases. When the reason for eliminating an alternative
is not readily apparent, the grantee is to present evidence or
discussion in sufficient detail to support his conclusion. In
particular, rejection of land application must be adequately
justified in all cases (PRM 79-3).
This analysis will identify the most feasible alternatives
which will then be evaluated in greater detail.
Review Procedures:
Review the facility plan and determine that the following
topics have been adequately addressed.
a. No Action
Generally, the "no action" alternative can be
eliminated from consideration because of the need for the project
as presented in the preceding chapters. However, where the "no
action" alternative may be feasible, the facility plan should
address this concept. The need for new facilities must be ade-
quately addressed by the plan.
Re: 40 CFR 6.506
GPFP (MCD-46)
b. Flow and Waste Reduction
For communities with populations over 10,000 the
plan will include a flow and waste reduction program and take the
reduced flows into account in the proposed capacity of the treat-
ment works. Possible elements of a flow and waste reduction program
include:
- a public education program;
- sewer system rehabilitation to reduce or eliminate
excessive infiltration/inflow;
IV-40
-------
- implementation of household plumbing fixtures and
water-saving devices;
- State laws or local ordinances to reduce water use
and nutrient discharges (e.g. phosphate detergent
ban);
- adoption of water pricing policies;
- installation of water meters (proven to reduce
water consumption);
- initiating industrial pretreatment requirements,
reuse or recycling.
Re_: 40 CFR 35.917-1 (d)(2)
GPFP (MCD-46)
c. Configuration of Sewers and Interceptors
When service areas have been established, the con-
figuration of the collection sewers is pretty well prescribed with
regard to routings and size (minimum size in most States is 8
inches). Attention should be directed toward trunk and inter-
cepting sewer alternatives to insure that they conform to existing
and future land use plans. Unless necessary to eliminate existing
point source discharges, interceptors allowable for grant funding
shall not be extended into environmentally sensitive areas, prime
agricultural lands or other undeveloped areas. Similarly, at
least two thirds of the expected flow from a proposed collection
system will be for wastewaters originating from habitations in
existence on October 18, 1972. The system should not provide
any capacity for new habitations located on environmentally sensi-
tive lands. Preliminary pipe sizes and costs may have to be esti-
mated to reduce the alternatives to a manageable number.
Re.: 40 CFR 35.925-13, Appendix A
GPFP (MCD-46)
PRM 78-9
d. Sludge Disposal
The plan should adequately address alternatives for
sludge treatment and ultimate disposal of solids under the following
methods:
IV-41
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- land utilization (agricultural, soil conditioner,
etc.);
- composting;
- sanitary landfill;
incineration, pyrolysis or coincineration with
solid waste;
- ocean disposal (only under very special circum-
stances).
EPA has published guidance documents for use by
grantees and their consultants in the evaluation of sludge dis-
posal alternatives, and will continue to publish guidance as the
"state-of-the-art" develops in this area.
In evaluating disposal alternatives, the plan should
adequately consider public health issues, regulatory constraints,
technological aspects, and social, economic and institutional fac-
tors. The environmental effects of alternative disposal methods
should be addressed in the environmental information portions of
the facilities plan.
(Note: Criteria for determining eligibility of land
for use in sludge disposal is discussed in Chapter VII).
Re: 40 CFR 35.917-1(d)(6)
GPFP (MCD-46)
Sludge Treatment and Disposal (EPA-625/4-78-012)
Municipal Sludge Management: Environmental Factors
(MCD-28)
Municipal Sludge Management: EPA Construction
Grants Program, An Overview of the Sludge Manage-
Situation (MCD-30)
Application of Sewage Sludge to Cropland:
Appraisal of Potential Hazards of the Heavy
Metals to Plants and Animals (MCD-33)
e. Best Practicable Waste Treatment Technology (BPWTT)
The regulations require that each project evaluate,
as a minimum, the following five waste treatment management tech-
niques:
IV-42
-------
- biological or physical-chemical treatment and dis-
charge to receiving waters;
- treatment and reuse;
- land application techniques;
- systems including revenue generating applications;
and
- onsite and non-conventional systems.
Note: Rejection of land treatment alternatives shall
be supported by a complete justification. Factors to be evaluated
are:
- alternative site characteristics
- loading rates and land area
- estimated costs
- level of preapplication treatment
- environmental effects
See PRM 79-3.
As the "state-of-the-art" develops for each of these
techniques, EPA will publish additional technical bulletins des-
cribing the application and evaluation of each. In selecting which
of these alternate waste treatment management techniques is most
cost-effective for the proposed project, the grantee must consider
the application of the best practicable waste treatment technology
(BPWTT).
EPA has established that the BPWTT for "treatment and
discharge to receiving waters," generally requires a minimum of
secondary treatment (see Section 3) or such advanced waste treat-
ment methods as is necessary and justifiable (PRM 79-7) to achieve
the effluent limitations required to meet applicable water quality
standards. Since "reused" wastewater and runoff of "land appli-
cation" techniques eventually enter receiving waters, the same
level of treatment is required for these techniques. In addition,
where discharges to groundwaters from "land application" may occur,
the level of treatment must comply with EPA BPWTT criteria pro-
tecting existing or potential uses of such groundwaters.
IV-43
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Where service is proposed for existing unsewered areas,
these areas must meet the requirements of 40 CFR 35.925-13.
Furthermore, thorough consideration of onsite and non-conventional
systems must be given for these unsewered areas in comparison to
conventional collection and treatment. Specific instructions are
included in PRM 78-9 and PRM 79-8.
As each of these techniques is evaluated, the grantee
must also consider how well the system lends itself to the appli-
cation of future technology for reclaiming or recycling the effluent.
Re: 40 CFR 35.917-1(d)(5), .925-13
PRM 78-9, PRM 79-3, PRM 79-7, PRM 79-8
Alternative Waste Management Techniques for Best
Practicable Waste Treatment
f. Combined Sewer Overflows and Stormwater Discharges
Projects involving treatment and control of combined
sewer overflows may be considered only after the planning process
has clearly established their cost-effectiveness. Such projects must
be considered on a case-by-case basis after a careful review of all
alternative control techniques has shown that, even after industrial
effluent limitations and a minimum of secondary treatment for dry
weather municipal flows are achieved, the selected alternative is
needed to protect the beneficial use of the receiving waters.
Alternative levels of treatment and options for achieving
each must be evaluated to insure selection of the most cost-effective
approach. Where a multiple-purpose approach is proposed, its grant
eligibility cannot exceed the cost of the most cost-effective
single-purpose option.
Re.: 40 CFR 35.925-21
PRM 75-34, 77-4
g. Industrial Service
The joint treatment of industrial and domestic wastes
should be considered and,where appropriate,encouraged. In con-
sidering industrial discharges, the grantee should evaluate to the
extent necessary: (1) interceptor or collector sewers proposed for
construction exclusively to serve industrial users (non-allowable
grant cost); (2) the compatability of industrial wastes with domestic
wastes; (3) the requirements for pretreatment (see Section 9.5 of
this Chapter); (4) the volume, strength and method of discharge
(batch or uniform); (5) the cost of industrial pretreatment and
IV-44
-------
joint treatment versus separate industrial treatment; (6) the
method of implementing and enforcing limitations on industrial
discharges.
Re: 40 CFR 35.925-15, .907
40 CFR, Part 403
GPFP (MCD-46)
h. Innovative and Alternative (I&A) Technology
The CWA requires I&A technology assessment by Grantees
in their facility planning, and provides incentives to insure that
the technology will be seriously considered. Alternative technology
entails proven processes and techniques of wastewater treatment which
provide for the reclaiming and reuse of water, for productively
recycling waste water constituents or otherwise eliminating the
discharge of pollutants, or for recovering energy. Innovative
technology involves developed methods which have not been proven
fully in the circumstances of their contemplated use. They may be
either alternative technology or conventional concepts of treat-
ment, which have an acceptable level of risk and a corresponding
opportunity for significant advancement of the state-of-the-art
to meet certain national goals.
Facilities planning grants (Step 1) made after September
30, 1978 must address I&A technology. The incentives provided
by CWA include: 85 percent Federal grants (Step 2, Step 3, and
Steps 2+3) for approved I&A projects, 100 percent grants if the
projects fail within two years after final inspection; set aside
(reserve) of State's allocations to be used for funding the
increased grants from 75 percent to 85 percent; and a cost
preference of 115 percent for approved I&A projects.
Alternative systems to solve the water pollution prob-
lem are initially classified as alternative technology or conven-
tional systems. For those which are not fully proven, the risk
of success (or failure) must be evaluated against the potential
for advancement in the state-of-the-art. For alternatives passing
the fully proven test or where the risk appears reasonable, the
alternatives are evaluated against six criteria. (See 40 CFR
Part 35 Appendix E.) An alternative technology project may be
classified as innovative if it meets any one of the six criteria.
Conventional systems may be classified as innovative by meeting
either the 15 percent life cycle cost reduction or 20 percent net
primary energy reduction.
IV-45
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All feasible alternatives for which cost effectiveness
analysis will be done are analyzed to identify the non-innovative
system which is the lowest cost,and the non-innovative system
which is the lowest energy consumer. I&A technology alternatives
are then compared with these non-innovative systems and the 115
percent cost preference is applied, i.e., the I&A alternatives
may be as much as 15 percent higher cost than the lowest costing
alternative and still be considered equal. The 115 percent cost
preference is applied to the present worth cost (capital plus
O&M minus salvage, etc.) replaced components or system.
If the I&A project is cost effective, environmentally
sound, implementable and been subjected to public review (public
participation program) the Step 2, Step 3, or Steps 2+3
federal grant may be increased to 85 percent.
Small wastewater systems for communities of 3,500
population or less or sparsely populated areas (3,500 or less) of
larger communities may also be considered as alternative techno-
logy projects provided they meet certain criteria. These criteria
include: on-site disposal methods, cluster disposal systems,
collection systems using 6 inch or smaller gravity sewers,
pressure or vacuum sewers, etc. The small wastewater alternative
technology system is compared with a conventional system, and if
after application of the 115 percent cost preference the alterna-
tive technology system is cost effective, the treatment works
including the collection system may be eligible for 85 percent
grants. These systems may be publicly or privately owned but a
public body must apply for the grant and be responsible for the
implementation, construction, operation and maintenance of the
system.
It is important that the reviewer consult "Innovative
and Alternative Technology Assessment Manual" (MCD-53) for a more
complete discussion of I&A requirements, policy, methodology
for evaluating, and for guidelines in assisting both the grantee,
consultant and reviewer.
Review Procedures:
(1) If Step 1 grant was made after September 30, 1978,
insure facility plan address I&A technology.
IV-46
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(2) Insure that land application of effluent has been
considered and at a minimum one slow rate (irri-
gation) and one rapid rate infiltration alterna-
tive have been included. If land application of
effluent has not been selected, insure facility
plan clearly justifies the reason for rejection.
(3) The I&A alternative must either be fully proven
or a risk assessment must be addressed.
(4) Where either alternative technology or conventional
systems are evaluated for innovative classification,
insure that the facility plan addresses which
criteria the alternative has met (conventional must
meet either 15 percent LCC reduction or 20 per-
cent net primary energy reduction).
(5) The facility plans must clearly identify the
lowest cost and least energy non-innovative
system for comparison with the I&A alternatives.
(6) Insure that the cost effectiveness analysis has
been correctly computed taking into account:
(a) cost comparisons are for either present
worth or equivalent annual cost;
(b) O&M, salvage value, staged construction, etc.
have been taken into account over the 20 year
planning period;
(c) land has been inflated at 3 percent per year
and natural gas at 4 percent per year (must
compute present worth of salvage value of land);
(d) other costs do not include inflation;
(e) alternatives are compared on equal basis of
area sewered, population served, equivalent
levels of treatment, etc.
(7) The 115 percent cost preference has been properly
applied:
(a) For treatment plants where I&A components are
50 percent or greater of the eligible treat-
ment works costs (excluding collection and
IV-47
-------
intercepting sewers) the 115 percent cost
preference is applied to the entire treatment
plant.
(b) For treatment plants where the I&A components
are less than 50 percent of the eligible
treatment works costs (excluding collection
and intercepting sewers) the 115 percent cost
preference is applied only to the replaced
components.
(c) For small wastewater treatment systems the
115 percent cost preference is applied only to
the publicly owned facilities including alter-
native collecting system (not privately owned).
(8) If land application of sludge has been selected,
insure the sludge has been used productively (com-
posting, agriculture, reclaiming of disturbed land,
codisposal with refuse) to qualify as I or A
technology.
(9) If an alternative has been designated as innovative
under the 20 percent net primary energy reduction
criteria, insure energy boundary conditions have
been properly drawn.
(10) If codisposal of sludge and refuse is analyzed,
insure that costs have been proportioned properly.
(11) For projects proposing anaerobic digestion with
90 percent methane recovery, insure that the
methane is productively used (either on or off
site) and the revenue, if any, has been considered
in the cost effectiveness analysis.
(12) The federal grant participation has been computed
properly to present accurate costs to the public.
Re_: 40 CFR Part 35, Preamble
40 CFR 35.905, .908, 915(a) (1) (i i i), (2-), .915-l(b),
(e), .917-1, .918-1, -2, -3, .930-1 (b), -5,
.935-20, .936-13(a)(2), (b), .940-3(a), (b), (c),
Appendix A, Appendix C-l(2)(d)
Appendix E,Innovative and Alternative Technology
Assessment Manual (MCD-53)
PRM's 77-4, 78-9, 79-3, 79-8
POM 79-3
IV-48
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i. Energy Requirements
For facilities planning begun after September 30, 1978,
an analysis of the operational energy inputs for each alternative
considered must be included, with the objective of reducing energy
consumption, or increasing recovery, among alternatives.
Re_: 40 CFR 35.917-1 (d) (9), Appendix E
6.4 Evaluation (Monetary, Environmental,Implementation)
Purpose:
An evaluation of the most feasible alternatives is per-
formed in order to select the most cost-effective and environmentally
sound project.
Discussion:
The preceding sections of this chapter provided a systematic
guide for reducing the possible alternatives to a manageable
number. The alternatives to be evaluated in this section are the
most feasible and will be subjected to a more detailed evaluation
under the broad categories of monetary, environmental and imple-
mentation considerations.
The results of the evaluation will be a comparison of the
final alternatives in preparation for public review and the
eventual selection of the most cost-effective and environmentally
sound project. During this evaluation some of the alternatives
may be eliminated from further consideration based upon adverse
environmental impacts, high costs, legal complications or other
reasons. The reasons for elimination must be stated. The data
used in the evaluations must be supported in other sections of
the facility plan. Each alternative should be evaluated in suf-
ficient detail and in a similar format to facilitate comparison.
Detailed assistance and instructions for preparing monetary
evaluations is given in the Guidance and in Appendix A, 40 CFR
Part 35. The environmental impact evaluation must consider both
primary and secondary impacts. The secondary impacts (indirect
or induced by the project) must be presented and carefully
evaluated as they could form the basis for the preparation of an
environmental impact statement (see Section 10). The review pro-
cedures below highlight the key factors to be considered in the
evaluation.
IV-49
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Review Procedures:
Each alternative should be analyzed and evaluated with re-
gard to its relationship or impact upon the subjects below:
a. monetary cost comparison based upon:
- present worth or equivalent annual cost over
planning period;
- 15% cost-effectiveness preference for I&A tech-
nologies;
- interest rate for present worth calculations as
published by U.S. Water Resources Council at the
time of initiation of the facility plan;
- all capital and operation and maintenance costs
are included in present worth calculations;
- existing facilities considered as sunk costs;
- differential inflation allowance only for land
and natural gas;
- interest on capital equipment during construction
uniform unless period is longer than 4 years;
- useful life - land—permanent
structures 30-50 years
process equipment 15-20 years
auxiliary equipment 10-15 years;
- salvage value included in present worth calculations.
Mote: The regulations (40 CFR 35.917-1(1)) and guidance
(PRM 76-3) require that monetary costs are shown in total, and in
terms of their full impact on the average citizen served by the
facilities and on industry. Itemized costs should show the capital
cost of the local 'share, interest on borrowed capital, sinking fund
costs, O&M costs, connection charges, etc. Criteria for identifying
"high-cost" alternatives or projects are outlined in PRMs 79-7
and 79-8. The reviewer must insure that the proposed facilities
will be affordable by the user.
Re.: 40 CFR Part 35.917-1 (d), (1), (in)
PRM 76-3, PRM 79-4, PRM 79-7, 79-8
GPFP (MCD-46)
IV-50
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b. environmental impacts (see Section 10);
- both primary and secondary;
- beneficial and adverse;
- irreversible and irretrievable commitments of re-
sources;
- long-term and short-term;
- mitigating measures.
Re: 40 CFR Part 6
PRM 75-26, PRM 76-4, PRM 78-1
GPFP (MCD-46)
Environmental Assessment of Construction Grants
Projects (FRD-5)
c. institutional arrangements;
- identify responsible organization for each alternative;
- estimated costs allocated to each jurisdiction;
- resolutions or agreements of implementing agencies
accepting the plan.
Re: 40 CFR 35.917-6
GPFP (MCD-46)
d. significant industrial service;
- costs of separate treatment;
- costs of pretreatment followed by municipal treatment;
- future industrial flow allowance.
Re: 40 CFR 35.925-15, Part 403
GPFP (MCD-46)
e. flow and waste reduction measures;
Re: 40 CFR 35.917-1 (d)(2), Appendix A
GPFP (MCD-46)
IV-51
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f. recycling of nutrients, reuse of wastewater.
Fte: 40 CFR Part 35 Appendix A
g. sewer system arrangements;
- consideration of onsite and nonconventional alter-
natives;
- pipe sizes and useful life (20 year limitations);
- limitations on grant funding of collection systems;
- excess or reserve capacity;
- extension into environmentally sensitive areas or
other undeveloped lands;
- alternate routings;
- CSO alternatives;
- ocean outfalls.
Re_: 40 CFR 35.917-1 (d)(l), .925-13, Appendix A
40 CFR Part 233
GPFP (MCD-46)
PRM 78-9, PRM 79-8
h. method of sludge disposal;
- alternative technologies;
- codisposal options.
Re_: 40 CFR 35.917-1 (d) (6)
GPFP (MCD-46)
Sludge Treatment and Disposal (EPA-625/4-78-012)
i. location of facilities;
- odors and aesthetics;
- cultural or environmentally sensitive resources
(see Section 10);
IV-52
-------
- relationship to flood plains and wetlands.
Re: 40 CFR Part 6
CPFP (MCD-46)
PRM 76-4, PRM
j. revision of waste load allocations;
Re_: 40 CFR 35 Appendix A
GPFP (MCD-46)
k. construction staging;
- excess or reserve capacity,
- modular designs.
Re_: 40 CFR Part 35 Appendix A
GPFP (MCD-46)
1. project segmenting;
Re_: PRM 75-14
m. flexibility;
- future land requirements for treatment plant ex-
pansion or upgrading;
- capability for future wastewater reuse;
- easements and rights-of-way for sewers.
Re: GPFP (MCD-46)
n. reliability;
- capability of maintaining operation during equip-
ment failure or maintenance;
- treatment processes;
- equipment and personnel
Re: GPFP (MCD-46)
IV-53
-------
o. analysis of primary energy requirements of alternatives;
Re: 40 CFR 35.917-1(d)(9), Appendix E
p. recreation, open space and access to bodies of water
afforded by alternatives;
Re: 40 CFR 35.917-l(j)
q. multi-purpose alternatives.
Re: PRM 77-4
7. Plan Selection
7.1 Evaluation and Comparison of Proposals
Purpose and Discussion:
Evaluation of alternatives, comparison and plan selection
involve making choices based on costs, environmental impacts and
feasibility of implementation. The grantee may select any number
of methods to display costs, primary energy requirements and
effects of the alternative proposals. Regardless of the display
method, the effects should be described, wherever practical, in
quantitative terms based on the supporting analyses elsewhere in
the plan. Where quantification is not possible, the comparison
should be made by brief narrative descriptions.
The end result of the evaluation is a comparative display
of alternatives for public presentation and discussion along with
an identification of the grantee's preferred plan.
Re: GPFP (MCD-46)
7.2 Views of Public and Concerned Interests on Alternatives
Purpose:
Public participation is required to aid the grantee in
selecting a plan which will be cost-effective and have the widest
possible public acceptance.
IV-54
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Discussion:
Issues surrounding water quality problems and the large
amounts of money needed to solve them often come under attack from
varied interests. Although the primary responsibility for water
pollution control and abatement rests in governmental agencies,
public involvement in the decisions and implementation is necessary
and desirable. The intent of public participation is to foster
a spirit of openness and a sense of mutual trust between the public
and governmental agencies and to give the public a role in
decision making efforts to restore and maintain the integrity
of the Nation's waters.
All facility planning initiated after February 16, 1979,
must include either a basic or full-scale public participation
program unless a program exemption is granted by the Regional
Administrator. The basic public participation program will be
used for most projects and includes the tasks as listed in 40 CFR
35.917-5(b). A full-scale public participation program is required'
for projects including preparation of an Environmental Impact
Statement, where advanced wastewater treatment levels are required,
or where particularly significant effects on matters of citizen
concern are possible (as defined in 40 CFR 35.917-5(c)(iii)). A
full-scale public participation program requires hiring a public
participation coordinator, establishing an advisory group and
holding an additional public meeting plus all of the tasks in-
cluded in the basic program. Upon written request of the grantee,
the Regional Administrator may exempt projects in which only minor
upgrading of treatment works or minor sewer rehabilitation is
anticipated. Before granting a public participation program
exemption, a notice of intent to waive program requirements must
be issued 30 days in advance, and consideration given to comments
received. Projects granted a program exemption must still hold
one public hearing and publicly disclose project costs during
facility planning. A final responsiveness summary is included
in the facility plan to discuss public participation efforts
during planning.
Review Procedures:
Insure that a public participation program appropriate
to the project has been adequately followed during preparation of
the facilities plan.
IV-55
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The following are minimum requirements applicable to both
the basic and full scale programs, except where noted:
a. a public information program was maintained throughout
the facilities planning process;
b. the public was notified and consulted during the
development of the plan of study;
c. an outline of the public participation program was
submitted with the Step 1 grant application;
d. a public participation work plan was submitted 45
days after grant acceptance;
e. at least two public meetings were held, with proper
advance notification, one early in the planning pro-
cess, and a second prior to plan selection;
f. responsiveness summaries were prepared and distributed
following each public meeting; adverse or significant
views were addressed and incorporated into the
facility plan, including the addressing of servicing
of areas where minority groups live but where there
has not been service by sewers;
g. a public hearing, with proper advance notice, was held
prior to final adoption of the facilities plan;
h. a final responsiveness summary is included in the
facilities plan;
i. for a full scale program, a public participation co-
ordinator was designated, and an advisory group
established, at the time of grant acceptance.
Re: 40 CFR 35.917-1(g), .917-5
40 CFR Part 25
44 FR 34, pp. 10300-10304
GPFP (MCD-46), Municipal Wastewater Management -
Public Involvement Activities Guide (FRD-7)
PRM 75-32
IV-56
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7.3 Selected Plan (major feature summary) and Reasons for
Selection
Purpose and Discussion:
Following the public meeting or hearing, the alternatives
are reevaluated recognizing any new information gained during pub-
lic review and noting those most acceptable to a broad range of
public interests. The plan is then selected based on reevaluation
of tradeoffs.
The selected plan, its major features, and reasons for
selection are presented in summary form for clarity and the con-
venience of reviewers.
Review Procedures:
Review the summary for inclusion of:
a. major features;
b. clear explanation and justification for plan selection.
Re: 40 CFR 35.917-1 (a), (b), 40 CFR 6.506
GPFP (MCD-46)
7.4 Environmental Impacts of Selected Plan
Purpose:
The primary and secondary environmental impacts of the
selected plan are presented in summary form and specific issues
are addressed as required by the National Environmental Policy Act
(NEPA) and other environmental and cultural resource laws.
Discussion:
The same issues and review procedures covered in Section 6,
alternatives, are addressed in the selected plan. However, in
review of the selected plan, they are analyzed in greater detail.
Special note should be made by the reviewer of impacts upon cultural
or environmentally sensitive resources as these require special
procedures and considerations (see Section 10).
IV-57
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The discussion of environmental impacts of the proposed
project must be sufficient to constitute an environmental information
document for utilization by the State, or EPA in preparing an en-
vironmental assessment. This must be adequate to serve as a basis
for EPA's decision to issue a finding of no significant impact
(FNSI) or an EIS for the proposed action.
The grantee should discuss in this or other sections the
mitigating measures which will be employed in the design and con-
struction phases of the project to minimize adverse effects. If
the adverse impacts are unacceptable, the reviewer should contact
the grantee (through the State agency) and discuss mitigating
measures which will make the selected plan acceptable.
Review Procedures:
The summary should include adequate discussion of:
a. any unavoidable adverse impacts resulting from the
proposed project (special note of cultural or environ-
mentally sensitive resources);
b. the relationship between local short-term uses of
the environment and the maintenance and enhancement of
long-term productivity including:
- tradeoffs between short-term environmental gains at
the expense of long-term gains, and vice versa;
- the possibility of proposed action foreclosing future
options;
- the effects which narrow the range of future uses
of land and water resources or pose long-term
risks to health or safety;
c. irreversible and irretrievable commitments of resources,
including an evaluation of the extent to which the
proposed project requires commitment of construction
materials, man-hours, and other resources, and cur-
tails the range of future uses of land and water re-
sources;
IV-58
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d. steps to minimize adverse effects (e.g. erosion control
measures).
Re_: 40 CFR 6.506
GPFP (MCD-46)
PRM 75-26; PRM 78-1
7.5 Energy Considerations
Aspects of the selected plan which conserve energy, re-
cover energy, or reduce energy consumption, as long as they are
cost-effective, should be described. For those systems which
claim to use innovative processes or techniques on the basis of
energy reduction criterion, the plan should contain a detailed
energy analysis.
Re: 40 CFR 35.917-1(d)(9)
40 CFR 35 Appendix E
7.6 Recreational Opportunities
For facilities planning begun after September 30, 1978,
the opportunities for recreation, open space and access to bodies
of water potentially available under the selected plan should be
described. Any coordination measures with Federal, State and
local recreational programs and with the recreational elements of
approved areawide WQM plans should also be described.
Re_: 40 CFR 35.917-1 (j)
8. Cost Estimates, Preliminary Designs
8.1 Description of Design
Purpose and Discussion:
The preliminary design of the selected plan is presented to
demonstrate that sound engineering principles have been employed,
that all major components of the system have been included and
that an adequate basis has been developed for the cost estimate,
and the facilities are capable of performing as planned. The de-
tail for the preliminary design may vary from project to project
depending on the complexity of the project. For example, standard
package plants will not require the same degree of detail as a
pure oxygen system with phosphate removal and sludge incineration.
IV-59
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Review Procedures:
Items in a preliminary design might include:
a. a schematic flow diagram;
b. unit processes and sizes;
c. plant site plans, and site availability;
d. interceptor and trunk sewer routings;
e. design criteria, including:
- detention times;
- overflow rates;
- other.
Re: 40 CFR 35.917-l(a), (b), (m)
GPFP (MCD-46), PRM
8.2 Summary of Cost Estimates
Purpose:
Cost estimates, including the impact on the average user,
for final design, preparation of plans and specification, and
construction of the treatment facilities are included to insure
that Step 2 and Step 3 grant requests are based upon inclusion
of major components of the selected plan.
Discussion:
As a part of its program responsibility, EPA is required
to forecast future funding requirements for the design and con-
struction of wastewater treatment facilities. The cost estimates
and schedules of completion provided in this section help fulfill
those responsibilities. The reviewer should be aware of these
requirements and of the procedures for recording the estimated
costs into the GICS process. The grantee is required to submit
these estimates in an appropriate format entitled "Summary of
Costs of Planned Treatment Works Scheduled by Project and Category"
(refer to Appendix B).
IV-60
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Review Procedures:
Review cost estimates to determine that:
a. costs for the construction of the facilities are
reasonable (PRM 79-8) and include both capital and
operation and maintenance cost (including cost of
proposed sites);
b. costs are presented in the required format;
c. schedules for the completion of related work have
been included.
Re: 40 CFR 35.917-1(1), (m)
GPFP (MCD-46)
PRM-76-3, PRM 79-8
9. Arrangements for Implementation
9.1 Institutional Responsibilities
Purpose:
The responsibilities for plan implementation are identified
to demonstrate recognition by the involved jurisdictions of the
steps necessary for initiation and completion of the project.
Discussion:
The responsibility for the implementation of the selected
plan may rest with one or more agencies. In the case of a single
agency, it must have the authority under State law (or the ability
to obtain such authority) to finance, design, construct, operate
and maintain the proposed facilities. For regional solutions,
several agencies may share the responsibility for plan imlementation
and each must have the authority and ability to carry out its
functions. An example of this is where one agency constructs the
treatment plant to serve the entire planning area, and the smaller
jurisdictions construct interceptor, trunk and lateral sewers.
IV-61
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In the regional solutions, one or more jurisdictions in
the planning area may either oppose or fail to approve the plan.
The grantee should discuss the appropriate measures required to
reach agreement among the jurisdictions. While final agreement
is desirable prior to the submission of the facility plan for re-
view, the State and EPA may approve it even in the absence of
such agreement, provided that assurance is made that the plan will
be properly implemented.
Review Procedures:
For implementation, the plan should:
a. identify each agency or jurisdiction and its responsi-
bility;
b. show that each agency has ability and authority (or
reasonable expectation to obtain such authority)
under State law to finance, design, construct, operate
and maintain the proposed facilities;
c. identify any referendums or public elections necessary
for plan implementation;
d. include adopted resolutions of plan acceptance and
agreements among jurisdictions;
e. include financial arrangements which obligate each
jurisdiction to enforce the requirements for user
charges, industrial cost recovery, sewer system re-
habilitation and sewer use ordinances;
f. identify jurisdictions which oppose or have failed to
a-pprove the plan and describe steps necessary to reach
agreement.
Re_: 40 CFR 35.917-6
9.2 Implementation Steps
Note: To demonstrate recognition of the proposed project
and an orderly program for implementing it, the grantee is to pre-
sent a step by step schedule of each specific action. The time
schedule should correspond with schedules in the NPDES permit.
Differences must be resolved.
Re: 40 CFR 35.917-l(a)
IV-62
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9.3 Operation and Maintenance
Purpose and Discussion:
The facility plan should include the minimum information
needed to perform cost-effectiveness computations, e.g. discussions
of staffing, management, training, sampling, laboratory facilities,
etc. As a part of the Step 3 grant application, a detailed Plan
of Operation must be submitted.
Re_: GPFP (MCD-46), PRM 77-3
9.4 Financial Requirements
Purpose:
A financial program is described to identify the sources
of funds for implementing the proposed project.
Discussion:
The proposed project funding will generally consist of
three parts, namely the Federal grant, the State grant and the
local share. When a State grant is shown as a source of funding,
the reviewer should confirm that the State grant program remains
in effect. Generally, the local funding will be derived from the
sale of bonds or industrial contributions. Funds must be made
available to retire these bonds over a period of years and to
provide for operation and maintenance of the facility. The cus-
tomary method of obtaining these funds is to proportion charges
to the various classes of users (40 CFR 35.929) and to recover
capital costs from industrial users (40 CFR 35.928).
Where small communities are involved in the facilities
plan, the reviewer is to insure that the economic impacts evaluation
identified in PRM 79-8 has been made, and that the community has
made the determination that it will be able to afford the local
share.
Total project costs, as well as the financial impacts of
the project on a typical residential customer, must be publicly
displayed and presented at a public meeting. Such financial impacts
must include total monthly or annual costs per customer including
pre-project debt retirement, project debt retirement, O&M costs
(user charges), connection charges, or other costs imposed on
users (PRM 76-3).
IV-63
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As a requirement for a Step 2 grant, the grantee must fur-
nish evidence of compliance with the user charge and industrial
cost recovery (UC/ICR) provisions of the regulations. Satisfactory
evidence of compliance for a Step 2 grant are letters from the
grantee and major industrial users expressing intent to comply with
these provisions. A detailed UC/ICR program must be submitted and
approved by EPA as a part of the Step 3 grant application.
Review Procedures:
Review the financial program to determine that:
a. all project costs, including engineering, construction,
lands and rights-of-way, legal and fixed costs have
been estimated;
b. sources of funds are identified, acceptable and
sufficient;
c. State grants programs are applicable;
d. the grantee has reasonable expectation of obtaining
letters of intent to comply with industrial cost
recovery programs as required for a Step 2 grant.
Re: 40 CFR 35.925-11, .928, .929, Appendix B
PRM 79-8
9.5 Pretreatment Program
Pretreatment programs are intended to control toxics from
non-domestic sources and to provide for the reclamation and reuse
of wastes wherever practicable. Therefore, the particular objec-
tives at present are: preventing the introduction of pollutants
into POTWs which will interfer with treatment works operation
and/or disposal or use of municipal sludge; preventing the intro-
duction of pollutants into POTWs which will pass through treat-
ment works into receiving waters, the atmosphere or which will be
otherwise harmful; and employing opportunities to recycle and to
reclaim the wastewater and the sludge produced by wastewater
treatment.
Development of a pretreatment program is required where
the municipal facilities serve or will serve industries subject to
IV-64
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pretreatment standards under CWA. Implementation of pretreatment
programs is divided into two phases because of the ongoing activi-
ties of implementing standards as they are promulgated. Phase I
of the program, therefore, is the basic skeletal structure and
Phase II is the insertion as promulgated of the specific standard.
Section C.I of Chapter III lists important dates applicable
to pretreatment requirements contingent on the award of Step 2 and
Step 3 grants. For existing steps 1, 2 or 3 grants funding may be
through grant amendment.
A complete and approvable pretreatment program will
include the following:
a. Phase I
- An industrial survey identifying system users by
type and location of industry and the character and
volume of pollutants discharged;
- An evaluation of the legal authority for control and
enforcement, including adequacy of enabling legis-
lation and selection of mechanisms to be used
(ordinances etc.);
- An evaluation of revenue sources and financial
programs to insure adequate funding to carry out the
pretreatment program;
- A determination of technical information needed to
support development of an industrial waste enforce-
ment mechanism to insure the compliance with NPDES
permit conditions;
- Design of an enforcement monitoring program;
- Determination of pollutant removals in existing
treatment facilities;
- A preliminary determination of monitoring equip-
ment required at the treatment facilities;
- Determination of tolerance of the treatment facili-
ties to toxic pollutants; and
IV-65
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- A preliminary determination of the municipal facili-
ties needed for monitoring or analysis of industrial
wastes.
b. Phase II
Incorporating standards for industrial categories into
the pretreatment program to ensure implementation and to improve
effectiveness.
Re: 40 CFR 35.907, .917-l(k)
40 CFR Part 403
10. Summary of Environmental Considerations
Purpose:
The summary of environmental considerations serves two
objectives: (1) satisfaction of NEPA requirements, and (2) en-
surance that environmental information is considered in the
selection of a proposed plan. The summary is primarily intended
for those reviewers concerned with environmental impacts, and
should reference other parts of the facilities plan wherein de-
tailed environmental impact analyses are included.
Discussion:
The facility plan must evaluate environmental as well as
engineering, monetary and institutional impacts. Adverse impacts
in any of these categories may be reason for plan revision, the
selection of another alternative, or the incorporation into the
design and construction phases of measures which will minimize the
adverse impacts or problems.
Throughout the entire facility plan preparation, the re-
viewer should work with the grantee in satisfying all the regula-
tory requirements and selecting the most acceptable plan. The
facility plan may be reviewed informally or in sections by the
reviewer as an aid to the grantee, and suggested changes may be
incorporated with minimum delay and formality.
IV-66
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After all discussions and revisions are completed, the
reviewer conducts a formal "environmental review". Based upon a
review of the environmental information presented in the facility
plan, or the environmental assessment submitted by the State, EPA
must make one of two decisions:
- issue a finding of no significant impact (FNSI) for the
project, supported by an appropriate environmental
assessment document;
- issue a Notice of Intent to prepare an environmental
impact statement (EIS) for the project.
In order to arrive at one of the decisions described above,
many reviewers within EPA and outside of EPA must evaluate the
proposed project and make their recommendations. The facility
plan must include pertinent environmental information to assist
in that decision.
As described in the Guidance for Preparing a Facility Plan,
the summary of environmental considerations should cover the fol-
lowing topics, with appropriate reference to portions of the plan
wherein more detailed information is provided:
10.1 Existing Environmental Conditions
10.2 Future Environment Without the Project
10.3 Evaluation of Alternatives
10.4 Environmental Effects of the Selected Plan
Section 1C.5 below includes procedures to be followed
during review of the environmental information document, as inte-
grated within the facilities plan, and interagency coordination
requirements.
10.5 Interacting Environmental Considerations
a. Criteria for Determining when to Prepare an EIS
The responsible official at EPA must assure that an
EIS will be issued where proposed facilities will result in any
of the following conditions:
IV-67
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(1) significant, induced changes in land use concen-
trations or distributions, including (but not limited to) such
factors as: increased developmental pressure on vacant land;
accelerated changes in population growth or density; or deleterious
changes in demand or availability of energy.
(2) significant, adverse effects, either direct or
indirect, on wetlands.
(3) significant effects, direct or indirect, on the
habitat of State or Federally listed threatened or endangered
species.
(4) direct or indirect changes which significantly
displace population, deface existing residential areas, adversely
affect floodplains, or adversely affect significant amounts of
prime or unique agricultural land or farm operations.
(5) adverse effects on parklands or other areas of re-
cognized scenic, recreational, archeological or historic value.
(6) direct or indirect, adverse effects on local air
quality, surface or groundwater quality or quantity, or the
habitats of fish and wildlife.
(7) treated effluent will be discharged into a water
body where the present classification is considered too low to
protect current or recent uses, and effluent quality may be con-
sidered insufficient to meet the requirements of these uses.
(8) the environmental impact is likely to be highly
controversial.
Also, where a full-scale public participation program
is required, the responsible official should consider preparing
an EIS.
Re_: 40 CFR 6.505, PRM 75-26
b. Required Coordination and Consultation
During the environmental review process, the responsible
official must insure that the various laws and executive orders,
independent of NEPA, are followed throug1. appropriate coordination.
IV-68
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(1) Historical and Archeological Sites
EPA has the responsibility under the procedures of
the Advisory Council on Historic Preservation to insure that
archeological and cultural resources are identified in the primary
impact areas of the project. The investigation to identify re-
sources is carried out by the grantee. The exact procedures may
vary from State to State, and the reviewer should be familiar with
the requirements of his particular State.
Generally, however, the grantee should contact the
State Historic Preservation Officer (SHPO) as soon as the project
scope and general location is known. The SHPO may be able to
identify cultural or historic sites in the area which may aid in
selecting the best alternative. The SHPO may also indicate that
the area is quite sensitive and that a professionally qualified
archeologist should be employed to identify the resources. In the
event that the project is limited to previously disturbed areas,
the SHPO may advise that the project will not affect any cultural
resources and that no further investigations are required.
In many cases the SHPO or grantee may be able to
review the National Register of Historic Places and identify re-
sources in the project area. A professional in this field may
need to be employed to identify resources which are eligible for
inclusion in the National Register. The grantee and his professional
representative must prepare a report in consultation with the SHPO
stating whether the project will have any effect upon the cultural
resources identified.
Upon receiving this report, and in the case of a
resource eligible for listing in the National Register, EPA
should immediately contact the Department of the Interior to
determine if the resource is, in fact, eligible for inclusion.
For all cultural resources identified, the
grantee, his professional representative, and the SHPO must pre-
pare a report for review and decision by EPA concerning the
effect the project may have on that resource. Specifically, the
following procedures should be followed, as applicable:
(a) project has no effect on identified resources--
applicant to include views of SHPO showing
concurrence; exchange of correspondence to be
appended to report;
IV-69
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FIGURE IV-3. Procedures for Review of Cultural Resources.
YES
CONSULTATION
PROCESS
1 CASE REPORT
2 SITE INSPECTION
3. PUBLIC MEETING
YE
ACRE!
Of P>
s „
•MENT
VRTIES
MEMO-
RANDUM
OF
AGREEMENT
PROCEED
>
0 *
ADVISORY COUNCIL
MFFTINIfl
AND COMMENTS
PROCEED
(WITH REPORT TO
ADVISORY COUNCIL;
IV-70
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(b) project has effect on identified resources--
apply Advisory Council Criteria of adverse effect;
(c) if the application of adverse effect criteria
results in the conclusion by the grantee's
professional expert, and is agreed to by the
SHPO, that the effect is not adverse, the
documentation supporting that conclusion must
be forwarded to the Advisory Council for con-
currence. If Advisory Council concurrence
is received, the project may proceed as pro-
posed with the application of any mitigating
criteria which may have been recommended;
(d) if the application of the adverse effect
criteria results in the conclusion that the
project will have an adverse effect, the com-
ments of the Advisory Council must be ob-
tained and a consultation process is set up;
(e) the consultation process involves:
- onsite inspections
- public information meetings
- considerations of alternatives
- avoidance of adverse effects
- mitigation of adverse effects;
(f) generally, the above procedures will be suf-
ficient to resolve adverse effects; specific
conditions of resolution are contained in a
Memorandum of Agreement between EPA, the
Advisory Council, and the SHPO.
It is the responsibility of the construction grants
reviewer to insure that the above procedures are, or have been,
carried out. Letters, reports, or other documents in support of
IV-71
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the above procedures are to be appended to the facility plan. The
final decision as to the effect of a project on historic and
archeological resources rests with EPA under the Advisory Council
Procedures.
Re_: 36 CFR Part 63, Part 64, Part 66, Part 800
40 CFR 6.301
40 CFR 30.405-7, -8
EO 11593, PRM 75-27, PRM
(2) Environmentally Sensitive Areas
Whenever a proposed project will affect any of
these environmentally sensitive resources, the consultations below
must be carried out. The impact of the project upon these resources
should be discussed by the grantee in his environmental information
document. EPA has the responsibility for carrying out these pro-
cedures, but the grantee may be encouraged to do so in preparing
the facility plan. Whether the project will have a harmful
effect on these resources requires prudent judgment on the part
of the reviewer.
The consultations below, as applicable, must be
carried out before the facility plan may be approved.
(a) Wetlands
Consult with:
- Department of the Interior
- Department of Commerce
- U.S. Army Corps of Engineers
Document consultation and obtain written
comments from each of these agencies where
appropriate. Where wetlands may be affected,
adverse impacts must be avoided to the extent
practicable and the responsible official must
prepare a floodplains/wetlands assessment
as part of the environmental assessment or
EIS.
Re: 40 CFR 6.302(a)
EO 11990, PRM 76-4
EPA's Statement of Procedures on Floodplain
Management and Wetlands Protection (6/5/79)
IV-72
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PAGE NOT
AVAILABLE
DIGITALLY
-------
(b) Flood Plains
Refer to Flood Hazard Boundary Maps or Flood
Insurance Rate Maps prepared by DHUD and
determine if grantee is or must be participating
in the flood insurance program; determine if
proposed project satisfies applicable flood
plain statutes and regulations and EPA guidance
with regard to location, elevation or pro-
tection of structures. Where floodplains
may be affected, adverse impacts associated
with direct and indirect development should
be avoided to the extent possible and a flood-
plains/wetlands assessment must be included
in the environmental assessment or EIS.
Re: 40 CFR 6.302(b)
EO 11988, PRM 76-5
EPA's Statement of Procedures on Flood-
plain Management and Wetlands Protection
(6/5/79)
(c) Agricultural Lands
Determine whether there are significant
agricultural lands in the area and the direct
and indirect effects of the selected plan on
these lands. Identify means to avoid or miti-
gate adverse impacts.
Re: 40 CFR 6.302(c)
EPA's Policy to Protect Environmentally
Significant Agricultural Lands
(9/8/78)
(d) Coastal Zones
Consult with:
- Appropriate State Office
- Department of Commerce
IV-73
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Document consultation and obtain written
comments from each of these agencies where
appropriate. If action significantly af-
fects coastal zone area, and State has an
approved coastal zone management program, a
consistency determination must be sought in
accordance with procedures promulgated by
the Office of Coastal Zone Management.
Re: 15 CFR Part 930
40 CFR 6.302(d)
(e) Wild and Scenic Rivers
Consult with:
- Appropriate State Office and
- Department of the Interior, or
- Department of Agriculture where National
forest lands are involved.
Document consultation and obtain written com-
ments from each of these agencies whenever
appropriate. Where the proposed action may
have a direct and adverse impact, the impact
must be avoided; if the impact cannot be
avoided, no action may be taken without
notification of the Secretary of Interior and
Congress 60 days in advance of taking the
action.
Re: 40 CFR 6.302(3)
(f) Fish and Wildlife
If the project will result in the control or
structural modification of any stream or body
of water, consult with:
- U.S. Fish and Wildlife Service, Department
of the Interior
- Appropriate State agency
IV-74
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Document consultation and obtain written
comments from each of these agencies where
appropriate.
Re: 40 CFR 6.302(f)
(g) Threatened or Endangered Species
Consult with:
- U.S. Fish and Wildlife Service
- National Marine Fisheries Service
- Appropriate State agency
Where the proposed action will have an ad-
verse impact on listed species or habitat,
mitigation measures must be undertaken.
Re: 40 CFR 6.302(g)
50 CFR Part 402
(3) Air Quality
The Clean Air Act requires all Federally assisted
activities to conform to any applicable State Air Quality Imple-
mentation Plan (SIP). The responsible official must assess the
extent of direct or indirect increases in emissions and resultant
change in air quality for any proposed action which may signifi-
cantly affect air quality. Where applicable:
(a) consult with State or local agencies having
responsibility for SIP development and imple-
mentation, to ascertain the conformity of
the action to the SIP, including compliance
with applicable emission limitations or
standards.
(b) submit the conformity determination to the
designated lead State or local agency for con-
currence. Lack of response by the lead
agency during the 30 day FNSI and 45 day
draft EIS review periods will be interpreted
as concurrence.
IV-75
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(c) EPA must provide in the FNSI or EIS a res-
ponse to non-concurrence, including the basis
on which conformity to the SIP will be
assured. If EPA finds that non-concurrence
is unjustified, then an explanation must be
included in the FNSI or EIS.
Re_: 40 CFR 6.303
c. Environmental Review
The environmental review by EPA is performed for
application of the criteria to determine whether an EIS is
warranted. Where deficiencies are found, they shall be identified
in writing by EPA, and must be corrected before approval or deter-
mination of EIS preparation. The review by the responsible
official of EPA, is based on:
(1) a complete facilities plan and environmental in-
formation document, where review of the facilities plan has not
been delegated to the State.
(2) the grantee's environmental information document
and State's preliminary environmental assessment, where the State
has been delegated authority for facilities plan review.
(3) other documentation considered necessary by the
responsible official, or submitted by the State where delegated,
adequate to allow an EIS determination by EPA.
Re_: 40 CFR 6.506(d)
d. Finding of No Significant Impact (FNSI)
Where, after completion of the environmental review,
a determination is made that no EIS is warranted, the responsible
official must prepare and publicly issue a FNSI. The decision
not to prepare an EIS must be substantiated by an environmental
assessment, which shall be incorporated into, or attached to, the
FNSI. The assessment provides support for the determination
that the proposed action will not have a significant adverse im-
pact on the environment. It is prepared by EPA, either based on
the review of the grantee's environmental information document
and other data as appropriate, or based on the State's environ-
mental assessment or other supporting documentation, where dele-
gated.
IV-76
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When a FNSI and environmental assessment have been
prepared for the facilities plan, additional grant awards may
proceed without further FNSI preparation, unless a determination
is made that significant changes have occurred from the project
as described in the facilities plan.
Once a decision is made, and a FNSI issued for the
proposed action, the following procedures are required with respect
to the facilities plan:
(1) notify the grantee and State in writing of
approval of the facilities plan;
(2) identify any special conditions, resulting from
the environmental review, which will be contin-
gent on any subsequent grant awards;
(3) advise the grantee that approval of the faci-
lities plan does not obligate the U.S. Govern-
ment to award related grants, and that the
grantee will not receive funding for Step 2 de-
sign until he has applied for and received a
Step 2 grant;
(4) update project information and cost data in the
Grants Information and Control System (GICS,
see Appendix B).
Re: 40 CFR 6.506(e), (f)
e. Notice of Intent
If upon completion of the environmental review, it is
determined that significant adverse impacts will be associated
with the proposed project, and cannot be satisfactorily mitigated,
the responsible official will determine that an EIS is warranted.
A notice of intent to prepare an EIS shall then be published in
the Federal Register and otherwise released for public notifica-
tion. In this case, the reviewer should contact the grantee and
State to advise them of this decision and the implications for the
project.
Re: 40 CFR 6.506(g)
IV-77
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f. EIS Preparation
Not later than 30 days after publication of the notice
of intent, the responsible official of EPA will determine the
scope of the EIS in consultation with the State and local parties
affected, at a "scoping" meeting.
EPA will prepare the EIS either by direct use of
agency staff, by contract with a qualifieid consultant, or by
utilizing the joint EIS process ("piggybacking") in which the
grantee enters into a contract with a qualified consultant.
The regulations (40 CFR Part 6) outline detailed pro-
cedures and criteria to be followed in the process of EIS pre-
paration. However, with respect to the facilities plan, a Step 2
grant may not be awarded until a final EIS has been prepared and
all regulatory requirements have been met. After waiver approval
has been obtained, action may continue on discrete segments of
the project. The resulting modified project will have to be re-
reviewed at the appropriate stage of the facility planning process,
In addition, the EIS or FNSI may dictate requirements that can
only be fulfilled by placing certain conditions on the Step 2
grant award.
Re: 40 CFR 6.506(h), (i), 35.925-8(b)
PRM 75-31
IV-78
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Figure IV-4. Procedures for NEPA Review.
ADDITIONAL PROCEDURES:
HISTORIC
ARCHEOIOGIC
WETLANDS
OTHER
NO
FINDING OF NO
SIGNIFICANT IMPACT
AND ENVIRONMENTAL
ASSESSMENT
SIGNIFICANT
*
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CHAPTER V
STEP 2 GRANT PROCESSING
A. INTRODUCTION
B. SCHEMATIC FLOW DIAGRAM
C. APPLICATION CONTENTS
D. FACILITY PLAN APPROVAL
E. ADMINISTRATIVE REVIEW
F. COMBINATION STEP 2+3 GRANTS
G. GRANT AWARD PROCEDURES
H. PREPARATION OF PLANS AND SPECIFICATIONS
I. PREDESIGN CONFERENCE
J. REVIEW OF PLANS AND SPECIFICATIONS
K. 0 & M FACILITY/TRAINING GRANTS
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A. INTRODUCTION
This chapter describes the contents of and review proce-
dures for processing of a Step 2 grant application. It be-
gins with the receipt of the application package and concludes
with the review and approval of the plans and specifications.
Section B, Schematic Flow Diagram, visually places this
chapter in the proper sequence and indicates the major acti-
vities of the Step 2 application and review.
Section C. Application Contents, provides a ready listing
of the materials which are contained in an application package.
Section D, Facility Plan Approval, restates the require-
ments for an approved facility plan as a part of the Step 2
application.
Section E, Administrative Review, describes the procedures
involved in reviewing priority list compliance and certification,
application form, contracts and subagreements and assurances.
Section F, Combination Step 2 + 3 Grants, concerns the
special case grants for combined Step 2+3 projects.
Section G, Grant Award Procedures, describes the action re-
quired on the part of EPA in making the grant offer.
Section H, Predesign Activities, discusses the need to work
with the grantee before and during the preparation of Plans and
Specifications.
Section I, Predesign Conference, describes the administrative
and technical considerations to be discussed with the grantee
at the conference prior to the preparation of plans and
specifications.
Section J, Review of Plans and Specifications, describes
the specific information to be reviewed in the plans and
specifications. Technical considerations are included to
enable the reviewer to adequately evaluate the Step 2 treat-
ment works design.
V-l
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Section K, 0 & M Facility/Training Grants, concerns special
grants for training facilities and programs.
The technical and administrative reviews are to be per-
formed simultaneously wherever possible. When items are
missing or explanations are necessary, the review is to pro-
ceed as far as possible to insure quick action once the items
are corrected.
V-2
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B. SCHEMATIC FLOW DIAGRAM
The flow diagram below visually places this chapter in the
proper sequence and indicates its relationship to other chapters.
The diagram includes the general functions of the Step 2 grant
process as performed by the applicant, State and EPA.
I
1
1
CHAPTER 2
(
STATE PRIORITY
SYSTEM
I
)
1
1
1
1
/ STEP 2 /
^J APPLICATION /
YWITH APPROVED/
/ FACILITY PLAN"/
PREPARATION
& SUBMISSION
OF PLANS AND
•REVIEW AND APPROVAL OF FACILITY PLAN COVERED IN CHAPTER 4
V-3
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C. APPLICATION CONTENTS
Below are listed the basic items to be included in an
application package. The items are listed here for quick
reference, while the review procedures for each item are des-
cribed later. The reviewer is to make a cursory review to
insure that all items are included, that all applicable por-
tions of the forms are completed, and that the documents are
signed by the appropriate officials. If items are missing or
explanations are necessary, the applicant is to be contacted
through the State but the review is to proceed as far as
possible to insure quick action when the required material or
information is received.
1. Facility Plan (complete and approved) with required
agencies comments and approvals (OMB A-95);
2. State Priority Certification, EPA Form 5700-28;
3. Application, EPA Form 5700-32, including authorizing
resolution and statement regarding availability of
the proposed site;
4. Proposed subagreements (generally A&E contracts) or
explanation of method of awarding proposal subagree-
ments, including compliance with MBE policy;
5. A Value Engineering (VE) proposal where the Step 3
total construction costs are expected to be $5 mil-
lion or more;
6. Proposed or executed intermunicipal agreements where
two or more jurisdictions are involved;
7. Project progress and payment schedule;
8. Evidence of compliance where applicable with:
user charge and industrial cost recovery requirements,
Federal facilities restrictions, sewer use ordinance
requirements, relocation requirements, and other
Federal regulations, including civil rights compliance
forms 4700-1 and 4700-4.
V-4
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9. Submissions for compliance with pretreatment require-
ments, where applicable;
10. A public participation work plan, where applicable;
Re: 40 CFR 35.907, .917-6, ,920-2(b), .920-3(b), .925-3,
.925-8, .925-9, .925-11, .926, .927-4, .935-9.
40 CFR 30.305, .315, .405-2, Suboart C.
PRM
V-5
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D. FACILITY PLAN APPROVAL
The technical review of a facility plan is described in
Chapter IV of this Handbook. The grantee was notified in
writing of his facility plan approval and need not resubmit
it. The reviewer must confirm in the project files that the
facility plan was approved by EPA. Also, he must review the
comments of Federal, State and local agencies under the OMB
A-95 review process to identify specific contingencies recom-
mended for inclusion during Step 2 work. These may include
such aspects as the need to perform an archeological survey
at proposed construction sites prior to completion of design.
If the Step 2 project has changed substantially from that pro-
posed in the facilities plan, the Regional Administrator may
require that the facilities plan be amended and resubmitted
by the applicant for appropriate re-review.
Re: 40 CFR 35 35.917-8, -9, .920-3 (b) (1), (4), .925-1.
V-6
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E. ADMINISTRATIVE REVIEW
1. Priority List Compliance and Certification
Purpose:
The State agency is required to certify each project as
entitled to priority for grant funds in accordance with the State
priority system and the project priority list.
Discussion:
Chapter II discusses the State priority system and list.
Once the system and annual list have been approved by EPA, each
project is certified by the State as being entitled to priority for
a grant over all other projects below it on the priority list (EPA
Form 5700-28, see Appendix B).
A State may elect to set aside up to ten percent of its
yearly allotment to fund Step 1 and Step 2 projects not on the
current priority list. When such projects are certified, the cer-
tification must signify that the grant is to be made from that
reserve allotment.
"Grant applications are considered received by EPA only when
complete and upon official receipt of the State priority certifica-
tion document."
Review Procedures:
Review State Priority Certification to determine that:
a. the name, project number and description of the
project agree with the application, form 5700-32,
and the approved State priority list;
b. the form includes the signature of the authorized
State official;
c. the award of grant assistance for the project will
not exceed the State's allotment, including reallot-
ments;
d. the award of grant assistance will not jeopardize
the funding of any projects of higher priority;
V-7
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e. the State has included a statement to the effect that
all jurisdictions within the facility planning area
have been notified of State and EPA approval of the
facility plan;
f. reserve funds are identified where used.
Re: 40 CFR 35.915, .915-1, .920-2, .925-3, .925-4
PRM 75-16
2. Application Form
Purpose:
EPA Form 5700-32 is the formal application document and sets
forth the information necessary to obtain a construction grant.
Additionally, the application contains "assurances" from the appli-
cant which satisfy several statutory requirements.
Discussion:
The application for a Step 2 grant is submitted by the
authorized representative of the jurisdictions included in the
approved facility plan. In all cases, the applicant must have the
legal authority to design, finance, construct, operate, and main-
tain any resulting wastewater treatment facilities.
The application form is used to request an initial grant,
make amendments, and to request supplemental grants. The form
(see Appendix B) contains instructions for completion of each of
the five parts. Part II, Section B, requires information concern-
ing the project site. For a Step 2 application, a statement regard-
ing availability of the proposed site must be included. If the
availability of easements has not been determined, the applicant is
to be informed of the need to accomplish preliminary easement work
concurrent with other Step 2 activities. (Sites and easements may
be acquired if they are not potentially eligible costs under Step
3.) Other site information (plot plan, soil survey, etc.) may be
included where necessary.
The statutes require that the applicant comply with related
laws and regulations and give other assurances. Many of these
requirements are satisfied for a Step 2 grant when the applicant
signs the application and thereby assures and certifies that he
will comply with the requirements. However, additional evidence
V-8
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of compliance with some of these assurances is required from the
applicant (see Section E.7). A copy of authorizing resolution
designating the signer as the official representative of the appli-
cant (Part V, item 1 of application Form 5700-32) must be included
with the application. Any subsequent changes in the authorized
official must also be documented by a copy of the resolution auth-
orizing the change.
Review Procedures:
Review application form to determine that:
a. the name, the project number, and the description
of project and amount of grant request agree with
the State Priority Certification, Form 5700-28,
and the approved State priority list;
b. the form is signed by the authorized representative
and a copy of the authorizing resolution is attached;
c. a statement regarding availability of the proposed
site is attached;
d. information regarding project location, entities
involved and cost data corresponds to that in the
facility plan and Summary of Costs of Planned
Treatment Works Scheduled by Project and Category;
e. all items in the application are complete or
marked not applicable (NA);
f. Part III, Section D, Proposed Method of Financing
Non-Federal Share, assures that the applicant can
successfully fund his share of the project costs.
g. Part V. Assurances, is included with the applica-
tion: if not the application must be returned to
the applicant for inclusion of a signed copy of
the Assurances.
Re: 40 CFR 30.315
40 CFR 35.920-2(b), .920-3(b) (2), .925-5
PL 94-488
31 CFR Part 51, Department of Treasury
PRM 77-6
V-9
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3. Contracts and Subagreements
Purpose:
Contracts or subagreements for personal or professional
services are submitted by the applicant and reviewed by both the
State and EPA to insure that the scope and nature of the proposed
services are sufficient to result in approvable plans and specifi-
cations and that the fees and schedules are reasonable.
Discussion:
The personal and professional services covered by the sub-
agreements at the time of Step 2 application submission are generally
the consulting engineering services. The regulations state that the
application shall include proposed subagreements or an explanation
of the intended method of awarding subagreements for performance of
any substantial portion of the project work.
The detailed requirements of and procedures for procuring
personal or professional services are contained in the regulations,
40 CFR 35.936 & .937 and Appendices C & D. Certain clauses of these
regulations (e.g. access) are applicable to subagreements and lower
tier subagreements in excess of $10,000. See Figure III-l (p.III-6)
for applicability of specific clauses. The goal oriented policies
and procedures regarding MBE set forth in 43 FR 248 contain the respon-
sibilities of EPA, Grantees, Consulting firms, Prime contractors, and
MBEs. Subagreements in which the fee is a percentage of construction
costs are not acceptable, nor are cost multiplier contracts where
profit is included in the multiplier.
Review Procedures:
Review the agreements) to determine that:
a. the applicant has complied with 40 CFR 35.936
.937; and (if applicable) .939;
b. the scope of the work is sufficient to prepare
approvable plans and specifications; and cost
and fee are appropriate to the scope of work;
c. completion schedules are reasonable and in
agreement with the facility plan;
d. the applicant has complied with EPA's policy for
increased use of minority business enterprises
(MBE).
V-10
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Re: 40 CFR 35.920-3(b)(3), .935-7, .936, .937, .939,
.965 and Appendices C & D; 40 CFR 30.605
43 FR 248 pp. 60220-60224
4. Intermunicipal Agreements
Purpose:
Where two or more jurisdictions are involved in facilities
development under Federal grants, intermunicipal agreements insure
that all jurisdictions will be obligated to comply with financial
arrangements and procedural requirements under the grants.
Discussion:
The Regional Administrator will determine on a project
basis whether intermunicipal agreements required in the Step 2
grant application must be proposed or executed. Such agreements
should correspond to the institutional arrangements included
within the approved facilities plan for the project.
Review Procedures:
a. insure that intermunicipal agreements are included
in application package where more than one juris-
diction is involved in the proposed project;
b. determine whether proposed agreements are accept-
able, and ensure that agreements are properly
executed if required by the Regional Administrator;
c. insure that proposed or executed agreements are
in accordance with the institutional arrangements
submitted with the approved facilities plan.
Re: 40 CFR 35.920-3(b)(6), .917-6
5. Value Engineering Proposal
Purpose:
A value engineering (VE) proposal insures that the appli-
cant will include a VE analysis in a Step 2 grant project where the
Step 3 total estimated construction costs are expected to be
$5 million or greater.
V-ll
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Discussion:
Value engineering is a systematic, specialized and creative
technique for controlling project costs. After October 1, 1979,
all applicable projects must include a proposal for a VE analysis
as part of the Step 2 application.
Review Procedures:
Where applicable to the project, a VE analysis proposal
submitted with the application should comply with the following
criteria:
a. The scope of the analysis should include all
components and systems, unless a limited scope
is adequately justified by the applicant.
b. Members of the VE team, including the team
coordinator, should be identified with brief
information about their qualifications and
experience.
c. The level of VE effort should be commensurate
with the complexity and size of the Step 2
project.
d. A detailed fee schedule should be included for
conducting the VE analysis, identifying work
hour requirements, level of effort, direct and
indirect costs; these should be reasonable in
comparison to the work involved.
e. The VE work schedule should be properly related
to the design schedule so that work may proceed
concurrently and avoid delays.
Re: 40 CFR 35.920-3(b)(5), .926(a)
PRM
Value Engineering Work Book for Construction
Grant Projects (EPA-430/9-76-008)
6. Project Progress Schedule
Purpose and Discussion:
As a condition of the grant, the applicant will be required
to expediously initiate and complete the Step 2 work. A progress
schedule, which identifies dates projected for initiation, comple-
V-12
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tion and any significant milestones, is required in all Step 2
grant applications. This schedule, amended where necessary, will
be incorporated into the grant agreement. It is important to
note that no dates included in the progress schedule will modify
any compliance dates established in the NPDES permit. A payment
schedule must accompany the progress schedule.
Review Procedures:
a. insure that the schedule included with the
grant application is reasonable and includes
all significant dates of progress, particu-
larly initiation and completion of the
project. (See items under "Predesign
Conference.")
b. where applicable, determine whether the
progress schedule will conflict with compli-
ance dates established in the NPDES Permit;
insure that the applicant is aware of its
responsibility to request modification of
permit terms or other enforcement require-
ments if necessary.
Re: 40 CFR 35.920-3(b)(7), .935-9, .945(b)
7. Evidence of Compliance
The regulations require that the applicant furnish evidence
of meeting program requisites and assurances made in the Step 1
and 2 grant applications, as well as requirements of other Federal
statutes. Evidence of compliance with the following is of partic-
ular importance:
a. user charges - the applicant must submit an
approvable plan and schedule for the implemen-
tation of a user charge system in accordance
with the regulations and guidance.
Re: 40 CFR 35.920-3(b)(8)(i), .925-11, .929,
.935-13, Appendix B.
b. industrial cost recovery - where applicable, the
applicant must agree to require each significant
industrial user to pay that portion of the grant
amount allocable to the treatment of its wastes;
V-13
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the applicant must also furnish letters from all
significant industrial users (10% or more of
design waste flow or strength) indicating their
agreement to pay their share of the grant amount,
and stating their intended period of use of the
treatment facility.
Re_: 40 CFR 35.920-3(b)(8)(ii), .925-11, .928,
.935-15
PRM 78-6
Federal facilities - the allowable project costs
cannot include the proportional costs allocable
to the treatment of wastes from major activities
of the Federal government (either 250,000 gpd or
more, or 5% or more of the total design flow,
whichever is less).
Re_: 40 CFR 35.920-3(b)(8)(iii), .925-16
PRM 75-35
sewer use ordinance - the applicant must assure
that an approvable sewer use ordinance or other
legally binding requirement will be enacted and
enforced in each jurisdiction to be served by
the facilities prior to completion of construc-
tion.
Re_: 40 CFR 35.920-3(b)(8)(iv), .927-4
relocation requirements - if the project will
result in the acquisition of private property
(including easements) or displacement of persons,
the applicant must give assurance of compliance
with the provisions of the Uniform Relocation
Assistance and Real Property Acquisition Policies
Act.
Re: 40 CFR 35.920-3(b)(8)(v), .935-3(b)
40 CFR 30.405-2, 40 CFR Part 4
V-14
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civil rights provisions - the applicant must have
completed two forms: Assurance of Compliance,
EPA Form 4700-1, and Compliance Report, EPA
Form 4700-4 for evidence of compliance with the
Civil Rights Act.
Re: 40 CFR 35.920-3(b)(8)(vi), .925-9
40 CFR 30.405-3, 40 CFR Part 7
PRM 75-32
other Federal requirements - the applicant must
give general assurance of compliance with the
applicable requirements of other Federal statutes
and regulations as listed in 40 CFR Part 30 sub-
part C.
Re: 40 CFR 35.920-3(b)(8)(vi), .025-14
section 404/section 10 permits - when permits
from the U.S. Army Corps of Engineers for the
discharge of dredged or fill material are
required for the facility, a section 404/section
10 permit must be issued or a determination must
be made by the RA that the Corps is prepared to
issue a permit.
Re: PRM 76-4
8. Pretreatment Requirements
Purpose and Discussion:
Pretreatment programs are intended to control toxics from
non-domestic sources, and to provide for the reclamation and reuse
of water wherever practicable. More particularly, the program is
designed to: prevent the introduction of pollutants into POTWs
which will interfere with treatment works operation and/or dis-
posal or use of municipal sludge or which will pass through treat-
ment works into receiving waters, the atmosphere or which will be
otherwise harmful; and employ opportunities to recycle and to
reclaim wastewater and sludge produced by wastewater treatment.
V-15
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Pretreatment programs are mandatory. For existing Step 2
grants, funding may be through grant amendment. Where a Step 2
award is to be made after June 3, 1980, the applicant must submit
information for compliance with the pretreatment regulations.
Review Procedures:
The application package must include the following:
a. An industrial survey identifying system users by
type and location of industry and the character
and volume of pollutants discharged;
b. An evaluation of the legal authority for control
and enforcement including adequacy of enabling
legislation and selection of mechanisms to be
used (ordinances etc.);
c. An evaluation of revenue sources and financial
programs to insure adequate funding to carry out
the pretreatment program;
d. A determination of technical information needed
to support development of an industrial waste
enforcement mechanism to insure the compliance
with NPDES permit conditions;
e. A design of an enforcement monitoring program;
f. A determination of pollutant removals in existing
treatment facilities;
g. A preliminary determination of monitoring equip-
ment required at the treatment facilities;
h. A determination of the tolerance of the treatment
facilities to toxic pollutants; and
i. A preliminary determination of the municipal
facilities needed for monitoring or analysis of
industrial wastes.
Where appropriate, the pretreatment program must be updated
to insure its proper implementation and to improve its effectiveness,
Re_: 40 CFR 35.907, .920-3(b)(9), 40 CFR Part 403
V-16
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9. Public Participation Work Plan
If the applicant determines, upon consultation with the
public, that additional public participation activities are
necessary, a public participation work plan shall be included in
the application package.
Re_: 40 CFR 35.920-3(b)(10), .917-5
10. Other Requirements and Limitations
Purpose and Discussion:
The Step 2 grant application and estimated costs must meet
several additional criteria for approval. Most of these are
elements required for approval of the facilities plan; however,
all should be checked.
Review Procedures:
a. the project must be consistent with any applicable
water quality management (WQM) plan approved under
section 208 or 303(e) of the Clean Water Act, and
the applicant must be the wastewater management
agency designated in any approved, final WQM plan.
Re: 40 CFR 35.925-2, PRM 75-38
b. the applicant must have, or have applied for the
appropriate NPDES permits(s) with respect to
existing discharges affected by the proposed
project.
Re: 40 CFR 35.925-6
c. the treatment works design must be based on a
proper cost-effectiveness analysis and must meet
the requirements for BPWTT, sewer system evalua-
tion and rehabilitation and VE analysis.
Re_: 40 CFR 35.925-7
d. pertinent changes in the proposed project must have
been made, as appropriate, in accordance with the
findings of the environmental review or EIS.
Re: 40 CFR 35.925-8
V-17
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any sewage collection system work proposed in the
project is in accordance with the limitations of
the regulations and guidance.
Re_: 40 CFR 35.925-13, PRM 78-9
the limitations imposed by the regulations on
treatment of industrial wastes are met.
Re: 40 CFR 35.925-15, PRM 77-1
no allowable costs are included for treatment
works to control pollutant discharges from a
separate storm sewer system.
Re: 40 CFR 35.925-21, PRM 75-34
V-18
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F. COMBINATION STEP 2+3 GRANTS
Purpose:
For projects involving relatively small communities, combination
Step 2+3 grants may be awarded with the intent of accelerating
the grant process as practical.
Discussion:
A single grant may be awarded for the combined Federal share of
the costs of Step 2 and Step 3 for communities of 25,000 or less
if the total cost estimated for Step 3 construction is $2 million
or less ($3 million or less in States with unusually high construc-
tion costs as determined by EPA Headquarters). However, the project
must consist of all associated Step 2 and Step 3 work, and no seg-
menting is permitted. Furthermore, the fundable range of the
approved State priority list must include the Step 2+3 work.
Review Procedures:
A single application package is to be submitted for a combined
Step 2+3 grant. The review must insure that the following
criteria and information are met or included:
a. the applicant community meets the qualification
limitations of population and Step 3 cost as
discussed above, and that the combined work is
within the fundable range of the approved project
priority list;
b. all of the items required for a Step 2 grant appli-
cation (under Section E, previous) have been
included and are acceptable;
c. a schedule for timely submission of plans and
specifications, operation and maintenance manual,
user charge and industrial cost recovery systems,
sewer use ordinance, and preliminary plan of
operation is included and acceptable.
Re: 40 CFR 35.909, .920-3(d), PRM 78-7
V-19
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G. GRANT AWARD PROCEDURES
The award procedures for the Step 2 grant are identical to
those described for the Step 1 grant in Section F. of Chapter
IV.
Note: Special grant conditions may need to be inserted in
the Grant Agreement/Amendment based on clearinghouse comments,
requests from the State agency, or conditions unique to the
project. Such unique conditions may include mitigative measures
identified during review of the facilities plan, EIS or FNSI,
sewer system evaluation/rehabilitation requirements or other
considerations.
Re: 40 CFR 35.930
V-20
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H. PREDESIGN ACTIVITIES
Purpose and Discussion
Program responsibility for the progress of a project does not
end with the grant offer. Rather, the reviewer must know the
status of the project to insure that it is completed in accord-
ance with the approved project progress and payment schedule.
Also, he must insure that the applicant is aware of the adminis-
trative and technical considerations to be included in the plans
and specifications. Further aspects of interim progress review
are described in Section J.
Procedures:
Shortly after acceptance of a Step 2 grant, the reviewer should:
a. contact the grantee and his consultant to make known
the kinds of advice and assistance available from the
State and EPA during the preparation of the plans
and specifications;
b. forward to the grantee and his consultant the admin-
istrative and technical considerations to be incor-
porated into the plans and specifications, including
40 CFR 35.936, .938, .939 and Appendix C-2;
c. arrange for a predesign conference, if appropriate.
V-21
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I. PREDESIGN CONFERENCE
Purpose and Discussion:
The State agency, in conjunction with EPA, should assume respon-
sibility for insuring that the plans and specifications are prepared
in accordance with work funded under the scope of the Step 2 pro-
ject and other regulatory requirements. Because of the complexity
of these requirements, a predesign conference between the grantee,
his consultant, the State and EPA is strongly urged, whenever
practicable.
The predesign conference, which may be held with one or more
grantees, promotes careful planning and coordination and insures
the timely completion of the various phases of a project. In many
cases, the review of plans and specifications may be delegated to
a State. In such cases, the State is responsible for the predesign
conference arrangements. For the other cases, the regions are
encouraged to develop formats for the predesign conferences. The
formats should be tailored to the individual staffing resources
of the States and the needs of the applicants.
Procedures:
Shortly after acceptance of a Step 2 grant, but prior to
the preparation of plans and specifications, the reviewer should
arrange a predesign conference with the grantee, grantee's
consultant and appropriate regulatory personnel. Suggested sub-
jects to be discussed include:
a. the legal requirement for inclusion of and provisions
for carrying out the bidding procedures described in
40 CFR 35.936, .938, .939, Appendix C-2, and EPA's
MBE policy and Regional guidance.
b. the technical requirements of the design to insure
that the project will meet effluent or BPWTT limita-
tions per NPDES permit, and will be designed in
accordance with sound engineering practice, including
cost effectiveness and VE provisions.
Re: 40 CFR 35.925-7, PRM 79-7
V-22
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c. additional requirements, as applicable, for detailed
design reports beyond that submitted with the facility
plan. Possible examples are:
- loading rates and sizes of various components
of the plant;
- design computations for sewers, including slopes
and capacities;
- system head curves for pumping stations, indi-
cating number and capacity of pumps;
- other detailed design reports which the particu-
lar project may require;
d. pretreatment design requirements and scheduling, as
applicable, for industrial discharges;
Re: 40 CFR 35.907, .925-12, 40 CFR Part 403
e. design considerations or investigations resulting
from the environmental assessment or environmental
impact statement. Possible examples are:
- a soil erosion and sediment control plan;
- a traffic control plan;
- archaeological investigations;
Re_: 40 CFR 35.925-8, PRM 75-27, PRM 78-1
f. design requirements arising from executed agree-
ments among jurisdictions;
Re: 40 CFR 35.917-6
g. force account requirements, as applicable;
Re: 40 CFR 35.936-14
h. phasing of contracts;
Re: PRM 75-14
i. flood protection insurance requirements, as applicable;
Re_: 40 CFR 30.405-10, PRM 76-5
V-23
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j. records to be maintained during design and construc-
tion, separating eligible and ineligible items;
Re_: 40 CFR 30.805, 35.940
k. site certification requirements including easement
acquisition if not previously satisfied (Note: if
land to be acquired is grant eligible, approval by
the Regional Administrator is needed prior to acqui-
sition so that grant funds are not lost);
Re: 40 CFR 35.920-3(b)(2), .935-3, PRM 77-6, PRM
1. future requirements for;
- user charge and industrial cost recovery systems;
- a sewer use ordinance;
- an evaluation/rehabilitation program, as applicable;
- a plan of operation, including, O&M manual, staffing,
training, and startup services;
Re: 40 CFR 35.935-12, -13, -15, -16
PRM 77-3
m. requirements for submission of quarterly project status
reports; and, requirements for periodic inspections
and audits, as necessary, for large or complex projects
(generally at 30% and 60% completion);
Re: 40 CFR 30.635, .820
n. requirement of value engineering in the design
phases of the project;
Re: 40 CFR 35.920-3(b)(5), .926, PRM 75-30,
PRM
o. possible benefits from the use of construction
management 4
p. the use of incentive clauses in construction contracts;
Re: PRM 79-5
V-24
-------
q. qualification of major items of equipment;
Re: PRM 79-10
r. sole source procurement, experience clause, and
buy American provisions;
Re: 40 CFR 35.936-13
s. eligible and ineligible cost separation in the
bid proposal;
t. initiation of plans for financing local share of
Step 3 project.
Re_: PRM
The reviewer -should provide the grantee with guidelines, instruc-
tions, booklets, or other publications which describe specific
requirements in detail.
V-25
-------
J. REVIEW OF PLANS AND SPECIFICATIONS
Purpose:
To insure that the project to be built will satisfy BPWTT and
statutory requirements.
Discussion:
Periodic reviews and inspections of progress should be made
during the preparation of plans and specifications. As a general
rule, the reviewer should contact the grantee and design consul-
tant at 30% and 60% completion, as a minimum, to insure that the
work is being performed properly. Progress reports should also be
required of the grantee, and submitted at least quarterly, in any
project of one year or longer duration. Review of progress should
insure that work is on schedule, complies with regulations, and
that grant conditions, including contingencies on design imposed
by the environmental review, are followed. Interim payments are
made generally in accordance with the project progress and payment
schedule so that outlay management projections can be maintained.
Interim audits may also be performed, as appropriate, based on
payment requests and actual work performed. Refer to Chapter VII
for other financial considerations.
The set of plans and specifications submitted for final review
must reflect all changes and be suitable for bidding purposes.
The review procedures are both administrative and technical. The
technical review procedures are broad in scope and each State or
Region is encouraged to pattern its own review procedures to
account for State or local design practices and requirements.
Through an interagency agreement, the Corps of Engineers may
conduct "biddability" and "construct!" bility" reviews of project
plans and specifications. While these reviews do not involve an
evaluation of the adequacy of the design to achieve the requisite
treatment level, they do insure that the plans and specifications
are suitable for bidding and that the project can be constructed as
designed without unforeseen and lengthy delays. The "Biddability"
review basically entails the assurance that the bid documents are
clear and concise and that nothing has been omitted. In addition,
the Corps will ensure that: (1) the project is properly segmented
into "biddable" packages, (2) specific bid items are such that bids
received may be realistically evaluated, (3) the plans and specifi-
cations are detailed enough to allow reasonable bidding. The
"Constructibility" review deals with the build-ability of the
project as designed. In addition, this aspect involves a consid-
eration of: (1) any potential construction constraints imposed
V-26
-------
by the site, (2) adequate resolution of actual or possible con-
flicts inherent in the plans and specifications, (3) the
relationships of the specifications to the plans, (4) the
compatibility of the plans and specifications with available
construction procedures/equipment, and (5) any other potential
difficulties.
The review period is limited to 30 days and the reports are
submitted to the EPA project officer (or State if appropriate)
for review and action. Generally, findings can be classified
within the following categories: (1) major significance - comments
of this nature should be included in the plans and specifications
unless extenuating circumstances are present; (2) important -
incorporation in the plans and specifications is advisable; (3) minor
the problem is of little importance (e.g., misspellings); (4)
differences between the plans and specifications (e.g., inconsistent
identification of equipment, materials, etc.). The project officer
shall determine what response is necessary from the grantee in regard
to Corps comments.
Review Procedures:
1. Administrative Review
The following six items must be included in the bidding
documents:
- a statement of work, including drawings and speci-
fications, and the required completion schedule;
- the terms and conditions of the contract (40 CFR
35.938-8 and Appendix C-2)
- an explanation of the method of bidding; the
method of evaluating the bid prices, and the
basis for the award of the contract;
- the criteria for evaluating bidders;
- the standard statement (40 CFR 35.938-4(c)(5))
concerning the funding of the project by EPA;
- a copy of 40 CFR 35.936, 35.938, 35.939, and
43 FR 248 pp. 60220-60224.
In addition to the above six items, the reviewer is to
insure that the specifications include the following provisions:
V-27
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a. Supplemental General Provisions
Appendix C-2 of 40 CFR Part 35 which includes
requirements for:
- changes, suspension or termination
- labor standards
- utilization of minority business enterprises (MBE)
- audit: access to records
- price reduction for defective cost or
pricing data
- covenant against contingent fees
- gratuties
- patents
- copyrights and rights in data
- clean air and water clause
- buy American provisions (PRM 78-3)
b. Equal Employment Opportunity (EEO) and MBE Utilization
The EEO and MBE provisions must be followed where
contracts are $10,000 or greater. In all such
cases, the contractors must comply with Executive
Order 11246 and engage in affirmative action
directed at promoting and ensuring EEO in the
work force under the contract pursuant to
requirements of the Department of Labor.
Where the cost of construction work is estimated
to be more than $1 million, or where specified by
the grant agreement, the grantee must consult the
Regional Administrator about EEO requirements before
issuance of invitations to bid. In such cases, a
preaward compliance review will be justified.
In addition, the plans and specifications should
include a statement of MBE goals for utilization
of minority business enterprises and a statement
of how MBE policy is to be implemented. The
reviewer should contact the Civil Rights and
Urban Affairs Office within the EPA region for
specific instructions as appropriate.
Re: 40 CFR 35.936-6, -7, .937-12(b), .938-9(b)(2);
Appendices C-l(14) & C-2(9)
40 CFR Part 8
43 FR 248 pp. 60220-60224
V-28
-------
c. Davis-Bacon Act
The provisions of the Davis-Bacon Act must be
included in contracts exceeding $2,000. These
provisions require the payment of prevailing
v/ages for the various trades as determined
by the Secretary of Labor.
Prevailing area-wide rates are published weekly
in the Federal Register. For individual projects
not included in areas with area-wide wage rate
determinations, the Regional Office will obtain
a wage rate for inclusion in the specifications.
Modifications to area-wide wage rate determina-
tions are to be included in the bidding docu-
ments provided they have been published 10 days
prior to the bid opening date. Modifications to
individual project determinations are to be
included provided they are received in the
Regional Office 10 days prior to bid opening.
The reviewer is to insure that the current wage
rate determination is included in the bidding
documents or that provisions for inclusion have
been made.
Re_: 40 CFR 30.415-1, 35.935-5
d. Flood Insurance
For projects requiring flood insurance (see Chapter
VI e.4.a. of this Handbook) make certain that the
contractor is required to obtain the necessary flood
insurance during construction.
Re: 40 CFR 30.405-10, PRM 76-5
V-29
-------
e. Bonding and Insurance
For contracts in excess of $100,000, the following
minimum bonding and insurance requirement must be
met:
- 5% bid bond; grantees may not require bid guarantees
greater than 5% or that a specific form of bid
guarantee be used unless required by State/local
law.
- 100% performance and payment bond;
- fire and extended coverage workmen's compensation,
public liability and property damage, and "all
risk", as required by local or State law;
- flood insurance, as applicable, during construction.
For contracts less than $100,000, bonding and insur-
ance requirements shall be in accordance with local
or State practices.
Re_: 40 CFR 35.936-22
f. Construction Incentive Program
A construction incentive clause may be included as
a part of the construction bid package for projects
having a Step 3 eligible cost of more than $10 miTlion,
when approved in accordance with PRM 79-5.
2. Technical Review:
The technical review of the plans and specifications must
insure that the design is based upon: the cost-effectiveness provi-
sions of the regulations (40 CFR Part 35 Appendix A), the achievement
of applicable effluent limitations or BPWTT, the sewer system evalua-
tion and rehabilitation requirements, and valve engineering provisions
(40 CFR 35.925-7). Structural, electrical and mechanical details of
the design are not critically reviewed because they are the responsi-
bility of the engineer whose seal appears on the drawings. However,
obvious irregularities should be noted.
The following are examples of items which should be reviewed.
a. Environmental Considerations
Plans and specifications must be compared with mitiga-
tive measures required by the FNSI or EIS. Examples
V-30
-------
might be soil erosion control, hours of operation,
backfilling and seeding, structural design for
buildings in a flood plain, etc. Refer also to
the approved facilities plan for energy conserva-
tion and open space measures.
b. Safety
The requirements of the Occupation Safety and Health
Act (OSHA) are addressed. The design of chlorine
facilities must specifically comply with agency
policy (PRM 79-1). Explosion proof motors should be
used wherever appropriate.
c. Bypassing
Construction is to be carried out so as to avoid
bypassing of flows during construction, except where
specific prior approval has been obtained from EPA.
d. Project Sign
The contractor is required to provide an appropriate
project sign.
e. Reliability and Flexibility
The proposed facilities must be reliable and provide
for flexibility in operation. This may be accomplished,
for example, by requiring standby power, by providing
for bypass of individual plant units, by providing
pumping capacity sufficient to operate the plant with
the largest pump out of service, etc.
f. Operation and Maintenance
All equipment, piping, switches, instruments, etc.
are to be clearly marked or color-coded for ease
of identification and location for operation and
maintenance.
V-31
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g. Public Water Supply
All public water supplies are to be protected by adequate
backflow preventers (for example, double check valves.
air gap).
h. Chemical Storage
All chemicals are to be properly stored and curbed to
hold the entire volume in the event of an accidental
spill. Also, adequate safety protection gear is to be
provided, with proper storage, for plant personnel.
Chlorine storage and safety requirements must be
followed.
Re: Technical Bulletin No. D-71-1, PRM 79-1
i. Ventilation
Adequate ventilation is to be provided in all areas
where necessary (for example wet well, dry well,
chlorine room, chemical storage area, etc.).
j. Laboratory Facilities
The laboratory facilities must be adequate to con-
duct the type of sampling and testing required by
the NPDES permit or by the State agency.
k. Emergency Alarms
Adequate alarms are to be provided to warn of
failures or dangers.
1. Hazardous Materials
Mercury is not to be used for trickling filter
seals. Other uses of mercury require special
review and approval. Other toxic compounds, such
as toxic sewer grouts (PRM 78-11), are not to be
used in hazardous applications.
Re_: Technical Bulletin No. D071-2
PRM 78-11
V-32
-------
m. Sewers
Acceptable levels of infiltration, and tests therefore,
are included; sewers should maintain minimum scouring
velocities and have adequate capacity, including
peaking factors.
n. Equipment
Specifications for equipment must conform with the
regulations (40 CFR 35.936-13), including nonrestric-
tive specifications requirements, sole source
restrictions, experience clause restritions, and
buy American provisions.
Re: 40 CFR 35.936-13
PRM 75-5, PRM 78-3
o. Shellfish Waters
Where discharges will come into contact with shell-
fish waters, appropriate measures must be included
to protect the shellfish.
Re_: Technical Bulletin, Protection of Shellfish
Waters, EPA 430/9-74-010
p. Pretreatment
Where applicable, the design must be in accordance
with the requirements for pretreatment of incom-
patible industrial wastes.
Re: 40 CFR 35.906, .925-15, Part 403
q. I & A Technology Confirmation
Where a project, or portion of a project, has been
designated innovative on the basis of the facili-
ties plan, the plans and specifications must meet
the appropriate criteria in 40 CFR 35 Appendix E.6,
or they may lose I & A designation.
Re: 40 CFR 35.908(b)(2)
V-33
-------
3. Plans and Specifications Approval
a. General
Upon determination that the plans and specifica-
tions are approvable, the grantee is to be so
notified. The notification will generally be in the
form of a letter and should contain any special
conditions resulting from the review which would be
imposed on the applicant upon application for a
Step 3 grant. This notification should specifi-
cally remind the applicant not to advertise for
bids until after applying for and receiving a
Step 3 grant. He should also be reminded that
the EPA is not obligated to award a Step 3 grant
for the project.
b. Step 2+3 Grants
If a grantee was awarded a combination Step 2 and 3
grant, he must receive written authorization from
the Regional Administrator before advertising for
bids on the construction portion of the project.
Before receiving this authorization, he must obtain
approval of his additional submissions for user
charge, industrial cost recovery, preliminary plan
of operation, and pretreatment compliance.
Re: 40 CFR 35.935-4
V-34
-------
K. O&M FACILITY/TRAINING GRANTS
Purpose:
Federal assistance is available in the form of grants for the
purpose of operation and maintenance training.
Discussion:
A grant may be awarded for construction and support of a training
facility, facilities or training programs for operation and mainten-
ance. A training grant for 100 percent of the cost of construction
of treatment works may be exempted by the Administrator from the State
priority list requirements; however, the Federal funds awarded to any
State for all training facilities or programs may not exceed $500,000.
A special application is required.
Review Procedures:
An application for a training grant must be reviewed for inclu-.
si on of:
a. a statement discussing the suitability of the treatment
facility, facilities or programs for training personnel
in operation and maintenance of treatment works through-
out one or more States;
b. a written commitment from the State to carry out an
approved training program at the facilities;
c. an engineering report (where a facility is to be
constructed) including design and cost data for
design and construction;
d. a detailed outline of the training programs,
including:
- an assessment of need for training
- how need was determined
- who will be trained
- the curriculum and materials to be used
- the training delivery system to be used
- the resources available for the program
- a budget breakdown for the program
- the relationship of the facility or program to
other programs •
Re: 40 CFR 35.915(a), .920-3(e), .930-l(b)
V-35
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CHAPTER VI
STEP 3 GRANT PROCESSING
A. INTRODUCTION
B. SCHEMATIC FLOW DIAGRAM
C. APPLICATION CONTENTS
D. PLANS AND SPECIFICATIONS APPROVAL
E. ADMINISTRATIVE REVIEW
F. GRANT AWARD PROCEDURES
G. PROCUREMENT OF CONSTRUCTION CONTRACTS
H. PRECONSTRUCTION CONFERENCE
I. MONITORING OF CONSTRUCTION ACTIVITIES
-------
A. INTRODUCTION
This chapter describes the contents of and review procedures for
processing of a Step 3 grant application. It begins with the
receipt of the application and concludes with the start-up of the
completed facilities.
Section B, Schematic Flow Diagram, visually places this chapter in
the proper sequence and indicates the major activities of the Step 3
application and review.
Section C, Application Contents, provides a ready listing of the
materials which are contained in an application package for a Step 3
grant.
Section D, Plans and Specifications Approval, restates the
requirement for approved plans and specifications as a part of the
Step 3 application.
Section E, Administrative Review, describes the procedures
involved in reviewing priority list compliance and certification,
application form, contracts and subagreements, intermunicipal agree-
ments, and other evidence of compliance.
Section F, Grant Award Procedures, describes the action required
on the part of EPA in making the grant offer.
Section G. Procurement of Construction Contracts, describes the
procedures involved in the authorization to advertise for bids,
review of bids, grant increase/decrease, protests, and authorization
to award contracts.
Section H, Preconstruction Conference, describes the administra-
tive and technical considerations to be discussed with the grantee
relative to construction activities.
Section I, Monitoring of Construction Activities, describes the
the procedures involved in the execution of change orders and onsite
inspections, and the review of operation and maintenance programs.
VI-1
-------
B. SCHEMATIC FLOW DIAGRAM
The flow diagram below visually places this chapter in the
proper sequence and indicates its relationship to other chapters.
The diagram includes the general functions of the Step 3 grant process
as performed by the applicant, State and EPA.
| CHAPTER 2
I
(STATE PRIORITY^
SYSTEM J
NO
STEP 3 /
APPLICATION If
W/APPROVABLE / V
'PLANS & SPECS/
AUTHORIZATION
TO ADVERTISE
FOR BIOS
ADVERTISE,
RECEIVE AND
EVALUATE BIDS
B
AWARD
CONTRACTS
INSPECTION &
CHANGE ORDERS
CONSTRUCTION
O&M MANUAL,
SEWER USE
ORDINANCE
NO
STATE/EPA
REVIEW
FINAL INSPECTION 1
VI-2
-------
C. APPLICATION CONTENTS
Below are listed the basic items to be included in an application
package. The items are listed here for quick reference, while the
review procedures for each item are described later. The reviewer
is to make a cursory review to insure that all items are included,
that all applicable portions of the forms are completed and that the
documents are signed by the appropriate officials. If items are miss-
ing or explanations are necessary, the State is to be contacted but
the reviewer is to proceed as far as possible to insure quick action
once the corrections are made.
1. Approvable Plans and Specifications.
2. State Priority Certification, EPA Form 5700-28.
3. Application, EPA Form 5700-32, including authorizing
resolution and site certificates.
4. Proposed subagreements or explanation of method of
awarding proposed subagreements, including information
necessary for development of outlay schedules and
MBE participation.
5. Executed intermunicipal agreements, where applicable.
6. Schedule for compliance with Plan of Operation requirements.
7. Submissions for compliance with pretreatment requirements,
where applicable.
8. User charge system, ordinance and resolution by jurisdictions.
9. Industrial cost recovery system, where applicable.
10. Evidence of compliance with the Flood Disaster Protection
Act and the sewer use ordinance requirements.
11. Sewer system rehabilitation scheduling, where applicable.
12. A public participation work plan, where applicable.
Re: 40 CFR 35.920-3(c), .925-3, -10, .927-3, -4.
40 CFR 30.315, .405-10.
VI-3
-------
D. PLANS AND SPECIFICATIONS APPROVAL
The review of plans and specifications is described in Chapter V
of this Handbook. The applicant has been notified that the plans
and specifications are approvable, and should have been informed of
any missing forms or documents which must be included in the final
bidding documents. The reviewer should confirm this by examining
the project file. The applicant is responsible for submitting copies
of the plans and specifications, including all required documents, as
a part of the Step 3 application. In particular the applicant should
be informed of the requirement for inclusion of the latest wage rate
determination in accordance with the Davis-Bacon Act.
Re: 40 CFR 35.920-3(c)(2)
VI-4
-------
E. ADMINISTRATIVE REVIEW
1. Priority List Compliance and Certification
Purpose:
The State agency is required to certify each project as
entitled to priority for a grant in accordance with the State
priority system and resulting project priority list.
Discussion:
Chapter II discusses the State priority system and list.
Once the system and annual list have been approved by EPA, each
project is certified by the State as being entitled to priortiy
for a grant over all other projects below it on the priority list
(EPA Form 5700-28, see Appendix B).
Only projects which have been certified by the State as
entitled to priority for Federal assistance may receive grants.
Review Procedures:
Review State Priority Certification and determine that:
a. the name, project number and description of
project agree with the application, form 5700-32,
and the approved State priority list;
b. the form includes the signature of the authorized
State official;
c. the award of grant assistance for the project
will not exceed the State's allotment, including
reallotments;
d. the award of grant assistance will not jeopardize
the funding of any projects of higher priority;
e. reserve funds are identified where used.
Re: 40 CFR 35.915, .917-2, .920-2, .925-3, .925-4.
PRM 75-14
PRM 75-24
VI-5
-------
2. Application Form
Purpose:
EPA Form 5700-32 serves as the formal application document
and sets forth the information necessary to qualify for a construction
grant. Additionally, the application contains "assurances" from the
applicant which are necessary to satisfy statutory requirements.
Discussion:
The application for a Step 3 grant is submitted by the author-
ized representative of the jurisdictions included in the approved
facility plan. The applicant must demonstrate the capability and
legal authority to finance, construct, operate and maintain the pro-
posed wastewater treatment facilites.
The application form is used to request initial grants, amend-
ments, and supplemental grants. The form (see Appendix B) contains
instructions for completion of each of the five parts. Part II,
Section B must be completed for a Step 3 grant. No Step 3 grant may
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 pro-
ceedings initiated (exceptions are discussed in PRM ).
Part III, Section D, concerns the applicant's proposed
method of financing the non-federal share of the project. In
accordance with PL 94-488, revenue sharing funds can be used to meet
the applicant's share of the cost of the project. In certain cases
involving sewage collection systems (not treatment plant nor inter-
cepting sewers), the applicant may use Community Development Block
Grant Funds as the community's local share. In these cases the
reviewer should contact the regional DHUD office for specific limi-
tations.
The grant request may not include costs for treatment of
wastes originating from Federal installations (excluded from
allowable costs).
The statutes require that the applicant comply with related
laws and regulations and give other assurances. Many of these
requirements are satisfied for a Step 3 grant when the applicant
signs the application and thereby assures and certifies that he will
VI-6
-------
comply v/ith the requirements. However, additional evidence of com-
pliance with some of these assurances is required from the appli-
cant (see Section E.9). A copy of the authorizing resolution
designating the signer to act as the representative of the applicant
(Part V, item 1 of the application form) must be included with the
application. Any subsequent changes in the authorized offical must
also be documented by a copy of the resolution authorizing the change.
Review Procedures:
Review the application form and determine that:
a. the name, project number, and description of the
project and the amount of the grant request agree
with the State Priority Certification Form 5700-28
and the approved State Priority List;
b. the form is signed by the authorized representa-
tive and a copy of the authorizing resolution
is attached;
c. the certification of project site interest (Part II,
Section B) is completed; and appropriate documentation
assuring all required property rights is included;
d. the applicant can fully fund its share of the project
costs and can obtain funds within 90 days of the
grant award;
e. all items in the application are complete or marked
not applicable (NA);
f. Part V, Assurances is included with the application.
If not, properly signed form must be obtained.
g. force account work must be properly identified.
Re: 40 CFR 30.315
40 CFR 35.920-2, .920-3(c), .925-5, .925-16,
.935-3(b)(3)
PL 94-488
31 CFR Part 51, Department of the Treasury
PRM
VI-7
-------
3. Contracts and Subagreements
Purpose:
Contracts or subagreements for personal or professional ser-
vices are submitted by the applicant and reviewed by both the State
and EPA to insure that the scope and nature of the proposed services
are sufficient to result in approvable facilities and that the fees
and schedules are reasonable.
Discussion:
The personal and professional services covered by the sub-
agreements at the time of Step 3 application submission are generally
the consulting engineering services. The regulations state that the
application shall include proposed subagreements, or detailed descrip-
tion of the method of awarding subagreements, for performance of any
substantial portion of the project.
The detailed requirements of and procedures for procuring
personal or professional services appear in 40 CFR 35.936, .937 and
Appendices C & D. Certain clauses of the regulations (e.g. access)
are applicable to subagreements and lower tier subagreements in excess
of $10,000. See Figure III-l, previous, for applicability of specific
clauses. The goal oriented policies and procedures regarding MBE set
forth in 43 FR 248 contain the responsibilities of EPA, Grantees,
Consulting firms, Prime contractors, and MBEs. Subagreements in
which the fee is a percentage of construction costs are not accept-
able nor are cost multipler contracts where profit is included in
the multipler.
Information must be sufficient for the preparation of outlay
schedules in accordance with PRM 79-9.
Review Procedures:
Review the agreement(s) and determine that:
a. the grantee has complied with 40 CFR 35.936 and
.937; and (if applicable) .939;
b. the scope of work is sufficient to construct
approvable facilities; and cost and fee are
appropriate to the scope of work;
VI-8
-------
c. completion schedules are reasonable and in agreement
with the plans and specifications.
d. the applicant has complied with EPA's policies and
goals as they apply to minority business enterprises
(MBE).
Re: 40 CFR 35.920-3(c), .935-7, .936, .937, .939,
.965, Appendices C and D
40 CFR 30.605
PRM 79-9
43 FR 248 pp. 60220-60224
4. Intermunicipal Agreement
Purpose and Discussion
Where two or more jurisdictions will be served by the
proposed facilities, intermunicipal agreements insure that all juris-
dictions will be obligated to comply with financial arrangements and
procedural requirements under the grants. At the time of Step 3
grant application, the final, executed intermunicipal agreements must
be furnished.
Review Procedures:
a. insure that final intermunicipal agreements are
included in the application package where more
than one jurisdiction is involved in the project;
b. insure that the agreements are properly executed
by the responsible officials of all jurisdictions
involved in the project, and are binding.
Re_: 40 CFR 35.920-3(c)(l)
5. Plan of Operation
Purpose and Discussion:
A preliminary plan of operation is required prior to award
of the Step 3 grant to insure that the applicant is committed to
implementation of operation and maintenance, staffing, training and
start up requirements.
VI-9
-------
The preliminary plan consists of a schedule for implementa-
tion of the activities necessary to assure efficient and reliable
start-up and continued operation of the facilities. The schedule
may be defined in terms of an estimated percent completion of con-
struction or in terms of numbers of days prior to an operational
start date.
Review Procedures:
Ensure that the schedule includes estimated milestones for
actions in accordance with PRM 77-3. These may include the follow-
ing:
a. points of hiring plant personnel, training milestones;
b. timing of O&M manual preparation;
c. development of safety and emergency operation
programs;
d. development of records, filing and laboratory
procedures;
e. timing of start up procedures.
Re_: 40 CFR 35.920-3(c)(3), .925-10, .935-12
PRM 77-3.
6. Pretreatment Requirements
Purpose and Discussion:
Pretreatment programs are intended to control toxics from
non-domestic sources, and to provide for the reclamation and reuse
of water wherever practicable. More particularly, the program is
designed to: prevent the introduction of pollutants into POTWs
which will interfere with treatment works operation and/or disposal
or use of municipal sludge or which will pass through treatment
works into receiving waters, the atmosphere or which will be other-
wise harmful; and employ opportunities to recycle and to reclaim
wastewater'and sludge produced by wastewater treatment.
Pretreatment programs are mandatory. No Step 3 grant award
can be made after December 31, 1980 unless applicant compliance with
the pretreatment regulations can be proven. On Step 3 projects in
existence prior to January 1, 1981, pretreatment programs can be
funded with grant increases.
VI-10
-------
Review Procedures:
The application package must include the following:
a. An industrial survey identifying system users by
type and location of industry and the character
and volume of pollutants discharged;
b. An evaluation of the legal authority for control
and enforcement including adequacy of enabling
legislation and selection of mechanisms to be used
(ordinances etc.);
c. An evaluation of revenue sources and financial
programs to insure adequate funding to carry out
the pretreatment program;
d. A determination of technical information needed
to support development of an industrial waste
enforcement mechanism to insure the compliance
with NPDES permit conditions;
e. A design of an enforcement monitoring program;
f. A determination of pollutant removals in existing
treatment facilities;
g. A preliminary determination of monitoring equip-
ment required at the treatment facilities;
h. A determination of the tolerance of the treatment
facilities to toxic pollutants; and
i. A preliminary determination of the municipal
facilities needed for monitoring or analysis of
industrial wastes.
Where appropriate, the pretreatment program must be updated
to insure its proper implementation and to improve its effectiveness.
Re: 40 CFR 35.907, .920-3(c)(4), 40 CFR Part 403
VI-11
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7. User Charge System
Purpose:
The user charge system requires that users of a treatment
works will pay their share of operation and maintenance (including
replacement) costs.
Discussion:
In the Step 2 application, the applicant must have developed
an approvable plan and schedule for the implementation of a user charge
system. After June 30, 1979, a Step 3 grant may not be awarded until
the applicant's user charge system is approved.
A system, based on actual use or ad valorem taxes as appro-
priate, must fulfill the objective of distributing the costs of
O&M among all users or user classes in proportion to their waste load
contributions. Factors to be included in the calculation of charges
are the volume, flow rate and strength of the wastes of all users
or classes. Each user, or class of users, must be charged on an
equitable basis to fairly apportion the O&M costs. An effective user
charge system will bring about operational self-sufficiency.
Where more than one political jurisdiction is included in
the project service area, each jurisdiction in the service area must
develop and enact an acceptable user charge system. In the first
year of operation, the user charges may be based upon past experience
or reasonable estimates. However, thereafter the applicant is to
review the user charges biennially at a minimum and initiate revi-
sions, as necessary, to reflect actual operation and maintenance
costs of the treatment works and actual waste load contributions from
each user or class of users.
Review Procedures:
The user charge system submission must be reviewed to insure
compliance with 40 CFR 35.929. The following criteria are applicable:
a. the system fairly apportions the O&M costs among
all users or user classes according to waste load
or flow characteristics. A system based upon" ad
valorem taxes (dependent upon taxable property
ownership) may be acceptable if in accordance with
40 CFR 35.929-1(b). Appendix 2 of 40 CFR Part 35
includes acceptable user charge system models;
VI-12
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b. the implementation of the program will provide
sufficient revenues to offset all actual O&M
costs;
c. a system will be implemented and enforced by
all political jurisdictions within the service
area of the treatment works. Resolutions,
local ordinances, written statements or other
agreements may be accepted as evidence of
compliance by the political jurisdiction
involved (confer with "Intermunicipal Agree-
ments," Section 4).
Re: 40 CFR 35.925-11, .929, .935-13, Appendix B
PRM 75-37
8. Industrial Cost Recovery System
Purpose:
The industrial cost recovery system provides a means whereby
industrial users of a publicly-owned treatment works repay the pro-
portionate Federal share of the construction costs of the treatment
works allocated to their use.
Discussion:
The industrial cost recovery (ICR) system provides a system
by which all industrial users of the treatment works will repay, over
a defined period, their portion of the Federal share of planning,
design and construction costs of the works. These costs are to be
recovered by the grantee over the useful life of the treatment works
but not to exceed 30 years. The grantee is obligated to collect
these payments no less often than annually and to refund 50% of the
total amount (plus any interest accrued) annually to the U.S.
Treasury. Of the remaining half of the recovered funds, a portion
may be used to pay the incremental cost of administering the ICR
system. A minimum of 80% of the amount remaining after payment of
the incremental cost is to be used by the applicant, subject to the
Regional Administrator's approval, for the eligible costs of expan-
sion or reconstruction of wastewater treatment facilities. The
remainder can be used for any purpose except construction of indus-
trial pretreatment facilities or rebates to contributing industries.
VI-13
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The system is applicable only to the Federal share of con-
struction costs. No Federal requirement exists for recovery of
the State or local share of costs for treatment of industrial
wastes (although State or local laws may be so enacted). The
Federal share of the cost of construction includes the Steps 1, 2
and 3 grants except the costs associated with I/I analysis and the
cost associated with sewer rehabilitation and nonexcessive I/I if
they are not attributable to industrial users.
ICR assessments are in proportion to the industrial user's
wastewater characteristics. The wastewater characteristics may
include strength, volume, delivery flow rate, and shall be monitored
according to the schedule included in the approved ICR system. In
determining the amount of an industrial user's discharge, the
grantee may exclude domestic wastewater originating from the industry.
After applying this exclusion, if the discharge exceeds 25,000 gpd
(or the weight of BOD or suspended solids equivalent to that found
in 25,000 gpd of domestic wastewater), the industry is subject to
ICR charges. The grantee reviews the ICR system annually and
adjusts ICR payments based on the monitored characteristics. If
an industrial user discontinues use of the treatment works, its ICR
payment will cease.
Note: A moratorium on the collection of ICR charges from
industrial users is in effect for the period of January 1, 1978 to
June 30, 1980.
Review Procedures:
The ICR system must comply with the regulations (40 CFR
35.928) and guidance (MCD-45). The following criteria are applicable:
a. the system will collect costs appropriately from
all "industrial users" defined in 40 CFR 35.905.
b. the system will be implemented and enforced by
all political jurisdictions to be served by the
proposed facilities. Resolutions, local ordi-
nances or written statements may be accepted as
evidence of compliance. These may be incorporated
into the required intermunicipal agreements
(Section 4).
Re: 40 CFR 35.905, .925-11, .929, .935-15
Industrial Cost Recovery Systems (MCD-45)
PRM 78-6
VI-14
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9. Evidence of Compliance
The regulations require that the applicant furnish evidence
of meeting program requirements and assurances made in the Step 3
grant application, and compliance with other Federal statutes. In
addition to evidence required previously for the Step 2 application
and approval of plans and specifications, the following are required:
a. Flood Disaster Protection Act
To determine if a community is required to participate in
the flood insurance program, consult the regional DHUD office. If
the community is eligible for participation and if the project con-
tains insurable structures, each of $10,000 or more in value, the
applicant is to furnish evidence that it is participating in the pro-
gram and a letter of intent that it will provide for the required
insurance both during construction and for the useful life of the
project.
Structures that must be insured are new or reconstructed-
surface structures which are walled and roofed (control building or
pumping station for example). Items which are not eligible for insur-
ance are sewers or other facilities not likely to be damaged in the
event of flooding.
Projects outside the flood hazard areas or in areas not
yet delineated by DHUD need not obtain flood insurance. Communi-
ties have until one year after notification of identification as a
flood-prone area to meet the flood insurance requirement.
Re: 40 CFR 30.405-10
PRM 76-5
b. Sewer Use Ordinance
The applicant must submit a current sewer use ordinance
or a letter of intent that such ordinance will be enacted in each
jurisdiction before completion of construction. The sewer use ordi-
nance must prohibit new sources of inflow (illegal connections from
sump pumps, foundation drains, roof leaders, etc.) from being
connected to the sewer system and require proper design and construc-
tion techniques for new connections.
Re: 40 CFR 35.927-4, .935-16
VI-15
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c. Sewer System Rehabilitation Schedule
Where the scope of the Step 3 grant includes sewer system
rehabilitation, the applicant must submit a schedule for completing
the rehabilitation program. Because the applicant is required to
comply with the schedule for sewer system rehabilitation in order to
receive full grant payment, the schedule must be reasonable for the
work involved. It is desirable that the rehabilitation program be
completed prior to completion of the plant. However, the rehabilita-
tion program may continue beyond the scheduled start-up provided that
the unfinished rehabilitation work will not have an adverse effect on
the operation of the plant.
Re: 40 CFR 35.927-3, .927-5(c), .935-16
10. Public Participation Work Plan
If the applicant determines, upon consultation with the public,
that additional public participation activities are necessary, a
public participation work plan shall be included in the application
package.
Re_: 40 CFR 35.920-3(c) (5), .917-5
VI-16
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F. GRANT AWARD PROCEDURES
Procedures to be followed in awarding a Step 3 grant are identi-
cal to those used in making a Step 1 award. (See Chapter IV,
Section F.)
In addition, special conditions of the grant are included in
Part III b of the Grant Agreement/Amendment. These conditions may
be based upon clearinghouse comments, requests from the State
agency or conditions unique to the project.
The grantee must complete certain regulatory requirements before
full grant payment may be made. To reinforce the importance of these
requirements, and to avoid oversight on the part of the applicant,
they may be included in the grant agreement as "special conditions."
These are:
a. O&M Manual - No more than 50% of the grant may be paid
until the draft manual has been submitted or evidence
of compliance has been received, and no more than 90%
may be paid until a satisfactory O&M manual has been
furnished.
b. Sewer Use Ordinance - No more than 80% of the Step 3
grant may be paid until the sewer use ordinance(s) is
approved, unless excepted.
c. Rehabilitation Program - No more than 80% of the
grant may be paid until compliance with the rehabili-
tation program (if required) is achieved, unless
excepted.
d. Pretreatment Program - No more than 90% of the grant
may be paid until the municipal pretreatment program
is approved (unless an extension is granted by the
Regional Administrator in accordance with 40 CFR
35.935-19).
Re: 40 CFR 35.935-12(c), -16(b), -19
Note: It is imperative that the preconstruction phase of Step
3 projects be carefully managed to minimize the lag time between
award of the Step 3 grant and initiation of construction. The
status of this phase is reported by periodic Regional updating of
the preconstruction information in the Grants Information and Control
System.
VI-17
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It should be borne in mind that 40 CFR 35.935-9 requires
that the Regional Administrator terminate a grant if construction
is not initiated within one year after award of the Step 3 grant.
The termination date may be extended for a maximum period of six
months if the Regional Administrator determines that such an exten-
sion is justified. Further extension is possible only upon formal
deviation from the appropriate provisions of 35.935-9.
Re: 40 CFR 30 Subpart I
40 CFR 35.935-9
PRM 78-12
VI-18
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G. PROCUREMENT OF CONSTRUCTION CONTRACTS
1. Authorization and Formal Advertising for Bids
Discussion:
Once the grantee has accepted the grant offer, or concur-
rent with transmittal of the grant offer and conditioned upon
acceptance, EPA may authorize advertising for bids (complete
approvable bidding documents, including plans and specifications,
were a part of the Step 3 grant application). While the approved
bidding documents contain the necessary requirements for formal
advertising (35.938-4), the letter authorizing the grantee to
advertise for bids should reemphasize and briefly remind the grantee
of these requirements and the procedures to be followed after
receipt of bids.
Procedures:
A letter to the grantee should:
a. authorize him to advertise for bids in accordance
with regulations;
b. indicate the documents to be submitted and pro-
cedures to be followed after receipt of bids
(see item 2 following for list of documents);
c. warn him not to award contracts until
authorization to do so is received from EPA.
d. remind grantee that while rejection of all bids
is possible, such action may be taken only with
prior EPA concurrence and only for good cause.
Re_: 40 CFR 35.938-4
PRM 78-8
2. Review of Bids
Purpose and Discussion:
A review of the bids, bidding procedures, and accompanying
documents is made to insure compliance with applicable Federal
laws and regulations and to insure that contracts will be awarded
to the lowest responsive, responsible bidder.
VI-19
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Review Procedures:
The following documents are to be submitted and reviewed
prior to authorizing award of construction contracts.
a. a certified tabulation of all bids received;
b. two copies of the proposal form and bonds from
the successful bidder;
c. a statement from the authorized official giving
the names of the bidders to whom the grantee
wishes to award contracts and the amount of each
contract;
d. proof of advertising indicating the circulation
dates and time for receipt of bids;
e. a copy of each addendum issued during the bidding
period and acknowledgment of its receipt by the
successful bidder;
f. signed copies of the certification by the contrac-
tors regarding compliance with EEO and MBE require-
ments;
g. if award is to be made to other than the low bidder,
a justification from the applicant indicating why
the low bidder is not responsive or responsible;
h. a revised cost estimate, as necessary (see suggested
cost breakdown format, Appendix B);
i. other documents showing conformance with applicable
State and local laws and ordinances.
Re: 40 CFR 35.935-6, .938
3. Grant Increases/Decreases
Discussion:
The grant amount is adjusted, as appropriate, after receipt
of bids to more accurately reflect project costs.
VI-20
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Procedures:
a. Grant increases
If the bids exceed the estimated construction costs and
the excess costs cannot be covered by the contingency allowance,
and if the grantee wishes to award the contracts on the basis of
these increased costs, he must request a grant increase through the
State agency. The State must submit a statement to LPA authorizing
the grant increase. A contingency allowance (generally between 3
and 5 percent of construction costs) is to be included in the
revised project costs to allow for change orders, overruns, etc.
Grant increases require a revised grant agreement/amendment, the
updating of the GICS, and Congressional liaison notification if the
increase exceeds $10,000. Refer to Chapter VII, Increases and
Decreases, for specific procedural instructions.
b. Grant decreases
If the bids are less than the estimated construction
costs contained in the Step 3 application, the grant is to be reduced
accordingly but should continue to include a contingency allowance
(generally between 3 and 5 percent of construction costs). Grant
decreases require a revised grant agreement/amendment and the updat-
ing of the GICS. Refer to Chapter VII, Increases and Decreases, for
specific procedural instructions.
c. Contingency adjustment
Regardless of whether a grant increase or decrease is
appropriate, the contingency allowance noted in the Step 3 grant
application should be adjusted after bids have been received.
Common practice has been to allow a ten percent contingency allow-
ance for a Step 3 grant request but to adjust the allowance to
between 3 and 5 percent of the construction costs after receipt of
bids. Should the contingency adjustment result in a need for a
grant increase or decrease, follow the procedures in a. or b. above.
Re: 40 CFR 35.915-l(c), .935-11, .955
40 CFR 30.900-1
PRM 75-21
VI-21
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4. Protests
Discussion:
In the award of contracts, many individuals and firms have
a vested interest in the decision as to who will receive the construc-
tion contract. If the proposed award is not in favor of their
particular interests, they may choose to protest the award. In such
instances, the protester must take his grievance to the grantee for
initial resolution. In turn, the grantee must advise EPA of the
protest, the basis therefore, and his proposed method of resolution
before awarding contracts. If the protester is dissatisfied with
the decision of the grantee and feels that Federal law will be
violated by the proposed award, he may make a written request for
the Regional Administrator to review the grantee's decision.
The award of contracts is subject to an immense body of laws
and regulations and often involves sensitive legal issues. There-
fore, the construction grants reviewer must be familiar with the
procurement and protest regulations, and should consult the
Regional Counsel when he learns of a protest or of an action which
may lead to a protest in order to obtain advice as to any steps he
should take relative to the protest. Early consultation with
Regional Counsel is particularly important when a porposal is made
for award of the contract to other than the low bidder or when
an attempt is made to withdraw a low bid.
Review Procedures:
The construction grants reviewer must exercise caution in
handling protests, especially with regard to commenting on the
nature of the protest or recommending courses of action. Accordingly,
the reviewer should:
a. Refer the potential protester to 40 CFR 35.939(b)
regarding timing requirements of a protest. Any
other comments to the grantee or potential pro-
tester should be limited to procedural require-
ments.
b. Should a protester indicate dissatisfaction with
the grantee's decision on the protest and express
such disatisfaction to the reviewer, refer the
protester to 40 CFR 35.939(b)(2).
VI-22
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The reviewer may wish to consult with the Regional Counsel
who will make the preliminary decision as to whether the protest is
valid or without merit and who will so advise the Regional Admin-
istrator. If the Regional Administrator adopts or concurs with the
position that the protest is without merit, the protest will be
dismissed without further EPA proceedings. If the protest appears
to have some merit, Regional Counsel is responsible for coordinating
actions as prescribed in 40 CFR 35.939 to resolve the matter.
According to 40 CFR 35.939(d)(2) & (3), the Regional Counsel shall
make his report and recommendations promptly, and the Regional
Administrator should transmit his determination within one week
after receiving such report. The reviewer should assist in
gathering data necessary to a final decision and in assuring
timely resolution of the protest.
Re: 40 CFR 35.939
5. Rejection of All Bids
Discussion:
Regulations (40 CFR 35.938-4(h)(2)) permit the grantee to
reject all bids and resolicit for new offers. However, the exer-
cise of that right is contingent upon the grantee's demonstration of
good cause for that proposed action. Any good cause demonstration
must reflect that the public interest will be best served by such
action in consideration of EPA requirements.
Review Procedures:
A good cause proposal for rejection of all bids by a
grantee must be consistent with one or more of the following crite-
ria, as defined in PRM 78-8:
a. specifications are ambiguous or otherwise deficient
and an addendum to the invitation is not possible;
b. the grantee's needs have changed and such change
could not be imposed upon bidders within the
procurement requirements;
c. the specification requirement is determined
unnecessary;
d. bids received indicate the grantee's quality
requirements were overstated;
VI-23
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e. although bids are acceptable, the grantee is
unable to fund its share of costs associated
with the lowest acceptable bid;
f. the amounts of all otherwise acceptable bids
are unreasonable;
g. the bids failed to provide sufficient competition
to insure fair prices;
h. bids were not independently arrived at in fair
competition, were collusive, or were submitted in
bad faith;
i. applicable Federal laws or policies require delay
for further study;
j. good cause rejection may not be based on: litiga-
tion over contract award, relaxation of specifica-
tion requirements not materially affecting competi-
tion, omissions or ambiguities not adversely affecting
competition or the needs of the grantee, or the lack
of a local or in-State firm as low bidder.
Re.: 40 CFR 35.938-4(h) (2)
PRM 78-8
6. Authorization to Award Contracts
Discussion:
After reviewing the bids and determining that all regulatory
requirements have been satisfied, the grantee is give authorization
to award contracts. This authorization is in the form of a letter
and should contain instructions for arranging a preconstruction
conference with the grantee, his resident inspector, the State
agency, the successful contractor and a representative of EPA.
VI-24
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H. PRECONSTRUCTION CONFERENCE
Purpose:
The preconstruction conference is held to identify and clarify
the responsibilities of the grantee (and his consultant, where
appropriate), the contractor, the State and EPA.
Discussion:
Preconstruction conferences are not mandatory but are to be
encouraged wherever possible. The conference may be called at the
request of the State, the grantee, the contractor or EPA. Separate
preconstruction conferences may also be held to discuss the equal
employment opportunity and minority business enterprise responsi-
bilities of each party (specifically where construction costs will
exceed $1 million). The procedures below list several areas which
might be discussed at the conference. Separate discussions may be
held with the grantee, his consultants and contractors as appro-
priate, depending on the nature of topics covered.
Procedures:
Suggested subjects to be discussed at preconstruction conferences
include:
a. the responsibilities and authority of the grantee,
the contractor, the resident inspector, the State
and EPA;
b. Contractor performance in accordance with progress
and payment schedules. (NOTE: It is important to
stress that payments will be made in accordance with
the schedule and that these schedules, cumulatively,
form the basis of EPA's outlay management program.
Ultimately, they serve as input to the Treasury
Department in planning the timing and amounts of
borrowings to finance the operations of the Federal
government. Therefore, if progress is not consis-
tent with the schedule, slippage must be corrected
or outlay management coordination will be adversely
affected);
Re: 40 CFR 35.935-9
VI-25
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c. compliance with Davis-Bacon and related laws con-
cerning the posting and payment of minimum wage
rates, and other State and local laws;
Re: 40 CFR 35.935-5, 30.415
d. equal employment opportunity and minority business
enterprise requirements;
Re: 40 CFR 35.935-6; 40 CFR part 8
e. access to the work site and records;
Re: 40 CFR 35.935-7
f. requirements for adequate engineering supervision
and inspection during construction;
Re: 40 CFR 35.935-8
g. payment documents, requests and procedures for
filing, in accordance with construction schedule;
Re: 40 CFR 35.938-6, -945
h. project changes, including time of completion,
change orders, change in project scope or grant
amount;
Re: 40 CFR 35.935-9, .935-11, .938-5, .955
i. interim and final inspections by the State and/or
EPA;
Re: 40 CFR 35.935-14
j. records (including an accounting system which
separates allowable and unallowable costs) to be
maintained by the grantee, the inspector, and
the contractor, and the auditing procedures;
Re: 40 CFR 30.805, .820
VI-26
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k. requirements for timely submission of
- a sewer use ordinance
- a sewer rehabilitation program
- a plan of operation
- an O&M Manual
Re_: 40 CFR 35.935-12, .935-16
1. archeological or historical resources requirements,
as applicable;
Re: 40 CFR 6.301
PRM 75-27
m. mitigative measures to be employed during construc-
tion, as recommended in the environmental assess-
ment and contract documents.
Re.: 40 CFR 6.508, .509
n. the use of force account labor where prior approval
is obtained from the Regional Administrator, and
where in accordance with regulatory limitations.
Re: 40 CFR 35.936-14
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I. MONITORING OF CONSTRUCTION ACTIVITIES
1. Change Orders
Purpose:
A change order is the customary method of modifying a
construction contract after work has begun and may result in price
increases/decreases, revised time of completion, or other project
changes. It is a written order from the Grantee to the contractor
authorizing an addition, deletion or revision to the work within
the general scope of the construction contract.
Discussion:
The following outline .of change order review procedures
is supplemented by Appendix B, Procedures for Review of Change
Orders under EPA Construction Grants, of this Handbook.
During the course of construction, it may be necessary to
make changes in the project which require a modification of the
construction contract. Project changes which may result from minor
errors in the plans and specifications or consist of emergency
changes required to protect life or property do not require prior
approval by EPA.
Project changes which will substantially alter the design
and scope of the project; the type of treatment; the location,
size, capacity or quantity of any major item of equipment or which
will require additional Federal funds to complete the project must
receive the prior approval of the State and EPA before being
executed.
Approved change orders resulting in construction cost
increases are ordinarily paid for from the contingency portion
of the total project cost. However, where the change order or
combination of change orders exceeds the contingency allowance,
the grantee must request an increase in the grant amount, and the
procedures in item G.3 of this Chapter are to be followed.
The Grantee has the responsibility to originate and nego-
tiate all change orders. Proposed change orders should 6e
reviewed as early and expediously as possible in the project, to
insure proper negotiation and execution. Pending change orders
should be discussed at interim inspections.
VI-28
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Review Procedures:
To process a change order, the reviewer should determine
that:
a. the basic change is needed because of
- differing site conditions
- errors/omissions in plans and specifications
- changes instituted by regulatory agencies
- minor design errors
- overruns/underruns in quantities
- factors affecting time of completion
b. the request has been screened to determine that
- identification of the request document is complete
- it includes a justification statement from the
grantee
- state agency approval has been given
- prior EPA and State approval has been obtained,
where necessary
- the availability of needed additional local funds
has been properly certified
- a financial statement showing grant amount and the
cumulative effects of prior change orders on project
costs is included
- items requiring Federal participation are identified
- evidence of negotiations is included
- it agrees with the unit price or unit price adjust-
ments as specified in the contract documents (where
changes in quantity of units exceed 15% of original
bid, and total dollar change is significant, nego-
tiation of a new unit price may be appropriate)
- proposed costs are supported by a separate engineering
estimate
- cost and pricing data in accordance with 40 CFR
35.938-5(d) is provided for change orders exceeding
$100,000
c. the method of accomplishing the change is reasonable,
based on consideration of
- alternatives
- secondary effects of the change
- impact on time of completion
VI-29
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d. the request is for eligible work which is directly
related to
- construction of a publicly owned treatment works
- approved plans, specifications and cost estimates
- not including work previously determined to be
ineligible
- maintaining effluent limitations and schedules
of compliance
- assurance of the availability of the non-federal
share
- size and capacity related to needs
- no proprietary, exclusionary or discriminatory
requirements other than those based on performance
- not requiring a commitment of Federal funds in
excess of current State allotments
e. the costs are allowable in accordance with
- the Regional Administrator's delegated authority
to determine allowable costs on eligible work
- appropriate laws, rules and regulations
- not including work previously determined to be
unallowable
- satisfactory evidence of negotiations assuring a
fair and reasonable price for the work
- provisions of the specifications
- guidance in Chapter VII, Section B pertaining
to allowable and unallowable costs
- determinations made in policy statements issued
by EPA
f. the reviewer will maintain a file with the following
documents concerning the contract changes
- contract change order (signed and dated copy)
- attachments
- notifications of approval or denial
- requests for additional information, and responses
- memoranda of meetings and telephone conversations
- updated project cost summary, including allowable
and total costs
g. upon review of the change order, the grantee shall be
expeditiously notified in writing of the action taken,
Re_: 40 CFR 35.935-11, .938-5, .955
40 CFR 30.900-1
PRM 75-4
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2. On-Site Inspections
Purpose:
On-site project inspections are made to insure that the
project is being managed properly, is on schedule, and is
being constructed in accordance with approved plans, specifications
and change orders.
Discussion:
On-site project inspections are made during construction
(interim) and at the completion of construction. The frequency
of interim inspections announced or unannounced will depend upon
the size and complexity of the project; however, to the extent
possible inspections will be made on all projects at least quarterly.
Interim inspections may be made by the State or EPA. If made by
the State, they should be coordinated with the Regional Office, and
copies of the inspection reports should be furnished to the project
officer. EPA may also utilize Inter-Agency Agreement Inspectors.
Full time, on-site presence by EPA or the State may be required
where appropriate.
Final inspections should be made within 60 days after
being notified by the grantee that the project is complete and
operating, that the necessary operational staff has been hired, and
that the project has been accepted by the grantee. EPA has the
responsibility for conducting final inspections but usually the
Federal inspector will be accompanied by an official of the State
agency.
Regional offices are encouraged to develop and use their
own inspection report forms. Appendix B includes a sample inspec-
tion report for reference.
Procedures:
a. Interim inspections - the EPA or State inspector
shall determine that:
- the grantee is providing competent and adequate
supervision and inspection and is maintaining
appropriate inspector's logs;
- approved plans, specifications and change orders
are available at the project site;
VI-31
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construction conforms to the approved plans,
specifications and change orders and is on
schedule;
the latest engineer's estimate of work-in-
place agrees reasonably with the actual
observed construction;
reasonable tests of materials and equipment
are being conducted and noted in logs or
reports (slump tests of concrete for example);
equipment delivered to the site is being
properly protected and stored;
a project sign is appropriately displayed
and identifies appropriate agencies;
the wage rate decision is prominently dis-
played and agrees with the contract documents;
project accounting records are maintained and
they distinguish between allowable and non-
allowable costs supported by receipts or
certified contractor invoices;
any special construction techniques or prac-
tices are being employed in accordance with
the grant agreement, including erosion and
sediment control measures;
the grantee has hired the operational staff
and is providing training, as appropriate
(see O&M requirements below);
the grantee is preparing an operation and
maintenance manual;
the grantee is making satisfactory progress
on the pretreatment program as applicable;
the grantee is making satisfactory progress
toward implementation of UC/ICR systems;
VI-32
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- the grantee is making satisfactory progress
toward the completion of sewer use ordinances
and the rehabilitation program as applicable;
- the grantee is providing wastewater treatment
capability during construction;
- procedure exists to call deficiencies to the
attention of the authorized representative.
b. Final inspections - the items under interim inspec-
tions should be considered, as appropriate, as well as the follow-
ing:
- the facilities are complete, operating and,
in the case of a treatment plant, will meet
the effluent limitations required by the
NPDES permit, or BPWTT;
- the facilities conform to the approved plans,
specifications and change orders;
- all equipment is operational and performing
satisfactorily;
- appropriate operation and maintenance staff
has been hired and instructed in the startup
and operational procedures;
- laboratory facilities are complete and suffi-
cient to conduct appropriate tests;
- the operation and maintenance manual, with
schedule for routine maintenance and testing,
is readily available and procedures are
being carried out in accordance with the
manual;
- accounting records are adequate and will be
made available for audits;
- if not previously approved, the grantee is
completing the sewer use ordinance and rehabil-
itation program;
- UC/ICR systems are implemented;
VI-33
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- industrial dischargers are pretreating wastes
as required by the pretreatment program.
Re: 40 CFR 35.935-8, -11, -14.
3. Payment Conditions
Discussion:
Grant payments are discussed more completely in Chapter VII
of this Handbook. Generally, however, Step 3 grant payments are
made in accordance with the outlay schedule. The grantee is respon-
sible for submitting a payment request (EPA Form 2550-16) and
supporting documentation. When it is received, EPA will review it
against the construction schedule and authorize payment as appro-
priate.
The grantee is also responsible for meeting particular con-
ditions before he may receive full payment. These have been men-
tioned in earlier parts of the Handbook but are summarized below
for the reviewer's convenient reference.
a. Operation and Maintenance Manual - No more than
50% of the Federal share may be paid until a draft
O&M manual, or evidence of timely development, is
submitted, and no more than 90% may be paid until
the manual is approved by the Regional Administrator.
Re: 40 CFR 35.935-12
b. Sewer Use Ordinance - No more than 80% of the
Federal share may be paid until the sewer use
ordinance(s) has been submitted by the grantee
and approved by the Regional Administrator.
Re_: 40 CFR 35.935-16
c. Rehabilitation Program - No more than 80% of the
Federal share may be paid until the grantee has
given evidence of complying with a sewer system
rehabilitation schedule, where appropriate, as
incorporated in the grant agreement.
Re: 40 CFR 35.935-16
VI-34
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d. Pretreatment Program - No more than 90% of the
grant may be paid until the municipal pretreat-
ment program is approved (unless an extension
is granted by the Regional Administrator in
accordance with 40 CFR 35.935-19).
Re: 40 CFR 35.907
e. Final Inspection - Final payment may not be made
until the final inspection has been completed
and the Regional Administrator has determined
that the treatment works have been satisfactorily
constructed in accordance with the grant agree-
ment and approved plans and specifications.
Re: 40 CFR 35.935-14
4. Plan of Operation
Purpose:
Federally funded treatment works are to be designed,
operated and maintained to achieve the effluent limitations
required in the NPDES permit or BPWTT. A well planned operation
and maintenance program is an essential step in achieving that
objective.
Discussion:
Surveys conducted in 1973, 1974, and 1975, which are
included in the Clean Water Report to Congress for each of those
years, indicate that approximately one-third of the Federally-funded
treatment plants surveyed were not achieving the level of efficiency
for which they were designed. In most cases, these problems resulted
from inadequate operation and maintenance. To prevent the future
occurrence of these unacceptable conditions, strict attention is to
be focused on operational considerations during facility design and
the development of an effective operation and maintenance program
for the completed treatment facilities.
During the Step 3 activity, the grantee is to implement a
program for efficient staffing, training of staff, and operation
and maintenance of all treatment works facilities. The program
must insure that the facilities are maintained at the designed
level of efficiency to meet the effluent standards as established
VI-35
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in the NPDES permit, and to comply with all other applicable State
and Federal requirements for process control, monitoring and
reporting. The grantee must provide an adequate budget and a
trained staff of personnel to insure the success of the program.
The elements of the O&M program should be those included in a
Plan of Operation which also identifies required actions and related
implementation dates needed to assure proper start-up and continued
operation.
A preliminary Plan of Operation should be reviewed concur-
rent with the review of project plans and specifications and
should be included as a part of the Step 3 grant application
package. The preliminary plan should be as complete ^s possible
in identifying needed actions and implementation time frames, but
specific dates may, of necessity, be omitted until a construction
start date is known.
A critical responsibility of the applicant is the prepara-
tion of an operation and maintenance manual for each treatment
facility, including pumping stations. No more than 50% of the
Federal share of the Step 3 grant may be paid until the draft
operation and maintenance manual or evidence of timely development
is submitted and no more than 90% of the grant may be paid unless
the grantee has furnished a satisfactory final operation and main-
tenance manual.
Review Procedures:
The review of the operation and maintenance program sub-
missions included in the Plan of Operation shall assure compliance
with the following requirements:
a. Staffing and training
- that a staffing plan, to include staffing and
salary schedules, staff structure and organ-
ization, and certification requirements is
developed;*
- that the chief operator is hired before con-
struction is 50% complete;
* To be submitted to both State and EPA
VI-36
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- that a preoperation training schedule is
developed within 30 days after hiring chief
operator;
- that a discussion of hiring problems encountered
and actions to solve the problems, if appropriate,
is held 60 days prior to start-up;
- that a list of positions filled and qualifica-
tions of personnel hired is prepared 30 days
prior to start-up* and assurance is given that
vacancies will be filled, if appropriate;
- that a continuous training plan and schedule*
is developed 30 days prior to start up;
* To be submitted to both State and EPA.
b. Administrative functions
- that program and laboratory facilities are
adequate to perform appropriate monitoring
and analysis necessary to assure adequate
process control and compliance with the
NPDES permit and State requirements;
- that arrangements for submission of appro-
priate operational reports to the State have
been made;
- adequate consideration has been given to
operational procedures during the start-up
period;
- provision is made for employee safety programs
and training is conducted in advance of plant
start-up;
- provision is made for developing and implementing
a maintenance management system;
VI-37
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c. Budget
- provisions is made for adequate annual budget
to insure efficient operation and maintenance,
including administration, supplies, utility
charges, and ancillary equipment;
- provision is made for salaries to attract
qualified personnel and to train and upgrade
employees.
d. Emergency Operating Plan - in developing the plan
the following items and provisions should be taken
into account:
- effects of emergencies on operation;
- vulnerability analysis of system;
- protective measures;
- emergency response program;
- periodic revision of plan as necessary.
e. Operation and Maintenance Manual - the O&M manual
is the primary document required in the operation
and maintenance program, and should incorporate
items a-d above into a comprehensive package of
instructions and information. Specifically, the
manual should include:
- design information describing the components
and equipment of the treatment plant, including
simplified schematic diagrams of the facilities,
pipelines and control systems and detailed dia-
grams of more complicated areas;
- process information discussing the control of
various processes to achieve maximum efficiency,
including a clear explanation of process func-
tions of the various components in simplified
language with references to appropriate equip-
ment manuals for detailed technical information;
- maintenance requirements, including schedules
for routine adjustment and lubrication of
equipment, referencing appropriate manufacturer's
manuals for details;
VI-38
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- laboratory procedures, specifying various
analyses and monitoring schedules required for
process control and by the NPDES permit and
other regulations, describing laboratory equip-
ment and general maintenance, and referencing
appropriate literature for standard test
procedures;
- safety aspects of the various process units
and related equipment and procedures for
complying with the OSHA requirements;
- administrative procedures describing the
various records required and reports to be sub-
mitted as a function of the State monitoring
program;
- troubleshooting procedures and a description
of the emergency response plan, including pro-
cedures for notification of proper authorities,
emergency equipment repair, and references to
the appropriate equipment manuals for specifi-
cations and limitations of components.
Re: 40 CFR 35.925-10, .935-12
Federal Guidelines, Operation and Maintenance of
Wastewater Treatment Facilities, August 1974
Considerations for Preparation of Operation and
Maintenance Manuals, (GPO No. EP 2.8: PO 2)
Emergency Planning for Municipal Wastewater Treat-
ment Facilities (GPO No. EP 2.8: W 28/6)
Estimating Laboratory Needs for Municipal Waste-
water Treatment Facilities (GPO No. EP 2.2:
W 28/3)
Start-up of Municipal Wastewater Treatment Facili-
ties (GPO No. EP 2.8: W 28/5)
Maintenance Management Systems for Municipal
Wastewater Facilities (GPO No. EP 2.8: W 28/4)
Estimating Staffing for Municipal Wastewater
Treatment Facilities (GPO No. EP 2.8: W 28/3)
A Planned Maintenance Management System for
Municipal Wastewater Treatment Plants (GPO No.
EP 1.23/2: 600/2-73-004)
PRM 77-3.
VI-39
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CHAPTER VII
FINANCIAL CONSIDERATIONS
A. INTRODUCTION
B. ALLOWABLE AND UNALLOWABLE COSTS
C. FORCE ACCOUNT
D. PAYMENTS
E. INCREASES AND DECREASES
F. AUDITS
-------
A. INTRODUCTION
This chapter discusses various financial considerations that
are common to all three step grants.
Section B, Allowable and Unallowable Costs, covers problems
faced by the reviewer in dealing with these costs and presents major
categories of cost statements.
Section C, Force Account, discusses when this method can be
used, prior approvals needed by EPA and other considerations to
serve as guidelines for the reviewer.
Section D. Payments, covers prior costs, Step 1, 2, 3, and 2 + 3
grant payment schedules and payments.
Section E, Increases and Decreases, discusses when increases
occur, contingency funds covering these, and what the reviewer needs
for EPA approval.
Section F. Audits, provides the reviewer with pertinent infor-
mation to help in answering the questions of grantees and in
working with the auditors.
VII-1
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B. ALLOWABLE AND UNALLOWABLE COSTS
1. General
In the process of reviewing grant payment requests, the re-
viewer is confronted with having to make decisions on the eligibility
of certain project costs for which there is no absolute guidance.
Such costs, termed "allowable and unallowable" costs, have been
assembled in Section B3 of this Chapter to provide uniformity in
interpreting their eligibility. In general, for miscellaneous
costs to be eligible for grant participation, they must:
Be necessary
of municipal
and reasonable and
administration.
not a normal expense
c.
Be authorized (or not prohibited) and be consistent
with Federal, State and local laws or regulations.
Be consistent with policies and regulations which are
applicable to both Federally assisted and other
activities of the unit of government of which the
grantee is a part.
d.
Not be included in the costs
Federally financed program.
allocable to any other
In summary, specific allowable costs are not defined by
statute as eligible for grant assistance, but must be interpreted
as eligible based upon EPA policy, appropriate Federal cost prin-
ciples, and reasonableness.
Re_: 40 CFR 35.940
40 CFR 30.705
2. Allowability Determinations
The cost items listed are applicable to PL 84-660, 92-500 and
95-217 projects. In making eligibility determinations, consideration
should be given to commitments previously made to grantees in the
absence of prior National policy, pertinent statutes or regulations.
Cost items not listed below should be considered on an individual
basis. As needed, the reviewer may seek advice from the Municipal
Construction Division, Office of Water Program Operations in EPA
Headquarters.
VII-2
-------
Final determinations by the Regional Administrator concerning
the allowability of costs are conclusive unless appealed within
thirty days in accordance with the "disputes" provisions of 40 CFR
Part 30, Subpart J.
Re_: ^O CFR 35-940
40 CFR 30 Subpart J
3. Allowability of Miscellaneous Costs
The reviewer should become familiar with 40 CFR 35.940 re-
garding allowable and unallowable costs.
The following statements of allowability relating to certain
construction grants project costs are included for the reviewers
ready reference:
Indirect Costs:
Indirect costs are those incurred for a common or joint
purpose, benefiting more than one project or cost objective and not
specifically identifiable to the particular project or cost objective
benefited. Indirect costs consist of items of a general overhead
nature such as office space, utilities, telephone, etc. The costs
are allowable if determined on the basis of a negotiated indirect
cost agreement and incorporated in the grant agreement.
fte: 40 CFR 30.715-2, 35.940-4
Travel Costs:
Grantee travel costs - allowable travel costs include
travel considered necessary and directly related to the accomplish-
ment of project objectives. Travel not directly related to con-
struction and/or "start up" of the facility, including trips to
professional meetings, symposia, lectures, etc., is not allowable
as a direct charge to the project. Travel not directly related to
VII-3
-------
a specific project may, however, be recovered under an Indirect
Cost agreement. (Federal Management Circular (FMC) 74-4, 7-18-74.)
Architect/Engineer travel costs - allowable travel costs
include travel considered necessary and project related, including
onsite travel costs. Costs of relocation of employees and their
families may be considered allowable when such travel is justified
and approved by the grantee. The cost of transportation between
living quarters and the construction site is normally unallowable.
In unusual circumstances, where job sites are located in isolated
areas and living quarters are not available within 30 miles, travel
costs between living quarters and the job site are considered
allowable.
Re: 41 CFR 1-15.2 and 41 CFR 1-15.4
Bond Costs:
All costs associated with the approval, preparation,
issuance and sale of bonds (including bond counsel and underwriters
fees) are unallowable for grant participation. Interest on bonds
or any other form of indebtedness is unallowable. (FMC 74-4,
7-18-74.)
Re: 40 CFR 35.940-2(f)
Liquidated Damages:
Monies received by grantees in the form of liquidated
damages shall have np_ effect on the determination of allowable
costs of grant projects. However, any additional costs—construction,
engineering, legal, or administrative-generated because of a con-
tractor's lack of performance should be covered by the liquidated
damages received. Thus, any such increase in cost as a result of
lack of performance is unallowable for participation even in the
event that the grantee elects not to exercise his right to recover
liquidated damages.
VII -4
-------
Bid Bond Forfeiture:
All bid bond forfeitures should be treated as a reduction
to project construction costs.
Rate Studies:
Such studies are allowable if required for the establish-
ment of user charge or industrial cost recovery system in order to
comply with 40 CFR 35.925-11. Such studies require prior approval
either in the grant agreement or an amendment thereto. Allowable
costs may include legal, C.P.A., and engineering fees related to
the studies. (In order to avoid double payment, care must be exer-
cjsed to assure that such v/ork is not incident to a general con-
tractual obligation.)
Re: CFR 35.940-3(e)
Financial Reports and Studies:
To the extent that such reports constitute "Rate Studies"
(see above) for user charges and/or industrial cost recovery pro-
cedures, the costs are allowable; provided that such studies are
approved in advance by the Regional Office and that the results of
such studies are acceptable to EPA. Financial reports which con-
stitute studies of, for example, the tax base, structure, etc., to
determine the financial capabilities of the applicant or the finan-
cial feasibility of the proposed undertaking are similarly allow-
able. The cost of all other financial reports and studies should
generally be considered unallowable in that they constitute a normal
function of government.
In this regard the Regional Office should adhere to a
strict interpretation of the term "studies". Generally, "studies"
refers to preliminary reviews, overviews, examinations, analyses, etc.
The interpretation must not be extended to include preparing pro-
cedures, designing implementation schemes, drafting statutes or regu-
lations, delineating boundaries relating to finances, issuance of
bonds, adjustment of tax rates, establishment of assessment districts,
etc. or other activities which are a normal function of government
and as such are unallowable.
VII-5
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Establishment of Special Assessment Districts:
The "mechanics" of establishing special assessment dis-
tricts developed, for example, on the basis of rate studies (see
above), are a normal function of government and as such the costs
associated therewith are unallowable. Indluded in this restriction
are legal, administrative and engineering costs associated with
activities such as: (1) drafting, review and passage of statutes/
ordinances (e.g. sewer use ordinances), (2) preparation of regu-
lations, (3) delineation of district boundaries, (4) elections, etc.
This policy extends equally to the establishment of any
"special districts" such as election, service, rate, etc. districts
(including Regional Authorities) related to the grant project.
Public Liaison Services:
Such services are generally unallowable since they con-
stitute a type of public information service and as such are not
directly related to or necessary for the construction of the treat-
ment works. This does not pertain to public participation; see
next item.
Assistance with State and Federal Regulations:
The cost of assistance associated with addressing State
and Federal Regulations and procedures which are basic to the
functions of general government, such as preparation of applications
and related documents, obtaining state construction permits, dis-
charge permits, etc. are unallowable. Costs growing out of meeting
specific Federal statutory requirements such as public participation,
and other activities related to the user charge study, facilities
planning, NEPA procedures, Uniform Relocation Assistance and Real
Property Acquisition Policies Act, procurement requirements, MBE liai-
son services, etc. are allowable.
If such costs entail assistance which is readily avail-
able through Federal or State offices, such as interpretation of
regulations, explanations of grant procedures, etc. they should be
disallowed.
VII-6
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(In order to avoid double payment, care must be exercised
to assure that such work is not incident to a general contractual
obligation.)
Re: 40 CFR 35.940-l(h), (s)
Public Participation On-Site Visits:
Reasonable costs of public participation-related on-site
visits (field trips) to observe the operation of waste treatment
facilities which employ uncommon processes or features may be in-
cluded as allowable project costs. Regional Offices must be certain
that: (1) a visit will serve-to address genuine public concerns,
(2) only reasonable costs are included for grant participation and
attendance is limited to interested or affected parties whose views
can be expected to influence public or official opinion, and (3)
travel is to the nearest appropriate location. Regional Offices
are cautioned that grant participation in these costs is not a
routine matter and should be approved only when they will make an
important contribution to the planning or acceptance of a project.
Unless written approval for the specific visits and estimated
associated costs are received from the Regional Office prior to
their taking place such costs will not be eligible for grant par-
ticipation.
Cost of Grantee Training Workshops:
Reasonable costs associated with grantee attendance at
training workshops/seminars designed to provide instruction in
administrative, fiscal and contracting requirements/procedures in-
cident to the EPA grant process may be considered allowable for
grant participation. Regional Offices must assure themselves that
such training is, in fact, a necessity. For example, a larger city,
with a number of ongoing grants, probably already possesses more
grant related expertise than could be imparted during such a work-
shop. Such training must be strictly limited to appropriate grantee
employees and receive prior approval from the Regional Office. Poten-
tial grantees (if on the current priority list) may also attend and
be reimbursed after grant award providing written evidence of ad-
vance Regional Office approval for the particular training is sub-
mitted with the reimbursement request.
VII-7
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Redesign/Replanning Costs Resulting from Changes in
Federal Requirements:
In those cases in which an applicant's completed or
partially completed planning and/or designs are rendered invalid or
unacceptable by changes in Federal requirements, both the original
cost plus the redesign or replanning costs are allowable. The
Regional Office must assure itself that the planning and/or design
thus invalidated was undertaken in good faith by the applicant
and was not the result of a disregard for existing Federal direc-
tives by either the applicant or his agent.
Cost of Implementing the Uniform Relocation Assistance
and Real Property Acquisition Policies Act of 1970
(PL 91-646):
Basically there are four categories of costs associated
with this Act which may be considered allowable:
(1) Moving and related expenses
(2) Replacement housing
(3) Relocation assistance advisory services (entailing
direct services of the grantee in assisting the dis-
placed person(s))
(4) Acquisition of real property.
Documented allowable costs from these categories incurred
on or after July 1, 1972, will be treated as other allowable project
costs and reimbursed at the same percentage rate. In the case of
costs resulting from acquisition or displacement occurring before
July 1, 1972, EPA shall pay the full amount of the first $25,000 of
such costs for each displaced person. Allowable costs should be
determined in accordance with 40 CFR Part 4 and guidelines issued
pursuant thereto.
Re: 40 CFR 35.940-1(g)
VII-8
-------
Field Surveys to Identify Cultural Resources:
Reasonable costs incident to field surveys to identify
historical, architectural, archeological and cultural resources in
the primary impact area of grant projects are allowable. Allowable
costs must be determined on a case-by-case basis and may include
the cost of onsite inspections, review of pertinent documents,
photographic reconnaissance, services of archeologists or historians,
etc.
Such costs should receive prior approval and delineation
by the EPA Regional Office. Survey costs associated solely with
the examination of the National Register of Historic Places are
unallowable. EPA may participate in the cost of intensive surveys
(e.g. "digging") only when a sufficient amount of information
exists to indicate that there is a reasonably high probability of
discovering important cultural resources.
Re: PRM 75-27
Industrial Planning:
Allowable project costs do not include either the costs
of interceptor or collector lines constructed exclusively or almost
exclusively to serve industrial users or the costs allocable to the
treatment for control or removal of pollutants in wastewater intro-
duced by industrial users.
Re: 40 CFR 35.925-15
Facilities Serving Communities and Federal Facilities:
Whenever a planned treatment works will jointly serve a
municipality and a Federal facility, that portion of the construction
cost allocable to the Federal facility will not be allowable for
75 percent construction grant funding, subject to the following
exceptions:
VII-9
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(1) Facility planning costs.
(2) Cost of Step 2 work if a Step 2 grant has been
certified by the State for funding to EPA prior
to the issuance of PRM 75-35 (12/29/75).
(3) Design and construction costs allocable to Federal
facilities producing less than 250,000 gpd or 5
percent of the total design flow of waste treatment
works, whichever is less.
That portion of the construction costs allocable to the
Federal facility shall be based on all factors which significantly
influence the cost of the treatment works. Factors such as
strength, volume, and delivery flow rate characteristics will be
considered and included to insure a proportional allocation of costs
to the Federal facility.
As a minimum, the portion of construction cost alloc-
cable to the Federal facility should be based on the ration of its
flow to the total design flow of the treatment works. The portion
(percentage) allocable to the Federal facility must be agreed upon
by the municipality and Federal agency, and approved by EPA prior
to award of a Step 2 or Step 3 grant, whichever is applicable, for
the works or any portion thereof.
Re: 40 CFR 35.925-16, PRM 75-35
Site Acquisition vs. Site Preparation Costs:
Site acquisition, including land used for sewage treat-
ment plant site, appurtenant piping and structures, sewer rights-of-
way, and pumping stations, whether by purchase, rental, lease or
easement, are unallowable. Similarly, all legal, realty, engineering
and grantee costs associated with ineligible acquisition are un-
allowable. Notable exceptions which are allowable if approved are
land acquired after 10/17/72 which is an integral part of the
treatment process or will be used for ultimate disposal; land ac-
quired after 12/26/77 which will be used for storage before land
application or composting and temporary storage. Approval must be
VII-10
-------
in accordance with pertinent regulations and PRM's, and made prior
to land acquisition. Legal, administrative, and engineering costs
associated with eligible acquisition are also allowable.
Costs associated with the preparation of the treatment
works site (including appurtenant features) before, during, and to
the extent agreed upon in the grant agreement or amendment thereto,
after construction are generally allowable. These costs include
such items as: grade and construction staking surveys, survey for
alignment and slope, preparation of working drawings and plans
dealing with site preparation, locations, grades, slopes, distances,
depth, alignments, etc. Also eligible are costs such as finegrading,
seeding, and protective trees and shrubs.
Costs related to reasonable site screening for aesthetic
purposes are also allowable. Criteria for participating in aes-
thetics related work include: support expressed in NEPA related
studies, approved facility plans, necessary screening of adjacent
properties, whether the facility is in constant public view or
remote therefrom, etc.
Re: PRM 75-25, 75-39, 77-5, 78-4
Certificate as to Title to Project Site:
Legal costs associated with certifying as to the adequacy
of the grantee's interest in the project site should be considered a
normal function of government incident to the project and as such
are unallowable. (Except in the case of grant eligible land as
listed above.)
Acquisition of Privately or Publicly Constructed Waste
Treatment Facilities:
Costs incurred by a grantee or applicant associated
with the purchase, lease or acquisition of privately or publicly con-
structed and owned waste treatment facilities are not allowable,
except when shown to be in compliance with Agency requirements as
provided for in PRM and approved by the Regional Administrator.
Re: 40 CFR 35.940-3(d)
VII-11
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Demolition of Existing Structures:
Demolition of existing structures constitutes an allow-
able cost provided that the structures are on the facility site
(including rights-of-way for the eligible sewer lines) and that
construction cannot be undertaken without such demolition. Off
site demolition is unallowable. Aesthetics related demolition is
allowable only if it conforms to the criteria relating to the
allowability of site preparation outlined above.
If demolition of existing structures is required on a
site not previously owned by the grantee, the grantee must address
such demolition in the cost effective analysis and demonstrate to
the satisfaction of the Regional Office that in choosing the site
appropriate consideration was given to the cost of demolition.
Utilities:
Costs associated with the removal , relocation and/or
replacement of utilities (water, electricity, etc.) are allowable
when such activity, resulting from a conscious governmental de-
cision, is necessary for and incident to acquisition of real prop-
erty and the construction of the eligible facility. Where such
removal, relocation, and/or replacement does not involve loss of a
property right by the utility, such costs are not allowable.
In addition, payment for that portion of cost of equip-
ment substantially different than the pre-existing utility equipment
or the cost of utility equipment having greater capacity than that
originally in place will be allowable if mandated by local, State
or Federal law.
Re: 40 CFR 35.940-1 (k)
In instances where new utility equipment for service to
the new facility or increased utility capacity to the new facility
requires the installation of new utility equipment servicing that
new facility, and where the grantee would by custom or law not re-
ceive such installation free of charge, such utility equipment
costs are allowable.
VII-12
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Restoration of Streets and Rights-of-Way:
The cost of restoring streets and/or rights-of-way to
their original condition is an allowable cost. The need for such
restoration must result directly from the construction of the eligible
project. Allowable restoration may include, for example: refilling
and patching of street and roadway surfaces (generally limited to
the width of the trench), fine grading and reseeding of off-street
rights-of-way, reasonable tree plantings, restoration of sidewalks,
etc.
Mobile Equipment*:
Generally, such equipment is allowable if identified by
the grantee and approved in advance of purchase by the Regional
Office and is directly necessary for the operation and/or main-
tenance of the overall wastewater treatment facility. Such equip-
ment must be necessary for the transmission of wastewater or sludge
or for the maintenance of plant grounds and/or equipment. Allowable
items include but are not limited to:
a. Portable stand-by generators.
b. Large portable emergency pumps to provide "pump-
around" capability in the event of pump station
failure or pipeline breaks.
c. Sludge tanks, trailers, and other vehicles having
as their sole purpose the transportation of liquid or
dewatered wastes from the collector point to the treat-
ment facility or disposal site.
d. Grounds and building maintenance apparatus. Such
apparatus may include, for example: mowers and snow
removal equipment (in certain geographic areas).
Regional Offices may use such criteria as cost effective-
ness, potential for abuse, frequency of use, etc. in
considering allowability. Requests for participation
based upon less than 100 percent use should be agreed
to only in special situations and prorated accordingly.
*NOTE: The grantee is required to maintain property
accountability on all such equipment in accordance
with A-102 and 40 CFR 30.810.
VII-13
-------
Cars and trucks are unallowable, except for specialized
sludge handling/transport equipment as noted in "c"
above.
Re: PRM 79-8
Office Equipment and Furnishings*:
Such items as identified by the grantee and approved in
advance by the Regional Office, when installed or located at
the treatment works and necessary to the administrative and/or
technical (including training and meetings) functioning of the
works, may be allowable. In larger facilities allowability may be
extended to reasonable special purpose rooms and equipment related
to the function of the facility. There may well be instances in
which the Regional Office will need to exercise judgment as in the
case of "luxurious furnishings", televisions, etc.
Shop Furnishings*:
Reasonable furnishings for shop areas such as shelves
bins, work benches, etc. are allowable costs.
Laboratory Equipment and Supplies*:
Generally, laboratory items identified by the grantee
and approved prior to procurement by the Regional Office as neces-
sary to conduct tests as may be required for plant operation are
allowable. In addition, the cost of a reasonable inventory of
chemicals and supplies necessary to start operation of the plant
is allowable. Large stocks of expendable materials are, however
not allowable. An EPA publication "Estimating Laboratory Needs
for Municipal Wastewater Treatment Facilities" discusses equipment
needed for various size plants.
Re.: 40 CFR 35.940-1 (m)
*NOTE_: The grantee is required to maintain property
accountability on all such equipment in accordance
with A-10Z and 40 CFR 30.810.
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Safety Equipment:
Based upon the specific needs of individual facilities,
necessary and reasonable safety equipment is an allowable cost.
Generally such equipment should be delineated in the operation and
maintenance manual and the approval of that document may constitute
the basis for participation.
NOTE: Such equipment should meet applicable Federal,
State, local and industry safety regulations and stand-
ards. The grantee is required to maintain property
accountability on all such equipment in accordance with
A-102 and 40 CFR 30.810.
Tools*:
Allowable tools are only those which are specified as
special purpose tools necessary for the repair and adjustment of
specific process components by the equipment supplier(s)/
manufacturer(s) or approved by the Regional Office. Also allowable-
based upon the size, complexity and nature of the treatment works--
are those basic tools/machines, generally mechanically powered
and usually fixed in place, which, in the opinion of the State and
Regional Office, are necessary to assure the uninterrupted func-
tioning of that facility. All other tools are unallowable.
*NOTE: The grantee is required to maintain property
accountability on all such equipment in accordance
with A-102 and 40 CFR 30.810.
Replacement Parts:
Replacement parts identified and approved in advance by
the Regional Office as necessary to assure uninterrupted operation
of the facility may be included as allowable costs. Allowable
replacement items are only those which constitute critical parts or
major systems components and which are: (1) not immediately avail-
able and/or whose procurement involves an extended "lead-time",
(2) identified as critical by the equipment supplier(s), or (3) are
critical but not included in the inventory provided by the equipment
supplier(s). In those instances where adequate "back-up" components
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are built into the system a reduction in replacement parts should
be made.
Items of routine "programmed" maintenance such as
ordinary piping, air filters, couplings, hose, bolts, etc. are un-
allowable. See EPA Technical Bulletin: "Design Criteria for
Mechanical, Electric and Fluid System and Component Reliability"
for additional discussion.
Collection System Maintenance Equipment:
EPA participation in the cost of such equipment pur-
chased in connection with a construction grant shall be based upon
a proration of the participated portion of the collection system to
the total system. Thus if EPA participates in 65 percent of the
grantee's total collection system, the allowable costs shall con-
stitute 65 percent of the cost of such equipment purchased pursuant
to the grant agreement. Generally, the proration should be based
upon the relative lengths of the new to the total system rather
than cost or size. Such equipment must be reasonable and be
approved by the Regional Office.
In addition allowability will be based upon: (1) a
demonstrable frequency of need, and (2) the equipment must be
necessary to preclude the discharge or by-passing of raw sewage,
and/or (3) the equipment is necessary to provide for the health,
safety and welfare of the citizens.
Project Inspection:
Costs associated with technical inspections of the
eligible project before and during construction (including change
order approved time extensions) are allowable. Such costs must be
clearly documented and, to avoid double payment, the work must not
be incident to a general contractual obligation.
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Groundwater Monitoring Facilities:
Costs associated with the construction of groundwater
monitoring equipment and facilities may be considered allowable
only in those cases in which, as a direct result of project con-
struction, the possibility of groundwater deterioration, depletion
or modification exists. Allowability may not be extended to the
operation, surveillance and/or analyses associated with these
facilities. Such facilities require the prior approval of the
Regional Office.
Biological "Seeding":
Under certain conditions (climatic, geographic, nature
of wastes, etc.) reasonable costs associated with the purchase and/
or transportation of biological seeding materials required for
initiating (or expediting the initiation of) the treatment process
operation are allowable.
Service Charges**:
Service charges are defined as: any supplemental charges
added to other direct cost (non-salary) which are claimed on an
actual cost basis.
Regardless of contract terms, the actual cost of service
charges must be supported by accounting records. If the service
charges are not supported or if the actual cost is less than the
amount claimed, the total difference is unallowable for Federal
participation. This is in accordance with the ASCE manual which
states that the service charge is for expenses to be reimbursed
by the client.
**
'NOTE: These requirements have been EPA National
policy under PL 84-660, PL 92-500 and PL 95-217 as
requireo under 40 CFR 30.800 and .805.
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Fringe Benefits**:
Regardless of contract terms, the actual cost of fringe
benefits must be supported by accounting records when they are
claimed as a direct charge. If the charges are not supported or
if the actual cost is less than the amount claimed, the total or
the difference is unallowable for Federal participation. Where the
fringe benefits are claimed as a direct charge and also included
in the multiplier the duplicate direct charge is unallowable for
Federal participation.
Labor Charges and Related Costs**:
Regardless of contract terms, where charges have been
made to the grant and there was no cost incurred, the charges should
be questioned. Labor charges and related costs for straight time
or overtime hours which are billed but for which cost has not been
incurred will be unallowable for Federal participation. (Compen-
satory time will be considered in determining actual labor costs
incurred. However, compensatory time is allowable only if it is
incurred in accordance with established company policy, if it is
properly controlled and accounted for, and if it is used within an
annual accounting period.)
**NOTE: These requirements have been EPA National
poTTcy under PL 84-660, PL 92-500 and PL 95-217 as
required under 40 CFR 30.800 and .805.
Start-up Services:
Grant 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. To
be grant eligible, the services must be rendered by the design
engineer or others identified by the design engineer.
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Start-up services include:
(1) Pre and post start-up personnel training—i .e.,
onsite training given plant operation and mainte-
nance personnel on the operation and control of
the specific treatment processes of the facility.
(2) Fine tuning to optimize process control--!'.e.,
expert operational assistance for adjustment of the
treatment process and related equipment functions
to optimize performance safety and reliability under
actual operating conditions.
(3) Laboratory procedures--!'.e., onsite training and
instruction to assure that the sampling and
laboratory testing program needed for satisfactory
process control and regulatory monitoring and re-
porting are fully understood.
(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.
(5) Records management systems--!.e., services to pro-
vide the training needed to implement a records
management system as outlined in the O&M manual.
(6) Revise O&M manual--!'.e., revising the O&M manual
based upon actual operating experience obtained
during the start-up period.
Note that costs normally associated with the operation
and maintenance 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 offsite
formal training/orientation programs. Finally, wet and dry equip-
ment and facility testing is the responsibility of the contractor
under the supervision of the Engineer.
Re: 40 CFR 35.940-1(p)
PRM 77-2
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Pretreatment Program:
Costs associated with the development of a municipal pre-
treatment program in accordance with 40 CFR Part 403 are allowable.
Also allowable are costs for the purchase of a limited amount of
monitoring equipment, construction of facilities to be used by the
municipal treatment works in the pretreatment program, and limited
sampling of industrial discharges to municipal works. Not allow-
able are costs for construction of privately-owned pretreatment
facilities unless authorized, or costs for monitoring equipment used
by industry for sampling discharges to municipal works.
Re: 40 CFR 35.940-1(r)
.950-2(1), (m), .940-3(f)
Individual Systems:
The costs for the treatment and treatment residue dis-
posal portions of toilets with composting tanks, oil-flush mechanisms
or similar in-house devices are allowable.
Costs for acquisition of land on which individual systems
are located are not allowable, nor are costs for the waste generating
fixtures and associated plumbing to the treatment unit (where pipes
are situated on private property). Modifications to homes or other
buildings for installation of special devices are excluded from
grant eligibility. However, reasonable costs of construction site
restoration to original conditions are allowable.
Re_: 40 CFR 35.918-2
PRM 79-8
Royalties and Patents:
Royalties for the use of, or for rights in, patents may
be allowable costs within the limitations of principles contained
in PRM 79-2. Prior to selecting a patented process or product upon
which a royalty must be paid, the grantee must consider the need and
reasonableness of the royalty, cost-effectiveness of the royalty,
and means to avoid use of patented products. Where a grantee will
VII-20
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be required to pay a royalty on a process or product necessary for
performance of the grant agreement, procedures outlined in PRM 79-2
must be followed in determining the allowability of the cost.
Re: PRM 79-2
Crossover Sewers:
Crossover sewers (lateral or collection sewers) may be
grant eligible when it is demonstrated that they are more cost
effective than the installation of an eligible parallel sewer. A
crossover sewer or crossover service connection is defined as "the
sewer to connect one or more properties on one side of a major
street, road or highway to the collector sewer on the opposite side."
A deviation from the regulations (see 40 CFR 35.905-13) must be
obtained when the crossover sewer system serves only one property
(service line) but is more cost effective than an eligible alterna-
tive sewer line.
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VII-24
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VII-25
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VII-26
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C. FORCE ACCOUNT
1. General
In most instances a grantee contracts with engineering or
construction firms to perform project related work. The program,
however, permits use of the "force account" method wherein the
grantees use their own employees, material, and equipment to per-
form all or part of the project work.
The use of force account is permitted for any Step 1, 2 or
3 grant work provided that prior written approval is obtained from
the Regional Administrator. Such approval is based on the grantee's
demonstrating that he possesses the necessary competence required
to accomplish such work, and that:
a. the work can be accomplished more economically by use
of such method;
b. emergency circumstances dictate its use.
In order to avoid problems with the force account method and
to assist grantees who will be using force account, the reviewer
must be familiar with those items needing prior approval. The re-
viewer must determine in advance that adequate procedures, records
and controls will be used by the grantee. In particular, payroll
records should adequately show the distributions of hours worked
and identify work performed.
Re: 40 CFR 35.936-15(b)
2. EPA Prior Approvals
A grantee must obtain prior written approval from the
Regional Administrator to use force account labor in lieu of sub-
agreements for any Step 1 or Step 2 work in excess of $10,000, any
sewer rehabilitation work in excess of $25,000 performed during
Step 1, or any Step 3 work in excess of $25,000 unless the grant
agreement stipulates the force account method. "Use of the force
account method for Step 3 construction shall generally be limited
to minor portions of a project."
VII-27
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Before approving a force account, the reviewer should con-
sider the following items:
a. all anticipated project administrative costs, including
salaries of administrative employees, travel expenses,
etc., in order to determine the extent of their
allowability.
b. proposed methods of timekeeping and timechecking,
methods for establishment of wage scales for Taborers
and mechanics and methods for establishment of salaries
of supervisory employees (sample time sheets, proposed
wage rates and an explanation of the methods for deter-
mining those rates and other information necessary to
comply with this item should be submitted as soon as
possible);
c. an indirect cost figure that is going to be used as
part of the costs billed to the project (this must be
a formal written agreement with EPA);
d. allowances for use, repair and overhaul of grantee
owned equipment and rental rates for rental equipment,
including when rental rates begin, apply and end, and
the extent of allowability of repairs and overhaul
(precise usage records for such equipment must be
maintained);
e. the writeoff or depreciation of small tools and other
expendable items or equipment;
f. any disposal and adjustment of costs in connection
with unused material and tools left over on completion
of work.
Re: 40 CFR 35.936-14(a),(c)
3. Other Considerations
The following considerations provide additional guidelines
for the reviewer in the force account area:
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a. adequate cost accounting records must be maintained,
b. satisfactory controls must be established and used to
assure that all material, supplies, equipment, labor
cost, etc. charged to the project are actually used in
connection with the project;
c. the Copeland Antikickback Regulations apply (see
Appendix C-2 of 40 CFR Part 35);
d. adequate insurance must be maintained. This insurance
is the same as that discussed in 40 CFR 35.936-22
covering such construction insurance as is customary and
appropriate, including fire and extended coverage, work-
men's compensation, public liability and property
damage and "all risk" as required by local or State
law.
Re: 40 CFR 30.645, .810
40 CFR 35.936-14, 936-22(b)
PRM 75-15
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D. PAYMENTS
1. General
It is the policy of EPA to process payment requests and to
make periodic progress payments as expeditiously as possible. Pay-
ments are to be made in accordance with the project outlay schedule,
which is developed by the EPA at the time of contract award. The
outlay schedule is revised annually and whenever actual project per-
formance strays significantly from the schedule.
NOTE: It is imperative that grantee payment requests be
processed as quickly as possible. On "routine" requests, procedures
assuring a 48 hour "turn around" are to be established. All payment
requests are to be considered "routine" except for the first and
final payments on Step 1, 2 and 3 awards; the 50%, 80% and 90% pay-
ments on Step 3 awards; and specific interim payment points estab-
lished, in writing, for a particular project.
Re.: 40 CFR 35.937-10, .938-6, .945
PRM 75-22, PRM 79-9
2. Prior Costs
After June 30, 1975, no Step 1 project work may be initiated
without a grant award unless the State (based on the review and
approval of a plan of study) has requested the Regional Administrator
to reserve grant funds. After June 30, 1975, Step 2 work initiated
without first having received a grant from EPA is not eligible for
grant participation.
Occasionally grant applications will be received for projects
in which prior costs have been incurred. These must be handled on
a project by project basis and be in accordance with the regulatory
date limitations as described in 40 CFR 35.925-18.
In considering the eligibility of prior costs, the reviewer
should bear in mind that:
they must be claimed prior to the grant award or no
payment may be made for those costs;
VII-30
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they should be supported by documents identifying dates
and the nature of the work performed;
they should be examined in light of the allowable/
unallowable cost statements in "Section B" of this
chapter.
Re: 40 CFR 35.925-18, .945(a)
3. Schedules
Schedules for the completion of any of the three grants steps
are contained in the grant agreement/amendment. The work schedule
and accompanying payment schedule are generally discussed with the
applicant prior to the grant application and should reflect realistic
targets. The reviewer has the responsibility for final approval of
the schedule. On the basis of the payment schedule, the EPA Region
prepares an outlay schedule for management of Federal grant funds
associated with the project. Payments made in accordance with the
payment schedule ensure that the outlay management will be main-
tained properly. When actual project performance strays significantly
from the schedule, adjustments must be made to properly control
outlay management.
Any time that a progress schedule is revised, the Municipal
Permits Office of EPA should be notified.
a. Step 1 and Step 2 - Periodic progress payments for
Step 1 and 2 work are to be made on the basis of
completion of the step or completion of specific tasks
within the step grant as contained in the grant agree-
ment. Every effort should be made to divide the sche-
duling into tasks, but where this is not possible or
practical, the grantee should submit a certified state-
ment as to percentage of completion of the work on a
periodic basis.
b. Step 3 - Step 3 payment schedules should realistically
reflect the likely construction progress. For example,
early equipment purchases and seasonal weather con-
ditions may require large grant payments for certain
VII-31
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months. If the monthly requests exceed those on the
outlay schedule, the schedule must be revised. Pay-
ment schedules should be structured so as to preclude
any need for frequent changes.
Re: PRM 79-9
4. Interim Payments
Problems with both payment requests and payments can be
minimized if, at the time of the grant award, the payment request
procedure is discussed with the grantee. Each region has specific
internal procedures for handling requests and processing payments so
the reviewer must be familiar with these. Payments, generally, are
handled as follows:
the grantee submits EPA Forms SF-271 (Outlay Report
and Request for Reimbursement for Construction Programs)
directly to the Regional Financial Management Office or,
as directed, to the individual responsible for work
performed;
the grantee provides necessary documentation to support
the request;
all support documents and a copy of the SF-271 form
are forwarded to the project officer,
"routine" requests are processed immediately; "non-
routine" requests are sent to the project officer who
must complete his action within ten days.
grantees are to submit requests for Step 3 payments
monthly.
NOTE: The Federal share shall be based upon those costs
which, at the time of the payment request, the grantee is currently
obligated to pay. For example, if the grantee has retained a cer-
tain percentage from a construction pay estimate, EPA shall base its
payment upon the amount of the estimate less the retained amount.
In addition, when retainage is used, the grantee must compensate the
contractor by use of an interest-bearing escrow account.
Re: PRM 75-22
VII-32
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a. Payment Requests Review'
It is the responsibility of the construction grants
reviewer to monitor the progress of the project. One means of doing
this is by periodically reviewing payment requests and supporting
documents. At any time before the final payment, the reviewer may
cause any request(s) for payment to be reviewed or audited, however,
the frequency of the periodic reviews should depend on the size
and complexity of the particular project. In instances where a
monthly payment schedule has been established, the reviewer should
not perform a detailed check of the request and supporting documents
each month. If a problem is discovered later when checking the
supporting documents, it can be resolved on a subsequent payment.
Judgment will be required to avoid unnecessary delays.
Re: 40 CFR 35.945(c)
b. Documentation
The following are some examples of task documentation
for Step 1 and 2 projects:
a grantee certified percentage of work complete--
preferably divided into tasks (e.g. Step 2: 35%
completion of design criteria; 60% completion of
preliminary draft plans and specs; 90% completion
of final draft plans);
working drafts completed for specific tasks and
which have been received in the Regional Office
or are held by the grantee;
The following are some examples of documentation for
Step 3 projects:
the engineer's latest monthly estimate of work in
place;
invoices accompanying claims for work completed,
equipment invoices accompanying claims for pur-
chases.
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c. Grant Conditions
The reviewer is reminded to check the grant agreement/
amendment and any subsequent amendments for any special grant con-
ditions prior to approving payment request. An example of this would
be the limit on the percentage of the Federal share that may be
paid prior to the submission of O&M manual, sewer use ordinance, etc.
(Chapter VI, F).
5. Final Payments
The request for final payment is submitted by the grantee
when the final inspection is completed and the treatment works have
been determined satisfactorily constructed in accordance with the
grant agreement. By acceptance of the final payment, the grantee
agrees to assign to the United States the Federal share of refunds,
rebates, credits or other amounts (including any interest thereon)
properly allocable to costs for which the grantee has been paid
by the Government under the grant. The grantee thereby also releases
and discharges the United States, its officers, agents, and
employees from all liabilities, obligations, and claims arising
out of the project work or under the grant, subject only to such
exceptions which may be specified in writing between the Regional
Administrator and the grantee.
Funds recovered after final payment which are subject to
reallotment shall be added to the amounts last allotted to the sub-
ject State, and shall be handled in the same manner as the latest
allotment.
Re: 40 CFR 35.945(e), (f), PRM 77-9
6. Refunds, Rebates. Credits, etc.
The Federal share of any refunds, rebates, credits, or other
amounts (including any interest on them) that has accrued to or been
received by the grantee in relation to the project, to the extent
that they are properly allocable to costs for which the grantee
has been paid under a grant, must be credited to the current State
VII-34
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allotment or paid to the United States. If the Regional Administrator
approves, the grantee may be allowed reasonable expenses incurred
in securing these refunds, rebates, credits or other amounts under
the grant.
Re: 40 CFR 35.945(d)
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E. INCREASES AND DECREASES
1. Increases
Grant increases most commonly occur because of cost overruns
occurring after the receipt of bids, cost of major change orders, or
cost of a sewer system survey. As soon as the grantee sees that
costs are going to be substantially more than those upon which the
grant is based, the grantee must notify the State and EPA and give
an estimate of the amounts involved. EPA will not increase a grant
until the State has approved an increase from its available allot-
ment and reallotments.
In order to make a determination on the increase, the re-
viewer must:
have a written justification for the increase from the
grantee;
have an approval letter from the State;
determine that the increase in cost is eligible for
grant participation;
determine that funds for the increased grant are avail-
able in the State's allotment.
Re_: 40 CFR 35.935-11, .955
40 CFR 30.900-1
2. Increase Notification Procedure
Upon approval of an increase in the grant, the following
procedures must be carried out: (Detailed explanations of each
step can be found in Chapter IV, F.)
a grant amendment must be prepared (EPA Form 5700-20);
(if the increase in the grant amount is over $10,000,
the grant amendment is not sent to the grantee until
five working days after signing by the Regional Ad-
ministrator to allow for Congressional notification);
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the grant amendment information must be entered into
GICS;
Standard Form 240 must be prepared for clearinghouse
notification;
Notification of Grant Award Action, EPA Form 5700-1B,
must be prepared and transmitted to Headquarters.
3. Decreases
Grant decreases most commonly occur when the bids received
are less than the estimated construction costs contained in the
Step 3 grant application. In most instances, a request for a de-
crease is not made by the grantee, but action is initiated by the
State or EPA after the review of the bid material. The grant is
reduced as necessary but the new project cost contains a contingency
allowance (generally between three and five percent of construction
costs).
4. Decrease Notification Procedure
For a grant decrease, the following procedures must be
followed:
if EPA has initiated the decrease, the SMte is to be
notified of the decrease and the State allotment is to
be adjusted accordingly;
a revised grant agreement/amendment must be prepared
(EPA Form 5700-20);
a revised grant amount must be entered into GICS:
Standard Form 240 must be prepared for clearinghouse
notification;
Noficiation of Grant Decrease Action, EPA Form 5700-1D,
must be completed and transmitted to Headquarters.
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F. AUDITS
1. General
By signing the grant agreement/amendment for a Step 1, 2 or
3 project, the grantee agrees that its books, documents, records,
and papers, and those of its contractors, are accessible to the EPA
Regional Administrator, the Comptroller General of the United States,
the State agency, or any authorized representatives. The EPA Office
of Audit is responsible for audits of all Step 1, 2 and 3 grants.
For Step 3 grants, however, it is the general rule that only those
projects having grants over $250,000 will be audited unless there
is some indication of irregularities.
Re: 40 CFR 35.935-7
40 CFR 30.605, 30.805
2. Objective
The objective of audits of construction grants projects is:
a. to determine whether the management controls exercised
by the grantee through its management system, accounting
system, procurement system, and property control system
are adequate to assure that costs claimed/incurred are
reasonable, allowable, and allocable to the project
under the grant terms and conditions, Federal Manage-
ment Circulars, and applicable EPA regulations;
b. to identify any non-compliance with applicable grant
provisions or EPA rules and regulations and to provide
recommendations for improvement.
3. Types of Audits
There are two types of audits, interim and final.
a. Interim audits are performed during the earlier part of
a project to review internal accounting controls, pro-
curement systems, design and construction controls,
and costs incurred.
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Final audits are performed after completion of the
project to review the grantee's records to assure
that costs claimed are reasonble, allocable, and
allowable and that the grantee has met the grant ob-
jectives.
4. Criteria for Choosing Projects
Not all Step 1, 2 or 3 projects are audited. For Step 3
projects, it is the general rule that only those with grants over
$250,000 will be audited unless there is some indication of irregu-
larities. Also, the intensity of the audit will vary from project
to project depending on its complexity and the problems encountered.
The EPA Office of Audit utilizes relevant reports, con-
struction grant file information, the results of sampling tests and
the following criteria to select projects for audit:
size of the grants/projects
existence of unit-price contracts
type of contracts and subcontracts
the number and significance of change orders
experience with prior grantee's project audits
identification of deficiencies
The EPA grant reviewer will be called upon to supply the
auditors with the following information to assist in determining
the scope, schedule, resource plans and estimates of audit efforts:
grant number
grantee name, address and phone
eligible project cost
grant amount
number and dollar value of change orders
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number, amount and type of construction and engineering
agreements
extent of force account work
cut off date
whether construction is located in a flood hazard area
requiring the grantee to purchase flood insurance
NPDES Permit.
5. Major Activity Areas for Audit Focus
The major activity areas that are addressed during the
audits include the grantee's accounting, procurement and project
management practices. Both interim and final audits will include
the audit of costs associated with these activities.
a. Accounting Practices - the grantee's accounting system
should include the following:
(1) accounting records
(2) supporting documents
(3) traceability
(4) segregation of costs (allowable/unallowable;
direct/indirect)
(5) internal control
(6) accounting reports.
b. Procurement Practices - the grantee is responsible
for demonstrating that engineering and construction
contracts were awarded in compliance with the
regulations.
c. Project Management Practices - the project management
approach applied by the grantee is significant to his
ultimate ability to control cost and schedules.
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6. Final Report
The final audit report issued by the Office of Audit is an
advisory report only and any action such as recovery of funds is
the responsibility of the Regional Administrator.
Once the audit review is completed, the process of issuing
a final report is flexible, depending on the complexity or serious-
ness of any deficiencies noted in relation to the project. In
general, the following procedures will be followed:
a. the rough draft report will be presented to the
grantee. The grantee and its subcontractors have two
weeks to answer any questions raised in the draft;
b. the Office of Audit will incorporate the grantee's
answers into the report and present this report to the
Regional Construction Grants Branch Chief. The Branch
Chief and Project Officer will meet with the auditor to
resolve any issues raised in the report in order to
reach concurrence;
c. an exit interview will be held by the auditors with
the grantee to discuss the findings in the final report;
d. the final report will be presented to the Regional
Construction Grants Branch Chief who will recommend
necessary action to the Regional Administrator.
The key to this entire process is flexibility because at any
one point the auditor may want to meet with the Project Office to dis-
cuss findings and resolve issues. The reviewer will generally be
involved in the discussions to resolve issues after the grantee
has responded to the rough draft. It is the Project Officer's res-
ponsibility to determine whether exceptions and claims in the report
are justified.
The final report will contain a statement of concurrence
between the Regional Administrator and the Office of Audit. A final
report may be issued, however, even if both parties do not concur.
There may be circumstances where the Regional Administrator chooses
to withhold comment pending further investigation. This is usually
done to protect the Agency in cases where future litigation may be
involved. Final resolution rests with the Regional Administrator.
Re: Audit Guide for Construction Grant Program
EPA Order 2750.2, Attachment A, 6/8/79
VII-41
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