SUPPLEMENT
NO. 4
JULY1977
Municipal Wastewater
Treatment Works
Construction Grants Program
References
Regulations -Guidance -Procedures
United States Environmental Protection Agency MQp 02 4
Washington, D.C. 20460
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TO HOLDERS OF THE UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY
MANUAL OF REFERENCES - MCD-02:
PLEASE FILE THE ATTACHED CONSTRUCTION GRANTS PROGRAM
REQUIREMENTS MEMORANDA 77-6, 77-7, 77-8 IN SECTION II OF
THE MANUAL.
(ALSO ATTACHED IS A REVISED THIRD/FOURTH PAGE
FOR THE TABLE OF CONTENTS)
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o Si; 1 ).
____ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
Construction Grants
Program Requirements Memorandum
4 /AV iqi PRM #77-6
SUBJECT: Easements
FROM: John T. Rhett, Deputy Assistant Administrator
for Water Program Operations (WH-546) /
TO: Regional Administrators
ATTN: Water Division Directors
PURPOSE :
The purpose of this memorandum is to establish Agency policy
regarding the timing of the conduct of the grantee’s easement work.
DISCUSSION
A report by the General Accounting Office (dated July 30, 1976)
indicated that certain Step 3 grant delays could have been avoided had
the grantees completed preliminary easement related work (obtaining maps
and descriptions of land parcels, determining property ownership, etc.)
during the Step 2 process. Therefore, by requiring that preliminary
easement work be accomplished during Step 2, potential delays in Step 3
can be avoided by timely resolution of such problems.
In addition, Regions should also consider the need (on a case-by-
case basis) for the grantee to undertake the actual taking of easements
and/or acquisition of sites during the Step 2 process. Such actions can
also serve to reduce delays in approving Step 3 awards. However, this
would exclude the acquiring of or the taking of easements for land
parcels to be used for sludge disposal or land treatment as the costs of
such acquisitions or easements are capital expenditures which are eligible
under a Step 3 grant {see PRM’s 75-25 (PG-49) and 75-39 (PG-67)], but
would become unallowable if incurred prior to the Step 3 award.
POLICY :
Effective this date all new Step 2 grants will include the provision
that appropriate preliminary easement related work will be accomplished
concurrent with other Step 2 work. This preliminary easement work
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2
should include obtaining maps and legal descriptions of land parcels,
determining land ownership, etc., and other steps necessary to forestall
property related problems which might tend to lengthen the preconstruction
period under Step 3.
In addition, Regions may (during Step 2) permit grantees to take
easements and/or acquire sites, if it is determined that such action
will contribute to the more efficient processing of the Step 3 award
and if such easements/sites are not potentially grant eligible under
Step 3.
IMPLEMENTATION :
Regional offices should take steps to include the requirement
relating to preliminary easement work in all Step 2 applications currently
under review. The requirement need not be in the form of a specific
Grant Condition, rather the applicant should simply be officially notified
of the need to accomplish the work. Future applicants should be notified
of the requirement during initial contacts with them; i.e., during
preapplication conferences, in grants information upackets , etc.
Regional offices may use their discretion in seeking proof of
compliance with this requirement. As a minimum, EPA should require
certification by the Authorized Representative that the requisite work
has been accomplished and/or that all foreseeable problems have been
reconciled or will be prior to Step 3 construction.
The Construction Grants Handbook of Procedures will be revised to
reflect this requirement.
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Sr 4 , .
____ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHtNGTQN, D.C. 20460
r 13
Program Requirement Memorandum
PRM #77—7
SUBJECT: Management of State Project Priority Lists
FROM: John T. Rhett, Deputy Assistant Administrator
for Water Program Operations (WH—546) (
TO: Regional Administrators
PURPOSE
This memorandum outlines EPA policy concerning annual State project
priority list development, and provides a procedure to manage priority
list review, approval, project scheduling, and update through the
Regional Construction Grants Management Information System (RCGMIS). No
basic changes from existing policy have been made, although an addi-
tional element of information concerning the relationship among the
various planning, design, and construction projects within a given grant
(i.e. parent project number) is now required in all priority list sub-
missions to facilitate management through the RCGMIS. (See Item (3)
under DISCUSSION below..) The previous policy guidance on priority list
development contained in PG SAN—4 (issued as PG SM—3 on March 28, 1975),
and the FY 1977 Program Planning Guidance has been incorporated herein.
PRM 75—40 (issued as PG 68 on March 7, 1976) outlining computer pro-
cedures for priority list review, and PG SAN-9 (issued as PG SM—5 on
September 29, 1975) and the documents referenced therein regarding
policy on State Priority Systems remain in effect. All other guidance
concerning State project priority lists , not consistent with this memo-
randum, is hereby superseded.
BACKGROUND
The basic regulatory framework for priority list development and
utilization is contained in 35.9l5 of 40 CFR Part 35 Subpart E (con-
struction grant regulations), 40 CFR Parts 130 and 131, especially
130.3l (relationship to municipal facilities program), and 35.562—
35.566 of 40 CFR Part 35 Subpart B (Section 106 program grant regula—
tions). The priority list is part of the State continuing planning
process, involving three interrelated functions:
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o Issuance of a State Priority System to provide a basis for
achieving optimum water quality improvement through develop-
ment of general criteria for ranking municipal discharges
throughout the State (See PG SAM—9 attached).
o Annual preparation of a State Municipal Discharge Inventory
(or Needs Inventory) which ranks all significant municipal
discharges for the entire State, submitted as part of the
annual State Program Plan pursuant to §35.562.
o Annual preparation and submittal of a State Project Priority
List (derived from the approved State Priority System and
consistent with the Municipal Discharge Inventory) containing
projects expected to receive awards from available construc-
tion grant allotment funds.
The primary functions and uses of priority lists are two—fold: (1)
to identify the relative priority of projects eligible for award within
limited State allotment funds based on clear and consistent priority
criteria, and (2) to facilitate the planning and management of the
future State program based on project schedules. The purpose of the
first function is to reserve funds for those facilitates which would
best achieve pollution abatement in the State for the funds available;
the second function allows management of funds by adding timing and the
treatment works sequence (i.e. Step 1,2,3) as factors in the order of
funding.
Until release of PC SAX—4 on March 28, 1975, EPA policy dealt
primarily with the priority criteria function and provided only minimal
guidance on management of funds within these general factors. Since
then, EPA has required (1) a projected target application certification
date for all projects, (2) an extended priority list supplement to the
fundable list that scheduled all subsequent step awards for existing or
planned Step 1 and 2’s, and (3) at least a quarterly update of the
expected funding schedule for pi jects on the fimdable and extended
priority list. In conjunctionwith these new management—oriented re-
quirements, EPA has developed procedures and related programming support
through the Regional Construction Grants Management Information System.
Since the issuance of the FY 1977 Program Planning Guidance outlining
the multiyear planning requirements, however, only a small number of
States and EPA Regions have made use of the extended list and the RCGMIS
for priority list management. Uncertainty of future funding, the short—
term planning perspective on use of FY 1976 allotment funds, and con-
flicting or ambiguous guidance have been cited as the major reasons for
non—compliance with the multiyear planning policy.
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DISCUSSION
The points addressed below focus on the substantive issues in
priority list management and outline EPA policy toward their resolution:
(1) Future State Funding . Early notice of future year funding is
essential for effective State priority list planning. The change from
contract authority to regular appropriations has made advance notice
more uncertain, as funds now will not be available to the States until
authorized, appropriated, and allotted —— a process that will probably
not make funding certain until only a few months before each fiscal year
begins. Accordingly, EPA will issue a Program Operations Memorandum
(P.O.M.) or provide information in the annual Program Planning Guidance
by April 1 of each year outlining annual funding assumptions by State,
expected long term funding eligibilities, and other legislative or
administrative factors that would affect priority list planning. Early
warning of variance from these assumptions will be provided as required.
(See final FY 1978 Program Planning Guidance for current year funding
assumptions).
(2) Priority List Management and the RCGMIS . Efficient priority
list management in a program as large and complex as the construction
grants program requires information that is easily accessible, accurate,
and timely. Because EPA now requires multiyear planning with timely and
accurate scheduling information, manual processing of priority list
information is no longer practical or acceptable to meet the demands of
our program. EPA guidance provided in PRM 75-40 outlined a suggested
procedure to more efficiently review, approve, and update State priority
list submissions through the RCGNIS. A number of analytical programs
have been provided to the Regions to assist in implementing this pro-
cedure. Starting with the FY 1978 planning cycle, the Regions will be
required to:
o Ensure that all required priority list information is sub-
mitted by the States in the format contained in Attachment A.
(Note that the format has one change from last year. See item
(3) below).
o Enter all priority list data into the RCGMIS immediately after
receipt of the final State list (prior to approval). (See
suggested procedure outlined in PRM 75—40 for deletion or
change in existing priority list projects prior to entry of
new list.)
o Approve and distribute the priority list contained in the
RCGMIS as the official, up—to—date priority list for day—to-
day use.
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o Update project schedules and project priority (where neces-
sary) contained in the RCGMIS on at least a quarterly basis.
Assistance in implementing these requirements Is available from the
Program Planning and Evaluation Branch, Municipal Construction Division,
in Headquarters (8—426—8990).
(3) Parent Project Number . To facilitate priority list manage-
ment, a mechanism to link all projects within a given grant or facility
is required. A parent project number for every priority list project,
as defined in the RC 4IS Data Element Dictionary (data element B2), will
provide this linkage.
The parent project is the prior project step (or segment of a step)
most closely related to the project being planned. For projects that
follow the Step 1, 2, 3 process, the parent project number is simply the
prior project in the step sequence. For more complex grants, however,
the parent project may not be immediately clear:
o A Step 2 project may have a parent Step 1 with a different
grant number or may share a single parent Step 1 with other
Step 2 projects.
o A Step 3 project may share the same parent Step 2 with other
Step 3 projects or may have one of many Step 2 awards within
the same grant as its parent.
o A Step 2 or Step 3 project may be the first project funded by
EPA for that facility. Therefore this project would not have
a prior related project (i.e. parent project).
o A Step 3 may have as its parent a Step 1 if no Step 2 project
is planned or funded (i.e. design reimbursed at Step 3 or non—
EPA funded).
The related Section 208 grant number also must be inserted as the parent
number for the first project of every grant.
The Regions should ensure that States identify this parent project
number for every project on the priority list. The parent project
number must Include the sequence number. The format contained in
Attachment A Includes a column for the parent project number. Existing
computer programs will use this number to link all related funded and
planned projects (however complex the grant) for display in one place to
allow convenient review of all grant actions for a given facility.
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(4) Priority Criteria . Priority criteria for priority list develop-
ment is provided through 35.9l5 (c)(l) and clarified in Program Guidance
Memorandum SAN—9 (See Attachment B). A number of issues have surfaced
recently regarding acceptable priority criteria per the general clause
in 35.9l5 (c)(l), which allows use of “... additional factors identi-
fied by the State in its priority system.” It has been, and will continue
to be, EPA policy to narrowly define the use of this factor. Unless
suggested criteria under this clause refer to specific pollution abate-
ment considerations or other special conditions that clearly work toward
that goal, EPA will not approve them as factors in the State priority
system. (Note that one factor —— separate lists for small communities ——
has been allowed under conditions outlined in PG SAN—9). One criterion
suggested recently —— the economic conditions or employment rate within
a project area —— is specifically disallowed under this policy. Al-
though employment impact is a byproduct of the grants program, nothing
in the FWPCA or the regulations would allow use of the economic situation
as a factor to rank projects.
(5) Readiness to Proceed in Priority List Management . Although
the use of project readiness for funding may not be used as a priority
criterion for ranking projects, the ability to bypass projects not yet
ready to proceed according to schedule is an integral part of priority
list management. Projects certified by the State and agreed to by the
Region as not ready for Step funding before the end of the current
allotment period can be bypassed in favor of lower priority projects as
long as (a) the approved priority system has a procedure to bypass them
(under specific conditions), reinstate them, and allow for public parti-
cipation, and (b) the projects to be bypassed maintain their relative
priority for future funding consistent with water quality management
plans approved by the State and EPA.
(6) Fundable Portion of Priority List . The fundable portion of
the priority list contains all the projects planned for award in a
specified funding period ranked in order of priority. It should include
a sufficient number of projects to fully obligate the available funds,
including specified reserves for grant increases and Step 1 and 2 projects.
All projects (regardless of priority) not planned for award in the
funding period are excluded from this list (See extended list below).
It is EPA policy to require a single fundable priority list (with the
exception of small city secondary lists allowed under PG SAN—9) for any
given period. Major items to consider in priority list development
include:
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o The fundable project priority list is to be based on all funds
available for a specific funding period , not on any single
allotment provided to the State. The funding period is de—
fined as the period from the first day of the upcoming fiscal
year through the reallotment date of the latest available or
expected allotment. During any funding period there may be
several allotments from which funds are available for obliga-
tion. For FY 1978, the funding period is from October 1, 1977
to the date that the PY 1978 allotment would be subject to
reallotment. During this period, the FY 1977 allotment and
funds from Title III of the Public Works Employment Act will
also be available for obligation. Although the funding period
extends to the reallotment date of the last allotment, it
should be recognized that there may be intermediate reallot—
ment dates during this period. Regions and States should
assure that sufficient projects are scheduled to fully utilize
each allotment by its respective reallotment date.
o All projects from prior fundable project priority lists for
which grant assistance has not been awarded at the time the
new list is prepared, and which are consistent with water
quality management plans approved by the State and EPA, should
be included in the annual development of the revised priority
list.
o No project need have funds reserved from a particular allot-
ment . A number of States have maintained multiple priority
lists based on the number of allotments available during the
funding period, or according to the year each project was
first put on the priority list. States maintaining multiple
lists should take steps to combine them into a single list
during the FY 1978 cycle. The balance from each allotment
should be awarded according to oldest allotment first, without
regard to a project/allotment connection.
o The fundable priority list is developed annually and must
contain enough projects (and associated dollar amounts) to
cover the obligation of all funds currently available or
assumed to be available during this funding period , including
a defined reserve for increases or unspecified Step 1/2 starts.
Regions should ensure that States maintain accurate project
schedules and estimates of EPA grant amount for every project
to properly reflect project eligibilities with available
funding levels.
o The total fundable list is subject to all relevant public
participation requirements.
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(7) Extended Portion of Priority List . States are required to
prepare an extended list for projects not planned for award during the
funding period that, at a minimum , includes (a) a Step 3 project or
projects for every Step 2 already funded or scheduled to be funded with
currently available funds, (b) Step 2 and 3 projects for each completed
facility plan, and (c) Step 2 and 3 projects for each Step 1 project
active or planned with currently available funds where the anticipated
scope of the Step 1 is apparent. The extended list will further include
Step 2 or 3 projects expected to receive awards past the fundable period
for which no Step 1 or 2 was funded by EPA. The States may also provide
information on new grants (including new Step l s) planned past the
funding period derived from approved water quality management plans or
the 1976 Needs Survey. The extended list provides a multiyear per-
spective to the annual State project priority list planning cycle.
Because it is a planning document for State and Region use only, it need
not be submitted to public hearing, although no project on the extended
list can be funded until complying with the requirements of public
participation and the State continuing planning process. Properly
developed, it will focus State/EPA planning on the consequences to the
future program of current planned actions.
The extended priority list should also contain a number of projects
that, while not included on the fundable priority list because of lower
relative priority, are expected to be ready for award during the funding
period. These projects should be considered contingency projects to
provide backup f or use of funds should higher priority projects slip.
These projects must already have been subjected to all relevant public
participation requirements so that States and Regions can move them onto
the fundable list in priority order as required according to the guide-
lines set forth in item (5) above.
(8) Use of Step 1/2 Reserve . A Step 1/2 reserve (not to exceed
10% of each allotment) was established to allow Regions to fund Step 1
projects for facilities of lower priority than current funds would allow
or for which no need had surfaced at the time of priority list develop—
lnent (e.g. emerging health problems). EPA policy, however, has been to
minimize the use of this reserve in favor of identifying Step 1 and 2
projects on the fundable priority ljst wherever possible. The use of
the 1976 Needs Survey data should make future project identification
more precise and lessen the need for this reserve. The amount set aside
for the Step 1/2 reserve for each allotment must be specifically stated
in the fundable priority list and separately accounted for.
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(9) Reserve for Grant Increases . The reserve set aside for grant
increases (no less than 5% of each allotment) is expected to cover
increases to funded projects, whether because of cost overruns or scope
changes, special studies, or mis—estimates. The reserve is expected to
cover SSES costs not anticipated in the Step 1 award (if not separately
included on the priority list). Although the fundable portion of the
priority list is based on all funds available f or a funding period , the
reserve is fixed to a specific allotment by regulation and must be
maintained until 6 months before the reallotment date for each allot-
ment. The reserve for each allotment must be specifically stated in the
fundable priority list and separately accounted for.
(10) Target Application Certification Date and Amount . The target
certification date is the date the State expects to certify the project
application to EPA for funding. The expected grant amount accompanying
this certification must always be based on the latest information avail-
able to the State and be updated on a quarterly basis. EPA policy
requires the target date (month and year) and projected grant amount to
be included on all projects in both the fundable portion and extended
portion of the project priority list. The target certification date is
based on the project’s readiness to proceed, not its funding priority.
Projects below the available funding line can be projected to be certi-
fied during the funding period (i.e. contingency projects) even though
not eligible under current funding levels. This date allows EPA and the
State to forecast workload, estimate obligations by month or quarter,
monitor performance, evaluate contingency plans, and track project
slippage8. Because the target certification date and amount will change
frequently, EPA requires at least q _ uarterly update of these estimates
for all projects on the fundable priority list, the contingency projects
on the extended list, and all projects on the extended list that have a
combined eligible cost for Step 1, 2, and 3 of greater than $10 million
(Program Management System (PNS) projects). The target certification
dates for other projects on the extended list may be updated less fre-
quently at the Region’s option. However the value of the extended
priority list as a planning tool lies in up—to—date project schedules.
The target certification date is a planning and management tool; more
frequent update is encouraged to facilitate the use of the priority list
in day—to—day management.
POLICY
This section contains EPA policy for development of fundable and
extended priority lists and their use in management and planning.
Additional policy regarding priority criteria is contained in Program
Guidance Memorandum SAN—9 and other guidance issued through the PRH
series. The following points define EPA policy on priority lists:
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o Funding assumptions, schedules for State priority list sub-
mittal and review, and other specific considerations will be
provided annually through the Program Planning Guidance or a
Program Operations Memorandum (POM) by of each year.
o The priority list shall be composed of two portions:
(1) The fundable (approved) priority list , based on all funds
available over a specified funding period. This list
shall include those projects planned for grant award from
the first day of the upcoming fiscal year through the
reallotment date of the latest available or expected
allotment, plus specified reserves for grant increases
and Step 1 and 2 projects. This portion of the list must
be developed in accordance with the approved State project
priority system and all regulatory provisions.
(2) The extended project list , to include (at a minimum) all
subsequent Steps and project segments of existing or
planned grants not planned for award during the funding
period. The extended list should contain a sufficient
number of projects that can be ready for award during ttie
funding period (contingency projects). Projects on the
fundable priority list that are certified by the State as
unable to proceed within the funding period may be by-
passed in favor of these contingency projects, subject to
all relevant public participation requirements. This
list may also include any new grants (including new
Step l ’s) planned past the funding period derived from
approved water quality management plans or the 1976 Needs
Survey. The extended list is a planning schedule to be
used to evaluate the draft fundable list for proper mix
of projects and commitments on future use of funds. All
planned Steps and segments for known grants should be
included on the list. The extended list, as a planning
document, should be developed through public participation
although its use will not be bound by the relevant public
participation regulations. However, no project on the
extended project list is fundable until it complies with
the regulations concerning public participation as they
relate to the priority list process.
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o The total priority list is to be submitted to EPA each year
according to the requirements of the State continuing planning
process and based on the schedule contained in the Section 106
regulations, in priority order, and with the information and
standard format provided for in Attachment A. Note that the
parent project number (data element 32) is now required for
all projects. The Region and State should work together to
expedite entry of the draft list into the Regional Construction
Grants Management Information System (RCGMIS) in accordance
with PRM 75—40.
o The approved project priority list will be the list residing
in the RCGMIS. The RCGNIS list will be used as the basic
document to address all priority list issues.
o The project priority list will incorporate all projects from
the prior approved priority list for which grant assistance
has not been awarded at the time the new list is prepared.
The prior list will be superseded at the time the new list
goes into effect (i.e. first day of upcoming fiscal year).
For any funding period , only one approved list will be oper—
ative.
o The funding period for the fundable (approved) priority list
will be from the first day of the upcoming fiscal year through
the reallotment date of the latest planned or available allot-
ment.
o The target certification date is required for all projects on
the priority list, including both the approved list and the
extended list.
o The State is required to update the target certification date
and expected EPA grant amount on a quarterly basis for projects
on the fundable priority list, the contingency projects on the
extended list, and all projects on the extended list that have
a combined eligible cost for Step 1, 2, and 3 of greater than
$10 million (Program Management System (PMS) projects). The
target certification dates for other projects on the extended
list may be updated less frequently at the Region’s option.
It is assumed for all uses of this information that the target
certification date and the expected grant amount contained in
RCGNIS are accurate from the beginning of the latest quarter.
o The use of the Step 1/2 reserve should be minimized in favor
of early identification of Step 1 projects on the approved
priority list, based on the 1976 Needs Survey. The reserve
for both Step 1 and Step 2 should be limited to emergency
situations (.i.e. health need) and not be used to cover in-
sufficient planning and non—priority needs.
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o Both the reserve for Step 1/Step 2 projects and for grant
increases should be explicit in the draft priority list sub-
mitted by the State and be separately accounted for allot-
ment throughout the life of the priority list.
IMPLEMENTATION
The States are to be advised of the revised EPA policy regarding
priority list development, starting in the Fl 1978 planning cycle. This
memorandum, in conjunction with the FY 1978 Program Planning Guidance,
is to be used by the Region to develop appropriate guidance materials
for each of the States to ensure that proper funding assumptions, pro-
cedures, and formats are followed by the State in its FY 1978 Section 106
Plan and draft project priority list.
The procedures outlining the use of the Regional Construction
Grants Management Information System (RCGMIS) for priority list review,
approval, and update are to be implemented in all Regions during the
FY 1978 State planning cycle.
REFERENCES
P.L. 92—500, Sections 106, 201, 202, 204, 208(b)(2)B
40 CFR 35.562, 35.563, 35.566, 35.915
40 CFR Parts 130, 131
Program Guidance Memorandum SAN—9 (formerly SM—5)
Fl 1978 Program Planning Guidance.
May 7, 1973 All—Region TWX on Priority Criteria
1974 EPA Water Strategy Paper on Priority Criteria
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CONSTRUCTION GRANTS PRIORITY LIST
ATTACHMENT A
(List Individual Projects ’ in Priority Rank Order)
AI’Pi.lCANT
GRANT
TYPE
APPLICA—
ESTIMAT
LLGM. NAME (TN=12)
PARENT PROJECT
IDENT.
OF
T 1 0t4
EPA
PRIORITY
Ranking
fl 59)
PRIORITY
POINTS
J =lI8)
STREET ADDRESS (TN—51)
CiTY (TN -14)
ZIP CODE (TN52)
COUNTY (TN —15)
NPDES
NUMBER
(TN C2)
NUMOER**
FACILITY NEED
AND SEQUENCE
(TN —B2)
NUMBER
(TN —O1)
SEQUENCE
(TN—54)
PROJECT
(STEP
NO.)*
(TN —87
TARGET
DATE
(YR.& MO.)
(TN—HO)
PROJECT DESCRIPTION
(Facility Need Scope)
(TN—20) —
ASST.
($)
(TN —ft7)
* F.acli Step and/or segment of a Step constitutes a separate project and is to be listed individually.
** The parent prolect number contains the grant number (9 digits) of the prior funded step directly related to the p)anned project.
FGr the first project of a gmat, the Section 208 grant number should be entered here (if available). See DISCUSSION section of memorandum.
NOTL Tue tranuaction number (TN) contained In each column refers to the data element number contained in the Regional Construction Grants Mgnir.
Information Syatem. For inlorm ttLon on iiumber of digits or letters required for each data element, consult the EPA Region RCCM1S Users
Manual and Data Element Dictionary.
STATE
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ATTACHNENT B.
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
SUBJECT: State Priority Systems Used in the Development’ DATES SEP 2 9 79’
_of State Projcct_Prio i. ’ Lists
FROM: Dir (WI!- 554)
TO: All Regional Administrators
AT I ’N: All Regional Water Division Directors PROGRN’ 1 GUIDANCE 1 ANflUM : SAM -9
PURPOSE
This memorandum is to clarify and reiterate previous guidance
concerning State priority systems, used in the development of State
project priority lists. As there has been limited guidance in this
area during the last two years and because several mc jor policy
issues with respect to priority lists have been raised, there is a
need for additional guidance. The guidance should serve to continue
the accelerated pace of the grants program while retaining the
Agency’s objective of dealing with the worst pollution problems first.
BACKGROUND
The Water Strategy Paper and several EPA regulations address the
development of priorities for the submission and approval of construc-
tion grant applications. The relevant regulations are those for
the State Planning Process (40 CFR Part 130) State Programs (40 CFR
Part 35 Subpart B), and Construction Grants (40 CFR Part 35 Subpart E).
In addition, an all-Region Th titled Guidance for State Devejppment
and gional Review of Construction Grant iorI Lists as trans-
i It don May 7, 1973, to assist the States and Regions in ensuring
the use of proper criteria for develciping State project priority lists.
The May 7, 1973 guidance TWX highlighted four general criteria
for use in the development of the State project priority lists:
1) severity of pollution problems, 2) population affected, 3) need for
preservation of high quality waters and 4) national priorities. Title
II regulations published on February 11, 1974, added total funds avail-
able and project and treatment works sequence as possible supplementary
factors. ! dditional factors to he considered in the development of
the list related to treatment levels and were outlined in the 1974 and
1975 Water Strategies. General priority was to be given to: 1) projects
required to meet water quality standards and which must comply with the
EPA Fonn 1320.6 (R v.,6.72)
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enforceable provisions of the law, (2) projects which are not required
to meet water quality standards, but which must comply with the enforce-
able provisions of the law, 3) projects that are desirable in terms of
water quality iniprovcment, but against which the enforceable provisions
of the law for secondary treatment can not be applied and 4) projects
which do not directly involve discharge of pollutants.
In the pust few months, several Regions and States have
inquired about I I’A 1)01 icy regarding various priority systems issues
not su’fficicntly covered by the previous guidance. The most fre-
quent inquiry deals with the use of population as a criterion. The
expressed cor cern relates to growth policy and whether the population
value used should ‘be existing or future population. The Agency’s
position supports the legislative history of P.L. 92-500 that
construction grant funds are intended to be used primarily for abate-
ment of existing pollution rather than treatment of expected future
wastewater flows. Thus, where population affected is used as a
priority system criterion populatipn should be defined as that
presestly existing.
There have also been recent requests for a clarification of EPA
policy concerning adequate construction grant funding for small
communities. To ensure that per capita distribution of grant funds
to communities of differing population size is generally proportional,
the-Agency has no objection if a State chooses to set aside a
reasonable percentage of its funds for projects’ of smaller communities.
Thus, a State may establish a reserve for small communities (as defined
by the State and approved by the Regional Office) and one for the
remaining larger communities. However, in ranking projects within each
community size category and in consolidating the lists of 1)0th cate-
gories, the State must consider the severity of the pollution problem
and the need for preservation of high quality waters. Funds may not be
al-locatedon any basis not related to water pollution needs.
An additional issue arises from the fact that some State have
developed priority systems which heavily emphasize advanced waste treat-
ment works at the expense of projects to achieve secondary treatment.
This may not be the most cost-effective use of available funds. Thus,
where advanced waste treatment rks which only slightly improve water
quality are given higher priority than projects with less than secondary
treatment, the Regional Administrator should question the State
priority system and seek a change if appropriate.
FOL ICY
The basic national criteria for use in State project priority
systems are retained. However, Regional Administrators continue to
be advised that they may approve other criteria consistent with these.
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The Regional Offices shall advise each State of the policies
established in this memorand m relative to the development of
the next project list, and shall determine jointly with each State
the need for revision, if any, of the States t priority systems. In
those cases, where a revision is determined to he necessary, the
Region shall obtain a conmitment from the State as to when such
revision will be completed, recognizing the need to prepare Fi’ 1977
State program plans next Spring.
The Regions shall work with all interested States to establish
priority lists which reflect a set aside of a proportional share of
construction funds for small coranunities. In addition, the Regions
should examine closely Situations where projects requiring advanced
waste treatment compete on the project list with other projects
requiring secondary treatment. Close examination of the priority
system is also required to ensure that population is construed only
as existing and not future population.
Finally, it is •the responsibility of the Regional Administrator
to assure that the priority system for each State is applied correctly
in the development of the project list.
CONCITRRENCES
O H-5Sl), Beck Concur C Nonconcur Date
(W}-1-546), Rhett Concur ?. . Nonconcur Date
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P
____ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
2 1 H
CONSTRUCTION GRAN
Program Requir -nents M Tiorand n
No. 77—8 THE ADMINISTRATOR
N MNDUM FOR egiona1 Administrators
SUBJEX.’f: Funding of Sewage Collection Systan Projects
I • PURPOSE
This n rcrandum surrrnarizes Agency pelicy on the award of grants for
sewage collection syst n projects under P.L. 92-500. It sets forth
guidance for rigorous review of grant applications to ensure that proposed
projects neet the established requir tents of the law and regulations.
II. DISCtJSSIG
Sewage coUection systen projects may be grant eligible projects
under P.L. 92—500 (the Act). Eligibility is limited, however, by Section
211 of the Act which provides for funding of collection systens only 1)
for the rep1ac nent or major rehabilitation of an existing collection
systen or 2) for new collection syster s in existing cannunities.
Sewage collection systens are defined in 40 CFR 35.905-19 as:
For the purpese of 35.925-13, each, and
all, of the ca on lateral sewers, within a
publicly—owned treatment systan, which are
primarily installed to receive wastewaters
directly fran facilities which convey wastewater
fran individual structures or fran private
property, and which include service connection
“Y t ’ fittings designed for connection with those
facilities. The facilities which convey waste-
water fran individual structures or fran private
property to the public lateral sewer, or its
equivalent, are specifically excluded fran the
definition, with the exception of pumping units,
and pressurized lines, for individual structures
or groups of structures when such units are cost
effective and are cMned and maintained by the
grantee.
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2
The eligibility of sewage collection systeii projects is further
defined in 40 CFR S 35.925-13 which reads:
That, if the project is for, or includes
sewage collection systaii w)rk, such wDrk (a) is
for replac ent or major rehabilitation of an
existing sewer systa pirsuant to S 35.927-3(a)
arxi is necessary to the total integrity arx
perforniance of the waste treathent works
servicing such axm mity, or (b) is for a new
sewer systen in a camunity in existence on
October 18, 1972, with sufficient existing or
planned capacity to adequately treat such collected
sewage. Replac ent or major rehabilitation of
an existing sewer systan may be approved only if
cost effective arii must result in a sewar systen
design capacity equivalent only to that of the
existing systen plus a reasonable xunt for
future growth. A carnunity, for pirposes of
this section, ld include any area with sub-
stantial hunan habitation on October 18, 1972.
No award may be made for a new sewer systen in
a cximunity in existence on October 18, 1972
unless it is further determined by the Regional
Mministrator that the tulJc (generally ts -thirds)
of the flow design capacity through the sewer
systan will be for waste waters originating fran
the cxiiuiunity (habitation) in existence on
October 18, 1972.
This section of the EPA regulations inp1 nts Section 211 of
P.L. 92—500.
AU treatn nt rks funded under the construction grants program
must represent the nost cost effective alternative to cxit ly with the
r jiir ents of the Act. Treatnent swks are defined in Section 212 to
include sewage collection systai s. EPA cost-effectiveness requiranents
are foui in 40 CFR 5 35.925—7 ar 1 in Appendix A to 40 CFR Part 35.
A large nunber of new collection systen projects have appeared on
FY 1977 State project priority lists. The lists contain both individual
collection systan projects ar 1 collection systetis associated with treat-
nent plant arKi interceptor sewer projects. Many of these projects may
rot ireet the eligibility ax cost-effectiveness requireients set forth
above.
Funding must be denied for all collection systen projects which are
rot grant eligible or rot cost-effective. This is important for t
reasons. First, the regpirarents of the regulations must be satisfied.
Secmlly, the funding of collection systan projects rot rreeting the
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3
eligiblity and cost—effectiveness requir xents will cxxrmit limited
Federal dollars to projects which provide fewer pollution control benefits
than ir re needed treatment plants and interceptors.
Public disclosure of cxsts is a fundarrental prerequisite for all
grants projects, including collection systans. Program Requireaents
orar 1um 76-3, “Presentation of Lical Government Costs of Wastewater
Treati nt Works in Facility Plans,” August 16, 1976, requires that cost
information be presented at all public hearings held on facility plans
after January 2, 1977. Hc ver, public hearings were held on many
collection syst i projects prior to this date. Special measures are
necessary to ensure the public is aware of the cost implications of
collection systen s prior to their approval.
The following policy is to be followed in reviewing future grant
applications for collection syst n projects. This policy supp1 rents
all existing Agency regulations and policy stateaents. It does not levy
any fur amentally new requiraiients, but provides guidance for ncre
rigorous review of grant applications to ensure that proposed projects
meet the established requirenents of the law and regulations. Ccnipliance
with this policy will help to assure that only grant eligible and cost—
effective collection syst n projects are funded by EPA.
III. POLICY
EPA policy on the funding of sewage collection syst ns is as follows:
A. Substantial human habitation
New collector sewer projects are eligible for funding only in a
cCIM’lUflity in existence on October 18, 1972, with sufficient existing or
planned capacity to treat adequately such collected sewage. The Title
II regulation states in Section 35.925-13 that a carrnunity would include
any area with substantial h an habitation on October 18, 1972. The
bulk (generally two-thirds) of the flc desigu capacity through the
se r syst n is to be for wastewaters originating fran the habitation.
The Agency policy is that closely populated areas with average
densities of 1.7 persons per acre (one household for every two acres) or
rIx)re on October 18, 1972, shall be considered to meet the requirenent
for “substantial human habitation”. Population density should be evaluated
block by block or, where typical city blocks do not exist, by areas of 5
acres or less. The “two-thirds” rule would apply within each area
evaluated when making a decision on collector sewer eligibility.
Densities of less than one household for every two acres rarely
result in serious localized pollution or public health prob] is fran the
use of properly operated on-Site systaris. These areas should not be
considered to have had, on October 18, 1972, substantial habitation
warranting collection sewers fran a pollution control standpoint.
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4
B. Cost-Effectiveness
New collector sewers must be proven in the facility plan to be
necessary and cost—effective in addition to being eligible under the
definition of “substantial human habitation” and the t o-thirds rule.
New collector sewers sheuld be funded only when the syst ns in use
(e.g. septic tanks or raw discharges fran 1xz s) for disposal of wastes
fran the existing population are creating a public health problen, con-
taminating groundwater, or violating the point source discharge re 4re-
ments of the Act. Specific cui ntation of the nature and extent of
health, groundwater and discharge problens must be provided in the
facility plan. Where site characteristics are considered to restrict
the use of on—site systens, such characteristics, (e.g. groundwater
levels, soil permeability, topogra y, geclogy, etc.) must be documanted
by soil maps, historical data and other pertinent information.
The facility plan must also docunent the nature, niinber and location
of existing disposal systans (e.g. septic tanks) which are malfunctioning.
A oanrn.inity survey of individual disposal systans is recmnendel for
this purpose, and is grant eligible.
In addition, the facility plan rrust dervDnstrate, where population
density is less than 10 persons per acre, that alternatives are clearly
less cost-effective than new gravity collector sewer construction and
centralized treabi ent. Such alternatives are cited in the previous
Mrninistrator’s nutorandum of Decenber 30, 1976, subject: “Encouraging
Less Costly Wastewater Facilities for Snail Ccuinunities” and Mr. Rhett’s
nurorandun of August 18, 1976 on “Eligibility of Septic Tanks and other
Snail Thea nt Systans”. A draft guidance docunent acainpanied the
August lB n raxx1um. The draft policy represents the policy of the
lgency until issued in final form.
The alternatives to be evaluated include the following:
- measures to improve c eration and maintenance of existing septic
tanks including nore frejuent inspections, timely pumpouts, and
prohibition of garbage grinders.
- new septic tanks
— helding tanks and “toney wagons”
- various means of upgrading septic tanks, including mounds,
alternate leaching fields and pressure se rs
- other systens to serve individual touselolds or a cluster
of luisetolds. Such systens include, for example, wastewater
separation, water conservation and recycle systens where feasible.
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5
The facility plan, where applicable, must examine alternatives such
as liiriited s er service for a portion of a ccxrrnunity. For example,
septic syst ns rk very well in many 1l towns except in one isolated
area st h as a business district where open space for adequate on-site
disposal is not available.
C. Public Disclosure of Costs
All projects, including collection systans, on which public hearings
s re held after January 2, 1977, must comply fully with the requiroments
of Program Requir nts Meiorandum 76-3 prior to approval.
Agency policy is to ensure public disclosure of the costs of any
collection syst n projects where a public hearing was held on or before
January 2, 1977. Such disclosure shall take the form of a praninently
jb1ished notice in a local newspaper, and the cost is grant eligible.
The Agency shall pay the cost of the notice if necessary to expedite the
project.
The notice shall include the estimated rronthly charge for operation
and maintenance, the estimated ironthly debt service charge, the estimated
connection charge and the total rt nth1y charge to a typical residential
custarer for the new collection syst n being funded and any other associated
wastewater facilities required. Such associated facilities v ou1d include
new treatrrent capacity needed to handle the flows from the new collection
syst .
The charges may be only rough estimates, and may be presented as a
range of possible costs when major un]cnowns exist such as whether or not
substantial parts of the project are grant eligible.
IV. I PL TATION
The States are to be advised of the issuance of this policy at
once. All pending and future grant applications for collection systei
projects or projects containing collection syst is are to be reviewed
for canpliance with this policy.
The requir nents of sections 111-A and 111—C are effective ininediately.
The requir rents of Section 111-B are effective i imediately for all
projects which have received a step 1 facility planning grant but have
not yet received approval of their facility plan.
For all other projects, the requirenents of section 111-B are
effective inircdiately unless the Reqional 9ministrator determines, from
information in the facility plan and other sources, that a project is
necessary and cost—effective even though the full docunentation required
by section Ill-B is not available. In any case, the full requirarents
of section 111-B shall apply without exception to all projects being
reviec d for funding after Sept nber 30, 1977.
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6
V. RER
A. Sections 201, 211, 212, P.L. 92—500.
B. 40 FR S 35.905—19, 925—7, 925—13, Appendix B.
C. P1 76-3, “Presentation of Local Goverri ent Costs of Wastewater
Treath nt Works in Facility Plans”, Ai. ust 16, 1976.
D. Memraixltin to Regional Mministrators fran Russell E. Train,
“Encouraging Less Costly Wastewater Facilities For &tall
C .ities”, Decatiber 30, 1976.
E. ti randum to Regional ‘i bett, “Less
Costly Trea nt Systatis”,
Costle
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Former
Memoranda Designation
PRM 75—36 Value Engineering in the EPA Construction PG-63
Grants Program
P I 75—37 User Charge System: Plan and Schedule PG-65
PRM 75-38 Relationship Between 201 Facility Planning PG-66
and Water Quality Management (WQM) Planning
PRM 75—39 ElIgibility of Land Acquisition Costs for PG-67
the Ultimate Disposal of Residues from
Wastewater Treatment Processes
PRM 75-40 Priority List Supplement to FY 1977 PG-68
Construction Grants Guidance
PRM 76-1 Construction Grants Program Issuances
PI 4 76-2 Cancellation of Certain Program Guidance
Memoranda (PGM)
PRM 76-3 Presentation of Local Government Costs of
Wastewater Treatment Works in Facility Plans
PRM 76-4 Coordination of Construction Grants Program
with EPA-Corps of Engineers Section 404/Section
10 Permit Programs
PRM 76-5 Flood Insurance Requirements
PRM 77-1 Treatment Works for Recreational Parks, Industrial
Parks, and Institutions
PRM 77-2 Grant Eligibility of Start-up Services
PRM 77-3 Plan of Operation for Municipal Wastewater
Treatment Facilities
PRM 77-4 Cost Allocations for Multiple Purpose Projects
PRM 77-5 Grant Eligibility of Land Acquisition by Leasehold
or Easements for Use in Land Treatment and Ultimate
Disposal of Residues
PRM 77-6 Easements
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Memoranda
PRM 77-7 Management of State Project Priority Lists
PRM 77-8 Funding of Sewage Collection System Projects
*IJ.S. Government Printing Office: 1977-780427/10 Region 8
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