'WASHINGTON. D c. 20450
                                CONSTRUCTION GRMiTS
                        Program Requirements Memorandum
                                                             THE ADMINISTRATOR
MEMORANDUM FOR  Regional Administrators-

SUBJECT:  Funding of Sewage Collection Systsn Projects


     This memorandum summarizes Agency policy on the award of grants for
sewage collection system projects under P.L. 92-500.  It sets forth
guidance for rigorous review of grant applications to ensure that proposed
projects meet the established requirements of the law and regulations.


     Sewage collection  system 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 systems only 1)
for the replacement or  major rehabilitation of an existing collection
system or 2) for new collection systems  in existing corrnunities.

     Sewage collection  systems  are  defined in  40 CFR S 35.905-19 as:

                    For the purpose of S 35.925-13, each, and
                all, of  the cotmon lateral sewers, within  a
                publicly-owned treatment system, which are
                primarily installed to receive  wastewaters
                directly from facilities  which  convey wastewater
                from individual structures or from private
                property, and which include service  connection
                uyii fittings designed for connection with  those
                facilities.  The facilities which convey v/aste-
                water from individual structures or frora private
                property to the public lateral sewer,  or its
                equivalent, are specifically excluded from tlie
                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 owned and maintained by the

The eligibility of sewage collec Lion system projects is further
defined in 40 CFR 8 35.925-13 which reads:
That, if the project is for, or includes
sewage collection system ork, such work (a) is
for replac nent or major rehabilitation of an
existing sewer systEm pursuant to S 35.927-3(a)
and is neces sexy to the total integrity and
perforn ance of the waste treatnent .vrks
servicing such corrrruinity, or (b) is for a new
sewer system in a ccinmunity in existence on
October 18, 1972, with sufficient existing or
planned capacity to aciequate] y treat such collected
sewage. Replacement or major rehabilitation of
an existing sewer system may be approved only if
cost effective and must result in a sewer system
design caDacity equivalent only to that of the
existing system plus a reasonable anount for
future grci.zth. A ccimiunity, for purposes of
this section, would include any area with sub-
stantial hu iran habitation on October 18, 1972.
No award may be made for a new sewer system in
a ccrmiunity in existence on October 18, 1972
unless it is further determined by the Regional
dministrator that the bu]k (generally two-thirds)
of the flow design capacity through the sewer
system will be for waste waters originating fra u
the cxxrirainity (habitation) in existence on
October 18, 1972.
This section of the EPA regulations implements Section• 211 of
P.L. 92—50Q.
All treatment works funded under the construction grants prc ram
must represent the nost cost effective alternative to canply with the
requirements of the Act. Treatment works are defined in Section 212 to
include sewage collection systems. EPA cost-effectiveness requir ents
are found in 40 CFR S 35.925-7 and in 1 \ppendix A to 40 CFR Part 35.
A large number of new collection system projects have appeared on
FY 1977 State project priority lists. The lists contain both individual
collection system projects and collection systems associated with treat-
ment plant and interceptor sewer projects. Many of these projects may
not meet the eligibility and cost-effectiveness requir vents set forth
Funding must be denied for all collection system projects which are
not grant eligible or not cost-effective. This is important for two
reasons. First, the requirements of the regulations must be satisfied.
Secondly, the funding of collection system projects not ir eting the

eligiblity and cost-effectiveness requirements will corrinit liiaited
Federal dollars to projects which provide fewer pollution control benefits
than more needed treatment plants and interceptors.
Public disclosure of costs is a fundamental prerequisite for all
grants projects, including collection systems. Program Requirements
MEtorandUEn 76-3, “Presentation of Local Government Costs of Wastewater
Treatment Works in Facility Plans,” August 16, 1976, requires that cost
infortr’ation be presented at all public hearings held on facility plans
after January 2, 1977. HOWCVeI, public hearings were held on many
collection system projects prior to this date. Special-measures are
necessary to ensure the public is aware of the cost implications of
collection systems prior to their approval.
The following policy is to be followed in reviewing future grant
applications or collection system projects. This policy supplements
all existing Agency regulations and policy statements. It does not levy
any fundamentally new requirements, but provides guidance for more
rigorous review of grant applications to ensure that proposed projects
meet the established requirements of the law arid regulations. Ccmpliance
with this policy will help to assure that only grant eligible and cost—
effective collection system projects . are funded by EPA.
EPA policy on the funding of sewage collection systems is as follows:
A. Substantial human habitation
New collector sewer projects are eligible for funding only in a
ccxmiunity 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 ccmnunity would include
any area with substantial human habitation on October 18, 1972. The
bulk (generally two—thirds) of the flow design capacity through the
sewer system 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
more on October 18, 1972, shall be considered to meet the requirement
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 problems fran the
use of properly operated on-site systems. These areas should not be
considered to have had, on October 18, 1972, substantial habitation
warranting collection sewers f ran a pollution control standpoint.

B. Cost-Effectiveness
New collector sewers must be proven in the facility plan to be
necessary arid cost-effective in addition to being eligible under the
definition of “substantial human habitation” arid the t -thirds rule.
New collector sewers should be funded only sthen the systans in US
(e.g. septic tanks or raw discharges fran hanes) for disposal of wastes
fran the existing population are creating a public health problEn, Con-
taminating groundwater, or violating the point source discharge require-
ments of the Act. Specific documantation of the nature and extent of
health, groundwater arid discharge prob]. ns ‘mist 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 pemt ability, topography, geclogy, etc.) must be documented
by soil maps, historical data and other pertinent information.
The facility plan must also document the nature, number and location
of existing disposal systans (e.g. septic tanks) which are malfunctioning.
A ccim inity survey of individual disposal systens is recarrcended for
this purpose, and is grant eligible.
In &dition, the facility plan must d ronstrate, 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 treatment. Such alternatives are cited in the previous
Administrator’s mei randwn of DecEnber 30, 1976, subject: “Encouraging
Less Costly Wastewater Facilities for Small Camiunities” and Mr. Rbett’ s
inairrazidum of August 18, 1976 on “Eligibility of Septic Tanks and other
Small Treatment Systans”. A draft guidance document acca anied the
August 18 maioraridum. The draft policy represents the policy of the
? gency until issued in final form.
The alternatives to be evaluated include the following:
- measures to improve operation and xna.interiance of existing septic
tanks including irore frequent inspections, timely pumpouts, and
prohibition of garbage grinders.
- new septic tanks
— holding tanks and “honey wagons”
- various means of upgrading septic tanks, including irounds,
alternate leaching fields arid pressure sewars
- other systans to serve individual households or a cluster
of households. Such systaiis include, for example, wastewater
separation, water conservation and recycle syst ns where feasible.

The facility plan, iere applicable, must examine alternatives such
as limited sewer service for a portion of a comitunity. For example,.
septic systems work very well in many small towns except in one isolated.
area such as a business district where open space for adequate on-site
disposal is riot available.
C. Public Disclosure of Costs
All projects, including collection systems, on which public hearings
were held after January 2, 1977, must comply fully with the requirements
of Program Bequirements M&rorandtm 76—3 prior to approval.
Agency policy is to ensure public disclosure of the costs of any
collection system projects where a public hearing was held on or before
January 2, 1977. Such disclosure -shall take the form of a praniriently
published notice in a local ne cspaper, and the cost is grant eligible.
The Agency shall pay the cost of the notice if necessary to expedite the
The notice shall include the estimated nonthly charge for operation
and maintenance, the estir ated n -onthly debt service charge, the estimated
connection charge and the total rnDnthly charge to a typical residential
customer for the new collection system being funded and any other assocIated
wastewater facilities required. Such associated facilities 3uld include
new treatrrent capacity needed to handle the flows from the new collection
The charges may be only rough estimates, and may be presented as a
range of possible costs when major unkri wns exist such as whether or riot
substantial parts of the project are grant eligible.
The States are to be advised of the issuance of th.is policy at
once. P ll pending and future grant applications for collection system
projects or projects containing collection systems are to be reviewed
for compliance with this policy.
The requirements of sections Ill-A and 111-C are effective iinr ediately.
- - The requireif nts of Section Ill—B are effective irm ediate1y 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 requirements of section Ill—B are
effective irrarediately unless the Regional Administrator determines, from
infonnation in the facility plan and other sources, that a project is
necessary and cost-effective even though the full documentation required
by section Ill-B is not available. In any case, the full requirements
of section Ill-B shall apply without exception to all projects being
reviewed for funding after SepteirJDer 30, 1977.

A. Sections 201L 211, 212, P.L. 92—500.
B. 40 FR 8. 35.905—19, 925—7, 925—13, 2 ppendix B.
C. PRM 76-3, “Presentation of Local Government Costs of Waste iater
Treatment Works in Facility Plans”, August 16, 1976.
D. - M randum to Regional Administrators fran RusseU E. Train,
“Encouraging Less Costly Wastewater Facilities For Small
Ccxrrnunities”, Deceiiber 30, 19761
E. Ma orandT1n to Regional Adminis 4 ath s fran “Less
Costly Treath ent SystE S”,