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                                                                     ;P- XV A fER -\NO
                     M A D *•?   1Q7R                          HAZARDOUS MATERIALS
                     W1AK 0   I3/O            Construction Grants
                                               Program Requirements Memorandum
                                               PRM s 78-9

     SUBJECT:  Funding of Sewage Collection System Projects

     FROM:     John  T. Rhett, Deputy Assistant Administrator
               for Water Program Operations (WH-546)         f

     TO:       Regional Administrators
               Attn:  V/ater Division Directors

        I. PURPOSE

          This memorandum supersedes Program Requirements Memorandum (PRM)
     No. 77-8, on construction grant funding of sewage collection system
     projects «nd amends that policy in accordance with P.L. 35--217.  This
     memorandum sets forth guidance for rigorous review of grant applications
     to ensure that  proposed projects meet the established requirements of
     both P.L. 92-500 and P.L. 95-217, plus the construction grant regulations.


          Sev/age 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 cf collection systems
     only (1) for the replacement or major rehabilitation of an existing
     collection system or (2) for new collection systems in existing communities.

          Sewage collection systems are defined in 40 CFR S35.905-19 as:

               For the purpose of S35.925-13, each, and all, of the common
          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 "Y" fittings designed
          for connection with those facilities.  The facilities which convey
          Wastewater from individual structures or from private property to
          the public lateral sewer, or its equivalent, are specifically
          excluded from 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 owned and
          maintained bv the crantee.


     Th«j  eligib.'lity  of  sewage  collect-ion  system  projects is further
defined in  40  CFR 535.925-13, which  reads:

          That,  if  the project  is  for, or  includes  sev/age collection
     system work, such work  (a)  is for replacement  or major rehabilitation
     of an  existing sewer system pursuant  to S35.927-3(a) and  is necessary
     to the total integrity  and performance of  the  waste treatment works
     servicing such cor.nunity,  or  (b) is for a  new  sewer systen in a
     community in existence  on  October 13, 1972,  with sufficient existing
     or planned  capacity to  adequately treat such collected sev/age.
     Replacement or major rehabilitation of an  existing sewer  system may
     be approved only if cost-effective and must  result in a sewer
     system design capacity  equivalent only to  that of the existing
     system plus a reasonable amount for future growth.  A community,
     for  purposes of  this section, would include  any area with substantial
     human  habitation on October 18, 1972.  No  award may be made for a
     new  sewer system in "a community in existence on October 18, 1972,
     unless it is further determined by the Regional Administrator that
     the  bulk  (generally two-thirds) of the flow  design capacity through
     the  sewer system will be for waste waters  originating frcm the
     community (habitation)  in  existence on October 18, 1972.

     The  above sections  of the  EPA regulations  implement Section 211 of
P.L. 92-500.

     Section 36  of p.L.  95-217  amends. Section 211 of P.L. 92-500 to
pjrecJkLde_us.e._of_the_popu,la.tion  densii:y..cr.lter_ion_in_BRM_77r8_as_a_tes.t
'qf_ grant jeligiblity for  collector  sewer projects_  but pennits_use_of_the.
crTtje>'io'n.f_6r""evaluating_.a.lternatives.  A one household per two acre
density criterion may be used only for identifying  less closely populated
areas where individual or other small wastewater  treatment systems are
.likely to be more cost-effective than collector sewers and thus must
be evaluated in  detail if collector  sewers are  proposed for such areas.
Such use  of the  population density criterion should assist with and
simpltfy  the cost-effectiveness analysis for collector sewer projects.

     All  treatment works funded under the Construction Grants  Program
must be cost-effective to comply with the requirements of the  Acts.
Treatment works  are defined  in  Section 212 to include sewage collection
systems.  EPA  cost-effectiveness requirements are found in 40  CFR
S35.925-and in Appendix  A to 40 CFR, Part .35.

     Public disclosure of costs is a fundamental  prerequisite  for all
grants projects, including collection systems.  Program Requirements
Memorandum  76-3, "Presentation  of  Local Government  Costs of Wastewater
Treatment 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.   However,  public hearings  were held  on many
     collection systsn projects prior  to this date.  Special  measures
     are necessary to ensure the public is aware of  the cost  implications
     of collection systens prior to their approval.

          The following policy is to be followed in  preparing future
     grant applications for  collection system projects.  This policy
     supplements all existing Agency regulations and policy statements.
     It provides guidance for more rigorous review of  grant applications
     to ensure that proposed orojects  meet the established requirements
     of the lav/ and regulations.  Compliance with this policy will help
     to assure that only grant eligible and cost-effective collection
     system projects are funded by EPA.

III. Policy

     EPA policy on the funding of sewage collection  systems is as

     A. Substantial human habitation

          New collector sewer projects are eligible  for funding  only in
     a community in existence on October 18, 1972, with sufficient
     existing or planned capacity to adequately treat  such collected
     sewage.  A community qualifying for Federal grant assistance
     to construct a collector sewer system may be a  geographic or
     jurisdictional area that is smaller than the jurisdiction of the
     municipality applying for the treatment facility  grant.   The
     Tttle II regulation states in Section 35.925-13 that a community
     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 from the habitation exsting on October 18, 1972.

          The Agency policy  is that areas to be served by new collector
     sewer projects must meet the requirement for "substantial human
     habitation."  Habitation existing as of October 18, 1972, should
     be evaluated block by block or, where typical city blocks do not
     exist, by areas of five acres or  less to determine if it is substan-
     tial.  Collector pipes  designed primarily to serve blocks or five
     acre areas without substantial human' habitation as of October 18,
     1972, would not be eligible for grant assistance.

     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 "substantial human habitation" and the two-thirds rule  require-


     New collector sev/ers should be fundsd only when the systsr.s  in  use
(e.g., septic tanks or raw discharges from homes)  for disposal  of wastes
from the existing population are creating a public health probl«n,
contann'natirg groundwater, or violating the point  source discharge
requirements of the Act.  Specific documentation of the nature  and
extent of health, groundwater and discharge problems must be provided  in
the facility plan,  Where site characteristics are considered to  restrict
the use of on-sita systems, such characteristics,  (e.g., groundwater
levels, soil pennability, topography, geology, 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 systems (e.g., septic tanks)  which are malfunction-
ing.  A community survey of individual disposal -systems is recommended
for this purpose, and is grant eligible.

     Where the population density within the collection system  area  is
less than 1.7 persons per acre (one household per  two acres), collector
sewer projects shall be considered non-cost-effective unless a  severe
pollution or public health problem is specifically documented and
collector sewers are shown to be clearly less costly than any of  the
alternatives for sparsely populated areas as cited below.

     In addition, the facility plan must demonstrate, where population
density is less than ten persons per acre, that alternatives are  less
cost-effective than new gravity collector sewer construction and
centralized treatment.  Such alternatives are cited in the previous
Administrator's memorandum of December 30, 1976, subject: "Encouraging
Less Costly Wastev/ater Facilities for Small Communities."

     The alternatives to be evaluated include the  following:

—measures to improve operation and maintenance of existing septic
tanks, including more frequent inspections, timely purnpouts and prohibi-
tion of garbage grinders.

—new septic tanks.

—holding tanks and "honey wagons."

—various means of upgrading septic tanks, including mounds, alternate
leaching fields and pressure sewers plus ponds or  other small treatment

—other systems to serve individual households or  a cluster of households.
Such systens include, for example, v/astewater separation, water conservetion
and recycle systems where feasible.

          The facility plan,  whc:r applicable,  must examine alternatives
     such as limited sewer service for a  portion of a  community.   For
     example, septic systt-is  wcrk  very well  in  n^ny small  tov/ns  except
     in one isolated area such -is  a business district  where open  space
     for adequate en-site disposal  is  not available.

          The collection system shall  not afford capacity  for new habitations
     or other establishments  to be located on environmentally sensitive
     lands such as wetlands,  floodplains  or prime agricultural  lands.
     Moreover, the proposed collection system must conform with  approved
     208 plans and air quality plans,  Executive Orders on  Wetlands  and
     Floodplains, and Agency policy on wetlands.

     C. Public disclosure of costs
          All  projects,  including collection systems,  on  which  public
     hearings  were held  after January 2,  1977,  must corcply fully with
     the requirements of Program Requirements Memorandum  76-3 prior  to

          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 disclosures snail  take the form of.
     a prominently published notice  in a  local  newspaper, and the  cost
     is grant  eligible.

          The  notice shall include the estimated monthly  charge for
     operation and maintenance,  the  estimated monthly  debt service
     charge, the estimated connection charge and the total  monthly
     charge to a typical residential customer for the  new collection
     system being funded and any other associated wastewater facilities
     required.  Such associated  facilities would include  new treatment
     capacity  needed to  handle the flows  from the new  collection system.

          The  charges may only be rough estimates,  and may be presented
     as a range of possible costs when major unknowns  exist, such  as
     whether or not substantial  parts of  the project are  grant  eligible.

 IV. Implementation

     The States are to be advised of the  issuance of this amended  policy
at once.  All  pending and future grant applications for collection
system projects or projects containing collection systems are to be
reviewed for compliance  with this policy.

V. References

   A. Sections 201, 211, 212, P.L. 92-500 and Section 36 of P.L.  95-

   B. 40 CFR SS35.905-19, 925-7, 925-13, Appendix 8.

   C. PRM 76-3, "Presentation of Local Government Costs  of Wastewater
      Treatment Works in Facility Plans," August 16,  1976,

   D, Memorandum to Regional Administrators from Russell E. Train,
      "Encouraging Less Costly Wastewater Facilities  for Small
      Communities," December 30, 1976.