AN EVALUATION OF THE
DELEGATED CONSTRUCTION
GRANTS PROGRAM
IN EPA REGION VIII
Prepared for
THE ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF WATER PROGRAM OPERATIONS
Larry Walker Associates
October 1980

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11V
AN EVALUATION OF THE
DELEGATED CONSTRUCTION
GRANTS PROGRAM
IN EPA REGION VIII
Prepared for
THE ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF WATER PROGRAM OPERATIONS
Larry Walker Associates
October 1980

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TABLE OF CONTENTS
fiSi
INTRODUCTION 		1
STATUS OF DELEGATION 		2
REGION'S ADMINISTRATION OF THE PROGRAM 		3
Organization 		3
Pesources		10
Management	10
Grants Processing Procedures 		13
Processing Times 		21
Monitoring of State Performance 		22
ASSESSMENT OF THE REGION'S PERFORMANCE 		24
Progress Towards Delegation 		25
Organizational Structure and Resources ....	27
Management	28
Grants Processing Procedures 		31
Processing Tines 		35
Monitoring of State Performance 		36
Overall Regional Performance 		37

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AN EVALUATION
DELEGATED CONSTRUCTION
IN EPA REGION
OF THE
GRANTS
VIII
PROGRAM
INTRODUCTION
This evaluation was conducted as a part of EPA's Office of Water
Program Operations effort to monitor the status and effectiveness of
the delegated construction grants program. The purposes of the eva-
luation were to determine the status of delegation within each region
and delegated state, to assess the performance of the delegated states
and the regions as it relates to delegation, and to identify any pro-
blems or needs associated with management or operation of the delegated
program.
This specific report contains the evaluation of delegation within
EPA Region VIII. An accompanying report contains an evaluation of dele-
gation within the State of Montana.
The contractor spent two days in the EPA Region VIII offices,
interviewing the management staff of the Water Division. One day (July 15)
was spent in the Region VIII, field operations office located in Helena,
Montana. The other day (July 18) was spent in the Denver regional office.
In interviewing regional staff, focus was given to managers and operations
associated with the State of Montana construction grants program. The
individuals interviewed were as follows:
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Harvey Hormberg
Sam Berman
Max Dodson
Jim Boyter
Steve Potts
Director, Office of Public Facilities
and Grants
Chief, Engineering Operations Branch,
Office of Public Facilities and Grants
Water Coordinator, Montana Office
Project Officer for Construction Grants,
Montana Office
Assistant Project Officer for Contruction
Grants, Montana Office
In conjunction with these interviews, the contractor spent two days
at the State of Montana offices interviewing the state's management staff
associated with the construction grants program.
STATUS OF DELEGATION
Within Region VIII, all six states have entered in delegation
agreements with the region:
South Dakota
Wyoming
Montana
North Dakota
Colorado
Utah
April 6, 1979
May 21, 1979
July 9, 1979
August 17, 1979
September 27, 1979
September 27, 1979
The delegation agreements for all six states are similar in terms of
the general agreement, but the appendices which describe the delegated
functions and the procedures to be followed by the states in administering
each function vary from state to state. The region generally gave each
state latitude in deciding how to group the delegated functions in the
appendices and in developing the procedures to be followed.
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In the case of Montana, eighteen delegable functions were described in
the appendices to the general delegation agreement. Table 1 identifies
the current status of delegation in each of the six states within the
Region at the time of this evaluation.
Montana is farthest along in assuming full delegation. Montana
has taken over responsibi1ty for review and certification of all grants
as well as facilities plans and plans and specifications. In several
months, when Montana and the region complete revisions to the existing
delegation agreement, the state will assume responsibility for all dele-
gable functions except those to be administered by the Corps of Engineers.
These include biddabi1ity/constructabi1ity reviews on plans and specifi-
cations, interim construction inspections, and final project inspections.
The State of Montana expects to assume responsibility for those functions
currently administred by the Corps in fiscal year 1982.
Within Region VIII the Corps of Engineers is performing similar
functions in all six states. They are conducting hiddabi1ity/construct-
ability reviews, interim inspections, and final inspections. In addi-
tion they are reviewing and approving change orders in all states except
Montana.
REGION'S ADMINISTRATION OF THE PROGRAM
Organi zation
The Region VIII Water Division, the division responsible for the
construction grants program is organized as shown in Figure 1. The
Office of Public Facilities and Grants is responsible for performing
all EPA construction grants activities within the Region, except for
certain activities performed by the Montana Operations Office.
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Table 1
STATUS OF DELEGATION IN EPA REGION VIII3
Functi on
Col o.
Mont.
No. Dak.
So. Dak.
Utah
Wyo.
Preapplication Confs.

D
D
D
D
D
Step 1 Applications

D
D

D ,

Step 2 Applications

D




Step 3 Applications

D




Faci1ity Plans

D




Change Orders

D




User Charges/ICR

9/81




Plans and Specifications

D

D
n
P
Payments

9/80




OflM Manuals

D
n
D
D
D
Plan of Operation

D




Site Title Opinion

9/80




Rid Documents

82
D



Preconstruction Confs.

9/80




Construction Inspections

82




Fi les

9/80




Public Participation

D




Federal Grant Offer

9/80




a Status as of July 1980
D = Delegated
9/80 = Date at which full delegation projected
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Figure 1
ORGANIZATIONAL STRUCTURE/RESOURCES - REGION VIII WATER DIVISION

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The immediate office of the director is responsible for the review of
user charge/ICR systems, sewer use ordinances, and environmental assesments,
and for the issuance of findings of no significant impact (FNSI).
In the cases where the states are not yet preparing the environmental
assesment, the director's office will prepare the assessment. For
states which are preparing the draft environmental documents, this
office will finalize those documents. In the case of Montana
projects, the draft environmental assessments are prepared by
the state and finalized by the Montana Operations Office. These
documents are then sent to the director's office in Denver for
review prior to signature by the regional administrator.
The Grants Administration Branch within the Office of Public Facili-
ties and Grants is responsible for processing all grants from an admin-
istrative standpoint. This office processes not only construction grants
but also other grants such as the Section 106 grants, Section 208 grants,
Clean Lake grants, etc. Relative to construction grants, this office pro-
cesses payments, reviews applications from the administrative standpoint,
performs cost analyses on A/E contracts, takes the lead in resolving audit
exceptions, and keeps track of the various accounts from which
grant awards are made. Finally this office is in charge of the
files. Under a fully delegated mode of operation, it is expected
that this office will still be responsible for receiving certified
applications from delegated states and processing them as well as
being involved in audit resolutions. In addition this office will
have the responsibility for monitoring delegated states from an
administrative standpoint, under the general direction of the
Engineering Operations Branch.
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The Engineering Operations Branch, prior to delegation, was responsible
for processing construction grants in all areas except the administrative
areas, which were handled by the Grants Administration Branch. Cur-
rently the region is in transition between a non-delegated and fully
delegated mode of operation, and in many states this branch is still
active in administration of non-delegated functions. Relative to the
State of Montana projects, the Engineering Operations Branch plays no
role, given the fact that the Montana Operations Office processes the
projects certified by the State of Montana.
The Control and Technology Branch is responsible for all operation
and maintenance related activitives associated with the construction grants
progran, for AST/AWT review, and for innovative and alternative tech-
nology. Again, as the region is currently in transition and most states
are not yet fully delegated, the people in this branch are still
reviewing operations and maintenance manuals and other operation
related documents. Under a fully delegated mode of operation this
group would be responsible for monitoring the performance of the state
in these areas, under the direction of the engineering operation
branch. It is expected that even under a fully delegated mode, that the
branch will continue to have responsihilty for AST/ AWT reveiw and inno-
vative and alternative technology.
The organizational structure of the Montana Operations Office of EPA
Region VIII is shown in Figure 2. As can be seen there are two major groups
of activities associated with the Montana office; water related activities
and air, pesticides and solid waste related activities. It should
be pointed out that the recent creation of this office is considered
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Figure 2
ORGANIZATIONAL STRUCTURE/RFSOURCES - MONTANA OPERATIONS OFFICE,
EPA REGION VIII

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an experiment by Region VIII. It is not certain at this time whether
the office will continue in existence.
Relative to the construction grants program in the State of Montana,
the Montana Operations Office has considerable res ponsiblity. The Opera-
tions Office staff processes the state certification packages and prepares
the federal grant offers. It is interesting to note that whereas the Water
Division Director signs all construction grant awards in other states, the
the director of the Montana Operations Office signs the grant awards for
Montana projects. The construction grants group within the Montana field
office is also responsible for performing all non-delegated activites
associated with the Montana construction grants program. For example they
review the preliminary environmental assestment prepared by the state, and
prepare a final assessment and a final FNSI. This latter package
is then forwarded to the Denver Regional Office for signature by
the regional administrator. It should be noted that the environmental
assessments and the FNSI's prepared by the construction grants
project officers within the Operations Office are reviewed for
consistency with regional policy by the National Environmental
Policy Act group within the operations office. Other groups within
the Montana office do not generally participate or get involved
with construction grants projects in Montana.
Within the Denver Pegional Office, several of the branches outside
of the Office of Public Facilities and Grants also are involved in the
construction grants program. In all states except Montana, five of the
six branches within the water division perform what is called a team
review of facility plans. The branches included are the Planning and
Management Branch, the Environmental Evaluations Rranch, the Grants
Administration Branch, the Engineering Operations Rranch, and the Control
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and Technology Branch. In addition where a federal environmental impact
statement is to be prepared relative to a construction grants project,
it is prepared by the Environmental Evaluations Branch within the Water
Di visi on.
Resources
The Region VIII Water Divison currently has ninety-four permanent
full-time positions and eighteen non-permanent positions. Forty-two of
the positions, permanent and non-permanent, are charged to the construc-
tion grants program. The bulk of these positions are located within the
Office of Public Facilities and Grants. The major exception is six posi-
tions located within the Environmental Evaluation Branch. The breakdown
of positions by major organizational unit within the Water Division is
shown in Figure 1.
In addition, the Corps of Engineers provides considerable manpower
resources towards administration of the construction related activities
associated with the grants program. The Corps provides approximately
13.5 positions towards constructions related activities within the Region.
The manpower resources currently being used by the region, by the
Corps of Engineers, and by the six states in the region toward admini-
stration of construction grants program, are shown in Table 2.
Management
The director of the Office of Public Facilities and Grants has over-
all responsiblity for managing the construction grants program within the
Region. The director and his management staff utilize a number of manage-
ment tools to assist them with management of the program. First they use
a number of regularly produced reports to identify the program's status.
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Table 2
RESOURCES APPLIED TO THE CONSTRUCTION GRANTS PROGRAM
IN EPA REGION VIIIa

State
Agency
Colorado
Montana
No. Dakota
So. Dakota
Utah
Wyoming
Total
EPA Region
2
2.5
1.5
1.5
1.3
1.3
10.1
Corps of Engineers
5
1.5
1.5
2
2
1.5
13.5
States
14
11.5
6
7
7
8
53.5
Total
21
15.5
9
10.5
10.3
10.8
77.1
a Includes resources applied directly to administration of grant projects in
each state. Does not include regional management level personnel in the
director's office or in the branch offices.
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For example, on a monthly basis, the Region produces a status report on
construction grant funds for each of the states within the Region. This
report identifies the amount of grant funds which has been obligated
from each of the fiscal years and the remaining balances. It also
identifies the projects within each state which have received grant
awards during the previous month. Finally it identifies grants appli-
cations and increases which are pending approval.
In addition to this report the Region also produces a monthly
report summarizing the obligations made by month in each state since
the start of the current federal fiscal year. This same report also
identifies construction grant payments (outlays) made for each previous
month since January of 1978. Finally this report contains projections
of obligations, outlays, and grant awards over the next quarter. These
projections are actually negotiated, in the case of the State of Montana,
between the project officer for construction grants in the EPA Operations
Office and the state construction grants program manager. These pro-
jections are used by both the EPA Operations Office and the state as
targets towards which to direct their review activities.
Several other management tools are utilized by the regional office.
For example semi-annually, the director of the Public Facilities and
Grants Office and his management staff meet with all of the delegated
states within the Region and discuss various program policies and issues.
In addition, the Montana Operations Office meets with the State of Montana
construction grants staff (the entire staff) on a monthly basis for the
purpose of conducting training sessions for the state staff. In these
sessions the EPA staff may instruct the state staff in the performance
of specific construction grants activities or they may brief the state on
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new policies, regulations, or guidelines that have been issued by EPA
pertaining to the construction grants program.
Grants Processing Procedures
This section describes the region's involvement in the processing
of grants for the state of Montana. As previously indicated the pri-
mary responsibility for processing grant certifications issued by the
State of Montana lies with the EPA Montana Operations Office, though the
Denver regional office does get involved in certain aspects of the pro-
cessing of individual grant projects.
Table 3 identifies the documents received by the Montana Operations
Office from the State of Montana on individual grant projects, and the
action taken by the Operations Office relative to each of the documents
recei ved.
The Region's first involvement in terms of individual grant projects
is when the operations office recieves a Step 1 application package from
the state. This package includes the state certification and numerous
accompanying documents identified in Table 3. The operations office staff,
and more particularly one of the two grants project officers, reviews the
package to determine that all required documents are contained therein and,
in addition, reviews certain of those attachments to determine whether or
not they are adequately executed. For example, checksheets are reviewed
to determine if all of the boxes are checked and A/E suhagreements are re-
viewed to determine whether or not they meet certain requirements imposed
by the federal government. In the case of A/E contracts for over $100,000,
the suhagreements are sent to the Denver regional office for review and
approval. While the state has received delegation of A/E subagreement
review, the state does not feel it has the expertise to perform the
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Table 3
DOCUMENTS RECEIVED FROM STATE ON INDIVIDUAL GRANT PROJECTS
Documents Received
Action Taken
Step 1 Application Package
State Certification
Review check Sheets
Step 1 Application
Plan of Study
A/E Subagreement
Subagreement Review Check Sheet
Reasonableness of A/E Cost Summary
Resolution of Authorized Representative
A95 Clearance
Assurance of Compliance Form
Compliance Peport
During Step 1 Phase
Public Participation Work Plan
Copies of all Correspondence
Environmental Documents
Preliminary Environmental Assessment
Draft Facilities Plan
Facilities Plan Checklist
A95 Clearinghouse Comments
State comment letter on draft plan
Grantee's response, submittals
Process Payment Requests
Check presence
Review to see if all boxes
checked
Route copy to Denver for files
Review to extent needed to
prepare offer
Review to see if EIS necessary
If under $100K, review several
aspects
If over $100K, send to Denver
for approval
Review to see if all boxes
checked
Check presence
Check presence
Check presence
Check for grantee signature
Send to Denver for approval
Prepare grant offer, sign,
send copy to Denver
File
Review, file
Review, finalize, prepare FNSI
Review to extent questions	on PEA
Review to extent questions	on PEA
Review to extent questions	on PEA
Review to extent questions	on PEA
Review to extent questions	on PEA
Route EA, FNSI to Denver
Reviewed for consistency, siqned
by R.A.
Check for compliance with condi-
tions, send to Denver for pro-
cessi ng
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Table 3 (contd.)
DOCUMENTS RECEIVED FROM STATE ON INDIVIDUAL GRANT PROJECTS
Documents Received
Action Taken
Step 2 Application Package
State Certification
Application Review Check Sheets
Step 2 Application
A/E Subagreement
Subagreement Review Check Sheets
Reasonableness of A/E Cost Summary
Assurance of Compliance Form
Compliance Report
Initial I/A Determination*
During Step 2 Process
Copies of all correspondence
Progress Payment Requests*
Proposed User Charge System
Preliminary Plan of Operation,
State Certification
Preliminary Plans and Specifications
B/C comments by Corps
State Comments on Plans and
Spec i ficati ons
Check presence
Peview to see if all boxes
checked
Route copy to Denver for files
Review to extent needed to
prepare offer
If under $ 100K, review general
aspects
If over $100K, send to Denver
for approval
Review to see if all boxes
checked
Check presence
Check for grantee signature
Send to Denver for approval
Send to Denver for review
Prepare grant offer, sign
send copy to Denver
Review, file
Check for compliance with
conditions
Send to Denver for processing
Send to Denver for approval
File
Send to Corps for R/C review
Review, transmit to State
Quick review, file
Step 3 Application Package
State Certification	Check presence
Certification P&S approvable	Check presence
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Table 3 (contd.)
DOCUMENTS RECEIVED FROM STATE ON INDIVIDUAL GRANT PROJECTS
Documents Received
Application Review Check Sheets
Step 3 Application
A/E Subagreement
Subagreement Review Check Sheet
Reasonableness of A/E Cost Summary
Assurance of Compliance Form
Compliance Report
During Step 3
Plans and Specifications Package
Final Plans and Specifications
State Check Sheets
Grantees response to State, Corps
Bid Documents*
Notification of Preconstruction
Conference
Process Payment Requests
Change Orders and State Approval
Draft O&M Manual, State Certification
Sewer Use Ordinance
Final Plan of Operation,
State Certification
Final OftM Manual, State Certification
Corps Interim Inspection Reports
Corps Final Inspection Report
Final Payment Request
Action Taken
Review to see if all boxes
checked
Send copy to Denver for files
Review to extent needed to
prepare offer
If under $100K, review several
aspects.
If over $100K, send to Denver
for approval
Review to see if all boxes
checked
Check presence
Check for grantee signature
Send to Denver for approval
Prepare grant offer, sign send
copy to Denver
File, send copy to Corps
Fi le
Fi 1 e
Send MBE info to Denver
Review, issue ATA
Check with Corps
Check for compliance with
condi ti ons,
Send to Denver for processing
Review to ensure acceptable
Fi le
Send to Denver for Approval
File
File
File
Review, file
Request audit, resolve exceptions
Request final payment from Denver
* These functions have not yet been delegated to the state.
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detailed review required for contracts over $100,000. Neither does the
operations office have this expertise, so the contracts are transmitted
to Denver where a single individual reviews all such contracts within
the Pegion.
The Step 1 application itself is reviewed to the extent that the
project officer needs to prepare the federal grant offer (not yet dele-
gated). In addition, the compliance report is sent to the Denver regional
office for approval by the Region VIII civil rights officer.
When everything is in order, the EPA grants project officer in the
operations office prepares the federal grant offer, submits it to the
director of the field office for signature, and sends a copy of the executed
grant offer to the Denver office for its files.
During the faciliites planning process the Montana field office
receives numerous field documents from the state relative to individual
construction grants projects. Approximatley 45 days after the Step 1
award, the field office will receive a public participation work plan.
Since public participation has been delegated to the State of Montana,
the field office staff will not review this work plan; rather they will
just place it in the appropriate project files.
During the planning phase of the program, the field office will also
receive copies of all correspondence between the state and the grantee or
its consultant. This correspondence will be reviewed by one of the two
field office project officers more or less in a general way and then filed.
The purpose of this review is just to keep the FPA project officers
up-to-date as to what is going on relative to individual projects within
the State of Montana.
A major package which comes in during the Step 1 process is the en-
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vironmental documents package. This contains the preliminary environmental
assessment prepared by the State of Montana as well as the draft facilities
plans, numerous checklists and related correspondence. The assigned
project officer within the Montana operations office will review the
preliminary environmental assessment and prepare a final environmental
assessment and FNSI. To the extent questions arise, the project offi-
cer may review the facility plan and other documents submitted with
the environmental package or he may contact the state for answers to
his questions. When the project officer has drafted the final environ-
mental assessment and the FNSI, it is submitted to the National Environ-
mental Policy Act person within the field office for a review to deter-
mine consistency with Pegion VIII policy. Finally, it is submitted
to the regional office in Denver for signature by the Regional Admin-
i strator.
Also during the Step 1 planning process, the operations office will
receive payment requests from the state. While the state has not been
delegated authority to process payment requests they are in fact doing
the bulk of the processing and the operations office checks the pay-
ment requests in a general way. When the operations office is satis-
fied that the payment request is appropriate, they transmit it to the
Denver regional office for processing. Within the Denver regional office
the payments are first processed by the Grants Administration Branch
within the Water Division and then forwarded to the Financial Management
Unit for payment.
The Region's next involvement is when the Montana operations office
receives the Step 2 application packaqe from the state. This includes
the state certification, the Step 2 application, the A/E subagreement,
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and numerous other documents. These documents are reviewed in a sim-
ilar manner to the review of the Step 1 application package. When
everything is in order, the grants project officer in the operations
office prepares the federal grant offer and submits it to the director
of the office for signature. He then sends a signed copy to the Denver
regional office for filing.
During the Step 2 process, the Montana field office will receive
copies of correspondence, payment requests, proposed user charge
systems, preliminary plans of operations, and preliminary plans
and specifications. Since user charge systems have not been delegated
to the state and since all user charge systems within the Region
are reviewed by a single individual, the field office will transmit
the proposed user charge system to Denver for review and approval.
The preliminary plan of operation is just filed in the Montana
field office and the preliminary plans and specifications are sent
to the Corps of Fngineers so that they can perform a biddabi1ity/con-
structabi1ity review. The Montana operations office also receives the
Corps' biddabi1ity/constructabi1ity review comments, reviews those com-
ments and transmits them to the state. Finally, during the Step 2 process,
the operations office will receive the state's comments on plans and
specifications. These will be quickly reviewed by the regional staff,
more or less to keep up-to-date on individual projects, and then filed.
Next, the operations office will receive the Step 3 application
package. This will include the state certification, the Step 3 appli-
cation, and numerous other documents. Again, this package is reviewed
in a manner similar to the Step 1 application package. When every-
thing is in order the EPA project officer prepares a federal grant offer,
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submits it to the director of the field office for signature, and when
signed, transmits a copy to Denver for their files.
During Step 3, the Montana operations office will also receive numerous
documents. First the operations office will receive the plans and speci-
fications package, including the final plans and specifications, the state
checksheets, and the grantee's response to the state and Corps of Engineers
comments. These will not generally be reviewed but will just he filed. One
copy of the plans and specifications will be sent to the Corps for construc-
tion inspections.
Next during Step 3, the field office will receive the bid documents.
These will be sent to the Denver field office for the purpose of reviewing
the proposed minority business enterprise (MBE) participation
associated with the low bidder's proposal. Subsequent to review
and approval of the MBE participation, the regional office will
issue the approval to award.
Next during the Step 3 process, the operations office will receive
notification of the pre-construction conference. They will not attend this
conference, but they will check to ensure that the Corps plans to attend.
Also during Step 3, the Region receives progress payment requests which are
processed in a similar manner to that previously described.
Change orders and state approval letters relative to change orders
will also be recieved by the operations office. These will be reviewed
in a general way to determine that the state approval of the change orders
is appropriate and then they will be filed. Draft operation and main-
tenance manuals received by the operations office will not be reviewed
prior to filing. Sewer use ordinances received during Step 3-will be
sent to Denver for review and approval since this function is not dele-
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gated. The final plan of operation and the final O&M manual will also
be received and filed in the appropriate project files. The Corps of
Engineers interim construction inspection reports will also be received
by the field office staff and will be filed, as will the Corps' final
inspection report. The operations office staff will generally review
the final inspection report, however, prior to filing.
The final involvement of the Region in the course of an individual
construction grant project is when they receive the final payment request
from the state. The field office will then request an audit of the pro-
ject, be involved in assisting in the resolution of audit exceptions,
and when all of the exceptions are taken care of, will request final
payment from the Denver regional office.
Region VIII has not formally chosen to use that section of the EPA
delegation regulations which allows the Region to play a stronger role
in administering projects having "overriding federal interest". The
Region basically treats all grant projects within the State of Montana
the same, with the exception of the Poseman project, for which a federal
environmental impact statement is being prepared. On the Boseman project,
the assigned project officer in the field office will routinely attend
meetings which are associated with the federal EIS. This is the only
federal environmental impact statement being prepared within the State
of Montana on a construction grants project.
Processing Times
The Region has four major reviews it has to make relative to in-
dividual projects in delegated states. Three relate to the acceptance
of state certifications and the award of grants for Step 1, Step 2 and
Step 3. In addition, the Region must review the environmental aspects
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of each project and issue the FNSI prior to the certification of the
Step 2 application by the state.
The review times for the Region relative to the award of grants
on Montana projects over the last four years is shown in Table 4, both
prior to and after delegation. The review times required for the
issuance of FNSI1s are not kept by the regional office so information
was not readily available in this regard. However, a tabulation of
actual times from information kept by the State of Montana indicates
that, on the average, EPA is taking about two months to issue the
FNSI subsequent to the receipt of the preliminary environmental
assessment from the state.
Monitoring of State Performance
The responsibility for monitoring the performance of delegated states
currently lies within the Engineering Operations Branch of the Office of
Public Facilities and Grants, in all states except Montana. In the case of
Montana, the responsibility for monitoring lies with the construction grants
group in the Montana Operations Office. To date, neither the Engineering
Operations Branch or the Montana Operations Office has conducted any moni-
toring of delegated states. In a way however, the Montana field office is
monitoring the performance of the State of Montana on an on-goino basis,
given the fact that many of the documents received by the state in asso-
ciation with state certifications are reviewed by the field office staff
to determine the adequacy of the state's reviews. The field office staff
acknowledges that this is a temporary measure expected to continue until
they feel comfortable with the performance of the State. At that time
they will go to an after-the-fact type of monitoring program.
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Table 4
REGION VIII AVERAGE APPROVAL TIMES FOR GRANT AWARDS
IN THE STATE OF MONTANA
Fiscal Year
Average Approval Times in Days3

Step 1
Step 2
Step 3
1977
32(13)
37(16)
88(6)
1978
47(11)
15(2)
43(16)
1979 Pre Delegation
44(6)
85(4)
41(6)
1979 Post Delegation
to Date^
17(16)
11(7)
11(5)
a Number of awards made are shown in parentheses.
b Includes all projects for which grant offers made subsequent
to date of Delegation AGreement (July 9, 1979) through June 30, 1980.
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The regional office does routinely conduct mid-year evaluations of
the states and end of the year reviews. In addition, the regional office
program managers meet quarterly with each state to review the state's
progress in each program area, including construction grants.
ASSESSMENT OF THE REGION'S PERFORMANCE
The Region's performance, in terms of administering the delegated
construction grants program, was evaluated in the following areas:
Progress Towards Delegation
Organization and Resources
Management
Grants Processing Procedures
Processing Times
Monitoring of State Performance
The contractor's analysis of Region VIII' s performance in each of these
areas is discussed in the following paragraphs.
One general observation is offered prior to the contractor's
assessment of Region VIII in each of the above areas. That observation is that
it is somewhat difficult to judge Region VIII's performance under dele-
gation in that the Region is not yet operating in a fully delegated mode.
While all six states within the Region have received delegation, only the
State of Montana has progressed very far into delegation and that has
only happened within the last six months. Even in this case, as pointed
out previously, the Montana Operations Office operates more in a transi-
tion type of operation rather than in a true delegation mode of operation,
because of the newness of the state program.
One other general observation is that the contractor's assessment of
Pegion VIII will focus on the EPA operation relative to the the State
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of Montana, though some observations will relate to the Region's per-
formance relative to other states.
Progress Towards Delegation
It appears to the contractor that Region VIII has made reasonable
progress towards implementation of delegation within the region. All
six states within the region have entered into delegation agreements
with the regional office and almost all of these were completed more
than a year ago. The fact that most of the states have not moved very
far into delegation, or at least have not assumed responsibility for the
more significant program activities, appears excuseable given the snail
staffs which existed in those state programs prior to delegation and
given the fact that most of those states had only limited previous
experience with the program.
The contractor only has one comment relative to the progress made
by Region VIII towards delegation. While Region VIII appears dedicated
towards delegating the construction grants program to the six states
within the region, they also appear somewhat reluctant to let go of the
individual functions associated with the program. For example, even
though Montana had been delegated authority for application review,
facility plans review and plans and specifications review for nore
than six months, and even though these delegations were preceded
by a training period, the Montana Operations Office continues to
provide reviews of many of the documents received from the state
under delegation. There does not appear to be any indication that
their reviews will cease in the immediate future, though the Montana
Operations Office does indicate that this this is not a permanent
mode of operation.
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Another example that indicates a reluctance on the part of the Region
to turn over delegated functions fully to the states relates to exception-
ally long training periods on certain functions where such long training
periods appear inappropriate. For example, the Denver regional office
indicated the probability of a one-year training period for most of the
states in the Region relative to the review and approval of plans and
specifications. The contractor feels that such a long training period
is inappropriate given the fact that the states for years have been
reviewing and approving plans and specifications under delegation agreements
that existed prior to the 205(g) delegations. Also the Region has not re-
viewed plans and specifications for several years because of these prior
delegation agreements. Given this situation it seems inappropriate for the
Region to require any training period at all for state takeover of these
functions, let alone a year long training period.
The Region is also proposing that the State of Montana have a one-year
training period relative to the state review and approval of user charge/
ICR systems. Again, the contractor feels such a long training period for an
activity like this is inappropriate given the relative simplicity of the
review of these systems compared to the bulk of the reviews already per-
formed by Montana.
The contractor believes that it would be of considerable benefit to
the Region and to the states if the Region would take care of training
during the training period and once the training period is over,
rely on after-the-fact monitoring to determine whether or not the
state is performing in accordance with the delegation agreement. Until
the Region gets to this mode of operation, the advantages of delegation
(elimination of duplication, savings of manpower, etc.) will not be
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reali zed.
The contractor also notes that the training provided by Region VIII
to delegated states prior to delegation of specific functions appears to
be on the light side. Though this is not unusual when compared to the
practices of other regions, the contractor believes considerable benefit,
primarily faster state takeover of the program, would result if a more
intensive training program was to be conducted by the Region prior to dele
gation of specific functions.
Organizational Structure and Resources
The present organizational structure utilized by Region VIII for
administration of the construction grants program may be adequate for
the present situation, but will undoubtedly have to be re-evaluated under
a full delegated program, i.e. when all states within the Pegion are
fully administering all delegated functions. Region VIII is the first
region visited by the contractor which has a field office to deal with
a particular state. While there are pros and cons associated with the
field office concept, the contractor was impressed with it. The
primary reason for this is that the contractor feels that communications
between EPA regions and the delegated states are extremely critical to
the success of delegation. Without something like a field office, given
the great distance between the state and regional offices, it would
be more difficult to maintain good communications between the Region
and the state. While good communications would be possible even with
the great distances involved, the contractor believes shortening that
distance to the distance existing in the State of Montana greatly en-
hances the ability of the state and the Region to communicate with each

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other. At the same time, of course, this removal of the field office
from the central regional office presents communications problems
and some control problems between the region and the field office.
The contractor believes that the central regional office has to
deal with this problem by establishing a mechanism to review the
work and the performance of the field office.
The contractor did not make an in-depth evaluation of the resources
utilized by the Region for administration of the grants program. It
would have been very difficult to make judgements as to the adequacy
of those resources under delegation given the fact that the Pegion is
not operating in a totally delegated mode as yet. Rather, the Region
is in a transition mode of operation fully administering some functions
which have not yet been delegated and overseeing state administration
of delegated functions. Given this situation, the contractor did not
see any obvious excesses or shortages of resources, either in the
Denver regional office or in the Montana field office insofar as the
grants program is concerned.
Management
The contractor believes several management tools are critical to
successful regional management of the delegated construction grants pro-
gram. These tools include an adequate reporting mechanism that allows
the Region's management to stay on top of and track the progress of the
program, an effective means of communications with delegated states, and
an effective monitoring program to assure sound state administration of
the program. Again, given the fact that Region VIII is not very far into
delegation and has not yet developed its monitoring program, it is some-
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what difficult to judge the Region's performance in this area. Still
there are some practices employed by Region VIII that the contractor
found impressive. The contractor was impressed with the monthly status
report developed and utilized by the region for each state. He
was also impressed with the monthly report of past obligations and
outlays and of projected obligations, outlays and awards. At the
operations office he was impressed with the fact that the EPA
construction grants project officer and the state's construction
grants manager sit down on a monthly basis and negotiate outputs
for the future months. Related to this, he was especially impressed
with the enthusiasm exhibited by the state towards meeting those
negotiated outputs. The contractor also was impressed with the
monthly training sessions conducted by the Montana Operations
Office for the state construction grants staff. Finally, the
contractor was impressed with the semi-annual meetings that the region's
construction grants staff holds with all delegated states.
Still there are some additional management tools and practices that
the contractor feels would enhance Region VIII's administration of the
delegated construction grants program. First, while the region has a
good start on a reporting system, the contractor suggests that this be
expanded to include additional information. The contractor suggests
along these lines that the region's management staff identify the
types of information that they will need to stay on top of a program
that basically is being administered by the states within the
regi on.
A second recommendation in the area of management is that the
region establish formal communication systems with each delegated
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state. The contractor would suggest either monthly or bi-monthly
meetings between the management people in the regional office respon-
sible for a given state and that state's construction grants managers.
These meetings should have formalized agendas and should provide a
mechanism for the EPA staff to update the state staff on new develop-
ments in the federal program, they should allow the state to do the
same thing relative to EPA management and they should provide a forum
for joint discussion of problems and issues encountered. These same
meetings could also be utilized to discuss important actions scheduled
over the coming month or months and to update the EPA staff on projects
or issues that they have an interest in.
Relative to the communications between the State of Montana and the
EPA Operations Office, the contractor believes that the existing training
sessions which are held on a monthly basis could be modified slightly to
accomplish what the contractor has recommended above. In other words, by
broadening the scope of the monthly training sessions, these sessions
can become a formal means of communication related to all grants
program activities between the state and the regional office.
While the Montana Operations Office may not feel the need for such
formal communications mechanisms at the present time, the contractor
suggests that this is because there is almost continual communications
between the operations office and the state in association with
the operations office reviews of state certification packages and
other documents. Once the operations office starts operating in a
truly delegated mode, those day-to-day communications associated
with individual projects will cease and some substitute communication
mechanism will be needed. The contractor has found that good
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communications are extremely important to the success of a delegated
construction grants program and, if anything, EPA and delegated
states should err on the side of too much communications rather
than too little.
The final recommendation that the contractor has in the area of man-
agement is that the region's management staff proceed to initiate an
effective monitoring program. At the present time little effort has
gone towards the development of such a program and, again, the con-
tractor feels that this is an essential tool to assist the region in
the management of the delegated program.
Grants Processing Procedures
The contractor focused primarily on the procedures utilized relative
to Montana construction grants projects, but to some extent he also con-
sidered proposed operating procedures identified by the Denver regional
office relative to other states. Based on the review of the processing
procedures utilized by the Montana operations office, the contractor con-
cludes that the operations office is not operating in a delegated mode.
It is the contractor's opinion that under delegation, the EPA regional
office should identify in the delegation agreement exactly what it wants
the states to do in terms of performing a particular function, the state
should certify to the regional office with each grant submittal that it
has complied with the terms of the delegation agreement, the region should
accept the State's certification without reviewing it, and the region should
monitor a certain percentage of state activities after-the-fact to determine
if the state has, in fact, complied with the terms of the delegation agree-
ment. In Montana the contractor observed two problems with how EPA is
operating. First, the operations office is getting far more information
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than it needs under a delegated mode of operation. Basically, it appears
that the field office is receiving from the state every document and piece
of correspondence that the state gets relative to individual construction
grants projects. The second problem with the Montana field office operation
is that state certifications are not being accepted without review.
Rather the EPA project officers are reviewing every project action
to one degree or another. The maximum review appears to come
relative to the facilities planning process (with the primary
access for this review being through the environmental documents
finalization). The minimum review involves reviewing packages
primarily to see if they look okay or to allow the EPA personnel
to stay on top of current developments on individual projects. In
fairness to the Montana Operations Office, the office personnel acknow-
ledge that they are not operating in the delegated mode, but they consider
the present method of operation as an extended, unofficial training period.
They intend to utilize this training approach until they feel
comfortable with the ability of the state to administer the program.
Outside of the activities of the Montana Operations Office, in dis-
cussions with personnel in the Denver regional office, the contractor also
got the impression that the region intends to review documents in other
states rather than just accepting state certification.
The contractor believes that the region should abandon its present
effort to review project certification packages submitted by the State of
Montana. At the same time the contractor feels that this office should
put more effort towards developing and implementing an after-the-fact
monitoring program. In conjunction with this the contractor believes
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that the Montana office should significantly reduce the amount of material
that it receives from the state relative to individual grant projects.
The contractor recommends that only those documents necessary to allov/
the region to carry out required functions under a delegated program
should be received. The contractor would suggest that the region, both
in Montana and in its other states, receive only five submittals from
state: a plan of study to determine whether or not a federal EIS may
be required, a Step 1 certification, a preliminary environmental assess-
ment to allow the EPA to fulfill its responsibilities under NEPA (which
cannot be delegated), a Step 2 certification and a Step 3 certification.
Relative to the grant certifications, the contractor believes that many
of the documents presently attached to the certification packages are not
necessary for the region to receive. Again the region is supposed to
accept on face value the state certification and make the grant offer.
The contractor suggests that items such as user charge/ICR systems,
operation and maintenance manuals, sewer use ordinances, etc. do not have
to be received at all by the regional office. No action by the region is
taken upon receipt of these documents and the only regional involvement
with these documents at all is to review them after-the-fact to determine
whether state reviews are consistent with the terms of the delegation
agreement. The documents do not have to be transmitted to the regional
office for this purpose. Rather they can be reviewed by a monitoring
team in the state offices.
In reviewing the files in the state of Montana, the contractor also
identified at least one instance where the EPA field office appeared to
be questioning state decisions relative to facilities planning reviews
through the environmental assessment review process. To elaborate on
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this, NEPA responsibilities cannot be delegated by the region and there-
fore EPA must thoroughly review environmental assessments before finalizing
them and issuing the FNSI. At the same time, under delegation the region
is supposed to accept the state's review of the facilities plans. There
is a fine line between what areas constitute environmental issues and
what areas constitute technical, procedural and administrative issues in
the facilities plan. It is the contractor's opinion, based upon one set
of comments prepared by the EPA field office, that some of the
questions that were arising in the EPA staff review of the environmental
documents were really facilities planning issues and were beyond the bounds
of EPA's responsibility under NEPA. One example noted was EPA questioning
of the basis of population projections utilized in one facilities plan. It
is the contractor's opinion that under NEPA, EPA's role is to evaluate the
environmental impact associated with those population projections, not to
question the technical basis for those projections. It is the contractor's
opinion that this is a facilities planning issue not an environmental issue,
although obviously there may be environmental impacts if the technical
method of projecting population is incorrect. Still, if this approach is
taken by EPA in reviewing environmental documents, the entire facilities
planning process is open to re-review by EPA in the course of its
environmental review.
One other comment that the contractor would make relative to the grants
processing procedures employed by Region VIII relates to a criticism levied
by the state. The state has indicated that the regional office is imposing
its own interpretations of grant regulations, historically practiced with-
in the region, on the state under delegation. It is the state's opinion
that regulations offer a significant range of interpretations and as long
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as EPA guidance does not exist to the contrary, they are free to make their
own interpretations. The EPA regional office, on the other hand, believes
that under the concept of delegation, they still have the perogative of
determining the interpretations of regulations that are to be utilized by
the delegated states. On this particular issue the contractor sides with
the state's position. The contractor believes that the states should have
the responsibility for interpreting EPA regulations relative to their pro-
jects, unless a proposed interpretation has national policy implications,
in which case EPA headquarters should resolve the issue. The contractor
does not believe the ten EPA regions should impose their own individual
interpretations, outside of interpretations made at the national level,
on delegated states.
Processing Times
The contractor was impressed with the short processing times exhibited
by the Montana Operations Office in terms of signing grant offers subsequent
to state certification. Generally, these appear to be in the order of two
weeks and often less for Step 1, Step 2 and Step 3 grant awards. This is
one of the best processing time records that the contractor has seen in
the seven EPA regions visited to date. The contractor would also note that
the construction grants staff in the operations office appears to have a
great deal of concern about making grant awards as rapidly as possible.
That staff noted that when state certifications came in the door they
basically drop all other activities to prepare the federal grant offer and
put it through the signature chain and get it signed. The record for EPA
issuance of FNSI's is not as good. The information available indicate
that these approvals are taking about two months. It is the contractor's
opinion that these documents could be issued in one month's time.
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While the Montana office has a very good record in terms of processing
times on grant awards and a fair record in terms of processing FNSI's, the
contractor believes there are several things the regional office
could do that would lead to reduced turnaround times throughout
the region. First, the contractor suggests that the region establish
turnaround time goals for each of its major review activities,
namely grant awards and FNSI's. The contractor would suggest a
goal of between five and ten days for the signing of grant offers
subsequent to receipt of state certifications, and thirty days for
issuance of FNSI's. Further, the contractor recommends that the
region develop a system for monitoring actual staff performance in
each delegated state against these turnaround time goals. Finally,
the regions management should feed back to the staff when performance
is inconsistent with the region's processing time goals.
Monitoring of State Performance
Region VIII has not yet initiated its monitoring effort nor has it
put very much thought into how it might go about this. Hence, it is im-
possible to judge the region's performance in this area other than to make
the observation that the region has not yet fulfilled it's responsibility
to monitor the performance of delegated states.
The contractor would offer several thoughts for the region's considera-
tion relative to monitoring. First, the contractor believes it is important
that the region's monitoring program be a true after-the-fact type of
monitoring, that the region randomly select projects for monitoring, and
that the region use a team approach with qualified people having various
areas of expertise. Further the contractor believes that the
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region's monitoring program should focus on four different areas, namely
state procedural compliance with the terms of the delegation agreement,
quality of state reviews, timeliness of state reviews, and the state's
overall management of the delegated program. Finally, the contractor
believes that the region should utilize its monitoring program as a con-
structive tool to assist each state with improving its overall management
of the construction grants program.
Overall Regional Performance
On an overall basis Region VIII 's performance in terms of admin-
istering the delegated construction grants program has to be rated as good.
The region has made considerable progress towards implementation of dele-
gation in that all states within the region are currently delegated.
Further the region is employing some fairly sophisticated management tools
to oversee delegation, including a monthly status reporting system and
regularly scheduled meetings with delegated states as well as, in the case
of Montana, monthly training sessions with the state. The other strength
of the Region VIII program, as exemplified by its operations relative to
Montana projects, is the rapid time in which the region processes state
certification packages.
Though the region's performance has to be rated as good, there are a
number of things that the contractor feels the region could do to enhance
its overall performance relative to administration of the delegated con-
struction grants program. First the contractor believes that the region
should move more rapidly towards turning over individual functions to
delegated states, as opposed to implementing long training periods and
holding back certain functions. The region should also increase its
training effort on individual functions for delegated states.
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Further the contractor feels the region could benefit by expanding
some of its management tools. Particularly the contractor believes it
would be advantageous for the region to expand the scope of its monthly
report on each state, establish formal communications mechanisms with
each delegated state, and initiate its monitoring program.
In terms of grants processing procedures, the contractor believes
that the region is getting more information than it needs and is stopping
stopping short of accepting state certifications without review.
The contractor recommends in the case of the State of Montana,
that the region reduce the amount of documents that it receives
from the state on individual projects to a bare minimum, that the
region accept state certifications on face value without review, and that
the region use the after-the-fact monitoring program to insure
adequate state compliance with the terms of the delegation agreement.
In terms of processing times, the contractor thinks that while the pro-
cessing times in Region VIII are very good, the implementation of certain
measures could insure good processing time relative to all of the states
within the region, not just Montana. The recommended measures include the
establishment of time based goals for each significant regional approval
activity under delegation, monitoring actual staff performance
against those goals, and feeding back to staff where performance
deviates substantially from the region's processing time goals.
In terms of monitoring, the contractor recommends that the region
implement an after-the-fact monitoring program for the delegated states
that focuses on procedural compliance with the terms of the delegation
agreement, the quality of state reviews, the timeliness of state reviews,
and the overall state management of the delegated program. Finally, in
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this regard the contractor recommends that the region use its monitoring
program as a constructive tool to assist the states in improving their
overall management of the construction grants program.
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