United States
Environmental Protection
Agency
Washington, DC 20460
Solid Waste and
Emergency Response
(5101)
EPA 500-B-98-001
May 1998
www.epa.gov/brownfields/
s-ERMhe Brownfields Economic
Redevelopment Initiative
^^^^^^^
Brownfields Cleanup
Revolving Loan Fund
Administrative Manual
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BCRLF Administrative Manual Table of
Contents
BCRLF Administrative Manual
Contents
CONTENTS AND INTENT OF MANUAL
I. PROGRAM DESCRIPTION 1-3
A. Introduction 1-3
B. Purpose 1-4
C. Program Overview 1-4
D. Authority 1-5
E. Applicability 1-5
II. PROPOSAL AND COOPERATIVE AGREEMENT APPLICATION PROCESS II-3
A. Introduction II-3
B. BCRLF Pilot Proposal II-3
C. Cooperative Agreement Package and Process II-4
1. Overview II-4
2. Deviation Request II-6
3. State Agreement II-6
D. High Risk Cooperative Agreement Recipients II-7
III. ELIGIBLE BCRLF COOPERATIVE AGREEMENT FUND USES AND PROGRAM
ACTIVITIES III-3
A. Introduction III-3
B. Eligible Sites III-3
C. Ineligible Sites III-3
D. Eligible Activities To Be Funded (At Eligible Sites) III-4
E. Ineligible Activities III-5
IV. ROLES AND RESPONSIBILITIES OVERVIEW IV-3
A. Introduction IV-3
B. The U.S. EPA Responsibilities IV-3
C. Cooperative Agreement Recipient Responsibilities IV-4
1. Functions IV-5
2. Institutional Alternatives IV-5
3. Written Commitments IV-7
D. Borrower Responsibilities IV-8
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V. BCRLF ENVIRONMENTAL RESPONSE REQUIREMENTS V-3
A. Applicable Authority V-3
B. Environmental Response Requirements V-3
1. Determining if a BCRLF Response is Authorized V-3
2. Selecting a BCRLF Response V-6
3. Community Relations and Public Involvement in BCRLF Response Actions V-9
4. Implementation of Response Action and Ongoing Activities V-ll
5. Completion of BCRLF Response V-12
6. Administrative Record V-13
C. Use of State Voluntary Cleanup Programs V-14
VI. BCRLF FUND MANAGER FUNCTIONS AND RESPONSIBILITIES VI-3
A. Introduction VI-3
B. Establishing the BCRLF Financial Plan VI-4
1. Sources of Capital for BCRLF Pilots VI-4
2. Capital Utilization VI-4
3. Types of Assistance VI-4
4. Insurance VI-5
5. Prudent Lending Practices VI-6
6. Project Selection Procedures VI-7
7. Borrower Eligibility VI-8
C. Loan Administration VI-9
1. Loan Agreements and Borrower Terms and Conditions VI-9
2. Loan Processing VI-10
3. Default Provisions VI-10
VII. ADMINISTRATIVE PROCEDURES AND RESTRICTIONS VII-3
A. Payment Procedures and Methods of Disbursement VII-3
1. Pre-payment Requirements VII-3
2. Payment Procedures VII-3
3. Methods of Disbursement VII-4
B. Use of Program Income VII-5
C. Ensuring Equivalency Standard Is Met for Cross-cutting Requirements VII-6
D. Administrative Costs VII-7
1. Cooperative Agreement Recipient VII-7
2. Borrowers VII-7
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E. Reporting and Audit VII-8
1. The U.S. EPA Responsibilities VII-8
2. Cooperative Agreement Recipient Responsibilities VII-9
3. Borrower Reporting and Recordkeeping VII-11
F. Termination VII-12
1. Termination for Convenience VII-12
2. Remedies for Noncompliance VII-13
3. Recovery of the U.S. EPA Interest in BCRLF Assets VII-13
VIII. CLOSEOUT AND ADDITIONAL REQUIREMENTS VIII-3
A. Closeout VIII-3
1. Criteria VIII-3
2. Closeout and Adjustments VIII-5
B. Post Closeout VIII-5
1. Post Closeout Requirements VIII-5
2. Post-Cooperative Agreement Program Income VIII-6
3. Post-Cooperative Agreement Reporting and Records Maintenance VIII-6
4. Repayment of Funds if BCRLF is Terminated Prior to Closeout VIII-7
IX. CROSS-CUTTING FEDERAL STATUTES, EXECUTIVE ORDERS, AND REGULATIONS IX-3
A. Introduction IX-3
B. Applicable Cross-cutters IX-3
1. Environmental IX-3
2. Social and Economic Cross-cutters IX-3
C. Alternative Approaches to Ensure Compliance IX-5
APPENDIX A. TERMS, PHRASES, AND TITLES A-l
APPENDIX B. PROPOSAL GUIDELINES FOR FY97 BCRLF DEMONSTRATION PILOTS B-l
APPENDIX C. GUIDANCE FOR PREPARING AN ASSISTANCE FUNDING PACKAGE C-l
APPENDIX D. SAMPLE COOPERATIVE AGREEMENT APPLICATION D-l
APPENDIX E. ENTITIES SELECTED FOR FY97 BCRLF PROGRAM E-l
APPENDIX F. LIST OF THE U.S. EPA BROWNFIELDS POLICY AND GUIDANCE F-l
APPENDIX G. KEY BROWNFIELDS REGIONAL AND NATIONAL CONTACTS G-l
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APPENDIX H. APPROVED DEVIATION REQUEST H-l
APPENDIX I. BROWNFIELDS CLEANUP REVOLVING LOAN FUND SCENARIOS 1-1
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BCRLF Administrative Manual Contents and Intent of Manual
Contents and Intent of Manual
This manual describes the administrative requirements and procedures for the Brownfields Cleanup
Revolving Loan Fund (BCRLF) demonstration pilots. The manual is intended to assist the U.S.
Environmental Protection Agency (U.S. EPA) Regions in developing cooperative agreements and
overseeing BCRLF pilots, as well as to provide program participants with initial guidance on various
requirements. Examples of these requirements include environmental and financial program
management standards, recordkeeping and reporting requirements, and the U.S. EPA oversight and
audit requirements.
The cooperative agreement entered into by the cooperative agreement recipient and the U.S. EPA, which
is composed of the approved application and the assistance agreement document which incorporates
the Standard Terms and Conditions and any Special Terms and Conditions, document the approved
scope of work as well as the legal requirements applicable to each BCRLF pilot funding recipient. Since
the cooperative agreements were awarded under the regulatory authority of 40 C.F.R. Part 35, Subpart
O, all of the requirements of those regulations, as well as applicable portions of 40 C.F.R. Part 31, apply
to these agreements, with the sole exception of the portion of the regulations for which a deviation has
been granted (see Appendix H, Approved Deviation Request). This manual is designed to support and
implement those established requirements. (Note: Congressional appropriations committee's report
language for FY 1998 limited the use of available brownfields funds to assessments, training, and
personnel costs. The report language stated that "the law preempts the expenditure of funds for
'revolving loan funds' for cleanups." EPA is not using FY 1998 funding for BCRLFs.)
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BCRLF Administrative Manual Section I Program
Description
I. Program Description
Contents
A. Introduction 1-3
B. Purpose 1-4
C. Program Overview 1-4
D. Authority 1-5
E. Applicability 1-5
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Section I Program
Description
I. PROGRAM DESCRIPTION
A.
INTRODUCTION
One element of the U.S. Environmental Protection Agency's (U.S. EPA) Brownfields
Economic Redevelopment Initiative is the Agency's award of financial assistance to
eligible entities so they may capitalize Brownfields Cleanup Revolving Loan Fund
(BCRLF) demonstration pilots to test loan fund models and facilitate coordinated
public and private cleanup efforts. In no way is the BCRLF designed to undermine
or replace the fundamental concept of "polluter pays/' upon which all U.S. EPA
cleanup initiatives are based. Those who create or contribute to environmental
problems should and will continue, whenever possible, to bear the funding burden
for cleanup (i.e., the "polluter pays").
As part of each award, the U.S. EPA will fund (i.e., provide seed funding to)
Brownfields Cleanup Revolving Loan Fund pilots in amounts up to $350,000. These
funds will be provided without a matching or cost share requirement. However,
participants are encouraged to contribute additional monies and/or in-kind services
to maximize the lending capacity of the BCRLF to support brownfields cleanup.
States, political subdivisions of states (e.g., counties, cities, towns), territories, and
Indian tribes are eligible cooperative agreement recipients. For the fiscal year 1997
award cycle, only the 29 entities that were awarded National or Regional
brownfields site assessment pilots prior to October 1995 were eligible recipients of
BCRLF pilot funds. Of those 29, twenty four were awarded funds (see Appendix
E, Entities Selected for FY 1997 BCRLF Program).
The U.S. EPA expects to be substantially involved in overseeing and monitoring the
BCRLF program. The U.S. EPA is responsible for general program oversight and
review, as well as ensuring that all applicable financial and environmental
management and cleanup requirements are met (see Section IV.B., U.S. EPA
Responsibilities). The U.S. EPA expects that its involvement will vary based on each
cooperative agreement recipient's level of experience and expertise to implement
cleanup and fund management requirements. Under no circumstance, however,
will the U.S. EPA be directly involved in a recipient's prioritization of loan recipients
or the day-to-day management of the loan program.
Each cooperative agreement recipient is legally responsible for managing BCRLF
funds, ensuring proper environmental cleanups, and complying with all applicable
Federal and state laws and regulations (see Section IV.C, Cooperative Agreement
Responsibilities; Section V, BCRLF Environmental Response Requirements Applicable
Authority; and Section VI, BCRLF Environmental Response Requirements Fund
Manager Functions and Responsibilities'). Furthermore, cooperative agreement
recipients are responsible for ensuring compliance with all applicable statutory and
executive order based "cross-cutting" Federal requirements to the extent of Federal
participation (i.e., the Federal monetary contribution) in the revolving loan fund (see
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B. PURPOSE
C. PROGRAM
OVERVIEW
Description
Section IX, Cross-cutters).
As with cooperative agreement recipients, BCRLF borrowers also are responsible for
complying with all applicable Federal and state laws and regulations, including
ensuring proper environmental cleanups and prudent financial management.
While cooperative agreement recipients retain legal responsibility for BCRLF
response activities, it is expected that borrowers will actively participate in
developing and conducting BCRLF response actions (see Section IV. D., Borrower
Responsibilities).
The overall purpose of the BCRLF pilot program is rooted in the mission of the U.S.
EPA's Brownfields Economic Redevelopment Initiative: to empower states, local
governments, communities, and other stakeholders to work together in a timely
manner to prevent, assess, and safely clean up brownfields in order to facilitate their
sustainable reuse. As part of this broader initiative, the specific purpose of the
BCRLF pilot program is to foster development and implementation of financial and
administrative approaches that can support self-sustaining efforts by states, local
governments, and Indian tribes to facilitate brownfields cleanup efforts.
The pilot program will accomplish this objective in two ways. First, it will facilitate
the implementation of loan programs to carry out cleanups in pilot locations.
Second, the experience gained from these pilots will provide important information
and lessons for all brownfields stakeholders about how to structure, establish, and
operate revolving loan funds to effectively support brownfields cleanup.
Similar revolving loan funds, such as those supporting investments in wastewater
treatment, drinking water, and general economic development, typically are
capitalized with a combination of Federal, state, and/or local funds. Through the
provision of loans, often at below-market interest rates, such revolving loan funds
are able to become self-sufficient sources of capital funds for targeted purposes (i.e.,
in the case of the BCRLF pilot program, brownfields cleanups). The fund
"revolves," by using loan repayments (principal and interest) and other program
income to provide new loans and for other for authorized purposes.
The U.S. EPA will make awards to selected BCRLF pilots through cooperative
agreements negotiated between the U.S. EPA and the entities selected to receive
pilot funding. For the demonstration pilot the U.S. EPA will be responsible for
ensuring that all cooperative agreement financial and environmental management
requirements are met including ensuring that all environmental response actions are
conducted in accordance with the cooperative agreement and the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA), and
consistent with the National Oil and Hazardous Substances Pollution Contingency
Plan (NCP) (see Section V, BCRLF Environmental Response Requirements Applicable
Authority). To this end, the U.S. EPA will be substantially involved in the general
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Section I Program
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D. AUTHORITY
APPLICABILITY
administration of the BCRLF program, including such activities as collaborating
with cooperative agreement recipients on operational matters and providing
necessary monitoring and oversight of the cooperative agreement. However, day-
to-day operations and all activities related to prioritizing loan applications will be
the responsibility of the cooperative agreement recipient.
Cooperative agreement recipients are expected to work with the U.S. EPA to ensure
that BCRLF pilot funds are used appropriately and that the individual BCRLF
programs established by the cooperative agreement recipients meet the intent and
legal requirements of the pilot program. The specific responsibilities of cooperative
agreement recipients include both environmental cleanup and financial
management components of operating the loan fund. The cooperative agreement
recipient will serve as the "lead agency" for clean up. The cooperative agreement
recipient may enter into a written agreement with a qualified government
organization or private entity to support its lead agency functions. As the lead
agency, the cooperative agreement recipient will designate a qualified government
environmental specialist as "brownfields site manager" (responsible for on-scene
coordinator responsibilities described in 40 C.F.R. Part 300) for each and every site
toward which BCRLF funding is directed. One brownfields site manager must be
responsible for each site, but a single brownfields site manager may be responsible
for more than one site. In addition to cleanup-related responsibilities, the
cooperative agreement recipient also will serve as, or enlist the services of, a "fund
manager" to provide all financial management functions required to operate the
BCRLF (see Section IV, Roles and Responsibilities Overview and Section V, BCRLF
Environmental Response Requirements Applicable Authority).
Among its other responsibilities, each cooperative agreement recipient must ensure
that its borrowers comply with all relevant requirements of the BCRLF program, as
well as other applicable Federal and state requirements. Such requirements will be
outlined in the loan agreement between the cooperative agreement recipient and
individual borrowers (see Section III, Eligible BCRLF Cooperative Agreement Fund Uses
and Program Activities).
Section 104(d)(l) of CERCLA, as amended, permits funding of the BCRLF program
to carry out cleanup activities. Regulations applicable to the program include 40
C.F.R. Part 31 (Uniform Administration Requirements for Grants and Cooperative
Agreements to State and Local Governments), 40 C.F.R. Part 35, Subpart O
(Cooperative Agreements for Superfund Response Action), and 40 C.F.R. Part 300
(the NCP).
This manual describes general legal and administrative requirements applicable to
all cooperative agreement recipients selected for the BCRLF demonstration pilot
program. Applicable statutes and regulations take precedence over any descriptions
contained in the manual. Cooperative Agreement Recipients are bound by the
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signed cooperative agreement and its terms and conditions.
To supplement this guidance, the U.S. EPA Regions may incorporate other terms
and conditions into a cooperative agreement if such terms and conditions meet the
requirements of CERCLA and any applicable Federal statutory and regulatory
requirements, are consistent with the overall goals of the BCRLF program, and meet
environmental and/or financial objectives.
Any changes to CERCLA legislation may apply to all cooperative agreement
recipients upon passage of new legislation or implementation of associated
regulations. Loans made by the cooperative agreement recipients prior to the
effective date of the change, however, will not be affected unless required by law or
authorized by an amendment to the agreement.
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Process
II. Proposal and Cooperative Agreement Application Process
Contents
A. Introduction II-3
B. BCRLF Pilot Proposal II-3
C. Cooperative Agreement Package and Process II-4
1. Overview II-4
2. Deviation Request II-6
3. State Agreement II-6
D. High Risk Cooperative Agreement Recipients II-7
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Process
11. rroposai ana L^ooperauve /\greemem /\ppncauon rrocess
A.
INTRODUCTION
B. BCRLF
PILOT
PROPOSAL
Designation as a BCRLF pilot involves a three step process. States, political
subdivisions of states (e.g., counties, cities, towns), territories, and Indian tribes first
submit proposals for BCRLF demonstration pilot awards. The U.S. EPA reviews
proposals based on threshold and evaluation criteria. Based on the U.S. EPA
review, proposers may choose to submit a formal application for a cooperative
agreement. This application is then processed and, if approved, becomes the basis of
a cooperative agreement. These steps are described in more detail below. In
addition, development of a BCRLF program includes creating or adapting a pre-
existing institutional structure to meet the needs of the program (see Section IV.C.2.,
Institutional Alternatives).
Three Step Development Process
Cooperative agreement
application approved
EPA panel reviews
proposals threshold and
evaluation criteria
BCRLF proposal submission
Proposer submits cooperative
agreement application
Cooperative agreement
approval and award
©
©
The U.S. EPA provides proposal instructions, minimum threshold criteria, and
evaluation criteria for parties interested in BCRLF pilots in The Brownfields Economic
Redevelopment Initiative: Proposal Guidelines for Brownfields Cleanup Revolving Loan
Fund (the U.S. EPA, OSWER, 500-F-97-147 April 1997) and BCRLF Administrative
Manual, Appendix B, Proposal Guidelines for BCRLF Demonstration Pilots.
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c.
COOPERATIVE
AGREEMENT
PACKAGE AND
PROCESS
Section II Proposal and Cooperative Agreement Application
Process
1. Overview
Upon proposal selection, the U.S. EPA Headquarters will send successful proposers
letters confirming their selection and will simultaneously notify the appropriate U.S.
EPA Regional Brownfields Coordinators and Regional Grant Specialists of the
selections (see Appendix G, Key Brownfields Regional and National Contacts).
Appropriate Regional Offices will then contact successful proposers and ask them
to submit a formal cooperative agreement application package. Proposers are
responsible for contacting their State Intergovernmental Review Office (single point
of contact) to initiate applicable review processes as soon as possible after receiving
notification of intent to award (see 40 C.F.R. Part 29). If no State Intergovernmental
Review Office exists for a given state, or if the state has not selected the BCRLF
program for review, proposers are responsible for distributing information about
their prospective application to each relevant reviewing agency. BCRLF
applications are subject to §204 of the Demonstration Cities and Metropolitan
Development Act of 1966 (see 40 C.F.R. §29.8(c)).
The cooperative agreement application requires more detailed information on
specific products, schedules, and budgets than initially submitted in BCRLF
proposals.
The cooperative agreement application package should include:
Standard application and budget forms (see Appendix D, Sample Cooperative
Agreement Application);
A formal workplan that provides a detailed description of the work to be
performed, including a schedule, milestones, products, and budget backup
information;
Information related to community relations, health and safety, and quality
assurance plans;
Required certification forms;
A letter from the state Governor or Attorney General (or, in the case of
political subdivisions, from the Mayor or a resolution from the City Council)
certifying that the applicant has the authority to enter into this agreement
with the U.S. EPA and has the authority to carry out the work included in
the application;
When the applicant is a political subdivision, a letter of support from the
appropriate state (see 40 C.F.R. §35.6205(c)); and
Any written commitments necessary to establish the roles and
responsibilities of the entities supporting the cooperative agreement
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Section II Proposal and Cooperative Agreement Application
Process
recipient.
U.S. EPA Regional Brownfields Coordinators and Regional Grants Specialists are
responsible for working with each BCRLF applicant to process the application
package and finalize the cooperative agreement (see Appendix C, Cooperative
Agreement Application Completeness Checklist). The cooperative agreement and its
associated workplan are the documents that cover the day-to-day operation of the
BCRLF and the relationship between the U.S. EPA and the cooperative agreement
recipient.
The cooperative agreement awards Federal funds, contains the Standard Terms and
Conditions, as well as any Special Terms and Conditions, and covers issues such as
environmental management and cleanup requirements, loan administration,
reporting requirements, recordkeeping, etc. (see Appendix D, Sample Cooperative
Agreement Application). Furthermore, the cooperative agreement details the amount
of each award and a schedule and protocol for payment of cooperative agreement
funds to the fund manager. In addition to these items, the cooperative agreement
incorporates the cooperative agreement application package and workplan.
The cooperative agreement workplan is the document negotiated between the U.S. EPA
and entities selected to receive BCRLF pilot funding. The cooperative agreement
workplan develops the cooperative agreement recipient's strategy for accomplishing
program goals and objectives.
The primary components of a cooperative agreement workplan include:
The details of the recipient's procedures for selecting sites/loan recipients
that meet the requirements of CERCLA and the NCP;
The recipient's financial plan, including the BCRLF cooperative agreement
payment structure or fund capitalization; and
An approach for handling the day-to-day operation of the BCRLF.
The workplan will contain a schedule outlining milestones and a schedule for items
to be delivered to the U.S. EPA during the course of the cooperative agreement.
These items include quarterly reports, site-specific Community Relations Plans, and
site-specific quality assurance project plans/sampling plans. Any site-specific
information or plans required by 40 C.F.R. Part 35, Subpart O which was not
submitted with an application also must be submitted to and approved by the U.S.
EPA prior to field work beginning or in accordance with milestones laid out in the
cooperative agreement.
Please note that unless a case specific deviation is granted, only costs incurred after
the award of the cooperative agreement are eligible for reimbursement under the
agreement.
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Section II Proposal and Cooperative Agreement Application
Process
2. Deviation
Request
3. State
Agreement
Since a program such as the BCRLF demonstration pilot program was not
envisioned at the time 40 C.F.R. Part 35, Subpart O was promulgated, deviations
from certain definitions and provisions of these regulations may be necessary to
ensure that the BCRLF demonstration pilot program can meet its stated objectives.
For example, a deviation has been granted for the first round of BCRLF Pilots from
those portions of 40 C.F.R. §35.6105(a) (as referenced in §35.6205(a) and (c)) which
require the Recipient to submit with its applications site-specific information
because site identification will not occur at the application phase of the cooperative
agreement. Cooperative Agreement Recipients will, however, submit all site-
specific information required under §35.6105(a) to the U.S. EPA once a site is
identified and the information becomes available (see Appendix H, Approved
Deviation Request). This deviation was requested from the U.S. EPA's Grants
Administration Division by the EPA's Office of Solid Waste and Emergency
Response (OSWER).
Cooperative agreement recipients must obtain and forward to the U.S. EPA Region's
BCRLF Project Officer written agreement from the state that the cooperative
agreement recipient may assume the lead responsibility for removal activity at a
particular site. If such an agreement cannot be obtained prior to cooperative
agreement signature, then it must be received prior to the cooperative agreement
recipient incurring any cost under a BCRLF cooperative agreement (this condition
should be included as a special term or condition of the cooperative agreement).
The state may agree to cooperative agreement recipient lead removals on a site by
site or programmatic basis. This requirement is in addition to and distinct from the
intergovernmental review required to initiate the cooperative agreement (see Section
II.C.l., Overview).
What type of state agreement is required for the cooperative agreement recipient to take
the lead responsibility for removal activities?
Cooperative agreement recipients must obtain and forward to the U.S. EPA BCRLF Projec t
Officer written agreement fro m the state that the cooperative agreement recipient may assume
the lead responsibility for removal activities. This requirement is in addition to and distinct from
the intergovernmental review required to init iate the cooperative agreement (see Section II.C.L,
Overview).
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Section III Eligible BCRLF Cooperative Agreement Fund Uses and Program
Activities
D. HIGH RISK A cooperative agreement recipient that has demonstrated difficulty in meeting the
COOPERATIVE
AGREEMENT
RECIPIENTS
terms and conditions of past awards may be treated as a "high risk" cooperative
agreement recipient. BCRLF awards to high risk cooperative agreement recipients
may be subject to special terms and conditions or other provisions, as detailed
below. The following criteria are listed in 40 C.F.R. §31.12 as defining a "high risk"
cooperative agreement recipient:
Has a history of unsatisfactory performance;
Is not financially stable;
Has a management system which does not meet the management standards
set forth in 40 C.F.R. Part 31;
Has not conformed to terms and conditions of previous awards; or
Is otherwise not responsible.
If a prospective cooperative agreement recipient meets any of the above criteria,
special conditions and/or restrictions corresponding to the relevant high risk
condition shall be included in the award. These may include:
Payment from the U.S. EPA limited to a reimbursement basis;
Withholding authority to proceed to the next phase until receipt of evidence
of acceptable performance within a given funding period;
Requiring additional, more detailed financial reports;
Additional project monitoring;
Requiring the cooperative agreement recipient to obtain technical or
management assistance; or
Establishing additional prior approvals.
Prospective cooperative agreement recipients must be notified by the EPA Award
Official1 as soon as possible, in writing, of the nature of the special
conditions/restrictions, the reason(s) for imposing them, the corrective actions
which must be taken before they will be removed and the time allowed for
completing the corrective actions, as well as the method that the recipient should
use to request reconsideration of the conditions/restrictions imposed.
Section II Endnotes:
1. Note that Regional Brownfield Coordinators are not "Award Officials." See 40 C.F.R. $1
"Uniform Administrative Requirements for Grants and Gnperative Agreements" for further details
on "Award Officials."
III. Eligible BCRLF Cooperative Agreement Fund Uses and
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Program Activities
Contents
A. Introduction III-3
B. Eligible Sites III-3
C. Ineligible Sites III-3
D. Eligible Activities To Be Funded (At Eligible Sites) III-4
E. Ineligible Activities III-5
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III. Eligible BCRLF Cooperative Agreement Fund Uses
and Program Activities
A
INTRODUCTION
B. ELIGIBLE
SITES
C. INELIGIBLE
SITES
BCRLF cooperative agreement funds may be used to provide loans or other
authorized financial assistance to eligible public and private borrowers. In order to
ensure funds are loaned consistent with the "polluter pays" principle, the EPA has
placed restrictions on parties eligible to receive loans. See section VLB.7. of this
manual for further discussion of borrower eligibility. Within established limits,
funds also may be used to pay for allowable administrative costs of the BCRLF (see
Section VII.D., Administrative Costs).
Cooperative agreement recipients may provide loans and/or other financial
assistance with BCRLF pilot funds only for eligible sites and for eligible cleanup
activities. Eligible sites and cleanup activities, as well as identified ineligible sites
and cleanup activities, are described below (also see Section V.A., Applicable
Authority and Section VLB.7., Borrower Eligibility).
Use of BCRLF pilot funds is limited to sites that have an actual release or substantial
threat of release of a "hazardous substance" (as listed under 40 C.F.R. §302.4) into
the environment. BCRLF pilot funds also may be used to address releases or
substantial threats of releases into the environment of a "pollutant" or
"contaminant" (as defined by CERCLA §101(33)) that may present an imminent or
substantial danger to public health or welfare. See CERCLA §104(a)(l).
BCRLF funds may be used at sites that are:
Publicly-owned, either directly by a municipality or indirectly through a
quasi-public entity such as a community development corporation; and
Privately-owned and with clear means of recouping BCRLF expenditures
(e.g., through an agreement with the owner or developer or through a lien
or other security interests) this includes sites undergoing purchase by an
entity who meets the definition of a prospective purchaser.2
BCRLF pilot funds may not be used at any sites:
Listed, or proposed for listing, on the National Priorities List;
At which a removal action must be taken within six months (i.e., time
critical removal action);
Where a Federal or state agency is planning or conducting a response or
enforcement action; or
Contaminated by petroleum products except to address a non-petroleum
hazardous substance (e.g., co-mingled waste).
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Section III Eligible BCRLF Cooperative Agreement Fund Uses and Program
Activities
D. ELIGIBLE
ACTIVITIES To
BE FUNDED
(AT ELIGIBLE
SITES)
May BCRLF funds be used for further investigation or assessment activities required
by the cleanup process?
No. BCRLF funds may only be used for cleanup activities and for site monitoring activities,
including sampling and analysis, that are necessary to determine the effectiveness of a
cleanup. BCRLF fun ds may not be used for pre-cleanup environmental response activities,
such as site assessment, identification, and chara cterization. BCRLF funds may not be used
for the preparation of Remedial Action Plans (RAPs) or feasibility studies .
BCRLF pilot funds have been designated by the U.S. EPA's Administrator for
cleanup activities only. BCRLF activities must be removals as defined in CERCLA
§101(23), and described in 40 C.F.R. §300.415. These activities are summarized
below:
Actions associated with removing, mitigating, or preventing the release or
threat of a release of a hazardous substance, pollutant, or contaminant (as
appropriate to different site situations), including:
Fences, warning signs, or other security or site control precautions;
Drainage controls;
Stabilization of berms, dikes, or impoundments or drainage or closing
lagoons;
Capping of contaminated soils;
Using chemicals and other materials to retard the spread of the release
or mitigate its effects;
Excavation, consolidation, or removal of highly contaminated soils
from drainage or other areas;
Removal of drums, barrels, tanks, or other bulk containers that contain
or may contain hazardous substances, pollutants, or contaminants;
Containment, treatment, disposal, or incineration of hazardous
materials; and
Provision of alternative water supply where necessary immediately to
reduce exposure to contaminated household water and continuing
until such time as local authorities can satisfy the need for a permanent
remedy.
Site monitoring activities, including sampling and analysis, that are
reasonable and necessary during the cleanup process, including
determination of the effectiveness of a cleanup.
Costs associated with meeting public participation, worker health and safety,
and interagency coordination requirements.
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Section III Eligible BCRLF Cooperative Agreement Fund Uses and Program
Activities
E. INELIGIBLE
ACTIVITIES
May BCRLF funds be used for demolition and/or site preparation related to cleanup?
Yes, BCRLF funds may be used for removal activities, including demolition and/or sit e
preparation, that are part of site cleanup. BCRLF funds may not be used for pre-cleanu p
environmental response activities, such a s site assessment, identification, and characterization.
BCRLF funds may not be used for the following activities:
Pre-cleanup environmental response activities, such as site assessment,
identification, and characterization;3
Cleanup of a naturally occurring substance, products that are part of the
structure of and result in exposure within residential buildings or business
or community structures (e.g., interior lead-based paint contamination or
asbestos which results in indoor exposure), or public or private drinking
water supplies that have deteriorated through ordinary useexcept as
determined on a site-by-site basis and approved by U.S. EPA Headquarters,
consistent with CERCLA §104(a)(3) and (4);
Monitoring and data collection necessary to apply for, or comply with,
environmental permits under other Federal and state laws, unless such a
permit is required as a component of the cleanup action;
Development activities that are not removal actions (e.g., construction of a
new facility or marketing of property).
May BCRLF funds be used for remediation of underground storage tanks, assuming
non-petroleum contaminants are present?
Yes and No. There are two issues here: First, BCRLF funds may not be used for "remedial"
actions. Secondly, BCRLF funds may be used to conduct non-time critical removal activities
to address underground storage tanks only to respond to a non-petroleum hazardou s
substance (e.g., co-mingled waste).
The U.S. EPA also places other, non-cleanup related restrictions on the use of BCRLF
pilot funds. These restrictions include the following provisions:
Only up to 15 percent of the total award may be used to cover a cooperative
agreement recipient's (including lead agency and fund manager)
administrative and legal costs (e.g., loan processing, professional services,
audit, legal fees, and state program fees), as negotiated by EPA and the
cooperative agreement recipient during the cooperative agreement
application and award process;
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Activities
Absent statutory authorization such as that which exist for community
development block grants the recipient may not use BCRLF funds to meet
a cost sharing or matching requirement for another Federal grant;4
Funds may not support job training; and
Funds may not support lobbying efforts of the cooperative agreement
recipient (e.g., before the U.S. Congress, state legislatures, the U.S. EPA, or
other Federal agencies).
Section III Endnotes:
2. See "Guidance on Agreements with Pospective Purchasers of Contaminated Property," U.S. EPA,
Washington, D.C., May 1995.
3. Brownfields Assessment Pilots are awarded for these purposes.
4. The U.S. EPA, if requested to do so by the cooperative agreement recipient, will provide case
specific guidance on whetherborrowers may use BCRLF funds to meet cost sharing or matchig
requirements for another Federal grant (40 C.F.R. Part 31.24(b).
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BCRLF Administrative Manual Section IV Roles and Responsibilities
Overview
IV. Roles and Responsibilities Overview
Contents
A. Introduction IV-3
B. The U.S. EPA Responsibilities IV-3
C. Cooperative Agreement Recipient Responsibilities IV-4
1. Functions IV-5
2. Institutional Alternatives IV-5
3. Written Commitments IV-7
D. Borrower Responsibilities IV-8
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Overview
A
INTRODUCTION
IV. Roles and Responsibilities Overview
There are three primary entities involved in the development, oversight, and
implementation of the BCRLF program: the U.S. EPA, cooperative agreement
recipients, and borrowers. The roles and responsibilities of each, in the context of
the BCRLF program, are detailed below (see also Section V, BCRLF Environmental
Response Requirements and Section VI, BCRLF Fund Manager Functions and
Responsibilities').
The U.S. EPA anticipates being substantially involved in overseeing and monitoring
the BCRLF program. Substantial involvement by the U.S. EPA generally covers such
activities as: monitoring; review and approval of procedures for site and loan
recipient selection; review or approval of project phases; developing scopes of work;
and overseeing operational matters. However, the U.S. EPA does not intend to be
involved in recipients' prioritization of loan recipients or day-to-day management
of the loan program.
B. THE U.S.
EPA
RESPONSIBILIT
IBS
What level of involvement does the U.S. EPA expect to have with the cooperative
agreement recipient?
The U.S. EPA expects to b e substantially involved with the cooperative agreement. The U.S.
EPA is responsible for monitoring BCRLF pilot s' fulfillment of all reporting, recordkeeping, and
other program requirements, including: 1) reviewing quarterly financial and performanc e
reports; 2) ensuring that all environmental cleanup actions conducted under the BCRL F
program are completed in accordance with CERCLA and consistent with the NCP.
For this demonstration pilot, the U.S. EPA will monitor a recipient's procedures to
ensure that all cooperative agreement financial and environmental management and
cleanup requirements are met. This includes reviewing quarterly financial and
performance reports, as well as environmental cleanup status reports, and
approving site-specific Community Relations Plans and quality assurance project
plans/sampling plans. In its oversight role, the U.S. EPA is responsible for ensuring
that all environmental response actions conducted under the BCRLF program are
conducted in accordance with the cooperative agreement and CERCLA, and are
consistent with the NCP.
The U.S. EPA is also responsible for monitoring cooperative agreement recipients to
ensure that they comply with other applicable statutory and executive order based
"cross-cutting" Federal requirements to the extent of Federal participation (i.e., the
Federal monetary contribution) in the fund. Each recipient, in turn, is responsible
for ensuring that its borrowers meet these requirements, as applicable.
The EPA expects that its degree of involvement will vary based on the level of
experience and expertise of the cooperative agreement recipient to implement
cleanup and fund management requirements. In some instances, special terms and
conditions may be imposed (40 C.F.R. Part 31.12 and 40 C.F.R. Part 35.6790). The
U.S. EPA also may provide technical assistance to BCRLF pilot recipients.
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Overview
c.
COOPERATIVE
AGREEMENT
RECIPIENT
RESPONSIBILIT
IBS
Cooperative agreement recipient responsibilities cover two basic functions:
environmental cleanups; and financial management. A cooperative agreement
recipient is legally responsible for ensuring proper environmental cleanups,
managing BCRLF funds, and complying with all applicable Federal and state laws
and regulations. For certain activities, the cooperative agreement recipient may
obtain services, by contract or agreement with other organizations or individuals.
Notwithstanding such contracts or agreements, the cooperative agreement recipient
is the entity legally responsible to the U.S. EPA for all actions of the BCRLF pilot.
For the purposes of the BCRLF program, the cooperative agreement recipient is the
"lead agency," as defined in the National Oil and Hazardous Substances
Contingency Plan (NCP). The lead agency is responsible for ensuring that BCRLF
response actions are conducted in conformance with the cooperative agreement,
CERCLA, and the NCP. The lead agency also is responsible for designating a
"brownfields site manager" to coordinate, direct, and oversee BCRLF response
actions at a particular site. The brownfields site manager is an on-scene coordinator
(OSC) and is responsible for carrying out the OSC duties described in the NCP. The
lead agency must designate a qualified government employee as the brownfields site
manager. Both the lead agency and the brownfields site manager must work with
the fund manager, prior to any final loan decisions and as loan agreements are
developed, to ensure that all environmental cleanup requirements will be met and
that BCRLF funds are used only for authorized activities (see Section V, BCRLF
Environmental Response Requirements Applicable Authority).
Each cooperative agreement recipient also must act as or enlist the services of a
"fund manager." Fund manager responsibilities include those related to financial
management of the seed capitalization funding, as well as program income resulting
from the lending of pilot funds (see Section VI, BCRLF Environmental Response
Requirements - Fund Manager Functions and Responsibilities and Section VII.B., Use of
Program Income).
The cooperative agreement recipient may choose to enlist the services of other
entities that have experience with overseeing and carrying out environmental
response actions and fund management activities to help the lead agency,
brownfields site manager, and the fund manager to fulfill their responsibilities. The
cooperative agreement recipient may enter into written commitments (by contract
or agreement) to obtain the services of other qualified agencies, organizations, or
individuals (see Section FV.C.3., Written Commitments and Section IV.C.2, Institutional
Alternatives). The cooperative agreement recipient, however, remains the entity
legally responsible for carrying out all terms and conditions of the cooperative
agreement, and complying with CERCLA and the NCP.
Does the U.S. EPA intend to review each loan application?
No. While the U.S. EPA does anticipate being sub stantially involved in the BCRLF program, the
Agency does not intend to review individual loan applications.
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Section IV Roles and Responsibilities
Overview
1. Functions
2. Institutional
Alternatives
There are four key roles and functions under the cooperative agreement. They
include:
The Cooperative Agreement Recipient, who enters into the cooperative
agreement with the U.S. EPA, receives BCRLF pilot funding from the U.S.
EPA, and is legally responsible to the U.S. EPA for managing funds, ensuring
proper environmental cleanups, and complying with all applicable laws and
regulations.
As Lead Agency, the cooperative agreement recipient is responsible for
ensuring that environmental cleanups conducted using BCRLF pilot funds are
conducted in accordance with the cooperative agreement and CERCLA and are
consistent with the NCP.
May the lead agency be a private party?
No. For the BCRLF program, the lead agency must be the cooperative agreement recipien t
itself (i.e., state, political subdivision, etc. selected as cooperative agreement recipient). The
lead agency may engage the services of another government organization or private entity to
support lead agency functions.
The Brownfields Site Manager, who is designated by the lead agency and is
responsible for overseeing cleanups at specific sites. The brownfields site
manager must be a qualified government employee (see definition of OSC in
40 C.F.R. §300.5.). One brownfields site manager must be responsible for each
site, but a single manager may be responsible for more than one site.
The fund Manager, who is responsible for ensuring that the BCRLF is
managed in conformance with the cooperative agreement, applicable laws and
regulations, and prudent lending practices. The fund manager may be a
cooperative agreement recipient or a private lender or other private entity that
has entered into a written agreement with the cooperative agreement recipient.
May a private lender serve as fund manager as long as they meet the requirements of
the BCRLF program?
Yes, under a written agreement with the cooperative agreement recipient, a private lender or
other qualified private entity may serve as a fund manager.
Cooperative agreement recipients may be able to fill all BCRLF roles in-house, but
many recipients likely will seek expertise from one or more other entities that have
experience administering loan funds and/or carrying out environmental cleanups.
The cooperative agreement recipient may obtain services of other qualified agencies,
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Section IV Roles and Responsibilities
Overview
organizations, or individuals to help perform its functions as lead agency or fund
manager. Cooperative agreement recipients seeking expert assistance could look to
such organizations as other revolving loan fund programs, such as those
administered by the U.S. Economic Development Administration, U.S. Department
of Housing and Urban Development, and the U.S. Small Business Administration,
infrastructure banks or state revolving fund programs, or another city, county, or
department.
A wide variety of institutional alternatives exist for BCRLFs due to the differing
nature of program needs from location to location. The cooperative agreement
recipient, however, remains the entity legally responsible for carrying out all terms
and conditions of the cooperative agreement.
Entities that are likely candidates to help provide services for a BCRLF operation
include, but are not limited to:
Economic development offices;
Environmental management offices;
Executive offices (mayor's, governor's, and county executive's offices);
Government finance departments;
Metropolitan planning organizations (MPOs);
Offices of management and budget;
Public works departments;
Public engineering agencies;
Transportation departments;
Environmental consultants;
Non-profit community development; and
For-profit and not-for-profit corporations.
Flexibility in the BCRLF program enables a cooperative agreement recipient to
coordinate with other public, private, or non-profit organizations such as those listed
above to take advantage of financial, environmental, project management,
administrative, and other specialized personnel. A BCRLF can therefore be
comprised of personnel from two or more organizations.
It is expected that BCRLF proposers will have given significant thought to potential
institutional arrangements in developing their proposals and will have selected the
one that best meets the pilot program's threshold criteria and most strongly
demonstrates a cooperative agreement recipient and any partners' abilities to
manage a revolving loan fund and environmental cleanups.
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3. Written
Commitments
Could the BCRLF be administered by the cooperative agreement recipient, perhaps using
the services of a review consultant under contract to the recipient to address technical
issues?
Yes. Institutional arrangements of the BCRLF c ooperative agreement are intentionally flexible.
The cooperative agreeme nt recipient may fulfill BCRLF roles/responsibilities itself or may use
agreements or contracts with other public or private organizations to support lead agenc y
functions or to serve as fund manager. The role of brownfields site manager must b e
performed by a gove rnment employee (e.g., local, tribal, state government). The brownfields
site manager may oversee a private party that is employed to conduct site managemen t
activities.
Cooperative agreement recipients wishing to enlist the services of other government
entities or private parties to assist with the activities required to fulfill the
responsibilities of lead agency or fund manager, must use written commitments to
secure such services. Any transaction involving a transfer of cooperative agreement
funds must comply with 40 C.F.R. §35.6550 through §35.6610. Cooperative
agreement recipients cannot enter into intergovernmental agreements or award
subgrants. BCRLF cooperating parties (i.e., organizations supporting fund manager
and lead agency roles) must establish some type of written commitment such as
contracts, by the time the final workplan is being negotiated so that they may be
incorporated by reference (if necessary) into the terms and conditions of that
agreement. If these written commitments are not in place, the cooperative
agreement recipient may not start work until the substantive terms are submitted
to the U.S. EPA for approval. BCRLF pilot applicants should provide some
indication of the intent of all cooperating parties to establish such an agreement(s)
(e.g., a letter of intent or the equivalent) along with their proposal package.
What type of agreements must the cooperative agreement recipient have with other
agencies that may be assisting with the activities of lead agency and/or fund manager?
At what point in time must these agreements be established?
Cooperative agreement recipients must have written commitments (e.g., contracts ,
intergovernmental agreements, and/or memoranda of understanding) by the time th e
cooperative agreement is being negotiated so that they may be reviewed and approved by the
U.S. EPA and incorporated by reference (if necessary) into the terms and conditions of tha t
agreement. Ideally, they should be established as part of the cooperative agreement package
before the award is signed. If these commitments are not in place, the cooperative agreement
recipient may not start work until the substantive terms of the agreement are submitted to EPA
for approval.
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Section V BCRLF Environmental Response
Requirements
D. BORROWER
RESPONSIBILIT
IBS
Although the cooperative agreement recipient retains primary control and final
decisionmaking authority over BCRLF response activities conducted using BCRLF
funds, it is expected that a borrower will actively participate in developing and
conducting a particular BCRLF response.
Borrowers are allowed to use BCRLF funds only for eligible activities (see Section III,
Eligible BCRLF Cooperative Agreement Fund Uses and Program Activities'). Borrowers
Can cooperative agreement recipients award subgrants to non-profit organizations?
No. Non-profit o rganizations are ineligible to receive CERCLA 104(d) cooperative agreements
and are therefore ineligible for subgrants. Cooperative agreement recipients may awar d
contracts to such organizations provided they follow applicable procurement procedures in 40
C.F.R. Part 35.
also will be required to document their use of funds. Such documentation must be
kept for a minimum of ten years after completion of the cleanup activities supported
by the loan or for the length of the loan, whichever is longer (see Section VILE.,
Reporting and Audit). Written approval of the lead agency must be obtained prior to
destroying any records.
Cooperative agreement recipients are responsible for ensuring that BCRLF
borrowers meet all relevant requirements. The EPA will have no direct contractual
ties with individual borrowers. Instead, cooperative agreements shall specify those
requirements that the BCRLF will impose on its borrowers. The EPA, through its
monitoring and oversight, will verify that the cooperative agreement recipient is
sufficiently fulfilling its responsibilities.
The cooperative agreement recipient must ensure that borrowers comply with all
applicable Federal and state requirements as well as the intent of the BCRLF
program. The requirements placed on the borrower should be spelled out in the
loan agreement, including both environmental and financial compliance
components.
V. BCRLF Environmental Response Requirements
Contents
A. Applicable Au
;hority
V-3
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B. Environmental Response Requirements V-3
1. Determining if a BCRLF Response is Authorized V-3
2. Selecting a BCRLF Response V-6
3. Community Relations and Public Involvement in BCRLF Response Actions V-9
4. Implementation of Response Action and Ongoing Activities V-ll
5. Completion of BCRLF Response V-12
6. Administrative Record V-13
C. Use of State Voluntary Cleanup Programs V-14
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Section V BCRLF Environmental Response
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V. BCRLF Environmental Response Requirements
A.
APPLICABLE
AUTHORITY
B.
ENVIRONMENT
AL RESPONSE
REQUIREMENT
s
1. Determining
if a BCRLF
Response is
All environmental response activities carried out using BCRLF demonstration pilot
funds must be in accordance with the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA) and consistent with the National Oil
and Hazardous Substances Pollution Contingency Plan (NCP), located in 40 C.F.R.
Part 300. BCRLF funds may only be used to carry out non-time critical removal
activities authorized by CERCLA and the NCP (for purposes of this discussion, the
term "BCRLF response" is equivalent to "non-time critical removal action").
Is compliance with the NCP required?
Yes, all environmental respons e activities carried out using BCRLF demonstration pilot funds
must be consistent with the NCP at 40 C.F.R. Part 300.
CERCLA provides authority to the U.S. EPA, and to a state, or political subdivision
of a state, an Indian Tribe, etc. operating pursuant to a §104(d) cooperative
agreement, to respond to the release, or substantial threat of release, of any
hazardous substance into the environment. The NCP establishes the responsibilities
of the "lead agency" and various organizations that participate in responses,
describes how coordination is to occur among these entities, outlines criteria for
determining the appropriate response, discusses community involvement and
public participation requirements, explains response action implementation
activities, and establishes procedures for preparing administrative records that
support the selection of response actions.
The following discussion is intended to highlight and clarify particular requirements
of CERCLA and the NCP in the context of the BCRLF demonstration pilot program
and the responsibilities of the BCRLF lead agency. It is not intended to apply to,
and should not be used for, anything other than BCRLF response actions. It is not
intended as a substitute for the statute or the regulations.5
Prior to lending BCRLF funds for a response action at a particular site, the lead
agency must first determine that a BCRLF response is authorized by CERCLA and
the NCP. The lead agency must make this determination based on a site evaluation
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Authorized
(its own and/or on site evaluation information submitted by the potential borrower),
and current site conditions. Potential borrowers are strongly encouraged to include
site evaluation information in their initial application to the lead agency.6
Site evaluations are described in the NCP at 40 C.F.R. §300.410. It is expected that
an American Society for Testing and Materials (ASTM) Phase I/Phase II assessment
will generally provide most of the information necessary for the lead agency to
determine whether a BCRLF response is authorized. A lead agency also may
require the borrower to submit additional site evaluation information. Any data
generated by anyone including the lead agency must conform to the NCP at 40
C.F.R. §300.415 (b)(4)(ii) in order to be used as a basis for any findings or decisions
by the lead agency.
What site evaluations are required to determine if a BCRLF response is authorized?
Site evaluations are described in the NCP at 40 C.F.R. §300.410. It is expected that a n
American Society for Testing and Materials (ASTM) Phase I/Phase II assessment wil I
generally provide most of the information necess ary for the lead agency to determine whether
a BCRLF response is authorized. Potential bo rrowers are strongly encouraged to include site
evaluation information in their initial application to the lead agency.
To determine whether a BCRLF response is authorized, the lead agency must make
findings (a) - (e) on a site-by-site basis and must document its findings in a signed
memorandum. It is recommended that determinations regarding the eligibility of
the potential borrower and eligible sites also be made at this time. Note that, if
responsible parties are known, the cooperative agreement recipient (lead agency)
must initially, to the extent practicable, make an effort to determine whether the
responsible party can and will perform the necessary removal action promptly and
properly (see NCP at 40 C.F.R. §300.415(a)(2)). For purposes of this effort, a
"responsible party" does not include an entity which meets the borrower eligibility
criteria summarized in Section VLB, Establishing the BCRLF Financial Plan.
The lead agency must make the following findings:
(a.) There is a release, or substantial threat of release, of any hazardous substance
into the environment, or there is a release, or substantial threat of release, of a
pollutant or contaminant into the environment which may present an imminent
and substantial danger to the public health or welfare (see CERCLA §104(a)(l)).
"Hazardous substance" is defined at CERCLA §101(14) and the list of hazardous substances
is at 40 C.F.R. §302.4. "Pollutant or contaminant" is defined at CERCLA §101(33).
BCRLF response actions may not be undertaken at site contaminated with unlisted
petroleum except to address a non-petroleum hazardous substance (e.g., a co-mingled waste).
CERCLA expressly excludes petroleum from the definition of hazardous substance and
pollutant or contaminant. The term "release" is defined at CERCLA §101(22).
"Environment" is defined at CERCLA §101(8).
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What type of release must the lead agency find to determine that a BCRLF response is
authorized?
The lead agency must find that there is a release, or substantial threat of release, of an y
hazardous substance into the environment (as defined at CERCLA §101(14)), or that there
is a release or substantial threat of release, o f a pollutant or contaminant into the environment
which may present an imminent and substantial danger to the public health or welfare (see
CERCLA §104(a)(1)).
(b.) The release does not involve: (1) a naturally occurring substance from a
location where it is naturally found; (2) a product that is part of the structure, and
results in exposure within, a residential building or business or community
structure (e.g., interior lead-based paint or asbestos which results in indoor
exposure); or (3) a public or private drinking water supply that has deteriorated
through ordinary use (see CERCLA §104(a)(3) and (4)).
If the release involves any of the substance(s) described above, BCRLF funding may not be
used for a BCRLF cleanup, except as determined on a site-by-site basis and approved by U.S.
EPA Headquarters, consistent with CERCLA §104(a) (3) and (4).7
(c.) A removal is appropriate because there is a threat to public health or welfare
or the environment (see NCP at 40 C.F.R. §300.415(b)(l)).
The lead agency must consider the following factors in making this determination:
1. Actual or potential exposure to nearby human populations, animals, or the food
chain from hazardous substances or pollutants or contaminants;
2. Actual or potential contamination of drinking water supplies or sensitive
ecosystems;
3. Hazardous substances or pollutants or contaminants in drums, barrels, tanks, or
other bulk storage containers, that may pose a threat of release;
4. High levels of hazardous substances or pollutants or contaminants in soils, largely
at or near the surface, that may migrate;
5. Weather conditions that may cause hazardous substances or pollutants or
contaminants to migrate or be released;
6. Threat of fire or explosion;
7. The availability of other appropriate Federal or state response mechanisms to
respond the release; and
8. Other situations or factors that may pose threats to public health or welfare of the
U.S. or the environment.
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2. Selecting a
BCRLF
Response
(d.) Sufficient time is available to plan and select a BCRLF response and to
implement the community relations and public involvement activities before any
on-site cleanup activities may take place.
BCRLF funds may only be used at a site where the lead agency determines that this planning
period exists. The lead agency must ensure that all NCP requirements regarding planning
and selecting a BCRLF response, community relations and public involvement, and the
administrative record have been met prior to initiating any on-site cleanup activity.
Community relations and public involvement requirements in BCRLF actions are further
discussed in Section V.B.3, Community Relations and Public Involvement in BCRLF
Response Actions.
If a state or local government have public participation requirements associated with
its cleanup and economic development programs, will they suffice for BCRLF response
actions?
BCRLF response actions must, at a minimum, meet NCP public participation requirements.
If the state or local government requirements meet or exceed the NCP requirements, then
their community relations and public involvement activities will suffice. However, state and
local government publi c participation requirements must at a minimum meet those outlined
in Section V.B.3., Community Relations and Public Involvement in BCRLF Response Actions.
(e.) Cleanup of the site will contribute to brownfields revitalization.
BCRLF funds may only be used to conduct response actions at brownfields sites, and the lead
agency should consider whether cleanup will significantly contribute to local community
revitalization.
The lead agency is responsible for conducting an analysis of BCRLF response
alternatives for a site and must ensure that an appropriate BCRLF response action
is selected (see the NCP at 40 C.F.R. §300.415(b)(4)(i)). This analysis is referred to as
an "engineering evaluation/cost analysis (EE/CA) or its equivalent" in the NCP.
The EE/CA or its equivalent should identify the objectives of a BCRLF response and
analyze the effectiveness, feasibility, and costs of alternatives that also would satisfy
BCRLF response objectives. As part of this analysis, the lead agency should
consider whether a BCRLF response may take more than 12 months. BCRLF
response actions may last only 12 months.8 This restriction will be referred to as the
"12 month limit." The lead agency also should consider current use restrictions and
potential future land use. An ASTM Phase I/Phase II assessment may supply
sufficient information to conduct the EE/CA or its equivalent. The lead agency may
rely on information supplied by the potential borrower to conduct this analysis.
(a.) Sampling and analysis plan
The lead agency must develop sampling and analysis plans that provide a process
for obtaining data of sufficient quality and quantity to satisfy data needs, if
environmental samples are to be collected. Any data generated by anyone,
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Section V BCRLF Environmental Response
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including the lead agency, must conform to the NCP at 40 C.F.R. §300.415 (b)(4)(ii)
in order to be used as a basis for any findings or decisions by the lead agency. Note
that 40 C.F.R. Part 35, Subpart O requires submission of a quality assurance project
plan and sampling plan to the U.S. EPA. Field work may not begin until the U.S.
EPA approves the plan.9 Sampling and analysis plans must consist of two parts:
(i) The field sampling plan which describes: the rationale; the number, type, and
location of samples; and the type of analyses and data quality objectives.
(ii) The quality assurance project plan which describes: policy, organization, and
functional activities; and the data quality objectives and measures necessary to
achieve adequate data for use in planning and documenting the removal action.
What information does the EE/CA, or its equivalent, require?
The EE/CA, or its equivalent, should identify the objectives of a BCRLF response and analyze
the effectiveness, feas ibility, and costs of alternatives that also would satisfy BCRLF response
objectives. An American Society of Testing and Materials (ASTM) Phase I/Phase II sit e
assessment submitted by the borrower may supply sufficient information for the lead agency
to conduct an "engineer! ng evaluation/cost analysis (EE/CA) or its equivalent," as described in
the NCP.
(b.) BCRLF response actions that may be taken
BCRLF funds may only be used to support removal activities authorized by
CERCLA and the NCP. "Removal" is defined in CERCLA §101(23). Removal
activities include actions associated with removing, mitigating, or preventing the
release or threat of release of a hazardous substance, pollutant, or contaminant (as
appropriate to different site situations). Some specific examples of removal activities
are described in the NCP at 40 C.F.R. §300.415(e) and include:
Fences, warning signs, or other security or site control precautions;
Drainage controls;
Stabilization of berms, dikes, or impoundments or drainage or closing
lagoons;
Capping of contaminated soils;
Using chemicals and other materials to retard the spread of the release or
mitigate its effects;
Excavation, consolidation, or removal of highly contaminated soils from
drainage or other areas;
Removal of drums, barrels, tanks, or other bulk containers that contain or
may contain hazardous substances, pollutants, or contaminants;
Containment, treatment, disposal, or incineration of hazardous materials;
and
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Provision of alternative water supply where necessary immediately to
reduce exposure to contaminated household water and continuing until
such time as local authorities can satisfy the need for a permanent remedy.
(c.) Requirements of other environmental laws (i.e., ARARs)
BCRLF response actions must be designed to attain, to the extent practicable,
applicable or relevant and appropriate requirements (ARARs) under Federal
environmental or state environmental or facility siting laws (see the NCP at 40 C.F.R.
§300.415(j)). Other Federal and state advisories, criteria, or guidance may, as
appropriate, be considered in formulating the BCRLF response action (see the NCP
at 40 C.F.R. §300.400(g)(3)). Identification and evaluation of ARARs should occur
throughout the BCRLF response selection process. It is recommended that the lead
agency work with the state to identify ARARs.
"Applicable" requirements are Federal or state environmental standards that
specifically address a particular hazardous substance, pollutant, contaminant,
removal action, location, or other site specific issue. "Relevant and appropriate
requirements" are not specific (i.e., not "applicable") to the location, action, or
substance of concern, but address problems or situations similar to those
encountered at the BCRLF site (see the NCP at 40 C.F.R. §300.500 for complete
definitions of "applicable" and "relevant and appropriate" requirements).
ARARs are required for removal actions "to the extent practicable considering the
exigencies of the circumstances." In determining whether compliance with ARARs
is practicable, the cooperative agreement recipient (lead agency) should consider
appropriate factors, including:
(i) The urgency of the situation. Because BCRLF responses will be non-time critical
removal actions, it is not generally expected that compliance with ARARs will
be impracticable due to the urgency of the situation.
(ii) The scope of the removal action to be conducted. The scope of the removal action
relates to the sometimes limited scope and purpose of a removal action, e.g.,
site stabilization and mitigation of near term threats. For the BCRLF Pilot
Program, the Cooperative Agreement Recipient (lead agency) must consider
current and future land use to determine ARAR practicability. For the BCRLF
pilot program, the lead agency must consider current and future land use to
determine ARAR practicability.
(iii) In addition, even if attaining ARARs is practicable, ARARs identified for a
particular BCRLF response may be waived under the NCP (40 C.F.R.
§300.415(j)).
(d.) Post-BCRLF response site control10
The cooperative agreement recipient (lead agency) should review a borrower's
proposed response actions to assess whether post-BCRLF response site controls will
be necessary. Such site controls include actions necessary to ensure the effectiveness
and integrity of the response action after the completion of the BCRLF response or
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3. Community
Relations and
Public
Involvement in
BCRLF
Response
Actions
the 12 month limit. Post-BCRLF response site controls may be removal actions
under CERCLA; however, controls necessary beyond the 12 month limit cannot be
funded with BCRLF funds.
May BCRLF funds be used for post-BCRLF cleanup response site control?
Post-BCRLF cleanup response site controls may be removal actions under CERCLA
however, controls necessary beyond the 12 month limit cannot be funded with BCRLF funds.
(e.) Documenting the BCRLF response selection decision
The lead agency must document final selection of a BCRLF response for a particular
site in a decision document. The decision document should explain why the BCRLF
response is authorized, identify the selected action, and explain the rationale for
selecting that particular response. In addition, the decision document should
document all ARARs and provide reasons for any waivers or findings of
impracticability. See the sample "action memo" in Exhibit 1 for a model outline of
a decision document).
Prior to signing the decision document, the lead agency must ensure that the public
has had an opportunity to review and comment on the EE/CA or its equivalent, and
that a response has been provided to any significant comments (see Section V.B.3.,
Community Relations and Public Involvement in BCRLF Response Actions'). Final loan
decisions should not be made prior to signing the decision document and in no event shall
any loan decision preclude the ability of the lead agency to change a BCRLF response, or any
portion of response, based on comments from the public or on any new information acquired
by the lead agency.
Community relations and public involvement activities occur throughout the BCRLF
response and implementation process, and the BCRLF funds may be used to
support these activities. Community relations and public involvement activities are
not administrative costs, and therefore, are not subject to the Cooperative
Agreement Recipient's fifteen percent limit on such expenditures. The lead agency
must meet the requirements described in 40 C.F.R. §300.415(n) and summarized
below:
Designate a spokesperson to inform the community of actions taken,
respond to inquiries, and provide information.
Prior to completion of the engineering evaluation/cost analysis (EE/CA) or
its equivalent, conduct interviews with local officials, community residents,
public interest groups, or other interested and affected parties, as
appropriate.
Prior to completion of the EE/CA or its equivalent, prepare a Community
Relations Plan (CRP) based on community interviews and other relevant
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information, specifying the community relations activities that the lead
agency expects to undertake during the response.11
Prior to formal documentation that a BCRLF response is authorized at a
particular site, establish at least one local information repository at or near
the location of the potential response action that includes public information
related to that action and an administrative record file. The cooperative
agreement recipient (lead agency) must inform the public of the information
repository and provide notice of availability of the administrative record for
public review.
Publish notice of availability of the EE/CA or its equivalent in a major local
newspaper of general circulation.
Provide reasonable opportunity (not less than 30 days) for written and oral
comments on the EE/CA or its equivalent. Upon timely request, extend the
public comment period by a minimum of 15 days.
Prepare a written response to significant comments.
Compliance with the requirements for interviews, a CRP, and information
repository discussed above must be documented in the Administrative Record file
(see Section V.B.6., Administrative Record and the NCP at 40 C.F.R. §300.820(a)(3)).
Public participation is a critical component of developing and selecting a BCRLF
response. Final loan decisions should not be made prior to carrying out the required
community relations and public involvement activities, and in no event shall any loan
decision preclude the ability of the lead agency to change a BCRLF response, or any portion
of a response, based on comments from the public or on any new information acquired by the
lead agency.
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4. Implementation
of Response
Action and
Ongoing Activities
Exhibit 1. Sample Action Memorandum Outline
I. Purpose
II. Site Conditions and Background
A. Site Description
1. Removal site evaluation
2. Physical location
3. Site characteristics
4. Release or threatened release of a hazardous substance, pollutant, or
contaminant
5. Maps, pictures, and other graphic representations
B. Other Actions
1. Previous actions
2. Current actions
C. State and Local Authorities' Roles
1. State and local actions to date
2. Potential for continued State/local response
III. Threats to Public Health or Welfare or the Environment, and Statutory and Regulatory
Authorities
A. Threats to Public Health or Welfare
B. Threats to the Environment
IV. Proposed Actions and Estimated Costs
A. Proposed Actions
1. Proposed BCRLF response
2. Engineering Evaluation/Cost Analysis (EE/CA) or its equivalent
i. EE/CA summary or EE/CA Executive Summary
ii. Summary of written responses to public comment
3. Applicable or relevant and appropriate requirements (ARARs)
4. Project schedule
B. Estimated Costs
V. Decision to Proceed
VI. Attachments [e.g., the loan agreement (as available); a copy of the EE/CA or its
equivalent; and the lead agency's response to significant public comments]
BCRLF cooperative agreement recipients and brownfields site managers must
ensure the adequacy of each BCRLF response as it is implemented. Each loan
agreement should contain terms and conditions which allow the cooperative
agreement recipients to change response activities as necessary. In some situations,
the planned environmental response may fail to fully address the threats at a site,
or new threats may be discovered. If the selected response action will not fully
address threats posed by releases, or a borrower is unable or unwilling to complete
the response, the cooperative agreement recipient must ensure that the site is secure
and poses no immediate threat to human health or the environment. The
cooperative agreement recipient also must notify the appropriate state agency and
the U.S. EPA to ensure an orderly transition to other appropriate response activities.
Other requirements to be aware of during selection and implementation of BCRLF
response actions include:
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5. Completion of
BCRLF
Response
(a.) Subpart O site-specific information requirements
The cooperative agreement recipient (lead agency) and brownfields site manager
must ensure that applicable 40 C.F.R. Part 35, Subpart O site-specific information
requirements, including budget sheets, site description, site-specific scopes of work,
designation of the lead site project manager, and the community relation plan, are
delivered to the U.S. EPA. This obligation terminates at cooperative agreement
closeout (see Section VIII, Closeout and Additional Requirements).
(b.) Notification of natural resource trustees
The cooperative agreement recipient (lead agency) and brownfields site manager
must ensure that Natural Resource Trustees (including, but not limited to, the U.S.
Department of the Interior, the National Oceanic and Atmospheric Administration,
etc.) are promptly notified of potential damages to natural resources and must
coordinate all BCRLF activities with such affected Trustees.
(c.) Worker health and safety
The cooperative agreement recipient (lead agency) and brownfields site manager
must ensure that all Federal and state requirements for worker health and safety are
met during BCRLF response activities. 40 C.F.R. §35.6105(a)(v), Subpart O requires
the cooperative agreement recipient (lead agency) to have a site-specific health and
safety plan which complies with 29 C.F.R. §1910.120. This should be submitted with
the cooperative agreement application or an assurance must be provided that a final
plan will be in place before starting field work.
(d.) Notification of out-of-state transfer of CERCLA wastes
The cooperative agreement recipient (lead agency) must provide written notification
of off-site shipments of CERCLA waste to an out-of-state waste management facility
to the appropriate officer as described in 40 C.F.R. §35.6120, Subpart O.
At the completion of a BCRLF response, the cooperative agreement recipient (lead
agency) and brownfields site manager must, at a minimum, ensure that the closeout
report contain the following items found in 40 C.F.R. §300.165(b):
Documentation that addresses the situation as it developed;
Documentation regarding the actions that were taken;
Documentation of the resources committed; and
Documentation of any problems encountered.
What happens in the event that a project funded by a BCRLF loan must be terminated?
In the event that a project must be terminated, the lead agency is required to secure the site
(e.g., ensure public safety) and inform the U.S. EPA and the state.
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6.
Administrative
Record
The cooperative agreement recipient (lead agency) is responsible for establishing an
administrative record containing the information forming the basis for the selection
of a BCRLF response action (see the NCP at 40 C.F.R §300.800(a)). This should
generally include all site information submitted by the borrower and may include
appropriate sections of loan documents necessary to ensure cleanup requirements
are met.
As described in the community relations section above, the cooperative agreement
recipient is responsible for establishing at least one docket of information that is
available for public inspection at or near the site at issue. Information regarding the
BCRLF response action that is not required to be kept on-site is outlined in the NCP
at 40 C.F.R. §300.805(a)(l-5). Typical contents of the administrative record are found
in the NCP at 40 C.F.R. §300.810 and summarized below:
Documents containing data and information that may form the basis for
selection of a response action, including: sampling data; quality control and
assurance documentation; chain of custody forms; site inspection reports;
preliminary assessment and site evaluation reports; ATSDR health
assessments; public health evaluations; and technical and engineering
evaluations.
Guidance documents, technical literature, and site-specific policy
memoranda that may form the basis for the selection of the response action.
Documents received, published, or made available to the public for non-time
critical removal actions or the BCRLF pilot program.
Decision documents (e.g., initial determination that BCRLF response is
authorized).
An index of documents included in the administrative record file.
Certain documents generated or received after the BCRLF response selection
decision document is signed must be added to the administrative record file in
accordance with 40 C.F.R. §300.825 (see 40 C.F.R. §300.820(a)(4)).
In establishing the administrative record, cooperative agreement recipients also
should be conscious of NCP provisions governing information that need not be
included, such as privileged documents, and summaries of confidential information
(see the NCP at 40 C.F.R. §300.810(b-d)).
It is the responsibility of the cooperative agreement recipient to make the
administrative record file available for inspection at the time that the EE/CA or its
equivalent is released for public comment and review (see the NCP at 40 C.F.R.
§300.820(a)(l)).
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C. USE OF
STATE
VOLUNTARY
CLEANUP
PROGRAMS
The U.S. EPA expects that cooperative agreement recipients and borrowers may
want to conduct cleanups pursuant to their respective State Voluntary Cleanup
Program (State VCP). BCRLF funds may be used to clean up a site pursuant to a
State VCP, so long as the BCRLF response meets the substantive and procedural
requirements of CERCLA and the NCP, and all terms and conditions of the
cooperative agreement are met. The BCRLF lead agency and brownfields site
manager are responsible for ensuring that these requirements will be met on a site-
specific basis, including ensuring that appropriate terms and conditions are included
in each loan agreement.
In instances where the BCRLF pilot is located in a state with a voluntary cleanup
program (State VCP), what is the most appropriate way to handle discrepancies
between the State VCP and the NCP (e.g., differing public participation/community
involvement requirements)?
BCRLF funds may be used to clean up a site pursuant to a State VCP, so long as th e
cleanup is carried out in accordance with all terms and conditions of the cooperativ e
agreement and CERCLA and consistent with the NCP. The BCRLF lead agency an d
brownfields site manager are responsible for ensuring that these requirements will be met
on a site-specific basis.
Section V Endnotes:
5. The U.S. EPA publication "Guidance on Conducting Non-Time Critical Removal Actions Under
CERCLA," PB93-963402, the U.S. EPA 540-R-93-057, August 1993, also can be consulted for further
reference.
6. BCRLF funds, however, may not be used to fund site assessment activities.
7. The U.S. EPA guidance "Response Actions At SES with Contamination Inside Buildings," OSWER
Directive 9360.3-12, August 1993, should also be consulted for further reference.
8. BCRLF response actions may last only 12 mnths unless the U.S. EPA determines that the response
may continue (consistent with CERCLA §104(c)(l) and the NCP §300.415(b)(5)).
9. The U.S. EPA Regions may use the same process for reviewing quality assurance plans for &h
brownfields site assessment pilots.
10. See the NCP at 40 C.F.R. §300.415(1).
11. Please note that 40 C.F.R. §5.6105(a)(2)(iv), Subpart O requires that a Community Relations Plan
(CRP) be submitted to the U.S. EPA as part of the cooperative agreement. The U.S. EPA Region
managing the BCRLF demonstrationpilot cooperative agreement may consider scheduling options
for addressing this requirement on a pilot-by-pilot basis, however, field work cannot begin until the
CRP has been approved by the U.S. EPA.
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Responsibilities
VI. BCRLF Fund Manager Functions and Responsibilities
Contents
A. Introduction VI-3
B. Establishing the BCRLF Financial Plan VI-4
1. Sources of Capital for BCRLF Pilots VI-4
2. Capital Utilization VI-4
3. Types of Assistance VI-4
4. Insurance VI-5
5. Prudent Lending Practices VI-6
6. Project Selection Procedures VI-7
7. Borrower Eligibility VI-8
C. Loan Administration VI-9
1. Loan Agreements and Borrower Terms and Conditions VI-9
2. Loan Processing VI-10
3. Default Provisions VI-10
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Section VI BCRLF Fund Manager Functions and
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VI. BCRLF Fund Manager Functions and Responsibilities
A.
INTRODUCTION
This section describes the objectives and mechanics of capitalizing and operating a
BCRLF and the specific responsibilities of the fund manager in administering the
financial and loan administration components of cooperative agreements. These
methods should be considered in conjunction with the more technical requirements
and procedures outlined in Section VII, Administrative Procedures and Restrictions.
Under the BCRLF pilot program, cooperative agreement recipients are responsible
for ensuring that the fund is set up to optimize its lending potential in order to meet
demands for financial assistance in the pilot area. A cooperative agreement
recipient may conduct the necessary financial management activities itself or,
through a written commitment with another qualified entity or individual, designate
such an entity to serve as fund manager for the BCRLF (see Section IV.C.2.,
Institutional Alternatives).
The overall financial objectives of a BCRLF can be achieved by establishing a fully
revolving fund whereby initial cooperative agreement award payments and any
other start-up capitalization funds form the initial capital of the fund. These funds
are used to make loans to eligible public and private borrowers, and, within
established limitations, to pay for administrative costs of the BCRLF (see Section
VII.D., Administrative Costs). Over time, these loan funds are returned to the BCRLF,
via repayments of principal and interest. Additional funds may accrue to the fund
in the form of loan processing and other loan-related charges imposed on borrowers,
as well as interest earned on fund balances. These relationships are illustrated in the
diagram below.
Payment(s)
BCRLF Flow of Funds
Other $
Administrative
BCRLF Corpus
Disbursements
t
Principal and interest
Loans
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Section VI BCRLF Fund Manager Functions and
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B.
ESTABLISHING
THE BCRLF
FINANCIAL
PLAN
1. Sources of
Capital for
BCRLF Pilots
2. Capital
Utilization
3. Types of
Assistance
Prior to the receipt of capitalization funds for the BCRLF, cooperative agreement
recipients or their designated fund managers must establish the objectives and
financial administration of the fund. These decisions include: the source(s) and
level of capitalization and provision for utilizing program income; the types of
assistance to be offered; capital utilization provisions (i.e., the revolving nature of
the fund); underwriting principles to be followed; and assurance that all financial
restrictions on funds use are met by the BCRLF and its borrowers.
Sources of capital for BCRLF pilots include the U.S. EPA cooperative agreement
funds and may include financial contributions from participating states, political
subdivisions, Indian Tribes, or private parties (see Section VILA., Payment Procedures
and Methods of Disbursement). The BCRLF pilot program does not require cost share
or matching funds, but, as noted in the proposal guidelines, non-federal financial
participation is encouraged.12 Program income, including principal repayments on
outstanding loans, interest, and other loan-related charges are expected to
recapitalize BCRLFs as they revolve over time.
Cooperative agreement recipients are expected to manage BCRLF lending schedules
to minimize the amount of uncommitted funds, in accordance with the terms and
conditions of their agreement. Generally the terms and conditions require BCRLF
assets be managed to maintain a minimum of 50 percent of the BCRLF capital
loaned out or committed at all times. The U.S. EPA Regions may negotiate alternate
capital utilization standards with cooperative agreement recipients in their
jurisdiction.
As currently envisioned, the primary form of financial assistance to be provided by
a BCRLF to eligible borrowers is a direct loan. Such loans may be provided at
below-market interest rates, but not less than zero percent (see discussion of interest
rates below). There also is no limit on the size of individual loans.
The use of BCRLF assets to provide other forms of financial assistance, such as
financial guarantees, etc. may be considered on a case-by-case basis. If a cooperative
agreement recipient chooses to use BCRLF funds to support loan guarantees, it
must: (1) document the relationship between the expenditure of CERCLA 104(d)
funds and response actions; (2) maintain an escrow account expressly for the
purpose (see Section VII.A.3., Methods of Disbursement); and (3) ensure that any and
all response actions guaranteed by BCRLF funds are conducted in accordance with
the terms and conditions of the cooperative agreement and CERCLA and consistent
with the NCP.
In instances where cooperative agreement recipients are providing borrowers with
loan guarantees rather than direct loans, the cooperative agreement recipient will
not receive payment from the U.S. EPA until the guaranteed loan has been issued
from a bank or other financial institution. That is, loans guaranteed with BCRLF
funds may only be made available on an as-needed basis for specific cleanup
activities. Funds used to provide the guarantee should remain in escrow and return
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4. Insurance
to the cooperative agreement recipient only when borrowers repay the guaranteed
loans. Escrow accounts should be established consistent with the standards for
"disbursement" of grant funds discussed by the General Accounting Office in 64
Comp. Gen. 96 (1984).
May BCRLF monies be used for loan guarantees?
Yes. If the cooperative agreement recipient chooses to use BCRLF funds to support a loa n
guarantee approach, the cooperative agreement recipient must: (1) document the relationship
between the expenditure of CERCLA 104 (d) funds and response actions; (2) maintain a n
escrow account expressly for this purpose, by following disbursement requirements described
below; and (3) ensure that response actions guaranteed by BCRLF funds are conducted i n
accordance with the terms and conditions of the cooperative agreement and CERCLA and are
consistent with the NCR.
To ensure that funds transferred to the cooperative agreement recipient are credited a s
disbursements of assisted funds, the escrow account supported by the loan guarantees must
be structured in accordance with the standards of 64 Comp. Gen. 96 (1984). To qualify as a
disbursement: (1) the recipient c annot retain the funds; (2) the recipient must not have access
to the escrow funds on demand; (3) the funds must remain in escrow unless there is a default
of a guaranteed loan; (4) the organization holding the escrow must be a bank or simila r
financial institution that is independent of the recipient; and (5) there must be an agreemen t
with participating finan cial institutions which documents that the financial institution has made
a guaranteed loan to clean up a brownfields site i n exchange for access to funds held in escrow
in the event of a default by the borrower.
Any obligations that the cooperative agreement recipient incurs for loan guarantees
in excess of the BCRLF award are the responsibility of the cooperative agreement
recipient. Cooperative agreement recipients are further required to communicate
the terms of their cooperative agreements and the limits described herein to all
participating banks and borrowers.
A cooperative agreement recipient may purchase insurance, including
environmental insurance, if the expense is incidental to costs it incurs as a lead
agency associated with a specific loan agreement or site cleanup. Purchase of
environmental insurance by a cooperative agreement recipient is subject to the 15
percent administrative cost limit (see Section VII.D., Administrative Costs).
May a cooperative agreement recipient use the BCRLF funds to purchase insurance,
including environmental insurance?
Yes. Purchase of insurance, including environmental insur ance, is an allowable administrative
cost for the cooperative agreement recipient, if the expense is incidental to costs it incurs as
a lead agency associated with a specific loan agreement or site cleanup. Unlike borrowers,
such insurance does count against the 15 percent limit on cooperative agreement recipient
administrative costs.
If a cooperative agreement recipient wishes to use BCRLF funds for the sole purpose o f
purchasing environmental insurance, approval from the EPA Headquarters must be obtained.
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Section VI BCRLF Fund Manager Functions and
Responsibilities
5. Prudent
Lending
Practices
Borrowers also may purchase insurance, including environmental insurance, if the
expense is incidental to, and associated with BCRLF costs it incurs for site-specific
cleanup activities (e.g., workers compensation). Unlike for a cooperative agreement
recipient, incidental insurance purchased by a borrower is not counted against the
borrower's ten percent limit on administrative costs.
May BCRLF funds be used by the borrower to pay for insurance, including
environmental insurance, associated with site cleanup?
Yes. Purchase of insurance, including environmental insurance, by the borrower usin g
BCRLF funding, is allowable if the expense is incidental t o, and associated with BCRLF costs
it incurs for site-specific cleanup activities. Insurance coverage that is purchased by th e
borrower associated with a specific cleanup activ ity is not counted against the borrower's ten
percent limit on administrative costs.
U.S. EPA Headquarters approval must be obt ained if the borrower wishes to use the BCRLF
funds for the sole purpose of purchasing environmental insurance.
With the U.S. EPA Headquarter's approval, BCRLF funds may be used by a
borrower for the sole purpose of purchasing environmental insurance if the
purchase of such insurance is necessary to carry out other removal activities.
Removal activities associated with BCRLF funded insurance must be carried out in
accordance with the terms and conditions of the cooperative agreement, CERCLA
and the NCP.
Cooperative agreement recipients should ensure that necessary institutional and
personnel structures are in place to maintain the BCRLF and meet long-term
brownfield cleanup and lending objectives. BCRLF cooperative agreement
recipients must operate the BCRLF in accordance with lending practices generally
accepted as prudent for Federally-assisted public loan programs.
Prudent underwriting principles include those related to the establishment of
interest rates, repayment terms, and collateral requirements (discussed below), as
well as practices covering loan processing, documentation, loan approval,
collections, servicing, administrative procedures, and recovery actions (discussed
later in this section).
(a.) Interest rates
Fund managers may make loans to eligible borrowers at interest rates that are less
than or equal to the market interest rate, but not less than zero percent. The
cooperative agreement recipient is responsible for identifying in the cooperative
agreement workplan the method it will use to determine the "prevailing" market
interest rate at the time a particular loan is executed with a borrower.
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6. Project
Selection
Procedures
(b.) Repayment terms
As a condition of the cooperative agreement, BCRLF cooperative agreement
recipients are required to develop a plan for how repayment terms on individual
loans will be determined. This plan should provide enough detail to assure the U.S.
EPA that loans will be repaid in a timely and efficient manner. It is not necessary
for these plans to specify the details of individual loan repayment schedules, since
these conditions will vary based upon the needs of individual borrowers.
No requirements for the length of the term of a loan repayment have been
established. The cooperative argument recipient is simply expected to use sound
judgement and apply standard practices when establishing loan durations.
(c.) Security
BCRLF cooperative agreement recipients are required to obtain adequate and
appropriate financial security from borrowers and to act diligently to protect the
interests of the revolving loan fund through collection, foreclosure, or other recovery
actions on defaulted loans. The U.S. EPA requires that cooperative agreement
recipients ensure that all loans are properly secured, but leaves the details of the
collateral to the cooperative agreement recipient as an operational decision. The
recipient should determine, on a case-by-case basis, whether a lien on the brownfield
site is appropriate collateral. Other collateral may include security interests in
equipment, accounts, and personal guarantees.
Each cooperative agreement recipient or designated fund manager, in cooperation
with the lead agency, is responsible for developing a systematic approach for
selecting borrowers and projects that are eligible for funding (see Section III.B.,
Eligible Sites; Section III.C, Ineligible Sites; and Section V, BCRLF Environmental
Response Requirements Applicable Authority). It is the responsibility of cooperative
agreement recipients to establish appropriate project selection criteria consistent
with Federal and state requirements, the intent of the BCRLF program, and the
cooperative agreement entered into with the U.S. EPA.
Cooperative agreement recipients must identify procedures for determining how
potential borrowers are qualified to direct proposed cleanup and redevelopment
activities. For program operation, it is expected that cooperative agreement
recipients will develop a formal protocol for potential borrowers to demonstrate
eligibility, based on the procedures described in the proposal and cooperative
agreement application. Such a protocol may include descriptions of projects that
will be financed, how loan monies will be used, and qualifications of the borrower
to make legitimate use of the funds. Additionally, cooperative agreement recipients
may ask borrowers for an explanation of how a project, if selected, would be
consistent with BCRLF program objectives.
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Section VI BCRLF Fund Manager Functions and
Responsibilities
1. Borrower
Eligibility
Are there any requirements for the term of repaying loans to the cooperative agreement
recipient as BCRLF lender?
No. There are not any requirements for the length of repayment period(s). However, th e
cooperative agreement recipient is expected to use sound judgement and standard practices
when establishing the overall loan terms (i.e., length of repayment, repayment start date ,
security, and amortization) of loans. The requirement for interest rates is as follows: a
cooperative agreement recipient may make loans with interest rates that are less than or equal
to the market interest rate, including zero percent loans. Negative interest rates are not
allowed. The cooperative agreement recipient is responsible for identifying in the cooperative
agreement the meth od it will use to determine the "prevailing" market interest rate at the time
a particular loan is executed with a borrower.
When several project borrowers are competing for BCRLF funds, cooperative
agreement recipients should be prepared to substantiate methods and reasons for
choosing one project over another. Project selection systems may be subject to
review to ensure that BCRLF program objectives are being met.13 However, the U.S.
EPA will not make decisions on individual loans.
Each fund manager should work with its respective BCRLF lead agency to establish
borrower eligibility provisions and ensure they are met. Generally, eligible
borrowers include any public or private entities with control over or access to an
eligible site (as defined in Section III. B., Eligible Sites).
Some restrictions do apply on the eligibility of potential borrowers. They are listed
below.
A cooperative agreement recipient may not lend to itself.
A party which is determined to be a generator or transporter of
contamination at a brownfields site(s) is ineligible for a BCRLF pilot loan for
that same site.
The cooperative agreement recipient's lead agency may initially find that an
owner/operator of a brownfields site(s) is an eligible borrower for a BCRLF
pilot loan for that same site only if: the lead agency can determine that an
owner/operator would fall under a statutory exemption from liability; or
that the U.S. EPA could use its enforcement discretion and not pursue the
party in question under CERCLA, as described by the U.S. EPA guidance
(see Appendix F, List of the U.S. EPA Brownfields Policy and Guidance).
However, initial findings of the lead agency by no means limit the
enforcement discretion or authority of the Federal or state government. The
lead agency must maintain documentation demonstrating the eligibility of
the owner/operator (see Appendix B, Proposal Guidelines for BCRLF
Demonstration Pilots).
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C. LOAN
ADMINISTRATI
ON
1. Loan
Agreements and
Borrower Terms
and Conditions
Section VI BCRLF Fund Manager Functions and
Responsibilities
A borrower must submit information regarding its environmental
compliance history. The cooperative agreement recipient will strongly
consider this history in its analysis of the borrower as a cleanup and business
risk.
Each borrower must certify that they are not currently, nor have they been,
subject to any penalties resulting from environmental non-compliance at the
site subject to the loan.
Someone that has been suspended, debarred, or otherwise declared
ineligible cannot be a borrower.
If a city is the cooperative agreement recipient, may it lend BCRLF dollars to another
government agency (i.e., a Redevelopment Agency) if that agency is part of the same
municipal government?
No. An entity would not be eligible to be a borrower if the entity is an agency of the sam e
government as the cooperative agreement recipient, unless a state or local law establishes
that the agency may borrow money from the political jurisdiction of the cooperativ e
agreement recipient and raise funds to pay the loan back (otherwise the state or city would
be lending money to itself).
Is the cooperative agreement recipient eligible to be a borrower? What if an organization
is filling any of the roles (lead agency, fund manager, or site manager)?
No, a cooperative agreement recipient may not lend to itself. The cooperative agreemen t
recipient also must establish and enforce conflict of inte rest provisions governing the roles and
responsibilities of the lead agency, fund manager, brownfields site manager, and borrower.
BCRLF fund managers are responsible for ensuring that the overall objectives of the
fund are met through the selection and structuring of individual loans and lending
practices. Such practices include the management of loan funds and timing of
disbursements.
There are a number of general terms and conditions that BCRLF borrowers must
agree to in order to receive a loan or other financial assistance from the BCRLF. It
is the responsibility of the fund manager to work with the lead agency to establish
appropriate terms and conditions in general and for individual borrowers. The fund
manager must consult with the lead agency in developing loan agreements to
ensure that all environmental cleanup requirements will be met and to ensure that
BCRLF monies are used only for authorized activities (see Section V.A., Applicable
Authority; Section III, Eligible BCRLF Cooperative Agreement Fund Uses and Program
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2. Loan
Processing
3. Default
Provisions
Section VI BCRLF Fund Manager Functions and
Responsibilities
Activities; and Section VILE., Reporting and Audit).
BCRLF fund managers must establish procedures for handling the day-to-day
management and processing of loans and repayments. These procedures include
coordination with the U.S. EPA on funds payment as well as disbursement of loans
to borrowers. All loan processing procedures will be subject to the Single Audit Act
of 1984, as amended, as implemented by OMB Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations and 40 C.F.R. Part 31 (see Section VILA.,
Payment Procedures and Methods of Disbursement).
Cooperative agreement recipients may choose to disburse funds to borrowers by
means of "schedule" or "actual expense." A schedule disbursement is one in which
all or an agreed upon portion of the obligated funds are disbursed on the basis of
an agreed upon schedule (e.g., progress payments) or upon execution of the loan.
An actual expense disbursement approach requires the cooperative agreement
recipient to submit documentation of the borrower's expenditures (e.g., invoices or
other contractual agreements) to the U.S. EPA Regional BCRLF project officer to
request payment (see Section VILE., Reporting and Audit).
In the event of a loan default, the BCRLF cooperative agreement recipient must
make reasonable efforts to enforce the terms of the loan agreement including
proceeding against the assets pledged as collateral to cover losses to the loan.
Differences between assets seized and outstanding loan balances should be
considered unrecoverable losses to the fund. If the cleanup is not complete at the
time of default, the BCRLF cooperative agreement recipient is responsible for: (1)
documenting the nexus between the amount loaned to the borrower or, in the case
of guaranteed loans, the amount paid to the bank or other financial institution and
the cleanup that took place prior to the default; and (2) securing the site (e.g.,
ensuring public safety) and informing the U.S. EPA and the state. The EPA will not
make any financial decisions regarding the default of BCRLF loans. Recipients may
consult with the U.S. EPA on these matters, but recipients ultimately must exercise
their own discretion regarding loan default. However, the U.S. EPA may be
involved in cleanup decisions regarding the default of BCRLF loans.
Will the U.S. EPA make any decisions regarding loan defaults?
No. The U.S. EPA will not make any financial decisions regarding the default of BCRLF
loans. However, the U.S. EPA may be involved in cleanup decisions regarding default
of BCRLF loans.
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Section VI BCRLF Fund Manager Functions and
Responsibilities
Could a cooperative agreement recipient be liable for cleanup costs if the borrower
defaults on the loan, or if the borrower fails to complete the cleanup in compliance
with CERCLA requirements?
Maybe. Whether a cooperative agreement red pient becomes liable for cleanup costs under
CERCLA §107 will depend upon the facts of the particular situation. CERCLA §107
generally imposes liability on owners and operators of facilities with hazardous substances
and persons who arranged for disposal, treatment or transportation of hazardou s
substances. Whether BCRLF participa nts are liable under CERCLA §107 will depend upon
the facts of the particular situation. The following provisions may limit the liability o f
BCRLF participants: Section 107(d) exempts from liability actions "in the course o f
rendering care, assistance, or advice in accordance with the [NCR]" except as the result of
negligence. Section 107(d)(2) exempts from liability state or local government actions "in
response to an emergency created by the release or threatened release of a hazardou s
substance," except as a result of gross negligence or intentional misconduct."
Section 101(20), as revised by the "Asset Conservation, Lender Liability, and Deposi t
Insurance Protection Act of 1996," 104 P.L. 208, provides that the terms "owner"an d
"operator" do not include lende rs who do not participate in the management of a facility. In
addition, Section 101(20)(D ) provides that the terms "owner" and "operator" do not include
"a unit of state or local government which acquired ownership or control involuntarily...by
virtue of its function as sovereign.
Section VI Endnotes:
12. "Proposal Guidelines for Brownfields Cleanup Revolving Loan Fund," U.S. EPA, OSWER, Washington,
B.C., 500-F-97-147, April 1997.
13. The recipient's decision to make a loan is not a procurement subject to 40 C.F.R. §31.36 and 40 C.F.R
§35.6550 through §35.6610.
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Section VII Administrative Procedures and
Restrictions
VII. Administrative Procedures and Restrictions
Contents
A. Payment Procedures and Methods of Disbursement
1. Pre-payment Requirements
2. Payment Procedures
3. Methods of Disbursement
B. Use of Program Income
C. Ensuring Equivalency Standard Is Met for Cross-cutting Requirements
D. Administrative Costs
1. Cooperative Agreement Recipient
2. Borrowers
E. Reporting and Audit
1. The U.S. EPA Responsibilities
2. Cooperative Agreement Recipient Responsibilities
3. Borrower Reporting and Recordkeeping
F. Termination
1. Termination for Convenience
2. Remedies for Noncompliance
3. Recovery of the U.S. EPA Interest in BCRLF Assets
VII-3
VII-3
VII-3
VII-4
VII-5
VII-6
VII-7
VII-7
VII-7
VII-8
VII-8
VII-9
VII-11
VII-12
VII-12
VII-13
VII-13
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Section VII Administrative Procedures and
Restrictions
VII. Administrative Procedures and Restrictions
A. PAYMENT
PROCEDURES
AND METHODS
OF
DlSBURSEMEN
T
1. Pre-payment
Requirements
2. Payment
Procedures
The U.S. EPA has established procedures governing how BCRLF funds may be
transferred (i.e., paid) to cooperative agreement recipients and subsequently
disbursed to borrowers. Furthermore, the U.S. EPA has put in place requirements
regarding the use of program income, meeting cross- cutting requirements, program
audit and recordkeeping, allowable administrative costs, remedies for
noncompliance, program termination, and recovery of BCRLF assets. These
administrative procedures and restrictions are discussed below (see also Section
VLB., Establishing the BCRLF Financial Plan).
For the purposes of the BCRLF program, "payment" refers to the U.S. EPA's
transfer of funds to the cooperative agreement recipient and "disbursement" refers
to the transfer of funds from the cooperative agreement recipient to the borrower.
The cooperative agreement recipient incurs an "obligation" when it enters into a
loan agreement with a borrower.
Each cooperative agreement recipient must make positive assertions regarding its
fund management capabilities and provide necessary certifications prior to any
receipt of cooperative agreement award funds. In particular, a cooperative
agreement recipient must certify that its accounting system is adequate to identify,
safeguard, and account for all BCRLF funds, including BCRLF program income.
Certification is normally completed through an independent accountant. The
recipient also must certify that BCRLF loan documents necessary for lending are in
place and that these documents have been reviewed by the recipient's legal counsel
for compliance with applicable state and local law and compliance with the Terms
and Conditions of the award.
All payments to cooperative agreement recipients will be made consistent with 40
C.F.R. Part 35.6280. Depending on the method of disbursement established for the
cooperative agreement, recipients may request payment from the U.S. EPA after
incurring an obligation or administrative expense or based on a pre-established
schedule. Funds for cooperative agreement recipients' administrative costs (up to
15 percent of the total award) may be paid as appropriate.
The U.S. EPA will make payments to the cooperative agreement recipient on a
schedule which minimizes the time elapsing between transfer of funds from the U.S.
EPA and disbursement by the recipient. For funds covering a cooperative
agreement recipient's loan to a borrower, the recipient may request payments when
it receives a disbursement request from a borrower, based on the borrower's
incurred costs under the actual expense method or the schedule for disbursement
under the schedule disbursement method (see discussion below). The cooperative
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Section VII Administrative Procedures and
Restrictions
3. Methods of
Disbursement
agreement recipient must disburse accrued program income to meet all or part of
this obligation or administrative expenses prior to requesting payment from the U.S.
EPA.
If funds are requested but the loan agreement signing delayed, a cooperative
agreement recipient may hold funds for a reasonable time period, but should return
the funds if disbursement to borrowers is unlikely within a 30-day period. Returned
funds will be available to the recipient for future drawdown for legitimate incurred
costs. Interest earned on prematurely drawn funds must be returned to the U.S.
EPA unless there is a statutory exemption.
What is the procedure by which the U.S. EPA plans to submit payment of funds to
cooperative agreement recipients?
The method of payment will vary. The Region and the cooperative agreement recipient should
work out the method of payment at the Region's discretion.
If the Automated Clearing House (ACH) Vendor Payment System is used to comply with the
Debt Collection Improvement Act of 1996, the cooperative agreement recipient must complete
and return the Payment Information Form ACH Vendor Payment System (TFS Form 3881).
Each cooperative agreement recipient should work with its regional EPA project
officer to establish the method of payment that will be used. Appropriate methods
of payment may include the Automated Clearing House Electronic Funds Transfer
(ACH/EFT) system and U.S. Treasury check.
The ACH/EFT system wires funds directly to a cooperative agreement recipient's
bank account. If the ACH Vendor Payment System is used, the cooperative
agreement recipient must comply with all relevant provisions of the Debt Collection
Improvement Act of 1996, including completing and returning (to the U.S. EPA
project officer) the Payment Information Form ACH Vendor Payment System
(Standard Form 3881). Once the SF 3881 has been submitted and accepted, a
payment form (SF 270, Request for Advance or Reimbursement) or reimbursement form
(SF 271, Outlay Report and Request for Reimbursement for Construction Programs)
should be used to request payment, unless the cooperative agreement recipient
already uses the ACH/EFT system.
Alternatively, a U.S. Treasury check may be used for payment(s). To request
payment, each cooperative agreement recipient must submit a completed (SF 270
or 271) to the U.S. EPA.
There are two ways that the cooperative agreement recipient may elect to disburse
funds to the borrower: via an "actual expense"approach or on a pre-determined
"schedule." An "actual expense" disbursement approach requires the cooperative
agreement recipient to submit documentation of the borrower's expenditures (e.g.,
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Section VII Administrative Procedures and
Restrictions
invoices) to the U.S. EPA to request payment. A "schedule" disbursement approach
requires that all, or an agreed upon portion, of the obligated funds are disbursed to
the borrower on the basis of an agreed upon schedule (e.g., progress payments)
which may coincide with execution of the loan. If a schedule disbursement
approach is employed, the cooperative agreement recipient must submit
documentation of the agreed-upon disbursement schedules to the U.S. EPA.
What is the procedure by which cooperative agreement funds are disbursed to
individual borrowers?
The cooperative agreement recipient may choose to disburse funds to borrowers by means
of a "schedule" disbursement or via an "actual expense" mechanism. A "schedule "
disbursement is one in which all or an agreed upon portion of the obligated funds ar e
disbursed to the borrower on the basis of an agreed upon schedule which may coincide with
execution of the loan. The cooperative agreement recipient must submit documentation of
disbursement schedules to the U.S. EPA. The "actual expense" approach requires th e
cooperative agreement recipient to submit documentation of the borrower's expenditure s
(e.g., invoices) to the U.S. EPA to request payment.
B. USE OF
PROGRAM
INCOME
Program income is the gross income received by the cooperative agreement
recipient, directly generated by the cooperative agreement award or earned during
the period of the award (the time between the effective date of the award and the
ending date of the cooperative agreement, as defined in 40 C.F.R. §31.25). The terms
of the cooperative agreement allow the recipient to add program income to the funds
awarded by the U.S. EPA and use the program income under the terms and
conditions of its agreement (as defined in 40 C.F.R. §31.25(g)(2)), including eligible
administrative costs and environmental response requirements.
Program income includes principal repayments, interest earned on outstanding loan
principal, interest earned on accounts holding BCRLF program income not needed
for immediate lending, all loan fees and loan-related charges received from
borrowers, and other income generated from BCRLF operations.
Will repaid loan funds (principal and interest) be subject to the same restrictions as
the initial BCRLF assistance funds? Could, for instance, local pilots lend these funds
for other uses (e.g., petroleum sites) as long as the uses are consistent with the
objectives of the Brownfields program?
Yes, repaid loan funds are subject to the same restrictions as the initial BCRLF assistance
funds. Cooperative agreement recipients must use program income in a manner
consistent with the terms and conditions of the cooperative agreement affecting disposal of
program income, eligible costs and in accordance with CERCLA and consistent with the
NCP. Providing funds to respond to petroleum contamination would not be consistent with
these requirements.
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Section VII Administrative Procedures and
Restrictions
C. ENSURING
EQUIVALENCY
STANDARD Is
MET FOR
BCRLF cooperative agreement recipients are encouraged to earn income to defray
administrative costs and preserve the fund corpus. While up to ten percent of
principal repayments and up to 100 percent of interest and fees may be used for
administrative costs, fund managers are strongly encouraged to maximize the
lending capacity of the BCRLF (see Section VII.D., Administrative Costs). In
accounting for program income, any proceeds from the sale, collection, or liquidation
of a defaulted loan, up to the amount of the unpaid principal and any proceeds in
excess of the unpaid principal, will be treated as program income and must be
placed in the BCRLF for lending purposes or to cover administrative costs.
All program income from active BCRLF loans received by cooperative agreement
recipients should be placed immediately in the BCRLF and made available for
relending. As new loans are made, cooperative agreement recipients may request
new payments only for the difference, if any, between the amount of program
income available for relending and the amount of the new loan. As noted earlier, up
to ten percent of repaid principal and up to 100 percent of interest and fees may be
deducted from funds available for relending to cover administrative costs.
Cooperative agreement recipients are expected to maintain a fund for future
borrowing needs within the eligible lending area. To determine the amount of
program income to use for administrative expenses, fund managers should consider
the costs necessary to operate a BCRLF program, the availability of other monetary
resources, the portfolio risk level and projected capital erosions from loan losses and
inflation, the community's (or area's) financial commitment to the BCRLF, and the
anticipated demand for BCRLF loans.
Cooperative agreement recipients electing to use program income to cover all or part
of a BCRLF's administrative costs must maintain adequate accounting records and
source documentation to substantiate the amount and percent of program income
expended for eligible BCRLF administrative costs and comply with applicable Office
of Management and Budget cost principles when charging costs against program
income.14 For any costs determined by the U.S. EPA to have been an ineligible use
of program income, the recipient must reimburse the BCRLF or the U.S. EPA. The
U.S. EPA will notify the recipient of the time period allowed for reimbursement.
After the period of the cooperative agreement has elapsed, cooperative agreement
recipients are required to use program income in a manner consistent with the terms
and conditions of the cooperative agreement affecting disposal of program income,
eligible administrative costs, and environmental compliance (see Section VIII,
Closeout and Additional Requirements).
Each cooperative agreement recipient must ensure that loans made with BCRLF
funding in combination with other non-Federal funding sources, meet Federal cross-
cutting requirements to the extent of the Federal participation in the loan.
Approaches to meeting cross-cutting requirements include requiring borrowers to
segregate expenditures between Federal and non-Federal sources, meeting cross-
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Section VII Administrative Procedures and
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CROSS-
CUTTING
REQUIREMENT
s
D.
ADMINISTRATI
VE COSTS
1. Cooperative
Agreement
Recipient
cutting requirements to the extent Federal funding is included in the loan pool, and
applying cross-cutting requirements to all BCRLF loans (see Section IX.B., Applicable
Cross-cutters).
In addition to the requirements of OMB Circular A-87, the U.S. EPA places
restrictions on the level and types of administrative costs for which BCRLF funds
may be usedfor both cooperative agreement recipient and borrower administrative
costs.
May the fund manager (lender) recover administrative costs through interest rates, loan
application fees, and/or loan processing fees?
Yes. To the extent possible, cooperative agreement recipients are encouraged to set up their
BCRLF programs to recoup administrative costs through interest charges and/or loa n
application and processing fees. Cooperative agreement recipients or designated fun d
managers may use up to 100 percent of interest and fees for administrative costs. Only 10
percent of the repayments of principal may be used for this purpose.
Cooperative agreement recipients may use BCRLF pilot funds for the lead agency's
or fund manager's administrative and legal costs up to 15 percent of the total initial
award, to be determined during cooperative agreement application negotiations
with the U.S. EPA. Cooperative agreement recipients also may use up to ten percent
of repaid principal and up to 100 percent of the borrower's interest payments and
any program fees for eligible administrative costs. This is allowable for every loan
made and repaid to the fund.
What are the allowable administrative costs of the cooperative agreement recipients?
The cooperative agreement recipient may use no more than 15 percent of the total award to
cover administrative and legal costs (e.g., insurance, loan processing, professional services,
audit, legal fees, and state program fees incurred by lead agency and/or fund manager), as
negotiated by the U.S. EPA and the cooperative agreement recipient during the cooperative
agreement application process.
Furthermore, the cooperative agreement recipient may use no more than ten percent of the
borrower's principal repayments to the fund, and up to 100 percent of the borrower's interest
payments and prog ram fees (e.g., loan origination or processing fee) for administrative and
legal costs.
Allowable administrative costs include loan processing, professional services,
administering the BCRLF, audit, legal fees, and state program fees. In addition,
allowable administrative costs also may include the costs incurred by the cooperative
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Section VII Administrative Procedures and
Restrictions
2. Borrowers
E. REPORTING
AND AUDIT
1. The U.S. EPA
Responsibilities
agreement recipient in ensuring that the BCRLF borrower complies with program
requirements, such as public participation, worker health and safety, and
interagency coordination.
Borrowers may use up to ten percent of borrowed funds for administrative costs,
including costs for BCRLF response planning. Cooperative agreement recipients
should define the borrowers administrative costs in the loan agreement.
To what extent may the borrower use the BCRLF for administrative costs?
Borrowers may use up to ten percent of borrowed funds for administrative costs. It als o
should be noted that while a borrower may not use BCRLF pilot funds to conduc t
environmental response activities preliminary to cleanup, such as site assessment, sit e
identification, and site characterization, the fund manager may negotiate with the borrower a
limit of up to ten percent of the total loan to cover both administrative and BCRLF response
planning costs.
The U.S. EPA is responsible for monitoring BCRLF pilots' fulfillment of all reporting
and recordkeeping requirements. This section describes those responsibilities.
(a.) Recordkeeping
The U.S. EPA Regional Offices will provide central storage/processing of data,
reports, and evaluations related to BCRLF cooperative agreements in their region.
Quarterly reports summarizing key information will be forwarded from the Regions
to U.S. EPA Headquarters. This information may be used to address performance
measures contained in the Government Performance and Results Act (GPRA) and
other national performance measurement programs.
(b.) Program review
The U.S. EPA will conduct periodic reviews of each BCRLF to assess the success of
the award recipient in meeting goals set forth by the BCRLF cooperative agreement
workplan. The review will determine if the BCRLF is meeting program
requirements, including recordkeeping, reporting, and audit requirements.
(c.) Evaluation
The U.S. EPA may develop case studies and other information to assist in periodic
program evaluations. Program evaluation data may include: total acres cleaned up,
total number of cleanups, total number of cleanup jobs leveraged, total number of
long-term jobs leveraged, total cleanup dollars leveraged, total redevelopment
dollars leveraged, and total tax dollars generated.
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Section VII Administrative Procedures and
Restrictions
2. Cooperative
Agreement
Recipient
Responsibilities
(d.) Dispute resolution
Any cooperative agreement recipient that believes it has been adversely affected by
an agency action or omission may request a review of such action or omission as
provided in 40 C.F.R. Part 31.70.
Cooperative agreement recipients are responsible for ensuring compliance with all
necessary reporting and records management for themselves, their implementation
partners (e.g., fund manager), and their borrowers. This section describes those
responsibilities.
(a.) Deliverables
Each cooperative agreement recipient is responsible for reporting to the EPA
requested measures of performance and other program-specific milestones. These
measures will relate both to environmental cleanup and success of the loan program
(see Section VII.E.l.b., Program review and Section VILE.I.e., Evaluation). Measures
will be used to evaluate the success of the pilot in advancing the goals of the
National Brownfields Initiative. All cooperative agreement recipients will be
requested to provide measures of success and program milestones. This information
should be provided consistent with reporting intervals established by the U.S. EPA
in accordance with applicable regulations.
(b.) Records maintenance
Cooperative agreement recipients must keep records of how they select borrowers
of BCRLF loans. Beyond a simple record of borrower identity, cooperative
agreement recipients must maintain documentation of criteria met by the borrower
that explains why the borrower was selected over other interested potential
borrowers. Thus, cooperative agreement recipients will have to establish selection
criteria at the outset of the BCRLF. This may involve a threshold set of criteria and
an evaluation set, similar to those approved for the evaluation of the BCRLF
demonstration pilots. Under this scenario, all applicants would be required to meet
the threshold criteria, and could subsequently be evaluated based on the evaluation
criteria.
If the BCRLF cooperative agreement recipients include administrative or legal fees
as part of their BCRLF costs, the exact fees to be paid out of the BCRLF must be
documented. Recipients also must maintain adequate accounting records and
source documentation to substantiate the amount and percent of program income
expended for eligible BCRLF administrative costs, and also must comply with
applicable Office of Management and Budget cost principles when charging costs
against program income.
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How long must cooperative agreement recipients keep records (financial, cleanup, etc.)?
As per 40 C.F.R. Part 35.6705, a cooperative agreement recipient must maintai n
documentation for a minimum of 10 years after completion of the cleanup activity supported
by each loan and must obta in written approval from the U.S. EPA prior to destroying records.
Microform copies may be substituted for the original records, but the U.S. EPA writte n
approval must still be obtained before destroying original records. The microform copyin g
must comply with 36 C.F.R. Part 1230 and U.S. EPA Directive 2160 Records Management
Manual. Additionally, cooperative a greement recipients must maintain records regarding post
close-out program income, if applicable.
Records must be maintained in accordance with 40 C.F.R.§35.6705. At a minimum,
records must be maintained for ten years after submission of the Financial Status
Report, closeout of the cooperative agreement, completion of an ongoing audit, or
for the length of the individual loan, whichever is longest. In addition, the
cooperative agreement recipient must obtain written approval from the U.S. EPA
prior to destroying any records. Microform copies may be substituted for the
original records, but the U.S. EPA written approval must still be obtained before
destroying original records. The microform copying must comply with 36 C.F.R.
Part 1230 and the U.S. EPA Directive 2160.
(c.) Quarterly reporting
Reporting serves to keep the U.S. EPA apprised of the BCRLF's performance. As
such, the cooperative agreement recipient must report quarterly on their
performance and the reports must be submitted within 30 days of the end of each
Federal fiscal quarter. The U.S. EPA may provide information to cooperative
agreement recipients in order to elicit reporting responses from them.
At a minimum, the items included in 40 C.F.R. §35.6650 should be included in
quarterly reports. Examples of activities which cooperative agreement recipients
may include in their quarterly report:
Types of projects assisted;
Criteria used in selection of sites/borrowers;
Maintenance of adequate funds for continued brownfields assistance;
Certification of efficient and timely funds administration;
Details of separate accounts that provide loans for the purpose of cleanup of
brownfields properties; and
Provider of environmental cleanup.
Generally, reports should inform the U.S. EPA as to whether the individual BCRLF
is meeting the goals of the pilot program. The U.S. EPA regions may require
additional reporting items as necessary and appropriate to ensure cleanups are
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BCRLF'Administrative Manual
Section VII Administrative Procedures and
Restrictions
3. Borrower
Reporting and
Recordkeeping
carried out in accordance with CERCLA and consistent with the NCP.
For what period of time will cooperative agreement recipients be required to provide
quarterly reports to the U.S. EPA?
Cooperative agreement recipients will be required to submit quarterly reports to the U.S. EPA
until the end of the closeout of their cooperative agreement.
(d.) Audit
Cooperative agreement recipients must ensure that periodic audits of their programs
are conducted by an outside auditor in accordance with General Accounting Office
(GAO) accounting standards or generally accepted government auditing standards.
Furthermore, a cooperative agreement recipient must comply with all applicable
requirements of the Single Audit Act of 1984, as amended and implemented by OMB
Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. In
addition, a cooperative agreement recipient must, as a condition of making a loan,
require borrowers to maintain project accounts in accordance with generally
accepted accounting principles. For example, charges against the loan must be
properly supported, related to eligible construction costs, and documented by
appropriate record. In some cases, the U.S. EPA Office of Inspector General may
also conduct audits of specific cooperative agreements.
Cooperative agreement recipients are required to ensure that borrowers comply with
all relevant Federal and state regulations as well as the requirements of the BCRLF
program. Cooperative agreement recipients should require borrowers to document
that they are meeting their responsibilities with regard to BCRLF program objectives
in regularly submitted reports. The cooperative agreement recipient must ensure
that borrowers provide financial records on a regular basis, and maintain the records
on file for a minimum of ten years from the end of the loan term.
Individual reporting systems will vary among cooperative agreement recipients and
borrowers, but such systems should include basic accounting and control
mechanisms to help ensure legitimate use of funds and to document that funds are
put to authorized uses. It is the role of the cooperative agreement recipient to direct
the borrower in filling out necessary forms to demonstrate compliance. This will
include, for instance, any pertinent requirements to seek minority- and women-
owned businesses when choosing contractors.
How long must borrowers keep records (financial, cleanup, etc.)?
The cooperative agreement recipient must ensure that borrowers maintain documentation for
a minimum often years after the completion of the activity supported by each loan and must
obtain written approval from the lead agency prior to destroying records.
Cooperative agreement recipients must ensure that borrowers keep records of
compliance with the terms and conditions of the loans including requirements of
May 1998 Version
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BCRLF'Administrative Manual
Section VII Administrative Procedures and
Restrictions
Does the U.S. EPA intend to audit the BCRLF programs? If so, what procedures will be
used? How often will audits be conducted?
Each cooperative agreement recipient must ensure that periodic program audits are conducted
by an outside auditor in accordance with U.S. General Accounting Office (GAO) accounting
standards or generally accepted government auditing standards. Furthermore, the cooperative
agreement recipient must comply with all applicable requirements of the Single Audit Act of
1984, as amended and implemented in OMB Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations. In addition, the cooperative agreement recipient
must, as a condition of making a loan, require borrowers to maintain project accounts i n
accordance with generally accepted accounting principles.
CERCLA, the NCP, and allowable costs. A system of accounting must be in place
that is both accurate and complete. The system should charge to individual sites,
activities, and operable units. The system should have the ability to maintain
records and track site-specific costs, and track costs by activity and operable unit.
The cooperative agreement recipient must ensure that borrowers meet pre-
established financial reporting requirements, including submitting financial reports
on a regular basis (may be required as often a quarterly). Reporting mechanisms
should provide financial information by site, activity, and operable unit.
Additionally, financial reports must show amount of funds received and expended,
direct and indirect project costs, and a record of property use, procurement methods
and records, and documentation of compliance with pertinent statutes and
regulations.
Pursuant to CERCLA reporting and recordkeeping requirements, the cooperative
agreement recipient must ensure that borrowers retain records for a minimum of ten
years, unless otherwise directed. Permission must be obtained from the lead agency
before records can be removed from storage systems, once records have been in
storage for a minimum of ten years.
F.
TERMINATION
1. Termination
for Convenience
A cooperative agreement recipient may terminate the agreement for convenience of
the cooperative agreement. In the case of a partial termination, the U.S. EPA must
determine that sufficient funds remain to permit an effective BCRLF operation.
Otherwise, the agreement may be terminated in its entirety by the U.S. EPA under
40 C.F.R. §31.43 or by mutual agreement. Upon termination, the Federal share of the
funds must be returned to the Superfund Trust Fund (see Section VII.F.3., Recovery
of the U.S. EPA Interest in BCRLF Assets).
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Section VII Administrative Procedures and
Restrictions
2. REMEDIES
FOR
NONCOMPLIAN
CE
What happens if the cooperative agreement recipient wants to terminate the program and
dissolve the BCRLF? Do any limits apply to the pilots' use of remaining funds?
In case of termination, for cause or convenience, the cooperative agreement recipient mus t
return to the U.S. EPA its fair share of the value of the BCRLF assets consisting of cash ,
receivables, personal and real property, and notes or other financial instruments develope d
through the use of the funds. These assets will be returned to the Superfund Trust Fund. And
yes, limits would apply to the pilot's use of remaining funds. Use of remaining funds mus t
If the U.S. EPA determines that a cooperative agreement recipient has failed to
comply with the terms of the cooperative agreement, the Agency may take action
under 40 C.F.R. §31.43 and 40 C.F.R. §35.6760 These actions may include
temporarily withholding payments, disallowing all or part of the cost activities not
in compliance with the terms of the award, whole or partial suspension or
termination, or whole or partial annulment of the agreement.
Before taking action, the U.S. EPA may give the recipient a reasonable period of time
in which to take the necessary corrective action to comply with the terms of the
cooperative agreement. However, should it appear that an award recipient will not
take the necessary action, and/or that continued operation of the BCRLF would
place the assets at risk, the EPA may suspend the cooperative agreement
immediately under 40 C.F.R. §31.43(a)(3).
Upon suspension, the cooperative agreement recipient and its designated fund
manager could be prohibited from any new lending activity, although normal loan
servicing and collection efforts would continue. The recipient may be subject to
restrictions on the use of BCRLF program income. Further, the U.S. EPA may
recover payments to the recipient that were expended in violation of the terms and
conditions of the agreement or in violation of applicable law and regulations.
In the event that compliance problems are not resolved during the suspension
period, the U.S. EPA may identify a successor recipient to assume responsibility for
administering the BCRLF in accordance with the terms of the original cooperative
agreement. If a successor is identified, the noncompliant recipient's fund manager
is expected to cooperate fully in the transfer of assets.
When a fund manager fails to complete the initial round of lending in the time
schedule provided in the cooperative agreement, the agreement may be partially
terminated and unused cooperative agreement funds may be de-obligated and the
cooperative agreement award amended to reflect the reduced amount of the
cooperative agreement. Cooperative agreement recipients who persistently fail to
make maximum use of the available BCRLF capital, as defined by the Terms and
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Section VII Administrative Procedures and
Restrictions
3. Recovery of
U.S. EPA
Interest in
BCRLF Assets
Conditions of the agreement, will be required to return excess funds, in an amount
determined by the U.S. EPA, to the Superfund Trust Fund. This amount will not be
greater than the EPA's proportionate share of the BCRLF funds. The cooperative
agreement award will be amended to reflect the reduced amount of the U.S. EPA's
participation.
In case of termination, for cause or convenience, the U.S. EPA has the responsibility,
on behalf of the Federal government, to recover its proportionate share of the value
of the BCRLF assets consisting of cash, receivables, personal and real property, and
notes or other financial instruments developed through use of the funds. Recovered
BCRLF assets must be returned to the Superfund Trust Fund. The U.S. EPA's
proportionate share is the amount computed by applying the percentage of the EPA
participation in the total capitalization of the BCRLF to the current fair market value
of the assets thereof. In addition, the U.S. EPA has the right to compensation, over
and above its share of the current fair market value of the assets, when it is
determined that the value of such assets has been reduced by the improper/illegal
use of cooperative agreement funding.
Section VII Endnotes:
14. As appropriate, please reference Office of Management and Budget circulars A-87, "Cbs
Principles for State and Local Governments," and A-122, "Cost Principles for Non-Prctfi
Organizations."
May 1998 Version
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BCRLF Administrative Manual Section VIII Closeout and Additional
Requirements
VIII. Closeout and Additional Requirements
Contents
A. Closeout VIII-3
1. Criteria VIII-3
2. Closeout and Adjustments VIII-5
B. Post Closeout VIII-5
1. Post Closeout Requirements VIII-5
2. Post-Cooperative Agreement Program Income VIII-6
3. Post-Cooperative Agreement Reporting and Records Maintenance VIII-6
4. Repayment of Funds if BCRLF is Dissolved VIII-7
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BCRLF Administrative Manual Section VIII Closeout and Additional
Requirements
May 1998 Version
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BCRLF Administrative Manual
Section VIII Closeout and Additional
Requirements
VIII. Closeout and Additional Requirements
A. CLOSEOUT
1. Criteria
This section describes the procedures for closing out a BCRLF demonstration pilot,
as well as the requirements that cooperative agreement recipients must meet after
the period of the award. Closeout is the process that the U.S. EPA follows to
ensure that all administrative actions and work required under a cooperative
agreement have been completed, and to de-obligate any funds that a BCRLF
cooperative agreement recipient has been unable to use. Post-award requirements
are administrative, or other requirements, that continue beyond the period of the
award.
For the purposes of the BCRLF demonstration pilot program, the following
definitions apply: "payment" is the U.S. EPA's transfer of funds to the cooperative
agreement recipient; "obligation" is what the cooperative agreement recipient incurs
when it enters into a loan agreement with the borrower; and "disbursement" is the
transfer of funds from the cooperative agreement recipient to the borrower.
There are two fundamental criteria for closeout: (1) final payment of funds from
the U.S. EPA to a cooperative agreement recipient; and (2) completion of all
cleanups funded by the amount of the award. All BCRLF cleanup responses must
be completed within 12 months from the date that on-site cleanup activity is
initiated, unless the U.S. EPA determines, consistent with CERCLA §104(c)(l) and
the NCP at 40 C.F.R. §300.415(b)(5), that the response may continue.
How is the cooperative agreement closed out once the term has ended?
There are two fundamental criterion fo r closeout: (1) final payment; and (2) completion of all
cleanups funded. The first criterion of cooperative agreement closeout is met when th e
cooperative agreement recipient receives all payments from the U.S. EPA. The secon d
closeout criterion is met when all cleanups funded by the amount of the award are complete
(all cleanups are expected to be complete within 12 month s from the date that on-site cleanup
activity is initiated).
Each cooperative agreement recipient has three years from the cooperative
agreement start date to obligate all funds awarded (i.e., the BCRLF seed principal).
The schedule of obligation should be no less than 50 percent of the amount
awarded within 18 months; 80 percent within two years; and 100 percent within
three years. Final payment and disbursement of award funds must be complete
within five years from the agreement start date. Any accrued program income (i.e.,
fees, repayments of interest, repayments of principal, and other income) must be
disbursed before requesting final payment from the U.S. EPA (per 40 C.F.R.
§31.21(f)).
May 1998 Version
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BCRLF Administrative Manual
Section VIII Closeout and Additional
Requirements
Each cooperative agreement recipient has five years from the agreement start date
to request final payment from the U.S. EPA. Therefore, closeout could occur at any
point between one and five years, depending on the method of disbursement (i.e.,
schedule or actual expense) in use (see Section VILA., Payment Procedures and
Methods of Disbursement) and compliance with other terms and conditions of the
agreement.
What is the anticipated term for the cooperative agreement?
The cooperative agreement recipient has f ive years from the agreement start date to request
final payment from the U.S. EPA. This will require the cooperative agreement recipient to
obligate and disburse all award funds and any program income (i.e., fees, repayments o f
principal and related interest, and other income) that accrues before final payment from the
U.S. EPA (per 40 C.F.R. §31.21(f)). The schedule of obligation and disbursement must be
no less than 50 percent of the amount awarded within 18 months; 80 percent within tw o
years; and 100 percent within three years. It is then antic ipated that associated cleanups and
necessary documentation will be completed in five years.
Under this process, the maximum cooperative agreement award period expected
would be five years (i.e., three years to obligate all of the award funding and five
years to complete disbursement of all award funds and any program income
earned during the award period, complete all cleanups, and request final payment
from the U.S. EPA, assuming the last cleanup is initiated no later than one year
after the final day of the three-year obligation period). This represents the end of
the U.S. EPA's cooperative agreement, but not necessarily the end of a BCRLF
itself. Also, a cooperative agreement recipient may request early closeout if both
the payment and cleanup closeout criterion are met before the five year period
ends. The diagram below graphically depicts the closeout process.
Closeout Process
EPA payment(s) t
cooperative agree
ipient _
Criterion I
Criterion II
BCRLF receives program income and capitalization payment(s)
and makes project loans until funds are depleted. Funds must be
obligated within 3 years of the cooperative agreement start date
(50% in 1 8 months, 80% on 2 years, and 100% in 3 years).
Final payment must be requested from EPA within 5 years.
Cleanup activities funded through BCRLF must be completed within
twelve months from the date that on-site activity is initiated.
"Trigger" date for 12-month cleanup period will vary.
Year 1 Year 2
YearS
Year 4
Year 5
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BCRLF Administrative Manual
Section VIII Closeout and Additional
Requirements
2. Closeout and
Adjustments
B. POST
CLOSEOUT
1. Post Closeout
Requirements
In accordance with applicable regulations, the U.S. EPA will close out a cooperative
agreement, or an activity under a cooperative agreement, when it is determined
that all applicable administrative actions and all required work of the award has
been completed. Within 90 days of completion, the cooperative agreement
recipient must submit all financial, performance, and other reports required as a
condition of the award which include, but are not limited to financial information
(such as status of payment, obligation, and disbursement) and cleanup information
(such as the cleanup completion dates). At the request of the cooperative
agreement recipient, the U.S. EPA may extend this timeframe.
Reports that will be included in closeout proceedings are:
Financial performance or progress reports;
Financial status report (SF 269);Final request for payment (SF 270);
Invention disclosure (if applicable);
A property inventory report (if applicable) including a request for
instructions regrading disposition of any property purchased with
cooperative agreement funds; and
A Federally owned property inventory report (if applicable).
Following submission of reporting forms and materials, the EPA will make (any
necessary) adjustments to allowable costs within 90 days. The U.S. EPA also will
make, if applicable, any necessary cash reimbursements on a timely basis.
Cooperative recipients must return unused principal funds (i.e, of the original
$350,000) to the U.S. EPA unless those funds had been pre-authorized by the U.S.
EPA for use on other programs.
The closeout of an award does not affect the U.S. EPA's right to disallow costs and
recover funds on the basis of a later audit or other review. Additionally, closeout
does not affect a cooperative agreement recipient's responsibility to return any
funds due as a result of later refunds, corrections, or other transactions.
During the closeout process, the cooperative agreement recipient must advise the
EPA whether the BCRLF will continue to operate beyond the project period (i.e.,
continue to make loans). If the cooperative agreement recipient chooses not to
continue the BCRLF, remaining funds not obligated by the cooperative agreement
recipient via a loan agreement shall be returned to the Superfund Trust Fund, or
the EPA region may choose to modify the cooperative agreement to allow the
recipient to use funds for other activities consistent with brownfields cleanup.
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BCRLF Administrative Manual
Section VIII Closeout and Additional
Requirements
2. Post-
Cooperative
Agreement
Program Income
3. Post-
Cooperative
Agreement
Reporting and
Records
Maintenance
If the cooperative agreement recipient chooses to continue the operation of the
BCRLF, the cooperative agreement recipient, as part of the closeout agreement,
shall reaffirm the use of program income in a manner consistent with the terms
and conditions of the cooperative agreement affecting disposal of program income,
eligible administrative costs, and environmental response requirements. The
recipient shall maintain appropriate records to document compliance with these
requirements. Should the cooperative agreement recipient choose to cease
operation of the BCRLF post-closeout, the remaining principal funds (i.e, of the
original $350,000) shall be returned to the Superfund Trust Fund or the Region may
choose to modify the close-out agreement to allow the recipient to use funds for
other activities consistent with brownfields cleanup. The U.S. EPA may review the
cooperative agreement recipient's compliance work plan.
After the cooperative agreement award period has elapsed, cooperative agreement
recipients must continue to use program income in a manner consistent with the
terms and conditions of the cooperative agreement affecting disposal of program
income, eligible administrative costs, and in accordance with CERCLA and
consistent with the NCP (see Section VII.B., Use of Program Income; Section VII.D.,
Administrative Costs; and Section V.A., Applicable Authority). Furthermore, each
cooperative agreement recipient is responsible for maintaining records to
document compliance with these requirements. An appropriate disposition of
program income will be negotiated with recipients who decide not to operate the
BCRLF after the project period.
As noted previously, cooperative agreement recipients are required to submit
quarterly reports to the U.S. EPA until the cooperative agreement is closed out (see
Section VII.E.2., Cooperative Agreement Recipient Responsibilities). However, the U.S.
EPA is responsible for continuing to monitor the recipient's compliance with the
terms and conditions in the agreement relating to the disposition of program
income earned after the award period. Therefore, in accordance with 40 C.F.R.
31.42, cooperative agreement recipients must also maintain records relating to the
use of post-award program income. The U.S. EPA may request access to these
records or may negotiate post closeout reporting requirements to verify that post-
award program income has been used in accordance with the terms and conditions
of the original agreement.
Will the U.S. EPA monitor the loan fund beyond the cooperative agreement's closeout?
Yes. Formal reporting requirements will end when the agreement is closed out. However,
the U.S. EPA will monitor the recipient's compliance with the terms and conditions in th e
agreement relating to the disposition of program income earned after the award period .
Therefore, the recipient must maintain records relating to the use of post-award progra m
income. The EPA may request access to these records or may negotiate post closeou t
reporting requirements to verify that post-award program income has been used i n
accordance with the terms and conditions of the original agreement.
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BCRLF Administrative Manual
Section VIII Closeout and Additional
Requirements
4. Repayment of
Funds if BCRLF
is Terminated
Prior to Closeout
In general, cooperative agreement recipients must maintain documentation for a
minimum of 10 years after completion of the cleanup activity supported by each
loan (or longer, if the stream of program income from outstanding loans continues
beyond this period). Written approval from the U.S. EPA prior to destroying of
any records (see Section VILE.2., Cooperative Agreement Recipient Responsibilities).
Similarly, borrowers are required to maintain documentation for at least 10 years
after the final BCRLF funded cleanup is complete and obtain written approval from
the lead agency prior to destroying records (see Section VII.E.3., Borrower Reporting
and Recordkeeping).
Will recipients have to report on the use of repaid loan funds or only on the initial
round of loans made by the pilots?
No. During the term of the cooperative agreement, cooperative agreement recipients are
required to report on aN. fund activities, including loans made from the award and fro m
program income (i.e., repaid loan funds, et c). Formal reporting requirements will end when
the agreement is closed out. However, the U.S. EPA will monitor the recipient's compliance
with the terms and conditions in the agreement relating to the disposition of progra m
income earned after the award period.
Cooperative agreement recipients may be required to repay assistance funds and
associated program income that are not used in accordance with the terms of their
cooperative agreement. Under BCRLF closeout provisions, cooperative agreement
recipients are required to obligate (i.e., sign loan agreements for) all awarded funds
by the end of three years. If at the end of three years, a cooperative agreement
recipient has not obligated all award funds, the U.S. EPA may de-obligate the
remaining funds by amending the term and condition related to post cooperative
agreement program income. If, at that time, EPA decides that the purpose of the
agreement cannot be met, the U.S. EPA may terminate the cooperative agreement
and recover the Federal share of its assets. If the agreement is terminated, the
cooperative agreement recipient must return to the U.S. EPA its proportionate
share of the value of BCRLF assets consisting of cash, receivables, personal and real
property, and notes or other financial instruments developed through use of the
funds (see Section VII.F.3., Recovery of the U.S. EPA Interest in BCRLF Assets). At the
U.S. EPA's discretion, the cooperative agreement may be extended in cases where
the recipient has not obligated all the funds but has an acceptable justification and
a viable plan for obligating funds expeditiously. The U.S. EPA may allow BCRLFs
to redirect funds for other brownfield cleanup related activities.
May 1998 Version
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BCRLF Administrative Manual
Section VIII Closeout and Additional
Requirements
Are cooperative agreement recipients required to repay the funds to the U.S. EPA?
Yes. Cooperative agreement recipients may be required to repay assistance funds, an d
associated program income, that are not used in accordance with the terms of th e
cooperative agreement. Under BCRLF closeout provisions, the cooperative agreemen t
recipient should not retain any award fun ds at the end of three (3) years. At the end of three
(3) years, if the recipient has not disbursed or obligated (i.e., a loan agreement is in place
but the recipient has not yet disbursed funds to "liquidate" the obligation) award funds, the
U.S. EPA may terminate the agreement and de-obligate the balance of the funds awarded
under the cooperative agreement and re turn the money to the Superfund Trust Fund. At the
EPA's discretion, the cooperative agreement may be extended in cases where the recipient
has not obligated all the funds but has an acceptable justification and a viable plan fo r
obligating funds expeditiously.
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BCRLF'Administrative Manual
Section IX Cross-cutting Federal Statutes, Executive Orders, and
Regulations
IX. Cross-cutting Federal Statutes, Executive Orders, and
Regulations
Contents
A. Introduction
B. Applicable Cross-cutters
1. Environmental
2. Social and Economic Cross-cutters
C. Alternative Approaches to Ensure Compliance
IX-3
IX-3
IX-3
IX-4
IX-5
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BCRLF'Administrative Manual Section IX Cross-cutting Federal Statutes, Executive Orders, and
Regulations
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BCRLF'Administrative Manual
Section IX Cross-cutting Federal Statutes, Executive Orders, and
Regulations
IX. Cross-cutting Federal Statutes, Executive Orders, and
Regulations
A.
INTRODUCTION
B.
APPLICABLE
CROSS-
CUTTERS
i.
Environmental
Cross-cutting requirements are those Federal requirements, in addition to CERCLA
and associated administrative authorities, which are applicable to the BCRLF by
operation of statutes, executive orders, and regulations. These cross-cutting Federal
authorities apply by their own terms to projects and activities receiving Federal
financial assistance, regardless of whether the statute authorizing the assistance
mentions them specifically. BCRLF cross-cutters include social and economic policy
authorities such as executive orders on equal employment opportunity and
government-wide debarment and suspension rules.
Which cross-cutters apply to BCRLF cooperative agreement recipients?
Cooperative agreement recipients are responsible for complying with all applicable cross -
cutting requirements. The U.S. EPA has developed a list of cross-cutting requirements tha t
may apply to the BCRLF (see list below). Ad ditional cross-cutting requirements are referenced
in Standard Form 424B, entitled "Assurances Non-Construction Programs." However, th e
cross-cutting list and Standard Form 424 B may not identify all cross-cutting requirements, and
cooperative agreement recipients are not relieved from responsibility for complying with a
cross-cutting requirement becaus e it is not included on the cross-cutting list or Standard Form
424B. The U.S. EPA will provide additional guidance on the applicability of specific cross -
cutting requirements if requested to do so by a cooperative agreement recipient.
Each cooperative agreement recipient is responsible for complying with all
applicable Federal cross-cutting requirements, including ensuring that BCRLF
funding is made available on a nondiscriminatory basis and that prospective
borrowers are not denied funding on the basis of race, color, age, national origin,
religion, handicap, or sex. Furthermore, cooperative agreement recipients should
actively market the BCRLF program to prospective minority and women borrowers.
Each cooperative agreement recipient is responsible for establishing procedures to
ensure compliance with all applicable Federal laws, statutes, regulations, and
executive orders to the extent of Federal participation in the program.
Federal environmental requirements will be identified and applied on a site-by-site
basis as part of the BCRLF response selection process (see Section V.B., Applicable
Authority). Therefore, environmental statutes and regulations have not been
included in the list of applicable cross-cutting requirements (see below) except as
they relate to specific social or economic issues.
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BCRLF'Administrative Manual
Section IX Cross-cutting Federal Statutes, Executive Orders, and
Regulations
2. Social and
Economic Cross-
cutters
Cooperative agreement recipients are responsible for complying with all applicable
cross-cutting requirements. The U.S. EPA has developed a list of social and
economic cross-cutting requirements that may apply to the BCRLF (see list below).
Additional cross-cutting requirements are referenced in Standard Form 424B,
entitled "Assurances Non-Construction Programs." However, the cross-cutting list
and Standard Form 424B may not identify all cross-cutting requirements, and
cooperative agreement recipients are not relieved from responsibility for complying
with a cross-cutting requirement because it is not included on the cross-cutting list
or Standard Form 424B.
Cooperative agreement recipients also are responsible for ensuring that borrowers,
including borrowers receiving non-BCRLF loans that are awarded based on a BCRLF
loan guarantee for which CERCLA funds are used, comply with all applicable cross-
cutting requirements. A term, condition, or other legally binding provision relating
to cross-cutting requirements should be included in all loan or financial assistance
agreements entered into with funds provided under a BCRLF cooperative
agreement. As noted for cooperative agreement recipients above, the cross-cutting
list and Standard Form 424B identify cross-cutting requirements that may be
applicable to borrowers. The cross-cutting list and Standard Form 424B may not,
however, identify all cross-cutting requirements, and the cooperative agreement
recipients are not relieved from responsibility for ensuring that borrowers comply
with a cross-cutting requirement because it is not included on the cross-cutting list
or Standard Form 424B.
May 1998 Version
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BCRLF'Administrative Manual
C.
ALTERNATIVE
APPROACHES
TO ENSURE
COMPLIANCE
Section IX Cross-cutting Federal Statutes, Executive Orders, and
Regulations
Cross-cutting Requirements
Following is a list of Federal laws and authorities sub-categorized as economic and socia I
authorities that may ap ply to projects or activities receiving BCRLF assistance. While BCRLF
cooperative agreement recipients an d borrowers should both be aware of the following Federal
authorities, it is unlikely that every law or regulation will apply to a particular project unde r
consideration. However, cooperative agreement recipients are responsible for ensurin g
compliance with all applicable cross-cutting requirements. The U.S. EPA will provide additional
guidance on the applicability of specific cross-cutting requirements if requested to do so by a
cooperative agreement recipient.
In addition, cooperative agreement recipients must comply with the Davis Bacon Act, a s
amended (40 U.S.C. 276a-276a-5 and 42 U.S.C. 3222). Pursuant to CERCLA 104(g)(1), the
Davis Bacon Act applies to construction, repair, or alteration work funded in whole or in part
with BCRLF loans, or guaranteed with BCRLF funds. A term and condition ensuring tha t
borrowers comply with the Davis Bacon Act should be included in all loan agreements made
with BCRLF funds provided under this cooperative agreement.
Economic and Miscellaneous Authorities
4 Debarment and Suspension, Executive Order 12549
4 Demonstration Cities and Metropolitan Development Act of 1966, Pub. L. 89-754, a s
amended, Executive Order 12372
4 Procurement Prohibitions under Section 306 of the Clean Air Act and Section 508 of the
Clean Water Act, including Executive Order 11738 , Administration of the Clean Air Act and
the Federal Water Pollution Control Act with Respect to Federal Contracts, Grants, o r
Loans
4 Uniform Relocation and Real Property A cquisition Policies Act of 1970, Pub. L. 91-646, as
amended
Social Policy Authorities
4 Age Discrimination Act of 1975, Pub. L. 94-135
4 Anti-Lobbying Provisions (40 C.F.R. Part 30)
4 Title VI of the Civil Rights Act of 1964, Pub. L. 88-352
4 Contract Work Hours and Safety Standards Act, as amended (40 U.S.C. 327-333) and the
Anti-Kickback Acts, as amended (40 U.S.C. 276 c), (18 U.S.C. 874)
4 Section 13 of the Federal Water Pollution Control Act Amendments of 1972, Pub. L. 92-
500 (the Clean Water Act)
4 The Drug-Free Workp lace Act of 1988, Pub. L. 100-690 (applies only to the capitalization
grant recipient)
4 Equal Employment Opportunity, Executive Order 11246
4 Section 504 of the Rehabilitation Act of 1973, Pub. L. 93-112 (including Executive Orders
11914 and 11250)
4 Section 129 of the Small Busi ness Administration Reauthorization and Amendment Act of
Cross-cutting requirements apply to loans funded under a cooperative agreement
in combination with non-Federal sources of funds, and to loans awarded as a result
of BCRLF loan guarantees, to the extent of the Federal participation in the loan.
Cooperative agreement recipients may take one of the approaches listed below to
ensure that cross-cutting requirements are met.
1) Include a term or condition in each loan agreement that will require
May 1998 Version
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BCRLF'Administrative Manual
Section IX Cross-cutting Federal Statutes, Executive Orders, and
Regulations
borrowers to maintain records which segregate expenditures from Federal and
non-Federal sources. The cross-cutting requirements apply to the Federal
expenditures. The Davis Bacon Act of 1931 (40 C.F.R. §276a) applies to all
projects funded entirely or in part with CERCLA funds.
2) Use an equivalency approach by applying cross-cutting requirements in
proportion to the amount of Federal funding included in the cooperative
agreement recipient's loan pool. Each cooperative agreement recipient has the
discretion to choose which loans are subject to the cross-cutting requirements as
long as the cross-cutters are applied in proportion to the amount of Federal
funds in the cooperative agreement recipient's loan pool. The Davis Bacon Act
of 1931 (40 C.F.R. §276a) applies to all projects funded entirely or in part with
CERCLA funds.
What is the equivalency approach?
The equivalency approach is one of three alternatives cooperative agreement recipients may
choose to ensure cross-cutting requirements are met. Under this approach, cross-cuttin g
requirements are applied in proportion to the amount of Federal funding included in th e
cooperative agreement recipient's loan pool. Each cooperative agreement recipient has the
discretion to choose which loans are subject to the cross-cutting requirements as long as the
cross-cutters are applied in proportion to the amount of Federal funds in the cooperativ e
agreement recipient's loan pool. Davis Bacon applies to all projects funded entirely or in part
with CERCLA funds.
3) Apply the cross-cutting requirements to all loans funded under the
cooperative agreement regardless of whether Federal and non-Federal funding
can be distinguished. The Davis Bacon Act of 1931 (40 C.F.R. §276a) applies to
all projects funded entirely or in part with CERCLA funds.
Within 90 days of the date of award of a cooperative agreement, each cooperative
agreement recipient must advise the U.S. EPA Project Officer of the approach that
will be followed under this agreement.
Cross-cutters apply not only to the initial loans made with Federal funds but also to
subsequent loans made with program income derived from Federal sources to the
extent of Federal participation in the fund. A cooperative agreement recipient
should be consistent in its approach to ensure compliance with cross-cutting
requirements.
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