United States
Environmental Protection
Agency
Washington, DC 20460
Solid Waste and
Emergency Response
(5101)
EPA 500-B-98-002
October 1998
www.epa.gov/brownfields/
•&EFy\The Brownfields Economic
Redevelopment Initiative
Brownfields Cleanup
Revolving Loan Fund
Administrative Manual:
Model Terms and Conditions
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Model BCRLF Terms and Conditions
Note to Regional Brownflelds Coordinators: These model terms and conditions have been
developed as guidance to capture requirements specific to the Brownfields Cleanup
Revolving Loan Fund (BCRLF) demonstration pilot program which would not be included
in a standard Superfund cooperative agreement and which may not otherwise be required
by statute or regulation. These terms and conditions should be incorporated into your
BCRLF cooperative agreements and may be modified as appropriate. Regions may add
other terms and conditions, if such terms and conditions meet the requirements of the
Comprehensive Environmental Response, Compensation, and Liability Act (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.
I. GENERAL FEDERAL REQUIREMENTS
A. Federal Policy and Guidance
"In implementing the demonstration pilot, the cooperative agreement recipient shall
consider EPA guidance for the BCRLF program as written in the BCRLF
Administrative Manual, dated May 1998, including any updates made to the
Administrative Manual and all other Federal brownfields policy and guidance.
Applicable statutes and regulations take precedence over any descriptions contained
in the manual. Applicable statutes and regulations include, but are not limited to,
CERCLA, 42 USCA §§ 96001 to 9675; 40 C.F.R. Part 31 (Uniform Administrative
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)."D
B. Cross-Cutting Federal Requirements
Note to Regional Brownfields Coordinators: Cross-cutting requirements are those which,
in addition to CERCLA and associated and administrative authorities, are applicable to the
BCRLF by operation of statutes, executive orders, and regulations other than CERCLA and
associated administrative authorities.
Environmental
Note to Regional Brownfields Coordinators: Federal environmental requirements will be
identified and applied on a site-by-site basis as part of the BCRLF response selection process.
Therefore, environmental statutes, executive orders, and regulations have not been included in the
list of applicable cross-cutting requirements (see the BCRLF Administrative Manual Section LX.B.,
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Applicable Cross-Cutters) except as they relate to specific social or economic issues. See the
BCRLF'Administrative Manual Section V.B.2. (c) Requirements of other environmental laws (i.e. ,
ARARs) for a discussion on the application of environmental laws to BCRLF response actions.
Social and Economic
"The cooperative agreement recipient is responsible for complying with all applicable cross-
cutting requirements. EPA has developed a list of cross-cutting requirements that may apply
to the BCRLF (see the BCRLF Administrative Manual Section IX.B.2., Social and
Economic Cross-cutters for a list of cross-cutting requirements). Additionally, other cross-
cutting requirements are referenced in Standard Form 424B, entitled "Assurances Non-
Construction Programs." The cross-cutting list and Standard Form 424B may not, however,
identify all cross-cutting requirements, and the cooperative agreement recipient is 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. The EPA will provide additional guidance
on the applicability of specific cross-cutting requirements if requested to do so by the
cooperative agreement recipient. "D
"Cooperative agreement recipients also are responsible for ensuring that borrowers, including
borrowers receiving non-BCRLF loans guaranteed with BCRLF cooperative agreement
funds, comply with all applicable cross-cutting requirements. A term, condition or other
legally binding provision relating to cross-cutting requirements shall be included in all loan or
financial assistance agreements entered into with funds provided under a BCRLF cooperative
agreement. 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 recipient is 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."D
"Cross-cutting requirements apply to loans that are funded under this 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. 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 participation in the fund. Within 90 days of the
date of award (i.e., the cooperative agreement start date), the cooperative agreement recipient
shall advise the U.S. EPA Project Officer of the approach for ensuring compliance with cross-
cutting requirements applicable to this cooperative agreement. "D
Note to Regional Brownflelds Coordinators: Cooperative agreement recipients may take one of
the approaches listed below to ensure that cross-cutting requirements are met:
a. Include a term or condition in the loan agreement which will require the
borrower to maintain records which segregate expenditures from Federal and
non-Federal sources. The cross-cutting requirements apply to the Federal
expenditures.
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b. Use an "equivalency"Vapproach which reflects the amount of Federal funding
included in the cooperative agreement recipient's loan pool. The 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.
An appropriate term and condition shall be included in all loans subject to cross-
cutting requirements.
c. Apply the cross-cutting requirements to all loans funded under this cooperative
agreement. An appropriate term and condition shall be included in all loans
subject to cross-cutting requirements.
"The cooperative agreement recipient shall comply with the Davis Bacon Act of 1931.
Pursuant to CERCLA 104(g)(l), 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 that borrowers comply with the Davis Bacon Act shall
be included in all loan agreements made with BCRLF funds provided under this cooperative
agreement. "D
C. State Agreements
Note to Regional Brownfields Coordinators: In accordance with 40 C.F.R. 335.6205(c), BCRLF
cooperative agreement recipients must obtain and forward to the U.S. EPA written agreement from
the state that the cooperative agreement recipient may assume the lead responsibility for removal
activity at a particular site. 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 under 40 C.F.R. Part 29 required to initiate the cooperative agreement
(see, Model BCRLF Terms and Conditions, Section I.D. Intergovernmental Review). If such an
agreement cannot be obtained prior to cooperative agreement signature, then the following
paragraph must be included in the cooperative agreement.
"Prior to incurring any costs under this cooperative agreement associated with a given site, the
recipient shall obtain, and shall forward to the EPA Project officer, written agreement from
the State that the recipient may assume the lead responsibility for removal activities at that
site."D
D. Intergovernmental Review (Under Federal Grants Regulations)
Note to Regional Brownfields Coordinators: EPA Headquarters Grants Office approved this
approach. The intergovernmental review should be completed as part of the application package
before the award is signed unless unusual circumstances prevent the completion of the process. If
it is not, please include the following condition in the cooperative agreement:
"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
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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))."D
"The start of work shall be delayed until the intergovernmental review process is completed.
The process is deemed complete if the reviewing agency has had a 60 day review period, or
provides comments prior to the expiration of this period. If comments requiring a response
by EPA are provided, then the process is deemed complete when the comments are resolved.
EPA reserves the right to rescind an award and de-obligate funding based on comments
received during the intergovernmental review. "D
II. GENERAL COOPERATIVE AGREEMENT
ADMINISTRATIVE REQUIREMENTS
A. Substantial EPA Involvement
Note to Regional Brownfields Coordinators: It is expected that EPA's 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. The following language may need to be
modified to account for regional and pilot differences:
"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; approval of substantive terms included in contracts; and
overseeing operational matters. Substantial involvement by the U.S. EPA includes reviewing
financial and environmental status reports, approving site-specific Community Relations
Plans and quality assurance project plans/sampling plans and ensuring that all environmental
cleanup actions initiated under the BCRLF program are conducted in accordance with
CERCLA and consistent with the NCP."D
"The U.S. EPA is responsible for monitoring BCRLF pilots' fulfillment of all reporting,
recordkeeping, and other program requirements. "D
B. Approved Deviation Request
Note to Brownfields Regional Coordinators: An approved deviation request may be attached to
cooperative agreements or described here (see the BCRLF Administrative Manual Appendix H,
Approved Deviation Request).
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C. Insurance Coverage for the Cleanup
"The 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."D
"The cooperative agreement recipient may allow borrowers to 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). Incidental insurance
purchased by a borrower is not counted against the borrowers's ten percent limit on
administrative costs."D
"With U.S. EPA 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, andtheNCP."D
Note to Regional Brownfields Coordinators: U.S. EPA Regions must receive EPA headquarters
approval in order to authorize the use of BCRLF funds for the sole purpose of purchasing
environmental insurance.
D. Cooperative Agreement Recipient Roles and Responsibilities
"The cooperative agreement recipient is the "lead agency" as defined in the NCP. The lead
agency is responsible for ensuring that BCRLF response actions are conducted in
conformance with CERCLA, the NCP, and the terms and conditions of this cooperative
agreement. As the lead agency, the cooperative agreement recipient is also responsible for
designating a qualified government employee as 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 cooperative agreement recipient may acquire or otherwise engage
the services of other entities that have experience with overseeing and carrying out
environmental response actions to assist it in its capacity as lead agency; however, the role of
"lead agency" cannot be assigned or delegated to any entity other than the cooperative
agreement recipient. "D
"The cooperative agreement recipient shall act as or enlist the services of a "fund manager. "D
Fund management responsibilities include those related to financial management of the
cooperative agreement recipient's loan program. The cooperative agreement recipient may
acquire or otherwise engage the services of other entities that have experience with fund
management activities to assist the cooperative agreement recipient with fulfilling its fund
management responsibilities; however, the cooperative agreement recipient remains
accountable to EPA for the proper expenditure of cooperative agreement funds. "D
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"The cooperative agreement recipient shall ensure that BCRLF borrowers comply with all
federal and state requirements as well as the intent of the BCRLF program. The cooperative
agreement recipient shall ensure that the lead agency, the brownfields site manager, and the
fund manager consult with each other prior to any final loan decisions and as loan agreements
are developed to ensure that all BCRLF environmental response requirements will be met and
that BCRLF funds are used only for authorized activities. "D
"The cooperative agreement recipient shall enter into legally authorized written commitments
(see Section II. G. Written Comments) to obtain the services of other qualified agencies,
organizations, or individuals. Notwithstanding any such written commitment, the
Cooperative Agreement recipient, remains legally responsible for carrying out all the terms
and conditions of the cooperative agreement and complying with CERCLA and the NCP."D
E. Written Commitments for Fulfillment of Cooperative Agreement Terms
Note to Regional Brownfields Coordinators: Any transaction involving the transfer of cooperative
agreement funds (with the exception of loans) to acquire goods and services must comply with 40
C.F.R. §35.6550 through §35.6610. Cooperative agreement recipients may use contracts or, when
appropriate, intergovernmental agreements as defined by 40 C.F.R. §35.6015 (a) to obtain
necessary goods and services. See also 40 C.F.R. 35, 6550 (a)(ll). Please note also that BCRLF
recipients cannot make "subgrants" to nonprofit organizations. However, cooperative agreement
recipients may enter into Memoranda of Understanding or other agreements which do not transfer
funds to any appropriate entity.
"The start of work shall be delayed until EPA approves the substantive terms of any
agreements (including non-financial Memoranda of Understanding) between the cooperative
agreement recipient and entity selected as fund manager and any entity which provides
services that the recipient will rely on as the lead agency. "D
III. FINANCIAL ADMINISTRATION REQUIREMENTS
A. Eligible Fund Uses
"BCRLF funds shall be used for non-time critical removal activities only (as defined in
CERCLA §101(23) and described in 40 C.F.R. §300.415)."D
"The cooperative agreement recipient that elects to use program income to cover all or part of
a BCRLF's administrative costs shall 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 OMB cost principles when
charging costs against program income. For any costs determined by the EPA to have been
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an ineligible use of program income, the recipient shall reimburse the BCRLF or the EPA.
EPA will notify the recipient of the time period allowed for reimbursement. "D
"The cooperative agreement recipient shall use no more than 15 percent of the total initial
award to cover a cooperative agreement recipient's (lead agency and fund manager)
administrative and legal costs (e.g., insurance, loan processing, professional services, audit,
legal fees, and state program fees), as negotiated between the U.S. EPA and the cooperative
agreement recipient during the cooperative agreement application and award process."D
"Allowable administrative costs may include loan processing, professional services,
administering the BCRLF, audit, legal fees, and state program fees. In addition, allowable
administrative costs shall include the costs incurred by the cooperative agreement recipient in
ensuring that the borrower complies with Federal requirements related to the agreement, such
as public participation, worker health and safety, and interagency coordination. "D
"The cooperative agreement recipient shall use no more than ten percent of the borrower's
principal repayments to the fund, and may use up to 100 percent of the borrower's interest
payments and any program fees for eligible administrative costs. This is allowable for each
loan made and repaid to the fund."D
"The cooperative agreement recipient shall allow borrowers to use no more than ten percent
of borrowed funds for administrative costs. The cooperative agreement recipient (fund
manager) shall negotiate with the borrower a limit of up to ten percent of the total loan to
cover both administrative and cleanup response planning costs."D
G. Method of Payment
Note to Regional Brownfields Coordinators: The method of payment from the U.S. Environmental
Protection Agency to the cooperative agreement recipient will vary. The U.S. EPA Region and the
cooperative agreement recipient should work out the method of payment at the Region's discretion.
In addition, see, fund payment and closeout term in Model BCRLF Terms and Conditions, Section
VII, Disbursement, Payment, and Closeout. If the Automated Clearing House (ACH) Vendor
Payment System is used, please include the following model condition in the cooperative
agreement:
"To comply with the Debt Collection Improvement Act of 1996, the cooperative agreement
recipient shall complete and return the "Payment Information Form ACH Vendor Payment
System" (U.S. Treasury Form 3881) with the signed assistance agreement."D
"The cooperative agreement recipient shall make positive assertions regarding its fund
management capabilities and provide necessary certifications prior to any receipt of
cooperative agreement funds. In particular, the cooperative agreement recipient shall certify
that its accounting system is adequate to identify, safeguard, and account for all BCRLF
funds, including BCRLF program income. The cooperative agreement recipient also shall
certify that BCRLF loan documents necessary for lending are in place and that these
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documents have been reviewed by the recipient's legal counsel for compliance with applicable
state and local law and compliance with all other terms and conditions of the award. "D
Note to Regional Brownfields Coordinators: Accounting system certification is normally
completed through an independent accountant.
H. Future Funding
"Neither EPA, nor any other federal agency has an obligation to provide any additional
funding in connection with this award. Any renewal of this award to increase funding is at the
sole discretion of the EPA."D
I. Interest-Bearing Accounts
Note to Regional Brownfields Coordinators: With respect to interest earned on advances,
cooperative agreement recipients are subject to the provisions of 40 C.F.R. %31.21(h)(2)(I) and
§35.6280(a)(2).
IV. BCRLF ENVIRONMENTAL RESPONSE REQUIREMENTS
A. Applicable Authority
"All environmental response activities carried out using BCRLF funds shall be conducted in
accordance with CERCLA and consistent with the National Oil and Hazardous Substances
Pollution Contingency Plan (NCP), [40 C.F.R. 300.1 et seq.]. The cooperative agreement
recipient shall ensure that borrowers of BCRLF funds conduct all activities in accordance
with CERCLA and consistent with the NCP, and in accordance with all terms and conditions
of this cooperative agreement. "D
B. Authorized BCRLF Response Actions
"BCRLF funds shall only be used to carry out non-time critical removal activities authorized
by CERCLA and the NCP (for the purposes of this document the term "BCRLF response" is
equivalent to "non-time critical removal action."). The cooperative agreement recipient shall
also consider guidance described in the most current version of the BCRLF Administrative
Manual. "D
"BCRLF funds may only be used to conduct response actions at brownfields sites, and the
cooperative agreement recipient shall consider whether cleanup of a particular site will
significantly contribute to local community revitalization."D
"The cooperative agreement recipient's findings and decisions with respect to whether a
BCRLF response action is authorized at a particular site and what response action is
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appropriate shall be documented in writing, as described in the most current version of the
BCRLF Administrative Manual.
"The cooperative agreement recipient shall ensure that loan decisions and/or agreements do
not preclude the ability of the cooperative agreement recipient to change a BCRLF response,
or any portion of response, based on comments from the public or on any new information
acquired. "D
C. Sampling and Analysis
"The cooperative agreement recipient shall 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 (including data generated by anyone
other than the cooperative agreement recipient) used as the basis for any findings or decisions
by the cooperative agreement recipient shall conform to 40 C.F.R. §300.415(b)(4)(ii)."D
Note to Regional Brownfields Coordinators: In accordance with 40 C.F.R. Part 35, Subpart O, field
work may not begin until EPA has approved the cooperative agreement recipient's quality
assurance project plan and sampling plan.
D. Community Relations and Public Involvement in BCRLF Response Actions
"All BCRLF activities shall be conducted consistent with the community relations and public
involvement requirements in the NCP."D
E. Administrative Record
"The cooperative agreement recipient shall establish an administrative record, consistent with
the requirements in the NCP, which contains the information forming the basis for the
selection of any BCRLF response action.
F. Implementation of BCRLF Response Actions
"The cooperative agreement recipient shall ensure the adequacy of each BCRLF response as
it is implemented. Each loan agreement shall contain terms and conditions which allow the
cooperative agreement recipient to change response activities as necessary. "D
"If the selected response action will not fully address threats posed by a release at a site, or a
borrower is unable or unwilling to complete the BCRLF response, the Cooperative
Agreement recipient shall ensure that the site is secure and poses no immediate threat to
human health or the environment. The Cooperative Agreement recipient shall notify the
appropriate state agency and the U.S. EPA to ensure an orderly transition to other appropriate
response activities. "D
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G. Completion of BCRLF Response
"The cooperative agreement recipient shall ensure that the completion of a BCRLF response
is documented in a report as described in the most current version of the BCRLF
Administrative Manual."U
H. State Voluntary Cleanup Programs
"The cooperative agreement recipient shall ensure that any BCRLF response actions
conducted under a State Voluntary Cleanup program are carried out in accordance with the
substantive and procedural requirements of CERCLA and the NCP, and all terms and
conditions of this cooperative agreement. "D
V. REVOLVING LOAN FUND REQUIREMENTS
Note to Regional Brownfields Coordinators: Cooperative agreement recipients may not make
loans until they have submitted to the U.S. EPA, and EPA has approved, their BCRLF pilot work
plan which specifies the recipient's financial plan, their procedures for selecting sites/loan
recipients that meet the requirements of CERCLA and the NCP, and their approach for handling
the day-to-day operation of the BCRLF. Cooperative agreement recipients may incur
administrative costs before submitting a BCRLF Pilot financial plan.
A. Prudent Lending Practices
"The cooperative agreement recipient shall not incur costs under this cooperative agreement
related to loans until a BCRLF pilot work plan has been submitted to the U.S. EPA and EPA
has approved it. The cooperative agreement recipient shall ensure that the overall objectives
of the fund are met through its or the fund manager's selection and structuring of individual
loans and lending practices. These activities shall include, but not be limited to the following:
• Establishing appropriate project selection criteria consistent with Federal
and state requirements, the intent of the BCRLF program, and the
cooperative agreement entered into with EPA.
• Establishing threshold eligibility requirements whereby only potential
borrowers are eligible to receive BCRLF financing.
• Developing a formal protocol for potential borrowers to demonstrate
eligibility, based on the procedures described in the initial BCRLF
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application proposal and cooperative agreement application. Such a
protocol shall include descriptions of projects that will be funded, how loan
monies will be used, and qualifications of the borrower to make legitimate
use of the funds. Additionally, cooperative agreement recipients shall ask
borrowers for an explanation of how a project, if selected, would be
consistent with BCRLF program objectives.
• Requiring that borrowers submit information describing the borrower's
environmental compliance history. The cooperative agreement recipient
shall strongly consider this history in an analysis of the borrower as a
cleanup and business risk.
• Establishing procedures for handling the day-to-day management and
processing of loans and repayments.
• Establishing standardized procedures for the disbursement of funds to
borrowers. "D
B. Inclusion of Special Terms and Conditions in BCRLF Loan Documents
"The cooperative agreement recipient shall ensure that the borrower meets the cleanup and
other program requirements of the BCRLF pilots by including the following special terms and
conditions in BCRLF loan agreements:
•D Borrowers shall use funds only for eligible activities.
•D ! Borrowers shall document all funds use.
• Borrowers shall maintain documentation for a minimum of 10 years after the
completion of the cleanup activity supported by the loan or for the length of
the loan, whichever is longer. Borrowers shall obtain written approval from
the lead agency prior to disposing of records.
• Borrowers shall use no more than 10 percent of the loan for allowable non-
cleanup activities.
• Borrowers shall 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.
• Borrowers shall conduct BCRLF response activities in accordance with the
cooperative agreement and CERCLA and consistent with the NCP."D
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Borrowers shall modify response activities as required by the lead Agency
(see, the Model BCRLF Terms and Conditions, Section IV., B and G).
C. Default
Note to Regional Brownfields Coordinators: This section "Default" applies to both loan and loan
guarantee programs.
"In the event of a loan default, the cooperative agreement recipient shall 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. If the cleanup is not complete at the time of
default, the cooperative agreement recipient is responsible for: (1) documenting the nexus
between 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 Officer and the State."D
D. Conflict of Interest
"The cooperative agreement recipient shall establish and enforce conflict of interest
provisions governing the roles and responsibilities of the lead agency, fund manager,
brownfields site manager and borrower. These provisions must address the situations
described at 40 C.F.R. 31.36(b)(3) and 35.6550(b)."D
E. Loan Guarantees
Note to Regional Brownfields Coordinators: If the cooperative agreement recipient chooses to use
the BCRLF funds to support a loan guarantee approach, please include the following condition:
"The cooperative agreement recipient shall: (1) document the relationship between the
expenditure of CERCLA 104 (d) funds and response actions; (2) maintain an escrow account
expressly for the purpose if guaranteeing loans, by following the payment requirement
described under the Escrow Requirements term and condition; and (3) ensure that response
actions guaranteed by BCRLF funds are carried out in accordance with CERCLA and
consistent with the NCP."D
Escrow Requirements
"Payment of funds to a cooperative agreement recipient shall not be made until a guaranteed
loan has been issued by a participating financial institution. Loans guaranteed with BCRLF
funds shall be made available as needed for specified cleanup activities on a "actual expense"D
or "schedule" basis to the borrower. (See, Model Terms and Conditions, Section VII. A,
Methods of Disbursement). The cooperative agreement recipient's escrow arrangement shall
be structured to ensure that the CERCLA 104 (d) funds are properly "disbursed" by the
recipient for the purposes of the assistance agreement as required by 40 C.F.R. §31.20 (b) (7)
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and §31.21 (c). If the funds are not properly disbursed, the CERCLA § 104 (d) funds that the
recipient places in an escrow account will be subject to the interest recovery provisions of 40
C.F.R. §31.21(I)."D
"To ensure that funds transferred to the cooperative agreement recipient are disbursements of
assisted funds, the escrow account shall be structured to ensure that: (1) the recipient cannot
retain the funds; (2) the recipient must not have access to the escrow funds on demand; (3)
the funds remain in escrow unless there is a default of a guaranteed loan; (4) the organization
holding the escrow, i.e., the escrow agency, shall be a bank or similar financial institution that
is independent of the recipient; and (5) there must be an agreement with financial institutions
participating in the guaranteed loan program which documents that the financial institution
has made a guaranteed loan to clean up a brownfields site in exchange for access to funds
held in escrow in the event of a default by the borrower. "D
Federal Obligation to the Loan Guarantee Program
"Any obligations that the cooperative agreement recipient incurs for loan guarantees in excess
of the amount awarded under the cooperative agreement are the cooperative agreement
recipient's responsibility. This limitation on the extent of the Federal Government's financial
commitment to the cooperative agreement recipient's loan guarantee program shall be
communicated to all participating banks and borrowers. "D
Repayment of Guaranteed Loans
Note to Regional Brownfields Coordinators: This term and condition is designed to cover
situations in which the recipient's loan guarantee program ceases to operate. The agency has the
discretion to wind up the program in a manner similar to that for loan programs (e.g. negotiate a
final disposition of funds). Please note that if the recipient chooses to guarantee another loan, the
commitments must be in place within 30 days of the time the escrow amount for the initial loan is
released, otherwise, funds must be returned to the U.S. EPA. A possible scenario for the close out
of guaranteed loans would provide that at the end of 5 years, the EPA and the cooperative
agreement recipient will negotiate a close out agreement. Any EPA funds which have not been
paid to the cooperative agreement recipient to enable it to guarantee loans will be deobligated
under this scenario. The cooperative agreement recipient and the EPA will need an agreement on
the disposition of funds subsequently released from escrow upon repayment of the guaranteed
loans. The disposition may be recovery by EPA of the paid cooperative agreement funds with
interest, EPA approval of apian by the recipient to guarantee additional loans, or an amendment
to the cooperative agreement to redirect the funds for other eligible brownfields activities (any
additional eligible brownfields activities must be conducted in accordance with CERCLA and the
NCP).
"Upon repayment of a guaranteed loan and release of the escrow amount by the participating
financial institution, the cooperative agreement recipient shall return the cooperative
agreement funds placed in escrow to the U.S. Environmental Protection Agency.
Alternatively, the cooperative agreement recipient may, with EPA approval, (1) guarantee
additional loans under the terms and conditions of the agreement (2) or, amend the terms and
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conditions of the agreement to provide for another disposition of funds that will redirect the
funds for other brownfields related activities. "D
VI. AUDITS
"The cooperative agreement recipient shall ensure that periodic program audits are conducted
by an outside auditor in accordance with General Accounting Office (GAO) accounting
standards or generally accepted government auditing standards. Furthermore, the cooperative
agreement recipient shall 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, the cooperative agreement
recipient shall, as a condition of making a loan, require borrowers to maintain project
accounts in accordance with generally accepted accounting principles. "D
VII. DISBURSEMENT, PAYMENT, AND CLOSEOUT
Note to Regional Brownfields Coordinators: For the purposes of these terms and conditions, the
following definitions apply: "payment" is the U.S. EPA's transfer of funds to the cooperative
agreement recipient; the cooperative agreement recipient incurs an "obligation" when it enters
into a loan agreement with the borrower; "disbursement" is the transfer of funds from the
cooperative agreement recipient to the borrower. "Close out" refers to the process that the U.S.
EPA follows to ensure that all administrative actions and work required under the cooperative
agreement have been completed, and to de-obligate funds that the recipient has been unable to use.
A. Methods of Disbursement
"The cooperative agreement recipient may choose to disburse funds to the borrower
by means of 'actual expense' or 'schedule'."D
"An 'actual expense' disbursement approach requires the cooperative agreement
recipient to submit documentation of the borrower's expenditures (e.g., invoices) to
EPA to request payment. "D
"A 'schedule' disbursement is one in which 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) or upon execution of the loan. The cooperative agreement recipient shall submit
documentation of disbursement schedules to EPA."D
"If the disbursement schedule of the loan agreement calls for disbursement of the
entire amount of the loan upon execution, the cooperative agreement recipient shall
demonstrate to U.S. EPA's Project Officer that this method of disbursement is
necessary for purposes of cleaning up the site covered by the loan. Further, the
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cooperative agreement recipient shall include an appropriate provision in the loan
agreement which ensures that the borrower uses loan funds promptly for costs
incurred in connection with the cleanup and that interest accumulated on schedule
disbursements is applied to the cleanup. "D
B. Payment Schedule
"The cooperative agreement recipient may request payment from EPA pursuant to 40 C.F.R.
35.6280 after it incurs an obligation or has an administrative expense. EPA will make
payments to the cooperative agreement recipient on a schedule which minimizes the time
elapsing between transfer of funds from EPA and disbursement by the recipient. 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. The cooperative agreement
recipient shall disburse accrued program income to meet all or part of this obligation or
administrative expenses prior to requesting payment from EPA."D
C. Schedule for Closeout
"There are two fundamental criteria for closeout: (1) final payment of funds from EPA to the
cooperative agreement recipient; and (2) completion of all cleanups funded by the amount of
the award. "D
"To close out the cooperative agreement all payments to the cooperative agreement recipient
must be complete. The first criterion of cooperative agreement closeout is met when the
cooperative agreement recipient receives all payments from EPA."D
"The second closeout criterion is met when all cleanups funded by the initial amount of the
award are complete (all cleanups must be completed within 12 months from the date that on-
site cleanup activity is initiated, unless 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.)"D
"The cooperative agreement recipient shall have three years from the cooperative agreement
start date to obligate all the funds awarded (i.e., the BCRLF principal). Final payment and
disbursement of award funds shall 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 EPA
(per 40 C.F.R. §31.21(f)). The schedule of obligation shall be no less than 50 percent of the
amount awarded within 18 months; 80 percent within two years; and 100 percent within three
years. "D
Note to Regional Brownfields Coordinators: During the period of the agreement, the cooperative
agreement recipient shall submit financial and performance reports which include but are not
limited to financial information quarterly (such as status of payment, obligation, and disbursement)
and cleanup information (such as the cleanup completion dates). As part of closeout, the
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cooperative agreement recipient shall submit a final status report which includes but is not limited
to financial information (such as status of payment, obligation, and disbursement) and cleanup
information (such as the cleanup completion dates). If both the payment and cleanup closeout
criterion are met before the five year period ends, the cooperative agreement recipient may request
early closeout.
D. Compliance with Closeout Schedule
"If a cooperative agreement recipient fails to comply with the closeout schedule, any
cooperative agreement funds not obligated under loan agreement to a borrower may be
subject to federal recovery, and the cooperative agreement award amended to reflect the
reduced amount of the cooperative agreement. "D
E. Capital Utilization Standard
Note to Regional Brownfields Coordinators: The cooperative agreement recipient's financial plan
shall propose a minimum level of the BCRLF's capital to be in use at all times (to be negotiated with
EPA). In negotiating the appropriate capital utilization standard with cooperative agreement
recipients, EPA Regions may make considerations for BCRLFs that propose to make loans that are
large relative to the size of the capital base unless other arrangements are agreed to use the
following standard:
"Subsequent to full payment of award funds, the cooperative agreement recipient shall
manage its repayment and lending activities to maintain 50 percent or more of the BCRLF
capital loaned out or committed at all times. "D
F. Recovery of BCRLF Assets
"In case of termination for cause or convenience, the cooperative agreement recipient shall
return to 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 developed through use of
the funds. EPA's fair share is the amount computed by applying the percentage of EPA
participation in the total capitalization of the BCRLF to the current fair market value of the
assets thereof. EPA also has remedies under 40 C.F.R. 31.43 when the Agency determines
that the value of such assets has been reduced by improper/illegal use of cooperative
agreement funding. In such instances, the cooperative agreement recipient may be required to
compensate EPA over and above the Agency's share of the current fair market value of the
assets. "D
G. Post Cooperative Agreement Program Income
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"After the end of the award period, the cooperative agreement recipient shall 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 in accordance with CERCLA and consistent with the NCP, as provided in [Model
BCRLF Terms and Conditions, Section III.C. Use of Program Income] and [ Model BCRLF
Terms and Conditions, Section IV. BCRLF Environmental Response Requirements] of this
agreement. In accordance with 40 C.F.R. 31.42 (c)(3), the cooperative agreement recipient
shall maintain appropriate records to document compliance with these requirements (i.e.,
records relating to the use of post-award program income. 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. "D
"When the cooperative agreement has been closed out (i.e., the cooperative agreement
recipient has met all funds use and cleanup requirements), remaining funds not obligated by
the cooperative agreement recipient via a loan agreement shall be returned to the Superfund
Trust Fund, or the Region may choose to modify the award to allow the recipient to use funds
for other activities consistent with brownfields cleanup. "D
VIII. HIGH-RISK GRANTEE
Note to Regional Brownfields Coordinators: A cooperative agreement recipient that has
demonstrated difficulty in meeting the 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'U
grantee:
Has a history of unsatisfactory performance;
Is not financially stable;
Has a management system which does not meet the management standards set
forth in this 40 C.F.R. Part 31;
Has not conformed to terms and conditions or previous awards, or
Is otherwise not responsible.
If the prospective cooperative agreement recipient meets any of the above criteria, special
conditions and/or restrictions that correspond to the relevant high risk condition shall be
included in the award. These may include:
Payment 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
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Establishing additional prior approvals.
The prospective cooperative agreement recipient should be notified by the EPA Award Official
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, and the method that the
cooperative agreement recipient should use to request reconsideration of the
conditions/restrictions imposed.
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