United States
Environmental Protection
Agency
Office of
Solid Waste and
Emergency Response
&EPA
DIRECTIVE NUMBER:
TITLE:
DATE:
ORIGINATING OFFICE:
9650. lOa
LUST Trust Fund Cooperative Agreement
Guidelines
May 24, 1994
OSWER
OSWER
OSWER
OSWER
DIRECTIVE
DIRECTIVE
DIRECTIVE
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Table of Contents
I. OVERVIEW OF THE LUST TRUST FUND 1
II. APPLICABILITY OF 40 CFRPART 31 GRANT REGULATIONS 1
III. STATE COST SHARE REQUIREMENTS 2
IV. ALLOWABLE COSTS 3
V. TRUST FUND USE AT GOVERNMENT FACILITIES 5
VI. SOLVENCY OF OWNERS AND OPERATORS 6
VII. STATE PROGRAM APPROVAL AND COOPERATIVE AGREEMENTS 7
A. Linking of Trust Fund With State Program Approval Process 7
B. Relationship of the Trust Fund to EPA's Transition Strategy 7
VIII. STATE UST PROGRAMS AND COOPERATIVE AGREEMENTS 8
A. State Capabilities 8
B. State Certification of Authority 10
C. State Program Work Plan 11
D. Federal Oversight 11
IX. CORRECTIVE ACTION 14
A. Compliance with Corrective Action Regulations 14
B. Guidance for Conducting Federal-Lead Underground Storage Tank Corrective Actions 14
C. State's Priority System for Addressing UST Releases 15
X. PUBLIC PARTICIPATION 16
XI. STATE'S QUALITY ASSURANCE PROGRAM 16
XII. ADMINISTRATIVE REQUIREMENTS FOR STATE COOPERATIVE AGREEMENT
APPLICATION 17
APPENDIX A: COST RECOVERY POLICY FOR THE LEAKING UNDERGROUND STORAGE
TANK TRUST FUND (OSWER DIRECTIVE 9610.10A) (PDF)
OSWER Directive 9630.10
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I. OVERVIEW OF THE LUST TRUST FUND
In October 1986, Congress amended Subtitle I of the Resource Conservation and Recovery Act (RCRA)
to provide EPA, and States with Cooperative Agreements, new enforcement and corrective action
authorities to respond to actual or suspected releases from petroleum USTs. Under the amendments, EPA,
or States with Cooperative Agreements, may undertake any of the following actions, or direct tank
owners and operators to do so:
Test tanks for leaks when a leak is suspected;
Investigate a site to evaluate the source and extent of petroleum contamination;
Assess how many individuals may have been exposed to petroleum contaminants and the
seriousness of exposure, and estimate resulting health risks;
Clean up contaminated soil and water;
Provide safe drinking water to residents at the site of a tank leak; and
Provide for temporary or permanent relocation of residents.
The 1986 amendments to RCRA also provide a Federal Trust Fund to finance the cleanup of petroleum
releases from underground storage tanks (USTs). This Trust Fund, financed through an excise tax of 1/10
of one cent per gallon on motor fuels, is expected to raise $500 million over a five year period. However,
there are some guidelines that a State must follow before using Trust Fund dollars. When a leak or spill is
discovered, the States should first seek to identify the tank's owner or operator and direct him to perform
the cleanup at his expense. A State should only rely on Trust Fund dollars to clean up a site when they
cannot identify a responsible tank owner or operator who will undertake corrective-action properly and
promptly. Even when the Trust Fund is used, tank owners or operators are liable to the State for costs
incurred, and are subject to cost recovery actions.
II. APPLICABILITY OF 40 CFR PART 31 GRANT REGULATIONS
In a joint effort with other Federal agencies, EPA has recently revised and published common grant
regulations that provide consistency in the administration of grants and Cooperative Agreements. The
revised regulations, promulgated on March 11, 1988, have an effective date of October 1, 1988.
The common rule, 40 CFR Part 31, published in the Federal Register on March 11, 1988, supersedes
certain EPA general assistance regulations currently contained in 40 CFR Parts 30 and 33. Specifically,
Part 31 is applicable to State and local governments and Federally recognized Indian tribal governments
and supersedes all regulations pertaining to these entities in 40 CFR Parts 30 and 33. Parts 30 and 33 have
been revised to consist of requirements applicable to grantees other than State and local governments.
Part 31 is intended to further Federalism principles by reducing Federal "controls" over State
governments. Part 31 will diminish the Federal role/presence in the States' conduct of certain LUST Trust
Fund related activities because it allows States to use their own procedures in such areas as procurement
and financial management.
Awards involving FY 89 Trust Fund monies will need to reference and adhere to the revised grant
regulations. EPA's Grants Administration Division has established the following general policy regarding
the applicability of Part 31:
OSWER Directive 9650.10A 1
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Part 31 applies to all Cooperative Agreements whose budget or project periods began on or after
October 1, 1988;
Part 31 applies to all amendments of existing agreements in which all of the activities in the
amendment's scope of work will be performed after October 1, 1988; and
Parts 30 and 33 apply to all Cooperative Agreements and amendments whose budget or project
periods began before October 1, 1988.
III. STATE COST SHARE REQUIREMENTS
Policy
In order to comply with Section 9003 (h) (7) (B) of Subtitle I, new or amended Cooperative Agreements
that utilize FY 89 Trust Fund monies must incorporate a minimum 10 percent State cost share
requirement for work done under the Cooperative Agreement. The cost share requirement applies to FY
89 monies that are awarded after January 24, 1989 (the effective date of the "Technical Standards and
Corrective Action Requirements for Owners and Operators of Underground Storage Tanks ~ Subpart H,
Financial Responsibility"). Awards of Trust Fund Monies prior to January 24, 1989 are not required to
incorporate the cost share provisions.
Guidance
The State cost share requirement begins with any award of FY 89 Trust Fund monies after January 24,
1989, the effective date (not the "compliance" date) of the "Technical Standards and Corrective Action
Requirements for Owners and Operators of Underground Storage Tanks ~ Subpart H, Financial
Responsibility." The date of the award is the date on which the Regional Administrator makes a
Cooperative Agreement offer to the State. The cost share requirement does not apply to unspent FY 88
monies which the State may expend after January 24, 1989.
The State cost share percentage should be applied to the total allowable cost (see Section IV, Allowable
Costs) of the program covered by the State's Cooperative Agreement. State Cooperative Agreement work
plans should reflect a total program budget, a minimum 10 percent of which will be contributed by the
State. All expenditures under the Cooperative Agreement are presumed to be shared on the same
percentage basis as the overall ratio of Federal to State monies under the Cooperative Agreement.
The manner in which States provide their cost share is to be negotiated with the Region and must be in
compliance with the grant requirements of 40 CFR Part 31. Acceptable methods for cost sharing include:
contributions, e.g., staff and equipment; and
direct, non-Federal funds expended or obligated by the State, or a political subdivision of the
State, for cost-allowable activities.
The amount of the State's contribution should be negotiated in advance and specified in the State's
Cooperative Agreement. Regardless of the source of funds the State uses to satisfy it cost share
requirement, the State's contributions must be verifiable from its records, in accordance with applicable
grant regulations.
OSWER Directive 9650.10A
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IV. ALLOWABLE COSTS
Policy
Section 9003(h) of RCRA provides that Trust Fund monies may be used for the following general
categories of activities, both before and after the promulgation of EPA's regulations for underground
storage tanks:
corrective action;
enforcement;
cost recovery;
exposure assessment;
provision of temporary and permanent alternate water supplies; and
relocation of residents.
These general categories include the following specific allowable activities:
emergency response and initial site hazard mitigation;
investigation of suspected leaks and source identification up to the time that a leak is determined
to come from an unregulated source;
exposure assessments to determine potential health effects of a leak and the establishment of
corrective action priorities;
development, issuance, and oversight of enforcement actions directed to responsible
owners/operators;
cleanup of releases;
long-term operation and maintenance of corrective action measures;
purchase and/or lease of equipment;
recovery of costs from liable tank owners and operators; and
reasonable and necessary administrative and planning expenses directly related to these activities.
The Trust Fund may only be used for addressing actual or suspected petroleum releases from
underground storage tank systems subject to Subtitle I jurisdiction. This includes tanks that EPA has
exempted or deferred from regulation until a later date in accordance with 40 CFR Part 280. The Trust
Fund may not be used to address releases from tanks that are statutorily exempt from Subtitle I
jurisdiction, although it may be used to investigate suspected releases up to the time that a leak is
determined to come from a statutorily exempt source.
Allowable activities are limited to actions in response to an existing or suspected release of petroleum
from an UST. Thus, an inspection and investigation to assess the site of a reported leak would be an
allowable activity, but an inspection conducted as part of a routine or random inspection scheme would
not be allowable.
In addition, as noted in the Conference Report to the 1986 Subtitle I Amendments, staffer activities that
enhance the general technical or legal capabilities of a State and that are not directly related to leaking
OSWER Directive 9650.10A
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petroleum USTs are not allowable. Furthermore, Trust Fund money cannot be used to lobby the State
legislature to pass LUST legislation.
Costs incurred by States prior to the award of the Cooperative Agreement with EPA will not be covered
by the Trust Fund and are not eligible for reimbursement.
Guidance
Alternative Water Supplies:
Temporary or permanent provision of water to protect human health while waiting for corrective action
measures to take effect is clearly an allowable cost. It is conceivable that, in some cases, the provision of
a permanent alternative water supply by the State will be necessary, and more cost-effective than
corrective action, relocation, or even extended "temporary" provision of bottled or trucked-in water.
Allowable costs for permanent water supplies are limited to the initial capital costs, and do not include
operation and maintenance costs of the system.
As part of their decision-making process, States should evaluate the cost-effectiveness of providing a
permanent water supply in comparison to other corrective action and clean-up alternatives. When
considering the cost of providing permanent alternative water supplies the State should consider both the
total cost per site as well as the cost per affected household. Relatively high total costs may be reasonable
if large numbers of households are affected.
Relocation of Residents:
Temporary relocation of residents is an allowable cost where it is necessary to protect human health or
where corrective action activities cannot be undertaken safely while residents remain in their homes.
States should evaluate the cost effectiveness of this measure versus other measures, such as a temporary
water supply or in-house air filtration or venting units.
Permanent relocation should be considered an allowable cost only under extreme circumstances in which
permanent relocation is the only available option for protecting human health or is the most cost-effective
option. If permanent relocation must be undertaken, States must comply with the Uniform Relocation Act
(42 U.S.C. 4610 et. seq.) regarding property acquisition and relocation of residents.
Operation and Maintenance:
Operation and maintenance (O&M) costs for corrective action measures, other than permanent water
supplies, are allowable costs under the Trust Fund. States will use discretion in deciding whether to fund
O&M costs out of the Trust Fund or through other means (e.g., responsible party contributions and State
or local funds).
States will be responsible for setting priorities between initiating cleanups at new sites or continuing
O&M at old sites. EPA's commitment is limited to providing money only for the work identified in the
Cooperative Agreement, and not to fully fund sites where the State may choose to continue O&M.
Further, EPA cannot commit monies to States beyond the budget period.
Purchase or Lease of Equipment:
Trust Fund monies may be used to purchase equipment if the equipment is necessary for LUST Trust
Fund corrective action or enforcement activities. EPA generally approves equipment purchases through
OSWER Directive 9650.10A
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the award-of Cooperative Agreements. Planned purchases of equipment should be included in the State's
proposed work plan, negotiated and agreed to by EPA and the State, and reflected in the "Equipment"
budget item under the Cooperative Agreement. Thus, EPA does not anticipate the need for routine
approval by EPA of individual equipment purchases made by the State that are reflected in the
Cooperative Agreement budget. However, any purchases of equipment that represent a substantial change
from the approved budget or work plan in the Cooperative Agreement require prior approval from EPA.
Where corrective action equipment is purchased for use at a single site, its cost should be attributed only
to that site. Equipment may be used at multiple sites, however. Where this occurs, the costs of equipment
that is over $10,000 should be allocated among sites where the equipment is used for corrective action.
An exception to this rule may be made for equipment used at a large number of sites (e.g., response
vehicles, field test equipment) for which it would be impractical to allocate costs to individual sites.
States should consult EPA's grant regulations for guidance in final disposition of equipment and supplies
purchased with Trust Fund monies.
V. TRUST FUND USE AT GOVERNMENT FACILITIES
Policy
The Trust Fund ordinarily will not be used to address petroleum UST releases from government facilities.
Governmental entities should be expected to meet their own obligations of addressing environmental
hazards for which they are the source.
The Trust Fund may be used if necessary, however, at Federal, State, or local government UST facilities
(subject to Subtitle I jurisdiction) in the following limited situations:
emergencies, including the mitigation of imminent hazards, and
site investigations, enforcement actions, and oversight of responsible party (RP)-lead cleanups.
The Trust Fund may not be used for cleanups at Federal or State UST facilities. The Trust Fund may,
however, be used for cleanups at local government facilities, if the State determines that the local entity is
incapable of carrying out corrective action properly. This policy does not convey additional authorities to
the State with regard to access to governmental facilities nor is it intended to alter State policies with
regard to intergovernmental relations.
Guidance
Use of the Trust Fund for emergencies and mitigation of imminent hazards is allowable because human
health and the environment should not be endangered if actions can be taken to minimize it. The State,
however, should pursue recovery of such expenditures from the responsible government entity.
As with other RPs, use of the Trust Fund for site investigations, enforcement, and oversight of
government entity-lead cleanups results in desirable leveraging of Trust Fund monies. Cost recovery of
these expenditures should be consistent with the cost recovery policy contained in Appendix A of these
guidelines.
OSWER Directive 9650.10A
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The Trust Fund may not be used for cleanups at Federal or State UST facilities. EPA considers these
entities (by definition) to have the requisite financial strength to cover the costs of taking corrective action
and compensating third parties in the event of a release. The State should require these entities to
undertake and pay for the cost of cleanup, and should take enforcement action if necessary.
The Trust Fund may be used for cleanups at local government facilities, if the State determines they are
incapable of carrying out corrective action properly, and if the State decides they are high priorities
compared to other eligible sites. The State should treat these entities as they would other responsible
parties. The State should first try to have the government entity undertake and pay for the cleanup, and
expect the entity to have the required level of financial assurance. If the Trust Fund is used, cost recovery
should follow.
VI. SOLVENCY OF OWNERS AND OPERATORS
Policy
Solvent responsible parties (RPs) are expected to undertake and pay for corrective action, either
voluntarily or in response to corrective action orders. The level of financial responsibility required to be
maintained by owners and operators is not a limitation of their liability. When a release is discovered,
States should first seek to identify the tank's owner or operator and direct him to perform the cleanup at
his expense. Where time and circumstances permit, States should pursue RP cleanups through
enforcement mechanisms. States may rely on the Trust Fund for cleanups when they cannot identify an
RP who will undertake action properly and promptly.
Solvency becomes a consideration when undertaking cost recovery. With regard to the financial condition
of responsible parties, solvency is defined as the ability to pay financial obligations as they become due,
including the costs of corrective action and cost recovery. In cost recovery situations, States should view
solvency in terms of how much an RP can afford to pay without becoming insolvent. In pursuing cost
recovery, States should not impair the ability of RPs to continue in business if the RP complied with
financial responsibility requirements and there was no negligence or misconduct by the responsible party.
Guidance
Although Congress intended that solvent owners and operators take responsibility for releases from their
tanks, if the State determines that an RP is incapable "... of carrying out such corrective action properly,"
it may use Trust Fund monies to take corrective action. Several conditions may give rise to this
determination. For example, an RP may refuse to comply with a request or order to take corrective action,
or the RP may claim he cannot afford the cost of cleanup. Another example is when the costs of
corrective action to be provided by the RP exceed the required level of financial responsibility and the
State determines that expenditures from the Trust Fund are necessary to assure an effective corrective
action. If such sites are among the State's priorities, the Trust Fund may be used for cleanup, with a more
detailed analysis of the RP's ability to pay performed later, as part of the cost recovery process.
For cost recovery, when a State is deciding whether and for what dollar amount to pursue the RP, more
scrutiny should be given to solvency. In these cases, the State should view solvency in terms of how
much an RP can afford to pay without becoming insolvent. (Pursuant to RCRA Section 9003 (h) (11),
OSWER Directive 9650.10A
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however, States may not consider the RP's solvency, and are directed by the statute to seek full cost
recovery if the RP has not complied with applicable financial responsibility requirements.) The State may
view the RP's ability to pay in terms of a lump sum payment or on an installment basis, depending on
State preference.
The rationale for not forcing RP's to become insolvent is found in the Congressional Conference Report
for the Trust Fund legislation:
"A full cost recovery is not intended where the owner or operator has maintained financial
responsibility as required. - and the financial resources of the owner or operator (including the
insurance or other methods of financial responsibility which was maintained) are not adequate to
pay for the costs of a response without significantly impairing the ability of the owner or operator
to continue in business."
This provision is not a legal defense for RPs against further cost recovery where deemed appropriate, but
it provides an indication of Congressional intent, particularly when small businesses are concerned.
See Appendix A, the LUST Trust Fund cost recovery policy, for additional information.
VII. STATE PROGRAM APPROVAL AND COOPERATIVE AGREEMENTS
A. Linking of Trust Fund With State Program Approval Process
Policy
States are expected to make reasonable progress toward submitting a completed application to EPA for
approval of their UST prevention, corrective action, and financial responsibility programs under Section
9004 of RCRA. A State's success in making reasonable progress toward submitting a complete
application may be grounds for increasing State access to the Trust Fund.
Guidance
The long-term objectives of the Trust Fund clean-up and the UST regulatory programs are to protect
human health and the environment from releases caused by leaking USTs. Cleaning up releases using the
Trust Fund is an immediate need, but by itself is a short-term and temporary solution. The long-term
solution is for States to develop prevention programs which, overtime, will result in fewer leaking tanks.
States must also develop financial assurance requirements or programs that will provide funds for future
cleanups.
Regions are encouraged to use the Trust Fund as an incentive for States to develop prevention programs
and apply for State program approval. Regions should develop criteria to measure and evaluate State
progress. They should consider the degree of progress in allocating Trust Fund monies to States.
B. Relationship of the Trust Fund to EPA's Transition Strategy
Policy
Following promulgation of EPA's corrective action regulations for underground storage tanks, States with
Cooperative Agreements will be asked to carry out activities to implement the Federal regulations during
the transition period prior to State program approval. There are no plans for EPA to conduct corrective
OSWER Directive 9650.10A
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action activities for petroleum UST releases in these States, except in emergency situations where a State
requests EPA involvement in accordance with Section IX.B., Guidance for Conducting Federal-Lead
Underground Storage Tank Corrective Actions.
Guidance
EPA has developed a Transition Strategy (OSWER Directive 9610.5, FY 1989-1990 Transition Strategy
for the Underground Storage Tank Program) and Transition Tasks List (OSWER Directive 9610.5-1) that
identify roles for EPA and the States during the period of time between the effective date of the Federal
UST regulations and the dates State programs are authorized by EPA to operate in lieu of the Federal
program. This strategy emphasizes program implementation by State and local programs, with Federal
resources in a supporting role. The transition period will be characterized by the continued development
of State and local programs.
Activities that States carry out under their Trust Fund Cooperative Agreements will provide
implementation of the Federal corrective action regulations during the transition period. The minimum
site-specific activities necessary to implement the Federal corrective action program for petroleum USTs,
as specified in 40 CFR Parts 280.60-280.67, are allowable costs for States to incur using the Trust Fund.
It should be noted, however, that conduct of these transition period tasks in no way implies that a State's
own program meets the "no less stringent" or "adequate enforcement" requirements of the State program
approval process under Section 9004 of RCRA.
VIM. STATE UST PROGRAMS AND COOPERATIVE AGREEMENTS
A. State Capabilities
Policy
The legislation establishing the UST Trust Fund requires that in order for States to participate in the
program, EPA must determine that they have "the capabilities to carry out effective corrective action and
enforcement activities" to protect human health and the environment (Section 9003 (h) (7) (A) (i)) .
The State must have or obtain both the authority and capability to carry out effective corrective action and
enforcement activities. The State must also establish corrective action and enforcement policies and
procedures that can be applied to known or suspected releases from regulated underground storage tanks.
Guidance
EPA Regions will evaluate State capabilities as part of the Cooperative Agreement negotiating process.
EPA's intent is to be flexible in its determination of capability. States must certify that they have the
authority to carry out enforcement activities, corrective actions, and cost recovery or provide a schedule
and plans for obtaining the necessary authority. However, a State does not have to have authority to
conduct all the activities of the LUST Trust Fund Program in order to receive a Cooperative Agreement.
A State can receive a Cooperative Agreement if it certifies that it has authority to conduct the activities
committed to in the work plan.
The Regions will evaluate the States' existing or potential capabilities in these and other relevant areas.
Given the widely varying level of development of State UST cleanup programs, the capabilities that will
be expected immediately versus those that can be developed over time will vary from State to State.
OSWER Directive 9650.10A
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Enforcement:
To demonstrate its enforcement capabilities, the State should describe its existing capabilities in this area,
or a plan for obtaining such capabilities in the Cooperative Agreement. The description should include, at
a minimum, identification of existing or potential staff capabilities, technical as well as legal, to pursue
enforcement activities, and that staffs previous experience in UST-related enforcement activities, as well
as ownership of or access to necessary equipment or facilities.
The State should have a set of clearly defined enforcement policies and procedures for addressing releases
from petroleum USTs, or a plan for developing such policies and procedures. The policy and procedures
should reflect the underlying philosophy of the Trust Fund to first seek corrective action by the
responsible party, unless there is an imminent and substantial endangerment of human health and the
environment. EPA will consider items such as proper identification of releases and responsible parties,
proper documentation of enforcement actions, and timely and appropriate enforcement activity, in
evaluating the State's enforcement policy and procedures.
The State may use its best professional judgment and enforcement discretion as long as they result in an
effective enforcement program.
Corrective Action:
The State should describe its existing corrective action capabilities, or a plan for establishing such
capabilities. The description should include, at a minimum, the identification of existing or potential staff
capabilities, and ownership of or access to necessary equipment or facilities. The description may include
capabilities such as:
Emergency response and hazard mitigation;
Investigation of suspected leaks and identification of the source;
Comprehensive site investigations;
Exposure assessments to determine potential health effects;
Provision of alternative water supplies;
Temporary or permanent relocation of residents;
Development of corrective action plans; and
Site cleanup, including removal, treatment, and disposal of surface and subsurface contamination.
Corrective actions are often carried out by contractors, at the direction of the State. As part of its
capability discussion, where applicable, the State should describe its plan for securing the services of such
contracting firms. This plan should include types of activities, estimated funding, and time frame for
obtaining contractor services.
The State should describe its corrective action policies and procedures, or plans, with milestones, for
developing such policies and procedures. This may include such items as a generic response plan or
decision-making framework for corrective action, criteria for provision of alternative water supplies or
relocation of residents, exposure assessment procedures, procedures for evaluation and selection of
remedies, and any cleanup standards that the State may wish to impose. The State's corrective action
policy should consider the relationship between corrective actions that may be taken and the need to
protect human health and the environment.
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Cost Recovery:
See Appendix A ~ Cost Recovery Policy for the Leaking Underground Storage Tank Trust Fund.
B. State Certification of Authority
Policy
There are three ways that a State can certify that it has legal authority to carry out the activities committed
to in the work plan. First, the State can certify that it has specific authorities similar to Section 9003(h) of
RCRA. Secondly, the State can certify that it has general state law authority sufficient to carry out the
work plan activities, (e.g., authority to protect public health, to protect the environment, or to protect any
State interest). Thirdly, the State can certify that it will use the authorities in RCRA section 9003(h) to
perform and require corrective action and Section 9003 (h) (6) (A) to perform cost recovery. In making
this type of certification, the State must assure that use of the RCRA authorities will not conflict with
State law.
Guidance
In view of the State's expertise in interpreting State law, EPA's role in review of the certification is not to
"second guess" a State interpretation of State law but rather only to assure that major legal issues have not
been overlooked.
The attorney general, or someone designated by the' attorney general, should either sign or concur in the
certification,1 preferably before the Cooperative Agreement is awarded. If a signature or concurrence
would significantly delay the awarding of the Cooperative Agreement (i.e., there are no other issues
holding up the award), it is acceptable for someone other than the AG/designee to sign the certification. In
this case, the agreement must contain a special condition requiring submission of the AG/designee's
concurrence to EPA within a reasonable time, not to exceed 120 days after the award of the agreement.
The person who signs at the time of award could be: 1) the head or general counsel of the State
environmental agency; 2) the head of the division within the environmental agency that has direct
responsibility for administering the program; 3) the head of any separate entity that may be responsible
for administering the program, such as the director of the State water control board.
If the concurrence of the AG/designee is not obtained within the time specified in the Cooperative
Agreement, payments of Trust Fund money may be withheld, consistent with the requirements of 40 CFR
Part 31.
A State should notify EPA promptly of any reduction in its authorities (e.g., successful challenge to its
State statutory authority) that may significantly inhibit its ability to carry out the activities committed to
in the Cooperative Agreement. Amendment of the Cooperative Agreement or recertification may be
necessary in such circumstances.
1 The assumption is that the Attorney General is the ultimate interpreter of State law in the executive branch of the
State. In at least one State, however, the Attorney General is primarily responsible for litigation, while there is also a
General Counsel to the Governor, who has responsibility for advising all executive branch agencies on the scope of
their authority, fn this situation, the State General Counsel could substitute for the Attorney General.
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C. State Program Work Plan
States are to submit a program work plan to EPA, which is commensurate with the level of development
of the State's corrective action program for petroleum USTs. The work plan shall include a budget and a
description of proposed activities and outputs to be accomplished with Trust Fund monies during the
State's Cooperative Agreement period. The budget should include a breakdown of associated costs of
each planned activity and output. A proposed schedule for accomplishing each activity should be
included. Activities may include, but are not limited to those mentioned in the following sections.
1. Core Program
Where certain basic program items do not currently exist, the Cooperative Agreement may provide for
their development. Examples include:
Develop a system for assigning priorities to sites;
Establish enforcement policies and procedures;
Secure contractor services to perform corrective action;
Establish cost recovery policies and procedures;
Establish a site-by-site tracking system for activities, decisions, and site-specific costs;
Develop public participation procedures; and
Develop quality assurance practices.
2. Site-Specific Activities
The Cooperative Agreement should include a description of and associated budget for those activities that
States plan to undertake at sites. It may include an estimate of the number of sites at which the State
intends to undertake the various specific activities, and/or identification of individual sites at which
specific work is contemplated. Examples of site-specific activities include:
Emergency response;
Source identification;
Site investigation;
Exposure Assessment;
Soil and ground-water remediation;
Provision of alternate water supplies;
Resident relocation (temporary or permanent);
Treatment, storage, and/or disposal of wastes and recovered materials; and
Oversight of cleanups, including those performed by responsible parties.
D. Federal Oversight
Federal Oversight
EPA will oversee State programs, both formally and informally, in order to:
Ensure adequate environmental protection through sound administration and use of the Trust
Fund;
Enhance State capabilities through effective communication, evaluation, and support; and
Describe and analyze the progress of programs on a regional and national scale.
OSWER Directive 9650.10A 11
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EPA's Regional staff will have the primary responsibility for oversight of State programs. Regions and
States should maintain a continuous dialogue so that States can communicate problems encountered in
meeting their commitments and Regions can be responsive to State needs.
The Regions will formally review State programs at least once a year. They will rely on required reports,
State records, and visits to the States to identify the successes and problems encountered in State
programs. Formal program reviews should focus on overall performance rather than individual actions.
To the greatest possible extent, reviews should be based on objective measures, standards, and
expectations that are agreed to in advance in the Cooperative Agreement.
Effective oversight entails the joint analysis of identified problems to determine their nature, causes, and
appropriate solutions. It also requires that the Regions identify and facilitate the transfer of successful
approaches to other States and Regions. Finally, information and insights gathered in oversight activities
should be used to refine subsequent Cooperative Agreements.
Program Oversight Strategy
In FY 89, EPA began to implement a formal program oversight system. The program oversight focuses
on balancing oversight of State UST programs with service to the State's needs. The types of reports that
will continue to be part of EPA's oversight process are summarized below.
1) Quarterly Progress Reports, including:
a) Exception Reports;
b) Trust Fund Usage Forecasts; and
c) Financial Reports.
In quarterly progress reports for State Cooperative Agreements, EPA is requesting that each State
submit data on activities that are supported by Trust Fund monies as well as comparable
information on the accomplishments of the State's program as a whole. Exhibit 1 lists the data
elements that are contained in the quarterly progress reports. The required forms and instruction
for the quarterly progress reports are issued separately from these guidelines, and will be updated
and revised as necessary in the future.
All States should report in a timely and accurate fashion the data needed for the quarterly
activities report and the Strategic Targeted Activities for Results System (STARS) report for the
EPA UST program. Regions will need to relay this data to OUST/HQ within 10 working days of
the end of each Federal fiscal quarter. Regions and States may develop reporting schedules that
allow them to meet these deadlines.
2) Financial Status Report SF 269 or 269A (year end), and Federal Cash Transactions Report SF 272
(quarterly).
The Office of the Comptroller is responsible for issuing Agency financial policies and procedures
for tracking the LUST Trust Fund in the Agency's Financial Management System (FMS). State
UST programs are required to comply with the provisions of the Leaking Underground Storage
Tank Trust Fund State Financial Management Handbook (March 1989).
OSWER Directive 9650.10A 12
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Exhibit 1.
ACTIVITIES REPORTING REQUIREMENTS FOR U.S. EPA OFFICE OF UNDERGROUND
STORAGE TANKS
1. Number of Confirmed Releases
2. Number of Emergency Responses Taken
3. Number of Sites Where Enforcement Actions Taken to Compel Cleanup
4. Number of Sites Where Cost Recovery Initiated
5. Site Cleanups for Petroleum ReleasesInitiated
1. Responsible Party-lead
2. State-lead with Trust Fund money
3. State-lead with no Trust Fund money
6. Site Cleanups for Petroleum ReleasesCompleted
1. Responsible Party-lead
2. State-lead with Trust Fund money
3. State-lead with no Trust Fund money
7. Exceptions Report (Identify, by site where:)
1. State plans to provide permanent alternative water supply
2. State plans to permanently relocate residents
8. Forecasting Trust Fund Use; Number of Sites with Confirmed Releases Where:
1. Owner/Operator has been identified
2. Owner/Operator is insolvent/incapable of conducting timely clean-up
3. Responsible Party search not completed
4. Search for Responsible Party unsuccessful
9. Financial Report
1. State plans to spend over $100,000 of Trust Fund money at site; include amount
2. State has obligated over $100,000 of Trust Fund money at a site; include amount
3. State actually spent over $100,000 of Trust Fund money at a site; include amount
4. For any site, State reached a cost recovery settlement; include amount
5. For any site, cumulative cost recovery payments received; include amount
6. Optional: Aggregate State dollars outlayed for site responses
OSWER Directive 9650.10A 13
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IX. CORRECTIVE ACTION
A. Compliance with Corrective Action Regulations
Policy
Corrective actions taken after the effective date of the Federal corrective action regulations (40 CFR Parts
280.60-280.67) must be performed in a manner that is consistent with the substantive requirements of the
Federal regulations.
Guidance
This policy pertains to the actual performance of UST cleanups. It is not intended to supplant the State
program approval process for corrective action. For example, States need not have, at time of award, their
own statutes and regulations in place that are no less stringent than the Federal regulations. Rather, States
need to assure that the actual cleanups performed, either by RPs or the State, reflect the substantive
requirements of the Federal corrective action regulations, until approval of the State's program to operate
in lieu of the Federal program.
B. Guidance for Conducting Federal-Lead Underground Storage Tank Corrective Actions
Policy
It is EPA's policy that, except in rare circumstances, Fund-financed responses at underground storage tank
petroleum releases will be conducted by States under Cooperative Agreement with EPA. Most States will
have broad programmatic Cooperative Agreements to address emergency response and perform cleanups.
In the absence of such agreements, the Region and State should develop site-specific Cooperative
Agreements under which the State will conduct corrective actions at individual sites. EPA will undertake
a corrective action only in instances where:
there is a major public health or environmental emergency;
the State is unable to respond; and
no responsible party is able or willing to provide an adequate and timely response.
Federal-lead corrective action will be limited to stabilization of the immediate situation, with the
expectation that further cleanup will be conducted by the State under an appropriate Cooperative
Agreement.
In addition to the criteria presented above, Federal-lead response should also depend on the existence of
one or more of the following conditions indicative of a major public health or environmental emergency:
The release poses an immediate and substantial threat of direct human, animal, or food chain
exposure to petroleum;
The release poses an immediate threat of fire or explosion;
The release poses an immediate and substantial threat to public drinking water supplies; or
The release immediately threatens a significant population or substantial amounts of property, or
poses substantial threats to natural resources.
OSWER Directive 9650.10A 14
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Obtaining Approval For Federal Response:
As specified in the OSWER Directive 9360.0-16A, Guidance for Conducting Federal-Lead
Underground Storage Tank Corrective Actions, Federal UST corrective actions that initially cost over
$250,000, and ceiling increases that bring the cost of an action over $250,000, require approval of the
Assistant Administrator (AA), office of Solid Waste and Emergency Response (OSWER). The Office
Director (OD) of the Office of Emergency and Remedial Response (OERR) will approve actions that
initially cost up to $250,000 and ceiling increases that bring the cost of an action up to $250,000, with
concurrence from the OD, Office of Underground Storage Tanks (OUST). In addition, Regional
Administrators (RAs) may approve actions costing up to $50,000 in acute, imminently life-threatening
situations where response must be initiated before Headquarters can be contacted. This authority may be
redelegated to Division Directors and On-Scene Coordinators (OSCs).
Depending upon the nature of the emergency that exists, response time requirements, and other relevant
circumstances, either a formal written approval process or an oral process (with written follow-up) should
be implemented. Headquarters approval must be obtained prior to initiating corrective action whenever
possible. No Federal-lead corrective action will be approved unless an appropriate request is received
from the State.
C. State's Priority System for Addressing UST Releases
Policy
The State will ensure that a priority system for addressing UST petroleum release sites is established and
maintained which incorporates the two priorities set forth in Section 9003(h) of RCRA. These priorities
are:
releases which pose the greatest threat to human health and the environment; and
sites where the State cannot identify a solvent owner or operator of the tank who will undertake
action properly.
The Cooperative Agreement will include a description of this system or a schedule, with milestones, for
developing one.
Guidance
The purpose of the State priority system requirement is to ensure that sites addressed with Trust Fund
monies provide the greatest impact on protection of human health and the environment and respond
where private sector resources are inadequate. The system does not have to be extensive, complex or
numerical in nature. Instead, it can use readily available information to establish broad, general classes of
priority. States may address the "threat to human health and environment" criteria by considering factors
such as total population exposed, proportion of the population affected in a community, number of
drinking water wells contaminated, proximity to a major aquifer, and impact on sensitive populations or
environmental areas. States also should develop methods for establishing capability and solvency of
owner/operators.
This requirement does not necessarily presume the need to rank all UST releases in the State. Rather, it is
a priority system or scheme that should be used as a screening device to assure that sites considered to be
addressed with Trust Fund monies are within the higher priority classes established by the State.
OSWER Directive 9650.10A 15
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X. PUBLIC PARTICIPATION
Policy
Section 7004 (b) (1) of RCRA requires that public participation be provided for and encouraged by the
States. In accordance with this requirement, the State will take lead responsibility for public notices,
public meetings, and other public participation activities that are related to State actions funded by the
LUST Trust Fund. Further, where corrective action is undertaken, public participation activities must
reflect the public participation requirements of the Federal corrective action regulations, 40 CFRPart
280.67.
The State also will have or will develop a public participation policy for the State's LUST Trust Fund
program. The Cooperative Agreement will include a statement of this policy or a schedule for developing
one.
Guidance
The purpose of the requirement for public participation is to promote two-way communication between
the implementing agency and the affected public by:
Facilitating public understanding of State response procedures and actions; and
Encouraging public input into State response decisions and schedules.
It is EPA policy that public participation activities be appropriate to the circumstances of a release.
The States may address the public participation requirement by developing a policy for public
involvement that recognizes the nature of the Trust Fund program, that is, relatively numerous, short-term
and small-scale responses. This is in contrast to programs involving far more complex facilities and
decision making such as the RCRA Subtitle C permitting program for hazardous waste facilities, or the
Superfund remedial action program. Also, the State-should consider the public's willingness to allow
emergency actions without prior consultation, but understand that the public may demand information on
and input into long-term responses to health threats. Thus, a State's public participation policy should be
based on the severity of the threat to human health and the environment posed by a release, the scale and
duration of the response, and the level of public interest.
At a minimum, the State's public participation policy must reflect the requirements of 40 CFR Part
280.67. For each confirmed release that requires a Corrective Action Plan (as directed by the State), the
State must notify the public and provide access to site release information. The State must also provide
public notice if implementation of the Corrective Action Plan does not achieve the established cleanup
levels and the State is considering terminating the plan.
XI. STATE'S QUALITY ASSURANCE PROGRAM
Policy
The State will develop and implement quality assurance practices in accordance with EPA's Uniform
Administrative Requirements for Grants and Cooperative Agreements, 40 CFR Part 31.45. The regulation
OSWER Directive 9650.10A 16
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required the development and implementation of quality assurance practices that will "produce data of
quality adequate to meet project objectives and to minimize loss of data due to out-of-control conditions
or malfunctions."
Guidance
The purpose of a quality assurance (QA) program is to ensure that procedures for data collection and
analysis are appropriate for the uses of that data, and, in particular, for environmentally related
measurements, to provide data that are scientifically valid, defensible, and of adequate and known
precision and accuracy.
Because the underground storage tank program deals with a known substance (petroleum), quality
assurance procedures and methodologies normally should not have to be as extensive or as complex as
those for a program where the pollutants can be of many types, often initially unknown. In the vast
majority of situations, as opposed to the Superfund remedial action program, UST cleanups will deal with
known petroleum materials and established procedures for corrective action. Accordingly, the details of
the State's QA procedures should be appropriate to the circumstances of the releases for which the QA
procedures will be applied, and should be designed to meet State program objectives.
For States desiring additional information, guidance on quality assurance is provided in EPA document
QAMS-004/80; "Guidelines and Specifications for Preparing Quality Assurance Program Plans" (EPA
600/8-83-024). This is available from the National Technical Information Service, NTIS Publication No.
PB 83-219667.
XII. ADMINISTRATIVE REQUIREMENTS FOR STATE COOPERATIVE AGREEMENT
APPLICATION
This section summarizes the basic administrative requirements for a State Cooperative Agreement
application. The regulations discussed in this section are:
1. Nondiscrimination in EPA Assistance Programs - 40 CFR Part 7;
2. Intergovernmental Review - 40 CFR Part 29;
3. Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local
Governments 40 CFR Part 31; and
4. Debarment and Suspension under EPA Assistance Program 40 CFR Part 32.
The discussion that follows provides a brief description of the requirements contained in each of the
above regulations that are most pertinent to Trust Fund Cooperative Agreements. For additional guidance
and a comprehensive review of EPA's administrative requirements for assistance under a Cooperative
Agreement, refer to EPA's Assistance Administration Manual (available through the EPA Grants
Administration Division).
OSWER Directive 9650.10A 17
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A. NONDISCRIMINATION IN EPA ASSISTANCE PROGRAMS - 40 CFR PART 7
Prohibits discrimination based on race, color, sex, or handicap. Requires applicants to submit an
assurance of nondiscrimination (compliance with Part 7) with a Cooperative Agreement application. The
current Part 7 has incorporated the requirements previously under Part 12 (The Clean Water Act).
B. INTERGOVERNMENTAL REVIEW - 40 CFR PART 29
Gives States the option of setting up a State process to review and comment upon applications for Federal
assistance. May involve comment by State, area-wide, or local governmental units. EPA must respond to
comments. Requires 60 day comment period before award. Part 29 implements Executive Order 12372.
C. UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE AGREEMENTS TO
STATE AND LOCAL GOVERNMENTS
Provides numerous basic requirements concerning application for award and management of assistance
agreements. The most relevant of these, at this stage of program development are:
31.20
Provides that States expend and account for grant funds in accordance with State laws and
procedures for expending and accounting for its own funds;
31.21
Discusses methods of making payments to recipients;
31.22
Discusses applicable cost principles and limitations on use of Federal funds;
31.23
Discusses period of-availability of funds;
31.24
Discusses State match and cost sharing provisions;
31.25
Discusses use of program income (this section is particularly relevant to cost recoveries of
Trust Fund expenditures);
31.32
Specifies that a State will use, manage, and dispose of equipment in accordance with State
laws and procedures;
31.36
Specifies that for procurement, a State will follow the same policies and procedures it uses for
procurements from its non-Federal funds;
31.40
Details grantees responsibility to monitor grant and subgrant supported activities and report
program performance;
31.41
Provides basic requirements for financial reports. Reports may be required no more frequently
than quarterly, per OMB Circular. Standard forms for Financial Status Reports (SF-269 or SF-
269A) must be submitted to EPA within 90 days after the end of the budget period. Final
reports are due 90 days after the expiration or termination of the Cooperative Agreement; and
Discusses Quality Assurance requirements.
31.45
D. DEBARMENT AND SUSPENSION UNDER EPA ASSISTANCE PROGRAMS 40 CFR PART 32
Provides rules for suspension and debarment of contractors from utilization under EPA assistance
programs (also direct procurement). If a contractor is suspended or debarred, he may not participate in an
EPA assistance program. EPA's Grants Administration Division maintains a list of such contractors.
OSWER Directive 9650.10A
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