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used by the municipal treatment works in the pretreatment program.

2. Unallowable costs for treatment works serving industrial and Federal facilities include:

a. The cost of developing an approvable municipal pretreatment program when performed solely for the purpose of seeking an allowance for removal of pollutants under Part 403 of this chapter.

b. The cost of monitoring equipment used by industry for sampling and analysis of industrial discharges to municipal treatment works.

c. All incremental costs for sludge management incurred as a result of the grantee providing removal credits to industrial users under 40 CFR 403.7 beyond those sludge management costs that would otherwise be incurred in the absence of such removal credits.

G. Infiltration/Inflow 1. Allowable costs include:

a. The cost of treatment works capacity adequate to transport and treat nonexcessive infiltration/inflow under $ 35.2120.

b. The costs of sewer system rehabilitation necessary to eliminate excessive infiltration/inflow as determined in a sewer system study under $ 35.2120.

2. Unallowable costs include:

a. When the Regional Administrator determines that the flow rate is not significantly more than 120 gallons per capita per day under $ 35.2120(c)(2)(ii), the incremental cost of treatment works capacity which is more than 120 gallons per capita per day.

works cannot meet its project performance standards; and

(3) The additions could have been included in the original grant award and:

(a) Are the result of one of the following:

(i) A change in the project performance standards required by EPA or the State;

(ii) A written understanding between the Regional Administrator and grantee prior to or included in the original grant award;

(iii) A written direction by the Regional Administrator to delay building part of the treatment works; or

(iv) A major change in the treatment works' design criteria that the grantee cannot control; or

(b) Meet all the following conditions:

(i) If the original grant award was made after December 28, 1981, the treatment works has not completed its first full year of operation;

(ii) The additions are not caused by the grantee's mismanagement or the improper actions of others;

(iii) The costs of rework, delay, acceleration or disruption that are a result of building the additions are not included in the grant; and

(iv) The grant does not include an allowance for facilities planning or design of the additions.

(4) This provision applies to failures that occur either before or after the initiation of operation. This provision does not cover a treatment works that fails at the end of its design life.

e. Costs of royalties for the use of or rights in a patented process or product with the prior approval of the Regional Administrator.

f. Costs allocable to the water pollution control purpose of multiple purpose projects as determined by applying the Alternative Justifiable Expenditure (AJE) method described in the CG series. Multiple purpose projects that combine wastewater treatment with recreation do not need to use the AJE method, but can be funded at the level of the most cost-effective singlepurpose alternative.

g. Costs of grantee employees attending training workshops/seminars that are nec essary to provide instruction in administrative, fiscal or contracting procedures required to complete the construction of the treatment works, if approved in advance by the Regional Administrator.

2. Unallowable costs include:

a. Ordinary operating expenses of the grantee including salaries and expenses of elected and appointed officials and prepara. tion of routine financial reports and studies.

b. Preparation of applications and permits required by Federal, State or local regulations or procedures.

H. Miscellaneous Costs 1. Allowable costs include:

a. The costs of salaries, benefits and expendable materials the grantee incurs for the project.

b. Unless otherwise specified in this regu,lation, the costs of meeting specific Federal statutory procedures.

c. Costs for necessary travel directly related to accomplishment of project objectives. Travel not directly related to a specific project, such as travel to professional meetings, symposia, technology transfer seminars, lectures, etc., may be recovered only under an indirect cost agreement.

d. The costs of additions to a treatment works that was assisted under the Federal Water Pollution Control Act of 1956 (Pub. L. 84-660), or its amendments, and that fails to meet its project performance standards provided:

(1) The project is identified on the State priority list as a project for additions to a treatment works that has received previous Federal funds;

(2) The grant application for the additions includes an analysis of why the treatment

C. Administrative, engineering and legal activities associated with the establishment of special departments, agencies, commissions, regions, districts or other units of government.

d. Approval, preparation, issuance and sale of bonds or other forms of indebtedness required to finance the project and the interest on them.

e. The costs of replacing, through reconstruction or substitution, a treatment works that was assisted under the Federal Water Pollution Control Act of 1956 (Pub. L. 84660), or its amendments, and that fails to meet its project performance standards. This provision applies to failures that occur either before or after the initiation of operation. This provision does not apply to an innovative and alternative treatment works eligible for funding under $ 35.2032(c) or a treatment works that fails at the end of its design life.

f. Personal injury compensation or damages arising out of the project.

g. Fines and penalties due to violations of, or failure to comply with, Federal, State or local laws, regulations or procedures.

h. Costs outside the scope of the approved project.

i. Costs for which grant payment has been or will be received from another Federal agency.

j. Costs of treatment works for control of pollutant discharges from a separate storm sewer system.

k. The cost of treatment works that would provide capacity for new habitation or other establishments to be located on environmentally sensitive land such as wetlands or floodplains.

1. The costs of preparing a corrective action report required by $ 35.2218(c). (49 FR 6234, Feb. 17, 1984, as amended at 50 FR 45896, Nov. 4, 1985)

4. The estimated and final allowance will be determined in accordance with this Appendix and Tables 1 and 2. Table 2 is to be used in the event that the grantee received a grant for facilities planning. The amount of the allowance is computed by applying the resulting allowance percentage to the initial allowable building cost.

5. The initial allowable building cost is the initial allowable cost of erecting, altering, remodeling, improving, or extending a treatment works, whether accomplished through subagreement or force account. Specifically, the initial allowable building cost is the allowable cost of the following:

a. The initial award amount of all prime subagreements for building the project.

b. The initial amounts approved for force account work performed in lieu of awarding a subagreement for building the project.

c. The purchase price of eligible real property.

6. The estimated allowance is to be based on the estimate of the initial allowable building cost.

7. The final allowance will be determined one time only for each project, based on the initial allowable building cost, and will not be adjusted for subsequent cost increases or decreases.

8. For a Step 3 project, the grantee may request payment of 50 percent of the Federal share of the estimated allowance immediately after grant award. Final payment of the Federal share of the allowance may be requested in the first payment after the grantee has awarded all prime subagreements for building the project, received the Regional Administrator's approval for force account work, and completed the acquisition of all eligible real property.

9. For a Step 2+3 project, if the grantee has not received a grant for facilities planning, the grantee may request payment of 30 percent of the Federal share of the estimated allowance immediately after the grant award. Half of the remaining estimated allowance may be requested when design of the project is 50 percent complete. If the grantee has received a grant for facilities planning, the grantee may request half of the Federal share of the estimated allowance when design of the project is 50 percent complete. Final payment of the Federal share of the allowance may be requested in the first payment after the grantee has awarded all prime subagreements for building the project, received the Regional Administrator's approval for force account work, and completed the acquisition of all eligible real property.

10. The allowance does not include architect or engineering services provided during the building of the project, e.g., reviewing bids, checking shop drawings, reviewing change orders, making periodic visits to job

APPENDIX B-ALLOWANCE FOR FACILITIES PLANNING AND DESIGN 1. This Appendix provides the method EPA will use to determine both the estimated and the final allowance under $ 35.2025 for facilities planning and design. The Step 2+3 and Step 3 grant agreement will include an estimate of the allowance.

2. The Federal share of the allowance is determined by applying the applicable grant percentage in $ 35.2152 to the allowance.

3. The allowance is not intended to reimburse the grantee for costs actually incurred for facilities planning or design. Rather, the allowance is intended to assist in defraying those costs. Under this procedure, questions of equity (i.e., reimbursement on a dollarfor-dollar basis) will not be appropriate.

*Interpolate between values.

TABLE 2-ALLOWANCE FOR DESIGN ONLY

sites, etc. Architect or engineering services during the building of the project are allowable costs subject to this regulation and 40 CFR Part 33.

11. The State will determine the amount and conditions of any advance under $ 35.2025(b), not to exceed the Federal share of the estimated allowance.

12. EPA will reduce the Federal share of the allowance by the amount of any advances the grantee received under $ 35.2025(b).

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TABLE 1-ALLOWANCE FOR FACILITIES

PLANNING AND DESIGN

$100,000 or less
120,000.
150,000.
175,000.
200,000.
250,000.
300,000.
350,000.
400,000.
500,000.
600,000.
700,000.
800,000.
900,000.
1,000,000
1,200,000
1,500,000
1,750,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
12,000,000
15,000,000
17,500,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
50,000,000
60,000,000
70,000,000
80,000,000
90,000,000
100,000,000.
120,000,000.
150,000,000.
175,000,000.
200,000,000.

8.5683 8.3808 8.1570 8.0059 7.8772 7.6666 7.4991 7.3602 7 2419 7.0485 6.8943 6.7666 6.6578 6.5634 6.4300 6.3383 6.1690 6.0547 5.9574 5.7963 5.6714 5.5664 5.4769 5.3306 5.2140 5.1174 5.0352 4.9637 4.9007 4.7935 4.6655 4.5790 4.5054 4.3851 4.2892 4.2097 4.1421 4.0314 3.9432 3.8702 3.8080 3.7540 3.7063 3.6252 3.5284 3.4630 3.4074

NOTE: The allowance does not reimburse for costs in curred. Accordingly, the allowance Tables shall not be used to determine the compensation for facilities planning or design services. The compensation for facilities planning or design services should be based upon the nature, scope and complexity of the services required by the community.

*Interpolate between values.

Subpart J-Construction Grants Program Delegation to States

Building cost

Allowance as a
percentage of
building cost*

$100,000 or less
120,000..
150,000..
175,000..
200,000..
250,000.
300,000..
350,000..
400,000.
500,000..
600,000.
700,000.
800,000.
900,000.
1,000,000
1,200,000
1,500,000
1,750,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
12,000,000
15,000,000
17,500,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
50,000,000
60,000,000
70,000,000.
80,000,000
90,000,000.
100,000,000
120,000,000
150,000,000
175,000,000
200,000,000

14.4945 14.1146 13.6631 13.3597 13.1023 12.6832 12.3507 12.0764 11.8438 11.4649 11.1644 10.9165 10.7062 10.5240 10.3637 10.0920 9.7692 9.5523 9.3682 9.0686 8.8309 8.6348 8.4684 8.1975 7.9827 7.8054 7.6550 7.5248 7.4101 7.2159 6.9851 6.8300 6.6964 6.4841 6.3142 6.1739 6.0550 5.8613 5.7077 5.5809 5.4734 5.3803 5.2983 5.1594 4.9944 4.8835 4.7894

NOTE: The allowance does not reimburse for costs incurred. Accordingly, the allowance Tables shall not be used to determine the compensation for facilities planning or design services. The compensation for facilities planning or design services should be based upon the nature, scope and complexity of the services required by the community.

AUTHORITY: Sec. 205(g) of the Clean Water Act, as amended, 33 U.S.C. 1251 et. seq.

SOURCE: 48 FR 37818, Aug. 19, 1983, unless otherwise noted.

of

8 35.3000 Purpose.

tive, fiscal, and program controls to This regulation establishes policies guard against fraud, misuse, and misand procedures for the development,

management of public funds. Overview management, and EPA overview of will also include review of the State State administration

the management process to ensure it is efwastewater treatment works construc- ficient, effective and assures timely tion grants program under section State reviews. 205(g) of the Clean Water Act, as amended. The delegation agreement

8 35.3010 Delegation agreement. between EPA and the State is a pre- (a) Before execution of the delegacondition for construction manage

tion agreement, the Regional Adminisment assistance under section 205(g).

trator must determine that the unit of Program requirements for other assist

the State agency designated to impleance agreements authorized by section

ment the agreement is capable of car205(g) for activities under sections 402 and 404 and section 208(b)(4) are pro

rying out the delegated functions. The

Regional Administrator will evaluate vided in Part 130. Administration of all section 05(g) assistance agree

those aspects of the unit which direct

ly affect the State's capability to imments follows the procedures estab

plement the agreement. lished in Subpart A of this part.

(b) In the delegation agreement, the 8 35.3005 Policy.

State agency will assure the Regional (a) EPA's policy is to delegate man

Administrator that it will execute its agement of the wastewater treatment

responsibilities under the delegation works construction grant program to

agreement in conformance with all apthe maximum extent possible consist

plicable Federal laws, regulations, ent with the objectives of the Act, pru

orders, and policies. dent fiscal management, and EPA's (c) The delegation agreement will: overall national responsibility for the (1) Designate the organizational unit program. The policy is premised on an within the State responsible for the on-going partnership between EPA implementation of the delegation and the States that includes consulta- agreement; tion with the States in formulation of (2) List the functions delegated and policy and guidance by EPA. EPA ex- functions to be delegated with a pects States to undertake full delega- schedule for their assumption by the tion of all project level activities, in- State; cluding preliminary determinations of

(3) Identify procedures to be folnon-delegable requirements. The ob

lowed and records to be kept by the jective of delegation is to eliminate du

State and EPA in carrying out each plication of Federal and State effort in

delegated function; the management of the construction

(4) Identify the staffing, hiring, grant program, to increase State par

training, and funding necessary to ticipation in the construction grant

carry out the delegated functions; program, and to improve operating ef

(5) Estimate program costs by year ficiency.

for the term of the delegation agree(b) Program delegation is to be accomplished through a formal delega

ment; tion agreement between the Regional

(6) Identify an accounting system, Administrator and the State. The dele- acceptable to the Regional Adminisgation agreement will specify the

trator, which will properly identify functions which the State will perform

and relate State costs to the conduct and procedures for State certification of delegated functions; and to EPA.

(7) Identify the form and content of (C) EPA will overview the perform- the system for EPA overview of State ance of the program under delegation performance consistent with the reto ensure that progress is being made quirements in § 35.3025 of this subtoward meeting the construction grant part, including the frequency, method, program objectives and that the State and extent of monitoring, evaluation, is continuing to employ administra- and reporting.

20-135 0-88-20

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(2) Projects where an overriding Federal interest requires greater Fed. eral involvement;

(3) Final determinations under Federal statutes and Executive Orders (e.g., the National Environmental Policy Act of 1969, 42 U.S.C. 4321 et seq., Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d et seq.), except for sections 201, 203, 204, and 212 of the Clean Water Act;

(4) Final resolution of construction grant audit exceptions; and

(5) Procurement determinations listed under 40 CFR 33.001(g).

8 35.3015 Extent of State responsibilities.

(a) Except as provided in paragraph (c) of this section, the Regional Administrator may delegate to the State agency authority to review and certify all construction grant documents required before and after grant award and to perform all construction grant review and management activities necessary to administer the construction grants program.

(b) The State may also act as the manager of waste treatment construction grant projects for small communities. The State, with the approval of the community, may serve as the community contracting agent and undertake responsibilities such as negotiating subagreements, providing technical assistance, and assisting the community in exercising its resident engineering responsibility. In this capacity, the State is in the same position as a private entity and cannot require a small community to hold the State harmless from negligent acts or omissions. The State may also execute an agreement with any organization within the State government, other than the State agency, which is capable of performing these services. The terms of the agreement to provide these services to small communities must be approved by the Regional Administrator before execution of the agreement.

(c) The Regional Administrator shall retain overall responsibility for the construction grant program and exercise direct authority for the following:

(1) Construction grant assistance awards, grant amendments, payments, and terminations;

8 35.3020 Certification procedures.

(a) The State will furnish a written certification to the Regional Administrator for each construction grant project application submitted to EPA for award. The certification must state that all Federal requirements, within the scope of authority delegated to the State under the delegation agreement, have been met. This certification must be supported by documenta. tion specified in the delegation agreement. The documentation must be made available to the Regional Administrator upon request.

(b) Certification that a construction grant project application complies with all delegable pre-award require ments consists of certification of compliance with the following sections of Subpart I of this part: $ 35.2030 (Facilities planning); g 35.2040 (a) and (b) (Grant application); $ 35.2042 (Review of grant applications); and $$ 35.2100 (Limitations on award) through and including 35.2125, except for $ 35.2101 (Advanced treatment reviews for projects with incremental capital ad. vanced treatment costs of over $3 million), $ 35.2112 (Marine waiver discharge applicants), and § 35.2113 (final decisions under the National Environmental Policy Act).

8 35.3025 Overview of State performance

under delegation. The Regional Administrator will review the performance of a delegated State through an annual overview program, developed in accordance with procedures agreed to in the delegation agreement (8 35.3010(c)(7)). The pur

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