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(1) Application processing. EPA will (4) Financial reports and records charge a non-refundable minimum fee necessary to reflect the planned and of $1,000 or Yo of one percent of the actual receipt of revenues for repay. loan amount, whichever is greater, but ment are maintained and preserved not to exceed $25,000 for processing until 3 years after the notes or the obapplications. This fee will be submit- ligations financed by the Bank have ted with the application and will be re- been retired. tained by the EPA whether or not a (5) Revenue plans adequate to loan is consummated.

assure repayment of principal and in(2) Fee for issuance of a commitment terest of the notes or the obligations to guarantee. A fee will be charged for financed by the Bank are adopted; and the issuance of a commitment to guar

(6) The Administrator is promptly antee a loan. This fee will be 42 of 1 notified whenever it appears that propercent of the principal amount of the jected annual revenues will be insuffiloan, and shall be placed in a contin- cient to meet payments for principal, gency reserve to offset defaults. This interest, and operating and maintefee is contingent upon the loan being nance costs. Such notification shall inobtained by the applicant and is pay- clude a description of the steps being able within 30 days of the date of loan taken to remedy the problem. approval.

(c) Other covenants. Among other (e) Format. The Administrator may,

covenants made by the public body in from time to time, prescribe a form or

the loan guarantee are the following, format for the submission of the appli- (1) Application of loan proceeds. The cation or any portion thereof.

loan proceeds shall only be applied to

the payment of costs associated with 8 39.115 Conditions of loan guarantee. the project for which EPA has awardAny loan guarantee made pursuant

ed grant assistance in accordance with to this part shall be subject to the fol

$ 39.140. lowing conditions:

(2) Payment. The public body cov

enants that if amounts adequate for (a) Step 1 or Step 2. Each public

the payment of principal and interest body applying for a loan guarantee for

are not available when due and pay. the local share of Step 1 or Step 2

able, appropriate steps will be taken to costs must assure that:

levy sufficient additional taxes, fees, (1) It will repay the loan using all

or charges and to make such payments local resources legally available; and

in a timely manner. (2) Any funds due to the public body

(3) Accounts and reports. The public from the amounts appropriated under

body shall keep complete and accurate section 206 of the Act may be used if

books, records, and accounts relating such use is necessary for repayment.

to the loan, the loan guarantee, and (b) Step 3. Each public body apply- the funds and accounts used to pay ing for a loan for the local share of the amounts due on the loan. Such Step 3 costs must assure that:

books, records, and accounts shall be (1) It will repay the loan using all subject to inspection by the Adminislocal resources legally available and, if trator or the Comptroller General of necessary, (i) all or any portion of the the United States at reasonable times. funds retained by it under section (4) Status of other encumbrances. 204(b)(3) of the Act, and (ii) any funds The public body will not on or after due to such grantee from the amounts the date of execution of the loan guarappropriated under section 206 of the antee by EPA, create or suffer to be Act;

created any lien or charge, which (2) The facilities are maintained in would constitute a lien prior to the good repair and operating condition lien created to secure the loan. Any during the period in which the notes bonded indebtedness or liens created or the obligations financed by the by the public body on or after the date Bank are outstanding;

of execution of the loan guarantee by (3) Adequate insurance and bonding EPA and associated with the treatare maintained to protect the guaran. ment works being constructed with tor;

Federal grant assistance may, at the

discretion of the Administrator, be on a parity with the lien of the loan guaranteed by the Administrator.

(d) Enforcement. The public body agrees to the enforcement of the fore. going conditions by the Administrator in a court of appropriate jurisdiction pursuant to any of the remedies provided for under $ 39.150, Defaults and remedies, in order to avert an Event of Default.

8 39.135 Loan terms.

(a) Interest rates. The interest rate(s), to be charged for each loan shall be determined by the Secretary of the Treasury in accordance with section 6(b) of the Federal Financing Bank Act of 1973.

(b) Repayment period. The repayment period for any obligation guaranteed by the Environmental Protection Agency shall be for a reasonable term not to exceed the useful life of the project or forty years whichever is less.

8 39.120 Limitation on assistance.

The amount of any grant, loan, loan guarantee, or other assistance available from another Federal agency, a State, or other third parties on reasonable terms shall be deducted from the local share amount before the loan guarantee amount is determined.

8 39.140 Loan proceeds.

The loan proceeds shall be applied solely to pay costs associated with the construction of the treatment works for which EPA has awarded a grant. Loan proceeds may be dispensed in a lump sum upon execution of the loan agreement, or drawdowns under the loan agreement may be made pursuant to a schedule or requests submitted to the Bank by the borrower. Any loan proceeds or drawdown requests which are paid in advance of the current need for funds to pay costs associated with the EPA grant will be placed by the borrower in investments approved by the Bank under the loan agreement until such time as the proceeds are applied to such costs.

8 39.125 Determination of eligibility for

assistance and issuance of guarantee. (a) The Administrator shall make the following determinations before issuing a loan guarantee:

(1) The project for which the loan guarantee is requested is eligible for grant assistance under Title II of the Act;

(2) The applicant is unable to obtain, on reasonable terms, sufficient credit to finance the local share without such a loan guarantee; and

(3) There is reasonable assurance that the applicant will be able to repay the loan or obligation to the Bank.

(b) If the application is approved, the Administrator will issue the loan guarantee and, subsequent to grant award, will request issuance by the Bank.

(c) If the loan application is disapproved, such disapproval shall be final and conclusive unless appealed within 30 days after receipt of the aotice of disapproval pursuant to Subpart J, Disputes, of the general grant regulations (40 CFR 30.1100 et seq.).

8 39.145 Loan payments by borrower.

The borrower will submit his pay. ments of principal and interest on the loan directly to the Bank in accordance with the loan agreement. A late payment penalty of 1 percent per month of the payment amount due shall be charged pursuant to the loan agreement and the provisions of the loan guarantee agreement in the event any payment of principal and interest is not paid when due.

8 39.130 Determination os reasonable

rates. The Secretary of the Treasury in accordance with the Act shall make a determination of whether financing is available at reasonable rates.

8 39.150 Defaults and remedies.

(a) Each of the following events shall be defined as an "Event of Default":

(1) Default by the public body in the payment of any Principal Installment, if any, on any loan guaranteed by the Administrator when due;

(2) Default by the public body in the a court having jurisdiction for other payment of any installment of interest appropriate administrative and judion the loan when due; and

cial relief. (3) Failure or refusal by the public body to comply with section 213 of the

PART 40—RESEARCH AND Act, or default in the performance or

DEMONSTRATION GRANTS observance of any other of the covenants, agreements, or conditions con

Sec. tained in the loan agreement, or loan

40.100 Purpose of regulation. guarantee agreement, where such fail.

40.105 Applicability and scope. ure, refusal or default shall continue 40.110 Authority. for a period of 45 days after written 40.115 Definitions. notice thereof is issued by the Admin- 40.115-1 Construction. istrator.

40.115-2 Intermunicipal agency. (b) The loan agreement and guaran

40.115-3 Interstate agency. tee shall provide that upon the hap

40.115-4 Municipality.

40.115-5 Person. pening and continuance of any event

40.115-6 State. described in paragraph (a) of this sec- 40.120 Publication of EPA research objection, the Administrator may proced on tives. behalf of the Environmental Protec- 40.125 Grant limitations. tion Agency and the United States to 40.125-1 Limitations on duration. protect and enforce its rights and the 40.125-2 Limitations on assistance. rights of the Federal Financing Bank

40.130 Eligibility. by such of the following remedies as

40.135 Application. the Administrator being advised by

40.135-1 Preapplication coordination.

40.135-2 Application requirements. counsel, shall deem most effectual:

40.140 Criteria for award. (1) Enforce by mandamus or other

40.140-1 All applications. suit, action or proceedings at law or in 40.140-2 (Reserved) equity all rights of the Administrator 40.140-3 Federal Water Pollution Control including the rights to require the Act. public body to enforce, collect and re- 40.145 Supplemental grant conditions. ceive taxes, fees, or charges adequate

40.145-1 Resource Conservation and Reto carry out the covenant or payment

covery Act.

40.145-2 Federal Water Pollution Control of principal and interest when due,

Act. and to require the public body to carry

40.145-3 Projects involving construction. out any other covenant or agreement 40.150 Evaluation of applications. with the Administrator to perform its 40.155 Availability of information. duties under the Act, these regulations 40.160 Reports. and the loan agreement and loan guar

40.160-1 Progress reports. antee agreement;

40.160-2 Financial status report. (2) Bring suit upon the loan;

40.160-3 Reporting of inventions. (3) Require the public body by

40.160-4 Equipment report.

40.160-5 Final report. action or suit to account as if it were

40.165 Continuation grants. the trustee of an express trust for the holders of the evidence of indebted- AUTHORITY: Cited in $ 40.110. ness of the loan;

SOURCE: 38 FR 12784, May 15, 1973, unless (4) Enjoin by action or suit any acts

otherwise noted. or things which may be unlawful or in violation of the rights of the Adminis

§ 40.100 Purpose of regulation. trator or the Bank;

These provisions establish and (5) Declare all remaining payments codify policies and procedures governof principal and interest on the loan ing the award of research and demondue and payable, and, if all default stration grants by the Environmental shall be made good, then, to annul Protection Agency. such declaration and its consequences; and

8 40.105 Applicability and scope. (6) In the event that all the remain- This part establishes mandatory ing principal and interest on the loan policies and procedures for all EPA rebe declared due and payable, apply to search and demonstration grants. The provisions of this part supplement the sary to the maintenance of the chemiEPA general grant regulations and cal, physical, and biological integrity procedures (40 CFR Part 30). Accord- of freshwater aquatic ecosystems. ingly, all EPA research and demon- (5) Section 104(s) (33 U.S.C. (s)) austration grants are awarded subject to thorizes grants to conduct and report the EPA interim general grant regula- on interdisciplinary studies on river tions and procedures (40 CFR Part 30) systems, including hydrology, biology, and to the applicable provisions of this ecology, economics, the relationship Part 40.

between river uses and land uses, and

the effects of development within 8 40.110 Authority.

river basins on river systems and on EPA research and demonstration the value of water resources and grants are authorized under the fol- water-related activities. lowing statutes:

(6) Section 105(a) (33 U.S.C. 1255(a)) (a) The Clean Air Act, as amended, authorizes grants for research and 42 U.S.C. 1857 et seq.

demonstration of new or improved (1) Section 103 (42 U.S.C. 1857b) au- methods for preventing, reducing, and thorizes grants for research and dem- eliminating the discharge into any onstration projects relating to the waters of pollutants from sewers causes, effects, extent, prevention, and which carry storm water or both control of air pollution.

storm water and pollutants; and for (2) Section 104 (42 U.S.C. 1857b-1) the demonstration of advanced waste authorizes grants for research and de- treatment and water purification velopment of new and improved meth- methods (including the temporary use ods for the prevention and control of of new or improved chemical additives air pollution resulting from the com- which provide substantial immediate bustion of fuels.

improvement to existing treatment (b) The Federal Water Pollution processes), or new or improved methControl Act, as amended, Pub. L. 92- ods of joint treatment systems for mu500.

nicipal and industrial wastes. (1) Section 104(b) (33 U.S.C. 1254(b)) (7) Section 105(b) (33 U.S.C. 1255(b)) authorizes grants for research and authorizes grants for demonstrating, demonstration projects relating to the in river basins or portions thereof, adcauses, effects, extent, prevention, re- vanced treatment and environmental duction, and elimination of water pol- enhancement techniques to control lation.

pollution from all sources, within such (2) Section 104(h) (33 U.S.C. basin or portions thereof, including 1254(h)) authorizes grants for re- nonpoint sources, together with insearch and development of new and stream water quality improvement improved methods for the prevention, techniques. removal, reduction, and elimination of (8) Section 105(c) (33 U.S.C. 1255(c)) pollution in lakes, including the unde- authorizes grants for research and sirable effects of nutrients and vegeta- demonstration projects for prevention tio, and for construction of publicly of pollution of any waters by industry owned research facilities for such pur- including, but not limited to, the prepose.

vention, reduction, and elimination of (3) Section 104(i) (33 U.S.C. 1254(i)) the discharge of pollutants. authorizes grants for research, studies, (9) Section 105(e)(1) (33 U.S.C. experiments, and demonstrations rela- 1255(e)(1)) authorizes grants for retive to the removal of oil from any search and demonstration projects waters and for the prevention, control, with respect to new and improved and elimination of oil and hazardous methods of preventing, reducing, and substances pollution.

eliminating pollution from agriculture. (4) Section 104(r) (33 U.S.C. 1254(r)) (10) Section 105(e)(2) (33 U.S.C. authorized grants for the conduct of 1255(e)(2)) authorizes grants for dembasic research into the structure and onstration projects with respect to function of freshwater aquatic ecosys- new and improved methods of preventtems, and to improve understanding of ing, reducing, storing, collecting, treatthe ecological characteristics neces- ing, or otherwise eliminating pollution

construction of new or improved solid waste disposal facilities.

(e) The Federal Insecticide, Fungicide, and Rodenticide Act, as amended, Pub. L. 92-516.

(1) Section 20 authorizes grants for research in the pesticides areas with priority given to the development of biologically integrated alternatives for pest control.

(f) The Grant Act, 42 U.S.C. 1891 et seg., authorizes grants for basic scientific research. (38 FR 12784, May 15, 1973, as amended at 42 FR 56056, Oct. 20, 1977)

8 40.115 Definitions.

The statutes identified in $ 40.110 contain definitions which are not all repeated here. The following terms shall have the meaning set forth below: (42 FR 56056, Oct. 20, 1977)

from sewage in rural and other areas where collection of sewage in conventional, communitywide sewage collection systems is impractical, uneconomical, or otherwise infeasible, or where soil conditions or other factors preclude the use of septic tank and drainage field systems.

(11) Section 107 (33 U.S.C. 1257) authorizes grants for projects to demonstrate comprehensive approaches to the elimination or control of acid or other mine water pollution resulting from active or abandoned mining operations and other environmental pollution affecting water quality within all or part of a watershed or river basin, including siltation from surface mining.

(12) Section 108 (33 U.S.C. 1258) authorizes grants for projects to demonstrate new methods and techniques, and to develop preliminary plans for the elimination or control of pollution within all or any part of the watersheds of the Great Lakes.

(13) Section 113 (33 U.S.C. 1263) authorizes grants for projects to demonstrate methods to provide for central community facilities for safe water and elimination or control of pollution in those native villages of Alaska without such facilities.

(c) The Public Health Service Act, as amended, 42 U.S.C. 241 et seq.

(1) Section 201 (42 U.S.C. 241, 242, and 246) authorizes grants for research relatiag to the human and environmental effects of radiation.

(d) The Solid Waste Disposal Act, as amended, by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. 6901 et seq.).

(1) Section 8001 (42 U.S.C. 6981) authorizes grants for research and demonstration projects relating to solid waste.

(2) Section 8004 (42 U.S.C. 6984) authorizes grants for demonstration of new or improved technologies for resource recovery.

(3) Section 8005 (42 U.S.C. 6985) authorizes grants to conduct special studies and demonstration projects on recovery of useful energy and materials.

(4) Section 8006 (42 U.S.C. 6988) authorizes grants for the demonstration of resource recovery system or for the

8 40.115-1 Construction.

May include the preliminary planning to determine the economic and engineering feasibility of a facility, the engineering, architectural, legal, fiscal, and economic investigations and studies, surveys, designs, plans, working drawings, specifications, procedures, and other action necessary to the construction of & facility, the erection, acquisition, alteration, remodeling, improvement, or extension of a facility, and the inspection and supervision of the construction of a facility. 8 40.115-2 Intermunicipal agency.

(a) Under the Clean Air Act, an agency of two or more municipalities located in the same State or in differ. ent States and having substantial powers or duties pertaining to the prevention and control of air pollution.

(b) Under the Resource Conservation and Recovery Act, an agency established by two or more municipalities with responsibility for planning or administration of solid waste.

(c) In all other cases, an agency of two or more municipalities having substantial powers or duties pertaining to the control of pollution. (38 FR 12784, May 15, 1973, as amended at 42 FR 56066, Oct. 20, 1977)

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