ect are unallowable. Such costs include, but are not limited to:

(a) Basin or areawide planning not directly related to the project;

(b) Bonus payments not legally required for completion of construction in advance of a contractual completion date;

(c) Personal injury compensation or damages arising out of the project, whether determined by adjudication, arbitration, negotiation, or otherwise;

(d) Fines and penalties resulting from violations of, or failure to comply with, Federal, State, or local laws;

(e) Costs outside the scope of the approved project;

(f) Interest on bonds or any other form of indebtedness required to finance the grantee's share of project costs;

(g) Ordinary operating expenses of local government, such as salaries and expenses of a mayor, city council members, or city attorney, except as provided in § 35.940-4;

(h) Site acquisition (for example, sewer rights-of-way, sewer treatment plant sites, sanitary landfills and sludge disposal areas), except as otherwise provided in § 35.940-3(a).

§ 35.940-3 Costs allowable, if approved.

Certain direct costs are sometimes necessary for the construction of a treatment works and are allowable if reasonable and approved by the Regional Administrator in the grant agreement or a grant amendment. Such costs include, but are not limited to:

(a) Land acquired after October 17, 1972, that will be an integral part of the treatment process or that will be used for ultimate disposal of residues resulting from such treatment (for example, land for spray irrigation of sewage effluent).

(b) Acquisition of an operable portion of a treatment works.

(c) Rate determinations studies required pursuant to § 35.925-11.

§ 35.940-4 Indirect costs.

Indirect costs of the grantee shall be allowable in accordance with an indirect cost agreement negotiated and incorporated in the grant agreement. An indirect cost agreement must identify those cost elements allowable pursuant to § 35.940-1. Where the benefits derived from a grantee's indirect services cannot be readily determined, a lump sum for overhead may be negotiated based upon a determination that such amount will be

approximately the same as the actual indirect costs that may be incurred. § 35.940-5 Disputes.

The grantee should seek to resolve any questions relating to cost allowability or allocation at its earliest opportunity (if possible, prior to execution of the grant agreement). Final determinations concerning the allowability of costs shall be conclusive unless appealed within 30 days in accordance with the "Disputes" article (Article 7) of the EPA General Grant Conditions (Appendix A, Subchapter B of this title).

§ 35.945 Grant payments.

The grantee shall be paid on a reimbursable basis for the Federal share of allowable costs incurred within the scope of an approved project: Provided, That such payments may not exceed the payment schedule and the grant amount set forth in the grant agreement and any amendments thereto.

(a) Initial payment. Upon award of a grant, the grantee may request payment for the unpaid Federal share of allowable project costs, e.g., preliminary plans and studies, sewer system evaluations, or preparation of final construction drawings and specifications.

(b) Interim payments. The grantee may submit requests for payment for allowable costs incurred in accordance with the negotiated payment schedule included in the grant agreement. Upon receipt of a request for payment, the Regional Administrator shall cause to be disbursed from available appropriated funds such amounts as are necessary so that the total amount of Federal payments to the grantee for the project is equal to the Federal share of the actual or estimated allowable project costs incurred to date, as certified by the grantee in its most recent request for payment.

(c) Adjustment. At any time or times prior to final payment under the grant, the Regional Administrator may cause any request(s) for payment to be reviewed or audited. Each payment theretofore made shall be subject to reduction for amounts included in the related request for payment which are found, on the basis of such review or audit, not to constitute allowable costs. Any payment may be reduced for overpayments or increased for underpayments on preceding requests for payment.

(d) Refund, rebates, credits, etc. The Federal share of any refunds, rebates,

credits, or other amounts (including any interest thereon) accruing to or received by the grantee with respect to the project, to the extent that they are properly allocable to costs for which the grantee has been paid under a grant, must be credited to the current State allotment or paid to the United States. Reasonable expenses incurred by the grantee for the purpose of securing such refunds, rebates, credits, or other amounts shall be allowable under the grant when approved by the Regional Administrator.

(e) Final payment. On receipt and approval of the request for payment designated by the grantee as the "final payment request" and upon compliance by the grantee with all applicable requirements of this part (including paragraph (d) of this section) and the grant agreement, the Regional Administrator shall cause to be disbursed to the grantee any balance of allowable cost which has not been paid to the grantee. The final payment request must be submitted by the grantee promptly following completion of the project work but in no event later than 1 year (or such longer period as the Regional Administrator may in his discretion approve in writing) from the date of such completion. Prior to final payment under the grant, the grantee must execute and deliver an assignment to the United States, in form and substance satisfactory to the Regional Administrator, of the Federal share of refunds, rebates, credits or other amounts (including any interest thereon) properly allocable to costs for which the grantee has been paid by the Government under the grant, and a release discharging the United States, its officers, agents, and employees from all liabilities, obligations, and claims arising out of the project or under the grant, subject only to such exceptions which may be specified in the release.

§ 35.950 Suspension or termination of grants.

Grants may be suspended, in accordance with § 30.902 of this chapter and Article 4 of the General Grant Conditions (Appendix A to Subchapter B of this title), or terminated, in accordance with $30.903 of this chapter and Article 5 of the General Grant Conditions (Appendix A to Subchapter B of this title): Provided, That the State agency shall be concurrently notified in writing of any such suspension or termination action.

§ 40.100

Purpose of regulation.

These provisions establish and codify policies and procedures governing the award of research and demonstration grants by the Environmental Protection Agency.

§ 40.105 Applicability and scope.

This part establishes mandatory policies and procedures for all EPA research and demonstration grants. The provisions of this part supplement the EPA general grant regulations and procedures (40 CFR pt. 30). Accordingly, all EPA research and demonstration grants are awarded subject to the EPA interim general grant regulations and procedures (40 CFR pt. 30) and to the applicable provisions of this part 40.

§ 40.110 Authority.

EPA research and

demonstration

grants are authorized under the following statutes:

(a) The Clean Air Act, as amended, 42 U.S.C. 1857 et seq.

(1) Section 103 (42 U.S.C. 1857b) authorizes grants for research and demonstration projects relating to the causes, effects, extent, prevention, and control of air pollution.

(2) Section 104 (42 U.S.C. 1857b-1) authorizes grants for research and development of new and improved methods for the prevention and control of air pollution resulting from the combustion of fuels.

(b) The Federal Water Pollution Control Act, as amended, Public Law 92-500.

(1) Section 104(b) (33 U.S.C. 1254 (b)) authorizes grants for research and demonstration projects relating to the causes, effects, extent, prevention, reduction, and elimination of water pollution.

(2) Section 104(h) (33 U.S.C. 1254 (h)) authorizes grants for research and development of new and improved methods for the prevention, removal, reduction, and elimination of pollution in lakes, including the undesirable effects of nutrients and vegetation, and for construction of publicly owned research facilities for such purpose.

(3) Section 104(i) (33 U.S.C. 1254(1)) authorizes grants for research, studies, experiments, and demonstrations relative to the removal of oil from any waters and for the prevention, control, and elimination of oil and hazardous substances pollution.

(4) Section 104(r) (33 U.S.C. 1254(r)) authorizes grants for the conduct of basic research into the structure and function of freshwater aquatic ecosystems, and to improve understanding of the ecological characteristics necessary to the maintenance of the chemical, physical, and biological integrity of freshwater aquatic ecosystems.

(5) Section 104(s) (33 U.S.C. (s)) authorizes grants to conduct and report on interdisciplinary studies on river systems, including hydrology, biology, ecology, economics, the relationship between river uses and land uses, and the effects of development within river basins on river systems and on the value of water resources and water-related activites.

(6) Section 105(a) (33 U.S.C. 1255(a)) authorizes grants for research and demonstration of new or improved methods for preventing, reducing, and eliminating the discharge into any waters of pollutants from sewers which carry storm water or both storm water and pollutants; and for the demonstration of advanced waste treatment and water purification methods (including the temporary use of new or improved chemical additives which provide substantial immediate improvement to existing treatment processes), or new or improved methods of joint treatment systems for municipal and industrial wastes.

(7) Section 105 (b) (33 U.S.C. 1255 (b)) authorizes grants for demonstrating, in river basins or portions thereof, advanced treatment and environmental enhancement techniques to control pollution from all sources, within such basin or portions thereof, including nonpoint sources, together with in-stream water quality improvement techniques.

(8) Section 105 (c) (33 U.S.C. 1255 (c)) authorizes grants for research and demonstration projects for prevention of pollution of any waters by industry including, but not limited to, the prevention, reduction, and elimination of the discharge of pollutants.

(9) Section 105 (e) (1) (33 U.S.C. 1255 (e) (1)) authorizes grants for research and demonstration projects with respect to new and improved methods of preventing, reducing, and eliminating pollution from agriculture.

(10) Section 105 (e) (2) (33 U.S.C. 1255 (e) (2)) authorizes grants for demonstration projects with respect to new and improved methods of preventing, reducing, storing, collecting, treating, or otherwise eliminating pollution 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 301 (42 U.S.C. 241, 242b, and 246) authorizes grants for research relating to the human and environmental effects of radiation.

(d) The Solid Waste Disposal Act, as amended, 42 U.S.C. 3251 et seq.

(1) Section 204 (42 U.S.C. 3253) authorizes grants for research and demonstration projects relating to new and improved methods of solid waste management.

(2) Section 205 (42 U.S.C. 3253a) authorizes grants for research and demonstration projects relating to the recovery of materials and energy from solid waste.

(3) Section 208 (42 U.S.C. 3254b) authorizes grants for the demonstration of resource recovery systems.

(e) The Federal Insecticide, Fungicide, and Rodenticide Act, as amended, Public Law 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 seq., authorizes grants for basic scientific research.

As used herein, the following words and terms shall have the meaning set forth below:

§ 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 a facility, the erection, acquisition, alteration, remodeling, improvement, or extension of a facility, and the inspection and supervision of the construction of a facility.

§ 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 different States and having substantial powers or duties pertaining to the prevention and control of air pollution.

(b) Under the Solid Waste Disposal Act, an agency established by two or more municipalities with responsibility for planning or administration of solid waste disposal.

(c) In all other cases, an agency of two or more municipalities having substantial powers or duties pertaining to the control of pollution.

§ 40.115-3 Interstate agency.

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

(b) Under the Federal Water Pollution Control Act, an agency of two or more States established by or pursuant to an agreement or compact approved by the Congress or any other agency of two or more States, having substantial powers or duties pertaining to the control of pollution of waters.

(c) Under the Solid Waste Disposal Act, an agency of two or more municipalities in different States, or an agency established by two or more States, with authority to provide for the disposal of solid wastes and serving two or more municipalities located in different States.

(d) In all other cases, an agency of two or more States having substantial

powers or duties pertaining to the control of pollution.

§ 40.115 4 Municipality.

(a) Under the Federal Water Pollution Control Act a city, town, borough, county, parish, district, association, or other public body created by or pursuant to State law, or an Indian tribe or an authorized Indian tribal organization, with jurisdiction over disposal of sewage, industrial wastes, or other wastes; or a designated and approved management agency under section 208 of the act.

(b) Under the Solid Waste Disposal Act, a city, town, borough, county, parish, district, or other public body created by or pursuant to State law, or an Indian tribe, with responsibility for the planning or administration of solid waste disposal.

(c) In all other cases, a city, town, borough, county, parish, district, or other public body created by or pursuant to State law, or an Indian tribe or an authorized Indian tribal organization, having substantial powers or duties pertaining to the control of pollution.

§ 40.115-5 Person.

Under the Federal Water Pollution Control Act, an individual, corporation, partnership, association, State, municipality, commission, or political subdivision of a State, or any interstate body. § 40.115-6 Recovered resources.

Materials or energy recovered from solid wastes.

§ 40.115-7 Resource recovery system.

A solid waste management system which provides for collection, separation, recycling, and recovery of solid wastes, including disposal of nonrecoverable waste residues.

§ 40.115-8 Solid waste.

Garbage, refuse, and other discarded solid materials, including solid waste materials resulting from industrial, commercial, and agricultural operations, and from community activities, but does not include solids or dissolved material in domestic sewage or other significant pollutants in water resources, such as silt, dissolved or suspended solids in industrial wastewater effluents, dissolved materials in irrigation return flows, or other common water pollutants.

To promote the most efficient utilization of available resources in the solution of national environmental problems, EPA has established a detailed planning system for the identification of research needs and priorities, definition of specific research objectives which will satisfy high priority needs, development of detailed plans to accomplish defined objectives, and selection of objectives and their accompanying accomplishment plans for implementation. Accomplishment plans are based upon the most effective funding mechanism available for meeting the defined objective. Funding mechanisms include grants, contracts, in-house projects and transfer of funds to other agencies. EPA grant awards are based upon the projected grant activities developed from this planning process. Research objectives and priorities are revised as needs change, but are comprehensively reviewed and revised annually.