Capitalization Grants for Drinking Water State Revolving Funds (66.468)

 

Program

66.468 Capitalization Grants for Drinking Water State Revolving Funds

 

Federal Agency

OFFICE OF WATER, OFFICE OF GROUND WATER AND DRINKING WATER, ENVIRONMENTAL PROTECTION AGENCY

 

Authorization

Safe Drinking Water Act (SDWA) Amendments of 1996, Section 130; Public Law 104-182.

 

Program Number

66.468

 

Last Known Status

Active

 

Objectives

Grants made to States capitalize their Drinking Water State Revolving Funds (DWSRFs) which will provide a long-term source of State financing for the costs of drinking water infrastructure. Funding Priority: The funding priority established by the SDWA are for projects that are needed to achieve or maintain compliance with SDWA requirements, protect public health, and assist systems with economic need. A State may also use the grant funds to for programs that emphasize preventing contamination problems through source water protection and enhancing water system management. States determine priorities for funding within their state in accordance with SDWA. The program supports the Agency's strategic goal of ensuring Clean and Safe Water.

 

Types of Assistance

Formula Grants.

 

Uses and Use Restrictions

Capitalization grants are available to each State for the purpose of establishing a DWSRF for providing assistance to drinking water systems for infrastructure improvements. The capitalization grant is deposited in the State's DWSRF, and is used to provide loans and other types of financial assistance to eligible public water systems. A State may elect to use up to 31 percent of the capitalization grant for other eligible activities, including 4 percent for administration of the program. States may also elect to transfer up to one-third of the DWSRF capitalization grant to the Clean Water State Revolving Fund (CWSRF) or an equivalent amount from the CWSRF to the DWSRF program.

 

Eligibility Requirements

Applicant Eligibility

States and the Territory of Puerto Rico are eligible to receive capitalization grants. The District of Columbia, Territories excluding Puerto Rico, and Indian tribes are eligible for direct grants from the program.

Beneficiary Eligibility

States are the primary beneficiary of assistance from EPA. States use funds awarded to them to provide loans and other types of financial assistance to eligible public water systems - which are publicly and privately owned community drinking water systems and non-profit non-community drinking water systems (including water systems owned by Indian Tribes and Alaska Native Villages).

Credentials/Documentation

To receive a capitalization grant, a State enters into an agreement with the EPA Regional Administrator which shall include, but not be limited to, the requirements set forth in Section 130 of the SDWA. Recipients must follow OMB Circular No. A-87, "Cost Principles for State, Local and Indian Tribal Governments."

 

Application and Award Process

Preapplication Coordination

An applicant (State) should seek preapplication assistance from the appropriate EPA Regional Office. The State is required to prepare and provide for public comment on a plan identifying the intended uses (Intended Use Plan, or IUP) of the funds in the DWSRF and how those uses support the goals of the DWSRF. The IUP is to be submitted no later than the application. An environmental impact statement is not required prior to grant award; however, a State environmental review process must be applied to all subsequent State assistance for drinking water systems. This program is eligible for coverage under E.O. 12372, "Intergovernmental Review of Federal Programs". An applicant should consult the office or official designated as the point of contact in his or her State for more information on the State's process for applying for assistance, if the State has selected the program for review.

Application Procedure

The standard application for EPA non- construction grant assistance (Standard Form SF-424 A and B) is submitted to the appropriate Regional Office. The State must certify that it has the legal authority to receive a capitalization grant and that it has the legal authority to operate the program. The State must provide the assurance in its application that it has the legal, managerial, technical and operational capabilities to administer the DWSRF program competently and that will comply with all applicable Federal cross-cutting authorities and Federal statutes. EPA grant regulations (40 CFR Part 31 apply to States receiving capitalization grants. Establishment of the DWSRF is a prerequisite for a grant award.

Award Procedure

A grant application is reviewed by the appropriate Regional Office, and if approved, the grant is awarded by the Regional Administrator under a delegation of authority from the Administrator of EPA. EPA Headquarters retains the authority to review certain applications or parts thereof.

Deadlines

Applications should be submitted to the appropriate Regional Office no later than June 30 of the year following the year of appropriation to allow sufficient time for review and processing prior to the September 30 reallotment deadline.

 

Range of Approval/Disapproval Time

Appeals

As described in EPA's Regulation 40 CFR Part 31, Subpart F.

Renewals

For those portions of the State program that do not change from year to year, a subsequent grant application may incorporate by reference relevant portions of the previous year's application which have not changed and are placed in its operating agreement.

 

Assistance Considerations

Formula and Matching Requirements

The Regional Administrator may award capitalization grants for DWSRFs from funds appropriated for this purpose. Allotments to the States are based on a formula, approved by the Administrator, that allocates the funds based on the proportional share of the State needs identified in the most recent needs survey conducted, except that each State and the District of Columbia will receive a minimum of one percent. The required State match is 20 percent of the amount of the capitalization made to the State. States must also provide a match or demonstrate a credit for State funded eligible activities to receive Federal funds for certain program support activities.

Length and Time Phasing of Assistance

Funds are available for EPA's obligation to the State during the fiscal year in which they are allotted and during the following year. The State must agree to enter into binding commitments with loan recipients to provide financial assistance from the DWSRF in an amount equal to the sum of Federal assistance, less amounts used by the State for eligible set-aside purposes, and the State match. The State is also required to agree to commit and expend all funds in the DWSRF as efficiently as possible, and in a timely manner.

 

Post Assistance Requirements

Reports

Beginning the second fiscal year after receiving payments the State shall provide a biennial report to the Regional Administrator in accordance with the schedule established in the grant agreement (generally not later than 90 days after the end of the second fiscal year during which the payments were received). The biennial report shall describe how the State has met the goals and objectives for the preceding two fiscal years as identified in its intended use plans for those periods, including identification of loan recipients, loan amounts, and loan terms and similar details on other forms of financial assistance provided from the DWSRF.

Audits

A State must comply with the provisions of the Single Audit Act Amendments of 1996, and the OMB Circular No. A-133 and Compliance Supplement. States are also encouraged to conduct annual independent audits. The audit of the fund to be prepared by the State or an independent auditor must be in accordance with the standards of the General Accounting Office (known as the Generally Accepted Government Auditing Standards). To the extent that the set-asides are used for project purposes that must be repaid, or are directly related to the DWSRF (e.g., administration) or are revolving funds themselves, they must be part of an audited opinion(s). The audits must provide an auditor's opinion on the DWSRF financial statements, a report on internal controls and a report on compliance with laws and regulations. Those set-aside funds that are not loaned out may be audited in conjunction with audits conducted under the Single Audit Act, as described in OMB Circular No. A-133 and OMB's Compliance Supplement for Single Audits of State and Local Governments. In accordance with the provisions of OMB Circular No. A-133, "Audits of States, Local Governments, and Non-Profit Organizations," nonfederal entities that receive financial assistance of $300,000 or more within the State's fiscal year shall have an audit made for that year. The Office of Management and Budget (OMB) Circular No. A-133, "Audits of States, Local Governments, and Non-Profit Organizations," was published in the Federal Register on June 30, 1997. The Circular implements the Single Audit Act amendments of 1996. The Circular requires nonfederal entities that expend more than $300,000 in Federal award dollars, to have an audit conducted in accordance with the Circular's provisions. With the revised Circular, the previous OMB Circular NO. A-128 for single audits of State and local governments was rescinded and the single audit requirements for these entities were incorporated among the provisions of OMB Circular No. A-133.

Records

As part of the annual review conducted by the agency to assess the State's performance against activities identified in the intended use plan and biennial report, and to determine compliance with the terms of the capitalization grant agreement, the State or assistance recipient shall make available to EPA such records as the Regional Administrator reasonably requires to review and determine State compliance with the requirements of the SDWA.

 

Program Accomplishments

All 50 states and the Territory of Puerto Rico have established and are implementing DWSRF programs through receipt of a capitalization grant. During FY02, states made 662 loans to systems for a total of $1.3 billion dollars. Of the total loans, 71% went to small water systems that serve 10,000 persons or fewer. In FY03, it is anticipated that states will make approximately 600 loans to systems.

 

Financial Information

Account Identification

68-0108-0-1-304.

Obligations

FY 02 $850,000,000; FY 03 est $844,475,000; FY 04 est $850,000,000 (estimate based on Pres Budget Request).

Range and Average of Financial Assistance

For fiscal year 2002 $8,058,500 to $82,523,700; $15,590,896.

 

Regulations, Guidelines and Literature

Final program guidance was issued February 28, 1997. Regulations include 40 CFR Part 31 and DWSRF regulations 40 CFR Part 35, Subpart L.. Additional program information is available online.

 

Related Programs

66.458, Capitalization Grants for Clean Water State Revolving Funds.

 

Information Contacts

Regional or Local Office

See EPA Regional Offices listed in Appendix IV of the Catalog, or online.

Headquarters Office

Charles Job, Infrastructure Branch (4606M), Drinking Water Protection Division, Office of Groundwater and Drinking Water, U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue, NW, Washington, DC 20460. Telephone: (202) 564-3941.

Web Site Address

http://www.epa.gov/safewater/dwsrf.html

 

Examples of Funded Projects

Drinking Water State Revolving Fund; drinking water projects addressing treatment, storage, source, transmission, distribution and consolidation.

 

Criteria for Selecting Proposals

Grants are awarded to States that satisfy the requirements outlined in the application procedure section.