drinking water loan account handbook of procedures

Drinking Water Loan Account Handbook

State of Idaho Department of Environmental Quality

March 2017

July 1, 2021 NOTE ABOUT THIS HANDBOOK: This document is under revision. This handbook was originally issued March 2017, and is being revised to update citations,provide clarity, and remove outdated information. The information in this handbook is still relevant for use until the revisions are finalized.

Printed on recycled paper, DEQ March 2017, PID 9300, CA 82043. Costs associated with this publication are available from the State of Idaho Department of Environmental Quality in accordance with Section 60-202, Idaho Code.


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July 1, 2021 NOTE ABOUT THIS HANDBOOK: This document is under revision. This handbook was originally issued March 2017, and is being revised to update citations,provide clarity, and remove outdated information. The information in this handbook is still relevant for use until the revisions are finalized.

DEQ initiated rulemaking in response to Executive Order No. 2019-02, Red Tape Reduction Act, issued by Governor Little on January 21, 2019 (Chapter Repeal). Upon review of its existing rules, DEQ determined that its two facility planning grant rule chapters could be simplified and consolidated into a single chapter. DEQ proposed to delete IDAPA 58.01.04, Rules for Administration of Wastewater Treatment Facility Grants, and merge necessary and relevant sections of IDAPA 58.01.04 with IDAPA 58.01.22, Rules for Administration of Planning Grants for Public Drinking Water Facilities.

Additionally, DEQ proposed to delete IDAPA 58.01.20, Rules for Administration of Drinking Water Loan Program, and merge necessary and relevant sections of IDAPA 58.01.20 with IDAPA 58.01.12, Rules for Administration of Water Pollution Control Loans.

These rule revisions were adopted as temporary rules with an effective date of July 1, 2021. The legal requirements for administration of drinking water and wastewater grants and loans are spelled out in IDAPA 58.01.22, Rules for Administration of Planning Grants for Drinking Water and Wastewater Facilities and IDAPA 58.01.12, Rules for Administration of Wastewater and Drinking Water Loan Funds, cited below.

Reference:

Pending Rules Review Book: https://adminrules.idaho.gov/legislative_books/2021/pending/21H_EnvEnergyTech.pdf

Pending Fee Rules Review Book: https://adminrules.idaho.gov/legislative_books/2021/fee/21H_Fee_EnvEnergyTech.pdf

https://adminrules.idaho.gov/legislative_books/2021/pending/21H_EnvEnergyTech.pdf

https://adminrules.idaho.gov/legislative_books/2021/fee/21H_Fee_EnvEnergyTech.pdf


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Table of Contents

General Policy Statements .............................................................................................................. 1 Overview ......................................................................................................................................... 1 1 Pre-Application Conference .................................................................................................... 3 2 Application Review ................................................................................................................. 3 3 Offer ......................................................................................................................................... 4

General Conditions for All Offers ............................................................................................... 4 Security ........................................................................................................................................ 5 Suspension or Termination of the Loan ...................................................................................... 5 DUNS Registration ..................................................................................................................... 5

4 Disbursement Requests and Cost Eligibility ........................................................................... 5 Allowable Costs .......................................................................................................................... 6

5 Review/Approval of Planning Documents and Environmental Reviews ................................ 7 SERP—A Consultative Process .................................................................................................. 8 SERP—Lessons Learned and Minor Projects ............................................................................. 8 Forms ........................................................................................................................................... 8 Responsibilities ........................................................................................................................... 9

6 Plans, Specifications, and Addenda Review.......................................................................... 10 7 User Charge System and Water System Protection Ordinance ............................................. 13 8 Bid Reviews ........................................................................................................................... 13 9 Construction Management ..................................................................................................... 14

Pre-Construction Conferences ................................................................................................... 15 Disputes ..................................................................................................................................... 15 Change Orders ........................................................................................................................... 15

10 Operations and Maintenance Manual .................................................................................... 15 11 Construction Inspections ....................................................................................................... 16 12 Project Files and Accounting ................................................................................................. 17

Project Files ............................................................................................................................... 17 Accounting ................................................................................................................................ 18

Policy for Determining Annual Drinking Water Loan Fee ................................................... 18 Policy Memo for Annual Interest Rate Setting...................................................................... 18

Glossary ........................................................................................................................................ 19


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List of Forms

Section 1. Pre-Application Conference Form 1-A Pre-Application Conference Checklist

Section 2. Application Review Form 2-A Application for State Revolving Fund Loan Form 2-B Financial Application Form Form 2-C, Sec. 1 Technical Capacity Assessment Form 2-C, Sec. 2 Financial Capacity Assessment Form 2-C, Sec. 3 Managerial Capacity Assessment Form 2-D Application Review Checklist

Section 3. Loan Offer Form 3-A Sample Offer, Acceptance, and Agreement Form 3-B Sample Project Schedule Form 3-C Sample Offer Transmittal

Section 4. Disbursement Requests Form 4-A Outlay Report and Request for Reimbursement for Drinking Water Loans Form 4-B Checklist for Reviewing Disbursement Requests

Section 5. Review/Approval of Planning Documents and Environmental Reviews Form 5-A Outline and Checklist for Planning Document (Engineering Report/Facility

Plan) Form 5-B DEQ Environmental Review Procedure Form 5-C SERP Scoping Meeting Form 5-D Checklist for a Categorical Exclusion Request Form 5-E Outline and Checklist for Environmental Information Documents (EIDs)

Section 6. Plans and Specifications Form 6-A Idaho Drinking Water State Revolving Fund (DWSRF) Specifications Insert Form 6-B Checklist for Plans and Specifications Review Form 6-C Plans and Specifications Review Approval Letter

Section 7. User Charge System and Water System Protection Ordinance Form 7-A Checklist for User Charge System (UCS) and Water System Protection

Ordinance (WSPO) Review Form 7-B Sample User Charge System (UCS) and Water System Protection Ordinance

(WSPO) Letter

Section 8. Bid Reviews Form 8-A Checklist for Reviewing Bid Documents

https://www2.deq.idaho.gov/admin/LEIA/api/document/download/16052



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Form 8-B Sample Letter Authorizing Bid Award Form 8-C Checklist for Data Due after Bid Award

Section 9. Construction Management Form 9-A Checklist for Pre-Construction Conference Form 9-B Drinking Water Loan Account Suggested Agenda and Points of Discussion

for Pre-Construction Meeting with Contractor Form 9-C Checklist for Construction Dispute Review Form 9-D Evaluation of Change Orders Form 9-E Checklist for Change Order Review Form 9-F Sample Letter Explaining DEQ Involvement with Acquisition of Professional

Services and Need for Certificate of Negotiation

Section 10. Operations and Maintenance (O&M) Manual Form 10-A Checklist for Operations and Maintenance (O&M) Manual Review Form 10-B Sample Operations and Maintenance Manual Review Transmittal Letter

Section 11. Construction Inspections Form 11-A Interim Construction Inspection Report Form 11-B Request for Final Construction Inspection and Disbursement Form 11-C Submittals Required Prior to Final Inspection Form 11-D Documents to Have Available at the Time of Final Inspection Form 11-E Final Construction Inspection Report

Section 12. Project Files Form 12-A Checklist for Major Milestone Dates Form 12-B Change Order Summary Form 12-C Miscellaneous Provisions and Specimen Documents


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General Policy Statements 1. Loans from the Drinking Water Loan Account may be offered for up to 100% of eligible

project costs under state and federal regulations, subject to availability of loan funds. Technically, the Idaho Department of Environmental Quality (DEQ) purchases debt from funding recipients; however, the term “loan” is used for readability purposes.

2. The length of the repayment period may vary according to the expected life of the project being financed. However, all repayment obligations must be fully paid off (amortized) no later than 30 years from project completion. Interest will accrue from the date funds are disbursed.

3. Long-term commitments for future funding will not be made. When deemed necessary to meet state public health and/or funding objectives, partial or phased funding may be offered for a project without guarantee of future funding.

4. Available resources will be committed to new loans in a timely manner.

5. Without formal written advance approval, costs incurred by an applicant before an assistance agreement is entered into will generally not be considered eligible. See“allowable costs” on page 6 for exceptions.

6. No disbursements will occur until application requirements are met.

7. The Idaho Department of Environmental Quality (DEQ) has established a policy for determining the rate of interest to be charged on loans from the drinking water loan accounts. The Policy for Determining Interest Rates on Loans from the Water Pollution Control and Drinking Water Loan Accounts (PM12-01) is found on DEQ’s websiteat https://www2.deq.idaho.gov/admin/LEIA/api/document/download/16034.

Overview Using funds provided by the United States Environmental Protection Agency (EPA), the Idaho Department of Environmental Quality (DEQ) offers loans to qualified water systems to improve their drinking water facilities. These loans come from the Drinking Water State Revolving Fund (DWSRF) Program.

The list below outlines the steps a public water system owner goes through to receive a DWSRF loan.

1. Submit Letter of Interest to get owner on fundable list2. Receive Confirmation from DEQ that you are on fundable list3. Pre-application meeting4. Loan application received5. Environmental review process initiated



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6. Environmental determination issued and published 7. Engineering contract approved 8. Viability certified through technical, financial, and managerial capacity assessment 9. Operator licensure verified 10. Final environmental determination is approved 11. Facility plan approved 12. Offer made 13. Offer accepted 14. Plans and specifications approved 15. Water system protection ordinance (WSPO) and user charge system (UCS) approved 16. Pre-bid conference 17. Bid review checklist completed 18. Authorization to award bid 19. Pre-construction conference 20. Notice to proceed 21. Plan of operation approved 22. Design and construction 23. Operations and maintenance manual approved 24. Final inspection 25. Closeout package 26. Final project review 27. Repayment of loan

This handbook explains what needs to be accomplished at each step in the loan process. In addition, 41 forms accompany the handbook to assist DEQ representatives and the borrower. Some forms are sample letters in Microsoft Word format, which DEQ or the borrower may download and customize to fit their individual situations by inserting the appropriate content where indicated in the letter. The remaining forms are in PDF format, and most are interactive—users can fill out the form electronically by opening the form with the free Adobe Acrobat reader and print a hard copy to submit.

Note: These forms open best in Internet Explorer. For Mozilla Firefox users, you may get a “Please Wait” message and will need to click on the “Open with Different Viewer” prompt on the top right of the screen if the document does not display properly. The forms do not open in Chrome.


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1 Pre-Application Conference Form 1-A, the Pre-Application Conference Checklist, accompanies this section.

The purpose of a pre-application conference is to provide the potential applicant and the Idaho Department of Environmental Quality (DEQ) an opportunity for a face-to-face meeting to discuss the program and its requirements. Appropriate government representatives should attend the pre-application conference.

DEQ shall be represented by its regional office project officer. Other attendees may include DEQ legal, financial, administrative, and public works staff.

Topics of discussion at the pre-application conference should include the following: Drinking water grant and DWSRF programs • Status of the proposed loan on the current priority list of projects approved by DEQ • Probability of funding for the project • Roles and responsibilities of all parties • Necessity for compliance with federal requirements •

If the potential applicant intends to submit an application, the requirements and a timetable should be discussed.

The project officer should complete Form 1-A, the Pre-Application Conference Checklist, which should be placed in TRIM (DEQ’s document management system). A list of attendees at the pre-application conference should be attached to the checklist.

2 Application Review Six forms accompany this section:

Form 2-A, Application for State Revolving Fund Loan • Form 2–B, Financial Application Form • Form 2-C, Section 1, Technical Capacity Assessment • Form 2-C, Section 2, Financial Capacity Assessment • Form 2-C, Section 3, Managerial Capacity Assessment • Form 2-D, Application Review Checklist •

Application review includes the following actions: 1. Upon receipt of the completed Application for a State Revolving Loan (Form 2-A and

Form 2-B) from an applicant, the project officer will review the application for accuracy and completeness.

2. The project officer should complete Sections 1 and 3 of the Water System Capacity Assessment Indicators (Form 2-C).

3. The DEQ state office will complete section 2 of Form 2-C.

4. The project officer should complete the Application Review Checklist (Form 2-D) and provide a recommendation for funding.


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5. The project officer should submit the following to the state office, where the final loan determination will be made, and the loan offer will be prepared: a. The completed Application for a State Revolving Loan (Forms 2-A and 2-B) b. The partially completed Idaho DEQ Water System Capacity Assessment

Indicators (Form 2-C, Section 1) c. The completed Application Review Checklist (Form 2-D) d. A completed recommendation for funding

3 Offer Three forms accompany this section:

Form 3-A, Sample Offer, Acceptance, and Agreement • Form 3–B, Sample Project Schedule • Form 3-C, Sample Offer Transmittal •

After review of the technical documents, the project officer in the DEQ regional office should submit a recommendation for funding to the state office.

If, after further review by the state office, the application is determined to be accurate and complete and the applicant is assessed to be a good credit risk, an offer (see Form 3-A for a sample) will be prepared. Once an offer is made, the applicant will generally have 60 days to accept the offer, as evidenced by the signature of an authorized representative. A copy of the resolution authorizing the representative to sign the offer must be on file at the DEQ state office.

General Conditions for All Offers The borrower shall agree to expeditiously initiate and complete the project work for which the loan is made, in accordance with applicable DEQ rules. For purposes of the agreement, DEQ inspection, review, and approval are only for the purposes of compliance with applicable rules. DEQ approval is not a warranty or guarantee.

DEQ will bring to the borrower’s attention any obvious defects in the project’s design, materials, or workmanship, but all such defects and their correction shall be the responsibility of the borrower and its agents.

Any questions raised by DEQ should be resolved exclusively by the borrower and its agents, who shall remain responsible for the completion and success of the project. The borrower shall agree that it and its agents, employees, and representatives will comply with DEQ rules and other conditions set forth in the loan agreement or any amendment that may be made to the loan agreement.

The proceeds of the loan will be used only for the described project.

The borrower shall agree to comply with applicable state and federal requirements including, but not limited to, the cross-cutting authorities.

The borrower should provide evidence in the form of a fee simple title or long-term lease and right of access or easements for real property on which facilities are to be constructed. Clear title,


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long-term lease, easement, or access to all real property necessary for the successful operation of the facilities should be guaranteed by the borrower for the useful life of the facilities.

The borrower shall retain and use the services of an engineer currently licensed in Idaho for all project planning, design, and construction oversight, who has liability indemnification in accordance with the “Rules for Administration of Wastewater and Drinking Water Loan Funds” (IDAPA 58.01.12.050.05.d).

The borrower shall permit DEQ, or its authorized agents, access to the project work. Additionally, the borrower will ensure that the contractor will provide adequate facilities for access and inspection.

The borrower shall agree to provide DEQ, or its authorized agents, access to all files, records, accounting, and books relating to the management and accountability of the project.

The borrower shall agree to indemnify and hold harmless DEQ, its agents, and its employees from any and all claims, actions, damages, liabilities, and expenses directly or indirectly connected to the borrower or its agents’, employees’, contractors’, or assignees’ actions related to the location, design, construction, operation, maintenance, repair, failure, or deactivation of the project or any part of the project.

Security The offer will identify the type of security instrument (either a bond or promissory note) that will be issued by the borrower. Such bond or promissory note will be held as security for the loan until the loan has been fully paid. If complete financing for the project has not been secured at the time of the loan request, a complete discussion of how the financing will be finalized (to include impact on user rates) should be included.

All debt instruments received by DEQ must be transmitted to the State Treasurer’s Office for safekeeping. Upon receipt of the final repayment from the borrower, DEQ will issue instructions to the Treasurer’s Office for the return of the debt instrument to the borrower.

Suspension or Termination of the Loan Pursuant to IDAPA 58.01.12.080, DEQ’s director may, for cause, suspend or terminate, as appropriate, any loan prior to final disbursement.

DUNS Registration Loan recipient must renew this registration annually.

4 Disbursement Requests and Cost Eligibility Two forms accompany this chapter:

Form 4-A, Outlay Report and Request for Reimbursement for Drinking Water Loans •Form 4–B, Checklist for Reviewing Disbursement Requests•


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DEQ will supply borrowers with disbursement requests (Form 4-A). Disbursements will be made as costs are incurred.

Requests for disbursement will be processed as quickly as possible by DEQ. Requests must be reviewed to determine eligibility and to ensure that costs are adequately documented. Project officers should review each request in accordance with criteria on the Checklist for Reviewing Disbursement Requests (Form 4-B) and sign the request as indicated.

Upon receipt of the borrower’s request, the DEQ regional office project officer will ensure appropriateness of the request and then transmit the request and appropriate supporting documents to the Senior Accountant in the DEQ fiscal office, with a copy to the Loan Officer in the state office. The documents will be reviewed for content and accuracy by the accounting staff and, upon approval, a payment will be prepared and issued. All related documents will become a permanent part of the project file.

Disbursement of the final 10% of the loan funds will not be made until a responsible charge operator (RCO) has been designated who is licensed at or above the classification level of the system. When the RCO is not available, a substitute RCO who is licensed at or above the classification level of the system shall be designated to replace the RCO. Additionally, the final 10% will not be disbursed until a User Charge System and Water System Protection Ordinance have been implemented and any “Special Conditions,” detailed in Section V of the Loan Agreement, have been met.

Disbursement of the final 5% of loan funds will not be made until a final review is conducted by DEQ and the following documents are in the project files maintained by DEQ:

Final construction inspection reports •Approved final operations and maintenance (O&M) manual•Engineer’s certification that construction was completed in accordance with approved•plans and specificationsBorrower’s acceptance of construction•Project review by DEQ•A final loan repayment schedule•

Allowable Costs In addition to IDAPA 58.01.12.041 “Determination of Eligibility of Costs,” the following interpretations will help to make clear DEQ’s position on cost eligibility.

Some costs incurred prior to the loan being signed have been categorically accepted as•allowable (appropriate supporting documentation will still be required):1. Costs necessary to prepare a loan application2. If delay would push construction into a new building season and incur inflationary

increases to the overall project3. Borrower must move forward quickly in order to comply with a compliance order4. Borrower’s match expense for a DEQ planning grant5. Cost for non-DEQ funded planning effort that was undertaken to meet a compliance

order


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6. If costs were incurred to comply with draft or final NPDES permit requirements or with a draft 401 certification that is related to a compliance schedule

7. If taking early action will result in cost savings (e.g., less mobilization/demobilization costs)

Connection fees are an eligible expense • Start-up costs for new systems are eligible expenses (e.g., permit costs) •

5 Review/Approval of Planning Documents and Environmental Reviews

This section of the handbook (Section 5) provides firm direction for State Revolving Fund (SRF) personnel to follow when administering the State Environmental Review Process (SERP), particularly during the initial evaluation of a loan-funded project. The guidance specifically addresses the processes followed when funding types are identified and the conditions under which a project shall be categorically excluded from further environmental review. It also discusses when an Environmental Information Documentation (EID) may be necessary and considers the scope and detail expected in the EID.

The National Environmental Policy Act (NEPA) was passed in 1969 to strike a balance between promoting economic development while protecting environmental quality. However, since the act was passed, the NEPA mandate has become unbalanced toward expanding review procedures and information collecting without discretion as to project nature or magnitude, while concurrently ignoring or minimizing economic, social, and environmental benefits. This is especially applicable in the case of relatively small and essential infrastructure projects such as water and wastewater systems.

Seeking to correct this imbalance, on March 6, 2012, the Council on Environmental Quality (CEQ) released final guidance for agencies on improving the efficiency and timeliness of environmental reviews under NEPA. The guidance strives to reduce the NEPA burden by encouraging efficient environmental reviews and quicker NEPA decisions.

In Idaho, the overwhelming majority of projects funded by the SRF Loan Program are small wastewater projects and drinking water projects.1 These projects are crucial to protecting human health and the environment through direct improvements in water quality, source water protection, stream enhancements, energy and water efficiency, and the introduction of innovative environmental technologies. These infrastructure improvements are also essential to the economic well-being of our small communities.

To balance any inefficiency in the application of the SERP, and reduce the reporting burden placed on applicants, the DEQ SRF staff shall implement the guidance presented in this section of the SRF handbook.

1 92% of the 238 SRF Loan projects funded through 2014 are less than $10M, while 80% are less than $5M. 2 CEQ, “Memorandum for Heads of Federal Departments and Agencies” (March 6, 2012), available at https://www.whitehouse.gov/sites/default/files/microsites/ceq/improving_nepa_efficiencies_06mar2012.pdf.


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SERP—A Consultative Process In accordance with the CEQ findings and recommendations (i.e., “to provide a sufficient and effective SERP process that is tailored to avoid excessive burden”2), the DEQ SERP implementation process shall incorporate and implement the following general items:

The SRF Program shall recognize that SERP is primarily a consultative and public •disclosure process to assist decision-makers, involving grant recipients as well as consulting agencies. An adversarial posture with grant recipients shall be avoided. The grant recipient—or their professional representative—shall be given due respect and equal consideration at all times. The process shall be considered as a “partnership” effort.

Grant recipients shall be encouraged to submit draft documents for which there are •questions. This will enable early DEQ input and direction, thereby avoiding lengthy and labor intensive alterations to “final” documents. This shall be similar to the review process for project plans and specifications.

The SERP reviewer will consider opinions on potential project impacts offered by the •recipient’s professional representatives, other stakeholders, and the public.

The SERP exists to ensure the protection of human health and the environment. •

SERP—Lessons Learned and Minor Projects 1. The 240 small drinking water and wastewater projects constructed by the SRF from

program inception through 2014 show overwhelmingly positive human health and environmental results, with little or no negative environmental impacts of note experienced in that time.

2. The existing rules allow for sufficient discretion in interpretation of key terms to give states adequate flexibility when implementing SERP.

3. The DEQ SRF has accumulated sufficient experience and data fulfilling SERP requirements to apply reasoned discretion to cost-effectively implement the SERP rules for SRF projects.

4. For any and all of the potential “Complicating Factors” (e.g., wetlands, floodplains, stream discharges, etc.) associated with our SRF projects through 2014, there were independent processes and permits to ensure these factors are addressed (e.g., Idaho Department of Water Resources well permits, Section 404 permits). These processes/permits control the potential impacts due to the small size of SRF projects.

5. The FONSI/EID procedure—relative to the SRF funding of small drinking water and wastewater systems in Idaho—has resulted in very little value added, while adding significant cost to the projects.

6. Accordingly, the definition of the term “minor” will encompass projects for which agency consultations and mitigation will be addressed by independent regulatory efforts.

Forms These forms accompany this section:

Form 5-A, Outline and Checklist for Planning Document • Form 5-B, DEQ Environmental Review Procedure •


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Form 5-C, SERP Scoping Meeting•Form 5-D, Categorical Exclusion Checklist•Form 5-E, Outline and Checklist for Environmental Information Documents•

Responsibilities DEQ—DEQ will review and approve planning documents and associated documents. The major objective of this review is to ensure that compliance with the requirements of the following are achieved: the Clean Water Act, as amended; “Rules for Administration of Planning Grants for Drinking Water and Wastewater Facilities” (IDAPA 58.01.22); and “Rules for Administration of Wastewater and Drinking Water Loan Funds” (IDAPA 58.01.12). DEQ will strive to ensure that the end product of the planning effort complies with the requirements of the applicable law.

In addition, DEQ will take the following actions: 1. Determine the funding mechanism that will guide the process as early as possible.2. Review and take action on any state-funded planning grant or SRF loan application-

related planning work.3. Encourage use of an effective public participation program throughout the planning

document process, including a full, early public disclosure of sensitive environmentalissues. This should include a public process whereby the applicant informs theaffected community about the alternatives and provides the opportunity for thecommunity to submit comments prior to selection of a preferred alternative by thegoverning authority.

4. Monitor progress on preparation of the planning document and hold meetings withthe engineer and system owners to identify and resolve problems at an early point inthe process (Scoping Meeting). As work on the planning document progresses, DEQshould encourage the applicant to identify important environmental issues, should anyexist, and to take whatever steps are necessary to resolve them.

5. Review documents for conformance with environmental requirements. The Outlineand Checklist for Planning Document (Form 5-A) and the Outline and Checklist forEnvironmental Information Documents (Form 5-E) should be used during review toensure completeness of information.

6. Transmit written comments to the applicant. Review responses to such comments todetermine final compliance with state requirements. Meet with the systemrepresentatives, if necessary, to resolve outstanding issues.

7. Direct the environmental review process using the DEQ Environmental ReviewProcedure (Form 5-B), and if applicable, the EID checklist (Form 5-E).

Loan Recipient—As the drinking water system representatives work to complete their planning document, it is their responsibility to:

1. Consult with DEQ on the planning document requirements, including environmentalreview responsibilities. The applicant should participate in a scoping meeting toidentify environmental requirements and use the DEQ-approved Outline andChecklist for Planning Document (Form 5-A), the DEQ Environmental ReviewProcedure (Form 5-B), the Outline and Checklist for Environmental InformationDocuments (Form 5-E), and any other applicable guidance materials.


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2. Include a discussion of alternatives and recommend a cost-effective and environmentally sound alternative.

3. Ensure that as project alternatives are developed, environmental impacts and associated mitigation costs are considered and become part of the public participation process leading to selection of an alternative.

4. Fulfill the environmental review requirement (following consultation described in item 1 of this list) by either completing documentation for a categorical exclusion or an EID.

6 Plans, Specifications, and Addenda Review Three forms accompany this section:

Form 6-A, DWSRF Specifications Insert • Form 6-B, Checklist for Plans and Specifications Review • Form 6-C, Plans and Specifications Review Approval Letter •

Contractors shall provide copies of all documentation required in Chapter 6 of this handbook to the recipient, who shall maintain the records until 3 years of repayments have occurred.

Form 6-A: Idaho DWSRF Specifications Insert This is the standard source document for DEQ engineers in each DEQ regional office to inform prospective DEQ loan recipients of the range of legal requirements. To maintain eligibility for the DWSRF, the project specifications shall contain the DWSRF Specifications Insert.

Documents Submitted

The recipient may, at their discretion, require all bidders to submit certain specification inserts from which DEQ only requires final submission from the successful bidder.

Davis Bacon Administration

A number of loan recipients have found it advantageous to utilize the services of grant administrators who are familiar with Davis-Bacon (DB) requirements. These specialists can provide assistance from the initial plans and specifications through contract administration during the course of the project. The costs for retaining grant administrators are loan-eligible (i.e., can be disbursed from the DWSRF loan).

American Iron and Steel (AIS) 1. General: In accordance with the current DWSRF Assistance AIS requirements, all of

the iron and steel products used in this project shall be produced in the United States, except those iron and steel products for which a waiver has been issued. For any AIS-related questions, contact Jorge Medrano of EPA at (202) 564-1968 [email protected].

2. Waivers: The statute permits EPA to issue waivers where EPA finds (1) that applying these requirements would be inconsistent with the public interest; (2) iron and steel

mailto:[email protected]


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products are not produced in the US in sufficient and reasonably available quantities and of a satisfactory quality; or (3) inclusion of iron and steel products produced in the US will increase the cost of the overall project by more than 25%. For more information on obtaining a waiver, access the EPA AIS Guidance, starting on page 11, at: http://www.epa.gov/sites/production/files/2015-09/documents/ais-final-guidance-3-20-14.pdf. SRF assistance recipients may apply for a waiver by emailing the completed documentation listed in Appendix 1 of the EPA AIS Guidance to the DEQ project engineer. Once the DEQ engineer determines the application is complete, he or she will forward the application to [email protected] with a copy to the SRF AIS Coordinator [email protected].

3. De Mimimis Waiver: Products would be considered eligible for a de minimis waiverif: (1) the sum total of the combined products does not exceed 5% of the total cost ofmaterials for the project; (2) the products are not described in the projectspecification; and, (3) any single product does not exceed 1% of the total materialscost of the project.

4. Required AIS Construction Contract Language: To ensure compliance with theAIS requirement, specific AIS contract language must be included in each contract,starting with the assistance agreement, all the way down to the purchase agreements.

5. On-site Inspections: The Owner’s representative shall periodically conduct on-siteinspections to review the materials compliance logs being maintained by theContractor to ascertain the completeness of information being recorded. In addition,the Owner’s representative shall spot-check stored iron and steel products against thelogged information to ensure the consistency and accuracy of the documentation.

6. Pay Applications: DWSRF Loan fund reimbursement shall only occur whenmanufacturer’s Letters Certifying Product Compliance with AIS requirements havebeen received and approved by the Owner or Owner’s representative and submitted assupporting documentation for requests for payment for iron and steel products. Asample acceptable manufacturer’s letter is included in the SRF spec insert (Form AIS-2). For assistance with reviewing manufacturer product certification letters,contact [email protected] with “cert letter review” as the subject.

DEQ P&S Review Responsibilities

DEQ will review and approve construction plans, specifications, and addenda for completeness, adequacy, and compliance with the rules:

1. Conduct design reviews at the 90% level, when deemed appropriate by the DEQproject engineer. In addition, DEQ may conduct in-progress design reviews at 10%and 50% levels, thereby ensuring that preparation of the plan and specifications is inaccordance with the approved facility plan and applicable federal and staterequirements.

2. Review the plans and specifications to ensure facilitation of project construction andcompliance with applicable procurement requirements. Purchasing and bidding mustcomply with Idaho Code for municipalities and political subdivisions of the state.DEQ engineers may document the review using the Checklist for Plans and

http://www.epa.gov/sites/production/files/2015-09/documents/ais-final-guidance-3-20-14.pdf

http://www.epa.gov/sites/production/files/2015-09/documents/ais-final-guidance-3-20-14.pdf





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Specifications Review (Form 6-B). This process ensures that the comments resulting from the review are considered and that loan recipients incorporate appropriate changes into the documents.

3. Retain deficient or incomplete plans and specifications and addenda until applicants correct the documents.

4. Notify the applicant, by letter, of plans and specifications approval (Form 6-C) and advise of any additional procurement requirements for the construction of the project.

5. Provide information and participation requirements regarding disadvantaged business enterprises (DBE) for inclusion in specifications.

Form 6-B: Checklist for Plans and Specifications Review

Form 6-B is a standard checklist provided to guide DEQ engineers in each DEQ regional office in their review of SRF-related plans and specifications. Consulting engineers will find this helpful, as it is a good indication of DEQ’s expectations.

Form 6-C: Plans and Specifications Review Approval Letter

This is the template for the letter of approval that DEQ will send out after reviewing the project plans and specifications.

Project Sign A sign may be produced and erected in a prominent location to adequately mark the project. (Signage costs are eligible.) The sign indicates that DEQ is providing funds for the project.

Sign Specifications:

A sign for identification of the project may be installed prior to commencement of construction at a location which is near the project site and accessible for public viewing.

The sign should be constructed of 4 feet by 8 feet exterior type high-density overlaid •plywood or other sign material of equivalent quality and framed with 2 inch by 4 inch wood of suitable grade.

The DEQ logo should be painted on the sign in a manner similar to the attached detail •drawing. The logo should be about 11 inches in diameter.

The sign should be painted with black or other visible dark lettering on a white •background.

Information specified on the attached detail drawing should be displayed on the sign. • Lettering should be of professional quality and in accordance with the attached detail •

drawing; all lettering should be in proportion to the sizes shown. Any additional information displayed on the sign should not detract from or displace the •

information required in the drawing. The contractor should provide adequate support for the sign with regard to site conditions •

and it should be an adequate distance above the prevailing grade to permit public viewing.


13

When the construction is complete and accepted by DEQ, the contractor should remove •and appropriately dispose of or reuse the sign. The cost of preparing and erecting the sign is an eligible cost.•

7 User Charge System and Water System Protection Ordinance

Two forms accompany this section: Form 7-A, Checklist for User Charge System (UCS) and Water System Protection•Ordinance (WSPO) ReviewForm 7-B, Sample User Charge System (UCS) and Water System Protection Ordinance•(WSPO) Letter

The UCS should be designed to distribute costs equitably among all users and produce sufficient revenue to fund costs of operation, maintenance, replacement, and debt retirement. If bonds are issued to finance construction of the facilities, a covenant for an adequate user charge must be included in the bond documents.

8 Bid Reviews Three forms accompany this section:

Form 8-A, Checklist for Reviewing Bid Documents•Form 8-B, Sample Letter Authorizing Bid Award•Form 8-C, Checklist for Data Due after Bid Award•

DEQ will review bid solicitations and contract documents prior to the award of the construction contract. Bid documents will be reviewed to determine conformance with state and federal requirements. Form 8-A, Checklist for Reviewing Bid Documents, should be completed during


14

each review. Notification should be provided for deficiencies, and inadequate or incomplete documents may be retained until all deficiencies are corrected. After reviewing the bids, DEQ may authorize award of the contracts. The authorization may be in the form of a letter, which should contain instructions for arranging a pre-construction conference (Form 8-B). Verbal authorization may be given; however, in all cases, written authorization will be provided prior to the specified last day to award.

Items of Concern Prior to Issuance of the Notice to Proceed The items listed below have historically been sources of concern in the bidding and awarding process of construction contracts. The explanations below are included to clarify the policies and to ensure AIS and DB model clauses are included in the contract(s).

American Iron and Steel

The loan recipient must include the AIS clause specified in the CWSRF Specification Insert (Form 6-A) in the signed contracts with the successful bidder(s) for the project.

Davis-Bacon Wage Provision Requirement

The loan recipient must include the following documents in the signed contracts between the loan recipient and the successful bidder(s) for the project:

• Either DB model clause I or model clause II from the DEQ website, under the Federal Requirement on SRF Loans section: https://www.deq.idaho.gov/water-quality/grants-and-loans/construction-loans/ (depending on the type of loan recipient), must be included in the signed contracts. Latest wage determinations.•(For further information refer to http://www.gpo.gov/fdsys/granule/USCODE-2010-title31/USCODE-2010-title31-subtitleII-chap13-subchapIII-sec1352/content-detail.html).

9 Construction Management Six forms accompany this section:

Form 9-A, Checklist for Pre-Construction Conference•Form 9-B, Drinking Water Loan Account Suggested Agenda and Points of Discussion for•Pre-Construction Meeting with ContractorForm 9-C, Checklist for Construction Dispute Review•Form 9-D, Evaluation of Change Orders•Form 9-E, Checklist for Change Order Review•Form 9-F, Sample Letter Explaining DEQ Involvement with Acquisition of Professional•Services and Need for Certificate of Negotiation

To plan, direct, and track the progress of construction, DEQ will be involved in various construction management activities. These may include pre-construction conferences, construction claims, in-process construction inspections, disputes, and change order reviews.

https://www.deq.idaho.gov/water-quality/grants-and-loans/construction-loans/

http://www.gpo.gov/fdsys/granule/USCODE-2010-title31/USCODE-2010-title31-subtitleII-chap13-subchapIII-sec1352/content-detail.html

http://www.gpo.gov/fdsys/granule/USCODE-2010-title31/USCODE-2010-title31-subtitleII-chap13-subchapIII-sec1352/content-detail.html


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Pre-Construction Conferences The borrower may schedule a pre-construction conference as soon as possible after the borrower awards the construction contract. The pre-construction conference may be conducted in two sessions:

1. DEQ may conduct the first session, using the Checklist for Pre-ConstructionConference (Form 9-A) to ensure that the borrower is aware of the requirements thatgovern construction activity.

2. The borrower may conduct the second session to ensure that the contractor is awareof the state and federal requirements that govern the project. The borrower, consultingengineer and/or inspectors, contractors, and DEQ staff may attend the second session.

The borrower should notify all appropriate parties regarding time, date, and location of the pre-construction conferences. In addition, a suggested agenda (Form 9-B) should be sent to all parties.

The borrower, using the suggested agenda, should provide to all appropriate parties a written report of the conference sessions, including a list of persons attending, items discussed, and conclusions reached.

Disputes To prevent disputes regarding the construction of the project, DEQ will assist borrowers by helping to facilitate clear communication on the project, providing inspections, and offering assistance with the items listed in the Checklist for Construction Dispute Review (Form 9-C).

DEQ will closely monitor the resolution of disputes, consult with the borrower concerning the eligibility of settlements and resulting fees, and promptly review documentation regarding the disputed issues. DEQ, in fulfilling its fiduciary-related responsibility in the effective use of DWSRF funds, is an interested participant in dispute resolution.

Change Orders DEQ will review change orders to determine technical and administrative adequacy pursuant to all applicable state and federal requirements as outlined in Form 9-D. Incomplete or deficient change orders will be returned to the borrower for correction, and notification of change order approval will be provided to the borrower in writing. The Checklist for Change Order Review (Form 9-E) may be completed to document change order review.

10 Operations and Maintenance Manual Two forms accompany this section:

Form 10-A, Checklist for Operations and Maintenance (O&M) Manual Review •Form 10-B, Sample Operations and Maintenance Manual Review Transmittal Letter•


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DEQ will review O&M manuals to ensure compliance with applicable state and federal requirements. Review activities include, but are not limited to, the following:

1. Review the draft and final versions of the O&M manual, using the Checklist for Review of O&M Manuals (Form 10-A), and provide review comments to the borrower.

2. Ensure that disbursements will not exceed 95% until the O&M manual has been approved by DEQ.

3. Upon final approval, stamp three copies of the O&M manual as “approved” and a. Provide one stamped copy to the borrower with an approval letter (Form 10-B). b. Provide one stamped copy to the DEQ state office’s SRF group. c. Retain one copy for the official project file.

11 Construction Inspections Five forms accompany this section:

Form 11-A, Interim Construction Inspection Report • Form 11-B, Request for Final Construction Inspection and Disbursement • Form 11-C, Submittals Required Prior to Final Inspection • Form 11-D, Documents to Have Available at the Time of Final Inspection • Form 11-E, Final Construction Inspection Report •

DEQ may conduct interim inspections of the construction of the project at the discretion of the DEQ project engineer. The frequency of interim inspections will be determined by the size and complexity of the project. The DEQ project engineer will complete an interim inspection report, using Form 11-A. DEQ will issue copies of the report to the borrower, the borrower’s project engineer, and the resident inspector, and retain a copy in the project file.

A final inspection will be conducted upon completion of construction. The final inspection is meant to determine that the project has been satisfactorily constructed in accordance with the loan authorization, approved plans and specifications, and applicable federal and state requirements.

When approximately 80% of the loan funds have been disbursed, the DEQ project officer may send Form 11-B to the borrower with instructions for completion and distribution.

Within 60 days of notification from the borrower of project completion, the final construction inspection should be conducted. Form 11-E, the Final Construction Inspection Report, may be completed and a copy provided to the borrower. The final inspection should include a review of the following items:

The facility is complete, operating, and meets applicable standards. • The facility conforms to the approved construction drawings, specifications, and change •

orders. Construction and accounting records are adequate and available. •


17

Construction impact mitigation measures and all special conditions of the loan •authorization have been met.

Any deficiencies discovered during the final inspection will be discussed with the borrower, and provisions will be made for correction of problems.

12 Project Files and Accounting Three forms accompany this section:

Form 12-A, Checklist for Major Milestone Dates•Form 12-B, Change Order Summary•Form 12-C, Miscellaneous Provisions and Specimen Documents•

Project Files DEQ will be responsible for maintaining and storing the official loan project file in the TRIM system. The DEQ state office maintains general project files and fiscal records, while the DEQ regional offices maintain complementary project oversight-specific files. The State Treasurer’s Office maintains any negotiable instruments used to secure loans.

DEQ may maintain a summary of major project milestone dates (Form 12-A) in each project file.

DEQ may maintain a summary sheet in each project file for change order information (Form 12-B). The information may include change order number, amount, amended contract time, andamended contract amount.

DEQ is subject to the Idaho Public Records Law (Idaho Code §9-337 through 9-350), which requires DEQ to provide the public access to all public records maintained by the agency. Generally, all project files are available to the public upon request, unless the file or document is exempt from release under the Idaho Public Records Law.

Exceptions to public records disclosure are described in Idaho Code §9-340 through 9-348, and requests for public records are evaluated according to the Idaho Public Records Law and DEQ’s Policy for Handling Public Records Requests (PM12-03), available at https://www.deq.idaho.gov/public-records-request/.

Each project file will contain documentation to explain any changes to the original amortization schedule. Generally, prepayments and late payments will be netted over time, and the adjustment to the original schedule will be made at the very end of the payment term. This approach is similar to a standard home mortgage, with the exception that payments will be applied based upon when they are received rather than when they are due. Should the loan recipient request an amended amortization schedule and DEQ agrees to the change, the project file will provide supporting documentation to explain DEQ action.

https://www.deq.idaho.gov/public-records-request/


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Accounting Accounting practices for borrowers will follow generally accepted accounting practice guidelines. The project officer and loan officer will document generally accepted accounting practice activities in the project file.

Policy for Determining Annual Drinking Water Loan Fee

Under the “Rules for Administration of Wastewater and Drinking Water Loan Funds” (IDAPA 58.01.12), DEQ may elect to impose a loan fee to offset administrative costs. DEQ considers the imposition of such a fee on new loans prudent if it is expected at the beginning of the year that loan fee reserves will be less than 100% of expected annual fee-related costs.

The maintenance of a 100% floor is to provide for continued funding of the loan program in the event that loan fees are unable to meet administrative costs and capitalization funds have been exhausted and to meet other costs associated with fees in the Intended Use Plan. To the extent that loan fee reserves and expected fee revenues on existing loans exceed the 100% floor, excess fees may be transferred to the Loan Fund.

Policy Memo for Annual Interest Rate Setting

The method for determining the annual interest rate to be charged on loans and extended term financing from the Water Pollution Control and Drinking Water Loan Account is established in a DEQ policy memo available at https://www2.deq.idaho.gov/admin/LEIA/api/document/download/16034.



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Glossary 100-Year Flood—A flood that has a 1% chance of occurring or being exceeded in magnitude in

any given year. The 100-year flood is based upon a statistical analysis of stream flow records available for the watershed or an analysis of rainfall and runoff characteristics in the watershed.

Amortization Schedule—A table showing the remaining payments on a loan, including principal and interest.

As-Built Drawings/Record Drawings—Drawings of the completed drinking water system by an engineer after construction is complete.

Backflow—The flow of water or other liquid in a reverse direction, created by a difference in water pressure. In a water system, backflow causes water to flow back into the distribution pipes.

Bidding—See Procurement Requirements.

Capital Budget—A financial statement of estimated capital expenses for a period of time, usually including proposed methods for financing those expenses. Capital includes accumulated assets and resources used to accomplish a goal.

Capital Improvements Plan—A long-range plan that identifies capital projects and equipment purchases, provides a planning schedule and capital replacement schedule, and identifies options for financing the plan. For a water system, the capital improvements plan provides a link between the water system, its comprehensive and strategic plans, and its annual budget.

Categorical Exclusion—A category of actions that do not individually or cumulatively have a significant effect on the human environment and for which neither an environmental information document (EID) nor an environmental impact statement (EIS) is required.

Change Order—A document that authorizes changes to the original construction contract. Some causes for construction change orders include, but are not limited to, changed site conditions; requests by the borrower, engineer, or contractor; omissions in the plans and specifications; differences between contract amounts and installed quantities; and regulatory changes.

Cross-Connection—A connection between pipes carrying contaminated water and pipes carrying drinkable (potable) water.

Cross-Cutting Authorities—The requirements of federal laws and executive orders that apply in federal financial assistance programs.

Disadvantaged Business Enterprise (DBE)—An entity owned, controlled, or both, by an individual who is socially and economically disadvantaged under either EPA’s 8% or 10% statutes, as well as a small business enterprise, a labor surplus area firm, or a small business in a rural area.

http://en.wikipedia.org/wiki/Strategic_plan

http://en.wikipedia.org/wiki/Budget


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Disbursement—The paying out of loan funds from DEQ to the borrower.

Drinking Water State Revolving Fund (DWSRF)—Many public water systems find it difficult to obtain affordable financing for infrastructure improvements that would enable systems to comply with national primary drinking water standards and protect public health. Recognizing this fact, Congress established the DWSRF as part of the 1996 Safe Drinking Water Act Amendments. The goal of the DWSRF program is to provide states with a financing mechanism for ensuring safe drinking water to the public. States can use federal capitalization grant money awarded to them to set up an infrastructure funding account from which assistance is made available to public water systems. Loans made under the program can have interest rates between 0% and market rate and repayment terms of up to 30 years. Loan repayments to the state will provide a continuing source of infrastructure financing into the next century. The program also places an emphasis on small and disadvantaged communities and on programs that emphasize prevention as a tool for ensuring safe drinking water.

Environmental Information Document (EID)—During the environmental review process, if a proposed drinking water construction project is determined to be ineligible for a categorical exclusion, an EID shall be prepared. The EID is a written environmental assessment prepared by an applicant or consultant describing the environmental impacts of the proposed project. The EID must be of sufficient scope to enable the responsible official to assess the environmental impacts of the proposed project and ultimately determine if an environmental impact statement (EIS) is warranted.

Environmental Review—For each potential state revolving fund (SRF) loan project, DEQ carries out an environmental review, which is the overall process to determine whether the project may have a significant impact on the environment. The level of environmental review determines whether a categorical exclusion, a finding of no significant impact (FONSI), or an environmental impact statement (EIS) will be needed.

Equal Employment Opportunity (EEO)—EEO refers to six federal laws that prohibit job discrimination: (1) Title VII of the Civil Rights Act of 1964, (2) the Equal Pay Act of 1963, (3) the Age Discrimination in Employment Act of 1967, (4) Title I and Title V of the Americans with Disabilities Act of 1990, (5) Sections 501 and 505 of the Rehabilitation Act of 1973, and (6) the Civil Rights Act of 1991. The United States Equal Employment Opportunity Commission enforces these laws.

Equivalent Dwelling Unit (EDU)—The amount of water or drinking water an average single-family residence uses.

Fee Simple Title—Full and unrestricted ownership of real estate.

Finding of No Significant Impact (FONSI)—A document prepared by DEQ briefly presenting the reasons why an action not otherwise categorically excluded will not have a significant effect on the human environment and for which an environmental impact statement (EIS) is not prepared. The FONSI shall include the environmental assessment or a summary of it, will generally detail mitigation measures, and shall note any other environmental


21

documents related to it. If the environmental assessment is included, the finding need not repeat any of the discussion in the assessment but may incorporate it by reference.

Fire Flow—The quantity of water available for fire-protection purposes.

Flood Insurance Rate Map (FIRM)—The official map of a community on which the Federal Emergency Management Agency (FEMA) has delineated both the special hazard areas and the risk premium zones applicable to the community. Lending institutions and federal agencies use FIRM to locate properties and buildings in relation to mapped flood hazards and to determine whether flood insurance is required when making loans or providing grants following a disaster for the purchase or construction of a building.

Force Account—Labor directly employed by the borrower (for example, a city’s public works department staff).

IDAPA—A numbering designation for all administrative rules in Idaho promulgated in accordance with the Idaho Administrative Procedures act.

Idaho Department of Environmental Quality (DEQ)—The state agency responsible for administering drinking water loans from the State Revolving Fund.

Indemnification—The act of restoring a victim of a loss, in whole or in part, by payment, repair, or replacement.

Maximum Contaminant Level (MCL)—The highest level of a contaminant that is allowed in drinking water. EPA establishes MCLs for many different contaminants.

Minority Business Enterprise (MBE)—A business that is owned and controlled by at least 51% minority member(s). Minority group members are citizens of the United States who are African American, Hispanic American, Native American, Asian Pacific American, or Subcontinent Asian American. EPA carries out the MBE/WBE program to ensure that MBEs and women’s business enterprises (WBEs) are given the opportunity to participate in contract and procurement for supplies, construction, equipment, and services under any EPA grant or cooperative agreement.

Mitigation Measures—Actions taken to minimize, remedy, reduce, eliminate, or compensate for the impact of a drinking water construction project.

No-Action Alternative—The option of not undertaking the proposed construction project.

Operations and Maintenance (O&M) Manual—Provides technical guidance on how a public water system is operated, including guidance for monitoring and reporting of water samples and testing results. The O&M manual is likely to be a system’s most detailed guidance document and helps to ensure continuity of quality service in the event of staff turnover.

Outlay—A payment or expenditure.


22

Plan of Operations—A planning document developed by the owner or operator of a drinking water facility detailing the facility’s life cycle, in other words, how it is to be operated during its active life and during closure.

Plans and Specifications—The engineering description of a project, including engineering drawings, maps, technical specifications, design reports, and construction contract documents in sufficient detail to allow contractors to bid on and construct the work.

Priority List—A list prepared by DEQ that ranks the drinking water projects interested in receiving loans. Loans are offered to systems based on their ranking on the priority list. Priority is given to those eligible projects that: (1) address the most serious risk to human health, (2) are necessary to ensure compliance with the requirements of the Safe Drinking Water Act, and (3) assist systems most in need, on a per household basis, according to state-determined affordability criteria.

Procurement Requirements—The legal requirements (commonly referred to as bidding) under which borrowers acquire goods and services.

Request for Proposals (RFP)—A document that solicits competitive proposals from prospective contractors for particular work or services. A contract is typically awarded to the winning bid.

Responsible Charge Operator (RCO)—A person designated by a water system owner to operate the water system. The RCO must be licensed at the type and class equal to or greater than the classification of the water system.

Rules for Public Drinking Water Systems (IDAPA 58.01.08)—State of Idaho rules that govern public drinking water systems in Idaho. The rules are available online at https://adminrules.idaho.gov/rules/current/58/580108.pdf.

Safe Drinking Water Act (SDWA)—The main federal law that ensures the quality of Americans’ drinking water. Under the SDWA, EPA sets standards for drinking water quality and oversees the states, localities, and water suppliers who implement those standards.

Sanitary Survey—An on-site review conducted by DEQ of a public water system’s water source, facilities, equipment, operation, and maintenance to determine their adequacy for producing and distributing safe drinking water.

Sole Source Aquifer—An aquifer that has been designated by EPA, under Section 1424(e) of the Safe Drinking Water Act, because the aquifer is a “sole or principal drinking water source” for an area where contamination of the aquifer could create a significant hazard to public health.

Substitute Responsible Charge Operator (SRCO)—A person designated by a water system owner to operate the water system when the responsible charge operator (RCO) is unavailable. The SRCO must be licensed at the type and class equal to or greater than the classification of the water system.

https://adminrules.idaho.gov/rules/current/58/580108.pdf


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Technical, Financial, and Managerial Capacity—Capacity (also referred to as viability) refers to the abilities of a water system to deliver drinkable (potable) water to its customers. State revolving funds may not be used to finance drinking water projects for a system that lacks the technical, financial, or managerial capability to maintain SDWA compliance, unless the owner or operator of the system agrees to undertake feasible and appropriate changes in operation or if the use of the financial assistance from the funds will ensure compliance over the long term. Idaho has developed a series of flowcharts (Form 2-B) to evaluate each system to be funded to determine whether or not the system possesses necessary capability to repay the loan.

US Environmental Protection Agency—The federal agency responsible for distributing drinking water state revolving fund funds allocated by Congress as part of the amendments to the Safe Drinking Water Act. These funds are used by each to state to provide loans to drinking water systems.

User Charge System (UCS)—A written description of the methodology by which a municipality will recover the costs of building, operating, and maintaining the water system. A UCS should be designed to distribute costs equitably among all users and produce sufficient revenue to fund costs of operation, maintenance, replacement, and debt retirement.

Water System Protection Ordinance (WSPO)—A regulatory tool implemented by local jurisdictions (such as city or county governments) to address the protection of public water system drinking water sources. The ordinance typically enacts specific requirements for the protection of public water system drinking water sources within the source water assessment area boundaries.

Women’s Business Enterprise (WBE)—A business that is at least 51% owned and controlled by a woman or women who are citizens of the United States. EPA carries out the MBE/WBE program to ensure that MBEs and women’s business enterprises (WBEs) are given the opportunity to participate in contract and procurement for supplies, construction, equipment, and services under any EPA grant or cooperative agreement.

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Idaho Department of Environmental Quality Drinking Water State Revolving Fund

Form 5-B DEQ Environmental Review Procedure January 2021 Page 1 of 19

Form 5-B DEQ Environmental Review Procedure

for Projects Funded through the Drinking Water State Revolving Fund (DWSRF) Loan Program

A. PROGRAM PROTOCOL

The Idaho Department of Environmental Quality (DEQ) will be guided by 40 CFR Part 6 and

will implement a “National Environmental Policy Act (NEPA)-like” process. 40 CFR Part 6

identifies the scope of federal environmental concerns and objectives that must be addressed for

equivalency projects, or those that receive federal monies. When no federal monies are used for

funding, an alternative process is followed (see Section K of this document).

Federal “cross-cutting requirements” are those provisions in federal law which “apply by their

own terms” to projects and activities receiving federal financial assistance.

ENVIRONMENTAL AUTHORITIES

Archeological and Historic Preservation Act of 1974, Pub. L. 86-523, as amended

Clean Air Act, Pub. L. 84-159, as amended

Coastal Barrier Resources Act, Pub. L. 97-348, as amended

Coastal Zone Management Act, Pub. L. 92-583, as amended

Endangered Species Act, Pub. L. 93-205, as amended

Environmental Justice, Executive Order 12898

Floodplain Management, Executive Order 11988 as amended by Executive

Order 12148

Protection of Wetlands, Executive Order 11990

Farmland Protection Policy Act, Pub. L. 97-98

Fish and Wildlife Protection Coordination Act, Pub. L. 85-624, as amended

National Historic Preservation Act of 1966, Pub. L. 89-665, as amended

Safe Drinking Water Act, Pub. L. 93-523, as amended

Wild and Scenic Rivers Act, Pub. L. 90-542, as amended

ECONOMIC AND MISCELLANEOUS AUTHORITIES

Demonstration Cities and Metropolitan Development Act of 1966 PL 89-754, as

amended

Procurement Prohibitions under Section 306 of the Clean Air Act and Section 508 of

the Clean Water Act, including Executive Order 11738 Administration of the Clean

Air Act and the Federal Water Pollution Control Act with Respect to Federal

Contracts, Grants and Loans

Uniform Relocation and Real Property Acquisition Policies Act, Pub. L. 91-646, as

amended

Debarment and Suspension, Executive Order 12549

Conversely, those projects that are funded with state recapitalization dollars cannot be required

by DEQ to be in compliance with these requirements; however, there are Social Policy



Authorities that are required of all projects. DEQ recognizes that it is crucial that all projects

adhere to federal, state, and local requirements for construction and recommendations are noted

in agency determinations.

SOCIAL POLICY AUTHORITIES

Age Discrimination Act of 1975, Pub. L. 94-135

Title VI of the Civil Rights Act of 1964, Pub. L. 88-352

Section 13 of the Federal Water Pollution Control Act Amendments of 1972, Pub. L

92-5200 (Clean Water Act)

Section 504 of the Rehabilitation Act of 1973, Pub. L. 93-112 (including Executive

Orders 11914 and 11250)

Equal Employment Opportunity, Executive Order 11246

Women’s and Minority Business Enterprise, Executive Orders 11625, 12138, and

12432

Section 129 of the Small Business Administration Reauthorization and Amendment

Act of 1988, Pub. L. 100-590

B. PROCEDURE

The following DEQ procedures are for the identification and analysis of the environmental

impacts created by construction of drinking water facilities funded wholly or in part by the

DWSRF.

C. TERMINOLOGY

Terms used in this section of the handbook will be consistent in large part with those used in the

NEPA regulations. Terms are defined as follows:

1. “Affecting” means acting upon.

2. “Applicant” means any community or other eligible entity (as defined by the Rules for

Administration of Drinking Water Loan Program, IDAPA 58.01.20; and the Rules for

Administration of Planning Grants for Drinking Water Facilities, IDAPA 58.01.22), who

files an application for a DWSRF loan or a state planning grant.

3. “Area of Potential Effects” is the geographic area or areas (that do not have to be

contiguous to the project boundaries) within which the project may cause indirect or direct

alterations in the character or use of a property. This includes all direct and reasonably

foreseeable indirect effects.

4. “Categorical exclusion” is the category of actions which do not individually or

cumulatively have a significant effect on the human environment and for which neither an

environmental information document nor an environmental impact statement is required.

5. “Categorical exclusion support document” is a written environmental assessment for the

category of actions that have been excluded and for which the position has been validated

by supporting documentation from appropriate consulted agencies.

6. “Cooperating agency” means any agency, other than DEQ, as the identified lead agency,

which has jurisdiction by law or expertise with respect to any environmental impact

involved in a major federal action significantly affecting the quality of the human



environment. Any such agency, or when the effects are on a reservation, an Indian Tribe,

may, by agreement with DEQ, become a cooperating agency.

7. “Cumulative impact” is the impact on the environment which results from the incremental

impact of the action when added to other past, present, and reasonably foreseeable future

actions regardless of what agency or person undertakes such other actions. Cumulative

impacts can result from individually minor but collectively significant actions taking place

over a period of time.

8. “Effects” are results or outcomes. Two types of effects are discussed in this document:

a) Direct, which are caused by the action and occur at the same time and place.

b) Indirect, which are caused by the action and are later in time or farther removed in

distance, but are still reasonably foreseeable. Indirect effects may include growth

inducing effects and other effects related to induced changes in the pattern of land use,

population density or growth rate, and related effects on air, water and other natural

systems, including ecosystems.

Effects and impacts as used in this handbook are synonymous. Effects include

ecological (such as the effects on natural resources and on the components, structures,

and functioning of affected ecosystems), aesthetic, historic, cultural, economic, social,

or health, whether direct, indirect, or cumulative. Effects may also include those

resulting from actions which may have both beneficial and detrimental effects, even if

on balance the agency believes that the effect will be beneficial.

9. “Environmental assessment” is a concisely written public document that provides

sufficient evidence and analysis for determining whether to prepare an environmental

impact statement or a finding of no significant impact; aids DEQ’s compliance with the

State Environmental Review Process (SERP) requirements when no environmental impact

statement is necessary and shall include (a) brief discussions of the need for the proposal,

(b) summary of alternatives as required by federal and state rules, (c) summary of the

environmental impacts of the proposed action and alternatives with a brief discussion of

potential mitigation measures, and (d) a listing of agencies and persons consulted. The

scope of environmental information developed, and the depth of analysis, will correlate to

the severity and probability of a proposed action’s potential environmental effects.

10. “Environmental information document (EID)” means any concisely written

environmental assessment prepared by an applicant or consultant briefly describing the

environmental impacts of a proposed drinking water construction project. This document

will enable the responsible official to assess the environmental impacts of the proposed

project and ultimately determine if a FONSI is warranted, or if the project is not feasible.

The scope of environmental information developed, and the depth of analysis, will

correlate to the severity and probability of a proposed action’s potential environmental

effects. Required contents of the EID are fully described in Section H, Step 3 of this form.

11. “Environmental review” means the overall process undertaken by DEQ on each potential

grant project and potential DWSRF loan project to determine whether the project may

have a significant impact on the environment, requiring implementation of mitigation

measures.



12. “Excluded action” includes those conditions or activity that allows a project to qualify for

a categorical exclusion.

13. “Extraordinary circumstances” means those circumstances listed in 40CFR§6.204 that

may cause a significant environmental effect such that a proposed action that otherwise

meets the requirements of a categorical exclusion may not be categorically excluded. The

project SERP reviewer assesses the potential for all extraordinary circumstances to be

mitigated to a level below significance either through permitting requirements or as a

condition of the SERP decision.

14. “Federal agency” means all executive agencies of the federal government. It does not

mean the Congress, the Judiciary, or the President (including the performance of staff

functions for the President in his Executive Office).

15. “Finding of no significant impact (FONSI)” means a document, prepared by DEQ, briefly

presenting the reasons why an action, not categorically excluded, will not have a

significant effect on the human environment and for which an environmental impact

statement is not prepared. It shall include the environmental assessment or a summary of

it, will generally detail mitigation measures, and shall note any other environmental

documents related to it. If the assessment is included, the finding need not repeat any of

the discussion in the assessment but may incorporate it by reference.

16. “Floodplain” is the land that has been or may be covered by floodwaters, or is surrounded

by floodwater and inaccessible, during the occurrence of a one hundred (100)-year flood.

The 100-year flood is defined by applicable federal emergency management agency

(FEMA) flood insurance maps or, if no map exists, then as defined in 40 CRF 258.11.

17. “Floodway” is the channel of a river or stream and those portions of the floodplain

adjoining the channel required to discharge and store the floodwater or flood flows

associated with a 100-year flood.

18. “Human environment” shall be interpreted comprehensively to include the natural and

physical environment and the relationship of people with that environment (see definitions

of “effects”).

19. “Loan” means a financing instrument (note or bond) by written agreement from the

DWSRF.

20. “Mitigation” includes:

a) Avoiding the impact altogether by not taking a certain action or parts of an action

b) Minimizing impacts by limiting the degree or magnitude of the action and its

implementation

c) Rectifying the impact by repairing, rehabilitating, or restoring the affected

environment

d) Reducing or eliminating the impact over time by preservation and maintenance

operations during the life of the action

e) Compensating for the impact by replacing or providing substitute resources or

environments



21. “One hundred (100) year flood” is also referred to as the base flood or the regulatory

flood. This refers to an area where there is a one percent (1%) chance that a flood may

occur or be exceeded in any given year. The 100-year flood is based upon a statistical

analysis of stream flow records available for the watershed or an analysis of rainfall and

runoff characteristics in the watershed

22. “Planning area” relates to the geographical, jurisdictional or political boundaries of the

area identified in the planning document or facility planning study area that is anticipated

to be served by the proposed project upon completion and for the life of the project (20

years minimum for drinking water treatment facilities and 40 years minimum for drinking

water distribution systems). The planning area is tied to the area impacted by the

construction of the proposed project. The environmentally affected area and the planning

area are not the same since the area environmentally affected by the project is not defined

by jurisdictional or political boundaries, or by the same geographical boundaries as the

planning area.

23. “Planning document” is a document which describes the condition of a public drinking

water system and presents a cost effective and environmentally sound alternative to

achieve or maintain regulatory compliance. Engineering reports and facility plans are

examples of such planning documents. The planning documents shall be prepared by or

under the responsible charge of an Idaho licensed professional engineer and shall bear the

imprint of the engineer’s seal. Requirements for planning documents prepared using grant

funds are provided in Section 030 of IDAPA 58.01.22 and in the handbook.

24. “Proposal” exists at that stage in the development of an action when an applicant has a

goal, and is actively preparing to make a decision on one or more alternative means of

accomplishing that goal and the effects can be meaningfully evaluated. Preparation of an

environmental impact statement on a proposal should be timed so that the final statement

is completed in time for inclusion in any recommendation or report on the proposal. A

proposal may exist in fact as well as by stated declaration that one exists.

25. “Responsible official” means the Department of Environmental Quality (DEQ) employee

who is authorized to fulfill the requirements of these procedures.

26. “Screening-level environmental analysis” consists of assembling general information

about potential environmental impacts for the purpose of alternatives comparison.

27. “Significantly” as used in this section requires considerations of context, intensity, and

mitigation:

a) Context. This means that the significance of an action must be analyzed in several

contexts such as society as a whole (human, national), the affected region, the

affected interests, and the locality. Significance varies with the setting of the proposed

action. For instance, in the case of a site-specific action, significance would usually

depend upon the effects at the locale rather than in the world as a whole. Both short-

term and long-term effects are relevant.

b) Intensity. This refers to the severity of impact. Responsible officials must bear in

mind that more than one agency may make decisions about partial aspects of a major

action. The following should be considered in evaluating intensity:



(1) Impacts that may be both beneficial and adverse. A significant effect may

exist even if DEQ believes that on balance the effect will be beneficial. Therefore adverse

impacts must not be considered as “offset” by beneficial impacts.

(2) The degree to which the proposed action affects public health or safety, and

acknowledging the highly beneficial nature of public drinking water projects when

assessing the potential transient impacts of such projects

(3) Unique characteristics of the geographic area such as proximity to historic or

cultural resources, park lands, important farmlands, wetlands, wild and scenic rivers, or

ecologically critical areas.

(4) The degree to which the effects on the quality of the human environment are

likely to be highly controversial.

(5) The degree to which the possible effects on the human environment are highly

uncertain or involve unique or unknown risks.

(6) The degree to which the action may establish a precedent for future actions with

significant effects or may represent a decision in principle about a future consideration.

(7) Whether the action is related to other actions with individually insignificant but

cumulatively significant impacts. Significance exists if it is reasonable to anticipate a

cumulatively significant impact on the environment. Significance cannot be avoided by

terming an action temporary or by breaking it down into small component parts.

However, the temporary nature of a transient impact should be an important

consideration when assessing significance, depending on the particular impact (e.g.

fugitive dust).

(8) The degree to which the action may adversely affect districts, sites, highways,

structures, or objects listed in or eligible for listing in the National Register of Historic

Places, or may cause loss or destruction of significant scientific, cultural, or historical

resources.

(9) The degree to which the action may adversely affect an endangered or threatened

species or its habitat that has been determined to be critical under the Endangered Species

Act of 1973.

c) Mitigation. Actions are not significant if they are addressed under existing

consultations, rules, regulations, permits, and procedures which mitigate and reduce

adverse effects below the level of significance.

32. “State” means the State of Idaho.

D. LEGAL FOUNDATION

1. STATE AUTHORITY TO UNDERTAKE ENVIRONMENTAL REVIEWS. Under

Section 39-105(4), Idaho Code, DEQ has the required level of authority to perform

reviews. Under that section, the Department Director, when designated by the Governor,

is authorized to “receive on behalf of the state, and utilize any federal aid . . . made

available through the federal government, including, but not limited to, the safe drinking

water act, for use in or by the State of Idaho in relation to health and environmental



protection.” The Director has been designated by the Governor to receive and utilize

DWSRF funds, and he or she is authorized to perform environmental reviews of projects

funded with federal money, since such authority is required to utilize such money.

The Board of the Department of Environmental Quality, through the Director, is the state

authority responsible for administration of grants and loans for drinking water projects

funded with state and federal money (Idaho Code Title 39 Chapter 76). The Board is

authorized to adopt rules necessary for the effective administration of the grant and loan

program. Because authority to conduct environmental reviews of eligible projects is

required to utilize federal funds, these provisions authorize the Board to adopt regulations

governing environmental reviews of federal funded projects, and authorize the Director to

implement such regulations.

2. LEAD AGENCY. The Department of Environmental Quality will have primacy in

conducting reviews. We will be conducting multidisciplinary reviews with other state

and federal agencies.

E. THE ENVIRONMENTAL REVIEW AND THE PLANNING DOCUMENT

DEQ shall review the planning document associated with a DWSRF loan application or state

planning grant project. Screening level environmental information shall be a part of any planning

document submitted to DEQ. After an initial review of the screening level information provided

and the Checklist for a Categorical Exclusion Request, the Regional DEQ office shall advise the

applicant if an environmental information document (EID) is required. If required, it should be

included as a section or chapter of the planning document, or may be submitted as an appendix.

Using references in the EID is acceptable on the condition that the EID is either a section of the

planning document or is included as an appendix. The Environmental Assessment may also be

made during the preliminary design.

F. RESPONSIBILITIES AND COMPLIANCE

1. The loan applicant will have the following responsibilities during the environmental

review process.

a) Gathering Environmental Information. The loan recipient will be responsible for

gathering and incorporating screening-level environmental information regarding the

project into the facility plan. This information will be used during the loan

recipients’ consultation with DEQ to determine whether the project is eligible for a

Categorical Exclusion (CatEx) or if an environmental information document (EID) is

required.

b) Agency Consultation. The loan recipient may be responsible for some consultations

with federal, state, and/or local agencies regarding the proposed project.

c) Preparation of Environmental Information Documents (EID). This will be the

responsibility of the loan recipient, and will include – as appropriate – consultation

with agencies having jurisdiction over environmental conditions and federal cross-

cutter regulations in order to assess potential impacts. The scope of environmental

information developed, and the depth of analysis, will correlate to the severity and

probability of a proposed action’s potential environmental effects.



d) Public Meetings. All activities pertinent to the public meeting including meeting

notices, mailings, and Limited English Proficiency compliance will be handled and

documented by the loan recipient.

e) Mitigation Measures. The loan recipient will incorporate into its project any

mitigation measures embodied in a Finding of No Significant Impact (FONSI), a

CatEx, or the loan agreement.

2. The Environmental Review responsibilities of the DEQ include:

a) During early consultation, assess the possible environmental impacts of the project

and discuss with the loan recipient the type of environmental documentation that

may be required.

b) Review and advise on the adequacy of environmental review documentation

submitted by the loan recipient.

c) Determine proposed impacts to specific resources through agency consultation.

d) Document all environmental determinations and issue public notices.

e) Review for compliance with rules and Chapter 5 of the handbook, and ensure that the

environmental review responsibilities of the loan recipient are carried out.

f) Adopt the environmental documentation of a state or federal agency, if appropriate,

in developing DEQ’s environmental determination.

g) If an environmental determination is more than 5 years old, re-evaluate the proposed

action, environmental conditions, and public views and reaffirm the previous

determination or require the loan recipient to update the environmental information.

3. COMPLIANCE FOLLOW-UP. Loan conditions will require compliance with mitigation

measures.

4. ADMINISTRATIVE PROCEDURES ACT. Regarding remedies “equivalent to” those in

the Federal Administrative Procedures Act (APA), Section 39-107(6) of the

Environmental Protection and Health Act, in conjunction with the Idaho Administrative

Procedures Act (Idaho Code 67-5201, et seq.), provide public remedies substantially

similar to the Federal APA. Both the federal and state statutes provide minimum due

process rights to any person aggrieved by DEQ: an impartial decision-maker, an

administrative hearing with prior notice and an opportunity to be heard and judicial

review on an administrative record of final agency decisions. Compare Idaho Code 39-

107(6), 67-5201 et seq. with 5 USC 554 and 702.

G. OVERVIEW OF THE ENVIRONMENTAL REVIEW PROCESS

The facility planning document is used to identify and assess the reasonable alternatives to a

proposed action so that adverse environmental effects can be avoided or minimized. The goal of

an environmental review is to establish the appropriate level of mitigative actions. The

environmental review process by which this is determined includes the following steps:

1. Consultation with DEQ (Scoping Meeting). The applicant is directed to consult with DEQ

early in the facilities planning effort (during preparation of the facility plan and before

submission to the regional office for technical approval) to determine the appropriate level

and scope of environmental review for the proposed project.



2. Is a project eligible for a categorical exclusion? DEQ will determine if a project is eligible

for a categorical exclusion, based on the completed Checklist for a Categorical Exclusion

(Form 5-D) including specified supplemental documentation. DEQ may determine that

issuing a categorical exclusion is appropriate without completion of any substantial part of

either the engineering report, categorical exclusion support documentation, or an EID. This

is called an undocumented categorical exclusion. When categorical exclusion support

documentation is needed to verify that a categorical exclusion is the appropriate

environmental determination, a loan recipient may retain recognized professional subject

area expertise to assist in documenting the significance (i.e., existence and/or severity, or

mitigation) of a potential impact. On occasion it may be necessary to confirm this finding

with a potentially affected agency.

3. Determining when an EID is needed. If the project is determined to be ineligible for a

categorical exclusion, the applicant shall prepare an EID for the project, which may be

included in the planning document as a separate chapter or appendix.

4. Contact potentially affected agencies. DEQ will determine if there is the potential for

significant impact, and if there is that potential DEQ will inform the loan recipient of the

potentially affected agencies. As part of the preparation of an EID, the loan recipient must

contact all potentially affected agencies. Note that if a regulatory process will generate

review independent of the SERP, the SERP will not engage in that consultation.

Agencies are given a 30-day period to respond to a formal request for consultation. A

nonresponse after 30 days will be treated as a “no comment” response.

Documentation of the contact shall be maintained in the SRF project file. Initial

agency response received after 30 days will not be considered.

The loan recipient must address all comments and concerns received from such

agencies in its EID. A list of agencies is provided in Part I of this procedure.

5. Assessing environmental impacts. DEQ will review the draft EID and may require changes

to it before final approval. Upon completion of the EID, DEQ will either:

Determine the project is eligible for a FONSI, prepare the draft determination, satisfy

publication requirements, address relevant comments, and prepare the final

determination, or

Determine the project will result in significant impacts and assess project feasibility.

6. Issuance of documents. DEQ will post to its website and publish Findings of No

Significant Impact in the newspaper(s) of record.



Figure 1. Categorical Exclusion Decision Tree

Y STEP 2STEP 2

STEP 5

Do extraordinary circumstances***

exist (that are not addressedby permit processes, limited agency

consultations or standard loan

requirements)?

STEP 5

STEP 1

Is the project "minor"?

See list*

Agency consultations and/or

studies. Do issues exist that will not be addressed and/or

avoided, minimized and

mitigated through rules or permit requirements?

YSTEP 6

STEP 5

Environmental Documentatio

n

CATEXIssued

STEP 4

N

No Cross-

Cutters

Will the project be funded

with Federal dollars from DEQ?

STEP 2

Cross-Cutters must be

addressed

YSTEP 3 STEP 3

Any

YSTEP 6 STEP 4

STEP 3

What are the characteristics

of the project**?

All

N

N

CONFIRM PUBLICMTG HAS BEEN HELD FOR ALT SELECTION

Y Are effects significant?

STEP 7

Further Review by

DEQ RequiredN EID

FONSI

Issued


Are effects proposed that are

not short-term/temp? Are conditions imposed by DEQ

that are not associated with a

permit?

STEP 7 EID

CONFIRM PUBLICMTG HAS BEEN HELD FOR ALT

Y N

STEP 6

FONSI

Issued

CATEXIssued


NNo Env

Documentation

? Investigation Required

N

Y

N

CONFIRM PUBLIC MTG HAS BEEN HELD FOR

ALT SELECTION

Document Required

No Env Doc



Figure 1a. Decision Tree footnotes

7. Finalizing the grant or awarding the loan. With issuance of the final environmental

determination, a planning document can be given final approval if technical

considerations have been met. Once the planning document has received final approval,

the grant can be closed out, or a design and construction loan can be awarded (if, in all

other respects, the loan application is complete).

8. Monitoring. The construction activities and post-construction operation and maintenance of

the facilities are monitored by DEQ to ensure implementation of mitigation measures. In

addition, the planning effort may be completed as part of the loan.

H. AN IN-DEPTH LOOK AT THE STEPS IN THE ENVIRONMENTAL REVIEW PROCESS

1. Project Scoping Meeting. The applicant shall initiate the environmental review process early

in the planning document development process with DEQ to identify important

environmental issues, to avoid delays, and to resolve conflicts. Thus, the environmental

review process should be an integral part of the facilities planning process.

An important benefit of early consultation with DEQ is the determination that a categorical

exclusion is appropriate without additional substantive environmental review or supporting

documentation.

In cases where a categorical exclusion with no supporting documentation is

determined to be appropriate early in the planning process, the planning document

* Actions that are considered "minor" (from Form 5-B/C CWSRF and DWSRF Env Review Procedures; NOTE: This listing is not comprehensive ):

- Is there a likelihood of significant public controversy?

*** Extraordinary Circumstances (Bold = questions asked regardless of funding source)

- Is the proposed project known or expected to cause significant adverse air quality effects?

- Is the proposed action known or expected to cause significant public controversy about a potential environmental impact of the proposed action?

- Existing infrastructure system projects - minor upgrading, minor expansion of system capacity or rehabilitation or construction of new minor ancillary

facilities adjacent to or on the same property.

- Unsewered communities - project involving replacement of existing onsite systems.

- Actions for which consultation is not required because independent regulatory mechanisms inherently reduce impacts to below the level of

significance.

---- Examples: functional replacement of systems, system components such as the distribution and collection networks, treatment works, storage

facilities, pumps, lift stations.

** Project Characteristics

- Installation of point of use units with a discharge of residuals to wastewater system.

- Installation of new wells.

---- Examples: permits such as those required by Federal, state and local agencies for well installation, stream alteration, floodplain development, and

waters of the U.S.

- Will the project provide capacity to serve a population projected to grow at a rate > 25% of the 20-yr population growth rate for the state AND is it

expected to change the current population by > 500 estimated residential units?

- Is the project known or expected to have a significant effect on the quality of the human environment including a substantial increase in the volume or

the mass of pollutant to the receiving water?

- Is the proposed action known or expected to have a significant effect on the pattern and type of land use (industrial, commercial, agricultural,

recreational, residential) or growth and distribution of population including altering the character of existing residential areas, or may not be consistent

with state or local government, or federally-recognized Indian tribe approved land use plans or federal land management plans?

- Is the proposed action known or expected to have potentially significant environmental impacts on the quality of the human environment

either individually or cumulatively over time?

- Is the proposed action known or expected to have disproportionately high and adverse human health or environmental effects on any

community, including minority communities, low-income communities, or federally-recognized Indian tribal communities?

- Is the proposed action known or expected to significantly affect federally listed threatened or endangered species or and significant fish or wildlife

habitat? - Is the proposed action known or expected to significantly affect national natural landmarks or any property with nationally significant historic,

architectural, or cultural value, including but not limited to, property listed on the National Register of Historic Places? - Is the proposed action known or expected to significantly affect the environmentally important natural resource areas such as wetlands, floodplains,

significant agricultural lands, aquifer recharge zones, wild and scenic rivers?



need only include the minimum environmental information called for in the

engineering report outline (see Form 5-A).

In cases where a categorical exclusion is determined to be the most likely decision,

but supporting documentation is needed to verify that stance, the planning document

needs to include appropriate documentation as specified by DEQ.

In cases when a categorical exclusion is not appropriate, the applicant shall begin

scoping the content of an EID early in the planning document development process.

This EID will, in final form, be suitable for issuance of a FONSI.

2. Categorical Exclusion (CatEx). Prior to the initial scoping meeting, DEQ shall forward the

Checklist for a Categorical Exclusion Request (Form 5-D) to all applicants to complete and

bring to the scoping meeting. From the completed checklist and documentation submitted,

DEQ shall then determine if the applicant is eligible for a CatEx. If there is any question as

to the significance of a potential adverse effect, the applicant is encouraged to provide

additional documentation such as an opinion rendered by a recognized subject area expert. If

the project qualifies for a CatEx, DEQ will prepare the CatEx documents (Form 5-E) for the

signature of the Responsible Official.

a) Categories of actions eligible for exclusion. For these procedures, actions consistent

with the following categories (items 1, 2, 3, or 4) are eligible for a categorical

exclusion:

(1) Actions relating to existing infrastructure systems (such as sewer systems

and stormwater systems, including combined sewer overflow systems) that involve

minor upgrading, or minor expansion of system capacity or rehabilitation (including

functional replacement) of the existing system and system components (such as the

sewer collection network and treatment system and stormwater systems, including

combined sewer overflow systems) or construction of new minor ancillary facilities

adjacent to or on the same property as existing facilities

(2) Actions in unsewered communities involving the replacement of existing

onsite systems, provided the new onsite systems do not result in substantial increases

in the volume of discharge or the loadings of pollutants from existing sources, or

relocate existing discharge

(3) Actions for which consultation is not required because independent

regulatory mechanisms will inherently reduce impacts to below the level of

significance (unless the regulatory actions are deemed insufficient by DEQ).

(4) Actions in #3 (below) that consultation shows do not require mitigation.

b) Criteria for not granting a categorical exclusion. Any of the actions listed below

where consultations show will require mitigation, or that are not addressed through

an independent regulatory mechanism:

(1) New or relocated discharges to surface or ground water;

(2) Known or expected to have a significant effect on the quality of the human

environment either individually, cumulatively over time, or in conjunction with other



federal, state, local, or private actions, including a substantial increase in the volume

or the mass of pollutant to the receiving water;

(3) Known or expected to directly or indirectly affect (1) cultural resource

sites; (2) endangered or threatened species or their habitats; (3) flood plains,

wetlands, important farmlands, aquifer recharge zones; or,

(4) Known or expected to cause significant public controversy.

(5) The facilities would provide capacity to serve a population projected to:

a. grow at a rate 25% in excess of the 20-year population growth

expectations for the state as a whole (according to the Idaho Division of

Financial Management projections); and

b. exceed the current system’s population by greater than 500 estimated

residential units (ERUs).

(6) The action is not supported by the state or other regional growth plan or

strategy

(7) The action directly or indirectly involves or relates to upgrading or

extending infrastructure primarily for the purposes of future development. If any of

the above conditions exist, the responsible official shall ensure that an EID and

FONSI are prepared and issued.

c) Developing new categories of excluded actions. The responsible official or other

interested parties may request that a new category of excluded action be created or

that an existing category be amended or deleted. The request shall be made in

writing to the director of DEQ and shall contain adequate supporting information.

Proposed new categories shall be evaluated by DEQ. The following shall be

considered in evaluating proposals for new categories:

(1) Actions in the proposed category should seldom result in the effects

outlined below.

(2) Based upon previous environmental reviews, actions consistent with the

proposed category have not required the preparation of an EID or EIS; and

(3) Information adequate in determining if a potential action is consistent with

the proposed category will normally be available when needed.

d) Extraordinary circumstances. The responsible official will review actions eligible

for categorical exclusions to ensure that no extraordinary circumstances are

involved. Extraordinary circumstances include the following circumstances when

they are not addressed by existing rules, regulations, permits, or other mechanisms

which mitigate adverse effects. Note: DEQ action is only required for projects

funded with federal dollars and water quality concerns congruent with DEQ’s

mission.

(1) The proposed action is known or expected to have potentially significant

environmental impacts on the quality of the human environment either individually

or cumulatively over time.



(2) The proposed action is known or expected to have disproportionately high

and adverse human health or environmental effects on any community, including

minority communities, low-income communities, or federally recognized Indian

tribal communities.

(3) The proposed action is known or expected to significantly affect federally

listed threatened or endangered species or their critical habitat. (Note: DEQ action

only required for projects funded with federal dollars and/or with water quality

concerns congruent with DEQ’s mission.)

(4) The proposed action is known or expected to significantly affect national

natural landmarks or any property with nationally significant historic, architectural,

prehistoric, archeological, or cultural value, including but not limited to, property

listed on or eligible for the National Register of Historic Places. (Note: DEQ action

only required for projects funded with federal dollars.)

(5) The proposed action is known or expected to significantly affect

environmentally important natural resource areas such as wetlands, floodplains,

significant agricultural lands, aquifer recharge zones, wild and scenic rivers, and

significant fish or wildlife habitat. (Note: DEQ action only required for projects

funded with federal dollars and/or with water quality concerns congruent with

DEQ’s mission.)

(6) The proposed action is known or expected to cause significant adverse air

quality effects. (Note: DEQ action only required for projects funded with federal

dollars.)

(7) The proposed action is known or expected to have a significant effect on

the pattern and type of land use (industrial, commercial, agricultural, recreational,

residential) or growth and distribution of population including altering the character

of existing residential areas, or may not be consistent with state or local government,

or federally recognized Indian tribe approved land use plans or federal land

management plans.

(8) The proposed action is known or expected to cause significant public

controversy about a potential environmental impact of the proposed action.

e) Proceeding with the project after the environmental determination has been issued:

(1) After a categorical exclusion on a proposed project has been granted and a

notice has been published in the local newspaper, the planning document can be

given final approval, if technical considerations have already been satisfied. With

approval of the planning document, the DEQ grant can be closed out, or DWSRF

loan arrangements may proceed without being subject to any further environmental

review requirements, unless the responsible official determines that the project or the

conditions at the time the categorical determination was made have materially

changed.

(2) For categorical exclusion determinations 5 or more years old, the

responsible official shall reevaluate the project, environmental conditions, and public

views and, prior to a loan agreement, either:



a. Reaffirm—Issue a public notice reaffirming DEQ’s decision to proceed

with the project without need for any further environmental review in the

event that nothing of a material nature has changed; or

b. Supplement—Update the information in the decision document on the

categorically excluded project and prepare, issue, and distribute a revised

public notice in the event that something of a material nature has changed;

or

c. Reassess—Revoke the categorical exclusion and require a more complete

environmental review.

3. Preparing an Environmental Information Document. If the responsible official determines

that issuing a categorical exclusion is not appropriate, then the applicant shall prepare an

EID. The EID shall concisely address all environmental impacts, including each of the

following subjects and requirements so that DEQ personnel may assist the applicant in

objectively identifying potentially significant environmental concerns and their potential

impacts (see Form 5-E). To avoid repetition, the EID may reference other sections of the

facility plan for the specified information.

If agency consultation responses are not received within 30 days of making the request,

the nonresponse will be treated as a “no-comment” response. Documentation of the

contact shall be maintained in the SRF project file. Agency response received after

30 days will not be considered.

Note: if at any time during the preparation of the EID and agency consultations it

becomes clear that the preferred alternative proposes significant impacts on a resource

(see Extraordinary Circumstances) that cannot be avoided, minimized, or mitigated, a

second project scoping meeting is necessary. Alternatives must be reconsidered for

feasibility at this time, as DEQ will likely not fund a project that proposes significant

impact to the environment.

Cover sheet. This should properly identify a project, with the applicant’s name,

mailing address, email address, and telephone number, and provide the same

information for the project contact and the environmental contact if different from

the applicant. The cover sheet should also provide basic cost and funding

information and an abstract.

Purpose and need. This should include a brief summary discussion.

Description of the existing environment. For the facility planning area, the

environmental conditions shall be concisely described.

Analysis of alternatives. This discussion shall include a brief comparison analysis

of feasible alternatives, including the no-action alternative. Each alternative must

be briefly evaluated based on beneficial and adverse consequences to the existing

environment. Near-term or long-range measures to avoid, minimize or mitigate

adverse impacts will be devised when appropriate. However, such mitigation will

only be considered for impacts that will not be controlled via a regulatory process

that is independent of the SERP (e.g., 404 permits).



Evaluating environmental consequences of proposed action. The relevant impacts

of the proposed action, including measures to mitigate adverse impacts shall be

identified.

Minimizing adverse effects of the proposed action.

(1) Measures taken to mitigate or eliminate adverse effects shall be identified

during the environmental review.

(2) DEQ shall accept a planning document and approve loan assistance for its

implementation if the applicant has made or agreed to make changes in the project in

accordance with environmental determinations made in a FONSI for an EID.

4. Decisions Resulting from the Environmental Information Document Review. The

responsible official will make one of two possible decisions after evaluating known and

suspected environmental impacts presented in an EID. The review and analysis of the

EID will determine whether a proposed project either qualifies for a FONSI

determination or may not be a feasible project. To determine if a FONSI is the

appropriate environmental determination, the responsible official should have the

planning document, EID for the project, the commitments for mitigation, and any other

documentation deemed necessary. The responsible official will verify that any mitigation

measures for impacts have been documented. Additionally, the responsible official will

ensure the commitments for mitigation clearly identify: that the mitigation measures

identified for implementation are enforceable, the party(s) committing to mitigation

measures has the authority and ability to fulfill the commitments, and appropriate

monitoring will be conducted during implementation of the mitigation measures.

a) Issuing a Finding of No Significant Impact (FONSI) Determination for an EID

(1) Criteria for distributing a draft FONSI. If, after assessment of environmental

impacts and completion of the environmental review, the responsible official

determines that a FONSI is appropriate, a draft FONSI may be issued and distributed

to the mailing list included in the EID or published in the newspaper of greatest

distribution for the project planning area. The draft FONSI determination will be

based on an independent review by DEQ of the EID and any other environmental

information deemed necessary by the responsible official, consistent with the

requirements of this document. The FONSI shall include any mitigation measures

necessary to make the recommended alternative environmentally acceptable.

(2) Publication of the draft FONSI. A 30-day public review and comment

period follows publication of the draft FONSI determination. The legal notice of the

draft FONSI includes the location where interested parties can review the draft

FONSI, the complete planning document and EID, and provides the information for

where comments are to be sent.

(3) Issuance of the final FONSI. After closure of the public comment period,

the responsible official shall respond to all substantive comments received,

incorporate any necessary revisions into the FONSI, and issue the final FONSI

determination.



(4) Proceeding with a grant closure or the loan agreement. Once the final

FONSI determination is issued for the project and the planning document is

approved, the DEQ grant may be closed out or a loan agreement may be made

without preparation of an additional FONSI unless the responsible official later

determines that the project or environmental conditions have changed significantly

from those that underwent environmental review.

(5) FONSIs 5 or more years old. For a FONSI 5 or more years old, the

responsible official shall reevaluate the project, environmental conditions, and public

views, and, prior to approval of a loan agreement, either:

a. Reaffirm—Issue a public notice reaffirming DEQ's decision to proceed

with the project without revising the EID in the event nothing of a material

nature has changed, or

b. Supplement—Require an update of the EID and issue and distribute a

revised FONSI in the event something of a material nature has changed, or

c. Reassess—Withdraw the FONSI and reconsider the feasibility of the

project.

I. POTENTIALLY AFFECTED AGENCIES

The appropriate state and federal agency contacts can be found at:

https://www.deq.idaho.gov/water-quality/grants-and-loans/

J. MONITORING FOR COMPLIANCE

DEQ shall ensure adequate monitoring of mitigation measures and other loan conditions

identified in the FONSI.

K. ALTERNATIVE STATE ENVIRONMENTAL REVIEW PROCESS

DEQ has authority to conduct environmental reviews of projects that are solely funded with state

monies. Therefore DEQ will implement an alternative SERP approach in which adherence to

cross-cutting considerations is not required. The implementation of an alternative process will

reduce the administrative burden associated with CWSRF and DWSRF loans without substantive

loss of environmental protections.

The following summarizes the five criteria that the Alternative SERP meets:

1. The process is supported by a legal foundation which establishes state authority to review

projects and activities receiving assistance.

2. The process ensures that the environmental objectives of the state are met (as listed

below).

a) DEQ Objective #1: Implement surface and ground water quality protection using a

watershed approach.

b) DEQ Objective #2: Reduce the pollutants in surface water to meet water quality

standards and beneficial uses.

https://www.deq.idaho.gov/water-quality/grants-and-loans/



c) DEQ Objective #3: Protect and improve ground water quality.

d) DEQ Objective #4: Assist/support public water systems in the delivery of safe/reliable

drinking water.

e) DEQ Objective #5: Encourage reuse.

f) DEQ Objective #6: Prevent and control pollution from wastewater discharges.

3. The process requires comparative evaluation of alternatives and an accounting of

beneficial and adverse consequences to the existing and future environment.

4. The process requires adequate documentation of the information, processes, and premises

that influence the environmental determination.

5. The process requires public notice of proposed projects to provide opportunity to

comment on alternatives and to examine environmental review documents.

I. PUBLIC PARTICIPATION

Public participation steps must be accomplished before completion of the environmental review

process. Consistent with public participation requirements in state rules, it is DEQ policy to

ensure that certain public participation steps be achieved before DEQ completes the

environmental review process. Public participation duties for the applicant and DEQ during the

environmental review process are outlined below.

1. Applicant Duties.

a) Required activities. As a minimum, the applicant must conduct the three steps

described below.

(1) Public Information. The applicant provides information to interested and

affected parties well in advance of decisions being made. Information may be

distributed to the public by newspapers, flyers, newsletters, brochures, posting

in local public areas, or whatever combination of means is needed to

effectively inform the public about the proposed project and the alternatives

under consideration.

(2) Public Notice. The applicant publishes a legal notice to solicit comments and

public involvement. The public comment period shall run for no less than

14 days. The governing authority should not make a decision until after

the close of the public comment period to allow consideration of public

input.

Public notice is defined for the purpose of the environmental review process as

publication in a newspaper of community-wide circulation. Public notice will

also be made by direct mailing to persons and agencies on the project mailing

list.

NOTE: The public meeting notice and the public comment period may or may

not run concurrently.

(3) Public Meeting. The applicant will hold one public meeting after all



alternatives have been developed, but before a preferred alternative has been

selected, to discuss all of the alternatives, the customer costs based on

anticipated funding sources, related environmental impacts and mitigation

measures specific to each alternative, and the reasons for possible rejection of

certain alternatives. The meeting should be well documented with minutes, an

agenda, and a list of attendees.

NOTE: One public meeting can satisfy the public participation requirements

for both the environmental review and the planning document if properly

coordinated.

b) Voluntary Activities. In addition to the minimum public participation requirements,

the applicant may choose to hold additional public meetings to informally solicit

public input during the initial environmental planning. Informal gatherings (e.g., open

houses or advisory groups) can be more conducive to a free exchange of questions and

answers than more formal proceedings.

2. DEQ Duties. DEQ has public participation responsibilities during the initial

environmental planning stage of a project and also at the completion of the environmental

review process that include the following three steps:

a) Outreach Efforts. DEQ supports the applicant’s outreach efforts during project

planning and is responsible for providing information about the technical and

environmental aspects of the project to the public as needed. This support may include,

participating and/or speaking about the project at informal informational meetings or

at public hearings, etc.

b) Environmental Determination Public Comment Period. DEQ issues an environmental

determination and publishes a legal notice (commensurate with the level of

environmental determination issued) to inform the public of the agency’s

environmental decision. For a Categorical Exclusion, this serves as the conclusion of

the environmental review process. When an EID is prepared, the Draft FONSI

determination is issued along with a public notice to invite public comment. Upon

completion of the public comment period for the Draft FONSI determination, DEQ

addresses relevant comments before issuing the Final FONSI determination.

c) When More Public Participation is Required. Once the minimum 14-day public

participation requirement has been satisfied for the alternatives analysis or the 30-day

public comment period for DEQ environmental determination, DEQ may require

additional public participation procedures as deemed necessary on a project specific

basis.


Form 6-C Plans and Specifications Review Approval Letter January 2017 Page 1 of 2

Form 6-C Plans and Specifications Review Approval Letter

Date

To:

RE: (county and/or public water system # if applicable), (Drinking Water SRF loan #)

Dear (name):

The plans and specifications covering construction of the subject project have been reviewed and are

essentially in conformance with state of Idaho standards. Accordingly, the plans and specifications

are hereby approved for bidding and construction purposes in accordance with Section 39-118 of

Idaho Code. For the project to remain loan-eligible you may not award any bids until you have

received Authorization to Award the Bid from this office.

Bid Process

Note that the proposed project must be bid out in accordance with state and federal requirements and

any amendments must be approved by change order before project costs may be classified as loan

eligible. Bidders are advised that they must complete and submit to the loan recipient the SRF forms

in the SRF specification insert. The loan recipient shall forward the apparent low bidder’s completed

forms to our office as indicated in the instructions.

It is essential that your instructions to potential bidders highlight the special Davis-Bacon

requirements and the American Iron and Steel requirements associated with SRF loan-funded

projects. Bidder shall also be advised that careful attention must be given to the SRF specification

insert and to completing the forms associated with the insert. Submitted bids must fully address all

the SRF specification insert requirements to ensure the bids are loan-eligible.

Contract Award

Prior to contract award, in order to receive the SRF Authorization to Award the Bid, a copy of the

following documents must be submitted to our office and to the DEQ DBE Coordinator:

1. Evidence of advertising demonstrating adequate notice to bidders and sufficient bid

preparation time per Idaho Code 67-23 and 67-28;

2. All addenda issued prior to the bid date unless previously approved;

3. The signed proposal from the apparent successful bidder and acknowledgment of all

addenda;

4. A tabulation of all bids received and the loan recipient’s and engineer’s recommendation to

award;

5. Completed SRF insert forms from the apparent successful bidder;

6. A revised budget and summary of costs by category, if necessary;

7. Bid Bond; and

8. An executed engineering contract for construction inspection.

Your cover letter should indicate the contractor(s) you have selected and the amount of each contract

you intend to award. You are required to award to the contractor submitting the lowest bid unless


Form 6-C Plans and Specifications Review Approval Letter January 2017 Page 2 of 2

the bid proposal is judged not to be responsive to the bid invitation or unless the bidder is judged not

to be responsible.

In either event, documentation must be submitted with the bid documents to this office. If no

acceptable bids are received, DEQ must be notified immediately. Prior approval is required if all bids

are rejected. Chapter 8 of the DEQ Drinking Water Loan Handbook (available at

https://www.deq.idaho.gov/water-quality/grants-and-loans/construction-loans/) provides further

details of requirements for bid review and award.

This approval will expire (date). If construction is not completed at that time, plans may need to be

resubmitted for approval before further construction proceeds.

This letter does not constitute approval of stormwater control design. Please contact your local

stormwater control authority for details on appropriate requirements.

If you have any questions or concerns, please feel free to contact this office at <phone>.

Project Engineer

Regional Office Name

Regional Office Address

Regional Office City, ID ZIP

Enclosure

c: (name of contact), Consulting Engineer (w/approved and stamped set of plans)

Source File # (insert number)

Reading File

Loan Officer, DEQ State Office

https://www.deq.idaho.gov/water-quality/grants-and-loans/construction-loans/


Form 7-B Sample UCS and WSPO Letter

Form 7-B Sample User Charge System (UCS) and

Water System Protection Ordinance (WSPO) Letter

DEQ Letterhead

Re: Loan Project Number (number)

PWS number (number)

User Charge System (UCS) Approval

Water System Protection Ordinance (WSPO) Approval

Dear (addressee name):

A review of the UCS and WSPO for (project name) has been completed by this office. We

hereby approve both ordinances.

Please be reminded that the UCS and WSPO must be enacted before your loan project is placed

into operation. Therefore, please furnish this office with a copy of your meeting minutes when

the ordinances are adopted and copies of the ordinances when signed and enacted.

If you have any questions or concerns, please feel free to contact me at (phone number).

Sincerely,

Name

Project Officer

c:

[Regional office address] www.deq.idaho.gov

Brad Little, Governor Jess Byrne, Director

Form 8-B Letter Authorizing Bid Award

[TODAY’S DATE]

«AddressBlock» «AddressBlock» «AddressBlock» «AddressBlock»

Subject: Authorization to Award Bid – [PROJECT/FACILITY]; State Revolving Fund Loan [LOAN #]

Dear Mr./Mrs.:

The Idaho Department of Environmental Quality (DEQ) received bid documents, supporting information, and engineers bid award recommendation for subject project. We have also received your {[LETTER] or [EMAIL]} dated [DATE] accepting the recommendation of [ENGINEERING CONSULTANT]. DEQ has reviewed this documentation and it appears to be acceptable. This letter constitutes your state revolving fund (SRF) authorization to award the construction contract to [BIDDER NAME] at the total amount bid of $ [DOLLAR AMOUNT]. Please proceed with the project based on the below conditions:

STATE REVOLVING FUND CONDITIONS:

1. Please note that the signed contract must include the following within its provisions:a. Attachment B from the Loan Offer Acceptance and Agreement.

b. The latest wage determinations from the U.S. Department of Labor that were in effect up until10 days before close of the bids (i.e., the wage determinations utilized for the bids).If thecontracts are not signed within 90 days of Bid Opening, then the latest wage determinations, ifany, are the ones that must be included in the contract.

2. Equal Employment Opportunity (EEO) Standard Form 100 must be submitted by separate letterto the Office of Federal Contract Compliance no later than thirty (30) days after the award of thecontract The EEO-1 Form is available at: https://www.eeoc.gov/

3. Refer to enclosed Form 8-C, Checklist for Data Due after Bid Award, to ensure that appropriatedocumentation and SRF Forms are provided to DEQ from the successful bidder prior to issuanceof notice to proceed.

4. Please coordinate the scheduling of the Pre-Construction Conference with DEQ so that we may

STATE OF IDAHO DEPARTMENT OF ENVIRONMENTAL QUALITY

https://www.eeoc.gov/

have the opportunity to attend. Conditions of DEQ plan and specification approval letter dated [DATED], and SRF requirements shall be reviewed at the Pre-Construction Conference and satisfied during construction.

5. Subsequent to the pre-construction conference, please forward copies of the Notice to Proceed authorizing the contractor to begin construction.

If you have any questions or comments, please contact me at [phone #] or [email address]. Regards, [Name] [Title] Enc: Form 8-C c: MaryAnna Peavey, DEQ


Form 9-B Suggested Agenda and Points of Discussion for Pre-Construction Meeting with Contractor January 2017 Page 1 of 3

Form 9-B Drinking Water Loan Account

Suggested Agenda and Points of Discussion for Pre-Construction Meeting with Contractor

A. INTRODUCTION OF ALL PARTIES

Attendance sheet should be filled out, including each attendee’s name, organization, title,

and telephone number.

B. REQUIRED DOCUMENTS

1. Is the contractor bonded, insured, etc.?

2. Does the contractor have drawings, specifications, and other data?

3. Has the contractor obtained building permits and work permits?

4. Does the contractor have a set of plans and specifications at the jobsite that were stamped

by the DEQ engineer?

5. Are wage determinations established?

C. CHAIN OF COMMAND

1. Explain the relationship between borrower, contractor, engineer, and DEQ.

2. Inquiries should be directed to the inspector.

3. Copies of all correspondence should be sent to the inspector.

4. DEQ’s responsibilities (e.g., approval of bid award, change order approval, payment

requests, inspections).

D. UTILITY COMPANIES

E. TIME OF COMPLETION

1. Review contractor's construction schedule. Contractor should submit detailed schedule

coordinated with other contractors

2. Establish starting date

3. Discuss sequence of operations

F. SUBMISSIONS FOR APPROVAL

1. List of subcontractors

2. Breakdown statement of lump sum prices for verifying progress payments

3. Submit shop drawings and material sample to the consulting engineer, with copies given

to the inspector

4. Obtain job approval of other materials, tests, and equipment by the inspector



G. LOCAL REGULATIONS

1. Parking and storage of materials

2. Access to site

3. Excessive noise

4. Unnecessary signs

5. Burning, dust

6. Medical assistance

7. Police and fire protection

H. LABOR LAWS

1. Hours of work and overtime

2. Workers’ compensation, post-wage rates

3. Discrimination

a) Compliance with state laws and executive orders

b) Post Equal Employment Opportunity notices

4. Davis Bacon job “interviews” (performed at discretion of borrowers)

5. Davis Bacon requires weekly payrolls

I. TEMPORARY SERVICE

1. Location of field offices and project sign

2. Temporary facilities–electric, heat, water, toilets

3. Interim road maintenance and barricades

J. SURVEYS

1. Control stakeout

2. Job stakeout

K. PROGRESS PAYMENTS

1. Detailed payment request required from general contractor

2. Contractor's daily work report and delivery slips should be basis of approval

3. AIS certificates of compliance

4. Engineer to review and approve payment request

L. CHANGE ORDER PROCEDURE

1. Appropriate consultation needed between:

a) Community

b) Engineer



c) Contractor

d) Inspector

e) DEQ project officer

2. Developed and signed by consulting engineer, signed by community and contractor.

Copies distributed to parties listed above (items a-e).

M. FUTURE PROGRESS MEETINGS

1. Monthly–community, contractor, engineer

2. Quarterly–community, contractor, engineer, DEQ

N. ENSURE COMPLIANCE WITH FEDERAL AND STATE REGULATIONS

1. Disadvantaged Business Enterprise (DBE)

2. Equal Employment Opportunity (EEO)

3. American Iron and Steel (AIS)

4. Borrower should keep a Master Project File

5. Prime contractor must keep on-site AIS logs

6. Mitigation measures from environmental document

a) Any changes to project scope must be cleared through the EID process.

O. OTHER WORK PERFORMED BY THE CONTRACTOR

P. OPEN DISCUSSION

A. DISPUTE PREVENTION

1. Are all bids and bid documents properly executed and in order?

2. Have all aspects of the award package–with emphasis on bonds, insurance, federal requirements, the agreement, and notice to proceed–been executed, and are these documents currently under the custody of the community?

3. Was the contract awarded with specific time limits?

4. Are there sufficient, qualified construction management personnel?

5. Is the project schedule used by the contractor and the community?

6. Is the community represented by legal counsel?

7. Do the community and engineer keep daily notes?

8. Are change orders approved or disapproved in a timely manner?9. Have spot checks of engineer's quantities listed on payment

requests been done?

10. Does the community understand that all field changes, including no-cost changes, require eligibility determination?

11. Has the engineer/inspector been questioned about his/her on-site relationship with the contractor?

B. DISPUTE RESOLUTION

1. Has a means to finish the construction been identified, planned, and initiated?

2. Are files organized so that all correspondence and data are readily available and secure?

Form 9-CChecklist for Construction Dispute Review


1Form 9-C Checklist for Construction Dispute Review

Project Name Project Number

DateReviewer

Y=yes N=no N/A=not applicable

Y N N/A

Y N N/A

Y N N/A

Y N N/A

Y N N/A

Y N N/A

Y N N/A

Y N N/A

Y N N/A

Y N N/A

Y N N/A

Y N N/A

Y N N/A

3. Have all legal remedies been identified and has a critical path through the legal process, with date estimates, been established?

4. Have efforts been made to negotiate a settlement?

5. Are all cost increases justified?

6. Is all communication (written or verbal) clear so that there is no confusion regarding intent?

7. Have phone notes been kept with dates and times?

8. If a contractor proceeds with construction during dispute, are all conditions met, including those in dispute?

9. Have payments and performance bonds been held until all disputes are settled and warranty periods expired?


2Checklist for Construction Dispute Review Form 9-C

N/ANY

N/ANY

N/ANY

N/ANY

N/ANY

N/ANY

Y N N/A

Form 9-DEvaluation of Change Orders

Project Name Project Number

Reviewer

1. Changed site conditions2. Requests by the borrower, engineer, or contractor3. Omissions in the plans and specifications

4. Differences between contract amounts and installed quantities

5. Regulatory changes

1. The usual method will be when the borrower and the contractor have reached agreement on the need for the change order.

2. A unilateral change order occurs when the borrower and contractor fail to reach an agreement on price and/or time required. This situation should only arise when all reasonable efforts to reach agreement have failed. The change order (without contractor's signature) should be submitted by the borrower with an explanation of the situation.

3. A “Time and Materials” change order occurs when emergency work is required without sufficient time to negotiate the cost.

Prior written approval from the Department of Environmental Quality required for changes which:

1. Substantially alter the design and scope of the project2. Substantially alter the size, location, capacity, or quality of any major piece of

equipment3. Increase the amount of funds needed to complete the project4. Involve additive or deductive items in excess of 5% of the construction contract

5. Increase or decrease the amount of time allowed for the project


1Evaluation of Change Orders Form 9-D

Date

A. USUAL CAUSES FOR CONSTRUCTION CHANGE ORDERS

B. METHODS OF PROCESSING CHANGE ORDERS BY THE BORROWER

C. APPROVALS–CHANGE ORDERS THAT MUST BE APPROVED BY DEQ (IDAPA 58.01.20.041)

D. CHANGE ORDER SUBMITTALS

Supporting documentation should provide enough information to facilitate a rules-based determination. Information may include:

1. Project name and number

2. Contract change order number3. Execution date (date signed by authorized representative)4. Description of each change, including unusual circumstances

5. Drawings which identify changes (deletions, additions, or revisions)6. Documentation of why change is needed: changed site condition, design error or

omission, improvement in system operation7. The pricing data must be in sufficient detail to allow the community and DEQ to

determine reasonableness. Evidence of negotiation with the contractor and pricing data from other sources should be included.

8. Change order document with approval signatures of engineer, community representative, and contractor (except for unilateral change order)

9. New contract amount and new completion date10. For proposed change orders in excess of 5% of the contract amount, the pricing data should be submitted, accompanied by: (1) certification of review of the contractor's cost or price, and (2) a copy of the proposed change.

E. JUSTIFICATION

Assure that contract change is necessary, reasonable (both from a basis of cost and timeliness), and not included in the current contract.

1. Necessity for change. Why is the addition or deletion required?

2. Reasonableness of cost adjustment:a) Review the cost data submitted and compare with the scope of work stated in the

change order.b) For variances in quantities of unit prices in the bid package, it is acceptable to use

bid prices. However, if quantities vary more than 15%, a new limit price should be considered.

c) Additional “in-house” cost estimates may be necessary when it appears the cost data submitted is questionable in regard to quantities, cost of materials, labor, etc.

Idaho Department of Environmental Quality


Drinking Water State Revolving Fund

3. Reasonableness of time extensions:a) Weather. Time extensions for weather delays are allowable for unusually severe or

unseasonable weather. Delays due to normal weather conditions prevailing in the area are generally not a sufficient cause. The community or engineer may use comparative historical data to determine if weather conditions were unusually severe. The contractor's progress schedule should be checked to see if a period of shutdown was scheduled during the winter months.

b) Equipment delivery delays.

4. Duplication. Assure that the change does not require work which is in the original contract or previous change order. Check the change order against the approved plans, specifications, and addenda.




Form 9-F Acquisition of Professional Services and Need for Certificate of Negotiation January 2017 Page 1 of 2

Form 9-F Sample Letter Explaining DEQ Involvement

with Acquisition of Professional Services and Need for Certificate of Negotiation

The following is a sample letter. Specific conditions will need to be changed to fit the applicant’s situation.

Date

Honorable (mayor name)

City of (city name)

(Street address)

(City), Idaho (Zip code)

Re: State Drinking Water Grant and Drinking Water State Revolving Fund (SRF) Loan

Programs, City of (city name) (project name)

Dear Mayor (name):

As you are already aware, the City of (city name) is actively investigating the city wastewater

system’s treatment problem and NPDES compliance issue. It was learned from a recent meeting

with the City of (city name) that the City may be interested in acquiring a low-interest CWSRF

loan.

As set forth in IDAPA 58.01.22.032, upon submission of an actual application for a loan, the

applicant must provide certain documentation to be loan eligible. Included in the list is

subsection 02(b) and (c), which state that:

“Contracts for engineering services or other technical services and the description of

costs and tasks set forth therein shall be in sufficient detail for the Department to

determine whether the costs associated with the tasks are eligible costs pursuant to

Section 041”;

And that applicants must provide:

“Justification for the engineering firm selected. An engineering firm selected by the

applicant must at a minimum be procured through the selection guidelines and

procedures prescribed under Section 67-2320, Idaho Code.”

Please understand that a certificate of negotiation (certifying the following) is necessary to

demonstrate that the city met the legal requirements for its loan application: 1) negotiation in

accordance with competitive bidding requirements took place, and 2) a request for proposals

(RFP) was used as part of the competitive bidding requirements in order to comply with Idaho

Code §§ 67-2801 et seq., 67-2320, 59-1026, and 42-3212.

If the city of (city name) is interested in acquiring a CWSRF loan, DEQ is respectfully

requesting that the city provide a certificate of negotiation to this office and the city attorney

provide a letter describing the negotiations for professional services. The letter from the city


Form 9-F Acquisition of Professional Services and Need for Certificate of Negotiation January 2017 Page 2 of 2

attorney should clearly provide an opinion as to whether or not the procurement process meets

the requirements of Idaho Code.

If you have any questions concerning CWSRF loan application processes or program rules and

regulations, please do not hesitate to contact this office at (phone number).

Sincerely,

DEQ Regional Engineer

c: DEQ Loan Officer

O&M MANUAL: TABLE OF CONTENTSB.

1. List of figures included? Y N2. List of tables included? Y N

3. Manual organized well? Y N

4. Manual tabbed for easy reference? Y N

5. Page numbers used to refer to other parts of manual? Y N

O&M MANUAL: INTRODUCTION AND OVERVIEWC.

1. Brief explanation of how to use manual? Y N2. Purpose of manual explained? Y N

O&M MANUAL: OPERATOR RESPONSIBILITYD.

1. Manager’s responsibilities explained? Y N

2. Owner’s responsibilities explained? Y N N/A

Form 10-A

Manual ReviewChecklist for Operations and Maintenance (O&M)

A. PROJECT IDENTIFICATION & DESCRIPTION


1O&M Manual Review Form 10-A

PWS Number

Project Name

Location

Owner

Address

Design Engineer

Design Flow Capacity

Source and Treatment

Project Number

3. Training requirements for operator listed? Y N

4. List of standard reference publications operator may consult?

Y N

O&M MANUAL: PERMITS AND STANDARDSE.

1. Drinking Water Rules included? Y N

2. Treatment and monitoring requirements included?

Y N

O&M MANUAL: GENERAL PLANT DESCRIPTIONF.

1. Source and type of treatment described? NY

2. Principal design criteria listed? Y N

3. Flow diagram included? Y N

4. Hydraulic capacity analysis included? Y N

5. Backflow prevention program and ordinance explained?

Y N

6. List of unit operations given? Y N

O&M MANUAL: DESCRIPTION, OPERATION, AND CONTROL OF UNIT PROCESSESG.

1. Description of process included? Y N

2. Function of process explained? Y N

3. Normal operation or control of process (valve position, flow rate) described?

Y N

4. Major components and mechanical equipment listed?

Y N

5. Relationship to adjacent units described? Y N/AN



8. Discussion of common operating problems included?

7. Special features explained?

6. Schematic diagram of each unit included?

Y N

Y N N/A

Y N

O&M MANUAL: MAINTENANCEI.

1. Purpose of maintenance discussed? Y N



9. Emergency operation or alternate operation explained?

Y N

10. Bypassing unit described? Y N N/A

11. Laboratory tests for unit control discussed?

Y N N/A

12. Startup procedures for equipment and unit processes described?

Y N

13. Brief operation instructions included for each piece of equipment, with reference to manufacturer’s O&M manual?

Y N

O&M MANUAL: LABORATORY TESTINGH.

1. Sampling and testing program outlined? Y N

2. Sampling location, time, and method identified? Y N

3. List of laboratory references included? Y N N/A

4. Monitoring requirements explained? Y N

5. Interpretation and significance of expected ranges of lab results given?

Y N N/A

6. Sample laboratory worksheets included? Y N N/A

Y N

3. Sample maintenance information included? Y N

4. Preventive maintenance schedule given? Y N

5. Troubleshooting charts or guides included which reference pages in O&M manual and manufacturer’s O&M manual?

Y N

2. General maintenance information included?

6. Housekeeping requirements included? Y N

7. Equipment record system explained for each type of equipment or machinery? Y N

a) Equipment numbering system explained? Y N

b) Equipment catalog available? Y N

c) Nameplate data cards available? Y N N/A

d) Maintenance record cards available? Y N N/A

8. Manufacturer's maintenance schedule summarized for routine adjustment, lubrication, etc., with reference to page numbers in manufacturer's O&M manual?

Y N

9. Work order system described? Y N

10. Sample forms provided? Y N N/A



O&M MANUAL: RECORDS & REPORTSJ.

1. Importance and location of records and reports, including record drawings, described?

Y N

2. Daily operating log described, with sample format provided? Y N

3. Maintenance records described, with examples given?

Y N

Y N

Y N

Y N

Y N

7. Annual report explained, with sample format provided?

6. Requirements of monitoring reports explained, with examples given?

5. Monthly report described, with format shown?

4. Laboratory records and reports described, with samples provided?

8. Operating cost record keeping system explained? Y N

9. Personnel record keeping system explained? Y N

10. Method for reporting system problems explained? Y N

11. Method for maintaining an accident report explained? Y N

K. O&M MANUAL: STOREROOM AND INVENTORY SYSTEM



6. List of outside contract maintenance tasks included?

5. List of warranted equipment and warranty provisions included?

7. List of manufacturers of equipment included?

4. Cross-reference lubricant list included?

3. Special tools list included?

2. Inventory sample forms and records included?

1. List of spare parts recommended?

N/ANY

N/ANY

N/ANY

NY

N/ANY

NY

Y N

O&M MANUAL: PERSONNELL.

1. Manpower requirements given? Y N

2. Qualifications of personnel given? Y N

3. Licensure of personnel explained? Y N

Y N1. Vulnerability analysis included?

O&M MANUAL: EMERGENCY OPERATING PLANM.

4. Mutual aid list included? Y N N/A

5. Chemicals used and their potential hazards explained?

Y N

6. Procedures outlined to follow in case of electrical emergency?

Y N

7. Detailed list included of jobs each person must carry out during emergency? Y N

O&M MANUAL: SAFETY PROGRAMN.

1. Emergency phone list included? Y N

2. Safety equipment list included? Y N

3. System hazards and precautions explained?

Y N

4. Mechanical equipment hazards described? Y N

5. Electrical hazards described? Y N


6O&M Manual ReviewForm 10-A

Y N

Y N

3. Police/fire departments coordination explained?

2. Emergency equipment list given?

6. Explosion and fire hazards described? Y N

7. Health hazards described? Y N

8. Chlorine hazards described? Y N N/A

9. Oxygen deficiency hazards described? Y N N/A

10. Laboratory hazards described? Y N N/A

11. Chemical hazards described? Y N

O&M MANUAL: APPENDIXO.

1. Detailed design criteria included?

2. Schematics included?

Y N

Y N

3. Sample forms provided? Y N4. List of lab chemicals included? Y N N/A

5. Manufacturer's manuals referenced? Y N6. Warranties included? Y N

7. Valve indices or schedule included? Y N

8. Approved shop drawings included? Y N

9. Construction photos included? Y N

10. Drinking Water Rules included? Y N

11. Piping color code included? Y N N/A

12. Recommended references included? Y N

13. Drinking water ordinance included? Y N N/A

14. Backflow prevention ordinance included? Y N N/A



P. O&M MANUAL: UTILITIES

1. Description of utilities included? Y N

2. Distribution system described?

3. Diagrams and manufacturers' drawings included?

4. Electrical emergency procedures described?

5. Gas and/or water capacities and limitations of responsibility described?

6. Heat described?

7. Telephone services described?

8. Emergency procedures described?

Y N

Y N

Y N

Y N

Y N

Y N

Y N

Date

Signature of Environmental Engineer

Comments:

Is the manual written so that a reasonably experienced reviewer could adequately operate and maintain the facility by using the manual?

Q. O&M MANUAL: FINAL TEST OF MANUAL




Form 10-B Sample O&M Manual Review Transmittal Letter

Form 10-B Sample Operations and Maintenance (O&M) Manual Review

Transmittal Letter

DEQ Letterhead

Re: Loan Project Number (number) Operations and Maintenance (O&M) Manual Approval


The Idaho Department of Environmental Quality has completed review of the final O&M

manual submitted to this office by your engineer on (date). It appears that the manual contains

all of the required information. Therefore, the O&M manual is hereby approved.

A copy of the O&M manual should be available to all personnel concerned with the facility, and

they should have a thorough knowledge of its contents. The manual should also be kept

up-to-date.

If you have any questions or comments concerning this matter, please feel free to contact me at

(phone number).

Sincerely,

Name, Project Officer

Enclosure: Drinking Water Loan Account Checklist for Operation and Maintenance Manual

Review (Form 10-A)


Form 11-B Request for Final Construction Inspection and Disbursement

Form 11-B Request for Final Construction Inspection and Disbursement

DEQ Letterhead

Re: Loan Project Number (number)

PWS (number)

Final Project Inspection

Dear (addressee):

Included with this letter are two forms which will assist you in preparing for the final project

inspection of the loan project listed above. By compiling and/or submitting the documents

referenced in the attached forms, the final inspection should proceed more smoothly. The

following forms are provided for your use:

Form 11-C, Submittals Required Prior to Final Inspection

Form 11-D, Documents to Have Available at the Time of Final Inspection

Please forward the completed forms to:

(name), Project Officer

Street Address

City, State, ZIP

If you have any questions concerning any aspect of this project, please feel free to contact me at

(phone number).

Sincerely,

Name

Staff Engineer (or other)

Enclosures

c:


Form 11-C Submittals Required Prior to Final Inspection September 2014

Form 11-C Submittals Required Prior to Final Inspection

1. A copy of the final disbursement request.

2. A copy of the final construction contract payment request covering the value of work in

place and materials and equipment delivered and installed. The payment request must be

approved.

3. Invoices for all related expenses (e.g., bid advertising, legal, administrative).

4. Certification by the consulting engineer that construction was completed in accordance with

the approved plans and specifications.

5. Operations and maintenance (O&M) manual.

6. Proof of operator licensure.

7. DEQ review of Water System Protection Ordinance (WSPO) and User Charge System

(UCS).


Form 11-D Documents to Have Available at Time of Final Inspection January 2017 Page 1 of 1

Form 11-D Documents to Have Available at the Time of Final Inspection

1. Executed construction contracts

2. Notices to proceed

3. DEQ-approved plans, specifications, and all addenda issued

4. Reports on materials tests

5. Approved change orders to the construction contract(s) showing all changes to the

contract(s)

6. DEQ-approved operations and maintenance manual

7. DEQ-approved water system protection ordinance and user charge system

8. Record drawings

9. Project files


Form 12-C Miscellaneous Provisions and Specimen Documents September 2014 Page 1 of 5

Form 12-C Miscellaneous Provisions and Specimen Documents

1. Letters of Interest – Priority Lists: The submission of Letters of Interest must occur prior to

the Intended Use Plan being exposed for public comment.

2. Davis Bacon

a. Farming activities and Force Account labor are not governed by Davis Bacon

b. The default construction category for SRF projects is “heavy”; however, if an SRF

project has > 10% or > $1,000,000 in a category other than “heavy” (e.g. roads), the

contractor will be required to pay according to whichever wage determination is

applicable and keep separate sets of payroll records for laborers that perform work in

multiple categories.

c. Attached are samples of the most commonly used Davis Bacon forms

Form 2-BFinancial Application Form

1. Operation, maintenance, and replacement (for new facilities)

3. Annual debt (for existing facilities). Attach a copy of the debt repayment (amortization) schedule for each debt.


Financial Application FormForm 2-B

A. ESTIMATED ANNUAL OPERATION, MAINTENANCE, AND REPLACEMENT COSTS OF THE PROPOSED FACILITIES:

2. Operation, maintenance, and replacement (for existing facilities)

B. REVENUE/INCOME-RELATED INFORMATION

1. Current number of equivalent residential users:

2. Planned monthly user charge per equivalent residential unit (after project completion, so that user charge will include new debt servicing and changes to operation and maintenance); please indicate the extent to which population growth is counted on to meet the debt burden.

3. Median household income per most recent census or

approved income survey:

4. Is water service subsidized by any other source of revenue not previously mentioned? If so, please explain:

Y N


Financial Application FormForm 2-B

C. DEBT-RELATED INFORMATION

1. What is the legal debt limit of the community for the proposed project as authorized by bond election, judicial confirmation, or local improvement district assessment:

2. Is there other outstanding debt on portions of the drinking water system?

If yes, describe type, amount of payments, and term:

3. Is the community in compliance with covenants of existing debt?

NY

N/ANY

4. Do covenants affect the issuance of new debt? N/ANY

If yes, describe:


Water System Capacity Assessment Indicators: Introduction • 1

Form 2-C, Section 1 Water System Capacity Assessment Indicators

Managerial, Financial, and Technical Capacity Assessment Indicators for Drinking Water State Revolving Fund Loans

INTRODUCTION

Form 2-C, Section 1

Between 1995 and 1997, significant amendments were made to the Safe Drinking Water Act (SDWA), notably in regard to the responsibility of the state primacy agency to improve the capacity of public water systems (PWSs) to comply with safe drinking water standards. For the first time, Congress also ensured that states would receive financial resources in the form of capitalization grants for Drinking Water State Revolving Funds (DWSRFs).

Congressional intent for the use of DWSRF resources is explained in the U.S. Environmental Protection Agency's (EPA) Drinking Water State Revolving Fund: Final Guidance (February 1997). The requirement for a technical, financial, and managerial (TFM) analysis is addressed in section C. 1 of the guidance:

“A Fund may not provide any type of assistance to a system that lacks the technical, managerial or financial capability to maintain SDWA compliance, unless the owner or operator of the system agrees to undertake feasible and appropriate changes in operation or if the use of the financial assistance from the DWSRF will ensure compliance over the long-term (section 1452(a)(3)(B)(i)). The State shall develop a capacity program to evaluate each system to be funded to ensure it has adequate capacity to receive funding.”

It is essential, then, for the state to develop and implement an assessment tool that will yield a determination of PWS capacity or capability. The capacity assessment tool encompasses the assessment criteria necessary to determine whether or not a PWS applying for DWSRF assistance possesses necessary capability to repay a loan. The TFM analysis combines the work that has been done by EPA, the states, and public and private technical assistance providers regarding capacity measurement.

This assessment tool uses measurement criteria for technical, fiscal, financial, and general management capacity.


Water System Capacity Assessment Indicators: Technical Capacity • 2

SECTION 1: TECHNICAL CAPACITY REVIEW QUESTIONS

Form 2-C, Section 1

Overview

The technical capacity questions in this section are designed to help describe the condition of the physical components of the drinking water system and its water sources. The questions address the following water system components:

• ωατερ τρεατµεντ φαχιλιτιεσ

• water sources

• water source capacity

• water storage, pumping, and distribution capacities

• water distribution system integrity

For the purpose of determining whether the state could confidently loan its funds to a water system, the questions are designed to address the critical issue of whether or not capital investment will enable the public water system to comply with existing and expected drinking water rules for a reasonable period of time.

Source(s) Used in Developing Technical Capacity Questions

The technical capacity categories, which were designed by DEQ Drinking Water Program engineers, are primarily derived from the Priority Rating System (IDAPA 58.01.20.020).

How to Use the Results of the Analysis

The technical capacity conditions are expressed through a set of questions in flow chart format. The best-case scenario for each question would involve two immediate “yes” answers. This indicates that technical capacity is currently sufficient for the technical category and that technical capacity will be in place for SDWA compliance in the near future.

For each question, if two consecutive “no” answers are given at any point, a technical capacity deficiency exists. The existence of a deficiency may be cause for suspending the remainder of the capacity evaluation. This is obviously the “worst-case” situation.

Some questions may require further clarification, as indicated by the symbol labeled “Go to the Q1 Explanations page and explain.” When this occurs, there may be an opportunity for more information to be provided that clarifies the technical capacity to comply with the Idaho Drinking Water Rules.

Who Should Answer These Questions?

Since DEQ engineers are involved in rating projects for possible DWSRF financing, they will likely complete this section of the capacity analysis. An alternative would be for the water system's engineer to complete the analysis, with review by appropriate DEQ staff. DEQ field staff can verify the answer submitted to question #6. It is strongly recommended that question #7 be answered by DEQ enforcement and/or compliance assurance personnel.

water treatment facilities

Will the DWSRF loan enable the PWS to comply with the current

Rules in this area?

Will the DWSRF loan

enable the PWS to meet water treatment facility

requirements that are reasonably expected to be

enacted through the Rules during the

next five years?

DWSRF = Drinking Water State Revolving FundPWS = Public Water SystemRules = Idaho Rules for Public Drinking Water Systems (IDAPA 58.01.08)

Do the necessary

water treatment facilities exist, are they

functional, and do they meet the requirements

of the Rules?

By using non-DWSRF resources, will the PWS likely

meet water treatment facility requirements that are reasonably

expected to be enacted through the Rules during the next

five years?

No, financing is expected from the

DWSRF.

Is the PWS expecting to finance

improvements needed to comply with the Rulesusing financing exclusive of

the DWSRF program? (Either its own financial resources or

alternative financing mechanisms.)

Go to question #2, Existing Water

Sources.


Sources.


Sources.

Will the PWS likely meet water treatment facility

requirements that are reasonably expected to be enacted

through the Rules during the next five years?

Go to the Q1 Explanations page and explain.

TECHNICAL CAPACITY REVIEW QUESTIONS

Question 1. Water Treatment Facilities




Yes No

Yes NoYes No

Yes No

Yes No

Yes No

Water System Capacity Assessment Indicators: Technical Capacity • 3Form 2-C, Section 1


Sources.


Q1 Explanations

If the PWS is NOT likely to meet water treatment facility

requirements that are reasonably expected to be enacted through the Rules during the next five

years, please explain why:

If by using non-DWSRF funds, the PWS is NOT likely to meet

water treatment facility requirements that are reasonably expected to be enacted through the Rules during the next five


If the DWSRF loan will NOT enable the PWS to comply

with the Rules in this area, please explain why:

If the DWSRF loan will NOT enable the PWS to meet water treatment facility requirements that are reasonably expected to be enacted through the Rules

during the next five years, please explain why:



Will the DWSRF loan enable the PWS to comply with the current

Rules in this area?

Will the DWSRF loan

enable the PWS to meet water source development and

protection requirements that are reasonably expected to be


next five years?


Are existing water sources developed and protected according to the requirements of the Rules?


DWSRF.

Question 2. Existing Water Sources

Go to question #3, Water Source

Capacity.

Will the PWS likely meet water

source development and protection requirements that are

reasonably expected to be enacted through the Rules

during the next five years?


Capacity.

By using non-DWSRF

resources, will the PWS likely meet water source development and


enacted through the Rules during the next five

years?


Capacity.

Yes No

Yes No Yes No

NoYes

Yes No

Yes No











Capacity.


Q2 Explanations

If the PWS is NOT likely to meet water source development and


enacted through the Rules during the next five years, please explain

why:

If by using non-DWSRF funds, the PWS is NOT likely to meet water source development and


enacted through the Rules during the next five years, please

explain why:



If the DWSRF loan will NOT enable the PWS to meet water

source development and protection requirements that

are reasonably expected to be enacted through the Rules




Will the DWSRF loan enable the PWS to comply with the Rules

in this area?

Will the DWSRF loan

enable the PWS to meet water capacity requirements that are

reasonably expected to be enacted through the

Rules during the next five years?


Is water source capacity adequate to meet current normal and peak demands, and is the system protected against inadequate water pressure or flow as required by the Rules?

Question 3. Water Source Capacity





Go to question #4, Water Facilities

Capacity.

Will the PWS likely meet water

source capacity requirements that are reasonably expected to be

enacted through the Rules during the next

five years?


meet water source capacity requirements that are reasonably

expected to be enacted through the Rules during

the next five years?


DWSRF.


Capacity.


Capacity.

Yes No

YesYes

Yes

Yes

NoNo

No

No

Yes No







Capacity.


Q3 Explanations

If the PWS is NOT likely to meet water source capacity

requirements that are reasonably expected to be enacted through the Rules during the next five



water source capacity requirements that are reasonably expected to be enacted through the Rules during the next five




If the DWSRF loan will NOT enable the PWS to meet water source capacity requirements

that are reasonably expected to be enacted through the Rules




Will the DWSRF loan enable the PWS to

comply with the Rulesin this area?



DWSRF.

Question 4. Water Facilities Capacity

Go to question #5, DistributionLine Leaks.


Will the DWSRF loan

enable the PWS to meet water storage, pumping, and

distribution facility requirements that are reasonably expected to be


next five years?

Do the water storage, pumping, and distribution facilities have adequate capacity to meet current normal and peak demands as required by the Rules?


improvements needed to comply with the Rules

using financing exclusive of the DWSRF program? (Either its

own financial resources or alternative financing

mechanisms.)

Will the PWS likely meet

water storage, pumping, and distribution facility requirements that are reasonably expected to be

enacted through the Rules during the next

five years?


By using non-DWSRF

resources, will the PWS likely meet water storage,

pumping, and distribution facility requirements that are reasonably

expected to be enacted through the Rules during

the next five years?

Yes No

YesYes

Yes

Yes

Yes

NoNo

No

No

No






Go to question #5, Distribution Line Leaks.


Q4 Explanations

If the PWS is NOT likely to meet water storage, pumping, and

distribution facility requirements that are reasonably expected to be enacted through the Rules



water storage, pumping, and distribution facility requirements that are reasonably expected to be enacted through the Rules

during the next five years, please

explain why:



If the DWSRF loan will NOT enable the PWS to meet water

storage, pumping, and distribution facility requirements that are reasonably expected to be enacted through the Rules

during the next five years, please

explain why:




reduce distribution line leak repairs to four or fewer per 100 connections each

fiscal year?



DWSRF.

Question 5. Distribution Line Leaks

Go to question #6, As-Built Drawings.

In each fiscal year, are there four or fewer repairs of water distribution line leaks per 100 connections?


improvements needed to comply with the Rules

using financing exclusive of the DWSRF program? (Either its

own financial resources or alternative financing

mechanisms.)

Will the DWSRF loan

enable the PWS to sustain the standard of four or fewer leak

repairs per 100 connections each fiscal year?


Will the PWS likely meet

or exceed the standard of four or fewer repairs per 100 connections each

fiscal year?



meet or exceed during the next five years the distribution line leak repair

standard of four or fewer repairs per 100 connections

each fiscal year?

Yes

Yes

Yes

Yes

Yes No

No

NoNo

No

Yes No








Q5 Explanations

If the PWS is NOT likely to meet or exceed the standard of four or

fewer repairs per 100 connections each fiscal year, please explain

why:

If by using non-DWSRF funds, the PWS is NOT likely to meet meet or exceed the standard of four or fewer repairs per 100 connections each fiscal year,

please explain why:

If the DWSRF loan will NOT enable the PWS to meet or

exceed the standard of four or fewer repairs per 100

connections each fiscal year, please explain why:

If the DWSRF loan will NOT enable the PWS to sustain the standard of four or fewer leak repairs per 100 connections

each fiscal year, please explain why:



Question 6. As-Built Drawings

Have copies of the as-built drawings been

received by DEQ?

Does the PWS have current as-built engineering drawings of system facilities?

Go to question #7, Rule

Violations.

Go to question #7, Rule Violations.

Yes No

Yes No

PWS = Public Water System



Go to Financial Capacity

ReviewQuestions.

Go to the

Yes No

Q7 Explanations page and explain.

Question 7. Rule Violations



ReviewQuestions.

How many of these violations

capacity?were due to inadequate technical

due to lack of managerial capacity?

of these violations were How many

NOTE: If DWSRF or other capital resources are extended to repair or upgrade the water system, violations related to technical capacity should not continue. If violations related to technical or managerial capacities are likely to continue after a DWSRF or other capital improvement is made, DEQ may wish to require specific management or technical capacity improvements as loan conditions.

Has the PWS violated the Rules on one or more occasions in the last 12 months?

Yes No


violations in the next five years?

significantly reduce the likelihood of repeat



ReviewQuestions.


Q7 Explanations

If the DWSRF loan will NOT enable the PWS to significantly reduce the likelihood of repeat

violations in the next five years, please explain why:



Water System Capacity Assessment Indicators: Financial Capacity • 1Form 2-C, Section 2

SECTION 2: FINANCIAL CAPACITY REVIEW QUESTIONS

Overall financial capacity for a water system can be assessed by examining both the fiscal condition and the financial management of the system. The fiscal condition describes the ability of the water system to raise the resources necessary for proper operation.

Questions 1-6 focus on the fiscal condition of the public water system, primarily related to the user charge system (also referred to as rates or fees).

These six questions address the following fiscal capacity components:

• total user charge revenues versus total system expenses

• other revenue sources (if applicable) • affordability of customer user charges

• cash budgeting

• frequency of rate setting

For the purpose of determining whether the state could confidently loan its funds to the system, the questions are designed to address the critical issue of whether or not the system has the ability to meet its obligations in a timely manner.

The first step in assessing capacity is to determine whether capital investment will make a difference in bringing a system into long-term compliance. Determining whether the water system can afford to pay back what it borrows is the second step.

While the technical capacity questions utilize a series of yes/no questions, the fiscal capacity questions are often answered by providing data that can be analyzed using common equations. Please refer to the “Note” box that accompanies most questions to see how the answers to the questions might be utilized.

Fiscal capacity is generally a self-assessment exercise. The water system operator and/or management team should be able to provide the answers for many of the questions. For purposes of the DWSRF, there must be assurance that the water system will have the financial capacity to be able to maintain compliance with the 1996 Safe Drinking Water Act (sec. 1452(a)(3)(B)) requirements. Fiscal capacity and financial management capacity information provided by the water system can meet this assurance requirement when accompanied by standard financial management documents such as audited financial statements.

Financial Management Review Questions

Financial review questions 7-10 address the following financial management components:

• development and use of an annual budget

• development and use of a capital budget

• development and use of a capital improvements plan

• periodic financial audits

For the purpose of determining whether the state could confidently loan its funds to the system, the questions are designed to address the critical issue of whether or not a public water system

Water System Capacity Assessment Indicators Form 2-C, Section 2



has financial management controls that enhance its ability to return DWSRF principal and interest payments.

How to Use the Results of the Analysis This section asks the water system to provide documents that can be reviewed to verify financial management practices. These documents will also provide support for information provided in the fiscal capacity measurement section.


FINANCIAL CAPACITY REVIEW QUESTIONS

Question 1. System Revenues

What is the number of EDUsin the PWS?

EDU = Equivalent Dwelling Unit, also known as equivalent residential unit (ERU)

What is the expected revenue per EDU per month?

What are the annual system expenses (O&M, debt service, and capital

replacement)?

Go to question #2, Other

Funds.

Go to question #3, Water

System Rate Affordability Index.

revenues from user charges, based on the existing population base and a conservative growth

projection, meet or exceed expenses (O&M, debt service,

and capital replacement)?

Yes No

O & M = Operations and Maintenance


Do water system



Question 2. Other Funds



NOTE: In some cases, water systems may supplement user charges with other revenues. This practice is usually discouraged because the full costs of operations should be met by revenues. However, where user fees are supplemented, DEQ should obtain information regarding the specific situation and the dependability of the supplemental resources.

If total system expenses exceed total user charge revenues,

are other funds contributed to offset system expenses?

What is the source(s) of additional revenue funds?



What is the total amount of additional revenue funds in the current year water system budget?

Yes No or N/A



Question 3. Water System Rate Affordability

For residential customers only, fill in the the following boxes,

using the most current information available:

Average median household income withinthe PWS (include source of data and year

data was compiled [e.g.,U.S. Census, 2000]):

Average residential water system user charge (should include O&M,

debt service, and capital replacement):

Go to question #4, Cash Budget.

Frequency of water system billing:

List new debts anticipated to be entered into by the PWS during the next five years:

O&M = Operations and Maintenance


Is the operating cash on hand equal to or

greater than 1.5 times the average monthly O&M plus general

and administrative expenses?


O&M = Operations and Maintenance

Question 4. Cash Budget


System Rates Review.

NOTE: A water system budget that incorporates a cash budget equivalent to 1.5 times the monthly O&M, general, and administrative expenses is conscious of the need to be prepared for emergencies, payment delinquencies, and other short-term cash flow problems.


System Rates Review.

Does the water system include a cash budget

within its annual budget for unexpected

expenses?

Yes No

Yes No



Question 5. Water System Rates Review

Go to question #6, Setting

Rates.

NOTE: It is good practice for a water system to review its rates on an annual basis. When a systemreviews its rates infrequently, it will be less able to adjust to significant changes in operating expenses. When a system reviews its rates frequently, it can more easily raise user charges to meet expenses related to new or amended drinking water rules.

Does the water system management review the user fee,

user charge, or rate system at least once

every two years?

Go to question #6, Setting

Rates.

When was the most recent review of water system rates (user fees and charges)?

Yes No



Question 6. Setting Rates

Go to question #7, Annual

Budget.

What resources and guidance does the water system use for setting water user rates,

fees, and charges?


FINANCIAL CAPACITY REVIEW QUESTIONS:Financial Management

DWSRF = Drinking Water State Revolving FundPWS = Public Water System

Question 7. Annual Budget

Go to question #8, Capital

Budget.

NOTE: The lack of an annual budget document is a serious deficiency and should be a stopping point for DWSRF application review.

Does the PWS produce and use

an annual budget?

Please submit the three most recent budget documents to the DEQ State Office.

Go to question #8, Capital

Budget.

Yes No



PWS = Public Water SystemQuestion 8. Capital Budget

Go to question #9,

Capital Improvements Plan.

NOTE: The use of five-year capital budget is a positive indicator of financial management and supports the assessment of technical capacity conditions. A capital budget is an indication that the PWS is aware of the need for financing infrastructure upgrade and/or replacement.

Does the PWS use a capital budget?

Does the capital budget forecast capital

improvement requirements for five

or more years?

Go to question #9,

Capital Improvements Plan.

Yes No

No

Yes

Please submit the three most recent capital budget documents to the DEQ State Office.



Question 9. Capital Improvements Plan

Go to question #10,

Financial Audits.

NOTE: The use of a capital improvement plan is a positive indicator of financial management and supports the assessment of technical capacity conditions. A capital improvement plan is an indication that the PWS is aware of the need to plan forinfrastructure upgrade and/or replacement, growth, and other factors that might require financing.


Does the PWS use a capital improvements

plan?

Please submit acurrent capital

improvements plan to the DEQ State

Does the capital improvements plan forecast

system impacts and needs for five or more years?

Go to question #10,

Indicate number of years forecasted:

Go to question #10,

Yes No

Yes No

Financial Audits.

Financial Audits.

Office.


DWSRF = Drinking Water State Revolving Fund



Question 10. Financial Audits

Go to Managerial Capacity

Review

NOTE: As a matter of good business practice,water systems should undergo financialaudits, which allow for verification of financial condition. The review of consecutive financial audits allows DEQ to observe whether auditor recommendations (if any) in one audit were indicated as accomplished in the subsequent audit. If a loan applicant cannot produce a recent audit document, a detailed review of existing financial reporting documents will be performed to determine the water system’s financial condition.

Does the PWS undertake periodic

financial audits?

Please submit copies of the three most recent financial

audits.

Go to Managerial Capacity

Review

Please submit copies of the three most recent financial

statements.

Yes No

Questions.

Questions.


Water System Capacity Assessment Indicators: Managerial Capacity • 1Form 2-C, Section 3

SECTION 3: MANAGERIAL CAPACITY REVIEW QUESTIONS

Overview

This section addresses the general management capacity of the water system. The questions assess staff and board capabilities and whether the condition of the organization supports proper financial management and technical operations.

The questions in this section address the following general management components:

• water system operation

• system governance, oversight, and communication

• system policies • professional support regarding engineering and legal services

• record keeping

How to Use the Results of the Analysis

This section asks the water system to provide documents that can be reviewed to verify general management policies and practices. These documents can also provide substantial additional information to support the technical and financial capacity analyses.

Who Should Answer These Questions?

For the most part, this section should be relatively easy for the operator and management team of a water system to answer. Question #4 asks for the submittal of written policies when available.

Water System Capacity Assessment Indicators Form 2-C, Section 3


Print Form

MANAGERIAL CAPACITY REVIEW QUESTIONS

Question 1. Licensed Operator

Give the name and license number of each operator:

Go to question #2,

Governing Board.

Does the PWS

currently employ the services of an

appropriately licensed

operator(s)?

PWS = Public Water SystemRCO = Responsible Charge Operator

Go to question #2,

Governing Board.

Go to question #2,

Governing Board.

What is the expected start date of the operator(s)?

Has the PWS begun the contract or

hiring process to obtain the services of an appropriately

licensed operator(s)?

Go to question #2,

Governing Board.

Go to question #2,

Governing Board.

Give the RCO’s name and license number:

Is the operator on-site and/or

on-call 24 hours a day, 7 days a week?

Has the PWS designated an

SRCO to perform the duties of the RCO when

the RCO is not available?

Has the PWS designated an RCO of

the water system who is licensed at the same classification

level as the system?

Give the substitute operator’s name and license number:

Yes No

Yes No

Yes No

Yes No

NoYes

SRCO = Substitute Responsible Charge Operator


Print Form


Question 2. Governing Board

Go to question #4,

Water System


Does the PWS have a governing body or board of directors?

What type of governing body exists?

Yes No

Go to question #3,

Communication.

Policies.


Print Form


Question 3. Communication

Please describe the formal communication link:

Go to question #4, Water System Policies.

Go to question #4, Water System Policies.

PWS = Public Water System Is there a formal communication link (i.e., written communication) between the PWS operator and one or more members of the governing body or board of directors?

Yes No


Print Form

Go to question #5,

Professional Engineer.

NOTE: It is good business practice for water systems to develop, in written form, the policies mentioned on this page, adopt them, and then periodically review them. DEQ may require these policies to be put in place as a condition of DWSRF loan approval. As systems are reviewed, the need may become clear for specific training and technical assistance in policy development.

DWSRF = Drinking Water State Revolving FundPWS = Public Water System

Does the PWS have a written

system operations manual or policy?

Does the PWS have a written governance

policy?

Does the PWS have a written personnel policy?

Does the PWS have a written safety and/or risk

management policy?

Does the PWS have a written operating emergency plan?

Does the PWS have a written customer service

policy?


Question 4. Water System Policies

Yes

Yes

Yes

Yes

Yes

Yes

No

No

No

No

No

NoSubmit a copy of the manual or policy to the DEQ State Office.

Submit a copy of the policy to the DEQ State Office.



Submit a copy of the plan to the DEQ State Office.



Print Form


Question 5. Professional Engineer

Give the name of the engineer and firm:

Go to question #6,

Attorney.

Go to question #6,

Attorney.

NOTE: Lack of engineering capability may affect a water system’s ability to maintain the integrity of its technical components. It may also limit the system’s ability to stay current with system requirements, emerging technologies, etc.


Does the PWS employ the services

of a professional engineer?

Yes No


Print Form


Question 6. Attorney

Go to question #7, Record

Keeping.

NOTE: Lack of legal capability may affect a water system’s ability to respond to changes in drinking water rules. Legal capability is also necessary at times for effective response to compliance and enforcement notices.

Does the PWS employ the services

of an attorney?


Give the name of the attorney and firm:

Yes No


Keeping.


Keeping.

Is this attorney a registered bond counsel in the state of

Idaho?

Yes No


Print Form


Question 7. Record Keeping

EPA = U.S. Environmental Protection AgencyPWS = Public Water System

Does the PWS maintain operating

records that are accessible to the system operator, governing body members, customers, EPA, and DEQ?

Does the PWS maintain records of correspondence with EPA, DEQ, and/or the local health district, and where appropriate, the Idaho Public Utilities Commission?

Give the location of records:

Does the PWS maintain records of

the results from required water testing

Give the location of records:

Yes No

No

Yes

No

Yes

and analysis?


Form 3-A Sample DEQ Loan Offer, Acceptance, and Agreement March 2013 Page 1 of 10

STATE OF IDAHO

DEPARTMENT OF ENVIRONMENTAL QUALITY

LOAN OFFER, ACCEPTANCE AND AGREEMENT

FOR DRINKING WATER TREATMENT

DESIGN AND CONSTRUCTION

SECTION I. INTRODUCTION

The State of Idaho (State) is authorized by Title 39, Chapter 36 (Act), Idaho Code, to make loans

from the Drinking Water Treatment Facility Loan Account (Account) to assist municipalities in the

construction of drinking water treatment facilities. The Idaho Board of Environmental Quality,

through the Department of Environmental Quality (Department), is authorized to administer the Act.

The Department has determined that the <Name of City/District/HOA> (Applicant/Borrower) has

established eligibility for a loan under the terms of the Act and IDAPA 58.01.20, the Idaho Rules for

Administration of Drinking Water Loan Program (the Rules).

The Applicant is a public entity with the authority to finance public improvements. The Department

hereby offers a loan to the Applicant according to the terms and conditions contained in this

document and the Rules.

SECTION II. DESCRIPTION OF PROJECT

This loan offer is for design and construction of the following project:

A. Loan Project Number: DW XXXX

B. Name and Address of Applicant: Applicant

Address

City, Idaho 83XXX

C. Project Description: The project consists of the construction of a pump

house and the replacement of two water mains.

D. Terms: $2,000,000 at 1.75% (interest of 0.75% and loan fee

of 1.00%) to be repaid in biannual installments over

20 years.



E. Estimated Project Budget:

1. Transmission & Distribution $2,000,000

2. Storage 0

3. Source Development 0

Total $2,000,000

SECTION III. GENERAL CONDITIONS

This offer may only be accepted by signature by an authorized representative of the Applicant. Upon

acceptance by the Applicant, this offer shall become a loan agreement (Agreement) and the

Applicant shall become a Borrower. By accepting this offer, the Borrower agrees to all terms and

conditions set forth in this document and the Rules:

The Borrower agrees:

A. To not transfer, assign or pledge any beneficial interest in this Agreement to any other person

or entity without the prior written consent of the Director of the Department of

Environmental Quality (Director). To not enter into sale, lease or transfer of any of the

property related to the Agreement. To not make any additional material encumbrances to the

project without the prior written consent of the Director. To not incur any liabilities that

would materially affect the funds pledged to repay this loan without the prior written consent

of the Director. To not delegate legal responsibility for complying with the terms,

conditions, and obligations of this Agreement without the prior written consent of the

Director. Notwithstanding any other provision of this paragraph, the Borrower may sell or

otherwise dispose of any of the works, plant, properties and facilities of the project or any

real or personal property comprising a part of the same which shall have become

unserviceable, inadequate, obsolete or unfit to be used in the operation of the project, or no

longer necessary, material or useful in such operation, without the prior written consent of the

Director.

B. To enter into such contractual arrangements with third parties as it deems advisable to assist

it in meeting its responsibilities under this Agreement. However, covered transactions that are

under consideration for any debarred or suspended contractors must comply with presidential

Executive Order 12549.

C. To fulfill all declarations, assurances, representations and statements in the application and

all other documents, amendments and communications filed with the Department by the

Borrower in support of the request for this loan. Which application is attached hereto and

incorporated by reference herein.

D. To comply with applicable State and Federal employment requirements including, but not

limited to, Equal Employment Opportunity and Civil Rights requirements.

E. To make efforts to award subagreements to Disadvantaged Business Enterprises (DBE)

which includes Minority and Women-owned businesses (MBE/WBE).



a. The separate fair share goals for MBE and for WBE will be in bid solicitations and

documentation of efforts to obtain MBE/WBE participation will be required of any

contractor who fails to attain the goals; and,

b. Semi-annual reports of MBE/WBE utilization will be prepared on forms supplied by

the Department; and,

c. Include the following language in all procurement contracts “The contractor shall not

discriminate on the basis of race, color, national origin or sex in the performance of

this contract. The contractor shall carry out applicable requirements of 40 CFR Part

33 in the award and administration of contracts awarded under EPA financial

assistance agreements. Failure by the contractor to carry out these requirements is a

material breach of this contract which may result in the termination of this contract

or other legally available remedies.”

F. To provide evidence of ownership in the form of fee simple title or long-term lease and right

of access or easements for real property on which the project is proposed to be constructed.

Clear title or legal right to all real property necessary for the successful operation of the

facilities shall be guaranteed by the Borrower for the useful life of the project, prior to

commencement of construction. Land acquisitions shall only be reimbursed by DEQ if

obtained from a willing seller.

G. To take affirmative action to ensure that the project shall be completed and operated in

conformance with federal and state laws relating to occupational health and safety.

H. That if prior to completion of this Agreement the project is damaged or destroyed, there will

be no reduction in the amounts payable by the Borrower to the Department.

I. That in the event there is any default in the payment of either the principal amount, loan fee

or the interest due under this Agreement, or any breach by the Borrower of any of the terms

or conditions of this Agreement, the entire principal amount and whatever interest and fees

are due to the date of payment may be declared due and immediately payable. The amount of

such default shall bear the same interest and fee rate as applies to the principal of this loan

from the date of default until the date of payment by the Borrower. All costs incurred by the

Department due to such default, including court costs and attorney's fees, shall be repaid by

the Borrower to the Department.

J. That any waiver by the Department at any time of the rights or duties under this Agreement

shall not be deemed a waiver of any subsequent or additional rights or duties under this

Agreement.

K. That the use by the Department of any remedy specified in this Agreement for its

enforcement is not exclusive and shall not deprive the Department of the right to seek any

other appropriate legal or equitable remedy.

L. That this Agreement is binding upon the Borrower and the Department, and any person,

office or entity succeeding the Borrower or the Department.

M. To comply with all applicable federal, state and local laws.



N. In the event any term of this Agreement is held to be invalid or unenforceable by a court, the

remaining terms of this Agreement will remain in force.

O. The total loan funds disbursed per this Agreement are considered federal financial assistance

per the Single Audit Act of 1984, as amended by the Single Audit Act Amendments of 1996

(SAA), 31 U.S.C. §§7501-7507. (2000). If Borrower expends more than $500,000 of any

federal funds in a fiscal year, Borrower shall conduct an audit in accordance with the SAA.

In such case, Borrower shall provide the Department a copy of the SAA audit within nine

(9) months of the end of the audit period per the SAA. Borrower recognizes that it is

responsible for determining if the $500,000 threshold is reached and if a SAA audit is

required. Additionally, Borrower shall inform the Department, in writing, of findings or

recommendations pertaining to the State Revolving Fund contained in any SAA audits

conducted by Borrower.

SECTION IV. PROJECT MANAGEMENT

The Borrower agrees to:

A. Require the prime engineering firm(s) and their principals retained for engineering services to

carry professional liability insurance to protect the public from the engineer's negligent acts

and errors of omission of a professional nature. The total aggregate of the engineer's

professional liability insurance shall be at least one hundred thousand dollars ($100,000) or

twice the amount of the engineer's fee, whichever is greater. Professional liability insurance

must cover all services rendered for all phases of the project, whether or not those services

are state funded, until the certification of project performance is accepted by the Department.

B. Comply with the Public Works Contractors License Act and the Public Contracts Bond Act,

Title 54, Chapter 19, Idaho Code, including requiring the prime construction contractor

retained for construction to carry performance and payment bonds equal to one hundred

percent (100%) of the contract price. The bond will be released when the constructed facility

is accepted by the Borrower.

C. Assure that contracts related to the project which provide for arbitration allow appeal of any

resulting arbitration decision to a district court or allow the arbitration to be non-binding on

both parties if either party desires not to use arbitration as a method of dispute settlement.

D. Jointly with an engineering consultant provide assurances that the physical and operational

integrity of the works, when constructed, will achieve the level of treatment provided for in

the design specifications.

E. Provide for the accumulation of funds through charges made for services or otherwise, for the

purposes of establishing a fund dedicated solely to (1) the repayment of principal, interest

and loan fee on this loan, (2) capital replacement and (3) a reserve account as required by the

Terms of the loan agreement, and (4) future improvements.

F. Provide a plan and program for an equitable user charge system, as permitted by law, for

payment of operation and maintenance of constructed facilities. The user charge system shall

be approved by the Department and enacted by the Borrower prior to receiving final



payment. Make available on an equitable basis the services of the project to the residents and

commercial and industrial establishments of the area it was designed to serve.

G. Develop and adopt a water system protection ordinance approved by the Department prior to

receiving final payment of loan funds.

H. Provide to the Department for approval, an operation and maintenance manual for the

project. The manual shall be approved by the Department prior to receiving final payment of

loan funds.

I. Provide adequate staffing and qualified operation and maintenance personnel as specified in

the operation and maintenance manual approved by the Department.

J. Assure that the operator in responsible charge of the facility has a level of competency

commensurate with the nature of the facility. He or she must be licensed as a Drinking Water

Operator in a class equal to or greater than that of the facility.

K. Assure that distribution and treatment facility personnel shall participate in operator training

programs designed to assure competence in the operation and maintenance of the facility.

L. Commence satisfactory operation and maintenance of the drinking water treatment facility on

completion of the project in accordance with applicable provisions, rules of the Department

and any other applicable law, rule or regulation and not discontinue operation or dispose of

the facility without the written approval of the Department.

M. Review and update the user charge system, as permitted by law, at least biennially during the

life of this Agreement to assure that all costs including debt retirement, operation and

maintenance are offset by sufficient revenues.

N. Maintain project accounts in accordance with generally accepted accounting principles.

O. All laborers and mechanics employed by the prime construction contractor and

subcontractors in the project using State Revolving Fund (SRF) loans shall be paid wages at

rates not less than those prevailing on projects of a character similar in the locality in

accordance with the labor standards, including prevailing wage rates and instructions for

reporting, as established by the United States Department of Labor (subchapter IV of Chapter

31 of title 40, United States Code). Borrower agrees that all procurement contracts must

include as a term and condition that contractors and subcontractors must obtain wage

determinations from the Department of Labor and comply with Department of Labor

guidance and regulations implementing wage rate requirements applicable to SRF funds.

Wage determinations shall be finalized prior to final bid submissions. Specific requirements

related to Davis Bacon compliance are included in Attachment B to this loan agreement.

P. Comply with Subpart C of 2 CFR Part 180 and 2 CFR Part 1532 (Suspension and

Debarment). Ensure any lower tier covered transaction and subsequent lower tier covered

transactions include a term or condition requiring compliance with Subpart C.



SECTION V. SPECIAL CONDITIONS

A. The Borrower shall complete the attached project schedule and submit to the Department for

approval on or before 60 days from the date of this loan offer. No funds shall be disbursed

per this Agreement until a project schedule has been approved by the Department. The

Department approved project schedule shall be attached to this Agreement as Attachment A

and incorporated by reference as if fully set forth herein. The Borrower shall complete the

project in accordance with the approved project schedule.

B. All amendments to the project schedule must be approved by the project engineer in the

Department’s (regional office) Regional Office, prior to becoming effective.

C. Prior to final loan distribution, the Borrower shall have established a written customer service

policy.

D. Prior to final loan distribution a technical memorandum will have been submitted for each

item identified as a Green Project Reserve (GPR) component in the Letter of Interest. Each

memorandum fully justifies the GPR designation according to the current EPA Guidance for

Determining Project Eligibility. The technical memorandum shall be made available as part

of the plans and specifications submission. Please review the following URLs for guidance

(current as of 2/22/2012):

1. http://kia.ky.gov/NR/rdonlyres/08C6B5D5-BD95-4DC7-A579-

9CAA7AEAA7AB/0/EPA_GPR_Guidance_May2011.pdf

2. http://water.epa.gov/grants_funding/dwsrf/upload/dwsrf_gpr_business_case_example

s_508_compliant.pdf

3. http://www.deq.idaho.gov/water-quality/grants-loans/green-project-reserve.aspx

SECTION VI. SECURITY REQUIREMENTS


A. This loan will be evidenced and secured by a promissory note in the amount of $2,000,000

(two million dollars). The promissory note will be issued upon project completion and

incorporated by reference into this Agreement.

B. There will be a reserve fund equal to one year’s payment of principal, fees and interest on the

loan established. The Borrower has ten years to establish the reserve, setting aside 10% (ten

percent) of one year’s payment into the reserve fund each year.

SECTION VII. LOAN DISBURSEMENTS


A. This loan shall be used solely to aid in the financing of the Borrower's project described in

Section II.

http://kia.ky.gov/NR/rdonlyres/08C6B5D5-BD95-4DC7-A579-9CAA7AEAA7AB/0/EPA_GPR_Guidance_May2011.pdf

http://kia.ky.gov/NR/rdonlyres/08C6B5D5-BD95-4DC7-A579-9CAA7AEAA7AB/0/EPA_GPR_Guidance_May2011.pdf

http://water.epa.gov/grants_funding/dwsrf/upload/dwsrf_gpr_business_case_examples_508_compliant.pdf

http://water.epa.gov/grants_funding/dwsrf/upload/dwsrf_gpr_business_case_examples_508_compliant.pdf

http://www.deq.idaho.gov/water-quality/grants-loans/green-project-reserve.aspx



B. Requests for actual disbursement of loan funds will be made by the Borrower using forms

provided by the Department. Upon approval of the disbursement request by the Department

loans funds shall be released to the Borrower.

C. The costs set forth in Section II have been determined by the Department to be eligible costs

for funding. Some of the costs however, have been estimated, and the actual costs may differ

from such estimated costs. A project review by the Department will determine final eligible

costs for the project.

D. If the actual eligible cost of the project is determined by the Department to be lower than the

estimated eligible cost, the loan amount will be reduced accordingly.

E. An increase in the loan amount as a result of an increase in eligible project costs shall be

considered, provided funds are available. Documentation supporting the need for an increase

must be submitted to the Department for approval prior to incurring any costs above the

eligible cost ceiling.

F. Payment of the final five percent (5%) of this loan shall be withheld until the following

requirements are met:

1. The Borrower's engineer certifies (a) that the project has been constructed according

to plans and specifications previously approved by the Department, (b) an operations

manual has been completed and (c) that the project is fully operational; and

2. The Department has inspected the project and verifies the engineer's certification.

G. Payment of the final ten percent (10%) of this loan shall be withheld until the following

requirements are met:

1. The Special Conditions in Section V have been met; and

2. A responsible charge operator (RCO) has been designated who is licensed at or

above the classification level of the system. At such times as the RCO is not

available, a substitute RCO shall be designated to replace the RCO, who is licensed

at or above the classification level of the system.

H. This offer is subject to the existence of the offered sum of money in the Account at the time

of payment. Should the offered sum of money not be available in the Account at the time of

payment, the Department hereby agrees to pay the Borrower the offered sum of money on the

basis of the Borrower's priority position immediately upon the accrual of said sum in the

Account.

SECTION VIII. REPAYMENT TERMS AND SCHEDULE


A. This loan shall be repaid in the manner set forth in the promissory note which shall be

attached to this Agreement and incorporated by reference.



B. To pay biannual payments of principal, fees and interest and to fully amortize this loan not

later than twenty (20) years from project completion. Interest will begin accruing with the

first disbursement of funds. At the time of closing, accrued interest will be either paid to the

Department or incorporated into the final loan amount if the approved amount has not been

exceeded.

C. At the time of closing, the Department may elect to impose a loan fee (not to exceed 1%)

pursuant to the Rules. If a loan fee is imposed, the loan interest rate will be reduced by the

amount of the loan fee. The loan fee will be assessed against the final loan balance, which

shall include the entire principal balance and may include capitalized interest. Any loan fee

shall be due and payable concurrently with scheduled loan principal and interest repayments

over the repayment period.

D. This Agreement shall remain in full force and effect until all loan proceeds, including

principal, interest and loan fee, have been paid in full or the Agreement is otherwise

suspended or terminated by the Department.

SECTION IX. SUSPENSION OR TERMINATION OF LOAN AGREEMENT

A. The Director may suspend or terminate this Agreement prior to final disbursement for failure

of the loan recipient or its agents, including engineering firm(s), contractor(s), or

subcontractor(s) to perform. This Agreement may be suspended or terminated for good cause

including, but not limited to, the following:

1. Commission of fraud, embezzlement, theft, forgery, bribery, misrepresentation,

conversion, malpractice, misconduct, malfeasance, misfeasance, falsification or

unlawful destruction of records, receipt of stolen property or any form of tortious

conduct; or

2. Commission of any crime for which the maximum sentence includes the possibility of

one (1) or more years imprisonment or any crime involving or affecting the project;

or

3. Violation(s) of any term of this Agreement; or

4. Any willful or serious failure to perform within the scope of the project, plan of

operation and project schedule, terms of engineering subagreements, or contracts for

construction; or

5. Utilizing a contractor or subcontractor who has been suspended or debarred by order

of any federal or state agency from working on public work projects funded by that

agency.

B. The Director will notify the Borrower in writing and by certified mail of the intent to suspend

or terminate this Agreement. The notice of intent shall state:

1. Specific acts or omissions which form the basis for suspension or termination; and

2. Availability of a contested case hearing before the Board of Environmental Quality



conducted as provided for in the Rules of Administrative Procedure Before the Board

of Environmental Quality, IDAPA 58.01.23.

C. If the Borrower does not initiate a contested case hearing before the Board by filing a petition

within the time period specified by the Rules of Administrative Procedure Before the Board

of Environmental Quality, IDAPA 58.01.23., the Department may thereafter terminate or

suspend the Agreement by written notice to the Borrower. If the Borrower initiates a

contested case, the termination or suspension shall be determined by the Board.

D. The Borrower shall perform no work under the Agreement after receiving a notice of intent

to suspend or terminate until all administrative proceedings and appeals therefrom are final or

the Department reinstates the Agreement as provided herein.

E. Upon written request by the Borrower with evidence that the cause(s) for suspension no

longer exists, the Director may, if funds are available, reinstate the Agreement. If a

suspended Agreement is not reinstated, the loan will be amortized and a repayment schedule

prepared in accordance with the provisions of this Agreement.

F. No terminated loan shall be reinstated. Terminated loans will be amortized and a repayment

schedule prepared in accordance with the provisions of this Agreement.

SECTION X. ACCESS AND INDEMNIFICATION

The Borrower agrees to:

A. Provide the Director, or his/her authorized agents, and the U.S. Environmental Protection

Agency, access to all files, records, accountings and books relating to the management and

accountability of this loan.

B. Indemnify and hold harmless the State of Idaho, its agents and its employees from any and all

claims, actions, damages, liabilities and expenses directly or indirectly connected to the

Borrower or its agents, employees, contractors, or assignees actions related to the location,

design, construction, operation, maintenance, repair, failure or deactivation of the project or

any part of the project.



SECTION XI. OFFER

The offer set forth herein must be accepted, if at all, on or before 60 days from the date of this loan

offer. An acceptance must be accompanied by a resolution of the Applicant's governing body

authorizing the signator to sign on the Applicant's behalf for the purpose of this agreement.

Dated February___, 2012.

________________________________

<Name>

Director

Department of Environmental Quality

SECTION XII. ACCEPTANCE

The <Borrower>, by and through its undersigned representative(s), accepts the foregoing offer and

agrees to discharge all obligations and to comply with all terms and conditions contained herein.

_______________________________________________

Signature of Representative

________________________________________________

Name and Title of Representative - type or print

____________________________

Date


Form 3-B Sample Loan Project Schedule 1

Form 3-B Sample Loan Project Schedule

Loan Agreement Between the State of Idaho Department of Environmental Quality

and (name of borrower) Loan Project Number (number)

Project Schedule

Pursuant to Section V, Special Conditions of the loan agreement (Agreement) between the State

of Idaho, Department of Environmental Quality (DEQ) and the (name of borrower) (Borrower),

Loan Project Number (number), the Borrower agrees to complete the project, which consists of

(briefly describe project), in accordance with the following schedule:

Number of Months

from Loan

Acceptance

Task

_________ 10% design review



_________ User charge system approved

_________ Water system protection ordinance approved

_________ Final plans, specifications, and bidding

documents

_________ Bid summary

_________ Award construction contract

_________ Project management conference

_________ Plan of operation amendment

_________ Draft operations and maintenance (O&M) manual

_________ Staffing plan

_________ Construction completion

_________ User charge or tax assessment system enacted

_________ Water protection ordinance enacted


Sample Loan Project Schedule 2 Form 3-B

Number of Months

from Loan

Acceptance

Task

_________ Final O&M manual

_________ Updated drinking water system classification

worksheets

_________ Updated drinking water responsible charge

operator report

_________ Final inspection

_________ Initiate operation

_________ Final payment

Project schedule approved by:

Signature of Borrower Representative Signature of DEQ Representative

Printed Name of Borrower Representative Printed Name of DEQ Representative

Date of Approval Date of Approval


Form 3-C Sample Loan Offer Transmittal

Form 3-C Sample Loan Offer Transmittal

To be sent with Forms 3-A and 3-B.

DEQ Letterhead

Date

Certified mail number (number)

Addressee Name

Street Address

City, ID ZIP code


I am pleased to inform you that your application for a loan in the amount of $ (amount) from the Drinking

Water State Revolving Fund has been accepted. The loan offer is enclosed. The enclosed loan offer must

be signed by the Borrower no later than (date).

Attached is a set of drinking water system classification worksheets for your use in determining the future

classification of your system. The updated system classification information is important and should be

shared with your responsible charge operator (RCO) and substitute responsible charge operator (SRCO).

Drinking water facility upgrades make it possible that the system classification will change or increase

and that the associated RCO and SRCO licenses will require upgrade. Should you have any questions

regarding system classification, please contact name at (208) 373-xxxx.

Please sign the attached loan offer on page xx. Once this offer has been accepted, please complete the

project schedule (Form 3-B) and drinking water system classification. Due to the phased nature of the

project, you may fill out more than one Form 3-B to represent the different phases. The project schedule

and classification worksheets should be sent to our (regional office name) Regional Office, to the

attention of (name). A copy of the signed offer should be kept in the Borrower’s files. The original loan

offer and the completed EPA Form 4700-4 should be returned to Loan Officer in this office at the address

listed above by (date).

If you have any questions regarding this loan offer, please contact the Loan Officer at 373-xxxx or

(regional office contact name) at (phone number). Please take note of the restriction on disbursements and

expenses related to completion of the environmental review process, discussed in the attached Loan Offer,

Acceptance, and Agreement in Section 5, Special Conditions.

Sincerely,

Name

Water Quality Division Administrator

Enclosures

c: (Name(s)), DEQ (regional office name) Regional Office

(Name(s)), DEQ State Office

1. Is the request signed by an authorized individual? 2. Have applicable loan conditions been met?

3. Are letters of compliance--approved by the owner or owner's representative--provided as supporting documentation certifying the domestic origin of iron and steel products for which reimbursement is claimed in this disbursement request?

4. Has a Plan of Operations been submitted?5. Has an operations and maintenance (O&M) manual been submitted as

required?6. Are current budget funds sufficient to complete the project?

7. Are costs on the request supported by invoices and construction estimates of work in place?

8. Are construction estimates signed by the engineer and contractor?

9. Do unit prices on construction estimates agree with the unit prices on bid proposals and approved change orders?

10. If the request includes stored materials, have the physical on-site quantities been verified?

11. Are all costs identified in the request eligible and allowable for State Revolving Funds (SRF) funding and allowable per the project scope?

12. If force account costs are claimed, was a proposal approved?

13. If costs of services and purchases in excess of $10,000 are claimed, have valid contracts been issued?

14. Are the costs for each contracted service or purchase within the approved contract amount?

15. Did the latest inspection indicate that construction was proceeding without discrepancies requiring correction?

Form 4-B Checklist for Reviewing Disbursement Requests

Borrower Loan Number

Reviewer Date


Checklist for Reviewing Disbursement RequestsForm 4-B January 2017

Y = yes N = no N/A = not applicable

NY

N/ANY

Y N

NY

NY

NY

NY

Y N

NY

N/ANY

N/ANY

NY

Y N

Y N

N/ANY

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