Document ID: EPA-HQ-OW-2002-0059-0008
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2006-11-06T05:00Z

SECTION I: PART A OF THE SUPPORTING STATEMENT

1. 	IDENTIFICATION OF THE INFORMATION COLLECTION

1 (a) 	TITLE OF THE INFORMATION COLLECTION

“Drinking Water State Revolving Fund Program” EPA ICR No. 1803.05,
OMB Control No. 2040-0185. 

1 (b) 	SHORT CHARACTERIZATION (ABSTRACT)

The information collection activities will occur primarily at the
program level through the State “Capitalization Grant Agreement /
Intended Use Plan” and “Biennial Report.” The information on the
Intended Use Plan (IUP) is needed annually to describe how the State
intends to use available Drinking Water State Revolving Fund (DWSRF)
funds for the year to meet the objectives of the Safe Drinking Water Act
(SDWA) and to further the goal of protecting public health. The Biennial
Report is needed to provide detailed information on how the State has
met its goals and objectives of the previous two fiscal years as stated
in the IUP and grant agreement. The SDWA requires this information to
ensure the national accountability, adequate public review and comment,
fiscal integrity, and consistent management needed to achieve public
health and SDWA compliance objectives.

The individual information collections are described as follows:

Capitalization Grant Agreement / IUP

The Capitalization Grant Agreement is the principal instrument by which
the State commits to manage its revolving fund program in conformity
with the requirements of the SDWA. The grant agreement contains or
incorporates by reference the IUP, application materials, payment
schedule, required certifications, Operating Agreement (if used), and
other documentation required by the Regional Administrator. Information
on set-asides and disadvantaged community assistance, environmental
indicators, core measurements, and work plans can be found in the IUP
and is needed for input into the DWSRF National Information Management
System. The agreement is a general instrument to legally commit the
State and the Environmental Protection Agency (EPA) to execute their
responsibilities under the SDWA.

Biennial Report

The Biennial Report indicates how the State has met its goals and
objectives of the previous two fiscal years as stated in the grant
agreement and, more specifically, in the IUP. The Report provides
information on loan recipients, loan amounts, loan terms, project
categories of eligible costs, and similar data on other forms of
assistance. The Report also describes the extent to which the existing
DWSRF financial operating policies, alone or in combination with other
State financial assistance programs, will provide for the long-term
fiscal health of the Fund and carry out other provisions as specified in
a State’s drinking water strategy. Financial information from the
Biennial Report may be entered into the DWSRF National Information
Management System.

State Audit

A State must comply with the provisions of the Single Audit Act
Amendments of 1996. Best management practices suggest and EPA recommends
that a State conduct an annual independent audit of its DWSRF program
(including set-asides). The Audit must contain an opinion on the
financial condition of the DWSRF program, a report on its internal
controls, and a report on compliance with applicable laws and the SDWA.
Therefore, a State may voluntarily agree to conduct annual independent
audits. Financial information on assistance provided that is found in
the voluntary independent audit report may be used for input into the
DWSRF National Information Management System.

Reviewing Applications for DWSRF Financing Assistance

Community and nonprofit non-community public water systems are eligible
for assistance from the State. These water systems may be publicly owned
(such as a community or a county) or privately owned (such as an
investor-owned utility or non-profit homeowner association). Local
respondents are responsible for preparing and submitting applications
for DWSRF assistance to their respective State agency that manages the
DWSRF program. The State has the sole responsibility for reviewing the
applications, entering into loan and other financing arrangements with
applicants, and otherwise managing the operations of the DWSRF program.

2. 	NEED FOR AND USE OF THE COLLECTION

2 (a) 	NEED / AUTHORITY FOR THE COLLECTION

The SDWA Amendments of 1996 (Pub. L. 104-182) authorize a DWSRF program
to assist public water systems to finance the costs of infrastructure
needed to achieve or maintain compliance with SDWA requirements and to
protect public health. Section 1452(a)(1) authorizes the Administrator
of EPA to award capitalization grants to States, which in turn can
provide low cost loans and other types of assistance to eligible
systems. The information collection activities are addressed in the
DWSRF Interim Final Rule found in 40 CFR Part 35, Subpart L (August
2000).  

The 1996 Amendments declare that the DWSRF program shall be administered
by an instrumentality of the State and is subject to the requirements of
the Act. This means that each State is responsible for administering its
revolving fund and must make certain assurances regarding its plans to
carry out its administrative duties.

In general, the information collections are required to ensure
compliance with Section 1452 of the SDWA and to ensure that
self-sufficient DWSRF programs are established. These data also provide
the accountability needed to detect and remedy situations of waste,
fraud, and abuse of Federal funds.

2 (b) 	USE / USERS OF THE DATA

In order for a State to receive a capitalization grant, it must enter
into an agreement (Capitalization Grant Agreement) with EPA. State
responsibilities include:

Contributing 20 percent matching funds;

Committing funds expeditiously;

Jointly establishing a payment schedule with the Federal government;

Ensuring that enforceable requirements are fulfilled before assistance
is provided to recipients for other purposes;

Monitoring assistance recipient compliance with program requirements and
other Federal cross-cutting authorities during the period of the
assistance agreement; and

Supplying work plans detailing how set-aside funds will be expended. 

EPA recommends that States have their DWSRF funds audited on an annual
basis in accordance with generally accepted government auditing
standards (GAGAS).

The information to be provided to EPA by the States includes:

IUP / Capitalization Grant Agreement and Application;

Biennial Report; and

Most recent Audit.

Upon approval of the Capitalization Grant Application, each State may
begin awarding project funds and using set-aside funds after work plans
are approved. Once the DWSRF program is operational, the State will
receive and review applications for DWSRF financing assistance. The
State will review the applications for conformance with the IUP,
environmental impacts, and financial capabilities of the applicant. For
those projects and activities funded with monies in an amount equal to
the Federal capitalization grant (including set-asides), the State will
also review the proposed projects and activities for consistency with
Federal cross-cutting authorities as described in the DWSRF Interim
Final Rule. The specific procedures for preparation and review of
assistance application materials will be developed by each State. If an
application is acceptable, the State will prepare the appropriate loan
agreement documents.

Although EPA oversees the general operations of the DWSRF program as
part of its Annual Review process, the Agency does not have any
responsibility for reviewing or approving individual applications for
DWSRF financial assistance.

3. 	THE RESPONDENTS AND THE INFORMATION REQUESTED

3 (a) 	RESPONDENTS / SIC CODES

The respondents for this request are state and local governments (SIC
Code #99). Community and nonprofit non-community public water systems
are eligible for assistance from the State. These water systems may be
publicly owned (such as a community or a county) or privately owned
(such as an investor-owned utility or non-profit homeowner association).

3 (b) 	INFORMATION REQUESTED

(i) 	Data Items 

The following information elements provide the accountability needed to
detect and remedy situations of waste, fraud, and abuse of Federal
funds.

a. 	IUP / Capitalization Grant Agreement

The Capitalization Grant Application is made on EPA Standard Form (SF)
No. 424 (OMB No. 2020-0020). The minimal increase in State burden
associated with use of this form is being handled separately by the
Grants Administration Division in their information collection budget
request.

The DWSRF Management Manual includes a model IUP and SF 424. This should
improve program efficiency and reduce the burden on the States and the
EPA Regions.

b. 	Biennial Report

Section 1452(g)(4) of the SDWA requires each participating State to
submit a Biennial Report at the end of every other fiscal year that
identifies the accomplishments of the previous two years under the IUP.
The Biennial Report provides the dates, amounts, recipients, and terms
of loans and other types of financial assistance from Respondent
Activities.

To reduce the burden on the States, EPA has developed a model Biennial
Report that is included in the DWSRF Management Manual.

c. 	State Audit

A State must comply with the provisions of the Single Audit Act
Amendments of 1996. EPA recommends that States conduct voluntary annual
independent audits that contain an opinion on the financial condition of
the DWSRF program, a report on its internal controls, and a report on
compliance with both applicable laws and SDWA requirements.

d. 	Reviewing Applications for DWSRF Financial Assistance

Section 1452(a) of the SDWA and the DWSRF Final Guidelines outline the
eligibilities under the DWSRF program in terms of potential recipients,
types of projects and activities that may receive DWSRF assistance, and
the types of financial assistance which may be provided. The SDWA
provides significant flexibility to the States regarding the development
of specific procedures for reviewing and approving applications for
DWSRF assistance and for managing the DWSRF program. 

Specific reporting requirements, which are statutorily based, relate
only to the relationship between the State as recipient of the Federal
capitalization grant and the Agency as the grantor. The DWSRF Management
Manual and other DWSRF program materials provide limited guidance or
direction to the States regarding the development of application
materials or specific procedures for the processing and disposition of
applications for DWSRF assistance.

(ii) 	Respondent Activities

As a condition of receiving Federal funds, State respondents must
prepare and submit the following documents to apply for Federal
financial assistance:

IUP / Capitalization Grant Agreement;

Biennial Report; and

Most recent Audit.

Local respondents must submit applications for DWSRF financing
assistance.

4. 	THE INFORMATION COLLECTED – AGENCY ACTIVITIES,   

COLLECTION, METHODOLOGY, AND INFORMATION MANAGEMENT

4 (a) 	AGENCY ACTIVITIES

The Agency reviews the submissions from the State and analyzes the data
provided on the Capitalization Grant Agreement / IUP in order to support
the State’s management of the program. The Agency also reviews
Biennial Reports and State Audits from each State to ensure that the
intended financial and programmatic objectives of the national program
are being met.

4 (b) 	COLLECTION METHODOLOGY AND MANAGEMENT

The DWSRF Management Manual includes a model grant agreement that draws
from the Clean Water State Revolving Fund (CWSRF) Grant Agreement. Using
this example should reduce the information burden on States and EPA
Regions.

Section 1452(b) of the SDWA requires States to prepare a plan
identifying the intended uses of funds in the DWSRF program to meet the
objectives of the SDWA and further the goal of protecting public health.
The State must prepare the IUP, after providing for public review and
comment, and submit it to the Regional Administrator as part of its
Capitalization Grant Application. In the IUP, the State must include
specific details on how it will use all funds available, including both
funds allocated to the Fund and those that will be allocated to the
set-aside programs. In addition to uses for the Fund, specified
percentages of the Capitalization Grant funds can be used as set-asides
to: (1) administer the DWSRF program and provide technical assistance to
public water systems (max 4 percent); (2) supplement State drinking
water management programs (max 10 percent); (3) provide technical
assistance to small systems (max 2 percent); and (4) provide assistance
for source water protection and capacity development activities (max 15
percent). A State has the option to develop the IUP in a two-part
process with one part identifying the distribution and uses of the funds
among the various set-asides and the other part dealing with project
assistance from the Fund. The two-part process allows States the
flexibility to submit a Capitalization Grant Application for a portion
of the funds before it completes all of its specific funding decisions.
In this situation, a State would have to conduct two rounds of public
review and comment. One round addresses the use of set-aside funding,
and the other deals with assistance for projects on the project priority
list. 

Under Section 1452(b), the IUP must contain a list of projects,
description of the projects, expected terms of financial assistance,
size of the community served, criteria and methods established for the
distribution of the funds, and a description of the financial status of
the Fund and the short-term and long-term goals of the Fund. The IUP
should provide to the maximum extent practicable: (1) priority for the
use of the funds to be given to projects that address the most serious
risk to human health; (2) priority for projects that are necessary to
ensure compliance with the requirements of the SDWA; and (3) priority
for projects that assist drinking water systems most in need, on a per
household basis, according to State affordability criteria.

Under Section 1452, States are required to provide assurances in the
Capitalization Grant Agreement / IUP on how it will comply with
requirements. Some of the fifteen assurances that follow require the
State to simply agree or certify in the grant application that it will
comply with them. Some of the fifteen assurances require the State to
furnish documentation on the procedures by which the State plans to
ensure compliance with them. The State must include this documentation
with its Capitalization Grant Application, except when noted. The
following fifteen assurances are necessary to establish a loan fund that
complies with Federal requirements:

1. 	Section 1452(a)(1)(B) – State certification that the state has the
authority to establish a DWSRF program and that it may legally bind
itself to the terms of the Capitalization Grant Agreement.

2. 	Section 1452(a)(1)(G) – Assurance that the State is eligible to
receive full allotment of funds by complying with the requirements of
capacity development and operator certification provisions.

3. 	Section 1452(g)(3) – Assurance that the State will comply with
State statutes and regulations.

4. 	Section 1452(a)(1) – Assurance that the State has the technical
capability to operate the DWSRF program.

5. 	Section 1452(g)(3) – Assurance that the State will accept
capitalization grant funds in accordance with a payment schedule and the
State will receive Federal funds in accordance with the provisions of
the EPA Automated Clearing House or Automated Standard Application for
Payments.

6. 	Section 1452(a)(1)(B) – Assurance that the State will deposit all
capitalization grant funds in the Fund, including repayment of principal
and interest and any other funds, except for those portions of the grant
that the State intends to use for set-aside purposes authorized under
the SDWA.

7. 	Section 1452(e) – Assurance the State will deposit an amount at
least equal to 20 percent of the capitalization grant (State match) in
the Fund and deposit any required match for set-aside activities in a
non-project account.

8. 	Section 1452(g)(2) – Assurance that the State will provide a
dollar for dollar match up to 10 percent of the funds the State uses for
the State program management set-aside.

9. 	Section 1452(g)(3) – Assurance that the State will use generally
accepted accounting principles. The State must agree to establish fiscal
controls and accounting principles, as promulgated by the Governmental
Accounting Standards Board, that are sufficient to account for and
report DWSRF program activities.

10. Section 1452(f)(1)(C) – Assurance that the State will adopt
policies and procedures to assure that borrowers have a dedicated source
of revenue (or in the case of privately owned systems, assure that there
is adequate security) of all loans to be repaid.

11. Section 1452(g)(3)(A) – Assurance that the State will disburse
loans as efficiently as possible and in an expeditious and timely
manner.

12. Section 1452(g)(3)(A) – Assurance that the State will commit and
expend all DWSRF Fund monies as efficiently as possible and will enter
into binding commitments with recipients of Fund assistance equal to the
combined amount of each quarterly grant payment and match within one
year of the grant payment.

13. Section 1452(b) – Assurance that funds will be used in accordance
with the IUP. The State must agree to expend DWSRF program funds in
accordance with an IUP that has undergone public review and comment.

14. Section 1452(g)(4) – Assurance that the State will provide EPA
with a Biennial Report, which includes the most recent Audit of the Fund
and the entire State allotment.

15. Section 1452(g)(3) – Assurance that the State will comply with all
Federal crosscutting authorities.

States must also assure that, as a condition of receiving Federal
financial assistance, they will comply with the provisions of the Single
Audit Act of 1996.

Section 1452 requires the State to prepare a Capitalization Grant
Agreement, which is the principal instrument by which the State commits
to manage its revolving fund program and to ensure that it conforms with
the requirements of the SDWA Amendments of 1996. The Capitalization
Grant Agreement contains, or incorporates by reference, the following
parts of the agreement: the IUP; the application materials; the payment
schedule; required certifications; the Operating Agreement, if used; and
other documentation required by the Regional Administrator. In addition
to these requirements, the Capitalization Grant Agreement will define
the types of oversight responsibilities that are required to determine
compliance with Section 1452. 

In order to lessen the burden of the annual Capitalization Grant
Application process, the State and EPA may develop an Operating
Agreement that covers parts of the DWSRF program that are not expected
to change from year to year. 

Section 1452(g)(4) requires the State to submit a Biennial Report to the
Regional Administrator reporting on its program activities, including
the findings of the most recent Audit of the Fund and the entire State
allotment. The report should be submitted according to the schedule
established in the grant agreement. The report will contain detailed
information on progress toward meeting the goals and objectives of the
previous two fiscal years as stated in the IUP and grant agreement. The
report will provide information on actual assistance provided,
including: loan recipients; loan amounts; loan terms; project categories
of eligible cost; and similar details on other forms of assistance. The
information is provided in a format and a manner that is consistent with
the needs of the EPA Regional Office. The report will describe the
extent to which the existing DWSRF financial operating policies, alone
or in combination with other State financial assistance programs, will
provide for the long-term fiscal health of the Fund, attain and maintain
compliance with the SDWA, and carry out other provisions specified in
the legislation.

The State must submit detailed financial statements as part of the
Biennial Report. At a minimum, this should include the financial
statements and footnotes required under generally accepted accounting
principles (GAAP) to present fairly the financial condition and results
of operation. These financial statements will measure and demonstrate
the DWSRF program’s ability to maintain its contributed capital. The
financial report will follow generally accepted accounting principles
and will follow enterprise fund reporting standards. Financial
information from financial reports may be used in the DWSRF National
Information Management System.

In addition, the State must address in its Biennial Report that it has:

Reviewed all DWSRF program-funded projects and activities in accordance
with the approved State Environmental Review Procedures;

Deposited its match on or before the date when each grant payment was
made; 

Made binding commitments in an amount equal to the amount of each grant
payment and accompanying State match that is deposited into the Fund
within one year after receiving the grant payment;

Managed the Fund in a fiscally prudent manner and adopted policies and
processes which promote the long-term financial health of the Fund;

Complied with Agency grant regulations (40 CFR Part 31) and specific
conditions of the grant;

Complied with Federal cross-cutting authorities that apply to the State
as a Federal grantee and those that flow through to assistance
recipients;

Provided assistance only to eligible water systems and for eligible
purposes under Section 1452; and

Funded only the highest priority projects listed on the IUP, according
to their priority and readiness to proceed, and complied with any
procedures for bypassing priority projects outlined in the IUP.

States are encouraged to conduct an annual financial and compliance
audit of the DWSRF program and its operations. The State may designate
an independent auditor of the State to carry out its audit or may
contractually procure the service. Under Section 1452(g)(4), the
Administrator shall periodically audit all State loan funds established
by, and other amounts allotted to, the States pursuant to Section 1452
in accordance with procedures established by the Comptroller General. If
needed, a financial and compliance audit of the DWSRF program for a
State will be conducted by the Office of the Inspector General (OIG).
The OIG has developed an audit guide for SRFs, which should reduce the
burden on States and improve the efficiency of EPA reviews.

Sections 1452(a)(2) and 1452(f) of SDWA outline the eligibilities under
the DWSRF program in terms of potential recipients and the types of
financial assistance that the DWSRF may provide. The DWSRF Interim Final
Rule identifies types of projects and activities that may receive DWSRF
assistance. The SDWA provides significant flexibility to the States
regarding the development of specific procedures for reviewing and
approving applications for DWSRF assistance and for managing the DWSRF
program.

Specific reporting requirements that are statutorily based relate only
to the relationship between the State as recipient of the Federal
capitalization grant and the Agency as grantor. Similarly, the DWSRF
Interim Final Rule, Management Manual, and other DWSRF program materials
do not provide guidance or direction to the States regarding the
development of application materials or specific procedures for the
processing and disposition of applications for DWSRF assistance to
eligible recipients.

Generally, State programs require that applications for DWSRF assistance
provide the following information:

Project description;

Project cost estimate;

Estimated construction schedule;

Projected disbursement schedule;

Description of environmental impacts;

Estimation of cost impacts on users;

Identification of repayment source;

Description of community;

Financial, technical, and managerial capability; and,

Certain projects, certifications, and demonstrations regarding
compliance with Federal cross-cutting authorities.

Because the DWSRF is a new program, EPA has undertaken many activities
to support the Regions and the States with implementation. EPA has
provided training on the program and prepared model documents relating
to IUPs, Capitalization Grant Agreements, and Biennial Reports. EPA
Regional personnel are regularly in contact with their State
counterparts and are currently working to determine efficient ways to
communicate needed information and reduce the burden on respondents.

4 (c) 	SMALL ENTITY FLEXIBILITY

Respondents are the States, usually within the State Department of
Health, Environmental Department, and/or Finance Agency. Although
information collection activities do not directly affect small
businesses or organizations as defined in the Regulatory Flexibility
Act, 5 U.S.C. Sections 601 (3) and (4), States might have activities
that require information from small businesses or organizations. Local
respondents, which include community water systems, both privately and
publicly owned, and nonprofit non-community water systems are eligible
for Fund assistance from State programs.

4 (d) 	COLLECTION SCHEDULE

The information collection activities will occur primarily at the
program level through the State IUP and the Biennial Report. The
information is needed annually to implement Section 1452 of the SDWA.
The Act requires this information to ensure national accountability,
adequate public comment and review, fiscal integrity, and consistent
management directed to achieve environmental objectives.

5. 	NON-DUPLICATION, CONSULTATIONS, AND OTHER COLLECTION

CRITERIA

5 (a) 	NON-DUPLICATION

The information collection elements are specific to Section 1452,
established under the SDWA Amendments of 1996. The information in the
IUP, Biennial Report, and the State Audit is unique to each State
participating in the DWSRF program. Therefore, there is no duplication
of the effort. The information collection activities herein are based on
program-specific State sources that are not duplicated anywhere else.

5 (b) 	CONSULTATIONS

The information requirements were subjected to the same reviews as the
other requirements and procedures contained in the DWSRF Interim Final
Rule. The DWSRF Interim Final Rule was commented on by State officials,
representatives of local government, private concerns involved with
municipal finance, EPA Regional and Headquarters offices, and the Office
of Management and Budget (OMB).

5 (c) 	EFFECTS OF LESS FREQUENT COLLECTION

The SDWA requires information to be provided annually. EPA is not
requesting the information more frequently than the Act requires,
although a State may submit information more frequently. 

Local respondents are only required to apply for DWSRF assistance from
States if the local respondent wishes to receive financial assistance.
In view of anticipated funding availability at the State level, a
limited number of local respondents will likely receive assistance in a
particular year. The impact on local respondents is generally considered
limited.

5 (d) 	GENERAL GUIDELINES

The data collections covered by this ICR are in compliance with the OMB
General Guidelines for information collections.

5 (e) 	CONFIDENTIALITY AND SENSITIVE QUESTIONS

(i) 	Confidentiality

No confidential data is collected.

(ii) 	Sensitive Questions

Financial information, such as income tax records and financial
statements, may be required from private water systems for assessing
financial capability during the loan application process.

6. 	ESTIMATING THE BURDEN AND COST OF THE COLLECTION

6 (a) 	ESTIMATING RESPONDENT BURDEN

The respondent burden estimates are based on the incremental effort
associated with the information collection activity. As program activity
increased at the local and State level, the burden associated with the
preparation and review of local respondent applications for DWSRF
assistance increased.

The respondents may use DWSRF administrative monies to pay the costs of
the annual State Audit. Section 1452(g)(2) of the SDWA allows each State
to set-aside up to 4 percent of the funds allotted to it to cover the
reasonable costs of administering the DWSRF program. The estimation of
the State respondents’ burden for the four information collections is
shown below:

a. 	IUP/Capitalization Grant Agreement

EPA estimates that each State will spend an average of 400 hours per
year to prepare the IUP and Capitalization Grant Agreement for
submission to EPA. Information on set-asides, disadvantaged community
assistance, environmental indicators, core measurements, and work plans
can be found in the IUP and can be used for input into the DWSRF
National Information Management System. Table 1 represents the total
national burden from the IUP/Capitalization Grant Agreement for 50
states and Puerto Rico.

Table 1: IUP/Capitalization Grant Agreement National Burden Hours

Year	Number of States

 (A)	Preparation Hours (B)	Burden Hours

 (A x B)

2006	51	400	20,400

2007	51	400	20,400

2008	51	400	20,400

b. 	Biennial Report

EPA estimates that, over the 3-year period covered by this ICR, each
State will spend an average of 275 hours per year in years during which
a report is due to compile each Biennial Report. The Report is required
every two years. This ICR assumes that approximately half of the States
will submit a Report in 2006 and 2008 (having last submitted a Report in
2004), while the other half will submit a Report in 2007 (having last
submitted a Report in 2005). The Biennial Report includes similar
information elements found on the IUP and for input into the DWSRF
National Information Management System. Table 2 shows the total national
burden from the Biennial Report.

Table 2: Biennial Report National Burden Hours

Year	Number of States

 (A)	Preparation Hours (B)	Burden Hours 

(A x B)

2006	26	275	7,150

2007	25	275	6,875

2008	26	275	7,150

c. State Audit

The estimated average burden for each State Audit is 80 hours per year.
States are required to comply with the provisions of the Single Audit
Act. This estimate reflects the extra increment of effort required of
the States for this program in meeting the Federal requirements. States
may build on audit work done under the Single Audit Act to complete the
separate audit required for this program. Financial information from
State Audits can be used for input into the DWSRF National Information
Management System.

Table 3 shows the total national burden from the State Audit.

Table 3: State Audit National Burden Hours

Year	Number of States (A)	Preparation Hours 

(B)	Burden Hours 

(A x B)

2006	51	80	4,080

2007	51	80	4,080

2008	51	80	4,080

d. 	Assistance for Application Preparation and Review

States have responsibility for reviewing and approving local
applications for assistance from the DWSRF program. EPA estimates that
the States will spend an average of 40 hours reviewing and approving
each assistance application. Based on historical data, EPA estimates
that, on average, a state will receive 27 applications for review each
year. Table 4 represents the total national State burden from processing
DWSRF assistance applications.

Table 4: Application Review National Burden Hours

Year	Number of States (A)	Applications (B)	Preparation Hours (B)	Burden
Hours 

(A x B x C)

2006	51	27	40	55,080

2007	51	27	40	55,080

2008	51	27	40	55,080

States develop specific procedures and reporting and application
materials for DWSRF assistance applicants. EPA estimates that local
respondents (including Indian Tribes and Alaska Native Villages) will
spend an average of 80 hours collecting information and preparing each
DWSRF assistance application. Table 5 represents the total national
local respondent burden from preparing DWSRF assistance applications.

Table 5: Application Preparation Local Respondent Burden Hours

Year	Number of Local Respondents (A)	Preparation Hours 

(B)	Burden Hours 

(A x B)

2006	1,377	80	110,160

2007	1,377	80	110,160

2008	1,377	80	110,160

SUMMARY OF RESPONDENT BURDEN HOURS

Table 6 summarizes the State burden hours for the four individual
information collection activities. Average burden hours per State and
total hours for all States for the three years covered by this ICR are
provided for each activity.

Table 6: Summary of State Burden Hours (FY 2006 - FY 2008)

ICR	Hours Per State	Hours for All States

IUP / Capitalization Grant Agreement	1,200	61,200

Biennial Report	415	21,175

State Audit	240	12,240

Application Review	3,240	165,240

Total Burden Hours (FY 2006 - FY 2008)	5,095	266,730

Table 7 illustrates burden hours for local respondents from preparing
applications. EPA estimates that a total of 4,131 local respondents will
spend 80 hours per application during the three years.

Table 7: Summary of Local Respondent Burden Hours (FY 2006 - FY 2008)

ICR	Local Respondents	Hours per Local Respondent	Hours for All Local
Respondents

Application Preparation	4,131	80	330,480

6 (b) 	ESTIMATING RESPONDENT COSTS

a. 	Costs to State Respondents 

The average annual State costs for the 3-year period is estimated to be
$3,209,651. 

Since these State costs are grant eligible, they can be paid for out of
the DWSRF program. Under Section 1452(g)(2), monies can be set aside and
used for any reasonable costs related to administering the Fund,
provided the amount does not exceed 4 percent of the State’s
allotment. Reasonable costs under this section can include reasonable
costs expended to establish a State loan fund and to provide technical
assistance to public water systems within the State.

Under Section 1443(a), an additional 10 percent of the State’s
allotment may be used, in part, for: (1) supervising public water system
programs; (2) administering or providing technical assistance through
source water protection programs; (3) developing and implementing a
capacity development strategy under Section 1420(c); and (4) developing
an operator certification program for purposes of meeting the
requirements of Section 1419. 

The following tables (Table 8.1 - 8.3) contain estimates of burden costs
for the four individual activities involving information collections.
The State salary cost of $36.10 per hour is based on an average
full-time equivalent (FTE) cost of $75,088 (including overhead), which
equates to approximately $36.10 per hour. This hourly rate, which has
been inflated to 2005 dollars, is based on the FTE cost ($65,255)
suggested by a workgroup comprised of States that developed the State
Workload Model in 2001 (note: the State Workload Model is a spreadsheet
model used by States to estimate resource needs for implementation of
the SDWA). 

Table 8.1: FY 2006 State Burden Costs

Fiscal Year 2006

ICR	# of States (a)	Hours (b)	Cost / Hour (c )	Cost 

(a x b x c)

IUP / CGA

– Initial Plan	51	332	$36.10	$611,245

– Revised Plan	51	68	$36.10	$125,195

Biennial Report	26	275	$36.10	$258,115

State Audit	51	80	$36.10	$147,288

Application Review	51	1,080	$36.10	$1,988,388

Total Fiscal Year 2006 State Cost

	$3,130,231

Table 8.2: FY 2007 State Burden Costs

Fiscal Year 2007

ICR	# of States (a)	Hours (b)	Cost / Hour (c)	Cost 

(a x b x c)

IUP / CGA

– Initial Plan	51	332	$36.10	$611,245

– Revised Plan	51	68	$36.10	$125,195

Biennial Report	25	275	$36.10	$248,188

State Audit	51	80	$36.10	$147,288

Application Review	51	1,080	$36.10	$1,988,388

Total Fiscal Year 2007 State Cost

	$3,120,304

Table 8.3: FY 2008 State Burden Costs

Fiscal Year 2008

ICR	# of States (a)	Hours (b)	Cost / Hour (c)	Cost

(a x b x c)

IUP / CGA

– Initial Plan	51	332	$36.10	$611,245

– Revised Plan	51	68	$36.10	$125,195

Biennial Report	26	275	$36.10	$258,115

State Audit	51	80	$36.10	$147,288

Application Review	51	1,080	$36.10	$1,988,388

Total Fiscal Year 2008 State Cost

	$3,130,231

SUMMARY OF STATE COSTS

Total State Costs (FY 2006 - FY 2008): 	$9,380,766

Average Annual State Cost over 3-Year Period: 	$3,126,922

b. 	Costs to Local Respondents

Local respondents (including Indian Tribes and Alaska Native Villages)
may incur costs in identifying and evaluating their drinking water
quality problems. Local respondents may need to absorb costs related to
the development and evaluation of alternative planning and engineering
approaches for solving their water quality problems. These planning and
design costs may be eligible for DWSRF assistance at a State’s
discretion. For the purposes of this information collection, only the
direct costs associated with the preparation of the application for
DWSRF financial assistance are reported.

During the period of this information collection activity, the number of
local respondents that will receive DWSRF financial assistance is
expected to remain relatively constant. The number of local respondents
in each State will vary significantly depending on the funding
available, the types of projects to be assisted, the average cost and
size of the projects, and other factors. The Agency estimates that the
number of local respondents to receive DWSRF assistance during the
period of this information collection will be 27 per State in per year.
Table 9 illustrates the burden costs of application preparation for
local respondents. The hourly rate of $33.88 for water system operators
and professional personnel is taken from a 2003 EPA document Labor Costs
for National Drinking Water Rules. The rate (in 2003 dollars) was
$31.26; this rate has been inflated to 2005 dollars using the Employment
Cost Index.

Only local respondents that desire financial assistance from the DWSRF
will prepare applications. Therefore, this information collection will
pertain only to a limited number of local respondents. The specific
requirements and complexity of application materials varies widely among
the States that are responsible for DWSRF program implementation and
management. The Agency estimates that, on average, local respondents
will spend approximately 80 hours completing each DWSRF assistance
application.

Table 9: Local Respondents Burden Costs (FY 2006 - FY 2008)

ICR - Application Preparation

Year	# of Local Respondents (a)	Hours (b)	Cost / Hour (c)	Cost 

(a x b x c)

2006	1,377	80	$33.88	$3,732,221

2007	1,377	80	$33.88	$3,732,221

2008	1,377	80	$33.88	$3,732,221

Total Local Respondent Costs (FY 2006 - FY 2008)	$11,196,662

Average Annual Cost Over 3-Year Period	$3,732,221

6 (c) 	Estimating Agency Burden and Cost

Estimation of the direct cost to EPA to implement the DWSRF program
covers negotiation and analysis of the IUP, Capitalization Grant
Agreement, Grant Application, and State performance and compliance
through the Biennial Report and the State Audit. 

The estimates in Tables 10.1 - 10.3 reflect Agency workload over the
3-year period covered by this information collection. The estimate of
EPA costs is based on average hourly expenditures, including Regional
and Headquarters personnel compensation and benefits. The estimates were
based on participation by all States in the DWSRF program.

The estimated average hourly cost of $48.26 for EPA Headquarters and
Regional personnel is based on the General Schedule (GS) 12, Step 05
level. The hourly estimates were calculated by dividing the annual
compensation of $62,740, from the 2006 GS pay schedule, by 2,080 hours
in the Federal work year. The hourly rates were then multiplied by the
standard government benefits multiplication factor of 1.6.

The average annual Federal cost of $2,017,670 over the 3-year period was
estimated as follows:

Table 10.1: FY 2006 EPA Burden Costs

Fiscal Year 2006

ICR	Hours	Cost / Hour	Agency Cost

EPA HQ Review of IUP and Agreement Materials (15 hours per State
submission)	765	$48.26	$36,919

EPA Regional Review of IUP and Agreement Materials (350 hours per State
submission)	17,850	$48.26	$861,441

EPA HQ Oversight Review of Audit & Biennial Reports (40 hours per State
submitting Biennial report; 25 hours per State only submitting Audit
Report)	1,665	$48.26	$80,353

EPA Regional Oversight Review of Audit & Biennial Reports (500 hours per
State submitting Biennial report; 445 hours per State only submitting
Audit Report)	24,125	$48.26	$1,164,273

Total Fiscal Year 2006 Federal Cost

	$2,142,985

Table 10.2: FY 2007 EPA Burden Costs

Fiscal Year 2007

ICR	Hours	 Cost / Hour 	Agency Cost

EPA HQ Review of IUP and Agreement Materials (15 hours per State
submission)	765	$48.26	$36,919

EPA Regional Review of IUP and Agreement Materials (350 hours per State
submission)	17,850	$48.26	$861,441

EPA HQ Oversight Review of Audit & Biennial Reports (40 hours per State
submitting Biennial report; 25 hours per State only submitting Audit
Report)	1,650	$48.26	$79,629

EPA Regional Oversight Review of Audit & Biennial Reports (500 hours per
State submitting Biennial report; 445 hours per State only submitting
Audit Report)	25,500	$48.26	$1,095,261

Total Fiscal Year 2007 Federal Cost

	$2,118,131

Table 10.3: FY 2008 EPA Burden Costs

Fiscal Year 2008

ICR	Hours	Cost / Hour	Agency Cost

EPA HQ Review of IUP and Agreement Materials (15 hours per State
submission)	765	$48.26	$36,919

EPA Regional Review of IUP and Agreement Materials (350 hours per State
submission)	17,850	$48.26	$861,441

EPA HQ Oversight Review of Audit & Biennial Reports (40 hours per State
submitting Biennial report; 25 hours per State only submitting Audit
Report)	1,665	$48.26	$80,353

EPA Regional Oversight Review of Audit & Biennial Reports (500 hours per
State submitting Biennial report; 445 hours per State only submitting
Audit Report)	24,125	$48.26	$1,164,273

Total Fiscal Year 2008 Federal Cost

	$2,142,985

6 (d) 	BOTTOM LINE BURDEN HOURS AND COSTS / BURDEN TABLES

(i) 	Respondent Burden (FY 2006 - FY 2008)	

Total State Burden Hours: 				259,855

Total State Costs: 					$9,380,766

Annual State Burden Hours: 				86,618

Annual State Costs:					$3,126,922

	

Total Local Respondent Burden Hours: 		330,480

Total Local Respondent Costs: 			$11,196,662

Annual Local Respondent Burden Hours: 		110,160

Annual Local Respondent Costs:			$3,732,221

	

Total Respondent (State & Local) Burden Hours: 	590,335

Total Respondent (State & Local) Costs: 		$20,577,428

Annual Respondent (State & Local) Burden Hours: 	196,778

Annual Respondent (State & Local) Costs: 		$6,859,143

	

(ii) 	The Agency Burden (FY 2006 - FY 2008)	

Annual Headquarters Burden Hours: 			2,425

Annual Headquarters Costs: 				$117,031

	

Annual Regional Burden Hours: 			41,808

Annual Regional Costs: 				$2,017,670

(iii) 	Variations in the Annual Bottom Line

There are no significant variations in the annual bottom line.

6 (e) 	REASONS FOR CHANGE IN BURDEN

The net increase in total respondent burden hours from the previous ICR
is attributed to the need for States to prepare a Biennial Report. The
Report is required every two years. Approximately half the States will
prepare a Biennial Report in both 2006 and 2008, while the other half
will only prepare a report in 2007. 

6 (f) 	BURDEN STATEMENT

The public reporting and recordkeeping burden for this collection of
information is estimated to average 1,698 hours per state and 80 hours
per local respondent (including Indian Tribes and Alaska Native
Villages) annually. Burden means the total time, effort, or financial
resources expended to generate, maintain, retain, disclose, or provide
information to or for a Federal agency. This includes the time needed to
review instructions; develop, acquire, install, and utilize technology
and systems for the purposes of collecting, validating, and verifying
information, processing and maintaining information, and disclosing and
providing information; adjust the existing processes to comply with any
previously applicable instructions and requirements; train personnel to
be able to respond to a collection of information; search data sources;
complete and review the collection of information; and transmit or
otherwise disclose the information. An agency may not conduct or
sponsor, and a person is not required to respond to, a collection of
information unless it displays a currently valid OMB control number. The
OMB control numbers for EPA's regulations are listed in 40 CFR part 9
and 48 CFR Chapter 15. 

To comment on the Agency's need for this information, the accuracy of
the provided burden estimates, and any suggested methods for minimizing
respondent burden, including the use of automated collection techniques,
EPA has established a public docket for this ICR under Docket ID No.
EPA-HQ-OW-2002-0059, which is available for online viewing at
www.regulations.gov, or in person at the public viewing at the Water
Docket in the EPA Docket Center (EPA/DC), EPA West, Room B102, 1301
Constitution Ave., NW, Washington, DC. The EPA Docket Center Public
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday,
excluding legal holidays.  The telephone number for the Reading Room is
(202) 566-1744, and the telephone number for the Water Docket is (202)
566-2426.  An electronic version of the public docket is available at
www.regulations.gov. This site can be used to submit or view public
comments, access the index listing of the contents of the public docket,
and to access those documents in the public docket that are available
electronically. Also, you can send comments to the Office of Information
and Regulatory Affairs, Office of Management and Budget, 725 17th
Street, NW, Washington, DC 20503, Attention: Desk Office for EPA. 
Please include the EPA Docket ID No. EPA-HQ-OW-2002-0059.

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