Document ID: EPA-HQ-OW-2016-0178-0029
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2019-10-30T04:00Z

ICR Supporting Statement
Information Collection Request for EPA Application Materials for the Water Infrastructure Finance and Innovation Act
OMB Control No. 2040-0292, EPA ICR No. 2549.02

A.  Justification.

       Explain the circumstances that make the collection of information necessary.  Identify any legal or administrative requirements that necessitate the collection. 

      The collection of information is necessary to receive applications for credit assistance pursuant to section 5024 of the Water Infrastructure Finance and Innovation Act (WIFIA) of 2014, 33 USC 3903. The purpose of the WIFIA program is to provide Federal credit assistance in the form of direct loans and loan guarantees to eligible clean water and drinking water projects. In addition, America's Water Infrastructure Act of 2018 passed on October 10, 2018 reauthorized the WIFIA program and created a separate loan program specifically for State Revolving Fund (SRF) programs. Therefore, the collection of information is necessary to receive applications for the SRF WIFIA (SWIFIA) program currently under development, pending appropriation.

      WIFIA requires that an eligible entity shall submit to the Administrator an application at such time, in such manner, and containing such information, as the Secretary or the Administrator may require to receive assistance under WIFIA. To satisfy these requirements, EPA must collect a Letter of Interest (LOI) and an application from entities seeking funding. The relevant section of WIFIA is attached hereto as Exhibit A. EPA is publishing a Federal Register Notice to give entities an opportunity to submit application materials upon appropriation of funding for the WIFIA program and/or the SWIFIA program. This collection is necessary to determine whether each proposed project meets creditworthiness and other Federal requirements to receive WIFIA credit assistance.
      

 2.	Indicate how, by whom, and for what purpose the information is to be used. Except for a new collection, indicate the actual use the agency has made of the information received from the current collection.

      The LOI and the application for the base WIFIA program and SWIFIA program (attached as Exhibits B, C, D, E, and F) collected from prospective borrowers through this solicitation will be used to evaluate applications for credit assistance under the WIFIA eligibility requirements and selection criteria as outlined in the annual Notice of Funding Availability (NOFA).
      

3.	Describe whether, and to what extent, the collection of information involves the use of automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g. permitting electronic submission of responses, and the basis for the decision for adopting this means of collection. Also describe any consideration of using information technology to reduce burden.  

	The LOI form is available electronically. To reduce burden and reduce the number of copies required, the LOI and supporting documents are submitted via WIFIA's SharePoint site or e-mail. The application is available electronically. It is also submitted electronically via WIFIA's SharePoint site.   

 4.	Describe efforts to identify duplication. Show specifically why any similar information already available cannot be used or modified for use for the purpose(s) described in item 2 above.
            
      The LOIs and applications will generally be project specific and the information is not available elsewhere. Applicants may reference documents that already exist and submit the documents as attachments as part of the LOI and application process. 

 5.	If the collection of information impacts small businesses or other small entities (item 5 of the OMB form 83-1), describe the methods used to minimize burden.

      Eligible applicants under WIFIA include corporations, partnerships, joint ventures, trusts, Federal, State, or local governmental entities, agencies, or instrumentalities, tribal governments or consortium of tribal governments, and state infrastructure financing authorities, which could include small entities. LOIs and applications are voluntary. EPA cannot minimize the burden to small entities because WIFIA requires all eligible entities to submit an application in order to receive credit assistance. The relevant section of WIFIA is attached hereto as Exhibit A.

 6.	Describe the consequence to federal program or policy activities if the collection is not conducted or is conducted less frequently, as well as any technical or legal obstacles to reducing burden.

      If the collection is not conducted, EPA will be unable to satisfy the statutory mandate to require the submission of applications. Therefore, WIFIA credit assistance will not be available. To provide credit assistance to eligible projects, which is the purpose of the program, EPA must collect letters of interest and applications that respond to the eligibility requirements and selection criteria.

 7.	Explain any special circumstances that would cause an information collection to be conducted in a manner inconsistent with 5 CFR 1320.6:  

      There are no special circumstances. The collection of information is conducted in a manner consistent with the guidelines in 5 CFR 1320.6.    
            
            
8.	Efforts to consult with persons outside the agency to obtain their views

      On April 23, 2019, Vol. 84, No. 78, pages 16850 to 16851, the Agency published the notice of information collection and request for comments in the Federal Register. The solicitation is attached as Exhibit G. One (1) comment was received from the Council of Infrastructure Financing Authorities.
      
      In addition, EPA consulted with six (6) borrowers or applicants for the base program and two (2) prospective borrowers for SWIFIA to obtain their views on the availability of data, frequency of recordkeeping, disclosure, or reporting format, and on the data elements to be recorded, disclosed, or reported.

      EPA appreciates the feedback that it received during the consultation process. As a result, several changes were made to the supporting statement as well as the draft letters of interest and draft applications for both the base and SWIFIA programs.
       
      Base Program
      In the six consultations done with borrowers and applicants for the base program, borrowers and applicants were overall very satisfied with the changes made to both the LOI and the application as part of this renewal process. The borrowers and applicants commented that burden in the LOI was less than the original LOI, due to the reduced amount of information required in the engineering and credit sections. Several borrowers and applicants also commented positively on the restructured selection criteria section, saying it would be easier to answer the direct questions in the new section compared to the language directly from the WIFIA statute in the current version of the LOI. 
      
      For the application, borrowers and applicants commented that they generally liked the new answer choices compared to the current application which has mostly write-in answers. Borrowers and applicants also commented that this new application would likely be more burdensome upfront but could save time later in the process by being asked for all the information EPA requires in the application.
      
      For the application materials, EPA appreciates the suggestions it received for clarifying certain questions and making the application form more inclusive of prospective borrowers who will be submitting multiple projects under one LOI and application. 
      
      For the base program, most of the comments from the consultations focused on the application. EPA added language in some of the questions' instructions to allow for the borrower to provide information in different ways. For example, EPA is allowing the borrower, in most cases, to reference an attachment instead of providing written description to reduce burden. In another effort to reduce burden, EPA is also clarifying instructions for questions that need more detailed information, to clarify that alternative metrics may be provided. EPA also received comments from the consultations that it will be easier to complete the application for multiple contracts under one loan. Due to this feedback, EPA decided to move Section E (previously Project Information, renamed Contract Information) to an additional form, an Excel spreadsheet, so applicants can provide information for multiple contracts using different rows. These changes for the updated LOI and application are included as Exhibits B, C, and D.
      
      SWIFIA Program
      
      EPA acknowledges that all SRFs that meet the eligibility requirements for the capitalization grant and all agencies who participate in administering the SRFs are allowed to apply for SWIFIA financing. EPA clarified the definition of State Infrastructure Financing Authorities to make it clear that it includes agencies who participate in administering the SRFs in the application materials instructions. 
      
      EPA received several comments about eliminating or streamlining the LOI. However, EPA does not agree that allowing all agencies who participate in administering the SRF to apply eliminates the need for a LOI or that it can accept the Intended Use Plans instead of a LOI. EPA is required to select loan recipients based on criteria outlined by statute. Based on feedback, EPA has shortened the LOI considerably and now requests only the submission of basic program and contact information, the amount of the loan being requested, the requested loan structure, and key program documents. The changes are included as Exhibit D. As a result, EPA decreased its burden estimate for SWIFIA prospective borrowers to complete a LOI to 5 hours as noted in EPA's updated response to question 12.
      
      EPA appreciates the feedback regarding the documentation that SRF programs already complete as requirements of its annual capitalization grant. As a result, EPA eliminated some questions in the SRF application form related to information provided in those documents, particularly related to the program's engineering review processes, and clarified the instruction to include that those documents could be references where narrative responses are still requested. In addition, at respondents' suggestions, it added the requirement to submit the program's Operating Agreement. EPA will still require that the most recent versions of those documents be provided in the LOI and application. The changes are included as Exhibit E and F. The reduced burden is included in EPA's updated responses to questions 12 and 13.
      
      In addition, EPA appreciates the numerous suggestions it received for making the instructions and questions clearer. It incorporated these changes into the updated LOI and application included as Exhibit E and F. In particular, EPA clarified language to make it clear when it is referring to the SRF sub-loans versus the SWIFIA loan. It also updated the instructions for both documents.
      
      EPA also received a comment that the fee estimates are likely too high for SWIFIA borrowers. In the SWIFIA program, prospective borrowers will either accept EPA's standard terms or EPA will adopt the prospective borrower's existing indenture. Therefore, the fees should be less. EPA agrees with this comment and reduced its estimated fees by $50,000 for SWIFIA borrowers in question 13. 
      
      EPA did receive comments that were beyond the scope of this ICR and did not result in changes to this supporting statement and the application materials. The comments were focused on:
 The allocation of annual appropriation
 Provisions to ensure timely expenditure of funds
 System for providing disbursements

      EPA appreciates these comments and will take this feedback into consideration as it continues to develop the SWIFIA program.

 9.	Explain any decision to provide any payment or gift to respondents, other than remuneration of contractors or grantees.  

       No payments or gifts are provided to respondents.

10.	Describe any assurance of confidentiality provided to respondents and the basis for the assurance in statute, regulation, or agency policy.

      EPA cannot offer an assurance of confidentiality to any applicant. The applicant is directed to state if any information submitted in its LOI, application, or any supplementary material may not be released by the Agency upon request from a member of the public or otherwise made publicly available. The applicant must identify the confidential business information and provide reasons why such information is confidential business information and should not be released, including particulars as to any competitive harm which would potentially result from the release of such information. The Agency will handle requests from the public for release of information under its standard Freedom of Information Act procedures. 

11.	Provide additional justification for any questions of a sensitive nature.

      Questions of a sensitive nature are not found in this information collection.
            
            
12.		Provide estimates of the hour burden of the collection of information.  
      Based on respondent numbers, burden data from the WIFIA's 2017 and 2018 rounds of collecting LOIs and applications, and consultations with borrowers, EPA is estimating the burden below.
       
      LOI (Base Program)
                              LOI Burden per LOI
Function
Legal
Manager
Technical
Clerical
Read LOI guidelines
                                                                               
                                                                              1
                                                                              1
                                                                              1
Gather Information
 
 
                                                                             10
                                                                              3
Complete basic LOI form
 
 
 
                                                                              3
Complete narrative
 
 
                                                                             20
 
Review LOI
                                                                              9
                                                                             10
 
 
Compile LOI
 
 
 
                                                                              2
TOTAL
                                                                              9
                                                                             11
                                                                             31
                                                                              9
            
 Total number of unduplicated respondents: 55
 Frequency of response: one per respondent
 Annual hour burden per application: 60
 Total annual burden hours: 3,300

      LOI (SWIFIA Program)
                              LOI Burden per LOI
Function
Legal
Manager
Technical
Clerical
Read LOI guidelines
                                                                               
                                                                               
                                                                            0.5
                                                                               
Gather Information
 
 
                                                                               
                                                                              1
Complete basic LOI form
 
 
                                                                            0.5
                                                                               
Review LOI
                                                                              1
                                                                              1
                                                                           0.5
 
Compile LOI
 
 
                                                                           0.5
                                                                               
TOTAL
                                                                              1
                                                                              1
                                                                              2
                                                                              1
            
 Total number of unduplicated respondents: 5
 Frequency of response: one per respondent
 Annual hour burden per application: 5
 Total annual burden hours: 25

	
	

	Application for Borrowers (Base Program):
                      Application Burden per Application
 
Legal
Manager
Technical
Clerical
Read application guidelines
                                                                               
                                                                              1
                                                                              2
                                                                              1
Gather Information
 
 
                                                                             50
                                                                             10
Complete application form
 
 
 
                                                                              1
Complete narrative
 
 
                                                                            110
 
Review Application
                                                                              5
                                                                             15
 
 
Compile Application
 
 
 
                                                                              5
TOTAL
                                                                              5
                                                                             16
                                                                            162
                                                                             17

 Total number of unduplicated respondents: 35
 Frequency of response: one per respondent
 Annual hour burden per application: 200
 Total annual burden hours: 7,000
	
	Application for Borrowers (SWIFIA Program):
                      Application Burden per Application
 
Legal
Manager
Technical
Clerical
Read application guidelines
                                                                              1
                                                                              1
                                                                              1
                                                                              1
Gather Information
                                                                              
                                                                              
                                                                             30
                                                                              5
Complete application form
                                                                              
                                                                              
                                                                              
                                                                              1
Complete narrative
                                                                              
                                                                              
                                                                             42
                                                                              
Review Application
                                                                              4
                                                                              4
                                                                             9
                                                                              
Compile Application
                                                                              
                                                                              
                                                                              
                                                                              2
TOTAL
                                                                              5
                                                                              5
                                                                             82
                                                                              8

 Total number of unduplicated respondents: 5
 Frequency of response: one per respondent
 Annual hour burden per application: 100
 Total annual burden hours: 500

13.		Provide an estimate of the total annual cost burden to respondents or recordkeepers resulting from the collection of information.  
      
      EPA estimates that the total annual cost burden to respondents will be $14,946,754.85. EPA used the following median hourly wages from the May 2017 National Occupational Employment and Wage Estimates United States (http://www.bls.gov/oes/current/oes_nat.htm) from the U.S. Bureau of Labor Statistics to calculate the cost of the estimated burden hours:
 Lawyers= $57.33
 Management= $50.77
 Engineers= $41.73
 Office and Administrative Support= $18.21
            
      The tables below show the breakdown in these costs for the LOIs, Applications, and other Application Costs. The numbers in blue in the tables below add up to the total annual cost. This estimate includes the following:
      
      LOIs (Base Program)
      
      For the Base Program LOI, EPA estimates 3,300 annual burden hours and the annualized cost of those hours is $139,257.80. EPA estimates 495 legal hours (at $57.33/hour equal $28,378.35); 605 management hours (at $50.77/hour equal $30,715.85); 1,705 technical hours (at $41.73/hour equal $71,149.65); and 495 clerical hours (at $18.21/hour equal $9,013.95).  
      
Number of Collections per year
Hours per Collection
Total Hours per Collection
Total Cost per year
55
60
3,300
$139,257.80
      
      LOIs (SWIFIA Program)
      
      For the SWIFIA LOI, EPA estimates 25 annual burden hours and the annualized cost of those hours is $1,048.85. EPA estimates 5 legal hours (at $57.33/hour equal $286.65); 5 management hours (at $50.77/hour equal $253.85); 10 technical hours (at $41.73/hour equal $417.30); and 5 clerical hours (at $18.21/hour equals $91.05).  
      
      
Number of Collections per year
Hours per Collection
Total Hours per Collection
Total Cost per year
5
5
25
$1,048.85
      
      Applications (Base Program)
      
      For the Base Program application, EPA estimates 7,000 annual burden hours and the annualized cost of those hours is $285,908. EPA estimates 175 legal hours (at $57.33/hour equal $10,032.75); 560 management hours (at $50.77/hour equal $28,431.20); 5,670 technical hours (at $41.73/hour equal $236,609.10); and 595 clerical hours (at $18.21/hour equal $10,834.95).  
      
      
Number of Collections per year
Hours per Collection
Total Hours per Collection
Total Cost per year
35
200
7,000
$285,908.00
      
      Applications (SWIFIA Program)
      
      For the SWIFIA application, EPA estimates 500 annual burden hours and the annualized cost of those hours is $31,048.30. EPA estimates 25 legal hours (at $57.33/hour equal $1,433.25); 25 management hours (at $50.77/hour equal $1,269.25); 410 technical hours (at $41.73/hour equal $17,109.30); and 40 clerical hours (at $18.21/hour equal $728.40).  
      
Number of Collections per year
Hours per Collection
Total Hours per Collection
Total Cost per year
5
100
500
$20,540.20
      
      Application Costs  -  Other
      
      	In addition, applicants will be charged two fees: an application fee and a credit processing fee. An application fee will be due upon submission of the application. A credit processing fee will be due upon loan closing, to reimburse costs incurred by the EPA due to legal, financial, and other expert contractor help. For projects serving small communities (population of not more than 25,000 people), the application fee will be $25,000. For all other applicants, including all SWIFIA applicants, the application fee will be $100,000. The application fee is a down payment on the credit processing fee when they submit an application, so the amount a small vs. large borrower pays differs in terms of what they pay in the up-front application cost, but EPA estimates the total costs of the application fee and the credit processing fee to be the same for all borrowers in the base program. Due to the nature of this credit processing fee, the amount is expected to vary between applicants. However, EPA estimates these costs for WIFIA base program applicants based on the FY 2017 borrowers as approximately $275,000 per applicant, a portion of which may be waived at the discretion of the EPA. For SWIFIA applicants, EPA estimates these costs to be lower since applicants will either accept EPA's standard terms or EPA will adopt the applicant's existing indenture. The total credit processing fees for SWIFIA would be $225,000. The total for 40 borrowers is $10,750,000, estimating 3 small community borrowers and 32 large community borrowers (at $275,000/borrower), and 5 SWIFIA borrowers (at $225,000/borrower).
      
      By statute, applicants to the base WIFIA program are required to submit a preliminary rating letter at the time of application and two (2) final rating letters at the time of closing that indicate that the senior obligation of the project has an investment grade rating. The cost of these rating letters varies based on the size and complexity of the project. Based on bond rating agency estimates and industry research, EPA estimates that the final rating letters will cost approximately $50,000 per letter and that the initial preliminary rating letter is included in the cost of one of the final letters. The total cost for 35 applicants (3 small community borrowers and 32 large community borrowers) is $3,500,000. Applicants to the SWIFIA program are required to submit a preliminary rating letter at the time of application and one (1) final rating letter at the time of closing that indicate that the senior obligation of the project has an investment grade rating. These rating letters must be from a bond rating agency identified by the Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization. The total cost for 5 applicants will be $250,000.
      
Large Community
Cost
# of Applications

Application Fee + Credit Processing Fee
 $275,000 
                                                                             32
 $8,800,000
Two Rating Letters
 $100,000
                                                                             32
 $3,200,000 
Annual Total per borrower
$375,000
 Annual Total 
 $12,000,000 
      
Small Community
Cost
# of Applications

Application Fee + Credit Processing Fee
 $275,000 
                                                                              3
 $825,000
Two Rating Letters
 $100,000
                                                                              3
 $300,000 
Annual Total per borrower
$375,000
 Annual Total 
 $1,125,000
      
SWIFIA
Cost
# of Applications

Application Fee + Credit Processing Fee
 $225,000 
                                                                              5
 $1,125,000 
One Rating Letter
 $50,000
                                                                              5
 $250,000
Annual Total per borrower
$275,000
 Annual Total 
 $1,375,000

14.	Provide estimates of annualized cost to the federal government.  
	The estimated cost to the Federal government of this request for letters of interest and applications is $3,512,217.76. This cost reflects three components:

 EPA follows an evaluation process to review each LOI and application and to determine which projects will receive WIFIA funding. This process includes technical, financial, and management review of the letters of interest. Then, additional technical, financial, and management review of the applications. EPA estimates that this process will take 65% of the 26 FTEs' time employed by WIFIA. 
      
      The estimated average annual cost for EPA personnel is $129,869 based on the General Schedule (GS) 14, Step 05 level from the 2018 GS salary table. The annual cost was then multiplied by the standard government benefits multiplication factor of 1.6 to calculate an estimated annual pay including benefits per FTE of $207,790.40. Therefore, the estimated annualized cost for the evaluation team is $3,511,657.76. 
      
 EPA will hire legal, financial, and other expert contractor support for credit processing. These costs are estimated to be $275,000 per Base Program application and $225,000 per SWIFIA application. They are expected to be reimbursed in full by the applicants. The net estimated annualized cost to the Federal Government for credit processing is $0.

 EPA will print application materials. EPA does not expect to need any special equipment or support, other than printing. As noted above in item 12, EPA expects 60 letters of interest and 40 applications. If each LOI is 25 pages and each application is 50 pages, as requested in the solicitation, EPA may need to print as many as 3,500 pages for staff involved in the evaluation process. EPA estimates up to 8 staff may need materials which adds up to a total of 28,000 pages of printing. EPA's printing costs are approximately 2 cents per page, which adds up to a total printing cost of $560.
      
      
       Explain the reason for any program changes or adjustments reported in items 13 or 14 of the OMB form 83-1.  
      
      There is an increase of 9,325 hours in the total estimated respondent burden compared with the ICR currently approved by OMB. This increase is due to EPA receiving more Letters of Interest and applications than it originally estimated during program inception. 
      
      For the respondent burden in item 13, the annual cost increased compared to the previous submission of OMB form 83-1. Since program inception, EPA received more LOIs and applications than it originally estimated. EPA estimated the program would receive 20 LOIs and 5 applications. This was based on the amount of budget authority initially authorized for WIFIA. However, in 2017, the program received 43 LOIs and invited 12 prospective borrowers to apply. In 2018, the program received 62 LOIs and invited 39 prospective borrowers to apply. In addition, EPA is including the newly authorized State Revolving Fund WIFIA (SWIFIA) program as part of this ICR renewal. EPA estimates that WIFIA will receive 5 LOIs and 5 applications through SWIFIA.
      
      For the cost to the federal government, EPA's annual cost increased for the same reason as for item 13. It received more LOIs and applications then initially anticipated. Due to the large number of LOIs and applications, EPA has since hired more WIFIA staff to meet the burden of these reviews. Due to the nature of the work, the majority of WIFIA staff are legal, financial and technical experts with salaries that are high on the GS scale. This also increases the cost.
      
      
       For collections of information whose results will be published, outline plans for tabulation, and publication.  

      The letters of interest and applications collected for the WIFIA program will not be published. EPA will maintain a publicly available list of projects that have submitted letters of interest and applications to the WIFIA program. The current lists are available at https://www.epa.gov/wifia/wifia-financing-requests.
      
      
17.	If seeking approval to not display the expiration date for OMB approval of the information collection, explain the reasons that display would be inappropriate.  

      The Agency plans to display the expiration date for OMB approval of the information collection on all instruments.
              
            
18.	Explain each exception to the certification statement identified in item 19, "certification for paperwork reduction act submissions," of OMB form 83-1. 

      The Agency is able to certify compliance with all provisions under Item 19 of OMB Form 83-I."