Home » 2009 Issues » December 23, 2009 » EFC-39-09-00002-E The Proposed Regulations Are for the DWSRF Co-Administered by EFC and the NYS Department of Health (DOH)
EFC-39-09-00002-E The Proposed Regulations Are for the DWSRF Co-Administered by EFC and the NYS Department of Health (DOH)
12/23/09 N.Y. St. Reg. EFC-39-09-00002-E
NEW YORK STATE REGISTER
VOLUME XXXI, ISSUE 51
December 23, 2009
RULE MAKING ACTIVITIES
ENVIRONMENTAL FACILITIES CORPORATION
EMERGENCY RULE MAKING
I.D No. EFC-39-09-00002-E
Filing No. 1344
Filing Date. Dec. 04, 2009
Effective Date. Dec. 04, 2009
The Proposed Regulations Are for the DWSRF Co-Administered by EFC and the NYS Department of Health (DOH)
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Amendment of Part 2604 of Title 21 NYCRR.
Statutory authority:
Public Authorities Law, sections 1284(5) and 1285-m(4)
Finding of necessity for emergency rule:
Preservation of general welfare.
Specific reasons underlying the finding of necessity:
The New York State Environmental Facilities Corporation ("EFC") has determined that the attached amendment to the Drinking Water State Revolving Fund ("DWSRF") Regulations, Part 2604 of Title 21 of the Official Compilation of Codes, Rules and Regulations of the State of New York, is in the public interest and necessary for the preservation of the general welfare throughout the State of New York and that this amendment be adopted on an emergency basis as authorized by section 202(6) of the State Administrative Procedure Act ("SAPA"), effective immediately upon filing with the Department of State.
This amendment was adopted as an emergency measure for an initial emergency period of 90 days pursuant to a Notice of Emergency Adoption and Proposed Rulemaking, such initial emergency period being effective upon filing with the Department of State on September 9, 2009 and is being readopted as an emergency rule for an additional 60-day period as it is in the public interest to expeditiously use funds made available pursuant to the American Recovery and Reinvestment Act of 2009, P.L. 111-5, Title VII, Environmental Protection Agency, State and Tribal Assistance Grants ("ARRA") to create jobs and stimulate the economy and thus, time is of the essence. The immediate promulgation and adoption of these amended regulations is necessary for the protection and preservation of life, health, property and natural resources due to the severe economic downturn, the possible destabilization of State and local government budgets, the prospect of reduction of essential services and counterproductive local tax increases which will exacerbate the current economic conditions. The expected duration of such emergency is expected to last through the 60-day extension of such emergency period while EFC concludes formal rulemaking procedures for the amended regulations. Certain regulatory provisions need to be changed in order to streamline provisions as well as to provide the flexibility and provisions specific to and necessitated by ARRA in order for the State Revolving Fund ("SRF") to obtain ARRA funds and provide the same to SRF applicants. In order to meet the tight timeframes of ARRA, these regulations need to be readopted expeditiously. Therefore, compliance with the rule making requirements of section 202(1) of the SAPA would be contrary to the public interest and, as such, the current circumstance necessitates that that the public and interested parties be given less than the minimum period for notice and comment provided for in section 202(1) of SAPA.
These revisions conform the current SRF regulations with the requirements and objectives set forth in the ARRA, which are to preserve and create jobs, promote economic recovery and invest in environmental protection and to provide short and long-term economic benefits.
ARRA requires that SRF funds be provided to projects on a State's intended use plan that are ready to proceed with construction within 12 months of the date of enactment of ARRA. Further, the Environmental Protection Agency Administrator is directed to reallocate funds where projects are not under contract or construction within 12 months of the date of enactment of ARRA.
In an effort to stimulate the economy and create or retain jobs, ARRA requires that at least 50 percent of the funds be provided as additional subsidization in the form of forgiveness of principal, negative interest loans, or grants. ARRA also provides that to the extent there are sufficient applications for eligible projects not less than 20 percent of the funds are to be provided for projects that address green infrastructure, water or energy efficiency improvements or other environmentally innovative activities. The amendments to the regulatory provisions will allow EFC to fund these types of projects.
With the downturn in the financial markets, residents have seen a dramatic decrease in home values as well as in other assets. Through out the State, businesses are retrenching and closing. Home foreclosure rates in the State have increased. State unemployment levels have risen to 9.0 percent as of October, 2009.
The need to address drinking water infrastructure and to reduce operational costs has become more pressing as the economy trends downwards. Compliance with ARRA requirements will provide additional Federal funds to accomplish these purposes.
A potential stimulus package was widely discussed and broadcast on all major networks, television, radio, newspapers and on the web. The details and adoption of ARRA were similarly widely disseminated, as well as the State's interest in utilizing such funds.
The readoption of these emergency regulations is consistent with EFC's statutory mission, which is to provide financial assistance for essential environmental infrastructure projects for the benefit of the people of New York State.
Subject:
The proposed regulations are for the DWSRF co-administered by EFC and the NYS Department of Health (DOH).
Purpose:
To set forth rules implementing the statutory provisions of the American Recovery and Reinvestment Act of 2009 ("ARRA")P.L 111-5.
Substance of emergency rule:
I. SUBJECT:
The proposed revised regulations are for the New York Drinking Water State Revolving Fund ("DWSRF"), Section 1285-m of the Public Authorities Law ("PAL"), co-administered by the New York State Environmental Facilities Corporation ("EFC") and the New York State Department of Health ("DOH"), pursuant to Chapter 413 of the Laws of 1996.
II. PURPOSE:
The proposed regulations set forth rules and procedures whereby EFC and DOH implement the requirements and objectives of the American Recovery and Reinvestment Act of 2009, P.L. 111-5, Title VII, Environmental Protection Agency, State and Tribal Assistance Grants ("ARRA") to enable the State Revolving Fund ("SRF") to accept and expend Federal funds to stimulate the economy and retain and create jobs for the benefit of the people of the State.
Among the changes, EFC is expanding the definition of eligible project to include green infrastructure, water or energy efficiency improvements or other environmentally innovative activities as required by ARRA. DOH is creating an additional category G list for such green infrastructure projects in 10 NYCRR Section 53.5(c)(5). Through these changes, DWSRF funds may be made available to a variety of recipients (public and private) carrying out these types of projects.
III. GENERAL SUBSTANCE:
EFC is proposing to amend the DWSRF regulations found within 21 NYCRR Part 2604 in the following manner (Companion regulations found within 10 NYCRR Part 53 will also be modified):
The proposed regulatory amendments serve to incorporate provisions required by or necessitated by ARRA. The term of additional subsidization in the form of forgiveness of principal, a negative interest loan or a grant is added to allow the SRF to provide principal forgiveness or grants, as required by ARRA. Modifications are made to provide flexibility in certain financial terms and products to meet the objectives of ARRA to stimulate the economy and help initiate projects. In addition, the definition of project is expanded to incorporate green infrastructure, water or energy efficiency improvements or other environmentally innovative activities. The proposed amendments will also permit financing of pre-design planning costs prior to completion to further stimulate project development. The provisions regarding project bypassing are also clarified to meet the objectives of ARRA as to project readiness. The proposed regulations will also clarify disbursements and that if certain requirements, including those mandated by ARRA, are not met that the SRF may decline to disburse funds, and if released, recover said funds. Similarly, the remedies provisions are clarified.
Certain definitions are amended within the regulations to expand the types of financial products available. EFC is proposing to add a new definition of "direct interest rate" and other definitions be modified to allow the SRF to address current and changing market conditions. The hardship assistance program is simplified, and clarified to indicate that in the event of a shared municipal project, hardship eligibility will be based upon a municipality's allocable portion of the shared project.
In addition, there are proposed administrative-oriented changes to EFC's regulations. The following definitions, among others, will be changed for the purposes of providing flexibility to address changing market conditions and increase funding opportunities for recipients: "Interest rate subsidy", "Leveraged financing", "Market rate of interest", and "Reduced interest rate." Grammatical changes will include the consistent use of capitalized terms, such as "Corporation", "Department", "Commissioner", "Comptroller" and "Administrator."
This notice is intended
to serve only as a notice of emergency adoption. This agency intends to adopt the provisions of this emergency rule as a permanent rule, having previously submitted to the Department of State a notice of proposed rule making, I.D. No. EFC-39-09-00002-EP, Issue of September 30, 2009. The emergency rule will expire February 1, 2010.
Text of rule and any required statements and analyses may be obtained from:
Judith A. Avent, Deputy General Counsel, New York State Environmental Facilities Corporation, 625 Broadway, 7th Floor, Albany, New York 12207-2997, (518) 402-6969, email: Avent@nysefc.org
Regulatory Impact Statement
1. STATUTORY AUTHORITY
When the Legislature enacted Chapter 413 of the Laws of 1996, it created the New York State Drinking Water Revolving Fund ("DWSRF") and, in part, amended the State's Public Authorities Law ("PAL"), creating Section 1285-m, which sets forth the provisions of the DWSRF. Under Section 1285-m of the PAL, the New York State Environmental Facilities Corporation ("EFC") is given the statutory authority to administer the DWSRF. Pursuant to Section 1285-m(4), the Legislature provided that "Moneys in the drinking water revolving fund shall be applied by the corporation in accordance with this section and title four of article eleven of the public health law to provide financial assistance to recipients for construction of eligible projects and upon consultation with the director of the division of the budget, for such other purposes permitted by the federal safe drinking water act, as amended..." PAL Section 1284, which sets forth the general powers of the corporation, provides that EFC has the power "…to make and alter by-laws for its organization and internal management, and rules and regulations governing the exercise of its powers and fulfillment of its purposes under this title…" PAL Section 1284(5). In addition, the federal Safe Drinking Water Act ("SDWA") provided for the establishment, by each state, of a revolving fund, for certain identified drinking water projects. During the last year, the economy has weakened significantly and the American Recovery and Reinvestment Act of 2009, P.L. 111-5, Title VII, Environmental Protection Agency, State and Tribal Assistance Grants ("ARRA") was signed into law amending the SDWA in an effort to stimulate the economy through building environmental infrastructure.
2. LEGISLATIVE OBJECTIVES
In creating the DWSRF under the PAL, the Legislature directed EFC and the New York State Department of Health ("DOH") to provide assistance in support of the planning, development and construction of drinking water projects and other types of projects permitted by the SDWA. ARRA provides federal funds through the DWSRF to create and retain jobs, to stimulate the economy and to promote green infrastructure. EFC and DOH are amending the DWSRF regulations in order to comply with the objectives and requirements of ARRA in order to accept and utilize these Federal funds for projects within New York State. Certain regulatory provisions need to be changed in order to streamline provisions as well as to provide the flexibility and provisions specific to and necessitated by ARRA in order for the SRF to obtain ARRA funds and provide the same to DWSRF applicants.
These revisions conform the current DWSRF regulations with the requirements set forth in ARRA to more effectively carry out the legislative objectives, which are to preserve and create jobs, promote economic recovery, invest in environmental protection and to provide short and long-term economic benefits. ARRA requires that SRF funds be provided to projects on a State's intended use plan that are ready to proceed with construction within 12 months of the date of enactment of ARRA.
In an effort to stimulate the economy and create or retain jobs, ARRA requires that at least 50 percent of the funds be provided as additional subsidization in the form of forgiveness of principal, negative interest loans, or grants. ARRA also provides that to the extent there are sufficient applications for eligible projects not less than 20 percent of the funds are to be provided for projects that address green infrastructure, water or energy efficiency improvements or other environmentally innovative activities. The amendments to the regulatory provisions will allow EFC to provide the same.
EFC is proposing to amend the DWSRF regulations found in 21 NYCRR Part 2604 and as appropriate, the 10 NYCRR Part 53 companion regulations of DOH to: (i) add a new definition of "additional subsidization" that will allow the provision of forgiveness of principal, a negative interest loan or a grant, as either financial assistance or hardship assistance; (ii) amend the definition for "project" to incorporate green infrastructure, water or energy efficiency improvements or other environmentally innovative activities; (iii) permit financing of pre-design planning costs prior to completion to further stimulate project development; (iv) clarify provisions regarding project bypassing to meet the objectives of ARRA as to project readiness; and (v) other administrative-oriented changes, including the changing of various definitions in the regulations for purposes of increasing flexibility in DWSRF financial terms and products to address current market conditions and meet the objectives of ARRA to stimulate the economy and help initiate projects.
3. NEEDS AND BENEFITS
As set forth above, PAL Section 1284(5), gives EFC the authority to make and alter regulations to fulfill its purposes under its enabling statutes. PAL Section 1285-m(4) gives EFC the power to provide assistance for such other purposes permitted by the SDWA, as amended. Compliance with ARRA objectives and requirements will provide substantial additional Federal funds to the DWSRF to construct eligible drinking water infrastructure projects and to reduce operational costs.
The proposed regulations allow for DWSRF funding to be extended to green infrastructure, water or energy efficiency improvements or other environmentally innovative activities projects, and in the form of forgiveness of principal, a negative interest loan or a grant as set forth in the Intended Use Plan (IUP). Other provisions will allow EFC to bypass projects based upon project readiness to meet the requirements of ARRA and address changing market conditions through the provision of additional financial products as well as providing funds for pre-design planning prior to completion in order to facilitate project initiation. These changes will provide greater access to funding for DWSRF recipients and stimulate environmental projects.
The use of ARRA funds in New York State will create and retain jobs, and stimulate the construction of critical environmental infrastructure throughout New York State.
With the changes outlined above being made to the current DWSRF regulations, certain regulatory definitions will need to be revised to reflect these changes. For example, the following definitions, among others, will be changed for the purposes of providing flexibility to address changing market conditions and increase funding opportunities for recipients: "Interest rate subsidy", "Leveraged financing", "Market rate of interest", and "Reduced interest rate."
4. COSTS
Participation in the DWSRF program is voluntary. The proposed amendments will not result in any additional costs to recipients other than those with respect to meeting ARRA requirements.
5. LOCAL GOVERNMENT MANDATES
None. Participation in the DWSRF program is voluntary. Anyone choosing to apply for financial assistance from the DWSRF would be responsible for compiling the documentation necessary to submit a complete application to EFC for its consideration and review, and meet the requirements of ARRA.
6. PAPERWORK
The proposed amendments do not require any additional paperwork. Participation in the DWSRF program is voluntary. Anyone choosing to apply for financial assistance from the DWSRF would have to submit the documentation required for a complete application to EFC for its consideration, and meet the reporting requirements of ARRA.
7. DUPLICATION
The proposed amendments to 21 NYCRR Part 2604 will be consistent, as applicable, with the DOH DWSRF regulations found in 10 NYCRR Part 53.
8. ALTERNATIVES
Upon review of the current regulations and the programmatic changes sought to be implemented, the proposal outlined above is the most efficient means by which the DWSRF regulations can be updated and the programmatic changes implemented.
9. FEDERAL STANDARDS
The proposed amendments do not exceed any minimum federal government standards.
10. COMPLIANCE SCHEDULE
There is no relevant compliance schedule to consider with respect to the rule. However, ARRA imposes specific requirements including project readiness in order for a project to qualify for funding.
Regulatory Flexibility Analysis
1. EFFECT OF RULE
Small businesses and local governments throughout New York State will be affected in a positive manner as a result of the promulgation of this rule. The American Recovery and Reinvestment Act of 2009, P.L. 111-5, Title VII, Environmental Protection Agency, State and Tribal Assistance Grants ("ARRA") will provide over $86 million dollars in additional funding for New York State Drinking Water State Revolving Fund ("DWSRF") projects intended to improve drinking water facilities. In addition, ARRA mandates that at least twenty percent of the funds be distributed for green infrastructure projects, water or energy efficiency or other environmentally innovative activities.
The infusion of these DWSRF funds into the New York State economy will preserve and create a significant number of jobs, primarily via funding for drinking water construction projects. This will have a commensurate positive effect on small businesses and consultants involved in the construction of these environmental infrastructure projects, in particular engineering firms, financial consulting firms and attorneys. Small businesses are actively involved in the drinking water construction industry in New York State. The rule will also expand the types of projects eligible to receive funding under the DWSRF to include green infrastructure projects, thereby creating additional opportunities for small businesses engaged in these types of projects. This will in turn provide an economic stimulus to localities, including additional tax revenues for local governments.
The types of local governments to be affected by this rule may include cities, towns, villages, and counties throughout New York State as they are considered eligible borrowers under the DWSRF. This rule will have a positive effect on local governments which maintain their own engineering and/or public works departments and are primarily responsible for the engineering, planning, design and construction of drinking water projects. This additional funding will allow such local governments to preserve and create jobs in connection with these types of projects.
2. COMPLIANCE REQUIREMENTS
Participation in the DWSRF by small businesses and local governments is entirely voluntary. Any reporting or recordkeeping imposed by this rule would solely be the result of their decision to participate in the DWSRF program. Such participation would require compliance with existing DWSRF reporting and recordkeeping requirements and any reporting and recordkeeping requirements imposed by the ARRA.
3. PROFESSIONAL SERVICES
Small businesses and local governments who voluntarily participate in the DWSRF program may need to retain professional services for green infrastructure projects to be authorized under the proposed rule. Otherwise, no new professional services will be required by this rule.
4. COMPLIANCE COSTS
No initial capital costs will be incurred by a regulated business or industry or local government to comply with the rule. Initial or continuing compliance costs for reporting and recordkeeping should not vary depending on the size of such small business or local government. However, these reporting and recordkeeping requirements for small businesses and local governments will vary depending on the type, size and complexity of the project and the number of applicable local, state and federal approvals required. These initial or continuing compliance costs, however, only occur when the small business or local government voluntarily elects to participate in the DWSRF program.
5. ECONOMIC AND TECHNOLOGICAL FEASIBILITY
There are no anticipated economic or technological feasibility compliance requirements on small businesses or local governments as a result of this rule. The purpose of this rule is to provide funds to stimulate the economy of the New York State, to preserve and protect jobs and to stabilize local tax bases. Participation in the DWSRF program is entirely voluntary and any direct or indirect compliance requirements will result from small businesses and local governments applying for and seeking DWSRF assistance.
6. MINIMIZING ADVERSE IMPACT
The proposed rule will not have any adverse economic impact. The rule is designed to implement the statutory provisions and objectives of the ARRA, which are to preserve and create jobs, to promote economic recovery, to invest in environmental protection infrastructure and to stabilize State and local government budgets in order to minimize reductions in essential services and counterproductive local tax increases. In addition, the New York State Environmental Facilities Corporation ("EFC") considered whether there were any feasible approaches for minimizing any conceivable adverse economic impacts pursuant to State Administrative Procedure Act section 202-b(1). Due to the nature and purpose of the proposed rule and the fact that there are no adverse economic impacts, EFC came to the conclusion that there were no feasible alternatives to promulgating the provisions of the rule on an emergency basis.
7. SMALL BUSINESS AND LOCAL GOVERNMENT PARTICIPATION
With respect to this rulemaking, EFC will publish this Notice of Emergency Adoption and supporting documentation in the State Register and in the Environmental Notice Bulletin. EFC also intends to provide notice to the appropriate business councils, trade groups or other associations which represent small businesses and local governments to ensure that small businesses and local governments will be given an opportunity to participate in the rulemaking process.
Rural Area Flexibility Analysis
1. TYPES AND ESTIMATED NUMBERS OF RURAL AREAS
The proposed rule will affect all types of rural areas throughout all of New York State, particularly those in need of drinking water facilities to be funded under the Drinking Water State Revolving Fund ("DWSRF").
2. REPORTING, RECORDKEEPING AND OTHER COMPLIANCE REQUIREMENTS
Participation in the DWSRF by any recipient within a rural area is entirely voluntary. Any reporting, recordkeeping or other compliance requirements would solely be the result of their deciding to participate in the DWSRF program. Such participation would require compliance with existing DWSRF reporting and recordkeeping requirements and any reporting and recordkeeping requirements imposed by the American Recovery and Reinvestment Act of 2009, P.L. 111-5, Title VII, Environmental Protection Agency, State and Tribal Assistance Grants ("ARRA"). However, the provisions of the proposed rule, in and of themselves, will not require any additional reporting or recordkeeping by rural areas.
3. COSTS
No initial capital or annual costs will be incurred by public or private entities in rural areas as a result of this rule. Initial capital costs and any annual costs to comply with the rule will vary depending upon the size and complexity of the project and the number of applicable local, state and federal approvals required. However, any initial capital or annual compliance costs occur only when public or private entities in rural areas voluntarily elect to participate in the DWSRF program.
4. MINIMIZING ADVERSE IMPACT
The proposed rule will not have any adverse economic impact. The rule is designed to implement the statutory provisions and objectives of the ARRA, which are to preserve and create jobs, to promote economic recovery, to invest in environmental protection infrastructure and to stabilize State and local government budgets in order to minimize reductions in essential services and counterproductive local tax increases. In addition, the New York State Environmental Facilities Corporation ("EFC") considered whether there were any feasible approaches for minimizing any conceivable adverse economic impacts pursuant to State Administrative Procedure Act section 202-bb(7). Due to the nature and purpose of the proposed rule and the fact that there are no adverse economic impacts, EFC came to the conclusion that there were no feasible alternatives to promulgating the provisions of the rule on an emergency basis.
5. RURAL AREA PARTICIPATION
With respect to this rulemaking, EFC will publish this Notice of Emergency Adoption and supporting documentation in the State Register and in the Environmental Notice Bulletin. EFC also intends to provide notice to the appropriate organizations and other associations which represent rural areas to ensure that public and private entities will be given an opportunity to participate in the rulemaking process.
Job Impact Statement
1. NATURE OF IMPACT
The rule will have a positive impact on jobs and employment opportunities. A primary goal of the American Recovery and Reinvestment Act of 2009, P.L. 111-5, Title VII, Environmental Protection Agency, State and Tribal Assistance Grants ("ARRA") is job preservation and creation. The infusion of over $86 million dollars into the New York State Drinking Water State Revolving Fund ("DWSRF') will preserve and create a significant number of jobs, in particular those involving construction of water supply facilities intended to improve drinking water facilities. The rule will also provide jobs and employment opportunities for consultants involved with DWSRF projects, including engineers, attorneys and financial advisors. The rule will also create additional job opportunities for private and public entities interested in green infrastructure, water or efficiency improvements or other environmentally innovative activities.
2. CATEGORIES AND NUMBERS AFFECTED
The categories of jobs most directly affected will be those of engineers, attorneys, financial advisors and construction related trades in the planning, design, construction and the obtaining of the necessary government permits and approvals regarding these projects.
3. REGIONS OF ADVERSE IMPACT
None. This rule will have a positive impact on jobs and employment opportunities throughout all regions of New York State.
4. MINIMIZING ADVERSE IMPACT
The provisions of the rule will have no unnecessary adverse impacts on existing jobs, but will promote the development of new employment opportunities. Therefore, no measures to minimize adverse impacts needed to be taken.
5. SELF-EMPLOYMENT OPPORTUNITIES
The proposed rule will have a positive effect on self-employment opportunities related to the construction field and consultants therein.
