HLT-38-09-00001-E Drinking Water State Revolving Fund

9/23/09 N.Y. St. Reg. HLT-38-09-00001-E

NEW YORK STATE REGISTER

VOLUME XXXI, ISSUE 38

September 23, 2009

RULE MAKING ACTIVITIES

DEPARTMENT OF HEALTH

EMERGENCY RULE MAKING

 

I.D No. HLT-38-09-00001-E

Filing No. 1034

Filing Date. Sept. 03, 2009

Effective Date. Sept. 03, 2009

Drinking Water State Revolving Fund

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:

Action taken:

Amendment of Part 53 of Title 10 NYCRR.

Statutory authority:

Public Health Law, sections 1161 and 1162

Finding of necessity for emergency rule:

Preservation of public health.

Specific reasons underlying the finding of necessity:

The American Recovery and Reinvestment Act of 2009 (ARRA) was signed into law by President Obama on February 17, 2009. The goals of the ARRA applicable to this rulemaking include job preservation and creation, infrastructure investment and energy efficiency. ARRA will provide over 86.8 million dollars from the federal government (via the Environmental Protection Agency (EPA)) to New York State for distribution to public drinking water improvement projects.

The Drinking Water State Revolving Fund (DWSRF) was created in 1996 as a result of State legislation and legislation enacted by the U.S. Congress. The DWSRF provides a significant financial incentive for municipally and privately owned drinking water systems to finance needed drinking water infrastructure improvements (e.g., treatment plants, distribution mains, storage facilities). The DWSRF is administered jointly by the Department and the New York State Environmental Facilities Corporation (EFC). The Bureau of Water Supply Protection represents the Department for the implementation of the DWSRF.

10 NYCRR Part 53, “Drinking Water State Revolving Fund,” contains the Department rules implementing the DWSRF. Part 53 must be amended to accommodate new requirements from ARRA to distribute the funds allocated to the State. The amendments include eligible projects which address “green infrastructure” [see paragraph 53.5(c)(5) of the above Express Terms].

ARRA requires that project funding commence within 120 days from the date from enactment of the law (law enacted February 17, 2009; funding commences by June 7, 2009). For the State and Department to be granted the funds from the EPA, the present DWSRF program rules need to be amended to assure timely distribution of the funds to eligible local public water system DWSRF projects; consequently, an “emergency rulemaking” of Part 53 is required. An emergency rulemaking is also necessary for the preservation of public health in that projects for safe drinking water may be delayed or not built if this money is not available. A “regular rulemaking” is also being pursued at the same time to expedite the permanent amendment of Part 53.

Subject:

Drinking Water State Revolving Fund.

Purpose:

To accommodate new requirements from the Federal American Recovery and Reinvestment Act (ARRA) of 2009.

Text of emergency rule:

Paragraph (1) of subdivision (a) of section 53.2 is amended to read as follows:

(1) Act means Title XIV of the Public Health Service Act (commonly known as the "Safe Drinking Water Act") 42 USC section 300-f et. seq[.]; and as supplemented by the American Recovery and Reinvestment Act of 2009 (ARRA).

A new Subdivision (e) is to be added to Section 53.4 and to read as follows:

(e) Notwithstanding the foregoing, an eligible project or portion thereof listed in Category G, as identified in section 53.5(c)(5), shall be evaluated based upon criteria set forth in section 53.5(c)(5) of this part.

Subdivision (a) of Section 53.5 is amended to read as follows:

(a) With the exception of Category G projects, [All] all completed pre-applications received by the Department will be evaluated and assigned a score based on the priority ranking scoring system described in section 53.4 of this Part, provided, however, that:

A new Paragraph (5) is to be added to Subdivision 53.5(c) and to read as follows:

(5) Category G List: The Category G list shall include projects or portions thereof that address green infrastructure including, without limitation, water and energy efficiency improvements or other environmentally innovative activities or that qualify as a demonstration project of new green infrastructure technology as provided in the IUP. Such projects or portions thereof shall be determined based on an evaluation of benefits to the public and positive (or least negative) impacts on the environment and that shall include, without limitation: economic benefits generated; public health and safety; protection of water quality and the environment; demonstrated readiness; green energy production and/or reduction in energy consumption; regional distribution of projects, or water conservation as provided in the IUP.

Paragraph (2) of Subdivision 53.5(e) is amended to read as follows:

(2) No more than thirty percent (30%) of the annual federal capitalization funds shall be used to give loan subsidies to disadvantaged systems as determined by the Corporation[.], except a greater percent of the annual federal capitalization funds may be used to give additional subsidization to eligible recipients when required or authorized by federal laws or regulations. Such additional subsidization shall be provided in accordance with the Act and shall include forgiveness of principal, a negative interest loan or a grant.

Paragraphs (2) and (3) of Subdivision 53.5(g) are amended to read as follows:

(2) the applicant fails to fulfill expectations, perform duties, or conform to deadlines or conditions established in the project schedule or the applicant will not be able to satisfy any other conditions precedent to obtaining funding during the period specified in the IUP; [or]

(3) the applicant has reached the fifty percent (50%) annual Fund resources cap for fundable projects on the Project Readiness List. All projects of an applicant that would cause the applicant to exceed the fifty percent cap will be by-passed for that annual funding cycle[.]; or

A new Paragraph (4) of Subdivision 53.5(g) is to be added and to read as follows:

(4) the department determines that another project better addresses water savings/conservation, or energy efficiency improvements or other environmentally innovative activities that meet green infrastructure mandates of the ARRA.

* * *

This notice is intended

to serve only as a notice of emergency adoption. This agency intends to adopt this emergency rule as a permanent rule and will publish a notice of proposed rule making in the State Register at some future date. The emergency rule will expire December 1, 2009.

Text of rule and any required statements and analyses may be obtained from:

Katherine Ceroalo, DOH, Bureau of House Counsel, Reg. Affairs Unit, Room 2438, ESP Tower Building, Albany, NY 12237, [phone], email: [e-mail]

Regulatory Impact Statement

Statutory Authority:

Public Health Law (PHL) Sections 1161 and 1162 authorize the Department of Health (Department) to revise 10 NYCRR Part 53 "Drinking Water State Revolving Fund (DWSRF)."

Legislative Objectives:

The legislative objective of PHL Sections 1161 and 1162 was to expand and enhance public drinking water supplies within New York State. This is in keeping with the objectives of the Public Health Law to protect public health.

The DWSRF was created in 1996 as a result of State legislation and legislation enacted by the U.S. Congress. The DWSRF provides a significant financial incentive for municipally and privately owned drinking water systems to finance needed drinking water infrastructure improvements. The DWSRF is administered jointly by the Department and the New York State Environmental Facilities Corporation (EFC). The Department's primary role is to provide technical review of proposed projects and to develop the "Readiness List" for the Intended Use Plan (IUP). The EFC administers the financial aspects of the DWSRF.

Projects eligible for DWSRF financing include investments to upgrade or replace infrastructure needed to achieve or maintain compliance with federal or state drinking water standards, prevent contamination, provide the public with safe affordable drinking water, etc. The American Recovery and Reinvestment Act of 2009 (ARRA) will provide additional funding to New York State via the DWSRF to finance drinking water infrastructure improvements.

ARRA was signed into law by President Obama on February 17, 2009. ARRA will provide over 86.8 million dollars from the federal government (via the Environmental Protection Agency (EPA)) to New York State for distribution to public drinking water improvement projects. ARRA also requires that fifty percent of the 86.8 million dollars be distributed as annual federal capitalization funds (e.g., grants) and that twenty percent be distributed for "green infrastructure" [see paragraph 53.5(c)(5) of the above Express Terms] projects.

Updating Part 53 to accommodate the receipt of additional funds from ARRA will significantly enhance the ability of New York State and the Department to protect public health and helps to assure that drinking water provided to the public meets Department drinking water standards.

Needs and Benefits:

Updating Part 53 to include ARRA funding is necessary for the Department to discharge its duties related to the fund and will significantly enhance and accelerate funding of projects on the Readiness List. (The Readiness List is developed by the Department. Staff experts review proposed projects based on eligibility criteria, scoring and ranking.)

COSTS:

Costs to Regulated Parties:

No new additional costs will be imposed by these amendments.

Costs to State Government:

There will be no additional costs to the Department. Existing staff and department resources will be used to implement the project (e.g., reviewing projects, administrative support) which would have been used eventually in any event for selected Readiness List projects. Receipt of ARRA funds accelerates the funding of projects that would have had to wait their turn for several months or years if such funding had not been available over the next two years.

Costs to Local Government:

The amendment does not mandate new costs. Participation in the DWSRF by local government is voluntary. Local governments choosing to participate in the ARRA enhanced DWSRF subsidized loan program would be required to comply with existing DWSRF loan repayment terms (interest rate proposed to be two-thirds of market rate). The Department determines if a proposed local government project is eligible to participate in the ARRA program based on project data submitted under the present DWSRF program. Consequently there are no new additional costs to local government. The Department, and not a local government, evaluates whether a proposed project meets ARRA eligibility criteria. These criteria include that the project is "shovel ready" (i.e., projects to be funded must be under construction or contract according to the schedule in the Intended Use Plan and priority given to projects ready to start construction), reachable on the Readiness List and, in some circumstances, meet "green" standards.

Local Government Mandates:

Participation in the DWSRF by local government is voluntary. Local governments choosing to participate in the ARRA enhanced DWSRF program would be required to comply with existing DWSRF loan repayment terms. No new additional administrative requirements are mandated for local government. The proposed revisions to Part 53 do not impose new responsibilities on any county, city, town, village, school district, fire district or special district. Local governments choosing to participate will need to comply with additional federally mandated weekly EPA/ARRA reporting requirements, including construction progress reports, financial disbursements and contract statements.

Paperwork:

There are no new "paperwork" requirements imposed by these amendments. Participation in the DWSRF by local government is voluntary. Local governments choosing to participate in the ARRA enhanced DWSRF program would be required to comply with existing DWSRF reporting and recordkeeping requirements, such as regular construction inspection reports, submittal of payment records, change orders, etc. Participating local governments will also be required to comply with additional federally mandated weekly EPA/ARRA reporting requirements, including construction progress reports, financial disbursements and contract statements and also show that their project is shovel ready and, if applicable, "green." It is anticipated that the EPA and the Department will be providing guidance to local governments on the frequency and extent of this reporting requirement.

Duplication:

This regulation does not duplicate any existing federal, state or local regulation.

Alternatives:

One alternative to the proposed revisions is to take no action. In that case, however, the State would not be eligible for ARRA funds under the requirements of the ARRA law and the funds targeted for New York State would be distributed to other participating states.

Federal Standards:

Existing federal standards for implementation of the State's DWSRF program must be complied with by the Department. These standards include a capitalization grant agreement, Intended Use Plan, payment schedule, State environmental review process, etc. The capitalization grant agreement must define the types of performance measures, reporting requirements (annual), and oversight responsibilities. Local governments participating in the ARRA enhanced funding program will be required, according to March 2, 2009 guidance from the EPA, to comply with additional weekly reporting requirements, including more frequent construction progress reports, financial disbursements and contract statements. It is anticipated that the EPA and the Department will be providing guidance to local governments on the frequency and extent of this reporting requirement.

Compliance Schedule:

The emergency regulation will be effective upon filing with the Department of State. Local projects that are funded need to comply with federal standards by submitting federally mandated weekly reports as mentioned above.

Regulatory Flexibility Analysis

Effect of Rule:

ARRA will provide over 86.8 million dollars from the federal government to New York State for distribution to public drinking water improvement projects. At the present time it is estimated that 16 to 25 projects will be funded with the recipients being villages, towns and communities.

Compliance Requirements:

There are no new compliance requirements. Participation in the Drinking Water State Revolving Fund (DWSRF) by local government is voluntary. Local governments choosing to participate in the American Recovery and Reinvestment Act (ARRA) enhanced DWSRF program would be required to comply with existing DWSRF loan repayment terms and requirements. Participating local governments will also be required to comply with additional federally mandated weekly EPA/ARRA reporting requirements, including construction progress reports, financial disbursements and contract statements.

Professional Services:

No new professional services will be required by this rule. Existing needs, under the present DWSRF program for professional involvement, such as cost accounting and construction oversight, will remain unchanged.

Costs:

Costs to Regulated Parties:

No new additional costs will be imposed by these amendments.

Costs to Local Government:

The amendment does not mandate new costs. Participation in the DWSRF by local government is voluntary. Local governments choosing to participate in the ARRA enhanced DWSRF subsidized loan program would be required to comply with existing DWSRF loan repayment terms (interest rate proposed to be two-thirds of market rate). The Department determines if a proposed local government project is eligible to participate in the ARRA program based on project data submitted under the present DWSRF program. Consequently there are no new additional costs to local government. The Department, and not a local government, evaluates whether a proposed project meets ARRA eligibility criteria. These criteria include that the project is "shovel ready" (i.e., projects to be funded must be under construction or contract according to the schedule in the Intended Use Plan and priority given to projects ready to start construction), reachable on the Readiness List and, in some circumstances, meet "green" standards.

Costs to State Government:

There will be no additional costs to the Department. Existing staff and department resources will be used to implement the project (e.g., reviewing projects, administrative support) which would have been used eventually anyway for selected Readiness List projects. ARRA funding accelerates the funding of projects that would have had to wait their turn for several months or years if the ARRA funding had not been available over the next two years.

Economic and Technological Feasibility:

Since this rule relies on existing Part 53 program requirements local governments and small businesses should be able to comply with existing DWSRF requirements with existing equipment and staff.

Minimizing Adverse Impact:

Federal requirements imposed by this proposal do not differentiate between the size of the municipality. We have adopted design rather than performance standards so that municipalities wishing to participate may do so.

Small Business and Local Government Participation:

There has been significant media coverage and public comments on ARRA. In addition the Department staff has met with local and county officials (e.g. Conference of Environmental Health Directors), presented at conferences (e.g., American Waterworks Association) attended by local government and small businesses, and met with the AWWA Regulatory Committee. There has also been extensive outreach to small businesses and local government by the Governor's Office, the Environmental Facilities Corporation (which co-administers the DWSRF with the Department), and the Environmental Protection Agency (EPA).

Rural Area Flexibility Analysis

Types and Estimated Number of Rural Areas:

Many rural areas have access to public water and there are several hundred rural area water supplies on the New York State Drinking Water State Revolving Fund (DWSRF) Readiness List that would be eligible under the American Recovery and Reinvestment Act (ARRA) enhanced DWSRF program. At the present time it is estimated that 16 to 25 projects will be funded in villages, towns, communities and hamlets that come under the definition of a rural area.

Reporting and Recordkeeping:

The proposed amendments do not mandate new reporting and recordkeeping requirements. However, if a local government wishes to participate in the "enhanced" funding offered by these amendments, they will be required to comply with additional federally mandated weekly EPA/ARRA reporting requirements, including construction progress reports, financial disbursements and contract statements. It is anticipated that the United States Environmental Protection Agency and the Department will be providing guidance to local governments on the frequency and extent of this reporting requirement.

Other Compliance Requirements:

There are no additional compliance requirements other than those described in the Reporting and Recordkeeping section above.

Professional Services:

No new professional services will be required by this rule. Existing needs, under the present DWSRF program for professional involvement, such as cost accounting and construction oversight, will remain unchanged and should be able to be handled by existing staff located at the local level.

Costs:

Projected Costs of Compliance:

None.

Costs to Regulated Parties:

No new additional costs will be imposed by these amendments.

Costs to Local Government:

The amendment does not mandate new costs. Participation in the DWSRF by local government is voluntary. Local governments choosing to participate in the ARRA enhanced DWSRF subsidized loan program would be required to comply with existing DWSRF loan repayment terms (interest rate proposed to be two-thirds of market rate). The Department determines if a proposed local government project is eligible to participate in the ARRA program based on project data submitted under the present DWSRF program. Consequently there are no new additional costs to local government. The Department, and not a local government, evaluates whether a proposed project meets ARRA eligibility criteria. These criteria include that the project is "shovel ready" (i.e., projects to be funded must be under construction or contract according to the schedule in the Intended Use Plan and priority given to projects ready to start construction), reachable on the Readiness List and, in some circumstances, meet "green" standards.

Costs to State Government:

There will be no additional costs to the Department. Existing staff and department resources will be used to implement the project (e.g., reviewing projects, administrative support) which would have been used eventually anyway for selected Readiness List projects. ARRA funding accelerates the funding of projects that would have had to wait their turn for several months or years if the ARRA funding had not been available over the next two years.

Minimizing Adverse Impact:

Federal requirements imposed by this proposal do not differentiate between the size of the municipality. We have adopted design rather than performance standards so that municipalities wishing to participate may do so.

Rural Area Participation:

There has been significant media coverage and public comments on ARRA. In addition the Department staff has met with local and county officials (e.g. Conference of Environmental Health Directors), presented at conferences (e.g., American Waterworks Association) attended by local government and small businesses, and met with the AWWA Regulatory Committee. There has also been extensive outreach to small businesses and local government by the Governor's Office, Environmental Facilities Corporation (which co-administers the DWSRF with the Department), and the Environmental Protection Agency (EPA).

Job Impact Statement

No Job Impact Statement is required pursuant to Section 201-a(2)(a) of the State Administrative Procedure Act. It is apparent, from the nature of the proposed amendment, that it will not have a substantial adverse impact on jobs and employment opportunities. The significant additional funding for construction projects will in fact substantially increase employment opportunities, which is the prime objective of ARRA. It is believed that the infusion of several million dollars into the New York State Drinking Water State Revolving Fund (DWSRF) will preserve and create a significant number of jobs, primarily via funding for construction projects of public water supply improvement projects and the commensurate positive effect on preserving and creation of construction sector jobs. Small businesses comprise much of the water supply construction industry in New York State. These businesses include consultant/engineering firms, construction contractors, material and equipment suppliers, analytical laboratories, archaeology firms, etc. Until the number of projects to be funded has been determined it is not possible to precisely estimate the number of small businesses impacted or jobs created; however, at least a few hundred businesses will need to execute contracts to perform construction and affiliated activities necessary to assure completion of the projects. This will, in turn, provide an economic stimulus to localities, including creation and preservation of jobs, and additional tax revenues for local government.