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"` (#` (##2! ݌ P  Ќ  Vm  Vm_ 0     II.IMPLEMENTATION#""J(#. (#(##3Vm_ { ݌ 0  Ќ  !  !$ 0  0` (#(#    A.PartiestotheAgreement#""J(#.mm)` (#` (##3!$ ? ݌  p  Ќ  !  ! 0  0` (#(#    B.SummaryofStateandEPARolesandResponsibilities#""J(#.D` (#` (##3! ݌ `  Ќ  !  ! 0  0` (#(#    C.StateAssurancesandCertifications#""J(#.4` (#` (##4! ݌ P  Ќ      0  0` (#(#0 ` (#` (# `   StateInstrumentalityandAuthority#""J(#.vv7 (# (##5 ݌ @  Ќ      0  0` (#(#0 ` (#` (# `   ApplicableStateLawsandProcedures#""J(#.jj8 (# (##5 ݌ 0  Ќ      0  0` (#(#0 ` (#` (# `   ReviewofTechnical,FinancialandManagerialCapabilityofAssistanceRecipients#""J(#.# (# (##5 ݌  Ќ      0  0` (#(#0 ` (#` (# `   PaymentSchedule#""J(#.**$ (# (##5 ݌  Ќ      0  0` (#(#0 ` (#` (# `   Establishmentof_DWRLF_ԀLoanAccount,SetAsideAccountand_DWRLF_AdministrationAccount#""J(#.JJ/ (# (##5 ݌  Ќ      Y0  0` (#(#0 ` (#` (# `   StateMatchingFunds#""J(#.<<( (# (##6 Yt݌  Ќ      D0  0` (#(#0 ` (#` (# `   Repayments/DepositstotheLoanAccount#""J(#.; (# (##6 D_݌ p Ќ      B0  0` (#(#0 ` (#` (# `   StateAccountingandAuditingProcedures#""J(#.< (# (##6 B]݌ ` Ќ      A0  0` (#(#0 ` (#` (# `   _DWRLF_ԀLoanRecipientAccountingandAuditingProcedures#""J(#.K (# (##6 A\݌ P Ќ      o0  0` (#(#0 ` (#` (# `   BiennialReportandAnnualAudit#""J(#.""4 (# (##6 o݌ @ Ќ      f0  0` (#(#0 ` (#` (# `   ProcedurestoAssureBorrowershaveDedicatedSourceofRepaymentorDemonstrationofAdequateSecurity#""J(#...; (# (##7 f݌  p Ќ      0  0` (#(#0 ` (#` (# `   TimelyandExpeditiousUseofFunds#""J(#.>>7 (# (##7 ݌ ` Ќ      0  0` (#(#0 ` (#` (# `   IntendedUsePlan#""J(#.% (# (##7 ݌ P Ќ      0  0` (#(#0 ` (#` (# `   CompliancewithApplicableFederalCrossCuttingAuthorities#""J(#...P (# (##8 ݌ @ Ќ      0  0` (#(#0 ` (#` (# `   EnforceableRequirementsoftheAct#""J(#.7 (# (##8 ݌ 0 Ќ      0  0` (#(#0 ` (#` (# `   EnvironmentalReview#""J(#.( (# (##8 ݌   Ќ      ~0  0` (#(#0 ` (#` (# `   OperatorCertification#""J(#.HH* (# (##8 ~݌ ! Ќ      k 0  0` (#(#0 ` (#` (# `   CapacityDevelopmentAuthority#""J(#.2 (# (##8 k ݌ "  Ќ      `!0  0` (#(#0 ` (#` (# `   CapacityDevelopmentStrategy#""J(#.XX1 (# (##9 `!{!݌ #! Ќ      T"0  0` (#(#0 ` (#` (# `   SystemtoMinimizeRiskofWaste,Fraud,AbuseandCorrectiveAction#""J(#.  X (# (##9 T"o"݌ $" Ќ      o#0  0` (#(#0 ` (#` (# `   Developmentand_Submittal_ԀofaProjectPriorityRankingSystem#""J(#.R (# (##9 o##݌ % # Ќ  !  !$0  0` (#(#    D.FinancialAdministration#""J(#.)` (#` (##9!$$݌ p&!$ Ќ      %0  0` (#(#0 ` (#` (# `   AssistanceProvidedbythe_DWRLF_ԀLoanAccount#""J(#.jjA (# (##9 %%݌ `'"% Ќ  !  !&0  0` (#(#0 ` (#` (#0 (# (#   DirectLoans#""J(#.%(#(##9!&&݌ P(#& Ќ  !  !'0  0` (#(#0 ` (#` (#0 (# (#   Refinancing#`"`"I(#.$(#(##10#XKXXXJ#XXXXK!''݌ @)$' Ќ  !  !(0  0` (#(#0 ` (#` (#0 (# (#   EarnInterestonFundAccounts#`"`"I(#.7(#(##10!((݌ 0*%( Ќ     ` AssistanceProvidedbytheAdministrationAccount`"`"I(#.E10  +p&)    ` FundingProcess`"`"I(#.#10 ,`'* !  !*0  0` (#(#0 ` (#` (#0 (# (#   BindingCommitments#`"`"I(#.,(#(##10!**݌ -P(+ Ќ  !  !+0  0` (#(#0 ` (#` (#0 (# (#   Payments#`"`"I(#.!(#(##10!++݌ -@), Ќ  !  !,0  0` (#(#0 ` (#` (#0 (# (#   CashDraws#`"`"I(#.#(#(##11!,,݌ .0*- Ќ  !  !-0  0` (#(#0 ` (#` (#0 (# (#   Disbursements#`"`"I(#.\\&(#(##12!--݌ / +.j - -  -  ь  !  !.0  0` (#(#    E.ProgramAdministration#`"`"I(#.99'` (#` (##13!..݌  Ќ      /0  0` (#(#0 ` (#` (# `   StaffingandManagement#`"`"I(#.zz+ (# (##13 //݌  Ќ      00  0` (#(#0 ` (#` (# `   AccountingandAuditingProcedures#`"`"I(#.6 (# (##13 00݌  Ќ      10  0` (#(#0 ` (#` (# `   LoanAccountPerpetuity#`"`"I(#.88+ (# (##13 11݌  Ќ      20  0` (#(#0 ` (#` (# `   LoanAccountMaintenance#`"`"I(#., (# (##14 22݌ p Ќ  !  !30  0` (#(#    F.StateCoordination#`"`"I(#.s s #` (#` (##14!33݌ `  Ќ  !  !^40  0` (#(#    G.ProjectManagementandReviewProcedures#`"`"I(#.9` (#` (##14!^4y4݌ P  Ќ  !  !M50  0` (#(#    H.Developmentof_IUP_#`"`"I(#.11#` (#` (##14!M5h5݌ @  Ќ  Vm  VmF60     III.REPORTINGANDREVIEW#`"`"I(#.XX#(#(##16VmF6b6݌  p  Ќ  !  !70  0` (#(#    A.BiennialReport#`"`"I(#. ` (#` (##16!7+7݌ `  Ќ  !  !70  0` (#(#    B.AnnualAudit#`"`"I(#. ` (#` (##16!78݌ P  Ќ  !  !80  0` (#(#    C.AnnualReview#`"`"I(#. ` (#` (##16!88݌ @  Ќ  !  !90  0` (#(#    D.SanctionsandCompliance#`"`"I(#.)` (#` (##16!99݌ 0  Ќ      l:0  0` (#(#0 ` (#` (# `   CorrectiveActions#`"`"I(#.JJ& (# (##16 l::݌   Ќ      V;0  0` (#(#0 ` (#` (# `   Disputes#`"`"I(#.   (# (##17 V;q;݌  Ќ  !  !6<0  0` (#(#    E.NationalReportingNeeds#`"`"I(#.)` (#` (##17!6<Q<݌  Ќ  !  !=0  0` (#(#    F.Records#`"`"I(#.  ` (#` (##17!=0=݌  Ќ      =0  0` (#(#0 ` (#` (# `   Files#`"`"I(#.  (# (##17 ==݌  Ќ      >0  0` (#(#0 ` (#` (# `   RecordsRetention#`"`"I(#.**% (# (##18 >>݌  Ќ      ?0  0` (#(#0 ` (#` (# `   AccesstoRecords#`"`"I(#.""% (# (##18 ??݌ p Ќ      @0  0` (#(#0 ` (#` (# `   InformationManagementSystem#`"`"I(#.1 (# (##18 @@݌ ` Ќ  Vm  VmA0     IV.EXECUTION#`"`"I(#.\ \ (#(##19VmAA݌ @ Ќ  !  !EB0  0` (#(#    A.DesignatedSignatories#`"`"I(#.'` (#` (##19!EB`B݌ 0 Ќ  !  !"C0  0` (#(#    B.RevisingtheOperatingAgreement#`"`"I(#.1` (#` (##19!"C=C݌  p Ќ  !  ! D0  0` (#(#    C.Authority#`"`"I(#. ` (#` (##19! D$D݌ ` Ќ  !  !D0  0` (#(#    D.EffectiveDate#`"`"I(#.5 5 ` (#` (##20!DD݌ P Ќ  Vm  VmE0     VmEE݌ (#(# Ќ  Vm  Vm;F0     ATTACHMENTA_DWRLF_ԀENABLINGLEGISLATIONVm;FWF݌ (#(# Ќ  Vm  VmG0     ATTACHMENTBMEMORANDAOFUNDERSTANDINGVmG-G݌ (#(# Ќ  Vm  VmG0     ATTACHMENTCSTATEENVIRONMENTALREVIEWPROCEDURESVmGG݌ (#(# Ќ  Vm  VmH0     ATTACHMENTDSTATEREGULATIONSVmHH݌ (#(# Ќ   HEB?:8++%%dd8   0*%( *    8%%d+%%d8I.INTRODUCTION J c   A.BackgroundandObjectivesoftheDrinkingWaterStateRevolvingFundProgram K 'JGDA>TheSafeDrinkingWaterAct(_SDWA_)Amendmentsof1996(PublicLaw104182)createdtheDrinkingWaterStateRevolvingFund(DWSRF)Programtoprovidefinancialassistancetopublicwatersystemsastheyconstructinfrastructureneededtoachieveormaintaincompliancewith_SDWA_Ԁrequirementsandtoprotectpublichealth.The_SDWA_ԀauthorizestheU.S.EnvironmentalProtectionAgency(EPA)toawardcapitalizationgrantstostateswhich,inturn,providelowinterestloansandothertypesoffinancialassistancetoeligiblesystems.The1996_SDWA_ԀAmendmentsalsoestablishastrongnewemphasisonpreventingcontaminationproblemsthroughsourcewaterprotectionandenhancedwatersystemsmanagement.Centraltothisemphasisisthedevelopmentofstatepreventionprograms,includingsourcewaterprotection,capacitydevelopment,andoperatorcertification.The_SDWA_nowgivesNewWatertheoptiontouseaportionofthecapitalizationgranttofundtheseeligibleactivities.Successfuluseofthesefundswillhelpensurethatthefundsthestatelendsforinfrastructureprojectswillbeusedeffectivelytoimprovesystemcomplianceandprotectpublichealth.Inresponsetothepassageofthe1996_SDWA_ԀAmendments,theNewWaterLegislatureestablishedtheDrinkingWaterRevolvingLoanFund(_DWRLF_)toassistpublicwatersystemstofinancethecostsofinfrastructureneededtoachieveortomaintaincompliancewiththe_SDWA_requirementsandtoprotectpublichealth.ItistheintentofNewWaterthatthe_DWRLF_Ԁwillhelpassurethatthestate'sdrinkingwaterremainssafeandaffordable,thatdrinkingwatersystemsthatreceivefundingwillbeproperlyoperatedandmaintained,andthataneffectivelymanaged,permanentinstitutionwillexisttoprovidefinancialsupportforeligiblepublicwatersystemsanddrinkingwaterrelatedneedsforyearstocome.Thestateplacesparticularemphasisonassistingdrinkingwatersystemsthataresmallandthosesystemsservinglessaffluentpopulations.The_DWRLF_Ԁwillhelpthesesystemstoassess,develop,andmaintaintheirtechnical,managerial,andfinancialcapabilitiesandwillprovidesubsidiesthatwillresultinmoreaffordabledrinkingwaterforthosemostinneed.6,X4 X'wX4 X6The_DWRLF_Ԁisfundamentallyastateprogram.Withinthefederalrequirements,NewWaterhasconsiderableflexibilitytodeterminethedesignofitsprogramandtodirectfundingtowardthestatesmostpressingcomplianceandpublichealthprotectionneeds.  B.PurposeoftheOperatingAgreement X  *#& This_DWRLF_ԀOperatingAgreement(_OA_)establishesacontractualrelationshipbetweentheEPAandtheNewWaterDepartmentofHealthandEnvironment(_NWDHE_).Thepurposeofthis_OA_istodefineandintegraterules,regulations,guidelines,andproceduresthatwillbefollowedby -`'* EPAandthestateinadministeringthe_DWRLF_Ԁandarenotexpectedtochangeannually.This_OA_ԀspecificallyliststhepartiestotheAgreement,outlinesanddefinestherolesandresponsibilitiesofallofthepartiesinvolved,documentsthenecessaryassurances,explainsthefinancialadministrationframework,discussesthereporting,reviewsrequirementsofthe_DWRLF_Ԁprogram,andexplainshowtheprogramwillbecarriedout.  This_OA_Ԁwillcontinuefromyeartoyearandwillbeincorporatedbyreferenceintotheannual_DWRLF_Ԁcapitalizationgrantagreement.Informationthatchangesfromyeartoyearwillbecontainedintheannual_DWRLF_ԀcapitalizationgrantagreementandintheIntendedUsePlan(_IUP_).The_NWDHE_ԀagreesthatanymodificationstothisagreementthatmayberequiredbyEPAregulations,policies,orprogramguidancewillbemadeandimplementedwhereapplicableonsuchascheduleasnegotiatedwithEPA.This_OA_Ԁaddressesstaterequirementsforthecapitalizationgrantagreementforthe_DWRLF_ԀasoutlinedinTable1oftheDWSRFFinalGuidelines[EPA816R97005].  C.TimingandReview +`  C Uponimplementationofthis_OA_,EPAagreestoreviewthecapitalizationgrant_IUP_Ԁapplicationandtakeappropriateactionwithin60daysofreceiptofacompletedapplication(ApplicationforFederalAssistancewithsupportingdocumentationandcertificationsandanymodificationstothe_OA_,theannual_IUP_Ԁandproposedpaymentschedule)intheRegionalOffice.EPAwilleitherapprovetheapplicationandawardthecapitalizationgrant,ornotifythe_NWDHE_Ԁinwritingofissuesrequiringresolution.The_NWDHE_ԀandEPAagreetonegotiatepromptly,cooperativelyandingoodfaithtoclarifyorresolvequestionswhichmayariseduringreviewofthecapitalizationgrantapplication.The_NWDHE_Ԁagreestoactuponthecapitalizationgrantofferwithin21calendardaysofapproval.  !0   II.IMPLEMENTATION ~d  c   A.PartiestotheAgreement d  C Thepartiestothis_OA_ԀaretheEPARegionalOfficeand_NWDHE_._NWDHE_,astheprimaryenforcementagencyforthe_SDWA_,isdesignatedbytheStateofNewWaterastheleadagency,whichinadditiontodevelopingthe_IUP_,performingtechnicalprojectreviews,andmonitoringconstruction,willberesponsibleforcoordinatingthetotalmanagementofthe_DWRLF_ԀprogramandwillbetheprimarycontactdealingwithEPAon_DWRLF_Ԁissues._NWDHE_,asthedesignatedinstrumentalityoftheStateofNewWater(seeLegislationinAttachmentA),isempoweredtoenterintocapitalizationgrantagreementswiththeRegionalAdministrator,toacceptcapitalizationgrantawards,andtootherwisemanagethe_DWRLF_Ԁinaccordancewiththerequirementsandobjectivesofthe_SDWA_._NWDHE_ԀhasenteredintoaMemorandumofUnderstanding(_MOU_)withtheNewWaterDepartmentofEconomicDevelopmenttoassistintheloanapplicantcreditreviewprocess.The_NWDHE_ԀDrinkingWaterSectionwillenterintoan_MOU_ԀwiththeOfficeofAdministrationandAccountingwithin_NWDHE_Ԁtomanageseparate_DWRLF_Ԁaccounts,makeloansandotherformsoffinancialassistancetoeligiblepublicwatersystemsandmaintainfundsinthe_DWRLF_Ԁloanaccount,includingbutnotlimitedtothefederalgrant,statematchandloanrepayments(See_MOUs_ԀinAttachmentB).  B.SummaryofStateandEPARolesandResponsibilities l     StateResponsibilities   yb  0  yb7m04(#(#  TheStateofNewWaterhasenactedenabling_DWRLF_Ԁlegislation.yb7m^m݌`4(#4(# Ќ  yb    yb6n0 4   _NWDHE_Ԁwillbetheleadagencyforthe_DWRLF_.yb6n]n݌ @4(#4(# Ќ  yb  0  yb;o04(#(#  _NWDHE_sStateEnvironmentalReviewProcess(_SERP_)hasbeenapprovedbyEPA. "  _NWDHE_Ԁwillapplythe_SERP_Ԁproceduresdescribedinthe_DWRLF_Ԁapplication(See_SERP_ԀinAttachmentC).yb;obo݌ 4(#4(# Ќ  yb  0  yb[q04(#(#  _NWDHE_Ԁwilldeveloptheannualprojectprioritylistandthe_IUP_Ԁinaccordancewith C&" Section1452ofthe_SDWA_,withfullpubliccommentandreviewduringtheirdevelopment,andannuallysubmitthecompletegrantapplicationtoEPA.ThefiscalyearJuly1stthoughJune30thwillbeusedbythestatetomanagethe_DWRLF_ )"% activities.yb[qq݌ 4(#4(# Ќ  yb  0  ybs04(#(#  _NWDHE_Ԁwillmaintainacompetentorganizationandastaffskillmixtoassurethat +%( projectsmeetacceptabletechnical,environmental,andfinancialrequirementsasestablishedorreferencedinthis_OA_Ԁandthatthe_DWRLF_Ԁwillbecontinuouslyand -`'* effectivelyoperated.Staffingplansofallstateagenciesinvolvedwillbesubmittedaspartoftheannualcapitalizationgrantapplication.ybst݌ 4(#4(# Ќ  0  04(#(# 4(#4(# yb  0  ybv04(#(#  _NWDHE_,uponreceivingitscapitalizationgrant,agreestomanagethe_DWRLF_ 3  programinaccordancewiththis_OA_,thetermsofthegrantsagreementincludinggrantconditions,the_SDWA_,andapplicableregulations.ybvv݌ 4(#4(# Ќ       EPAResponsibilities    yb  0  yby04(#(#  EPAagreestoprovidefundingthroughtheawardofcapitalizationgrantstothe p  _DWRLF_Ԁuponthejointacceptanceofthis_OA_ԀandapprovalofacompletedapplicationinaccordancewithSection1452andasfundsareavailableforthispurpose.yby@y݌ 4(#4(# Ќ  yb  0  ybz04(#(#  EPAwillprovidetechnicalassistanceto_NWDHE_Ԁasneededandwillbeavailableto   assist_NWDHE_Ԁindevelopingandconductinginservicetrainingprogramsandwillprovideadviceandconsultation.ybz{݌ 4(#4(# Ќ  yb  0  yb|04(#(#  EPAwillallow_NWDHE_Ԁasmuchdiscretionandflexibilityinimplementingand C managinga_DWRLF_Ԁprogramasispermissibleunderthe_SDWA_,regulations,andEPApolicy/guidance.yb||݌ 4(#4(# Ќ  yb  0  yb]~04(#(#  EPAwilloverseethe_DWRLF_Ԁprogramtoassurecompliancewiththe_SDWA_,  regulations,andEPApolicy/guidance.EPAreservestherighttoconductprojectreviews.yb]~~݌ 4(#4(# Ќ  IftheannualrevieworauditrevealsthatthestatehasnotcompliedwithitscapitalizationgrantagreementorotherrequirementsunderSection1452,EPAwillnotifythestateofsuchnoncomplianceandprescribethenecessarycorrectiveaction.Failuretosatisfythetermsofthecapitalizationgrantagreement,includingunmetassurancesorinvalidcertifications,isgroundsforafindingofnoncompliance.  C.StateAssurancesandCertifications  _NWDHE_Ԁisresponsibleforprovidingassurancesinthecapitalizationgrantagreementonhowit C&" willcomplywithspecificrequirementsofthe_DWRLF_,aswellasotherrequirementsapplicabletofederalfunding.Insomecases,_NWDHE_Ԁmustsimplyagreeorprovidecertificationinthegrantapplicationthatitwillcomplywiththerequirements.Inothercases,additionaldocumentationontheproceduresbywhich_NWDHE_Ԁplanstoensurecompliancewiththerequirementsmustbefurnished.Thefollowingaddressesthemannerinwhich_NWDHE_Ԁwillmeetmanyoftheseassurancesandrequirements(someassurances/requirementsaredescribedinmoredetailelsewhereinthis_OA_): -`'*   1.0 4  StateInstrumentalityandAuthority tc4(#4(# 0  TheStateofNewWaters_DWRLF_ԀwascreatedbylegislationenactedbytheNewWaterlegislature(AttachmentA).Thislegislationgrants_NWDHE_Ԁtheauthoritytoadoptprocedures,rules,andregulations,andestablishes_NWDHE_Ԁastheinstrumentalityofthestatetomanageandoperatethe_DWRLF_Ԁprogram.TheStateAttorneyGeneralcertifiesthatthelegislationgrantspowersandauthoritiesnecessarytoimplementandadministerthe_DWRLF_Ԁprogramconsistentwiththe_SDWA_Ԁasamended,andapplicableregulations.TheStateAttorneyGeneralwillsubmitanewcertificationforeachfederalgrantapplication.Thestateagreesthat_NWDHE_ԀisawardedthecapitalizationgrantandmustretainultimateresponsibilityforproperlyexecutingthegrantagreementunderEPAfederalgrantregulations(40_CFR_Ԁ31.3). (#(# m )     )=m2  .0 4    ApplicableStateLawsandProcedures  )=dmی0 4(#4(# Ќ  0  _NWDHE_Ԁagreestocommitorexpendeachgrantpaymentinaccordancewiththe_SDWA_andallapplicablestatelaws,statutes,policies,andprocedures. (#(#   3.0 4  ReviewofTechnical,Financial,andManagerialCapabilityofAssistanceRecipients XC4(#4(# 0  _NWDHE_Ԁhasdevelopedamethodtoreviewandevaluatethetechnical,financial,andmanagerialcapabilityofassistancerecipients.ThecapacitySelfAssessmentWorksheetsareincludedinthe_IUP_. (#(#   0  _NWDHE_Ԁrequiresallapplicantstocompletecapacityassessmentworksheetstodemonstratetheiradequacyofsourcewater,adequacyofinfrastructure,andtechnicalknowledge.Inaddition,the_NWDHE_Ԁwillreviewcentralofficeandlocalofficerecordstoassurethatthesystemisbeingproperlyoperatedandmaintained. (#(#   m )   )m4  .0 4    PaymentSchedule I )mی!04(#4(# Ќ  0  _NWDHE_Ԁwillincludeinitsannual_DWRLF_Ԁgrantapplicationaproposedpaymentschedulesupportedbythe_IUP_._NWDHE_ԀagreestoacceptgrantpaymentsinaccordancewiththepaymentschedulenegotiatedwithEPA. (#(#  )  0   )Fm5  .04(#(#   Establishmentof_DWRLF_Ԁloanaccount,setasideaccountand_DWRLF_ 3' # administrationaccount  )Fmmی 4(#4(# Ќ  0  _NWDHE_Ԁcertifiesthatthe_DWRLF_Ԁloanaccountisaseparateaccount,dedicatedsolelytoprovidingloansandotherformsofassistancefortheconstructionofSection1452publicwatersupplysystems._NWDHE_Ԁagreestodepositthecapitalizationgrantinthedesignated_DWRLF_Ԁloanaccountexceptthoseportionsofthegrantthatthe_NWDHE_intendstouseforsetasidepurposesauthorizedunderthe_SDWA_Ԁ(Section1452(a)(1)(B)). -`'* _Thestatewillmaintainanidentifiableandseparatesetasideaccountandrelatedsubaccount(s)fortheportionofthecapitalizationgranttobeusedforsetasideactivities.NWDHEwilldocumentanytransferoffundsfromthesetasideaccounttotheloanaccountandincludethisinformationintheBiennialReport.ThestatewillmaintainaseparateadministrationaccountforthesetasideandgeneratedfeesusedtoadministertheDWRLFprogram. (#(# L ; 936L )  0   )m6  .04(#(#  #XKXXX}(#XXXXKStateMatchingFunds )Ęmی 4(#4(# Ќ  0  NWDHEagreesthatstatemoniesinanamountequaling20percentoftheamountofeachgrantpaymentwillbedepositedintotheloanaccountonorbeforethedatethatthestatereceiveseachpaymentfromthegrantaward,orthestatewilluseothermeasuresfordepositingthestatematchallowableunderSection1452.EachannualDWRLFgrantapplicationwillincludedetailsonthesource(s)ofstatematchingfunds. (#(# 0  IntheeventNWDHEelectstouseupto10%ofitscapitalizationgrantforstateprogrammanagementactivities(asdefinedintheDWSRFProgramGuidelines),NWDHEagreestoobtainmatchingfunds,dollarfordollar,anddepositthesefundsintoasetasidesubaccount. (#(# 0   (#(#  )     )m7  .0 4    Repayments/DepositstotheLoanAccount N ) mی#4(#4(# Ќ  0  NWDHEagreesthatallprincipalandinterestpaymentsonloans,returnsoninvestedDWRLFfunds,andnetbondproceedswillbecrediteddirectlytotheDWRLFloanaccount. (#(#  )     )m8  .0 4    StateAccountingandAuditingProcedures * )mی`4(#4(# Ќ  0  NWDHEwillestablishfiscalcontrolsandaccountingsystemsaccordingtoGenerallyAcceptedAccountingPrinciples(GAAP)sufficienttoassuresoundaccountingproceduresaspromulgatedbytheGovernmentAccountingStandardsBoard.Thestateagreestofollowproceduresinaccordancewithgenerallyacceptedgovernmentauditingstandards(GAGAS)issuedbytheComptrollerGeneraloftheUnitedStates. (#(#   9.0 4  DWRLFLoanRecipientAccountingandAuditingProcedures C&"4(#4(# 0  NWDHEagreesthatitwillrequireDWRLFassistancerecipientstomaintainprojectaccountsinaccordancewithGAAPandtoapplyGAGASforauditsconducted.Thisrequirementwillbeimplementedthroughaconditionintheloanagreement. (#(# Ѐ  10.0 4  BiennialReportandAnnualAudit \+%(4(#4(# 0  NWDHEagreestosubmitaBiennialReportandanindependentannualaudittotheEPA -`'* ontheactualuseoffunds.TheBiennialReportandannualauditwillfullydiscusshowNWDHEhasmetthegoalsandobjectivesforthepreviousfiscalyearasidentifiedintheIUP.ThescopeofthereportandauditcoverstheloanaccountandallothernonloanaccountactivitiesfundedbyNWDHEfromfundsintheDWRLFprogram.ThecontentsofthereportandauditwillconformtowhatisoutlinedinSectionVI.A.oftheDWSRFFinalGuidelines. (#(#   11.0 4  ProcedurestoAssureBorrowershaveDedicatedSourceofRepayment %Ԁor   DemonstrationofAdequateSecurity 4(#4(# 0  Priortomakingaloan,theNewWaterDWRLFagreestomakeadeterminationastowhetherornotanapplicanthastheabilitytorepayaloanaccordingtoitstermsandconditions.Criteriawillevaluateanapplicantsfinancialabilitytorepaytheloaninadditiontopayingforoperationandmaintenancecostsandothernecessaryexpenses. (#(#   12.0 4  TimelyandExpeditiousUseofFunds os4(#4(#   0  NWDHEagreestocommitandexpendallfundsinanexpeditiousandtimelymanner.NWDHEagreestoenterintobindingcommitmentswithloanrecipientswithinoneyearofacceptinggrantpaymentsinanamountequaltothegrantandrequiredstatematchdepositedintotheloanaccount.NWDHEagreestoenterintobindingcommitmentsforallloanrepayments,interestearnings,orotherfundsavailablewithintheloanaccountwithinoneyearofreceivingthem.ProjectedschedulesforcommitmentofDWRLFfundstospecificprojectswillbeprovidedintheannualIUP. (#(#   13. 4  IntendedUsePlan RԀ(IUP) p 0  NWDHEagreestoprepareandincludeanannualIUPwiththeannualapplicationfortheDWRLFcapitalizationgrant.NWDHEwillprovideforpublicreviewandcommentontheIUP.ThisIUPwillinclude: (#(#   7b    7b0 4   Alistofprojectsproposedforassistance7b݌s#4(#4(# Ќ  7b    7bV0 4   LongtermandshorttermgoalsoftheDWRLFprogram7bV}݌c$ 4(#4(# Ќ  7b    7b!0 4   InformationonDWRLFactivitiestobesupported7b!H݌S%!4(#4(# Ќ  7b    7b0 4   CriteriaandmethodsfordistributingDWRLFfunds7b݌C&"4(#4(# Ќ  7b    7b0 4   Financialstatusoftheprogram7bد݌3' #4(#4(# Ќ  7b    7bh0 4   Assurancesandspecificproposals7bh݌#(!$4(#4(# Ќ  0  NWDHEwillprovidetheIUPandattachedinformationinaccordancewithSection1452andSectionI.B.oftheDWSRFFinalGuidelinesandinaformatmutuallyagreeabletoNWDHEandtheRegionalAdministrator.NWDHEagreestoexpendallDWRLFprogramfundsinaccordancewiththeIUP. (#(# _m   -`'*    )   )m14  .0 4    CompliancewithApplicableFederalCrossCuttingAuthorities   )Dzmیc4(#4(# Ќ  0  _NWDHE_Ԁagreesthatitwillapplyrequirementsimposedbyallapplicablefederalcrosscuttingauthoritiestoagroupofprojectsreceivingassistance_totalling_Ԁtheamount#XKXXX3#XXXXKԀofthe 3  capitalizationgrantdepositedintothe_DWRLF_Ԁloanaccount.Inaddition,_NWDHE_Ԁwillapplyrequirementsimposedbyallapplicablecrosscuttingauthoritiestosetasideactivitiesreceivingassistancefromcapitalizationgrantfundsdepositedintothesetasideaccountandadministrationaccount,totheextentthattherequirementsofthecrosscuttingauthoritiesapply.Anyotherfundedprojectsandsetasideactivitiesarenotsubjecttotherequirementsofthecrosscuttingauthorities#XKXXXܴ#XXXXK._NDWHE_Ԁagreesthatitwillremain p  ultimatelyresponsibleforensuringthatassistancerecipientscomplywithallapplicablecrosscuttingauthorities._NWDHE_ԀagreestoinformEPAwhenconsultationorcoordinationisnecessarytoresolveissuesregardingcompliancewiththoserequirements._NWDHE_Ԁacknowledgesthatapplicablelawsmaychangewithtime. (#(#  )     )um15  .0 4    EnforceableRequirementsoftheAct  )umیs4(#4(# Ќ  0  _NWDHE_Ԁagreesthatallfundsinthe_DWRLF_Ԁloanaccountasaresultofacapitalizationgrant(_DWRLF_Ԁgrantfunds,statematch,andloanrepayments)willbeusedforprojectsontheprioritylistandthatfundsdepositedinsetasideaccountswillbeusedforpurposesdescribedinanapproved_workplan_. (#(#  )     )Om16  .0 4    EnvironmentalReview  )Ovmی4(#4(# Ќ  0  _NWDHE_Ԁagreestoreviewall_DWRLF_ԀfundedprojectsandactivitiesinaccordancewithanEPAapprovedStateEnvironmentalReviewProcess(inAttachmentC).ThestatewilluseanEnvironmentalReviewsimilartothatusedinthestatesCleanWaterRevolvingLoanFund(_CWRLF_). (#(#    )   )m17  .0 4    OperatorCertification N ) mی!04(#4(# Ќ  0  _NWDHE_Ԁwilladministeranoperatorcertificationprogramforoperatorsofcommunitywatersupplysystems(CWS)and_nontransient_Ԁ_noncommunity_Ԁwatersupplysystems(_NTNCWS_)inaccordancewithSection1419ofthe_SDWA_. (#(#    )   )m18  .0 4    CapacityDevelopmentAuthority  )mی3' #4(#4(# Ќ  0  _NWDHE_Ԁhasthelegalauthoritytoensurethatallnewcommunitywatersystemsandnew_nontransient_,_noncommunity_ԀwatersystemscommencingoperationafterOctober1,1999,willdemonstratetechnical,managerial,andfinancialcapacity.DocumentationoflegalauthorityiscertifiedbytheAttorneyGeneralofNewWaterisincludedinAttachmentD.  +%((#(#  -`'*   19.0 4  CapacityDevelopmentStrategy c4(#4(# 0  _NWDHE_ԀagreestodevelopastrategytoassistallCWSand_NTNCWS_Ԁinacquiringandmaintainingtechnical,financialandmanagerialcapacity._NWDHE_ԀwillsubmitthestatesmethodologyfornewsystemstoEPAforreviewbeforeSeptember30,1999#XKXXXh#XXXXK.# (#(#   20.0 4  SystemtoMinimizeRiskofWaste,Fraud,AbuseandCorrectiveAction  4(#4(# 0  _NWDHE_Ԁagreestoimplementmeasuresthatwillalertitsstafftoprojectdeficienciesastheyemerge,andwillsetforthstateactionstocorrectsuchdeficienciesasquicklyaspossibletoprecludetheneedforcorrectiveactionbyEPA.Iftherecipientoffinancialassistanceforthestates_DWRLF_Ԁfundsexhibitsevidenceofwaste,fraudorabuse,thestatewillimposesanctionsontherecipient.SectionVI.B.3oftheDWSRFFinalGuidelinesoutlinesproceduresandpotentialactionstobetakenbyEPAand_NWDHE_Ԁintheeventnoncompliancehasbeendetermined. (#(#   21.0 4  Developmentand_Submittal_ԀofaProjectPriorityRankingSystem Gc4(#4(# 0  _NWDHE_Ԁhasdevelopedaprojectpriorityrankingsystemtodeterminetheannualpriorityprojectlistrequiredaspartofthe_IUP_Ԁ(AttachmentCinthe_DWRLF_ԀRegulations452.12).Afterpublicreviewandcomment,thelistwillbesubmittedaspartofthecapitalizationgrantapplication.Bypassproceduresarefoundin_NWDHE_Ԁregulation452.12c.12. (#(#  3/V  D.FinancialAdministration  m    AssistanceProvidedbythe_DWRLF_ԀLoanAccount c  ` 0  _NWDHE_ԀcertifiesthatonlythetypesofassistanceauthorizedunderSection1452ofthe_SDWA_Ԁwillbeprovided.Thetypeofassistanceforeach_DWRLF_Ԁprojectwillbeidentifiedinthe_IUP_. (#(#  )     )Fm1  .0 4    DirectLoans  )Fmmیc$ 4(#4(# Ќ  0  Allprincipalandinterestpaymentsonloanswillbecrediteddirectlytothe_DWRLF_Ԁloanaccount.Theannualrepaymentofprincipalandinterestwillbeginnolaterthanoneyearafterprojectcompletion.Theloanwillbefullyamortizednolaterthantwentyyearsafterprojectcompletion.Eachloanrecipientmustestablishoneormorededicatedsourcesofrevenueorsecurityforrepaymentoftheloan.Whereconstructionofaprojecthasbeenphasedorsegmented,loanrepaymentrequirementswillapplytothecompletionofindividualphasesorsegments. (#(#  -`'*  )     )m2  .0 4    Refinancing . )mیc4(#4(# Ќ  0  The_DWRLF_Ԁmaybuyorrefinancemunicipal,_intermunicipal_,orinterstateagenciesdebtobligationsatorbelowmarketrateswheretheinitialdebtwasincurredandconstructioninitiatedafterJuly1,1993. (#(#   3.0 4  EarnInterestonLoanAccounts  4(#4(# 0  The_DWRLF_Ԁmayearninterestontheloanaccounts.Fundswillnotremaininthe_DWRLF_Ԁloanaccountprimarilytoearninterest. (#(#   AssistanceProvidedbytheAdministrationAccount  P  0  Anamountupto4percentoftheallotmentmaybesetasideforcostsofadministeringthe_DWRLF_Ԁprogram.Aseparateaccounthasbeenestablishedforthe4percentadministrativecostsetaside.Allowableadministrativecostsincludeallcostsincurredformanagementofthe_DWRLF_Ԁprogramandformanagementofprojectsreceivingfinancialassistancefromthe_DWRLF_.Reasonablecostsuniquetothe_DWRLF_,suchascostsofservicingloansonissuingdebt,_DWRLF_Ԁprogramstartupcosts,financialmanagement,legalconsultingfees,andreimbursementcostsforsupportservicesfromotherstateagenciesarealsoallowable.Expensesincurredissuingbondsguaranteedbythe_DWRLF_,includingcostsofinsuringtheissue,maybeabsorbedbytheproceedsofthebondsandneednotbechargedagainstthe4percentadministrativecostceiling.Thenetproceedsofissuedbondsmustbedepositedintheloanaccount. (#(#   m    FundingProcess :  p 0  Thefollowingdescribeshowthe_DWRLF_Ԁwillusethefederalfundingprocessforeligibleactivities. (#(#   1.0 4  BindingCommitments M" 4(#4(# 0  Withinoneyearofacceptinggrantpayments,#XKXXX#XXXXKԀ_NWDHE_Ԁagreestoenterintobinding c$  commitmentswithloanrecipientsinanamountequaltothegrant,requiredstatematch,repaymentsandanyotherfundsdepositedintotheloanaccount.Projectedschedulesforcommitmentof_DWRLF_Ԁfundstospecificprojectswillbeprovidedintheannual_IUP_. (#(# m )     )m2  .0 4    Payments R )mی)"%4(#4(# Ќ    StateMatch *$' 0  _NWDHE_Ԁagreesthatstatemoniesinanamountequaltoatleast20percentofeachcapitalizationgrantwillbedepositedintothe_DWRLF_Ԁloanaccount.NewWatersmatch -`'* maybemadeavailablefromanyorallofthefollowingsources:stateappropriations,stateissuedGeneralObligationorrevenuebonds,revenuesfromstatetaxesorassessmentsandfundsmaintainedinotherstateaccounts.Thesourceofthestatematchwillbespecifiedinthegrantapplication.The20percentstatematchwillbedepositedintheloanaccountonorbeforethedatesuchpaymentsareprovidedbytheEPAsAutomatedClearinghousepaymentsystem(EPA_ACH_). (#(# 0  EPA_ACH_ԀPaymentSystem (#(# 0  _NWDHE_ԀwillusetheEPA_ACH_ԀPaymentSystemandwillfollowEPA_ACH_ԀPaymentSystemproceduresindicatedintheEPA_ACH_ԀPaymentSystemRecipientsManual. @c!  @c! EPAwillauthorizepaymentsfromthe_ACH_Ԁasprovidedforinthepaymentscheduleshownintheassistanceagreement.Onceapaymenthasbeenmadebyincreasingtheamountoffundsavailableforcashdrawsinthe_ACH_ԀPaymentSystem,EPAwillnotreducethatamount._NWDHE_Ԁagreestokeep_DWRLF_Ԁcashdrawsseparatefromthoseofanyotherprograms._NWDHE_ԀagreestofollowthoseEPA_ACH_ԀPaymentSystemproceduresspecifictotheDWSRFprogramlistedinExhibitJoftheEPA_ACH_ԀPaymentSystemRecipientsManual. (#(#   PaymentTiming 3 0  Thescheduleofpaymentsisbasedontheprojectedscheduleforbindingcommitmentsincludedin_NWDHE_sannual_IUP_. (#(# __  SeparateAccount  0  Theloanaccountisaseparateaccountwithin_NWDHE_s_DWRLF_Ԁdedicatedsolelytoprovidingloanstoeligiblepublicwatersystems. (#(#    )   )&m3  .0 4    CashDraws  )&Amی!04(#4(# Ќ    0  RulesofCashDraws#(#(# 0  CashdrawsfromtheEPA_ACH_ԀPaymentSystemarelimitedbythepaymentscheduleshownintheassistanceagreementandtherulesofcashdraws.Moneywillbetransferredtothe_DWRLF_ԀfromtheUSDepartmentofTreasuryinaccordancewithestablishedEPA_ACH_ԀPaymentSystemprocedures.CashdrawsfromtheEPA_ACH_ԀPaymentSystemforloanaccountactivitiesaremadeinproportiontothefederalshareofincurredeligiblecosts.Thebalanceofthecostswillcomefrommatchingstatefunds.Inaccordancewithfederalcashdrawrules,ifthestatechoosestodepositintothe_DWRLF_Ԁloanaccountmorethantherequired20percentmatch,asisplannedfor_SFY_Ԁ1999,theproportionalfederalandstatecashdrawratiowillnotbeaffected.Allcashdrawsforsetasidesmustbeas_costsareincurred.Cashdrawsforsetasideactivitieswillnotbesubjecttofederal_Ԅstate -`'* proportionalityrequirements. (#(#   Loans C 0  _NWDHE_ԀmaydrawcashfromtheDWSRF_ACH_Ԁwhentheloanaccountreceivesarequestfromaloanrecipient,basedonincurredprojectcosts.Uponexecutionofaloan,cashmaybedrawntopayprebuildingcostssuchasplanninganddesign.Cashmayalsobedrawntoreimburseprebuildingcostsincurredbyarecipientafter1)therecipientreceivesnotificationtoproceedfromthestateand2)theprojecthasbeenplacedonaprojectprioritylistandhasundergonepublicreview. (#(#   RefinancingandPurchaseofLocalDebt P  0  Forcompletedconstruction,cashdrawswillbemadeataratenogreaterthanequalamountsoverthemaximumnumberofquartersthatcapitalizationgrantpaymentsaremade,anduptotheportionoftheloanaccountcommittedtotherefinancingorpurchaseofthelocaldebt.Forprojectsorportionsofprojectsthathavenotbeenconstructed,thecashmaybedrawnbasedonincurredconstructioncostsaccordingtotheruleforloans.Thestatealsohastheoptiontoimmediatelydrawcashforuptofivepercentofeachcapitalizationgrantortwomilliondollars,whicheverisgreater,torefinanceorpurchaselocaldebt. (#(#   4.0 4  Disbursements r4(#4(#   Process  0  _NWDHE_Ԁwilldisbursefundsfromtheloanaccountandfromthesetasideaccountonthebasisofincurredcosts. (#(#   ConstructionProgress !0 0  _NWDHE_Ԁwillconductperiodicinspectionstoreviewconstructionprogressinordertocoordinateoutlayrequests.Constructioninspectionsandoutlayprocedureswillbedocumentedbythestate. (#(# 0  EstimatedDisbursementsd3' #(#(# 0  dDuringthefirstquarterofeachfederalfiscalyear,_NWDHE_ԀwillprovideEPAascheduleofestimateddisbursementsforthestate_DWRLF_Ԁfortheupcomingfederalfiscalyear.Thisschedulewillbethebasisfornegotiatingthestatesoutlaycommitments.d (#(# d  -`'* 0  TransferofFundsto/fromCleanWaterRevolvingLoanFundc(#(# 0  Beginningoneyearaftera_DWRLF_Ԁprogramreceivesitsfirstcapitalizationgrant,thestatemaytransferuptoathirdoftheamountofits_DWRLF_Ԁcapitalizationgrantstoits_CWRLF_oranequivalentamountfromits_CWRLF_Ԁcapitalizationgranttoits_DWRLF_Ԁ(Section302ofthe_SDWA_ԀAmendmentsof1996).Thestateagreestoidentify,document,andjustifytransfersandwillsubmitaplanforEPAreviewandapprovalifitchoosestodosointhefuture. (#(#   E.ProgramAdministration   p  m )     )Wm1  .0 4    StaffingandManagement  )W~mیP 4(#4(# Ќ  0  _NWDHE_Ԁwillmaintainthestaffandothernecessaryresourcestoeffectivelyadministerthe_DWRLF_Ԁprogram. (#(#  )     ) m2  .0 4    AccountingandAuditingProcedures  ) Gmیc4(#4(# Ќ  0  _NWDHE_Ԁwilluseanaccountingsystemthatmeetsapplicablefederalregulationsandpoliciesregardinggrantstostates.Theaccountingsystemwillproperlyidentifyandrelatestatecoststotheoperationofthe_DWRLF_.Toensurethattheaccountingsystemproperlyreflectsthefullrangeofcostreportingneedsoftheprogramandprovidesforanaudittrailwithclearlydefinablebenchmarks,anauditorfromEPAsOfficeofInspectorGeneral(_OIG_),orasenioraccountantfromthefinancialmanagementofficeoftheRegionmayreviewandconcuronthesystemsframeworkandoperation. (#(# 0  _NWDHE_Ԁwillhaveanannualindependentauditofthe_DWRLF_Ԁandtheoperationofthe_DWRLF_.TheauditwillfollowproceduresinaccordancewithgeneralacceptedgovernmentauditingstandardsissuedbytheComptrolleroftheUnitedStates.TheauditreportwillbecompletedwithinoneyearoftheappropriateaccountingperiodandwillbesubmittedtotheRegionalAdministrator(RA),withacopysenttoEPAs_OIG_.EPAagreestonotify_NWDHE_Ԁwithin90calendardaysastothetechnicaladequacyoftheauditreportanditsfindings. (#(#  )     )m3  .0 4    LoanAccountPerpetuity G )mیC&"4(#4(# Ќ    0  _NWDHE_Ԁwillconsiderthelongtermhealthandviabilityoftheloanaccountwhenselectingitsmixofprojectcategoriesfor_DWRLF_Ԁfunding.Eachyear_NWDHE_Ԁwillassessthefinancialhealthoftheloanaccountbyexaminingfundbalances,sourcesoffunds,projectedlevelsofloanrepayments,etc.,andreviseproceduresasnecessarytopromoteloanaccountperpetuity. (#(#  -`'*   4. 4  LoanAccountMaintenance   c _0  NWDHEwillmaintaintheinvestmentofcashinthesamemannerasitmaintainsothercashreserves. (#(#   F.StateCoordination   NWDHEassuresthatacoordinatedstateDWRLFwillbecarriedout.  G.ProjectManagementandReviewProcedures l    ProjectmanagementandDWRLFmanagementregulationsandprocedures(includingprojectreviewprocedures)tobefollowedbytheNWDHEinadministeringprojectsundertheDWRLFareassetforthinDepartmentregulations(AttachmentEAttachmentD).TheNWDHEherebyagreestoreviewprojectsinaccordancewiththosecriteriaandtothoroughlydocumenttheprojectfileconfirmingthatreview.  H.DevelopmentofIUP f  Eachyear,anIUPwillbedevelopedandpresentedtothepublicforreviewandcommentpriortosubmissiontoEPA.Thecurrentyearsprojectprioritylistasdevelopedundertheestablishedprioritysystemwillbereviewedtodeterminewhichprojectswillreceivefunding.AllocationofDWRLFfundsamongtheseprojectsisathreestepprocess.Thetypeoffinancialassistanceneededforeachcommunityisdetermined,thesourceandlimitsofallofthefiscalyearsfundsareidentified,andtheDWRLFfundsareallocatedamongtheprojects,consistentwiththeamountavailableandthefinancialassistanceneeded.RefertotheIUPforchartsandfiguresforthecurrentyear.NWDHEwillprovideIUPinformationinaformatandamannerthatisconsistentwiththeneedsoftheEPARegionalOffice.NWDHEwillprepareanannualIUPaslongastheloanaccountremainsinoperation,notjustinthoseyearsinwhichanapplicationforafederalcapitalizationgrantissubmitted.TheIUPwillinclude,butnotbelimitedtothefollowing:  m )     )m1  .0 4   Listofprojects,includingdescriptionandsizeofcommunity )mی#(!$4(#4(# Ќ   )     )m2  .0 4   Descriptionofthecriteriaandmethodusedforthedistributionoffunds )mی*#&4(#4(# Ќ   )     )m3  .0 4   DescriptionofthefinancialstatusoftheDWRLF )$mی+%(4(#4(# Ќ   )     )m4  .0 4   DescriptionofthelongandshorttermgoalsoftheDWRLF )mی-`'*4(#4(# 3/V 3XX 3  ь   )     );m5  .0 4   DescriptionoftheamounttransferredbetweentheDWRLFandCWRLF );bmیc4(#4(# Ќ   )     )Dm6  .0 4   DescriptionofthesetasideactivitiesincludingDWRLFadministrativeexpenses C allowance,PWSSprogramsupport,technicalassistance,etc. )Dkmی 4(#4(# Ќ   )     )m7  .0 4   Descriptionofhowthestatewilldefineadisadvantagedsystemandtheamountof   DWRLFfundsthatwillbeusedforthistypeofloanassistance )mی 4(#4(# Ќ   )     )m8  .0 4   Documentation,certification,andagreementtoassurancesandproposalsintheareas   including,butnotlimitedto,environmentalreview,federalcrosscutters,bindingcommitments,andtimelyexpenditures ).mی 4(#4(# Ќ    AspartoftheIUP,NWDHEagreestoidentifywhatportionofthecapitalizationgrantthestateiselectingtouseforsetasideactivities.Thestateagreestoestablishaseparatesetasideaccountinordertoacceptthesetargetedfunds.Thestateagreestoprovidethesamelevelofdetailforprojectsfundedthroughthesetasideaccountasisrequiredfortheloanaccount.   S III.REPORTINGANDREVIEW 7  c   A.BiennialReport   C    4 NWDHEagreestocompleteandsubmitaBiennialReport(Section1452(g)(4))detailinginformationonhowthestatehasmetthegoalsandobjectivesoftheprevioustwofiscalyearsasstatedintheIUPandgrantagreement.ThecontentsandrequiredelementsoftheBiennialReportwillconformwithSectionVI.A.IoftheDWSRFFinalGuidelines.TheBiennialReportisrequiredforthelifeoftheDWRLF.TheBiennialReportssubmittaldatewillbeincludedinthegrantagreement.TheBiennialReportwilldescribehowgoalsoutlinedinIUPshavebeenmet.ThereportwillincludeinformationontheprogramoutlinedinEPAguidelines,regulationsandinresponsetonegotiationswiththeRA.Ataminimum,thereportwillidentifyassistancerecipients,projectdescriptions,loanamountsandterms,andthefinancialstatusoftheDWRLF.Thereportwillalsoreportontheprogressofactivitiesfundedwithsetasidedollars.   B.AnnualAudit   NWDHEagreestoconductandsubmitanannualauditinordertoassureadequatefinancialmanagementoftheprograminaccordancewithSectionVI.A.2.oftheDWSRFFinalGuidelines.TheauditrequiresaseparateindependentauditorsopiniononDWRLFfinancialstatementsandinternalcontrols.  C.AnnualReview -" NWDHEandEPAwilljointlyplantheannualreviewprocess.AneffectivereviewrequiresthehelpandsupportoftheNWDHE.However,EPAisresponsiblefordeterminingwhetherfederalrequirementshavebeenmetandforassessingthestatesprogresstowardnationalgoalsandobjectives.Theannualreviewwillbecompletedaccordingtothescheduleestablishedinthegrantagreement.InadditiontotheBiennialReport,IUP,andannualaudit,NWDHEagreesthatotherrecordsEPAmayreasonablyrequirewillbemadeavailabletouseinconductingtheannualreviewoftheDWRLF.  D.SanctionsandCompliance $   1.0 4  CorrectiveActions %*#&4(#4(# 0  IfEPAdeterminesthatNWDHEhasnotcompliedwiththetermsofthecapitalizationgrant,thisOA,ortheIUP,theRegionalAdministratorwillnotifytheNWDHEofthenoncomplianceandofthecorrectiveactionorsubmitaplantoEPAwithin60daysthat -`'* willleadtocompliance. (#(# 0  Ifwithin60daysofreceiptofthenoncompliancenotice,NWDHEfailstotakethenecessaryactionstoobtaintheresultsrequiredbyEPA,orprovideanacceptableplantoachievetheresultsrequired,EPAmaysuspendfutureEPAACHSystempaymentstotheDWRLFuntilNWDHEhastakenacceptableactions.OnceNWDHEhastakencorrectiveactionsatisfactorytoEPA,anysuspendedpaymentswillbereleasedandscheduledpaymentscontinued. (#(# 0  IfNWDHEfailstotakethenecessarycorrectiveactiondeemedadequatebyEPAwithintwelvemonthsofreceiptoftheoriginalnotice,EPAwillwithholdpaymentsandreallotthefundstootherstates. (#(# 0  IfEPAdeterminesthatcapitalizationgrantfundsweresubjecttowaste,fraudorabuse,thecapitalizationgrantmayberecoveredunderproceduresoutlinedin40CFRPart31. (#(# m  )     )Z*m2  .0 4    Disputes * )Z**mیc4(#4(# Ќ  0  The disputesprovisionsof40CFRPart31,SubpartFshallbeusedfordisputesinvolvingEPAdisapprovalofanapplicationoracapitalizationgrant,aswellasdisputesarisingunderacapitalizationgrant,includingsuspensionorterminationofgrantassistance. (#(#   E.NationalReportingNeeds , 0  Annually,NWDHEwillprovideEPAwithaspecifiedsetofprojectleveldatainitsprioritylist,IUP,thirdquarterdisbursementschedule,BiennialReport,andotherinformationnegotiatedbetweenEPAandNWDHE. (#(#   F.Records - m )     ).m1  .0 4    Files m. ).).mیs#4(#4(# Ќ  0  NWDHEwillreceiveandreviewprojectdocumentsfromassistanceapplicants.Thesedocuments,togetherwithNWDHEsreviewmemosandthesummarychecklists,willbefiledinofficialprojectfilesmaintainedbythestate.NWDHEwillmaintaintheofficialfinancialreviewfilesandtheloanagreement.TheprojectfileswillbemadeavailabletoEPAforreviewbasedonreasonablenoticebyEPA.ItisexpectedthatthefileswouldbereviewedonasamplebasisinconjunctionwithonsitevisitsscheduledaspartoftheannualrevieworotherwisetomonitorNWDHEsmanagementoftheDWRLFfunds. (#(#  -`'*  )     )1m2  .0 4    RecordsRetention 1 )11mیc4(#4(# Ќ    0  NWDHEwillretainprojectfilesinaccordancewith40CFRPart31.NWDHEwillarrangeforthestorageofcertainrecordsforaperiodaslongastherepaymentperiodonanyDWRLFassistance,andotherwiseinaccordancewithstatelaw.AllrecordswillberetainedbyNWDHEfortheperiodagreeduponforrepayment,plus(3)yearsfollowingcompletionofrepayment. (#(#  )     )4m3  .0 4    AccesstoRecords 4 )4A4mی 4(#4(# Ќ  0  AccesstoallDWRLFrecordsinthepossessionofthestatewillbeinaccordancewithstatelawsgoverningaccesstoinformation.AccesstoallrecordsinthepossessionoftheEPAwillbeinaccordancewiththeUSFreedomofInformationAct,P.L(93502). (#(# 0  InformationrelatedtothecapitalizationgrantagreementandsupportingdocumentslocatedintheEPARegionalOfficeisavailablefromEPAinaccordancewiththeUSFreedomofInformationAct. (#(#  )     )7m4  .0 4    InformationManagementSystem 7 )7B7mیC4(#4(# Ќ  0  TheinformationmanagementsystemforregularlyupdatingdataonprojectsreceivingDWRLFassistanceandotherinformationontheDWRLFstatusisnewnowbeingdevelopedbyEPAinconjunctionwiththestates.NWDHEwillagreetoenterrelevantDWRLFinformationintothesystemonceitiscomplete.EPAwillhaveaccesstoinformationinthesystemasneeded,butwillnotbeabletomodifydata.EPAwillusethisinformationtoassesstheprogramonanationalbasisandtomonitorstateprogressinyearsinwhichBiennialReportsarenotrequiredtobesubmitted.TheEPARegionalOfficeswillusetheinformationtoassistinconductingannualreviews. (#(#    !0 IV.EXECUTION :  c   A.DesignatedSignatories R;  C m )     );m1  .0 4   Authorization );;mی# 4(#4(# Ќ    0  Thefollowingofficialsareauthorizedtoeffectprogramchanges(itemssignificantlyalteringtheOperatingAgreement): (#(#   ForNWDHE:0 Director,NWDHEp  (# (# 0  ForEPA:0 (#(#RegionalAdministrator`  (# (#     2.0 4 OtherChanges@ 4(#4(# 0  ItemsnotalteringtheOA,butinvolvingchangestoimplementationorreviewprocedures,maybeimplementedthroughtheagreementofthesameofficials: (#(#     ForNWDHE:0 Director,NWDHES (# (#   ForEPA:0 RegionalAdministratorC (# (#    4  B.RevisingtheOperatingAgreement ?  # m )     )=@m1  .0 4   ThisOAmaybeamendedatanytimebymutualagreementbetweentheauthorized  signatoriesinwriting.RevisionswillbeparticularlyconsideredfollowingreviewsoftheAnnualReportand/orAudit. )=@d@mی 4(#4(# Ќ   )     )Am2  .0 4   Allrevisionsregardingmodificationstoanyattachmentorproceduresshallbe ` throughthedesignatedofficialindicatedabove.  )AAmیP4(#4(# Ќ   C.Authority 4C  !0 0  TheauthorityofthisOperatingAgreementisfoundinlegislationestablishingtheDWRLF(SL98121). (#(# 0  40CFRPartEisthefederalregulatoryauthorityfortheDWSRFprogram.ShouldanyconflictsresultbetweenthefederalregulationsandtheOperatingAgreement,thefederalregulationswilltakeprecedence. (#(#    *#& D.EffectiveDate D  c     TheOperatingAgreementwillbeeffectivecommencingon򀀀 C 򀀀       RegionalAdministrator0  0h(#(#0h(#h(#0(#(#ExecutiveDirector0 (#(#  (# (# EnvironmentalProtectionAgency0 h 0h(#h(#0(#(#NewWaterDepartmentofHealthand   Environment (#(#    4     h     StateofNewWater  @  8XXd%%d8'  XX  ATTACHMENTA I    DWRLFENABLINGLEGISLATION RI #XXH#   XX  ATTACHMENTB I    MEMORANDAOFUNDERSTANDING 9J #XXI#   ( XX  ATTACHMENTC J    STATEENVIRONMENTALREVIEW_PROCEDURES 1K   ( ( XTRO'3 LetterX3' Letter'3 Letter Landscape3'T (  TRX3' LetterO'3 Letter3' Letter'3 Letter LandscapeT#XXJ#XX  ATTACHMENTD N    ATTORNEYGENERALSCERTIFICATION -O#XXN#XX     ATTACHMENTE O  STATEREGULATIONS P#XXO# #XKXXX#