Part 10. TEXAS WATER DEVELOPMENT BOARD

Chapter 371. DRINKING WATER STATE REVOLVING FUND

The Texas Water Development Board (Board) proposes amendments to 31 TAC §§371.2, 371.19-371.22, 371.24, 371.25, and new 371.90, concerning the Drinking Water State Revolving Fund (DWSRF). The amendments are proposed to update the rules, correct sequence, style, and definition of terms, clarify administrative procedures, and to add a new element to the DWSRF rating system.

Section 371.2, relating to Definitions of Terms, is proposed for amendment to expand the definition of "consolidation" to include an applicant which owns two or more water systems that are not physically interconnected. Previously an entity which owned and operated separate systems was excluded from receiving a higher rating score for consolidation because the systems were not physically interconnected. Since efficiencies in management should be rewarded, and since single management of multiple system can result in efficiencies in management, those entities owning and managing multiple water systems, even if the systems are not physically interconnected, can now receive an enhanced score for consolidation.

Section 371.19, relating to Rating Process, is proposed for amendment to define "projected violations" and to allow for the calculation of a rating score for "projected violations." Water systems that are noncompliant with drinking water regulations receive higher rating scores because they pose greater public health risks. Similarly, water systems which are acting voluntarily to prevent noncompliance and the associated public health risk, should also be entitled to receive higher rating scores prior to an actual finding of noncompliance. The granting of a higher rating score will increase the threatened water system's opportunity to receive funding for constructing improvements before being found in noncompliance. Subsequent paragraphs were renumbered to accommodate the new paragraph and graphic Figure 31 TAC §371.19(a)(11) was renumbered to §371.19(a)(12) as a result.

Section 371.19 is additionally proposed for amendment to create a process for calculation of a rating score for those water systems which will now qualify for higher points under the proposed expanded definition of "consolidation." The section is further amended to correct the abbreviation for the Texas Natural Resource Conservation Commission from "TNRCC" to "commission," which is defined, and to re-order the alphabetical listing of definitions that are included within the section. Section 371.19(l) is amended to add a title for the subsection that is consistent with other subsections of the section.

Section 371.20, relating to Intended Use Plan, is proposed for amendment to describe acceptable changes that may be made to a project after it has been listed on an adopted Intended Use Plan. These changes include the applicant, itself; the number of participants in a consolidated project; and the solution to an identified water supply problem. The amendments allow the board to focus on providing funding for solutions to the water supply needs of a particular area, rather than focusing on a particular applicant or project.

Section 371.21, relating to Criteria and Methods for Distribution of Funds for Water System Improvements, is proposed for amendment to extend a commitment deadline in limited circumstances where an applicant has timely submitted an application, as defined in the chapter rules, but additional information is deemed to be necessary. The change will allow the Executive Administrator to request additional information from an applicant without causing the applicant to lose its place on the funding list. The section is also proposed for amendment to clarify that references to applications are references to "applications for assistance," as defined in the chapter. The section is further amended to correct the deadline for receiving a loan commitment from six to seven months from the date of notification.

Section 371.22, relating to Administrative Cost Recovery, is proposed for amendment to eliminate the requirement for an administrative cost recovery fee to be assessed from disadvantaged communities which are receiving additional subsidies in the form of forgiveness of loan principal. This change will bring the Board's rules into compliance with the United States Environmental Protection Agency's proposed regulations for administering the DWSRF program.

Section 371.24, relating to Disadvantaged Community Program through Loan Subsidies, is proposed for amendment to provide that projects which qualify as disadvantaged community projects are entitled to receive a 30-year loan, regardless of whether funds for subsidies are available for the project. This change will bring the Board's rules into compliance with the United States Environmental Protection Agency's proposed regulations for administering the DWSRF program. Section 371.24(d) is amended to add a title for the subsection that is consistent with other subsections of the section.

Section 371.25, relating to Criteria and Methods for Distribution of Funds for Disadvantaged Communities, is proposed for amendment to specify the conditions under which unused disadvantaged community funds may be made available for disadvantaged communities listed in future Intended Use Plans. By allowing for a rollover of unused funds, this change will enable a more complete utilization of subsidy monies over a period of time. A typographical error is corrected in §371.25(c).

New §371.90, relating to Force Account, is proposed to specify for applicants the conditions under which the applicant may utilize its own employees and/or equipment to construct all or part of a project. The force account provision is offered as a limited alternative to awarding competitively bid contracts on minor phases of a project in situations where efficiencies would clearly result from the use of force account.

Ms. Pamela Gulley, Director of Accounting and Finance, has determined that for the first five-year period these sections are in effect there will not be fiscal implications on state and local government as a result of enforcement and administration of the sections.

Ms. Gulley has also determined that for the first five years the sections as proposed are in effect the public benefit anticipated will be to clarify for applicants for financial assistance the procedures used by the Board in rating projects and allocating funds to the various categories of projects within the DWSRF program.

Ms. Gulley has determined there will be no economic costs to small businesses or individuals required to comply with the sections as proposed.

Comments on the proposed amendments will be accepted for 30 days following publication and may be submitted to Gail L. Allan, Director, Administration and Northern Legal Services, Texas Water Development, P.O. Box 13231, Austin, Texas, 78711-3231, by e-mail to gallan@twdb.state.tx.us or by fax at (512) 463-5580.

Subchapter A. INTRODUCTORY PROVISIONS

31 TAC §371.2

The amendments are proposed under the authority of the Texas Water Code, §6.101 and §15.605 which provide the Texas Water Development Board with the authority to adopt rules necessary to carry out the powers and duties in the Water Code and other laws of the State.

The statutory provisions affected by the amendments are Texas Water Code, Chapter 15, Subchapter J, and Chapter 17, Subchapters C, D, and E.

§371.2.Definitions of Terms.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Words defined in the Texas Water Code, Chapter 15 and not defined here shall have the meanings provided by Chapter 15.

(1)-(15)

(No change.)

(16)

Consolidation--Any one of the following activities:

(A)

a public water system acquiring another public water system;

(B)

a public water system providing retail service to another public water system; [ or ]

(C)

a public water system providing wholesale service, which may include operation of the system, to another public water system ; or [ . ]

(D)

an applicant owning two or more water systems that are not physically interconnected.

(17)-(60)

(No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 26, 2000.

TRD-200004429

Suzanne Schwartz

General Counsel

Texas Water Development Board

Proposed date of adoption: August 16, 2000

For further information, please call: (512) 463-7981

31 TAC §§371.19-371.22, 371.24, 371.25

The amendments are proposed under the authority of the Texas Water Code, §6.101 and §15.605 which provide the Texas Water Development Board with the authority to adopt rules necessary to carry out the powers and duties in the Water Code and other laws of the State.

The statutory provisions affected by the amendments are Texas Water Code, Chapter 15, Subchapter J, and Chapter 17, Subchapters C, D, and E.

§371.19.Rating Process.

(a)

Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1)-(10)

(No change.)

(11)

Projected Violations--A violation of a maximum contaminant level or treatment technique during the time period between the date of promulgation of a new or amended regulation by the commission or EPA, and the date such regulation becomes effective. Such projected violations will be considered as equivalent to those defined in paragraphs (1)-(5) and (14) of this subsection. Any change to the list of contaminants and associated maximum contaminant levels listed in the applicable figures (relating to Carcinogenic Contaminants, Chronic Chemical Contaminants, Secondary Chemical Constituents, and Organic Chemical Contaminants) will be considered effective for the purpose of determining a projected violation, beginning at the date of promulgation of a regulation by the commission or EPA.

(12)

[ (11) ] Secondary chemical constituent exceedance--An exceedance of the constituent level established for any secondary chemical constituent listed in the following table:

Figure: 31 TAC §371.19(a) (12) [ (11) ]

(13)

Selected vulnerable aquifer--Aquifers identified by the commission at the time of preparation of the annual intended use plan and included by list in the letter soliciting project information as described in §371.20(b)(1) of this title (relating to Intended Use Plan) with criteria including, but not limited to: high transmissivity, rapid recharge (e.g., karst), unconfined aquifers with shallow water tables.

(14)

[ (12) ] Treatment technique violation--A violation of any surface water treatment technique as specified in 30 TAC Chapter 290 (Water Hygiene). For the purposes of this rating, these will include all 5.0% exceedances of the 0.5 NTU standard.

[(13)

Selected vulnerable aquifer--Aquifers identified by the commission at the time of preparation of the annual intended use plan and included by list in the letter soliciting project information as described in §371.20(b)(1) of this title (relating to Intended Use Plan) with criteria including, but not limited to: high transmissivity, rapid recharge (e.g., karst), unconfined aquifers with shallow water tables.]

(15)

[ (14) ] Watershed--The contributing area of water to a surface water body such as a river or reservoir.

(b)-(c)

(No change.)

(d)

Health and Compliance Factors. Health and compliance factors for rating purposes will be calculated as follows.

(1)

(No change.)

(2)

The filtration factor of 12 points will be awarded to any system with one or more sources of water identified as surface water, or groundwater under the direct influence of surface water for which no filtration is provided as identified by records maintained by the commission [ TNRCC ].

(3)-(12)

(No change.)

(e)

(No change.)

(f)

Consolidation. In the event a project proposed for funding is to benefit two or more water systems, the combined rating factor will be the sum of the combined rating factors for each of the systems if the applicant will be wholly responsible for the ownership, operation and maintenance of the interconnected [ consolidated ] system; or will be the combined rating factor of the applicant system plus one-half the sum of the combined rating factors of each system to be consolidated if the applicant will be responsible only for supplying wholesale water to the individual system(s) and not be responsible for the ownership, operation and maintenance of the individual system(s) ; or will be the combined rating factor of the applicant system plus one-half the sum of the combined rating factors of each system to be consolidated if the applicant will be wholly responsible for ownership, operation and maintenance of the individual system(s) and does not physically interconnect each system . To receive the consolidation points, the applicant must provide documentation of agreement by the system(s) to be consolidated.

(g)-(i)

(No change.)

(j)

Tie Breaker. In the event of ties in the ratings, priority will be given to the project serving the smaller total population based on information maintained by the commission [ TNRCC ].

(k)

(No change.)

(l)

Source Water Protection Rating. Eligible entities that seek consideration for source water protection funding will be rated according to the following criteria.

(1)-(6)

(No change.)

§371.20.Intended Use Plan.

(a)-(b)

(No change.)

(c)

Subsequent to adoption of an intended use plan, certain changes to a proposed project included in the intended use plan are allowed without requiring a re-ranking in the following circumstances:

(1)

The applicant for a proposed project may change;

(2)

An alternative project may be proposed which addresses the specific system conditions which received priority points;

(3)

The number of participants in a consolidation project may change provided that the change does not result in a change to the combined rating factor as determined by §371.19 of this title (relating to Rating Process).

(4)

The total cost of a proposed project may decrease from the amount listed in the adopted intended use plan.

(d)

If any changes are proposed to the nature of the improvements of a proposed project, or in the number of participants in a consolidation project which would result in a change to the combined rating factor as determined by §371.19 of this title, the project must be re-ranked in the intended use plan. In this case the availability of funding will be determined based on the revised combined rating factor.

§371.21.Criteria and Methods for Distribution of Funds for Water System Improvements.

(a)-(d)

(No change.)

(e)

Applicants must submit [ complete ] applications for assistance, as defined, within four months of being invited to submit.

(f)-(h)

(No change.)

(i)

Applicants must submit [ complete ] applications for assistance, as defined, within four months of being invited to submit.

(j)

(No change.)

(k)

If, at any time during either seven month period of availability of funds, a potential applicant above the funding line submits written notification that it does not intend to submit an application or if additional funds become available for assistance, the line may be moved downward in priority order to accommodate projects which would utilize the funds that would otherwise not be committed during the particular seven month period. The executive administrator will notify such additional potential applicants in writing and will invite the submittal of applications. Potential applicants receiving such notice will be given four months to submit an application and seven [ six ] months from the date of notification to receive a loan commitment.

(l)

(No change.)

(m)

Notwithstanding the provisions of subsections (f), (j), and (k) of this section, the executive administrator may request additional information regarding any portion of the application for funding after an application has been submitted without affecting the priority rating status of the application.

§371.22.Administrative Cost Recovery.

(a)

General. The board will assess charges for the purpose of recovering administrative costs of all projects receiving [ recipients of ] DWSRF loan assistance , except those projects or portions of projects which receive subsidies in the form of forgiveness of loan principal pursuant to §371.24 of this title (relating to Disadvantaged Community Program through Loan Subsidies) and which [ who ] receive binding commitments after the effective date of this section.

(b)-(g)

(No change.)

§371.24.Disadvantaged Community Program through Loan Subsidies.

(a)-(c)

(No change.)

(d)

Additional Project Costs. If the actual cost of a project funded under this section exceeds the estimated cost of the project as listed on the intended use plan, the additional cost will be funded through the Water Supply Account of the Texas Water Development Fund and interest rates for the additional cost will be set according to the provisions of §363.33 of this title (relating to Interest Rates for Loans and Purchase of Board's interest in State Participation Projects).

(e)

Term of Loan. Notwithstanding the provisions of §371.12(1)(B) of this title (relating to Uses of the Fund), the board may extend the term of a loan made to a political subdivision or a disadvantaged community as provided in subsections (a) and (b) of this section [ through the Disadvantaged Community Account of the DWSRF ] if the extended term terminates not later than the date that is 30 years after the date of project completion and does not exceed the expected design life of the project.

(f)-(g)

(No change.)

§371.25.Criteria and Methods for Distribution of Funds for Disadvantaged Communities.

(a)

The board will determine annually the amount of capitalization grant funds to be made available for projects for disadvantaged communities and will include this information in the intended use plan, provided however that no more than 30% of the [ any ] capitalization grant for that fiscal year can be so distributed. Funds available may include funds made available for disadvantaged communities in prior years' intended use plans and disadvantaged communities' funds which have become de-obligated from prior obligations or commitments.

(b)

(No change.)

(c)

After projects have been ranked, a disadvantaged community funding line will be drawn on the priority list [ lists ] according to the amount of available funds in accordance with §371.21(b) of this title (relating to Criteria and Methods for Distribution of Funds for Water System Improvements). After the funding line is drawn, the executive administrator shall notify in writing all potential disadvantaged community applicants above the funding line of the availability of funds and will invite the submittal of applications. In order to receive funding, disadvantaged communities projects above the funding line must submit applications for assistance, as defined, within four months of the date of notification of the availability of funds. Upon receipt of an application for assistance, the executive administrator shall notify the applicant, in writing, that an application has been received. The executive administrator may request additional information regarding any portions of an application for funding from the disadvantaged community account after the four month period has expired without affecting the priority status of the application. Applicants for funding from the disadvantaged community account will be allowed three months after submittal of an application to receive a loan commitment.

(d)-(g)

(No change.)

(h)

If, after four months of the second date of invitation to submit applications, there are insufficient applications to obligate the remaining funds of the funds made available for disadvantaged communities, the executive administrator will return any incomplete applications. Any funds remaining that exceed the amount needed to fund completed applications will be made available for disadvantaged communities the next fiscal year[ , subject to the limitations of subsection (a) of this section ].

(i)-(j)

(No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 26, 2000.

TRD-200004428

Suzanne Schwartz

General Counsel

Texas Water Development Board

Proposed date of adoption: August 16, 2000

For further information, please call: (512) 463-7981

31 TAC §371.90

The new section is proposed under the authority of the Texas Water Code, §6.101 and §15.605 which provide the Texas Water Development Board with the authority to adopt rules necessary to carry out the powers and duties in the Water Code and other laws of the State.

The statutory provisions affected by the new section are Texas Water Code, Chapter 15, Subchapter J, and Chapter 17, Subchapters C, D, and E.

§371.90.Force Account.

(a)

Definition of Force Account. The force account method is a method of construction of a project in which the applicant utilizes its own employees and/or equipment to construct all or part of a project.

(b)

Use of Force Account. All significant elements of a project shall be constructed with skilled laborers and mechanics obtained through the competitive bidding process. The force account method may not be used in the major construction of a project, but force account may be used by the applicant for inspection and/or minor construction. In order to use the force account method, the applicant must demonstrate to the satisfaction of the executive administrator that it possesses the necessary competence required to accomplish such work and that the work can be accomplished more economically by the use of the force account method.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 26, 2000.

TRD-200004432

Suzanne Schwartz

General Counsel

Texas Water Development Board

Proposed date of adoption: August 16, 2000

For further information, please call: (512) 463-7981