TITLE 31.NATURAL RESOURCES AND CONSERVATION

Part 10. TEXAS WATER DEVELOPMENT BOARD

Chapter 375. CLEAN WATER STATE REVOLVING FUND

The Texas Water Development Board (the board) proposes amendments to 31 TAC §§375.15, 375.212, 375.214 and 375.222, and new §§375.301-375.305 concerning the Clean Water State Revolving Fund (the "CWSRF"). The amendments and new sections will implement legislative changes to enable "persons" to receive CWSRF loans for nonpoint source pollution control and abatement and estuary management projects. The changes will also add flexibility to managing loan applications in situations where the program capacity is adequate to invite all applications for projects listed on an intended use plan. Additionally, the amendments correct a legal reference, delete a reference to the Davis-Bacon Act, and increase the interest rate subsidy for federally funded "tier three" projects.

In the past, the demand for CWSRF program funds have exceeded the amount of funds available. It is currently estimated that sufficient funds will be available to serve all requests, except in a circumstance where a borrower requests an unusually large amount. The proposed amendments to §375.15(m) will allow the board to impose a cap on the maximum amount of funds available to any single applicant. This amendment will allow the board to limit funds on any one large request for funds when the limitation is necessary in order to be able to fund all of the applicants that have requested assistance. The amendments also provide that it is the policy of the board to fund all projects listed on the intended use plan whenever possible so that the maximum number of projects can be funded. The proposed amendments to §375.15(n) provide that, if funds are available to do so, the executive administrator will invite the submittal of all applicants on the annual intended use plan. This represents a change from previous practice whereby the executive administrator could invite the submittal of only those applications for which limited funds were available. The amendments also specify timelines applicable to such applications so that the board may more efficiently identify those projects that will actually seek commitments for this funding year.

§375.15 (o) is renumbered to account for the new section. Proposed amendments to §375.212 will remove a reference to the Davis-Bacon Act, relating to wage rate requirements. This reference is removed because the United States Environmental Protection Agency recently notified the board that Davis-Bacon requirements were not applicable to the CWSRF program. The proposed amendment to §375.214 corrects a citation to a federal act with which CWSRF funding must comply. The proposed amendment to §375.222 provide an increased interest rate subsidy for the purpose of encouraging more borrowers to apply for available funds by reducing the cost of such funds.

New §§375.301-375.305 comprise new Subchapter C, Nonpoint Source Pollution Loan and Estuary Management Program. The proposed new sections implement Senate Bills 2 and 312 of the 77th Texas legislative session and further compliance with the federal Clean Water Act. §375. 301 provides notice to applicants for funds that applications for nonpoint source pollution control and estuary management projects will be administered under the requirements of the general provisions of this title.

To assist customers in the understanding of the nonpoint source pollution and estuary management programs, §375.302 , relating to Definitions of Terms, provides additional definitions of terms that apply to the two programs, including a new definition of an eligible applicant for funds. §375.303 informs customers of the types of projects that will be eligible to receive funding pursuant to the nonpoint source pollution loan program. Proposed §375.304 provides additional information to customers on the application process when loans for nonpoint source pollution or estuary management are sought. In order to be processed, applications must contain sufficient information for the board to understand the details of the proposed project. §375.305 advises customers of a board option for borrowing through the use of promissory note and loan agreement with the board.

Ms. Misti Hancock, Interim Director of Fiscal Services, has determined that for the first five-year period these sections are in effect there will be no fiscal implications on state and local government as a result of enforcement and administration of the sections.

Ms. Hancock has also determined that for the first five years the sections as proposed are in effect the public benefit anticipated as a result of enforcing the sections will be an expansion of funding available to applicants through the CWSRF, removal of an incorrect reference, and ensuring that board rules comply with federal requirements. Ms. Hancock 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 Jeff Walker, Texas Water Development Board, P.O. Box 13231, Austin, Texas, 78711-3231, by e-mail to jeff.walker@twdb.state.tx.us or by fax @ (512) 475-2086.

Subchapter A. GENERAL PROVISIONS

2. PROGRAM REQUIREMENTS

31 TAC §375.15

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 including specifically the SRF program.

The statutory provisions affected by the proposed amendments are Texas Water Code, Chapter 15, Subchapter J.

§375.15.Criteria and Methods for Distribution of Funds.

(a) - (l) (No change.)

(m) It is the policy of the board to fund all projects listed in the intended use plan whenever possible. To implement this policy, the board may impose a cap on the maximum amount of funds available to any single applicant.

(n) If no shortage of funds exists for a fiscal year the executive administrator will invite the submittal of applications from all applicants. After official invitation, applicants will be given until August 31 of that fiscal year to submit an application and an additional two months to receive a loan commitment.

(o) [ m ] Notwithstanding the provisions of subsections (e), (f), and (h) of this section, the executive administrator may request additional information regarding any portion of the application for assistance, after the application has been submitted, without affecting the priority rating status of the application.

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 July 23, 2001.

TRD-200104218

Suzanne Schwartz

General Counsel

Texas Water Development Board

Proposed date of adoption: September 19, 2001

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


Subchapter B. PROVISIONS PERTAINING TO USE OF CAPITALIZATION GRANT FUNDS

2. PROGRAM REQUIREMENTS

31 TAC §375.212, §375.214

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 including specifically the SRF program.

The statutory provisions affected by the proposed amendments are Texas Water Code, Chapter 15, Subchapter J.

§375.212.Capitalization Grant Requirements.

(a) All projects which receive assistance from the fund and will be constructed in whole or part with funds directly made available by capitalization grants shall satisfy the following federal requirements:

(1) National Environmental Policy Act of 1969, PL 91-190;

(2) Archeological and Historic Preservation Act of 1974, PL 93-291;

(3) Clean Air Act, 42 USC 7506(c);

(4) Coastal Barrier Resources Act, 16 USC 3501 et seq;

(5) Coastal Zone Management Act of 1972, PL 92-583, as amended;

(6) Endangered Species Act, 16 USC 1531, et seq;

(7) Executive Order 11593, Protection and Enhancement of the Cultural Environment;

(8) Executive Order 11988, Floodplain Management;

(9) Executive Order 11990, Protection of Wetlands;

(10) Farmland Protection Policy Act, 7 USC 4201 et seq;

(11) Fish and Wildlife Coordination Act, PL 85-624, as amended;

(12) National Historic Preservation Act of 1966, PL 89-665, as amended;

(13) Safe Drinking Water Act, §1424(e), PL 92-523, as amended;

(14) Wild and Scenic Rivers Act, PL 90-542, as amended;

(15) Demonstration Cities and Metropolitan Development Act of 1966, PL 89-754, as amended;

(16) Clean Air Act, §306 and Clean Water Act, §508, including Executive Order 11738, Administration of the Clean Air Act and the Federal Water Pollution Control Act with Respect to Federal Contracts, Grants, or Loans;

(17) Age Discrimination Act, PL 94-135;

(18) Civil Rights Act of 1964, PL 88-352;

(19) PL 92-500, §13; Prohibition against sex discrimination under the Federal Water Pollution Control Act;

(20) Executive Order 11246, Equal Employment Opportunity;

(21) Executive Orders 11625 and 12138, Women's and Minority Business Enterprise;

(22) Rehabilitation Act of 1973, PL 93-112 (including Executive Orders 11914 and 11250);

(23) Uniform Relocation and Real Property Acquisition Policies Act of 1970, PL 91-646;

(24) Executive Order 12549, Debarment and Suspension;

(25) The Wilderness Act, 16 USC 1131 et seq.;

(26) Environmental Justice, Executive Order 12898;

(27) Clean Water Act, PL 92-500, as amended; and

(28) Section 129, Small Business Administration Reauthorization and Amendment Act of 1988, PL 100-590 . [ ; and ]

[(29) Davis-Bacon Act, 40 U.S.C. §§276a-276a-5, as amended, to the extent required by §513 of the Clean Water Act, 33 U.S.C. §1372, as amended.]

(b) (No Change.)

§375.214.Required Environmental Review and Determination.

(a) - (c) (No change.)

(d) Application of other laws and authorities. In addition to the requirements of state law and rules, the Act, and the NEPA, the board must, as required by the initial guidance for the state water pollution control revolving fund and the capitalization grant agreement, insure that each project proposed to receive CWSRF financial assistance complies with the following federal laws and authorities respecting the human environment: the Archeological and Historic Preservation Act of 1974, Public Law 93-191; the Historic Sites Act; the Clean Air Act, 42 United States Code 7506(c); the Coastal Barrier Resources Act, 16 United States Code 3501 et seq., the Coastal Zone Management Act of 1972, Public Law 92-583, as amended; the Endangered Species Act, 16 United States Code 1531 et seq.; Executive Order 11953, Protection and Enhancement of the Cultural Environment; Executive Order 11988, Floodplain Management; the Flood Disaster Protection Act of 1973, Public Law 93-234; Executive Order 11990, Protection of Wetlands; the Farmland Protection Policy Act, 7 United States Code 4201 et seq.; the Fish and Wildlife Coordination Act, Public Law 85-624, as amended; the National Historic Preservation Act of 1966, Public Law 89-665, as amended; the Safe Drinking Water Act, §1424(e), Public Law 92-523, as amended; and the Wild and Scenic Rivers Act, Public Law 90-542, as amended. Because particular federal and/or state agencies are charged with the enforcement of or permitting under many of these laws and authorities, the executive administrator will provide guidance to applicants to the fund regarding consultation requirements and will encourage proper coordination of project planning with the appropriate agencies. Because of their complexity and critical importance to the board's administration of the fund, the board has adopted the following sections to effect proper compliance with the requirements of the Flood Disaster Protection Act of 1973, the Coastal Barrier Resources Act, and Executive Order 11988, Floodplain Management.

(1) - (2) (No Change.)

(3) Pursuant to the requirements of Executive Order 11988, the board will avoid direct and indirect support of development in floodplains wherever there is a practicable alternative. Therefore, both to preserve the significant natural functions and values of floodplains and to protect human health and safety.

(A) The board may provide financial assistance from the fund for the transportation or treatment of wastewater generated in a floodplain only when the proposed project will provide service to:

(i) - (ii) (No change.)

(iii) areas of projected growth if an EID demonstrates that the proposed development will be consistent with FEMA's floodplain management criteria for flood prone areas ( 44 [ 40 ] Code of Federal Regulations 60.3) and will have no significant impacts on natural functions and values of floodplains; and

(iv) (No change.)

(B) - (D) (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 July 23, 2001.

TRD-200104219

Suzanne Schwartz

General Counsel

Texas Water Development Board

Proposed date of adoption: September 19, 2001

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


3. PREREQUISITES TO RELEASE OF FUNDS

31 TAC §375.222

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 including specifically the SRF program.

The statutory provisions affected by the proposed amendments are Texas Water Code, Chapter 15, Subchapter J.

§375.222.Lending Rates.

(a) (No change.)

(b) Fixed rates. The fixed interest rates for CWSRF loans under this chapter are set at rates 170 [ 120 ] basis points below the fixed rate index rates for borrowers plus an additional reduction under paragraph (1) of this subsection, or if applicable, are set at the total basis points below the fixed rate index for borrowers derived under paragraph (2) of this subsection. The fixed rate index rates shall be established for each uninsured borrower based on the borrower's market cost of funds as they relate to the Delphis Hanover Corporation Range of Yield Curve Scales (Delphis) or the 90 index scale of the Delphis for borrowers with either no rating or a rating less than investment grade, using individual coupon rates for each maturity of proposed debt based on the appropriate index's scale. The fixed rate index rates shall be established for each insured borrower based on the higher of the borrower's uninsured fixed rate index scale or the Delphis 96 index scale.

(1) Under §375.18(c) of this title (relating to Administrative Cost Recovery) an additional 25 basis points reduction will be used, for total fixed interest rates of 195 [ 145 ] basis points below the fixed index rates for such borrower.

(2) (No change.)

(c) - (d) (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 July 23, 2001.

TRD-200104220

Suzanne Schwartz

General Counsel

Texas Water Development Board

Proposed date of adoption: September 19, 2001

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


Subchapter C. NONPOINT SOURCE POLLUTION LOAN AND ESTUARY MANAGEMENT PROGRAM

31 TAC §§375.301 - 375.305

The new sections 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 including specifically the SRF program.

The statutory provisions affected by the proposed new sections are Texas Water Code, Chapter 15, Subchapter J.

§375.301.Scope of Subchapter.

Subchapter C shall pertain to requests for financial assistance to persons from the Clean Water Pollution Control Revolving Fund established by the Texas Water Code, Chapter 15, Subchapter J, for nonpoint source pollution control and abatement projects and estuary management projects. Unless in conflict with the provisions of this subchapter, the provisions of Subchapter A of this chapter (relating to General Provisions) shall apply to nonpoint source and estuary protection projects.

§375.302.Definitions of Terms.

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

(1) BMP--Best management practices are those practices determined to be the most efficient, practical, and cost-effective measures identified to guide a particular activity or address a particular problem.

(2) Person--An individual, corporation, partnership, association, state, municipality, commission, or political subdivision of a state or any interstate body, as defined by Section 502 of the Act, including a political subdivision as defined by Texas Water Code, §15.602(9), if the person is eligible for financial assistance under federal law establishing the revolving fund.

(3) National Estuary Program--Program created by the Water Quality Act of 1987 and administered according to Section 320 of the Act.

(4) NPS Loan Program--Nonpoint Source Pollution Loan Program, the loan program funded by the board to provide for low interest loans to persons for the implementation of approved nonpoint source pollution control and abatement projects and estuary management projects.

(5) NPS Management Report--The Texas Nonpoint Source Pollution Assessment Report and Management Program.

(6) Individual Water Quality Management Plan--An approved land management plan which considers site-specific characteristics (such as soil types, slope, climate, vegetation and land usage) to improve or conserve water resources.

§375.303.Eligible Projects.

Projects eligible for funding from the NPS Loan Program must be:

(1) an identified practice within a Water Quality Management Plan; or

(2) a nonpoint source management activity that has been identified in the Texas Comprehensive Groundwater Protection Program; or

(3) a BMP listed in the NPS Management Report; and

(4) must be consistent with the EPA approved Nonpoint Source Management Plan or the National Estuary Program efforts.

§375.304.Application for Assistance.

An applicant for financial assistance for a nonpoint source or estuary protection project pursuant to this subchapter shall submit an application in the form and number prescribed by the executive administrator. The executive administrator may request any additional information needed to evaluate the application, and may return any incomplete application.

§375.305.Promissory Notes and Loan Agreements.

(a) The board may provide financial assistance to applicants by either purchasing bonds issued by such applicant or by receiving a promissory note and entering into a loan agreement with such applicant. If, however, an applicant is a governmental entity that is fully authorized to issue bonds, the applicant may not enter into a loan agreement as provided in this section.

(b) If an applicant executes a promissory note and loan agreement with the board, the executive administrator may waive the hiring or employment of a financial advisor required pursuant to these rules.

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 July 23, 2001.

TRD-200104221

Suzanne Schwartz

General Counsel

Texas Water Development Board

Proposed date of adoption: September 19, 2001

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