5 CCR 1002-52
DEPARTMENT OF PUBLIC HEALTH AND ENVIRONMENT REGULATION NO. 52 DRINKING WATER REVOLVING FUND RULES 5 CCR 1002-52 [Editor’s Notes follow the text of the rules at the end of this CCR Document.] _______________________________________________________________________________
52.1 AUTHORITY
In Senate Bill 95-083, the Colorado General Assembly created the Drinking Water Revolving Fund to provide financial assistance to certain drinking water projects in the State of Colorado. The fund is held and administered by the Colorado Water Resources and Power Development Authority (Authority), which is authorized to issue bonds to finance the program. Moneys in the fund may be used to provide financial assistance to projects included on a Project Eligibility List, which is part of the annual Intended Use Plan (IUP). Codified at sections 37-95-103 and 37-95-107.8, C.R.S., the statutes direct the Water Quality Control Commission (Commission) to submit additions and modifications to the Project Eligibility List annually for adoption by the General Assembly by Joint Resolution signed by the Governor. This regulation complies with 40 CFR part 35, subpart l, and provides for the Commission’s approval of the Intended Use Plan including additions and modifications to the Project Eligibility List and the Projected Loan List.
The 1996 amendments to the federal Safe Drinking Water Act (SDWA) include authorization of a state revolving fund program similar to that included in the Clean Water Act for wastewater projects. The Drinking Water Revolving Fund established by Senate Bill 95-083 meets the requirements of the SDWA concerning revolving fund financing programs and allows for federal funding of Colorado's revolving fund financing program.
Section 25 1.5-203, C.R.S., also provides authority for this regulation.
52.2 DEFINITIONS
Section 11.3 of the Colorado Primary Drinking Water Regulations 5 CCR 1002-11, contains additional definitions that apply to this rule.
(1) “Beneficial Use” - The use of water treatment plant residuals to act as a soil conditioner or low grade fertilizer for the promotion of vegetative growth on land or to be used in commercial construction or industrial applications, and that meet the requirements of the state Biosolids Regulations.
(2) “Consolidation and Regionalization Project” - A proposed new construction or expansion of a drinking water supply system that will eliminate one or more existing water supply or treatment works. A letter of intent or a resolution adopted by the project participants must be provided to the Water Quality Control Division (Division) to guarantee the facilities will consolidate.
(3) “Governmental Agencies” - Departments, divisions, or other units of state government, special districts, water conservation districts, metropolitan water districts, conservancy districts, irrigation districts, municipal corporations, counties, cities and other political subdivisions, the United States or any agency thereof, and any agency, commission, or authority established pursuant to an interstate compact or agreement.
(4) “Health Hazard” - A situation where the Division has identified a waterborne disease outbreak primary maximum contaminant level (MCL) violation, violation of the Surface Water Treatment Rule (SWTR), a treatment technique violation, or significant deficiencies from an approved sanitary survey as defined in the Colorado Primary Drinking Water Regulations. Funding for projects that address an existing or potential health hazard must result in compliance with existing standards and regulations.
(5) “Pollution” - The man made, man induced, or natural alteration of the physical, chemical, biological, and radiological integrity of water.
(6) “Private Nonprofit Entity” – A private nonprofit corporation with perpetual duration and in good standing, which is formed and operated in Colorado pursuant to the requirements of the Colorado Revised Nonprofit Corporation Act, and which files federal and state tax returns as a nonprofit corporation.
(7) “Project Eligibility List” - The list of projects eligible for financial assistance from the Authority through the Drinking Water Revolving Fund (DWRF), as adopted and modified in accordance with Section 37 95 107.8(4), C.R.S.
(8) “Projected Loan List” – The list of projects that has been partially scored in accordance with the criteria described in the Intended Use Plan. This list represents those projects that are reasonably anticipated to receive a binding commitment for a loan in the DWRF program. Projects may be moved from the Project Eligibility List to the Projected Loan List at any time during the year.
(9) “Public Water System” (PWS) - A system for the provision to the public of piped water for human consumption through pipes or other constructed conveyances, if such system has at least fifteen service connections or regularly serves at least twenty-five individuals daily at least 60 days per year. Such term includes:
(10) “Source Water Protection” - Structural or nonstructural source water protection activities done in addition to area delineation and contaminant assessment.
(11) “Sustainability Projects” - Projects and/or planning methodologies that promote sustainable drinking water systems through effective utility management and capacity development to improve the technical, financial, and managerial capacities of public water systems, as well as those that promote the conservation of natural resources, alternative approaches such as natural or “green” systems, innovative approaches and technologies, and the full life-cycle costs on infrastructure investments.
(12) “Treatment Facilities” - Any devices or systems used in the collection, storage, treatment, transmission, diversion, or distribution of water intended for drinking water purposes.
(13) “Water Conservation” - Any structural or nonstructural water conservation measure that achieves a reduction in water consumption for a PWS or a publicly owned treatment works. Structural measures shall include installation of interior low-flow plumbing fixtures that are distributed and/or installed by a governmental agency or private nonprofit entity or that are funded in whole or in part by the governmental agency or private nonprofit entity and water meters that are funded and owned by the governmental agency or private nonprofit entity. Nonstructural measures shall include but are not necessarily limited to: incentives for previously installed low-flow fixtures, leak detection or infiltration/inflow programs, public awareness, public education, and incentive water service charges.
(14) “Water Treatment Plant Residuals” - The accumulated solids, sludge, backwash water, and brine resulting from treatment of water for domestic use.
(15) “Waterborne Disease Outbreak” - The significant occurrence of acute infectious illness, epidemiologically associated with the ingestion of water from a public water system which is deficient in treatment, as determined by the appropriate local or State agency.
52.3 PURPOSE AND GENERAL POLICIES
(1) The purpose of the DWRF is to provide financial assistance to governmental agencies or private nonprofit entities for the construction of water projects for health and compliance purposes as defined above.
(2) An annual Intended Use Plan (IUP) is required by the SDWA to provide information about how the state will assist communities with their drinking water needs. Included in the IUP is the Project Eligibility List, which is a comprehensive list identifying governmental agencies and private nonprofit entities with drinking water project needs, and the Projected Loan List, identifying prioritized PWS projects that are eligible for financial assistance from the DWRF. The project priority system is intended to establish priorities for the DWRF to protect and improve the health, safety, quality and reliability of drinking water supplies in Colorado. It is the policy of the Commission to maintain and improve the existing high quality standards for drinking water in the State by providing accessibility to the DWRF.
(3) It is also the policy of the Commission to encourage consolidation and regionalization of drinking water systems and to promote source water protection and water conservation where practicable.
(4) It is the policy of the Commission to promote beneficial use of water treatment plant residuals created by treatment processes of a PWS.
(5) Any applicant for financial assistance from the DWRF must comply with policies and procedures and other requirements of the Authority.
(6) Each year, after a public notice and comment period, the Commission will schedule a public hearing for approval of the IUP. After considering all pertinent comments, the Commission shall approve the IUP and adopt additions and modifications to the Project Eligibility List no later than December 31st of each year. The Division will establish a date each year for finalizing its proposal to the Commission for the IUP and Projected Loan List. After that date, any requests for changes must be transmitted directly to the Commission.
(7) The Commission may amend the Project Eligibility List at any time throughout the year to include projects that it determines and declares to be emergency projects needed to prevent or address threats to public health or environment. In cases where the Commission determines the amendments will result in substantial changes to the Project Eligibility List, public notice and opportunity for comment on the proposed inclusion shall be provided.
(8) All loan project proponents shall submit applications by deadlines established in the annual IUP. If it is determined that the DWRF lacks sufficient funds to cover loans for all eligible projects that are ready to proceed within the funding year, projects will be funded per section 52.6.
52.4 INTENDED USE PLAN
The Division, in cooperation with the Division of Local Government (DLG) and the Authority, shall develop an annual IUP.
The IUP shall include:
(1) The Project Eligibility List and Projected Loan List of projects.
(2) Descriptions of:
(3) Any other material that may be required by the SDWA.
52.5 PROCEDURES FOR IDENTIFYING PROJECTS AND ESTABLISHING THE PROJECT
(1) The Project Eligibility List is the comprehensive list of projects showing current and future needs of PWS improvements. Each year the Division shall, after consultation with interested persons and entities, including the DLG and Authority, review, update, and compile additions and modifications to the Project Eligibility List.
(2) Eligible Project Criteria The Project Eligibility List shall be comprised of four project types, which were developed to emphasize public health, drinking water quality, and compliance for Colorado PWSs. Projects on the Project Eligibility List will be classified by type A, B, C, or D below. No consideration will be given to governmental agencies or private nonprofit entities that have violations caused by poor operation and maintenance procedures or are under an administrative order for violating reporting requirements. All loan projects shall submit applications by deadlines established in the annual IUP.
52.6 PROCEDURES FOR ESTABLISHING THE PROJECTED LOAN LIST AND DISTRIBUTING
(1) The Projected Loan List shall be included in the IUP and, after a public notice and comment period, shall be presented to the Commission for final agency action at a public hearing. At minimum, the Projected Loan List shall identify:
(2) The Division shall rank each project on the Projected Loan List based on the priority score of each project, and projects shall be funded in priority order. Detailed scoring mechanisms shall be established in the IUP based on the following parameters:
(3) Projects on the Projected Loan List will be financed in priority order; however, exceptions for funding out of priority order shall be allowed for one or more of the following reasons:
(4) The Division shall identify the subsidy rate (if applicable) for each project on the Projected Loan List as identified in the Intended Use Plan.
52.7 DISADVANTAGED COMMUNITIES
(1) Under the SDWA, states are authorized to provide loans at or below market interest rates, including interest free loans, at terms not to exceed 30 years.
(2) The DWRF may provide additional loan subsidies for governmental entities or private nonprofit entities that are determined to be “disadvantaged.” The definition/criteria of a disadvantaged community and the nature of the loan subsidies to be made available thereto shall be recommended for inclusion in the IUP by the Division and the Authority in consultation with the DLG.
(3) While compiling projects on the Projected Loan List (utilizing the procedures listed in Section 52.6 above), the Division will identify the community projects that qualify for assistance under the Disadvantaged Communities Program in accordance with program definition/criteria.
52.8 PLANNING GRANTS AND DESIGN / ENGINEERING GRANTS
52.11 STATEMENT OF BASIS, SPECIFIC STATUTORY AUTHORITY AND PURPOSE (JULY 14,
Sections 37-95-103 and 37-95-107.8, C.R.S. provide the specific statutory authority for adoption of the attached regulatory amendments. The Commission also adopted, in compliance with section 24-4-103(4) C.R.S. the following statement of basis and purpose.
Sections 37-95-103 and 37-95-107.8 C.R.S.of the Colorado Revised Statutes moved the authority for promulgating rules and approving the annual Drinking Water Revolving Loan Fund Intended Use Plan from the Colorado Board of Health to the Water Quality Control Commission (WQCC). Updates to these rules reflect this change in authority.
52.12 FINDINGS IN SUPPORT OF EMERGENCY REVISIONS TO REGULATION #52, DRINKING
The Commission adopted these revisions on an emergency basis, with the intent that such revisions become effective immediately. The Commission found that immediate adoption of these revisions to Regulation #52 is imperatively necessary to preserve public health and welfare and that compliance with the requirements of section 24-4103, C.R.S., would be contrary to the public interest. The Commission found that immediate effectiveness of these regulatory revisions was necessary to ensure timely addition of new projects to the Project Eligibility list contained within the 2009 IUP. To that end, the Commission conducted an administrative action hearing immediately after the Regulation #52 rulemaking hearing for the purpose of considering appropriate additions to the IUP (in the form of an addendum) and addition of specific projects to the Project Eligibility List contained in the IUP. The Commission determined that the projects added to the Project Eligibility List are emergency projects needed to prevent or address threats to public health or the environment. The Commission intends that the revised Project Eligibility List be submitted to the General Assembly for action by the April 1, 2009 statutory approval deadline.
52.13 STATEMENT OF BASIS, SPECIFIC STATUTORY AUTHORITY AND PURPOSE (MARCH 9,
Sections 25-8-202(1)(g) and (o); and Section 37-95-107.8(4), C.R.S. provide the specific statutory authority for adoption of the attached regulatory amendments. The Commission also adopted, in compliance with section 24-4-103(4) C.R.S. the following statement of basis and purpose. The Commission conducted this rulemaking hearing to add a sixth category of projects for inclusion on the Drinking Water Revolving Fund Project Eligibility List. The addition of this category will ensure that Colorado will be able to use all funds that may become available under the American Recovery and Reinvestment Act of 2009 (ARRA). Projects added to the existing 2009 Project Eligibility list will receive funding only if necessary to fully utilize existing loan capacity and new federal funding that may become available in 2009. Consistent with the existing structure for prioritization, Category 6 projects will only be considered for funding after all other projects designated under Categories 1-5 have been given an opportunity to proceed. Category 6 projects will be subject to the eligibility requirements and intra- category ranking system outlined in Section 52.6 of this regulation. The Commission intends that terms and conditions specific to the administration of grant monies received under the ARRA will be memorialized in an addendum to the 2009 Drinking Water Revolving Fund and State Drinking Water Grant Fund Intended Use Plan (IUP). Such terms and conditions may include additional criteria for funding eligibility and priority ranking to comply with the requirements of the ARRA and to maintain consistency with EPA’s final ARRA guidance document. Interim deadlines or milestones to ensure that projects are proceeding expeditiously to meet the 12-month deadline in the ARRA may also be included in the IUP Addendum. To the extent that any of the terms and conditions in the IUP Addendum may differ from the original 2009 IUP or these Regulations, the Commission intends that the provisions of the IUP Addendum will govern with respect to the details of administering ARRA funds among the six funding categories. The Commission will utilize its administrative action hearing process, including opportunity for public review and comment, for approval of any IUP Addendum(s) as developed by the Water Quality Control Division, the Division of Local Affairs, and the Colorado Water Resources and Power Development Authority, consistent with Section 300j-12(b) of the federal Safe Drinking Water Act.
The Commission adopted these revisions on both an emergency and permanent basis, with the intent that the permanent amendments become effective April 30, 2009. PARTIES TO THE RULEMAKING 1. Denver Water 2. City of Aurora 3. Colorado Contractors Association 4. Northwest Colorado Council of Governments
52.14 STATEMENT OF BASIS, SPECIFIC STATUTORY AUTHORITY AND PURPOSE (APRIL 14,
Sections 25-8-202(1)(g) and (o); and Section 37-95-107.8(4), C.R.S. provide the specific statutory authority for adoption of the attached regulatory amendments. The Commission also adopted, in compliance with section 24-4-103(4) C.R.S. the following statement of basis and purpose. The Commission took action to modify Regulation #52 by: removing the criteria for determining the priority assigned and including it in the Intended Use Plan (IUP); eliminating the categories and developing new criteria for determining a project’s priority; establishing a Project Loan List that includes all projects that can be reasonably anticipated to receive a loan; and adding/deleting/revising definitions and updating other provisions. The Commission adopted these revisions for three principal reasons:
1. To provide a new emphasis on funding water projects based on a more holistic approach for addressing health and compliance consistent with subsection 52.3(1) of this regulation, while maintaining the current emphasis on providing funding opportunities for smaller, less financially capable communities; and 2. To improve the function and transparency of the Drinking Water Revolving Fund loan process; and 3. To better align the administration of the Drinking Water Revolving Fund program with the Water Pollution Control Revolving Fund program.
The Commission’s action to modify Regulation #52 will require revisions to the process for prioritizing projects, and the Commission is aware of the approach the Division, Authority, and DLG have developed to revise the project prioritization system for inclusion in the annual IUP. While the revised system will be proposed for consideration in a draft IUP, the Commission understands and appreciates that the Division, Authority, and DLG have conducted significant outreach to inform stakeholders of the draft approach that will be included in the IUP.
Specific modifications to Regulation #52 on a section-by-section basis are described below. Section 52.2 – Definitions – Several new definitions were added to define terms used in the previous regulation, as well as terms added to the regulation. Several existing definitions were deleted as the terms were no longer used in the regulation. The Commission also revised existing definitions to clarify their intent or to make them consistent with the definition in other regulations or statute. Section 52.3 – Purpose – This section was modified to add General Policies to the heading to indicate that the Commission will promote regionalization and the beneficial use of residuals generated by water treatment technologies. Further, this section now clarifies the procedural processes for the Project Eligibility List and IUP.
Section 52.5 – Procedures for Identifying Projects and Establishing the Project Eligibility List – The Commission renamed this section to delineate differences between the Project Eligibility List and Projected Loan List. This section lays out the broad approach to identify projects and to develop the Project Eligibility List. Project types were added that will be used to quantify types of projects listed on the Project Eligibility List. The Commission understands that these project types will not be used for the prioritization of funding.
Section 52.6 – Procedures for Establishing the Projected Loan List and Distributing Funds – The Commission renamed this section to describe the process for developing the Projected Loan List and how funds will be disbursed. Further, the Commission deleted the previous concept of project categories that had been used to prioritize projects and replaced it with a new project priority system to be established in the annual IUP. This eliminates the previous approach of prioritizing projects based on category first, and then priority score within the respective category. Project proponents will have to provide information under the six identified factors in subsection 52.6(2) to allow for the required priority scoring. These factors are based on drinking water quality and public health, affordability indicators, Colorado Primary Drinking Water Regulations compliance, source protection and conservation, sustainability, and readiness to proceed that, taken together, will result in projects being funded that will help attain the protection of public health and other goals identified by the Division and the Commission. These factors will serve as a general guide for the Division, Authority, and DLG to establish specific criteria in the IUP upon which all projects will be evaluated and scored. The Commission anticipates that the Division will bring the prioritization model to the Commission for its consideration in an informational hearing prior to the administrative action hearing for the annual IUP.
The Commission also established conditions under which the Division will identify projects that are within the fundable range based on a combination of readiness to proceed and priority score. This will allow the Division, Authority, and DLG to focus the bulk of their efforts on projects that are most likely to proceed during the coming year.
Section 52.7 - Disadvantaged Communities – The Commission revised section 52.7 to delete the requirement for periodic review of the disadvantaged community program, as the Commission finds that provision of funding to disadvantaged communities is an important aspect of the DWRF program, and that such funding should be provided when authorized. In addition, “Procedures” was deleted from the heading.
Section 52.8 – Emergency Procedures-The Commission renamed the “Emergency Procedures” section to “Planning and Design Grants” since emergency procedures are outlined in the annual IUP. The Commission used this section to authorized funding of planning and design grants when such funding is available and approved in the IUP.
52.15 STATEMENT OF BASIS, SPECIFIC STATUTORY AUTHORITY AND PURPOSE (AUGUST 10,
Sections 25-8-202(1)(g) and (o); and Section 37-95-107.8(4), C.R.S. provide the specific statutory authority for adoption of the attached regulatory amendments. The Commission also adopted, in compliance with section 24-4-103(4) C.R.S. the following statement of basis and purpose. The Commission took action to modify Regulation #52 by: inserting private nonprofit entities where applicable throughout the document per Senate Bill 15-121; and revising the planning and design grant nomenclature to planning, design and engineering grants to align with the program grant terminology. The Commission adopted these revisions for two principal reasons:
1. To provide access to grant and loan funding for private nonprofit entities that is consistent with Senate Bill 15-121; and 2. To clarify the grant terminology under the Colorado Drinking Water Revolving Fund (DWRF) loan process.
Specific modifications to Regulation #52 on a section-by-section basis are described below. Section 52.2 – Definitions – The Commission added definition (6) Private Nonprofit, and re-numbered definitions accordingly.
Section 52.2(7) – Definitions – Project Eligibility List - The Commission deleted “from time to time” to reflect a revision approved at its April 2014 hearing, which was inadvertently not reflected in the published regulation.
Sections 52.2(13); 52.3(1); 52.5(2); 52.6(3)(a),(b),(c), and (d); and 52.7 – Added the phrase “ or private nonprofit entity(ies)” following “governmental agency(ies)”. Sections 52.3(2) – Added the phrase “ and private nonprofit entities” following “governmental agencies”. Section 52.4 – Intended Use Plan – Deleted sentence “The Division shall recommend the IUP to the Commission each year for final agency action at a public hearing, and shall also provide for public notice and an opportunity to comment to comply with the SDWA.” This duplicates the information in 52.3 and is not necessary.
Section 52.7 – Disadvantaged Communities Procedures – “Procedures” was deleted from the heading to reflect a revision approved at the Commission’s April 2014 hearing, which was inadvertently not reflected in the published regulation.
Section 52.8 – The Commission renamed and reworded the section to reflect the two grant programs being (1) Planning Grants and (2) Design / Engineering Grants. _______________________________________________________________________________ Editor’s Notes History Entire rule eff. 11/30/2004.
Entire rule eff. 01/01/2009.
Sections 52.6, 52.12 emer. rules eff. 03/09/2009.
Sections 52.6, 52.12, 52.13 eff. 04/30/2009.
Entire rule eff. 05/30/2014.
Sections 52.2, 52.3, 52.4, 52.5(2), 52.6(3), 52.7-52.8, 52.15 eff. 09/30/2015.