1. (a) the municipality remains responsible for proper and timely submission of the appropriate operation and maintenance grant application forms;
2. (b) the basic requirements for State operation and maintenance aid are applied regardless of any administrative arrangements or agreements which may be made between the municipality and the contractor;

3. (c) if the municipality furnishes a documentable breakdown of eligible costs, reimbursement will be based on the submitted eligible cost statement. If the municipality is unable to provide the documentable breakdown of eligible costs, and is otherwise found to meet all other eligibility requirements, reimbursement will be based on whichever of the following results in the lesser amount:

   1. (1) the eligible costs of the last full year of operation by the municipality, increased by the statewide rate of escalation of total eligible costs of operating and maintaining public sewage treatment plants between that year and the year of application; or
   2. (2) the amount of the contract.

State aid will be considered for a municipal corporation which contracts with a second party to operate and/or maintain a municipally owned sewage treatment works, if the following conditions are met: