CHAPTER 01 ‑ DEPARTMENTAL RULES
SUBCHAPTER 01N - DRINKING WATER state revolving FUND RULES
SECTION .0100 - GENERAL PROVISIONS
15A NCAC 01N .0101 PURPOSE
Loans for public water systems from the Drinking Water State
Revolving Fund established by the Water Infrastructure Act S.L. 2005-454 (HB 1095)
shall be made in accordance with this Subchapter.
History Note: Authority G.S. 159G-22; 159G-35; 159G-44;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999;
Amended Eff. February 1, 2008.
15A NCAC 01N .0102 DEFINITIONS
The following definitions shall apply to this Subchapter:
(1) "Act" means the N.C. Drinking Water Act,
G.S. 130A-311 et. seq;
(2) "Division" means the Division of
Environmental Health, Department of Environment and Natural Resources;
(3) "Fund" means the Drinking Water State
Revolving Fund established by G.S. 159G-22;
(4) "Intended Use Plan" (IUP) means an annual
plan to identify the proposed uses of the amount available in the Fund;
(5) "MCL" means maximum contaminant level
which is the permissible level of a contaminant in water which is delivered to
any user of a public water system; and
(6) "Receiving agency" means the Division.
History Note: Authority G.S. 159G-2; 159G-35; 159G-44;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999;
Amended Eff. February 1, 2008.
15A NCAC 01N .0103 APPLICABLE PROCEDURES
Loans from the Fund shall be made in accordance with 40 CFR
Part 9 and 35, Subpart L which are hereby incorporated by reference including
any subsequent amendments and additions. This material is available for
inspection at the Department of Environment and Natural Resources, Division of
Environmental Health, 2728 Capital Boulevard, Raleigh, North Carolina. Free
copies may be obtained from the U.S. Environmental Protection Agency by
telephoning 1-800-426-4791. Copies are also available on-line at
http://www.deh.enr.state.nc.us/pws/srf/rules/072506-operating-agreement.doc and
http://www.epa.gov/fedrgstr/EPA-WATER/2000/August/Day-07/w19783.htm.
History Note: Authority G.S. 159G-22; 159G-35; 159G-44;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999;
Amended Eff. February 1, 2008.
SECTION .0200 - AVAILABILITY OF LOANS
15A NCAC 01N .0201 Availability of loans
(a) Loans shall be available only for projects that appear
on the state approved intended use plan submitted to the U.S. Environmental
Protection Agency and that comply with the requirements of this Subchapter.
(b) Proposed projects may be added to the IUP to address
emergency situations. The qualifying criteria is that a serious public health
hazard or a drought emergency is present or imminent for a public water supply
system. Such actions will be reported in the Annual Report.
(c) Fifteen percent of the annual allocation shall be
available to public water systems which regularly serve fewer than 10,000
persons to the extent such funds can be obligated in accordance with Rule .0701
of this Subchapter.
(d) During any fiscal year a maximum of five percent of the
annual allocation may be used for loans for project planning purposes only.
History Note: Authority G.S. 159G-22; 159G-35; 159G-44;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999;
Amended Eff. February 1, 2008; August 1, 2004.
15A NCAC 01N .0202 loans restrictions
(a) Loans shall not be used for the acquisition of real
property or interests therein, unless the acquisition is integral to a project
authorized under this Subchapter and the purchase is from a willing seller.
(b) Except as provided in Paragraph (c) of this Rule no
assistance shall be provided to a public water system that does not have the
technical, managerial, and financial capacity to ensure compliance with the
requirements of the Act or to a public water system that is in significant
non-compliance with any requirement of the Act or with a variance authorized
under the Act as evidenced by administrative penalty, administrative order or
court action against the water system. A determination of technical, managerial,
and financial capacity shall be based upon a review of finances; compliance
with applicable public health, environmental and utility laws; and the
experience and certification level of the water system operator as evidenced by
the submission of a water system management plan as required by Section .0400
of this Subchapter.
(c) A public water system in significant non-compliance
with the Act may receive assistance if the assistance shall ensure compliance
with the Act. A public water system that does not have technical, managerial,
and financial capacity may receive assistance if the owner or operator shall
agree to undertake changes in operation of the water system that will ensure
the system will achieve technical, managerial, and financial capacity over the
long-term.
(d) Each applicant shall establish a dedicated source of
revenue or demonstrate that there is adequate security for repayment of the
loan.
(e) Funding shall be limited to the most cost-effective
solution for the compliance or public health problem identified in a proposed
project.
(f) Funding shall be limited to the eligible portions of a
project containing ineligible segments.
(g) Funding shall not be available for federally owned
public water systems.
History Note: Authority G.S. 159G-22; 159G-35; 159G-44;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999;
Amended Eff. February 1, 2008.
15A NCAC 01N .0203 ADMINISTRATIVE EXPENSES
Agreement to a debt instrument by a loan applicant shall
include payment of a two percent administrative fee which is an eligible
project cost. These monies shall accrue to be used only for the reasonable
costs of administering the Fund.
History Note: Authority G.S. 159G-5; 159G-15;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999.
SECTION .0300 - ELIGIBILITY REQUIREMENTS
15A NCAC 01N .0301 DETERMINATION OF ELIGIBILITY
(a) Eligibility of applicants shall be determined in
accordance with G.S. 159G-31.
(b) Applications shall be returned to ineligible
applicants.
(c) An application may not be filed after the award of a
construction contract on a project, except when an applicant is subject to an
administrative order or deadline issued by the Division or the project
qualifies as an emergency situation.
History Note: Authority G.S. 159G-22; 159G-35; 159G-44;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999;
Amended Eff. February 1, 2008.
15A NCAC 01N .0302 ELIGIBLE PROJECTS
(a) Projects that will facilitate compliance with the North
Carolina Drinking Water Act or federal Safe Drinking Water Act or further
health protection under the criteria of Rule .0602 of this Subchapter shall be eligible
for funding under this Subchapter. Eligible projects include those that:
(1) Rehabilitate or develop sources to replace
contaminated sources of drinking water;
(2) Install or upgrade treatment to meet state
or federal regulations;
(3) Install or upgrade eligible storage to
prevent entry of microbiological contamination;
(4) Install or replace transmission or
distribution pipes to prevent contamination;
(5) Consolidate or restructure water systems;
or
(6) Purchase capacity in another water system.
(b) Types of projects which are not eligible for funding
are:
(1) Dams or rehabilitation of dams;
(2) Water rights, except if the water rights
are owned by a system that is being purchased through consolidation as part of
a capacity development strategy;
(3) Reservoirs, except for finished water
reservoirs and those reservoirs that are part of treatment process and are
located on the property where the treatment facility is located;
(4) Laboratory fees for monitoring;
(5) Operation and maintenance expenses;
(6) Projects needed mainly for fire protection;
or
(7) Projects primarily intended to serve future
growth.
History Note: Authority G.S. 159G-5; 159G-1;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999.
15A NCAC 01N .0303 ELIGIBLE PROJECT COSTS
(a) Project construction costs eligible for a loan under
this Subchapter are limited to:
(1) Planning, including system and needs
assessment, the preparation of a local water supply plan and the preparation of
a water system management plan;
(2) Environmental
assessment reports, including all federal cross-cutters;
(3) Design;
(4) Construction;
(5) Legal, fiscal, and administrative costs;
(6 Contingency
costs; and
(7) Land acquisition integral to the project
and acquired from a willing seller.
(b) Loans may be up to 100 percent of allowable
construction project costs.
History Note: Authority G.S. 159G-22; 159G-35; 159G-44;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999;
Amended Eff. February 1, 2008.
15A NCAC 01N .0304 MAXIMUM LOAN AMOUNT
History Note: Authority G.S. 159G-5; 159G-15;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999;
Repealed Eff. August 1, 2004.
SECTION .0400 – APPLICATIONS
15A NCAC 01N .0401 FILING DEADLINES
Complete applications for loans shall be postmarked or
delivered to the Division of Environmental Health on or before September 30 of
each year in order to be considered for loan funds available during the
following fiscal year except those applications for emergency projects as
defined in Rule .0201(b) of this Subchapter may be submitted at any time.
History Note: Authority G.S. 159G-22; 159G-35; 159G-44;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999;
Amended Eff. February 1, 2008.
15A NCAC 01N .0402 APPLICATION PROCEDURES
(a) Applications for loans shall be submitted on forms
provided by the Division and shall be accompanied by all documents such as the
Preliminary Engineering Report (PER), assurances, and other information required
by the instructions for completing and filing the applications. Information
concerning any grant or loan funds from any other source for which the
applicant has applied shall be disclosed on the application.
(b) Every application shall be accompanied by an adopted
resolution or other documentation as required by G.S. 159G-37. The resolution
or documentation shall be certified or attested to as a true and correct copy
as adopted.
(c) An applicant shall furnish additional information upon
the request of the Division as required by these Rules.
(d) A project shall not receive a priority rating unless
the application contains sufficient information on the day of rating for the
receiving agency to review and assign priority points.
(e) An application may be withdrawn from consideration upon
request of the applicant but if it is resubmitted it shall be considered as a
new application subject to Rule .0401 of this Subchapter.
History Note: Authority
G.S. 159G-22; 159G-35; 159G-44;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999;
Amended Eff. February 1, 2008.
15A NCAC 01N .0403 PROJECT SCHEDULE AND RESOLUTION
History Note Authority G.S. 159G-44;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999;
Repealed Eff. February 1, 2008.
SECTION .0500 - REVIEW AND ASSIGNMENT OF PRIORITIES
15A NCAC 01N .0501 PRIORITY REVIEW PERIOD
The priority review period shall be from October 1 until
June 30 of the following year.
History Note: Authority G.S. 159G-5; 159G-15;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999.
15A NCAC 01N .0502 ASSIGNMENT OF PRIORITIES
(a) During each review period the Division shall assign a
priority rating to each eligible application for inclusion in the state
intended use plan; the priority rating shall be determined in accordance with
the rating criteria and points established pursuant to G.S. 159G-35.
(b) The Division may establish a priority rating when two
or more applications receive the same number of priority points. The project
receiving more points for affordability shall receive the higher priority. If
the affordability points awarded the projects are equal, the project with the
smaller population shall receive the greater priority.
(c) Only the eligible portions of a project shall receive a
priority rating.
(d) The Division may assign a different priority rating to
each substantially independent part of a proposed project.
(e) Any applications that are not awarded assistance during
a review period shall be held over and considered for a second review in
accordance with G.S. 159G-39(c).
History Note: Authority G.S. 159G-35; 159G-44;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999;
Amended Eff. February 1, 2008.
15A NCAC 01N .0503 INTENDED USE PLAN
A state intended use plan containing the priority rating of
each eligible project will be prepared by the Division. The intended use plan
shall include a comprehensive priority list identifying which projects are intended
to be funded in the current year and in future years. The projects that are
expected to be funded in the current year shall be so noted. The priority
rating of eligible projects shall be published and an opportunity for public
hearing will be provided before funds are awarded.
History Note: Authority G.S. 159G-5; 159G-15;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999.
SECTION .0600 - PRIORITY CRITERIA
15A NCAC 01N .0601 GENERAL CRITERIA
15A NCAC 01N .0602 PUBLIC HEALTH AND COMPLIANCE
15A NCAC 01N .0603 CONSOLIDATION
15A NCAC 01N .0604 RELIABILITY
15A NCAC 01N .0605 AFFORDABILITY
15A NCAC 01N .0606 SOURCE PROTECTION AND MANAGEMENT
History Note: Authority G.S. 159G-35; 159G-44;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999;
Amended Eff. August 1, 2004;
Repealed Eff. February 1, 2008.
SECTION .0700 - AWARD, COMMITMENT AND DISBURSEMENT OF LOANS
15A NCAC 01N .0701 DETERMINATION OF AWARDS AND BYPASS
PROCEDURES
(a) All funds appropriated for a fiscal year and all other
funds accruing from loan principal repayments, interest payments, interest
earned on funds, excess funds not awarded in the previous priority review
period, and any other source shall be available for loans during the priority
review period.
(b) The funds available in a priority review period shall
be awarded in the form of a binding commitment in descending order of priority
rating upon EPA approval of that IUP considering Rule .0201 of this Subchapter
to those eligible projects that are ready to proceed. A project is defined as
ready to proceed when the following conditions have been met:
(1) Project
plans and specifications are approved by the Division;
(2) Any
environmental review required is complete;
(3) One hundred percent funding necessary for
the project is committed; and
(4) Authorization To Construct is issued by the
Division.
(c) Except as provided in Paragraph (d) of this Rule, the
maximum principal amount of loan commitment from any fiscal year's allocation
made to an applicant shall be three million dollars ($3,000,000) for a
construction project or twenty-five thousand dollars ($25,000) for project
planning purposes.
(d) Any funds remaining after the initial allocation of
Paragraphs (b) and (c) of this Rule shall be awarded in descending order of
priority rating to those eligible projects in any approved IUP subject to the
limitation of Paragraph (c) of this Rule for each 'pass' through the remaining
available funding.
History Note; Authority
G.S. 159G-36;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999;
Amended Eff. February 1, 2008; August 1, 2004.
15A NCAC 01N .0702 CERTIFICATION OF ELIGIBILITY
(a) The receiving agency shall create a certificate of
eligibility for each applicant for which a loan has been made.
(b) The certificate of eligibility shall indicate that the
applicant meets all eligibility criteria and that all other requirements of the
Act have been met.
(c) The certificate of eligibility shall also indicate the
amount and the fiscal year of the loan commitment.
History Note: Authority G.S. 159G-5; 159G-15;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999.
15A NCAC 01N .0703 CRITERIA FOR LOAN ADJUSTMENTS
Upon receipt of bids, a loan commitment may be adjusted as
follows:
(1) The loan commitment may be decreased by the
receiving agency provided; the project cost as bid is less than the estimated
project cost;
(2) The loan commitment may be increased a maximum of
10 percent by the receiving agency provided: the project cost as bid is
greater than the estimated project cost; the project as bid is in accordance
with the project for which the loan commitment was made; the receiving agency
has reviewed the bids and determined that substantial cost savings would not be
available through project revisions without jeopardizing the integrity of the
project; and adequate funds are available in the Fund. Increases greater than
10 percent of the loan commitment require approval by the Local Government
Commission.
History Note: Authority G.S. 159G-5; 159G-15;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999.
15A NCAC 01N .0704 DISBURSEMENT OF LOANS
(a) Disbursement of loan monies shall be made at intervals
as work progresses and expenses are incurred. No disbursement shall be made
until the receiving agency receives documentation of incurred costs. At no
time shall disbursement exceed the allowable costs which have been incurred at
that time.
(b) No disbursement shall be made until the receiving
agency receives documentation of compliance with applicable federal and state
laws.
(c) The receiving agency shall authorize the Controller's
Office of the Department of Environment and Natural Resources to make loan
disbursements.
History Note: Authority G.S. 159G-22; 159G-35; 159G-44;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999;
Amended Eff. February 1, 2008.
15A NCAC 01N .0705 TERMINATION OF LOANS
Loan commitments may be terminated by the receiving agency
when recipients do not meet project schedules, if they fail to award contracts
within one year, or if they fail to comply with applicable federal requirements.
History Note: Authority G.S. 159G-5; 159G-15;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999.
SECTION .0800 - LOAN REPAYMENTS
15A NCAC 01N .0801 INTEREST RATES
The interest rate to be charged on loans under this Subchapter
shall be set in each priority review period at the lesser of four percent per
annum or one half the prevailing national market rate as derived from the Bond
Buyer's 20-Bond Index in accordance with G.S. 159G-40.
History Note: Authority
G.S. 159G-22; 159G-35; 159G-44;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999;
Amended Eff. February 1, 2008.
15A NCAC 01N .0802 REPAYMENT OF PRINCIPAL AND INTEREST
(a) The debt instrument setting the terms and conditions of
repayment of loans under this Subchapter shall be established after the receipt
of bids. Adjustments to the loan may be made only under Rule .0703 of this
Subchapter.
(b) The maximum maturity on any construction loan shall not
exceed 20 years.
(c) The maximum maturity on any project planning loan shall
not exceed five years.
(d) Interest on the debt instrument shall begin to accrue
on the original date that a project's contracts are scheduled to be completed.
Extensions of this deadline are not allowed.
(e) All principal payments shall be made annually on or
before May 1 or November 1. The first principal payment is due not earlier than
six months after the date of completion of the project.
(f) All interest payments shall be made semiannually on or
before May 1 and November 1 of each year. The first interest payment is due
not earlier than six months after the date of completion of the project.
(g) All principal and interest payments shall be made
payable to the Fund.
History Note: Authority G.S. 159G-5; 159G-15;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1,1999.
SECTION .0900 - INSPECTION AND AUDIT OF PROJECTS
15A NCAC 01N .0901 INSPECTION
Inspection of a project to which a loan has been committed
may be made by the receiving agency to determine the percentage of completion
of the project for disbursements, and for compliance with all applicable laws
and rules.
History Note: Authority G.S. 159G-5; 159G-15;
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999.
15A NCAC 01N .0902 AUDIT
All projects to which a loan has been committed shall be
audited in accordance with G.S. 159G-35 and G.S. 159-40.
History Note: Authority G.S. 159G-22(c);
Temporary Adoption Eff. January 31, 1998;
Eff. April 1, 1999;
Amended Eff. February 1, 2008.
