[Code of Federal Regulations]
[Title 33, Volume 3]
[Revised as of July 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 33CFR241.7]

[Page 333-334]
 
                TITLE 33--NAVIGATION AND NAVIGABLE WATERS
 
         CHAPTER II--CORPS OF ENGINEERS, DEPARTMENT OF THE ARMY
 
PART 241--FLOOD CONTROL COST-SHARING REQUIREMENTS UNDER THE ABILITY TO PAY PROVISION--Table of Contents
 
Sec. 241.7  Application of test.

    (a) A preliminary ability to pay test will be applied during the 
study phase of any proposed project. If the ability to pay cost-share is 
lower than the standard share, the revised estimated cost-share will be 
used for budgetary and other planning purposes.
    (b) The official application of the ability to pay test will be made 
at the time the Project Cooperation Agreement (PCA) between the Corps of 
Engineers and the Non-Federal sponsor is signed. For structural flood 
control projects, the standard level of cost-sharing will not be known 
until the end of the project (since the standard level as specified in 
section 103(a), 33 U.S.C. 2213, includes LERRD). In this case, if the 
Eligibility Factor is greater than zero but less than one, the ability 
to pay non-Federal share will be determined using estimated costs.
    (c) The PCA for all projects subject to the ability to pay test will 
include a ``whereas'' clause indicating the results of the test. If the 
project is eligible for a lower non-Federal share:
    (1) The revised share will be specified in the PCA (there will be no 
recalculation of this share once the PCA is signed).
    (2) An exhibit attached to the Project Cooperation Agreement (PCA) 
will include the Benefits Based Floor (BBF) determined in Sec. 241.5(a): 
the Eligibility Factor (EF) determined in Sec. 241.5(b): If the 
Eligibility Factor is greater than zero but less than one, the estimated 
standard non-Federal share; the formula used in determining the ability 
to pay share as described in Sec. 241.5(c)(1) through (c)(4); and a 
display of the non-Federal cost share under the high cost criteria 
described in Sec. 241.5(d).
    (d) If at the time of project completion, the standard non-Federal 
share based on actual costs is less than the ability to pay share 
specified in the PCA, the standard share will apply.
    (e) For structural projects. (1) If the standard LERRD plus cash 
requirement exceeds the ability to pay cost-share, the Federal 
Government will make any necessary adjustments in expenditures in the 
following order: First, paying any cash requirement in excess of five 
percent of total project costs (if any) that would, under standard cost-
sharing, have been the responsibility of the non-Federal sponsor; 
second, making payments for LERRD; and third, providing for 
reimbursement at the end of construction. Federal payments for LERRD 
will be made only after the non-Federal payment for LERRD reaches a 
percentage of total project costs equal to the ability to pay non-
Federal cost-share less the five percent cash requirement. If such 
arrangements are necessary, the PCA should be prepared to reflect 
agreement on the best manner available for acquisition of those LERRD 
over the limiting percentage, or for reimbursing the sponsor upon 
completion of construction.
    (2) The non-Federal sponsor will be required to provide a cash 
payment equal to the minimum of five percent of estimated project costs, 
regardless of the outcome of the ability to pay test, unless any or all 
of the five percent cash requirement is waived by application of the 
high cost criteria described in Sec. 241.5(d). The project sponsor shall 
make cash payments during construction at a rate such that the amount of 
non-Federal payments in each year, as a percentage of total non-Federal 
cash payments, equals the amount of Federal expenditures (including sunk 
pre-construction engineering and design costs as a first year Federal 
construction expenditure) as a percentage of total Federal expenditures. 
Total Federal expenditures include cash payments for construction and if 
necessary (due to ability to pay considerations), for LERRD, and for 
reimbursement to the non-Federal sponsor. Total Federal expenditures for 
the

[[Page 334]]

purpose of this calculation, do not include expenditures which allow the 
non-Federal sponsor to defer payment of the non-Federal share under the 
provisions of this rule.
    (f) For non-structural projects, reductions in the non-Federal cost-
share as a result of the ability to pay test will not affect the 
procedures for determining the non-Federal and Federal payment 
schedules. For non-structural projects, no specific cash payments during 
construction are required by law.

[54 FR 40581, Oct. 2, 1989, as amended at 60 FR 5134, Jan. 26, 1995]