United States EPA 816-R-99-012
Environmental Protection July 1999
Agency
Office of Water (4606)
Handbook for
Capacity
Development:
Developing Water System
Capacity Under the Safe
Drinking Water Act as
Amended in 1996
Capacity Development:
Tapping Into the Future. Protecting Public Health.
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
Contents
Part 1: SDWA: The Big Picture -5-
Section 1: The Safe Drinking Water Act Amendments of 1996:
Strengthening Protection for America's Drinking Water
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Part 2: Capacity Development Overview -17-
Section 2:
Capacity Development and SDWA -18-
SectionS: Public Water System Universe: Small Systems in the United States .... -27-
Part 3: Implementing a State Program -34-
Section 4: Worksheet #1: Program for Ensuring that All New Community
Water Systems and Nontransient, Noncommunity Water Systems
Have Technical, Managerial, and Financial Capacity -35-
Section 5: Worksheet #2: Assessing Proposed State Capacity Development Strategies
for Existing Public Water Systems -42-
Section 6:
Ensuring New System Capacity -50-
Section 7: Preparing Capacity Development Strategies -55-
Section 8: Assessing System Capacity of DWSRF Applicants -69-
Section 9: Capacity Development and Other Programs -74-
Section 10: Building System Capacity -82-
Section 11: Affordability -92-
Section 12: Funding Sources for Capacity Development Programs -98-
Section 13: Public Education and Participation -109-
Part 4: Appendices -114-
Appendix A: Additional Resources -115-
AppendixB: Glossary -139-
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
Exhibits
Exhibit 2-1: The History of Drinking Water Protection and Capacity Development -20-
Exhibit 3-1: Number of Systems by System Type -27-
Exhibit 3-2: Number of People Served by System Type (in millions) -28-
Exhibit 3-3: Percent Change in the Number of CWSs by System Size -29-
ExhibitT-1: Solving Small System Problems: Alternative Spatial Boundaries -56-
Exhibit 7-2: Solution Possibilities Frontier -56-
Exhibit 7-3: Building a Capacity Development Strategy -58-
Exhibit 7-4: Tools to Develop Methods or Criteria to Prioritize Systems -60-
Exhibit7-5: Tools to Address Factors that Impair Capacity Development Efforts -62-
Exhibit 7-6: Tools that May Permit the State to Exercise the
Authority and Resources of the SDWA -63-
Exhibit 8-1: Tools that May be Used by States to Assess System Capacity
for DWSRF Eligibility -70-
Exhibit 9-1: The '96 SDWA Tapestry -74-
Exhibit 9-2: Capacity Development Benefits of SDWA Programs -76-
Exhibit 10-1: The Restructuring Spectrum -85-
Exhibit 10-2: Economics of Physical Interconnection -86-
Exhibit 10-3: Economics of Common Management -87-
Exhibit 10-4: The Economies of Scale vs. Local Control Tradeoff -87-
Exhibit 10-5: Variances and Exemptions: A Before and After Picture -89-
Exhibit 11-1: The Affordability Function Graph -94-
Exhibit 11-2: Ability to Pay is a Function of Income -95-
Exhibit 11-3: Underpricing of Water -96-
Exhibit 11-4: Factors Influencing Affordability Assessment -96-
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
Acronyms
Acronym
AMWA
AWWA
BMP
CCE
CCN
CPE
CWA
CWS
CWSP
CWSRF
DEM
DEP
DHS
DOH
DPUC
DWSRF
EPA
EQIP
FVT
FY
GLP
HOP
IUP
MCL
MDE
MES
Meaning
Association of Metropolitan Water
Agencies
American Water Works Association
Best Management Practice
Comprehensive Compliance Evaluation
Certificates of Convenience and Necessity
Comprehensive Performance Evaluations
Clean Water Act
Community Water System
Coordinated Water System Plan
Clean Water State Revolving Fund
Department of Environmental Management
Department of Environmental Protection
Department of Health Services
Department of Health
Department of Public Utility Control
Drinking Water State Revolving Fund
Environmental Protection Agency
Environmental Quality Incentive Program
Financial Viability Test
Fiscal Year
Great Lakes Program
Hardship Grants Program
Intended Use Plan
Maximum Contaminant Level
Maryland Department of the Environment
Maryland Environmental Service
Acronym
MHI
MOU
NDWAC
NPDWR
NPS
NRCS
NRWA
NTNCWS
OWM
PPGP
PUC
PWS
PWSCA
RCAP
RUS
SDWA
SDWPC
SMA
SWPP
TNCWS
UIC
UTC
WSP
WUCC
Meaning
Median Household Income
Memorandum of Understanding
National Drinking Water Advisory
Committee
National Primary Drinking Water
Regulations
Nonpoint Source
Natural Resources Conservation Service
National Rural Water Association
Nontransient, Noncommunity Water
System (also NTNC)
Office of Waste Water Management
Pollution Prevention Grant Program
Public Utility Commission
Public Water System
Public Water Supply Coordination Act
Rural Community Assistance Programs
Rural Utility Service
Safe Drinking Water Act
State Drinking Water Program Coordination
Satellite Management Agency
Source Water Protection Program
Transient Noncommunity Water Systems
Underground Injection Control
Utilities and Transportation Commission
Water System Plan
Water Utility Coordination Committee
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
Parti
SDWA: The Big Picture
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
Section 1
The Safe Drinking Water Act Amendments of 1996:
Strengthening Protection for America's Drinking
Water
President Clinton signed the Safe Drinking Water Act (SDWA) Amendments of 1996 on
August 6, 1996. The Amendments establish stronger prevention programs, increase State flexibility,
give better information to consumers, and ^^^^^^^^^^^^^^^^^^^^^^^^^^
strengthen EPA's regulatory development
process.
Four themes characterize the areas of
greatest change. Together, they comprise a
balanced, integrated framework of reform, and
represent a major national commitment to:
Capacity Development is part of SDWA's
new and stronger approach to preventing
drinking water contamination. SDWA's
changes also include initiatives to improve
communication with the public, employ better
science for risk assessment, and provide
funding for systems through the DWSRF.
1. Better information for
consumers, including the "right to
know" (through consumer
confidence reports and other provisions);
2. Regulatory improvements, including better science, prioritization of effort, and risk
assessment;
3. New funding for States and communities through the Drinking Water State Revolving
Fund (DWSRF); and
4. New and stronger approaches to prevent contamination of drinking water (including
source water protection, capacity development, and operator certification).
1. Better Consumer Information: The "Right-to-Know"
In addition to the much-discussed new requirement for systems to prepare consumer
confidence reports, the Amendments frequently specify that the public be provided with or given access
to other data collected, analyses done, or implementation strategies developed under new SDWA
programs. These consumer information provisions herald a new era of public involvement in safe
drinking water, founded on the idea that the understanding and support of the public is vital to address
and prevent the growing threats to drinking water quality in the years ahead.
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
Consumer Confidence Reports
On August 19, 1998, EPA promulgated a final rule requiring community water systems to
prepare and provide to their customers annual consumer confidence reports on the quality of the water
delivered by the systems. These reports will provide valuable information to customers of
community water systems and allow them to make personal health-based decisions regarding
their drinking water consumption. The first round of reports are due by October 1999.
The regulations require, at a minimum, each CWS to mail each customer of the system at least
once annually a report on the level of contaminants in the drinking water purveyed by that system. In
addition, the CCR must contain brief statements in plain language regarding the health concerns that
resulted in the regulation of contaminants for which a Maximum Contaminant Level (MCL), treatment
technique, or action level was violated, and a brief and plainly worded explanation regarding
contaminants that may reasonably be expected to be present in drinking water, including bottled water.
Finally, the regulations provide for an EPA toll-free hotline that consumers can call for more
information.
The Governor of a State may determine not to apply the mailing requirement to a CWS serving
fewer than 10,000 persons. Such a system would then be required to inform its customers, through a
newspaper notice, that the system will not be mailing the report, and to publish the report in a local
newspaper. The system would then also be obliged to make the report available on request to the
public. The Governor of a State also may determine that systems serving fewer than 500 persons need
only to post notices announcing the availability of the report.
Other Provisions for Improved Consumer Information
The 1996 Amendments ask water systems, States, and EPA to share responsibility for
improving communication with the public.
Water System Responsibilities
Persons served by a PWS must be given notice of any violation of a national drinking
water standard "that has the potential to have serious adverse effects on human health
as a result of short-term exposure." Notice must be given within 24 hours of the
violation through at least one effective avenue of communication.
Written notice of any other violation of a national standard or monitoring requirement
must be given within one year of the violation.
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
States share of the communication responsibility include these duties:
Making "readily available to the public" the annual report to the Administrator on
violations of NPDWRs by PWSs within the State. [§1414(c)(l-3)]1
Submitting a triennial report to the Governor on the effectiveness of its capacity
development strategy and must also make its report available to the public. Public
involvement is required in the development of the capacity development strategy.
[§1420(c)(3)]
The public must be provided with notice and an opportunity to comment on the annual
priority list of projects eligible for DWSRF assistance that States will publish as a part
of their DWSRF intended use plans (RJPs). [§1452(b)(3)(B)]
States "shall make the results of the source water assessments ... available to the
public." [§1453(a)(7)]
Even EPA shoulders a portion of the responsibility by:
Making the information from the national drinking water contaminant occurrence
database "available to the public in readily accessible form." [§1445(g)(5)]
Publishing and making all regulations, and most guidance and information documents,
available for public notice and comment.
2. Regulatory Improvements
A decade of experience under the 1986 SDWA revealed several areas where responsible,
flexible science-based policies and a better prioritization of efforts could improve protection of public
health.
Risk-based Contaminant Selection
The 1986 SDWA requirement that EPA regulate an additional 25 contaminants every 3 years
has been eliminated under the 1996 SDWA Amendments. EPA now has the flexibility to decide
whether or not to regulate a contaminant after completing a required review of at least five contaminants
every five years. In order to regulate a contaminant, EPA must determine that:
1. The contaminant adversely affects human health;
1 All [xxxx] reference sections in the 1996 SDWA Amendments.
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
2. The contaminant is known or substantially likely to occur in PWSs with a frequency and
at levels of public health concern; and
3. Regulation of the contaminant presents a meaningful opportunity for health risk
reduction. [§1412(b)(l)]
This provision departs dramatically from the approach of the previous law. The "25 every 3
years" mandate allowed little risk prioritization by EPA, and the mandate to regulate 83 specified
contaminants allowed essentially none. The new provision makes risk prioritization a dominant criteria
in selecting contaminants to regulate. EPA will work in partnership with the States, water systems,
environmental and public health groups, the scientific community, and the public to identify and closely
scrutinize unregulated contaminants that are most prevalent in drinking water, present the most serious
threat to health, and can be most productively and effectively controlled. Sizeable contaminant clusters
(similar to the disinfection byproducts/microbial cluster, with 13 contaminants proposed) can be
reviewed and other contaminants added for analysis with only those that meet the three criteria
receiving a determination to regulate.
Furthermore, the 1996 SDWA amendments require EPA to publish a list of prioritized
contaminants which, at the time of publication, are not subject to any proposed or promulgated national
primary drinking water regulation (NPDWR), that are known or anticipated to occur in public water
systems, and which may require regulations under the SDWA [§1412(b)(l)]. EPA published the first
list of contaminants (Drinking Water Contaminant Candidate List, or CCL) on March 2, 1998. The
CCL prioritizes contaminants which are identified by need for drinking water research, those which
need additional occurrence data, and contaminants which are priorities for consideration for the
development of future drinking water regulations and guidance. The CCL includes 50 chemical and 10
microbiological contaminants/contaminant groups.
Collection and Organization of Occurrence InformationDatabase Creation
The collection, organization, and ready availability of contaminant occurrence data takes on
unprecedented importance under the new law's risk-based regulatory framework. Accordingly, the
statute includes several responsive provisions. EPA must issue regulations when establishing criteria for
the monitoring of unregulated contaminants, and, within 3 years after enactment (August 1, 1999), and
every 5 years thereafter, must issue a list of no more than 30 such contaminants for which monitoring is
required. Significant changes from previous law include a provision that the States may (and if they
decline, EPA shall) develop a plan for monitoring by a representative sample of systems serving fewer
than 10,000 people (to ensure an understanding of contaminant occurrence in different size systems),
and a provision requiring that persons served by the chosen systems be notified of the availability of
monitoring results. [§1445(a)(2)]
For the first time, a national occurrence database covering regulated and unregulated
contaminants will be established, primarily using compliance monitoring detection data and information
from the unregulated contaminant monitoring program. The principal use of the database will be for
EPA to make occurrence determinations on whether or not to regulate a certain contaminant, but it may
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
also be useful for such purposes as State tailoring of system monitoring and source water protection.
The occurrence database will also improve public understanding and participation in drinking water
protection because the data must "be available to the public in readily accessible form." [§1445(g)J In
addition, prior to issuing regulations, EPA can require systems to submit information for compliance
purposes and to provide a basis for promulgating new regulations.
Cost-benefit Analysis and Research for New Standards
Under the SDWA Amendments, EPA is to conduct a thorough cost-benefit analysis of all
future drinking water standards and provide comprehensive and understandable information to the
public. EPA is also required to use the "best available, peer-reviewed science and supporting studies"
in setting new drinking water standards. [§1412(b)(3)J
A number of statutory provisions will help to ensure that adequate scientific information is
developed to support these new requirements:
Health effects research [§1452(n)];
Disinfection byproducts/microbial pathogens ($87.5 million over 7 years) [§1458(c)];
Waterborne disease occurrence ($15 million over 5 years) [§1458(d)];
Subpopulations at greater risk [§1458(a)]; and
Biological mechanisms by which contaminants affect human health [§1458(b)].
Standard setting has new flexibility compared to the 1986 law. After first defining a maximum
contaminant level (MCL) or treatment technique standard based on feasibility [§1412(b)(4)J, EPA
must determine whether the costs of that standard would be justified by the benefits. If not, then EPA
may adjust an MCL to a level that "maximizes health risk reduction benefits at a cost that is justified by
the benefits." The authority to adjust the MCL cannot be used if the costs to large systems are justified
by the benefits, and other systems are likely to receive variances. The rationale is that affordability
problems for smaller systems should not change a national standard if those systems would receive a
variance from that national standard anyway, based on affordability grounds. Flexibility to "minimize
the overall risk of adverse health effects" is also authorized where certain means of controlling one
contaminant may increase the risk from another contaminant ("risk-risk" balancing situations).
[§1412(b)(4-6)]
The cost-benefit provision was included primarily to address the concern that the health
protection benefits of certain future standards might not be "worth" their costs, even if large systems
could afford to meet such standards through their economies of scale. The new standard-setting retains
the previous law's approach to defining an affordable technology standard, but subjects that standard in
every case to the "justified" test. EPA can proceed with a standard based on the affordable technology
approach, or may adjust an affordable technology-based MCL to a level that is "justified." In the latter
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case, the new law further requires that the MCL must also maximize health benefits, ensuring that health
protection remains the paramount consideration in standard setting.
Small System Technologies, Variances, and Exemptions
A fundamental problem with the 1986 law was that, in setting standards based on technology
that large systems could afford, it did not recognize the often-different economics of small systems. The
new law contains multiple remedies. First, as part of a new drinking water standard, EPA is to identify
technologies that comply with the standard and are specifically affordable for each of three groups of
smaller systems: 25-100; 501-1,000; and 1001-3500 persons served. [§1412(b)(4)(E)] Second,
where such technologies do not exist for a certain group of smaller systems or quality of source water, a
"variance" technology must be identified that need not meet the standard but must provide the maximum
health protection affordable for such groups of smaller systems. [§1412(b)(15)]
EPA issued new regulations on August 14, 1998, which revise existing variances and
exemptions regulations [63 FR 157]. The revisions codify provisions of the 1996 SDWA Amendments
dealing with "general" variances available to PWSs of all sizes, and implement new small system
variances for water suppliers that serve fewer than 10,000 people. The revised regulations create a
new affordability-based small systems variance which may be granted by a State to a PWS serving
fewer than 3,300 persons, or, with the approval of EPA's Administrator, to a system serving 3,301-
10,000 persons. The revised regulations also implement changes related to exemptions.
States with primacy will make decisions on affordability variances for specific systems serving
up to 3,300 persons, while EPA must approve variances for systems between 3,300 and 10,000. The
State variance decision must include consideration of whether the system could comply with the
standard through water treatment, alternative water supplies, restructuring, or consolidation. In
February 1998, EPA also published a document titled Information for States on Developing
Affordability Criteria of Drinking Water, providing guidance that States can use to make affordability
determinations. Consumers may petition EPA to object to a variance proposed by a State, and EPA
must respond to petitions within 60 days. If EPA objects to a variance, it cannot be granted until the
State makes the requested changes or responds in writing to each objection. [§1415(e)]
The statute also authorizes traditional "source water" variances on condition that the systems
install affordable compliance technology. This gives the certainty of a variance to any size system able
to install treatment, bu't whose unavoidably poor source water quality may prevent it from meeting the
standard even with treatment. [§1415(a)(l)(A)J
These new provisions create a logical and workable hierarchy of options for small systems.
Most small systems whose source water quality does not meet a national standard will be able to
comply if they are allowed to use treatment that is affordable for systems of their size. For those
systems that cannot afford such treatment, the State (with EPA review if applicable) will assess whether
other changes e.g., source water protection, restructuring, or connection to another system could
enable them to meet the standard. Only if such changes are not practicable can a system be authorized
to provide drinking water that does not fully meet a national standard. That authorization will only be
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
for the best technology the system can afford, which will give much more protection than was actually
provided under the all-or-nothing regime of the previous law.
Moreover, a system serving 3,300 persons or fewer may receive an exemption from a standard
for up to nine years if the system serves an economically disadvantaged community, is reasonably likely
to get financial assistance to comply during the exemption term, and cannot comply by developing an
alternative water source or by restructuring changes. Exemptions are meant to help systems avoid
continuing violation repercussions if they cannot comply now but will in the near future. [§1416]
Compliance Time Frames
The Amendments extend to three years the previous 18-month deadline for systems to comply
with new regulations to 3 years; EPA can shorten the 3 year deadline if an earlier date is "practicable."
EPA or States (for individual systems) may extend the deadline to comply by an additional two years if
necessary for capital improvements. [§1412(b)(10)]
Monitoring Reforms
States may grant "interim monitoring relief to systems serving less than 10,000 persons
(exempting them from additional quarterly monitoring) if monitoring done at the time of "greatest
vulnerability to the contaminant" fails to detect it, and the State finds that further monitoring is unlikely to
detect the contaminant. This relief cannot cover any microbiological contaminants (or their indicators),
disinfectants, or disinfection or corrosion byproducts. [§1418(a)]
States with an approved program for source water assessments may implement tailored,
alternative monitoring requirements for any contaminant for which interim relief may be granted (except
unregulated microbiological contaminants or indicators). This provision strikes a balance encompassing
two key aims of the new law: greater flexibility for States in crafting a drinking water program that
responds to local conditions and needs, and the assurance that both regulation and deregulation under
that program will be solidly based on good science. The new law also explicitly protects "existing
authorities" available to States to alter monitoring requirements through waivers or other EPA initiatives,
such as the chemical monitoring reform process now underway. [§1418(b-d)]
Enforcement
The Amendments streamline processes for administrative compliance orders and penalties up to
$5,000, raise the administrative and emergency penalty caps, make enforceable many SDWA
provisions and requirements implemented by EPA or primacy States, and give up to a 2 year
enforcement moratorium for violations being remedied by a specific plan to consolidate with another
system. States with primacy must also adopt administrative penalty authority. These measures will
facilitate more effective enforcement, encouraging compliance while keeping safeguards for systems.
[§1414]
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
3. Drinking Water State Revolving Fund
The creation of a DWSRF to assist communities in installing and upgrading drinking water
system infrastructure is among the most important changes in the nation's drinking water program since
passage of the original SDWA in 1974. President Clinton proposed this DWSRF in 1993 to advance
the same kind of national commitment to safe drinking water as America has made to wastewater
treatment and clean water through the Clean Water State Revolving Fund (CWSRF).
Authorized Funding
The DWSRF is authorized at $599 million for Fiscal Year (FY) 1994, and $1 billion annually
thereafter through FY 2003. The full span of this authorization is meaningful because the law permits
appropriation in future years of any funds authorized but not appropriated in prior years. Funds are
allotted to all primacy States (Wyoming is grandfathered) through FY 1997 based on the current
formula for PWS Supervision grants, and thereafter based on the results of the most recent needs
survey.
A minimum allotment of 1 percent will be available for all States, and the required State match
is 20 percent. One and one-half percent of the total DWSRF can be used for grants to Indian Tribes
and Alaska Native villages. CWSs and non-profit non-community water systems (NCWSs) are
eligible for DWSRF loans, but federal systems are not. Projects, including associated land "integral to
a project," are eligible if they "will facilitate compliance with" applicable national drinking water
regulations or will "significantly further the health protection objectives" of SDWA.
States will annually prepare Intended Use Plans (RJPs) identifying eligible projects and their
priority, giving top priority to those that:
Address the most serious risk to human health;
Are necessary to ensure compliance with the requirements of this title (including
requirements for filtration); and
Assist systems most in need on a per household basis according to State affordability
criteria.
States may provide additional loan subsidies and loan forgiveness to disadvantaged communities for up
to 30 percent of the annual DWSRF capitalization grant [§1452(a-b), (d)].
Before FY 2002, State Governors may shift up to 33 percent of the SDWA capitalization grant
into the CWSRF, or up to an equivalent dollar amount from the CWSRF into the DWSRF
Set Asides for Prevention Programs and Projects.
One of the most notable features of the new law is the flexibility given to states to set aside
funds from their DWSRF allotment for a number of priority activities. Up to 10 percent of a State's
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
capitalization grant may be used for implementation of source water protection, capacity development,
and operator certification programs, as well as for the State's overall drinking water program
[§1452(g)J. As much as 15 percent (no more than 10 percent for any one purpose) can be used for
prevention projects in water systems, including source water protection loans, technical and financial
assistance to systems as part of a State capacity development strategy, source water assessments, and
wellhead protection [§1452(k)].
These set aside provisions reflect the high priority and importance Congress placed on
prevention activities some of which are discretionary for States and systems. The success of these
activities will determine whether the new law's potential as a preventive, environmental statute is
realized, and how far we as a nation can advance under it towards the sustainable use of water.
Appropriately, wide discretion is provided to States in both the design and implementation of these
activities. This will enable States to further their individual priorities, and to coordinate with other State
and local activities that may help meet the objectives of the new prevention programs.
The remainder of this handbook addresses the capacity development provisions of SDWA,
including the responsibilities of States, tools that States can use to help systems develop their capacity,
and the links between capacity development and other SDWA initiatives.
4. Stronger Emphasis on Prevention
The SDWA Amendments establish a strong new emphasis on preventing contamination
problems through source water protection and enhanced water system management. That emphasis
transforms the previous law, which had an after-the-fact, regulatory focus, into a environmental statute
that can better provide for the sustainable use of water by our nation's PWSs and their customers. The
States' role will be central in designing programs to prevent problems by helping water systems
improve operations and avoid contamination.
Capacity Development
The 1996 Amendments create a program that builds nationally on the demonstrated success of
several States in strengthening the technical, managerial, and financial capacity of water systems to
reliably deliver safe drinking water. In order to receive the full allotment of funds to which they are
entitled under the DWSRF, States must develop:
1. A program to ensure that all new community and new nontransient, noncommunity
water systems commencing operation after October 1, 1999, demonstrate sufficient
technical, managerial, and financial capacity to comply with national primary drinking
water regulations (NPDWRs); and
2.
A strategy to assist existing PWSs in acquiring and maintaining technical, managerial,
and financial capacity to comply with SDWA requirements.
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States may use DWSRF set aside funds for their capacity development and implementation
efforts. States that do not meet the provision's requirements are subject to a 20 percent withholding
from their DWSRF allotment.
The capacity development provisions offer an unprecedented opportunity for States to
creatively and comprehensively address the long standing challenges and difficulties associated with
small water systems. Capacity development strategy preparation affords States a chance to identify
and prioritize systems most in need of assistance in enhancing their technical, managerial, and financial
capacity. Having identified and prioritized systems most in need, States can then effectively target
technical and financial assistance. Capacity development strategy preparation also offers States the
chance to consider how the resources and authorities of the SDWA, as well as other resources and
authorities, can be used to:
Assist PWSs in complying with national primary drinking water regulations;
Encourage the development of partnerships between PWSs to enhance the technical,
managerial, and financial capacity of the systems; and
Assist PWSs in the training and certification of operators.
Capacity development strategies will likely lead to a greater emphasis by small systems on self
assessment and long-term planning. Strategies may also prove to be a useful framework within which
State's explore integrated resource planning and its potential to help resolve conflicts over drinking
water quality and management issues. For each new drinking water regulation, EPA must analyze the
likely effect of the regulation on the viability of PWSs. [§§1452(a)(l)(G)(I), (g)(2)(C), (k)(l)(B)]
Operator Certification
Ensuring the knowledge and skills of PWS operators is widely considered one of the most
important, cost-effective means to strengthen drinking water safety. To that end, the Amendments
require all States to carry out an operator certification program. Each State must either:
1. Implement a program that meets the guidelines established by EPA; or
2. Enforce an existing State program, provided it is substantially equivalent to or meets the
overall public health objectives of EPA's guidelines.
States are allowed to use a set-aside from the DWSRF to carry out their operator certification
program. EPA is required to withhold 20 percent of DWSRF funds that States would otherwise be
eligible to receive if they fail to meet the requirements of this provision of the SDWA.
This program does not require that every water system operator be certified. Rather, the
objective of the program is to ensure every water system has (directly, under contract, or in conjunction
with other systems) an operator to perform certain key compliance functions, and who is trained and
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certified to the level that each State determines is appropriate for the functions, facilities and operations
of that system.
Source Water Protection
In August of 1997, EPA published the State Source Water Assessment and Protection
Programs Guidance (EPA 816-R-97-009). Within 18 months thereafter, States were required to
submit programs for delineating source water areas of PWSs, and for assessing the susceptibility of
these source waters to contamination. States could set aside up to 10 percent of their FY 1997
DWSRF allotment for use in delineating and assessing source water protection areas (funds set aside in
FY 1997 can be used through FY 2000). Assessment programs may also use data from other, related
watershed-type survey activities, which will encourage the efficient use of funds and coordination
among the varied programs designed to gather and analyze water resource-oriented data. Results of
completed source water assessments must be made available to the public. These assessments can
provide a sound scientific science base for State monitoring programs. [§1452(k)(l)(C)]
The source water assessment results will also provide the information necessary for water
systems to seek help from States in protecting source water or initiating local government efforts.
States may use set-asides to protect source water if they choose to adopt source water "petition"
programs, under which they may use non-SDWA federal funds according to current eligibilities. These
funds may be used to fund the following particular elements of a source water protection program
(SWPP):
1. To voluntarily reduce existing contamination;
2. To develop or continue other types of SWPP, which can focus on preventing
contamination; or
3. For loans for certain source water protection activities.
EPA must write guidance on State source water partnership programs, including a description
of available technical and financial aid, not later than one year after the enactment of the section on
August 6, 1997. [§§1452(g)(2)(B), 1452(k)(l)(A), 1454(d)(l)(A)]
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Part 2
Capacity Development Overview
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
Section 2
Capacity Development and SDWA
1. New Approach to Implementation
As outlined in the previous section, the SDWA Amendments of 1996 created many new
initiatives that are tightly interlinked. These include the DWSRF, operator certification, source water
protection, variances and exemptions, and capacity development programs. The Amendments were
purposefully designed to be flexible so that States
and local governments could develop appropriate
solutions to their unique problems. Complementing
this flexibility is a strong emphasis on public
awareness and involvement.
SDWA offers states flexibility and the
opportunity to develop creative, state-
specific solutions to achieve technical,
managerial, and financial capacity.
2. New Implementation Ethic
Capacity development provides flexibility to States while ensuring accountability to the
provisions of the SDWA. The process of establishing State capacity development programs should be
open and transparent. EPA's contribution to capacity development programs consists of guidance and
information documents, rather than regulation. EPA expects and encourages diversity in State
programs. There are many acceptable approaches to meeting the minimal requirements outlined in the
SDWA.
3. Legislative History of Small System Protection
Since crafting the SDWA in the early 1970's, Congress has recognized the unique challenges
that face small drinking water systems. The original Act, and the major Amendments in 1986, focused
on developing and implementing a strong regulatory program based on monitoring and treatment. The
general sentiment was that, in the face of a strong regulatory program, systems would make the changes
necessary to comply. The Act authorized training and technical assistance to help systems, and
provided exemptions for systems that faced compelling economic circumstances. These exemptions
could be extended for very small systems.
By the late 1980's and early 1990's it was clear that small systems were having great difficulty
keeping up with the rapidly expanding SDWA-mandated regulations. A few States were implementing
"viability" initiatives, which sought to promote small system compliance by ensuring that systems had the
necessary underlying technical, managerial, and financial wherewithal. These programs showed great
promise, and the concept of "small system viability" emerged as a major consideration in the early
discussion about SDWA reauthorization.
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As the debate on SDWA reauthorization progressed, however, it became clear that the term
"viability" had at least two significant shortcomings. First, it promoted an unproductive focus on
classifying systems as "viable" or "nonviable." Second, it implied a static endpoint. The debate was
really about finding a way to create a process through which systems could enhance their technical,
managerial, and financial capacity to ensure consistent compliance with the SDWA. Thus the concept
became known as "Capacity Development." Capacity development implies a process, not a static
endpoint, and does not promote a focus on rigidly classifying systems as "having it" or "not having it."
Exhibit 2-1 presents a brief outline of the historical development of drinking water protection
resulting in the passage of the capacity development provisions in the 1996 SDWA Amendments.
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Exhibit 2-1: The History of Drinking Water Protection and Capacity Development
Early 1900s: Concern over typhoid and other disease outbreaks leads to growing concern about drinking
water-related health threats. Results in the creation of State public health programs to protect public
water supplies, with efforts focused on identifying and limiting sources of surface water contamination.
Early to Mid-1900s: Throughout the early 20th Century, the United States Public Health Service (PHS)
establishes bacterial standards for drinking water, which PHS revises mid-century to include a variety
of chemical constituents and bacteriological indicators. Thus, water quality concerns began to extend
beyond waterborne disease by addressing potential toxicological and carcinogenic effects attributed to
long-term ingestion. The concept of a "multiple barriers" approach is introduced.
Mid 1900s: Ever advancing science, technology, and industrialization lead to concerns about water
contamination resulting from pesticides, fertilizers, VOCs, and SOCs.
1940s: The PHS begins to focus on ground water protection and chemical pollution prevention. The Indian
Health Service is created.
1948: The Water Pollution Control Act funds research support for States.
1956: The Federal Water Pollution Control Act initiates the Construction Grants Program to finance
construction of POTWs.
1965: The Water Quality Act requires States to review, establish, and revise water quality standards. These
early federal programs (including the Water Pollution Control Act and the Federal Water Pollution
Control Act) have no federal enforcement authority and limited effectiveness.
Late 1960s-Early 1970s: Several water quality surveys are conducted, revealing widespread contamination
of drinking water on a national scale (particularly with SOCs). Contamination is revealed to be
especially alarming in large cities.
1970: The Environmental Protection Agency (EPA) is created, assuming control of drinking water regulation
from the PHS and water pollution control from the Federal Water Pollution Control Agency.
1974: Congress passes the SDWA as a result of water quality and public health concerns. The purpose of
SDWA is to establish national enforceable standards for drinking water quality and to guarantee that
water suppliers monitor water to ensure compliance with standards. The SDWA mandates that EPA
identify substances in drinking water that negatively affect public health. The SDWA restructures
drinking water programs by:
1) Moving primary responsibility from established State programs to a newly formed federal
program called the Public Water System Supervision Program (PWSS).
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
2) Shifting focus from water system planning and prevention to standards, monitoring, and
enforcement.
The SDWA also establishes the Underground Injection Control Program (UIC), outlines the
requirements for State programs to obtain "primacy," and sets standards for POTWs and industrial
facilities discharging into surface waters.
1977: The national interim primary drinking water regulations are established.
1979: The national interim primary drinking water regulations are supplemented with regulations pertaining to
chlorination byproducts called trihalomethanes (THM). In the next few years, further research leads to
the augmentation of the toxicological and carcinogenic database.
1986: SDWA amended. The 1986 Amendments mandate the regulation of microbiological constituents,
inorganic and organic compounds, and radioactivity. The idea of system viability also emerges as one
of the objectives of federal policy, prompting many States to begin implementing programs that
promote this goal. At the beginning of the SDWA reauthorization process, EPA continues to
emphasize the importance of system viability for all water systems. Pressure increases on State
programs, many of which are already under-funded and under-staffed.
EPA initiates the Ground Water Protection Program (GWPP) to develop initiatives for protecting
ground water resources. EPA's GWPP includes the Wellhead Protection Program and the Sole-
Source Aquifer Protection Program.
1996: SDWA amended. The 1996 Amendments address funding needs for PWSS infrastructure and State
program management with the creation of the Drinking Water State Revolving Fund (DWSRF).
Improvements are made to limit burdensome regulatory requirements and emphasis is placed on new
and stronger prevention approaches and improved public information and involvement. The 1996
Amendments require the development of Operator Certification programs, the Source Water
Protection Program, and the creation of the Contaminant Candidate List (CCL) and the Unregulated
Contaminant Monitoring Regulation (UCMR).
The system viability effort is brought to the forefront and evolves into the current capacity development
initiative due to the 1996 Amendments' emphasis on water system management. Section 1420 requires
EPA to withhold 20% of the State DWSRF capitalization grant for those States that do not develop the
means to prevent the formation of new water systems without adequate capacity and those that do not
develop a strategy to address existing drinking water systems. Please see Section 3, Exhibit 3-2, for an
illustration of the interdependence of the three capacity development components.
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4. The Objectives and Flexibility of Capacity Development
Congress established the goals of the capacity development program in 1996 with the following
statutory requirements:
"[States must] ensure that all new CWSs and NTNCWSs demonstrate technical,
managerial, and financial capacity for each NPDWR"; [§1420(a)]
"[States must] develop and implement a strategy to assist PWSs in acquiring and
maintaining technical, managerial, and financial capacity"; [§1420(c)]
"No assistance shall be provided to a PWS that does not have the technical, managerial,
and financial capability to ensure compliance with requirements of this title [SDWA]"; and
[§1452(a)(3)(A)(i)]
"No assistance shall be provided to a PWS that is in significant noncompliance with the
requirements of this title [SDWA]." [§1452(a)(3)(A)(ii)]
Flexibility
Congress provided States with the flexibility to devise their own means to meet the 1996
requirements. States have tremendous discretion on how to achieve the required outcomes. The
statutory language describing a State's implementation effort are as follows:
"[The State must have the] legal authority or other means to ensure that [new] systems
demonstrate technical, managerial, and financial capacity"; [§1420(a)]
"[The State must be] developing and implementing a strategy to assist public water systems
in acquiring and maintaining technical, managerial, and financial capacity";
"In preparing the capacity development strategy, the State shall consider, solicit public
comment on, and include as appropriate [five potential programmatic elements]";
[§1420(c)(2)]
"The States shall develop a program to evaluate each system to be funded to ensure it has
adequate capacity";
"... each State shall prepare, periodically update, and submit to the Administrator a list of
community water systems and nontransient, noncommunity water systems that have a
history of significant noncompliance with this title [SDWA]..."; [§1420(b)(l)]
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"... each State shall report to the Administrator on the success of enforcement mechanisms
and initial capacity development efforts in assisting the public water systems listed [as
systems with a history of significant noncompliance by August 6, 2001]"; [§1420(b)(2)J
"... the head of the State agency that has primary responsibility to carry out this title
[SDWA] in the State shall submit to the Governor a report that shall be available to the
public on the efficacy of the [capacity development] strategy and progress made toward
improving the technical, financial, and managerial capacity of public water systems in the
State [by August 6, 1998]" [§1420(c)(3)]; and
"In promulgating a national primary drinking water regulation, the Administrator shall
include an analysis of the likely effect of compliance with the regulation on the technical,
financial, and managerial capacity of public water systems." [§1420(d)(3)]
5. EPA Accountability
Despite the flexibility States enjoy in developing and implementing their capacity development
program, they must ensure that the basic requirements are met and that public health is protected. If
States fail to meet their capacity development responsibilities, then:
"Beginning in fiscal year 1999, the Administrator shall withhold 20 percent of each
capitalization grant... unless the State has met the requirements of section 1420(a)..."
[§1452(a)(l)(G)(i)] Section 1420(a) requires States to obtain "the legal authority or other
means to ensure that all new community water systems and new nontransient,
noncommunity water systems ... demonstrate technical, managerial, and financial capacity."
The Administrator "shall withhold 10 percent for fiscal year 2001, 15 percent for fiscal year
2002, and 20 percent for fiscal year 2003 if the State has not complied with the provisions
of §1420(c)" [§1452(a)(l)(G)(i)] Section 1420(c) requires each State to develop and
implement a capacity development program for existing systems, to solicit public comment
during the development of its program, and to ensure that five potential programmatic
elements are considered for inclusion within its capacity development program.
"In promulgating a national primary drinking water regulation, the Administrator shall
include an analysis of the likely effect of compliance with the regulation on the technical,
financial, and managerial capacity of public water systems." [§1420(d)(3)]
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6. The Importance of Partnerships
Partnerships between federal, State, and local organizations allow diverse perspectives and
concerns to be heard in pursuit of the most effective and efficient capacity development programs
nationwide. A primary partnership that significantly contributes to EPA's capacity development work is
the National Drinking Water Advisory Council (NDWAC). NDWAC was established by the original
SDWA as a widely-reaching group of stakeholders to advise the Agency on drinking water issues. To
better serve its purpose, NDWAC established a Small Systems Working Group (SSWG), which met
on four occasions between February and July, 1997, with the purpose of developing recommendations
on how EPA should implement the capacity development provisions of the SDWA Amendments of
1996. The Small Systems Working Group consisted of 22 members representing small public water
systems, environmental and public health advocacy groups, State drinking water programs, public utility
commissions, and other interest groups. The SSWG recommended to NDWAC, which in turn
recommended to EPA, that the Agency publish a combination of guidance and information to facilitate
the implementation of the capacity development provisions of the 1996 SDWA Amendments.
Partnerships can serve as valuable tools for States in crafting programs that appropriately
address the unique concerns, circumstances, and obstacles found in each. To take full advantage of the
opportunity to design capacity development programs that meet the responsibilities and characteristics
of each State, capacity development coordinators should develop partnerships in cooperation with
some of the following actors:
Federal agencies
EPA
USDA
State agencies
Health
Community Development
Financial Assistance
Natural Resources
Public Utilities Commission
Environment
Local governments
Water suppliers
Privately owned
Publicly owned
Technical assistance organizations
American Water Works Association (AWWA)
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RCAC
RCAP
NRWA
Association of Metropolitan Water Agencies (AMWA)
Environmental and public health organizations
The public especially water system customers
7. National Drinking Water Advisory Committee Guidances
To aid States in the development of their capacity development programs, EPA published a
document developed by the National Drinking Water Advisory Committee (NDWAC), Guidance on
Implementing the Capacity Development Provisions of the Safe Drinking Water Act
Amendments of 1996, that includes three guidances on specific capacity development issues:
Guidance on DWSRF Withholding Determinations Related to State Programs for
Ensuring that New CWSs andNTNCWSs Demonstrate Technical, Managerial, and
Financial Capacity
Guidance on DWSRF Withholding Determinations Related to State Capacity
Development Strategies
Guidance on Assessment of Capacity for Purposes of Awarding DWSRF Assistance
8. National Drinking Water Advisory Committee Information Documents
EPA also approved another document developed by NDWAC, Information for States on
Implementing the Capacity Development Provisions of the Safe Drinking Water Act, as amended
in 1996, that includes three information pieces on specific capacity development issues:
Ensuring that All New Community Water Systems and Nontransient, Noncommunity
Water Systems Demonstrate Technical, Managerial, and Financial Capacity
Preparing Capacity Development Strategy
Assessing Capacity
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In addition, EPA published several other information pieces separately, including:
Information for States on Developing Affordability Criteria
Information for the Public on Participating with States in the Preparation of
Capacity Development Strategies
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Section 3
Public Water System Universe: Small Systems in the
United States
According to FY98 data obtained from the Safe Drinking Water Information System (SDWIS)
database, there are 170,376 public water systems (PWSs) in operation in the United States. A PWS
is a "system for the provision to the public of water for human consumption through pipes or
other constructed conveyances, if such system has at least 15 service connections or regularly
serves an average of at least 25 individuals daily at least 60 days out of the year. A public
water system is either a community water system or a noncommunity water system." (40 CFR
§141.2)
Exhibit 3-1: Number of Systems by System Type
CWSs
NTNCWSs
TNCWSs
Source: SDWIS FY98Q4 Frozen Inventory Table
A community water system (CWS) is "a public water system that serves at least 15
service connections used by year-round residents or regularly serves at least 25 year-round
residents." (40 CFR §141.2) There are 54,367 CWSs (Exhibit 3-1) serving about 253 million
people (Exhibit 3-2). CWSs can be privately owned or publicly owned. A substantial number of
privately owned systems are 'ancillary' systems that provide water as an ancillary function of their
principal business. Mobile home parks are common examples of ancillary systems.
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
A noncommunity water system (NCWS) is a PWS that is not a CWS. Noncommunity water
systems are divided into nontransient (NTNCWSs) and transient (TNCWSs) systems. A NTNCWS
is a PWS that "regularly serves at least 25 of the same persons over 6 months per year." (40
CFR §141.2) Examples of NTNCWSs are schools, factories, office and industrial parks, and major
shopping centers. The 20,255 NTNCWSs (Exhibit 3-1) across the nation serve about 6 million people
(Exhibit 3-2). Many of these systems are privately owned.
CWSs
NTNCWSs
17
TNCWSs
Exhibit 3-2: Number of People Served by System Type (in millions)
Source: SDWIS FY98Q4 Frozen Inventory Table
A TNCWS is a PWS that "does not regularly serve at least 25 of the same persons over 6
months per year." (40 CFR §141.2) Examples of TNCWSs are highway rest stops, small restaurants,
and recreation areas. The 95,754 TNCWSs (Exhibit 3-1) serve approximately 17 million people
(Exhibit 3-2).
Exhibit 3-3 illustrates the net change in the number of systems from 1992-1994. EPA data
from the 1994 National Compliance Report (NCR) show that the largest decrease in the number of
CWSs by size category is found in systems serving fewer than 500 persons, a decrease of 4.3 percent.
Three factors contributed to the overall decline in the number of small systems: interconnection of
systems; systems terminating operation; and corrections in the inventory of systems. In contrast to small
systems, there was modest growth in larger CWSs, with a 0.7 percent increase in the number of
systems serving over 10,000 people between 1992 and 1994. There has been a 3.3 percent overall
decline in the number of CWSs nationwide.
This report addresses the characteristics of PWSs in general and CWSs in particular.
Approximately 93 percent of CWSs serve fewer than 10,000 persons. Although these systems
comprise a significant majority of CWSs, they serve only 20 percent of the total population served by
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CWSs. For the purposes of this report, small systems will be defined as those systems serving fewer
than 10,000 people. These small systems differ from their larger counterparts in many important
aspects. This report highlights the differences between small and large systems in ownership, operating
characteristics, financial characteristics, infrastructure needs, and compliance with National Primary
Drinking Water Regulations (NPDWRs). Noncommunity systems, which are not included in many of
the national surveys that furnish data on water systems, are dealt with separately at the end of this
report.
Exhibit 3-3: Percent Change in the Number of CWSs by System Size
Source: 1994 National Compliance Report
Most of the data for this report were drawn from the three sources outlined below:
Community Water System Survey
EPA conducted the 7995 Community Water System Survey to provide data necessary for
the development and evaluation of drinking water regulations. The survey was completed in two
phases. Phase one involved a preliminary survey and instrument sampling plan, which was followed by
a pretest of nine water systems. Computer-assisted telephone interviews were then conducted to
determine system eligibility and appropriate respondents for the pilot test and mail questionnaire. The
second phase of the survey was a mailing of 3,700 questionnaires. Water systems were asked to
respond to questions concerning operating and financial characteristics, including questions regarding
source, treatment, distribution, operator certification, revenues, and expenses. Approximately 54
percent of eligible participants completed the questionnaire.
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Drinking Water Infrastructure Needs Survey
EPA's Drinking Water Infrastructure Needs Survey was conducted in 1995 to document the
infrastructure needs of the nation's CWSs for the 20-year period from January 1995 through
December 2014. Infrastructure needs were grouped into four categories: source, treatment, storage,
and transmission and distribution.
Systems were divided into three size classifications: large (serving more than 50,000 people),
medium (serving 3,301-50,000 people), and small (serving fewer than 3,300). All large CWSs
received mailed questionnaires. Infrastructure needs for medium and small CWSs were estimated using
statistical surveys. To identify needs of medium systems, a portion of the medium sized systems were
surveyed by mailed questionnaire. To determine the needs of the small drinking water systems, EPA
staff and contractors conducted site visits. Needs of the sampled systems were extrapolated to
estimate total need for medium and small systems. The most common documentation of CWS needs
was found in captial improvement plans and engineering reports.
Safe Drinking Water Information System (FY98 data)
The Safe Drinking Water Information System (SDWIS), maintained by EPA, is a database
containing information on public water systems throughout the United States. It contains a variety of
historical and current data on compliance, enforcement, and water system inventoryrequired and
non-required information. Each State uploads information individually. Data can be accessed by the
public through the World Wide Web.
Most of the SDWIS data in this report was drawn in November 1998. Limited data came
from the 1994 National Compliance Report and FRDS, the precursor to the SDWIS database.
For more information on the characteristics of small systems, please refer to Small Water
System Characteristics (EPA 816-D-99-002). The paper is available on EPA's website at
www.epa.gov.
General Conclusions
The report addresses questions raised by the National Drinking Water Advisory Council's
Small Systems Working Group concerning the characteristics of small drinking water systems in the
United States. The data in the report were drawn primarily from three sources: the 1995 Community
Water System Survey, the 1995 Drinking Water Infrastructure Needs Survey, and FY98 data from
the Safe Drinking Water Information System (SDWIS).
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Findings
Principle conclusions are summarized below:
Inventory
There are 54,367 community water systems (CWSs), serving about 253 million people.
Approximately 93 percent of CWSs are small systems serving fewer than 10,000 persons.
Although these small systems comprise the significant majority of CWSs, they serve just 20
percent of the population served by CWSs.
There are 20,255 nontransient, noncommunity water systems (NTNCWSs), serving about 6
million people.
There are 95,754 transient, noncommunity water systems (TNCWSs), serving approximately
17 million people.
Ownership Characteristics
Ownership type and system size are related. Most systems serving 500 or fewer people are
ancillary or privately owned systems, while most larger systems are publicly owned.
Operating Characteristics
The smallest systems (systems serving under 501 persons) appear to have experienced little
growth in service population between 1990 and 1994. The only evident growth was found in
the number of systems serving 101 to 500 persons, which increased by only 2.5 percent in
median connections for this period.
The largest growth in service population among small systems was found in those serving
3,301-10,000 persons. Between 1990 and 1994, systems in this size category experienced a
10 percent increase in the number of connections and an 11.1 percent increase in customers.
A system's water source is a key factor in determining operating characteristics, and source
corresponds closely to system size. Larger systems are more likely to use surface water or
purchased water as their primary source, whereas most small systems use ground water.
Production per connection increases steadily as system size increases. This increase in
production per connection is likely indicative of the differences between the customer bases of
larger and smaller systems. Large systems tend to have a higher percentage of industrial,
commercial, and agricultural customers, whereas small systems serve primarily residential
customers, who, as a group, generally use less water.
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Publicly owned systems serving less than 500 persons generally receive more technical
assistance than privately owned or ancillary systems of the same size.
Through source water protection and wellhead protection programs, water systems can
improve the quality of their water, decrease the likelihood of waterborne disease outbreaks,
and reduce the need for future capital expenditures for treatment facilities and equipment. The
importance of source water protection is highlighted by the finding that 93 percent of
groundwater systems serving 1,001-3,300 persons and 83 percent of those serving less than
1,001 persons have a potential source of contamination within 2 miles of their well(s).
Financial Characteristics
More than 50 percent of systems serving 25 to 100 persons do not keep separate income and
expense statements. This may be attributed to the large number of systems in this size category
that are ancillary systems and, therefore, do not provide water as their primary business.
Ancillary systems typically do not record water-related expenses separately.
Water systems' total water revenues are generated from water sales, fees, fines, and general
fund revenues. Systems can also generate revenues from other non-consumption based
charges such as interest earnings. Ancillary systems usually do not generate water sales or
water-related revenue. Rather, revenue is generated by the principal business of the system of
which the provision of water is merely an ancillary function. Water rates are the primary
mechanism through which customers are charged for service and the main vehicle through
which non-ancillary systems generate revenue.
Median total water revenue per connection for the smallest CWSs (serving 25-100 persons) is
$0, indicating that at least half of the smallest systems do not charge for water through rates or
fees.
Revenues per connection across all revenue categories are higher for surface water systems,
perhaps reflecting the greater technical complexity generally associated with surface water
sources.
Unmetered systems tend to be very small systems; only 37 percent percent of all connections
served by systems serving 25-100 persons are metered.
For systems serving fewer than 10,001 persons, median expenditures per connection increase
as system size increases for all ownership types.
Infrastructure
Small systems have more than 3 times the per-household need of large systems. The small
systems need is $3,300 per household until the year 2015. Transmission and distribution is the
largest category of need cited by small systems.
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Over 60 percent of small systems also report need in source development, often because their
sources are threatened by contamination or supply problems.
Compliance and Violations
Systems serving 25-500 persons have many more violations per 1,000 people than do any
other size category of systems. This is true for CWSs, NTNCWSs, and TNCWSs. Of
particular note are MCL violations which, like other types of violations, decrease in frequency
with system size. For every one million customers of CWSs serving 500 or fewer people, there
are approximately 800 MCL violations and 7,164 total violations. In contrast, for systems
serving over 10,000 persons, there is approximately 2 MCL violations and 10 total violations
per one million customers.
Noncommunity Water Systems
NOTE: The Community Water System Survey (CWSS) provided a unique opportunity to
review data for a variety of system sizes and ownership types. No similar survey exists for
noncommunity water systems (NCWS). Therefore, because SDWIS is the primary source of
information on these systems, analysis is limited to information contained in that database, which
is largely inventory and compliance data available from SDWIS.
Over 97 percent of NTNCWSs serve fewer than 3,301 people and most NTNCWSs have
large service populations per connection.
TNCWSs serving 3,300 or fewer persons account for over 99 percent of violations committed
by TNCWSs. Of these violations, almost 97 percent were committed by systems serving
fewer than 501 persons. Most of these violations were monitoring and reporting.
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Part 3
Implementing a State Program
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
Section 4
Worksheet #1: Program for Ensuring that All New
Community Water Systems and Nontransient,
Noncommunity Water Systems Have Technical,
Managerial, and Financial Capacity
State Reviewed:
Date Completed:
Reviewer:
General Comments:
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Regions
Use this sheet to guide your review of proposed state programs for new system capacity.
The questions contained within this packet focus on program functionality.
In order to avoid a 20 percent State Revolving Fund (DWSRF) withholding, States
must ensure that all new community water systems (CWSs) and all new nontransient,
noncommunity water systems (NTNCWSs) commencing operation after October 1,1999,
demonstrate technical, managerial, and financial capacity.
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States
Use this sheet to help guide your description of your capacity development program for new
systems.
This sheet may help you in developing your capacity development program for new systems.
The questions contained within this packet focus on program functionality and ensure that the
requirements of the statute and guidance are met.
In order to avoid a 20 percent State Revolving Fund (DWSRF) withholding, States
must ensure that all new community water systems (CWSs) and all new nontransient,
noncommunity water systems (NTNCWSs) commencing operation after October 1,1999,
demonstrate technical, managerial, and financial capacity.
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Fully Functional Program
The Big Picture
1. How does the State's proposed program ensure that new systems commencing operations after
October 1, 1999 demonstrate technical, managerial, and financial capacity?
The Details
2. How are various authorities and control points coordinated within a State agency, between
agencies, or between various levels of government to ensure that all three aspects of capacity
are reviewed and verified before a new CWS or new NTNCWS is approved to commence
operations?
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Basis of Authority
1. Describe the State's regulations, policies, or other implementing authorities.
2. Identify the State or sub-State agencies responsible for implementing the regulations, policies,
or other authorities.
3. What is the statutory basis for these regulations, policies, or other implementing authorities?
4. Describe the collaborative arrangements (if any) among the various agencies responsible for
implementing these regulations, policies, or other authorities. Identify the means (such as
memoranda of understanding) used to document the collaborative arrangements among
agencies.
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Control Points
1. Describe each control point outlined in the State program and identify the agency responsible
for implementing that control point. Make special note of the control point(s) that permit the
State to directly exercise its authority to ensure the demonstration of capacity in new CWSs
andNTNCWSs.
2. Describe the aspect(s) of capacity (technical, managerial, or financial) evaluated at each of the
control points listed above. Ensure that all aspects of capacity are evaluated.
3. At each of the control points listed above, what specific action will the State or sub-State
agency take to ensure demonstration of technical, managerial, and financial capacity?
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Plan for Implementation and Periodic Review
1. How does the State's implementation plan ensure that systems commencing operations after
October 1, 1999 demonstrate technical, managerial, and financial capacity?
2. How will the State evaluate the implementation and on-going effectiveness of its new system
capacity development program.
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Section 5
Worksheet #2: Assessing Proposed State Capacity
Development Strategies for Existing Public Water
Systems
State Reviewed:
Date Completed:
Reviewer:
General Comments:
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Suggestions for Regions
Use this sheet to guide your review of proposed State strategies for ensuring capacity in public
water systems (PWSs).
The questions are designed to assist you in evaluating proposed State strategies for the purpose
of making Drinking Water State Revolving Fund (DWSRF) withholding decisions.
This is not a checklist. However, using the following questions, you should be able to assess
State compliance with the Capacity Development provisions of §1420 of the Safe Drinking
Water Act (SOWA), as amended in 1996.
In order to avoid a 10 percent DWSRF withholding in 2001, a 15 percent withholding in 2002, and
a 20 percent withholding in subsequent FYs, States must develop and implement a strategy to assist
PWSs in the acquisition and maintenance of technical, managerial, and financial capacity.
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Suggestions for States
Use this sheet to help guide your description of your capacity development strategy for existing
public water systems (PWSs).
This sheet may help you in developing your capacity development strategy for existing PWSs.
The questions contained within this worksheet will help you to ensure that the requirements
detailed in both §1420 of the Safe Drinking Water Act (SOWA), as amended in 1996, and the
associated guidance are met.
This is not a checklist. However, using the following questions, you should be able to identify
the major strengths and/or weaknesses of your proposed capacity development strategy.
In order to avoid a 10 percent DWSRF withholding in 2001, a 15 percent withholding in 2002, and
a 20 percent withholding in subsequent FYs, States must develop and implement a strategy to assist
PWSs in the acquisition and maintenance of technical, managerial, and financial capacity.
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Solicitation and Consideration of Public Comments
1. Describe how the State, in preparing its capacity development strategy, solicited public
comment on the program elements listed in §1420(c)(2)(A-E) of the SDWA, as amended in
1996.
2. Describe how the State considered public comment on the program elements.
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Program Elements
1. Describe how the State considered the appropriateness of each program element listed in
§1420(c)(2)(A-E) in deciding whether or not to include the element in its capacity development
strategy.
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Strategy
1. Describe the basis on which the State believes that the program elements it has chosen, when
taken as a whole, constitute a strategy that is likely to assist PWSs in the acquisition and
maintenance of technical, managerial, and financial capacity.
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Implementation
1. Describe the State's current implementation efforts for its capacity development strategy.
2. Describe the State's future plans for strategy implementation.
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Future Considerations
1. Listing of systems in significant noncompliance (§ 1420(b)(l)).
States must prepare, update, and submit to the EPA Administrator a list of CWSs and
NTNCWSs that have a history of significant noncompliance. States must also, to the
extent practicable, provide reasons for the noncompliance of these systems.
Note: A system is considered to be in significant noncompliance if it has violated one or more
National Primary Drinking Water Regulations (NPDWRs) in any three quarters within
the last three years.
2. Report to the EPA Administrator (§ 1420(b)(2)).
States must submit a report to the EPA Administrator by August 6, 2001, that details
the success of enforcement mechanisms and initial capacity development efforts in
helping those PWSs listed as having a history of significant noncompliance to improve
their technical, managerial, and financial capacity.
3. Report to the State Governor (§ 1420(c)(3)).
No later than two years after a State develops a capacity development strategy, and
every three years thereafter, each State's primacy agency must submit a report to the
State's Governor and to the public that details the efficacy of the State's capacity
development strategy and that outlines the progress made towards improving the
technical, managerial, and financial capacity of PWSs in the State.
Note: EPA encourages States to include the methodology they plan to use to assess the efficacy of
their capacity development strategy as part of their strategy. The inclusion of assessment
methodology is not mandatory and will not be a basis for withholding DWSRF funding in
FY 2001. However, failure to provide the required reports in subsequent years will serve
as a basis for withholding.
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Section 6
Ensuring New System Capacity
The previous section described the large, diverse universe of water systems in the United
States. The 1996 SDWA Amendments made ensuring the capacity of all new water systems a priority
so that as the universe of water systems
grows, the number of water systems without
Ensuring new system capacitya crucial
component of capacity development
requires a well-structured legal framework and
the cooperation of many governmental
entities. Several proactive steps can be taken
to streamline this process and enhance the
authority held by states over new system
creation.
the capacity to provide safe drinking water will
not. This section provides an overview of
State authorities and reviews special issues
that may arise when dealing with proposed
NTNCWSs.
At the time of publication, EPA has
approved seven State programs to ensure that
all new CWSs and new NTNCWSs
demonstrate capacity prior to the
commencement of operation. These programs provide useful examples of how States are successfully
implementing the SDWA new system program requirement. Most States are well on their way to
completing and submitting their programs for final approval. The following summaries may provide
ideas or offer insight and direction to those putting the final touches on their programs.
1. Statutory and Regulatory Authority
In accordance with Section 1420(a) of the 1996 Amendments to the SDWA, States will
receive only 80 percent of their Drinking Water State Revolving Fund allotment unless they obtain the
legal authority or other means to ensure that all new CWSs and new NTNCWSs commencing
operation after October 1, 1999, demonstrate the technical, managerial, and financial (TMF) capacity
to comply with each national primary drinking water regulation in effect or likely to be in effect.
Congress provided States with significant flexibility in meeting this requirement. Some States have
enacted broad statutory authority (e.g., "Department of Environmental Quality is empowered to create
or repeal any rules necessary to implement the SDWA") and then relied on the implementing agency to
develop a mechanism of rules and policies by which new system capacity is ensured. Some States
have enacted explicit statutory language that describes in more detail the new water system capacity
development program and then developed implementing regulations based on the specific statutory
language. EPA's Guidance on Implementing the Capacity Development Provisions of the Safe
Drinking Water Act Amendments of 1996 (Guidance) encourages diverse paths to implementation,
as long as a State implements a program that ensures that all new CWSs and NTNCWSs demonstrate
capacity prior to commencing operation.
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States must document the actual implementing authority and underlying statutory authority to
ensure the demonstration of new system capacity. This authority could include State laws, regulations,
policies, or other effective and demonstrable means. The following are some examples of the statutory
and regulatory authorities enacted in States with approved new system capacity program.
Connecticut's General Statutes give the Department of Public Health (DPH) jurisdiction over
source water adequacy, delegate to DPH the authority to develop guidelines for technical and cost
criteria of water supply plans (CGS §25-32), and the authority to approve plans and specifications of
any construction, expansion, or addition of new water sources (CGS §25-33b). New CWSs and
NTNCWSs are required to apply to both DPH and the Department of Public Utility Control (DPUC)
for a Certificate of Convenience and Necessity (CCN) (CGS §16-262m). New systems are also
required to submit proposals for new development to DPUC (CGS §8-25a). State regulations define
the provisions for new water system approval (Public Health Code 19-13-B102(d)) and new system
requirements for obtaining a CCN State Agencies Regulation 16-262m).
Connecticut's legal authority is relatively simple in that regulatory power is given to two
agencies focused on implementing one control point (i.e the CCN), with application requirements
outlined in regulation. New York, on the other hand, has a more complicated underlying statutory
authority involving four different agencies regulating a new system capacity program. New York's
Department of Health (DOH) has the authority to ensure TMF capacity for new CWSs through a
review of plans and specifications and an engineering report depending on system size (Public Health
Law §225). The Public Service Commission (PSC) has the authority to ensure TMF for PWSs
through oversight of rates, service, record keeping, and water quality (Public Service Law §§89-e(2),
89-b(l). Town Law §§54, 194(6), 209-f(l), 209-q(13) and County Law §§258, 274 give the Office
of the State Comptroller (OSC) authority to ensure financial capacity of PWSs through the
(disapproval of the establishment or extension of town and county water districts and systems. Finally,
the Department of Environmental Conservation (DEC) is given the authority (in Environmental
Conservation Law (§§15-1501, 1503)) to ensure TM capacity (excluding mobile home parks) through
a water supply permit review.
New York Codes Rules and Regulations (NYCRR) outline operator certification and the plans
and specifications review processes (10 NYCRR §5-1.22 and subpart 5-4). 6 NYCRR Part 601
outlines the technical and managerial criteria a system will have to meet to receive a water supply permit
from DEC. 16 NYCRR Part 542-545 requires private systems to undergo rate reviews with the PSC
and 2 NYCRR Part 85 requires the OSC to determine, under certain financial circumstances, whether
the cost of the new system will be an undue burden on the properties that will bear the cost.
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Control Points
The authorities described in the previous section, and the authorities of other State programs,
will be exerted at certain control points. A control point is a point in a new system's development at
which time the State can exercise its authority to ensure that a new system has adequate TMF capacity.
By using these control points, the appropriate regulatory authority has the ability to ensure that creating
a new water system is the most appropriate alternative for providing water service and that a system
commencing operation after October 1, 1999, will have adequate TMF capacity both at start-up and
for the future. EPA requires States to identify at least one control point to meet the requirements of
SDWA. The following are some examples of control points implemented by States during their review
of a new water system.
Washington State has twelve different actions that can be taken to ensure TFM capacity,
providing comprehensive control to new systems during a variety of development phases. (See box at
the end of this Section). To prevent the creation of small, potentially unviable systems, all new systems
must be owned or managed and operated by an approved Satellite Management Agency (SMA). If an
SMA is not available, the system's approval is conditioned upon the periodic review of the system's
operational history. The review is used to determine the system's ability to meet the Department of
Health's (DOH) capacity requirements. Other DOH control points include such actions as obtaining an
operating permit, approval of water system plans, and operator certification. In addition, Washington
has control points specifically designed to halt illegal construction. The DOH can issue a departmental
order to stop work if it determines that a system is being created without necessary approvals (i.e. of
project reports and construction documents prior to construction).
South Dakota's implementation, on the
other hand, focuses on one primary control
pointthe Certificate of Approval (CA). The
process of obtaining a CA spans the entire
development of the system, ending with a notice
of completion, which certifies that the system
was constructed according to the approved
plans and specifications. Through this one
vehicle, the Department of Environment and
Natural Resources (DENR) is able to collect a
variety of system information including
documentation necessary for permits and
assurances. To obtain a CA, systems must
submit several documents to the DENR for a full
capacity review. These documents include a
New Water System Application (which should
contain documentation of water right permits),
business plans, plans and specifications, O&M
manuals (must be completed by licensed
South Dakota passed capacity assurance
legislation in February 1998. The statute
gives the secretary of the DENR the authority
to establish procedures where a supplier of
water must demonstrate that a new system
intended to be a PWS has the TMF capacity
to achieve and maintain compliance with all
relevant local, State, and federal
requirements. The statute also gives the
secretary the authority to promulgate rules
establishing procedures for DENR to issue
certificates of approval to new water suppliers
once a TMF capacity review is completed.
The rules specify that a new system intended
to be a PWS, after October 1, 1999, may not
operate until it has been issued a certificate of
approval (CA).
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Professional Engineers), a construction schedule, and finally, a notice of completion signed by the
engineer who designed the system. In addition, banks assessing the financial capacity of State
Revolving Fund applicants will not make loans to new water systems unless a CA has been issued.
3. Plan for Implementation and Periodic Review
States must demonstrate that they will have a fully functional program in place by October 1,
1999. EPA will annually assess each program to ensure ongoing implementation. States must
document that they are requiring each new CWS and new NTNCWS to demonstrate IMF capacity.
States can include this documentation in a given year's capitalization grant application or in separate
submission to EPA. The following are some examples State Implementation Plans.
Louisiana's implementation plan primarily consists of a schedule for review. The State plans to
conduct annual sanitary surveys and reviews of compliance data and business plans. In addition, three
year reviews (including a capacity review and a sanitary survey) will be conducted on all CWSs and
NTNCWSs. All reviews will be tracked through a database in order to monitor trends in compliance.
Pennsylvania's implementation plan focuses more on guidance materials and computerized
monitoring. The State has developed two main documents that will aid in the implementation of its new
system capacity program. The business plan evaluation manual will aid DEP in capacity review and
assist systems in writing business plans. The document "Development of Benchmark Measures for
Viability Assessment" will also serve as an evaluation and monitoring guide. In addition to these
evaluation tools, the DEP will use two computerized systems to track compliance and monitor new
systems. The Pennsylvania Drinking Water Information System (PADWIS) database will primarily be
used to track compliance. Permit applications and business plans for new systems will be monitored
with the FIX (Foundation for Information Exchange) tracking system.
South Dakota also uses databases to track compliance rates. The Department of Environment
and Natural Resources (DENR) currently maintains a database of PWS information including operator
certification, violation data, and other system information. This database will be linked to a new
database that will contain capacity review findings, construction inspection findings, source water
assessment information, etc. The database will also be designed to ensure that new systems have
submitted all required information for issuance of a CA. Queries of the database will allow for the
comparison of new system compliance rates with the compliance rates of existing systems. This
information will be used to evaluate the success of the program.
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Washington State's Authority/Control Points
Washington State's Capacity Development Program lists 12 sources of authority and related
control points used to ensure that all new CWSs will have adequate capacity when they commence
operations:
1) All new systems must develop and receive approval for Water System Plans before they can
commence operations.
2) To prevent the creation of small, potentially unviable systems, all new systems must be owned
or managed and operated by an approved Satellite Management Agency (SMA). If an SMA is
not available, the system's approval is conditioned upon the periodic review of the system's
operational history to determine its ability to meet the Department of Health's (DOH) financial
viability and other operating requirements.
3) All systems must obtain an operating permit before that system may be operated.
4) Several Washington statutes require local governments to make written findings regarding
provisions for potable water supplies or adequacy of water supply when considering short plan
subdivisions or individual building permit applications.
5) All new systems must have certified operators in accordance with federal regulations.
6) New PWSs may not be created inside critical water supply service areas, recognized in an
approved Coordinated Water System Plans, unless authorized by DOH.
7) New systems must have approved Water System Plans before project reports and construction
documents will be reviewed by DOH.
8) A party seeking to use a new source as a public water supply must first get department
approval for that source.
9) Purveyors must receive approval for project reports before they can begin construction. Illegal
construction can be stopped (see #11)
10) Purveyors must receive approval for construction documents before construction can begin.
Illegal construction can be stopped (see #11).
11) DOH can issue a departmental order to stop work if it determines that a system is being created
without the necessary approvals.
12) In accordance with a MOU with the Department of Ecology (the agency responsible for the
State's water resource program), a new system applicant must have a water right to withdraw
water. Parties requesting water rights for new systems are required to have a current approved
WSP.
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Section 7
Preparing Capacity Development Strategies
Creating effective strategies to assess and
enhance existing system capacity offers States a
historic opportunity to develop a regulatory
blueprint for the future. In this section, we
discuss the tools and resources States can use to
address the five elements of §1420(c)(2)(A-E).
A strong emphasis is placed on creativity,
innovation, and the expansion of temporal and
spatial frames of reference.
The capacity development provisions
of the 1996 SDWA Amendments provide the
flexibility and opportunity to address the
unique needs and circumstances facing PWSs
in different States. While the problems facing
small systems may appear daunting, capacity
development represents a historic opportunity
for States to create a blueprint for the future.
In the following discussion we assess available
resources and programs with an eye towards
creating comprehensive strategies that will
enable small systems to achieve and maintain
compliance with drinking water regulations.
But where should States begin as they start crafting workable, feasible strategies for small
systems? The easy answer, of course, is to take it one step (or regulatory element) at a time. The
Guidance delineates five elements of a capacity development strategy which the State must consider,
solicit public comment on, and include as appropriate. These elements are:
The methods or criteria used to prioritize systems;
The factors that encourage or impair capacity development;
The way the State will use authority and resources of the SDWA;
The way the State will establish the baseline and measure improvements; and
The procedures used to identify interested persons.
These elements will be discussed at length in a moment. However, it is important to get into the
proper (read: creative) mindset as we approach this process and begin brainstorming
solutions that will ideally ensure safe drinking water for all Americans. You have probably heard the
expression "thinking outside the box," a phrase
describing the process of pushing past the boundaries
of conventional thinking with the goal of developing
innovative, non-traditional solutions. To create the
most effective capacity development strategies,
thinking outside of the box may be exactly what
States need to do.
Conventional
Thinking,
Expected
Solutions
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Exhibit 7-1: Solving Small System Problems: Alternative Spatial Boundaries
C«unly/
MulttCMmtr
Stete-lVkte
Two of the most relevant boundaries to capacity development efforts are space and time.
Exhibit 7-1 offers a visual depiction of different spatial boundaries that may be considered in pursuit of
successful capacity development strategies. While considering the unique characteristics of a single
system may lead to the development of a viable, system-specific program for achieving capacity,
expanding the frame of reference will also increase the number of possible options available to the
system. For example, in a multi-system region, a system may be able to consolidate with a neighboring
system either physically or managerially. At the county level, regionalized efforts to accomplish water-
related goals, such as source protection or operator training, will enhance the system's ability to comply
with capacity development requirements. Finally, an economic analysis at the State level may reveal
that the system is in a disadvantaged area, making it eligible to receive additional financial support. As
the lens widens, so too does the list of possible solutions available to the system.
In addition to space,
States may also begin to
consider wider expanses of time,
looking beyond months and
years to the consideration of
decades. In doing so, States will
be able to tackle short-term
problems while simultaneously
creating a sound foundation for
future capacity development
efforts. Exhibit 7-2 depicts what
happens graphically when States
and systems begin to think
"outside the box," extending
their thinking beyond traditional
boundaries. If the area below
the curve represents all possible
solutions, one can see that by
Exhibit 7-2: Solution Possibilities Frontier
TIME
SPACE
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simply considering greater ranges of space and time when brainstorming, the number of potential
solutions increases dramatically.
Thinking "outside the box" has already contributed to policy innovation in capacity development
efforts. For example, the capacity development provisions give States the flexibility to create a strategy
that assesses system capacity not only at the system level but at the watershed level. By extending
beyond the traditional spatial boundary (the individual system) to a larger area of consideration (the
watershed), new solutions have become apparent (i.e., creating mentor programs, pooling system
resources to achieve economies of scale, creating monitoring partnerships, etc.).
Helping existing systems develop capacity requires States to come up with separate strategies
that may use different tools and resources than those required to ensure capacity in new systems. The
remainder of this section identifies useful tools and resources that States could use to address the five
programmatic elements listed below [§1420(c)(2)(A-E)] and discusses some of the ways in which they
can contribute to the success of other parts of a State's drinking water program. When appropriate,
this chapter also provides suggestions as to how the tools might be assembled to form a functioning
capacity development strategy.
Due to the unique characteristics and circumstances of each State, the tools and strategies
employed by States will vary. Therefore, each of the five programmatic elements is discussed
individually.
1. Building a Strategy
As noted in the Guidance and in the section entitled "State and Federal Responsibilities," each
State must consider, solicit public comment on, and include as appropriate five elements in their
capacity development strategies:
B. Methods or criteria to prioritize systems. [§1420(c)(2)(A)J These include
methods or criteria that could be used to identify and prioritize PWSs most in need of
improving technical, managerial, and financial capacity.
C Factors that encourage or impair capacity development. [§1420(c)(2)(B)] These
include the "institutional, regulatory, financial, tax, or legal factors" that exist at the
Federal, State, or Local level that encourage or impair capacity development.
D How the State will use the authority and resources of the SDWA.
[§1420(c)(2)(C)] States should describe how they will use the authority and resources
of the SDWA or other means to:
1. Assist PWSs in complying with NPDWRs.
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2. Enhance technical, managerial, and financial capacity by encouraging the
development of partnerships between PWSs.
3. Assist PWSs in the training and certification of their operators.
E How the State will establish the baseline and measure improvements.
[§1420(c)(2)(D)J States should describe how they will establish a baseline and
measure improvements in the capacity of PWSs under their jurisdiction. This potential
programmatic element provides the tools that State primacy agencies must have to
produce and submit a report to their Governors on the efficacy of their capacity
development strategy and progress made toward improving the technical, managerial,
and financial capacity of PWSs in their State.
E. Procedures to identify interested persons. [§1420(c)(2)(E)] States should identify
and involve stakeholders in the creation and implementation of their capacity
development strategy.
Exhibit 7-3 illustrates one way that these elements may be integrated to form a comprehensive
capacity development strategy.
Exhibit 7-3: Building a Capacity Development Strategy
Compare results
against baseline and
measure progress
§1420(c)(2)(D)
Plan and implement
actions designed to
build capacity
§1420(c)(2)(C)
(Create method and criteria
for prioritizing systems
§1420(c)(2)(A)
Stakeholder
Involvement
Establish a baseline
for measuring
improvements
§1420(c)(2)(D)
Collect and evaluate
information on factors that
encourage or impair capacity I
development §1420(c)(2)(B)/
Determine how State
will use the authority
and resources of the
SDWA §1420(c)(2(C)
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The order of activities included in the process of building a capacity development strategy can
vary from that shown above. The emphasis is not on order, but on whether all five elements have been
addressed. Note that the identification and involvement of stakeholders is crucial to each step in the
process, from strategy creation to implementation and evaluation.
These strategy elements allow States great flexibility as they seek to build successful capacity
development strategies. Encourage creativity and innovative thinking!
2. Relationship Between the Elements of a Capacity Development Strategy and the Tools
Used to Enable Their Implementation
Although the SDWA requires that a State consider each of the five programmatic elements for
inclusion in its capacity development strategy, it does not require the State to use specific tools to
implement the selected elements. Each State is unique and must make policy decisions based upon its
unique characteristics and circumstances. The SDWA provides States with the flexibility to tailor their
strategies to these particulars, which will maximize the opportunity each State has to meet the public
health protection goals of the Act. Several tools designed to help States develop capacity development
programs and strategies are provided in Exhibits 7-4 through 7-6. For complete descriptions of these
tools and several others, please see Information for States on Implementing the Capacity
Development Provisions of the Safe Drinking Water Act, as Amended in 1996.
Some States will have access to many of the tools described, while others have access to only a
few. Further, States may need to apply specific tools differently to make maximum progress toward
capacity development goals. Tools will also need to be applied differently according to the type of
system being considered; a tool that is useful for developing capacity for privately-owned, ancillary
systems may not be useful for developing capacity in municipal systems. Each of the five elements that
must be considered as part of a State's capacity development strategy are described in more detail
below.
Element A: Methods or Criteria to Prioritize Systems
Prioritizing systems will help State's get the most "bang for their buck" as they attempt to
determine how funds will be spent to aid existing systems. A variety of methods and criteria can be
used to identify and prioritize systems that need to improve their technical, managerial, and financial
capacity. In many cases, a combination of tools is most effective in collecting the information needed to
prioritize systems. States may consider the following in developing their methods and criteria:
Do the State's methods or criteria for prioritizing systems permit the consideration of all
systems in the State?
Do the methods or criteria for prioritizing systems provide the State with a ranking
scheme?
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Are the methods or criteria for prioritizing systems easy to implement?
What are the data requirements of the prioritization procedure? Does the State have an
existing database, can an existing database be modified, or can a new data system be
developed, given available resources?
Washington State has developed systems to identify and prioritize those systems most in need
of capacity development. Washington tracks the performance of all systems in terms of their
compliance histories, their water system plans, and the financial viability component of their water
system plans. Systems are classified according to their compliance and capacity. Systems classified as
"green" have adequate capacity and compliance histories; systems coded as "red" have inadequate
capacity and/or compliance histories.
Exhibit 7-4 lists tools that States might use in developing their methods or criteria for prioritizing
systems. This exhibit is meant to serve only as a starting pointdepending upon their unique
circumstances, States may be able to take advantage of additional tools to help prioritize systems.
Exhibit 7-4: Tools to Develop Methods or Criteria to Prioritize Systems
Tools
Annual Financial Reports
Capital Improvement Plans
Compliance Data
Comprehensive Performance Evaluations (CPEs)
Consumer Confidence Reports
DWSRF Loan Applications
Operator Certification Programs
Permitting Requirements
Sanitary Surveys
Self-Assessments
Source Water Assessment Programs
State/Federal Surveys of Infrastructure Needs
Statewide Water Quality /Quantity Studies
WSPs or Business Plans
Element B: Factors That Encourage or Impair Capacity Development
Under §1420(c)(2)(B) of the SDWA, States must consider developing a description of the
"institutional, regulatory, financial, tax, or legal factors at the Federal, State, or local level that encourage
or impair capacity development." The broad spectrum of factors that might be included in this
description may make it quite comprehensive for each State. Factors that impair capacity development
efforts within a State might include:
A State's lack of legal (or regulatory) authority to develop and implement a capacity
development strategy.
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Institutional barriers to developing a capacity development strategy.
Legal and financial issues associated with water rights.
Insufficient State or local funding to implement a capacity development strategy.
A lack of reciprocity for operator certification.
Barriers that preclude systems from obtaining variances or exemptions reasonably.
State statutes or regulations that hinder consolidation, regionalization, or
interconnection.
The 1996 SDWA Amendments streamline the process of applying for variances and
exemptions, and provide access to DWSRF resources to help States overcome some of the barriers
outlined above.
Factors that encourage capacity development within a State might include:
Statewide growth-management legislationencourages capacity development by
checking the unrestricted growth of poorly-planned water systems (other Statewide
planning statutes have similar beneficial effects).
Statutes dealing with privatization or procurementallows systems to contract for
operations and maintenance or other services more easily.
Statutes dealing with mergers and acquisitionsencourages consolidation by allowing
rate base adjustments.
Statutes that require renewable operating permits for water systems, CCNs, or periodic
sanitary surveysencourages capacity development by enabling the State to
periodically assess capacity.
Technical assistance programs that provide help to small systems.
States' reports to their legislatures on the subject of capacity development may prove useful in
the creation and implementation of capacity development strategies. Many of these reports include
discussions of the factors that encourage or impair capacity development. Examples of useful reports
are those submitted in Washington, Connecticut, California, and Pennsylvania. While each State's
report has unique aspects, the process that was followed including the issues that were discussed
should be helpful to other States that are considering these issues.
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Reports derived from the deliberations of stakeholder workgroups, such as those published in
North Carolina and South Carolina, may also prove helpful in the preparation of capacity development
strategies for other States.
Exhibit 7-5 lists several tools that address the factors that impair capacity development. This
exhibit is meant only as a starting point. As States build their capacity development strategies, they are
likely to find other tools to address factors that impair capacity efforts.
Exhibit 7-5: Tools to Address Factors that Impair Capacity Development Efforts
Tools
Capital Improvement Plans
CPEs
Permitting Requirements
Cooperation with Nongovemental Organizations
(NGOs)
Coordination with Other Agencies
Water Conservation Plans
Operator Certification Programs
Rate Reviews and Approvals
Regional Plans
Restructuring Programs
Sanitary Surveys
Satellite Management Programs
Source Water Assessment Programs
Training and Technical Assistance Programs
WSPs or Business Plans
Element C: Description of How the State Will use the Authority and Resources of the SDWA
Under SDWA §1420(c)(2)(C), States must describe how they will use the authority and
resources of the SDWA to improve capacity in PWSs. Specifically, the States are asked to describe
how they will accomplish three goals central to a sound capacity development strategy:
1.
Assist PWSs in complying with NPDWRs.
2. Encourage the development of partnerships between PWSs to enhance their technical,
managerial, and financial capacity.
3. Assist PWSs in the training and certification of operators.
Under this element, the State describes how it will use the new financial and programmatic
resources of the 1996 SDWA Amendments, and any other statutory or programmatic means, to help
water systems reliably deliver safe drinking water. This element encompasses a wide variety of
activities meant to provide assistance to individual water systems and to build partnerships among
systems.
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The activities set forth in Element C are at the heart of the linkages between the capacity
development program and other sections of the SDWA. The authority and resources that can be used
to enhance a State's capacity development program are provided throughout the SDWA and must be
carefully coordinated with each other and with State authority and resources to create the most
effective capacity development program. This coordination of State and federal programs is vital to
developing capacity, just as the development of greater system capacity through compliance is essential
for the efficient functioning of other important sections of the SDWA.
Exhibit 7-6 lists several tools that may permit States to exercise the authority and resources of
the SDWA. This exhibit is meant only as a starting point as States build their capacity development
strategies.
Exhibit 7-6: Tools that May Permit the State to Exercise
the Authority and Resources of the SDWA
Tools
Enforcement Records
Capital Improvement Plans
Certificates of Convenience and Necessity
Compliance Data
Comprehensive Performance Evaluations
Cooperation with NGOs
Cooperation with Industry Groups
Coordination with Other Agencies
DWSRF Loan Applications
Emergency Response Plans
Big Brother and "Buddy System" Programs
Operator Certification Programs
Permitting Requirements
Public Education Programs
Rate Reviews and Approvals
Regional Plans
Restructuring Programs
Bond Issue Review
Reviews of Audit Reports
Sanitary Surveys
Satellite Management Programs
Self-Assessments
Statewide Water Quality /Quantity Studies
Training and Technical Assistance Programs
WSPs or Business Plans
Water Conservation Plans
Element D: Establishing a Baseline and Measuring Improvements
Establishing a baseline with the aim of measuring improvements is crucial to fulfilling State
responsibilities under §§1420(b)(2) and 1420(c)(3), which require States to report to the EPA
Administrator and the Governor. States must evaluate the success of their capacity development efforts
as part of both reports. The most meaningful way to measure the success of State efforts is to measure
actual improvements in water system capacity. However, because capacity building is an incremental
process, it may take years before improvements are measurable. Therefore, even highly effective
capacity development programs may not show immediate improvements in the actual capacity of water
systems.
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There are several approaches to measuring capacity. In most cases, these methods would
need to be combined to measure a State program fully. Approaches include:
Volume of activity. A State could assess its program on the basis of its effectiveness
in reaching water systems. This could include a count of sanitary surveys or CPEs
conducted, the amount of technical assistance provided, or the number of water system
plans or self-assessments completed. To make this a valid measure, States need to
ensure that these activities are helping systems achieve and maintain capacity.
Operator certification. States could base their assessment on the prevalence of
certified operators who have the training necessary to improve the capacity of the
systems they operate.
Planning mechanisms. States could use the results of water system self-assessments,
WSPs, annual financial reports, or simplified budgeting worksheets to measure
improvements in capacity. This process would require a baseline measure of all
systems at the time when the capacity development efforts began and a method to
update system assessments regularly.
Compliance data. Since the statute explicitly mentions capacity with respect to
NPDWRs, analyzing compliance trends could be a useful way to measure
improvements in capacity. Variables such as the number of systems in significant
noncompliance, number of exceedances, number of M/R violations, and time required
to achieve compliance could be used as indicators of capacity (using compliance data
from the calendar quarter when the capacity development efforts began as a baseline).
Measuring improvements solely on the basis of compliance might yield an analytical
framework that is too limited, since factors such as new regulations or new enforcement
tools could influence compliance rates. In addition, trends in compliance data may not
yield sufficient data over the short term because capacity development is an
incremental, long-term process.
Element E: Identifying Interested Persons
The purpose of this element is to identify stakeholderspeople that have an interest in and are
involved in the development and implementation of the capacity development strategy. The overall
purpose of identifying and involving stakeholders is to inform the parties that interact with water systems
in an attempt to facilitate better communication about and contributions to capacity assurance efforts.
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One approach to identifying stakeholders is to use resources available through related outreach
programs. Potentially interested parties include:
Advisory panels for new system development. Foremost among the methods for
involving and informing key stakeholders is utilizing any stakeholder advisory panels
convened during the development of the new systems program. The key groups
involved in providing input into the development of a program for ensuring capacity in
new systems will not represent all of the interested stakeholders, but their
communication networks will reach a large proportion of the target audience.
Operator certification advisory boards. Operator certification advisory boards can
be key resources in disseminating capacity information. States might work with
operator certification boards to develop a certification curriculum that would help
ensure capacity.
Tools to identify additional stakeholders include:
Regional plans. Regional planning can promote communication and information
sharing between water systems in the planning area. In Washington State, the regional
planning document explicitly specifies the types of support that large systems will
provide to smaller systems within the plan's jurisdiction. This support system is a
formal agreement under which a large or central utility in a county performs direct,
contract, or support services for smaller utilities.
MOUs with PUCs. Some State PUCs are involved in regulating public water districts
or authorities and, on occasion, municipal water systems. PUC approval may also be
required to extend service from an existing investor-owned system to a new
development outside the original franchise area, or from a municipal water system to a
new development outside the municipal boundaries. The statutory authority for the
PUCs' actions are defined in the statutes that authorize them to promote the general
public interest (e.g., safe and reliable service at reasonable cost) by regulating the
manner in which monopoly services are provided.
These statutory authorities make PUCs logical partners in capacity development.
Several State commissions have adopted more expanded roles in small water system
capacity by opening formal proceedings on the matter and requesting public comment
(New York); developing and issuing a new policy statement adopted by the
commissioners (California, Connecticut); and drafting MOUs that state the broad
objectives of small system capacity development and itemize specific commission
responsibilities (Connecticut, Pennsylvania, North Carolina).
Permitting requirements. The permitting process alerts permittees to capacity
development and helps the State identify stakeholders.
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Cooperation of industry groups, lenders, and NGOs Developing relationships
with these important groups helps ensure their participation in the capacity development
process.
Public education. Public education plays an essential role in identifying interested
persons by informing the public of the issue and the opportunity to participate. In
addition, public education allows the general public to participate as an informed party
in the preparation of the capacity development strategy.
Coordination with other agencies. Coordinating with all involved agencies helps
ensure that the capacity development process runs smoothly. This is particularly
important in States where the primacy agency is not the only agency participating in the
DWSRF process.
3. Noncommunity Water Systems
Though similar, NCWSs and ancillary CWSs must be approached somewhat differently than
most CWSs in terms of capacity development. In this section, the five elements are reviewed with a
focus on the places where the approach to NCWSs needs to be developed differently.
Element A: Methods or criteria to prioritize systems
Many of the tools discussed for CWSs could also be used for NCWSs. For example, States
are likely to have information to prioritize NCWSs from permit applications, compliance data, or
sanitary surveys (since these types of data collection activities generally apply to both NCWSs and
CWSs). NCWSs are less likely, however, to employ tools such as water supply plans and capital
improvement plans. NCWSs may resist disclosing financial data since many are ancillary to larger,
privately owned entities.
Element B: Factors that encourage or impair capacity development
Many of the factors that impair or encourage capacity development in CWSs are likely to apply
to NCWSs. Dedicating resources to training and technical assistance will encourage capacity in
NCWSs.
Element C: How the State will use the authority and resources of the SDWA
States can use the programmatic and funding resources of the SDWA to help NCWSs achieve
compliance, build partnerships, and gain access to trained operators if applicable. In some cases,
States will want to work with individual NCWSs. In other cases, partnerships between CWSs and
NCWSs may be appropriate.
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States should recognize the limitations of the SDWA with regards to NCWSs. For example,
consumer confidence reports are required only of CWSs, and the operator certification requirements
apply only to CWSs and NTNCWSs, not transient, noncommunity water systems (TNCWSs).
However, the Act's source water protection provisions apply to NCWSs and CWSs.
Element D: How the State will establish a baseline and measure improvements
Assuming that the States rely on traditional data sources to establish their baselines and
measure improvements, States are likely to have data on CWSs and NCWSs. Data sources such as
compliance reports, sanitary surveys, and permit applications are likely to have information on all
PWSs. There is one difference between data collected on CWSs and those collected on NCWSs:
States collect information on NCWSs less frequently than CWSs, making it more difficult to measure
improvements in NCWSs.
Another characteristic of NCWSs is that ownership may change frequently, particularly for
small businesses. This may make it more difficult for States to measure improvement in these systems.
Element E: Procedures to identify persons that have an interest in and are involved in the
development and implementation of the strategy
The State should identify representatives of NCWSs and those served by NCWSs to
participate in the preparation of the State capacity development strategy. These stakeholders can be
identified using the tools previously discussed under Element E for CWSs.
States have been trying to reach out to NCWSs for many years, and some States have
perfected methods for doing so. One important step is to identify the largest categories of NCWSs
(e.g., public schools, day care centers, offices, factories). Interest groups representing these entities
can help conduct outreach and identify interested persons.
Some States find it difficult to reach the public affected by TNCWSs, yet many organizations
represent these groups. For example the American Automobile Association has an interest in water
quality at highway rest stops. Similarly, tourism organizations have a keen interest in avoiding outbreaks
of acute waterborne illnesses. In States that rely on tourism (e.g., Colorado, Florida, and California)
the tourism industry has focused public attention on water quality in highway rest stops.
The statute recognizes not only persons with an interest in the strategy, but also those who will
be involved in its implementation. This is useful because some drinking water regulators may need to
coordinate with other regulatory or governmental agencies, particularly regarding NCWSs. For
example, drinking water regulators may need to work closely with the State agencies that license
TNCWSs such as restaurants and lodging establishments. An MOU with the licensing authority may
substantially increase the effectiveness of the implementation of the capacity development strategy.
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The final component of a State's capacity development program is ensuring that DWSRF
money only goes to systems with adequate technical, managerial, and financial capacity. This
responsibility, and the exception to it, are discussed in the next section.
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Section 8
Assessing System Capacity of DWSRF Applicants
The previous section described how a State may formulate its strategy to assist existing systems
in achieving and maintaining capacity. One incentive for States to develop an existing system strategy is
that States cannot provide loans to systems
lacking adequate capacity. SDWA
§1452(a)(3) prohibits States from providing
DWSRF assistance to a PWS that "does not
have the technical, managerial, and financial
capability to ensure compliance with the
requirements of this title" or is in significant
noncompliance with a NPDWR or variance.
The Act does, however, allow a system
lacking adequate capacity or in significant
noncompliance to receive DWSRF assistance
if one of two conditions is met:
Careful system evaluation is important because
(unless improvements will bring a system into
compliance) only systems with technical,
managerial, and financial capacity are eligible to
receive DWSRF monies. This section outlines
tools and resources to aid in system assessment
with attention to differences between CWSs and
NCWSs and provides examples of State
The use of the assistance ensures the compliance of a system in significant
noncompliance.
The owner or operator of a system that lacks capacity agrees to undertake "feasible
and appropriate" changes in operations (including ownership, management, accounting,
rules, maintenance, consolidation, alternative water supply, or other procedures) that
the State determines would ensure the system's technical, managerial, and financial
capacity.
The remainder of this section focuses on the first step of the capacity assessment process,
which is to have States answer the following question: Which systems lack technical, managerial,
and financial capability, thereby rendering them ineligible for DWSRF assistance (under
§1452(a)(3))? The tools and resources that States can use to answer this question are discussed
below. Many States have not yet finalized their strategies for assisting existing systems in achieving and
maintaining capacity. Once a baseline is established (i.e the State defines through rule or policy the
definition of adequate capacity), States will be better able to make capacity determinations at the
outset. Systems with sufficient capacity are eligible to receive funding. For systems lacking adequate
capacity, States must determine if these systems meet either of the conditions described above.
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Capacity Assessment Tools
The DWSRF is a lending operation. Therefore, assessments of capacity for DWSRF purposes
should focus, in part, on criteria used to make lending decisions. The borrower must not only have the
financial capacity to repay the loan and to retain financial solvency over the life of the loan, but must
also be able to maintain the technical and managerial capacity to maintain the system over the life of the
loan. DWSRF assessment of capacity must be comprehensive, with an emphasis on financial capacity.
Exhibit 8-1 lists many tools for assessing a system's technical, managerial, and financial capacity.
Exhibit 8-1: Tools that May be Used by States to Assess System Capacity for DWSRF
Eligibility
Tools
Compliance data
Sanitary surveys
WSPs or business plans
Self-assessment/peer reviews
Regional plans
Criteria used by other lenders
Facility Plans
Operator certification
Educational opportunities for personnel
Permit application data
Capital improvement plans
Comprehensive Performance Evaluation (CPE)
O&M Manual
Consumer complaint records
State-wide studies of water quality or quantity
Budgeting worksheets
Annual financial reports
Source water assessment programs
Water conservation plans
Emergency response plans/ Policy procedures
Certificate of Convenience and Necessity
Review of audit report
Bond issue reviews
Rate reviews and approvals
Credit rating services
Financial assurance mechanisms
Consumer confidence reports
Engineering Reports
Interviews with personnel familiar with the system
DWSRF loan application
It is difficult to determine which tool is most appropriate for evaluating each element of
capacity. Each system is unique. A tool that is useful for assessing the capacity of a very small system
may not be useful for assessing the capacity of a large system. In addition, there are differences
between nontransient noncommunity water systems (NTNCWSs) and community water systems
(CWSs) that may warrant alternative approaches to capacity assessment. Because many NTNCWSs
are ancillary systems and may therefore seek funding elsewhere, States may not review a large number
of NTNCWS loan applications. Most of the tools described above apply to both CWSs and
NTNCWSs.
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Methods of Assessing Capacity
Just as capacity assessment tools apply to each system in unique ways, each State uses unique
combinations of tools to fit the individual characteristics and program needs of the State. An evaluation
of selected State capacity assessment procedures for the purposes of awarding DWSRF loans
indicates that these States use a
majority of the tools discussed
above. Of the States reviewed
(AK, AZ, FL, IN, SD, and VT),
none have developed separate
procedures based on the type of
system.
Diversity among the State
programs is found in the ways in
which the capacity information is
obtained and in how the States use
that information during the capacity
evaluation of the system. Some
States have amended their
regulations to specifically require the
submission of technical, managerial,
and financial information. Other
States have developed DWSRF
policies explaining the
documentation requirements. In
both situations, States are gathering
information through a combination of
loan applications, loan worksheets,
or State database information.
In addition to documentation
requirement differences, the States
that were reviewed use this
information to evaluate capacity
through a variety of different
procedures. Some States dedicate
specific evaluation teams or
coordinate between offices to ensure
that all areas of capacity are
evaluated by those with skills
specific to the individual elements of
VERMONT
Administration:
The Water Supply Division (WSD) of the Department of
Environmental Conservation (DEC), the Vermont Municipal
Bond Bank, and the Vermont Economic Development
Authority (VEDA) each play a role in assessing the capacity
of Vermont's DWSRF loan applicants. While WSD is
ultimately responsible for determining if a system
demonstrates capacity, the Bond Bank and VEDA assist
WSD by performing a financial assessment of applicants.
Evaluation Process:
WSD has developed a form for staff to complete as they
review loan applications to determine if there is a need for
capacity-based loan conditions in the loan agreement. The
form, similar to a "crosswalk" for a regulation, walks the
reviewer through a series of considerations where he or she
is required to make a determination of capacity and
document a basis for each response. Some examples of the
items on which staff might base a determination include the
Preliminary Engineering Report, sanitary surveys, WSD
water quality records, or a loan application.
Vermont has developed 17 standard loan conditions which
correspond to the 17 considerations on the form. Loan
conditions are applied to the loan agreement for those
considerations where the reviewer's response was "no."
WSD is working with New England Rural Water (NERW)
to track loan conditions and to develop templates and other
tools to help systems come into compliance.
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capacity. Arizona's Water Infrastructure Finance Authority (WIFA) reviews each loan applicant's
capacity in teams consisting of a project manager, the executive director, the finance director, and the
technical coordinator. Within Florida's Department of Environmental Protection (DEP), the Public
Water System Supervision Program is primarily responsible for technical and managerial capacity
assessment, while the Bureau of Water Facilities Funding evaluates the applicant's financial capacity.
In South Dakota on the other hand, the Department of Environment and Natural Resources evaluates
all three components of capacity.
Due to the direct relationship of financial capacity to a lending program and the potential
repercussions of a lack in financial capacity for the lender (in this case the State), in most States the
financial assessment is a more comprehensive process and is therefore conducted separately. For
example, Indiana and Vermont use the assistance of the Indiana Budget Agency, and the Vermont
Municipal Bond Bank and Vermont Economic Development Authority, respectively, to complete the
financial aspects of the assessment.
Some States have begun to develop specific worksheets and more formalized procedures for
SOUTH DAKOTA
Administration: South Dakota Department of Environment and Natural Resources (DENR)
administers the DWSRF program for the State through the Board of Water and Natural
Resources, which ultimately approves all loans.
Evaluation Process:
Both the System and DENR provide information necessary for capacity evaluation. Technical,
managerial, and financial capacity information is gathered primarily from the required application
form and Capacity Assessment Worksheets.
Capacity Assessment Worksheets are completed in a joint effort of the State and the loan
applicant. Applicants provide information concerning rates, financial planning, operator
certification, source adequacy, etc. This information is supplemented by the State with information
contained in State databases such as compliance data, facility information, and laboratory
certification information. DENR also reviews past sanitary survey results.
Finally, DENR staff review all information and documentation, complete an evaluation form, and
either recommends funding, funding with requirements, or denies funding. Requirements ensure that
systems will achieve compliance and capacity and are conditions of the loan.
capacity assessment. South Dakota has developed Capacity Assessment Worksheets and evaluation
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forms specifically for the DWSRF program. Vermont, like South Dakota, has formalized its review
process through the development of worksheets to ensure a thorough and comprehensive review of
each applicant.
States are not currently denying loans to systems based strictly on deficiencies in technical,
financial, or managerial capacity. Such deficiencies are being handled through loan conditions which
detail the required "feasible and appropriate changes" the system must complete. For example,
Alaska's Department of Environmental Conservation requires loan applicants in significant non-
compliance to sign to the Safe Drinking Water Act Compliance Agreement., which outlines a list of
actions the system must take in order to achieve compliance and sets a schedule for completion of
those actions. In addition, some States have rule provisions or policies intended to ensure that systems
receiving conditional loans will complete projects as planned and agreed upon.
INDIANA
Administration: Indiana's DWSRF program is managed jointly by the Indiana Department of
Environmental Management (IDEM) and the State Budget Agency. Currently, only existing
political subdivisions of the State (e.g. cites, towns, conservancy districts, etc) are eligible to apply
for a loan.
Evaluation Process:
Indiana requires systems to submit a loan application, a due diligence form, and a preliminary
engineering report. The loan application contains two yes/no questions that specifically address
capacity. If either of the answers is "no," the system must submit a plan which describes the steps
they will take to ensure adequate capacity.
The due diligence form provides the State Budget Agency with information about the financial
capacity of the system. It advises the State on economic matters of the political subdivision and
their ability to repay the loan, and provides financial disclosures. Financial capacity is
demonstrated by a showing of a dedicated source of repayment and the ability of the system to
repay each loan according to its terms and conditions.
Indiana has developed policies and procedures in the event of a default. The State may, without
prior notice, declare the entire outstanding principal amount of the loan together with any interest,
immediately due and owing.
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Section 9
Capacity Development and Other Programs
C Water
Conservation
: Variance
and
Exemption
Technical
Enhancement
Capacity
Development
Source
Water
Protection
State
Revolving
Fund
Operator
Certification
Exhibit 9-1: The '96 SDWA Tapestry
The capacity development provisions
outlined in §1420 of the SDWA are a vital
element of any successful State drinking water
program. A State's ability to comply with
§1420 can be enhanced through other water-
related programs included in the SDWA.
Several initiatives outlined in the SDWA
influence the ability of water systems to
develop and maintain capacity in ways that
may not be immediately obvious. When State
water programs are considered together as an
integrated whole, States will be able to create
more comprehensive and efficient capacity development strategies, maximizing the impact of their
dollars and resources. In formulating capacity development strategies, States should carefully consider
how they will allocate resources to the programs included in the SDWA, paying particular attention to
This section discusses the tapestry of the SDWA
and how each of its initiatives influence one
another and the development of water system
capacity. SDWA initiatives discussed include,
among others: regulatory enhancements, the
State Revolving Fund, operator certification,
source water protection, and variances and
exemptions.
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those programs that will have significant impacts on system capacity.
The following text highlights four general issues influencing capacity that are addressed in
sections other than §1420, including water quality, water quantity, technical enhancement, and resource
allocation. Specific programs within each area are also briefly described.
Exhibit 9-2 summarizes the ways in which the program areas described can benefit systems in
terms of each component of capacity. This list is by no means complete, but will hopefully offer
examples of how to begin thinking "outside the box," prompting policy makers to take a more creative
look at viable approaches to capacity development.
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Exhibit 9-2: Capacity Development Benefits of SDWA Programs
Programs
Water Quality
Source Water Protection
Underground Injection
Control
Wellhead Protection
Ground Water Protection
Grants
Water Quantity
Conservation
Technical Enhancements
Research and Technical
Assistance
Operator Certification
Resource Allocation
Variances
Exemptions
Assurance of Supply
Availability
Drinking Water State
Revolving Fund
Capacity Component
Technical
Cleaner raw water
reduces the need for
additional treatment
equipment and
infrastructure
Lower water demand
reduces need to
expand technical
infrastructure
Life of infrastructure
prolonged due to lower
volume of water
processed
Improved treatment
techniques and
infrastructure
Improved operating
knowledge and
technical skill
Adequate treatment
equipment affordable
Chemicals and
supplies available
Creation of capacity
development strategy
encouraged
Managerial
Linkages and
partnerships between
stakeholders
encouraged, translating
into shared knowledge
and improved
managerial practices
Enhanced managerial
and operational skill
Ongoing training
Consolidation or
regionalization
encouraged, enhancing
systems' managerial
abilities
Creation of capacity
development strategy
encouraged
Financial
Less costly treatment
processes and
equipment needed
Avoid high cost of
expanding
infrastructure due to
lower water demand
Grant money available
for infrastructure
needs
Cheaper technologies
place less strain on
budgets
Affordable treatment
and technology
Affordable supplies
and chemicals
Creation of capacity
development strategy
encouraged
Low or no cost
financing encouraged
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Water Quality
Measures taken to protect or
improve the quality of drinking water at any
point from source to tap will have positive
impacts on capacity development.
Improved raw water quality will improve a
system's technical and financial capacity by
reducing the need for complex and costly treatment procedures, subsequently allowing the system to
implement more affordable treatment options. Underground injection control (UIC), wellhead
protection, and groundwater protection programs have similar positive impacts on water system
capacity.
Source Water Protection
As per §1454, a State may work with owners, operators, and others through incentive-based
partnerships for the following purposes:
To reduce the presence of contaminants in drinking water;
To obtain financial or technical assistance to implement source water protection
strategies; and
To develop recommendations regarding voluntary and incentive-based strategies for
long-term protection of the source water of CWSs.
These efforts will maintain and improve the quality of the raw water available to water systems
within the State by encouraging water system planning.
Underground Injection Control
The EPA Administrator has promulgated regulations for State UIC programs under §1421 of
the SDWA. State UIC programs must prevent underground injection (i.e., the subsurface
emplacement of fluids by well injectionnot including the injection of natural gas for storage) that
endangers drinking water sources. Therefore, the implementation of an effective State UIC program
will enhance (or at least help maintain) the quality of a groundwater system's raw water supply.
Wellhead Protection
Under §1428, Governors of all States must adopt a State program designed to protect
wellhead areas within their jurisdiction from contaminants which may have an adverse impact on public
health. A wellhead protection area is the surface and subsurface area surrounding a water well or
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wellfield supplying a PWS through which contaminants may migrate towards the well or wellfield.
Thus, a successful wellhead protection program will enhance (or at least help to maintain) the quality of
a groundwater system's raw water supply.
Ground Water Protection Grants
EPA provides funding to States under §1429 exclusively for activities that provide additional
protection for groundwater resources; $15,000,000 has been authorized to carry out this section for
each fiscal year from 1997 to 2003. These monies enhance the technical capacity of a water system by
improving (or maintaining) the quality of a groundwater system's raw water supply. In addition, ground
water protection grants may reduce the financial burden on water systems since the State, rather than
systems within the State, will provide funding for ground water protection activities.
Water Quantity
Programs encouraging water conservation can also help
systems and States achieve capacity development goals. Section
1455 of the SDWA stipulates that EPA must develop and publish
guidelines for water conservation plans for systems of differing sizes
based upon water availability and climate. The Water Conservation
Plan Guidelines were published by EPA on August 6, 1998. Although the SDWA does not require
States to establish a water conservation plan, States like Kansas are finding that systems making small
investments into water conservation are saving a considerable amount of money through reduced
expansion and treatment costs.
Capacity can be enhanced in several ways by systems that implement and encourage water
conservation measures. Reducing the quantity of water that must be withdrawn, treated, and
distributed to the service population will help systems prolong the life of their infrastructure. By
circumventing the need for increasing technical capacity to treat and distribute water for inefficient use,
systems can also improve their financial capacity by avoiding the potentially high costs of infrastructure
expansion. Furthermore, in areas of the country where water quantity is an important issue, water
conservation can reduce the demand on source water, improving financial capacity by helping systems
avoid the need to purchase water or pay for expensive new water rights.
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Technical Enhancement
A system's technical capacity can be improved or enhanced through
several avenues, which in turn can lead to greater financial and managerial
capacity. For example, funding available for infrastructure replacements and
upgrades will allow systems to improve facility condition and function with far
less financial strain. Education and assistance programs provided to system
operators, culminating with the operator certification program, will lead to
improved operation and maintenance of system facilities. Furthermore,
support for research may lead to the development of more effective, and
potentially cheaper, treatment technologies. All of these steps, although not
necessarily mentioned in §1420, will lead to improved capacity.
Research and Technical Assistance
Section 1442(a) of the SDWA authorizes EPA to conduct research, studies, and
demonstrations relating to the causes, diagnosis, treatment, control, and prevention of physical and
mental diseases and other impairments that result from contaminants found in water. The SDWA also
authorizes EPA to provide the necessary research facilities to appropriate public authorities, institutions,
and individuals, and encourages EPA to make findings available to the public.
EPA is authorized to provide technical assistance and grants to States or publicly-owned water
systems to alleviate emergency situations affecting PWSs (§1442(b)), to provide training for State
enforcement personnel and owners/operators of PWSs (§1442(c)), and to assist small PWSs in
achieving and maintaining compliance with applicable NPDWRs (§1442(e)). The financial and
informational assistance provided to States and water systems under this section will help to improve
their technical, managerial, and financial capacity.
Operator Certification
Section 1419 of the SDWA sets forth the guidelines for State operator certification programs.
The operator certification program is designed to ensure that the operators of all CWSs and
NTNCWSs meet specific, minimum requirements relating to the proper operation and maintenance of
their water systems and the components that make up these water systems.
Operators who understand proper maintenance techniques and schedules will more effectively
maintain collection, treatment, and distribution equipment than those who do not. Thus, operator
certification will enhance the technical capacity of water systems. In addition, well crafted operator
certification programs may permit States to disseminate information regarding management techniques
or actuarial measures to operators. For example, a module covering basic accounting procedures
would permit system operators to plan for current, ongoing, and future expenditures and to ensure an
adequate revenue stream to offset these costs.
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Resource Allocation
Many programs and practices will allow systems to channel
resources more effectively towards areas of greatest need. At first glance,
a system with limited funds may not be able to afford all of the costs
associated with capacity-related activities, such as meeting expensive
technical requirements. However, mechanisms that allow systems to
temporarily forgo costly compliance measures, as well as policies designed
to fund (or defray the costs of) certain system components will allow
systems' dollars to stretch further. As a result, systems will have more
options and opportunities to strategically budget to meet long-term
compliance goals. The options listed below are just a few of the mechanisms that could help a system
save both time and money.
Variances and Exemptions
The use of variances and exemptions may permit systems with limited financial and technical
resources to provide safe drinking water to their customers at a lower cost. The SDWA allows States
with primacy (and EPA for States that do not have primacy) to relieve a PWS from a MCL
requirement, treatment technique, or both by granting a variance (§1415) or exemption (§1416).
Certain conditions relating to affordability, public health, and the alternative treatment technology used
by the system must exist for a variance or exemption to be allowed.
Variances and exemptions were designed with the long-term health of communities in mind.
Both provide more time and "breathing room" to find sustainable means of compliance rather than
forcing systems to opt for "quick fixes." Although the variant technologies may not achieve the required
MCLs, the water provided by the systems will still be of a higher quality as a result of the
implementation of the variances and exemptions. In this way, systems can move incrementally towards
compliance with NPDWRs.
Clearly, a reduction in operating costs will enhance a water system's financial
capacityimproving its ability to meet other financial obligations on an ongoing basis (including the
maintenance and replacement of its infrastructure). A successful capacity development program will
permit States to offer additional compliance options to small water systems (e.g., regionalization, big
brother programs) and decrease State and water system reliance upon variances and exemptions.
Assurance of Supply Availability
If the operator of a water system determines that s/he cannot reasonably obtain sufficient
quantities of required treatment chemicals, and this conclusion is verified by EPA, §1441 requires the
Administrator to issue the system a certification of need. This certification requires manufacturers or
distributors to supply the necessary quality and quantity of treatment chemicals to the water system.
Failure to provide the water system with those supplies deemed necessary will result in stiff fines for the
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manufacturer or distributor. Thus, this provision may enhance a system's technical (and financial)
capacity by ensuring the availability (and affordability) of the treatment chemicals a system requires to
provide safe drinking water to its customers.
The development of managerial capacity will diminish the necessity of this emergency program.
Section 1420(c)(2)(C)(ii) of the SDWA requires States to consider the inclusion of a description of
how the State will use the resources and authority of the SDWA to encourage the development of
partnerships between PWSs. Systems with adequate managerial capacity will be able to enter into
regional partnerships with other PWSs. Regional partnerships permit bulk purchase of supplies and
allow small PWSs to take advantages of some of the large economies of scale that exist within the
water industry. Further, long-term planning, essential to system stability, will improve with the
development of financial capacityreducing the occurrence of emergency shortages and the need for
federal bail-out.
Drinking Water State Revolving Fund
The DWSRF set aside fund provisions, like those specified in §1452(g) and §1452(k), serve as
the primary source of federal funding to ensure adequate technical, managerial, and financial capacity
for new and existing CWSs and NTNCWSs. In addition to other purposes, a State is allowed to set
aside substantial amounts of its capitalization allotment under §1452 of the SDWA to establish and fund
its capacity development program. For a more in-depth discussion about the DWSRF set asides,
please see Section 10.
After subtracting its set aside funds, States must grant the remaining DWSRF money to systems
that meet particular criteria (as discussed in Section 8) and that will use their award to enhance their
capability to provide reliable and safe water service to their customers. To this end, States are
penalized for the failure to develop and implement a capacity development strategy (or an operator
certification program) by having up to 20 percent of their DWSRF allotment withheld. Therefore, the
DWSRF provides States with financial support to establish capacity development programs, but can
reduce the size of those allotments (both temporarily and permanently) if State programs do not meet
federal requirements.
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Section 10
Building System Capacity
Small systems face a variety of challenges in their quest to provide high-quality water at an
affordable cost. However, there are many
SDWA programs and tools that can be used
to address the obstacles encountered by small
Helping struggling systems achieve capacity can
be very difficult. This section discusses several
options presented in the SDWA that States may
consider when assisting systems in significant
noncompliance. Two real-world success stories
of capacity building efforts are also provided.
systems, even those that are significantly out of
compliance. These tools include, among
others, State capacity development strategies
(§1420), restructuring, variances and
exemptions (§§1415 and 1416), affordability
mechanisms, consolidation incentives
(§1414(h)), and DWSRF monies (§1452),
especially the disadvantaged community
program (§1452(d)) and the 2 percent
technical assistance set-asides (§1452(g)(2)). Additional programs from SDWA that could be used to
help seriously non-compliant systems are the source water protection and operator certification
programs.
It is helpful to begin by identifying the most prevalent barriers faced by small systems as they
attempt to comply with capacity requirements. These barriers include:
Lack of technical knowledge about State and federal requirements (and how to meet them);
Lack of access to capital;
Lack of economies of scale, leading to a high per-customer cost of operations;
Lack of financial capacity; and
Lack of affordable technologies to comply with existing and new technologies.
Following is a discussion of the tools and options that you can provide or suggest to systems
trying to overcome serious obstacles to achieving capacity. The technical and financial assistance you
can offer as described in SDWA is presented first, followed by a discussion of other tools systems
should consider as they seek to comply. The stories of two communities who have successfully used
the tools presented below to overcome the obstacles and come into compliance have also been
included.
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1. Capacity Development Strategies
Capacity development strategies are intended to help States evaluate the technical, managerial,
and financial capacity of water systems within their jurisdictions and provide assistance to the systems
lacking capacity. SDWA §1420(c)(2)(A-E) requires that in creating this strategy, a State must
"consider, solicit public comment on, and include as appropriate" five elements, one of which is a
description of the methods or criteria the State will use to prioritize systems [§1420(c)(2)(E)]. In
completing this activity, States will create tools to help them identify the systems most in need of help.
Furthermore, States may be able to determine which systems will benefit the most from State
assistance, thus achieving the greatest "bang for the buck."
Successful capacity development strategies also depend on a State's ability to establish and use
a solid, reliable base of information. Capacity development strategies provide a framework for
gathering information which, when analyzed, may reveal the most pressing needs of small systems. In
turn, States can evaluate these findings to determine which available tools will most effectively assist
struggling systems.
2. Financial and Technical Assistance Mandated by the Safe Drinking Water Act
Several sections in the SDWA specify that DWSRF monies can, and sometimes must, be used
to financially and technically support small water systems. These are important tools and resources that
States have at their disposal to aid small systems that are struggling to meet compliance requirements.
Relevant SDWA sections include:
Section 1452(a)(2): Fifteen Percent DWSRF Set-Aside
Of the amount credited to any State loan fund established under this section in any
fiscal year, 15 percent shall be available solely for providing loan assistance to
public water systems which regularly serve fewer than 10,000 persons to the extent
such funds can be obligated for eligible projects of public water systems.
Though the language of this section is self-explanatory, it is important to note that a significant
percentage of a State's DWSRF allotment must be used to provide financial support to small systems.
Because most of the barriers facing small, non-compliant systems are financial in nature, this section
creates a strong foundation for States in their attempts to help all small PWSs achieve capacity.
Section 1452(d)(l): Assistance for Disadvantaged Communities
PWSs serving disadvantaged communities can face tremendous financial limitations. The
SDWA recognizes this restriction and allows States to provide additional subsidization to systems
serving economically depressed areas.
[l]n any case in which the State makes a loan pursuant to subsection (a) (2) to a
disadvantaged community or to a community that the State expects to become a
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disadvantaged community as the result of a proposed project, the State may
provide additional subsidization (including forgiveness of principal).
Determination of "disadvantaged" status must be based on the State's affordability criteria. A State
must define "disadvantaged community" in its DWSRF Intended Use Plan, define the amount of the
capital grant it intends to devote to subsidies for disadvantaged communities, identify the systems that
have been chosen to receive additional subsidies, and describe the State's affordability criteria. The
total amount of loan subsidies made by a State may not exceed 30 percent of the capitalization grant
received for the year.
Section 1452(g)(2): DWSRF Technical Assistance Set-Aside
An additional 2 percent of the funds annually allotted to each State under this section
may be used by the State to provide technical assistance to public water systems serving
10,000 or fewer persons in the State.
In other words, 2 percent of a State's DWSRF money may be set-aside to provide technical
aid to small systems. For example, the State may offer technical assistance to PWSs that are
consolidating or implementing variance or exemption technology. Because knowledge and manpower
may be resources that are as crucial as funds for many small PWSs, this section may be particularly
helpful in building capacity among struggling systems.
3. Restructuring
Restructuring is defined as changing the operational, managerial, or institutional structure of a
water system in order to meet the increasing costs and responsibilities of the SDWA while still
providing water at an affordable price. Restructuring solutions range in complexity and vary with the
creativity and resources of local systems and their communities. Solutions can involve physical
connections, changes in managerial operations, or a combination of the two. Restructuring may or may
not involve a transfer of ownership. Restructuring offers a convenient bridge between the support for
compliance-building found in the SDWA and the initiative that States and systems must take when
attempting to achieve compliance. Exhibit 10-1 illustrates the full spectrum of restructuring options,
described in greater detail in EPA's Restructuring Small Drinking Water Systems: Options and
Case Studies (September 1995).
Consolidation Incentives
The SDWA provides incentives for capable systems to consolidate with systems in significant
non-compliance. Consolidation with neighboring systems is an effective means to improve capacity and
encourage the resolution of compliance problems, thus improving water quality and safety. Section
1414(h) provides States with the opportunity to target systems for which consolidation may help build
technical, managerial, or financial capacity with the promise of additional time to remedy compliance
problems before enforcement action is taken.
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Exhibit 10-1: The Restructuring Spectrum
Internal
Completely
self contained
Requires no
cooperation or
interaction with
other systems
Examples:
Installing meters
Raising rates
Drilling a well
Soliciting
technical
assistance
iniorm
'opera
Work with other
systems, but without
contractual obligations
Examples:
Bulk purchase of
supplies
Mutual aid
arrangements
nraciuai
sistance
Requires a contract,
but contract is under
the system's control
System negotiates the
terms and duration of
the contract
Contract renewal at
the option of the
system
Examples:
Engineering
Legal
O&M
Purchasing water
Supplies
Laboratory services
Agencies
Creation of a new entity
designed to serve the
systems that form it
Creating systems
continue to exist as
independent entities
Requires cooperation of,
and possible negotiation
with, member systems in
areas covered by joint
powers agency
Examples:
System management
Source water
wnersmp
Transfer
Take over by existing
entity
Take over by newly
created entity
Examples:
Acquisition and
physical
interconnection
Acquisition and
satellite operation
Transfer of privately
owned system to new or
existing public entity
"increasing Transfer of Responsibility
To meet the requirements of this section, PWSs must submit a plan to the State for physical
and/or managerial consolidation with one or more neighboring systems, or a system may request a
transfer of ownership. The State or EPA will not take enforcement action with respect to a specific
violation identified in the plan until the consolidation is complete or 2 years after the plan is approved,
whichever occurs first. During the 2 years, PWSs will not face penalties for specified violations which
the consolidation attempts to remedy.
Please note that physical interconnection may not always be a sound economic solution for
systems attempting to achieve capacity. Exhibit 10-2 shows that, as the distance between systems
lengthens, infrastructure and related system costs needed to transport water will eventually surpass the
costs associated with other capacity building solutions. The feasibility of physical interconnection must
therefore be analyzed carefully and compared with the economic savings that less drastic options, such
as cooperatives and common management, may achieve.
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Exhibit 10-2: Economics of Physical Interconnection
$/Gal
Volume produced
Distance transported
Cooperatives
Small water systems may also join together to buy or share goods and services. If they create a
new, independent entity to perform this function, this entity is called a "cooperative." If no new entity is
created, the arrangement is considered an agreement to "cooperatively purchase" goods and services.
By joining together, in either form, small systems can achieve greater economies of scale and
reduce the unit prices of their purchases. Examples of goods and services that may be purchased more
cheaply include: operation and maintenance services, lab services, chemicals, and equipment. For
example, if State regulations permit, a group of small systems could save money by hiring one certified
operator to serve the entire group. Cooperatives may also be able to share equipment, such as
construction machinery that is not in continual use. In addition to the cost savings that might be
achieved, an additional feature of cooperatives is the forum they create for sharing knowledge about
regulations, pricing, and solutions to common problems.
Systems may also opt to join together under common management, wherein all managerial
functions (e.g., billing, collection, operations, etc.) Are performed by the same people. As Exhibit 10-3
demonstrates, this kind of agreement may result in significant cost-savings for systems that may find it
impractical to physically consolidate.
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
Exhibit 10-3: Economics of Common Management
J6M
Billing GColUctum
CumulativeJUll-i>tf Cumulativefttttrt*gt
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
Success Story #1: Tremonton, Utah
Regional Provider of Equipment and Supplies
As the largest water system for 30 miles, Tremonton helps smaller systems buy supplies at a
discount, borrow equipment when they need it, and stay current with industry developments.
The custom of neighbor helping neighbor is firmly rooted in the pioneer spirit of the West. In
northern Utah that spirit is evident in the informal cooperation between the Tremonton water system
(service population 3,500) and its 30 smaller neighbors.
For years, Tremonton has shared equipment parts with its neighboring systems, with the
understanding that the borrowing systems will replace what they use. Since chlorine distributors will not
deliver to many of the small systems, principally because of logistics problems, the Tremonton City
Council agreed to act as a "chlorine clearing house." Tremonton buys the chemical disinfectant, and
systems within a 30-mile radius pick up what they need when they need it. The systems pay
Tremonton the same price for the chlorine that Tremonton paid the distributor.
In 1993, Tremonton was also instrumental in establishing an organization that provides training
to water system operators. Although the Utah section of the National Rural Water Association and the
Rural Community Assistance Program (RCAP) provided assistance, the operators' group is not
affiliated with any national organization. The monthly meetings cover the latest topics of interest to
drinking water system operators (e.g., the lead and copper rule, recent regulatory changes, etc.). The
meetings also provide opportunities for systems to pick up chlorine and replace the parts they
borrowed.
Tremonton's transformation into an informal regional supplier of equipment parts and supplies
grew out of long-standing practice. The operators' organization it helped found grew out of need.
Such informal cooperation has helped more than 30 small systems in Utah improve their quality of
service.
4. Variances and Exemptions
Variance and exemption provisions offer systems added time and flexibility in meeting drinking
water requirements. State level affordability determinations help guide the analysis of systems'
compliance options. Consideration is given to the system's ability to afford nationally listed compliance
treatment technology, to afford the development of an alternative source of water, or to restructure or
consolidate with another system.
A variance allows a noncompliant PWS to deviate from the MCL of a drinking water standard
if: (1) the variance is protective of public health, and (2) the compliance options are either not
affordable or not practicable. States then must enforce the terms and conditions of the variance rather
than the drinking water standard.
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An exemption allows a noncompliant PWS to be exempt from meeting the MCL of a drinking
water standard for a limited time if (1) there will not be an unreasonable risk to human health and (2)
compliance options either are not affordable or not practicable. Exemptions allow systems extra time
to seek other compliance options or financial assistance.
Why Issue a Variance or an Exemption?
When treatment, development of an alternative source, restructuring, and consolidation are
unaffordable or unpractical for a system, variances and exemptions ensure that systems are protecting
public health as much as possible. Variances and exemptions give PWSs an opportunity to enhance
their capacity to comply with SDWA (or at least create net gains in the quality of finished water). For a
discussion of the evolution of variances and exemptions, see Exhibit 10-5 below.
Exhibit 10-5: Variances and Exemptions: A Before and After Picture
Pre 1996 SDWA
Post 1996 SDWA
Variances
After PWS installed
BAT
On the condition that the PWS install BAT
Small
System
Variances
Not Applicable
Affordability-based
Treatment, alternative source, and/or restructuring not
possible/affordable
No microbials or pre-'86 MCLs
Exemptions
PWS unable to
comply due to
compelling factors,
mainly economic
Compelling factors can include disadvantaged
community status under DWSRF provisions
Treatment, alternative source, or
restructuring/management changes unaffordable
Three additional 2-year renewals for small PWSs
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Success Story #2: Trailer Village Mobile Home Park; Centralia,
Washington:
Annexation Ensures Safe Water For Low-Income Housing2
A contamination problem that may have begun 30 years earlier led a neighboring community to
annex this mobile home park and to assume ownership of the park's drinking water system.
When Phase I (Volatile Organic Chemical) sampling found high concentrations of tetrachloroethylene
(PCE) in its drinking water wells in 1991, the Trailer Village Mobile Home Park outside Centralia,
Washington had few options. Its two wells, which showed PCE concentrations of 25 ppb and 103 ppb
(the maximum contaminant level is 5 ppb), were taken off line and bottled water was provided to its 85
households. The park's water distribution system was connected to the irrigation well of a nearby
cemetery to provide washing and other domestic purposes in the short term.
A preliminary site assessment implicated a dry-cleaning business that had operated on the mobile
home park site from 1960 to 1978 as the likely source of the contamination. The PCE contamination
threatened hundreds of area wells that pumped water from the aquifer. Working with Portland, OR-
based Backflow Management, Inc., the mobile home park owners investigated several long-term options,
including:
Installing an air stripper to control PCE in water pumped by the park's two wells.
Drilling a new well.
Connecting to the city of Centralia's water system about five miles away.
They chose to connect to the Centralia water system. Before that could happen, however, the State
health department had to approve the design and construction of a new distribution system for the park
(the park was not allowed to simply hook up to and purchase water from the Centralia system). As was
consistent with the health department's policy of promoting the annexation of small systems by larger
ones whenever possible, the health department required that Centralia own and maintain the new system.
Furthermore, local ordinance prevented Centralia from extending water service beyond the city's
boundaries, so Centralia had to annex the mobile home park. The park could not hook up with city water
without also hooking up to the city sewer, so new sewer lines were laid to serve the park, which
previously had been served by a septic system.
Construction was completed in September 1994. Total costs exceeded $640,000. A portion of the
costs will be covered by a loan to Centralia from the State-funded Public Trust Fund. Because 81
percent of the park households have low-to-moderate incomes, a State Community Development Block
Grant also provided loan funds. The park's owners will repay the loan.
As a result of this consolidation, the mobile home park's residents kept their homes and will have an
adequate supply of safe drinking water. Their bills will be about $35 per month for both water and sewer;
previously water service had been included in their rental fee. Centralia has increased its tax base and
gained a low-income housing community served by new water and sewage systems and a new city well.
3. Example fmmRestructuring Small Drinking Water System: Options in Case Studies, EPA 810-R-95-002, September
1995.
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Other Capacity-Building Tools
There are many other capacity-building tools available to States and systems that are not specifically
mentioned in the SDWA. A variety of loan programs offer financial assistance for use by water
systems, particularly those serving disadvantaged communities. States might also consider developing
trainings that focus on aspects of capacity building (e.g., system operation, new and applicable
regulations, etc.) or programs designed to provide technical assistance.
Role of Affordability
When addressing the problems of noncompliant systems, a primary question should be whether a
system can even afford to comply with the 1996 SDWA Amendments. At the national level, federal
affordability criteria are used for technology designation (e.g. compliance technologies, small systems
variance technologies). At the State level, State affordability criteria are used to analyze compliance
options (e.g. treatment, alternative source development, restructuring) and to determine
"disadvantaged" status under the DWSRF provisions. Information for States on affordability criteria is
now available. The next section discusses the assessment of affordability and the SDWA.
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Section 11
Affordability
Whether a system can afford to comply with the SDWA is an essential question in capacity
development. If a system cannot afford to
comply with the SDWA, then capacity
development efforts may not be enough to
bring a system into compliance. Affordability
may be defined in three simple ways:
"Having a sufficiency of
means :
"To be able to bear the
expense of; or
"Spare without much loss."
This section addresses the financial strain that
small systems in particular face as they struggle
to come into compliance with more rigorous
SDWA standards. It discusses the development
of affordability criteria and the importance of it in
the context of federal assistance. Several other
options and resources to improve affordability
are also addressed.
Affordability is the ability of a system and it's community to bear the increasing costs of compliance
associated with the 1996 Amendments to the SDWA. In the 1997 Drinking Water Infrastructure
Needs Survey, EPA estimated that systems will spend approximately $138.4 billion on infrastructure
improvements over the next 20 years to comply with the new requirements of the Act. Based on the
1995 Needs Survey, a total of $37.2 billion of infrastructure need is projected for small systems alone.
The majority of need will be for installation and rehabilitation of transmission and distribution systems.
Meeting these challenges will involve a critical analysis of system finances. It will mean looking at
available resources and options creatively to seek out innovative and sustainable solutions.
Assessing affordability allows a system to identify and choose the least cost paths to compliance.
This may be as simple as raising rates or as complex as the formation of a regional water authority.
Solutions may also take advantage of the many SDWA provisions (geared for small systems in
particular) that ease the transition into compliance. These include variances, exemptions, and loan
subsidies for communities experiencing serious economic difficulties. The solution may lie in combining
several options. The flexibility of the SDWA encourages and requires a creative and critical assessment
of affordability.
The assessment of affordability and the development of affordability criteria are an essential part of
State capacity development programs. In order to take full advantage of available federal funds, States
are required to develop Intended Use Plans (RJPs). These plans, based on State affordability criteria,
prioritize systems (including identified "disadvantaged communities") for assistance. The granting of
variances and exemptions is also based on State affordability criteria. These variances and exemptions
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can be used by States to assist systems most in need. Therefore, the evaluation of affordability is a
necessary step in the fair allocation and distribution of funds for several important SDWA programs.
1. Federal Role
Under the 1996 SDWA Amendments, EPA must use affordability criteria to:
Assess the feasibility of new MCLs; and
Assess the affordability of compliance options for three categories of systems: Those
serving 25 to 500, 501 to 3,300, and 3301 to 10,000 persons.
2. State Role
States must establish affordability criteria for the following three functions:
Prioritizing systems for DWSRF assistance;
Determining disadvantaged community status for communities; and
Granting variances and exemptions.
3. Factors Affecting Affordability
Affordability is a function both of the price of water and the ability of customers to pay, as
demonstrated in Exhibit 11-1. Ability to pay can be determined at the household level. It is primarily a
function of income, as shown in Exhibit 11-2. The standard measurement for household ability to pay is
the annual user charge as a percentage of median household income (MHI). A community's ability to
pay, therefore, can be seen as the aggregate of household ability to pay for any given service area.
Increasing affordability is a matter of either increasing the ability to pay or lowering the price of
water. There are several factors that influence a community's ability to pay. Socioeconomic conditions
and the health of the local economy are indicative of a system's ability to cope with future debt. A
community with high employment rates and higher incomes has a greater ability to pay for the increasing
cost of quality water. Transfer payments and progressive rate structures are ways to improve a
community's ability to pay for higher-quality water.
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Exhibit 11-1: The Affordability Function Graph
Affordable
100
80
60
£> 40
i 20
T3
^-
<
-20
-40
-60
-80
Unaffordable -100
X \
Abflity-Price
Affordability Threshold:
Price=Ability
Conversely, a community with high unemployment, regressive rate structures, lower income, and
income consumed by nondiscretionary obligations, has a low ability to pay for quality water. These
communities may qualify as disadvantaged communities. According to the SDWA, a "disadvantaged
community" is the service area of a PWS that qualifies as such under State affordability criteria. For
example, this may be gauged by the percentage of income per household devoted to water utility
expenses (where any commitment above a given percentage qualifies the community as disadvantaged).
Disadvantaged communities are eligible for loan subsidies of up to 30 percent of the amount of the total
capitalization grant for the State.
Ability to pay can be increased in several ways. Policy makers within an economically viable
community can increase the ability to pay by implementing progressive rate structures or transfer
payments. In communities with more dire economic problems, taking advantage of loan subsidies may
make improvements in water quality more affordable. Finally, increasing the efficiency of water system
operations (e.g. eliminating unaccounted-for water use), will decrease costs and therefore increase
ability to pay.
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Exhibit 11-2: Ability to Pay is a Function of Income
National Distribution of Household Income
"o
3
tsi
O
ffi
1989 Census
MHI=$30,065
10-14.9 15-24.9 25-34.9 35-49.9 50-74.9 75-99.9 100-149.9 >150
Income Level ($ 1000s)
Decreasing costs (and thereby lowering prices) is an important aspect of increasing ability to pay for
financially strapped communities. There are many factors influencing price. Infrastructure repair and
replacement costs, compliance costs, and demand growth costs can all increase the price of water.
Smaller systems, in particular, are also affected by diseconomies of
scale. Because they lack the power to purchase in bulk, small systems often pay higher prices for
supplies or services, and large capital costs are distributed across a smaller customer base. This
translates into higher rates for consumers.
For a community that can afford to absorb rate increases, decreasing costs (associated with
infrastructure/technology improvements or demand growth) are harmful to a true assessment of
affordability. Historically, people have paid very little for water (please see Exhibit 11-3). Upward
pressure on prices is created by both meeting higher standards for the provision of a safe and adequate
supply of drinking water and increases in demand due to economic development or population growth.
When faced with the increased costs of compliance and demand growth, systems that have been
historically underpricing their water may feel that changes are unaffordable. However, as has been the
case with the provision of other utilities, drinking water rate increases are necessary to ensure the
quality of service. Keeping the price of this utility artificially low sends a flawed message about the true
cost of providing water.
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Exhibit 11-3: Underpricing of Water
700
600
500
$per
Household
400
per year 300
200
100
0
Rate Currently
Being Paid
True "Full
Cost" Rate
Affordability assessment allows a system to evaluate compliance options by considering not
only the price of infrastructure repair, but also the costs resulting from diseconomies of scale.
Abolishing diseconomies of scale (both in management and production) through restructuring lowers
costs by providing the system with greater purchasing power and less expensive service costs. In
addition, low cost technologies and subsidies (if the system qualifies according to established criteria)
can exert deflationary pressure on water prices.
Exhibit 11-4: Factors Influencing Affordability Assessment
Infrastructure repair and replacement costs
Compliance costs
Demand growth costs
Unemployment rates
Incomes
Nondiscretionary expenditures as a percentage of
income
Economies of scale
Lower cost technologies
Increased efficiency
Subsidies
Rate structures
Unaccounted-for water levels
Transfer payments
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In summary, the key factors in improving affordability for a community are addressing the rate
structure, taking advantage of economies of scale, providing subsidies to the neediest of communities,
and allowing for regulatory flexibility.
Several examples of existing affordability assessment methodologies are available for reference:
Office of Policy, Planning, and Evaluation Panel Critique.
U.S. EPA. September 1993. Combined Sewer Overflows: Guidance for Financial
Capability Assessment and Schedule Development. Washington, DC: Office of Drinking
Water, U.S. EPA.
U. S. EPA Region V, Water Division: Small Community Municipal Financial Capability
Analysis, Self Evaluation Guidebook.
Washington State Financial Viability Program in Methods for Assessing Small Water
System Capability.
PAWATER: A Financial Planning Model for New, Small CWSs.
For more information please refer to the EPA's Information for States on Developing
Affordability Criteria for Drinking Water. The next section provides information on potential
sources of funding States that may be used for funding the creation and implementation of their capacity
development programs.
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Section 12
Funding Sources for Capacity Development
Programs
A State's capacity development program can involve substantial State commitment, including
developing programs to ensure new system capacity, assisting systems in developing capacity, assessing
capacity of DWSRF applicants, and assessing the affordability of systems. To develop such an array of
capabilities, States may need to find sources of ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
outside revenue. Capacity development
programs, and programs that contribute to the
procure funding for various activities through
several avenues under the amended SDWA.
,, -^11 A programs that contribute to the success of
success or capacity development programs r fe .
. x capacity development programs, may procure
(see section entitled "SDWA Tapestry"), may ^ J ^ F & > ; F
Capacity development programs, and
funding for various activities through several
avenues under the amended SDWA.
1. Drinking Water State Revolving Fund: SDWA §1452
The DWSRF is the largest new source of funding available to States under the amended
SDWA. Section 1452(a)(l)(A) of the SDWA requires the EPA Administrator to provide
capitalization grants to eligible States to "further the health protection objectives of this title (SDWA),
promote the efficient use of fund resources, and for other purposes as specified in this title (SDWA)."
State Eligibility
To ensure eligibility for a DWSRF capitalization grant, a State must establish a drinking water
treatment revolving loan fund. To avoid withholding of part of the DWSRF allotment they would
otherwise receive, States must:
Develop a program to ensure that all new CWSs and new NTNCWSs beginning operation
after October 1, 1999 have, and will be able to maintain, adequate technical, managerial,
and financial capacity [§1452(a)(l)(G)(i)];
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Solicit public comment on, and consider the inclusion of, the elements outlined in
§1420(c)(2)(A-E) in their capacity development strategy for existing water systems
[§1452(a)(l)(G)(i)]; and
Adopt and implement an operator certification program for operators of CWSs and
NTNCWSs [§1452(a)(l)(G)(ii)].
As per §1452(b)(l-2), States that participate in the DWSRF program must submit an Intended
Use Plan (IUP) on an annual basis. The IUP must include a list and description of all projects that will
be provided with DWSRF monies in the upcoming FY. The project description should include the
expected terms of financial assistance and the size of the community that will benefit from DWSRF
assistance. The IUP must also include the criteria and methods used by the State to distribute DWSRF
monies, a description of the financial status of the State's DWSRF, and the short-term and long-term
goals of the State's DWSRF loan program.
Allocation and Fund Availability
Section 1452 funds will be allocated to States according to a formula that allocates to each
State the proportional share of the State needs identified in the most recent needs survey. Primacy
States will be guaranteed at least 1 percent of available funds, while Wyoming and the District of
Columbia will continue to be guaranteed a minimum proportionate share.
Authorized funds are available to States for obligation during the FY for which the funds are
authorized and during the following FY. Grants made available from funds provided prior to FY 1997
are available for obligation during FY 1997 and FY 1998. Funds that have not been obligated by the
last day of the period for which they are available will be reallocated according to the same formula
used to determine initial fund allocation. Moreover, up to 10 percent of unobligated funds may be
allocated to Indian Tribes, and no funds will be reallocated to States that have not obligated all of their
grant monies. Further, funds that have been withheld under §1452(a)(l)(G)(i) and §1452(a)(l)(G)(ii)
may not be reallocated to States that have not fulfilled the requirements of §1420 (capacity
development) and §1419 (operator certification), respectively.
Eligible Programs, Minimum and Maximum Funding Levels
Under §1452(a)(3)(C), States must determine whether a PWS is in significant noncompliance
with any NPDWR or variance (i.e., the system has been out of compliance for any three quarters over
the preceding three year period) and must determine whether a PWS has adequate technical,
managerial, and financial capacity. States may not use DWSRF funds to provide assistance to PWSs
that are in significant noncompliance with any NPDWR or variance [§1452(a)(3)(A)J. Nor may States
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provide assistance to PWSs that do not have the technical, managerial, and financial capacity to ensure
compliance with the SDWA. However, a State may provide assistance to a PWS that would
otherwise be ineligible for assistance if DWSRF assistance will ensure system compliance or if the
system owner agrees to make operational changes that the State determines will ensure that the system
will have adequate technical, managerial, and financial capacity to comply with the SDWA over the
long term [§1452(3)(B)].
DWSRF Set Aside Funds that can be used for Capacity Development
Assistance for Disadvantaged Communities [§1452(d)] allows a State to use up to 30 percent
of its total capitalization grant to assist disadvantaged communities.
Cost of Administering the Fund [§1452(g)(2)] allows a State to use up to 4 percent of its
allotment to cover the cost of programs under this section, and to provide technical assistance to PWSs
within the State. These programs encourage technical capacity (through operator certification and
source water protection), managerial capacity (through operator certification), and provide general
support for capacity development strategies.
For FY 1995 and each FY thereafter, each State may use up to an additional 10 percent of the
funds allotted under this section if the State matches the expenditures with at least an equal amount of
State funds. At least half of the match must be additional to the amount expended by the State for
public water supervision in FY 1993. These set aside funds can be used to fund:
PWS supervision programs under §1443(a);
Technical assistance through SWPPs;
The development and implementation of a capacity development strategy; and
Operator certification.
An additional 2 percent of the funds annually allotted to each State under this section may be
used by the State to provide technical assistance to PWSs serving 10,000 or fewer persons.
Other Authorized Activities [§1452(k)J allow a State to expend up to 15 percent of the
capitalization grant each fiscal year for any of the following activities, which also increase technical
capacity through source water and wellhead protection and provide general support for capacity
development strategies. The expenditure may not exceed 10 percent for any single activity. These
activities include:
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To acquire land or conservation easements for the protection of source water or to ensure
compliance with NPDWRs;
To provide funding to implement voluntary, incentive-based source water quality protection
measures;
To provide assistance through a capacity development strategy including technical and
financial assistance;
To make expenditures to delineate or assess source water protection areas (drawing from
the capitalization grant from FYs 1996 and 1997 in accordance with §1453), except that
funds set aside for such expenditure shall be obligated within 4 FYs; and
To make expenditures to establish and implement wellhead protection programs in
accordance with §1428.
The following program provides funding for efforts that further capacity development, but may
not be directly related.
2. The Environmental Quality Incentives Program
NFS pollution degrades the quality of both surface and ground water in the United States. This
degradation adversely impacts the ability of water systems to provide reliable, safe drinking water to
their customers since contaminated raw water must undergo more thorough (and more expensive)
treatment before it may be distributed to consumers. This additional treatment directly affects both the
technical and financial capacity of a water system. While many programs have been developed and
successfully implemented to reduce the levels of point-source pollution, non-point sources (NPSs) of
pollution remain both largely unregulated and unameliorated.
The Environmental Quality Incentives Program (EQIP) was established by the Natural
Resources Conservation Service (NRCS) of the U.S. Department of Agriculture (USDA) under the
1996 Farm Bill to provide a single, voluntary conservation program for farmers and ranchers to address
significant natural resource needs and objectives and to eliminate overlapping efforts. EQIP replaced
four programs: the Agricultural Conservation Program, the Water Quality Incentives Program, the
Great Plains Conservation Program, and the Colorado Basin Salinity Control Program. Nationally, it
provides technical, financial, and educational assistance, half of it targeted to livestock-related natural
resource concerns [e.g., confined animal feeding operations] and the other half to more general
conservation priorities. EQIP is available primarily in priority areas where there are significant natural
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resource concerns and objectives. By providing funding to conservation activities on farms and
ranches, EQIP offers State Drinking Water Program Coordinators (SDWPCs) a way to address NFS
pollution problems that impact vital watersheds.
All non-Federal landowners (including Native American Tribes) engaging in livestock
operations or agricultural production are eligible to receive funding under this program. Cropland,
rangeland, pasture, forest land, and other farm and ranch lands are eligible for remediation programs.
Thus EQIP funding can be used in virtually any area where agricultural activity occurs.
EQIP provides funding for up to 75 percent of the cost of implementing specified conservation
practices. Additionally, certain landowners may qualify for incentive payments that will pay for up to
100 percent of the cost of implementing conservation practices for up to 3 years. The maximum award
under this program is $10,000 per person per year and $50,000 over the length of the EQIP contract.
It is estimated that this program will be funded at $200 million per year from FY 98 to FY 02.
For more information on this program, contact your local or State NRCS office or the
Headquarters of the USDA NRCS at P.O. Box 2890, Washington, D.C. 20013 or (202) 720-1873.
3. Watershed Protection and Flood Prevention Program
Authorized by the Watershed Protection and Flood Prevention Act, P.L. 83-566, as amended
and P.L. 78-534, this program works through local government sponsors and is designed to help
participants solve natural resource and related economic problems on a watershed basis. Eligible
projects include watershed protection, flood prevention, erosion and sediment control, water supply,
water quality, fish and wildlife habitat enhancement, wetlands creation and restoration, and public
recreation in watersheds of 250,000 or fewer acres. Technical and financial support is available for
installation of works of improvement designed to protect, develop, and utilize the land and water
resources in small watersheds.
Eligible entities for funding under this program include: local or State agency, county,
municipality, town or township, soil and water conservation district, flood prevention or flood control
district, Indian Tribe or Tribal organization, or nonprofit agency with the authority to carry out, maintain,
and operate watershed improvement works
The Watershed Protection and Flood Prevention Program (WPFPP) provides funding to cover
up to 100 percent of flood prevention construction costs; and 50 percent of construction costs related
to agricultural water management, recreation, and fish and wildlife. Funding is not provided under this
program for other municipal or industrial water management activities or facilities. WPFPP monies
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may also be used to provide technical assistance and counseling regarding watershed conservation
issues to eligible entities. Thus, much like EQIP, this program may improve source water quality,
reducing the need for treatment and decreasing the financial burden of water systems.
The FY 98 budget for this program is estimated at $40 million; technical assistance activities are
proposed to be funded under a different program in 1998 and beyond. For more information on this
program, contact your local or State NRCS office or the Headquarters of the USDA NRCS at P.O.
Box 2890, Washington, D.C. 20013 or (202) 720-1873.
4. Surface Transportation Program
Surface Transportation Program (STP) funds may be used by State and local governments for
any roads (including the National Highway System) that are not functionally classified as local or rural
minor collectors. The STP was authorized by the Intermodal Transportation Efficiency Act of 1991
and the National Economic Crossroads Transportation Efficiency Act of 1997 and is administered by
the U.S. Department of Transportation (DOT). Each State must set aside 10 percent of STP funds for
transportation enhancements, which can include water-related projects, such as wetland mitigation and
implementation of control technologies to prevent polluted highway runoff (NPS pollution) from
reaching surface water bodies. Other transportation enhancements include landscaping and other
scenic beautification, pedestrian and bicycle trails, archaeological planning and research, preservation of
abandoned railway corridors, and historic preservation.
Public, private, for-profit, and non-profit entities and individuals, local government agencies,
universities, colleges, technical schools, and institutes are all eligible to receive funding under STP.
Since up to 10 percent of STP funds may be used for water-related projects, SDWPCs may be able to
tap into this funding source to enhance watershed protection and improve watershed quality by
reducing the impact of NPS pollution resulting from highway run-off.
Assistance under STP is provided in the form of project grants (cooperative agreements).
Note that matching funds may be required of eligible entities. Although FY 98 funding is contingent
upon reauthorization, funding levels should approach those of FY 97 (i.e., $596 million nearly $60
million of which would be available for water-related programs)
For additional information, contact the DOT at Federal Highway Administration, ISTEA
400 7th Street, SW, Washington, D.C. 20590 or (202) 366-5004.
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5. Capitalization Grants for Clean Water State Revolving Funds
EPA awards grants to States to capitalize their Clean Water State Revolving Funds
(CWSRFs). The States, through the CWSRF, make loans for high priority water quality activities. As
loan recipients make payments back into the fund, money is available for new loans to be issued to
other recipients. While traditionally used to build wastewater treatment facilities, loans are used
increasingly for other water quality management activities, including:
Agricultural, aquacultural, rural, and urban runoff control;
Estuary improvement projects;
Wet weather flow control, including stormwater and sewer overflows;
Alternative wastewater treatment technologies; and
Nontraditional projects such as landfills and riparian buffers.
Capitalization grant funds under the CWSRF are available to States, Puerto Rico, Territories,
and D.C. Indian Tribes can receive project grants from either EPA or the Indian Health Service.
Funds are lent to municipalities, communities, citizens' groups, nonprofit organizations, and private
citizens to implement NFS and estuary management activities (provided for in State plans developed
under the Clean Water Act (CWA) § 319 and § 320.)
A 20 percent State match is required for CWSRF participation. States may then provide loans
to eligible entities more or less at their discretion. Although this program falls under the purview of the
CWA rather than the SDWA, the water quality improvement programs eligible for funding under this
program can greatly reduce the financial burden on water systems by improving the quality of the
source water upon which they rely. It is estimated that $1.075 billion will be available under the
CWSRF in FY 98. SDWPCs should actively lobby for the funding of water quality programs in their
States the CWSRF represents an enormous potential source of funding that may enhance capacity
development programs.
For more information contact the EPA's Office of Wastewater Management (OWM)
DWSRF Branch at Municipal Support Division (4204), 401 M Street, SW, Washington, D.C. 20460,
by phone at (202) 260-2268, or by email at DWSRFinfo@epamail.epa.gov.
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6. Great Lakes Program
EPA's Great Lakes Program (GLP) issues awards to monitor Great Lakes ecosystem
indicators; provides public access to Great Lakes data; helps communities address contaminated
sediments in their harbors; supports local protection and restoration of important habitats; promotes
pollution prevention through activities and projects such as the Canada-U.S. Binational Toxics Strategy;
and provides assistance to implement community-based Remedial Action Plans for Areas of Concern
and for development of Lakewide Management Plans and the reduction of critical pollutants pursuant to
those Plans.
Authorized under §104 and §188 of the CWA, GLP assistance is available to State water
pollution control agencies, interstate agencies, other public or nonprofit private agencies, institutions,
organizations, and individuals. Clearly, the programs authorized under the GLP will greatly enhance the
water quality of the Great Lakes, reducing the treatment burden of local water systems.
Assistance is provided under the GLP in the form of project grants (cooperative agreements),
use of property and equipment (vessels for open lake monitoring or harbor sediment sampling),
provision of specialized services, and dissemination of technical information. The principal means of
awarding assistance is through an annual competitive solicitation distributed by mail and noticed in the
Federal Register. SDWPCs should send their name and address to the contact identified below to be
put on the mailing list.
For further information, please contact EPA's Great Lakes National Program Office (G-17J) at
77 West Jackson Boulevard, Chicago, Illinois 60604-3590, by phone at (312) 886-4013, or by email
at russ.michael@epamail.epa.gov.
7. Hardship Grants Program for Rural Communities
In conjunction with the CWSRF, the Hardship Grants Program (HGP) provides funds to rural
communities for wastewater projects. The 1996 Congressional Appropriation Act reserved funds from
the CWSRF appropriation to fund the HGP. The HGP is designed to assist disadvantaged rural
communities through a combination of grants and technical assistance. Funding is distributed among
States based on a formula that considers the rural per capita income in each State and the number of
rural communities that lack access to centralized wastewater treatment. Communities must initially
apply for CWSRF funding; if they meet the eligibility requirements, they could receive a combination of
a CWSRF loan, a Hardship Grant, and technical assistance. Clearly, funding provided under this
program could enhance the technical capacity of rural PWSs by improving the quality of local surface
and ground water sources.
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Under this program, States receive funds and distribute them to rural communities that have:
Fewer than 3,000 people;
No access to centralized wastewater treatment or collection system, or rely upon on-site
systems (i.e., septic tanks) that need improvement;
A per capita income rate that is less than 80 percent of the national average;
An unemployment rate that exceeds the national average by one percentage point or more;
and
A proposed project that will improve public health or reduce environmental risk.
Although it is unknown if additional monies will be made available in FY 98, States have until
March 1999 to collect their share of the $50 million appropriated in FY 96. For more information,
contact the EPA's OWM DWSRF Branch at Municipal Support Division (4204)
401 M Street, SW, Washington, D.C., 20460, by phone at (202) 260-2268, or by email at
DWSRFinfo@epamail.epa.gov.
8. Nonpoint Source Implementation Grants: Section 319 of the CWA
The §319 program provides formula grants to the States to implement Nonpoint Source (NFS)
projects and programs in accordance with §319(h) of the CWA. Examples of previously-funded
projects include best management practices (BMPs) installation for animal waste; design and
implementation of BMP systems for stream, lake, and estuary watersheds; basin-wide landowner
education programs; and lake projects previously funded under the CWA §314 Clean Lakes Program.
Both States and Indian Tribes are eligible to receive §319 funds. Formula grants are awarded to a lead
agency in each State. States and Tribes then may distribute these funds at their discretion to State and
local government agencies and nonprofit organizations, although recipients are required to provide 40
percent of total project or program cost.
It is estimated that $100 million is available for this program for FY 1998. For further
information, please contact EPA's Office of Wetlands, Oceans and Watersheds
Assessment and Watershed Protection Division, NFS Control Branch at (4503F)
401 M Street, SW, Washington, D.C., 20460, by phone at (202) 260-7100, or by email at
ow-general@epamail.epa.gov.
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9. Pollution Prevention Grants Program
The Pollution Prevention Grant Program (PPGP), authorized by §6605 of the Pollution
Prevention Act, provides project grants to States to implement pollution prevention projects. The grant
program is focused on institutionalizing multimedia pollution (air, water, land) prevention as an
environmental management priority, establishing prevention goals, providing direct technical assistance
to businesses, conducting outreach, and collecting and analyzing data. A reduction in pollution will lead
to an improvement in source water quality and should reduce the technical and financial burden of water
systems.
State and local governments, Indian Tribes, and nonprofit organizations are eligible for
assistance under this program (local governments and nonprofit agencies, while not eligible to submit
applications directly, are encouraged to work with State agencies to implement pollution prevention
programs). Individual grants are awarded based on requests, however, States are required to provide
at least 50 percent of total project costs. It is estimated that up to $6 million will be available under the
PPGP in FY 98.
For further information, please contact EPA's Office of Pollution Prevention and Toxics
Pollution Prevention Division, at (7409) 401 M Street, SW, Washington, D.C., 20460, by phone at
(202) 260-3480, or by email atkent.christopher@epamail.epa.gov.
10. Water Quality Cooperative Agreements
Grants are provided under §104(b)(3) of the CWA to support the creation of unique and new
approaches to meeting stormwater, combined sewer outflows, sludge, and pretreatment requirements
as well as enhancing State capabilities. These grants may permit SDWPCs to implement watershed
protection programs that will result in improved water quality reducing the technical and financial
burden on water systems. Eligible projects usually include research, investigations, experiments,
training, environmental technology demonstrations, surveys, and studies related to the causes, effects,
extent, and prevention of pollution. State water pollution control agencies, interstate agencies, local
public agencies, Indian Tribes, nonprofit institutions, organizations, and individuals are eligible to receive
this assistance. While matching is encouraged, it is not required. It is estimated that $20 million will be
available under §104 of the CWA for FY 98.
For further information please contact the EPA's OWM at 401 M Street, SW, Washington,
D.C. 20460, by phone at (202) 260-9545, or by email at ow-general@epamail.epa.gov.
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Finding sources of additional funds will not be a State's only challenge. States should also find
ways to engage the public, both through education efforts and channels of participation and input. The
need to include the public is discussed in the next section.
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Section 13
Public Education and Participation
Even with adequate funding, States will not be able to develop their capacity development
programs in a vacuum. Ensuring safe drinking water is a collaborative process, requiring the
participation and shared responsibility of
diverse groups and individuals. For this
reason, public education and opportunities for
participation are crucial elements of successful
implementation of capacity development
programs and strategies.
Public education is a crucial aspect of
successful capacity development that is
frequently overlooked. Informing interested
parties of recent developments in clean water
legislation and the measures necessary to meet
new requirements will help pave a smoother
path towards SDWA compliance.
The 1996 Amendments recognize the
importance of public understanding and
involvement in capacity development.
§1420(c)(2) states that:
In preparing the capacity development strategy, the State shall consider, solicit
public comment on, and include as appropriate
(E) An identification of the persons that have an interest in and are involved
in the development and implementation of the capacity development
strategy (including all appropriate agencies of Federal, State, and local governments,
private and nonprofit public water systems, and public
water system customers).
In other words, States must consider developing a process to inform decision-makers, PWS
owners and operators, and consumers of the steps being taken to ensure water systems have adequate
capacity. Many states may give these stakeholders avenues through which they can meaningfully
participate in the planning process. Failure to consider this aspect may result in a partial loss of
DWSRF funds. By providing interested parties with an avenue for input, States not only ensure that all
relevant voices are being heard, but including stakeholders in the policy process paves a smoother,
more direct path towards effective capacity development and compliance implementation.
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States may face resistance from a variety of factions as the new amendments take effect. The
most common factors that motivate such resistance include:
Political or ideological opposition;
Concern from system owners and operators about loss of control or cost;
Concern from consumers regarding possible rate increases; and
Apathy
However, these fears can (and should) be allayed by a well-structured, comprehensive strategy
that attempts to educate the public about the reasons behind capacity development, and provides
opportunities for citizens to voice their questions and concerns. Because improving financial capacity
could potentially lead to an increase in water rates for average water customers, consumer education
will play an increasingly important role.
Following is a brief explanation of the most important factors that will lead to greater
understanding and acceptance of changes in accordance with the SDWA Amendments, as well as a list
of tools that will help facilitate effective educational and participatory opportunities.
1. The Bottom Line
The primary message that a public education program must convey to system owners,
operators, and customers is that problems may exist with current drinking water capacity. In order to
maintain an adequate level of safely in the drinking water supplya luxury that most consumers expect,
demand, and supportchanges in current programs must be made, including possible system
restructuring and rate increases.
Complying with the new standards set forth in the amendments, including requirements of
adequate capacity, will yield several noticeable benefits. Most obviously, attaining technical,
managerial, and financial capacity will result in safer drinking water supplies and more reliable water
service. In addition, consumers may benefit from rate decreases. Restructuring is often the most cost-
effective way of meeting new requirements, whichalthough expensive in the short-termwill likely
translate into lower long-term costs to consumers and communities.
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2. Tools of the Trade
Many tools are available to the State and/or local entities attempting to facilitate public
education and participation. Cooperation and coordination among groups, the creation of events that
bring stake-holders together, and the dissemination of information through a variety of media avenues
are common themes that emerge from these lists, and should be incorporated in public education
programs.
One must first identify a list of interested groups that should be targeted by education and
participation programs. The following groups represent a sampling of those that might have an interest
in capacity development:
Water system operators;
Water system owners;
Customers;
PUCs;
Environmental groups;
Developers;
Professional societies/consultants; and
Chambers of Commerce/Economic development groups.
A public education program does not need to be expensive or overly time consuming to reach
its targeted audience. There are several methods through which information can be communicated to
the public, including:
Regular briefings of key officials or groups;
Public meetings;
Feature stories in newspapers;
Mailing of planning documentation to civic leaders;
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Newsletters;
Paid advertisements;
Public service announcements; and
Hotline telephone information numbers.
Similarly, many options exist that could provide citizens and stake-holders with the opportunity
to participate in the planning process:
Advisory groups/task forces comprised of interested parties;
Focus groups to discuss compliance options and impacts;
Interviews with key officials and interested citizens;
Open planning meetings or workshops to involve all interested parties;
Public hearings to provide formal input into the decision making process; and
Surveys or polls to determine public preferences.
Please see the Information document in Appendix A for these additional tools that apply to
public education and participation efforts:
CCN;
Cooperation with non-government organizations;
Cooperation of industry groups and lenders;
Coordination with other agencies;
Operator certification;
Permit application data; and
Regional plans.
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These are just a sampling of the many tools available to the policy maker for reaching interesting
stakeholders.
As state officials begin the process of implementing their capacity development programs, it is
important that the public's voice be heard. If public education and opportunities for participation are
adequately provided, this seemingly minor step could reap positive results.
For additional information on public education and participation, please refer to:
AWWA Blue Thumb Proj ect, "Give Drinking Water A Hand."
http ://www. awwa. org/bluethum.htm
Plank, R. David, Roddy Rogers, Frank L. Shorney, David J Novak and Robert R.
Zion. "Public Involvement Helps Supply Project Succeed." Journal of American
Water Works Association. (May 1997): 40-54.
Powell, John R., David J. Allee and Charles McClintock. "Groundwater Protection
Benefits and Local Community Planning: Impact of Contingent Valuation Information."
American Journal of Agricultural Economics. 76 (Dec. 1994): 1068-1075.
Public Involvement Strategies: A Manager's Handbook. AWWARF. Denver: 1996.
USEPA Office of Water. (WH595), EPA 430/09-89-006. July 1989. "Building
Support for Increasing User Fees."
. EPA 832/B-95-007. August 1995. "Combined Sewer Overflows: Guidelines for
Funding Options."
. EPA 570/9-91-095. December 1991. "Restructuring Manual."
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Appendices
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
Appendix A
Additional Resources
1. Publications
Note: Where possible, publications are grouped by the publishing organizations. Contact information
for those organizations is provided.
Association of State Drinking Water Administrators
(Call 202-293-7655, www.asdwa.org)
Enhancing Drinking Water System Viability: Options for States, December 1995
Final Position Statement - Operator Certification, #96-03, October 1996
American Water Works Association
(Call 800-926-7337, Fax 303-347-0804, www.awwa.org)
AWWA Evaluation of State Water Conservation Guidelines, August 1997
Cost Allocation and Rate Design for Water Utilities by Beecher and Mann, 1991
Meeting Future Financial Needs of Water Utilities
Water Rates and Related Charges, AWWA Manual M26, 1986
"Incremental and Average Cost Methods in Rate Design." AWWA Journal: v88 n634,
June 1996
"Integrated Resource Planning Fundamentals." AWWA Journal: v87 n634, June 1995
"Small Systems." AWWA Journal: May 1992, June 1993, October 1994, January
1997
"Water Affordability and Alternatives to Service Disconnection." AWWA Journal:
v86n!061, October 1994
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California Public Utilities Commission
Staff Report on Issues Related to Small Water Utilities, Proc. #1.90-11-033, June
1991
Community Resources Group. Inc./Southern RCAP
(Call 703-771-8636, Fax 703-771-8753, www.rcap.org, www.rcap.org/html.publicat.html)
Board Guide to Small System Policies, 1993
Local Decision-Maker's Guide to Groundwater and Wellhead Protection
Self-Evaluation Guide for Decision-Makers of Small Community Water Systems
Small System Guide to Board Responsibilities for Operation and Maintenance
Small System Guide to Developing & Setting Water Rates
Small System Guide to Factors that Affect Capital Financing
Small System Guide to Financial Management, 1993
Small System Guide to Group and Conflict Management
Small System Guide to Hiring and Evaluating Employees
Small System Guide to Rate Setting
Small System Guide to Risk Management and Safety
Small System Guide to the Safe Drinking Water Act (SecondEdition), August
1993
Small System Guide to the Safe Drinking Water Act Amendments of 1996
Small System Guide to Viability, August 1994
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Council for Infrastructure Financing Authorities
Financial Alternatives for Small Water & Wastewater Utility Systems, February
1997
Elim Water Company. Inc.
Basic Accounting Systems for Water Utilities, June 1994
EPA Center for Environmental Research and Investigation
(Call 513-569-7562 or 800-490-9198)
Summary Report: Optimizing Water Treatment Plan Performance with the
Composite Correction Program, EPA 625-8-90-017, March 1990
EPA CWA Water Resource Center
(Call 202-260-7786, Fax 202-260-0386)
Building Support for Increasing User Fees, Office of Water (WH-595), EPA 430-
09 89-006, July 1989
Combined Sewer Overflows: Guidance for Financial Capability Assessment and
Schedule Development, Office of Water, EPA 832-B-97-004, March 1997
Combined Sewer Overflows: Guidance for Funding Options, Office of Water, EPA
832-B-95-007 or WB12 PB 95-274601, August 1995
Evaluating Municipal Environmental Bur dens, Office of Policy, Planning, and
Evaluation, September 1994
Guidelines for Implementing the Hardship Grants Program for Rural
Communities, EPA 832-Z-97-001, March 1997
Hardships Grants Program for Rural Communities, Office of Water, EPA 832-F-
97-001, February 1997
The Road to Financing: Assessing and Improving Your Community's
Creditworthiness, Office of Water (WH-547), EPA 832-B-92-004, September 1992
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A Utility Manager's Guide to Water and Wastewater Budgeting, Office of Water
(4204), EPA 832-B-94-010, September 1994
A Water and Wastewater Manager's Guide for Staying Financially Healthy, Office
of Water (WH-546), EPA 430-09-89-004, July 1989
EPA Educational Resource Information Center
(Call 800-276-0462)
Analysis of Operation & Maintenance Costs for Municipal Wastewater Treatment
Systems, EPA 430-9-77-015; W561; PB 283471, May 1979*
Applications of Sludges and Wastewater s on Agricultural Land: A Planning and
Educational Guide, EPA 832-B-78-100; T240; PB 284824, March 1978*
Financial Capability Guidebook, Office of Water Programs Operations (WH-547),
EPA 83-/B-84-104; NTIS PB 84-218098; ERIC U071, March 1994*
Financial Management Evaluation: Handbook for Wastewater Utility, EPA 832-
K-89-100 NTIS PB 91-206177; ERIC N487, August 1989*
Obtaining Drinking Water Funding: A Review of Eight State Capacity Efforts,
EPA 812/R-92-002; G346, January 1992
7975 Needs Survey: Cost Methodology for Control of Combined Sewer Overflow
andStormwater Discharge, EPA 43-9-79-003; W002PB; 296604, February 1979*
* Can also be found by contacting the National Technical Information Service
EPA National Center for Environmental Publications and Information
(Call 800-490-9198, www.epa.gov/ncepihom/)
Financial Capability Summary Foldout: A Simplified Approach, EPA 832-R-84-
103
Guidance Document for Providing Alternate Water Supplies, EPA 540-G-87-006
Restructuring Manual, Office of Water (WH-550), EPA 570-9-91-035, December
1991
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State Source Water Assessment and Protection Programs Guidance, EPA 816-R-
97-009, April 1997
Water Quality Standards Handbook (Second Edition), EPA 823-B-94-005
Wellhead Protection: Guide for Small Communities, EPA 625-R-93-002
Wellhead Protection Workbook, EPA 903 -B-93 -002
EPA National Technical Information Service
(Call 800-553-NTIS)
Alternative Financing Mechanisms for Environmental Programs: State Capacity
Task Force..., Office of Administration and Resources Management, W 985 PB 95-
207221, August 1992
Diagnostic Operational Modeling Programs for Municipal Wastewater Treatment
Plants: Users Manual, EPA 910-9-82-096; UO63; PB 83-214809, October 1992
Ensuring the Viability of New, Small Drinking Water Systems: A Study of State
Programs, Office of Water (WH-550), EPA 570-9-89-004; NTIS PB 89-187413,
April 1989
Establishing Programs to Resolve Small Drinking Water System Viability, Office
of Water (WH-550), EPA 570-9-91-002; NTIS PB 91-179028, February 1991
Financial Management System for Publicly Owned Treatment Works (Accounting
Options), EPA 430-9-84-005; U070; PB 85-1212234, June 1984
Improving the Viability of Existing Small Drinking Water Systems, Office of Water
(WH-550), EPA 570-9-90-004; NTIS PB 91-179010, June 1990
Methodology and Assumptions Used to Determine Acceptable Staging Periods for
Treatment Plant Capacity, PB 95-15741, November 1976
Regionalization Options for Small Water Systems, Office of Water (WH-550), EPA
570-9-83-008; NTIS PB 84-194836, June 1983
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Report on the Regional State Capacity Building Initiatives, W919 PB 95-158390,
September 1993
Report to Congress: Industrial Cost Recovery-Volume One, EPA 832-R-78-101a:
W920 PB 292171, December 1978
Reports to Congress: Industrial Cost Recovery-Volume Five Transcripts of Public
Hearings, EPA 832-R-78-101-e; W974 PB 292175, December 1979
Self-Assessment for Small Privately Owned Water Systems, Office of Water (WH-
550), EPA 570-9-89-012; NTIS PB 91-129791, September 1989/1991
Self-Assessment for Small Publicly Owned Water Systems, Office of Water, EPA
570-9-89-014; NTIS PB 91-129783, September 1990
Technical and Economic Capacity of States and Public Water Systems to
Implement Drinking Water Regulations, EPA 810-R-93-001, September 1993
Technologies and Costs for Control of Disinfection By-products (Appendix A), PB
94-184827, July 1994
Water System Self-Assessment for Homeowners Associations, Office of Water
(WH-550), EPA 570-9-89-013; NTIS PB 91-129775, September 1991/1992
Water System Self-Assessment for Mobile Home Parks, Office of Water (WH-550),
EPA 570-9-89-11; NTIS PB 91-129809, September 1989/1992
EPA SDWA Publications
(Call the SWDA Hotline at 800-426-4791, Fax 703-285-1101)
An Overview of Existing State Alternative Financing Programs: Financing
Drinking Water System Capital Needs in the 1990s, Office of Water (WH-550),
EPA 812-R-92-001, May 1992
EPA/State Joint Guidance on Sanitary Surveys, Office of Ground Water and
Drinking Water, December 1995
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Innovative Options for Financing Nongovernmental Public Water Supplies'
Needs, Office of Ground Water and Drinking Water, EPA 812-R-93-004, November
1993
Institutional Solutions to Drinking Water Problems: Maine Case Studies, Office of
Water (WH-550), EPA 812-R-93-002, March 1993
Methods for Assessing Small Water System Capability: A Review of Current
Techniques and Approaches, Office of Water (4601), EPA 810-R-96-001, March
1996
Public/Private Partnerships for Environmental Facilities: A Self-help Guide for
Local Governments, Administration and Resource Management, (H3304), 20M-
2003, July 1991
Resource Guide for Small Drinking Water Systems, Office of Water (WH-550),
EPA 570-9-89-015, September 1989
Restructuring Small Drinking Water Systems: Options and Case Studies, Office of
Water, EPA 810-R-95-002, September 1995
EPA. General Publications on the Internet
(www.epa.gov)
ABC Operator Certification Program Standards, January 1997
ABC Survey of Water Treatment Certification Requirements: Preliminary Results,
December 1996
Drinking Water State Revolving Fund Program Guidelines, EPA 816-R-97-005,
February 1997
Economic Guidance for Water Quality Standards: Workbook, Office of Water,
November 1993 (www.epa.gov/ost/econ)
Environmental Finance Program: A Guidebook of Financial Tools, June 1997
(www.epa.gov/efmpag/guidebk/guindex.htm)
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Guidance for States on Implementing the Capacity Development Provisions of
the Safe Drinking Water Act, December 1997
Information for States on Implementing the Capacity Development Provisions of
the Safe Drinking Water Act, EPA 816-D-97-002, 1997
Information for the Public on Participating with States in Preparing Capacity
Development Strategies, 1997
EPA Office of Ground Water and Drinking Water Publications
(www. epa.gov/ogwdw)
Drinking Water Glossary: A Dictionary of Technical and Legal Terms Related to
Drinking Water, Office of Water, EPA 810-B-94-006, June 1994
Drinking Water Infrastructure Needs Survey: First Report to Congress, EPA 812-
R-97-001, January 1997
Getting Involved in Protecting Your Community's Source of Drinking Water, EPA
816-F-97-009, October 1997
Initial Summary of Current State Capacity Development Activities, Office of
Water, EPA 816-S-97-001
New Federal Funding for Land Acquisition and Conservation Easements, EPA
816-F-97-010, October 1997
Small System Compliance Technology List for the Surface Water Treatment Rule,
Office of Water, EPA 815-R-97-002, August 1997
Water on Tap: A Consumer's Guide to the Nation's Drinking Water, Office of
Water, EPA 815-K-97-002
EPA. Other Publications (No order information)
Announcement of the Drinking Water Contaminant Candidate List, EPA 815-Z-
98-001, March 2, 1998
ABEL User's Manual, Office of Enforcement, October 1991
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Affordability of the 1986 SDWA Amendments to Community Water Systems,
Drinking Water Standards Division, September 1993
Cost Estimates for Select Combined Sewer Overflow Control Technologies:
Storage Basins..., EPA Contract #68-08-0023, September 1993
Discussion Paper on Implementing the Water Conservation Guidelines, 1997
Drinking Water DWSRF Program - Questions and Answers, December 1997
EPA Small Community Financial Capability Self-Evaluation Guidebook, Region 5
Water Division, January 1998
Evaluating Municipal Environmental Burdens and Municipality's Ability to Pay
(MABEL): Volume 1 - User's Manual, Office of Policy, Planning, and Evaluation,
June 1990
Guidance for Calculating Municipal and Not-for-Profit Organizations' A bility to
Pay Civil Penalties..., Toxics Enforcement Policy Branch, March 1993
How to Conduct a Sanitary Survey of Small Water Systems - A Training Course
Learner's Guide, 1998
Implementing the Conservation Guidelines Provision of the 1996 SDWA, Office of
Waste Water, September 1997
Information for States on Developing Affordability Criteria for Drinking Water,
Office of Water, EPA 816-R-98-002, February 1998
Information for States on Recommended Operator Certification Requirements,
Office of Water, EPA 816-R-98-001, February 1998
Methods for Assessing the Viability of Small Water Systems: A Review of Current
Techniques and Approaches, Office of Water, EPA 810-R-95-003, August 1995
Model State Programs for Ensuring that All New PWSs and NTNCWSs
Demonstrate Technical, Managerial, and Financial Capacity, Cadmus, 1998
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Proceedings of the Blue Ribbon Panel on Safe Drinking Water Act Costing., Office
of Drinking Water, October 1996
Proposed Reissuance ofNPDES General Permits for Storm Water Discharges
from Construction Activities., June 1997
Public Review of Draft Guidelines for the Certification and Recertification of the
Operators of Community and Nontransient Noncommunity Public Water Systems,
FRL-5988-3, March 27, 1998
Region V Training Meeting Summary, The Cadmus Group, Inc., 1998
Revision of Existing Variance and Exemption Regulations to Comply with
Requirements of the Safe Drinking Water Act, FRL-5999-5, April 20, 1998
Water Conservation Plan Guidelines, Office of Waste Water, August 1998
Gale Research Co.
Public Utilities: Information Sources; an Annotated Guide to Literature and
Bodies Concerned with Rates..., Hunt, 1966
Georgia Rural Water Association and AWWA
Georgia's Small System Peer Review Program
General Accounting Office
(www.gao.gov)
Drinking Water: Stronger Efforts Essential for Small Communities to Comply
with Standards, RCED-94-4
Housing Allowances: An Assessment of Program Participation and Effects,
1984.07
Housing and Community Development Products, 1992-94, RCED-95-61W
Housing Finance: Improving the Federal Home Loan Bank System's Affordable
Housing Program, RCED-95-82
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Rural Development: Availability of Capital for Agriculture, Business, and
Infrastructure, RCED-97-109
Rural Development: Financial Condition of the Rural Utilities Service's Loan
Portfolio, RCED-97-82
Rural Development: Patchwork of Federal Water and Sewer Programs is
Difficult to Use..., RCED-97-82
Rural Development: USDA 's Approach to Funding Water and Sewer Projects,
RCED-95-258
Healthcare Financial Management
Using an Affordability Analysis to Budget Capital Expenditures, Singhvi, v50
n668, 1996
Housing and Urban Development
(www.hud.gov)
1996 Native American Housing Assistance and Self-Determination Act, 1996
Community Planning and Development Program Guide, San Francisco Office,
1974
Small Cities Community Development Block Grant Program for Fiscal Year
1996; Section 108Loan Guarantee..., FR-40040-Nol, December 28, 1995
Iowa Department of Natural Resources
(Call 515-281-9361, www.state.ia.us/government/dnr/index.html)
Self-Assessment Manual for Iowa Water System Viability, September 1996
Self-Assessment Manual for Iowa Water System Viability: Homeowner
Association-Owned and Municipality-Owned Systems, September 1996
Self-Assessment Manual for Iowa Water System Viability: Mobile Home Park
Systems, September 1997
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Self-Assessment Manual for Iowa Water System Viability: Privately-Owned
Systems., September 1998
Self-Assessment Manual for Iowa Water System Viability: Rural Water
Association-Owned and Municipality-Owned Systems, September 1999
Journal of Economic Psychology
Perceptions ofAffordability: Their Role in Predicting Purchase Intent and
Purchase, Notani, v!8 n5525, 1997
Journal of Family and Economic Issues
"Balancing Regulation and Affordability of Housing," Meeks, v!3 n4373, 1992
Journal of the American Planning Association
"Florida's Affordable Housing Needs Assessment Methodology," Noll, v63 n4495,
1997
Massachusetts Division of Water Supply
In the Main, Spring 1996
National Association of Regional Councils
Factors Affecting Regionalization of Environmental Treatment
National Association of Regulatory Utility Commissioners
Uniform System of Accounts for Water Utilities
National Association of Towns and Townships
Innovative Grassroots Financing: A Small Town Guide to Raising Funds and
Cutting Costs
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National Regulatory Research Institute
www.nrri.ohio-state.edu/cgi-bin/sectorsrc.pl
Deregulation and Regulatory Alternatives for Water Utilities, Beecher and Mann,
1990
Integrated Resource Planning for Water Utilities, Beecher and Mann, 1992
Meeting Water Utility Revenue Requirements: Alternative Financial and
RatemakingMechanisms., Beecher and Mann, 1993
Proceedings of the Biennial Regulatory Information Conference, Saunders, 1992
Viability Policies and Assessment Methods for Small Utilities, July 1996
Nation Training Coalition
Final Report on Training Needs and Providers, July 1997
New Mexico Public Service Commission
Record Keeping and Accounting Manual for Small Water Utilities
National Rural Water Association
(Call 580-252-0629, Fax 580-255-4476, www.nrwa.org)
Emergency Response Manual for Small Systems
Operator Certification - The NRWA Position, 1996
New York State Environmental Facilities Corporation
Small Private Water Company Pooled financing: A Public-Private-Partnership
Initiative, January 1994
Pennsylvania Department of Environmental Protection
(Call 717-787-1323, www.dep.state.pa.us)
PA WA TER Cost Model
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Pennsylvania Water System Budgeting Worksheets, September 1996
Pennsylvania Water System Self-Assessment Guide, September 1996
State Initiatives to Address Non-viable Small Water Systems in Pennsylvania, with
Wade Miller Associates, PA DER Contract BCEC RFP 10-89, ME #90015, August
1991
Public Utilities Fortnightly
"Real Water Rates on the Rise," Beecher, v!35 n!442, July 1997
Real Estate Economics
Indicators of Local Housing Affordability: Comparative and Spatial Approaches,
Bogodon, v25 n!43, Spring 1997
Resources for the Future
Economic Analyses at EPA: Assessing Regulatory Impact, Morganstern, 1997
Rules in the Making: A Statistical Analysis of Regulatory Agency Behavior, Magat,
1986
Rural and Small Water Systems
Water Audits: Training Guide, 1989
Southern Rural Sociology
Assessing Housing Affordability in Rural Georgia, Meeks, v!0n!91, 1994
Texas Natural Resource Conservation Commission
www.tnrcc.state.tx.us
Capacity Development Strategy Report, University of NM Environmental Finance
Center, August 29, 1997
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The Reason Foundation
(www.reason.org)
Water-Utility Regulation: Rates and Cost Recovery, Mann, 1993
U.S. Small Business Administration
Record Keeping in Small Businesses, 1988
University of Tennessee Municipal Technical Advisory Service
Managing Your Utility's Money - The Participant's Manual
Urban Studies
Can Pay? Won't Pay? Or Economic Principles ofAffordability, Hancock, v30 nl,
February 1993
Measuring the Affordability of Home-Ownership, Bourassa, v33 nlOl, December
1996
Washington Department of Environmental Protection
Financial Viability Manual for New and Expanding Small Water Systems,
September 1996
Washington Department of Health
(Call 360-753-5871, www.doh.wa.gov)
Impacts of Engrossed Second Substitute Senate Bill... on Satellite Management of
Public Water Systems
Planning Handbook: A Guide for Preparing Water System Plans, WAC 246-290-
135, August 1993
Satellite Management Program
Small Water Systems: Problems & Proposed Solutions, Division of Drinking Water
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Handbook for Capacity Development: Developing Water System Capacity Under the Safe Drinking Water Act as Amended in 1996.
Small Water Utilities Financial Viability Manual., Division of Drinking Water,
September 1994
Viability Information State of Washington, Office of Environmental Health, Drinking
Water Program, May 1989
Washington State Wellhead Protection Program Guidance Document, WAS 246-
290-13 5A, April 1995
Wade Miller Associates. Inc.
A Dozen Questions to Assess Small System Viability, John Cromwell and Richard
Albani, November 1993
The PUC Role in Assuring Viable Water Service in Small Communities, John
Cromwell and Richard Albani, September 1992
Water Engineering & Management
"Water and Wastewater Cost and Rate-Setting Trends," v!42 n540, May 1995
Water International
"Water Utility Privatization and Regulation: Lessons from the Global Experiment,"
Beecher, v22 n!54, March 1997
Water Resources Update
(www.uwin. siu. edu/ucowr/updates)
"Avoided Cost: An Essential Concept for Integrated Resource Planning," Beecher,
n 10428, Summer 1996
Whitfield Consulting
Cash & Financial Management Tips for Small Business Presented to TRCC
Businesses, September 1994
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Other Publications
Basic Record Keeping Procedure Manual
Examples of Capacity Development Assessment Tools and Business Plans from
Various States, July 1997
Fee-Based Models for Funding Water Quality Infrastructure, April 1997
Public Involvement in Austin's Rate Study, Eric E. Rothstein & Elaine Jones,
November 1993
Resource Guide for Small Drinking Water Systems: A Study of State Programs
The Concept of Housing Affordability: Six Contemporary Uses of the Housing
Expenditure-to-income Ratio, Hulchanski, vlO n4471, October 1995
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2. Capacity Development Contacts
EPA Headquarters Contacts
Peter Shanaghan, Capacity Development
U.S. EPA
401 M Street, S.W., Mail Code 4606
Washington, DC 20460
202-260-5813
Email: shanaghan.peter@epa.gov
Jamie Bourne, DWSRF
U.S. EPA
401 M Street, S.W., Mail Code 4606
Washington, DC 20460
202-260-5557
Email: bourne.james@epa.gov
Joshua Joseph, Jr.
U.S. EPA
401 M Street, S.W., Mail Code 4606
Washington, DC 20460
202-260-2446
Email: joseph.joshua@epa.gov
Regional Capacity Development
Coordinators
Region 1
Mark Sceery
U.S. EPA-Region I
JFK Federal Building
One Congress Street, Mail Code CCT
Boston, MA 02203-0001
617-918-1559
fx. 617-565-4940
Email: sceery.mark@epa.gov
Region 2
Taj Khan
U.S. EPA-Region II
290 Broadway
New York, NY 10007-1866
212-637-3897
fx. 212-637-3887
Email: khan.taj@epa.gov
Region 3
Ghassan Khaled
U.S. EPA-Region IE
1650 Arch Street, Mail Code 3WP22
Philadelphia, PA 19103-2029
215-814-5780
fx. 215-814-2318
Email: khaled.gassan@epa.gov
Region 4
Dan Clone
U.S. EPA Region IV
61 Forsyth Street
Atlanta, GA 30303-3415
404-562-9434
fx. 404-562-9439
Email: olone.dan@epa.gov
Region 5
Sahba Rouhani
U.S. EPA Region V
77 West Jackson Boulevard, Mail Code
WD15J
Chicago, IL 60604-3507
312-886-0245
fx. 312-886-6171
Email: rouhani.sahba@epa.gov
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Region 6
Dave Reazin
U.S. EPA Region VI
Fountain Place
1445 Ross Avenue, Suite 1200, Mail Code
6WQ-SD
Dallas, TX 75202-2733
214-665-7501
fx. 214-665-2191
Email: reazin.david@epamail.epa.gov
Region 7
Stephanie Lindberg
U.S. EPA-Region VH
726 Minnesota Avenue, Mail Code
WWPD/DWE
Kansas City, KS 66101
913-551-7423
fx. 913-551-7765
Email: lindberg.stephanie@epa.gov
Region 8
Paul Felz
U.S. EPA-Region VHI
999 18th Street, Suite 500
Denver, CO 80202-2466
303-312-6270
fx. 303-312-6131
Email: felz.paul@epa.gov
Region 9
Michelle Moustakas
U.S. EPA-Region IX
75 Hawthorne Street, Mail Code WTR-6
San Francisco, CA 94105
415-744-1859
fx. 415.744.1235
Email: moustakas.michelle@epa.gov
Region 10
Bill Chamberlain
U.S. EPA-Region X
1200 Sixth Avenue, Mail Code OW-136
Seattle, WA 98101
206-553-8515
fx. 206-553-1280
Email: chamberlain.william@epa.gov
Regional DWSRF Coordinators
Region 1
Mark Spinale
U.S. EPA-Region I
JFK Federal Building
One Congress Street, Mail Code SEW
Boston, MA 02203
617-565-3554
fx. 617-565-4940
Email: spinale.mark@epa.gov
Region 2
Bob Gill
U.S. EPA-Region II
290 Broadway
New York, NY 10007-1866
212-637-3884
fx. 212-637-3891
Email: gill.william@epa.gov
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Region 3
Cathy McCaffrey/Virginia Thompson
U.S. EPA-Region IE
1650 Arch Street, Mail Code 3WP21
Philadelphia, PA 19103-2029
215-814-5783 (McCaffrey)
215-814-5755 (Thompson)
fx. 215-814-2302
mccaffrey. cathy@epa.gov
thompson.virginia@epa.gov
Region 4
Sheryl Parsons/Dorothy Rayfield
U.S. EPA Region IV
61 Forsyth Street
Atlanta, GA 30303-3415
404-562-9337 (Parsons)
404-562-9278 (Rayfield)
fx. 404-562-8692
Email: parsons.sheryl@epa.gov
Region 5
Gene Wojcik
U.S. EPA Region V
77 West Jackson Boulevard, Mail Code
WS15J
Chicago, IL 60604
312-886-0174
fx. 312-886-0168
Email: wojcik.gene@epa.gov
Region 6
Tye Biasco
U.S. EPA Region VI
Fountain Place
1445 Ross Avenue, Suite 1200
Dallas, TX 75202-2733
214-665-2140
fx. 214-665-2191
Email: ray.jay@epa.gov
Region 7
Ken Deason
U.S. EPA-Region VH
726 Minnesota Avenue, Mail Code
WWPD/DWE
Kansas City, KS 66101
913-551-7585
fx. 913-551-7765
Email: deason.ken@epa.gov
Region 8
Jack Theis
U.S. EPA-Region VHI
999 18th Street, Suite 500
Denver, CO 80202-2466
303-312-6347
fx. 303-312-6131
Email: theis.jack@epa.gov
Region 9
Jose Caratini
U.S. EPA-Region IX
75 Hawthorne Street, Mail Code WTR-6
San Francisco, CA 94105
415-744-1852
fx. 415-744-1235
Email: caratini.jose@epa.gov
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Region 10
Rick Seaborne
U.S. EPA-Region X
1200 Sixth Avenue, Mail Code OW-136
Seattle, WA 98101
206-533-8150
fx. 206-553-0165
Email: seaborne.rick@epa.gov
Literature Sources:
SDWA Hotline
(800)426-4791
fx. (703)285-1101
Water Resource Center
(202) 260-7786
fx: (202) 260-0386
Center for Environmental Research and
Investigation publication
(513) 569-7562 or
(800)490-9198
Educational Resource Information Center
(800) 276-0462
National Technical Information Service
call (800) 553-NTIS
PWS
(800) 926-7337
fx: (303) 347-0804
RCAP
(703) 771-8636
fx: (703) 771-8753
National Center for Environmental Publications
(800)490-9198
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3. Websites
Theme Sites
Blue Thumb Project. "Give Drinking Water A Hand"
www.awwa.org/bluethum.htm
Consumer Confidence Reports
www.epa.gov/OGWDW/sdwa/consumer.html
www.ci.portland.or.us/water/ccrindex.htm
www.city.davis.ca.us/city/pworks/wqrept95.htm
www. water. denver. co. gov/dwb wq96 .htm
www.epa.gov/OGWDWOOO/ccr/cerfsold.html
www. awwa. org/ccrupdat.htm
www. awwa. org/ccr/htm
www.awwa.org/utility.htm
Credit Rating Services
www.dnb.com
www.moodys.com
Standard & Poor's: www.ratings.standardpoor.com
Partnership for Safe Water
www. awwa. org/partner2 .htm
Organization Sites
American Water Works Association
www. awwa. org
American Water Works Association Research Foundation
www. awwarf. com
Association of Metropolitan Water Agencies
www. amwa-water. org/water
Association of State Drinking Water Administrators
www. asdwa. org
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EPA (General)
www.epa.gov
EPA National Center for Environmental Publications
www.epa.gov/ncepihom
EPA Office of Ground Water and Drinking Water
www.epa.gov/ogwdw
General Accounting Office
www.gao.gov
Housing and Urban Development
www.hud.gov
Illinois' Targeted Watershed Approach
www. epa. state.il .us/org/bow/targeted-watershed
Iowa Department of Natural Resources
www.state.ia.us/government/dnr/index.html
NRRI Publications
www.nrri.ohio-state.edu/cgi-bin/sectorsrc.pl
NRWA
www.nrwa.org
Pennsylvania Department of Environmental Protection
www.dep.state.pa.us
The Reason Foundation
www.reason.org
RCAP
www.rcap.org
Texas Natural Resource Conservation Commission
www.tnrcc.state.tx.us
Washington DOH
www.doh.wa.gov
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Washington Public Utility Districts Association
www. wpuda. org
Water Resources Update
www.uwin.siu.edu/ucowr/updates
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Appendix B
Glossary
affordability. The ability of a water system and
its customers to support the cost of complying
with the SDWA.
appropriations. The right to withdraw water
from its source.
best management practice. A measure or
activity that is beneficial, empirically proven,
cost-effective, and widely accepted in the
professional community.
block. A quantity of water for which a price per
unit of water (or billing rate) is established.
budget (water-use). An accounting of total
water use or projected water use for a given
location or activity.
capital costs. Costs (usually long-term debt) of
financing construction equipment. Capital costs
are usually fixed, one-time expenses which are
independent of the amount of water produced.
capital improvements. Fixed outlays needed
for the initial design and construction of water
system infrastructure and equipment, such as
pumps, pipes, treatment facilities, etc.
community water system. According to the
SDWA, a drinking water conveyance system
serving at least 15 service connections used by
year-round residents of the area served by the
system or regularly serving at least 25 year-round
residents.
control point. A crux in a new system's
development at which a State (or other unit
of government) can exercise its authority to
ensure the new system's capacity.
conservation pricing. Water rate
structures that help achieve beneficial
reductions in water usage.
consolidation. The physical
interconnection of systems without a
transfer of ownership.
contaminant. Any physical, chemical,
biological, or radiological substance or
matter that has an adverse effect on air,
water, or soil.
contamination. The introduction into
water of microorganisms, chemicals, toxic
substances, wastes, or wastewater in a
concentration that makes the water unfit
for its next intended use.
cost/benefit analysis. A quantitative
evaluation of the costs which would be
incurred versus the overall benefits to
society of a proposed action, such as the
establishment of an acceptable dose of a
toxic chemical.
cost-effectiveness. A comparison of costs
required for achieving the same benefit by
different means. Costs are usually
expressed in dollars, but benefits can be
expressed in another unit (such as a
quantity of water).
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distribution facilities. Pipes, treatment, storage
and other facilities used to distribute drinking
water to end users.
exemption. A state with primacy may relieve a
public water system from a requirement
respecting an MCL, treatment technique, or
both, by granting an exemption if certain
conditions exist. These are: 1) the system cannot
comply with a MCL or treatment technique due
to compelling factors which may include
economic factors; 2) the system was in operation
on the effective date of the MCL or treatment
technique requirement; and 3) the exemption will
not result in an unreasonable public health risk.
holdback. Reversible decrease in SRF allotment
that can occur only in fiscal year 1999.
Holdback funds will be awarded to the State if
the State implements a new system capacity
program by September 31, 1999.
integrated resource planning. An open and
participatory planning process emphasizing least-
cost principles and a balanced consideration of
supply and demand management options for
meeting water needs.
losses (water). Metered source water less
revenue-producing water and authorized
unmetered water uses.
maximum contaminant level (MCL).
The maximum permissible level of a
contaminant in water which is delivered to
the free flowing outlet of the ultimate user
of a public water system, except in the case
of turbidity where the maximum
permissible level is measured at the point
of entry to the distribution system.
Contaminants added to the water under
circumstances controlled by the user are
excluded from this definition, except those
contaminants resulting from the corrosion
of piping and plumbing caused by water
quality.
meter. An instrument for measuring and
recording water volume.
monitoring. Measuring concentrations of
substances in environmental media or in
human or other biological tissues.
pollutant. Generally, any substance
introduced into the environment that
adversely affects the usefulness of a
resource.
primacy. The responsibility for ensuring
that a law is implemented, and the
authority to enforce a law and related
regulations. A primacy agency has primary
responsibility for administrating and
enforcing regulations.
public water system (PWS). A system
for the provision to the public of piped
water for human consumption, if such
system has at least fifteen service
connections that regularly serves at least 60
days out of the year.
raw water. Untreated water.
restructuring. Changing the operational,
managerial, or institutional structure of
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water systems in order to meet the increasing
costs and responsibilities of the SDWA and still
provide water at an affordable price.
Safe Drinking Water Act (SDWA). Federal
drinking water quality legislation administered by
the U.S. Environmental Protection Agency
(EPA) through state primacy agencies; amended
in 1996.
satellite management. An arrangement
whereby a large community water system agrees
to become responsible for specified management
tasks of nearby smaller systems.
service territory. The geographic area served by
a water utility.
State Revolving Fund (SRF). State loan funds
for water utilities established under the Safe
Drinking Water Act.
system (water). A series of interconnected
conveyance facilities owned and operated by a
drinking water supplier; some utilities operate
multiple water systems.
transfers (water). Exchange of water among
willing buyers and sellers.
transmission facilities. Pipes used to transport
raw or treated water from the source to
distribution facilities.
treated water. Water treated to meet drinking
water standards.
user fees. The price a customer must pay for
water, including fixed and variable charges, that
goes toward supporting the efficient function of
the water utility.
variance. A State with primacy may
relieve a public water system from a
requirement respecting an MCL by granting
a variance if certain conditions exist.
These are: 1) the system cannot meet the
MCL in spite of the application of best
available treatment technology, treatment
techniques or other means (taking costs
into consideration), due to the
characteristics of the raw water sources
which are reasonably available to the
system, and 2) the variance will not result
in an unreasonable public health risk. A
system may also be granted a variance from
a specified treatment technique if it can
show that, due to the nature of the
system's raw water source, such treatment
is not necessary to public health.
withholding. Irreversible and permanent
decrease in SRF funding that will occur by
failing to implement a variety of programs
(strategies for existing systems, new system
strategies, operator certification, etc.).
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