United States
Environmental Protection
Office of Water and Waste
Washington, D.C. 20460
                         January 1981


"This paper presents a preliminary draft
strategy, proposed by EPA staff, for
improving the national municipal waste-
water treatment program.  EPA is now
considering the positions offered here.
The document is intended for public
review and discussion to assist EPA
in developing its final 1990 Strategy."
            January lb . 1981
 U.S. Environmental  Protection Agency
 Region  V, Lbrsry
 230 South Dc'<:bo-n Street
 Chicago, Illinois  GOS04

U,S.  Environmental Protection Agency

     The proposals presented in the strategy are the  result  of  both  a major
effort within the U.S.  Environmental  Protection  Agency  and extensive partici-
pation on the part of the interested public through meetings and  the distribu-
tion of relevant issue and background papers prepared by  EPA.

     The 1990 Strategy was prepared under the guidance  of Eckardt C. Beck,
Assistant Administrator, Office of Water and Waste Management;  James N.  Smith,
Associate Assistant Administrator, Office of Water and  Waste Management;  and
Henry L. Longest II, Deputy Assistant Administrator,  Office  of  Water Program

     The Chairman of the 1990 Strategy effort within  the  Agency was  Merna Hurd,
Associate Assistant Administrator, Office of Water and  Waste Management.  The
Deputy Chairman was Carl Reeverts, Office of Water Program Operations.

     The Chairman of Task IV - Compliance Strategy was  Robert Eagen, Office of
Water Program Operations.



        Strategy to  Improve the  Quality and  Utility
          of Compl iance Information	    3
        Strategy to  Improve the  Compliance Rate  of New
          POTWs Constructed with the  Aid  of  the  Construction
          Grants Program	    4
        Strategy to  Improve Continuing  Compliance Rates	    4
        Strategy to  Improve the  Compliance Rate  of Existing
          POTWs	    5


        Background on Current Program—Legislative Authority	;...    7
        Current Enforcement Policies.	    9
        Current Situation:   Data/Grants/Noncompliance   	   12
        Status of Enforcement Activities	 17
        Del egation to the  States	18


        Options to Improve  the Quality  and Utility
          of Compl iance Information	23
        Recommendations to  Improve the  Quality and Utility
          of Compliance Information 	 25
        Options to Improve  the Compliance Rates  of New Plants
          Constructed with  the Aid of the Grants Program	26
        Recommendation to  Improve the Compliance Rate of
          New POTWs	39
        Options to Improve  Continuing Compliance Rates  	 39
        Program Management  Roles   	 52
        Recommendation to  Improve Continuing Compliance Rates	 54
        Near-Term Recommendations	 55
        Long-Term Recommendations 	 57
        Program Management  Recommendations 	 58
        Summary of The Recommendations  to Provide Financial
          Guidance	59
        Options to Improve  Compliance Rates at Existing POTWs 	 60
        Recommendations to  Improve Compliance at Existing POTWs 	 66

                                    CHAPTER  I


     Since 1973 the federal  government has awarded  approximately  $30
billion in wastewater treatment facility construction  grants.  Most
of these grant funds have not yet been converted  to functioning
sewage treatment plants, primarily because the  average grant-assisted
project requires from seven  to nine years to complete.   Moreover,
approximately 85% of the completed facilities  serve less than  10,000
people.  Major grants, categorized generally as standard metropolitan
statistical areas (SMSAs), have not, for the most part, completed
planning, design and construction of facilities needed to satisfy
the enforceable objectives of the Clean Water  Act.   Smaller
communities, however, have been able to move through the program.
Currently, more than 2300 communities have completed construction
activity and now are confronted by the task  of operating and maintaining
totally new or upgraded treatment facilities.

     As the expenditure of federal grant funds  for  the construction of
community wastewater treatment plants increases,  and as more of these
facilities are placed in operation, public interest will shift from
construction to the performance of the nation's publicly owned
treatment works (POTWs).  Numerous studies (1,2,3,4) of municipal
wastewater treatment plants  throughout the country  have determined
that a significant percentage of these facilities are  not meeting
the minimum effluent quality requirements of their  National  Pollutant
Discharge Elimination System (NPDES) permits.   Although the
numbers differ somewhat from study to study, it is  clear there
are widespread performance problems.  Depending on  the criteria
applied, between 30 and 50 percent of the nation's  POTWs are
signficantly out of compliance with their NPDES effluent
quality limits, thus failing to yield anticipated water quality

     Obviously, these facilities represent a major  public investment in
pollution abatement which is not producing the anticipated results.  This
paper examines the POTW performance problem  and discusses options which
EPA and States can pursue to improve the compliance rate of municipal
wastewater treatment facilities.  More detailed discussions  of these issues
are available in the issue papers which were produced  in the earlier stages
of Task IV.

     This strategy paper evaluates  options  available  to  EPA and the
States to improve the performance of POTWs.   Information presented
is drawn from representatives of all  levels  of  government and  segments
of the private sector involved in the planning,  design,  construction,
management and operation of wastewater treatment plants.  The  proposed
strategy should not be construed as EPA policy,  but rather as  an
intermediate stage in the adoption  of a compliance strategy to pursue
in the next decade.  It is intended to elicit comment from interested
parties and reflects the influence  of those who  have  reviewed  earlier
issue papers.

                                   CHAPTER II


     The Clean Water Act of 1972, as amended  in 1977 and  1980,  incorporates
the construction grants program as the primary means of reducing  pollutants
discharged from municipal sewerage systems. The publicly  owned  treatment
works (POTWs) constructed with the assistance  of the construction grants
program can achieve the applicable goals of the Act only  if they
produce effluents that meet the quality requirements set  in their
National Pollutant Discharge Elimination System (NPDES) permits which
govern their operation.

     During the early years following the passage of the  Clean  Water Act,
the primary objective of the construction grants program  was to initiate
action necessary to the construction of the required facilities.   As the
numbers of POTWs completed increases, it is evident that  greater  emphasis
must be placed on the performance of these facilities  once they are
completed.  The 1990 Construction Grants Strategy recognizes this need
and includes a compliance strategy as one of  the five  major areas of
concern in the overall strategy.  This Compliance Strategy attempts
to formulate a sound, practical program which, with the cooperation of
State and local government agencies, will produce improved POTW
compliance rates.

     The major recommendations of the compliance strategy are summarized


     EPA presently lacks sufficient information on the performance of the
POTWs constructed with the aid of the construction grants program.  Improved
compliance information will enable EPA and the States  to  better evaluate
the program and to modify it to increase water quality benefits.

     1 .   The Office of Water Program Operations and the  Office of
          Enforcement will establish a national compliance data
          management system which summarizes  self-monitoring data
          submitted by POTWs.  This system must be coordinated  with
          State pollution control agencies and cross-referenced with
          the Grants Information and Control  System (GIGS) to provide
          full utilization of the data.

     2.   EPA will establish requirements for  quality  control  activities
          to be performed by the States to improve the quality  of the
          POTW self-monitoring data.


     It*'i« imperative that greater consideration  be  given  to  the
perfoi^nance of POTWs during the planning,  design  and  construction  of
these"facilities.  The following actions are intended to  improve the
quality of facilities constructed with the aid  of the grants  program
and to better equip the POTWs to manage, operate  and  maintain these

     1.   Encourage the application of the systems approach  to the
          construction grants process.

     2.   Strengthen implementation of pretreatment  programs  to prevent
          industrial wastes from degrading POTW effluent  quality or
          jeopardizing sludge disposal options, particularly where
          effluent or sludge reuse alternatives are  selected.

     3.   Modify the Inflow/Infiltration program  to  reflect  the experience
          gained in earlier projects.

     4.   Investigate the feasibility of modifying NPDES  effluent  quality
          requirements for wet-weather conditions at POTWs experiencing
          severe I/I problems.  This activity will be a part of the
          development of a strategy to deal with  combined  sewer
          overflows and stormwater.

     5.   Modify the definition of secondary treatment to allow the  use
          of proven biological processes which do not satisfy existing
          secondary requirements but which offer  benefits  such as  low
          energy requirements, process stability, and/or  lower operator
          skill requirements.  Use of these processes would  be limited to
          applications which would not adversely  affect water quality.
          Provide an improved  mechanism  for  the  immediate correction
          of facility problems if a  POTW fails to  achieve compliance
          during startup,  or if it is  apparent that  it will  not  be
          capable of achieving compliance at design  loading.


     Once a POTW is constructed and  sucessfully  started  up  in  compliance
with NPDES permit requirements, it is  essential  that the operating  agency
take all measures necessary to assure  that the facility  continues to meet
effluent standards.  Unless the agency applies sound management  practices
to the operation and maintenance of the  POTW, the  public investment in
clean water could be lost  within a short time of startup.   The following
recommendations form the basis of a  strategy to  maintain POTWs in compliance
after startup:

     1.   Provide grantees with financial  management  assistance.

     2.   Encourage the establishment of self-sufficient  enterprise,
          or utility-type organizations.

     3.   Provide increased operator training assistance  to  the States.

     4.   Establish a POTW management assistance  program  for small

     As more POTWs are constructed with the aid  of the  grants  program,
it is increasingly obvious that EPA must formulate a strategy  to  address
those POTWs which have completed construction but are not  achieving  the
effluent quality required by their NPDES permits. Although  the quality
of available data is not fully satisfactory, there can  be  no question
that remedial  action is required at many POTWs on final  NPDES  standards.

     The following recommendations address this  need:

     1.   Fund diagnostic evaluations of noncomplying POTWs  and use
          the recommendations of these evaluations as the  basis of
          enforcement action by the States or EPA.

     2.   Fund limited remedial  construction necessary  to  correct
          deficiencies causing noncompliance at  grant funded facilities.

     3.   Require and assist recipients of remedial  construction  grants
          to take legal action against negligent firms  as  a  condition
          of grant acceptance.

     Implementation of these recommendations by  EPA  and the  States,  in
cooperation with local government agencies, will  improve the quality and  the
performance of facilities produced with the assistance  of  the  construction
grants program, thus yielding increased benefits to  the public and greater
environmental  protection.

                                   CHAPTER  III

                           CURRENT PROGRAM  DESCRIPTION


     The present construction grants program is  authorized  by  the  Federal Water
Pollution Control  Act (Clean Water Act)  as   amended  in  1977.   The  1977 Act,
Public Law 95-217 made significant changes  to its  preceding act, the  Clean
Water Act of 1972 (PL-92-500).   The 1972 Act provided the legislative basis
for the present construction grants program.

     The 1977 Act contains two national  goals which  were  intended  to  provide
a timetable for restoration and maintenance of the nation's waterways:

     0    By 1985 the discharge of pollutants to navigable  waters  be

     t    By July 1, 1983 (wherever attainable)  an interim  goal of water
          quality that provides for the  protection and  propagation of
          fish, shellfish and wildlife and  provides  for recreation in
          and on the water, be achieved.

     In order to carry out the national  goals a  number  of incentives  and
penalties were established.  Specifically,  the following  sections  shaped
the present program:

Title II - Grants for Construction of Treatment  Works

     •    Section 201 authorizes the granting of federal monies for
          construction of treatment works.

     t    "Section 204 - Limitations and Conditions" provides  that no
          201 grants be approved unless:

               The applicant adopts a user  charge  system  that  assures
               each user will pay a proportionate  share of  the costs  of
               operation, maintenance, and  replacement  of the  system.

               The applicant has the legal, institutional,  managerial
               and, financial capability to ensure adequate construction,
               operation, and maintenance of the treatment  works.

               The applicant has made provision  for  the industrial users
               of the system to pay the  applicant  for the federal  share
               of the cost of construction  attributed to  the treatment
               of such industrial  wastes (Industrial Cost Recovery).

               The last provision  of  ICR  was  repealed  by Senate Bill
               #2725 as passed  by  the Congress  on  October  1,  1980, along
               with repeal  of federal  funds for the  treatment of
               industrial  flows in excess of  50,000  gallons per day.
               Congress did not prohibit  industry  from using  municipal
               facilities.   In  fact,  planning and  designs  to  accommodate
               industrial  flows are still  grant eligible.   Industries
               and local  governments  now, however, most jointly develop
               programs for raising funds to  construct industrial capacity.

Title III - Effluent Limitations

     •    "Section 301, Standards  and Enforcement,"  makes  possible
          extensions of permit  compliance deadlines  under  paragraph  (i)(l)
          if construction is necessary at a POTW but the funds or time are
          not available for the construction  to be completed. Under this
          provision, interim effluent limits  can be  set but the construction
          must be completed by  July 1, 1983.  This provision  was the basis
          of the Municipal  Management System  undertaken by the Office of
          Water Enforcement.

     •    "Section 307, Pretreatment" of  industrial  wastes sent to muni-
          cipal facilities, provides  that municipalities shall require
          industrial users  to remove  toxic elements  from discharges  to
          POTW to the extent required by  local  sludge  disposal programs
          and the POTW's capability to treat  and prevent toxics from
          entering the nation's waters.

     t    "Section 309, Federal Enforcement"  contains  specific penalties
          to be used in the case of violations. Included  are provisions

               Administrative orders  which seek correction of a specific
               problem with a deadline generally less  than 30 days.

               The State in which a municipality is  located  shall be
               joined as a  party to any civil action brought  against
               the municipality by the U.S.   Should  the municipality
               be prevented from raising  revenue (by State law), the
               State shall  be liable  for  payment of  any judgement against
               the municipality.

Title IV - Permits and Licenses

     r    Section 402 establishes a National  Pollutant Discharge
          Elimination System (NPDES)  to issue permits  for  discharge
          to navigable waters.   Under the system the State submits
          a permit program to the Administrator for  approval.
          After approval the State may administer  the  program and
          issue the permits.

     •    Section 402(h)  provides  for  restriction or  prohibition of
          new connections to a  treatment  works  that violates  its NPDES
          permit.  This adds the moratorium  as  an enforcement tool
          against noncompliant  municipalities.

     t    Section 405 encourages reuse of sludge and  the development
          of pretreatment programs compatible with sludge reuse programs.


     The current enforcement policies  of  EPA can be found in  the
National Municipal  Policy and Strategy (NMPS) published by the Office
of Water Enforcement in October 1979.   This  document  was followed by
the Municipal  Management  System published in March 1980 which provided
guidance in implementing  the NMPS.

Municipal Enforcement Strategy

     •    The current definition of non-compliance is failure (generally
          a consistent failure) to achieve NPDES permit quality limitations
          imposed on the  plants effluent.  The  definition does not lend
          itself to a classification or grading system of violation but
          the terms "serious" or "minor"  are used to  quantify noncompliance.

     t    The National  Municipal Policy and  Strategy  is an effort to
          obtain national  POTW  compliance with  the minimum secondary
          standard  deadline  of  July 1, 1977.  Since 60% of the nations
          POTWs did not meet the deadline, a program  of correction is
          necessary.  In  addition, a large percentage of treatment plants
          cannot meet their  NPDES  permit  limits.  By  correcting the
          "non-compliance" with the secondary deadline the NMPS hopes
          to improve the  NPDES  compliance also.  The  NMPS established
          six  categories  of  POTW compliance:

               CATEGORY I     POTWs that need construction comply; did
                             not significantly  contribute to  the delay in
                             construction; construction grant funding is or
                             will  be available  to assist in complying; and
                             can complete construction by the 1983 deadline.

               CATEGORY II   POTWs that need construction to  comply; did
                             not significantly  contribute to  the delay in
                             construction; construction grant funding
                             through Step 3  is  available to assist in
                             complying; but  cannot complete construction
                             by the 1983  deadline.

               CATEGORY  III
               CATEGORY IV
               CATEGORY V
               CATEGORY VI
POTWs that need construction to comply;  did
not significantly contribute to the delay in
construction; for which construction grant
funding through Step 3 does not appear to be
available by July 1, 1983, and consequently,
may not complete construction by the 1983

POTWs that need construction to comply and are
causing significant public health or pollution
problems, but due to lack of position on pro-
ject priority lists, may require judicial
action to assure prompt achievement of NPDES
permit requirements.

POTWs that have completed construction and
are not meeting effluent limitations or other
NPDES requirements.

POTWs that need construction to comply and
did not significantly contribute to the delay
in construction.
          Through construction grants,  permit modification  (Section  301(h),
          authorizes five-year secondary treatment  waivers  for  "no harm"
          discharges to marine waters),  permit  extension  (301(i)) and
          enforcement action the NMPS  forces all  POTWs  into a compliance
Current Penalties and Priorities

     As seen from the categories of POTWs  contained  in  the  NMPS,  plants
with and without construction grants are treated  differently.   Also
treated differently are plants which have  completed  construction  and
do not comply - they are targeted for enforcement action.

     The NMPS and the Municipal  Management System (MMS)  have  singled  out
major facilities for enforcement priority.  Since these  facilities are
normally associated with significant pollution problems,  they are to  be
corrected as soon as possible.

     The MMS contains a penalty or enforcement response  guide for major
permitees which contains sanctions for reporting, compliance  schedule
and effluent violations.  The severity of  the actions taken are usually
tied to the number of times the violations has taken place  and the
effect of the violation.  The majority of  the enforcement actions
recommended involve notices of noncompliance, grant  related actions
and administrative orders.  The effectiveness of  these  methods is limited

Pretreatment Policies/Penalties

     The national municipal pretreatment program is concentrating on  the
problem of industrial wastes in POTWs on three fronts:

     •    Section 301(b)(2)(A)(ii) of the Clean Water Act requires that
          all industrial users of POTWs be in compliance with national
          pretreatment standards no later than 3 years  after such
          standards have been established.

     •    Pretreatment requirements are to be tied to a POTWs NPDES
          permit setting a date by which a program must be developed.

     •    The construction grants program contains regulations which
          prohibit grant awards (Step 2-Design after June 30, 1980;
          Step 3-after December 31, 1980) and payments  (no more than
          90% of a Step 3 or 2+3 grant after October 1, 1978) if a
          pretreatment program is not being developed.

     With this segmented procedure and the delay in providing national
categorical  standards for many industries, there has been confusion and
reluctance to act on the part of municipalities, industries and State
officials.  The publishing of a Pretreatment Program Guidance Package
on September 23, 1980, by the Municipal Construction Division should
help correct the situation.

     Categorical standards represent an attempt by EPA  to limit pollutants
from specific industries which have historically caused water quality
problems.  These include industries such as metal  plating, tanneries,
petrochemical production, etc., that discharge substances that are
harmful to the biological systems of POTWs (oils,  fats, toxic metals,
etc.)  Since these industries regularly produce biologically toxic
substances they have been singled-out for action as a protective precaution.

     The setting of these standards has been a time consuming job for
the agency.   The industries affected have not always been involved to
the greatest extent possible and, therefore, many industries have
challenged the standards.  The challenges and subsequent discussion have
caused further delay.

     Since the pretreatment program is tied into construction grant
regulations  and NPDES permit requirements, some of the  same enforcement
tools used in the NMPS can be applied to pretreatment noncompliance.  An
important difference is the added sanctions given  in the case where Step  2
or Step 3 funding has not been obtained.  No new grants may be made after
December 31, 1980, without the grantee starting a  pretreatment program.  With
most new POTW construction being funded by construction grants, this  represents
a powerful penalty.


Data Information Systems - ADP

     At present several  EPA systems exist independently  which  contain
POTW information:

     •    PCS - Permit Compliance System -  contains  facility inspection
          reports,  compliance schedule events  and  discharge monitoring
          report (DMR) data.

     t    6ICS - Grants Information and Control  System - contains  grant
          tracking:  grant dollars, project description, target dates
          for the municipal  construction grants  program.

     •    NEEDS - Contains Construction Grants Needs Survey data with
          costs and categories of needs.

     •    Also available is a limited amount of  EPA  Form 7500-5 Operation
          and Maintenance Inspection data.

     The fragmented state of the ADP systems at  EPA  makes information
retrieval difficult at best.   Ironically, one  reason ADP is used is  to
facilitate access to a large quantity of data.

     One of the tasks presented in the municipal management strategy is
integration of the  EPA data bases containing municipal treatment works
information.  Specifically the PCS and GICS are  to be combined or  cross
referenced so that  grant schedules and permit  compliance schedules can
be coordinated.  Progress on this subject has  been very  slow.

     In short, EPA's present compliance data management  system cannot
produce the type of management information necessary to  adequately
characterize POTW performance.  Furthermore, since compliance  data
cannot be readily cross-linked with grants data, the grants program
lacks the capability to adequately assess performance of POTWs con-
structed with the aid of the grants program.

Status of Grant Project Completion vs. Needs

     As of October  1980, the following construction  grant project
information is available:

     •    Active Step 3 construction grants -  6,268  representing 24.925
          billion dollars.

     •    Active Step 4 grants (design and construction) - 783 repre-
          senting 850.8 million dollars.

     •    8,846 PL-92-500 projects have been completed representing
          4.106 billion dollars (2,183 Step 3  projects - $3.065  billion;
          156 Step 4 - $233.1 million).

     •    31.58 billion dollars has been appropriated for the  program
          (PL-92-500 and subsequent).


The following is a summary of the 1978 Needs  Survey:

     Needs Category                        1978  Survey
	(in Billions)	

     I      (Secondary Treatment)             15.09

     II     (More Stringent Treatment)

            A.  Secondary levels              (11.0)
            B.  Advanced Secondary            (6.8)
            C.  Advanced Treatment            (2.7)
            Total Category II                 20.51

     III-A  (Infiltration/Inflow)               2.44

     III-B  (Replacement and/or Rehabilitation)  4.88

     IV-A  (New Collector Sewers)             19.02

     IV-B  (New Interceptor Sewers)            18.47

     V     (Combined Sewer Overflow)           25.74

     Total I - V                              106.15

     VI    (Control of Stormwater             61.67

     Total I - VI                             167.82

     Since congressional allocations  for the  program  are  running  between
3 and 4 billion dollars a year, the  program cannot  expect to  satisfy
even the 1978 Needs.  Because of population and  urbanization  increase
the Needs projection is used primarily to assess the  backlog  of program
funding deficiency.

Status of POTW Noncompliance

     Currently EPA's construction grant and enforcement data  management
systems are not capable of displaying compliance profiles for all
existing major and minor publicly owned treatment plants.

     Since 1972, the Agency has used  its data management  resources to track
grant activity and new construction.   The existing  data system does not adequately
determine and assess continuing compliance.  The current  emphasis for data
management reflects the Agency's past enforcement and municipal management

     Many of the 33 States administering  the  NPDES  program  periodically
compile statistics on POTW compliance.

     The methods used and objectives  associated  with  gathering contin-
uous compliance information differ among  the  States,  and  EPA  Regional
interest in reviewing compliance information  varies.   In  the  future
regular, uniform compliance information should  be generated by the
States for use by Congress, EPA, and  State  agencies.   Such  information
would be useful for determining funding and enforcement priorities.
Before an integrated data management  system can  be  developed, however,
agreement must be reached on several  issues,  including:

     •    An acceptable classification  system for major and minor

     •    Methods for distinguishing  between  significant  and  insignifi-
          cant permit violations;

     •    A universal classification  system and  manifest  system  for
          industrial users;

     •    A system for ranking discharge permit noncompliance that  is
          keyed to displaying water quality impacts;

     •    The need for reporting financial  and  management information
          related to POTW budgets, staffing,  maintenance  and  rehabilitation.

     Nationally, failure to achieve continuous  compliance appears  to be
a significant problem for POTWs.  Recent studies indicate permit non-
compliance will continue to be a problem.  Generally, continous  noncom-
pliance is not attributable to a single cause,  but  is the result of
several factors, all of which must be coordinated  to  secure successful
POTW operations.  A recent study of 180 major POTWs conducted by Energy
and Environmental Analysis, Inc., found, for  example:

     •    64 percent of the noncompliance cases involved  influent
          problems (infiltration, inflow, and industrial  waste  flows
          were the prevalent cause);

     •    49 percent of the cases involved design,  construction  and
          equipment flows;

     •    20 percent of the cases involved poor insufficient operations,
          maintenance, management procedures  or staff.

     Although the  percentages vary, the above findings are supported by
similar studies conducted by EPA, as well as  independent  program reviews
conducted by the General Accounting Office.  Moreover, all  reviews of
noncompliance  have reached the  same conclusion:  in more  cases  than not,

noncompliance is the result of several  factors, but the probability of
noncompliance can be reduced if operations costs, staffing, operator training,
influent characteristics and POTW budgets are adequately considered as treatment
systems are designed, equipment is selected, and construction proceeds.

     Many of the noncompliance reviews completed indicate influent
characteristics, as well as a grantee's ability to operate and manage a
new sewage treatment plant, are not adequately considered during the
facilities planning process.  For example, GAO found in a recent review
of small community treatment systems that installed technologies were
often too complex, requiring skills and revenues that could not be
provided by the operating agencies.  In many of the small community
cases examined, GAO found grantee capability was inadequately considered
during facility design, and uniformed grantees failed to question the
need for costly or inadequately sized treatment units advocated by their •
design engineers.

     Another study, also completed by GAO, found in many instances
inadequate controls on industrial influent caused significant noncom-
pliance.  GAO found numerous cases where industrial users either failed
to adequately characterize wastes and flows prior to system design, or
radically changed production processes once the POTW was placed in
operation, thus altering influent profiles originally used to develop
the treatment processes.

     GAO and others also found failure to adequately consider operating
costs and a grantee's capability to raise needed revenues often contributes
to noncompliance.

     In some cases user charge cost estimates developed early in the
facility planning process were far below actual operations costs.  In
other cases anticipated growth needed to defray fixed costs associated
with reserve capacity did not occur, thus maintaining higher than
projected costs for existing users and restricting POTW management's
ability to secure approval  of rate increases as needed.  Industrial
plant closures, relocations, or changes in product and need for treat-
ment services also have been identified as causes for noncompliance,
particularly in communities with signficant individual users and a
stable population.  Fixed cost associated with the new "reserve"
capacity must be distributed among remaining users, thus elevating per
capita costs to levels which often are not acceptable.

Financial Management

     The area of fiscal management of a POTW and how it impacts non-
compliance is just now receiving attention.  In recent articles (July
1980, May 1979) the Journal of the Water Pollution Control Federation
has pointed out fiscal self sufficiency as an area of concern for
municipalities in the 1980's.  With decreasing federal involvement,

inflation, eroding State financial  resources, and  taxpayer revolt, the
local  governments are faced  with  tighter  financial restrictions which
they must balance with good  O&M and adequate wastewater  treatment

     The federal  involvement in fiscal management  at the local level has
been deliberately minimized,.  The only specific  requirements  in the
Clean Water Act involve:

     •    A construction grants applicant must  have sufficient legal and
          financial  capability to insure  adequate  construction, opera-
          tion and maintenance of the treatment  works.

     •    An applicant must  adopt a user  charge  system that assures that
          each user will pay a proportionate share of the costs of
          operation, maintenance  and replacement of the  system.

     EPA and State reviews of financial capability determine  primarily
whether a grantee has legal  authority to  charge  users and raise construc-
tion funds through bond issues or other mechanisms.  The user charge
system is created and approved during design or  construction  of the
facility and represents a "best guess" of the costs of O&M and replace-
ment.  State and federal reviews  do not determine  the adequacy of POTW
operating budgets.  Instead, the  user charge review determines only if
each class of user (industrial, residential or  commercial) is assigned a
rate coefficient proportional to  demand for treatment services.
Replacement as defined by EPA regulations is an  expenditure "for obtaining
and installing equipment, accessories, or appurtenances  which are neces-
sary to maintain the capacity and performance during the service life of
the treatment works for which such works  were designed and constructed."
This definition excludes costs associated with  replacing the  plant after
its design life is over, expanding the system,  or  upgrading treatment
capabilities.  With this type system the  municipality is destined to
remain dependent on the federal government  for  new construction and
major upgrading.

     Given the large federal liability for  satisfying unmet treatment
needs (approximately $80 billion), it appears unlikely that munici-
palities will receive federal grants for  system expansions, future
rehabilitation, and process  improvements.  The  Water Act does provide
that grantees should raise sufficient revenues  to  operate and maintain
their POTWs in compliance with discharge  permits.  Currently  national
user charge revenues are estimated to be  $46  billion annually.  POTW
operating revenues, based on increasing the current  federal investment
from $30 billion to $70 billion by 1990,  must  increase to approximately
$30 billion to assure adequate operation, maintenance and expansion of
municipal treatment capability.  It appears,  however, that without
significant changes at the local  level, revenues needed  to maintain
newly constructed facilities will not be  available.  The record for
existing POTWs indicates that current operations,  maintenance and
replacement revenues fall short of needs.  Unless  this trend  is reversed,

maintenance of treatment facilities now put in place is  likely  to  be
deferred, necessitating massive future investments  if water  quality
is to be maintained.  It appears a joint federal-State effort to assist
municipalities in developing user charge and treatment system financial
management programs, and periodically review POTW operating  budgets  is
warranted.  The effort for new facilities should involve identification,
during the preliminary planning, of domestic and industrial  revenue
sources, actual and anticipated.  This information  would assist the
grantee in selecting treatment alternatives, assessing operating
capability, designating services areas, and developing financial
profiles necessary for securing local construction  funds.

     The effort for upgraded, one-line facilities should involve
preventive maintenance scheduling, review of service agreements,
assessment of existing charges and schedules for r"ate increases,
and the development of revenue sources for capacity expansions  or
significant future upgrades.

     Under current program conditions, municipalities are "conditioned"
to expect POTW replacement funds from federal  programs.   Consequently,
unless some fundamental financial management changes are made,  the
long term outlook for continual compliance, with decreasing  federal
participation, is bleak.

Implementation of the Municipal  Strategy

     The Municipal  Management System (MMS)  is the implementation  process
for the national municipal  policy and strategy.   The operation  of the  MMS
is currently being phased in.  Headquarters evaluation  of the MMS
operation is scheduled for January 1981.

Federal Court Orders

     Under the current policies  of enforcement,  municipal  strategy has
been focused on plants to be constructed.   The anticipated large  increase
in court cases has as yet failed to materialize:

     •    1978 - Six federal court orders

     •    1980 - 28 federal  court orders against plants under

Other EPA Enforcement Actions under the Water Pollution Control  Act

                           1977                           1978
Type of Action         Non-         Municipal    Non-         Municipal
                    municipal                  municipal

  Order                354            265         436             556
Referral to the
  Department of
  Justice               88             20         107              26
     Source:   Information supplied by U.S. Environmental Protection
 Agency, Office of Water Enforcement.

     Although  EPA's enforcement resources are shifting toward POTWs which
 are  not meeting effluent quality requirements, the agency's enforcement
.capabilities are of necessity limited to the most serious violators among
 the  nation's more than 18,000 POTWs.  Clearly, other measures are
 necessary to supplement existing federal enforcement programs if POTW
 compliance rates are to improve.


     In accordance with the 1977 amendments to the Clean Water Act, EPA
 is actively engaged in the transfer of the operation of the construction
 grants program to the States.  Delegation of the NPDES permit program
 has  been in progress since 1972, when the Act was first passed.  The
 following table shows the status of NPDES and 205(g) construction
 grant delegation.

     At present, 33 States have been delegated permitting authority,
 37 states have assumed a significant portion of the administration of
 the  construction grants program (see Figure III.I).  While slightly more
 States have obtained 205(g) delegation than NPDES delegation, the differences
 become significant when it is realized that the NPDES delegation was
 presented in the 1972 Act but the 205(g) delegation did not come
 into existence until the 1977 Amendments.

     The obvious explanation for the difference is the incentives
 provided for 205(g) delegation.  After October 1, 1977 a State may
 receive up to  2% of its construction grants allocation (or $400,000, which-
 ever is greater) each year to administer the construction grants program
 in the State.  This monetary incentive, together with the States opportunity
 to "run its own show", make the construction grants delegation attractive
 to State governments.

                                  Figure III.l


REGION      STATE	NPDES Delegation	205(g) Delegation







New Hampshire
Rhode Island
New York
New Jersey
Virgin Islands
Puerto Rico
West Virginia
North Carolina
South Carol ina
1 1 1 i no i s
New Mexico



















                             FIGURE III.l  CONTINUED

REGION	STATE	NPDES Delegation	205(q)  Delegation

VIII        Montana                     X                                X
            North Dakota                X                                X
            South Dakota                                                X
            Wyomi ng                     X                                X
            Utah                                                        X
            Colorado                    X                                X

IX          California                  X                                X
            Nevada                      X
            Arizona                                                     X
            Hawaii                      X

X           Oregon                      X
            Idaho                                                       X
            Washington                  X                               X
            Alaska                                                      X

     One of the provisions of Senate bill  #2725,  passed by the Congress  on
October 1, 1980, allows the State management assistance grant (for 205(g)
delegation) to be based on the authorized  construction grant fund amount rather
than the allocated amount.  This was changed because the Congress has  been  reducing
the allocation for the program year after  year.   If this situation was to continue,
the States would be faced with dwindling program  budgets to support their delegation
staffs.  More stable state programs should result from the change.

     The delegation program, however, also has run into problems.  Those States
assuming responsibility for managing construction activity have experienced budget
constraints, hiring freezes, and high rates of staff turnover.  Moreover, the
volume of grant activity has forced delegated States as well  as EPA to focus on
new construction as opposed to assuring continuous compliance at recently constructed

     Recently, Congress approved changes to the Water Act which permit the  agency
to base 205(g) awards on program authorizations as opposed to appropriations.  This
change will enable the agency to substantially increase State management grants,
but it in no way removes internal State restrictions on personnel.  Without adequate,
qualified staffs the States will be unable to address continuous compliance and
will be pressed to adequately oversee construction, design and planning  activity
for the approximately 11,487 grant projects now in the system.  The potential  for
management problems at the State level  could increase in the near future as major
grantees move through facilities planning  into design and construction.   In the
near future State staffs will be pressed to manage their workload.  Over the long
run, if States increase staff capability,  State revenue sources will have to be
secured because the federal 205(g) management grants could become inadequate.

                                   CHAPTER IV

                                AVAILABLE OPTIONS
                               AND RECOMMENDATIONS

     Chapter III, in describing the existing compliance  situation and the
EPA programs which affect POTW compliance rates, raises  several  issues:

     •    The quality of EPA's compliance data  management  system

     t    The compliance rate of new POTSs constructed with  the
          aid of the grant program

     •    The compliance rate of POTWs  which have gone through the
          grants process and are now on line

     t    POTW financial management capabilities

     •    POTW staffing needs.

     This section of the strategy paper discusses options  EPA might  employ
to improve POTW compliance rates.

     The issue papers which have been written as a  part  of Task  IV have
discussed a great many options which EPA might  employ to improve POTW
compliance.  In addition, other options have come to light in comments responding
to the issue papers or from other sources. These options  represent  a wide
variety of actions, and some are in conflict with others.  Some  would require
legislative action to implement, while  others require only administrative
action.  Many of these options are discussed below.  For greater detail, the
reader should refer to the Task IV issue papers.


     One of the difficulties encountered in an  attempt to  formulate  an EPA
strategy to improve POTS compliance rates is the scarcity  of high quality
compliance data.  Although essentially  every POTW in the country is  required
to submit standardized quarterly self-monitoring reports on  plant performance,
there is no coordinated national data management system  to enable the Agency
to effectively utilize the information  contained in these  Discharge  Monitoring
Reports (DMRs).  Furthermore, although  the DMRs report self-monitoring data,
there is no systematic means of insuring that the information in these reports
is accurate.  In fact, the limited efforts which have been made  by EPA to
evaluate the quality control  capabilities of POTWs  indicate  that there is a
strong probability that DMR data accuracy is not good.

     Presently, only the DMR data  submitted  by major  (flows  greater  than  1
mgd) POTWs is included in a national  data  processing  system.   Because of  the
lack of standardized procedures at various State and  EPA  Regional offices,
this information is of limited value  in assessing POTW  performance.  EPA's
office of Enforcement is presently implementing a new system called  Permit
Compliance System II (PCS II), which  should  improve the present  situation
somewhat.  However, there is little activity now underway to improve the
quality of DMR data.  The options  listed below are designed  to improve  EPA's
ability to evaluate the performance of the nation's POTWs.

Option 1

Establish a national POTW performance information system  which would summarize
self-monitoring effluent data submitted in the quaterly Discharge Monitoring
Reports (DMR's) and utilize existing  cross-links between  enforcement and  grants
information files to examine the relationship between performance and location,
type of treatment, capacity, flow, etc.

     The system would feature a POTW  performance index  assigning a numerical
index to each facility based on the frequency and magnitude  of permit violations
Composite indices would be calculated for  various groups  of  plants (e.g., types
of treatment, location, capacity,  etc.).  Concise reports would  be issued
quarterly, allowing readers to quickly evaluate the performance  of the  nation's

     Although setting the criteria for these degrees  of noncompliance involves
the exercise of professional judgement, once the criteria are accepted, classi-
fication of a given POTW's compliance status can easily be accomplished by a
computer program which surveys data from DMR's/  A five-point performance index
is suggested:

     Effluent quality                                  Performance index

     compliance with NPDES effluent limits                    5
     insignificant noncompliance                              4
     minor noncompliance                                      3
     significant noncompliance                                2
     serious noncompliance                                    1

     Such a system would provide a more meaningful gauge  of  the  performance
of POTW's than is now available.  In  addition to providing a yardstick  to
evaluate the effectiveness of the  construction grants program, the system
would serve as a means of setting  priorities for enforcement actions taken
by EPA and the States.  It would also identify problem  areas, thereby serving
as an aid to the formulation of corrective programs and policies.

     Although the system would overlap with systems  now in  service  in  some
States, it would provide most States and EPA with  valuable  information not
presently available.

Option 2

Increase surveillance and analysis efforts by EPA  and  the States  to improve
the reliability of DMR data.

     Although this is a resource intensive activity, it is  essential if the
DMRs are to have any utility as indicators of POTW compliance.  EPA has developed
a procedure called the Performance Audit Inspection  (PAI),  which  is designed
to evaluate the quality control capability of POTWs.  PAIs  must be  conducted
on a continuing basis to achieve an acceptable level of self-monitoring data
quality.  The delegated States would perform the vast  majority of PAIs.  EPA's
role would be that of setting minimum requirements for PAI  procedures, minimum
numbers of inspections to be performed, and program  quality assurance.  The
inspections would also benefit the POTWs by supplying  a written evaluation of
plant quality control activities and some on-site  training  by experienced,
skilled inspection personnel.

Option 3

EPA, through the delegated States, establishes a POTW  effluent sampling program
independent of the self-monitoring program.

     This effort would eliminate the dependence on self-monitoring  data to
evaluate POTW performance.  However, it would necessitate a great increase in
cost to provide meaningful information.  Furthermore,  since a significant portion
of the self-monitoring data is also used for in-plant  process control, this
option would not eliminate the need for self-monitoring activities.  It is
unlikely that such a massive monitoring program would  produce benefits worthy
of the large resource requirement.


     Because the self-monitoring system is well  established, it should remain
as the foundation of the POTW compliance information gathering effort  of EPA
and the States.  However, both EPA and the States  must increase efforts to
improve the quality of the self-monitoring data if this system is to be of

any significant value in measuring POTW performance.   Secondly,  the  various
agencies which receive the discharge monitoring reports  (DMRs)  from  the  POTWs
must standardize their data management system outputs  if EPA is  to effectively
use the information to manage the national  program.   EPA must expand its  compliance
data management system to include data on all POTWs,  not just majors,  as  is  now
the case.  If the grants program is to fund the construction of minor  POTWs,
it must have the ability to track their performance;  otherwise,  it cannot
effectively manage the program.   Finally, EPA's Office of Water  Program  Operations
and Office of Enforcement must improve coordination of their programs  by
accelerating implementation of the National  Municipal  Policy and Strategy and
work closer together to improve the management of POTW compliance data which  is
vital to both programs.

     These improvements, which are incorporated in Options 1  and 2,  can  be
achieved with a modest increase in State and federal  resources.   Without  these
improvements, EPA will have a limited ability to evaluate the impact of  various
enforcement and grants policies, procedures and programs, and therefore  will
be handicapped in its ability to manage the grants program.   The implementation
of Option 3, on the other hand, would require excessive  resources at the  State
level, and would not be cost effective.

     These recommendations would best be implemented  through the formation of
a task force of representatives from EPA's Office of  Enforcement, Office  of
Water Program Operations (both Headquarters and Regional personnel)  and  several
State program officials.


     A number of factors influence the performance of a  wastewater treatment
plant, and the interrelationship of those factors is  complex.  For example,
the choice of process in the facility plan has a profound influence  on the
skills and revenues required to operate a POTW.  Conversely, a  skilled operator
can often compensate for poor design or faulty equipment by modifying operational
practices.  Obviously, improving the quality of facilities through improved
facility plans, improved design and improved equipment will  enhance  the  probability
that the facility will comply with its NPDES permit conditions.   However, without
adequate funding and sound management even the finest POTW will  eventually fail.
EPA must take measures to assure that compliance is  factored into every  step
of the construction grants program, from facility plan through  startup.

     The impact of the facility plan on compliance is often underestimated.
Many major decisions which affect plant performance,  including  the selection of
process and the estimation of project capital and O&M costs, are made in the

facility plan.   If unnecessarily complex  technology requiring  highly skilled
operators is selected for a small  rural community  POTW,  the  probability of
compliance is reduced.  Failure to accurately characterize the wastewater to be
treated has resulted in the construction  of facilities unable  to achieve effluent
quality compliance at startup.   Specific  options to improve  the quality of
facility plans are discussed in detail  in Task III, Operations.  This  selection
of the Compliance Strategy will discuss some options which affect  facility plan
quality in a more general manner.

     Obviously, the design of a POTW has  a profound impact on  the  operability
and maintainability of the facility and,  consequently, on the  probability of
compliance of the completed plant.  Ideally, every POTW  design would be developed
in close coordination with individuals  skilled in  the operation and maintenance
of wastewater treatment facilities, communicating  with design  professionals as
equals.  Unfortunately, this is too seldom the case. A  specific design-related
problem which has received a great deal of attention is  the  selection  of equip-
ment for use in POTWs.  The Federal Government, like most States and many local
governmental units, encourages  open competition in procurement and prohibits
the use of proprietary or "lock out" specifications. Many designers contend
that this policy has on occasion resulted in the installation  of inferior
equipment in grant-funded POTWs, subsequently causing poor effluent quality due
to mechanical breakdown or failure to attain adquate performance levels.  EPA
is continuing to work with appropriate  representatives of the  private  sector to
develop methods and policies to assure  that appropriate  equipment  is installed
in POTWs.

     As wastewater treatment facilities become more complex  to meet higher
effluent quality requirements,  the efficient management  becomes a  greater
challenge to operating agencies.  Operators needed to staff  sophisticated
treatment systems may be unavailable or unaffordable, particularly outside
of major metropolitan areas.  Many grantees, especially  in small towns or
those located in rural areas, are unable  to operate and  maintain complex
treatment systems.  Sometimes,  the grantee's capabilities are  not  adequately
considered as system designers  develop  treatment alternatives  and  operation,
maintenance and replacement programs.  In the past, the  primary emphasis of all
participants in the construction grants program has been on  the construction
of facilities.  Relatively little attention has been devoted to the subsequent
operation of the plants once construction has been completed.   It  has  generally
been assumed that grantees possessed or could quickly develop  the  capabilities
to successfully manage the POTWs produced with the assistance  of the grants
program.  In many cases this assumption has proven to be incorrect.  This is
not surprising, since the POTW  often represents the largest, most  complex
capital and operations project  ever undertaken by  the grantee. EPA must adopt
policies which will better prepare POTWs  to manage their projects  from facility
plan through startup and beyond.

     A major cause of noncompliance in many POTWs  is  the  existence of  influent
conditions which exceed the ability of the  plant to treat and  discharge within
effluent quality limites.   There are two primary types  of influent problems:

     •    Industrial  wastes, and

     •    Inflow/Infiltration (I/I).

Industrial wastes cause noncompliance by imposing  excessive  organic  or hydraulic
loads on the treatment units or, less frequently,  contributing toxic substances
which inhibit biological treatment processes and severely limit sludge utiliza-
tion and disposal options  available to the  POTW.   EPA must  implement measures
which will address these serious influent problem  areas as a part of the
construction grants strategy.

     In those cases where toxic loadings from industry  contaminate sludge  and
preclude reuse, local disposal  costs are fixed at  high  levels, thus  raising
overall treatment costs for all users.  Often increased costs  for sludge disposal
will stimulate efforts to reduce costs in other areas such as  preventive maintenance
or operator staffing and salaries.  Noncompliance  will  result  from such cost-
cutting measures.

     Frequently, those preparing facility plans fail  to adequately characterize
the wastes to be treated by a proposed POTW, especially where  significant
industrial discharges are involved.  Also,  municipalities,  fearful of  jeopar-
dizing the economy of the community, are often reluctant  to  impose effective
controls on industrial dischargers.  Changes in industrial  processes sometimes
lead to the discharge of wastes which the POTW is  not equipped to treat, causing
NPDES permit violations.  Currently, there are no  requirements for binding use
agreements between industrial users and POTW managers.  The  absence  of such
agreements leaves many POTWs unprepared to treat or  pay for  system modifications
needed to treat process waste which changes significantly during the life  of a
POTW.  Moreover, the absence of user agreements between a POTW and industrial
users impairs the POTW management's ability to develop  preventive maintenance
schedules, forecast future treatment needs, and project long-term revenues.  At
any time an industrial user may withdraw from this sytem  and face little or no
financial or legal penalty.  This new "excess capacity" can  cause noncompliance
in an otherwise sound treatment system.

     The following options to improve the compliance  rate of new POTWs have been
discussed in greater detail in earlier issue papers  prepared as background for
the 1990 Strategy:

Option 1

Implement the pretreatment program in accordance with the Clean Water  Act,
Section 307(b) and (c) and other sections as applicable.

     Federal  requirements for industrial  pretreatment programs  are  being  developed
at this time.  These requirements involve three major components:   categorical
standards, general  pretreament regulations and construction grants  regulations.
Three of the 34 categorical  pretreatment standards  have been issued.   The remainder
are under development.  General pretreatment regulations are expected  to  be  issued
in final form before the end of 1980.   Construction grants  regulations pertinent
to. pretreatment were issued  in 1978.   A class deviation was issued  this June
extending the dates for submission of  pretreatment  programs.

Option 3

Requirement of a binding agreement between POTWs and  major  industrial  waste

     Federal  requirements for industrial  pretreatment programs  are being  developed
at this time.  These requirements involve three major components:   categorical
standards, general  pretreament regulations and construction grants regulations.
Three of the 34 categorical  pretreatment standards have been issued.   The remainder
are under development.  General pretreatment regulations are expected  to  be issued
in final form before the end of 1980.   Construction grants  regulations pertinent
to. pretreatment were issued  in 1978.  A class deviation was issued this June
extending the dates for submission of pretreatment programs.

     A Municipal Pretreatment Program Guidance Document has been developed and
will be issued shortly.  Currently, municipalities are utilizing 201  grant funds
to undertake the first phase of the pretreatment program which  includes industrial

     In addition to the activities already underway, this option includes a
vigorous public awareness and implementation assistance effort, including the
distribution of material to  explain the importance of pretreatment programs,
emphasizing the benefits to  POTW operation.  Also, a minimum of one pretreatment
seminar would be held in each Region to acquaint POTW administrative and  technical
personnel with the pretreatment program.   Each Region would sponsor seminars for
State personnel to fully acquaint them with the pretreatment program.

Option 2

Improve the quality of facility plans by increasing the emphasis on characterizing
industrial wastewaters (quality and quantity) to be discharged  to  POTWs.

     This can be accomplished by the following actions:

     •    Encourage the active involvement of significant industrial
          dischargers in the preparation of the facility plan.

     •    Issue guidance to  A/E firms, grantees, and reviewers  regarding
          the importance of  industrial wastes to POTW performance.

     t    Liberalize funding of industrial waste surveys and other facility
          planning activites necessary to determine the impact  of  industrial
          wastewaters on the POTW.

     t    Require those preparing facility plans to cross-reference all
          industries in the  study area with the industrial  waste survey
          information on file with EPA and the States.

Option 3

Requirement of a binding agreement  between  POTWs  and major  industrial waste

     The discharge of industrial  wastes  into  a municipal  system can  have major
impacts on operations if the flow or  waste  characteristics  change dramatically
from original  design conditions.  This  is particularly  true if the industrial
loads are a large percentage of the total waste loads.   Dramatic changes may
occur due to a plant shutdown,  a  major  plant  expansion  or a major change in an
industrial process.

     Currently, as a condition  of participating in  the  grants program, a grantee
is required to obtain from an industry  a letter of  intent as to projected waste
loading.  However, the letter of intent  is  not binding.   Considering the financial
commitment on the part of the grantee,  this option  requires an agreement between
the grantee and industrial user as  to existing and  future waste loadings.  Modi-
fications to the agreement would involve a  penalty  clause,  probably  including
financial considerations.  The  concept  should be  applied only to the large
industrial users, e.g., those contributing  loading  greater  than ten  percent of
system capacity, or where an industry discharges  a  lesser quantity of a waste
which might present significant problems to the treatment process or sludge

Option 4

Modify the Inflow/Infiltration  (I/I)  program  to reflect findings of  recent

     Recent investigation has revealed  that grant-assisted  projects  to reduce
I/I problems in collection systems  have, to a great extent, failed to provide
predicted results.  Since excessive I/I  is  a  well-documented serious problem
at POTWs--often a leading cause of  noncompliance  in large areas of the country--
significant changes must be made in the present  I/I program.  In a recent  issue
paper on Infiltration/Inflow, the following three-phased implementation plan was
formulated to modify the I/I program:

Phase I  - Interim Guidelines for I/I  (Ongoing):

     Issue PRM providing interim I/I  guidelines which  emphasize the

     •    Addressing I/I problems in service lines  separately in  terms
          of quantity and proposed rehabilitation.

     •    Using concurrent pressure testing and sealing techniques  in
          plance of TV whenever applicable.  This would be especially
          emphasized where TV was previously used for quantifying
          infiltration sources.

     •    Determining excessive I/I on the basis of a 30% to 50%  maximum
          removal  efficiency.  This will  ensure that other factors  such
          as groundwater migration and I/I from service lines will  be
          taken into consideration in the cost-effectiveness analysis.

     •    Proposing an acceptable sewer maintenance program as part of
          Step 1 work.

     •    Limiting all field work to I/I  problem areas only.  Problem
          areas must be identified by flow monitoring or other means
          first in order to minimize unnecessary field work and thereby
          improve the overall effectiveness of the  program.

Phase II - Input for Final Guidelines for I/I;

1.   Conduct four I/I program review meetings to be  held in four
    different strategic locations.  The meetings will serve two
    major functions:

     t  Inform the public (including States, municipalities and private
        sector participants) of the results and findings of the recent
        study on the effectiveness of the I/I program.

     •  Request the public to participate in the development and  formula-
        tion of solutions to the problems identified in the I/I program.

2.   Initiate joint effort of OWPO and ORD to develop new approaches
    and technical  procedures for I/I.

    Research efforts will be initiated to develop more effective
    technical  procedures.  Briefly, the new I/I procedures will
    emphasize the following issues:

         •  Increase the efficiency of the I/I program and the treatment
            plant by more effectively rehabilitating sewers to remove
            excessive I/I.

         •  Improve the  reliability  of  the  I/I  program by accurately
            determining  the  I/I  conditions  in the  sewer  system.

         •  Expedite the Step  1  grant process by simplifying and
            streamlining the I/I procedure.

         •  Maintain the useful  life of the  treatment plant by
            minimizing the effect of I/I  migration.

         •  Ensure an effective  O&M  program  for the rehabilitated
            sewer system.

3.  Initiate a program to further evaluate  the  effectiveness of
    both the technical and administrative aspects  of the I/I
    program, and to recommend  additional  modifications as appropriate.
Phase III - Final  Guidance for I/I:

1.  Formulate and  propose final  I/I  guidelines  to  supplement  or
    supersede the  PRM issued  in  phase I.

2.  Circulate for  comment and implement through statutory changes,
    regulatory changes, or policy development,  previously identified
    initiatives found to be beneficial  and  productive.   These initiatives
    may include, but are not  limited to the following:

         •  increased enforcement of sewer  use  ordinances

         0  increased enforcement of required O&M  programs

         •  expanded grant funding for service  line rehabilitation

         •  construction grants  sanctions for accountability  (i.e., assist
            municipalities recover funds where  jobs are not satisfactorily

         •  technical changes to guidance and/or methodology

         •  continue R&D effort

         •  continue short-term  and long-term program evaluations.

Option 5

Modify NPDES permit effluent standards  on  a  case-by-case  basis  for  POTWs
experiencing excessive inflow and/or infiltration.

     As explained above, recent studies have shown  that the  efforts to  correct
I/I have often fallen far short of expectations,  indicating  that  it is  not as
feasible to reduce I/I as was originally assumed  when  the sewer system  rehabili-
tation program was initiated.  On the other  hand, it is often equally difficult
to effectively treat large hydraulic surges  associated with  I/I and maintain
effluent quality.  Biological treatment processes do not  generally  respond well
to rapid changes in hydraulic loading rates.  Flow  equalization,  while  useful
in some situations, is often ruled out  by  cost or space considerations.
This option would allow, on a case-by-case basis, the  relaxing  of
federal secondary requirements, as is now  permitted for POTWs which treat combined
sewer flows during periods when flow exceeds the  capacity of the  secondary treat-
ment units.  In effect, POTWs in this category would be assigned  a  dual effluent
standard with the NPDES permit stipulating the conditions which would permit the
discharge of wastewater receiving less  than  secondary  treatment.  During periods
of high peak flow (i.e., wet weather flows from collection systems  with excessive
I/I) all flows in excess of design flow should be diverted for  physical treatment
(e.g., swirl device clarifier), disinfection and  discharged  to  receiving waters.
During this period of peak flow the normal (design) flow  would  be treated as
usual, so that relatively stable conditions  of the  unit processes can be maintained.
The legal definition of "significant" influent problems should  be based on a
cost-effectiveness analysis showing that dual  discharge levels  would result  in a
significant life-cycle cost savings and improve POTW compliance with minimum impact
on water quality.

     The imposition of dual effluent standards will increase secondary  unit
process reliability by minimizing hydraulic  surges. In most cases, there will
be negligible impact of the poorer effluent  quality on receiving  water  quality
because of the receiving waters'  high flow.   During periods  of  receiving water
high flow, surface runoff (nonpoint) pollution can  contribute more  pollutants
than POTW effluent.  The decision to allow a POTW to operate under  dual effluent
standards would be based on assessments of the environmental and  health effects
of reduced treatment levels.  The pollutant  load  on receiving waters may be
increased slightly under this option.

Option 6

Modify the definition of secondary treatment to allow  the use of  biological
processes which do not meet the existing criteria but  which  have  other  signi-
ficant advantages.

     The present definition of secondary treatment  found  in  Federal Regulations
(40 CFR 133.100) requires the concentration  of effluent BOD  and total suspended
solids (TSS) concentrations to be no greater than 30 milligrams per liter  (mg/1)
and a reduction in BOD and TSS of at least 85%.  These limits  have shifted the
economics of wastewater treatment toward the more sophisticated unit  processes,
such as activated sludge, and away from fixed-film  processes such as  trickling
filters and other biological  processes  which are less demanding of operator
skill and less energy intensive.   In general, activated sludge becomes more
cost-effective as plant size increases  and is more  suitable  for large facilities.
Modifying the secondary requirements would permit the use of simpler  processes
in the small POTWs, which are generally less able to afford  highly trained
personnel.  Because these simpler processes  usually cost  less  to operate—especially
in small facilities—it is likely that  the change in secondary treatment require-
ments will enhance compliance rates and reduce O&M  costs  in  smaller systems.  It
is possible that this modification should be restricted to POTWs below a certain
capacity, as is the present exception applicable to waste stabilization ponds.
The reduced requirements would be limited to those  applications where it could
be demonstrated that receiving water beneficial  uses would not be jeoparized  by
the modification.

     The existing requirement that secondary treatment remove  85% of  BOD and  TSS
is another requirement which often causes compliance problems  at POTWs which  treat
unusually "weak" sewage.  Since NPDES permits set limits  on  the total weight  of
these pollutants to be discharged from  a POTW, as well as the  maximum concentration
of those pollutants, dropping the 85% removal requirement would increase compliance
rates and avoid expenditures for unnecessary advanced waste  treatment units without
jeopardizing water quality.  The quality and quantity of  effluent discharged, not
percentage removal, determine the impact of  a discharge on receiving  water quality.
Therefore, this option also proposes the elimination of the  85% removal requirement
from the definition of secondary treatment.

     The precise effluent quality limits to  be applied  in the  modified definition
and the restrictions or its application will require extensive technical evalua-
tion and consultation with State water  quality management agencies and other
interest groups.

Option 7

Increase federal POTW operator training assistance  in areas  of special need.

     In general, the federal government has  determined  that  operator  training
is a State function.  Accordingly, EPA has discontinued  its  direct  POTW operator
training program.  However, recent studies (2,3) which  evaluated  the  performance
of 103 POTWs concluded that improper operator application of concepts and  testing
to process control was the most frequently occurring  factor  limiting  the  perfor-
mance of the selected facilities.  This finding indicates a  need  to  improve  the
effectiveness of existing operator training  efforts,  especially  in  the area  of
process control.  Although the States provide direct  training  of  operators,  there

are some training-related functions which are more  appropriately accomplished at a
national level.  These include the preparation of operator  training materials and
assistance in developing an effective training delivery system.  This  latter
function would logically include workshops for trainers and other  similar  activities
designed to improve the effectiveness of trainers of POTW operators.

     Although EPA's National  Training and Operational  Technology Center  (NTOTC)
in Cincinnati, is now performing this function, these activities must  be accelerated
if the process control training is to meet existing and future  needs.  Competent
operators are an indispensable element in any program to improve POTW  compliance

Option 8

Promote operability in the design and review of plans and specifications for new

     The focus of facility planning and design and  their review is not usually
directed towards those things which most affect the ability of  a POTW  to attain
compliance with permit conditions.  In addition, there may  be an issue that
treatment plants should be designed more conservatively based on the variable
characteristics of sewage.  There are indications that treatment plants  in
England operate very consistently at high levels of removal.  The  English  plants
seem to be immune to many of the problems found in  this country.   Although
English and American treatment systems are very similar in  most respects,  the
English plants are designed more conservatively. A study of English plants  is
presently in progress through a cooperative project by AMSA, EPA and the British
Water Research Center.

     A recently completed EPA-sponsored study (4) of 50 POTWs in nine  Western
States found that many of the design faults contributing to noncompliance
were failures to design treatment units and sludge  handling facilities
conservatively enough.  EPA is cooperating with the Water Pollution Control
Federation (WPCF) and the American Society of Civil  Engineers (ASCE) in  the
production of a series of design guidance manuals which should  assist  designers
to improve the quality and operability of new POTWs.

     Promoting operability in design and review could be established by:

     •  Reviewing existing requirements for planning  and design and their
        resultant impacts on operations

     •  Complete study on English plants

     •  Establish design parameters and/or modify requirements

     •  Observe program in Illinois  which  is  currently  being revamped to
        focus on operations

     e  Train State reviewers to focus  on  operations  during review of
        facility plans and design plans.

     Such a program may be difficult to establish  in  a  short time period.  Also,
too rigid application of design parameters could reduce designer initiative and
flexibility.  More conservative designs may increase  costs of  treatment.   Effec-
tive training programs to enhance reviewers'  abilities  to evaluate operability
will be difficult to develop.

Option 9

Promote the automation of wastewater treatment process  control  through  research,
development, demonstration, and technology transfer.

     Two recent EPA-sponsored studies (2,3) investigating operation  and maintenance
of POTWs found that the failure of operators  to apply wastewater treatment concepts
and process control testing to the control of the  wastewater treatment  process was
the most prevalent operational deficiency  at  the facilities studies.  Operators
skilled in process control are in extremely short  supply.  The development of
reliable automated control of wastewater treatment processes will allow more
efficient utilization of the scarce talents available.   In July 1980, EPA's
Municipal Environmental Research Laboratory released  a  report  entitled  "Assesment
and Strategy for Automated Process Control in Wastewater Treatment,"  (5)  which
reports on the existing status of the development  of  automated process  control
and recommends a strategy to accelerate improvements  in plant  performance using
automated process control.  A summary of the  strategy follows:

Short Range Objectives:

     1.  Transfer state-of-the-art, demonstrate and document  integrated micropro-
cessor control of small plants and document design approaches  on available
automation for energy conservation.

    a.  Transfer present SOA technology to the field  so that  the cost
        effective instrumentation and automation  presently  proven  feasible
        is appreciated, understood and properly applied.

    b.  Demonstrate and document integrated micro-processor control  of
        small treatment plants.

    c.  Document design approaches for use of authomation and  instrumenta-
        tion for energy conservation.

     2.  Develop centralized management of multiple  small  plants using digital

     3.  Document benefits of overall  plant automation.

Long Range Objectives:

     1 .  Develop improved automated approaches  to  achieve  energy conservation.

     2.  Develop automated process control  for  new technology  and  improve
approaches on existing  technology.

     3.  Develop automated areawide management  for plants  and  collection

     4.  Support as needed, the continuing development of  instrument  specifica-
tions by the National  Bureau of Standards  (NBS) and  the  establishment
of a non-federal instrument certification  laboratory.

Option 10

Apply the systems approach to the construction  grants process.

     The planning, design, construction and subsequent operation of a waste-
water treatment facility is often the  largest,  most  complex  project ever
undertaken by a municipality or other  local  government unit.   Successful
implementation requires a wide variety of  specialized skills seldom found  in
a single firm.  Presently, the consulting  engineer is usually  called  upon  by
the POTW owner to coordinate the entire project.   Under  this option,  a project
manager with specific  skills and training  would act  as the POTW owner's agent
to direct and coordinate the activities of all  the participants throughout
the project, from facility plan through startup.   This would facilitate the
involvement of specialists in fields such  as financial management, user charge
systems, pretreatment  and operations and maintenance in  addition to the more
conventional areas of  planning, design and construction.

     An example of this process is the separation  of those tasks associated
with operations and maintenance of the POTW from the design  contract. A team
of specialists skilled  in the management,  operation  and  maintenance of POTWs,
with capabilities to train O&M personnel,  would institute  a  comprehensive
startup program including staffing, training, and  initiating operations of the
POTW in order to provide the grantee with  a stable,  competent  operating organi-
zation.  This process  expands and modifies the  present grant-eligible startup
activities now associated with the operation and maintenance of the POTW.
Specifically, the activities would include the  following:

     •  Preparation of a series of plant-specific  training manuals for
        each functional unit of the POTW.

     •  Preparation of a  comprehensive  plant  operations manual focusing
        on process control.

     •  Initiation of a Preventive  Maintenance  Management System prepared
        specifically for  the POTW.

     t  Preparation of a  Plan of Operation.

     •  Periodic consultation with  the  designer regarding process control
        features, plant layout and  equipment  selection.

     •  Plant-specific training of  operating  and maintenance  personnel.

     t  Coordinating and  supplementing  training supplied by equipment

     •  Supervision of startup of the POTW.

     The design engineer  would supervise  equipment  testing and determine  if  the
installed equipment meets the requirements of the plans and specifications.

     The startup service  could be provided by firms to be prequalified  by the
States to perform this work.  Where it  possesses the capability, the design
firm could provide the startup service.  Otherwise, any firm  meeting the  require-
ments of the certifying State would provide  this service.   In any case, the
contract would be separate from the design contract, and all  activities would  be
coordinated by the project manager.

     Although the use of the systems approach may add to the  capital cost of
the POTW, it will improve the quality of  the resulting facility  and, just as
importantly, it will establish the  POTW as a fully  operational unit, with a
trained staff and a functional management capability at the outset  of operations.

     Where conflicts between the designer and the O&M team  arose, they  would
be resolved by the project manager, who would have  authority  over the entire
project.  If this option is to have a significant beneficial  impact on  the
compliance rate of POTWs, there must be some system implemented  to  assure that
qualified firms are selected for the various tasks.  A significant  advantage
to this system lies in the fact that it does not assume that  the many diverse
capabilities required to plan, design,  construct and startup  a  POTW must  be
obtained from a single firm.  Rather, it  allows the project manager to  tap the
strengths of several firms.

Option 11

Mandatory starting services.

     Under present EPA policies, the provision of startup services  is  optional.
This option would require that all  grant assisted projects include  startup
services unless specifically exempted by a  Regional  Administrator or appropriate
State official.  Even the smallest, simplest POTWs have operating and  maintenance
needs.  It is important that POTW operational  personnel  be adequately  trained
and that the facilities be placed in full  operation  while the  designer,  contractor,
and others under contract with the grantee  are still  actively  engaged  in the
project.  This requirement will  facilitate  the transition from construction
project to functional POTW.  Startup services  would  be provided by  the same
O&M team described in the previous option.


     None of the options listed above can insure that all  new  POTWs constructed
with the aid of the grants program will  meet effluent quality  requirements
when placed in service.  Compliance at startup depends upon the skill,
cooperation and dedication of all of the participants in the complex process
which produces a sucessfully operating facility.  Regulations  and requirements
cannot compensate for a lack of these necessary qualities.  However, the ten
options listed above do address many of the major causes of noncompliance of
new POTWs.  They attempt to propose reasonable, workable approaches to the
correction of these problems.  Many of the  concepts  incorporated in these
options have been sucessfully demonstrated  projects  and programs throughout
the country.


     Once a POTW is constructed and sucessfully started up in  compliance with
NPDES permit requirements, it is essential  that the  operating  agency take
all measures necessary to assure that the facility continues to meet effluent
standards.  Unless the agency applies sound management practices to the  operation
and maintenance of the POTW, the public investment in clean water could  be lost
within a short time of startup.   The performance of many facilities constructed
with the assistance of the grants program has  deteriorated because  the operating
agencies have failed to provide such basic  requirements as preventive  maintenance
programs, personnel training and advancement programs and adequate  financial

     Obviously, many of the practices and policies required to assure  continuing
compliance must be established before the POTW is constructed.  User charge systems
and plans for equipment replacement or other contingency funds must be developed
before a facility starts up, if financial  emergencies are to be avoided. Effective

maintenance management systems must be in place from the  first  day  of  operation
if mechanical reliability and long equipment service life are to  be realized.
Sewer maintenance programs, industrial waste monitoring and  control, and  effective
hookup policies and tracking are required to assure that  treatment  capacity  is
not exceeded.  Many of the measures required to assure initial  compliance,
discussed in the previous section, are also necessary to  maintain compliance
throughout the life of the facility.

     The options listed below address the issue of continuing POTW  compliance.
They discuss various measures EPA and the delegated States might  employ to
favorably influence the compliance rates of grant-funded  POTWs  beyond  startup.

Option 1

Increase availability and quality of process control training for POTW operating

     Although basic training for entry level wastewater treatment plant operators
is widely available, high quality training in the control of biological
processes is difficult to obtain.  Yet lack of process control  skill  is the
most prevalent operational problem encountered at non-complying POTW's.  EPA
has assumed the role of catalyst in operator training, relying  on others  to
provide direct training to operating personnel.  EPA's National Training  and
Operational Technology Center (NTOTC) in Cincinnati is now developing  process
control training packages for basic introductory level courses.  Under this
option, this activity would be accelerated and senior level  course  packages
would also be developed immediately.  NTOTC would increase the  availability
of process control training opportunities to experienced  operators  through
the following activities:

     t  Development of process control training materials.

     •  Development of curriculum for process control instructors.

     •  Training of process control instructors.

     t  Assisting States in delivery of process control  training.

     It is an undeniable fact that the successful performance of all  POTWs
ultimately depends on the availability of competent, dedicated  operators.  The
Federal Government has taken the position that operator training is the responsi-
bility of the States.  However, there are certain training-oriented activities,
such as the development of training packages and reference materials,  information
exchange and the development of improved training delivery systems, which are
most efficiently carried on at the national level.  Under this  option, EPA would
increase it's activities in this area to assist the States in their efforts  to
equip senior POTW operators (and those who advise these operators)  with the
training necessary to operate modern wastewater treatment facilities.

Option 2

Establish an assistance program for small  communities,  emphasizing  sound  innovative
and economical  mangement schemes.

     Approximately 85% of the nation's POTW's  serve  communities  with  populations
of less than 10,000.  Because of the high  unit costs of operating small waste-
water treatment facilities and a general lack  of resources,  many small communi-
ties have difficulty maintaining POTW effluent quality  at  a  satisfactory  level.
Modern wastewater treatment plants often require skilled personnel  and expensive
equipment which are beyond the financial means of small  communities.

     The development of cooperative, multiple-system management  arrangements,
in which several  POTW's could join together to share administrative and
technical resources, would allow each participant to enjoy an  economy of
scale otherwise available only to larger organizations.  Arrangements could
vary widely, drawing on private sector resources where  they  would offer the
most economical solution to a specific problem.

     EPA would  implement this initiative primarily thorugh the delegated
States, offering a variety of services.

     •  Demonstration grants for innovative management  alternative
        for small POTW's, emphasizing cooperative efforts  and  private
        sector  services.

     0  Preparation and distribtion of guidance material for small
        communities, emphasizing efficient and effective management

     t  Establishment of a small multi-disciplined resource  team in
        each EPA region to work with the States to assist  small  communi-
        ties in the formation of effective management programs.  The  team
        would include experts on the financial,  administrative,  legal, and
        technical aspects of operating small  POTW's.

     •  Distribution of case histories of  successful small POTW  management
        arrangements to States and small communities.

Option 3

Encourage the establishment of self-sufficient enterprise, or  utility-type
organizations to provide wastewater collection and treatment services.

     Most POTWs are operated as an  integral  part  of  local  government, often
as a section of the department of public  works.   It  is  often  difficult to
separate the actual POTW costs and  revenues  in  this  situation.   EPA construc-
tion grants regulations require that a  user  charge system  be  established to
provide adequate funding for the operation,  maintenance and repair of the
POTW.  Unfortunately, EPA and the States  do  not  have sufficient  resources
to assure that realistic user charge systems are  implemented  and updated,
and, if they are, that the user charges are  dedicated to the  support of the
management of the POTW.  Local governments also  have difficulty  establishing
sinking funds for the replacement or repair  of major equipment because of
competing demands for funds.  The establishment  of independent,  financially
self-sufficient utility-type organizations would  alleviate many  of these
financial management problems.  EPA has encouraged financial  self-sufficiency,
but has not yet developed an effective  program  which will  have any appreciable
impact on this issue.  Because of the profound  influence of wastewater service
on development patterns, and the economic significance  of  wastewater utility
policy on local government, many jurisdictions  are reluctant  to  surrender  control
of the wastewater service function.  EPA  must develop a program  which provides
incentives to local government to convert to financially self-sufficient organi-
zations or to accomplish the same ends  by assuring financial  integrity and
independence of POTWs with the local government.   EPA must provide POTWs with
realistic, practical financial mangement  assistance  and must  enforce existing
regulations governing the self-sufficiency of POTWs.

Option 4

Encourage POTWs to conduct comprehensive  periodic performance audits.

     As with any enterprise, it is usually quite beneficial to conduct periodic,
comprehensive audits of POTW performance. These audits would be performed by
a multidisciplined team which would address, at a minimum, the following areas:

     •  Financial management

        - User charges
        - Placement funding

     •  Staffing

        - Qualifications
        - Salaries
        - Training

     •  Process control

     •  Laboratory

     •  Preventive maintenance management

     •  Solids  handling  and  disposal

     •  Administration

     •  Energy  conservation.

     The results of the  audit would  provide  the  POTW with guidance to modify
its management  program  before deficiencies lead  to compliance problems.  The
report would also be available to  regulatory agencies and the public, thus
providing additional incentive to  implement  measure necessary to maintain the
facility in compliance with  NPDES  effluent quality requirements.

     Although the audit  would add  to the O&M budget, it would, at least  in
some cases, improve operating efficiency, thereby saving operating expenses.

Option 5

Provide grantees financial management assistance through the delegated States.

     Without adequate financial  support,  a POTW, no matter  how well planned,
designed, and constructed, cannot  long continue  to comply with effluent  quality
requirments.  For this  reason, financial management must be considered the
foundation of continuing POTW compliance.  Yet lack of sound financial management
is a common problem in  both  major  and minor  wastewater treatment facilities.
Because of the  complexity of the financial management issue, this option is
broken down into several sub-options which are discussed below.

     This section first  presents the various types of assistance options EPA
might wish to implement, briefly sets forth  some considerations relating to
the delivery of technical  assistance, and discusses EPA and State roles  in
managing the assistance  programs.

     Assistance options  fall into  two major  areas- financial planning and
financial oversight—which are outlined on the following page (Figure IV.1) and
presented in the matrix  shown as Figure IV.2.  Planning assistance is designed
to address financial management obstacles before they become serious impediments
to a project.  Oversight assistance  involves corrective action to ensure that
difficulties beyond the  scope of financial planning are overcome.

     The type of assistance  offered  will  depend  on grantee  needs (or areas of
concern) the project phase,  and grantee capabilities.  The  purpose of providing
financial management assistance is to address the following areas of concern--
to remove the financial  management barriers  to achieving and maintaining compliance,
to reduce the economic  burden on the users,  and  to achieve  POTW economic self-
sufficiency. Although many  of the assistance options address all areas  of
concern, they may do so  to different degrees of  effectiveness.  Others focus
on one or two areas, even though all  areas are somewhat related.

                         Figure  IV.1
     Some of the assistance options,  such  as  studies dealing with the feasibility
of consolidating service areas,  are  suited to a  POTW's entire life cycle, both
the pre-operational  and operational  phases.   Others, such as the early fiscal
assessment and the compliance diagnostic,  are designed to respond to needs
arising in a particular phase.

     Grantee capabilities will also  guide  the selection of assistance options.
Planning and oversight assistance may well  be sufficient for larger grantees
having an adequate in-house financial  management staff.  Smaller grantees with
limited expertise may be unable  to take  full  advantage of the planning options,
however, and may required specialized delivery mechanisms discussed under the
technical assistance option.

     Other considerations include:

     •  The Promotion of Long-Term Federal  Cost  Reductions—Some options,
        especially those related to  planning  assistance, have a high potential
        to reduce federal costs  over  the long run.  The concept is that by
        spending a relatively small  amount of money for prevention the need
        for more costly remedial  programs  can be reduced.

     •  Relative Federal  Cost--The types of assistance contemplated cost very
        little when compared to  the  magnitude of the construction grants program.
        Yet it is still possible to  distinguish  relative costs among the various
        options.  Some costs, however, may vary  widely depending on the number
        of grantees wishing to participate.

     t  Increased Administrative Workload—This  includes only those options which
        are likely to consume a  fairly substantial amount of manhours in adminis-
        tration.  This increased workload  will result whether the option is
        administered by the Federal  Government or is assigned to local, regional
        or State authority.

     •  Grantee Participation—Because it  is  in  the interest of the grantees to
        respond to the identified areas  of concern, most forms of assistance
        proposed are described as optional.   Compliance and self-sufficiency,
        however, are two areas of critical  concern to the national program.
        Attaining both of these  is the result of a number of complex factors,
        many of which cannot be  fully addressed  through financial planning
        assistance options alone. Oversight  options are therefore required
        to help ensure that financial  planning efforts meet with eventual
        success.  If selected as a strategy element, early fiscal assessment
        would also be required.   Because it is aimed at the third area
        of concern—reduced economic  burden on users—it is well within the
        capability of even small  communities, and will cause no increase in
        project completion times.

     A discussion of the various  assistance  options  follows:

A.  Require Early Fiscal Assessment:


         An assessment of an applicant's  financial condition  is done  by  local
officials prior to the selection  of a  treatment system.   It may take  the form
of an inventory, using such indicators as the ratio  of debt to potential  revenues
and operating surplus to total  expenditures.  Each ratio  indicates  the relative
strength or weakness of a particular aspect  of the local  economy.   The aggregate
of individual of individual figures suggests an overall picture of  the
municipality's financial condition and may provide an  early indication of
future problems.


         •  Serves as an early warning of existing or  potential

         0  Likely reduces the number  of  treatment system alternatives
            to be considered in Step 1.

         •  Assessment is compatible with small community management

         •  May indicate that further  studies are needed  to determine
            if there is economic  justification for reclassifying  water
            quality standards.

         •  Could be used in conjunction  with the generic facility  plan
            screening process.

         •  Provides adequate lead time to seek additional aid and  to
            coordinate this aid with EPA  construction  grants.

         •  Entails minimal expense which would be grant  eligible.

         t  Likely reduces the number  of  treatment system alternatives
            to be considered in Step 1.

         •  Saves time spent in considering  systems  a  community cannot

         •  Provides useful data  for bond marketing.

B.  Fund Consolidated Service Area Feasibility Studies:.


         This option studies the feasibility of consolidating  under  a  single
authority the management functions which would otherwise  be provided by
separate jurisdictions.  The studies, conducted as  part of facility  planning,
would include the political  feasibility of consolidation  as well  as  any
economic and environmental  benefits anticipated.  One variation  of this  option
would fund studies related  to consolidated procurement of construction material
and consultant services.


         •  Uses combined resources of an entire area.

         •  Promotes achievement of economies of scale.

         •  Facilitates areawide financial planning.

         •  Often resisted  because of conflicting jurisdictional

C.  Require User Charge Review Before and After Implementation:


         This alternative standardizes pre-implementation review procedures
at the national level.  It  establishes a centralized  review process  in each
Regional or State Office; conducts post-implementation reviews of a  represen-
tative example of grantees.   User charge reviews as currently  practiced  place
substantial emphasis on the proportional distribution of  expenses among  the
various classes of users.  Under this option, proposed and actual  charges  would
also be reviewed to determine if sufficient funds were being collected to
operate and maintain the system without further outside aid.


         •  Assists in the  achievement of POTW financial  self-sufficiency  by
            identifying funds needed for current and  long-term operation.

         •  Stresses consistency and thoroughness in  review methodology.

         •  Improves accuracy and reliability of entire review process.

         •  Helps  ensure compliance  by  encouraging  good management and
            maintenance practices.

         •  Requires  a  fairly high level  of federal  involvement.

D.   Make Available and  Fund Compliance  Diagnostics:


         This alternative would  provide grantees  whose  POTW's  are not meeting
prescribed effluent levels with  the  option  of engaging  private sector firms  to
evaluate the causes of  permit violations.  Whether  or not  the  causes are  found
to originate from  financial management  difficulties, POTW  owners would  be
required under enforcement actions to take  steps  to  remedy the identified
problem areas.  The diagnostics  would be eligible for federal  funding thus
offering grantees  an alternative to  paying  for their own studies.


         •  "Hands on"  approach  designed to solve grantee-specific

         •  Relatively  cost-effective:  diagnosis  costs  incurred by
            the Federal Government and  correction costs  incurred by
            grantees are small in comparison to original planning,
            design and  construction  costs,  yet will  lead to permit

         t  Requires substantial increase in federal administrative
            work load.

         •  Raises equity issue  of  second-round grants.

E.  Make all Financial  Planning  Costs Grant Eligible:


         The alternative funds all aspects  of financial  planning related  to
the construction and operation,  maintenance, and  replacement (0,M&R) of
treatment systems.  Many financial  planning costs are already  eligible  under
current regulations and encouragement of such planning  may result  in wider
use.  Funding additional costs,  such as those incurred  in  marketing  bonds,
would help ensure that  grantees  secure  adequate construction financing  at
the appropriate time and would help  to  reduce the total  local  share  of  the
project.  Advocating the use of currently eligible  financial planning  studies
will result in identification of a  project's full cost  and the establishment
of a user charge system sufficient  to cover 0, M  &  R costs.  The timing and
magnitude of the required expenditures  could then be integrated with the capital
improvements program, thereby contributing to the town's overall fiscal sound-


         •  Promotes unified, realistic  municipal  planning.

         •  Identifies where adjustments or trade-offs  in  the  capital
            improvements program might have to be  made.

         •  Improves programming for future capital  budgeting.

         t  Requires, in many instances, the use of  outside  consultants;
            small  communities may lack the expertise to  fully  evaluate
            and use such input.

F.  Provide States and Grantees  with Technical  Assistance:


         This option enables local  governments to  develop  such major  elements
of comprehensive financial  management as grant management  and  user  charge
systems.  This can be accomplished  either through  delivery mechanisms which
provide assistance directly to the  grantees, or through  a  two-tiered  approach
in which Headquarters establishes national and regional  programs  to aid the
States.  (See Task II — The 1990 Management Strategy.)  Aside from financial
management assistance, the delivery options listed below can be adopted to
offer such technical assistance  as  that  related to pretreatment,  sludge manage-
ment and I/A technologies.   The  following methods  of providing technical
assistance thus achieve a dual flexibility in that they  can  be targeted either
at States or municipalities, while  responding to a wide  variety of  needs.  The
sole exception is  the circuit rider program which, although  managed at the
State level, is designed primarily  to serve small  grantees directly.  The
comments on the various delivery mechanisms are mainly  in  reference to the
impacts of the proposals on grantees, rather than  States,  because grantees are
the ultimate beneficiary of any  particular approach.

         1.   Provide Financial  Systems  Guidance Document


            This alternative focuses on  the accounting,  financial management
and management information system needs  of grantees. It explains and illustrates
EPA compliance requirements and  addresses the grantee's  internal  needs related
to treatment facility management.


            t  Lowest federal  cost of all  delivery options.

            0  Well suited to  rapid distribution  of information.

            •  Of less use to  small  communities with existing  in-
               house management deficiencies.

         2.   Fund a National  Resource Center


            The center serves  as a national  clearinghouse  for  financial
management and resource information.  It issues  information  digests  in
newsletters, offers generic financial  management  assistance  and, where  a
specific problem arises, directs the grantee to  the appropriate  source  of
assistance.  It could also be  staffed with professional  engineers  and
planners, as well as financial managers, enabling them to  address  the full
range of grantee concerns, and to disseminate  information  regarding, innovative
management techniques.  Resource center staff  would also be  responsible for
training Regional experts, preparing training  packages,  and  advising and
assisting on projects as requested by the Regions.  Regional  personnel  would,
in turn, provide similar assistance to the States, offering  information on
program development, staff training, and evaluation of delegation  performance.
(See Task II -- 1990 Management Strategy.)

            This Center is somewhat similar to the Financial  Management Resource
Center sponsored by the Department of Housing  and Urban Development  and operated
by the Municipal Finance Officers Association.  The proposed resource center,
however, differs from the HUD  model in that it would not sponsor workshops  or
conferences.  It is distinguished from the service center  (below)  because it
would cost less than the service center to staff and operate,  and  would be
national in scope.


            •  Requires low levels of federal  administrative involvement
               and financial commitment.

            •  Well suited to  communities which confront problems  in
               obtaining basic information.

            •  Does not have "hands on" assistance capabilities; would
               probably be less effective than service center for
               communities with severe management deficiencies.

         3.  Fund Regional Information Centers


            The Centers serve as regional  contact points for financial  manage-
ment and planning issues related to POTW's.   They sponsor workshops  to  improve
State and local capabilities.  As States continue to assume greater  responsibi-
lities for program management, they will have a corresponding need to develop
higher levels of expertise in these areas.  The Regions will serve as the
second tier in the financial  management and  technical  assistance strategy,  helping
to ensure that delegation is  not hampered  by such constraints.


            •  Serves as an unbiased reference point against which
               consultants' recommendations  can be evaluated.

            •  Decreases reliance on the private sector which is
               especially prevalent in small  communities and is
               sometimes responsible for expensive, inappropriate

            •  Lowers local financial  management costs by supplying
               these services only as  needed.

            t  Possibly the most costly delivery option in the long-

         4.  Fund a Circuit Rider Program


            A number of grantees located in  a reasonably serviceable geographic
area may apply for federal funds to establish a circuit rider program.   The
circuit rider is expected tp  visit each town at least monthly and to work with
grantees to ensure that financial management considerations do not result in
project delays, excessive user charges, continued dependence on  outside funding
sources, or, ultimately, in permit violations.

            Circuit riders will  be retained  by the grantees and  will be
directly responsible to local officials.  The sole grant eligible function
of circuit riders is to provide assistance which relates exclusively to POTW
projects.  Grants under this  program will  be for a very substantial  amount
of the eligible costs for the first year and will  be gradually reduced  over
a three-year period.  If all  or some of the  participating communities wish
to continue the program after the third year, they will  be responsible  for
funding it and may then use the program to respond to non-POTW concerns.

            Circuit rider programs  could  also be  staffed  with  professional
engineers as community needs dictate.   The service  of both  financial managers
and engineers would be grant eligible  for towns  involved  in all  construction
grants steps, as well  as for those  with operating plants  who are either  not
in compliance, or who  wish to improve  their current financial  management or
operating techniques.


            •  Provides continuous  access to expertise usually available
               only in larger cities.

            •  Enhances local control  of  the program by reducing reliance
               on independent consultants and contractors.

            •  Promotes short-term  federal involvement.

            •  Programs similar to  this have been used in other States;
               an engineer will soon be hired as  a  circuit rider in
               Region  VII to help with the technical  and  financial
               problems of POTW's in a group of  small  communities.

            •  Program has great potential to generate important spin-off
               benefit: the permanent  establishment of circuit rider
               services to fill a wide variety of other local  financial
               management needs after  POTW needs  have been met.

The financial management assistance options are  summarized in  the matrix
(Figure IV.2) on the following page.


     While assistance programs can  operate through a number of different
institutions such as 208 agencies and  Regional or interstate authorities,
program management functions are the responsibility of either  EPA or the
delegated States.  Each management  approach has  its advantages as noted

Programs Managed by States

     EPA policy of delegating certain  program management functions  to the
States would be furthered by providing financial  management assistance through
new or existing State programs, such as those used in Maryland and  New
Hampshire.  New State programs which address one or more of the national areas
of concern could also be made eligible for funding.  The benefits of this
approach are as follows:

                     Figure IV.2



t— t






,f /

J\J f
^/ z
f&. f *•
f-^j / O
^v J *~*



1 1


< CO
M §
b« £
^ CO

B3 co
<; en






w ^

pi ^-i


l-l W

z u
O B!
CJ <







Z l-l
25 t-J
<: w


& W—v

b. cj^|







B- l-<
[ij ^





« s:
^ P-.


i] CJ
LJ l-l
*C C/3
j £
2 <

• H







< z
CJ <
S l-l
w co
H <







< z
M 5
co O
< o










< u
o B:
-i O
< CO
z u











5 Oi
3 H
g u

• H






3 ee.
03 O
M h-t
cj B:

SNOiicio AtiaAnsa

     •  States  have a  number  of  different  financial reporting, debt
        ceiling and other  requirements which  should be recognized early
        in the  process and can serve  as  the framework around which
        assistance programs are  built.

     t  Because States are closer  to  the grantees and are more aware of
        their individual needs,  they  could be in a better position to
        devise  alternative types of assistance.

     t  Delivering assistance through federal  support of State programs
        could also be  made contingent on State matching funds.  Although
        it would be desirable for  funds  to be matched on a one-to-one
        basis,  program flexibility and State  participation could be improved
        by allowing States to contribute as much as they desired, or to
        designate for  matching funds  only  those options which they would
        especially like to implement. Whichever form the State contribution
        assumes, it will  increase  the impact  of every federal dollar spent
        and enable more grantees to receive assistance.

Programs Managed by EPA

     Even though EPA continues to  delegate more responsibility to the States,
it is, in the end, responsible for the success of the program.  Questions
therefore arise as to  which functions the  States are better able to fulfill
and whether the assistance options contemplated are the proper objects of
delegation.  The advantage of an EPA-managed  program are summarized below:

     •  EPA already has the knowledge and  experience required to address
        complex problems and  implement new initiatives.  This capability
        has generally not  been developed on the State level because of
        limited resources  or  because  States are slow to react to demands
        for this type of assistance.

     •  EPA is in a better position to inform grantees of new and existing
        federal policies,  concerns, and  requirements, as well as to disseminate
        new technical  information.

     •  Federal support of State programs  will result in duplication of
        resources in each  State.  Due to the  high levels of expertise required
        to provide technical  assistance, this duplication will be very


     Unquestionably, the responsibility  for maintaining  POTWs  in compliance
with NPDES permit requirements  lies with local government.  The roles of

     The strategy should be sensitive to  the  federal  costs  involved.   In  spite
of the fact that no strategy element is very  expensive  when compared with
other Program costs, the costs of the entire  strategy should be  proportionate
to the benefits derived.

     Finally, in order to reinforce and refine the  strategy over the next few
years, more data needs to be gathered regarding grantee financial  capabilities
and financial management needs.  The type of  information of interest to the
construction grants program is outlined on page 26.

     The recommendations presented below  are  listed  according to their order of
importance in meeting these criteria.



     Fund the compliance diagnostic, thereby  encouraging grantees to use  it.

     This recommendation directly responds to the most  important area of  concern:
achieving and maintaining compliance. Besides serving  as a final  phase checkpoint
for altering or refining the financial management and planning activities that
preceded it, the diagnostic is also the most  comprehensive  of the strategy elements,
Not only do financial management problems fall within its scope, but all  others
related to planning, design, construction and operation of  the plant.  The
diagnostic also offers guidance which is  tailored to individual  local  needs and
POTW-specific problems.


     Require that pre- and post-implementation user  charge  reviews give
     particular attention to the adequacy of  the charges in terms of
     sustaining the plants' operating and maintenance expenses.

     The restructuring of emphasis in user charge reviews and the addition of
post-implementation reviews is designed to contribute not only to the  goal of
compliance, but also to the secondary objective of  POTW self-sufficiency. These
reviews will ensure that grantees are aware of the  full  cost of  their  projects
so that adequate revenues can be generated to meet  these expenses.


     Fund regional  service center and circuit rider  programs on  a pilot
     program basis.

Federal and State Government are confined  to  regulatory  activity and assis-
tance.  The options presented in the previous section  all  deal with some  form
of assistance -.- either through active assistance programs or  information  transfer.

     Of the first four options, only Option 1  —  the provision of  operator training
assistance to the States -- represents any significant commitment  of EPA  resources.
In light of the continuing demand for senior  operators,  it is  recommended  that
this option to upgrade federal  operator training  assistance be implemented as
soon as possible.  Effective State operator training programs  depend on the
development of high quality instructional  material  and skilled trainers.   These
resources can be most efficiently developed at the national  level.

     Option 2, which establishes a program to assist small  POTWs through  the
delegated States and through information transfer programs,  requires only modest
resources which should yield significant benefits in improved  compliance  rates
at minor POTWs.

     Options 3 and 4 are also recommended. They  require that  EPA,  in  its guidance
documents and other appropriate means, encourages the  application  of sound
management practices at POTWs.

     Option 5 discusses methods of providing  financial management  assistance.
The rationale for the financial management assistance  strategy is  based on
each strategic element's ability to respond to criteria  developed  throughout
this paper.  These criteria can be ranked  according to their potential  for creating
conditions which lead to compliance.  The  options, or  strategy elements,  can
then be ranked according to this potential for satisfying the  criteria.

     First of all, it is essential that any strategy element address at least
one of the three areas of concern.  Achieving and maintaining  compliance  is
clearly the most important because it, alone  of the three, represents  a major
effort toward improved national water quality.  Even though promoting  POTW
self-sufficiency and reducing the economic burden on users are important  objec-
tives, these other areas of concern are subordinate to the goal  of constructing
and operating treatment plants which meet  permit  discharge requirements.

     Yet the strategy as a whole should address these  other areas, because the
potential for achieving the primary goal of compliance is enhanced by  ensuring
that user charges are sufficient by themselves to cover  O&M expenses,  and are
developed as efficiently as possible in order to  reduce  costs.

     Next, the strategy should contain at least one element which  treats
grantee-specific problems.  The wide range of grantee  financial  management
capabilities makes this essential.

     The strategy should also be suited to both phases of a POTW's life cycle.
Again, this is necessary in order to assure compliance.   The least costly
efforts toward this end can be made in the planning, design and  construction
phase, while remedial efforts may be needed for some plants now  in operation.

     Both programs address all  three areas  of concern,  provide  a  much  needed
individual level  of assistance, and are suitable for both  POTW  phases.   By
funding both programs on a pilot basis, the effectiveness  and expense  of each
program can be evaluated before a relatively substantial,  nationwide commitment
is made.


     Fund a national resource center.

     While providing less intensive levels  of assistance than the service center
or circuit rider programs, the resource center meets all  three  areas of concern and
does so at substantially less cost.  It also is suited  to  all POTW phases and
serves to complement the other strategy elements by supplying information about


     Prepare and distribute a financial systems guidance document.

     Addressing all areas of concern and suited to both POTW phases, the
guidance document will  supply financial systems information  which is adaptable
to a wide variety of communities.  The cost and time involved in  producing  and
distributing this assistance are relatively small , yet  many  grantees may derive
considerable benefit from this guidance.


     Require that an early fiscal assessment be conducted  by grantees  during
     facility planning.

     Aimed primarily at reducing the economic burden on users by  examining
fiscal capability early in facility planning, the costs and  time  required to
conduct this assessment are minimal.  And,  by requiring local officials themselves
to evaluate their municipality's financial  condition, this strategy element
drives home the importance of financial considerations  in  POTW  projects.


     Each strategy element should be periodically evaluated  to  insure  that  any
necessary adjustments and refinements are made and that program objectives
continue to be met.

     The service center and cricuit rider programs should  be expanded,  if justified
by the demand for such services, the success of the program  in  meeting  grantee needs,
and the reasonableness of the projected costs.

     The recommended plan excludes  two options  discussed  earlier; concolidated
service area feasibility studies and  grant eligibility for  all  financial  planning
costs.  The latter is not included  because very few costs are  not now  eligible
under the Step 1  grants process and the emphasis placed on  making full use of
existing eligibilities will  soon be provided  by the issuance of a new  Program
Operations Memorandum (POM).  Consolidated service area feasibility  studies were
excluded because the costs involved are so minimal  as  not to discourage  local
jurisdictions from initiating these studies on  their own.


     As noted primarily, State and  federal approaches  to  program management
each have their own benefits.  Because any given strategy element might  be more
suitably managed by one level of authority rather than another, it  is  necessary
to evluate each element individually  to determine the  best  manager  of  that
particular program.

Programs Managed By States

     The list below outlined those  programs that will  produce  the greatest  benefits
if delegated to the States.

     1 .  Early Fiscal Assessment.  Because some States already have  the
authority to approve facility plans and because this assessment would  be part
of the facility planning process, it  is logical that the  States assume this
function along with approval of other Step 1  processes.  State management of
this process would also help produce  realistic  assessments  which take  into
account State financial reporting,  debt ceiling and other requirements.

     2.  User Charge Reviews.  Many States have already been delegated this
function.  They are familiar with the existing  review  procedures and consequently
would  have little difficulty in applying the  new reviews  which stress  the
adequacy of the proposed and actual charges.

     3.  Compliance Diagnostic.  Those States that have been delegated NPDES
permit enforcement would also manage  the diagnostic.  These federally  funded
evaluations provide an additional incentive which complements  the deterrent of
State  enforcement actions.

     4.  Circuit Rider Programs.  While the program described  in this  paper
envisions a contract between grantees and the circuit  rider, States could
assume a greater degree of control  by hiring  the circuit  rider themselves and
making his services available to groups of grantees.

Programs Managed By EPA

     The benefits of federally managed programs, described in the last section,
center on EPA's knowledge and experience derived from program management over
the past eight years and from a national and regional  management infrastructure.
The following programs can be implemented to best advantage if they are managed
at the federal level.

     1.  Financial Systems Guidance Document.  This publication is issued and
compiled by EPA Headquarters and will  contain the most reliable financial
management information available nationally.  Such a document is beyond the
scope of most State agencies.

     2.  National Resource Center.  Because of its national coverage,  the
resource center will provide even the  most geographically isolated grantees
throughout the country with a first line of direct, reliable financial
management information.

     3.  Regional Service Center.  The regional approach to providing
financial management assistance combines the best features of the federal
management role (expertise and regional  infrastructure) with individual
attention to grantee-specific problems.   The regional  approach also eliminates
the need to duplicate such programs in every State, thereby reducing costs.

     An action plan to implement this  strategy will be presented in the final
draft of this paper.


A.  Near-Term Recommendations

    1.  Fund Compliance Diagnostic Studies

    2.  Fund and Require Pre- and Post-Implementation User Charge Reviews

    3.  Fund Pilot Programs for Regional Service Centers and Circuit Riders

    4.  Fund a National Resource Center

    5.  Prepare and Distribute Financial Systems Guidance Document

    6.  Fund and Require Early Fiscal  Assessments

B.  Long-Term Recommendations

    1.  Periodically Evaluate Near-Term  Recommendations

    2.   Expand Pilot Programs  for  Regional  Service  Centers and Circuit
         Riders,  if justified

C.   Program Management Roles

    1 .   Programs  Managed by States

        o  Early  Fiscal  Assessments

        o  User Charge Reviews

        o  Compliance Diagnostics

        o  Circuit Rider Programs

    2.   Programs  Managed by EPA

        o  Financial Systems  Guidance Documents

        o  National Resource  Center

        o  Regional Service Center


     As more POTWs are constructed with the aid  of  the  grants  program,  it
is increasingly obvious that  EPA must formulate  a strategy to  address  those
POTWs which have  completed construction but are  not achieving  the  effluent
quality required  by their NPDES permits.  Although  the  quality of  available
data is not fully satisfactory, there can be no  question  that  remedial  action
is required at many POTWs on  final NPDES standards.

     A recent EPA-funded study (1) of POTW performance  found that  53%  of the
1,167 major municipal treatment plants (those with  actual average  flows greater
than 1  MGD) on secondary or more stringent treatment limits, were  in  significant
or serious violation of their NPDES  permit conditions during the spring quarter
of 1977.  When all effluent quality  violations were included,  the  noncompliance
rate rose to 77%.  This latter figure is somewhat misleading,  since  it includes
minor transient violations which have little water  quality significance.

     Noncompliance at existing POTWs is discussed  in greater detail  in an  issue
paper produced earlier.  This paper  will limit discussion of the subject to a
brief summary of the problem, followed by a listing of  options to  improve  the
compliance rate of existing POTWs  under consideration by  EPA.  Causes  of non-
compliance can be placed in three  general categories:

     •  Inf1uent--These include industrial wastes,  I/I, and
        failure to limit system hookup to plant  capacity.

     •  Facility—These include  design  and  equipment deficiencies,
        obsolescence and construction related  problems.

     •  O&M--These include all  problems related  to  the management,
        financing, operation,  and  maintenance  of POTWs.

     These categories are not  independent of each other.   Often, adjustments
in O&M procedures can counteract the negative  effectiveness of design or
influent problems.  A study (2)  sponsored by EPA's  Office  of  Research and
Development (ORD) found that 70% of the noncompliers analyzed could  be  brought
into compliance with operations-oriented corrections.

     Many plants exhibit multiple  problems  which prevent compliance.  EPA's
Municipal Environmental Research Laboratory has  funded two studies  (2,3) which
together comprise the National  Operational  Maintenance Cause  and Effect Survey.
One of the MERL-funded studies developed a  systematic approach to the correction
of problems causing POTWs to  violate effluent standards.  This procedure, called
the Composite Correction Program (CCP)  consists  of  a detailed diagnostic evalua-
tion of a POTW, in which all  factors contributing to violation of NPDES permit
conditions are identified.  Next,  a plan of action—the CCP--addressing each
of these problems is formulated.  Finally,  the CCP  is implemented to bring the
plant into compliance.  The CCP addresses administrative as well as  technical
problems, and requires the continuing involvement of a team of experts  over a
significant period of time to  insure that the  improvements called for in the
CCP are fully implemented and  achieve the intended  results.   This process generally
requires a minimum of several  months and longer, if extensive physical  modification
are required.  The CCP has been successfully demonstrated  at  several POTWs.  MERL
has issued a contract for the  development of a detailed protocol for the CCP.
This work will be completed in 1981.

     Based on experience gained through several  EPA funded studies,  along with
information and comments offered by EPA's regional  offices and several  State
environmental protection agencies, the  following options have been  developed
to address effluent quality noncompliance in existing POTWs.

Option 1

     Utilize diagnostic evaluations of  noncomplying POTWs  to  prepare Composite
Correction Programs (CCPs), which  are used  as  the basis of enforcement  action
by the States or EPA.

     A growing number of firms are developing  the capability  to perform diagnostic
evaluations of POTWs.  These firms have the ability to prepare composite correction
programs which address all of the  factors contributing to  effluent  quality non-
compliance, including adminstrative, financial and  managerial problems  as well
as the technical O&M problems  which are often  the result of more basic  problems
in the financing or management of  a POTW.

     Because of the limited resources  available for  enforcement  against  POTWs
which have completed construction but  fail  to meet NPDES  permit  requirements,
this option provides for the payment,  through a Step 1  grant,  of 75%  of  the  cost
of a diagnostic evaluation by a  firm qualified in the operation  and management
of POTWs.  This would substitute a corrective action for  the present  punative
enforcement measures, which are  both expensive and time consuming to  implement.
Funds for these "enforcement diagnostics"  would be provided  from 201  monies  in
accordance with a priority system based on severity  of violation. As with
any activity, the utility of the enforcement dianostic, which  would provide
a plan for achieving compliance, would be  directly dependent on  the qualifications
of those performing the work.  Firms providing this  service  would be  required
to demonstrate competence in the management of POTWs, including  process  control,
preventive maintenance management, personnel  management,  budget  analysis and
other aspects of POTW management.

     An alternative procedure would have the State or EPA issue  on administra-
tive order requiring a POTW, in  violation  of NPDES permit effluent quality require-
ments, to engage a qualified firm to perform an enforcement  diagnostic without
grant assistance.  As in the original  option, the CCP would  be utilized  as the
basis of a remedial program.  A  compliance schedule  for implementation of the
CCP would be set, and the POTW would be required to  adhere to that schedule.

     Another variation of option 1 would have those  States which choose  to do
so develop the capability to conduct their own enforcement diagnostics or
contract directly wit firms which would perform the  diagnostics  evaluation.

     Selecting the best method of funding  diagnostic evaluations is  particularly
difficult.  Those opposed to partial federal  funding of diagnostics contend
that local government is responsible for compliance  and must pay for  all
corrective action required to achieve  compliance. Those  favoring grant  eligibility
state that the cost of a diagnostic evaluation as compared to the federal invest-
ment in the POTW is a very small price to  pay for a  CCP which can be  used as a
plan for remedial action to achieve compliance.  Furthermore, federal funding
of the diagnostic should minimize the  time required  to obtain the CCP, since
enforcement actions are frequently subject to delays.

Option 2

Establish a "fast track" grant procedure to fund limited  remedial capital
construction (including eligible collection system improvements) necessary
to correct influent and facility problems  preventing POTW compliance.

     Remedial grants would be available only to POTWs that are unable to
achieve compliance after constructing  new facilities or upgrading existing
facilities.  Remedial grants would be  used solely for correcting mistakes
and oversights.  Second grants would not be available for correcting  noncompliance
caused by deficient operations,  new industrial flows, or  capacity expansions.

     These grants would not change  the  scope  of  the original POTW construction
grant, but would be limited to those  measures necessary  to  achieve compliance
with NPDES permit requirements.   The  grant would encompass  both design and
construction costs, and would be exempted  from many of the  usual restrictions
and requirements of the existing construction grants  program,  since  it is
intended only to meet the objectives  of the originally approved project.
Priorities would be determined by severity of violation  and water quality impact.
Grant eligibility would be determined by the  same criteria  now employed  by the
construction grants program.

     These grants would provide a rapid means of attacking  facility  and  influent
problems identified in the "enforcement diagnostic" discussed  in option  1 of
this section.  The use of the fast  track grant,  to correct  facility  deficiencies
at a POTW which was constructed with  grant funds, may be regarded as a "bail
out" of incompetent designers, suppliers of substandard  equipment and local
goverment agencies which have not initiated timely corrective  action.
However, under present federal and  State laws and regulations  governing
the complex process of planning, designing, constructing and operating a
POTW with the assistance of the construction  grants program, it is virtually
impossible to identify a party who  is accountable to  the extent of financial
responsibility for corrective action.  In  any event,  the fast  track
grant to correct POTW deficiencies  in no way  prevents legal action against
a negligent designer, contractor or vendor.  Where EPA or the  State  feels
that negligence on the part of a consultant or contractor is the cause
of noncompliance, the grant can be  made on the condition that  the grantee
files suit against the negligent party, returning damages recovered  to the
grants fund.

Option 3

Develop and implement more effective  enforcement mechanisms to improve
compliance at POTWs.

     Present EPA enforcement activities are primarily directed at the
construction of new grant-assisted  POTWs.   However, without a  meaningful
enforcement program focusing on the performance  of existing facilities,
many POTWs will not devote the resources necessary to assure compliance.
Some of the options discussed above are, in effect, enforcement activities.
Under the provisions of the 1977 amendments to the Clean Water Act,  EPA
is currently in the process of delegating  much of the responsibility for
the construction grants program and the NPDES permit  program to the  States.
During this period of transition, it  is important that close coordination
be maintained between the grants program and  the enforcement program
at the State and federal levels.

     At present,  many POTWs  in  serious  violation  of  NPDES effluent
quality requirements are not under  any  meaningful  enforcement action which
is likely to result in some  effective stimulus  to achieve compliance.   In
most cases, it is more costly to operate  a  POTW in compliance than to
violate effluent  standards.   Since  resources  at the  local level are
generally scarce, expenditures  necessary  to properly operate and maintain
a treatment system are often deferred,  or funds are  diverted to other uses.
EPA must increase its efforts to implement  more effective enforcement
methods in cooperation with  the States.  Once POTWs  are  convinced they  are
better off if they maintain  effluent quality  in compliance  with NPDES
requirements, they will redirect resources  to this purpose.


     EPA and States administering the NPDES program  are  responsible
for enforcing national pollution control  requirements.   Currently,
the Clean Water Act mandates all municipalities discharging into the
nation's waterways must, at  a minimum,  meet secondary treatment discharge
limitations as defined by EPA by 1983.  The Clean Water  Act authorizes
waivers from secondary treatment requirements only for approved marine
discharges.  All  other municipalities must  construct necessary treatment
facilities, regardless of whether federal funds are  available or not.

     The Clean Water Act's secondary treatment requirement  is mandatory.
Enforcement discretion is not authorized, nor are waivers available to
municipalities that are unable  to secure  funds through the  construction
grants program.  The only funding-based waiver in the legislation
applies to industries committed to  using  POTWs which have not yet received
funding.  Industries, however,  are  not  entitled to federal  construction
grant funds.

     EPA's current enforcement  program  for  municipal dischargers  is
construction oriented.  Most agency resources are devoted to negotiations
with municipalities.  Construction  scheduling, grant commitments, and
eventual satisfaction of secondary  treatment  requirements are  stressed.
These activities  produce enforceable schedules which may not be realistic
but will technically satisfy the Clean  Water  Act's 1983  completion  deadline.

     Among those municipalities which are not entitled to federal construction
grant funds, few have decided to locally  finance necessary  treatment  system
improvements.  Municipalities have  not  felt threatened by agency  enforcement
proceedings or compelled to meet the statutory deadline. Where  enforcement
has been initiated, the courts   have been  reluctant to impose rigid  penalaties,
especially in cases where the treatment system was in need  of major capital
improvements which were considered  eligible for federal  grant funding.

     Municipalities that have already completed  construction,  or  need  no
construction to satisfy enforceable requirements of the  Clean  Water Act, also
feel little risk for violating NPDES effluent  quality  standards.  These
municipalities can save substantial  operating  costs (energy, chemicals,
and operations salaries) by minimizing POTW performance.   If an enforcement
action is initiated, most municipalities  can continue  to  operate  their
POTW in a noncompliance mode until  a court approved settlement is reached.
In most cases, fines that are imposed are small  compared  to the savings
in operational costs.

     Although EPA and State pollution control  agencies are beginning to
direct some enforcement activity toward continuous  compliance, program
managers are faced with the task of developing remedies  which  are acceptable
to the courts while also acting as  a deterrent to non-target POTWs.

     The courts are reluctant to impose significant fines on municipalities,
and significant, punitive penalities have been awarded only in the
most egregious cases where intent to violate the law could be  clearly
established.  Moreover, even before fines for  egregious  violations
can be secured, significant violations must be detected  through the
self-reporting compliance tracking  system, causal factors established,
and responsibility assigned.

     The major element missing from the national continuous compliance
program is risk.  Given the existing focus of  enforcement -- construction
and initial compliance — municipalities  recognize  continuous  compliance
is often ignored by federal and State officials. Continuous compliance
monitoring is often a low priority  within the  States.  Priority for
continuous monitoring could be established at  the national level, and
State specific objectives negotiated through State  management  assistance
grants awarded to delegated States.  Such an objective oriented approach
could be tied to grant awards under Section 205(g)  and would be
compatible with the environmental manager mode under review in the 1990
management task.

     Compliance monitoring and quality assurance also  could be developed
at the State or jurisdictional level through Section 208  of the Clean
Water Act.  Although generally regarded as a planning  provision,  Section
208 could be modified to provide funding  to State or areawide  "utility
commissions."  These commissions, particularly if established  with Statewide
authority, could monitor compliance, administer  operator  certification
and continuing training programs, review  and approve user charge  rate
increases, oversee expansion and preventive maintenance  scheduling and
review and approve sewer use ordinances,  industrial use  agreements and
sludge disposal programs.  The utility commission could  regulate  POTW
operations along the same lines as  electric utilities, which are
also providing basic public services.

     Regardless  of whether  "utility commissions"  to regulate POTWs are
established or not, use of  existing enforcement tools could be  improved
to encourage compliance in  specific instances  while serving as  a
deterrent nationally.

     An initial  step in deterring  noncompliance would be  to remove
uncertainty concerning enforcement risk.   Currently, enforcement under
the Water Act is not clearly mandatory.   Mandatory enforcement  responses
for noncompliance would encourage  POTW compliance.  This  same "mandatory"
approach could be applied to monetary or  other penalities, such as connection
bases or appointment of special  POTW  managers  that are  responsible only to
the courts but paid by local agencies.

     Continuous  compliance  tools,  such as connections bans or fines, are
punitive.  They are fair, however, if universally applied.  They would
not be effective in all cases.   For example, a connection ban would not
encourage compliance at a POTW  serving a  no-growth area.  It would be
effective where residential or  industrial growth  is expected and sewage
treatment alone is the limiting  influence.

     Other tools also are available for assuring  continuous and initial
compliance, but their usefulness is limited to new, EPA funded  grantees.
For example, in new construction EPA  could avoid  increasing grants to
municipalities that have delayed construction, fallen off schedule, and
incurred substantial inflationary costs.   This policy would encourage
grantees to tightly manage  construction activity, but it  would  be difficult
in some instances to assign responsibility for delay.   It would be unfair
to punish a grantee for delays  caused by  State or federal reviewers.

     Once federally funded  systems are constructed, EPA could reward
compliance by subsidizing local  debt  payments. Such a  program  would
initially reward sound operators,  but over time would become a  small
compliance incentive as real operations costs  rise but  debt payments, due
to inflated tax receipts, become less of  a burden locally.


     Aggressive enforcement programs  at the State and federal level are
the key to the reduction of the high  incidence of effluent  quality
noncompliance in POTWs.  Greater emphasis on the  performance of facilities
which have completed construction and are not  meeting NPDES permit limits
is a central feature of the compliance  strategy.  However,  to be effective,
the strategy must incorporate reasonable  programs which demonstrate a cooperative
approach on the part of regulatory agencies.

     The following measures are recommended to reduce  effluent quality
violations at POTWs which have completed construction:

     •    Utilize diagnostic evaluations as a basis  of enforcement action.
          Diagnostics should be grant eligible.

     •    Require violating POTWs to implement the recommendations of the
          diagnostic on a firm schedule.

     •    Establish a fast track procedure to fund remedial  capital
          construction which is strictly limited  to  the correction of
          deficiencies in the original project and which do  not represent
          changes in the basic scope of the original project.

     •    Require and assist recipients of these  remedial  construction
          grants to take appropriate legal action to recover funds where
          EPA or the States identify negligence on the part  of construction
          contractors, engineers or equipment suppliers.
          •U.S. QOVQMHEHT PBIKTIHO OFFICE: 1981-O-72O-016/5981