oEPA
     United States
     Environmental Protection
     Agency
          Using  DWSRF  Funds to Comply  with
          the  New Arsenic  Rule
The Drinking Water State Revolving Fund (DWSRF) program was established by the 1996 Safe Drinking Water Act (SDWA)
Amendments and authorizes grants to states to capitalize revolving loan funds.  The states provide low-interest loans to eligible
systems for infrastructure improvements needed to ensure compliance with the SDWA and protect public health.  The
DWSRF program can play a significant role in helping systems, especially small systems, to meet the challenges of complying
with new drinking water standards.

The Environmental Protection Agency (EPA) published revisions to the Arsenic Rule in 2001 which further reduce exposure
to arsenic in  drinking water by adopting a new arsenic maximum contaminant level (MCL) of 10 ppb. The new MCL will
impose a financial burden on some water systems. The DWSRF can provide assistance to systems to help ease this burden,
increase compliance, and protect public health.

WHY DID EPA CREATE THIS  RULE?
EPA established the previous MCL of 50 ppb for arsenic in 1975 based on a Public Health Service standard originally
established in 1942.  The 1996 SDWA Amendments required EPA to finalize a new arsenic rule by January 2001.  A 1999
report by the National Academy of Sciences concluded that the 50 ppb standard did not adequately protect human health.
EPA set the new MCL of 10 ppb to protect the public against the effects  of long-term, chronic exposure to  arsenic in drinking
water. The new MCL will decrease non-fatal and fatal bladder and lung cancers and will reduce the frequency of other health
effects such as diabetes, developmental problems, gastrointestinal illness, and heart disease.

TO WHOM DOES THIS RULE APPLY?
The new 10  ppb arsenic MCL becomes enforceable
on January 23, 2006 for community water systems
(CWSs) and nontransient noncommunity water
systems (NTNCWSs).  Of all affected systems, 97%
are small systems that serve fewer than  10,000
people. Higher levels of arsenic tend to be found in
ground water rather than surface water sources (i.e.,
lakes and rivers).  Compared to the rest of the
United States, the occurrence of arsenic in ground
water tends to be higher in western states and states in the Great Lakes region.
                                      Source Type
                                     Surface Water  i/
                                     Ground Water  /
                                      GWUDI     /
System Type
  CWSs     /
NTNCWSs  /
 TNCWSs
 Population Type
   < 10,000    /
10,001 - 100,000 /
    100,001   /
CRITICAL RULE  DEADLINES & REQUIREMENTS
                EPA meets and works with states to explain new rules and requirements and to initiate adoption and
                implementation activities.
 July 1, 2002       Systems that detect arsenic concentrations between 10 ppb and 50 ppb must include health effects language in
                all Consumer Confidence Reports beginning on this date through July 1,2006. Systems that detect arsenic
                concentrations between 5 ppb and 10 ppb must include an educational statement in all Consumer Confidence
                Reports beginning on this date.
                State primacy revision applications due, if no extension is requested.
 January 22,2004   All new systems/sources must collect initial monitoring samples for all inorganic contaminants (lOCs), synthetic
                organic contaminants (SOCs), and volatile organic contaminants (VOCs) within a period and frequency determined
                by the state.
                State primacy revision applications due from states that received 2-year extensions.
 January 23,2006   The new arsenic MCL of 10 ppb becomes enforceable. All systems must begin monitoring or submit data that
                meets grandfathering requirements (if allowed by the state).
 December 31, 2006
Surface water systems must complete initial monitoring or have a state approved waiver.
 December 31, 2007  Ground water systems must complete initial monitoring or have a state approved waiver.
 * Deadlines for specific systems may be affected by variances or exemptions granted by the state.

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HOW WILL THIS  RULE IMPACT SYSTEMS?
The costs systems will face to meet the new arsenic
standards are significant. Total capital costs for invest-
ments in treatment technology and infrastructure are
estimated to be almost $900 million  (see Figure 1).  In
addition, annual operation and maintenance (O & M)
costs for systems and monitoring and administrative
costs for states implementing the rule will top $120
million. Most of the capital costs will fall on the shoul-
ders of a relatively small number of ground water systems
(see Figure 2).
                                                        Figure I: TOTAL ARSENIC PRICE TAG
                                                                (in millions of 1999 $)
                                                       Capital Costs
                                                               CWSs
                                                              NTNCs
                                        CWSs Capital Costs by
                                             System Size
Capital C
       ,
                                                       CAPITAL COST GRAND TOTAL   $878
                                                       Annual O & M Costs              $ 118
                                                       Annual Monitoring & Admin Costs  $2.7
       < 100
      101-500
    SO I-1.000
   1,001-3,300
  3,301-10,000
10,001-100,000
    > 100,000
 $27
 $57
 $34
$110
$118
$316
$180
                                                                           Figure 2: Percentage of All Affected
                                                                           Systems Exceeding New Arsenic MCL
Of the 74,000 systems subject to this new MCL, EPA
estimates that 3,000 CWSs and 1,100 NTNCWSs will need to install treatment for compliance.  To be in compliance by
January 2006,  capital investments will need to be made over the next four
years. A majority of the systems that will have to modify treatment serve less
than 500 people (see Figure 3).

Figure 4 shows how much it will cost systems (on average) to meet the new
MCL. In order to comply with the rule, most systems will have to add new
technologies, upgrade existing technologies, consolidate their systems into
larger systems, or develop new water sources.

The average increase in costs per household to meet the new arsenic standard
depends on the size of the water system and how many people are served by
that system. The estimated compliance cost per system is considerably lower
for small systems than for large systems because less water must be treated.
However, the burden on small system households is significantly higher
because the costs must be paid from a much smaller revenue base.  EPA
estimates that the average annual household water bill for systems out of
compliance may increase by $32 per year, but that the cost will be substantially higher (ranging from $58-$327) for systems
serving less than 3,300 people.
                                                                                 Ground Water   Surface Water
  Figure 3: Number of CWSs That Will Need to Install
  Treatment to Comply with New Arsenic MCL
          100.000
                                                          Figure 4: Average Annual Cost per CWS Exceeding New
                                                          Arsenic MCL (in thousands of 1999 $)
                                                            $0
                                                                                                       $1,341
                                                                 36
                                                                       $12    $22    $53
                                                                                          $112
                                                                 
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WHAT TYPE OF TREATMENT WILL SYSTEMS  HAVE TO PUT IN PLACE?
Arsenic is present in two forms: arsenate (As5+) and arsenite (As3+).  Surface water typically contains much more arsenate, while
ground water typically contains higher levels of arsenite (which is harder to remove). Arsenite is easily oxidized to arsenate
using conventional oxidation methods (e.g., chlorination).  As a result, up to 50% of ground water systems that install treat-
ment for arsenic may need to install pre-oxidation.  In order to determine if pre-oxidation will be needed, systems should first
perform a test to determine what form of arsenic they have.
The characteristics of a system's
source water (especially the pH
level and presence of other con-
taminants), the skill level of its
operators, and other compliance
considerations will greatly impact
which treatment train is most
appropriate and the ultimate cost
of compliance.  Systems with
treatment trains in place that can
remove arsenic will face lower
compliance costs than those
without sufficient treatment.  For
instance, most surface water
systems already have treatment in
place  that is capable of removing
arsenic, though very few utilize
reverse osmosis, ion exchange, or
activated alumina.  Among ground
   Exhibit 1: Arsenic Treatment Technologies
Type Removal Other Contaminants
Efficiency Removed
1 Modified Lime Softening
2 Modified Coagulation/Filtration
3 Anion Exchange
4 Oxidation Filtration (Greensand)
5 Activated Alumina
6 POU Reverse Osmosis
7 POU Activated Alumina
8 Coagulation Assisted Microfiltration
BAT, SSCT
BAT, SSCT
BAT, SSCT
BAT, SSCT
BAT, SSCT
SSCT
SSCT
SSCT
90%
95%
95%
50%
95%
90%
90%
90%
Metals, lOCs
Physically large
contaminants
Anions
Metals
Anions
lOCs and large organics
Anions
Physically large
contaminants
water systems, larger systems are more likely to have arsenic treatment technology in place.
EPA has identified a number of Best Available Technologies (BATs) and Small System Compliance Technologies (SSCTs) for
arsenic (see Exhibit 1). For all BATs, most of which are developed with large systems in mind, removal is much more efficient
for arsenate. When considering SSCTs, EPA looks at the affordability of the technology (since per household costs for central
treatment tend to be higher for smaller system customers) and technical complexity (since many small systems do not have
access to well-trained water system operators). The SSCTs represent technologies that are affordable and achieve compliance
with the arsenic MCL across the small system size categories (25-500; 501-3,300; and 3,301-10,000 people).  Reverse osmosis
and activated alumina point-of-use (POU) devices are viable options for small systems, especially those serving fewer than 200
persons.  EPA assumes that the most common treatment technology for small systems will utilize an adsorptive media.
  Figure 5: Representative Costs for Ground Water Systems
  Serving Populations of 101-500
                I      23456
                    Treatment Technologies

  Note: All costs are based on average flows (design flow of 123,670 gpd
  and average flow of 33,200 gpd) for the median population. Capital and
  waste costs are total (not annualized). O & M costs are annual. Costs do
  not reflect the need for pre-oxidation  or corrosion control.
                              Systems may have other treatment alternatives to the
                              treatment technologies listed in Exhibit 1, such as granu-
                              lar ferric hydroxide (GFH). GFH is a technology that
                              may combine very long run length without the need to
                              adjust pH. Ongoing studies should provide more infor-
                              mation about whether GFH will be affordable and viable.

                              To ensure cost-effective compliance with the arsenic
                              MCL, systems will need to evaluate their treatment
                              technology options as a first step.  All other factors being
                              equal, systems will most likely choose the cheapest
                              treatment option that ensures compliance with the new
                              MCL.  The costs in Figure 5 are best-case estimates  for an
                              average ground water system with an arsenic influent level
                              of 50 ppb and a target treatment concentration of 8 ppb.
                              Several of these central treatment technologies have
                              associated waste disposal costs, which are also depicted in
                              the graph.

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HOW CAN  THE DWSRF ASSIST SYSTEMS?
States use DWSRF capitalization grant monies to provide low-interest
loans to publicly- and privately-owned public water systems for infra-
structure improvements needed to continue to ensure safe drinking
water.  States may offer principal forgiveness, reduced interest rates, or
extended loan terms to systems identified by the state as serving disad-
vantaged communities. States also have the ability to reserve a portion of
their grants (i.e., set-asides) to finance activities that encourage enhanced
water system management and help to prevent contamination problems
through source water protection measures.  Based on the fiscal year 2002
appropriation of $850 million, capitalization grants ranged from $8.0
million to $82.4 million per state. Where funding is not adequate for all
systems that require treatment, states may choose to offer extended
compliance schedules through exemptions, where appropriate, to some
systems.

Most capital projects  including adding new technologies and upgrad-
ing existing technologies  needed to comply with the new  arsenic
standards are eligible for funding under the DWSRF (see Exhibit 2).
Consolidation and restructuring of systems can be a cost-effective option
for small systems  that are affected by the arsenic rule.  The DWSRF can
fund consolidation, including situations where a supply has become
contaminated or a system is unable to maintain compliance for technical,
financial, or managerial reasons.  POU devices will be an attractive
option to small systems because of cost.  The DWSRF can fund these
devices as long as the units are owned and maintained by the water
system.

States can use set-aside funds from the DWSRF to assist systems directly
as well as to enhance their own program management activities (see
Exhibit 2). A state may use set-asides to make administrative improve-
ments  to the entire drinking water program, which faces increased costs
in implementing  the new arsenic rule. States can provide training to
                                                 small systems on
                                                                     Exhibit 2: Projects/Activities Eligible for DWSRF
                                                                     Funding To Comply With Arsenic Rule
                                                                       Type of
                                                                       Project/Activity
                                                                                               Eligible Under   Eligible Under
                                                                                           Infrastructure Fund   Set-Asides
                                                                       Treatment
                                                                            Precipitative Processes    Yes
                                                                                                             No
                                                                             Adsorption Processes    Yes
                                                                                                             No
                                                                           Ion Exchange Processes    Yes
                                                                                                             No
                                                                               Membrane Filtration
                                                                                                  Yes
                                                                                                             No
                                                                                    POU Devices    Yes*
                                                                                                             No
                                                                         Planning & Design Activities    Yes
                                                                                                            Yes*
                                                                       System Consolidation
                                                                                                  Yes
                                                                                                             No
                                                                       System Restructuring
                                                                                                  Yes
                                                                                                            Yes
                                                                       System Administrative Improvements
                                                                                       Hire Staff
                                                                                                   No
                                                                                                             No
                                                                                    Staff Training     No
                                                                                                            Yes
                                                                                  Public Outreach
                                                                                                   No
                                                                                                            Yes
                                                                                      Monitoring     No
                                                                                                             No
                                                                             Rate Increase Process
                                                                                                   No
                                                                                                            Yes
                                                                       State Administrative Improvements
                                                                                       Hire Staff
                                                                                                   No
                                                                                                            Yes
                                                                                    Staff Training     No
                                                                                                            Yes
                                                                                  Public Outreach
                                                                                                   No
                                                                                                            Yes
                                                                             Compliance Oversight     No
                                                                                                            Yes
                                                                                     Enforcement
                                                                                                   No
                                                                                                            Yes
                                                                                     Pilot Studies
                                                                                                   No
                                                                                                            Yes
        Camp Verde, Arizona
In 1998, a $1.3 million low-interest loan was given
to the Camp Verde water system to address a long-
standing problem of high arsenic levels in the
drinking water source. The system had been
working to get financing for many years, but could
not afford improvements until the DWSRF
program was implemented in the state. The loan
provided the funding to install a pipeline from a
new source to provide safe drinking water to 2,000
                                                                                  *Must be owned and maintained by system.
                                                                                                 "For small systems only.
                                                 meeting the require-
                                                 ments of the arsenic
                                                 rule as well as technical assistance in identifying appropriate technologies.
                                                 In addition, states can provide assistance to small systems to cover the
                                                 costs of project planning and design for infrastructure improvements.

                                                 Since the DWSRF program is managed by states, project and set-aside
                                                 funding varies according to the priorities, policies, and laws within each
                                                 state. Given that each state administers its own program differently,  the
                                                 first step in seeking assistance is to contact the state DWSRF representa-
                                                 tive which can be found on the EPA DWSRF website.
                                                       General Information
 FOR  MORE  INFORMATION...
     DWSRF and Arsenic Rule
DWSRF Website:
http://www.epa.gov/safewater/dwsrf.html
 Arsenic Implementation Website:                   Water Website:
 http://www.epa.gov/safewater/ars/implement.html     http://www.epa.gov/
                                                  SDWA Hotline
                                                  1-800-426-4791
                                                                                    Office of Ground Water and
                                                                                    Drinking Water (4606M)

                                                                                    EPA816-F-02-004
                                                                                    March 2002
Printed on Recycled Paper

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