&EPA
    United States
    Environmental Protection
    Agency
                   Using DWSRF Funds to Comply with the Stage  I

                   Disinfectants and Disinfection  Byproducts  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 the Stage 1 Disinfectants and
    Disinfection Byproducts Rule (Stage 1 DBPR) in 1998. The Stage 1 DBPR increases public
    health protection from disinfection byproducts (DBPs) and excess disinfectants by establish-
    ing new standards (see Exhibit 1) and expanding the regulations to include most public water
    systems.  In addition, the Stage 1 DBPR sets a required removal percentage of total organic
    carbon (TOC) for surface water and ground water under the direct influence of surface water
    (Subpart H) systems that use conventional filtration treatment or lime softening. The new
    standards will impose significant financial burdens on some water systems. The DWSRF can
    provide assistance to systems to help ease this burden, increase compliance, and protect public
    health.
                                                                                Exhibit 1: New or Revised
                                                                                Standards (mg/L)
TTHMs
Five Haloacetic Acids
(HAAS)
Chlorite
Bromate
Chloramines
Chlorine
Chlorine Dioxide
0.080
0.060
1.0
0.010
4.0
4.0
0.8
    WHY DID EPA CREATE THIS RULE?
    In 1979, EPA began regulating DBPs in drinking water by establishing an interim maximum contaminant level (MCL) for
    total trihalomethanes (TTHMs) that  only applied to disinfecting community water systems (CWSs) serving at least 10,000
    people.  Although disinfectants are critical for inactivating microorganisms, they are harmful when consumed in excessive
    quantities and react with naturally occurring matter in source water to form harmful DBPs. DBPs have been shown to cause
    bladder cancer and adverse developmental and reproductive effects in laboratory animals. The 1996 SDWA Amendments
    required EPA to develop rules that balance the risks from microbial pathogens and DBPs. The Stage 1 DBPR expands health
    protection for 140 million Americans that drink disinfected water. The Long Term 1 and Interim Enhanced Surface Water
    Treatment Rules, being implemented  concurrently, will ensure that reducing the risks from DBPs will not increase the risks
    from microbial pathogens.

    TO WHOM DOES THIS RULE APPLY?
    The Stage  1 DBPR applies to all CWSs and non-
    transient non-community water systems
    (NTNCWSs) that add a chemical disinfectant,
    regardless of system size or source water type. In
    addition, transient non-community water systems
    (TNCWSs) that use chlorine dioxide  must comply
    with chlorine dioxide standards.
                                                  Source Type
                                                 Surface Water  v
                                                 Ground Water  
                                                  GWUDI    /
System Type
  CWSs    /
NTNCWSs  /
 TNCWSs   /
 Population Type
   < 10,000    /
10,000- 100,000 /
   > 100,000   /
    CRITICAL RULE  DEADLINES & REQUIREMENTS
FOR SYSTEMS
February 16, 1999

January 1,2002

January 1 , 2004
January 1,2004
June 30, 2005

Methods specified for analyzing DBPs, disinfection residuals, and DBP precursors were approved for use.
States submitted Stage 1 DBPR primacy revision applications to EPA (triggered interim primacy).
Subpart H systems serving > 10,000 people must comply with the Stage 1 DBPR requirements.
Primacy extension deadline-all states with an extension must submit primacy revision applications to EPA.
Compliance deadline for systems which received an extension from the state to install Granular Activated Carbon
(GAG) or membranes.
Subpart H systems serving < 10,000 people and all ground water systems must comply with the Stage 1 DBPR
requirements.
Systems that made a clear and irrevocable financial commitment before the applicable complaince date to install
technologies that limit TTHM to 0.040 mg/L and HAAS to 0.030 mg/L must have these technologies operating.
FOR STATES

December 16, 2000

December 16, 2002




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HOW WILL THIS RULE IMPACT SYSTEMS?
The costs systems will face to meet the Stage 1 DBPR standards
are significant.  EPA estimates that the total capital costs for
investments in treatment technology and infrastructure will be
over $2.3 billion (see Figure 1). In addition, annual operation &
maintenance (O & M) and monitoring costs for systems will
exceed $450 million. Most surface water systems will face
increased costs to comply with the Stage 1 DBPR standards (see
Figure 2).
                                                                 Figure I: TOTAL STAGE I DBPR
                                                                 PRICE TAG (in millions of 1998 $)
                                                                 Capital Costs    $2,323

                                                                 Annual O & M Costs     $362.5

                                                                 Annual Monitoring Costs   $90.6
                                                                    Capital Costs by System Size
                                                                              Surface
                                                                              Water
      Ground
      Water
                                                                         < 100
                                                                        101 -500
                                                                      501-1,000
                                                                     1,001-3,300
                                                                    3,301-10,000
                                                                   10,001-100,000
                                                                      > 100,000
  $6
 $16
 $25
 $50
$146
$286
$269
 $69
$181
$169
$327
$252
$382
$146
 Figure 2: Percentage of All Affected Systems
 Requiring Additional Treatment
                                              Of the 76,000 systems that disinfect, EPA estimates that 5,000 surface water
                                              and 8,500 ground water systems will require additional treatment capability
                                              to comply with the Stage 1  DBPR (see Figure 3). To  be in compliance with
                                              the Stage 1 DBPR, systems will need to make capital  investments immedi-
                                              ately.  A majority of the systems that are facing a capital investment serve less
                                              than 500 people.

                                              Figure 4 shows, on average, how much it will cost systems annually to
                                              comply with the Stage 1 DBPR. The estimated cost of compliance per
                                              smaller system is considerably lower than  the cost for larger systems because
                                              less water must be treated, which allows systems to  utilize cheaper treatment
                                              options.  In general, the costs faced by surface water systems are lower
because most surface water systems will only need to upgrade treatment technology (coagulation or softening) already in place.
However, the burden on small system households is significantly higher because  the costs must be paid from a much smaller
revenue base.
         Surface Water Systems
Ground Water Systems
Figure 4 does not show the steep costs that the largest systems will experience. Ground water systems that will need to install
new treatment and serve between 10,000 and 100,000 people face per system costs of over $330,000 ($110,000 for surface
water systems of similar size). The 12 ground water systems that serve more than 100,000 people that will need to install new
treatment will each face (on average) over $2.6 million in annual compliance costs ($1.1 million for the 141 surface water
systems of similar size).

An estimated 116 million households are served by systems affected by the Stage 1 DBPR. EPA estimates that 95% of these
households, which are primarily served by large systems, will see their monthly water bills increase by less than $1, 4% are
expected to see an increase of $1 to $10, and 1% are expected to see an increase of $10 to $40.  Most of the 1 million house-
holds facing the largest increase are served by small ground water systems that face DBP regulations for the first time and will
need to install expensive treatment processes.
   Figure 3: Number of Systems That Will Need to Install New
   Treatment to Comply with the Stage 1 DBPR
                                      Surface Water
                                      Ground Water
                                                              Figure 4: Average Annual Cost per System That Will
                                                              Need to Install New Treatment to Comply with the Stage
                                                              1 DBPR (in thousands of 1998 $)
                                                              $150
                                      3,300-
                                      10,000
                                             10,000-
                                             100,000
                                                   > 100,000
                                                              $125

                                                              $100

                                                               $75

                                                               $50

                                                               $25

                                                                $0
                                                Surface Water
                                                Ground Water
                                                                       25-100
                                                                                100-500
                                                                                         500-1,000  1,000-3,300  3,300-10,000
                        Population Served
                                                                                 Population Served
                                                             Note: Costs based on total costs amortized over 20 years at a 3% discount rate.

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WHAT TYPE  OF  TREATMENT WILL SYSTEMS HAVE TO PUT IN  PLACE?
The Stage 1 DBPR introduces MCLs, maximum residual disinfectant levels (MRDLs), and a
treatment technique requirement. The current DBF MCL for TTHMs has been tightened
and expanded to apply to all disinfecting CWSs and NTNCWSs. An additional DBF MCL
for HAA5 has been created that applies to the same systems.  Two new DBF MCLs have
been created for chlorite and bromate that only affect the limited number of systems that
disinfect with chlorine dioxide and ozone, respectively.  Systems can control DBF levels
using a variety of methods, including decreasing the contact time and/or the concentration
of the disinfectant, changing disinfectants, altering water pH, or installing additional treat-
ment capability (see Exhibit 2).  Treatment options, like enhanced coagulation, membranes,
and GAG filters, remove the naturally occurring precursors that are necessary for DBF
formation and/or capture the DBFs themselves.
                                     Exhibit 2: Treatment Options for
                                     Stage 1 DBPR Compliance*
                                     1 Enhanced Coagulation
                                     2 Modified Chlorine/Chloramine
                                     Disinfection Process
                                     3 Ozone Treatment
                                     4 Membrane Filtration
                                     5 Other (e.g., Chlorine Dioxide,
                                     Granular Activated Carbon, and
                                     Consolidation).
                                            'Referenced in Figures 5 and 6
 Figure 5: Percent of Systems Using Various Treatment
 Options for Stage 1 DBPR Compliance
  100%
  80%
  60%
  40%
  20%
   0%
        Small Surface Large Surface Small Ground  Large Ground
           Water       Water       Water       Water
                          System Type
         The term MRDL, which is not in the SDWA, was created to
         distinguish disinfectants (because of their beneficial use)
         from contaminants. The Stage 1 DBPR created MRDLs for
         chloramines, chlorine, and chlorine dioxide.  Only systems
         that add chlorine or chloramine to their water must meet the
         chloramine and chlorine MRDL.  Likewise, only systems
         using chlorine dioxide are subject to the chlorine dioxide
         MRDL.  Rather than face large capital costs, systems
         exceeding an MRDL will likely alter the operations of their
         treatment processes to reduce the need for disinfectant and
         lower disinfectant levels.

         Subpart H systems already using conventional filtration
         treatment are required to remove a certain percentage of
         TOG, based on surface water alkalinity. These systems will
         accomplish this removal by enhancing their coagulation or
         softening capability, unless certain alternative criteria are
         met. This treatment technique requirement only applies to
         systems that already have the treatment infrastructure in
         place in order to minimize compliance costs.
Most of the capital costs faced by systems will be
generated by installing, operating, and maintain-
ing treatment technologies to comply with the
MCLs for DBFs.  Most small water systems will
only have to meet the MCLs for TTHMs and
HAA5 and the MRDLs for chlorine and chloram-
ines. EPA estimates that most water systems out
of compliance with an MCL will either install
enhanced coagulation technology, modify the
chlorine/chloramine disinfection process, or do
both (see Figure 5).  Some ground water systems
may install membrane filters to control DBF
levels.  As shown in Figure 6, the total capital and
annual O & M costs for small systems to install
and run membrane filtration or ozonation
treatment is much more expensive than enhancing
existing coagulation technology and/or modifying
the chlorine or chloramines process.
Figure 6: Representative Annual Compliance Costs for Systems
Serving Populations of 101-500 (in thousands of 1998 $)
   $300 T
                       2       I&2      3        4

                    Treatment Technologies
  Note: All costs are based on average flow (8 million gallons) for the median population.
  Capital costs are total (not annualized). O & M costs are annualized at a 3% discount rate.

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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
infrastructure improvements needed to continue to ensure safe drink-
ing water. States may offer principal forgiveness, reduced interest rates,
or extended loan terms to systems identified by the state as serving
disadvantaged communities. States also have the ability to reserve a
portion of their grants (i.e., set-asides) to finance activities that encour-
age enhanced water system management and help to prevent contami-
nation 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.

Most capital projects  including adding new technologies and
upgrading existing technologies  needed to comply with the Stage 1
DBPR are eligible for funding under the DWSRF (see Exhibit 3).
Consolidation and restructuring of systems can be a cost-effective
alternative to treatment for small systems that are affected by the Stage
1 DBPR.  The DWSRF can fund consolidation, including situations
where the quality of a supply source has deteriorated or a system is
unable to  maintain compliance for technical, financial,  or managerial
reasons.

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 3). A state may use set-asides to make administrative
improvements to the entire drinking water program, which faces
increased costs in implementing the Stage 1 DBPR.  States can provide
training to small systems on meeting the requirements of the Stage 1
                                                  DBPR as well as
                                                  technical assis-
                                                  tance in identify-
                                                  ing appropriate
                                                  technologies. In
                                                  addition, states
        Pascagoula, Mississippi
The water system serving the Gulf Coast City of
Pascagoula, Mississippi was having trouble
meeting the MCL forTTHMs. To address this
issue, the city decided to build three reverse
osmosis water treatment plants with ozone filters
to serve its 35,000 residents.  DWSRF loans were
made in the amount of $1.3 million for the first
plant, $1.2 million for the second, and $1.5
million for the third. With two of the three plants
operational, the water in Pascagoula is now in
compliance.
Exhibit 3: Projects/Activities Eligible for DWSRF
Funding to Comply With Stage 1 DBPR |
TvpeofProiect/Activitv Eligible Under Eligible Under
Type of Project/Activity infrastructure Fund Set-Asides
Treatment
Enhanced Coagulation
Ozone
Modified Chlorine/Chloramine
Disinfection Process
Membrane Filtration
Granular Activated Carbon
Planning & Design Activities
System Consolidation
System Restructuring
Yes No
Yes No
Yes No
Yes No
Yes No
Yes Yes*
Yes No
Yes Yes
System Administrative Improvements
Hire Staff
Staff Training
Public Outreach
Monitoring
Rate Increase Process
No No
No Yes
No Yes
No No
No Yes
State Administrative Improvements
Hire Staff
Staff Training
Public Outreach
Compliance Oversight
Enforcement
Pilot Studies
No Yes
No Yes
No Yes
No Yes
No Yes
No Yes
               *For small systems only.
                                                 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.
  FOR MORE INFORMATION.
      DWSRF and Stage 1 DBPR
 DWSRF Website:
 http://www.epa.gov/safewater/dwsrf.html

  Microbial & DBF Website:
  http://www.epa.gov/safewater/mdbp.html
Printed on Recycled Pape
                                                    General Information
                                               SDWA Hotline
                                               1-800-426-4791
                                              EPA's Ground Water & Drinking
                                              Water Website:
                                              http://www.epa.gov/safewater/
Office of Ground Water and
Drinking Water (4606M)
EPA 816-F-02-007
May 2002

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