Re-Energizing the Capacity
     Development Program

     Findings and Best Practices from the
Capacity Development Re-Energizing Workgroup

              April 2011

Office of Water (4606M)
April 2011
http://water.epa. gov/drink

Re-Energizing the Capacity Development Program
Table  of  Contents

Acknowledgements	ii
Introduction	3
  Re-Energizing the Capacity Development Program	3
  The Capacity Development Re-Energizing Workgroup	4
  Recognizing Differences Among Public Water Systems	4
  Document Overview	5
Chapter 1: Continue to Enhance Water System Capacity	6
  Recommendation 1.1: Improve assessment and measurement of managerial and financial
  capacity	7
  Recommendation 1.2: Implement efforts to address public water systems with continuing
  non-compliance	9
  Recommendation 1.3: Continue to enhance operator trainings and support	11
Chapter 2: Re-focus on Education and Outreach	12
  Recommendation 2.1: Educate potential and existing public water system owners and board
  members on their roles and responsibilities	13
  Recommendation 2.2: Raise public awareness on the value and cost of water services	15
  Recommendation 2.3: Increase awareness and access to resources and useful tools	16
  Recommendation 2.4: Emphasize trainings for public water system managers, owners, and
  technical staff on environmental sustainability	17
Chapter 3: Strengthen Implementation through Collaboration	18
  Recommendation 3.1: Increase collaboration for all state and  federal staff working on
  drinking water issues	19
  Recommendation 3.2: Increase coordination and communication among funding groups ... 20
Conclusion	22
Appendix A: EPA's Initiatives for Re-Energizing Capacity Development and Promoting
Sustainable Systems	23
  EPA's Approach for the Equitable Consideration of Small System Customers (Small Systems
  Approach)	23
  2010 National Capacity Development and Operator Certification Workshop	24
  Clean Water and Drinking Water Infrastructure Sustainability  Policy	25
Appendix B: Detailed Case Studies	26
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Re-Energizing the Capacity Development Program

This document reflects the comments and insights contributed by a variety of individuals and
organizations. In particular, EPA would like to thank the state representatives and the
Association of State Drinking Water Administrators (ASDWA) who were part of the Capacity
Development Re-Energizing Workgroup, and whose efforts provided substantial contributions to
this document. The states represented on the Capacity Development Re-Energizing Workgroup
include: Indiana, Kansas, Nevada, New Hampshire, North Carolina, Texas, Virginia, and
New Hampshire
North Carolina
EPA Region 1
EPA Region 3
EPA Region 6
EPA Region 7
EPA Headquarters
Mary Hollingsworth
Cathy Tucker-Vogel
Sarah Pillsbury
Jennifer Carr
Julia Cavalier
Doug Holcomb
Barry Matthews
Kristin Bettridge
Jane Downing
Vicky Binetti
Blake Atkins
Mary Mindrup
Mindy Eisenberg, Sonia Brubaker,
Stephen Hogye, Maria Lopez-Carbo
Bridget O'Grady, Jim
April 2011
Page ii

Re-Energizing the Capacity Development Program

This document is a reflection of the discussions held over the course of 2010 by the Capacity
Development Re-Energizing Workgroup, as well as a compilation of comments received during
the 2010 National Capacity Development and Operator Certification Workshop. It also includes
insights and ideas from existing strategies and policies, such as EPA's Approach for the
Equitable Consideration of Small System Customers ("Small Systems Approach"). Further
information on EPA's Small Systems Approach, the 2010 National Capacity Development and
Operator Certification Workshop, and other EPA initiatives is included in Appendix A of this

This document was prepared for individuals involved in the Capacity Development and Operator
Certification Programs, including EPA Headquarters staff, EPA Regional staff, state staff, and
stakeholder groups. This document is also intended to be informative to the staff of other
programs (e.g., Drinking Water State Revolving Fund) that help public water systems (PWSs)
attain and maintain technical, managerial, and financial (TMF) capacity.

Re-Energizing the  Capacity  Development Program

The 1996 Safe Drinking Water Act (SDWA) Amendments emphasize a holistic approach to the
protection of public health and prevention of drinking water contamination. The Act's provisions
for Capacity Development provide a framework for EPA, states, and PWSs to work together and
ensure that  PWSs attain and maintain the TMF capacity needed to achieve SDWA's objectives
for short- and long-term capacity. The SDWA Amendments recognized that states have different
needs and resources, and therefore, this framework is not prescriptive. This has led to varied
strategies and diverse implementation of state Capacity Development Programs.

Over 10 years have elapsed since EPA developed detailed guidance for the Capacity
Development Program.l Since that time, national and regional meetings have been held to
facilitate information sharing, numerous tools and resources have been developed, and many
states have  identified unique approaches to addressing TMF capacity challenges. Most recently
the EPA Administrator has increased attention to supporting underserved communities,
improving community and infrastructure sustainability, and ensuring that all consumers have
access to safe drinking water. Based on these developments, EPA partnered with eight states and
1 EPA's Guidance on Implementing the Capacity Development Provisions of the 1996 SDWA Amendments (EPA
816-R-98-006) was published July 1998 and EPA's Handbook for Capacity Development: Developing Water System
Capacity under the Safe Drinking Water Act, as amended in 1996 (EPA 816-R-99-012) was published July 1999.
These documents are available on EPA's website at: guidance.cfm.

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Re-Energizing the Capacity Development Program
the Association of State Drinking Water Administrators (ASDWA) to form the Capacity
Development Re-energizing Workgroup to assess Capacity Development's progress thus far and
bring renewed attention to the Capacity Development Program.

The Capacity Development Re-Energizing Workgroup

The main goals of the Capacity Development Re-energizing Workgroup were to better
understand the Program's existing implementation efforts, evaluate roadblocks to building water
system capacity, and identify best practices to facilitate program implementation. Ultimately, this
re-energizing effort should help more PWSs be sustainable as a result of Capacity Development
Programs strengthened by increased knowledge sharing, particularly the sharing of
implementation best practices.

The Workgroup held monthly meetings over the course of 9 months, beginning in January 2010.
At the conclusion of these meetings, the Workgroup developed a summary of identified
challenges, recommendations, and best practices and in September 2010, took these findings to
the 2010 National  Capacity Development and Operator Certification Workshop. State and EPA
Regional Workshop attendees were asked for feedback, and the Workgroup met again in October
2010 to incorporate the comments and to further summarize the findings and recommendations.

Recognizing  Differences Among Public  Water Systems

One  of the Workgroup's first actions was to identify challenges faced by states in implementing
the program as well as PWSs that struggle with TMF capacity. Some of the challenges initially
identified by the Workgroup included:

   •   Compliance - meeting current and future regulatory requirements.

   •   Education - providing information to rural PWSs; increasing customer understanding of
       the value of water services; expanding knowledge of water and energy efficiency

   •   Finance -  ensuring long-term financial stability to maintain the necessary infrastructure
       for providing safe drinking water; ensuring affordable rates and customers' ability to pay
       for delivery of safe drinking water; addressing the effects of the recent economic

   •   Management - improving decision maker (e.g., board member) involvement and
       knowledge of their responsibilities; effectively managing assets; enhancing use of
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Re-Energizing the Capacity Development Program
   •   Workforce - hiring/retaining certified operators; planning for an aging workforce and
       associated loss of institutional knowledge.

Workgroup members acknowledged that challenges differ between community water systems
(CWSs) and noncommunity water systems (NCWSs). For example, nontransient noncommunity
water systems are less likely to employ tools such as water supply plans and capital improvement
plans. CWSs, on the other hand, are subject to more stringent requirements, and therefore, more
technical knowledge and financial resources are generally needed for these PWSs to be
successful. The Workgroup decided not to include transient noncommunity water systems in the
current scope of work due to the unique characteristics of these water systems and the allocated
timeframe for the Workgroup to develop their report.

Document Overview

The Capacity Development Re-energizing Workgroup's findings and recommendations are
organized into the three chapters of this document:

   1.  Continue to Enhance Water System Capacity.

   2.  Re-focus  on Education and Outreach.

   3.  Strengthen Implementation through Collaboration.

Each chapter identifies common implementation challenges experienced by state Capacity
Development Programs, followed by recommendations and best practices that can be used to
address these challenges. Some of the best practices demonstrate work that state Capacity
Development Programs, EPA, or other organizations are already implementing, while other best
practices are ideas to work toward. By implementing these recommendations and best practices,
both PWSs and state Capacity Development Programs may benefit.

All of the best practices are examples only. The Workgroup acknowledges that not all best
practices will be applicable to a particular state or PWS, and that additional best practices exist
that are not described in this document. A number of current state examples, corresponding to
specific best practices, are highlighted in textboxes throughout the document. Some of these
examples, as well as additional state examples, are described in greater detail in Appendix B.
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Re-Energizing the Capacity Development Program
Chapter  1:  Continue  to  Enhance Water  System  Capacity

One of the goals of the Capacity Development Program is to assist new and existing public water
systems (PWSs) in achieving and maintaining technical, managerial, and financial (TMF)
capacity. PWSs that are able to acquire and maintain TMF capacity are more likely to achieve
long-term sustainability. There are numerous ways to enhance capacity: from correcting non-
compliance to implementing asset management programs to establishing PWS partnerships (e.g.,
equipment sharing, system consolidation). Both PWSs and states, however, may encounter
challenges associated with enhancing capacity, some of which are identified below.

    •  States may not receive sufficient information or may find it difficult to interpret the
      documentation  received during the PWS proposal/application process in order to
      fully assess whether a proposed PWS will have managerial and  financial capacity. In
      many cases, PWSs are not  required to submit information on managerial or financial
      capacity along with their permit application, making it difficult for states to determine if
      proposed PWSs  have the necessary managerial and financial capacity.

    •  Managerial and financial capacity are not easily assessed and measured by PWSs or
      states. Many states and technical  assistance (TA) providers have found that managerial
      and financial  capacity are more difficult to define and measure than technical capacity
      and, therefore, more challenging to address. Additionally, some states do not have
      standard indicators or a uniform method for evaluating managerial and financial capacity.

    •  Some PWSs  struggle to obtain and retain qualified operators. A certified, dedicated
      operator is essential to the  capacity of a PWS. PWSs without knowledgeable operators
      are at higher risk of non-compliance and other capacity issues.

    •  States often do not have the staff or resources to conduct follow-up visits to ensure
      that PWSs are implementing TMF activities. Staffing shortfalls and budgetary
      constraints make it difficult for states to follow up with PWSs that have received
      technical, managerial, or financial assistance. This creates opportunities for existing
      PWSs to lose TMF capacity without the state's immediate knowledge.

The following recommendations and associated best practices were identified as opportunities to
address these challenges. As mentioned earlier, some of the best  practices for each
recommendation are already being used, while others are ideas for the future. Furthermore, not
all best practices will be applicable to all states or PWSs.
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Re-Energizing the Capacity Development Program
Recommendation 1.1:  Improve  assessment and  measurement of
managerial  and financial capacity

To address challenges related to IMF capacity, the Workgroup identified several ways that states
can work to improve the assessment and measurement of PWS capacity and thereby identify
areas for improvement. Understanding a PWS's IMF capacity will assist the state in prioritizing
assistance resources based on identified need. While all three components of TMF capacity are
important, managerial and financial capacity are sometimes less clearly defined and oftentimes
more challenging to measure. Therefore, it is important to identify specific tools that can assess
the managerial and financial capacity of PWSs and to use these as metrics for measuring
improvement. The following best practices may aid states in implementing this recommendation.

   •  Promote effective management by providing specific support for new PWSs.
       Offering direct support over the first year or more of operation may help a PWS maintain
       managerial and financial capacity.  It may also allow the PWS to better understand all of
       its regulatory requirements to ensure long-term compliance.

       »»»  During the first year of operation,
          states or TA providers might
          consider assisting PWSs in the
          development of asset management
          plans, programs, and/or standard
          operating procedures (SOPs).
          States and TA providers should
          encourage PWSs to create dynamic
          plans that will help guide
          management decisions and can be
  The Iowa Department of Natural Resources
  promotes effective management by offering a Self-
  Assessment Manual as a tool for PWSs to assess
  their TMF capabilities. The Manual allows PWS
  managers to carefully consider all aspects of TMF
  capacity and plan for long-term capacity and
  sustainability. All PWSs are encouraged to utilize the
  Manual for self-evaluation.
          updated over the years as various changes occur.

          States may want to consider developing a primer on managerial capacity that
          introduces new PWS owners to available TMF tools and resources and helps them
          understand how and why to use these tools.
          Some states have suggested
          requiring a detailed business
          plan or water system
          management plan for proposed
          PWSs to ensure that PWSs start
          off with adequate managerial
          and financial capacity. Either of
          these plans or a similar
Indiana currently requires potential PWSs to submit a
water system management plan. The plan allows
potential owners to learn about the full responsibilities
of owning a PWS. Additionally, the state encourages
proposed PWSs to identify existing PWSs within a 5-10
mile radius that may be suitable for connection. Refer
to Appendix B for more information.
April 2011

Re-Energizing the Capacity Development Program
          management plan could cover, among other things, the details of an infrastructure
          strategy, information on the PWS owner and operator, and short- and long-term
          budget plans. Water system management plans should also be designed so they can be
          updated easily to facilitate adaptation to future changes and be useful to the PWS over
          the course of many years.

       »»» Another option for promoting effective management is for states to develop tailored,
          dynamic monitoring plans for PWSs that detail all of the responsibilities and
          associated costs of day-to-day activities (e.g., sampling procedures). States that
          choose to develop such a plan could design a general plan for all PWSs, for any PWS
          that requests such a plan, or design a tailored plan for PWSs that the state has
          identified as struggling to achieve or maintain capacity.

    •   Use surveys to collect managerial and financial information, determine which PWSs
       have the greatest need, and prioritize state resources  Although it may be resource
       intensive, states may find it worthwhile to use surveys or questionnaires to request
       information about managerial and financial capacity. States can use the submitted
       information to determine which PWSs  need the
       most assistance and then prioritize state
       resources accordingly. Follow-up surveys could
       be sent (e.g., every 2 years) to track PWSs'
       progress. Over time, the information may help
       the state identify which PWSs are not building
       managerial and financial capacity and,  therefore,
       require additional assistance. Another option is
       for states to review managerial and financial
       components during sanitary surveys.  Some states
       (e.g., Nebraska) have had success using sanitary
       surveys for this purpose, while other states have
       struggled. A common challenge for using
       sanitary surveys to obtain managerial and financial information is that survey reviewers
       are trained specifically to conduct sanitary surveys, not to assess  TMF capacity. States
       may want to consider training sanitary  survey reviewers on standard procedures for
       collecting TMF capacity data. Most importantly, prior to choosing an information-
       collection method and starting data collection efforts, states will want to be sure that the
       type and amount of information to be collected reflects the state's intended purposes and
       will provide valuable insight on PWSs' managerial and financial capacity.
Kansas send outs a comprehensive
survey to community water systems
(CWSs) in the state every 3 years, which
includes  questions on TMF capacity.
Kansas uses the survey to score each
CWS, determine trends (e.g., number of
CWSs not reviewing their water rates),
assess loan distribution (CWSs lacking
TMF capacity are ineligible for full
loans), and develop appropriate tools
(e.g., rate setting resources).
April 2011

Re-Energizing the Capacity Development Program
Recommendation  1.2:  Implement  efforts to  address  public water
systems with  continuing  non-compliance

A PWS that is regularly or continually in non-compliance poses a serious risk to public health
and requires state attention. There are numerous reasons that a PWS may be continually non-
compliant. Technical capacity may be the most apparent problem; however, managerial or
financial deficiencies may be the underlying causes of technical deficiencies. Understanding the
drivers of non-compliance will help states in their efforts to assist struggling PWSs in achieving
long-term compliance. These efforts will move these PWSs along a path towards achieving long-
term TMF capacity and sustainability, which is supported by the following best practices.

   •   Assign a dedicated person to each non-compliant PWS. PWSs facing multiple years of
       non-compliance oftentimes have a unique combination of circumstances which results in
       recurring violations. The state may want to consider having a dedicated person oversee
       each struggling PWS. This individual would become intimately familiar with the PWS's
       characteristics and become knowledgeable
        ,     ,                  .,  .       ,         New Hampshire uses referrals from
       about the root causes contributing to the non-     ,           ,
                                                  enforcement and sanitary surveys to
       compliance (e.g., new regulations, poor
       management, artificially low or non-existent
       water rates, lack of maintenance,
       unwillingness to change PWS procedures,
       need for infrastructure financing, etc.). PWSs
       could view this person as their "go to" person
       for questions and concerns since this
       individual would be responsible for helping
       to shepherd the system back into compliance.
       Furthermore, this individual may be able to    r/dwgb/capacity/index.htm
generate a "bucket list" of PWSs in need. A
primary contact or Project Manager is then
responsible for identifying each PWS's
needs and reporting progress on a regular
basis. The state keeps track of interactions
with each PWS using a task log and regular
meetings with management. Refer to
Appendix B for more information.
       develop a relationship with the board members, owner, and operator, which may facilitate
       information sharing and open communications between the PWS and the state. As an
       additional benefit to the state, this dedicated person may be able to develop an overall
       understanding of the types and underlying causes of non-compliance throughout the state.

       Improve non-compliant PWSs' access to and use of technical assistance and other
       resources, while balancing state resource limitations. Continually non-compliant
       PWSs are typically in need of additional assistance from states. These PWSs oftentimes
       have less knowledge of available resources that may help them return to compliance, or
       they may have less knowledge of how to use resources. These resources may include, but
       are not limited to, contact information for third-party TA providers, copies of guidance
       materials, and lists of funding sources. The type of assistance that states may need to
       provide will differ from one PWS to the next and may range from simply providing and
April 2011                                                                         Page 9

Re-Energizing the Capacity Development Program
       explaining informational materials (e.g., factsheets, software) to providing one-on-one
       assistance (e.g., in-person demonstration on how to do jar testing). States may be able to
       allocate assistance efforts more effectively by assessing which PWSs will benefit most in
       the long-run from targeted outreach and which PWSs will not make long-term changes
       towards self-sufficiency and, therefore, become a drain on state resources. To make this
       distinction, it is important to understand and recognize that the root causes of non-
       compliance are specific to a given PWS. Most PWSs that are provided with assistance
       will use those resources to build capacity.  However, the state must determine how to
       prioritize resources to achieve the greatest benefit while providing assistance to all
       struggling PWSs.

    •   Assess, explain, and promote PWS partnerships, where  appropriate. One way states
       can assist struggling PWSs is by conducting initial assessments to determine whether the
       PWS is a good candidate for partnerships, including restructuring or consolidation.
       Forming partnerships with other PWSs is  a proven approach that may provide a wide
       range of options and benefits. PWS partnerships may be an effective means of changing a
       PWS's operation, management, or institutional structure so that the PWS can provide
       reliable drinking water services, streamline system management, and reduce costs.
       Partnership options can range
       from informal measures, such
       as sharing equipment, to more
       formal options, such as
                               Texas contracts with the Texas Rural Water Association to
                               provide consolidation assessments. The contractor discusses
                               consolidation with the small PWS and other surrounding
,     f             i-   f       entities and helps facilitate consolidation activities (e.g.,
transferring ownership of a
_„,„ ,      ,       1-1-        completing paperwork or providing support at public
PWS through consolidation.            >        ,              ,  ,         .   r
                               meetings). Texas also contracts with the University of Texas to
For example, partnerships can   ,  .  _..._    ..,..,,,  ....       ,  t   , t.   .    ,,
         r  'r        r        help PWSs with MCL violations understand their problems
allow PWSs to contract         gnd conso|idation options (e.g., interconnections, treatment,
                                      or relocating a source), including the financial impacts. Refer
                                      to Appendix B for more information.
management, billing, or
customer service tasks to a
neighboring PWS or an
outside business. Another
partnership option, which
may reduce administrative and operating costs, is to create a Joint Powers Agency or to
consolidate under common regional ownership or management while maintaining
separate infrastructure and treatment. Neighboring PWSs can sometimes benefit from
physically connecting their infrastructure and sharing components, such as treatment
facilities and distribution lines. States have noted that it is more cost effective and
successful in the long-run to spend money on helping PWSs with partnerships than on
maintaining failing, unsustainable PWSs. To further promote these efforts, states may
offer additional support, such as low-cost financing for various partnership activities.
Potential resistance to partnerships, especially consolidation, should be recognized and
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Re-Energizing the Capacity Development Program
       earnestly addressed. This may involve employing a third-party mediator to explain the
       benefits to all the parties involved.

Recommendation  1.3: Continue to enhance operator trainings and

It is important for states to regularly evaluate and enhance operator trainings as needed,
especially taking into account technological changes that may improve PWS operations and
innovations in management of PWSs. Other support mechanisms for operators, in addition to
traditional classroom trainings, can include periodic meetings with the state and TA providers,
site visits, and website resources such as operator "chat rooms." Below are some specific best
practices to enhance operator trainings and support.

   •   Promote outreach, mentoring, internship, and apprenticeship programs to address
       workforce challenges. Some PWSs struggle with workforce issues, whether related to
       staff retirement or turnover. Hiring and retaining a certified operator is vitally important
       to the success of any PWS. To
                                          Massachusetts uses its Green Job Training and
                                          Placement Partnership to identify, attract, and train
                                          future PWS operators by providing them with both
                                          classroom and field training. Trainings are offered
                                          through vocational and technical high schools, evening
                                          adult education classes, and state and community
                                          colleges. An associated internship program is open to all
                                          students who complete a training program. The state
                                          identifies PWS operators who can mentor the training
                                          program graduates. These mentors agree to play an
                                          active role in the development of the individual as a
                                          water supply professional and offer meaningful work
                                          that exposes the student to many facets of PWS
                                          operation. Refer to Appendix B for more information.
   address these workforce issues,
   states may consider developing,
   requiring, and/or supporting
   mentoring, internship, or
   apprenticeship programs that
   educate the next generation of
   PWS operators.  States can also
   promote programs that increase the
   prestige associated with the
   certified water profession and help
   encourage more individuals to
   learn about and pursue the career.
   States may encourage PWS
   managers and operators or industry
   associations to reach out to those
   who will eventually be entering the workforce. These outreach activities may include
   operators visiting elementary, middle, and high schools or participating in career days. It
   may also include reaching out to those currently in the workforce through adult education
   or career re-training programs. The state should be sure that any outreach activities are
   appropriately tailored to target the intended audience.

•  Encourage programs to sustain institutional knowledge. Many PWS owners,
   managers, and operators have a thorough understanding of operation and maintenance of
April 2011
                                                                               Page 11

Re-Energizing the Capacity Development Program
       their PWS because they have worked at the PWS for many years. States may want to
       assist PWSs in ensuring that this institutional knowledge is gathered, preserved, and
       passed on by encouraging programs that facilitate information sharing between new and
       existing PWS operators. For example, states may want to require a "transitional" operator
       that will observe the previous operator before his or her retirement from the PWS.
       Similarly, mentoring programs, like those mentioned in the previous best practice, allow
       current operators to pass on their knowledge of a particular PWS and its operation,  as
       well as PWS operation in general. These types of programs can help ensure that
       institutional knowledge, including best practices and PWS-specific SOPs, is maintained
       and shared with future owners and operators through first-hand experience.

   •   Provide assistance to PWSs using contract operators  Some PWSs benefit
       substantially from using contract operators. Some states, such as Colorado, encourage the
       majority of their small PWSs to utilize contract operators so that a certified operator is
       consistently working at the PWS. To assist
       PWSs with the process of contracting water
       services, states can maintain an active list of
       contract operators in the state and provide       operators which is made available on its
         •1     i  Tvn7o        i     11              website. These contract operators are
       guidance to PWSs on contractual language
         ,                 .,.,..   T   ,,..         certified operators that are responsible for
       and contractor responsibilities. In addition,       ,   ,  ..        .   .   ...    , ,
                                                    the daily operational activities of three or
       states may want to consider compiling a list of
                                             The Washington Office of Drinking Water
                                             maintains a list of approved contract
                                                    more PWSs. Contract operators must be
                                                    available 24 hours per day and are subject
                                                    to specific certification and documentation
                                                    requirements. These requirements also
                                                    apply to operators of Washington's
                                                    Satellite Management Agencies.
contractor operators that are able to assist in
the event of an emergency. It may also be a
good idea for states to monitor the number and
complexity of PWSs being run by a single
operator so that one operator does not assume
more responsibilities than he or she can
reasonably manage. Some states have
developed contractor operator materials and documents, including interview questions,
contract templates, guidelines, and more. One way states can obtain this information is
through ASDWA's CapCert Connections website
( This
website does require individuals to register and obtain a valid username and password in
order to access the information.
Chapter 2:  Re-focus on  Education and  Outreach

The Workgroup identified a need for further education and outreach efforts to assist PWSs and
boards, as well as to improve knowledge sharing among states related to implementation of the
April 2011                                                                        Page 12

Re-Energizing the Capacity Development Program
Capacity Development Program. Several commonly experienced challenges can be tackled
through education and outreach. These challenges include:

   •   Ensuring that PWS owners and board members understand their roles and
       responsibilities. In particular, new PWS owners and board members are often unaware
       of the complexity, legal responsibility, and expense of running a PWS.

   •   Recognizing that it is often difficult to convey the value and cost of water services to
       customers. The public is largely accustomed to the false notion that treated water is a
       freely available public good. Some PWS customers are unaware of the complexity and
       costs associated with delivering reliable, safe drinking water.

   •   Improving awareness of available tools and resources. Many states, PWS owners and
       operators, and TA providers have tools and resources that can address specific needs and
       problems. Many of these resources, however, remain unknown to or underutilized by
       others who can benefit from them. In addition, the tools and resources are rarely collected
       in one central location, creating an obstacle to  accessibility.

A number of recommendations and best practices were identified to address these challenges. As
with the previous chapter, some of the associated best practices for each recommendation are
already being used, while others are ideas for the future.

Recommendation 2.1: Educate  potential  and  existing public  water
system owners  and board members  on their roles and responsibilities

Many state Capacity Development Programs have created opportunities or established
requirements for new owners to learn about their responsibilities prior to  state approval of a new
PWS. Such opportunities or requirements are intended to reduce the likelihood that owners will
find themselves unable or unprepared to handle the responsibilities of running a PWS. The
Workgroup identified several existing and potential best practices that state Capacity
Development Programs may use to support this recommendation.

   •   Develop a "PWS Ownership 101" package.  Some states have developed an
       introductory package describing roles and responsibilities that can serve as an effective
       tool for states to communicate with new or potential PWS owners. In addition to
       providing these 101  packages to potential new owners, states can  also provide them to
       any "found" PWSs (i.e., PWSs that are identified after they are constructed). Introductory
       packages can outline important roles and responsibilities, emphasizing those of owners.
       In some cases, potential PWS  owners who receive this type of information will recognize
       that the responsibilities and complexities of owning a PWS are greater than they had
       realized and that establishing a new PWS may not be the best option. Therefore,  states
April 2011                                                                      Page 13

Re-Energizing the Capacity Development Program
       may want a 101 package to include alternatives to forming a new PWS (e.g., connecting
       to an existing PWS). A number of states, such as North Carolina, send letters or other
       materials addressing specific topics related to PWS ownership. Any "101" materials,
       whether newly developed or adapted from an existing state's materials, should be
       provided to potential PWS owners as early in the permitting process as possible.

       Use incentives to increase PWS owner and board member attendance and
       participation at trainings. Effective trainings should identify and distinguish between
       the roles and responsibilities of owners, operators, and board members. Board members
       play an integral role in ensuring that their PWS has capacity. Many states and
       organizations offer well-developed and
       effective trainings, but are looking for
       innovative ways to increase attendance
       and engagement. One idea for
                                      As an incentive to increase board member/council
                                      attendance at trainings, Kansas awards additional
                                      DWSRF points to a PWS if 80 percent or more of the
       encouraging owners or board members   board/council for that pws attends a trainin§
              ,,  •  •    .  ,   jv.              session. Additionally. PWS operators earn 5 hours of
       to attend trainings is to otter
                    ,    _, . , .   T,T          credit if the majority of the board attends a training
       incentives, such as Drinking Water             _  ,     „      ,.  _,       . ,
                                             session. Refer to Appendix B for more information.
State Revolving Fund (DWSRF)
priority points. Once owners or board
members attend a training session, they may develop a deeper understanding of the
complexity of operating and maintaining a PWS. Seeing the need for and value of such
trainings may even lead these individuals to seek out additional trainings and resources
and may also make them more apt to address the PWS's needs and plan for long-term

Promote effective management by providing periodic training for existing PWS
owners and board members. Providing trainings on a periodic basis can support
managerial and financial capacity for PWSs and provide useful IMF capacity indicators
for states and EPA. Periodic training ensures that existing PWS owners and board
members continue to understand the managerial and financial needs of the PWS even as
changes occur over time, such as new regulatory requirements or changes in workforce
(e.g., turnover or retirement).  States may want to provide training on developing and
updating a PWS business plan, calculating cash flow summaries, and understanding
profitability and basic accounting practices. Other ideas include training PWS owners and
board members in performing rate analyses and conducting water loss audits and energy
efficiency evaluations. By training these individuals on how to accurately produce this
type of information, states could benefit from being provided with useful indicators of
capacity, which can then be used to prioritize PWS assistance.
April 2011                                                                         Page 14

Re-Energizing the Capacity Development Program
Recommendation  2.2:  Raise public  awareness on the value  and cost of
water services

Community support is essential for PWSs to be sustainable. Public awareness of the value and
cost of water treatment and delivery services allows PWSs to accurately price these services.
States can help ensure a PWS's long-term capacity, particularly financial capacity, by promoting
a common understanding of the value of water services among PWSs' customers. To raise public
awareness of the value and cost of water services, a variety of best practices are available.

    •   Support a public campaign to raise customer awareness. A public campaign to raise
       awareness about the value of delivered water can change consumer expectations by
       increasing awareness and understanding of the true costs of providing water. These
       campaigns could aim to increase customers' appreciation for the amount of effort that is
       required to reliably provide safe water and ensure that PWSs have the capacity to meet
       water demands. Campaigns can be developed and implemented at the national, state,
       community, or PWS level.  Under the Capacity Development Program, states are able to
       use DWSRF set-aside funds for public education outreach campaigns. For example,
       Arkansas uses set-aside dollars to support general outreach on the importance of wellhead
       and ground water protection programs. In addition to performing public outreach in their
       own states, states can also support existing national or regional initiatives, such as the
       American Water Works Association (AWWA) Only Tap Water Delivers grassroots and
       media campaign. This AWWA campaign helps PWSs and local officials communicate to
       consumers, the media, and  other stakeholders about the value of tap water services.

    •   Evaluate,  assess, and communicate the value provided by PWSs by comparing
       water rates with other utility rates or commodities. It is beneficial for PWSs to
       evaluate their water rates on a regular basis to determine whether the current rates meet
       their near- and long-term financial
       needs. If an evaluation of water rates
       appropriate water rate would be. When
                                             The Environmental Finance Center and the North
       indicates that current or proposed rates    Carolina League of MuniciPalities collect rate
        .,,    ,              rv-  .   .   ,       schedules annually from hundreds of local
       will make revenue insufficient and
                                    .         government and not-for-profit utilities in North
       stress the PWS s financial capacity, the   _   ..   _.       ,   , ,         ,    ,
                                             Carolina. The rate schedules are used to determine
       PWS must then assess what a more       ,  .   .         ....  ,,     .      , ..
                                             what customers are billed for water and other
                                             services at various consumption levels. Information
       a PWS determines that its water rates     on rates and rate structures are then shared among
                                             utility managers, including PWS owners.
are unsustainable, one way to
communicate the importance of higher
rates to its customers is to demonstrate
that water rates are lower than other utility rates (e.g., heating) and commodities (e.g.,
bottled water). This difference in rates is often found even when water rates are increased
April 2011                                                                        Page 15

Re-Energizing the Capacity Development Program
       to sustainable levels, and PWS owners need to articulate the benefits customers are
       getting for the price. Illustrating this value for cost can be especially useful for helping
       customers realize how much they benefit from a sustainable PWS that provides safe,
       reliable drinking water while operating with sufficient infrastructure, management,
       technology, and resources.

   •   Link water bills to water use. PWS owners, operators, and customers should be aware
       of exactly how much water is being consumed. If PWSs bill according to metered
       consumption, consumers may be more apt to control their water use through water
       efficiency and water conservation efforts in order to save money. Additionally, providing
       explanations on how water rates reflect actual costs (e.g., instead of just stating "variable
       fee" or "fixed fee" on the bill) can also help customers to correctly value water services.

Recommendation 2.3:  Increase  awareness and access to resources  and
useful  tools

The Workgroup emphasized that PWSs, states, third-party TA providers, and EPA all need to
find ways to increase their awareness of existing practices and resources. The primary issue is
not a shortage of tools or best practices. Rather, resources are scattered and can be time-
consuming to collect, which can hinder the dissemination of this information. While venues for
information  sharing, such as national and regional meetings, webinars, and websites, do exist,
demand for faster and easier access to resources is still high. For example, the 2010 National
Capacity Development and Operator Certification Workshop provided a meaningful opportunity
for groups and individuals working in the Capacity Development, Operator Certification, and
technical assistance fields to come together and participate in discussions (for more information
on the 2010 Workshop, refer to  Appendix A of this document). The comments received during
the Workshop reinforced the notion that people are very interested in learning from one another
and sharing ideas. Based on the  Capacity Development Re-Energizing Workgroup's findings and
recommendations, a number of potential best practices are available to enhance outreach and
sharing of tools and resources.
       meetings at all
       organizational levels
       to share new and
       information. State
       workshops can be
       organized to both
       contribute to and build
The Mississippi Department of Health partners with a state Advisory
Committee to review, evaluate, and discuss the state's Capacity
Development Program during a regular, annual meeting. The
Advisory Committee consists of representatives from stakeholder
organizations (e.g., Mississippi Rural Water Association, Mississippi
Municipal League, Mississippi Water & Pollution Control Operators'
Association, Rural Community Assistance Partnership), as well as
selected PWS managers and operators from around the state.
April 2011                                                                         Page 16

Re-Energizing the Capacity Development Program
       off of national or regional workshops, such as the 2010 National Capacity Development
       and Operator Certification Workshop. Participants and stakeholders should be able to
       contact workshop planners with relevant information and ideas, both before and after the
       workshop, so that the information can be shared more broadly. It is important for
       meetings to facilitate two-way information sharing - meaning participants should be
       encouraged to both contribute to, and learn from the events.

       Increase and encourage sharing of information, tools, and resources. States and other
       organizations can collaborate to address a range of timely topics and provide examples of
       recommendations and best practices by hosting webinars or other types of events. States
       or EPA can also highlight interesting and innovative examples from states and PWSs,
       including those that address challenges related to implementation, system capacity, and
       sustainability. Furthermore, EPA's website, or
       an alternate website, may be used as a discussion
       board for states to share the challenges and best
       practices of their programs. Capturing materials
           /-^T\   TTCT-)     u    _i-  i  i  u i  f i  •     TA. permitting, contact information.
       on a CD or USB may be particularly helpful  in       ' ^       Bl
        n   •    A A              i    •  r-    A-        emergency planning, water conservation
       allowing state programs to share information
         ... „„,„ .      i i    +-     u    u-  u     A    Planning. and reporting.
       with PWSs in rural locations where high-speed        ,,              ,
                                         °  r
       internet access may not be available or
The Kansas Department of Health and
Environment developed a CD for PWSs
that includes information on requesting
       affordable. Overall, the goal of any of these efforts should be to increase knowledge
       sharing amongst all individuals.

Recommendation  2.4: Emphasize trainings for public water system
managers, owners,  and technical staff on  environmental

Many PWSs face water availability and financial challenges. Incorporating environmental
sustainability objectives such as water and energy efficiency and long-term source water
management into operator and board member trainings can play an important role in
strengthening TMF capacity and can generate real cost savings for PWSs. To implement this
recommendation, the best practice below was identified. The Workgroup noted that some small
and very small PWSs may find the implementation of water and energy efficiency and long-term
resource management objectives to be particularly challenging and that in some cases this best
practice could conflict with the need to address existing non-compliance issues (e.g., arsenic
violations). For these reasons, some states may choose not to prioritize use of the following best
practice for some PWSs.
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Re-Energizing the Capacity Development Program
   •   Educate PWS managers, owners, and technical staff on the DWSRF Green Project
       Reserve (GPR) and other funding sources for efficiency and environmental
       sustainability. The DWSRF provides several funding opportunities to enhance IMF
       capacity by implementing water efficiency (e.g., metering, leak detection), energy
       efficiency (e.g., energy audits, pump system
                  x       .  ,,             .         The Georgia Environmental Finance
       optimization), green infrastructure, and
                   ...      .       .               Authority uses a pre-application process for
       environmentally innovative projects,
                                                  green projects requesting DWSRF funding.
                                                  The pre-application is designed to help
                                                  potential loan applicants describe proposed
                                                  green projects and environmental
                                                  improvements. The pre-application is used
                                                  to rank each GPR project and develop a
                                                  priority list of green projects.
                                                  http://www.gefa. org/lndex.aspx?page=504
       particularly through the GPR. In Fiscal Year
       2010, 20 percent of state DWSRF funds had
       to be used to help PWSs implement GPR
       projects. PWSs considering their
       infrastructure needs should evaluate the costs
       and benefits of GPR-eligible projects. States
       can assist them in understanding the GPR
       requirements, as well as requirements for
       other funding sources for environmental sustainability (e.g., Department of Energy grants
       for energy efficiency). For example, states can consider holding training sessions to
       explain requirements or provide examples of green business cases (e.g., engineering
       reports, information on water or energy audits). State programs can also use a variety of
       resources to help identify PWSs with potential projects that qualify for funding based on
       green or sustainable criteria. Pennsylvania, for example, contracted services for
       assistance in identifying GPR-eligible projects.

Chapter 3:  Strengthen  Implementation through

Members of the Workgroup and participants of the 2010 National Capacity Development and
Operator Certification Workshop recognized that collaboration efforts are essential to addressing
many of the challenges identified by state Capacity Development Programs. Several commonly
experienced challenges related to collaboration include:

   •   Limited communication reduces opportunities for collaboration across various
       groups working on drinking water issues. Staff and managers working on drinking
       water issues (in the Capacity Development, Operator Certification, DWSRF Programs,
       and more) may sometimes be located in different office buildings or government
       divisions, or may rarely interact on a regular basis.  This communication challenge often
       prevents staff from having a sound understanding of the needs, practices, and priorities of
       the other individuals working on drinking water issues, resulting in limited collaboration
       and missed  opportunities for joint efforts.

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Re-Energizing the Capacity Development Program
   •   A lack of coordination among different funding sources. The variations in the rules
       and deadlines for funding sources can make it challenging for PWSs to acquire the funds
       needed for a particular project. Navigating the numerous, different funding options can
       sometimes be an overwhelming task. As a result, some PWSs do not take advantage of
       the most appropriate funding sources and therefore, do not make needed long-term
       planning or infrastructure investments.

The following recommendations and associated best practices were identified to address these
challenges. These best practices call attention to the fact that partnerships can occur on many
levels, including within state programs, across state programs, and between states and EPA. In
addition to the recommendations listed below, states can also explore other approaches for
effective collaboration. The most effective strategy will vary based on the specific circumstances
of the state and on the type and size of a PWS.

Recommendation 3.1:  Increase collaboration  for all  state and  federal
staff working  on drinking water issues

Increasing collaboration between staff working on drinking water issues requires communication
and cooperation among members of the Operator Certification, Capacity Development, DWSRF,
Enforcement, Source Water Protection, and Regulatory Programs, among others. Collaboration
can improve the utilization of funds as well as the prioritization of PWSs or operators in need of
assistance. The most effective actions and approaches for collaboration will vary from one
organization to another. Critical to the success of such partnerships is support from both the
bottom-up (a desire for staff members to collaborate) and the top-down (encouragement and
support for collaboration from state program managers, EPA Regional staff, and EPA
Headquarters staff). The following best practices, identified by the Workgroup, are intended to
help implement this recommendation.

   •   Participate in collective discussions about struggling PWSs and how to assist them.
       Discussions among the different individuals responsible for assisting struggling or non-
       compliant PWSs can
       help everyone develop
       Capacity Development
       Program can meet
       with those in the
       enforcement, funding,
                              Washington's Capacity Development Program promotes the Small
       a more comprehensive   Communities lnitiative 
Re-Energizing the Capacity Development Program
       and regulatory divisions to analyze why PWSs are not attaining or maintaining IMF
       capacity. Staff can work together to find ways to assist struggling PWSs and ensure that
       the PWSs can maintain capacity after assistance has ended. In-person meetings,
       electronic correspondence, conference calls, and discussion boards are just a few
       examples of forums to facilitate this information sharing.

       Increase interactions between the Capacity Development and DWSRF Programs to
       promote sustainable PWSs. Discussions between these programs can increase
       identification of current resources within the state and ways that these resources  can be
       used most effectively to further promote
              11  Tvnrn  T        1   /->    -A     The Maine Drinking Water Program uses PWS
       sustainable PWSs. In particular, Capacity
                                                Consolidation Grants to provide financial
       Development staff can comment on
       Intended Use Plans to provide insight into
       PWS projects, such as projects for
       optimization of pump systems for
       increased energy efficiency. Additionally,
       Capacity Development staff can help
       assess the TMF capacity of DWSRF loan
       applicants. This may ensure that more
       loans are given to sustainable PWSs, that
       set-asides are used to build TMF capacity,   vices/capdev/capdev.htm
                                         assistance to PWSs struggling with TMF
                                         capacity. The grants of up to $100,000 are
                                         intended to encourage these PWSs to consider
consolidation with a more viable PWS or    consolidation with a neighboring, viable PWS.
                                         The Consolidation Grants are funded using the
                                         15 percent DWSRF Capacity Development set-
                                         aside. Grant recipients are required to
                                         complete an environmental review process.
                                         Refer to Appendix B for more information.
       and that PWSs lacking TMF capacity are provided with the opportunity to become
       sustainable by having access to conditional loans (e.g., requiring submittal of quarterly
       operations and maintenance data). Capacity Development staff can then evaluate PWSs'
       capacity after receiving DWSRF funding to determine if funding has led to long-term
       improvements in TMF capacity.

Recommendation 3.2:  Increase coordination  and communication
among funding groups

States, EPA, the United States Department of Agriculture (USDA), the Department of Housing
and Urban Development (HUD), and others involved in funding drinking water infrastructure
can benefit from proactively coordinating and communicating to achieve shared goals and
enhance PWS capacity. Several existing and potential best practices to increase collaboration can
be explored at the state and federal levels.

    •   Identify non-traditional sources of funding for PWSs. The Workgroup suggested that
       by considering innovative or non-traditional funding ideas (e.g., not the DWSRF), EPA
       or state Capacity Development Programs can develop a list, database, or catalog of
April 2011                                                                        Page 20

Re-Energizing the Capacity Development Program
       funding sources that extends beyond the traditional sources that are familiar to most
       PWSs. States that use or discover non-traditional funding sources can also make this
       information available
                               The California Partnership for the San Joaquin Valley is a public-
                               private partnership focused on improving the region's economic
                               vitality and quality of life. The Partnership is composed of 24 members
                               from state government to local governments and the private sector.
                               One effort undertaken by the Partnership included using a Seed (e.g.,
                               startup) Money grant to develop a draft integrated federal and state
                               regional water plan.
to other states, third-
party TA providers,
and PWSs. This may
help PWSs determine
which funding sources
are most applicable to
their projects and take
advantage of more
diversified funding options. Some potential non-traditional funding sources for states and
PWSs to explore include, but are not limited to: Public-Private Partnerships, Department
of Education grants (for drinking water projects at schools), the Bureau of Reclamation
Working Capital Fund, the Small Business Administration's Small Business Loans, the
Army Corps of Engineers, and the Department of Energy (grants for energy efficiency).

Increase collaboration at a national level to increase funding opportunities for all
PWSs. HUD's Community Development Block Grant Program, USDA's Rural Utilities
Service, and the DWSRF Program all have important and unique funding programs. By
taking advantage of opportunities for collaboration, these funding agencies  may be able
to collectively promote worthwhile and sustainable projects, while clarifying and
increasing consistency between their different funding requirements. Some  PWSs may be
more familiar with one particular funding source than others. Increased clarification of
funding objectives may aid PWSs in recognizing ways that their projects fit within the
objectives of different funding sources. Furthermore, increased consistency in funding
requirements may reduce the burden of completing funding applications for multiple
funding agencies, particularly for small PWSs.
    •   Coordinate funding efforts among all
       state funding agencies. Well-designed
       funding coordination activities can help
       stretch limited public dollars further and
       streamline the efforts of both local
       communities and funding agencies.
       Coordination may take place on a
       variety of levels, depending on a state's
       needs or resources. One way to
       coordinate funding sources is by
       establishing a pre-application process.
                                        The Nevada Water and Wastewater Review
                                        Committee (NWWRC) brings together state and
                                        federal funders to assist communities in navigating
                                        multiple agencies' application processes. NWWRC
                                        created a pre-application to help small
                                        communities begin the application process and to
                                        provide consistent information to all of the
                                        funding agencies. The committee recommends the
                                        most appropriate funding for the applicant. Refer
                                        to Appendix B for more information.
April 2011
                                                                             Page 21

Re-Energizing the Capacity Development Program
       Another coordination method is to hold regular (e.g., quarterly) meetings among funding
       agencies or create a funding committee with representatives from each agency.


The Workgroup hopes that sharing the recommendations and best practices described in this
document will help spread awareness about available tools and opportunities, inspire new
initiatives and ideas, and re-energize state Capacity Development Programs. Measuring the
progress of Capacity Development Programs can be difficult, but is a worthwhile endeavor,
particularly in light of declining state resources and the need for PWSs to be sustainable.

At the conclusion of the 2010 National Capacity Development and Operator Certification
Workshop,  participants identified the three most important topics to address over the next few
years. Many participants agreed to  help tackle these issues by forming workgroups that would
promote discussion of challenges and sharing of best practices. The three workgroups address the
following topics identified at the Workshop:  1) managerial capacity; 2) collaboration; and, 3)
workforce. At the time of this document's publication, these workgroups have already started to
meet. These workgroups will continue to meet and hope to share the information learned with all
individuals  involved in the Capacity Development Program. In addition, the Capacity
Development Re-energizing Workgroup agreed to continue meeting on an ad hoc basis to
discuss any timely issues or new best practices. Any individuals interested in staying up-to-date
with EPA's  and the states' current activities on these topics can obtain information through the
new CapCert blog on ASDWA's CapCert Connections website
( This website does
require individuals to register and obtain a valid username and password in order to access the

Overall, information sharing within the Capacity Development Program is moving forward and
improved communication methods are being evaluated and tested. The Workgroup encourages
EPA to continue working closely with states in addressing new and existing challenges, and
identifying new and innovative best practices for the Capacity Development Program.  The
culmination of actions by states, EPA, and other stakeholders will continue to help PWSs
improve capacity and continue along a path towards achieving long-term sustainability.
April 2011                                                                       Page 22

Re-Energizing the Capacity Development Program
Appendix A:  EPA's Initiatives for Re-Energizing Capacity
Development and Promoting Sustainable  Systems

EPA's Approach  for the Equitable Consideration of Small System
Customers  (Small  Systems Approach)

The United States Environmental Protection Agency (EPA) prepared the Approach for the
Equitable Consideration of Small System Customers ("Small Systems Approach") in 2009 to
improve public water system (PWS) sustainability and public health protection for persons
served by small PWSs, and to fulfill the commitment in the Fiscal Year (FY) 2010 President's
Budget2 which states:

      In conjunction with the dramatic increase in Federal funding for local water
      infrastructure needs, the Administration will pursue program reforms that will put
      resources for these ongoing needs on a firmer foundation...  The 2010 Budget also
      proposes to work with State and local governments to address Federal drinking
      water policy  in  order  to provide  equitable  consideration of small system

In working with these stakeholders and reviewing available data, EPA confirmed that:  1) some
small PWSs (also referred to as small systems) face challenges to providing water in compliance
with drinking water standards; and, 2) there is no single solution to small system challenges, and
therefore, a variety of strategies needs to be employed. The principles and key components of
EPA's Small Systems Approach, incorporating the input EPA received through outreach efforts,
are provided below.

Principles of the Approach

   1.  Access to safe drinking water should not be based on ability to pay. Every person served
      by a PWS should receive safe drinking water.

   2.  Small systems should be provided a hand-up not a hand-out.

   3.  A variety of strategies should be employed to address the full spectrum of needs.

   4.  The long-term sustainability of small systems should be ensured.

   5.  Better targeted assistance should be provided to those small  systems that are most in
2 U.S. EPA. Office of the Chief Financial Officer. Budget Homepage,

April 2011                                                                 Page 23

Re-Energizing the Capacity Development Program
Key Components of the Approach

   1.  EPA will work with the state Drinking Water State Revolving Fund (DWSRF) Loan
       Fund and the United States Department of Agriculture (USD A) Rural Utilities Service to
       strengthen and target financial support to small systems.

   2.  EPA will support strengthening Capacity Development Programs and tools.

   3.  EPA will promote partnerships/restructuring of non-sustainable systems.

EPA believes that the Safe Drinking Water Act (SDWA) currently allows for the development
and implementation of many of the tools and programs necessary to assist these systems in
reaching EPA's public health objectives, and to move PWSs down the path toward long-term
sustainability. The robust use of these tools will promote protection of public health while
providing for the equitable consideration of small system customers.

2010  National Capacity Development and Operator  Certification

In recognition of a need for greater input and involvement nationwide, EPA partnered with the
states to plan the first ever joint National Capacity Development and Operator Certification
Workshop. This workshop was held in September 2010 in Dallas, Texas. The goals of the
workshop were to promote greater cohesion and communication between state programs and
among stakeholders (e.g., states, EPA, and technical assistance [TA] providers), and to discuss
challenges and identify best practices that states can apply to their individual programs. The
workshop was  attended by 35 states, EPA Headquarters and Regions, the Rural Community
Assistance Program, the Environmental Finance Centers, the National Rural Water Association,
the American Water Works Association, Small System Technical Assistance Centers, the
Association of State Drinking Water Administrators, and the USDA Rural Development.

Participants at the workshop expressed great interest in moving forward with implementation of
approaches and practices that address the key PWS challenges identified. For this reason, the
participants suggested forming three ongoing workgroups to address the following topics: 1)
challenges with managerial capacity; 2) workforce; and, 3) improving coordination among
drinking water programs. These workgroups, in addition to the Re-Energizing Capacity
Development Workgroup, will  assist EPA in implementing the Small Systems Approach and
moving the Capacity Development Program forward.
April 2011                                                                     Page 24

Re-Energizing the Capacity Development Program
Clean Water and  Drinking Water Infrastructure  Sustainability  Policy

EPA issued its Clean Water and Drinking Water Infrastructure Sustainability Policy in October
2010 as part of its efforts to promote sustainable infrastructure within the water sector.

Sustainable management of our water infrastructure is one of the most substantial challenges
facing the water sector and is essential to protecting human health and the environment and
realizing the goals of clean and safe water. Communities across the country face challenges with
their water infrastructure—often related to aging systems in need of significant upgrade and
repair. The investments made now in water sector infrastructure can have profound impacts on
long-term community Sustainability. Through the Clean Water and Drinking Water Infrastructure
Sustainability Policy, EPA is helping to ensure that federal investments, policies, and actions
support water infrastructure in efficient and sustainable locations to best aid existing
communities, enhance economic competitiveness, and promote affordable neighborhoods.

The Policy was released in response to a request in the FY 2010 President's Budget. In
developing the Policy, EPA reached out to federal, state, and local officials to obtain input.
These stakeholders provided a number of key insights on water and wastewater infrastructure
Sustainability that EPA took into consideration.

The Clean Water and Drinking Water Infrastructure Sustainability Policy emphasizes the need to
build on existing efforts to promote sustainable water infrastructure, working with states and
PWSs to employ robust, comprehensive planning processes to deliver projects that are cost
effective over their life cycle, resource efficient,  and consistent with community Sustainability
goals. The Policy encourages communities to develop sustainable systems that employ effective
management practices to build and maintain the level of technical, managerial, and financial
(TMF) capacity necessary to ensure long-term Sustainability.

This Policy represents a collaborative effort between EPA and its federal, state, and local
partners. Working with these partners, EPA will  develop guidance, provide TA, and target
federal-state revolving fund capitalization funds  and other relevant federal financial assistance to
increase the  Sustainability of our water infrastructure.
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Re-Energizing the Capacity Development Program
Appendix  B:  Detailed Case  Studies
                                  FACILITY OPERATORS PROGRAM
  The Colorado Water Quality Control Division's Water and Wastewater Facility Operators
  Certification Board has a Facility Operators Program for the certification of operators for water
  treatment plants, water distribution systems, and other water related systems.

  While basic operator responsibilities include physical operation of the PWS and chemical dosing, the
  Facility Operator Program encourages operators to go above and beyond their basic duties and to
  hold themselves to a higher level of professionalism. Colorado recently enhanced the Facility
  Operator Program by implementing the Certified Water Professional (CWP) credential. The goal of
  this new credential is to establish a higher level of operator qualification and recognize those
  individuals who perform above and beyond their basic responsibilities. The CWP credential is
  intended to enhance an operator's professional status by encouraging operators to achieve the
  highest applicable certification level and to participate in education beyond the minimum required
  training units. The designation as a CWP would appear after an operator's name, similar to a
  professional engineer (P.E.) designation. The state also wants to use the CWP credential to highlight
  individuals who display additional  professionalism, ethics, competence, and pride in their system
  and community. For example, the  state is interested in highlighting individuals who mentor new
  operators, visit local schools to promote the water system operator profession, or respond to
  emergency situations.

  The Facility  Operators Program is strengthened through several partnerships. For example, the
  Water Quality Control Division (WQCD) works closely with the state's Capacity Development
  Program. This collaboration allows the WQCD to better inform water systems and communities  of
  information related to upcoming trainings. The Capacity Development Program also supports the
  WQCD's Facility Operator Program by allocating Local Assistance set-aside funds to support a
  coaching program. The coaching program enables certified operators with a high level of knowledge
  and experience to assist small systems lacking TMF capacity using a non-enforcement and non-
  regulatory approach. ERG funds are also used to reimburse  small system operators for  renewal
  certifications. In  addition, the WQCD funds hands-on distribution system training at low or no cost.
  These programs  and trainings are offered as a direct result of collaboration between the Capacity
  Development Program  and the Facility Operator Program.

              For more information:
April 2011                                                                           Page 26

Re-Energizing the Capacity Development Program
                            WATER SYSTEM PLAN FOR PROPOSED SYSTEMS
  The Indiana Department of Environmental Management (IDEM) has established several new system
  requirements, including a water system plan. The goals of these requirements are to help the IDEM
  assess TMF capacity of potential PWSs and to ensure that potential owners have an understanding
  of the effort it takes to run a PWS and of the quality and quantity of their proposed water source.
  Since 1999, Indiana has had 7 or 8 PWSs halt their request for a permit because the prospective
  applicant realized that establishing and running a system would be too expensive. The water system
  plan and other new system requirements also help expedite the permitting process and limit the
  need for enforcement activities by the state since non-viable systems will not receive a permit.
  PWSs must submit a water system plan prior to the submission of a construction permit. The plan is
  required to have not only descriptions of the technical aspects of the systems but also include
  financial information,  including details on an infrastructure replacement plan and both a 5 year and
  10 year budget. Managerial information required in the water system plan includes information on
  the  owner and operator, a description of risks and how the PWS would respond to an emergency,
  and an assessment of authority and responsibility. The IDEM provides an Information Handbook for
  Preparing a Water System Management Plan on their website to ensure that potential owners know
  how to create the water system plan and why each component is important to a PWS's capacity.

                     For more information:
                             KANSAS CAPACITY DEVELOPMENT PROGRAM:
  The Kansas Capacity, or KanCap, Education Program was developed by the Kansas Capacity
  Development Program to train water district board and  city council members in rural areas. The
  KanCap Education Program utilizes a handbook and an interactive CD. Board or council members
  can use these as a learning tool and also as a reference guide once the training course is completed.
  As an incentive to increase attendance, Kansas awards additional "points" towards a PWS's ranking
  for DWSRF loans if 80 percent or more of the board or council for that PWS attends a training
  session. Additionally, PWS operators earn 5 hours of educational credit if the majority of the  board
  attends. This educational outreach effort has been highly successful, with 112 PWSs (229 people)
  participating in the training in state fiscal year 2010.

  The Kansas Rural Water Association was contracted to develop training materials and conduct the
  trainings. The purpose of the 8-hour training sessions is  to provide board and council members with
  information they need to make decisions that protect public health, with an emphasis on their
  managerial and financial responsibilities. The training program is voluntary and flexible, with  a
  minimum of 12 training sessions conducted during each state fiscal year. Learning options range
  from on-site discussions with TA providers to a self study option. There is no cost for materials if
  participants attend either classroom training or engage  in on-site discussions; materials for self
  study are available for a fee. Available training materials include video clips, interactive quizzes, and
  other activities that provide information on maintaining compliance with drinking water regulations.

                  For more information: http://www.kdheks.Qov/pws/capdev.html

April 2011                                                                           Page 27

Re-Energizing the Capacity Development Program
 To address the challenge of an aging and retiring workforce, the Massachusetts Department of
 Environmental Protection (MassDEP) created the Green Jobs Training and Placement Partnership
 (GJPP). GJPP is a targeted initiative that aims to identify, attract, and train future water system
 professionals by providing them with both classroom and field training. This program focuses on, but
 is not limited to, EPA-designated environmental justice (EJ) areas.

 MassDEP partners with various groups, including EPA Region 1, drinking water trade associations and
 service providers, water systems, vocational technical high schools, adult education programs, and
 state and community colleges in order to provide a complete and well-rounded experience to
 potential water system operators. These partners assist in providing operator trainings and
 internships, examination preparation and review, and career counseling.

 GJPP is comprised of four components:

 1.   Training for students at vocational and technical high schools. MassDEP works with vocational
     and technical high schools to expose students to drinking water operations and educate them on
     a career as a water system professional. MassDEP and its partners work together to offer
     classroom instruction including use of reading/reference materials, guest lecturers, and field trips.

 2.   Training for adult students through evening adult education classes. MassDEP partners with an
     existing adult education program to provide a 15-hour course on operator training for very small
     systems. The evening classes attract ready-to-work individuals and introduce them to the water
     supply field and the responsibilities of certified operators. Adult education students receive
     reference materials, lectures from water supply professionals, networking opportunities, field
     trips to drinking water systems, and reimbursements for the  Operator Certification exam.

 3.   Training for students at state and community colleges. MassDEP partners with four community
     colleges (all located in EJ areas) to offer an 18-hour classroom training course. The course
     provides students with an understanding of professional opportunities in the drinking water field
     and helps attract students to existing environmental programs in the colleges' networks. Students
     participating in this training are eligible to receive college credit for the course.

 4.   On-site field trainings (i.e., internships) for all trainees. MassDEP provides interactive field
     training experience for students who complete any of the above trainings. MassDEP identifies
     operators that will act as mentors for the training program graduates. These mentors agree to
     play an active role in the individual's development as a water supply professional and offer
     meaningful work that exposes the student to many facets of  water system operation. One of
     MassDEP's partners identifies PWSsto host interns, processes applications from interested
     students, and sets up interviews with prospective PWSs. Interns are reimbursed $10 per hour for
     up to 300 hours of work and must submit  a project at the conclusion of the internship. MassDEP
     funds these internships through EPA Operator Expense Reimbursement Grants.

 A total of 240 students (115 in the community college program, 66 in the adult education program,
 and 59 in the vocational high school program) participated in the first year of GJPP. At the conclusion
 of the first year, more than 12 operator licenses were issued and four students were hired by PWSs.

           For more information:

April 2011                                                                             Page 28

Re-Energizing the Capacity Development Program
                                MAINE DRINKING WATER PROGRAM:
  The Maine Drinking Water Program (DWP) assists water systems in achieving IMF capacity by
  increasing PWS access to funding mechanisms, including the Public Water System Consolidation
  Grants and the Very Small Water System Compliance Loan Fund.

  Public Water System Consolidation Grants

  The Public Water System Consolidation Grant Program was started in 2008 and provides financial
  assistance to PWSs struggling with IMF capacity. The grants are intended to encourage PWSs with
  capacity issues to consider consolidation with a neighboring, viable PWS. PWSs are eligible for a
  grant of up to $100,000. The grant funds up to 50 percent of consolidation costs for for-profit PWSs
  and up to 75 percent of costs for non-profit PWSs. Qualifying costs include, but are not limited to:
  planning and design, environmental review, income survey, and construction and abandonment of
  sources. Currently, the state allocates $500,000 annually to the Grant Program through the use of
  the 15 percent DWSRF Capacity Development set-aside.

  To qualify for a Consolidation Grant, the following criteria must be met:

  •   The  applying PWS must have a TMF  capacity issue that will be addressed by consolidation with
      the more viable PWS and applying PWS must report a median household income of less than

  •   The  receiving PWS must have sufficient TMF capacity, and the consolidation must not reduce
      the receiving PWS's capacity.

  •   Plans and  specifications for the consolidation must be reviewed and approved by DWP.

  •   The  PWS must complete the environmental review process that is currently part of the DWSRF
      construction loan program.

  Since 2008, 13 water systems have received Consolidation Grants, totaling $720,000. Overall,
  approximately 1,600 customers have been impacted. Due to the popularity of the Program, the
  state is planning to implement a ranking process and will  use certain criteria to evaluate
  applications, including risk to public health, timeframe for completion, and timing of the application

  Very Small Water System Compliance Loan Fund
  The Very Small Water System Compliance Loan Fund was created in 2010 to help very small water
  systems achieve compliance with new and current standards of the SDWA, excluding the Total
  Coliform Rule. The Fund puts aside $500,000 of construction funds for use by very small PWSs,
  enabling community water systems (CWSs) serving 100 or fewer customers or any non-profit,
  nontransient noncommunity water systems (NTNCWSs) to receive a loan of up to $50,000 to
  address  compliance issues. The loans are provided at 100 percent principal forgiveness, have no
  application period, and overhead costs are rolled into the loan. The state has identified eight
  potential projects;  seven with arsenic compliance issues and one with a uranium compliance issue.
  To date, three water systems have applied for a Very Small System Compliance Loan.

   For more information: http://www.maine.ciov/dhhs/enci/water/dwp_services/capdev/capdev.htm

April 2011                                                                          Page 29

Re-Energizing the Capacity Development Program
  The Nevada Water and Wastewater Review Committee (NWWRC) brings together state and federal
  funders to assist communities in navigating the application processes of multiple agencies. The
  committee includes representatives from the United States Department of Agriculture, the
  Community Development Building Group, and the Nevada Division of Environmental Protection
  (DEP). These groups collaborate to assist potential PWS loan and grant applicants in determining the
  best approach to funding their projects.

  The NWWRC also has a particular focus on small, rural communities since these communities often
  face difficulties with meeting both the administrative and financial requirements of individual (or in
  some cases, multiple) funding agencies. The NWWRC created a pre-application to help communities
  begin the funding application process and to provide consistent information to all of the funding
  agencies. The NWWRC's committee meets within 3-4 weeks of receiving a pre-application and
  provides detailed correspondence to recommend the most appropriate funding for the applicant.
  Applicants can then complete the funding applications for individual agencies.

  The Nevada DEP has found the creation of the NWWRC to be very beneficial. The NWWRC helps
  small communities by identifying funding opportunities and helping to navigate the application
  process. The NWWRC has also been beneficial in allowing Nevada's funding agencies to craft
  funding packages that combine various loans and grants. Additionally, project applicants know that
  the various funding agencies are communicating, which reduces "answer shopping" by applicants.
  This also allows the funding agencies to receive consistent explanations of funding  proposals
  because all agencies have read the basic project information on the pre-application.

                   For more information:
                              TECHNICAL ASSISTANCE AND ENFORCEMENT
  The New Hampshire Capacity Development Program identifies PWSs in need (i.e., "the bucket list")
  based on referrals primarily from enforcement and sanitary survey inspections. This Capacity
  Development list is cross-checked quarterly with EPA's Enforcement Targeting Tool (previously the
  Significant Non-Complier [SNC] and Historical SNC lists) to ensure outreach has been exhausted for
  all higher level enforcement cases as well.
  In January  2008, one new outreach  position was created and other technical staff members were
  assigned outreach duties to shepherd each PWS on the bucket list back to compliance. An active
  work log for each PWS is maintained and is accessible internally to all staff of the Drinking Water
  and Groundwater Bureau (DWGB) for recording and review of information on outreach activities.
  The current status of non-compliant PWSs is discussed at weekly meetings of the Capacity
  Development staff, and quarterly meetings with the Bureau Administrator and all technical and
  survey staff. When necessary, the Administrator personally attends membership meetings and
  conference calls with PWS commissioners or board members to review deficiencies  and come to an
  agreement on a suitable work plan and timeline for resolution. The work plan log is closed when the
  PWS returns to compliance, and a copy of the chronological log is maintained in the PWS file.
    For more information: http://des.nh.aov/oraanization/divisions/water/dwgb/capacitv/index.htm

April 2011                                                                            Page 30

Re-Energizing the Capacity Development Program
  The North Carolina Department of Environment and Natural Resources (DENR) requires a water
  system management plan (WSMP) to document that new PWS owners have the ability to finance,
  operate, and manage their PWS. A WSMP is a useful tool for any owner, and especially new owners,
  and is required by state regulation for all CWSs and NTNCWSs intending to construct, alter, or
  expand their PWS. To assess the capacity of new PWSs, the state reviews WSMPs to verify that
  PWSs have both managerial and financial capacity. DENR has the authority to review WSMPs at any
  time and to require existing PWSs to address any management and ownership issues.

  The WSMPs must include details on the managerial and financial capacity of the PWS. The WSMP
  specifically discusses: system organization; ownership; management qualifications; management
  training; internal PWS policies; monitoring,  reporting, and record keeping procedures; and financial
  plans. Once construction, alteration, or expansion activities are finalized, the PWS must submit an
  engineer's certification that the project has been constructed in accordance with the approved
  WSMP and specifications. When DENR encounters difficulty with a PWS, it may review the WSMP
  and require that the PWS submit an engineer's report on how it is addressing the problem.

        For more information:
                                     SYSTEM RESTRUCTURING
  The Texas Commission on Environmental Quality (TCEQ) offers consolidation assessments for PWS
  owners who are considering getting out of the water business by consolidating their PWS. In these
  circumstances, TCEQ contracts with the Texas Rural Water Association (TRWA) to provide
  consolidation assessments.  If consolidation is determined to be feasible and recommended, the
  TWRA discusses consolidation with the PWS owner and other affected parties and helps to facilitate
  the process (e.g., complete paperwork and applications, provide support at public meetings) until
  completion. PWSs currently in enforcement proceedings or in the process of being referred to
  enforcement for violations are not eligible for assistance without the approval and involvement of
  the TCEQ Enforcement Division and Regional Field Operations Office. Projects that will result in PWS
  consolidation can receive additional priority points in the state's DWSRF Intended Use Plan.
  TCEQ also contracts with the University of Texas to help PWSs with Maximum Contaminant Level
  violations understand the issues and related consolidation options (e.g., interconnections,
  treatment, relocating a source).  Financial impacts are also discussed, so that the PWS understands
  the costs per customer for different options. TCEQ funds this high-level technical assistance to small
  PWSs using the DWSRF Small Systems Technical Assistance (2%) set-aside.

            For more information: http://www.trwa.orci/FMTAssistanceBrochure.pdf and
                 http://www.beg. ss2004-2007.htm
April 2011                                                                           Page 31

Re-Energizing the Capacity Development Program
                               VIRGINIA OFFICE OF DRINKING WATER:
  Virginia's Office of Drinking Water (ODW) staff work collaboratively with PWSs to help them comply
  with regulations by using a programmatic and financial assistance approach. As part of the state's
  Capacity Development Strategy, ODW promotes sustainability and encourages PWSs to develop
  IMF capacity by utilizing ODWs source water assessments and engaging PWSs in the development
  of source water protection (SWP) plans.
  In 2003, ODW completed a focused effort to perform Source Water Assessment Reviews on all
  active public water supplies. These assessments were designed to reveal PWSs' potential
  vulnerabilities to manmade contamination and serve as a tool for water supply resource planning.
  ODW continues to perform assessments on new PWSs and to update historical  assessments using
  field observations made during sanitary surveys.
  ODW also has a Source Water Protection Program for small ground water CWSs. This Program
  utilizes a contractor to provide technical support to small PWSs. The resulting SWP plans enable
  participating PWSs to take steps to safeguard their drinking water sources by managing and
  controlling activities in the vicinity of the source that could compromise water quality and quantity.

  As of August 2010: 89 CWSs (46% of population, 9% of CWSs) have achieved substantial
  implementation of their SWP plans; 255 CWSs (26% of CWSs) have a SWP strategy in place; and, 166
  CWSs have completed a SWP plan which addresses one or more aspect of their protection strategy.

  Additionally, ODW, in conjunction with the Department of Environmental Quality, solicits proposals
  for Wellhead Protection Plan Development from PWSs. This funding source helps PWSs implement
  activities in their SWP plans (e.g., installing fencing around wellheads, adding signs, removing
  underground storage tanks).

       For more information:
April 2011                                                                           Page 32

Re-Energizing the Capacity Development Program
  The State of Washington Department of Health (DOH) collaboratively engages with their TA
  providers to provide PWSs with Capacity Development assistance. The state's regional staff
  members make referrals to TA providers based on a PWS's needs. This assistance can include board
  training, asset management, budgeting, rate setting, loan preparation, and other activities that
  improve the PWS's viability. The TA providers complete summary reports of services provided and
  consult with the state's contract manager and regional staff to discuss progress, concerns,
  remaining technical assistance needs, and how best to address unresolved  issues.

  DOH also proactively engages with PWSs through their planning program. By regulation, all CWSs
  and NCWSs must demonstrate their TMF capacity through a comprehensive planning document.
  CWSs that serve 1,000 or more connections or that are expanding in size must receive DOH approval
  of their water system plan. These PWSs evaluate and document their operational and management
  structure, future capital improvements, budget, current and estimated future demand, and ability to
  meet the demand. The remaining PWSs must develop and implement a smaller comprehensive plan
  that evaluates system capacity, but does not anticipate future growth. PWSs work with local
  planning agencies, emergency responders, officials,  and neighboring PWSs  throughout their plan
  development process. DOH regional planners and engineers use the plan approval process to
  oversee PWSs' capacity to serve their current and future customers. Regional staff members also
  help small PWSs develop appropriate plans for their future by providing direct technical assistance
  and outreach or referrals to TA providers.

           For more information: http://www.doh.wa.qov/ehp/clw/Procirams/capacitv.htm
April 2011                                                                           Page 33