Safe Drinking Water Act: Implementation and Issues

Order Code IB10118

CRS Issue Brief for Congress

Received through the CRS Web

Safe Drinking Water Act:

Implementation and Issues

Updated May 3, 2006

Mary Tiemann

Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

CONTENTS

SUMMARY

MOST RECENT DEVELOPMENTS

BACKGROUND AND ANALYSIS

Introduction

The 1996 SDWA Amendments

Regulated Public Water Systems

Safe Drinking Water Issues

Regulating Drinking Water Contaminants

Standard-Setting

Recent and Proposed Rules

Perchlorate

Methyl Tertiary Butyl Ether (MTBE)

Drinking Water Infrastructure Funding

Drinking Water State Revolving Fund

Funding Issues

Drinking Water Security

Small Systems Issues

Small System Variances

Exemptions

Affordability Issues and Compliance

LEGISLATION

CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS

FOR ADDITIONAL READING

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Safe Drinking Water Act: Implementation and Issues

SUMMARY

Key drinking water issues in the 109th

Congress have included problems caused by

specific contaminants, such as methyl tertiary

butyl ether (MTBE) and perchlorate, as well

as the related issue of the appropriate federal

role in providing financial assistance for water

infrastructure projects. Congress last reauthorized the Safe Drinking Water Act (SDWA) in

1996, and although funding authority for most

SDWA programs expired in FY2003, broad

reauthorization bills have not been proposed,

as the Environmental Protection Agency

(EPA), states, and water systems remain busy

implementing the 1996 amendments.

The 107th Congress amended SDWA to

address concerns regarding the security of the

nation’s drinking water supplies. This act

included requirements for community water

systems to conduct vulnerability assessments

and prepare emergency response plans. In the

first session of the 109th Congress, S. 1426 was

introduced to require EPA to report to Congress on implementation of the water security

research provisions of the Bioterrorism Act.

An ongoing SDWA issue involves the

growing cost and complexity of drinking water

standards and the ability of water systems,

especially small systems, to comply with standards. The issue of the cost of drinking water

standards, such as the new arsenic standard, has

merged with the larger debate over the federal

role in assisting communities with financing

drinking water infrastructure — an issue that

has become more challenging in a time of

tightened government budgets.

In the first session of the 109th Congress,

Congress passed the Energy Policy Act of

2005 (P.L. 109-58, H.R. 6), which authorizes

appropriations from the Leaking Underground

Storage Tank Trust Fund specifically for EPA

and states to address releases of MTBE. It

also imposes new leak prevention requirements on EPA, states, and underground storage tank owners to better protect sources of

drinking water. Section 322 of the energy act

amended SDWA to preclude EPA from regulating the underground injection of fluids

(other than diesel fuel) into drinking water

sources for hydraulic fracturing purposes

related to oil, gas, and geothermal production.

Congress authorized a drinking water state

revolving fund (DWSRF) program in 1996 to

help communities finance projects needed to

comply with drinking water standards. For

FY2006, Congress provided $837.5 million for

this program. However, studies show that a

large funding gap exists and will grow as

SDWA requirements increase and infrastructure ages. The Senate Environment and Public

Works Committee has reported S. 1400, the

Water Infrastructure Financing Act, to increase

funding for the DWSRF program and a parallel

wastewater program, and to provide grant

assistance for small and rural communities.

Several other bills would establish a grant

program to help small communities comply

with drinking water standards and provide

greater compliance flexibility for small water

systems.

Concerns about perchlorate in drinking

water returned to the congressional agenda,

after the 108th Congress enacted several provisions on this issue. The House has passed

H.R. 18 and H.R. 186, which would establish

groundwater remediation programs in California, where most perchlorate contamination has

been identified. Other bills would direct EPA

to issue a SDWA standard for perchlorate.

Congressional Research Service

˜

The Library of Congress

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MOST RECENT DEVELOPMENTS

On December 8, 2005, the Senate Environment and Public Works Committee reported

S. 1400, the Water Infrastructure Financing Act (S.Rept. 109-186), to increase funding for

the drinking water state revolving fund (DWSRF) and the Clean Water SRF and to authorize

a grant program for small water systems and critical infrastructure projects. The Energy

Policy Act of 2005 (P.L. 109-58, H.R. 6), enacted August 8, 2005, amended SDWA to

exempt from regulation the underground injection of all fluids, except diesel fuel, into

underground sources of drinking water for hydraulic fracturing purposes related to oil, gas,

and geothermal production. (See CRS Report RL32873, Key Environmental Issues in the

Energy Policy Act of 2005 (P.L. 109-58, H.R. 6), coordinated by Brent D. Yacobucci.) The

energy act also authorizes appropriations from the Leaking Underground Storage Tank Trust

Fund to address releases of MTBE, and it imposes new leak prevention requirements on

EPA, states, and underground storage tank owners to better protect drinking water sources.

EPA’s FY2006 appropriations act (P.L. 109-54), enacted August 2, included $850 million

for the DWSRF program and $9 million for EPA’s Water Sentinel security initiative. After

applying two across-the-board rescissions applicable to EPA (a 0.476% rescission under P.L.

109-54 and a 1% rescission under P.L. 109-148, the Department of Defense FY2006

appropriations act), these amounts were $837.5 million and $8.1 million, respectively.

BACKGROUND AND ANALYSIS

Introduction

The Safe Drinking Water Act (SDWA), Title XIV of the Public Health Service Act (42

U.S.C. 300f-300j-26), is the key federal law for protecting public water supplies from

harmful contaminants. First enacted in 1974 and widely amended in 1986 and 1996, the act

is administered through programs that regulate contaminants in public water supplies,

provide funding for infrastructure projects, protect sources of drinking water, and promote

the capacity of water systems to comply with SDWA regulations. The 1974 law established

the current federal-state arrangement in which states and tribes may be delegated primary

enforcement and implementation authority (primacy) for the drinking water program by the

Environmental Protection Agency (EPA), which is the federal agency responsible for

administering the law. The state-administered Public Water Supply Supervision (PWSS)

Program remains the basic program for regulating public water systems, and EPA has

delegated primacy for this program to all states, except Wyoming and the District of

Columbia (which SDWA defines as a state); EPA has responsibility for implementing the

PWSS program in these two jurisdictions. (See also CRS Report RL31243, Safe Drinking

Water Act: A Summary of the Act and Its Major Requirements, by Mary Tiemann.)

More than 90% of people in the United States get their drinking water from one of the

nearly 53,000 community water systems nationwide. Congress passed the SDWA in 1974,

after a nationwide study of community water systems revealed widespread water quality

problems and health risks resulting from poor operating procedures, inadequate facilities, and

poor management of water supplies in communities of all sizes. Since then, government and

private efforts to implement the act have led to better public water system management.

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Significant progress has been made since the enactment of SDWA. Some 91 drinking

water contaminants are now regulated, and EPA reports that the population served by

community water systems that met all health-based standards increased from 83% in 1994

to 91% in 2002. Nonetheless, drinking water safety concerns and challenges remain. EPA

and state enforcement data indicate that public water systems still incur tens of thousands of

violations of SDWA requirements each year. These violations primarily involve monitoring

and reporting requirements, but also include thousands of violations of standards and

treatment techniques. Moreover, monitoring and reporting violations create uncertainty as

to whether systems actually met the applicable health-based standards. Concern also exists

over the potential health effects of contaminants for which drinking water standards have not

been set, such as perchlorate and MTBE.

The 1996 SDWA Amendments

The 104th Congress made numerous changes to the act with the SDWA Amendments

of 1996 (P.L. 104-182), culminating a multi-year effort to amend a law that was widely

criticized as having too little flexibility, too many unfunded mandates, and an arduous but

unfocused regulatory schedule. Among the key provisions, the 1996 amendments authorized

a drinking water state revolving loan fund (DWSRF) program to help public water systems

finance projects needed to comply with SDWA rules. The amendments also established a

process for selecting contaminants for regulation based on health risk and occurrence, gave

EPA some added flexibility to consider costs and benefits in setting most new standards, and

established schedules for regulating certain contaminants (such as Cryptosporidium, arsenic,

and radon). The law added several provisions aimed at building the capacity of water

systems (especially small systems) to comply with SDWA regulations, and imposed many

new requirements on the states including programs for source water assessment, operator

certification and training, and compliance capacity development. The amendments also

required that community water suppliers provide customers with annual “consumer

confidence reports” that provide information on contaminants found in the local drinking

water. The law authorized appropriations for SDWA programs through FY2003.

Regulated Public Water Systems

Federal drinking water regulations apply to some159,000 privately and publicly owned

water systems that provide piped water for human consumption to at least 15 service

connections or that regularly serve at least 25 people. (The law does not apply to private,

residential wells.) Of these systems, 52,838 are community water systems (CWS) that serve

a residential population of nearly 270 million year-round. All federal regulations apply to

these systems. (Roughly 15% of community systems are investor-owned.) Nearly 18,650

public water systems are non-transient, non-community water systems (NTNCWS), such as

schools or factories, that have their own water supply and serve the same people for more

than six months but not year-round. Most drinking water requirements apply to these

systems. Another 84,740 systems are transient non-community water systems (TNCWS)

(e.g., campgrounds and gas stations) that provide their own water to transitory customers.

TNCWSs generally are required to comply only with regulations for contaminants that pose

immediate health risks (such as microbial contaminants), with the proviso that systems that

use surface water sources must also comply with filtration and disinfection regulations.

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Of the 52,838 community water systems, roughly 84% serve 3,300 or fewer people.

While large in number, these systems provide water to just 9% of the population served by

all community systems. In contrast, 8% of community water systems serve more than 10,000

people, and they provide water to 81% of the population served. Fully 85% (16,545) of nontransient, non-community water systems and 97% (84,740) of transient noncommunity water

systems serve 500 or fewer people. These statistics give some insight into the scope of

financial, technological, and managerial challenges many public water systems face in

meeting a growing number of complex federal drinking water regulations. Table 1 provides

statistics for community water systems.

Table 1. Size Categories of Community Water Systems

System size

(population served)

Number of

community

water systems

Population

served

(millions)

Percent of

community water

systems

Percent of

population

served

Very small (25-500)

30,006

4.96

57%

2%

Small (501-3,300)

14,212

20.14

27%

7%

Medium (3,301-10,000)

4,707

27.35

9%

10%

Large (10,001-100,000)

3,541

99.81

7%

37%

Very large (>100,000)

372

120.25

1%

44%

52,838

272.5

100%

100%

Total

Source: Adapted from US Environmental Protection Agency, Factoids: Drinking Water and Ground Water

Statistics for 2004. Available at [http://www.epa.gov/safewater/data/pdfs/data_factoids_2004.pdf].

Safe Drinking Water Issues

Regulating Drinking Water Contaminants

Standard-Setting. The Safe Drinking Water Act directs EPA to promulgate a

National Primary Drinking Water Regulation for a contaminant if the Administrator

determines that (1) it may have adverse health effects, (2) it is likely to be present in public

water systems with a frequency and at levels of public health concern, and (3) its regulation

presents a meaningful opportunity for health risk reduction. The regulations generally include

numerical standards to limit the amount of a contaminant that may be present in drinking

water. Where it is not economically and technically feasible to measure a contaminant at very

low concentrations, EPA may establish a treatment technique in lieu of a standard.

To develop a drinking water regulation, EPA must address a variety of technical issues.

The agency must (1) determine the occurrence of a contaminant in the environment, and

especially in public water systems; (2) evaluate human exposure and risks of adverse health

effects to the general population and to sensitive subpopulations; (3) ensure that analytical

methods are available for water systems to use in monitoring for a contaminant; (4) evaluate

the availability and costs of treatment techniques that can be used to remove a contaminant;

and (5) assess the impacts of a regulation on public water systems, the economy, and public

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health. Consequently, regulation development typically is a multi-year process. EPA may

expedite procedures and issue interim standards to respond to urgent threats to public health.

After reviewing health effects studies, EPA sets a nonenforceable maximum

contaminant level goal (MCLG) at a level at which no known or anticipated adverse health

effects occur and that allows an adequate margin of safety. EPA also considers the risk to

sensitive subpopulations (e.g., children). For carcinogens and microbes, EPA generally sets

the MCLG at zero. Because MCLGs are based only on health effects and not analytical

detection limits or treatment technologies, they may be set at levels that water systems cannot

meet. Once the MCLG is established, EPA sets an enforceable standard, the maximum

contaminant level (MCL). The MCL generally must be set as close to the MCLG as is

“feasible” using the best technology or other means available, taking costs into consideration.

EPA has relied on legislative history to determine the meaning of “feasible.” Most

recently, the Senate report (S.Rept. 104-169) accompanying the 1996 amendments stated that

feasible means the level that can be reached by large, regional drinking water systems

applying best available treatment technology. The report explained that this approach is used

because 80% of the population receives its drinking water from large community water

systems, and thus, safe water can be provided to most of the population at very affordable

costs. (About 80% of the population is served by systems that serve a population of 10,000

or more.) However, because standards are based on cost considerations for large systems,

Congress expected that standards could be less affordable for smaller systems. An issue in

the 1996 reauthorization debate concerned whether the costs of some standards were

justified, given their estimated risk-reduction benefits. As amended, the act now requires

EPA, when proposing a standard, to publish a determination as to whether or not the benefits

of a proposed standard justify the costs. If EPA determines that the benefits do not justify

the costs, EPA, in certain cases, may promulgate a standard less stringent than the feasible

level that “maximizes health risk reduction benefits at a cost that is justified by the benefits.”

Recent and Proposed Rules. EPA’s recent rulemaking activities include a January

4, 2006, rule package (71 FR 387) that expands existing requirements to control pathogens,

especially Cryptosporidium (Long Term 2 Enhanced Surface Water Treatment Rule [LT2

rule]) and disinfectants (e.g., chlorine) and their byproducts (e.g., chloroform) (Stage 2

Disinfectant and Disinfection Byproduct Rule [Stage 2 DBP]). These rules complete a series

of statutorily mandated rules EPA has promulgated that impose increasingly strict controls

on the presences of pathogens and disinfectants and their byproducts in water systems.

(Information on the rules is available at [http://www.epa.gov/safewater/disinfection].) EPA

also has promulgated rules for several radionuclides, including revised radium standards

(effective December 2003), and a revised standard for arsenic (effective January 23, 2006).

EPA has nearly completed a rulemaking to establish disinfection requirements for

systems relying on ground waste. The groundwater rule, expected in August 2006, is

intended to protect against fecal bacteria contamination in these systems. EPA expects to

promulgate a radon rule in December 2006 and is evaluating many other contaminants,

including perchlorate and MTBE, for possible regulation.

Perchlorate. The key ingredient of solid rocket fuel, perchlorate is used heavily by

the Department of Defense (DOD), the National Aeronautics and Space Administration

(NASA), and related industries. It is also used in road flares, fireworks, and other products.

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This highly soluble and persistent compound has long been disposed of on the ground, and

has been detected in sources of drinking water that serve more than 11 million people,

usually at low levels. Perchlorate is known to disrupt the uptake of iodine in the thyroid,

potentially affecting thyroid function. A key concern is that, if sufficiently severe, impaired

thyroid function in pregnant women can impair brain development in fetuses and infants.

EPA identified perchlorate as a candidate for regulation in 1998, but concluded that

information was insufficient at that time to make a regulatory determination. EPA listed

perchlorate as a priority for further research on health effects and treatment technologies, and

for collecting occurrence data. In 2002, EPA issued a controversial draft risk assessment for

perchlorate that concluded that potential human health risks of perchlorate exposure include

effects on the developing nervous systems and thyroid tumors, based on rat studies that

observed benign tumors and adverse effects in fetal brain development. The draft assessment

included a revised draft reference dose (RfD) intended to protect the most sensitive groups

against these effects. That dose roughly translated to a drinking water standard of 1 part per

billion (ppb). EPA’s 1999 draft level translated to a standard of roughly 32 ppb.

Because an RfD provides the basis for determining the level at which a drinking water

standard is set, and because these standards are, in turn, the basis of environmental cleanup

standards, DOD and other perchlorate users and manufacturers have followed EPA’s efforts

closely. Interagency debate over the draft assessment persisted, and in March 2003, EPA, the

DOD, NASA, and other federal agencies asked the National Research Council (NRC) to

review the science for perchlorate and EPA’s draft risk assessment.

The NRC released its study in January 2005, and it broadly agreed with several EPA

findings; however, the NRC committee suggested several changes to EPA’s draft risk

assessment. Among other findings, the committee noted that, unlike rats, humans have

multiple mechanisms to compensate for iodide deficiency and thyroid disorders, and that

studies of rats are of limited use for assessing human health risk associated with perchlorate

exposure. The committee recommended that EPA base its assessment on human data. The

NRC calculated an RfD for perchlorate that incorporates an uncertainty factor to protect the

most sensitive populations; that is, RfD would translate to a drinking water equivalent level

of 24.5 ppb. (In developing an MCL, EPA would likely lower this number to reflect the

amount of perchlorate exposure that EPA determines comes from other sources, especially

food.) EPA has adopted the NRC’s recommended RfD but has not decided whether to set

a standard for perchlorate. (For further discussion, see CRS Report RS21961, Perchlorate

Contamination of Drinking Water: Regulatory Issues and Legislative Actions, by Mary

Tiemann.)

The House passed two bills that address perchlorate-contaminated groundwater in

California: H.R. 186 would authorize the Secretary of the Interior to make grants to the Santa

Clara Valley Water District for groundwater remediation projects, and H.R. 18 would

authorize grants for local water authorities within the Santa Anna River watershed. Among

other bills that have been introduced, H.R. 3053 would authorize the restoration of

perchlorate-contaminated groundwater in Eastern Santa Clara River Basin. Companion bills

H.R. 4798/S. 2298 would authorize grants for remediating California water supplies and

sources contaminated by perchlorate, authorize grants for developing perchlorate cleanup

technologies, and express the sense of Congress that EPA should set a drinking water

standard for perchlorate. H.R. 213 would require EPA to set a standard by July 31, 2007.

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Methyl Tertiary Butyl Ether (MTBE). This gasoline additive has been widely used

to meet the Clean Air Act requirement that reformulated gasoline (RFG) contain at least 2%

oxygen to improve combustion. RFG is required for use in areas that fail to meet the federal

ozone standard. However, numerous incidents of water contamination by MTBE have led

to calls for restrictions on its use. At least 25 states, including California and New York, have

enacted limits or phase-outs of the additive. EPA has not developed a drinking water

standard for MTBE, but at least seven states have set their own MTBE standard.

The primary source of MTBE in drinking water has been petroleum releases from

leaking underground storage tank (UST) systems. Once released, MTBE moves through soil

and into water more rapidly than other gasoline components, thus making it is more likely

to reach drinking water sources. EPA estimates that UST leaks involving MTBE can be two

to four times more costly to clean up than conventional gasoline leaks, which generally cost

from $100,000 to $125,000 to remediate.

Because of data gaps, EPA has not issued a health advisory or drinking water standard

for MTBE; however, EPA’s Office of Research and Development concluded in 1993 that the

inhalation evidence would support classifying MTBE as a “possible human carcinogen.”1

In 1997, EPA issued a drinking water advisory for MTBE based on consumer acceptability

(for taste and smell), because even small amounts of MTBE can render water undrinkable

because of its strong taste and odor. Advisories provide information on contaminants that are

not regulated under SDWA. They are not enforceable, but provide guidance to water

suppliers and others regarding potential health effects or consumer acceptability. While the

MTBE advisory is not based on health effects, EPA stated at that time that keeping MTBE

levels in the range of 20-40 parts per billion or lower for consumer acceptability reasons

would also provide a large margin of safety from potential adverse health effects.

EPA has taken steps that could lead to the issuance of a drinking water standard for

MTBE. In 1998, EPA included MTBE on a list of contaminants that are potential candidates

for regulation. Compounds on the contaminant candidate list are categorized as regulatory

determination priorities, research priorities, or occurrence priorities. EPA placed MTBE in

the category of contaminants for which further occurrence data collection and health effects

research are priorities. Thus, although EPA did not select MTBE for regulation, the agency

planned to pursue research to fill data gaps so that a regulatory determination may be made.

However, most current MTBE research is focused on inhalation risks, and very little research

is being done specifically to assess the risks of exposure to MTBE via drinking water. The

next round of regulatory determinations is scheduled for 2006, although EPA can select

contaminants for regulation outside of this cycle.

The Energy Policy Act of 2005 (P.L. 109-58, H.R. 6) adds several new leak prevention

provisions to the UST regulatory program under the Solid Waste Disposal Act. It authorizes

an appropriation of $200 million from the LUST Trust Fund annually for six years,

specifically for addressing petroleum tank leaks involving MTBE or renewable fuels (e.g.,

1

U.S. Environmental Protection Agency, Health Risk Perspectives on Fuel Oxygenates, Office of

Research and Development, EPA 600/R-94/217, 1994, p. 8. See also, EPA’s MTBE risk assessment,

Assessment of Potential Health Risks of Gasoline Oxygenated with Methyl Tertiary Butyl Ether

(MTBE), EPA/600/R-93/206, 1993, [http://www.epa.gov/ncea/pdfs/mtbe/gasmtbe.pdf].

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ethanol) and another $200 million annually for six years for EPA and states to administer the

general leaking petroleum tank cleanup program. The energy law’s UST provisions authorize

EPA and states to use LUST funds to enforce the new leak prevention provisions and

authorize Trust Fund appropriations for this purpose. However, the act’s motor fuels tax

language (which extends the LUST Trust Fund tax through March 2011) prohibits the use

of the trust fund for any new purposes. P.L. 109-58 does not ban MTBE, but it removes the

Clean Air Act oxygenated fuel requirement that prompted greater use of MTBE. A Senate

provision authorizing EPA to regulate the sale a motor fuel or additive if it caused water

pollution also was dropped in conference. (For details, see CRS Report RL32865, Renewable

Fuels and MTBE: A Comparison of Selected Provisions in the Energy Policy Act of 2005

(H.R. 6), by Brent D. Yacobucci, et al.; CRS Report RS21201, Leaking Underground

Storage Tanks: Program Status and Issues, by Mary Tiemann; and CRS Report RL32787,

MTBE in Gasoline: Clean Air and Drinking Water Issues, by James E. McCarthy and Mary

Tiemann.)

Of major concern to drinking water suppliers was the House version of H.R. 6, which

included a retroactive “safe harbor” provision to prohibit products liability lawsuits, alleging

manufacturing or design defects, against producers of fuels containing MTBE and renewable

fuels. The provision would not affect other liability (such as liability for cleanup costs or

negligence for spills). With liability ruled out for design defects, manufacturing defects, and

failure to warn of hazardous products, MTBE manufacturers would likely be more difficult

to reach under these other bases of liability. (For a discussion of legal issues, see CRS Report

RS21676, The Safe Harbor Provision for Methyl Tertiary Butyl Ether (MTBE), by Aaron M.

Flynn.) The safe harbor provision was opposed by many states, local government

organizations, and water suppliers. Opponents argued that a products liability shield would

effectively leave gas station owners liable for cleanup, and because these businesses often

have few resources, the burden for cleanup would fall to communities, water systems, the

states, and private well owners. Proponents argued that a liability safe harbor was merited,

given that MTBE has been used to meet federal Clean Air Act mandates, and that the key

problem was leaking tanks, not MTBE. The Senate bill included a safe harbor for renewable

fuels but not MTBE, and it was not retroactive. Unable to work out a broadly acceptable

compromise, conferees dropped the safe harbor provision from the legislation.

Drinking Water Infrastructure Funding

Drinking Water State Revolving Fund. A persistent SDWA issue concerns the

ability of public water systems to upgrade or replace infrastructure to comply with federal

drinking water regulations and, more broadly, to ensure the provision of a safe and reliable

water supply. In the 1996 SDWA Amendments, Congress responded to growing complaints

about the act’s unfunded mandates and authorized a drinking water state revolving loan fund

(DWSRF) program to help water systems finance infrastructure projects needed to meet

drinking water standards and address the most serious health risks. The program authorizes

EPA to award annual capitalization grants to states. States then use their grants (plus a 20%

state match) to provide loans and other assistance to systems. Communities repay loans into

the fund, thus making resources available for projects in other communities. Eligible

projects include installation and replacement of treatment facilities, distribution systems, and

certain storage facilities. Projects to replace aging infrastructure are eligible if they are

needed to maintain compliance or to further public health protection goals.

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Authorizations of appropriations for the DWSRF program totaled $9.6 billion, including

$1 billion for each of FY1995 through FY2003. Congress has provided nearly $8.6 billion

for this program, including roughly $843 million for FY2005 and $837.5 million for FY2006

(after applying two rescissions of 0.474% and 1%). Through June 2004, EPA had awarded

$5.74 billion in capitalization grants, which, when combined with the state match, bond

proceeds, and other funds, amounted to $9.64 billion in DWSRF funds available for loans

and other assistance. Through June 2004, 6,500 projects received assistance, and total

assistance provided by the program reached $7.98 billion. (See also CRS Report RS22037,

Drinking Water State Revolving Fund: Program Overview and Issues, by Mary Tiemann.)

Funding Issues. The DWSRF program is well regarded, but many organizations and

state and local officials argue that greater investment in water infrastructure is needed. EPA’s

2003 Drinking Water Infrastructure Needs Survey and Assessment concluded that systems

need to invest $276.8 billion in infrastructure improvements over 20 years to comply with

drinking water regulations and to ensure the provision of safe water. The survey includes

funds needed for compliance with several recent rules (including the arsenic rule and the

disinfectants and disinfection byproducts rules) and several proposed rules (e.g., radon). The

survey also identified $1 billion in security-related needs. All infrastructure projects in the

needs assessment promote the health objectives of the act, but only $45.1 billion (16.3%) of

the total need is attributable to SDWA compliance. Of this amount, $35.2 billion is needed

to address existing regulations, and $30.2 billion (86%) is needed for projects to address

microbiological contamination. Nearly two-thirds of the need ($183.6 billion) is for

transmission and distribution projects. Although aging deteriorated infrastructure often poses

a threat to drinking water safety, these needs are largely unrelated to federal mandates.

A related issue is the need for communities to address infrastructure costs that are

outside the scope of the DWSRF program and generally ineligible for such assistance.

Ineligible categories include future growth, ongoing rehabilitation, and system operation and

maintenance. Often, these basic infrastructure costs far exceed SDWA compliance costs.

In 2002, EPA issued The Clean Water And Drinking Water Infrastructure Gap Analysis,

which identified potential funding gaps between projected needs and spending from 2000

through 2019. This analysis estimated the potential 20-year funding gap for drinking water

and wastewater infrastructure capital and operations and maintenance (O&M), based on two

scenarios: a “no revenue growth” scenario and a “revenue growth” scenario that assumed

spending on infrastructure would increase 3% per year. Under the “no revenue growth”

scenario, EPA projected a funding gap for drinking water capital investment of $102 billion

(roughly $5 billion per year) and an O&M funding gap of $161 billion ($8 billion per year).

Using revenue growth assumptions, EPA estimated a 20-year capital funding gap of $45

billion ($2 billion per year), and no gap for O&M. In response to the Gap Analysis, EPA’s

budget request for FY2004 proposed that funding for the DWSRF program be continued at

a level of $850 million annually through FY2018. EPA’s budget justification explained that

this funding level would allow DWSRFs to revolve at a cumulative level of $1.2 billion

(more than double the previous goal of $500 million) and would help close the funding gap

for drinking water infrastructure needs.

Other assessments also have revealed a funding gap. In 2000, the Water Infrastructure

Network (WIN) (a coalition of state and local officials, water providers, environmental

groups and others) reported that over the next 20 years, water and wastewater systems need

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to invest $23 billion annually more than current investments to meet SDWA and Clean

Water Act health and environmental priorities and to replace aging infrastructure. WIN and

other groups have proposed multibillion dollar investment programs for water infrastructure.

Others, however, have called for more financial self-reliance within the water sector.

Water infrastructure issues have received attention in the 109th Congress. The Senate

Environment and Public Works Committee has reported S. 1400, the Water Infrastructure

Financing Act (S. Rept 109-186). This bill would amend SDWA and the Clean Water Act

to reauthorize both SRF programs (authorizing $15 billion over five years for the DWSRF).

It also would direct EPA to establish grant programs for small or economically disadvantaged

communities for critical drinking water and water quality projects; authorize loans to small

systems for preconstruction, short-term, and small project costs; and direct EPA to establish

a demonstration program to promote new technologies and approaches to water quality and

water supply management. At markup, the committee adopted an amendment to apply DavisBacon prevailing wage requirements, in perpetuity, to projects receiving DWSRF assistance.

Action on similar legislation in the 108th Congress was stalled largely by such an amendment.

The Davis-Bacon measure remains contentious, and further action on S. 1400 is uncertain.

In the face of uncertainty over increased federal assistance for water infrastructure, EPA,

states, communities, and utilities have been examining alternative management and financing

strategies to address costs. Strategies include establishing public-private partnerships

(privatization options range from contracting for services to selling system assets), improving

asset management, and adopting full-cost pricing for water services. (For further discussion

of infrastructure issues, see CRS Report RL31116, Water Infrastructure Needs and

Investment: Review and Analysis of Key Issues, by Claudia Copeland and Mary Tiemann.)

Drinking Water Security

Congress addressed drinking water security issues in the Bioterrorism Preparedness of

2002 (P.L. 107-188, H.Rept. 107-481), which amended SDWA to require community water

systems to conduct vulnerability assessments and prepare emergency response plans (new

SDWA section 1433). The act also added sections 1434 and 1435, directing EPA to review

methods by which terrorists or others could disrupt the provision of safe water supplies and

to review methods for preventing, detecting, and responding to disruptions. Introduced in

the July 2005, S. 1426 would reauthorize appropriations for sections 1434 and 1435 and

require EPA to report to Congress on progress and problems with their implementation.

A key provision of the Bioterrorism Act required each community water system serving

more than 3,300 individuals to assess their vulnerability to terrorist attacks or other

intentional acts to disrupt the provision of a safe and reliable water supply. Combined, these

systems serve more than 90% of the population served by community water systems. The

act required these systems to certify to EPA that they conducted a vulnerability assessment

and to provide EPA with a copy of the assessment. The act also required the systems to

prepare or revise emergency response plans incorporating the results of the assessments no

later than six months after completing them. Table 2 outlines the deadlines by which

utilities had to submit their assessments to EPA and complete emergency response plans.

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Table 2. Community Water System Requirements Under the

Bioterrorism Act

System size by population

(approx. no. of systems)

Vulnerability assessments

due dates

Emergency response plans

due dates

100,000 or more (425)

March 31, 2003

September 30, 2003

50,000 - 99,999 (460)

December 31, 2003

June 30, 2004

3,301 - 49,999 (7,500)

June 30, 2004

December 31, 2004

The Bioterrorism Act authorized $160 million for FY2002, and sums as may be needed

for FY2003 through FY2005, to provide financial assistance to community water systems

to assess vulnerabilities, prepare response plans, and address security enhancements and

significant threats. The emergency supplemental appropriations for FY2002 (P.L. 107-117)

provided $90 million for assessing the vulnerabilities of drinking water utilities and security

planning, and $5 million for state grants for assessing drinking water safety. In FY2002, EPA

awarded roughly $53 million in grants to help the largest systems complete vulnerability

assessments by the March 31, 2003 deadline. Essentially all systems met that deadline.

Federal grants were not available for smaller systems covered by the Bioterrorism Act’s

requirements. Instead, EPA, states and water organizations have provided vulnerability

assessment tools, guidance documents, training, and technical assistance to support security

enhancement efforts among these systems. Similar assistance also has been provided for the

remaining 84% of community water systems that serve 3,300 or fewer and were not required

to do vulnerability assessments and emergency planning.

For FY2003, EPA requested $16.9 million for vulnerability assessments for small and

medium-sized systems and $5 million for state water security coordinators to work with EPA

and utilities in assessing water security. P.L. 108-7 included this amount, plus $2 million for

the National Rural Water Association to help small systems with vulnerability assessments,

and $1 million to the American Water Works Association to provide security training.

For FY2004, EPA requested and received $32.4 million for critical water infrastructure

protection, including $5 million for state water security coordination grants. This funding

supported states’ efforts to work with water and wastewater systems to develop and enhance

emergency operations plans; conduct training in the implementation of remedial plans in

small systems; and develop detection, monitoring and treatment technology to enhance water

security. EPA used funds to assist the nearly 8,000 community water systems that serve

water to populations between 3,300 and 100,000 and are subject to the Bioterrorism Act.

For FY2005, EPA requested $5 million for state water security grants and $6.1 million

for other critical infrastructure protection efforts (including $2 million for the Water

Information Sharing and Analysis Center, which shares sensitive security information with

water systems). EPA noted that the $21.3 million reduction reflected a shift in priorities

from assistance for vulnerability assessments. P.L. 108-447 provided the requested amount.

The President requested $5 million for state water security grants for FY2006. The

request also included $44 million for a new water security initiative, Water Sentinel, in

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response to EPA’s water security responsibilities under Homeland Security Presidential

Directive (HSPD) 7, that designated EPA as the lead agency for water infrastructure security.

The goal of the Water Sentinel initiative is to establish pilot early warning systems in several

cities through water monitoring and surveillance for chemical and biological contaminants,

and to build the analytical capacity to support the surveillance program. For this initiative,

EPA’s FY2006 appropriations bill (P.L. 109-54) included $8.1 million, after rescissions. In

H.Rept. 109-80, the House Appropriations Committee urged EPA to develop clear goals for

the Water Sentinel program and justify the request more clearly for FY2007. Congress also

provided $5 million ($4.93 after rescissions) for state water security grants.

The FY2007 budget request includes $41.7 million for the Water Sentinel Program,

which EPA views as an essential component of its water security activities. The request also

includes $4.95 for state water security grants. (See also CRS Report RL31294, Safeguarding

the Nation’s Drinking Water: EPA and Congressional Actions, by Mary Tiemann.)

Small Systems Issues

A key SDWA issue involves the financial, technical, and managerial capacity of small

systems to comply with SDWA regulations. Some 84% (44,000) of the nation’s 52,800

community water systems are small, serving 3,300 persons or fewer, and 57% of the systems

serve 500 persons or fewer. Many small systems face challenges in complying with SDWA

rules and, more fundamentally, in ensuring the quality of water supplies. Major problems

include deteriorated infrastructure, lack of access to capital, limited customer and rate base,

inadequate rates, diseconomies of scale, and limited managerial and technical capabilities.

Although these systems serve just 9% of the population served by community water systems,

the sheer number of small systems has created challenges for policymakers.

In the earliest SDWA debates, Congress recognized that setting standards based on

technologies affordable for large cities could pose problems for small systems. During the

reauthorization debate leading up to the 1996 amendments, policymakers gave considerable

attention to the question of how to help small systems improve their capacity to ensure

consistent compliance with the SDWA. The 1996 amendments added provisions aimed at

achieving this goal, including a requirement that states establish strategies to help systems

develop and maintain the technical, financial and managerial capacity to meet SDWA

regulations. Congress also revised provisions on standard-setting (§1412(b)), variances

(§1415(e)), and exemptions (§1416) to increase consideration of small system concerns.

Small System Variances. Since 1996, the SDWA has required EPA, when issuing

a regulation, to identify technologies that meet the standard and that are affordable for

systems that serve populations of 10,000 or fewer. If EPA does not identify “compliance”

technologies that are affordable for these systems, then EPA must identify small system

“variance” technologies. A variance technology need not meet the standard, but must protect

public health. States may grant variances to systems serving 3,300 persons or fewer, if a

system cannot afford to comply with a rule (through treatment, an alternative source of water,

or other restructuring) and the system installs a variance technology. With EPA approval,

states also may grant variances to systems serving between 3,300 and 10,000 people.

To date, EPA has determined that affordable compliance technologies are available for

all drinking water regulations. Consequently, the agency has not identified any small system

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variance technologies, and no small system variances have been available. However, several

recent rules (such as the arsenic and radium rules and the Stage 2 Disinfectants and

Disinfection Byproducts Rule [DBP]) have caused growing concern that EPA is not using

the tools Congress provided in the 1996 amendments to help small systems comply with

SDWA regulations. As discussed below, EPA currently is reevaluating its affordability

criteria. Based on this reevaluation, EPA may authorize states to grant small system

variances for the Stage 2 DBP, which EPA published on January 4, 2006.

Exemptions. The act’s exemption provisions also are intended to provide compliance

flexibility in certain cases. States or EPA may grant temporary exemptions from a standard

if, due to certain compelling factors (including cost), a system cannot comply on time. For

example, all systems are required to comply with the new arsenic standard five years after

its promulgation date. An exemption would allow three more years for qualified systems.

Small systems (serving 3,300 persons or fewer) may be eligible for up to three additional

two-year extensions, for a total exemption duration of nine years (for a total of up to 14 years

to achieve compliance). In the preamble to the arsenic rule published in January 2001, EPA

noted that exemptions will be an important tool to help states address the number of systems

needing financial assistance to comply with this rule and other SDWA rules (66 FR 6988).

However, because of the administrative burden to the state, the exemption authority may not

be widely used. As of late 2004, 13 states had indicated that they would use the exemptions

process for the arsenic rule. However, because the exemption process is resource-intensive

for states, it is unclear whether states will use this authority with much frequency.

Affordability Issues and Compliance. Prompted by intense debate over the

revised arsenic standard and its potential cost to small communities, the conference report

for EPA’s FY2002 appropriations (H.Rept. 107-272) directed EPA to review its affordability

criteria and how small system variance and exemption programs should be implemented for

arsenic. Congress directed EPA to report on its affordability criteria, administrative actions,

potential funding mechanisms for small system compliance, and possible legislative actions.

EPA’s report to Congress, Small Systems Arsenic Implementation Issues, summarized

actions EPA was undertaking to address these directives. Major activities included (1)

reviewing the small system affordability criteria and variance process; (2) developing a small

community assistance plan to improve access to financial and technical assistance, improve

compliance capacity, and simplify the use of exemptions; and (3) implementing a $20

million research and technical assistance strategy. In 2002, EPA issued Implementation

Guidance for the Arsenic Rule, which includes guidance to help states grant exemptions.

EPA has offered technical assistance to small systems and has sponsored research on lowcost treatment technologies for arsenic. Also, EPA is working with small communities to

maximize loans and grants under SDWA and the U.S. Department of Agriculture water

infrastructure programs. For information on USDA and other assistance programs, see CRS

Report RL30478, Federally Supported Water Supply and Wastewater Treatment Programs.

Congress continues to express concern about the cost to communities to comply with

the arsenic rule, which is now in effect. The conference report for the Consolidated

Appropriations Act for FY2005 directed EPA to report, by August 2005, on the extent to

which communities will be impacted by the arsenic rule, and to propose compliance

alternatives and make recommendations to minimize compliance costs. Congress also

provided $8.3 million for research on cost-effective arsenic removal technologies.

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On March 3, 2006, EPA proposed three options for revising its affordability criteria for

determining whether a compliance technology is unaffordable for small systems (71 Federal

Register 10671). States could use the criteria to grant small-system variances when systems

cannot afford to comply with a standard. Using the current draft criteria, EPA considers a

technology affordable unless the average compliance cost exceeds 2.5% of the area’s median

household income, and to date, EPA has determined that affordable technologies are

available for all SDWA standards. The three proposed options are well below that level

(0.25%, 0.50%, and 0.75%). The revised criteria are also expected to address how to ensure

that a variance technology would be protective of public health. According to EPA, the final

criteria would apply only to EPA’s newly promulgated Stage 2 DBP and future rules.

In the 109th Congress, various bills have been introduced to help small systems comply

with the arsenic rule and other rules. S. 41 and H.R. 1315 would direct states to grant

qualified small water systems exemptions for naturally occurring contaminants. H.R. 4495

would give small systems two more years to comply with the arsenic rule. S. 2161 would

prevent the enforcement of drinking water regulations for small systems unless EPA has

identified a variance technology and sufficient DWSRF funds are made available. S. 2161

would further establish new affordability criteria for treatment technologies. Companion bills

H.R. 2417 and S. 689 would require EPA to establish a small system grant program to help

qualified communities comply with standards, delay state enforcement of the arsenic rule

until states implement the grant program, and prevent EPA from enforcing a standard during

the grant application process. S. 1400 would increase SRF funding and create a grant

program for priority projects, including projects to help small systems comply.

LEGISLATION

P.L. 109-58, H.R. 6 (Barton)

The Energy Policy Act of 2005, §322, amends SDWA to exempt from regulation the

underground injection of fluids (except diesel fuel) into underground sources of drinking

water for hydraulic fracturing purposes related to oil, gas, and geothermal production. Signed

into law on Aug. 8, 2005.

P.L. 109-307, H.R. 3058 (Knollenberg)

FY2006 appropriations act for the Departments of Transportation, Treasury, and

Housing and Urban Development, the Judiciary, District of Columbia, and Independent

Agencies. Directs the Secretary of the Treasury to submit a report to Congress that provides

the legal basis for applying arbitrage bond rules to reserve funds held by the clean water SRF

and DWSRF that generally contain replacement proceeds, not bond proceeds. Senate agreed

to amendment (S.Amdt. 2162 [Reed]) on Oct. 20, 2005; bill signed into law Nov. 30, 2005.

H.R. 213 (Solis)

Amends SDWA to require EPA to issue a standard for perchlorate by July 31, 2007.

Introduced Jan. 4, 2005; referred to the Committee on Energy and Commerce.

H.R. 1315 (Otter)

Amends SDWA to require states to grant temporary exemptions to small water systems

from the requirements of regulations for naturally occurring contaminants (e.g., arsenic and

radium). Introduced March 15, 2005; referred to the Committee on Energy and Commerce.

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H.R. 1540 (Miller, Gary)

Amends SDWA civil suit provisions to establish liability standards for public water

systems regarding damages arising from injuries allegedly caused by the delivery of water

containing regulated or unregulated contaminants. Introduced April 8, 2005; referred to the

Committee on Energy and Commerce, and the Committee on the Judiciary.

H.R. 1679 (Andrews, Robert E.)

Authorizes supplemental appropriations for the DWSRF of $85 million for state

expenses of formulating source water assessment programs; specifies that the programs must

include the assessment of specified pesticides, surface water sources, residential wells, and

contaminated soil. Introduced April 19, 2005; referred to the Committee on Appropriations.

H.R. 2417 (Wilson, H.)/S. 689 (Domenici)

Amends SDWA to direct EPA to establish a program to provide grants to eligible

communities for projects needed to comply with drinking water standards; authorizes

funding at $1.9 million annually for six years; provides temporary relief from enforcement

of standards during the grant application process; delays state enforcement of the arsenic rule

until the state implements the grant program. H.R. 2417 was introduced May 17, 2005;

referred to the Committee on Energy and Commerce. S. 689 was introduced April 4, 2005;

referred to the Committee on Environment and Public Works.

H.R. 3178 (Norton)/S. 1328 (Jeffords)

Amends SDWA to require EPA to revise the lead regulation, establish an enforceable

standard for lead, and revise monitoring requirements; authorizes appropriations for a lead

service line replacement fund; reduces the amount of lead allowed in plumbing; and requires

EPA to issue rules for testing and remediating lead in school drinking water. H.R. 3178 was

introduced June 30, 2005; referred to the Committee on Energy and Commerce. S. 1328 was

introduced June 29, 2005; referred to the Committee on Environment and Public Works.

H.R. 4198 (Andrews)

Amends SDWA provisions requiring EPA to conduct studies on the health effects of

drinking water contaminants on sensitive subpopulations (e.g., infants and children) to

require that the studies include an evaluation of morbidity and endocrine disruptors; amends

reporting requirements to require EPA to ensure that related reports to Congress include

statistics on health effects as determined by rates of occurrence by age and gender.

Introduced November 2, 2005; referred to the Committee on Energy and Commerce.

H.R. 4495 (Renzi)

Amends SDWA to direct EPA to extend by two years the compliance date for the

arsenic rule for public water systems serving 65,000 or fewer persons. Introduced Dec. 8,

2005; referred to the Committee on Energy and Commerce.

H.R. 4798 (Pombo)/S. 2298 (Feinstein)

Authorizes grants to remediate California water supplies and sources contaminated by

perchlorate; establishes a California Perchlorate Cleanup Fund in the Treasure; authorizes

grants for developing perchlorate cleanup technologies; and expresses the sense of Congress

that EPA should establish a perchlorate drinking water standard. Both bills were introduced

Feb. 16, 2006. H.R. 4798 was referred to the Committee on Transportation and

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Infrastructure, Subcommittee on Water Resources and Environment. S 2298 was referred

to the Committee on Environment and Public Works.

S. 41 (Nelson, E. Benjamin)

Amends SDWA to direct states to grant small, nonprofit water systems exemptions

from drinking water regulations for naturally occurring contaminants, in certain cases.

Introduced January 24, 2005; referred to the Committee on Environment and Public Works.

S. 837 (Inhofe)

Amends SDWA to exempt hydraulic fracturing related to oil and gas production from

the definition of underground injection and, thus, exclude this practice from potential

underground injection regulations related to the protection of underground sources of

drinking water. (Similar to H.R. 6, Section 322.) Introduced April 18, 2005; referred to the

Committee on Environment and Public Works.

S. 1080 (Jeffords)

Amends SDWA to prohibit the use of diesel fuel and other toxic substances for

hydraulic fracturing practices related to oil and natural gas production. Introduced May 19,

2005; referred to the Committee on Environment and Public Works.

S. 1400 (Chafee)

The Water Infrastructure Financing Act amends SDWA and the Clean Water Act to

amend and reauthorize both SRF programs; direct EPA to establish grant programs for small

or economically disadvantaged communities for critical drinking water and water quality

projects; authorize loans to small water and wastewater systems for preconstruction and

small project costs; require a study of the availability of no- and low-lead plumbing

components; authorize funding for lead service line replacement in the District of Columbia;

direct EPA to establish a grant program to promote new technologies and approaches to

water quality and supply management; authorize an agricultural pollution control grant

program; and for other purposes. Introduced July 14, 2005; referred to the Committee on

Environment and Public Works; reported, amended, Dec. 8, 2005 (S.Rept. 109-186).

S. 1409 (Murkowski)

Amends and reauthorizes Section 303 of the 1996 SDWA Amendments to authorize

EPA to make grants to Alaska to pay 75% of the cost of water and wastewater systems for

rural and Native villages in Alaska. Introduced July 14, 2005; referred to the Committee on

Environment and Public Works; reported, amended, October 24, 2005 (S.Rept. 109-159).

S. 1426 (Obama) Amends SDWA to reauthorize appropriations for water security

Sections 1334 and 1435 regarding contaminant prevention, detection, and response, and to

require a report to Congress on progress and problems in implementing these provisions.

Introduced July 19, 2005; referred to the Committee on Environment and Public Works.

S. 1836 (Jeffords)

The Gulf Coast Infrastructure Redevelopment and Recovery Act, § 304, amends SDWA

to temporarily grant states authority to provide DWSRF funding for water system projects

that are not on the state priority list to address hurricane damage. Introduced Oct. 6, 2005;

referred to the Committee on Environment and Public Works.

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S. 2161 (Inhofe)

Amends SDWA to prevent enforcement of certain drinking water regulations for small

systems unless sufficient funding is available or EPA has identified small system variance

technologies; establishes new affordability criteria for treatment technologies. Introduced

December 21, 2005; referred to the Committee on Environment and Public Works.

CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS

U.S. Congress. House. Committee on Energy and Commerce. Subcommittee on

Environment and Hazardous Materials. Tapped Out: Lead in the District of Columbia

and the Providing of Safe Drinking Water. Hearing, July 22, 2004, 108th Cong., 2nd

sess. 155 p. (H.Rept. 108-97).

U.S. Congress. House. Committee on Government Reform. Public Confidence, Down the

Drain: the Federal Role in Ensuring Safe Drinking Water in the District of Columbia.

Hearing, March 5, 2004, 108th Cong., 2nd sess. 268 p. (H.Rept. 108-161).

U.S. Congress. House. Committee on Government Reform. Subcommittee on Energy Policy,

Natural Resources and Regulatory Affairs. EPA Water Enforcement: Are We on the

Right Track? Hearing, October 14, 2003, 108th Cong., 1st sess. 201p. (H.Rept. 108-157).

U.S. Congress. House. Committee on Transportation and Infrastructure. Subcommittee on

Water Resources and Environment. Aging Water Supply Infrastructure. Hearing, April

28, 2004, 108th Cong., 2nd sess. 78 p. (H.Rept. 108-63).

U.S. Congress. Senate. Committee on Environment and Public Works. Water Infrastructure

Financing Act. Report to accompany S. 2550. Oct. 7, 2004. 116 p. (S.Rept. 108-386).

FOR ADDITIONAL READING

U.S. Environmental Protection Agency. The Clean Water and Drinking Water Infrastructure

Gap Analysis Report. Report No. EPA 816-R-02-020. September 2002. 50 p.

U.S. Environmental Protection Agency. Providing Safe Drinking Water in America: 2002

National Public Water Systems Compliance Report. Report No. EPA 305-R-04-001.

Dec. 2004. 96 p.

National Research Council. Health Implications of Perchlorate Ingestion. Board on

Environmental Studies and Toxicology. National Academies Press. Jan. 2005. 177 p.

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