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Drinking Water
State Revolving Fund (DWSRF) Program Policy Announcement: Eligibility
of Using DWSRF Funds to Create a New Public Water System
[Federal Register: November 3, 1998 (Volume 63, Number 212)]
[Notices]
[Page 59299-59300]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03no98-63]
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ENVIRONMENTAL PROTECTION AGENCY
[FRL-6183-2]
Drinking Water State Revolving Fund (DWSRF) Program Policy
Announcement: Eligibility of Using DWSRF Funds to Create a New Public
Water System
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice.
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SUMMARY: The U.S. Environmental Protection Agency (EPA) is issuing a
policy decision for the Drinking Water State Revolving Fund (DWSRF)
program that will allow States to make loans for projects that are
needed to solve public health problems for residents currently served
by individual wells or surface water sources. This policy would expand
the universe of eligible loan recipients by allowing loans to an entity
that is not currently a public water system, but which will become a
public water system upon completion of the project. The Agency
published the proposed policy in the Federal Register on June 12, 1998
to seek comment. Comments received during a public comment period and
in a stakeholder meeting held on July 13, 1998 were considered in
developing the final policy.
Background
Section 1452(a)(2) of the Safe Drinking Water Act (SDWA) Amendments
states that ``financial assistance under this section may be used by a
public water system only for expenditures . . . which . . . will
facilitate compliance with national primary drinking water regulations
. . . .'' The Act defines a public water system (PWS) as a ``system . .
. (of) pipes or other constructed conveyances'' which regularly serves
at least 15 service connections or at least 25 individuals.
Several States indicated that a strict interpretation of this
provision would prevent them from providing funds to an entity (e.g.,
homeowners' association, township) that has a public health problem and
is not currently a PWS, but which would become a federally regulated
PWS upon construction of a piped system. States want the flexibility to
provide DWSRF funds to these entities in order to solve public health
problems posed by contaminated wells. While the SDWA does allow States
to lend funds to an existing PWS to extend lines to solve these types
of public health problems, not all of these situations have an existing
PWS nearby that is willing or able to help.
EPA believes that the statute permits the DWSRF to be used to
create a federally regulated PWS in limited circumstances to solve
public health problems intended to be addressed by the statute.
However, the Agency proposed several conditions in its June 12, 1998
Federal Register proposal which would have to be met before such a
project could be funded. They were: (a) upon completion of the project,
the entity responsible for the loan must meet the definition of a
Federal community public water system; (b) funding is limited to
projects on the State's fundable list where an actual public health
problem with serious risks exists; (c) the project must be limited in
scope to the specific geographic area affected by contamination; (d)
the project can only be sized to accomodate a reasonable amount of
growth expected over the life of the facility--growth cannot be a
substantial portion of the project; and (e) the project must meet the
same technical, financial and managerial capacity requirements that the
SDWA requires of all DWSRF assistance recipients.
Comments
Comments were received from 31 parties by July 27, 1998 (1 week
after close of the comment period). Support was divided, with 17 in
favor of, and 14 opposed to, the proposal. Commentors in support of the
policy came from state health and environmental quality departments,
national associations representing water utilities, engineering
professionals and town managers. Commentors opposed to the policy were
from national associations representing ground water professionals, and
representatives of state well driller's associations and associated
industries.
Most of the comments in support of the policy only asked for
clarification of the language used in the proposal. One commentor asked
that the policy be extended to address situations where homeowners
receive unsafe drinking water from surface water sources.
There were three main concerns expressed by those opposing the
policy. The first was that, in proposing such a policy, EPA is implying
that drinking water provided by private wells is unsafe or inferior to
that provided by public water systems. Comments indicated that the
Agency does not distinguish between contaminated wells and contaminated
ground water and that, in the case of the former, there are often
solutions that will result in the provision of safe drinking water. The
second concern was that, in rushing to build new water systems,
communities and states would not sufficiently evaluate all possible
alternatives to solving a problem in an effort to identify the most
cost-effective solution. The third concern was that homeowners served
by private wells would be forced to ``hook-on'' to a system, would not
receive sufficient notice when a PWS was proposed, or would not receive
balanced information about alternatives to construction of a new PWS. A
concern raised by environmental organizations at a stakeholder meeting
held to discuss the proposal was that the policy could result in growth
or urban sprawl. Although EPA limits projects to encompass ``reasonable
growth'', it provides no definition of what is reasonable.
[[Page 59300]]
Response to Comments
In proposing this policy, EPA did not intend to imply that private
wells do not provide safe drinking water to users. There are millions
of people in the nation that obtain water from wells with good drinking
water quality. However, it must be acknowledged that there are
situations where the public health of citizens would be better
protected by creating a public water system supplying drinking water
that is required to meet all health-based standards. States need the
flexibility to address these important public health concerns.
The Agency recognizes that every situation is different, and that
in many cases construction of a public water system is not the most
cost-effective solution to addressing problems caused by poor ground
water quality or poorly constructed wells. In response to the comments
received, we have added an additional condition that must be met before
a loan can be issued to construct a public water system. This condition
requires that a State determine that the project proposed to create a
public water system is a cost-effective solution to resolve the problem
causing a risk to public health.
It is important to remember that these projects are funded using
loans, which must ultimately be repaid by the users of the system. The
DWSRF program requires that all applicants have adequate technical,
financial and managerial capacity to operate a system. States are also
required by the Safe Drinking Water Act to ensure that any new system
created after October 1, 1999 will have adequate capacity to ensure
provision of safe drinking water. If the cost of a project is too high
or if community support for a project is lacking, it becomes more
difficult to guarantee repayment of a loan, and the project would not
receive assistance. States have also indicated that they have little
interest in promoting the creation of new small systems, which often
have more trouble complying with drinking water regulations. These
controls, along with the condition described above and other
requirements, should ensure that only cost-effective projects that are
needed to protect public health receive assistance.
Public participation is an important element of the 1996 SDWA
Amendments and the DWSRF program. States are required to release their
Intended Use Plans for public review and comment before they can
receive federal funds. States have policies in place to ensure that
there is sufficient notification at the local level as well. For
example, all projects are required to undergo an environmental review,
which includes requirements for public notification. Additionally, in
some States, where communities must approve debt, the public must
approve a project by referendum. EPA strongly encourages States to
ensure that homeowners which would be served by a proposed PWS get
adequate notice and informational material to allow them to make an
informed decision.
The issue of growth is important for the Agency as well as for
environmental organizations. The DWSRF program cannot be used to
finance projects where the primary purpose is growth and only allows
for growth considered to be reasonable. The Agency has been hesitant to
define ``reasonable'' because one definition would not capture the
variability between States. For example, what is reasonable in Arizona
may be completely unacceptable in New Hampshire. Many States are also
sensitive to the issue of growth and have developed their own policies
to address what is reasonable. For example, in one State, a proposed
service area would only be allowed to encompass two properties (wells)
beyond the last contaminated well. In another State the amount of
growth that is considered reasonable is that which would increase
capacity of the existing user base by 10%. Additionally, in most cases,
requirements for environmental review should ensure that unworthy
projects are not funded.
Minor changes to the final policy were also made in response to
comments asking for clarification regarding such eligibility issues as
creation of a system to replace a surface water source or creation of a
regional public water system to consolidate smaller systems.
Final Policy
EPA will allow for the creation of a community water system
(publicly or privately owned) to address an existing public health
problem caused by unsafe drinking water provided by individual wells or
surface water sources. This policy also extends to a situation where a
new regional PWS is created by consolidating several existing PWS's
that have technical, financial or managerial difficulties.
When reviewing an application for assistance the State must ensure
that the applicant has given sufficient public notice to potentially
affected parties and has considered alternative solutions to addressing
the problem.
A proposed project may only receive assistance if the following
conditions are met:
(a) Upon completion of the project, the entity responsible for the
loan must meet the definition of a Federal community public water
system;
(b) The project must be on the State's fundable list and must
address an actual public health problem with serious risks;
(c) The project must be limited in scope to the specific geographic
area affected by contamination;
(d) The project can only be sized to accomodate a reasonable amount
of growth expected over the life of the facility--growth cannot be a
substantial portion of the project;
(e) The project must meet the same technical, financial and
managerial capacity requirements that the SDWA requires of all DWSRF
assistance recipients; and
(f) The project is a cost-effective solution to solving the public
health problem.
FOR FURTHER INFORMATION CONTACT: The Safe Drinking Water Act Hotline,
telephone (800) 426-4791. Information about the DWSRF program,
including program guidelines and State contact information, is
available from the EPA Office of Ground Water and Drinking Water Web
Site at the URL address ``http://www.epa.gov/safewater.''
Dated: October 22, 1998.
Elizabeth Fellows,
Acting Director, Office of Ground Water and Drinking Water.
[FR Doc. 98-29448 Filed 11-2-98; 8:45 am]
BILLING CODE 6560-50-P
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