[Federal Register Volume 89, Number 105 (Thursday, May 30, 2024)]
[Proposed Rules]
[Pages 46998-47026]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-11687]
[[Page 46997]]
Vol. 89
Thursday,
No. 105
May 30, 2024
Part II
Environmental Protection Agency
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40 CFR Part 142
Water System Restructuring Assessment Rule; Proposed Rule
Federal Register / Vol. 89 , No. 105 / Thursday, May 30, 2024 /
Proposed Rules
[[Page 46998]]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 142
[EPA-HQ-OW-2022-0678; FRL 7487-02-OW]
RIN 2040-AF96
Water System Restructuring Assessment Rule
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
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SUMMARY: The U.S. Environmental Protection Agency (EPA or the agency)
is proposing a regulatory framework for states and public water systems
(PWSs) to identify and assess restructuring alternatives to ensure that
every community receives safe, affordable, and reliable drinking water.
The proposed regulations would: establish a new mandatory restructuring
assessment authority for states; require states with primary
enforcement authority (primacy) to develop mandatory restructuring
assessment programs and submit primacy revisions for EPA review and
approval; establish requirements for states and PWSs that implement
system-specific mandatory restructuring assessments; and establish
eligibility requirements and limitations for restructuring incentives
under state-approved restructuring plans. This proposed rulemaking is
required under amendments to the Safe Drinking Water Act (SDWA). By
taking this action, the EPA intends to strengthen the ongoing efforts
of states and PWSs to protect public health.
DATES: Comments must be received on or before July 29, 2024. Under the
Paperwork Reduction Act (PRA), comments on the information collection
provisions are best assured of consideration if the Office of
Management and Budget (OMB) receives a copy of your comments on or
before July 1, 2024.
ADDRESSES: You may send comments, identified by Docket ID No. EPA-HQ-
OW-2022-0678, by any of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov
(our preferred method). Follow the online instructions for submitting
comments.
Email: [email protected]. Include Docket ID No. EPA-HQ-OW-
2022-0678 in the subject line of the message.
Mail: U.S. Environmental Protection Agency, EPA Docket
Center, Office of Water Docket, Mail Code 28221T, 1200 Pennsylvania
Avenue NW, Washington, DC 20460.
Hand Delivery/Courier (by scheduled appointment only): EPA
Docket Center, WJC West Building, Room 3334, 1301 Constitution Avenue
NW, Washington, DC 20004. The Docket Center's hours of operations are
8:30 a.m. to 4:30 p.m., Monday through Friday (except Federal
Holidays).
Instructions: All submissions received must include the Docket ID
No. for this rulemaking. Comments received may be posted without change
to https://www.regulations.gov, including any personal information
provided. For detailed instructions on sending comments and additional
information on the rulemaking process, see the ``Public Participation''
heading of the SUPPLEMENTARY INFORMATION section of this document.
FOR FURTHER INFORMATION CONTACT: Will Bowman, Drinking Water Capacity &
Compliance Assistance Division, Office of Ground Water and Drinking
Water (MC-4606M) Environmental Protection Agency, 1200 Pennsylvania
Avenue NW, Washington, DC 20460; telephone number: (202) 564-3782;
email address: [email protected].
SUPPLEMENTARY INFORMATION:
Preamble acronyms and abbreviations. Throughout this document the
use of ``we,'' ``us,'' or ``our'' is intended to refer to EPA. We use
acronyms in this preamble. For reference purposes, EPA defines the
following acronyms here:
AMWA Association of Metropolitan Water Agencies
ASDWA Association of State Drinking Water Administrators
AWWA American Water Works Association
CBI Confidential Business Information
CFR Code of Federal Regulations
DWSRF Drinking Water State Revolving Fund
E.O. Executive Order
EPA United States Environmental Protection Agency
FR Federal Register
ICR Information Collection Request
NPDWR National Primary Drinking Water Regulations
NRWA National Rural Water Association
OMB Office of Management and Budget
PRA Paperwork Reduction Act
PWS Public Water System
PWSS Public Water System Supervision
RCAP Rural Community Assistance Partnership
RFA Regulatory Flexibility Act
RTCR Revised Total Coliform Rule
SBREFA Small Business Regulatory Enforcement Fairness Act
SDWA Safe Drinking Water Act
SDWIS Safe Drinking Water Information System
TMF Technical, Managerial and Financial
UMRA Unfunded Mandates Reform Act
U.S.C. United States Code
WSRAR Water System Restructuring Assessment Rule
Table of Contents
I. Public Participation
II. General Information
A. Applicability of This Action
B. Summary of Proposed Action
C. Agency Authority for This Action
D. Incremental Costs and Benefits of This Action
E. Stakeholder Engagement
III. Background
A. Purpose of the Proposed Rule
B. Scope of the Proposed Rule
C. Guiding Principles for Water System Restructuring
IV. Proposed Water System Restructuring Assessment Rule
A. General
B. Definitions
C. Mandatory Restructuring Assessments
D. Restructuring Plans
E. Enforcement Relief Under Approved Restructuring Plans
F. Protection of Non-Responsible Water Systems Under Approved
Restructuring Plans
G. Financial Assistance for Restructuring Activities
H. Violations
I. Effective Date
V. State Implementation
A. Revisions to Primacy Requirements
B. State Reporting and Recordkeeping Requirements
VI. Economic Impact Analysis
A. Annualized and Present Value Cost Estimates
B. Accounting for Uncertainty in the Cost Estimates
C. Non-Quantified Benefits of the Proposed WSRAR
VII. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review, as
Amended by Executive Order 14094: Modernizing Regulatory Review
B. Paperwork Reduction Act (PRA)
C. Regulatory Flexibility Act (RFA)
D. Unfunded Mandates Reform Act (UMRA)
E. Executive Order 13132: Federalism
F. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
G. Executive Order 13045: Protection of Children From
Environmental Health Risks and Safety Risks
H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution or Use
I. National Technology Transfer and Advancement Act (NTTAA)
J. Executive Order 12988: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations and Executive Order 14096: Revitalizing Our Nation's
Commitment to Environmental Justice for All
VIII. References
I. Public Participation
A. Written Comments
Submit your comments, identified by Docket ID No. EPA-HQ-OW-2022-
0678 at https://www.regulations.gov (our
[[Page 46999]]
preferred method), or the other methods identified in the ADDRESSES
section of this document. Once submitted, comments cannot be edited or
removed from the docket. The EPA may publish any comment received to
its public docket. Do not submit electronically any information you
consider to be Confidential Business Information (CBI) or other
information whose disclosure is restricted by statute. Multimedia
submissions (audio, video, etc.) must be accompanied by a written
comment. The written comment is considered the official comment and
should include discussion of all points you wish to make. The EPA
generally will not consider comments or comment contents located
outside of the primary submission (i.e., on the web, cloud, or other
file sharing system). Please visit https://www.epa.gov/dockets/commenting-epa-dockets for additional submission methods, the full EPA
public comment policy, information about CBI or multimedia submissions,
and general guidance on making effective comments.
II. General Information
A. Applicability of This Action
This proposed rulemaking would apply to all states with primary
enforcement responsibility, to a PWS that is the subject of a mandatory
restructuring assessment where the state has mandated such assessment,
and to a PWS that submits a restructuring plan to the state for
purposes of enforcement relief or liability protection. Consistent with
the SDWA, a PWS is subject to a mandatory assessment if the state finds
that: (1) the PWS has repeatedly violated one or more National Primary
Drinking Water Regulations (NPDWRs) and such violations are likely to
adversely affect human health; (2) the PWS is unable or unwilling to
implement restructuring activities, or already has attempted to
implement such activities but has not achieved compliance; (3)
restructuring of the PWS, including a form of consolidation or a
transfer of ownership, is feasible; and (4) restructuring of the PWS
could result in greater compliance with drinking water standards.
Although the mandatory assessment requirements would not apply to a PWS
that does not meet these four SDWA criteria, such PWSs may develop and
submit restructuring plans eligible for restructuring incentives. This
description of the applicability of this proposed regulation is not
intended to be exhaustive, but rather provides a guide for readers
regarding entities intended to be regulated by this action. To
determine whether a particular entity or state would be regulated by
this action, the reader should carefully examine the definitions of
``primary enforcement responsibility,'' ``public water system'' or
``PWS,'' ``supplier of water,'' and ``state'' found in the Code of
Federal Regulations (CFR) at 40 CFR 142.2 entitled ``Definitions'' and
in 40 CFR 142.3 entitled ``Scope.'' The reader also should review the
paragraph entitled ``Applicability'' in the proposed 40 CFR 142.90 of
this document. For any questions regarding the applicability of this
action to a particular entity, the reader should consult the person
listed in the FOR FURTHER INFORMATION CONTACT section of this document.
B. Summary of Proposed Action
The proposed Water System Restructuring Assessment Rule (WSRAR)
would create a framework for states and PWSs to evaluate and implement
restructuring alternatives for systems in chronic noncompliance.
Assessments may identify a broad array of alternatives that may include
sharing resources (e.g., operators or equipment), debt restructuring,
operational changes, upgrades, or replacement of components of water
system infrastructure (treatment technology, transmission,
distribution, or storage), interconnection with another PWS,
consolidation, or transfer of ownership to achieve the capacity to
provide safe drinking water. Restructuring alternatives for an assessed
water system depend on system-specific physical and socio-economic
factors (Green, et al. 2018). Therefore, the proposed rule would
provide states the authority to mandate assessments and to approve
restructuring plans eligible for incentives but would not limit the
restructuring alternatives that the assessment could identify.
In some cases, consolidation or transfer of ownership could be the
most feasible alternative to ensure a community receives safe drinking
water in a sustainable manner, particularly if a PWS already has
attempted to build technical or managerial capacity, to invest in
infrastructure improvements, or to implement other restructuring
actions, yet public health remains at risk due to persistent
noncompliance with drinking water standards. For example, consolidation
can reduce costs per household by spreading the cost of service across
a larger customer base (US Water Alliance and UNC Environmental Finance
Center 2019). As described in section IV of this preamble, the proposed
rule distinguishes consolidation from privatization, which can occur
under a transfer of PWS ownership from a public entity to a private
entity. A common form of consolidation by small water utilities is
referred to as regionalization, in which neighboring water utilities
facing similar challenges choose to consolidate administratively or
physically. The EPA recognizes that forms of consolidation or transfers
of ownership, particularly those that would result in privatization,
might raise community concerns. These concerns include affordable water
rates, the need for transparency and community involvement in decision
making, and ensuring accountability for utility management and
operations (Zhang, et. al, 2022). A recently published case study on
privatization provides an example that highlights these concerns. The
case study found that, due to lack of consumer protections and utility
mismanagement under private control, residents and community organizers
demanded public ownership and management of the water system, more
equitable water rates, and greater accountability and transparency in
governance (Rivas and Schroering, 2021). To address these concerns, the
proposed rule would establish several ``tailoring'' requirements to
ensure that the assessment identifies feasible restructuring
alternatives based on the physical and socio-economic characteristics
of the water system, which can limit its capacity to restructure
without technical and financial assistance. These characteristics
include not only those cited in the SDWA (population served, water
system type), but also the following: source water type; the technical,
managerial, and financial (TMF) capacity of the water system; whether
the community it serves is disadvantaged or underserved; as well as
other characteristics. In addition, the proposed rule would require the
mandatory assessment to describe how restructuring would ensure that
the service community would sustainably receive safe, affordable
drinking water. To ensure that the local community can raise concerns,
ask questions, and provide input to the state and to the water utility,
the proposed rule also would require the state to hold a public meeting
before approving either a mandatory assessment or a restructuring plan
that would result in consolidation or transfer of ownership. Finally,
the proposed rule would require the state to make electronic and
physical copies of state-approved assessment reports or restructuring
plans available to the public. In addition to the assessment
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report, the EPA strongly encourages states to make publicly available a
written summary of its responses to comments received during the public
meeting. Section III.C of this preamble describes guiding principles of
water system restructuring to help states, drinking water utilities,
and local communities navigate the challenges of identifying feasible
alternatives to ensure safe drinking water.
The SDWA also establishes enforcement relief and liability
protection incentives for state-approved restructuring plans. The
enforcement relief incentive would prohibit enforcement action for up
to two years for specific violations identified in the plan. The
liability protection incentive would protect a compliant water system
from liability for violations at an assessed water system until it has
acquired an assessed water system through transfer of ownership or has
completed physical or administrative consolidation with the assessed
water system. The SDWA limits these incentives to plans for managerial
or physical consolidation, transfer of ownership, or contracts for
managing or administering the water system to resolve violations. As
described in sections IV.E and IV.F of this preamble, the proposed rule
also would establish additional eligibility requirements and
limitations for both incentives, which would apply only to violations
that the PWS identified in a state-approved plan.
Finally, the proposed rule would revise existing primacy
regulations to require states to develop programs with the authority to
mandate restructuring assessments and to review and approve
restructuring plans. To obtain this authority, states would submit
primacy revision applications for the EPA's approval. To assist the
agency with oversight of state mandatory assessment programs, the
revised primacy regulations would establish new reporting and
recordkeeping requirements for states.
C. Agency Authority for This Action
The EPA proposes this regulation as mandated by SDWA section
1414(h)(6), 42 U.S.C. 300g-3(h)(6) and pursuant to SDWA sections 1413,
42 U.S.C. 300(g)-2 and 1450(a), 42 U.S.C. 300j-9.
D. Incremental Costs and Benefits of This Action
The proposed rule, if finalized, would impose direct costs on
states that are required under the SDWA to establish mandatory
assessment programs, and, when a state mandates an assessment, would
impose indirect costs on both states and assessed PWSs to ensure that
the proposed assessment requirements are satisfied. The EPA estimated
that the annualized direct costs to states of implementing the
requirements of this proposed WSRAR, if finalized, would be within $0.8
million to $1.0 million at a 2 percent discount rate. The estimated
benefits of this proposed rulemaking would be reduced risks to public
health at assessed water systems that return to compliance through
restructuring, and reduced enforcement costs for states.
E. Stakeholder Engagement
In 2019, the EPA met with the Association of State Drinking Water
Administrators (ASDWA) on the restructuring-related amendments to SDWA
sections 1413 and 1414(h). The purpose of the consultations was to
determine how the EPA should communicate with states regarding each set
of amendments and their implications for states, especially the
mandatory primacy revisions. Following these initial conversations, in
August 2019, the EPA participated in a national webinar on water system
consolidation hosted by ASDWA. During the webinar, the EPA presented a
detailed summary of the America's Water Infrastructure Act (AWIA)
amendments to SDWA sections 1413 and 1414(h), described several policy
issues that the agency might consider as part of WSRAR development, and
explained the likely effects of the amendments on state programs.
Consistent with Paperwork Reduction Act (PRA) requirements,
following the national webinar, from September through November 2019,
the EPA conducted telephone interviews with drinking water program
staff and managers in the States of California, Connecticut, Indiana,
Nebraska, Nevada, Pennsylvania, Virginia, and Washington. The EPA
selected these eight states as representative of state Public Water
System Supervision (PWSS) programs based on total population served,
sizes of PWS inventory, geographic region, and features of their
capacity development programs as documented in the EPA's 2017
compendium of state partnership programs (EPA 2017). The interviews
allowed the EPA to develop a clearer understanding of states'
perspectives on how these new SDWA primacy requirements and the
proposed mandatory assessment authority could affect their PWSS
programs. In addition, the interviews helped the EPA understand how
these states currently conduct four types of water system assessments:
sanitary surveys; Revised Total Coliform Rule (RTCR) Level 1 and 2
assessments; technical, managerial, and financial (TMF) capacity
assessments; and feasibility studies. Collectively, these four types of
assessment, which include the identification of system vulnerabilities,
evaluations of water system performance, or financial capacity
assessments, are closely related to the proposed elements of mandatory
restructuring assessments under the WSRAR. As a result of the state
interviews, the EPA obtained, for each of the assessment types, state
costs of establishing an assessment program, including training staff,
developing training materials for water systems, preparing databases,
and conducting assessment activities. The interviews also yielded data
from each state that the EPA used to calculate the cost estimates for
the proposed WSRAR discussed in section VI of this preamble.
In 2019 and 2020, the EPA conducted webinars and held informational
meetings with national associations that represent large and small
drinking water utilities, or that provide direct technical assistance
to PWSs, to discuss water system partnerships, including forms of
consolidation, transfers of ownership, and other types of
restructuring. These organizations included: The Rural Community
Assistance Partnership (RCAP), the Rural Community Assistance
Corporation (RCAC), the Association of Metropolitan Water Agencies
(AMWA), the National Rural Water Association (NRWA), and the American
Water Works Association (AWWA). During these meetings, the EPA provided
stakeholders with an overview of the AWIA amendments to SDWA sections
1413 and 1414(h), and described potential provisions of interest,
including those that require the EPA to establish implementing
regulations in the WSRAR. For large water utilities, the discussion
centered on the statutory requirements for liability protection as an
incentive to consolidate with assessed water systems. Small water
utilities focused on the SDWA tailoring provision that requires
assessment of restructuring options to be based on the characteristics
of each water system, and on enforcement relief as a restructuring
incentive. The EPA outlined these SDWA requirements to ensure that
stakeholders were aware of how these provisions might affect them.
During these discussions, utility stakeholders also identified
restructuring barriers and incentives and provided case studies for the
EPA to consider when developing the proposed WSRAR. This feedback
informed our rulemaking process. The
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EPA is requesting public comment on the resulting tailoring and
liability provisions.
In October 2022, the EPA conducted an informational meeting with
the Natural Resources Defense Council (NRDC) and community-based
organizations from Michigan and California. The meeting provided the
agency an opportunity to listen to concerns about: the importance of
community involvement in restructuring decisions; community impacts
when restructuring alternatives are evaluated and implemented; and the
potential impacts of consolidation or transfer of ownership on
community access to safe, affordable drinking water. Of particular
concern were the potential impacts of water system privatization that
could result in unaffordable water rate increases or water shut offs,
particularly in disadvantaged or underserved communities. This feedback
also informed the agency's rulemaking process.
III. Background
A. Purpose of the Proposed Rule
Congress has long been concerned about PWSs that struggle to comply
with drinking water standards, particularly small PWSs.\1\ In 1996,
Congress added section 1414(h) to the SDWA. This provision allows a
water system to receive enforcement relief if a state approves a
restructuring plan for consolidation or ownership transfer. In 2018,
Congress added section 1414(h)(3) to authorize a state or the EPA to
require a PWS in chronic noncompliance (among other factors) to perform
an assessment of restructuring alternatives that are expected to help
the PWS achieve compliance. Congress also added section 1414(h)(5) to
provide liability protection for a ``non-responsible'' PWS that
consolidates with, or acquires, an assessed water system. In section
1414(h)(6), Congress mandated that the EPA promulgate regulations to
implement these new SDWA 1414(h) provisions. This rule would,
consistent with SDWA mandates in sections 1413 and 1414(h), enable
states and PWSs to identify and to implement feasible water system
restructuring alternatives, including consolidation or transfer of
ownership, that support compliance with drinking water standards and
help ensure communities receive safe, affordable drinking water. Under
the proposed rulemaking, a PWS could be subject to a mandatory
restructuring assessment if the state were to find that: (1) the PWS
has repeatedly violated one or more NPDWRs and such violations are
likely to adversely affect human health; (2) the PWS is unable or
unwilling to take feasible and affordable restructuring actions, or
already has attempted such actions without achieving compliance with
NPDWRs; (3) restructuring, including a form of consolidation or a
transfer of ownership, is feasible; and (4) restructuring of the PWS
could result in greater compliance with drinking water standards. A PWS
that meets these four criteria has consistently failed to demonstrate
it has the capacity to comply with drinking water standards that are
established to protect public health. As a result, the proposed WSRAR,
if finalized, would establish a regulatory framework and requirements
for states and PWSs to conduct water system-specific assessments to
identify feasible restructuring options for such PWSs, and to implement
SDWA incentives for PWSs to develop and implement restructuring plans
that can increase sustainable access to safe, affordable drinking
water. These incentives include enforcement relief for a persistently
noncompliant water system that restructures, and liability protection
for a non-responsible water system from any violations committed by an
assessed water system. By establishing enforcement relief and liability
protection incentives, the SDWA encourages an assessed water system to
consider forms of consolidation or transfer of ownership as permanent,
long-term solutions to noncompliance. Therefore, if consolidation or
transformation of ownership were determined to be infeasible, the
proposed rule would require the mandatory assessment to include an
explanation of how consolidation or transfer of ownership is infeasible
for the assessed PWS.
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\1\ See e.g., House Report 104-632 (104th Cong. 2d Sess.) at 9-
10 for discussion of small system noncompliance in report
accompanying the 1996 SDWA amendments.
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B. Scope of the Proposed Rule
There are three regulatory components of the proposed rule: (1)
requirements for state primacy revisions to establish a mandatory
assessment program with the authority to mandate assessments and to
approve assessors; (2) requirements for mandatory assessments to
evaluate restructuring alternatives based on water system
characteristics, content requirements for assessment reports, and an
assessment schedule that includes holding a public meeting prior to
state approval of an assessment that identifies ownership transfer or
consolidation as a feasible restructuring option; and, (3) requirements
for restructuring plans, including content requirements to determine
eligibility for enforcement relief or liability protection, and public
meeting requirements. These regulatory components are based on the
America's Water Infrastructure Act of 2018 (AWIA) amendments to SDWA
sections 1413 (Primary Enforcement Responsibility) and 1414(h)
(Consolidation Incentive). Through this action, the EPA proposes
implementing regulations for both the section 1413 amendments that
modify 40 CFR part 142 subpart B and the section 1414(h) amendments
under new 40 CFR part 142 subpart J. The proposed WSRAR would give
states the authority, as part of their approved SDWA primacy programs,
to mandate restructuring assessments and to approve restructuring plans
eligible for enforcement relief or liability protection. The
implementing framework for the three regulatory components, and the
guiding principles of water system restructuring, are summarized in the
following section.
1. State Primacy Revisions
SDWA section 1413 describes requirements for states with primary
enforcement responsibility (primacy). The proposed revisions would
require states to establish procedures to identify and notify PWSs that
meet the statutory preconditions for a mandatory assessment; review and
approve eligible assessors; review and approve mandatory assessments;
review restructuring plans to determine water system eligibility for
enforcement relief or liability protection; and enforce mandatory
assessment requirements. The WSRAR would establish implementing
regulations for these new primacy requirements under revised 40 CFR
142.10 and 142.11. To support the EPA's oversight of state mandatory
assessment programs, the proposed WSRAR would establish new reporting
and recordkeeping requirements, codified under revised 40 CFR 142.14
and 142.15.
2. Mandatory Restructuring Assessments
The primary objective of a mandatory restructuring assessment under
SDWA section 1414(h) is to identify feasible restructuring activities
expected to help the assessed water system comply with NPDWRs.
Consistent with the SDWA, the proposed rule requires a state to find
that a PWS meets the following conditions before mandating an
assessment: the PWS has repeatedly violated NPDWRs; the PWS is
unwilling or unable to implement feasible and affordable restructuring
activities to comply, or already has attempted to take
[[Page 47002]]
such actions but not achieved compliance; that restructuring at the PWS
is feasible; and that restructuring could result in greater compliance.
Then the EPA, a state, the assessed water system or a state-approved
third party could perform the mandatory assessment. Given the
knowledge, expertise, and resources required, the EPA expects that
states, or third-party assessors on behalf of states, would perform
most mandatory assessments.
A mandatory restructuring assessment process would include:
a. Notifying the public water system that it is the subject of a
mandatory restructuring assessment;
b. Performing an evaluation to identify feasible restructuring
alternatives for a water system based on its geographical, managerial,
financial, socio-economic, and physical characteristics;
c. Preparing an assessment report that: identifies the unresolved
violations at the assessed PWS and their underlying causes; identifies
at least one feasible alternative to return the PWS to compliance while
ensuring its long-term TMF capacity based on its socio-economic,
physical and other characteristics; describes how feasible alternatives
were identified, including an explanation if consolidation or ownership
transfer are infeasible, based on documented procedures, data and data
sources; and, describes how any alternative would ensure that the
community achieves access to safe, affordable drinking water;
d. Holding a public meeting with community leaders, e.g., mayors,
town council members, community activists, and residents served by the
PWS, to share the assessment results if the report identified a form of
consolidation or transfer of ownership as a feasible alternative, and
to provide an opportunity for community input and dialogue with the
state and the assessed PWS;
e. Making physical and electronic copies of the assessment report
publicly available; and,
f. Consulting with the assessed PWS and community leaders during
the assessment and any next steps, which might include applying for
Federal or state funding to voluntarily carry out restructuring
activities that the PWS and community decide to implement.
3. Restructuring Plans and Eligibility Requirements for Incentives
SDWA section 1414(h) establishes enforcement relief and liability
protection incentives for struggling water systems to restructure.
Under SDWA section 1414(h)(2), if a state approves a restructuring plan
for administrative or managerial consolidation, physical consolidation,
or transfer of ownership, then for a period of no more than two years
from the date of state approval, the PWS that submitted the plan would
be eligible for enforcement relief (as discussed further in section IV
of this preamble). During this enforcement relief period, the state
could not take further enforcement action for a specific violation
identified in the approved plan, although the PWS that received
enforcement relief would remain subject to existing enforcement orders
to ensure it takes short-term corrective actions to protect public
health.
Under SDWA section 1414(h)(5), a non-responsible PWS that either
has assumed ownership of, or has completed administrative or physical
consolidation with, an assessed PWS would not be liable for the
specific violations identified in the plan. However, the non-
responsible PWS must use any liquid assets of the assessed PWS to pay
any outstanding fines or penalties for those violations. The proposed
rule clarifies that a non-responsible PWS would not be liable for
violations not identified in the approved plan, such as those that
occur during restructuring, until the non-responsible system became the
owner of the restructured water system. As described in more detail in
section IV of this preamble, under the proposed rule a state may
determine eligibility for either enforcement relief or liability
protection, or for both incentives under the same restructuring plan.
The proposed WSRAR also would establish implementing regulations for
this statutory provision, with clarifications regarding eligibility
requirements, as described in section IV of this preamble.
C. Guiding Principles for Water System Restructuring
The proposed WSRAR, if finalized, would establish implementing
regulations for statutory provisions that give states the authority to
mandate restructuring assessments and to approve restructuring plans
that are eligible for enforcement relief or liability protection. These
new authorities complement other Federal and state programs and
policies that are collectively intended to increase sustainable access
to safe and affordable drinking water supplies in all communities
served by PWSs. To achieve these goals, in addition to regulatory
requirements, the EPA proposes three guiding principles of
restructuring to help ensure that mandatory assessments and
restructuring plans are the result of collaborative efforts between
states, local authorities, water utilities and community leaders (US
Water Alliance 2022; 2019a, 2019b). These guiding principles are
applicable not only to assessed water systems, but also to compliant
water systems that are considering restructuring to ensure a
sustainable capacity to provide access to safe, affordable drinking
water.
1. Evaluate Restructuring Alternatives Based on the Needs of the
Community
States should consider restructuring alternatives that take into
consideration community culture, needs and interests to ensure that the
planned restructuring leads to access to safe, affordable drinking
water for all consumers served by the PWS. This principle is consistent
with the EPA's Water Technical Assistance (WaterTA) initiative, which
focuses directly on the status and needs of recipients and on
developing locally driven approaches to identifying and implementing
public health solutions to ensure equitable access to water
infrastructure funding (EPA Office of Water 2023). For example, when a
large water utility consolidates with a smaller utility that serves a
disadvantaged community, the restructuring could result in less
affordable drinking water. As a result, the proposed WSRAR would
require any identified restructuring alternative, including
consolidation, to describe how it will ensure that the community served
by the assessed PWS will achieve access to safe, affordable drinking
water. Feasible alternatives for PWSs struggling with long-term
compliance challenges should reflect the socio-economic conditions of
the communities they serve, including disadvantaged or underserved
status, or other barriers to water equity such as historical
disinvestment in water infrastructure. Therefore, when identifying
solutions for a restructuring water system, the assessor must consider
not only geographical and technical factors, but also water
affordability and socio-economic conditions of the community. States
should proactively engage with local governments and community leaders
that would be affected by restructuring to fully understand the range
of technical, managerial, financial, and socio-economic factors that
create long-term compliance challenges. Public water systems that might
have attempted to restructure but remain persistently noncompliant have
demonstrated they do not have the sustainable capacity to provide safe,
affordable drinking water. To address the significant public health
risks to the
[[Page 47003]]
communities they serve, community leaders and drinking water utilities
should work closely with states to evaluate all forms of restructuring,
including whether a form of consolidation or transfer of ownership is
the right solution.
2. Engage Affected Communities Directly in Restructuring Decision
Making
States and water utilities should directly engage with community
leaders when making restructuring decisions. This approach is essential
to ensure successful collaboration between state and local authorities,
community leaders, and drinking water utilities. Direct engagement is
particularly important if the water system is considering consolidation
or transfer of ownership, which can raise community concerns about the
affordability of safe drinking water and which involve complicated
technical and financial terms and concepts. States should work with
utilities, trained facilitators, and technical assistance providers to
clearly communicate the costs and benefits of restructuring
alternatives to community leaders and consumers and should ensure
frequent opportunities for public input. In addition, the management
structure determines the authority to establish water rates and rate
structures, to apply for state and Federal funding, and to operate the
water system. Therefore, states should provide comprehensive
information that describes alternative management structures and water
system ownership types to the affected communities. Providing
information to support community involvement in decision making
includes, for example, access to state data, and to mapping and
planning tools. The EPA can assist in this process by providing
guidance and tools to support community-level engagements in workshops,
public meetings, and information sharing, including the agency's
partnerships implementation tools and resources. More information about
these implementation tools and resources is available at the agency's
website for water system partnerships.\2\
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3. Ensure the Community Has Capacity To Make Affordable Investments in
Safe Drinking Water
Under SDWA section 1414(h), a water system may be a candidate for a
mandatory assessment even if it has attempted to obtain technical or
financial assistance through the Drinking Water State Revolving Fund
(DWSRF). Under the proposed WSRAR, states and drinking water utilities
would benefit from the availability of an unprecedented level of
Federal investment in grant programs that focus on small,
disadvantaged, and underserved communities. These programs can help
PWSs achieve and maintain the long-term capacity to provide safe
drinking water through the implementation of a wide range of eligible
restructuring activities, including consolidation or transfer of
ownership. The 2021 Infrastructure Investment and Jobs Act, also known
as the Bipartisan Infrastructure Law (BIL), is set to provide $16.6
billion in additional investment in the DWSRF over the next three
years. A key priority of the BIL is to increase investment in
disadvantaged communities, including those with environmental justice
concerns. Nearly half (49 percent) of this investment is designated for
disadvantaged communities either as loan forgiveness or as grants to
water systems that meet a state's disadvantaged community criteria as
described in SDWA section 1452(d). These resources may be used to:
identify restructuring alternatives that address the underlying causes
of noncompliance; provide technical support for communities applying
for funding; design and implement restructuring plans; and build and
maintain water systems with the long-term capacity to provide
affordable access to safe drinking water. The EPA will continue to work
with states to implement program administration flexibilities under the
DWSRF that are designed to help disadvantaged communities overcome
barriers in applying for and receiving DWSRF funds. In addition, the
EPA's Small, Underserved and Disadvantaged Community (SUDC) grant
program can help communities establish and maintain access to safe,
affordable drinking water by funding eligible restructuring activities.
These activities include physical infrastructure improvements related
to treatment, distribution, and storage; development of new sources;
and assistance to increase technical, managerial, and financial (TMF)
capacity, physical interconnection, water system consolidation or
purchase of a water system. For more information on how SUDC grants may
be used to support water system restructuring, please refer to the
EPA's website.\3\ The EPA will continue to collaborate with states,
technical assistance providers and community leaders to implement the
EPA's WaterTA programs to ensure that small, disadvantaged, or
underserved communities can successfully identify water challenges,
develop plans, apply for, and effectively utilize, BIL, SUDC and other
funding to build their capacity and address compliance challenges. In
addition, states, water utilities, and local communities should explore
customer-assistance programs that can help ensure affordability of
water rates and allow the water utility to make the infrastructure
investments necessary to provide sustainable access to safe, reliable
drinking water services (UNC EFC 2017, EPA 2016).
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\3\ https://www.epa.gov/dwcapacity/wiin-grant-small-underserved-and-disadvantaged-communities-grant-program-0.
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IV. Proposed Water System Restructuring Assessment Rule
The three regulatory components previously described--state primacy
revisions, mandatory assessment requirements, and restructuring plan
eligibility requirements and limitations for enforcement relief and
liability protection--comprise the framework of the proposed rule. This
section of the preamble describes the proposed rule sections that
govern mandatory restructuring assessments and restructuring plans.
The agency seeks public comment on whether the rule appropriately
balances meeting the statutory requirements of the SDWA while
considering the impacts of the proposed requirements on our state and
Tribal co-regulators, large and small water utilities, and the
communities they serve. The EPA also has identified in this preamble
specific topics for which the agency seeks public comment.
A. General
1. Authority
SDWA section 1413 and its implementing regulations under 40 CFR
part 142 subpart B set forth the requirements for a state to obtain
primacy for EPA regulations under 40 CFR parts 141 and 142, and for EPA
review and approval of state applications for primacy or for revisions
to primacy. Because AWIA directly amended the criteria for primacy
under SDWA section 1413(a), every state with primacy for the PWSS
program must submit to the EPA an application for a primacy revision
that demonstrates that the state has adopted, and is prepared to
implement, the requirements of the proposed WSRAR. The proposed WSRAR,
if finalized, would amend 40 CFR 142.10 and 142.11 to describe the
basis on which the EPA would determine whether to authorize state
[[Page 47004]]
primacy for the WSRAR, and the content of a state application that is
required for the agency's approval of a primacy revision. The proposed
WSRAR also contains state recordkeeping requirements under amended 40
CFR 142.14, and state reporting requirements under amended 40 CFR
142.15. These proposed reporting and recordkeeping requirements, if
finalized, would support the EPA's oversight of state implementation of
the WSRAR and ensure consistent compliance with the proposed
requirements.
2. Direct Implementation by the EPA
Where an EPA Region has primacy for the WSRAR, the Regional
Administrator would have the authority, fully equivalent to that of a
state, to mandate restructuring assessments, to perform assessments, to
review and approve restructuring plans, and to determine PWS
eligibility for restructuring incentives. This equivalent authority
also would include EPA enforcement actions for noncompliance with the
WSRAR and use of its independent enforcement authority under SDWA
section 1414. Accordingly, the term ``state'' as it appears throughout
this preamble, also refers to the EPA exercising its authority to
implement the WSRAR. In addition, states with primacy for the WSRAR
could, at their discretion, request that the EPA Region mandate an
assessment of a PWS or assist the state with the implementation and
enforcement of WSRAR requirements.
3. Applicability
The proposed requirements of the WSRAR would apply to all states
for which the EPA has approved primacy for the WSRAR, and to PWSs for
which an approved state has mandated a restructuring assessment.
Additional proposed WSRAR requirements would apply to PWSs that submit
plans to states seeking enforcement relief or liability protection.
B. Definitions
The EPA proposes the following terms and definitions for the WSRAR:
1. Assessed Water System
The EPA proposes this term to refer to a PWS that meets all four
preconditions for a state to use its mandatory assessment authority
described in SDWA section 1414(h)(3)(A), and that is the subject of a
mandatory restructuring assessment as required by the state pursuant to
proposed 40 CFR 142.92.
2. Enforcement Relief
The EPA proposes this term to refer to the incentive described in
SDWA section 1414(h)(2). Enforcement relief would apply to an eligible
PWS as specified in proposed sections 40 CFR 142.93 and 142.94. A PWS
would be eligible for enforcement relief if the state approved a
restructuring plan that met the proposed requirements and that would
result in physical or administrative consolidation; transfer of
ownership to improve water quality; or a contractual agreement to carry
out the administrative or managerial functions of a water system.
Enforcement relief would mean that if a state approved a restructuring
plan, the state could not take enforcement action under SDWA for
specific violations identified in the plan for up to two years from the
date of state approval. If the eligible water system were to complete
its planned restructuring earlier, the enforcement relief period would
end on the date of completion.
3. Liability Protection
The EPA proposes this term to refer to the incentive described in
SDWA section 1414(h)(5). This incentive applies to a non-responsible
(compliant) water system that seeks liability protection when it
restructures with an assessed (non-compliant) water system. Under the
proposed rule, a non-responsible water system would be eligible for
liability protection once restructuring has been completed under a
state-approved restructuring plan for physical or administrative
consolidation; transfer of ownership to improve water quality; or a
contractual agreement to carry out the administrative or managerial
functions of a water system. Liability protection would mean that,
after using available assets of the assessed water system to pay any
liabilities for specific violations identified in the approved plan,
the non-responsible water system would have no remaining liability
under SDWA for those specific violations. Liability protection would
continue for SDWA violations at the assessed system that occur during
restructuring, but that protection would end after the state determined
that the non-responsible system had become the owner of the newly
restructured water system.
4. Mandatory Restructuring Assessment
The EPA proposes this term to refer to a mandatory evaluation of
restructuring alternatives at an assessed water system as described in
SDWA section 1414(h)(3) and that is performed consistent with the
requirements of proposed 40 CFR 142.92. For rule implementation
purposes, the term ``restructuring'' means any planned change in water
system operations, management, or infrastructure.
5. Non-Responsible System
The EPA proposes this term to refer to a compliant PWS that
restructures with an assessed water system under a state-approved plan
that is based on a completed mandatory restructuring assessment. The
non-responsible system is the PWS that intends to benefit from
liability protection because it did not commit the violations
identified in the approved restructuring plan. Under the proposed rule,
if the state determined that all requirements for liability protection
in proposed 40 CFR 142.95 had been met, then the non-responsible system
would not be liable for assessed water system violations identified in
the plan, but it would be required to use any acquired liquid assets of
the assessed water system to compensate the state for any fines or
penalties associated with the identified violations. Under the proposed
rule, a non-responsible system would continue to receive liability
protection for violations at the assessed system that occurred during
restructuring but would become liable for violations after it became
the owner of the newly restructured water system.
6. Restructuring Plan
The EPA proposes this term to refer to the four restructuring plan
types cited in SDWA section 1414(h)(1): physical consolidation of a
water system with one or more other water systems; the consolidation of
significant management or administrative functions of a water system
with one or more other water systems; the transfer of ownership of a
water system to another water system for purposes of improving drinking
water quality; and a contractual agreement for significant management
or administrative functions of a water system. Although other
restructuring plan types are possible, they are outside the scope of
this proposed rulemaking. A PWS that voluntarily develops and submits a
plan to potentially benefit from the SDWA incentives should only incur
burden when there is an incentive to do so. Unlike a mandatory
restructuring assessment, a restructuring plan would be optional for a
water system to submit. Consistent with SDWA, under the proposed 40 CFR
142.93, a submitted restructuring plan must include a schedule for
restructuring activities and measures of progress. In addition, to be
eligible for enforcement relief or liability
[[Page 47005]]
protection, the restructuring plan must identify the specific
violations to which the restructuring incentives would apply.
C. Mandatory Restructuring Assessments
The proposed WSRAR, if finalized, would establish requirements for
the EPA, the state, or a state-approved assessor to implement a
mandatory restructuring assessment according to an established
schedule, and to produce an assessment report that satisfies the
proposed content and tailoring requirements of the WSRAR. The specific
elements of the proposed mandatory assessment requirements are outlined
in the following sections.
1. When a State May Mandate an Assessment
SDWA section 1414(h)(3)(A) describes four preconditions that a
state would be required to find are applicable to a PWS before it could
mandate a restructuring assessment. The proposed WSRAR restates these
four preconditions to provide additional clarifications. A state with
primacy for the proposed WSRAR may mandate a restructuring assessment
if it finds that: (1) the PWS has repeatedly violated one or more
NPDWRs and such violations are likely to adversely affect human health;
(2) the PWS is unable or unwilling to implement restructuring
activities, or already has attempted to implement such activities but
has not achieved compliance; (3) restructuring of the water system,
including a form of consolidation or a transfer of ownership, is
feasible; and (4) restructuring of the water system could result in
greater compliance with drinking water standards. Consistent with the
SDWA, under the proposed rule each state has the discretion to
determine whether a PWS meets all four preconditions and, if so,
whether to mandate a restructuring assessment as a result. When
exercising its mandatory assessment authority, a state would be
required to provide written notification to the assessed system. This
``state notification date'' would determine the milestones and dates in
the required assessment schedule.
Recurring monitoring violations might conceal repeated health-based
violations at PWSs. Although recurring monitoring violations are not a
regulatory precondition for a mandatory assessment, states should
ensure there are no underlying health-based violations by investigating
possible causes of the monitoring violations.
2. State Notification
If a state finds that a public water system meets the four
preconditions and mandates a restructuring assessment, the state would
be required to notify the assessed system in writing.
3. Minimum Assessment Tailoring Criteria
SDWA section 1414(h)(3)(A) requires a mandatory assessment to
identify restructuring options that are expected to help the water
system achieve compliance and that are feasible for the water system to
implement. A wide range of water system restructuring alternatives are
possible. These alternatives range from temporary, informal agreements
between neighboring water systems to permanent, formal types of
restructuring, such as physical consolidation. The EPA expects that an
assessor would evaluate and compare restructuring alternatives from
within this range, such as changes in rate structure and associated
impacts, installation of treatment technology, operator training, or
access to alternative water supplies. SDWA section 1414(h)(3)(B) states
that the requirements of a mandatory restructuring assessment must be
tailored to the size, type, and other characteristics of the assessed
water system. Therefore, consistent with these two SDWA provisions, and
with the proposed principles of restructuring, the proposed rule
requires the assessor to ``tailor'' the feasibility of restructuring
options based on the following geographical, socio-economic, and
physical criteria. The information would ensure that a feasible
restructuring alternative is technically, managerially, and financially
feasible in the long term for the assessed PWS to implement.
a. System Size
The population served by the assessed water system. This criterion
is required by the SDWA.
b. System Type
The classification of the assessed system as a community water
system or a noncommunity water system. This criterion is required by
the SDWA.
c. Source
The extent to which the assessed system uses ground water, surface
water, or both ground and surface water as a drinking water supply, and
the extent to which the drinking water supply is purchased from another
supplier of water.
d. TMF Capacity
The technical, financial, and managerial capacity of the assessed
system, using the state definition of each term as part of its capacity
development strategy under SDWA section 1420(c).
e. Disadvantaged or Underserved Community Status
A determination whether the service area of an assessed water
system meets the state definition of a disadvantaged community pursuant
to the requirements of SDWA section 1452(d) or SDWA section
1459A(c)(2), or whether a community is underserved pursuant to SDWA
section 1459A(a)(2). Disadvantaged or underserved status is a critical
socio-economic factor that determines feasibility of the restructuring
options both in terms of the affordability of the restructuring and the
impacts of the restructuring on the community served by the assessed
water system.
f. Geographic Factors
The extent to which proximity to neighboring water systems, changes
in elevation, or other geographic factors affect the available
restructuring alternatives.
g. Hydrogeologic or Geologic Factors
The potential or known interactions between surface activities,
such as agriculture, and the ground water or surface water sources of
water used by the assessed system. This criterion includes naturally
occurring levels of contaminants in the geologic formation surrounding
a ground water source.
h. State or Local Statutory or Regulatory Requirements
State or local laws or regulations can determine the permissible
legal authorities and types of restructuring at assessed water systems.
Request for public comment: The EPA requests public comment on all
aspects of the proposed rulemaking, but in particular on the proposed
minimum Federal tailoring criteria, including other water system
characteristics or socio-economic factors that could affect
restructuring alternatives.
4. Minimum Assessment Report Content Requirements
Under the proposed WSRAR, a mandatory restructuring assessment
would identify feasible restructuring alternatives that must be
documented in a report that meets five minimum content requirements.
These requirements would establish a minimum standard that requires a
focus
[[Page 47006]]
on identifying underlying causes of non-compliance, protecting public
health from ongoing violations, and a long-term plan to develop a
sustainable capacity to provide safe, affordable drinking water. The
content requirements also include a description of the potential
community impacts of restructuring alternatives.
First, to address immediate health risks, the proposed rule would
require the assessment report to describe all unresolved violations,
their underlying causes, their enforcement status, and how
restructuring would return the system to compliance as soon as
practicable. Underlying causes can be technical, such as inadequate
treatment technologies, or financial or managerial issues such as those
related to being a disadvantaged or underserved community.
Second, to achieve a sustainable capacity to provide safe drinking
water, the proposed rule would require the assessment report to
identify at least one feasible restructuring alternative for the
assessed water system that will return the PWS to compliance as soon as
possible, while also improving its technical, managerial, and financial
(TMF) capacity. For purposes of implementing these proposed
requirements, the term ``TMF capacity'' generally means the capability
of a public water system to achieve and maintain compliance with
NPDWRs, including ensuring sufficient resources for sustainable fiscal
planning and management. Technical capacity improvements may include
greater access to higher quality source water; sharing, upgrading, or
building new infrastructure; or implementing more effective treatment
technologies. Managerial capacity improvements may include increasing
expertise in water system planning and operations, or enhancing
systems' financial, accounting, and asset management practices.
Financial capacity improvements may include reducing costs, achieving
greater economies of scale through shared services, or increasing a
system's sustainable access to funding through new partnerships (EPA
Office of Water 2017).
Third, the assessment report would be required to describe how the
assessor has used the tailoring criteria to take a holistic approach to
identifying feasible and affordable alternatives based on a broad range
of technical, managerial, financial, and socio-economic factors. The
report also must describe how the proposed alternatives ensure that the
communities served by the assessed water system sustainably achieve or
maintain access to safe, affordable drinking water. As part of its
primacy revision for the rule, a state may propose using affordability
criteria in addition to those already identified by the state as
required under SDWA section 1452(d)(3). This requirement helps to
ensure that the assessment considers the long-term affordability
impacts of restructuring alternatives, particularly at water systems
that serve disadvantaged or underserved communities.
Fourth, because SDWA section 1414(h) establishes incentives for
consolidation or transfer of ownership at struggling water systems, the
proposed rule would require the mandatory assessment report to provide
an explanation if these alternatives are considered infeasible.
Finally, to help the state or EPA ensure the assessment is valid,
the proposed rule would require that the assessment report include a
description of the data, data sources, information, procedures, and
techniques used to identify the feasible restructuring alternatives for
the assessed water system. This documentation requirement helps ensure
that the state or EPA could independently determine the quality of the
evidence used as the basis for an evaluation of alternatives.
5. Burden of Assessments
SDWA section 1414(h)(3)(D) describes a sense of Congress that a
mandatory restructuring assessment should not be ``overly burdensome''
on the assessed system. Under the proposed WSRAR, the mandatory
assessment would involve collecting data; identifying and evaluating
feasible alternatives using the tailoring criteria; and preparing an
assessment report. Although the EPA expects that the assessment burden
would vary by individual water system, the WSRAR's minimum content and
tailoring requirements have been designed to minimize the burden. In
addition, as described in the economic impact analysis of the proposed
WSRAR, due to the technical expertise necessary to meet the WSRAR's
proposed requirements and the proposed principles of restructuring, the
EPA anticipates that states would perform nearly all mandatory
restructuring assessments (EPA Office of Water 2022). Therefore, a
mandatory assessment conducted according to the proposed requirements
would not be overly burdensome on the assessed system.
6. Eligible Assessors
Consistent with the meaning and intent of the statute, the EPA's
proposed rule restates SDWA section 1414(h)(3)(C) while providing
additional clarifications. The assessor would be responsible for
ensuring that the assessment report aligns with the proposed
restructuring principles, meets all content requirements, is submitted
on time, and that the restructuring alternatives identified during the
assessment are feasible in the long term based on the tailoring
requirements. A state or a third-party assessor may perform the
assessment. A third-party assessor could be a technical assistance
provider or another individual whom the state deems to be qualified to
perform the mandatory assessment on behalf of either the water system
or the state. A third-party assessor that performed an assessment on
behalf of the state would be acting as ``the state'' for purposes of
performing the evaluation of alternatives and preparing the assessment
report. Alternatively, the assessed water system could conduct a self-
assessment if approved by the state. To ensure that an assessor is
qualified, as part of its primacy revision each state would be required
to establish and implement procedures and qualifications for reviewing
and approving eligible assessors.
7. Assessment Schedule
The following proposed assessment schedule requirements apply to a
state, to a PWS performing a self-assessment, and to a third-party
assessor retained by the assessed water system. These requirements
would begin as of the date the state notifies the water system in
writing. Within 30 days of the state notification date, the water
system could request in writing that the state approve either a self-
assessment or a third-party assessor retained by the water system. The
state would have 30 days from receipt of the system's request to
approve or reject the request. If the state rejected the request, or if
the system did not request a self- assessment within 30 days, the state
could decide to perform the assessment instead. In such cases, the
system also would be required to provide relevant information requested
by the state, such as an asset inventory, accounting records to
demonstrate financial capacity, or monitoring results, to help the
state perform the assessment.
If the state approved the request for a self-assessment or third-
party assessor, the assessment report would be due on the submittal
date established by the state. The EPA expects that the submittal date
would be based on the anticipated complexity of the mandatory
assessment. During the assessment, either the assessed system or the
state could propose a different
[[Page 47007]]
submittal date. In such cases, the state ultimately would decide, based
on information or other documentation that the state deemed acceptable,
whether to change the submittal date. When submitting the assessment
report to the state, the assessed water system or an approved third-
party assessor would be required to include a certification statement.
The certification statement would attest that: the assessor has the
authority to verify the assessment results; the report content is true,
accurate, and complete; and the assessor understands the penalties for
submitting false information to the state.
8. Public Meeting
If the mandatory restructuring assessment identified a form of
consolidation or transfer of ownership as a feasible alternative for
the immediate and long-term needs of the community, the state would be
required to notify the community that it will hold a public meeting.
The state would hold this meeting as soon as practicable after
receiving the assessment report from the assessed water system. If the
state performed the assessment, it would be required to hold the
meeting before approving the mandatory assessment report.
Consistent with the principles of restructuring, the required
public meeting would allow community-based organizations and residents
served by the system to be directly involved in decision-making to
ensure that the proposed consolidation or transfer of ownership would
meet immediate and long-term community needs. The state and the water
utility would provide specific details from the assessment report to
the local community, including the anticipated costs and benefits, to
ensure transparency into how the assessment was based on a holistic
approach to identify consolidation or transfer of ownership as a
sustainable, feasible and affordable alternative. To ensure meaningful
opportunity for community participation, the public meeting would be
required to comply with the EPA's notice, location, and time
requirements under 40 CFR 25.6, as well as any state-specific-
regulations for public meetings. The EPA expects that the state would
consider community feedback received during the public meeting, and the
potential impacts of restructuring on the community, before it
determines whether to approve the report. The EPA also strongly
encourages states to make publicly available a written summary of its
responses to comments received during the public meeting. The public
meeting requirements are intended to provide transparency into, and
accountability for, the mandatory assessment decision-making process.
9. State Determination
Following the public meeting, the state would determine whether the
report complied with tailoring and content requirements. Once the state
determined that the submitted assessment met all requirements and was
developed consistent with the proposed restructuring principles, it
would approve the assessment, and notify the assessed water system in
writing. If the state determined that the submitted assessment report
did not meet all proposed requirements, it could choose to consult with
the assessed system to determine a schedule and a method for completing
a revised assessment report.
10. Public Availability of Approved Assessment Report
Within 30 days of approval, the state would be required to make
electronic copies of the report publicly available on the state
website, and physical copies available in one or more public libraries
within, or as near as possible to, the communities served by the
assessed water system. Requiring both electronic and physical copies
would help ensure that that the approved assessment is widely available
to the local community, including to individuals without internet
service. The EPA expects that states will take additional steps to
ensure that approved assessment reports are publicly available in an
alternative format, and that translation services are provided, in
communities where English is not the primary language.
11. State Consultation With the Assessed Water System and the Local
Community
In addition to making the approved report publicly available, the
state would be required to meet with the assessed water system to
discuss the restructuring alternatives. The state consultation is
intended to ensure that the assessed water system understands proposed
alternatives and their potential benefits, as well as available sources
of state and Federal funding for restructuring. Additionally,
consistent with the principles of restructuring, the EPA strongly
encourages states to either create a Citizen's Advisory Committee (CAC)
or to identify an existing organization, such as the local water
utility board, a town committee, or a local environmental justice
group, that would serve as a community point-of-contact to perform
three essential roles during the assessment. First, it would
collaborate with the state and assessed PWS to ensure a shared
understanding of the purpose, schedule, and objectives of the
assessment. Second, it would consult with the state and assessed PWS as
restructuring alternatives are identified, to help ensure that the
tailoring requirements are met. Third, it would assist the state and
assessed water system in the development of a restructuring plan, after
the assessment is complete.
Request for public comment: The EPA requests public comment on all
aspects of the proposed rulemaking, but in particular on the proposed
schedule for mandatory assessments, including the reasonableness of the
proposed time frames. The agency is aware of stakeholder concerns that
when communities are excluded from restructuring decisions, the goal of
access to safe, affordable drinking water may not be achieved. Given
these concerns, a key goal of the WSRAR is to ensure that communities
are directly involved in mandatory restructuring assessments. At the
same time, the EPA assumes that, due to the technical and financial
resources necessary to implement the proposed requirements, states will
perform nearly all mandatory restructuring assessments. As a result,
another key goal of the WSRAR is to ensure that state implementation
burden is minimized while meeting the requirements of SDWA section
1414(h). Therefore, the EPA requests specific comment on how best to
strengthen community involvement in mandatory restructuring assessments
in the final rule, while also considering the potential implementation
burden of such requirements on states. The EPA considers direct
community involvement to include both regular collaboration between a
local community organization, the state, and the restructuring PWS, and
periodic engagement with the broader community at key junctures of the
assessment. Regular collaboration is important to building trust with
the local community while also ensuring that restructuring decisions
are locally driven, and based on community culture, needs and
interests. To ensure regular collaboration with the local community,
the EPA could require states to ensure a community point-of-contact for
each mandatory assessment, either by creating a CAC or by identifying
an existing organization for this purpose. As previously described, an
existing organization would be defined broadly and could include a
local water utility board, a town
[[Page 47008]]
committee, or a local environmental justice group.
Periodic engagement with the broader community also is important
because although not every member of the affected community is able to
collaborate regularly with the state and assessed PWS, all members of
the community should be fully informed about the purpose, objectives,
and schedule of the assessment, and about the potential impacts of
restructuring on each household's ability to maintain or achieve access
to safe, affordable drinking water. To ensure periodic engagement with
the broader community, the EPA would require a state to describe in its
mandatory primacy revisions how it would implement the WSRAR principles
of restructuring at three key stages of the mandatory restructuring
assessment: when the assessment is mandated, to provide information to
the community about the purpose, objectives and schedule; when
restructuring alternatives are identified, to explain what kinds of
changes the state and water utility are considering; and, when the
assessment is complete, to explain what kind of restructuring the state
has approved, when it will be completed, and how community access to
safe, affordable drinking water will be maintained or achieved.
In addition, the EPA seeks public comment on how best to ensure
transparency into restructuring decisions, and accountability for the
impacts of restructuring, in communities where English is not the
primary language.
D. Restructuring Plans
1. Plan Types Eligible for Restructuring Incentives
SDWA section 1414(h)(1) identifies four types of restructuring
plans that are eligible for enforcement relief under SDWA section
1414(h)(2) or for liability protection under section 1414(h)(5):
physical consolidation between water systems; management or
administrative consolidation; transfer of ownership to improve drinking
water quality; and a contractual agreement for significant management
or administrative functions of a water system to correct violations
identified in the plan. In addition, SDWA section 1414 (h)(1) requires
a restructuring plan to identify the violations at the restructuring
water system(s) and include an implementation schedule and measures of
restructuring progress. Consistent with the meaning and intent of the
SDWA, the proposed WSRAR reaffirms and clarifies these SDWA section
1414(h)(1) requirements while providing additional clarifications.
In preparing this proposed rulemaking, the EPA conducted a
literature review that identified several published reports and case
studies on public water system restructuring (RCAP 2020; Water Research
Foundation 2020; UNC Environmental Finance Center 2019b; Water Research
Foundation 2018; RCAC 2016a; RCAC 2016b; AWWA 2012; AWWARF 2008). These
reports and studies collectively refer to a typology of restructuring
that generally defines physical consolidation as two or more water
systems joining physically and managerially; administrative
consolidation as the merger of decision-making and management authority
of two or more water systems under one governance structure; and
transfer of ownership as one water system acquiring the assets and
liabilities of another water system. The reports and studies also
showed that plans for physical consolidation, administrative
consolidation, or transfers of ownership can vary based on several
factors. These factors include extent of physical interconnection; type
of governance (decision-making) structure; full or partial ownership
transfer; ownership type; whether a new legal entity is created; and
state laws governing restructuring (AWWARF 2008). Because of this
variability, the EPA proposes to define each of the four eligible plan
types in general terms, instead of through formal regulation, to assist
states as they implement the rule. Further, a restructuring plan that
is eligible for incentives may combine aspects of more than one type,
e.g., a plan for transfer of ownership also could involve
administrative consolidation while the systems remain physically
independent.
The first eligible type would be a plan for administrative or
managerial consolidation.\4\ Under the proposed rule, the term
``administrative consolidation'' generally would mean combining the
decision-making authority for the administrative and managerial
functions of two or more water systems under a single governance
structure. These functions would include, for example, asset
management, capital improvement planning, operator training, sampling,
reporting, recordkeeping, accounting, establishing water rates,
billing, and purchases of equipment. In practice, governance under
administrative consolidation varies based on the legal powers and
responsibilities permitted in each state and can take different forms,
including joint or balanced mergers, joint powers authorities, regional
utilities, and water and sewer authorities, among others (UNC
Environmental Finance Center 2019a; Water Research Foundation 2018).
Although administratively consolidated water systems would operate
under a single governance structure, each could maintain physically
independent supplies, treatment facilities, and distribution systems.
Each water system also could remain independently owned and retain some
degree of decision-making authority.
---------------------------------------------------------------------------
\4\ In this preamble, the EPA uses the terms ``administrative
consolidation'' and ``managerial consolidation'' synonymously.
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The second eligible type would be a plan for full physical
consolidation. The EPA's proposed rule would distinguish physical
consolidation from physical interconnection because a consecutive water
system can be physically interconnected to purchase water while
remaining administratively and managerially independent.\5\ Therefore,
although a mandatory restructuring assessment might identify physical
interconnection as a feasible restructuring alternative, a plan for
physical interconnection by itself would not be eligible for liability
protection or enforcement relief. In this case, the proposed rule would
require a plan for physical consolidation to include the administrative
consolidation of two or more physically interconnected water systems.
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\5\ As used here, ``consecutive water system'' has the same
meaning as ``consecutive system'' as defined at 40 CFR 141.2.
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The third eligible type would be a plan for the transfer of
ownership to improve drinking water quality. In a transfer of
ownership, a merged water system no longer exists as an independent
entity because another water system has acquired its assets and
liabilities. In practice, a transfer of ownership is often, but not
necessarily, combined with administrative consolidation (Water Research
Foundation 2020; UNC Environmental Finance Center 2019a; RCAC 2016a).
Transfers of ownership generally involve:
Direct acquisition, in which one water system directly
acquires another water system in its entirety;
Joint merger, in which two existing water systems combine
to create a new, jointly owned and jointly managed water system or
water system facility; or,
Balanced merger, in which one water system acquires
another water system but the acquired water system
[[Page 47009]]
retains some decision-making authority after the merger.
The fourth eligible plan type would be a contract for
administrative or managerial functions of a PWS to correct the
violations identified in the restructuring plan. Under this plan type,
a technical assistance provider would contract with a water system to
perform some or all administrative functions of the water system, while
the water system owner would retain ownership of the PWS's assets and
liabilities (AWWARF 2008). A technical assistance provider could be a
non-governmental organization, a private company, or another water
system. Like the other plan types, to be eligible the restructuring
plan would be required to identify the violations to be resolved and to
include an implementation schedule with measures of progress. Unlike
plans for permanent forms of restructuring such as consolidation or
transfer of ownership, however, the schedule and duration of this plan
type would be limited to the contract terms.
Consistent with SDWA, this proposed WSRAR, if finalized, would not
mandate any type of restructuring plan, including plans for
consolidation, transfer of ownership, or contracts for administrative
or managerial functions.
2. State Determination of Plan Eligibility for Restructuring Incentives
The proposed WSRAR, if finalized, would require each state to
determine plan eligibility for restructuring incentives in two steps.
First, the state must determine within 60 days whether a submitted plan
is an eligible type and notify the submitting water system(s) in
writing. Second, after this initial determination the state would
determine within 12 months whether the submitted plan is eligible for
enforcement relief, or, it would determine within 18 months whether the
plan is eligible for liability protection. Because under the proposed
rule the eligibility requirements for liability protection incorporate
the requirements for enforcement relief, a plan for liability
protection may include enforcement relief for the assessed PWS. If a
state determined that a plan was an eligible type that did not satisfy
the minimum requirements, the state could consult with the submitting
system(s) to decide when and how to submit a revised plan.
3. Plan Revisions
The EPA recognizes that due to such challenges as unforeseen
project delays or increases in project costs, either the planned
restructuring or the implementation schedule could become infeasible.
As a result, either revisions to an existing restructuring plan, or a
new plan entirely, could be necessary to protect public health. To
account for such cases, the EPA proposes to allow a restructuring water
system to submit a new or revised plan to the state for approval. As
with the original submitted restructuring plan, the state would be
required to evaluate the new or revised plan against the same minimum
eligibility requirements and any applicable requirements for
enforcement relief or for liability protection as established under the
proposed WSRAR.
Request for public comment: The EPA requests public comment on all
aspects of the proposed rulemaking, but in particular on plan type
eligibility and reasonableness of the proposed time frames.
E. Enforcement Relief Under Approved Restructuring Plans
1. Minimum Plan Eligibility Requirements for Enforcement Relief
Under the proposed WSRAR, if finalized, the state first would
determine whether the submitted restructuring plan is eligible. Then
the state would determine whether the plan satisfies the minimum
requirements for enforcement relief. Unlike the SDWA eligibility
requirements for liability protection, a plan could be eligible for
enforcement relief even if it were not based on a mandatory
restructuring assessment. As a result, under the proposed rule, the
first minimum requirement is to identify each violation that the
restructuring plan is intended to resolve. Second, because the
identified violations indicate a public health risk, the restructuring
plan would be required to describe how the proposed restructuring
activities would return the system to compliance as soon as practicable
by addressing the underlying causes of noncompliance. Third, as stated
in SDWA section 1414(h)(1), the restructuring plan would be required to
include an implementation schedule and measures of progress. The
schedule and measures would allow the state to monitor restructuring
progress to determine that the plan is on schedule and that the
proposed restructuring activities remain feasible. Fourth, the plan
would be required to describe how restructuring would improve the
technical, managerial, and financial capacity of the restructuring
system. This requirement is intended to ensure that an approved
restructuring plan focuses not only on corrective actions for the
violations identified in the plan, but also on strengthening water
system capacity to sustainably maintain compliance over time. Fifth,
the plan would be required to ensure that all consumers served by the
restructuring water system continuously achieve access to safe,
affordable drinking water. This requirement is intended both to prevent
communities from losing access to safe drinking water because of
restructuring, and to ensure consumers who live in disadvantaged or
underserved communities receive sustainable, safe, and affordable
drinking water. Finally, the restructuring plan would be required to
include a request for enforcement relief for the noncompliant water
system(s) subject to the plan.
The restructuring plan would be required to incorporate state-
approved quantitative and qualitative types of information that
describe how restructuring would protect public health in the short
term while also improving the long-term TMF capacity of the
restructuring PWS. States would have the discretion to determine
whether the submitted documentation or data are acceptable for this
purpose. Although the proposed rule does not prescribe specific forms
of acceptable data or documentation, examples could include engineering
plans, feasibility studies, performance specifications for treatment
technologies, proposed changes to water system operations, state-
approved water system operator certification, or sample results from
alternative water supplies.
2. Conditional Eligibility Requirements for Enforcement Relief
In addition to the minimum eligibility requirements for enforcement
relief, the proposed WSRAR, if finalized, would require the submitted
restructuring plan to meet additional requirements under three sets of
conditions. First, a restructuring plan that involves a transfer of
ownership to improve drinking water quality would be required to
describe the date on which ownership is expected to change and to
identify the new water system owner. These conditional requirements
would ensure that the state could determine when the new owner becomes
legally liable for compliance at the restructured water system. Second,
conditional requirements would apply if the restructuring plan were to
establish a new or revised governance structure. Water system
governance structures can vary based on state law and on the approach
to administrative or physical consolidation. In some cases, a merged
public water system no longer participates in the decision making for
the newly consolidated water utility. As
[[Page 47010]]
a result, plans that featured a new or revised governance structure
would be required to describe how the proposed structure would help
achieve public health objectives. These additional requirements would
allow the state to ensure that the proposed governance structure is
consistent with state and local laws, supports resolving the underlying
causes of the violations, and is likely to strengthen the capacity of
the water system to provide sustainable access to affordable safe
drinking water. Third, conditional requirements would apply if the
submitted plan proposed to establish a temporary alternative source or
supply of water. These additional requirements would apply under a wide
range of site-specific conditions that include: the provision of
bottled water or of water filters that are certified to remove
contaminants to safe levels; purchased water from a wholesaler; or a
temporary physical interconnection to a nearby water system.\6\ The EPA
anticipates that temporary alternative sources or supplies would be
utilized under restructuring plans that take several years to
implement, such as plans for physical consolidation. Under the proposed
WSRAR, if finalized, such restructuring plans would be required to
include an implementation schedule and measures of progress that are
specific to the provision of a temporary alternative source or supply
of water. In addition, the plan would need to incorporate data and
other forms of documentation that the state finds acceptable to
demonstrate how the alternative source or supply will comply with
Federal and state health-based drinking water standards or other
requirements. Finally, such plans would be required to identify when
the temporary supply or source will no longer be needed. Before
approving a plan that includes a temporary alternative source or supply
of water, states also should consider the simultaneous compliance
implications of this restructuring activity. Taking this step would
help ensure that restructuring activities intended to improve
compliance with one NPDWR would not potentially result in noncompliance
with another.
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\6\ Organizations accredited by the American National standards
Institute (ANSI) certify units using ANSI/NSF standards. Each ANSI/
NSF standard requires verification of contaminant reduction
performance claims, an evaluation of the unit, including its
materials and structural integrity, and a review of the product
labels and sales literature. ANSI/NSF standards are issued in two
different sets, one for health concerns (such as removal of specific
contaminants) and one for aesthetic concerns (such as improving
taste or appearance of water).
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The EPA expects that the time frame for developing and submitting a
restructuring plan would vary widely based on several factors,
including the specific characteristics of the restructuring water
system, the number and type of restructuring activities planned, the
nature and extent of the violations to be corrected, and applicable
state or local laws and regulations. As a result, states are in the
best position to determine, on a case-by-case basis, whether the
proposed measures of progress and the implementation schedule are
acceptable for each restructuring plan.
Request for comment: Similar to a mandatory restructuring
assessment, implementation of the temporary provision of alternative
water sources or supplies involves site-specific considerations for
each public water system. The EPA plans to provide implementation
training materials or case studies to describe examples of the
temporary provision of an alternative source water or supply of water
in a variety of site-specific scenarios. These materials would be
designed to help states implement these proposed WSRAR requirements.
Alternatively, the EPA could include in the rule language specific
examples of the temporary provision of alternative water supplies;
however, this approach could unnecessarily limit the applicability of
the requirement. The EPA requests comment on whether adding such rule
language would be appropriate for states and PWSs to understand these
requirements.
3. Eligible Violation Types
Consistent with SDWA section 1414(h)(2), under the proposed WSRAR a
PWS would be eligible for enforcement relief from specific violations
under SDWA that were identified in the submitted restructuring plan,
subject to state approval. The restructuring plan should identify each
violation by its identification number, type, and the date of
notification.
4. Public Meeting
As soon as practicable after determining a submitted plan is
eligible for enforcement or liability protection, a state would be
required to notify the service community and to conduct a public
meeting. Like the requirements for a mandatory restructuring
assessment, the purpose of the public meeting would be to ensure that
the impacted communities are aware of how the draft restructuring plan,
subject to public input and available before and during the meeting,
would be implemented to ensure their sustainable access to safe,
affordable drinking water. For example, a restructuring plan could
include potential changes in water rates or rate structures, or terms
of service. The public meeting would need to comply with the EPA's
requirements in 40 CFR 25.6, as well as any state-specific-regulations.
The EPA expects that state would incorporate community feedback
received during the public meeting when determining whether the
proposed restructuring plan is feasible in terms of the immediate and
long-term needs of the community, particularly for plans that would
result in consolidation or transfer of ownership.
5. State Determination Date
No later than 12 months from the date it determines that a
restructuring plan is an eligible type, the state would be required to
determine whether a plan meets all minimum and applicable conditional
eligibility requirements. If the plan meets all rule requirements, and
the public meeting has been held, the plan would be considered
approved, and the state would be required to notify the supplier of
water in writing.\7\ If the plan did not meet all requirements, the
state could consult with the water system that submitted the plan
regarding a time frame for submitting a corrected plan.
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\7\ As used here, ``supplier of water'' has the same meaning as
defined at 40 CFR 142.2, i.e., any person who owns or operates a
public water system.
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6. Plan Availability
Within 30 days of approving a restructuring plan, the state would
be required to make electronic copies of the plan publicly available on
the state website, and physical copies available in one or more public
libraries within, or as near as possible to, the communities served by
the assessed water system. Requiring both electronic and physical
copies ensures that that the approved assessment is widely available to
the local community, including to individuals without internet service.
The EPA also expects that states will take additional steps to ensure
that approved restructuring plans are publicly available in an
alternative format, and that translation services are provided, in
communities where English is not the primary language.
7. Extent of Enforcement Relief
On the date the state determines that the submitted plan met all
requirements, the plan would be approved and an enforcement relief
period of up to two years would begin. During this enforcement relief
period,
[[Page 47011]]
the state could neither initiate, nor continue to take, enforcement
action for any of the specific violations of the SDWA that are
identified in the plan. Consistent with SDWA section 1414(h)(2), the
enforcement relief period could end earlier if the state determines
that all restructuring activities in the approved plan were completed
sooner than two years. Additionally, the proposed WSRAR clarifies that
during the enforcement relief period the EPA could exercise its SDWA
section 1431 imminent and substantial endangerment authority to protect
public health.
8. Limitations
The proposed rulemaking contains limitations on enforcement relief.
These limitations clarify that enforcement relief would apply only to
violations identified in a restructuring plan. In addition, under the
proposed rule a water system eligible for enforcement relief would be
required to:
a. Implement any corrective actions that are required under
existing enforcement orders or agreements that were established prior
to the state's approval of the restructuring plan. This limitation
ensures that steps are taken to protect public health by resolving
existing noncompliance as soon as practicable. Although the corrective
actions under existing enforcement orders must be taken, the EPA
recommends that states consider ways to align such orders with proposed
restructuring plans. For example, the implementation schedule for
corrective actions under an existing enforcement order could be
incorporated within a state-approved restructuring plan as part of the
SDWA-required measures and schedule of restructuring activities.
b. Comply with any applicable requirements of the SDWA or its
implementing regulations, including EPA directives stemming from the
use of its SDWA section 1431 authority. These requirements including
monitoring, reporting sample results, and notifying and informing
consumers regarding their drinking water quality.
c. Comply with any enforcement actions for new violations that
occur after the date on which the state approves the plan. Only
violations identified in the approved restructuring plan would be
eligible for statutory enforcement relief. Therefore, new violations at
the restructuring water system would be ineligible.
9. Termination of Enforcement Relief Under Approved Plans
The EPA considers the proposed measures and schedule required for
each approved restructuring plan to be critical elements of state
oversight of water system restructuring. The EPA expects that during
the enforcement relief period, each state would use the required
measures and schedules to conduct oversight and to consult with the
restructuring water system as needed. As a result of its oversight, a
state might determine that a noncompliant water system is unwilling or
unable to restructure according to the approved plan. In such cases, if
the state determines that enforcement relief is no longer applicable to
the water system, the state would be required to inform the supplier of
water in writing as soon as practicable.
Request for comment: The EPA requests comment on all aspects of the
proposed rulemaking, but in particular on the proposed minimum and
conditional requirements for enforcement relief, and the reasonableness
of the proposed time frames for state determination of plan eligibility
for enforcement relief. In addition, the EPA seeks public comment on
how best to ensure transparency into restructuring plans, and
accountability for the impacts of restructuring, in communities where
English is not the primary language.
10. Enforcement Relief Under Revised Plans
The EPA recognizes that restructuring activities, the project
schedule, or both could become infeasible due to unanticipated project
delays or increases in project costs. The EPA also recognizes that a
water system that would benefit from enforcement relief is likely to
incur additional violations as it restructures. Because SDWA section
1414(h)(2) establishes a two-year time frame for enforcement relief
under an approved restructuring plan, pursuant to the proposed 40 CFR
142.94(h), the EPA proposes that a water system would not be eligible
for additional Federal enforcement relief under an approved revised
restructuring plan. Under a revised plan, states could instead provide
state-level enforcement relief granted through system-specific
enforcement agreements. Such enforcement agreements could identify
additional compliance options for a noncompliant water system, thereby
providing additional relief for the duration of the restructuring
beyond the initial two years.
Request for comment: Although SDWA section 1414(h)(1) establishes a
two-year limit on enforcement relief for each approved plan, the SDWA
does not establish a limit on the number of restructuring plans that a
state may approve for an individual PWS. As a result, the EPA requests
comment on the assumptions underlying the proposed limits on
enforcement relief under revised plans as described in this preamble.
F. Protection of Non-Responsible Water Systems Under Approved
Restructuring Plans
1. Minimum Requirements for Liability Protection
The proposed eligibility requirements for liability protection
build on the eligibility requirements for enforcement relief. Under the
proposed rule the state would be required to determine whether the plan
is an eligible type and meets the minimum and conditional requirements
for enforcement relief. After this initial determination, the state
would then determine whether the plan also satisfied the proposed
requirements for liability protection.
Consistent with the language and intent of the statute, the
proposed WSRAR restates the SDWA section 1414(h)(5) requirements for
liability protection while providing additional clarifications. The
proposed WSRAR, if finalized, would ensure that only a non-responsible
system is potentially eligible for liability protection. To meet the
proposed eligibility requirements, the non-responsible water system
would be required to submit to the state a restructuring plan that:
a. Is based on a mandatory restructuring assessment that the state
has approved. To meet this requirement, the EPA expects that the
submitted plan would describe how the non-responsible water system
plans to implement the feasible restructuring alternatives identified
in the approved mandatory assessment report.
b. Identifies the non-responsible water system(s) and assessed
water system(s) that are subject to the restructuring plan, to allow
the state to determine the extent of any liability protection.
c. Identifies and describes, using data and other forms of
documentation that the state finds acceptable for purposes of
calculating liability, any potential and existing liability for
violations that are identified in the restructuring plan. SDWA section
1414(h) does not describe or define potential or existing liability.
The EPA proposes that states and suppliers of water would consider an
``existing liability'' to be a known obligation or responsibility for
penalties and damages that the state has assessed for a violation
identified in the plan. The submitted plan could identify these
existing liabilities as the amounts of penalties or fines that would be
cited in formal state notices of violation or
[[Page 47012]]
enforcement orders. In addition, states and suppliers of water would
consider a ``potential liability'' to be an expected obligation or
responsibility for health-based violations that are likely to reoccur
at the assessed system until the identified underlying causes of
noncompliance are resolved through restructuring. Identification of
potential liabilities could include references to state regulations
that specify the amounts of penalties or fines associated with the
violation types that the assessed water system has repeatedly incurred
and that prompted the state to mandate the restructuring assessment.
d. Identifies and describes, using data and other forms of
documentation acceptable to the state, the available funds or other
liquid assets of the assessed water system as of the date of plan
submittal. The EPA expects that as part of its submitted restructuring
plan a non-responsible water system would conduct an asset inventory of
the assessed system. The asset inventory could identify and document
recoverable assets that could be used to pay the liability for the
identified violations.
e. Requests liability protection of the non-responsible system for
the violations identified in the submitted plan.
2. Eligible Violation Types
Consistent with SDWA section 1414(h)(5), a non-responsible water
system would be eligible for liability protection from specific
violations under the SDWA if the violations were identified in the
submitted restructuring plan, subject to state approval. The
restructuring plan should identify each violation by its identification
number, type, and the date of notification.
3. Exclusions
The EPA proposes that either an assessed water system, or a water
system that otherwise meets the four statutory preconditions for a
mandatory restructuring assessment, would be ineligible for liability
protection. Under the SDWA, such water systems have repeatedly violated
health-based standards and therefore cannot be considered ``non-
responsible'' water systems.
4. Public Meeting
As under the proposed enforcement relief requirements, before
approving a restructuring plan that is eligible for liability
protection, the state would be required to notify the community that
would be affected by the restructuring plan and to hold a public
meeting. The primary purposes of the meeting are to provide the
community served by the restructuring water system(s) a meaningful
opportunity to understand how the restructuring would ensure their
continuous access to safe, affordable drinking water, and how the
restructuring plan would be implemented, including potential changes in
water rates or rate structures, or terms of service. The state would be
required to hold the meeting as soon as possible after it determines
that a plan is an eligible type. The public meeting would need to
comply with the EPA's notice, location, and time requirements for
public meetings under 40 CFR 25.6, as well as any state-specific-
regulations. The EPA also expects that the state would consider the
outcomes of the public meeting when determining whether the proposed
restructuring plan is feasible for both the immediate and long-term
needs of the community, particularly for plans that would result in
consolidation or transfer of ownership.
5. State Determination Date
The EPA proposes to require the state to determine that the plan
meets the rule eligibility requirements for liability protection, and
to notify the non-responsible water system, no more than 18 months from
the date on which the state determines plan type eligibility. The
proposed time frame would include the time necessary for the state to
review and verify the required documentation of existing and potential
liabilities and assets before making its determination. If the state
determined that the submitted plan met all requirements, the submitted
plan would be approved. As under the proposed requirements for
enforcement relief, if the submitted plan did not meet all
requirements, the state could consult with the non-responsible water
system regarding a time frame for submitting a corrected plan.
6. Extent of Liability Protection
Unlike the enforcement relief incentive, a non-responsible water
system would not be eligible as of the date of state approval of a plan
that meets eligibility requirements. Instead, as required by SDWA
section 1414(h)(5), under the proposed rule all restructuring must be
completed before the non-responsible system is eligible for liability
protection. As a result, the EPA expects that restructuring would begin
as soon as practicable after the state determined that the plan met
eligibility requirements. During restructuring, the state should
consult with the non-responsible water system and apply the required
measures and schedules of the restructuring plan to track progress.
Once the state determined that all restructuring activities in the plan
were complete, the state would be required to notify the non-
responsible system in writing within 30 days.
Under the proposed rule, the state's notification must explain
that, as of the date of state notification, the non-responsible water
system is eligible for liability protection. To determine the extent of
liability protection, the state would be required to calculate the
difference between the total value of all liabilities and assets of the
assessed (noncompliant) water system. To enable the state to perform
this calculation, the submitted plan would be required to identify all
assets and liabilities of the assessed water system. Although the non-
responsible system would not be liable for penalties or fines that
exceed the value of the identified liquid assets, the non-responsible
water system would be required to transfer to the state any identified
liquid assets or funds of the assessed system up to the amount
necessary to pay the outstanding penalties or fines. The state's
notification also would be required to explain that the non-responsible
water system must consult with the state to determine when and how it
would transfer the funds or other identified assets of the assessed
system(s) to the state. Based on stakeholder consultation, the EPA
acknowledges that an assessed system could have no liquid financial
assets that could be used to pay liabilities. In such cases, to obtain
liability protection, the non-responsible water system would be
required to submit data or other forms of documentation acceptable to
the state that demonstrate that the assessed system had no liquid
financial assets.
In addition, although the eligibility requirements for each SDWA
restructuring incentive are separate, a state may approve a
restructuring plan that provides both enforcement relief for a
noncompliant system and liability protection for a compliant system.
For example, under an approved plan for transfer of ownership,
enforcement relief would begin on the date the state approves the plan
and end up to two years later. If the transfer of ownership were
completed in fewer than two years, the enforcement relief would end on
the date of completion. Under the same restructuring plan, liability
protection for the non-responsible system would begin on the date that
the transfer of ownership is completed. Within 30 days of this date,
the non-responsible water system would consult with the state to
determine if there were any acquired
[[Page 47013]]
assets that could be used to pay for fines or penalties owed by the
noncompliant system. The non-responsible PWS would not be liable for
any remaining amount.
7. Plan Availability
As with the proposed requirements for enforcement relief, within 30
days of approving a restructuring plan eligible for liability
protection, the state would be required to make the approved plan
publicly available. The state would need to provide electronic copies
on the state website, and physical copies in one or more public
libraries within, or as near as possible to, the communities served by
the assessed water system. Requiring both electronic and physical
copies would ensure that that the approved assessment is widely
available to the local community, including to individuals without
internet service. The EPA also expects that states will take additional
steps to ensure that approved restructuring plans are publicly
available in an alternative format, and that translation services are
provided in communities where English is not the primary language.
8. Limitations
The EPA's proposal would not establish any liability protection
that exceeds the extent of protection that the state calculates as
required under the rule. The non-responsible water system also would be
required to comply with all other applicable requirements of SDWA and
its implementing regulations.
9. Determination of Change in the Supplier of Water
Under proposed 40 CFR 142.94(b)(1), if the non-responsible water
system intended to take ownership of the restructured water system,
then the restructuring plan would be required to identify the planned
date of the change in ownership. This date should appear in the
schedule of restructuring activities as would be required of any
eligible plan. As part of its determination that all restructuring
activities were completed, the state would be required to identify the
date on which the non-responsible water system took ownership of the
restructured water system, and to provide notice. Until this
notification date, the non-responsible water system would not be liable
for any violations that occurred during restructuring.
10. Liability Protection Under Revised Plans
As with plans seeking enforcement relief, the EPA recognizes that
there could be circumstances under which an approved restructuring plan
should be revised. The proposed WSRAR, if finalized, would allow a non-
responsible water system to remain eligible for liability protection
under a revised restructuring plan under three conditions. First, the
non-responsible water system would need to provide a justification to
the state, using data and other forms of documentation that the state
found acceptable, that a revised plan is necessary to ensure that the
restructuring objectives are achieved as soon as practicable. Second,
the state would need to confirm that any violations identified in the
revised restructuring plan did not occur at the non-responsible system.
Third, the state would need to approve the revised restructuring plan
consistent with the proposed rule's plan requirements for liability
protection. As a result, the state would have 18 months from submittal
of the revised plan to determine whether it met the eligibility
requirements.
Request for comment: The EPA requests public comment on all aspects
of the proposed rule, but in particular on the following aspects of
this section of the proposed WSRAR: the liability protections proposed
in this rulemaking, including the meaning of the terms ``potential
liability'' and ``existing liability''; approaches to the
identification of existing and potential liabilities and assets; the
calculation of liability protection for the non-responsible system;
minimum requirements for liability protection; and the reasonableness
of the proposed time frames for state determination of plan eligibility
for liability protection. The EPA also requests comment on how best to
engage communities with environmental justice concerns as part of the
proposed public meeting requirements for restructuring plans. In
addition, the EPA seeks public comment on how best to ensure
transparency into restructuring plans, and accountability for the
impacts of restructuring, in communities where English is not the
primary language.
G. Financial Assistance for Restructuring Activities
As provided under SDWA section 1414(h)(4), a PWS that has completed
a mandatory restructuring assessment would be eligible for a DWSRF loan
to support restructuring. The EPA believes that the language of SDWA
section 1414(h)(4) is consistent with statutory language regarding
DWSRF loan eligibility under SDWA section 1452(a)(3). As a result,
under existing regulations states and assessed water systems should
consider a completed mandatory restructuring assessment to be a means
of identifying restructuring activities that are eligible for DWSRF
loans. As a result, the agency does not propose to amend existing DWSRF
regulations in 40 CFR part 35 to implement this provision under the
WSRAR.
H. Violations
Under the proposed rule, a reporting violation would occur if the
assessed water system, or an approved third party on behalf of the
assessed water system:
1. Failed to submit the assessment report as mandated by the state;
2. Submitted an assessment report to the state after the submittal
date that the supplier of water and the state had established through
previous consultation;
3. Submitted an assessment report to the state that does not
address all minimum elements; or
4. Submitted an assessment that does not include the required
certification statement.
I. Effective Date
Pursuant to the Administrative Procedure Act (APA) at 5 U.S.C.
553(d), the EPA is proposing that the WSRAR would be effective 60 days
from the date of publication in the Federal Register. Primacy agencies
would be required to update their programs to incorporate the new
primacy requirements within two years from the date of promulgation,
with an optional two-year extension as provided under 40 CFR 142.12(b).
V. State Implementation
As of the date of this proposed rulemaking, the EPA has approved
PWSS primacy for 49 states, Puerto Rico, American Samoa, Commonwealth
of the Northern Mariana Islands, Virgin Islands, Guam, and the Navajo
Nation. Primacy for the PWSS program is established under SDWA section
1413. The EPA may approve primacy for the PWSS program for states,
territories, and federally recognized Tribes. To obtain initial primacy
from the EPA, a state must meet the EPA's regulatory requirements under
40 CFR 142.10, including that it: has adopted drinking water
regulations that are no less stringent than the NPDWRs established
under SDWA section 1412; has adopted and is implementing adequate
procedures for enforcement of the regulations; and, is keeping records
and making reports as required by SDWA section 1413.
[[Page 47014]]
Under 40 CFR 142.11, a state's primacy application must contain
several elements including:
The text of the state's PWSS statutes and administrative
regulations.
Documentation of the primacy agency's procedures for
enforcement of its drinking water regulations including a description
of the state's procedures to maintain its PWS inventory and conduct
sanitary surveys, identification of certified laboratories, a brief
description of the state's program to ensure that new or substantially
modified PWSs will be capable of complying with the state's drinking
water regulations, copies of state statutory and regulatory provisions
authorizing adoption and enforcement of state primary drinking water
regulations.
A brief description of state procedures for administrative
or judicial action against noncompliant PWSs.
A statement that the state will satisfy reporting and
recordkeeping requirements.
Text of the state's statutory and regulatory provisions
concerning variances and exemptions (if allowed by the state).
A description of the state's plan for ensuring safe
drinking water under emergency conditions.
Copies of state statutory and regulatory provisions
authorizing the state executive branch to impose administrative
penalties.
An Attorney General's statement certifying that the laws
and regulations were duly adopted and are enforceable.
The 2018 AWIA amended SDWA section 1413 to require, as a condition
of primacy, the adoption and implementation of procedures for requiring
public water systems to assess options or consolidation or transfer of
ownership or other actions in accordance with regulations issued by the
EPA under SDWA section 1414(h)(6). As a result, the proposed WSRAR
would revise the implementing regulations under 40 CFR part 142 subpart
B to include a description of the state's procedures for an assessment
to be completed with respect to options for consolidation, transfer of
ownership, or other restructuring actions in accordance with WSRAR
requirements.
The proposed primacy requirements are intended to ensure that
states would adequately describe how they would implement mandatory
assessment programs and determine eligibility for enforcement relief or
liability protection. The requirements would apply both to a state
seeking an initial determination of primacy under 40 CFR 142.11 and to
existing primacy agencies that seek a revision under 40 CFR 142.12. The
EPA may not grant interim primacy for WSRAR under 40 CFR 142.12(e)
because the proposed rule is not a NPDWR.
A. Revisions to Primacy Requirements
As described in proposed requirements under 40 CFR 142.10(i), the
EPA would approve a state primacy application for the WSRAR if the
agency were able to determine that, consistent with state legal
authority, the state had adopted and is implementing procedures for
conducting or approving mandatory restructuring assessments, and review
of restructuring plans, as would be required under 40 CFR part 142
subpart J. To obtain primacy for the WSRAR, an applicant would be
required to show that is has adopted and is implementing procedures to,
among other activities: find that a PWS has satisfied the SDWA
preconditions for a mandatory restructuring assessment; review and
approve eligible assessors; ensure assessed water system compliance
with the requirements for conducting a mandatory assessment, including
public meetings; and, review restructuring plans to determine water
system eligibility for enforcement relief or liability protection and
the extent of liability protection, as applicable, based on rule
requirements.
Pursuant to the proposed requirements under 40 CFR 142.11(a)(8), a
state primacy application would be required to demonstrate to the EPA
that it has adequate authority to satisfy all the proposed new WSRAR
primacy requirements under 40 CFR 142.10(i), and the proposed new WSRAR
reporting and recordkeeping requirements for mandatory assessments and
approved restructuring plans under 40 CFR 142.14 and 142.15. The
submitted application would serve as the basis for the EPA's initial
primacy determinations for the WSRAR.
Pursuant to 40 CFR 142.12(c), an entity that already has primacy
would be required to submit to the EPA a primacy revision application
that includes: the documentation required by proposed new WSRAR primacy
requirements under sections 142.10(i) and 142.11(a)(8); any primacy
elements that would not change under a proposed program revision; and,
a certification statement from the state's Attorney General or
independent counsel, or the attorney representing the Indian Tribe,
that its laws and regulations to carry out the requested program
revisions were duly adopted and are enforceable.
B. State Reporting and Recordkeeping Requirements
The proposed WSRAR, if finalized, also would establish new
reporting and recordkeeping requirements that are intended to ensure
that mandatory assessments satisfy scheduling, content, and tailoring
requirements, and that states determine water system eligibility for
statutory incentives consistent with WSRAR requirements for
restructuring plans.
1. Reporting Requirements
Existing regulations in 40 CFR 142.15 establish reporting
requirements for states with primary enforcement responsibility. The
proposed WSRAR would establish new requirements under 142.15(c)(8) for
states to report to the EPA annually, using a format and on a schedule
that the agency will have established, the name and identification
number of each PWS for each of the following notifications or
determinations, as applicable:
a. Candidates for a mandatory restructuring assessment. This
proposed reporting element would refer to each PWS that the state has
determined to be a candidate for a mandatory assessment, having met the
four statutory preconditions in the proposed WSRAR, including the date
of determination;
b. Mandatory assessment notifications. This proposed reporting
element would refer to each identified PWS that the state has notified
as the subject of a mandatory assessment, including the date of
notification;
c. Mandatory assessments completed. This proposed reporting element
would refer to each PWS that the state has notified as the subject of a
mandatory restructuring assessment and has completed the assessment as
required, including the date of completion;
d. Violations of mandatory assessment requirements. This proposed
reporting element would refer to each PWS that the state has determined
to be in violation of the WSRAR mandatory restructuring assessment
requirements, by violation type and violation date; or
e. Eligibility for restructuring incentives. This proposed
reporting element would refer to each PWS that the state has determined
to be eligible for either enforcement relief or liability protection
based on an approved restructuring plan, including the type of
eligibility and the date of plan approval.
2. Recordkeeping Requirements
Existing regulations in 40 CFR 142.14 establish recordkeeping
requirements for states with primary enforcement responsibility. To
enable the EPA to
[[Page 47015]]
fulfill its oversight responsibilities, the proposed WSRAR also would
establish recordkeeping requirements for primacy states under new 40
CFR 142.14(h). The proposed rule would require states to retain records
of approved mandatory assessment reports for five years from the date
of approval. In addition, the EPA also proposes to require that each
state retain records of restructuring plans submitted by PWSs seeking
enforcement relief or liability protection, and to provide a copy of
such plans to the EPA upon request, from the date of plan approval
until one year from the date on which the state determines that all
restructuring activities in the approved plan are complete. In such
cases, the EPA also proposes that states be required to retain an
approved mandatory assessment report if: the approved assessment report
served as the basis for a restructuring plan that met regulatory
requirements for enforcement relief, or for any restructuring plan that
met regulatory requirements for liability protection. In such cases,
states would be required to retain a copy of an assessment report until
one year following the completion of restructuring under an approved
restructuring plan.
VI. Economic Impact Analysis
The following section summarizes the EPA's analysis to estimate the
economic impact of the proposed WSRAR on states with primacy, including
the Navajo Nation and U.S. territories, and EPA Regions, to develop and
maintain mandatory assessment programs. Because the EPA is required to
propose the WSRAR pursuant to 42 U.S.C. 300g-3(h)(6), and the scope of
the proposed WSRAR is defined by 42 U.S.C. 300g-3(h), the agency did
not consider regulatory alternatives. In addition, because the proposed
WSRAR does not mandate restructuring plans, the EPA also did not
estimate the costs to PWSs of developing restructuring plans, or the
costs to states of reviewing restructuring plans to make eligibility
determinations. The full economic impact analysis (EIA) Analysis of the
Economic Impacts of the Proposed Water System Restructuring Assessment
Rule is available in the docket for this action. See the ADDRESSES
section of this document for instructions on accessing the docket.
A. Annualized and Present Value Cost Estimates
SDWA section 1413 requires states to develop mandatory assessment
programs as a condition of primacy. In addition, consistent with SDWA
section 1414(h)each state would have discretion to decide whether a PWS
meets the statutory preconditions and whether to mandate a
restructuring assessment. As a result, states would incur direct costs
of the mandatory primacy revision under the proposed WSRAR, even if
they elected not to use their mandatory assessment authority. To
estimate the indirect costs of the proposed rule requirements on states
and PWSs where a state chooses to exercise its mandatory assessment
authority, the EPA also conducted a supplementary analysis, which is
provided in Appendix A of the EIA for the proposed rule.
The direct costs of the proposed rule requirements would comprise
both program development costs and program administration costs. States
would incur program development costs to establish state programs to
implement the proposed WSRAR. These costs would include reading and
understanding the WSRAR, developing policies and procedures, preparing
a primacy revision package, updating data systems, preliminary data
analysis, outreach to PWS, and the education and training of staff.
States would incur program administration costs to maintain established
mandatory assessment programs. These costs would include maintaining
program staffing and funding, collecting, and reviewing data to
identify PWSs that meet the assessment preconditions, and reporting and
recordkeeping.
Because the proposed rule would impose direct costs only on states,
the EIA focused primarily on the program development and program
administration costs of the mandatory primacy revision. Additionally,
the EPA expects that to protect public health, states with primacy for
the WSRAR would exercise their mandatory assessment authority. As a
result, the EPA also conducted a supplementary analysis of the indirect
costs of the proposed rule requirements on states and PWSs. The
indirect cost estimates were based on different approaches to
estimating the number of mandatory restructuring assessments that would
be conducted over a 25-year period after promulgation of the rule. The
indirect costs of the proposed WSRAR would include performing mandatory
restructuring assessments; reviewing assessment reports to ensure they
satisfy the content and tailoring requirements; and enforcement of
assessment reporting violations. Details of the supplementary analysis
are available in Appendix A of the EIA for the proposed WSRAR.
For each direct cost, the EPA developed high and low estimates. The
EPA derived the high estimates from a cost model that assumed no prior
experience conducting water system assessments. The EPA derived the low
estimates based on available information about each primacy agency's
baseline capacity to implement the WSRAR. The primary source of data
for these estimates was interviews conducted with staff and managers
from eight state PWSS programs. The EPA used data from these interviews
to estimate the level-of-effort (LOE, in hours) to develop, administer
and implement a mandatory assessment program. Following the interviews,
states provided assessment forms, report examples, procedural
documents, and spreadsheets showing the LOE for various assessments.
The EPA used this information to better characterize the LOE estimates
provided during the interviews. The EPA supplemented the interview
information with details available on primacy agency websites, as well
as documents provided by interview states that included assessment
forms, report examples, state procedures and spreadsheets. The agency
also used published EPA and state reports on state programs and state
resource needs.
1. Program Development Burden Estimation
Based on these assumptions and data sources, the EPA estimated the
costs of program development using two approaches. Under the first
approach, the EPA assumed a constant uniform distribution between the
high and low burden estimate. This approach permitted the EPA to
estimate a theoretical upper bound program development burden of the
proposed rule. The EPA refers to estimates based on this approach as
``full program development'' burden. The ``full program development''
burden is designed to show that, even under the constraint that prior
experience conducting similar activities would not lower the burden of
developing a mandatory assessment program, the estimated costs of the
proposed WSRAR would not exceed any statutory or executive order
thresholds (see section VII of this preamble).
Under the second approach, while the EPA assumed that all states
need experience and technical expertise to implement mandatory
assessment programs, each will start from a different baseline. Using
the interview data, publicly available information on state websites,
and published reports, the EPA established three categories of state
baseline capacity, based on the assumed experience of each state in
establishing and implementing
[[Page 47016]]
programs to conduct assessment activities like those that would be
conducted under the proposed rule. Similar activities include Level 2
assessments under the Revised Total Coliform Rule (RTCR), sanitary
surveys, TMF capacity assessments, and feasibility studies. The EPA
assigned all states to one of the three baseline categories, from those
with the lowest baseline capacity that conduct mostly technical
capacity assessments (i.e., sanitary surveys), to those with the
greatest baseline capacity that already evaluate the feasibility of
restructuring options. Under the ``differential program development''
approach, the EPA assumed that for the most experienced states program
development costs would be 50 percent less than the full cost estimate,
while for the least experienced states these costs would be equivalent
to the ``full program development'' model values. For states that
conduct assessment activities that include in-depth evaluation of
technical and managerial capacity or routine site visits focused on TMF
capacity, program development costs would be 25 percent less than the
full cost estimate.
Of the two approaches, the EPA assumes the differential program
development estimates, shown in Table VI-1 of this preamble, more
accurately represent the cost of the EPA's proposal if finalized.
Estimates in Table VI-1 of this preamble represent aggregate average
development costs for primacy agencies during the three years after
promulgation of the final rule, because the EPA assumes the LOE will
vary by state based on factors other than program experience, such as
program efficiencies in implementing procedures or policies, etc. As a
result, some primacy agencies costs would exceed the highest estimate
while others would be below the lowest estimate.
Table VI-1--Estimated Burden and Cost for Program Development Activities
[Differential Program Development Cost Approach, Cost in 2023 Dollars]
----------------------------------------------------------------------------------------------------------------
Average hours
Cost component per primacy Multiplier Total hours
agency \a\
----------------------------------------------------------------------------------------------------------------
Read and Understand the Rule.................. 38 56 primacy agencies \c\......... 2,100
Regulation Adoption, Development of Primacy 623 56 primacy agencies \c\......... 34,905
Agency Program/Primacy Revision Package \b\.
Update Data System............................ 76 56 primacy agencies \c\......... 4,229
Preliminary Data Analysis..................... 32 56 primacy agencies \c\......... 1,790
PWS Outreach and Education.................... 212 56 primacy agencies \c\......... 11,863
Staff Training................................ 272 56 primacy agencies \c\......... 15,215
-----------------------------------------------------------------
Total Hours............................... .............. ................................ 70,102
Labor Rate................................ .............. ................................ $70.63
Estimated Total Cost...................... .............. ................................ $4,951,212
----------------------------------------------------------------------------------------------------------------
\a\ Totals may not add due to rounding.
\b\ Although the cost of revising primacy packages does not apply to EPA Regions with primacy, the costs were
included in the model because the costs could not be split out from the other regulation adoption costs.
\c\ Entities with primacy include EPA (which has primacy for Wyoming and American Indian systems), 49 states
(all except Wyoming), Puerto Rico, American Samoa, Commonwealth of the Northern Mariana Islands, Virgin
Islands, Guam, and Navajo Nation.
2. Program Administration Costs
After adopting a new rule, states incur direct costs on an ongoing
basis to administer the rule. For the proposed WSRAR, each state would
incur direct program administration costs related to updating mandatory
assessment guidance, forms, resources, and materials; training
inexperienced staff; collecting and reviewing data to identify
candidates for a mandatory assessment; and maintaining required
records. Unlike the program development cost estimates, the EPA assumed
that program administration costs would not vary based on past program
experience conducting similar activities. Based on the results of state
interviews, the EPA assumed that to identify candidates for mandatory
assessments, states would collect and review data annually using one-
third the amount of time required to conduct the preliminary data
analysis. Like the program development cost estimates, the EPA also
assumed that some primacy agencies would incur a higher level of effort
(LOE) and some primacy agencies would incur a lower LOE to maintain
their programs based on factors other than experience, such as program
efficiencies in implementing procedures or policies. Therefore, the EPA
calculated the average per primacy agency of the high and low estimates
to develop the estimate for each program administration activity as
shown in Table VI-2.
Table VI-2--Estimated Average Burden and Cost for Program Administration
[Cost in 2023 Dollars]
----------------------------------------------------------------------------------------------------------------
Average hours
Cost component per primacy Multiplier Total hours
agency \a\
----------------------------------------------------------------------------------------------------------------
Maintain Program.............................. 189 56 primacy agencies \b\......... 10,584
Collect and Review Data....................... 13 56 primacy agencies \b\......... 728
-----------------------------------------------------------------
Total Hours............................... .............. ................................ 11,312
Labor Rate................................ .............. ................................ $70.63
Estimated Total Cost...................... .............. ................................ $798,950
----------------------------------------------------------------------------------------------------------------
\a\ Totals may not add due to rounding.
\b\ Entities with primacy include EPA (which has primacy for Wyoming and American Indian systems), 49 states
(all except Wyoming), Puerto Rico, American Samoa, Commonwealth of the Northern Mariana Islands, Virgin
Islands, Guam, and Navajo Nation.
[[Page 47017]]
3. Total Direct Costs
As a result of its analysis, the EPA estimated that the annualized
total direct (development and administrative) costs to states of
implementing the requirements of this proposed WSRAR, if finalized,
would lie within a 95 percent confidence interval of $0.8 to $1.0
million at the 2 percent discount rate. As shown in Table VI-3 of this
preamble, in either the differential or full implementation burden
scenarios, the estimated annualized total direct cost over a 25-year
period is not more than $1 million. For more information about how the
EPA estimated the annualized direct costs, please refer to section VI
of the EIA.
Table VI-3--Annualized Direct Costs to Primacy Agencies of the Proposed
WSRAR Using a 2% Discount Rate
[Millions of 2023 Dollars]
------------------------------------------------------------------------
Differential
program Full program
Cost component development development
burden \b\ burden \c\
------------------------------------------------------------------------
Read/Understand Rule:
Est. 95% CI......................... * *
* - * * - *
Other Program Development:
Est. 95% CI......................... $0.2 $0.3
$0.2-$0.2 $0.3-$0.3
Direct On-Going Program Administration:
95% CI.............................. $0.6 $0.6
$0.6-$0.7 $0.6-$0.7
Total Direct Costs \a\..........
Est. 95% CI................. $0.9 $0.9
$0.8-$0.9 $0.9-$1.0
------------------------------------------------------------------------
* Costs are positive but less than $50,000, so would round to $0.0 in
millions of dollars.
\a\ Totals may not add due to rounding.
\b\ Assumes that some primacy agencies will incur lower program
development costs than others.
\c\ Assumes all primacy agencies will incur the full program development
costs.
B. Accounting for Uncertainty in the Cost Estimates
When preparing the EIA, the EPA also accounted for uncertainty in
estimating the differences in the states' baseline capacity to conduct
mandatory restructuring assessments, and in the estimated level of
effort needed to complete program development and administrative tasks.
The uncertainty in the estimates stems from the limited amount of data
that could be used to estimate direct costs for all state programs and
is inherent to the data sources available to populate the cost model.
Therefore, the EPA used a three-pronged approach to address uncertainty
in its estimate of the total (direct and indirect) cost of the proposed
rule, including estimating the cost under four different cost scenarios
based on two sets of assumptions about the number of assessments that
primacy agencies could mandate and the cost of program development.
Each scenario reflects a combination of one of two alternative
assumptions about the number of assessments primacy agencies will
mandate and one of two approaches for estimating primacy agencies'
program development costs.
Scenario 1a assumes primacy agencies will mandate a low number of
assessments and have a differential program development burden.
Scenario 2a assumes primacy agencies will mandate a low number of
assessments and have a full program development burden. Scenario 1b
assumes primacy agencies will mandate a high number of assessments and
have a differential program development burden. Scenario 2b assumes
primacy agencies will mandate a high number of assessments and a have a
full program development burden. Table VI-4 summarizes the four
scenarios for which the EPA evaluated total costs of the proposed rule.
Table VI-4--Results of Scenario Analysis
[Cost in 2023 Dollars]
------------------------------------------------------------------------
Number of assessments mandated by primacy
agencies
-------------------------------------------
Low estimate based High estimate based
on violation on violation
Program development costs duration approach: frequency approach:
352 Initial 575 Initial
Assessments; 2,015 Assessments; 4,457
Assessments over Assessments over
2028-2048 2028-2048.
------------------------------------------------------------------------
Primacy Agencies in Scenario 1a (Low Scenario 1b
Categories B and C Face cost):. (Moderate-high
Differential Program Low number of cost):
Development Burden. assessments, High number of
differential assessments,
Program Development differential
burden. Program Development
Annualized cost: burden.
$1.6 million. Annualized cost:
Maximum annual cost $2.3 million.
in a single year: Maximum annual cost:
$2.4 million. $4.1 million.
All Primacy Agencies Face Scenario 2a Scenario 2b (High
Full Program Development (Moderate-low cost):
Burden as in Category A. cost):. High number of
Low number of assessments, full
assessments, full Program Development
Program Development burden.
burden. Annualized cost:
Annualized cost: $2.4 million.
$1.7 million. Maximum annual cost:
Maximum annual cost: $4.1 million.
$2.4 million.
------------------------------------------------------------------------
Present value of costs and annualized costs calculated using a 2 percent
discount rate.
[[Page 47018]]
C. Non-Quantified Benefits of the Proposed WSRAR
Consistent with the provisions of SDWA section 1414(h), states have
the discretion to mandate restructuring assessments that require
assessed PWSs to undertake the restructuring alternatives identified in
mandatory restructuring assessments, including forms of consolidation
or transfer of ownership. To quantify the potential costs of these
activities, the EPA estimated the number of restructuring assessments
that states would mandate under different scenarios. For the potential
benefits of the proposed WSRAR, the EPA conducted qualitative analysis
that included the types of benefits likely to result from
implementation of the proposed rule, as there is no reasonable basis
for quantifying the effects of future restructuring activities on
compliance rates. The EPA could not quantitatively estimate how the
proposed WSRAR would affect water system capacity to comply with
health-based standards, or what reductions in morbidity or mortality
could result from water systems that return to compliance. The primary
nonquantifiable benefit of mandatory restructuring assessments under
the proposed WSRAR would be returning assessed PWSs to compliance. The
EPA also estimates that the proposed WSRAR would generate two potential
long-term benefits. First, the enforcement relief and liability
protection incentives increase the likelihood that assessed public
water systems will restructure and return to compliance with health-
based standards. As a result, public health risks would be reduced in
communities where the assessed water system restructures. Second,
states that utilize the mandatory assessment authority will be able
reduce the administrative costs of enforcement against water systems
that otherwise would remain persistently noncompliant.
VII. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review, as Amended by
Executive Order 14094: Modernizing Regulatory Review
This action is not a significant regulatory action as defined in
Executive Order 12866, as amended by Executive Order 14094, and was
therefore not subject to a requirement for Executive Order 12866
review.
B. Paperwork Reduction Act (PRA)
The information collection activities in this proposed rulemaking
have been submitted for approval to the OMB under the PRA. The
Information Collection Request (ICR) document that the EPA prepared has
been assigned EPA ICR number 2736.01. You can find a copy of the ICR in
the docket for this rulemaking, and it is briefly summarized here.
Because the AWIA directly revised primacy requirements under SDWA
section 1413, all primacy agencies must submit to the EPA a primacy
revision application for the proposed WSRAR. Primacy agencies include
each of the 49 states (all U.S. states except Wyoming), Puerto Rico,
American Samoa, Commonwealth of the Northern Mariana Islands, Guam,
Virgin Islands, and Navajo Nation, for a total of 56 primacy agencies.
The ICR for the proposed WSRAR describes costs and burden for all 56
primacy agencies to conduct the following activities: adopt the
proposed WSRAR by developing primacy agency programs and submitting
primacy revision packages to the EPA for review and approval; update
data systems; analyze data on water systems that are potential
candidates for a mandatory restructuring assessment; develop PWS
outreach and education materials about the WSRAR; and train staff for
adoption and implementation of the WSRAR (USEPA 2024b).
The burden estimate is derived from the economic impact analysis of
the proposed WSRAR (USEPA 2024a). The EPA estimated the potential cost
of the proposed WSRAR under alternative scenarios to account for
uncertainty regarding how primacy agencies will develop their programs
and implement the WSRAR. For the proposed ICR, the EPA used the
estimated burden hours and costs from the highest cost scenario. Under
this scenario, the EPA assumed the full program development cost for
every primacy agency, regardless of existing program capacity to
implement the proposed WSRAR requirements. This approach established an
upper bound on the estimated burden and cost of the proposed WSRAR.
The ICR for the proposed WSRAR presents the total time, effort, and
financial resources required of primacy agencies to generate, maintain,
retain, disclose, and/or provide information to the EPA during the
first three years following WSRAR promulgation. Existing regulations
under 40 CFR 142.12(b), promulgated pursuant to 42 U.S.C. 300g-2(b)(1),
allow primacy agencies up to two years to request approval of primacy
revisions to adopt regulations that are no less stringent than those
that the EPA promulgates, with an extension of up to two years if the
EPA Administrator determines the extension is necessary and justified.
Once approved, primacy agencies may exercise this authority to require
a PWS to assess options for system restructuring, including forms of
consolidation or the transfer of ownership to improve drinking water
quality. The proposed WSRAR imposes no direct reporting requirements on
PWSs.
The EPA will use the information collected during the first three
years after promulgation of the WSRAR to review each submitting primacy
agency's application and to determine whether the submitting primacy
agency has met the proposed revised requirements under 40 CFR 142.10
and 142.11.
Respondents/affected entities: Primacy agencies.
Respondent's obligation to respond: Mandatory pursuant to 42 U.S.C.
300g-2(a)(6) and the agency's authority in the implementing regulations
for revisions to state programs under 40 CFR 142.12.
Estimated number of respondents: 56.
Frequency of response: Once for each respondent to read and
understand the rule; develop a program; submit a primacy application to
the EPA; update data systems; conduct preliminary data analysis;
educate PWSs in rule requirements; and conduct staff training.
Total estimated burden: 29,088 hours per year across all 56 primacy
agencies. Burden is defined at 5 CFR 1320.3(b).
Total estimated costs: $1,889,497 per year across all 56 primacy
agencies, including $0 in annualized capital or operation and
maintenance costs. An agency may not conduct or sponsor, and a person
is not required to respond to, a collection of information unless it
displays a currently valid OMB control number. The OMB control numbers
for the EPA's regulations in 40 CFR are listed in 40 CFR part 9. Submit
your comments on the agency's need for this information, the accuracy
of the provided burden estimates, and any suggested methods for
minimizing respondent burden to the EPA using the docket identified at
the beginning of this rule. The EPA will respond to any ICR-related
comments in the final rule. You may also send your ICR-related comments
to OMB's Office of Information and Regulatory Affairs using the
interface at www.reginfo.gov/public/do/PRAMain. Find this particular
information collection by selecting ``Currently under Review--Open for
Public Comments'' or by using the search function. OMB must receive
comments no later than July 29, 2024.
[[Page 47019]]
C. Regulatory Flexibility Act (RFA)
I certify that this action will not have a significant economic
impact on a substantial number of small entities under the RFA. This
action will not impose any requirements on small entities. The proposed
WSRAR mandate applies only to state or Tribal government agencies with
primary enforcement responsibility (primacy). The EPA expects states
that elect to exercise their mandatory assessment authority will
conduct nearly all mandatory restructuring assessments. Finally, this
action does not require small entities to implement any restructuring
activities identified in a mandatory assessment (USEPA 2024a). Small
entities may voluntarily submit restructuring plans that must meet the
eligibility requirements established by SDWA and any additional
requirements of the proposed WSRAR.
D. Unfunded Mandates Reform Act (UMRA)
This action does not contain an unfunded mandate of $100 million or
more as described in UMRA, 2 U.S.C. 1531-1538, and does not
significantly or uniquely affect small governments. The proposed WSRAR
requirements to establish a mandatory assessment program and to submit
a primacy revision to the EPA apply only to state or Tribal government
agencies with primary enforcement authority under 42 U.S.C. 300(g)-2
and not to small governments as defined by UMRA.
E. Executive Order 13132: Federalism
This action does not have federalism implications. It will not have
substantial direct effects on the states, on the relationship between
the national government and the states, or on the distribution of power
and responsibilities among the various levels of government. The
proposed WSRAR, if finalized, mandates primacy agencies to adopt and
develop mandatory assessment programs, including new recordkeeping
requirements, and to submit primacy applications to the EPA for review.
The Analysis of the Economic Impacts of the Proposed Water System
Restructuring Assessment WSRAR, which can be found in the docket,
estimated the annualized direct cost for state, local, and tribal
governments in the aggregate to be $0.8 to $1.0 million annualized at a
2 percent discount rate. In addition, because the proposed WSRAR also
does not impose any requirements on small governments, it has no impact
on small government revenues. As a result, the proposed WSRAR does not
have substantial compliance costs and Executive Order 13132 does not
apply to this action. Pursuant to SDWA 1413(a)(6), the proposed WSRAR
would establish implementing regulations for states to adopt mandatory
assessment programs and establish reporting and recordkeeping
requirements but would not preempt state or local law. Therefore, the
preemption threshold under Executive Order 13132 also does not apply to
this action.
F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments
This action does not have Tribal implications as specified in
Executive Order 13175. The proposed WSRAR does not uniquely affect the
communities of Tribal governments, nor does it impose substantial
direct compliance costs on those communities. The direct compliance
costs of the primacy requirements of the proposed WSRAR would apply
uniformly to primacy agencies. Thus, Executive Order 13175 does not
apply to this action. Consistent with the EPA's Policy on Consultation
and Coordination with Indian Tribes, the EPA consulted with Tribal
officials during the development of this action from October 4 through
November 15, 2019, including two national webinars conducted for all
federally recognized Tribes. The EPA conducted the first webinar on
October 16 and the second webinar on October 30, for a total of 47
participants. The EPA provided an overview of the AWIA restructuring-
related amendments to the SDWA and sought Tribal input on the potential
effects of the amendments on Tribal governments and Tribal PWSs.
During the webinars, the EPA requested input from Tribal
governments on three aspects of WSRAR development: first, factors that
EPA should consider for mandatory assessments of Tribal PWSs; second,
whether and how the amended SDWA provisions to obtain enforcement
relief from primacy agencies might affect the number of restructuring
plans submitted by Tribal PWSs; and third, whether and how the amended
SDWA provisions to obtain liability protection for compliant (non-
responsible) water systems that are consolidating with, or acquiring,
assessed PWSs might affect the number of restructuring plans submitted
by Tribal PWSs. In addition, on October 9, 2019, the EPA participated
in informational meetings upon request with the Region 1 Tribal
Operations Committee (RTOC) and National Tribal Water Council (NTWC) to
discuss the AWIA amendments to SDWA. During these informational
meetings, the EPA encouraged broad participation in both national
webinars to ensure that the agency could explain the policy
implications of the SDWA-required provisions of the WSRAR to Tribal
PWSs and could hear Tribal perspectives before drafting this proposal.
Tribes did not provide written comments or further requests for
consultation or outreach by the end of the consultation period. This
discussion under Executive Order 13175 serves as a summary of EPA's
Tribal consultation efforts for this proposed rulemaking.
G. Executive Order 13045: Protection of Children From Environmental
Health Risks and Safety Risks
The EPA interprets Executive Order 13045 as applying only to those
regulatory actions that concern environmental health or safety risks
that the EPA has reason to believe may disproportionately affect
children, per the definition of ``covered regulatory action'' in
section 2-202 of the Executive Order. Therefore, this action is not
subject to Executive Order 13045 because it does not concern an
environmental health risk or safety risk. Since this action does not
concern human health, EPA's Policy on Children's Health also does not
apply.
H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution or Use
This action is not subject to Executive Order 13211 because it is
not a significant regulatory action under Executive Order 12866.
I. National Technology Transfer and Advancement Act (NTTAA)
This rulemaking does not involve technical standards.
J. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations and
Executive Order 14096: Revitalizing Our Nation's Commitment to
Environmental Justice for All
The EPA believes that the human health or environmental conditions
that exist prior to this action may result in or have the potential to
result in disproportionate and adverse human health or environmental
effects on communities with environmental justice concerns. The EPA has
identified several recent studies that support this Executive Order
review which indicate disparities in access to safe drinking water
based on racial or socioeconomic status in the United States (Zhang, et
al. 2022; Martinez-Morata et al. 2022;
[[Page 47020]]
Rockowitz et al. 2018; London, et. al. 2018; Mack and Wrase 2017;
Gasteyer, et al. 2016).
The EPA believes that it is not practicable to assess whether this
action is likely to change existing disproportionate and adverse
effects on communities with environmental justice concerns. Consistent
with SDWA 1414(h), the proposed rule requires states to establish
mandatory assessment programs and provides states with the discretion
to use the mandatory assessment authority for persistently noncompliant
PWSs, including those that serve communities with environmental justice
concerns. The rule does not require a PWS or a community to implement
any restructuring actions identified in a mandatory restructuring
assessment. Instead, the rule establishes eligibility criteria for SDWA
incentives under which PWSs would voluntarily submit restructuring
plans. As a result, it is difficult to quantify the potential impacts
of this rulemaking on communities with environmental justice concerns.
The EPA proposes in this rule several requirements that are
intended to ensure that mandatory assessments and restructuring plans
are carried out in a transparent manner with the direct involvement of,
and engagement with, impacted communities:
States would be required to hold a public meeting before
approving an assessment report or proposed restructuring plan. The
public meeting would be subject to notice, location, and time
requirements to ensure it is well publicized and accessible to all
interested and affected parties.
States would be required to make drafts of mandatory
assessment reports available before and during public meetings, and
physical and electronic copies of state-approved mandatory assessment
reports and restructuring plans publicly available within 30 days of
approval. This requirement increases transparency of drinking water
utility decision making for potentially impacted communities.
Assessments would be required to meet minimum tailoring
requirements that expressly require the assessor to determine whether
the assessed water system meets the state definition of a disadvantaged
community pursuant to the requirements of SDWA section 1452(d) or to 42
U.S.C 300j-19(c)(2)(B), or whether the consumers served by assessed
system are underserved pursuant to 42 U.S.C. 300j-19a. This requirement
would benefit underserved or disadvantaged populations because it
ensures that the assessment identifies affordable restructuring options
in the communities served by the assessed water system.
Assessments and restructuring plans would be required to
describe how restructuring would ensure that the community served by
the assessed water system would achieve access to safe, affordable
drinking water.
States would be required to consult with the assessed
water system to discuss the results of the assessment. This
consultation is intended to ensure that the assessed water system
understands the restructuring options, the potential benefits of
restructuring, and available funding sources.
In addition to these proposed requirements, in section IV of this
preamble the agency specifically requests public comment on additional
requirements to ensure that communities are directly involved and
engaged in mandatory restructuring assessments.
VIII. References
AWWA. (2012). National Inventory of Regional Collaboration Among
Water and Wastewater Utilities: Final Report. Retrieved from:
https://www.awwa.org/Portals/0/AWWA/ETS/Resources/awwautilitycollaborationreport.pdf?ver=2018-12-27-132811-107
AWWARF. (2008). Regional Solutions to Water Supply Provision. Second
Edition. Retrieved from: https://www.waterrf.org/research/projects/regional-solutions-water-supply-provision
California State Water Resources Control Board. (2021). 2021
Drinking Water Needs Assessment. Informing the 2021-22 Safe and
Affordable Drinking Water Fund Expenditure Plan. Retrieved from:
https://www.waterboards.ca.gov/drinking_water/certlic/drinkingwater/needs.html
London, Jonathan et al. (2018). The Struggle for Water Justice in
California's San Joaquin Valley: A Focus on Disadvantaged
Unincorporated Communities. UC Davis Center for Regional Change.
Retrieved from: https://regionalchange.ucdavis.edu/report/the-struggle-for-water-justice
Gasteyer, S., Lai, J., Tucker, B., Carrera, J., & Moss, J. (2016).
BASICS INEQUALITY: Race and Access to Complete Plumbing Facilities
in the United States. Du Bois Review: Social Science Research on
Race, 13(2), 305-325. doi:10.1017/S1742058X16000242
Green Nylen Nell, Camille Pannu, Michael Kiparsky. (2018). Learning
from California's Experience with Small Water System Consolidations:
A Workshop Synthesis. Center for Law, Energy and the Environment, UC
Berkeley School of Law, Berkely, CA. Retrieved from: https://www.law.berkeley.edu/research/clee/resources/publications/
Mack, E.A., Wrase, S. (2017). A Burgeoning Crisis? A Nationwide
Assessment of the Geography of Water Affordability in the United
States. PLoS ONE 12(1): e0169488. doi:10.1371/journal.pone.0169488
Martinez-Morata, I., Bostick, B.C., Conroy-Ben, O. et al. (2022).
Nationwide geospatial analysis of county racial and ethnic
composition and public drinking water arsenic and uranium. Nat
Commun 13, 7461. https://doi.org/10.1038/s41467-022-35185-6
Rockowitz, D., Askew-Merwin, C., Sahai, M., Markley, K., Kay, C. &
Reames, T. (2018). Household Water Security in Metropolitan Detroit:
Measuring the Affordability Gap. University of Michigan Policy
Solutions, Policy Paper. August.
Rural Community Assistance Partnership (RCAP). (2020). Resiliency
Through Water and Wastewater System Partnerships: 10 Lessons from
Community Leaders. Research Report. Retrieved from: https://www.rcap.org/community-resources/
Rural Community Assistance Corporation (RCAC). (2016a). Alpaugh and
Allensworth Regional Water System Governance and Finance Study.
Obtained from: Rural Community Assistance Corporation, 3120
Freeboard Drive, Suite 201, West Sacramento, CA 95691
Rural Community Assistance Corporation (RCAC). (2016b). Northern
Tulare County Evaluation of Governance Structures and Affordability.
Obtained from: Rural Community Assistance Corporation, 3120
Freeboard Drive, Suite 201, West Sacramento, CA 95691
UNC Environmental Finance Center. (2019a). Consolidation of Water
and Wastewater Systems: Options and Considerations. Retrieved from:
https://efc.sog.unc.edu/resource/utility-regionalization-and-consolidation/
UNC Environmental Finance Center. (2019b). Crafting Interlocal Water
and Wastewater Agreements. Retrieved from: https://efc.sog.unc.edu/resource/utility-regionalization-and-consolidation/
USEPA. (2023). Water Technical Assistance: Ensuring Equitable Access
to Water Infrastructure Funding. Fact Sheet. Retrieved from: https://www.epa.gov/water-infrastructure/water-technical-assistance-waterta
USEPA. (2024a). Analysis of the Economic Impacts of the Proposed
Water System Restructuring Assessment Rule. 810-P24-001
USEPA. (2024b). Information Collection Request for the Proposed
Water System Restructuring Assessment Rule. OMB Control Number 2040-
AF96. EPA ICR Number 2736.01. USEPA 2017. Water System Partnerships:
State Programs and Policies Supporting Cooperative Approaches for
Drinking Water Systems 816-S-17-002.
USEPA. (2016). Drinking Water and Wastewater Utility Customer
Assistance Programs.
US Water Alliance. (2022). Catalyzing Community-Driven Utility
Consolidations and Partnerships.
[[Page 47021]]
Retrieved from: http://uswateralliance.org/resources/
US Water Alliance. (2019). Utility Strengthening through
Consolidation: Guiding Principles for the Water Sector. Retrieved
from: http://uswateralliance.org/programs/other-initiatives/utility-consolidation/
US Water Alliance and UNC Environmental Finance Center. (2019).
Strengthening Utilities Through Consolidation: The Financial Impact.
Retrieved from: http://uswateralliance.org/programs/other-initiatives/utility-consolidation/
Water Research Foundation. (2020). Solutions for Underperforming
Drinking Water Systems in California. WRF Project Number 5015.
Retrieved from: https://www.waterrf.org/research/projects/solutions-underperforming-drinking-water-systems-california
Water Research Foundation. (2018). Water Utility Partnership
Resource Guide and Toolbox. WRF Project Number 4750. Retrieved from:
https://www.waterrf.org/research/projects/water-utility-partnerships-resource-guide-and-toolbox
X. Zhang, M. Gonz[aacute]lez Rivas, M. Grant, M. E. Warner. (2022).
Water pricing and affordability in the US: public vs. private
ownership. Water Policy 1 March 2022; 24 (3): 500-516. doi: https://doi.org/10.2166/wp.2022.283
List of Subjects in 40 CFR Part 142
Environmental protection, Administrative practice and procedure,
Chemicals, Indian lands, Radiation protection, Reporting and
recordkeeping requirements, Water supply.
Michael S. Regan,
Administrator.
For the reasons set forth in the preamble, the EPA proposes to
amend 40 CFR part 142 as follows:
PART 142--NATIONAL PRIMARY DRINKING WATER REGULATIONS
IMPLEMENTATION
0
1. The authority citation for part 142 is revised to read as follows:
Authority: 42 U.S.C. 300f, 42 U.S.C. 300g-1, 300g-2, 300g-3,
300g-4, 300g-5, 300g-6, and 42 U.S.C. 300j-4, 300j-9, and 300j-11.
0
2. Amend Sec. 142.10 by adding paragraph (i) to read as follows:
Sec. 142.10 Requirements for a determination of primary enforcement
responsibility.
* * * * *
(i) Has adopted and is implementing procedures for requiring that
an assessment be completed with respect to alternatives for
consolidation, transfer of ownership, or other restructuring actions in
accordance with 40 CFR part 142 subpart J, including procedures to:
(1) Establish that a public water system has satisfied the
statutory preconditions for a mandatory restructuring assessment
pursuant to Sec. 142.92(a) and to notify the assessed public water
system pursuant to Sec. 142.92(b);
(2) Ensure that an assessment meets the minimum assessment
tailoring criteria of Sec. 142.92(c) and the minimum report content
requirements of Sec. 142.92(d);
(3) Review and approve eligible assessors pursuant to Sec.
142.92(e);
(4) Ensure that the assessment is conducted according to a schedule
pursuant to Sec. 142.92(f);
(5) Determine whether a restructuring plan is eligible for
restructuring incentives pursuant to Sec. 142.93;
(6) Review restructuring plans pursuant to Sec. 142.94 to
determine public water system eligibility for enforcement relief;
(7) Review restructuring plans pursuant to Sec. 142.95 to
determine non-responsible public water system eligibility for liability
protection, and the extent of liability protection, as applicable;
(8) Enforce mandatory assessment requirements pursuant to Sec.
142.97; and
(9) Implement the reporting and recordkeeping requirements related
to mandatory assessments and approved restructuring plans pursuant to
Sec. Sec. 142.14(h) and 142.15(c)(8).
0
3. Amend Sec. 142.11 by adding paragraph (a)(8) to read as follows:
Sec. 142.11 Initial determination of primary enforcement
responsibility.
(a) * * *
(8) A description of the State's procedures for requiring that an
assessment be completed with respect to alternatives for consolidation,
transfer of ownership, or other restructuring actions in accordance
with 40 CFR part 142 subpart J, including procedures to:
(i) Establish that a public water system has satisfied the
statutory preconditions for a mandatory restructuring assessment
pursuant to Sec. 142.92(a) and to notify the assessed public water
system pursuant to Sec. 142.92(b);
(ii) Ensure that an assessment meets the minimum assessment
tailoring criteria of Sec. 142.92(c) and the minimum report content
requirements of Sec. 142.92(d);
(iii) Review and approve eligible assessors pursuant to Sec.
142.92(e);
(iv) Ensure that the assessment is conducted according to a
schedule pursuant to Sec. 142.92(f);
(v) Determine whether a restructuring plan is eligible for
restructuring pursuant to Sec. 142.93;
(vi) Review restructuring plans pursuant to Sec. 142.94 to
determine public water system eligibility for enforcement relief;
(vii) Review restructuring plans pursuant to Sec. 142.95 to
determine non-responsible water system eligibility for liability
protection, and the extent of liability protection, as applicable;
(viii) Enforce mandatory assessment requirements pursuant to Sec.
142.97; and
(ix) Implement the reporting and recordkeeping requirements related
to mandatory assessments and to approved restructuring plans pursuant
to Sec. Sec. 142.14(h) and 142.15(c)(8).
* * * * *
0
4. Amend Sec. 142.14 by adding paragraph (h) to read as follows:
Sec. 142.14 Records kept by States.
* * * * *
(h) Pursuant to 40 CFR part 142 subpart J, each State that has
primary enforcement responsibility shall retain, and provide to the
Administrator upon request, records of any plans submitted by a public
water system for consolidation, transfer of ownership, or other
restructuring actions, and of any mandatory assessment reports approved
by the State as follows:
(1) From the date of plan approval until one year following the
completion of all activities in an approved restructuring plan that
meets the requirements for enforcement relief pursuant to Sec. 142.94,
a copy of the approved restructuring plan and, if conducted, a copy of
the approved assessment report on which the approved plan may be based.
(2) From the date of plan approval until one year following the
completion of all activities in an approved restructuring plan that
meets the requirements for liability protection of a non-responsible
public water system pursuant to Sec. 142.95, a copy of the approved
plan and a copy of the approved assessment report on which the plan
must be based.
(3) For five years from the date of approval of a mandatory
restructuring assessment pursuant to Sec. 142.92(f), a copy of the
assessment report, notwithstanding the assessment retention
requirements of paragraphs (h)(1) and (2) of this section.
0
5. Amend Sec. 142.15 by adding paragraph (c)(8) to read as follows:
Sec. 142.15 Reports by States.
* * * * *
(c) *-*-*
(8) Water system restructuring assessment rule. Each State that has
primary enforcement responsibility shall report annually to the
Administrator, in a format and on a schedule prescribed by the
Administrator, the name and
[[Page 47022]]
identification number of each public water system:
(i) That has satisfied the preconditions for a mandatory
restructuring assessment as required pursuant to Sec. 142.92(a),
including the date on which the State made its finding;
(ii) That the State has identified pursuant to paragraph (c)(8)(i)
of this section, and has notified as the subject of a mandatory
restructuring assessment pursuant to a schedule as described in Sec.
142.92(f) including the date of notification;
(iii) That the State has notified pursuant to paragraph (c)(8)(ii)
of this section, and that has completed a mandatory restructuring
assessment pursuant to Sec. 142.92 as determined by the State,
including the date of determination.
(iv) That is in violation of the mandatory restructuring assessment
requirements pursuant to Sec. 142.97, by violation type and violation
date; or
(v) That the State has determined to be eligible for enforcement
relief pursuant to Sec. 142.94 or liability protection pursuant to
Sec. 142.95, including the type of eligibility and the date of plan
approval.
* * * * *
0
6. Add subpart J to read as follows
Subpart J--Mandatory Restructuring Assessments and Restructuring Plans
Sec.
142.90 General.
142.91 Definitions.
142.92 Mandatory restructuring assessments.
142.93 Restructuring plans.
142.94 Enforcement relief under approved restructuring plans.
142.95 Liability protection under approved restructuring plans.
142.96 DWSRF eligibility of restructuring activities.
142.97 Reporting violations.
Subpart J--Mandatory Restructuring Assessments and Restructuring
Plans
Sec. 142.90 General.
(a) Authority. A State that meets the requirements for a
determination of primary enforcement responsibility, and that has
obtained such responsibility from the Administrator pursuant to 42
U.S.C 300g-2 and its implementing regulations at 40 CFR part 142,
subpart B, is authorized to implement this subpart.
(b) Implementation by the EPA. A Regional Administrator with
primary enforcement responsibility may exercise all authorities
extended to States in this subpart.
(c) Applicability. The provisions of this subpart apply to all
States with primary enforcement responsibility, to all public water
systems for which a mandatory restructuring assessment is required or
approved by a State pursuant to Sec. 142.92, and to suppliers of water
that have submitted a restructuring plan to the State pursuant to Sec.
142.93.
Sec. 142.91 Definitions.
The following definitions apply to terms used in this subpart:
Assessed water system. Refers to a public water system that
satisfies the mandatory assessment preconditions under Sec. 142.92(a)
and that is the subject of a mandatory restructuring assessment
required by the State under this subpart.
Enforcement relief. Refers to the ``consequences of approval'' at
42 U.S.C. 300g-3(h)(2) and means that, except for the limitations
described in Sec. 142.94, if a primacy agency approves a restructuring
plan that is eligible under Sec. 142.93 and that satisfies the
applicable requirements of Sec. 142.94, then with respect to each
specific violation identified in the approved plan, as of the date of
plan approval, the State shall not take enforcement action until the
earlier of:
(1) Two years from the date on which the primacy agency approves
the restructuring plan; or
(2) The date on which all restructuring activities identified in
the schedule of the approved plan have been completed.
Liability protection. Refers to the ``reservation of funds'' at 42
U.S.C. 300g-3(h)(5)(B) and means that if a State approves a
restructuring plan that is eligible under Sec. 142.93 and that
satisfies the applicable requirements of Sec. 142.95 and determines
that all of the activities in the approved plan have been completed,
then the non-responsible water system shall not be liable for a
specific violation identified in the approved plan, except to the
extent to which funds or other assets identified in the plan are
available to satisfy such liability.
Mandatory restructuring assessment. Refers to the ``mandatory
assessment'' at 42 U.S.C. 300g-3(h)(3) and means an evaluation of
alternatives for consolidation, transfer of ownership or other types of
restructuring at the assessed water system pursuant to the applicable
requirements of Sec. 142.92.
Non-responsible water system. Refers to a public water system that
is not liable under the SDWA for a specific violation identified in an
approved restructuring plan that meets all requirements of Sec.
142.95.
Restructuring plan. Refers to ``plans'' at 42 U.S.C. 300g-3(h)(1)
and means a plan that is submitted to the State for purposes of
enforcement relief or liability protection under this subpart, and that
is intended to achieve greater compliance with national primary
drinking water regulations through:
(1) Physical consolidation of the public water system with one or
more other public water systems;
(2) The consolidation of significant management or administrative
functions of the public water system with one or more other public
water systems; the transfer of ownership of the public water system to
another public water system for purposes of improving drinking water
quality; or
(3) Entering into a contractual agreement for significant
management or administrative functions of the public water system to
correct violations identified in the plan.
Sec. 142.92 Mandatory restructuring assessments.
(a) Mandatory assessment preconditions. A State may mandate a
restructuring assessment of a public water system if the State finds
that:
(1) The water system has repeatedly violated one or more national
primary drinking water regulations, and such repeated violations are
likely to adversely affect human health;
(2) The supplier of water is unable or unwilling to take feasible
and affordable actions, as determined by the State, that will result in
the public water system complying with the national primary drinking
water regulations, or has already undertaken such actions, including
accessing technical assistance or financial assistance from the State,
without achieving compliance;
(3) Physical, administrative, or managerial consolidation, transfer
of ownership, or another type of restructuring is feasible for the
water system; and
(4) Physical, administrative, or managerial consolidation, transfer
of ownership, or another type of restructuring of the water system
could result in greater compliance with national primary drinking water
regulations.
(b) State notification. A State that mandates an assessment
pursuant to this section shall notify the supplier of water in writing.
(c) Minimum assessment tailoring criteria. A mandatory
restructuring assessment conducted pursuant to this section shall
evaluate, at a minimum, the feasibility of the proposed restructuring
alternatives based on the following criteria:
[[Page 47023]]
(1) System size based on the number of people served by the
assessed water system;
(2) Whether the assessed water system is a community or
noncommunity water system;
(3) The source(s) of water used by the assessed water system;
(4) The technical, managerial, and financial (TMF) capacity of the
assessed water system;
(5) Whether the service area of the assessed water system is
disadvantaged pursuant to the State's definition under 42 U.S.C. 300j-
12(d)(3) or to 42 U.S.C 300j-19(c)(2)(B), or is underserved pursuant to
42 U.S.C. 300j-19a;
(6) Geographic factors;
(7) Hydrogeologic or geologic factors; and
(8) State or local statutory or regulatory requirements.
(d) Minimum assessment report content requirements. The results of
the mandatory restructuring assessment must be documented in a report
that, at a minimum:
(1) Identifies all unresolved violations at the assessed water
system, the underlying causes of the violations, and the enforcement
status of each violation;
(2) Identifies at least one feasible restructuring alternative, and
describes how the alternative(s) will:
(i) Return the system to compliance as soon as practicable; and
(ii) Help ensure the technical, financial, and managerial capacity of
the assessed water system to provide safe drinking water;
(3) Describes how the assessor has determined the feasibility of
the identified alternative(s) pursuant to paragraph (c) of this
section, including how alternative(s) will ensure that a community
served by the assessed water system receives safe and affordable
drinking water;
(4) Explains, if a type of consolidation or a transfer of ownership
is not identified as a feasible restructuring alternative, why such
alternative is not feasible; and
(5) Describes the processes, procedures, data, data sources, and
other information used to identify feasible restructuring alternatives
for the assessed water system.
(e) Eligible assessors. The supplier of water at the assessed water
system or a third party-approved by the State may conduct a mandatory
restructuring assessment pursuant to this section; otherwise, the State
may conduct the assessment.
(f) Assessment schedule. Mandatory restructuring assessments shall
be conducted as follows:
(1) Within 30 days of the date of State notification that a
mandatory restructuring assessment is required, the supplier of water
may request in writing State approval of either a self-assessment or a
third-party assessor on its behalf; otherwise, the State may conduct
the mandatory restructuring assessment.
(2) Within 30 days of the date of request by the supplier of water
pursuant to paragraph (f)(1) of this section, the State shall determine
whether to approve a third-party assessor or a self-assessment and
notify the supplier of water.
(i) If the State approves a self-assessment or a third-party
assessor to conduct the mandatory restructuring assessment, the
supplier of water must submit an assessment report on a date that is
determined by the State. At any time during the implementation of the
mandatory restructuring assessment, either the supplier of water or the
State may consult with the other party to determine whether to revise
the assessment report submittal date. The State may determine whether
to revise the submittal date based on documentation or other
information acceptable to the State.
(ii) If the State does not approve a third-party assessor or a
self-assessment, the State may conduct the mandatory restructuring
assessment and develop the assessment report. In such cases, the
supplier of water shall provide as soon as practicable any information
deemed necessary by the State to complete a mandatory restructuring
assessment pursuant to the requirements of this section.
(3) When submitting the assessment report to the State, the
supplier of water or a third-party assessor must provide a
certification statement to affirm:
(i) The authority of the assessor to verify the results of the
mandatory restructuring assessment;
(ii) That the information included in the assessment report is
true, accurate and complete; and
(iii) That the assessor understands that there are penalties for
submitting false information to the State.
(4) If the assessment report identifies a form of consolidation or
transfer of ownership during the mandatory assessment, the State shall
hold at least one public meeting in the community served by the
assessed water system. The public meeting shall satisfy EPA public
meeting requirements under 40 CFR 25.6 and any applicable provisions of
State law (as determined by the State). Otherwise, as soon as
practicable following the date of submission, the State shall review
the assessment pursuant to paragraph (f)(5)(i) or ((ii) of this
section.
(i) If the supplier of water performs the mandatory assessment, the
State shall hold the public meeting as soon as practicable from the
date of submission.
(ii) If the State performs the mandatory assessment, the State
shall hold the public meeting before completing its assessment report.
(5) As soon as practicable following the date of a public meeting
pursuant to paragraph (f)(4) of this section, the State shall review
the assessment report to determine whether it satisfies the
requirements of this section.
(i) If the supplier of water has prepared the assessment report and
the State determines it satisfies the requirements of this section,
then the assessment is approved and the State shall notify the supplier
of water in writing within 7 business days of its determination.
Otherwise, the State may consult with the supplier of water to
determine a schedule and a method by which a revised assessment report
must be completed pursuant to the requirements of this section.
(ii) If the State has prepared the assessment report, the State
shall ensure that the report satisfies the requirements of this section
and is otherwise complete. Upon such completion, the State shall notify
the supplier of water in writing within 7 business days of its
determination.
(6) Within 30 days of the State's approval of an assessment report
submitted by the supplier of water or of the State's completion of an
assessment report, the State shall make available to the public a copy
of the approved assessment report in an electronic format on an
appropriate State website and shall transmit physical copies of the
restructuring plan to one or more public libraries in the closest
possible proximity to the community served by the restructuring
supplier of water.
(7) If the State has notified the supplier of water that the
assessment report is approved or that the State assessment report is
complete, the State shall consult with the supplier of water as soon as
practicable to discuss the results of the mandatory restructuring
assessment.
Sec. 142.93 Restructuring plans.
(a) Plan types eligible for restructuring incentives. A supplier of
water may submit to the State, for purposes of enforcement relief or
liability protection under this subpart, a restructuring plan that is
intended to achieve greater compliance with national primary drinking
water regulations through:
(1) Physical consolidation of the water system with one or more
other water systems;
[[Page 47024]]
(2) The consolidation of significant management or administrative
functions of the water system with one or more other water systems;
(3) The transfer of ownership of the water system to another water
system for purposes of improving drinking water quality; or
(4) Entering into a contractual agreement for significant
management or administrative functions of the system to correct
violations identified in the plan.
(b) State determination. As soon as practicable, but no later than
60 days from the date it receives a restructuring plan, the State shall
determine whether the plan is eligible pursuant to paragraph (a) of
this section and shall notify the supplier of water in writing.
(i) If the State determines that the plan is eligible pursuant to
paragraph (a) of this section, then pursuant to Sec. 142.94 or Sec.
142.95, the State shall determine whether the plan also satisfies the
applicable requirements for enforcement relief or liability protection.
(ii) If the State determines that the plan is not eligible pursuant
to paragraph (a) of this section, then the State may consult with the
supplier of water that submitted the ineligible plan to determine a
schedule and a method by which a corrected plan may be submitted.
(c) Plan revisions. If at any time during the implementation of an
approved restructuring plan a supplier of water submits a revised plan
to the State, the State may review the revised plan pursuant to the
requirements of this section and the applicable requirements and
limitations of Sec. Sec. 142.94 and 142.95.
Sec. 142.94 Enforcement relief under approved restructuring plans.
(a) Minimum plan eligibility requirements for enforcement relief.
To obtain enforcement relief under this subpart, the supplier of water
must submit a restructuring plan that the State has determined is
eligible for restructuring incentives pursuant to Sec. 142.93(a) and
that:
(1) Identifies each specific violation that the restructuring plan
is intended to correct;
(2) Describes, using data and other forms of documentation
acceptable to the State, how the activities in the restructuring plan
will protect public health as soon as practicable by addressing the
underlying causes of the identified violations;
(3) Proposes a schedule for implementing and completing each of the
restructuring activities identified in the plan, including corrective
actions to resolve identified violations and measures by which the
State can assess progress for each restructuring activity;
(4) Describes, using data and other forms of documentation
acceptable to the State, how the restructuring plan will improve, as
applicable, the technical capacity, managerial capacity, or financial
capacity of the restructuring system to achieve compliance with
national primary drinking water regulations;
(5) Describes how the proposed restructuring plan will ensure that
the community served by the restructured water system receives safe and
affordable drinking water; and
(6) Requests enforcement relief from the violations identified in
the plan for the noncompliant water system(s) subject to the plan.
(b) Conditional plan eligibility requirements for enforcement
relief. In addition to the minimum requirements of Sec. 142.94(a), to
obtain enforcement relief under this subpart, the supplier of water
must submit a restructuring plan that satisfies the following
conditional requirements, as applicable:
(1) If the restructuring plan will result in a change in the
supplier of water at the restructured water system, the submitted plan
must identify both the date on which the change is planned to occur,
and the identity of the new supplier of water at the restructured water
system.;
(2) If the restructuring plan will require one or more suppliers of
water to establish a new or revised governance structure, the plan must
describe the new governance structure and how it will help achieve the
objectives of the plan; and
(3) If the restructuring plan includes the temporary provision of
an alternative source or supply of water, the plan must include an
implementation schedule and measures, supported by data and other forms
of documentation acceptable to the State, that describe how the water
served will comply with applicable Federal or state regulations and
identify when the temporary alternative source will no longer be
needed.
(c) Eligible violation types. For purposes of enforcement relief
under this subpart, specific violations of the SDWA and its
implementing regulations must be identified in the restructuring plan
submitted to the State.
(d) Public meeting. As soon as practicable after making its
determination pursuant to Sec. 142.93(b), the State shall hold at
least one public meeting with the community served by a restructuring
public water system regarding the proposed restructuring plan. The
meeting shall be held in accordance with EPA public meeting
requirements under 40 CFR 25.6 and any applicable provisions of State
law (as determined by the State).
(e) State determination date. As soon as practicable, but no later
than 12 months from the date on which it determines that a submitted
restructuring plan is an eligible type pursuant to Sec. 142.93(b), the
State shall determine whether the requirements of paragraphs (a)
through (d) of this section have been satisfied and shall notify the
supplier of water in writing. If the State determines that the
submitted plan satisfies the requirements, then the plan is approved,
otherwise, the State may consult with the supplier of water that
submitted the plan to determine a schedule and a method by which a
corrected plan may be submitted.
(f) Plan availability. Within 30 days of its determination under
paragraph (e) of this section, the State shall make available to the
public a copy of the approved restructuring plan in an electronic
format on an appropriate State website and shall transmit physical
copies of the restructuring plan to one or more public libraries in the
closest possible proximity to the community served by the restructuring
supplier of water.
(g) Extent of enforcement relief. If the State approves the plan,
then with respect to the specific violations identified in the approved
plan, the State shall take no enforcement action until the earlier of
two years from the date on which the State approves the restructuring
plan or the date on which the State determines that all restructuring
activities identified in the schedule of the approved plan have been
completed. Notwithstanding the enforcement relief described in this
paragraph, the Agency may exercise its authority at 42 U.S.C. 300i to
protect the health of persons served by the water system(s) that are
subject to the plan.
(h) Limitations. The supplier of water of the public water system
subject to enforcement relief as described in paragraph (e) of this
section must:
(1) Implement any corrective actions as required under existing
enforcement orders or agreements;
(2) Comply with all other applicable requirements of the SDWA and
its implementing regulations, including any EPA actions pursuant to 42
U.S.C. 300i; and
(3) Comply with any enforcement actions for violations that occur
after the date of plan approval.
(i) Termination of enforcement relief under approved plans. If
during the enforcement relief period the State
[[Page 47025]]
determines that the supplier of water at a noncompliant water system is
unwilling or unable to implement the plan according to its approved
measures and schedule(s), then the noncompliant water system is no
longer eligible for enforcement relief under this subpart. In such
cases, the State shall inform the noncompliant supplier of water in
writing as soon as practicable that the water system is ineligible for
enforcement relief, and that the State may take enforcement action for
the identified violations.
(j) Enforcement relief under revised plans. A water system that is
subject to enforcement relief pursuant to this subpart is ineligible
under a revised restructuring plan for enforcement relief that exceeds
2 years from the date on which the State approved the original
restructuring plan.
Sec. 142.95 Liability protection under approved restructuring plans.
(a) Minimum plan eligibility requirements for liability protection.
To obtain liability protection under this subpart, the non-responsible
water system's supplier of water must submit a restructuring plan that:
(1) Satisfies the minimum eligibility requirements for enforcement
relief pursuant to Sec. 142.94(a);
(2) Satisfies any conditional requirements pursuant to Sec.
142.94(b), as applicable;
(3) Is based on a mandatory restructuring assessment approved or
completed by the State pursuant to Sec. 142.92;
(4) Identifies the non-responsible water system(s) and assessed
water system(s) subject to the plan;
(5) Identifies and describes, using data and other forms of
documentation that the State finds acceptable, any potential and
existing liability for penalties and damages associated with each
specific violation identified in the plan;
(6) Identifies and describes, using data and other forms of
documentation that the State finds acceptable, any funds or other
assets of the assessed system(s) available as of the date of
submission; and
(7) Requests liability protection of the non-responsible water
system for the violations identified in the plan.
(b) Eligible violation types. For purposes of liability protection
under this subpart, specific violations of the SDWA and its
implementing regulations must be identified in the restructuring plan
submitted to the State.
(c) Exclusions. Neither a water system that is subject to a
mandatory restructuring assessment under Sec. 142.92, nor a water
system that the State finds has satisfied the preconditions for a
mandatory restructuring assessment under Sec. 142.92(a), may benefit
from liability protection under this subpart.
(d) Public meeting. After making its determination pursuant to
Sec. 142.93(b), the State shall hold at least one public meeting as
soon as practicable with the community served by a restructuring public
water system regarding the proposed restructuring plan. The meeting
shall be held in accordance with EPA public meeting requirements under
40 CFR 25.6 and any applicable provisions of State law (as determined
by the State).
(e) State determination date. As soon as practicable, but not later
than 18 months from the date on which it determines that a submitted
restructuring plan is an eligible type pursuant to Sec. 142.93(b), the
State shall determine whether the requirements of paragraphs (a)
through (d) of this section have been satisfied and shall notify the
supplier of water in writing. If the State determines that the
submitted plan satisfies applicable requirements, then the plan is
approved, otherwise, the State may consult with the supplier of water
that submitted the plan to determine a schedule and a method by which a
corrected plan may be submitted.
(f) Extent of liability protection. If the State determines,
according to the measures and schedule(s) of the plan approved pursuant
to paragraph (e) of this section, that all restructuring activities
have been completed, then within 30 days of its determination under
this paragraph the State shall notify the non-responsible supplier of
water in writing that:
(1) As of the date of State notification, the non-responsible water
system is not liable under the SDWA for penalties or damages associated
with the violations identified in the plan that exceed the total amount
of the identified funds and the value of other identified assets of the
assessed system(s); and
(2) Within 30 days of the date of State notification, the non-
responsible supplier of water shall consult with the State to determine
a method and a schedule by which any identified funds, and the value of
the identified assets of the assessed system(s), shall be transferred
to the State to satisfy the liability for violations at the assessed
system(s). If the non-responsible supplier of water finds that it
cannot identify funds or assets to satisfy the liability of the
identified violations, it shall support its finding pursuant to the
requirements of Sec. 142.95(a)(6).
(g) Plan availability. Within 30 days of its determination under
paragraph (e) of this section, the State shall make available to the
public a copy of the approved restructuring plan in an electronic
format on an appropriate State website and shall transmit physical
copies of the restructuring plan to one or more public libraries in the
closest possible proximity to the community served by the restructuring
supplier of water.
(h) Determination of change in supplier of water. If the non-
responsible supplier of water is subject to the requirements of Sec.
142.94(b)(1), when making its determination and notification pursuant
to paragraph (f) of this section, the State shall identify the date on
which the non-responsible supplier of water becomes the supplier of
water at the restructured water system. Until the date of State
notification, the non-responsible water system is not liable for
violations at the assessed water system(s).
(i) Limitations. Notwithstanding the liability protection for which
a non-responsible water system may be eligible under this subpart, the
non-responsible water system must comply with all other applicable
requirements under the SDWA and its implementing regulations.
(j) Liability protection under revised plans. A non-responsible
supplier of water that requests liability protection under a
restructuring plan that is approved by the State remains eligible for
liability protection under a revised plan if:
(1) The non-responsible supplier of water has provided a
justification, using data and other forms of documentation that the
State finds acceptable, that a revised plan is necessary to ensure that
the objectives of the restructuring plan are achieved as soon as
practicable;
(2) The non-responsible water system is not the water system that
incurred the violations identified in the revised restructuring plan;
and
(3) The State has determined that the revised restructuring plan
meets the requirements of this section and has approved the revised
plan.
Sec. 142.96 DWSRF eligibility of restructuring activities.
Notwithstanding 42 U.S.C. 300j-12(a)(3) and its implementing
regulations, a public water system undertaking consolidation, transfer
of ownership for purposes of improving drinking water quality, or other
restructuring activities pursuant to a mandatory assessment that meets
the requirements of Sec. 142.92 may receive a loan described in 42
U.S.C. 300j-12(a)(2)(A) to implement such consolidation, transfer of
ownership, or
[[Page 47026]]
other restructuring activities identified in the assessment.
Sec. 142.97 Reporting violations.
An assessed water system is in violation of this subpart if the
supplier of water that performs a self-assessment, or an approved third
party performing the assessment on behalf of the supplier of water:
(a) Fails to submit an assessment report to the State as mandated
under Sec. 142.92;
(b) Submits an assessment report after the submittal date that was
determined by the State as required under Sec. 142.92(f)(2);
(c) Submits an assessment report that does not meet the minimum
content requirements of Sec. 142.92(c); or
(d) Submits an assessment report without the certification
statement required under Sec. 142.92(f)(3).
[FR Doc. 2024-11687 Filed 5-29-24; 8:45 am]
BILLING CODE 6560-50-P