Order Code IB10118
CRS Issue Brief for Congress
Received through the CRS Web
Safe Drinking Water Act:
Implementation and Issues
Updated July 22, 2005
Mary Tiemann
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Introduction
The 1996 SDWA Amendments
Regulated Public Water Systems
Current Drinking Water Issues
Regulating Drinking Water Contaminants
Standard-Setting
Recent and Pending Rules
Perchlorate
Methyl Tertiary Butyl Ether (MTBE)
Drinking Water Infrastructure Funding
Drinking Water State Revolving Fund
Funding Issues
Drinking Water Security
Small Systems Issues
Small System Variances
Exemptions
Affordability Issues and Arsenic Compliance
LEGISLATION
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
FOR ADDITIONAL READING

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Safe Drinking Water Act: Implementation and Issues
SUMMARY
Key drinking water issues on the agenda
systems to conduct vulnerability assessments
in the 109th Congress include problems caused
and prepare emergency response plans.
by specific contaminants, such as the gasoline
Subsequent congressional action has involved
additive methyl tertiary butyl ether (MTBE),
oversight and funding of water security
and perchlorate, as well as the related issue of
assessment and planning efforts and research.
the appropriate federal role in providing finan-
cial assistance for water infrastructure pro-
An ongoing SDWA issue involves the
jects. Congress last reauthorized the Safe
growing cost and complexity of drinking
Drinking Water Act (SDWA) in 1996, and
water standards and the ability of water sys-
although funding authority for most SDWA
tems, especially small systems, to comply with
programs expired in FY2003, broad reauthori-
standards. The issue of the cost of drinking
zation efforts are not expected as EPA, states,
water standards, particularly the new arsenic
and water systems remain busy implementing
standard, has merged with the larger debate
the 1996 amendments.
over the federal role in assisting communities

with financing drinking water infrastructure
The 109th Congress is continuing efforts
— an issue that has become more challenging
to address MTBE contamination of public
in a time of tightened budgets.
water supplies. The House and Senate ver-
sions of H.R. 6 would authorize funding from
Congress authorized a drinking water
the Leaking Underground Storage Tank
state revolving fund (DWSRF) program in
(LUST) Trust Fund for the cleanup of MTBE
1996 to help communities finance projects
releases. The House bill also would prevent
needed to meet standards. For FY2005, Con-
EPA from regulating the underground injec-
gress provided $843 million for the DWSRF
tion of fluids into drinking water sources for
program, and the President has requested $850
hydraulic fracturing purposes related to oil and
million for FY2006. Notwithstanding this
gas production.
program, studies show that a large funding
gap exists and will grow as SDWA require-
Concerns about perchlorate in drinking
ments increase and infrastructure ages.
water also have returned to the congressional
agenda, after the past Congress enacted sev-
On July 20, the Senate Environment and
eral provisions on this issue. The House
Public Works Committee ordered reported S.
passed H.R. 18 and H.R. 186, both of which
1400, the Water Infrastructure Financing Act,
would establish groundwater remediation
which would increase funding for the DWSRF
programs in California, where most perchlor-
and a parallel wastewater program, and pro-
ate contamination has been identified.
vide additional assistance for small and rural
communities. H.R. 2417/S. 689 would direct
Concerns over the security of the nation’s
EPA to establish a grant program to help
drinking water supplies were addressed by the
eligible communities comply with drinking
107th Congress through the Bioterrorism
water standards and add compliance flexibility
Preparedness Act (P.L. 107-188), which
for such communities.
amended SDWA to require community water

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MOST RECENT DEVELOPMENTS
On July 20, the Senate Environment and Public Works Committee ordered reported S.
1400, the Water Infrastructure Financing Act, that would increase funding authority for the
DWSRF and the Clean Water SRF, and provide other funding for small, rural communities.
On April 21, 2005, the House passed H.R. 6, the Energy Policy Act of 2005. The Senate
passed its version of H.R. 6 on June 28. Both versions would provide funding to clean up
releases of MTBE. The House bill also includes a provision to exempt from regulation under
the Safe Drinking Water Act the underground injection of fluids, such as diesel fuel, for
hydraulic fracturing purposes related to oil and gas production. (For more information, see
CRS Report RL32873, Selected Environmental Provisions Related to the Omnibus Energy
Bill (H.R. 6) in the 109th Congress.) The House- and Senate-passed versions of EPA’s
funding bill, H.R. 2361, include $850 million for the drinking water state revolving fund
program.
BACKGROUND AND ANALYSIS
Introduction
The Safe Drinking Water Act (SDWA), Title XIV of the Public Health Service Act (42
U.S.C. 300f-300j-26), is the key federal law for protecting public water supplies from
harmful contaminants. First enacted in 1974 and widely amended in 1986 and 1996, the Act
is administered through programs that regulate contaminants in public water supplies,
provide funding for infrastructure projects, protect sources of drinking water, and promote
the capacity of water systems to comply with SDWA regulations. The 1974 law established
the current federal-state arrangement in which states and tribes may be delegated primary
enforcement and implementation authority (primacy) for the drinking water program by the
Environmental Protection Agency (EPA), which is the federal agency responsible for
administering the law. The state-administered Public Water Supply Supervision (PWSS)
Program remains the basic program for regulating public water systems, and EPA has
delegated primacy for this program to all states, except Wyoming and the District of
Columbia (which is defined as a state under SDWA); EPA has responsibility for
implementing the PWSS program in these two jurisdictions. (See also CRS Report
RL31243, Safe Drinking Water Act: A Summary of the Act and Its Major Requirements.)
More than 90% of people in the United States get their drinking water from one of the
nearly 53,400 community water systems nationwide. Congress passed the SDWA in 1974,
after a nationwide study of community water systems revealed widespread water quality
problems and health risks resulting from poor operating procedures, inadequate facilities, and
poor management of water supplies in communities of all sizes. Since then, government and
private efforts to implement the Act have led to better public water system management.
Significant progress has been made since the enactment of SDWA. Some 91 drinking
water contaminants are now regulated, and EPA reports that the population served by
community water systems that met all health-based standards increased from 83% in 1994
to 91% in 2002. Nonetheless, drinking water safety concerns and challenges remain. EPA
and state enforcement data indicate that public water systems still incur tens of thousands of
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violations of SDWA requirements each year. These violations primarily involve monitoring
and reporting requirements, but also include thousands of violations of standards and
treatment techniques. Moreover, monitoring and reporting violations create uncertainty as
to whether systems actually met the applicable health-based standards. Concern also exists
over the potential health effects of contaminants for which drinking water standards have not
been set, such as perchlorate and MTBE.
The 1996 SDWA Amendments
The 104th Congress made numerous changes to the Act with the SDWA Amendments
of 1996 (P.L. 104-182), culminating a multi-year effort to amend a law that was widely
criticized as having too little flexibility, too many unfunded mandates, and an arduous but
unfocused regulatory schedule. Among the key provisions, the 1996 amendments authorized
a drinking water state revolving loan fund (DWSRF) program to help public water systems
finance projects needed to comply with SDWA rules. The amendments also established a
process for selecting contaminants for regulation based on health risk and occurrence, gave
EPA some added flexibility to consider costs and benefits in setting most new standards, and
established schedules for regulating certain contaminants (such as Cryptosporidium, arsenic,
and radon). The law added several provisions aimed at building the capacity of water
systems (especially small systems) to comply with SDWA regulations, and it imposed many
new requirements on the states including programs for source water assessment, operator
certification and training, and compliance capacity development. The amendments also
required that community water suppliers provide customers with annual “consumer
confidence reports” that provide information on contaminants found in the local drinking
water. The law authorized appropriations for SDWA programs through FY2003.
Regulated Public Water Systems
Federal drinking water regulations apply to some161,000 privately and publicly owned
water systems that provide piped water for human consumption to at least 15 service
connections or that regularly serve at least 25 people. (The law does not apply to private,
residential wells.) Of these systems, roughly 53,400 are community water systems (CWSs)
that serve a residential population of nearly 270 million year-round. All federal regulations
apply to these systems. (Roughly 15% of community systems are investor-owned.) Nearly
18,700 public water systems are non-transient, non-community water systems (NTNCWSs),
such as schools or factories, that have their own water supply and serve the same people for
more than six months but not year-round. Most drinking water requirements apply to these
systems. Another 89,000 systems are transient non-community water systems (TNCWSs)
(e.g., campgrounds and gas stations) that provide their own water to transitory customers.
TNCWSs generally are required to comply only with regulations for contaminants that pose
immediate health risks (such as microbial contaminants), with the proviso that systems that
use surface water sources must also comply with filtration and disinfection regulations.

Of the 53,363 community water systems, roughly 84% serve 3,300 or fewer people.
While large in number, these systems provide water to just 10% of the population served by
all community systems. In contrast, 7% of community water systems serve more than 10,000
people, and they provide water to 81% of the population served. Fully 85% (15,900) of non-
transient, non-community water systems and 97% (86,400) of transient noncommunity water
systems serve 500 or fewer people. These statistics give some insight into the scope of
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financial, technological, and managerial challenges many public water systems face in
meeting a growing number of complex federal drinking water regulations. Table 1 provides
statistics for community water systems.
Table 1. Size Categories of Community Water Systems
System size
Number of
Population
Percent of
Percent of
(population served)
Community
Served
Community
Population
Water Systems
(millions)
Water Systems
Served
Very small (25-500)
30,417
5.01
57%
2%
Small (501-3,300)
14,394
20.26
27%
7%
Medium (3,301-10,000)
4,686
27.20
9%
10%
Large (10,001-100,000)
3,505
98.71
7%
36%
Very large (>100,000)
361
122.15
1%
45%
Total
53,363
273.33
100%
100%
Adapted from: US Environmental Protection Agency. Factoids: Drinking Water and Ground Water Statistics for 2003.
Available at Internet website: [http://www.epa.gov/safewater/data/pdfs/factoids_2003.pdf].
Current Drinking Water Issues
Regulating Drinking Water Contaminants
Standard-Setting. The Safe Drinking Water Act directs EPA to promulgate National
Primary Drinking Water Regulations for contaminants that may pose public health risks and
that are likely to be present in public water supplies. These regulations generally include
numerical standards to limit the amount of a contaminant that may be present in drinking
water. Where it is not economically and technically feasible to measure a contaminant at very
low concentrations, EPA establishes a treatment technique in lieu of a standard.
To develop a drinking water regulation, EPA must address a variety of technical issues.
The agency must (1) determine the occurrence of a contaminant in the environment, and
especially in public water systems; (2) evaluate human exposure and risks of adverse health
effects to the general population and to sensitive subpopulations; (3) ensure that analytical
methods are available for water systems to use in monitoring for a contaminant; (4) evaluate
the availability and costs of treatment techniques that can be used to remove a contaminant;
and (5) assess the impacts of a regulation on public water systems, the economy, and public
health. Consequently, regulation development typically is a multi-year process. EPA may
expedite procedures and issue interim standards to respond to urgent threats to public health.
After reviewing health effects studies, EPA sets a nonenforceable maximum
contaminant level goal (MCLG) at a level at which no known or anticipated adverse health
effects occur and that allows an adequate margin of safety. EPA also considers the risk to
sensitive subpopulations (e.g., children). For carcinogens and microbes, EPA sets the MCLG
at zero. Because MCLGs consider only health effects and not analytical detection limits or
treatment technologies, they may be set at levels that water systems cannot meet. Once the
MCLG is established, EPA sets an enforceable standard, the maximum contaminant level
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(MCL). The MCL generally must be set as close to the MCLG as is “feasible” using the best
technology or other means available, taking costs into consideration.
EPA has relied on legislative history to determine the meaning of “feasible.” Most
recently, the Senate report accompanying the 1996 amendments stated that feasible means
the level that can be reached by large, regional drinking water systems applying best
available treatment technology. The report explained that this approach is used because 80%
of the population receives its drinking water from large community water systems, and thus,
safe water can be provided to most of the population at very affordable costs. (About 80%
of the population is served by systems that serve a population of 10,000 or more.) However,
because standards are based on cost considerations for large systems, Congress expected that
standards could be less affordable for smaller systems. An issue in the 1996 reauthorization
debate concerned whether the costs of some standards were justified, given their estimated
risk-reduction benefits. As amended, the Act now requires EPA, when proposing a standard,
to publish a determination as to whether or not the benefits of a proposed standard justify the
costs. If EPA determines that the benefits do not justify the costs, EPA, in certain cases, may
promulgate a standard less stringent than the feasible level that “maximizes health risk
reduction benefits at a cost that is justified by the benefits.”
Recent and Pending Rules. EPA’s recent rulemaking activities include a 1998 rule
package that expanded requirements to control pathogens, especially Cryptosporidium
(Interim Enhanced Surface Water Treatment Rule (STR)) and disinfectants (e.g., chlorine)
and their byproducts (e.g., chloroform) (Stage 1 Disinfectant and Disinfection Byproduct
Rule). In 2002, EPA issued the Long Term 1 Enhanced STR to improve control of microbial
pathogens among small systems. EPA also has issued new rules for several radionuclides,
including radium (now in effect), and a revised standard for arsenic that water systems must
comply with by January 23, 2006.
EPA has nearly completed several related rulemakings, including a groundwater rule
to establish disinfection requirements for systems relying on ground water (this rule is
intended to protect against fecal bacteria contamination in these systems); and a rule package
that includes the Stage 2 Disinfectants and Disinfection Byproduct Rule and the Long Term
2 Enhanced Surface Water Treatment Rule. These rules build on the rules issued in 1998 to
strengthen public health protection from disinfectants, their byproducts, and pathogens. EPA
also is working to issue a radon rule, and is evaluating many other contaminants, including
perchlorate and MTBE, for possible regulation.
Perchlorate. Perchlorate is the main ingredient of solid rocket fuel and has been used
heavily by the Department of Defense (DOD), the National Aeronautics and Space
Administration (NASA), and related industries. This highly soluble and persistent compound
has been disposed of on the ground for decades, and now has been detected in sources of
drinking water that serve more than 11 million people. Perchlorate is known to disrupt the
uptake of iodine in the thyroid; thus, perchlorate can affect thyroid function. A key concern
is that, if sufficiently severe, impaired thyroid function in pregnant women can impair brain
development in fetuses and infants.
EPA identified perchlorate as a candidate for regulation in 1998, but concluded that
information was insufficient at that time to make a regulatory determination. EPA listed
perchlorate as a priority for further research on health effects and treatment technologies, and
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for collecting occurrence data. In 2002, EPA issued a controversial draft risk assessment for
perchlorate that concluded that potential human health risks of perchlorate exposure include
effects on the developing nervous systems and thyroid tumors, based on rat studies that
observed benign tumors and adverse effects in fetal brain development. The draft assessment
included a revised draft reference dose (RfD) intended to protect the most sensitive groups
against these effects. That dose roughly translated to a drinking water standard of 1 part per
billion (ppb). EPA’s 1999 draft level translated to a standard of roughly 32 ppb.
Because an RfD provides the basis for determining the level at which a standard is set,
and because drinking water standards are often used as environmental cleanup standards, the
DOD and other major perchlorate users have followed EPA’s efforts closely. Interagency
debate over the draft assessment persisted, and in March 2003, EPA, the DOD, NASA, and
other federal agencies asked the National Research Council (NRC) of the National Academy
of Sciences to review the science for perchlorate and EPA’s draft risk assessment.
The NRC released its study in January 2005, and broadly agreed with several EPA
findings; however, the NRC committee suggested several changes to EPA’s draft risk
assessment. Among other findings, the committee noted that, unlike rats, humans have
multiple mechanisms to compensate for iodide deficiency and thyroid disorders, and that
studies in rats are of limited use for quantitatively assessing human health risk associated
with perchlorate exposure. The committee recommended that EPA base its assessment on
human data. The NRC calculated an RfD for perchlorate that incorporates an uncertainty
factor to protect the most sensitive populations; that RfD would translate to a drinking water
equivalent level of 24.5 ppb. (In developing an MCLG, EPA would likely lower this number
to reflect the amount of perchlorate exposure that EPA determines comes from other sources,
especially food.) In February, EPA adopted the NRC’s recommended reference dose. (For
further discussion, see CRS Report RS21961, Perchlorate Contamination of Drinking
Water: Regulatory Issues and Legislative Actions.)

In the 109th Congress, interest in perchlorate contamination continues. The House has
passed two bills to address perchlorate-contaminated groundwater in California: H.R. 186
would authorize the Secretary of the Interior to make grants to the Santa Clara Valley Water
District for groundwater remediation projects; H.R. 18 would similarly authorize grants for
local water authorities within the Santa Anna River watershed. Additionally, H.R. 213
would require EPA to promulgate a drinking water standard for perchlorate by July 31, 2007.
The 108th Congress passed several perchlorate measures. The Department of Defense
Authorization Act of FY2004 (P.L. 108-136) required DOD to provide for health studies of
perchlorate in drinking water. The DOD FY2004 Appropriations Act (P.L. 108-87) directed
DOD, with EPA, to study perchlorate groundwater pollution that threatens drinking water
and irrigation supplies in the Southwest. The National Defense Authorization Act for
FY2005 (P.L. 108-375) included a “Sense of Congress” that DOD should develop a plan for
remediating perchlorate contamination resulting from DOD activities to ensure DOD can
respond quickly once a federal drinking water standard is established; continue remediating
sites where perchlorate contamination poses an imminent and substantial endangerment to
human health and welfare; develop a plan to remediate contamination when the Secretary
determines that the contamination poses a health hazard; and continue evaluating sites, even
in the absence of an SDWA standard. Several other bills would have required EPA to
promulgate a drinking water standard for perchlorate.
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Methyl Tertiary Butyl Ether (MTBE). This gasoline additive has been widely used
to meet the Clean Air Act requirement that reformulated gasoline (RFG) contain at least 2%
oxygen to improve combustion. RFG is required for use in areas that fail to meet the federal
ozone standard. However, numerous incidents of water contamination by MTBE have led
to calls for restrictions on its use. At least 23 states, including California and New York, have
enacted limits or phase-outs of the additive. EPA has not developed a drinking water
standard for MTBE; however, at least 7 states have set their own MTBE standard.
The primary source of MTBE in drinking water has been petroleum releases from
leaking underground storage tank (UST) systems. Once released, MTBE moves through soil
and into water more rapidly than other gasoline components, thus making it is more likely
to reach drinking water sources. EPA estimates that UST leaks involving MTBE can be two
to four times more costly to clean up than conventional gasoline leaks, which generally cost
from $100,000 to $125,000 to remediate.
Because of data gaps, EPA has not issued a health advisory or drinking water standard
for MTBE; however, EPA’s Office of Research and Development concluded in 1993 that the
inhalation evidence would support classifying MTBE as a “possible human carcinogen.”1 In
1997, EPA issued a drinking water advisory for MTBE based on consumer acceptability (for
taste and smell), because even small amounts of MTBE can render water undrinkable
because of its strong taste and odor. Advisories provide information on contaminants that are
not regulated under SDWA. They are not enforceable, but provide guidance to water
suppliers and others regarding potential health effects or consumer acceptability. While the
MTBE advisory is not based on health effects, EPA stated at that time that keeping MTBE
levels in the range of 20-40 micrograms per liter (:g/L) or lower for consumer acceptability
reasons would also provide a large margin of safety from potential adverse health effects.
EPA has taken steps that could lead to the issuance of a drinking water standard for
MTBE. In 1998, EPA included MTBE on a list of contaminants that are potential candidates
for regulation. Compounds on the contaminant candidate list are categorized as regulatory
determination priorities, research priorities, or occurrence priorities. EPA placed MTBE in
the category of contaminants for which further occurrence data collection and health effects
research are priorities. Thus, although EPA did not select MTBE for regulation, the agency
planned to pursue research to fill data gaps so that a regulatory determination may be made.
However, most current MTBE research is focused on inhalation risks, and very little research
is being done specifically to assess the risks of exposure to MTBE via drinking water. The
next round of regulatory determinations is scheduled for 2006, although EPA can select
contaminants for regulation outside of this cycle.
Both the House- and Senate-passed versions of H.R. 6, the omnibus energy bill, would
amend Subtitle I of the Solid Waste Disposal Act to expressly allow EPA and states to use
appropriations from the Leaking Underground Storage Tank (LUST) Trust Fund to address
MTBE leaks and would authorize appropriations for these purposes. Both versions also
1 U.S. Environmental Protection Agency, Health Risk Perspectives on Fuel Oxygenates, Office of
Research and Development, EPA 600/R-94/217, 1994, p. 8. For more detail, see EPA’s MTBE risk
assessment, Assessment of Potential Health Risks of Gasoline Oxygenated with Methyl Tertiary
Butyl Ether (MTBE), EPA/600/R-93/206, 1993, [http://www.epa.gov/ncea/pdfs/mtbe/gasmtbe.pdf].
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would authorize EPA and states to use LUST funds to enforce UST release prevention and
detection requirements and authorize appropriations from the LUST Trust Fund for this
purpose. The House-passed bill also would add new leak prevention provisions to the tank
regulatory program and add new requirements for states, EPA, and tank owners.
The House bill would authorize $1 billion over five years for implementation of the
LUST cleanup program, and would authorize another $1 billion for the program to be used
to address underground storage tank (UST) leaks of fuels containing MTBE or other
oxygenates. The Senate bill would authorize $200 million for the cleanup of MTBE and
other ether fuels (but not ethanol), and funds could be used to remediate contamination from
USTs and other sources as well (e.g., pipelines, above-ground tanks, and water craft).
As in the previous Congress, the House version includes a retroactive “safe harbor”
provision to prohibit products liability lawsuits, alleging manufacturing or design defects,
against producers of fuels containing MTBE and renewable fuels, such as ethanol and
biodiesel. The provision states that it does not affect other liability (such as liability for
cleanup costs or negligence for spills). With liability ruled out for design defects,
manufacturing defects, and failure to warn of hazardous products, MTBE manufacturers
would likely be more difficult to reach under these other bases of liability. (For a discussion
of legal issues, see CRS Report RS21676, The Safe Harbor Provision for Methyl Tertiary
Butyl Ether (MTBE).) The safe harbor provision is opposed by many state attorneys general,
the Western Coalition of Arid States, the National Association of Counties, the National
Association of Towns and Townships, the National League of Cities, the National Water
Resources Association, the U.S. Conference of Mayors, and community water suppliers.
Opponents argue that providing a products liability shield would effectively leave gas station
owners liable for cleanup, and because these businesses often have few resources, the effect
of the safe harbor provision would be that the burden for cleanup would fall to local
communities, drinking water utilities, the states, and private well owners. MTBE
manufacturers argue that a safe harbor provision is reasonable, given that MTBE has been
used to meet federal Clean Air Act mandates, and that the key problem lies with leaking
tanks, not with MTBE. The Senate bill includes a safe harbor for renewable fuels but not
MTBE, and it is not retroactive. (For more information on these bills, see CRS Report
RL32865, Renewable Fuels and MTBE: A Comparison of Selected Legislative Initiatives.
For more information on MTBE issues, see CRS Report RL32787, MTBE in Gasoline:
Clean Air and Drinking Water Issues.)
Drinking Water Infrastructure Funding
Drinking Water State Revolving Fund. A persistent SDWA issue concerns the
ability of public water systems to upgrade or replace infrastructure to comply with federal
drinking water regulations and, more broadly, to ensure the provision of a safe and reliable
water supply. In the 1996 SDWA Amendments, Congress responded to growing complaints
about the Act’s unfunded mandates and authorized a drinking water state revolving loan fund
(DWSRF) program to help water systems finance infrastructure projects needed to meet
drinking water standards and address the most serious health risks. The program authorizes
EPA to award annual capitalization grants to states. States then use their grants (plus a 20%
state match) to provide loans and other assistance to systems. Communities repay loans into
the fund, thus making resources available for projects in other communities. Eligible projects
include installation and replacement of treatment facilities, distribution systems, and certain
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storage facilities. Projects to replace aging infrastructure are eligible if they are needed to
maintain compliance or to further public health protection goals.
Congress authorized funding totaling $9.6 billion, including $1 billion for each of
FY1995 through FY2003 for the DWSRF program. To date, Congress has provided roughly
$7.8 billion for this program, including $843 million in the FY2005 omnibus spending bill,
P.L. 108-447. For FY2006, the President has requested $850 million, and committee reports
to accompany the House and Senate versions of H.R. 2361 provide this amount. Through
June 2004, EPA had awarded $5.74 billion in capitalization grants, which, when combined
with the state match, bond proceeds, and other funds, amounted to $9.64 billion in DWSRF
funds available for loans and other assistance. Through that same period, 6,500 drinking
water system projects had received assistance, and total assistance provided by the program
reached $7.98 billion. (For further information, see CRS Report RS22037, Drinking Water
State Revolving Fund: Program Overview and Issues.)
Funding Issues. The DWSRF program is generally well regarded; however, many
organizations and state and local officials argue that greater investment in drinking water
infrastructure is needed. EPA’s June 2005 survey of capital improvement needs for water
systems estimates that water systems need to invest $276.8 billion on drinking water
infrastructure improvements over 20 years to comply with drinking water regulations and to
ensure the provision of safe water. The survey includes funds needed for compliance with
several recent regulations (including the revised arsenic and radium rules) and pending rules
for radon and other contaminants. The survey also identified $1 billion in security-related
needs. EPA reports that, although all of the infrastructure projects in the needs assessment
promote the health objectives of the Act, roughly $45.1 billion (16.3%) of the total need is
attributable to SDWA regulations. Of this amount, $35.2 billion is needed to address
existing regulations, and $30.2 billion (86%) is needed for projects to address
microbiological contamination.
A related issue is the need for communities to address infrastructure needs that are
outside the scope of the DWSRF program and, thus, generally are ineligible for assistance
from this source. Ineligible categories include future growth, ongoing rehabilitation, and
operation and maintenance of systems. According to EPA, outdated and deteriorated drinking
water infrastructure poses a fundamental long-term threat to drinking water safety, and in
many communities, basic infrastructure costs far exceed SDWA compliance costs.
In 2002, EPA issued The Clean Water And Drinking Water Infrastructure Gap Analysis,
which identified potential funding gaps between projected needs and spending from 2000
through 2019. This analysis estimated the potential 20-year funding gap for drinking water
and wastewater infrastructure capital and operations and maintenance (O&M), based on two
scenarios: a “no revenue growth” scenario and a “revenue growth” scenario that assumed
spending on infrastructure would increase 3% per year. Under the “no revenue growth”
scenario, EPA projected a funding gap for drinking water capital investment of $102 billion
(roughly $5 billion per year) and an O&M funding gap of $161 billion ($8 billion per year).
Using revenue growth assumptions, EPA estimated a 20-year capital funding gap of $45
billion ($2 billion per year), and no gap for O&M.
Other needs assessments also reveal a funding gap. A Congressional Budget Office
study, Future Investment in Drinking Water and Wastewater Infrastructure, concluded that
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current funding from all levels of government, combined with current revenues from
ratepayers, will not be sufficient to meet the nation’s future demand for water infrastructure.
In 2000, the Water Infrastructure Network (WIN) (a coalition of state and local officials,
water service providers, environmental groups and others) reported that, over the next 20
years, water and wastewater systems need to invest $23 billion annually more than current
investments to meet SDWA and Clean Water Act health and environmental priorities and
to replace aging infrastructure. WIN and other groups have presented proposals to Congress
for multi-billion dollar investment programs for water infrastructure. Others, however, have
called for more financial self-reliance within the water sector.
In response to EPA’s Gap Analysis, EPA’s budget request for FY2004 proposed that
funding for the DWSRF program be continued at a level of $850 million annually through
FY2018. EPA’s budget justification explained that this funding level would allow DWSRFs
to revolve at a cumulative level of $1.2 billion (more than double the previous goal of $500
million) and would help close the funding gap for drinking water infrastructure needs.
In the face of large needs, tight budgets, and debate over the federal role in funding
water infrastructure, EPA, states, and utilities have been examining alternative management
and financing strategies to address costs. Strategies include establishing public-private
partnerships (privatization options range from contracting for services to selling system
assets), improving asset management, and adopting full-cost pricing for water services.
Infrastructure needs and funding issues continue to receive attention in the 109th
Congress. On July 20, the Senate Environment and Public Works Committee ordered
reported S. 1400, the Water Infrastructure Financing Act. This bill would amend SDWA and
the Clean Water Act to reauthorize both acts’ SRF programs (authorizing $15 billion over
five years for the DWSRF). It also would direct EPA to establish grant programs for small
or economically disadvantaged communities for critical drinking water and water quality
projects; authorize loans to small water and wastewater systems for preconstruction, short-
term, and small project costs; and direct EPA to establish a demonstration program to
promote new technologies and alternative approaches to water quality and water supply
management, among other purposes. At markup, committee members adopted an amendment
that would apply Davis-Bacon prevailing wage requirements, in perpetuity, to projects
receiving DWSRF assistance. The same committee reported similar legislation in the past
Congress, S. 2550 (S.Rept. 108-386), but contentious amendments, including a similar
Davis-Bacon amendment, were adopted at markup, and that bill was not taken up on the
Senate floor. See CRS Report RL32503, Water Infrastructure Financing Legislation:
Comparison of S. 2550 and H.R. 1560. For a broader discussion of water infrastructure
issues, see CRS Report RL31116, Water Infrastructure Needs and Investment: Review and
Analysis of Key Issues.)
Drinking Water Security
Congress addressed drinking water security issues in the Bioterrorism Preparedness of
2002 (P.L. 107-188, H.Rept. 107-481), which amended SDWA to require community water
systems to conduct vulnerability assessments and prepare emergency response plans. In the
108th Congress, attention focused on several issues including the progress utilities have made
in meeting the requirements of the Bioterrorism Act and in addressing identified
vulnerabilities, and whether utilities need more resources to make security improvements.
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S. 2269 would have authorized EPA to make grants to utilities to improve security and
authorized funds for the Water Information Sharing and Analysis Center (Water ISAC).
A key provision of the Bioterrorism Act required each community water system serving
more than 3,300 individuals to assess their vulnerability to terrorist attacks or other
intentional acts to disrupt the provision of a safe and reliable drinking water supply.
Combined, these systems serve more than 90% of the population served by community water
systems. The Act required these systems to certify to EPA that they conducted a vulnerability
assessment and to give EPA a copy of the assessment. The Act also required these systems
to prepare or revise emergency response plans incorporating the results of the vulnerability
assessments no later than six months after completing them. Table 2 outlines the deadlines
by which utilities had to submit their assessments to EPA and complete emergency response
plans.
Table 2. Community Water System Requirements
under the Bioterrorism Act
System size by population
Vulnerability assessments
Emergency response plans
(approx. no. of systems)
must be completed
must be completed
(% completed as of 10/1/04)
(% certified as of 10/1/04)
100,000 or more (425)
March 31, 2003
September 30, 2003
(100%)
(100%)
50,000 - 99,999 (460)
December 31, 2003
June 30, 2004
(98%)
(99%)
3,301 - 49,999 (7,500)
June 30, 2004
December 31, 2004
(88%)
(NA)
The Bioterrorism Act authorized $160 million for FY2002, and sums as may be needed
for FY2003 through FY2005, to provide financial assistance to community water systems
to assess vulnerabilities, prepare response plans, and address security enhancements and
significant threats. The emergency supplemental appropriations for FY2002 (P.L. 107-117)
provided $90 million for assessing the vulnerabilities of drinking water utilities and other
security planning, and $5 million for state grants for assessing drinking water safety. In
FY2002, EPA awarded roughly $53 million in water security grants to help the largest public
water systems complete vulnerability assessments by the March 31, 2003 deadline.
Federal grants were not available for smaller systems covered by the Bioterrorism Act’s
requirements. Instead, EPA, states and water organizations have provided vulnerability
assessment tools, guidance documents, training, and technical assistance to support security
enhancement efforts among these systems. Similar assistance also has been provided for the
remaining 84% of community water systems that serve 3,300 or fewer and were not required
to do vulnerability assessments and emergency planning.
For FY2003, EPA requested $16.9 million for vulnerability assessments for small and
medium-sized systems and $5 million for state water security coordinators to work with EPA
and utilities in assessing water security. P.L. 108-7 included this amount, plus $2 million for
the National Rural Water Association to help small systems with vulnerability assessments,
and $1 million to the American Water Works Association to provide security training.
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For FY2004, EPA requested and received $32.4 million for critical water infrastructure
protection, including $5 million for state water security coordination grants. This funding
supported states’ efforts to work with water and wastewater systems to develop and enhance
emergency operations plans; conduct training in the implementation of remedial plans in
small systems; and develop detection, monitoring and treatment technology to enhance water
security. EPA used funds to assist the nearly 8,000 community water systems that serve water
to populations between 3,300 and 100,000 and are subject to the Bioterrorism Act.
For FY2005, EPA requested $5 million for state water security coordination grants and
$6.1 million for other critical infrastructure protection efforts. EPA’s budget justification
explained that the $21.3 million reduction reflected a shift in priorities from assistance and
training on vulnerability assessments. The Consolidated Appropriations Act for FY2005
provided this amount, including $2 million for the Water Information Sharing and Analysis
Center, which shares sensitive security information with water systems.
In the FY2006 budget request, the President again requested $5 million for state water
security grants. The President also requested $44 million to launch a new drinking water
security initiative, the Water Sentinel, in response to EPA’s water security responsibilities
under Homeland Security Presidential Directive (HSPD) 7, which designated EPA as the
lead agency for water infrastructure security. The goal of the Water Sentinel initiative is to
establish pilot early warning systems in five cities through water monitoring and surveillance
for certain chemical and biological contaminants, and to form a water laboratory alliance to
build the analytical capacity needed to support the surveillance program. In the committee
reports to accompany H.R. 2361, EPA’s FY2006 appropriations bill, the House included $9
million, and the Senate included $5.6 million, for this security initiative. In H.Rept. 109-80,
the House Appropriations Committee stated that EPA should develop clear goals for the
Water Sentinel program and justify the request more clearly next year. Both chambers
approved the $5 million requested for state water security grants. (See also CRS Report
RL31294, Safeguarding the Nation’s Drinking Water: EPA and Congressional Actions.)
Small Systems Issues
A key SDWA issue involves the financial, technical, and managerial capacity of small
systems to comply with SDWA regulations. Roughly 84% of the nation’s community water
systems are small, serving 3,300 persons or fewer; 57% of the systems serve 500 persons or
fewer. EPA and states have documented the problems many small systems face in meeting
SDWA rules, and more fundamentally, in ensuring the quality of water supplies. Major
problems include deteriorated infrastructure; lack of access to capital; limited customer and
rate base; inadequate rates; diseconomies of scale; and limited technical and managerial
capabilities. Although these systems serve just 9% of the population served by community
water systems, the sheer number of small systems creates challenges for policymakers.
In the earliest SDWA debates, Congress recognized that setting standards based on
technologies that are affordable for large cities could pose problems for small systems.
During the reauthorization debate leading up to the 1996 amendments, policymakers gave
considerable attention to the question of how to help small systems improve their capacity
to ensure consistent compliance with the SDWA. The 1996 amendments added provisions
aimed at achieving this goal, including a requirement that states establish strategies to assist
systems in developing and maintaining the technical, financial and managerial capacity to
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meet SDWA regulations. Congress also revised provisions on standard-setting, variances,
and exemptions to increase consideration of small system concerns.
Small System Variances. As amended in 1996, the SDWA requires EPA, when
issuing a regulation, to identify technologies that meet the standard and that are affordable
for systems that serve populations of 10,000 or fewer. If EPA does not identify “compliance”
technologies that are affordable for these systems, then EPA must identify small system
“variance” technologies. A variance technology need not meet the standard, but must protect
public health. States may grant variances to systems serving 3,300 persons or fewer, if a
system cannot afford to comply with a rule (through treatment, an alternative source of water,
or other restructuring) and the system installs a variance technology. With EPA approval,
states also may grant variances to systems serving between 3,300 and 10,000 people.
To date, EPA has determined that affordable compliance technologies are available for
all drinking water regulations. Consequently, the agency has not identified any small system
variance technologies, and no small system variances are available. If EPA had identified
variance technologies, states still might not make much use of these variances for a number
of reasons — a key issue being the creation of a double standard for tap water quality in
communities that meet a standard, compared with those that would rely on variances.
Exemptions. The Act’s exemption provisions also are intended to provide compliance
flexibility in certain cases. States or EPA may grant temporary exemptions from a standard
if, due to certain compelling factors (including cost), a system cannot comply on time. For
example, all systems are required to comply with the new arsenic standard five years after
its promulgation date. An exemption would allow three more years for qualified systems.
Small systems (serving 3,300 persons or fewer) may be eligible for up to three additional
two-year extensions, for a total exemption duration of nine years (for a total of up to 14 years
to achieve compliance). In the preamble to the arsenic rule published in January 2001, EPA
noted that exemptions will be an important tool to help states address the number of systems
needing financial assistance to comply with this rule and other SDWA rules (66 FR 6988).
Affordability Issues and Arsenic Compliance. Prompted by intense debate over
the revised arsenic standard and its potential cost to small communities, the conference report
for EPA’s FY2002 appropriations (H.Rept. 107-272) directed EPA to review its affordability
criteria and how small system variance and exemption programs should be implemented for
arsenic. Congress directed EPA to report on its affordability criteria, administrative actions,
potential funding mechanisms for small system compliance, and possible legislative actions.
EPA’s report to Congress, Small Systems Arsenic Implementation Issues, summarized
activities that addressed these directives. Major activities included (1) reviewing the small
system affordability criteria and variance process; (2) developing a small community
assistance plan to improve access to financial and technical assistance, improve compliance
capacity, and simplify the use of exemptions; and (3) implementing a $20 million research
and technical assistance strategy. EPA has completed several efforts to help states and water
systems meet the requirements of the arsenic rule. In 2002, EPA issued Implementation
Guidance for the Arsenic Rule, which includes guidance to help states grant exemptions.
EPA has offered technical assistance and training to small systems, and is sponsoring
research on low-cost treatment technologies for removing arsenic from drinking water. Also,
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EPA is working with small communities to maximize loans and grants under SDWA and the
U.S. Department of Agriculture water infrastructure programs.
Water systems must comply with the new arsenic standard by January 23, 2006, and
Congress has shown ongoing concern about compliance costs. The conference report for the
Consolidated Appropriations Act for FY2005 directs EPA to report, by August 2005, on the
extent to which communities will be impacted by the arsenic rule, and to propose compliance
alternatives and make recommendations to minimize compliance costs. Congress also
provided $8.3 million for research on cost-effective arsenic removal technologies, which
could reduce compliance costs.
In the 109th Congress, S. 41 and H.R. 1315 have been introduced to require states to
grant small community water systems exemptions from regulations for naturally occurring
contaminants in certain cases. Companion bills, H.R. 2417 and S. 689, would require EPA
to establish a small system grant program to help qualified communities comply with
standards, delay state enforcement of the arsenic rule until states implement the grant
program, and prevent EPA from enforcing a standard during the grant application process;
funding for the program would be authorized at $1.9 million annually for six years. S. 1400,
the Water Infrastructure Financing Act, would establish a grant program for priority projects,
including projects to help small systems comply with standards.
LEGISLATION
H.R. 213 (Solis)
Amends SDWA to require EPA to issue a drinking water standard for perchlorate by
July 31, 2007. Introduced Jan. 4, 2005; referred to the Committee on Energy and Commerce.
H.R. 879(Dingell)/S. 439 (Boxer)
These very similar bills amend the Solid Waste Disposal Act to require secondary
containment for all new and replaced underground storage tank systems located near public
water systems, potable drinking water wells, and state-designated sensitive areas to prevent
contamination by petroleum and MTBE. Both were introduced on Feb. 17, 2005; H.R. 879
was referred to the Committee on Energy and Commerce. S. 439 was referred to the
Committee on Environment and Public Works.

H.R. 1315 (Otter)
Amends SDWA to require states to grant temporary exemptions to small public water
systems from the requirements of regulations for naturally occurring contaminants (including
arsenic, radon, radium, uranium, and disinfection byproducts). Introduced Mar. 15, 2005;
referred to the Committee on Energy and Commerce.
H.R. 1540 (Miller, Gary)
Amends SDWA civil suit provisions to establish liability standards for public water
systems regarding damages arising from injuries allegedly caused by the delivery of water
containing regulated or unregulated contaminants. Introduced Apr. 8, 2005; referred to the
Committee on Energy and Commerce, and the Committee on the Judiciary.
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H.R. 1679 (Andrews, Robert E.)
Authorizes supplemental appropriations for the DWSRF of $85 million for state
expenses of formulating source water assessment programs; specifies that the programs must
include the assessment of specified pesticides, surface water sources, residential wells, and
contaminated soil. Introduced Apr. 19, 2005; referred to the Committee on Appropriations.
H.R. 2417 (Wilson, H.)/S. 689 (Domenici)
Amends SDWA to direct EPA to establish a program to provide grants to eligible
communities for projects needed to comply with drinking water standards; provides
temporary relief from enforcement of standards during the grant application process; delays
state enforcement of the arsenic rule until the state implements the grant program. H.R. 2417
was introduced May 17, 2005; referred to the Committee on Energy and Commerce. S. 689
was introduced Apr. 4, 2005; referred to the Committee on Environment and Public Works.
H.R. 3178 (Norton)/S. 1328
Amends SDWA to (1) require EPA to revise the drinking water regulation for lead,
establish a maximum contaminant level for lead, and revise monitoring requirements; (2)
increase the pace at which lead service lines are replaced; (3) revise public notification and
education requirements for water systems and require the provision of in-home filters when
the standard or action level is exceeded; (4) authorize appropriations for a lead service line
replacement fund; (5) reduce the amount of lead allowed in plumbing; and (6) require EPA
to issue regulations for testing and remediating lead in school drinking water. H.R. 3178 was
introduced June 30, 2005; referred to the Committee on Energy and Commerce. S. 1328 was
introduced June 29, 2005; referred to the Committee on Environment and Public Works.
S. 41 (Nelson, E. Benjamin)
Amends SDWA to direct states to grant small, nonprofit water systems exemptions
from drinking water regulations for naturally occurring contaminants, in certain cases.
Introduced Jan. 24, 2005; referred to the Committee on Environment and Public Works.
S. 837 (Inhofe)
Amends SDWA to exempt hydraulic fracturing related to oil and gas production from
the definition of underground injection and, thus, exclude this practice from potential
underground injection regulations related to the protection of underground sources of
drinking water. (Parallels H.R. 6, Section 327.) Introduced Apr. 18, 2005; referred to the
Committee on Environment and Public Works.
S. 1080 (Jeffords)
Amends SDWA to prohibit the use of diesel fuel and other toxic substances for
hydraulic fracturing practices related to oil and natural gas production. Introduced May 19,
2005; referred to the Committee on Environment and Public Works.
S. 1400 (Chafee)
The Water Infrastructure Financing Act amends SDWA and the Clean Water Act to
amend and reauthorize both acts’ SRF programs; direct EPA to establish grant programs for
small or economically disadvantaged communities for critical drinking water and water
quality projects; authorize loans to small water and wastewater systems for preconstruction
and small project costs; require the National Academies of Science to study the availability
of no- and low-lead plumbing components; authorize funding for lead service line
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replacement in the District of Columbia; direct EPA to establish a demonstration grant
program to promote new technologies and alternative approaches to water quality and water
supply management; authorize EPA to establish an agricultural pollution control technology
grant program; and for other purposes. Introduced July 14, 2005; referred to the Committee
on Environment and Public Works; ordered reported, amended, July 20, 2005.
S. 1409 (Murkowski)
Amends and reauthorizes Section 303 of the 1996 SDWA Amendments to authorize
EPA to make grants to Alaska to pay 75% of the cost of water and wastewater systems for
rural and Native villages in Alaska. Introduced July 14, 2005; referred to the Committee on
Environment and Public Works; ordered reported, amended, July 20, 2005.
S. 1426 (Obama)
Amends SDWA to reauthorize and extend water security Sections 1334 and 1435
regarding contaminant prevention, detection, and response. Introduced July 19, 2005;
referred to the Committee on Environment and Public Works.
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
U.S. Congress. House. Committee on Energy and Commerce. Subcommittee on
Environment and Hazardous Materials. Tapped Out: Lead in the District of Columbia
and the Providing of Safe Drinking Water. Hearing, July 22, 2004, 108th Congress, 2nd
session. 155 p. (108-97)
U.S. Congress. House. Committee on Government Reform. Public Confidence, Down the
Drain: the Federal Role in Ensuring Safe Drinking Water in the District of Columbia.
Hearing, March 5, 2004, 108th Congress, 2nd session. 268 p. (108-161)
U.S. Congress. House. Committee on Government Reform. Subcommittee on Energy Policy,
Natural Resources and Regulatory Affairs. EPA Water Enforcement: Are We on the
Right Track? Hearing, Oct. 14, 2003, 108th Congress, 1st session. 201p. (108-157)
U.S. Congress. House. Committee on Transportation and Infrastructure. Subcommittee on
Water Resources and Environment. Aging Water Supply Infrastructure. Hearing, April
28, 2004, 108th Congress, 2nd session. 78 p. (108-63)
U.S. Congress. Senate. Committee on Environment and Public Works. Water Infrastructure
Financing Act. Report to accompany S. 2550. Oct.7, 2004. S.Rept. 108-386. 116 p.
FOR ADDITIONAL READING
U.S. Congress. Congressional Budget Office. Future Investment in Drinking Water and
Wastewater Infrastructure. Nov. 2002. 56 p.
U.S. Environmental Protection Agency. The Clean Water and Drinking Water Infrastructure
Gap Analysis Report. Report No. EPA 816-R-02-020. Sept. 2002. 50 p.
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U.S. Government Accountability Office. Perchlorate: A System to Track Sampling and
Cleanup Results Is Needed. GAO-05-462. May 2005. 74 p.
National Research Council. Health Implications of Perchlorate Ingestion. Board on
Environmental Studies and Toxicology. National Academies Press. Jan. 2005. 177 p.
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