[Federal Register Volume 71, Number 41 (Thursday, March 2, 2006)]
[Notices]
[Pages 10671-10685]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-1917]
[[Page 10671]]
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ENVIRONMENTAL PROTECTION AGENCY
[EPA-HQ-OW-2005-0005; FRL-8035-7]
Small Drinking Water Systems Variances--Revision of Existing
National-Level Affordability Methodology and Methodology To Identify
Variance Technologies That Are Protective of Public Health
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice.
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SUMMARY: The 1996 amendments of the Safe Drinking Water Act (SDWA)
provide States the authority to grant variances to small public water
systems that cannot afford to comply with a primary drinking water
standard. These variances allow a system to install and maintain
technology that can remove a contaminant to the maximum extent that is
affordable and protective of public health in lieu of technology that
can achieve compliance with the regulation. One of the conditions for
States to grant variances on a case-by-case basis is that the EPA must
have found for systems of a similar size and with similar source water
that there are no affordable technologies available that achieve
compliance with the standard, but that there are affordable variance
technologies that are protective of public health.
The EPA currently determines if there are affordable compliance
technologies available to small systems by comparing (for a
representative system) the current household cost of water plus the
estimated additional cost to comply with a new rule to an affordability
``threshold'' of 2.5 percent of the median household income (MHI).
Today=s Federal Register notice requests comment on revisions to this
existing national-level affordability methodology for small drinking
water systems and an approach for determining if an affordable variance
technology is protective of public health. The Agency is committed to
working with State and local officials and stakeholders to update and
improve affordability analyses under the Safe Drinking Water Act.
DATES: Comments must be received on or before May 1, 2006.
ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-OW-
2005-0005, by one of the following methods:
http://www.regulations.gov. Follow the on-line
instructions for submitting comments.
E-mail: OW-Docket@epa.gov, Attention Docket ID No. OW-
2005-0005.
Fax: (202) 566-1749.
Mail: Water Docket, Environmental Protection Agency,
Mailcode: 4101T, 1200 Pennsylvania Ave., NW., Washington, DC, 20460.
Hand Delivery: Water Docket, Environmental Protection
Agency, EPA West Building, Room B102, 1301 Constitution Avenue, NW.,
Washington, DC. Such deliveries are only accepted during the Docket's
normal hours of operation, and special arrangements should be made for
deliveries of boxed information.
Instructions: Direct your comments to Docket ID No. EPA-HQ-OW-2005-
0005. EPA's policy is that all comments received will be included in
the public docket without change and may be made available online at
http://www.epa.gov/edocket, including any personal information
provided, unless the comment includes information claimed to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Do not submit information that you
consider to be CBI or otherwise protected through http://www.regulations.gov, or e-mail. The http://www.regulations.gov Web site
is an ``anonymous access'' system, which means EPA will not know your
identity or contact information unless you provide it in the body of
your comment. If you send an e-mail comment directly to EPA without
going through http://www.regulations.gov, your e-mail address will be
automatically captured and included as part of the comment that is
placed in the public docket and made available on the Internet. If you
submit an electronic comment, EPA recommends that you include your name
and other contact information in the body of your comment and with any
disk or CD-ROM you submit. If EPA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EPA
may not be able to consider your comment. Electronic files should avoid
the use of special characters, any form of encryption, and be free of
any defects or viruses.
Docket: All documents in the docket are listed in the http://www.regulations.gov index. Although listed in the index, some
information is not publicly available, e.g., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, will be publicly available only in hard copy.
Publicly available docket materials are available either electronically
in http://www.regulations.gov or in hard copy at the Water Docket, EPA/
DC, EPA West, Room B102, 1301 Constitution Avenue, NW., Washington, DC.
The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday
through Friday, excluding legal holidays. The telephone number for the
Public Reading Room is (202) 566-1744, and the telephone number for the
Water Docket is (202) 566-1749.
FOR FURTHER INFORMATION CONTACT: Dan Olson, Standards and Risk
Management Division, Office of Ground Water and Drinking Water,
(4607M), Environmental Protection Agency, 1200 Pennsylvania Ave., NW.,
Washington, DC, 20460; telephone number: (202) 564-5239; fax number:
(202) 564-3758; e-mail address: olson.daniel@epa.gov.
SUPPLEMENTARY INFORMATION:
I. General Information
A. What Should I Consider as I Prepare My Comments for EPA?
1. Submitting CBI. Do not submit this information to EPA through
http://www.regulations.gov or e-mail. Clearly mark the part or all of
the information that you claim to be CBI. For CBI information in a disk
or CD ROM that you mail to EPA, mark the outside of the disk or CD ROM
as CBI and then identify electronically within the disk or CD ROM the
specific information that is claimed as CBI. In addition to one
complete version of the comment that includes information claimed as
CBI, a copy of the comment that does not contain the information
claimed as CBI must be submitted for inclusion in the public docket.
Information so marked will not be disclosed except in accordance with
procedures set forth in 40 CFR part 2.
2. Tips for Preparing Your Comments. When submitting comments,
remember to:
Identify the rulemaking by docket number and other
identifying information (subject heading, Federal Register date and
page number).
Follow directions--The agency may ask you to respond to
specific questions or organize comments by referencing a Code of
Federal Regulations (CFR) part or section number.
Explain why you agree or disagree; suggest alternatives
and substitute language for your requested changes.
Describe any assumptions and provide any technical
information and/or data that you used.
If you estimate potential costs or burdens, explain how
you arrived at your estimate in sufficient detail to allow for it to be
reproduced.
[[Page 10672]]
Provide specific examples to illustrate your concerns, and
suggest alternatives.
Explain your views as clearly as possible.
Make sure to submit your comments by the comment period
deadline identified.
Table of Contents
I. General Information
A. What Should I Consider as I Prepare My Comments for EPA?
II. Background
A. What Is the Purpose of Today's Action?
B. Statutory Background
C. How Does EPA Currently Determine if Affordable Compliance
Technologies Are Available to Small Drinking Water Systems?
III. Affordability Methodology
A. The EPA's Science Advisory Board Recommendations on
Affordability
1. EPA's Approach to Determining Affordability for Small Systems
2. Components of the Affordability Determination Method
3. Source Water and Regional Disparities
4. Financial Assistance
B. The National Drinking Water Advisory Council's
Recommendations on Affordability Criteria
1. Should MHI or Another Income Measure (Such as Per Capita
Income) Be Used for the Income Level?
2. Should 2.5 Percent or Another Percentage Be Used as the
Income Percentage for Determining the Maximum Affordable Water Bill,
and What Is the Basis for an Alternative Selection?
3. How Should the Expenditure Baseline Be Adjusted To Account
for New Rules?
4. Should Separate Affordability Criteria Be Developed for
Surface and Ground Water Systems?
5. Should Financial Assistance Be Incorporated in the
Calculations of the Expenditure Baseline?
6. Should Regional Affordability Criteria Be Developed, Given
Current Data Limitations?
7. NDWAC Perspective
8. NDWAC Work Group--Minority View
C. Key Factors Considered in Developing Affordability
Methodology Options
1. Variability in Household Costs of Water Treatment
2. Variability in the Ability of Small Systems To Pay for
Treatment
3. Need for Improved Implementation at the Federal Level of the
Small System Variance Provisions of the SDWA
D. Affordability Methodology Options
1. Calculating Household Costs
2. Affordability Determination Options
3. Identification of Affordable Variance Technologies
IV. Protection of Public Health Methodology
A. How Does EPA Consider Public Health in Establishing Drinking
Water Standards?
1. Setting the Maximum Contaminent Level Goal
2. Setting the MCL or Treatment Technique
3. Determining That Variance Technologies Are Protective of
Public Health
B. Methodology To Identify Affordable Variance Technologies That
Are Protective of Public Health
V. State Consultation
VI. Request for Comment
VII. References
II. Background
This section provides the purpose of today's action, a brief
statutory background on affordability-based small drinking water system
variances, and how EPA currently determines if affordability-based
variances can be made available to small drinking water systems.
A. What Is the Purpose of Today's Action?
Today's notice seeks comment on revisions to EPA's national
affordability methodology for small drinking water systems and a
methodology for determining if an affordable variance technology is
protective of public health. EPA believes such revisions are needed to
address variability in both incomes and costs across small systems, and
to maintain transparency and consistency in determinations regarding
affordability and protectiveness of public health. Neither the national
affordability methodology nor the methodology for determining if an
affordable variance technology is protective of public health imposes
any requirement on any person or entity. Rather, these methodologies
will be applied by EPA in evaluating small system affordability of
future National Primary Drinking Water Regulations (NPDWRs), except
regulations for microbial contaminants (including bacteria, viruses, or
other organisms) or indicators for microbial contaminants. SDWA section
1415(e)(6)(B) states that small system variances are not available for
microbial contaminants.
B. Statutory Background
Today's Federal Register requests comment on a revised approach for
implementing the small systems variance provision of the 1996 SDWA
amendments. The SDWA, as amended in 1996, includes a provision intended
to help reduce the economic impact that certain new regulations will
have on some small systems. For small systems with a service population
of less than 10,000, SDWA section 1415(e) authorizes a primacy agency
to grant a variance from compliance with a Maximum Contaminant Level
(MCL) or treatment technique under certain conditions. (An MCL is the
maximum permissible level of a contaminant in drinking water that is
delivered to any user of a public water system. A treatment technique
is an enforceable procedure or level of technological performance,
which public water systems must follow to ensure control of a
contaminant.) A primacy (primacy enforcement) agency may grant such a
variance on a case-by-case basis for an NPDWR only if EPA has
determined that there are no nationally affordable compliance
technologies for small systems in the corresponding size category and
with comparable source water quality and EPA has identified one or more
affordable variance technologies that are protective of public health.
In granting this variance, a primacy agency must provide public notice
and an opportunity for a public hearing. The primacy agency must also
make two system-specific determinations: (1) That the system cannot
otherwise afford to comply (using the State's affordability criteria)
through treatment, using an alternative source of water supply or
restructuring or consolidation; and (2) that the terms of the variance
ensure adequate protection of public health. In accordance with the
SDWA, EPA evaluates the affordability of new drinking water rules for
these categories of small systems: (1) A service population of 10,000
or fewer but more than 3,300; (2) a service population of 3,300 or
fewer but more than 500; and (3) a service population of 500 or fewer
but more than, or equal to, 25.
The legislative history of section 1415(e) does not provide
guidance on how EPA is to interpret the term ``affordable.'' However,
the Senate Report for S 1316, the Senate version of the SDWA amendments
of 1996 which contained similar small system variance provisions,
includes the following discussion.
``Of the approximately 57,000 community water systems regulated
under the Safe Drinking Water Act, nearly 54,000 serve populations
of 10,000 or less. While EPA has taken steps to recognize the
difficulties of small systems by establishing the Small System
Technology Initiative, by forming the National Training Coalition,
and by developing handbooks and computer software, the current Safe
Drinking Water Act does not successfully address the problems of
small systems.
The fundamental problem is one of economics. Maximum contaminant
levels in national primary drinking water regulations have been
based on the best available treatment techniques that are affordable
for large systems. Because small systems do not enjoy the economies
of scale that are available to large systems (infrastructure costs
cannot be spread over a large number of households) drinking water
regulations can have a much greater economic impact on small
systems. EPA and the Congressional
[[Page 10673]]
Budget Office have published estimates indicating that systems
serving more than 10,000 persons experience costs averaging less
than $20 per household per year to comply with the current
requirements of the Safe Drinking Water Act. By way of comparison,
the average annual incremental household cost to comply with the
requirements of the Safe Drinking Water Act for systems serving 25
to 100 persons is $145.'' (Senate Report No. 104-169, Nov 7, 1995,
pp 54-55) \1\
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\1\ The average annual household increases cited in the report
is for the cumulative impact imposed by the drinking water
regulations at the time of the report. These are average costs
across all systems in the size category including those with no
impact. Treatment costs would not be derived in that manner for the
options in this notice.
This language underscores the Senates concern for the burden
imposed on very small systems by NPDWRs, and provides an indication of
the treatment cost data considered by the Senate at the time they
developed these small system variance provisions. The House and
Conference Reports do not provide any additional guidance on
interpreting section 1415(e).
C. How Does EPA Currently Determine if Affordable Compliance
Technologies Are Available to Small Drinking Water Systems?
As explained in the August 6, 1998 Federal Register notice (63 FR
42032), EPA currently determines if there are any affordable compliance
technologies for a given NPDWR by comparing the estimated household
costs to national-level affordability criteria based on household
income. If EPA cannot identify affordable compliance technologies, then
EPA must identify affordable variance technologies, pursuant to section
1412(b)(15) of the SDWA. A variance technology is one that provides the
maximum contaminant removal, or inactivation, that is affordable,
considering the quality of the source water to be treated and the
expected useful life of the technology, and that the Agency determines
is protective of public health. To date, EPA has found no NPDWRs
``unaffordable'' for small systems.
The focus of the current national-level affordability analysis is
the household. Treatment technology costs are presumed affordable to
the typical household if they do not cause median water bills to exceed
an affordability threshold of 2.5 percent of MHI. This approach assumes
that affordability to the median household in a system size category
can serve as an adequate measure for the affordability of technologies
to the size category as a whole.
The current national-level affordability criteria consider current
annual water bills, or baseline cost, the incremental cost of the new
regulation, and the affordability threshold (i.e., 2.5 percent of MHI).
For each NPDWR, EPA estimates the baseline cost using annual sales
revenue per residential connection from the most recent Community Water
System Survey (CWSS). The CWSS is a national survey that the Agency
conducts and is designed to compile operating and financial information
from a statistically representative sample of community water systems.
EPA subtracts this baseline from the affordability threshold to yield
an ``expenditure margin.'' The Agency then compares this expenditure
margin with the projected per household treatment costs for a new rule
to make affordable technology determinations. As previously stated,
this national affordability threshold currently sets the maximum
affordable water bill at 2.5 percent of the MHI for the median system
in a given size category (e.g., public water systems serving (1) a
population of 10,000 or fewer but more than 3,300; (2) a population of
3,300 or fewer but more than 500; and (3) a population of 500 or fewer
but more than, or equal to, 25).
Some stakeholders have argued that the current criteria are too
stringent and fail to recognize situations in which a significant
minority of systems within a size category may find a regulation
unaffordable. After seven years of experience with the current
criteria, EPA agrees it is time to consider refinements to address the
situations of communities with below average incomes or above average
drinking water and treatment costs.
In today's notice EPA has changed the term it uses to refer to the
procedures for evaluating the affordability of compliance technologies.
Today's notice refers to an ``affordability methodology'' rather than
``affordability criteria.'' EPA believes the term ``methodology''
better describes its procedures for determining small system
affordability of NPDWRs. EPA again reiterates that this methodology
imposes no regulatory requirements on the public. Its only purpose is
to guide EPA in making small system affordability determinations under
the SDWA. EPA may continue to update and refine this methodology as
appropriate in the future.
III. Affordability Methodology
As part of the 2002 appropriations process, Congress directed EPA
to review and update the national-level affordability methodology. In
response, EPA sought the advice of its Science Advisory Board (SAB) and
the National Drinking Water Advisory Committee (NDWAC). This section
summarizes the SAB and NDWAC recommendations to EPA for revising the
national-level affordability methodology, presents the key issues EPA
considered in evaluating its affordability methodology, and discusses a
range of options for revising the existing national-level affordability
methodology.
A. The EPA's Science Advisory Board Recommendations on Affordability
The EPA SAB is a public advisory group that provides extramural
scientific information and advice to the Administrator and other EPA
officials. The Board is structured to provide balanced and expert
assessment of scientific matters related to problems facing the Agency.
In March 2002, the EPA asked the SAB to consider the economic
issues associated with the current national-level affordability
methodology, as well as the factors that were used to establish the
methodology. The SAB's Environmental Economics Advisory Committee met
twice to prepare recommendations regarding four key topics:
1. EPA's approach to determining affordability for small systems.
2. Components of the affordability determination method.
3. Source water and regional disparities.
4. Whether financial assistance should be considered in EPA's
national-level affordability methodology.
The SAB's findings and recommendations on these topics were
published in the report Affordability Criteria for Small Drinking Water
Systems: An EPA Science Advisory Board Report (EPA-SAB-EEAC-03-004)
which can be found in the EPA Docket. The discussion in today's notice
summarizes the key findings with respect to the four general areas
noted above.
1. EPA's Approach To Determining Affordability for Small Systems
The SAB found that EPA's approach to determining affordability for
small systems addressed equity, efficiency, and administrative
practicality considerations. However, the SAB recommended that the
Agency consider some modifications to address long-term efficiency
issues (i.e., allowing variances potentially inhibit movement toward
small system consolidation) and to more effectively deal with the
diversity among small systems.
[[Page 10674]]
2. Components of the Affordability Determination Method
a. Measures other than median. The SAB highlighted some concerns
with relying on median household income as the basis for the
affordability threshold for small systems. One concern is that it does
not reflect income inequality within water systems. That is, even if
the median household can afford to pay the increased water bill, poorer
households within a water system may find it unaffordable. Another
concern about using median household income arises from income
inequality across water systems within a size class. That is, even if
the median system in a size category can afford to pay for a treatment
technology, poorer systems may find it unaffordable.
The SAB identified three approaches to account for these income
inequalities. To address within-system income inequality, SAB suggested
that EPA could keep the current affordability formula, but specify a
lower household income percentile within water systems (instead of the
current MHI) such as the 10th or 25th percentile. To address between-
system income inequality, SAB suggested that EPA could consider whether
a significant percentage of systems (e.g., 10 percent or 25 percent)
fall below the threshold, even when the median system does not. A third
approach that may address both issues involves basing the threshold on
some statistical measure of dispersion, such as variance or standard
deviation, in addition to the mean (i.e., basing it on 1.5 standard
deviations below the mean household income within a system size
category).
b. Alternatives to 2.5 percent as the income percentage. The SAB
highlighted the fact that the national affordability threshold has
never been exceeded and that there was evidence suggesting that some
small water systems have genuinely struggled with compliance costs.
They believe that this suggests that the 2.5 percent threshold is too
high, and that a lower cutoff should be used resulting in a greater
likelihood that small systems variances would be authorized.
c. Alternatives to the expenditure baseline calculation. The use of
an expenditure baseline (e.g., current water bills) potentially has the
effect of causing early regulations to be considered affordable,
whereas later, if the affordability threshold is exceeded, even
regulations with trivial costs could be found unaffordable to small
systems. The SAB recommended eliminating the expenditure baseline from
the formula and evaluating the affordability of each set of regulations
incrementally (i.e., where the cost of each new rule is compared to a
percentage of household income). EPA notes that in practice, this has
not been an issue, as the expenditure margin calculated using 2.5
percent of MHI has widened, not narrowed, over time.
3. Source Water and Regional Disparities
a. Ground water versus surface water. The SAB noted that a
significant number of (typically) small rural communities have
historically relied on ground water as their source of supply with
little or no treatment. For these communities to comply with new
drinking water regulations, they may incur costs of establishing a
Awhole treatment system@ rather than simply adding onto an existing
system. While this may be more likely for groundwater systems, the SAB
noted that some surface water supplies also require little treatment.
The SAB also noted that there is great variation in treatment costs for
both surface water and ground water systems. Therefore, the SAB
recommended that the affordability methodology not differentiate
between ground water and surface water systems.
b. Regional versus national basis. The SAB discussed making
determinations on a regional or even local basis as well as adding an
urban/rural distinction. The SAB stated that ``regional income measures
and expenditure baselines would capture affordability relative to the
resources available in a community more accurately than the national
values; however, a national affordability threshold is necessary to
implement the fairness goal.''
4. Financial Assistance
Funding is available to assist small systems through the Drinking
Water State Revolving Loan Fund and the Rural Utilities Service of the
U.S. Department of Agriculture. However, it is not available to all
systems because affordability is only one criterion used in awarding
this type of assistance. The SAB stated that since this funding is only
available to some systems, it should not affect the national-level
affordability determination.
B. The National Drinking Water Advisory Council's Recommendations on
Affordability Criteria
One of the formal means by which EPA works with its stakeholders is
the National Drinking Water Advisory Council. The NDWAC, comprised of
members of the general public, State and local agencies, and private
groups concerned with safe drinking water, advises the EPA on
everything that the Agency does relating to drinking water. To assist
in this process, the NDWAC forms work groups of experts to perform
assessments of specific drinking water issues. The work groups prepare
reports and recommendations that the NDWAC considers when making its
recommendations to EPA.
The NDWAC Affordability Work Group met five times between September
2002 and January 2003. The NDWAC Work Group was comprised of 18
individuals representing an array of backgrounds and perspectives.
Collectively, these individuals brought into the discussion the
perspectives of State, local, and tribal governments, environmental and
consumer groups, drinking water utilities, small system advocates,
technical assistance providers, and academia.
The NDWAC Work Group was specifically asked--based on six charge
questions posed by EPA--to provide advice on EPA's national-level
affordability methodology, the process used to derive the methodology,
and EPA's approach to applying this methodology to NPDWRs. The six
questions were as follows:
1. Should MHI or another income measure (such as per capita income)
be used for the income level?
2. Should 2.5 percent or another percentage be used as the income
percentage for determining the maximum affordable water bill, and what
is the basis for an alternative selection?
3. How should the expenditure baseline be adjusted to account for
new rules?
4. Should separate affordability criteria be developed for surface
and ground water systems?
5. Should financial assistance be incorporated in the calculations
of the expenditure baseline?
6. Should regional affordability criteria be developed, given
current data limitations?
The NDWAC's findings and recommendations on these topics were
published in the report Recommendations of the National Drinking Water
Advisory Council to U.S. EPA on Its National Small Systems
Affordability Criteria (NDWAC, 2003) and can be found in the EPA
Docket. The discussion in today's notice summarizes the key findings
with respect to the six general areas noted earlier.
[[Page 10675]]
1. Should MHI or Another Income Measure (Such as Per Capita Income) Be
Used for the Income Level?
The NDWAC found that since the MHI is clearly defined and available
for all regions of the nation, it was the most appropriate income
metric to use for this purpose at the time of the report. The NDWAC
members noted that a better metric may be found in the future.
2. Should 2.5 Percent or Another Percentage Be Used as the Income
Percentage for Determining the Maximum Affordable Water Bill, and What
Is the Basis for an Alternative Selection?
The NDWAC recommended that EPA replace its current approach with an
incremental approach where the cost of each new rule is compared to a
percentage of household income (e.g., one percent) because it ``is
theoretically sounder, is simpler to administer, and has greater
transparency than the current EPA method.'' The NDWAC observed that the
incremental approach permits EPA to assess each new rule independently
of the cumulative costs of preceding regulations. While this
recommendation does not involve calculating a maximum water bill, the
NDWAC did recommend that the incremental affordability threshold be set
at a fixed percent of MHI.
The NDWAC stated that the incremental percentage of MHI could be
based on an analysis of willingness to pay measures (comparable
expenditures as a percent of MHI), defensive expenditures (i.e.,
bottled water or point-of-use/filter devices), or other considerations
related to household affordability such as a ``doubling of current
water bills.'' The NDWAC did not believe that an affordability
threshold should be greater than twice the amount of current household
water bills. The NDWAC stated that national data indicated the average
water bill for households amounted to 0.5-0.6 percent of MHI. In
addition, NDWAC stated that one percent of MHI was approximately equal
to 1.5 times the cost of point-of-use technologies used to treat water.
Based on these observations, the NDWAC recommended that EPA use one
percent of MHI as the incremental affordability threshold.
3. How Should the Expenditure Baseline Be Adjusted To Account for New
Rules?
The NDWAC recommended an incremental approach that eliminates the
need for establishing or updating an expenditure baseline.
4. Should Separate Affordability Criteria Be Developed for Surface and
Ground Water Systems?
The NDWAC recommended that EPA use the same criteria for surface
water and ground water systems. The NDWAC Work Group observed not only
minimal cost differences between surface and ground water systems, but
also that treatment costs vary widely for both types of systems.
5. Should Financial Assistance Be Incorporated in the Calculations of
the Expenditure Baseline?
The NDWAC recommended an incremental approach that eliminates the
need for establishing or updating an expenditure baseline. However, if
EPA retains its present approach to making the national affordability
determination, the NDWAC recommended incorporating financial assistance
into the calculations if the financial support is generally available
to all systems nationwide. The NDWAC further recommended that States
consider the availability of financial assistance in their analysis and
calculations when determining whether a variance should be granted to a
particular system, regardless of EPA's approach to making the national
affordability determination.
6. Should Regional Affordability Criteria Be Developed, Given Current
Data Limitations?
The NDWAC recommended that EPA establish differential regional
affordability criteria when sufficient supporting data are available.
In particular, the NDWAC recommended that EPA separate the MHI into
rural and urban categories to more accurately reflect actual ability
and willingness to pay.
7. NDWAC Perspective
The NDWAC adopted the Work Group report with minor modifications to
some of the Work Group's recommendations, and provided additional
recommendations and perspective on affordability issues associated with
small public water systems. These are summarized below. The
recommendations of the NDWAC Work Group were made in the context of the
SDWA requirement to make affordability-based variances available to
small systems when the statutory criteria are satisfied. However, the
NDWAC did not believe that this is generally the best approach for
addressing affordability issues at small systems. The NDWAC stated
specifically that ``significant practical, logistical, and ethical
issues mitigate against the use of variances.''
The NDWAC noted that the regulatory burden associated with the
procedures for obtaining a variance (40 CFR part 142, subpart K) may be
substantial to both small drinking water systems and primacy (primacy
enforcement) agencies. Furthermore, the NDWAC found that ``the
potential acceptance of lower water quality for disadvantaged
communities is ethically troublesome.''
The NDWAC believes that alternatives to the variance process,
including cooperative strategies (e.g., State leadership to promote
consolidation or other types of cooperation among small systems), and
targeted use of funding to disadvantaged water systems (e.g.,
supporting individual households with a Low-Income Water Assistance
Program funded through Congressional appropriation) are more
appropriate means to address affordability issues associated with small
public water systems that cannot afford to comply with a NPDWR.
8. NDWAC Work Group--Minority View
Through its representative on the Work Group, the National Rural
Water Association (NRWA) filed a minority report indicating
disagreement with the recommendations of the majority of the Work Group
members. The minority report is entitled Small and Rural Community
Affordability Consensus Report and is included as an appendix to the
NDWAC Report. The NRWA Report identifies three issues on which it
dissents from the NDWAC recommendations.
First, the NRWA Report states that the NDWAC Work Group recommended
affordability level is ``clearly unaffordable for millions of low-
income families and many communities by any reasonable definition of
affordable.'' The NRWA Report also identifies a problem with the use of
median household income (MHI) as a metric for determining
affordability, noting that, ``The fact that a certain level of
expenditure is affordable to the median income household in a community
tells us very little about the ability of the low-income households in
the community to afford the same levels of expenditure.'' To address
these concerns, the NRWA suggested an alternative ``Safe and Affordable
Variance Approach'' under which EPA would list variance technologies
for each applicable rule, and States would decide on a case by case
basis if a variance technology is appropriate. Under this approach, all
NPDWRs would be found potentially ``unaffordable'' at the national
level, and it would be up to States to determine
[[Page 10676]]
which small systems actually could not afford to comply and thus were
eligible for a variance.
Second, NRWA found that the NDWAC Work Group recommendations do not
``provide a reasonable and workable small systems variance technology
program as mandated in the SDWA.'' NRWA expressed concern that the
NDWAC Work Group's recommended affordability level was designed to
avoid requiring EPA ``to determine a variance technology policy, which
incidentally is the Congressionally prescribed solution to unaffordable
EPA rules.''
Finally, the NRWA identified concerns with the NDWAC
recommendations regarding consolidation, USDA Program Initiatives, low-
income water assistance programs (LIWAP) and other potential federal
initiatives. NRWA found these to be ``steps in the wrong direction for
assisting small and low-income communities to comply with rules because
each recommendation shares a common theme of eroding local government
authority, control and protection.''
In developing the proposed revisions to its national affordability
methodology, EPA has carefully considered the recommendations of both
the NDWAC majority report, and the NRWA minority report.
C. Key Factors Considered in Developing Affordability Methodology
Options
Based on the recommendations of the SAB, the NDWAC and the NRWA,
the Agency identified three key factors that it considered in
developing revisions to its affordability methodology: Variability in
household costs of water treatment, variability in small system ability
to pay, and the need for improved implementation at the Federal level
of the small system variance provisions of the SDWA. This section
discusses these issues.
1. Variability in Household Costs of Water Treatment
Within and among the approximate 50,000 small systems in the U.S.,
there are a number of factors that affect the household cost of a given
technology. Among these, the SDWA requires the Agency to consider two:
population served and source water quality.
a. Population served. EPA currently selects the median sized system
as representative of the costs within a system size category and
estimates the household costs for each of the technologies that can
achieve compliance with the primary drinking water standard. In
general, total costs for installation, operation, and maintenance of
treatment units are greater for systems that serve large populations
than for systems that serve small populations. However, on a per
household basis, the opposite is true. Because of fixed costs and
substantial economies of scale, the per household costs of treatment
are higher for small water systems (especially very small systems
serving less than 500 people) than for large regional systems. It was
this concern that led Congress to include the affordability-based small
system variance provisions in the 1996 SDWA amendments.
Table III-1 demonstrates the increasing per household cost for
compliance as system size decreases by presenting the average household
costs for compliance among system size categories for recently
promulgated or proposed drinking water standards. In addition to
economies of scale, average household costs presented in Table III-1
are also affected by larger systems being more likely to have multiple
sources of water, not all of which will have source water
concentrations of a contaminant that require treatment.
Table III-1.--Comparison of Average Costs \1\ Per Household by System Size for Three Recent Rulemakings
----------------------------------------------------------------------------------------------------------------
Stage 1 DBPR
System size Arsenic \2\ Radon \3\ \4\
----------------------------------------------------------------------------------------------------------------
25-100.......................................................... $327 $270 $177
101-500......................................................... 163 99 123
501-1,000....................................................... 71 27 84
1,001-3,300..................................................... 58 27 55
3,301-10,000.................................................... 38 17 27
10,001-50,000................................................... 32 12 14
50,001-100,000.................................................. 25 12 8
100,001-1 million............................................... 21 10 7
> 1 million..................................................... 1 10 6
----------------------------------------------------------------------------------------------------------------
\1\ Costs are an average of the treatment costs for all systems installing treatment in the size category. The
majority of these systems do not need significant removal of the contaminant, since they are just above the
MCL.
\2\ Costs are based on Exhibit 6-17 in the Arsenic in Drinking Water Rule Economic Analysis (EPA 815-R-00-026)
and can be found in the Docket.
\3\ Costs are presented for compliance with the proposed Radon MCL of 300 pCi/L and are taken from Table XIII.11
of the Proposed Radon Rule preamble (64 FR 59246-59378) and can be found in the Docket. The costs presented do
not reflect the proposed AMCL in combination with a multi-media mitigation plan.
\4\ The Stage 1 DBPR economic analyses does not present an average of household costs across influent and
treatment conditions as was done in arsenic and radon. The values listed are a weighted average from tables F-
1 through F-4 in Appendix F of the November 1998 Regulatory Impact Analysis of Final Disinfectant/Disinfection
By-Products Regulations (EPA 815-B-98-002) and can be found in the Docket.
As the table shows, there is significant variability in per
household costs, even within the statutory system size categories,
particularly within the smallest size category. For example, for the
arsenic rule, the average per household cost for systems serving <101
persons was roughly double that for systems serving 101-500 persons,
while for the proposed radon rule, it was roughly triple. For the Stage
1 DBP rule, the average per household cost for systems serving <101
persons was roughly 50 percent higher than that for systems serving
101-500 persons. These figures suggest that the per household costs for
the median sized system within a statutory size category may not be the
best proxy for per household costs within the category generally,
particularly for the smallest size category.
b. Source water quality. The type of treatment a system must
install and the treatment costs are also affected by the quality of the
source water, including the concentration of the contaminant to be
removed, the pH of the source water, and the presence of other
dissolved or suspended solids. The concentration of the contaminants
may affect the size of the treatment units, the amount of treatment
chemicals that must be used,
[[Page 10677]]
or the amount of residual to be disposed of--all of which affect the
cost to install, operate, and maintain the treatment units. Source
water quality parameters such as pH or the presence of dissolved solids
can make some treatment technologies ineffective, requiring a system to
select a different technology or to install and operate a pretreatment
system that removes or adjusts these parameters so that the treatment
to remove the contaminant will be effective. Source water varies
significantly among public water systems. It is affected by the source
water type (ground water or surface water) and the conditions in the
watershed or aquifer from which it is drawn.
Population served and source water quality are perhaps the most
significant factors that affect the household cost of technologies.
Therefore, it is appropriate that the SDWA requires the Agency to
consider these factors in its evaluation of the affordability of new
drinking water rules. The national affordability methodology should
address the variability in these factors, such that a reasonable range
of potential household costs are considered by the Agency in its
national affordability determination.
2. Variability in the Ability of Small Systems To Pay for Treatment
Under the approaches EPA is currently considering for revising the
national affordability methodology, EPA would continue to use an income
threshold (i.e., a fixed percentage of household income) as a screen to
make general findings of unaffordability. The affordability threshold
has two components: the income percentile and the income percentage.
The income percentile is the value selected from the distribution of
household incomes. It can be based either on the distribution of
individual incomes, or on the distribution of system-level median
incomes. The income percentage is the percentage by which the selected
income level is multiplied to determine the affordable level of per
household treatment costs. For example, EPA's current threshold is 2.5
percent of the MHI for the median system in a given size category
(currently $44,544 for the smallest size category). In this example,
the income percentile is 50 percent and it is based on the distribution
of system-level median incomes. The income percentage is 2.5 percent
($1,114, or $44,544 times 2.5 percent).
EPA views the affordability determination to be made under SDWA
Section 1412(b)(4)(E) as a general screen to determine the likelihood
that a significant number of systems may find a regulation
unaffordable. Congress left to the primacy (primacy enforcement)
agencies (usually the States) the task of determining which particular
small systems cannot afford compliance technologies once EPA determines
that affordability may be an issue for a particular regulation. The
Agency established household income as the basic measure to determine
affordability for the current methodology. If the households served by
a system do not have income available to pay for increased water bills,
then the modifications to the system are unaffordable. Because systems
ultimately pass additional water treatment costs on to customers, EPA
believes that household income remains the appropriate basis for
determining affordability.
EPA believes that system-level MHI is the most appropriate income
metric for determining water system affordability because it meets
several reasonable criteria for a national-level affordability
methodology. First, MHI data are available nation-wide. Second, the
calculation of system-level MHI is simple (it is based on readily
available Census data on household income), and finally, the metric can
be easily understood. Consequently, it provides a consistent income-
based metric for determining affordability or ``ability to pay'' for
new drinking water regulations. Additionally, the NDWAC supported the
use of system-level MHI as the metric for determining small water
system affordability.
EPA used system-level MHI as the basis for its original
affordability threshold for several reasons. EPA stated that the
approach was based on the assumption that affordability to the median
household served by a system can serve as an adequate measure of the
affordability of technologies to the system as a whole. EPA does not
believe that the economic circumstances of the poorest households
within a system should drive its national level affordability
methodology. Communities have other mechanisms (e.g., financial
assistance, rate structures) for addressing inequalities within a
community.
EPA chose the median system-level MHI for its original
affordability methodology, based on income data from the 1995 CWSS. EPA
reasoned that the median is a measure of central tendency and would
thus be appropriate for a national level affordability screen because
it reflects the characteristics of ``typical'' systems rather than
those at the low end of the income distribution. However, one
limitation of basing the national level affordability determination on
the median system is that there may be a significant number of systems
below the median that might find a regulation unaffordable even when it
is affordable to the median system. As a practical matter, this concern
can be addressed in two equivalent ways, basing the threshold on a
lower MHI percentile (e.g., 25th or 10th percentile, as was suggested
by the SAB), or basing it on a lower percentage of the median MHI. The
revised approaches that EPA is considering would retain the median MHI
and consider lower percentages (rather than using a lower percentile of
MHI) because EPA believes this method is more transparent and better
supported by existing data. However, EPA wishes to emphasize that
looking at lower percentages is to some extent a proxy for looking at
lower percentiles. In other words, if EPA were to ultimately select a
threshold of, say, 0.5 percent of MHI (one of the options presented
below), this is partially in recognition of the fact that that
particular income level ($220 for the 25-500 system size category)
represents a significantly higher percentage of income for systems at
the low end of the income distribution, and it is exactly these systems
that are most likely to find a new regulation unaffordable and may thus
need a small system variance.
In examining the distribution of system-level income across a size
category, another argument in favor of applying a lower income
percentage to the median system, as opposed to applying a higher
percentage to a significantly below-median system (as ranked by its
MHI) is the shape of the distribution of system-level MHIs. Toward the
lower end of the range, especially at around the 10th percentile
system, the income figures tend to drop off sharply. This implies that
relatively slight data inaccuracies could have relatively large impacts
on estimated income levels. Given the inherent difficulties of
measuring income, EPA believes the median system provides a more
reliable basis for its national affordability methodology than a system
at the low end of the income distribution (e.g., 10th percentile). This
is not to suggest that EPA is not concerned about affordability for
these systems. On the contrary, it is exactly these systems that are
most likely to have affordability issues. But EPA believes that these
can be better addressed by choosing a lower income percentage and
applying it to the median system MHI.
As previously stated, EPA established the current threshold at 2.5
percent of median system MHI. However, that
[[Page 10678]]
income percentage was applied to a cumulative approach. As recommended
by both the SAB and NDWAC, EPA is considering revisions that would drop
the expenditure baseline and move to an incremental approach. This
means that the total cost of water (including current costs) could be
significantly higher than whatever affordability threshold EPA selects,
because the threshold is compared only to the incremental cost of
complying with the regulation. In addition, as water systems are
subject to future regulations, they could potentially be required to
undergo expenditures up to the affordability threshold multiple times.
The current methodology has also never triggered a finding that a
regulation was unaffordable, while the evidence suggests that there may
in fact be significant numbers of systems that have struggled with
compliance costs for some recent regulations. For all of these reasons,
the options EPA is considering for revising its affordability
methodology are based on a range of income percentages significantly
below the current 2.5% threshold.
3. Need for Improved Implementation at the Federal Level of the Small
System Variance Provisions of the SDWA
As previously stated, SDWA section 1415(e) authorizes a primacy
(primacy enforcement) agency to grant small systems a variance from
compliance with an MCL or treatment technique for a NPDWR only if EPA
has determined that there are no affordable compliance technologies for
small systems and EPA has identified affordable variance technologies
that are protective of public health. To date, EPA has found no NPDWRs
(either existing or new) unaffordable using the current methodology.
However, the SAB and various stakeholders have suggested, and EPA
recognizes, that some small systems have legitimate affordability
concerns regarding compliance with some of these regulations.
EPA recognizes that its current approach has not allowed small
system variances to be included among the options that States and
systems consider as they struggle to address small system affordability
issues. EPA is therefore considering revisions that would make a
national level determination of unaffordability significantly more
likely, thus triggering the listing of affordable variance technologies
that are protective of public health. This will in turn give primacy
states which choose to include small system variance provisions in
their drinking water programs the option to evaluate small system
variance applicants on a case-by-case basis and to authorize adoption
of affordable alternatives to compliance technologies that provide some
measure of regulatory relief while still protecting public health.
D. Affordability Methodology Options
Based on the SAB and NDWAC recommendations, the Agency is
considering several options under which the incremental increase in
household water costs that is expected to occur as a result of the
system installing, operating, and maintaining a treatment technology
required to comply with a NPDWR would be compared to an affordability
threshold based on a percentage of household income. In evaluating
different household cost and affordability threshold options, EPA
considered the three key factors discussed in section III.C (i.e.,
variability in the household costs of water treatment, variability in
the ability of small systems to pay for treatment, and the need for
improved implementation at the Federal level of the small system
variance provisions of the SDWA). This section discusses the household
cost and affordability threshold options EPA is seeking comment on as a
result of this process, and discusses EPA's interpretation of
affordability for both compliance and variance technologies.
1. Calculating Household Costs
There are two issues concerning the calculation of household costs
on which EPA is requesting comment: (1) Should only incremental costs
(i.e., those of complying with the new regulation) be considered, or
the total (i.e., cumulative) cost of water to consumers after the new
treatment technology is installed, and (2) should costs be evaluated
for the 10th percentile or the 50th percentile sized system within a
given small system size category. The following discusses each of these
issues in turn.
EPA is considering using incremental costs of compliance with the
new regulation only, rather than the cumulative costs of providing
water, as the basis for its affordability determination. This is a
change from the Agency's current approach which adds incremental costs
to an expenditure baseline to determine affordability. An incremental
approach would not calculate or consider current household water bills,
nor would it provide a ceiling on the total increase in household costs
due to the cumulative effects of different NPDWRs.
The Agency believes the incremental approach is a better approach
than the current cumulative approach for several reasons. First, the
incremental approach focuses directly on the regulation for which
affordability is being evaluated. The cumulative approach, in contrast,
considers not just the cost of treatment to comply with the new
standard but also takes into account costs for existing water system
improvements, which may involve treatment for odor control, taste, or
other items not regulated under NPDWRs, as well as costs for
distributing and storing water. These costs may not be relevant for
determining whether a system can afford to comply with NPDWRs. In
addition, the cumulative approach could have the effect of making new
rules with similar system costs affordable in the near-term, but not in
the future, as cumulative costs increase. Additionally, an incremental
approach is consistent with SAB and NDWAC recommendations. An
incremental approach may also be more transparent than the cumulative
approach because it deals with fewer variables and calculations in that
it only considers the costs of the regulation in question. EPA requests
comment on moving to an incremental approach for calculating household
costs.
Under its current national affordability methodology, EPA estimates
household costs for small systems by estimating each technology's per
household cost for the 50th percentile (median) system size in each
size category. This approach assumes that affordability to the median
sized system within a small system size category can serve as an
adequate measure for the affordability of technologies to systems
within the size category as a whole. However, household costs for
systems at the low end of a system size category are likely to be
significantly higher than costs for the median-sized system. This is
particularly true for the smallest system size category (serving 25 to
500 people). Thus, even if a NPDWR is affordable to the median sized
system within this size category, there may be a significant number of
systems at the low end of this category (i.e., serving less than 100
people) for which compliance with the standard would not be affordable.
To address this concern, EPA is considering basing its
affordability determination on the incremental per household costs for
the 10th percentile system size in each system size category rather
than the median. This approach recognizes that smaller systems do not
enjoy the same economies of scale and have a smaller customer base over
which to spread fixed costs of providing water. In general, household
costs would most likely be significantly greater for the 10th
percentile than for
[[Page 10679]]
the 50th percentile sized system in a system size category due to this
lack of economies of scale.
For the current methodology, the Agency determined the 50th
percentile system size by compiling the population sizes for all
systems in a given size category and finding the system where half of
the systems serve fewer individuals. For today's notice, EPA used the
same method to determine the 10th percentile system size (i.e., finding
the system where 10 percent of the systems serve fewer individuals).
Table III-2 provides an example of household costs for the 10th and
the 50th percentile size systems within each of the small system size
categories. This example demonstrates that the greatest difference in
household costs are typically found in the 25-500 size category, as the
estimated household cost for the 10th percentile size system is more
than double that for the 50th percentile (median) size system. It is
this smallest system size category where there is most likely to be an
affordability concern.
Table III.-2--Comparison of Annual Per Household Costs of Ion Exchange Treatment
----------------------------------------------------------------------------------------------------------------
10th Percentile sized system 50th Percentile sized system
---------------------------------------------------------------
System size Population Treatment Population Treatment
size costs size costs
----------------------------------------------------------------------------------------------------------------
25-500.......................................... 40 $540 120 $200
501-3,300....................................... 600 72 1,195 54
3,301-10,000.................................... 3,609 40 5,325 35
----------------------------------------------------------------------------------------------------------------
Note: Costs are based on cost curve equations in the document Technologies and Costs for Removal of Arsenic from
Drinking Water (EPA-815-R-00-028). System sizes are determined from SDWISFED January 2004.
EPA requests comment on whether it should continue to base
affordability determinations on the median system within a size
category, or should move to an approach based on costs to the 10th
percentile size system.
Section 1412(b)(15)(A) of SDWA requires the Administrator to list
affordable variance technologies ``considering the size of the system
and the quality of the source water.'' Under the current methodology,
EPA estimates household costs for small systems within a size category
under a range of scenarios that represent the range of expected source
water conditions that these systems are likely to encounter. Thus, the
Agency might find a new regulation affordable for systems with a
particular source water quality, but not for systems in the same size
category with a different source water quality. The Agency plans to
continue to evaluate household costs in the same manner. This involves
estimating the range of expected levels of a contaminant that may be
present in the source water based on available data, as well as
considering other source water parameters likely to affect the
efficiency of identified treatment technologies, and estimating
incremental per household costs separately for each relevant source
water quality. If a new regulation is found unaffordable only for some
subset of systems within a size category, based on poor source water
quality, only those systems with comparably poor source water quality,
and for which the regulation may thus be unaffordable, would be
eligible to apply for small system variances. EPA requests comment on
continuing to evaluate source water quality in this manner.
2. Affordability Determination Options
EPA is requesting comment on two distinct approaches for
determining affordability. Both approaches would start by determining
whether the incremental household cost of treatment to meet a new
regulation exceeds an increment based threshold. Under the first
approach, this would be the sole criterion for determining
affordability. Under the second approach, if EPA were to find the
compliance technology affordable at the national level, we would then
take the additional step of identifying counties that are economically
at-risk, and list affordable variance technologies for small systems in
these counties. These systems could then apply to their primacy agency
for a variance. In other words, EPA would determine that any regulation
is potentially unaffordable for small systems in these economically at-
risk counties, and leave it to the primacy agency to evaluate
affordability individually for systems applying for a variance, as they
are required to do under the SDWA for all small system variance
requests if the State includes such variances in its drinking water
program. EPA requests comment on which of these two approaches to
adopt.
EPA further requests comment as to what the most appropriate
national affordability threshold is and what system size should be used
to calculate costs (i.e., 10th or 50th percentile) for each of the
three population size categories defined in SDWA (i.e., 25-500, 501-
3,300, and 3,301-10,000).
Specifically, EPA requests comment on three affordability
thresholds: 0.25 percent, 0.50 percent, and 0.75 percent of the median
MHI for small systems in a particular small system size category. The
thresholds represent an approximate one third, two thirds, and 100
percent increase in a current median water bills though for any
individual system these percent increases might be greater or smaller.
EPA also requests comment on comparing the selected threshold with
household treatment costs for either the 10th percentile or 50th
percentile system size in each of the three population size categories.
Table III-3 presents the three thresholds as a percentage of the
median incomes among small systems, the current dollar amount for each
threshold for a given size category, and the current median, 10th
percentile and 90th percentile water bills for each system size
category. While the options under consideration are based on an
incremental approach, commenters can see from the table what the 10th
percentile, median, and 90th percentile projected total cost of water
would need to be both before and after a regulation for compliance
technologies to be considered unaffordable at a national level. For
example, if the 0.5 percent threshold option were selected, compliance
technologies would be considered unaffordable if they raised the median
water bill for a system in the smallest size category from about $300
to about $520 per year. This would also have the effect of raising the
10th percentile water bill (i.e., a system with low baseline costs)
from about $105 to about $325 per year, and of raising the 90th
percentile water bill (i.e., a system with high baseline costs) from
about $580 to about $800 per year. It should be noted that over time,
the total baseline cost of water would rise as new
[[Page 10680]]
regulations are added, but under the incremental approach being
considered today, the affordability threshold would not be adjusted to
compensate for this rise, as it is under the current expenditure
baseline approach.
Table III-3.--Affordability Threshold Options
----------------------------------------------------------------------------------------------------------------
Current dollar value (median system MHI 1)
-----------------------------------------------
Income threshold 25-500 501-3,300 3,301-10,000
($44,544) ($40,872) ($42,459)
----------------------------------------------------------------------------------------------------------------
Threshold 2, 3 = 0.25% MHI...................................... $110 $100 $110
Threshold 2, 3 = 0.50% MHI...................................... $220 $200 $210
Threshold 2, 3 = 0.75% MHI...................................... $330 $310 $320
Current Median Water Bill....................................... $299 $294 $285
Current 10th Percentile Water Bill.............................. $106 $176 $151
Number of Systems <10th Percentile 4............................ 3,013 1,426 466
Current 90th Percentile Water Bill.............................. $576 $492 $488
Number of Systems >90th Percentile 4............................ 3,013 1,426 466
-----------------------------------------------
Total Number of Systems 4................................... 30,1323 14,263 4,661
----------------------------------------------------------------------------------------------------------------
1 Based on 2000 U.S. Census figures adjusted to 2004 using national trends and then to September 2005 using the
Consumer Price Index.
2 Percentage of the median value (50th percentile) of a distribution of system-level median household incomes.
3 Threshold calculations are adjusted to two significant figures.
4 Total number of systems in each size category based on January 2004 SDWIS/FED.
The second approach is based upon analysis presented in two papers
prepared by Scott Rubin (Rubin, 2001 and Rubin, 2002). Under this
approach, EPA would use a two-part test to screen at first the national
level and then the county level for systems that cannot afford
compliance.
The national-level screen would work the same way as under the
first approach, except that because of the additional screen for at-
risk counties, EPA might choose a higher percentage of median system
MHI for the national screen than it would under the first approach.
Should the national-level screen find that the compliance treatment
costs are affordable for some or all small systems, the Agency would
proceed to a county level screen to identify economically at-risk
counties, in which States could still grant variances.
For any small drinking water system in counties deemed to be at-
risk in this second part of the affordability test, compliance
technologies would be considered potentially unaffordable, regardless
of EPA's national per household cost estimates, and it would be up to
the primacy agency to grant variances where appropriate based on a
system specific analysis of affordability. That is, States would be
enabled to determine, based on the criteria in SDWA section 1415(e),
whether to grant small system variances to small systems in those at-
risk counties.
EPA is requesting comment on three socioeconomic triggers for the
county-level screen: (1) MHI less than or equal to 65 percent of the
national MHI, (2) U.S. Census Bureau-defined poverty rate at least
twice the national average, or (3) two-year average unemployment rate
at least twice the two-year national average.
Under this option, triggering any one of these measures would be
sufficient to trigger a finding of unaffordability for small systems
within the county. Therefore, this methodology allows for regional
socioeconomic conditions to supplement the national-level affordability
determination. Table III-4 shows how many counties and small systems
would be eligible for variances under this county-level screen.
Table III-4.--The Number of Counties, Small Drinking Water Systems, and the Population Served That Would Be Eligible for Small System Variances Under
the County-Level Screen
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Percent of
Criterion Number of Percent all small systems Percent all Population national
counties \1\ counties \2\ small systems served population \3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
MHI <=0.65 National MHI................................. 356 11.3 3,485 7.3 4,372,677 1.5
Poverty Rate >=Twice National Average................... 81 2.6 532 1.1 950,205 0.3
Two-year Unemployment Rate >=Twice National Average..... 80 2.5 920 1.9 1,391,226 0.5
One or more of the Above................................ 410 13.1 4,249 8.8 5,485,158 1.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Based on 3,140 total counties in the U.S.
\2\ There are 48,025 small drinking water systems in SDWIS that could be linked to counties.
\3\ Based on July 1, 2004 U.S. Census, the national population was 293,655,404.
EPA requests comment on this approach to a county-level
affordability screen, and on the specific criteria listed above for
identifying economically at-risk counties.
3. Identification of Affordable Variance Technologies
As previously stated, SDWA section 1415(e) authorizes a primacy
(primacy enforcement) agency to grant small systems a variance from
compliance with an MCL or treatment technique for a NPDWR only if EPA
has determined that there are no affordable compliance technologies for
small systems and EPA has identified affordable variance technologies
that are protective of public health.
[[Page 10681]]
Under the current methodology, EPA uses the same threshold to
determine affordability for both compliance and variance technologies.
While this seems sensible on its face, it can lead to a situation where
no compliance technologies are found to be affordable, but there are no
variance technologies that are found to be affordable either. As a
result, EPA would not list any variance technologies and primacy
agencies (in most cases the States) would be unable to grant small
system variances under section 1415(e). This could occur even if there
were candidate variance technologies that were both cheaper than the
compliance technologies and protective of public health, if these
cheaper technologies still exceeded a predetermined affordability
threshold. Not listing ``affordable'' variance technologies in this
case would be inconsistent with Congressional intent that States be
provided the authority to grant variances which allow small systems
that cannot afford to comply fully with NPDWRs to instead adopt
alternative protective but less expensive technologies where such
technologies are available.
EPA is thus considering an alternate approach to determining
affordability for variance technologies in situations where there is no
candidate variance technology that falls below the affordability
threshold. Under this approach, EPA would consider variance
technologies ``affordable'' if they are cheaper than the least
expensive compliance technology and still protective of public health.
Of course, the Agency's first choice would still be to list variance
technologies whose costs fall below the affordability threshold if such
technologies are available and protective of public health. As an
example, suppose the affordability threshold were set such that it
equated to an incremental per household cost of $200 per household per
year, and suppose further that the cheapest compliance technology for a
particular size category cost $300 per household per year. If there
were a candidate variance technology that cost less than $200 per
household per year and were protective of public health, EPA would list
this technology. But if there were no such technology, and EPA
identified a candidate variance technology costing $250 per household
per year (and it was protective of public health), EPA would list this
as an affordable variance technology even though its costs exceed the
affordability threshold of $200 per household per year (in this
example). Under this approach, EPA would interpret ``affordability'' of
variance technologies under section 1412(b)(15) as not being limited by
the affordability threshold (i.e., 0.25 percent, 0.50 percent, or 0.75
percent of median system MHI) under section 1412(b)(4)(E). Rather, in
cases where no variance technology had costs below the affordability
threshold, EPA would interpret ``affordable'' for purposes of listing
variance technologies as meaning any technology that is less costly
than the corresponding compliance technologies and that is protective
of public health.
EPA requests comment on this approach to determining affordability
for variance technologies.
EPA reiterates that its national level affordability methodology is
only a screen to make general findings of unaffordability, in
accordance with SDWA section 1412(b)(4)(E), not a definitive finding of
whether the application of a technology at a particular small system
will be affordable. If EPA determines that compliance technologies are
not affordable for small systems in one or more categories, then, under
section 1412(b)(15), EPA must identify variance technologies that are
affordable and protective of public health. Congress left to the
primacy (primacy enforcement) agencies (usually the States) the task of
granting small system variances on a case-by-case basis to those small
systems included in any size/water quality category for which EPA has
determined that compliance technologies are generally ``unaffordable.''
States may utilize EPA's methodology or develop a different methodology
for evaluating the affordability of compliance technologies for
individual systems. Only if the primacy agency finds that compliance is
unaffordable for a specific system, using its chosen affordability
methodology, is it authorized under SDWA to grant a small system
variance, and as a condition of that variance, the system must install,
operate and maintain an alternative variance technology from among the
list identified by EPA at the time the regulation was promulgated.
Further, the system must operate the variance technology in a way that
both EPA (at the national level) and the primacy agency (at the system
specific level) determine to be protective of public health. EPA's
methodology for determining protectiveness of public health is
discussed in Section IV below.
EPA believes that interpreting ``affordable'' to mean something
different for compliance and for variance technologies is a reasonable
way to implement these provisions in a manner consistent with
Congressional intent. First, while Congress provided the same phrase
``affordable, as determined by the Administrator in consultation with
the States'' in both sections of the statute, Congress did not cross-
reference the two provisions and expressly left the definition of
``affordable'' to EPA (in consultation with States). As a result, EPA
believes there is flexibility to interpret the terms differently based
on the different purposes of these provisions. As noted above, the
purpose of the ``affordable'' finding in section 1412(b)(4)(E) is to
serve as a general screen to determine when, as a class, compliance
technologies may not be affordable for entire categories of small
systems. In contrast, the purpose of the ``affordable'' finding in
section 1412(b)(15) is to list for States those technologies that are
generally protective of public health even though the technology would
not achieve full compliance with NPDWRs and that would provide some
relief for small systems for which compliance technology are not
affordable. States must make a site-specific finding of protectiveness
and affordability prior to granting a small system variance and it is
appropriate for them to have protective technologies available to
choose from in order to select the most appropriate for each system.
Finally, to interpret the statute in a way that makes variances
unavailable when there are no affordable compliance technologies
defeats the Congressional purpose in setting up small system variances.
If this approach is adopted, and depending on the threshold
selected, the actual cost of a variance technology could be greater
than the affordability threshold. The lower the affordability threshold
chosen, the more likely this result would be.
IV. Protective of Public Health Methodology
This section presents EPA's approach for determining if an
affordable variance technology is protective of public health. As
background, this section also discusses how EPA considers public health
in establishing drinking water standards.
A. How Does EPA Consider Public Health in Establishing Drinking Water
Standards?
The SDWA requires EPA to consider public health impacts of
contaminants at several steps in the process for establishing NPDWRs.
EPA considers peer-reviewed science and data collected in accordance
with accepted methods to support an intensive evaluation of public
health impacts of
[[Page 10682]]
the contaminant under consideration, which includes factors such as:
Occurrence in the environment; human exposure and risks of adverse
health effects in the general population and sensitive subpopulations;
analytical methods of detection; technical feasibility; and impacts of
regulation on water systems, the economy, and public health. However,
while the general purpose of SDWA is to protect public health from
unacceptable risks that may be posed by contaminants in tap (drinking)
water, the criterion in section 1412(b)(15) that variance technologies
be ``protective of public health'' is distinct from the requirements
for setting drinking water standards.
1. Setting the Maximum Contaminant Level Goal
The Maximum Contaminant Level Goal (MCLG) is the maximum level of a
contaminant in drinking water at which no known or anticipated adverse
effect on the health of persons would occur, and which allows an
adequate margin of safety. MCLGs are non-enforceable public health
goals. Since MCLGs consider only public health and not the limits of
detection and costs and capabilities of treatment technologies,
sometimes they are set at levels which water systems cannot meet using
available technologies, or that can not currently be reliably measured.
EPA has traditionally established MCLGs of zero for known or
probable human carcinogens based on the default assumption that any
exposure to carcinogens might represent some non-zero level of risk. If
there is substantial scientific evidence, however, that indicates there
is a threshold below which no adverse effect is expected to occur, then
a non-zero MCLG can be established with an adequate margin of safety.
For non-carcinogens that can cause adverse noncancer health
effects, the MCLG is based on the reference dose (RfD). A reference
dose is an estimate (with uncertainty spanning perhaps an order of
magnitude) that is likely to be without appreciable risk of deleterious
effects during a lifetime. It can be derived from a no-observed adverse
effect level, lowest-observed adverse effect level, benchmark dose
level (the lowest confidence limit of the dose that will result in a
level of ``x'' percent response), or other suitable point of departure.
Uncertainty factors are generally applied to reflect limitations of the
data used and ensure an appropriate margin of safety.
The RfD is multiplied by typical adult body weight and divided by
daily water consumption. The result is then multiplied by a percentage
of the total allowable daily exposure contributed by drinking water to
determine the MCLG.
2. Setting the MCL or Treatment Technique
Once the MCLG is determined, EPA sets an enforceable standard. In
most cases, the standard is an MCL. When it is not economically and
technically feasible to ascertain the level of a contaminant in
drinking water, EPA may set a treatment technique rather than an MCL.
The MCL is set as close to the MCLG as feasible, which the SDWA defines
as the level that may be achieved with the use of the best available
technology, treatment techniques, and other means that EPA finds are
available taking cost into consideration. The legislative history for
this provision makes it clear that ``feasibility'' is to be defined
relative to ``what may reasonably be afforded by large metropolitan or
regional public water systems.'' \2\ Thus affordability may be
considered in establishing the feasible level, but it is affordability
to large water systems. As noted above, costs are generally
significantly higher on a per household basis for customers of small
systems than for customers of large ones. As a result, what is feasible
(taking cost into consideration) for large systems may not be feasible
(taking costs into consideration) for small ones. To address this
situation, in addition to other tools, SDWA requires EPA to determine
if affordable small system compliance technologies are available, and
when there are none, SDWA requires EPA to identify small system
variance technologies.
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\2\ a Legislative History of the Safe Drinking Water Act,
Committee Print, 97th Cong., 2d Sess. (1982) at 550.
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After determining a feasible level of treatment or treatment
technique based on affordable technologies for large systems, EPA
prepares a health risk reduction and cost analysis to determine whether
the benefits of the feasible level justify the costs. If not, the
Administrator may in some cases set the MCL at a less stringent level
that ``maximizes health risk reduction benefits at a cost that is
justified by the benefits.'' In evaluating the quantified benefits and
costs, EPA has found the ratio of benefits to costs is likely to be
much greater among large systems than it is among small systems. This
is because the per household costs are likely to be significantly
higher for customers of small systems than for customers of large ones,
while the per household benefits will be about the same for both
groups. As a general matter, EPA considers the total cost and benefits
for all systems (large and small) as the principal factor when
determining whether or not benefits of a proposed NPDWR justify its
costs.\3\ Because this analysis will generally be dominated by the
costs and benefits for large systems, it can mask a situation where
benefits justify costs for large systems but would not justify the
significantly higher costs for small systems.
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\3\ The one exception is that, under the SDWA, EPA must exclude
systems likely to be granted small system variances from this
determination based on information provided by the States.
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This is not to suggest that the costs and benefits at small systems
can never influence NPDWRs. In fact, small system impacts were a factor
in the Agency's determination to utilize this SDWA authority to
establish the MCLs for arsenic and uranium at levels less stringent
than the feasible levels. However, use of this authority will not
ensure that a drinking water standard is affordable to small systems;
therefore Congress provided the small system variance provisions as a
mechanism for EPA to recognize in the standard setting process the
different economic situations of large and small systems.
3. Determining that Variance Technologies are Protective of Public
Health
As discussed in the previous section, EPA sets drinking water
standards based on what is affordable for large systems. In 1996,
Congress amended the SDWA to address affordability issues for small
systems. Rather than change the Congressional mandate by which EPA
establishes drinking water standards (i.e., as close to the MCLG as is
``feasible''), Congress established a new small system variance
provision under which States would be able to grant special variances
to small systems if (1) EPA makes a finding as part of a new drinking
water standard that compliance with the MCL or treatment technique is
``unaffordable'' for specific groups of small systems and identifies
variance technologies that are available, affordable, and ``protective
of public health,'' (section 1412(b)(15)), and (2) the State makes a
subsequent finding that compliance with the new MCL or treatment
technique would be unaffordable for a particular small system applying
for a variance and that an alternative variance technology identified
by EPA would provide adequate protection of human health when installed
by that system (section 1415(e)). Thus, the 1996 amendments established
a two-step process for
[[Page 10683]]
granting these variances under which EPA would make general findings of
unaffordability and protectiveness at a national level, but where the
determinative findings of actual unaffordability and protectiveness at
a specific water system would be made by the State, after consultation
with the affected consumers following the comprehensive public process
for variances set out in section 1415(e) and EPA's regulations at 40
CFR part 142, subpart K.
When granted by the State, a small system variance allows a small
system that cannot afford to comply with a new drinking standard to
install a variance technology that provides treatment which is
affordable and protective of human health. SDWA 1412(b)(15)(A)
specifically recognizes that the variance technology `` * * * may not
achieve compliance with the maximum contaminant level or treatment
technique requirement of such regulation * * *,'' but does require that
the variance technology `` * * * achieve the maximum reduction or
inactivation efficiency that is affordable considering the size of the
system and the quality of the source water.'' Thus, by requiring EPA to
establish affordable variance technologies that are protective of
public health for systems unable to comply with a new drinking water
standard, Congress was clearly intending that EPA consider contaminant
levels above the MCL protective of public health for purposes of
identifying small system variance technologies.
This interpretation is also consistent with the standard setting
process itself, which is designed to identify a feasible MCL or
treatment technique that provides an acceptable level of public health
protection, consistent with the statutory factors considered, which
include cost, but only the cost reasonably affordable to large systems.
As a result of the two-step statutory findings as well as the fact
that Congress clearly intended that the ``protective of public health''
mandate would necessarily encompass situations in which the applicable
federal drinking water standard is not met, EPA views the
protectiveness finding to be made under SDWA section 1412(b)(15) as a
national-level screen, not a definitive finding that a particular
technology or contaminant level is adequately protective for a
particular public water system and its customers. Instead, Congress
left to the primacy agencies (usually States) the task of determining:
(1) Which specific small systems, within a class for which EPA has
determined that compliance is generally ``unaffordable,'' are truly
unable to afford to comply with the standard, and (2) the specific
conditions under which the use of a listed variance technology would be
protective of public health at a particular system. EPA expects that
States would be partially guided by public input from within the
affected communities in making these system-specific determinations,
particularly the determination regarding the appropriate level of
public health protection.
B. Methodology To Identify Affordable Variance Technologies That Are
Protective of Public Health
The Agency requests comment on finding a variance technology to be
sufficiently protective of public health for purposes of the national-
level screen required by SDWA section 1412(b)(15) if the concentration
of the target contaminant after treatment by the variance technology is
no more than three times the MCL. When evaluating variance technologies
for treatment technique standards, EPA similarly requests comment on
finding a variance technology sufficiently protective of public health
if the Agency determines that the expected concentration of the target
contaminant in water treated by the variance technology would not be
more than three times greater than the expected concentration of the
contaminant if the same source water were treated in accordance with
the requirements of the treatment technique. EPA would view this 3x
level as a general guideline, which might be modified for a specific
contaminant if unusual factors associated with the contaminant or EPA's
risk assessment suggested that an alternate level, whether higher or
lower, was appropriate. In such cases, EPA would clearly explain its
reasons for departing from the 3x guideline in the proposed rule and
request public comment on the alternate level.
EPA is required under the SDWA to establish MCLGs based on best
available science. Even the best available science is limited and
therefore has some degree of uncertainty. For contaminants with non-
zero MCLGs, the uncertainty in the estimate of the level of exposure
that is likely to represent an appreciable risk may span an order of
magnitude (i.e., 10 fold or one log unit) or more. For carcinogens, EPA
generally uses a default assumption that sets the MCLG at zero and uses
the cancer slope factor (which contains some uncertainty) to inform its
MCL decision. In addition, SDWA requires that MCLGs be set at a level
at which no adverse effects occur and ``which allows an adequate margin
of safety.'' In many cases, the margin of safety may also span an order
of magnitude or more in recognition of this uncertainty (as well as
other factors). The margin of safety embodied in the MCLG may be
explicit, or it may result from the parameter choices used in the risk
assessment (e.g., use of 95th percentile upper confidence bound for a
dose response function or point of departure). As described in Section
IV.A.2 of this notice, SDWA generally requires EPA to set the MCL as
close to the MCLG as is feasible. Determining what is feasible involves
considerations of treatment technology effectiveness, measurement
capabilities, and cost, all of which also involve uncertainty. In SDWA
section 1412(b)(15), Congress assumed that some level less stringent
than the MCL would still be sufficiently ``protective'' for small
systems for which compliance with the MCL is unaffordable. Therefore,
EPA believes that for purposes of determining what is ``protective''
under this section, it is reasonable to allow variance technologies to
be considered by the primacy agency if such technologies achieve
removal of a contaminant from drinking water within a span of one log
unit (10x) centered on the MCL, which is established through a SDWA
mandated procedure designed to identify an acceptable level of risk for
drinking water, taking all of the statutory factors into account.
Therefore, EPA requests comment upon considering concentrations up to
three times the MCL ``protective of public health'' under SDWA section
1412(b)(15)(B).
EPA believes that for the majority of contaminants, restricting the
contaminant level for a variance technology to not more than three
times the level that would be produced by a compliance technology would
be adequately protective for purposes of enabling States to make a
variance decision. While EPA recognizes that consuming water with as
much as three times the concentration of a particular contaminant
results in greater exposure and may translate to a greater risk of
adverse health effects, EPA believes that the small system variance
provisions, as directed by Congress, are intended to permit State
primacy agencies, small water systems, and their consumers to decide,
within a range of levels close to the drinking water standard, the
specific conditions upon which they can best assure the safety of their
water supply when they are unable to afford compliance.
EPA believes that this methodology for determining if a variance
technology is protective of public health is transparent and
reproducible. State
[[Page 10684]]
officials, water system operators, and water system consumers will be
able to readily understand the basis for the national determination and
evaluate its applicability to their system specific conditions.
V. State Consultation
SDWA section 1412(b)(15)(A) requires ``consultation with the
States'' by EPA in its determination that variance technologies are
available and affordable. EPA has consulted with administrators of
State drinking water programs in developing the options for revising
the affordability methodology presented in today's notice. The NDWAC
Work Group whose recommendations on the affordability methodology are
described earlier in this notice included administrators of the
drinking water programs from two States. Additionally, on December 5,
2005 EPA consulted with drinking water administrators from seven States
regarding the options under consideration for revisions to the
methodology for evaluating the affordability of new drinking water
standard and determining if variance technologies are protective of
public health. State administrators expressed concern that
implementation of the revisions described in today's notice would
result in a two level standard: one standard for small systems that
cannot afford compliance, and another more stringent standard for all
other systems. A State administrator noted the risk communication
challenge that such a situation would pose.
States expressed concern that reviewing and issuing small system
variances for future regulations will place additional demands upon
their already limited, and in many cases decreasing, State drinking
water program resources. If a State chooses to include small system
variances in its drinking water program, SDWA section 1415(e)(3)
requires the State to determine that a system on a case by case basis,
cannot afford to comply and that the terms of a variance will ensure
adequate protection of public health before it may grant a variance.
SDWA section 1415(e)(7) requires notification of customers, and a
public hearing before granting a variance. States agreed with the
conclusion of the NDWAC that alternatives to the variance process,
including cooperative strategies (e.g., State leadership to promote
cooperation among small systems), and targeted use of funding to
disadvantaged water systems (e.g., supporting individual households
with a LIWAP funded through Congressional appropriation) are more
appropriate means to address affordability issues associated with small
public water systems that cannot afford to comply with a NPDWR.
States also believe that EPA should consider NDWAC's recommendation
of an incremental affordability threshold of one percent of median
household incomes among small systems (approximately $400 per year).
EPA appreciates and has carefully considered the State
administrators' concerns. EPA is sensitive to the risk communication
challenge posed by different systems effectively having different
standards, based on affordability. However, Congress in amending SDWA
determined that cost differences between large and small systems may
make it appropriate for a small system to operate above the MCL as long
as it achieves the maximum reduction that is affordable. Small systems
have the greatest treatment costs per household served due to economies
of scale. Households that receive water from these systems face the
greatest challenge of affording to comply with a drinking water
standard. Congress established the small system variances as an answer
to this problem; however, the current methodology has never triggered a
finding that a regulation was unaffordable. The options being
considered by EPA are more likely to trigger such a finding and thus
make small system variances available as one option that States and
small systems customers may consider. States that choose to implement a
small system variance program would make the system-specific
determinations on affordability and protectiveness for regulations EPA
determines are unaffordable. It is the choice of an individual small
system and the community it serves whether to apply for a variance
following a comprehensive public process (set out in SDWA section
1415(e)). This process ensures that customers of a small system will be
fully informed and have opportunity for input into the decision before
a system receives a variance. EPA would not expect a variance
application to be successful without significant community support.
EPA is also mindful of the potential strain on State resources of
evaluating small system variance applications. EPA notes that States
are not required to include small system variances in their drinking
water programs. EPA's affordability methodology is merely a screen. If
a regulation is found unaffordable and EPA is able to identify more
affordable variance technologies which are protective of public health,
States that wish to grant small system variances and communities that
wish to apply for them may do so.
EPA also appreciates the State recommendations for alternatives to
small system variances. EPA believes that such variances should be a
last resort. Where a State is able to make financial assistance
available to small systems for compliance through its SRF, or
aggressively encourage cooperation among small systems, EPA strongly
encourages States to do so. As for the recommendation that assistance
be targeted directly to low income consumers through some kind of LIWAP
program, only Congress can authorize such an approach. In the meantime,
EPA has a responsibility to utilize the existing tools under the Safe
Drinking Water Act, which include small system variances, as mechanisms
to address the legitimate affordability concerns of small systems and
their customers.
Finally, EPA has not included the NDWAC recommendation among the
options it is considering because, in EPA's judgment, it would not
allow for appropriate implementation at the Federal level of the small
system variance provisions that Congress included in the SDWA. As Table
III-1 shows, an incremental threshold of $400 would not likely have
triggered an unaffordability finding or the listing of alternative,
protective variance technologies for any size category of small systems
for any recent drinking water standard. For all of the reasons
discussed previously in this notice, EPA believes that some small
systems have genuinely struggled with compliance costs for some recent
NPDWRs, and that EPA needs an affordability methodology that will allow
States that wish to do so an opportunity to address these concerns
through, among other strategies, the granting of protective small
system variances where appropriate.
VI. Request for Comment
The EPA seeks comments on the range of issues addressed in this
notice. The information and comments submitted in response to this
notice will be considered in determining the affordability methodology
for small drinking water systems and the methodology for determining
when variance technologies are protective of public health.
Specifically, EPA seeks comments on the following issues:
1. EPA requests comment on basing its determination of
affordability on the incremental cost of new treatment required rather
than the total (i.e., cumulative) cost of water to consumers
[[Page 10685]]
after the new treatment technology is installed.
2. EPA requests comment on whether it is more appropriate to base
its affordability determination on the incremental costs of treatment
for the system at the 10th percentile or the 50th percentile of system
size in each small system category.
3. EPA requests comment on what the most appropriate national-level
percentage threshold is (i.e., 0.25 percent, 0.50 percent, or 0.75
percent of the median MHI among small systems within a size category).
4. EPA requests comment on the key factors considered in developing
affordability methodology options as described in section III.C of this
notice. Do commenters believe these are the appropriate factors to
consider? Are there other factors commenters would suggest the Agency
consider?
5. EPA requests comment on whether the Agency should use a two-part
test to screen at the national and county levels for systems that
cannot afford compliance. Additionally, EPA seeks comment on whether
the county or a different level is the appropriate unit of analysis for
the second part of this test. The approach would first compare the
incremental household cost of compliance to a national income-based
threshold. If EPA were to find compliance affordable at the national
level, we would then identify counties that are economically at-risk
based on three socioeconomic triggers (MHI less than or equal to 65
percent of the national MHI, a U.S. Census Bureau-defined poverty rate
at least twice the national average, or a two-year average unemployment
rate at least twice the two-year national average). EPA also requests
comment on the specific triggers that should be used to identify
economically at-risk counties.
6. EPA requests comment upon its interpretation of affordability in
section III.D.3 of today's notice. That is, should EPA consider
variance technologies affordable even when they do not fall below the
affordability threshold in cases where there would otherwise be no
affordable variance technologies to list.
7. EPA requests comment on implementation challenges to States in
reviewing and issuing small system variances.
8. EPA requests comment on finding a variance technology to be
protective of public health if the concentration of the target
contaminant after treatment by the variance technology is no more than
three times the MCL unless unusual factors associated with the
contaminant or EPA's risk assessment suggest that an alternate level is
appropriate, in which case EPA would explain its basis for the
alternate level and request public comment in the proposed rule. EPA
requests comment on whether a finding that variance technologies are
protective of public health if they achieve a contaminant level within
three times the MCL should be ``capped'' at a particular risk level
(i.e., 10-3) in order to provide further assurance that
variance technologies are in fact protective.
The Agency also requests comment on any other issue raised by this
notice on options for revising its national-level affordability
methodology or its methodology for determining if a variance technology
is protective of public health.
VII. References
National Drinking Water Advisory Council (NDWAC). 2003.
Recommendations of the National Drinking Water Advisory Council to
U.S. EPA on Its National Small Systems Affordability Criteria.
Available at http://www.epa.gov/safewater/ndwac/council.html.
Rubin, Scott, J. 2001. White Paper for National Rural Water
Association, Criteria to Assess the Affordability of Water Service.
Available at http://www.nrwa.org.
Rubin, Scott, J. 2002. White Paper for National Rural Water
Association, Criteria to Assess Affordability Concerns in Conference
Report for H.R. 2620. Available at http://www.nrwa.org.
U.S. EPA. 1998. Announcement of Small System Compliance Technology
Lists for Existing National Primary Drinking Water Regulations and
Findings Concerning Variance Technologies. Notice. Federal Register
Vol 63, No. 151, p. 42032. August 6, 1998. Available at http://www.epa.gov/safewater/standard/clistfrn.pdf.
U.S. EPA Science Advisory Board (SAB). 2002. Affordability Criteria
for Small Drinking Water Systems: An EPA Science Advisory Report.
EPA-SAB-EEAC-03-004, U.S. EPA Science Advisory Board, Washington,
DC, December 2002. Available at http://www.epa.gov/sab.
Dated: February 14, 2006.
Benjamin H. Grumbles,
Assistant Administrator, Office of Water.
[FR Doc. 06-1917 Filed 3-1-06; 8:45 am]
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