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The Water System Restructuring Rule (WSRR)

The Water System Restructuring Rule (WSRR). Presentation for Association of State Drinking Water Administrators. August 1, 2019. EPA’s Objectives for Today’s Presentation. Summarize America’s Water Infrastructure Act (AWIA) 2018 amendments to SDWA Subsection 1414(h) and Section 1413.

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The Water System Restructuring Rule (WSRR)

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  1. The Water System Restructuring Rule (WSRR) Presentation for Association of State Drinking Water Administrators August 1, 2019

  2. EPA’s Objectives for Today’s Presentation • Summarize America’s Water Infrastructure Act (AWIA) 2018 amendments to SDWA Subsection 1414(h) and Section 1413. • Describe key concepts from 1414(h) to be included in the rulemaking. • Summarize relationships between assessments, plans, loans, enforcement relief, and liability protection. • Show results of one approach to estimating how many water systems could be subject to a state mandatory assessment. • Identify opportunities for State and ASDWA input into WSRR development in 2019

  3. Examples of Extensive State Experience Supporting Water System Partnerships • Water System Partnerships: A Compendium of State Programs, Statutes and Policies (2017) details many examples of states’ work on water system partnerships: • Many offer financial incentives for partnerships to help systems provide safe drinking water. • 35 states offer priority points in the DWSRF for partnerships • 10 states, like Maine, have a specific grant program to encourage partnerships • 17 states include partnerships activities and facilitation of partnerships within their capacity development program • 14 states require new systems to consider interconnection to existing systems • California and Alaska - have programs that authorize the state to order consolidation under certain conditions

  4. Where does the WSRR fit into Ongoing Partnership Efforts? • The WSRR will provide a framework and incentives which states and water systems could use to support water system partnerships: • A new primacy agency authority for mandatory assessments • Providing enforcement relief for non-compliant water systems • Providing liability protection for compliant water systems. • New DWSRF loan eligibility for restructuring activities

  5. 1414(h) Incentives and the Partnership Spectrum • 1414(h) statutory incentives focus on: • forms of consolidation, • transfer of ownership • contracts for administrative or managerial functions to resolve violations.

  6. AWIA – Summary of Changes to SDWA 1414(h)-Consolidation Incentive • 1414(h) After AWIA • New type of restructuring plan – a contract for managerial or administrative functions to resolve violations • New mandatory assessment authority and conditions for using the authority • Eligible assessors defined • Assessments must be “tailored” and “not overly burdensome” • Restructuring activities DWSRF-loan eligible • Liability protection for non-responsible system • EPA required to issue regulation • Primacy requirements revised • 1414(h) Before AWIA • 3 types of restructuring plan eligible for enforcement relief • Physical consolidation • Administrative/managerial consolidation • Transfer of ownership • Enforcement relief if the State approves one of the above plan types

  7. AWIA – Summary of Changes to Primacy Requirements in SDWA 1413(a) and 1413(b) • Change to subsection (a): New primacy requirement for all primacy states: • “…6) has adopted and is implementing procedures for requiring public water systems to assess options for consolidation or transfer of ownership or other actions in accordance with the regulations issued by the Administrator under section 1414(h).” • Change to subsection (b): Revised requirements for EPA primacy approval • “…a State may apply to the Administrator for a determination that the requirements of subsection (a) are satisfied” • All 7 paragraphs (not only the first 4) under SDWA subsection 1413(a) are now mandatory primacy requirements:

  8. Review of Key Concepts in SDWA 1414(h) Which Will be Incorporated into the WSRR • Authority for Mandatory Assessment: Who and When? • Tailoring a Mandatory Assessment • Ensuring a Mandatory Assessment is “Not Overly Burdensome” • Protection of Non-responsible System • Enforcement Relief under Approved Restructuring Plans • Relationship of Mandatory Assessment to Restructuring Plan

  9. Authority – Who May Conduct Assessments and When May an Assessment be Mandated? • 1414(h)(3)(C) - Approved Entities • An assessment may be conducted by a third party approved by the state, the state, the EPA or public water system (effectively a self-assessment). • 1414(h)(3)(A) - Authority • A primacy agency may mandate an assessment if it determines the public water system: • Has repeatedly violated one or more health-based standards in NPDWRs; • Is unable or unwilling to attempt feasible and affordable actions to return to compliance OR • already has attempted to take feasible and affordable actions and not succeeded; • Restructuring could result in greater compliance. • Proposed rule considerations for Approved Entities and Assessment Authority: • Describing a process and conditions for primacy agency approvals of third-party assessors or water system self-assessments • Defining when assessments can be mandated • Defining “repeatedly violated”

  10. How Assessments Must be Conducted – Tailoring and Burden of Assessments • 1414(h)(3)(B) – Tailoring of Assessments • “any assessment…shall be tailored with respect to size, type and characteristics of the public water system to be assessed.” • “Tailoring” and “[other] characteristics” are not defined or fully described. • 1414(h)(3)(D) – Burden of Assessments • “any assessment…should not be overly burdensome on the water system that is assessed.” • “Not overly burdensome” is not defined or described. • Proposed rule considerations for Tailoring and Burden: • Defining terms • Describing how tailoring could be conducted • Identify other characteristics of water systems that should be considered when tailoring an assessment. • Clarify relationship between the concepts of tailoring and water system burden.

  11. Enforcement Relief as a Consolidation Incentive for a Noncompliant Water System • 1414(h)(1) – In General • Physical, administrative or managerial consolidation • Transfer of ownership • NEW: Contractual agreement for significant management or administrative functions to correct violations • Plans must include “measures and schedules” and identify violations • 1414(h)(2) – Consequences of Approval • Earlier of: 2 years from the date on which the primacy agency approves the plan OR the date on which consolidation/restructuring is completed. • Proposed rule considerations for Eligible Plans and Enforcement Relief: • Describe a process for providing enforcement relief • Provide more detail around eligible plan types and validity

  12. New DWSRF Loan Eligibility for Assessed Water SystemsThat Implement Restructuring • 1414(h)(4) – Financial Assistance • …a public water system undertaking consolidation or transfer of ownership or other actions pursuant to an assessment…may receive a loan described in 1452(a)(2)(A)… • Changes DWSRF loan eligibility to include a public water system that is implementing restructuring activities based on a mandatory assessment. • Proposed rule considerations for DWSRF Loan Eligibility: • Codify the statutory language regarding loan eligibility. • Additional clarifications to be provided in DWSRF program guidance following final rule promulgation.

  13. Liability Protection as a Consolidation Incentive for Compliant Water Systems • 1414(h)(5) – Protection of Non-responsible System • Provides liability protection for a public water system that submits a restructuring plan for: consolidation, transfer of ownership, or a contract for administrative or managerial functions to resolve violations. • Example: $100,000 in fines and penalties assessed; $75,000 of assessed water system assets used to pay fines; $25,000 remainder waived • Conditions: • Eligible plan must be approved by the State • Approved plan must be based on a State-approved assessment • All steps in the approved plan must be completed • All violations must be identified in the approved plan • Any potential or actual liability for those violations identified • Assets of the responsible water system identified • Proposed rule considerations for Liability Protection: • Describe a process for providing liability protection based on eligible plan types • Provide more detail around eligible plan types and validity

  14. Assessments, Plans, Loans, Enforcement Relief, Liability Protection: How do these Concepts Relate to Each Other? • When a restructuring plan must be related to a mandatory assessment • A mandatory restructuring assessment does not compel the PWS to prepare and submit a restructuring plan. • A restructuring plandoes not need to be based on a restructuring assessment for a State to approve. • However, if a non-responsible PWS wants to receive liability protection, then the submitted planmust be based on an approved assessment. • Relationships of assessments, plans, loans, and consolidation incentives under different scenarios: • State mandates an assessment, then the PWS submits a plan based on the assessment • State mandates an assessment, but PWS does not submit a plan based on the assessment • PWS submits a restructuring plan, but not pursuant to an assessment • PWS receives a DWSRF loan to implement activities identified in the assessment (might be part of a plan) • State approves a restructuring plan which results in enforcement relief (does not need to be based on assessment) • Water system submits a restructuring plan which also seeks liability protection (must be based on assessment)

  15. Examples of Pathways for Water Systems under SDWA 1414(h)

  16. Estimating Number of PWS Candidates for Mandatory Assessment: Modified “Intractable” Water System Definition • Population served <10,000 • Active systems • Health-based violations (MCL or TT) with a start date after 1/1/2016 • System has an open health-based violation for 3 out of 4 quarters in each year (2016-2018) • Total: 438 systems with at least 1 violation under this definition

  17. Violations of Potential Mandatory Assessment Candidates Based on Revised Intractable System Definition

  18. Opportunities for State Involvement in Rule Development, 2019 • ASDWA Survey on State Consolidation Practices and Policies • Cadmus Interviews of State Programs to Learn about Existing Assessment Practices • Region 6-10 Capacity Development and Operator Certification Workshop • September 16-19, 2019 • Kansas City, MO • Register: https://www.eventbrite.com/e/2019-regions-6-10-operator-certification-and-capacity-development-workshop-tickets-62915320417 • 2020 National Capacity Development and Operator Certification Workshop • Date TBD • ASDWA Annual Conference, October 2019

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