    [House Hearing, 106 Congress]
    [From the U.S. Government Publishing Office]

       IMPLEMENTATION OF THE 1996 SAFE DRINKING WATER ACT AMENDMENTS AND
                    FUNDING OF STATE DRINKING WATER PROGRAMS

    =======================================================================

                                    HEARING

                                   before the

                                SUBCOMMITTEE ON
                             HEALTH AND ENVIRONMENT

                                     of the

                             COMMITTEE ON COMMERCE
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED SIXTH CONGRESS

                                 SECOND SESSION

                                   __________

                               SEPTEMBER 19, 2000

                                   __________

                               Serial No. 106-158

                                   __________

                Printed for the use of the Committee on Commerce

                        ------------------------------

                        U.S. GOVERNMENT PRINTING OFFICE
    67-116CC                    WASHINGTON : 2000

                             COMMITTEE ON COMMERCE

                         TOM BLILEY, Virginia, Chairman

    W.J. ``BILLY'' TAUZIN, Louisiana     JOHN D. DINGELL, Michigan
    MICHAEL G. OXLEY, Ohio               HENRY A. WAXMAN, California
    MICHAEL BILIRAKIS, Florida           EDWARD J. MARKEY, Massachusetts
    JOE BARTON, Texas                    RALPH M. HALL, Texas
    FRED UPTON, Michigan                 RICK BOUCHER, Virginia
    CLIFF STEARNS, Florida               EDOLPHUS TOWNS, New York
    PAUL E. GILLMOR, Ohio                FRANK PALLONE, Jr., New Jersey
      Vice Chairman                      SHERROD BROWN, Ohio
    JAMES C. GREENWOOD, Pennsylvania     BART GORDON, Tennessee
    CHRISTOPHER COX, California          PETER DEUTSCH, Florida
    NATHAN DEAL, Georgia                 BOBBY L. RUSH, Illinois
    STEVE LARGENT, Oklahoma              ANNA G. ESHOO, California
    RICHARD BURR, North Carolina         RON KLINK, Pennsylvania
    BRIAN P. BILBRAY, California         BART STUPAK, Michigan
    ED WHITFIELD, Kentucky               ELIOT L. ENGEL, New York
    GREG GANSKE, Iowa                    TOM SAWYER, Ohio
    CHARLIE NORWOOD, Georgia             ALBERT R. WYNN, Maryland
    TOM A. COBURN, Oklahoma              GENE GREEN, Texas
    RICK LAZIO, New York                 KAREN McCARTHY, Missouri
    BARBARA CUBIN, Wyoming               TED STRICKLAND, Ohio
    JAMES E. ROGAN, California           DIANA DeGETTE, Colorado
    JOHN SHIMKUS, Illinois               THOMAS M. BARRETT, Wisconsin
    HEATHER WILSON, New Mexico           BILL LUTHER, Minnesota
    JOHN B. SHADEGG, Arizona             LOIS CAPPS, California
    CHARLES W. ``CHIP'' PICKERING,
    Mississippi
    VITO FOSSELLA, New York
    ROY BLUNT, Missouri
    ED BRYANT, Tennessee
    ROBERT L. EHRLICH, Jr., Maryland

                       James E. Derderian, Chief of Staff

                       James D. Barnette, General Counsel

          Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                     ______

                     Subcommittee on Health and Environment

                      MICHAEL BILIRAKIS, Florida, Chairman

    FRED UPTON, Michigan                 SHERROD BROWN, Ohio
    CLIFF STEARNS, Florida               HENRY A. WAXMAN, California
    JAMES C. GREENWOOD, Pennsylvania     FRANK PALLONE, Jr., New Jersey
    NATHAN DEAL, Georgia                 PETER DEUTSCH, Florida
    RICHARD BURR, North Carolina         BART STUPAK, Michigan
    BRIAN P. BILBRAY, California         GENE GREEN, Texas
    ED WHITFIELD, Kentucky               TED STRICKLAND, Ohio
    GREG GANSKE, Iowa                    DIANA DeGETTE, Colorado
    CHARLIE NORWOOD, Georgia             THOMAS M. BARRETT, Wisconsin
    TOM A. COBURN, Oklahoma              LOIS CAPPS, California
      Vice Chairman                      RALPH M. HALL, Texas
    RICK LAZIO, New York                 EDOLPHUS TOWNS, New York
    BARBARA CUBIN, Wyoming               ANNA G. ESHOO, California
    JOHN B. SHADEGG, Arizona             JOHN D. DINGELL, Michigan,
    CHARLES W. ``CHIP'' PICKERING,         (Ex Officio)
    Mississippi
    ED BRYANT, Tennessee
    TOM BLILEY, Virginia,
      (Ex Officio)

                                      (ii)

                                C O N T E N T S

                                   __________
                                                                       Page

    Testimony of:
        Fox, J. Charles, Assistant Administrator for Water,
          Environmental Protection Agency............................    15
        Gloriod, Terry L., President, Illinois American Water Company    74
        Guerrero, Peter F., Director, Environmental Protection
          Issues, General Accounting Office; accompanied by Helen
          Crocker, Principal Investigator on the GAO Report..........     7
        Neukrug, Howard, Director, Office of Watersheds, Philadelphia
          Water Department, on behalf of American Water Works
          Association, accompanied by Alan Roberson, Director of
          Regulatory Affairs, American Water Works Association.......    49
        Olson, Eric D., Senior Attorney, Natural Resource Defense
          Council....................................................    67
        Rutherford, Jay L., Director, Water Supply Division, Vermont
          Department of Environmental Conservation...................    40
        Tippin, David L., Director, Tampa Water Department...........    62
    Material submitted for the record by:
        Association of California Water Agencies, prepared statement
          of.........................................................    94

                                     (iii)

       IMPLEMENTATION OF THE 1996 SAFE DRINKING WATER ACT AMENDMENTS AND
                    FUNDING OF STATE DRINKING WATER PROGRAMS

                                  ----------

                          TUESDAY, SEPTEMBER 19, 2000

                      House of Representatives,
                                 Committee on Commerce,
                        Subcommittee on Health and Environment,
                                                        Washington, DC.
        The subcommittee met, pursuant to notice, at 10:05 a.m., in
    room 2322, Rayburn House Office Building, Hon. Michael
    Bilirakis (chairman) presiding.
        Members present: Representatives Bilirakis, Deal, Bilbray,
    Bryant, Brown, Green, and Capps.
        Staff present: Joe Stanko, majority counsel; Nandan
    Kenkeremath, majority counsel; Robert Simison, legislative
    clerk; and Dick Frandsen, minority counsel.
        Mr. Bilirakis. The hearing will come to order.
        Good morning. I want to welcome all of our witnesses to
    today's hearing on implementation of the 1996 State Drinking
    Water Act Amendments and funding for State drinking water
    programs.
        This hearing is a continuation of the subcommittee's review
    of the 1996 amendments. In October 1998, we held our first
    implementation hearing on the 1996 amendments covering a range
    of issues, from initial allocations to the State Revolving
    Fund, or SRF as we fondly call it, to the process for
    promulgating new contaminant regulations.
        In October of last year we continued the subcommittee's
    review of the 1996 amendments, focusing on the research efforts
    which lie at the heart of new drinking water regulations.
        Today's hearing will continue our broad review of
    implementation activities pursuant to the 1996 amendments, but
    will also focus on funding for State programs. We will receive
    testimony from the General Accounting Office, which has
    conducted an extensive review of the available Federal
    resources for State programs, how much States have actually
    spent for implementation activities, and what effect future
    funding levels could have on the ability of States to implement
    drinking water programs.
        Under the Safe Drinking Water Act, States are responsible
    for the day-to-day activities which ensure the safety of our
    water supply. Forty-nine out of 50 States maintain primary
    enforcement responsibility for drinking water programs.
        States conduct sanitary surveys or physical inspections of
    drinking water systems. They provide technical assistance. They
    are responsible for overseeing the monitoring of water systems,
    and they are required to determine the technical, managerial
    and financial capability of drinking water systems.
        States have also developed operator certification programs,
    and made ongoing decisions regarding the allocation of millions
    of dollars in SRF loans as well as SRF grants to disadvantaged
    communities.
        In short, States are the primary reason that the Safe
    Drinking Water Act actually works to protect the public.
        One of the most notable findings of the GAO report,
    however, and there is always a however, is the fact that 75
    percent of State drinking water programs believe that they have
    inadequate staffing, and over 90 percent project that these
    staffing deficiencies will continue into the future.
        While the GAO report cites many factors for these
    shortfalls, it remains clear that the safety of our drinking
    water supply is as dependent on people as it is on drinking
    water facilities and infrastructure.
        The GAO report indicates that there may be structural
    reasons why States have not taken full advantage of funding
    set-asides provided in the 1996 amendments. These include a
    desire not to divert funds from necessary infrastructure
    improvements. In effect, States may not want to rob Peter to
    pay Paul.
        However, as the GAO report also notes, if such
    understaffing continues, it could eventually lead to more
    compliance problems and a larger enforcement workload. So
    clearly we need to discern the extent of this problem and what
    States can do to address it, as well as evaluate whether there
    are any changes in the set-aside system which could alleviate
    this condition.
        We should also be very mindful that the overall burden of
    States is projected to increase substantially in upcoming
    years. In the next few years, States will be faced with new
    regulations for arsenic and radon, new disinfection by-product
    rules, new standards for previously unregulated contaminants,
    and possible revision of over 80 existing drinking water
    regulations. We must ensure this burden does not overwhelm a
    system that is apparently already taxed by existing
    obligations.
        Altogether, I hope this hearing will provide valuable
    information for the further review of the 1996 amendments. As
    hard as it is to believe, we are now over halfway through the
    timeframe for the implementation of the 1996 amendments.
    Therefore, it is now time not only to look back at what has
    been accomplished, but to look ahead at what aspects of the law
    may be improved and to reauthorization 3 years hence.
        The Chair now gladly yields to the gentleman from Ohio, the
    ranking member, Mr. Brown.
        Mr. Brown. Mr. Chairman, thank you.
        Our hearing this morning provides the subcommittee with an
    opportunity to continue our review of the Safe Drinking Water
    Act Amendments of 1996.
        I want to, at the outset, register my deep concern about
    the anti-environmental and anti-public health riders in the
    HUD-VA appropriations bills that affect the Safe Drinking Water
    Act. I will focus for a minute on arsenic, which can cause
    skin, bladder, and lung cancer. The current standard of 50
    micrograms per liter was established more than 50 years ago.
    Virtually all experts share the view today that the current
    standard is not protective of human health and needs to be
    significantly strengthened.
        Both the World Health Organization and the European
    Community have significantly strengthened their protective
    standard for arsenic in drinking water. The National Research
    Council in its March, 1999 report also found that the current
    drinking water standard for arsenic does not protect human
    health sufficiently and should be strengthened.
        Our job in this body is to protect our water supply and to
    protect the public. Yet, the Republican leadership of the
    Committee on Appropriations has directed the EPA to ``cease all
    actions relative to the enforcement'' of the current, the
    weaker, the current arsenic drinking water standard. Whom are
    they protecting?
        It is irresponsible for Congress to instruct the EPA to
    ignore cases in which drinking water supplies do not even
    achieve the current standards of 50 milligrams per liter. As
    the authorizing committee, we have a responsibility to take a
    strong stance against these appropriation riders affecting the
    Safe Drinking Water Act.
        One of the most important provisions in the 1996 amendments
    is the source water quality assessment program. The American
    Metropolitan Water Association has informed us that it is more
    effective and more equitable to prevent pollution in the first
    place than to require drinking water suppliers to install
    complex and costly treatment technologies. Prevention at the
    source also protects the environment and enhances recreational
    use of water sources.
        One hundred million Americans are served by water systems
    using ground water as the primary source. Twenty million more
    Americans use private wells fed by ground water. Every State
    has obtained source water assessments set-aside funding
    totaling $112 million nationwide.
        Today I look forward to hearing whether local source water
    assessment programs have actually progressed to the point where
    boundaries of the assessment areas are delineated and the
    origins of the contaminants fully identified.
        The estrogenic substances screening program is another
    important health provision that was added in the Safe Drinking
    Water Act and the Federal Food, Drug, and Cosmetic Act in 1996.
    The endocrine disrupter screening program, which was also
    authorized in the Food Quality Protection Act, will help us
    identify synthetic chemicals that affect the body's hormonal
    system.
        As a member from the Great Lakes region, where endocrine
    disrupters and other systemic pollutants have become
    concentrated to a greater degree than any other region, I look
    forward to involvement of the Office of Water in this program.
        I welcome all of our witnesses today. Thank you, Mr.
    Chairman.
        Mr. Bilirakis. I thank the gentleman for his opening
    statement.
        Mr. Bilbray.
        Mr. Bilbray. Thank you, Mr. Chairman.
        I want to thank you for holding this hearing, and I want to
    thank you for actually allowing us to air this study that you
    and I and Mr. Lazio and Mr. Bliley specifically requested.
        Mr. Chairman, I guess I come here after 20 years of working
    at the local level of actually providing the infrastructure
    that those of us in Washington talk about so much nowadays. I
    think too often those of us in Washington forget that
    infrastructure is not just the buildings and pumps and pipes
    essential to the operation, but as the part of the
    infrastructure it is our men and women, bone and blood, that
    actually make the pipes and the concrete and the steel work.
        One of the things we have really been able to identify with
    this study, this report, is the fact that where we focus so
    often on the things of infrastructure, we forget about the
    people. This report is a great indicator that we need to be
    proactive. It is an opportunity and a challenge for us to be
    proactive and recognize that we can build all the treatment
    plants and all the infrastructure in the world, but if we do
    not have the human component available to be able to operate
    them in a safe and efficient manner, it will be a disaster.
        Let me just sort of open my heart up and say, as somebody
    who has grown up on the Mexican border and seen what has
    happened when people are not trained properly, when operational
    integrity is not a high priority, you see environmental
    disaster after environmental disaster and people shrugging
    their shoulders and saying, well, you are right, we turned the
    wrong valve, or we did not operate that pump, or we made a
    mistake. But after all, I am not trained to be able to do that.
    I am not being paid that much. I really do not have the
    expertise to run this type of plant. You can't blame me.
        I think this is a great example of where we have looked
    down at our crystal ball and we see that we are going to have
    great, huge temples to quality water but we may not have any
    priests and priestesses in there to operate it.
        I just ask us to take a look at this, both Democrats and
    Republicans, to take this as an opportunity and challenge to
    show how we can take the theory of the Safe Drinking Water Act
    and make it a reality in the United States, even in the Great
    Lakes region.
        I yield back.
        Mr. Bilirakis. I thank the gentleman.
        The gentleman from Tennessee, who I guess maybe attends our
    hearings more so than virtually any other member, and the Chair
    very much appreciates that.
        Mr. Bryant. Thank you, Mr. Chairman, for that recognition,
    and thank you also for this hearing.
        I assume that with unanimous consent, any statement that I
    might want to add, I can do that.
        Mr. Bilirakis. Yes.
        Mr. Bryant. I have no opening statement.
        Mr. Bilirakis. Without objection, the opening statement of
    all members of the subcommittee will be made part of the
    record.
        [Additional statements submitted for the record follow:]
       Prepared Statement of Hon. Clifford Stearns, a Representative in
                       Congress from the State of Florida
        Thank you, Mr. Chairman, for having this hearing. Four years have
    passed since the 1996 Safe Drinking Water Act Amendments were signed
    into law. I remember working on that legislation--our goal at that time
    was to give states and governments greater flexibility to combat
    contaminants in local water systems. The debate at the time was not
    whether we all shared the goal of safe drinking water--of course we all
    do. Instead, we asked whether the best way to achieve that goal was
    with counterproductive rules, or with state and local responsibility.
    The answer was clear.
        Therefore, we rewrote and modernized the SDWA. We gave money to a
    state revolving loan fund (SRF) to help public water systems to comply
    with the SDWA requirements. Additionally, we updated the EPA systems
    for identifying new contaminants for regulation.
        Now it is time to look back and evaluate the success of our
    actions. We need to ask if the state revolving fund provides enough
    money for public water systems to comply with the SDWA. We also must
    ask if state revolving funds are sufficient to aid the states in
    implementing the SDWA. If the funds are sufficient now, could they
    become insufficient in the near future with compliance changes?
        Another concern I have is the funding for on-site rural community
    tech assistance in the Safe Water Drinking Water Act. I believe this
    should be a priority in the EPA budget. Small rural communities often
    have difficulty complying with SDWA requirements due to limited budgets
    and technical expertise. We need to ensure environmental funding is
    spent in the most efficient and effective manner possible. It has been
    documented that rural water programs have resulted in more compliance
    and more ground water protection programs than the alternated top-down
    EPA approach.
        I hope to learn from our panel the environmental and financial
    position of the Safe Drinking Water Act. We worked hard on these
    revisions four years ago and I look forward to ensuring the program's
    continued success. I thank the Chairman for holding this hearing and I
    yield back.
                                     ______

       Prepared Statement of Hon. Brian P. Bilbray, a Representative in
                     Congress from the State of California
        Mr. Chairman, thank you very much for calling this important
    hearing. As a Member of this Health and Environment Subcommittee, and
    also of the Water Infrastructure Caucus, I appreciate your providing us
    with this opportunity as we continue to examine the important issues
    surrounding our national drinking water systems.
        One of my proudest moments to date as a Member of Congress was my
    close involvement with the crafting and passage of the Safe Drinking
    Water Act Amendments of 1996. Among other key provisions, we
    established a $9 billion dollar Safe Drinking Water Revolving Fund, and
    dramatically improved the process by which EPA reviews existing
    drinking water standards, by requiring EPA to use the best available
    science, and to focus specifically on contaminants which pose the
    greatest health risk.
        Last year, I joined with Chairman Bilirakis, Chairman Bliley, and
    my colleague from New York Rick Lazio to request that GAO specifically
    review the state implementation of the 1996 Amendments, spending
    levels, and estimated ``needs.'' Clearly, one of the goals contemplated
    in the 1996 Amendments was for states to be able to effectively
    implement and operate these drinking water programs, and so the timing
    of this hearing is very important in our oversight of the Act,
        One element of the GAO report which was of particular concern to me
    was the finding that over 90% of the states surveyed predicted that
    their staffing levels would be less than adequate in the future, as new
    program requirements and regulations take effect. Clearly, the ability
    to successfully operate the appropriate equipment is critical to
    maintaining and improving the drinking water provided to American
    citizens.
        I look forward to hearing more and learning from our witnesses at
    the hearing today about these important questions, and working with my
    colleagues and these stakeholders to help provide the answers that will
    ensure the safety of America's drinking water into this new century.
    Mr. Chairman, I would also ask unanimous consent that the statement
    from the Association of California Water Agencies be placed in the
    hearing record at the appropriate point.
        Thank you and I yield back the balance of my time.
                                     ______

     Prepared Statement of Hon. Tom Bliley, Chairman, Committee on Commerce
        I first want to thank Chairman Bilirakis for holding today's
    hearing. This hearing is the third in a series of hearings which the
    Subcommittee has conducted concerning the 1996 Safe Drinking Water Act
    Amendments and the implementation of this far reaching law.
        This hearing will examine several issues. First, a new report from
    the General Accounting Office which examined funding for state drinking
    water programs. This report indicates that while current funding
    streams may be adequate in theory, in the real world, there are some
    problems and challenges ahead for funding and staffing the programs.
        Seventy-five percent of states reported to GAO that their staffing
    levels don't meet the requirements of the Act. Moreover, over ninety
    percent of states think that these staffing problems will continue.
    Since states are at the front lines in ensuring the quality of drinking
    water--this is a worrisome condition.
        In 1996, this Committee provided an increase in federal grants for
    state drinking water programs and funded a new $9.6 billion dollar
    State Revolving Fund. The GAO report appears to indicate that these
    funds have been, to date, adequate for projected needs. But the GAO
    report also indicates that there could be problems down the road. We
    need to get to the bottom of this.
        Second, this hearing will examine overall burdens on the states. As
    we know from the Subcommittee's previous hearings, a number of new
    requirements will take effect over the next five years, namely on radon
    and arsenic. In the near future, a new ``disinfection by-products''
    rule is required. EPA must also review a slew of new contaminants, plus
    reevaluate standards for over 80 existing drinking water contaminants.
        I believe federal requirements must be based on sound science,
    realistic examination of costs and benefits and common sense
    implementation. After all, it is the states that work hard to adopt and
    enforce new requirements.
        Finally, this hearing will serve as a status check on just how well
    the 1996 Amendments are working. When the Amendments were signed into
    law in August 1996, Congress and the Administration shared a vision of
    revitalizing an outdated law while improving protection of the public
    health. This Committee and its Members worked tirelessly to secure
    passage of this major environmental and public health legislation. This
    hearing, then, serves to examine whether the promise of 1996 is indeed
    being fulfilled.
        I look forward to receiving the testimony of our witnesses and want
    to thank all members for their participation.
                                     ______

      Prepared Statement of Hon. Gene Green, a Representative in Congress
                            from the State of Texas
        Mr. Chairman: The Safe Drinking Water Act (SDWA) is one of the most
    important pieces of public health legislation this country has ever
    enacted.
        Since passage of the Act in 1974 this country has made dramatic
    improvements in controlling hazardous runoff into our local watersheds.
        The Potomac River here in Washington is now seeing the return of
    fish species that were nearly wiped out in the late '70's and early
    '80's due to pollution.
        The progress America has achieved can be improved though.
        The Environmental Protection Agency (EPA), the chief federal
    regulator of clean water issues, needs to continue to improve their
    scientific collections methods.
        A case in point.
        The EPA has taken the lead in calling for a ban on the gasoline
    additive MTBE.
        Incidents of MTBE contamination in California has spurred an almost
    hysterical drive to ban this very beneficial gasoline additive.
        I, like everyone on the Subcommittee, wants to ensure our
    constituents are not exposed to harmful chemicals in their drinking
    water.
        However, action already taken to reduce the presence of MTBE in
    drinking water is working, but I am wondering if the EPA is aware of
    these improvements and if their position on banning MTBE may also be
    changing.
        Mr. Chairman, I plan to discuss this issue further with Mr. Fox
    during the panel discussion, but aside from this particular issue I am
    quite pleased with the progress America is making to clean and improve
    our drinking water supply.
        Thank you Mr. Chairman and I yield back the balance of my time.

        Mr. Bilirakis. That being the case, we will call the first
    panel to come forward. Mr. Peter Guerrero is Director of the
    Environmental Protection Issues of the General Accounting
    Office, and Mr. J. Charles Fox, Assistant Administrator for
    Water and with the Environmental Protection Agency.
        Mr. Fox, welcome. We appreciate both of you being here.
    Obviously, as you know, your written statement is part of the
    record, and we will turn this on to 5 minutes.

        STATEMENTS OF PETER F. GUERRERO, DIRECTOR, ENVIRONMENTAL
     PROTECTION ISSUES, GENERAL ACCOUNTING OFFICE; ACCOMPANIED BY
    HELEN CROCKER, PRINCIPAL INVESTIGATOR ON THE GAO REPORT; AND J.
     CHARLES FOX, ASSISTANT ADMINISTRATOR FOR WATER, ENVIRONMENTAL
                           PROTECTION AGENCY

        Mr. Guerrero. Thank you, Mr. Chairman.
        I also want to indicate with me is Ellen Crocker, the
    principal investigator on the report that the committee is
    releasing today.
        We are here to discuss our report on ``Drinking Water:
    Spending Constraints Could Affect States' Ability to Implement
    Increasing Program Requirements,'' which you are releasing
    today.
        Ensuring an adequate supply of safe drinking water requires
    not only investing in the physical infrastructure, as
    Congressman Bilbray pointed out, but also in providing
    essential oversight activities performed by the States.
        In recognition of the key role the States play in
    implementing the requirements of this act, you asked us to
    provide information on the following points:
        First, how EPA's budget request for State program
    implementation compare to the amounts that are authorized and
    estimated to be needed; second, how much States have spent
    since the passage of the 1996 amendments, and how their
    expenditures compare with the estimated needs; third, what
    effects Federal funding levels have had and could have in the
    future on the States' ability to implement their programs; and
    finally, what existing practices have the potential to help
    States implement their drinking water programs more effectively
    and efficiently.
        To understand these issues in context, Mr. Chairman, it is
    necessary to provide a brief summary of the funding available
    for implementing the States' drinking water programs.
        In the 1996 amendments, Congress substantially increased
    the amount of funding authorized to help States, and did so in
    two regards. First, it increased funding for the public water
    system supervision grants from $70 million to $100 million a
    year. The States use these grants for a variety of activities
    related to implementing their programs, such as providing
    technical assistance to local water systems, conducting
    inspections, and overseeing the water systems' compliance with
    the requirements for testing and treating water to achieve
    water quality standards.
        Second, the amendments authorized $9.6 billion to be
    appropriated to establish the drinking water revolving fund to
    finance infrastructure improvements at local water systems.
        While the State revolving funds are primarily directed at
    these infrastructure types of improvements, each State, at its
    option, may reserve or set aside up to 31 percent of its annual
    allotment to the SRF to supplement supervision grants and thus
    help the State meet its program responsibilities.
        Although EPA does not routinely estimate the State
    resources needed for implementing the act's requirements, the
    Association of State Drinking Water Administrators has
    periodically developed such estimates with EPA support and
    participation.
        According to the Association's most recent estimates, the
    States will need $345 million in fiscal year 1999, and that
    will grow to $449 million in fiscal year 2005. That is a 30
    percent increase.
        To answer the questions you posed, we surveyed 49 States
    with program primacy, and we also conducted more in-depth
    reviews in eight States.
        In summary, Mr. Chairman, we found the following:
        First, for fiscal years 1998 through 2000, EPA had
    requested 94 percent of the amount authorized for the
    supervision grants; for the same fiscal years, EPA requested
    about 80 percent of the amounts authorized to capitalize the
    States' SRF.
        If the States had made the maximum use of the set-asides by
    reserving the full 31 percent available from the revolving
    fund, EPA's requested appropriations would have provided a
    total of $308 million in 1999 and $318 million in fiscal year
    2000. These amounts, when combined with required matching funds
    from the States themselves, would have exceeded estimates of
    the needs for the two most recent years.
        Second, despite the fact that the funds potentially
    available exceed the estimated needs, the actual State spending
    fell short. According to our nationwide survey of State
    drinking water agencies, the States' actual expenditures for
    implementing their programs, including expenditures of both
    Federal and State funds, were $214 million, $237 million, and
    $276 million, respectively, over the last 3 years.
        In fiscal year 1999, the only year for which our data
    permit such a comparison, total State expenditures fell short
    of the estimated needs for program implementation by about 20
    percent.
        Our third finding is, according to our nationwide survey,
    that the amounts of Federal funding available for fiscal years
    1997 through 1999 had less of an impact on the States' ability
    to implement their programs than did the effects of State-
    imposed spending constraints.
        Over 75 percent of the States reported that their staffing
    levels in fiscal year 1999 were inadequate to meet the act's
    requirements in effect through that year. The most frequently
    cited reasons were authorized staffing and funding levels that
    were too low, hiring freezes which prevented States from
    filling authorized positions, and inadequate State salaries
    which made it difficult to attract and retain qualified staff.
        In addition, while States had collectively reserved about
    half of the available SRF set-asides to address inadequate
    staffing levels, they expressed a great reluctance to do so,
    citing, among other things, concerns about diverting funds from
    needed infrastructure projects.
        Because of these constraints, Mr. Chairman, States have had
    to scale back technical assistance and other oversight
    activities. According to these officials, if the situation
    continues it could eventually lead to further compliance
    problems, especially among smaller systems. Over 90 percent of
    the States in our survey predicted that their staffing levels
    would be less than adequate in the future as the number of new
    program requirements and complex contaminant regulations take
    effect.
        Finally, EPA officials cited some practices that could help
    mitigate this resource shortfall. For example, EPA pointed to
    new program requirements that may increase efficiency,
    including those designed to assess water sources for
    contamination and improve the financial, technical, and
    managerial ability of local water systems to comply with the
    regulations.
        However, it could take years to realize the benefits of
    these programs. In the meanwhile, these are exactly the
    programs most likely to be adversely affected by current
    resources limitations.
        In conclusion, the amount of Federal funds potentially
    available to the States in the last few years appear to be
    adequate for meeting their estimated collective needs. However,
    a number of factors may impair the future ability of the States
    to meet the requirements of the Safe Drinking Water Act.
        Most important among these is the understandable reluctance
    to divert funds from needed infrastructure improvements and
    spending constraints at the State level, resulting in staffing
    shortfalls.
        While the eight States we contacted have been able to meet
    their statutory requirements in effect through this year, they
    have done so only by scaling back their programs and doing the
    minimum amount of work required. In the future, as resource
    needs increase with the growth in State program
    responsibilities, it will become imperative to address the
    factors that have thus far limited the States' ability to fully
    implement their programs.
        This concludes my remarks, Mr. Chairman. I would be happy
    to answer any questions.
        [The prepared statement of Peter F. Guerrero follows:]
       Prepared Statement of Prter F. Guerrero, Director, Environmental
       Protection Issues, Resources, Community, and Economic Development
               Division, United States General Accounting Office
        Mr. Chairman and Members of the Committee: We are here today to
    discuss our report entitled, Drinking Water: Spending Constraints Could
    Affect States' Ability to Implement Increasing Program Requirements,
    which you are releasing today.1 Ensuring an adequate supply
    of safe drinking water requires investing not only in the physical
    infrastructure, such as water treatment and distribution systems, but
    also in essential oversight activities performed by the states, such as
    training water system operators and monitoring water systems'
    compliance with the drinking water standards promulgated by the
    Environmental Protection Agency (EPA). Under the Safe Drinking Water
    Act Amendments of 1996, the states are responsible for implementing a
    number of new requirements, such as ensuring that the nation's
    thousands of drinking water systems have the financial, managerial, and
    technical ability to comply with regulations and assessing the
    vulnerability of drinking water sources to contamination. In addition,
    the states must oversee their water systems' compliance with complex
    new regulations on specific contaminants.
    ---------------------------------------------------------------------------
        \1\ See GAO/RCED-00-199, Aug. 31, 2000.
    ---------------------------------------------------------------------------
        In recognition of the key role that the states play in implementing
    the requirements of the Safe Drinking Water Act, you asked us to
    provide information on

     how EPA's budget requests for state program implementation
            compare to the amounts that are authorized and estimated to be
            needed;
     how much the states have spent since the passage of the 1996
            amendments to implement their drinking water programs and how
            their expenditures compare with estimated needs;
     what effects federal funding levels have had, and could have
            in the future, on the states' ability to implement their
            programs; and
     what existing practices have the potential to help the states
            implement their drinking water programs more effectively and
            efficiently.
        To understand these issues in context, Mr. Chairman, it is
    necessary to provide a brief summary of the funding available for
    implementing the states' drinking water programs. In the 1996
    amendments, the Congress substantially increased the amount of funding
    authorized to help the states meet their responsibilities. First, the
    amendments authorized an increase in the funding for Public Water
    System Supervision grants from $70 million to $100 million annually
    through fiscal year 2003. The states use these supervision grants for a
    variety of activities related to implementing their drinking water
    programs, such as providing technical assistance to local water
    systems, conducting inspections, and overseeing the water systems'
    compliance with requirements for testing and treating water quality.
    Second, the amendments authorized $9.6 billion, to be appropriated
    through 2003, to establish the Drinking Water State Revolving Fund
    primarily for financing infrastructure improvements at local water
    systems. In its annual budgets, EPA requests appropriations to
    capitalize the states' funds and, subsequently, makes specific
    allotments to each state for that purpose. The states, in turn, loan
    these funds to their local water systems. As loans are repaid, the
    states' funds are replenished, and the states can make loans for other
    eligible drinking water projects. While the state revolving funds are
    primarily directed at financing local infrastructure, each state, at
    its option, may reserve or ``set aside'' up to 31 percent of its annual
    allotment to supplement the supervision grant and, thus, help the state
    meet its responsibilities in implementing its program. The states must
    match a portion of both the supervision grants and the moneys they set
    aside from their revolving funds.
        Despite the significant increases in the amount of funding Congress
    has authorized to help states implement their programs, representatives
    of state drinking water programs have expressed concerns about whether
    they have sufficient resources to fulfill their responsibilities under
    the Safe Drinking Water Act. Although EPA does not routinely estimate
    the states' resource needs for implementing the act's requirements, the
    Association of State Drinking Water Administrators (ASDWA) has
    periodically developed such estimates with EPA's support and
    participation. According to ASDWA's most recent estimate, which
    incorporated the requirements of the 1996 amendments, the states'
    collective needs range from $345 million in fiscal year 1999 to $449
    million in fiscal 2005.
        In response to the questions you asked, Mr. Chairman, we found the
    following:

     In its budget requests for fiscal years 1998 through 2000, EPA
            requested about 94 percent of the $100 million authorized
            annually for supervision grants. For the same fiscal years, EPA
            requested, on average, 80 percent of the amounts authorized to
            capitalize the states' revolving funds for drinking water. If
            the states had made maximum use of the set-asides by reserving
            the full 31 percent available from the revolving fund, EPA's
            requested appropriations would have provided a total of $308
            million in fiscal year 1999 and $318 million in fiscal year
            2000 to help the states meet their responsibilities in
            implementing their drinking water programs. These amounts, when
            combined with required matching funds from the states, would
            have exceeded ASDWA's estimates of the states' needs.
     Despite the fact that the funds potentially available to the
            states exceed the estimated needs, actual state spending fell
            short of what was needed. According to our nationwide survey of
            state drinking water agencies, for fiscal years 1997 through
            1999, the states' actual expenditures for implementing their
            drinking water programs--including expenditures of both federal
            and state funds--were $214 million, $237 million, and $276
            million, respectively. In fiscal year 1999--the only year for
            which our data permit such a comparison--total state
            expenditures fell short of ASDWA's estimate of the amount
            needed for program implementation by about 20 percent.
     However, according to our nationwide survey, the amounts of
            federal funding available for fiscal years 1997 through 1999
            had less of an impact on the states' ability to implement their
            drinking water programs than did the effects of state-imposed
            spending constraints. Over 75 percent of the states reported
            that their staffing levels in fiscal year 1999 were inadequate
            to meet the act's requirements in effect through that year. The
            most frequently cited reasons were (1) the states' authorized
            staffing and authorized funding levels were too low, (2) hiring
            freezes prevented the states from filling authorized positions,
            and (3) inadequate state salaries made it difficult to attract
            and retain qualified staff. In addition, about 40 percent of
            these respondents indicated a reluctance to use revolving fund
            set-asides to address inadequate staffing levels, citing, among
            other things, concerns about diverting funds from
            infrastructure projects. Our discussions with drinking water
            officials from eight states disclosed that they have been able
            to meet most requirements in effect through fiscal year 1999,
            generally by scaling back technical assistance and other
            oversight activities or doing the minimum amount of work
            required. According to these officials, if this situation
            continues, it could eventually lead to more compliance
            problems, especially among small water systems, which make up
            the overwhelming majority of water systems. Over 90 percent of
            the states in our nationwide survey predicted that their
            staffing levels would be less than adequate in the future as a
            number of new program requirements and complex contaminant
            regulations take effect.
     Program officials in the eight states we contacted cited some
            management practices that could increase the efficiency of
            program implementation. For example, some states are taking
            advantage of the expertise in other state and federal agencies
            or associations. EPA officials pointed to new program
            requirements that may increase efficiency, including those
            designed to assess water sources for contamination and improve
            the financial, technical, and managerial ability of local water
            systems to comply with drinking water regulations. However, it
            could take years to realize the benefits of these programs.

                                   BACKGROUND
        The Safe Drinking Water Act of 1974 authorized EPA to give the
    primary responsibility for enforcing requirements of EPA's safe
    drinking water program--commonly referred to as ``primacy''--to the
    states that meet certain requirements. Among the key requirements are
    that the states (1) adopt drinking water regulations that are no less
    stringent than EPA's national primary drinking water regulations and
    (2) adopt and implement adequate procedures to carry out the program's
    requirements and enforce the regulations. All states, except Wyoming,
    have assumed primacy for managing their drinking water programs. To
    assist the states in developing and implementing their own drinking
    water programs, the 1974 act authorized EPA to award them program
    supervision grants and provided that the federal funds would comprise
    not more than 75 percent of the cost of implementing state programs.
        In addition to increasing the authorized funding for the
    supervision grants, the 1996 amendments authorized $9.6 billion through
    fiscal year 2003 to establish the Drinking Water State Revolving Fund
    for infrastructure improvements at local water systems. To give the
    states more flexibility in operating their drinking water programs, the
    Congress gave the states the option of setting aside up to 31 percent
    of their annual revolving fund allotments for certain designated
    activities, most of which are related to program implementation. For
    example, the states may set aside funds for: supervision of public
    water systems; technical assistance through programs designed to
    protect sources of drinking water; strategies to help ensure the
    financial, technical, and managerial capacity of water systems to
    provide safe drinking water; and programs to certify water system
    operators.
        The 1996 amendments also gave the states a number of new
    responsibilities. For example, the amendments established new programs
    for assessing the vulnerability of drinking water sources to
    contamination and ensuring the technical, financial, and managerial
    viability of water systems. As these new programs are being
    implemented, states will also be overseeing the water systems'
    compliance with complex new regulations on such contaminants as arsenic
    and radon.

     THE FUNDS POTENTIALLY AVAILABLE TO THE STATES HAVE BEEN SUFFICIENT TO
                          COVER THEIR ESTIMATED NEEDS
        For fiscal years 1998 through 2000, on average, EPA requested, as
    part of the President's budget, about 94 percent of the funding
    authorized for supervision grants in the Safe Drinking Water Act
    Amendments of 1996 and 80 percent of the funding authorized for the
    revolving fund, from which the set-asides are available. During this
    period, EPA's requests for the supervision grants remained constant at
    about $85 million while its requests for the revolving fund allotments
    increased, making more funds available for set-asides each year, from
    $212 million in fiscal year 1998 to $233 million in fiscal year 2000.
    (During this period, EPA received the amount it requested for both the
    supervision grants and the revolving fund, except for fiscal year 2000
    when the appropriation for the revolving fund was $5 million less than
    the request.)
        According to ASDWA, the total estimated needs for implementing the
    states' programs in fiscal years 1999 and 2000 are $345 million and
    $339 million, respectively. The amounts EPA requested for those years
    would have been more than enough to meet the states' annual needs as
    estimated by ASDWA if

     the states took full advantage of the available set-asides--
            that is, if each state set aside the maximum 31 percent for
            state implementation activities and provided the required
            matching funds--and
     the supervision grants and minimum required match were
            included in the total.
        The funds potentially available to the states would have exceeded
    their estimated needs for fiscal years 1999 and 2000 by about $27
    million and $44 million, respectively.

     THE STATES' OVERALL SPENDING HAS FALLEN SHORT OF THEIR ESTIMATED NEEDS
        According to the results of our nationwide survey, for fiscal years
    1997 through 1999, the states' actual expenditures for implementing
    their drinking water programs--including expenditures of both federal
    and state funds--were $214 million, $237 million, and $276 million,
    respectively. We found that the states are contributing a significant
    share of the funding for their programs and are contributing more
    funding than the minimum required to meet the statutory matching
    provisions. Over the 3-year period, state funds were the source of 53
    percent, on average, of the states' total expenditures for implementing
    their drinking water programs.
        Although they have contributed more funds than required by the
    federal matching provisions, according to the data on state
    expenditures obtained in our survey, the states collectively may be
    spending less than ASDWA's estimates of the amounts needed nationwide.
    For example, in fiscal year 1999--the only year for which our data
    permit a direct comparison--the states' collective expenditures,
    including funds from both state and federal sources, were about 80
    percent of the amount estimated to be needed for program
    implementation.2 If recent trends continue over the next
    several years--that is, if EPA's appropriations for supervision grants
    and the state revolving fund remain at about their existing levels
    relative to the amounts authorized and states collectively continue to
    make use of only about half of the available set-asides--then the gap
    between the amounts expended and estimated to be needed could grow
    larger. ASDWA estimates that by fiscal year 2005 the states will need
    $449 million to implement their drinking water programs, an increase of
    about 30 percent from fiscal year 1999. Table 1 shows the projected
    resource needs for implementing the states' oversight programs, by
    year, from fiscal years 1999 through 2005.
    ---------------------------------------------------------------------------
        \2\ We collected data on how much the states spent to implement
    their drinking water programs for fiscal years 1997 through 1999 only;
    ASDWA estimated the amount of funding states would need to implement
    their programs for fiscal years 1999 through 2005 only.

       Table 1: Resource Needs for Implementing the States' Drinking Water
                    Programs, Fiscal Years 1999 Through 2005
                               Dollars in millions
    ------------------------------------------------------------------------
                                                     Full-time
                      Fiscal year                    equivalent    Funding
                                                       staff
    ------------------------------------------------------------------------
    1999..........................................        4,911          345
    2000..........................................        5,020          339
    2001..........................................        5,190          362
    2002..........................................        5,208          374
    2003..........................................        5,588          414
    2004..........................................        5,755          439
    2005..........................................        5,252          449
    ------------------------------------------------------------------------
    Note: The estimates do not include Wyoming or the District of Columbia.
      In addition, we adjusted ASDWA's estimates to exclude Puerto Rico, the
      U.S. Virgin Islands, American Samoa, Guam, and the Commonwealth of the
      Northern Mariana Islands.
    Source: GAO's presentation of data from ASDWA.

     FACTORS OTHER THAN FEDERAL FUNDING LEVELS AFFECT MOST STATES' ABILITY
                          TO IMPLEMENT THEIR PROGRAMS
        According to our nationwide survey and more detailed discussions
    with drinking water officials in eight states, for fiscal years 1997
    through 1999, factors other than federal funding levels affected the
    states' ability to implement their drinking water programs. These
    factors include both state-imposed spending constraints and concerns
    about using funds from the revolving fund for program implementation
    instead of infrastructure projects. Despite these factors, program
    officials from all eight states we contacted told us they were able to
    meet most program requirements in effect through fiscal year 1999,
    largely by scaling back their programs and doing the minimum amount of
    work required. For example, four states told us that they have reduced
    the frequency with which they conduct comprehensive inspections of
    water systems, called sanitary surveys. Officials from seven of the
    eight states indicated that over the next 5 years, increasing program
    responsibilities could exacerbate the effects that the states have
    experienced thus far.
    Factors Contributing to Inadequate Staffing Levels in State Drinking
            Water Programs
        In responding to our nationwide survey, 76 percent of the states
    reported that their current staffing level is less than adequate or
    much less than adequate to implement their drinking water programs.
    Among these states, the most frequently cited reasons for not having an
    adequate staffing level were inadequate authorized state staffing
    levels (76 percent), inadequate authorized state funding levels (60
    percent), state-imposed hiring freezes that prevent drinking water
    program offices from filling authorized positions (41 percent), and
    inadequate state salary structures that make it difficult to attract
    and retain qualified staff (49 percent).
        According to program officials from the eight states we contacted,
    state legislatures generally authorize the number of staff that state
    drinking water programs can hire and/or the amount of state funding the
    programs can receive. This can create situations in which some states
    have adequate authorized staffing levels to carry out program
    responsibilities but not enough funding to hire all of the authorized
    staff. Other states may have adequate funding but cannot hire anyone
    because they have inadequate authorized staffing levels or because
    there is a hiring freeze.
        Five of the eight states that we looked at in-depth were
    experiencing problems as a result of these circumstances. For example:

     Program officials from Maine commented that even if they did
            receive additional federal funds, they would not be able to
            hire new permanent staff unless the authorized state staffing
            level is increased.
     A program official from Indiana said that the authorized state
            funding level is only enough to meet the minimum match required
            to obtain federal funds and estimated that the state needs to
            increase its total resource level by at least 50 percent.
        Program officials from two of the states that we contacted
    attributed inadequate staffing levels in their programs in part to an
    inability to pay staff competitive salaries, which makes it difficult
    to attract and retain qualified staff. Arkansas' program had several
    vacancies as a result of this problem.
        In addition to state-imposed spending constraints, our nationwide
    survey found that over 40 percent of the states that reported
    inadequate staffing levels attributed this situation to factors that
    can limit the states' use of the revolving fund set-asides to help
    implement their drinking water programs.3 These factors
    included concerns about using the revolving fund to implement drinking
    water programs instead of using the money to fund infrastructure
    projects (41 percent) and uncertainty about the continued availability
    of the set-aside money from this fund after its authorization expires
    (43 percent). In addition, about 30 percent of the states reporting
    inadequate staffing levels said that an insufficient level of funding
    for the supervision grants was a contributing factor.
    ---------------------------------------------------------------------------
        \3\ During fiscal years 1997 and 1998, the only years for which
    complete set-aside information is available, only 11 and 8 states,
    respectively, used the full 31 percent set-aside allowed by law.
    Collectively, the states reserved about two-thirds of the available
    set-asides in fiscal year 1997 and took less than half of the amounts
    available in fiscal year 1998.
    ---------------------------------------------------------------------------
        Regarding the adequacy of the funding for the supervision grants,
    program officials from four of the eight states we contacted said that
    an increase in this funding might prompt their legislatures to approve
    additional state funding since a small increase in state funding could
    be used to match a larger amount of federal dollars. Program officials
    from both Ohio and Utah commented that increasing the supervision
    grants would mean that the states would not be forced to make a choice
    between program implementation and infrastructure construction.
    Current and Future Impact of Inadequate Staffing on the States' Ability
            to Implement Their Programs
        Although program officials in all of the eight states we contacted
    maintain that they have been able to meet most of the program
    requirements in effect through fiscal year 1999, they have done so by
    (1) scaling back their programs, (2) doing the minimum amount of work
    required, and (3) setting formal or informal priorities among their
    responsibilities. For example, six of the eight states said they have
    had to scale back their programs by providing less technical assistance
    to water systems, particularly small water systems, which make up the
    overwhelming majority of all public water systems. In addition, six of
    the eight states currently engage in some form of priority setting
    using such criteria as the size of the water system, the size of the
    population at risk, the potential health effects of a violation, and
    whether or not the state could lose federal funding if it did not
    perform an activity.
        Ninety-four percent of the states in our nationwide survey
    predicted that their staffing levels would be less than adequate or
    much less than adequate as new program requirements and complex
    contaminant regulations take effect over the next 5 years. Similarly,
    officials from seven of the eight states we contacted indicated that
    the state-imposed constraints that currently affect their ability to
    implement their programs--such as inadequate state staffing and funding
    levels, hiring freezes, and inadequate state salary levels--will
    continue to compromise their programs if not addressed. In light of
    ASDWA's estimate that the states' resource needs will increase by about
    30 percent between fiscal years 1999 and 2005, the effects experienced
    thus far could be exacerbated in the future.
        The extent to which future spending constraints will affect the
    states' drinking water programs is unclear because the details of
    certain regulations, and hence the resulting workload on their
    programs, are unclear. For example, an Ohio official pointed out that
    the cost of implementing the arsenic regulation depends on where EPA
    sets the standard for this contaminant. This official said that 225
    public water systems in Ohio would be affected by this regulation if
    the arsenic standard were set at 10 milligrams per liter while 500
    systems would be affected if the standard were set at 5 milligrams per
    liter.

          MANAGEMENT PRACTICES AND NEW REQUIREMENTS COULD ENHANCE THE
    EFFECTIVENESS AND THE EFFICIENCY OF THE STATES' DRINKING WATER PROGRAMS
        Beyond adding more funding, one potential solution to the states'
    increasing responsibilities under the Safe Drinking Water Act is the
    adoption of management practices that improve efficiency or otherwise
    enhance the states' ability to implement their programs. Officials in
    the eight states we contacted cited efforts to improve program
    efficiency by adopting such new management practices as taking
    advantage of the expertise in other state and federal agencies or
    associations through contracts, interagency agreements, and
    partnerships. Also, the EPA officials we interviewed emphasized that
    new requirements to assess drinking water sources and improve water
    systems' ability to comply with drinking water regulations, mandated in
    the 1996 amendments, would likely increase the efficiency of state
    programs over the long term. Although these new requirements would
    necessitate substantial resource investments in the short term,
    according to EPA officials, they will eventually improve both the
    efficiency and effectiveness of the states' programs.

                         AGENCY COMMENTS ON OUR REPORT
        We provided EPA with a draft of our report for its review and
    comment. EPA officials generally agreed with the information presented
    in the draft report; however, they expressed concerns in two areas.
    First, the officials said that the draft report did not sufficiently
    emphasize the impact of the increasing program requirements on the
    states' future resource needs. We made several changes to highlight
    material already in the report concerning the impact of potential state
    resource shortfalls on their future program implementation. Second, the
    EPA officials noted that our comparison of the funds potentially
    available to the states with the needs estimated by ASDWA could be
    misleading because, as our draft report indicated, most states (1) do
    not take the maximum amount allowed for the revolving fund set-asides
    and (2) actually have contributed much more than the minimum amounts
    required for matching the EPA-provided funds. We clarified our
    presentation of this comparison.
        In summary, Mr. Chairman, the amounts of federal funds potentially
    available to the states during the last few years appears to have been
    adequate for meeting their estimated collective needs to date. However,
    a number of factors may impair the future ability of the states to meet
    the requirements of the Safe Drinking Water Amendments of 1996. Most
    important among these are the spending constraints at the state level,
    resulting in staffing shortfalls, and an understandable reluctance to
    divert revolving fund resources from needed infrastructure improvements
    at local water systems. While the eight states we contacted have been
    able to meet statutory program requirements in effect through fiscal
    year 1999, they have done so only by scaling back their programs and
    doing the minimum amount of work necessary. As the states' resource
    needs increase along with the growth in their responsibilities, it will
    become imperative to address the factors that have thus far affected
    the states' ability to implement their programs.
        This concludes my prepared statement. I would be pleased to answer
    any questions you or Members of the Committee may have.
    Contact and Acknowledgement
        For future contacts regarding this testimony, please contact Peter
    F. Guerrero at (202) 512-6111. Individuals making key contributions to
    this testimony included Ellen Crocker, Terri Dee, Carolyn Hall, and
    Lisa Pittelkau.

        Mr. Bilirakis. Thank you, Mr. Guerrero.
        Mr. Fox.

                       STATEMENT OF J. CHARLES FOX

        Mr. Fox. Thank you, Mr. Chairman. It is a pleasure to be
    here. I very much appreciate the committee's calling this
    hearing so we can have this important discussion.
        Today, Americans enjoy one of the safest drinking water
    supplies in the world. Over 90 percent of Americans served by
    community water systems receive water with no reported health
    standard violations. However, the lesson we learned in
    Milwaukee is that we can never take the safety of our drinking
    water for granted.
        High quality drinking water is a testament to the hard work
    and dedication of water systems throughout the country, large
    and small, both public and private. State officials oversee the
    work of local systems, and now more than ever we rely on the
    States to identify and fix problems and to work with local
    systems to assure safe drinking water for the public we all
    serve.
        It is also important to recognize that the country would
    not have the high quality drinking water system we enjoy today
    without the leadership provided by Congress and the
    administration in the enactment of the 1986 amendments to the
    Safe Drinking Water Act.
        Consistent with the goals of the 1996 amendments, the
    President and Vice President have dramatically increased
    funding for States' drinking water programs and for financing
    drinking water infrastructure.
        In addition, EPA has established an outstanding record of
    success in implementing the many new and challenging
    authorities called for in the 1996 amendments.
        For example, the agency worked with States to successfully
    establish State revolving loan funds for financing drinking
    water infrastructure improvements. The agency has also worked
    closely with States and a range of other stakeholders to
    develop a new right-to-know program, and new drinking water
    standards within the tight timeframes established in the 1996
    amendments.
        I want to publicly commend all the EPA staff that have
    worked so hard over the past several years to build this record
    of accomplishment.
        My written statement describes many of our actions in more
    detail. I would like to highlight some of the important
    initiatives we have taken to strengthen public health
    protection.
        Most scientists and drinking water systems, managers agree
    that the most significant threat to public health is microbial
    contaminants, such as E. coli or Cryptosporidium. Exposure to
    these contaminants can include severe infections that can last
    for several weeks and, in some cases, might result in death.
        This spring EPA proposed the ground water rule and the
    long-term enhanced surface water treatment rule to address
    microbial health concerns to consumers. When finalized, these
    rules will complete a cycle of microbial protection with
    existing rules so all water systems, whether big or small,
    whether their source water is ground water or surface water,
    whether public or private, have basic protections, including
    filtration, disinfection, and monitoring, as appropriate to the
    individual system.
        I am also pleased to announce that on September 6 a Federal
    advisory committee reached agreement on the second phase of
    these rules. We will be issuing a formal notice in the Federal
    Register later this fall to begin an extensive process of
    collaboration with interested parties prior to future
    rulemaking.
        Consistent with Congress' direction, EPA has also issued a
    proposed rule to lower the maximum contaminant level of
    arsenic, another high priority drinking water contaminant. It
    is a known carcinogen, and also linked to many known noncancer
    health effects.
        In a March 1999 report, the National Academy of Sciences
    found that the current standard of 50 parts per billion does
    not provide adequate human health protection, and recommended
    that the EPA lower the MCL as quickly as possible. The agency
    proposed a standard of 5 parts per billion, and also asked for
    comments on 10 and 20 parts per billion.
        I understand this proposal has significant interest, and I
    am happy to talk about it in greater detail later today or at
    any time in the future.
        You asked that I also address State funding for the
    implementation of the 1996 amendments. I believe that by
    working together, Congress and the administration have, in
    fact, provided the resources that EPA, States, and others need
    to assure the effective implementation of the amendments.
        Since the early 1990's, the Clinton-Gore Administration has
    proposed and Congress has provided dramatically increased
    resources for implementation grants to the States. The funding
    has increased almost threefold in less than 10 years from the
    basic implementation grant account. In addition, Congress and
    the administration agreed to include in the 1996 law the
    discretionary authority to set aside drinking water SRF funds
    to support State programs.
        Although not all States have chosen to use the full amount
    of funding that is available to them, as you can see in the
    chart attached to my testimony, the funding available to the
    States since the 1996 amendments passed has almost quadrupled.
    I do want to note that this situation may change in coming
    years as workloads increase, and we urge that future
    administrations and future Congresses will want to pay very
    close attention to this situation.
        In conclusion, Mr. Chairman, I am confident that the
    safety, security, and availability of drinking water will
    always be at the top of the American public's agenda. You can
    trust that EPA will continue to work with Congress, the States,
    local governments, and others to identify and develop the best
    mechanism to help deliver safe water that protects public
    health.
        Thank you very much.
        [The prepared statement of J. Charles Fox follows:]
       Prepared Statement of J. Charles Fox, Assistant Administrator for
                  Water, U.S. Environmental Protection Agency
        Thank you, Mr. Chairman, for the opportunity to address the
    Subcommittee today on the important work that the Environmental
    Protection Agency (EPA) is doing, in cooperation with States and
    drinking water systems, to assure that all Americans have drinking
    water that is safe.
        Today, Americans enjoy one of the safest drinking water supply
    systems in the world. Over 90% of Americans served by community water
    systems receive water with no reported health standard violations.
        The high quality of our drinking water is a testament to the hard
    work and dedication of the managers and staff of water systems
    throughout the country--large and small, publicly owned and private--
    who are the first line of defense in assuring safe drinking water.
        State officials oversee the work of local systems and are essential
    to keeping the promise of safe drinking water. Now more than ever, we
    rely on States to identify and fix problems and to work with local
    systems to ensure safe drinking water long into the future.
        It is also important to recognize that the country would not have
    the high quality drinking water system that we enjoy today without the
    leadership provided by the Congress in the enactment of the 1996
    amendments to the Safe Drinking Water Act (SDWA). The SDWA amendments,
    which the Clinton Administration played a major role in developing,
    invigorated the core drinking water program and provided new direction
    to federal, State and local governments and the drinking water
    community. The 1996 amendments moved us toward more comprehensive
    drinking water protection by:

     improving the way EPA sets drinking water safety standards
            based on good science and data;
     addressing some of the highest public health risks;
     expanding consumer information and involvement;
     providing over 3 billion dollars in funding for infrastructure
            investments for communities;
     emphasizing prevention through source water assessments,
            capacity development, and operator certification; and
     attending to some of the most pressing problems of small water
            systems.
        In addition to playing a leadership role in developing the key
    elements of the SDWA amendments, the Administration has also
    dramatically increased funding for State safe drinking water programs
    and for financing of drinking water infrastructure.
        Perhaps more important, EPA has established an outstanding record
    of success in implementing the many new and challenging authorities
    called for by the SDWA amendments--a total of some 55 new Federal
    responsibilities. The Agency worked with States to successfully
    establish State Revolving Loan Funds for financing drinking water
    infrastructure improvements. The Agency has worked closely with States
    and a range of other stakeholders to develop strong and practical new
    drinking water standards within the very tight timeframes established
    in the SDWA amendments. And, we have worked with all interested parties
    to improve the long-term protection of sources of drinking water. I
    want to publicly commend all the EPA staff who have worked so hard over
    the past several years to build an outstanding drinking water program.
        I believe that the outstanding quality of the drinking water
    program we have today is the best evidence that we will be able to do
    even better in the coming years. We will do better in our efforts to
    identify contaminants of special concern. We will do better in helping
    communities finance needed system improvements. We will do better in
    planning for the long-term safety of sources of drinking water. And, we
    will accomplish this work hand-in-hand with State and local officials,
    citizens, and the Congress.
        My testimony today will review some of the work we have done to
    implement the SDWA amendments, describe some of the funding issues that
    the program faces, and identify some of the challenges that we will be
    working on in the coming years.

                        SUCCESS IN MEETING SDWA MANDATES
        The 1996 SDWA amendments gave the entire drinking water community,
    but especially EPA, new marching orders and many new challenges,
    including regulating high risk contaminants, improving consumer right-
    to-know about drinking water quality, protecting source waters, and
    financing system improvements.
    Regulating High-Risk Contaminants
        In the past two years, we have proposed or finalized a series of
    new rules that address microbial and other high risk contaminants in
    drinking water.
        The Administration and Congress agree that the most significant
    threat to public health is microbial contamination, such as E.coli and
    Cryptosporidium. Adverse health effects from exposure to microbial
    pathogens in drinking water are well documented. As we have seen in
    Milwaukee and New York--and most recently in our neighbor, Ontario,
    Canada--these health effects can include severe infections that can
    last several weeks and may result in death.
        This Spring, EPA proposed the Ground Water Rule and the Long Term 1
    Enhanced Surface Water Treatment Rule to address the health threats to
    consumers by microbial contamination in ground water systems.
        When promulgated, these rules will complete a cycle of microbial
    protection with the Interim Enhanced Surface Water Treatment Rule,
    issued in 1998. Together, these rules will cover all consumers of water
    provided by public water systems and significantly reduce threats to
    human health from microbial disease.
        Disinfection of drinking water to protect from microbial
    contamination is one of the major public health advances in the 20th
    century. However, the disinfectants themselves can react with
    naturally-occurring materials in the water to form unintended
    byproducts that may pose health risks. EPA's Disinfectants/Disinfection
    Byproducts Rule, released with the Interim Enhanced Surface Water
    Treatment Rule in 1998, addresses the potential health threats that may
    be related to the disinfection process itself. It strengthens standards
    for trihalomethanes, establishes new drinking water standards for seven
    disinfectant byproducts and three disinfectants, and requires treatment
    techniques to further reduce exposure to disinfection byproducts.
        The risk-risk tradeoff between disinfectants and their byproducts
    makes decisions about treatment difficult. However, the extensive
    stakeholder process that EPA used to develop these complex rules has
    assured that the new requirements are well supported and understood.
        I am pleased to announce that on September 6th, a Federal Advisory
    Committee--with whom the Agency has been discussing efforts on
    microbial contaminants, the disinfectants used to treat these
    contaminants, and disinfection byproducts resulting from the
    treatment--reached agreement on the second phase of these rules. This
    agreement builds on both the results of the microbial and disinfection
    byproducts research that is currently ongoing and a massive data
    collection effort on contaminant occurrence. It will strengthen and
    expand the human health protections provided in the rules promulgated
    in 1998.
        In November 1999, EPA proposed the Radon Rule, which will have an
    important impact on reducing the human health risk from radon in
    drinking water as well as in indoor air from soil. Radon in indoor air
    is the second leading cause of lung cancer in the United States.
    Although the risk posed by radon from drinking water is much smaller
    than that from indoor air, the 1999 report from the National Academy of
    Sciences confirmed that radon in drinking water causes cancer.
        Because of the multimedia nature of radon risk, Congress, in the
    SDWA Amendments, created a unique multimedia mitigation approach to
    allow local flexibility in addressing both risks. Our approach of an
    alternative maximum contaminant level and multimedia mitigation program
    accurately and fully reflects the 1996 SDWA amendments' provisions to
    protect public health, and will result in a reduction of cancer cases
    from both indoor air and drinking water in a cost-effective manner.
        Consistent with the Congress' direction, EPA has also issued a
    proposed rule to lower the maximum contaminant level for arsenic,
    another high-priority drinking water contaminant. Arsenic is a known
    carcinogen and is also linked to many non-cancer health effects. In a
    March 1999 report, the National Academy of Sciences' National Research
    Council found that the current, 50-year-old arsenic standard of 50
    parts per billion does not provide adequate human health protection,
    and recommended that EPA lower the MCL as quickly as possible.
        The Agency proposed a standard of 5 parts per billion and also
    asked for comments on 3, 10, and 20 parts per billion. Last month we
    held a day-long, public meeting on this proposed rule in Reno, Nevada.
    Over 140 people attended in person and another 40 or so joined in the
    discussion via telephone. While we knew there was considerable interest
    in this proposed rule, the attendance at this meeting serves as a good
    indicator that the comments submitted on this rule will be significant.
        In addition, we expect a report on this proposed rule from the
    Agency's Science Advisory Board (SAB) in the next few weeks. This SAB
    assessment, as well as the numerous public comments submitted on the
    proposed rule, will be thoroughly evaluated as EPA develops the final
    regulation on arsenic.
    Right-to-Know/Consumer Awareness
        The Clinton Administration has a strong commitment to the right of
    consumers to know the quality of the water that they drink. We made
    expanded consumer information a top priority in the development of the
    SDWA amendments and have worked hard to assure the effective
    implementation of new right-to-know authorities. In addition, drinking
    water systems are making outstanding progress in providing information
    to consumers.
        The new ``consumer confidence'' reports give customers of drinking
    water systems the information they need to make their own health
    decisions. Today, approximately 253 million Americans have access to
    their annual consumer confidence report. Over 100 million Americans are
    able to read their water quality report online. These reports provide
    information the public is demanding.
        The public also needs immediate information about drinking water
    health threats so they can protect themselves and their children. EPA
    recently completed revisions to the Public Notification Rule, which now
    requires faster notice in emergencies--specifically, within 24 hours.
    While providing for faster and clearer communication to consumers, the
    rule will also reduce the burden to water systems by requiring fewer
    notices overall and enabling water systems to better target notices to
    the seriousness of the risk.
        Finally, EPA continues to respond to the public about drinking
    water issues. In 1999, EPA's Safe Drinking Water Hotline received over
    10,000 calls from consumers about their water quality, most coming near
    the October, 1999 deadline for the first consumer confidence report.
    EPA's Local Drinking Water Information website is accessed over 5,000
    times per month.
    Preventing Contamination of Drinking Water
        The 1996 SDWA amendments recognized that a robust program to
    prevent contamination of drinking water supplies and efforts to ensure
    reliable systems are necessary and cost-effective approaches to address
    current and emerging problems.
        Effective drinking water protection has to start with an
    understanding of the threats to the water source. States are making
    significant progress in development of source water assessments. Fifty
    States/Territories have an EPA-approved Source Water Assessment and
    Prevention Program and are conducting assessments for the water
    supplies.
        To support source water assessment and prevention activities,
    States were provided a one year only, FY1997, set-aside that allowed
    them to use up to10 percent of their Drinking Water State Revolving
    Fund allotment to support their source water delineations and
    assessment efforts.
        The total amount available for this set-aside was approximately
    $124 million; all States and Territories actually set aside close to
    $112 million, or 90 percent of the amount available. While the set-
    aside itself was limited to one year, the States have four years to
    obligate these funds.
        Preventing drinking water contamination also means that water
    systems must have the financial, technical, and managerial ability to
    meet new challenges and continue to provide safe drinking water to
    their consumers. As required by the 1996 SDWA amendments, EPA has
    developed guidance to States on both capacity development programs and
    programs to ensure that all water systems have access to a fully
    qualified operator.
        All States are developing their capacity development and operator
    certification programs. We are optimistic that they will meet the
    statutory requirements and deadline so as to avoid the penalty of a 10
    percent reduction for capacity development and a 20 percent reduction
    for operator certification from their State Revolving Loan Fund
    allocation in FY 2001.
    Drinking Water State Revolving Fund
        The Drinking Water State Revolving Fund (DWSRF) has been extremely
    successful in less than 4 years of operation. From its four year (FYs
    97,98,99, 00) aggregate appropriations of some $3.6 billion, EPA has
    given out nearly $2.7 billion in revolving loan grants to all 50
    States, Puerto Rico, the District of Columbia, and the Territories.
        States have made over 1,200 loans totaling over $2.3 billion to
    water systems to address the most significant public health needs.
    Small water systems have been a focus of the DWSRF. Nearly three-
    fourths of all DWSRF loans awarded have gone to systems serving fewer
    than 10,000 persons.
    EPA Cooperation with States and Drinking Water Systems
        As EPA has implemented SDWA, we have tried to ameliorate some of
    the demands that the requirements place on our partners, especially the
    States.
        We have had extensive stakeholder involvement in our actions,
    including a particular focus on small water systems. This has improved
    the quality of our rules and has resulted in increased flexibility to
    States and water systems.
        The SDWA amendments provide the authority to accommodate the needs
    and concerns of small systems and to emphasize technologies as a cost-
    effective approach to achieve compliance with our rules. We have worked
    hard to make effective use of this authority.
        We have also given the regulated community advance notice of new
    requirements, so that they may better prepare. The new Contaminant
    Candidate List process that Congress added to SDWA in 1996 gives us a
    fair and workable way to identify and address the highest risks to
    public health. We will also attempt to consolidate rules by type to
    move away from a contaminant-by-contaminant approach to regulation.
        As we develop our rules, we have taken into consideration the
    impacts that other rulemakings will have on the regulated community. We
    have tailored rules to consider local or regional considerations. We
    have phased implementation components where possible. We have worked to
    improve the capacity of water systems to meet these new requirements
    through early and improved technical assistance, training, outreach,
    and funding through the DWSRF.
        Finally, we are working to lessen the pressure on water systems as
    the last line of defense by promoting tools for watershed and source
    water protection through such mechanisms as the SDWA's source water
    protection programs and the Clean Water Act.

                      FUNDING SAFE DRINKING WATER PROGRAMS
        Mr. Chairman, in your letter of invitation to this hearing, you
    asked that I address funding for the implementation of the SDWA
    amendments, both now and in the future.
        I am confident that, working together, Congress and the
    Administration have provided the resources that EPA, States, and others
    needed to assure the effective implementation of the SDWA amendments.
        Since the early 1990s, the Clinton Administration had proposed, and
    Congress has provided, dramatically increased resources for Public
    Water Supply Supervision (PWSS) grants to the States. These grants
    provide support to States in their role as primary implementors of
    drinking water programs.
        The funding for PWSS grants has increased from a level of $39.3
    million in FY-90, to $72.2 million in FY 96, and almost $94.0 million
    in FY's 1998, 1999, and 2000--an almost threefold increase in less than
    10 years. (Note that roughly 10% of PWSS funding has been used by EPA
    to implement drinking water programs for Territories, Tribes, and
    States not implementing the program.) States must match these federal
    funds by providing at least one dollar for every three federal dollar
    received, but usually provide more.
        Congress and the Administration recognized that adequate funding
    for drinking water programs called for in the new SDWA amendments would
    be essential to the success of the program. We agreed to include in the
    new law authority for States to use some of the funds provided to them
    through the DWSRF to support program management activities. The
    authority to ``set-aside'' the DWSRF funds is discretionary to each
    State. Many States have chosen to use this new authority to supplement
    State funds and the federal funds available under the PWSS grant
    program.
        I understand your question, Mr. Chairman, to be whether these
    various funding sources are sufficient to support implementation of the
    strong drinking water program called for in the SDWA amendments. I
    believe that the short answer to that question is ``yes.'' At the same
    time, it is important to note that not all States have chosen to use
    the full amount of funding that is available to them. And, as the
    program evolves in the coming years, some funding shortfalls may
    develop.
        I have attached to my testimony a graph that illustrates the
    funding increases for drinking water program implementation over the
    past decade.

                FUTURE CHALLENGES FOR THE DRINKING WATER PROGRAM
        The challenges facing the entire drinking water community are
    indeed daunting. Protection of drinking water safety has always
    required constant vigilance and a proactive approach to emerging
    threats. That is still the case today. We can continue to meet these
    challenges through the framework provided by the SDWA, but it will
    require concerted effort by everyone in the drinking water community.
        The cost of providing safe drinking water--finding a water supply,
    treating the water, delivering the water, and maintaining the system--
    will continue to be a challenge. EPA's 1997 Drinking Water Needs Survey
    Report to Congress identified over $138 billion in industry needs with
    the vast majority of these needs targeted for delivery of water, rather
    than for meeting SDWA regulatory requirements. EPA is committed to
    working with Congress, the States, the drinking water industry, and
    consumers to ensure that Americans continue to receive safe, affordable
    drinking water into the future.
        The impressive successes of drinking water systems, States, and
    Federal agencies in providing safe water to all Americans should not
    lull us into a false sense of security. This success is a result of
    daily efforts to address constant risks and challenges.
        While some threats have been eliminated and some require continual
    management, new challenges are arising, including--

     unknown, or newly emerging contaminants;
     a pace of development that may threaten source water quality
            if not properly managed;
     an expanding and aging population that increasingly includes
            those with special health concerns;
     increasing demand and competition for water that strains
            available resources;
     a need for high-quality research on health effects and
            treatment technologies;
     a need for accurate information on compliance with drinking
            water standards; and
     a need for data that is reliable and accurate and information
            systems that can serve as a user-friendly reference for the
            drinking water community and the general public.

                                   CONCLUSION
        I am confident that the safety, security, and availability of
    drinking water will always be at the top of the American public's
    agenda. EPA will continue to work tirelessly with Congress, the States,
    localities, and others to identify and develop the best mechanisms for
    full and appropriate implementation of drinking water protection
    activities.
        Thank you again for the opportunity to discuss these important
    issues. I would be happy to address any questions you may have at this
    time.

        Mr. Bilirakis. Thank you, Mr. Fox.
        Mr. Fox, just to start the questions, does EPA essentially
    agree with the findings of GAO?
        Mr. Fox. At this point we haven't seen the final report. As
    you know, it was just released today. We did comment on a draft
    report.
        I have reviewed the draft summary of this report. Again, it
    is difficult, because I have not seen the final, but the draft
    report certainly is consistent with our understanding of the
    current states of financing today with the State programs.
        Mr. Bilirakis. Well, I appreciate that. And with all
    respect, the question is, was EPA aware that 75 percent of
    States had inadequate staffing levels in their drinking water
    programs?
        The GAO report assembled information on State funding for
    drinking water programs, and the EPA, did they or did they not
    possess that information?
        I guess basically the question goes to, would you expect
    that you would agree that EPA would agree ultimately, once you
    are able to look at this report, with the findings of the GAO?
    If that is the case, maybe you can share with this committee
    what EPA has been doing or is planning to do regarding some of
    these findings.
        Mr. Fox. We will, needless to say, offer for the committee
    our very specific comments on the GAO report. I would be happy
    to provide that.
        In general, I think the conclusions of the report are fair.
    That is, there perhaps are some deficiencies today at the State
    level for implementation of these programs. However, I think
    the report shows that the solutions to this are fairly
    complicated.
        I think, frankly, when we step back we see that the
    Congress and the administration--we really rose to the
    challenge together--we provided sizable new investments for
    drinking water programs.
        One of the overarching conclusions of the GAO report is
    that the Federal Government has really stepped up to the plate
    and provided sizable new investments, in some cases quadrupling
    the total Federal investment in a very short period of time,
    but there has not been the commensurate State level investment
    in these programs.
        I think this is a challenge for all of us. I don't mean to
    intend to point fingers here. This is an opportunity for all of
    us to try to solve a problem that I think we all owe to the
    American people.
        Mr. Bilirakis. I would ask, of course, that you provide to
    the committee your comments on the GAO report. You have already
    mentioned you are willing to do that. That is important that we
    get that.
        [The following was received for the record:]

        EPA agrees with the GAO's finding that funding and
    opportunities provided by congressional appropriations in
    addition to the required State match is sufficient to help
    States meet their current responsibilities under the Safe
    Drinking Water Act (SDWA), if States are able to use those
    funds. EPA acknowledges that many States face certain barriers,
    at the State level, to using these funds and we are committed
    to working with States to help them overcome these barriers. If
    we are not successful in this effort, States will face critical
    resource problems meeting their current responsibilities to
    protect public health. As more regulations are promulgated in
    the future, these resource problems will grow.
        In the early 1990s, implementation of State drinking water
    programs was severely hampered by a lack of resources. A
    widely-held criticism was that the federal government was not
    providing sufficient funds to the States to cover an
    appropriate share of the costs of the drinking water program.
    Between Fiscal Years 1990 and 2000, federal funds for the
    Public Water System Supervision (PWSS) grant program have
    increased from $39.3 million to almost $94.0 million. The
    Drinking Water State Revolving Loan Fund (DWSRF), authorized in
    the 1996 SDWA Amendments, provides the means for States to
    access even greater amounts of federal funds for use in
    implementing their drinking water programs. The States must
    decide the balance in use of SRF funds between infrastructure
    financing and State program support. On average, States are not
    setting aside the full level of funds that are available for
    State program support, and are not spending the funds that they
    have set aside. The GAO report shows that States had only
    expended approximately 20 percent of the more than $400 million
    that they had reserved to conduct set-aside activities.
        There are several reasons that States do not set aside the
    full level of available funds. When forced to choose between
    helping water systems improve their infrastructure or funding
    State implementation, assistance or compliance programs, the
    latter is not always the highest priority. Further, of those
    States that have set-aside funds from the DWSRF for program
    implementation, many have not been able to actually make use of
    those set asides because of State-imposed funding constraints.
    Inability to increase State-authorized staffing levels, hiring
    freezes, and inadequate salaries, which make it difficult for
    States to hire and retain qualified staff, have all played a
    role in limiting program implementation. Adequate funding for
    State programs is currently available, but that funding is not
    yet fully accessible and there is competition for those funds
    from other critical public health priorities.

        Mr. Bilirakis. But Mr. Brown has mentioned arsenic
    downstairs in our little bit of a press conference regarding
    this hearing. He mentioned radon, et cetera.
        EPA apparently is considering changing the standards on
    arsenic. We want them to do what is consistent with human
    health. I was just asking counsel if EPA had contacted us
    regarding changes they feel maybe are necessary in the statutes
    to afford them to be able to do a better job as intended by the
    1996 amendments, if you will. He tells me he is not aware of
    that. Maybe there has been, but he is not aware of it.
        It is critical that we do the fundamentals, too. We are
    talking about changing standards. Maybe they are necessary, and
    maybe they are not necessary. Your statement indicates that EPA
    will fully evaluate an upcoming scientific advisory assessment
    on arsenic.
        I would note that a draft report of the SAB, which was just
    issued a few days ago, raises significant questions regarding
    EPA's use of the 1999 National Research Council report on
    arsenic.
        I understand you cannot be expected to respond to a draft
    report. I am not asking you to do so. However, can we at least
    have some assurance that all comments and recommendations of
    the Scientific Advisory Board will be given proper credit in
    any decision on the final standard?
        Mr. Fox. There is no question they will, Mr. Chairman. In
    fact, we are going to be considering all the comments that we
    receive before we make any final decisions.
        If I could just make one comment about arsenic, there have
    been a lot of questions about the number that we recommended. I
    will be the first to admit that one of the most difficult jobs
    in my position is picking a number for drinking water
    standards, because you have to weigh a lot of different
    information in making that decision.
        The current standard is 50 parts per billion. Pretty much
    everybody would agree that this standard is woefully
    unprotective of public health. The National Academy of Sciences
    has said that.
        Mr. Bilirakis. Many States have a stricter standard, do
    they not?
        Mr. Fox. That is correct. However, you will hear later from
    analysts here today. One group in their comments said we should
    have picked a number at 3 parts per billion, and another group
    on the water suppliers side said we should have picked a number
    about 10 parts per billion. We ended up at about 5.
        If you do a straight line interpretation of the National
    Academy of Sciences report, you could end up with a number much
    smaller than 5. There is a lot of scientific uncertainty, I
    will be the first to admit it. Everybody is certainly pointing
    in the direction, in my opinion, that this number has to be
    much, much lower, and in the zone of 3 to 10 parts per billion,
    to be protective of public health.
        Mr. Bilirakis. I have no position on that. Basically what I
    am saying is that we should be concerned about that. But again,
    the States have the obligation to implement these things and
    enforce them. If they are not doing their job adequately, then
    we have to address that problem, and in fact probably address
    it maybe in a more primary manner, if you will, than being
    concerned about possibly focusing on changing standards. We can
    change all the standards we want, but if they are not put in
    place, what good are they?
        Mr. Fox. That is correct.
        Mr. Bilirakis. Mr. Brown, to inquire.
        Mr. Brown. Thank you.
        Mr. Fox, I would like to agree with you when you said that
    everybody thinks that 50 is too weak. Unfortunately, a majority
    of this Congress apparently does not think that.
        Comment on that, if you would. We tried to strip that on a
    floor amendment and were unsuccessful; that is, the reporting
    action ``to cease all actions relative to enforcement'' of the
    current standard that you say no one agrees with anymore.
        Mr. Fox. In your opening statement, Mr. Brown, you referred
    to an anti-environmental rider. Some on the other side of the
    aisle have suggested to me that this is an appropriate
    condition of funding discretion.
        Whatever you call it, there is no question in my mind,
    having spent a lot of time on this subject, that that language
    included in the House appropriations bill is wholly
    irresponsible. When you are concerned about protecting public
    health, there is no question that the current standards of 50
    parts per billion is not protective of public health.
        There are some drinking water systems with arsenic at that
    level. A strict interpretation of the House language is going
    to prevent us from providing public health protections to those
    communities around the country. I think that is very
    irresponsible.
        Mr. Brown. Thank you.
        Mr. Stupak, whose district actually borders, I believe,
    three of the Great Lakes, and my district, which borders Lake
    Erie, he and I worked to include language on estrogenic
    substances in the 1996 Safe Drinking Water Amendments. There
    was an endocrine disrupter screening program which was
    authorized in the Food Quality Protection Act which is underway
    in EPA.
        I understand much of EPA's work on that is handled by other
    branches of the agency. The Office of Water received $1 million
    this fiscal year for work on endocrine disrupters. You expect
    to receive similar amounts this year and into the future.
        Describe the Office of Water's activities, if you would, on
    endocrine disrupters for us.
        Mr. Fox. First let me say that endocrine disrupters do pose
    a potential risk to public health. We are still doing a number
    of research investigations into trying to define that risk more
    clearly.
        The administration was supportive of the language that you
    and your colleagues put into the Safe Drinking Water Act, as
    well as other colleagues put into the Food Quality Protection
    Act. We are embarking on a screening program to assess whether
    or not these chemicals are found in our food supply or in our
    drinking water.
        The Office of Water has a $1 million program that will
    support our working with the Office of Research and Development
    to look specifically at drinking water treatment systems,
    examining closely as to what chemicals are found in their
    effluent, what chemicals are found in different places in their
    treatment processes, and ultimately what chemicals might be
    found in the treated water that comes out of the plant. Our
    intent is to get a much better understanding as to what is the
    exposure to the American public to endocrine-disrupting
    chemicals is and a better understanding of what these treatment
    plants will actually provide in the way of treatment for these
    chemicals.
        This is a $1 million program, so it is a sizable one but
    not a very large one. We are anticipating that the work will
    begin in fiscal year 2001 and we will have a report before the
    end of 2001.
        Mr. Brown. Thank you.
        Mr. Guerrero, your testimony tells us that the primary
    reason that States cannot properly implement their drinking
    water programs is not Federal funding levels but State-imposed
    spending constraints that force inadequate staffing levels.
        Could you elaborate on the results of your 49-State survey
    with respect to these State barriers?
        Mr. Guerrero. Yes. There are some States that have limits
    on the amount of funds that could be spent in this program
    area. Some States have limits on the number of staff they can
    devote to this program. Some States are struggling with
    problems in terms of attracting the expertise they need because
    of compensation levels which do not allow them to compete
    effectively in the market for the kinds of expertise they need.
        All of those factors contribute to various problems in
    having the right kind of staff and the right numbers of staff.
        Mr. Brown. Would you will be willing to provide this
    committee the individual State response to the GAO survey, if
    you would?
        Mr. Guerrero. We would certainly entertain that request if
    you were to make that.
        Mr. Brown. I just did. You would provide those to us
    quickly?
        Mr. Guerrero. We have a policy, a draft policy, as you
    know, that allows for access to workpapers. We ask that that
    request be put in writing, and we would then consider it and
    get back to you.
        Mr. Brown. That is not a very definite answer. That is the
    best you can do? I will write a note to you and hand it to you.
    You will consider it then, or you will get us the report, then?
        Mr. Guerrero. We will consider it and get back to you
    promptly.
        Mr. Bilirakis. If I may, I think it is a very meritorious
    question. It would help us an awful lot. I think you would
    agree, Mr. Guerrero.
        Mr. Guerrero. Yes, Mr. Chairman.
        Mr. Brown. There are two of us that want that.
        Mr. Bilirakis. Do you want something from the committee in
    that regard?
        Mr. Guerrero. Let me explain some of the considerations.
    When we make determinations to turn over actual workpapers for
    products like this. Of course we are obviously concerned about
    things like privacy and information that was provided to us
    with pledges of confidentiality. That is why I caveated my
    response to you.
        I am not aware in this particular case that we have those
    particular problems, but there is a sensitivity in terms of
    comparing States with one another and who is doing better than
    somebody else. That was not the purpose of this particular job.
        If there is a bipartisan agreement that we provide that
    information, we would be happy to.
        Mr. Bilirakis. We also do not want to put your work into a
    dangerous position, either. We bank on your work so very much.
        Mr. Guerrero. The concern here is that in order to be of
    service to you in answering these questions, it requires some
    level of confidence on the part of the States that if they
    provide us information that they view as sensitive, that can
    put them in a situation that makes them look bad in some
    circumstances and relatively better in others, that they
    understand whether that information is likely to come up in the
    public domain or not.
        If that is going to compromise our ability to collect that
    information in the future, we would like to work with you on
    that.
        Mr. Brown. Thank you for teaching me the word ``caveated.''
    I had never heard that.
        Mr. Bilirakis. You are from Ohio.
        Mr. Brown. I am from Ohio.
        Most of this information is about State staffing levels.
    That is public information in the States. We are asking you to
    pass that information along to us. That is not a question of
    confidentiality. That is in public domain already in the
    States.
        Mr. Guerrero. That is exactly right. That is the kind of
    consideration we look at. To the extent this is in the public
    domain----
        Mr. Bilirakis. I would think EPA would have this
    information. Is that true?
        Mr. Fox. We certainly have some of it. I would pledge that
    whatever information you cannot get from GAO, that we will be
    of help. We will do our best to provide it to you.
        Mr. Bilirakis. Okay. Maybe we can ask the staffs to get
    together with your staffs in terms of the wording of the letter
    so we can get what we think we need but at the same time not
    jeopardize your future efforts.
        [The following was received for the record:]

                         U.S. House of Representatives,
                                         Committee on Commerce,
                                                     September 25, 2000
    The Honorable David M. Walker,
    Comptroller General,
    U.S. General Accounting Office,
    441 G Street, N.W.,
    Washington, D.C. 20548
        Dear Mr. Walker: On September 19, 2000 the Subcommittee on Health
    and Environment received testimony from Mr. Peter Guerrero, Director of
    Environmental Protection Issues, General Accounting Office (GAO),
    regarding GAO's report titled Drinking Water: Spending Constraints
    Could Affect States' Ability to Meet Increasing Program Requirements.
    Given the reliance of that report and Mr. Guerrero's testimony on a
    survey of state drinking water program's administrative expenditures
    conducted by the GAO earlier this year, we requested during the hearing
    that GAO provide the Subcommittee and its members with copies of the
    individual survey responses.
        We wish to renew in writing our earlier, oral request for these
    survey documents, and request that GAO provide this material no later
    than the close of business on October 6, 2000.
        We appreciate your attention to this request. If you have any
    questions regarding this matter, please have your staff contact Mr.
    Joseph Stanko, Majority counsel, at 225-2927, or Mr. Richard Frandsen,
    Minority counsel, at 225-3641. Thank you for you cooperation with the
    Subcommittee.
                Sincerely,
                                   Michael Bilirakis, Chairman,
                                 Subcommittee on Health and Environment
                                 Sherrod Brown, Ranking Member,
                                 Subcommittee on Health and Environment
                                     ______

               United States General Accounting Office,
       Resources, Community, and Economic Development Division,
                                                        October 4, 2000
    The Honorable Michael Bilirakis,
    Chairman, Subcommittee on Health and Environment,
    Committee on Commerce,
    House of Representatives

    The Honorable Sherrod Brown,
    Ranking Minority Member,
    Subcommittee on Health and Environment,
    Committee on Commerce,
    House of Representatives
        In response to your request, we are transmitting copies of the
    individual state responses to our nationwide survey on the states'
    expenditures to implement their drinking water programs. Because of the
    sensitivity of these data and the difficulty of making meaningful
    comparisons among the states, we included only aggregate data on the
    states' expenditures in our report. We suggest that caution be
    exercised in drawing comparisons among the states because a variety of
    factors influence the level of state expenditures. Such factors include
    the number and type of water systems in a state, a state's size and
    population, and the type and incidence of contamination.
        We did not validate the responses provided by the states. However,
    when a state's initial survey response contained gaps or apparent
    discrepancies, we followed up with the appropriate state officials and
    noted any corrections on the survey document. In addition, once the
    data were computerized, we ran a series of data checks to ensure that
    the data were consistently reported and made corrections as necessary.
    For example, one data check detected states' errors in calculating
    their minimum matching contributions. Thus, we are also providing a
    spreadsheet with the adjusted expenditures, which served as a basis for
    the aggregate data included in our report.
                Sincerely yours,
                                                 David G. Wood,
                            Director, Natural Resources and Environment
    Enclosure
        [Information on State data is retained in subcommittee files.]

        Mr. Bilirakis. Mr. Bilbray.
        Mr. Bilbray. Thank you, Mr. Chairman.
        Let me say that the conversation that just went on I think
    was a very healthy one. I think, in all fairness, a lot of us
    say, why can't we get this information, and do not understand
    the defensive mechanisms that can be thrown up by bureaucracy
    from information-gathering.
        I appreciate the fact that you try to keep those lines of
    communication open and eliminate the paranoia or the
    justification for restricting information to this body. I think
    the information is more important, and I'm sure the ranking
    member is sensitive to that.
        Mr. Fox, I want to thank you for pointing out the reality,
    where the real threats lie on the first stage, but also the
    fact we need to talk about this. Microbial contamination is not
    something that gets a lot of high profile attention by those of
    us in politics. It is not sexy to talk about that, but it is
    sexy to talk about poisoning the waters.
        Frankly, I appreciate the fact that you placed that--that
    here it is the No. 1 threat. We have other things we have to
    do. The arsenic is a good example. I guess a lot of us like to
    talk about arsenic because it equates to--people kind of
    picture that as to someone is pouring poison into our water,
    when in fact a high percentage of the problem is ambient
    background arsenic that exists naturally.
        My biggest concern, though, is that as we talk about these
    components, that we take a look at where we need to go in the
    future. Here is this issue about the States having the ability
    to actually implement the law.
        Let me be very frank. When I come to Washington, I do worry
    about drinking the water that the Federal Government provides
    within this district. I don't worry about it in San Diego
    mostly because I have more faith in the oversight and the
    operations in San Diego than I do in DC.
        Does that sound harsh? I think if you look at what has
    happened in the last 10 years with the water quality problems
    in this city, I don't think it is harsh. I think what we are
    talking about here is a real life experience that if I need to
    trust somebody to do my oversight, I sort of trust the States
    and the local communities a little more than I do the Federal
    Government when it comes down to the practical application of
    the standard.
        So what I see here is this issue of do we look at providing
    the resources for oversight, and is it best spent for the
    public resources at the Federal level here in Washington, or at
    the local level in the communities?
        I don't mean to make this an ``us and them,'' but I think
    that we may need to be talking about the fact that is it better
    to have the infrastructure of water quality control at the
    State, and I prefer the local level, but I am prejudiced to it.
    I admit to that. I come from that background, and I am as
    prejudiced as holy hell on this issue.
        But I think that my own personal experience about the
    concern of the Federal oversight locally, in this town, is the
    fact that I think that level of confidence is something we all
    have to just adapt to.
        When we talk about the use of our resources, is there a
    degree of concern here that we may be redirecting Federal
    resources to the local community, or are you guys open to the
    fact that we need to take a look at oversight, and that local
    and State oversight usually tends to be the most cost-effective
    when it comes down to it?
        I use an example--and again, my own prejudice--again, the
    implementation of the Clean Air Act of having the major
    oversight being local and State, and then the secondary
    standard-setting kind of thing being the Federal.
        Would you like to comment on that?
        Mr. Fox. First, your experience in California for both air
    and water is somewhat unique relative to the rest of the
    Nation. Those communities, as you know, have spent a good deal
    of time on these programs, perhaps more so than others.
        I don't disagree about anything you said about the
    preference for where these problems should be solved. The
    drinking water systems in this country have been primarily
    locally provided services. The Federal Government got involved
    in this in the sixties in large part due to the concern of
    interstate commerce, acknowledging that as the public travels
    around this country, there are some basic protections that they
    should feel confident about: that they can drink water in
    another State and get high quality water.
        The vast majority of our resources are given to the States,
    which, in turn, are given to the local governments. I think
    that is the appropriate pattern.
        We have talked a lot today about these oversight dollars,
    implementation dollars. I just do not want to hide the fact
    that this is an important subject, but it also is a much, much
    smaller part of our overall financing problem than the real
    infrastructure problem, which you mentioned in your opening
    statements.
        I know there are a number of Members of Congress on a
    bipartisan basis, and you can count the administration among
    them, that think we need to have a debate about what is the
    appropriate Federal level of involvement in infrastructure. I
    am talking mostly about concrete and mortar--to provide the
    increased investment that is necessary to meet these needs.
        Truly, there are literally hundreds of billions of dollars
    of needs that we have for both drinking water and wastewater.
    We do need to have a debate about the Federal role.
        Mr. Bilbray. I would ask us again to look at the fact of
    our big successes. I just saw in California one of our great
    successes is that the State and local community is the
    implementing arm and agent of the Federal regulations, and the
    Federal oversight is really just that.
        I do not want to see us make the mistake that we look too
    much at the concrete and steel. Let's face it, there is a whole
    lot of pressure and interest groups who would love to see us
    spend it on that. They can make money on that. But the local
    oversight is not something that any real political pressure
    group benefits from, but it is part of the essential formula.
        I yield back, Mr. Chairman.
        Mr. Bilirakis. You had nothing to yield.
        Mr. Green.
        Mr. Green. Thank you, Mr. Chairman. I would like to join
    both the chairman and our ranking member in asking for the
    information on how all 50 States responded to the GAO survey.
    Obviously, I have an interest not only in Texas but all over
    the country, because of the jurisdiction of our committee.
        Mr. Fox, I noticed when I reviewed your testimony that you
    had a number of clean water issues to focus on. Can I ask why
    the EPA, in light of their recent action, did not include MTBE
    in your discussion on contaminants?
        Mr. Fox. In fact, we are doing a lot in the drinking water
    program on MTBE. I know this is a subject on which the
    subcommittee has spent a good deal of time and attention. I am
    not sure what I can add, but I will tell you a couple of
    things.
        One, from a national drinking water standpoint, MTBE is
    being found in drinking water. On one level, it is found at
    very high levels typically associated with a spill of some
    kind. However, it is ubiquitous. It is being found at lower
    levels throughout the country.
        We are now in the process of developing a new secondary
    standard for MTBE which we hope to have out by the end of this
    year.
        Under the Safe Drinking Water Act, a secondary standard is
    a standard based on taste and odor, as opposed to what we call
    an enforceable public health standard. We should have more
    information for this committee shortly. Currently, we are doing
    our final interagency review on the secondary standard level.
        We are also participating with the agency in an overall
    look at MTBE. The administration has a series of legislative
    principles that a Senate environmental committee has recently
    acted on consistent with what the administration would like to
    see. Needless to say, we would like to see the House do the
    same.
        Mr. Green. You support a significant phase-down of the use
    of MTBE?
        Mr. Fox. Absolutely, from a drinking water standpoint,
    regardless of whether we can demonstrate a public health
    threat. And I don't want to belittle that. The fact that MTBE
    or gasoline can be smelled in the water basically makes it
    unusable to drinking water systems. This is a very serious
    problem.
        Mr. Green. I have been trying to follow up on the efforts.
    Is there any information that the EPA has that exposure to MTBE
    may be a cancer-causing agent or carcinogen?
        Mr. Fox. There is some information. My understanding is
    that it is at higher levels, but that does not come under my
    office.
        Mr. Green. Higher levels?
        Mr. Fox. Higher concentration levels.
        Mr. Green. I have never been able to hear that. We see that
    in newspapers, yes, but not when we had somebody testifying. I
    am not aware of any specific data. If you had that, would you
    be willing to share that with the committee.
        Tell me what information does EPA have on the presence of
    MTBE in the drinking water supplies across our country. Does
    EPA have any comprehensive, uniform data about the presence of
    MTBE in drinking water supplies?
        Mr. Fox. There have been a number of studies done by the
    U.S. Geological Survey. Also, a number of States have conducted
    monitoring. We have required MTBE monitoring as part of our
    unregulated contaminants monitoring rule which will go into
    effect next year. It will require that a number of systems
    monitor for MTBE concentrations. The results of that monitoring
    will be available on line in the national Containment
    Occurrence Database. We can certainly get you that data.
        Generally, the picture shows, as I said, that you find
    relatively low concentrations of MTBE ubiquitous around the
    country, talking about 2 parts per billion, and in some areas
    you will have a hot spot generally associated with a leak of
    some kind.
        [The following was received for the record:]

        Information from the National Contaminant Occurrence
    Database, which provides an overview of MTBE national
    occurrence as reported by States and public water systems,
    indicates most of the concentrations detected are at low
    levels. Of 1,060 public water systems tested, only 54 systems
    reported detections of MTBE. The concentrations ranged from 0.4
    parts per billion (ppb) to 31.1 ppb. The average detected
    concentration was around 3.1 ppb.
        Regarding instances of high concentrations being detected,
    the City of Santa Monica discovered that two of its drinking
    water wellfields, Charnock and Arcadia, were contaminated with
    MTBE at levels as high as 610 ppb and 86 ppb respectively in
    1996. In response, the two wellfields, representing 50 percent
    of the city's drinking water supply, were shut down and the
    City began purchasing replacement water. After completing
    investigations of the area, leaking underground storage tanks
    were identified as contributing to the contamination of the
    drinking water supply.

        Mr. Green. A year ago we saw the EPA regulations requiring
    all large public water systems have a representative sampling
    of water. The tests started only recently and the comprehensive
    data is still being compiled.
        Mr. Fox. That is correct.
        Mr. Green. When will the results from the mandated test be
    available?
        Mr. Fox. I will get back to you on that one. They are just
    starting to collect that. There are other studies available,
    including those done by the USGS.
        [The following was received for the record:]

        EPA published the Unregulated Contaminant Monitoring Rule
    (UCMR) in September 1999. This rule requires all large public
    water systems and a representative sample of small public water
    systems to monitor for certain unregulated contaminants. MTBE
    was included in the list of contaminants for which systems must
    monitor. Under the UCMR, public water systems will begin
    monitoring in January 2001. The first results of monitoring
    should be available online by the Spring of 2001.

        Mr. Green. How old are those studies?
        Mr. Fox. There has been a range all over the last 5 years,
    including some in the States. California was the leader, of
    course.
        Mr. Green. Let me make you aware of the results on testing
    in Texas.
        Our Natural Resource Commission collected more than 26,000
    samples from nearly 6,500 entry points of drinking water
    distribution systems. Of these, MTBE was detected in 13.
    Furthermore, the mean result is 2.6 parts per billion.
        Do you have any comments on that? Would that be similar to
    what other States have had?
        Mr. Fox. I would like to look at that data. The average
    that you describe is certainly consistent with my understanding
    when I testified. The fact that you had--I think you described
    there were 25 percent of them in excess of 13 parts per
    billion. That sounds a little different than my understanding
    of the national picture. But again, let me look at the data.
        [The following was received for the record:]

        Occurrence data from a joint U.S. Geological Survey/EPA
    study conducted in 12 States in the Northeast/Mid-Atlantic
    region show that MTBE was detected in 7.8% of public drinking
    water supplies at a detection level of 1.0 ppb. This study
    analyzed finished drinking water samples from 2,110 randomly
    selected community water systems. Most of the MTBE detections
    were below 5 ppb, with 2% of the CWSs reported above 5 ppb, and
    only 0.8% at levels above 20 ppb, the lower limit of EPA's
    Drinking Water Advisory.
        In 1998, the State of Maine conducted a statistical survey
    of its public water supplies and private wells providing
    drinking water to the community. MTBE was detected in 150 or
    15.8% of the 951 private wells sampled (minimum reporting level
    of 0.1 parts per billion). 67 (6.6%) of the wells showed a
    level of MTBE at 1 ppb or greater, and 10 wells (1.1%) had
    levels exceeding 35 ppb, (Maine's drinking water standard). For
    public water systems sampled, MTBE was detected in 125 (16%) of
    793 public water supplies. 48 of these supplies (6.1%) showed a
    level of MTBE at 1 ppb or greater. None of the public water
    systems had detections above 35 ppb.
        There are other State sampling results. For instance, in
    California, 1,718 public water systems (serving 30 million of
    the 34 million people in the state) were sampled and only 32
    systems (1.9%) had MTBE detections. Of those systems with
    detections, 20 systems (1.2%) were at levels above 5 ppb
    (California's secondary standard based on taste and odor), and
    12 systems (0.7%) at levels above 13 ppb (primary health based
    standard). Since 1995, the State of Maryland has been sampling
    community and nontransient noncommunity public water systems
    for MTBE. Of the 1,060 public water systems tested, MTBE was
    detected in 66 systems (6.2%) with only 10 systems (0.9%)
    having levels above 20 ppb.

        Mr. Green. MTBE was detected in 13 of the 6,500 entry
    points.
        Mr. Chairman, will we have another round of questions?
        Mr. Bilirakis. I don't contemplate that.
        Mr. Green. Just to follow up, if I could----
        Mr. Bilirakis. If you do it very quickly, without
    objection.
        Mr. Green. Since my colleague said he did not have any
    problem with the drinking water in San Diego, I would like to
    follow up with the testing in California. It was updated this
    month.
        You may know that information shows that out of the 7,000
    drinking water sources tested for MTBE, MTBE has occurred at
    levels above the State MCL of 13 parts per billion in only
    about .2 percent of the samples. That is two-tenths of 1
    percent of the sources have MTBE above the California MCL.
        Are you familiar with that information?
        Mr. Fox. Again, I think that is consistent with the picture
    I tried to describe for the committee.
        Mr. Green. Last, if possible, I would like to have
    information based on--because in earlier testimony on MTBE,
    there was some concern about Lake Tahoe. From what I
    understand, the MTBE has dropped 80 percent from recreational
    vehicles, but there is a problem with ethanol now in Lake Tahoe
    because of the substitution. I think that the committee should
    have that information.
        [The following was received for the record:]

        Ethanol detections in the Lake Tahoe region are currently
    being found in the monitoring wells for underground storage
    tank facilities. While the occurrence of ethanol in these
    monitoring wells could be a result of ethanol in gasoline,
    there is also suspicion that the bentonite pellets used for
    well seals, when put in water, leave behind a high
    concentration of ethanol.
        At this time the South Tahoe Public Utility district has
    not reported any detection of ethanol in its drinking water
    wells.

        Mr. Fox. Part of the way MTBE works in the environment is
    it volatilizes very quickly. You can have a very high
    concentration in a place like Lake Tahoe over a 3-day weekend
    when there is a lot of activity, and then go out and monitor
    again, in the middle of the week and find lower levels because
    it goes into the air.
        Mr. Green. Did you say MTBE?
        Mr. Fox. Yes.
        Mr. Bilirakis. Mr. Bryant is recognized to inquire.
        Mr. Bryant. Thank you, Mr. Chairman.
        Mr. Fox, I will question a little bit off the focus of
    today's hearing. Maybe you can help me or direct me to someone
    in your agency.
        EPA Region IV, which covers my State of Tennessee, recently
    announced a reinterpretation of rules pertaining to high water
    events which would prohibit the common practice by municipal
    sewer facilities of bypassing the biological treatment point
    near these events.
        Cities in my district have expressed to me a concern over
    this recent reinterpretation of existing EPA rules. As I
    understand, this rule would prohibit this diversion because of
    the tremendous cost applications. Obviously, the city officials
    are concerned about this.
        My question to you is, is this reinterpretation related
    solely to the Clean Water Act, or does the Safe Drinking Water
    Act contain provisions affecting the permitting of these
    wastewater treatment facilities?
        Mr. Fox. I have not heard anyone describe this as affected
    by the Safe Drinking Water Act. This was only presented to me
    as part of the Clean Water Act. It is an issue with which I am
    very familiar. I have spoken, in fact, with some of the
    municipal sewage districts around the country including some
    from the State of Tennessee. This is a very complicated,
    difficult, legal, technical and financial issue. I know the
    agency has some obligation to provide some clear guidance on
    this subject, and I let the sewage authorities know that. You
    should be expecting to hear something from EPA in fairly short
    order. By ``short order,'' I mean in the next few months.
        Mr. Bryant. Thank you. Mr. Guerrero, one thing that your
    report indicates to me that jumps out at me is that 75 percent
    of the States believe they have inadequate staffing in the
    drinking water programs, and over 90 percent of the States
    believe that inadequate staffing will continue. Can you briefly
    tell us a little bit more about the possible consequences of
    these kind of numbers to public health?
        Mr. Guerrero. Yes. What we found was that as a result,
    States are, in some cases, doing what is minimally required, so
    what gets triaged, what doesn't get done are things such as
    technical assistance or conducting sanitary surveys, which are
    intended to be more preventative in nature, identifying
    problems before they occur. These have an impact on the smaller
    systems that lack the technical resources and the wherewithal
    to do some of these things themselves. That is basically
    setting the stage for problems with a large number of small
    systems. About 90 percent, give or take, of all the community
    water systems are small, and, to some degree, are faced with
    challenges of meeting competing demands, and to the extent that
    the States cut back on some of these technical assistance and
    proactive-type measures, it does set the stage for future
    problems that could be related to the quality of the drinking
    water provided especially by smaller systems.
        Mr. Bryant. In connection with these funding numbers, and I
    had another question about your report indicating that in
    fiscal year 1999, State spending fell 20 percent short of the
    estimated need for spending, according to the ASDWA. I am
    wondering how real is this 20 percent funding shortfall and,
    again, would you have a similar answer to my first question, as
    to the consequences of only spending 80 percent for what is
    needed for safe drinking water, the same ramifications?
        Mr. Guerrero. Exactly. It has the same effects. In terms of
    the estimate of what is needed, we believe in the aggregate,
    the association's estimate is a reasonable estimate for the
    country as a whole. It doesn't predict what is needed in a
    particular State. But the association worked with about 25
    percent of the States in developing its model to estimate
    needs. We looked in depth at eight States, and when we talked
    to the States, we asked them about the model. And in some cases
    they said, well, part of this model overestimates what we need
    and other parts of it underestimates needs. So it may not be
    the best predictor for an individual State, but its assumptions
    are reasonable and it is reasonable for predicting the total
    national need. How confident are we in that 20 percent number?
    I think reasonably comfortable.
        Mr. Bryant. Very quickly, one last question. Your report
    notes that these shortcomings on the part of the State
    programs, it also notes that the State spending has been
    increasing each year from $213 million in 1997 to $276 million
    in 1999. Is the problem then or is the problem that the States
    that are spending more, but like the old dog trying to chase
    the car, they can't quite get it each year. In other words, are
    the requirements on the State accelerating at a rate at which
    it is harder and harder for the States to keep up? Do we see
    that in your report?
        Mr. Guerrero. I think primarily what we have here is more
    of a structural problem than an acceleration of
    responsibilities. It is clear that the Safe Drinking Water Act
    sets forth a number of very demanding requirements for
    individual water systems to meet and for States to meet. Having
    said that, we did identify a number of impediments that exist
    now that are predominantly financial in nature, that could be
    overcome.
        To put this in perspective, the Federal contribution in
    this area has grown about 60 percent over the last 3 years,
    give or take. The State contribution has grown about 10
    percent. So both the Federal Government and the States are
    putting in more money for safe drinking water purposes. The
    problem is most of the Federal increase comes from the State
    revolving fund which the States are understandably reluctant to
    use because, by using those dollars, it removes those dollars
    for necessary infrastructure that they need. Also, they can't
    revolve those dollars and multiply them by making those
    dollars--once they are taken out of the SRF, available in the
    future to address those pressing infrastructure needs. So there
    is a today effect and there is a tomorrow effect by spending
    infrastructure dollars on program oversight. So the States are
    reluctant to use most of the Federal funds, because they are in
    this one category that requires them to, in using them, to
    compete with infrastructure needs. And then the States, as I
    mentioned earlier, have some constraints they are operating
    under themselves. They have hiring limitations. They have
    resource funding limitations. They have salary and compensation
    limitations. All of those combined make it difficult to bring
    to bear the resources needed to address fully the program
    elements today.
        Mr. Bilirakis. Well, the gentleman's time has long expired,
    but I would like to go on because I think that is the gist of
    what we are doing here today. We can talk about standards all
    we want, but if they are not being enforced, then what good is
    it? So what we need from you all is some help in terms of
    whether or not we should be changing the legislation. I know we
    have the States testifying in the next panel, and hopefully,
    Mr. Fox, you might have somebody remain in the room from EPA
    who will takes notes and listen to what the States will testify
    to. Ms. Capps, do you have any questions?
        Ms. Capps. I have a request from my colleague, Congressman
    Green, who was unable to finish his remarks and then if he has
    time left, I have a question to ask too. I yield to my
    colleague.
        Mr. Green. Thank you, Mr. Chairman.
        Mr. Fox, in continuing the question, I am sure you are
    aware of the problems that States like California and my
    colleague from Nevada have had with MTBE from recreational
    vehicles in Lake Tahoe. Are you aware that the California
    Secretary of Environment, Winston Hickok, recently announced
    the levels of MTBE in Lake Tahoe dropped by 80 percent after
    recreational vehicles such as jet skies were banned.
        Mr. Fox. No, I am not specifically aware of his
    announcement.
        Mr. Green. Tell me what criteria the EPA uses to recommend
    that a chemical should be banned.
        Mr. Fox. It is a fairly complicated process under the Toxic
    Substances Control Act. It is a procedure that the agency is
    currently going through, and we have not reached any
    conclusions at this point.
        Mr. Green. Is it based on impacts on human health?
        Mr. Fox. That is among the factors considered, as well as
    ecological impacts and, of course, economic impacts. A number
    of factors that go into the evaluation.
        Mr. Green. It is not solely based on the presence of MTBE
    in drinking water? Would that be the sole reason for it?
        Mr. Fox. It wouldn't be the sole reason. It very well could
    be a driving reason simply in terms of the analysis and what
    other factors were considered.
        Mr. Green. What other chemicals or substances would meet
    this criteria? How do the reported levels of MTBE in drinking
    water supplies compare with the reported levels of pesticides/
    herbicides in drinking water?
        Mr. Fox. It is a little bit of apples and oranges, but I
    certainly can get you that information. MTBE has very different
    characteristics than, say, Atrazine, so trying to compare a
    concentration of Atrazine to MTBE is a little difficult.
        Mr. Green. But if it impacts human health is one of the
    criteria. It seems like it is not really comparing apples to
    oranges if it impacts.
        Mr. Fox. Well, a number of contaminants in drinking water
    can impact human health or, for whatever reason, render the
    water unacceptable. As I said in the case of MTBE, simply
    having an odor--making it smell like gasoline--renders that
    water unacceptable, perhaps at levels that are actually lower
    than we have documented scientific information that it is a
    public health concern. But still to the public, it is unusable
    water.
        Mr. Green. If you could provide that information for us.
        Mr. Fox. Sure.
        [The following was received for the record:]

        The majority of human health-related research on MTBE has
    focused on inhalation of the chemical. At high doses, MTBE has
    caused non-cancer health effects as well as tumors in animal
    studies. However, there have been no human or animal health
    effects studies concerning the ingestion of MTBE in drinking
    water. While EPA has determined there are insufficient data on
    MTBE health effects to establish an enforceable health-based
    drinking water standard, the Agency did state in the 1997
    Drinking Water Advisory that keeping concentrations between 20
    and 40 ppb or below would provide a large margin of exposure
    (safety) from toxic effects. The Advisory also noted that
    keeping MTBE concentrations in the range of 20 to 40 ppb and
    below would likely avert unpleasant taste and odor effects. The
    Agency does recognize some people may detect the chemical below
    this range and, in some controlled taste and odor studies,
    individuals have detected MTBE as low as 2 ppb.

        Mr. Green. I think you would agree that if MTBE is removed
    from our gasoline supply significantly more ethanol would
    likely be used, is that correct?
        Mr. Fox. I am the assistant administrator for water. That
    is certainly my understanding of the conventional wisdom.
        Mr. Green. I had mentioned earlier as my time expired on my
    first 5 minutes, are you familiar with research showing that
    ethanol can make gasoline contamination groundwater worse by
    enhancing the solubility of the aromatic hydrocarbons in
    gasoline.
        Mr. Fox. I am aware that this is a very complex problem and
    phenomenon in groundwater that probably does not lend itself to
    quick and short answers.
        Mr. Green. It can also slow the biodegradation of the
    components of gasoline.
        Mr. Fox. Sir, as I said, there are a lot of components and
    characteristics of plume movement that are very tough to
    generalize.
        Mr. Green. My concern is if EPA is moving forward with
    banning MTBE, then the only substitute is ethanol, although my
    colleague from California and I, are we going to be here next
    year and the year after with the same problem with ethanol?
        Mr. Fox. Part of the analysis that I am aware of is looking
    at alternatives. So when the agency makes its determination
    under TSCA, it will look at some of these alternatives to which
    you are referring.
        Mr. Green. My last question, do you know if there is any
    ethanol contamination in Lake Tahoe's drinking water supply?
        Mr. Fox. I am specifically not familiar with that, but I
    can certainly look into it.
        Mr. Green. Okay. Because the information I have is in April
    of 2000 the South Tahoe Public Utility District reported that
    ethanol had been found in the groundwaters serving as drinking
    water supplies for Lake Tahoe residents and ethanol was
    substituted for MTBE after MTBE was found last year. I
    appreciate that information. I yield back my time.
        Ms. Capps. Thank you. And I know my California colleague is
    itching to get into this too. Since I do have a little time
    left, and this is really pertaining to what I believe the
    chairman was getting at in summary, I would like to hear it
    stated one more time, Mr. Guerrero. The GAO report on page 22
    indicates that States are generally in the best financial
    condition in decades. We hear all these impediments between the
    resources, Federal and some State resources, in actually
    getting the corrections in the water supply itself. If it is
    personnel or what is it, could you summarize for me and also
    reiterate what is the role that we could play to free this up?
        Mr. Guerrero. Right. As I indicated earlier, the States are
    faced with a number of constraints. They sometimes have
    staffing limitations. They sometimes have limitations on the
    amount of funding provided, and they sometimes have problems
    with providing the compensation necessary to attract the
    technically skilled and knowledgeable individuals they need in
    their programs. I think, you know, we do not make
    recommendations in this particular report, but I would say that
    it is really a twofold issue that need to be addressed. The
    first part of it clearly is the funding impediments of the
    States. The States themselves will need to come to grips with
    those limitations and figure out how to provide the funding
    that they need for these programs, especially to meet future
    requirements.
        Some 90 percent of the States expressed concern to us about
    their ability to do that. So they are going to be challenged to
    do that. This, as you point out, is indeed a good environment
    for them to be challenged in that regard. Because we are not
    faced with the same situation that we were faced with back in
    the late 1980's when requirements were not being met, yet then
    the States were hard pressed financially.
        Ms. Capps. Right.
        Mr. Guerrero. The other part of the equation is the Federal
    Government. That is how these grants are structured. The nature
    of some of the moneys are in a pot called the supervisory
    grant. That is matched on a 1-to-3 basis. The rest of the
    money, a large charge chunk of the money, is in a State-
    revolving fund pot which is intended for infrastructure.
        Mr. Bilirakis. If the gentlelady doesn't mind, I appreciate
    you getting us back on point quite frankly. I am not belittling
    the standard and that sort of thing. This is what we hoped we
    would concentrate on, is why the States are not really doing--
    --
        Ms. Capps. Exactly, and what incentives they need.
        Mr. Bilirakis. But that is going to take probably more than
    the amount of time that Mr. Guerrero might have or Mr. Fox
    might have. I made the comment previously, it is critical we
    hear from you, both of you, in terms of any recommendations you
    may have. If there is something we can do, we should do up here
    in order to get this done the way we want it to be done.
    Because again, I say we can change all the standards we may
    want, but if they are not enforced, if they are not being put
    in place, what good are they? We can thump our chest a little
    bit about changing the arsenic standard or whatever the case
    may be, but if that is not being put in place back there where
    the people are, what good is it? It is critical that we
    concentrate on that. If the gentlelady doesn't mind, I will
    yield to Mr. Deal who has been very, very patient.
        Mr. Deal. Thank you, Mr. Chairman. And in order to pursue
    the continuity of that discussion rather than to add a caveat
    to it, my colleague, Mr. Bilbray, has requested a bit of time
    and I will yield to him.
        Mr. Bilbray. Mr. Chairman, to get back off the subject, I
    think it is important to point out that as the Tahoe issue was
    talked about California has now taken the extraordinary effort
    of outlawing two cycle motors totally out of the State. But
    outlawing is not the answer. I think my colleague from Texas
    has pointed out that we should stop mandating, to some degree,
    strategies. And, in fact, Mr. Fox, California has been waiting
    525 days for a waiver request, so that we are not forced to do
    certain things. As the chairman points out----
        Mr. Fox. I can definitely note that that does not come
    under my office, Mr. Bilbray.
        Mr. Bilbray. Thank you very much. I will exit with the
    chairman and apologize for my rude interruption of going off
    the subject again. I do thank my colleague from Texas for
    raising the issue that some things are not so simple as some
    people in this town would like to point out. I yield back to
    Mr. Deal.
        Mr. Deal [presiding]. My question deals with the very
    complex and multifaceted issue of safe drinking water. Being
    from a rural district, my concerns and the issues that my
    district faces are somewhat different, perhaps from some of the
    other members of this panel. Mine is a district in which the
    Chattahoochee River begins and flows into the largest reservoir
    for the supply of water for the city of Atlanta, that being
    Lake Lanier. It is a Corps of Engineers lake as you probably
    are aware. My first question is a rather broad one, and that
    is, what role does your agency play in the decisions that are
    made with regard to treated water discharges into bodies like
    Lake Lanier, what role do you play in working in a cooperative
    fashion with the Corps of Engineers, for example?
        Mr. Fox. That is a very good question. In general, EPA is
    responsible for permitting discharges to reservoirs that come
    from all sorts of point sources including the discharge from a
    treatment plant. This authority is actually delegated to the
    State of Georgia and EPA has oversight responsibilities. With
    respect to the broader question of our involvement with the
    Corps of Engineers, we do, in general, coordinate our work with
    the Army Corps of Engineers to achieve our shared goals of
    environmental protection, water supply provisions and flood
    prevention.
        Mr. Bilbray. As you are aware, in any body of water like
    that especially in one that developed at a time when there were
    no extensive sewer treatment facilities, much of the
    contamination of that drinking water we are told at least is
    coming from leaking septic tanks near the shore, perhaps non-
    point source pollution from upper river sediment and run off.
    What financial assistance do these local entities and the State
    itself have to draw upon in dealing with these, perhaps not as
    direct an issue on water quality, but obviously, have an effect
    on water quality? What additional resources perhaps that we
    haven't even talked about here today would be available for
    them?
        Mr. Fox. First, the loan funding we did talk about today
    actually can be used for some source water protection efforts
    like you described. Other program funds that I have
    jurisdiction over but, frankly, might not fall within the
    jurisdiction of this committee but with which you should be
    aware to solve your problem, include section 319 non-point
    source grants under the Clean Water Act. This is a program that
    is funded in excess of $200 million. We give moneys out to the
    States and there is a lot of flexibility that the States have
    in deciding how they will spend it. We also have a clean water
    SRF fund, like the drinking water, that is also a multi-billion
    dollar Federal account. Again in that case, we give the
    discretion to the State of Georgia, but these kind of projects
    you described would be eligible for that as well. Those would
    be our two principal funding mechanisms certainly, the
    Department of Agriculture has some funds as well.
        What I would tell you is that the problems that you
    described are imminently solvable. Many communities around the
    country have found ways to solve them. It requires that people
    spend time and attention in looking at various sources of
    different contamination and really trying to clean them up. New
    York State, for example, is a real model in solving some of its
    water quality problems very similar to the one you mentioned.
        Mr. Deal. It is hard for me to sell New York State to
    Georgia as much of a model for anything.
        Mr. Fox. Sure, and you all could use some rain.
        Mr. Deal. Yes, we are praying for that. Thank you very
    much. I believe that concludes my time.
        I want to thank the panel members for their attendance
    today. We appreciate your participation in this discussion.
    Thank you. If you could follow up with the requests that have
    been made by the members of this committee, we would appreciate
    that as well. Thank you.
        We will now call the second panel. If they would come to
    the tables please.
        Thank you, gentlemen. I will go ahead and introduce the
    second panel. First of all, Mr. Jay L. Rutherford, who is the
    director of Water Supply Division of the Vermont Department of
    Environmental Conservation. Second, Mr. Howard Neukrug, who is
    the director of the Office of Watersheds of the Philadelphia
    Water Department; Mr. David L. Tippin, the director of the
    Tampa Water Department. Mr. Eric B. Olson, the senior attorney
    of Natural Resource Defense Council here in Washington, DC. Mr.
    Terry Gloriod, the president of the Illinois American Water
    Company of Belleville, Illinois.
        Gentlemen, we are pleased to have you here today. We will
    begin with the opening statement by Mr. Rutherford.

        STATEMENTS OF JAY L. RUTHERFORD, DIRECTOR, WATER SUPPLY
      DIVISION, VERMONT DEPARTMENT OF ENVIRONMENTAL CONSERVATION;
     HOWARD NEUKRUG, DIRECTOR, OFFICE OF WATERSHEDS, PHILADELPHIA
          WATER DEPARTMENT, ON BEHALF OF AMERICAN WATER WORKS
        ASSOCIATION, ACCOMPANIED BY ALAN ROBERSON, DIRECTOR OF
    REGULATORY AFFAIRS, AMERICAN WATER WORKS ASSOCIATION; DAVID L.
    TIPPIN, DIRECTOR, TAMPA WATER DEPARTMENT; ERIC D. OLSON, SENIOR
       ATTORNEY, NATURAL RESOURCE DEFENSE COUNCIL; AND TERRY L.
          GLORIOD, PRESIDENT, ILLINOIS AMERICAN WATER COMPANY

        Mr. Rutherford. Mr. Chairman and committee members, good
    morning.
        In addition to being a board member of the Association of
    State Drinking Water Administrators, I am the director of
    Vermont's drinking water and groundwater protection programs
    and I thank you for inviting me to testify today on behalf of
    the association. I would like to highlight two aspects of my
    written testimony. First is the challenges that the States are
    facing with small systems, and increasingly complex
    regulations, and the second is problems with funding.
        Our first concern is that EPA's new regulatory proposals
    have become more complex and do not seem to recognize the
    phenomenal workload and time required to help small public
    water systems comply with them. To illustrate this, I ask you
    to consider the typical public water system. It is not the
    utility serving 50,000 or 100,000 people. It does not have
    professional drinking water staffs or around-the-clock
    coverage. It is far more likely to be a small subdivision or a
    school or a restaurant. The fact is that there are 169,000
    public water systems in the country, and of those, only 9,000
    serve more than 3,300 people. This leaves a whopping 160,000
    systems that must be considered small or very small.
        In my State, Vermont, over 300 of our smallest community
    water systems serve approximately the same population as our
    single largest one. For the same number of people served, the
    difference between working with one utility with professional
    staffs versus 300 of the small variety is huge and illustrates
    the basic problem from the State's perspective. It is highly
    resource and time intensive to work with small systems. In my
    written testimony, there is a list of some 18 requirements
    resulting from the 1996 amendments.
        These new requirements are much more complex than the
    ``detect and treat'' model that we are used to. Some of them
    require that the State become directly involved in process
    control decisions or conduct detailed inspections and
    assessments. It also imposes substantially increased reporting
    burdens on the States. It is against this backdrop that we ask
    you to consider the challenging tasks that the States are
    facing in carrying out our oversight duties regardless of the
    funding questions.
        The result of these factors is that the expectations of
    this body and the public will not be met in full by many State
    drinking water programs. We have no choice but to prioritize
    our efforts. While we would all like to provide the expected
    level of oversight, we must limit our work to those issues of
    most immediate public health benefit. This disparity between
    expectations and realities needs to be addressed soon.
        My second topic is on funding. The Federal program grant to
    States known as the PWSS Grant has remained static over the
    past few years, even though new Federal mandates are arriving
    at a breathtaking pace. Congress authorized the use of a
    portion of the each State's SRF capitalization grant for non-
    infrastructure initiatives, including State program support.
    This welcomed flexibility was a wise decision and has allowed
    States to develop programs that are best suited to their
    individual situations.
        On the other hand, the use of set-asides to fund ongoing
    programs is problematic, especially in the absence of any PWSS
    increases. There were a number of pitfalls that limit its use,
    as some were mentioned earlier. The first one that I would like
    to mention is that the capitalization grants were only
    authorized through 2003, while the resources needs go well
    beyond. It has been challenging to get approval for new
    positions or to get people to accept them when the funding
    source appears to be temporary.
        The second problem stems from the basic purpose of the
    capitalization grants which is infrastructure improvement loans
    for water systems. It is a difficult sell to explain to water
    system owners that we will be taking a significant piece of the
    capitalization grant to pay for State government instead. Also,
    even ignoring these issues temporarily, it is clear that there
    are program shortfalls of thousands of FTEs in the country and
    hundreds of millions of dollars over the next few years.
    Without corrections to these shortfalls, in spite of the
    dedication and hard work of thousands of State employees, we
    will not be able to keep up with the expected schedules for all
    these rules.
        Mr. Chairman, I would like you to know that the States are
    fully committed to this program and would like to work with
    you, EPA, water systems and other stakeholder groups, to have
    our national drinking water program be the success that the
    1996 amendments envisioned them to be.
        [The prepared statement of Jay L. Rutherford follows:]
     Prepared Statement of Jay L. Rutherford, P.E., Director, Water Supply
           Division, Vermont Department of Environmental Conservation
        The Association of State Drinking Water Administrators (ASDWA) is
    pleased to provide written testimony on state resource needs,
    implementation of the 1996 Safe Drinking Water Act (SDWA), and
    infrastructure funding to the House Commerce Committee Subcommittee on
    Health and Environment. ASDWA represents the state drinking water
    administrators in the 50 states and six territories who have
    responsibility for implementing the many provisions of the SDWA and
    ensuring the provision of safe drinking water. State drinking water
    programs are committed to providing safe drinking water and improved
    public health protection to the citizens of this nation. ASDWA's
    testimony will focus on state resource needs and implementation
    concerns as well as the documented and growing need for adequate
    funding for water system infrastructure.

                                   BACKGROUND
        The SDWA was first authorized in 1974. Since that time, it was
    revised in 1986, and most recently in 1996. Forty-nine of the 50 states
    currently have ``primacy'' or enforcement authority for the Federal
    SDWA. To achieve and maintain primacy, states must adopt rules that are
    as stringent as the Federal rules and have the ability to enforce these
    regulations. Although some states have requirements that are more
    stringent; for the most part, state drinking water programs are
    implementing and enforcing a Federal mandate.
        Collectively, state programs provide oversight, implementation
    assistance, and enforcement for approximately 169,000 public water
    systems nationwide. These systems range from large metropolitan
    municipalities to mobile home parks and schools. The vast majority
    (over 95 percent) of the systems are small, serving less than 3,300
    people. Many of these systems require extensive technical assistance,
    training, and oversight.
        Since 1974, states have worked diligently with communities to
    assure their drinking water is safe. In doing so, states have adopted
    and been implementing standards for 20 inorganic chemicals including
    lead and nitrate; 56 organic chemicals including pesticides,
    herbicides, and volatile chemicals; total trihalomethanes; and total
    and fecal coliform; as well as implementing treatment requirements for
    surface water systems for turbidity, Giardia, and viruses. In addition,
    states have developed technical assistance programs, conducted sanitary
    surveys, and addressed operator certification, training, enforcement,
    emergency response, and review of water utilities plans and
    specifications.
        The 1996 reauthorization of the SDWA contained numerous new
    requirements to enhance the provision of safe drinking water in this
    country. These new requirements include: providing consumer confidence
    reports; revisions to the lead/copper rule; a Stage 1 D/DBP rule; an
    interim enhanced surface water treatment rule; source water assessments
    and delineations for all public water systems; unregulated contaminant
    monitoring requirements; a revised public notification rule; a long-
    term enhanced surface water treatment rule; a filter backwash rule; a
    radon rule; a rule to protect ground water; an arsenic rule; a
    radionuclides rule; a Stage 2 disinfection by-products rule; a long-
    term 2 enhanced surface water treatment rule; water system capacity
    development programs; a drinking water SRF program; and operator
    certification program revisions. In addition, the U.S. Environmental
    Protection Agency (EPA) is required to obtain data to make
    determinations on whether to regulate an additional five more
    contaminants every six years. Of critical importance is that the new
    law did not lessen or negate any of the previous requirements but
    rather added a significant number of major new initiatives and
    rulemakings (see chart on top of page 9).
        In order to ensure the effective implementation of all of these new
    mandates--most of which will affect state programs between now and 2005
    (see chart on bottom of page 9), states will need to develop new
    expertise, greatly expand their current staff, and increase financial
    resources commensurate with these intensive new activities. This is
    particularly challenging since the new law greatly expanded the nature
    of drinking water protection from primarily measuring contaminants at
    the tap to evaluating and protecting source water, enhancing water
    system capacity, and significantly increasing the amount of information
    provided to the public.

                             STATE FUNDING NEEDS
    Federal Funding Sources
        The SDWA authorizes EPA to fund up to 75 percent of the costs to
    states to implement the drinking water program. Historically, however,
    states have contributed 65 percent of the funding while EPA has only
    contributed 35 percent. While the actual contributions for individual
    states vary, with some substantially over matching the Federal
    contribution, the bottom line is that adequate Federal funding for this
    Federal law has not historically been provided.
        The current Federal PWSS grant provides $87.5 million for states to
    implement their programs (the remainder of the $93 million currently
    appropriated by Congress is directed to Indian Tribes). This level has
    not increased for states over the last five years (since FY-97), even
    though many of the new initiatives under the 1996 Amendments became
    effective almost immediately.
        The 1996 Amendments also allowed states to take set-asides from the
    drinking water SRF for program implementation. EPA, however, has never
    requested the full $1 billion per year authorization, and, in fact, is
    using the SRF as a convenient funding mechanism for new programs such
    as operator certification training which further reduces the corpus of
    the funds available for state use. In addition, many states have
    encountered significant barriers to fully accessing these funds
    including:

     the inability to obtain the needed one-to-one state match with
            new state revenue
     the inability to shift resources directed to water system
            infrastructure improvements to state program implementation
     the unstable nature of the annual SRF funding allocation which
            is based on water system needs and is affected by the states
            intended use plan for projects
     the threat of up to 40 percent withholding for failure to
            implement certain program requirements such as capacity
            development and operator certification
     the unwillingness of state legislatures to approve new hires
            using ``temporary'' funding (the drinking water SRF is only
            authorized until 2003)
        States view the PWSS grant program as a stable, dependable funding
    base that allows states to hire and maintain full time staff over the
    long term. States feel strongly that the preferred funding vehicle is
    the PWSS grant program and that either resources from the SRF should be
    shifted to this fund, or additional new resources should be directed to
    this fund. As an immediate first step, EPA should begin annually
    requesting the full $100 million authorized by the SDWA for PWSS
    grants.
    State Resource Needs Analyses
        ASDWA and EPA have jointly conducted state program resource needs
    analyses since 1988. Over the last twelve years, three analyses have
    been conducted, one in 1988, one in 1993, and the most recent analysis
    in 1999. The analyses looked at current needs as well as long-term
    needs, and in all cases, the analyses indicated a shortfall in funding
    to states. The most recent analysis, completed in 1999 (but not yet
    published), was based on a national model that looked at funding needs
    for small, medium, and large states between 1999 and 2005. Taking into
    account state funding contributions, as well as the Federal PWSS grant
    allocations, and set-asides from the drinking water SRF, the recent
    survey found the following (see chart on page 10):

     a state staffing shortfall of 1,627 FTEs in 1999 growing to
            2,670 FTEs in 2005
     a state funding shortfall of $83 million in 1999 growing to
            $207 million in 2005
        Collectively, the states, EPA, and Congress need to evaluate and
    agree on state resource needs and find the necessary funds to ensure
    the full implementation success of the new SDWA. Without adequate staff
    and financial resources, states will continue to be forced to
    prioritize workload efforts, focus on their highest priorities, and
    potentially extend the timing for full program implementation. The
    states do not believe these actions meet the expectations of Congress
    or the public, nor are they consistent with the states' desire to fully
    implement the law and provide maximum public health protection to all
    consumers.
        Recommendations: 1) ASDWA and EPA should complete and publish the
    1999 State Resource Needs Report; 2) EPA Headquarters, Regions, and
    states should work together to identify individual state resource gaps
    and develop a strategy for meeting staffing as well as financial needs;
    3) as an immediate first step, EPA should request the full $100 million
    for PWSS grants; 4) as another immediate action, EPA should request the
    full $1 billion authorized for the SRF, including the amounts remaining
    from previous authorizations that were never requested; 5) Congress
    should consider moving the 10 percent set-aside in the drinking water
    SRF for state program implementation to the PWSS grants and ensure that
    the full funding is made available to the states on a long term basis;
    6) Congress should direct EPA to conduct a thorough analysis of state
    implementation costs for each new rule or program activity and require
    that the cumulative cost burden be presented against the funds
    available to states to implement all the requirements; and 7) should
    EPA find that the increased costs are individually or cumulatively more
    than the state resources available, additional funding should be sought
    from Congress to ensure full implementation. States stand fully
    prepared to work with EPA and Congress to explore these and other
    alternatives to address these critical funding needs.

                              SDWA IMPLEMENTATION
        The states were willing players and partners in the discussions
    leading up to SDWA reauthorization in 1996 with the specific
    understanding that a significant new mandate such as this law, which
    encompasses sweeping new reforms and activities outside of the
    traditional drinking water program, must be accompanied by significant
    new resources and staff. While essential, resources alone are simply
    not enough. In addition, states need a reasonable regulatory schedule
    and the flexibility to allow states to shift staff and resources to new
    programs in a calculated and manageable fashion. States and public
    water systems also need regulations that are simple, understandable,
    and implementable, and that focus on public health outcomes rather than
    micro-management of process minutia.
        To date, states have attained a significant amount of success in
    implementing the provisions of the SDWA. For example, states have made
    progress in working with utilities using surface water supplies to
    install new treatment facilities to assure a much higher level of
    public health protection. Exposures to lead from drinking water have
    been significantly reduced; the data and information about water system
    quality and compliance is more readily available to the public through
    Consumer Confidence Reports, state compliance reports, the Envirofacts
    database, and state web sites; the training and certification of water
    plant operators is being significantly improved; and the drinking water
    SRF has been established in all states and loans are now being made to
    water systems to improve both their infrastructure and their ability to
    provide safe water to their consumers. States are also beginning a very
    comprehensive and resource intensive effort to delineate and assess the
    quality of all source water being used for drinking water to ensure
    that local communities have the tools and information they need to
    protect their drinking water sources.
        Despite these many successes, new and different challenges have
    emerged. These include issues related to:

     resource limitations--funding and staffing
     rule development and implementation complexities
     increasing small system needs
        These issues are discussed below.
    Resources--Funding and Staffing
        As indicated in the previous section, many states are facing a
    serious crises due to inadequate funding. EPA must recognize that state
    as well as Federal resources are finite and in many cases are already
    inadequate. States are also struggling to find and hire new staff.
    States are faced with a decreasing pool of qualified candidates as
    schools begin turning out more computer specialists than engineers.
    Hiring freezes and in many cases, non-competitive salary structures
    make many states unable to compete for qualified candidates
    particularly in today's tight labor market. States often must resort to
    hiring entry level staff without the experience and management skills
    to develop and manage complex technological programs and, once trained,
    many employees leave the state for the private sector. These realities
    and dynamics must be understood by EPA.
        In this current environment, the overwhelming magnitude and pace of
    rule promulgation and adoption is a major concern for the states. EPA
    intends to finalize no less than eight major rule packages in 2000 and
    2001. The states are very concerned about the resources needed to
    ensure simultaneous compliance with all of these rules both for water
    systems and state programs.
    Rule Development and Implementation Complexities
        To maximize state efforts, given funding and staff limitations, EPA
    must work diligently to ensure that new regulations and programs are
    simple, understandable, and implementable. Unfortunately, many of the
    regulations that have been proposed recently do not fall under any of
    these headings. Certainly a large part of it has to do with the very
    complex nature of some of the contaminants being regulated--
    particularly for treatment technique regulations--but a large part of
    it is also caused by the Agency's inability to coordinate and provide
    an overarching implementation strategy that views all regulations
    holistically. A classic example is the manner in which the Agency is
    handling sanitary survey requirements for public water systems. When
    all is said and done, requirements for sanitary surveys will likely
    appear in numerous regulations with each regulation requiring something
    different or more than the last rule. Unfortunately, the individual
    rules do not cover all public water systems. The states, therefore,
    find themselves in the quandary of having to deal with varying
    requirements for different water systems for the same activity. This is
    an example of the barriers that are being artificially imposed on
    states and water systems.
        Another example is the lack of communication between the program
    office and the Office of Enforcement and Compliance Assurance (OECA).
    OECA maintains an interest in the enforceability and violations
    reporting but does not appear to participate in a regular manner during
    rule development. The result is that proposals are often published that
    do not include key state implementation activities such as data
    reporting and violation determinations. This provides little to no
    opportunity for states and affected parties to comment as part of a
    complete rule package. Many of these elements have the means to make
    implementation relatively straightforward or immensely complex.
        For years, states have also been imploring EPA to include data
    management and implementation staff as active participants in the rule
    development process. This participation is critical to ensure that the
    data tracking and reporting elements developed for the rule are in fact
    able to be computerized and evaluate compliance in a simple and
    straightforward manner. Too often, states feel that the reporting and
    tracking systems are more focused on micro-managing the process and
    fail to adequately measure the intended outcome of the regulation which
    is whether public health has been protected and improved. ASDWA
    believes that the reporting for most rules should encompass only a few
    critical reporting elements that answer the question about whether
    water quality has improved.
        EPA also needs to maintain a balance among all of the requirements
    of the various rules to ensure that state time and resources are being
    spent on the most important public health regulations and in a manner
    that is commensurate with the potential public health benefits. This is
    often not the case because individual EPA staff work on a limited
    number of rules and are not aware of the requirements of other rules
    and how their efforts can be best incorporated into a comprehensive
    strategy.
        Finally, states are very concerned about a real tension that exists
    between their need for time to adopt state rules and the interpretation
    of the SDWA that requires water systems to be in compliance within
    three years of rule promulgation. Clearly the law allows states the two
    years for rule adoption. This time is necessary for states to follow
    their own administrative procedures acts, obtain legislative authority
    if needed, and work with the public and stakeholders to develop the
    state rule, taking into account state flexibilities in decision making
    and the ability to be more stringent. States also need time to share
    drafts of rules and work through rule development issues with EPA
    Regions and Headquarters. During this period, states are also training
    staff and operators, certifying laboratories, modifying their
    databases, and generally developing the internal infrastructure to
    implement and enforce the rule. Once state regulations are final, they
    typically must then notify the systems of their new requirements and
    when monitoring should begin. If states take the full two years, then
    it leaves only one year for systems to monitor, identify a problem,
    hire a consulting engineer, submit plans to the state for approval, and
    install new treatment in order to meet the compliance deadline. As can
    be seen, this scenario is fundamentally flawed and presents yet another
    barrier to full and effective implementation.
        Inserting EPA Regions into the implementation process prior to
    state rule adoption is not the answer, however. Regions are not on-site
    and do not have the resources, experience, and mechanisms in place to
    do much more than send letters and issue orders which greatly
    complicates the process and leaves the program in great disarray at the
    point when states must assume responsibility. This intrusion has the
    potential to negatively impact state fee structures and potentially
    abrogates states flexibilities and rights to develop rules that meets
    the needs of their states. This would be a disservice to the states,
    the utilities, and the public across this country and brings into
    question the concept of primacy and state authority.
    Increasing Small System Needs
        States are very concerned about the increasing regulatory and
    implementation impacts that future rules will have on small systems.
    Prior to the 1996 Amendments, the primary concern of the states was to
    get small systems to monitor for the regulated contaminants. For the
    most part, many of the contaminants were not detected and did not
    require the installation of treatment. This, however, will change
    dramatically in the future as EPA modifies regulations on arsenic and
    radionuclides, and develops regulations on radon, disinfection by-
    products, and the ground water rule. It will be critical that small
    systems understand the requirements, have cost-effective treatment
    options available, and willingly work with the states to achieve
    compliance. Since 95 percent of the systems that the states regulate
    serve less than 3,300 persons, the workload implications may be
    staggering if states must spend a significant amount of time educating,
    training, and working with small systems to achieve compliance. This is
    another reason why EPA's rules must be simple, understandable, and
    implementable.
        Recommendations: 1) As stated above, EPA and the states need to
    work together to identify needed state resources and staff and develop
    a strategy to close identified gaps; 2) EPA needs to be cognizant of
    the numerous rule packages being developed simultaneously and develop
    tools and guidance to maximize the integration of the various rule
    packages for states as well as water systems; 3) EPA must continue to
    work toward simplifying and streamlining new regulations and reporting
    requirements; 4) Congress should ensure that EPA implementation, rule
    development, data management, and enforcement staff all work together
    from the beginning to the end of the rule development process to ensure
    complete, comprehensive, and implementable rule proposals; 5) EPA and
    the states need to work together to develop a small number of outcome,
    rather than process, measures for new regulations; and 6) Congress
    should re-evaluate the issue of water system compliance timeframes in
    light of the timing incongruity of state rule adoption and activities
    needed to be completed by water systems and their communities to ensure
    compliance.

                             INFRASTRUCTURE ISSUES
        Significant investment in water system infrastructure is critical
    to ensure the safety of drinking water today and into the future. A
    recent report, prepared by the Water Infrastructure Network, indicates
    that a current gap of $11 billion a year exists between current
    infrastructure investments and the investments that will be needed
    annually over the next 20 years to replace aging and failing pipes and
    water treatment plants. Between water and wastewater needs, the
    estimate is almost $1 trillion in need over the next 20 years for water
    treatment facilities, water distribution systems, and wastewater
    collection systems.
        The new mandates under the SDWA of 1996 will necessitate increasing
    infrastructure investment in the future. New rules dealing with
    disinfection by-products, radon, radionuclides, arsenic, ground water
    protection, and filter backwash are expected to create new treatment
    facility demands--particularly for small systems. The needs will
    continue to escalate as more regulations are promulgated that address
    new contaminants in drinking water, and as current standards are
    continually driven lower to match new analytical detection methods. In
    addition, new treatment technologies such as membranes, ozone, and
    ultra violet irradiation will become more common place in water
    treatment. A number of these technologies are currently quite costly to
    purchase, operate, and maintain.
        Another significant issue of concern is aging and failing
    distribution systems. Funding must be made available to ensure that
    pipes are maintained and replaced as needed to ensure that the quality
    of water produced at the treatment plant is not significantly degraded
    between the plant and the consumer's tap.
        Recommendations: 1) Congressional House members should consider
    joining the House Water Infrastructure Caucus; 2) Congress should
    evaluate the existing and projected infrastructure needs and work with
    Governors, states, mayors, and water systems as well as the public to
    evaluate funding mechanisms available to close the gap.

                                   CONCLUSION
        While states intend to do all they can to meet their existing and
    new commitments, full implementation of the SDWA is not achievable with
    the resources currently being made available and the obstacles states
    face. The implementation road blocks and barriers being placed before
    and upon states are beginning to take their toll. States, EPA, and
    Congress need to work together to ensure that collectively states have
    the resources, staff, and necessary tools to ensure full implementation
    of the SDWA. States cannot do it alone.
        While quietly prioritizing and addressing the most critical
    implementation activities at the state and local level is the current
    reality, it is doubtful that this approach ultimately meets the
    expectations of the public and Congress. States do not want to see the
    gains that have been made over the last 25 years eroded due to lack of
    resources and implementation tools. The fundamental principles of the
    SDWA Amendments of 1996 are sound and, if correctly administered, have
    the potential to provide meaningful new public health protections. The
    states want the chance to succeed and they want the opportunity to help
    craft, as EPA's partners, the future direction of programs that will
    ensure the provision of safe drinking water in this country.
        INSERT OFFSET FOLIO 1 HERE

        Mr. Deal. Thank you, Mr. Rutherford.
        Mr. Neukrug.

                       STATEMENT OF HOWARD NEUKRUG

        Mr. Neukrug. Good morning, Mr. Chairman and members of the
    committee. My name is Howard Neukrug, and I am the director of
    the Office of Watersheds for the Philadelphia Water Department
    in Philadelphia. The Philadelphia Water Department is a
    municipal water, wastewater and stormwater utility serving
    around 2 million people in the Philadelphia region. I am here
    serving as the vice chair of the American Waterworks
    Association Water Utility Council. I am here today on their
    behalf. AWWA appreciates this opportunity to present its views
    on the implementation of the Safe Drinking Water Act amendments
    of 1996. You have our written statements.
        I would like to begin my oral remarks with some good news.
    The good news is we are now in an era where we have the best
    quality water anywhere in the world, and it is better than any
    time in history.
        We have a respected, credible drinking water profession and
    industry. We are customer driven. We are becoming more and more
    the stewards of the environment, particularly with the ground
    breaking efforts of the source water protection provisions of
    the 1996 act. We are partners in public health protection,
    consumer advocacy. We are professionals and we are dedicated to
    providing the highest quality of drinking water possible. We
    are providers of good quality service and communications and
    information and, with the consumer confidence report, even more
    so today than ever before, and we are providers of fresh
    healthy water.
        Our problem is in the definition of what is healthy water
    and defining healthy water. From the 1996 Safe Drinking Water
    Act Amendments healthy water is defined by regulation:
    Occurrence in health effects data, acceptable risk and risk
    tradeoffs, cost-benefit analysis.
        Unfortunately, the promises of the 1996 amendments have not
    been fully realized. We hear more and more that sound science
    is in the eye of the beholder. We have consensus-driven
    definitions for healthy water, we see regulatory compromises.
    We need good science, good science that will be believed by the
    public. Final decisions on healthy water, there is no consensus
    and final decisions are deferred. Real or perceived dangers
    still lurk out there. There is low public perception of the
    quality of the drinking water and the expectations of the
    public. We have in place a staggered step-down series of
    regulations which has led to an unstable regulatory
    environment, no long-term vision and a reactive mode by the
    drinking water industry.
        We want to emphasize that EPA has made a very good faith
    effort in many areas to implement the Safe Drinking Water Act
    Amendments of 1996. And the EPA Office of Groundwater and
    Drinking Water is to commended for its exemplary outreach and
    involvement of stake holders in the regulatory process.
    However, AWWA does have a major concern that EPA is not
    conducting the essential research and developing new data to
    support the drinking water regulations as expected in the 1996
    amendments. Indeed, the use of best available, peer-reviewed,
    good science that is the foundation for the new drinking water
    standard setting process requires extensive drinking water
    research, particularly health effects research. Unfortunately,
    there has been a cycle in which critical drinking water
    research lags behind the regulatory process. We must break that
    cycle, and this can only be done through improved funding and
    planning. Long-range planning is needed to break the cycle of
    drinking water research lagging behind the regulatory needs.
    Since EPA has put a strong emphasis on meeting statutory
    deadlines, the results may be the promulgation of regulations
    without the good science that was envisioned in the 1996 act.
        Before concluding, I will point out two other issues that
    are also in the written comments. The first one is the new
    Drinking Water State Revolving Fund. We are concerned that it
    will not adequately address the needs identified to comply with
    the safe drinking water regulations and upgrade drinking water
    infrastructure that is needed to ensure the high quality, safe
    drinking water to be provided to the American public in the
    future.
        Our written statement also addresses AWWA's concern about
    MTBE in contaminated drinking water, an issue that cuts across
    several statutes in EPA programs. The AWWA recommends that
    Congress take swift action on legislation necessary to prevent
    further contamination of water supply by MTBE or other fuel
    additives and provide assistance to public water systems that
    have MTBE-contaminated water supplies.
        Thank you, sir.
        [The prepared statement of Howard Neukrug follows:]
     Prepared Statement of Howard Neukrug, Director, Office of Watersheds,
     Philadelphia Water Department, on Behalf of the American Water Works
                                  Association

                                  INTRODUCTION
        Good morning Mr. Chairman. I am Howard Neukrug, Director of the
    Office of Watersheds for the Philadelphia Water Department in
    Pennsylvania. The Philadelphia Water Department is a municipal water,
    wastewater and stormwater utility serving over two million people in
    the Philadelphia metropolitan area. I serve as the Vice Chair of the
    American Water Works Association (AWWA) Water Utility Council and am
    here today on behalf of AWWA. AWWA appreciates the opportunity to
    present its view on the implementation of the Safe Drinking Water Act
    Amendments of 1996.
        Founded in 1881, AWWA is the world's largest and oldest scientific
    and educational association representing drinking water supply
    professionals. The association's 56,000-plus members are comprised of
    administrators, utility operators, professional engineers, contractors,
    manufacturers, scientists, professors and health professionals. The
    association's membership includes over 4,2000 utilities that provide
    over 80 percent of the nation's drinking water. AWWA and its members
    are dedicated to providing safe, reliable drinking water to the
    American people.
        AWWA utility members are regulated under the Safe Drinking Water
    Act (SDWA) and other statutes. AWWA believes few environmental
    activities are more important to the health of this country than
    assuring the protection of water supply sources, and the treatment,
    distribution and consumption of a safe and healthful adequate supply of
    drinking water. AWWA strongly believes that the successful
    implementation of the reforms of the SDWA Amendments of 1996 is
    essential to effective regulations that protect public health.

                           EPA DRINKING WATER PROGRAM
        The Environmental Protection Agency (EPA) drinking water program
    took on greatly increased responsibilities in the 1996 SDWA amendments.
    These responsibilities included developing a new regulatory process
    requiring additional science and risk analysis for regulations,
    creating a contaminant occurrence data base and methodology to select
    contaminants for regulation, promulgating regulations for arsenic,
    radon and microbial and disinfectant/disinfection by-products (M/DBP),
    identifying new treatment technologies for small systems, administering
    the newly created drinking water state revolving fund, and developing
    regulations and guidelines for consumer confidence reports, operator
    certification programs, source water assessment and monitoring relief.
        In satisfying these requirements, EPA has involved the public in
    the regulatory process to an extent not equaled by any other federal
    agency and stands as a model for federal rule making. EPA has involved
    private citizens, scientists, drinking water professionals, medical
    professionals, public health officials, economists, and environmental
    and consumer advocacy representatives, as well as other experts, to
    provide recommendations on how to carry out these new regulatory
    responsibilities. The EPA Office of Groundwater and Drinking Water is
    to be commended for taking this exemplary approach for public
    involvement that should result in better regulations that protect
    public health.
        However, AWWA does have a major concern that EPA is not conducting
    essential research and developing new data nor doing adequate cost-
    benefit analysis to support new drinking water standards as expected in
    the 1996 SDWA Amendments. There is also a long-term concern that the
    authorizations for the new drinking water state revolving fund will not
    be adequate to address the needs identified to comply with SDWA
    regulations and upgrade drinking water infrastructure to ensure that
    high quality safe drinking water is provided to the American people. In
    this statement, AWWA will focus on the research and infrastructure
    funding needs as well as highlight AWWA's concerns with the arsenic,
    radon, radionuclides and M/DBP rulemaking that illustrate some
    deficiencies in EPA rulemaking. Although it is not an SDWA
    implementation issue, this statement also will address AWWA's concern
    about MTBE contamination of drinking water--an issue that cuts across
    several statutes and EPA programs.

                            DRINKING WATER RESEARCH
        The use of best-available, peer-reviewed good science as the
    foundation of the new drinking water standard-setting process under the
    SDWA amendments of 1996 will require extensive drinking water
    research--particularly health effects research. Unfortunately, there
    has been a cycle in which critical drinking water research lags behind
    the regulatory process. We must break that cycle. This can be done
    through improved funding and planning.
        The nation needs an integrated, comprehensive drinking water
    research program. EPA must develop research schedules that meet
    regulatory needs along with a research tracking system so that the
    researchers and their EPA project officers can be held accountable and
    Congress must appropriate the funds required to carry out timely
    research. Only with timely appropriations and Congressional oversight
    can EPA, the drinking water community and consumers work together to
    ensure that sound science yields the most appropriate regulations and
    practices possible for the provision of safe drinking water for all the
    people in America.
    Drinking Water Research Funding
        Funding for drinking water research is a critical issue. The 1996
    SDWA Amendments require EPA to develop comprehensive research plans for
    Microbial/Disinfection By-Products (M/DBP) and arsenic as well as other
    contaminants. An estimated total of over $100 million is needed for the
    combined arsenic and M/DBP regulatory research plans alone and this
    figure does not include other needed drinking water research on radon,
    a whole array of other radionuclides, groundwater contamination,
    children's health issues, endocrine disruptors, and other new
    contaminants on EPA's Contaminant Candidates List (CCL) that will
    require additional occurrence, treatment, and health effects research.
        In the past year, AWWA and other stakeholders worked closely with
    EPA to resolve any future research resource gaps beginning with the FY
    2001 budget process. As a result of this cooperative approach to
    determining drinking water research needs, AWWA believes that the
    $48,872,500 requested in the President's Budget for FY 2001 is the
    absolute minimum necessary for FY 2001, (and may not be enough) to
    assure that the essential research will be conducted on which to base
    drinking water regulations as required by the Safe Drinking Water Act
    (SDWA).
        Over the past several years, public water suppliers have worked
    together with EPA and the Congress to secure increased research funding
    for the nation's drinking water program. We believe that, through this
    cooperative effort, essential increases in research dollars have been
    obtained for drinking water over the past few years after several years
    of steady decline.
        In August 2001, EPA will select at least five contaminants from the
    Contaminant Candidate List (CCL) and determine whether or not to
    regulate them. This process will be repeated every five years. To
    determine whether to regulate a contaminant and establish a maximum
    contaminate level (MCL) or another regulatory approach, EPA will need
    good health effects research. Recognizing the serious burden this
    regulatory mandate presents, the drinking water community has offered
    its time, resources and expertise to work with EPA to develop a
    research plan for the contaminants on the CCL.
    Drinking Water Research Planning
        Developing a comprehensive drinking water research plan is
    necessary. EPA finalized the first Contaminant Candidate List (CCL) in
    February, 1998, which contained 61 contaminants that could be
    considered for future regulations. Of these 61 contaminants, only 12
    currently have adequate information to move forward in the standard-
    setting process. The balance of the contaminants (including such
    important contaminants as MTBE, triazines, and acetochlor) need
    additional health effects, treatment, analytical methods, and
    occurrence research. A comprehensive research plan for this large
    number of contaminants needs to be completed, peer-reviewed, adequately
    resourced, and then implemented. EPA has been working over the past
    couple of years to develop such a comprehensive plan. The total funding
    need for a comprehensive research plan is unknown at this time, but the
    amount is expected to be substantial.
        AWWA has been encouraging EPA for the past several years, without
    much success, to develop a research plan to address the regulatory
    needs resulting from the Contaminant Candidate List (CCL). EPA's Draft
    Contaminant Candidate List (CCL) Research Plan attempts to fill that
    need, but misses the mark. The Drinking Water Committee (DWC) of the
    Science Advisory Board (SAB) recently completed a review of EPA's Draft
    Contaminant Candidate List (CCL) Research Plan. The DWC concluded that:

     The plan is not in the form of a plan, rather, it appears to
            be structured as more of a research strategy.
     The decision processes used in phases I and II are not
            transparent.
     The process of prioritization is the most important issue. The
            CCL Research Plan must develop practical priorities to
            determine the allocation of scarce resources that will maximize
            the protection of public health.
        The vast majority of EPA's ongoing drinking water research is
    related to the M/DBP Cluster and arsenic. EPA has established
    innovative research partnerships with the AWWA Research Foundation
    (AWWARF) and the Association of California Water Agencies (ACWA) that
    has partially filled the research gap on these two issues. However,
    very little research is ongoing on other priority regulations such as
    radon, other radionuclides, the filter backwash rule, etc. While the
    research on the M/DBP Cluster and arsenic is important, these other
    priority contaminants and future contaminants for regulatory action
    cannot be neglected.
        Long-range planning is needed to break the cycle of drinking water
    research lagging behind the regulatory needs. Assume that EPA will
    finish their overall contaminant research plan and have it peer
    reviewed by mid-2001. Then, EPA issues a research request, receives
    proposals, selects specific proposals, and contracts for the research.
    This process will take at least six months, so the research would not
    start until early 2002. Most research takes a minimum of two to three
    years to complete, with an added year for complete peer review, so the
    results would be available in 2006. The timing of this future research
    (which is based on a lot of optimistic assumptions)) bumps up against
    the statutory deadline for the second round of regulatory
    determinations in 2001. Since EPA has put a strong emphasis on meeting
    statutory deadlines, the result may be the promulgation of regulations
    without the good science that was envisioned in the 1996 SDWA
    Amendments. Long-range research planning efforts must be accelerated by
    EPA to breaking cycle of research availability only after regulatory
    decisions have been made.
    Additional Drinking Water Research Improvements
        Recently the National Research Council (NRC), an arm of the
    National Academy Sciences (NAS) recommended that the position of deputy
    administrator for science and technology be created within EPA to
    oversee research throughout the agency. AWWA has long contended that
    coordination of research in EPA needed to be improved. While EPA
    recently has begun to improve the quantity and quality of its science,
    a higher level of coordination is needed to ensure its effectiveness.
    The current position of assistant administrator for research and
    development does not have agency wide responsibility or authority to
    oversee all of the science needed for policy-making. AWWA recommends
    that the Congress give serious consideration to the NRC proposal.
        AWWA also suggests that EPA work closely with other federal
    agencies such as the Centers for Disease Control and Prevention (CDC),
    the National Institutes of Health, the US Department of Agriculture,
    the US Army Corps of Engineers, etc., to leverage resources so that the
    research efforts can be maximized. The Congress and EPA need to
    continue to look for innovative research partnerships to get the job
    done, similar to what was developed for the M/DBP cluster and arsenic.
    Congress should also consider funding these partnerships for drinking
    water research independent of other environmental research to give the
    drinking water program, a public health program that affects every
    person in the United States, the priority it deserves.

                           DRINKING WATER REGULATIONS
        While timely, best available, peer-reviewed good science is
    essential to intelligent regulatory decision-making, how that science
    and other data are actually used in decision-making is critical. AWWA
    is concerned about the scientific basis for some regulatory decisions.
    Incomplete or old science, although it is the ``best-available'' may
    still be inadequate science. Making regulatory decisions on inadequate
    science is not in accordance with the intent of the 1996 SDWA
    Amendments. The use of cost data and benefit assumptions appears to be
    arbitrary and capricious in some cases. The following drinking water
    regulations, either proposed or under development, illustrate AWWA's
    concerns that EPA rulemaking is deficient in following the requirements
    of the 1996 SDWA Amendments.
    Arsenic
        Arsenic research is too late to affect the final arsenic
    regulation. The 1996 SDWA Amendments required EPA to propose a revised
    arsenic regulation by January, 2000, and promulgate a final regulation
    by January, 2001. The 1996 SDWA Amendments also required EPA to develop
    a comprehensive research plan on low-levels or naturally occurring
    arsenic. The objective of the plan was to develop an extensive arsenic
    research program. The plan has been completed but has not yet been
    fully executed and the vast majority of the research results will not
    be ready in time to impact the regulation. The key issue for the
    arsenic regulation is that the health effects data and the results of
    the health effects research should have been completed by mid-1999 to
    meet the deadlines for the arsenic proposal in the SDWA. Only five
    major arsenic health effects research projects were started by that
    time. Since EPA had not made a significant start on the bulk of the
    necessary health effects (which will take several years to complete),
    very little of the necessary research was completed in time to be used
    in developing the proposed arsenic regulation.
        The lack of realistic prioritization of the arsenic research, from
    the AWWA viewpoint, has minimized the potential for the ongoing
    research to substantially reduce the uncertainty in the arsenic risk
    assessment. The ongoing research projects may (or may not) be the
    specific projects that could have the most impact in reducing that
    uncertainty, but nobody knows for sure at this point. AWWA is concerned
    that some of the ongoing research may simply lead to the need for more
    research rather than give answers that are meaningful for the
    regulatory process.
        Data does not support an arsenic standard lower than 20 ppb. The
    National Research Council (NRC) conducted a comprehensive review of the
    arsenic risk assessment that was released last year. AWWA supports a
    reduction in the current arsenic standard, as recommended by the NRC,
    even though compliance will be costly for the public. In fact, AWWA has
    gone on record supporting a level of no less than 10 parts per billion
    (ppb) if the science backs it up. AWWA has publicly stated this
    position for nearly 12 months giving the Agency the benefit of the
    doubt that the critical questions regarding the uncertainties in health
    effects (many of which are pointed out by the NRC) could be answered
    prior to the publication of the proposed arsenic rule. Unfortunately,
    AWWA believes the Agency has been unsuccessful in satisfactorily
    answering these crucial questions. As documented in the detailed
    comments to be submitted by AWWA to EPA on the proposed rule, AWWA
    believes that a critical evaluation of the data that is presented by
    EPA in the proposed arsenic regulation convincingly demonstrates that
    20 ppb is the MCL that maximizes health risk reduction benefits at a
    cost that is justified by the benefits. At a level of 10 ppb or lower,
    the health risk reduction benefits become vanishingly small as compared
    to the costs.
        EPA has not credibly demonstrated a risk to the U.S. population to
    justify lowering the standard to the proposed level. AWWA has
    significant concerns regarding the basis upon which the proposed
    arsenic regulation will be promulgated. The proposed arsenic rule is
    incomplete, inconsistent, and inaccurate. The health benefits
    anticipated by this proposal are minute and open to scientific debate.
    EPA has significantly under estimated the impact of the proposed rule
    because it has failed to develop a logical methodology for estimating
    the costs and subsequently the benefits of the proposed rule.
        One of the conclusions of the NRC study is that ``Additional
    epidemiological evaluations are needed to characterize the dose-
    response relationship for arsenic-associated cancer and non-cancer end
    points, especially at low doses. Such studies are of critical
    importance for improving the scientific validity of risk assessment.''
    Some of the ongoing research being conducted by EPA (in accordance with
    the Arsenic Research Plan) and work being conducted by the arsenic
    research partnership between the AWWA Research Foundation (AWWARF), the
    Association of California Water Agencies (ACWA), and EPA includes
    epidemiological studies that will address some of the NRC questions.
    The research will provide some of the answers for the risk assessment;
    however, none of these epidemiological studies will be completed until
    AFTER the arsenic regulation is finalized.
        EPA has ignored specific recommendations for the arsenic risk
    assessment from the NRC report. The Executive Summary of NRC report
    states that ``data that can help to determine the shape of the dose-
    response curve in the range of extrapolation are inconclusive and do
    not meet EPA's 1996 stated criteria for departure form the default
    assumption of linearity.'' The report goes on to state ``Of the several
    modes of action that are considered most plausible, a sublinear dose-
    response curve in the low-dose range is predicted, although linearity
    can not be ruled out.'' Here the panel considers a sublinear dose-
    response curve ``most plausible''. It is AWWA's opinion that this whole
    issue of dose-response extrapolation adds enormous uncertainty to the
    standard setting process and makes high cost standards for arsenic in
    the single digits very unrealistic. The linear extrapolation used by
    EPA likely overstates the risk at low doses. The degree of potential
    over-estimation increases as the proposed MCL is reduced to lower and
    lower levels. What specific research does EPA have planned to address
    the issue of non-linearity in the dose-response curve? Will this data
    be available for the six-year review cycle?
        In June, in a preliminary draft report, the Drinking Water
    Committee of EPA's Science Advisory Board (SAB) said that the available
    scientific evidence on arsenic's health effects could justify a
    standard of 10 ppb or even 20 ppb under the 1996 SDWA Amendments. This
    again calls into question the basis for EPA's proposed MCL of 5 ppb.
    The SAB Drinking Water Committee noted that there are uncertainties
    associated with the use of old Taiwanese data to estimate the risks
    from arsenic and concluded that EPA may have misinterpreted the data
    and overestimated lung cancer risks. According to the draft SAB report,
    results from the Taiwanese and other studies should not be rigidly
    extrapolated to the U.S. population. Poor nutritional status in Taiwan,
    Chile, and India may have influenced the health effects. A 1999 study
    conducted in Utah found no evidence of either bladder or lung cancer at
    arsenic levels of 200 ppb, the report said. In addition, the report
    noted that studies conducted in animals have shown that deficiencies in
    selenium substantially increases the toxicity of arsenic. Urinary
    concentrations of selenium in the area of Taiwan were found to be
    between three and four micrograms per liter, as opposed to 60
    micrograms per liter in the United States. The report also noted that
    there other nutritional factors which were not taken into account by
    EPA. These studies should not be summarily dismissed or used
    inconsistently by EPA is in the case of the proposed arsenic rule.
        Clearly the scientific basis upon which to base such a revised
    arsenic standard is questionable at best. In light of the SAB draft
    report and the NRC study, the scientific data is not necessarily as
    strong as previously thought. EPA recognized in the recent abstract of
    the Utah cohort mortality study that the relationship between health
    effects and exposure to drinking water arsenic is not well established
    in the U.S. populations. EPA concluded that further evaluation of
    potential health effects in low-exposure U.S. populations is warranted.
    By its own admission, the Agency does not clearly understand the health
    effects issues as they relate to U.S. populations. Since the science on
    which to base an MCL of 5 ppb is questionable, how can EPA justify the
    high cost of the MCL?
        The cost-benefit analysis is not adequate and does not meet the
    requirements of the SDWA. Even though EPA's own cost-benefits analysis
    concludes that the costs are greater than the benefits, the net
    negative benefit increases significantly when the appropriate costs,
    latency, and discounting adjustments are incorporated into the
    analysis. The net negative benefits become astronomical at the proposed
    arsenic standard of 5 ppb. Clearly, EPA doesn't understand the
    magnitude of their errors in the cost-benefit analysis, nor does EPA
    understand the magnitude of this proposal's impact on small
    communities. The proposed arsenic standard of 5 ppb literally has the
    potential to drive many small communities out of the drinking water
    business.
        The inadequate cost-benefit analysis presented by EPA is
    particularly troubling in light of the cost-benefit flexibility that
    was specifically inserted in Section 1412(b)(6) of the 1996 Safe
    Drinking Water Act (SDWA) Amendments for situations just like this. The
    proposed arsenic regulation is the most compelling case to date for
    using this flexibility, however, there is no practical way to make
    public policy decisions without an appropriate cost-benefit analysis.
        EPA invoked the cost benefit provisions of the SDWA to support the
    choice of an MCL of 5 ppb for arsenic. However, EPA did not employ a
    marginal analysis to justify this decision. EPA has not therefore
    performed a proper cost benefit analysis and has not complied with the
    SDWA. SDWA compliance inherently exhibits diminishing returns. As lower
    and lower treatment targets are considered, costs increase at an
    increasing rate while the increment of exposure reduction achieved
    diminishes with each additional increment of stringency. This
    relationship implies that there is a balance point where the marginal
    benefit obtained equals the marginal cost and net benefits are
    maximized. This is the right way to use cost benefit analysis to
    justify a decision. However, this is not what EPA did to justify the
    proposed arsenic MCL.
        EPA discussed an aggregate comparison of total costs and benefits
    to justify its choice of an MCL. In this procedure, the more favorable
    relationship between benefits and costs from the first increments of
    additional stringency (i.e., moving from 50 ppb to 20 ppb) are averaged
    in with the less favorable data relating to the last increments (i.e.,
    moving from 10 ppb to 5 ppb). EPA based its decision on a comparison of
    these aggregates (and other risk criteria of its own making). The SDWA
    specifically states that the incremental costs and benefits associated
    with each alternative MCL must be considered. EPA presents such values
    but provides no discussion of them and does not incorporate them into
    its justification, relying instead on aggregate cost benefit comparison
    and analysis of uncertainties on the benefits side. The aggregate
    comparison performed by EPA embodies a decision rule that is structured
    such that it will always over-shoot the economically optimal level of
    stringency that would be prescribed by marginal analysis. EPA's
    decision rule is arbitrary and has no standing in economic analysis. It
    is not a cost benefit analysis and does not meet the clear or implied
    intent of the SDWA.
        The cost methodology presented in the proposal is incomplete and
    inconsistent throughout the proposal. The presentation of cost is
    arguably the worst that AWWA has seen in any drinking water regulation.
    It is unclear how EPA developed the national compliance costs. EPA has
    not provided any estimates of total capital costs, which is unusual for
    a major drinking water regulation. Computing the total capital costs
    could have helped identify errors that are apparent in the O&M costs.
    In calculating the O&M costs, the amortized cost of the capital
    investment appears to exceed EPA's estimate for the total national cost
    (capital and O&M). In addition, EPA unrealistically assumes that many
    treatment plants will be able to dispose of their residuals waste
    streams to a sanitary sewer. The reality is that many wastewater plants
    will not accept these waste streams for a multitude of reasons, but
    primarily due to the increased Total Dissolved Solids (TDS). This
    assumption leads to substantially lower national compliance cost
    estimates than is likely to be the case.
        AWWA has been looking closely at the cost numbers in the arsenic
    proposal and found significant discrepancies between the cost data
    referenced in the proposal and the numbers in the Regulatory Impact
    Analysis (RIA). When AWWA asked EPA to explain these discrepancies, EPA
    disclosed that the Unit Cost Curves (used to predict compliance cost
    based on the technology chosen and design flow) shown in the Technology
    and Cost Document were not the curves EPA actually used in the RIA.
    Without the actual Unit Cost Curves that EPA used, there is no way to
    verify EPA's national compliance cost estimates for a revised arsenic
    standard. The curves that were actually used have not been disclosed
    and without them (and supporting documentation) it is not possible to
    independently assess whether EPA used reasonable assumptions or to
    judge whether EPA's cost estimates are high, low, or on the mark. It is
    our understanding that EPA will publish on Notice of Data Availability
    (NODA) on the Unit Cost curves actually used, with all supporting
    documentation, and allow a full thirty day comment period on the NODA.
    This will allow others to assess how EPA developed its cost estimates
    and comment on their validity.
        The AWWA Research Foundation (AWWARF) did an independent analysis
    of the costs of implementing the arsenic drinking water regulation at
    varying MCLs. The differences in estimates were significant. The
    differences are:

    ----------------------------------------------------------------------------------------------------------------
                                                    5 ppb                    10 ppb                   20 ppb
    ----------------------------------------------------------------------------------------------------------------
    EPA Estimate.........................  $378 million/year......  $164 million/year......  $62 million/year
    AWWA Estimate........................  $1.46 billion/year.....  $605 million/year......  $55 million/year
    ----------------------------------------------------------------------------------------------------------------

        These widely differing cost estimates need to be reconciled before
    the final rule is promulgated. AWWA and AWWARF are working with EPA to
    better understand the differences.
        AWWA believes EPA should take the full twelve months between the
    proposal and promulgation of the arsenic regulation as provided by
    Congress through the 1996 Amendments to the Safe Drinking Water Act.
    The arsenic drinking water regulation was proposed June 22nd, and
    comments are due to EPA on September 20th. However, because the rule
    has been delayed and EPA has a statutory deadline to promulgate the
    final regulation in January 2001, AWWA is deeply concerned that EPA
    will not have sufficient time to evaluate comments and that an MCL
    based on inadequate science and cost and benefit data may be
    promulgated. EPA needs this time to critically evaluate the information
    received during this public comment period and make careful
    consideration to changes in the final regulation prior to its
    promulgation. AWWA believes that allowing a statutory deadline to drive
    imprudent public policy decisions would be unfortunate. If this occurs,
    the public will suffer from an untenable and unsupportable regulation
    of arsenic. Based on the information presented in this statement and
    comments submitted to EPA, the ethical action on the part of the Agency
    would be to retract their existing proposal and start afresh in a
    transparent stakeholder-based process to develop the drinking water
    standard for arsenic. Should the Agency decide to proceed on its
    current course of action, AWWA believes that the critical evaluation of
    the data presented by EPA in this proposed arsenic regulation shows
    that the prudent maximum contaminant level (MCL) that protects public
    health is 20 ppb.
    Microbial, Disinfectant & Disinfection By-Products Cluster
        This ``cluster'' of regulations is the most significant and
    potentially the most costly of all drinking water regulations required
    in the 1996 SDWA amendments. It includes Disinfectant/Disinfection By-
    Product Rules, Enhanced Surface Water Treatment Rules, a Filter
    Backwash Rule and the Groundwater Rule. The regulations in this
    ``cluster'' require substantial research, most of which will not be
    completed by the time indicated in the SDWA.
        Disinfectant/Disinfection By-Products Rules (D/DBP): Research on
    microbial contaminants and disinfectants and disinfection by-products
    is a critical need. Each day there are roughly 50,000 deaths in the
    world attributed to microbial contamination of drinking water. Much of
    this threat has essentially been eliminated in the United States
    through disinfection of drinking water. However, it is now known that
    disinfection of drinking water can produce chemical by-products, some
    of which are suspected human carcinogens or may cause other toxic
    effects. Controlling risks from these by-products must be carefully
    balanced against microbial risks to ensure that when reducing
    disinfection levels or changing treatment to lower by-product risk,
    significant microbial risks are not created.
        Research on disinfectants and disinfection by-products, as endorsed
    by the National Academy of Sciences and EPA's Science Advisory Board,
    is essential. The cost to the nation of microbial and disinfection by-
    products regulations under the SDWA will certainly be in the billions
    and could be as high as $60 billion or more depending on the final
    rule. An appropriate investment in health effects research will ensure
    that costs of regulation will be commensurate with the health benefit
    and not driven to extremes because of the lack of data.
        Cryptosporidium is a microbial pathogen of major concern to
    drinking water supplies. The Centers for Disease Control, in
    correspondence with EPA, has pointed out that extensive research on the
    health implications of this pathogen and dramatic improvements in
    analytical methods for its detection are necessary before it is
    possible to evaluate the public health implications of its occurrence
    at low levels and determine the appropriate regulatory response.
    Adequate funding for research on Cryptosporidium, as well as other
    emerging pathogens, is essential to protect the health of millions of
    Americans.
        Negotiated Rulemaking for Stage 2 of the D/DBP Rule: The
    negotiations on Stage 2 of the D/DBP rule were completed on September
    7, 2000, and members of the FACA (Federal Advisory Committee Act)
    negotiating committee have agreed to urge their respective
    organizations to sign the agreement by September 29, 2000. The
    agreement is risk-based and involves a long-term treatment technique
    approach that is based on a measured and proportional response to raw
    water quality. This departure from the ``one-size-fits all'' approach
    is perhaps one of the most significant aspects of the agreement and
    will recognize watershed control and source water protection among the
    notable activities in a ``tool box'' approach to achieving the goals of
    the 1996 SDWA amendments to balance the chronic risk from DBPs and the
    acute risk of waterborne diseases from microbial contamination. The
    agreement allows for the use of ozone, chlorine-based products and
    ultraviolet light for microbial inactivation. AWWA will consider
    whether that the agreement fairly balances the competing public health
    concerns in an effective manner in deciding whether to sign the
    agreement.
        Filter Back Wash Rule: The final Filter Backwash Rule was scheduled
    to be promulgated by August 2000. However, this rule has become a major
    concern since there is not much data on which to base a regulation and
    the potential for significant compliance costs and the rule has not yet
    been finalized.
        For the Filter Backwash Rule, EPA assembled a collection of studies
    that appears to reflect 1,907 individual surface water samples. As
    presented, this assemblage cannot be directly related to drinking water
    sources. Few of these individual studies obtained positive samples and
    large data sets appear to be prone to lower observed occurrence than
    smaller data sets. Twenty-six of the studies either reported ranges of
    observation including zero or neglected to provide a range of
    observations.
        Most disturbing is that the assembled studies did not include the
    most recent and comprehensive survey of drinking water treatment plant
    effluent water concentrations available from the Information Collection
    Rule (ICR) data collected over 18 months in 1997 and 1998. During that
    data collection process, public water systems serving greater than
    100,000 persons collected monthly protozoan samples using an existing
    EPA approved method. The resulting data has been available to EPA since
    December 1999. The raw ICR data suggests that less than 7 percent of
    large public water systems use source waters that contain
    Cryptosporidium oocysts at detectable levels. Preliminary estimates
    from statistical models of this data indicate that the median oocyst
    concentration to be approximately 0.03 oocysts per liter rather than
    the values of 4.70 and 10.64 oocysts per liter cited by EPA in their
    proposal for the Filter Backwash Rule. After all the cost and time
    involved to collect this information under the requirements of the ICR,
    why is EPA discounting this most recent information?
        EPA correctly points out the difficulties in performing
    Cryptosporidium analysis for filter backwash samples. Where recovery
    data are provided in the literature, the rates typically have been low.
    It is important to point out that the volumes analyzed have been very
    small due to high turbidity in the samples. It is not uncommon for
    spent filter backwash samples to have equivalent volumes analyzed of
    much less than one liter. Therefore, the focus by EPA on high outlier
    levels of oocysts reported is unjustified. EPA is aware of the
    uncertainties of individual protozoan measurements and citing these
    outlier values violates the sound statistics that have been developed
    by EPA and others over the past several years to better understand
    protozoan data. The 1996 SDWA Amendments call for the use of ``best
    available'' science. EPA does not appear to be following this provision
    of the law in the Filter Backwash Rule.
    Radon
        EPA is under a statutory deadline to finalize the radon drinking
    water regulation by August 6, 2000; however, the rule has not yet been
    finalized AWWA has significant concerns about whether regulating radon
    in drinking water is cost effective--particularly the primary Maximum
    Contaminant Level (MCL) of 300 picocuries per liter. For the radon
    drinking water regulation to provide effective public health benefits,
    it is essential that states adopt a multi-media mitigation (MMM)
    program to abate radon in indoor air which is the primary threat to
    public health.
        However, AWWA believes that there are some flaws in establishing
    the primary MCL. AWWA has repeatedly indicated to EPA our numerous
    concerns regarding the Health Risk Reduction and Cost Analysis (HRRCA)
    for radon. These concerns cover a wide range of issues such as life
    years saved estimates, latency times, discounting rates, cumulative
    costs of regulation, affordability, entry points to the distribution
    system, and treatment costs. Many of these factors can have a dramatic
    impact on the benefit-cost ratio. Depending on the assumptions, the
    cost-benefit ratio can vary from a high of 0.95, indicating a
    reasonable comparison of benefits to costs, to a low of 0.04, where the
    costs are clearly extreme compared to the benefits received.
        The first and foremost issue is a policy concern in determination
    of when ``benefits justify costs.'' Some Federal Agencies use a cost
    benefit ratio to justify an expenditure. The US Army Corps of
    Engineers, for example, uses a ratio of 1:2. Studies on the lead
    service line replacement portion of the Lead and Copper Rule show a
    dismal cost benefit ratio of 100:1. Prudent public policy dictates that
    federally mandated expenditures at the state and local level should
    have a ratio where benefits exceed costs.
        Costs from the radon HRRCA show that it will have a devastating
    impact on small water systems, which are the majority of systems
    expected to take action as a result of the regulation. Simply looking
    at national costs, in aggregate, allows economies of scale for larger
    systems to mask the regulations affect on smaller systems. When one
    looks at the very very small systems category cost benefit ratios range
    from a disappointing 20:1 to 50:1. To make matters worse, benefits
    accrue locally in tiny increments. Again in the very very small system
    size, costs are estimated at $10,000 per year, with a corresponding
    10,000-14,000 years between statistical cancer cases avoided. Clearly
    the primary MCL should take into account the regulatory impacts on
    small systems, which it does not.
        The accounting of benefits in the HRRCA is inconsistent with common
    risk assessment and risk management principles. For example, risk
    assessment and management in the EPA's drinking water program typically
    assumes a 70-year exposure period. This implies that 1/70 of the
    benefits will appear in the first year after implementation, 2/70 in
    the second year and so on. The HRRCA grossly over estimates benefits by
    assuming that the full benefit of the regulation is realized in the
    first year, and succeeding years. The HRRCA should have been revised to
    reflect a phase in, or latency period, for benefits.
        Also of concern is the failure of the HRRCA to account properly for
    time in the benefits estimate. The HRRCA discounts costs of a 7% annual
    rate, but does not discount benefits at all. This inflates the benefits
    estimate. Costs and benefits should be discounted at the same rate and
    the HRRCA should reflect this. AWWA estimates that the failure to phase
    in benefits and the failure to consider the timing of benefits shifts
    the cost benefit ratio from approximately 1:1 an to unfavorable 5:1, or
    even 9:1.
        With the cost benefit ratios for the primary MCL shifting
    negatively, the multi-media mitigation program that Congress wrote into
    the 1996 SDWA Amendments becomes critical to providing a public health
    benefit. The EPA's 1994 Report to Congress placed the dollar cost of
    saving a life through a radon indoor air program at $700,000. This is
    almost ten times lower than the cost to save a statistical life through
    drinking water efforts on radon. AWWA supports the concept of the MMM
    program; however, AWWA has a significant concern that the MMM program
    in the statute and in the proposed radon regulation will not work as
    intended. There is little incentive in the SDWA for a State to adopt a
    MMM program simply to enforce the alternative MCL for radon rather than
    the primary MCL. In States that do not adopt a MMM program for radon,
    the costs to drinking water consumers will be exorbitant with very
    little public health benefit.
        AWWA urges Congress to provide incentives in the Indoor Air Radon
    Abatement Act for States to adopt a MMM program that would meet the
    requirements for a State to enforce the alternate MCL for radon. This
    would put the MMM program and requirement in the air program where it
    more rightfully belongs and provide resources for the States to
    successfully implement the MMM program. If all States have a MMM
    program, the alternate MCL will provide more public health benefit and
    at a more reasonable cost than the primary MCL. AWWA also believes that
    there should be a single standard for radon in drinking water based on
    the MMM since the major health threat is from air. AWWA recommends that
    the Congress address this flaw in the SDWA as soon as possible before
    the American people are faced with the exorbitant cost that would
    result from enforcing the primary MCL in the proposed regulation.
    Radionuclides
        AWWA, through its volunteers and contractors, has invested
    significant time and resources on the benefit-cost analysis (BCA) in
    the Notice of Data Availability (NODA) that was published on April 21st
    for the Radionulclides Rule. The BCA components, and the process to fit
    them together, used in the NODA are critical, as this is one of the
    first BCA conducted under the new provisions of the 1996 Safe Drinking
    Water Act Amendments.
        At this time, AWWA does not believe that the BCA presented in the
    radionuclides NODA meets the requirements of Section 1412(b)(4)(C) of
    the SDWA. EPA simply put the costs in one column, and the benefits in
    another column to meet this requirement. AWWA believes that a much more
    robust BCA must be included in the final regulation, and the lack of a
    more robust BCA in the final regulation would be considered arbitrary
    and capricious and contrary to the clear SDWA language
        Considerable mention is made in the NODA of the EPA ``policy'' that
    MCLs must be established such that individual lifetime cancer risks do
    not exceed a threshold of 10-\4\. This notion that a maximum
    ``allowable risk'' (of 10-\4\) is the ultimate binding
    constraint on EPA rulemaking--regardless of what the costs of the rule
    are, or how the benefits compare to those costs--is quite troubling.
        Clearly, there is no statutory mandate or authority to have a self-
    defined and self-imposed Agency policy on an ``acceptable risk'' floor.
    The 1996 SDWA Amendments do not impose or envision such a constraint.
    Consider a case in which the cost of a potential MCL was not justified
    by its benefits, but where the estimated cancer risk at a less
    stringent alternative exceeded the 10-\4\ level. The NODA
    language appears to clearly state that the Administrator would be
    obliged to set the MCL at the unjustified level (to maintain a
    10-\4\ risk ceiling) rather than follow the letter and
    intent of the statute and set a less stringent MCL that was indeed
    justified on a reasonable benefit-cost basis. EPA should explicitly
    clarify whether this indeed is its intent and interpretation of the
    statute. If this is the case, then the ``acceptable risk'' floor of
    10-\4\ is more of a rule than a policy, and EPA should
    publish an ``acceptable risk'' proposal that allows for public comment
    on such a critical issue.

                         DRINKING WATER INFRASTRUCTURE
        According to the EPA Drinking Water Infrastructure Needs Survey
    released on January 31, 1997, $12.1 billion is needed in the immediate
    future to protect drinking water supplies. Of this amount, $10.2
    billion, or 84 percent, is needed to protect water from microbial
    contaminants which can produce immediate illness or death. According to
    the needs survey, between 1995 and 2015, a total of $138.4 billion will
    be needed to upgrade the infrastructure of the nation's water utilities
    to meet requirements of the SDWA. It is also important to note that
    this figure does not include other drinking water infrastructure needs,
    such as replacing aging transmission and distribution facilities, which
    are not eligible for funding from the Drinking Water State Revolving
    Fund (DWSRF).
        In an independent analysis, AWWA estimates that the total drinking
    water needs, taking full account of infrastructure replacement needs,
    is on the order of $385 billion over a twenty year period. The Water
    Infrastructure Network (WIN), of which AWWA is a member, recently
    released a report that estimates that the total drinking water and
    waste water infrastructure needs over a twenty year period approaches
    one trillion dollars. AWWA will soon release a report that will outline
    the size and shape of the investment need for drinking water in the
    United States. The findings illustrate that the size of the need will
    vary from place to place, reflecting the age, character and history of
    the community. The AWWA report raises the questions that need to be
    addressed to determine how best to meet the Nation's drinking water
    infrastructure needs.
        The report concludes that, in the aggregate, after accounting for
    the potential of best practices in asset management, research and new
    technologies, efforts to increase ratepayer awareness and support, and
    possible alternative compliance scenarios, in some utilities there
    still remains a ``gap'' between what is needed for infrastructure re-
    investment and what is practical to fund through water rates. This gap
    can be expected to grow over the next few decades as a reflection an
    infrastructure building boom years ago that will begin to reach the end
    of its useful life.
        AWWA remains committed to the principle of full cost recovery
    through water rates as the essential under-pinning of local
    sustainability of water infrastructure. Longer term, the objective
    should be to flatten the replacement function and restore utilities to
    full cost recovery and financial sustainability.
        AWWA does not expect that federal funds will be available for 100
    percent of the infrastructure needs of the nation's water utilities.
    The DWSRF is a loan program with a state match. Ultimately, the rate-
    paying public will have to pay for the nation's drinking water
    infrastructure, regardless of whether financing comes from the DWSRF or
    other sources. However, AWWA does believe that DWSRF funding is a major
    issue for congressional oversight to ensure that federal funding is
    adequately available to meet the intended purposes of the SDWA. Over
    the next twenty years, it is clear that SDWA compliance requirements
    and infrastructure needs will compete for limited capital resources.
    Infrastructure needs and SDWA compliance can no longer be approached as
    separate issues. Oversight should take place in the context of the
    total compliance and infrastructure need and how the needs should be
    apportioned among the various financing mechanisms and sources.
        There are a number of enhancements to the DWSRF that should be
    considered to increase its effectiveness, such as:

     increasing the authorized DWSRF funding levels to fund SDWA
            compliance projects and other needs.
     expanding the DWSRF to encompass system rehabilitation and
            replacement in addition to SDWA compliance as eleigible
            expenditures, allowing communities to take a more comprhensive
            approach to providing safe drinking water. As drinking water
            regulations become more stringent, upgrading the distribution
            system, like protecting drinking water sources, becomes a
            larger factor in maintaining the regulated safety level until
            the water reaches the consumer.
     Examining strategies for streamlining current operations of
            DWSRFs and strategies to encourage more innovative use of
            DWSRFs at the state level.
        AWWA will provide a copy of the forthcoming AWWA report to members
    of the committee. We look forward to working with you to help resolve
    the Nation's growing drinking water infrastructure needs.

                       METHYL TERTIARY BUTYL ETHER (MTBE)
        Although it is not the subject of this hearing, we believe that we
    would be remiss to not mention methyl tertiary butyl ether (MTBE)
    contamination of drinking water. MTBE contamination is an issue that
    cuts across the Clean Air Act, the Resource Conservation and Recovery
    Act (RCRA) and the Safe Drinking Water Act. MTBE contamination clearly
    illustrates the pitfalls of regulating within a statutory ``stove
    pipe'' and why coordination across programs is necessary within EPA.
        The Clean Air Act of 1990 required that areas of the country with
    certain air quality problems use reformulated gasoline (RFG) with an
    increased oxygen content. MTBE is the oxygen additive most commonly
    used by the petroleum industry to satisfy the RFG mandate. Since MTBE
    is very soluble in water and does not ``cling'' to soil well, it has a
    tendency to migrate much more quickly into water than other components
    of gasoline. The use of MTBE has created a significant and unacceptable
    risk to drinking water supplies and groundwater resources. At levels as
    low as 20 parts per billion, MTBE makes drinking water unfit for human
    consumption because of taste and odor. It should also be noted that
    MTBE has been detected in the taste and odor of drinking water at
    levels as low as 2 parts per billion.
        In Santa Monica, California, seven wells supplying 50 percent of
    the water for the city were shut down because of MTBE concentrations as
    high as 600 parts per billion. It is estimated that it will cost the
    city $150,000,000 to develop new water sources. This does not include
    the cost of remediation and treatment of the contaminated wells. Cases
    of persistent MTBE plumes extending for kilometer-scale distances in
    the subsurface have been documented in Port Hueneme, California; Spring
    Creek, Wisconsin; and East Patchoque, New York. Recent testing
    conducted by the US Geological Survey (USGS) shows MTBE has been found
    in approximately 20 percent of the groundwater in RFG areas. As many as
    9,000 community water wells in 31 states may be affected by
    contamination from MTBE. The data was from one-third of the wells in
    those states and is generally representative of the entire nation.
    Source water is being impacted from a variety of sources including
    pipeline leaks, spills, leaking underground storage tanks, and
    recreational boating on source waters.
        According to the report of the EPA Blue Ribbon Panel on Oxygenates
    in Gasoline, a major source of groundwater MTBE contamination appears
    to be releases from underground gasoline storage tanks. The EPA Blue
    Ribbon Panel on Oxygenates in Gasoline recommended enhanced funding
    from the Leaking Underground Storage Tank (LUST) Trust Fund to ensure
    that treatment of MTBE contaminated drinking water supplies can be
    funded. The LUST funds could only be used for contamination resulting
    from leaking underground storage tanks. Since leaking underground
    storage tanks appear to be the major source of MTBE contamination in
    ground water, the LUST Trust fund is an existing option to consider as
    a source of potential funding assistance for some cases of MTBE
    contamination of drinking water supplies in circumstances that meet the
    criteria of the law. As part of MTBE legislation, AWWA recommends that
    Congress amend RCRA to clarify the use of the LUST Trust Fund to
    provide alternative drinking water supplies or treatment for drinking
    water sources contaminated by MTBE from leaking underground storage
    tanks. AWWA is very pleased that Senator Smith has addressed this issue
    in draft legislation circulated on June 13, 2000. We thank Senator
    Smith and other Senators and staff for their assistance on this issue.
        In testimony before the House VA, HUD, and Independent Agencies
    Appropriations Subcommittee and in a similar statement submitted to the
    Senate VA. HUD, and Independent Agencies Appropriations Subcommittee,
    AWWA recommended that Congress appropriate at least $100,000,000 for
    LUST to accelerate the clean up of LUST sites with priority for MTBE
    contaminated sites to prevent contamination of water supplies. There is
    a backlog of about 169,000 LUST site clean ups. EPA and the States have
    put increased emphasis on monitoring for MTBE as part of the
    Underground Storage Tank (UST) program so the number of MTBE
    contaminated sites may increase. Eliminating leaking tanks is an
    immediate remedy to protect drinking water supplies from further
    contamination until MTBE is phased out or eliminated.
        Congress appropriated $70,000,000 for the LUST program in FY 2000.
    The FY 2001 President's budget requests $72,100,000 for the LUST
    program. AWWA strongly believes that the requested increase is not
    sufficient to accelerate cleanups of LUST sites that are difficult to
    remediate because they are contaminated by MTBE. EPA's goal for FY 2001
    to complete 21,000 LUST cleanups is commendable but not adequate to
    address the immediate needs of millions of Americans who no longer can
    drink the water from their wells. An aggressive, high priority effort
    is necessary to cleanup sources of MTBE from leaking underground
    storage tanks as quickly as possible. AWWA is pleased that the House
    Appropriations Committee increased the LUST appropriation to
    $79,000,000 for FY 2001; however, no additional funding was
    appropriated in the Senate. AWWA requests that the joint conference on
    the VA. HUD and Independent Agencies appropriations bill accept the
    House LUST appropriation.
        Numerous bills have been introduced in Congress and draft
    legislation circulated that would amend the Clean Air Act to ban or
    phase out MTBE as a fuel additive. EPA has recently called for Congress
    to amend the oxygenate requirement in the Clean Air Act to ban or phase
    out the use of MTBE as a fuel additive. The EPA Blue Ribbon Panel on
    Oxygenates in Gasoline recommended action to amend the Clean Air Act to
    remove the oxygenates requirement and to clarify federal and state
    authority to regulate and/or eliminate the use of gasoline additives
    that threaten drinking water.
        AWWA has developed the following legislative principles that will
    address the contamination of drinking water sources by MTBE:

    1. Amend the Clean Air Act to significantly reduce or eliminate the use
            of MTBE as a fuel additive.
    2. Ensure that air quality gains are not diminished as MTBE use is
            reduced or eliminated.
    3. Require adequate research to be conducted on any replacement fuel
            additive for MTBE to ensure that a replacement will not
            contaminant drinking water sources.
    4. Provide federal funding assistance to public water systems that have
            MTBE contaminated water sources for treatment or alternative
            water supplies.
        AWWA recommends that Congress take swift action on legislation
    necessary to prevent further contamination of water supplies by MTBE or
    other fuel additives and provide assistance to public water systems
    that have MTBE contaminated water supplies. We look forward to working
    with the Congress to advance legislation addressing this critical
    issue.
                                   CONCLUSION
        We have covered a lot of issues in our statement today. Although
    much of the statement appears critical of EPA, we want to emphasize
    that EPA has made a good faith effort in other areas to implement the
    1996 SDWA amendments. The agency's outreach and involvement of
    stakeholders in the regulatory process is to be commended. However, our
    concerns raised in how EPA uses science and cost benefit analysis in
    regulations are valid and are issues that bear watching by the
    Congress.
        We look forward to working with the committee on MTBE and drinking
    water infrastructure issues. We thank you for your consideration of our
    views.
        This concludes the AWWA statement on the implementation of the 1996
    Safe Drinking Water Act Amendments. I would be pleased to answer any
    questions or provide additional material for the committee.

        Mr. Deal. Thank you, sir.
        Mr. Tippin.

                      STATEMENT OF DAVID L. TIPPIN

        Mr. Tippin. Thank you very much. Good morning, members of
    the subcommittee. I am David Tippin. I am director of Tampa
    Florida Water Department. We serve about a half a million
    people in the Tampa area with clean, safe drinking water. I am
    also a board member and recent President of the Association of
    Metropolitan Water Agencies, which represents the largest
    municipal drinking water agencies in the United States.
        Thank you for holding this hearing. The subcommittee's
    commitment to a well run drinking water program that ensures
    safe, affordable drinking water for all customers is very
    clear.
        I would also like to thank Chairman Bilirakis and
    Congressman Brown for agreeing to co-chair the Water
    Infrastructure Caucus. The drinking water and the waste water
    community is hopeful that the caucus will help resolve the
    overwhelming infrastructure needs faced by municipal water
    systems.
        I would also like to thank Chairman Bilirakis for his
    leadership in defeating H.R. 623 and Congressman Pallone for
    his help during the markup in which the bill was defeated. H.R.
    623 proposed to repeal important water conservation measures in
    the Energy Policy Act.
        With regard to implementation of the Safe Drinking Water
    Act Amendments of 1996, I would like to commend EPA for its
    remarkable efforts. The amendments set out a demanding
    regulatory schedule and the EPA has made it a priority to meet
    that schedule.
        State regulators deserve our recognition, too. The list of
    Federal regulations that States must implement has become
    larger and more demanding each year since the 1996 amendments
    were enacted. I might want to add, too, that most of the
    States, I know Florida is one of them, as I presume many of
    your States, are having funding problems, too, along with
    trying to meet budgets for these items, also.
        The last time I testified on this issue was January 31,
    1996. Our main concern then and our main concern today is the
    need to develop drinking water standards based on sound
    science. Congress shares this concern and enacted the sound
    science mandate in a bipartisan fashion in the 1996 amendments.
    AMWA is supportive of regulations that neither underregulate or
    overregulate. In other words, the Association urges EPA to
    develop regulations to protect health based on accurate health
    effects information.
        Congress took a major step when it gave EPA the flexibility
    to let science determine drinking water standards. This is the
    cornerstone of the 1996 amendments and it recognizes that the
    most serious threat to public health should be addressed first
    because resources are limited at all levels of government. The
    mandate recognizes that the public, who must ultimately bear
    the increased cost of drinking water regulations, ought to
    receive true value for what they are being asked to spend.
        Given this, the Association has a number of concerns with
    the agency on how the agency is incorporating science into the
    standard setting program. For instance, EPA recently finalized
    the maximum contaminant level of zero for chloroform, despite
    noting in the final rule that the best available peer-reviewed
    science indicated that a level above zero would have been more
    appropriate.
        Also, EPA proposed a filter backwash rule while
    acknowledging the lack of sufficient scientific information to
    know what risk might be involved. It would be unreasonable to
    expect perfection given an ever changing base of scientific
    knowledge. Nevertheless, the importance of meeting the sound
    science provisions of the act must be stressed. Focusing on the
    deadlines of the act to the point of ignoring sound science
    provisions deprives the public of sensible cost effective
    regulations.
        That is why in June AMWA made a request before the Senate
    Subcommittee on Wildlife and Water in testimony for a report by
    the General Accounting Office to determine how well EPA is
    fulfilling the Safe Water Drinking Act's sound science mandate.
        Also, in the 1996 amendments Congress called on EPA to
    develop health risk reduction and cost analysis documents to be
    published for public comment at the same time the rule is
    proposed. With a straightforward analysis of risk and cost, the
    public will know the answer to a very basic question: What am I
    getting for my money?
        So far EPA's cost and risk analyses are not published for
    comment in the Federal Register along with the proposed rule.
    Additionally, the analyses stray from normal cost-benefit
    practices. In some cases, EPA chooses to discount costs but not
    benefits. Thus, the agency compares what we in Florida know as
    kumquats to oranges. You may know them as apples to oranges.
        This is why the Association has recommended an independent
    review of how well EPA's cost-benefit analyses conform to
    standard practices of the requirements of the act.
        Thank you for the opportunity to provide this testimony
    today. We have enjoyed working with members of the subcommittee
    as well as Counsel Bob Meyers and Dick Frandsen, and I also
    look forward to working with you in the future to ensure safe,
    affordable drinking water for the Nation.
        I would be happy to answer any questions you have.
        [The prepared statement of David L. Tippin follows:]
     Prepared Statement of David L. Tippin, Director, City of Tampa Water
       Department on Behalf of Association of Metropolitan Water Agencies
    Introduction
        Good morning. I'm David Tippin, and I'm the director of the Tampa,
    Florida, Water Department. We serve nearly a half-million people in the
    Tampa area with clean, safe drinking water.
        I am also a board member and recent president of the Association of
    Metropolitan Water Agencies (``AMWA''), which represents the largest
    municipal drinking water agencies in the United States.
        Thank you for holding this hearing.
    History
        Since late 1996, when the Amendments to the Safe Drinking Water Act
    were enacted, the Environmental Protection Agency has developed a
    number of new rules and programs. These include a source water
    assessment program, a rule requiring annual water quality reports for
    consumers, an updated program for water systems to inform consumers of
    violations of drinking water regulations, and a loan program for
    drinking water systems.
        One of the most important fundamental changes brought about by
    these Amendments is Congress directive to the Agency to rely on the
    best available, peer-reviewed science and supporting studies conducted
    in accordance with sound and objective scientific practices.
        To meet the requirements of the 1996 Amendments, EPA is at work on
    a number of new rules. These include rules governing filter backwash,
    ground water disinfection, radon, other radionuclides and, most
    recently, arsenic. Also, EPA, water suppliers and environmental
    organizations have completed negotiations over the second phase of a
    rule to control microbes and the chemical byproducts of disinfection.
    And finally, EPA with the help of the National Drinking Water Advisory
    Council is establishing a process to determine other contaminants to
    regulate from the Contaminant Candidate List.
    Support for EPA and the States
        The last time AMWA testified on implementation of the Safe Drinking
    Water Act was before any major, new regulations had been issued under
    the 1996 revisions. The Act set out a demanding regulatory schedule,
    and AMWA commends EPA's Office of Ground Water and Drinking Water for
    its hard work. Also in previous testimony, AMWA strongly supported
    adequate funding for EPA's drinking water program as key to attaining
    the promise of the new Act. Today, we reiterate that support and call
    your attention to several areas of funding need.
        AMWA's major concern, given the requirements of the Act for the use
    of sound science, is adequate drinking water research funding. Research
    is critical to ensuring that drinking water regulations address
    contaminants that actually occur in drinking water and that occur at
    levels of public health concern. This is important so that the limited
    resources at all levels of government--federal, state, and local--are
    directed at high-priority risks. It is also critical for the public,
    who must ultimately bear the increased costs of drinking water driven
    by new regulations, to receive true value for what they are being asked
    to spend. This year, EPA has requested nearly $49 million in drinking
    water research funding. AMWA believes that this is the minimum needed,
    and we urge you and your colleagues to support this request.
        AMWA also would like to express its support for our state
    regulators. The Safe Drinking Water Act authorizes federal funding for
    up to 75 percent of state implementation costs. As the list of federal
    regulations that states must implement becomes larger and more
    demanding each year, federal support should rise, too. Seeking to
    ensure the Safe Drinking Water Act is implemented as per Congress
    intent, AWMA recommends that state primacy programs be funded at
    appropriate levels.
        Lastly, we encourage Congress to support the authorized level of $1
    billion per year, at a minimum, for the Drinking Water State Revolving
    Fund. This program assists water systems throughout the country in
    building facilities to meet the new requirements of the Act.
    Areas Where Implementation Can Be Improved
        We have already noted the remarkable amount of effort EPA has put
    into implementing the 1996 Amendments, but we would also like to
    express a number of concerns and to offer recommended actions. The
    Agency is already aware of these recommendations, as they appeared in
    AMWAs official comments on various proposed rules.
        Source Water Protection. First and foremost, AMWA looks to EPA to
    better coordinate its various programs to prevent pollution of the
    nation's drinking water sources. It is more effective and more
    equitable to prevent pollution in the first place rather than rely on
    drinking water suppliers to install ever more complex and costly
    treatment to remove that pollution from the public's water. It is more
    effective for two reasons. First, no treatment technology removes all
    contaminants 100 percent of the time. Second, prevention at the source
    for many contaminants reduces threats to recreational use of water
    sources as well as the aquatic environment. It is more equitable, since
    preventing pollution at its source ensures that those responsible for
    it bear the costs of removal, rather than transferring those costs to
    drinking water system customers.
        The case of MTBE, the gasoline additive approved by EPA under the
    Clean Air Act, provides an example of why coordination is needed. At
    the time MTBE was approved for use, EPA's scientists warned that,
    because of its characteristics, pollution of drinking water supplies
    was likely. The additive was nevertheless approved, and now we have
    extensive MTBE contamination of drinking water supplies. Consideration
    of drinking water concerns in the initial decision would have led to
    better results.
        Indeed, the Clean Water Act and Safe Drinking Water Act offer many
    opportunities for coordination to protect drinking water sources.
        The Use of Sound Science. The revised Safe Drinking Water Act
    stresses the use of sound science in developing and making regulatory
    decisions. As previously noted, AMWA has strongly supported increased
    research funding for drinking water to meet this purpose.
    Unfortunately, recent events have given all of us reason for concern.
    As you may know, EPA finalized a maximum contaminant level goal (MCLG)
    for chloroform at zero, despite noting in the final rule that the best
    available, peer-reviewed science indicated a non-zero value was more
    appropriate. EPA has now vacated the chloroform standard after a court
    ruling that the agency failed to use the best-available science.
        More recently, EPA proposed a Filter Backwash Rule while
    acknowledging that they lack sufficient scientific information to know
    what risks might be involved, the effectiveness of current treatment,
    or the benefits that the public might receive from implementation of
    the rule. EPA's own Science Advisory Board has pointed out major
    deficiencies in the proposal.
        While AMWA appreciates that the demanding schedule laid out in the
    Safe Drinking Water Act may lead to some oversights, we urge you to
    stress to EPA the importance of meeting the sound science provisions of
    the Act. We also recommend that Congress be open to changing statutory
    deadlines when there is reasonable expectation that additional, near-
    term information will better provide for the public's interests.
    Focusing on the mandated timelines in the Act to the point of ignoring
    its other provisions will not ultimately lead to the sensible, cost
    effective regulations the public deserves.
        Health Risk Reduction and Cost Analyses. One of the most
    significant provisions of the Safe Drinking Water Act is the
    requirement for preparation of a Health Risk Reduction and Cost
    Analysis (HRRCA) document to be published for public comment at the
    same time a rule is proposed. AMWA believes that this document is a key
    public right-to-know provision of the Act. With a straightforward
    analysis of risks and costs, the public will know the answer to a very
    basic question, ``What am I getting for my money?''
        So far, the cost and risk analyses, with the exception of that for
    radon, have tended to be buried within a very long and complex
    Regulatory Impact Analysis. Moreover, the analyses are not published
    for comment in the Federal Register along with the proposed rule.
    Rather, HRRCAs must be obtained either from the rule docket or accessed
    via the Internet, and it is not clear that public comments are desired
    or whether they will even be reviewed and considered by the Agency.
        A key component of HRRCAs required by the Act is an analysis of the
    ``quantifiable and nonquantifiable health risk reduction benefits for
    which there is a factual basis in the rulemaking record to conclude
    that such benefits are likely to occur as the result of treatment to
    comply with each (maximum contaminant) level'' (emphasis added). AMWA
    is concerned that several of the analyses to date have tended to rely,
    at least in part, on speculative (``what if'') analyses.
        Additionally, the analyses stray from normal cost-benefit
    practices. For example, EPA chooses to discount costs, but not
    benefits. Thus the Agency compares apples to oranges, which obfuscates
    whether the benefits of a rule justify the costs.
        These are but a few of the problems that concern AMWA about how
    Health Risk Reduction and Cost Analyses are being conducted under the
    Safe Drinking Water Act. If these analyses are truly intended to inform
    decision-makers, then they must be very clear in addressing actual
    rather than speculative risk reduction benefits. And, if these analyses
    are truly intended to inform the public about the benefits they may
    receive for what they will pay, then the HRRCAs must be clear,
    straightforward, and easy to read.
    Comments on Specific Proposed Regulations
        Arsenic Rule. In June, EPA proposed regulating arsenic at 5 parts
    per billion (ppb), but will also be taking comment on 3, 10 and 20 ppb.
    EPA is required under SDWA to promulgate a final rule by January 2001.
    The 1996 Amendments also required that the National Academy of Sciences
    (NAS) conduct a review of EPAs arsenic risk assessment. The NAS report
    recommended that EPA revise the existing 50 ppb standard for arsenic
    downward as quickly as possible but did not recommend a specific level.
    The report also recommended that EPA conduct more studies of its
    arsenic toxicity analysis and risk characterization, conduct additional
    human studies, and identify markers of arsenic-induced cancers. The
    arsenic standard is a very complex issue, and the proposal rule will
    draw many valuable comments from stakeholders. Unfortunately, once the
    comment period closes EPA must finalize the standard only a few months
    later. We ask the subcommittee to consider extending this deadline by
    six months to give EPA more time to evaluate comments.
        In addition, the Science Advisory Boards Drinking Water Committee
    was charged with reviewing the proposed rule for EPA. In a preliminary
    draft report prepared in August, the committee suggested that EPA
    consider setting the arsenic standard higher than the proposed level of
    5 ppb. The committee noted that the available science might support a
    standard in the range of 10 to 20 ppb.
        Filter Backwash Rule. The Act also required EPA to issue a rule
    governing filter backwash recycle practices by August 2000. The rule is
    likely to be finalized in the next couple of months. The rule is
    intended to address the concentration of contaminants in the drinking
    water treatment process resulting from cleaning of water filter beds.
    AMWA is concerned about the lack of scientific data that is available
    to support this rule. In the preamble of the rule, EPA acknowledges
    that there is a paucity of data available regarding the recycle
    practices of filter backwash.
        Radon Rule. EPA was required to finalize the Radon Rule by August
    2000. Reportedly, the Radon Rule likely will be finalized in December .
    Under the 1996 Amendments, Congress established the need for a
    mitigation program to reduce radon levels in indoor air. It is
    generally accepted that indoor air radon mitigation provides greater
    risk reduction than other methods of removal. Therefore, EPA developed
    a dual compliance regulatory approach: water systems may comply with an
    alternative maximum contaminant level (MCL) of 4000 picoCuries per
    liter (pCi/L) where the state, or the water system itself, operates an
    indoor air radon mitigation program. And where no mitigation program
    exists, water systems must either initiate one or comply with a primary
    MCL of 300 pCi/L. This approach is intended to attract water systems to
    participate in indoor air radon mitigation programs and thus achieve a
    higher risk reduction.
        AMWA endorses the concept of addressing radon through multimedia
    programs that reduce indoor air risk. AMWA agrees that that indoor air
    radon mitigation provides greater risk reduction than does the
    treatment of drinking water. AMWA would like to see the Radon Rule
    refocused on encouraging states to adopt the multimedia program option
    and reducing the burden on water systems to develop their own indoor
    air program or be forced to comply with the maximum contaminant level.
    Infrastructure Challenges
        A recent report by the Water Infrastructure Network (WIN), which is
    comprised of water suppliers, city officials, environmental
    organizations, and state agencies, shows that drinking water agencies
    spend roughly $13 billion per year on infrastructure to protect public
    health. But according to the report, that amount is only about half of
    what may be needed. The WIN report indicates that approximately $11
    billion more per year is needed through 2019. EPA's recent ``gap''
    analysis and a report by the American Water Works Association confirm
    this overwhelming shortfall.
        AMWA member agencies are exploring every avenue available to fund
    this anticipated future need. The vast majority of large municipal
    water systems currently fund 100 percent of their infrastructure as
    well as 100 percent of all federally mandated treatment requirements.
    Public Agencies have embraced public-private partnerships and private
    investment where it makes sense from a local perspective. We have
    adopted new efficiencies and streamlined our process. In short, we
    attempt to run our agencies not only as public services, but as
    businesses, too.
        AMWA is currently working with local governments, other water
    supply associations, state groups as well as the environmental
    community to assess the need and to develop appropriate funding
    solutions. AMWA is committed to evaluating all possibilities for future
    financing, and as we proceed, will keep the subcommittee apprised of
    any financing options that impact the long-standing partnerships we
    have had with the federal government.
    Methyl Tertiary Butyl Ether (MTBE)
        AMWA urges swift action on the part of the subcommittee and
    Congress to pass legislation that significantly reduces or eliminates
    the use of MTBE to prevent further water contamination, to assist water
    systems where supplies are contaminated, and to support development of
    treatment technologies to remove existing contamination.
        Water systems in at least 31 states have detected MTBE in their
    wells or surface sources. As you know, the primary sources of
    contamination are leaking underground gasoline storage tanks, although
    there is concern that air deposition is another source. Since MTBE is
    very soluble in water and does not cling to soil well, it has a
    tendency to migrate much more quickly in water than other components of
    gasoline. MTBE renders drinking water unfit for human consumption due
    to strong taste and odor levels, even at levels as low as 2 parts per
    billion. Most consumers perceive drinking water with an unpleasant
    taste or odor as being unhealthy, and in some cases the water may very
    well be unsafe to drink. The bottom line is that consumers will not
    tolerate MTBE in their water.
        This concludes the association's testimony.

        Mr. Bilirakis. Thank you, Mr. Tippin.
        Mr. Olson.

                       STATEMENT OF ERIK D. OLSON

        Mr. Olson. Thank you and good morning. I wanted to just
    note we have several recent reminders of why the discussion
    today is so important. Many of you may have read about the
    Walkerton, Ontario waterborne disease outbreak that killed
    several people earlier this year and the upState New York
    outbreak that occurred from E. coli where a child was killed.
        There have been several other recent outbreaks of
    waterborne disease in the United States that serve as a
    reminder that although we have made enormous progress over the
    last century in drinking water protection, we still have a long
    way to go, and all the recent reports that were cited earlier
    today and other reports document that we have absolutely
    enormous needs for infrastructure improvement.
        EPA estimated a couple of years ago that it is going to
    cost about $138 billion to upgrade our drinking water
    infrastructure, and more recent reports by the water utilities
    themselves, in coalition with others, suggested it is more like
    half a trillion dollars to upgrade it for capital alone, and if
    one considers operation and maintenance and capital and
    financing it is more like a trillion dollars over the next 20
    years that will have to be invested. That is an enormous
    shortfall from where we are now, an enormous investment that
    will be necessary.
        We thankfully are in the midst of what often has been
    called the third revolution in how water is provided in the
    developed world. The first was during Roman times when we
    started piping water. Around 100 years ago we started using
    chlorine and treatment to remove the particles in our water,
    and now we are on the cusp of an enormous change in how water
    is treated and delivered to protect our water sources: Upgrade
    how the water is treated, modernize the distribution systems,
    these pipes, some of which--in this room we are getting water
    from pipes that were in some cases built during the Lincoln
    Ldministration. We will have to upgrade those pipes all over
    the country. And then we are moving toward more public
    involvement and information about drinking water. All of those
    are very important improvements, and that is why some of the
    burdens on States and local officials have increased, but we
    think it is a wise and sound public health investment.
        There are enormous challenges. Some of them specifically
    have been mentioned, such as arsenic. We wanted to highlight
    the fact that the National Academy of Sciences last year had a
    consensus document that put to rest many of the arguments, in
    fact, virtually all of the arguments that have been made
    against making a much stricter standard. The consensus document
    said that the current EPA standard presents about a one in a
    hundred cancer risk. Just for the sake of comparison, that is
    10,000 times higher cancer risk than Congress unanimously said
    was the highest cancer risk that would be allowed in our food
    from pesticides. It is an enormous risk. And even if you think
    the National Academy of Sciences is off by ten or a
    hundredfold, it is a much higher risk than EPA would ever allow
    in any other environmental medium or in drinking water. It is
    an issue that has to be addressed. We have procrastinated on it
    now for 58 years. The standard was issued during World War II
    and it hasn't been amended since then.
        In addition, radon is a major issue. EPA has recently
    proposed a regulation that will start addressing radon in our
    tap water and allow States in a creative new program to
    tradeoff radon that comes in from the basement, reducing those
    risks, for reducing risks in drinking water. It is an
    interesting approach. We think the rule has some holes in it
    and it is a little loosey-goosey, but may improve public health
    protection.
        Recently, a landmark agreement earlier this month was
    reached by all the groups at this table as well as EPA and
    others to reduce the levels of microbial risk from
    Cryptosporidium and disinfection by-products. That agreement
    should be ratified later this month by all these groups and
    hopefully we will see major improvements in health protection
    over the next decade as a result of that agreement.
        Other major rules include the groundwater rule, which EPA
    will be completing shortly and recently proposed. We identify
    many enormous challenges that are ahead in our written
    testimony, but I just wanted to highlight a couple of them.
        One of them is how in the world are we going to fund about
    a half of trillion dollars in infrastructure improvements over
    the next 20 years. Obviously we are not thinking that the
    Federal Government is going to foot the bill for all of that,
    but we need to have a national dialog on how we are going to
    deal with that and how we are going to get the public involved
    and excited about and interested in and concerned about this
    issue and get them involved in helping them fund it.
        In addition, we need to be talking about how polluters who
    are causing some of the contamination will foot part of the
    bill as well. We think, as is identified in our testimony in
    more detail, there are several other important debates that
    will be moving forward over the next several years, but really
    this infrastructure improvement issue is going to have to
    dominate the debate and we commend the committee for moving
    forward in addressing some of these important issues.
        Thank you.
        [The prepared statement of Erik D. Olson follows:]
    Prepared Statement of Erik D. Olson, Senior Attorney, Natural Resources
                                Defense Council

                                  INTRODUCTION
        Good morning, I am Erik D. Olson, a Senior Attorney at the Natural
    Resources Defense Council (NRDC), a national non-profit public interest
    organization dedicated to protecting public health and the environment.
    We have over 400,000 members nationwide. We appreciate the opportunity
    to testify today on the implementation of the Safe Drinking Water Act.
        Drinking water treatment improvements begun at the turn of the 20th
    Century have advanced public health protection enormously, but much of
    the nation's drinking water infrastructure now is aging and outdated.
    We must modernize our water systems and safeguard the nation's water
    supplies from new and emerging contaminants. While EPA has estimated
    based on state figures that the costs of modernization will exceed $138
    billion dollars, many in state and local government, in the water
    industry, and public health and environmental communities believe the
    true costs of this needed massive upgrade will be many times higher.
        For example, a report published in March 2000 by a coalition of
    state and local governments, the water industry, and water professional
    trade associations called the Water Infrastructure Network (WIN)
    estimated that building these costs would be far greater than previous
    estimates. The WIN report found that building new and replacing old
    drinking water facilities will cost $480 billion dollars (including
    finance costs) over the next 20 years, and that about $1 trillion
    dollars is needed for drinking water capital, financing, and operation
    and maintenance over that period. The WIN investigators concluded that
    there is a funding gap of about $15 billion per year for drinking water
    infrastructure, operation, and maintenance.1
    ---------------------------------------------------------------------------
        \1\ Water Infrastructure Network, Clean and Safe Water for the 21st
    Century: A Renewed National Commitment to Water and Wastewater
    Infrastructure (2000).
    ---------------------------------------------------------------------------
        Most of these expenses are expected to be necessary irrespective of
    Safe Drinking Water Act regulatory requirements. Aging pipes in
    distribution systems, antiquated water treatment plants, water
    professionals' recognition of the need for infrastructure improvements,
    public demands for improved water quality, taste, odor, and
    reliability, growth, and other factors, all will drive this investment.
    While most of these costs will be incurred with or without new EPA
    regulations, it is clear that many improvements will be necessary in
    water treatment and distribution systems in order to meet modern
    demands for safer tap water. Major new public investments will be
    needed to fund this important national priority, and to significant
    research initiatives are necessary to support and guide this
    modernization.
        It recently has been recognized that the United States and other
    developed nations' drinking water suppliers have begun a ``Third
    Revolution'' in drinking water provision. It is this revolution that
    the WIN report has recognized will require greater financing. These
    revolutions can be summarized as follows:

     The ``First Revolution,'' occurred when water was captured,
            stored, and channeled or piped for household drinking and other
            uses. This important advance began in pre-biblical times in the
            Middle East and was expanded and refined by the Roman Empire.
     The ``Second Revolution,'' took place when coagulation,
            sedimentation, filtration, and ultimately chlorination were
            installed by many major water suppliers, beginning in the 19th
            Century and with widespread adoption by the first World War.
            This Second Revolution was triggered by the steady march
            forward of medical science, the acceptance of the ``germ
            theory'' of disease, and the leadership of public health
            proponents such as John Snow who in 1849 linked the London
            cholera outbreaks to water supplies. This resulted in enormous
            public health benefits, and has hailed by the Centers for
            Disease Control and Prevention (CDC) as one of the ten greatest
            triumphs of public health protection of the 20th Century.
     The ``Third Revolution'' in drinking water provision now has
            been launched by utilities in the U.S. and Europe. This
            revolution is the culmination and synthesis of the ``multiple
            barriers'' approach to preventing disease from drinking water
            that had long been advocated by Abel Wolman and other 20th
            Century water industry leaders. In essence, the Third
            Revolution consists of a four-pronged approach to modern
            drinking water protection:
        (1) vigorous measures to prevent contamination of drinking water,
                through source water protection;
        (2) adoption of modern, highly effective, and broad-spectrum water
                treatment technologies that can remove a wide array of
                emerging contaminants simultaneously, such as membranes,
                ultraviolet radiation disinfection, and granular activated
                carbon with ozone disinfection;
        (3) the modernization of aging, sometimes century- or more-old
                water distribution systems that often contain lead, are a
                frequent cause of main breaks, can harbor microbial growth,
                and, according to CDC, are a significant cause of
                waterborne disease outbreaks; and,
        (4) The establishment and use of an efficient and open information
                infrastructure and public involvement approach in which
                utilities and their government regulators use advanced
                methods to monitor, assess, communicate, and engage in a
                dialogue with consumers regarding drinking water source
                water threats, and tap water conditions, contaminants, and
                quality.
        Among the larger challenges now facing the water industry include:
    1. Arsenic.
        The National Academy of Sciences, in a report issued in 1999,
    recognized that arsenic in tap water poses a significant public health
    risk in the United States, and that EPA's outdated arsenic in tap water
    standard set in 1942 ``does not achieve EPA's goal for public health
    protection and, therefore, requires downward revision as promptly as
    possible.'' 2 The Academy concluded that drinking water
    containing arsenic at the 50 parts per billion (ppb) level allowed by
    the outdated current standard ``could easily'' pose a total cancer risk
    of 1 in 100--about 100 times higher than EPA would ever allow for tap
    water under other rules. For the sake of comparison, the cancer risk
    allowed by this arsenic standard is about 10,000 times higher than EPA
    may permit in food under the Food Quality Protection Act of 1996, which
    Congress passed unanimously. It also is a cancer risk 100 times greater
    than EPA policy has allowed for drinking water contaminants for over
    two decades. The Academy also found that there was insufficient basis
    to find a threshold for arsenic carcinogenesis, and that there was no
    credible evidence that arsenic was a necessary nutrient for humans
    ---------------------------------------------------------------------------
        \2\ National Research Council, Arsenic in Drinking Water, p. 9
    (1999)
    ---------------------------------------------------------------------------
        Moreover, the Academy discussed a litany of other adverse non-
    cancer health effects from arsenic in tap water, including
    cardiovascular effects, nervous system problems, skin lesions, and
    possible reproductive and other effects. Several peer-reviewed,
    published studies completed in the year since the Academy's report have
    reinforced the conclusion that a much lower standard is needed for
    arsenic in tap water. For example, a recently published study showed
    increased cancer rates among Finns who consumed low levels of arsenic
    (below 5 ppb). Even more recently, three studies in the July 2000 issue
    of that National Institutes of Health's journal Environmental Health
    Perspectives that found that arsenic is linked to skin and other health
    effects even in populations that are well nourished, that arsenic is
    linked to certain reproductive problems in exposed women, and that
    cancer risks are increased among many people consuming tap water
    containing arsenic.
        EPA in June 2000 published a proposal to reduce allowable arsenic
    levels from 50 ppb down to 5 ppb--a level that still presents a cancer
    risk higher than the 1 in 10,000 cancer risk that EPA traditionally
    allows in tap water. NRDC and many public health professionals and
    organizations believe that EPA should set the standard at 3 ppb, the
    level that EPA says is as close to the health goal (Maximum Contaminant
    Level Goal) as is feasible, considering costs, and is
    affordable.3
    ---------------------------------------------------------------------------
        \3\ The underlying science supports an arsenic standard lower than
    3ppb. EPA must consider that many Americans also have unavoidable
    exposure to arsenic in their food, so relatively low levels of arsenic
    in tap water can cause safety levels to be exceeded. A health-
    protective tap water arsenic standard should allow a maximum lifetime
    cancer risk no greater than that EPA has traditionally accepted (a
    level presenting a lifetime cancer risk from 1 in 1,000,000 to at most
    1 in 10,000 for vulnerable or highly exposed individuals). This would
    require EPA to set a drinking water standard well below the current 50
    ppb standard--in the range of 1 ppb. Limitations in the analytical
    techniques widely used for measuring arsenic in water, however, would
    likely necessitate a standard of 3 ppb, rather than a standard of 1
    ppb, because reliably quantifying arsenic at levels below this would be
    difficult using current standard lab equipment and practices. Based on
    an extrapolation of NAS's risk estimates, even a relatively strict
    arsenic standard of 3 ppb could pose a fatal cancer risk several times
    higher risk than EPA has traditionally accepted in drinking water.
    ---------------------------------------------------------------------------
    2. Radon
        Radon in tap water poses significant cancer risks to over 40
    million Americans. Another National Academy of Sciences report, issued
    last year, found that radon is known to cause cancer, and concluded
    that a multimedia mitigation strategy made the most sense in dealing
    with the radon problem. The Academy found that while radon can be
    present in tap water at levels posing substantial risks, on average
    nationally the vast majority of radon risk comes from radon seepage
    into homes from soils.
        Congress enacted a provision in the 1996 Safe Drinking Water Act
    Amendments that provides that states or water systems may adopt
    Multimedia Mitigation (MMM) programs for radon that focus on the
    highest indoor radon risks. States and public water systems with
    approved MMM programs need not assure compliance with the Maximum
    Contaminant Level for radon in tap water, and can instead meet a less
    stringent ``Alternative Maximum Contaminant Level'' (AMCL). The theory
    is that states will provide greater public health benefits by reducing
    overall indoor radon levels through a MMM program than would be
    achievable using only the MCL for tap water. EPA's proposed rule for
    implementing this provision, while in NRDC's view suffering from
    certain problems of lack of clarity to assure that the MMM programs
    actually will achieve the public health benefits billed, if improved
    could prove an important step toward protecting public health from
    radon.
    3. Cryptosporidium, Other Microbial Risks, and Disinfection Byproducts
        EPA has engaged in a lengthy, multi-stage process of negotiations
    over the past eight years with the water industry, states, local
    government, water treatment trade associations, public health groups,
    and environmental organizations in an effort to tackle the complex
    issue of microbial contaminants and disinfection byproducts. These
    negotiations have wrestled with how to control the parasite
    Cryptosporidium (which sickened over 400,000 people and killed over 100
    in Milwaukee in 1993, and has lead to many smaller outbreaks since
    then). In addition, the issue of how to deal with risks introduced or
    exacerbated in the water distribution system was debated.
        These negotiations have sought to produce an agreement that would
    improve protection from the class of contaminants known as disinfection
    byproducts, which are created when chemicals such as chlorine are used
    to disinfect water, but create unwanted byproducts as a result of
    chemical reactions between the disinfectant and organic matter in the
    water, creating a potentially toxic soup of chemicals that have been
    linked in both animal studies and epidemiological studies of people to
    certain forms of cancer and to reproductive problems such as
    miscarriages and certain birth defects.
        It appears that after years of serious negotiations over the
    ``Stage 2'' disinfection byproduct rules, and the ``Long Term 2'' rule
    for surface water treatment, early in September 2000 we finally
    achieved a breakthrough in the negotiations, and an agreement has been
    reached. Senior leadership of all parties must approve the agreement in
    the coming week or so, but we are optimistic that the agreement will be
    ratified. A proposed rule is anticipated in early or mid-2001.
    4. Groundwater Rule.
        EPA also was charged by Congress in the 1996 amendments with
    issuing a rule requiring that groundwater supplied public water systems
    disinfect their drinking water, unless such disinfection were to be
    found unnecessary. EPA recently proposed a groundwater rule, upon which
    the public comment period recently closed. NRDC believes that the
    proposal includes several important measures that may improve public
    health protection, but also has several fundamental flaws that will
    need to be fixed if the rule is not to become bogged down at the state
    level.4
    ---------------------------------------------------------------------------
        \4\  Among the major flaws of the proposed rule are: (1)
    Disinfection has become the last alternative. EPA has chosen to move
    from a position of requiring disinfection of ground water systems, with
    exceptions (where it can be shown that it is not necessary), to a
    position of not disinfecting a ground water system until almost all
    other options have been exhausted. (2) States do not have to set time
    limits for ground water systems to fix problems. (3) Ground water
    systems will not have to test for both pathogens and viruses. (4) EPA
    does not require sanitary surveys to be done frequently enough to find
    problems in time to correct them. (5) States may design Sanitary
    Surveys that vary widely in quality and oversight. (6) States are not
    required to have a cross connection control Program. (7) EPA does not
    establish a baseline list of significant deficiencies which states may
    exceed. (8) EPA should require public participation and Right To Know
    throughout the Ground Water Rule (9) The SWAP Should Be More Tied Into
    the Ground Water Rule. Though EPA advises States to take the SWAP
    process into account, we feel that EPA could do much more to formally
    tie source water assessments and the sanitary surveys together.
    ---------------------------------------------------------------------------
        The 1996 SDWA Amendments should help to encourage better health
    protection, and EPA should be commended for the generally open public
    process used to date in implementing most of this law. There are
    several other important challenges:

     The Need for a National Dialogue on How to Fund the Massive
            Funding Gap for Drinking Water Infrastructure Improvement and
            Modernization. The massive shortfall in resources available for
            water systems to upgrade, replace, and expand their
            infrastructure is a problem that must be addressed. NRDC
            believes there is a need for a serious national dialogue on how
            this funding gap will be addressed. While certainly federal
            funding will not itself plug this massive hole, the time has
            come for a serious discussion of what the respective federal,
            state, and local governmental roles are, and what role private
            industry might play in this overhaul. We believe that there is
            a need for federal leadership on this issue, and for
            significantly increased federal resources to be dedicated to
            this crucially important national need.
     An Assured Funding Mechanism, Such as a Modest, Dedicated
            Water Fee, Allocated to a Trust Fund Without Further
            Appropriation, is Needed to Support Long-Term Drinking Water
            Research and to Address High Priority Health Risks for Small
            Systems. As part of a series of discussions with the water
            industry and others, NRDC and many in the public interest
            community (and frankly, some in the industry) have come to the
            conclusion that Congress should enact a modest water fee that
            would support a long-term guarantee of adequate research
            funding for drinking water. The funds raised should be set
            aside in a trust fund that is available without need for
            further appropriations, so that the research agenda is not
            buffeted by the ever-changing winds of the annual
            appropriations process. In addition, we believe that those
            funds should be made available for direct funding of the most
            substantial public health threats posed by drinking water
            systems, such as grants for emergency repairs, treatment, or
            consolidation of small systems with serious health standard
            violations.
     A ``Polluter Pays'' Mechanism is Needed to assure that
            consumers do not end up footing the bill for expensive
            monitoring and treatment when polluters contaminate source
            water. We recommend that the SDWA be amended (or that separate
            legislation be enacted) to enable public water systems or
            consumers to recover the full costs that source water pollution
            imposes on them in the form of increased monitoring, treatment,
            and other costs.
     Appropriations Acts and a Court Decision Have Effectively
            Eliminated the Drinking Water State Revolving Fund (DWSRF) Set-
            Aside for Health Effects Research, Undercutting Funding
            Assurances. This Committee and the 1996 SDWA Amendments adopted
            a provision in the DWSRF assuring a $10 million set-aside for
            health effects research, SDWA Sec. 1453(n). The appropriations
            committees, however, have included provisions purporting to
            negate this set-aside in the last several appropriations acts.
            Unfortunately, a court decision--reached with the support of
            EPA--effectively found that the appropriations language
            overrode the set-aside in the Act. Thus, this Committee's
            effort to assure long-term funding of this research has been
            nullified by subsequent Congressional action. This Committee
            should fight for the full set-aside for this research.
     A Forum for Open Public Research Planning and Priority Setting
            is Necessary. EPA should formalize an open public process for
            developing its drinking water research plans, similar to the
            highly successful Microbial and Disinfection Byproducts
            Council, but with additional public comment and openness
            assured. This is a far more effective approach than the largely
            closed-door process EPA used in planning its arsenic research,
            for example.
     Assuring More Effective Public Right-to-Know, Better Source
            Protection, More Affordable Advanced Treatment Technologies,
            Better Analytical Methods. EPA needs to conduct further
            research and funding, and to take regulatory and other steps to
            build better public understanding of tap water challenges. The
            EPA right-to-know report rules issued in 1998 that required the
            annual reports to be issued beginning in 1999, are a major step
            forward. It is critical, however, that methods be developed to
            improve public understanding of these complex issues. Other
            important areas of research include: investigations into ways
            in which source water protection can be made a more effective
            tool for drinking water protection; research on how modern
            treatment methods can be improved and costs decreased;
            development of better, cheaper, and easier analytical methods;
            and improved approaches to assuring small system compliance
            through restructuring or treatment upgrades.
     Research to Support Treatment, Occurrence, and Related Issues
            for Microbes, Disinfection Byproducts, Groundwater, and
            Distribution System Risks. New standards will be issued over
            the next several years for many contaminants, yet EPA resources
            for research on the availability of treatment and on occurrence
            are inadequate. These rules will be determinative as to whether
            the ``Third Revolution'' in drinking water protection--
            involving true multiple barriers to contamination in the form
            of source water protection, advanced ``leap frog'' treatment
            technologies, and modern distribution system management--will
            occur in the early 21st Century, or whether the nation's aging
            and often outdated water supplies will continue to inadequately
            address these emerging problems and to deteriorate. A stronger
            research commitment is needed.
     Compliance Problems that Continue to Plague the Drinking Water
            Program. Widespread violations of the SDWA, and inadequate
            state and EPA enforcement against even the most recalcitrant
            violators continue to be a major problem. Improved data
            collection and management, and a stronger commitment to
            enforcement, are crucial to assist EPA, states, and the public
            to address these issues. Compliance problems and data
            collection and management failures have been catalogued in a
            USA Today series published in October, 1998, in a recent EPA
            audit discussed in a front page USA Today article in late 1999,
            and in EPA's own 1998 and 1999 Annual Compliance Reports. The
            EPA drinking water program and states need to upgrade their
            management systems and programs. Routine audits of federally-
            funded state programs are a crucial part of this effort. The
            new SDWA small system viability provisions could begin to
            reduce these problems, but substantial additional resources and
            research are needed to assure that these programs bear fruit.
            Additionally, small system technical assistance should be
            granted on a competitive basis, based upon the best available
            research, so that these assistance providers demonstrate that
            they can deliver accurate technical assistance to small systems
            in a cost-efficient manner. We oppose ``earmarked'' assistance
            funding that is non-competitive, as it often fails to allocate
            resources so as to maximize health benefits.
     Improved Data Management, Reporting, and A Comprehensive
            National Contaminant Occurrence Database. EPA must work with
            states and the public to develop a fully integrated and fully
            automated joint data management system for the drinking water
            program. Included in this system should be accurate, reliable
            and real-time compliance, water quality, enforcement, and other
            key information. In addition, an effective National Contaminant
            Occurrence Database (NCOD) is needed that will require
            compatible data systems across states, electronic data
            reporting to EPA by states and testing labs, and sufficient
            will to ensure that national contaminant reporting is complete
            and timely. A well-organized NCOD will provide an essential
            national right-to-know counterpart to the consumer confidence
            or ``right to know'' reports that water utilities provide
            directly to their customers.
     Better Integration of Clean Water Act and SDWA Programs. While
            modest progress and much discussion have occurred in the effort
            to better integrate the Clean Water Act and SDWA programs, in
            fact we have a long way to go at the state and federal levels.
            It is an unfortunate historical and jurisdictional byproduct
            that hampers full integration of these programs and impedes
            progress. For example, EPA's source water assessments and
            protection programs, filtration avoidance programs, the
            groundwater rule, wellhead protection programs, sole source
            aquifer programs, and UIC programs under the SDWA, need to be
            better integrated with the CWA Sec. Sec. 319, 305(b), and Total
            Maximum Daily Load programs have developed largely independent
            of each other. The Unified Watershed Assessment effort is
            beginning to make some headway in integrating these diverse
            programs, but a more aggressive effort would be helpful.
     Meaningful Source Water Protection Authority. Public water
            systems, states, EPA, and the public need to have the ability
            to protect, through regulatory mechanisms or other mechanisms
            as necessary, source waters. The 1996 SDWA Amendments largely
            punted on this issue, but creeping development and pollution
            are contaminating many source waters; strong legal authorities
            to prevent such contamination are needed.
     Better Leveraging of Other Federal Agency Resources. The
            federal government has a wealth of expertise and resources
            directly relevant to EPA's drinking water program that should
            be better integrated into EPA's efforts. For example, the
            Centers for Disease Control, Agency for Toxic Substances
            Disease Registry, and many of the institutes at the National
            Institutes of Health, including the National Cancer Institute,
            the National Institute of Environmental Health Sciences, the
            National Institute of Allergy and Infectious Disease, National
            Institute of Child Health and Human Development, National
            Heart, Lung, and Blood Institute, National Institute of
            Neurological Disorders and Stroke, and many other institutes
            and agencies conduct research of which EPA often is unaware. A
            better program is urgently needed to assure more information
            sharing and collaboration among the federal agencies. Some
            successful examples of such collaboration can be noted--such as
            the waterborne disease estimation research being jointly
            spearheaded by EPA and CDC, and the joint work on disinfection
            byproducts by EPA, ATSDR, and NTP. Perhaps more often, however,
            there is little or no collaboration among many of the agencies
            in priority setting and in conducting research. The lack of
            coordination can result in serious lost opportunities, and
            potentially in duplication of effort.
     Programs to Protect Consumers of Small Systems and Private
            Wells. The United States may be moving towards a two-tiered
            water supply: higher quality water for consumers in larger
            cities, and lower quality water in small town and rural
            America. America's small water systems are often having
            significant difficulty complying with EPA's basic health
            standards, and as additional rules (such as arsenic and the
            groundwater rules) are issued, these difficulties will only
            increase. There is a need to develop a stronger program to
            assist and fund the restructuring, technical assistance,
            regionalization, consolidation, package treatment technology,
            and other approaches that will have to be adopted to assure
            that small water system customers receive safe and affordable
            drinking water. There also are 30 to 40 million Americans who
            get their water primarily from private wells not covered by the
            SDWA at all. Monitoring and protection of the quality of water
            in these wells is often spotty to nonexistent. A national
            dialogue is needed to discuss how these tens of millions of
            Americans' health can be better protected from contamination of
            these often highly vulnerable supplies.

                                   CONCLUSION
        In conclusion, NRDC strongly believes that EPA's implementation of
    the 1996 Amendments to the Safe Drinking Water Act is beginning to show
    signs of achieving substantial public health gains. Some of the most
    knotty, difficult issues that have faced EPA and the nation's drinking
    water supplies for the past quarter century since the original 1974
    SDWA was passed, and in many cases for even longer than that, are now
    being squarely addressed. This process will not be simple, nor will it
    be cheap. But this effort is necessary to protect public health and to
    achieve public demands for a reliable supply of safe, good-tasting tap
    water for all Americans. A vigorous and well-funded EPA research and
    regulatory effort is crucial to the long-term success of the drinking
    water program and the nation's tap water safety. Only a long-term
    stable source of adequate funding will assure that this is achieved.

        Mr. Bilirakis. Thank you very much, Mr. Olson.
        Mr. Gloriod.

                      STATEMENT OF TERRY L. GLORIOD

        Mr. Gloriod. Good morning, Mr. Chairman. My name is Terry
    Gloriod. I am the President of Illinois-American Water Company,
    an investor-owned community water system serving a population
    of about 760,000 people in Illinois. I am also the Chairman-
    Elect of the Government Relations Committee of the National
    Association of Water Companies, NAWC, a nonprofit trade
    association that exclusively represents the Nation's private
    and investor-owned drinking water industry. I am offering
    testimony today on behalf of NAWC's membership, nearly 300
    companies in 43 States that provide safe, reliable drinking
    water to over 23 million Americans every day.
        Areas of concern that we have addressed in our written
    testimony include the proposed radon rule, the proposed arsenic
    rule, MTBE contamination of drinking water sources,
    implementation of the drinking water SRF by some States and
    drinking water infrastructure needs. I am going to limit my
    oral remarks today to these last two subjects.
        On State revolving loan funds, when NAWC testified before
    this subcommittee in October 1998 we observed that 17 States
    had declared privately owned drinking water systems to be
    ineligible for drinking water SRF assistance through their
    constitution's statute or official policies. This unfortunate
    consequence is a clear and in many cases deliberate violation
    of congressional intent that SRF loans should benefit customers
    of all public water systems regardless of ownership. In fact,
    this intent was made explicit recently in a letter to EPA from
    House Commerce Committee Chairman Tom Bliley and Appropriations
    Subcommittee Chairman James Walsh, who stated, ``We believe it
    is clear that Congress intended such financial assistance to be
    available to all community water systems, including both
    publically and privately owned systems.''
        Unfortunately, the most recent data from EPA reveals that
    23 months later the numbers of States ignoring congressional
    intent has remained at 17. EPA's State-by-State allocation of
    SRF funding is based on infrastructure needs surveys that
    include the needs of all utilities regardless of ownership.
    Those 17 noncompliant States are accepting Federal funds based
    in part on the needs of privately owned utilities in their
    States while refusing to allow those same utilities to apply
    for SRF assistance. Plainly put, this is discriminatory, not
    against the company but also against their customers, both of
    whom pay taxes that make these funds available in the first
    place.
        We have urged EPA to base its SRF allocations on the needs
    of those customers that the States are actually willing to
    help. The funds forfeited by those States that refuse to comply
    would be reallocated to those who do.
        Mr. Chairman, we very much appreciate your interest and
    support regarding this issue and that of Chairman Bliley.
        On drinking water infrastructure, the 1997 EPA report
    estimated that the drinking water industry must invest $138
    billion over the next 20 years to replace failing
    infrastructure. At that time, this amount actually exceeded
    EPA's total estimate of existing water industry assets. A more
    recent analysis by the American Water Works Association
    estimate total infrastructure needs to be $385 billion. When
    waste water needs are added, the number more than doubles.
        The private sector stands willing and able to help with
    these infrastructure financing challenges. Creative
    partnerships should be encouraged and pursued so that
    municipalities can tap and pursue the private capital markets.
    If such partnerships were fully pursued, many cities and towns
    all over the country could successfully address many of their
    infrastructure financing shortfalls.
        Some have responded to this challenge by calling upon
    Congress to consider massive Federal grant or trust fund
    programs. NAWC believes such a call at best to be premature.
    NAWC believes that the supply and delivery of potable water
    should be cost effective and should pay for itself, as is the
    case for electric, gas and telecommunications utilities.
    Consequently we need to find solutions that will assure that
    water utilities are economically viable in the future without
    subsidy.
        In summary, if it is demonstrated that Federal assistance
    is warranted, NAWC would support narrowly targeted solutions
    that are economically efficient and equitable, include all
    utilities regardless of size and ownership, support innovation,
    assure that utilities are self-supporting over the long term
    and provide special assistance in economically depressed areas
    based on consumer needs.
        Mr. Chairman, we appreciate the leadership role that you
    and Congressman Brown have taken to address drinking water
    infrastructure problems, and we also appreciate the concern
    that you have expressed regarding the need for cost effective
    solutions. These are long-term challenges and we look forward
    to working with this committee to achieve long-term solutions
    that will allow the drinking water industry to stand on its own
    two feet. We thank you very much for the opportunity to be here
    today, and we will answer any questions.
        [The prepared statement of Terry L. Gloriod follows:]
     Prepared Statement of Terry L. Gloriod, President, Illinois-American
                                 Water Company
        Good morning, Mr. Chairman. My name is Terry L. Gloriod. I am the
    President of Illinois-American Water Company, an investor-owned
    community water system serving a population of 760,000 throughout
    Illinois. I am also the Chairman-Elect of the Government Relations
    Committee of the National Association of Water Companies (NAWC), a non-
    profit trade association that exclusively represents the nation's
    private and investor-owned drinking water industry. I am offering this
    testimony on behalf of NAWC's membership--nearly 300 companies in 43
    states--that provides safe, reliable drinking water to over 23 million
    Americans every day.
        Mr. Chairman, NAWC commends you and your Subcommittee for
    conducting these oversight hearings on the implementation of the 1996
    Amendments to the Safe Drinking Water Act (SDWA), the second such
    hearings by your Subcommittee since the Amendments were enacted. With
    its emphasis on public participation and right to know, and the
    requirements for sound science and cost-benefit analysis in the
    regulatory process, the 1996 Act represents a new paradigm for
    environmental legislation of which this Committee and Congress can be
    justly proud.
        Although our statement expresses some concerns over current and
    future issues regarding the Act and the drinking water industry, NAWC
    believes that overall EPA has made a good faith effort to comply with
    the letter and spirit of the Act. In particular we wish to commend EPA
    for its timely implementation of the Consumer Confidence Reports (CCR)
    rule; its efforts to seek increased funding for scientific research
    through the FY 2001 appropriations process; its positive response to
    complaints about its SDWIS compliance database (although much still
    needs to be done); its efforts to implement the new Drinking Water
    State Revolving Loan Fund (DW-SRF) in an equitable manner; and the
    recently completed successful negotiations by the Stage 2 Microbial/
    Disinfection Byproducts Federal Advisory Committee.
        Areas of concern that we wish to address today include the proposed
    radon rule, the proposed arsenic rule, MTBE contamination of drinking
    water sources, inequitable implementation of the DW-SRF by some states,
    and drinking water infrastructure needs.

                           EPA'S PROPOSED RADON RULE
        NAWC does not believe that EPA's proposed MCL of 300 pCi/L, or any
    level below 1000 pCi/L, can be justified by cost-benefit analysis,
    especially for small companies. NAWC's California chapter, the
    California Water Association, has prepared a statement that documents
    in detail the deficiencies of EPA's cost estimates, and we would like
    to submit CWA's statement for the record of this hearing.
        The cost differences between compliance with the proposed
    alternative MCL (AMCL) of 4000 pCi/L and 300 pCl/L can be huge. NAWC's
    largest company, American Water Works Company, estimates capital costs
    of $1.3 million for a treatment level of 4000 pCi/L compared with $134
    million for a treatment level of 300 pCi/L, a 100-fold difference.
        NAWC supports state-sponsored Multimedia Mitigation (MMM) programs
    as the most cost-effective way to achieve substantial health benefits
    through reduction in exposure to radon in indoor air. Furthermore, we
    believe that the prospect of water systems implementing local MMM
    programs in the absence of state programs is unrealistic. It is highly
    doubtful that the nation's public water systems, especially small
    systems, will have sufficient resources to achieve the goals of
    multimedia mitigation by themselves without state assistance. Tracking
    new home construction and remedial venting of existing homes is far
    removed from the chartered objectives of community water systems, not
    to mention the added burdens that would be placed on water ratepayers.
        In summary, NAWC believes that nationwide implementation of
    effective state MMM programs is essential for the Radon Rule to achieve
    its intended goals. Otherwise systems will be faced with the very
    unattractive alternatives of implementing local MMM programs or meeting
    a very costly MCL which cannot be justified by cost-benefit analysis.
    We urge Congress to consider legislation that would place the
    requirements of the MMM program in EPA's air program where it belongs
    and to provide states with sufficient resources to implement it.
    Effective MMM programs implemented in every state plus a drinking water
    AMCL (or MCL) of 4000 pCi/L will provide far greater public health
    benefits at a more reasonable cost than a drinking water MCL of 300
    pCi/L standing alone.

                          EPA'S PROPOSED ARSENIC RULE
        NAWC agrees with the National Academy of Science that the current
    arsenic standard of 50 ppb needs to be revised in accordance with the
    provisions of the 1996 SDWA Amendments. However we are not convinced
    that EPA's proposed standard of 5 ppb, announced June 22, 2000, can be
    justified.

     Earlier this year, in a preliminary draft report, the Drinking
            Water Committee of EPA's Science Advisory Board (SAB) concluded
            that the available scientific evidence on health effects could
            justify a standard of 10 ppb or even 20 ppb.
     The World Health Organization has an arsenic standard for
            drinking water of 10 ppb.
     According to the AWWA Research Foundation, the cost of
            compliance with a standard of 5 ppb is 2\1/2\ times that of
            compliance with a standard of 10 ppb.
        NAWC urges EPA to reconsider the available body of scientific
    evidence and to consider a final standard of no less than 10 ppb.

                  MTBE CONTAMINATION OF DRINKING WATER SOURCES
        The use of Methyl tertiary butyl ether (MTBE) as an oxygen additive
    in reformulated gasoline has created a significant and unacceptable
    risk to drinking water surface and groundwater sources in many areas
    throughout the United States. Recently EPA recommended that Congress
    amend the Clean Air Act to significantly reduce or eliminate the use of
    MTBE as a fuel additive.
        Earlier this year NAWC joined three other drinking water
    Associations in urging Congress promptly to consider legislation that
    would:

     Amend the Clean Air Act to significantly reduce or eliminate
            the use of MTBE in gasoline.
     Ensure that air quality gains are not diminished as MTBE use
            is reduced.
     Require adequate research to be conducted on any replacement
            fuel additive to ensure that such a replacement will not
            contaminate drinking water sources.
     Provide assistance to public water systems that have MTBE
            contaminated sources for treatment or for alternative water
            supplies.
        We urge Congress to take swift action to resolve this threat to our
    nation's drinking water supplies in accordance with these principles.

                           STATE REVOLVING LOAN FUNDS
        When NAWC testified before this Subcommittee in October, 1998, we
    observed that 17 states had declared privately owned drinking water
    systems to be ineligible for DW-SRF assistance through their
    constitutions, statutes or official policies. This unfortunate
    consequence is a clear, and in many cases deliberate, violation of
    Congressional intent that SRF loans should benefit customers of all
    public water systems, regardless of ownership. In fact, this intent was
    made explicit recently in a letter to EPA from House Commerce Committee
    Chairman Tom Bliley and Appropriations Subcommittee Chairman James
    Walsh who stated, ``We believe it is clear that Congress intended such
    financial assistance to be available to all community water systems,
    including both publicly and privately owned systems.'' Unfortunately,
    the most recent data from EPA reveals that, 23 months later, the
    numbers of states ignoring Congressional intent has remained at 17.
        EPA's state-by-state allocation of SRF funding is based on
    infrastructure needs surveys that include the needs of all utilities
    regardless of ownership. Those 17 non-complying states are accepting
    federal funds based in part on the needs of privately owned utilities
    in their states while refusing to allow those same utilities to apply
    for SRF assistance. Plainly put, this is discriminatory--not just
    against the companies but also against their customers, both of whom
    pay the taxes that make these funds available in the first place.
        Some argue that privately owned companies, even those serving the
    public, should not receive federal assistance--not even loans. Congress
    considered that argument in 1996, and concluded that regulation by
    state public utility commissions would assure that the interest savings
    from SRF loans would benefit customers--not company shareholders. In
    fact the National Association of Regulatory Utility Commissioners
    (NARUC) has joined us in criticizing the failure of these states to
    comply with Congressional intent.
        We have urged EPA to base its SRF allocations on the needs of those
    customers that the states are actually willing to help. The funds
    forfeited by those states that refuse to comply would be reallocated to
    those who do.
        In a letter dated June 9, 2000, responding to Chairman Bliley's
    letter, EPA Assistant Administrator J. Charles Fox acknowledged that
    EPA has the necessary authority ``to base the allotment formula on
    needs that each state determines are eligible . . .'' However EPA is
    concerned that such reallocation would have little or no impact in some
    states. We share those concerns, but they should not keep EPA from
    taking a reasonable first step that would help get SRF resources to all
    systems and customers that Congress intended to help.
        Mr. Fox also describes in his letter several initiatives EPA has
    undertaken ``to increase the comfort level of states in handling
    privately-owned systems.'' These are important efforts for which EPA
    should be commended.
        Mr. Chairman, we very much appreciate your interest and support
    regarding this issue, and that of Chairman Bliley.

                      DRINKING WATER INFRASTRUCTURE NEEDS
        A 1997 EPA report estimated that the drinking water industry must
    invest $138 billion over the next 20 years to replace failing
    infrastructure. At that time, this amount actually exceeded EPA's total
    estimate of existing water industry assets. A recent analysis by the
    American Water Works Association estimated total infrastructure needs
    to be $385 billion. When wastewater needs are added, that number more
    than doubles.
        The private sector stands willing and able to help with these
    infrastructure financing challenges. Creative partnerships should be
    encouraged and pursued so that municipalities can tap and pursue the
    private capital markets. If such partnerships were fully pursued, many
    cities and towns all across the country could successfully address many
    of their infrastructure financing shortfalls.
        However, some have responded to this challenge by calling upon
    Congress to consider massive federal grant or trust fund programs. NAWC
    believes such a call to be, at best, premature. In addition, if the
    water industry cannot meet the infrastructure challenge substantially
    on our own over the long run, we will have admitted that our utility
    models are not self-sustaining. In other words, NAWC believes that the
    supply and delivery of potable water should be cost effective and
    should pay for itself as is the case with the electric, gas and
    telecommunication utilities. Consequently, we need to find solutions
    that will assure that water utilities are economically viable in the
    future, without subsidy.
        In summary, if it is demonstrated that Federal assistance is
    warranted, NAWC will be prepared to support narrowly targeted solutions
    that:

     Are economically efficient and equitable.
     Include all water utilities regardless of size or ownership.
     Support innovation.
     Assure that utilities are self-supporting over the long term.
     Provide special assistance in economically depressed areas
            based on consumer needs.
        Mr. Chairman, we appreciate the leadership role that you and
    Congressman Brown have taken to address drinking water infrastructure
    problems, and we also appreciate the concern that you have expressed
    regarding the need for cost-effective solutions. These are long-term
    challenges, and we look forward to working with this Committee to
    achieve long-term solutions that will allow the drinking water industry
    to stand on its own two feet.
        In conclusion, Mr. Chairman, NAWC very much appreciates this
    opportunity to present our views, and I would be happy to respond to
    any questions.[The statement of the California Water Association on the
    proposed National Primary Drinking Water Regulation for Radon retained
    in subcommittee files.]

        Mr. Bilirakis. Thank you very much, Mr. Gloriod.
        I want to apologize to Mr. Tippin. I wanted to be here,
    David, to introduce you. Anyhow, other appointments were made.
    People come down here and we have to break loose.
        Mr. Brown. He was real good, Mr. Chairman.
        Mr. Bilirakis. Was he really good?
        Mr. Brown. It seems to me, Mr. Chairman, a whole lot of
    people from Tampa show up at these.
        Mr. Bilirakis. Not too many as a matter of fact.
        I would ask you, Mr. Tippin, you are responsible for
    running a large metropolitan water system. As was testified to
    earlier, about 90 percent of water systems out there are small
    water systems. So maybe you could tell us very briefly how the
    large water system is different from those smaller systems. In
    other words, how the problems of a large system are different
    than those of smaller water systems.
        Mr. Tippin. I think the larger systems are more visible.
        Mr. Bilirakis. They are----
        Mr. Tippin. More visible to the media and everyone. We are
    probably more restrictive in what--I know my utility is--as in
    what we will allow as far as water quality is concerned. We try
    to hire the experts in not only the United States, but in the
    world as far as water quality is concerned, whether they be on
    staff or as a consultant to us, to address our problems that we
    have.
        Like most of the panelists up here who represent utilities,
    we are a mature water utility. That means our infrastructure is
    aging. We have pipe--compared to Philadelphia, we are a baby,
    but we have pipe in our system which is in operation right
    now--I hope it hasn't broken--over 100 years old. We have pipe
    newer than that. Our problem is funding some of the
    infrastructure which was put in 50, 75 years ago which is
    failing and causing water quality problems. Water quality
    doesn't stop at the treatment plant. Water quality stops at the
    tap. But there is a big gap in there. In our case we have 2100
    miles of water mains which we are responsible for, and a lot of
    that is aging, very old, and about 25 percent of our capital
    improvement budget right now is dedicated strictly to replacing
    that aging----
        Mr. Bilirakis. Of course there are an awful lot of the
    small water systems that also have the same problems, Tarpon
    Springs.
        Mr. Tippin. They have the same problems.
        Mr. Bilirakis. They are a small water system, obviously,
    and I think their piping has been in there.
        Mr. Tippin. Yes. One of the problems I think for a smaller
    system is financing for the smaller systems. They don't have
    the financing that the larger systems do have, and that is a
    major problem for them. And I know in Florida, we help each
    other out. The large systems help the small systems and vice
    versa. We are in it all together and we try to be one family as
    far as helping out the small systems. But some of the problems
    can be really aggravated in the small systems when--such as the
    technical staff--of which they aren't privy to as much as some
    of the larger systems are.
        Mr. Bilirakis. Let's get into a specific, Mr. Gloriod, Mr.
    Tippin, whatever; for instance, EPA's proposed radon rule based
    on provisions contained in the 1996 amendments. Mr. Gloriod
    cited the broad concerns of your association and other
    associations about this rule. So I would ask you, can you give
    us a real world example of how you believe the rule could
    affect a small drinking water system? Because again it goes
    back to, how many times have I said it, we can change the
    standards, and I am not saying they should not be changed or
    they should not be tightened or anything of that nature. What I
    am saying is that if we can't put them into effect, then what
    the hell good are they?
        Go ahead, sir.
        Mr. Gloriod. I think the general effects on small systems
    and on large systems are not very much different. But as Mr.
    Tippin has said, large systems generally have the capacity, if
    you will, to get the resources together to deal with the
    regulatory issues. The case of radon is particularly complex in
    that the exposure, the public health problem really isn't just
    from drinking water. It is a naturally occurring contaminant,
    and we really believe that the public health improvement
    requires more than just looking at the water. But just looking
    at the water can cause the need for treatment plants for radon
    removal. A small system may not have the land available to
    build such plants. That may be true with large systems as well.
    But the problem is more complex than just water. The issue
    comes down to costs and what customers can afford to pay as
    well.
        Mr. Bilirakis. Well, thank you. I would ask all of you, my
    time has expired, if you have any suggestions, and EPA is in
    the room and hopefully I know they are taking notes on some of
    the things you have said, but if you have any suggestions on
    changes that may be made, real world changes that can be made
    to the--you know, we are still in the process of implementing
    the 1996 amendments. It is unlikely that we are going to
    substantially change the 1996 law in the near future because
    authorization does not expire until 2003. But in the interim we
    may be able to make some technical or targeted changes.
        We had a press conference downstairs. Some of you were
    there. We have this caucus that has been created here, over 70
    members. We feel we have some clout. Give us some real world
    practical type things that you feel can be helpful as far as
    getting States to implement what we intend to have them
    implement.
        Mr. Brown.
        Mr. Brown. Thank you, Mr. Chairman.
        I would like each of you, starting with Mr. Gloriod, to go
    on record for you and your organization on your position on the
    rider in the House, the HUD/VA bill that directs EPA to seesaw
    actions relative to the enforcement of the current, forgetting
    the stricter standards that Mr. Olson and others talked about,
    of the current arsenic drinking water standards. It came to a
    vote on the House floor. The rider was not stripped. Would you
    give us your position ?
        Mr. Gloriod. NAWC believes the current standard is not
    protective of public health and should be lower. We do not have
    a problem with compliance with the current standard of 50 at
    all.
        Mr. Brown. So you support the enforcement of current and
    want it stronger?
        Mr. Gloriod. Yes.
        Mr. Brown. Mr. Olson.
        Mr. Olson. We oppose the rider and believe the standard
    should be much stricter than it currently is.
        Mr. Brown. Mr. Tippin.
        Mr. Tippin. This is new and we have no comment on it at
    this point.
        Mr. Brown. What was the first part of your answer?
        Mr. Tippin. This is new and we do not have an answer.
        Mr. Brown. Okay. Mr. Neukrug.
        Mr. Neukrug. The AWWA feels very strongly that EPA should
    be given a full 12 months to review the 270 comments that have
    come in so far.
        Mr. Brown. I am talking about the rider on the arsenic
    issue.
        Mr. Neukrug. Yes. We believe that they should be given the
    full 12 months to review that and that it should--that the
    arsenic rider, at this point we are hoping it doesn't have to
    come to anything like that.
        Mr. Brown. That the rider, you believe that the current
    standard should be enforced then?
        Mr. Neukrug. The current standard, at least the current
    standard should be enforced.
        Mr. Brown. Is that what you are saying?
        Mr. Neukrug. For arsenic 50, yes.
        Mr. Brown. Mr. Rutherford.
        Mr. Rutherford. I am not familiar with this rider, until
    you mentioned it this morning at the press conference. But I
    think the consensus is clear that the current level of 50 is
    inadequately protective of public health and it should be
    lowered. I don't have an opinion on what that actual level
    should be.
        Mr. Brown. Lowered means strengthened?
        Mr. Rutherford. Yes, strengthened.
        Mr. Brown. Mr. Rutherford, 2 years ago Mr. Jerry
    Beaverstein was sitting in your chair representing the
    Association of State Drinking Water Administrators. At that
    hearing I asked him back in October 1998 to inform us of the
    percentage of local source water assessment programs under
    section 1453 that have actually progressed to the point where
    the boundaries of the assessment areas are delineated and the
    origin of the contaminants are fully identified. He responded
    that progress had not been all that impressive. It had been
    rather woeful, that he expected every system to be done by
    2001. That was 2 years ago that he said that.
        Where do we stand today in source water delineation and
    identification of contaminants?
        Mr. Rutherford. Mr. Brown, I am not prepared to address
    that on a national level but I could get that information for
    you as soon as possible. In my State at least we are making
    progress. I don't think we are moving as fast as we would like
    due to the constraints of obtaining resources, but we do have
    the delineations complete, at least for our community, and non-
    transient systems are making progress. I am recruiting staff
    right now to continue with that work.
        [The following was received for the record:]

        Mr. Brown. This subcommittee would like that information,
    if you would, and as you are representing the Association of
    Administrators, if you could give us some update on the
    progress that Mr. Beaverstein indicated would be made by next
    year. Okay.
        Another question. You indicated that Congress and EPA need
    to ensure that States have the needed tools, the staff, the
    resources to work more directly and work closely with these
    water systems. What seems to be missing is the role that the
    States themselves can play to supplement funding and remove the
    various constraints on increased staff, resources that the GAO
    testified about on the first panel this morning.
        Could you address what efforts you and your colleagues in
    other States are making at the State level?
        Mr. Rutherford. As I am sure you are aware, there are a
    number of competing priorities at the State level. We have
    analyzed the needs by the drinking water programs and have
    pursued obtaining increased State resources. In some cases,
    there has been some level of success.
        It is a challenge from all counts in order to get
    sufficient staff, however.
        Mr. Brown. Thank you.
        Mr. Bryant [presiding]. Thank you. I have obviously assumed
    the Chair. I think it is my turn to question from the other
    side of the aisle. I will go ahead, with Mr. Green's
    indulgence, and come to him after I have finished.
        Mr. Green. Sure.
        Mr. Bryant. Mr. Neukrug, on behalf of many who were in
    Philadelphia, I want to thank your great city for the
    hospitality you showed to us.
        Mr. Neukrug. I hope you drank the water there.
        Mr. Bryant. I guess I did. I am still surviving. After Mr.
    Bilbray's comments, I have had three glasses of water this
    morning, and I don't know what to do. I think we will all be
    all right.
        Mr. Rutherford, I have a question for you. You were here
    during the first panel's testimony. I want to contrast your
    statement with that of Assistant Administrator Fox.
        Mr. Fox assured us that the agency has worked closely with
    the States and a range of other stakeholders to develop strong
    and practical new drinking water standards within tight
    timeframes established by SDWA amendments. My question is, I
    expect you would agree to the tight timeframe on the 1996
    amendments. Given your testimony on the rule development and
    implementation complexities, would you agree that the EPA's
    rules have been practical?
        Mr. Rutherford. The agency has a difficult task in the
    promulgations that are being developed since the 1996
    amendments. I think these are the really challenging ones and
    hard to address appropriately.
        I would not--if I were proposing them, I would certainly
    simplify some of the approaches to them, to the degree that I
    could. My remarks were attempting to focus on the challenges of
    getting the attention of very small systems and then trying to
    help them determine what to do.
        The degree to which they can be simplified, and
    particularly from my perspective that the burdens on the State
    should be as simple as possible--I would not agree that we have
    reached that point.
        Mr. Bryant. Mr. Tippin, a question for you.
        The EPA indicates that it has involved stakeholders at
    every stage of the process in its rulemakings under the 1996
    amendments. If this is the case, why do you have so many
    complaints and issues with the various actions that the agency
    has taken or failed to take?
        Mr. Tippin. We have been involved in some of the issues,
    and I think our concern is with the sound science part. I
    mentioned earlier today on the peer review for chloroform and
    the recommended zero, I think the Scientific Advisory Board or
    one of the experts recommended 300 parts per billion.
        I think something needs to be changed in that the Safe
    Drinking Water Act and the 1996 amendments have a non-
    backsliding rule that you cannot do that. It was set at a goal
    of zero. You cannot backslide into something, really, which is
    more logical.
        I don't know what EPA can do about that, but I think, as we
    go along through implementing the 1996 Safe Drinking Water Act
    Amendments and regulating the contaminants and as we learn more
    from the science, I think maybe that should be changed and
    looked at.
        Mr. Bryant. For the remaining three panelists that I have
    not asked questions to, I would like, if you have an opinion on
    this, and I think some of you do on the drinking water research
    funding that we have, and some of you may be familiar with it
    more so than others, but if the other three of you, beginning
    with you, Mr. Neukrug, if you would comment on the adequacy of
    safe drinking water research.
        Mr. Neukrug. I think research is really the key to all of
    this. I have a couple of quotes here. One is by Joe Cotruvo,
    who used to work with the EPA in the 1980's, who is still
    seeing the same issues come forward year after year in terms of
    safe drinking water. He says, ``When will we know we have
    answered the question?''
        I think that is really key here. No matter what we do, no
    matter where the arsenic level ends up, whether it is 2, 5, 10,
    20, or remains at 50, at what point are we all going to be able
    to sit around the room and say, okay, the water is safe to
    drink now?
        I am not seeing that, where this game ends and when we all
    will feel comfortable that the water quality is safe. I think
    research is what is needed in order to get us to that point.
        Mr. Bryant. Good point.
        Mr. Olson.
        Mr. Olson. I just wanted to bring to your attention a
    couple of issues.
        This committee set aside $10 million a year in the State
    Revolving Fund for drinking water health effects research as a
    result of a court decision and an effort to try to get that
    money set aside. Unfortunately, that money is not available, so
    that money that we thought was going to be there is not there.
    So, clearly, there is a shortfall, in our view, in funding for
    health effects and other research.
        We think EPA could do a better job also of reaching out to
    NIH and CDC and some of the other Federal family to leverage
    some of the resources. We have discussed that in our written
    testimony.
        Mr. Bryant. Mr. Gloriod?
        Mr. Gloriod. I would like to echo and agree with the
    comments of my colleagues.
        Also, I am a member of the American Water Works Association
    Research Foundation, and we try to focus the research dollars
    that are available from utilities in conjunction with those
    that might come our way from Federal sources to help drive the
    research, if you will, in a way that prioritizes the answers
    that are of most regulatory importance.
        One of the difficulties we face is timing in that the
    questions are asked and we find ourselves on a regulatory time
    track that the research cannot necessarily keep up with.
        So we really need, I guess, a more strategic long-range
    research plan that gets us pointed toward finding answers
    before we are on a scheduled regulatory process.
        Mr. Bryant. Very good.
        Mr. Green.
        Mr. Green. Thank you, Mr. Chairman. I am sorry our chairman
    is not here, because our first panel of EPA representatives--I
    noticed also three of our witnesses on the second panel--
    actually discussed MTBE, so, hopefully, I was not off the
    reservation, so to speak, in asking.
        My concern is that what we have seen for a number of years
    is that we have a knee-jerk reaction on the Federal and
    sometimes at the State level, but at least on the State level
    we can respond quicker. But on the Federal level we all of a
    sudden go from one headline to the next and do not realize the
    cost of unintended consequences.
        Hopefully our regulators, whether it be EPA or our State
    level, would realize that when they either promote a substance,
    like we did with MTBE in the early 1990's, and now start to ban
    it, let us see what the next step would be.
        So that is my concern. I wish we had EPA here on a regular
    monthly basis so we could get these questions answered. That is
    not always available.
        Let me ask Mr. Neukrug a question. He mentioned a problem
    in the city of Santa Monica of having MTBE. We are aware of
    that from our earlier hearings. I assume the 600 parts per
    billion was a result of a leaky underground storage tank or
    tanks?
        Mr. Neukrug. I could not give you that answer.
        Mr. Roberson. Most of it, yes.
        Mr. Green. Do you have any more recent data from the U.S.
    Geological Survey or the EPA on the remediation efforts in
    California, particularly Santa Monica, since that is where I
    stayed? We were out there for our convention, and I drank the
    water, just like Mr. Bryant did in Philadelphia. It did not
    smell any worse than anywhere else.
        Are there any remedial efforts in California? Can you tell
    the subcommittee whether the problem is getting better or
    worse?
        Mr. Neukrug. Do we have any data on that?
        Mr. Roberson. It is about the same. They closed the wells
    that are contaminated.
        Mr. Green. Do you know whether they have actually tried to
    deal with the leaky storage tank areas?
        Mr. Roberson. Yes. We are having trouble getting a
    settlement with the oil companies involved.
        Mr. Bryant. I was going to recommend we get that.
        Sir, would you identify yourself for the record?
        Mr. Roberson. I am Alan Roberson, a representative with the
    American Water Association, and have been working closely with
    the city of Santa Monica.
        Mr. Green. So it is about the same in the Santa Monica area
    or the California area?
        Maybe you heard my information earlier to Mr. Fox. We have
    had a problem with regard to MTBE, particularly because of an
    explosion of a pipe across one of our water supplies for north
    Texas. The Texas Natural Resource Conservation Commission had
    collected 26,000 samples from nearly 6,500 entry points to
    drinking water distribution centers. MTBE was detected in 13 of
    those. Furthermore, the mean results of these detections is 2.6
    parts per billion.
        Do you or anyone on the panel have any comments? That is
    the information from our Texas agency, as compared to the
    California experience.
        Mr. Neukrug. As we saw from the last answer I just gave you
    through Alan Roberson, I don't have the detailed information
    that you are seeking here, other than to say that the American
    Water Works Association is very concerned about the
    contamination of MTBE in drinking water. We note that it is a
    cross-jurisdictional issue in terms of Washington, and we look
    forward to it being addressed quickly.
        Mr. Green. Let me ask specifically, what about your
    experience in Philadelphia?
        Mr. Neukrug. In Philadelphia, we have not identified MTBE
    in drinking water. We have a source water supply, not a
    groundwater supply, and have not found it at this point.
        Mr. Green. Is Philadelphia using reformulated gasoline?
        Mr. Neukrug. Yes.
        Mr. Green. It is reformulated using MTBE or ethanol, if you
    know?
        Mr. Neukrug. MTBE, I believe.
        Mr. Green. Anyone else, the question concerning the Texas
    experience?
        Mr. Olson?
        Mr. Olson. I would just want to add that if you are
    interested in the national picture, USGS has done a fairly
    comprehensive review.
        EPA is pulling together the State-by-State data that is
    available, which I have been told will be available later this
    year or earlier next year.
        Mr. Green. I always approach the issue of MTBE that I don't
    want to drink whatever makes my car run, whether it is MTBE or
    benzene, whatever.
        I know the earlier testimony we had that MTBE actually
    stays longer in the water supply--it does not stay that much
    longer, because the information I have from north Texas with
    our lake, sure, other things evaporated or dissipated, but
    within a week or 10 days the MTBE--the smell and taste was also
    gone.
        Is that what you have heard of? Again, this is just
    reporting. Is there any information on that?
        Mr. Olson?
        Mr. Olson. There is information on persistence. It depends.
    In the ground, it persists longer than it does when it can
    volatilize, obviously. I think EPA is looking at that as well
    when they are developing their secondary standard.
        Mr. Green. Mr. Gloriod, did you wish to comment?
        Mr. Gloriod. No comment, sir.
        Mr. Green. Okay. Thank you.
        Thank you, Mr. Chairman.
        Mr. Bryant. Let me thank the panel for being concise in
    your answers and very informative, and certainly you have been
    a great help to this committee, as well as the first panel.
        This hearing is closed.
        [Whereupon, at 12:12 p.m., the subcommittee was adjourned,
    subject to the call of the Chair.]
        [Additional material submitted for the record follows:]