[House Hearing, 106 Congress]
[From the U.S. Government Printing 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
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    \1\ Water Infrastructure Network, Clean and Safe Water for the 21st 
Century: A Renewed National Commitment to Water and Wastewater 
Infrastructure (2000).
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    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
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    \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.
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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
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    \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.
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    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:]