[Federal Register Volume 63, Number 75 (Monday, April 20, 1998)]
[Proposed Rules]
[Pages 19438-19457]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-10393]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 142

[FRL-5999-5]
RIN 2020-AA37


Revision of Existing Variance and Exemption Regulations to Comply 
With Requirements of the Safe Drinking Water Act

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Agency is proposing to revise the existing regulations 
regarding Safe Drinking Water Act variances and exemptions. These 
revisions are based on the 1996 Safe Drinking Water Act Amendments. A 
new subpart, Subpart K, created to implement a new section in the 
Amendments, describes procedures and conditions under which a primacy 
State/Tribe (please note that throughout this preamble and proposed 
rule, the term ``State'' has the same definition as currently exists in 
40 CFR 141.2, i.e., ``State means the agency of the State or Tribal 
government which has jurisdiction over public water systems . . .'') or 
the Administrator may issue small system variances to public water 
systems serving less than 10,000 persons. This rule-making is intended 
to provide regulatory relief to all public water systems, particularly 
small systems.

DATES: Written comments must be received by midnight May 20, 1998.

ADDRESSES: Written comments should be submitted to: W-97-26 Comment 
Clerk, Water Docket (mailcode MC4101), Environmental Protection Agency, 
401 M Street, S.W., Washington, D.C., 20460.
    The record is available for inspection at the Water Docket, 
Washington, D.C., from 9 a.m. to 4 p.m., Monday through Friday, 
excluding legal holidays. For access to docket materials, please call 
(202)-260-3027 to schedule an appointment.

FOR FURTHER INFORMATION CONTACT: Andrew J. Hudock, Office of

[[Page 19439]]

Enforcement and Compliance Assurance, Office of Regulatory Enforcement, 
Water Enforcement Division (Mailcode: 2243-A), Environmental Protection 
Agency, 401 M Street, S.W., Washington, D.C., 20460. Phone: (202)-564-
6032.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Statutory Authority
    A. Overview
    B. New Small System Variances
    C. General Variances
    D. Exemptions
II. Consultation With Public Water Systems, State, Tribal and Local 
Governments, Environmental Groups, and Public Interest Groups
III. Discussion of Proposed Rule
    A. Purpose and Applicability
    B. Effective Date
    C. Primacy Requirements
    D. Rationale for New Subpart
    E. Rationale for Format of New Subpart
    F. General Provisions in Proposed Subpart K
    G. Small System Variance Requirements
    1. Section 142.306. Compliance Options Analysis
    2. Section 142.306(b). Documentation of State Considerations in 
Reviewing Small System Variances
    3. Section 142.306(b)(2). Affordability Criteria
    4. Section 142.306(b)(3). Availability of Approved Variance 
Technologies
    5. Section 142.306(b)(5). Adequate Protection of Public Health
    6. Section 142.307. Terms and Conditions of Small System 
Variances
    7. Section 142.307(c)(4). Compliance Period for Small System 
Variances
    8. Sections 142.308-142.310. Public Participation Requirements 
for Issuance of a Small System Variance
    H. Sections 142.311 and 142.312. Bases for Administrator's 
Objections to State-Proposed Small System Variances
    I. Section 142.313. Bases for Administrator's Review of State 
Small System Variance Program
    J. General Variances: Time Limitation
    K. Relationship of Exemptions and Small System Variances
    L. State Revolving Fund Linkage to Exemptions
    M. Exemptions: Renewals for Small Systems
IV. Cost of Rule
V. Other Administrative Requirements
    A. Executive Order 12866
    B. Regulatory Flexibility Act
    C. Paperwork Reduction Act
    D. Unfunded Mandates Reform Act and Executive Order 12875
    E. Enhancing Intergovernmental Partnerships
    F. Protection of Children and Environmental Justice
    G. National Technology Transfer and Advancement Act
VI. Request for Public Comments

Regulated Persons

    Potentially regulated persons are public water systems (PWSs).

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           Category                  Example of regulated entities      
------------------------------------------------------------------------
Industry.....................  May include privately-owned utilities,   
                                ancillary water systems, homeowner's    
                                associations, mobile home parks,        
                                Municipalities; County Governments;     
                                Water districts; Water and Sewer        
                                Authorities.                            
State/Local/Tribal             May include publicly-owned PWS's,        
 governments.                   municipalities, county governments,     
                                water districts, State drinking water   
                                programs.                               
Federal government...........  Federally-owned facilities.              
------------------------------------------------------------------------

This table is not intended to be exhaustive, but rather it provides a 
guide for readers regarding entities likely to be affected by this 
action. This table lists the types of entities that the Agency is now 
aware could potentially be affected by this action. Other types of 
entities not listed in this table could also be affected. If you have 
questions regarding the applicability of this action to a particular 
entity, consult the person listed in the preceding section FOR FURTHER 
INFORMATION CONTACT.

I. Statutory Authority

    Sections 115-117 of the Safe Drinking Water Act (SDWA) Amendments 
of 1996 (Pub. L. 104-182), enacted August 6, 1996, amended sections 
1415 and 1416 of the Act (42 U.S.C. 300g-4, 300g-5) concerning 
variances and exemptions.

A. Overview

    As provided under the Act, under certain conditions, variances are 
available to public water systems that cannot (due to source water 
quality, or, in the case of small systems, affordability) comply with 
the national primary drinking water standards. Variances generally 
allow a system to comply with less stringent, but still protective, 
standards based on a specified technology available to the system. The 
duration of the variance generally coincides with the life of the 
technology. An exemption, on the other hand, is intended to allow a 
system with compelling circumstances an extension of time before the 
system must comply with applicable Safe Drinking Water Act 
requirements. An exemption is limited to three years after the 
otherwise applicable compliance date (although extensions up to a total 
of six additional years may be available to small systems under certain 
conditions).

B. New Small System Variances

    Section 1415(e) establishes new provisions by which a small public 
water system may obtain a variance from complying with National Primary 
Drinking Water Regulations (NPDWR) under certain specified conditions. 
Section 1415(e)(1) identifies, through service population, the size of 
systems which may seek such small system variances. Specifically, this 
section limits such small system variances to public water systems 
serving 3,300 or fewer persons, and, with the approval of the 
Administrator, to public water systems serving more than 3,300 persons 
but less than 10,000 persons.
    Section 1415(e)(6) states that such small system variances are not 
available for (1) any maximum contaminant level (MCL) or treatment 
techniques for a contaminant for which a NPDWR was promulgated prior to 
January 1, 1986, or (2) a NPDWR for a microbial contaminant or an 
indicator or treatment technique for a microbial contaminant.
    Sections 1415(e)(2) and (3) identify the conditions under which 
small systems may receive such a variance. Section 1415(e)(2)(A) states 
that one such condition is that a variance technology which has been 
identified by the Administrator under section 1412(b)(15) is applicable 
to the size and source water quality conditions of the public water 
system. In addition, under section 1415(e)(2)(B), the system is 
required to install, operate, and maintain such treatment technology, 
treatment technique, or other means, in accordance with guidance or 
regulations issued by the Administrator. Section 1415(e)(2)(C) 
indicates that the small system variance is also contingent upon 
whether a State/Tribe exercising primary enforcement responsibility (or 
the Agency, where a State/Tribe does not have primacy) determines that 
certain conditions are met, namely that (1) the system cannot afford, 
in accordance with State/Tribal (or EPA) affordability criteria, to 
comply through

[[Page 19440]]

treatment, alternative sources of water supplies, or restructuring and 
consolidation, and (2) the variance will ensure adequate protection of 
human health (section 1415(e)(3)).
    Section 1415(e)(4) describes the maximum length of schedules to 
comply with the conditions of such variances (three years), and 
possible additional time (two additional years) to achieve compliance 
with the variance, under certain conditions.
    Section 1415(e)(5) requires the Administrator or primacy State/
Tribe to review each variance not less than every five years after the 
compliance date established in the variance to ensure that the system 
remains eligible for the variance and is conforming to each condition 
of the variance.
    Section 1415(e)(7)(A) requires the Administrator to promulgate, 
within two years of enactment, regulations for variances to be granted 
under the newly established program. These regulations must specify, at 
a minimum, procedures to grant and deny variances, including public 
participation requirements, requirements for proper installation and 
maintenance of approved variance technology and sufficient financial 
and technical capability to operate such treatment, eligibility 
requirements for a variance for each NPDWR, and information 
requirements for variance applications. Section 1415(e)(7)(B) requires 
the Administrator to publish information by February 6, 1998, to assist 
primacy States/Tribes in developing affordability criteria and requires 
State/Tribal review of such criteria not less than every five years.
    Section 1415(e)(8)(A) requires the Administrator to periodically 
review the primacy State's/Tribe's variance program to determine 
whether variances granted by the State/Tribe comply with the 
requirements of the Act. If the Administrator determines that the 
variances granted by the primacy State/Tribe are not in compliance with 
the State's/Tribe's affordability criteria and the requirements of the 
Act, section 1415(e)(8)(B) requires the Administrator to notify the 
State in writing of the deficiencies and to make public the 
determination.
    Section 1415(e)(9) requires a primacy State/Tribe, which is 
proposing to grant a small system variance to a public water system 
serving more than 3,300 and fewer than 10,000 persons, to submit that 
variance to the Administrator for review and approval prior to 
issuance. The Administrator is required to approve or disapprove the 
variance within 90 days. If the Administrator disapproves of the 
variance, the Administrator is required to notify the State in writing 
of the reasons for such disapproval. The State may then revise and 
resubmit the modified variance for approval by the Administrator.
    Section 1415(e)(10) addresses objections to small system variances. 
Section 1415(e)(10)(A) states that the Administrator may review and 
object to any variance proposed to be granted by the State/Tribe, if 
such objection is communicated to the State/Tribe not later than 90 
days after the State/Tribe proposes to grant the variance. Such 
objections must be communicated in writing, identifying both the basis 
for the objection and proposed modifications. The State/Tribe shall 
then make the recommended modifications or respond in writing to each 
objection. If the State/Tribe proceeds to issue the variance without 
resolving the Administrator's concerns, the Administrator may overturn 
the State/Tribal decision to grant the variance if the State/Tribal 
decision does not comply with the Act or regulations.
    Section 1415(e)(10)(B) addresses objections based on petitions to 
the Administrator by consumers. Under this section, not later than 30 
days after a primacy State/Tribe proposes to grant a small system 
variance, any person served by the public water system may petition the 
Administrator to object to the granting of the variance. The 
Administrator is required to respond to the petition and determine 
whether to object to the variance not later than 60 days after the 
receipt of the petition.
    Also regarding objections to small system variances, section 
1415(e)(10)(C) states that no variance shall be granted by a State/
Tribe until the later of the following: (1) 90 days after the State/
Tribe proposes to grant a variance, or (2) following the 
Administrator's objection to a variance, the date on which the State/
Tribe makes the recommended modifications or responds in writing to 
each objection.

C. General Variances

    In the 1996 Amendments to the SDWA, Congress modified the language 
governing general variances (i.e., those variances available to systems 
of any size). Under the newly enacted section 1415(a)(1)(A), a variance 
may be granted on the condition that the system install the best 
technology, treatment techniques, or other means, which the 
Administrator finds are available. This new modification changes the 
previous requirement that mandated that the system install variance 
technologies before a variance could be issued. In the new Amendments, 
before a variance can be issued, Congress also requires primacy States/
Tribes to conduct an evaluation that satisfies the State/Tribe that 
alternative sources of water are not reasonably available to a system.

D. Exemptions

    In a major change in the exemption provisions of the SDWA, section 
1416(b)(2)(A) deleted provisions which limited an exemption to 12 
months, subject to a three-year extension. The new provisions require 
the schedule for an exemption to require compliance with each 
contaminant level and treatment technique for which the exemption was 
granted as soon as practicable but not later than three years after the 
otherwise applicable compliance date established in section 
1412(b)(10).
    The only exception to this exemption time period is in section 
1416(b)(2)(C) for small systems serving less than 3,300 persons, under 
certain specified conditions, for which extensions may be renewed for 
one or more additional two-year periods, but not to exceed a total of 
six years.
    The Amendments also modified section 1416 of the Act to specify a 
wider set of factors that need to be considered before an exemption is 
granted from the requirements of the NPDWR. Prior to the 1996 
amendments, section 1416 authorized a State that has primary 
enforcement responsibility under the SDWA (or EPA where the State/Tribe 
does not have such primacy) to exempt a public water system from the 
NPDWR if (1) the system could not comply with the regulation and (2) no 
unreasonable risk to public health would result from the exemption. 
Section 1416(a) now requires the State/Tribe, in determining whether an 
exemption may be granted, to also consider whether the public water 
system is a ``disadvantaged community'' and whether management or 
restructuring changes can be made that will result in compliance or, if 
compliance cannot be achieved, would improve the quality of the 
drinking water. Section 1416(a)(4) also requires a State/Tribe to 
consider measures to develop an alternative source of water supply. 
Section 1416(b)(2)(D) states that a small system that has received a 
variance under section 1415(e) cannot receive an exemption under 
section 1416.

II. Consultation with Public Water Systems, State, Tribal and Local 
Governments, Environmental Groups, and Public Interest Groups

    As required under section 1415 of the SDWA, as amended, the Agency 
has

[[Page 19441]]

consulted with State representatives, as well as a broad range of other 
interested parties, in the development of this proposed rule.
    On September 16, 1997, early in the regulatory development process, 
EPA held its first stakeholders meeting in Washington, D.C., to discuss 
the amendments as they apply to Safe Drinking Water Act variances and 
exemptions. Participants in this day-long meeting included industry 
representatives, State representatives, and representatives of 
environmental groups. This meeting was designed specifically to solicit 
views and ideas from a number of interested stakeholders at a very 
early stage in the process, prior to development of internal drafts. A 
summary of this meeting was subsequently provided to attendees, as well 
as to interested persons who were unable to attend.
    On September 17, 1997, as a follow-up to the previous day's 
meeting, the Agency met with a representative of the Association of 
State Drinking Water Administrators (ASDWA) and a State representative 
to discuss implementation of the 1996 variances and exemptions 
provisions. The stakeholders provided early comments on possible 
procedures to obtain a small system variance, including at what point 
in the process the public water system or the State should notify the 
public.
    On September 30, 1997, in conjunction with the National Rural Water 
Association national conference in Indianapolis, Indiana, the Agency 
met with community water system operators and industry representatives 
to further discuss revisions to the variances and exemptions 
regulations. Discussion during this meeting focused primarily on (1) 
the extent to which public water systems should be expected to assemble 
information when applying for a variance, (2) public notification 
associated with the variance, and (3) required terms and conditions of 
small system variances.
    On October 20, 1997, in conjunction with the ASDWA national meeting 
in Savannah, GA, the Agency presented a summary of the draft variance 
and exemption regulations. At that time, all States were given the 
opportunity to participate in a discussion regarding the content of the 
regulations.
    On October 24, 1997, the Agency met with representatives of 
environmental and consumer groups to discuss their perspective on 
possible revisions to the variances and exemptions regulations. 
Discussion during this meeting focused primarily on public 
participation and notification concerns, variance eligibility, and 
criteria for reviewing and granting small system variances.
    Although the Agency has not consulted directly with representatives 
of Tribal governments in the development of this proposal, the Agency 
will make efforts to do so, as appropriate, during the comment period. 
The rule being proposed today has been developed in consultation with, 
and takes into consideration suggestions from, public water systems, 
environmental groups, public interest groups, the States, and other 
interested parties.

III. Discussion of Proposed Rule

A. Purpose and Applicability

    Through this proposed rulemaking, the Agency seeks to codify the 
1996 SDWA amendments addressing general variances and exemptions 
provisions, as well as providing a new subpart which addresses the 
procedures for issuance of small system variances. This proposed rule 
will be applicable to all eligible public water systems and primacy 
agencies (States, Tribes, and the Agency).

B. Effective Date

    The effective date of this rule will be one month after 
promulgation.

C. Primacy Requirements

    Primacy States/Tribes, if they choose to issue variances and 
exemptions, are required under section 1413(a)(4) of the Safe Drinking 
Water Act to issue such variances and exemptions under conditions and 
in a manner which is not less stringent than the variance and exemption 
provisions of the Act. In addition, section 1415(e)(7)(A) of the Safe 
Drinking Water Act requires the Administrator to promulgate regulations 
that shall, among other things, specify procedures to be used by the 
Administrator or the State to grant or deny variances. This statutory 
language suggests that it was the intent of Congress that States adopt 
procedures no less stringent than those identified in this proposed 
rule for issuance of small system variances. Therefore, the Agency is 
proposing to change Sec. 142.10(d) of the regulations accordingly. 
Thus, if a primacy State wishes to issue small system variances, it 
must first enact State regulations which are no less stringent than the 
requirements in section 1415(e) of the Act and as embodied in this 
proposed rule, and seek EPA approval of such regulations by submitting 
a program revision package.

D. Rationale for New Subpart

    This proposed rule creates Subpart K, which addresses the issuance 
of small system variances. This separate subpart was created to reflect 
the rather substantial statutory language in section 1415(e) of the 
Act, which establishes new provisions by which a small public water 
system may obtain a variance from complying with National Primary 
Drinking Water Regulations (NPDWR) under certain specified conditions. 
The Agency's decision to establish this separate subpart in the 
regulations is intended to provide clear and concise descriptions of 
the new regulatory requirements for small public water systems in one 
location in the regulations. The alternative of interspersing small 
system variance requirements within the existing regulations for 
variances could easily become too confusing when trying to identify and 
follow small system requirements.

E. Rationale for Format of New Subpart

    The Agency has attempted to draft Subpart K of these proposed 
regulations in a question-and-answer format in ``plain English'', in 
accordance with current Agency policy for regulation development. The 
intent of ``plain English'' is to produce rules which are clear, 
concise, straight-forward, understandable, and enforceable, without 
extensive ``legalese''. This effort to use ``plain English'' is not 
just a Federal initiative; over half of the States now have legislative 
drafting manuals recommending plain English principles.

F. General Provisions in Proposed Subpart K

    Sections 142.301-142.305 of the proposed small system variance 
regulations essentially codify the statutory provisions governing who 
can apply for, and who can grant, these variances. One of these 
provisions (Sec. 142.304), however, requires some explanation.
    For small system variances, section 1415(e)(6) of the Safe Drinking 
Water Act states that such variances are not available for (1) any 
maximum contaminant level (MCL) or treatment technique for a 
contaminant for which a NPDWR was promulgated prior to January 1, 1986, 
or (2) a NPDWR for a microbial contaminant or an indicator or treatment 
technique for microbial contaminant. As a result, the Agency will not 
be listing small system variance technologies for microbial 
contaminants, and the proposed rule (Sec. 142.304) prohibits the 
primacy agency

[[Page 19442]]

from granting a variance for a microbial contaminant.
    Similarly, the Agency will not be listing any variance technology 
for an MCL or treatment technique for a contaminant for which a NPDWR 
was promulgated prior to January 1, 1986 or allowing any variances for 
such contaminants (see Sec. 142.304). With respect to this latter 
category, however, the scope of the statutory prohibition is somewhat 
ambiguous. The Agency must consider whether Congress intended that the 
prohibition apply to a contaminant for which an MCL was established 
prior to 1986, even if subsequently revised, or whether the prohibition 
only attaches to the pre-1986 regulation itself (and thus would not 
apply to any future regulations for a contaminant), or whether the 
prohibition attaches to the pre-1986 level at which a contaminant was 
regulated (but not to more stringent levels in future regulations). The 
statutory language could be amenable to any of the three 
interpretations, and while the legislative history for this provision 
provides conflicting explanations (cf. Senate Report 104-169 at 55-56 
with House Report 104-632 at 39), there is no explanation of the policy 
rationale for any particular interpretation.
    The Agency surmises that the intent behind this provision is to 
prohibit a public water system from obtaining a variance for a 
contaminant for which compliance should have been achieved long ago. At 
the same time, the Agency does not believe that this rationale applies 
where the Agency revises a pre-1986 regulation to make it more 
stringent. As a result, the Agency interprets section 1415(e)(6)(A) 
prohibition to apply to the level at which any contaminant was 
regulated before 1986; therefore, variances are not available for 
systems above the pre-1986 level even if subsequently revised. (Note 
that several of the pre-1986 levels were interim levels and have 
already been revised.) However, if the Agency revises a pre-1986 level 
and makes it more stringent (i.e., makes the MCL lower), then a 
variance would be available for that contaminant, but only up to the 
pre-1986 MCL. The Agency requests comment on this approach and 
statutory analysis.

G. Small System Variance Requirements

    Sections 142.306-142.310 of the proposed rule establish the 
conditions under which the primacy agency can grant small system 
variances. The Agency has attempted in the proposed rule to provide 
flexibility in the process of applying and reviewing requests for small 
system variances. For example, the Agency has not specified any 
particular form of a variance application or who (the system or the 
State) needs to provide the relevant information; rather, the Agency 
has only specified that the information must be sufficient for the 
primacy agency to make certain findings and that those findings are 
documented in writing. Additional rationale for several of the 
provisions is discussed below.
1. Section 142.306--Compliance Options Analysis
    Sections 1415(e)(1)-(3) of the Act identify the conditions under 
which small systems may receive a small system variance. In the 
proposed rule, Sec. 142.306(b) codifies these conditions and includes 
concepts related to the State Capacity Development Strategy.
    The compliance options analysis is an integral element of sections 
1415 and 1416 of the Act, as well as under the proposed rule at 
Sec. 142.306(b)(2). Similar in concept to capacity development, a 
compliance options analysis can allow the State to consider the 
underlying reasons for noncompliance, and what options are available to 
the system to return to compliance for the long term. Under the Act, 
such options include some form of treatment, development of an 
alternative source, or management restructuring or consolidation with a 
nearby system. States may wish to include a compliance options analysis 
as part of their capacity development strategy to address the available 
options for noncompliant public water system to return to compliance.
    Management changes which could be considered by the State in 
performing such a compliance options analysis include financial 
management changes, the appointment of a State-certified operator under 
the State's Operator Certification program, contractual agreements for 
a more efficient and capable public water system based on joint 
operation, etc.
    The 1996 Amendments to the Safe Drinking Water Act place strong 
emphasis on technical, managerial, and financial capacity as integral 
components of the implementation strategies of the Act. There is strong 
statutory linkage between section 1420 of the Act (the capacity 
development provisions), and section 1415 (the variances and exemptions 
provisions), and the Agency has attempted to reflect this linkage in 
Sec. 142.306(b) of the proposed rule.
    Section 1415(e)(7)(A)(ii) of the Act states that today's proposed 
rule must include requirements concerning the technical and financial 
capability to operate and maintain a small system variance technology. 
Therefore, under proposed Sec. 142.306(b)(4), a State or the Agency 
must find that a small system has the technical and financial capacity 
to operate a variance technology before granting a small system 
variance.
    However, the Agency recognizes that there may be instances in which 
a small system is otherwise eligible for a variance, but lacks the 
technical and financial capability to operate the variance technology. 
Since enhancing technical and financial capacity of public water 
systems will likely be dominant goals in State capacity development 
strategies, a State may wish to focus elements of its capacity 
development strategy to help systems in such a situation develop the 
technical and financial ability to operate a small systems variance 
technology.
    Furthermore, under section 1420 of the Act, the State could face 
the possibility of Drinking Water State Revolving Fund withholding 
unless, under the capacity development strategy in section 1420(c) of 
the Act, the State develops a strategy to help systems enter and remain 
in compliance with National Primary Drinking Water Regulations (NPDWRs) 
by enhancing their technical, financial, and managerial capacity to 
comply. Additional considerations and conditions related to the 
protection of public health are addressed in sections III.G.6 and V.F. 
of this preamble.
2. Section 142.306(b)--Documentation of State Considerations in 
Reviewing Small System Variances
    The proposed regulations require that States document their 
findings regarding a small system's eligibility for a small system 
variance. Where the State does not have primary enforcement 
responsibility under section 1413 of the Safe Drinking Water Act, the 
Agency will document its findings for the record, if it grants a small 
system variance. Such documentation fulfills many goals.
    Documentation of small system variance findings, as required in 
Sec. 142.306 of the proposed rule, serves as a written record of 
decision which the public can review in preparation for the required 
public hearing or in preparation of a petition to the Administrator. In 
addition, a summary of the findings and the bases for such findings 
should be included in the required public notices associated with the 
proposal of such small system variances.
    Sufficient documentation of the State's findings regarding a 
system's eligibility for a small system variance

[[Page 19443]]

will also be necessary for the Agency's periodic review of State-issued 
variances, the Agency's approval of variances issued to systems serving 
between 3,300 and 10,000 persons, and the Agency's review of a petition 
to object to a variance. Where adequate documentation of findings is 
not available, the Agency may have to summarily overturn, reject, or 
object to a variance.
    Documentation required in the proposed rule must indicate not only 
that a certain factor listed in Sec. 142.306 of the proposed 
regulations was considered, but must also include the rationale for 
decisions by the State regarding each of the required findings, as well 
as the underlying facts supporting that decision.
3. Section 142.306(b)(2)--Affordability Criteria
    Section 142.306(b)(2) of the proposed rule codifies the statutory 
requirement that States undertake a compliance options analysis in 
accordance with the State's own affordability criteria.
    Section 1415(e)(7)(B) of the 1996 Safe Drinking Water Act, as 
amended, requires the Agency to publish, within eighteen months of the 
Act's enactment, information to assist the States in formulating 
affordability criteria. According to the Act, this information is to be 
developed by the Agency in consultation with the States and the Rural 
Utilities Service (RUS) of the U.S. Department of Agriculture. States 
are to develop affordability criteria to make determinations relative 
to compliance options available to small drinking water systems, 
including eligibility for small system variances under section 1415 of 
the Act, as amended. The Agency published this document on February 6, 
1998 and is available by contacting the Safe Drinking Water Hotline at 
1-800-426-4791 (request document number 816-R-98-002). The Agency may 
use principles in this document to develop affordability criteria for 
granting small system variances in those areas in which the State does 
not have primary enforcement responsibility under section 1413 of the 
Safe Drinking Water Act.
4. Section 142.306(b)(3)--Availability of Approved Variance 
Technologies
    Section 1412(b)(15)(D) of the Act requires that, not later than 
August 6, 1998, the Agency issue guidance regarding the available 
variance technologies for each national primary drinking water 
regulation for which a variance may be granted. This guidance is 
currently in development by the Agency's Office of Groundwater and 
Drinking Water and is anticipated to be released by the statutory 
deadline. The proposed variance regulations include, in various 
sections (including Sec. 142.306), the requirement that, during review 
of an application for a small system variance, a primacy State or the 
Administrator make a finding whether, among other things, the 
Administrator has published a variance technology in accordance with 
section 1412(b)(15) for the applicable maximum contaminant level or 
treatment technique for which that variance is sought.
    Pursuant to section 1412(b)(15)(A) of the Act, variance 
technologies may not suffice to achieve compliance with the relevant 
maximum contaminant level or treatment technique, but the variance 
technologies must achieve the maximum reduction or inactivation 
efficiency that is affordable considering the size of the system and 
the quality of the source water. In addition, section 1412(b)(15)(B) 
requires that any identified variance technology be determined by the 
Administrator to be protective of public health.
    For further discussion of adequate protection of human health, 
please see section III.G.5 of this preamble. In addition, section V.F. 
provides a discussion of health matters related to protection of 
children and environmental justice concerns.
5. Section 142.306(b)(5)--Adequate Protection of Public Health
    Section 142.306(b)(5)(i-ii) of the proposed rule codifies the 
statutory requirement that the primacy agency grant a small system 
variance only where the terms ensure adequate protection of public 
health, considering the source water quality and removal efficiencies 
and expected useful life of the small systems variance technology. 
Under section 1412(b)(15)(B) of the Act, the Administrator, in 
identifying variance technologies for small systems, must determine 
that the technology is protective of public health considering the 
quality of the source water to be treated and the expected useful life 
of the technology. The Agency believes that Congress intended the 
Administrator to make a determination that, on a national level, any 
variance technology identified is generally protective of public health 
when applied within general source water conditions and operating and 
maintenance procedures. However, recognizing that the level of public 
health protection afforded by a specific technology could be dependent 
on site-specific factors that may vary system by system, Congress 
provided for a corresponding requirement that the State also make a 
determination that the terms of the variance as applied to a particular 
system adequately protect public health.
    In section 1412(b)(15)(C) of the Act, Congress further provided 
that the Administrator must include in the guidance identifying 
variance technologies any assumptions supporting her determination that 
a listed technology is protective of public health, where such 
assumptions concern the public water system to which the technology may 
be applied, or its source waters. The Agency believes that Congress 
intended this information to be used by States to determine if the 
assumptions used by the Administrator in determining that a technology 
is protective of public health are applicable to the specific small 
system applying for a variance, and define what terms or conditions 
will ensure adequate protection of public health. In making a finding 
of adequate protection of public health, States need to consider the 
elements in the source water that may interfere with the performance of 
the technology. Depending on the specific technology being implemented, 
these may include the current level of contamination, variation in 
levels of contamination, the rate of change in those variations, the 
frequency in which the variations occur, and the duration that 
contamination remains at elevated levels (days, weeks, months). States 
should then use these types of information, as appropriate, to set 
site-specific terms and conditions which will adequately protect public 
health.
    As previously discussed, EPA believes that Congress intended the 
Administrator to make a determination that, on a national level, any 
variance technology identified is generally protective of public health 
under general source water conditions and operating and maintenance 
procedures. The variance technology guidance under section 
1412(b)(15)(C) will identify assumptions used by the Administrator in 
determining that each technology is protective of public health. In 
doing so, the guidance will identify the typical removal efficiency 
achieved by each variance technology listed by the Administrator, 
considering the overall capabilities of the treatment process and the 
source waters on which the technology would typically be applied. The 
guidance will also discuss source water characteristics that can 
adversely affect the removal of the contaminant by the process. These 
general source water characteristics will include a description of 
other

[[Page 19444]]

contaminants that may interfere with treatment (such as sulfate or 
iron), pH, hardness, total dissolved solids, and turbidity, among 
others. General guidance on treatment modifications that can address 
the adverse impacts will also be included. As an example, the guidance 
may identify total dissolved solids in the source water as having 
potential to foul the membrane in the treatment process, and therefore 
may suggest that the membrane be more closely monitored and more 
frequently replaced. The State may use this information in the guidance 
to set specific terms and conditions on the operation of the technology 
that will ensure adequate protection of public health. In the previous 
example, such terms might include how often the membrane should be 
monitored and replaced, considering the exact levels of total dissolved 
solids in the source water and any other factors that may interfere 
with removal.
    EPA is requesting comment on whether it would be useful and 
appropriate, at some time in the future, to provide additional, 
technology-specific guidance on site-specific factors that should be 
considered and appropriate terms and conditions that may be needed to 
ensure adequate protection of public health. Congress clearly left the 
responsibility to consider site-specific factors and define appropriate 
terms and conditions to the States, and EPA does not wish to diminish 
that responsibility. At the same time, the Agency believes it may be 
efficient for EPA, to identify, in the context of its determination 
that a technology is protective, those factors of which the Agency is 
aware that may be appropriate for the State to consider on a site-
specific basis and to suggest appropriate responses to situations which 
pose additional risks. EPA is soliciting comment and recommendations on 
both the need for and appropriateness of such guidance and on its 
substantive content if provided.
    In addition to the statutory requirements that the State consider 
the quality of the source water and removal efficiencies and useful 
life of the technology in its determination of adequate public health 
protection, EPA is also considering including a requirement that the 
States consider disproportionate impacts and risks to sensitive sub-
populations, including infants and pregnant or nursing women. Although 
a leading risk to sensitive subpopulations from drinking water comes 
from infectious contaminants, which are specifically excluded by the 
Act from eligibility for small system variances, there may be other 
contaminants which pose special risks to sensitive subpopulations. In 
general, EPA would consider such risks in its national determination 
that a variance technology is protective of public health. There may be 
instances, however, where site-specific factors would specifically 
affect the risk to sensitive subpopulations and should thus be 
considered by the State in that light. EPA is requesting comment on the 
appropriateness of including in the final rule a requirement that the 
State specifically consider impacts on sensitive subpopulations in its 
determination of adequate public health protection. Commenters are 
encouraged to provide specific examples of contaminants for which site-
specific conditions may result in special risks to sensitive 
subpopulations. One alternative to such a requirement would be for EPA 
to include in guidance specific factors that may result in special 
risks to sensitive subpopulations and suggestions on how to address 
such risks. EPA is also soliciting comment on this alternative.
6. Section 142.307--Terms and Conditions of Small System Variances
    Section 142.307 outlines what terms and conditions must be included 
in a small system variance. A State or the Administrator must clearly 
specify enforceable terms and conditions of a small system variance. 
The terms and conditions of a small system variance issued under this 
subpart must include, at a minimum, proper installation of the 
applicable small system variance technology, proper operation and 
maintenance of the technology, and monitoring requirements for the 
contaminant for which a small system variance is sought as specified in 
40 CFR Part 141. If a contaminant level is above the maximum 
contaminant level, the public water system is required to monitor, at 
least, quarterly. The State may require more frequent monitoring. In 
addition, the State must include any other terms or conditions that it 
determines that are necessary to ensure adequate protection of public 
health.
    The small system variance must also include a schedule for the 
public water system to comply with the terms and conditions of the 
small system variance. At a minimum, the schedule should include 
increments of progress and quarterly reporting to the State or 
Administrator of the public water system's compliance with the terms 
and conditions of the small system variance. This quarterly reporting 
will enable the primacy agency to adequately track compliance of the 
schedule. In addition, States are required under 40 CFR Part 
142.15(a)(1) to report on a quarterly basis to EPA any violations of 
the terms and conditions of a small system variance.
    The schedule must also notify the public water system when the 
State or the Administrator will review the small system variance under 
Sec. 142.307(d). The intent of this provision is to address the 
concerns of public water systems that they be provided adequate notice 
of when the State or Administrator will review the variance.
7. Section 142.307(c)(4)--Compliance Period for Small System Variances
    Section 142.307(c)(4) of the proposed rule codifies the statutory 
language regarding the duration of variances. In accordance with 
section 1415(e)(4), Sec. 142.307(c)(4) of the proposed rule states that 
the terms and conditions of a small system variance must require 
compliance with the conditions of the variance as soon as practicable 
but not later than three years after the date on which the variance is 
granted. It is the Agency's expectation that this three-year period 
will usually be sufficient.
    However, section 1415(e)(4) of the Act also states that the 
Administrator or the State may allow up to two additional years under 
two situations: (1) Where the Administrator or the primacy State 
determines that additional time is necessary for capital improvements 
to comply with a variance technology, secure an alternative source of 
water, or restructure or consolidate, or (2) to allow for financial 
assistance provided pursuant to section 1452 of the Act or any other 
Federal or State program.
    The Agency interprets section 1415(e)(4) to allow the primacy 
agency to grant the two additional years at the time of issuance, upon 
a determination by the primacy State or the Administrator that those 
two additional years are necessary to ensure compliance. Therefore, it 
is possible, under certain conditions, that small systems may receive a 
five-year compliance schedule to achieve compliance with the terms and 
conditions of the small system variance.
8. Sections 142.308-142.310--Public Participation Requirements for 
Issuance of a Small System Variance
    a. Overview. The 1996 Amendments to the Safe Drinking Water Act 
provide for many opportunities for the public to be involved in 
decisions that affect the delivery and treatment of drinking water. 
Today's proposed rule provides opportunities for the public to become 
involved in the decision-making process of whether a variance or 
exemption

[[Page 19445]]

should be granted. The Agency's intent in the proposed regulations is 
to provide sufficient opportunity for meaningful public participation 
in the variance and exemption process, while, at the same time, keeping 
the public notification requirements for small systems and States 
manageable.
    The Agency is required under section 1415(e)(7)(A)(i) of the Act to 
promulgate regulations specifying requirements for notifying the 
consumers of the public water system that a small system variance is 
proposed to be granted (including information regarding the contaminant 
and variance) and requirements for a public hearing on the small system 
variance before the variance is granted. Today's proposed rule 
addresses this statutory mandate through Secs. 142.308-142.310 of the 
regulations. These requirements are also intended to ensure that 
persons served by the system who may wish to file a petition with the 
Administrator objecting to the variance, as provided for in Section 
1415(e)(10)(B) of the Act, have adequate information and time to do so.
    The overall structure of the process intended by today's proposed 
regulations for granting a small system variance is as follows:
    (1) A small public water system which is in noncompliance with an 
eligible maximum contaminant level or treatment technique submits an 
application to the primacy agency for a small system variance;
    (2) The primacy agency reviews the small system's application and 
performs a compliance options analysis to determine if a small system 
variance should be issued to the public water system.
    (3) If a small system variance can be issued in accordance with the 
Act and the proposed regulations, and upon finding and documenting the 
required information under Section 142.307 of the proposed rule, the 
primacy agency establishes the terms and conditions of the proposed 
small system variance;
    (4) The primacy agency prepares a draft of the small system 
variance including the terms and conditions of the same;
    (5) The primacy agency provides notice to consumers of the system 
of its intent to propose the small system variance and of a public 
hearing on the proposed variance, including information on the 
contaminant and its potential health effects, the compliance options 
considered, and the terms and conditions of the proposed variance;
    (6) The primacy agency also proposes the variance by publishing a 
notice in the State equivalent of the Federal Register, or, in the case 
of the Administrator, in the Federal Register;
    (7) Either before, or within 15 days after publication of this 
notice, the primacy agency conducts a public hearing on the draft 
proposed small system variance;
    (8) If a State proposes to issue a small system variance to a 
public water system serving a population of more than 3,300 and fewer 
than 10,000 persons, the State must submit the proposed small system 
variance and all supporting documentation, including any public comment 
received prior to this submission, to EPA for review and approval of 
the proposed variance;
    (9) Within thirty days of the proposal date of any small system 
variance, persons served by the system may petition the Administrator 
to object to the proposed small system variance; and
    (10) The Administrator must respond to all such petitions within 60 
days of receiving them and may object to a proposed small system 
variance within ninety days of the proposal date.
    EPA is proposing that the State may provide the notice for a public 
meeting on the small system variance at the same time that the State 
notifies the public that it intends to propose the small system 
variance. Under this approach, the State would not be required to issue 
an additional notification directly to consumers on the actual date of 
proposal. Such notice must be issued at least 15 days before the actual 
proposal date and at least 30 days before the public meeting. For 
purposes of the consumer petition process, the variance is proposed on 
the actual proposal date (generally the date of publication in the 
State or Federal Register) as opposed to the date that the State issues 
one or more public notices.
    In summary, the proposed regulation requires a State to provide at 
least one public notice directly to the system's consumers (in addition 
to publishing the proposed variance in the State or Federal Register); 
to fulfill the requirement of notifying the public of the public 
hearing and proposal of the small system variance. This approach 
considers the burden on the State and system seeking the variance of 
providing more than one such notice. However, the Administrator 
encourages the State and small systems to engage the public in the 
development and issuance of the small system variance early in the 
process.
    The Agency also requests comments on an alternative approach to the 
State notification requirements included in the proposed regulatory 
language. Under this approach, the Agency would require that the State 
provide two distinct public notices directly to water system consumers 
during the small system variance process, in addition to publishing the 
proposed variance in the State or Federal Register. This proposal would 
require that the State provide public notice (1) announcing the 
required public meeting at least 30 days before the meeting and (2) at 
the time a State proposes to issue a small system variance. In 
addition, the State would be required to hold the public meeting before 
the State proposes the small system variance. Before holding a public 
meeting, the State or the Administrator would need to make public a 
draft of the proposed small system variance to ensure that the public 
is adequately informed of the terms and conditions likely to be in the 
proposed small system variance.
    The Agency requests comments on whether the Agency should require 
two separate notices by the State to water system consumers (in 
addition to publication of the proposed variance in the State or 
Federal Register), one announcing the public meeting and a second on 
proposal of the small system variance.
    Although the alternative approach may increase the State burden by 
requiring two different notices, adopting this approach in the 
regulation may maximize public notification and participation in the 
issuance of a small system variance. In addition, by requiring that the 
public meeting be held before proposing the small system variance, a 
person served by the system would be guaranteed at least 30 days 
following the public meeting before expiration of the deadline for 
filing a petition. Under the proposed approach, a person served by the 
system could have as little as 15 days following the public meeting to 
file a petition, though they would still be guaranteed at least 45 days 
from the time they first received notice of the proposed variance 
(along will all of the required supporting information) to file such a 
petition. In selecting a final approach, the Agency will consider all 
comments and attempt to balance the burden to the State and water 
system with the need to provide adequate opportunity for public 
participation, including use of the petition process.
    b. Notice by public water systems. The Agency is also requesting 
comment on adding an additional public notification requirement which 
is currently not a part of the proposed regulatory language. Under this 
approach, the Agency would require the public water system to provide 
notice to the persons served by the system that the system is applying 
for a small system variance.

[[Page 19446]]

The intent of this would be to address some stakeholders' concerns that 
public notification should be provided early in the small system 
variance process. This alternative would require the system applying 
for a small system variance to notify the public at the time it applies 
for a small system variance. The notice would be required to be in the 
same manner as required for the State in notifying persons served by 
the system that a variance will be proposed as prescribed, in 
Secs. 142.308(a) through (d) of the proposed regulation (see III.G.8.d 
below). Consistent with the underlying theme of today's proposed 
regulations, States would be encouraged to provide assistance to small 
systems to ensure that the public notification requirements are 
satisfied.
    The Agency requests public comment on whether this additional 
notification should be a part of this regulation. The Agency recognizes 
that this would place an additional burden on the small public water 
system. However, such notification may further the goal of affording 
early public participation in the development of the small system 
variance, before the State has conducted its initial compliance options 
analysis and considered appropriate terms and conditions to ensure 
adequate protection of public health. The information provided with 
such a notice would necessarily be less complete than that provided by 
the State after reviewing the application. The Agency also requests 
comments on what information should be required in such a notice and 
whether there is concern over the first notification to water system 
consumers being one that would necessarily lack complete information.
    c. Public hearing requirement. Section 142.309 of the proposed 
regulations addresses the requirements for a public hearing on a draft 
proposed small system variance and notice of the public hearing. 
Consistent with section 1415(e)(7)(A)(i) of the Act, a State or the 
Administrator is required to provide for at least one (1) public 
hearing on the small system variance before it is granted. However, 
before holding a public meeting, the State or the Administrator must 
make public a draft of the proposed small system variance along with 
various supporting information as specified in Sec. 142.308(c), to 
ensure that the public is adequately informed of the terms and 
conditions likely to be in the proposed small system variance. The 
State or the Administrator must notify the public of the public hearing 
(and provide the required supporting information) at least 30 days 
before the date of the meeting.
    d. Manner of public notification. Section 142.308 of the proposed 
regulations codifies the Safe Drinking Water Act provision that any 
person served by the system may petition the Administrator to object to 
the granting of a variance. The notice requirements in the proposed 
regulations are intended to provide adequate notice for persons who may 
wish to petition the Administrator to ask the Agency to object to the 
variance.
    Operators of small systems requested that the Agency address the 
issue of whether persons who are not billing customers of the system 
must be provided a notice by direct mail considering the burden 
associated with identifying and obtaining mailing addresses for non-
billed consumers of a system's water. In light of all comments provided 
to the Agency during the stakeholder process, the Agency is proposing 
to require individual notice only to billing customers of the system. 
In addition, notice must be provided in a brief and concise manner to 
regular consumers who are not billing customers, by some other 
reasonable method, such as publication in a local newspaper, posting in 
public places, or delivery to community organizations. Although this 
might not reach persons outside the service area, it would reach 
factory workers and tenants of apartment houses and condominiums, even 
if those persons do not receive water bills. Today's proposed rule 
would therefore require that a State provide some form of notice to all 
persons served by the system on a regular basis.
    e. Content of notices. Section 1415(e)(7)(A)(i) of the Safe 
Drinking Water Act requires that public notification include 
information regarding the contaminant and variance. Section 142.308(c) 
of the proposal implements this statutory requirement. In this 
provision, the Agency is requiring, along with other information, 
specific health effects language to be used by States in the notices. 
The Agency is proposing to require use of the health effects language 
developed for the recently proposed consumer confidence report rules, 
63 Federal Register 7625, 7631-7632 (Feb. 13, 1998). The Agency 
believes that there are many benefits to the use of standard health 
effects language in the various public notice provisions of the amended 
Safe Drinking Water Act, particularly in reducing confusion for the 
systems and the public. If the language in the consumer confidence 
report rules is revised after public comment, the Agency intends to use 
the revised language for this rule.
    The Agency is also implementing stakeholders' concerns that notices 
not contain highly technical information by requiring the notices to 
provide a brief non-technical summary of the variance process and 
compliance options considered by the system and the primacy agency. In 
addition, all proposed notices would be required to meet the 
multilingual requirement in Sec. 142.308(c)(7) of the proposed 
regulations, if appropriate. This requirement specifies that in 
communities with a large portion of non-English-speaking residents, 
information in the appropriate language regarding the content and 
importance of the notice should be included. The multilingual 
requirement is consistent with the Agency's environmental justice 
policy.
    f. Consumer petition process. Section 1415(e)(10)(B) of the Safe 
Drinking Water Act allows for persons served by the system to petition 
the Administrator to object to the granting of a small system variance; 
such petitions must be submitted not later than 30 days after a State 
proposes to issue a small system variance. This statutory provision is 
implemented in Sec. 142.310 of the proposed regulations. Consumer 
petitions should be mailed to the EPA Regional Administrator. The 
proposed rule requires that the State or the Administrator include, in 
the public notice of the proposed small system variance, information to 
consumers regarding the petition process and the address of the EPA 
Regional Administrator for their State.

H. Sections 142.311 and 142.312.--Bases for Administrator's Objections 
to State-Proposed Small System Variances

    Pursuant to section 1415(e)(9) of the Act, Sec. 142.312(a) of the 
proposed rule requires a primacy State, which is proposing to grant a 
small system variance to a public water system serving more than 3,300 
and fewer than 10,000 persons, to submit that variance to the 
Administrator for review and approval prior to issuance. Section 
142.312(c) requires that, if the Administrator disapproves the 
variance, the Administrator notify the State in writing of the reasons 
for such disapproval. Such disapproval must be based upon a 
determination that the variance is not in compliance with the 
requirements of the Act and regulations, including the requirement that 
the system cannot afford to comply with the maximum contaminant level 
(MCL) or treatment technique for which the variance is being sought, in 
accordance with the State affordability criteria.

[[Page 19447]]

    In addition, Sec. 142.311(a) of the proposed rule requires a 
primacy State, which is proposing to grant a small system variance to a 
public water system serving 3,300 or fewer persons, to submit that 
variance to the Administrator for review prior to issuance.
    Section 1415(e)(10) of the Act addresses objections to small system 
variances. Pursuant to section 1415(e)(10)(A) of the Act, 
Sec. 142.311(b) of the proposed rule states that the Administrator may 
review and object to any variance proposed to be granted by the State, 
if such objection is communicated to the State not later than 90 days 
after the State proposes to grant the variance. Again, the Agency 
expects that such objections would be based upon a determination that 
the variance is not in compliance with the requirements of the Act and 
the rule, including a finding consistent with the State's affordability 
criteria that the system cannot afford to comply. In accordance with 
section 1415(e)(10)(A) of the Act, the notification to the State must 
include the basis for the objection and propose a modification to the 
variance to resolve the concerns of the Administrator. The State shall 
make the recommended modification or respond in writing to each 
objection. If the State issues the variance without resolving the 
concerns of the Administrator, the Administrator may overturn the State 
decision to grant the variance if the Administrator determines that the 
State decision does not comply with the Act and the rule.

I. Section 142.313.--Bases for Administrator's Review of State Small 
System Variance Program

    Pursuant to section 1415(e)(8)(A) of the Safe Drinking Water Act, 
Sec. 142.313 of the proposed rule requires the Administrator to 
periodically review the primacy State's variance program to determine 
whether variances granted by the State comply with the requirements of 
the Act. The Administrator may determine that the variances granted by 
the primacy State are not in compliance with the State's affordability 
criteria and the requirements of the Act. Pursuant to section 
1415(e)(8)(B) of the Act, Sec. 142.313(b) of the proposed rule requires 
the Administrator to notify the State in writing of the deficiencies 
and to make public the determination.

J. General Variances: Time Limitation

    Section 1415(a)(1)(A)(ii) of the Safe Drinking Water Act states 
that a schedule prescribed under a general variance must require 
compliance by the public water system, with each maximum contaminant 
level or treatment technique requirement with respect to which the 
variance was granted, as expeditiously as practicable (as the State may 
reasonably determine) but sets no specific final date for compliance 
other than that in the compliance schedule.
    The Agency is seeking comment on whether to add language to 
Sec. 142.20 of the proposed regulations that would require any variance 
issued by a State pursuant to section 1415(a) of the Safe Drinking 
Water Act to prescribe a schedule that would require a public water 
system to install technology, which the Administrator finds available, 
within three years of the issuance of the variance. In addition, the 
regulations could be modified to allow the State or Administrator to 
grant an additional two years to complete necessary capital 
improvements to achieve compliance or to obtain financial assistance 
provided under section 1452 of the Safe Drinking Water Act or any other 
Federal or State program.
    The Agency recognizes that under a general variance, the State must 
prescribe a schedule which requires compliance with the conditions of 
the variance as expeditiously as possible (as determined by the State) 
which may be less than three years for a given public water system. 
Under this proposal, a State would also have the flexibility to require 
compliance under a general variance within a possible five-year time 
period.
    This proposal is based upon the rationale that because sections 
1415(a) and 1415(e) of the Act require the installation of specific 
technology as specified by the Administrator, it is reasonable to 
require a system to install the technology specified through section 
1415(a) within the same time periods as required for section 1415(e). 
On the other hand, Congress did not choose to impose a time limit on 
general variances, further differentiating them from small system 
variances. Therefore, the option of imposing such a time limit may not 
be appropriate for general variances. The Agency requests public 
comment on whether the final rule should specify compliance time 
periods for general variances issued under section 1415(a) of the Safe 
Drinking Water Act, with such time periods matching those specified for 
small system variances issued under section 1415(e).

K. Relationship of Exemptions and Small System Variances

    Under section 1416(b)(2)(D) of the Safe Drinking Water Act, a 
public water system may not receive an exemption under section 1416 if 
the system was granted a small system variance under section 1415(e) of 
the Act. However, the Act is silent on whether a small system variance 
under section 1415(e) may be issued after the issuance of an exemption 
under section 1416.
    The Agency firmly believes that, at the conclusion of the 
established compliance schedule, a public water system receiving an 
exemption for a given contaminant should come into full compliance with 
the applicable national drinking water regulation for which the 
exemption was granted, wherever possible. However, during the 
stakeholders process, the Agency received comments indicating that the 
regulations should implement the exemption provisions of the Act to 
allow, under certain conditions, a public water system which has 
received an exemption to subsequently receive a variance for that same 
contaminant if it turns out that there is no affordable compliance 
technology for the system.
    Today, the Agency is considering three alternatives to address 
whether a small system variance may be issued after an exemption. The 
first approach would prohibit the issuance of a small system variance 
after an exemption. Under this approach, if a public water system 
cannot achieve full compliance with national primary drinking water 
regulations at the end of the exemption period, the public water system 
would be subject to an enforcement action by which failure to comply 
would be remedied. The second approach would allow a State or the 
Administrator to issue a small system variance after an exemption for 
the same contaminant, but only under specific conditions. For example, 
the rule might require that before a small system variance is issued to 
a system that has already received an exemption, the primacy agency 
must make a determination whether the system was taking all practicable 
steps to meet the requirements of the established compliance schedule 
under the exemption. Under the third approach, due to the variety of 
circumstances under which the issuance of a small system variance after 
an exemption could be appropriate, the final rule would allow such a 
variance but leave the decision to the implementing agency regarding 
which such circumstances merit the issuance of a small system variance 
after an exemption for the same contaminant. The Agency requests public 
comment on which regulatory approach is most appropriate.

[[Page 19448]]

L. State Revolving Fund Linkage to Exemptions

    Strong statutory linkage exists between the exemptions provisions 
in section 1416 of the Safe Drinking Water Act and the State Revolving 
Fund provisions of section 1452 of the Act. Today's proposed rule 
attempts to reflect that linkage. Under section 1452 of the Act, the 
State may provide at its discretion additional subsidization to a 
recipient of State Revolving Fund assistance for a project serving a 
disadvantaged community according to the State's affordability criteria 
for drinking water. Under section 1416(a) of the Act, States are 
directed to consider whether a system serves such a disadvantaged 
community in determining whether compelling economic factors prevent 
the system from complying with an MCL or treatment technique, which is 
one of the eligibility requirements for receiving an exemption. To 
implement this provision and reflect the linkage existing in the Act, 
today's proposed regulation, in Secs. 142.20 and 142.50, requires that 
the primacy agency consider whether the public water system serves a 
disadvantaged community, pursuant to section 1452(d) of the Act.
    The State Revolving Loan Fund program plays a prominent role in the 
consideration of whether to issue exemptions. Today's proposed 
regulation requires the State to consider whether State Revolving Loan 
Fund assistance is available to the public water system to assist it in 
achieving compliance with the Act. That consideration should include an 
assessment of the public water system's technical, financial, and 
managerial capacity, and whether assistance can help bring the system 
into compliance with the Act. These two provisions, the State Revolving 
Fund provisions and the exemptions provisions, can be used together to 
complete two important tasks: (1) ensure that State Revolving Loan Fund 
assistance is targeted towards those public water systems most in need 
of such assistance, and (2) allow systems which receive such assistance 
to be able to use it in conjunction with an exemption in a way that 
will produce full compliance with the Act within the compliance 
schedule established by the State.

M. Exemption: Renewals for Small Systems

    Under section 1416(b)(2)(A) of the Safe Drinking Water Act, an 
exemption issued to a public water system must prescribe a schedule 
requiring compliance by the system with each contaminant level and 
treatment technique requirement with respect to which the exemption was 
granted as expeditiously as practicable (as the State may reasonably 
determine) but not later than three years after the otherwise 
applicable compliance date established in section 1412(b)(10). Section 
1416(b)(2)(C) states ``[i]n the case of a system which does not serve 
more than a population of 3,300 and which needs financial assistance 
for the necessary improvements, an exemption . . . may be renewed for 
one or more additional 2-year periods, but not to exceed a total of 6 
years, if the system establishes that it is taking all practicable 
steps to meet the requirements of [the established compliance 
schedule].''
    The intensive compliance options analysis required, under 
Sec. 142.20(b)(1) and Sec. 142.50(a), to be performed before an 
exemption is initially granted should indicate whether an exemption is 
appropriate. If an exemption is appropriate after the compliance 
options analysis, the primacy agency should facilitate and work with 
the system to ensure compliance as soon as practicable, but within 
three years of the otherwise applicable compliance date, including 
providing financial assistance under section 1452 of the Act. Under 
Secs. 142.20(b)(2) and 142.56 of the proposed rule, two-year extensions 
of exemptions pursuant to section 1416(b)(2)(C) of the Act may only be 
granted to systems which serve 3,300 or fewer people and which need 
financial assistance, and upon State review of the small system's 
progress and the State's subsequent determination that the small system 
and is taking all practicable steps to meet the requirements of the 
Act.
    The Agency interprets the use of the word ``renewal'' by Congress 
to indicate that additional two-year periods may not be granted ``up-
front'' to the small system at the time of initial issuance of the 
exemption. Review by the primacy agency is necessary in this renewal 
process to ensure that the system is taking all practicable steps to 
meet the requirements of the Act. However, it is not anticipated that 
the review process to renew an exemption will be as complex as the 
initial determination process, including a compliance options analysis, 
performed by the primacy State or the Administrator prior to granting 
the exemption. Rather, the State should review the progress of the 
small system to determine if the system is taking all practicable steps 
to meet the compliance schedule. Even though not required by section 
1416 of the Act, the primacy State may wish to consider the 
incorporation of public participation into the review process of an 
exemption. If the State determines that a renewal would not be 
appropriate under the Act or regulations, the public water system must 
comply with applicable national primary drinking water regulations at 
the end of the exemption period.
    The Agency requests comment on the above approach and on the level 
of effort required by the primacy agency for review and issuance of 
renewals of exemptions. In addition, the Agency requests comment on 
whether the Agency should consider allowing the extensions to be 
incorporated in the initial compliance schedule.

IV. Cost of Rule

    The purpose of this rule is to allow systems, especially those 
serving under 10,000 people, to adopt affordable technologies that 
improve the quality of their water and move them closer to compliance 
with national drinking water standards. By relieving these systems of 
the obligation to achieve full compliance with applicable standards 
when such compliance is not affordable, while maintaining public health 
protection, the rule has the potential to generate significant cost 
savings. However, since the vast majority of systems currently are 
already in compliance with existing standards, the Agency expects the 
new variance and exemption provisions to be used primarily by systems 
unable to achieve compliance (or which require additional time to 
achieve compliance) with future standards. Because the Agency does not 
yet know what these new standards will require or what variance 
technologies will be approved, it is not possible to quantify the 
potential cost savings of the rule with respect to future standards. 
Rather, at the time that new standards are promulgated, the Agency will 
factor the availability of variances and exemptions under appropriate 
conditions into the cost estimates for these standards.
    The Agency is currently working on identifying variance 
technologies for existing standards. Once these technologies have been 
identified and preliminarily financially analyzed, it may be possible 
for the Agency to estimate the potential cost savings from variances 
for these existing standards. However, the analysis of these 
technologies is not far enough along for the Agency to provide an 
estimate of these cost savings with the current proposal. In addition 
to the savings associated with adopting affordable technologies, 
however, the Agency anticipates that systems (and States) will also 
realize savings associated with a reduction in enforcement actions (and

[[Page 19449]]

associated judicial proceedings) for systems that are not able to 
comply with existing standards but will now have greater access to 
variances and exemptions. The Agency has therefore performed an 
illustrative analysis of the costs to systems of applying for variances 
and exemptions and the cost to States of granting them, relative to the 
savings from reduced enforcement actions. This analysis focused on two 
sets of existing standards, those contained in the Lead and Copper 
Rule, and those contained in the Phase II/V Rule.
    Based upon this economic impact analysis (EIA), public water 
systems would realize net economic benefits as a result of today's 
proposed rule. Results of the impact analysis show that, if all 
eligible public water systems in all 56 States and territories apply 
for and are granted variances under sections 1415(a) or 1415(e), or 
exemptions under today's proposed rule, for the rules considered in 
this analysis, then the regulation will show a net annualized economic 
benefit of $573,706 to the Agency, States, and public water systems, 
not including benefits due to increased public health protection or 
savings associated with the installation of affordable technologies. A 
summary of this EIA is available in the Office of Water Docket, #W-97-
26.
    The Agency performed an economic impact analysis of today's 
proposed rule to examine the economic costs and benefits of this rule 
on the Agency, State Drinking Water programs, and public water systems 
over a nine-year period. A nine-year period was chosen because systems 
serving fewer than 3,300 persons can operate for a maximum of nine 
years under an exemption, if they receive all available extensions. 
Small system variances, however, are available for the useful life of 
the variance technology, which can depend on various technical and 
financial factors. Thus, nine years was chosen as an appropriate time 
frame in which to examine the costs incurred by a variance and/or 
exemption program.
    The Agency's economic analysis for the variance and exemption rule 
include variables such as administrative burden on States and the 
Agency, as well as costs on public water systems of applying and 
providing notice of application under the proposed rule. Costs to the 
Agency and States specifically include review of variance and exemption 
applications, setting terms and conditions of small system variances, 
and setting and enforcing milestones within the exemption period for a 
system. Some administrative costs, such as those associated with 
adopting new regulations or developing new criteria, were not included 
in the analysis. Estimated benefits include administrative costs 
associated with noncompliance avoided for States and the Agency, as 
well as litigation, judicial, and other process costs avoided by public 
water systems and regulatory agencies as a result of having variance 
and exemption programs in place. These costs avoided are not specific 
to any rule.
    For the purposes of the economic impact analysis, the Agency 
selected two example regulations for which a system may apply for 
either a small systems variance or exemption. The Safe Drinking Water 
Act states in section 1416(b)(2)(A) that exemptions require compliance 
as soon as practicable but not later than 3 years after the otherwise 
applicable compliance date established for a given contaminant. Because 
no SDWA rules have been promulgated in the past three years, estimating 
the costs of implementing an exemption program was somewhat 
problematic, i.e., there are currently no national primary drinking 
water regulations for which exemptions can be currently granted.
    As an alternative, the Agency used the Lead and Copper Rule (last 
promulgated in 1995) as an example so that the Agency could estimate 
the process costs of implementing an exemption on all affected 
entities. The Lead and Copper Rule was chosen because over 68,093 
public water systems (approximately 38% of all public water systems) 
are subject to that rule, which provides a practical upper bound on the 
potential costs associated with processing and issuing exemptions for a 
rule. Further, the Agency has access to Lead and Copper Rule compliance 
data for those 68,093 public water systems.
    The Agency also selected the Phase II/V regulation (inorganic 
contaminants) as an example of a pool of maximum contaminants levels 
for which variances under sections 1415(a) and 1415(e) may be granted. 
This regulation was selected because, for the purpose of issuing small 
system variances under section 1415(e), variance technologies are 
likely to be designated by the Agency for some of the maximum 
contaminant levels under this regulation. This assumption is based on 
preliminary analyses performed in preparing a small systems variance 
technology list under section 1412(b)(15) of the Safe Drinking Act. 
Also, Phase II/V addresses approximately 25 contaminants, some or all 
which may also be eligible for source water variances under section 
1415(a) of the Act. Therefore, Phase II/V helps the Agency obtain a 
practical upper bound on the potential costs associated with processing 
and issuing variances for a NPDWR.
    In using the Phase II/V Regulation and the Lead and Copper Rule as 
examples, the Agency does not make any indication as to whether these 
rules will be eligible for small system variances. The Administrator 
has not yet finally determined the contaminants for which small system 
variance technologies will be designated.
    The table below provides, by system size as number of persons 
served, the number of public water systems (PWSs) subject to the Lead 
and Copper Rule and the Phase II/V Rule.

------------------------------------------------------------------------
                                                     All PWS            
                                                     subject    All PWS 
                                                      to the    subject 
          System size (in persons served)            lead and    to the 
                                                      copper   phase II/
                                                       rule      V rule 
------------------------------------------------------------------------
25-500............................................     51,191     48,100
501-3,300.........................................     16,902     14,126
Total < 3,301.....................................     68,093     62,226
3,301-10,000......................................      4,323      3,410
Total < 10,000....................................     72,416     65,636
> 10,000..........................................      3,529      2,774
                                                   ---------------------
    Total.........................................     75,945     68,410
------------------------------------------------------------------------

    For both regulations, the Agency used compliance data to estimate 
the number of systems that may be eligible for a variance under 
sections 1415(a) or 1415(e) of the Act, or exemptions. The violation 
rates used in the economic impact analysis are identified in the table 
below. Violation data for the Lead and Copper Rule was taken from the 
Safe Drinking Water Information System database; violation rates for 
the Phase II/V Rule are from the Public Water Supply Supervision 
program information collection rule.

------------------------------------------------------------------------
                                                   Percentage of all PWS
                                                   potentially eligible 
                                                      for variances/    
                                                        exemptions      
                                                 -----------------------
                                                   Lead and             
                                                    copper    Phase II/V
                                                   (percent)   (percent)
------------------------------------------------------------------------
Treatment Technique or Maximum Contaminant Level                        
 (annual violation rate)........................        0.50        0.50
Treatment Technique or Maximum Contaminant Level                        
 (nine-year violation rate).....................        4.50        2.00
------------------------------------------------------------------------

    The number of potentially eligible systems (i.e., systems in 
violation) was then used to estimate processing costs incurred by 
implementing a variance

[[Page 19450]]

and/or exemption program to all affected entities, summed for both 
rules. As stated previously, these costs include administrative burden 
to States and the Agency, as well as the public water systems' costs of 
applying for variances and exemptions. These costs were then compared 
to the economic benefits to public water systems, States, and the 
Agency of avoiding litigation and other administrative costs associated 
with noncompliance, summed for both rules. The net results are shown 
below, and costs are shown in parentheses.

----------------------------------------------------------------------------------------------------------------
                                                                  State drinking                                
                                                        EPA       water programs        PWS        All entities 
----------------------------------------------------------------------------------------------------------------
Costs...........................................       $241,821      $5,041,694         $348,716  ..............
Benefits........................................              0       2,863,321        3,342,616  ..............
Net annualized economic costs and benefits......       (241,821)     (2,178,373)       2,993,900        $573,706
Net present value of economic costs and benefits  ..............  ..............  ..............       4,057,739
----------------------------------------------------------------------------------------------------------------

    The Agency also examined the distribution of net economic benefits 
within differing size categories of public water systems serving 10,000 
or fewer persons. As shown below, systems serving 25-500 persons will 
show the greatest net benefit from the issuance of variance and 
exemptions according to the model assumptions.

------------------------------------------------------------------------
                                                          Net annualized
              System size (persons served)                   economic   
                                                             benefits   
------------------------------------------------------------------------
25-500..................................................      $2,060,939
501-3,300...............................................         642,323
3,301-10,000............................................         149,782
------------------------------------------------------------------------

    According to the economic impact analysis and the above tables, the 
variance and exemption rule is not considered to have a ``significant 
impact'' as defined under the Unfunded Mandates Reform Act, nor would 
it pose an adverse impact on a substantial number of small entities, as 
discussed in section V.D. of the preamble to today's proposed rule. 
Instead, public water systems would show a net economic benefit under 
today's proposed rule.

V. Other Administrative Requirements

A. Executive Order 12866

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to review by the Office of Management and Budget 
and the requirements of the Executive Order. The Order defines 
``significant regulatory action'' as one that is likely to result in a 
rule that may:
    (1) Have an annual effect on the economy of $100 million or more, 
or adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of the 
recipients thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    It has been determined, that this rule is a ``significant 
regulatory action'' because it may raise novel legal or policy issues. 
The rule seeks to improve public health protection while providing 
regulatory relief to small systems by encouraging the adoption, by 
small systems unable to comply with drinking water standards, of 
affordable technologies that will improve the quality of their water 
even if they do not achieve full compliance with the MCL or treatment 
technique requirement for a particular contaminant. Therefore, EPA 
submitted this action to OMB for review. Substantive changes made in 
response to OMB suggestions or recommendations will be documented in 
the public record.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act (SBREFA), generally 
requires the Agency to consider explicitly the effect of proposed 
regulations on small entities. The Agency assesses the impact of the 
proposed rule on small entities and considers regulatory alternatives 
if a rule has a significant economic impact on a substantial number of 
small entities. However, under section 605(b) of the RFA, if the Agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities, the Agency is not required to 
prepare an RFA.
    Pursuant to section 605(b) of the Regulatory Flexibility Act, 5 
U.S.C. 605(b), the Administrator certifies that this rule will not have 
a significant economic impact on a substantial number of small 
entities. Regulations on variances and exemptions provide regulatory 
relief from the costs of complying with a maximum contaminant level or 
a treatment technique under a given national primary drinking water 
regulation. As directed in the Safe Drinking Water Act, this rule 
describes procedures and criteria by which those small public water 
systems which cannot afford the appropriate treatment to comply with a 
given national primary drinking water regulation can receive a variance 
or exemption. Thus, public water systems show a net economic benefit 
under today's proposed rule as a result of being granted a variance or 
exemption, rather than bear process costs associated with litigation 
and enforcement. Please see section IV, ``Cost of Rule'', in today's 
preamble for a more detailed discussion of the economic costs and 
benefits of today's proposed rule.

C. Paperwork Reduction Act

    The information collection requirements in this proposed rule are 
currently being prepared and will be submitted for approval to the 
Office of Management and Budget (OMB) under the Paperwork Reduction 
Act, 44 U.S.C. 3501 et seq. An Information Collection Request (ICR No. 
270.39) document will be prepared by the Agency to amend the current 
Public Water System Supervision Program ICR (OMB control number 2040-
0090). A copy of the ICR is available from Sandy Farmer, Regulatory 
Information Division, Office of Policy, Planning, and Evaluation, U.S. 
Environmental Protection Agency (Mailcode: 2137), 401 M St., S.W., 
Washington, D.C., 20460, or by calling (202) 260-2740. Information 
requirements created by this regulation are not effective until OMB 
approves them.
    Information required by this regulation allows the State or the 
Administrator to determine that the circumstances at a public water 
system

[[Page 19451]]

satisfy the statutory conditions for granting a small system variance 
or an exemption. Some of the required information allows the 
Administrator and the public to determine that the public had adequate 
opportunity to review and comment on a decision to grant a small system 
variance. The information collection requirements of this rule are 
mandatory for public water systems applying for either a variance or an 
exemption and for primacy States that review and either grant or deny 
these applications. Information collected by this rule will be provided 
to the public to facilitate public involvement in this process.
    Based upon the analysis of the two rules discussed above, total 
public burden for this collection of information is estimated as 
128,178 hours annually. The Agency notes however that the rule is 
estimated to provide a benefit of 117,414 annual hours of burden 
reduction by reducing enforcement actions against public water systems 
unable to comply fully with the maximum contaminant level or treatment 
technique requirements of the National Primary Drinking Water 
Regulations. Because this type of burden is not generally counted when 
developing burden estimates for these regulations, it is not netted out 
of the burden estimated for the current rule. Burden means the total 
time, effort, or financial resources expended by persons to generate, 
maintain, retain, or disclose or provide information to or for a 
Federal agency. This includes the time needed to review instructions; 
develop, acquire, install, and utilize technology and systems for the 
purposes of collecting, validating, and verifying information, 
processing and maintaining information, and disclosing and providing 
information; adjust the existing ways to comply with any previously 
applicable instructions and requirements; train personnel to be able to 
respond to a collection of information; search data sources; complete 
and review the collection of information; and transmit or otherwise 
disclose the information.
    Despite the increased burden hours, the rule is expected to provide 
a net economic benefit to systems choosing to apply for a variance or 
exemption, as discussed in section IV. This benefit includes avoided 
litigation and judicial costs, as well as the savings associated with 
the implementation of affordable technologies.
    An Agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations are listed in 40 CFR Part 9 and 48 CFR Chapter 15.
    Comments are requested on the Agency's need for the required 
information, the accuracy of the provided burden estimates, and any 
suggested methods for minimizing respondent burden, including through 
the use of automated collection techniques. Send comments on the ICR 
June 19, 1998 to: Director, OPPE Regulatory Information Division, U.S. 
Environmental Protection Agency (Mailcode: 2137), 401 M St., S.W., 
Washington, D.C., 20460 and to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, 725 17th St., N.W., 
Washington, D.C., 20503, Attn: Desk Office for EPA Office of Water. The 
final rule will respond to any OMB or public comments on the 
information collection requirements contained in this proposal.

D. Unfunded Mandates Reform Act and Executive Order 12875

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, Tribal, and local 
governments and the private sector. Under section 202 of the UMRA, the 
Agency generally must prepare a written statement, including a cost-
benefit analysis, for proposed and final rules with ``Federal 
mandates'' that may result in expenditures to State, Tribal, and local 
governments, in the aggregate, or to the private sector, of $100 
million or more in any one year.
    Before promulgating an Agency rule for which a written statement is 
needed, section 205 of the UMRA generally requires the Agency to 
identify and consider a reasonable number of regulatory alternatives 
and adopt the least costly, most cost-effective, or least burdensome 
alternative that achieves the objectives of the rule. The provisions of 
section 205 of the UMRA do not apply when they are inconsistent with 
applicable law. Moreover, section 205 of the UMRA allows the Agency to 
adopt an alternative other than the least costly, most cost-effective, 
or least burdensome alternative if the Administrator publishes with the 
final rule an explanation why that alternative was not adopted.
    Before the Agency establishes any regulatory requirements that may 
significantly or uniquely affect small governments, including Tribal 
governments, it must have developed a small government agency plan 
under section 203 of the UMRA. The plan must provide for notifying 
potentially affected small governments, enabling officials of affected 
small governments to have meaningful and timely input in the 
development of Agency regulatory proposals with significant Federal 
intergovernmental mandates, and informing, educating, and advising 
small governments on compliance with the regulatory requirements.
    Today's rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) for State, local, or tribal 
governments or the private sector. This rule imposes no enforceable 
duty on any State, local or tribal governments or the private sector. 
This is because the rule will apply only to primacy States or Tribes. 
States or Tribes may choose whether to acquire or maintain primacy 
under the Safe Drinking Water Act. Further, States and Tribes with 
primacy may choose whether to issue variances and exemptions; they can 
decide to not issue any exemptions or variances at all. If they choose 
to issue variances or exemptions, they are only required to issue 
variances and exemptions in a manner not less stringent than the 
conditions under, and the manner in which, variances and exemptions may 
be granted under section 1415 and 1416 of the SDWA. Thus, today's rule 
is not subject to the requirements of section 202 and 205 of the UMRA.
    Moreover, because this rule establishes procedures and criteria for 
public water systems to obtain variances and exemptions from Safe 
Drinking Water Act requirements, the Agency has determined that this 
rule contains no regulatory requirements that might significantly or 
uniquely adversely affect small governments and thus this rule is not 
subject to the requirement of section 203 of UMRA.

E. Enhancing Intergovernmental Partnerships

    Executive Order 12875, ``Enhancing Intergovernmental 
Partnerships,'' October 26, 1995, requires the Agency to consult with 
State, tribal, and local entities in the development of rules that will 
affect them, and to document for OMB review the issues raised and how 
the issues were addressed. As described in section II of the 
Supplementary Information above, the Agency held several meetings with 
a wide variety of State and local representatives, who provided 
meaningful and timely input toward the development of the proposed 
rule. Summaries of these meetings have been included in the public 
docket for this rulemaking.

[[Page 19452]]

F. Protection of Children and Environmental Justice

    Under the Executive Order entitled ``Protection of Children from 
Environmental Health Risks and Safety Risk,'' dated April 21, 1997, the 
Agency must ensure that its policies, programs, activities, and 
standards address environmental and safety risks to children. Every 
regulatory action submitted to OMB for review under Executive Order 
12866 must include information that evaluates the environmental health 
and safety effects of the planned regulation on children and explains 
why the planned regulation is preferable to other potentially effective 
and reasonably feasible alternatives considered by the Agency.
    In addition, under Executive Order 12898, entitled ``Federal 
Actions to Address Environmental Justice in Minority Populations and 
Low-Income Populations'', dated February 11, 1994, the Agency must make 
achieving environmental justice part of its mission.
    The Agency believes that this proposed rule has the potential to 
significantly reduce risks to children caused by inadequate drinking 
water and address environmental justice problems. After a small public 
water system applies for a small system variance, Sec. 142.306(b) of 
the proposed rule requires the State to perform a compliance options 
analysis for the system. Small noncompliant public water systems are 
often financially distressed as a result of the service population's 
inability to pay for safe drinking water and other factors. The public 
water system may have unprotected source waters or is unable to afford 
the appropriate treatment technology or technique, certified operator, 
and/or adequate transmission and distribution systems. As required by 
Sec. 142.306(b) of the proposed rule, an analysis of the applicant 
system's compliance options will provide insight into alternative means 
of compliance. This might include some form of restructuring or 
consolidation with another system, development of a cleaner, safer 
water source, or using some alternative treatment technique or 
technology.
    If according to a State's affordability criteria, these compliance 
options are unaffordable for a drinking water system, the State may 
grant the system a variance. Prior to issuing a variance, 
Sec. 142.306(b)(5) of the proposed rule requires that the State find 
that the terms and conditions of a small system variance ensure 
``adequate protection of public health.'' Similarly, an exemption can 
only be granted if its conditions ensure that there is no unreasonable 
risk to health.'' Both findings are made at the State level on a case-
specific basis.
    The intent of the small system variance subpart of the rule is to 
move a system, which is not complying with Safe Drinking Water Act 
standards because the treatment required is unaffordable, toward or 
into compliance status by requiring the system to install, operate and 
maintain treatment which is affordable and protective of human health. 
Although the level of treatment provided may not meet the maximum 
contaminant level, it must be determined to be protective of human 
health--both by the Agency in identifying the approved variance 
technology and by the primacy State in making such a finding--if the 
variance is granted.
    The Agency believes that a system operating under a small system 
variance as proposed today will provide better treatment than that 
provided by a system in noncompliance. Although the drinking water 
system may not be able to provide water that is consistently below the 
maximum contaminant level, a water system operating under a variance 
will be able to create a net gain in the quality of its finished water 
above what it could provide before installing a variance technology. In 
turn, this will lead to a net gain in public health protection for 
infants, children, and nursing or pregnant women as well as for persons 
in low-income areas, thus protecting children's health as well as 
alleviating environmental justice problems.
    In addition to requirements that ensure public participation in 
granting variances and exemptions, Sec. 142.308(c)(7) of the proposed 
rule requires that, in communities with a large portion of non-English 
speaking persons, notices provided to the public must include 
information in the appropriate language regarding the content and 
importance of the notice.
    For these reasons, the Agency believes that this rule is consistent 
with, and implements, the Executive Order on protecting children as 
well as the Executive Order addressing environmental justice.

G. National Technology Transfer and Advancement Act

    Under section 12(d) of the National Technology Transfer and 
Advancement Act, the Agency is required to use voluntary consensus 
standards in its regulatory and procurement activities, unless to do so 
would be inconsistent with applicable law or otherwise impractical. 
Voluntary consensus standards are technical standards (e.g., materials 
specifications, test methods, sampling procedures, business practices, 
etc.) that are developed or adopted by voluntary consensus standards 
bodies. Where available and potentially applicable voluntary consensus 
standards are not used by the Agency, the Act requires the Agency to 
provide Congress, through the Office of Management and Budget, an 
explanation of the reasons for not using such standards. Because this 
proposed rule is procedural and does not involve or require the use of 
any technical standards, the Agency does not believe that this Act is 
applicable to this rule. Moreover, the Agency is unaware of any 
voluntary consensus standards relevant to this rulemaking. Therefore, 
even if the Act were applicable to this kind of rulemaking, the Agency 
does not believe that there are any ``available or potentially 
applicable'' voluntary consensus standards. A commenter who disagrees 
with this conclusion should indicate how the rule is subject to the 
Act, and identify any potentially applicable voluntary consensus 
standards.

VI. Request for Public Comments

    The Agency seeks public comment on this proposed rule. In 
particular, several sections of the preamble describe alternative 
approaches under consideration by the Agency or specifically request 
comment. The topic areas addressed in these particular sections 
include: which contaminants should be eligible for small system 
variances; the usefulness and appropriateness of additional guidance on 
site-specific determination of adequate public health protection; the 
appropriateness of requiring States to explicitly consider impacts on 
sensitive subpopulations, or alternatively of the Agency providing 
guidance on impacts to such subpopulations; the number and timing of 
public notices that must be provided prior to granting a small system 
variance; the content of required health effects language in such 
notices; whether the Agency should promulgate a specific time limit for 
compliance with the terms of general variances; whether small system 
variances should be permitted for systems that are unable to comply 
within the terms of an exemption; whether exemption renewals should be 
allowed in advance; and the reporting and recordkeeping requirements of 
the rule and associated burden. Comments are also welcome on any other 
aspect of the proposed rule and supporting documentation.

[[Page 19453]]

    Please submit an original and three copies of your comments and 
enclosures (including references). To facilitate Agency review and 
response to comments, the Agency would prefer that commenters cite, 
where possible, the specific paragraph(s) or section(s) in the notice 
or supporting documents to which each comment refers. Commenters should 
use a separate paragraph for each issue discussed. Commenters who want 
the Agency to acknowledge receipt of their comments should enclose a 
self-addressed, stamped envelope. No facsimiles (faxes) will be 
accepted.
    Written comments must be received by midnight May 20, 1998. All 
written comments should be submitted to: W-97-26 Comment Clerk, Water 
Docket (Mailcode MC4101), Environmental Protection Agency, 401 M 
Street, S.W., Washington, D.C., 20460.
    Comments may also be submitted electronically to ow-
[email protected]. Electronic comments must be identified by the 
docket number W-97-26. Electronic comments must be submitted as an 
ASCII file avoiding the use of special characters and form of 
encryption.
    The record for this rulemaking has been established under docket 
number W-97-26, and includes supporting documentation as well as 
printed, paper versions of electronic comments.

List of Subjects in 40 CFR Part 142

    Environmental protection, Administrative practice and procedures, 
Chemical, Indian-lands, Radiation protection, Reporting and 
recordkeeping requirements, Water supply.

    Dated: April 14, 1998.
Carol M. Browner,
Administrator.

    For the reasons set out in the preamble, 40 CFR part 142 is 
proposed to be amended as follows:

PART 142--[AMENDED]

    1. The authority citation for part 142 continues to read as 
follows:

    Authority: 42 U.S.C. 300g, 300g-1, 300g-2, 300g-3, 300g-4, 300g-
5, 300g-6, 300j-4, and 300j-9.

    2. Section 142.10 is amended by revising paragraph (d) to read as 
follows:


Sec. 142.10  Requirements for a determination of primary enforcement 
responsibility.

* * * * *
    (d) Variances and exemptions. (1) If it permits small system 
variances pursuant to Section 1415(e) of the Act, it must provide 
procedures no less stringent than the Act and subpart K of this part.
    (2) If it permits variances (other than small system variances) or 
exemptions, or both, from the requirements of the State primary 
drinking water regulations, it shall do so under conditions and in a 
manner no less stringent than the requirements of Sections 1415 and 
1416 of the Act. In granting these variances, the State must adopt the 
Administrator's findings of best available technology, treatment 
techniques, or other means available as specified in subpart G of this 
part. (States with primary enforcement responsibility may adopt 
procedures different from those set forth in subparts E and F of this 
part, which apply to the issuance of variances (other than small system 
variances) and exemptions by the Administrator in States that do not 
have primary enforcement responsibility, provided that the State 
procedures meet the requirements of this paragraph); and
* * * * *
    3. Section 142.20 is revised including the section heading to read 
as follows:


Sec. 142.20  State-issued variances and exemptions under Section 
1415(a) and Section 1416 of the Act.

    (a) States with primary enforcement responsibility may issue 
variances to public water systems (other than small system variances) 
from the requirements of primary drinking water regulations under 
conditions and in a manner which are not less stringent than the 
requirements under Section 1415(a) of the Act. A State must document 
all findings that are required under Section 1415(a) of the Act. In 
States that do not have primary enforcement responsibility, variances 
may be granted by the Administrator pursuant to subpart E of this part.
    (b) States with primary enforcement responsibility may issue 
exemptions from the requirements of primary drinking water regulations 
under conditions and in a manner which are not less stringent than the 
requirements under Section 1416 of the Act. In States that do not have 
primary enforcement responsibility, exemptions may be granted by the 
Administrator pursuant to subpart F of this part.
    (1) A State must document all findings that are required under 
Section 1416 of the Act, including the following:
    (i) Before finding that management and restructuring changes cannot 
be made, a State must consider the following measures, and the 
availability of State Revolving Loan Fund assistance, or any other 
Federal or State program, that is reasonably likely to be available 
within the period of the exemption to implement these measures:
    (A) Consideration of rate increases, accounting changes, the 
appointment of a State-certified operator under the State's Operator 
Certification program, contractual agreements for joint operation with 
one or more public water systems;
    (B) Activities consistent with the State's Capacity Development 
Strategy to help the public water system acquire and maintain 
technical, financial, and managerial capacity to come into compliance 
with the Act; and
    (C) Ownership changes, physical consolidation with another public 
water system, or other feasible and appropriate means of consolidation 
which would result in compliance with the Act;
    (ii) The State must consider the availability of an alternative 
source of water, including the feasibility of partnerships with 
neighboring public water systems, as identified by the public water 
system or by the State consistent with the Capacity Development 
Strategy.
    (2) In the case of a public water system serving a population of 
not more than 3,300 persons and which needs financial assistance for 
the necessary improvements under the initial compliance schedule, an 
exemption granted by the State under Section 1416(b)(2)(B)(i) or (ii) 
of the Act may be renewed for one or more additional 2-year periods, 
but not to exceed a total of 6 additional years, only if the public 
water system establishes that the public water system is taking all 
practicable steps to meet the requirements of Section 1416(b)(2)(B) of 
the Act and the established compliance schedule. A State must document 
its findings in granting an extension under this paragraph.
    4. The heading for Subpart E is revised to read as follows:

Subpart E--Variances Issued by the Administrator Under Section 
1415(a) of the Act

    5. Section 142.42 is amended by revising paragraph (c) to read as 
follows:


Sec. 142.42  Consideration of a variance request.

* * * * *
    (c) A variance may be issued to a public water system on the 
condition that the public water system install the best technology, 
treatment techniques, or other means, which the Administrator finds are 
available (taking costs into consideration) and based upon an 
evaluation satisfactory to the

[[Page 19454]]

Administrator that indicates that alternative sources of water are not 
reasonably available to the public water system.
* * * * *

Subpart F--[Amended]

    6. Section 142.50 is revised to read as follows:


Sec. 142.50  Requirements for an exemption.

    (a) The Administrator may exempt any public water system within a 
State that does not have primary enforcement responsibility from any 
requirement regarding a maximum contaminant level or any treatment 
technique requirement, or from both, of an applicable national primary 
drinking water regulation upon a finding that--(1) Due to compelling 
factors (which may include economic factors, including qualification of 
the public water system as a system serving a disadvantaged community 
pursuant to Section 1452(d) of the Act), the public water system is 
unable to comply with such contaminant level or treatment technique 
requirement or to implement measures to develop an alternative source 
of water supply;
    (2) The public water system was in operation on the effective date 
of such contaminant level or treatment technique requirement, or for a 
public water system that was not in operation by that date, no 
reasonable alternative source of drinking water is available to such 
new public water system;
    (3) The granting of the exemption will not result in an 
unreasonable risk to health; and
    (4) Management or restructuring changes (or both), as provided in 
Sec. 142.20(b)(1)(i)(A), cannot reasonably be made that will result in 
compliance with the applicable national primary drinking water 
regulation or, if compliance cannot be achieved, improve the quality of 
the drinking water.
    (b) No exemption shall be granted unless the public water system 
establishes that the public water system is taking all practicable 
steps to meet the standard and;
    (1) The public water system cannot meet the standard without 
capital improvements which cannot be completed prior to the date 
established pursuant to Section 1412(b)(10) of the Act;
    (2) In the case of a public water system which needs financial 
assistance for the necessary improvements, the public water system has 
entered into an agreement to obtain such financial assistance or 
assistance pursuant to Section 1452 of the Act, or any other Federal or 
State program that is reasonably likely to be available within the 
period of the exemption; or
    (3) The public water system has entered into an enforceable 
agreement to become a part of a regional public water system.
    (c) A public water system may not receive an exemption under this 
subpart if the public water system was granted a variance under Section 
1415(e) of the Act.
    7. Section 142.53 is amended by revising paragraph (c)(1) to read 
as follows:


Sec. 142.53  Disposition of an exemption request.

* * * * *
    (c) * * *
    (1) Compliance (including increments of progress or measures to 
develop an alternative source of water supply) by the public water 
system with each contaminant level requirement or treatment technique 
requirement with respect to which the exemption was granted; and
* * * * *
    8. Section 142.55 is amended by revising paragraph (b) and removing 
and reserving paragraph (c) to read as follows:


Sec. 142.55  Final schedule.

* * * * *
    (b) Such schedule must require compliance with each contaminant 
level and treatment technique requirement with respect to which the 
exemption was granted as expeditiously as practicable but not later 
than 3 years after the otherwise applicable compliance date established 
in Section 1412(b)(10) of the Act.
    (c) [Reserved].
    9. Section 142.56 is revised to read as follows:


Sec. 142.56  Extension of date for compliance.

    In the case of a public water system which serves a population of 
not more than 3,300 persons and which needs financial assistance for 
the necessary improvements, an exemption granted under Sec. 142.50(b) 
(1) or (2) may be renewed for one or more additional 2-year periods, 
but not to exceed a total of 6 additional years, if the public water 
system establishes that the public water system is taking all 
practicable steps to meet the requirements of Section 1416(b)(2)(B) of 
the Act and the established compliance schedule.
    10. Subpart K is added to read as follows:

Subpart K--Variances for Small System

Sec.

General Provisions

142.301  What is a small system variance?
142.302  Who can issue a small system variance?
142.303  Which size public water systems can receive a small system 
variance?
142.304  For which of the regulatory requirements is a small system 
variance available?
142.305  When can a small system variance be granted by a State?

Review of Small System Variance Application

142.306  What are the responsibilities of the public water system, 
State and the Administrator in ensuring that sufficient information 
is available and for evaluation of a small system variance 
application?
142.307  What terms and conditions must be included in a small 
system variance?

Public Participation

142.308  What Public Notice is Required Before a State or the 
Administrator Proposes to issue a Small System Variance?
142.309  What are the public meeting requirements associated with 
the proposal of a small system variance?
142.310  How can a person served by the public water system obtain 
EPA review of a State proposed small system variance?

EPA Review and Approval of Small System Variances

142.311  What procedures allow for the Administrator to object to a 
proposed small system variance or overturn a granted small system 
variance for a public water system serving 3,300 or fewer persons?
142.312  What EPA action is necessary when a State proposes to grant 
a small system variance to a public water system serving a 
population of more than 3,300 and fewer than 10,000 persons?
142.313  How will the Administrator review a State's program under 
this subpart?

Subpart K--Variances for Small System

General Provisions


Sec. 142.301  What is a small system variance?

    Section 1415(e) of the Act authorizes the issuance of variances 
from the requirement to comply with a maximum contaminant level or 
treatment technique to systems serving fewer than 10,000 persons. The 
purpose of this subpart is to provide the procedures and criteria for 
obtaining these variances.


Sec. 142.302  Who can issue a small system variance?

    A small system variance under this subpart may only be issued by 
either:
    (a) A State that is exercising primary enforcement responsibility 
under

[[Page 19455]]

Subpart B for public water systems under the State's jurisdiction; or
    (b) The Administrator, for any other public water systems.


Sec. 142.303  Which size public water systems can receive a small 
system variance?

    (a) A State exercising primary enforcement responsibility for 
public water systems (or the Administrator for other systems) may grant 
a small system variance to public water systems serving 3,300 or fewer 
persons.
    (b) With the approval of the Administrator pursuant to 
Sec. 142.312, a State exercising primary enforcement responsibility for 
public water systems may grant a small system variance to public water 
systems serving more than 3,300 persons but fewer than 10,000 persons.
    (c) In determining the number of persons served by the public water 
system, the State or Administrator must include persons served by 
consecutive systems. A small system variance granted to a public water 
system would also apply to any consecutive system served by it.


Sec. 142.304  For which of the regulatory requirements is a small 
system variance available?

    (a) A small system variance is not available under this subpart for 
a national primary drinking water regulation for a microbial 
contaminant (including a bacterium, virus, or other organism) or an 
indicator or treatment technique for a microbial contaminant.
    (b) A small system variance under this subpart is otherwise only 
available for compliance with a requirement specifying a maximum 
contaminant level or treatment technique for a contaminant with respect 
to which;
    (1) A national primary drinking water regulation was promulgated on 
or after January 1, 1986; and
    (2) The Administrator has published a small system variance 
technology pursuant to Section 1412(b)(15) of the Act.


Sec. 142.305  When can a small system variance be granted by a State?

    No small system variance can be granted by a State until the later 
of the following:
    (a) 90 days after the State proposes to grant the small system 
variance;
    (b) If a State is proposing to grant a small system variance to a 
public water system serving 3,300 or fewer persons and the 
Administrator objects to the small system variance, the date on which 
the State makes the recommended modifications or responds in writing to 
each objection; or
    (c) If a State is proposing to grant a small system variance to a 
public water system serving a population more than 3,300 and fewer than 
10,000 persons, the date the Administrator approves the small system 
variance. The Administrator must approve or disapprove the variance 
within 90 days after it is submitted to the Administrator for review.

Review of Small System Variance Application


Sec. 142.306  What are the responsibilities of the public water system, 
State and the Administrator in ensuring that sufficient information is 
available and for evaluation of a small system variance application?

    (a) A public water system requesting a small system variance must 
ensure that accurate and correct information is available for the State 
or the Administrator to issue a small system variance in accordance 
with this subpart. A State may assist a public water system in 
compiling information required for the State or the Administrator to 
issue a small system variance in accordance with this subpart.
    (b) Based upon an application for a small system variance and other 
information, and before a small system variance may be proposed under 
this subpart, the State or the Administrator must find and document the 
following:
    (1) The public water system is eligible for a small system variance 
pursuant to Secs. 142.303 and 142.304;
    (2) The public water system cannot afford to comply, in accordance 
with the affordability criteria established by the Administrator or the 
State, with the national primary drinking water regulation for which a 
small system variance is sought, including by:
    (i) Treatment;
    (ii) Alternative sources of water supply;
    (iii) Restructuring or consolidation changes, including ownership 
change and/or physical consolidation with another public water system; 
or
    (iv) Obtaining financial assistance pursuant to Section 1452 of the 
Act or any other Federal or State program;
    (3) The public water system meets the source water quality 
requirements for installing the small system variance technology 
developed pursuant to guidance published under Section 1412(b)(15) of 
the Act;
    (4) The public water system is financially and technically capable 
of installing, operating and maintaining the applicable small system 
variance technology; and
    (5) The terms and conditions of the small system variance, as 
developed through compliance with Sec. 142.307, ensure adequate 
protection of human health, considering the following:
    (i) The quality of the source water for the public water system; 
and
    (ii) Removal efficiencies and expected useful life of the small 
system variance technology.


Sec. 142.307  What terms and conditions must be included in a small 
system variance?

    (a) A State or the Administrator must clearly specify enforceable 
terms and conditions of a small system variance.
    (b) The terms and conditions of a small system variance issued 
under this subpart must include, at a minimum, the following 
requirements:
    (1) Proper and effective installation, operation and maintenance of 
the applicable small system variance technology in accordance with 
guidance published by the Administrator pursuant to Section 1412(b)(15) 
of the Act, taking into consideration any relevant source water 
characteristics and any other site-specific conditions that may affect 
proper and effective operation and maintenance of the technology;
    (2) Monitoring requirements, for the contaminant for which a small 
system variance is sought, as specified in 40 CFR Part 141; and
    (3) Any other terms or conditions that are necessary to ensure 
adequate protection of public health, which may include:
    (i) Public education requirements; and
    (ii) Source water protection requirements.
    (c) The State or the Administrator must establish a schedule for 
the public water system to comply with the terms and conditions of the 
small system variance which must include, at a minimum, the following 
requirements:
    (1) Increments of progress, such as milestone dates for the public 
water system to apply for financial assistance and begin capital 
improvements;
    (2) Quarterly reporting to the State or Administrator of the public 
water system's compliance with the terms and conditions of the small 
system variance;
    (3) Schedule for the State or the Administrator to review the small 
system variance under paragraph (d) of this section; and
    (4) Compliance with the terms and conditions of the small system 
variance as soon as practicable but not later than 3 years after the 
date on which the small system variance is granted. The Administrator 
or State may allow up to 2 additional years if the Administrator or 
State determines that additional time is necessary for the public water 
system to:

[[Page 19456]]

    (i) Complete necessary capital improvements to comply with the 
small system variance technology, secure an alternative source of 
water, or restructure or consolidate; or
    (ii) Obtain financial assistance provided pursuant to Section 1452 
of the Act or any other Federal or State program.
    (d) The State or the Administrator must review each small system 
variance granted not less often than every 5 years after the compliance 
date established in the small system variance to determine whether the 
public water system continues to meet the eligibility criteria and 
remains eligible for the small system variance and is complying with 
the terms and conditions of the small system variance. If the public 
water system would no longer be eligible for a small system variance, 
the State or Administrator must determine whether continued adherence 
to the small system variance conditions is in the public interest.

Public Participation


Sec. 142.308  What public notice is required before a State or the 
Administrator proposes to issue a small system variance?

    (a) At least fifteen (15) days before the date of proposal, and at 
least thirty (30) days prior to a public meeting to discuss the 
proposed small system variance, the State or the Administrator must 
provide notice to all consumers of the public water system. This notice 
identified in paragraph (a)(1) of this section must include the 
information listed in paragraph (c) of this section. The notice 
identified in paragraph (a)(2) of this section shall include the 
information identified in paragraph (d) of this section. Notice must be 
provided to such consumers by:
    (1) Direct mail to billed customers; and
    (2) Any other method reasonably calculated to notify, in a brief 
and concise manner, other persons regularly served by the system. Such 
methods may include publication in a local newspaper, posting in public 
places or delivery to community organizations.
    (b) At the time of proposal, the State must publish a notice in the 
State equivalent to the Federal Register or, in the case of the 
Administrator, in the Federal Register. This notice shall include the 
information listed in paragraph (c) of this section.
    (c) The notice in paragraphs (a)(1) and (b) of this section must 
include, at a minimum, the following:
    (1) Identification of the contaminant[s] for which a small system 
variance is sought;
    (2) A brief statement of the health effects associated with the 
contaminant[s] for which a small system variance is sought using 
language in Appendix B of Part 141 Subpart O of this chapter;
    (3) The address and telephone number at which interested persons 
may obtain further information concerning the contaminant and the small 
system variance;
    (4) A brief summary, in easily understandable terms, of the 
compliance options considered by the public water system and of the 
terms and conditions of the small system variance;
    (5) A description of the consumer petition process under 
Sec. 142.310 and information on contacting the EPA Regional Office;
    (6) A brief statement of the purpose of the meeting, information 
regarding the time and location for the meeting, and the address and 
telephone number at which interested persons may obtain further 
information concerning the meeting; and
    (7) In communities with a large portion of non-English speaking 
residents, information in the appropriate language regarding the 
content and importance of the notice.
    (d) The notice in paragraph (a)(2) of this section must provide 
sufficient information to alert readers to the proposed variance and 
direct them where to receive additional information.
    (e) At its option, the State or the Administrator may choose to 
issue separate notices or additional notices related to the proposed 
small system variance, provided that the requirements in paragraphs (a) 
through (d) of this section are satisfied.
    (f) Prior to promulgating the final variance, the State or the 
Administrator must respond in writing to all significant public 
comments received relating to the small system variance. Response to 
public comment and any other documentation supporting the issuance of a 
variance must be made available to the public after final promulgation.


Sec. 142.309  What are the public meeting requirements associated with 
the proposal of a small system variance?

    (a) A State or the Administrator must provide for at least one (1) 
public meeting on the small system variance no later than 15 days after 
the small system variance is proposed.
    (b) The State or Administrator must prepare and make publicly 
available, in addition to the information listed in Sec. 142.308(c), 
either:
    (1) The proposed small system variance, if the public meeting 
occurs after proposal of the small system variance or;
    (2) A draft of the proposed small system variance, if the public 
meeting occurs prior to proposal of the proposed small system variance.
    (c) Notice of the public meeting must be provided in the manner 
required under Sec. 142.308 at least 30 days in advance of the public 
meeting.


Sec. 142.310  How can a person served by the public water system obtain 
EPA review of a State proposed small system variance?

    (a) Any person served by the public water system may petition the 
Administrator to object to the granting of a small system variance 
within 30 days after a State proposes to grant a small system variance 
for a public water system.
    (b) The Administrator must respond to a petition filed by any 
person served by the public water system and determine whether to 
object to the small system variance under Sec. 142.311, no later than 
60 days after the receipt of the petition.

EPA Review and Approval of Small System Variances


Sec. 142.311  What procedures allow the Administrator to object to a 
proposed small system variance or overturn a granted small system 
variance for a public water system serving 3,300 or fewer persons?

    (a) At the time a State proposes to grant a small system variance 
under this subpart, the State must submit to the Administrator the 
proposed small system variance and all supporting information, 
including any written public comments received prior to proposal.
    (b) The Administrator may review and object to any proposed small 
system variance within 90 days of receipt of the proposed small system 
variance. The Administrator must notify the State in writing of each 
basis for the objection and propose a modification to the small system 
variance to resolve the concerns of the Administrator. The State must 
make the recommended modification, respond in writing to each 
objection, or withdraw the proposal to grant the small system variance.
    (c) If the State issues the small system variance without resolving 
the concerns of the Administrator, the Administrator may overturn the 
State decision to grant the variance if the Administrator determines 
that the State decision does not comply with the Act or this subpart.

[[Page 19457]]

Sec. 142.312  What EPA action is necessary when a State proposes to 
grant a small system variance to a public water system serving a 
population of more than 3,300 and fewer than 10,000 persons?

    (a) At the time a State proposes to grant a small system variance 
to a public water system serving a population of more than 3,300 and 
fewer than 10,000 persons, the State must submit the proposed small 
system variance and all supporting information, including public 
comments received prior to proposal, to the Administrator.
    (b) The Administrator must approve or disapprove the small system 
variance within 90 days of receipt of the proposed small system 
variance and supporting information. The Administrator must approve the 
small system variance if it meets each requirement within the Act and 
this subpart.
    (c) If the Administrator disapproves the small system variance, the 
Administrator must notify the State in writing of the reasons for 
disapproval and the small system variance does not become effective. 
The State may resubmit the small system variance for review and 
approval with modifications to address the objections stated by the 
Administrator.


Sec. 142.313  How will the Administrator review a State's program under 
this subpart?

    (a) The Administrator must periodically review each State program 
under this subpart to determine whether small system variances granted 
by the State comply with the requirements of the Act, this subpart and 
the affordability criteria developed by the State.
    (b) If the Administrator determines that small system variances 
granted by a State are not in compliance with the requirements of the 
Act, this subpart or the affordability criteria developed by the State, 
the Administrator shall notify the State in writing of the deficiencies 
and make public the determinations.
    (c) The Administrator's review will be based in part on quarterly 
reports prepared by the States pursuant to Sec. 142.15(a)(1) relating 
to violations of increments of progress or other violated terms or 
conditions of small system variances.

[FR Doc. 98-10393 Filed 4-17-98; 8:45 am]
BILLING CODE 6560-50-P