[Federal Register Volume 66, Number 97 (Friday, May 18, 2001)]
[Notices]
[Pages 27648-27651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-12579]


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ENVIRONMENTAL PROTECTION AGENCY

[FRL-6978-7]


Allocation of Drinking Water State Revolving Fund Monies

AGENCY: Environmental Protection Agency.

ACTION: Notice.

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SUMMARY: The 1996 Safe Drinking Water Act (SDWA) Amendments established 
a Drinking Water State Revolving Fund (DWSRF) program and authorized 
$9.6 billion to be appropriated for the program through fiscal year 
2003. Congress directed that allotments for fiscal year 1998 and 
subsequent years be distributed among States based on the results of 
the most recent Drinking Water Infrastructure Needs Survey.
    In this notice, the Environmental Protection Agency (EPA) is 
releasing a revised allocation for DWSRF monies among States in 
accordance with the results from the most recent Drinking Water 
Infrastructure Needs Survey (i.e., the 1999 Drinking Water 
Infrastructure Survey) which was released on February 28, 2001. This 
revised allocation affects DWSRF program appropriations for fiscal 
years 2002 through 2005.
    Beginning in fiscal year 1998, EPA established a formula which 
allocates funds to the States based directly on each State's 
proportional share of the total State need, provided that each State 
receives a minimum share of one percent of the funds available to the 
States, as required by the SDWA. EPA has made the determination that it 
will continue to use this method for allocating DWSRF funds. The 
findings from the 1999 Needs Survey will change

[[Page 27649]]

the percentage of the DWSRF monies received by some States relative to 
their current allotments. This change reflects an increase or decrease 
in these States' share of the total State need.

DATES: This notice is effective May 18, 2001.

FOR FURTHER INFORMATION CONTACT: For technical inquiries, contact 
Veronica Blette, Drinking Water Protection Division, Office of Ground 
Water and Drinking Water (4606), 1200 Pennsylvania Avenue NW., 
Washington, DC 20460. The telephone number is (202) 260-3980 and email 
address is [email protected]. Copies of this document and 
information on the Drinking Water Needs Survey and the DWSRF program 
can be found on EPA's Office of Ground Water and Drinking Water website 
at http://www.epa.gov/safewater.

SUPPLEMENTARY INFORMATION:

Background

    The 1996 Safe Drinking Water Act (SDWA) Amendments established a 
Drinking Water State Revolving Fund (DWSRF) program and authorized to 
be appropriated $9.6 billion for the program through fiscal year 2003. 
Since 1996, Congress has appropriated $4.4 billion for the DWSRF 
program. Congress directed that allotments for fiscal year 1998 and 
subsequent years be distributed among States based on the results of 
the most recent Drinking Water Infrastructure Needs Survey (SDWA 
section 1452(a)(1)(D)(ii)), which must be conducted every four years. 
The first survey, which reflected 1995 data, was released in February 
1997.
    The 1999 Drinking Water Infrastructure Needs Survey was conducted 
over the last two years with the cooperation of the States. States 
participated in the development of the survey methods, documentation 
requirements, and the Report to Congress, which was released on 
February 28, 2001 (EPA 816-R-01-004). The survey examined the needs of 
approximately 4,300 water systems and used these data to extrapolate 
needs to each State. The survey included all of the nation's 1,111 
largest systems (those serving over 40,000 people) and a statistical 
sample of systems serving fewer than 40,000 people. EPA conducted site 
visits to approximately 600 small community water systems and 100 not-
for-profit noncommunity water systems. The sample design produces a 
statistically valid State-by-State estimate of need.
    The 1999 Needs Survey presents State-by-State needs in several 
ways. For each State, the Needs Survey provides a bottom-line estimate 
of the total need, which reflects the capital costs for all drinking 
water infrastructure projects allowed for inclusion in the Survey. The 
Needs Survey also presents capital needs for each State by system size, 
by category of need (i.e., treatment, distribution and transmission, 
storage, source, and ``other''), by existing SDWA regulation, and by 
current and future need. A current need is a project needed now to 
protect public health, while a future need is a project that will be 
needed over the next 20 years.
    The 1999 Needs Survey found that the total national need is $150.9 
billion (Table 1). This estimate represents the needs of the 
approximately 55,000 community water systems (CWS) and 21,400 not-for-
profit non-community water systems (NCWS) that are eligible to receive 
DWSRF assistance. These systems are found in all 50 States, the 
District of Columbia, Puerto Rico, on American Indian lands and in 
Alaska Native Villages, and the Virgin Island and Pacific Island 
territories.

 Table 1.--1999 Drinking Water Infrastructure Needs Survey 20-Year Needs
------------------------------------------------------------------------
                                                                Need
                       Type of need                          (billions)
------------------------------------------------------------------------
States....................................................        $139.0
Territories...............................................           0.4
American Indian and Alaska Native Villages................           2.2
Costs for Proposed and Recent Regulations.................           9.3
                                                           -------------
  Total National Need.....................................         150.9
------------------------------------------------------------------------

    The total national need also includes $9.3 billion in capital needs 
associated with recently promulgated and future regulations, as 
identified in EPA Economic Analyses accompanying the rules. Although 
these needs are included in the total national need, they were not 
apportioned to the States based upon the unanimous recommendation of 
the State representatives who participated in the survey design. The 
States expressed concern that the methods available for allocating the 
costs of these regulations would not represent the true costs of 
compliance on a State level.
    The total State need, which is the figure that EPA will use to 
calculate the allotment formula, includes only the needs of the 50 
States, the District of Columbia, and Puerto Rico. The 1999 Needs 
Survey estimates that the total State need is $139.0 billion.

Allocation Method

    On October 31, 1996, EPA solicited public comment on six options 
for using the results of the first Drinking Water Infrastructure Needs 
Survey to allocate DWSRF monies to the States (61 FR 56231). On March 
18, 1997, EPA announced its decision to allocate DWSRF monies for 
fiscal years 1998 through 2001 appropriations based on each State's 
proportional share of the total eligible needs for the States as 
derived from the 1995 Needs Survey (62 FR 12900). EPA has made the 
determination that it will continue to use this method for allocating 
DWSRF funds for fiscal years 2002 through 2005 appropriations utilizing 
the results of the 1999 Needs Survey.
    The funds available to the States will be the level of funds 
appropriated by Congress, less the national set-asides, which includes 
an allocation for American Indian and Alaska Native Village water 
systems. Of the funds available to States, the SDWA includes specific 
allocations for the Pacific Islands, the Virgin Islands, and the 
District of Columbia.
    Each State will receive an allotment of DWSRF funds based on each 
State's proportional share of the total State need ($139.0 billion), 
provided that each State receives a minimum allocation of one percent 
of the funds available to States, as required by the SDWA. The total 
need calculated for each State is the survey's bottom-line and the 
simplest way of allocating DWSRF grant funds among States.
    The total State need includes all documented projects collected by 
the Needs Survey. In general, a project was included in the Needs 
Survey if project documentation demonstrated that meeting the need 
would address the public health objectives of the SDWA. The total State 
need includes projects needed now and over the next 20 years in four 
general categories: treatment, source, storage, and transmission and 
distribution. The total State need excludes capital projects that are 
ineligible for DWSRF assistance, such as projects solely for growth and 
dams, and the capital costs associated with recently promulgated and 
future regulations.
    The formula based on the total need makes no distinction between 
the four categories--that is, it assigns an equal weight to all 
categories of need. Also, projects to correct imminent public health 
threats (e.g., replacing a deteriorated filter plant) are given the 
same weight as less critical needs (e.g., replacing a storage tank that 
is expected

[[Page 27650]]

to reach the end of its useful life in five years).

Consideration of Alternative Allocation Methods

    The method that EPA uses to allocate funds to States is based on 
each State's share of the total State need. Several States have 
explicit restrictions against providing funding to privately-owned 
enterprises. Such restrictions may be the result of statutory or 
constitutional provisions at the State level or may be due to policy 
decisions made by the State program. The constitution or statutes of 17 
States prohibit the provision of DWSRF monies to privately owned 
systems.
    EPA had been asked by some stakeholders to consider changes to the 
allotment method to account for restrictions in some States that limit 
the provision of DWSRF assistance to publicly owned water systems. 
These stakeholders expressed the opinion that the allocation for these 
States should only consider the total need associated with publicly 
owned water systems that are eligible to receive DWSRF monies. They 
proposed that capital needs associated with privately owned water 
systems (determined thorough inventory information) be deducted from 
these States's total need estimates, although, as required by the SDWA, 
each State (even those States restricting privately-owned water systems 
from funding) would receive at least one percent of the funds available 
to States. Stakeholders felt that basing the allotment formula on 
whether States restrict DWSRF funding would ensure that States receive 
an allotment directly in proportion to their total needs eligible for 
assistance from the State.
    EPA has reviewed the statutory language authorizing the program and 
determined that State DWSRF allotments should be based on the needs 
reported in the most recent needs survey which must assess ``capital 
improvement needs of all eligible public water systems''. The total 
State need collected through the survey represents the needs associated 
with publicly and privately-owned community water systems and non-
profit noncommunity water systems, therefore these needs must be 
included in determining the allotment of funds.
    It is important to note that in reviewing the issue, EPA found that 
some States with explicit restrictions are working to make changes to 
legislation or are working to identify alternative methods of assisting 
privately-owned systems. Some States are working to develop funding 
mechanisms which would enable them to provide DWSRF assistance to these 
water systems. Other States are using set-aside funds to provide 
technical assistance or are helping privately-owned systems obtain 
assistance from other State or Federal sources. EPA also found that 
some States that had the authority to provide assistance to privately-
owned utilities had not done so. It is likely that any attempt to 
remedy inequities through the allotment method would itself be 
inequitable.
    Although we are not making changes to the allotment formula, the 
Agency will continue to monitor States with respect to their decisions 
to fund privately-owned systems to ensure that the program maximizes 
benefits to public health. The Agency will also continue to work to 
assist States in working with privately-owned systems by providing 
financial management training on the mechanics of applicant credit 
evaluation and facilitating the dissemination of information between 
States.

Allocation of Monies

    Table 2 contains each State's expected DWSRF allotment based on an 
appropriation of $823,185,000 and national set-aside assumptions. The 
appropriation amount is based on the President's budget request of 
$823,185,000 for fiscal year 2002. The national set-asides for fiscal 
year 2002 include funds for American Indian and Alaska Native Village 
water systems at the level of 1.5 percent of the total appropriation. 
(SDWA Section 1452(i)). This comes to $12,374,700 for Indian Tribes and 
Alaska Native Villages. Additional national set-asides for fiscal year 
2002 include $2,000,000 for monitoring for unregulated contaminants and 
$30,000,000 for operator certification expense reimbursement grants. If 
funds are appropriated for the DWSRF at the level of $823,185,000 
million and if the anticipated national set-asides do not change, the 
total funds available to the States, the District of Columbia and 
Territories would equal $778,837,300. Because the percentages are based 
on the total funds available for allotment to the States, they can be 
used for general planning purposes for future years. Once the 
appropriated amount and national set-asides are known, a State's 
allotment can be estimated by subtracting the national set-asides from 
the total funds available for allotment and then applying the 
appropriate percentage shown below. EPA will annually notify each State 
of their allotment from a specific fiscal year's appropriation after 
the final budget has been passed.
    The findings from the 1999 Needs Survey will change the percentage 
of the DWSRF monies received by some States when compared to their 
current percentages. This change reflects an increase or decrease in 
these States' share of the total State need. The variation in these 
States' needs occurred principally as a result of the data submitted by 
individual water systems, but also in part due to refinements in the 
survey methods. With the collection of data from nearly 4,300 water 
systems and over 80,000 projects submitted, a change in some States' 
allotments represents an inevitable consequence of conducting a survey 
of this scale.

Table 2.--Distribution of Drinking Water State Revolving Fund Allotments
------------------------------------------------------------------------
                                                              Amount
                    State                       Percent      allotted
------------------------------------------------------------------------
Alabama.....................................        1.00      $7,788,400
Alaska......................................        1.00       7,788,400
Arizona.....................................        1.13       8,826,900
Arkansas....................................        1.08       8,431,800
California..................................       10.24      79,756,000
Colorado....................................        1.65      12,886,000
Connecticut.................................        1.00       7,788,400
Delaware....................................        1.00       7,788,400
Florida.....................................        2.34      18,223,300
Georgia.....................................        1.58      12,331,600
Hawaii......................................        1.00       7,788,400
Idaho.......................................        1.00       7,788,400
Illinois....................................        3.73      29,064,700
Indiana.....................................        1.17       9,144,900
Iowa........................................        1.84      14,299,600
Kansas......................................        1.15       8,931,800
Kentucky....................................        1.22       9,483,500
Louisiana...................................        1.00       7,788,400
Maine.......................................        1.00       7,788,400
Maryland....................................        1.16       9,044,200
Massachusetts...............................        3.58      27,843,600
Michigan....................................        4.10      31,920,400
Minnesota...................................        1.98      15,429,600
Mississippi.................................        1.00       7,788,400
Missouri....................................        1.45      11,318,800
Montana.....................................        1.00       7,788,400
Nebraska....................................        1.00       7,788,400
Nevada......................................        1.00       7,788,400
New Hampshire...............................        1.00       7,788,400
New Jersey..................................        2.30      17,930,500
New Mexico..................................        1.00       7,788,400
New York....................................        7.75      60,382,900
North Carolina..............................        1.76      13,676,100
North Dakota................................        1.00       7,788,400
Ohio........................................        3.05      23,742,400
Oklahoma....................................        1.55      12,038,200
Oregon......................................        1.76      13,684,800
Pennsylvania................................        3.22      25,080,100
Puerto Rico.................................        1.33      10,388,900
Rhode Island................................        1.00       7,788,400
South Carolina..............................        1.00       7,788,400
South Dakota................................        1.00       7,788,400
Tennessee...................................        1.01       7,877,800
Texas.......................................        7.70      59,989,300
Utah........................................        1.00       7,788,400
Vermont.....................................        1.00       7,788,400
Virginia....................................        1.38      10,762,600
Washington..................................        2.47      19,220,200

[[Page 27651]]

 
West Virginia...............................        1.00       7,788,400
Wisconsin...................................        1.98      15,423,400
Wyoming.....................................        1.00       7,788,400
District of Columbia........................        1.00       7,788,400
Territories.................................        0.33       2,570,200
                                             ---------------------------
  Total.....................................      100.00     778,837,200
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    Dated: May 4, 2001.
Diane C. Regas,
Acting Assistant Administrator, Office of Water
[FR Doc. 01-12579 Filed 5-17-01; 8:45 am]
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