[Federal Register Volume 89, Number 105 (Thursday, May 30, 2024)]
[Proposed Rules]
[Pages 46998-47026]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-11687]



[[Page 46997]]

Vol. 89

Thursday,

No. 105

May 30, 2024

Part II





Environmental Protection Agency





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40 CFR Part 142





Water System Restructuring Assessment Rule; Proposed Rule

  Federal Register / Vol. 89 , No. 105 / Thursday, May 30, 2024 / 
Proposed Rules  

[[Page 46998]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 142

[EPA-HQ-OW-2022-0678; FRL 7487-02-OW]
RIN 2040-AF96


Water System Restructuring Assessment Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The U.S. Environmental Protection Agency (EPA or the agency) 
is proposing a regulatory framework for states and public water systems 
(PWSs) to identify and assess restructuring alternatives to ensure that 
every community receives safe, affordable, and reliable drinking water. 
The proposed regulations would: establish a new mandatory restructuring 
assessment authority for states; require states with primary 
enforcement authority (primacy) to develop mandatory restructuring 
assessment programs and submit primacy revisions for EPA review and 
approval; establish requirements for states and PWSs that implement 
system-specific mandatory restructuring assessments; and establish 
eligibility requirements and limitations for restructuring incentives 
under state-approved restructuring plans. This proposed rulemaking is 
required under amendments to the Safe Drinking Water Act (SDWA). By 
taking this action, the EPA intends to strengthen the ongoing efforts 
of states and PWSs to protect public health.

DATES: Comments must be received on or before July 29, 2024. Under the 
Paperwork Reduction Act (PRA), comments on the information collection 
provisions are best assured of consideration if the Office of 
Management and Budget (OMB) receives a copy of your comments on or 
before July 1, 2024.

ADDRESSES: You may send comments, identified by Docket ID No. EPA-HQ-
OW-2022-0678, by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov 
(our preferred method). Follow the online instructions for submitting 
comments.
     Email: [email protected]. Include Docket ID No. EPA-HQ-OW-
2022-0678 in the subject line of the message.
     Mail: U.S. Environmental Protection Agency, EPA Docket 
Center, Office of Water Docket, Mail Code 28221T, 1200 Pennsylvania 
Avenue NW, Washington, DC 20460.
     Hand Delivery/Courier (by scheduled appointment only): EPA 
Docket Center, WJC West Building, Room 3334, 1301 Constitution Avenue 
NW, Washington, DC 20004. The Docket Center's hours of operations are 
8:30 a.m. to 4:30 p.m., Monday through Friday (except Federal 
Holidays).
    Instructions: All submissions received must include the Docket ID 
No. for this rulemaking. Comments received may be posted without change 
to https://www.regulations.gov, including any personal information 
provided. For detailed instructions on sending comments and additional 
information on the rulemaking process, see the ``Public Participation'' 
heading of the SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Will Bowman, Drinking Water Capacity & 
Compliance Assistance Division, Office of Ground Water and Drinking 
Water (MC-4606M) Environmental Protection Agency, 1200 Pennsylvania 
Avenue NW, Washington, DC 20460; telephone number: (202) 564-3782; 
email address: [email protected].

SUPPLEMENTARY INFORMATION: 
    Preamble acronyms and abbreviations. Throughout this document the 
use of ``we,'' ``us,'' or ``our'' is intended to refer to EPA. We use 
acronyms in this preamble. For reference purposes, EPA defines the 
following acronyms here:

AMWA Association of Metropolitan Water Agencies
ASDWA Association of State Drinking Water Administrators
AWWA American Water Works Association
CBI Confidential Business Information
CFR Code of Federal Regulations
DWSRF Drinking Water State Revolving Fund
E.O. Executive Order
EPA United States Environmental Protection Agency
FR Federal Register
ICR Information Collection Request
NPDWR National Primary Drinking Water Regulations
NRWA National Rural Water Association
OMB Office of Management and Budget
PRA Paperwork Reduction Act
PWS Public Water System
PWSS Public Water System Supervision
RCAP Rural Community Assistance Partnership
RFA Regulatory Flexibility Act
RTCR Revised Total Coliform Rule
SBREFA Small Business Regulatory Enforcement Fairness Act
SDWA Safe Drinking Water Act
SDWIS Safe Drinking Water Information System
TMF Technical, Managerial and Financial
UMRA Unfunded Mandates Reform Act
U.S.C. United States Code
WSRAR Water System Restructuring Assessment Rule

Table of Contents

I. Public Participation
II. General Information
    A. Applicability of This Action
    B. Summary of Proposed Action
    C. Agency Authority for This Action
    D. Incremental Costs and Benefits of This Action
    E. Stakeholder Engagement
III. Background
    A. Purpose of the Proposed Rule
    B. Scope of the Proposed Rule
    C. Guiding Principles for Water System Restructuring
IV. Proposed Water System Restructuring Assessment Rule
    A. General
    B. Definitions
    C. Mandatory Restructuring Assessments
    D. Restructuring Plans
    E. Enforcement Relief Under Approved Restructuring Plans
    F. Protection of Non-Responsible Water Systems Under Approved 
Restructuring Plans
    G. Financial Assistance for Restructuring Activities
    H. Violations
    I. Effective Date
V. State Implementation
    A. Revisions to Primacy Requirements
    B. State Reporting and Recordkeeping Requirements
VI. Economic Impact Analysis
    A. Annualized and Present Value Cost Estimates
    B. Accounting for Uncertainty in the Cost Estimates
    C. Non-Quantified Benefits of the Proposed WSRAR
VII. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review, as 
Amended by Executive Order 14094: Modernizing Regulatory Review
    B. Paperwork Reduction Act (PRA)
    C. Regulatory Flexibility Act (RFA)
    D. Unfunded Mandates Reform Act (UMRA)
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution or Use
    I. National Technology Transfer and Advancement Act (NTTAA)
    J. Executive Order 12988: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations and Executive Order 14096: Revitalizing Our Nation's 
Commitment to Environmental Justice for All
VIII. References

I. Public Participation

A. Written Comments

    Submit your comments, identified by Docket ID No. EPA-HQ-OW-2022-
0678 at https://www.regulations.gov (our

[[Page 46999]]

preferred method), or the other methods identified in the ADDRESSES 
section of this document. Once submitted, comments cannot be edited or 
removed from the docket. The EPA may publish any comment received to 
its public docket. Do not submit electronically any information you 
consider to be Confidential Business Information (CBI) or other 
information whose disclosure is restricted by statute. Multimedia 
submissions (audio, video, etc.) must be accompanied by a written 
comment. The written comment is considered the official comment and 
should include discussion of all points you wish to make. The EPA 
generally will not consider comments or comment contents located 
outside of the primary submission (i.e., on the web, cloud, or other 
file sharing system). Please visit https://www.epa.gov/dockets/commenting-epa-dockets for additional submission methods, the full EPA 
public comment policy, information about CBI or multimedia submissions, 
and general guidance on making effective comments.

II. General Information

A. Applicability of This Action

    This proposed rulemaking would apply to all states with primary 
enforcement responsibility, to a PWS that is the subject of a mandatory 
restructuring assessment where the state has mandated such assessment, 
and to a PWS that submits a restructuring plan to the state for 
purposes of enforcement relief or liability protection. Consistent with 
the SDWA, a PWS is subject to a mandatory assessment if the state finds 
that: (1) the PWS has repeatedly violated one or more National Primary 
Drinking Water Regulations (NPDWRs) and such violations are likely to 
adversely affect human health; (2) the PWS is unable or unwilling to 
implement restructuring activities, or already has attempted to 
implement such activities but has not achieved compliance; (3) 
restructuring of the PWS, including a form of consolidation or a 
transfer of ownership, is feasible; and (4) restructuring of the PWS 
could result in greater compliance with drinking water standards. 
Although the mandatory assessment requirements would not apply to a PWS 
that does not meet these four SDWA criteria, such PWSs may develop and 
submit restructuring plans eligible for restructuring incentives. This 
description of the applicability of this proposed regulation is not 
intended to be exhaustive, but rather provides a guide for readers 
regarding entities intended to be regulated by this action. To 
determine whether a particular entity or state would be regulated by 
this action, the reader should carefully examine the definitions of 
``primary enforcement responsibility,'' ``public water system'' or 
``PWS,'' ``supplier of water,'' and ``state'' found in the Code of 
Federal Regulations (CFR) at 40 CFR 142.2 entitled ``Definitions'' and 
in 40 CFR 142.3 entitled ``Scope.'' The reader also should review the 
paragraph entitled ``Applicability'' in the proposed 40 CFR 142.90 of 
this document. For any questions regarding the applicability of this 
action to a particular entity, the reader should consult the person 
listed in the FOR FURTHER INFORMATION CONTACT section of this document.

B. Summary of Proposed Action

    The proposed Water System Restructuring Assessment Rule (WSRAR) 
would create a framework for states and PWSs to evaluate and implement 
restructuring alternatives for systems in chronic noncompliance. 
Assessments may identify a broad array of alternatives that may include 
sharing resources (e.g., operators or equipment), debt restructuring, 
operational changes, upgrades, or replacement of components of water 
system infrastructure (treatment technology, transmission, 
distribution, or storage), interconnection with another PWS, 
consolidation, or transfer of ownership to achieve the capacity to 
provide safe drinking water. Restructuring alternatives for an assessed 
water system depend on system-specific physical and socio-economic 
factors (Green, et al. 2018). Therefore, the proposed rule would 
provide states the authority to mandate assessments and to approve 
restructuring plans eligible for incentives but would not limit the 
restructuring alternatives that the assessment could identify.
    In some cases, consolidation or transfer of ownership could be the 
most feasible alternative to ensure a community receives safe drinking 
water in a sustainable manner, particularly if a PWS already has 
attempted to build technical or managerial capacity, to invest in 
infrastructure improvements, or to implement other restructuring 
actions, yet public health remains at risk due to persistent 
noncompliance with drinking water standards. For example, consolidation 
can reduce costs per household by spreading the cost of service across 
a larger customer base (US Water Alliance and UNC Environmental Finance 
Center 2019). As described in section IV of this preamble, the proposed 
rule distinguishes consolidation from privatization, which can occur 
under a transfer of PWS ownership from a public entity to a private 
entity. A common form of consolidation by small water utilities is 
referred to as regionalization, in which neighboring water utilities 
facing similar challenges choose to consolidate administratively or 
physically. The EPA recognizes that forms of consolidation or transfers 
of ownership, particularly those that would result in privatization, 
might raise community concerns. These concerns include affordable water 
rates, the need for transparency and community involvement in decision 
making, and ensuring accountability for utility management and 
operations (Zhang, et. al, 2022). A recently published case study on 
privatization provides an example that highlights these concerns. The 
case study found that, due to lack of consumer protections and utility 
mismanagement under private control, residents and community organizers 
demanded public ownership and management of the water system, more 
equitable water rates, and greater accountability and transparency in 
governance (Rivas and Schroering, 2021). To address these concerns, the 
proposed rule would establish several ``tailoring'' requirements to 
ensure that the assessment identifies feasible restructuring 
alternatives based on the physical and socio-economic characteristics 
of the water system, which can limit its capacity to restructure 
without technical and financial assistance. These characteristics 
include not only those cited in the SDWA (population served, water 
system type), but also the following: source water type; the technical, 
managerial, and financial (TMF) capacity of the water system; whether 
the community it serves is disadvantaged or underserved; as well as 
other characteristics. In addition, the proposed rule would require the 
mandatory assessment to describe how restructuring would ensure that 
the service community would sustainably receive safe, affordable 
drinking water. To ensure that the local community can raise concerns, 
ask questions, and provide input to the state and to the water utility, 
the proposed rule also would require the state to hold a public meeting 
before approving either a mandatory assessment or a restructuring plan 
that would result in consolidation or transfer of ownership. Finally, 
the proposed rule would require the state to make electronic and 
physical copies of state-approved assessment reports or restructuring 
plans available to the public. In addition to the assessment

[[Page 47000]]

report, the EPA strongly encourages states to make publicly available a 
written summary of its responses to comments received during the public 
meeting. Section III.C of this preamble describes guiding principles of 
water system restructuring to help states, drinking water utilities, 
and local communities navigate the challenges of identifying feasible 
alternatives to ensure safe drinking water.
    The SDWA also establishes enforcement relief and liability 
protection incentives for state-approved restructuring plans. The 
enforcement relief incentive would prohibit enforcement action for up 
to two years for specific violations identified in the plan. The 
liability protection incentive would protect a compliant water system 
from liability for violations at an assessed water system until it has 
acquired an assessed water system through transfer of ownership or has 
completed physical or administrative consolidation with the assessed 
water system. The SDWA limits these incentives to plans for managerial 
or physical consolidation, transfer of ownership, or contracts for 
managing or administering the water system to resolve violations. As 
described in sections IV.E and IV.F of this preamble, the proposed rule 
also would establish additional eligibility requirements and 
limitations for both incentives, which would apply only to violations 
that the PWS identified in a state-approved plan.
    Finally, the proposed rule would revise existing primacy 
regulations to require states to develop programs with the authority to 
mandate restructuring assessments and to review and approve 
restructuring plans. To obtain this authority, states would submit 
primacy revision applications for the EPA's approval. To assist the 
agency with oversight of state mandatory assessment programs, the 
revised primacy regulations would establish new reporting and 
recordkeeping requirements for states.

C. Agency Authority for This Action

    The EPA proposes this regulation as mandated by SDWA section 
1414(h)(6), 42 U.S.C. 300g-3(h)(6) and pursuant to SDWA sections 1413, 
42 U.S.C. 300(g)-2 and 1450(a), 42 U.S.C. 300j-9.

D. Incremental Costs and Benefits of This Action

    The proposed rule, if finalized, would impose direct costs on 
states that are required under the SDWA to establish mandatory 
assessment programs, and, when a state mandates an assessment, would 
impose indirect costs on both states and assessed PWSs to ensure that 
the proposed assessment requirements are satisfied. The EPA estimated 
that the annualized direct costs to states of implementing the 
requirements of this proposed WSRAR, if finalized, would be within $0.8 
million to $1.0 million at a 2 percent discount rate. The estimated 
benefits of this proposed rulemaking would be reduced risks to public 
health at assessed water systems that return to compliance through 
restructuring, and reduced enforcement costs for states.

E. Stakeholder Engagement

    In 2019, the EPA met with the Association of State Drinking Water 
Administrators (ASDWA) on the restructuring-related amendments to SDWA 
sections 1413 and 1414(h). The purpose of the consultations was to 
determine how the EPA should communicate with states regarding each set 
of amendments and their implications for states, especially the 
mandatory primacy revisions. Following these initial conversations, in 
August 2019, the EPA participated in a national webinar on water system 
consolidation hosted by ASDWA. During the webinar, the EPA presented a 
detailed summary of the America's Water Infrastructure Act (AWIA) 
amendments to SDWA sections 1413 and 1414(h), described several policy 
issues that the agency might consider as part of WSRAR development, and 
explained the likely effects of the amendments on state programs.
    Consistent with Paperwork Reduction Act (PRA) requirements, 
following the national webinar, from September through November 2019, 
the EPA conducted telephone interviews with drinking water program 
staff and managers in the States of California, Connecticut, Indiana, 
Nebraska, Nevada, Pennsylvania, Virginia, and Washington. The EPA 
selected these eight states as representative of state Public Water 
System Supervision (PWSS) programs based on total population served, 
sizes of PWS inventory, geographic region, and features of their 
capacity development programs as documented in the EPA's 2017 
compendium of state partnership programs (EPA 2017). The interviews 
allowed the EPA to develop a clearer understanding of states' 
perspectives on how these new SDWA primacy requirements and the 
proposed mandatory assessment authority could affect their PWSS 
programs. In addition, the interviews helped the EPA understand how 
these states currently conduct four types of water system assessments: 
sanitary surveys; Revised Total Coliform Rule (RTCR) Level 1 and 2 
assessments; technical, managerial, and financial (TMF) capacity 
assessments; and feasibility studies. Collectively, these four types of 
assessment, which include the identification of system vulnerabilities, 
evaluations of water system performance, or financial capacity 
assessments, are closely related to the proposed elements of mandatory 
restructuring assessments under the WSRAR. As a result of the state 
interviews, the EPA obtained, for each of the assessment types, state 
costs of establishing an assessment program, including training staff, 
developing training materials for water systems, preparing databases, 
and conducting assessment activities. The interviews also yielded data 
from each state that the EPA used to calculate the cost estimates for 
the proposed WSRAR discussed in section VI of this preamble.
    In 2019 and 2020, the EPA conducted webinars and held informational 
meetings with national associations that represent large and small 
drinking water utilities, or that provide direct technical assistance 
to PWSs, to discuss water system partnerships, including forms of 
consolidation, transfers of ownership, and other types of 
restructuring. These organizations included: The Rural Community 
Assistance Partnership (RCAP), the Rural Community Assistance 
Corporation (RCAC), the Association of Metropolitan Water Agencies 
(AMWA), the National Rural Water Association (NRWA), and the American 
Water Works Association (AWWA). During these meetings, the EPA provided 
stakeholders with an overview of the AWIA amendments to SDWA sections 
1413 and 1414(h), and described potential provisions of interest, 
including those that require the EPA to establish implementing 
regulations in the WSRAR. For large water utilities, the discussion 
centered on the statutory requirements for liability protection as an 
incentive to consolidate with assessed water systems. Small water 
utilities focused on the SDWA tailoring provision that requires 
assessment of restructuring options to be based on the characteristics 
of each water system, and on enforcement relief as a restructuring 
incentive. The EPA outlined these SDWA requirements to ensure that 
stakeholders were aware of how these provisions might affect them. 
During these discussions, utility stakeholders also identified 
restructuring barriers and incentives and provided case studies for the 
EPA to consider when developing the proposed WSRAR. This feedback 
informed our rulemaking process. The

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EPA is requesting public comment on the resulting tailoring and 
liability provisions.
    In October 2022, the EPA conducted an informational meeting with 
the Natural Resources Defense Council (NRDC) and community-based 
organizations from Michigan and California. The meeting provided the 
agency an opportunity to listen to concerns about: the importance of 
community involvement in restructuring decisions; community impacts 
when restructuring alternatives are evaluated and implemented; and the 
potential impacts of consolidation or transfer of ownership on 
community access to safe, affordable drinking water. Of particular 
concern were the potential impacts of water system privatization that 
could result in unaffordable water rate increases or water shut offs, 
particularly in disadvantaged or underserved communities. This feedback 
also informed the agency's rulemaking process.

III. Background

A. Purpose of the Proposed Rule

    Congress has long been concerned about PWSs that struggle to comply 
with drinking water standards, particularly small PWSs.\1\ In 1996, 
Congress added section 1414(h) to the SDWA. This provision allows a 
water system to receive enforcement relief if a state approves a 
restructuring plan for consolidation or ownership transfer. In 2018, 
Congress added section 1414(h)(3) to authorize a state or the EPA to 
require a PWS in chronic noncompliance (among other factors) to perform 
an assessment of restructuring alternatives that are expected to help 
the PWS achieve compliance. Congress also added section 1414(h)(5) to 
provide liability protection for a ``non-responsible'' PWS that 
consolidates with, or acquires, an assessed water system. In section 
1414(h)(6), Congress mandated that the EPA promulgate regulations to 
implement these new SDWA 1414(h) provisions. This rule would, 
consistent with SDWA mandates in sections 1413 and 1414(h), enable 
states and PWSs to identify and to implement feasible water system 
restructuring alternatives, including consolidation or transfer of 
ownership, that support compliance with drinking water standards and 
help ensure communities receive safe, affordable drinking water. Under 
the proposed rulemaking, a PWS could be subject to a mandatory 
restructuring assessment if the state were to find that: (1) the PWS 
has repeatedly violated one or more NPDWRs and such violations are 
likely to adversely affect human health; (2) the PWS is unable or 
unwilling to take feasible and affordable restructuring actions, or 
already has attempted such actions without achieving compliance with 
NPDWRs; (3) restructuring, including a form of consolidation or a 
transfer of ownership, is feasible; and (4) restructuring of the PWS 
could result in greater compliance with drinking water standards. A PWS 
that meets these four criteria has consistently failed to demonstrate 
it has the capacity to comply with drinking water standards that are 
established to protect public health. As a result, the proposed WSRAR, 
if finalized, would establish a regulatory framework and requirements 
for states and PWSs to conduct water system-specific assessments to 
identify feasible restructuring options for such PWSs, and to implement 
SDWA incentives for PWSs to develop and implement restructuring plans 
that can increase sustainable access to safe, affordable drinking 
water. These incentives include enforcement relief for a persistently 
noncompliant water system that restructures, and liability protection 
for a non-responsible water system from any violations committed by an 
assessed water system. By establishing enforcement relief and liability 
protection incentives, the SDWA encourages an assessed water system to 
consider forms of consolidation or transfer of ownership as permanent, 
long-term solutions to noncompliance. Therefore, if consolidation or 
transformation of ownership were determined to be infeasible, the 
proposed rule would require the mandatory assessment to include an 
explanation of how consolidation or transfer of ownership is infeasible 
for the assessed PWS.
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    \1\ See e.g., House Report 104-632 (104th Cong. 2d Sess.) at 9-
10 for discussion of small system noncompliance in report 
accompanying the 1996 SDWA amendments.
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B. Scope of the Proposed Rule

    There are three regulatory components of the proposed rule: (1) 
requirements for state primacy revisions to establish a mandatory 
assessment program with the authority to mandate assessments and to 
approve assessors; (2) requirements for mandatory assessments to 
evaluate restructuring alternatives based on water system 
characteristics, content requirements for assessment reports, and an 
assessment schedule that includes holding a public meeting prior to 
state approval of an assessment that identifies ownership transfer or 
consolidation as a feasible restructuring option; and, (3) requirements 
for restructuring plans, including content requirements to determine 
eligibility for enforcement relief or liability protection, and public 
meeting requirements. These regulatory components are based on the 
America's Water Infrastructure Act of 2018 (AWIA) amendments to SDWA 
sections 1413 (Primary Enforcement Responsibility) and 1414(h) 
(Consolidation Incentive). Through this action, the EPA proposes 
implementing regulations for both the section 1413 amendments that 
modify 40 CFR part 142 subpart B and the section 1414(h) amendments 
under new 40 CFR part 142 subpart J. The proposed WSRAR would give 
states the authority, as part of their approved SDWA primacy programs, 
to mandate restructuring assessments and to approve restructuring plans 
eligible for enforcement relief or liability protection. The 
implementing framework for the three regulatory components, and the 
guiding principles of water system restructuring, are summarized in the 
following section.
1. State Primacy Revisions
    SDWA section 1413 describes requirements for states with primary 
enforcement responsibility (primacy). The proposed revisions would 
require states to establish procedures to identify and notify PWSs that 
meet the statutory preconditions for a mandatory assessment; review and 
approve eligible assessors; review and approve mandatory assessments; 
review restructuring plans to determine water system eligibility for 
enforcement relief or liability protection; and enforce mandatory 
assessment requirements. The WSRAR would establish implementing 
regulations for these new primacy requirements under revised 40 CFR 
142.10 and 142.11. To support the EPA's oversight of state mandatory 
assessment programs, the proposed WSRAR would establish new reporting 
and recordkeeping requirements, codified under revised 40 CFR 142.14 
and 142.15.
2. Mandatory Restructuring Assessments
    The primary objective of a mandatory restructuring assessment under 
SDWA section 1414(h) is to identify feasible restructuring activities 
expected to help the assessed water system comply with NPDWRs. 
Consistent with the SDWA, the proposed rule requires a state to find 
that a PWS meets the following conditions before mandating an 
assessment: the PWS has repeatedly violated NPDWRs; the PWS is 
unwilling or unable to implement feasible and affordable restructuring 
activities to comply, or already has attempted to take

[[Page 47002]]

such actions but not achieved compliance; that restructuring at the PWS 
is feasible; and that restructuring could result in greater compliance. 
Then the EPA, a state, the assessed water system or a state-approved 
third party could perform the mandatory assessment. Given the 
knowledge, expertise, and resources required, the EPA expects that 
states, or third-party assessors on behalf of states, would perform 
most mandatory assessments.
    A mandatory restructuring assessment process would include:
    a. Notifying the public water system that it is the subject of a 
mandatory restructuring assessment;
    b. Performing an evaluation to identify feasible restructuring 
alternatives for a water system based on its geographical, managerial, 
financial, socio-economic, and physical characteristics;
    c. Preparing an assessment report that: identifies the unresolved 
violations at the assessed PWS and their underlying causes; identifies 
at least one feasible alternative to return the PWS to compliance while 
ensuring its long-term TMF capacity based on its socio-economic, 
physical and other characteristics; describes how feasible alternatives 
were identified, including an explanation if consolidation or ownership 
transfer are infeasible, based on documented procedures, data and data 
sources; and, describes how any alternative would ensure that the 
community achieves access to safe, affordable drinking water;
    d. Holding a public meeting with community leaders, e.g., mayors, 
town council members, community activists, and residents served by the 
PWS, to share the assessment results if the report identified a form of 
consolidation or transfer of ownership as a feasible alternative, and 
to provide an opportunity for community input and dialogue with the 
state and the assessed PWS;
    e. Making physical and electronic copies of the assessment report 
publicly available; and,
    f. Consulting with the assessed PWS and community leaders during 
the assessment and any next steps, which might include applying for 
Federal or state funding to voluntarily carry out restructuring 
activities that the PWS and community decide to implement.
3. Restructuring Plans and Eligibility Requirements for Incentives
    SDWA section 1414(h) establishes enforcement relief and liability 
protection incentives for struggling water systems to restructure. 
Under SDWA section 1414(h)(2), if a state approves a restructuring plan 
for administrative or managerial consolidation, physical consolidation, 
or transfer of ownership, then for a period of no more than two years 
from the date of state approval, the PWS that submitted the plan would 
be eligible for enforcement relief (as discussed further in section IV 
of this preamble). During this enforcement relief period, the state 
could not take further enforcement action for a specific violation 
identified in the approved plan, although the PWS that received 
enforcement relief would remain subject to existing enforcement orders 
to ensure it takes short-term corrective actions to protect public 
health.
    Under SDWA section 1414(h)(5), a non-responsible PWS that either 
has assumed ownership of, or has completed administrative or physical 
consolidation with, an assessed PWS would not be liable for the 
specific violations identified in the plan. However, the non-
responsible PWS must use any liquid assets of the assessed PWS to pay 
any outstanding fines or penalties for those violations. The proposed 
rule clarifies that a non-responsible PWS would not be liable for 
violations not identified in the approved plan, such as those that 
occur during restructuring, until the non-responsible system became the 
owner of the restructured water system. As described in more detail in 
section IV of this preamble, under the proposed rule a state may 
determine eligibility for either enforcement relief or liability 
protection, or for both incentives under the same restructuring plan. 
The proposed WSRAR also would establish implementing regulations for 
this statutory provision, with clarifications regarding eligibility 
requirements, as described in section IV of this preamble.

C. Guiding Principles for Water System Restructuring

    The proposed WSRAR, if finalized, would establish implementing 
regulations for statutory provisions that give states the authority to 
mandate restructuring assessments and to approve restructuring plans 
that are eligible for enforcement relief or liability protection. These 
new authorities complement other Federal and state programs and 
policies that are collectively intended to increase sustainable access 
to safe and affordable drinking water supplies in all communities 
served by PWSs. To achieve these goals, in addition to regulatory 
requirements, the EPA proposes three guiding principles of 
restructuring to help ensure that mandatory assessments and 
restructuring plans are the result of collaborative efforts between 
states, local authorities, water utilities and community leaders (US 
Water Alliance 2022; 2019a, 2019b). These guiding principles are 
applicable not only to assessed water systems, but also to compliant 
water systems that are considering restructuring to ensure a 
sustainable capacity to provide access to safe, affordable drinking 
water.
1. Evaluate Restructuring Alternatives Based on the Needs of the 
Community
    States should consider restructuring alternatives that take into 
consideration community culture, needs and interests to ensure that the 
planned restructuring leads to access to safe, affordable drinking 
water for all consumers served by the PWS. This principle is consistent 
with the EPA's Water Technical Assistance (WaterTA) initiative, which 
focuses directly on the status and needs of recipients and on 
developing locally driven approaches to identifying and implementing 
public health solutions to ensure equitable access to water 
infrastructure funding (EPA Office of Water 2023). For example, when a 
large water utility consolidates with a smaller utility that serves a 
disadvantaged community, the restructuring could result in less 
affordable drinking water. As a result, the proposed WSRAR would 
require any identified restructuring alternative, including 
consolidation, to describe how it will ensure that the community served 
by the assessed PWS will achieve access to safe, affordable drinking 
water. Feasible alternatives for PWSs struggling with long-term 
compliance challenges should reflect the socio-economic conditions of 
the communities they serve, including disadvantaged or underserved 
status, or other barriers to water equity such as historical 
disinvestment in water infrastructure. Therefore, when identifying 
solutions for a restructuring water system, the assessor must consider 
not only geographical and technical factors, but also water 
affordability and socio-economic conditions of the community. States 
should proactively engage with local governments and community leaders 
that would be affected by restructuring to fully understand the range 
of technical, managerial, financial, and socio-economic factors that 
create long-term compliance challenges. Public water systems that might 
have attempted to restructure but remain persistently noncompliant have 
demonstrated they do not have the sustainable capacity to provide safe, 
affordable drinking water. To address the significant public health 
risks to the

[[Page 47003]]

communities they serve, community leaders and drinking water utilities 
should work closely with states to evaluate all forms of restructuring, 
including whether a form of consolidation or transfer of ownership is 
the right solution.
2. Engage Affected Communities Directly in Restructuring Decision 
Making
    States and water utilities should directly engage with community 
leaders when making restructuring decisions. This approach is essential 
to ensure successful collaboration between state and local authorities, 
community leaders, and drinking water utilities. Direct engagement is 
particularly important if the water system is considering consolidation 
or transfer of ownership, which can raise community concerns about the 
affordability of safe drinking water and which involve complicated 
technical and financial terms and concepts. States should work with 
utilities, trained facilitators, and technical assistance providers to 
clearly communicate the costs and benefits of restructuring 
alternatives to community leaders and consumers and should ensure 
frequent opportunities for public input. In addition, the management 
structure determines the authority to establish water rates and rate 
structures, to apply for state and Federal funding, and to operate the 
water system. Therefore, states should provide comprehensive 
information that describes alternative management structures and water 
system ownership types to the affected communities. Providing 
information to support community involvement in decision making 
includes, for example, access to state data, and to mapping and 
planning tools. The EPA can assist in this process by providing 
guidance and tools to support community-level engagements in workshops, 
public meetings, and information sharing, including the agency's 
partnerships implementation tools and resources. More information about 
these implementation tools and resources is available at the agency's 
website for water system partnerships.\2\
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    \2\ https://www.epa.gov/dwcapacity/water-system-partnerships-implementation-tools-and-resources.
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3. Ensure the Community Has Capacity To Make Affordable Investments in 
Safe Drinking Water
    Under SDWA section 1414(h), a water system may be a candidate for a 
mandatory assessment even if it has attempted to obtain technical or 
financial assistance through the Drinking Water State Revolving Fund 
(DWSRF). Under the proposed WSRAR, states and drinking water utilities 
would benefit from the availability of an unprecedented level of 
Federal investment in grant programs that focus on small, 
disadvantaged, and underserved communities. These programs can help 
PWSs achieve and maintain the long-term capacity to provide safe 
drinking water through the implementation of a wide range of eligible 
restructuring activities, including consolidation or transfer of 
ownership. The 2021 Infrastructure Investment and Jobs Act, also known 
as the Bipartisan Infrastructure Law (BIL), is set to provide $16.6 
billion in additional investment in the DWSRF over the next three 
years. A key priority of the BIL is to increase investment in 
disadvantaged communities, including those with environmental justice 
concerns. Nearly half (49 percent) of this investment is designated for 
disadvantaged communities either as loan forgiveness or as grants to 
water systems that meet a state's disadvantaged community criteria as 
described in SDWA section 1452(d). These resources may be used to: 
identify restructuring alternatives that address the underlying causes 
of noncompliance; provide technical support for communities applying 
for funding; design and implement restructuring plans; and build and 
maintain water systems with the long-term capacity to provide 
affordable access to safe drinking water. The EPA will continue to work 
with states to implement program administration flexibilities under the 
DWSRF that are designed to help disadvantaged communities overcome 
barriers in applying for and receiving DWSRF funds. In addition, the 
EPA's Small, Underserved and Disadvantaged Community (SUDC) grant 
program can help communities establish and maintain access to safe, 
affordable drinking water by funding eligible restructuring activities. 
These activities include physical infrastructure improvements related 
to treatment, distribution, and storage; development of new sources; 
and assistance to increase technical, managerial, and financial (TMF) 
capacity, physical interconnection, water system consolidation or 
purchase of a water system. For more information on how SUDC grants may 
be used to support water system restructuring, please refer to the 
EPA's website.\3\ The EPA will continue to collaborate with states, 
technical assistance providers and community leaders to implement the 
EPA's WaterTA programs to ensure that small, disadvantaged, or 
underserved communities can successfully identify water challenges, 
develop plans, apply for, and effectively utilize, BIL, SUDC and other 
funding to build their capacity and address compliance challenges. In 
addition, states, water utilities, and local communities should explore 
customer-assistance programs that can help ensure affordability of 
water rates and allow the water utility to make the infrastructure 
investments necessary to provide sustainable access to safe, reliable 
drinking water services (UNC EFC 2017, EPA 2016).
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    \3\ https://www.epa.gov/dwcapacity/wiin-grant-small-underserved-and-disadvantaged-communities-grant-program-0.
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IV. Proposed Water System Restructuring Assessment Rule

    The three regulatory components previously described--state primacy 
revisions, mandatory assessment requirements, and restructuring plan 
eligibility requirements and limitations for enforcement relief and 
liability protection--comprise the framework of the proposed rule. This 
section of the preamble describes the proposed rule sections that 
govern mandatory restructuring assessments and restructuring plans.
    The agency seeks public comment on whether the rule appropriately 
balances meeting the statutory requirements of the SDWA while 
considering the impacts of the proposed requirements on our state and 
Tribal co-regulators, large and small water utilities, and the 
communities they serve. The EPA also has identified in this preamble 
specific topics for which the agency seeks public comment.

A. General

1. Authority
    SDWA section 1413 and its implementing regulations under 40 CFR 
part 142 subpart B set forth the requirements for a state to obtain 
primacy for EPA regulations under 40 CFR parts 141 and 142, and for EPA 
review and approval of state applications for primacy or for revisions 
to primacy. Because AWIA directly amended the criteria for primacy 
under SDWA section 1413(a), every state with primacy for the PWSS 
program must submit to the EPA an application for a primacy revision 
that demonstrates that the state has adopted, and is prepared to 
implement, the requirements of the proposed WSRAR. The proposed WSRAR, 
if finalized, would amend 40 CFR 142.10 and 142.11 to describe the 
basis on which the EPA would determine whether to authorize state

[[Page 47004]]

primacy for the WSRAR, and the content of a state application that is 
required for the agency's approval of a primacy revision. The proposed 
WSRAR also contains state recordkeeping requirements under amended 40 
CFR 142.14, and state reporting requirements under amended 40 CFR 
142.15. These proposed reporting and recordkeeping requirements, if 
finalized, would support the EPA's oversight of state implementation of 
the WSRAR and ensure consistent compliance with the proposed 
requirements.
2. Direct Implementation by the EPA
    Where an EPA Region has primacy for the WSRAR, the Regional 
Administrator would have the authority, fully equivalent to that of a 
state, to mandate restructuring assessments, to perform assessments, to 
review and approve restructuring plans, and to determine PWS 
eligibility for restructuring incentives. This equivalent authority 
also would include EPA enforcement actions for noncompliance with the 
WSRAR and use of its independent enforcement authority under SDWA 
section 1414. Accordingly, the term ``state'' as it appears throughout 
this preamble, also refers to the EPA exercising its authority to 
implement the WSRAR. In addition, states with primacy for the WSRAR 
could, at their discretion, request that the EPA Region mandate an 
assessment of a PWS or assist the state with the implementation and 
enforcement of WSRAR requirements.
3. Applicability
    The proposed requirements of the WSRAR would apply to all states 
for which the EPA has approved primacy for the WSRAR, and to PWSs for 
which an approved state has mandated a restructuring assessment. 
Additional proposed WSRAR requirements would apply to PWSs that submit 
plans to states seeking enforcement relief or liability protection.

B. Definitions

    The EPA proposes the following terms and definitions for the WSRAR:
1. Assessed Water System
    The EPA proposes this term to refer to a PWS that meets all four 
preconditions for a state to use its mandatory assessment authority 
described in SDWA section 1414(h)(3)(A), and that is the subject of a 
mandatory restructuring assessment as required by the state pursuant to 
proposed 40 CFR 142.92.
2. Enforcement Relief
    The EPA proposes this term to refer to the incentive described in 
SDWA section 1414(h)(2). Enforcement relief would apply to an eligible 
PWS as specified in proposed sections 40 CFR 142.93 and 142.94. A PWS 
would be eligible for enforcement relief if the state approved a 
restructuring plan that met the proposed requirements and that would 
result in physical or administrative consolidation; transfer of 
ownership to improve water quality; or a contractual agreement to carry 
out the administrative or managerial functions of a water system. 
Enforcement relief would mean that if a state approved a restructuring 
plan, the state could not take enforcement action under SDWA for 
specific violations identified in the plan for up to two years from the 
date of state approval. If the eligible water system were to complete 
its planned restructuring earlier, the enforcement relief period would 
end on the date of completion.
3. Liability Protection
    The EPA proposes this term to refer to the incentive described in 
SDWA section 1414(h)(5). This incentive applies to a non-responsible 
(compliant) water system that seeks liability protection when it 
restructures with an assessed (non-compliant) water system. Under the 
proposed rule, a non-responsible water system would be eligible for 
liability protection once restructuring has been completed under a 
state-approved restructuring plan for physical or administrative 
consolidation; transfer of ownership to improve water quality; or a 
contractual agreement to carry out the administrative or managerial 
functions of a water system. Liability protection would mean that, 
after using available assets of the assessed water system to pay any 
liabilities for specific violations identified in the approved plan, 
the non-responsible water system would have no remaining liability 
under SDWA for those specific violations. Liability protection would 
continue for SDWA violations at the assessed system that occur during 
restructuring, but that protection would end after the state determined 
that the non-responsible system had become the owner of the newly 
restructured water system.
4. Mandatory Restructuring Assessment
    The EPA proposes this term to refer to a mandatory evaluation of 
restructuring alternatives at an assessed water system as described in 
SDWA section 1414(h)(3) and that is performed consistent with the 
requirements of proposed 40 CFR 142.92. For rule implementation 
purposes, the term ``restructuring'' means any planned change in water 
system operations, management, or infrastructure.
5. Non-Responsible System
    The EPA proposes this term to refer to a compliant PWS that 
restructures with an assessed water system under a state-approved plan 
that is based on a completed mandatory restructuring assessment. The 
non-responsible system is the PWS that intends to benefit from 
liability protection because it did not commit the violations 
identified in the approved restructuring plan. Under the proposed rule, 
if the state determined that all requirements for liability protection 
in proposed 40 CFR 142.95 had been met, then the non-responsible system 
would not be liable for assessed water system violations identified in 
the plan, but it would be required to use any acquired liquid assets of 
the assessed water system to compensate the state for any fines or 
penalties associated with the identified violations. Under the proposed 
rule, a non-responsible system would continue to receive liability 
protection for violations at the assessed system that occurred during 
restructuring but would become liable for violations after it became 
the owner of the newly restructured water system.
6. Restructuring Plan
    The EPA proposes this term to refer to the four restructuring plan 
types cited in SDWA section 1414(h)(1): physical consolidation of a 
water system with one or more other water systems; the consolidation of 
significant management or administrative functions of a water system 
with one or more other water systems; the transfer of ownership of a 
water system to another water system for purposes of improving drinking 
water quality; and a contractual agreement for significant management 
or administrative functions of a water system. Although other 
restructuring plan types are possible, they are outside the scope of 
this proposed rulemaking. A PWS that voluntarily develops and submits a 
plan to potentially benefit from the SDWA incentives should only incur 
burden when there is an incentive to do so. Unlike a mandatory 
restructuring assessment, a restructuring plan would be optional for a 
water system to submit. Consistent with SDWA, under the proposed 40 CFR 
142.93, a submitted restructuring plan must include a schedule for 
restructuring activities and measures of progress. In addition, to be 
eligible for enforcement relief or liability

[[Page 47005]]

protection, the restructuring plan must identify the specific 
violations to which the restructuring incentives would apply.

C. Mandatory Restructuring Assessments

    The proposed WSRAR, if finalized, would establish requirements for 
the EPA, the state, or a state-approved assessor to implement a 
mandatory restructuring assessment according to an established 
schedule, and to produce an assessment report that satisfies the 
proposed content and tailoring requirements of the WSRAR. The specific 
elements of the proposed mandatory assessment requirements are outlined 
in the following sections.
1. When a State May Mandate an Assessment
    SDWA section 1414(h)(3)(A) describes four preconditions that a 
state would be required to find are applicable to a PWS before it could 
mandate a restructuring assessment. The proposed WSRAR restates these 
four preconditions to provide additional clarifications. A state with 
primacy for the proposed WSRAR may mandate a restructuring assessment 
if it finds that: (1) the PWS has repeatedly violated one or more 
NPDWRs and such violations are likely to adversely affect human health; 
(2) the PWS is unable or unwilling to implement restructuring 
activities, or already has attempted to implement such activities but 
has not achieved compliance; (3) restructuring of the water system, 
including a form of consolidation or a transfer of ownership, is 
feasible; and (4) restructuring of the water system could result in 
greater compliance with drinking water standards. Consistent with the 
SDWA, under the proposed rule each state has the discretion to 
determine whether a PWS meets all four preconditions and, if so, 
whether to mandate a restructuring assessment as a result. When 
exercising its mandatory assessment authority, a state would be 
required to provide written notification to the assessed system. This 
``state notification date'' would determine the milestones and dates in 
the required assessment schedule.
    Recurring monitoring violations might conceal repeated health-based 
violations at PWSs. Although recurring monitoring violations are not a 
regulatory precondition for a mandatory assessment, states should 
ensure there are no underlying health-based violations by investigating 
possible causes of the monitoring violations.
2. State Notification
    If a state finds that a public water system meets the four 
preconditions and mandates a restructuring assessment, the state would 
be required to notify the assessed system in writing.
3. Minimum Assessment Tailoring Criteria
    SDWA section 1414(h)(3)(A) requires a mandatory assessment to 
identify restructuring options that are expected to help the water 
system achieve compliance and that are feasible for the water system to 
implement. A wide range of water system restructuring alternatives are 
possible. These alternatives range from temporary, informal agreements 
between neighboring water systems to permanent, formal types of 
restructuring, such as physical consolidation. The EPA expects that an 
assessor would evaluate and compare restructuring alternatives from 
within this range, such as changes in rate structure and associated 
impacts, installation of treatment technology, operator training, or 
access to alternative water supplies. SDWA section 1414(h)(3)(B) states 
that the requirements of a mandatory restructuring assessment must be 
tailored to the size, type, and other characteristics of the assessed 
water system. Therefore, consistent with these two SDWA provisions, and 
with the proposed principles of restructuring, the proposed rule 
requires the assessor to ``tailor'' the feasibility of restructuring 
options based on the following geographical, socio-economic, and 
physical criteria. The information would ensure that a feasible 
restructuring alternative is technically, managerially, and financially 
feasible in the long term for the assessed PWS to implement.
a. System Size
    The population served by the assessed water system. This criterion 
is required by the SDWA.
b. System Type
    The classification of the assessed system as a community water 
system or a noncommunity water system. This criterion is required by 
the SDWA.
c. Source
    The extent to which the assessed system uses ground water, surface 
water, or both ground and surface water as a drinking water supply, and 
the extent to which the drinking water supply is purchased from another 
supplier of water.
d. TMF Capacity
    The technical, financial, and managerial capacity of the assessed 
system, using the state definition of each term as part of its capacity 
development strategy under SDWA section 1420(c).
e. Disadvantaged or Underserved Community Status
    A determination whether the service area of an assessed water 
system meets the state definition of a disadvantaged community pursuant 
to the requirements of SDWA section 1452(d) or SDWA section 
1459A(c)(2), or whether a community is underserved pursuant to SDWA 
section 1459A(a)(2). Disadvantaged or underserved status is a critical 
socio-economic factor that determines feasibility of the restructuring 
options both in terms of the affordability of the restructuring and the 
impacts of the restructuring on the community served by the assessed 
water system.
f. Geographic Factors
    The extent to which proximity to neighboring water systems, changes 
in elevation, or other geographic factors affect the available 
restructuring alternatives.
g. Hydrogeologic or Geologic Factors
    The potential or known interactions between surface activities, 
such as agriculture, and the ground water or surface water sources of 
water used by the assessed system. This criterion includes naturally 
occurring levels of contaminants in the geologic formation surrounding 
a ground water source.
h. State or Local Statutory or Regulatory Requirements
    State or local laws or regulations can determine the permissible 
legal authorities and types of restructuring at assessed water systems.
    Request for public comment: The EPA requests public comment on all 
aspects of the proposed rulemaking, but in particular on the proposed 
minimum Federal tailoring criteria, including other water system 
characteristics or socio-economic factors that could affect 
restructuring alternatives.
4. Minimum Assessment Report Content Requirements
    Under the proposed WSRAR, a mandatory restructuring assessment 
would identify feasible restructuring alternatives that must be 
documented in a report that meets five minimum content requirements. 
These requirements would establish a minimum standard that requires a 
focus

[[Page 47006]]

on identifying underlying causes of non-compliance, protecting public 
health from ongoing violations, and a long-term plan to develop a 
sustainable capacity to provide safe, affordable drinking water. The 
content requirements also include a description of the potential 
community impacts of restructuring alternatives.
    First, to address immediate health risks, the proposed rule would 
require the assessment report to describe all unresolved violations, 
their underlying causes, their enforcement status, and how 
restructuring would return the system to compliance as soon as 
practicable. Underlying causes can be technical, such as inadequate 
treatment technologies, or financial or managerial issues such as those 
related to being a disadvantaged or underserved community.
    Second, to achieve a sustainable capacity to provide safe drinking 
water, the proposed rule would require the assessment report to 
identify at least one feasible restructuring alternative for the 
assessed water system that will return the PWS to compliance as soon as 
possible, while also improving its technical, managerial, and financial 
(TMF) capacity. For purposes of implementing these proposed 
requirements, the term ``TMF capacity'' generally means the capability 
of a public water system to achieve and maintain compliance with 
NPDWRs, including ensuring sufficient resources for sustainable fiscal 
planning and management. Technical capacity improvements may include 
greater access to higher quality source water; sharing, upgrading, or 
building new infrastructure; or implementing more effective treatment 
technologies. Managerial capacity improvements may include increasing 
expertise in water system planning and operations, or enhancing 
systems' financial, accounting, and asset management practices. 
Financial capacity improvements may include reducing costs, achieving 
greater economies of scale through shared services, or increasing a 
system's sustainable access to funding through new partnerships (EPA 
Office of Water 2017).
    Third, the assessment report would be required to describe how the 
assessor has used the tailoring criteria to take a holistic approach to 
identifying feasible and affordable alternatives based on a broad range 
of technical, managerial, financial, and socio-economic factors. The 
report also must describe how the proposed alternatives ensure that the 
communities served by the assessed water system sustainably achieve or 
maintain access to safe, affordable drinking water. As part of its 
primacy revision for the rule, a state may propose using affordability 
criteria in addition to those already identified by the state as 
required under SDWA section 1452(d)(3). This requirement helps to 
ensure that the assessment considers the long-term affordability 
impacts of restructuring alternatives, particularly at water systems 
that serve disadvantaged or underserved communities.
    Fourth, because SDWA section 1414(h) establishes incentives for 
consolidation or transfer of ownership at struggling water systems, the 
proposed rule would require the mandatory assessment report to provide 
an explanation if these alternatives are considered infeasible.
    Finally, to help the state or EPA ensure the assessment is valid, 
the proposed rule would require that the assessment report include a 
description of the data, data sources, information, procedures, and 
techniques used to identify the feasible restructuring alternatives for 
the assessed water system. This documentation requirement helps ensure 
that the state or EPA could independently determine the quality of the 
evidence used as the basis for an evaluation of alternatives.
5. Burden of Assessments
    SDWA section 1414(h)(3)(D) describes a sense of Congress that a 
mandatory restructuring assessment should not be ``overly burdensome'' 
on the assessed system. Under the proposed WSRAR, the mandatory 
assessment would involve collecting data; identifying and evaluating 
feasible alternatives using the tailoring criteria; and preparing an 
assessment report. Although the EPA expects that the assessment burden 
would vary by individual water system, the WSRAR's minimum content and 
tailoring requirements have been designed to minimize the burden. In 
addition, as described in the economic impact analysis of the proposed 
WSRAR, due to the technical expertise necessary to meet the WSRAR's 
proposed requirements and the proposed principles of restructuring, the 
EPA anticipates that states would perform nearly all mandatory 
restructuring assessments (EPA Office of Water 2022). Therefore, a 
mandatory assessment conducted according to the proposed requirements 
would not be overly burdensome on the assessed system.
6. Eligible Assessors
    Consistent with the meaning and intent of the statute, the EPA's 
proposed rule restates SDWA section 1414(h)(3)(C) while providing 
additional clarifications. The assessor would be responsible for 
ensuring that the assessment report aligns with the proposed 
restructuring principles, meets all content requirements, is submitted 
on time, and that the restructuring alternatives identified during the 
assessment are feasible in the long term based on the tailoring 
requirements. A state or a third-party assessor may perform the 
assessment. A third-party assessor could be a technical assistance 
provider or another individual whom the state deems to be qualified to 
perform the mandatory assessment on behalf of either the water system 
or the state. A third-party assessor that performed an assessment on 
behalf of the state would be acting as ``the state'' for purposes of 
performing the evaluation of alternatives and preparing the assessment 
report. Alternatively, the assessed water system could conduct a self-
assessment if approved by the state. To ensure that an assessor is 
qualified, as part of its primacy revision each state would be required 
to establish and implement procedures and qualifications for reviewing 
and approving eligible assessors.
7. Assessment Schedule
    The following proposed assessment schedule requirements apply to a 
state, to a PWS performing a self-assessment, and to a third-party 
assessor retained by the assessed water system. These requirements 
would begin as of the date the state notifies the water system in 
writing. Within 30 days of the state notification date, the water 
system could request in writing that the state approve either a self-
assessment or a third-party assessor retained by the water system. The 
state would have 30 days from receipt of the system's request to 
approve or reject the request. If the state rejected the request, or if 
the system did not request a self- assessment within 30 days, the state 
could decide to perform the assessment instead. In such cases, the 
system also would be required to provide relevant information requested 
by the state, such as an asset inventory, accounting records to 
demonstrate financial capacity, or monitoring results, to help the 
state perform the assessment.
    If the state approved the request for a self-assessment or third-
party assessor, the assessment report would be due on the submittal 
date established by the state. The EPA expects that the submittal date 
would be based on the anticipated complexity of the mandatory 
assessment. During the assessment, either the assessed system or the 
state could propose a different

[[Page 47007]]

submittal date. In such cases, the state ultimately would decide, based 
on information or other documentation that the state deemed acceptable, 
whether to change the submittal date. When submitting the assessment 
report to the state, the assessed water system or an approved third-
party assessor would be required to include a certification statement. 
The certification statement would attest that: the assessor has the 
authority to verify the assessment results; the report content is true, 
accurate, and complete; and the assessor understands the penalties for 
submitting false information to the state.
8. Public Meeting
    If the mandatory restructuring assessment identified a form of 
consolidation or transfer of ownership as a feasible alternative for 
the immediate and long-term needs of the community, the state would be 
required to notify the community that it will hold a public meeting. 
The state would hold this meeting as soon as practicable after 
receiving the assessment report from the assessed water system. If the 
state performed the assessment, it would be required to hold the 
meeting before approving the mandatory assessment report.
    Consistent with the principles of restructuring, the required 
public meeting would allow community-based organizations and residents 
served by the system to be directly involved in decision-making to 
ensure that the proposed consolidation or transfer of ownership would 
meet immediate and long-term community needs. The state and the water 
utility would provide specific details from the assessment report to 
the local community, including the anticipated costs and benefits, to 
ensure transparency into how the assessment was based on a holistic 
approach to identify consolidation or transfer of ownership as a 
sustainable, feasible and affordable alternative. To ensure meaningful 
opportunity for community participation, the public meeting would be 
required to comply with the EPA's notice, location, and time 
requirements under 40 CFR 25.6, as well as any state-specific-
regulations for public meetings. The EPA expects that the state would 
consider community feedback received during the public meeting, and the 
potential impacts of restructuring on the community, before it 
determines whether to approve the report. The EPA also strongly 
encourages states to make publicly available a written summary of its 
responses to comments received during the public meeting. The public 
meeting requirements are intended to provide transparency into, and 
accountability for, the mandatory assessment decision-making process.
9. State Determination
    Following the public meeting, the state would determine whether the 
report complied with tailoring and content requirements. Once the state 
determined that the submitted assessment met all requirements and was 
developed consistent with the proposed restructuring principles, it 
would approve the assessment, and notify the assessed water system in 
writing. If the state determined that the submitted assessment report 
did not meet all proposed requirements, it could choose to consult with 
the assessed system to determine a schedule and a method for completing 
a revised assessment report.
10. Public Availability of Approved Assessment Report
    Within 30 days of approval, the state would be required to make 
electronic copies of the report publicly available on the state 
website, and physical copies available in one or more public libraries 
within, or as near as possible to, the communities served by the 
assessed water system. Requiring both electronic and physical copies 
would help ensure that that the approved assessment is widely available 
to the local community, including to individuals without internet 
service. The EPA expects that states will take additional steps to 
ensure that approved assessment reports are publicly available in an 
alternative format, and that translation services are provided, in 
communities where English is not the primary language.
11. State Consultation With the Assessed Water System and the Local 
Community
    In addition to making the approved report publicly available, the 
state would be required to meet with the assessed water system to 
discuss the restructuring alternatives. The state consultation is 
intended to ensure that the assessed water system understands proposed 
alternatives and their potential benefits, as well as available sources 
of state and Federal funding for restructuring. Additionally, 
consistent with the principles of restructuring, the EPA strongly 
encourages states to either create a Citizen's Advisory Committee (CAC) 
or to identify an existing organization, such as the local water 
utility board, a town committee, or a local environmental justice 
group, that would serve as a community point-of-contact to perform 
three essential roles during the assessment. First, it would 
collaborate with the state and assessed PWS to ensure a shared 
understanding of the purpose, schedule, and objectives of the 
assessment. Second, it would consult with the state and assessed PWS as 
restructuring alternatives are identified, to help ensure that the 
tailoring requirements are met. Third, it would assist the state and 
assessed water system in the development of a restructuring plan, after 
the assessment is complete.
    Request for public comment: The EPA requests public comment on all 
aspects of the proposed rulemaking, but in particular on the proposed 
schedule for mandatory assessments, including the reasonableness of the 
proposed time frames. The agency is aware of stakeholder concerns that 
when communities are excluded from restructuring decisions, the goal of 
access to safe, affordable drinking water may not be achieved. Given 
these concerns, a key goal of the WSRAR is to ensure that communities 
are directly involved in mandatory restructuring assessments. At the 
same time, the EPA assumes that, due to the technical and financial 
resources necessary to implement the proposed requirements, states will 
perform nearly all mandatory restructuring assessments. As a result, 
another key goal of the WSRAR is to ensure that state implementation 
burden is minimized while meeting the requirements of SDWA section 
1414(h). Therefore, the EPA requests specific comment on how best to 
strengthen community involvement in mandatory restructuring assessments 
in the final rule, while also considering the potential implementation 
burden of such requirements on states. The EPA considers direct 
community involvement to include both regular collaboration between a 
local community organization, the state, and the restructuring PWS, and 
periodic engagement with the broader community at key junctures of the 
assessment. Regular collaboration is important to building trust with 
the local community while also ensuring that restructuring decisions 
are locally driven, and based on community culture, needs and 
interests. To ensure regular collaboration with the local community, 
the EPA could require states to ensure a community point-of-contact for 
each mandatory assessment, either by creating a CAC or by identifying 
an existing organization for this purpose. As previously described, an 
existing organization would be defined broadly and could include a 
local water utility board, a town

[[Page 47008]]

committee, or a local environmental justice group.
    Periodic engagement with the broader community also is important 
because although not every member of the affected community is able to 
collaborate regularly with the state and assessed PWS, all members of 
the community should be fully informed about the purpose, objectives, 
and schedule of the assessment, and about the potential impacts of 
restructuring on each household's ability to maintain or achieve access 
to safe, affordable drinking water. To ensure periodic engagement with 
the broader community, the EPA would require a state to describe in its 
mandatory primacy revisions how it would implement the WSRAR principles 
of restructuring at three key stages of the mandatory restructuring 
assessment: when the assessment is mandated, to provide information to 
the community about the purpose, objectives and schedule; when 
restructuring alternatives are identified, to explain what kinds of 
changes the state and water utility are considering; and, when the 
assessment is complete, to explain what kind of restructuring the state 
has approved, when it will be completed, and how community access to 
safe, affordable drinking water will be maintained or achieved.
    In addition, the EPA seeks public comment on how best to ensure 
transparency into restructuring decisions, and accountability for the 
impacts of restructuring, in communities where English is not the 
primary language.

D. Restructuring Plans

1. Plan Types Eligible for Restructuring Incentives
    SDWA section 1414(h)(1) identifies four types of restructuring 
plans that are eligible for enforcement relief under SDWA section 
1414(h)(2) or for liability protection under section 1414(h)(5): 
physical consolidation between water systems; management or 
administrative consolidation; transfer of ownership to improve drinking 
water quality; and a contractual agreement for significant management 
or administrative functions of a water system to correct violations 
identified in the plan. In addition, SDWA section 1414 (h)(1) requires 
a restructuring plan to identify the violations at the restructuring 
water system(s) and include an implementation schedule and measures of 
restructuring progress. Consistent with the meaning and intent of the 
SDWA, the proposed WSRAR reaffirms and clarifies these SDWA section 
1414(h)(1) requirements while providing additional clarifications.
    In preparing this proposed rulemaking, the EPA conducted a 
literature review that identified several published reports and case 
studies on public water system restructuring (RCAP 2020; Water Research 
Foundation 2020; UNC Environmental Finance Center 2019b; Water Research 
Foundation 2018; RCAC 2016a; RCAC 2016b; AWWA 2012; AWWARF 2008). These 
reports and studies collectively refer to a typology of restructuring 
that generally defines physical consolidation as two or more water 
systems joining physically and managerially; administrative 
consolidation as the merger of decision-making and management authority 
of two or more water systems under one governance structure; and 
transfer of ownership as one water system acquiring the assets and 
liabilities of another water system. The reports and studies also 
showed that plans for physical consolidation, administrative 
consolidation, or transfers of ownership can vary based on several 
factors. These factors include extent of physical interconnection; type 
of governance (decision-making) structure; full or partial ownership 
transfer; ownership type; whether a new legal entity is created; and 
state laws governing restructuring (AWWARF 2008). Because of this 
variability, the EPA proposes to define each of the four eligible plan 
types in general terms, instead of through formal regulation, to assist 
states as they implement the rule. Further, a restructuring plan that 
is eligible for incentives may combine aspects of more than one type, 
e.g., a plan for transfer of ownership also could involve 
administrative consolidation while the systems remain physically 
independent.
    The first eligible type would be a plan for administrative or 
managerial consolidation.\4\ Under the proposed rule, the term 
``administrative consolidation'' generally would mean combining the 
decision-making authority for the administrative and managerial 
functions of two or more water systems under a single governance 
structure. These functions would include, for example, asset 
management, capital improvement planning, operator training, sampling, 
reporting, recordkeeping, accounting, establishing water rates, 
billing, and purchases of equipment. In practice, governance under 
administrative consolidation varies based on the legal powers and 
responsibilities permitted in each state and can take different forms, 
including joint or balanced mergers, joint powers authorities, regional 
utilities, and water and sewer authorities, among others (UNC 
Environmental Finance Center 2019a; Water Research Foundation 2018). 
Although administratively consolidated water systems would operate 
under a single governance structure, each could maintain physically 
independent supplies, treatment facilities, and distribution systems. 
Each water system also could remain independently owned and retain some 
degree of decision-making authority.
---------------------------------------------------------------------------

    \4\ In this preamble, the EPA uses the terms ``administrative 
consolidation'' and ``managerial consolidation'' synonymously.
---------------------------------------------------------------------------

    The second eligible type would be a plan for full physical 
consolidation. The EPA's proposed rule would distinguish physical 
consolidation from physical interconnection because a consecutive water 
system can be physically interconnected to purchase water while 
remaining administratively and managerially independent.\5\ Therefore, 
although a mandatory restructuring assessment might identify physical 
interconnection as a feasible restructuring alternative, a plan for 
physical interconnection by itself would not be eligible for liability 
protection or enforcement relief. In this case, the proposed rule would 
require a plan for physical consolidation to include the administrative 
consolidation of two or more physically interconnected water systems.
---------------------------------------------------------------------------

    \5\ As used here, ``consecutive water system'' has the same 
meaning as ``consecutive system'' as defined at 40 CFR 141.2.
---------------------------------------------------------------------------

    The third eligible type would be a plan for the transfer of 
ownership to improve drinking water quality. In a transfer of 
ownership, a merged water system no longer exists as an independent 
entity because another water system has acquired its assets and 
liabilities. In practice, a transfer of ownership is often, but not 
necessarily, combined with administrative consolidation (Water Research 
Foundation 2020; UNC Environmental Finance Center 2019a; RCAC 2016a). 
Transfers of ownership generally involve:
     Direct acquisition, in which one water system directly 
acquires another water system in its entirety;
     Joint merger, in which two existing water systems combine 
to create a new, jointly owned and jointly managed water system or 
water system facility; or,
     Balanced merger, in which one water system acquires 
another water system but the acquired water system

[[Page 47009]]

retains some decision-making authority after the merger.
    The fourth eligible plan type would be a contract for 
administrative or managerial functions of a PWS to correct the 
violations identified in the restructuring plan. Under this plan type, 
a technical assistance provider would contract with a water system to 
perform some or all administrative functions of the water system, while 
the water system owner would retain ownership of the PWS's assets and 
liabilities (AWWARF 2008). A technical assistance provider could be a 
non-governmental organization, a private company, or another water 
system. Like the other plan types, to be eligible the restructuring 
plan would be required to identify the violations to be resolved and to 
include an implementation schedule with measures of progress. Unlike 
plans for permanent forms of restructuring such as consolidation or 
transfer of ownership, however, the schedule and duration of this plan 
type would be limited to the contract terms.
    Consistent with SDWA, this proposed WSRAR, if finalized, would not 
mandate any type of restructuring plan, including plans for 
consolidation, transfer of ownership, or contracts for administrative 
or managerial functions.
2. State Determination of Plan Eligibility for Restructuring Incentives
    The proposed WSRAR, if finalized, would require each state to 
determine plan eligibility for restructuring incentives in two steps. 
First, the state must determine within 60 days whether a submitted plan 
is an eligible type and notify the submitting water system(s) in 
writing. Second, after this initial determination the state would 
determine within 12 months whether the submitted plan is eligible for 
enforcement relief, or, it would determine within 18 months whether the 
plan is eligible for liability protection. Because under the proposed 
rule the eligibility requirements for liability protection incorporate 
the requirements for enforcement relief, a plan for liability 
protection may include enforcement relief for the assessed PWS. If a 
state determined that a plan was an eligible type that did not satisfy 
the minimum requirements, the state could consult with the submitting 
system(s) to decide when and how to submit a revised plan.
3. Plan Revisions
    The EPA recognizes that due to such challenges as unforeseen 
project delays or increases in project costs, either the planned 
restructuring or the implementation schedule could become infeasible. 
As a result, either revisions to an existing restructuring plan, or a 
new plan entirely, could be necessary to protect public health. To 
account for such cases, the EPA proposes to allow a restructuring water 
system to submit a new or revised plan to the state for approval. As 
with the original submitted restructuring plan, the state would be 
required to evaluate the new or revised plan against the same minimum 
eligibility requirements and any applicable requirements for 
enforcement relief or for liability protection as established under the 
proposed WSRAR.
    Request for public comment: The EPA requests public comment on all 
aspects of the proposed rulemaking, but in particular on plan type 
eligibility and reasonableness of the proposed time frames.

E. Enforcement Relief Under Approved Restructuring Plans

1. Minimum Plan Eligibility Requirements for Enforcement Relief
    Under the proposed WSRAR, if finalized, the state first would 
determine whether the submitted restructuring plan is eligible. Then 
the state would determine whether the plan satisfies the minimum 
requirements for enforcement relief. Unlike the SDWA eligibility 
requirements for liability protection, a plan could be eligible for 
enforcement relief even if it were not based on a mandatory 
restructuring assessment. As a result, under the proposed rule, the 
first minimum requirement is to identify each violation that the 
restructuring plan is intended to resolve. Second, because the 
identified violations indicate a public health risk, the restructuring 
plan would be required to describe how the proposed restructuring 
activities would return the system to compliance as soon as practicable 
by addressing the underlying causes of noncompliance. Third, as stated 
in SDWA section 1414(h)(1), the restructuring plan would be required to 
include an implementation schedule and measures of progress. The 
schedule and measures would allow the state to monitor restructuring 
progress to determine that the plan is on schedule and that the 
proposed restructuring activities remain feasible. Fourth, the plan 
would be required to describe how restructuring would improve the 
technical, managerial, and financial capacity of the restructuring 
system. This requirement is intended to ensure that an approved 
restructuring plan focuses not only on corrective actions for the 
violations identified in the plan, but also on strengthening water 
system capacity to sustainably maintain compliance over time. Fifth, 
the plan would be required to ensure that all consumers served by the 
restructuring water system continuously achieve access to safe, 
affordable drinking water. This requirement is intended both to prevent 
communities from losing access to safe drinking water because of 
restructuring, and to ensure consumers who live in disadvantaged or 
underserved communities receive sustainable, safe, and affordable 
drinking water. Finally, the restructuring plan would be required to 
include a request for enforcement relief for the noncompliant water 
system(s) subject to the plan.
    The restructuring plan would be required to incorporate state-
approved quantitative and qualitative types of information that 
describe how restructuring would protect public health in the short 
term while also improving the long-term TMF capacity of the 
restructuring PWS. States would have the discretion to determine 
whether the submitted documentation or data are acceptable for this 
purpose. Although the proposed rule does not prescribe specific forms 
of acceptable data or documentation, examples could include engineering 
plans, feasibility studies, performance specifications for treatment 
technologies, proposed changes to water system operations, state-
approved water system operator certification, or sample results from 
alternative water supplies.
2. Conditional Eligibility Requirements for Enforcement Relief
    In addition to the minimum eligibility requirements for enforcement 
relief, the proposed WSRAR, if finalized, would require the submitted 
restructuring plan to meet additional requirements under three sets of 
conditions. First, a restructuring plan that involves a transfer of 
ownership to improve drinking water quality would be required to 
describe the date on which ownership is expected to change and to 
identify the new water system owner. These conditional requirements 
would ensure that the state could determine when the new owner becomes 
legally liable for compliance at the restructured water system. Second, 
conditional requirements would apply if the restructuring plan were to 
establish a new or revised governance structure. Water system 
governance structures can vary based on state law and on the approach 
to administrative or physical consolidation. In some cases, a merged 
public water system no longer participates in the decision making for 
the newly consolidated water utility. As

[[Page 47010]]

a result, plans that featured a new or revised governance structure 
would be required to describe how the proposed structure would help 
achieve public health objectives. These additional requirements would 
allow the state to ensure that the proposed governance structure is 
consistent with state and local laws, supports resolving the underlying 
causes of the violations, and is likely to strengthen the capacity of 
the water system to provide sustainable access to affordable safe 
drinking water. Third, conditional requirements would apply if the 
submitted plan proposed to establish a temporary alternative source or 
supply of water. These additional requirements would apply under a wide 
range of site-specific conditions that include: the provision of 
bottled water or of water filters that are certified to remove 
contaminants to safe levels; purchased water from a wholesaler; or a 
temporary physical interconnection to a nearby water system.\6\ The EPA 
anticipates that temporary alternative sources or supplies would be 
utilized under restructuring plans that take several years to 
implement, such as plans for physical consolidation. Under the proposed 
WSRAR, if finalized, such restructuring plans would be required to 
include an implementation schedule and measures of progress that are 
specific to the provision of a temporary alternative source or supply 
of water. In addition, the plan would need to incorporate data and 
other forms of documentation that the state finds acceptable to 
demonstrate how the alternative source or supply will comply with 
Federal and state health-based drinking water standards or other 
requirements. Finally, such plans would be required to identify when 
the temporary supply or source will no longer be needed. Before 
approving a plan that includes a temporary alternative source or supply 
of water, states also should consider the simultaneous compliance 
implications of this restructuring activity. Taking this step would 
help ensure that restructuring activities intended to improve 
compliance with one NPDWR would not potentially result in noncompliance 
with another.
---------------------------------------------------------------------------

    \6\ Organizations accredited by the American National standards 
Institute (ANSI) certify units using ANSI/NSF standards. Each ANSI/
NSF standard requires verification of contaminant reduction 
performance claims, an evaluation of the unit, including its 
materials and structural integrity, and a review of the product 
labels and sales literature. ANSI/NSF standards are issued in two 
different sets, one for health concerns (such as removal of specific 
contaminants) and one for aesthetic concerns (such as improving 
taste or appearance of water).
---------------------------------------------------------------------------

    The EPA expects that the time frame for developing and submitting a 
restructuring plan would vary widely based on several factors, 
including the specific characteristics of the restructuring water 
system, the number and type of restructuring activities planned, the 
nature and extent of the violations to be corrected, and applicable 
state or local laws and regulations. As a result, states are in the 
best position to determine, on a case-by-case basis, whether the 
proposed measures of progress and the implementation schedule are 
acceptable for each restructuring plan.
    Request for comment: Similar to a mandatory restructuring 
assessment, implementation of the temporary provision of alternative 
water sources or supplies involves site-specific considerations for 
each public water system. The EPA plans to provide implementation 
training materials or case studies to describe examples of the 
temporary provision of an alternative source water or supply of water 
in a variety of site-specific scenarios. These materials would be 
designed to help states implement these proposed WSRAR requirements. 
Alternatively, the EPA could include in the rule language specific 
examples of the temporary provision of alternative water supplies; 
however, this approach could unnecessarily limit the applicability of 
the requirement. The EPA requests comment on whether adding such rule 
language would be appropriate for states and PWSs to understand these 
requirements.
3. Eligible Violation Types
    Consistent with SDWA section 1414(h)(2), under the proposed WSRAR a 
PWS would be eligible for enforcement relief from specific violations 
under SDWA that were identified in the submitted restructuring plan, 
subject to state approval. The restructuring plan should identify each 
violation by its identification number, type, and the date of 
notification.
4. Public Meeting
    As soon as practicable after determining a submitted plan is 
eligible for enforcement or liability protection, a state would be 
required to notify the service community and to conduct a public 
meeting. Like the requirements for a mandatory restructuring 
assessment, the purpose of the public meeting would be to ensure that 
the impacted communities are aware of how the draft restructuring plan, 
subject to public input and available before and during the meeting, 
would be implemented to ensure their sustainable access to safe, 
affordable drinking water. For example, a restructuring plan could 
include potential changes in water rates or rate structures, or terms 
of service. The public meeting would need to comply with the EPA's 
requirements in 40 CFR 25.6, as well as any state-specific-regulations. 
The EPA expects that state would incorporate community feedback 
received during the public meeting when determining whether the 
proposed restructuring plan is feasible in terms of the immediate and 
long-term needs of the community, particularly for plans that would 
result in consolidation or transfer of ownership.
5. State Determination Date
    No later than 12 months from the date it determines that a 
restructuring plan is an eligible type, the state would be required to 
determine whether a plan meets all minimum and applicable conditional 
eligibility requirements. If the plan meets all rule requirements, and 
the public meeting has been held, the plan would be considered 
approved, and the state would be required to notify the supplier of 
water in writing.\7\ If the plan did not meet all requirements, the 
state could consult with the water system that submitted the plan 
regarding a time frame for submitting a corrected plan.
---------------------------------------------------------------------------

    \7\ As used here, ``supplier of water'' has the same meaning as 
defined at 40 CFR 142.2, i.e., any person who owns or operates a 
public water system.
---------------------------------------------------------------------------

6. Plan Availability
    Within 30 days of approving a restructuring plan, the state would 
be required to make electronic copies of the plan publicly available on 
the state website, and physical copies available in one or more public 
libraries within, or as near as possible to, the communities served by 
the assessed water system. Requiring both electronic and physical 
copies ensures that that the approved assessment is widely available to 
the local community, including to individuals without internet service. 
The EPA also expects that states will take additional steps to ensure 
that approved restructuring plans are publicly available in an 
alternative format, and that translation services are provided, in 
communities where English is not the primary language.
7. Extent of Enforcement Relief
    On the date the state determines that the submitted plan met all 
requirements, the plan would be approved and an enforcement relief 
period of up to two years would begin. During this enforcement relief 
period,

[[Page 47011]]

the state could neither initiate, nor continue to take, enforcement 
action for any of the specific violations of the SDWA that are 
identified in the plan. Consistent with SDWA section 1414(h)(2), the 
enforcement relief period could end earlier if the state determines 
that all restructuring activities in the approved plan were completed 
sooner than two years. Additionally, the proposed WSRAR clarifies that 
during the enforcement relief period the EPA could exercise its SDWA 
section 1431 imminent and substantial endangerment authority to protect 
public health.
8. Limitations
    The proposed rulemaking contains limitations on enforcement relief. 
These limitations clarify that enforcement relief would apply only to 
violations identified in a restructuring plan. In addition, under the 
proposed rule a water system eligible for enforcement relief would be 
required to:
    a. Implement any corrective actions that are required under 
existing enforcement orders or agreements that were established prior 
to the state's approval of the restructuring plan. This limitation 
ensures that steps are taken to protect public health by resolving 
existing noncompliance as soon as practicable. Although the corrective 
actions under existing enforcement orders must be taken, the EPA 
recommends that states consider ways to align such orders with proposed 
restructuring plans. For example, the implementation schedule for 
corrective actions under an existing enforcement order could be 
incorporated within a state-approved restructuring plan as part of the 
SDWA-required measures and schedule of restructuring activities.
    b. Comply with any applicable requirements of the SDWA or its 
implementing regulations, including EPA directives stemming from the 
use of its SDWA section 1431 authority. These requirements including 
monitoring, reporting sample results, and notifying and informing 
consumers regarding their drinking water quality.
    c. Comply with any enforcement actions for new violations that 
occur after the date on which the state approves the plan. Only 
violations identified in the approved restructuring plan would be 
eligible for statutory enforcement relief. Therefore, new violations at 
the restructuring water system would be ineligible.
9. Termination of Enforcement Relief Under Approved Plans
    The EPA considers the proposed measures and schedule required for 
each approved restructuring plan to be critical elements of state 
oversight of water system restructuring. The EPA expects that during 
the enforcement relief period, each state would use the required 
measures and schedules to conduct oversight and to consult with the 
restructuring water system as needed. As a result of its oversight, a 
state might determine that a noncompliant water system is unwilling or 
unable to restructure according to the approved plan. In such cases, if 
the state determines that enforcement relief is no longer applicable to 
the water system, the state would be required to inform the supplier of 
water in writing as soon as practicable.
    Request for comment: The EPA requests comment on all aspects of the 
proposed rulemaking, but in particular on the proposed minimum and 
conditional requirements for enforcement relief, and the reasonableness 
of the proposed time frames for state determination of plan eligibility 
for enforcement relief. In addition, the EPA seeks public comment on 
how best to ensure transparency into restructuring plans, and 
accountability for the impacts of restructuring, in communities where 
English is not the primary language.
10. Enforcement Relief Under Revised Plans
    The EPA recognizes that restructuring activities, the project 
schedule, or both could become infeasible due to unanticipated project 
delays or increases in project costs. The EPA also recognizes that a 
water system that would benefit from enforcement relief is likely to 
incur additional violations as it restructures. Because SDWA section 
1414(h)(2) establishes a two-year time frame for enforcement relief 
under an approved restructuring plan, pursuant to the proposed 40 CFR 
142.94(h), the EPA proposes that a water system would not be eligible 
for additional Federal enforcement relief under an approved revised 
restructuring plan. Under a revised plan, states could instead provide 
state-level enforcement relief granted through system-specific 
enforcement agreements. Such enforcement agreements could identify 
additional compliance options for a noncompliant water system, thereby 
providing additional relief for the duration of the restructuring 
beyond the initial two years.
    Request for comment: Although SDWA section 1414(h)(1) establishes a 
two-year limit on enforcement relief for each approved plan, the SDWA 
does not establish a limit on the number of restructuring plans that a 
state may approve for an individual PWS. As a result, the EPA requests 
comment on the assumptions underlying the proposed limits on 
enforcement relief under revised plans as described in this preamble.

F. Protection of Non-Responsible Water Systems Under Approved 
Restructuring Plans

1. Minimum Requirements for Liability Protection
    The proposed eligibility requirements for liability protection 
build on the eligibility requirements for enforcement relief. Under the 
proposed rule the state would be required to determine whether the plan 
is an eligible type and meets the minimum and conditional requirements 
for enforcement relief. After this initial determination, the state 
would then determine whether the plan also satisfied the proposed 
requirements for liability protection.
    Consistent with the language and intent of the statute, the 
proposed WSRAR restates the SDWA section 1414(h)(5) requirements for 
liability protection while providing additional clarifications. The 
proposed WSRAR, if finalized, would ensure that only a non-responsible 
system is potentially eligible for liability protection. To meet the 
proposed eligibility requirements, the non-responsible water system 
would be required to submit to the state a restructuring plan that:
    a. Is based on a mandatory restructuring assessment that the state 
has approved. To meet this requirement, the EPA expects that the 
submitted plan would describe how the non-responsible water system 
plans to implement the feasible restructuring alternatives identified 
in the approved mandatory assessment report.
    b. Identifies the non-responsible water system(s) and assessed 
water system(s) that are subject to the restructuring plan, to allow 
the state to determine the extent of any liability protection.
    c. Identifies and describes, using data and other forms of 
documentation that the state finds acceptable for purposes of 
calculating liability, any potential and existing liability for 
violations that are identified in the restructuring plan. SDWA section 
1414(h) does not describe or define potential or existing liability. 
The EPA proposes that states and suppliers of water would consider an 
``existing liability'' to be a known obligation or responsibility for 
penalties and damages that the state has assessed for a violation 
identified in the plan. The submitted plan could identify these 
existing liabilities as the amounts of penalties or fines that would be 
cited in formal state notices of violation or

[[Page 47012]]

enforcement orders. In addition, states and suppliers of water would 
consider a ``potential liability'' to be an expected obligation or 
responsibility for health-based violations that are likely to reoccur 
at the assessed system until the identified underlying causes of 
noncompliance are resolved through restructuring. Identification of 
potential liabilities could include references to state regulations 
that specify the amounts of penalties or fines associated with the 
violation types that the assessed water system has repeatedly incurred 
and that prompted the state to mandate the restructuring assessment.
    d. Identifies and describes, using data and other forms of 
documentation acceptable to the state, the available funds or other 
liquid assets of the assessed water system as of the date of plan 
submittal. The EPA expects that as part of its submitted restructuring 
plan a non-responsible water system would conduct an asset inventory of 
the assessed system. The asset inventory could identify and document 
recoverable assets that could be used to pay the liability for the 
identified violations.
    e. Requests liability protection of the non-responsible system for 
the violations identified in the submitted plan.
2. Eligible Violation Types
    Consistent with SDWA section 1414(h)(5), a non-responsible water 
system would be eligible for liability protection from specific 
violations under the SDWA if the violations were identified in the 
submitted restructuring plan, subject to state approval. The 
restructuring plan should identify each violation by its identification 
number, type, and the date of notification.
3. Exclusions
    The EPA proposes that either an assessed water system, or a water 
system that otherwise meets the four statutory preconditions for a 
mandatory restructuring assessment, would be ineligible for liability 
protection. Under the SDWA, such water systems have repeatedly violated 
health-based standards and therefore cannot be considered ``non-
responsible'' water systems.
4. Public Meeting
    As under the proposed enforcement relief requirements, before 
approving a restructuring plan that is eligible for liability 
protection, the state would be required to notify the community that 
would be affected by the restructuring plan and to hold a public 
meeting. The primary purposes of the meeting are to provide the 
community served by the restructuring water system(s) a meaningful 
opportunity to understand how the restructuring would ensure their 
continuous access to safe, affordable drinking water, and how the 
restructuring plan would be implemented, including potential changes in 
water rates or rate structures, or terms of service. The state would be 
required to hold the meeting as soon as possible after it determines 
that a plan is an eligible type. The public meeting would need to 
comply with the EPA's notice, location, and time requirements for 
public meetings under 40 CFR 25.6, as well as any state-specific-
regulations. The EPA also expects that the state would consider the 
outcomes of the public meeting when determining whether the proposed 
restructuring plan is feasible for both the immediate and long-term 
needs of the community, particularly for plans that would result in 
consolidation or transfer of ownership.
5. State Determination Date
    The EPA proposes to require the state to determine that the plan 
meets the rule eligibility requirements for liability protection, and 
to notify the non-responsible water system, no more than 18 months from 
the date on which the state determines plan type eligibility. The 
proposed time frame would include the time necessary for the state to 
review and verify the required documentation of existing and potential 
liabilities and assets before making its determination. If the state 
determined that the submitted plan met all requirements, the submitted 
plan would be approved. As under the proposed requirements for 
enforcement relief, if the submitted plan did not meet all 
requirements, the state could consult with the non-responsible water 
system regarding a time frame for submitting a corrected plan.
6. Extent of Liability Protection
    Unlike the enforcement relief incentive, a non-responsible water 
system would not be eligible as of the date of state approval of a plan 
that meets eligibility requirements. Instead, as required by SDWA 
section 1414(h)(5), under the proposed rule all restructuring must be 
completed before the non-responsible system is eligible for liability 
protection. As a result, the EPA expects that restructuring would begin 
as soon as practicable after the state determined that the plan met 
eligibility requirements. During restructuring, the state should 
consult with the non-responsible water system and apply the required 
measures and schedules of the restructuring plan to track progress. 
Once the state determined that all restructuring activities in the plan 
were complete, the state would be required to notify the non-
responsible system in writing within 30 days.
    Under the proposed rule, the state's notification must explain 
that, as of the date of state notification, the non-responsible water 
system is eligible for liability protection. To determine the extent of 
liability protection, the state would be required to calculate the 
difference between the total value of all liabilities and assets of the 
assessed (noncompliant) water system. To enable the state to perform 
this calculation, the submitted plan would be required to identify all 
assets and liabilities of the assessed water system. Although the non-
responsible system would not be liable for penalties or fines that 
exceed the value of the identified liquid assets, the non-responsible 
water system would be required to transfer to the state any identified 
liquid assets or funds of the assessed system up to the amount 
necessary to pay the outstanding penalties or fines. The state's 
notification also would be required to explain that the non-responsible 
water system must consult with the state to determine when and how it 
would transfer the funds or other identified assets of the assessed 
system(s) to the state. Based on stakeholder consultation, the EPA 
acknowledges that an assessed system could have no liquid financial 
assets that could be used to pay liabilities. In such cases, to obtain 
liability protection, the non-responsible water system would be 
required to submit data or other forms of documentation acceptable to 
the state that demonstrate that the assessed system had no liquid 
financial assets.
    In addition, although the eligibility requirements for each SDWA 
restructuring incentive are separate, a state may approve a 
restructuring plan that provides both enforcement relief for a 
noncompliant system and liability protection for a compliant system. 
For example, under an approved plan for transfer of ownership, 
enforcement relief would begin on the date the state approves the plan 
and end up to two years later. If the transfer of ownership were 
completed in fewer than two years, the enforcement relief would end on 
the date of completion. Under the same restructuring plan, liability 
protection for the non-responsible system would begin on the date that 
the transfer of ownership is completed. Within 30 days of this date, 
the non-responsible water system would consult with the state to 
determine if there were any acquired

[[Page 47013]]

assets that could be used to pay for fines or penalties owed by the 
noncompliant system. The non-responsible PWS would not be liable for 
any remaining amount.
7. Plan Availability
    As with the proposed requirements for enforcement relief, within 30 
days of approving a restructuring plan eligible for liability 
protection, the state would be required to make the approved plan 
publicly available. The state would need to provide electronic copies 
on the state website, and physical copies in one or more public 
libraries within, or as near as possible to, the communities served by 
the assessed water system. Requiring both electronic and physical 
copies would ensure that that the approved assessment is widely 
available to the local community, including to individuals without 
internet service. The EPA also expects that states will take additional 
steps to ensure that approved restructuring plans are publicly 
available in an alternative format, and that translation services are 
provided in communities where English is not the primary language.
8. Limitations
    The EPA's proposal would not establish any liability protection 
that exceeds the extent of protection that the state calculates as 
required under the rule. The non-responsible water system also would be 
required to comply with all other applicable requirements of SDWA and 
its implementing regulations.
9. Determination of Change in the Supplier of Water
    Under proposed 40 CFR 142.94(b)(1), if the non-responsible water 
system intended to take ownership of the restructured water system, 
then the restructuring plan would be required to identify the planned 
date of the change in ownership. This date should appear in the 
schedule of restructuring activities as would be required of any 
eligible plan. As part of its determination that all restructuring 
activities were completed, the state would be required to identify the 
date on which the non-responsible water system took ownership of the 
restructured water system, and to provide notice. Until this 
notification date, the non-responsible water system would not be liable 
for any violations that occurred during restructuring.
10. Liability Protection Under Revised Plans
    As with plans seeking enforcement relief, the EPA recognizes that 
there could be circumstances under which an approved restructuring plan 
should be revised. The proposed WSRAR, if finalized, would allow a non-
responsible water system to remain eligible for liability protection 
under a revised restructuring plan under three conditions. First, the 
non-responsible water system would need to provide a justification to 
the state, using data and other forms of documentation that the state 
found acceptable, that a revised plan is necessary to ensure that the 
restructuring objectives are achieved as soon as practicable. Second, 
the state would need to confirm that any violations identified in the 
revised restructuring plan did not occur at the non-responsible system. 
Third, the state would need to approve the revised restructuring plan 
consistent with the proposed rule's plan requirements for liability 
protection. As a result, the state would have 18 months from submittal 
of the revised plan to determine whether it met the eligibility 
requirements.
    Request for comment: The EPA requests public comment on all aspects 
of the proposed rule, but in particular on the following aspects of 
this section of the proposed WSRAR: the liability protections proposed 
in this rulemaking, including the meaning of the terms ``potential 
liability'' and ``existing liability''; approaches to the 
identification of existing and potential liabilities and assets; the 
calculation of liability protection for the non-responsible system; 
minimum requirements for liability protection; and the reasonableness 
of the proposed time frames for state determination of plan eligibility 
for liability protection. The EPA also requests comment on how best to 
engage communities with environmental justice concerns as part of the 
proposed public meeting requirements for restructuring plans. In 
addition, the EPA seeks public comment on how best to ensure 
transparency into restructuring plans, and accountability for the 
impacts of restructuring, in communities where English is not the 
primary language.

G. Financial Assistance for Restructuring Activities

    As provided under SDWA section 1414(h)(4), a PWS that has completed 
a mandatory restructuring assessment would be eligible for a DWSRF loan 
to support restructuring. The EPA believes that the language of SDWA 
section 1414(h)(4) is consistent with statutory language regarding 
DWSRF loan eligibility under SDWA section 1452(a)(3). As a result, 
under existing regulations states and assessed water systems should 
consider a completed mandatory restructuring assessment to be a means 
of identifying restructuring activities that are eligible for DWSRF 
loans. As a result, the agency does not propose to amend existing DWSRF 
regulations in 40 CFR part 35 to implement this provision under the 
WSRAR.

H. Violations

    Under the proposed rule, a reporting violation would occur if the 
assessed water system, or an approved third party on behalf of the 
assessed water system:
    1. Failed to submit the assessment report as mandated by the state;
    2. Submitted an assessment report to the state after the submittal 
date that the supplier of water and the state had established through 
previous consultation;
    3. Submitted an assessment report to the state that does not 
address all minimum elements; or
    4. Submitted an assessment that does not include the required 
certification statement.

I. Effective Date

    Pursuant to the Administrative Procedure Act (APA) at 5 U.S.C. 
553(d), the EPA is proposing that the WSRAR would be effective 60 days 
from the date of publication in the Federal Register. Primacy agencies 
would be required to update their programs to incorporate the new 
primacy requirements within two years from the date of promulgation, 
with an optional two-year extension as provided under 40 CFR 142.12(b).

V. State Implementation

    As of the date of this proposed rulemaking, the EPA has approved 
PWSS primacy for 49 states, Puerto Rico, American Samoa, Commonwealth 
of the Northern Mariana Islands, Virgin Islands, Guam, and the Navajo 
Nation. Primacy for the PWSS program is established under SDWA section 
1413. The EPA may approve primacy for the PWSS program for states, 
territories, and federally recognized Tribes. To obtain initial primacy 
from the EPA, a state must meet the EPA's regulatory requirements under 
40 CFR 142.10, including that it: has adopted drinking water 
regulations that are no less stringent than the NPDWRs established 
under SDWA section 1412; has adopted and is implementing adequate 
procedures for enforcement of the regulations; and, is keeping records 
and making reports as required by SDWA section 1413.

[[Page 47014]]

    Under 40 CFR 142.11, a state's primacy application must contain 
several elements including:
     The text of the state's PWSS statutes and administrative 
regulations.
     Documentation of the primacy agency's procedures for 
enforcement of its drinking water regulations including a description 
of the state's procedures to maintain its PWS inventory and conduct 
sanitary surveys, identification of certified laboratories, a brief 
description of the state's program to ensure that new or substantially 
modified PWSs will be capable of complying with the state's drinking 
water regulations, copies of state statutory and regulatory provisions 
authorizing adoption and enforcement of state primary drinking water 
regulations.
     A brief description of state procedures for administrative 
or judicial action against noncompliant PWSs.
     A statement that the state will satisfy reporting and 
recordkeeping requirements.
     Text of the state's statutory and regulatory provisions 
concerning variances and exemptions (if allowed by the state).
     A description of the state's plan for ensuring safe 
drinking water under emergency conditions.
     Copies of state statutory and regulatory provisions 
authorizing the state executive branch to impose administrative 
penalties.
     An Attorney General's statement certifying that the laws 
and regulations were duly adopted and are enforceable.
    The 2018 AWIA amended SDWA section 1413 to require, as a condition 
of primacy, the adoption and implementation of procedures for requiring 
public water systems to assess options or consolidation or transfer of 
ownership or other actions in accordance with regulations issued by the 
EPA under SDWA section 1414(h)(6). As a result, the proposed WSRAR 
would revise the implementing regulations under 40 CFR part 142 subpart 
B to include a description of the state's procedures for an assessment 
to be completed with respect to options for consolidation, transfer of 
ownership, or other restructuring actions in accordance with WSRAR 
requirements.
    The proposed primacy requirements are intended to ensure that 
states would adequately describe how they would implement mandatory 
assessment programs and determine eligibility for enforcement relief or 
liability protection. The requirements would apply both to a state 
seeking an initial determination of primacy under 40 CFR 142.11 and to 
existing primacy agencies that seek a revision under 40 CFR 142.12. The 
EPA may not grant interim primacy for WSRAR under 40 CFR 142.12(e) 
because the proposed rule is not a NPDWR.

A. Revisions to Primacy Requirements

    As described in proposed requirements under 40 CFR 142.10(i), the 
EPA would approve a state primacy application for the WSRAR if the 
agency were able to determine that, consistent with state legal 
authority, the state had adopted and is implementing procedures for 
conducting or approving mandatory restructuring assessments, and review 
of restructuring plans, as would be required under 40 CFR part 142 
subpart J. To obtain primacy for the WSRAR, an applicant would be 
required to show that is has adopted and is implementing procedures to, 
among other activities: find that a PWS has satisfied the SDWA 
preconditions for a mandatory restructuring assessment; review and 
approve eligible assessors; ensure assessed water system compliance 
with the requirements for conducting a mandatory assessment, including 
public meetings; and, review restructuring plans to determine water 
system eligibility for enforcement relief or liability protection and 
the extent of liability protection, as applicable, based on rule 
requirements.
    Pursuant to the proposed requirements under 40 CFR 142.11(a)(8), a 
state primacy application would be required to demonstrate to the EPA 
that it has adequate authority to satisfy all the proposed new WSRAR 
primacy requirements under 40 CFR 142.10(i), and the proposed new WSRAR 
reporting and recordkeeping requirements for mandatory assessments and 
approved restructuring plans under 40 CFR 142.14 and 142.15. The 
submitted application would serve as the basis for the EPA's initial 
primacy determinations for the WSRAR.
    Pursuant to 40 CFR 142.12(c), an entity that already has primacy 
would be required to submit to the EPA a primacy revision application 
that includes: the documentation required by proposed new WSRAR primacy 
requirements under sections 142.10(i) and 142.11(a)(8); any primacy 
elements that would not change under a proposed program revision; and, 
a certification statement from the state's Attorney General or 
independent counsel, or the attorney representing the Indian Tribe, 
that its laws and regulations to carry out the requested program 
revisions were duly adopted and are enforceable.

B. State Reporting and Recordkeeping Requirements

    The proposed WSRAR, if finalized, also would establish new 
reporting and recordkeeping requirements that are intended to ensure 
that mandatory assessments satisfy scheduling, content, and tailoring 
requirements, and that states determine water system eligibility for 
statutory incentives consistent with WSRAR requirements for 
restructuring plans.
1. Reporting Requirements
    Existing regulations in 40 CFR 142.15 establish reporting 
requirements for states with primary enforcement responsibility. The 
proposed WSRAR would establish new requirements under 142.15(c)(8) for 
states to report to the EPA annually, using a format and on a schedule 
that the agency will have established, the name and identification 
number of each PWS for each of the following notifications or 
determinations, as applicable:
    a. Candidates for a mandatory restructuring assessment. This 
proposed reporting element would refer to each PWS that the state has 
determined to be a candidate for a mandatory assessment, having met the 
four statutory preconditions in the proposed WSRAR, including the date 
of determination;
    b. Mandatory assessment notifications. This proposed reporting 
element would refer to each identified PWS that the state has notified 
as the subject of a mandatory assessment, including the date of 
notification;
    c. Mandatory assessments completed. This proposed reporting element 
would refer to each PWS that the state has notified as the subject of a 
mandatory restructuring assessment and has completed the assessment as 
required, including the date of completion;
    d. Violations of mandatory assessment requirements. This proposed 
reporting element would refer to each PWS that the state has determined 
to be in violation of the WSRAR mandatory restructuring assessment 
requirements, by violation type and violation date; or
    e. Eligibility for restructuring incentives. This proposed 
reporting element would refer to each PWS that the state has determined 
to be eligible for either enforcement relief or liability protection 
based on an approved restructuring plan, including the type of 
eligibility and the date of plan approval.
2. Recordkeeping Requirements
    Existing regulations in 40 CFR 142.14 establish recordkeeping 
requirements for states with primary enforcement responsibility. To 
enable the EPA to

[[Page 47015]]

fulfill its oversight responsibilities, the proposed WSRAR also would 
establish recordkeeping requirements for primacy states under new 40 
CFR 142.14(h). The proposed rule would require states to retain records 
of approved mandatory assessment reports for five years from the date 
of approval. In addition, the EPA also proposes to require that each 
state retain records of restructuring plans submitted by PWSs seeking 
enforcement relief or liability protection, and to provide a copy of 
such plans to the EPA upon request, from the date of plan approval 
until one year from the date on which the state determines that all 
restructuring activities in the approved plan are complete. In such 
cases, the EPA also proposes that states be required to retain an 
approved mandatory assessment report if: the approved assessment report 
served as the basis for a restructuring plan that met regulatory 
requirements for enforcement relief, or for any restructuring plan that 
met regulatory requirements for liability protection. In such cases, 
states would be required to retain a copy of an assessment report until 
one year following the completion of restructuring under an approved 
restructuring plan.

VI. Economic Impact Analysis

    The following section summarizes the EPA's analysis to estimate the 
economic impact of the proposed WSRAR on states with primacy, including 
the Navajo Nation and U.S. territories, and EPA Regions, to develop and 
maintain mandatory assessment programs. Because the EPA is required to 
propose the WSRAR pursuant to 42 U.S.C. 300g-3(h)(6), and the scope of 
the proposed WSRAR is defined by 42 U.S.C. 300g-3(h), the agency did 
not consider regulatory alternatives. In addition, because the proposed 
WSRAR does not mandate restructuring plans, the EPA also did not 
estimate the costs to PWSs of developing restructuring plans, or the 
costs to states of reviewing restructuring plans to make eligibility 
determinations. The full economic impact analysis (EIA) Analysis of the 
Economic Impacts of the Proposed Water System Restructuring Assessment 
Rule is available in the docket for this action. See the ADDRESSES 
section of this document for instructions on accessing the docket.

A. Annualized and Present Value Cost Estimates

    SDWA section 1413 requires states to develop mandatory assessment 
programs as a condition of primacy. In addition, consistent with SDWA 
section 1414(h)each state would have discretion to decide whether a PWS 
meets the statutory preconditions and whether to mandate a 
restructuring assessment. As a result, states would incur direct costs 
of the mandatory primacy revision under the proposed WSRAR, even if 
they elected not to use their mandatory assessment authority. To 
estimate the indirect costs of the proposed rule requirements on states 
and PWSs where a state chooses to exercise its mandatory assessment 
authority, the EPA also conducted a supplementary analysis, which is 
provided in Appendix A of the EIA for the proposed rule.
    The direct costs of the proposed rule requirements would comprise 
both program development costs and program administration costs. States 
would incur program development costs to establish state programs to 
implement the proposed WSRAR. These costs would include reading and 
understanding the WSRAR, developing policies and procedures, preparing 
a primacy revision package, updating data systems, preliminary data 
analysis, outreach to PWS, and the education and training of staff. 
States would incur program administration costs to maintain established 
mandatory assessment programs. These costs would include maintaining 
program staffing and funding, collecting, and reviewing data to 
identify PWSs that meet the assessment preconditions, and reporting and 
recordkeeping.
    Because the proposed rule would impose direct costs only on states, 
the EIA focused primarily on the program development and program 
administration costs of the mandatory primacy revision. Additionally, 
the EPA expects that to protect public health, states with primacy for 
the WSRAR would exercise their mandatory assessment authority. As a 
result, the EPA also conducted a supplementary analysis of the indirect 
costs of the proposed rule requirements on states and PWSs. The 
indirect cost estimates were based on different approaches to 
estimating the number of mandatory restructuring assessments that would 
be conducted over a 25-year period after promulgation of the rule. The 
indirect costs of the proposed WSRAR would include performing mandatory 
restructuring assessments; reviewing assessment reports to ensure they 
satisfy the content and tailoring requirements; and enforcement of 
assessment reporting violations. Details of the supplementary analysis 
are available in Appendix A of the EIA for the proposed WSRAR.
    For each direct cost, the EPA developed high and low estimates. The 
EPA derived the high estimates from a cost model that assumed no prior 
experience conducting water system assessments. The EPA derived the low 
estimates based on available information about each primacy agency's 
baseline capacity to implement the WSRAR. The primary source of data 
for these estimates was interviews conducted with staff and managers 
from eight state PWSS programs. The EPA used data from these interviews 
to estimate the level-of-effort (LOE, in hours) to develop, administer 
and implement a mandatory assessment program. Following the interviews, 
states provided assessment forms, report examples, procedural 
documents, and spreadsheets showing the LOE for various assessments. 
The EPA used this information to better characterize the LOE estimates 
provided during the interviews. The EPA supplemented the interview 
information with details available on primacy agency websites, as well 
as documents provided by interview states that included assessment 
forms, report examples, state procedures and spreadsheets. The agency 
also used published EPA and state reports on state programs and state 
resource needs.
1. Program Development Burden Estimation
    Based on these assumptions and data sources, the EPA estimated the 
costs of program development using two approaches. Under the first 
approach, the EPA assumed a constant uniform distribution between the 
high and low burden estimate. This approach permitted the EPA to 
estimate a theoretical upper bound program development burden of the 
proposed rule. The EPA refers to estimates based on this approach as 
``full program development'' burden. The ``full program development'' 
burden is designed to show that, even under the constraint that prior 
experience conducting similar activities would not lower the burden of 
developing a mandatory assessment program, the estimated costs of the 
proposed WSRAR would not exceed any statutory or executive order 
thresholds (see section VII of this preamble).
    Under the second approach, while the EPA assumed that all states 
need experience and technical expertise to implement mandatory 
assessment programs, each will start from a different baseline. Using 
the interview data, publicly available information on state websites, 
and published reports, the EPA established three categories of state 
baseline capacity, based on the assumed experience of each state in 
establishing and implementing

[[Page 47016]]

programs to conduct assessment activities like those that would be 
conducted under the proposed rule. Similar activities include Level 2 
assessments under the Revised Total Coliform Rule (RTCR), sanitary 
surveys, TMF capacity assessments, and feasibility studies. The EPA 
assigned all states to one of the three baseline categories, from those 
with the lowest baseline capacity that conduct mostly technical 
capacity assessments (i.e., sanitary surveys), to those with the 
greatest baseline capacity that already evaluate the feasibility of 
restructuring options. Under the ``differential program development'' 
approach, the EPA assumed that for the most experienced states program 
development costs would be 50 percent less than the full cost estimate, 
while for the least experienced states these costs would be equivalent 
to the ``full program development'' model values. For states that 
conduct assessment activities that include in-depth evaluation of 
technical and managerial capacity or routine site visits focused on TMF 
capacity, program development costs would be 25 percent less than the 
full cost estimate.
    Of the two approaches, the EPA assumes the differential program 
development estimates, shown in Table VI-1 of this preamble, more 
accurately represent the cost of the EPA's proposal if finalized. 
Estimates in Table VI-1 of this preamble represent aggregate average 
development costs for primacy agencies during the three years after 
promulgation of the final rule, because the EPA assumes the LOE will 
vary by state based on factors other than program experience, such as 
program efficiencies in implementing procedures or policies, etc. As a 
result, some primacy agencies costs would exceed the highest estimate 
while others would be below the lowest estimate.

                    Table VI-1--Estimated Burden and Cost for Program Development Activities
                     [Differential Program Development Cost Approach, Cost in 2023 Dollars]
----------------------------------------------------------------------------------------------------------------
                                                 Average hours
                Cost component                    per primacy              Multiplier               Total hours
                                                    agency                                              \a\
----------------------------------------------------------------------------------------------------------------
Read and Understand the Rule..................              38  56 primacy agencies \c\.........           2,100
Regulation Adoption, Development of Primacy                623  56 primacy agencies \c\.........          34,905
 Agency Program/Primacy Revision Package \b\.
Update Data System............................              76  56 primacy agencies \c\.........           4,229
Preliminary Data Analysis.....................              32  56 primacy agencies \c\.........           1,790
PWS Outreach and Education....................             212  56 primacy agencies \c\.........          11,863
Staff Training................................             272  56 primacy agencies \c\.........          15,215
                                               -----------------------------------------------------------------
    Total Hours...............................  ..............  ................................          70,102
    Labor Rate................................  ..............  ................................          $70.63
    Estimated Total Cost......................  ..............  ................................      $4,951,212
----------------------------------------------------------------------------------------------------------------
\a\ Totals may not add due to rounding.
\b\ Although the cost of revising primacy packages does not apply to EPA Regions with primacy, the costs were
  included in the model because the costs could not be split out from the other regulation adoption costs.
\c\ Entities with primacy include EPA (which has primacy for Wyoming and American Indian systems), 49 states
  (all except Wyoming), Puerto Rico, American Samoa, Commonwealth of the Northern Mariana Islands, Virgin
  Islands, Guam, and Navajo Nation.

2. Program Administration Costs
    After adopting a new rule, states incur direct costs on an ongoing 
basis to administer the rule. For the proposed WSRAR, each state would 
incur direct program administration costs related to updating mandatory 
assessment guidance, forms, resources, and materials; training 
inexperienced staff; collecting and reviewing data to identify 
candidates for a mandatory assessment; and maintaining required 
records. Unlike the program development cost estimates, the EPA assumed 
that program administration costs would not vary based on past program 
experience conducting similar activities. Based on the results of state 
interviews, the EPA assumed that to identify candidates for mandatory 
assessments, states would collect and review data annually using one-
third the amount of time required to conduct the preliminary data 
analysis. Like the program development cost estimates, the EPA also 
assumed that some primacy agencies would incur a higher level of effort 
(LOE) and some primacy agencies would incur a lower LOE to maintain 
their programs based on factors other than experience, such as program 
efficiencies in implementing procedures or policies. Therefore, the EPA 
calculated the average per primacy agency of the high and low estimates 
to develop the estimate for each program administration activity as 
shown in Table VI-2.

                    Table VI-2--Estimated Average Burden and Cost for Program Administration
                                             [Cost in 2023 Dollars]
----------------------------------------------------------------------------------------------------------------
                                                 Average hours
                Cost component                    per primacy              Multiplier               Total hours
                                                    agency                                              \a\
----------------------------------------------------------------------------------------------------------------
Maintain Program..............................             189  56 primacy agencies \b\.........          10,584
Collect and Review Data.......................              13  56 primacy agencies \b\.........             728
                                               -----------------------------------------------------------------
    Total Hours...............................  ..............  ................................          11,312
    Labor Rate................................  ..............  ................................          $70.63
    Estimated Total Cost......................  ..............  ................................        $798,950
----------------------------------------------------------------------------------------------------------------
\a\ Totals may not add due to rounding.
\b\ Entities with primacy include EPA (which has primacy for Wyoming and American Indian systems), 49 states
  (all except Wyoming), Puerto Rico, American Samoa, Commonwealth of the Northern Mariana Islands, Virgin
  Islands, Guam, and Navajo Nation.


[[Page 47017]]

3. Total Direct Costs
    As a result of its analysis, the EPA estimated that the annualized 
total direct (development and administrative) costs to states of 
implementing the requirements of this proposed WSRAR, if finalized, 
would lie within a 95 percent confidence interval of $0.8 to $1.0 
million at the 2 percent discount rate. As shown in Table VI-3 of this 
preamble, in either the differential or full implementation burden 
scenarios, the estimated annualized total direct cost over a 25-year 
period is not more than $1 million. For more information about how the 
EPA estimated the annualized direct costs, please refer to section VI 
of the EIA.

 Table VI-3--Annualized Direct Costs to Primacy Agencies of the Proposed
                     WSRAR Using a 2% Discount Rate
                       [Millions of 2023 Dollars]
------------------------------------------------------------------------
                                           Differential
                                              program      Full program
             Cost component                 development     development
                                            burden \b\      burden \c\
------------------------------------------------------------------------
Read/Understand Rule:
    Est. 95% CI.........................               *               *
                                                   * - *           * - *
Other Program Development:
    Est. 95% CI.........................            $0.2            $0.3
                                               $0.2-$0.2       $0.3-$0.3
Direct On-Going Program Administration:
    95% CI..............................            $0.6            $0.6
                                               $0.6-$0.7       $0.6-$0.7
        Total Direct Costs \a\..........
            Est. 95% CI.................            $0.9            $0.9
                                               $0.8-$0.9       $0.9-$1.0
------------------------------------------------------------------------
* Costs are positive but less than $50,000, so would round to $0.0 in
  millions of dollars.
\a\ Totals may not add due to rounding.
\b\ Assumes that some primacy agencies will incur lower program
  development costs than others.
\c\ Assumes all primacy agencies will incur the full program development
  costs.

B. Accounting for Uncertainty in the Cost Estimates

    When preparing the EIA, the EPA also accounted for uncertainty in 
estimating the differences in the states' baseline capacity to conduct 
mandatory restructuring assessments, and in the estimated level of 
effort needed to complete program development and administrative tasks. 
The uncertainty in the estimates stems from the limited amount of data 
that could be used to estimate direct costs for all state programs and 
is inherent to the data sources available to populate the cost model. 
Therefore, the EPA used a three-pronged approach to address uncertainty 
in its estimate of the total (direct and indirect) cost of the proposed 
rule, including estimating the cost under four different cost scenarios 
based on two sets of assumptions about the number of assessments that 
primacy agencies could mandate and the cost of program development. 
Each scenario reflects a combination of one of two alternative 
assumptions about the number of assessments primacy agencies will 
mandate and one of two approaches for estimating primacy agencies' 
program development costs.
    Scenario 1a assumes primacy agencies will mandate a low number of 
assessments and have a differential program development burden. 
Scenario 2a assumes primacy agencies will mandate a low number of 
assessments and have a full program development burden. Scenario 1b 
assumes primacy agencies will mandate a high number of assessments and 
have a differential program development burden. Scenario 2b assumes 
primacy agencies will mandate a high number of assessments and a have a 
full program development burden. Table VI-4 summarizes the four 
scenarios for which the EPA evaluated total costs of the proposed rule.

                Table VI-4--Results of Scenario Analysis
                         [Cost in 2023 Dollars]
------------------------------------------------------------------------
                               Number of assessments mandated by primacy
                                               agencies
                             -------------------------------------------
                               Low estimate based    High estimate based
                                  on violation          on violation
  Program development costs    duration approach:    frequency approach:
                                   352 Initial           575 Initial
                               Assessments; 2,015    Assessments; 4,457
                                Assessments over      Assessments over
                                    2028-2048            2028-2048.
------------------------------------------------------------------------
Primacy Agencies in           Scenario 1a (Low      Scenario 1b
 Categories B and C Face       cost):.               (Moderate-high
 Differential Program         Low number of          cost):
 Development Burden.           assessments,         High number of
                               differential          assessments,
                               Program Development   differential
                               burden.               Program Development
                              Annualized cost:       burden.
                               $1.6 million.        Annualized cost:
                              Maximum annual cost    $2.3 million.
                               in a single year:    Maximum annual cost:
                               $2.4 million.         $4.1 million.
All Primacy Agencies Face     Scenario 2a           Scenario 2b (High
 Full Program Development      (Moderate-low         cost):
 Burden as in Category A.      cost):.              High number of
                              Low number of          assessments, full
                               assessments, full     Program Development
                               Program Development   burden.
                               burden.              Annualized cost:
                              Annualized cost:       $2.4 million.
                               $1.7 million.        Maximum annual cost:
                              Maximum annual cost:   $4.1 million.
                               $2.4 million.
------------------------------------------------------------------------
Present value of costs and annualized costs calculated using a 2 percent
  discount rate.


[[Page 47018]]

C. Non-Quantified Benefits of the Proposed WSRAR

    Consistent with the provisions of SDWA section 1414(h), states have 
the discretion to mandate restructuring assessments that require 
assessed PWSs to undertake the restructuring alternatives identified in 
mandatory restructuring assessments, including forms of consolidation 
or transfer of ownership. To quantify the potential costs of these 
activities, the EPA estimated the number of restructuring assessments 
that states would mandate under different scenarios. For the potential 
benefits of the proposed WSRAR, the EPA conducted qualitative analysis 
that included the types of benefits likely to result from 
implementation of the proposed rule, as there is no reasonable basis 
for quantifying the effects of future restructuring activities on 
compliance rates. The EPA could not quantitatively estimate how the 
proposed WSRAR would affect water system capacity to comply with 
health-based standards, or what reductions in morbidity or mortality 
could result from water systems that return to compliance. The primary 
nonquantifiable benefit of mandatory restructuring assessments under 
the proposed WSRAR would be returning assessed PWSs to compliance. The 
EPA also estimates that the proposed WSRAR would generate two potential 
long-term benefits. First, the enforcement relief and liability 
protection incentives increase the likelihood that assessed public 
water systems will restructure and return to compliance with health-
based standards. As a result, public health risks would be reduced in 
communities where the assessed water system restructures. Second, 
states that utilize the mandatory assessment authority will be able 
reduce the administrative costs of enforcement against water systems 
that otherwise would remain persistently noncompliant.

VII. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review, as Amended by 
Executive Order 14094: Modernizing Regulatory Review

    This action is not a significant regulatory action as defined in 
Executive Order 12866, as amended by Executive Order 14094, and was 
therefore not subject to a requirement for Executive Order 12866 
review.

B. Paperwork Reduction Act (PRA)

    The information collection activities in this proposed rulemaking 
have been submitted for approval to the OMB under the PRA. The 
Information Collection Request (ICR) document that the EPA prepared has 
been assigned EPA ICR number 2736.01. You can find a copy of the ICR in 
the docket for this rulemaking, and it is briefly summarized here.
    Because the AWIA directly revised primacy requirements under SDWA 
section 1413, all primacy agencies must submit to the EPA a primacy 
revision application for the proposed WSRAR. Primacy agencies include 
each of the 49 states (all U.S. states except Wyoming), Puerto Rico, 
American Samoa, Commonwealth of the Northern Mariana Islands, Guam, 
Virgin Islands, and Navajo Nation, for a total of 56 primacy agencies. 
The ICR for the proposed WSRAR describes costs and burden for all 56 
primacy agencies to conduct the following activities: adopt the 
proposed WSRAR by developing primacy agency programs and submitting 
primacy revision packages to the EPA for review and approval; update 
data systems; analyze data on water systems that are potential 
candidates for a mandatory restructuring assessment; develop PWS 
outreach and education materials about the WSRAR; and train staff for 
adoption and implementation of the WSRAR (USEPA 2024b).
    The burden estimate is derived from the economic impact analysis of 
the proposed WSRAR (USEPA 2024a). The EPA estimated the potential cost 
of the proposed WSRAR under alternative scenarios to account for 
uncertainty regarding how primacy agencies will develop their programs 
and implement the WSRAR. For the proposed ICR, the EPA used the 
estimated burden hours and costs from the highest cost scenario. Under 
this scenario, the EPA assumed the full program development cost for 
every primacy agency, regardless of existing program capacity to 
implement the proposed WSRAR requirements. This approach established an 
upper bound on the estimated burden and cost of the proposed WSRAR.
    The ICR for the proposed WSRAR presents the total time, effort, and 
financial resources required of primacy agencies to generate, maintain, 
retain, disclose, and/or provide information to the EPA during the 
first three years following WSRAR promulgation. Existing regulations 
under 40 CFR 142.12(b), promulgated pursuant to 42 U.S.C. 300g-2(b)(1), 
allow primacy agencies up to two years to request approval of primacy 
revisions to adopt regulations that are no less stringent than those 
that the EPA promulgates, with an extension of up to two years if the 
EPA Administrator determines the extension is necessary and justified. 
Once approved, primacy agencies may exercise this authority to require 
a PWS to assess options for system restructuring, including forms of 
consolidation or the transfer of ownership to improve drinking water 
quality. The proposed WSRAR imposes no direct reporting requirements on 
PWSs.
    The EPA will use the information collected during the first three 
years after promulgation of the WSRAR to review each submitting primacy 
agency's application and to determine whether the submitting primacy 
agency has met the proposed revised requirements under 40 CFR 142.10 
and 142.11.
    Respondents/affected entities: Primacy agencies.
    Respondent's obligation to respond: Mandatory pursuant to 42 U.S.C. 
300g-2(a)(6) and the agency's authority in the implementing regulations 
for revisions to state programs under 40 CFR 142.12.
    Estimated number of respondents: 56.
    Frequency of response: Once for each respondent to read and 
understand the rule; develop a program; submit a primacy application to 
the EPA; update data systems; conduct preliminary data analysis; 
educate PWSs in rule requirements; and conduct staff training.
    Total estimated burden: 29,088 hours per year across all 56 primacy 
agencies. Burden is defined at 5 CFR 1320.3(b).
    Total estimated costs: $1,889,497 per year across all 56 primacy 
agencies, including $0 in annualized capital or operation and 
maintenance costs. 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 the EPA's regulations in 40 CFR are listed in 40 CFR part 9. Submit 
your comments on the agency's need for this information, the accuracy 
of the provided burden estimates, and any suggested methods for 
minimizing respondent burden to the EPA using the docket identified at 
the beginning of this rule. The EPA will respond to any ICR-related 
comments in the final rule. You may also send your ICR-related comments 
to OMB's Office of Information and Regulatory Affairs using the 
interface at www.reginfo.gov/public/do/PRAMain. Find this particular 
information collection by selecting ``Currently under Review--Open for 
Public Comments'' or by using the search function. OMB must receive 
comments no later than July 29, 2024.

[[Page 47019]]

C. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic 
impact on a substantial number of small entities under the RFA. This 
action will not impose any requirements on small entities. The proposed 
WSRAR mandate applies only to state or Tribal government agencies with 
primary enforcement responsibility (primacy). The EPA expects states 
that elect to exercise their mandatory assessment authority will 
conduct nearly all mandatory restructuring assessments. Finally, this 
action does not require small entities to implement any restructuring 
activities identified in a mandatory assessment (USEPA 2024a). Small 
entities may voluntarily submit restructuring plans that must meet the 
eligibility requirements established by SDWA and any additional 
requirements of the proposed WSRAR.

D. Unfunded Mandates Reform Act (UMRA)

    This action does not contain an unfunded mandate of $100 million or 
more as described in UMRA, 2 U.S.C. 1531-1538, and does not 
significantly or uniquely affect small governments. The proposed WSRAR 
requirements to establish a mandatory assessment program and to submit 
a primacy revision to the EPA apply only to state or Tribal government 
agencies with primary enforcement authority under 42 U.S.C. 300(g)-2 
and not to small governments as defined by UMRA.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have 
substantial direct effects on the states, on the relationship between 
the national government and the states, or on the distribution of power 
and responsibilities among the various levels of government. The 
proposed WSRAR, if finalized, mandates primacy agencies to adopt and 
develop mandatory assessment programs, including new recordkeeping 
requirements, and to submit primacy applications to the EPA for review. 
The Analysis of the Economic Impacts of the Proposed Water System 
Restructuring Assessment WSRAR, which can be found in the docket, 
estimated the annualized direct cost for state, local, and tribal 
governments in the aggregate to be $0.8 to $1.0 million annualized at a 
2 percent discount rate. In addition, because the proposed WSRAR also 
does not impose any requirements on small governments, it has no impact 
on small government revenues. As a result, the proposed WSRAR does not 
have substantial compliance costs and Executive Order 13132 does not 
apply to this action. Pursuant to SDWA 1413(a)(6), the proposed WSRAR 
would establish implementing regulations for states to adopt mandatory 
assessment programs and establish reporting and recordkeeping 
requirements but would not preempt state or local law. Therefore, the 
preemption threshold under Executive Order 13132 also does not apply to 
this action.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    This action does not have Tribal implications as specified in 
Executive Order 13175. The proposed WSRAR does not uniquely affect the 
communities of Tribal governments, nor does it impose substantial 
direct compliance costs on those communities. The direct compliance 
costs of the primacy requirements of the proposed WSRAR would apply 
uniformly to primacy agencies. Thus, Executive Order 13175 does not 
apply to this action. Consistent with the EPA's Policy on Consultation 
and Coordination with Indian Tribes, the EPA consulted with Tribal 
officials during the development of this action from October 4 through 
November 15, 2019, including two national webinars conducted for all 
federally recognized Tribes. The EPA conducted the first webinar on 
October 16 and the second webinar on October 30, for a total of 47 
participants. The EPA provided an overview of the AWIA restructuring-
related amendments to the SDWA and sought Tribal input on the potential 
effects of the amendments on Tribal governments and Tribal PWSs.
    During the webinars, the EPA requested input from Tribal 
governments on three aspects of WSRAR development: first, factors that 
EPA should consider for mandatory assessments of Tribal PWSs; second, 
whether and how the amended SDWA provisions to obtain enforcement 
relief from primacy agencies might affect the number of restructuring 
plans submitted by Tribal PWSs; and third, whether and how the amended 
SDWA provisions to obtain liability protection for compliant (non-
responsible) water systems that are consolidating with, or acquiring, 
assessed PWSs might affect the number of restructuring plans submitted 
by Tribal PWSs. In addition, on October 9, 2019, the EPA participated 
in informational meetings upon request with the Region 1 Tribal 
Operations Committee (RTOC) and National Tribal Water Council (NTWC) to 
discuss the AWIA amendments to SDWA. During these informational 
meetings, the EPA encouraged broad participation in both national 
webinars to ensure that the agency could explain the policy 
implications of the SDWA-required provisions of the WSRAR to Tribal 
PWSs and could hear Tribal perspectives before drafting this proposal. 
Tribes did not provide written comments or further requests for 
consultation or outreach by the end of the consultation period. This 
discussion under Executive Order 13175 serves as a summary of EPA's 
Tribal consultation efforts for this proposed rulemaking.

G. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

    The EPA interprets Executive Order 13045 as applying only to those 
regulatory actions that concern environmental health or safety risks 
that the EPA has reason to believe may disproportionately affect 
children, per the definition of ``covered regulatory action'' in 
section 2-202 of the Executive Order. Therefore, this action is not 
subject to Executive Order 13045 because it does not concern an 
environmental health risk or safety risk. Since this action does not 
concern human health, EPA's Policy on Children's Health also does not 
apply.

H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution or Use

    This action is not subject to Executive Order 13211 because it is 
not a significant regulatory action under Executive Order 12866.

I. National Technology Transfer and Advancement Act (NTTAA)

    This rulemaking does not involve technical standards.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations and 
Executive Order 14096: Revitalizing Our Nation's Commitment to 
Environmental Justice for All

    The EPA believes that the human health or environmental conditions 
that exist prior to this action may result in or have the potential to 
result in disproportionate and adverse human health or environmental 
effects on communities with environmental justice concerns. The EPA has 
identified several recent studies that support this Executive Order 
review which indicate disparities in access to safe drinking water 
based on racial or socioeconomic status in the United States (Zhang, et 
al. 2022; Martinez-Morata et al. 2022;

[[Page 47020]]

Rockowitz et al. 2018; London, et. al. 2018; Mack and Wrase 2017; 
Gasteyer, et al. 2016).
    The EPA believes that it is not practicable to assess whether this 
action is likely to change existing disproportionate and adverse 
effects on communities with environmental justice concerns. Consistent 
with SDWA 1414(h), the proposed rule requires states to establish 
mandatory assessment programs and provides states with the discretion 
to use the mandatory assessment authority for persistently noncompliant 
PWSs, including those that serve communities with environmental justice 
concerns. The rule does not require a PWS or a community to implement 
any restructuring actions identified in a mandatory restructuring 
assessment. Instead, the rule establishes eligibility criteria for SDWA 
incentives under which PWSs would voluntarily submit restructuring 
plans. As a result, it is difficult to quantify the potential impacts 
of this rulemaking on communities with environmental justice concerns.
    The EPA proposes in this rule several requirements that are 
intended to ensure that mandatory assessments and restructuring plans 
are carried out in a transparent manner with the direct involvement of, 
and engagement with, impacted communities:
     States would be required to hold a public meeting before 
approving an assessment report or proposed restructuring plan. The 
public meeting would be subject to notice, location, and time 
requirements to ensure it is well publicized and accessible to all 
interested and affected parties.
     States would be required to make drafts of mandatory 
assessment reports available before and during public meetings, and 
physical and electronic copies of state-approved mandatory assessment 
reports and restructuring plans publicly available within 30 days of 
approval. This requirement increases transparency of drinking water 
utility decision making for potentially impacted communities.
     Assessments would be required to meet minimum tailoring 
requirements that expressly require the assessor to determine whether 
the assessed water system meets the state definition of a disadvantaged 
community pursuant to the requirements of SDWA section 1452(d) or to 42 
U.S.C 300j-19(c)(2)(B), or whether the consumers served by assessed 
system are underserved pursuant to 42 U.S.C. 300j-19a. This requirement 
would benefit underserved or disadvantaged populations because it 
ensures that the assessment identifies affordable restructuring options 
in the communities served by the assessed water system.
     Assessments and restructuring plans would be required to 
describe how restructuring would ensure that the community served by 
the assessed water system would achieve access to safe, affordable 
drinking water.
     States would be required to consult with the assessed 
water system to discuss the results of the assessment. This 
consultation is intended to ensure that the assessed water system 
understands the restructuring options, the potential benefits of 
restructuring, and available funding sources.
    In addition to these proposed requirements, in section IV of this 
preamble the agency specifically requests public comment on additional 
requirements to ensure that communities are directly involved and 
engaged in mandatory restructuring assessments.

VIII. References

AWWA. (2012). National Inventory of Regional Collaboration Among 
Water and Wastewater Utilities: Final Report. Retrieved from: 
https://www.awwa.org/Portals/0/AWWA/ETS/Resources/awwautilitycollaborationreport.pdf?ver=2018-12-27-132811-107
AWWARF. (2008). Regional Solutions to Water Supply Provision. Second 
Edition. Retrieved from: https://www.waterrf.org/research/projects/regional-solutions-water-supply-provision
California State Water Resources Control Board. (2021). 2021 
Drinking Water Needs Assessment. Informing the 2021-22 Safe and 
Affordable Drinking Water Fund Expenditure Plan. Retrieved from: 
https://www.waterboards.ca.gov/drinking_water/certlic/drinkingwater/needs.html
London, Jonathan et al. (2018). The Struggle for Water Justice in 
California's San Joaquin Valley: A Focus on Disadvantaged 
Unincorporated Communities. UC Davis Center for Regional Change. 
Retrieved from: https://regionalchange.ucdavis.edu/report/the-struggle-for-water-justice
Gasteyer, S., Lai, J., Tucker, B., Carrera, J., & Moss, J. (2016). 
BASICS INEQUALITY: Race and Access to Complete Plumbing Facilities 
in the United States. Du Bois Review: Social Science Research on 
Race, 13(2), 305-325. doi:10.1017/S1742058X16000242
Green Nylen Nell, Camille Pannu, Michael Kiparsky. (2018). Learning 
from California's Experience with Small Water System Consolidations: 
A Workshop Synthesis. Center for Law, Energy and the Environment, UC 
Berkeley School of Law, Berkely, CA. Retrieved from: https://www.law.berkeley.edu/research/clee/resources/publications/
Mack, E.A., Wrase, S. (2017). A Burgeoning Crisis? A Nationwide 
Assessment of the Geography of Water Affordability in the United 
States. PLoS ONE 12(1): e0169488. doi:10.1371/journal.pone.0169488
Martinez-Morata, I., Bostick, B.C., Conroy-Ben, O. et al. (2022). 
Nationwide geospatial analysis of county racial and ethnic 
composition and public drinking water arsenic and uranium. Nat 
Commun 13, 7461. https://doi.org/10.1038/s41467-022-35185-6
Rockowitz, D., Askew-Merwin, C., Sahai, M., Markley, K., Kay, C. & 
Reames, T. (2018). Household Water Security in Metropolitan Detroit: 
Measuring the Affordability Gap. University of Michigan Policy 
Solutions, Policy Paper. August.
Rural Community Assistance Partnership (RCAP). (2020). Resiliency 
Through Water and Wastewater System Partnerships: 10 Lessons from 
Community Leaders. Research Report. Retrieved from: https://www.rcap.org/community-resources/
Rural Community Assistance Corporation (RCAC). (2016a). Alpaugh and 
Allensworth Regional Water System Governance and Finance Study. 
Obtained from: Rural Community Assistance Corporation, 3120 
Freeboard Drive, Suite 201, West Sacramento, CA 95691
Rural Community Assistance Corporation (RCAC). (2016b). Northern 
Tulare County Evaluation of Governance Structures and Affordability. 
Obtained from: Rural Community Assistance Corporation, 3120 
Freeboard Drive, Suite 201, West Sacramento, CA 95691
UNC Environmental Finance Center. (2019a). Consolidation of Water 
and Wastewater Systems: Options and Considerations. Retrieved from: 
https://efc.sog.unc.edu/resource/utility-regionalization-and-consolidation/
UNC Environmental Finance Center. (2019b). Crafting Interlocal Water 
and Wastewater Agreements. Retrieved from: https://efc.sog.unc.edu/resource/utility-regionalization-and-consolidation/
USEPA. (2023). Water Technical Assistance: Ensuring Equitable Access 
to Water Infrastructure Funding. Fact Sheet. Retrieved from: https://www.epa.gov/water-infrastructure/water-technical-assistance-waterta
USEPA. (2024a). Analysis of the Economic Impacts of the Proposed 
Water System Restructuring Assessment Rule. 810-P24-001
USEPA. (2024b). Information Collection Request for the Proposed 
Water System Restructuring Assessment Rule. OMB Control Number 2040-
AF96. EPA ICR Number 2736.01. USEPA 2017. Water System Partnerships: 
State Programs and Policies Supporting Cooperative Approaches for 
Drinking Water Systems 816-S-17-002.
USEPA. (2016). Drinking Water and Wastewater Utility Customer 
Assistance Programs.
US Water Alliance. (2022). Catalyzing Community-Driven Utility 
Consolidations and Partnerships.

[[Page 47021]]

Retrieved from: http://uswateralliance.org/resources/
US Water Alliance. (2019). Utility Strengthening through 
Consolidation: Guiding Principles for the Water Sector. Retrieved 
from: http://uswateralliance.org/programs/other-initiatives/utility-consolidation/
US Water Alliance and UNC Environmental Finance Center. (2019). 
Strengthening Utilities Through Consolidation: The Financial Impact. 
Retrieved from: http://uswateralliance.org/programs/other-initiatives/utility-consolidation/
Water Research Foundation. (2020). Solutions for Underperforming 
Drinking Water Systems in California. WRF Project Number 5015. 
Retrieved from: https://www.waterrf.org/research/projects/solutions-underperforming-drinking-water-systems-california
Water Research Foundation. (2018). Water Utility Partnership 
Resource Guide and Toolbox. WRF Project Number 4750. Retrieved from: 
https://www.waterrf.org/research/projects/water-utility-partnerships-resource-guide-and-toolbox
X. Zhang, M. Gonz[aacute]lez Rivas, M. Grant, M. E. Warner. (2022). 
Water pricing and affordability in the US: public vs. private 
ownership. Water Policy 1 March 2022; 24 (3): 500-516. doi: https://doi.org/10.2166/wp.2022.283

List of Subjects in 40 CFR Part 142

    Environmental protection, Administrative practice and procedure, 
Chemicals, Indian lands, Radiation protection, Reporting and 
recordkeeping requirements, Water supply.

Michael S. Regan,
Administrator.
    For the reasons set forth in the preamble, the EPA proposes to 
amend 40 CFR part 142 as follows:

PART 142--NATIONAL PRIMARY DRINKING WATER REGULATIONS 
IMPLEMENTATION

0
1. The authority citation for part 142 is revised to read as follows:

    Authority:  42 U.S.C. 300f, 42 U.S.C. 300g-1, 300g-2, 300g-3, 
300g-4, 300g-5, 300g-6, and 42 U.S.C. 300j-4, 300j-9, and 300j-11.
0
2. Amend Sec.  142.10 by adding paragraph (i) to read as follows:


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

* * * * *
    (i) Has adopted and is implementing procedures for requiring that 
an assessment be completed with respect to alternatives for 
consolidation, transfer of ownership, or other restructuring actions in 
accordance with 40 CFR part 142 subpart J, including procedures to:
    (1) Establish that a public water system has satisfied the 
statutory preconditions for a mandatory restructuring assessment 
pursuant to Sec.  142.92(a) and to notify the assessed public water 
system pursuant to Sec.  142.92(b);
    (2) Ensure that an assessment meets the minimum assessment 
tailoring criteria of Sec.  142.92(c) and the minimum report content 
requirements of Sec.  142.92(d);
    (3) Review and approve eligible assessors pursuant to Sec.  
142.92(e);
    (4) Ensure that the assessment is conducted according to a schedule 
pursuant to Sec.  142.92(f);
    (5) Determine whether a restructuring plan is eligible for 
restructuring incentives pursuant to Sec.  142.93;
    (6) Review restructuring plans pursuant to Sec.  142.94 to 
determine public water system eligibility for enforcement relief;
    (7) Review restructuring plans pursuant to Sec.  142.95 to 
determine non-responsible public water system eligibility for liability 
protection, and the extent of liability protection, as applicable;
    (8) Enforce mandatory assessment requirements pursuant to Sec.  
142.97; and
    (9) Implement the reporting and recordkeeping requirements related 
to mandatory assessments and approved restructuring plans pursuant to 
Sec. Sec.  142.14(h) and 142.15(c)(8).
0
3. Amend Sec.  142.11 by adding paragraph (a)(8) to read as follows:


Sec.  142.11  Initial determination of primary enforcement 
responsibility.

    (a) * * *
    (8) A description of the State's procedures for requiring that an 
assessment be completed with respect to alternatives for consolidation, 
transfer of ownership, or other restructuring actions in accordance 
with 40 CFR part 142 subpart J, including procedures to:
    (i) Establish that a public water system has satisfied the 
statutory preconditions for a mandatory restructuring assessment 
pursuant to Sec.  142.92(a) and to notify the assessed public water 
system pursuant to Sec.  142.92(b);
    (ii) Ensure that an assessment meets the minimum assessment 
tailoring criteria of Sec.  142.92(c) and the minimum report content 
requirements of Sec.  142.92(d);
    (iii) Review and approve eligible assessors pursuant to Sec.  
142.92(e);
    (iv) Ensure that the assessment is conducted according to a 
schedule pursuant to Sec.  142.92(f);
    (v) Determine whether a restructuring plan is eligible for 
restructuring pursuant to Sec.  142.93;
    (vi) Review restructuring plans pursuant to Sec.  142.94 to 
determine public water system eligibility for enforcement relief;
    (vii) Review restructuring plans pursuant to Sec.  142.95 to 
determine non-responsible water system eligibility for liability 
protection, and the extent of liability protection, as applicable;
    (viii) Enforce mandatory assessment requirements pursuant to Sec.  
142.97; and
    (ix) Implement the reporting and recordkeeping requirements related 
to mandatory assessments and to approved restructuring plans pursuant 
to Sec. Sec.  142.14(h) and 142.15(c)(8).
* * * * *
0
4. Amend Sec.  142.14 by adding paragraph (h) to read as follows:


Sec.  142.14  Records kept by States.

* * * * *
    (h) Pursuant to 40 CFR part 142 subpart J, each State that has 
primary enforcement responsibility shall retain, and provide to the 
Administrator upon request, records of any plans submitted by a public 
water system for consolidation, transfer of ownership, or other 
restructuring actions, and of any mandatory assessment reports approved 
by the State as follows:
    (1) From the date of plan approval until one year following the 
completion of all activities in an approved restructuring plan that 
meets the requirements for enforcement relief pursuant to Sec.  142.94, 
a copy of the approved restructuring plan and, if conducted, a copy of 
the approved assessment report on which the approved plan may be based.
    (2) From the date of plan approval until one year following the 
completion of all activities in an approved restructuring plan that 
meets the requirements for liability protection of a non-responsible 
public water system pursuant to Sec.  142.95, a copy of the approved 
plan and a copy of the approved assessment report on which the plan 
must be based.
    (3) For five years from the date of approval of a mandatory 
restructuring assessment pursuant to Sec.  142.92(f), a copy of the 
assessment report, notwithstanding the assessment retention 
requirements of paragraphs (h)(1) and (2) of this section.
0
5. Amend Sec.  142.15 by adding paragraph (c)(8) to read as follows:


Sec.  142.15  Reports by States.

* * * * *
    (c) *-*-*
    (8) Water system restructuring assessment rule. Each State that has 
primary enforcement responsibility shall report annually to the 
Administrator, in a format and on a schedule prescribed by the 
Administrator, the name and

[[Page 47022]]

identification number of each public water system:
    (i) That has satisfied the preconditions for a mandatory 
restructuring assessment as required pursuant to Sec.  142.92(a), 
including the date on which the State made its finding;
    (ii) That the State has identified pursuant to paragraph (c)(8)(i) 
of this section, and has notified as the subject of a mandatory 
restructuring assessment pursuant to a schedule as described in Sec.  
142.92(f) including the date of notification;
    (iii) That the State has notified pursuant to paragraph (c)(8)(ii) 
of this section, and that has completed a mandatory restructuring 
assessment pursuant to Sec.  142.92 as determined by the State, 
including the date of determination.
    (iv) That is in violation of the mandatory restructuring assessment 
requirements pursuant to Sec.  142.97, by violation type and violation 
date; or
    (v) That the State has determined to be eligible for enforcement 
relief pursuant to Sec.  142.94 or liability protection pursuant to 
Sec.  142.95, including the type of eligibility and the date of plan 
approval.
* * * * *
0
6. Add subpart J to read as follows
Subpart J--Mandatory Restructuring Assessments and Restructuring Plans
Sec.
142.90 General.
142.91 Definitions.
142.92 Mandatory restructuring assessments.
142.93 Restructuring plans.
142.94 Enforcement relief under approved restructuring plans.
142.95 Liability protection under approved restructuring plans.
142.96 DWSRF eligibility of restructuring activities.
142.97 Reporting violations.

Subpart J--Mandatory Restructuring Assessments and Restructuring 
Plans


Sec.  142.90  General.

    (a) Authority. A State that meets the requirements for a 
determination of primary enforcement responsibility, and that has 
obtained such responsibility from the Administrator pursuant to 42 
U.S.C 300g-2 and its implementing regulations at 40 CFR part 142, 
subpart B, is authorized to implement this subpart.
    (b) Implementation by the EPA. A Regional Administrator with 
primary enforcement responsibility may exercise all authorities 
extended to States in this subpart.
    (c) Applicability. The provisions of this subpart apply to all 
States with primary enforcement responsibility, to all public water 
systems for which a mandatory restructuring assessment is required or 
approved by a State pursuant to Sec.  142.92, and to suppliers of water 
that have submitted a restructuring plan to the State pursuant to Sec.  
142.93.


Sec.  142.91  Definitions.

    The following definitions apply to terms used in this subpart:
    Assessed water system. Refers to a public water system that 
satisfies the mandatory assessment preconditions under Sec.  142.92(a) 
and that is the subject of a mandatory restructuring assessment 
required by the State under this subpart.
    Enforcement relief. Refers to the ``consequences of approval'' at 
42 U.S.C. 300g-3(h)(2) and means that, except for the limitations 
described in Sec.  142.94, if a primacy agency approves a restructuring 
plan that is eligible under Sec.  142.93 and that satisfies the 
applicable requirements of Sec.  142.94, then with respect to each 
specific violation identified in the approved plan, as of the date of 
plan approval, the State shall not take enforcement action until the 
earlier of:
    (1) Two years from the date on which the primacy agency approves 
the restructuring plan; or
    (2) The date on which all restructuring activities identified in 
the schedule of the approved plan have been completed.
    Liability protection. Refers to the ``reservation of funds'' at 42 
U.S.C. 300g-3(h)(5)(B) and means that if a State approves a 
restructuring plan that is eligible under Sec.  142.93 and that 
satisfies the applicable requirements of Sec.  142.95 and determines 
that all of the activities in the approved plan have been completed, 
then the non-responsible water system shall not be liable for a 
specific violation identified in the approved plan, except to the 
extent to which funds or other assets identified in the plan are 
available to satisfy such liability.
    Mandatory restructuring assessment. Refers to the ``mandatory 
assessment'' at 42 U.S.C. 300g-3(h)(3) and means an evaluation of 
alternatives for consolidation, transfer of ownership or other types of 
restructuring at the assessed water system pursuant to the applicable 
requirements of Sec.  142.92.
    Non-responsible water system. Refers to a public water system that 
is not liable under the SDWA for a specific violation identified in an 
approved restructuring plan that meets all requirements of Sec.  
142.95.
    Restructuring plan. Refers to ``plans'' at 42 U.S.C. 300g-3(h)(1) 
and means a plan that is submitted to the State for purposes of 
enforcement relief or liability protection under this subpart, and that 
is intended to achieve greater compliance with national primary 
drinking water regulations through:
    (1) Physical consolidation of the public water system with one or 
more other public water systems;
    (2) The consolidation of significant management or administrative 
functions of the public water system with one or more other public 
water systems; the transfer of ownership of the public water system to 
another public water system for purposes of improving drinking water 
quality; or
    (3) Entering into a contractual agreement for significant 
management or administrative functions of the public water system to 
correct violations identified in the plan.


Sec.  142.92  Mandatory restructuring assessments.

    (a) Mandatory assessment preconditions. A State may mandate a 
restructuring assessment of a public water system if the State finds 
that:
    (1) The water system has repeatedly violated one or more national 
primary drinking water regulations, and such repeated violations are 
likely to adversely affect human health;
    (2) The supplier of water is unable or unwilling to take feasible 
and affordable actions, as determined by the State, that will result in 
the public water system complying with the national primary drinking 
water regulations, or has already undertaken such actions, including 
accessing technical assistance or financial assistance from the State, 
without achieving compliance;
    (3) Physical, administrative, or managerial consolidation, transfer 
of ownership, or another type of restructuring is feasible for the 
water system; and
    (4) Physical, administrative, or managerial consolidation, transfer 
of ownership, or another type of restructuring of the water system 
could result in greater compliance with national primary drinking water 
regulations.
    (b) State notification. A State that mandates an assessment 
pursuant to this section shall notify the supplier of water in writing.
    (c) Minimum assessment tailoring criteria. A mandatory 
restructuring assessment conducted pursuant to this section shall 
evaluate, at a minimum, the feasibility of the proposed restructuring 
alternatives based on the following criteria:

[[Page 47023]]

    (1) System size based on the number of people served by the 
assessed water system;
    (2) Whether the assessed water system is a community or 
noncommunity water system;
    (3) The source(s) of water used by the assessed water system;
    (4) The technical, managerial, and financial (TMF) capacity of the 
assessed water system;
    (5) Whether the service area of the assessed water system is 
disadvantaged pursuant to the State's definition under 42 U.S.C. 300j-
12(d)(3) or to 42 U.S.C 300j-19(c)(2)(B), or is underserved pursuant to 
42 U.S.C. 300j-19a;
    (6) Geographic factors;
    (7) Hydrogeologic or geologic factors; and
    (8) State or local statutory or regulatory requirements.
    (d) Minimum assessment report content requirements. The results of 
the mandatory restructuring assessment must be documented in a report 
that, at a minimum:
    (1) Identifies all unresolved violations at the assessed water 
system, the underlying causes of the violations, and the enforcement 
status of each violation;
    (2) Identifies at least one feasible restructuring alternative, and 
describes how the alternative(s) will:
    (i) Return the system to compliance as soon as practicable; and 
(ii) Help ensure the technical, financial, and managerial capacity of 
the assessed water system to provide safe drinking water;
    (3) Describes how the assessor has determined the feasibility of 
the identified alternative(s) pursuant to paragraph (c) of this 
section, including how alternative(s) will ensure that a community 
served by the assessed water system receives safe and affordable 
drinking water;
    (4) Explains, if a type of consolidation or a transfer of ownership 
is not identified as a feasible restructuring alternative, why such 
alternative is not feasible; and
    (5) Describes the processes, procedures, data, data sources, and 
other information used to identify feasible restructuring alternatives 
for the assessed water system.
    (e) Eligible assessors. The supplier of water at the assessed water 
system or a third party-approved by the State may conduct a mandatory 
restructuring assessment pursuant to this section; otherwise, the State 
may conduct the assessment.
    (f) Assessment schedule. Mandatory restructuring assessments shall 
be conducted as follows:
    (1) Within 30 days of the date of State notification that a 
mandatory restructuring assessment is required, the supplier of water 
may request in writing State approval of either a self-assessment or a 
third-party assessor on its behalf; otherwise, the State may conduct 
the mandatory restructuring assessment.
    (2) Within 30 days of the date of request by the supplier of water 
pursuant to paragraph (f)(1) of this section, the State shall determine 
whether to approve a third-party assessor or a self-assessment and 
notify the supplier of water.
    (i) If the State approves a self-assessment or a third-party 
assessor to conduct the mandatory restructuring assessment, the 
supplier of water must submit an assessment report on a date that is 
determined by the State. At any time during the implementation of the 
mandatory restructuring assessment, either the supplier of water or the 
State may consult with the other party to determine whether to revise 
the assessment report submittal date. The State may determine whether 
to revise the submittal date based on documentation or other 
information acceptable to the State.
    (ii) If the State does not approve a third-party assessor or a 
self-assessment, the State may conduct the mandatory restructuring 
assessment and develop the assessment report. In such cases, the 
supplier of water shall provide as soon as practicable any information 
deemed necessary by the State to complete a mandatory restructuring 
assessment pursuant to the requirements of this section.
    (3) When submitting the assessment report to the State, the 
supplier of water or a third-party assessor must provide a 
certification statement to affirm:
    (i) The authority of the assessor to verify the results of the 
mandatory restructuring assessment;
    (ii) That the information included in the assessment report is 
true, accurate and complete; and
    (iii) That the assessor understands that there are penalties for 
submitting false information to the State.
    (4) If the assessment report identifies a form of consolidation or 
transfer of ownership during the mandatory assessment, the State shall 
hold at least one public meeting in the community served by the 
assessed water system. The public meeting shall satisfy EPA public 
meeting requirements under 40 CFR 25.6 and any applicable provisions of 
State law (as determined by the State). Otherwise, as soon as 
practicable following the date of submission, the State shall review 
the assessment pursuant to paragraph (f)(5)(i) or ((ii) of this 
section.
    (i) If the supplier of water performs the mandatory assessment, the 
State shall hold the public meeting as soon as practicable from the 
date of submission.
    (ii) If the State performs the mandatory assessment, the State 
shall hold the public meeting before completing its assessment report.
    (5) As soon as practicable following the date of a public meeting 
pursuant to paragraph (f)(4) of this section, the State shall review 
the assessment report to determine whether it satisfies the 
requirements of this section.
    (i) If the supplier of water has prepared the assessment report and 
the State determines it satisfies the requirements of this section, 
then the assessment is approved and the State shall notify the supplier 
of water in writing within 7 business days of its determination. 
Otherwise, the State may consult with the supplier of water to 
determine a schedule and a method by which a revised assessment report 
must be completed pursuant to the requirements of this section.
    (ii) If the State has prepared the assessment report, the State 
shall ensure that the report satisfies the requirements of this section 
and is otherwise complete. Upon such completion, the State shall notify 
the supplier of water in writing within 7 business days of its 
determination.
    (6) Within 30 days of the State's approval of an assessment report 
submitted by the supplier of water or of the State's completion of an 
assessment report, the State shall make available to the public a copy 
of the approved assessment report in an electronic format on an 
appropriate State website and shall transmit physical copies of the 
restructuring plan to one or more public libraries in the closest 
possible proximity to the community served by the restructuring 
supplier of water.
    (7) If the State has notified the supplier of water that the 
assessment report is approved or that the State assessment report is 
complete, the State shall consult with the supplier of water as soon as 
practicable to discuss the results of the mandatory restructuring 
assessment.


Sec.  142.93  Restructuring plans.

    (a) Plan types eligible for restructuring incentives. A supplier of 
water may submit to the State, for purposes of enforcement relief or 
liability protection under this subpart, a restructuring plan that is 
intended to achieve greater compliance with national primary drinking 
water regulations through:
    (1) Physical consolidation of the water system with one or more 
other water systems;

[[Page 47024]]

    (2) The consolidation of significant management or administrative 
functions of the water system with one or more other water systems;
    (3) The transfer of ownership of the water system to another water 
system for purposes of improving drinking water quality; or
    (4) Entering into a contractual agreement for significant 
management or administrative functions of the system to correct 
violations identified in the plan.
    (b) State determination. As soon as practicable, but no later than 
60 days from the date it receives a restructuring plan, the State shall 
determine whether the plan is eligible pursuant to paragraph (a) of 
this section and shall notify the supplier of water in writing.
    (i) If the State determines that the plan is eligible pursuant to 
paragraph (a) of this section, then pursuant to Sec.  142.94 or Sec.  
142.95, the State shall determine whether the plan also satisfies the 
applicable requirements for enforcement relief or liability protection.
    (ii) If the State determines that the plan is not eligible pursuant 
to paragraph (a) of this section, then the State may consult with the 
supplier of water that submitted the ineligible plan to determine a 
schedule and a method by which a corrected plan may be submitted.
    (c) Plan revisions. If at any time during the implementation of an 
approved restructuring plan a supplier of water submits a revised plan 
to the State, the State may review the revised plan pursuant to the 
requirements of this section and the applicable requirements and 
limitations of Sec. Sec.  142.94 and 142.95.


Sec.  142.94  Enforcement relief under approved restructuring plans.

    (a) Minimum plan eligibility requirements for enforcement relief. 
To obtain enforcement relief under this subpart, the supplier of water 
must submit a restructuring plan that the State has determined is 
eligible for restructuring incentives pursuant to Sec.  142.93(a) and 
that:
    (1) Identifies each specific violation that the restructuring plan 
is intended to correct;
    (2) Describes, using data and other forms of documentation 
acceptable to the State, how the activities in the restructuring plan 
will protect public health as soon as practicable by addressing the 
underlying causes of the identified violations;
    (3) Proposes a schedule for implementing and completing each of the 
restructuring activities identified in the plan, including corrective 
actions to resolve identified violations and measures by which the 
State can assess progress for each restructuring activity;
    (4) Describes, using data and other forms of documentation 
acceptable to the State, how the restructuring plan will improve, as 
applicable, the technical capacity, managerial capacity, or financial 
capacity of the restructuring system to achieve compliance with 
national primary drinking water regulations;
    (5) Describes how the proposed restructuring plan will ensure that 
the community served by the restructured water system receives safe and 
affordable drinking water; and
    (6) Requests enforcement relief from the violations identified in 
the plan for the noncompliant water system(s) subject to the plan.
    (b) Conditional plan eligibility requirements for enforcement 
relief. In addition to the minimum requirements of Sec.  142.94(a), to 
obtain enforcement relief under this subpart, the supplier of water 
must submit a restructuring plan that satisfies the following 
conditional requirements, as applicable:
    (1) If the restructuring plan will result in a change in the 
supplier of water at the restructured water system, the submitted plan 
must identify both the date on which the change is planned to occur, 
and the identity of the new supplier of water at the restructured water 
system.;
    (2) If the restructuring plan will require one or more suppliers of 
water to establish a new or revised governance structure, the plan must 
describe the new governance structure and how it will help achieve the 
objectives of the plan; and
    (3) If the restructuring plan includes the temporary provision of 
an alternative source or supply of water, the plan must include an 
implementation schedule and measures, supported by data and other forms 
of documentation acceptable to the State, that describe how the water 
served will comply with applicable Federal or state regulations and 
identify when the temporary alternative source will no longer be 
needed.
    (c) Eligible violation types. For purposes of enforcement relief 
under this subpart, specific violations of the SDWA and its 
implementing regulations must be identified in the restructuring plan 
submitted to the State.
    (d) Public meeting. As soon as practicable after making its 
determination pursuant to Sec.  142.93(b), the State shall hold at 
least one public meeting with the community served by a restructuring 
public water system regarding the proposed restructuring plan. The 
meeting shall be held in accordance with EPA public meeting 
requirements under 40 CFR 25.6 and any applicable provisions of State 
law (as determined by the State).
    (e) State determination date. As soon as practicable, but no later 
than 12 months from the date on which it determines that a submitted 
restructuring plan is an eligible type pursuant to Sec.  142.93(b), the 
State shall determine whether the requirements of paragraphs (a) 
through (d) of this section have been satisfied and shall notify the 
supplier of water in writing. If the State determines that the 
submitted plan satisfies the requirements, then the plan is approved, 
otherwise, the State may consult with the supplier of water that 
submitted the plan to determine a schedule and a method by which a 
corrected plan may be submitted.
    (f) Plan availability. Within 30 days of its determination under 
paragraph (e) of this section, the State shall make available to the 
public a copy of the approved restructuring plan in an electronic 
format on an appropriate State website and shall transmit physical 
copies of the restructuring plan to one or more public libraries in the 
closest possible proximity to the community served by the restructuring 
supplier of water.
    (g) Extent of enforcement relief. If the State approves the plan, 
then with respect to the specific violations identified in the approved 
plan, the State shall take no enforcement action until the earlier of 
two years from the date on which the State approves the restructuring 
plan or the date on which the State determines that all restructuring 
activities identified in the schedule of the approved plan have been 
completed. Notwithstanding the enforcement relief described in this 
paragraph, the Agency may exercise its authority at 42 U.S.C. 300i to 
protect the health of persons served by the water system(s) that are 
subject to the plan.
    (h) Limitations. The supplier of water of the public water system 
subject to enforcement relief as described in paragraph (e) of this 
section must:
    (1) Implement any corrective actions as required under existing 
enforcement orders or agreements;
    (2) Comply with all other applicable requirements of the SDWA and 
its implementing regulations, including any EPA actions pursuant to 42 
U.S.C. 300i; and
    (3) Comply with any enforcement actions for violations that occur 
after the date of plan approval.
    (i) Termination of enforcement relief under approved plans. If 
during the enforcement relief period the State

[[Page 47025]]

determines that the supplier of water at a noncompliant water system is 
unwilling or unable to implement the plan according to its approved 
measures and schedule(s), then the noncompliant water system is no 
longer eligible for enforcement relief under this subpart. In such 
cases, the State shall inform the noncompliant supplier of water in 
writing as soon as practicable that the water system is ineligible for 
enforcement relief, and that the State may take enforcement action for 
the identified violations.
    (j) Enforcement relief under revised plans. A water system that is 
subject to enforcement relief pursuant to this subpart is ineligible 
under a revised restructuring plan for enforcement relief that exceeds 
2 years from the date on which the State approved the original 
restructuring plan.


Sec.  142.95  Liability protection under approved restructuring plans.

    (a) Minimum plan eligibility requirements for liability protection. 
To obtain liability protection under this subpart, the non-responsible 
water system's supplier of water must submit a restructuring plan that:
    (1) Satisfies the minimum eligibility requirements for enforcement 
relief pursuant to Sec.  142.94(a);
    (2) Satisfies any conditional requirements pursuant to Sec.  
142.94(b), as applicable;
    (3) Is based on a mandatory restructuring assessment approved or 
completed by the State pursuant to Sec.  142.92;
    (4) Identifies the non-responsible water system(s) and assessed 
water system(s) subject to the plan;
    (5) Identifies and describes, using data and other forms of 
documentation that the State finds acceptable, any potential and 
existing liability for penalties and damages associated with each 
specific violation identified in the plan;
    (6) Identifies and describes, using data and other forms of 
documentation that the State finds acceptable, any funds or other 
assets of the assessed system(s) available as of the date of 
submission; and
    (7) Requests liability protection of the non-responsible water 
system for the violations identified in the plan.
    (b) Eligible violation types. For purposes of liability protection 
under this subpart, specific violations of the SDWA and its 
implementing regulations must be identified in the restructuring plan 
submitted to the State.
    (c) Exclusions. Neither a water system that is subject to a 
mandatory restructuring assessment under Sec.  142.92, nor a water 
system that the State finds has satisfied the preconditions for a 
mandatory restructuring assessment under Sec.  142.92(a), may benefit 
from liability protection under this subpart.
    (d) Public meeting. After making its determination pursuant to 
Sec.  142.93(b), the State shall hold at least one public meeting as 
soon as practicable with the community served by a restructuring public 
water system regarding the proposed restructuring plan. The meeting 
shall be held in accordance with EPA public meeting requirements under 
40 CFR 25.6 and any applicable provisions of State law (as determined 
by the State).
    (e) State determination date. As soon as practicable, but not later 
than 18 months from the date on which it determines that a submitted 
restructuring plan is an eligible type pursuant to Sec.  142.93(b), the 
State shall determine whether the requirements of paragraphs (a) 
through (d) of this section have been satisfied and shall notify the 
supplier of water in writing. If the State determines that the 
submitted plan satisfies applicable requirements, then the plan is 
approved, otherwise, the State may consult with the supplier of water 
that submitted the plan to determine a schedule and a method by which a 
corrected plan may be submitted.
    (f) Extent of liability protection. If the State determines, 
according to the measures and schedule(s) of the plan approved pursuant 
to paragraph (e) of this section, that all restructuring activities 
have been completed, then within 30 days of its determination under 
this paragraph the State shall notify the non-responsible supplier of 
water in writing that:
    (1) As of the date of State notification, the non-responsible water 
system is not liable under the SDWA for penalties or damages associated 
with the violations identified in the plan that exceed the total amount 
of the identified funds and the value of other identified assets of the 
assessed system(s); and
    (2) Within 30 days of the date of State notification, the non-
responsible supplier of water shall consult with the State to determine 
a method and a schedule by which any identified funds, and the value of 
the identified assets of the assessed system(s), shall be transferred 
to the State to satisfy the liability for violations at the assessed 
system(s). If the non-responsible supplier of water finds that it 
cannot identify funds or assets to satisfy the liability of the 
identified violations, it shall support its finding pursuant to the 
requirements of Sec.  142.95(a)(6).
    (g) Plan availability. Within 30 days of its determination under 
paragraph (e) of this section, the State shall make available to the 
public a copy of the approved restructuring plan in an electronic 
format on an appropriate State website and shall transmit physical 
copies of the restructuring plan to one or more public libraries in the 
closest possible proximity to the community served by the restructuring 
supplier of water.
    (h) Determination of change in supplier of water. If the non-
responsible supplier of water is subject to the requirements of Sec.  
142.94(b)(1), when making its determination and notification pursuant 
to paragraph (f) of this section, the State shall identify the date on 
which the non-responsible supplier of water becomes the supplier of 
water at the restructured water system. Until the date of State 
notification, the non-responsible water system is not liable for 
violations at the assessed water system(s).
    (i) Limitations. Notwithstanding the liability protection for which 
a non-responsible water system may be eligible under this subpart, the 
non-responsible water system must comply with all other applicable 
requirements under the SDWA and its implementing regulations.
    (j) Liability protection under revised plans. A non-responsible 
supplier of water that requests liability protection under a 
restructuring plan that is approved by the State remains eligible for 
liability protection under a revised plan if:
    (1) The non-responsible supplier of water has provided a 
justification, using data and other forms of documentation that the 
State finds acceptable, that a revised plan is necessary to ensure that 
the objectives of the restructuring plan are achieved as soon as 
practicable;
    (2) The non-responsible water system is not the water system that 
incurred the violations identified in the revised restructuring plan; 
and
    (3) The State has determined that the revised restructuring plan 
meets the requirements of this section and has approved the revised 
plan.


Sec.  142.96  DWSRF eligibility of restructuring activities.

    Notwithstanding 42 U.S.C. 300j-12(a)(3) and its implementing 
regulations, a public water system undertaking consolidation, transfer 
of ownership for purposes of improving drinking water quality, or other 
restructuring activities pursuant to a mandatory assessment that meets 
the requirements of Sec.  142.92 may receive a loan described in 42 
U.S.C. 300j-12(a)(2)(A) to implement such consolidation, transfer of 
ownership, or

[[Page 47026]]

other restructuring activities identified in the assessment.


Sec.  142.97  Reporting violations.

    An assessed water system is in violation of this subpart if the 
supplier of water that performs a self-assessment, or an approved third 
party performing the assessment on behalf of the supplier of water:
    (a) Fails to submit an assessment report to the State as mandated 
under Sec.  142.92;
    (b) Submits an assessment report after the submittal date that was 
determined by the State as required under Sec.  142.92(f)(2);
    (c) Submits an assessment report that does not meet the minimum 
content requirements of Sec.  142.92(c); or
    (d) Submits an assessment report without the certification 
statement required under Sec.  142.92(f)(3).

[FR Doc. 2024-11687 Filed 5-29-24; 8:45 am]
BILLING CODE 6560-50-P