A proposed federal rule that seeks to direct states and public water systems (PWS) to develop a framework to evaluate and implement restructuring alternatives for systems that are in chronic noncompliance with drinking water standards should consider consolidation or transfer of ownership to achieve compliance with such standards, the proposed regulation says.

On May 30, 2024, the Environmental Protection Agency (EPA) issued the proposed “Water Systems Restructuring Assessment Rule” (WSRAR), which says its purpose is to “establish a new mandatory restructuring assessment authority for states” and require states with primary enforcement authority (primacy) “to develop mandatory restructuring assessment programs and submit primacy revisions for EPA review and approval.”

The proposed rule would also “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,” the proposed WSRAR says.

The WSRAR is required under the Safe Drinking Water Act (SDWA) and 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, the proposed rule says. In addition, a PWS is subject to a mandatory assessment if the state finds that:

• A PWS has repeatedly violated one or more national primary drinking water regulations and such violations are likely to adversely affect human health.

• A PWS is unable or unwilling to implement restructuring activities, or already has attempted to implement such activities but has not achieved compliance.

• Restructuring of a PWS, including a form of consolidation or a transfer of ownership, is feasible.

• Restructuring of a 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, according to the WSRAR.

Furthermore, the EPA says the proposed WSRAR would create a framework for states and PWSs to evaluate and implement restructuring alternatives for systems in chronic noncompliance, and assessments may identify a broad array of alternatives such as sharing resources, 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.

Because restructuring alternatives for an assessed water system depend on system-specific physical and socio-economic factors, 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.

There are likely to be circumstances in which consolidation of PWSs or transfer of ownership of a PWS could be the most feasible alternative to ensure a community sustainably receives safe drinking water, 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, the WSRAR says.

Some PWS associations welcome the proposed regulation, while others are still reviewing it. Nonetheless, an environmental group says the WSRAR can help water utilities deal with the presence of per- and poly-fluoroalkyl substances (PFAS), as well as lead in drinking water.

“To ensure affordable, sustainable, and equitable water services, many utilities should be considering structural reforms,” Ben Grumbles, the executive director of the Environmental Council of the States (ECOS), told The Driller. “Whether you call it consolidation, regionalization, right-sizing, shared services, or something else, this is particularly important as PFAS, lead, climate, and other drivers test the durability of local systems,” he added.

The Association of Metropolitan Water Agencies (AMWA) “recognizes that consolidation (of water systems) and sharing of resources can be beneficial to communities,” said Tom Dobbins, the AMWA’s chief executive officer. However, Dobbins added that consolidation does not necessarily mean a water system will merge with other systems. “There are all sorts of ways that consolidation (can take place),” he said. When community utilities have banded together, they are “not necessarily connecting” all their infrastructures “with the same pipe,” he said. What can occur under consolidation is that water utility functions can be combined to be more efficient, such as central billing, essential finance, and shared work crews, which can serve multiple rural communities, Dobbins said.

While not completely mirroring ECOS and the AMWA’s reasons for supporting WSRAR, the American Water Works Association (AWWA) says the WSRAR is needed “as one tool in the toolbox of options to assist water systems that chronically struggle with compliance and the public served by them,” Adam Carpenter, AWWA’s manager of energy and environmental policy told The Driller. 

According to Carpenter, the WSRAR would give state regulators the authority to require assessments when a public water system is persistently out of compliance with regulations. Most states do not have the authority to require a restructuring (merger/consolidation, regionalization, or other similar changes), and he said this rule will not directly change that. However, he said this rule provides the authority to both require the assessment and provide limited enforcement and liability protections and possibly some financial incentives for those who assist a struggling system.

“Although there are many open questions that need further examination, the hope is that this rule will eventually help to facilitate more consolidation, regionalization, shared services, and other forms of cooperation in those places where it makes sense to do so,” Carpenter said.

The deadline to file comments on the proposed rule with the EPA is on or before July 29, 2024, and all submissions must include the Docket ID No. EPA–HQ–OW–2022–0678. 

Any of the following methods can be used to send comments:

• Federal eRulemaking Portal: https://www.regulations.gov (our preferred method). Follow the online instructions for submitting comments.
• Email: ow-docket@epa.gov, and include Docket ID No. EPA–HQ–OW–2022–0678 in the message's subject line.
• Mail: U.S. Environmental Protection Agency, EPA Docket Center, Office of Water Docket, Mail Code 28221T, 1200 Pennsylvania Ave., NW, Washington, DC 20460
• Hand Delivery/Courier (by scheduled appointment only): EPA Docket Center, WJC West Building, Room 3334, 1301 Constitution Ave., NW, Washington, DC 20004. The Docket Center’s hours of operation are 8:30 a.m. to 4:30 p.m., Monday through Friday (except Federal Holidays).

Comments received may be posted without change to https://www.regulations.gov, including any personal information provided. 

For further information, contact Will Bowman, Drinking Water Capacity & Compliance Assistance Division, Office of Ground Water and Drinking Water, EPA, 1200 Pennsylvania Ave., NW, Washington, DC 20460; telephone number: (202) 564–3782; email address: bowman.will@epa.gov.

Read the Water Systems Restructuring Assessment Rule.