June 9, 1998


Ms. Carol M. Browner
Administrator
United States Environmental Protection Agency
401 M Street, S.W.
Washington, D.C.  20460


Dear Administrator Browner:

     Enclosed for your consideration is the Report of the Small
Business Advocacy Review Panel convened for EPA's rulemaking on
the Ground Water Rule (GWR).  The Agency's goal in developing the
GWR is to reduce the risk of illness caused by microbial
contamination in public water systems relying on ground water. To
achieve this goal, EPA is considering a multi-barrier approach
that could include source water assessment and protection,
identification and correction of system defects, proper
maintenance of the well and distribution system, appropriate use
of disinfection where necessary, and monitoring.

     On April 10, 1998, EPA's Small Business Advocacy Chairperson
(Thomas E. Kelly) convened this Panel under section 609(b) of the
Regulatory Flexibility Act as amended by the Small Business
Regulatory Enforcement Fairness Act (SBREFA).  In addition to its
chairperson, the Panel consists of the Director of the Standards
and Risk Management Division of the Office of Ground Water and
Drinking Water within EPA's Office of Water, the Administrator of
the Office of Information and Regulatory Affairs within the
Office of Management and Budget, and the Chief Counsel for
Advocacy of the Small Business Administration.

     It is important to note that the Panel's findings and
discussion are based on the information available at the time
this report was drafted.  EPA is continuing to conduct analyses
relevant to the proposed rule, and additional information may be
developed or obtained during the remainder of the rule
development process and from public comment on the proposed rule.
Any options the Panel identifies for reducing the rule's
regulatory impact on small entities may require further analysis
and/or data collection to ensure that the options are
practicable, enforceable, environmentally sound and consistent
with the Safe Drinking Water Act.

Stakeholder Meetings and Small Entity Outreach

     The rule being considered could potentially affect all
public water supplies that use ground water as a source of
drinking water. A public water system provides water for human
consumption through pipes and other constructed conveyances.
There are 158,000 public water systems that use ground water.
The term "public water systems" applies not only to water
utilities, but also to a wide range of privately or publicly
owned businesses and entities that provide drinking water (e.g.,
campgrounds, factories, restaurants, and schools).

     The Office of Ground Water and Drinking Water (OGWDW) plans
to develop a proposed rule in March of 1999 and a final rule by
November of 2000.  To facilitate regulation development, EPA has
actively involved stakeholders in the development of the proposed
rule.  As part of this effort, EPA is sponsoring public meetings
across the country.  The purpose of these meetings is to provide
stakeholders with summaries of the data that support rule
development; engage stakeholders in analysis and discussion of
the implications of the data; solicit additional data; discuss
EPA's next steps for rule development, data analysis, and
stakeholder involvement; and identify additional parties who may
be interested in future meetings. OGWDW is planning two
additional stakeholder meetings to collect additional information
regarding the potential impact the GWR may have on regulated
systems.

     OGWDW believes that input from small entities is
particularly important in the rulemaking process because so many
systems are small.  EPA consulted with twenty two small entity
representatives (SERs) for the GWR SBREFA process which represent
a broad range of the entities potentially affected by the rule
including  small water utilities and businesses providing
drinking water ancillary to their primary business, such as,
restaurants, mobile home parks, hotel/motels, factories, and
campgrounds, representatives from home-owner associations,
investor-owned systems, purchased water systems, small local
governments, and churches. The SERs were provided with background
information on the Safe Drinking Water Act and the GWR at a
meeting on March 4, 1998 at EPA Headquarters. The SERs also
received Information for Small Entity Representatives Regarding
the Ground Water Rule that described possible components of a
GWR.  All 22 SERs provided comments on these materials.   The
SBAR Panel convened on April 10, 1998.  The SERs were provided
with additional information on possible regulatory approaches for
the GWR and a discussion of the occurrence data prior to a
teleconference with the Panel on May 18, 1998.  Three SERs
provided additional written comment following the teleconference.
A summary of the comments during a teleconference and written
comments received by both OGWDW and the Panel are included in the
report. OGWDW will consider the comments received at the public
meetings along with the Panel's recommendations when developing
the proposed rule.

Panel Findings and Discussion

     Under the RFA, the Panel is to consider four regulatory
flexibility issues related to the potential impact of the rule on
small entities:  (1) the type and number of small entities to
which the rule will apply; (2) record keeping, reporting and
other compliance requirements applicable to small entities; (3)
the rule's interaction with other Federal rules; and (4)
regulatory alternatives that would minimize the impact on small
entities consistent with the stated objectives of the statute
authorizing the rule. The Panel's most significant findings and
discussion with respect to each of these issues are summarized
below.  In addition, the Panel discussed several issues related
to the general approach currently being considered by EPA for the
proposed rule.
                              


Major Topics of Panel Discussion

     Panel members have not been able to agree upon the degree to
which currently available  viral and bacterial occurrence data
for public ground water systems are representative of national
conditions.  The range in the occurrence rate is reflective of
the different testing methods used in the different studies and
the sensitivity of particular methods. In addition, the studies
underlying those numbers were conducted at different times and
for different purposes.  Some emphasized high-risk wells, and
some examined a variety of wells, including many that were not
expected to present high risk.  Therefore, the 600 wells included
in these studies do not represent a statistically random sample
of ground water wells.  EPA has not presented the data to
represent a nationally applicable occurrence rate for fecal
contamination.

     With regard to national data on Total Coliform Rule (TCR)
violations, EPA is concerned that fecal coliform data are not
necessarily a good indicator of national microbial pathogen
occurrence, both because of a low frequency of sampling for many
systems and because neither fecal nor coliform tests can identify
the presence or absence of virus.  However, these data are
clearly relevant to the rule development process and will be
included with the other information that EPA considers with
stakeholders in developing the GWR proposal.

     One of the points that EPA emphasized in its fact sheet
distributed to SERs on Microbial Occurrence is the question of
how all these data should be interpreted and used in developing
the GWR.  EPA believes these data raise an important concern that
current microbial monitoring approaches may significantly
understate the occurrence of ground water contamination from
fecal viruses and fecal bacteria.  This information indicates
that both viral and bacterial contamination can and do occur in
underground sources of drinking water, though the degree and
extent of this contamination is not fully known.

     EPA believes that most ground water supplies are safe.
However, EPA has a statutory obligation to protect public health
by regulating contaminants of concern for which there is a
meaningful opportunity for health risk reduction.  Taking into
account all the data currently available to the Agency, EPA
believes that fecal contamination of ground water warrants such
regulation.

     OMB and SBA shared the concern of some commenters that the
study data presented by EPA may significantly overstate the
extent of ground water fecal contamination nationally.  OMB and
SBA thus recommend that in evaluating the usefulness of these
data for estimating national occurrence rates, the agency give
careful consideration to the well selection criteria and
methodologies used in the individual studies.  Studies in which
wells were selected because of a known risk of contamination
would not be appropriate for estimating national occurrence.  EPA
should also be alert to inadvertent sources of bias in the
occurrence rate estimates produced by these studies.  For
example, if all of the wells in a study are currently
disinfecting, this may be an indication that many of them
previously detected contamination and are therefore more likely
to be high risk.  Conversely, if well operators volunteered for
participation in a study, there may have been a natural self
selection process in which those most likely to have
contamination problems would be least likely to volunteer.
Finally, if a study included a mix of targeted high risk wells
along with a more representative sample, occurrence rate
estimates should only be based on the subset of wells considered
to be representative.

     EPA recognizes and understands the concern that available
study data may overstate the extent of ground water
contamination.  OGWDW notes, however, that it has received input
from a number of virologists and microbiologists suggesting that
available information may also possibly understate the extent of
ground water contamination for several reasons.  Much of the
current occurrence data is based on single grab samples; the
analytical methods used are sensitive only to a subset of virus
families associated with water-borne diseases; and, as noted
above, there may have been significant self-selection among
system operators volunteering to participate in these studies.
In light of these different perspectives, EPA continues to stress
that a central issue facing all participants and stakeholders in
this rulemaking is how to interpret available information.  EPA
agrees that the Ground Water Rule must be based on the best
available data, good science, and sound analysis.  OGWDW will
continue to evaluate existing information, gather new information
from studies not yet complete, and consult with all stakeholders
on the nature and scope of the problem.  As noted above, the
studies EPA has under examination were conducted at different
times and for different reasons; each requires careful analysis
to ensure its proper use and to avoid misuse.

Types and Number of Potentially Affected Small Entities

     The Panel notes that the number of potentially impacted
small systems is significant (about 157,000) and suggests EPA
focus the compliance requirements upon only those systems which
are at risk of fecal contamination.  In this regard, the Panel
suggests that EPA continue  to evaluate whether it may be
appropriate to establish different ground water requirements for
a particular system based upon system type, size, or location.
This can also be accomplished by giving maximum flexibility to
primacy states, consistent with ensuring an appropriate minimum
level of public health protection nationally, to tailor specific
requirements to individual system needs and resources.

Record Keeping, Reporting and Other Compliance Requirements

     The Panel notes the concern of many SERs that small systems
often have a single, part-time operator with many other
responsibilities and suggests EPA keep reporting and record
keeping requirements to the minimum necessary to ensure adequate
protection of public health.  The Panel further suggests EPA
focus the record keeping, reporting and other compliance
requirements upon the ground water systems which face the
greatest risk of contamination.   Minimal requirements should be
imposed upon systems which demonstrate they are at a low risk of
contamination.
                         

     The Panel recommends development of cost effective
approaches for evaluating the risk of contamination that
minimizes the need for system operators to produce records that
are not readily available.  Risk evaluation approaches should
focus upon techniques which are inexpensive and effective.  EPA,
after consultation with the SERs, stakeholders and SBAR Panel has
determined that it will not use factors such as: (1)  lack of
adequate well records, (2)  lack of a cross-connection control
program, or (3) intermittent pressure fluctuations as automatic
triggers to indicate a potential risk of contamination, although
these factors may be considered along with other evidence which
more definitively demonstrates risk (e.g. uncorrected significant
defects noted in past sanitary surveys) in evaluating whether
corrective action is needed and what that action should be.  The
Panel supports this determination.

     The Panel notes the SERs' concerns regarding the impact
additional monitoring would have upon small systems,
particularly if expensive viral indicator methods are required.
The Panel believes that in determining whether and under what
circumstances to require monitoring for viral indicators, EPA
should consider the value of the information obtained from such
monitoring in comparison to the cost of obtaining that
information.  EPA should only require monitoring for additional
indicators if it determines that such monitoring can cost-
effectively provide significant additional information on the
presence of fecal contamination in ground water.  Furthermore,
the Panel is concerned about the practicability of requiring
viral monitoring for small systems unless there is a significant
decline in the cost (which currently ranges from several hundred
to a thousand dollars per sample).  Therefore, the Panel
recommends continuing to support, as a high priority, efforts to
develop cost effective viral indicator methods (such as a $50
coliphage test).  In addition, the Panel notes that EPA is
currently supporting research intended to develop an approach by
which states can identify those systems with the highest risk of
viral contamination and strongly endorses this effort.  If a
reliable and workable method for identifying high risk systems is
developed and some viral monitoring is required, the Panel
believes that EPA should consider requiring viral monitoring only
for these high risk systems.

     A number of SERs indicated that they were not opposed to a
modest increase to the minimum frequency of total coliform
monitoring or to an increase in sampling locations to include the
source water in the event of a positive TCR sample because this
would be far less burdensome than a requirement for regular viral
monitoring.  The Panel urges EPA to evaluate continued use of the
sampling methods required by the TCR as the central tool for
detecting fecal contamination until cost effective alternative
methods are developed.

     The Panel notes that many SERs believe sanitary surveys are
effective tools for identifying problems which may lead to fecal
contamination. The Panel believes that States should also have
the authority to require the correction of significant defects as
a cost effective method of eliminating risks of contamination.
The Panel recommends, however, allowing States the flexibility to
distinguish among the defects those which are significant for
public health protection and those which are not.


     The Panel also notes concerns expressed by many SERs that
EPA should not require disinfection for all public water systems
regardless of the potential risk of contamination.  The Panel
agrees with EPA that fecal contamination of public drinking water
is a public health threat that must be corrected.  The Panel
recommends, however, that States be provided with the flexibility
to select the most appropriate corrective action from a list
which includes, but is not limited to, disinfection.  At the same
time, States should also have the flexibility to mandate across-
the-board disinfection for all or a subset of systems if they
determine that this provides the most appropriate level of public
health protection.  In this context, however, the Panel notes the
concern of several SERs that disinfection not be viewed as a
substitute for good sanitary engineering.

     Although disinfection may be necessary in some
circumstances, the Panel is concerned about the potential cost
burden to systems that may be required to disinfect as a result
of the GWR.  In developing requirements or guidance concerning
the appropriate use of disinfection, EPA should consider (and
include in its regulatory cost estimates) the complete burden and
benefits associated with the rule.

     EPA should also consider (and quantify to the extent
possible) health risks and benefits that may result from the use
of disinfectants, including those associated with elevated levels
of other contaminants and with the storage and use of hazardous
chemicals.

Interaction with Other Federal Rules

     The Panel  suggests  using the Source Water Assessment
Program`s (SWAP) susceptibility determination as a component of
the vulnerability assessment process. SWAP assessments could
provide much of the data needed to evaluate the risk of fecal
contamination.  EPA should encourage States and systems to
utilize SWAP data to the extent possible when assessing system
vulnerability, in order to avoid duplicative data collection.

     The Panel also  recommends that any monitoring required
under the GWR should complement TCR monitoring and rely as much
as possible on the TCR's analytical methods as indicators of
fecal contamination in ground water.

     The Panel also notes that when developing regulations or
guidance relating to disinfection, EPA should carefully consider
the potential increase in other contaminants of concern (e.g.,
disinfection byproducts)  and allow states and systems adequate
flexibility to avoid or mitigate them in the most cost-effective
manner.  They should also be appropriately accounted for in the
Regulatory Impact Analysis for the GWR.

Regulatory Alternatives

     In general, SERs supported the multi-barrier approach, while
at the same time commenting on various aspects of it that might
to burdensome or otherwise problematic for them.  The Panel
recommends that EPA consider tailoring compliance requirements to
system size.  For example, the burden upon the smallest systems
(e.g. systems serving 500 or less) could be decreased by reducing
the required monitoring frequency, or the minimum required
frequency of sanitary surveys.

     The Panel recommends that EPA consider combining the
vulnerability assessment and sanitary survey into a single
requirement.  This requirement could be tiered, with a relatively
low-effort screening assessment used to eliminate low-risk
systems, followed by more data-intensive assessments for systems
that might be at risk.  Systems that find no contamination over a
period of years may be considered low-risk.

     The Panel also recommends EPA consider some variation on
this approach as it could significantly reduce the record-
gathering burden on small systems and the assessment burden on
primacy states.  Another option might be to allow a streamlined,
combined vulnerability assessment and sanitary survey for very
small systems, which are least likely to have complete records,
while requiring more comprehensive (and perhaps separate)
vulnerability assessments and sanitary surveys for larger
systems.

     The Panel believes EPA should carefully consider all
comments received during this outreach process on these and other
issues of concern to small entities.  A full discussion of the
comments received and Panel recommendations are included in the
final report.

                              Sincerely,


Thomas E. Kelly, Chair                  Don Arbuckle, Acting
                                        Administrator
Small Business Advocacy                 Office of Information and
                                        Regulatory Affairs 
Environmental Protection Agency         Office of Management and Budget




_
Jere W. Glover                     William R. Diamond, Director
Chief Counsel for Advocacy         Standards and Risk Management Division
U.S. Small Business Administration Office of Ground Water and Drinking Water
                                   Office of Water
                                   U.S. Environmental Protection
                                   Agency




Enclosure