Using DWSRF Funds to Comply with the Stage 1

Disinfectants and Disinfection Byproducts Rule

The Drinking Water State Revolving Fund (DWSRF) program was established by the 1996 Safe Drinking Water Act (SDWA)

Amendments and authorizes grants to states to capitalize revolving loan funds. The states provide low-interest loans to eligible

systems for infrastructure improvements needed to ensure compliance with the SDWA and protect public health. The

DWSRF program can play a significant role in helping systems, especially small systems, to meet the challenges of complying

with new drinking water standards.

The Environmental Protection Agency (EPA) published the Stage 1 Disinfectants and

Disinfection Byproducts Rule (Stage 1 DBPR) in 1998. The Stage 1 DBPR increases public

health protection from disinfection byproducts (DBPs) and excess disinfectants by establishing new standards (see Exhibit 1) and expanding the regulations to include most public water

systems. In addition, the Stage 1 DBPR sets a required removal percentage of total organic

carbon (TOC) for surface water and ground water under the direct influence of surface water

(Subpart H) systems that use conventional filtration treatment or lime softening. The new

standards will impose significant financial burdens on some water systems. The DWSRF can

provide assistance to systems to help ease this burden, increase compliance, and protect public

health.

WHY DID EPA CREATE THIS RULE?

In 1979, EPA began regulating DBPs in drinking water by establishing an interim maximum contaminant level (MCL) for

total trihalomethanes (TTHMs) that only applied to disinfecting community water systems (CWSs) serving at least 10,000

people. Although disinfectants are critical for inactivating microorganisms, they are harmful when consumed in excessive

quantities and react with naturally occurring matter in source water to form harmful DBPs. DBPs have been shown to cause

bladder cancer and adverse developmental and reproductive effects in laboratory animals. The 1996 SDWA Amendments

required EPA to develop rules that balance the risks from microbial pathogens and DBPs. The Stage 1 DBPR expands health

protection for 140 million Americans that drink disinfected water. The Long Term 1 and Interim Enhanced Surface Water

Treatment Rules, being implemented concurrently, will ensure that reducing the risks from DBPs will not increase the risks

from microbial pathogens.

TO WHOM DOES THIS RULE APPLY?

The Stage 1 DBPR applies to all CWSs and nontransient non-community water systems

(NTNCWSs) that add a chemical disinfectant,

regardless of system size or source water type. In

addition, transient non-community water systems

(TNCWSs) that use chlorine dioxide must comply

with chlorine dioxide standards.

Exhibit 1: New or Revised

Standards (mg/L)

T 0 THMs 0.08

Five Haloacetic Acids

(HAA5) 0.060

C 0 hlorite 1.

B 0 romate 0.01

C 0 hloramines 4.

C 0 hlorine 4.

C 8 hlorine Dioxide 0.

Source Type System Type Population Type

 

 

 







Surface Water < 10,000

Ground Water 10,000 - 100,000

GWUDI > 100,000

CWSs

NTNCWSs

TNCWSs

FOR SYSTEMS FOR STATES

February 16, 1999 Methods specified for analyzing DBPs, disinfection residuals, and DBP precursors were approved for use.

States submitted Stage 1 DBPR primacy revision applications to EPA (triggered interim primacy). December 16, 2000

January 1, 2002 Subpart H systems serving ≥ 10,000 people must comply with the Stage 1 DBPR requirements.

Primacy extension deadline−all states with an extension must submit primacy revision applications to EPA. December 16, 2002

January 1, 2004 Compliance deadline for systems which received an extension from the state to install Granular Activated Carbon

(GAC) or membranes.

January 1, 2004 Subpart H systems serving < 10,000 people and all ground water systems must comply with the Stage 1 DBPR

requirements.

June 30, 2005 Systems that made a clear and irrevocable financial commitment before the applicable complaince date to install

technologies that limit TTHM to 0.040 mg/L and HAA5 to 0.030 mg/L must have these technologies operating.

CRITICAL RULE DEADLINES & REQUIREMENTS
HOW WILL THIS RULE IMPACT SYSTEMS?

The costs systems will face to meet the Stage 1 DBPR standards

are significant. EPA estimates that the total capital costs for

investments in treatment technology and infrastructure will be

over $2.3 billion (see Figure 1). In addition, annual operation &

maintenance (O & M) and monitoring costs for systems will

exceed $450 million. Most surface water systems will face

increased costs to comply with the Stage 1 DBPR standards (see

Figure 2).

Of the 76,000 systems that disinfect, EPA estimates that 5,000 surface water

and 8,500 ground water systems will require additional treatment capability

to comply with the Stage 1 DBPR (see Figure 3). To be in compliance with

the Stage 1 DBPR, systems will need to make capital investments immediately. A majority of the systems that are facing a capital investment serve less

than 500 people.

Figure 4 shows, on average, how much it will cost systems annually to

comply with the Stage 1 DBPR. The estimated cost of compliance per

smaller system is considerably lower than the cost for larger systems because

less water must be treated, which allows systems to utilize cheaper treatment

options. In general, the costs faced by surface water systems are lower

because most surface water systems will only need to upgrade treatment technology (coagulation or softening) already in place.

However, the burden on small system households is significantly higher because the costs must be paid from a much smaller

revenue base.

Figure 4 does not show the steep costs that the largest systems will experience. Ground water systems that will need to install

new treatment and serve between 10,000 and 100,000 people face per system costs of over $330,000 ($110,000 for surface

water systems of similar size). The 12 ground water systems that serve more than 100,000 people that will need to install new

treatment will each face (on average) over $2.6 million in annual compliance costs ($1.1 million for the 141 surface water

systems of similar size).

An estimated 116 million households are served by systems affected by the Stage 1 DBPR. EPA estimates that 95% of these

households, which are primarily served by large systems, will see their monthly water bills increase by less than $1, 4% are

expected to see an increase of $1 to $10, and 1% are expected to see an increase of $10 to $40. Most of the 1 million households facing the largest increase are served by small ground water systems that face DBP regulations for the first time and will

need to install expensive treatment processes.

Figure 1: TOTAL STAGE 1 DBPR

PRICE TAG (in millions of 1998 $)

Capital Costs

Capital Costs by System Size

Surface

Water

Ground

Water

< 100

101-500

$6 $69

$16 $181

$25 $169

$50 $327

$2,323

$362.5

$90.6

$146 $252

$286 $382

$269 $146

501-1,000

1,001-3,300

3,301-10,000

10,001-100,000

>100,000

AnnualO&M Costs

Annual Monitoring Costs

0%

10%

20%

30%

40%

50%

60%

70%

80%

68%

12%

Surface Water Systems Ground Water Systems

Figure 2: Percentage of All Affected Systems

Requiring Additional Treatment

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

25-100 100-

500

500-

1,000

1,000-

3,300

3,300-

10,000

10,000-

100,000

>100,000

Surface Water

Ground Water

$0

$25

$50

$75

$100

$125

$150

25-100 100-500 500-1,000 1,000-3,300 3,300-10,000

Surface Water

Ground Water

Figure 3: Number of Systems That Will Need to Install New

Treatment to Comply with the Stage 1 DBPR

Figure 4: Average Annual Cost per System That Will

Need to Install New Treatment to Comply with the Stage

1 DBPR (in thousands of 1998 $)

Note: Costs based on total costs amortized over 20 years at a 3% discount rate.

Population Served Population Served
WHAT TYPE OF TREATMENT WILL SYSTEMS HAVE TO PUT IN PLACE?

The Stage 1 DBPR introduces MCLs, maximum residual disinfectant levels (MRDLs), and a

treatment technique requirement. The current DBP MCL for TTHMs has been tightened

and expanded to apply to all disinfecting CWSs and NTNCWSs. An additional DBP MCL

for HAA5 has been created that applies to the same systems. Two new DBP MCLs have

been created for chlorite and bromate that only affect the limited number of systems that

disinfect with chlorine dioxide and ozone, respectively. Systems can control DBP levels

using a variety of methods, including decreasing the contact time and/or the concentration

of the disinfectant, changing disinfectants, altering water pH, or installing additional treatment capability (see Exhibit 2). Treatment options, like enhanced coagulation, membranes,

and GAC filters, remove the naturally occurring precursors that are necessary for DBP

formation and/or capture the DBPs themselves.

The term MRDL, which is not in the SDWA, was created to

distinguish disinfectants (because of their beneficial use)

from contaminants. The Stage 1 DBPR created MRDLs for

chloramines, chlorine, and chlorine dioxide. Only systems

that add chlorine or chloramine to their water must meet the

chloramine and chlorine MRDL. Likewise, only systems

using chlorine dioxide are subject to the chlorine dioxide

MRDL. Rather than face large capital costs, systems

exceeding an MRDL will likely alter the operations of their

treatment processes to reduce the need for disinfectant and

lower disinfectant levels.

Subpart H systems already using conventional filtration

treatment are required to remove a certain percentage of

TOC, based on surface water alkalinity. These systems will

accomplish this removal by enhancing their coagulation or

softening capability, unless certain alternative criteria are

met. This treatment technique requirement only applies to

systems that already have the treatment infrastructure in

place in order to minimize compliance costs.

Most of the capital costs faced by systems will be

generated by installing, operating, and maintaining treatment technologies to comply with the

MCLs for DBPs. Most small water systems will

only have to meet the MCLs for TTHMs and

HAA5 and the MRDLs for chlorine and chloramines. EPA estimates that most water systems out

of compliance with an MCL will either install

enhanced coagulation technology, modify the

chlorine/chloramine disinfection process, or do

both (see Figure 5). Some ground water systems

may install membrane filters to control DBP

levels. As shown in Figure 6, the total capital and

annual O & M costs for small systems to install

and run membrane filtration or ozonation

treatment is much more expensive than enhancing

existing coagulation technology and/or modifying

the chlorine or chloramines process.

Exhibit 2: Treatment Options for

Stage 1 DBPR Compliance*

1 Enhanced Coagulation

2 Modified Chlorine/Chloramine

Disinfection Process

3 Ozone Treatment

4 Membrane Filtration

5 Other (e.g., Chlorine Dioxide,

Granular Activated Carbon, and

Consolidation).

$0

$50

$100

$150

$200

$250

$300

1 2 1&2 3 4

Treatment Technologies

Total $ Capital

$0

$2

$4

$6

$8

$10

$12

$14

$16

Annual$O&M

Capital

O&M

Note: All costs are based on average flow (8 million gallons) for the median population.

Capital costs are total (not annualized). O & M costs are annualized at a 3% discount rate.

Figure 6: Representative Annual Compliance Costs for Systems

Serving Populations of 101-500 (in thousands of 1998 $)

0%

20%

40%

60%

80%

100%

Small Surface

Water

Large Surface

Water

Small Ground

Water

Large Ground

Water

System Type

1 2 1&2 3 4 5

Figure 5: Percent of Systems Using Various Treatment

Options for Stage 1 DBPR Compliance

*Referenced in Figures 5 and 6
HOW CAN THE DWSRF ASSIST SYSTEMS?

States use DWSRF capitalization grant monies to provide low-interest

loans to publicly- and privately-owned public water systems for

infrastructure improvements needed to continue to ensure safe drinking water. States may offer principal forgiveness, reduced interest rates,

or extended loan terms to systems identified by the state as serving

disadvantaged communities. States also have the ability to reserve a

portion of their grants (i.e., set-asides) to finance activities that encourage enhanced water system management and help to prevent contamination problems through source water protection measures. Based on

the fiscal year 2002 appropriation of $850 million, capitalization

grants ranged from $8.0 million to $82.4 million per state.

Most capital projects – including adding new technologies and

upgrading existing technologies – needed to comply with the Stage 1

DBPR are eligible for funding under the DWSRF (see Exhibit 3).

Consolidation and restructuring of systems can be a cost-effective

alternative to treatment for small systems that are affected by the Stage

1 DBPR. The DWSRF can fund consolidation, including situations

where the quality of a supply source has deteriorated or a system is

unable to maintain compliance for technical, financial, or managerial

reasons.

States can use set-aside funds from the DWSRF to assist systems

directly as well as to enhance their own program management activities

(see Exhibit 3). A state may use set-asides to make administrative

improvements to the entire drinking water program, which faces

increased costs in implementing the Stage 1 DBPR. States can provide

training to small systems on meeting the requirements of the Stage 1

DBPR as well as

technical assistance in identifying appropriate

technologies. In

addition, states

can provide assistance to small systems to cover the costs of project

planning and design for infrastructure improvements.

Since the DWSRF program is managed by states, project and set-aside

funding varies according to the priorities, policies, and laws within each

state. Given that each state administers its own program differently, the

first step in seeking assistance is to contact the state DWSRF representative which can be found on the EPA DWSRF website.

Printed on Recycled Paper

FOR MORE INFORMATION...

DWSRF and Stage 1 DBPR General Information

DWSRF Website:

http://www.epa.gov/safewater/dwsrf.html

Microbial & DBP Website:

http://www.epa.gov/safewater/mdbp.html

SDWA Hotline

1-800-426-4791

EPA's Ground Water & Drinking

Water Website:

http://www.epa.gov/safewater/

Office of Ground Water and

Drinking Water (4606M)

EPA 816-F-02-007

May 2002

*For small systems only.

Type of Project/Activity

Eligible Under

Infrastructure Fund

Eligible Under

Set-Asides

Treatment

E s nhanced Coagulation Y o e N

O s zone Y o e N

Modified Chlorine/Chloramine

Disinfection Process Y o es N

M s embrane Filtration Y o e N

G s ranular Activated Carbon Y o e N

P s lanning & Design Activities Y * e Yes

System Consolidation Y o es N

System Restructuring Y s es Ye

System Administrative Improvements

H o ire Staff N oN

S o taff Training N s Ye

P o ublic Outreach N s Ye

M o onitoring N oN

R o ate Increase Process N s Ye

State Administrative Improvements

H o ire Staff N s Ye

S o taff Training N s Ye

P o ublic Outreach N s Ye

C o ompliance Oversight N s Ye

E o nforcement N s Ye

P o ilot Studies N s Ye

Pascagoula, Mississippi

The water system serving the Gulf Coast City of

Pascagoula, Mississippi was having trouble

meeting the MCL for TTHMs. To address this

issue, the city decided to build three reverse

osmosis water treatment plants with ozone filters

to serve its 35,000 residents. DWSRF loans were

made in the amount of $1.3 million for the first

plant, $1.2 million for the second, and $1.5

million for the third. With two of the three plants

operational, the water in Pascagoula is now in

compliance.

Exhibit 3: Projects/Activities Eligible for DWSRF

Funding to Comply With Stage 1 DBPR