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 revisions to the Arsenic Rule in 2001 which further reduce exposure

to arsenic in drinking water by adopting a new arsenic maximum contaminant level (MCL) of 10 ppb. The new MCL will

impose a financial burden on some water systems. The DWSRF can provide assistance to systems to help ease this burden,

increase compliance, and protect public health.

EPA established the previous MCL of 50 ppb for arsenic in 1975 based on a Public Health Service standard originally

established in 1942. The 1996 SDWA Amendments required EPA to finalize a new arsenic rule by January 2001. A 1999

report by the National Academy of Sciences concluded that the 50 ppb standard did not adequately protect human health.

EPA set the new MCL of 10 ppb to protect the public against the effects of long-term, chronic exposure to arsenic in drinking

water. The new MCL will decrease non-fatal and fatal bladder and lung cancers and will reduce the frequency of other health

effects such as diabetes, developmental problems, gastrointestinal illness, and heart disease.

WHY DID EPA CREATE THIS RULE?

TO WHOM DOES THIS RULE APPLY?

The new 10 ppb arsenic MCL becomes enforceable

on January 23, 2006 for community water systems

(CWSs) and nontransient noncommunity water

systems (NTNCWSs). Of all affected systems, 97%

are small systems that serve fewer than 10,000

people. Higher levels of arsenic tend to be found in

ground water rather than surface water sources (i.e.,

lakes and rivers). Compared to the rest of the

United States, the occurrence of arsenic in ground

water tends to be higher in western states and states in the Great Lakes region.

Using DWSRF Funds to Comply with

the New Arsenic Rule

CRITICAL RULE DEADLINES & REQUIREMENTS

FOR SYSTEMS* FOR STATES

EPA meets and works with states to explain new rules and requirements and to initiate adoption and Spring 2002

implementation activities.

July 1, 2002 Systems that detect arsenic concentrations between 10 ppb and 50 ppb must include health effects language in

all Consumer Confidence Reports beginning on this date through July 1, 2006. Systems that detect arsenic

concentrations between 5 ppb and 10 ppb must include an educational statement in all Consumer Confidence

Reports beginning on this date.

State primacy revision applications due, if no extension is requested. January 22, 2003

January 22, 2004 All new systems/sources must collect initial monitoring samples for all inorganic contaminants (IOCs), synthetic

organic contaminants (SOCs), and volatile organic contaminants (VOCs) within a period and frequency determined

by the state.

State primacy revision applications due from states that received 2-year extensions. January 22, 2005

January 23, 2006 The new arsenic MCL of 10 ppb becomes enforceable. All systems must begin monitoring or submit data that

meets grandfathering requirements (if allowed by the state).

December 31, 2006 Surface water systems must complete initial monitoring or have a state approved waiver.

December 31, 2007 Ground water systems must complete initial monitoring or have a state approved waiver.

* Deadlines for specific systems may be affected by variances or exemptions granted by the state.
HOW WILL THIS RULE IMPACT SYSTEMS?

The costs systems will face to meet the new arsenic

standards are significant. Total capital costs for investments in treatment technology and infrastructure are

estimated to be almost $900 million (see Figure 1). In

addition, annual operation and maintenance (O & M)

costs for systems and monitoring and administrative

costs for states implementing the rule will top $120

million. Most of the capital costs will fall on the shoulders of a relatively small number of ground water systems

(see Figure 2).

Of the 74,000 systems subject to this new MCL, EPA

estimates that 3,000 CWSs and 1,100 NTNCWSs will need to install treatment for compliance. To be in compliance by

January 2006, capital investments will need to be made over the next four

years. A majority of the systems that will have to modify treatment serve less

than 500 people (see Figure 3).

Figure 4 shows how much it will cost systems (on average) to meet the new

MCL. In order to comply with the rule, most systems will have to add new

technologies, upgrade existing technologies, consolidate their systems into

larger systems, or develop new water sources.

The average increase in costs per household to meet the new arsenic standard

depends on the size of the water system and how many people are served by

that system. The estimated compliance cost per system is considerably lower

for small systems than for large systems because less water must be treated.

However, the burden on small system households is significantly higher

because the costs must be paid from a much smaller revenue base. EPA

estimates that the average annual household water bill for systems out of

compliance may increase by $32 per year, but that the cost will be substantially higher (ranging from $58-$327) for systems

serving less than 3,300 people.

Figure 2: Percentage of All Affected

Systems Exceeding New Arsenic MCL

Figure 3: Number of CWSs That Will Need to Install

Treatment to Comply with New Arsenic MCL

Figure 4: Average Annual Cost per CWS Exceeding New

Arsenic MCL (in thousands of 1999 $)

Note: Costs based on total costs amortized over 20 years at a

3% discount rate.
WHAT TYPE OF TREATMENT WILL SYSTEMS HAVE TO PUT IN PLACE?

Arsenic is present in two forms: arsenate (As5+) and arsenite (As3+). Surface water typically contains much more arsenate, while

ground water typically contains higher levels of arsenite (which is harder to remove). Arsenite is easily oxidized to arsenate

using conventional oxidation methods (e.g., chlorination). As a result, up to 50% of ground water systems that install treatment for arsenic may need to install pre-oxidation. In order to determine if pre-oxidation will be needed, systems should first

perform a test to determine what form of arsenic they have.

The characteristics of a system's

source water (especially the pH

level and presence of other contaminants), the skill level of its

operators, and other compliance

considerations will greatly impact

which treatment train is most

appropriate and the ultimate cost

of compliance. Systems with

treatment trains in place that can

remove arsenic will face lower

compliance costs than those

without sufficient treatment. For

instance, most surface water

systems already have treatment in

place that is capable of removing

arsenic, though very few utilize

reverse osmosis, ion exchange, or

activated alumina. Among ground water systems, larger systems are more likely to have arsenic treatment technology in place.

EPA has identified a number of Best Available Technologies (BATs) and Small System Compliance Technologies (SSCTs) for

arsenic (see Exhibit 1). For all BATs, most of which are developed with large systems in mind, removal is much more efficient

for arsenate. When considering SSCTs, EPA looks at the affordability of the technology (since per household costs for central

treatment tend to be higher for smaller system customers) and technical complexity (since many small systems do not have

access to well-trained water system operators). The SSCTs represent technologies that are affordable and achieve compliance

with the arsenic MCL across the small system size categories (25-500; 501-3,300; and 3,301-10,000 people). Reverse osmosis

and activated alumina point-of-use (POU) devices are viable options for small systems, especially those serving fewer than 200

persons. EPA assumes that the most common treatment technology for small systems will utilize an adsorptive media.

Systems may have other treatment alternatives to the

treatment technologies listed in Exhibit 1, such as granular ferric hydroxide (GFH). GFH is a technology that

may combine very long run length without the need to

adjust pH. Ongoing studies should provide more information about whether GFH will be affordable and viable.

To ensure cost-effective compliance with the arsenic

MCL, systems will need to evaluate their treatment

technology options as a first step. All other factors being

equal, systems will most likely choose the cheapest

treatment option that ensures compliance with the new

MCL. The costs in Figure 5 are best-case estimates for an

average ground water system with an arsenic influent level

of 50 ppb and a target treatment concentration of 8 ppb.

Several of these central treatment technologies have

associated waste disposal costs, which are also depicted in

the graph.

Type Removal Other Contaminants

Efficiency Removed

1 Modified Lime Softening BAT, SSCT 90% Metals, IOCs

2 Modified Coagulation/Filtration BAT, SSCT 95% Physically large

contaminants

3 Anion Exchange BAT, SSCT 95% Anions

4 Oxidation Filtration (Greensand) BAT, SSCT 50% Metals

5 Activated Alumina BAT, SSCT 95% Anions

6 POU Reverse Osmosis SSCT 90% IOCs and large organics

7 POU Activated Alumina SSCT 90% Anions

8 Coagulation Assisted Microfiltration SSCT 90% Physically large

contaminants

Exhibit 1: Arsenic Treatment Technologies

Figure 5: Representative Costs for Ground Water Systems

Serving Populations of 101-500

Note: All costs are based on average flows (design flow of 123,670 gpd

and average flow of 33,200 gpd) for the median population. Capital and

waste costs are total (not annualized). O & M costs are annual. Costs do

not reflect the need for pre-oxidation or corrosion control.
Printed on Recycled Paper

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. Where funding is not adequate for all

systems that require treatment, states may choose to offer extended

compliance schedules through exemptions, where appropriate, to some

systems.

Most capital projects – including adding new technologies and upgrading existing technologies – needed to comply with the new arsenic

standards are eligible for funding under the DWSRF (see Exhibit 2).

Consolidation and restructuring of systems can be a cost-effective option

for small systems that are affected by the arsenic rule. The DWSRF can

fund consolidation, including situations where a supply has become

contaminated or a system is unable to maintain compliance for technical,

financial, or managerial reasons. POU devices will be an attractive

option to small systems because of cost. The DWSRF can fund these

devices as long as the units are owned and maintained by the water

system.

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 2). A state may use set-asides to make administrative improvements to the entire drinking water program, which faces increased costs

in implementing the new arsenic rule. States can provide training to

small systems on

meeting the requirements of the arsenic

rule 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.

FOR MORE INFORMATION...

DWSRF and Arsenic Rule General Information

DWSRF Website:

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

Arsenic Implementation Website:

http://www.epa.gov/safewater/ars/implement.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-02-004

March 2002

Type of Eligible Under Eligible Under

Project/Activity Infrastructure Fund Set-Asides

Treatment

Precipitative Processes Yes No

Adsorption Processes Yes No

Ion Exchange Processes Yes No

Membrane Filtration Yes No

POU Devices Yes* No

Planning & Design Activities Yes Yes**

System Consolidation Yes No

System Restructuring Yes Yes

System Administrative Improvements

Hire Staff No No

Staff Training No Yes

Public Outreach No Yes

Monitoring No No

Rate Increase Process No Yes

State Administrative Improvements

Hire Staff No Yes

Staff Training No Yes

Public Outreach No Yes

Compliance Oversight No Yes

Enforcement No Yes

Pilot Studies No Yes

Exhibit 2: Projects/Activities Eligible for DWSRF

Funding To Comply With Arsenic Rule

*Must be owned and maintained by system.

**For small systems only.

In 1998, a $1.3 million low-interest loan was given

to the Camp Verde water system to address a longstanding problem of high arsenic levels in the

drinking water source. The system had been

working to get financing for many years, but could

not afford improvements until the DWSRF

program was implemented in the state. The loan

provided the funding to install a pipeline from a

new source to provide safe drinking water to 2,000

people.

Camp Verde, Arizona