[Federal Register Volume 62, Number 52 (Tuesday, March 18, 1997)]
[Notices]
[Pages 12900-12903]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-6827]



[[Page 12899]]

_______________________________________________________________________

Part III





Environmental Protection Agency





_______________________________________________________________________



Allotment of Drinking Water State Revolving Fund Monies; Notice

Federal Register / Vol. 62, No. 52 / Tuesday, March 18, 1997 / 
Notices

[[Page 12900]]



ENVIRONMENTAL PROTECTION AGENCY

[FRL-5708-2]


Allotment of Drinking Water State Revolving Fund Monies; Notice

AGENCY: Environmental Protection Agency.

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SUMMARY: The Environmental Protection Agency (EPA) is announcing its 
decision on allotment of Drinking Water State Revolving Fund (DWSRF) 
monies to States. For fiscal year 1997, funds will be allotted based on 
the formula used to distribute public water systems supervision grants 
in fiscal year 1995. For fiscal year 1998 and subsequent fiscal years, 
funds will be allotted based on each State's proportional share of the 
total eligible needs for the States, derived from the Drinking Water 
Infrastructure Needs Survey: First Report to Congress. Each State will 
be allotted at least one percent of the funds available to the States.

Introduction

    The DWSRF program was established by the reauthorized Safe Drinking 
Water Act (SDWA), signed by President Clinton on August 6, 1996. The 
SDWA authorizes $9.599 billion for the DWSRF program through FY 2003. 
For FY 1997, EPA's budget includes $1.275 billion for the DWSRF 
program. EPA's Office of Water is the national program manager for the 
SDWA, including the DWSRF program. As intended by Congress, the DWSRF 
program will be implemented largely by the States.

Fiscal Year 1997

    Funds available for allotment to States in FY 1997 will be allotted 
based on the formula used to distribute public water system supervision 
grant funds in FY 1995 (SDWA Section 1452(a)(1)(D)(i)). In accordance 
with the law, each State, including the District of Columbia, will be 
allotted at least one percent of the funds available for allotment to 
all the States. The law also requires that the Virgin Islands, the 
Commonwealth of the Northern Mariana Islands, American Samoa, and Guam 
together receive an allotment not to exceed 0.33 percent of the total 
funds available for allotment. The formula results are shown below for 
each State in dollar terms as well as in percentages of the funds 
available to the States. Allotment amounts are rounded to the nearest 
one hundred dollars. Under the law, the funds available for allotment 
to the States are determined by deducting national set-asides from the 
total DWSRF appropriation. In fiscal year 1997, this means that the one 
and one half percent set-aside for Native Americans, which totals 
$19,125,000, is removed from the total appropriation to calculate the 
level of funds available to the States. In fiscal year 1997, 
$1,255,875,000 is the level of funds available to the States.

Fiscal Year 1997 DWSRF Final Allotment Results

Alabama $12,558,800 (1.00%);
Alaska $ 27,039,000 (2.15%);
Arizona $16,938,300 (1.35%);
Arkansas $12,558,800 (1.00%);
California $75,682,600 (6.03%);
Colorado $16,784,100 (1.34%);
Connecticut $21,408,200 (1.70%);
Delaware $12,558,800 (1.00%);
District of Columbia $12,558,800 (1.00%);
Florida $45,132,600 (3.59%);
Georgia $25,775,000 (2.05%);
Hawaii $12,558,800 (1.00%);
Idaho $14,157,800 (1.13%);
Illinois $38,502,400 (3.07%);
Indiana $25,712,100 (2.05%);
Iowa $16,857,300 (1.34%);
Kansas $14,095,000 (1.12%);
Kentucky $12,558,800 (1.00%);
Louisiana $20,420,300 (1.63%);
Maine $12,653,200 (1.01%);
Maryland $17,640,900 (1.40%);
Massachusetts $14,344,600 (1.14%);
Michigan $59,681,100 (4.75%);
Minnesota $42,086,000 (3.35%);
Mississippi $16,474,200 (1.31%);
Missouri $21,857,600 (1.74%);
Montana $14,826,200 (1.18%);
Nebraska $12,824,000 (1.02%);
Nevada $12,558,800 (1.00%);
New Hampshire $13,754,800 (1.10%);
New Jersey $27,947,300 (2.23%);
New Mexico $12,759,800 (1.02%);
New York $59,167,700 (4.71%);
North Carolina $46,114,100 (3.67%);
North Dakota $12,558,800 (1.00%);
Ohio $43,073,000 (3.43%);
Oklahoma $17,561,900 (1.40%);
Oregon $18,920,500 (1.51%);
Pennsylvania $53,270,700 (4.24%);
Puerto Rico $12,558,800 (1.00%);
Rhode Island $12,558,800 (1.00%);
South Carolina $14,821,600 (1.18%);
South Dakota $12,558,800 (1.00%);
Tennessee $12,776,200 (1.02%);
Texas $70,153,800 (5.59%);
Utah $12,558,800 (1.00%);
Vermont $12,558,800 (1.00%);
Virginia $29,442,400 (2.34%);
Washington $31,145,900 (2.48%);
West Virginia $12,558,800 (1.00%);
Wisconsin $41,546,400 (3.31%);
Wyoming $12,558,800 (1.00%);
Other Areas <SUP>1 $4,144,400 (0.33%)
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    \1\ Other Areas include: the Virgin Islands, American Samoa, 
Guam, and the Commonwealth of the Northern Mariana Islands.
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Fiscal Year 1998 and Subsequent Fiscal Years

    Under SDWA Section 1452(a)(1)(D)(ii), Congress has directed that 
capitalization grants for FY 1998 and subsequent years be allotted 
among States based on each State's proportional share of the State 
needs identified in the most recent Drinking Water Needs Survey, 
provided that each State be allotted a minimum share of one percent of 
the funds available for allotment to all the States. The first Drinking 
Water Needs Survey was conducted over the last two years with the 
cooperation of every State. The results of the Survey were presented to 
Congress on January 29, 1997.

Options Presented for Public Comment

    On October 31, 1996, EPA solicited public comment on six options 
for using the results of the Drinking Water Needs Survey to allocate 
DWSRF monies among States (61 FR 56231). The options presented in that 
Federal Register notice are summarized below. All of the options 
discussed below assume that each State, and the District of Columbia, 
will be allotted a minimum share of one percent of the funds available 
for allotment to all the States, as required by law. All of the options 
also assume, as required by law, that the Virgin Islands, the 
Commonwealth of the Northern Mariana Islands, American Samoa, and Guam, 
will together receive an allotment not to exceed 0.33 percent of the 
funds available for allotment to the States. The funds available for 
allotment to the States will be the level of funds appropriated by 
Congress, less the national set-asides, which include funds reserved 
for Indian Tribes and Alaska Native water systems. This framework was 
specified by Congress in the 1996 amendments to the SDWA (Section 
1452).
    <bullet> Option 1 was a formula that would allocate DWSRF monies to 
States based on each State's share of the total need. Total need is the 
capital infrastructure need faced by publicly and privately owned 
community water systems nationwide. Total need includes both current 
and future needs for the 20-year period from January 1995 through 
December 2014. This option was the one most favored by commenters, and 
was selected by EPA, with some modifications, as the basis for the 
allotment formula. As discussed below, total eligible need is the basis 
for allocation of DWSRF monies.
    <bullet> Option 2 was a formula based on each State's share of 
Current Need. Current Need is identified as all infrastructure 
improvement projects needed now to protect public health.
    <bullet> Option 3 was a formula based on Current SDWA Need, which 
represents capital improvement projects needed

[[Page 12901]]

now to ensure compliance with existing SDWA regulations. Current SDWA 
Need does not include distribution need tied to the Total Coliform Rule 
(TCR).
    <bullet> Option 4 was a formula based on Total SDWA Need. This 
component of need includes Current SDWA Need and Future SDWA Need. 
Future SDWA need includes projects needed over the next 20 years for 
compliance with existing regulations, as well as for the proposed 
Disinfectants and Disinfection Byproducts and Enhanced Surface Water 
Treatment Rules. Total SDWA Need does not include distribution need 
tied to the TCR.
    EPA also solicited comments on hybrid options that would take 
advantage of the strengths of different options and/or address concerns 
for meeting the needs of small systems. EPA presented two such options 
in its request for comments:
    <bullet> Option 5 was a hybrid of Current Need and Current SDWA 
Need (e.g., 50% of the formula based on a State's share of Current 
Need, with the other 50% based on Current SDWA Need). Such an approach 
would combine the benefits of formulas based on both types of need. The 
Current SDWA Need component would place emphasis on the projects 
required now for compliance with regulations, while the Current Need 
component would take into account all projects needed now--including 
current distribution need associated with the TCR.
    <bullet> Option 6 was a hybrid formula emphasizing the needs of 
small systems (e.g., basing 50% on total need and 50% on small system 
need). Giving added weight to small system need would acknowledge the 
special problems of small systems. Small water systems have both a 
higher per-household need and more trouble in maintaining compliance 
with drinking water regulations than larger systems.
    In addition to comments on these hybrid options, EPA requested 
suggestions for other hybrid options. EPA also requested comment on the 
percentages to employ in any hybrid. EPA requested that commenters 
suggesting alternative hybrids or other options not included in the 
Federal Register notice keep those options within the scope of the law. 
The law requires that funds be allotted to States based on each State's 
proportional share of the State needs identified in the most recent 
Drinking Water Needs Survey.

Summary of Comments

    EPA received 23 responses to its request for comments. These 
commenters included the following:
    <bullet> 12 State representatives.<SUP>2
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    \2\ The State of Alaska Department of Environmental Conservation 
submitted two separate responses.
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    <bullet> 6 regional or city water agencies.
    <bullet> 5 associations.
    Almost three-fourths of the commenters (15) favored Option 1, total 
need, as their first choice. In addition, 6 commenters supported the 
total need option as either their second choice, or as the most 
significant factor in a hybrid formula. Thus, 21 of the 23 commenters 
supported use of total need in some significant manner. The other 
options that received support were: Option 2, Current Need (1 
commenter); Option 6, Total or SDWA Need with an emphasis on small 
systems need (5 commenters); and two allotment formula options not 
presented in the request for comments (2 commenters). A summary of 
comments appears below.

Comments Favoring Total Need

    As stated above, the majority of comments supported Option 1, total 
need. Commenters from all but one State favored this option, and all 
State representatives participating in the October 14, 1996, meeting of 
the Association of State Drinking Water Administrators favored this 
option.
    Commenters in favor of total need argued that this option is most 
consistent with the intent of SDWA. They noted that total need was the 
bottom-line of the Drinking Water Needs Survey. Section 1452(a)(1)(D) 
of the SDWA requires that DWSRF monies for fiscal year 1998 and 
following years be allotted to States based on each State's 
proportional share of the State needs identified in the most recent 
Drinking Water Infrastructure Needs Survey. These commenters 
interpreted this provision to mean the bottom line total need in the 
survey. Additionally, statistical precision associated with total need 
is the highest.
    According to the commenters, this approach appropriately provides 
States with flexibility to determine which needs are critical for 
protecting public health, does not put States with the most active SDWA 
compliance programs at a disadvantage, includes distribution system 
needs associated with the TCR, and encourages proactive health 
protection. In addition, these commenters noted that many of the 
projects identified as future needs when the information was collected, 
are now or will become current needs during the lifetime of this 
formula.
    EPA is persuaded by the arguments of the commenters that supported 
Option 1, total need. The Agency feels that this approach recognizes 
the differences in need among States and gives the maximum degree of 
flexibility. The Agency will allot funds to each State based on the 
State's proportional share of total eligible needs reported for the 
most recent Drinking Water Needs Survey conducted under SDWA Section 
1452(h). Each State shall be allocated a minimum of one percent of the 
funds available to States, as required under SDWA Section 
1452(a)(1)(D)(ii). Once funds have been allotted, States must then 
choose projects for funding based on the criteria in the law. The law 
requires that State Intended Use Plans, to the maximum extent 
practicable, give priority for funding to projects that address the 
most serious risk to human health, are necessary to ensure compliance 
with SDWA requirements (including filtration), and assist systems most 
in need on a per household basis, according to State affordability 
criteria.
    Total eligible need for the purpose of the allotment formula will 
include most but not all types of need under the category of total need 
reported for the Drinking Water Infrastructure Needs Survey: First 
Report to Congress. Total eligible need for the allotment formula (or 
total eligible need) will not contain projects that are ineligible for 
DWSRF funding. Projects not eligible for funding that are included in 
the Drinking Water Infrastructure Needs Survey: First Report to 
Congress are new and improved dams and reservoirs. These ineligible 
projects total just over three percent of the total need identified in 
the Drinking Water Infrastructure Needs Survey: First Report to 
Congress.

Comments Favoring Current Need

    One commenter provided an argument against Option 1, total need, 
stating that it would require public water systems or States to project 
future needs, which depend on a variety of factors. For this reason, 
the commenter advocated Option 2, Current Need. However, EPA notes that 
the Drinking Water Needs Survey included only well-documented future 
needs that affect the current population and are very likely to be 
implemented. Furthermore, the Agency notes that most future needs are 
no more than five years away, because systems generally plan only five 
years in advance. Consequently, EPA believes that basing the allotment 
formula upon total needs will not result in an unfair distribution of 
funds.

Comments Favoring Small System Need

    In addition to the commenters that favored total need and the one 
commenter that favored Current Need, five commenters favored a hybrid

[[Page 12902]]

option that emphasizes small system needs. Four commenters advocated a 
hybrid of total need and total need for small systems, and one 
commenter advocated a hybrid of Total SDWA Need and Total SDWA Need for 
small systems.
    One commenter supported a hybrid option emphasizing small system 
needs because the commenter felt that it would be most beneficial to 
the commenter's State. Some commenters believed that the Drinking Water 
Needs Survey underestimated small system need because many small 
systems do not have the resources available to document current and 
future needs. Additionally, commenters argued that this option was most 
consistent with the SDWA's intent to provide relief to small systems 
and address the most serious threats to public health.
    EPA disagrees that small system needs have been underestimated. The 
approach for estimating small system needs was developed by a workgroup 
that included State representatives. Under this approach, a 
statistically significant sample of small systems participated in the 
Drinking Water Needs Survey. Because the workgroup was aware that many 
small systems would not have the capacity to document their needs, the 
approach called for site visits to all selected systems. EPA staff and 
other water system professionals, often accompanied by State personnel, 
interviewed small system operators, examined all system components, and 
developed documentation on site. If project costs were not available, 
this documentation, along with data provided by States, engineering 
firms, and other water systems, was used to model small system costs. 
EPA believes this methodology yielded a very accurate estimate of need 
for small systems.
    It was not feasible to conduct a survey of small systems that was 
statistically significant on a State-by-State basis because the 
Drinking Water Needs Survey approach emphasized the importance of 
accurately capturing small system needs through site visits. Therefore, 
the workgroup's approach called for a survey that was statistically 
significant on a national basis. (For medium and large systems, the 
survey was statistically significant on a State-by-State basis.) The 
national small system need was distributed among States based on the 
number of small systems in each State, taking system size and type 
(surface vs. ground) and regional construction cost trends into 
account. Since small system needs were not based on State-by-State 
samples, EPA concludes that it would not be appropriate to assign a 
disproportionately heavy weight to small system needs in the allotment 
formula.
    Additionally, EPA notes that the decision to utilize Option 1, 
total need, does not diminish access by small systems to DWSRF funding. 
The formula allocates money to States, which in turn determine how to 
distribute the funds to systems. As required under SDWA 1452(a)(2), 
States must make available to small systems a minimum of fifteen 
percent of DWSRF funds, and it is within their purview to distribute a 
greater percentage. There is no reason to believe that weighting small 
system needs in the allotment formula would affect States'' decisions 
to provide DWSRF funding to small systems. The Agency adds that the 
reauthorized SDWA provides other relief for small systems. The Act 
includes provisions that allow States to issue subsidized loans to 
``disadvantaged communities''. Further, it allows States to use two 
percent of their allotments for technical assistance to small systems 
serving 10,000 or fewer people. In addition, the SDWA requires that 
States make available a minimum of 15 percent of all dollars credited 
to a DWSRF for loan assistance to small systems that serve fewer than 
10,000 persons.

Comments Suggesting Other Options

    Two commenters advocated allotment formula options not presented in 
the October 31, 1996, Federal Register notice requesting comments. One 
commenter suggested a formula that would take into account either the 
number of individuals without piped water or State populations. 
However, EPA notes that SDWA Section 1452(a)(1)(D)(ii) requires that 
DWSRF funding be allocated to States based on a State's proportional 
share of the State needs identified in the most recent Drinking Water 
Needs Survey of eligible water systems. No provision is made in the law 
to distribute DWSRF funds to States based on the number of individuals 
without piped water or on population.
    Another commenter suggested a hybrid formula based 50 percent on 
total need and 50 percent on Current SDWA Need. While EPA recognizes 
that current SDWA need emphasizes many of the most serious threats to 
public health, many commenters pointed out that the category does not 
cover all projects needed to protect public health.
    There were no comments received in favor of Options 3 or 4.
    The commenters also addressed other, related issues. Most 
significantly, commenters requested that EPA reevaluate the allotment 
formula after the completion of the next Drinking Water Needs Survey. 
The results of the next Drinking Water Needs Survey are due to Congress 
in February 2001 (SDWA Section 1452(h)). In late 2000, EPA intends to 
again solicit comments on the allotment formula for the purpose of 
evaluating whether the DWSRF allotment formula should be modified.
    Some commenters also questioned whether comments on the allotment 
formula should have been solicited before the results of the Drinking 
Water Infrastructure Needs Survey were made available. The Agency 
believes that seeking comments on the options for the allotment formula 
before the survey results were available invited commenters to provide 
impartial comments on which option best meets the intent of the 
reauthorized SDWA. EPA is confident that this approach helped ensure 
that the chosen allotment method was equitable and would meet the 
intent of the SDWA.
    EPA appreciates the participation of all commenters in this 
process. To reiterate, the Agency will use an allotment formula that 
allocates to each State a share of funding proportional to the State's 
total eligible need as determined by the Drinking Water Infrastructure 
Needs Survey: First Report to Congress (SDWA Section 1452(a)(1)(D)). 
Each State, and the District of Columbia, shall be allotted a minimum 
of one percent of the funds available for allotment to States (SDWA 
Section 1452(a)(1)(D)(ii)). The Virgin Islands, American Samoa, Guam, 
and the Commonwealth of the Northern Mariana Islands, will together 
receive an allotment not to exceed 0.33 percent of the funds available 
for allotment to the States (SDWA Section 1452(j)). The funds available 
for allotment to the States will equal the level of funds appropriated 
by Congress, less the national set-asides.
    The national set-asides for fiscal year 1998 include funds for 
Indian Tribes and Alaska Native Village water systems at the level of 
one and one half of one percent of the total appropriation. (SDWA 
Section 1452(i)). This comes to $10,875,000 for Indian Tribes and 
Alaska Native Villages in fiscal year 1998. Also, a national set-aside 
of $2,000,000 is anticipated to be used for monitoring for unregulated 
contaminants. If funds are appropriated for the DWSRF at the level of 
the President's budget of $725 million and if the anticipated national 
set-asides do

[[Page 12903]]

not change, the total funds available to the States would equal 
$712,125,000. Each State's allotment, based on these assumptions, is 
shown below. Because the percentages are based on the total funds 
available for allotment to the States, they can be used for planning 
purposes for future years. Once the appropriated amount and national 
set-asides are known, a State's allotment can be estimated by 
subtracting the national set-asides from the total funds available for 
allotment and then applying the appropriate percentage shown below.

Fiscal Year 1998 DWSRF Allotment Results (Based on the President's 
Budget of $725 Million and National Set-Aside Assumptions)

Alabama $8,465,600 (1.19%);
Alaska $7,121,300 (1.00%);
Arizona $7,257,400 (1.02%);
Arkansas $10,132,200 (1.42%);
California $77,108,200 (10.83%);
Colorado $9,581,800 (1.35%);
Connecticut $7,121,300 (1.00%);
Delaware $7,121,300 (1.00%);
District of Columbia $7,121,300 (1.00%);
Florida $20,642,800 (2.90%);
Georgia $15,253,300 (2.14%);
Hawaii $7,121,300 (1.00%);
Idaho $7,121,300 (1.00%);
Illinois $ 24,753,200 (3.48%);
Indiana $8,687,500 (1.22%);
Iowa $11,238,700 (1.58%);
Kansas $10,008,100 (1.41%);
Kentucky $10,851,600 (1.52%);
Louisiana $9,949,200 (1.40%);
Maine $7,121,300 (1.00%);
Maryland $7,121,300 (1.00%);
Massachusetts $27,414,400 (3.85%);
Michigan $20,951,400 (2.94%);
Minnesota $11,856,100 (1.66%);
Mississippi $8,271,700 (1.16%);
Missouri $9,574,900 (1.34%);
Montana $7,121,300 (1.00%);
Nebraska $7,121,300 (1.00%);
Nevada $7,121,300 (1.00%);
New Hampshire $7,121,300 (1.00%);
New Jersey $17,347,900 (2.44%);
New Mexico $7,121,300 (1.00%);
New York $45,061,600 (6.33%);
North Carolina $12,859,400 (1.81%);
North Dakota $7,121,300 (1.00%);
Ohio $22,806,200 (3.20%);
Oklahoma $10,224,200 (1.44%);
Oregon $10,567,800 (1.48%);
Pennsylvania $22,404,800 (3.15%);
Puerto Rico $10,225,000 (1.44%);
Rhode Island $7,121,300 (1.00%);
South Carolina $7,669,400 (1.08%);
South Dakota $7,121,300 (1.00%);
Tennessee $9,557,400 (1.34%);
Texas $54,014,400 (7.58%);
Utah $7,121,300 (1.00%);
Vermont $7,121,300 (1.00%);
Virginia $13,895,300 (1.95%);
Washington $19,169,100 (2.69%);
West Virginia $7,121,300 (1.00%);
Wisconsin $9,548,400 (1.34%);
Wyoming $7,121,300 (1.00%);
Other Areas \3\ $2,350,000 (0.33%)
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    \3\ Other Areas include: the Virgin Islands, American Samoa, 
Guam, and the Commonwealth of the Northern Mariana Islands.
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Submission to Congress and the General Accounting Office

    Under 5 U.S.C. 801(a)(1)(A) as added by the Small Business 
Regulatory Enforcement Fairness Act of 1996, EPA submitted a report 
containing this rule and other required information to the U.S. Senate, 
the U.S. House of Representatives and the Comptroller General of the 
General Accounting Office prior to publication of the rule in today's 
Federal Register. This rule is not a ``major rule'' as defined by 5 
U.S.C. 804(2).

ADDRESSES: A copy of the public comment received regarding this 
allotment formula is available for review at the EPA Drinking Water 
Docket, 401 M ST, SW, Washington, DC 20460. For access to the docket 
materials, call (202) 260-3027 between 9:00 a.m. and 3:30 p.m. The 
allotment formula results for fiscal year 1998 will be published in the 
Federal Register once national set-aside amounts have been finalized.

FOR FURTHER INFORMATION CONTACT: Mr. Clive Davies (202) 260-1421.

    Dated: March 12, 1997.
Robert Perciasepe,
Assistant Administrator for Water.
[FR Doc. 97-6827 Filed 3-17-97; 8:45 am]
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