The public health and environmental requirements of two federal laws are primarily driving projects in rural, as well as non-rural, areas for drinking water and wastewater treatment. The Environmental Protection Agency (EPA) administers both laws. For the quality of drinking water supply , requirements of the Safe Drinking Water Act (SDWA) apply to public water supply systems, whether government-owned or privately owned. Under this law, EPA regulates the quality of drinking water provided by community water supply systems, which are defined as those having at least 15 service connections. Community water supply systems serve approximately 300 million persons; 19 million persons also get their drinking water from non-community systems (such as wells that serve individual homes, schools, factories, or campgrounds), which are not subject to the act. Regulated water systems provide drinking water to 97% of Americans. The vast majority of systems are small and privately owned, although most people (70% of those served by community water systems) are customers of large, publicly owned systems. The smallest water systems (serving fewer than 3,300 persons, many serving small clusters of homes) account for 77% of all systems and a similarly high percentage of systems in significant noncompliance with drinking water regulations. Most very small systems have no credit history and have never raised capital in financial markets. Small to medium systems (serving 3,301 to 50,000 persons) are institutionally more capable than smaller systems, yet they also face financing challenges. The smallest of these have limited access to financial markets and creditworthiness more sensitive to local economic conditions than larger systems. Community water supply systems currently are subject to a number of drinking water regulations issued by EPA under the SDWA. Federal regulations limiting levels of contaminants in treated water are implemented by local water suppliers. These require, for example, system monitoring, treatment to remove certain contaminants, and reporting. New regulations are being developed that are likely to impose additional compliance burdens on these systems within the next few years, and costs of meeting these requirements are a growing concern to water suppliers and policy makers. EPA estimates that compliance with the regulations already promulgated will provide millions of people protection from numerous industrial chemicals, microbes, and other contaminants in public water supplies. However, to comply, many cities and towns must invest in capital equipment, operation and maintenance, and increased staff technical capacity. Recent regulations with particularly costly implications for small towns include water filtration, lead control, arsenic control, and inorganic and organic contaminant control. According to EPA, small community water systems (serving up to 3,300 persons) have funding needs of $64.5 billion (17% of the total national need) to provide safe drinking water—accounting for a disproportionate percentage of community water system need. Although small systems account for only 8% of the population served, nearly 83% of all systems with reported funding needs are small communities, EPA said. For wastewater treatment , requirements of the Clean Water Act (CWA) apply to all communities that discharge municipal sewage waste into the nation's waters. About 80% of wastewater treatment and collection facilities serve small communities (defined as those with a population of 10,000 or less), yet those facilities serve only 7% of the U.S. population . Under the CWA, all municipalities were to achieve secondary treatment of municipal sewage (equivalent to removing approximately 85% of wastes from the municipal wastestream), or more stringent, where that is required to meet local water quality standards, by 1988. Much like the Safe Drinking Water Act, small community wastewater systems have higher rates of noncompliance than larger systems. Unlike the SDWA, however, regulatory requirements under the CWA have been fixed for some time. The CWA issue for many cities of all size is continuing efforts to finance improvements that have largely been known for several years. EPA reported in 2016 that as of 2012, cities throughout the country (of all sizes) would require nearly $271 billion for wastewater facilities to meet water quality standards. EPA estimated that documented funding needs for rural communities totaled $68 billion. Needs for projects in small communities (populations less than 10,000) were $33 billion, or about 12% of the total U.S. funding needs. The largest needs in small communities are for improved wastewater treatment and correction of combined sewer overflows. Five states accounted for 30% of the small community needs (Pennsylvania, New York, Kentucky, Texas, and Alabama). With few exceptions, small community facilities are a large majority of the total number of publicly owned facilities in each state, and in four states (Iowa, Montana, Nebraska, and North Dakota), small community facilities constitute more than 95% of publicly owned facilities. In 19 other states, small community facilities constitute 80% to 95% of the publicly owned facilities. As with meeting drinking water needs, EPA has estimated that, because small systems lack economies of scale, their customers face a particularly heavy financial burden to meet needs for clean water investments. The smallest cities are likely to experience the largest overall percentage increases in user charges and fees as a result, EPA has said. The federal government administers a number of programs that assist rural communities in developing water and waste disposal systems. The most prominent are programs of the Department of Housing and Urban Development (HUD); the Appalachian Regional Commission (ARC); the Economic Development Administration (EDA); EPA; and the U.S. Department of Agriculture (USDA). HUD administers assistance primarily under the Community Development Block Grant (CDBG) program, in Title I of the Housing and Community Development Act of 1974, as amended. FY2016 appropriations are $3.0 billion, of which approximately $900 million is available for smaller communities. CDBG funds are used by localities for a broad range of activities intended to result in decent housing in a suitable living environment. Water and waste disposal needs compete with many other public activities for this assistance and are estimated to account for 10% to 20% of CDBG obligations. Program policy requires that at least 70% of funds must benefit low/moderate-income persons. According to data from HUD, in recent years, water and sewer improvement projects have accounted for 9%-10% of all CDBG funds nationally. Thirty percent of CDBG funds are allocated by formula to the states for distribution to small communities and may be available for rural community projects. The larger portion of total CDBG funds, 70%, is allocated by formula to metropolitan areas and cities with populations of 50,000 or more and statutorily defined urban counties and thus does not assist rural areas directly. The ARC assists with programs and projects to provide basic facilities essential to economic growth in the Appalachian regions of 13 states. Investments are concentrated in areas with significant potential for future growth as well as in areas that suffer the greatest distress. States recommend projects for assistance. In FY2016, the ARC is funded at a level of $146 million, budgeted primarily for area development assistance, covering a range of community-based projects including basic infrastructure, business, and human development. Historically, environmental projects have received about 5% of ARC economic and human development funds. EDA provides project grants for construction of public facilities, including water and sewer systems, to alleviate unemployment and underemployment in economically distressed areas. Development grants provide for infrastructure projects that foster industries and commercial businesses that provide long-term employment and are part of approved overall economic development programs in areas of lagging economic growth. Economic development grants can be used for a wide range of purposes and frequently have a sewer or water supply element. In FY2016, EDA's public works grants are funded at $100 million. In historic terms, the largest federal program for wastewater treatment assistance is administered by EPA under the Clean Water Act. Since 1973 Congress has appropriated $94 billion in assistance under this act. FY2016 funding is $1.39 billion. Funds are distributed to states under a statutory allocation formula and are used to assist qualified projects on a priority list that is determined by individual states. Prior to 1989, states used their allotments to make grants to cities and other localities. Now, however, federal funds are used to capitalize state loan programs (State Revolving Funds, or SRFs), and project loans are made according to criteria in the CWA. Over the long term, the loan programs are intended to be sustained through repayment of loans to states, thus creating a continuing source of assistance for other communities. Rural and non-rural communities compete for funding; rural areas have no special priority, nor are states required to reserve any specific percentage for projects in rural areas. Some small communities and states with large rural populations have had problems with the CWA loan program. Many small towns did not participate in the previous grants program and are more likely to require major projects to achieve compliance with the law. Yet many have limited financial, technical, and legal resources and have encountered difficulties in qualifying for and repaying loans. They often lack an industrial tax base or opportunities for economies of scale and thus face the prospect of very high per capita user fees to repay a loan for the full cost of sewage treatment projects. Still, small communities have been participating in the clean water SRF program: an estimated 23% of the $42 billion in SRF assistance since 1989 (representing 67% of loans made by states) has gone to communities with less than 10,000 in population. In 1996, Congress enacted Safe Drinking Water Act (SDWA) amendments which authorize federal capitalization of state loan programs to help public water systems finance improvements needed to comply with federal drinking water regulations ( P.L. 104-182 ). Since then, Congress has provided $20 billion in appropriations for the drinking water SRF program (DWSRF), which is similar in structure to the CWA SRF program. Elements that differ under the DWSRF include authority for states to make both loans and grants and to assist both privately and publicly owned community water systems.