The Congress enacted the Safe Drinking Water Act in 1974 to protect the public from the risks of contaminated drinking water. Under the act, EPA is required, among other things, to (1) set standards or treatment techniques for contaminants that may adversely affect human health and (2) establish requirements for monitoring the quality of drinking water supplies and for ensuring that water systems are properly operated and maintained. EPA is authorized to grant primary enforcement authority for the drinking water program, commonly referred to as “primacy,” to the states that meet certain requirements. Among the key requirements are that the states (1) adopt drinking water regulations that are no less stringent than EPA’s national primary drinking water regulations and (2) adopt and implement adequate procedures to carry out the program’s requirements and enforce the regulations. In a series of reports and testimonies leading up to the 1996 amendments, we cited a number of problems that seriously impeded EPA’s and the states’ drinking water programs. We noted, for example, that EPA had fallen behind the statutory timetable for promulgating new regulations and cited substantial resource constraints that made it difficult for EPA, the states, and the nation’s public water systems to comply with basic requirements of the statute. Among other things, we (1) identified the particularly difficult problems many smaller water systems had in complying with the act and in ensuring a safe water supply and (2) found that the public was often inadequately informed of both the health risks posed when water systems violated contaminant limits and the appropriate preventive measures that should be taken. The Safe Drinking Water Act Amendments of 1996 sought to address many of these issues. Of particular note, the statute eliminated the requirement that EPA set standards for at least 25 additional contaminants every 3 years (regardless of the health risks they posed) and replaced it with a 5-year regulatory cycle that requires that new regulations be based on the risk to human health and on sound data and science and allowed EPA to consider costs and benefits as factors in setting the standards. The statute addressed the severe resource constraints experienced by EPA, the states, Indian tribes, and water systems with increased funding for research and the Public Water System Supervision program (the program that largely supports the states’ key drinking water oversight activities) and through the creation of the Drinking Water State Revolving Fund program for infrastructure improvements at water systems. Among other things, the amendments also (1) attempted to resolve the particularly challenging problems associated with small water systems; (2) sought to focus greater attention on preventing the contamination of water supplies at their source, rather than solely on the purification of water at treatment plants; and (3) encouraged greater consumer awareness by requiring water systems to inform their customers about the source and quality of their drinking water supplies. The 1996 amendments replaced the requirement to regulate 25 additional contaminants every 3 years with a new selection process that explicitly allows EPA to identify contaminants that warrant regulation on the basis of the adverse health effects of the contaminants, their frequency of occurrence in public water systems, and the projected risk reduction to be achieved in regulating them. EPA was required to publish, by February 1998, a list of high-priority contaminants not currently regulated. (EPA calls this the “Contaminant Candidate List.”) Rather than automatically requiring 25 new contaminants to be regulated every 3 years, beginning in August 2001 (and in 5-year cycles thereafter), the amendments require EPA to determine whether to regulate at least 5 of the contaminants on the list. A determination to regulate is to be based on the best available public health information and data concerning the occurrence of the contaminant. The replacement of the requirement to regulate 25 new contaminants every 3 years was an important step in addressing both the resource problems affecting EPA and key regulatory problems affecting the drinking water industry. Nonetheless, the cost and technical issues associated with new regulations will continue to challenge both regulators and the regulated community. In particular, the 1996 amendments required that EPA complete the development of most of the regulations that were in process at the time of reauthorization. Specifically, they require the agency to (1) finalize standards for certain contaminants for which proposed regulations were in place (i.e., standards for disinfection by-products and cryptosporidium); (2) issue new or updated standards for certain contaminants that were previously required to be regulated under the 1986 amendments to the Safe Drinking Water Act (i.e., arsenic and radon) and determine whether to regulate others (i.e., sulfate); and (3) finalize regulations requiring filtration treatment for surface water systems and disinfection treatment for groundwater systems (i.e., the Enhanced Surface Water Treatment Rule and Ground Water Disinfection Rule). Pursuant to these requirements, the first new drinking water standards in over 6 years (and the first since the 1996 amendments) were promulgated by EPA in December 1998—the Interim Enhanced Surface Water Treatment Rule and the Disinfectants/Disinfection By-Products Stage 1 Rule. Other regulations currently under development include those dealing with arsenic, radon, and other radionuclides, disinfectants/disinfection by-products (stage 2), long-term enhanced surface water treatment, filter backwash, and groundwater. These regulations are scheduled to be issued over the next 3 to 5 years. Other efforts will focus on (1) updating the Total Coliform Rule and regulations on atrazine, aldicarb, and nickel; (2) regulating contaminants chosen from the Contaminant Candidate List; and (3) reexamining existing standards for 80 other contaminants. Compliance costs associated with some of the new regulations will be significant. For example, EPA has estimated that the total annual compliance costs associated with the Disinfectants/Disinfection By-Products Stage 1 Rule will be about $700 million per year for community and nontransient noncommunity water systems.Furthermore, the revised arsenic standard could impose high costs on water systems; estimates by EPA and the American Water Works Association indicate that the total annual compliance costs could be as high as $2.1 billion or $4.1 billion, respectively. Compliance costs are typically much greater for customers of small water systems because these systems have fewer customers to share the costs. Overall, according to estimates by EPA and the Congressional Budget Office, the cost of complying with existing regulations averages less than $20 per household annually for systems serving more than 10,000 people. For systems serving between 25 and 100 people, however, the average annual household cost is $145. The expense associated with drinking water regulations underscores the need to have a sound scientific and information basis underlying them. Achieving that scientific basis for the full range of required regulations by the new statutory deadlines, however, will pose an enormous challenge. According to officials from EPA’s Office of Ground Water and Drinking Water, the ongoing and planned research is sufficient to support the regulations currently under development but cannot adequately support the work required for future regulations within the timetables prescribed by the amendments. Citing an Office of Water needs assessment (which was coordinated with the Office of Research and Development), the Director of the Standards and Risk Management Division said that the new demands cannot be met by shifting resources without sacrificing quality or missing statutory deadlines. Initial EPA estimates are that the annual funding shortfall for research and data collection will be in the range of $10 million to $20 million per year for fiscal years 1999 through 2005. Consequently, without additional resources, EPA will be faced with a difficult choice: (1) fall behind the statutory timetable for considering contaminants for possible regulation to advance public health protection, (2) focus on meeting its timetable—but risk greater challenges to the adequacy of the proposed regulations’ underlying quality and science, or (3) shift research and program resources from other high-priority activities. The Contaminant Candidate List regulations and activities are a case in point. EPA is required to make regulatory determinations based on the list by 2001 and concurrently initiate research and data collection to support subsequent Contaminant Candidate Lists and rules. But agency officials indicate that current resources are almost fully devoted to the development and completion of ongoing priority rulemaking efforts and cannot be shifted to new projects. Industry organizations we contacted also expressed concern over EPA’s ability to conduct all of the research necessary to support new regulations. Officials from the American Water Works Association and the Association of Metropolitan Water Agencies told us that the scientific studies supporting EPA’s rulemakings are one of the issues of greatest concern to them about the implementation of the 1996 amendments. They expressed particular concern about the science supporting some of the near-term regulations. An Association of Metropolitan Water Agencies official told us that her association is particularly concerned that EPA may be under pressure to set standards for some contaminants regardless of whether the scientific data needed to support the rulemakings are ready in time. An American Water Works Association official expressed similar concerns. Such concerns prompted these organizations to file a lawsuit seeking an order compelling EPA to comply with a statutory requirement (under section 1452 of the Safe Drinking Water Act) to set aside funds from the Drinking Water State Revolving Fund program’s appropriation, beginning in fiscal year 1995, for health-related research studies. EPA contends that the appropriation in question did not include monies for earlier years and was limited to capitalization grants for Drinking Water State Revolving Fund programs and grants for assistance to Indian tribes to support the financing of water infrastructure. EPA instead received $10 million, the amount authorized to be set aside by section 1452, from a separate fiscal year 1997 appropriation for health effects research. The water associations see a danger in year-by-year funding for health effects research. They believe that if funds were set aside for section 1452, there would be a constant flow of funds for research. Instead, EPA must depend on additional appropriations from the Congress every year, which may not yield the same amount of money as a permanent set-aside.