Mr. Chairman, NAWC is pleased that you and your Subcommittee have scheduled this oversight hearing on the implementation of the 1996 Amendments to the Safe Drinking Water Act (SDWA). With its emphasis on public participation and right-to-know, the requirements for sound science and cost-benefit analysis in the regulatory process, and the creation of a state revolving loan fund (SRF) for infrastructure improvements, the 1996 Act represents a new paradigm for environmental legislation and an achievement that this Committee and Congress should be justly proud of.
NAWC supported the 1996 Act and we are happy to report that, based on our experience over the past two years, its overall implementation to date has been successful. Officials at the Environmental Protection Agency should be commended, in particular, for meeting the Act's deadlines while involving interested stakeholders in the process of developing regulations and guidelines in a fashion that is truly unprecedented. Although we have concerns which I will discuss and we can see problems developing that should be addressed, overall we believe that to date EPA, the state primacy agencies, and the various stakeholder groups have worked in a positive and cooperative manner towards implementation of the letter and spirit of the legislation.
Consumer Confidence Reports
One conspicuous example of this success was the announcement by the President on August 11, 1998, of the Consumer Confidence Reports (CCR) final rule. Pursuant to this rule all community water systems will be required to disclose to their customers each year the state of their drinking water supply--something that many NAWC companies have been doing for many years. Generally the reports will include information on the sources of drinking water, potential sources of contamination, the health effects of any violations, and precautionary advisories for people with special medical problems. We strongly believe in the public's right to have relevant information about their drinking water, and we believe that the final rule strikes a proper balance by requiring the disclosure of important information at a level of detail that is meaningful and understandable.
State Revolving Loan Funds
The plain language of the SDWA Amendments of 1996, as well as the legislative history, makes it clear that Congress intended DW-SRF funds to benefit all customers of public water systems, regardless of the ownership of the systems. This policy was a deliberate departure from that of the Clean Water Act SRF which provides funds to publicly owned wastewater systems only. Because of this change, the Senate Committee Report made eligibility of private systems explicit: "Drinking water systems eligible for [DW-SRF] assistance are those public water systems (as defined by the Act) that are community water systems (whether publicly or privately owned)..."
EPA has supported this policy, and EPA officials should be commended for their efforts to implement the SRF equitably. In particular, we appreciate EPA's recent announcement that "reimbursement" is permitted for costs incurred after state approval of a project but before execution of a loan agreement. Such reimbursement for privately owned companies might not have been permitted under a strict interpretation of the Act which does not allow "refinancing" for privately owned companies. This common-sense interpretation by EPA was critical in some states, including New Jersey, where approval of a project typically takes place many months prior to the execution of a loan agreement.
In spite of the best efforts of EPA, however, implementation of the SRF has been uneven in the states. According to a recent survey by NAWC, only 11 SRF applications have been approved for NAWC companies since the 1996 Amendments became effective, for a total of $40 million spread across 8 states (Arizona, California, Connecticut, Iowa, Maine, New Hampshire, New Jersey and Pennsylvania).
Most significantly, 19 states, through their constitutions, statutes or official policies, have declared privately owned systems to be ineligible for SRF assistance. Presently EPA is considering a policy that would base a state's SRF allocation only on those infrastructure needs that the state has determined to be eligible. This makes perfect sense. Why award an allocation to a state for infrastructure needs which the state has no intention of assisting? NAWC believes that such a revised policy would be fair and proper for all water systems and their customers, as well as the states. We urge EPA to formally announce such a policy soon. If EPA concludes that it lacks legal authority, we urge Congress to make such authority explicit.
EPA Regulatory Standard Setting Process
Mr. Chairman, one of the most important objectives of the 1996 SDWA Amendments, and one which NAWC heartily endorses, is to make EPA regulations as rational as possible, based on the best science available. To accomplish this, we believe that it is critical for EPA to develop a process that will enable decision-makers to focus on important issues in a timely fashion. For example, we believe that EPA should emphasize early, statistically valid, contaminant occurrence monitoring before investing heavily in health studies and other contaminant analyses.
Consequently, we have provided EPA with a detailed paper presenting our concerns and specific recommendations. I would like to emphasize that these concerns are industry wide. Our paper has been specifically endorsed by the American Water Works Association (AWWA), the Association of Metropolitan Water Agencies (AMWA) and the Association of State Drinking Water Administrators (ASDWA). In summary, the objectives of this paper are to facilitate the development of a regulatory development process that:
Adequate Funding for EPA Research
Mr. Chairman, NAWC is seriously concerned that without increased research funding over the next several years, EPA will either fail to meet statutory deadlines for regulating contaminants, or will fail to meet the requirements of the Act for standards based on sound science. The January 1999, GAO Report on the Safe Drinking Water Act cites EPA estimates of annual funding shortfalls for research and data collection in the range of $10 million to $20 million per year for fiscal years 1999 through 2005.
These concerns are shared by other experts. The National Drinking Water Advisory Council (NDWAC) has concluded that:
"[S]hortfalls in the [drinking water] program's funding and research to support basic SDWA public health objectives ... will substantially hinder attainment of the SDWA quality and sound science requirements or will result in missing statutory deadlines for priority rulemakings.
"A comprehensive, targeted and fully funded research program on drinking water health effects, exposure, treatment and analytical methods is essential to the success of the new statutory framework and to achieving the full potential of the SDWA reforms."
We endorse NDWAC's recommendation that, "The Administrator should request full funding for drinking water activities to address shortfalls which threaten the scientific and programmatic integrity of the program." Mr. Chairman, we recognize that this Committee is not responsible for EPA appropriations, but we urge you, during the budget and appropriations process, to be supportive of requests to meet the funding levels necessary to fulfill the Act's mandates and to protect the public health.
Water Contamination Tort Litigation
Mr. Chairman, NAWC wishes to express its grave concern about a new kind of lawsuit which we believe seriously threatens America's drinking water industry and the water quality regulatory system under which it has successfully operated for many years. In California, the plaintiff's bar has organized and commenced, as of now, eleven mass tort lawsuits against several community water systems (both public agencies and private companies) for allegedly delivering contaminated water, even though the companies claim to have been in full compliance with state and federal standards. As you know, these standards have been developed by regulatory agencies over many years based on the health effects of contaminants, measurement capabilities, and technical feasibility. They are the product of extensive Congressional debate over both the need to protect public health and the cost of treatment.
If twelve jurors, after hearing "scientific" testimony from plaintiffs' "expert witnesses", conclude that the national standards are inadequate to protect the public health, water systems across the country will need to consider whether to comply with uniform national standards or the new standards set by the litigation. Furthermore, the costs of defending these lawsuits will place upward pressure on water prices. Ultimately, the substantial judgments that could result from these lawsuits could threaten the financial stability of water systems across the country.
On March 12, 1998, the California Public Utilities Commission instituted its own investigation into the adequacy of existing drinking water standards. This investigation has resulted in a temporary stay of the judicial proceedings. The California PUC has set May 1999, as its goal for a final determination of its investigation. Depending on that determination and its impact on the underlying tort lawsuits, Congress may wish to examine more closely the potential impact of these lawsuits on the national drinking water standards program, as well as possible legislative remedies. Given the widely-acknowledged success of the SDWA since its enactment 25 years ago, we believe that it would be most unfortunate, if not potentially disastrous, if the heart of the Act--uniformly enforced national drinking water standards--were to be eroded or destroyed by civil litigation.
Reliability of the SDWIS Compliance Database.
Last summer NAWC and its member companies, along with other associations, expressed serious concern about the inaccuracy and unreliability of much of the SDWIS compliance information displayed to the public on the Internet through EPA's Envirofacts Warehouse. We were pleased when EPA officials responded positively and immediately and began the development and implementation of a system for correcting existing errors and ensuring future reliability. In addition, disclaimers have been placed on the website for some states, and just last week EPA agreed to place "flags" next to specific information that has been challenged as incorrect, and not yet corrected.
Since the system relies on information provided by state agencies, the problems are complex and vary from state to state. Much remains to be done. However, we want to emphasize our appreciation for EPA's prompt response to a problem with serious potential for eroding public confidence in drinking water quality.
Conclusion
In conclusion, Mr. Chairman, the National Association of Water Companies wants to express its gratitude to the Subcommittee for the opportunity to share its views on the implementation of the SDWA Amendments of 1996. As we approach the 25th anniversary of the original Act, we can all be grateful for, and proud of, the substantial improvements that have been made in the delivery of safe and reliable drinking water to the American public. You have also listened to our concerns about current and potential problems and our recommendations for dealing with them.
Essentially, NAWC views the 1996 Act as the expression of a partnership between Congress, EPA, the states and tribes, public water systems and the consuming public to commit ourselves to maintaining the best public drinking water delivery system in the world. We believe that the partnership is effective and we look forward to working with Congress and this Committee in continued pursuit of this goal.