05-12660. State Allotment Percentages for the Drinking Water State Revolving Fund Program

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Notice.

SUMMARY:

The 1996 Safe Drinking Water Act (SDWA) Amendments established a Drinking Water State Revolving Fund (DWSRF) program and authorized $9.6 billion to be appropriated for the program through fiscal year 2003. Congress directed that allotments for fiscal year 1998 and subsequent years would be distributed among States based on the results of the most recent Drinking Water Infrastructure Needs Survey and Assessment. In this notice, the Environmental Protection Agency (EPA) is announcing revised DWSRF program State allotment percentages in accordance with the results from the most recent 2003 Drinking Water Infrastructure Needs Survey and Assessment (Needs Assessment), which was released on June 14, 2005. The revised State allotment percentages affect DWSRF program appropriations for fiscal years 2006 through 2009. Beginning in fiscal year 1998, EPA established a formula that allocates funds to the States based directly on each State's proportional share of the total need for States, provided that each State receives a minimum share of one percent of the funds available to the States, as required by the SDWA. EPA has made the determination that it will continue to use this method for allocating DWSRF program funds. The findings from the 2003 Needs Assessment will change the percentage of the DWSRF program funding received by some States in prior years. This change reflects an increase or decrease in these States' share of the total needs for States and will allow appropriations disbursements to more accurately reflect the needs of the States to reach the public health objectives of the SDWA. The Agency believes that the 2003 Needs Survey and Assessment more accurately captures needs for necessary long-term rehabilitation and replacement of deteriorating infrastructure that were under-reported in the earlier surveys.

DATES:

This notice is effective June 24, 2005.

FOR FURTHER INFORMATION CONTACT:

For technical inquiries, contact Jeff McPherson, Drinking Water Protection Division, Office of Ground Water and Drinking Water (4606M), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460; telephone number: [phone]; fax number: [phone]; e-mail address: [e-mail]. Copies of this document and information on the Drinking Water Infrastructure Needs Survey and Assessment and the DWSRF program can be found on EPA's Office of Ground Water and Drinking Water Web site at http://www.epa.gov/​safewater/​.

SUPPLEMENTARY INFORMATION:

The 1996 Safe Drinking Water Act (SDWA) Amendments established a Drinking Water State Revolving Fund (DWSRF) program and authorized $9.6 billion to be appropriated for the program through fiscal year 2003. Through federal fiscal year 2005, Congress has appropriated $7.8 billion for the DWSRF program. Congress directed that allotments for fiscal year 1998 and subsequent years be distributed among States based on the results of the most recent Drinking Water Infrastructure Needs Survey and Assessment (SDWA section 1452(a)(1)(D)(ii)), which must be conducted every four years. The first survey, which reflected 1995 data, was released in February 1997 and the second survey, which reflected 1999 data, was released in February 2001. The 2003 Drinking Water Infrastructure Needs Survey and Assessment, which was conducted over the last two years, was released on June 14, 2005 (EPA 816-R-05-001). The survey and assessment was completed in cooperation with the States. The States participated in both the design and development of the survey. The survey examined the needs of water systems and used these data to extrapolate needs to each State. The survey included all of the nation's 1,342 largest systems (those serving over 40,000 people) and a statistical sample of 2,553 systems serving 3,301—40,000 people. For the 1999 Needs Assessment, EPA conducted site visits to approximately 600 small community water systems and 100 not-for-profit noncommunity water systems. The EPA believes that the needs captured from the site visits in 1999 represented a fair and complete assessment of these systems' 20-year needs. Findings from 1999 were very similar to the findings in 1995, indicating that the systems needs did not change significantly over a four-year period. Therefore, EPA decided it could estimate the 2003 needs for small community water systems and not-for-profit noncommunity water systems by adjusting the 1999 needs to 2003 dollars.

The sample design for the survey produces a statistically valid State-by-State estimate of need. The 2003 Needs Assessment presents State-by-State needs in several ways. For each State, the Needs Assessment provides a bottom-line estimate of the total need, which reflects the capital costs for all drinking water infrastructure projects allowed for inclusion in the Survey. The Needs Assessment also presents capital needs for each State by system size, by category of need (i.e., treatment, distribution and transmission, storage, source, and “other”), by existing SDWA regulation, and by current and future need. Current needs are projects that a system considers a high priority for near-term implementation to enable a water system to continue to deliver safe drinking water. The Needs Assessment also allocated the $0.9 billion need for the recently promulgated Arsenic Rule. The EPA used the total national cost for the Arsenic Rule from the Economic Analysis to allocate the Rule's implementation cost to each State based on the occurrence data for the number of systems with arsenic over 10 ppb.

The 2003 Needs Assessment found that the total national need is $276.8 billion (Table 1). This estimate represents the needs of the approximately 53,000 community water systems and 21,400 not-for-profit noncommunity water systems that are eligible to receive DWSRF program assistance. These systems are found in all 50 States, the District of Columbia, Puerto Rico, on American Indian lands and in Alaska Native Villages, and the Virgin Island and Pacific Island territories.

Table 1.—2003 Drinking Water Infrastructure Needs Survey and Assessment 20-Year Needs

Type of need	Need (billions)
States	$263.8
Territories	0.6
American Indian and Alaska Native Villages	2.4
Costs for Proposed and Recent Regulations (does not include the recently promulgated Arsenic Rule)	9.9
Total National Need	$276.8
Note: Numbers may not total due to rounding.

The total national need also includes $9.9 billion in capital needs associated with recently promulgated (excluding the Arsenic Rule) and future regulations, as identified in EPA Economic Analyses accompanying the rules. Although these needs are included in the total national need, they were not apportioned to the States based upon the unanimous recommendation of the State representatives who participated in the survey design. The States expressed concern that the methods available for allocating the costs of these regulations would not represent the true costs of compliance on a State level. The total State need, which is the figure that EPA will use to calculate the State allotments, includes only the needs of the 50 States, the District of Columbia, and Puerto Rico. The 2003 Needs Assessment estimates that the total State need is $263.8 billion.

Allocation Method

On October 31, 1996, EPA solicited public comment on six options for using the results of the first Drinking Water Infrastructure Needs Survey and Assessment to allocate DWSRF program funds to the States (61 FR 56231). On March 18, 1997, EPA announced its decision to allocate DWSRF program funds for fiscal years 1998 through 2001 appropriations based on each State's proportional share of the total eligible needs for the States as derived from the 1995 Needs Assessment (62 FR 12900). EPA used this same method when allocating DWSRF program funds for fiscal years 2002 through 2005, utilizing the results of the 1999 Needs Assessment. EPA has made the determination that it will continue to use this method for allocating DWSRF program funds for fiscal years 2006 through 2009 appropriations, utilizing the results of the 2003 Needs Assessment. The funds available to the States will be the level of funds appropriated by Congress, less the national set-asides, which includes an allocation for American Indian and Alaska Native Village water systems. Of the funds available to States, the SDWA includes specific allocations for the Pacific Islands, the Virgin Islands, and the District of Columbia. Each State will receive an allotment of DWSRF program funds based on each State's proportional share of the total State need ($263.8 billion), provided that each State receives a minimum allocation of one percent of the funds available to States, as required by the SDWA.

The 2003 Needs Assessment found that 22 States, Puerto Rico, and the District of Columbia each had less than one percent of the total national need (in aggregate, 8 percent of the total national need); however, for 2006 to 2009, each of these States will be eligible for one percent of the annual DWSRF funds made available to states (or, in aggregate, 24 percent of the total DWSRF funds made available to states). The discrepancy between these States' allocations percentages and their proportional needs as identified in the 2003 Assessment may be due, in part, to a number of these States participating in the needs assessment effort to a lesser degree than the other States.

The total State need includes all documented projects collected by the Needs Assessment. In general, a project was included in the Needs Assessment if project documentation demonstrated that meeting the need would address the public health objectives of the SDWA. The total State need includes both projects that are currently needed and future projects that will be needed over the next 20 years in four general categories: treatment, source, storage, and transmission and distribution. The formula based on the total need makes no distinction between the four categories—that is, it assigns an equal weight to all categories of need. Also, projects to correct immediate public health threats (e.g., replacing a deteriorated filter plant) are given the same weight as less critical needs (e.g., replacing a storage tank that is expected to reach the end of its useful life in five years). With the exception of the Arsenic Rule, capital costs associated with recently promulgated and future regulations were included in the total national need but not distributed to individual states. Costs associated with the Arsenic Rule were allocated to each State based on occurrence data. The Needs Assessment excluded capital projects that are ineligible for DWSRF program assistance, such as dams, reservoirs and projects needed solely for growth.

Allocation of Funds

Table 2 contains each State's expected DWSRF program allotment based on an appropriation of $850,000,000 and national set-aside assumptions. The appropriation amount is based on the President's budget request of $850,000,000 for fiscal year 2006. The national set-asides for fiscal year 2006 include funds for American Indian and Alaska Native Village water systems at the level of 1.5 percent of the total appropriation. (SDWA Section 1452(i)). The amount will be $12,750,000 for Indian Tribes and Alaska Native Villages if funds are appropriated at the level of the President's 2006 budget request. Additional national set-asides for fiscal year 2006 include $2,000,000 for monitoring for unregulated contaminants. If funds are appropriated for the DWSRF program at the level of $850,000,000 and if the anticipated national set-asides do not change, the total funds available to the States, the District of Columbia, and Territories would equal $835,250,000. Because the percentages are based on the total funds available for allotment to the States, they can be used for general 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. EPA will annually notify each State of their allotment from a specific fiscal year's appropriation after the final budget has been passed.

The findings from the 2003 Needs Assessment will change the individual allotment percentage of the DWSRF program funds received by some States when compared to their current allotment percentage. This change reflects an increase or decrease in these States' proportion of the total State need. The variation in needs occurred principally as a result of the data submitted by individual water systems, but also in part due to refinements in the survey methods. With the collection of data from nearly 4,000 water systems and over 128,600 projects submitted, a change in some States' allotments represents an inevitable consequence of conducting a survey of this scale.

Table 2.—Distribution of Drinking Water State Revolving Fund Allotments

State	Percent	Amount allotted
Alabama	1.00	$8,352,500
Alaska	1.00	8,352,500
Arizona	2.84	23,704,100
Arkansas	1.26	10,487,900
California	8.15	68,108,400
Colorado	1.76	14,714,300
Connecticut	1.00	8,352,500
Delaware	1.00	8,352,500
Florida	4.52	37,724,800
Georgia	2.81	23,461,900
Hawaii	1.00	8,352,500
Idaho	1.00	8,352,500
Illinois	4.08	34,068,800
Indiana	1.40	11,655,600
Iowa	1.25	10,405,500
Kansas	1.00	8,352,500
Kentucky	1.05	8,759,400
Louisiana	1.42	11,833,100
Maine	1.00	8,352,500
Maryland	1.38	11,493,200
Massachusetts	2.68	22,365,800
Michigan	3.46	28,893,000
Minnesota	1.80	15,038,600
Mississippi	1.00	8,352,500
Missouri	1.94	16,217,400
Montana	1.00	8,352,500
Nebraska	1.00	8,352,500
Nevada	1.00	8,352,500
New Hampshire	1.00	8,352,500
New Jersey	2.21	18,484,300
New Mexico	1.00	8,352,500
New York	4.45	37,184,400
North Carolina	3.37	28,109,400
North Dakota	1.00	8,352,500
Ohio	3.00	25,040,200
Oklahoma	1.61	13,484,400
Oregon	1.46	12,213,900
Pennsylvania	3.37	28,133,00
Puerto Rico	1.00	8,352,500
Rhode Island	1.00	8,352,500
South Carolina	1.00	8,352,500
South Dakota	1.00	8,352,500
Tennessee	1.04	8,668,600
Texas	8.24	68,814,200
Utah	1.00	8,352,500
Vermont	1.00	8,352,500
Virginia	1.06	8,892,600
Washington	2.14	17,906,900
West Virginia	1.00	8,352,500
Wisconsin	1.94	16,169,700
Wyoming	1.00	8,352,500
District of Columbia	1.00	8,352,500
Other Areas *	0.33	2,756,300
Total	100.00	835,250,000

Dated: June 17, 2005.

Benjamin H. Grumbles,

Assistant Administrator, Office of Water.